By: Aubrey Patino, Third Sector Manager and Catherine Distelrath, CSH Michigan Director
As the nation continues to grapple with homelessness driven by severe shortages of affordable housing and coordinated services, the State of Michigan is advancing critical efforts to improve the quality of supportive housing. A proven solution to addressing homelessness for those with complex needs, supportive housing pairs safe, affordable, and stable housing with support services.
But the success of supportive housing is fundamentally dependent on sustainable, scalable service funding. Today, Michigan providers, like many supportive housing providers across the country, are navigating a fragile patchwork of revenue streams: time-limited grants, developer fees, limited state resources, and highly competitive federal funding such as the Department of Housing & Urban Development (HUD) Continuum of Care (CoC) funds.
While Medicaid cannot close the entire funding gap, it is a critical piece of the puzzle for building a resilient, accountable, and performance-driven supportive housing services system. Over the past year, Third Sector and Corporation for Supportive Housing (CSH) have actively collaborated to build the operational capacity of Michigan’s long-term supportive housing network. Together, they have equipped providers to deliver high-quality, Medicaid billable services (once contracted with Community Mental Health providers) that directly improve behavioral health outcomes and housing stability, while reinforcing strong standards for documentation, billing integrity, and outcomes tracking.
Michigan is not alone in this effort. To date, thirty-one states have received approval from the Centers for Medicare & Medicaid Services (CMS) to fund supportive housing services through Medicaid. This reflects a growing national recognition that stable housing is a fundamental social determinant of health and cost-effective alternative to crisis care.
Supportive housing offers a clear opportunity to spend smarter, not more. This approach shifts resources away from costly emergency room visits, crisis services, and jail stays toward proven solutions that stabilize individuals and reduce long-term public costs. By pairing housing with targeted services, states can improve health outcomes, reduce system strain, and deliver stronger returns on taxpayer investment. Michigan has an opportunity to lead by demonstrating how supportive housing drives measurable results—fewer people in crisis, safer communities, and more efficient use of public resources.
RECOMMENDATIONS TO IMPROVE MEDICAID UTILIZATION FOR SUPPORTIVE HOUSING
There is a need for targeted national and state-level analysis to evaluate how Medicaid-funded supportive housing services influence provider revenue, housing stability, and health outcomes. This means assessing each state’s supportive housing capacity, Medicaid billing requirements, reimbursement structures, referral pathways, provider readiness, and cross-agency coordination. These efforts can help states determine whether rates reflect the full cost of service delivery, whether providers have the tools to meet Medicaid requirements, and whether clear contracting pathways exist between regional payors and supportive housing providers. These analyses should distinguish between traditional healthcare providers and organizations with deep experience in housing and homelessness services that may be newer to Medicaid to ensure program design supports effective implementation while maintaining strong standards for provider qualification, oversight, and accountability. This learning can also help state Medicaid offices and supportive housing providers develop shared quality metrics that align with HUD and CMS standards.
Technical assistance is vital for bridging the implementation gaps as they emerge. This work is complex and dynamic and requires ongoing support to help providers navigate Medicaid requirements, build operational capacity, and deliver services that meet both compliance standards and outcome expectations.
PRIORITY ACTIONS FOR MICHIGAN
Building on CSH’s national best practices and real-time implementation experience, Third Sector and CSH have seven recommendations for Michigan to improve Medicaid utilization to reduce homelessness and support better well-being outcomes in their communities:
Financial Sustainability
Establish standardized reimbursement rates (“a floor”) and develop evidence demonstrating how tenancy supports reduce high-cost crisis care (ER/inpatient stays) to make a clear business case for payors.
Systemic Coordination
Create dedicated cross-agency workgroups that bring together supportive housing agencies, Medicaid, housing finance, and payors to resolve barriers, share data, and promote peer learning. These groups should also play a role in oversight and continuous improvement.
Policy & Incentives
Implement performance metrics and incentive structures to encourage state housing finance agencies to utilize available Medicaid benefits.
Evaluation & Learning
Evaluate the impact of services on housing stability and health outcomes while documenting successful local operational models to streamline benefit delivery.
Benchmarking
Establish clear benchmarks for utilization, outcomes, and provider performance to guide decision-making and ensure consistent standards statewide.
Advocacy & Education
Engage in statewide advocacy to educate consumers, advocacy groups, and key stakeholders on the importance and availability of the Medicaid benefit.
Local Examples
Identify local examples that have successfully overcome these barriers, documenting innovative operational models, successful policy adjustments, and mechanisms for streamlining benefit delivery.
MICHIGAN’S IMPLEMENTATION PATHWAY
Michigan has already taken a significant step forward. On October 1, 2023, the state transitioned its Housing Assistance (HA) benefit from a limited 1115 waiver to a 1915(i) State Plan Amendment (iSPA). This transition signaled a permanent commitment to integrating housing support into the state’s healthcare system.
Despite this progress, utilization of the HA benefit remains very limited, indicating that both supportive housing providers and the behavioral health system lack the tools and resources needed to leverage this opportunity.
To address this gap, CSH and Third Sector implemented a targeted, multi-pronged strategy focused on three key groups:
- Supportive housing providers
- State leadership
- Regional Prepaid Inpatient Health Plans and Community Mental Health Service Programs (PIHPs/CMHSPs)
These regional entities are crucial as they serve as the primary payors and contract holders, managing enrollment, oversight, and funding for the Housing Assistance code, which reimburses supportive housing providers for their essential services.
KEY AREAS OF PROGRESS
Systems Coordination
By focusing on individuals with complex housing and social needs, supportive housing directly targets individuals for whom traditional community mental health interventions alone are often insufficient. Current efforts should focus on:
- Enable providers to successfully bill Medicaid
- Improve operational readiness and capacity
- Enhance the delivery and access to supportive housing
State-Level Advocacy and Case-Making
Partner with the critical stakeholders to advocate for the HA benefit’s utilization as a clinical necessity and facilitating direct meetings with regional entities to model financial impact and scope of need.
Administrative Streamlining
Establish a state leadership workgroup, including Medicaid staff from the Michigan Department of Health and Human Services (MDHHS) and state housing finance agency staff from the Michigan Department of Housing Development Authority (MSHDA), which resulted in the publication of a statewide memo and FAQ document to clarify implementation standards.
Exploration of the Role of CCBHCs
Analyzing the capacity of Certified Community Behavioral Health Clinics (CCBHCs) to incorporate housing supports within their integrated care models.
LOOKING AHEAD
By focusing on these targeted strategies, states can effectively solidify Medicaid as a reliable revenue stream, contributing to the sustainable infrastructure needed to end homelessness and improve health outcomes statewide.
For more information, contact:
- Aubrey Patino, Manager at [email protected]
- Catherine Distelrath, CSH Michigan Director at [email protected]