Home care providers will be required to direct 80% of Medicaid payments to wages for aides and nurses under a final regulation the Biden administration unveiled Monday.
The Ensuring Access to Medicaid Services rule is aimed at improving job quality and pay for direct care workers to attract more people to those jobs as more long-term care moves to the home. The rule will also require states to be more transparent in how they pay for home- and community-based services, as well as how they set rates, according to the White House.
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The rule comes as the Biden administration has called for more funding for home-based care. The White House estimated that 7 million older adults and people with disabilities rely on home- and community-based services. Approximately 2.8 million workers provide in-home care, according to PHI National which tracks the direct care workforce. The nonprofit estimates the industry will need an additional 1 million workers by the end of the decade to care for the growing number of aging baby boomers.
Under the rule, states will be required to create home care and rate-setting advisory boards made up of Medicaid beneficiaries, home care workers and others to advise states on provider payment rates and worker compensation.
“Higher wages will likely reduce turnover, leading to high quality of care for older adults and people with disabilities across the nation, as studies have shown,” the White House said in a statement.
The National Association for Home Care and Hospice said the rule could result in providers closing their business or exiting Medicaid.
“NAHC remains committed to overturning this devastating policy and instead advocating for more feasible and rational policies that address the root causes of low worker compensation,” Bill Dombi, the association’s president, said in a statement.
LeadingAge, which represents nonprofit home care companies, said the rule could be difficult for providers to execute.
"[T]he lack of infrastructure for collecting and reporting out accurate information, of financing to support added resource needs, and of data to ensure that the dollars are being distributed as intended, will decrease access to care," LeadingAge President and CEO Katie Smith Sloan said in a statement.
Home care companies argued the rule could make it difficult to operate in states with low Medicaid reimbursements. Addus HomeCare CEO Dirk Allison said last year the company might pull out of states with low Medicaid payments and grow in others where Medicaid rates are higher. Addus provides home care and hospice services in 22 states.
Some large providers have been exiting home care. Last month, Charlotte, North Carolina-based Advocate Health sold personal care unit Senior Helpers to Chicago private equity firm Waus Capital Partners for an undisclosed sum. Home health and hospice company Amedisys sold its personal care business to HouseWorks last year $50 million.
