S3491

An Act raising the Medicaid reimbursement rate for personal care services and supplementing and amending P.L.2017, c.239.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) The Legislature finds and declares that:

a. Personal care services are an integral part of providing reliable and accessible healthcare to New Jersey’s elderly, sick, and disabled populations. Such services are provided in the home and include assistance with activities of daily living and household duties essential to the patient’s health and comfort. For the applicable patients, home health care provides greater cost efficiencies, better patient outcomes, and more dignified treatment than care provided in long term care facilities, and is consistent with the 1999 United States Supreme Court decision in Olmstead v. L.C. and New Jersey public policy.

b. The current Medicaid reimbursement rate for personal care services provided in the managed care delivery system is a minimum of $16.12 per hour. Home Health Agency Providers utilize these funds to cover direct and indirect administrative costs, as well as wages for workers.

c. New Jersey’s Medicaid reimbursement rate for personal care services is one of the lowest in the United States and on average approximately 25 percent less than neighboring states, despite that the cost of providing these services is similar across the region. For example, Connecticut has a rate of $19.05 per hour, Pennsylvania has an average rate of $19.50 per hour, New York has a rate between $21 and $23 per hour, and Massachusetts has a rate of $24.40 per hour.

d. While New Jersey has one of the lowest Medicaid reimbursement rates for personal care services in the entire country, it has one of the highest costs of labor, averaging at 18 percent above the normal wage rate for home health workers. States like Oklahoma and Mississippi, that have Medicaid reimbursement rates at $16.20 and $17.64 per hour, respectively, each have substantially lower costs of labor than New Jersey.

e. Dictated by this low reimbursement rate, providers cannot offer a competitive wage to the workers who directly provide personal care services, which has led to instability and high turnover within the home health industry. With private companies, such as Amazon, and State hospital systems, such as Cooper University Health Care, paying $15 per hour, there is a significant workforce issue in retaining and recruiting workers to provide personal care services. The recent adoption of a $15 per hour State minimum wage, pursuant to P.L.2019, c.32, further amplify the challenges to develop and grow this essential workforce under the current reimbursement rate.

f. While the Department of Human Services has focused its efforts on an ongoing multi-year initiative to provide lower-cost community-based services to long-term care Medicaid clients rather than to place them in higher cost nursing homes, this effort is dependent on a strong and thriving home health workforce to deliver services in the home. The cost-effectiveness of home and community-based services as a substitute for nursing home use is clear, with community-based services projected to cost $42,200 per client in FY 2019 and nursing homes services projected to cost $71,000.

g. In the coming years, a rapidly growing elder population will increase the demand on the home health system. According to the recent New Jersey Governor’s Advisory Council on End-of-Life Care Report and Recommendations, New Jersey residents 65 and over are expected to grow by 54 percent by 2030, leaving 2 million people potentially needing personal care services. The report further stresses the uncertainty in how the current healthcare system will be able to meet the growing needs for chronic, palliative, and end-of-life care. With the current personal care workforce unable to meet the needs of this expanding population, it is likely that the State will experience an escalation in high cost hospital and nursing home admissions.

h. It is, therefore, in the public interest for the Legislature to set a minimum Medicaid reimbursement rate for personal care services that reflects the rates of neighboring states and the implementation of a $15 per hour State minimum wage. Affording the employees who directly provide these critical services with a competitive wage will stabilize the home health workforce, maintain the quality of care for personal care service recipients, and deliver cost savings to the State of New Jersey by further rebalancing long-term care services.

2. Section 1 of P.L.2017, c.239 (C.30:4D-7n) is amended to read as follows:

1. The hourly reimbursement rate for personal care services within the Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), whether the services are provided in the Medicaid fee-for-service delivery system or through a managed care delivery system, shall be no less than the established State Medicaid fee-for-service rate. [Any and all rate increases realized pursuant to this section shall be used solely to increase wages for workers who directly provide personal care services] On January 1 of 2020 and January 1 of each subsequent year, the reimbursement rate shall be increased by an increase in the consumer price index for all urban wage earners and clerical workers (CPI-W) as calculated by the federal government for the 12 months prior to September 30 preceding that January 1, except that any of the following rates shall apply if it exceeds that rate determined in accordance with the applicable CPI-W for the indicated year: on July 1, 2019, the reimbursement rate shall be $20 per hour; on January 1, 2020, the reimbursement rate shall be $21 per hour; and on January 1 of each year from 2021 to 2024, inclusive, the reimbursement shall be increased from the rate of the preceding year by $1 per hour. If the federal minimum hourly wage rate set by section 6 of the federal "Fair Labor Standards Act of 1938" (29 U.S.C. s.206), or a successor federal law, is raised to a level higher than the State minimum wage rate set in section 5 of P.L.1966, c.113 (C.34:11-56a4), then the hourly reimbursement rate for personal care services established pursuant this section shall be increased by the level of the federal minimum wage rate. Subsequent increases based on increases in the CPI-W pursuant to this section shall be applied to the higher hourly reimbursement rate for personal care services.

(cf: P.L.2017, c.239, s.1)

3. This act shall take effect on July 1, 2019 and shall apply to services provided on or after the effective date of this act and to any managed care organization contract which provides benefits under the Medicaid program executed or renewed by the Division of Medical Assistance and Health Services in the Department of Human Services on or after the effective date of this act.

STATEMENT

This bill raises, over time, the hourly Medicaid reimbursement rate for personal care services to $25. Providers who receive reimbursement for personal care services utilize those funds to cover direct and indirect administrative costs, as well as wages for workers who directly provide personal care services. Personal care services are provided in the home rather than a long term care facility and include assistance with activities of daily living and household duties essential to the patient’s health and comfort.

Currently, pursuant to section 1 of P.L.2017, c.239, the reimbursement rate for personal care services within the Medicaid program, whether the services are provided in the Medicaid fee-for-service delivery system or through a managed care delivery system, is required to be no less than the established State Medicaid fee-for-service rate. However, pursuant to the FY 2019 Appropriations Act, the hourly reimbursement rate for fee-for-service personal care services is $19, while the hourly reimbursement rate for personal care services provided through a managed care delivery system is required to be no less than $16.

Under the bill, the current rate would be maintained until certain provisions are implemented. For example, the bill stipulates that on January 1 of 2020 and January 1 of each subsequent year, the reimbursement rate is required to be increased by an increase in the consumer price index for all urban wage earners and clerical workers (CPI-W) as calculated by the federal government for the 12 months prior to September 30 preceding that January 1. The bill also provides for certain increases in the reimbursement rate greater than the increases resulting from CPI-W calculations. Under the bill, the reimbursement rate will be increased to $20 per hour on July 1, 2019, to $21 per hour on January 1, 2020, followed by $1 increases each year until the rate reaches a level of $25 per hour in 2024.

In addition, if the federal minimum hourly wage rate set by section 6 of the federal "Fair Labor Standards Act of 1938" (29 U.S.C. s.206), or a successor federal law, is raised to a level higher than the State minimum wage rate set in section 5 of P.L.1966, c.113 (C.34:11-56a4), then the hourly reimbursement rate for personal care services established pursuant the bill will be increased by the level of the federal minimum wage rate. Subsequent increases based on increases in the CPI-W pursuant to the bill are required to be applied to this higher hourly reimbursement rate for personal care services.

Finally, this bill eliminates the current statutory provision requiring any and all rate increases in the hourly reimbursement rate for personal care services to be used solely to increase wages for workers who directly provide personal care services.

This bill is intended to ensure that the reimbursement rate for personal care services reflects the rates of neighboring States, such as New York with a reimbursement rate between $21 and $23 per hour, and the implementation of a $15 per hour State minimum wage. It is sponsor’s belief that affording the employees who directly provide these critical services with a competitive wage will stabilize the home health workforce, maintain the quality of care for personal care service recipients, and deliver cost savings to the State of New Jersey by further rebalancing long-term care services.