Pandemic and Recession Are Devastating Medicaid-Funded Disability Service Providers

[UPDATE: After pressure described below from advocates and lawmakers, the Trump administration released $25 billion to health providers caring for Medicaid patients.]  

As the pandemic wreaks its havoc and the economy slides into recession, Medicaid-funded disability service providers are among the hardest hit sectors. And, despite tireless advocacy from disability rights groups and lawmakers, the federal government does not appear to be coming to the rescue.  

The Medicaid program is the primary funding source for a wide-range of services specifically directed toward people with disabilities. This money supports both residential and non-residential services, including care management, community based residential facilities, adult family homes, supported living arrangements, day programs and other services that enable people with disabilities to live and work in their local communities.

Due to the COVID-19 pandemic, many providers of such services are facing numerous threats. Some of them have been closed as non-essential, while others are assisting far fewer clients because of lockdowns around the nation.  

Medicaid, unlike Medicare, operates as a federal-state partnership, meaning that policy is mostly set at the federal level, but funds are directed to providers through state agencies. Moving forward, as states see reduced revenue flows due to the depressed economy, they are also likely to cut funding for disability service providers to help close budget shortfalls.

Although Congress has earmarked $175 billion for health providers in response to COVID-19, almost none of that money has gone toward Medicaid providers, which constitute by far the largest source of government-funded services for people with disabilities.

In April 2020, the American Network of Community Options and Resources (ANCOR) surveyed 689 disability service providers nationwide. More than two-thirds of providers said they had to close “one or more service lines,” resulting in an average loss of 32 percent in revenue. More than half of the organization surveyed reported they had been forced to increase staff overtime expenses to compensate for a greater need for services resulting from the pandemic.

“It’s staggering,” Gabrielle Sedor, chief operations officer at ANCOR, told Disability Scoop. “What the survey is showing us is that providers really are on the brink and they’re in dire need of fiscal relief.”

On June 3, a bipartisan group of legislators wrote Alex Azar, Secretary of the U.S. Department of Health and Human Services, demanding to know why more funds were not being directed to Medicaid providers.

“HHS has, thus far, relied on methodologies that favor providers that receive a larger share of their payments from Medicare or private insurance,” the letter states. “While HHS has made public statements regarding a commitment to develop a distribution for Medicaid providers who may not have Medicare claims, we have not yet seen public progress on such a commitment.” 

“We need significantly more investment if we want to keep our system whole, let alone being able to serve more people,” Chuck Ingoglia, the president and CEO of the National Council for Behavioral Health, told The Hill.

The full ANCOR report can be read here.