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The ARC of Martin County
2001 South Kanner Highway | Stuart, FL 34994 | (772) 283-2525
 
Arc Family

As a parent, there is nothing more frightening than knowing your child has serious disabilities, yet living day to day without understanding how to help her. ARC changed our lives! Their staff immediately took us in and helped us with therapy and techniques to address her disabilities. For a family in our situation, there are no other organizations that can provide the care, expertise and resources ARC does. Simply put, their work is God's work to many families. 

 
ARC of Martin County has done amazing work for my family, with little funding available. When we came through their doors for the first time in 2007, it was hard to see even a light at the end of the tunnel for our son. ARC taught us how to work with him daily on social, physical, and academic accomplishments. Now, not only is he able to do tasks on his own, he is thriving in his school! He has truly been given new opportunities in his youth.
 

 

Funding History

Funding Challenges at the State Level

History of APD Medicaid Waiver Cuts

  • In July 2003, the State of Florida adopted the Mercer Rate system that contained up to 720 billing options for residential habilitation rates and new rates for most of the 30+ services funded by the Home and Community Based Services Waiver.  Transportation, Special Medical Homes and Intensive Behavior services continued to have negotiated rates. The legislature basically bought a reimbursement system that was based on direct care wages funded at the 25th percentile compared to national averages for wages.
  • In November 2003, the Agency reduced Residential Habilitation rates by 14.3% and Live In Residential Habilitation by 7%. Also, billable days were limited to 350 per year for homes having more than 3 individuals.  ADT rates were reduced by about 9.5%. The actions were taken to prevent deficit spending although the state actually realized a surplus at the end of the fiscal year. The annualized reductions totaled about $45 million for three services. Per Medicaid claims data, the Agency realized a $37 million surplus for the same year.
  • In 2004, the Agency implemented a residential habilitation matrix system that limited billings by individuals and looked at the overall number of staffing hours needed per home for staffing. The impact was significant in that in many cases the last two admissions to a six-bed group home received reduced hours (typically 2).
  • Chore, Non-residential Support Services, and Homemaker Services were eliminated for a projected $12.7 million savings to APD. However, the definition of In-Home Support Services was expanded to include some activities previously provided in the eliminated services.
  • Massage Therapy and IQ Testing (Psychological Assessments) services were eliminated for a projected $2.2 million savings to APD.
  • In 2006, agencies received a 2.81% Cost of Living Adjustment that applied to all waiver services.  This action added about $21 million back into the system.
  • During the 2007 Legislative Session, the Florida Legislature mandated changes in Senate Bill 1124 that resulted in limitations and eliminations of DD Home and Community Based Services (HCBS) Waiver services. Although implemented, the limitations and eliminations resulted in little if any savings in expenditures because clients often shifted to other services to meet their needs.
  • Massage Therapy and IQ Testing (Psychological Assessments) services were eliminated for a projected $2.2 million savings to APD.
  • Supported Living Coaching was limited to no more than 20 hours per month for persons who also receive in-home support services for a $4.4 million savings.
  • Support Coordination to all persons under the age of 18 who live in the family home was limited to Limited Support Coordination only for a $1.7 million savings to APD.
  • Personal Care Assistance (PCA) services were limited to 180 hours a month unless the person has intensive needs and all rate modifiers have been eliminated. Additional hours can be authorized if a substantial change in circumstances occurs. Projected savings were at $2.3 million. APD and AHCA agreed consumers under the age of 21 could receive more than 180 hours of PCA under the Medicaid State plan.
  • In December 2007, residential habilitation rates were collapsed and reduced overall by 7%; however, a settlement agreement reduced the costs to 4.25%. Some providers actually realized slight increases because of an averaging effect. The net savings was about $11 million.
  • As a result of the 2007 legislation, AHCA in consultation with APD sought and obtained federal approval for additional waivers to implement a four-tiered waiver system. The tiers were implemented in the fall of 2008 and were intended to remove $120 million from expenditures in the waiver system. Because of rate reductions and other changes, the annualized savings projections were lowered to $74 million per year.
  • Tier 1 No Monetary Cap: Limited to individuals with intensive medical, behavioral, and adaptive needs that cannot be met in other tiers.
  • Tier 2 Capped at $55,000: Limited to clients whose service needs included support in a licensed residential facility and required at least moderate levels of residential habilitation with behavior focus services as well as clients in supported living who received more than six hours of in-home support services. The tier applied only to individuals who received residential habilitation or supported living and in-home support services.
  • Tier 3 Capped at $35,000: Included individuals requiring residential placements, clients in independent or supported living situations, and clients who lived in their family home who did not fall into Tiers 1 or Tier 2.
  • Tier 4 Capped at $14,792: Included most families with children under 21 receiving Personal Care Assistance services through the Medicaid State Plan and included clients in independent or supported living situations and clients who lived in their family home. Total annual expenditures under tier four could not exceed $14,792 per client each year.

 

Full tier implementation did not occur until 2010 and 2011. APD indicates the savings were negligible although many individuals lost services, especially meaningful day activities.

  • In May 2008, proviso language passed that implemented a $43 million across the board rate cut for waiver services that were effective July 1, 2008. Residential Habilitation and Support Coordination received a 3% cut effective July 1, 2008, (in addition to the 4% reduction taken in December 2007 for residential habilitation) and other waiver services received a 7.21% reduction in rates. Other changes included:
  • The rate paid to Personal Care Assistants decreased by 4%.
  • Support coordinator caseloads were allowed to increase to 43 people per month, up from 36. APD no longer required support coordinators to conduct consumer needs assessments or develop cost plans.
  • In July 2008, South Florida providers had geographic rate differentials reduced for residential habilitation services by 2.5% in Broward, Palm Beach, and Dade Counties. Monroe County realized a 5% reduction. 
  • In October 2008, the APD began a rebasing exercise to freeze individual service expenditures as of January 2009 at the FY 07-08 level plus no more than a 5% increase until June 30, 2009. Because of inaccurate data, the exercise was delayed until late December. The intent was to control a projected 9% utilization creep that resulted in deficit spending. APD projected saving $20 million per year from this exercise.
  • In January 2009, during a Special Session the Florida Legislature approved a 3% services rate reduction ($21 million) for DD waiver services. The Governor vetoed the rate cut but the $21 million in funding was not restored.
  • Effective July 1 2009, the appropriation increased by about $43.8 million but this amount was removed the following fiscal year.
  • Effective October 1, 2009, Medication Administration Review services were eliminated as a waiver service for a reduction of $301,907.
  • Effective January 1, 2010, durable and consumable medical supply purchases were consolidated to save $932,093.
  • The 2010 Legislature decreased the overall funding level for the waiver by $43.8 million and did not budget anticipated federal stimulus (FMAP) dollars to continue Florida's current enhanced FMAP ratio from January 2011 through June 30, 2011. The cuts were as follows:
  • $3,075,000 transferred to the Agency for Health Care Administration (AHCA) to provide disposable incontinence supplies to children ages 4-20 through the Medicaid state plan.
  • $4,196,362 savings as a result of reducing the caps for Tiers 2, 3, and 4 by 2.5%. The reductions were effective February 2011.
  • $1,393,145 in savings by limiting Tier 1 annual expenditures to $150,000 annually excluding Intensive Behavior Services and Special Medical Care Homes effective January 1, 2010, although implementation did not follow.
  • $35,208,560, including a $16,811,989 reduction for a 2.5% provider rate reduction for waiver services excluding: Support coordination, transportation, personal care assistance, durable medical equipment, consumable medicals supplies, and environmental and home accessibility services. The Governor vetoed the rate cut but did not reinstate the funding. While the General Revenue portion of the appropriation increased by about $38.9 million, the Trust Fund was reduced by $78,790,410.
  • On April 1, 2011, the Agency for Health Care Administration (AHCA) filed Emergency Rules to reduce DD Medicaid Waiver provider reimbursement rates for 90 days. The intent was to enact a15% across-the-board rate cut but the reductions equated to more than 30% in some cases since the cuts involved collapsing agency to independent rates for 19 services. The emergency rules were in response to a projected $170 million deficit. The rate reductions were to reduce state General Revenue expenditures by $16.3 million over a 90-day period and would have resulted in the loss of another $30 million dollars in federal Medicaid funding.  The reductions were lifted two weeks later when the Governor, Senate President, and Speaker of the House agreed to fund the projected current year deficit. The two-week rate reduction resulted in a loss to providers of approximately $5 million.
  • In response to the 2011 General Appropriations Act, on July 1, 2011, DD waiver providers received a 4% across-the-board rate cut for all waiver services which was intended to generate $37 million in rate reductions. Also, current recipient cost plans have been frozen which will generate another $6 million in savings.
  • Per the 2011 General Appropriations Act, the APD program is required by Florida statutes to operate within its appropriation of approximately $810 million. Even with the referenced rate reductions, the program is anticipated to be spending at a rate that will create an $84 million deficit.APD has been given legislative authority to implement an iBudget system that will ensure that collectively cost plans for individuals served via the waivers do not exceed the appropriation amount.Discussions as of June 2011 indicate the deficit will be managed through proportional reductions to cost plans at a level that will generate the needed savings. September 2011 projections indicate about 18,000 individuals would experience cost plan reductions if iBudgets were implemented in October 2011.
  • The following shows the funding history of the HCBS/ FSL Medicaid Waivers since FY 03-04.

 

DD Medicaid Waivers Summary
Year
Appropriation Expenditures Surplus/Deficit
Served
Ave. Cost
FY 03-04 $687,255,720 $32,372,000 $32,372,000 24,257 $26,998
FY 04-05 $734,118,671 $644,339,179 $89,779,492 25,848 $24,928
FY 05-06 FY 05-06 FY 05-06 $48,991,643 30,936 $24,216*
 FY 06-07  $851,549,572  $905,954,703  -$54,405,131  30,991  $29,233
 FY 07-08  $961,599,474  $927,531,579  $34,067,895  30,585  $30,326
 FY 08-09  $833,529,770  $882,784,502  -$49,254,732 30,166  $29,264
 FY 09-10  $849,699,685 $928,167,201  -$78,467,516  30,275  $30,658
 FY 10-11  $805,826,618  $975,208,918  -$169,382,300  30,044  $32,459**
 FY 11-12  $810,437,372        

 

 *Additional 5,000 individuals added late in fiscal year.  Costs not annualized until following year. **Includes $78.4 million deficit spending from previous year.

Conclusions
From the preceding analysis, the funding level for FY 10-11 is only about $12 million more than it was in FY 05-06 and the program is still in deficit spending status. The deficit can be attributed to the addition of about 5,000 new enrollees added to the program late in FY 05-06 but the total cost of care was not realized until FY 06-07 and this began the history of deficit spending. In FY 07-08, funding was added to sustain the program for one year until cost control measures could be implemented; however, the anticipated savings did not materialize. Last year, the deficit was exacerbated by cost plan increases. For the last five years the only new enrollees added to the program have been individuals who are in crisis status – typically meaning significantly high cost plans.

June 2011 data indicate about 30,000 individuals are now being served and thousands of recipients are receiving fewer services as a result of tier caps, rebasing, and other cost savings measures. Another 20,000 individuals are on a wait list for services.

Annual average expenditures for the HCBS waiver averaged $32,459 per individual in FY 10-11 (includes previous year’s deficit spending). An analysis of DD waiver claims data based on date-of-pay for the HCBS waiver for the same year indicated a spending rate of $952 million for FY 10-11, or average expenditures of about $31,687 per individual. This number suggests the program is again experiencing utilization increases of about 5 percent. Possible factors include adding only crisis enrollees (high cost) recipients to the waiver, increases in CDC+ spending, and aging caregivers who require more support services to care for their loved ones. Reducing expenditures to the current appropriation amount via the iBudget process means average annual expenditures would have to drop to about $27,000 per individual, per year.

The DD service system cannot sustain continued service reductions and service rate cuts. Efforts in this regard have had little impact on deficit spending. The program is simply not funded at the level needed to serve the individuals enrolled on this waiver. A minimum of $55 million (GR & Trust) is needed above the current appropriation to prevent massive service reductions for thousands of individuals, and even if appropriated significant cost containment reductions will still be required. To fund the current spending level, another $85 million (GR & Trust) would be required and would equate to a total appropriation of $950.6 million.

Recommendations
Funding for the DD waiver must be addressed during the 2012 Legislative Session and will require the addition of $55 million (GR & Trust) combined with cost containment reductions. Failure to implement this recommendation will create a crisis situation for individuals served. History shows more "patchwork" solutions will not fix the APD deficit problem.

A service system that defines the amount the state can pay must be adopted. This could be achieved through cost modeling or service groupings that allow predictability and management of resources. Florida ARF has presented such models.

The most effective and accountable recommendation would be to fund the DD waiver at $950.6 million based on an average annual expenditure of $31,687 per individual for 30,000 individuals served. APD would be required to live within the appropriation and as efficiencies are realized, additional individuals from the wait list could be served.