Homelessness, which refers to the lack of a fixed, regular, and adequate nighttime residence, is a pervasive public health issue. This report presents results from an implementation and outcome study of a permanent supportive housing program—including service utilization and associated costs—operated by a large not-for-profit Medicaid and Medicare managed care plan serving more than 1 million members in a region of Southern California.

Implementation and 12-Month Health Service Utilization and Cost Outcomes from a Managed Care Health Plan's Permanent Supportive Housing Program

Sarah B. Hunter, Adam Scherling, Ryan K. McBain, Matthew Cefalu, Brian Briscombe, William Mcconnell, Priya Batra

ResearchPublished Oct 25, 2021

Homelessness, which refers to the lack of a fixed, regular, and adequate nighttime residence, is a pervasive public health issue. This report presents results from an implementation and outcome study of an ongoing permanent supportive housing (PSH) program—including service utilization and associated costs review—operated by a large not-for-profit Medicaid and Medicare managed care plan serving more than 1 million members in the Inland Empire area of Southern California. This PSH program combines a long-term housing subsidy with intensive case management services for adult plan members experiencing homelessness who have one or more chronic physical or behavioral health conditions and represent high utilizers of inpatient health care.

The aim of this report was to determine whether programmatic costs incurred by the health plan supporting the PSH program were partially or fully offset by decreased costs attributable to health care utilization within the health system. The evaluation used a quasi-experimental research design with an observational control group. The authors differentiated the program's effect during the transitional period—that is, after program enrollment and prior to housing placement—from its effect during the period after members were housed. In addition, the authors present participant flow through the key program milestones (e.g., referral, enrollment, housing placement, program exit) and describe health care utilization and associated costs for members who exited the program. Finally, they report the PSH programmatic expenditures relative to the changes in health care costs to provide an overall picture of the intervention's benefits and costs to the health plan.

Key Takeaways

Supportive housing interventions are associated with decreases in inpatient and emergency care

  • The health plan was successful in identifying and enrolling high health care utilizers into its PSH program.
  • Members enrolled in the program used a significant amount of health services in the 12-month period before program entry: roughly $70,000 per person.

The PSH program was associated with increased health care engagement and fewer high-cost health care events

  • Enrollees were more likely to remain engaged with health care providers and use more primary and home health care after enrollment, relative to the comparison group.
  • Health care among program enrollees may have shifted to early intervention or more regular disease management, as observed by the increase in visits for the most common chronic conditions.

When accounting for the program costs and health care service utilization among enrollees, the PSH program has yet to achieve any net cost offset from program participation

  • PSH enrollees' average health service utilization increased in the 12 months following program enrollment, while associated costs decreased from $70,136 to $48,718.
  • Overall, health care costs declined among program enrollees once they were placed into housing, relative to the period after enrollment but before PSH placement: from an average of $5,542 per member per month (PMPM) in the transitional period to $2,919 PMPM once enrollees were placed in PSH housing.
  • Enrollees who exited the program before 12 months had higher health care utilization and associated costs in the pre-enrollment and post-enrollment periods relative to enrollees who remained in stable housing.

Recommendations

  • Payers of PSH programs should be aware of initial cost drivers; specifically, individuals experiencing homelessness who are discharged from emergent or inpatient settings may require temporary housing with a variety of medical and nonmedical supports before PSH placement—resulting in a continuation of elevated costs.
  • More research is needed to determine whether changes in health care utilization are leading to better chronic condition management and quality of life for PSH enrollees.
  • More targeted recruitment and identification of successful program candidates could result in more-consistent findings and larger decreases in health care costs among enrollees. For higher-risk candidates, a higher level of care or a more direct and targeted intervention may be necessary.
  • These findings—specifically, that health care utilization and associated costs were reduced among members once they were placed in PSH—might help payers better prepare and plan for PSH program implementation in terms of initial and longer-term impacts on health care utilization and associated costs.

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Hunter, Sarah B., Adam Scherling, Ryan K. McBain, Matthew Cefalu, Brian Briscombe, William Mcconnell, and Priya Batra, Implementation and 12-Month Health Service Utilization and Cost Outcomes from a Managed Care Health Plan's Permanent Supportive Housing Program. Santa Monica, CA: RAND Corporation, 2021. https://www.rand.org/pubs/research_reports/RRA374-3.html.
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This research was funded by the Inland Empire Health Plan and conducted in the Community Health and Environmental Policy Program within RAND Social and Economic Well-Being.

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