Innovations in Pay for Success: Paving a Path to Sustainable Medicaid Funding for PFS Projects in Public Health

Innovations in Pay for Success: Paving a Path to Sustainable Medicaid Funding for PFS Projects in Public Health

It’s been five years since the first Pay for Success transaction closed in the U.S. At Living Cities, we’ve been asking ourselves: “Five years later, what has Pay for Success (PFS) achieved and what does its future look like?” Our blog series will share reflections from us and our partners on new directions in PFS. Today we are featuring the Green & Healthy Homes Initiative. Follow our Pay for Success Newsletter for updates!

When the Fulton family moved into their new home, they had no idea what lay ahead. The home passed inspections, but conditions quickly deteriorated—leaks caused mold to grow and a termite infestation took over. Before they knew it, the health of husband, wife, and two young children was declining rapidly. The conditions were exacerbating the children’s asthma and other respiratory issues so much that, in one year, the family visited the clinic or hospital 111 times and the children missed over 20 days of school each. After exhausting all resources to cover medical bills and address the conditions of the house, they were desperate.

Through a referral from a home restoration company—what they now call a “godsend”—the Fultons found the Green & Healthy Homes Initiative of Salt Lake County. After assessing their home for health and safety hazards, the County coordinated different resources to remediate all the problems in the home at no cost to the family. In addition, they educated the family about environmental triggers of asthma attacks. One year after these timely services, the Fultons had only 11 medical visits for their children’s asthma, with estimated medical savings of over $80,000 that year.

Unfortunately, this family’s experience is not wholly unique. Families across the country are experiencing similar detrimental health effects due to poor housing conditions and they lack the resources to address them. This all adds up to exorbitant costs to the healthcare system, as Medicaid and other insurance plans fail to cover the majority of services that address the social determinants of health, despite the fact that research shows they have an estimated 60 percent impact on overall health. The negative effects of poor housing in particular go beyond health, as children are kept out of the classroom and parents are kept away from work to tend to ensuing health needs.

With the mission of breaking the link between unhealthy homes and unhealthy families, the Green & Healthy Homes Initiative (GHHI) is paving the path toward sustainable Medicaid funding to address the social determinants of health. GHHI currently leads 12 public health Pay for Success (PFS) projects in 10 states, working with state Medicaid programs, managed care insurance plans, hospital systems, and community-based service providers across the country. The majority of these projects focus on asthma, as it is one of the leading reasons children miss school and visit the hospital. Once successfully authorized and implemented, the mechanism used in these PFS projects to address poor home conditions that cause asthma attacks can be applied to other social determinants of health across a variety of issues areas. Potential savings to the system are vast and the unique nature of the GHHI PFS projects has lessons for others.

What makes GHHI’s asthma PFS projects unique?

Below are the primary characteristics that make the asthma PFS projects GHHI leads distinct from the majority of other PFS projects in the U.S.:

  • Most involve private entities (in lieu of government agencies), such as a Medicaid managed care organization, in the role of back-end payor
  • All will utilize Medicaid funds for success payments to PFS investors
  • Most have the back-end payor heavily involved in the feasibility study from the beginning of the project
  • Most of the projects’ payors are involved in the delivery of services through care management programs
  • All utilize actuarial analysis of Medicaid claims data for cost savings projections during feasibility
  • Most will have actuaries perform the outcomes evaluation in order to align it with the capitation rate-setting process that managed care organizations undergo for Medicaid reimbursement
  • All have projections showing a direct ROI from medical cost savings alone with one streamlined source of data that the back-end payor houses (Medicaid claims records)
  • All are part of cohorts of similar projects that GHHI leads, which allows us to build reference datasets to refine assumptions and leverage cross-site knowledge sharing

The Linchpin: Structuring the Payment Mechanism as a Value-Based Purchasing Model

The key issue in launching these and other similar public health PFS projects is ensuring that Medicaid funds can be utilized to pay for outcomes tied to cost savings. We refined potential solutions with the Centers for Medicare and Medicaid Services (CMS), state Medicaid agencies, and industry experts to develop a way forward through value-based purchasing arrangements—models that have spread across states in recent years with the goal of improving outcomes while reducing costs. We continue to work with Medicaid agencies to secure explicit authorization for this innovative use of the value-based purchasing mechanism so payors feel fully comfortable launching these projects.

Looking Ahead

Salt Lake County’s Office of Housing and Community Development, whose services produced such a significant impact for the Fulton family, is the service provider in the Healthy Homes Salt Lake asthma PFS project that GHHI is leading toward a target launch in early 2018. The project will serve 600 to 800 families of Medicaid-enrolled adults and children with asthma. As the back-end payor, University of Utah Health Plans is committed to helping set a national precedent through structuring the PFS project as a value-based purchasing model. Upon launch, Healthy Homes Salt Lake will potentially open opportunities down the road for Medicaid managed care organizations seeking to scale preventive services that address the social determinants of health for families like the Fultons. Medicaid and CHIP provide health coverage to over 70 million people in low-income communities. With budgets tightening and the healthcare landscape shifting, innovative models should link payments to outcomes that produce cost savings and, more importantly, improve the health and well-being of the communities that need it most.

For more information on GHHI’s analysis and recommendations for aligning and implementing these models, read our State Playbook for implementing PFS projects as value-based purchasing programs and review our other PFS tools and informational materials. Also, reach out to us to join the Coalition to Advance PFS in Public Health for regular updates and opportunities to collaborate with other leaders in the field.


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