Financing

Medicaid is the nation’s largest payer of long-term services and supports (LTSS) and key funder of the direct care workforce. This research examines Medicaid LTSS spending and other opportunities to strengthen financing of the direct care workforce.

Federal Resources

• Engaging Stakeholders in the Rate Setting Process— Describes stakeholder engagement for the 1915(c) Home and Community-Based Services (HCBS) waiver rate setting process (Centers for Medicare & Medicaid Services) 
• Cost Factors and Rate Assumptions Template— Explains the tool that states may use when documenting fee schedule rate setting methodologies (Centers for Medicare & Medicaid Services) 
• Trends in Rate Methodologies for High-Cost, High-Volume Taxonomies— Reviews the top five taxonomy categories and common rate setting methodologies, along with notable approaches unique to those categories, and other rate setting considerations (Centers for Medicare & Medicaid Services)
• Tiered Rates: Trends in Acuity-Based and Geography-Based Rate Variation— Defines two common types of tiered rate variants in home- and community-based services, fee for service environment and discusses common methods used and considerations regarding tiered rates, based on Rate Contractors’ experience in reviewing 1915(c) waiver applications (Centers for Medicare & Medicaid Services) 
• Ensuring Rate Sufficiency: Rate Review and Revision Approaches— Identifies various approaches to determine if existing rates are sufficient to meet Social Security Act §1902(a)(30)(A) requirements and reviews state options for updating waiver service payment rates upon determining rate insufficiency (Centers for Medicare & Medicaid Services) 
• HCBS Waiver Rate Setting: Data Validation— Explains common ways for states to identify data to validate 1915(c) waiver service rate setting assumptions and basic approaches to collecting provider cost data to support a state’s review of waiver rates (Centers for Medicare & Medicaid Services) 
• HCBS Waiver Rate Setting: Use of Inflation Factors— Explains how to apply concepts of inflation to the rate setting process, including Consumer Price Index overview, the impact of inflation on rates, and limits to using inflation indices (Centers for Medicare & Medicaid Services)  
• Documentation of Rate Setting Methodology— Explains rate-setting instructions and guidelines related to completing Appendix I-2-a in the waiver application and the five types of common rate setting methodologies and how to document them effectively (Centers for Medicare & Medicaid Services) 
• Fee Schedule HCBS Rate Setting: Developing a Rate for Direct Service Workers— Demonstrates a fee schedule rate setting methodology in detail by setting a rate for direct service professionals and reviews factors to be considered (Centers for Medicare & Medicaid Services) 
• Wages of Direct Care Workers Lower Than Other Entry-Level Jobs in Most States Issue Brief— Presents results of a descriptive analysis comparing state-level median wages of direct care professionals with median wages of workers employed in other entry-level jobs (Office of the Assistant Secretary for Planning and Evaluation, 2023)

Other Resources

• Addressing Wages of the Direct Care Workforce Through Medicaid Policies— Highlights states’ short- and long-term actions to address recruitment and retention through their Medicaid policies (National Governors Association, 2022)
• Alternative Funding Models for People With Intellectual and Developmental Disabilities (IDDs): Quality Outcomes and Measurement Metrics— Recommendations for goals and outcomes related to long-term services and supports for people with I/DD (The Council on Quality and Leadership, 2020)
• Paying Family Caregivers Through Medicaid Consumer-Directed Programs: State Opportunities and Innovations— Explores how three states developed Medicaid-funded consumer-directed care programs that allow family members to be hired as caregivers (National Academy for State Health Policy, 2021)
• Value-Based Payment in New York: Assessing Progress on Integrating the Home Care Workforce— Case study with home care agencies and Workforce Investment Organizations in New York City to examine Medicaid value-based payment in home care, the impact of COVID-19, and state budget changes (PHI, 2020)
• The End of Pandemic-Era Medicaid Funding Threatens Key Investments in the Direct Care Workforce— Article that addresses challenges faced by the direct care workforce worsened by COVID-19 and how to sustain progress made after American Rescue Plan temporarily boosted Medicaid funding, improving wages and support (Health Affairs Forefront, 2024)