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BOARD OF DIRECTORS

Susan BayerlPeople Home Health ServicesChairperson

Mary WintersRegionCareExecutiveVice Chairperson

James RollaPeople Care, Inc.Treasurer

Richard SchaeferBetter Home Health Care AgencySecretary and Long Island Chapter

President

Annette HorvathAll Metro Health CareVice Chairperson, LHCSA

Kenrick CortTri-Borough Home CareVice Chairperson, CHHA

Sandra Lyons-JacksonCompanion Care of RochesterFinger Lakes Chapter President

Iris CognevichBAYADA Home Health CareHudson Valley Chapter President

Amy Thomas

Best Choice Home Health CareNew York City Chapter President

Debra ObenhoffHome Helpers and Direct LinkNortheastern New York ChapterPresident

Patricia DwyerHealth ForceWestern New York Chapter President

Gary CarpenterAVZAssociate/Allied Representative

Sheila RabideauHome Health Services of WestchesterJewish Community Services

CHC Chairperson

Andrea BrownProgressive Home Health ServicesPublic Policy & Government RelationsCommittee Chair

Bader ReynoldsCareGiversImmediate Past Chair

20 Corporate Woods Blvd.

2nd Floor

Albany, NY 12211

hcp@nyshcp.org

(P) 518.463.1118

(F) 518.463.1606www.nyshcp.org

October 14, 2015

The Honorable Andrew M. CuomoGovernor of New York StateExecutive ChambersNYS State Capitol BuildingAlbany, NY 12224

Dear Governor Cuomo:

On behalf of the members of the New York State Association of HealthCare Providers, Inc. (HCP) and the tens of thousands of homeboundclients we serve, I am writing to inform you of the serious negativeconsequences that the recent changes to the Fair Labor Standard Act(FLSA) rules regarding overtime pay and other current and pendingwage pressures and policies will have on the provision of home careservices in New York unless the State takes immediate action toprovide temporary and long-term relief to the home care industry.

Absent quick and significant financial assistance by the State, a homecare industry already in crisis by Wage Parity requirements, severepayment delays from managed care plans, double digit WorkersCompensation increases and a mercurial pace of reforms, will be

confronted with unacceptable risks to our primary mission: thecommunity-based care of our frail, elderly, and disabled patients.

On October 13, changes to the FLSA companionship rule went intoeffect requiring home health aides and personal care aides to be paidovertime rates based on time and a half their regular rate of pay ratherthan the State minimum wage. Home care agencies have received noadditional support, either through the State or through managed careorganizations, to cover the additional expenses of complying with thenew FLSA rule.

The new Federal overtime rule brings new urgency to the need tocomprehensively address the financial challenges facing NewYorkshome care agencies, particularly providers of long term care. Theseservices are now primarily funded through Medicaid Managed LongTerm Care (MLTC) plans. The increased overtime costs far exceed thecurrent level of reimbursement that home care agencies are operatingunder, and there have been no guarantees from the New York StateDepartment of Health (DOH) or the MLTC plans that providers willbe reimbursed at rates that will permit them to meet the new overtimecosts required under the law.

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Faced with mounting financial pressures due to rising costs and inadequate reimbursements,many of our members have responded to the rule change by reducing their overtime as advisedto do by the MLTC plans, despite the significant disruption it will cause for both their patientsand their aides. However, due to the nature of home care, some amount of overtime will beunavoidable, and many agencies, particularly in rural areas, will have no choice but to continuepaying overtime to their existing aides because they cannot recruit additional staff to handle the

additional hours. Many agencies are also limiting their availability to accept new 24-hour live-in cases, despite the demand for these services, because of the overtime implications.

New Yorks home care industry cannot continue to absorb these increased costs withoutcommensurate reimbursement by Medicaid, managed care organizations, or other payers. Weare facing a tidal wave of financial and regulatory challenges that threaten the stability of theindustry and, ultimately, continued patient access to home care services. In addition to increasedovertime costs, these include scheduled increases to the State minimum wage, Home CareWorker Wage Parity increases in New York City, Westchester, Nassau and Suffolk Counties,steeply rising Workers Compensation rates, new Federally-mandated health insurancerequirements, and other unfunded wage and benefit mandates. Proposals to increase the States

minimum wage to $15 and additional overtime increases if a number of State lower courtdecisions on overtime are upheld would jeopardize the entire home care industry unlessincreased funding is put into the system.

At the same time, home care agencies are struggling to navigate a complex and rapidly evolvinghealth care delivery system that, to date, has not yielded benefits to the industry. The transitionto managed care has been fraught with challenges that have still largely remained unaddressed.Consequently, agencies are experiencing significant cash flow deficits due to delayedreimbursements, inadequate payment rates, system inefficiencies, and failure to be reimbursedfor services rendered. Rate cuts at both the Federal and State levels have removed even morefunding from the system. Compounding the problem, the transition to managed care hasdramatically increased administrative burdens on home care agencies; regulatory streamliningis needed to reduce system inefficiencies and keep pace with the changes in the health caredelivery system.

Home care is a critical component of the States health care system, and is widelyrecognizedas the most cost-efficient and patient-preferred method of care delivery.

We urge you to take the following actions to ensure that there continues to be a robustnetwork of providers across the State available to meet the growing demand for long termhome care services in New York:

1) Immediately establish a transitional funding pool to reimburse home care agencies for the

costs associated with the new FLSA overtime rule and to ensure continuity of care for elderly,disabled, and chronically-ill clients;

2) Ensure that there is adequate funding flowing into the States Medicaid managed caresystem and ultimately to home care providers to cover the cost of compliance with all Stateand Federal wage and hour requirements;

3) Require that managed long term care plans promptly and adequately reimburse homecare agencies for services rendered, and work to resolve costly system inefficiencies.

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Due to limited data availability for long term care services, it is difficult to quantify the additionalcosts of complying with the FLSA overtime rule and the upcoming increases in the Stateminimum wage and Wage Parity, but HCP estimates that it will be hundreds of millions ofdollars. This does not include other costs borne by the industry, such as sharply escalatingWorkers Compensationrates projected to increase nearly 30% this year - and the impact of

potential further minimum wage increases to $15 an hour. Nor does it include infrastructureinvestments needed to effectively participate in new and evolving health care delivery andpayment models, such as the Delivery System Reform Incentive Payment (DSRIP) program andvalue-based purchasing (VBP). HCP is working to identify these costs through member surveysand will continue to assist the State in its data collection efforts.

In conclusion, the future of the home care industry in New York has never been moreprecarious. Without immediate attention to infuse adequate funding into the system, there couldbe devastating consequences for patients continuity of care and access to care for hundreds ofthousands of New Yorkers across the State. In order to ensure that home and community-basedcare is able to play the integral role envisioned for it in the health care transformations that are

currently being developed, the State must significantly increase its investment now.

We look forward to working with you and your Administration to address these criticallyimportant issues.

Sincerely,

Claudia J. HammarPresident

Cc:

Jim Malatras, N.Y.S. Director of State OperationsPaul Francis, N.Y.S. Deputy Secretary for HealthHoward Zucker, MD, Commissioner, N.Y.S. Department of Health (NYSDOH)Jason Helgerson, Deputy Commissioner and Medicaid Director, NYSDOHU.S. Senator Chuck SchumerU.S. Senator Kristin Gillibrand

N.Y.S. Senate Majority Leader John FlanaganN.Y.S. Assembly Speaker Carl HeastieN.Y.S. Senator Kemp Hannon, Chair Senate Health CommitteeN.Y.S. Assembly Member Dick Gottfried, Chair, Assembly Health Committee