Sen. May Introduces Bill Requiring Home Care Wage at 150% of Minimum Wage 

Situation Report | March 8, 2021

State Senator Rachel May has formally introduced legislation (S.5374) requiring that home care aides be paid a minimum of 150 percent of the regional minimum wage or applicable wage orders, which, ostensibly may mean the Wage Parity Law or local wage requirements.

HCA previously reported on the bill in February when it was announced conceptually as a proposal targeting a threshold salary level of at least $35,000 annually for home care aides in New York State.

The bill directs the Commissioner of Health to set regional minimum rates of reimbursement under Medicaid and Managed care plans. This determination would be made using cost reports and updated yearly, the bill summary says. It also establishes a “Fair Pay for Home Care Fund” pooling revenue from the “federal community first choice enhanced rate, Medicaid savings from the decertification of nursing home beds, unspent capital project moneys, and possible grant or gift awards, to subsidize Medicaid payment rates when necessary.” The bill adds compliance certification requirements for providers and managed care plans as well.

Bill sponsors have specifically cited a recent CUNY School for Labor and Urban Studies report which asserts that raising wages could double the size of the home health aide workforce, amid well-documented shortages, and create “spillover” economic effects that would also accrue to state and local governments at a net gain above the cost of providing the wages.

HCA supports funding of wages commensurate with the valued work of home health aides. It improves support for workers but also system stability and access to care. While this bill appears to recognize the need for investments and accompanying rate adequacy for providers, we’ve stressed in our conversations with Senator May and other sponsors that Medicaid rates have historically underfunded the current obligations for paying wages and related costs.

As our most recent State of the Industry report shows, wages and benefits are among the highest impacts on an agency’s rising costs. And providers have shouldered new, unanticipated costs, like Personal Protective Equipment (PPE) in the pandemic. More than half of agencies said PPE was a top impact on their finances. Meanwhile, one-third of agencies have had to rely on short-term funds from the federal Paycheck Protection Program (PPP) simply to cover payroll.

Prior state and federal changes to the Fair Labor Standards Act, incremental minimum wage increases, and the Wage Parity Law have all been laudable goals; yet, in practice, providers have not received commensurate, consistent, or direct rate increases to cover the costs of these mandates. HCA is following up with Senator May and Assemblyman Richard Gottfried, the anticipated Assembly sponsor, to discuss major concerns with the legislation, funding needs and assurances, and other implications. For example, while the bill would seek to provide Medicaid funds, the mandated wage scale would presumably also apply to Medicare, private pay and commercial insurance cases, and the legislation has no provision to adjust rates for non-Medicaid payor sources, nor does it address overtime costs, which also would be impacted.