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A Step Backwards: Disturbing Changes to the NY State Medicaid Waiver in the Works


Now all those gains are in jeopardy, due to the enormous pressure being exerted by the federal government on the New York State government to reduce spending on services to the MRDD population. In response, the state is proposing to restructure the way that all current services are delivered to individuals who qualify for Medicaid Waiver, including basic health care services that are identified in their IEPs. The plan is euphemistically named the “1115 People First Waiver” and the cost of its development and implementation is being funded by the federal government.

The plan calls for many of the current functions of the New York State Office for People With Developmental Disabilities (OPWDD), which was formerly known as OMRDD, to be outsourced to the DISCOs, which are not under direct government control.

Services from the Lowest Bidder

The DISCOs are supposed to offer Medicaid Waiver qualified individuals the full range of services to which they are legally entitled, oversee the quality of those services, and pay the actual costs of providing them. In return, the DISCOs would receive a capitation (flat rate) per person payment provided by the government. This is very different from the current fee-for-service model, under which community service providers receive payments from the government that are directly related to the historic operating costs of their specific facilities and programs. The more costly the program has been to operate, the higher the reimbursement rate they received.

By contrast, the DISCOs will be paid a flat per-person rate established by the Cuomo administration for a standard spectrum of services for individuals with the same category of diagnosis. The DISCOs will subcontract the actual delivery of the services to community providers, with whom they will negotiate the reimbursement the provider will actually receive. Current community service providers will have to compete with one another for DISCO subcontracts.

Since the DISCOs pocket any difference between the flat rate the state pays them and what they pay the providers, the DISCOs will choose service providers largely on the basis of lowest cost, and in some cases, will be providing the services themselves. Over time, the higher cost providers will be eliminated, even if they provide higher quality services, and the quality of care will inevitably suffer.

Care recipients are supposed to be offered a choice of DISCOs, but given the powerful incentives for each DISCO to cut costs built into the new system, it is doubtful that the choices will be meaningful. Furthermore, since the DISCOs are expected to monitor themselves, the ability of care recipients and their family members to file effective complaints will be significantly reduced.

The State’s Real Priorities

The preliminary 1115 Waiver plans published by New York State talks about provisions to deal with these problems, but government officials have made it clear to community providers that the state’s top priority is to cut the cost of services, while paying only lip service to the issues of maintaining service quality and meaningful patient choice.

The state’s main goal is clearly laid out in the report of the fiscal team designing the 1115 Waiver (see reference 1): “In recent years, Medicaid expenditures for individuals with developmental disabilities have grown at twice the rate of inflation and three times faster than personal income. . .

“The 2.8 percent annual growth in [the number of] individuals seeking services is due to factors largely outside the control of State government and is likely to continue indefinitely.”

The aim of the Waiver initiative, therefore is, “to meet individuals’ needs, but at lower cost. . . [by implementing] a capitation payment model to achieve these goals.”

State officials have said that the current system of 750 groups providing services is financially unsustainable, and admit that they hope to eliminate the higher cost providers with the new 1115 Waiver system.

The state began implementing planning and evaluation for the new system in November, and expects to launch pilot programs under the system and test DISCO operations in the latter part of 2012 (for the full 1115 Waiver timetable, see reference 2).

Unfortunately, what we know about the 1115 Waiver plans so far serves as a warning that many of the hard earned gains that have been achieved for the MRDD population since Willowbrook are now in jeopardy. Time is running out. The citizens of New York State must be alerted about how the 1115 Waiver changes will hurt all individuals with special needs. We must join together to protest and speak out against them, before it is too late.

Sidebar:

Reference 1: http://www.opwdd.ny.gov/2011_waiver/images/fiscal_final_report.pdf Reference 2: http://www.skipofny.org/upload/OPWDD_1115_Waiver_Background.pdf Reference 3: The New York State branch of The Arc, a disability activist group, has provided a web page with layman’s definitions of the terms used by New York State in discussing the 1115 waiver - http://blog.nysarc.org/2011/08/10/understanding-the-1115-waiver-terminology-guide/ Reference 4: New York State has created a “People First Waiver” web page invites the participation of the public in the process of its development. It also accepts e-mail addresses for notification of further waiver developments: http://www.opwdd.ny.gov/2011_waiver/

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