American Rescue Plan Act: Medicaid HCBS Rate Reform Initiative

Supporting quality, cost-effective care

A 5% rate increase for home and community-based services was rolled out to eligible programs starting January 1, 2022. It  It applies to multiple service providers in Medicaid programs such as:

  • BadgerCare Plus Managed Care
  • Care4Kids
  • Children Come First
  • Children’s Long-Term Support (CLTS) Waiver
  • Family Care
  • Family Care Partnership
  • IRIS (Include, Respect, I Self-Direct)
  • Medicaid fee-for-service state plan services
  • Program of All-Inclusive Care for the Elderly (PACE)
  • SSI Managed Care
  • Wraparound Milwaukee

Wisconsin’s frail elders and people of all ages with disabilities rely on HCBS to meet their daily needs. These services are a cost-effective alternative to higher-cost institutional services, such as nursing home placements and hospital services. Higher reimbursement rates allow providers to recruit staff and maintain these vital care supports.

Note that IRIS participants can use these funds to increase wages for participant-hired workers. Learn how the funding impacts IRIS participants, service providers, and consultant agencies. 

Frequently asked questions

What is the current status of the Medicaid HCBS rate reform initiative?

DHS sought approval from the state Joint Finance Committee for the 5% increase to Medicaid home and community-based services (HCBS) providers to address the staffing shortage in the direct care workforce and strengthen members’ access to services. Since no committee members raised any objections by the due date of December 10, 2021, the increase took effect on January 1, 2022 for most eligible programs. For others, such as IRIS, the increase took effect on January 9, 2022. The overall rate increases for the specified services are projected to total $156.3 million annually. Funds for this 5% rate increase are currently available until March 2024.

What is the funding source for this increase?

The American Rescue Plan Act gives states an additional 10% federal medical assistance percentage for HCBS expenditures claimed between April 2021 and March 2022. Wisconsin’s plan for these dollars includes a 5% rate increase for HCBS services effective January 1, 2022. This proposal would not cause an increase or decrease to the 2021-23 biennium Medicaid budget.

What services will receive the increase?

The 5% increase would apply to 42 service categories across Family Care, Family Care Partnership, IRIS (Include, Respect, I Self-Direct), PACE (Program of All-Inclusive Care for the Elderly), Children’s Long-Term Supports (CLTS) Waiver, SSI Managed Care, BadgerCare Plus Managed Care, and Medicaid fee-for-service state plan services:

  • Adult day care service
  • Alcohol and other drug abuse (AODA)
  • AODA day treatment
  • Assistive technology/communication aid
  • Behavioral treatment services
  • Care management for Care4Kids
  • Care management for children with medical complexities
  • Care management in fee-for-service
  • Consultative clinical and therapeutic services for caregivers
  • Consumer-directed supports (self-directed supports) broker
  • Consumer education and training
  • Counseling and therapeutic
  • Environmental accessibility adaptations (home modifications)
  • Financial management services
  • Habilitation services (daily living skills training and day habilitation resources)
  • Home delivered meals
  • Home health services
  • Housing counseling
  • Medication therapy management
  • Mental health day treatment
  • Mental health services
  • Nursing (in-home)
  • Occupational therapy (in-home)
  • Personal care
  • Physical therapy (in-home)
  • Prenatal care coordination
  • Prevocational services
  • Residential care
  • Residential substance use disorder treatment.
  • Respiratory care
  • Respite
  • Self-directed personal care
  • Skilled nursing services (RN/LPN)
  • Speech and language pathology services (in-home)
  • Supported employment - individual employment support
  • Supported employment - small group employment support
  • Supportive home care (SHC)
  • Training services for unpaid caregivers
  • Transportation (specialized transportation) - community transportation
  • Transportation (specialized transportation) - other transportation
  • Transportation 107.23
  • Vocational futures planning and support (VFPS)

How will providers receive this additional funding?

DHS will increase the Medicaid fee-for-service and Children’s Long-Term Support Program fee schedules for all eligible services starting January 1, 2022. Managed care entities will be required to increase their provider rates for qualified services by 5% for services provided starting January 1, 2022. Finally, the IRIS program will also be eligible for the 5% increase—DHS is meeting with IRIS stakeholders to plan the implementation of that increase.

Why is this increase needed?

Like all health care and long-term care providers, HCBS providers have faced increasing challenges recruiting and retaining qualified staff and maintaining access for members. The 2021-23 biennial budget provided much-needed support for the Medicaid HCBS workforce. Increased investments for personal care providers, behavioral treatment services for individuals with autism and other disorders, home health, therapeutic services, Family Care providers, and the Family Care direct care workforce funding initiative take effect January 1, 2022.

However, the state’s population aged 65 and older is expected to grow by 640,000, or 72%, between 2015 and 2040, according to the Governor’s Taskforce on Caregiving. Providers should expect rising labor costs in the future as the demand for long-term care services is projected to outpace workforce growth. Home and community-based services are a cost-effective alternative to nursing home placements, hospital services, and other higher-cost institutional services. A sustainable reimbursement system that supports HCBS providers is essential to maintain this vital care system.

Last Revised: March 15, 2022