How Proposed Medicaid Cuts Could Impact Home Care Providers and HCBS Services

The conversation around potential Medicaid funding cuts is heating up — and while the headlines often focus on "healthcare" at large, it's critical to understand how those cuts would land squarely on home care providers and the clients who depend on them.

For agencies delivering Medicaid-funded home and community-based services (HCBS) — including personal care, attendant care, structured family caregiving, and more — these cuts would directly affect agency cash flow, service capacity, caregiver retention, and client access to care.

Here’s what providers should be paying attention to.

Why Home Care is at Risk

Medicaid funds an estimated 61 percent of all long-term care services in the U.S., and a growing share of those services are delivered in the home. Many states have shifted toward home-based care to better meet consumer needs and reduce system costs.

But with proposed federal Medicaid cuts exceeding $600 billion, the very services that help individuals remain safely at home could be scaled back.

Key risks for home care providers include:

• Tighter service eligibility, resulting in fewer clients approved for HCBS waivers or personal care services.
• Lower reimbursement rates, which can erode agency margins and limit caregiver wage growth.
• Delayed or denied payments as states respond to budget constraints.
• Increased audit and compliance pressures.

The Impact on Home Care Agencies

For agencies providing Medicaid personal care services, these risks are very real.

Agencies could face:

• Delays in service authorizations and care plan approvals, leaving clients without needed care.
• Cuts to authorized hours, reducing billable revenue.
• Rate freezes or reductions that do not keep pace with caregiver wage expectations.

In an industry already facing staffing shortages, these pressures make it harder to retain and attract caregivers. Smaller agencies with thinner margins could face financial instability or closure.

The Ripple Effect on Clients and Families

Medicaid-funded home care is the only affordable option for many low-income older adults and individuals with disabilities who want to remain at home. Without this coverage:

• More clients may be forced into institutional care settings, often at higher cost to the system.
• Family caregivers may face increased unpaid care demands with fewer formal supports.
• Disruptions in care continuity and workforce stability could reduce care quality.

Cuts to Medicaid would shift more of the burden onto families and communities already stretched thin.

What Home Care Agencies Can Do Now

While national Medicaid funding decisions are ongoing, home care agencies can take proactive steps:

1. Stay informed about proposed Medicaid changes at both the federal and state levels.
2. Engage in state-level advocacy efforts through home care and provider associations.
3. Strengthen billing and compliance processes to reduce denials and payment delays.
4. Explore opportunities to diversify revenue sources and payer mix.
5. Prepare staff and caregivers for potential changes to authorizations, hours, and reimbursement rates.

The Bottom Line

Medicaid cuts would not just impact healthcare broadly. They would have a direct and immediate effect on the home care industry — on agencies, caregivers, and the clients and families who rely on this care every day.

Now is the time for providers to stay informed, prepare operationally, and actively participate in advocacy efforts to ensure that essential home and community-based services remain funded and accessible.