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Federal Register / Vol. 86, No. 146 / Tuesday, August 3, 2021 / Proposed Rules
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When Congress adopted the original version of this statute in 1972, it was focused on the practice of factoringa practice which often led to the submission of inflated or false claims, raising concerns that the factoring industry was a breeding ground for Medicaid fraud.5 When Congress amended this provision in 1977, it reiterated that it understood the provision simply as a response to and an attempt to prevent factoring. Indeed, in 1977, Congress amended the antireassignment provision to close what it perceived to be a loophole that factoring companies were exploiting.6 This legislative history supports our proposed interpretation of the statutory prohibition as extending only to assignments and assignment-like arrangements that involve a potential for the type of abuse that the statute was intended to prevent.
With respect to classes of practitioners for whom the states Medicaid program is the only or primary payer, the ability of the state to ensure a stable and qualified workforce may be adversely affected by the inability to deduct from Medicaid payments at the request or with the consent of a provider in order to make separate payment to a third party on behalf of the provider. Deductions for these purposes are an efficient and effective method for ensuring that the workforce has provisions for basic needs and is adequately trained for their functions, thus ensuring that beneficiaries have greater access to such practitioners and higher quality services. Requiring practitioner consent for such deductions ensures Medicaid provider payments are treated appropriately, and in a manner consistent with the wishes of the practitioner, for purposes of receiving benefits such as health insurance, skills training, and other benefits customary for employees.
Although we propose that these deduction practices fall outside the scope of what the statute prohibits, we consider it important to document the flexibility in regulation to ensure confidence in the provider community, particularly for front line workers 5 See, for example, H.R. REP. NO. 92231, at 104
1972, reprinted in 1972 U.S.C.C.A.N. 4989, 5090;
H.R. REP. NO. 92231, at 205, reprinted in 1972
U.S.C.C.A.N. at 5090; S. REP. NO. 921230, at 204
S. REP. NO. 921230, at 204 1972; Professional Factoring Service Association v. Mathews, 422 F.
Supp. 250, 25152 S.D.N.Y. 1976.
6 See, for example, H. REP. NO. 95393II, at 43, reprinted in 1977 U.S.C.C.A.N. at 3045; H. REP. NO.
95393II, at 46, reprinted in 1977 U.S.C.C.A.N. at 3048; H. REP. NO. 95393II, at 4849 1977, reprinted in 1977 U.S.C.C.A.N. 3039, 3051; S. REP.
NO. 95453, at 68 1977.

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during the Coronavirus Disease 2019
COVID19 pandemic. Within broad federal Medicaid law and regulation, CMS has long sought to ensure maximum state flexibility to design state-specific payment methodologies that help ensure a strong, committed, and well-trained work force. Currently, certain categories of Medicaid covered services, for which Medicaid is a primary payer, such as home and personal care services, suffer from especially high rates of turnover and low levels of participation in Medicaid which negatively impact access to and quality of providers available to Medicaid beneficiaries.7 These issues often result in higher rates of institutional stays for beneficiaries. This proposed rule would support previous CMS efforts to strengthen the home care workforce by specifying what actions are permitted, to help foster a stable and high-performing workforce.8 Under our proposed amendment to 447.10, state Medicaid programs would be permitted, as authorized under state law and with the consent of the individual practitioner, to deduct from the practitioners reimbursement in order to pay third parties for health and welfare benefit contributions, training costs, and other benefits customary for employees.
In late 2017, we requested input from states indicating whether they had implemented the types of payment arrangements permitted under 447.10g4 after publication of the 2014 final rule. Of the states that voluntarily responded to CMS, we found that some states had entered into third party payment arrangements on behalf of individual practitioners, while others had not. This input is the most current state stakeholder feedback we have; therefore, we anticipate the impact of such payment arrangements to be positive for both states and practitioners. For states, the third-party payment arrangements authorized by this proposed rule would be optional and if a state chooses to implement them, then states can use existing administrative processes to make deductions, with consent of the individual practitioner, from a practitioners Medicaid reimbursement for benefits. For practitioners, this proposed rule will enhance the ability of the practitioners, regardless of their employment arrangement, to perform their functions as health care
professionals, and thus, support beneficiary access to quality home health care. The Medicaid program, at both the state and federal levels, has a strong interest in ensuring the development and maintenance of a committed, well-trained workforce.
With the majority of LTSS
expenditures spent on HCBS, rather than institutional services, the importance of a strong home care workforce in Medicaid cannot be understated. Under section 9817 of the American Rescue Plan, we continue to reinforce the importance of HCBS in Medicaid and during the COVID19
pandemic by providing a temporary 10
percentage point increase to the federal medical assistance percentage for certain HCBS delivered by home care providers, as these services are crucial to some of the most vulnerable individuals in our country. The proposed rule would help protect the economic security for home care providers. The ability of home care providers to choose how deductions are made is critically important to improvements in workforce standards.
Moreover, since the majority of home health care workers are women and people of color,9 permitting this type of payment arrangement will directly benefit those populations and address inequities.
Further, the increasing shortage of home care providers due to high turnover, low participation in Medicaid, low wages, and lack of benefits and training has significantly reduced access to home health care services for older adults and people with disabilities.
State Medicaid agencies can play a key role in increasing such access by improving workforce stability of these practitioners by addressing training, wages and benefits, and provider reimbursement.10 Under this proposed rule, state Medicaid agencies would be authorized to deduct from a practitioners Medicaid payment, with the consent of the individual practitioner, in order to pay a third party on behalf of the individual practitioner for benefits that provide the workforce with freedom to advocate for higher wages and career advancement, access necessary trainings, and options for other customary employee benefits.
States typically have an established administrative process for their own employees deductions for benefits that
7 Kim J. 2020. Occupational Credentials and Job Qualities of Direct Care Workers: Implications for Labor Shortages. Journal of labor research, 118.
Advance online publication. https doi.org/
10.1007/s12122-020-09312-5.
8 https www.medicaid.gov/federal-policyguidance/downloads/cib080316.pdf.

9 https www.kff.org/coronavirus-covid-19/event/
march-30-web-event-unsung-heroes-the-crucialrole-and-tenuous-circumstances-of-home-healthaides-during-the-pandemic/.
10 https www.medicaid.gov/medicaid/long-termservices-supports/downloads/ltss-rebalancingtoolkit.pdf.

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