If PA Wants to Control Medicaid Costs, Home Care Must Be Part of the Budget

As Pennsylvania lawmakers negotiate the state budget, the Commonwealth’s home care crisis looms over the process as a growing, unresolved problem, and one that gets more expensive every year.  While an investment of $21 million was made last year to support 6% of the home care workforce, much more is needed to support the agency-directed home care system that more than 300,000 Pennsylvanians rely on. 

Home care agencies, where 94% of home care workers are employed today, have not seen an increase in years.  While all neighboring states increased Medicaid rates an average of 24% following Covid (since 2022), Pennsylvania has failed to act entirely.  The result: Pennsylvania pays 25-75% less than every surrounding state.  We are completely failing to support the recruitment and retention of workers in this field.  Without enough workers, Pennsylvania’s children, seniors and physically disabled residents are being left without care.

The reality is that when the home care system fails, as it is right now in Pennsylvania, costs don’t disappear; they explode.

Without a workforce to meet the growing need for care, more than 112,500 home care shifts go unfilled every month in Pennsylvania, and nearly 29% of authorized nursing hours for children cannot be staffed.  Equally concerning is that when care cannot be delivered at home, unmet needs often escalate into avoidable emergency room visits, hospitalizations, and nursing facility placement – shifting individuals from more cost-effective preventive care in the home to far more expensive institutional care.

Studies show that fixing this crisis will require a major investment. Several recent taxpayer-funded studies found that stabilizing Pennsylvania’s home care system would require a 23% Medicaid rate increase, requiring more than $800 million in new funding in the state budget. Those numbers are daunting, especially as Pennsylvania faces a structural budget deficit. However, the alternative for individuals that are served by this program is more costly institutionalization, such as nursing home and hospitalization stays. These alternatives remove a preferred option for individuals and is more costly for the state.

The reality is that Pennsylvania cannot afford not to invest in – and solve – our home care crisis.

In-home care is overwhelmingly the preferred method of care for seniors and families alike, and it costs about half as much as much as care delivered in a hospital, nursing home, or other institutional setting.  So, when Pennsylvania underinvests in home care, it doesn’t save the Commonwealth money; it merely shifts people into nursing facilities and hospitals, driving higher long‑term Medicaid spending. This is exactly the kind of cost growth fiscal conservatives rightly want to prevent.

State Rep. David Rowe, who is a leader on this issue, has emphasized that home care allows people to remain in their homes and communities and improves quality of life; he has also made clear that rate increases must be paired with strong program integrity, which we fully support.

Medicaid dollars are taxpayer dollars, and accountability matters. In Medicaid home and community‑based services, however, not all delivery models operate with the same level of built‑in oversight.

Licensed in-home care agencies operate under structured compliance systems designed to safeguard Medicaid dollars. Agencies recruit, credential, train, and supervise workers, verify services using Electronic Visit Verification, conduct billing and claims audits, maintain incident reporting systems, and operate under state licensure and regulatory oversight. Managed care organizations and regulators also have clear authority to audit agencies and recover improper payments when necessary.

Just as important, agencies provide a clear line of responsibility. When a visit is missed, documentation doesn’t match the plan of care, or a safety issue arises, there is a regulated entity legally required to investigate, correct the problem, and hold the agency accountable. That structure protects consumers, supports workforce stability, and gives lawmakers confidence that Medicaid dollars are being spent as intended.  That accountability is strengthened because agencies are financially incentivized to identify and report fraud, waste, and abuse – their claims, compliance standing, and future participation as providers are at risk if improper payments are identified. In models where agencies are not involved, financial claw backs are often severely limited. Pennsylvania should support models where reimbursement and fraud, waste, and abuse prevention are structurally aligned, creating a direct connection between payment, accountability, and program integrity.

We understand and appreciate the need to prevent fraud and protect taxpayer dollars, and increasing Medicaid reimbursement for licensed home care agencies advances both of those goals. It keeps people out of far more expensive institutional settings, strengthens oversight and accountability, stabilizes the workforce, and reduces long‑term pressure on the state budget.

In a difficult fiscal year, this isn’t about spending more, it’s about spending smarter.