Home-Based Care Providers Break Down ‘Unintended Consequences’ Of CMS’ Proposed Medicaid Rule

A proposed rule from the U.S. Centers for Medicare & Medicaid Services (CMS) – which would require at least 80% of Medicaid reimbursement for home- and community-based services go toward worker compensation – received over 2,100 submissions during its public comment period.

Many of the comments included gratitude and appreciation for CMS regarding its efforts to enhance the HCBS workforce. But concerns persist over how the rule would affect HCBS providers across the country.

“While we understand and appreciate the linkage between caregiver wages and recruitment and retention, the non-uniformity of state program requirements and the disparity in reimbursement rates — both across and within states — preclude the implementation of a standard minimum percentage threshold for direct care workers’ compensation,” Darby Anderson, EVP and chief government relations officer for Addus HomeCare Corporation (Nasdaq: ADUS), wrote in a comment.


The Frisco, Texas-based Addus currently provides home-based care services to about 47,500 individuals through 203 locations across 22 states.

Like many of his colleagues across the industry, Anderson wrote and reiterated what others have told Home Health Care News when the proposed rule came out: that implementing a standard minimum percentage threshold without studying the potential impacts of the 80% rule will likely result in unintended consequences.

Those consequences could include smaller providers going out of business and larger providers leaving certain markets, thus reducing access to care.


One of the most consistent criticisms of the CMS rule is that it essentially puts blanket Medicaid regulations over the whole country, which could create issues because each state operates its Medicaid program differently.

In drafting the proposed rule, CMS used two states — Illinois and Minnesota — as examples of how a nationwide Medicaid rule would be rolled out. However, dozens of providers and advocates took issue with using those two states as examples.

To start, neither state requires an 80% threshold. And even within the thresholds — Illinois is set at 77% and Minnesota is at 72.5% — there is reasonable wiggle room for providers to spend money elsewhere.

“CMS has not proposed the 80/20 mandate consistent with either of the two states it references nor has it produced data which indicates whether these initiatives were successful in raising wages or expanding access,” Barbara Merrill, CEO of the American Network of Community Options and Resources (ANCOR), wrote in a comment.

ANCOR is a national organization that represents more than 2,000 private community-based care providers.

Commenters took issue with CMS not showing its work in terms of how it got to the 80% number. They similarly took issue with a lack of supporting evidence and data.

“CMS [does not] cite any data or evidence that the 80% threshold is likely to improve direct care workers’ wages in low reimbursement states,” Anderson wrote. “More pointedly, CMS does not state how requiring HCBS providers to pass through 80% of a very low reimbursement rate will materially raise direct care workers’ pay rates or address the current workforce crisis.”

Meanwhile, groups like the Partnership for Medicaid Home-Based Care (PMHC) provided data of their own from a survey that showed 54% of participating agencies would go into the red if the rule were implemented.

On top of that, an additional 35% of agencies would “narrow service offerings or geographies served.” Over 92% of providers said they would be challenged to take on new referrals.

Some advocates even believe that the proposed rule will have the opposite effect on wages for caregivers.

“We want to stress that this provision is not only unworkable, it’s likely to have the opposite impact as intended,” Harrison Collins, director of legislative affairs and public policy with the Home Care Alliance of Massachusetts, wrote in a comment. “The rule misses the mark because it does not address one of the most significant reasons that the current workforce crisis exists: the consistent, pervasive, underfunding of Medicaid HCBS payment rates.”

Requiring 80% of reimbursements to be passed through to direct care workers, Collins wrote, only redistributes the reimbursements that are “substantially underfunded” in the first place.

The success of a state’s HCBS program is dependent on providers’ participation in that program.

Their participation, at the same time, is dependent on a sufficient payment rate structure for the delivery of services.

“Unless state Medicaid reimbursement rates under HCBS programs increase to cover the federal wage passthrough requirement, the proposed rule will result in individuals going without essential community-based LTSS and eventually being forced into facilities,” Stacey Smith, VP of public affairs with AccentCare, wrote in a comment. “[That would result in] the institutionalization of individuals and greatly increase costs to the program.”

The Dallas-based Accentcare is a provider of home health, hospice, palliative care and care management services. It offers HCBS to over 14,000 Medicaid beneficiaries and employs over 15,000 direct care workers at 260 locations across 30 states and Washington, D.C.

What happens next

The public comment period for the Medicaid proposed rule closed at the beginning of July. Hundreds of respondents mentioned their recommendation would be to withdraw or remove the 80% rule entirely.

Some, like Care Advantage, offered other solutions. One of those solutions was for CMS to change the definition of compensation to include costs that come with training, technology investments, recruiting and onboarding costs.

“In addition to broadening the definition of compensation, states should also be given the flexibility to allow providers in their jurisdiction to include other costs as necessary,” CareAdvantage CEO Tim Hanold wrote in a comment. “This will help ensure that providers in states that are more heavily regulated are not punished — and clients are not harmed — by a compensation definition that is too narrow.”

The Richmond, Virginia-based Care Advantage is a home-based care company that has 51 locations throughout Virginia, Maryland, Delaware, Washington, D.C., and North Carolina. The company offers both personal care and home health care services.

Hanold also recommended CMS give providers more time to adjust to the new rule if it is implemented. As it’s written now, the proposed rule would give providers a four-year implementation timeline for the direct care worker mandate. Dozens of comments urged CMS to lengthen this timeline.

More clarity on what CMS ultimately plans to do should come in the third or fourth quarter of this year.

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