Report: Medicaid Payment Variability Hinders Access To Home- and Community-Based Services

Medicaid payment rates for home- and community-based services (HCBS) vary drastically across states, causing workforce instability and access challenges for services.

That’s according to a recent report from the Medicaid and CHIP Payment and Access Commission (MACPAC). MACPAC makes recommendations to Congress, the U.S. Department of Health and Human Services (HHS) and states on issues affecting Medicaid.

“Variability in payment rate assumptions can incentivize workers to switch to higher-paying services, creating access challenges” Robert Nelb, principal analyst with MACPAC, wrote in the report.


Medicaid payment policies significantly impact the HCBS workforce. Much like other corners of the home-based care industry, there’s a growing shortage of HCBS workers due to high demand and headwinds exacerbated by the COVID-19 pandemic.

States have a wide variety of ways that they can pay for HCBS services.

In order to address workforce shortages, states will adjust Medicaid rates to supplement more funding for HCBS caregivers. Most states base their payment rates on wage data from sources like the Bureau of Labor Statistics.


Many stakeholders who were interviewed for the MACPAC report said that while short-term funding from the American Rescue Plan Act (ARPA) has helped to stabilize the workforce, these gains may be lost if funding is not sustained in the long term.

“Because of growing inflationary pressures, some stakeholders also expressed concern that simply sustaining ARPA rate increases may not be enough to address current HCBS workforce challenges,” Gabby Ballweg, a research assistant with MACPAC, said during a commission meeting in March.

However, increases in HCBS funding and payment rates do not always translate into equivalent wage increases for HCBS workers, Ballweg explained.

“Many states in our study used wage pass-through policies as a strategy to require providers to pay a direct share of the provider rate increases to workers,” Ballweg said.

The report also found that many states don’t regularly update HCBS payment rates.

“There is substantial variance in the frequency of HCBS rate updates across waiver programs ranging from annually to every five years,” Nelb wrote. “Public documentation of rate studies, processes and results is also highly variable. Some states publish formal rate study reports on their websites and others have very little external rate study reporting.”

One potential solution to this issue is self-directed care when a patient or client will select their own caregiver, often a family member or close friend.

In 2022, there were approximately 3.5 million HCBS workers. Of those, 2.8 million were home care workers – and about 40% of those workers are employed through self-direction.

MACPAC leaders believe that with more research and data, self-directed care could be an effective way to curb some of the workforce issues in HCBS.

“I really appreciate your attention to self-direction and looking more closely at family members as paid caregivers,” MACPAC Commissioner Jami Snyder said during the commission meeting.
“Many states, understanding the tremendous workforce challenges, decided to extend paid care to parents of minor children during the pandemic. That’s just one facet of the equation that we should definitely include in our study of this area.”

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