DHS Releases Guidance on Spending Requirements for Increased EW Rates

Posted on November 2, 2023 by Jeff Bostic

The Minnesota Department of Human Services (DHS) posted guidance on how Elderly Waiver (EW) providers should develop a distribution plan for the rate increase that starts Jan. 1, 2024.

The rate increase will be historic, as legislation advocated for by LeadingAge Minnesota and its Long-Term Care Imperative partner in the 2023 legislative session. Passed earlier this year, the changes will be a big step toward paying EW rates that cover the cost of providing services.

Rate increase details

The rate increase is projected at 44.8% for customized living and 28.6% for adult day services. The rate changes will be implemented starting Jan. 1, 2024, for all new EW clients and existing clients at their reassessment time.

Distribution plans

The legislation that included the rate increase requires that 80% of the “marginal increase in revenue” be spent on new wage and benefit increases. The recent guidance addresses what providers need to put into their plans and suggests a method for estimating an increase in revenue. Plans must be developed by Jan. 1, 2024, and posted for employees for six months.

The estimated increase in revenue is designed to take into account the rolling implementation of the increase throughout 2024. DHS suggests starting with 2023 EW revenue, applying the projected percent increases, and then calculating the amount to be received each month as more clients convert to the new rate. The guidance includes a detailed example of how to estimate increased EW revenue.

The funds in the distribution plan need to be spent on wage increases, including new positions, employer benefit cost increases, or new benefits. The guidance allows providers to use wage increases implemented since Jan. 1, 2023, toward meeting the legislative requirements, and it also allows operators of multiple sites to do a single plan covering the increase in EW funds at all sites.