That contract language, dubbed a non-solicitation agreement, is a widely used clause in home care contracts to protect providers’ businesses.

On its end, the Irvine, California-based Comfort Keepers is a large franchise that offers non-medical in-home support, including meal preparation, companionship and personal assistance.

The company required each client to execute a care agreement containing this language before receiving services. California Attorney General Rob Bonta concluded that this agreement violated California law by restraining worker mobility, as caregivers could not be hired by any Comfort Keepers client, not just the client to whom they were assigned to provide services.

In a statement issued to Home Health Care News, Comfort Keepers wrote, “We value Comfort Keepers caregivers, who are the heart and soul of each of our franchises and the Comfort Keepers brand. “As a service-based company, the quality of our care is rooted in the dedication and expertise of the caregivers who serve as employees. We invest significantly in their development to ensure the success of our services, the satisfaction of clients and the wellbeing of the caregivers. While this investment comes at a cost, we believe protecting the caregivers who become invaluable to our clients through their training and expertise is essential. Comfort Keepers is not seeking to limit or restrict any employee’s ability to earn a living; rather, we believe in a business’s right to protect its assets, ensuring the continued excellence of the care we provide.

Comfort Keepers maintains that direct hire provisions do not hinder workers from finding future employment. These provisions are designed to provide service-based businesses with compensation when the care recipient elects to hire a caregiver vetted, background-checked and trained by the agency in the form of a reasonable amount for the placement services it provided.

This is standard practice with service-based businesses across many industries. Furthermore, this is part of a larger and evolving issue being scrutinized by the U.S. Chamber of Commerce.”

Angelo Spinola, home health, home care and hospice chair at the Polsinelli law firm headquartered in Kansas City, Missouri, was involved in the case and told HHCN he thought the attorney general was incorrect in his position.

“They are applying a law that applies to non-compete agreements with employees to a client service agreement,” he said.

Non-compete and non-solicit agreements

In general, Spinola said that restrictive covenants are divided into confidentiality, non-compete and non-solicit agreements. These agreements are based on state laws, and certain states limit their use.

Non-solicitation agreements in home care are meant to prevent clients from hiring a caregiver directly and cutting out the agency. These agreements protect the agency’s business without restricting the caregivers’ mobility, providers believe. If the contract is violated, the agency may seek legal action and sometimes request damages.

“I can absolutely understand why [an agency] would want [an agreement] because there’s such a strong incentive to hire aids and home health care workers,” Jolie Apicella, partner at Wiggin and Dana Law Firm, told HHCN. “This is a time when staffing is already critically difficult after COVID-19. It’s never been harder to find good people who are qualified, who meet all the regulatory requirements and who you can really trust to go into people’s homes, which is the most intimate and vulnerable place. To lose those people… your whole business model would be canceled out if they’re able to be hired directly by patients and families.” 

Nearly one in five workers in the United States is bound by a non-compete agreement that prevents them from finding a new job or starting a business in their field when they leave their employer. Non-competes are currently governed at the state level, and research shows that they suppress wages, reduce job mobility and stifle innovation.

California, Minnesota, North Dakota and Oklahoma have completely banned non-compete agreements. Thirty-three states plus the District of Columbia restrict their use, according to the Economic Innovation Group. Recently, the FTC unsuccessfully tried to ban non-competes nationally.

However, non-compete agreements and non-solicitation clauses are not interchangeable, and the latter should not affect a caregiver’s mobility, according to Spinola.

“The non-compete is the most restrictive covenant,” he said. “For example, the term for which a non-compete applies generally might be shorter – a year instead of two years, like a non-solicit agreement. The territory in which it applies will be limited to the territory where the business operates.”

When they can be used, non-compete agreements are generally reserved for executives who could harm the business if they left and worked for a competitor. Non-solicit agreements are more commonly used for caregivers and other individual contributors.

“Non-solicit agreements shouldn’t impact the caregiver’s ability to work wherever they want and even for whomever they want to,” Spinola said. “If a client reaches out to a caregiver and says, ‘I’d like you to work for me,’ that’s not a violation of a non-solicit agreement. If the caregiver calls the agency’s client and says, ‘I want you to get services from me instead of the agency you’re with,’ that would be a violation.”

The post The Growing, Troublesome Issues Around Non-Solicitation Agreements In Home Care appeared first on Home Health Care News.

More people than ever want to age in place, but payment and staffing concerns linger in the larger home-based care space. This emphasizes the need for scalable, efficient, high-quality solutions to meet the growing service demand. As a result, artificial intelligence  is emerging as a crucial tool. 

AI is a multifaceted field focused on creating systems that mimic and augment human intelligence. With AI comes the ability to learn, reason and solve problems. However, AI models rely on large data sets to learn, train and evolve, which can lead to privacy concerns.

“Home care agencies are actively reaching out to us to learn how we can help them care better and grow faster amidst caregiver shortages and rising costs,” Sensi.AI Co-Founder and CEO Romi Gubes told Home Health Care News.

Sensi.AI is an artificial intelligence company based in Tel Aviv-Yafo, Israel, with offices in the United States. It uses audio technology to detect unusual events in a client’s home and relays the information to the clinical care team. For a relatively young company, it is expanding quickly. The company raised $31 million in Series B funding earlier this year.

This high demand indicates that the home care industry is shifting from a heavily human-dependent model to one that will regularly leverage AI. Agencies that are feeling the pressure of caregiver shortages see AI as a necessary solution, according to Gubes.

“Sensi allows us to take care of more clients, especially those needing around-the-clock care,” Care Around the Block Chief Operating Officer Casey Rausin said. “Without it, providing 24/7 coverage for a client would require five to seven people, which is hard to staff. We can now identify and prioritize when a senior truly needs a human caregiver, and for the rest, we supplement with Sensi as a safety net.” 

Care Around the Block is a Knoxville, Tennessee-based provider of professional care management, home care and dementia care services.

AI can potentially transform the home-based care space by enhancing community-level care, connecting vulnerable populations with providers earlier and delivering tailored support for managing chronic conditions at home. Home care providers are uniquely positioned to act as proactive responders, addressing client needs before they escalate into crises that may lead to repeated hospitalizations.

A question of privacy

While AI offers numerous potential benefits and opportunities to provide better care, alleviate staffing shortages, and aggregate and analyze personal data, concerns arise regarding privacy and keeping that data out of the hands of the wrong people.

Gubes said that her company takes proactive measures to educate its customers, ensuring they fully understand how the technology works to address privacy concerns before they arise. She also noted that audio-based technology provides privacy advantages by avoiding invasive video surveillance, while still being able to focus on specific sounds or patterns that may indicate the need for intervention.

Yet, audio technology does not completely circumvent privacy concerns.

“We work with some AI providers that are using audio monitoring,” Angelo Spinola, the home health, home care and hospice chair at the Polsinelli law firm, told HHCN. “Some privacy laws are triggered, sometimes at a state level, that require consents and notices. Normally, you want a privacy policy and consent from the client, caregiver and also something for visitors.” 

Spinola advised that there should be some notice when other people in the home haven’t consented to being monitored and the device is passively monitoring those individuals.

“Then there’s the scope of that notice,” he said. “I think that is important as well. People need to know why they are being monitored. It may initially be intended to improve the quality of care, but if there are purposes related to the caregiver or employee, that should also be indicated.”

As AI plays a larger role in health care, it’s essential to pay attention to the Health Insurance Portability and Accountability Act (HIPAA). However, incorporating AI while ensuring HIPAA compliance can be challenging. AI applications need vast amounts of data for training, including sensitive health information. It is an essential but difficult task to ensure this data is properly de-identified to protect patient privacy while still being useful for AI.

Health care organizations using this technology should carefully work with developers to understand how these tools work to ensure they meet HIPAA standards. In addition, it is crucial to regularly update policies and procedures, implement strong security measures and monitor AI tools for compliance issues.

Technology shouldn’t replace the human element

While technology is undoubtedly an important tool in helping caregivers complete their jobs more efficiently, it is still only a tool. The humans behind the technology should still take ownership of how it is used and what safeguards are put in place.

“I think everyone in health care is learning and evolving how they think about and use AI,” Bayada President and Chief Operating Officer Heather Helle told HHCN. “AI has tremendous promise in application, not just for making the back-end office more efficient, but also in helping us think about streamlining clinical workflows.”

However, according to Helle, AI should be seen as a co-pilot for a caregiver or clinician in the home.

“When you look at the pace of adoption and the pace of change that AI is helping usher in, it’s much faster than we’ve seen typically in health care,” Helle said. “We have to be thoughtful about the risks that come with that and ensure we have the appropriate guardrails and manage that.”

The post Monitoring The Risks That Come With Using Artificial Intelligence In Home-Based Care appeared first on Home Health Care News.

While certain leaders may have celebrated the FTC’s vote to ban non-competes across the country, home care providers were concerned over what the ban would mean for non-solicitation agreements.

Broadly, non-solicitation agreements keep home care clients from cutting out the agency and hiring their assigned caregiver directly.

In the event that a non-compete ban came to fruition, however, those non-solicitation agreements may have been rendered unenforceable in certain states.

“The rulings and the positions are going beyond just the traditional non-compete agreement into client service agreements that have direct-hire provisions or penalty provisions not allowing the client to hire the caregiver away,” Angelo Spinola, the home health, home care and hospice chair at the law firm Polsinelli, previously told Home Health Care News. “That’s a big concern with what the FTC is doing – that they’re going to take that position and apply the term non-compete very broadly. If you look at the language of the final rule, it absolutely suggests that’s going to be their enforcement position.”

U.S. District Judge Ada Brown said the FTC did not have the ability to enforce such a ban. The agency originally voted to ban non-competes in May.

“The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition, … instead of targeting specific, harmful non-competes, renders the rule arbitrary and capricious,” Brown wrote.

The FTC is considering challenging the ruling, and expressed its disappointment Wednesday. Meanwhile, the U.S. Chamber of Commerce celebrated the judge’s decision.

“This decision is a significant win in the Chamber’s fight against government micromanagement of business decisions,” U.S. Chamber of Commerce President and CEO Suzanne Clark said in a statement. “A sweeping prohibition of noncompete agreements by the FTC was an unlawful extension of power that would have put American workers, businesses, and our economy at a competitive disadvantage.”

In states like California and Connecticut – which already have strict laws against non-competes – non-solicitation agreements are already under fire.

Home care providers across the country see those agreements as a must-have for sustainable home care businesses, particularly due to the training and resources they pour into their caregiver workforces.

“I know that those are things that we responsibly have in our agreements, especially for private pay,” Care Advantage CEO Tim Hanold previously told HHCN. “That is something that could create some issues for certain, considering how much time and energy we put into our professional caregiver workforce.”

The post In Win For Home Care Providers, US Judge Strikes Down Non-Compete Ban appeared first on Home Health Care News.

Home health workers can be vulnerable as they face an unprotected and unpredictable environment each time they enter a patient’s home. The spectrum of violence ranges from verbal abuse to stalking or threats of assault to homicide, according to the National Institute for Occupational Safety and Health (NIOSH).

Violence impacts not only the individual, but also the employer. Exposure to violence may lead to low employee morale, poor job satisfaction and high turnover rates, according to one study on violence in nursing.

In 2021, the Occupational Health and Safety Administration began acting against providers who failed to protect their employees adequately; however, statistics show the problem shows no signs of abating.

Over 75% of workplace violence victims in 2024 worked in health care and social assistance, and 48% of nonfatal injuries due to workplace violence are experienced by health care workers, according to the Centers for Disease Control and Prevention (CDC).

For example, in an extreme act of violence, Joyce Grayson, a home health care nurse, was found dead in a Willimantic, Connecticut, halfway house in October 2023. In response, state officials outlined a $6 million safety program for home health care workers.

Among the initiatives are providing emergency response buttons to each worker for quick access to assistance, implementing a buddy escort system to ensure the safety of staff members during visits to high-risk areas, distributing GPS tracking devices to monitor the location and safety of home health workers in real-time and establishing dedicated phone lines for staff in the field to access immediate support and report concerns.

“The type of violence that I’m seeing increasing more than any other is where the violence is directed at an employee by a patient or client,” Will Vail, an employment attorney at Polsinelli Law Firm, told Home Health Care News. “There are a lot of causes; mental health is certainly one. You’ve got people who are not mentally well in high-stress situations regarding their health and the ability to live as they had been in the past.”

Studies have shown that up to 65% of home health workers experience verbal abuse from patients. Providing home care services to patients with a history of violence, mental illness or substance abuse disorders is associated with experiencing physical or verbal threats of violence.

Vail mentioned that his company has experienced an increase in clients seeking workplace violence policies to enhance the safety of employees in home-based care settings.

“Many of our clients are implementing workplace violence plans, and some states require that,” he said.

A majority of states have criminal statutes addressing assaults on emergency medical providers, and 32 states make it a felony to assault health care workers or emergency medical personnel.

Six states – California, Connecticut, Illinois, New Jersey, Oregon and Washington—require health care employers to implement workplace violence prevention programs. These programs train medical staff to recognize and respond to potentially violent situations.

“One of the policies we are developing includes conducting a criminal history check on the client,” Vail said. “Depending on the state, it is possible to run a background check on the client under certain circumstances. This will help determine the necessary steps and procedures to ensure that caregivers entering a person’s home are kept as safe as possible.”

Vail said that background checks must be conducted with the client’s consent. Although they provide an extra layer of protection, they do not guarantee whether an organization will work with that client. However, they do provide crucial background information for making a decision.

“Even in states that don’t have specific legislation, we are seeing a growing emphasis on home safety assessments before the start of service, training for caregivers on de-escalation techniques and protocols for addressing concerns or signs of potential violence,” Angelo Spinola, chair of home health, home care and hospice at Polsinelli, told HHCN.

Are reimbursement rates partially to blame?

Before entering a client’s home, Robyn Gershon, a researcher at the New York University School of Global Public Health, suggested that someone experienced in security conduct should do an assessment.

In her experience, home health care providers frequently report dealing with demanding patients, aggressive pets, neighborhood violence or crime, challenging family members, personal security fears, drug use by the patient or family, firearms in the home and racial discrimination.

“Caregivers should understand if the neighborhood has a higher prevalence toward violence,” Gershon said. “The employer should ask if the caregiver should go to the home only during daylight hours or if they should go with a security guard.”

However, Gershon pointed out that sending caregivers with security guards or other workers poses an issue regarding the cost of care.

“The problem is this,” she said. “Home care providers are not reimbursed at rates that they need to do the work to protect these workers properly. The CDC says to send workers in pairs. Then, you’re doubling the hourly rate. It’s not financially sustainable.”

Gershon said that in her research, she had contact with caregivers who were sent into homes without cell phones due to the cost of plans.

“Caregivers must have constant contact,” she said. “They should check in at least once an hour so the organization knows everything is fine.”

Gershon suggested that home care organizations implement a zero-tolerance policy against violent behavior. This means that if a caregiver faces any form of violence, they should be able to leave the home immediately after the first occurrence rather than waiting for a second or third incident.

“They must be taught to pick up, walk out the door and leave immediately. Then, that client should be denied service,” she said.

Employers should provide support

Gershon said employer-provided support services can impact health care workers’ well-being and should be explored. These services might include peer support, formal debriefing, trauma counseling or employee-assistance programs (EAPs).

“EAPs are being adopted at a higher rate where there have been issues,” Spinola said. “These programs help with the emotional impact of workplace violence and provide counseling on how to be proactive and hopefully avoid catastrophic incidents.”

Post-incident support through debriefing has been shown to increase workers’ awareness of workplace violence risks and boost reporting. Reporting workplace violence is crucial for understanding the extent of the issue in the industry and for collecting data to guide future prevention strategies, according to NIOSH.

Workers may under report violence because they believe it’s a normal part of the job, think no action will be taken, fear negative consequences or don’t have easy access to reporting systems. To address these issues, it’s essential to implement user-friendly reporting systems and ensure that leaders provide support and take action. This can help reduce the barriers to reporting, lessen the burden on workers and prevent burnout.

In addition to addressing barriers to reporting, health care leaders should communicate that the organization, rather than the victims, is responsible for ensuring provider safety.

The post As On-The-Job Violence Rises, Mitigation Is Up To Home-Based Care Organizations  appeared first on Home Health Care News.

A U.S. judge decided not to block the Federal Trade Commission’s (FTC) ban on non-compete agreements this week, continuing an ongoing saga that home care providers are paying close attention to.

Broadly, the ban on non-competes is seen as generally positive for home care leaders, who can now freely move on to better career opportunities. It likely won’t affect caregivers much, as many already work for more than one agency.

Where it will likely have an effect, however, is in non-solicitation agreements. Those keep clients from using home care agency caregivers, and then ultimately hiring those caregivers directly and cutting out the agency. A non-solicitation is different from a non-compete, of course, but some states are already viewing them in the same light, which could be a major threat to home care operators.

The FTC in April banned non-competes in a 3-2 vote. It was a major change in direction, specifically because non-compete laws were historically handled on a state level. Some states – like California and Connecticut – already had very strict laws against non-compete agreements. Other states were less strict.

But this ban comes from the federal level.

“The rulings and the positions are going beyond just the traditional non-compete agreement into client service agreements that have direct-hire provisions or penalty provisions not allowing the client to hire the caregiver away,” Angelo Spinola, the home health, home care and hospice chair at the law firm Polsinelli, recently told Home Health Care News. “That’s a big concern with what the FTC is doing – that they’re going to take that position and apply the term non-compete very broadly. If you look at the language of the final rule, it absolutely suggests that’s going to be their enforcement position.”

The aforementioned challenge to the non-compete ban was from a tree-trimming company. U.S. District Judge Kelley Hodge in Philadelphia wrote in a decision that the FTC has the power to ban practices that it deems anticompetitive.

Anticompetitive business practices – in M&A and otherwise – have been a major focus for the Biden administration.

In Medicare-certified home health care, the ban could also have significant effects.

Chip Kahn, the president and CEO of the Federation of American Hospitals, explained the health care impact shortly after the ban was voted on by the FTC. He did so through a hospital lens, but the sentiment also could apply to home health agencies.

“This final rule is a double whammy,” Kahn said. “The ban makes it more difficult to recruit and retain caregivers, while at the same time creating an anti-competitive, unlevel playing field between tax-paying and tax-exempt hospitals – a result the FTC rule precisely intended to prevent.”

Non-solicitations

Client service agreements – or non-solicitation agreements – are an essential part of home care.

Agencies pour money and resources into their caregivers to train them, upskill them and find them the right clients. Logically, it’s not right then for a client to be able to cut the agency out and hire them on their own.

But that’s already happening in certain areas. In California, for instance, agencies are having to tell clients they are no longer restricted by these agreements, according to Spinola. If agencies don’t do so, they could be fined thousands of dollars – per agreement.

“The point around direct hire clauses, that would, for me, probably be more so a concern that’s less controllable,” Care Advantage CEO Tim Hanold recently told Home Health Care News. “I know that those are things that we responsibly have in our agreements, especially for private pay. That is something that could create some issues for certain, considering how much time and energy we put into our professional caregiver workforce.”

Because of how big of a deal the non-compete ban is, it’s likely there will be a bevy of challenges to it across the country in the near-term future.

Ultimately, Spinola still believes that the ban will be done away with, or at least altered, given the history of states controlling this particular issue.

“This is state domain, not federal domain,” Spinola said. “If it were federal domain, it’s so significant that it should be something that goes through Congress, and through actual rulemaking and legislation, not through a branch where there’s really no way to stop them from doing what they want to do, other than this litigation.”

The post US Judge Elects Not To Block Non-Compete Ban, Spelling Trouble For Home Care Providers appeared first on Home Health Care News.

Home care providers are navigating headwinds that include, but are not limited to, the 80/20 provision, the FTC ban on non-competes and increased workplace violence. Arguably, there are more legal considerations for leaders now than there were even during the COVID-19 pandemic. 

Home Health Care News recently caught up with home care insiders Angelo Spinola and Tim Hanold to talk through these issues.

Spinola serves as the home health, home care and hospice chair at the law firm Polsinelli, and Hanold is the CEO of Care Advantage, a home-based care company with more than 45 locations across America’s Mid-Atlantic region.

Highlights from the conversation are included below.

HHCN: Tim, let’s start with some background on yourself and your company for anyone that may not be in the know. Also, I assume there’s been some updates at your company since the last time people heard from you.

Hanold: I have the honor of leading Care Advantage. We’re a home care company and also a skilled home health company serving the middle-Atlantic area. That contains Virginia, DC, Maryland, Delaware, and also North Carolina.

We have a pretty balanced payer portfolio — Medicaid, private pay, we serve our vets, the VA community, and a number of specialty programs throughout the Commonwealth of Virginia and elsewhere. We also have adult day in Northern Virginia. I’ve been here for six and a half years. We are backed by Searchlight Capital Partners.

Angelo, how about yourself?

Spinola: I am an attorney. Don’t hold it against me. I work with a lot of the folks on this call, including Tim. I specialize in home care. I personally am an employment lawyer. I’ve been doing this for a couple of decades now. My firm is Polsinelli. We’re a full-service firm, we do a lot of transactional work and health care regulatory and national practice. It is an honor of mine to work with Tim and the others on the calls, good to see you all, and to be able to support the industry.

Tim, let’s start with you. From a provider perspective, it seems like there’s more legal and regulatory issues than there have been in a while, certainly since I’ve been covering the industry. Obviously, during COVID there was a lot related to the vaccine, but a lot of different things are going on right now. What are the most pressing ones to you? What is top of mind for Care Advantage?

Hanold: I believe that there’s a number of these that, if you’ve been in the business for a while, these things are going to be present and a spectrum from some things that are more operational to other things that feel like regulatory shocks that create a different pathway. Whenever it comes to most pressing, I’d go back to just the spirit of the CMS access rule. It’s really something for us to collectively think about and to understand.

The rules final, I know we’ll probably end up spending some time to talk about this later in the conversation, but I think it’s an important moment that there’s continued added scrutiny and thinking around what should be the profitability of a Medicaid home care provider, with at this point, a firm federal view with that 80/20. The conversation is oxygen. We, as an industry, and leaders, need to understand what that means. An industry with reimbursement from the government by tax dollars, there should be a responsibility and certainly vigilance around fraud, waste, and abuse. That being said, for good actors, if there’s no margin, there’s no mission.

We need a manageable gross profit spread where we can be stable, healthy, and have funds to provide high-quality care. This gross profit spread or percentage is really, it’s very market-specific. We know that’s a fundamental issue with the CMS access rule. This lends itself to this general narrative that we need to prove our value to the state and the health care system, pay us for being the safety net in the community and for the quality outcomes that we provide.

Angelo, am I correct in the fact that there seems to be a lot of different things going on right now if you’re a home care provider? Tim mentioned the 80/20 rule. There’s a lot of non-specific regulation that can affect the home care industry going on right now as well. Am I right in that estimation, or is it just par for the course?

Spinola: No, you definitely are. I think historically what we have seen over the last several years are the states, both states and cities, getting into the game and passing legislation and law really at an all-time high rate. At least, the federal government was relatively gridlocked. You didn’t see a lot happening at a federal level. Now, you have all three of those things kicking.

You’ve got federal law changes and largely using the executive branch to do that, like with the FTC ban on non-competes, the DOL salary increases, the changes to independent contractor rules, the National Labor Relations Board has been very active in scrutinizing handbooks and bringing charges against employers. Their joint employment rule right now is in litigation.

You have the federal government going wild. Tim mentioned the 80/20 [rule]. Then on top of that, you still have the states and the cities doing quite a bit. This is about the time of year to this time in January where the laws change. July 1st and January 1st are basically the two places where the law changes. We’re seeing so much happening at a state level, some of which is industry-specific, like the California health care minimum wage increases, the New Jersey Domestic Worker Bill of Rights that goes into effect in a couple of days.

Then some of it is, like you mentioned, generic that applies to everybody. A big one is workplace safety right now. There’s several new state level laws that impact the home care industry, as well as other industries, that require workplace safety plans and things like that. There is quite a bit going on.

Do you mind diving into that for just a brief moment? What’s going on, in terms of workplace safety, because that’s not something that I’m not as aware of.

Spinola: There have been some really significant changes, and I don’t know if it’s something in the water. My guess is that it has to do with some of the mental health issues that resulted from COVID and the quarantines and the isolation. There have been so many incidences of caregiver violence, caregiver or client violence, something happening in the home, significant things like murder suicides. Things that are hitting the news and creating PR nightmares for lots of providers. Like I said, I’ve been doing this for a couple of decades, and I’ve never seen anything like this. I’ve seen incidents occur, but at the frequency in which this is happening, is at the highest level I’ve ever seen.

We’re getting calls. It’s not always something that’s extreme, but guns in the home, some type of harassment. There was that whole Papa issue, that exposé on them, where there were caregivers doing things to clients, clients doing things to caregivers, and nobody really supervising any of that. Even at the W-2 agency level, there have just been a lot of incidences.

You’re seeing California has a new law. The state of Washington all have laws that require implementation of programs and policies and training and things like that for home care agencies to put their caregivers through incident responses, to try to avoid some of these issues. We’re seeing the government, the state OSHAs, like Cal/OSHA, get pretty active in enforcing their standards. I think that’s going to be a trend that we continue to see for the end of ’24 and well into ’25 where other states are going to do the same thing.

Tim, is this a trend that you’ve noticed at Care Advantage? Is there more client violence issues around that? If so, or even not, how do you deal with that proactively?

Tim: Fortunately at this point, we haven’t necessarily seen a bump or something that would be beyond the general probability of that. I would say that there’s probably a higher level of just conversation that we’re having in our branches around just mental health, and also just ensuring that our caregivers are safe going into all of these different environments.

That initial assessment up front is really important. It’s not just an assessment for the family and for the client, the member, if you will, but also for our caregivers. Certainly, on a weekly basis, there are cases that we will need to turn away from. We pride ourselves on taking rigor, if you will, on figuring out all the different puzzles and situations.

There are some cases where we’ll either state that, ‘Hey, this is something that needs a high level of care, something that we can provide if we have X, Y, and Z in place,’ and those things need to be paid for, or it’s something that may not be appropriate for care in the home. If you think about Maslow’s hierarchy of needs, safety comes first. If one of our caregivers doesn’t feel safe in the home, then that’s not a place for them.

Angelo, what do you find clients are bringing to your attention or calling you about the most these days? What’s something that maybe is on your wide range of clients’ minds, but not something maybe we’re writing about enough, or something that maybe everyone across the country knows is that big of a deal?

Spinola: I was trying to think about this because we get a lot of 80/20 calls. The salary level increase has gotten some folks spooked. I’m trying to figure out how to manage that. It’s all the things that we talked about, we get calls on, but the most common call really is a reactive one, because the government has been very active in investigation. It’s DOL investigations, union organizing, false claims issues or anti-kickback stuff, overpayment issues with the VA or Medicaid.

I can say that the Department of Labor, there’s a clear uptick in their audits and investigations. In these other realms, I’m relatively new to that, because I didn’t work at a firm where we handled those kinds of matters before. It’s only been the last three years or so.

It seems anecdotally, there’s a lot more scrutiny. You hear about that from the associations from NAHC and HCAOA, a lot more fraud investigations into hospices that are all in the same location. 100 hospices in the same place, and in LA and things like that. It seems like there’s a spotlight on our industry from a government perspective more than what we’ve historically seen.

I do want to get specific with each issue. I think we’ll start with DOL’s new overtime rule that’s increased the salary threshold that’s necessary for an individual to be exempt from overtime under the Fair Labor Standards Act. Tim, on your end, have you had to adjust things operationally at Care Advantage to deal with this?

Hanold: Nothing, I’d say, reactive at this moment, but things that we’ve adapted to over many years. Generally, we have a career ladder and really a tiered approach for our office personnel with respect to job description. Different tiers of role and responsibility, and then the compensation that goes along with it, and the compensation structure. There’s a knowledge and job test for salary positions. Consistency is really important. Angelo could speak to that, I’m sure.

For example, our senior care coordinators are salaried employees because of the expectations that go with that role and what it takes to get there. Across the company, we have both hourly and salaried employees. Many times, actually, you can see it with geographic trends. When it comes to hourly, you have to be really smart around managing OT. If there’s companies out there that are moving the threshold early of July 1st, it’s 44K. I’m rounding. January 1st, it’s 59K.

For those that may be moving to something hourly, be really smart on managing OT. It’s not just managing OT for your caregivers, but the entire office. Because you’ve got to ensure that work gets done and taken care of the clients and caregivers the right way, but also while being really efficient. Possibly one recommendation here is, what operators are using whenever it comes to daily and weekly KPIs to be managing the workforce.

Angelo, what are you telling your clients about how to get ready for this, about how to be prepared, how to make sure that you’re both not violating any rules, but also being efficient and making sure that you’re not putting in a payment system that’s ultimately going to hurt your bottom line?

Spinola: I think most providers are not having a problem with the July hike, which, as Tim mentioned, is about $44,000. It’s January where you’re going up to almost $59,000 and then it will adjust every three years after that. The numbers are going to keep going. Tim runs a really compliant shop, and very sophisticated, as you can hear from this conversation. There’s a lot of providers that don’t understand that there is a duties element to the salary exemptions.

You can pay the required minimum salary, but if the individual isn’t performing exempt duties, they’re not exempt. Doesn’t matter what their salary is. There are a lot of misclassification issues in the industry. We’re actually using this as an opportunity to clean some of that up. We’re seeing, I’d say, the Southeast is most impacted. The providers in the Southeast impacted from a financial perspective of what the salaries are. What we’re doing is using it as an opportunity to take care coordinators that shouldn’t be treated as exempt, or schedulers who shouldn’t be exempt in the first place, and cleaning that up.

Then it also impacts the pay-per-visit models because the way pay-per-visit works in the home health environment, there are flat rates that are paid that are supposed to be the equivalent of the salary threshold if you were to prorate the salary over a 40-hour work week. A lot of those clinicians, the way that works, they may ultimately make more than $60,000. If any individual visit amounts to less than that equivalent, they lose the exemption.

We’re seeing, and this has been a trend for the last few years, but in home health, a lot of the full-time clinicians, the RNs, PTs, OTs are moving to a different salary-plus model rather than pay-per-visit, which I think puts their exemption at risk. A lot of work around analyzing the workforce, determining whether it makes sense.

One other thing I’ll say is the employees do not like being moved to hourly. They do not like it. They see it as a demotion, even though the hourly rate is the salary equivalent of just reengineering the salary into an hourly rate. They feel micromanaged when they have to clock in and out, and things like that. Some of our clients are moving to a salary non-exempt type model where they’re still paid a salary, but they can also earn overtime if they work beyond that 40-hour threshold, and that’s been preferable.

For some, it’s more semantics than anything. It doesn’t really change the bottom line financially. I think Tim is absolutely correct that the key to all of this is how you communicate it to your employees and then really managing it on the back end. We saw this happen when the live-in and companionship exemptions went away and none of the EMRs were set up to record time, the time that wasn’t with the client.

It was only client time, so you didn’t have travel time and orientation and preparation time, and there were just a slew of lawsuits that continue to this day around personal care overtime because the providers were very slow to respond and start tracking all that time. The DOL says that when they conduct an investigation, 90% of the time, the home care providers are out of compliance. There’s some backwage component to the investigation. The concern of moving exempt people to non-exempt status is their behavior has to change, and the way we manage them has to change as well.

Angelo, also non-competes, something you and I have talked about a lot, and not just the non-compete ban, but how it could affect the similar language and non-solicitations that are very common in home care. What’s the update here? First, let’s just talk about the non-compete ban at large and legal challenges, and then maybe we’ll dive deeper into other aspects of it.

Spinola: Basically, what’s happened is the FTC, the Federal Trade Commission, has issued a ban on non-competes. This was a Biden initiative. He’s been talking about it for a long time. I honestly didn’t think it was going to happen, so you have to take my prediction with a grain of salt as well. I thought the FTC would punt on this. They punted last year on the vote till April of this year.

I thought they would punt again and wait until the election because I think they took a real political risk in trying to do something so sweeping as ban non-competes, effectively, for everyone other than highly compensated executives retroactively in an area where this is the state’s domain. The states have always addressed non-compete law, and never the federal government, and we’re seeing more of that. CMS is looking at doing that, as well for facilities where they’re receiving government funds to eliminate what they call TRAPS, trading repayment agreement provisions, I think is what that stands for.

When you look at the FTC language, you look at enforcement provisions in, say California, Connecticut at a state level, the rulings and the positions are going beyond just the traditional non-compete agreement into client service agreements that have direct hire provisions or penalty provisions not allowing the client to hire the caregiver away. That’s a big concern about what the FTC is doing is that they’re going to take that position and apply the term non-compete very broadly. If you look at the language of the final rule, it absolutely suggests that’s going to be their enforcement position.

The good news, as you mentioned, is there is some litigation challenge to the FTC. It seems to me, and again, take it with a grain of salt, I haven’t read or seen many lawyers that are willing to predict what they think is going to happen. We know this, it’s going to happen really, really soon because the judge in the litigation that’s challenging the FTC has said that before July 3rd, there will be a decision on whether or not the rule be enjoined, at least at the district court level.

If it’s enjoined, that means that it doesn’t apply to anybody until the litigation is concluded. Normally, when something is enjoined, that’s a real suggestion that at least at that level, that court is going to invalidate the rule.

My view is that that’s probably what’s going to happen for a couple of reasons. No.1, this is state domain, not federal domain. If it were federal domain, it’s so significant that it should be something that goes through Congress, and actual rulemaking and legislation, not through a branch where there’s really no way to stop them from doing what they want to do, other than this litigation.

My view is that it gets enjoined, it gets stricken at the district court level, and then it gets appealed by the FTC. It may turn out just like some of the prior Obama initiatives, like the salary increase. If you remember, the salary levels were going to increase to $47,000 many years ago. We actually brought litigation on behalf of several associations to challenge it.

At the district court level, we were successful. The Department of Labor appealed that, and then Trump won the election and they withdrew their appeal. Eventually they split the baby and moved salaries up to what they are today, 35 and change. Now, they’re at it again under Biden. I think with all the things that we’re looking at and talking about, there’s litigation in nearly every arena around independent contracting, salary level increases, joint employment. There’s litigation challenging just about all of it. Nothing yet on 80/20, but I would expect that may be coming. It’ll be interesting to see, if we do see a change in administration, how many of those initiatives continue, or are they withdrawn for some other less obtrusive option. That’s my thought of what happens at the FTC stage, at the district court stage with the non-compete ban.

Tim, I’m curious, are you more concerned about executives and how they could leave, jump to other agencies, or are you more concerned about those direct hire clauses?

Hanold: Sure. I think Angelo approached the question well and the topic well. It is something that, for example, it was that the FTC voted three to two, so along party lines. We’ll see what happens here by July 3rd.

I’ll start with maybe the first piece, in regards to executive senior leadership.

When I think about execs jumping, and we’ll see a forecast, a spike of that, I don’t believe so. Regardless of the covenant, I just think people are attracted to, and want to pursue purpose-driven work in settings that are conducive to do it.

We’re in a place where, especially when talking about leaders, executive leaders, senior leading teams that essentially strike the right balance on some motivation and accountability. If an exec is solely staying at a job because they’re tethered to a non-compete, I can’t imagine that’s a really productive situation for either party, the company, or the employee.

There are certain covenants whenever it comes to the selling of a business and some of those things and maybe the quantum that goes along with that, where these things will have, even regardless of what happens here, real durability.

The point around direct hire clauses, that would, for me, probably be more so a concern that’s less controllable. I know that those are things that we responsibly have in our agreements, especially for private pay. That is something that could

create some issues for certain, considering how much time and energy we put into our professional caregiver workforce. I’ll be intently watching to see what happens there, but there’s a time training development that goes into our caregivers. I think we should be able to retain that value.

Angelo, do you want to jump in and add anything to that?

Spinola: I think that hit the nail on the head. Regardless of what happens with the FTC, we continue to see more and more regulation into the ability to use non-competes, and restrictive type agreements with employees. The analysis that the courts typically take is the design to protect your business. If it’s to protect your business, your trade secrets and confidential information, your pricing, things like that, and you’re simply protecting that and the employee can’t take those things to a competitor, that’s in-bounds.

If the restriction is on the individual’s ability to have a career in the area that they know, in the industry that they know or the place that they live, there’s more and more scrutiny into those agreements, however they look. I think it’s insane to try to apply that to a client service agreement when you’re the agency, you’re vetting the worker, training them, doing the background screening, you have all the costs for marketing, and you put caregiver and client together, and then the client can just hire that caregiver away.

That’s the position right now in California and the Department of Justice is out fining businesses for enforcing those provisions, or even having those provisions in their client service agreement, which is crazy. You’ve got providers taking those out. In some cases, notifying clients, ‘Hey, you had this provision in your agreement, it doesn’t apply to you,’ because they don’t want to be fined by the DOJ, which by the way could be up to $5,000 per term in an agreement. If you got 100 agreements, you do the math. It’s a lot of money.

We’re seeing naturally, as you would expect, clients taking the caregiver away and there being no remedy. That makes no sense to me. There’s some work to be done there. I would expect that that California position is going to be challenged before too long. In general, I think that the philosophy of an agency should be — make your platform so attractive that people don’t want to leave because the ability to restrict them is becoming less and less of an option for you.

Tim, across state lines, do you have to be more sensitive with this subject, in one state versus another right now, or is that something that you haven’t seen materialize yet?

Hanold: We have not. I guess just whenever it comes to running the business, our covenants for leaders are consistent. We’re also, I guess fortunate to be in a pretty tight geographic region. We don’t have those swings. We do not provide care in California.

Spinola: Tim is absolutely right that the rule and in general, these laws do not protect an individual who’s selling their business. When it’s an arm’s length sale, you can utilize those type of restrictive covenants. I know there’s a lot of acquisitive folks on this call. That’s an exception to the rule. We’re really talking about agreements with employees, independent of a sale of a business.

Moving back to 80/20, Tim, knowing that there’s six years before implementation, and knowing that people like Angelo are telling us there’s most likely going to be legal challenges, how do you prioritize getting ready for the 80/20?

Hanold: It does seem like something that is pretty far out on the horizon. That being said, I think just generally, I touched on this a little bit earlier, but whenever it comes to the 80/20, it is about the scrutiny of the profitability of a home care provider.

Then also, just in general, there’s things I agree or disagree with, but in general, it’s just progressively running a smarter business. Whether we’re talking about home care, or any other industry, you’re going to have these pressures. For example, the way we run our business is whenever the 80/20 rule came out, and then whenever the final came out, it did not change the course about how we’re going about our business plan. For me, that’s volume, rate, and OPEX. Volume, really the 80/20, if anything, underscores the need for density in your core markets and to pursue expansion, at least for us and our appetite around M&A and de novo.

Scale is a must. Volume, that then tags to 0.3 OPEX, which I’ll touch on in a second. Then rates have to be really good. There’s a number of groups within the home care landscape that do that really well, but everyone has to have a voice on this. You can point to keeping states honest on access to care. According to the rule, CMS is requiring states to report out on waiting lists in regards to the 1915(c) waiver.

Those are things that we can arm ourselves. When we’re talking to the General Assembly at the state level and the administrations and governors, it’s like this is something that is coming and something that we have to ensure that we’ve got a place where we can afford stability, and not just that, but also we can do things that are innovative because we are the safety net for the community — for the frail, for the elderly, for the disabled. We can keep people safe and happy at home.

Then third, what I was talking about is OPEX. It’s like an MLR for an MCO, this is equivalent for home care. I spent time whenever I was working at Humana, and the way that we went about just managing those cost structures, that type of thinking is also, we’re going to have to bring to the way that we operationalize our business. Obviously, it’s the membership and the census volumes can be very different there that goes back to point one, you got to go scale, you got to go be of size, but also look for where are things that we’re doing manually right now, we can automate, and then leveraging technology to support and enable those consumer facing.

Tim, you said safety net for the community. Do you think that those safety nets may go away, particularly in states where there isn’t rate adequacy and smaller providers don’t have that scale?

Hanold: That’s a real potential consequence anywhere. 100%, the safety net is essentially only as durable as the rate adequacy that goes with it.

Essentially, it creates both a number of different points, or issues for a general assembly or who’s looking at funding or where those dollars go to. You’re not funding the safety net of HCBS, then you’re going to have to build some more nursing homes.

Absolutely. Angelo, anything to add there before we move on?

Spinola: Only that I think that the fact that 80/20 has a six-year window has gotten some folks complacent. It reminds me of a show on Netflix called Three-Body Problem, where these aliens are coming and they’re 400 years away. It’s like, do you care? Some people care, some people don’t care. I’ll be dead by then. My kids will be dead by then.

I think that some folks, they’ve taken their foot off the gas. We’ve seen changes already in 80/20 from what was proposed and what was final. For example, training, the cost of training and supervision was at one point in that 20%, and now it’s excluded from it. That needs to continue for us to be effective. We have to speak with one voice. Everybody’s got to get involved. I do think that if we do that, and handle our business, where we end up and what is actually implemented is going to be very different, hopefully, than what we see today.

Let’s move on to dealmaking. There’s a lot of scrutiny around dealmaking. What’s your take on the environment for M&A right now? Obviously, it’s been down for a couple of years now. Do you think that has to do with the scrutiny, and do you think that’s going to ease up at a certain point?

Spinola: I think that’s probably a factor, but not a significant one. You’re talking about the mega deal. Even there, I think that is more of a nuisance. Amedisys Inc. (Nasdaq: AMED) will probably have to divest some of their offices. I think we’ll see that in the news sometime in the near future. At the end of the day, United already has 10% of home health car. e That’s about what it would be with this deal. To me, that’s not the news. There are headwinds in every arena.

For personal care, it’s the increased labor costs. With home health, the reimbursement cuts. For each area, you’ve got an issue. You’ve got the 80/20 issues for the Medicaid group. What we’ve seen is that a lot of our clients are yin-ying when others are yang-ying and wanting to take advantage of some of that disruption. The main thing is the interest rates. That’s what most folks will tell you.

Then the white-hot 2021 and those multiples, I think sellers are just now sort of readjusting to the new world. That we’re not in ’21 anymore. What I’ve heard is from the banks and those who are closer to the ground, there’s a lot more prep activity with sellers, getting their house in order, and those types of things. We’ve seen a few things break in the last few months. HouseWorks acquired AccordCare’s personal care division in Connecticut. We just saw Addus HomeCare Corp. (Nasdaq: ADUS) get Gentiva’s personal care division.

There’s been some pretty significant movement, and that’s what I think will happen towards the end here of ’24 that we’ll see the market return, not to ’21 numbers, ’20 numbers, but a certain uptick. That normally happens towards the end of the year anyway. The back half is always more active than the first half. There has been a little bit of a lull, but I don’t anticipate that lasting much longer.

The other thing I think that has to be addressed, and maybe Tim can talk about this, is you may want to do a deal, but who’s available to you? When you look at the type of transaction that the bigger providers and the strategics and the PE firms would like, what they’re targeting, there’s not a ton of that inventory that’s available where you’ve got a $10 million revenue agency that actually wants to sell. I think everybody’s seeing the same tailwinds. We’ve talked a lot today about headwinds, but everybody is also seeing where our industry is going and the need for what it is that we do, and understanding that it’s only going to get better and better.

As you continue to invest in your own business, it will continue to grow and become more valuable as our population ages. There’s a lot of desire for a lot of our clients on the sell side to hold and wait, let’s hold out and grow it back after COVID, and exceed where we were prior to the COVID years, and then think about maybe an exit strategy.

Tim, I know one thing that Care Advantage does is arrange different sorts of agreements with sellers to make them feel comfortable coming on board now and getting creative. One seller may want this, one may want a completely different thing to make them feel comfortable. Can you explain how you’ve gone about that, especially over the last few years?

Hanold: There’s different strategic reasons for investing in different types of home care companies, whether it’s the team that comes with it, the leadership team, the geographic presence, different types of contracts and agreements and specialty arrangements, pay for performance, you name it. Anyway, it’s a mosaic of different things that equates to the value of a company.

That can be different from one buyer to the next. This is something, and again, it’s not just in home care, but whenever it comes to M&A and acquisitions, companies that bring real distinct value have run their shop the right way, really tight on compliance, have a very durable, organic engine. You can see that both on client, and caregiver acquisition, those companies will get paid appropriately.

Then for other companies where maybe it was a difficulty going through COVID, and maybe a slower time getting volume back and showing those organics or just being able to deliver on good caregiver retention and some interesting programs that go along that within your business, those are ones that are probably taking time to tighten things together, stitch things together the right way, and then being able to come back later and go to market. We’re not in the era of ZIRP anymore, the zero interest rates. Good, smart money is going to be really diligent at how they go out, and about and use it.

To your question, what is the motivation of the seller matching that up? Culture matters a lot. Then from a financial perspective, to get people where they need to be, there’s earnouts and there’s other different types of mechanics and mechanisms that ensure that with performance, that people get paid appropriately.

Just to end this call, on a brighter note, we’ve talked about a lot of the headwinds. Is there a tailwind, is there a regulatory piece or legislative piece that you’re really happy about?

Angelo: I’m very excited to see, hopefully, some PAGA reform, Private Attorney General Act reform in California. That has been an absolute nightmare for providers in California. Governor Newsom has been working with some of the business leaders and associations in California to create some regulatory modifications that will make this significantly better for employers.

There are literally thousands of these PAGA suits. It’s basically an end around class actions. You can avoid class actions in any state with an arbitration provision, the right arbitration agreement, certain kinds of class actions like wage-hour class actions, which are so prevalent in our industry, except for in California, because of these PAGA claims. There was a ballot measure on the docket that we didn’t think was going to pass, but it looks like instead of that, we’re going to see some legislative reform, which is very, very much needed.

Hanold: I’ll just say in general, any type of legislation that is something that, essentially, takes a look at fraud, waste, and abuse, and continues to prune out bad actors is excellent for the industry. 99 out of 100 providers that you’ll have a conversation with are really doing this thing for the right reason, purpose-driven, going about this the right way, and really doing something special.

Anyway, when regulation design helps with that, and helps to elevate the state of good actors and companies are going about doing it the right way, I’m all for it.

Anything else, I’d say it’s around whenever these things come through, like the CMS access rule, just be smart, be really as efficient as possible in your service delivery, be innovative outside of regular reimbursement streams, whether it’s paid for performance, value-based care, whether that’s direct to a payer or CMS 2030, that vision is risk-bearing entities like ACOs and so forth. I feel really bullish on our industry because the outcomes are there, the data proves it out.

Now, let’s just continue to make sure that we’re providing it, and selling that with a really comprehensive and smart approach.

The post Analyzing The Wide Range Of Legal Issues Currently Affecting Home Care appeared first on Home Health Care News.

Last month, the U.S. Department of Labor (DOL) unveiled its final overtime rule, which is set to go into effect this summer. The rule increases a minimum salary threshold for millions of workers across the country, and could impact home health and home care providers.

Broadly, the DOL has increased the salary threshold for the minimum compensation necessary for an individual to be exempt from overtime under the Fair Labor Standards Act.

“For federal purposes, that minimum salary threshold will increase as of July 1 of this year, and then increase again at the beginning of 2025, and then continue to increase every three years, so that the salary threshold doesn’t become out of date with actual compensation,” Angelo Spinola, the home health, home care and hospice chair at the law firm Polsinelli, told Home Health Care News.

Specifically, the salary threshold will rise to the equivalent of an annual salary of $43,888, and will increase to $58,656 on Jan. 1.

Currently, the annual salary threshold is $35,568.

“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” Julie Su, acting secretary of labor, said in a press statement. “Too often, lower-paid salaried workers are doing the same job as their hourly counterparts, but are spending more time away from their families for no additional pay. That is unacceptable.”

Once it begins, the rule could impact both home care and home health providers in a variety of ways.

“For office staff that typically are not compensated all that highly, the new salary level may result in a requirement to increase their salaries, or to move them to non-exempt status and pay them overtime,” Spinola said. “I am expecting to see a lot of reclassification.”

For home health providers, the rule also means that clinicians who are paid per visit may need their rates adjusted to align with the new minimum salary equivalent. Providers that aren’t paying high enough visit rates run the risk of clinicians’ being found to be misclassified as exempt.

On the flip side, the rule’s impact is very dependent on what is going on at each individual company. Some providers might see any effect at all, according to William A. Dombi, president of the National Association for Home Care & Hospice (NAHC).

“That could mean at some health care companies, they have everybody above the minimum salary level to begin with and will continue to be above that on January 1 of 2025, and nothing then occurs as an impact,” he told HHCN.

Though there’s a possibility that some companies will see no impact at all, Dombi doubts that this will be the case for the majority of providers.

“We do believe — based more on anecdote rather than on any kind of deep comprehensive data — there are home health agencies that have salaried individuals who are below what will be the minimum levels, and those providers will have to make a choice,” Dombi said. “Do they want to manage the employee as an hourly employee, within the risk of overtime, or do they want to manage the employee on a salary basis, exempt from it, by increasing the individual salary?”

So far, home-based care leaders’ reaction to the DOL’s final overtime rule has been minimal, according to Dombi.

He believes that one of the reasons for this is because there hasn’t been as much attention paid to this topic in an educational context.

“Some law firms have certainly done a number of educational programs around this, and we’ve brought it up in some of our webinars and put it in our newsletter, but when I look at our online communities, we’re not seeing much [reaction],” Dombi said.

Dombi suspects that most of the industry is taking time to process what the rule will mean for their individual company before reacting.

However, those who have determined that this will impact their company have not reacted positively, according to Spinola.

“There have been questions about whether there will be a challenge to the rule,” he said. “I think that the concern is more about the impact over time. That’s what people’s eyes are turned towards — the numbers in January and this continual increase that may price them out every time the labor costs go up.”

Spinola noted that, on the home care side, providers are already operating in environments where the 80-20 rule has been finalized, and where rates aren’t keeping pace. He noted that the overtime rule could put additional pressure on margins for certain companies.

In order to prepare for the rule, providers should take a close analysis of their exempt positions.

“Who do they have as exempt?” Spinola said. “Who is close to that threshold? How many hours do they actually work? Consider reclassification of some of these positions, and I think that should be done with January in mind. Providers should ask, ‘Are we able to pay our exempt staff close to $60,000 annually, and will we be better off converting their existing salary into an hourly rate, so that we’re not paying more than we can afford?’”

The post What Home-Based Care Providers Need To Do To Comply With DOL’s Overtime Rule appeared first on Home Health Care News.

On April 23, the Federal Trade Commission (FTC) voted 3-2 to finalize a new rule largely prohibiting employers from enforcing non-competes against workers.

While the regulatory timeline on the non-compete ban is fairly immediate, the rule will face intense legal pressure from a variety of groups, mainly of which will come from health care. Regardless of what the courts eventually decide, home-based care employers need to understand the significance and ripple effects of Tuesday’s vote.

Chip Kahn, president and CEO of the Federation of American Hospitals, captured the ban’s impact on health care in a statement released shortly after the FTC voted. His remarks focus on hospitals, but the sentiments could apply to the home health, home care and hospice markets as well.

“This final rule is a double whammy,” Kahn said. “The ban makes it more difficult to recruit and retain caregivers, while at the same time creating an anti-competitive, unlevel playing field between tax-paying and tax-exempt hospitals – a result the FTC rule precisely intended to prevent.”

Some home-based care employers use non-compete agreements to discourage former executives from sharing company secrets or starting a new business of their own. Non-competes can be particularly important components in the M&A process, too, offering a certain level of competitive protection for the buyer.

Non-solicitations – another type of agreement used in home-based care preventing clients from hiring caregivers directly – are more frequently leveraged by provider employers. They’re not the same as non-competes, but FTC’s ban could create confusion around how they’re used.

“In our industry, you see non-solicitation agreements, which are designed to protect the business of the provider, but not to restrict the caregiver,” Angelo Spinola, the home health, home care and hospice chair at the law firm Polsinelli, previously told Home Health Care News. “They work where they want to work; it’s just about not taking an agency’s clients with them, because the only reason they know them is because of the agency. I think that’s a fair position to take.”

In this week’s exclusive, members-only HHCN+ Update, I highlight key provisions from FTC’s final rule and discuss what’s likely to happen next.

Unpacking the non-compete ban

From when the FTC proposed its non-compete ban through the end of that proposal’s comment window, it received more than 26,000 comments. About 25,000 of those comments were in support of the ban, with a majority of that feedback coming from people in health care, according to the commission.

FTC’s non-compete ban takes effect 120 days from the rule’s publication in the Federal Register. At that point, employers will need to stop enforcing existing non-compete agreements with certain workers while also letting employees know they’re no longer obligated to uphold previous commitments.

One point home-based care employers should be aware of is that their top executives may be exempt from the rule if an existing agreement is in place. Specifically, the final rule says senior executives making more than $151,164 and who are in a “policymaking position” aren’t covered by the ban.

Employers will be banned from entering into or attempting to enforce any new non-competes, even if they involve senior executives, however.

Less than 1% of workers are estimated to be senior executives under the final rule, according to an FTC fact sheet.

Another critical point in FTC’s rule is how it handles nonprofit employers, of which there are many across home health, home care and hospice.

Broadly, there’s a belief that the FTC’s jurisdiction does not capture entities claiming tax-exempt status as a nonprofit. In the 570-page final rule, the commission makes it clear that’s not always the case.

“Merely claiming tax-exempt status in tax filings is not dispositive,” the final rule clarifies.

If a nonprofit organization engages in business on behalf of for-profit members, for instance, it could still be held to the standards in the non-compete ban.

Another key exemption

Although home health, home care and hospice transaction activity has dropped recently, deals are still getting done.

And when it comes to M&A, FTC’s non-compete ban will include exemptions between the buyer and seller of a business. In other words, sellers won’t be able to cash in on their business, then turn around and open up a competing provider in the same market, perhaps even taking key employees in the process.

What’s more, the exemptions appear fairly broad and comprehensive.

Originally, FTC proposed to restrict non-compete agreements between buyers and sellers only when sellers had at least 25% ownership interest in the entity being sold. That language wasn’t included in the final rule, partly due to commenters successfully arguing against it.

“Most of the commenters who supported some form of exception for non-competes between the seller and the buyer of a business contended that they are necessary to protect the value of the sale by ensuring the effective transfer of the business’s goodwill,” the final rule states. “According to these commenters, a buyer will be less willing to pay for a business if they cannot obtain assurance that they will be protected from future competition by the seller, and so a failure to exempt related non-competes may chill acquisitions.”

FTC likewise declined to include provisions where a non-compete ban would only kick in at a certain valuation or dollar amount.

There were at least 12 home-based care deals that took place during 2024’s first quarter, according to data provided by M&A firm Mertz Taggart.

What about non-solicitation agreements?

During the public comment window on the proposed rule, many commenters asked FTC to revise its rulemaking to expressly cover non-solicitation agreements that prohibit workers from doing business with “prospective or actual customers” to an extent that would effectively preclude them from continuing to work in the same field.

Other comments also sought FTC to include language preventing workers from doing business with their former employers’ clients directly. In home care, this means clients “poaching” caregivers from their agency.

In its final rule, FTC clarified that it does not see non-competes as the same as non-solicitation agreements, leaving room for the latter.

“Non-solicitation agreements are generally not non-compete clauses under the final rule because, while they restrict who a worker may contact after they leave their job, they do not by their terms or necessarily in their effect prevent a worker from seeking or accepting other work or starting a business,” the commission wrote.

But non-solicitation agreements will remain somewhat of a gray area because, under the right conditions, they could function more like a non-compete.

“Whether a non-solicitation agreement – or a no-hire agreement or a no-business agreement, both of which were referenced by commenters, as discussed previously – meets this threshold is a fact-specific inquiry,” FTC noted.

Tuesday’s final rule does not impact trade secret laws and non-disclosure agreements (NDAs).

Other considerations, what’s next

The FTC’s non-compete ban arguably has the greatest impact on the health care sector.

As health care has consolidated, those consolidators have worked to gain more control over the clinicians that power the business. To illustrate that notion: Previous research has found that up to 45% of U.S. doctors are subject to non-competes.

In fact, in coming up with its proposal, the FTC considered a 2016 paper published in Management Science, titled “Screening Spinouts,” which evaluated the economic effects of health care non-competes.

By cutting non-competes out of health care, FTC estimates that health care costs may shrink by upwards of $194 billion over the next decade.

Looking at the total economic picture, the FTC estimates that its final rule will lead to new business growth of 2.7% per year, resulting in more than 8,500 additional new businesses annually.

Moving forward, the FTC ban is going to be challenged in court.

The U.S. Chamber of Commerce already announced its intention to sue.

“The Federal Trade Commission’s decision to ban employer non-compete agreements across the economy is not only unlawful but also a blatant power grab that will undermine American businesses’ ability to remain competitive,” Suzanne P. Clark, the organization’s president and CEO, said in a statement.

Even so, many states and cities already have non-compete bans of their own, with many focused on health care. FTC’s final rule could empower more states and cities to follow suit.

The post ‘This Final Rule Is A Double Whammy’: What Home-Based Care Providers Should Know About FTC’s Non-Compete Ban appeared first on Home Health Care News.

Generally, employers aren’t thrilled at the idea of their workforces unionizing. In home-based care, that’s particularly the case.

Provider leaders see home care union demands as unrealistic. The most basic example of that is wage increase pleas, which are often tough to meet given most providers’ reliance on government-funded payer sources.

Private-pay home care is the exception, where agencies can pass additional wage costs onto the consumer. At least for now.

Home care unionization efforts ticked up prior to the pandemic, but slowed once COVID-19 began to spread. With that crisis mostly in the rearview, however, those efforts are bubbling back up to the surface.

Anecdotally, the stories have been cropping up much more often. New York has been dealing with home care worker strikes on a regular basis. Illinois home care workers held a rally at the state capitol earlier this month vying for higher wages. Just this week, University of Rochester Medicine Home Care (URMHC) workers elected to unionize. More than 2,300 University of Michigan Medicine health care workers joined the Service Employees International Union (SEIU), too, with many of them being home care workers. 

This week’s exclusive, members-only HHCN+ Update takes a further look at unionization within home care, and sets out to answer these questions:

– Is home care unionization actually ticking up?

– What would more unionization mean for home-based care providers?

A unionized workforce

Traditionally, home care workers have not been as unionized as other sects of health care workers because of their remote status.

Workers don’t generally gather at the same places, at the same time. Instead, they’re out at seniors’ homes. That’s begun to change of late, however, as union organizers have advanced their efforts with online campaigns, phone campaigns and legislation that has allowed them to gather more workers’ contact information.

It’s worth noting, too, that the changes to independent contractor statutes throw fuel on the union fire. Independent contractors cannot be organized, but employees can. For unions, the more workers classified as employees, the better.

The first question I asked Angelo Spinola – the co-chair of the home health and home care industry group at the law firm Polsinelli – was whether or not unionization was ticking up in home care.

“Yes,” he said.

How much so? There’s no real way to quantify it yet. I reached out to the SEIU for more direct details, but it had not gotten back to me by the time of this story being published.

For Spinola, it’s obvious due to the greatly increased number of phone calls he has been getting from home-based care provider clients related to union issues.

“There’s so much more activity with our clients,” he said. “They are reaching out because there’s a campaign going on, or soliciting for a union going on.”

It’s happening across the board: in personal care, home- and community-based services (HCBS) and home health care. Although, it’s likely happening the most right now in home health care, Spinola said.

The other area where union activity has become very prevalent is in consumer-directed models. Family caregivers are being picked up. Those unions are sometimes negotiating with the third-party providers in the middle of consumer-directed setups, and also negotiating with the states themselves.

Broadly, these unions aim to negotiate better wages, better fringe benefits and a less of a chance of termination for any reason.

Home care workers are a reasonable target for unionization. They have arduous jobs that require extreme effort and care. They are also regularly underpaid.

But that’s not all.

“When you look at unionization on the whole, the numbers are reducing,” Spinola said. “And then you look at this industry, which is rapidly growing and has always been a target industry, the union presence is minimal. It’s not nearly as significant as unions would like it to be. … The tea leaves are relatively clear that we’re going to be dealing with these issues for a long time to come.”

Provider takeaways

For providers, unionization can be an added headache in an already difficult operating environment.

As mentioned above, while many providers aim to give raises where they can, many are dependent on subsequent rate increases from Medicaid or Medicare. And those increases aren’t always there.

For smaller providers in particular, the legal fees alone associated with dealing with a union can be enough to submerge the bottom line.

“Generally and historically, unions have focused on larger businesses, but now we’re seeing smaller businesses being targeted,” Spinola said. “We’re seeing systems being targeted, and individual businesses within a system being targeted. Unions are targeting caregivers – more than we’ve seen in the past – because a lot of the time they work for multiple agencies. And they’re effectively using that caregiver as a seed to bring others in and start to generate interest.”

Spinola said he’s seen examples of providers throwing their hands up and calling it quits, particularly due to recent software hacks and unionization efforts.

Given the rate uncertainty – in fee-for-service Medicare and Medicare Advantage (MA) – home health providers aren’t in a great spot currently to be spending extra dollars on a new issue.

Private-pay home care providers, again, have more leeway. But even their billing rates are starting to price out more than 90% of Americans.

More sellers could emerge in M&A pipelines, with a lack of resources to keep up with the spending tied to union negotiations. That’ll especially be the case if the 80-20 rule passes as proposed in HCBS.

If caregivers can derive more benefits from joining a union than they would have otherwise – even taking dues into account – it’s a win for them.

But Spinola doesn’t always believe things turn out that way in home care.

“I think what’s often misunderstood is that there’s only so much you can do,” he said. “Capital forces are really dictating what the benefits and wages for caregivers are a lot more than any legislation or union. What often happens is, because there’s not enough to give, it creates too much pressure. And it’s not an effective technique to enhance the working conditions of the caregiver, and the caregivers often don’t realize that until after the fact.”

The post As Home Care Workers Unionize, Key Questions Come Into Play For Providers appeared first on Home Health Care News.

The cyberattack was a cruel reminder to home health agencies, insurers and other stakeholders that they can never be too safe when it comes to protected patient information.

For home health agencies that are wary of a cyberattack of their own, it’s important to hold strong relationships with third-party vendors and to also be aware of a possible threat on the outskirts of those relationships, experts advise.

“It’s not just the vendors that you contract with or the vendors you have relationships with,” Bruce Radke, a member of the tech transactions and data privacy team at the health care law firm Polsinelli, said during a webinar Thursday. “It’s the vendor that you have to be concerned about. Even though you may not have a direct contractual relationship with those vendors, each time you add a new vendor into the mix, it creates a point of potential vulnerability.”

UnitedHealth Group, the largest U.S. health insurer, and its Change Healthcare unit was breached earlier this year by a hacking group called ALPHV. It’s already being described as one of the most disruptive hacks against America’s health care infrastructure – and home health providers have reason to be worried about future attacks.

Having a trusted security plan in place is an obvious first step to take, and it’s one that most agencies are aware of. However, being cognizant about who providers are giving their patient information to is also another important aspect to keep in mind.

“If you provide information to a vendor or allow access to your systems that contain sensitive information — and a compromise of that information has occurred — you very well may be obligated to notify the affected individuals,” Radke said. “Even though the incident may have happened on your vendor’s systems.”

Setting aside the mounting costs it takes to potentially get back compromised information, that doesn’t include notification costs, costs associated with ongoing investigations as well as a “public relations hit,” Radke said.

How to reduce risk

There have been plenty of real-world examples of home-based care cyberattacks.
In 2018, as many as 80,000 patients potentially had personal records stolen by a hacker group after it infiltrated the computer systems of home care services provider CarePartners.

In 2020, Preferred Care Home Health Services reportedly found unusual activity within its email services, with some sensitive information possibly compromised.

Of the many steps providers should take to reduce the risk of a cyberattack, conducting thorough vendor due diligence is at the top of the list.

“This is not a one-size-fits all proposition,” Radke said. “There are going to be certain vendors that have more access to your information. There will be ones that you rely more heavily on and for those vendors, the amount of due diligence should be commensurate in terms of the operational risks that you have with them.”

Providers should also be proactive and operate in a way where they almost expect a breach to happen. There are statutory laws that require vendors to notify an agency if a breach has occurred.

However, in the negotiation period between a provider and a vendor, those can be altered to make sure the notification window is shorter.

“Statutory requirements … may range between 30 and 60 days for the vendor to notify you,” Radke said. “You also want to ensure that you’re being provided timely notification from those vendors in a shorter period of time other than those 30 or 60 days. In the absence of those contractual periods, it could take a significant amount of time before those vendors notify you.”

Asking about cybersecurity insurance, developing contingency plans, establishing alternative measures to ensure business continuity during an attack and having a clear incident response plan are all vital steps agencies should make in the wake of the most recent data breach.

“It’s amazing that whenever we deal with third-party incidents, a lot of our clients unfortunately don’t have a good understanding of how much data they’re providing to vendors or what data is being provided,” Radke said. “Having an understanding about that data flow is also very, very important.”

The post Beyond The Breach: Strategies For Mitigating Cybersecurity Risks In Home Health Care appeared first on Home Health Care News.