[Updated] CMS Proposes New Rule Requiring At Least 80% of HCBS Medicaid Payments To Go Toward Worker Compensation

Home Health Care News / By Robert Holly

The U.S. Centers for Medicare & Medicaid Services (CMS) [last] Thursday announced a new proposed rule that would, among its provisions, establish a strict requirement for the amount of Medicaid payment going toward home care worker compensation.

Specifically, the proposed rule from CMS would require that at least 80% of Medicaid payments for personal care, homemaker and home health aide services be spent on compensation for direct care workers. That’s opposed to expenses such as “administrative overhead or profit,” according to the agency.

“If adopted as proposed, the rules would establish historic national standards for access to care regardless of whether that care is provided through managed care plans or directly by states through fee-for-service (FFS),” the CMS announcement explains. “Specifically, they would establish access standards through Medicaid or CHIP managed care plans, as well as transparency for Medicaid payment rates to providers, including hourly rates and compensation for certain home care and other direct care workers.”

Other aspects of Thursday’s proposed rulemaking announcement include:

– Establishing national maximum standards for certain appointment wait times for Medicaid or Children’s Health Insurance Program (CHIP) managed care enrollees

– Requiring states to conduct independent secret shopper surveys of Medicaid or CHIP managed care plans

– Mandating that states report every other year on the HCBS Quality Measure Set for their HCBS program

“With the provisions we’ve outlined, we’re poised to bring Medicaid or CHIP coverage and access together in unprecedented ways – a key priority that’s long overdue for eligible program participants who still face barriers connecting to care,” CMS Administrator Chiquita Brooks-LaSure said in the announcement.

Notably for home- and community-based services (HCBS) providers, CMS is likewise attempting to create new payment transparency requirements for states by requiring disclosure of provider payment rates in both FFS and managed care.

The goal, according to the agency, is to get “greater insight into how Medicaid payment levels affect access to care.”

Currently, demand for HCBS far exceeds service supply from providers. That’s partly because many providers, especially in personal care, continue to struggle with the recruitment and retention of workers.

“Access to most HCBS generally requires hands‑on and in‑person services to be delivered by direct care workers,” a CMS fact sheet explains. “However, direct care worker shortages are impacting beneficiaries’ access to services.”

As part of the transparency efforts under the proposal, states would have to publish the average hourly rate paid to direct care workers delivering personal care, home health aide and homemaker services.

“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 self‑directed,” the fact sheet continues. “We proposed that these requirements would be effective four years after the effective date of the final rule.”

States would also need to more rigorously report on waiting lists in section 1915(c) waiver programs, along with service delivery timeliness for personal care, homemaker and home health aide services.

The National Association for Home Care & Hospice (NAHC) called the Medicaid announcement a “mixed bag” for the program.

“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,” Damon Terzaghi, NAHC’s medicaid director, said in a statement shared with Home Health Care News.

NAHC does have concerns about 80% of Medicaid payments going toward worker compensation, Terzaghi noted.

“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,” Terzaghi said. “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. 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.”

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The rules are available online at:

Access rule: 2023-08959.pdf (federalregister.gov)

Managed Care Rule: 2023-08961.pdf (federalregister.gov)