by Kristin Rowan, Editor

The Centers for Medicare and Medicaid Services (CMS) has finalized the “Ensuring Access to Medicaid Services” rule, more commonly known as the 80/20 rule. The 80/20 finalized rule requires at least 80% of Medicaid payments for home care services goes to caregiver wages. No more than 20% can be spent on administrative or other overhead costs. The White House, citing a study by The Commonwealth Fund, says that higher wages for caregivers will reduce turnover. Facing massive workforce shortages, home health, hospice, and supportive care at home agencies have been struggling to recruit and retain an adequate number of caregivers. The higher wage will also increase the quality of care, according to the study.

Prior to the 80/20 rule, there was no law or rule requiring home care agencies to report how they were spending money from federal medical payments. The rule includes requirements for states to create advisory groups to consult on rates and compensation. This changes the current Medical Care Advisory Committee regulations by increasing the percent of beneficiaries on the committee from 10% to 25% over the next two year. The Home Care Association of America (HCAOA) and the National Association for Home Care & Hospice (NAHC) argued that the rule adds administrative requirements to home care agencies while simultaneously reducing the resources available to fund them. NAHC President Bill Dombi said, “We all agree that more needs to be done to support the direct care workforce; however, this policy will make things worse, not better.” NAHC suggests the policy will force some agencies to close and others will leave the Medicaid program altogether, causing patients to have even more problems accessing care.

Exceptions to the Rule

From the text of the final rule, CMS acknowledges additional comments that the minimum direct payment to caregivers in this rule will create hardships for some agencies. Across the country, there are substantial differences among waiver programs for HCBS that are not accounted for in the rule. There is some flexibility built into the rule to account for these factors, according to CMS. Some of the flexibilities include:

  • Excluding some costs from the calculation
  • Including clinical supervisors in the calculation
  • Allowing states to set a different minimum for small providers
  • Allowing states to develop their own criteria to qualify as a small provider
  • Allowing states to develop criteria to exempt some providers from the rule
  • Exemption from the minimum payment rule for all Indian Health Service and Tribal health programs

The final rule also changes the timeline for complying with the rule from four years after the date of publication to six.

Objections to the Rule

Other comments included the need to address various reasons for the workforce shortage. In addition to low wages, commenters cited the social valuation of direct care work, lack of governmental support for some workforce pipelines, and immigration policies as deterrents to recruitment. One suggested that CMS start looking at creative strategies for developing an atypical workforce.

There were several submitted comments stating the either HHS or CMS or both does not have the authority under the Affordable Care Act to make specific requirements for minimum payments, but only to ensure that each State is assessing payment regulations and ensuring payments are economical, efficient, and ensure quality of care. A specific section of the Affordable Care Act, section 2402(a)(1) requires the Secretary of the Department of Health and Human Services (HHS) to ensure states implement service systems to allocate resources. The provision does not give HHS the authority to dictate the terms of those service systems, only to ensure the states develop those systems. Not surprisingly, CMS disagreed with those comments.

Many people questioned the 80% as being unrealistic, too high, and not based on quality data. CMS cited data from several states, who have pass-through requirements of 80-95% for all rate increases. This is not a minimum payment from all Medicaid payments, only a requirement for a minimum pass-through to direct care workers of increases in rates. Two states, Minnesota and Illinois, currently have minimum payment requirements set at 72% and 77%, respectively. CMS used these two states as justification for the 80% rule, acknowledging that it is higher than both states while also acknowledging that they did not perform a state-by-state study of the impact the 80% rule will have. CMS states the rate was set higher than those states to “encourage further steps towards improving compensation for workers.” CMS believes that requiring HCB agencies to pay their direct care workers a higher percentage of Medicaid rates than any state currently does will somehow make those agencies want to voluntarily pay even more.

The 80/20 Rule and Technology

Technological advances in telehealth, remote patient monitoring, revenue cycle management, scheduling, employee benefits, assistive technology, EVVs, EMRs, CRMs, and other software solutions can and will lower overhead costs and increase efficiency in your agency. Paperwork automation can reduce the time spent on documentation by a significant percentage. Revenue Cycle Management software can reduce claim denials and decrease reimbursement payment cycles so you can get your money faster. They can also reduce the number of unpaid claims. Employee benefit and training software can reduce responsibilities for HR teams, lessen the requirements for clinical supervisors, and cut training time in half, getting your newly recruited caregivers out in the field faster. Scheduling and onboarding software can increase your intake capabilities. The advances in generative AI allow you to create robust reports almost instantly so you can see your agency’s strengths and weaknesses and create plans for improvement.

Some of these costs will be excluded from the calculations for the 80% rule. Now is the time to invest in technology for your agency. Not only will your agency be more efficient and more effective, but you will be able to care for more patients with the same staff you have now, and the software solutions are as close to cost-neutral as they will ever be. We have a list of technology solutions that we’ve recently discovered and will be writing about in the next few weeks. If you are in immediate need of a software solution, contact us directly for a consultation.

# # #

Kristin Rowan, EditorKristin Rowan has been working at Healthcare at Home: The Rowan Report since 2008. She has a master’s degree in business administration and marketing and runs Girard Marketing Group, a multi-faceted boutique marketing firm specializing in event planning, sales, and marketing strategy. She has recently taken on the role of Editor of The Rowan Report and will add her voice to current Home Care topics as well as marketing tips for home care agencies. Connect with Kristin directly or

©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in  Healthcare at Home: The Rowan Report. One copy may be printed for personal use: further reproduction by permission only.