Introduction

As the Biden administration continues to rally the support of the American people, its proposed policy changes have reached the medical and health care industry. Home health agencies, in particular, are sounding the alarm about a potential policy that could drive them out of business and drastically reduce their services and staffing. Let’s look at how this proposal might create a seismic shift in the industry and what can be done to mitigate the effects.

Biden Proposal for Higher Pay and Medicare Reimbursement

The proposal put forth by the Biden administration would require home health agencies to allocate the majority of their Medicaid dollars to direct care workers, which means paying workers higher wages. At face value, this looks like a positive move for healthcare staff who consistently work long hours and are often underpaid. However, it raises questions about the agencies’ ability to keep operations running if they no longer have financial flexibility.

Financial Shortfall May Force Agencies to Close

Should the proposal become a reality, it is estimated that home health agencies could face deficits of millions of dollars each year due to not being able to recover costs associated with the increase in wages. Although the pay increases are intended to help workers from all 50 states, it could spell disaster for the agencies’ bottom line, forcing them to either scale back operations or close down completely.

Conclusion

The Biden administration’s proposed policy regarding a higher pay requirement for direct care workers could have potentially disastrous consequences for home health agencies. For the agencies, this policy could mean being strapped for cash, unable to operate at full capacity, and potentially facing closure. While the higher wages are no doubt a positive step for workers, avenues must be explored to ensure that home health agencies are not driven out of business due to a lack of Medicaid dollars.

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