On May 12, the Centers for Medicare & Medicaid Services (CMS) issued a rule allowing states to make Medicaid payments to third parties, such as for union dues or benefits, on behalf of individual home care providers.

About the rule

The final rule “explicitly authorizes States to make payments to third parties on behalf of individual practitioners, for individual practitioners’ health insurance and welfare benefits, skills training, and other benefits customary for employees, if the individual practitioner consents to such payments on their behalf.” The rule was published in the Federal Register on May 16.

The rule “reinterprets the scope” of Section 1902(a)(32) of the Social Security Act, which says, “[N]o payment under the plan for any care or service provided to an individual shall be made to anyone other than such individual or the person or institution providing such care or service,” with certain exceptions.

According to Bloomberg Law‘s Christopher Brown, “Medicaid has become increasingly reliant on the home health workforce in recent years as federal health-care policy has shifted to encourage care in the home and community rather than in institutions. Over 50% of Medicaid spending on long-term care now takes place in the home and communities, up from less than 10% in the 1980s.” Brown said that of the 3.4 million individual practitioners in the country, at least 800,000 belong to a union. 

The backstory 

In a final rule document published in 2014, during the Obama administration, CMS said the goal of the statute in question was “not to preclude a Medicaid program that is functioning as the practitioner’s primary source of revenue from fulfilling the basic responsibilities that are associated with that role.” The 2014 rule made an exception allowing states to “enter into third party payment arrangements on behalf of individual practitioners for health and welfare benefit contributions, training costs, and other costs customary for employees.” 

In 2019, during the Trump administration, CMS published a final rule that removed the 2014 exception, saying, “[T]his provision [§ 447.10(g)(4)] is neither explicitly nor implicitly authorized by the statute, which identifies the only permissible exceptions to the rule that only a provider may receive Medicaid payments.“ 

Six states—California, Connecticut, Illinois, Oregon, Massachusetts, and Washington—challenged the 2019 rule with a lawsuit filed in the U.S. District Court for the Northern District of California. In November 2020, the court struck the rule and sent it back to CMS for further assessment. The defendant, then-HHS Secretary Alex Azar, appealed to the U.S. Court of Appeals for the Ninth Circuit. The case was temporarily suspended following the change in administrations and is currently on administrative hold through June 2022. 

In the May 2022 final rule document, CMS said: 

“Presently, as a result of the district court decision, the 2019 final rule is nullified and the 2014 final rule implementing § 447.10(g)(4) represents current policy. When the district court vacated the 2019 final rule and remanded the case to HHS for further proceedings, we had broad discretion as to how to address the remand. Because the vacatur reestablished the policy from the 2014 rule, we could have simply published a final rule in the Federal Register waiving notice of proposed rulemaking and public comment and informing the public that § 447.10(g)(4) was in effect due to the district court’s decision … We initially appealed, then chose to review the statute anew, eventually determining that the payments to third parties addressed in this rulemaking fall outside the scope of the statute.”

To read more about the rulemaking process and see comments CMS received about the most recent rule, click here.

About CMS

Part of the Department of Health and Human Services (HHS), CMS administers public healthcare programs including Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the health insurance marketplaces created by the Affordable Care Act.  

What we’re reading

• Federal News Network, “Feds: National Guard members on state duty can join unions,” May 18, 2022 
• The Seattle Times, “Inside WA legislative workers’ union push as frustration builds with Democratic leadership,” May 17, 2022
• Government Executive, “With a Senate Confirmation Vote, A Federal Labor Relations Board is Back in Democratic Control,” May 16, 2022
• National Right to Work Legal Defense Foundation, “Orange County Lifeguards Push for Rehearing of First Amendment Challenge to Union Scheme Trapping Them in Union Membership,” May 16, 2022 

The big picture

Number of relevant bills by state

We are currently tracking 142 pieces of legislation dealing with public-sector employee union policy. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we’re tracking. 

Number of relevant bills by current legislative status

Number of relevant bills by partisan status of sponsor(s) 

Recent legislative actions

Below is a complete list of relevant legislative actions taken since our last issue.

• California AB1714: This bill would allow unions representing excluded state employees to request arbitration with the Department of Human Resources in certain circumstances. 
  • Democratic sponsorship. 
  • Assembly Appropriations Committee hearing May 19. 
• California AB2556: This bill would change the time frame for a local public agency employer to implement a final offer after a factfinders’ recommendation has been submitted in the case of a dispute between the employer and employee organization. 
  • Democratic sponsorship.
  • Referred to Senate Labor, Public Employment and Retirement Committee May 18. 
• California SB931: This bill would allow a union to bring a claim before the Public Employment Relations Board against a public employer allegedly in violation of California Government Code Section 3550 and sets civil penalties for violations. Section 3550 prohibits public employers from discouraging union membership.
  • Democratic sponsorship.
  • Senate Appropriations Committee hearing May 19. 
• California SB1313: This bill would prohibit Los Angeles County from discriminating against union members by limiting employee health benefits. 
  • Democratic sponsorship.
  • Senate Appropriations Committee hearing May 19.
• California SB1406: This bill would allow unions representing excluded state employees to request arbitration with the Department of Human Resources in certain circumstances.
  • Democratic sponsorship.
  • Senate Appropriations Committee hearing May 19.
• Colorado SB230: This bill would give county employees the right to organize and bargain collectively beginning in 2023.
  • Democratic sponsorship.
  • Speaker of the House and president of the Senate signed May 18. Bill sent to the governor.
• Louisiana HB663: This bill would allow public employees to resign from union membership and revoke dues deduction authorizations at any time. It would require employees to annually renew dues deduction authorizations by signing a form described in the bill. The public employer would be required to confirm the authorization by email.
  • Republican sponsorship. 
  • House Labor and Industrial Relations Committee hearing May 19. 
• Missouri HB2121: This bill would establish the “Public Employee Janus Rights Act.” It would require public employees to give written, informed consent before union dues or fees may be withheld from their paychecks. Employees must also give written, informed consent for unions to use fees or dues for political purposes.
  • Republican sponsorship.
  • Referred to House Workforce Development Committee May 13.
• Missouri HB2122: This bill would bar employers from requiring employees to become, remain, or refrain from becoming members of a union as a condition of employment.    
  • Republican sponsorship.
  • Referred to House Workforce Development Committee May 13.