States Boosting Medicaid Payment Rates for Home Healthcare Amid Shortages

October 26, 2023 - Most states have increased Medicaid payment rates for home healthcare providers as the sector grapples with staffing shortages, according to a KFF issue brief.

The COVID-19 pandemic exacerbated workforce challenges among staff providing Medicaid home- and community-based services (HCBS). HCBS benefits include home health, personal care, and waiver services for specific populations like people with disabilities.

The brief reflects survey data from state officials administering Medicaid HCBS programs between May and August 2023. The data highlights how states are addressing HCBS workforce shortages as pandemic flexibilities expire.

All states except Florida responded to the survey, although response rates for different questions varied.

All responding states, including Washington, DC, reported workforce shortages in 2023. The most common shortages were among direct support professionals (50 states), personal care attendants (49 states), and nursing staff (49 states).

In addition, states reported shortages in home health aides (47 states), case managers (45 states), community-based mental health providers (38 states), and occupational, physical, and speech therapy providers (35 states).

The shortages may be due to low reimbursement rates and more requirements of providers. In 2021, HCBS providers in focus groups reported that their jobs had high physical and mental demands that were often overwhelming.

Some states have had to close HCBS facilities, including adult health day programs, group homes, and assisted living facilities. Thirty-seven states reported closures among two or more provider types. Provider shortages and pandemic challenges have both contributed to these closures.

Most states (48) have attempted to rectify provider shortages by boosting payment rates. While some states have implemented permanent payment rate increases, 13 states reported that increases for at least some workers were temporary. Just 14 states have payment formulas that automatically grow with the cost of living, but the formulas do not apply across all types of staff.

Forty-two states said they are developing or expanding worker education and training programs, while 41 states are offering incentive payments to recruit or retain workers.

Some states have also established or raised the state minimum wage (20 states) and offered paid sick leave for workers (19 states). Other initiatives included creating platforms or support systems to connect job seekers with employers, providing outreach to prospective employees, and launching a social media campaign.

Thirty-four states reported payment rates based on time. Among these respondents, 20 paid providers less than $20 per hour. The average payment rate to HCBS providers was $19 per hour for personal care providers, $28 for home health aides, and $43 for registered nurses providing home and community-based care.

Medicaid HCBS workforce shortages are just one part of the broader challenges in the long-term services and supports (LTSS) sector. Nursing facilities, in particular, have been experiencing significant workforce challenges since the pandemic hit.

A proposed rule released by the Biden Administration could potentially exacerbate these struggles for nursing homes. The rule proposed minimum staffing requirements that would mandate nursing facilities to provide each resident with a minimum of 0.55 hours of care per day from a registered nurse and 2.45 hours per day from a nurse aide.

A KFF brief indicated that less than 20 percent of nursing facilities would currently meet the recommended staffing levels.

Congressman Greg Pence (R-IN) and other representatives recently sent a bipartisan letter to HHS Secretary Xavier Becerra expressing their concerns with the proposed minimum staffing requirements.

“At a time when nursing homes are already experiencing healthcare worker shortages and financial hardships, CMS and the Biden Administration should not be implementing a regulation that would only exacerbate this issue,” Pence said.

“If implemented, facilities throughout the country will have no choice but to deny access to our nation’s seniors who need nursing home care, especially in rural communities, like many of the ones I represent in Indiana’s sixth congressional district. This one-size-fits-all regulatory requirement will result in many negative consequences, and I strongly urge Secretary Becerra to reconsider this proposal.”