This paper examines how New England states pay for the mental health care of the homeless mentally ill. The focus is on how states choose providers, how they reimburse and monitor them, and how these arrangements may affect the incentives facing providers. Detailed case studies of Massachusetts, Rhode Island, and Vermont regulations are included. The studies reveal important differences in how states choose and reimburse providers, for both the homeless and nonhomeless mentally ill. The states also differ in the extent to which they have contracted with nontraditional providers, which many believe to be a necessary approach, given the frequent unwillingness of homeless persons to use the traditional mental health care system. The authors recommend investigation of the health, housing, and cost outcomes associated with these interstate differences in reimbursement policy, as the relationship may offer insights relevant to ongoing policy reforms.



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