Home Health & Hospice Week

80% pass-through is the wrong approach, experts tell CMS.

Everyone seems to agree that workforce problems are a huge challenge to Medicaid beneficiaries accessing home- and community-based services. But the latest solution offered by CMS may make the problem worse instead of better.

The Centers for Medicare & Medicaid Services has issued two proposed rules addressing Medicaid access and quality issues. Among other HCBS provisions, the rules would require “that at least 80 percent of Medicaid payments for personal care, homemaker, and home health aide services be spent on compensation for direct care workers (as opposed to administrative overhead or profit),” CMS notes in a release about the proposals.

“Direct care worker shortages are impacting beneficiaries’ access to services,” CMS stresses in a fact sheet about the rules’ HCBS changes. “In an effort to address direct care workforce shortages, CMS proposes to require that at least 80 percent of Medicaid payments in a State for homemaker, home health aide, and personal care services be spent on compensation for direct care workers,” the agency specifies.

“We are also proposing to require that states report annually, in the aggregate for each service, on the percent of payments for homemaker, home health aide, and personal care services that are spent on compensation for direct care workers, and separately report on payments for such services when they are selfdirected.”

The provisions would take effect four years from the rule’s effective date.

“The Biden-Harris administration has made clear where we stand: we believe all Americans deserve the peace of mind that having health care coverage brings,” Health and Human Services Secretary Xavier Becerra says in the release. “We are proposing important actions to remove barriers to care, engage consumers, and improve access to services.”

“Having health care coverage is fundamental to reducing health disparities, but it must go hand-in-hand with timely access to services. Connecting those priorities lies at the heart of these proposed rules,” CMS Administrator Chiquita Brooks-LaSure says in the release about the rules published in the May 3 Federal Register.

But industry experts fear the 80 percent requirement could do the opposite of broadening access.

“We are concerned that CMS is not proactively addressing the chronically woeful state payment rates for home and community-based services and instead is creating a new bureaucratic analysis that may or may not ever impact the wages of workers,” says Damon Terzaghi, the National Association for Home Care & Hospice’s Medicaid Director, in a statement. “We are further concerned that CMS has decided to forego ensuring adequate state payments in favor of applying an arbitrary requirement to pass through a proportion of the rates to direct care workers,” Terzaghi adds.

“This policy cannot be effective without consideration of the actual payment rates or the substantial administrative requirements that Federal and state regulations place on providers,” Terzaghi insists.

“We believe the specific approach and the proposed minimum threshold would be contradictory to the goal of assuring access to Medicaid services, which we fully support, due to the wide variance in state waiver programs which directly impacts the administrative burden in individual states,” says Frisco, Texas-based chain Addus HomeCare, which furnishes personal care and other services across 22 states. “We also believe it may adversely affect many smaller providers. Those operating in states with larger rural populations may be unable to continue providing care due to the significant administrative burden required to provide quality, regulatory compliant HCBS services,” Addus says in a release.

“For over a decade, Addus and other HCBS providers have advocated for higher rates of reimbursement to increase wages and benefits for the direct caregivers who provide these essential services,” Addus CEO Dirk Allison notes in the release.

The rule isn’t all bad, however.

“We are heartened and excited to see that CMS is addressing issues related to waiting lists for home and community-based services and delays in access to care, increasing transparency around provider payment rates and managed care contracting practices, and requiring states to provide more justification around their payment rate structures,” Terzaghi highlights. “All of these changes will help Medicaid beneficiaries and will help promote better access to community-based services,” he expects.

And at least “HHS recognizes the complexity of implementing any such provision by proposing a four-year timeframe before implementation is required,” Allison points out. “We note the express willingness of HHS, stated in the proposed rule, to entertain comments regarding both the appropriate minimum percentage and the related components in calculating such percentage.”

Note: A summary of the HCBS provisions in the rule is at www.cms.gov/newsroom/fact-sheets/ensuring-access-medicaid-services-cms-2442-p-notice-proposed-rulemaking. The rule with the 80 percent requirement is at www.govinfo.gov/content/pkg/FR-2023-05-03/pdf/2023-08959.pdf. Comments are due by July 3.