Contact Michael Strouse at:

CLO
2113 Delaware St.
Lawrence, KS 66046
(785) 865-5520

It's Time to Align Kansas Spending with Kansas Values

by: Michael C. Strouse, Ph.D.

The easy solution is to ask the taxpayer for more money. However, given the competing needs of Kansans, along with a still recovering economy, I don't think this is possible or likely. For the moment, let's consider that this is not an option. Instead, let's look at a few changes that we can make to make the system more economical and focus more money on DIRECT CARE.

First, there is far too much money being spent on the administration of DD services. Right now, there are 28 Community Developmental Disability Organizations (CDDO's) that act as managed care entities. Their administrative costs per person range from about $500 a person to $2400 a person. Why the difference? Actually, it is simple. Some CDDO areas serve fewer than 100 persons while others serve more than 1000. The CDDOs that serve more people cost less because their administrative infra- structure is more leveraged.

Second, CDDO's are often also service providers. This means that they oversee and direct ALL funding, client referrals and services for their own agency, as well as providers that compete for the same limited funding and persons served. In the real world this is like Wal-Mart directing resources and customers to either themselves or Target. This doesn't sound very good to most people. And, it was addressed as a significant concern in two different Legislative Post Audits scanning 5 years.

Third, the rates for direct care services are the same in Overland Park, Lawrence, Wichita, Wamego, Atwood, Iola, etc… regardless of local costs. This is done despite DD Reform statute which requires that funding for DIRECT CARE should vary according to local costs. Two independent cost studies have shown that costs are significantly higher in some regions than in others. Johnson and Douglas counties, the two primary regions in which CLO provides services, are the highest cost areas in Kansas. The implementation of a flat rate structure statewide actually increases costs because in order to keep services operating in the five high cost regions, rates have to be increased for all regions. The five urban, high cost regions serve about 50% of the total population of persons with developmental disabilities.

Fourth, during the same time period that DIRECT CARE services have been cut twice to persons with more significant needs, the rate for Targeted Case Management more than doubled. The total expenditure on Targeted Case Management has actually increased by $11,000,000 during this fiscal year. This is equivalent to about 5% of the entire DIRECT SERVICE budget!!! TCM is, of course, not a direct service. Why did this occur??? While there are many people who might give very complicated rationales for this, there really isn't a good reason. This spending strategy runs against the grain of Kansas values and common sense. The stated reason was that these extra funds were designed to produce very consider- able profit. This substantial profit became discretionary by the agencies who earn it. And consequently, SRS hoped that these profits would be redirected for other more noble purposes, such as enhancing wages to direct care staff.

These funds are being redirected alright!! According to the recently completed legislative post audit, SRS allowed each CDDO to develop a local plan for the use of these funds. As a result, the CDDOs took a cut of these funds, anywhere from 2.4% to 15%, for administrative expenses and then passed on the rest in a variety of different ways. SRS's hope was that the profit on TCM would be used by service providers to pay for operating deficits or unfunded needs. Instead, many Targeted Case Mangers (who previously worked for service providers in some cases for many years) opened up their own FOR-PROFIT TCM businesses. THEY make considerable profit, but none of these funds benefit DIRECT SERVICES because they don't provide any. Independent TCM providers can easily make in excess of $80,000 a year working from home.

In addition to this, SRS has changed the TCM billing from an hourly rate based upon services performed, to a FLAT rate based upon one billable service provided to the consumer during the month. This, of course, further increases the profit for people or agencies that provide TCM for people with fewer needs and places an additional burden on agencies that serve people with more significant needs. Also, it reinforces increased caseloads and less service.

Fifth, did you know that provider's can bill EVERY DAY for providing community-based residential services EVEN IF THE PROVIDER DID NOT PROVIDE AN ACTUAL SERVICE that day? In fact, the criteria for billing the Medicaid HCBS/MRDD waiver for residential services (direct care for supporting people in community homes), requires only that the consumer be present at mealtime at his/her home. The actual presence of direct care staff is not a criteria for billing. Why would we allow billing for direct care support that was not, in fact, provided?

So what can we do?

1. We need a spending cap placed upon the per person cost of CDDO Administration. This will reinforce either consolidation or cooperation (a co-op) to leverage the 28 CDDOs to decrease costs.
   
   
2. We need to remove the conflict of interest that exists when a provider is also the managed care entity for the agency that they own, and for those providers competing for the same service dollars and referrals. There is legislation proposed to make CDDO's independent of service provision, and to also consolidate service areas to make administrative costs less. I encourage you to do all you can to actively support this initiative. It clearly is the most important legislation that has been proposed since the DD Reform Act in 1995.
   
   
3. . Funding should be provided that varies according to the costs of the region. Every region should financially have its head the same distance above water. Independent cost study information already exists, spanning 7 years, providing rate modifiers for certain regions. This would allow funding increases to be rationed in ways to get the most good from available funds.
   
   
4. We need to stop paying excessive rates for TCM as soon as possible and develop a strategy that ensures that more of the available $11,000,000 is spent on DIRECT CARE funding. Not only do we need to stop paying excessively for TCM, but we need to return to paying an hourly rate for support actually provided so that people get what they need. More importantly, we need to promote spending values that are reasonable and defendable. Until this is done, I encourage families to seriously consider the decision of who does their family member's case management. Whoever is doing it is making a substantial profit. And right now it begs the question, "What is becoming of this profit?" My hope is that families make sure that profit can be used to pay for unfunded or under-funded direct care, not personal profit or CDDO administration.
   
   
5. We need to reconsider the existing system of paying for direct care services that are not delivered. If someone does not need direct services on a given day (perhaps they only need advice by phone) then couldn't the Targeted Case Manager provide this support in exchange for the substantial money provided for this service? Or, we could establish a minimum amount of support provided per week for reimbursement.

Yes, the times are difficult and funding is very tight. There will likely be little to no relief in funding this year. While we should always be good stewards of public funds, it is times like these that compel us to examine our spending and values (and better align one with the other). Perhaps we might not get more money this year. But, maybe we can do more and better with what we have. Let's double our efforts to change the system in ways that promote better DIRECT CARE services.