CMS finalizes rule to end dues skimming of in-home caregivers


Last week, the Centers for Medicare and Medicaid Services (CMS) finalized a rule to no longer allow states to make payments to third parties on behalf of in-home care providers.

Under Medicaid, a federal program administered by the states and funded by state and federal tax dollars, elderly or disabled individuals meeting eligibility requirements can receive support at home from a caregiver to assist them with aspects of daily living, a broad range of everyday activities including “eating, bathing, dressing, grooming, and mobility.” These caregivers can either be paid directly from the state or through a company under which they are contracted to provide care.

Since 1978, CMS has maintained a rule that, absent a statutory exemption, states must make payments directly to providers. In the 1990s, some states began diverting home caregivers’ wages to third parties. In 2014, CMS under the Obama administration’s Department of Health and Human Services, in attempt to retroactively legitimitze those actions, added a direct payment exemption “for benefits such as health insurance, skills training, and other benefits.”

In many states, the “third parties” that got a cut of caregiver pay were public-sector unions such as the Service Employees International Union (SEIU) and the Association of Federal, State, County, and Municipal Employees (AFSCME).

In a report released last year, the Freedom Foundation estimated that $1.4 billion were diverted from home caregivers’ wages since 2000. It also shows that in 2017, unions in eight states skimmed over $150 million from caregivers.

Following a 2014 ruling in Harris v. Quinn that freed in-home caregivers from forced unionism on the basis of the First Amendment, the Washington-based Freedom Foundation began to pursue the CMS rule change. They deemed the third-party dues-skimming to have occurred without statutory authority, and CMS ultimately agreed with them.

Loren Freedman, who serves with his wife as a caregiver for his daughter in Washington, had this to say about the ruling:

“As both a caregiver and former regulatory analyst for the state, it’s clear the dues collection schemes unions like SEIU implemented have always violated federal Medicaid law. The Obama administration tried to grant legal cover to this scheme by passing a regulation in 2014, but an administrative rule can’t abrogate federal law just because a powerful special interest wants it to. By repealing this illegal regulation, the Center for Medicaid Services is not only upholding the rule of law but helping caregivers. Many live-in providers like myself pay as much as $1,300 a year in union dues for dubious representation. All caregivers deserve to be able to decide for themselves whether to hand over part of their wages to a union.”

Maine dodged a bullet by rejecting the universal home care referendum last November. If it had passed, in-home care providers would have been considered state employees and placed under the purview of the SEIU. With this scheme in place, the union would be able to claim exclusive representation of these workers and potentially skim their paychecks; workers who are oftentimes family members caring for loved ones. This explains why the SEIU bankrolled the ballot initiative and paid for a study of the universal home care initiative conducted by researchers at the University of Southern Maine’s Muskie School of Public Service.

This rule change will allow in-home care providers to maintain their independence and ensure that taxpayer funds will be used for their intended purpose: providing care for the elderly and disabled. Wages of in-home caregivers should not be used for political theatre from powerful unions.


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