Idaho cuts Medicaid reimbursement for in-home care for the developmentally disabled

Dec. 22--A health care agency based in Meridian must lay off 39 employees and will have to cut services to certain patients following a recent decision by the Idaho Department of Health and Welfare to slash Medicaid reimbursement rates for in-home care for the developmentally disabled.

"If we don't do that, we cannot continue as a company," said Amy Wright, administrator and co-owner of A New Leaf. The layoffs amount to half of the agency's in-home care team for people with developmental disabilities.

The change was announced Friday in an information release, and its timing close to the holidays drew a harsh rebuke from advocates, who compared the department to the Grinch and accused it of "stealing Christmas."

Advocates said most Idaho companies that provide in-home care to those with developmental disabilities won't survive the rate cuts. The developmentally disabled will instead be "warehoused" in state institutions and prisons, they warned, where they won't get the care and assistance they need to be functioning members of society.

Department officials accused advocates of being overly "cutting" in their response, and they said the timing of the announcement was simply due to when they received approval from the feds.

The cuts are dramatic.

They return providers to the level of reimbursement they received in 2006. Taking the general rate of inflation into account, that's a 15 percent cut in real reimbursement -- and medical costs have risen much more quickly than the general rate of inflation.

A provider who provides one day of in-home services at the "intense" level of service currently gets $500 per day. The cuts bring the reimbursement for the same service down to $270 -- a 46 percent cut.

At the lowest level of support, rates were cut by 37 percent. At the "high" level of support, reimbursement was cut 9 percent. All the cuts are final and were scheduled to go into effect Jan. 1. But on Tuesday, the department announced it will delay the cuts until Feb. 1 to give providers more time to adjust.

The cuts also correspond with major changes to overhead and pay regulations for local employers like A New Leaf. The agency will need to start offering health insurance to employees this coming year, which Wright had expected would increase expenses. And rules just went into effect for home-care workers, requiring employers to pay them overtime, which prompted A New Leaf to revamp its pay scales and worker schedules.

Wright said A New Leaf pays its "intense" care providers about $10 to $10.50 per hour. The new pay rates would leave about $1 to cover all expenses beyond wages, if the agency were to continue its around-the-clock, one-on-one staffing for those high-needs patients.

She is now looking at ways to place one care worker with two patients at the same time, which the state may allow, she said.

Thirteen of the agency's 25 patients under the program are in that "intense" need category -- in many cases, because they have extreme medical needs. Some have feeding tubes or need special nursing and hygiene care, which had partly been covered by the higher payments from the state, Wright said.

Of those 13, Wright said seven clients had once been housed in the Southwest Idaho Treatment Center in Canyon County. The center, known as SWITC (swit'-see), is the only government-run intermediate care facility for Idahoans needing "highly specialized treatment." The facility used to house 1,000 people, but over time all but 25 residents were moved out into housing in the community, which the state said was "more cost-efficient and preferred over an instutitional setting."

The payment cuts are the delayed effect of a March decision by the U.S. Supreme Court. The Ninth Circuit Court of Appeals had earlier ruled in favor of in-home service providers who had sued the Department of Health and Welfare, saying reimbursement rates were far too low.

But the Supreme Court found in a 5-4 decision that the providers don't have the right to sue the state over its Medicaid reimbursement formula.

James Piotrowski represented the state's providers in that case. He said the department's decision will drive companies who provide in-home care out of business, leaving those with developmental disabilities without access to needed care.

"Some people aren't going to be able to get services at all, so they're going to wind up back in institutions where they will cost the state even more money," he said.

And there is evidence costs to the state could rise if those who lose services wind up being institutionalized.

A presentation by the department about State Hospital South indicates that it has on average 115 patients per day and an annual budget of $19 million. That translates into a per-patient, per-day cost of about $450 -- substantially higher than the maximum $270 that Medicaid will pay for in-home care starting in January.

The department says it won't allow loss of access to services.

"We monitor these rates continuously, especially at the beginning, especially to make sure that all participants have access to the services they need and that we have quality services," spokesman Tom Shanahan said. "If we have issues with either access or quality, we will have to review those rates."

But Shawn Johansson, director of Idaho Falls-based H.A.S. Inc., said his business won't even be able to make payroll under the new reimbursement rates. In order for the business to cover costs, he said, it would have to take out a loan equal to 12 percent of its total costs each year without ever repaying the loans.

"They're arbitrary cuts," Johansson said. "It's going to shut down half the companies (who provide in-home services,) if not more. And it's going to put the community at risk."

Most H.A.S. caregivers who work directly with clients are paid only $8.50 per hour. And that's relatively high for the industry, Johansson said. So there isn't much room to cut in caregivers' wages.

Many individuals at the "intense" level of treatment either have convictions for violent felonies or have behaviors that would amount to violent felonies if courts didn't take their disabilities into account, he said.

"The vast majority of these individuals present significant risk to the community," he said.

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