Policy

Care With a Side of Comfort Promises Big Savings in Health Costs

Experiments targeting housing, transportation, food and other nonmedical services are flourishing

Circle the City’s respite program provides health assessments, physical therapy and other care for homeless patients. (Courtesy Circle the City)

As state and federal officials increasingly search for ways to curb rising health care costs, a decades-old idea is gaining traction: helping people with challenges that have nothing to do with medical care but everything to do with their health.

Insurers are taking steps as simple as paying for hot meal deliveries and outreach to homebound people and replacing air filters in homes with asthmatic children. More radical approaches include building affordable housing for people who don’t have a stable home of their own.

State and local experiments targeting factors like housing, transportation, food and other nonmedical services are flourishing as ways to improve people’s health while cutting costs.

But advocates and industry veterans say federal involvement could bolster those efforts. State leaders say the federal government also could increase flexibility in how Medicaid and Medicare dollars can be spent, as well as break down the divisions among housing, criminal justice, health care and other agencies that make addressing social problems challenging.

“So much can be accomplished leveraging successful public-private partnerships, but each side needs to do their part,” said Lucy Theilheimer, Meals on Wheels America’s chief strategy and impact officer. “Together, by addressing social determinants of health on a national level, we can not only provide the best possible care for our most vulnerable Americans, but also avoid more costly health care usage in the future.”

Proponents point to projects across the country as proof that addressing these so-called “social determinants of health” will help curb spending.

A health care nonprofit in Phoenix sliced monthly Medicaid costs by more than half, saving more than $4.3 million in one year, by constructing temporary housing for homeless patients who had nowhere to go after leaving the hospital. Research on Meals on Wheels America shows people who receive daily meals and interactions with other individuals have fewer hospital trips and save Medicare money.

The conversation and action around the issue has made its way to the national level.

The Centers for Medicare and Medicaid Services is investing in pilot projects and creating flexibility through value-based purchasing arrangements. Earlier this year, the agency issued guidance that opens the door for private Medicare plans to provide a broader range of supplemental benefits beyond the typical medical-related services, and a law that Congress passed last year affecting chronic care is set to expand those supplemental benefits beginning in 2020.

Advocates argue the new Medicare benefits don’t go far enough and note they apply only to people in the private plans known as Medicare Advantage. They are pushing Congress to invest more in legislation like the Older Americans Act, which is up for reauthorization in 2019 and helps fund services like meals, caregiver support and transportation.

Meanwhile, Health and Human Services Secretary Alex Azar recently hinted that the Center for Medicare and Medicaid Innovation will explore pilot projects to address social needs.

“What if we gave organizations more flexibility so they could pay a beneficiary’s rent if they were in unstable housing, or make sure that a diabetic had access to, and could afford, nutritious food?” Azar told an audience at the Hatch Center for Civility and Solutions in a Nov. 14 speech about the social determinants of health. “I want you to stay tuned to what CMMI is up to.”

The administration wants “to try out truly bold solutions to some of the most stubborn social problems our country faces,” Azar said. “What it will take is coming together and pushing the boundaries of what we have traditionally thought possible.”

The power of housing

In Phoenix, Sister Adele O’Sullivan was working as a family doctor serving the homeless when she began to identify significant gaps in care.

Homeless patients had no easy way to hygienically clean and change bandages for open wounds. They didn’t readily have access to food necessary to take with medications. They weren’t getting enough sleep. Managing medication was nearly impossible for people with poor eyesight and no glasses.

So O’Sullivan began stashing donated funds in a shoebox hidden in a medicine cabinet, eventually opening Circle the City, a nonprofit health care provider.

Today, the organization runs two respite centers that provide temporary housing and medical care to homeless patients when they are discharged from the hospital.

A two-year study of the program found that monthly per-enrollee Medicaid payments fell by roughly 56 percent in one year, according to a report by CMS and the National Health Care for the Homeless Council.

Investments like this not only improve people’s health but are also cost-effective, Circle the City CEO Brandon Clark said.

“This is one of the few arenas where we can actually do the right thing for people in a compassionate and human-oriented way,” Clark said. “[It] should be one of the most bipartisan movements on the table right now.”

Arizona Medicaid Director Thomas Betlach points to Circle the City and its respite care housing as one example of how addressing things like putting a roof over someone’s head leads to better outcomes and lower health care costs.

The state has funneled millions of its own dollars through its managed care companies to help address issues like housing, which federal Medicaid funds typically don’t cover. Health plans then work with local housing providers and other organizations that specialize in nonmedical services.

He notes his agency keeps housing and employment experts on staff who speak the lingo of those types of non-health care programs.

The Medicaid agency is also working with the state’s corrections department to help identify people preparing to leave prison or jail and sending that information to managed care companies, which can then proactively reach out to individuals and make sure they have health coverage when they’re released.

It’s really about coming up with strategies to break down the silos among various agencies, Betlach said. The federal government could assist, especially in helping data systems talk to each other, he said.

Financing is another area where federal officials could play a role in change, Betlach said. While Medicaid isn’t going to pay rent for every beneficiary, there may be a limited way to use some federal money to create stable housing for very high-cost people, he said.

The creation of home- and community-based waivers, or HCBS, is an example of how that can work, Betlach noted. The waivers help people live in the community instead of in institutions by paying for support services like home aides and case management. Institutional care is often more expensive.

“It’s got to be very targeted, very focused, very high-cost individuals and very limited, but I do think the formula is there similar to what it was for HCBS,” he said.

An experimental program in North Carolina offered tailored care to people on Medicaid. CMS Administrator Seema Verma called it “groundbreaking.” (Bill Clark/CQ Roll Call file photo)
An experimental program in North Carolina offered tailored care to people on Medicaid. CMS Administrator Seema Verma called it “groundbreaking.” (Bill Clark/CQ Roll Call file photo)

A comprehensive experiment

The Centers for Medicare and Medicaid Services has supported some efforts to address social determinants in the past but indicated recently that it hopes to test more models through its innovation center.

It recently approved a proposal from North Carolina to transition its Medicaid program away from a fee-for-service model and into managed care. As part of that, federal officials approved a first-of-its-kind pilot project where the state will use enhanced case management to create tailored individual plans focused on housing, food, transportation, employment and addressing domestic violence.

CMS Administrator Seema Verma touted the five-year demonstration in an op-ed in the journal Health Affairs as “groundbreaking.”

“As we seek to create a health care system that truly rewards value, we must consider the impact that factors beyond medical care have in driving up health care costs,” Verma wrote.

The pilot will start in a few still-undetermined regions.

Part of the reason there’s movement now toward tackling these issues is the industry’s recent shift to alternative payment models, said Mandy Cohen, North Carolina’s Health and Human Services secretary.

If a health plan wants to be a statewide player, factoring these types of interventions into its bid is just part of the expectation, Cohen said.

The health plans will get extra dollars to implement the program, but eventually they’ll be expected to take on more financial risk.

Federal Medicaid rules limit what it will fund in housing, but there are still ways to use dollars to make a significant impact, she said. North Carolina has high rates of children with asthma, so one intervention could be going into their homes, ripping up old carpet and putting in air filters.

“We’re not paying the rent, but we are clearly taking out mold and taking asthma triggers out of the home,” she said.

Cohen said the state won’t likely implement that pilot until 2020 after the transition to managed care has had time to get underway.

“We have a lot of work to do to make sure this goes well,” she said, noting that infrastructure, communication and other operational elements still need to be worked out.

CMS will oversee North Carolina’s efforts and hold it accountable, Verma wrote in Health Affairs. The state plans to conduct frequent assessments to see what’s working and what’s not, so it can discontinue services that aren’t as effective and redeploy resources as needed.

“I am excited to follow this closely and to see the results, which will serve as an important learning opportunity for all states,” Verma wrote.

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Breaking down barriers

Experts, providers, insurers and officials agree one of the biggest hurdles to addressing social challenges is the inherent division among agencies that provide services like housing support, food stamps and employment help.

The government provides social services in a variety of ways, said health care consultant Rodney Whitlock. “But we do so in ways that are siloed … with no recognition of how the pieces fit together.”

Health care programs have to drive changes because of their size, Whitlock said.

But it’s not as simple as letting Medicaid pay for services beyond medical care because that raises an important question of what the program’s mission is and what goes too far, experts say.

“You could create an optional class of benefits — housing, transportation, nonmedical transportation, food,” Whitlock said. “But the problem is that once you go down that road, you’re opening Pandora’s box. You have to be very concerned about your ability to control it.”

While it’s encouraging that the administration and states are looking for more efficient and effective ways to deliver care, the costs and details matter, said Nina Schaefer, senior research fellow at the conservative Heritage Foundation.

“The specifics of this initiative will need to be carefully scrutinized to ensure these efforts do not duplicate existing programs, do not crowd out actual medical services, and do not result in other federal or state programs shifting costs to Medicare or Medicaid,” Schaefer said.

The road ahead

Advocates and health plans are pressing federal officials to take on a bigger role as efforts to address the social determinants of health grow in earnest.

Theilheimer of Meals on Wheels said the Trump administration’s announcement earlier this year expanding the use of supplemental benefits by Medicare Advantage plans didn’t go far enough.

She was particularly disappointed the guidance didn’t specify nutrition.

A 2017 Brown University analysis of Medicare claims for roughly 14,000 individuals found that hospitalization rates fell by nearly 40 percent among patients 30 days after starting Meals on Wheels, while average Medicare reimbursements also declined. The nonprofit currently has several pilot projects going with health plans and states.

The nation’s population is rapidly aging, Theilheimer said, and federal support through the Older Americans Act update could be important.

“There will be greater and greater demand,” she said. “These are folks who are costing the health care system the most money.”

Medicaid managed care plans say the administration could make changes, such as by adjusting rules regulating how much of the premiums insurers take in that must be spent on medical care versus administrative costs or profits. That percentage is known as the medical loss ratio, or MLR.

The ratio is problematic because states will sometimes count innovative practices health plans are experimenting with as administrative when they actually improve patients’ health, said Francis Rienzo, interim CEO of industry group Medicaid Health Plans of America. For instance, smart phones and data plans help people with diabetes manage their diets and insulin may be counted as administrative, Rienzo said.

“Wouldn’t that discourage you from attempting to innovate?” he said. “That’s not the way it’s supposed to be, and that’s not the way we want it.”

CMS recently released a proposal aimed at changing Medicaid managed care regulations, but it didn’t adjust the MLR percentage.

More change is needed to help efforts to address the social determinants of health scale and spread significantly beyond discreet pilot projects, said Cindy Mann, a health care expert with consultant firm Manatt who was previously the top Medicaid official in the Obama administration.

The health care system isn’t going to be the only entity to solve these issues, Mann said. There are questions around data sharing and which entities are in the best position to help someone with housing or food insecurity and other issues.

“How do you make it sustainable in terms of integrating it well into the health care system, so it’s natural and not disruptive? How do you scale it and spread it?” she said. “I don’t think it’s a single answer.”

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