NO ONE TESTIFIES IN FAVOR OF EOHHS CUTS TO ADULT FOSTER CARE RATE CUT
The state’s Executive Office of Health & Human Services held a hearing on March 17th regarding a proposed rate cut to the Adult Foster Care program that would take effect April 20th and cut $2 milion from to the program by June 30, 2017, and another $10 million in FY 18.
Rep. Denise Garlick (D-Needham), the chair of the Mental Health committee, testified against the rate cuts, as did the Mass Council for Adult Foster Care programs.
Excerpts of the testimony from Mass Home Care are shown below:
Mass Home Care Testimony Regarding Adult Foster Care Rates
101 CMR 351.00
March 17, 2017
- Statutory Requirements for Rates
The Executive Office of Health & Human Services derives its rate setting authority pursuant to section 13C of chapter 118E of the General Law, where it states:
“The secretary of the executive office shall have the responsibility for establishing rates of payment for social service programs which are reasonable and adequate to meet the costs which are incurred by efficiently and economically operated social service program providers in providing social service programs in conformity with federal and state law, regulations and quality and safety standards…When establishing rates of payment for social service programs, the secretary of the executive office shall adjust rates to take into account factors, including, but not limited to: (i) the reasonable cost to social service program providers of any existing or new governmental mandate that has been enacted, promulgated or imposed by any governmental unit or federal governmental authority; (ii) a cost adjustment factor to reflect changes in reasonable costs of goods and services of social service programs including those attributed to inflation; and (iii) geographic differences in wages, benefits, housing and real estate costs in each metropolitan statistical area of the commonwealth and in any city or town therein where such costs are substantially higher than the average cost within that area as a whole.” (emphasis added)
In reviewing any social services rates, we should ask if the methodology to derive those rates produce a rate which is “reasonable and adequate to meet the costs which are incurred by efficiently and economically operated social service program providers.”
- Are these rates Reasonable and Adequate?
Each time a rate is determined for AFC, the methodology is changed and inconsistent with past rate-settings. For example, in 2003 the state used a method that calculated a daily rate based on the “average hours per day” of staff needed x an hourly rate.
In November of 2006, MassHealth transmitted a new Level II AFC rate set at $82.02 per day, with no methodology cited in the transmittal letter. Ibn 2017, that rate is being proposed cents higher: $82.06–and a cut from the current Level 2 rate of $85.18.
In the 2017 Notice of Public Hearing for these Adult Foster Care rates, EOHHS stated yet another methodology for determining the AFC rates:
“AFC provider cost report data was reviewed and the proposed rates apply an efficiency standard for indirect costs at the 75th percentile among AFC providers. After these adjustments, the 60th percentile of unit costs was taken to determine the proposed per diem rates. The proposed amendments to 101 CMR 351.00 also include the additional of code modifiers to determine utilization of medical leave of absence days, and nonmedical leave of absence days as well as changes to align the reporting requirements with other existing EOHHS rate regulations.”
EOHHS does not publish its working papers that the analysts use to reach the rates found in 101 CMR 351. Such working papers can be requested through a public records act request, but the calculations are not included in any document made public as part of the rate hearing process. There is no consistent pattern or predictability to the methodology the state used to “build” rates for AFC that meet the statutory requirements of section 13C of Chapter 118E.
The following points can be made about this somewhat opaque methodology:
- These rates do not meet the standard of being “reasonable and adequate to meet the costs which are incurred by efficiently and economically operated social service program providers.” Instead, EOHHS has used “AFC provider cost report data,” which by definition refers to historical cost statements from prior fiscal years. It can be demonstrated by AFC provider cost reports from prior fiscal years that previous rate increases were neither reasonable nor adequate. In fact, the rate increases for the AFC program in the past, which produced costs reports, had been wholly inadequate and unresponsive to meet the costs incurred by efficiently and economically operated programs.
- The AFC program rates promulgated in December of 2006 were in effect until April of 2008, and in May of 2008 were slightly increased, but AFC programs went without another increase for 5.5 years. The rates established in December of 2013 were not changed for 3.33 years. The rate being suggested today is 4 cents higher than it was in FY 2006!
Massachusetts AFC Rates
- The AFC rate increases historically over the past decade have been untimely and inadequate. For example, after increasing by only 1.3% in May of 2008, the level 2 rate remained unchanged for 5.5 years without a rate hike, and in December of 2013, the level 2 rate rose by only 2.5%, and saw no change for the next 3.3 years. MassHealth is now proposed to cut the level 2 rate set in December of 2013 by -3.66%, reducing the level 2 rate to roughly the same rate it was granted in December of 2006—9.33 years ago! No human services program can operate a 2017 program based on 2006 rates. This erratic funding pattern, has seriously constrained AFC agency program delivery, because the program spending has to meet imposed budget limitations.
A methodology that uses an “efficiency standard for indirect costs at the 75th percentile” appears to be entirely arbitrary and capricious when compared to the language found in Chapter 118E, section 13C. EOHHS estimates that these proposed rates will result in a loss to the AFC programs of $10,600,000 in FY 18. Because these rates are based on historically-restrained cost reports, the resulting rates bear no relationship to rates which are “reasonable and adequate to meet the costs which are incurred by efficiently and economically operated social service program providers.”
III. Do these rates take into account existing or new governmental mandate that has been enacted, promulgated or imposed?
EOHHS is taking testimony today on 28 pages of updated regulations to the Adult Foster Care program. These proposed regulations contain numerous new governmental mandates that will add to the complexity of managing the AFC program.
Below are highlights of unfunded regulatory mandates:
- The regs add a Community Health Worker to the Multidisciplinary Professional Team. Although the reason for adding this staff position to the MPT is to give providers the opportunity to substitute a lower cost staff person for an RN or care manager visit, the fact is the new staff will come at a cost: there will be advertising, supervision, training and payroll/fringe costs to the agency.
- The new regulations require AFC providers to become accredited. Although AFC providers support accreditation, this could be a time-consuming and expensive process, occurring as EOHHS cuts the program funds by $10.6 million annually.
- AFC providers will be dealing with a new Third Party Administrator for prior authorization, which will increase costs for staff training, and staff time spent preparing and processing prior authorization requests. The EOHHS are falling, but administrative burden is rising.
- New requirement for annual AFC authorizations for consumers to continue in program
- The regulations add a new requirement for a new assessment to be performed when a member Transfer from one AFC provider to another.
- Calculating medical and non-medical Leaves of Absence will become more administratively burdensome because they must be calculated on a consecutive 12 month period basis rather than a simple calendar year basis.
- Expanded Policy Manuals: the regulations substantially increase the written list of policies and procedures that must now be developed as part of an AFC provider’s policy manual.
- Expanded Plan of Care Requirements for level 2 members: New plan of care review requirements substantially increase the reporting and documentation requirements mandated for plan of care review for all level 2 members, with a new list of policies and procedures that must be in the plan, including an emergency file with list of required contents.
- New preadmission procedures and activities that may or may not lead to prior approval. Instead of waiting for prior approval, the regulations require AFC providers to do a full workup on the applicant, right up to a move-in date—without any guarantee of approval by the Third Party Administrator.
- New Staffing Qualification checks, in addition to already required licenses and certification verification, TB screenings and PS reporting, AFC agencies will now be responsible for pre-hire screening of Sex Offender Registry, OIG checks, checks, These new vetting and training requirements will drive up administrative and personnel costs and prolong the hiring process.
- Expanded scope of first month staff orientation: such as basic first aid, CPR, emergency procedures, Heimlich maneuver, universal precautions, elder abuse and neglect, critical incident reports, techniques of providing safe personal care assistance, good body mechanics, human rights and non-discrimination, developmental needs of the member, reporting changes in conditions, relevant provisions of the affordable care act, etc.
- AFC Backup Staff Coverage: As a new requirement, AFC providers must budget for professional and direct care backup staff to cover for illnesses, vacations or other reasons. This would be an additional line item on AFC Cost Reporting.
The proposed rates do not meet the statutory requirements of providing for the reasonable costs of new government mandates. Given all the programmatic and administrative changes, it is inconceivable that rates would be reverting to 2006 levels.
- Do these rates apply a cost adjustment factor to reflect changes in reasonable costs of goods and services of social service programs including those attributed to inflation?
The explanation of these new rates in the Hearing Notice makes reference to “indirect costs,” “code modifiers,” and “changes to align reporting requirements.” But there is no evidence that these programs, pursuant to the section 13C requirements, have had any inflation cost adjustments. This has been the pattern for the past decade: long periods with no rate increase, followed my small adjustments, following by rate reductions.
The evidence available suggests that EOHHS has backed into these rates based on a target spending figure for FY 17 and FY 18, by manipulating findings of cost reports that do not reflect the true scope of the current day AFC Program. This random methodology fails to address any of the statutory requirements in Chapter 118E for setting rates “which are reasonable and adequate to meet the costs which are incurred by efficiently and economically operated social service program providers,” or which “take into account factors, including, but not limited to: (i) the reasonable cost to social service program providers of any existing or new governmental mandate that has been enacted, promulgated or imposed,” or which take into account “a cost adjustment factor to reflect changes in reasonable costs of goods and services of social service programs including those attributed to inflation,” or which take into account “geographic differences in wages, benefits, housing and real estate costs in each metropolitan statistical area of the commonwealth and in any city or town therein where such costs are substantially higher than the average cost within that area as a whole.”
These rates are not in compliance with state law, and should be withdrawn and recalculated to account for the factors that are required for AFC programs that are “reasonable and adequate to meet the costs which are incurred by efficiently and economically operated social service program providers.”
We also request that all AFC providers be sent a copy of the analyst’s worksheets and methodology that were used to calculate the proposed rate.
Mass Home care thanks EOHHS for the opportunity to testify on these AFC budgetary cuts and proposed rates.