States can again directly pay for home health aides’ insurance

Medicaid can directly pay for independent home health aides’ benefits, including health insurance, according to a final rule the Centers for Medicare and Medicaid Services issued Thursday.

State Medicaid agencies can now allow home health aides not working with an agency to have employee benefit premiums and union dues deducted from their paychecks. The policy is not mandatory for states, but removes federal barriers for states wishing to use the system, said Dan Tsai, deputy CMS administrator and director of the Center for Medicaid and Children’s Health Insurance Program Services.

Home health is becoming more and more popular with patients, but access problems persist because of a grave worker shortage. Home health jobs often pay little, come with few benefits and offer little access to training, CMS states in the regulation. The median annual wage for home health aides was $29,430 last year, and more than 40% of these workers relied on some type of public benefit program, according to a 2021 report by consulting group PHI.

Medicaid can boost home health access if states make the work more rewarding through better compensation packages and more training, according to CMS.

“It is to no one’s benefit to have a workforce that is turning over substantially,” Tsai said. “Doing this, we think, allows states to strengthen the value proposition for recruiting and retaining critical homecare workers,” he said.
CMS acknowledged that the rule is “narrowly tailored” and that a “significant investment” in the workforce needed to improve access to home- and community-based services is outside the scope of the regulation.
Congress passed a law last year increasing the federal Medicaid matching rate for home- and community-based services by 10%, but that funding stream expired March 31. Several states used the money for workforce initiatives. Legislation that would devote billions of dollars more to Medicaid home care is currently stalled.
“We look forward to seeing if there are additional investments offered by by Congress that we can work with states on to really strengthen invest in HCBS services,” Tsai said.
The new rule replaces a 2019 policy that required states to pay the full Medicaid rate to home health aides, which made health coverage and other benefits more costly and erected administrative barriers to enrollment, according to CMS. Labor groups viewed the 2019 policy as anti-union because it disallowed automatic payroll deductions for dues.

A federal court blocked the regulation in late 2020 after six states sued the federal government over the regulation. The new final rule closely mirrors the policy that had been in place since 2014.