Although many of the new Medicare and Medicaid provisions outlined in the One Big Beautiful Bill Act (OBBBA) will not take effect until 2026, home care providers are preparing for how the law — and how public perception of the law — will affect their businesses. Budget cuts to reduce the overall amount of Medicaid reimbursement from CMS are expected, and these reductions will have a domino effect on how providers make choices regarding investments, staffing, and services. Providers have begun taking steps to increase the efficiency of their operations in response to these forthcoming changes. Early strategies involve assessing current processes for day-to-day activities such as client paperwork and appointment scheduling, and making more deliberate use of advanced healthcare technologies, including AI tools and platforms. Providers are also keeping a close eye on regulation changes related to employment laws, and the possibility of federal reinstatement of the “companionship exemption.”
History
The companionship exemption (est. 1975) stated that home caregivers providing “companionship” services were exempt from Fair Labor Standards Act (FLSA) laws governing minimum wage and overtime. Such services were defined broadly as offering “fellowship, care, and protection,” including certain household tasks. Through this exemption, third-party home care provider businesses were able to operate on leaner staffing budgets.
However, in 2013 the federal government chose to end enforcement of the exemption, to narrow the definition of companionship services, and to prevent third-party home care providers from claiming the supportive funding. While several legal challenges followed, court decisions have upheld the change. Under the current administration, the Department of Labor has proposed rules that will roll the FLSA standards back to their 1975 interpretation and permit home care agencies to once again utilize the exemption.
Key Points
- Industry experts and business owners observe that there is a great deal of anxiety surrounding the changes to Medicaid, but that the actual effects may differ from expectations.
- Reimbursement rates, overtime laws, and minimum wage requirements vary from state to state, prompting different strategies for different regions.
- Reinstating the companionship exemption could be crucial to future operations planning. The exemption gives providers greater reimbursement flexibility to fund their workforce and allows more access to resources and services to the public.
- The companionship exemption would remove a requirement for overtime pay. And while a number of providers still intend to offer staff compensation that remains competitive, some are raising concerns over a waning workforce and the limited access to care that hinges on staffing.
Looking Ahead
Home care providers’ future planning continues to involve educating lawmakers to ensure that they understand the needs of both staff and patients. Organizations are inviting state representatives and senators to shadow a typical work day for an in-home caregiver to offer real-world context and illustrate the cost benefits to community-based home care. By painting a more thorough portrait of the work being done, providers aim to more effectively lobby their legislators for higher reimbursement rates and other adaptive provisions.