Navigating Medicaid Challenges in 2025: A Provider's Guide to Success

This blog post draws from Paradigm's recent webinar featuring Damon Terzaghi, Senior Director of Medicaid Advocacy at the National Alliance for Care at Home, who shared the following federal Medicaid updates with attendees on December 5, 2024. Below, we’ve summarized key takeaways and actionable advice from the session to help you navigate these important updates in the home care industry.

As the landscape of Medicaid funding and regulation continues to evolve, home care providers are facing both opportunities and challenges. From legislative advocacy efforts to federal rule changes and expiring funding programs, the path forward requires a strategic approach to ensure the viability of home and community-based services (HCBS).

Regulatory “Ping-Pong” and What to Expect

The regulatory landscape is set to remain dynamic. Provisions of the Biden administration’s Access Rule, along with other regulations such as Medicaid managed care rules and ACA nondiscrimination requirements, are likely to be rescinded or revised under the incoming administration.

While this could reduce administrative burdens for providers, the potential for future reimplementation means that ongoing vigilance is necessary.

What’s Next for the Medicaid 80/20 Rule?

The controversial CMS Access Rule— part of which would require 80% of Medicaid payments to go to direct care worker compensation—dominated discussions in 2024.  

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Here’s the current outlook:

• The 80/20 rule will likely be repealed under the new administration.
• However, CMS remains concerned about access to home and community-based services (HCBS).
• Providers should expect ongoing discussions about addressing workforce shortages and service accessibility.  

While the 80/20 rule may be eliminated, several beneficial provisions from the Access Rule could remain in place:

• New protections against arbitrary rate cuts, requiring states to meet specific criteria before reducing payment rates.
• Creation of Interested Party Advisory Councils to evaluate payment rates every two years.
• Enhanced transparency requirements for waiver waiting lists and service access.
• Improved quality reporting systems focused on participant-level outcomes.

Feedback from providers remains crucial—your insights could shape the industry's position on these critical issues.

Impact of Expiring Federal Medicaid Funding

With the phase-out of enhanced federal funding from programs like the American Rescue Plan Act (ARPA), states are grappling with how to maintain HCBS funding levels. Providers should prepare for potential funding declines as states weigh whether to increase their financial contributions or reduce program expenditures.

This shifting financial landscape makes it imperative for providers to:

• Demonstrate the cost-effectiveness of home care as an alternative to institutional care.
• Engage state Medicaid agencies with data-driven proposals to maintain—and even grow—your role within the HCBS ecosystem.
  

Medicaid Cuts: Still an Opportunity for Providers?

Despite looming federal cuts, Medicaid remains a vital business opportunity for home care providers. Damon outlined three scenarios—modest, medium, and substantial reductions—and how agencies can respond:

• Modest Cuts: States will look for cost-effective care models. Home care is more affordable than institutional care—position your agency as a solution.

• Medium Cuts: If caps on spending emerge, states will need to reduce costs per patient. Highlight home care’s role in reducing hospitalizations and improving outcomes.

• Substantial Cuts: Even with block grants, states will have flexibility. Advocate for deinstitutionalization and showcase home care as the answer to budget constraints.
  

Getting Involved and Advocate for Change

For providers ready to make an impact, advocacy at both the state and national levels is a powerful place to start. Damon emphasized the importance of engaging with state home care associations and the National Alliance for Care at Home, which work directly with federal advocacy groups to amplify providers’ voices.

Steps to Get Involved:

• Connect with a home care association—this could be a national organization like The National Alliance for Care at Home or a local state association. Here is a helpful list.

• Offer your insights—agencies and advocacy groups value real-world input from providers.

• Reach out to Paradigm if you’re unsure where to start. We can help connect you to the right resources.
  

Preparing for 2025 and Beyond

The focus for 2025 will likely be on maintaining stability rather than pursuing major expansions. However, providers who can demonstrate their value in delivering cost-effective, high-quality care will find continued opportunities in Medicaid home care services.

For providers seeking to get more involved in advocacy efforts or needing guidance on navigating these changes, state home care associations and organizations like the National Alliance for Care at Home offer valuable resources and connections.

Remember: While the regulatory environment may be changing, the fundamental value proposition of home care remains strong. By staying informed, engaged, and focused on demonstrating your value, your agency can continue to thrive in the evolving Medicaid landscape.

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