Paying home care workers more is a very popular idea. Both houses of the New York State Legislature have included substantial funding for a proposed “Fair Pay for Home Care Act” in recently passed budget bills for the fiscal year starting April 1st. To solve a shocking shortage of workers for home care to elderly and disabled New Yorkers (an estimated third of positions are vacant), it promises a 50 percent boost in the current $15 hourly rates.  

But the administration of Governor Kathy Hochul has balked, putting the pay increase, which may lack the votes to override a veto, in jeopardy. Tellingly, cost concerns aren’t the only objection. State Medicaid Director Brett Friedman also testified to a February 8th joint legislative hearing that it just isn’t possible to translate the Legislature’s good intentions into workers’ pay packets. He maintained that the State’s Medicaid home care system is so complicated and, essentially, beyond State control that a $7.50 per hour boost would not survive as an increase in workers’ take-home pay.  

His testimony demonstrates how State government has, for all intents and purposes, abandoned responsibility for managing $11 billion-plus in annual Medicaid home care spending. Of course, it retains authority to regulate this system. But to cut costs and, in the process, avoid tough decisions, it regularly chooses not to. 

Over the past decade, the State has instead contracted out publicly financed home care to private “managed long-term care” (MLTC) providers, most of them part of major private insurer companies.   

Shortly after taking office in 2011, Governor Andrew Cuomo convened a Medicaid Redesign Team with the explicit instruction to reduce the second-largest piece of the State budget. Medicaid home care spending was a prime target. In response, the Medicaid Redesign Team recommended, and the State Department of Health (DoH) quickly implemented, a transition to MLTCs.  

There were three key policy changes. First, all people receiving care for more than 120 days would be required to get their services through an MLTC. Second, MLTC plans, not local public social service agencies, would evaluate the need for home care and award hours of service. Third, MLTC plans would receive a fixed monthly amount (capitation) for each client from which to pay licensed home care agencies (their own and others), plus a small basket of related services. The State’s public rationale is that it is buying care management and that managing care saves money. The paucity of medical, mental health, social services or other related needs included in the MLTC package, however, makes crystal clear that MLTCs are charged with managing the State's money, not their client's care. 

The transition to MLTCs amounted to a massive privatization of Medicaid home care. At first, the State relied on MLTC plans operated by longstanding non-profit providers, including Visiting Nurse Service, Hebrew Home, and Cooperative Home Care. Only 15 percent of patients were enrolled in a plan run by a for-profit company. Today, however, two out of three are registered in a publicly traded plan - owned by such insurance giants as Anthem, Aetna, Centene, and Molina. 

Government is no longer either provider or regulator of home care. Instead, it has become the banker.  A spending cap is set by the State Division of the Budget. Calculation of capitation premiums are outsourced to Deloitte, a private consulting firm. Every MLTC contractor is given a maximum enrollment target. No more open-ended, budget-busting entitlements. 

Home care is a simple service. One worker spends hours every day seeing to the safety and needs of one client. The means that cost control offers brutal options. Pay workers too little and suffer a severe shortage in the number and quality of people willing to take on this physically and emotionally taxing work. Or cut hours of service and risk abandoning people who cannot care for themselves and who do not have family to rely on.  

Rather than directly face the implications of such options the State increasingly relies on private companies to do the dirty work. Despite a thicket of regulations, many clients receive less care than they need, and many workers are paid less than they deserve. Regarding payment of minimum wage to workers employed through MLTC contractors, State Medicaid Director Friedman testified that the State “struggles everyday to insure that the amount paid to the worker is adequate.” Nevertheless, DoH has not sought help from the State Department of Labor to enforce wage laws.  

Nor has it asked the Department of Financial Services, which regulates insurance companies, to investigate repeated reports of inadequate coverage for severely disabled and dementia patients who should not be left alone. DoH has not published its quality assessment, “Managed Long-Term Care Annual Technical Report,” since the 2015 plan year. Whether it conducts independent member satisfaction surveys is impossible to establish. The last one reported on the DoH web site is for plan years 2013-2014.   

History provides an example of the difference robust State action can make. When Medicaid became law in 1965, it funded long-term care benefits, reimbursed “at cost.” It didn’t take long for fast buck nursing home operators to move in – reporting one level of costs, then providing much less, and pocketing the difference. In New York, this culminated in a major mid-1970s scandal. State investigators found, and revealed in highly publicized hearings, shocking neglect of nursing home residents and widespread fraud. Authorities then closed 62 nursing homes across the state.  

Today, the home health system that, with State encouragement, has in many cases supplanted nursing homes is at a crossroads of its own. Most MLTC spending is for wages, so an MLTC plan can make a bundle by authorizing fewer hours and paying below the authorized wage rate. The Legislature wants to pay home health workers more. If the Fair Pay Act becomes law will, the State rediscover its power, and keep too many from taking their slice as the extra money makes its way from the Budget Bureau to the MLTC to the home care agency to the worker? 

Barbara Caress has worked for many years in non-profit, union, and public agency health care and administration. She teaches health policy at Baruch College.