The Centers for Medicare & Medicaid Services released the so-called 80/20 rule Monday afternoon with a six-year runway. The rule, which is contained in the Medicaid Access Rule, also provides states the option to establish a hardship exemption and a separate performance level for small providers. And the payment adequacy provision exempts the Indian Health Service and Tribal health programs from complying with its requirements.
CMS phases the rule in with other milestones. In three years, states must report on their readiness to collect data regarding the percentage of Medicaid payments for homemaker, home health aide, personal care and habilitation services spent on compensation to the direct care workers furnishing these services. And in four years, states must report on the percentage of Medicaid payments for those specific services spent on compensation to the direct care workers furnishing these services, subject to certain exceptions, a fact sheet explained.
“[The Medicaid Access Rule] requires that, in six years, states generally ensure a minimum of 80% of Medicaid payments for homemaker, home health aide and personal care services be spent on compensation for direct care workers furnishing these services, as opposed to administrative overhead or profit, subject to certain flexibilities and exceptions (referred to as the HCBS payment adequacy provision),” CMS said in the fact sheet.
The six-year runway period is a departure from CMS’ initial proposal of four years. Still, the provisions included in the rule will likely bring financial hardships for Medicaid home care businesses, according to experts at the National Association for Home Care & Hospice.
“I think that it’s an extremely unfortunate day for home care,” Damon Terzaghi, director of Medicaid and HCBS (home- and community-based services) at NAHC, said in an interview with McKnight’s Home Care Daily Pulse earlier Monday. “We’ve tried to work in good faith with the administration to find workable solutions, and unfortunately, what they’ve come out with is counter to the desired goals of improving access and increasing the wages of workers.”
80% to include employee training
The rule requires that 80% of Medicaid payments for home health, personal care and homemaker services be spent on workers’ compensation. Included in the 80% is employees’ direct salary, overtime payments, employer cost of payroll taxes and workers’ benefits, and pay for employees’ time spent training or traveling. Mileage reimbursement and the costs of personal protective equipment are not included in the 80%, according to the rule.
CMS noted, “We do not want to encourage providers to reduce training to cut administrative costs.”
Enforcement challenges
One of the most challenging aspects of the rule for states will be enforcing it, Terzaghi pointed out.
“This would require mandatory universal cost reporting in the Medicaid program at a level that just has not existed historically,” Terzaghi said. “It would be pushing a huge burden onto the states to establish the infrastructure to manage and monitor it.”
Given this, William Dombi, president of NAHC, noted that legal action on the part of states may be forthcoming.
“Given the comments we’ve seen from some of the state Medicaid programs themselves, we would anticipate that states will be investigating and potentially litigating over the issue,” Dombi told McKnight’s Home Care Daily Pulse. “They conclude, fairly consistently, that this is not authority that the federal government has on how to run the [Medicaid] program.”
In an analysis of reports that private contractors developed for Medicaid programs, four law firms concluded that the statute CMS cited does not give them the authority to enact the 80/20 mandate, Terzaghi said.
“This is likely going to be something that we defer to the States on because it’s really within their purview as it’s a mandate on them,” Terzaghi said. “But we do know that there’s a lot of concern from the Medicaid agencies around the country, so we are hopeful that they will seek some relief.”
Dombi pointed out that the rule means well.
“We think this may be a well-intentioned effort to improve the compensation paid to the workforce that does incredible work,” he said. “This is just not the way to go. It’s what we’ve been saying. It’s unfunded to begin with. It doesn’t recognize the nuances that exist in one state’s program from another state’s program. And unfortunately, it will fail to achieve the end. It will reduce access to care.”
CMS did not agree.
“We continue to believe 80 percent is the feasible performance level to ensure that payments made for Medicaid HCBS are appropriately allocated to direct care workers’ compensation to ensure sufficient providers for beneficiaries to access HCBS as approved in their person-centered plans,” CMS said. “However, given that the 80 percent minimum performance is higher than what states have currently set in terms of permanent wage pass-through requirements, we will provide states with additional time to come into compliance with the 80 percent performance level.”
Editor’s Note: The story was edited to clarify what CMS included in the 80% threshold under the 80/20 provision.
