New federal rule increases pay for home health workers

Written by Jamie Baxley

Under new federal rules, home health care providers in North Carolina will be required to use most of the money they receive from Medicaid to pay workers' wages.

The policy was announced by the Centers for Medicare and Medicaid Services on April 22 as part of the Biden administration's initiative to expand access to Medicaid services, and comes amid a nationwide shortage of direct care workers. It is something that has been launched. Like other states, North Carolina has struggled in recent years to find enough willing people to provide in-home services to elderly and disabled residents on Medicaid.

Currently, businesses that directly employ care workers have wide flexibility regarding Medicaid amounts. Typically, they are free to divide the funds as they see fit and choose how much to spend on overhead, management fees, salaries, and profits.

Federal rules change this, forcing companies to spend at least 80% of their Medicaid payments on their employees.

White House officials hope the changes, which will take six years for states to fully implement, will help reduce high turnover rates among direct care workers.

“The macroeconomics of wages, how wages in the direct care sector compare to the broader economy, is a question of how people actually may move directly into and out of the care workforce.” human services. “I think that's exactly the macroeconomic concern that this rule is trying to address.”

workforce woes

Adam Levinson, chief financial officer of the state's Medicaid program, said people in the direct care sector “are often the lowest-paid workers of all Medicaid provider workers.”

In 2022, the median wage for direct care workers in North Carolina was just $13.62 an hour, or just over $28,000 annually. A 2021 analysis by the nonprofit PHI found that nearly half of the state's direct care workers live in poverty.

“The pay for many of these workers is comparable to working at Starbucks or Target,” Sand said, adding that employees at these chains “serve people who need additional assistance with bathing and bathing. “They don't necessarily have to do that difficult job,” he added. Other very, very difficult aspects of direct care work. ”

A report released by DHHS earlier this year found that low wages are contributing to “disproportionate levels of turnover and turnover” among direct care workers. At the same time, the ministry expects a “significant increase in the number of people requiring direct care services” in the coming years.

The expected surge in demand is due to the state's aging population. North Carolina's demographer predicts that the number of residents 65 and older, the home health industry's primary customers, will outnumber those under 18 by 2031.

“North Carolina in particular is facing an aging population and will need more and more direct care workers in the coming years,” Sandow said. “If we do not increase the supply of direct care workers, there will not be enough workers to meet the demands and needs of our beneficiaries.”

This federal action follows the state Legislature's approval last year of a budget provision that increases Medicaid reimbursement rates for certain direct care services. Similar to the new national policy, national provisions required providers to ensure that funds set aside for rate increases were actually used to improve wages for employees.

But there are some key differences, Levinson argued. First, the state's pay increase would only apply to some home health care providers who participate in the state's Innovation Waiver Program. Additionally, he said the state action “relates only to increases due to rate hikes,” not total Medicaid funding for health care providers.

“We are closely monitoring the federal regulations to understand all potential impacts so that we can respond,” Levinson said of the federal rules. “There are going to be financial pressures, and we understand that. This is a huge provider community and it's very diverse, so we don't understand all the details yet, but we We want to understand that to know what makes sense to implement and maintain access to care.”

Industry backlash

Industry groups such as the North Carolina Home and Hospice Care Association have voiced opposition to the policy, believing it will force health care providers to go out of business or stop accepting Medicaid patients.

“While we recognize the value of increasing pay directly to care workers, this policy ultimately

It is counterproductive, [does] It is not contributing to expanding access to care,” Tim Rogers, president and CEO of the association, said in a statement to NC Health News. “Washington, D.C.’s one-size-fits-all solution is wrong for North Carolina. Once providers decide how to spend the revenue, the market will be devastated.”

Rogers said the organization, whose members represent 98% of the state's home health and hospice providers, was “actively working with lawmakers and state officials to push for higher rates for providers” before the rule went into effect. We will meet regularly,” he added.

The American Home Care Association also criticized the rule, with CEO Jason R. Lee warning that it would have a “rapid and severe negative impact on patient access across the country.”

“Rather than addressing the underlying workforce issue, the deficiencies in the rates themselves, the final rule governs how agencies can use current Medicaid funding,” Lee said. This was stated in a letter to members of Congress. “Prices are so low that providers do not have room to continue to invest and innovate.”

State Rep. Donnie Lambeth (R-Winston-Salem) said he shares the organization's concerns. He co-chairs the General Assembly's Joint Legislative Oversight Committee on Medicaid.

“In general, Medicaid is a federal program that is primarily funded by the federal government and administered by states,” Lambeth wrote in an email to NC Health News. “It is not uncommon for federal authorities to mandate the administration of Medicaid programs. Sometimes these directives are good, improving care, but sometimes they create administrative hurdles and can cost more money.”

Lambeth believes the new policy falls into the latter category. He fears this could lead to “providers suffering losses and ultimately closure.”

“While the 80% rule appears to be a positive step on the surface, it could actually result in some providers failing to comply and going out of business or no longer caring for government patients,” he said. Stated. “We would have liked to have conducted a pilot program to determine whether this achieved the intended goals and evaluate the pilot before rolling it out to all patients.”

His position mirrors that of congressional Republicans who denounced the policy at a congressional hearing Tuesday.

“While this goal seems reasonable given the shortage of resources, it could easily have a negative impact on patients and health care workers,” Lambeth said.

Advocates react

One group that praised the policy was the National Domestic Workers Alliance, which advocates for the rights of low-income workers.

“As well as improving the lives of care workers, this measure will improve the quality of care for over 7 million older people and people with disabilities, ensuring they get the support they need in their communities. ” said Secretary of State Chanel “CC” Croxton. He described the alliance's strategy and organization in a statement to NC Health News. “Furthermore, the rule puts in place strong mechanisms to ensure the transparency and appropriateness of payment rates, including data collection and the formation of an advisory group of direct care workers. These strategic measures The aim is to strengthen the home care services sector, stabilize the workforce and ensure continuity of quality care for those in need.”

Erin Carson, director of the alliance's North Carolina chapter, rejected the idea that the rule would cause providers to shut down or drop out of the Medicaid program. If businesses can't afford to pay their employees, “they can't afford to stay in business,” she says.

“If there's not enough funding across the system, if people can't afford this 80/20 split, if workers can't earn what they deserve, then that's the kind of investment that's needed across the industry and across care. It's a bigger issue,''' Carson said in a phone interview. “That's something we should all be on the same side of and not fight over splitting the percentage. If there really isn't enough money for care, let's work together to ensure it.”

Carson acknowledged that some home health care companies recognize the importance of paying employees a livable wage. The problem, she said, is that many people don't.

“We have people and coalition partners who are serious about workforce issues, who want to support workers, and who want to be good employers and pay their workers well and make sure they have what they need. “I'm doing my best,” she said. “But that's not the industry standard. We know that from worker surveys and data collected by state health departments.”

Furthermore, she added: “You don't make laws for people who are doing the best they can. You make laws for people who do the bare minimum to make sure everyone meets at least some standard.” .”

Anna Pardo, co-director of the North Carolina Justice Center's Worker Rights Project, also believes the potential negative effects of the rule have been overstated.

She recalled advocating for higher Medicaid reimbursement rates for state home health services several years ago. Industry leaders support the action, many of whom argue for the need to properly compensate workers and reduce turnover, she said.

Interest rate hikes were approved, but low wages and high turnover continued. If anything, “the family health crisis is probably worse now than it was before,” Pardo said.

“I think it's very ironic that these same providers were saying, 'If Medicaid reimbursement rates don't increase, we're going to close because we can't afford to continue providing care.'” Or, People who said, “We're going to have to say no to Medicaid patients,” are now saying, “If you make us prove that we're providing benefits and wages to our employees in order to continue providing health care, we'll close up shop.” “they said. “For Medicaid patients,” she said. “That doesn't make any sense.”