Chairperson Mast and members of the committee, thank you for the opportunity to provide information today about Community Living Opportunities (CLO) and its receipt of Special Tier funding for persons it serves. My name is Stephanie Wilson and I am a Senior Administrator with CLO. As Trip mentioned, CLO was founded over 30 years ago to provide services to persons with severe to profound developmental disabilities. I have worked for CLO for 18 of those years, providing services in different capacities.
In talking individually with legislators, the primary concerns about the Special Tier funding CLO received seem to be in regard to potential political influence, and possible considerations given by SRS to CLO but not other providers.
Regarding CLO’s potential political influence, I would like to point out that many CDDOs and providers in Kansas have influential members on their Boards including legislators and county commissioners. The influence that CDDOs and InterHab have is self-evident in the recent articles published by the Kansas Health Institute and written by The Associated Press. Both articles were full of quotes from CDDOs, members of InterHab, and current and past Executive Directors and officers of InterHab. CDDOs also have significant influence in that they have the exclusive right to negotiate their contract, including the service terms and rates with SRS that no other provider, including CLO has. In 2007, a majority of InterHab CDDOs and providers contributed over $548,000 in membership dues to InterHab. Approximately $130,000 of these dues is a special assessment for legal fees for a lawsuit InterHab and its membership are waging against the State of Kansas. Further, InterHab reported spending $118,500 during the month of January 2009 for marketing and lobbying expenses to advertise the waiting list issues to legislators. To suggest that the advocacy provided by CLO’s board members for persons with very significant disabilities is somehow inappropriate, but that advocacy provided by legislators and county commissioners who serve on CDDO/provider boards is fine, seems at best, odd. The real issue is that programs like CLO sit on the outside of contract negotiations and funding discussions that are led by people who have significant conflicts of interest and who do not fairly represent the needs of Kansans with disabilities that they don’t serve.
Regarding the concern that CLO received special attention from SRS, CLO is not the only organization that requested and received funding consideration from SRS in 2008. Secretary Jordan mentioned during the Appropriations discussion Monday that “at least” one other organization received funding it needed to stay in operations during 2008. Ironically, the Executive Director of the CDDO/provider who received these funds, Developmental Services of Northwest Kansas (DSNWK), was quoted in the KHI article indicating that the Special Tier funding provided to CLO may have been unfair. In a 2008 Medicaid billing audit, DSNWK had a recoupment finding of approximately $180,000. This payback was forgiven by SRS in order to keep the organization in operation. The total cost to the State was $288,000 ($180,000 plus the State’s 60% match payment to the federal government). In contrast, the State’s share of the funding provided to CLO in Special Tier rates is $285,000. Therefore the assertion by some CDDO/Providers and InterHab that CLO received special consideration is not correct. The difference is that we have been working with SRS on our issue for many years and the funding that was provided to CLO was to address the specific needs of 43 persons with significant disabilities.
When discussing the issue of the Special Tier funding the persons we serve received, it is also important to recognize exactly whom we serve, and the many challenges in serving this population. Trip provided you with general information regarding the level of disability of persons CLO serves, and I would like to expand upon that information. The BASIS assessment that Kansas utilizes to determine level of need, provides the individual with an overall score, and also places each individual into one of five tier levels for funding. Tier 1 persons are considered to have the greatest level of need, and Tier 5 persons the least (most independent). There are approximately 195 licensed residential providers in the State of Kansas. Three providers including CLO, Creative Community Living in South Central Kansas (CCL), and Individual Support Systems (ISS) in Topeka serve an average tier distribution within their organizations of 63% Tier 1 persons to 2% Tier 5 persons. The remainder of the State serves an average distribution in their organizations of 21% Tier 1 persons to 19% Tier 5 persons. (This data is provided through the 2007 Independent Rate Study)
This distribution becomes important when discussing the problems with the State’s Medicaid reimbursement system. When Kansas began to participate in the Medicaid waiver program in the early 1990’s, the reimbursement model was developed to fund persons “on the average.” Of course, an “average pay” system works if you serve needs that fit this model. Providers, however, such as CLO, CCL and ISS that specialize in serving persons with more challenging needs, lose significant funding with this reimbursement model. This issue was compounded in 2008 when SRS changed the billing definition for residential services. The most recent SRS HCBS/MRDD Waiver manual indicates that a day of residential services can be billed “if the supports were provided and/or the provider was available to provide the necessary supports to the individual that day.” Providers who serve persons with less significant needs are, in fact, interpreting the billing criteria to mean that they can bill for days or even weeks of time where no services are provided. This leads to the question of why we are paying for services not provided at a time when there are so many needs and people waiting for services.
Further, SRS has conducted four independent rate studies since the implementation of the Developmental Disability Reform Act in 1996. The data from the four studies confirm that persons with more significant disabilities (Tiers 1 and 2) are significantly underfunded compared to those clients with fewer needs. In fact, when utilizing the data from the four rate studies, and assigning the cost of persons related to their tiers using the State’s tier allocation strategy, the outcome is that individuals with Tier 1 and 2 scores have an average loss of 0.4% for service reimbursement versus an average gain of 7% for persons with Tier 4 and 5 scores.
As indicated in the chart below, the total loss for serving Tier 1 and 2 persons across the four studies was 2%, versus a total gain of 27% for serving Tier 4 and 5 persons.
SRS developed the Special Tier funding system in the mid-1990s as a mechanism for paying for persons who have extraordinary needs that the regular tier system doesn’t address. The percentage of Special Tiers received by persons served by CLO, CCL and ISS is 64% versus the 36% served by the remaining agencies within the State. Special Tier cost coverage has only been included in the more recent rate studies. The cost coverage for the five special tiers averaged a 9.69% loss in the 2006 study.
Although the Special Tier system exists, as Trip mentioned, there are critical flaws within the mechanism for approval for Special Tiers. First, the assessment and approval process is not implemented consistently by CDDOs. Second, an agency must lose a significant amount of funds in order to qualify for special tier funding. Unfortunately, if an agency serves too many people with great needs, the losses become more than it can afford. Third, and perhaps most importantly, CDDOs do not advocate for Special Tier funding because they generally do not provide residential and day services for the persons who need these funds. This last reason is the primary reason CLO advocated for help from SRS.
Historically, CLO has attempted to gain support from its CDDOs for the protection of funding for persons with significant needs. CLO, however, has never received this advocacy from its CDDOs. In fact, some of you may recall that some providers, including CLO, had to seek temporary protection by the legislature in the form of a provision that protected Special Tier funding from being removed by CDDOs, and every year we seek protection from SRS during their contract and rate negotiations with CDDOs. CDDOs have historically fought the existence of Special Tier funding, and have fought against increasing this funding when they negotiate rate increases. CLO does not have a vote during CDDO/SRS contract negotiations, and therefore has had to have special meetings with SRS prior to, and during the negotiations to make sure our funding and service interests are protected.
The reason that CDDOs do not equally advocate for the persons we serve has been demonstrated in multiple audits over the history of the CDDO system. Two separate Legislative Post Audits were conducted in 1999 and 2003 indicating that there are serious conflict of interest issues when CDDOs are also allowed to be providers of services. Concerns were raised about CDDOs negotiating contract terms and making funding decisions with SRS that direct Medicaid funding unfairly to benefit persons they serve providing a competitive advantage to the organizations they operate. They also confirmed that CDDOs serve a disproportionate share of persons with fewer needs (e.g., serve more Tier 4 and Tier 5 clients which rates studies show to have a greater profit); and even discovered that they serve persons with less needs within tiers. Such concerns raise serious questions about their ability to exercise fairly their statutory functions for their own provider and the providers with which they affiliate. CMS also conducted an audit in 2003 indicating that CDDO conflict of interest is an issue, as did SRS in 2002. Although all of these audits have cited the issue, the systemic bias of CDDOs not equally representing all persons with developmental disabilities in their regions, still exists.
CLO has directly experienced this conflict of interest in several ways, just within the past year. The DD Reform Act requires that CDDOs provide a copy of the local waiting list for services to their affiliate providers, when requested, except for the names of persons who want their information to remain confidential to providers (which is hard to enforce fairly if the CDDO itself is a provider). In 2008, when CLO had openings within our residential services, I requested a copy of this waiting list from five CDDOs with which we affiliate. Two of the CDDOs provided a copy of the list, and three didn’t after multiple requests. Additionally, some CDDOs continue to maintain websites that present their CDDO services and provider services together, but without describing or linking other provider options or websites. Some CDDO/Providers also distribute their newsletters and other information to families (including families served by CLO) that co-mingle CDDO services and their own provider services, without mention of other service options like CLO. This is, at best, confusing; but at worst it is using their CDDO connections and influence to their own advantage.
To understand the concern about referrals one only needs to look at CLO’s referrals across the last year. In 2008, CLO has received 56 referrals for its services, but only 32% came from CDDOs who are supposed to be where families learn about our service options. Instead, the majority of our referrals 68% have come from other sources, including CLO’s own marketing efforts. In addition, the persons often referred to CLO by our CDDOs tend to have more significant needs. Beth Gray, owner of TSS in Newton, has provided written testimony about the similar experiences they had with referrals from their CDDO/Provider, prior to when it stopped providing services and became an independent CDDO. Our Chief Operating Officer, Jamie Price, will share this testimony with you as well as testimony prepared by Gary Blumenthal, the past Executive Director of CLO’s CDDO/Provider, JCDS.
Within the past six months CLO has served three persons from crisis situations referred by our CDDOs. We are getting ready to serve two additional persons who are currently in crisis. Many times when I receive the phone calls about persons in crisis, our CDDOs indicate that they believe CLO can handle such cases because we have the capability of serving persons with more significant behavioral and medical challenges, which we do. Many of the same CDDOs, however, aren’t advocating for the funding we need to continue providing these supports to those people they have asked us to serve.
Trip has mentioned that JCDS receives $6.9 million in County Mill funding that they do not share with affiliate providers. Likewise, many CDDOs who are also providers do not share this funding. Although CDDOs report that approximately 3,800 persons are waiting for needed services, the county funding they receive doesn’t seem to be making a dent within this waiting list. KSA 19-4001 through 19-4016 describes the establishment, oversight and operation of County Mental Retardation (CMRCs) and Community Mental Health Centers (CMHCs). The DD Reform Act assigned the CMRCs as the CDDOs. K.S.A 19-4005 and 19-4007 provides that CMRCs may not deny services to persons based upon the individual’s ability to pay. Community Health Centers quote this statute as requiring them to serve everyone who seeks their services. Since both systems are included within the same statute, I wonder how we have two very different interpretations of the proper use of County Mill funding.
I appreciate the time allowed to share all of this information with you. My purpose is to indicate that there is an issue worth studying, and for which change is needed. Unfortunately, it is the same issue that has been studied many times and which repeatedly comes to the same conclusion. Allowing CDDOs to be a service provider, and to also manage funding and access to services, provide quality assurance and resolve local disputes for themselves and others continues to be problematic—and it continues to be a barrier to Kansans’ with developmental disabilities getting the services they need.
I would be happy to try and answer any questions you have.
