What are Wage-Proportionate Disbursements?
Instead of the State only offering one payment rate, (disbursement), to all home care provider agencies, (without consideration of the quality of services or wages they pay), Wage-Proportionate Disbursements would set three or four different payment rates that would be applied according to the wages companies actually pay their caregivers. (See … Example/Suggestion.)
- Medicaid administration will maintain the right to adjust the rates and category margins, (as needed), to keep in balance with the budget limit set on the total allocation for hourly home care services. (This limit might be initially set at $500,000 below the current expenditure for identical services.)
- Medicaid administrators must structure the disbursement rate categories in a way conducive to higher wages. Minimally, a spread of $3 between the high and low disbursement rate categories is needed to effectively encourage wage protection for caregivers.
- Provider agencies would bill for the actual service hours provided, applying the appropriate rate(s), not averaging the wages they pay out.
What effects and benefits will it achieve?
Wage-Proportionate Disbursements will encourage participation in the caregiving field, (which is facing an imminent shortfall* of workers). It will give some real protection to caregivers should further cutbacks be imposed. This ultimately helps the recipient by fostering greater availability and better quality of care.
It will do these things by encouraging higher wages and discouraging further cutbacks from falling on the backs of the caregivers… It will accomplish this while keeping in balance with a set budget limit for the services.
- Companies with business models that offer higher wages will be encouraged to continue with that model.
- Some companies will choose to continue with a lower wage structure and receive a lower disbursement, because… in many instances their gross profit margin remains higher.
- Virtually all of the home care provider companies will look at their bottom line and consider raising wages.
- If there are caregiver disbursement cutbacks, fewer companies will pass along the entire loss onto their caregivers.
Why protect caregiver wages with Wage-Proportionate Disbursements?
- It is crucial to maintain quality caregiver availability for Nevada’s people who must have caregiver services in order to remain outside of institutions.
- There is an accelerating increase in the need for home care and a shrinking pool of available home caregivers. This caregiver shortage must be addressed.*
- The caregiver must take on substantial responsibilities, often including life preserving tasks. The average wages paid for this vital service by Nevada agency providers is only about $10 per hour.
- Almost all the previous $1.50 cutback of disbursements, (June 09), for home care was passed directly onto the individual caregiver employees.
Example/Suggestion for Disbursement Rate Categories…
- Companies paying their caregivers $12.25 or more would receive $1 increase in their disbursement to $18.02.
- Companies paying $10.50 - $12.24 per hour, would remain at the current disbursement level of $17.02 per hour. (Similarly, those doing case management services would continue at their current rate of $18.52 if their wage/benefit falls within this category.)
- Companies paying $9.00 – $10.49 per hour would suffer a one dollar cut in their disbursement… $16.02 per hour.
- Companies paying minimum wage, $7.55 up to $8.99 per hour would receive the lowest disbursement… $15.02 per hour.
Other Factors Must Be Included…
- Companies providing a qualified health plan in behalf of an employee are granted $1.00 per hour toward their rate category determinations, (applying similar standards as the Nevada minimum wage law).
- Should include significant penalties for incorrect filing by any provider agency.
- In order to encourage new company startups, (for a six-month period), and tiny companies, (those having five or less employees) would be granted an additional $1.00 toward their rate category determination.
- An approximation of the existing number of hours that would fall within each of the proposed category disbursement rates is necessary to establish a reasonable baseline. (The rate categories would be adjusted after the first month to bring in balance with the set budget for the services.)
- Also, requires modifying the billing forms to include new code numbers for their corresponding rates.
Why do this extra work?
- It will do much to alleviate, (in a cost-effective manner), a growing caregiver availability and quality problem. If this is unaddressed, it will result in worsening unnecessary institutionalization.
- People with disabilities endorse Wage-Proportionate Disbursements saying, “We want to encourage the people who take care of us with fair wages. Then, many more will stick with their job as a career and provide us with better care. We are not asking you to pay more to the home care businesses. You can encourage…these businesses to pay more to the people who take care of us.”
* Census Bureau statistics show there will be a 7% shift of the baby boomers into the very old population demographic. This means a major decrease in the population groups available to provide this type of services. And, at the same time, there will be an equally significant increase in the numbers of very old people who will require at-home services to remain outside of institutions.
- Using the suggested disbursement rate structure, the threshold for the highest disbursement rate is $12.25. Because very few companies offer that wage, it is predictable the State's initial payouts at startup would be considerably lower than budgeted. Starting with a buffer will allow Medicaid to confidently initiate the system without exceeding their targeted budget limit. They should then be required to adjust the rates the following month to appropriately balance out any gained revenues.
- To minimize the shock of rate changes for home care providers, and to better encourage higher wages, the highest disbursement rate’s qualifying amount, (the threshold of the next lower rate), should be the primary adjustment factor Medicaid adjusts to balance the overall payout with their targeted budget.
- Medicaid would only need to adjust that factor on an as-needed basis to maintain their set budget.
- Wage-Proportionate Disbursements for homecare service providers must maintain an adequate range between the rate categories in order to be effective.
- Any legislation language must include a binding purpose statement. It should require Medicaid administrators to make the category/rate adjustment in a way that not only agrees with the set budget but, it must also include that whenever they adjust the rate categories, they do it in a manner most conducive to protecting the caregivers’ wages.
Additional Discussion on Wage Proportionate Disbursements