Addiction treatment homes say funding fixes don’t go far enough

Montana health officials have started a voucher system to help people with substance use disorders move into transitional housing as they rebuild their lives. But those who run the clinical houses said the new money isn’t enough to fix a financial hole after a prior state revamp.

Residential treatment facilities are usually nondescript homes tucked into neighborhoods. The state’s lowest-intensity homes can provide people with alcohol and drug addiction leaving inpatient care a bridge to independent living. They're the final option of four tiers of clinical housing and aim to offer residents stability amid daily stressors.

But these particular houses have been disappearing — down to 10 sites today from 14 in 2022. That was the year the state started paying providers a blanket rate for their services through Medicaid, the state-federal program for people with low incomes and disabilities. At the same time, the state increased the homes’ staffing requirements.

State health department officials lauded the 2022 change as an expansion in access to care, saying it increased the houses' pay and matched the cost to operate. But providers warned at the time that it could backfire because the rates weren’t high enough to cover the new staffing rules.

Terri Russell, who runs John “Scott” Hannon House, a treatment home in Helena, said it has been hard to break even since, and she’s watched other sites close under financial pressure.

“It’s the hardest thing in the world to watch a person leave treatment and go back down to the homeless shelter, or go on the street,” Russell said.

The new voucher program could help fill in some of the gap, Russell said. Approved by the state in April, it pays low-intensity treatment residences to house uninsured people as they sign up for Medicaid or other health coverage. The idea is to reduce barriers to care for vulnerable patients at a key point in their recovery. But the money is capped at $35 a day, with a $1,000 limit per resident a year.

“It’s like it was somebody’s idea for a band-aid,” said Demetrius Fassas, who runs Butte Spirit Homes, which has two eight-bed facilities.

He said the payments fall well below the cost of providing care. And, because of the vouchers’ cap, the aid could run out weeks before someone knows whether they qualify for Medicaid coverage.

Low-intensity programs vary in how long patients stay; it could be a few months or more than a year. Fassas said when things go as intended, clients find stable jobs. That success can lead to residents earning too much money to qualify for Medicaid but not enough to afford the full cost of care.

Providers have said funding issues are widespread for substance use disorder programs but that shortfalls especially hit these low-intensity homes. The tension in Montana mirrors challenges elsewhere around how to fund transitional treatment so that patients don’t fall off a cliff in their recovery because care is unavailable.

As of 2022, at least 33 states were using money from Medicaid to help run residential treatment programs, KFF found. Federal rules prohibit Medicaid dollars from going to room and board at transitional homes, though states can chip in their own money. In North Dakota, for example, lawmakers set aside state funds for a voucher program that addresses treatment barriers, which include the cost of room and board.

Montana once was among the states that let providers seek help covering room and board costs for its poorer residents. The money came from federal grants the state manages for addiction treatment and prevention.

But those room and board grants stopped when Montana’s health department shifted to higher, bundled Medicaid rates in 2022. According to a state report last year, reducing the block grants to the low-intensity homes allowed officials to put that money toward other “prevention priorities.”

The new rules the state added at the same time brought the residential facilities up to American Society of Addiction Medicine standards. That included having on-site clinical services, a clinical director for each home, and an employee working anytime a resident was in the home, including night shifts.

Fassas, of Butte Spirit Homes, called the rules bittersweet. They increased the quality of care. But, Fassas said, he had to hire six additional workers to comply with the rules and the company now runs at a loss if he doesn't find additional grants.

Jon Ebelt, a spokesperson with the Montana Department of Public Health and Human Services, said the new rates, $143 a day per Medicaid resident, were developed by a state-paid contractor as part of Montana’s effort to match the cost of care.

Ebelt said administrative costs were factored into the state’s Medicaid rate, and that traditional room and board expenses typically fall into that category.

Low-intensity homes’ rates haven’t increased since they went into place in 2022.

Malcolm Horn, chief behavioral health officer for the Rimrock Foundation, said the facilities need more help in covering expenses like the mortgage, repairs to the home, or feeding residents.

The Rimrock Foundation, which is based in Billings, is one of Montana’s largest mental health providers. Horn said after the new rules were implemented, Rimrock converted one of its two low-intensity homes for women with children into high-intensity housing, which pays more. The switch displaced families in the low-intensity program.

“We couldn’t actually sustain having both those houses,” Horn said.

Montana officials set aside $300,000 for the voucher program and estimated that money would help cover initial housing for 329 people in 2024.

Terri Todd, who runs the nonprofit Gratitude in Action in Billings for people in recovery, advocated for the program during the 2023 legislative session. She said the goal had been to follow North Dakota’s model to help cover addiction care for people facing barriers. But Montana lawmakers scaled that back, which Todd attributed to concerns about cost.

Todd said that while what survived the legislature is less than what she had hoped for, the voucher program is still a start in addressing barriers to care.

State Rep. Mike Yakawich, the Republican who proposed the program, said it was initially so broad, he learned, it overlapped with some existing efforts. But he said state staffers told him the low-intensity group homes’ room and board costs were an area that could use more funding.

Yakawich said securing any money felt like a win in a funding tug-of-war. More help to stabilize the state’s mental health system is coming.

Money for the vouchers is coming out of Republican Gov. Greg Gianforte’s HEART Fund initiative, which is due to invest about $25 million a year toward behavioral health programs. Separately, state officials recently announced that they’re creating grants to increase Montana’s bed capacity across residential facilities, including for substance use treatment providers. That money could go toward reopening closed facilities.

But Yakawich said even that infusion of money won’t provide enough to go around.

“Everybody wants a chunk of the pie, and not everyone’s going to get it,” he said.

The voucher program is scheduled to expire in three years, Yakawich said. By then, he said, maybe he can persuade lawmakers to renew the program — with more money.

KFF Health News is a national newsroom that produces in-depth journalism about health issues.