Home and community-based services (HCBS) providers operate in a difficult labor market and must manage rising wage pressure and high day-to-day costs. Thankfully, some states have begun raising Medicaid payment rates to help stabilize the workforce. And a federal transparency mandate is set to add another layer of visibility—and potential influence—to how those rates evolve.
Under the new reporting requirements outlined in CMS’ Ensuring Access to Medicaid Services final rule, states must publicly report Medicaid HCBS payment rates beginning in July, create advisory groups to review whether those rates are sufficient, and ensure that at least 80% of payments for certain homecare services go toward direct care worker compensation by 2030.
These provisions will reshape the evaluation of reimbursement data. Homecare agencies should understand the implications and start planning now to keep operations stable and support growth.
Recent KFF survey data highlights current pressures on the HCBS industry. Nearly every state reports an ongoing shortage of caregivers. In response, most states raised payment rates as part of workforce retention strategies.
Despite these increases, the data shows clear variations between regions. Where reported, current median payment rates remain inconsistent, with personal care rates below $20 per hour in many states. This financial strain is evident. Permanent homecare provider closures happening across the country underscore the need for structural improvements to agency funding.
CMS’ Ensuring Access to Medicaid Services final rule stipulates that states must publish hourly payment rates for personal care, homemaker, home health aide, and rehabilitation services. In addition to segmenting them by provider types and geographical regions, reports must include the number of Medicaid enrollees receiving these services and total claims volume.
This data should reveal exactly how states reimburse for HCBS, laying the groundwork for future rate setting and staffing strategy. For the first time, providers and payers will have a systematic way to compare payment rates across different regions and services. Providers will need tools to organize and interpret this information. That is where homecare management systems can help. Agencies can use it to track reimbursement data, monitor payment, and align operational decisions with changing state rate structures.
It’s important to recognize that while 80% of Medicaid payments must go to direct care worker compensation by 2030, the requirement will be phased in over time. Instead of treating 2026 as a deadline for this provision, providers can use the newly published data in 2026 to assess how payments flow within their specific states and then plan accordingly.
Preparing now will ensure compliance with the rule is second nature by 2030. Providers looking to get ahead in 2026 should be aware of these implications:
1. Transparency could increase competitive pressure: With state rates published, agencies will be able to benchmark service rates and wage structures openly. It’s now possible to advocate for meaningful rate changes armed with actual state data.
2. Workforce alignment—rates vs. reality: Even though states have raised rates to ease wage pressures, those increases don’t automatically lead to higher pay for workers. Providers should review their salary scales and make long-term compensation plans. Tracking labor costs and compensation levels in real time ensures reimbursement increases are reflected in caregiver wages and support financial stability.
3. Managed care and fee-for-service linkages: Many states rely on managed care models, but fee-for-service (FFS) rates often serve as the benchmark that influences what managed care plans pay providers. This connection makes it important to monitor FFS and managed care contract clauses tied to state rate changes to protect agency margins.
4. Benchmarking opportunity for provider advisory input: States will establish Interested Parties Advisory Groups (IPAGs) — consisting of providers, direct care workers, and enrollees — to advise on payment sufficiency. Industry leaders who engage early have the opportunity to help shape future rate increases in their states.
5. Prepare for state variation: Knowing the KFF data underscores significant differences in how states compensate for HCBS, providers operating across multiple states should tailor their strategies regionally to account for these variations.
The HCBS industry’s first year of formal rate transparency will likely require an adjustment period. However, the new mandate will heavily impact future funding and workforce policies, so it’s crucial to understand the data and communicate clearly about what it means and how it’s being used. Technology platforms like HHAeXchange can play an important role in helping providers track reimbursement trends, manage workforce costs, and adapt quickly to new regulatory requirements.
We’re here to support your preparation efforts. Secure your agency’s future by building the right processes today.
See More Blog