COVID-19 crisis crimps funding for home-health aides in Minnesota

The COVID-19 recession that flipped Minnesota's state budget this spring from a $1.5 billion surplus to a $2.5 billion deficit hurt personal-care aides who serve disabled and elderly Minnesotans on Medicaid in their homes.

After two years of work, Sen. Jerry Relph, R-St. Cloud, a retired attorney, and Rep. Jennifer Schultz, D-Duluth, a university economist, were shepherding bills to raise the reimbursement rate to home-health agencies that employ the aides, known as PCAs. That would let the businesses raise base pay for aides to $15 an hour in a tough trade that is short of workers.

The measures, which drew bipartisan support and backing from Gov. Tim Walz, were not only compassionate but economical. Without home-health care, many low income patients would go to nursing homes that cost $90,000 or more a year on the public dime, according to the Minnesota Department of Human Services.

"All of a sudden, we ran out of money," Relph said last week. "It's a pretty big lift, a couple bucks an hour times thousands of PCAs is about $300 million [a year]. But it improves the quality of the life for the elderly and the disabled economically, through in-home PCA services that gives them a more independent life and puts money back in the economy by paying more to the hardworking PCAs in their local communities."

Relph also worked futilely to use some of the $841 million in federal CARES Act funds sent to Minnesota recently to cover some of the recession-related spending by state, county and local governments.

Relph and Andre Best, the founder of 15-year-old Best Care, said that some of the smaller, weaker agencies this year will fail, compounding the worker shortage.

"Between COVID and the riots in the Twin Cities, the PCA program, for the second year, didn't get the attention it deserves," said Best, 46, also an attorney and board member of his industry association.

"We have decided not to limit overtime this year, and we won't have additional workers to pick up the hours, because of the negative impact it would have on our clients," he said. "We estimate more than a $60,000 loss. Many other providers are not in a position to absorb these kinds of losses, so I worry about what will happen to a lot of people."

Best Care, one of the larger home-health businesses in the state, serves Minnesotans with 800 full-and-part-time PCAs. Many of Best's PCAs are friends or relatives of at least one client. That also creates an emotional incentive.

The Relph bill would have provided a 15% increase to home-health agencies, to more than $20 per hour, of which 80% must be used to pay PCAs, enshrining a $15 minimum wage, up from about $13.50.

The PCA medical-assistance program serves about 45,000 Minnesotans at a cost approaching $900 million last year in state and federal funds, or about $20,000 per client per year.

That's less than it would cost for a few months in a nursing home. Patients typically require assistance ranging from a couple hours a day to 24-hour care. They are, by virtue of qualifying for Medicaid services, low-income folks.

Employers started to get squeezed last year when they negotiated a $1.25 increase with PCAs that effectively brought the minimum hourly wage above $13. However, the Minnesota Department of Human Services only allotted an extra 40 cents an hour to the agencies. That squeezed many.

"We tried mightily," Relph said. "I spent countless hours trying to get some of the federal CARES money, but we can't use it for wages [under Medicaid rules]. These are our most vulnerable people. We have to find money somewhere. Finding somebody to bathe and care for people for less than they can make flipping burgers is tough. These PCAs tend to be hardworking and love what they do."

Walz did allow agencies to stretch existing workforces further by raising the maximum number of hours PCAs can work monthly.

Best also is a techie who shares his app with other agencies so PCAs can file time sheets electronically so they don't have to go into an office. He added that his and other agencies are further stressed this year by COVID-related restrictions and expenses.

"Some of the smaller agencies, and there are about 200 who only have about 50 clients, can't absorb those losses. They are going to stop overtime. And some of the state's most vulnerable patients will go without care. It's a lot to ask independent agencies to bear that burden. Some feel a moral obligation. But something has to give."

The Department of Human Services said in a statement: "The department has been working with stakeholders to ensure the strength of the personal care workforce … and leading discussions about rate changes with stakeholders. The department will issue recommendations on rate changes to the Legislature this summer."