CITY OF MINNEAPOLIS Minimum Wage – update: non-hospital residential health care Committee of the Whole October 18, 2017
Background • On June 30, 2017, City Council approved a municipal minimum wage for the City of Minneapolis. • Council also asked staff to meet with stakeholders in non-hospital residential care enterprises qualifying as large businesses to determine whether they could accommodate minimum wage increases as set forth by policy.
What we learned • The issue of medical reimbursement for medical professionals is complex and varied. • Among some of the most critical nuances are rates can often lag behind service delivery between 18 to as much as 27 months. For others, their rates are “banded” and tied to rates determined by the state legislature. • Recent contracts negotiation with labor have also impacted rates for nursing and home care professionals, even if not a part of a collective bargaining unit.
Nursing home facilities • In 2015, the MN Legislature authorized a new system for nursing facility reimbursement rates called Value-Based Reimbursement or “VBR.” • As of 2016 under VBR, reimbursement rates are based on the actual costs of resident care, but there are limits: if a facility’s care-related costs are greater than its limit, the facility’s rate would not reflect the portion of the costs in excess of the limit. • As with previous systems, facilities’ rates are case-mix adjusted—facilities receive higher rates to care for more-resource intensive patients.
Nursing home facilities A few more considerations regarding reimbursement: • There’s an additional quality component that impacts a facility's rates with those scoring higher in quality surveys or indicators, or those applying for quality incentives based on measurable outcomes, eligible for up to 5% of their operating payment rate, though all providers must achieve measurable program outcomes to retain full funding. • Additionally, MN’s rate equalization law requires nursing home facilities to provide equal services to its residents, regardless of payer source – meaning they cannot charge private paying residents more than the rate paid by the state under its medical assistance program (Medicaid).
Nursing home facilities VBR shows some positive trends in wages and staffing, due in part to the market needing to remain competitive in this field. A 2017 Nursing Facility Payment Reform report issued by the Department of Human Services indicates: • Wages: per hour increases ranged from 3%-12% from 2015 to 2016 under VBR, with “facilities much more likely to use VBR funds to provide increases in wages than in benefits.” • Staffing: noted a “continuing trend of staffing level increases. One-hundred eight facilities (30%) indicated that they increased staffing levels due to the increase in funds from VBR.”
Nursing home facilities But there are flaws as well: • 18-27 month gap or lag between when facilities report their costs and the subsequent associated payment rate year – something that happens with most healthcare providers seeking reimbursement from Medicaid. • Does not include an inflationary adjustment in rate setting – something advocates are trying to get included in the future. • Prior to moving to VBR, most nursing homes were under a 4 year rate freeze and so are still catching up from that period in time.
Nursing home facilities LeadingAge Minnesota: • Represent about 60-70 members in Minneapolis, including 10 nursing homes. • Importantly, are supportive of efforts to increase minimum wage for workers – their request is: • Modify the phase in depending on size of employer and whether such employers provide medical benefits (6 years if not providing benefits and 8 years if providing benefits) or • Treat all nursing home providers as “small” for purposes of implementation. • Their date reveals: • The “lowest wage paid for these positions is below $15 in all cases but one, and other than nursing assistants is often $3 or more less than $15. Again with the exception of nursing assistants, the average wages in all settings are also below $15.” • It also reveals consistency with what we know: most non hospital health care facilities are already paying above minimum wage in order to stay competitive. In fact of the 22 facilities surveyed by LeadingAge, almost 1/3 (32%) already have an average wage above $15/hr.
Nursing home facilities This is consistent with our initial report containing DEED data: • Nursing care facilities: 7 employers/61 employees/$15.57 avg. wage 1-25 • Home health care facilities: 23 employers/215 employees/$10.95 avg. wage employees • Assisted living facilities: 7 employers/167 employees/$9.99 avg. wage • Other residential facilities: 14 employers/142 employees/$8.39 avg. wage • Nursing care facilities: <5 (no identifying data is available) 26-50 • Home health care facilities: 9 employers/299 employees/$8.12 avg. wage employees • Other residential facilities: <5 (no identifying data is available) • Nursing care facilities: <5 (no identifying data is available) 51-100 • Home health care facilities: 8 employers/554 employees/$10.25 avg. wage employees • Assisted living facilities: <5 (no identifying data is available) • Other residential facilities: <5 (no identifying data is available) • Nursing care facilities: 9 employers/1375 employees/$16.54 avg. wage 101-250 • Home health care facilities: 8 employers/1136 employees/$11.05 avg. wage employees • Assisted living facilities: <5 (no identifying data is available) • Other residential facilities: <5 (no identifying data is available)
Other types of home and community-based care • We had an opportunity to speak with other stakeholders in this general non-hospital health care space whose reimbursement rates are tied to some type of regulation. • Specifically, we met with ARRM who represents home and community-based services providers who provide direct support services for people living with disabilities (like PCA’s, for ex.). • Wages for these professionals are almost entirely influenced by the reimbursement rates for services set by the state.
Other types of home and community-based care • While there is no lag in payment for these services, rates for this group are currently “banded” – meaning the state has allowed for rates to be increased throughout the state on a staggered basis. • Average of wages throughout the state are $11.97, with slightly higher rates for those in urban metro areas. • By 2018, rates for all professionals are intended to reach around $13/hr.
Other types of home and community-based care • Aside from reimbursement rates, they also expressed concern with providers who have PCA’s provide services that involve short trips to the city. • For example, many PCA’s travel to Minneapolis to attend a Twins game, visit a museum or go to the theater. Given that our ordinance applies to any employee who performs at least two hours of work in a calendar week within the City of Minneapolis, such PCA’s would be covered by the ordinance. • While also supportive of the City’s efforts to raise the minimum wage, their ask was an outright exemption and if not, a phased in approach that matched their “banded” rate schedule.
Staff considerations • Current rates in comparison to Minneapolis policy requirements • Impacts of providing unique accommodations based on industry • Ability to review impacts by industry through minimum wage impact study
Staff considerations • Ultimately, we do not recommend a change in policy, but do recommend: • Ensuring staff report back on this industry specifically as part of the minimum wage impact assessment. • Including support for improvements to rate reimbursement rates for all non-hospital health care providers in our legislative policy agenda that includes considerations such as inflation rate inclusion and reduction or elimination of the reimbursement lag for providers.
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