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DOH Discusses Minimum Wage Payment Reconciliation

Last week’s minimum wage stakeholder meeting included representatives from the Department of Health (DOH), Department of Labor (DOL), and the Office of the Medicaid Inspector General (OMIG), as well as individual managed care plans and groups representing plans and home care providers. Each agency described its responsibility in the process. DOH will determine rate adjustments that will ensure compliance with minimum wage mandates, administer provider wage surveys, and develop and collect supplemental cost reports and attestations from plans and providers. DOL will provide oversight to ensure that employers are in compliance with wage requirements and audit in cases of non-compliance. OMIG will audit plans to ensure that money received from DOH is distributed to network providers and that unspent funds are returned to the state. It will also audit providers to ensure that money received from plans is used to increase direct salary costs and related fringe benefits.

Staff from DOL's Division of Labor Standards, the group charged with ensuring that employers are complying with minimum wage requirements, provided a review of the current minimum wage and the scheduled phase-in. They reminded participants that:

  • The wage is determined by the location where the work is performed, not the employer’s address.
  • When determining whether a New York City employer has more than 10 employees, all employees, not just those working in NYC, must be counted (e.g., a business with 8 employees in NYC and 5 in Albany has 13 employees for minimum wage purposes).
  • For workers receiving a weekly rate, DOH will convert the weekly pay into an hourly rate and ensure that overtime pay is at least time and a half of that hourly rate.
  • Wage parity compensation for 2017 for NYC employers with 10 or fewer employees is $14.59 ($10.50 plus $1.69 in additional wages and $2.40 in supplemental wages).
  • Wage parity compensation for 2017 for NYC employers with 11 or more employees is $15.09 ($11.00 plus $1.69 in additional wages and $2.40 in supplemental wages).
  • Wage parity compensation for 2017 for Westchester, Nassau, and Suffolk counties is $13.22 ($10.00 plus $3.22 in supplemental wages).
  • Providers must keep accurate, detailed pay records; provide notices and wage statements; and pay additional wages for split shifts or spread of hours.
  • The DOL website has helpful fact sheets and FAQs, including a minimum wage lookup tool.

DOH Division of Long Term Care and rate setting staff reviewed previously issued guidance and addressed questions. DOH clarified that:

  • Aggregate additional funds paid to plans for minimum wage must be paid out to providers.
  • Plans are able to allocate minimum wage resources appropriately and based on provider network need.
  • Plans may renegotiate rates, including reductions, but minimum wage funding cannot be used to subsequently increase rates after a reduction to address minimum wage.
  • While DOH recommends that plans collect attestations from their network providers, this is not required; DOH is responsible for collecting and maintaining provider attestations
  • Providers must apply minimum wage funding to statutory payroll burden and may not use the funding to fund compression.
  • Unspent funds are to be returned to the state in the next reimbursement cycle.
  • Although not yet done, DOH is developing new cost reports and additions to existing cost reports for plans and providers to collect minimum wage funding flows.
  • DOH expects the additional reports to be released in the last quarter of each year and be due by April to allow reconciliations (up or down) to be made for the next rate cycle.
  • DOH anticipates using the cost report data to calculate provider-specific minimum wage shortfalls and overpayments and reconcile them. Shortfalls will flow to providers through managed care plan rates.
  • DOH acknowledges the complexity of crosswalking every provider to every plan with which they contract to make necessary reconciliations.
  • The data from the recently completed wage survey of home care providers will be used to estimate aggregate minimum wage funding to be used in April 2017 plan rates.
  • DOH is developing compliance protocols for the implementation of FLSA that will mirror the protocols DOH intends to follow for the minimum wage funding.
  • FLSA compliance requires attestations from plans and providers.

OMIG staff said that wage compliance reviews were new to them and that they were receiving training on the issue from DOL. At least at the outset, they would function as DOL’s eyes and ears during other audits and refer wage issues to DOL. They anticipate their work to include:

  • Looking at minimum wage payments to make sure they are passed through by plans.
  • Ensuring that any overfunding identified by reconciliations is being returned.
  • Scrutinizing to make sure plans and providers have appropriate documentation of the funds flows.
  • A similar process used in other audits that includes a final audit report that allows for the audited entity to challenge the findings.
  • OMIG does not have audit protocols for the audits, but discussions indicated that audit of plan minimum wage activities was appropriately limited to ensuring that the aggregate amount of minimum wage funding received was paid out to providers.

There was some discussion about other managed care plan types whose rates do not yet reflect minimum wage. FIDA rates that include minimum wage are finalized, and others are underway. DOH promised to circulate draft cost report revisions within several weeks. 

Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841