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Paralyzed Floridians and Elderly Could Lose Home Caregivers via $15-an-Hour Pay-Raise Funding Glitch

Paralyzed Floridians and Elderly Could Lose Home Caregivers via $15-an-Hour Pay-Raise Funding Glitch

Medicaid HCAF in the News

By Ron Hurtibise, South Florida Sun-Sentinel | October 23 | Read online

Coral Springs resident Ryan Gebauer has overcome more challenges than most of us could imagine facing.

In 1995, when he was 16, Gebauer was horsing around at a friend’s house in The Falls development. He climbed a tree so he could jump into a canal, but when a branch broke off, he fell head-first, 35 to 40 feet, and was paralyzed from the neck down.

But with the help of personal caregivers and a wheelchair similar to one used by Christopher Reeves, Gebauer moved forward with his life, first graduating high school, then earning a bachelor’s degree, then a master’s degree, and then a real estate license. In 2012, he started a real estate agency, Ryan Realty Group, that helps disabled people and seniors find homes specially equipped to meet their needs.

He couldn’t have done it without help from daily caregivers, he said. “Caregivers got me out of bed, into the van and to school.”

Now, Gebauer faces yet another challenge: He is being “discharged” by the home health care provider that employs two long-term caregivers he’s been relying upon for years. The loss is the result of a funding shortfall created when the state raised hourly wages of all Medicaid-funded direct care workers to at least $15 an hour beginning Oct. 1.

The pay raise, enacted by the Legislature and governor last spring, was intended to help health care providers compete for workers in an industry with severe labor shortages. It’s $4 an hour more generous than the $11 minimum wage that took effect in Florida on Sept. 30.

The difference between direct care workers’ previous hourly wage and the new $15 minimum is supposed to be funded by a $135.9 million budget allocation distributed to health insurance companies that administer Medicaid-funded managed care plans, including those that care for elderly patients in assisted-living facilities. But the money isn’t yet flowing.

Reimbursement delay creates hardship for providers

While the care providers were required by the Agency for Health Care Administration (AHCA) to pay $15 an hour beginning Oct. 1, the insurers that reimburse them for Medicaid-funded services weren’t required to pass along the money earmarked for the pay raises until Jan. 1.

As a result, providers are having trouble meeting their labor costs. Some, like Gebauer’s provider, Maxim Healthcare Services, are cutting services. That’s because stipends ranging from $17- to $18-an-hour that they currently receive from Medicaid for the direct care workers isn’t enough to generate income after paying the new minimum wage plus the workers’ Social Security and Medicare taxes and Workers Compensation insurance.

Seven major insurers run Medicaid managed care organizations that fund the services, says Kyle Simon, director of Government Affairs and Communications for the Home Care Association of Florida. While some have started reimbursing providers for the pay raises, others are dragging their feet, either by proposing increases that barely cover providers’ costs, or by so far ignoring providers’ requests to sign new contracts, Simon says.

Gebauer says he supports pay raises for his caregivers, who prevent him and others in his situation from having to live in nursing homes. “I totally agree that the individuals who take care of me should be paid $15 an hour. A few years ago, they were only making $9 or $10 an hour.”

But at their previous rate of $12 to $13 an hour, the providers that employ them could pay the workers’ taxes and Workers Compensation insurance and still turn a profit on a stipend of $17 to $18 an hour. If they can’t make a profit, providers can’t be blamed for cutting services, he said.

Scott Greenberg, CEO of ComForCare Home Care in Palm Beach Gardens, said his company, which primarily serves elderly patients, stopped taking new Medicaid clients before the pay raise took effect to avoid the shortfalls others are now facing. “It comes down to economics,” he said. “The reality is that in the Medicaid world today, you’re just not going to make money.”

Contracted workers pose risks

Gebauer is looking for another long-term care provider agency able to replace his two daily caregivers. If he can’t find an agency, he’ll be forced to seek services from a different kind of long-term care provider — a Medicaid-funded “registry” that signs up self-employed caregivers on a contracted basis.

Registries aren’t facing the same reimbursement uncertainties because they get the same $17-to-$18 Medicaid stipend but don’t pay Social Security or Medicare taxes for their contracted workers.

More importantly, to Gebauer, they don’t provide Workers Compensation insurance. That means if one of the contracted caregivers suffers an accident in Gebauer’s home, they will likely file a claim against his homeowners insurance policy. Such a claim could lead to a sharp rise in his insurance premiums or worse, result in the cancellation of his policy, he says.

Maxim Healthcare Services did not respond to questions about Gebauer’s pending discharge and the funding shortfall facing the provider industry.

Financial pressures mount

But the pressure is being felt across the state, Simon said, by providers operating on thin profit margins.

Among the 200 Medicaid-funded home health care agencies in the Home Care Association of Florida, a majority are experiencing financial challenges, he said. They represent a fraction of the 2,200 home health agencies and 900 registries in Florida, so it’s difficult to estimate how many companies are affected, he added.

Similarly, the Florida Assisted Living Association represents about 500 members out of 3,080 assisted living facilities (ALFs) that AHCA reports are licensed in the state.

Not all ALFs provide services to clients with Medicaid, but those who do are being affected by the minimum wage mandate, spokeswoman Aubrey Brown said by email.

“Providers still do not have clarification about reimbursement rates, so increased wages are essentially coming out of their pockets,” Brown said. “We have not heard about any impacts to staffing, but providers were faced with the extremely tough decision of moving forward with the unclear terms of the mandate or canceling their Medicaid contracts and discharging those residents.”

Veronica Catoe, CEO of the Florida Assisted Living Association, said some ALFs have been offered new contracts from insurers that include no increase, while others are getting 30% of what the insurer is receiving for the minimum wage increase.

Other Medicaid-funded services that are struggling with the minimum wage increase and no immediate reimbursement hikes include home health aides, ambulance companies, adult day cares and adult family care homes, Catoe said.

Nursing homes also were subject to the $15 minimum wage but they negotiate Medicaid reimbursement rates directly with the state, Simon said.

In September, four entities affected by the increase joined forces on a lawsuit against the state and AHCA related to the $15 minimum wage.

The lawsuit by the Home Care Association of Florida, Florida Assisted Living Association, Florida Ambulance Association and Heather Haven III, an ALF in Largo, seeks to strike language in the state’s budget that allows Medicaid-funded direct care workers to file class-action suits against any employer who failed to pay the increase in their pay to a minimum $15 an hour on Oct. 1. A hearing on the matter is scheduled Nov. 30 in Leon County.

Gebauer says he’s reached out to numerous elected leaders about the pending loss of his caregivers, including sending a letter to Gov. Ron DeSantis. So far, only Gebauer’s state representative, Dan Daley, has promised to look into the situations, Gebauer said.

Simon said the Home Care Association of Florida met with Tom Wallace, AHCA’s deputy secretary in charge of Medicaid-funded managed care services. Wallace told the association that insurers that administer Medicaid-funded long-term care already have the $135.9 million in supplemental funding in their coffers, Simon said. Wallace, Simon said, also pledged that providers will be reimbursed retroactively to Oct. 1 for the increased wages as long as they agree to new contracts with insurers.

In response to questions about the reimbursement lag, AHCA said in an emailed statement that insurers are being paid the funds earmarked for the minimum wage increases and are “required to reimburse providers in a manner to ensure providers are able to pay” the new minimum wage.

It added that increased reimbursements from insurers are not required if providers are already being reimbursed at a rate that allows them to pay $15 an hour.

Clients, not workers, losing out

Despite the reimbursement lag, Simon said that companies like Maxim are unlikely to fire or lay off employees because of the industrywide worker shortage. Maxim is a large company with branches in 35 states. Large companies rely on multiple revenue streams for services, including through Veterans Administration coverage, Medicare Advantage plans, long-term care plans, and market rates from self-insured clients, and have less to lose by choosing not to extend a contract with a specific insurer if it doesn’t like the terms, he said.

“I’ve heard from providers that notified (Medicaid-funded direct care) plans that they do not accept the rates they are proposing, and they’ll have to do the same thing” — discharge clients insured by the plans.

Catoe said she’s heard the same from assisted-living facilities. Some “will be submitting 30-day termination notices to AHCA as required,” she said. “Some absorb the loss of payment and others will be helping to relocate residents.”

Gebauer says a caseworker from his Medicaid managed care plan, Humana, is having trouble finding another agency that can replace his caregivers with others that are employed and not contracted.

He knows of about 30 to 40 other Maxim clients in Florida who are quadriplegic or paraplegic and likely also facing a discharge by Maxim.

A Humana spokesman said by email that the insurer does not publicly discuss contract negotiations with specific health care providers. “As Humana reaches agreements with Florida home care providers on higher reimbursement levels, those will be retroactive to Oct. 1,” the statement said.

The spokesman also said, “Should a member face disruption of care for any reason, we will work directly with them to reach a solution.”

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