The COVID-19 pandemic exacerbated longstanding racial and ethnic health inequities and disparities in health care. As we move out of the pandemic, there is a growing recognition that focusing on the social determinants of health—or health-related social needs—can improve health disparities and the health outcomes of populations. In order to achieve whole-person care, care and assistance need to be local and extend beyond medical services received in health centers and hospitals.  

Using 1115 Waivers to Cover Health-Related Social Needs Interventions

The Centers for Medicare and Medicaid (CMS), which administers Medicaid at the federal level, is prioritizing health equity. Recently, CMS approved several 1115 waivers that allow state Medicaid programs to pay for interventions that target health related social needs (HRSNs). Section 1115 waivers are experimental or demonstration projects proposed by states that test different policy approaches to serving Medicaid populations not currently allowed in federal Medicaid law.  

CMS also released a HRSN framework for what the agency will approve through Section 1115 waivers. The new 1115 HRSN framework is novel because Medicaid has not traditionally paid for non-medical interventions. As part of this framework, CMS will allow Medicaid to cover housing supports, nutritional supports, and case management services. In a groundbreaking move, CMS approved two 1115 waivers that allow Oregon and Arizona Medicaid programs to pay for rent for certain populations. Never before has a Medicaid program paid for costs associated with room and board. Now, California is the latest state to propose paying for rental assistance through an 1115 waiver.  

California’s Proposals 

California’s CalAIM initiative is a sweeping plan to transform the Medi-Cal program and invest in HRSNs. For example, the CalAIM Community Supports program covers medically appropriate and cost-effective alternatives to services covered under Medi-Cal offered by Medi-Cal managed care plans. Community Supports include non-traditional service categories such as housing navigation, medically tailored meals, and asthma remediation. The waivers underpinning CalAIM were approved in late 2021 prior to CMS approving Oregon and Arizona’s waivers, but rental assistance was not included as a service through the Community Supports program.  

However, in the fall of 2022, California’s Department of Health Care Services released a concept paper for a new waiver focused on expanding access to behavioral health services. The concept paper also included an option for counties to enhance community-based mental health coverage by allowing Medicaid to cover rent/temporary housing for certain populations.  

In January 2023, California’s proposed FY 2023-24 budget included a proposal to amend CalAIM and add six months of transitional rent as an additional Community Support that Medi-Cal managed care plans could elect to offer. The May Revision, released by the Newsom Administration, did not strike or modify these proposals, and they were included in the Legislature’s version of the budget, so they are expected to become part of the final Budget Act of 2023.

The Arizona and Oregon waivers and proposed California initiatives on rental assistance are similar in scope. They are time-limited and allow Medicaid to pay for rent for up to six months, and cover vulnerable populations transitioning from one setting to another, including: 

• Individuals transitioning out of institutional care or congregate settings, including nursing facilities, large group homes, congregate residential settings, Institutions for Mental Diseases (IMDs), correctional facilities, and acute care hospitals; 
• Individuals who are experiencing homelessness, at risk of homelessness, or transitioning out of an emergency shelter; and  
• Youth transitioning out of foster care.    

What’s Next 

States are looking at solutions such as these to address the needs of their communities. The California Legislature passed budget legislation by the constitutionally required June 15 deadline but still needs to come to an agreement with Governor Newsom. Both sides appear to agree on the need to include the Medicaid rental assistance initiatives, so we expect they will be included in the final version of the budget act that will take effect July 1. It will also take time for the initiatives to be implemented. California will need to get CMS approval for the behavioral health-focused waiver, as well as amend the CalAIM 1115 waiver to include transitional rent as part of the Community Supports program. However, when California succeeds, it will join Oregon and Arizona – and potentially other states – in soon allowing Medicaid to offer transitional rent assistance. And California’s whole-person care efforts will take another leap forward.  

Connect with Us

Contact Heather Bates at heather@transformhc.com to discuss a partnership with Transform Health. For media inquiries, please contact Elizabeth Wells elizabeth@transformhc.com.