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COUNTY OF SAN MATEOInter-Departmental Correspondence |
Health Services Agency |
DATE: |
August 19, 2003 |
BOARD MEETING DATE: |
September 9, 2003 |
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TO: |
Honorable Board of Supervisors, as Governing Board of the In-Home Supportive Services Public Authority |
FROM: |
Margaret Taylor, Director of Health Services |
Charlene A. Silva, Director, Aging and Adult Services
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SUBJECT: |
Amendment No. 2 to Agreement with Addus HealthCare, Inc. |
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Recommendation |
Adopt a resolution, as Governing Board of the In-Home Supportive Services Public Authority, authorizing Amendment No. 2 to the Agreement with Addus HealthCare, Inc. |
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Background |
In September 1993, by ordinance of the San Mateo County Board of Supervisors, a Public Authority was established to administer the provider components of the In-Home Supportive Services (IHSS) program. The enabling ordinance designated the Board of Supervisors as the Governing Board of the Public Authority. |
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There are approximately 2,200 senior and disabled clients receiving IHSS in San Mateo County. Services are delivered using two modes: individual providers, who serve the majority of clients, and a contract agency serving approximately 120 clients. Clients who are unable to hire, supervise or fire their own providers due to the type or severity of their disabilities are referred to the contractor for services. Contract services are reserved for the most at-risk clients who would otherwise need to be placed outside their home. These services are thus an integral part of our service delivery system as they enable individuals to remain independent for as long as possible and avoid premature institutionalization. |
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On June 19, 2001, your Board approved an agreement with Addus HealthCare, Inc. for provision of In-Home Supportive Services for the period of July 1, 2001 through June 30, 2004. On November 20, 2001, your Board approved Amendment No. 1 increasing the provider hourly rate from $14.43 to $15.20 through June 30, 2004. |
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Discussion |
The original agreement with Addus HealthCare, Inc., provided for the delivery of a maximum of 182,000 hours of IHSS to eligible senior and disabled residents of San Mateo County each year for three years beginning July 1, 2001 at an initial rate of $14.43 per hour. Amendment No. 1 retained the original level of service with an hourly rate of $15.20 effective November 1, 2001. Amendment No. 2 retains the original level of service but increases the hourly rate to $18.75 effective July 1, 2003 through July 31, 2003 and then reduces the rate to $18.25 from August 1, 2003 through June 30, 2004. Aging and Adult Services manages the care of clients within the overall approved IHSS budget. It only uses the services of this contractor when clients cannot hire and direct an independent provider. |
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In recognition of the continued increase in the cost of providing contract services through the IHSS program, the State Department of Social Services advised in March 2003 that the Legislature had approved expenditures for the new In-Home Supportive Services Maximum Allowable Contract Rates (MACRs). San Mateo County's MACR was increased by the State from $15.20 per hour to $19.02, the first increase in the County's MACR since July 1, 2001. |
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Subsequently Addus requested an increase in the contract rate to the state maximum of $19.02 per hour in order to meet significant increases in health insurance and workers' compensation costs as well as to raise provider wages to be competitive with the Independent Provider base wage. In response to the contractor's request for an increase in the rate, staff reviewed the budget and justifications prepared by Addus as well as the proposed budget for the Public Authority. Weight was given to the difficulties experienced by Addus in recruitment and retention of workers. To meet the needs of some of the more severely disabled clients in IHSS it is critical that the contractor have a stable workforce of trained and experienced providers. |
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Though unable to meet the rate of $19.02 per hour, staff determined that a new rate of $18.75 per hour could be managed within the existing budget. Since this rate was negotiated, however, legislation has been signed by the Governor which provides that the State Department of Social Services will assume responsibility for providing Workers' Compensation coverage for employees of IHSS contracting agencies on the same terms as is provided to IHSS Independent Providers. This change will result in a savings in Workers' Compensation charges for the contract agencies, and consequently the legislation directs them to reduce their hourly rates by fifty cents per hour effective August 1, 2003. Because of this new legislation, this amendment includes a rate of $18.75 per hour for July 2003 and a rate of $18.25 per hour for the remaining eleven months of the agreement. These new rates are in line with the $18.00 per hour rate currently paid for attendant care and similar services provided through Aging and Adult Services (AAS) case management programs. |
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County Counsel has reviewed and approved this amendment to the agreement as to form and content. |
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Vision Alignment |
This Agreement with Addus HealthCare, Inc. keeps the commitment of Ensuring Basic Health and Safety for All as stated in goal number 8: Help vulnerable people - the aged, disabled, mentally ill, at-risk youth and others - achieve a better quality of life. This agreement contributes to this commitment and goal by providing services throughout the county designed to assist individuals with the greatest needs to maintain their independence and dignity within the least restrictive setting possible. |
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Fiscal Impact |
The term of the agreement remains the same: July 1, 2001 through June 30, 2004. The maximum hours that can be purchased under this agreement each year is 182,000. The hours used from July 1, 2001 through October 31, 2001, were paid at the rate of $14.43 as specified in the original agreement. Service hours incurred after November 1, 2001, were paid at a rate of $15.20 per hour. Service hours incurred July 1, 2003 through July 31, 2003, will be paid at a rate of $18.75 per hour. Service hours from August 1, 2003 through June 30, 2004 will be paid at a reduced rate of $18.25. |
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The increase to $18.25 per hour represents a 20% increase over the previous rate paid to the contractor of $15.20 per hour (approved in November 2001). Though this is a significant increase, the rate for contract services has only increased an average of 4.6% per year since July 1995 (from $12.74 to the proposed $18.25). In contrast the comparable rate for Independent Provider services (wage, benefits, and administration) has increased from $4.91 to $11.71 per hour or an average of 11.5% annually during the same time period. |
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Within the next 120 days we will assess market conditions to determine whether going out to bid for a new contract for IHSS services beginning in July 2004 would enable us to reduce the rate from the $18.25 per hour. We will report our findings to your Board in January 2004. |
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The maximum amount payable through this agreement as amended is not to exceed $2,719,687 for the period July 1, 2001 through June 30, 2002, $2,766,400 per year for the period July 1, 2002 through June 30, 2003. The amount payable for the final year of this agreement is $284,381 for the month of July 2003 and $3,044,702 for the period August 1, 2003 through June 30, 2004 for a total of $3,329,083. The total maximum amount for the three years is $8,815,170. |
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State and Federal funding pays approximately 81% of the cost of this agreement. The remaining 19% represents the required County obligation. The amount necessary for reimbursement of this amendment for Fiscal Year 2003-04 is included in the approved 2003-04 Public Authority budget. The additional County Cost resulting from this rate increase will be paid from realignment trust fund revenues. There will be no additional impact on the County General Fund as a result of this action. |