6 Company Leaders On What The Medicaid Access Rule Means For The Future Of Home Care

Now that the Medicaid Access Rule has been finalized, home-based care’s company leaders have had time to digest it, and consider what it means for the future of the space. 

While some acknowledge the good in the Centers for Medicare & Medicaid Services’ (CMS) reform efforts, others are facing the grim realities tied to the 80-20 provision.

Home Health Care News recently caught up with these leaders to learn their in-depth thoughts about the Medicaid Access Rule. Here’s what six of them had to say.

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The finalization of the Medicaid Access Rule presents significant challenges for family-owned and family-operated home care agencies like ours. The rule includes a six-year implementation window and requires that 80% of Medicaid payments be directed toward caregiver compensation. This restricts our ability to cover essential operational costs, as CMS excludes costs such as training, travel and personal protective equipment for direct care workers. Also excluded are all the other costs that come with running a home care agency.

For a small agency with a single location, these provisions are unsustainable. The lack of capacity to absorb these costs like larger agencies might pose a risk to our ability to continue providing care to this vulnerable population.

Moreover, the current fee-for-service model does not allow us to adopt innovative approaches such as value-based care, which could benefit our clients and align with the services provided by our home health partners. This outdated system fails to account for potential savings and quality improvements achievable through alternative care models.

While the Medicaid Access Rule aims to improve care quality, I believe it misses the mark, by leaving smaller home care agencies like ours struggling to survive. We urge policymakers to consider more flexible and sustainable approaches to enable us to continue serving this community and contribute to its well-being.

— Bob Roth, managing partner at Cypress HomeCare Solutions

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It’s hard to imagine anything more overly prescriptive than the 80-20 provision. It’s as if there was no math taken into consideration in terms of considering what 80% of incredibly low reimbursement rates actually looks like. When you begin to consider the states and regions where minimum wage is the prevailing wage, where are small agencies supposed to source the additional financial resources to comply from a pay rate perspective?

The simple answer to that question is to stop delivering Medicaid-funded service immediately and either A) pivot to a private-pay focused strategy or B) exit the industry via dissolution or desperation acquisition activity. It’s difficult to understand how either of those scenarios yield the net positive return for the workforce or for the home care network at large.

The only bright spot I can potentially glean is that the private-pay market will experience a glut of new, or newly refocused, home care agencies competing for the “middle-class” dollar. As a result, an increased number of players in this space could potentially create a competitive scenario whereby billing rates and pricing are at least temporarily decreased in an effort to gain market share.

— Kevin Smith, CEO of Best of Care

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As a provider of home care services, we support the stated goal of HHS to expand access to services like ours for Medicaid beneficiaries while providing for a stable ongoing workforce. We were disappointed that HHS elected to keep the 80% payment threshold in place, despite over 2,000 comment letters to HHS from our industry and trade groups over the past year, which pointed out the significant challenges implementing such a provision would create. We believe a nationwide “one size fits all” minimum threshold is contradictory to the goal of ensuring access to Medicaid services, given the wide variance in state waiver programs, which directly affects the administrative burden in individual states.

It is very difficult to project what, if any, impact this requirement would have on our business and even more so now that the implementation date has been pushed out another two years. We will continuously be evaluating the states in which we provide care to determine our ability to continue operations. Those evaluations are based on many factors including the rate of reimbursement, volume of business and programmatic requirements as well as the cost to meet those requirements. All of those factors will likely change over the course of six years. We will also be monitoring legislative action and legal challenges either of which could block implementation of the provision.

— Darby Anderson, executive vice president & chief government relations officer at Addus HomeCare Corp. (Nasdaq: ADUS)

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I believe the Medicaid Access Rule is a step in the right direction for many of our beneficiaries, especially here in Michigan, where waiting lists for home and community-based services (HCBS) could be lengthy at times. With 13% of Michigan residents living at or below the poverty level, and Detroit facing a staggering 30% poverty rate and 43% child poverty rate, the need for accessible HCBS programs for disabled and senior populations is paramount.

However, I have concerns about the 80-20 rule, as it does not make direct concessions for much-needed increases in Medicaid reimbursements. Most home care agencies operate with 60%-75% overhead costs for payroll and wages, making it challenging to provide services sustainably under the current Medicaid rates. At AAHC, we plan to diversify our offerings into service lines with higher margins, such as hospice, palliative, and ancillary care, to help offset the impact of this ruling.

Despite these challenges, I firmly support our workforce and recognize the realities of the care worker shortage. Ensuring that our home health aides and CNAs earn a livable wage is not only a moral imperative, but also essential for attracting and retaining talented caregivers to meet the growing demand for HCBS in Michigan and the Detroit area.

While the Medicaid Access Rule may not be perfect, it is a positive development for beneficiaries. I hope that continued advocacy efforts will lead to further policy changes and Medicaid rate adjustments that better support HCBS providers and their dedicated workforce.

As a board member of Michigan Home Care and Hospice Association (MHHA), I know that it is one of our top priorities and pushes. By working together, with the states and CMS, I hope we can ensure that vulnerable populations in Michigan and across the country have access to the high-quality home care services they need and deserve.

— Cleamon Moorer Jr., president of American Advantage Home Care

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Care Advantage shares CMS’ concern with the health of the HCBS workforce, and in particular the need for more sustainable approaches to DCW compensation, especially given the current inflationary environment and rate inadequacy in many state Medicaid programs. That said, we believe the Medicaid Access Rule’s 80% mandate is likely to create a number of unintended consequences, all of which will reduce access to care and quality of care for Medicaid beneficiaries, especially amongst smaller providers and rural communities. Disciplined resource allocation and ROI considerations will need to be an even more important part of an operator’s weekly calculus.

We will continue to significantly scale our business, partner with the payer community through innovative value-based care programs and advocate for increased reimbursement for HCBS. Care Advantage is committed to this public-private partnership, improving health outcomes, and maximizing the value of the HCBS model for the communities we serve.

— Tim Hanold, CEO of Care Advantage Inc.

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Above all, Help at Home appreciates CMS’ efforts to professionalize Medicaid-funded home- and community-based care, particularly those services that allow elderly and physically disabled individuals to receive care in their homes, as well as the acknowledgement of states’ historic investment in home-based care. We particularly appreciate the allowance for more time for states to prepare for proper data collection, allowances for states to obtain hardship exemptions based on impacts on providers. Additionally, changes to threshold definitions were important to recognize the fact that good, quality home care includes additional direct worker supports such as training and clinical supervision and travel reimbursement to facilitate access to clients, particularly in non-urban settings.

While we acknowledge this is just the beginning of a complex effort to reform HCBS, we’re encouraged by many of the modifications made to the rule based on stakeholder input. Like CMS, we remain committed to our belief that home care workers must be treated as professionals, receive appropriate compensation, and receive care supports that add value to the client/caregiver relationship, helping to coordinate care and connect health care to home care. We will continue to advocate for higher quality, higher accountability and better support for clients and caregivers who provide essential home-based services for our population of Medicaid beneficiaries.

— Tim O’Rourke, president of home care at Help at Home