Can Health Care Savings Drive a New
Funding Model For Affordable Housing?
Shifts in Health Care Industry Provide
Opportunity for a New Funding Model
1. Industry moving from “pay for volume” to “pay for value”
2. Shift from access to “sick care” to health care” and “well
care”
3. Public Purchasers are shifting their patients to managed
care plans
• Capitated rates with cost savings and risk potential for
health plans
• Better potential for aligning costs and savings
Figure 4
Medicaid Managed Care Penetration Rates
by State, 2008
VT
NH
WA
ME
MT
ND
MA
MN
OR
ID
NY
SD
WI
MI
CT
WY
PA
IA
NE
NV
IL
UT
CA
CO
KS
IN
DE
WV
VA
IL
MO
KY
NC
TN
OK
AZ
NM
AK
MD
DC
SC
AR
MS
TX
NJ
OH
AL
GA
LA
FL
HI
U.S. Average = 70%
0-50% (5 states)
51-70% (20 states including DC)
71-80% (9 states)
81-100% (17 states)
Note: Unduplicated count. Includes managed care enrollees receiving comprehensive and limited benefits.
4
SOURCE: Medicaid Managed Care Enrollment as of December 31, 2008. Centers for Medicare and Medicaid
Services.
RI
Proposed Health and Housing
“Products”
1) Care Management services: generally focused on increasing
services and improving outcomes for existing residents or in new
properties using traditional HUD/LIHTC deal structures
2) Supportive Housing– service-enriched housing, typically for formerly
homeless individuals, including seniors, veterans and/or disabled
3) Service-enriched senior housing: Unlicensed housing with support
services that do not reach the level of care and supervision of assisted
living or skilled nursing
Funding Considerations
Funding Model Options
1) Traditional approach (current): Reliant on public funding for capital,
services, and operations. Health and housing integration and innovation
occurs at project level with some philanthropic support
2) Fee for service (proposed approach): directly contract with a health
plan or provider for a monthly fee that covers health and housing costs in
an integrated payment that is not dependent on health outcomes.
3) Pay for Success: Seek contract with public agency to pay fee in
return for specific outcomes (e.g.. avoided hospitalizations, lower costs,
etc.). Would require partnership with investor that would pay for the upfront costs of the housing and services in return for share of savings.
Factors that influence revenue potential
Cost Savings Potential
Access: what is the
process by which
residents gain access
to apartments
$60,000
$50,000
Annual
Medicaid
Expense
$40,000
$30,000
Cost
$20,000
$10,000
$25%
50%
Alignment / Access Control
100%
Alignment: Degree
to which the
residents are
members, enrollees,
patients of the
health partner
Potential business models
Opportunity #1: Care Management
• service-enriched housing communities are a platform for
comprehensive health promotion and risk reduction
• On-site staff can deliver targeted care coordination services in a
community-based setting
• Coordinators also facilitate access to residents for third party services
such as health screenings
• Mercy Housing has the expertise and opportunity to reach individuals
who elude clinic-based case management
Core Wellness Practices and Programs
•
Health and Wellness Interview
•
Preventative and Primary Health Care
•
Behavioral Health Care
•
Health Benefits Acquisition
•
Health Education and Risk Reduction
•
Food
•
Physical Activity
•
WellBeing Checks
•
Activates for Daily Living Screening and Support
•
Transition Plan to and From Hospitals/Institutions
Examples of Third Party Services Coordinated
by Mercy Housing
• Health screenings and immunizations
• Services to promote healthy pregnancies and help children
with special needs
• Hospice
• In-home Support Services/ Adult Day Health
• Food services: Meals on Wheels; Food Bank
Fee-for-service senior housing
Hot-spotter approach:
Small percent of “high cost” individuals
drive health care costs
• High-cost Medicaid enrollees (over $25,000 annual spending)
are 4% of all enrollees, 49% of all spending
• 49% are elderly and 43% are disabled.
•nursing homes or other long-term care represent 77% of
cost attributable to elderly “high-cost enrollees” of
Medicaid
Problem: Traditional “medical” solutions are
unlikely to avoid key cost drivers of highest cost
enrollees
• Nursing homes or other long-term care represent 77% of cost
attributable to elderly “high-cost enrollees” of Medicaid
•There is currently no affordable alternative to skilled nursing
• Homeless individuals and other extremely low-income individuals are
often difficult to treat for illness and/or discharge from hospitals
because they lack stable housing and often fail to access behavioral
health supports.
“Market Failure”
Medicaid will pay for skilled nursing or residential
care facilities at three to four times the monthly cost
of Mission Creek
•
•Medicare will pay 20X the daily cost of Mission
Creek for hospital beds for patients that lack a
home to be discharged to.
•Once the patient’s medical needs have been met,
hospitals pay the cost of “housing” the dual
eligibles in their $1,000/night beds
Case Study:
Mission Creek
Senior Community
San Francisco
• Service-enriched independent living alternative to nursing home beds
at Laguna Honda
• 50 of 140 units direct referral of SF Dept of Public Health from skilled
nursing, hospitals and shelters
• SF DPH pays $700/month operating subsidy for exclusive access to
those units.
Case Study:
Mission Creek
Senior Community
San Francisco
• Mercy’s on-site team provides a holistic “blended” approach to services
and property management
Service Coordination
Health Education
Physical Activity
Transition Plans
Health Interview
Food banks
Well-being Checks
Benefits Acquisition
• SF DPH also provides access to a roving team that can meet
the “medical” needs of residents
Study Findings:
San Francisco
Department of Public
Health
• Medicaid/Medicare costs of the 50 original DPH referrals shrank
from $1.7 million per year to $253,000
• Per capita, $29,000 annual savings, Medicaid and Medicare
• Savings: reduced hospitalizations and skilled nursing stays
Value Proposition:
Estimated Total Costs & Savings
Net Savings
Health
care cost
$65k-100k
per year
Impact of
Independen
t Long
Term Care
Fee
Ongoing
health cost
Pre-Intervention
With Independent
Long-Term Care
How else might we understand pricing?
Residential Care Options
low
Average
high
5,463
5,418
4,889
4,195
4,133
3,518
2565
2,865
2,568
2,575
1,300
Mercy LTC Model RCFE base rate - RCFE Base Rate ALWPP Rate:**
Los Angeles* + Add. Services:*
Skilled Nursing Skilled Nursing
Facility: LA
Facility: Statewide