Group homes say they’re being shorted by state in effort to raise care worker wages

Touted as one of the top achievements in a $1.2 billion supplemental budget passed last month, state lawmakers say they are countering Maine’s severe shortage of trained direct care workers to care for seniors and people with disabilities by finally funding a long-sought wage increase.

But some directors of state-subsidized congregate living facilities say the state’s plan to raise wages to $15.94 an hour, or 125% of the state’s minimum wage, is essentially robbing Peter to pay Paul, as the wage boost will come at the expense of their other program costs.

“We see all the rhetoric out there around how they have finally and ultimately fulfilled this 125%-of-minimum-wage initiative. It’s not true,” said Todd Goodwin, CEO of the John F. Murphy homes, which runs 37 group homes in the Lewiston-Auburn area. The agency is the largest group living provider in Maine.

Direct care professionals, many of whom are women and people of color, care for seniors and people with disabilities in their homes or group settings and are some of the lowest paid employees in the state. Low reimbursement rates from MaineCare, the state’s Medicaid program, often leave agencies without enough funds to adequately pay their employees. That low pay, combined with often having to work far more than 40 hours a week to cover staffing shortages, has led to an extremely high turnover rate among care workers and uneven services for those in need. 

A multi-year legislative campaign to address the high turnover gained steam in January 2020 when the Commission to Study Long-Term Care Workforce Issues issued its report recommending that direct care workers be paid at least 125% of the minimum wage. In 2021, a bill introduced by Rep. Jessica Fay (D-Raymond) to adopt the recommendations put forth by the commission, including a pay raise, was supported by group home agencies and their workers and passed the legislature.

The bill wasn’t funded until this year, however, when it was included in the bipartisan supplemental budget signed by Gov. Janet Mills on April 20. Lawmakers said agencies will receive back pay retroactive through January 2022 when Fay’s law went into effect.

‘Bait and switch’

But group home managers who Beacon spoke with say the wage hike is partially being funded by shifting money from their operations budgets. They explained that it is because the state switched to a new funding model late last year without notifying them.

From 2007 until Fall 2021, group home agencies were funded through MaineCare based on what is known in the industry as the Deshaies funding model. Under the model, a per hour reimbursement fee is paid out in a lump sum to each agency, 40% of which must be allocated for staff wages, 18% for payroll taxes and benefits, 25% for program costs and 11% for administration costs, along with a 6% provider tax.

Under the old model, agencies received a total reimbursement rate of $29.28 per service hour, 40% of which allowed only for a $11.71-an-hour wage for direct care workers. This left agencies with $17.57 per hour for all other program costs. 

But under the new model adopted by the state last year, the allocation for other program costs has shrunk. The total per hour reimbursement rate was raised to $32.13, but subtracting the higher wage of $15.94 an hour from that rate leaves the agencies with $16.19 per hour for program costs.

That seemingly small difference between the remaining $17.57 per hour under the old model and the $16.19 per hour left under the new model will yield significant impacts on an agency’s annual budget, explained Ray Nagel, the executive director of the Independence Association, a community in Brunswick for people with intellectual disabilities. 

“That is a lot of money,” he said. “In one year alone, just for my agency, that’s a difference of about $360,000.” 

Goodwin echoed Nagel, saying that in order for the state to fully fund the pay raise and not cut into their other programing funds, the total per hour reimbursement rate for agencies would need to be raised to $39.85, not the $32.13 currently set by the state.

Goodwin maintains that the state did not inform group home agencies that they were no longer using the Deshaies funding model. He said he and other providers have made records requests under the Maine Freedom of Access Act to find out more about the state’s new funding model.

“Absent a published methodology upon which to check claims, there is nothing about this that doesn’t stink,” he said.

Rep. Michele Meyer (D-Eliot), who serves as the House chair of the legislature’s Health and Human Services Committee, gave this response when Beacon asked her about the agencies’ concerns over cutting operation costs as a result of the state’s new funding model.

“There are many providers in Maine and we were glad to hear from them during the public hearing process for the supplemental budget,” she said in a statement. “The HHS Committee prioritized their needs and asked the Appropriations Committee to fund them. The law we passed requires that impacted rates include a minimum of 125% of minimum wage for the labor component of the rates. Please note, providers must choose to pass that on to their staff.”

Nagel agreed that there has been a lack of transparency from lawmakers about the new funding model. “They’re just trying to baffle people by saying, ‘We put millions of dollars here, we put in this and this and that,’” he said. “But when you look at the details, that’s 100% wrong.”

He continued, “They essentially reallocated the rate so that now our agencies are paying for the labor portion at the expense of the programming. We’re extremely upset. We think it’s a bait and switch.”

Wages need to continue to rise, advocates say

Alan Cobo-Lewis, a professor at the University of Maine who serves as head of the school’s Center for Community Inclusion and Disability Studies, said raising direct care worker wages is critical to eliminating large waitlists for various home or community-based care services. Several thousand Mainers in need of care are currently on such lists. 

But Cobo-Lewis, whose son has a disability and relies on daily-living support services, said the controversy about how the state has funded the wage boost is ultimately beside the point, as even the long-sought raise to $15.94 an hour can’t compete in today’s labor market against less demanding jobs.

“125% of minimum wage was a pre-pandemic recommendation,” he said. “I think that the state needs to invest in getting direct care worker wages up to around $20 an hour. Anything less devalues direct care workers and the people with disabilities who they support.”

He added that other state initiatives to recruit new direct care workers are likely to be unsuccessful unless workers are provided a living wage. “All the money being spent on one-time incentives, career lattices, websites to promote direct care worker jobs, etc., isn’t going to address the crisis unless hourly wages also go up,” he said.

Top photo by Getty.