In August, the U.S. Department of Health and Human Services (HHS) proposed a new regulation seeking to provide legal cover so states can continue siphoning union dues from Medicaid payments to home care aides serving clients with functional disabilities.
The move was a reversal of HHS’s position during the Trump administration and the latest development in a years-long battle over the legality of the deductions.
During the Trump administration, HHS rightly recognized that federal law requires payments to Medicaid providers be made directly and in-full to the providers without any funds being diverted to third parties, like unions, that provide no services to Medicaid beneficiaries, a position urged by the Freedom Foundation.
At the time, a comprehensive Freedom Foundation report concluded that, in 2017 alone, unions collected nearly $150 million in dues from the Medicaid payments to about 350,000 caregivers in eight states, including: California, Connecticut, Illinois, Massachusetts, Minnesota, Oregon, Vermont and Washington.
Unfortunately, litigation brought against HHS by several states and unions succeeded in delaying HHS from taking enforcement action against these states until after President Biden’s inauguration. While the litigation technically remains unresolved, HHS is now headed by Biden appointee Xavier Becerra who, as then-attorney general for the state of California, led the litigation against Trump’s HHS to defend the illegal dues deductions.
In a 30-page comment submitted to HHS during the required public notice and comment period on the latest regulation, the Freedom Foundation explained how the proposal violates federal law governing Medicaid and would enable continued exploitation of home caregivers by unions like SEIU and AFSCME.
The Freedom Foundation also pointed out and corrected several significant absurdities and inaccuracies in the HHS proposal.
First, the statute at issue provides that “no payment… shall be made to anyone other than… the person or institution providing such [Medicaid-funded] care or service, under an assignment or power of attorney or otherwise…” Simple, right?
Not simple enough for HHS, apparently, which contends the statute prohibits only the “full diversion of the right to claim and/or receive such payments to third parties” but does not “apply to partial deductions from payments” (emphasis added).
Taken to its logical extreme, this interpretation would hold that the statute is satisfied so long as the Medicaid provider receives any portion of their payment directly, even if it’s just pennies on the dollar. In HHS’s view, the unequivocal words “no payment… shall be made to anyone other than” the provider really mean “any payment that amounts to less than 100 percent of what is owed to the provider may be made to a third party.” In effect, this interpretation flips the statute on its head, turning it from prohibitive to permissive.
Even more outrageous was HHS’s claim that “since the 1990s,” when unions first started organizing home caregivers in California, it has “mostly understood” the statute as permitting union dues deductions from caregivers’ Medicaid payments, making the Trump administration’s position that such deductions violate the statute “a departure from our prior interpretation.”
This is simply false.
Years of documents exchanged between HHS and Washington state officials and obtained by the Freedom Foundation show that HHS warned Washington as far back as 2011 — during the Obama administration — that withholding dues from caregivers’ Medicaid payments was impermissible.
In a May 2011 letter to the Washington State Department of Social and Health Services, HHS officials explained that Washington “was not in compliance” with federal law because,
“… Medicaid can only pay for Medicaid-covered services. The State of Washington was paying for union dues, health insurance and training costs as a separate payment, not included in the PCS [personal care services] payment. Union dues, health insurance and training costs are not Medicaid-covered services when paid by themselves. States may develop rates that include considerations for costs related to health insurance and union dues; however, the entire rate must be ‘paid’ to the provider of personal care services and reported as income by that provider.”
Unfortunately, rather than enforce its own interpretation of the law, HHS adopted a regulation in 2014 adding an exception to the direct payment requirement to allow deductions for third parties like unions, despite being forced to acknowledge “the statute does not expressly provide for additional exceptions to the direct payment principle.”
In short, Trump’s repeal of the 2014 regulation wasn’t a departure from HHS’s historical position regarding the deductions, but a restoration of it.
After promising to be history’s most pro-union president, it’s no surprise Biden’s administration is again attempting to ignore federal law and preserve a coercive practice that harms the nation’s home care workforce while enriching a far-Left special interest group. But’s it’s still disappointing and shameful.
Regardless, as it has for the past seven years, the Freedom Foundation remains committed to deploying every means at its disposal to protect hard-working home caregivers from union and government exploitation.
The Freedom Foundation’s full comment to HHS on the latest regulation is available below.