Case management agencies that oversee Medicaid care for those in adult foster homes are breathing easier after a last-minute compromise threw out a planned 50 percent reduction in their reimbursement rates.

Instead, the agencies will see a 17 percent reduction in rates from 'Ohana Health Plan, one of two companies that contracts with the state to provide Medicaid services for some 40,000 elderly and disabled people.

More than 1,200 of those residents are in adult foster homes.

The new rates took effect Monday.

Case management agencies feared the 50 percent reduction in reimbursement rates would drive them out of business within months.

State Rep. John Mizuno, chairman of the House Human Services Committee, said that the agencies are "elated" about the compromise.

"All of them have accepted that new rate amount," Mizuno said yesterday. "We don't anticipate any case management industries closing."

There are about 25 case management agencies state-wide.

About half are affected by the new rates.

Under the rate plan, case management agencies will get $13.50 per client per day, a reduction of $2.75 a day. 'Ohana Health Plan has said the reduction is necessary to reduce program costs and to remain viable.

Elsa Talavera, president and CEO of Talavera Case Management Agency Inc., said the rate reduction will still hit case managers hard. "It is a compromise," she said. "We understand the budget deficit."

Case managers for Medicaid patients in adult foster homes do everything from placing clients to monitoring them once they're housed.

Donna Schmidt, president of Case Management Inc., said the work case managers do moves patients out of expensive, acute-care beds faster.

She added that case management agencies were eying their budgets to determine how they could weather a 50 percent drop in reimbursement rates, and many said remaining open would be next to impossible.

"Given the alternative, we were happy with what we finally negotiated," Schmidt said. "Our industry is really critical to the continuum of care."