The changes have shaken up a home care industry that was once dominated by licensed providers.
Certified home health agencies are state-regulated skilled-nursing providers for short- and long-term care, which are covered by Medicare, Medicaid and private health insurers. Much of their work is in post-acute care services offered on a more episodic basis than for those who need long-term assistance at home, according to Dan Lowenstein, senior vice president of government affairs at VNS Health, the state’s largest certified home health agency. Through CDPAP, which is funded by Medicaid, individuals can hire a person of their choice, often a relative or friend, and direct their own care. That can include tasks that certified home health aides may not be licensed to do, like giving injections, Lowenstein said.
CDPAP has made waves in the home care landscape and has come into the spotlight for proliferating a sector of financial middlemen responsible for funneling federal Medicaid dollars to home aides. The program has ballooned to over 250,000 enrollees and spurred a 173% increase in the number of workers in the home healthcare services sector since 2014, according to data from the state Department of Labor.
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The total number of CDPAP users rivals the number of people depending on home healthcare agencies, according to an analysis of federal Medicare data from VNS Health. That analysis, which was reviewed by Crain’s, showed the estimated number of home health agency customers enrolled in the two main Medicare programs, fee-for-service and Medicare Advantage, together totaled 242,000 in 2023, a drop of about 46,000 over five years.
At the same time, federal funding for certified home healthcare for Medicare fee-for-services has declined nearly 20% since 2020, according to VNS Health. In October, a bipartisan letter from New York’s congressional delegation called last year’s proposed cuts “unprecedentedly steep.” Another 4% cut has been proposed this year, according to VNS Health.
Workforce challenges have been a major obstacle for home health agencies seeking to take on more clients. VNS Health, formerly known as the Visiting Nurse Service of New York, had to turn away 18,000 patients in 2023 due to staffing shortages, according to information provided by the organization. That year, the company admitted just 50% of referrals, down from 66% in 2019.
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Labor shortages were a primary driver of the CDPAP’s growth over the past decade, along with a push by the state Department of Health to get more people enrolled in the cheaper service, according to Bryan O’Malley, executive director of the Consumer Directed Personal Assistance Association of New York State, which represents so-called “fiscal intermediaries,” the middlemen companies paying workers under CDPAP.
“There are any number of counties that for several years you [couldn’t] open a new home care case in,” he said.
This story first appeared in Crain's New York Business.
