ANALYSIS OF FY 13-14 PROPOSED STATE BUDGET FOR SERVICES FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES

A transitional budget for services to people with developmental disabilities. The Executive Budget proposal for FY 13-14 marks a challenging turning point for services for people with developmental disabilities. In particular, it includes extensive amendments to the Public Health law to create a foundation for eventually bringing almost all services for people with developmental disabilities into managed care. These new amendments appear to give the Commissioner of Health greater authority over services for people with developmental disabilities in key areas such as rate setting and oversight. While OPWDD continues to retain important responsibility in these and other areas, managed care is and has been for years under the jurisdiction of the State Department of Health. NYSARC has been told that thats where the expertise is. So, it is only natural that DOH will have increased influence over our field. Nonetheless, this shift toward DOH raises important concerns. Many of these concerns have been triggered by the experience of many providers and advocates who have warned that DOH is an agency with limited sensitivity to the needs of people with developmental disabilities. This is reinforced by DOHs overwhelming responsibility for populations served through a medical model which presumes that care is aimed at curing people. This model is not appropriate to the lifelong needs of people with developmental disabilities for whom the habilitative model, aimed at giving them full lives in their communities, has evolved over the last three decades. This poses a very significant challenge to people with developmental disabilities, their families advocates and their providers. OPWDD APPROPRIATIONS (AND RELATED HIGHLIGHTS) Category Aid To Localities Capital Projects State Operations Total FY 12-13 Requested FY 13-14 Change Percent change

2,479,141,000 163,540,000 2,144,907,000 4,787,588,000

2,480,091,000 950,000 .03 168,950,000 5,410,000 3.0 2,083,756,000 (61,151,000) (2.8) 4,732,797,000 (54,791,000) (1.1)

OPWDD

A. Downsizing State Operated programs

There appears to have been a major policy decision to downsize State operated programs including: DC Rundown Developmental Center census is expected to drop from about 1,000 individuals to about 700 over the course of FY 13-14. Most of these individuals are expected to be absorbed by voluntary programs. State operated community rundown The significant personnel drop in state operated community programs reflects an anticipated reduction in the number of individuals served in those programs. However, it is not clear how many people that reduction includes. Again, most persons from State operated community programs are expected to be absorbed by voluntary operated community programs. Reduction of the OPWDD workforce As a result of the decision to reduce State operated programs, OPWDD personnel are reduced by 1,249 FTEs from 19,816 to 18,567, including 450 in State operated community services and 799 in institutional services. This is expected to generate significant but currently undetermined savings. The Executive Budget states: To ensure OPWDD delivers the most integrated and cost effective services possible, the Budget supports ongoing plans to downsize institutional programs by including resources to fund more integrated and appropriate service opportunities in the community. Specifically, the Budget reflects the closures announced last year of the Finger Lakes and Taconic Campuses which are expected to be completed by December 2013. The vast majority of new services will be provided by the agencys network of nonprofit providers. B. Voluntary funding to absorb people from State institutional and community programs While voluntary programs are expected to absorb most people from State institutional and community programs, funding for voluntary programs is flat from year to year. However, the appropriation bills authorize the transfer of savings from State operations budget to the Aid to Localities budget which funds voluntary programs.

C. No trend factor/cost of living increase is contained in the Governors proposed budget Trend factor With the controversial institutional rate methodology effectively dead, the Medicaid trend factor which the developmental disabilities system had for years received, is no longer possible. (See G. Payback of federal funding for Institutional Rate Controversy.) No Cost of living increase (COLA) The budget would delay the Planned Human Services COLA Increase of 1.4%. This is the fifth year in a row the budget has done this. A no trend/no COLA policy is across all human services and mental hygiene providers.

D. OPWDD Development The budget contains about $30 million in development for new services. Along with federal funds this amounts to about $60 million. The exact breakout of this funding has not yet been determined but it is expected to include supported work, residential supports and various day options. However, the budget also projects a reduction of $32.1 million in development for FY 13-14 expanding to $64.2 million in FY 14-15. E. Enhanced Family Care Rates About $5 million is recommended to enhance rates for Family Care to make it a more viable option. F. Various OPWDD reforms According to the Executive Budget these include the following Increased hiring qualifications and training standards in State-run programs for direct support professionals, including pre-employment psychological and fitness training, mandatory drug testing, rigorous background checks, and a minimum of a high school diploma. Refocused efforts on cases of abuse, with creation of a centralized Incident Management Unit with real time oversight of incidents, and an overhauled investigations process that has direct relationships with local law enforcement/State Police. Holding non-profit providers more accountable for their performance via a restructured Early Alert program to quickly remedy deficiencies in non-profit provider services, with imposition of fines and revocation of operating certificates when appropriate. An improved statewide standardized objective process to ensure potential new non-profit providers have the requisite fiscal and programmatic expertise, and an initiative that supports and recognizes providers that have achieved excellence in service delivery. Enhanced fire safety efforts, implementing recommendations of outside experts to comply with enhanced standards, including unannounced fire drills, better training and safety plans, direct relations with local fire personnel, and capital improvements.

G. Payback of federal funding for institutional rate controversy $1.1 billion in federal funds at risk. The issue of the $5,000 per day New York State developmental center rate, originally reported on over 2 years ago in the Poughkeepsie Journal, erupted in a major controversy which included hearings by the House Oversight Committee last summer. In response to the controversy generally and the hearings specifically, CMS has demanded that New York State return substantial federal Medicaid funding totaling approximately $1.1 billion.
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While this matter has not formally been concluded, NYSARC has been told that the entire $1.1 billion in revenue to New York State is at risk. If a satisfactory settlement with CMS is not reached, there is a strong likelihood that it will result in cuts to developmental disabilities and other Medicaid providers. If the State loses the entire amount of federal funds at risk, the States budget deficit for this entire years $140 billion State budget would be doubled. The State budget notes: On January 11, 2013, based on a request from Federal CMS, the State DOH submitted an amendment to the State Plan for OPWDD to lower Medicaid developmental center payment rates effective April 1, 2013. This has the impact of lowering Federal funding to New York by approximately $800 million annually beginning in FY 2014. In addition, Federal CMS has requested that the State lower other rates for State-provided services by April 1, 2013, which would result in an additional reduction in Federal funding of roughly $300 million in FY 2014. The State is in ongoing discussions with Federal CMS concerning alternate funding approaches to avoid these reductions, but no decisions have been finalized. As a result, the State is preparing a contingency budget reduction plan that would need to be undertaken in order to keep the FY 2014 budget in balance. The plan being developed will cover the potential loss of $1.1 billion in Federal funding. TRANSITION TO MANAGED CARE, DOH A. Consolidation of Medicaid functions into the Department of Health The Executive Budget states that it will Combine all Medicaid administrative functions into the Department of Health. According to the budget Currently, multiple agencies play a role in administering the Medicaid program, despite the Federal requirement that there be one State Medicaid Agency. In 2013-14, all State Medicaid administrative functions (e.g., rate setting, negotiation of managed care contracts, claims processing) will be consolidated in DOH. This will standardize administrative practices; generate efficiencies, and free agencies to focus on Medicaid policy and the implications of Medicaid on their constituencies. B. Managed care for people with developmental disabilities According to the Executive Budget OPWDD is seeking authorization from the Federal government to make changes that will improve coordination of long-term care, acute and behavioral health care services for individuals with developmental disabilities, increase the flexibility of services provided to individuals with developmental disabilities, increase funding transparency, and improve overall service quality and outcomes. Without these changes there could be significant negative consequences on the States ability to maintain current service levels. Extensive Article 7 budget language is included to 1) define/describe DISCOS, 2) allow for expansion of existing HMOs to serve people with developmental disabilities

and 3) authorize Managed Long Term Care (MLTC) programs to serve people with developmental disabilities. The language requires approvals on key issues (rate setting, oversight, assessments, character and competence of potential managed care providers) by the Commissioner of DOH solely or jointly with the Commissioner of OPWDD or in consultation with the Commissioner of OPWDD. In the key area of rate setting the Commissioner of DOH either exclusively or jointly sets rates with the Commissioner of OPWDD, with the approval of the Director of the Budget. For the existing system, section 43.02 of the Mental Hygiene law gives that sole authority to the Commissioner of OPWDD, with the approval of the Director of the Budget. This language, along with consolidation of functions in DOH, marks transference of significant authority for services for people with developmental disabilities from OPWDD to the State Department of Health (DOH). It appears that OPWDD will continue to play an important role in the new managed care system. C. Other items to facilitate system change/managed care Other items to facilitate the future reconfiguration of the OPWDD system under managed care include: Regional crisis capacity. To be accomplished through a phase in of 50 state positions each year for the next three years (total 150). Managed Care assessments and Quality Review. To be accomplished through the phase in of 50 state positions a year for 3 years (150 positions total).

JUSTICE CENTER Justice Center implementation The Governor recommends total funding of $45,013,000 to fund the Justice Center for the Protection of People with Special Needs, the new state agency created last year to deal with abuse of vulnerable populations. The Justice Center is expected to have 280 full time equivalent positions. The Justice Center will subsume the functions of the Commission on Quality of Care and Advocacy, saving $9.4 million in annual funding. The Justice Center will be operational by June 30, 2013.

SCOPE OF PRACTICE Making Certain License Exemptions Permanent The Executive Budget States that it includes legislation to make permanent the current long time temporary exemption for certain social work and mental health professional licensure requirements of persons employed by a program or service operated, regulated, funded, licensed, or approved by OMH, OPWDD, OASAS, DOH, OCFS, Office for the Aging, Department of Corrections and Community Supervision, and/or local governmental units or social services districts. The licensure exemption was due to sunset on July 1, 2013. The Governors Article 7 budget language deletes the sunset, making the exemption permanent. NYSARC and other developmental disabilities providers had advocated for this exemption prior to release of the Budget. SCHOOL RELATED PROGRAMS A. Early Intervention Some key Early Intervention reforms, among quite a few others, include: Require expanded insurance coverage of Early Intervention services. This includes HMOs, CHIP (Childrens Health Insurance Program), Medicaid and other health insurers. Early Intervention services would be defined as a covered service for purposes of CHIP. Require the use of network providers to provide services and perform screenings and evaluations. Authorize health insurers and HMOs to reimburse providers at negotiated rates. Such payments would be considered payment in full. Additionally, they would be authorized to charge copays and deductibles. It should be noted that these out-of-pocket costs are reimbursable with public funds. Require providers to exhaust all appeals to insurers. This would be a precondition of claiming State/county reimbursement through the DOH Early Intervention agent. Require the direct submission of HMO claims through the States fiscal agent. Impose various limits and conditions on evaluation. Including prohibit reevaluation within 3 months of a previous evaluation; requiring that evaluators only use evaluation instruments approved by DOH; and, conduct mandated screenings prior to an evaluation to efficiently focus evaluations. Also, multidisciplinary evaluations could be performed by a single professional with appropriate licensure in more than one discipline.
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B. Preschool Special Education In the wake of numerous stories on financial abuse in the States preschool program, the Governors Budget notes that projected State expenditures of $1.1 billion for the next school year will represent a doubling of total preschool cost over the last 10 years. To address the unsustainable growth the Executive Budget recommends: A large scale audit of preschool providers. This will result in an extensive data base that can be used to enhance accountability and oversight. Enhanced county oversight capacity. The Executive Budget includes $1 million in grant funding to counties to enhance their ability to detect fraud and abuse. To incentivize county oversight, the budget authorizes counties to retain 75% of audit recoveries (instead of the current 40.5%). Allow New York City to set rates. Given the disproportionate increase in preschool costs in New York City, the budget authorizes the City to set its own rates subject to certain conditions and constraints. C. School District Mandate Relief As recommended by the Mandate Relief Council, the Executive Budget will create a new waiver process which will allow school districts and private 852 programs to petition the State Education Department for flexibility from special education requirements. MINIMUM WAGE INCREASE The Executive Budget proposes to increase the hourly minimum wage from $7.25 to 8.75.