The House of Representatives passed a budget bill on Tuesday that, if passed, would create a challenging rate environment and additional administrative burden, among other dangers, for home-based care providers.

The bill includes an estimated $698 billion budget cut to federal Medicaid subsidies over a decade and an estimated $45 billion cut to Medicare spending in 2026, according to the Congressional Budget Office. The Senate has not yet approved the budget bill, but if it passes in its current form, it would have a “devastating impact” on home-based care providers and their patients, according to industry advocates. 

“I definitely think we’ll see much more challenging rate environments, particularly in the out years. I think we will likely see new administrative burdens, challenges with individuals enrolling and staying enrolled in the Medicaid program,” Damon Terzaghi, senior director at the National Alliance for Care Home (The Alliance), told Home Health Care News. “That’s the long-term impact that I anticipate.”

House Republicans tried not to directly impact older adults, people with disabilities and home- and community-based services when writing the bill, Terzaghi said. However, the bill would still put these populations and services at risk.

The budget slashing would “shred the health care safety net for older adults and ultimately drive up health care costs,” according to LeadingAge, the association of nonprofit providers of aging services.

“If enacted, the policies in the House-passed bill will have a devastating impact on millions of older adults and their families who rely on Medicaid and Medicare for health care and long-term care and services, and on our nonprofit provider members who serve them,” Katie Smith Sloan, CEO of LeadingAge, said in a statement.

Decreased access to care, increased administrative burden

One portion of the bill that poses danger for home-based care recipients is that the bill would lower the limit on the home equity exclusion, which limits the amount of home equity individuals can have and qualify for Medicaid long-term services.

“Right now, the current law is the maximum that can be excluded by a state is $1.1 million, essentially, and it indexes for inflation every year,” Terzaghi said. “The bill would lower that limit to $1 million and remove the inflationary updates. A million dollars sounds like a lot, but when we think about this, who does this really impact? It impacts older adults who bought their houses a long time ago and are in areas of high housing cost growth. This isn’t real wealth. It’s like wealth on paper.”

This change could force individuals to either not receive long-term care or to sell their houses, which could lead more people to enter nursing homes, Terzaghi said.

People with disabilities who qualify for Medicaid because of the Affordable Care Act expansions could also struggle to access home-based care, according to Terzaghi.

Work and community engagement requirements would increase the documentation burden for expansion populations to receive care, and require home-based care providers to meet new administrative requirements to help those individuals maintain coverage, Terzaghi said.

Lawmakers made several last-minute changes to the bill to ensure sufficient votes to pass the bill. Among those changes was a move to implement Medicaid work requirements sooner, from Jan. 1, 2029, to Dec. 31, 2026 or earlier. 

Direct care workers would also face additional documentation burdens.

“Roughly a third of direct care workers are enrolled in Medicaid, and those individuals, we assume, would meet the community engagement requirements because they are direct care workers, they’re employed,” Terzaghi said. “However, again, it becomes a documentation burden, and our members are likely to have to do some of that work to help them qualify, meet the reporting requirements in order to become enrolled and remain enrolled in Medicaid.”

Mandatory cost-sharing requirements would also hit patients and providers.

The bill requires mandatory cost sharing for people in the expansion population with income above 100% of the federal poverty level. Many people in the expansion population have disabilities of some kind, Terzaghi said, and would not be excluded from mandatory cost sharing.

“Home care services, home health, personal care, etc, are not exempt services from mandatory cost sharing, so that could place pressure as well, both on participants and providers,” he said.

The bill also includes meaningful changes to provider taxes. If passed, it would freeze state provider taxes at current rates and keep states from establishing new provider taxes.

The changes to provider taxes would place more pressure on state budgets and make it harder for states to fund Medicaid programs, which would have ancillary impacts on home-based care providers, Terzaghi said.

Trickle-down challenges and Senate struggles

Some portions of the bill not directly tied to health care could also cause strain within the home-based care community.

For example, the bill would expand work requirements for the Supplemental Nutrition Assistance Program (SNAP) and shift some of the federal government’s spending on SNAP to states. Adding pressure to state budgets will likely negatively impact the Medicaid program and in-home care specifically, Terzaghi said.

“States have a finite amount of money to work with each year, and we see that whenever there is a challenging fiscal environment at the state [level], it makes it harder to negotiate for rate increases,” Terzaghi said. “Sometimes you’ll see states either constrict eligibility, establish waiting lists for home and community-based services, or have flat to, sometimes in extreme cases, even negative rate environments. Anytime you have something like this that places more burden on state budgets, it’s an area of concern for our industry.”

Overall, the bill could cause long-term challenges with people enrolling and staying enrolled in Medicaid, Terzaghi said.

In the past, reductions in the number of Medicaid beneficiaries have reduced patient census for home-based care providers. For example, Addus HomeCare Corporation (Nasdaq: ADUS) reported in March that Medicaid redeterminations caused a slowdown in new patients. However, Addus CEO Dirk Allison said the company was insulated from significant changes to Medicaid because it is a low-cost provider of Medicaid services. Other home-based care providers have been more concerned about maintaining as many Medicaid-eligible beneficiaries as possible. 

While the potential fallout from the bill for home-based care destruction looms large, it has not yet passed the Senate, where it could face opposition from some Republicans. 

Terzaghi said it is “unlikely to pass as it is written.”

“We hope to work with the Senate to make some changes, hopefully make the Medicaid portion of the bill less onerous and relieve some of the pressure on state budgets, state Medicaid programs and providers,” Terzaghi said. “We’re going to be working with the Senate, hopefully,  to create some of those changes that support our industry, and remove some of the burden and downsides that we anticipate happening from the legislation.” 

LeadingAge also promised to continue working with the Senate to oppose the Medicaid and Medicare cuts included in the bill.

“Recognize this for what it is: cold-hearted legislation that will have ugly consequences, essentially eliminating for vulnerable people the support they rely on, leaving them with few options,” Sloan said. “The Medicaid and Medicare programs, and the aging services infrastructure they support, help older Americans age with dignity, not desperation. They must be protected. We urge the Senate: do not follow in the House’s footsteps.”

ANCOR, an advocacy organization for over 2,500 community-based providers, also spoke out to encourage the Senate to reject the cuts, saying that the non-mandatory nature of community-based services means that the bill’s Medicaid cuts would harm people with disabilities.

“We now call on lawmakers in the Senate to protect people with disabilities from the very real, very harmful consequences of cutting Medicaid,” a statement from ANCOR read. “We urge all Senators to reject Medicaid cuts and to consider the impact of reducing the supports many of us take for granted that enable us to live, work and thrive in our communities. All lawmakers should remember that real lives of real people, and the very prosperity and well-being of people with disabilities, are at stake when you take up this budget legislation.”