Medi-Cal Transitional Rent and short-term post-hospitalization housing

Medi-Cal health plans pay room costs for eligible bed residents.

What it is

Medi-Cal is California's health insurance for people with low incomes, paid with state and federal money. Most members belong to a health plan. In Los Angeles County the two plans are L.A. Care and Health Net. Since 2022, under a federal permission called CalAIM, those plans may pay for some non-medical services that keep people healthy, called Community Supports. One of them is short-term post-hospitalization housing: a place to recover right after leaving a hospital, a treatment program or another institution.

Since January 1, 2026, every Medi-Cal health plan must also offer Transitional Rent. It pays up to six months of rent for an eligible member, in a permanent apartment or in an interim setting such as a motel room, a tiny home or a small shared site. A separate federal permission, BH-CONNECT, created it and runs through December 2029.

Who qualifies today: a member must meet all three tests. First, they meet the access criteria for county specialty mental health care or Drug Medi-Cal addiction treatment. Second, they are homeless or at risk. Third, they belong to a listed group, which includes people sleeping unsheltered, people leaving a hospital, jail, treatment program or shelter, young adults leaving foster care, and people eligible for Full Service Partnership care. Other groups, such as people with serious chronic physical illness or disabilities and pregnant members, join no sooner than January 1, 2027.

On a normal Tuesday it works like this. A bed operator signs up with L.A. Care or Health Net as a provider. A caseworker writes a housing support plan. The plan authorizes the member, and the operator bills the plan a daily rate for that member's room, up to a ceiling. For a motel room the monthly ceiling is 150% of HUD's local rent estimate. One plan outside Los Angeles pays $108 a day for short-term post-hospitalization housing. L.A. Care and Health Net do not publish their rates.

There is no county budget line here, which is why no county line shrinks. The money comes from Medi-Cal through the health plans, one eligible resident at a time. Two caps apply. A member gets at most six months, or 182 days, of Transitional Rent in total through 2029. And no member can receive more than six months of room-and-board services, counting short-term post-hospitalization housing, recuperative care and Transitional Rent together, in any rolling 12 months. We count 15% of the 150 beds' operating cost, $1.28 million to $1.72 million a year, or about 22 beds' worth.

How it started

The federal government approved California's CalAIM waivers on December 29, 2021, and they took effect January 1, 2022, running through December 31, 2026 (secondhand). They let Medi-Cal health plans offer a menu of Community Supports, including housing navigation, deposits, recuperative care and short-term post-hospitalization housing. California applied for a second waiver, BH-CONNECT, in October 2023. The federal Centers for Medicare and Medicaid Services approved it on December 16, 2024, for January 1, 2025 to December 31, 2029 (fact, DHCS). It created Transitional Rent as a fifteenth Community Support. Transitional Rent became mandatory for every plan on January 1, 2026, for the behavioral health population; wider eligibility comes no sooner than January 1, 2027 (fact, National Health Law Program brief, April 2026). L.A. Care told DMH in September 2025 that it projects about $222 million for Community Supports housing services and warned they may not continue after CalAIM expires (fact, L.A. Care deck). DHCS filed a five-year CalAIM renewal on May 12, 2026, for 2027 through 2031 (secondhand). In a May 2026 briefing to counties, DHCS proposed ending short-term post-hospitalization housing as a separate service and folding it into a single recuperative care model from January 1, 2027 (secondhand, search extract of the CSAC deck). The state's May Revise cut Enhanced Care Management and Community Supports by $68.3 million of General Fund from January 1, 2027 (secondhand). Transitional Rent itself sits under BH-CONNECT, so it does not depend on the CalAIM renewal.

What we take and when

When the 150 beds open in 2027, the operator contracts with L.A. Care and Health Net as a Transitional Rent and short-term post-hospitalization housing provider and bills them for eligible residents' room costs. We count $1.28 million to $1.72 million a year, about 15% of the beds' operating cost, ongoing. No county vote is needed and no county line is cut.

The numbers today

Transitional Rent start, mandatory for every Medi-Cal planJanuary 1, 2026CY 2026 fact
Transitional Rent maximum per member6 months (182 days) through December 20292025 to 2029 fact
Combined room-and-board cap (STPHH, recuperative care, Transitional Rent)6 months in any rolling 12 monthscurrent rule fact
Monthly ceiling for a motel used as interim housing150% of HUD Small Area Fair Market Rentcurrent rule fact
Daily ceilingmonthly rate divided by 28current rule secondhand
STPHH daily rate on Partnership HealthPlan's 2026 sheet$108 a dayCY 2026 fact
Recuperative care daily rate on the same sheet$204 a dayCY 2026 fact
L.A. Care projected Community Supports housing spendingabout $222 million through 20292025 projection fact
Our take: 15% of the 150 beds' cost of $8.55 million to $11.46 million$1,280,000 to $1,720,000 a yearfrom bed opening in 2027 inference
Bed-equivalents paidabout 22from 2027 inference
Santa Monica efficiency Small Area Fair Market Rent; L.A. Care and Health Net contracted ratesNot established2026 not

What we give up

No county line shrinks. The costs fall elsewhere. A resident who uses Transitional Rent in one of these beds uses up part of a six-month benefit that could later have paid rent on a permanent apartment, and uses up the six-month room-and-board limit for that year. The operator takes on billing and authorization work with two health plans. If fewer residents qualify than we assume, or the plans will not pay, the shortfall falls back on the county stack.

Why this works

Medi-Cal money adds to the county stack instead of taking from another program: each eligible night it pays is a night county money does not cover. Transitional Rent was designed for this group, and people sleeping unsheltered with a mental illness or addiction are a listed eligible population (fact, NHeLP). Beds are what move the number of people sleeping outside. Culver City paired its 2023 camping ban with a safe sleeping site and 73 Homekey units, and its unsheltered count went from 139 in 2023 to 115 in 2024, then from 51 in 2025 to 38 in 2026 (fact/secondhand, Wave and Culver City Crossroads). New York, which must offer shelter to everyone, had about 3.5% of its homeless population unsheltered in 2025, against 66% in Los Angeles County (fact, NYC DSS and LAHSA). Clearing camps without places moves people instead of housing them: in Venice, Hollywood and Skid Row, RAND found about three vehicles or rough sleepers added for every four tents removed (fact, RAND). Houston's unsheltered count rose 15.8% in 2025 after its shelter capacity fell (fact, Coalition for the Homeless). Santa Monica moved 72 people from the street into interim housing in FY 2025-26 (secondhand, SMDP).

The strongest case against

This is a guess dressed as a budget line. The 15% share is a low-confidence estimate, and only the behavioral health population qualifies today. The rules say Transitional Rent cannot supplant other state, local or federally funded housing, so a bed the county already pays for may not be billable at all. L.A. Care and Health Net do not publish rates. The CalAIM waiver expires December 31, 2026 with no approved renewal, the state proposes to fold short-term post-hospitalization housing into recuperative care, and the state already cut Community Supports by $68.3 million from January 2027. Federal Medicaid changes add more risk. And spending a person's one-time six months on a motel room wastes the benefit that would do the most good paying rent on a permanent apartment.

Our answer

We mark this the least certain item and count only 15% of the beds' cost. The supplanting rule is the biggest risk. Our proposal is that Medi-Cal pay first for eligible residents' room costs and county money pay the rest, the same order DHCS sets for BHSA housing. Whether DHCS and the plans accept that for a bed that also carries county money is not established, and we ask HSH to get a written answer before the plan is adopted on January 26, 2027. If the answer is no, this take is zero and the county must find $1.28 million to $1.72 million elsewhere. Transitional Rent does not depend on the CalAIM renewal; it runs under BH-CONNECT through 2029. Interim use is allowed by design: plans must offer both interim and permanent settings.

Who decides

Who votes: The California Department of Health Care Services (DHCS) sets the rules. L.A. Care and Health Net contract with providers and authorize each member. No county body votes.
Votes needed: None. Each resident is authorized by their health plan, which has 14 days to decide a provider's request (fact, DHCS FAQ citing APL 21-011).
When: Transitional Rent is available now, since January 1, 2026. The beds open in 2027. The CalAIM renewal decision is expected in late December 2026 (secondhand). BH-CONNECT, which carries Transitional Rent, runs through December 31, 2029. The county plan that funds the rest of each bed is adopted January 26, 2027, after comment closes November 20, 2026.
Note: The operator must contract with L.A. Care or Health Net as a Transitional Rent provider before it can bill.

The agenda or process

Questions people ask

Isn't this just moving money around?

No. This brings in state and federal Medi-Cal money that eligible residents are already entitled to. Nothing else in a county budget is cut.

If Medi-Cal pays, why does the county need to pay anything?

Medi-Cal pays only for eligible residents, for at most six months each, and only for room costs up to a ceiling. We count about 15% of the beds' cost. The county pays the rest.

What is the 182-day cap?

Each member gets at most six months, or 182 days, of Transitional Rent in total through 2029. Separately, no member can receive more than six months of room-and-board services in any 12 months, counting Transitional Rent, recuperative care and short-term post-hospitalization housing together.

What if the CalAIM waiver is not renewed?

Transitional Rent runs under BH-CONNECT through December 2029, so it continues. Short-term post-hospitalization housing could change, because the state proposes to merge it into recuperative care from January 2027.

Will people actually use the beds?

People sleeping unsheltered are a listed eligible group, so the benefit fits the people the beds are for. How many Santa Monica residents meet the behavioral health test is not established.

Sources

National Health Law Program: Medi-Cal Transitional Rent issue brief, April 2026January 1, 2026 start; three eligibility tests; 182-day maximum; six-month room-and-board cap; 150% SAFMR motel ceiling; no supplanting; expansion no sooner than January 1, 2027
DHCS: BH-CONNECT approval, December 16, 2024Approval date; demonstration through December 31, 2029
DHCS: About BH-CONNECTProgram page
DHCS Transitional Rent payment methodologyDaily ceiling equals monthly rate divided by 28 (secondhand, search extract)
Partnership HealthPlan 2026 Community Supports rate sheetSTPHH $108 a day; recuperative care $204 a day
L.A. Care Community Supports deck for DMH, September 29, 2025About $222 million projected; services may not continue after CalAIM expires
CSAC: DHCS CalAIM 1115 renewal briefing, May 19, 2026Proposal to fold STPHH into recuperative care from January 1, 2027 (secondhand, search extract)
CHCS: national context for CalAIM renewalMay Revise cut of $68.3 million to ECM and Community Supports from January 1, 2027 (secondhand, research lane 02)
DHCS BHSA Housing Interventions Policy FAQBHSA pays after Transitional Rent; 14-day plan authorization
Culver City touts progress in reducing homeless numbers (Wave)Culver City unsheltered 139 in 2023 to 115 in 2024
Homeless counts raw data (Culver City Crossroads, 2026-08-03)Culver City unsheltered 51 in 2025 to 38 in 2026
NYC DSS press release, 2025About 3.5% of New York's homeless population unsheltered
LAHSA finalized 2025 countLos Angeles County about 66% unsheltered
RAND RR-A4903-1, LA LEADSAbout three vehicles or rough sleepers added for every four tents removed
Coalition for the Homeless, 2025 PIT resultsHouston unsheltered up 15.8% in 2025 (1,107 to 1,282)
SMDP: Santa Monica realignment plan first year72 people street to interim housing in FY 2025-26

Words on this page

BH-CONNECT: A separate federal Medi-Cal waiver for behavioral health approved December 16, 2024 and running January 1, 2025 to December 31, 2029. It created Transitional Rent.
BHSA: Behavioral Health Services Act. California's tax on personal income above $1 million for mental health and addiction services, renamed and redirected by Prop 1 in 2024.
CalAIM: California Advancing and Innovating Medi-Cal. A set of federal waivers, approved December 29, 2021 and running through December 31, 2026, that lets Medi-Cal health plans pay for some non-medical services such as housing help.
Community Supports: The optional non-medical services Medi-Cal health plans may offer under CalAIM, such as housing navigation, recuperative care and short-term housing after a hospital stay.
General Fund: A government's main flexible account, paid mostly from general taxes.
interim housing: A temporary place to sleep indoors (shelter, motel room, tiny home) while a person works toward a permanent home.
managed care plan: A private or public health plan that Medi-Cal pays to cover its members. In Los Angeles County the two are L.A. Care and Health Net.
Medi-Cal: California's Medicaid program, paid with state and federal money, covering low-income residents.
recuperative care: Short-term housing with medical oversight for people too sick to recover on the street but not sick enough to stay in a hospital.
SAFMR: Small Area Fair Market Rent. HUD's estimate of typical rent by ZIP code. Transitional Rent caps are set as a percentage of it.
STPHH: Short-Term Post-Hospitalization Housing. A Medi-Cal Community Support that pays for a place to recover after a hospital, treatment or institutional stay.
Transitional Rent: A Medi-Cal benefit, required of every Medi-Cal health plan from January 1, 2026, that pays up to six months of rent in an interim or permanent setting for eligible members.