Medicaid Reimbursement Rates are Rising; Some with a Catch

Medicaid reimbursement rates in North Carolina, South Carolina, and Virginia are finally rising. Home care administrators have complained for years that rising operating costs and labor costs have eroded agency profits. As the shortage for caregivers worsens, attracting and retaining talented workers has become expensive. Finally, state legislators have responded to the industry's calls for help. Medicaid reimbursement rates rose substantially in the past year. That's great, but some of these increases come with a catch.

North Carolina Rates Rise Sharply

North Carolina aggressively raised its Medicaid fee schedules to combat rising home care delivery costs. Effective August 1, 2026, the NC Division of Health Benefits applied an 18% increase across its major Home and Community-Based Services programs. This translates to a Medicaid base rate of $7.03 to $7.50 per 15-minute unit (about $28.12 to $30.00 per hour) for State Plan PCS, NC Medicaid CAP/DA, and CAP/C programs.

South Carolina Applies a Percentage-based Wage Pass-Through

South Carolina's approach was to standardized its home care billing while legally structuring how agencies allocate their Medicaid payouts. The base Medicaid personal care reimbursement rate is about $25.00 per hour. However, South Carolina law (Bill 486) dictates a strict wage pass-through percentage. Agencies providing personal care services must use at least 70% of their total Medicaid reimbursement strictly as compensation for direct care workers. This required percentage is scheduled to rise to 75% and eventually 80% in the coming years.

Virginia Ties Rate Increase to Fixed Worker Wages

Virginia has the most aggressive rate increase of these three states. It implemented a 15% rate hike which brough Agency-Direct Personal Care (T1019) to $20.23 per hour. To build on this, the Virginia General Assembly introduced further measures to boost rates by another 20%. Here's the catch. Providers must pass through at least $20 per hour of the reimbursement rate directly to direct care workers. So, while agency gross billings may substantially rise, that rise is passed-through to direct care wages and does not improve agency operating margins.