If there is one aspect of the dramatic cut in Veterans Administration home care rates that bothers providers in New Mexico and Texas, it is that it is not a uniform decrease.
“I don’t understand why our state was targeted,” a New Mexico VA provider of skilled and unskilled home care services told McKnight’s Home Care Daily Pulse. “We have one of the [highest] poverty states already, and our veterans just didn’t deserve it. If this was a national directive, that’s fine. Then tell us there’s a national directive to reduce the veterans’ home care rates and reduce it across the board 3% 5%. But to come to a company and take away from the veterans 20% is just not feasible, and it doesn’t make sense.”
Providers sounded the alarm about the rate changes last December when the VA released the 2026 VA Schedule for Authorized Community Care. The adjustment, which went into effect Jan. 1 of this year, lowers reimbursement by as much as 43% for home health aide and homemaker services in rural areas in Texas and 19% for home health aide services in New Mexico. Texas has one of the largest populations of veterans in the country, the 2021 American Community Survey found. New Mexico has roughly 145,000 to 150,000 total veterans. Of that population, approximately 66,000 to 68,000 are seniors over the age of 65, according to the US Census Bureau American Community Survey.
In a March 4 letter to Doug Collins, secretary of the VA, six senators and congressmen expressed “serious concerns” about the rate cuts in Texas and New Mexico and inquired about the methodology behind the cuts. In a May 1 response to the lawmakers’ letter, Collins said the rate reduction in New Mexico and rural parts of Texas “reflect our assessment that prior rates for these areas significantly exceeded prevailing market rates. Aligning these rates with market conditions is not expected to affect veteran care.”
In part because of the questionable reasoning behind the directive, the Polsinelli law firm now is representing a coalition of providers in New Mexico and Texas, including the aforementioned New Mexico provider.
“That’s one of the potential reasons we’re looking into challenging it: There does not seem to be rhyme or reason to it,” Allessandra Stewart, an attorney with Polsinelli who specializes in healthcare reimbursement, told McKnight’s Home Care Daily Pulse.
In an April 27 letter to Collins, Polsinelli attorney Angelo Spinola of Polsinelli argued that the rural reimbursement reductions set forth in the 2026 fee schedule are “unsupported by substantial evidence, and are otherwise arbitrary and capricious within the meaning of the Administrative Procedure Act.”
He noted that the VA’s community care authority is intended to ensure that veterans have access to necessary care through non-VA providers, particularly where access would otherwise be limited. He referenced the recently passed Elizabeth Dole Act, which authorizes the VA to cover home health services at 100% — up from 65% — of the geographically adjusted equivalent cost of nursing home care.
The cuts threaten providers’ ability to continue to provide care to veterans in the Community Care Network, particularly in rural, underserved areas, Spinola asserted. He gave the example of one veteran who lives in a rural New Mexico town of 1,100 without a nursing home.
“In such a low-population area, it is difficult to recruit a qualified provider who is willing and able to assist the veteran with personal care services, including toileting, bathing and dressing,” Spinola wrote. “Delivering necessary home care services often requires a provider to travel almost two hours each way from Santa Fe across rough mountainous terrain and poorly maintained rural roads. These hurdles make recruiting and retaining qualified providers difficult in the best of times, but this rate cut further strains the fragile lifeline this veteran has to the care they need and deserve.”
In response to the rate changes, the New Mexico provider who spoke to McKnight’s Home Care Daily Pulse has had to limit her service area.
“We are limiting our service areas to certain core areas now because with home health you have to either have higher payment rates for rural areas or you have to have several patients in a specific area to make it worth it,” she said. “You can’t drive three hours to see a patient and three hours back and only see one patient.”
She also has had to cut back on other perks — paying into a 401K for staff and not charging patients for bringing them to the doctor. She also had to decline referrals.
“They don’t have agencies to serve them,” the provider said. “They don’t have other agencies. We were one of the only ones that was willing to still do this over the last four months since this happened, but we’re just not able to anymore.”
Polsinelli has asked for a response to its letter in 30 days.
“The concern is the longer the longer we wait, the longer there’s no action, the more this has an adverse effect on access to care for veterans,” Stewart said.