Case Studies of Six State Personal Assistance Service Programs Funded by the Medicaid Personal Care Option. VI. Attendant Issues: Family Providers, Wages, Benefits, Withholding


A. Family Provider Regulations

Family members may not become providers, but could become surrogates. Family is defined as parent, spouse, child, son-in-law, or daughter-in-law.

B. Attendant Wages

Independent providers are reimbursed by the state at $7.85 per hour, $11.80 per hour on Thanksgiving and Christmas day. Night attendants receive a flat nightly rate plus an hourly wage for services in excess of 59 minutes. The ILCs receive $0.24 per unit for administration. This is a fairly generous reimbursement, which allows consumers to recruit attendants and ILCs to pay for overhead and staff.

Until recently, reimbursement rates have been determined solely by the state Rate Setting Commission, which is responsive to consumers and providers. Critics charged that it was generally too responsive, citing inflated Medicaid reimbursement rates to medical professionals and durable medical equipment vendors. In 1989, the rate-setting commission was changed to an advisory body, so that the state Medicaid office could have a say in rate setting. DPW administrators say this was a necessary step in containing state expenditures. Some disability advocates expressed concern about the potential impact of this transition, but others say that reimbursement to ILCs is a relatively insignificant line-item on the Medicaid budget so they doubt that rates will be effected.

C. Attendant Benefits

No benefits are provided to independent providers.

D. Withholding and Liability Issues

Rules regarding attendant withholding have been intentionally vague, with no clear designation of responsibility, but this lack of policy has recently been called into question. ILCs have combined all PCA service invoices and billed Medicaid for a lump sum reimbursement. The ILC also sends individual invoices to a for profit computing service (UNISYS) which checks each invoice. The DPW compares the ILC claim with the UNISYS data, and the ILC must reconcile any difference. This is an extraordinarily complicated process which can involve hundreds of thousands of dollars each month, and the ILCs must maintain a separate accounting department to process the paperwork involved. There is no record of what actually happens to the reimbursement check after it is issued to the consumer.

An ILC was audited in 1990, and the IRS reviewed this billing process and decided that the PCAs could be designated as ILC employees. They threatened to hold the ILC liable for income tax, but then negotiated a settlement whereby the ILC would establish a formal process for designating responsibility for withholding.

Some PCA agencies are now issuing 1099 forms to consumers, and instructing them to tell their attendants that they are liable for paying income tax as independent contractors. This may have an impact on service delivery, which to this point was based on what one service coordinator referred to as "money under the table." There will be a net loss in pay, as taxes are paid, which could cause some attendants to drop out of the system. The work force could further be depleted because many consumers are currently using foreign students without work visas, illegal aliens, and AFDC recipients as attendants. These attendants cannot report their income because of loss of benefits or potential deportation. One consumer interviewed has already lost a long time attendant because of new withholding requirements established.

An ILC staffer estimates that up to 25% of the current caseload will require a surrogate to handle the additional paperwork required for withholding. Despite these dire predictions, the policy change seems inevitable. The training resources of the ILCs may be used to facilitate the transition, but some disruption of services is likely.

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