State DHS' fund maneuver averts care-hour cuts

Darrell Price sits in his power wheelchair in his apartment in Cleveland In this July 2017 file photo. Price relies on a Medicaid-funded assistant to help him get dressed, washed and fed. In Arkansas, a last-minute fix helped prevent a cut in allotted home-based care for hundreds of disabled Arkansans this year.
Darrell Price sits in his power wheelchair in his apartment in Cleveland In this July 2017 file photo. Price relies on a Medicaid-funded assistant to help him get dressed, washed and fed. In Arkansas, a last-minute fix helped prevent a cut in allotted home-based care for hundreds of disabled Arkansans this year.

A last-minute fix helped prevent a cut in allotted home-based care for hundreds of disabled Arkansans this year, the chief executive of a state contractor says.

The 2,800 people who receive care through the state's Independent Choices program had been facing a reduction in their state-supported care hours as a result of the minimum-wage increase that took effect Jan. 1.

But Alicia Paladino, chief executive of Palco in Little Rock, said the state Department of Human Services agreed to a maneuver that will allow all but 13 recipients to keep their full allotment of hours through the end of the state's fiscal year on June 30.

Paladino's company uses money from the state Medicaid program to pay the individual caregivers, handles the payroll taxes and helps Medicaid recipients keep track of hours and perform other employer-related duties under contracts worth about $9 million a year.

"We worked with DHS and got a resolution," Paladino said.

The Independent Choices program allows Medicaid recipients to hire someone -- often a friend or relative -- to help them with daily tasks such as dressing and bathing.

The hours of care recipients receive each week depends on the outcome of an assessment designed to measure their needs. The hour allocations are then translated into a budget based on the amount the state Medicaid program will pay for each hour of care.

Although the Medicaid program's hourly rate increased by 14 cents, to $10.54, on Jan. 1, that amount was not enough to cover a caregiver's wage, plus unemployment and payroll taxes, after the minimum wage increased from $9.25 an hour to $10 an hour.

Initially, recipients were told that their allotted hours would be cut. That way, the state could pay the caregivers the higher wage and still stay within the recipient budgets that were calculated based on the Medicaid rate.

But Paladino said the Human Services Department agreed to allow her company to use accumulations of leftover funds to supplement recipients' budgets, allowing them to avoid a reduction in hours in most cases.

Funds accumulate, for instance, when Palco ends up needing less money than it had estimated to pay a caregiver's state unemployment taxes. The tax is charged on the first $7,000 worth of a caregiver's wages paid during a year, with the rate varying depending on how long the recipient has been in the program and whether they have had any caregivers who have filed for unemployment.

Program participants also accumulate unspent funds when they are in the hospital and are not allowed to bill for home services.

Normally, the unspent funds are returned to Medicaid after a year or within 45 days after a Medicaid recipient drops out of the program.

Jerry Sharum, director of the Human Services Department's Provider Services and Quality Assurance Division, authorized the use of unspent funds to pay caregiver wages in an email to Palco on Dec. 18.

Reductions in many Medicaid recipients' state unemployment tax rates that kicked in Jan. 1 also helped, Paladino said.

"That was a big chunk of it," she said.

Act 512, passed by the Legislature last year, reduced the amount of an employee's wages subject to the tax from $10,000 by tying the amount to the number of people who filed for unemployment the previous state fiscal year.

Carolyn Godfrey, 46, of Conway, who is paid for 30 of the hours she spends each week caring for a paraplegic relative, said she was initially told by a Palco representative that her hours would be slightly reduced as a result of the minimum-wage increase.

As a result, she expected the amount she is paid every two weeks to drop by about $1.60.

Then last week, she said she learned that the hours hadn't been cut after all. Meanwhile, her hourly wage went up from $9.74 to the new $10 minimum.

"I think it turned out great," Godfrey said. "We already don't get paid enough for what we do."

Paladino said the accumulated balances will be enough to prevent a reduction for most recipients until June 30, when a rate increase or other measures will be needed to avert more cuts.

The rate paid to caregivers hired directly by recipients is set at 57.8% of what the Medicaid program pays to agencies for the same services.

State lawmakers in December approved the use of $3.4 million in one-time funds to increase the agency rate by 24 cents an hour, to $18.24, from Jan. 1 through June 30.

That increased the rate paid to individual caregivers by 14 cents an hour.

Because of the higher rate paid to agencies, Sharum has noted that recipients can avoid a reduction in hours by switching from the Independent Choices program to using an agency.

He said last month that the rate increase that took effect Jan. 1 was just "provisional" and that the state was continuing to review what the agency rate should be.

Human Services Department spokeswoman Amy Webb said last week that the department is reviewing Palco's data on the impact of the wage increase and the use of the unspent funds.

As for other measures that could be taken, she said, "We are discussing the best way to move forward on this issue and will develop action steps, but those are not yet complete."

Kevin De Liban, an attorney for Legal Aid of Arkansas in Jonesboro, said that he heard from clients in late November who had been told their hours would be cut starting with the pay period that began on Christmas Eve. Soon after the Arkansas Democrat-Gazette published an article on the issue on Dec. 22, the clients learned the cuts had been called off.

"I'm glad that my clients won't be losing services, but it's yet another instance of DHS creating its own problems and putting the consequences of its own inaction on the people who need services," he said.

Voters approved the minimum-wage increase in November 2018. It is scheduled to rise again, to $11 an hour, next year.

"DHS could have planned for and fixed this problem over a year ago so that nobody would have even faced the possibility of getting their services cut," De Liban said.

SundayMonday on 01/19/2020

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