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Get the Facts: Minimum Wage Hike and its $2.19 Billion Impact for Home Care

For immediate Release: March 1, 2016

Contact: Roger Noyes, (518) 275-6961 (cell), or (518) 810-0665 (office)

ALBANY – If it remains unfunded, the Governor’s $15 minimum wage proposal will be catastrophic for home care providers whose reimbursement is provided substantially by Medicaid and Medicare for elderly individuals and families already struggling to afford services.

Medicaid is capped. Home care cuts have been worsened by new cost increases and little to no support, accordingly. Now, home care faces another multi-billion-dollar unfunded wage mandate within these confines.

The Home Care Association of New York State (HCA) has long advocated for improved reimbursement to support home care worker wages and benefits, and we agree that staff should be compensated in measure to the valued work they do.

However, for a constructive discussion of this issue – especially the need for full funding of this wage mandate – a few facts must be made clear about the impact of a higher wage in the context of home care’s current state.

Fact 1: First, HCA’s impact estimates of the minimum wage increase are rigorous and statistically sound

Our analysis of the minimum wage impact uses Department of Health-issued reports required of all home and community based providers and managed care payors, along with industry data which further supports the numbers.

These reports include Medicaid Cost Reports, Statistical Reports, Medicaid Managed Care Operating Reports and other association survey data. The reports present such figures as the total number of home care hours worked annually per employee type, along with associated labor costs and provider operating margins.

Based on months of calculations and refining our methods, we find that the final year of this wage hike, based on current fiscal data, would result in a $2.19 billion cost increase for home care providers in New York State. In just the first two years alone, this impact is $1.1 billion.

Fact 2: Home care, in its current state, cannot support this unfunded mandate. It needs full and direct funding of any new state-imposed costs

To understand what this impact means for home care, it is important for the public to know the current financial condition of home care providers in New York State.

Similar to our wage impact analysis, HCA has separately conducted a data analysis on the financial condition of home care providers. (The results and methodology are posted at https://hca-nys.org/wp-content/uploads/2016/01/RiskFactors2016HCAFinancialConditionReport.pdf.)

In sum, we find that:

  • Two-thirds of New York’s certified home care agencies are operating at a loss. Nearly half of these agencies are additionally subject to a recent 30 percent Medicaid cut (not accounted for in our operating-loss analysis) due to the state’s “rebasing” process, a term which basically means a resetting of the rates.
  • One-half of New York home care agencies have had to borrow money to stay afloat in the last two years.
  • Fifteen percent of home care agencies indicated that more than 20 percent of their anticipated revenue winds up as bad-debt (meaning they are not getting paid for 20 percent of their claims). One in ten home care agencies reported that over 30 percent of their revenue results in bad-debt. This is due to pressure on non-government payors in the Medicaid program, now that the state has moved most home care under managed care plans for coverage. Those plans are also underpaid. In fact, 63 percent of Managed Long Term Care (MLTC) plans had negative premium incomes in 2014, up from 57 percent in 2013 and 42 percent in 2012. This has a downstream effect on timely billing to providers, as the plans cope with underfunded premiums.

Fact 3: Unreimbursed, government-imposed labor costs are not new. Funding for these costs has been uneven, indirect, disproportionate and untimely in reaching home care providers.

In 2012, the state passed a Wage Parity Law requiring higher wages in the downstate region for home health and personal care aides. The state has created a distribution process intended to support this new cost. However, the flow of funds has been held up, subject to cumbersome attestation forms and eligibility criteria which have disqualified many agencies for support even as their costs have increased substantially. We are still working to resolve this process and hope to find a solution with the state.

In October, the federal government changed the labor law to require higher overtime payments, costly record-keeping requirements and travel reimbursement in home care. Again, the state has started to adjust Medicaid reimbursement for these costs, but there is no guarantee that the funding will reach home care providers who have already incurred these new costs. We are working to ensure that these new costs are fully funded, and that the distribution process is expeditious and efficient.

Fact 4: HCA has advanced legislative proposals to support home care in this current environment AND meet the state’s health care goals proactively.

Our priority focus is on the minimum wage proposal and the imperative for full funding of home care if the Governor’s (or any other such) proposal is adopted. We have provided the evidence and are calling for recognition that, across all health sectors, home care would be most impacted.

However, we have also focused heavily on the need for basic investment in critical areas of the home care and managed care system for the benefit of the state’s policy goals. These include premium and rate payment adequacy for providers and plans as well as investment in essential infrastructure so that providers can remain viable in meeting the state’s laudable health care reform goals which call for increasing integration and outcomes targets. Home care is needed at a time when the state is trying to reduce unnecessary hospital use by 25 percent. Home care is designed to provide services which result in lower hospital admissions and to prevent premature institutionalization, but not in its current state of underfunding.

HCA has advanced a series of legislative proposals that we call on the Legislature to include in the budget. These proposals specifically urge investment appropriations, reimbursement fixes and program support, and a commitment to full, timely, and direct funds for any minimum wage proposal that would be adopted.

Our proposals also addresses labor costs holistically: by requiring state reimbursement levels to match mandated costs, whether it’s the Wage Parity Law, the federal overtime increases, a higher minimum wage, workers’ compensation or other such expenses.

To learn more about these issues, please contact HCA’s Communications Director Roger Noyes at: (518) 275-6961 (cell); (518) 810-0665; or rnoyes@hcanys.org.

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The Home Care Association of New York State (HCA), the state’s premier home care association, represents approximately 400 home and community-based providers, individuals, and associate members who collectively serve thousands of New Yorkers.

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