How The 80-20 Provision Could Affect Private-Pay Home Care Providers

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The Medicaid Access Rule has been heralded by home care providers as a mostly good rule with one misguided piece: the 80-20 provision. And while that provision’s potential impact has been discussed ad nauseam, one area that hasn’t been considered as much is the effect it will have on private-pay home care providers.

Billing rates have already soared in private-pay home care since the COVID-19 pandemic, which has forced providers to get creative.

Some have decided to take on more payer sources like Medicaid and Medicare Advantage, some have looked to drive efficiencies to keep private-pay costs down, and others have decided to tailor their business to the most wealthy. Many have also taken shades of each strategy.


The 80-20 provision is six years away from implementation, but the regulation itself could immediately begin to affect how Medicaid programs operate. Eventually, it will inflate the wages that caregivers are being paid in home- and community-based services (HCBS).

And, thus, it also could affect the perception of caregiver wages in private-pay home care. If one area of an industry begins paying its employees more, the entire industry has to adjust. And that adjustment may be one that some home care providers can’t afford.

The costs go up

The 80-20 provision is yet another regulatory issue that home care providers are logging under: well meaning, with potential unintended consequences.


“With the 80-20 provision, my fear is it could have some unintended consequences, and I cannot stress enough that I believe caregivers deserve to be compensated well,” Jeff Stevens, the co-founder and CEO of Village Caregiving, told Home Health Care News. “There are positive aspects to the [Medicaid Access Rule], but I do believe it could reduce access… and I think it’s fair to suggest that it could raise costs for [all providers].”

For instance, if a private-pay home care provider operates in a market with other HCBS providers that are now directing 80% of reimbursement to caregivers, the baseline of home care wages in that area could increase rapidly, and swiftly.

In turn, it could force private-pay providers up their billing rates yet again, boxing out even more potential clients who can’t afford to pay those rates out of pocket anymore.

In certain states especially, increased Medicaid rates have made HCBS a more lucrative business. It has also leveled the playing field in recruiting and retention efforts between Medicaid-focused providers and private-pay providers.

The Centers for Medicare & Medicaid Services (CMS) certainly believes that the HCBS recruiting and retention woes will be mitigated by higher wages through the 80-20 provision.

And, while providers aren’t so sure of that, those new caregivers have to come from somewhere, potentially from providers who do not work in Medicaid.

“Data shows that direct care workers typically earn low wages and receive limited benefits, contributing to a shortage of direct care workers and high rates of turnover in this workforce, which can limit access to and impact the quality of HCBS,” Daniel Tsai – the deputy administrator and director of Center for Medicaid and CHIP services at CMS – said last month. “By supporting and stabilizing the direct care workforce, this provision will result in better qualified employees, lower turnover, and a higher quality of care, improving access to quality care for Medicaid beneficiaries.”

Not so sure

Senior Helpers COO Mari Baxter doesn’t think that the private-pay industry can afford to have many more significant hikes to billing rates, even if the cost to pay caregivers does go up with the 80-20 provision and similar policies in the future.

“I’m hoping it doesn’t drive up the cost of care on the private-pay side,” she told HHCN. “There’s going to be the natural progression of that, but we’ve already seen such a big increase over the last few years. I think we kind of need to slow down in [the future], frankly.”

AccordCare CEO Brandon Ballew doesn’t see that cost increase materializing as a result of the provision, however.

In the end, Medicaid rates – for the most part – are still much lower than private-pay rates in the vast majority of the country.

“Will there be wage inflation that might affect other payers outside of Medicaid reimbursement, because you’re moving them up there?” Ballew told HHCN. “I don’t personally think that’ll be the case. Medicaid tends to be one of your lower payers today anyway. So, if anything, it might get them more on par with some of the other payers. But again, they’ve got to put the money back into the reimbursement side in order to make that 80% still material as it competes with other payers for what is an extremely rare commodity.”

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