Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.

Existing law, subject to implementation of the California Advancing and Innovating Medi-Cal (CalAIM) initiative, authorizes a Medi-Cal managed care plan to elect to cover community supports approved by the department as cost effective and medically appropriate in a comprehensive risk contract that are in lieu of applicable Medi-Cal state plan services. Under existing law, community supports that the department is authorized to approve include, among other things, housing transition navigation services, housing deposits, and housing tenancy sustaining services.

Existing law, subject to an appropriation, requires the department to complete an independent analysis to determine whether network adequacy exists to obtain federal approval for a covered Medi-Cal benefit that provides housing support services. Existing law requires that the analysis take into consideration specified information, including the number of providers in relation to each regions or countys number of people experiencing homelessness. Existing law requires the department to report the outcomes of the analysis to the Legislature by January 1, 2024.

This bill would delete the requirement for the department to complete that analysis, and instead would make housing support services for specified populations a covered Medi-Cal benefit when the Legislature has made an appropriation for purposes of the housing support services. The bill would require the department to seek federal approval for the housing support services benefit, as specified. Under the bill, subject to an appropriation by the Legislature, a Medi-Cal beneficiary would be eligible for those services if they either experience homelessness or are at risk of homelessness. Under the bill, the services would include housing transition navigation services, housing deposits, and housing tenancy sustaining services, as defined.

The bill would authorize the department to implement, interpret, or make specific this section, in whole or in part, by means of all-county letters, plan letters, provider bulletins, information notices, or similar instruction, and to enter into exclusive or nonexclusive contracts, or amend existing contracts for its purposes, as specified. The bill would authorize these provisions to be modified by the department to the extent necessary to meet the requirements of federal law or regulations, to obtain federal approval, or to enhance the probability that federal approval can be obtained, as specified.

Date of Hearing: April 30, 2025

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 804

Author:(Wicks) – As Introduced Ver:February 18, 2025

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the Department of Health Care Services (DHCS) seek federal approval to make housing support services for specified populations a covered Medi-Cal benefit, as specified, subject to an appropriation, federal approval, and availability of federal matching funds.

Specifically, this bill:

1. Requires DHCS cover housing support services for specified populations as a covered Medi-Cal benefit, subject to utilization controls and when the Legislature has passed an appropriation for this purpose.
2. Requires DHCS seek, by March 31, 2026, any federal approvals necessary to cover housing support services as a Medi-Cal benefit.
3. Upon implementation of a federally approved covered Medi-Cal benefit for housing support services, requires housing support services cease to be optional services in Medi-Cal managed care.
4. Makes a Medi-Cal beneficiary eligible for housing support services if they are either experiencing homelessness, or at risk of homelessness, as defined.
5. Defines housing support services to include the following: housing transition navigation services, housing deposits, housing tenancy sustaining services, and supported employment services, as specified.
6. Allows DHCS to implement the bill through non-regulatory bulletin authority and requires DHCS to seek stakeholder input at least two weeks before issuing guidance pursuant to this authority.
7. Conditions implementation on necessary federal approvals and the availability of federal financial participation.
8. Strikes the requirement that by January 1, 2024, DHCS complete an independent analysis to determine network adequacy to obtain federal approval for a covered Medi-Cal benefit that provides housing support services.
   

FISCAL EFFECT:

Costs to DHCS in the tens of millions of dollars annually.

This estimate of costs is based on an estimate DHCS provided to the Department of Finance for a similar bill, AB 1085 (Maienschein), of the 2023-24 Legislative Session. DHCS estimated costs related to AB 1085 as follows, assuming it obtained necessary federal approvals:

Annual costs to the Medi-Cal program in the range of approximately $36.6 million to $80.9 million (50% General Fund (GF), 50% federal funds (FF)), subject to utilization and

benefit structure, to provide the housing supports benefit.

Additional costs of $154,000 (50% GF, 50% FF) in the first year of implementation and $145,000 (50% GF, 50% FF) annually thereafter to develop a new rate setting methodology for new housing support service benefits, implement the benefit in the fee-for-service delivery system, and perform monitoring and maintenance over time.

The author has requested an annual, ongoing GF state budget allocation of $18.3 million to $40.4 million for the state’s 50% share.

COMMENTS:

1. Purpose. This bill is sponsored by Corporation for Supportive Housing, Housing California, and Western Center on Law & Poverty. According to the author:

[In] December 2024, a statewide homelessness point-in-time count found more than 187,000 Californians experiencing homelessness. These residents—our neighbors—lack adequate access to resources to find and keep stable housing. Unless individuals experiencing homelessness can stabilize in housing, health treatment is often ineffective. In fact, an unhoused patients’ acute care costs continually increase so long as they remain homeless, regardless of the quality of treatment. Homelessness also disproportionately impacts disadvantaged communities. For example: a UCSF study released in February 2024 found that 26% of California’s unhoused population identifies as Black, compared to 6% of California’s overall population.

[I]n 2022 the [California Advancing and Innovating Medi-Cal (CalAIM)] program began providing housing support services to aid eligible Californians in obtaining and keeping housing…[A] statewide benefit would be more equitable, consistent, and available to more Medi-Cal enrollees. It would enable California to take full advantage of federal matching funds for housing as healthcare of at least 50% and up to 90% for the expansion population. This bill also has the potential to save our government more than $46,000 per year per person.

1. Background.
   
   CalAIM. CalAIM is a collection of major initiatives that align with the administration’s Medi-Cal program improvement goals, including addressing social drivers of health, reducing program complexity and increasing flexibility, and modernizing payment structures to promote better outcomes. The majority of CalAIM proposals were put forward in 2021 through two comprehensive applications to the federal government for a “Section 1115 demonstration” and “Section 1915(b) waiver.” DHCS received approval for both the demonstration and waiver, effective through December 31, 2026.
   
   Community Supports. One component of CalAIM that addresses social drivers of health is called Community Supports. Community Supports are services that can be provided by Medi-Cal managed care plans as cost-effective alternatives to traditional medical services or settings. DHCS has a pre-approved list of 14 Community Supports, based on experience in prior demonstration programs to address health-related social needs. These supports are designed to provide flexibility to address specific needs of complex populations. CalAIM includes as Community Supports the housing support services required by this bill. Although Medi-Cal managed care plans may choose whether to provide these services, all plans have elected to provide these housing-related services as Community Supports.
   
   According to the January 2023 Community Supports Program Guide issued by DHCS, housing support services can keep people healthier, potentially reducing the need for high-cost and high-intensity services such as emergency and inpatient services, rehabilitation services, and skilled nursing facility services.
2. Prior Legislation. AB 1085 (Maienschein), of the 2023-24 Legislative Session, was similar to this bill and would have required DHCS to seek federal approval to add housing support services as a Medi-Cal benefit. AB 1085 was vetoed by Governor Newsom, who stated new Medi-Cal benefits must be considered as part of the annual budget process.

Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081

Date of Hearing: April 8, 2025

ASSEMBLY COMMITTEE ON HEALTH

Mia Bonta, Chair

ABPCA Bill Id:AB 804

Author:(Wicks) – As Introduced Ver:February 18, 2025

SUBJECT: Medi-Cal: housing support services.

SUMMARY: Requires the Department of Health Care Services (DHCS) to seek federal approval to add housing support services as a Medi-Cal benefit, as specified, subject to a Legislative appropriation, federal approval, and the availability of federal matching funds. Specifically, this bill:

1. Requires, subject to utilization controls, housing support services for specified populations to be a covered Medi-Cal benefit in an applicable fiscal year when the Legislature has passed an appropriation for the subject fiscal year for this express purpose.
2. Requires DHCS to seek any necessary federal approvals for a Medi-Cal benefit to cover housing support services by March 31, 2026.
3. Specifies that upon implementation of a federally approved covered Medi-Cal benefit for housing support services, housing support services will no longer be optional services for Medi-Cal managed care plans to cover.
4. Makes a Medi-Cal beneficiary eligible for housing support services if they meet either of the following criteria:
   1. The beneficiary is experiencing homelessness; or,
   2. The beneficiary is at risk of homelessness, as specified.
5. Defines housing support services as including all of the following:
   1. Housing transition and navigation services, defined as evidence-based and best practices that provide outreach to, and engage with, people experiencing homelessness in order to facilitate participation in the program and assist with transitioning to housing;
   2. Housing deposits, defined as one-time expenses for move-in, such as security deposits, payment of utility arrears and startup, and necessary furniture costs; and,
   3. Housing tenancy and sustaining services, defined services that preserve and maintain a person’s housing within their community, resolving landlord-tenant issues, coaching, education and advocacy, and supported employment services, as specified.
6. Allows DHCS to implement the bill through non-regulatory bulletin authority, but requires DHCS to seek stakeholder input at least two weeks before issuing guidance pursuant to this authority.
7. Conditions implementation on necessary federal approvals and the availability of federal financial participation.
8. Strikes the requirement that DHCS must complete an independent analysis to determine whether network adequacy exists to obtain federal approval for a covered Medi-Cal benefit that provides housing support services by January 1, 2024.

EXISTING LAW:

1. Establishes the California Advancing and Innovating Medi-Cal (CalAIM) Act, and requires the implementation of CalAIM to support the following goals:
   1. Identify and manage the risk and needs of Medi-Cal beneficiaries through whole-person-care approaches and addressing social determinants of health;
   2. Transition and transform the Medi-Cal program to a more consistent and seamless system by reducing complexity and increasing flexibility; and,
   3. Improve quality outcomes, reduce health disparities, and drive delivery system transformation and innovation through value-based initiatives, modernization of systems, and payment reform. [Welfare and Institutions Code (WIC) § 14184.100]
2. Establishes a CalAIM term of January 1, 2022, to December 31, 2026, inclusive, and any extensions. [WIC § 14184.101]
3. Requires DHCS to seek federal approval for specific CalAIM components, including those related to Medi-Cal managed care, specialty mental health, behavioral health payment reform, Drug Medi-Cal, pre-release services for justice-involved individuals, county administration of Medi-Cal, the Providing Access and Transforming Health (PATH) program to build CalAIM implementation capacity, and other components. [WIC § 14184.102]
4. Authorizes housing supports, including housing transition navigation services, housing deposits, and housing tenancy and sustaining services, under CalAIM as “Community Supports” that a Medi-Cal managed care plan may elect to cover. Specifies Community Supports are provided “in lieu of” typical Medi-Cal covered services, in accordance with the federally approved CalAIM Terms and Conditions. [WIC § 14184.206]
5. Requires DHCS, upon appropriation by the Legislature for this purpose, to complete an independent analysis to determine whether network adequacy exists to obtain federal approval for a covered Medi-Cal benefit that provides housing support services. Requires DHCS to report outcomes of the independent analysis to the Legislature by January 1, 2024. [WIC § 14124.16]

FISCAL EFFECT: Unknown. This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. This bill is co-sponsored by Corporation for Supportive Housing, Housing California, and Western Center on Law & Poverty to expand housing support services for people experiencing or are at risk of homelessness. The author indicates housing support services help people access housing, remain stably housed, and are essential for beneficiaries experiencing homelessness to meaningfully access health care. Accordingly, this bill would require DHCS to seek federal approval for a Medi-Cal housing support services benefit. The author notes that in 2021, DHCS shared an intent to make housing support services a Medi-Cal benefit for Californians experiencing homelessness, but DHCS leadership expressed concern that California faced an inadequate statewide network of providers to meet state or federal requirements. Since that time, the author explains, DHCS has worked to build a statewide network of providers of housing support services with the capacity to participate in and bill Medi-Cal.
2. BACKGROUND.
   1. CalAIM. CalAIM is a collection of major initiatives spearheaded by the DHCS that align with the administration’s program improvement goals, including addressing social drivers of health, reducing program complexity and increasing flexibility, and modernizing payment structures to promote better outcomes. The majority of CalAIM proposals were put forward in 2021 through two comprehensive applications to the federal government for a “Section 1115 demonstration” and “Section 1915(b) waiver”—both named for the sections of the Social Security Act that authorize state and federal flexibility with Medicaid program rules to implement specific initiatives. DHCS received approval on December 29, 2021, for both the demonstration and waiver, effective through December 31, 2026.
   2. Community Supports. One component of CalAIM that addresses social drivers of health is called Community Supports. Community Supports are services that can be provided by Medi-Cal managed care plans as cost-effective alternatives to traditional medical services or settings. DHCS has a pre-approved list of 14 Community Supports, based on experience in prior demonstration programs to address health-related social needs. These supports are designed to provide flexibility to address specific needs of complex populations. For instance, home modifications, adaptations, and remediation can support individuals in maintaining or improving their health and reduce emergency department visits and inpatient stays. Similarly, housing support services, including transition and navigation services, housing deposits, and housing tenancy and sustaining services can potentially provide similar health improvements and avoidance of expensive, high-intensity health care services.

Every Medicaid program has a Medicaid State Plan that specifies the benefits and services covered by that program. Community Supports, as defined through CalAIM, are alternative services to those covered under the Medi-Cal State Plan, but are delivered by a different provider or in a different setting than is described in the State Plan. Community Supports can only be covered if the state determines they are medically-appropriate and cost-effective substitutes or settings for a State Plan service.

• 1. DHCS Housing Initiatives. In an effort to address health-related social needs, DHCS currently administers several housing-related initiatives. In addition, the Housing and Homelessness Incentive Program offered Medi-Cal managed care plans the opportunity to earn $1.3 billion of one-time incentive funds in 2023 and 2024 for building partnerships with homeless systems of care.
     1. Housing Support Services as Community Supports. Housing support services, including housing transition navigation services, housing deposits, and housing tenancy and sustaining services, are currently being provided under CalAIM as Community Supports. Although Medi-Cal managed care plans can choose whether to provide these services, all plans have elected to provide these three housing-related services as Community Supports.

As noted above, Community Supports can be provided as a cost-effective substitute for other covered services. According to the January 2023 Community Supports Program Guide issued by DHCS, housing support services can keep people healthier, potentially reducing the likelihood of high-cost and high-intensity State Plan covered services such as emergency and inpatient services, rehabilitation services, and skilled nursing facility services.

• • 1. Transitional Rent Assistance. Effective January 1, 2025 through December 31, 2029, the federal Centers for Medicare and Medicaid Services approved DHCS’s application for a federal waiver called Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT). BH-CONNECT allows reimbursement for many behavioral health services and supports, including Transitional Rent Assistance. Transitional Rent Assistance provides up to six months of rental support for eligible Medi-Cal members experiencing or are at risk of homelessness or transitioning out of institutional, congregate, carceral, or other eligible settings. It is intended to serve as a bridge to permanent housing and help stabilize and connect members to permanent housing options.
    2. Behavioral Health-Related Housing Programs.
       1. Behavioral Health Services Act (BHSA) Housing Funds. Proposition 1, passed by California voters in the 2024 statewide primary election, revised and recast the Mental Health Services Act as the BHSA and changed how the money from the act is used. Specifically, Proposition 1 reallocated 30% of local county BHSA funds for housing interventions. Although DHCS does not administer these funds, DHCS oversees county implementation of BHSA, including compliance with the requirement to spend funds on housing interventions. DHCS intends local BHSA funding to provide permanent rental subsidies and housing once individuals are stabilized in housing through Transitional Rent Assistance.
       2. Behavioral Health Bridge Housing (BHBH). The BHBH program was authorized through June 30, 2027 under AB 179 (Ting), Chapter 249, Statutes of 2022. Through the BHBH program, DHCS is awarding funds to county behavioral health agencies and tribal entities to address the immediate housing needs of people experiencing homelessness who have serious behavioral health conditions, including a serious mental illness and/or substance use disorder. The BHBH program provides support through various “bridge” housing settings, including tiny homes, interim housing, rental assistance models, and assisted living settings. All bridge housing settings must include voluntary supportive services to help program participants obtain and maintain housing, manage symptoms of serious behavioral health conditions, and support recovery and wellness. According to the Legislative Analyst’s Office, from 2022‑23 through 2025‑26, BHBH is providing $1.1 billion, reflecting a $118 million total funds reduction proposed in the Governor’s 2025‑26 budget.
  1. Joint Oversight Hearing. On February 15, 2023, Assembly Committees on Housing and Community Development, Accountability and Administrative Review, Health, and Human Services held a joint informational hearing titled “Coordinating California's Homelessness Services: 2023 Landscape,” with the goal of understanding the full scope of the state’s investments in homelessness across various policy areas. The associated background paper notes the number of people falling into homelessness poses a major challenge that leads to persistently high rates of homelessness despite recent state and local investments, but strategies such as rental assistance and housing navigation can also help with those individuals who need prevention tools to avoid homelessness.
  2. Considerations for adding Housing Support Services as a Medi-Cal Benefit. According to “Summary of State Actions: Medicaid and Housing Services,” a policy brief issued by one of the bill’s co-sponsors Corporation for Supportive Housing, over a dozen states already have some type of supportive housing services benefit in place. In addition, the federal Medicaid and CHIP Payment and Access Commission (MACPAC) issued a report summarizing the role Medicaid plays in addressing housing needs, and has noted that states can choose to offer housing support services through various Medicaid authorities.

According to a fact sheet provided by DHCS, provision of housing support services as Community Supports is intended to serve as a bridge to statewide implementation of housing supports as benefits in the longer term. DHCS indicates that by providing financial resources and robust training and technical assistance to plans and providers to offer such services and to build related capacity, CalAIM will facilitate the integration of housing into Medi-Cal more broadly.

As noted above, Community Supports are currently authorized through a demonstration program and the offer of Community Supports is subject to specific rules. Specifically, because Community Supports must overall be medically appropriate and cost-effective substitutes or settings for the State Plan service, this imposes a cost-benefit calculation on the provision of Community Supports that the sponsors of this bill point out may result in inequitable access to services. For instance, while a housing-related Community Support may be considered cost-effective for someone with high health care needs because it prevents an emergency department visit or inpatient stay, it may not be cost-effective to provide this same housing support service to a young mother and child who are otherwise healthy.

The author and sponsors indicate that making housing support services a benefit, versus a Community Support offered through a temporary demonstration project, will result in more equitable delivery of services based on need. Making housing supports a permanent benefit would also provide community-based service providers additional certainty that investments building capacity to offer this benefit are worthwhile, meaning there could be a more robust network of providers.

1. SUPPORT. In addition to the bill’s three co-sponsors, this bill is supported by a large number of homeless and consumer advocates. Supporters point out that homelessness drives high health care costs, and that housing support services help people access and maintain housing, which improves their health. Supporters assert that DHCS has already expressed an intent to make housing supports a permanent benefit, and that establishing a benefit will encourage more providers to participate, improve health outcomes among Californians experiencing homelessness, reduce homelessness, standardize eligibility, and draw down additional funds to support housing services.
2. PREVIOUS LEGISLATION.
   1. AB 1085 (Maienschien) of 2023 was similar to this bill and would have required DHCS to seek federal approval to add housing support services as a Medi-Cal benefit. AB 1085 was vetoed by Governor Gavin Newsom, who noted that while he appreciates and shares the author's goal to support those who are experiencing homelessness, new Medi-Cal benefits must be considered as part of the annual budget process. For example, the Governor noted, the 2023 Budget Act establishes coverage for CalAIM transitional rent. The Governor noted General Fund costs to implement this bill must be considered alongside other budgetary priorities.
   2. AB 1338 (Petrie-Norris) of 2023 would have added fitness, physical activity, recreational sports, and mental wellness memberships as a Community Support under the Medi-Cal CalAIM initiative. AB 1338 was held on suspense in the Assembly Appropriations Committee.
   3. AB 1644 (Bonta) of 2023 and AB 1970 (Bonta) of 2024 would have both made medically supportive food and nutrition services a covered Medi-Cal benefit for all eligible Medi-Cal beneficiaries. AB 1644 was held in the Assembly Appropriations Committee, while AB 1970 was vetoed by Governor Gavin Newsom. The AB 1944 veto message encouraged the Legislature to explore the policy as a part of the annual budget process.
   4. AB 586 (Calderon) of 2023 would have added “Climate change remediation,” as specified, as a Community Support under the Medi-Cal CalAIM initiative. AB 586 was held on suspense in the Assembly Appropriations Committee.
   5. AB 133 (Committee on Budget), Chapter 143, Statutes of 2021, established statutory authority for various aspects of the CalAIM initiative, including authority to provide “In Lieu of Services,” which was later renamed as “Community Supports.”

REGISTERED SUPPORT / OPPOSITION:

Support

Corporation for Supportive Housing (CSH) (co-sponsor)

Housing California (co-sponsor)

Western Center on Law and Poverty (co-sponsor)

ACLU California Action

All Home, a Project of Tides Center

APLA Health

Asian Americans Advancing Justice-southern California

Asian Resources, INC.

Bay Area Legal Aid

Brilliant Corners

California Housing Partnership

Children Now

Children's Institute

City and County of San Francisco

Coalition of California Welfare Rights Organizations

Community Legal Aid SoCal

Delivering Innovation in Supportive Housing

Disability Rights Education and Defense Fund

Downtown Women's Center

EAH Housing

Families Inspiring Reentry & Reunification 4 Everyone (FIR4E)

Justice in Aging

LA Family Housing

LA Mesa First United Methodist Church

Linc Housing

Merritt Community Capital Corporation

National Alliance to End Homelessness

Path (People Assisting the Homeless)

Sacramento County

Shields for Families

Solutions for Supportive Homes

Supportive Housing Alliance

The Arc and United Cerebral Palsy California Collaboration

The Children's Partnership

The People Concern

Townspeople

United Ways of California (UWCA)

Opposition

None on file

Analysis Prepared by: Lisa Murawski / HEALTH / (916) 319-2097