Supporting Healthy Aging Through Strong HCBS Rate Setting
Healthy aging is about more than longevity, it’s about helping older adults live independently, stay connected to their communities, and maintain a high quality of life. Learn how strong HCBS rate setting can help support access to the services that make those outcomes possible.
Key Takeaways
Home and community-based services (HCBS) play a vital role in helping older adults age safely and independently, reducing reliance on institutional care while improving their quality of life. Sustainable and data-driven Medicaid rate setting is crucial for ensuring provider capacity, supporting the direct care workforce, and addressing the growing demand for long-term services as the aging population continues to increase.
September is National Healthy Aging Month, a time to focus on improving health, independence, and quality of life as we age. For many older adults, healthy aging means remaining in their homes and communities for as long as possible while receiving the services and supports they need.
As the population ages and demand for LTSS increases, HCBS have become a cornerstone of Medicaid programs nationwide. These services allow seniors and individuals with disabilities to receive care in less restrictive settings rather than institutional facilities.
Behind the success of HCBS programs is a critical but often overlooked component: Medicaid rate setting. Sustainable, data-driven reimbursement methodologies help ensure that providers can deliver quality care while protecting taxpayer resources.
Growing Demand for Home and Community-Based Services
Research continues to demonstrate the growing importance of HCBS in meeting the needs of older adults. As the Baby Boomer generation ages, LTSS needs are more common, demand for in-home and community-based care is expected to increase significantly.
HCBS programs support a wide range of services that help individuals maintain independence, including:
The Centers for Medicare & Medicaid Services (CMS) reported that Medicaid HCBS enrollment continues to grow while institutional utilization remains relatively stable. At the same time, HCBS now accounts for the majority of Medicaid LTSS spending, reflecting both consumer preferences and state efforts to expand access to community-based care. For seniors, these services often mean greater independence, improved health outcomes, and the ability to remain connected to family and community.
Why HCBS Rate Setting Matters
As HCBS demand grows, states must ensure that payment rates remain sufficient to support a stable provider network and an adequate direct care workforce.
Effective HCBS rate setting helps states:
Medicaid is the primary source of revenue for many HCBS service providers. Without adequate reimbursement, providers may struggle to recruit staff, expand services, or meet increasing demand, potentially limiting access to services for vulnerable populations.
Key HCBS Rate Setting Challenges
While the goals of HCBS reimbursement are straightforward, developing sustainable rates can be complex. States commonly face three major challenges:
- Workforce and Wage Pressures. Direct care worker compensation represents one of the largest cost components in HCBS rates. Ongoing workforce shortages, turnover, and wage competition make it difficult for states to establish reliable assumptions and maintain rates that reflect current market conditions.
- Accounting for Client Acuity. Individuals receiving HCBS have varying levels of need. Some require limited assistance, while others need intensive supports due to complex medical, behavioral health, or functional conditions.
Rate methodologies that do not adequately account for differences in acuity can create financial challenges for providers serving high-need populations and may impact access to care for the most vulnerable beneficiaries. - Balancing Budget Constraints and Federal Requirements. States must balance finite Medicaid resources with federal requirements that rates be sufficient to ensure adequate provider participation and beneficiary access. Achieving this balance requires careful analysis, stakeholder engagement, and defensible reimbursement methodologies.
Supporting Sustainable HCBS Programs
As HCBS programs continue to expand, strategic rate setting practices play an essential role in strengthening access to care, supporting providers, and improving outcomes for older adults.
At Myers & Stauffer, we help state agencies develop reimbursement strategies that are transparent, data-driven, and aligned with program goals. Our teams provide expertise in:
By combining technical expertise with a deep understanding of Medicaid financing, we help states build sustainable HCBS systems that support healthy aging, strengthen provider networks, and protect taxpayer dollars.
As Healthy Aging Month reminds us, helping older adults remain healthy, independent, and engaged in their communities requires more than quality services alone. It also requires thoughtful policies and sustainable funding strategies that ensure those services remain available for years to come.
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Dan Brendel
Principal
Email: dbrendel@mslc.com
Phone Number: 317-815-5492
Krista Stephani, CPA
Member
Email: kristas@mslc.com
Phone Number: 208-378-1400
Megan Frenzen, MSc, MBA, PhD
Principal
Email: meganfrenzen@mslc.com
Phone Number: 916-957-6350