This article was originally published on LinkedIn.
For home care organizations delivering certain Medicaid-funded services, new federal reporting requirements are bringing direct care worker compensation into sharper focus.
On October 9, 2026, the Centers for Medicare & Medicaid Services (CMS) released guidance and technical specifications explaining how states must report the percentage of Medicaid payments spent on direct care worker compensation for certain home- and community-based services (HCBS).
The requirements were established under the 2024 Ensuring Access to Medicaid Services final rule, commonly known as the Medicaid Access Rule.
Although states won’t begin submitting annual reports until 2028, the first reporting cycle is expected to cover compensation data from 2027.
For affected home care providers, that timeline makes the new guidance worth understanding now.
What Do the New Requirements Cover?
Under the Medicaid Access Rule, states must report the percentage of Medicaid payments for certain homemaker, home health aide, personal care and habilitation services that is spent on direct care worker compensation.
According to the CMS State Medicaid Director Letter issued October 9, the reporting requirement applies to qualifying services authorized under Sections 1915(c), 1915(i), 1915(j), 1915(k) and 1115 of the Social Security Act.
Not every Medicaid-funded service falls under these requirements. For example, state plan services authorized under Section 1905(a) are excluded, as are certain self-directed arrangements in which the beneficiary serves as the employer and sets the worker’s payment rate. Services provided through Indian Health Service and Tribal health programs are also excluded from the calculation.
CMS bases applicability on how services are defined, rather than simply what a state calls them. Providers should therefore confirm which services are subject to reporting in the states where they operate.
The requirements apply to qualifying services delivered through both Medicaid fee-for-service and managed care arrangements.
What Information Must Be Reported?
CMS requires states to calculate the proportion of Medicaid payments for covered services that goes toward direct care worker compensation.
CMS defines direct care worker compensation to include qualifying wages, overtime and employee benefits. The agency’s technical specifications also address which employer payroll taxes may be included in the calculation.
Not every expense qualifies. The technical specifications establish rules for determining which payments and compensation costs should be included.
States must report the information separately by covered service category and provide additional breakdowns for specified service arrangements.
While state Medicaid agencies are responsible for submitting the information to CMS, providers may need to supply the underlying financial and compensation data.
The Home Care Association of America (HCAOA) has advised agencies serving Medicaid clients to communicate with their state Medicaid authorities about anticipated data collection requirements.
Why the 2027 Timeline Matters
The new reporting requirements take effect July 9, 2028, with the first annual state reporting window expected to open around September 1, 2028, and close around December 31, 2028.
However, the first state reports are expected to use compensation data from January 1 through December 31, 2027.
As outlined in the CMS reporting guidance, states must also provide an update by July 9, 2027, describing their readiness to collect the required information for covered services under fee-for-service and managed care delivery systems.
These dates apply to states, not directly to individual home care agencies.
States will determine how they collect the necessary information from providers. According to HCAOA’s analysis, state Medicaid agencies are expected to establish their own provider submission timelines so they have sufficient time to review and aggregate the data before reporting to CMS.
For home care organizations, the important distinction is that the first measurement period covers 2027, even though states won’t submit their initial annual reports until 2028.
What Should Home Care Providers Do Now?
Because reporting procedures will be developed and administered at the state level, affected providers should seek guidance from the Medicaid agencies responsible for overseeing their services.
HCAOA recommends that agencies contact their state Medicaid authorities or the agencies overseeing HCBS programs to understand which services are covered and how the reporting process will work.
Providers can ask about anticipated data collection procedures, submission timelines and whether their states plan to introduce specific reporting tools.
Organizations can also review their existing payroll and financial records to understand where relevant compensation information is maintained.
This review may help them identify questions to raise with state officials as reporting procedures are developed.
Importantly, the new guidance addresses direct care worker compensation reporting, which is separate from the Medicaid Access Rule’s minimum compensation percentage requirement scheduled to take effect in 2030. LeadingAge’s analysis discusses the reporting requirements and their relationship to the broader rule.
Providers should consult the applicable CMS guidance and state Medicaid authorities for details about their obligations.
Why Understanding Your Data Matters
The new reporting requirements illustrate how financial and workforce information can play an increasingly important role in Medicaid oversight.
For home care organizations, understanding where relevant information is stored and how it is maintained is a practical starting point.
At 5e Analytics, we help organizations make better use of the data they already have. Our Memphi platform brings information from different organizational systems together, making it easier to view workforce and financial data through reports and dashboards.
While Memphi is not a substitute for state-specific compliance guidance or reporting procedures, having better visibility into existing information can help organizations understand what data they maintain and where potential gaps may exist.
As states prepare to implement the new CMS reporting requirements, home care providers have an opportunity to review their information systems and better understand the records they may be asked to provide.
The first state reports are scheduled for 2028, but the information they cover dates back to 2027. For affected providers, now is the time to understand what’s coming.