Medi-Cal pilot aims to cut shelter costs

San Jose is starting a Medi-Cal billing pilot at three tiny home villages to shift some shelter costs onto health care reimbursements. (sanjosespotlight.com) The San Jose City Council voted unanimously on April 21 to accept and match about $1.3 million from the federal Providing Access and Transforming Health grant, or PATH, to help shelter providers build billing and data systems. The pilot will start this year at the Cherry Avenue, Evans Lane and Cerone tiny home villages. (sanjosespotlight.com, sanjoseca.gov) City housing officials said the setup period usually takes 12 to 18 months. If San Jose later expands the model across its shelter system, officials estimate annual savings of about $7 million to $9 million. (sanjosespotlight.com) The mechanics are specific: California’s CalAIM overhaul lets Medi-Cal managed care plans pay for some nontraditional services, including care coordination and housing-related supports, when they are meant to prevent costlier hospital or emergency care. State health officials call those benefits Enhanced Care Management and Community Supports. (dhcs.ca.gov, calaim.dhcs.ca.gov) In Santa Clara County, those Community Supports can include housing navigation, housing deposits, tenancy-sustaining services and recuperative care for eligible Medi-Cal members. San Jose’s bet is that case management and related work already happening in shelters can qualify for reimbursement once providers are set up to bill correctly. (scfhp.com, hoodline.com) The timing is budget-driven. San Jose projects $94 million in maintenance and operating costs for homeless shelters in the coming fiscal year while facing a $56 million city budget shortfall. (sanjosespotlight.com, sanjosespotlight.com) Those costs are tied to a much larger temporary housing system than the city had 18 months ago. San Jose now has 23 interim sites in its portfolio: 10 tiny home villages, two safe parking sites, one safe sleeping site and 10 motels converted to shelters. (sanjosespotlight.com, sanjosespotlight.com) Cherry Avenue shows the scale of that expansion. The site opened in November 2025 with 136 beds near the Guadalupe River, part of a city push that Mayor Matt Mahan said had opened 11 interim housing communities in 10 months. (kqed.org) The pressure behind that push has not eased. Santa Clara County’s preliminary 2025 Point-in-Time count found 10,711 people experiencing homelessness, up 8.2% from 9,903 in 2023, even as the number of sheltered people rose about 30%. (news.santaclaracounty.gov) Providers have been slow to use CalAIM because billing rules, staffing and payment delays are hard for homelessness nonprofits to absorb upfront. The federal grant is meant to pay for that back-end work first, so the city can try to keep shelter beds open without carrying the full cost alone. (sanjosespotlight.com)