New Report Details COVID-19’s Devastating Impact on Home Care Finances, Staffing Levels

Staffing Reclaims Title of Home-Based Care Industry’s Biggest Challenge

In January, New York Gov. Andrew Cuomo released a proposed budget that included a slew of cuts to make up for the $15 billion deficit that the state was facing amid the ongoing public health emergency.

On Wednesday, the Home Care Association of New York State (HCA-NYS) released a report that explained how some of those specific cuts could be devastating to home-based care providers and why the budget should be revisited.

Cuts that would directly affect the home-based care industry include a 1% reduction for Medicaid providers, a 3.5% retroactive rate reduction to managed care plans and a 50% reduction in home care workforce recruitment and retention funding.

Less funding could not come at a worse time for the state’s home-based care providers. Even before the pandemic, 55% of all home care agencies in New York were estimated to have a negative operating margin, according to HCA-NYS.

That number has undoubtedly increased during the COVID-19 crisis, as agencies have seen a 136% increase in personal protective equipment (PPE) costs in addition to other expenses.

“Our goal has been to try to educate the state officials who are going to make decisions in the budget process on this role that we play,” Al Cardillo, president and CEO of HCA-NYS, told Home Health Care News. “We’re calling on legislators to reject these cuts in our field, because not only are you going to have an adverse effect on those you are caring for, but you’re going to cripple the very part of the system that is needed desperately during COVID.”

HCA-NYS has nearly 400 provider and organization members that deliver home- and community-based care to hundreds of thousands of New Yorkers annually.

The staffing environment is already turbulent in home-based care. That’s why the 50% reduction to home care recruitment and retention funding would hit especially hard.

Last year was the first year of decline in home health aide employment following a six-year period of growth in New York.

Overall, 85% of home care agencies in New York report that existing structural workforce shortages have been “greatly amplified by COVID-19,” according to HCA-NYS. About 44% of home care and hospice agencies have experienced a decrease of 11% or more in their home health aide and personal care aide workforce capacity since March 7, 2020, when the public health emergency was declared.

“We’re really presenting the fact that home care is, to a great extent, the solution that keeps the system going,” Cardillo said. “You don’t want to trip up the very thing that’s maintaining your health care system.”

The struggle that New York providers are already facing is reflected in the numbers.

One-third of them have relied on Paycheck Protection Program (PPP) funds to meet payroll. Additionally most agencies are relying on some form of money borrowing to stay afloat, according to HCA-NYS’s report.

As of July 2020, at least 458 in-home care businesses in New York had received nearly $18 million in PPP loans of under $150,000, a HHCN review of federal data found.

That’s why HCA-NYS is not just asking for the cuts to be done away with. The association is also hoping for things like PPE costs to be baked into reimbursement moving forward.

“It’s something that should be built into the system so that when those costs are incurred and necessary, they’re in there,” Cardillo said. “They’re reflected in the rate so that providers can have the proper stockpiles and proper preventive protocols that are financed. It shouldn’t be something that you’re scrambling for and then two years later, you’re restoring it in a rate adjustment — it’s got to be real time.”

Money coming in

There is still a chance that through advocacy efforts and other funding measures, those cuts to home-based care could be mitigated.

For one, on a federal level, House lawmakers included a 7.35% Medicaid boost for home- and community-based services in the stimulus proposal making its way through Congress.

In addition, the original budget proposal had the worst-case scenario in terms of budget relief from the federal government in mind. Instead of just $6 billion in relief, New York could be getting as much as $12 billion.

With a $15 billion budget deficit, fewer cuts would need to be made.

“We’re obviously urging that the anticipated increase in federal aid to the state be utilized to turn back those cuts,” Cardillo said. “But also, we’re hoping that aid that’s specifically directed toward COVID relief should also be fairly and proportionately directed to the home- and community-based system.”

Thus far, much of the COVID-19 relief money has not been directly set aside to aid home- and community-based services.

HCA-NYS is also asking for more information from the state legislators. Since the onset of the pandemic, home-based care providers have fulfilled reporting requirements and surveys on a day-to-day basis, but have not received any beneficial data back in return.

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