The Personal Care Assistance (“PCA”) and home health care industry has been rewarding for owners of PCA agencies in Minnesota, some of whom are first-generation immigrants serving a particular demographic or immigrant community. A perfect storm of regulatory changes, however, is making this line of business increasingly challenging. Because Minnesota PCA businesses bill the state’s Medicaid program for reimbursement of services provided, and because reimbursement rates are set by statute, PCA companies cannot raise their prices. The ceiling on hourly revenue rates becomes an issue when the cost side of the business increases due to new regulations.
Overtime Issues
For decades, home health care workers were exempt from the overtime pay requirements of the federal Fair Labor Standards Act (“FLSA”). This changed on October 1, 2013 when the U.S. Department of Labor (“U.S. DOL”) eliminated the exemption.  The regulatory change was challenged in court, but a ruling from the U.S. Court of Appeals for the D.C. Circuit, which the U.S. Supreme Court declined to review in July of 2016,  meant the regulation went into effect.  Some companies in Minnesota were unaware of the rule change and were not paying overtime for hours worked in a single week over 40.  Starting in 2017, U.S. DOL investigators have audited several home health care companies in Minnesota and have overseen the payment of hundreds of thousands of dollars in back wages. Most PCA companies in the state are now aware of the requirement and do not allow PCA employees to work more than 40 hours in a week. The reason for such a policy is that a personal care assistant is typically paid $12 per hour and gets reimbursed at $17 per hour. The $5 per hour difference is what the business needs to pay for overhead, insurance, nurses, office staff, etc. If a personal care attendant works 50 hours, they receive $18 per hour (time and a half) for ten hours, which is less than the reimbursement rate.  Policies against overtime are not popular with PCA employees but they have become the new normal.
Electronic Visit Verification
The federal 21^st Century Cures Act requires states, including Minnesota, to implement Electronic Visit Verification (“EVV”) for all Medicaid reimbursed personal care services and home care services. EVV will require personal care assistants to log in at the client’s home using an electronic device or app with geo-location capabilities in order to confirm their location and track hours spent providing services. The actual technology used to comply with the law is left to the state and the Minnesota Department of Human Services (“DHS”) has not yet finalized guidelines for PCA companies in Minnesota, but there is certain to be some administrative cost for companies to implement EVV when the requirement becomes effective, currently scheduled for January 1, 2020.
(Personal care assistants are not the only employees being electronically monitored in the workforce. The wider trend of hi-tech monitoring of employees has raised privacy concerns on the part of some employee advocates. For example, a similar federally-mandated requirement for commercial truck drivers to be subject to Electronic Logging Devices (“ELD”), which is currently being phased in and becomes mandatory for all drivers and carriers by December 16, 2019, has been criticized by the Owner-Operator Independent Drivers Association. In a poll of independent truck drivers 71% said they would quit trucking if the ELD rule went into effect – a significant concern in light of a national driver shortage.)
Paid Sick Leave and Minimum Wage Ordinances
Both Minneapolis and St. Paul have recently passed employment-related ordinances requiring paid sick leave and a minimum wage for employees working in those cities. Because personal care assistants set their own hours, and because sick leave is not reimbursed by the state, this requirement further erodes profitability for these businesses. And, if the minimum wage hits $15 per hour without a commensurate increase in reimbursements, many agencies may be forced out of business completely.
Conclusion
Along with increased scrutiny by the Minnesota legislature of alleged fraud in state-reimbursed services these are tough times for PCA businesses.
If you have questions about a home health care or PCA business, contact the attorneys at Trepanier MacGillis Battina P.A.
____________
About the author
Trepanier MacGillis Battina P.A. is a business law firm located in Minneapolis, Minnesota. Their business law attorneys can be reached at 612.455.0500.