Independent contractors no longer permitted for AHCCCS clients.
A regulatory change made quietly last year is posing a threat to small businesses in Arizona.
In October 2014, the Arizona Health Care Cost Containment System announced a policy change that required all businesses providing support services for AHCCCS clients to do so using only direct employees. In other words, AHCCCS—Arizona’s Medicaid agency—prohibited businesses from using payroll services, staffing agencies or independent contractors when providing in-home care to patients, which include senior citizens and people with disabilities.
For small businesses in the industry, says David Selden, senior member attorney with Phoenix-based Cavanagh Law Firm, the rule imposes higher costs. To absorb the costs, owners might be forced to reduce workers’ pay, which increases turnover and reduces the quality of available workers. This turnover is particularly distressing for senior citizens, who want stability with home care workers.
Selden says the workers also prefer to be independent contractors because it enables them to earn more money as well as take advantage of tax deductions on expenses like mileage, uniforms and certifications, which they cannot do as employees.
Wendy Swager, CEO of in-home support services provider Soreo in Tucson, says the rule, which hasn’t been fully implemented yet, will dramatically impact her business. Soreo works with 1,250 independent contractors.
“This rule will close these small businesses and force [independent contractors] to become W-2 employees irrespective of their skill or success as an independent contractor,” she says.
NFIB/Arizona has spearheaded the introduction of Senate Bill 1241 to correct this problem. The bill, sponsored by state Sen. Nancy Barto, would prohibit AHCCCS from mandating the exclusive use of W-2 employees when providing in-home support services and preserve the freedom of choice for businesses and workers.
“Sen. Barto is a proven champion of small business interests at the Arizona Legislature, especially on healthcare-related topics,” says Farrell Quinlan, NFIB’s Arizona state director. “Home healthcare entrepreneurs can be confident that their voices and concerns will be addressed by lawmakers this session.”
