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CMS Medicaid Access Final Rule sparks controversy within the Home Care industry

New York -- April 23, 2024

CMS repeals rule on Medicare 'reasonable and necessary' definition | AHA  NewsEarlier this week, the Centers for Medicare and Medicaid Services (CMS) elected to finalize the “payment adequacy” provision in the Medicaid Access Final Rule (CMS 2442-F). The rule has several provisions that were enacted as a way to protect Direct Care Workers. However the most notable--and most controversial--is the "payment adequacy provision” which requires that a minimum percentage of Medicaid HCBS reimbursements be passed through to the workers. 

The provision is controversial for several reasons. Medicaid HCBS varies from state to state. This provision will make access to care harder across the nation (especially in rural areas). To expand, the rule features a Medicaid pas-through requirement. 80% of HCBS Medicaid payments must be directed towards Direct Care Workers. The rest will go to towards operational expenses. This means rent, quality oversight, regulatory requirements, and technological improvements. 

Though on paper this new rule seems to support home care agencies, many home care associations are nervous that this will discourage home care agencies from finding innovative stategies for improving their care plans and caregiver retention. With the 80% allocation, there is no incentive for agencies to support advancement in their agency practices. Rather, the money will just go to caregivers directly and thus will lead to burnout and shortages in care. 

The other main concern is that HCBS are too different across the nation. This includes both admisntration and reimbursements. The rule is meant to apply nationwide, but does not take into account how home care varies state by state. Different states have varying patient populations, home care programs, cost of living, and regulations. CMS has not done any review to see how this national rule will affect states, and in general the home care industry is worried about the impact. 

The widespread fear is that this will lead to underinvestment in home care agencies, as owners will be forced to allocate the overwhelming majority of their reimbursement towards Direct Care Workers. However, time will tell about the impact of this rule. Home care asdociations are advocating for changes, especially as many of them have found that CMS has no staturoety authority for enacting this rule. More developments will be incoming in the aftermath of this rule, and hopefully the controversy will be loud enough for more information to come fro CMS about what this rule means for home care agencies across the nation.