Addressing Housing Insecurity via Medicaid Managed Care

Health Highlights

With the prices of homes and rentals continuing to climb alongside already high rates of housing insecurity, access to basic, safe, and clean housing is at risk for many people with low incomes across the country. Recognizing the critical role stable housing plays in improving health and reducing health care costs, states are increasingly leveraging Medicaid to address the housing-related needs of members. One recent study found that access to safe, stable and affordable housing decreased Medicaid expenditures by 12 percent. States’ ability to pay for non-medical services—such as food or housing—with Medicaid dollars is limited by federal statute. However, states have a variety of tools to support the health-related social needs of their Medicaid beneficiaries including:

  • Leveraging Medicaid managed care contracts to require or encourage managed care organizations (MCOs) to perform activities to address drivers of health (DOH) and/or
  • Using Section 1115 demonstration waiver authority, which allows states additional flexibility to test new approaches in Medicaid that go beyond what is permitted or required by federal statute, to test new DOH related initiatives  

In October 2020, Manatt reviewed the contracts of each state and territory with Medicaid managed care as well as their 1115 demonstrations to identify provisions related to DOH. That analysis found that 34 of 37 states profiled included housing-related provisions in their contracts with health plans. In August 2022, Manatt refreshed the analysis, focusing on 15 states that have undergone significant changes to their managed care contracts since the original 2020 publication. The 2022 analysis found that all 15 states reviewed (Arizona, California, Colorado, Hawaii, Kentucky, Louisiana, Minnesota, Nevada, Ohio, Oregon, Tennessee, Virginia, Washington, West Virginia, Wisconsin) have included contract requirements related to supporting housing initiatives to improve members’ health. Below are some highlights of how states are using these tools to address member needs.

Examples of State Requirements to Address Housing-Related Needs

Medicaid Managed Care Contracts

  • Using “in lieu of services” (ILOS) to provide housing supports. ILOS are optional services that may be provided “in lieu of” a service or setting covered in a state plan because they are cost-effective and medically necessary. While ILOS have long been included in managed care contracts, some states have started using them as a way to address DOH. California recently developed a list of 14 “pre-approved” ILOS (called “Community Supports”) focused on addressing the unmet resource needs of members with seven of the 14 Community Supports focused on housing-related services: 
    • Housing Transition Navigation Services
    • Housing Deposits
    • Housing Tenancy and Sustaining Services
    • Short-Term Post-Hospitalization Housing
    • Recuperative Care (medical respite)
    • Environmental Accessibility Adaptations (Home Modifications)
    • Asthma Remediation
  • Developing MCO staffing requirements to address member housing issues: Many states are requiring MCOs to invest in the development of a multidisciplinary workforce that meets the spectrum of beneficiary needs, for example, by hiring staff with DOH-specific expertise. Arizona, New Jersey and Louisiana are among states that require MCOs to hire a housing specialist to support members that are experiencing homelessness and/or housing insecurity. The housing specialist is expected to assist members in obtaining and sustaining housing that meets their needs and goals.
  • Requiring MCO participation in non-Medicaid housing initiatives. Louisiana requires MCOs to partner with the Louisiana Housing Authority to provide the State’s permanent supportive housing program to Medicaid members. The state requires MCOs to actively participate by 1) identifying members who would benefit from the program, 2) authorizing housing support services and 3) contracting with housing providers to provide permanent supportive housing services.

Section 1115 Demonstration Waiver Authority

  • Integrating housing-related programs authorized through 1115 demonstrations into Medicaid managed care. Hawaii, North Carolina, Virginia and Washington all have integrated housing supports authorized through 1115 demonstrations into their Medicaid programs. These demonstrations require MCOs to collaborate and partner with community-based organizations (CBOs) that provide the housing-related services and supports to Medicaid members. Hawaii’s 1115 demonstration allows MCOs to cover certain tenancy supports for eligible populations, called “Community Integration Services” and “Community Transition Services,” including:
    • Transitional housing case management services,
    • First month’s rent and security deposits,
    • Home remediation, and
    • Legal assistance.
    In addition, Arizona is requesting 1115 demonstration waiver authority (pending at the time of publication) to provide comprehensive housing supports to qualifying Medicaid members. Qualifying members include those who are homeless or at risk of becoming homeless and who have a qualifying condition (e.g., individuals with severe mental illness, those who are high-risk or high utilizers, individuals with chronic conditions, individuals who are pregnant, young adults who have aged out of the foster care system). Comprehensive housing supports include:
    • Up to 18 months of short-term transitional housing,
    • Housing move-in supports and
    • Eviction prevention, including back payment of rent.


Many state Medicaid agencies have been leveraging Medicaid policies and funding to address the housing needs of beneficiaries. These innovative policies can help members achieve greater stability and ultimately better health, as well as help the state contain health care costs. Given that members are likely to have trusting and enduring relationships with CBOs, MCOs can partner with community organizations to develop successful housing initiatives that truly move the needle in supporting communities experiencing housing instability and improving health outcomes. Of course, MCOs cannot do it alone— to achieve a meaningful impact on housing instability will require upstream investment to address housing affordability, safety and stability and promote effective strategies nationwide.



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