Raises for in-home care workers included in state budget turn out to be just a recommendation

In the state budget passed last fall, North Carolina lawmakers said they included raises for workers who provide direct care for the elderly or people with disabilities who live at home. The budget says that the rate increase is to “assist” in getting workers to $15 an hour.

As it turns out those workers won’t get enough punch out of the budget provision to hit that $15 hourly minimum any time soon. Companies aren’t required to use the money — part of Medicaid rate increases — on worker raises. Federal pandemic-era rate increases are expiring, so whatever funds do get passed along to direct-care workers won’t be enough to pay them a living wage. The median wage for home health care workers was $10.74 an hour in 2020, according to the Bureau of Labor Statistics.

Dave Richard, deputy secretary for Medicaid at the state Department of Health and Human Services, called the budget’s Medicaid rate increases “an important first step,” but it will take more than a year to raise pay for in-home direct care workers to the $15 an hour minimum.

The legislature in its budget included raises for a variety of workers, intended to help get them to a $15 an hour minimum wage. Money was set aside for school support staff, direct care workers employed in facilities and group homes for people with disabilities, and for direct care workers who provide in-home care to the elderly and disabled people.

Medicaid rate increases cover raises for both categories of health care workers. Companies that operate facilities and group homes must use at least 80% of the money for employee raises. But for health care workers who provide in-home services, the budget language omits the part about passing 80% of the money on to workers.

The state Medicaid office in January told agencies that employ these in-home workers that 80% of the money from the increase should go to wages. The remaining 20% of the Medicaid rate increase money could be used for administrative costs, payroll taxes, benefits, and other expenses. The information was included in a Medicaid bulletin that notifies providers about changes to the government insurance program.

Employers, however, balked. A state Medicaid administrator described it as “pushback” in a meeting with legislators last month. As a result, the directive in the Medicaid bulletin was softened to “strongly encourage” providers use 80% of the money for raises.

“The General Assembly’s intent was for the vast majority of those dollars to go to the direct care workers,” Richard said in an interview this week.The budget calls for the Medicaid office to determine “the manner in which each provider is required to utilize that increased rate and to demonstrate compliance with those requirements.” Still, the office “did not have the legal authority” to require an 80/20 split, Richard said.

There is no minimum amount of money that companies must pass on to workers. Richard said he anticipates a significant majority of companies will use the money for raises, anyway, because they need and want to keep employees.

The state Medicaid office plans to survey employers to ask how they’re using the money and intends to check the records of some companies to get specifics. The number of employers’ records that will be checked hasn’t yet been determined, Richard said, but the information will be collected, and legislators will get the results.

“This is the biggest increase for direct care workers, the biggest rate increase that’s happened in my years for these types of services,” Richard said. “The General Assembly, they deserve to have this information come back to them.”

He anticipated having a report on how companies are spending the money later this year.

Worker advocates push for more

C.C. Croxton, North Carolina organizing director for the National Domestic Workers Alliance, is concerned that the 80% requirement was dropped. Croxton is part of a group that includes advocates for the elderly and people in long-term care facilities, long-term care industry representatives, and others, which is working on policies to support direct care workers.

“As NDWA, we fought for this legislation in order to ensure that workers are brought up to a minimum standard of $15 an hour,” she said in an interview. “The legislative intent was very clear. We want the implementation to match the intent. We’re doing everything we can to make sure the money gets into the hands of workers.”

An effort called “Essential Jobs, Essential Care,” a project of the NC Coalition on Aging and a national group focused on the direct care workers called PHI, is working to convince policymakers that creating a strong direct care workforce is essential in a state where more and more people are going to need it.

According to PHI, 92% of the direct care workers in North Carolina are women, and 61% are people of color. More than half live in poverty or close to the poverty line. As a result, direct care workers often have more than one job and leave the industry for less stressful and higher-paying work.

Direct care workers are employed in a variety of settings, said Heather Burkhardt, executive director of the Coalition on Aging. The pay can differ, depending on where people work and what Medicaid service they’re providing.

“It’s really critical that we bring everybody up to lift wages and do things outside of wages to improve these jobs,” she said.

Employers say reimbursements are insufficient

There were lots of discussions among legislators, Medicaid officials, and representatives of industries that employ direct care workers about the 80/20 requirement, said Tim Rogers, president and CEO of the Association for Home & Hospice Care in North Carolina. In those talks, some industry representatives said it would be impractical to impose the requirement, Rogers said, because of way Medicaid billing is structured and the variety of jobs direct workers perform.

Rogers said he is encouraging members of his association to pass the money on to workers, not only because the state will ask how it’s being used but also because the companies need to keep employees.

“The vast majority of people are going to do the right thing,” he said. “If not, they’re in the business for the wrong reasons. Those good direct care workers will be able to find employment elsewhere.”

Even with the rate increase, Medicaid payments to agencies for in-home care is about $19.80 an hour, Rogers said. That’s not enough, he said, to pay workers $15 an hour, pay nurse supervisors and cover administrative costs.  Agencies need more money if they’re expected to pay a living wage, he said. “Otherwise, we’re going to lose more good people.”

Karen McLeod, president and CEO of Benchmarks, a coalition of mental health and child welfare agencies, said direct care workers can find jobs at Walmart and fast food restaurants that pay more.

Even direct care workers committed to their clients leave those jobs because they earn too little to provide for their own families, she said. “It’s not that they don’t love what they do,” she said. “They care deeply about this work. They want to survive.”

Like Richard, McLeod said companies will channel the money to raises because they need workers so desperately.

“We strongly believe there is nothing but disincentive not to put the money through to workers. Otherwise, you won’t have workers,” she said. “Agencies are reducing capacity for services because they can’t find or keep their staff. It’s incentive for providers to pass the money on to workers, and then some.”

Frontline workers

Direct care workers deserve higher pay and more respect, said Terrie Able, of Charlotte. Able is long-time direct care worker who has her own clients and, before the pandemic, worked for agencies.

People who need care in their homes and in facilities depended on health care workers doing their jobs through the pandemic, she said. “Your health care workers were on the front line like any other first responder,” said Able, who is part of the Fight for $15 campaign.

She agreed that companies would have an incentive to use some of the Medicaid rate increase to raise pay because the competition for workers is fierce. When agencies don’t have enough workers to cover shifts, they’ll advertise that they’re adding a few dollars an hour to their base pay or offer gift cards to try to convince people to take the work, Able said. But sometimes, workers who agree to take those jobs don’t find that extra pay in their checks, she said.

And she worries that some companies that do increase wages will make other cuts – eliminating travel reimbursements, for example.

“Guaranteed, they’re going to take something away,” she said.