Home Care Providers Scramble, Plead in Wake of DOL Rule

Federal minimum wage and overtime protections officially kicked in for home care workers this week, prompting a provider association in New York to send an urgent letter to Gov. Andrew Cuomo (D), pleading for increased funding. The rule from the Department of Labor is part of a “tidal wave” of costs facing home care providers in the state, and the future of the industry “has never been more precarious,” the Oct. 14 letter from the NYS Association of Health Care Providers (HCP) states.

Under the Department of Labor rule—which home care associations challenged and still could be subject to a legal battle in the Supreme Court—home care workers no longer can be exempt from federal minimum wage and overtime laws, as they have been for decades The rule officially took effect Tuesday, although the DOL has said it will not begin enforcement until Nov. 12.

Home care providers shared mixed reactions to the rule going into effect, with some stating that the wage protections are fair and that well-prepared providers should not be facing big hits to their margins. However, others said that the rule could have dire consequences for certain providers, including those that provide live-in caregivers and those that rely heavily on Medicaid for revenue.

New York has transitioned to managed long-term care, under which a large proportion of home care is paid for through Medicaid plans administered by non-government entities such as Aetna. Neither these managed care plans nor the state has provided additional funding to help home care providers with the extra costs they now face in paying for overtime, the HCP letter states.

As a result, some providers have begun reducing their overtime, even though it will disrupt care for patients, according to the letter. Other providers, particularly in rural areas, are now being forced to pay overtime because they cannot hire additional staff to handle the extra time with patients. The situation is not sustainable, the letter emphasizes, particularly because the DOL rule is only one of a slew of regulations, laws and market forces that are driving costs up.

“New York’s home care industry cannot continue to absorb these increased costs without commensurate reimbursement by Medicaid, managed care organizations, or other payers,” the letter states. “We are facing a tidal wave of financial and regulatory challenges that threaten the stability of the industry and, ultimately, patient access to home care services.”

That tidal wave also consists of scheduled increases to the state minimum wage, rising workers’ compensation rates, federally mandated health insurance requirements, and the need to enhance infrastructure to succeed in value based purchasing and other new models of care delivery and payment, according to the association.

HCP has requested that Cuomo take a number of steps, including establishing a transitional funding pool to cover costs associated with the DOL rule, to review funding going into the managed Medicaid system and ensure that it is sufficient, and require that managed long-term care plans “promptly and adequately” reimburse home care agencies for services.

“The future of the home care industry in New York has never been more precarious,” the letter concludes. “Without immediate attention to infuse adequate funding into the system, there could be devastating consequences for patients’ continuity of care and access to care for hundreds of thousands of New Yorkers across the state.”

Written by Tim Mullaney

Pictured: New York state capital by Matt H. Wade