HOUSTON — In early January, freezing temperatures hit Texas’ most populous city, killing at least two homeless people. It was the type of weather that, just a couple of years ago, would have sent Allan Clifton to the emergency room. Instead the 64-year old spent much of the day in shorts in a studio apartment, paid for with federal dollars.

Clifton spent much of 2015 and early 2016 homeless on Houston’s streets until he got his apartment as part of a city project to provide housing for chronically homeless people who frequently end up in the emergency room. When he was homeless, Clifton ended up in the emergency room about once a month, whenever his back, injured in a 2013 motorcycle accident, would give out. Since he got the apartment 18 months ago, he’s appeared in the emergency room only once, after a bicycle accident, and his back has improved so much that he rarely needs pain pills.

“Being on the street with pain pills is not a good thing, because they’ll jack you for them,” said Clifton, who also has a congenital hand deformity and was treated for Hepatitis C. Now, “I can shut my door and I ain’t worried about nothing.”

Having the city pay someone's rent might seem like a costly way to address homelessness. But add health care to the mix and the equation starts to look different: Health care and housing experts have long known that keeping someone off the streets is often the most straightforward way to keep him or her out of the emergency room, one of the most expensive places to get health care.

For just as long, however, they’ve struggled to figure out just what to do with that knowledge. The problem, in a nutshell, is who will pay? How do you persuade governments to spend money on housing when the biggest payoff comes from money saved somewhere else in the system?

One reason health care in America is so expensive is that patients with some of the costliest cases require not only health care, but a roof over their heads and counseling to gain ordinary skills for living, like how to manage a bank account. But the agencies that manage health don't think much about housing, and vice versa — it's simply not their job. “The reason this is collectively hard is that you just have to pull resources from lots of different groups and think creatively about how you use these resources,” said Neal Rackleff, assistant secretary for community planning and development at HUD and formerly director of Houston’s housing and community development department. “Different groups have different ways of doing things.”

Allan Clifton wound up in the emergency room roughly once a month when he was homeless and living on the streets of Houston. Now that he has a small apartment, right, the 64-year-old has largely stayed out of the hospital. At left, he shows off the hand deformity that makes it hard for him to wear gloves in cold weather. | Aaron Sprecher for POLITICO

The program that got Clifton into an apartment is an effort to bridge those gaps, a four-year effort by the city of Houston to solve that bureaucratic tangle. But for the program to grow beyond a localized short-term project into a permanent statewide program, its proponents will have to convince Texas’ conservative lawmakers that the framework will save the state money in the long run. They have until 2019, when the state Legislature next convenes, to convince lawmakers to let the state’s Medicaid program, which covers health care costs for the homeless, to spend some of of those funds on housing support instead.

If they can figure it out, their strategy might help other states as well. Some Democratic-leaning states, including Washington and California are already experimenting with paying for such housing services. But in conservative Texas, lawmakers spent much of their last legislative sessions debating how to further cut the joint state and federal health program, not expand it to tackle housing. Frances Isbell, who helps run the project for the city, is convinced that once her group finishes its cost analysis this year, it will be able to show that investing money upfront in housing support services can save the entire state significant amounts of money, not just in emergency room costs, but in costs associated with prisons, police, fire, and other departments. And — who knows — it might catch on elsewhere. “There is a real conservative argument to be made for continuing this program,” said Isbell, CEO of a federally qualified health center called Healthcare for the Homeless-Houston. “We can prove that it works.”

IT'S NO GREAT secret that helping out high-cost patients with their housing can have big payoffs for public health. More than a decade ago, a profile of “Million Dollar Murray” in the New Yorker magazine created an iconic example of how cities could spend more money to keep a homeless man with health problems on the street than it would cost to pay for his housing — and treat his ills in the process.

Where the idea breaks down, as many big-picture policy insights do, is in the details of how to make it happen. Agencies that pay for housing and health are governed by their own particular sets of financing, regulations and organizational practices, differences that are difficult to bridge. For example, working with federal funds creates a puzzle for city officials like those in Houston. Medicaid money can’t be used for room and board unless those are provided by a nursing home, while federal housing vouchers can be used only for housing, not health care. To complicate the matter, the funds wind up in different places. Medicaid dollars go to the state and funds from the Department of Housing and Urban Development are directed among dozens of local housing agencies. Plus, working with Health and Human Services and HUD means contending with complex sets of regulations that often are at odds with each other: HHS and HUD literally have two different definitions of chronic homelessness, with the HHS definition being more broad and the HUD definition being more strict.

Some difficulties are local. Even well-intentioned hospitals aren’t equipped to handle patients with serious illnesses who face long-term homelessness. Busy medical staff don’t always know whether patients are going home to an apartment or to an underpass. They often can do little more than discharge homeless people onto the streets with a handful of prescriptions, which are useless if they can’t be filled or if the patients’ medications are stolen. Meanwhile, housing providers, who don’t have access to medical records, are quick to kick out tenants who violate their lease, which allows little time for people who have been homeless for long periods to adjust to housing and figure out how to stay on their medications.

Frances Isbell, CEO of Healthcare for the Homeless-Houston, who helped spearhead the partnership between health care providers and housing agencies that's working to keep homeless residents of Houston healthier and out of the hospital. | Aaron Sprecher for POLITICO

Houston’s project grew out of efforts by former Mayor Annise Parker’s efforts to reduce homelessness and it got a boost from President Barack Obama’s administration, which permitted states to apply for a waiver from Medicaid rules and to redirect federal funds in ways not previously allowed. Texas received a waiver that allowed Houston’s health department to experiment with using Medicaid funds for housing services. The city’s housing authorities pitched in by contributing HUD vouchers.

The resulting project was called Integrated Care for the Chronically Homeless, which combined the forces of Isbell’s health center, a social services provider called SEARCH Homeless Services, and New Hope Housing. Under the project terms, people who are chronically homeless and have at least three emergency department visits over two years are placed in permanent supportive housing units, where they receive a variety of services to help keep them there.

But it wasn’t always an easy fit. Mandy Chapman Semple, tasked in 2013 by the mayor to head up the city’s initiatives to address homelessness, had to convince the health care folks that if they wanted the project to succeed, they would have to get their hands dirty in homeless services. “The health care system generally had not seen themselves as a homeless service provider,” Semple recalled.

Isbell, from Healthcare for Homeless-Houston, admits that she and her organization didn’t quickly adjust to the idea that they would share responsibility for more than delivering medical or dental care. “They wanted us to get really involved in housing retention in terms of being able to pass inspections,” Isbell said. “We agreed, at the very beginning, including the staff, ‘Wait a second, that’s not our [responsibility]—that’s the housing folks. They’re the ones that should be dealing with that.’”

Isbell’s reluctance was overcome once she realized that while organizations were trying to figure out who should do what, tenants were getting kicked out of their apartments. She took on the task of helping provide housing support services, even when that meant her health team had to throw on protective suits to clean a tenant’s apartment while working with the doctor to adjust their medications.

Then they had to figure out how to structure the program to keep clients, who faced great challenges, in their housing over the long term. Each client is assigned a three-person care team from the health center and SEARCH, the social services provider, that includes a nurse, a community health worker and a case manager. The team meets regularly to help the patient adjust to housing, schedule their medical appointments, hold their hand before major surgery and help fill prescriptions. The care team also meets regularly with the housing provider to address any issues that crop up before a tenant gets evicted. New Hope Housing, the housing provider, meanwhile, has loosened some of its rules, such as a zero-tolerance fighting policy, to help keep clients in their homes.

“There is just a lot of trauma that goes along with being homeless,” said Andrea Piro, a registered nurse with Healthcare for the Homeless-Houston. “Getting housed doesn’t solve that.”

Despite the initial bumps, the program seems to be working to reduce the amount of time clients spend in the emergency room. Clients who have been enrolled for two years have seen an 82 percent decline in emergency room usage. Isbell said one client went to the emergency department 122 times in the year before he was admitted. Once he had housing, he still was a frequent emergency department visitor —averaging 12 visits a year over three years — but Houston’s health care system was still saving money. The program now serves nearly 200 people spread across four Houston housing complexes that cater to people with low incomes.

There are limits to what it can accomplish and not everyone in the program gets better. But for some, it’s been life changing. Piro said one of her clients landed a job with IBM and now has a higher income than she does.

The project’s financial lifeline, however, is about to run out. The pool of waiver money that the program relies on ends in four years. To keep the project going in Houston and to scale it up across the state, Isbell and others working on it will have to prove it’s worth the state’s investment.

Andrew Brown, 60, who spent eight years homeless, enjoys watching television in his new apartment in Houston, decorated with a photo of his daughter, below left. Having his own apartment means he no longer needs to worry about his medications, bottom right, being stolen in homeless shelters. | Aaron Sprecher for POLITICO

ISBELL AND THE project’s leaders plan to spend the next year quantifying cost savings and capturing its monetary benefit to the state. It won’t be easy, in part because county hospitals don’t always track whether patients are homeless.

The effort has momentum on its side, however, as runaway medical costs are forcing the federal government and states to think more creatively to curb spending. The Houston program’s annual cost runs about $8,500 per patient, whereas a single visit to the emergency department can cost from $740 to $3,437, according to a 2013 study.

Realizing that housing support services could be one answer to the problem of escalating health costs, in 2015 the Obama administration cracked open a door that could allow states to start more formally including housing support services in Medicaid programs.

Few states have taken the current administration up on the offer. If Texas lawmakers do agree to include housing support services in its Medicaid program when they meet next year, it would make the state one of the most progressive in terms of combining housing and health care. Programs like the one in Houston could flourish in other Texas cities with high homeless populations. If lawmakers don’t agree, the Houston program will wither on the vine once its temporary source of federal funding dries up.

Some insurers are not waiting for regulators and lawmakers to catch up. UnitedHealthcare, which operates Texas’ Medicaid plans, have hired housing experts in 11 states including Texas on its own dime to help with the Houston pilot and assist clients in other parts of the state with more limited housing support. The insurer is heavily involved in studies to prove that paying for housing support services through Medicaid ends up saving money and lives down the road. [UnitedHealthcare is financial underwriter for POLITICO’s Agenda 2020 series, but was not involved in conceiving or editing this story.]

Meanwhile, clients who have so far been helped by the program are hoping that lawmakers can find a way to keep it around. During the eight years that Andrew Brown lived on Houston’s streets, asthma attacks sent him to the emergency room about four times a year. Since he moved into his studio about four years ago, he hasn’t once visited an emergency room even though he’s since been diagnosed with diabetes and takes medication for impulse control.

“If I had not got housed, I probably would have ended up way sicker,” Brown said.

Because he no longer has to worry about his pills or inhaler getting stolen or figuring out where to take a bath, the 60-year-old has more time to focus on his health and his future. The former diesel technician said he hopes to start working at Wal-Mart part time and wants to eventually go back to school to learn medical coding. But even if his circumstances improve, he plans to keep his apartment or upgrade to a one bedroom in the same complex.

“It took me a while to get used to staying here,” Brown said. “Now I am home. Can’t beat it.”

Renuka Rayasam is a health reporter for POLITICO Pro based in Texas.

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