Dear Sir or Madam –

Individuals with developmental disabilities certainly face enough barriers in their lives, but now they have to worry about one more. The state plans to cut funding and eliminate important services and supports.

As a provider of these services and supports, I was outraged to learn that the Department of Children & Families has mismanaged its funding for these programs benefiting the developmentally disabled. Our non-profit agency takes pride in helping individuals with developmental disabilities obtain employment and live more independently in their communities.

DCF’s short-sighted objective of saving money is only going to cost the state more in the long-term. The budget cuts will lead to less quality services, less meaningful opportunities and less independence. All of this is happening to save money?

The state has already cut funding for our programs. In essence, DCF is giving these individuals less money to purchase the services and supports they need.

It makes no sense that they claim to want to reduce the state’s waiting list on the one hand, while taking steps to eliminate needed services on the other?

Sincerely,
Ed Aldama
Executive Director.... 11/14/03

Two documents were attached to this post:

and the following editorial appeared in the Palm Beach Post 11/21/03

State fails, then shifts the blame
 The disabled have the nerve to use services... DCF Secretary Jerry Regier boasted last week that the state has increased the budget for services to the developmentally disabled by 118 percent during the past five years. But the number of people served by the program has tripled. And while the new rate for service providers reflects "an average increase of 11 percent" over last year, some districts are receiving less money... 11/21
 

Department Statements on Proposed Budget Cuts Paint Inaccurate Picture

Tallahassee – Community-based agencies, advocates and supporters of Floridians with developmental disabilities are sorting through the confusing and, often conflicting, information made public over the last two weeks by the Florida Department of Children & Families (DCF) on its proposed budget cuts.

On October 24, 003, DCF hastily announced that it was cutting $48 million in funding from caregiver services to over 10,000 of our state’s most vulnerable citizens.

There is growing concern that an inaccurate picture has been painted regarding the ongoing crisis. Upon careful review of public statements made to state and local news media last week by DCF officials, the following inaccuracies have come to light.

In discussing the issue with the Bradenton Herald, Developmental Disabilities Program Director Shelly Brantley stated that the cuts are necessary because current expenditures are outpacing appropriations. “The Legislature has mandated that if we expect to exceed appropriations, we must implement a rate decrease within 30 days,” she said.

According to Ivan Canuteson, executive director for Manasota ARC, numerous adjustments have already lowered the rates for many providers. “The presumption must have been they could afford the rates as proposed in July, but three months into the year they are running out of money,” Canuteson said. “It’s not just a question of dollars…you can’t take an 8 percent cut in your budget without cutting services.”
Brantley also stated that the agencies brought the rate changes on themselves by charging the state for an unreasonable number of days.

“The money doesn’t flow into the agency, it goes to the consumer,” Mary Hitchcock, executive director for Easter Seals of Southwest Florida, said in response to Brantley’s claim. “They are getting less money to buy the services they need. They are the ones being cut.”

Brantley told the Palm Beach Post that DCF has enough money to take only 30 new families a month off the state’s waiting list and rising costs of services could reduce that number more if DCF does not cap spending.

But across the state, community-based agencies are already faced with not being able to afford services they want to provide. Peggy Connell, executive director of Children’s Haven and Adult Community Services, said the cuts jeopardize her agency’s three group homes and its housing for twenty-four residents.

Brantley said her agency was forced to make the cuts in order for the state to cope with the escalating costs of caring for disabled people in group homes and day training programs. “Group home costs, for example, are rising by 20 percent each year,” Brantley told the Miami Herald.

Miami-Dade’s Community Committee for Developmental Handicaps director, Helene Good responded, “This could jeopardize the quality of care, because it is hard enough to find…direct-care staff who are qualified. They are already paid less than people who work at fast-food restaurants.”

Residential care and daily living activities are two of the most important services Floridians with developmental disabilities receive to maintain their health, safety and independence. Scores of community agencies fear that the proposed budget cuts will lead to less care, closing homes and programs, reducing service quality and quantity, layoffs and employee salary and benefit reductions.

Terry R. Farmer, President & CEO for the Florida Association of Rehabilitation Facilities (Florida ARF), a statewide advocacy group for Floridians with disabilities served by community agencies, summarized the current situation by saying, “We’re suppose to be helping these people, not hurting them by creating additional barriers and hardships.”

“These cuts, if enacted, will save the state money today, but only lead to bigger challenges in the future.”

Florida Association of Rehabilitation Facilities

Florida Department of Children & Families

Developmental Disabilities Program Proposed Budget Cuts

Myths vs. Realities

Myth #1:        The Florida Department of Children & Families (DCF) has stated that it is not cutting any services under its Developmental Disabilities (DD) Program for Residential Habilitation and Adult Day Training (ADT) services. 

Reality:          While DCF has not directly eliminated any services, it has reduced its payment reimbursement rates to community-based providers under its DD Program to dangerously low levels for Residential Habilitation and ADT services, as well as other service limitations.   

DCF has proposed 14.3 percent rate reductions in Residential Habilitation; 9.5 percent rate reductions in ADT; and 7.0 percent rate reductions in Live-In Residential Habilitation.  In addition, certain limitations have been combined with the proposed reductions, thereby resulting in an 18 percent reduction in Residential Habilitation rates, and 15 percent rate reduction in ADT rates. 

The proposed rate reductions will force many community-based providers to discontinue their services to vulnerable Floridians with developmental disabilities.  In essence, DCF’s proposed rate reductions will close the doors to many group homes across the state. 

In fact, Representative Heather Fiorentino clearly recognized this reality during a recent public hearing before the House Subcommittee on Human Services’ Appropriations.  “The people that we’ve taken off the waiting list and we’re saying that we’re serving…  If we’re cutting their services or their homes start to close down, are we setting ourselves up for another lawsuit because now we aren’t providing the services…,” said Representative Fiorentino.  “When you start closing down homes, you’re cutting services.”[1]

Myth #2:        The Florida Department of Children & Families (DCF) claims that it has increased funding for community-based providers under its Developmental Disabilities (DD) Program by $100 million over the last three fiscal years. 

Reality:          According to Mercer Human Resources Consulting, there has been a nineteen percent increase in the number of Floridians with developmental disabilities being served now compared to 2000.[2]  Other figures place this number much higher.  While additional funding has been allocated for the DD program, less “per person” dollars are available for community-based providers to spend on services because funding has not kept pace with demand and operating costs. 

                        In addition, community-based providers have had to accept state reimbursement rates that have fallen behind inflation by as much as 30 percent over the last decade.  In fact, most recently community-based providers are coping with increased employment-related expenses, such as double-digit premium increases for fringe benefits (i.e. employer-sponsored health insurance) and sky-rocketing worker’s compensation.  The Legislature and DCF have even recognized these challenges.[3] 

                        DCF DD Program Director Shelly Brantley also acknowledged this reality during her recent testimony before the House Subcommittee on Human Services’ Appropriations.  She stated, “Employment related expenses…I don’t need to tell you all about this.  You’ve all had so much fun with Worker’s Comp, as well as other employee benefits over the last year.”  Brantley even noted that she was aware of “a number of providers who have some significant challenges with maintaining and obtaining insurance and benefits.”[4] 

                        Nationwide trends last year in private health insurance placed significant operating pressures on employer-sponsored health benefits, where the rate of growth increased to 13.9 percent from 12.9 percent in 2002.[5] 

                        Florida businesses pay the nation’s second-highest workers compensation insurance rates, while injured workers get the second-lowest benefits level.[6] 

                        Coupled with rising operating costs, community-based providers have also had to compensate for reduced rates under the new rate structure that was implemented on July 1, 2003.  It pegged reimbursement for services at the 25^th percentile of the market norms, as determined by the state’s actuarial consultant, Mercer Human Resource Consulting.

Myth #3:        The Florida Department of Children & Families (DCF) claims that the immediate proposed rate reduction is needed because state spending on Residential Habilitation and Adult Day Training (ADT) programs under its Developmental Disabilities (DD) Program is fast outpacing this year’s budget. 

Reality:          DCF adopted a new standardized rate structure earlier this year to better manage and predict costs.  Many argued that this approach would be too costly to implement system-wide without piloting it first.  Now based on only two months of reporting, DCF projects it will run a $27 million deficit in two service categories – Residential Habilitation and ADT. 

                        The projected budget deficit is questionable because DCF’s own figures have fluctuated between $27 and $48 million.  Assuming that the projected budget deficit is accurate, DCF should have been better prepared to see their projected budget shortfall.  It should be noted that DCF is the agency responsible for service referrals and authorization. 

                        On October 2, 2003, Shelly Brantley, DCF Director of Developmental Disabilities, testified before the House Subcommittee on Human Services’ Appropriations.  When referring to the new standardized rates in her testimony, she stated, “It’s a critical part of our overall efforts to better manage costs, and especially to predict costs, and… any of you can appreciate, when you have thousands and thousands of negotiated rates, it is next to impossible to predict costs, and…that has created significant problems for us over the last two budget years.”[7] 

                        DCF should have better prepared to handle its DD program budget using the new rate structure. During her testimony, Brantley also acknowledged that the new rates for Residential Habilitation and ADT were the first rates implemented by the department.[8]   

                        Brantley also provided testimony that her department was prepared to meet increased demand for Residential Habilitation Services.  “When we did our projections, we based them on a certain number of individuals we projected to serve which we think was probably over inflated,” Brantley testified.  “So we probably have some cushion here.”[9] 

                        Community-based providers and Floridians with developmental disabilities are left wondering what ever happened to the “cushion.”  It is increasingly obvious that the new standardized rate structure was not accurate enough for DCF to project the amount of money that the system truly needed, thereby requesting too little from the Legislature.   

Myth #4:        The Florida Department of Children & Families (DCF) Developmental Disabilities (DD) Program is projected to have a $27 million budget deficit for the current fiscal year (FY) 2003-04.  Expenditures for Residential Habilitation and Adult Day Training (ADT) under the new rate structure are outpacing this year’s appropriation. 

Reality:          DCF has not been consistent about the size of its projected budget deficit, with recent statements indicating that it is between $27 and $48 million.  But an analysis of DCF’s quarterly report released on October 24, 2003, does not support their position that the DD program will run a budget deficit without rate reductions in Residential Habilitation and ADT services.   

The report states 5,389 clients now receive Residential Habilitation services at a cost of $3,681 per month for an annual cost of $238,042,908, and that the Legislature budgeted $246,912,192 ($6,192 x $3,323 x 12) resulting in a projected excess of $8,869,284.[10]   

The Legislature also provided funding to add 30 clients to Residential Habilitation services per month.  Assuming these clients must be served from this budget category, the cost in fiscal year 2003-04 would be $7,950,650 at the current rate (360 clients x 6 months average x $3,681).  Taking this provision into account, the surplus would still be $918,324. 

                        It appears that the Florida Developmental Services Offices assumed that 803 more clients are receiving Residential Habilitation services as of July 1, 2003, than are receiving services by their own data (6,192 minus 5,389 = 803).  Such discrepancies merit further review before DCF proceeds with a rate reduction exercise that is precipitous and may not even be warranted. 

                        The Quarterly Report also includes a number of other misleading or incorrect statements, including misleading percentage increases in Residential Habilitation rate, incorrect per person expenditure increases for Residential Habilitation and ADT compared to previous fiscal years, and misleading utilization increases over prior fiscal years.  Also, calculations for percentage increases in Residential Habilitation rates did not take into account the fact that Long Term Residential Care (LTRC) payments were reduced by approximately $179 per month per client and placed in the Residential Habilitation rate.  Instead of a 5.6 percent higher expenditure rate for residential services as stated by DCF, each client at the budgeted rate of $3,323 will receive two dollars less per month than was received in FY 2002-03 ($3,146 + $179 = $3,325).[11] 

                        The projections relating to ADT appear to be suspect as 27.1 percent of the 240 billable days have occurred in the 1^st quarter, not 25.0 percent as DCF appears to have utilized in their calculations.

Myth #5:        The Florida Department of Children & Families (DCF) Developmental Disabilities (DD) Program claims that the projected $27 million budget deficit is a result of community providers “charging” the state for an unreasonable number of days. 

Reality:          DCF has spent millions of dollars hiring a nationally recognized company, Mercer Human Resources Consulting, to conduct an 18-month, $1.6 million study for devising “fair and equitable” state reimbursement rates to fund individuals with developmental disabilities programs.   

The new rates were implemented on July 1, 2003. 

                        Community providers are paid on reimbursement rates established by Mercer Human Resources Consulting “Home & Community-Based Services Waiver Final Published Rates.[12]  Providers do not “charge” for their services rather they are reimbursed for the costs associated with providing services to Floridians with developmental disabilities.    

The needs of Floridian with developmental disabilities drove utilization, not community-based providers billing for services that were not rendered. 

                        DCF DD Program Director Shelly Brantley even acknowledged this reality during her testimony before the House Subcommittee on Human Services’ Appropriations.  She testified, “All of those rates are negotiated through Maximus, well Mercer and Maximus.  Those were all, we did those almost pretty much…through the implementation process.”[13] 

                        Client needs are identified by an objective third party and service plans are approved by DCF.  Community-based providers deliver the requested and approved services, billing according to their rules.   

Under Florida’s State Medicaid plan, which is approved annually by the Centers for Medicare & Medicaid Services (CMS), DCF determines the services that Floridians with developmental disabilities are eligible to receive.   

Any change in the utilization of either Residential Habilitation or ADT services is more a product in changes in the billing system rather than a change in the use of these services by individuals served under the waiver.  For example, costs for Residential Habilitation as of July 1, 2003, was spread over 365 days rather than 240 days as in the previous fiscal year.  The truth is that the same people are living in the same group homes and benefiting from the same services today as they were last year. 

Myth #6:        The Florida Department of Children and Families (DCF) also contends that community providers are purposely increasing the utilization of Residential Habilitation through unethical attendance policies as means to generate more revenue under the newly implemented rate structure.  

 DCF states that the average utilization was 212 days last year, while the current utilization is 50 percent higher. 

Reality:          Last year Residential Habilitation rates were typically negotiated through an agreement on total annual costs divided by 240 days, although in some instances monthly rates, hourly rates, and even 365 days rates were established.   

Mercer Human Resources Consulting developed a rate that also considers annual acceptable costs and used a 365-day unit of service structure. 

                        If in fact, DCF’s average utilization for last year was calculated using only the daily units of service rates that would include the 240-day, 365-day, and all other daily unit of service permutations, and derived an average value of 212 days, a utilization rate of 88 percent would be obtained.  This average is not entirely accurate because it includes consideration of all the various daily units of services that existed last year, but can be used to illustrate the fallacy and inaccuracy of DCF’s conclusion of increased utilization. 

                        A simple extrapolation of the 88 percent utilization under the new residential habilitation rate would generate an average of 321 days.  Note that this number reflects almost a 50 percent increase over last year’s average of 212 days.  Clearly an increase in utilization is merely a reflection of a different unit of service methodology and is not due to unethical provider attendance policies. 

                        However, it is also important to realize that this calculation is somewhat inaccurate and artificially low due to the differences in the number of billable days established (i.e. 240 to 365), and the movement of consumers from one home to another over the year, as well as individuals who were initially authorized to receive residential habilitation or left the service for some other living arrangement at various times throughout the 12-month period. 

Myth #7:        The Florida Department of Children & Families (DCF) claims that the new standardized rate structure will better compensate direct support staff working with developmentally disabled populations. 

Reality:          The average salaries under the new rate structure are expected by the state to be approximately $7.33 per hour.  That hourly wage amounts to an annual salary of $15,246.40.  However, Mercer Human Resources Consulting recommended that wages for direct-service workers be $8.63 per hour, or an annual salary of $17,950.40. (insert footnote) 

                        The proposed budget cuts will only push down wages paid to direct-support staff.  Press reports across the state have documented that the proposed budget cuts will further hinder community-based providers’ capability to recruit, obtain and retain qualified direct-support staff.   

The American Network of Community Options & Resources (ANCOR) commissioned a comprehensive report that provided clear evidence of the staffing challenges being faced by community-based providers.  The report found, “Over the past decade, both the dollar amount and percentage increase in hourly wage rates for Direct Support Workers are far below that of comparable job categories as well as the national minimum wage. The lack of adequate funding has put providers to the developmentally disabled at a distinct competitive disadvantage with other industries and professions competing in the same workforce. Primary funding for wages comes from state and federal Medicaid programs.”[14]  

                        The economic implications to consider when assessing the impact of DCF’s new standardized rate structure and how it is driving the proposed budget cuts are far reaching. 

According to the Center on Budget & Policy Priorities, “When states cut spending, they lay off employees, cancel contracts with vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals.  In all of these circumstances, the companies and organizations that would have received government payments have less money to spend on salaries and supplies, and individuals who would have received benefits also have less money for consumption.  This directly removes demand from the economy.  Given current macroeconomic conditions, in which excess capacity to produce goods and services already exists, this reduction in demand causes a decline in economic growth.”[15] 

                        By cutting services to Floridians with developmental disabilities, DCF is also cutting the jobs of hard-working healthcare professionals who serve them.

Myth#8:         The Florida Department of Children & Families (DCF) Developmental Disabilities (DD) Program is facing a projected budget shortfall this fiscal year for its Residential Habilitation and Adult Day Training (ADT) services. 

Reality:          DCF has stated that it has a surplus of bed availability during a recent House Subcommittee Human Services’ Appropriations hearing. 

                        “Actually we have a surplus,” DD Program Director Shelly Brantley testified on October 2, 2003.  “If it’s licensed facilities, we have a surplus of beds.  In fact, I have been meeting regularly with a number of providers who are interested in expanding statewide, and have a number of vacancies right now.”[16] 

                        Why is DCF cutting services when there is federal funding available? 

                        Assuming that the projected budget deficit is accurate, additional federal funding is available to offset this deficit. 

                        On May 28, 2003, President George W. Bush signed into law (P.L. 108-27) the “Jobs and Growth Tax Relief Reconciliation Act of 2003” (TRRA).  Subsection 401(a) of TRRA provides temporarily, with respect to certain expenditures by eligible states, increases in the Federal Medical Assistance Percentage (FMAP), that is, the Federal matching rate for states’ medical assistance expenditures under the Medicaid programs.  Under this provision, the increased FMAP is available only for a period of five calendar quarters, the last two quarters of Federal fiscal year (FYY) 2003 and the first three quarters of FYY 2004.[17] 

                        Under section 401(a)(6) of TRRA, a state is eligible for an increase in its FMAP for of the affected quarters of FYY 2003 and 2004 only if eligible under its Medicaid state plan (including any waivers under title XIX or section 1115 of the Act) in effect for such quarter is no more restrictive than the eligibility under such plan or waiver as in effect on September 2, 2003.[18]                       

                        On June 4, 2003, U.S. Department of Treasury Secretary John W. Snow sent Governor Jeb Bush a letter outlining Florida’s share of the temporary FMAP increase.  The Treasury Department is the agency responsible for making these payments. 

Florida is eligible to receive $271,742,077.38 for FYY 2003 and, an additional $271,742,077.38 for FYY 2004.[19]  Surely nearly $550 million should be enough for DCF to fund programs that Floridians with developmental disabilities depend upon to maintain their independence.

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