The 2022-23 Budget: In-Home Supportive Services

The 2022-23 Budget: In-Home Supportive Services FEBRUARY 2022 Summary. This post describes the Governor’s of the Patient Protection and Affordable Care Act budget assumptions and proposals related to the expansion (90 percent federal reimbursement rate) In-Home Supportive Services (IHSS) program and and the Community First Choice Option waiver offers relevant issues for Legislative consideration. (56 percent federal reimbursement rate). Overall, the effective federal reimbursement rate for IHSS BACKGROUND is about 54 percent. The remaining nonfederal share of IHSS costs is covered by the state and Overview of the IHSS Program. The IHSS counties. Historically, counties paid 35 percent program provides personal care and domestic of the nonfederal share of IHSS service costs services to low-income individuals to help them and 30 percent of the nonfederal share of IHSS remain safely in their own homes and communities. administrative costs. Beginning in 2012-13, however, In order to qualify for IHSS, a recipient must be the historical county share-of-cost model was aged, blind, or disabled and in most cases have replaced with an IHSS county maintenance-of-effort income below the level necessary to qualify (MOE), meaning county costs would reflect a set for the Supplemental Security Income/State amount of nonfederal IHSS costs as opposed to a Supplementary Payment cash assistance program certain percent of nonfederal IHSS costs. The state (for example, about $1,040 a month for an aged is responsible for covering the remaining nonfederal and/or disabled individual living independently in share of costs not covered by the IHSS county MOE. 2021-22). IHSS recipients generally are eligible to receive up to 283 hours per month of assistance BUDGET OVERVIEW with tasks such as bathing, dressing, housework, and meal preparation. Social workers employed by AND LAO ASSESSMENT county welfare departments conduct an in-home The Governor’s budget proposes a total of assessment of an individual’s needs in order to $18.5 billion (all funds) for IHSS in 2022-23, which determine the amount and type of service hours is about $1.6 billion (9 percent) above estimated to be provided. In most cases, the recipient is expenditures in 2021-22. The budget includes about responsible for hiring and supervising a paid IHSS $6.5 billion from the General Fund for support of provider—oftentimes a family member or relative. the IHSS program in 2022-23. We estimate that this The average number of service hours that will be is a net increase of about $2.8 billion (75 percent) provided to an estimated 598,000 IHSS recipients is above estimated General Fund costs in 2021-22. projected to be 120 hours per month in 2022-23. This year-to-year increase in General Fund reflects IHSS Costs Split Between Federal a much faster rate of cost growth relative to Government, State, and County. IHSS costs prior budget estimates. The main reason for the are shared by the federal government, state, year-to-year General Fund cost increase is the and county. Since IHSS primarily is delivered as anticipated ramp down of temporary increases to a Medi-Cal benefit, the federal share of cost is federal Medicaid funds (largely associated with the determined by the Medicaid reimbursement rate, public health emergency) that were used to offset which typically is 50 percent. The state receives General Fund costs in the IHSS program in 2021-22. an enhanced federal reimbursement rate for many This ramp down results in roughly $2 billion in IHSS IHSS recipients who receive services as a result costs shifting back to the General Fund in 2022-23. 2022-23 Budget Series 1 Additionally, the Governor’s budget assumes Additionally, authorized cases continue to grow continued year-to-year growth in the three primary at a similar rate to pre-COVID-19 levels (4 percent IHSS cost drivers: caseload (2.8 percent), hours per annually, or roughly 25,000 more authorized cases case (1 percent), and IHSS provider hourly wages every year). We found, however, that IHSS paid and benefits (3 percent). We describe in more detail caseload is growing at a slower rate since the start key cost increases and cost shifts in this section. of COVID-19 (from 4 percent annually to 2 percent in 2020-21). IHSS Paid Caseload, Hours Per Case, Continued IHSS Paid Caseload Growth, but and Hourly Wage Assumptions at a Slower Rate. Prior to the start of COVID-19, LAO Bottom Line: Growth in IHSS Caseload the average number of IHSS paid cases has grown Continues to Be Slower Than Pre-COVID-19 at an average rate of about 4 percent annually, Rates. Caseload growth, a rising number of paid reaching 555,000 in 2019-20. The Governor’s hours per case, and hourly wage increases for IHSS budget, however, assumes slower paid caseload providers are key drivers of increasing IHSS costs. growth in 2021-22 (2.8 percent) and 2022-23 Based on our analysis, we found that hourly wages (2.7 percent). IHSS paid caseload began to grow and hours per case generally continue to grow at a slower rate in 2020-21 (2.1 percent), which at a rate similar to historical levels. However, we coincided with the start of the COVID-19 pandemic found that IHSS paid caseload continues to grow (March 2020). Based on our analysis of caseload at a slower rate relative to pre-COVID-19 growth data, the slower growth in IHSS paid cases seems trends. Below, we summarize our assessment of to be due, in part, to fewer authorized cases the paid caseload, hours per case, and hourly wage receiving paid services in any given month since assumptions included in the Governor’s budget. the start of COVID-19. Figure 2 shows that the Changes in Caseload Trends Before and After average share of authorized cases that are paid the Onset of the Pandemic. Figure 1 summarizes every month slightly decreased from 90 percent our analysis of IHSS caseload trends before and to 88 percent since March 2020. This translates after the onset of the pandemic. In general, the to roughly 14,000 fewer paid cases every month current average number of new applicants and relative to pre-COVID-19 levels. Some of the denials are similar to pre-COVID-19 levels. In reasons why authorized cases may not receive contrast, the average number of terminations are paid services include recipients not yet hiring an below pre-COVID-19 levels, which in part is due to IHSS provider or being temporarily hospitalized or the temporary pause of Medi-Cal redeterminations admitted into a licensed care facility. Additionally, (which we discuss in more detail in a later section). one possible COVID-19-related reason may be that Figure 1 Assessment of IHSS Caseload Trends IHSS Caseload Trends… IHSS Caseload Trend ...Before COVID-19 ...Since COVID-19 Comparison Average number of new Around 17,000 in any given month. Around 17,000 in any given month. Generally reflects IHSS applications pre-COVID-19 trends. Average number of IHSS Around 7,500 in any given month. Around 7,500 in any given month. Generally reflects denials pre-COVID-19 trends. Average number of IHSS Around 9,000 in any given month. Around 5,000 in any given month. Falls below pre-COVID-19 terminations trends. Average growth in About 4 percent annually. About 4 percent in 2020-21. Generally reflects authorized cases pre-COVID-19 trends. Average growth in paid About 4 percent annually. About 2 percent in 2020-21. Falls below pre-COVID-19 cases trends. IHSS = In-Home Support Services. 2022-23 Budget Series 2 recipients with non-live-in providers or non-live-in Continued Growth in IHSS Wages. providers themselves may be hesitant to interact As shown in Figure 3, the average IHSS hourly with individuals outside of their household due wage has increased by 6 percent annually to public health concerns. We are working with since 2014. The growth in IHSS hourly wages Department of Social Services (DSS) to get in part is due to increases to the state minimum additional IHSS caseload data and will provide wage—from $8 per hour in January 1, 2014 to further comments at the time of the May Revision. $15 per hour in January 1, 2022. Pursuant to Continued Growth in IHSS Hours Per Case. current law, the state minimum wage will remain Since 2016-17, the number of IHSS paid hours at $15 per hour in January 1, 2023, increasing per case increased by about 2.5 percent annually, by inflation annually beginning January 1, 2024. reaching 118.7 hours per case in 2020-21. The Governor’s budget estimates that average Figure 2 hours per case will remain roughly the same in 2021-22 and slightly increase in 2022-23 by Share of Authorized 1 percent (to 119.6 hours per case). Based on IHSS Cases That Were Paid recent growth trends, we expect that the average 2019, 2020, and 2021 Monthly Data paid hours per case will continue to grow in 2021-22 (as opposed to remaining roughly flat). Before COVID-19 Period Additionally, we expect the growth in average hours (January 2020 to February 2020) per case in 2022-23 to be slightly higher than the administration’s current estimate. We will continue to monitor the data related to IHSS paid hours per COVID-19 Period (March 2020 to December 2021) case and provide further comments at the time of 90% the May Revision if necessary. Average Share of Paid Cases Before COVID-19 IHSS = In-Home Supportive Services. Figure 3 Statewide Average In-Home Supportive Services (IHSS) Hourly Wage Reflects Weighted Statewide Average of IHSS Hourly Wage $18 $15.98 $14.93 16 $13.71 14 $12.54 $11.21 $11.51 12 $10.17 $10.32 $10.63 10 8 Average IHSS County Wage 6 State Minimum Wage 4 2 Jan Jan Jan Jan Jan Jan Jan Jan Jan 2014 2015 2016 2017 2018 2019 2020 2021 2022 2022-23 Budget Series 3 Additionally, counties may establish IHSS hourly Consider Possible Ways to Ensure wages above the state minimum wage through local Similar Treatment When Pause on Medi-Cal wage ordinances or, more commonly, collectively Redeterminations Expires. When IHSS recipients bargained agreements. As of January 2022, do not complete the Medi-Cal redetermination 50 counties have IHSS hourly wages above the process they can continue to receive their state minimum wage ($15 per hour). The Governor’s IHSS services through the IHSS-Residual program budget includes about $400 million General Fund unless counties manually terminate them from the ($877 million total funds) in 2022-23 for IHSS IHSS program. Those that are terminated from the previously set, or agreed upon, wage increases. program must reinstate their Medi-Cal eligibility Specifically, this cost estimate partially reflects before receiving services again. Currently, there is the full-year impact of the state minimum wage no consistent approach to manual terminations. increase to $15 per hour (effective January 1, 2022). As a result, some recipients continue to receive Additionally, the Governor’s budget includes services through the IHSS-Residual program, the full-year cost impact of locally negotiated while others do not. wage increases above the $15 per hour state When the pause on Medi-Cal redeterminations minimum wage. expires, there likely will be an increase in Medi-Cal terminations due to beneficiaries not completing the Temporary Pause of redetermination process. We expect that in some Medi-Cal Redeterminations cases, IHSS recipients terminated from Medi-Cal LAO Bottom Line: Consider Ways to Address will continue to receive services through the residual Different Treatment for IHSS Recipients Who Fail program, while others will not. As a part of the to Complete Medi-Cal Redetermination Once 2021-22 budget, the Legislature did not approve the Federal Pause Expires. Medi-Cal redeterminations administration’s approach to address this different were paused during the COVID-19 public health treatment (which was to automatically terminate all emergency. Once Medi-Cal redeterminations begin IHSS recipients who do not complete their Medi-Cal again, some IHSS recipients who do not complete redetermination and require them to reinstate their their Medi-Cal redetermination may move to the Medi-Cal eligibility before reentering the IHSS IHSS-Residual program (fully state-funded IHSS program). Given the continued possibility of differing program), while others may lose their eligibility treatment across similar recipients, the Legislature for IHSS. The Legislature could consider ways to may want to consider the benefits and trade-offs of ensure all recipients receive the same treatment, alternative approaches to ensure similar treatment which we explain in more detail below. for all recipients. For example, the Legislature could Anticipated Expiration of Temporary Pause consider ways to assist IHSS recipients in completing of Medi-Cal Redeterminations and Subsequent their Medi-Cal redetermination or provide temporary IHSS Terminations. Federal COVID-19-related IHSS services for all IHSS recipients while they work legislation effectively requires the state to suspend towards reestablishing their Medi-Cal eligibility. most Medi-Cal eligibility redeterminations Temporary Increase to for the duration of the national public health Federal Medicaid Funding emergency declaration, which the Governor’s budget assumes will last until June 30, 2022. LAO Bottom Line: IHSS General Fund Costs While Medi-Cal redeterminations are paused, Expected to Increase in 2023-24 as a Result of essentially no IHSS recipient would need to be Expiration of Temporary Increase in Federal eliminated from IHSS due to failure to complete Medicaid Funding. Under the Families First their Medi-Cal redetermination. This effectively Coronavirus Response Act, the federal government reduced the number of terminated IHSS recipients increased the federal match rate for Medicaid and the number of IHSS recipients entering the services by 6.2 percentage points for the duration IHSS-Residual program. As a result, the Governor’s of the national public health emergency caused by budget assumes $90 million General Fund savings COVID-19. This increased federal match lowers state for the IHSS-Residual program in 2021-22. costs for Medi-Cal, IHSS, and other programs that 2022-23 Budget Series 4 rely on federal Medicaid funding. The Governor’s Lacking Statutory Structure, Permanent budget assumes this enhanced federal funding is in Back-Up System Delayed. At the start of the place from January 1, 2020 through June 30, 2022 COVID-19 pandemic, the state created a temporary and will offset $940 million in total IHSS General Fund back-up provider system to assist IHSS recipients spending in 2021-22. when their regular provider could not work due to Additionally, under the American Rescue Plan circumstances related to COVID-19. The temporary (ARP) Act, the federal government increased COVID-19 back-up provider system expired on the federal match rate for IHSS and other December 31, 2021. The 2021-22 budget included Medicaid-funded home- and community-based $5 million General Fund to create a permanent services (HCBS) by an additional 10 percentage back-up provider system on January 1, 2022, points from April 1, 2021 through March 31, 2022. contingent on a policy framework being adopted This increase in federal Medicaid funding is expected in statute. However, a policy framework for the to offset over $1 billion in baseline IHSS General permanent back-up provider system has not yet Fund spending across 2020-21 and 2021-22. These been adopted, resulting in a lapse in statewide savings will be transferred to the HCBS ARP Fund and back-up provider services. (Some counties are spent on federally approved HCBS enhancements continuing to provide back-up provider services and expansions. The Governor’s budget reflects the despite the expiration of the temporary COVID-19 baseline IHSS savings and transfer of funds in the back-up provider system.) We understand that Department of Health Care Services budget. the administration intends to propose trailer bill language—effective July 1, 2022—outlining the Status of COVID-19 Program program structure for the permanent back-up Responses and Flexibilities provider system. The Governor’s budget includes $11 million General Fund in 2022-23 to implement LAO Bottom Line: Consider Whether the permanent back-up provider system Certain COVID-19 Program Flexibilities Merit on July 1, 2022. an Extension. The state implemented numerous IHSS program flexibilities and enhancements to Possible Ways to Address Gap in IHSS mitigate health and safety risks associated with Back-Up Provider Services. In the meantime, COVID-19. As shown In Figure 4 on the next page, the Legislature could consider ways to address the many of these program flexibilities and enhancements current gap in statewide back-up provider services. have expired. Given that Omicron has become For example, the Legislature could extend the the prevailing COVID-19 variant in California since expenditure authority of any unspent funds originally the development of the Governor’s budget, the provided for the temporary emergency back-up Legislature may want to consider whether any provider system to June 30, 2022. (Recently, the IHSS program flexibilities or temporary supports administration extended the expenditure authority warrant an extension. for existing essential protective gear funds from December 31, 2021 to June 30, 2022 via an Permanent Back-Up Provider System all-county letter. A similar approach could possibly LAO Bottom Line: Consider Possible Ways be used to extend the expenditure authority of to Address Gap in IHSS Back-Up Provider any unspent back-up provider service funds.) Services Given Delay in Permanent Back-Up Alternatively, the Legislature could allow the Provider System. The emergency back-up provider $5 million General Fund allocated in the 2021-22 system expired on December 31, 2021. While the budget to be used for emergency back-up provider permanent back-up provider system was intended to services until a permanent system is established take effect on January 1, 2022, because no program or adopt the administration’s permanent back-up structure has been set in statute yet, the start date provider system proposal early (to the extent that has been delayed to July 1, 2022. As a result, there is the proposed language reflects Legislative goals). a current gap in back-up provider services. Below, we describe possible ways the Legislature could address this gap in back-up provider services. 2022-23 Budget Series 5 Figure 4 Status of COVID-19 IHSS Program Responses and Flexibilities Program Activity Description of Flexibility End Date Active Initial IHSS Assessment Counties may use video-conferencing for initial assessment only if an applicant or End of the state someone in the applicant’s household has been infected with COVID-19, has symptoms of emergency of COVID-19, or has been exposed to COVID-19 in the previous two weeks. In in California situations where there is less risk of COVID-19 infection, counties should conduct initial assessment via an in-person home visit. Counties may collect as much information as possible regarding the applicant over the phone before the home visit to reduce the amount of time spent in the applicant’s home. Annual IHSS While counties are expected to begin to transition back to in-person reassessments End of the state Reassessment whenever possible, they may continue to use telephone and video-conferencing to of emergency conduct annual reassessments as needed. Additionally, before conducting an in-person in California reassessment, counties may collect as much information as possible regarding the applicant over the phone to reduce the amount of time spent in the applicant’s home. Submission of IHSS When assessments and reassessments are conducted via telephone or video-conference, End of the state Program Forms county staff may accept self-attestations from applicants and recipients and/or their of emergency authorized representatives in lieu of original signatures on most required forms normally in California signed during assessments and reassessments. Submission of IHSS Temporarily waive requirement for IHSS providers to go to IHSS county or public authority End of the state Provider Identification office to present and photocopy original identification documents if office is closed. of emergency Documents As an alternative, counties may accept mailed-in or faxed photocopies of the original in California identification documentation. Quality Assurance and Counties may perform home visits for purposes of quality assurance and program integrity End of the state Program Integrity remotely using telehealth, including video-conferencing and telephone. Specifically, of emergency counties should continue to use video-conferencing in situations where the applicant in California or someone in their household has been infected with COVID-19, has symptoms of COVID-19, or has been exposed to COVID-19 in the two weeks prior to the home visit. In situations where there is no danger of COVID-19 infection, the county can conduct an in-person home visit. Expired Implement Adverse Postpone the implementation of adverse actions, such as reduction of IHSS hours and June 30, 2020 Actions Related to termination from IHSS program, resulting from the IHSS redetermination. IHSS Reassessments Social Worker IHSS and APS social workers perform out-bound calls and/or visits to elderly recipients to June 30, 2020 Outreach ensure at-risk recipients are receiving services they need and are safe in their homes. IHSS Provider Criminal Temporarily suspend requirement for IHSS provider to complete fingerprint-based criminal July 31, 2020 Background Check background check. As an alternative, counties may conduct name-based criminal background checks. IHSS Paid Parent Allow IHSS parent provider in two-parent household to continue to be an eligible IHSS August 3, 2020 Provider Eligibility provider even if the second parent becomes a suitable care provider because the parent is not working or attending school or vocational program. In-Person Provider Temporarily suspend requirement for IHSS providers to complete in-person provider August 31, 2020 Orientation orientation. IHSS Provider Overtime Temporarily remove violations if IHSS provider worked above the allowable overtime limit. August 31, 2020 Violations Federal COVID-19 Paid Provide additional hours of paid sick leave for IHSS providers if they are unable to work March 31, 2021 Sick Leave due to COVID-19. Back-Up Provider Create a statewide emergency back-up provider system with $2 per hour wage differential. December 31, System 2021 COVID-19 Vaccination Pay IHSS provider to accompany IHSS recipient to their COVID-19 vaccination December 31, Assistance appointment. 2021 Note: There is no set end date for the state of emergency in California. IHSS = In-Home Supportive Services and APS = Adult Protective Services. 2022-23 Budget Series 6 Proposed Full-Scope Medi-Cal and from $3,000 to $195,000 for couples no Expansion to Remaining sooner than July 2022. Moreover, the asset limit would be eliminated altogether no sooner than Undocumented Adults January 2024 if the necessary federal approvals LAO Bottom Line: Proposed Full-Scope are obtained. The Governor’s budget assumes Medi-Cal Expansion to Remaining that the asset limit will be raised on July 1, 2022, Undocumented Adults Would Increase resulting in more seniors and persons with IHSS Caseload. Historically, income-eligible disabilities becoming eligible for Medi-Cal services, undocumented immigrants only qualified for including IHSS. The administration estimates that “restricted-scope” Medi-Cal coverage, which about 6,000 seniors and persons with disabilities covers their emergency- and pregnancy-related will become eligible for IHSS as a result of this service costs. In general, beneficiaries of restricted policy change, increasing General Fund costs by scope Medi-Cal are not eligible for IHSS. The state $67 million in 2022-23. has expanded comprehensive, or “full-scope,” Medi-Cal coverage, including IHSS eligibility, to IHSS-Related HCBS income-eligible undocumented children (effective Spending Plan Items May 2016), adults aged 19 through 25 (effective LAO Bottom Line: DSS Working Towards January 1, 2020), and older adults aged 50 and Implementation of IHSS-Related HCBS over (effective no sooner than May 2022). Spending Plan Items. As previously mentioned, The Governor’s budget proposes to further the ARP Act temporarily increases the federal extend full-scope Medi-Cal coverage and IHSS Medicaid match for HCBS services, including eligibility to income-eligible undocumented IHSS. The state expects to receive, in total, immigrants aged 26 to 49 no sooner than January $3 billion in additional federal Medicaid funds 2024. As a result of this proposal, all undocumented (including the estimated $1 billion in additional immigrants, regardless of age, will be eligible for federal Medicaid funds for the IHSS program). full-scope Medi-Cal and IHSS. While no funding is As a condition of receiving these funds, the state provided within the budget window (2021-22 and is required to spend an equal amount of funding 2022-23) due to the proposed schedule of on new HCBS enhancements and expansions. implementation, the administration estimates The federal government conditionally approved that this policy change will increase IHSS costs the various HCBS enhancements and expansions over time, reaching ongoing costs of roughly included in the state’s HCBS spending plan. $400 million General Fund in 2026-27. (Upcoming The state’s HCBS spending plan includes two publications, The 2022-23 Budget: Analysis of IHSS-related enhancements: (1) provide a one-time the Medi-Cal Budget and The 2022-23 Budget: $500 incentive payment to IHSS providers who Analysis of Health Care Access and Affordability worked at least two months between March 2020 Proposals, will provide additional details on the and March 2021 and (2) create specialized training full-scope Medi-Cal expansion to remaining opportunities for IHSS providers. We understand undocumented adults.) that the one-time $500 payments to IHSS providers tentatively are scheduled to occur in early 2022. Implementation of Phasing in Additionally, DSS is currently seeking stakeholder the Medi-Cal Asset Limit Repeal input on the structure of the IHSS provider training LAO Bottom Line: Phasing in Medi-Cal Asset opportunities, which is set to start no later than Limit Repeal Will Increase IHSS Caseload. September 1, 2022 (and remain operative until Currently, seniors and persons with disabilities March 1, 2024). must have assets at or below $2,000 (or $3,000 for couples) to be eligible for Medi-Cal. The 2021-22 budget included legislation to raises the Medi-Cal asset limit from $2,000 to $130,000 for individuals 2022-23 Budget Series 7 LAO PUBLICATIONS This post was prepared by Jackie Barocio, and reviewed by Ginni Bella Navarre and Carolyn Chu. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. 2022-23 Budget Series 8