Five Reasons Why Persons with Significant Needs Served by CLO are Under-Funded

1. DD Reform requires that rate recommendations/increases are based upon the findings of the SRS independent rate studies, but they were not. Instead, across the board funding increases were typically made and/or special rate increases were not given or underfunded. As a result, rates for tiers are not fairly funded relative to their costs. This has resulted in an average loss for people with significant needs (Tier 1, Tier 2 and Special Tier rates) ranging from 0.4% to 9.7%, while producing an average gain for persons with fewer needs of about 7%.

2. A critical flaw in how rate studies are conducted has significantly inflated tier costs disproportionately for Tier 4 and Tier 5 clients, and hence has inflated funding for this population. In reviewing all past rate studies it was determined that Kansas public funding for services (State Aid and County Mill funding) was not backed out of the funding analysis for determining all Kansas Medicaid rates since DD Reform. County mill and State Aid funding, when spent, drives up the costs of tiers each time the rate study is conducted. If these public tax funds are not backed out of the analysis of tier costs, then the State of Kansas is essentially paying for what already is paid for with public funds. According to two Legislative Post Audits and independent rate studies, County Mill and State Aid funding are largely available only to CDDO/Provider agencies that serve a disproportionate share of Residential Tier 4 and Tier 5 clients (but not Tier 1 and Tier 2 clients).

3. CLO operates 11 small (4 to 8 bed) ICF/MR homes in Douglas and Johnson Counties, which serve 56 people with very significant developmental disabilities. The reimbursement for CLO’s ICF/MR homes between 2004 through October of 2008 increased only 2.9%, while HCBS average increases were 15.5% for the same period. From 2004 through October of 2008, CLO did not receive an inflationary increase for any staff salary cost (the largest percent of all costs) in its ICF/MR homes.

4. CLO’s funding issues are amplified because it provides services in the two highest cost regions of the State for the most challenging population of the State with rates that are based upon Statewide Average costs. The DD Reform Act states that rate recommendations should take into consideration the regional costs of staffing, yet that has not happened in any recommendation since DD Reform. The early independent rate studies presented the regional cost differences in services but it did not result in a recommendation that rates be modified by regional staffing costs. No other rate study since the second independent rate study has even presented regional cost data for consideration. Johnson and Douglas Counties are where CLO services are primarily provided, and these two counties have the State’s highest federal MSA rate (about 14% higher than statewide average costs).

5. There are many costs associated with serving people with significant needs that are not funded or fully funded by HCBS funding. For example, persons in CLO’s HCBS program must pay for room, board and personal care needs with their own money. Many people with significant needs require specialized and accessible housing; costly fire safety protections; larger and accessible vans; dietary supplements and supplies; and expensive personal need supplies such as Attends. Additionally, individuals with significant needs often have less personal income to spend because they do not work or earn wages. The providers who serve people with significant needs typically end up paying for these needs. Finally, persons with significant needs are disproportionately hospitalized for chronic health concerns. Unfortunately, the provider does not receive any payment for times when a client is hospitalized even though they must often provide support to the individual in the hospital and cannot decrease the costs of the home where the client lives.