Can reimbursing for services such as medical transportation, food and housing actually save Medicare money in the long run? (Photo: Shutterstock)

The Centers for Medicare and Medicaid are considering a pilot program that would pay for items as far removed—in appearance, anyway—from health care, such as housing, food and transportation. These are examples of social determinants of health—elements of living that affect health but technically are not health care.

Such programs are already being utilized elsewhere to provide housing for the homeless, hot meals and other outreach for the home-bound, as well as transportation to and from medical appointments. And they're seeing a substantial reduction in health care costs by doing so, reports government policy site Roll Call.

Related: How social determinants of health affect your employee benefit program

One such instance: a health care nonprofit in Phoenix, which, as Roll Call explains, “sliced monthly Medicaid costs by more than half, saving more than $4.3 million in one year, by constructing temporary housing for homeless patients who had nowhere to go after leaving the hospital.”

In addition, research from Meals on Wheels America has drawn a correlation between people who receive daily meals and social interactions and fewer hospital trips.

Now, as Modern Healthcare reports, HHS Secretary Alex Azar is considering a pilot program to permit health care organizations to bill CMS for such services as assistance with food and housing. Insurers, especially those who care for Medicare beneficiaries, were quick to weigh in on the issue.

The move is setting insurers against hospitals and other providers, since the former say they should be the ones to manage and receive CMS funding since they have the data, the interaction with beneficiaries and the access they have to beneficiaries' needs. But hospitals and other providers are opposed to that, saying that since in many cases they're the ones already providing such care, they should be the ones who get the money.

“We have the population. You should start with the health plan because they have all the members,” Michael Schrader, CEO of CalOptima, a Medicaid and Medicare health plan based in Orange County, California, is quoted as saying. “You can go to a hospital, but all services don't happen at the hospital. Hospitals are only going to touch a small number of our members in any given year.”

But hospital groups are in no hurry to back down. “America's hospitals and health systems are leading the way in addressing the social determinants of health,” Joanna Hiatt Kim, vice president of payment policy at the American Hospital Association, responded.

HHS, for its part, hasn't exactly been lavish with the details of such a pilot program. According to Modern Healthcare, “Azar's comments about the model were vague and didn't directly address who would receive the payments. At one point in his remarks, however, he did refer to patients as beneficiaries.”

“What if we provide solutions for the whole person, including addressing housing, nutrition and other social needs?” Azar asked his audience at the Hatch Center for Civility and Solutions in a recent speech. “What if we gave organizations more flexibility so they could pay a beneficiary's rent if they were in unstable housing or make sure that a diabetic had access to, and could afford, nutritious food?”

Of course, regardless of who gets paid, Congress will have to weigh in first, since there are regulations against CMS paying for housing and other “social determinants of health.” And getting Congress to agree on anything, particularly once the new members are seated, could be a tall order, since it would require changes to the Social Security Act.

Still, there is that cost reduction factor, which could make the difference. Says Modern Healthcare, “There has been growth in published literature showing that addressing social risk factors can improve patients' outcomes as well as decrease costs for health plans and providers through lower utilization of emergency departments and reduced readmission rates.”

A single example offers an indication of how far cost reductions might be able to go” CalOptima pays about $200 a day to provide housing for a member compared with an emergency room visit that can cost CalOptima at least $1,200.

With numbers like these, perhaps there's hope after all.

Read more: 

• What's next for health care policy?
• Trends, innovations and helpful solutions in the Medicare Advantage space
• How do social factors affect health?