DHS wage-and-rate study recommends $1.3 billion annual provider revenue increase; urges standardized rates and transparency

The Joint Ways and Means Human Services Subcommittee on April 8 heard a work session report required by the budget note attached to Senate Bill 5506 (2023) recommending broad changes to how Oregon pays providers that deliver home- and community‑based services. Steven Pawlowski of Burns and Associates, the consultant that conducted the wage-and-rate study, told the committee the recommendations would “increase spending in total, or provider revenue, by $1,300,000,000 annually.”

The study responds to long‑standing concerns about low wages, high turnover and uneven rate methodologies across the Oregon Department of Human Services’ Office of Developmental Disability Services (ODDS) and the Office of Aging and People with Disabilities (APD). The report proposes standardized, transparent rate models tied to assessment tiers, new reporting requirements for providers, and benchmark wage assumptions designed to improve recruitment and retention.

Why it matters: The consultant estimated the proposal’s federal and state mix would produce an annual state cost of about $400 million if fully implemented. Committee members pressed presenters about phased implementation options and the potential budget impact. Burns and Associates and DHS officials emphasized the recommendations are policy options for lawmakers and that final decisions and funding are subject to the Legislature’s budgeting process.

Pawlowski said a central aim of the study was transparency and comparability. “One of the overarching recommendations here is to both create greater standardization, but importantly more transparency into the rate setting approach across the HCBS system within the state of Oregon,” he said. The study also recommends that APD finish development of a portable assessment framework similar to ODDS’ Oregon Needs Assessment (ONA), so that individual level assignments are comparable across services.

Key recommendations and assumptions

- Direct‑care wage benchmark: The study assumes an average agency wage of $23.20 per hour (about $48,000 annually for full‑time work) for agency‑employed direct‑care staff. Burns explained that figure is derived from a composite of Bureau of Labor Statistics occupations adjusted for market conditions and carried forward for inflation.

- Collective bargaining (SEIU) workers: For personal support workers and home care workers covered by the statewide collective bargaining agreement, the study recommends adding roughly $4.50 per hour to current base wages, producing typical wages in the $26–$27 per hour range when combined with existing CBA elements. Burns said the CBA model differs from agency compensation because it uses a subsidy approach to health coverage.

- Rate models and tiers: The report recommends formal rate models for services not yet covered (for example, supported living and adult foster homes) and a five‑tier reimbursement structure for adult foster homes and for APD residential settings (assisted living and residential care facilities). Burns said these models tie staffing assumptions to tier assignments to reduce the current reliance on one‑off “special needs” contracts.

- Reporting and pass‑through options: The consultant recommended greater reporting about how additional revenue is used (for example, how much reaches direct‑care workers) and noted a spectrum of approaches used by other states — from reporting requirements to pass‑through mandates tied to wage increases. Burns referenced recent federal guidance on Medicaid access (commonly called the CMS access rule) as part of the context encouraging transparency.

Data, limits and implementation notes

Burns and Associates said the study combined rate models, federal wage data and provider surveys. The firm reported 171 agency providers participated in its survey (representing roughly 28% of delivered services), and about 100 responses were received from adult foster home operators (from a universe of roughly 2,500). Burns acknowledged participation was lower than hoped and said the survey was only one of several data sources used.

The study estimated total additional provider revenue of roughly $1.3 billion per year, of which Burns said the state share would be about $400 million annually after the federal match. Burns and DHS staff recommended policymakers consider phased or prioritized implementation, focusing first on services most “underwater” or where parity gaps are largest, rather than implementing the full package at once.

Public feedback and next steps

Burns reported receiving written comments from about 70 stakeholders and a form letter from more than 1,300 home‑care and personal‑support workers. The consultant said feedback was mixed; some providers objected to standardization and to particular allocation assumptions, while workforce advocates generally supported wage increases.

Administrative action in the subcommittee

The Department of Administrative Services’ chief financial officer recommended that the subcommittee acknowledge receipt of the report. The Legislative Fiscal Office made the same recommendation. An LFO representative moved the motion that the committee acknowledge receipt of the report; Co‑Chair Campos called for objections, heard none, and the subcommittee carried the recommendation to the full committee by voice consent.

What’s next: The subcommittee carried the receipt‑acknowledgment to the full Ways and Means Committee. Any change to provider rates, the proposed wage benchmarks, or new reporting and pass‑through rules would require legislative action and appropriation decisions during the budget process.