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Seeking an exemption
Home health industry wants employer mandate relief

By Ashok Selvam
Posted: July 20, 2013 - 12:01 am ET

The home health industry, which has come under fire for not providing health insurance to its largely low-income workforce, wants to be permanently exempted from the healthcare reform law's employer mandate. It argues that requiring home-care providers to provide insurance for their workers would significantly decrease access to home health services around the country.

The National Association for Home Care & Hospice, which represents 33,000 home-care and hospice providers, is lobbying for a permanent exemption from the mandate, so that home-care providers are not required to pay the annual $2,000 per employee penalty assessed on employers that don't offer qualifying coverage to their full-time workers. The NAHC argues that its members receive low reimbursement rates from Medicare and Medicaid and can't afford to provide coverage to their workers. Instead, the group is seeking federal subsidies for its workers to buy coverage on the state insurance exchanges.

An NAHC survey found that 62% of home health providers do not provide qualifying coverage to the workers and would face the penalty, which the Obama administration has delayed for all employers of 50 or more full-time workers until 2015.

But labor unions and advocates for home-care workers argue that home-care employers should provide coverage to their workers, who suffer a high rate of workplace-related injuries and medical conditions. They strongly oppose the NAHC's request for an exemption from the employer mandate, noting that home-care providers on average earned a 14.8% margin on Medicare patients in 2011, according to the Medicare Payment Advisory Commission.

The Paraprofessional Healthcare Institute, a New York-based not-for-profit group representing the interests of the nation's 3 million home health workers, estimates 38% of them were uninsured in 2010. For these workers, who frequently have to lift patients and perform strenuous manual labor, lack of insurance means they are less likely to make a doctor's visit if they wrench their backs.

The employer mandate in the Patient Protection and Affordable Care Act seemed tailor-made for home-care workers.

“We certainly did support the ACA because we thought it was important to provide health coverage for the direct-care workforce,” said Steven Edelstein, national policy director for the Paraprofessional Healthcare Institute.

But the decision by many states not to participate in the ACA's Medicaid expansion has reduced the law's coverage expansion for home-care workers. Many home-care workers would otherwise qualify for the ACA's Medicaid expansion, which covers adults up to 138% of the federal poverty level in participating states. In states that aren't expanding Medicaid, however, people with incomes under the federal poverty level also won't qualify for federal subsidies to buy private coverage on the state insurance exchange.

The part-time status of many home-care workers leaves many without employer coverage. That coupled with low wages builds a sympathetic case for home-care workers to obtain employer-provided coverage.

The government reported the country spent $70.2 billion on home-care services in 2010, more than a 33% increase in spending since 2006. That amount is projected to more than double in 2021 to $155.8 billion.

But if providers have to cover their workers, the NAHC warns that they'll downsize their workforce to come under the ACA's mandate threshold of 50 full-time workers, or shift more workers to schedules of less than 30 hours a week, removing them from the mandate.

In addition to an exemption from the mandate penalties, the NAHC wants automatic Medicaid eligibility for home-care workers who qualify based on income. The association also is asking for federal aid so they could offer vouchers to workers who earn less than 400% of the federal poverty level. The workers would use the vouchers to buy coverage on their state's health insurance exchange. The NAHC also wants tax credits ranging from $2,000 to $3,000 per employee, including one that would benefit providers with fewer then 25 full-time employees.

William Dombi, the NAHC's vice president for law, said the Medicare profit margin for home-care providers presents a rosier financial picture than the reality. “Do you understand what it takes to recruit, train and hire a worker?” he said. “Do you understand what it takes to supervise that work and compensate them?”

Meanwhile, the Home Care Association of America, which represents providers of private-duty home care, is asking the federal government to use the Small Business Administration's criteria of total business income rather than number of full-time employees to define a small business. For home healthcare services, under the SBA definition, a small business is one generating less than $14 million in total annual income. Industry groups could not say how many providers would benefit from that change.

PHI's Edelstein said it's important to keep in mind that the home-care industry has a variety of types of providers. Edelstein argues the larger chains, whose interests are prominently represented by the trade groups, could well afford to provide health coverage to their workers.

Observers doubt the Obama administration or Congress will exempt home-care providers from the employer mandate. John Barlament, a healthcare attorney with Quarles & Brady in Milwaukee who represents home-care providers, said “the government hasn't been generous in granting relief to any particular industry.”

Follow Ashok Selvam on Twitter: @MH_aselvam

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