National Association of Medicaid Directors Asks Secretary of Labor to Delay Implementation of the Companionship Services Final Rule
May 1, 2014 10:31 AM
The National Association of Medicaid Directors (NAMD) recently sent a letter to Labor Secretary Thomas Perez asking him to delay for 18 months implementation of its Final Rule, “Application of the Fair Labor Standards Act to Domestic Service,” which was issued October 1, 2013.
NAMD is a bipartisan organization that represents Medicaid Directors in the fifty states, the District of Columbia, as well as US territories. The Final Rule is of particular interest to NAMD because state Medicaid programs are responsible for the financing, delivery and oversight of services that are at the heart of the FLSA rule change, specifically, “Medicaid-financed in-home services, particularly for individuals with extensive home care needs.” NAMD had previously advocated against the proposed rule changes because of the financial and care impacts on state Medicaid programs nationwide.
NAHC has led the efforts to stop the Department of Labor’s changes in the companionship services and live-in rules that will require minimum wage and overtime compensation for personal care workers beginning in January 2015. NAHC worked with NAMD and the Center for Medicaid Services to gain their awareness of the rule impacts on Medicaid starting in 2000 when a previous rule change was proposed.
The new companionship rule redefines “companionship services” to be limited to “fellowship”, “protection”, and limited direct care. Care related services are limited to no more than 20% of the hours worked. This definition means that the vast majority of Medicaid personal care services will be subject to minimum wage and overtime requirements. Private pay home care impact will vary on a client-specific basis. The new exemption also excludes employees employed by home care agencies (“third-party employers”) from any remaining exemption. The exemption will remain for workers directly employed by the client or a family member. However, that exemption will apply only if the services are within the new, limited definition of companionship.
According to NAMD’s letter:
“We remain concerned that the current effective date of January 1, 2015, fails to provide sufficient time for the federal agencies and state partners to understand the policy and operational issues, develop workable solutions on key components and determine an appropriate course of action if we cannot identify a feasible solution.
We respectfully request that the Department of Labor extend the effective date for compliance for an additional 18 months. The extension will allow the Labor and Health and Human Services departments to work through and, where appropriate, reevaluate those areas where unforeseen issues have arisen and outstanding questions remain as it pertains to Medicaid. An extension will also allow the Administration to continue with more thoughtful discussions with states regarding the unintended impact on certain Medicaid-financed in-home services, particularly for individuals with extensive home care needs…
In addition, many states are increasingly concerned that the tools and technology to comply with the rule do not exist in some areas and may require a significant investment of resources in other areas. State legislatures will need to approve funding for any such investment in many states. More time is needed to refine the cost estimates and secure approval for such resources. State agencies will then need additional time to procure the vendor contracts and educate staff, providers and Medicaid enrollees about the new tools.”
During a teleconference shortly after the Final Rule was announced, NAHC’s Vice President for Law stated that under the new rule, “almost nothing in the realm of home care personal care has much of a chance for qualifying for the companionship exemption or the live-in care exemption…[Home care] workers are going to get the short end of the stick. It will become an industry filled with part-timers.”
If the Department of Labor honors NAMD’s request, the Final Rule - which is currently scheduled to go into effect on January 1, 2015 – would be delayed for 18 months, going into effect July 1, 2016 instead.
To read NAMD’s letter, please click here.
To read NAHC’s continuing coverage of this issue, please click here.