Payment Adequacy—Required by July 9, 2030

• States must ensure that 80% of Medicaid payments for services defined in the rule (see service definitions below) will be spent on direct care worker compensation (see definitions below). Only 20% of Medicaid payments can be spent on administrative overhead.
• Compensation includes direct salary, wages, overtime pay, employer paid payroll taxes, all forms of paid leave, retirement plans/employer contributions, and benefits, “such as” health, dental, life/disability insurance, and tuition reimbursement. **More technical guidance to states will be needed to define benefits more clearly in the future.
  • Costs excluded from the percentage calculation are required training costs, travel costs such as mileage, and personal protective equipment.
    • This means providers will be able to deduct these expenses from their total revenue before applying the 80/20 calculation.
  • Direct care workers refer to the following: RNs, LPNs, individuals practicing under their supervision, such as home health aides, personal care attendants, etc. Direct Care Workers include anyone who is specifically tied to clinical supervision of the direct care staff, as well as those providing the service.
  • Services impacted include:
    • Homemaker Services
    • Home Health Aide Services
    • Personal Care Services
  • Waivers impacted include:
    • 1915(c)
    • 1915(i, j, and k)
    • 1115 Waiver (MCO waivers)
      • These do not apply to state plans, 1905(a) services.
    • Exclusions
      • CMS did provide states with several exclusions based on the public comments received to the proposed rule.
• Small Provider Exclusion
  • States are allowed, but not required, to establish the definition of “small provider” and establish an “alternative threshold.”
    • States must report annually on these and demonstrate actively working to get these providers under the provision, unless the total number of providers under this exclusion is less than 10%.
  • Hardship Exception
    • States are allowed, but not required, to establish a process and definition to exempt providers due to “extraordinary circumstances” that prevent compliance.
      • States must report annually on these and demonstrate actively working to get these providers under the provision, unless the total number of providers under this exclusion is less than 10%.
    • Other Exceptions include Self-directed services, where the beneficiary sets the direct care workers payment rates and Indian Health Services and Tribal Health Programs.
  • Additionally, states must begin collecting and tracking data on direct care compensation within four years of the effective date of the final rule, including Habilitation Services.
  • This portion of the rule becomes effective July 9, 2030.

Additional provisions within the rule included:

Payment Rate Transparency—By July 1, 2026

States must maintain an easily accessible website that contains current fee for service rates of any personal care, home health aide, homemaker and habilitative services.

Rate Cut/Restructure Test

CMS requires that States use the following test if they cut or restructure rates for these services:

1. Aggregate payment rates at or above 80% of the comparable Medicare rates;
2. Aggregate payment reduction is less than 4%; and
3. Public input processes resulted in no concerns or concerns that the state can reasonably mitigate.

All three must be met.

**Services without Medicare equivalent will be subject to more stringent reporting.

Creation of an “Interested Party Advisory Council”

Requires that states develop an advisory council of stakeholders to consult on fee-for-service rates for habilitation, home health aide, and personal care services, ensuring access. This group will meet minimally every two years to evaluate and comment on the rate structure. States would be required to publish recommendations of this group but are not required to adopt their recommendations.

New Waiver Waiting List Reporting

Requires that states screen prior to placing individuals on waitlists, and report how often they are re-screened. Waitlists will be reported to CMS, including total number of individuals on waitlists and the average amount of time that individual waits prior to enrollment.

Reports in Delays and Gaps in Care—Beginning 2027

Requires states report on the average amount of time that lapses between when certain HCBS are authorized and when services begin. Specific services include Homemaker, Home Health Aide and Personal Care Services. States must also report on the percentage of authorized hours that are delivered for those services.

New HCBS Quality Reporting System

Requires that states must report every other year on a subset of measures of the HCBS Quality Measure Set.

HCBS Grievance Systems

Requires states to establish a new system to collect and track grievances. Grievances are defined as “an expression of dissatisfaction or a complaint.” States minimally must address any grievances regarding person-centered planning and service plan requirements, as well as any grievances that may violate the HCBS Settings Rule.

HCBS Incident Management System

Requires that states establish and operate an incident management system which will identify, report, triage, investigate and track any instances of abuse, neglect, exploitation, as well as misuse of interventions or seclusions, medication errors and unique or unanticipated deaths.

What to Expect Next

Further regulatory guidance is needed and will be provided to the states by CMS on this Medicaid Access Rule. A website is already in development as a landing page for technical assistance to states as they work to interpret this rule and begin the process toward implementation and compliance.

As the Idaho Department of Health and Welfare’s Medicaid Division works to interpret this rule and the scope and application to providers in Idaho, it will be essential that advocates, providers and beneficiaries are prepared to partner and address adequacy of rates to ensure access to these services remain intact.

Additionally, congressional leaders have also begun moving forward with possible legislation placing a moratorium on the 80/20 provision. The House Energy and Commerce Hearing is anticipated to hear comments on HR8114 on Tuesday, April 30^th.

And lastly, it’s likely we’ll see legal action from State Medicaid Agencies and Attorney General’s offices on this matter forthcoming.

IHCCA will continue to monitor and provide updates to this important issue.