New York’s health companies could pocket millions meant for low-wage care aides

Two health care companies are positioned to keep tens of millions of dollars that are meant to benefit the army of low-wage home health aides who care for disabled and elderly New Yorkers.

The first company, Public Partnerships LLC, recently took over New York’s state-funded home health program. The second, health insurer Leading Edge Administrators, was hired by PPL to provide insurance and other benefits to the hundreds of thousands of workers — mostly women and immigrants — who provide the home care. The new coverage began in May.

A New York Focus investigation has found that Leading Edge has championed a business model allowing the employers they work with to keep money that should legally go to their workers.

In partnership with PPL, that strategy could help the two companies hold on to nearly $100 million a year in New York.

“That is them keeping the money that they were supposed to pay to the employees,” said LaDonna Lusher, partner at employment law firm Virginia & Ambinder, after New York Focus described the business model to her. “I do think that the New York attorney general could investigate that.”

A spokesperson for the attorney general’s office declined to comment and the state has not accused the companies of any wrongdoing. PPL is currently facing multiple lawsuits alleging that it has underpaid New York’s home care workers, who generally make about $20 per hour. The company denies those allegations.

There are two parts to Leading Edge’s model.

In the first, 40 cents per hour out of every NYC-area home care worker’s paycheck will automatically go towards the Leading Edge health plan. That plan doesn’t cover most medical expenses, like hospital care and specialist visits, but rather covers only basic preventative care, like annual physicals and mammograms. That’s useless for the majority of home health aides, who already have health insurance that covers those basics.

Because many aides likely will not use the insurance, Leading Edge and PPL will be able to keep the money that they take out of the aides’ paychecks to pay for it, instead of spending that money on health care. and there is no way for most aides to opt out.

“I don’t want anything to do with this insurance,” said Maggie Ornstein, a home health aide who cares for her mother in Queens and was forced to enroll in the Leading Edge plan. “I already have insurance that I pay a lot of money for.”

The second part of the Leading Edge model involves deducting more money from home care workers’ hourly pay and putting that cash in an account that they can use for expenses ranging from prescription drugs to transportation costs. Aides frequently complain that the account is difficult to use, and the company admits that roughly a third of employee funds go unspent — which could equal tens of millions of dollars more each year not going to New York’s home care workers.

“It only qualifies for certain things. It won’t qualify for other things. The aides don’t know that in the beginning, and then they learn that the hard way,” said Lusher, the employment lawyer. She added that many health care companies offer similar accounts — and workers frequently struggle to use them.

New York Focus’s ongoing investigation into Leading Edge — which sometimes goes by the name Omni Advantage — has revealed patients left in ruinous medical debt, numerous suits by doctors and hospitals who have accused the company of not paying bills, and a founder, Jerry Weissman, convicted of insurance-related felonies for which he was sentenced to 18 months in prison.

Even how the company spends its profits is questionable: Weissman and his wife Barbara run a charity — the Modim Foundation — to which they and the companies they control have donated over $5 million since 2022. The charity has reported giving away $4.3 million since then but has refused to disclose where it sent the money even after repeated inquiries from New York Focus — a violation of federal law that raises questions about whether the Modim Foundation is truly doing charitable work.

Some legislators have expressed concern about Leading Edge’s history and practices, but the company has not yet faced any consequences or public scrutiny from government regulators. A legislative hearing to investigate PPL’s takeover of the home care program was scheduled for early July, but was then postponed to August.

Leading Edge did not respond to requests for comment for this story.

A PPL spokesperson said that New York Focus’s new findings are “categorically incorrect and founded on outdated assumptions and misinformation,” and that the company and its partners are in “full compliance” with New York law and “not profiting off unspent premiums.” Money meant for employees “will be used only to benefit workers,” they said.

The spokesperson, who wouldn’t share their name, did not respond to follow-up questions or agree to interview requests.

The two programs that Leading Edge offers have their roots in a 2011 New York state law known as “wage parity,” which says that home care workers in New York City and the surrounding area must be paid a supplemental amount in addition to the state minimum wage.

Almost as soon as the law was passed, companies such as Leading Edge found a way to circumvent it by focusing on a critical loophole: The bonus wages can be paid either in cash or in benefits, such as health insurance.

Leading Edge’s strategy relies on offering workers benefits, but making those benefits very difficult to claim. When employees don’t claim or use the full value of their benefits, the company paying saves significantly.

The majority of home health aides will likely be unable to claim any benefits from the Leading Edge plan. That’s because they already have public health insurance or coverage through another job or a family member, according to an analysis of census data by Barbara Caress, a health policy professor at Baruch College. These plans provide all of the services covered by the Leading Edge plan. As a result, insurance plans like Leading Edge’s are usually useless to workers, said Edward Larned, a vice president at New York-based company Clarity Benefit Solutions.

“It’s like, ‘Hey, I’m offering a medical plan,’ and it’s the worst plan ever,” Larned said.

There is no way to opt out of the Leading Edge plan unless health aides purchase an even more expensive plan from the company, one which also has huge gaps in coverage. People enrolled in Medicare, which the federal government offers to Americans over 65, can also opt out.

Since most workers are already covered under a different insurance, the 40 cents per hour that they pay for the Leading Edge plan will likely go almost entirely unspent. According to a former Leading Edge leadership employee, who spoke on the condition of anonymity due to continued employment in the insurance industry, the average number of bills submitted under similar plans was less than one per employee per year.

In a 2018 appearance on the podcast All Things Homecare, Leading Edge insurance and benefits specialist Mayer Majer acknowledged that “utilization is really low” for these kinds of Leading Edge plans.

PPL has tried to minimize the fact that workers are paying for the program, instead framing it as a benefit on top of their salary. When asked during a radio interview why workers are being forced to enroll in the plan, ex-PPL president Maria Perrin said that “there is no cost” to employees to be in the plan.

Health aide Cynthia Villalobos, who cares for her mother on Staten Island, rejected this claim. “I’m not a fool. I know that money is getting taken out of my check,” she said. Villalobos already has health insurance through her other job at a sleepwear manufacturer, and doesn’t plan to use the insurance from Leading Edge.

The former leadership employee said that this type of insurance plan is an arrangement that Leading Edge has created numerous times with other clients in New York — and profited handsomely from.

That’s because Leading Edge takes the money workers paid for the insurance — and didn’t use — and splits it with the employer.

“They’re putting in programs that give kickbacks to the employer,” the former employee said. PPL did not answer New York Focus’s inquiry about whether it is using this model.

An insurance claim has first been stamped “approved,” but then stamped “denied.”

In 2020, New York’s legislature passed a law meant to end this type of practice. They barred companies like Leading Edge from taking bonus wages meant for workers and returning the cash to employers.

The mandatory health insurance business model serves as the replacement. These plans can reach unheard-of profit margins — as high as 70 percent per year — netting Leading Edge and its clients millions of dollars, the former employee said. Margins in the insurance industry are generally in the single digits.

If the plan that Leading Edge is offering PPL hits that benchmark, it could mean that the two companies will reap nearly $60 million a year in profits, according to New York Focus’s analysis.

Another part of Leading Edge’s benefit package could also lead to tens of millions of dollars meant for home care aides remaining with the company and with PPL.

Another portion of every worker’s hourly pay — between 22 to 47 cents per hour, depending on their location — will go towards the company’s “Flex Card” program, with workers receiving a debit card to be used to pay for eligible expenses such as health and transportation.

The workers don’t have to pay taxes on this part of their salary (Leading Edge’s clients also save money because this portion of employees’ wages is exempt from Social Security and Medicare taxes, which are paid by employers). However, by Leading Edge’s own admission, a significant amount of the money goes unspent.

In the 2018 podcast, Majer, the Leading Edge employee, said that about 30 percent of Flex Card dollars are never spent. If that rate was applied to all of the health aides now in the Flex Card program, that would equal nearly $30 million each year not being used by workers.

Majer did not respond to a request for comment.

One of the reasons that much of the money isn’t spent is because the card is difficult to use. Facebook forums for New York home health aides abound with complaints that certain stores or websites don’t accept the card, or it doesn’t work for particular products.

Aides also complain that the card’s website is difficult to navigate and frequently unusable. “The hours I have spent on this are hours that I’m not spending hanging out with my mother or providing her with the care she needs,” said Ornstein, the Queens home health aide.

Like with the insurance plan, Leading Edge has a method for getting the money back. When health aides leave their jobs, PPL and Leading Edge can deduct an “administrative fee” each month until the account’s balance reaches zero, according to documents prepared by Leading Edge.

This is a strategy frequently used by employers to reclaim money after it’s been allocated to employees, said Larned, the vice president at the benefits company.

“We would just withdraw that from their account balance every month until the combination of that withdrawal and their spending gets down to zero, and then we close out the account,” he said.

This appears to be a strategy that Leading Edge has used on previous occasions.

Rather than slowly draining former employees’ benefit accounts, companies that want to obey the spirit of the law can mail their former employees a check for the sum they accrued before leaving the job, Larned said.

Helping companies spend less on their workers is an explicit part of Leading Edge’s business pitch. In a LinkedIn post from last year, Majer — the company executive — boasted that Leading Edge can “help you save” by providing employees with “benefits instead of wages.”

In the 2018 podcast, Majer acknowledged that this arrangement is unpopular with some home care aides. “The aides don’t want the card, they want the money,” he said.

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