Proposed funding boost for long-term care at home hits a roadblock

A $258 million plan to improve the pay for thousands of home health care providers in Wisconsin is on hold after lawmakers on the Legislature’s powerful budget committee blocked it.

The plan that the state Department of Health Services (DHS) sent to the Joint Finance Committee last month involves covering services for people enrolled in Medicaid-funded home and community-based long-term care programs, primarily Wisconsin’s Family Care Program.

The first year of the proposal is already covered by federal funds. But a finance committee co-chair said Wednesday that its likely impact on the state’s next budget — more than $500 million in additional long-term care Medicaid funding, partly drawing on state funds — is at the root of the committee’s objection.

Advocates for providers of long-term health-related services, as well as for the people who receive that care, say that if providers can’t cover higher wages, their workforce will shrink along with the number of agencies that provide that care.

Supporters of the DHS plan have expressed concerns that more might be necessary to fully address what providers and clients need over the long-term. But they told the Wisconsin Examiner this week that it was an important start and shouldn’t go by the wayside.

“While it was not everything we hoped it would be, a significant investment is needed in that workforce,” said Janet Zander, advocacy and policy coordinator for the Greater Wisconsin Agency on Aging Resources. “So if the Joint Finance Committee does not approve the proposal as submitted, our question would be, what are their plans to shore that system up?”

Long-term care at home

Under the standard rules of the Medicaid program, jointly funded by the state and federal governments, people without resources who need long-term care must go to a nursing home for that care to be covered by Medicaid.

Family Care, authorized under a federal waiver since it started as a pilot program in 2000, allows state residents who qualify for Medicaid and need long-term care to remain in their homes or in a community residence. The Medicaid funds pass through managed-care organizations, which contract with providers for various home and community-based services.

The DHS proposal, submitted March 19, would for the first time set a minimum Medicaid fee schedule for providers that the managed care organizations would be required to pay. The increased fees — totaling $258 million in the first year — would be funded through June 2025 under the American Rescue Plan Act (ARPA), the pandemic relief measure enacted soon after President Joe Biden took office.

DHS was required to send the plan to the Joint Finance Committee for review under legislation passed at the end of 2018 and signed by outgoing Republican Gov. Scott Walker just before Democrat Tony Evers took office as governor. The so-called “lame duck” bill  requires the budget committee’s review for any Medicaid reimbursement changes exceeding $7.5 million — regardless of where the money comes from.

The proposed fee schedule “is a critical investment in Wisconsin’s long term care system and the providers who care for the state’s most vulnerable citizens,” DHS Secretary-designee Kirsten Johnson wrote in a March 19 letter to the finance committee outlining the plan. “The funding would support direct care workers and providers serving individuals with intellectual disabilities, physical disabilities, or over age 65 needing a nursing home level of care.”

The hiring challenges that have affected virtually every industry and occupation in recent years have been especially acute in health care and long-term care.

“Long term care providers are experiencing significant cost pressures to recruit and retain direct care workers,” Johnson wrote.

Meanwhile, health care and long-term care providers have complained that what Medicaid pays them hasn’t kept up with their costs — especially with rising employee compensation costs.

“Those lower reimbursement rates are simply not sustainable for long-term care providers to provide services to everyone they provide them to under Family Care,” Rene Eastman, vice president for financial and regulatory services at LeadingAge Wisconsin, told the Wisconsin Examiner. The organization represents nonprofit long-term care providers, including about 500 assisted living homes in the state, many of which include Family Care recipients among their residents.

When home care isn’t available

If elderly people who qualify for Medicaid can’t get home-based care, there could be a broader ripple effect. For example, a person’s relative or other loved one might have to give up a job in order to tend to the patient’s needs at home, Eastman said.

In addition, more patients could wind up having to go to a nursing home, where their care will be more expensive, she observed — even as there is already a backlog of people hospitalized and waiting to get into a nursing home to finish their recovery.

The DHS fee schedule proposal has been two years in the making, with the department negotiating with organizations representing providers.

Managed care organizations would be required to pay providers at least the minimum fee schedule set in the plan. They would also be “contractually required and expected to negotiate rates and pay above the minimum when needed to secure the care that members need,” Johnson told the finance committee in her letter.

Nearly two-thirds of residential providers such as assisted living facilities that get reimbursed under the Family Care program will see their rates go up by 40.5%, Johnson wrote.

Eastman said that some providers, including ones belonging to LeadingAge Wisconsin, already have negotiated higher rates with managed care organizations and have been concerned that with the new floor, those higher rates could regress.

The health department has sought to allay those fears. “DHS has been clear that they don’t expect any [managed care organization] to lower rates,” Eastman said.

The Disability Service Provider Network (DSPN), which represents care providers serving people with disabilities who also get home and community-based care under the Family Care, has had a similar concern.

Providers that are paid at rates above the proposed fee schedule are seeking assurance that they can continue to negotiate higher rates, said Lisa Davidson, chief executive officer for the provider group. Those providers typically have  clients whose disabilities and health needs are more complex and severe, she said.

The state can’t make that guarantee under federal regulations, but managed care organizations “did make a commitment not to lower rates for providers,” Davidson added.

Eastman said providers with private pay patients have historically used those revenues to offset shortfalls from Medicaid.

That’s not an option for the disability service providers, however. “We are entirely reliant on the public payer,” said Davidson. “Medicaid is the full payer of long-term services and supports for my members.”

Providers back DHS proposal

Along with LeadingAge and DSPN, groups representing assisted living providers,  for-profit nursing homes and the Wisconsin Association of Health Plans, which represents the managed care organizations, wrote to the Joint Finance Committee co-chairs April 3 urging them to support the DHS plan.

“The committee’s support and approval of the $258 Million in American Rescue Plan Act (ARPA) funds is critical to establishing a path for long-term care providers and payers to continually invest in caring for Wisconsin’s most vulnerable through ongoing workforce and operational challenges,” the joint letter stated. “This is an important step to recognize and reward the work of caregivers.”

The united front from providers did not persuade leaders of the budget committee, however. On Monday the committee announced there had been an objection, stopping the plan from going forward.

Neither Sen. Howard Marklein (R-Spring Green) nor Rep. Mark Born (R-Beaver Dam), the committee co-chairs, made themselves available to discuss the committee’s objection.

“We look forward to continuing conversations with the long-term care industry and impacted individuals, as we look for ways to support the industry,” Marklein said in a statement.

Born issued a statement with similar language but also adding additional context. He noted that the 2023-25 state budget drafted by the committee’s Republican majority had increased Medicaid reimbursement. He also alluded to the fact that the proposed fee schedule’s ARPA-funded first year would have to be rolled into the state’s Medicaid budget going forward, at more than $500 million over two years.

“Just nine months ago, the Joint Committee on Finance approved nearly half a billion dollars in new money to support the long-term care industry in our state, bringing our total new investment in the past three budgets to well over a billion dollars,” Born said. “Committing to spend an additional half a billion dollars in the next budget less than halfway through the current budget cycle is exceptionally rare.”

Whether and when the lawmakers in control of the budget committee will come up with an alternative isn’t clear. One possibility appears to include building in lower compensation costs to the fee schedule.

The DHS fee schedule includes an assumption that staffing costs per worker are $15.75 an hour in wages, $4,218 per year for health insurance and 1.68% of total pay for retirement contributions.

“Many providers pay their direct care givers in excess of that,” said Eastman, with some offering entry-level wages of $20 an hour. “There are many easier jobs available at wages higher than $15.75 an hour.”

She said the ARPA funding to help raise reimbursement rates offered “a once-in-a-generation opportunity” to tide the state over until the next budget — bolstering what has been a chronic problem in a field that is only going to become more necessary as Wisconsin’s population ages

“The home and community-based services provider community is in such dire straits with a lack of caregivers, caregiver burnout and low wages,” Eastman said. “If the Legislature is not able to approve any version of the DHS proposal, then we will lose providers” for home and community-based care. By the time Wisconsin’s next budget takes effect in July 2025, she said, that will make those services “that much more precarious.”