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Providers warn proposed waiver cuts and rate caps would worsen workforce crisis and reduce services
Summary
Residential and waiver service providers, unions and disability advocates told the committee the governor’s proposal to cap inflation adjustments, limit rate exceptions and reduce utilization factors would destabilize disability waiver services and threaten access for people with disabilities, especially in rural and BIPOC communities.
Representatives of disability service providers, provider associations and a home-care union told the House Health and Human Services Finance Policy Committee that several elements of Gov. Tim Walz’s Medicaid and waiver proposals would reduce provider revenue, deepen workforce shortages and shrink service access.
"This proposal will exacerbate an already dire workforce crisis," Johnny Tivetz, policy manager for ARM, told the committee, urging lawmakers to reject a proposal to cap inflationary adjustments at 2% and other proposed reductions. "Direct support professionals...are already underpaid," he said, adding that the administration’s $1.3 billion in four-year reductions to waiver services would be "unrealistic" to absorb without service disruption.
Laurie Schluttenhofer of Opportunity Partners and co‑president of MORE (Minnesota Organization for Habilitation and Rehabilitation) testified that two specific proposals in the governor’s package were especially harmful: reducing the day-program absence/utilization factor from 9.4% to 3.9% (which she said would amount to a roughly 5–6% rate cut for her organization) and capping future inflationary adjustments at 2%. "Making and cutting off the ability to compete in this very difficult workforce would have a devastating impact and reduce access for people who are in critical need of these services," she said.
Shekiah Richmond, executive director of Healing Homes Living Services and representative of the Residential Providers Association of Minnesota, testified that eliminating or altering customized living for people under 55 would disproportionately affect culturally specific providers and BIPOC communities. "The proposal...would mean individuals newly seeking the services could no longer access them," Richmond said, citing DHS budget documents that, she said, acknowledge disparate impacts but offer no mitigation.
SEIU home care worker Carrie Adleman testified in support of targeted investments in wages and benefits. She described a tentative contract settlement for home care workers that depends on legislative funding and said the governor’s budget includes funds for a nursing-home minimum wage standard and a tentative home-care settlement, but that larger cuts elsewhere would undermine workforce stability.
Providers and advocates requested that the legislature reject the 2% cap on inflationary adjustments, avoid reductions to utilization and attendance factors, preserve rate exceptions for high-need clients, and maintain customized living options or develop alternative culturally appropriate community-based placements. No committee votes occurred during the testimony; witnesses asked for legislative protections for providers and for more careful analysis of any rate or program changes before adoption.
