Home Care Industry Slams Finalized 80-20 Rule, Warns Agency Closures Are Coming

The “Ensuring Access to Medicaid Services” rule has been finalized.

Most importantly, the bemoaned “80-20” provision has gone through as proposed, meaning providers will eventually be forced to direct 80% of reimbursement for home- and community-based services (HCBS) to caregiver wages. 

First proposed by the U.S. Centers for Medicare & Medicaid Services (CMS) in April 2023, the goal of the rule is to enhance access to HCBS for Medicaid beneficiaries. Allocating 80% of reimbursement for wages would help ensure better access, CMS believes, by raising wages for direct care workers.  


“The ‘Ensuring Access to Medicaid Services’ final rule, finalized today, will help improve access to home care services as well as improve the quality caregiving jobs through its new provisions for home care,” the White House wrote in a statement Monday. “Specifically, the rule will ensure adequate compensation for home care workers by requiring that at least 80% of Medicaid payments for home care services go to workers’ wages.”

During the public comment period and otherwise, providers have vehemently argued against the 80-20 provision.

A blanket rule that fails to take into account the different factors affecting HCBS in different markets across the country was – while well intended – a poor measure, according to some of the top home-based care leaders in the country.


Organizations like the National Association for Home Care & Hospice (NAHC) and LeadingAge immediately condemned the rule being finalized on Monday.

“We all agree that more needs to be done to support the direct care workforce; however, this policy will make things worse, not better,” NAHC President William A. Dombi said in a statement. “NAHC remains committed to overturning this devastating policy and instead advocating for more feasible and rational policies that address the root causes of low worker compensation.”

Prior to Monday, providers and advocates argued that small providers would be hurt most, but the White House claims that CMS will find ways around that. 

“This policy would also allow states to take into account the unique experiences that small home care providers and providers in rural areas face while ensuring their employees receive their fair share of Medicaid payments and continued training as well as the delivery of quality care,” the White House statement said.

Outside of the variance in Medicaid HCBS markets state by state, providers also believe the rule does not consider the other investments that they put into the workforce – such as training programs and assistive technology, among others.

“We know that CMS has good intentions and a desire to improve the lives of workers, but this policy is ill-advised and will have serious negative impacts on providers and their clients around the country,” Jennifer Sheets, co-chair of the NAHC Medicaid Advisory Council (MAC), also said in a statement.

Addus Homecare Corporation (Nasdaq: ADUS) – one of the largest providers of HCBS in the country – previously suggested that the 80-20 provision, if finalized as proposed, would force it to exit certain markets

NAHC echoed those sentiments on Monday, calling the 80-20 rule “misguided policy that will result in agency closures.” The policy will additionally “force providers to exit the Medicaid program” and “ultimately make access issues worse around the country,” NAHC warned.

HCBS providers have been preparing for the worst-case scenario since the rule was proposed last year, but were hoping for a percentage adjustment or a more holistic approach to the issue of caregiver wages.

“Access to care is a shared goal, and so is increasing compensation for our caregivers,” Care Advantage CEO Tim Hanold told Home Health Care News earlier this month. “I think we’re all aligned around that. The CMS rule started with good intentions, but certainly there’s going to be some unintended consequences if it comes out as written. Rate adequacy really continues to be the main driver for providing appropriate wages, and that is what I believe the administration should focus on to improve access to care.”

As of Monday afternoon, the final rule itself had not yet been released, though it is expected that providers will have four years to adjust to the new provision. 

LeadingAge President and CEO Katie Smith Sloan said that the 80-20 provision is not only ill-advised for providers’ sake, but also may not end up benefiting caregivers.

“On the Medicaid Access rule, the lack of infrastructure for collecting and reporting out accurate information, of financing to support added resource needs, and of data to ensure that the dollars are being distributed as intended, will decrease access to care,” she said. “What’s more, given these shortcomings, there is no guarantee that this rule will increase worker compensation.”

The 80-20 rule is just a part of the Medicaid Access rule. There are other provisions that would aim to help reduce HCBS waiting times for beneficiaries, add additional transparency around those waiting lists and enhance quality reporting.

But, for now, those provisions have taken a back seat.

“It is unfortunate that the final rule included a mandatory pass-through requirement,” David Totaro, the president and executive director of Bayada’s Hearts for Home Care and NAHC MAC’s co-chair, said in a statement. “There are so many positive and necessary changes in the regulation, so it is disappointing that this one provision will undermine all the good things about the rule.”

This is a developing story. Please revisit this homehealthcarenews.com later for additional updates and information.

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