“Each State’s Medicaid Program Reflects the Unique Needs of its Population, Making the One-Size-Fits-All 80/20 Rule Problematic:” Aaron Marcum’s Standpoint on the Challenges of Healthcare Reform

By Aaron Marcum, founder of Breakaway Home Care Accelerator

In response to growing demands for affordable care and better outcomes, the U.S. healthcare system is implementing significant changes towards increased accessibility, equity, and service efficacy. A critical component of this transformation is the revitalization of home- and community-based care (HCBC). This emphasis extends beyond quality of care, encompassing fair compensation for HCBC workers.

The Centers for Medicare & Medicaid Services (CMS) recently implemented the “Ensuring Access to Medicaid Services” rule. This initiative, at first glance, appears to be a major advancement in social reform. Aiming to direct increased funding towards healthcare with a focus on compassionate care, the rule presents a promising approach. However, the underlying complexity of this initiative necessitates further examination. Unforeseen consequences could potentially exacerbate existing challenges within the care industry. 

My analysis of the 80/20 rule is enriched by the invaluable insights of the Home Care Association of America (HCAOA) and several Medicaid HCBC providers. Their on-the-ground experience and nuanced perspectives on this complex issue have informed key aspects of this article.

Financial Mismanagement in the Name of Reform

Essentially, the 80/20 rule aims to tackle wage disparities, yet its approach is too narrow. By focusing solely on how Medicaid funds are allocated, it misses a crucial issue—the inadequacy of Medicaid reimbursement rates. Industry insiders are well aware that these rates hardly cover operational costs, making significant wage increases difficult.

With many providers operating on slim margins, the mandate of allocating 80% of funds to wages, though well-intentioned, isn’t a one-size-fits-all solution. Especially in areas with high living and care costs, this approach may not lead to effective compensation strategies.

Austerity as a Measure of Quality?

The 80/20 regulation is a severe and counterproductive restriction that jeopardizes the flexible allocation of resources. It’s worth noting that various service providers have successfully adjusted their expenditure to not only improve service quality but also increase workforce satisfaction. Nonetheless, this new mandate threatens to undermine these achievements by enforcing a rigid financial boundary. This overlooks the distinct demands and circumstances of different service populations and care environments.

The essence of quality in home- and community-based care lies within its capacity for innovation and flexibility. Imposing the 80/20 ratio may inadvertently introduce unnecessary restrictions, converting the quest for quality into a superficial compliance exercise. This shift could divert providers’ focus from substantive quality improvements to merely ticking off requirements.

Diminishing Doors of Access

The introduction of the 80/20 rule is expected to result in reduced services, particularly impacting rural and underserved communities where the implications of each provider’s decision are significantly magnified in terms of access. It’s important to note that funding adjustments don’t happen in a vacuum; they often come hand-in-hand with strategic cutbacks and realignments, potentially leading to restrictions on services and, in extreme cases, causing providers to leave the Medicaid space entirely.

This situation presents a paradox where the rule, intended to safeguard access, may inadvertently restrict it as providers navigate tighter financial constraints and the ripple effects on the availability of care. This scenario serves as a poignant illustration of the larger healthcare challenge: how to reconcile financial stewardship with a deep-seated commitment to support the most vulnerable populations.

Facilitating Shortages, Not Solutions

The CMS directive, aimed at enhancing the direct care worker (DCW) workforce by allocating a significant portion of funds to improve wages, unintentionally highlights a crisis—the shrinking pool of resources needed for developing a skilled and sustainable workforce. The importance of training, supervision, and career development in improving caregiver effectiveness is well-established. However, by focusing primarily on wage increases, the directive may overlook these fundamental aspects of professional development in the caregiving field. This oversight may lead to long-term consequences, where today’s investment in future caregivers could result in a shortfall of adequately prepared professionals. This generation of workers might enter the job market inadequately equipped for their roles, their potential hampered by financial regulations that overlook the comprehensive needs of the health human resources sector.

A Patchwork of Opposition

This federal initiative encounters practical challenges, leading to significant pushback from various states. Each state’s Medicaid program reflects the unique needs of its population, making the one-size-fits-all 80/20 rule problematic. This lack of flexibility could spark debates on implementation, resource allocation, and state autonomy, which could overshadow any benefits the CMS plan might offer. States, often seen as incubators for policy innovation and Medicaid reform, face a dilemma: adapt at potentially high costs or face penalties that could derail wider health policy objectives.

Solutions Beyond 80/20

The discussion around Medicaid funding and the economic impact of caregiver wages is undeniably important and deserves thorough attention. Yet, the current CMS rule risks being more of a blunt instrument than a catalyst for genuine improvement in an industry known for its complexity.

The key to real progress isn’t in top-down funding mandates, but rather in tackling the root problem: the low reimbursement rates that resonate through the healthcare system. Encouraging states to boost these rates, along with revitalizing the Federal Medical Assistance Percentage (FMAP), offers a straightforward strategy for a fairer and more stable care environment.

Here are five viable solutions for a more sustainable and sound healthcare reform approach:

1. Rethinking Reimbursement

The current Medicaid reimbursement structure creates a financial stranglehold, leaving HCBC providers with limited resources for wage increases. The first reconsideration should be a comprehensive analysis of operational cost drivers specific to HCBC delivery. This analysis should consider factors like geographic variations, service complexity, and staff qualifications. Based on this analysis, Medicaid reimbursement rates must be adjusted to a level that ensures financial solvency for providers, enabling them to offer competitive wages for DCWs. Secondly, explore alternative funding models that move away from a strictly per-service payment structure. Capitated payment models or bundled payment arrangements could incentivize cost-effectiveness while allowing providers more flexibility in resource allocation.

2. Risk-Adjusted Funding

This model considers the varying needs of different HCBC populations. For example, individuals with complex medical conditions or those residing in remote locations may require more intensive care and higher staffing ratios. A risk-adjusted model would allocate funding based on these assessed needs, ensuring resource allocation aligns with service delivery demands. Additionally, cost-effectiveness analyses should be conducted to evaluate the impact of different staffing models on quality of care outcomes. This data can then be used to inform optimal resource allocation strategies within the HCBC system.

3. Investing in the Workforce

While the 80/20 rule’s focus on wage increases is commendable, it presents a limited perspective on workforce development. Funding should be directed towards robust training and development programs to equip DCWs with the necessary skills and knowledge to deliver high-quality care. Furthermore, exploring career advancement opportunities within the HCBC field is equally important. Developing clear career pathways with opportunities for professional growth can attract and retain qualified caregivers, promoting a more stable and sustainable workforce.

4. State-Specific Solutions

Developing a framework for HCBC reform that allows for customization at the state level would be beneficial. This framework should establish core national standards while empowering states to tailor interventions to their unique circumstances. This may require collaboration between federal state agencies. Knowledge-sharing, joint program development, and the exchange of best practices can lead to more effective implementation strategies and avoid unnecessary burdens for states.

5. Data-Driven Evaluation

Continuous monitoring and evaluation of reform initiatives are crucial for long-term success. This evaluation should assess the impact of policy changes on service access, workforce development, quality of care outcomes, and cost-effectiveness. Data-driven insights gleaned from these evaluations can then be used to refine reform efforts, ensuring that HCBC programs remain sustainable and meet the evolving needs of the population they serve.

In Closing

The CMS’ “Ensuring Access to Medicaid Services” rule is driven by commendable objectives aimed at enhancing the caregiving profession and improving healthcare accessibility. Nonetheless, its implementation faces significant challenges due to budgetary shortsightedness and bureaucratic rigidity, potentially triggering a series of adverse effects that might compromise the quality and accessibility of healthcare services.

Addressing these challenges requires acknowledging that healthcare is an evolving journey rather than a fixed target. Within this context of reform, it is imperative to prioritize the perspectives of healthcare providers, payers, and particularly patients. Their diverse, occasionally conflicting, but fundamentally human experiences must shape our policy-making and system development processes.

This rule represents an urgent call to critically evaluate our healthcare priorities and the policies implemented in their pursuit. Our ultimate goal should be to navigate towards the most empathetic and effective strategies that promote a healthier and more equitable society.

About the Author

Aaron Marcum is a renowned figure in the home care industry, celebrated for founding Home Care Pulse in 2008, and more recently the transformative Breakaway Home Care Accelerator. With a Master of Applied Positive Psychology from the University of Pennsylvania, Aaron combines his entrepreneurial expertise with principles of positive psychology.

The innovative Breakaway Accelerator for Home Care program guides home care business owners towards exponential growth and personal freedom. Aaron is also the author of the best-selling book “EntreThrive,” which outlines his unique approach to achieving entrepreneurial success and well-being.

error: Content is protected !!