CMS Proposes Stricter Payment Rule for Independent Home Care Workers

The Centers for Medicare & Medicaid Services (CMS) has taken action to tighten Medicaid payment rules related to independent home care providers.

It announced the move in a proposed rule issued Tuesday.

“The law provides that Medicaid providers must be paid directly and cannot have part of their payments diverted to third parties outside of a few very specific exceptions,” said Tim Hill, acting director for the Center for Medicaid and CHIP Services, in a press release. “This proposed rule is intended to ensure that providers receive their complete payment, and any circumstances in which a state does divert part of a provider’s payment must be clearly allowed under the law.”


At issue is a move that CMS took in 2014.

That year, the agency authorized states to divert some Medicaid funds away from independent home care providers—for example, family members caring for loved ones—to third parties that provide “benefits customary for employees,” such as health insurance or skills training.

In the proposed rule issued Tuesday, CMS notes that the Social Security Act requires direct payments to providers who are rendering services to Medicaid beneficiaries, and allows for limited and specific exceptions to that rule, such as when the health care provider owes money to the state. In light of this, the agency has determined that exceptions allowed in 2014 are “overbroad” and “insufficiently linked” to the statutorily allowed exceptions.


CMS is seeking public comment on the proposal and has specifically invited comments related to potential cost impacts. Should it be enacted, the change likely would have more than a $100 million annual effect on the economy, according to the proposed rule.

But “there is considerable uncertainty around this estimate,” the document states.

CMS does not track the amount of Medicaid funds being reassigned to third parties.

The economic impact of the proposal would not be consequential for the private sector, according to the proposed rule. Indeed, home care companies should not be impacted, given the focus on independent care providers, according to William Dombi, president of the National Association for Home Care & Hospice (NAHC).

The proposal can be seen as anti-union, Dombi noted to Home Health Care News. Individual providers have unionized through organizations such as the Service Employees International Union (SEIU), and the rule change would prevent states from automatically diverting a portion of Medicaid payments to cover dues for these workers.

Unions may be collecting as much as $71 million through these reassignments, the proposed rule states.

Union interests have been dealt several setbacks recently. In late June, the Supreme Court ruled that public sector employees cannot be forced to pay union fees, even if they theoretically are benefiting from collective bargaining agreements. The decision has sparked some lawsuits in which home care workers are seeking reimbursement for those fees.

Written by Tim Mullaney

Companies featured in this article:

, ,