Federal rule challenges Oregon home care system

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SALEM, Ore. (AP) — Federal rules will likely force a major overhaul of Oregon's groundbreaking system for providing publicly funded caregivers to elderly and disabled people, state officials said in a report presented to the Legislature's budget committee on Wednesday.

The rules adopted last year extend minimum wage and overtime requirements to 20,000 home care workers paid through the state's Medicaid program. That will mean a massive increase in costs unless the state curtails services for certain clients, officials say.

Gov. John Kitzhaber has asked the U.S. Department of Labor for a delay, saying in a letter to Labor Secretary Thomas Perez that Oregon hasn't had enough time to negotiate changes to the program.

"These issues quickly become quite personal for consumers," the governor wrote in his letter dated Aug. 14. The Labor Department has not formally responded.

Complying with the federal rule would cost the state $18 million during the first six months of next year, an amount that hasn't been budgeted. The price tag for the next two-year budget cycle, which begins next summer, would be $75 million for the state and $168 million for the federal government, according to a report prepared for Legislature's Ways and Means Committee.

In Oregon's Medicaid-funded home care system, workers help 21,000 elderly and disabled Oregonians with chores such as cooking, bathing and taking medications. The program saves money by avoiding more expensive nursing home care.

Home care workers are employed by their clients, but the money comes from the state Medicaid program, which provides health and long-term care to people who are poor or disabled.

The Department of Labor ruled that the state of Oregon is a third-party employer of the workers because the state pays the bills. That means, starting Jan. 1, workers who exceed 40 hours a week must be paid a higher overtime rate, even if no single client exceeds 40 hours. Workers who serve multiple clients on the same day also must be paid while driving between them.

About 80 percent of consumers won't be affected by the new rules, said Mike McCormick, director of the office of Aging and People With Disabilities at the Oregon Department of Human Services. Of the people who are affected, most are receiving round-the-clock care, often from a relative who lives with them.

Complying with the rules will require changes to the way the state delivers services to the affected consumers, as well as how it tracks hours worked by providers. State officials hope to negotiate policy changes with the Service Employees International Union, which represents state-funded home care workers, representatives of clients, and officials from the legislative and executive branches.

Potential solutions could include reducing the hours of service for some individuals or divvying them up among multiple providers. That might require people now receiving care from a family member to have new, unrelated providers get involved, Kitzhaber noted in his letter to the Labor Department.

McCormick said it's too soon to know what route the state will go. Policy changes will ultimately have to be approved by federal officials.

"Our goal is to make responsible program modifications that have the least impact possible on both providers and consumers," McCormick said.

Heather Conroy, the SEIU's executive director, said the Labor Department's new rules are "a recognition that care providing is work just like any other work." If the state thinks creatively, she said, it can find a way to comply with the rule without cutting service hours.

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