Hundreds of Angelenos in recuperative care facilities face homelessness after Health Net ends contract

Hundreds of people living in Soul Housing recuperative care facilities across Los Angeles County are expected to be discharged this week after their health insurance plan ended its contract with the company, authorities said.

There appears to be no clear plan for where most of those residents will go next.

The likely mass exodus comes after health insurance plan Health Net terminated its contract with Soul Housing, which was — until recently — L.A. County’s largest recuperative care provider, with more than 1,300 beds across 16 facilities.

Recuperative care facilities are meant to provide medical stabilization and housing, often for people leaving hospitals who are too sick to be on the street. Soul Housing has provided that care through the state’s expanded Medi-CAL initiative, known as CalAIM.

Health Net officially ended the contract Tuesday — after giving Soul Housing four months' notice, the insurance plan told LAist.

Even as that deadline passed, Soul Housing and Health Net continued to disagree about who’s responsible for transferring the high-need residents elsewhere and preventing them falling into homelessness.

A Soul Housing representative told LAist on Tuesday that the organization believes it was the insurance company's responsibility.

“We are still awaiting Health Net's transition plan for affected members, and we hold out hope that a resolution can still be reached that will best serve this fragile population.”

But on Wednesday, as it began clearing out its remaining L.A. County facilities, Soul Housing representatives were no longer expecting Health Net to act.

“We wish we had been notified sooner of their decision not to provide continuity of care for the majority of their members here,” a company spokesperson said. “Soul Housing’s only priority remains the well-being of the Californians in our care.”

Health Net told LAist that most of its members still residing in Soul Housing facilities no longer were authorized to participate in the Medi-CAL program as of Tuesday. That means, according to the insurance company, it’s mostly up to Soul Housing to figure out what happens next.

“Any people staying without active authorizations for these programs are there at the discretion of Soul Housing,” said Beatriz Lopez, a spokesperson for Health Net.

Soul Housing said it is committed to helping residents without authorizations get access to other available Medi-CAL benefits, including housing navigation services, to find appropriate shelter. The company said it’s working to prevent displacements.

“We have already secured more than 100 safe placements for Health Net's remaining members and will continue to uphold our mission by working to connect every person to appropriate housing and support,” a representative said.

State and county response

As many as 500 recuperative care residents were expected to be discharged from at least three Soul Housing facilities beginning Wednesday, according to a company representative.

L.A. County’s Emergency Centralized Response Center helped with some relocations last month, county officials told LAist. They said the county will continue to place people discharged by Soul Housing into “appropriate” housing facilities “when available.”

Earlier this year, there were about 40 recuperative care facilities in L.A. County operated by 26 different organizations, according to the National Institute for Medical Respite Care.

Medi-CAL reimburses providers for recuperative care through the state’s CalAIM initiative, which in 2022 expanded coverage to include benefits like housing and meals. The state Department of Healthcare Services oversees the CalAIM program, but individual contractors like Soul Housing are overseen by the insurance provider.

Health Net contracts with more than 20 recuperative care providers in L.A. County.

In a statement Wednesday, a spokesperson from the Department of Healthcare Services told LAist Health Net is in compliance with provider termination requirements, which include notifying the department and submitting a transition plan to the agency.

“We are closely monitoring the situation to ensure that Medi-Cal members continue to have access to appropriate recuperative care services for which they are eligible and that any transitions are handled with minimal disruption to care,” spokesperson Tessa Outhyse said in a statement.

Health Net declined to answer questions from LAist about why the contract with Soul Housing was terminated.

Soul Housing claims it happened “without cause” and after Health Net delayed some payments because of a tech glitch that erroneously denied some claims. The insurance company told LAist the problem had been identified and is being fixed.

The state says Health Net and other health insurance companies are allowed to terminate contracts with their subcontractors for business reasons.

Recent Soul Housing closures

Soul Housing said Wednesday morning that it's now operating three recuperative care facilities in L.A. County, down from 16. It closed down several facilities last month, including one 120-bed site in Van Nuys.

One former resident, Garrison Alecsaunder, told LAist he realized the site had been emptied after returning there from a hospital stay. Alecsaunder said a Soul Housing representative told him he could move to a facility in Gardena but did not provide any more information. He slept in a friend’s car at first.

On Wednesday, he was staying in the lobby of a hotel in Skid Row, he said.

Alecsaunder, who uses a walker and an oxygen tank, said he worries about recuperative care residents who use wheelchairs or have physical disabilities.

“You know, no options and no real warning, that's just, that's criminal to me, to put somebody with that much of a need out on the street with no help,” he said. “I mean, they had to know this was going on far before two or three days ago.”

Soul Housing also operates in Fresno but announced yesterday it was closing operations there, leaving 250 people in limbo.

Discharge notices issued in June

Health Net notified Soul Housing in early June that it intended to terminate its contract 120 days later, both parties confirmed to LAist.

On June 11, Soul Housing delivered discharge notices to residents of at least one facility in Koreatown. The letters, signed by CEO Casey Reinholtz, informed residents they had three days to vacate the facility because Health Net denied their coverage.

Someone claiming to be a resident of a Soul Housing facility in Koreatown posted copies of the notices on Reddit, warning the public of the looming displacement of hundreds of disabled Angelenos. But that discharge didn’t occur on schedule, representatives from Soul Housing told LAist.

Instead, Soul Housing continued providing care to participants at its own expense, while working with Health Net to resolve the authorization issues, a spokesperson said.

A Soul Housing representative told LAist in June the organization had received notices from Health Net discontinuing authorization for many of its participants.

“We are working closely with Health Net around the clock to identify alternative care pathways for the affected members of our community,” the representative said. “While we are hopeful for a resolution soon, our priority is ensuring that no participant is left without support or recourse.”