Rising Gas Prices Expose Home Care Fault Line

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Published by enakhnikian PHI Blog

We all feel the pinch from high gas prices, but for home care workers it’s more of a punch. As PHI President Steven Dawson puts it: “The doubling of gas prices over the past few years has been like a pay cut for many home care workers “” particularly those serving clients in rural areas.

“Policy makers like to believe that home care is cheaper than nursing homes, but that’s only true because home care workers are paid less than nursing home workers, often without health benefits,” adds Dawson. “There’s not much good to say about higher gas prices, except perhaps that they will now force policy makers to look more closely at the real costs of shifting toward home-based care, and in response create realistic reimbursement policies that will offer home care workers a true livable wage and benefits.”

When PHI’s Michigan State Director Hollis Turnham wrote about the home care gas crisis in our blog in June, talking about the problems she was already hearing about, anticipating others, and asking what other people were experiencing, the response was swift and impassioned. An employer called rising gas prices “the 500 lb gorilla in the room for home care agencies.” A home care worker talked about seeing turnover increase and “looking for something closer to home myself.” The head of a home care and hospice aide recruitment agency said he planned to do “something very tangible to address this issue,” though he wasn’t ready yet to say just what.

People need a place to share information and ideas, learn how others are coping with the crisis, and vent a little. We hope this section of our blog will be that place for you.

If you have experiences, ideas, or information to share, please leave a comment. And if you want to learn more about how rising gas prices are exposing the fault line underlying our home care delivery system, read on.

Wages Fall as Gas Prices Rise
Wages that average less than $10 an hour, combined with the difficulty of piecing together full-time work from a patchwork of cases, have always added up to low annual earnings for personal and home care aides. In 2006, their median annual earnings totaled just $13,000, and about half lived in a household that relied on Medicaid, food stamps, or other public assistance.

What’s worse, raises have been failing to keep up with inflation in many states. Nationwide, real earnings for personal and home care aides fell by 4 percent between 1999 and 2006, according to PHI’s State Chart Book on Wages for Personal and Home Care Aides, 1999-2006. (pdf)

Now wages that were stretched paper thin are being strained to the breaking point by the price of gas, and home care workers, employers, and clients are paying the price.

Some home care workers can reach their clients by bus or subway, but most need a car. Keeping up with car payments, upkeep, and insurance while keeping the gas tank filled has never been easy, but it’s becoming much harder since gas prices have topped $4 a gallon. Take Fahntah Staples, a personal care assistant in Philadelphia. Fahntah earns about $400 a week before taxes, and lately she’s been paying $160 a week for gas. Her job reimburses her just $20 to $25 for mileage. “It would be a lot cheaper to catch the bus, but the schedules don’t work,” she says. “I need to get from one part of the city to another in about half an hour between clients, and sometimes I’d need to take three different buses.”

Stephanie Butler, a home health aide with Keystone Home Health Services in Philadelphia, is caught in the same trap. “I love my job””I love to take care of people,” she says. “It’s always been what I love to do, all my life. But this puts a strain on it. I’m seriously considering getting a job where I can just go one place and stay all day, because the gas is killing me.” A single mother of three, Butler can’t afford to take her girls anywhere after work. “The kids say, ‘Mom, where are we going?’ and I say, ‘Well, we’re not going much of anywhere, because I got to make this gas last.'”

Mileage Reimbursement Can’t Keep Up
Aides who work for an agency are almost always reimbursed for the miles they drive between clients – usually between about 30 cents/mile and the IRS’s current rate of 58.5 cents/mile – but workers who are hired directly by the people they assist get no mileage reimbursement at all. Even agency employees are not reimbursed for driving to and from home at the beginning and end of their shifts, and those miles can add up fast – particularly if they have only one client or live far from the people they assist. Helen Hanson (pictured at left), a home care worker in Maine, drives more than 120 miles a week to earn just over $200 before taxes. “I love my job,” she says, but the high cost of gas is making her wonder if she can afford to keep it – especially since recent state budget cuts reducing the amount of time she can spend with a client are causing her to earn less for the same amount of travel.

The monthly mileage checks that used to cover gas and at least part of the car payment for workers like Brenda Nachtway (pictured below) no longer cover even the cost of gas. “I’ve only been about to budget $100 a month for gas, and it’s now costing me $230 a month,” says Nachtway, a hospice aide in Lewisburg, Pennsylvania. I’m finding it difficult to make up that difference. This is one of the reasons I work three jobs.”

Mileage rates may be too low for workers, but they’re too high for the agencies that employ them. Churchill Hindes, president and CEO of a Visiting Nurse Association that serves two rural counties in northwestern Vermont, says his agency pays roughly $2,000 a day in employee mileage reimbursement.

“Each year, we reimburse 1.5 million miles of travel. That’s the equivalent of three round trips to the moon. No insurance company in the world, including Medicare and Medicaid, will pay us for that, so we’re absorbing those costs. We’ll probably spend three-quarters of a million dollars on mileage reimbursement this year – 120 to 150 thousand dollars more than last year.”

In addition, “once or twice a year,” Hindes’ agency gives a $25 gas card to everyone on the staff who drives to see clients. “It’s a sign of solidarity with our staff, because it’s an important issue,” he says. But the money didn’t go far this year. “It used to be a fill-up and now it’s half a tank.”

Employers Struggle to Keep Workers, Serve Far-Flung Clients
A survey by the National Association of Area Agencies on Aging found that more than half of the agencies had already cut back on delivery of home care and other services because of fuel costs, and 90 percent expected to make cuts next year.

Sherry Gast (pictured), the office manager for WellsBrooke Premium Home Health Care in East Lansing, Michigan, says she feels for the workers who “have to decide between spending money on gas and other basic needs.” She also worries about her clients, who need to be able to rely on quality care. “When you bring somebody into your home, it’s very scary,” she says. “That person has to be a quality person, who is competent and well trained and ready to do whatever they need to do – yet still compassionate and sensitive to the fact that this is somebody’s home, sensitive to the emotional needs of the client. It’s difficult to ask competent, professional, compassionate staff to work part-time for about $9 an hour and then to travel 20-40 miles per case, when gas is at $4.25 per gallon.”

Gast says she’s been able to find good staff to serve all her clients so far, although it’s gotten a lot harder to find people to help those who live far away. But not all employers can say the same.

“We’ve had some people who have been long-term supporters of this agency that we’ve had to end relationships with because we couldn’t provide any staffing,” said Bridgette Menger-Anderson, manager of a Minneapolis home health service, in a June 5 Minnesota Public Radio report. And a July 22 Associated Press article cites a not-for-profit home care and hospice company in Montana that is “looking at discontinuing service in the state’s back country.” The company serves two sparsely populated Montana counties covering 7,136 square miles.

Other employers are finding it hard to recruit the caregivers they need. Suzanne Russell, executive director of Home Caring Services in southeastern Iowa, says her nonprofit agency is losing good candidates because it can reimburse only 40 cents a mile. “Some of the for-profit agencies are giving employees more, and we have lost some good applicants because we could not match their mileage.”

Employer Solutions
Agencies are trying various ways of coping with the gas crisis. Among them:

Paying a one-time stipend for each trip taken by staff to see clients. Some pass on the extra cost (often between $5 and $15) to the client.
Providing cars and gas for employees.
Pushing for the use of tele-health care systems that monitor vital signs electronically, to cut back on the number of visits needed by home care professionals.
Policy Solutions
“The gas price crisis demonstrates how precarious our home and community-based service system really is,” says PHI National Policy Director Steve Edelstein. “Our failure to adequately compensate home care workers and assist with transportation costs puts them and the people they care for at risk. States need to revamp their reimbursement systems to ensure that these workers earn a living wage, with regular updates to keep up with inflation.”

No reforms to Medicaid’s home care payment rates have been proposed yet, but South Dakota Senator Tim Johnson plans to introduce a bill to reform Medicare’s payment rates in order to “close the gap between the current Medicare reimbursement and rising gas prices.”

For publicly financed programs, one possible approach is mandating emergency pass-throughs of additional funds to home care and personal assistance providers to cover higher transportation costs “” but significant monitoring would be required to make sure that the additional funds reached workers’ pockets in a timely fashion.

Ultimately, according to Dorie Seavey, PHI’s Director of Policy Research, the solution lies in improving Medicaid reimbursement policies so they do two key things:

Establish systematic, on-going methods for setting payment rates based on providers’ actual costs and competitive market rates, and
Build in regular evaluation of the adequacy of rates over time, including emergency reviews based on sudden increases in key costs, such as transportation.
“Right now,” says Seavey, “most states set their payment rates for home- and community based home care services in an ad hoc fashion “” without reference to any market analyses or minimum competitive standards for wages and benefits, without reviewing actual provider costs, and without a commitment to review and update these rates in a systematic and ongoing way.”

Read more about PHI’s state and federal policy recommendations for improving direct-care worker wages and benefits, and the government payment policies that play such a key role in determining this compensation.

Read more about gas prices on PHI’s blog or make it an RSS feed

Elise Nakhnikian, Senior Online Editor
[email protected]

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