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OHCA Calls on State to Suspend its Home Care Choice Program, Predicting Public Bailout

The Home Care Choice Program was fully launched this month, to offer seniors and their families an alternative to private home care agencies, which assist them with basic needs and allow them to stay in their home. The program utilizes the workers from the Medicaid program, but costs are to be borne entirely out of user fees. The Oregon Health Care Association, which would compete with the program, argues the program bills seniors below costs and will not be self-sustaining as promised.
May 27, 2016

The Oregon Health Care Association has called for the Oregon Home Care Commission to suspend its program offering home care services to private payers, arguing that the little-utilized program has no way of covering its costs, and taxpayers will be left bailing it out.

“We’re concerned frankly that payment rates are inadequate to support the program,” said Gwen Dayton, the in-house attorney for the association, which represents private senior healthcare service providers, including private agencies that provide home care.

A budget is set at $9 million, which includes a marketing contract to Pac/West Communications to advertise on TV, radio, U.S. Mail and social media to spread the word about the program, which will provide middle-class seniors and their families the chance to buy into a system that has worked well for the Medicaid system -- and compete with the private payers who belong to the Oregon Health Care Association. .

Only about six consumers have signed up with the Home Care Choice Program since it opened to private payers earlier this year, but Commission Director Cheryl Miller said it had only been offered on a trial basis, and opening only to the general public May 16. Pac/West bid on the contract, and began advertising this month as well.

“We really need to see what happens in the real world,” Miller said. “It’s really too soon to know the response.”

The projections for spending $9 million budget were preliminary, Miller said, and built based on assumptions of how many consumers would sign up.

Miller was unable to share any newer data, saying the program was too new and the Department of Human Services also didn't say how much money was given to Pac/West upfront on advertising for the launch. Most of the costs are tied to the services rendered, she said, so if revenues are lower, expenses would be as well.

The hourly rates have been set at $22, with $14 going toward wages. When the legislation passed, Oregon Health Care Association President Jim Carlson helped negotiate changes to the bill but didn’t fight its passage, believing the state’s program would be uncompetitive. At the time, the program had expected to cost $25 an hour, higher than the private sector, without providing as much training or nurse supervision as private agencies.

But now, the $22 hourly cost is roughly the same as private homecare agencies, which will have to market their services on quality and comprehensiveness rather than price, while Carlson questions whether the state is offering such services below cost.

“The number of people they need to for this to break even is just completely unrealistic,” said Carlson. “It’s obviously being subsidized. They’re spending money on PR contracts. The statute’s real clear that it has to be self-sustaining.”

Dayton pointed out to the commission that while many expenses will fluctuate based on volume, the program will still have fixed overhead costs, including marketing expenses -- which are budgeted for $300,000 regardless of how many people use the services.

The 2013 Legislature did budget $1.3 million in general fund dollars in start-up money to cover the initial marketing contract, as well as $575,000 for information technology costs. Ongoing costs will have to be self-generated.

The Home Care Choice Program was enacted by the Legislature in 2014, and was a big political victory for the Service Employees International Union Local 503, one of the largest campaign finance contributors for Democrats. SEIU 503 represents the commission’s home care workers as well as many public employees.

At the time, it was seen politically as compensation to SEIU after the Democrats balanced the 2013-2015 budget by trimming public employee pensions, although most of those cuts were later restored by the Oregon Supreme Court.

Despite Miller’s insistence that the program was launching as planned, SEIU spokeswoman Jill Bakken wouldn’t respond to questions or address the concerns raised by Carlson and Dayton.  

Home care workers help people with their basic needs of daily living, including dressing, bathing, cooking, shopping and medication management, although they are generally not trained to inject medications or replace a registered nurse or certified nursing assistant.

Short of suspending the program, Dayton suggested some minor improvements such as giving a longer time period before canceling a client’s services, and defining “medication assistance” more narrowly so these home care workers are only working within their narrow scope of practice.

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