PHI Statement on CMS’s Deferral of Medicaid Payments to California
The Centers for Medicare & Medicaid Services has deferred $1.3 billion in Medicaid reimbursement payments to California, while issuing a six-month national moratorium on new Medicare enrollments for home health and hospice agencies and sending warning letters to all 50 states. These measures represent a significant escalation of the Administration’s targeting of state Medicaid programs, with clear and dire implications for the delivery of long-term services and supports (LTSS) and hospice care in every state.
Strong program integrity is critical to Medicaid—but withholding funding from a state Medicaid program is a blunt instrument that puts care itself at great risk. The deferral of federal funds threatens California’s ability to sustain the In-Home Supportive Services (IHSS) program and other home and community-based services (HCBS) that allow older adults and people with disabilities to remain safely in their homes. CMS’s simultaneous 50-state warning indicates that similar actions could follow elsewhere.
PHI is also concerned by narratives that conflate the necessary expansion of the home care sector with systemic abuse. As PHI has consistently documented, the rapid growth of the direct care workforce across the country is driven by surging demographic demand. Our growing population of older adults, combined with individuals living longer with complex conditions, increasingly requires paid care—and the majority of people prefer to age and receive services at home, a preference that has been supported by bipartisan policy choices. IHSS and similar programs are not only essential to making independent living a reality; they also offer a cost-effective alternative to nursing home care.
Direct care workers outnumber every other segment of the U.S. labor force, but remain among the most under-supported. Imposing broad financial penalties misses a critical opportunity to strengthen the LTSS sector. The most effective way to ensure that care is delivered effectively to all who need it is to invest in the direct care workforce— through better training, standardized credentials, and livable, competitive wages that simultaneously protect public dollars and program integrity while also elevating the quality of care.
Medicaid is structured as a federal-state partnership, and that partnership is the foundation on which the program’s stability rests. Unilateral federal actions that destabilize state Medicaid programs—whether in California or in any of the other states and jurisdictions now on notice—fundamentally alter that relationship, with lasting consequences for the people who provide and depend on these services. PHI urges the Administration to work with California and every state to identify where additional data collection or oversight might be needed to protect program integrity—recognizing that many statutory safeguards are already in place—without severely compromising the entire system itself. The Administration’s actions threaten the stability of the direct care workforce and the well-being of the millions who rely on them, and we urge a reversal of this course before they create far greater challenges than those they purport to address.
