By Erica C. Barnett

A report commissioned by the King County Regional Homelessness Authority, but never publicly released, highlights some of the challenges the regional agency will face as it attempts to use federal Medicaid funding to pay for Partnership for Zero, a marquee program that aims to eliminate homelessness in downtown Seattle by connecting people directly with housing.

The report, from the nonprofit Corporation for Supportive Housing, also lays out a potential road map for navigating the Medicaid reimbursement process, which is so byzantine that many King County providers have avoided using the program.

Currently, homeless service providers can seek funding through a Medicaid-based program called Foundational Community Supports, which provides benefits and services for people experiencing homelessness who are eligible for Medicaid and have chronic health conditions. The program, which has been around since 2018, treats homelessness as a health care issue and housing as a form of health care—a meaningful step that many advocates have applauded.

“FCS is a really unique revenue source, because it’s not a short-term grant or contract—it really is based on a person’s health and will stay with them as long as they need these services,” said Debbie Thiele, CSH’s western managing director. “It’s been a major breakthrough to have the health care system seeing supportive housing services as a part of health.”

But establishing clients’ eligibility for the program and securing payment for ongoing services has been a daunting and sometimes money-losing challenge for service providers, who often have to hire specialized administrative staff and train case managers to meticulously document encounters with clients. In conversations with PubliCola earlier this year, providers explained how challenging it can be to translate notes by front-line case managers into billable Medicaid hours; a case worker who isn’t fully trained and dogged in their efforts to enroll clients and “constantly generate [billable] service contacts” can cost an agency significantly more than they bring in, one provider said.

“Once providers are up and running with Medicaid FCS, it is projected to cover gaps with increase revenue, but to get to that point, providers report their start-up costs to be far more than they can afford, in some cases in the hundreds of thousands of dollars,” the report says.

Thiele says one solution would be funding to help organizations, particularly smaller and BIPOC-led groups, set up the billing and other infrastructure they need. “If you want the nonprofit sector, which is reliant on grants and contracts and doing this incredibly challenging work in community, to make a major internal change to the way they operate, then they need investment in order to do that,” Thiele said. “With staff turnover being what it is right now, it’s a big risk for nonprofits to do new things,” she added.

The CSH report breaks down some of the primary issues that prevent homeless service providers from getting the most out of Medicaid funds, including administrative hurdles that force staff to work extra hours manually inputting data and doing duplicative work; denials and disenrollments for reasons that can feel capricious, such as minor technical errors; and difficulty knowing what services FCS will consider “supplemental” or new, as opposed to “supplanting” funding for services that already exists.

Many of the issues that exist at nonprofits are also relevant for KCRHA, which will have to train its system advocates—case managers with personal experience of homelessness who navigate Partnership for Zero clients into services and housing—to do all the things nonprofit service providers have identified as major challenges.

Earlier this year, KCRHA’s then-CEO Marc Dones told the agency’s implementation board that securing funds through FCS should be relatively simple, and expressed confidence that Partnership for Zero, which has fallen significantly behind schedule, would be at least 85 percent Medicaid-funded by next year. In fact, Dones called the agency’s 85 percent prediction “conservative,” adding that “if we are able to exceed that, then we will close the budget gap just on Medicaid reimbursement.” KCRHA baked this optimism into its 2024 budget, which assumes that Medicaid, through FCS, will provide about $5 million for Partnership for Zero, with KCRHA making up an estimated $900,000 gap.

Dones resigned earlier this year. The city of Seattle is currently paying them $250 an hour to come up with recommendations for using Medicaid funds “to maximize the region’s resources available to address homelessness”—a portfolio that seems quite similar to the the work CSH is doing for KCRHA.

Back in April, Dones said the KCRHA was about to start billing some services to Medicaid in a series of experimental “dry runs” that will “give us ample time to correct anything that is going wrong” before transitioning Partnership for Zero into a mostly Medicaid-funded program next year. Those dry runs haven’t happened, and the reasons for the delay remain somewhat opaque.

According to Thiele, CSH was supposed to move into Phase 2 of their “engagement” with KCRHA as soon as they finished the initial report earlier this year: The “dry run, and convenings across King County.” But, she said, “we’ve been waiting on our contract with them for some time. … They did recently give us a small contract to get started, but we were seeing this as probably a good 18 months of process work” before Medicaid billing can start in earnest. “It’s in motion, but I just can’t tell how far we’ll get with it.”

KCRHA spokeswoman Anne Martens said the agency is “on track for a ‘dry run’ this fall. … My guess is that there will be some kinks to work out, and we’ll have to adjust and evaluate as we go.” Later, Martens clarified that the “dry run… is still expected to happen before the end of the year. So we’re still in the process of setting up the system, policies, tech configurations, and trainings required to test how Medicaid billing would work in practice.”

Partnership for Zero is funded by corporate and philanthropic donors through the nonprofit We Are In, which is also paying for the contract between the KCRHA and Corporation for Supportive Housing.

Had Partnership for Zero achieved its original targets, every person living unsheltered in downtown Seattle would now be housed, and the KCRHA would be working to rapidly house each new person who arrived in the downtown area as part of the final, “hold steady” phase of the project. After this phase, KCRHA planned to expand the Partnership for Zero effort into other parts of Seattle and other regions of King County.

Since launching, the downtown effort has encountered many challenges, including a reluctance among private landlords to rent to people in the program. One issue that arose early on, according to a January 2023 memo from Dones to We Are In director Felicia Salcedo, is that landlords wanted assurances that formerly homeless tenants would be able to pay fair market rent after the first 12 months, when their Partnership for Zero rent subsidy runs out.

In February, We Are In announced another million dollars in funding for the program, but the future of the overall program remains unclear. We Are In declined to comment for this story.