Why Medicaid HCBS Providers May Pull Their Business From Unfavorable Markets

Between the increase to the Federal Medicaid Assistance Percentage (FMAP) match and American Rescue Plan (ARP) funds, home- and community-based services (HCBS) providers had a safety net.

In 2024, providers will need to prepare for a very different environment that does not include these financial buffers.

“We’ve had success in many states, over the last couple of years,” Dave Totaro, chief government affairs officer at Bayada Home Health Care, recently said during a Home Health Care News webinar. “Notably, [we saw] big increases in states like Missouri and Delaware, which hadn’t seen increases for over maybe one or two decades. Given the fact that these funds are drying up, on the federal level, [we expect that] states are going to begin to pull back.”


There might even be enough of a discrepancy between funding in different states that even large companies will consider leaving markets that make it difficult for providers to deliver care services.

Many providers are already having to deny upwards of 65% to 75% of their referrals, according to Totaro.

“Higher reimbursement states, like Massachusetts, Delaware, even New Jersey might be a bit better off, but eventually, if you can’t provide care because you’re losing money, you can’t provide quality care,” he said. “We’ll probably have to make those hard decisions. No health care provider ever wants to leave patients without health care.”


Lower reimbursement states such as Mississippi, and others, may see providers leave these markets.

Emmet O’Gara, CEO of Sandata, emphasized that most providers will try to face the unique challenges of each state before deciding to stop operating in a specific market.

“I think for the most part, we’ve seen folks positioning themselves to be as successful in the state they serve, as they can, versus wholesale, ‘I’m out of here,’” he said during the webinar. “Regulation can alter that path. Most of the folks that we work with are in this business because they are mission driven, economic realities, of course, can challenge that.”

Though some providers might be slow to exit a state entirely, this doesn’t mean that there won’t be some kind of fallout.

For example, a company may decide that they will keep operating in a state, but choose to pull out specific pockets in that market, Care Advantage CEO Tim Hanold said during the webinar.

“It might not be wholesale — folks moving out of a state — but its rural communities, it’s deep cultural pockets,” he said. “Areas without scale that don’t have density, and don’t have favorable economics. Those are the ones that will suffer.”

Further compounding challenges is Medicaid redetermination, which is happening in many states across the country. Totaro thinks this will make things even tougher for providers.

Even with rumors of additional funding, Totaro believes that it’s unlikely that this will actually result in more money being distributed.

“We do hear on the Hill that there is some talk, particularly among Democrats, for some additional funding in 2024, along the lines of the American Rescue Plan, but in reality they’re just generating headlines, and maybe some election year talking points for themselves,” he said. “I doubt we’re going to see any kind of reimbursement funding increases happen from the federal government.”

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