Kansas Health Institute | Information For Policy Makers. Health for Kansans.

TOPEKA — State welfare officials say they’ve found a way to give a pay raise to the in-home caregivers for elderly or disabled Medicaid beneficiaries while at the same time, lowering the program’s administrative costs.

But some who work with the frail and disabled predict the plan will force many service providers out of business, creating hardships for thousands of people who depend upon them.

“A number of providers, especially the smaller ones, won’t be able to make it,” said Ami Hynten, assistant director with the Topeka Independent Living Resource Center. “They’ll go under.”

Officials at the Kansas Department of Social and Rehabilitation Services and the Kansas Department on Aging jointly announced the policy change last week. It becomes effective Sept. 1.

According to KDoA spokeswoman Sara Arif, the change will save the department about $2 million a year. It’s expected to cut SRS spending by about $4.6 million a year.

People with disabilities and the frail elderly are eligible for Medicaid-funded, in-home services if they are poor and if without the services they likely would move to a nursing home.

They have the option of letting a home-health agency hire and pay their caregivers or hiring the caregivers themselves.

Self-directed care

It’s not unusual for those who choose to “self-direct” their care to hire close friends, neighbors, or family members. But to limit the potential for fraud and abuse, they’re also required to contract with a “payroll agent,” who pays the caregivers and keeps track of the services they provide.

Some of these agents are part-time and oversee services for three or four people. Others, such as the Topeka Independent Living Resource Center, one of the state’s largest, have more than 1,000 clients.

SRS and KDoA have contracts with hundreds of agents across the state.

Currently, the agents are paid an hourly rate that varies according to the needs of each client, some of whom require around-the-clock care while others may get by with a few hours help a week.

The hourly rate is designed to cover both the caregivers’ wages and the agents’ overhead.

Some agents pay caregivers better than others, but there’s nothing to stop a client and their caregiver from switching agents, if they can find one willing to pay the caregiver more.

Caregiver wages also vary across the state. Some make as little as $7.50 an hour, others as much as $11.

The system, in place since 1989, was intended to promote choice and competition.

"Cash cow going away"

Concerns about the policy and how it worked predated the current administration of Gov. Sam Brownback, a Republican. State and federal officials have questioned the system’s administrative costs for several years. SRS and KDoA, pushed by the federal Centers for Medicare and Medicaid Services, had been considering changes to the system for about three years.

“CMS has been the driving force on this,” said Maury Thompson, executive director with Johnson County Developmental Services. “We have a system where service delivery and administration are combined in a single rate. You can’t do that anymore. It has to be one for administration and one for service delivery.”

“I’ll be honest with you, there are some payroll agents out there that do all kinds of training, lots of care coordination, and all the administrative kinds of things that come with doing payroll,” said Jim Beckwith, former executive director of the Northeast Kansas Area Agency on Aging. “And there are some that just process timecards and pay the caregivers $7.50 an hour. They’ve been making a killing off these people and I’m sure they’ll be screaming bloody murder because the cash cow is going away.”

The system, too, he said, has long been plagued by lack of standardization.

“You might have some caregivers who know first aid and CPR and who’ve been trained in the proper lifting techniques. Or, you might not,” said Beckwith, who is now retired. “As long as the person receiving the care has said they wanted them to be their caregiver that’s pretty much it.”

State will set the wages

Under the new system, caregiver wages will be set by the state. Wages will vary, depending upon the gravity of the conditions of the people in their care but, over time, will be capped. Listed below are the new averages:

• $11.31 an hour to care for medically fragile children.

• $10.15 an hour to care for people who’ve suffered traumatic brain injuries.

• $9.64 an hour to care for people with physical disabilities.

• $8.98 an hour to care for people with developmental disabilities.

• $9.32 an hour to care for the frail elderly.

“This is an increase of 9 percent over the current average hourly wage, which is $8.55 per hour,” KDoA’s Arif wrote in an email to KHI News Service, referring to $9.32-an-hour wage for those caring for the frail elderly.

Hyten, of the Topeka Independent Living Center, said she welcomed the prospects for entry-level caregivers getting a raise but said that experienced workers – those who tend to care for those with the most needs - likely will see their pay cut.

“We have (caregivers) who’ve been with us since the 1990s,” she said. “They’re making $10 to $11 an hour, based on performance and tenure.”

"Not enough"

The new system also calls for paying agents a flat $115-a-month fee for each of their customers instead of the hourly rate.

Under the previous administration of Gov. Mark Parkinson, a Democrat, the agents had tentatively agreed to a plan that would have shifted them to a flat monthly fee of $140 per client. The Brownback administration cut that proposed flat rate from $140 to $115.

“That’s not enough,” said Janet Williams, president at communityworks, inc., an Overland Park-based agency that oversees more than 500 full- and part-time caregivers. “It might be if you’re talking about taking somebody grocery shopping once a week, but it’s not if you’re talking about coordinating care for someone who can’t be left alone, someone who has a feeding tube or somebody who has to have their trach (breathing tube) cleaned. The folks with more needs need more staff.”

For $115 a month, payroll agents will have to help customers find and train their caregivers, make sure the services are provided, process the caregivers’ paychecks, and respond to safety concerns.

"Moving to a volume game"

Many payroll agents, Williams said, won’t be able to make ends meet.

“If you’re a locally owned family operation that’s been helping 20 people...you’re not going to be able to do that anymore,” she said. “We’re moving to a volume game.”

Williams and Hyten said they fear, people requiring the most care eventually will have a hard time finding workers.

“Going to a flat rate creates an incentive for agents to accept people whose needs are the least complex and who need the fewest caregivers,” Hyten said. “They’ll be the most desirable…a profit center, if you will.”

“If you’re an agent and you’re getting $115 a month to oversee the care for someone who has to have somebody with them 24 hours a day, seven days a week, and $115 a month to oversee the care for someone who’s down for, say, eight hours a week, what are you going to do? The pay is the same for both.” Williams said.

“When that happens,” she said, “the (care recipient) is either going to have to go to agency-directed care or to nursing-home care, both of which will end up costing the state more than self-directed care. Plus, you’ve also lost freedom and choice.”

SRS and KDoA officials anticipated those concerns.

They said a 2010 study showed that, “the minimum administrative rate for (payroll agents) to break even is $100 per client per month.”

Electronic time keeping

The change in payment is expected to coincide with SRS and KDoA plans for launching a telephone-based “electronic visit timekeeping system” that will record when caregivers arrive and leave a customer’s home.

The new system is intended to reduce the potential for fraud and, according to agency officials, could “significantly reduce the administrative time devoted to the current paper-based timekeeping service.”

SRS and KDoA will cover the costs of the new system.

(Editor's note: Kansas welfare agency chief Rob Siedlecki has promised to transform the Kansas Department of Social and Rehabilitation Services. This is the first in a series of articles examining major policy changes planned or already underway at the agency.)

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