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CMS: Wage Cuts Don’t Disqualify California for Medicaid Stimulus Funds

On Wednesday, the Obama administration said that California's decision to cut the state's contribution to home health care workers' wages will not affect the state's eligibility for $8 billion for Medi-Cal provided through the federal economic stimulus package, the Sacramento Bee reports.

Medi-Cal is California's Medicaid program.

The wage cuts affect workers participating in the In-Home Supportive Services program.  A provision of the state budget approved in February reduced the state's contribution to the workers' wages from a maximum of $12.10 to $10.10 an hour (Hotakainen, Sacramento Bee, 5/20).

Unions representing the workers complained to the Obama administration, arguing that the cut violated a provision of the stimulus package that bars states from shifting costs to counties.

However, in a letter to Gov. Arnold Schwarzenegger (R), federal officials wrote that the reduced state contribution to the wages does not violate the stimulus law because it does not require counties to increase their contribution to IHSS workers' wages (Freking, AP/San Francisco Chronicle, 5/20). 

The letter was presented to the governor yesterday morning (Nicholas, Los Angeles Times, 5/20).

Capitol Weekly posted the letter on its Web site (York, Capitol Weekly, 5/20).

Back Story

Wednesday's letter is a reversal from preliminary indications about the Obama administration's stance on the wage cut, Capitol Weekly reports (Capitol Weekly, 5/21).

California officials said a May 3 letter from the Obama administration stated that the wage cut violated the stimulus package's provisions.

Obama administration officials said no final ruling on the matter had been issued until yesterday.

In an interview with the Times Tuesday, Andy Stern -- president of the Service Employees International Union, which had raised objections to the wage cut -- reasserted his belief that the move violates the stimulus law (Los Angeles Times, 5/20).

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