March 2, 2020
Ms. Katherine Ceroalo
Bureau of Program Counsel
Regulatory Affairs Unit
New York State Department of Health
Room 2438, Empire State Plaza Tower Building
Albany, NY 12237
Comments submitted electronically to firstname.lastname@example.org
Comments Re: Department of Health Proposed Rule Making HLT-53-19-00012P
The Consumer Directed Personal Assistance Association of New York State (CDPAANYS) offers the following comments on proposed rule HLT-53-19-00012P.
The proposed rule should be rejected. Instead, the Department of Health (DOH, or “the Department”) should work with stakeholders to examine cost report data from fiscal intermediaries (FIs) operating in both Fee-For-Service (FFS) and across all managed care organizations (MCOs) to determine whether and, if necessary, how, rates should be restructured.
CDPAANYS is the only organization in New York solely representing the interests of fiscal intermediaries (FIs), consumers and personal assistants participating in the Consumer Directed Personal Assistance Program (CDPA). Given our specific expertise and knowledge of the program, we are happy to be able to provide the DOH with our comments, which are aimed at both preserving and strengthening this vital program while ensuring appropriate usage of Medicaid funds.
Since 1995, CDPA has served as an option that allows Medicaid recipients in need of long term supports and services the ability to receive those services in their home and under their own direction. By providing control over core employment functions, particularly the recruitment, hiring, training, supervision, and termination of their staff, called personal assistants (PAs), the program gives an unprecedented level of control to those who use these services. In recent years, the combination of that exceptional level of control, an increased awareness of the program, and a shortage of home care workers throughout the state has led to dramatic growth within CDPA.
As part of the SFY 2019-20 budget, the Governor proposed changing the reimbursement methodology that DOH had historically utilized. The new rate was implemented via MLTC Policy 19.01. Implemented on September 1, 2019, the policy was ruled “null and void” on October 13, 2019 because the DOH did not follow the regulatory process in the State Administrative Procedure Act (SAPA).
This proposed regulation, along with its rationales, are identical to those put forward in Managed Care policy 19.01. However, CDPAANYS notes that the justification for the new rules remains deeply flawed and inconsistent with the work performed by FIs. Further, the justification is not based on an adequate amount of information to draw the conclusions that the Department relies upon. Finally, the Department’s compliance with all the provisions of SAPA remains questionable due to a failure to adequately complete all the required sections in the rule-making process, as will be detailed in these comments.
For these reasons and more, which we outline in greater detail below, CDPAANYS strongly urges the DOH to withdraw these draft regulations and work with us and other stakeholders to implement savings options that will protect the integrity of the program, create efficiencies and savings, and protect it for decades to come.
The Proposed Reimbursement Methodology
Currently, DOH reimburses FIs in the FFS system the same manner that it reimburses licensed home care services agencies (LHCSAs) for personal care, as the two involve a good amount of the same work. In recognition of the differences between the different services, namely that licensed home care services agencies (LHCSAs) must hire, train, supervise, and schedule their personal care aides (PCAs), the administrative portion of a CDPA rate is limited to 18% of total costs, whereas LHCSAs may bill up to 28%. Neither service currently has a cap on the administrative expenses within managed care.
If this rule goes into effect, FIs reimbursement will change dramatically to a per member, per month methodology in three tiers, as follows:
- Tier 1: 1-159 hours per month at $64/month
- Tier 2: 160-479 at $164/month
- Tier 3: 480-7000+ at $522/month
DOH claims that it based this metric on the number of consumers per tier; the average number of PAs consumers need to staff their case hours per tier; what it believes to be the costs of paying for health assessments and immunizations for uninsured PAs; the number of FI staff needed to service cases at the New York City minimum wage, plus fringe and training costs; and FI overhead. However, actual FI administrative costs far exceed the proposed rates.
The Department claims that the current rate does not adequately reflect the cost of these services, and that the costs of providing these administrative services does not have a linear correlation to the number of hours a consumer receives. However, the Department does not have adequate data to back up their claims.
There are two primary flaws with the DOH’s arguments. First, while maintaining that administrative costs are not linked substantially to the number of PAs, the DOH creates tiers of administrative payment directly tied to the number of hours a consumer receives. This conflict is irreconcilable and demonstrates that the DOH’s rationale for the cuts is unjustified.
Second, in the justification for the proposed methodology cited above, the DOH itself states that administrative payments are disproportionate “in many cases.” This qualification indicates that, even in the DOH’s estimation, in many cases, even the Department has determined that the administrative costs reimbursed to the FI are in fact appropriate. Making cuts that will dramatically cut reimbursement even when the DOH itself has determined that payment to be adequate is an arbitrary and capricious cut that threatens the future of the program.
The fact remains that the DOH cannot know the extent to which the administrative costs are appropriate or not, as the data they have is insufficient to draw these conclusions. The DOH states that these cuts were made based on data submitted by Managed Long Term Care Plans (MLTCs) in their Medicaid Managed Care Operating Reports (MMCORs) and “…other information furnished to the Department by FIs…”
Because the DOH did not specifically state what data they were using from FIs, and because it would not be rational for FIs who are purportedly reaping excessive profit under the administrative costs to voluntarily provide that information to the DOH, we presume that the information being referred to is FI cost report data submitted to the DOH subject to the cost reports required in FFS. However, in the answers provided to Request for Offers #20039 (hereafter referred to as “the RFO”), only 15% of consumers are in fee-for-service. The answers in the RFO also note that there are approximately 450 FIs in the state, with only approximately 20% of them, at most, filing cost reports. Even in these 20% of instances where a FI filed a cost report, it did not reflect all of their costs, as the cost report data only captured the portion of the business that was FFS.
Since only a small fraction of FI business is reported through the FFS network, the state would have to have relied more on MMCOR data to make their assumptions. However, MMCOR data is incapable of determining the amount of administrative payment mainstream managed care plans and managed long-term care plans (collectively referred to as “managed care organizations”, or “MCOs” from here on) make to FIs. This is because payments from plans are not structured in this manner, nor do FIs currently report administrative costs to the plan, or any other entity.
Therefore, the DOH does not have sufficient data to make a claim that FI administrative payments are disproportionate to the actual costs associated with administering the service. The limitations on the DOH’s data prevent it from doing a detailed analysis of the rates received by FIs. In fact, two of the largest administrative expenses a FI has apart from its own payroll, billing MCOs and bad debt from payments that MCOs fail to make for legitimate provision of services, are not at all represented in FFS cost reports. In FFS, a FI bills for the hours that are worked, and the state pays the cost two weeks later. In managed care, a FI bills over 50 different MCOs, each with different software and billing platforms. Most FIs must then pursue payment on up to one-third of claims, as the plans often do not pay on a timely basis. One plan even goes so far as to as to only allow three payment inquiries at a time on denials, with an approximate 30 – 45-minute wait on hold each time. This administrative bureaucracy, created in part by the State’s reliance on such a large number of MCOs and the failure of the Department of Financial Services to adequately enforce the prompt-ay law, is a primary driver of the higher administrative costs FIs face in managed care.
The DOH’s determination of the number of personal assistants per consumer is inaccurate.
The DOH maintains that the average number of PAs required for consumers in each tier is:
- Tier 1 – one PA per consumer
- Tier 2 – two and a half PAs per consumer
- Tier 3 – five PAs per consumer
The DOH does not state the specific information used to make this assessment. They also do not possess adequate information to make this determination. FFS cost reports do not contain information as to the number of PAs each consumer employs. Neither does the MMCOR data. In fact, the MCOs do not have this data at all. While some MCOs do capture PA information on enrollment, this is not maintained on a long-term or ongoing basis, as 18 NYCRR 505.28(g)(3) only requires the consumer to inform the FI of any changes in the employment status of PAs. Indeed, 18 NYCRR 505.28(h), which details social services district, and by extension MCO, responsibilities, does not say anything about PAs. All references to PA record maintenance are located in (i), which speaks to FI responsibilities.
It is contrary to CDPA best practices and regulation for most consumers to only have one PA. Regulations at 18 NYCRR 505.28(g)(7) state that a consumer’s responsibilities in the program include, “arranging and scheduling substitute coverage when a consumer directed personal assistant is temporarily unavailable for any reason.” While CDPAANYS, and most FIs we are familiar with, maintain that using informal supports as backup would suffice for backup, many plans actually require a second formal support prior to approving services. Therefore, based on the policies of several large plans, many consumers have at least two consumers each, regardless of the number of hours for which the consumer is approved.
Backup is a critical part of CDPA, as PAs, like employees in any other field, must occasionally be absent from work, both with and without advance notice to the consumer. Even if a consumer has a low-hour caseload, if their PA is not working, that consumer cannot receive assistance with their activities of daily living, jeopardizing their ability to remain in the community. No matter which tier a consumer is placed in, this is inevitable with only one PA, unless voluntary informal supports can be identified. Even without the MCO requirement of a second formal PA for backup, many consumers do not have an option for informal supports as backup, meaning that a second formal support is required.
It seems DOH did not rely on anything more than a calculation of how many PAs, at exactly 40 hours per week, would be required to meet the number of hours in a tier, as each tier maxes at PAs working 38-40 hours per week. This is not a valid methodology for determining how many PAs each consumer utilizes; however, based upon the information DOH has, it is likely the only methodology that could have been employed.
The reality is, in keeping with the design and intent of the program, each consumer determines how many PAs are appropriate for them, and the number of PAs a consumer employs directly impacts the administrative costs of a FI. Some consumers do hire one PA and use informal supports for backup. Many consumers, even on low hours cases, will maintain several PAs and spread hours out among them to minimize the risk that they are left without staff, a fact of life in an industry with high levels of churn. Often, high hour cases will have eight or more PAs employed, as a consumer pieces together what they can to meet their needs. In one extreme instance that CDPAANYS learned of through a peer mentoring session, a consumer receiving 30 hours of service per week employed up to 35 PAs at a time.
In response to a request for this data from member FIs, those responding all indicated that they averaged 1.5 PAs per consumer in the DOH’s first tier, 3 PAs per consumer in the second tier, and 7 or more PAs per consumer in the highest tier. It was also noted that these numbers were extremely variable, and that in Tier 1, some FIs had up to one-third of consumers with 2 or more PAs. In Tier 2, an eighth of consumers had over 5 PAs. In the highest tier, fully 20% of consumers had over double what was reported by the DOH, with more than 10 PAs.
In surveying a very small number of consumers, including consumers members of our Board, it was determined that one consumer, who is in the highest tier, has seven PAs at the current time. Two other consumers who would be in tier 1 currently have two PAs and five PAs, respectively. While three out of 70,000 is clearly not statistically valid, it is based on actual information from three more consumers than the DOH used for information. Further, it demonstrates that there is wide variation among consumers and how they implement their program. Particularly when combined with information from FIs, it demonstrates that the assumptions the DOH uses are deeply flawed.
Based on the lack of actual data and the extreme variance, the DOH cannot say how many PAs the average consumer employs with any sense of confidence. The data they have is not broken out in a way that can accurately provide information about the PA needs of individual or groups of consumers, as such data is not collected anywhere.
The new rate does not reflect the realities of overtime
Historically, there has been substantial variation in how FIs have authorized overtime. Some FIs, for instance AccessCNY, who has administered the program since its inception as a pilot, has never allowed consumers’ PAs to work overtime. Others, such as the other pilot program participant, Concepts of Independence, have always had large overtime allocations. The reality for overtime has existed in the middle, with many FIs allowing some amount of overtime.
On September 1, 2019, when the PMPM rates momentarily went into effect, that changed. On that day most consumers lost the ability to have their PAs work in excess of 40 hours. FIs eliminated overtime to remain financially solvent. The new rates, both from FFS and managed care, resulted in direct care costs that were too high and unreimbursed. Even at minimum wage, a PA in New York City would receive $22.50/hour for overtime, while a PA in Erie or Albany County would receive $17.70/hour. When fringe costs are factored in, even at a reduced level to account for benefits that would be counted on a 40-hour basis, this exceeds the FIs reimbursement. For instance, at $22.50 per hour, the PA associated fringe would cost $26.10 when calculated at only 16%. This is well below what most plans were offering for reimbursement prior to September 1, 2019; however, after the PMPM was implemented, it became entirely inadequate.
In the wake of the September cuts, and before the policy was voided by a judge, some plans as tried to cut rates to reap windfall profits from the change. Centene, d/b/a Fidelis, offered FIs operating in NYC $21.12 per hour, and $14.72 per hour Upstate. Nascentia offered Upstate FIs $14.48 per hour. These amounts are below the funds necessary for regular wages, without factoring in overtime. When overtime is factored in, on base wages, a FI in New York City would lose $27.60 on wages alone if only 20 hours of overtime was worked. When fringe costs are factored in, that New York City FI would lose almost $5 per hour, or $99.60 per week. That would be a per consumer loss of $5,179.20 per year.
Upstate, the situation is even more dire. The hourly loss for FIs offering overtime upstate at the Fidelis/Centene rate would be $2.98 per hour, or $59.60 per week assuming 20 hours of overtime. When fringe costs are factored in, the loss per week becomes$5,81 per hour, or $116.24 per week. On an annualized basis, one consumer would result in a loss of over $6,000 for the FI.
While the Department does not set rates for the managed care plans, these examples are relevant because the regulations specifically state that the DOH will not determine how MCOs reimburse FIs for their administrative costs. By extension, and using historical evidence, this extends to the DOH’s willingness or capacity to enforce any requirements on MCOs regarding the adequacy of reimbursement by MCOs to FIs. Even during the period when the PMPM was in effect, the DOH made no attempt, despite repeated communications from CDPAANYS and others regarding the inadequacy of these rates, to correct them.
The reality is that those FIs who do offer overtime currently utilize what DOH would characterize as the administrative component of payment from MCOs, that is payment not directly related to services provided in the first 40 hours of service, to provide overtime. However, because of the limitations of the data that the DOH has, they have no way in which to know the extent to which this is the case.
Within FFS, the difference between the rate of pay and the cost of overtime, which already is upside down on the balance sheet due to the direct care ceiling freeze that has been in place for a decade, is often written off as loss. In fact, the rates of the plans have, in some cases, been subsidizing the rate inadequacy of FFS for years.
Under this proposal, the FIs are placed in a financial “catch-22.” All of an FIs rates will be inadequate to support overtime; however, in its answers to the RFO, the DOH indicated that FIs would now have to allow unlimited amounts of overtime to all consumers, a dramatic change in policy that undoes basic protections put in place by FIs, counties, and plans over the last 25 years. The change is so drastic that it, in and of itself, merits further explanation as to the full rationale, as the timing suggests that the DOH and plans reacted to the sudden loss of overtime in response to the rate cut. In effect, the requirement seems a post-facto action to make claims that wages would not be impacted slightly truer.
The Administrative expenses identified by DOH are incomplete and do not accurately reflect the cost of doing business
The definition of what an FI’s administrative costs are does not fully capture their requirements
DOH defines “administrative costs” as “…those associated with maintaining time records, health status records and processing wages and benefits.” Based merely on the reading of a FIs responsibilities in 18 NYCRR 505.28(i), this is a wholly incomplete list of responsibilities and, inherently, dramatically underestimates the costs of providing services. The inadequacy of the list becomes even more pronounced as new requirements on FIs added in both the SFY 2019-20 budget and a Request for Offers (RFO) issued on December 23, 2019, are included.
According to regulations, FIs are responsible for:
- processing each PA’s wages and benefits, including establishing the amount of each PA’s wages; processing all income tax and other required wage withholdings; and complying with worker’s compensation, disability and unemployment insurance requirements;
- ensuring that the health status of each PA is assessed prior to service delivery;
- maintaining personnel records for each consumer directed personal assistant, including time sheets and other documentation needed for wages and benefit processing and a copy of the medical documentation for PAs;
- maintaining records for each consumer including copies of the authorization or reauthorization;
- monitoring the consumer’s or, if applicable, the consumer’s designated representative’s continuing ability to fulfill their responsibilities under the program and promptly notifying the social services district or MCO of any circumstance that may affect the consumer’s or, if applicable, the consumer’s designated representative’s ability to fulfill such responsibilities;
- complying with the DOH’s regulations at 18 NYCRR section 504.3, or any successor regulation, that specify the responsibilities of providers enrolled in the medical assistance program;
- entering a DOH approved memorandum of understanding with the consumer that describes the parties’ responsibilities under the consumer directed personal assistance program.
This list alone far exceeds what the DOH has budgeted for in calculating the PMPM rate; however, it is far from all inclusive. Other responsibilities the FI has include:
- certifying HIPAA compliance of all consumer data;
- confirming that all technology is compliant with state and MCO security guidelines;
- checking the records of PAs against the Medicaid exclusion list twice a month;
- providing resources to consumers for the provision of mandatory sexual harassment training;
- ensuring staff or other resources are available to meet the language needs of consumers and PAs are available, including translation services;
- the provision of informational resources explaining CDPA and the consumer’s responsibilities under the program
FIs will also be subject to even more administrative requirements as a result of the pending RFO and/or changes in state and Federal law. These measures include:
- the provision of Electronic Visit Verification (EVV), under the Federal CURES Act (many FIs currently provide this voluntarily or as an existing contract requirement; however, whether it is currently provided or not does not eliminate the need to account for the cost);
- the provision of peer mentoring services;
- the need for training of PAs on Medicaid compliance (to strengthen the consumers role as employer, many FIs currently train consumers, who then undertake this responsibility);
- face-to-face visits with PAs on intake;
- face-to-face visits with consumers.
The largest new administrative expense will come from the RFO requirement that all FIs acknowledge that they are a joint employer. Under regulations and interpretations of the United States Department of Labor’s Wage and Hour Division, the Internal Revenue Service, and existing case law and precedent, many FIs do not meet any definition of joint employer. The new mandate arbitrarily stating that FIs are joint employers imposes significant new costs on the FI, and negatively impacts both consumers and PAs.
Specifically, the requirement will:
- dramatically increase liability insurance costs, as FIs could be liable for, among other things, the workplace environment, sexual harassment by the consumer and/or other PAs, and discrimination by consumers and/or PAs without the ability to cease working with the consumer or the ability to terminate the PA.
- potentially force FIs to provide health insurance for all PAs, which the current calculus specifically does not assume. The justification for the PMPM specifically assumes that one-quarter of PAs do not have health insurance.
In answers to the RFO, the DOH refuted a claim that FIs will not have additional liability insurance requirements, or exposure under sexual harassment or discrimination laws. However, CDPAANYS notes that these matters have historically not been decided by state or Federal agencies, but by the courts. To the extent that the state has input, courts would be under no obligation to take the opinion of the DOH, whose jurisdiction does not include these matters. This would instead fall to the Department of Labor. Based on conversations with insurance liability companies, they do not share DOH’s confidence, and are noting the likelihood of dramatically higher premiums.
The Needs and Benefits analysis on several components is both incorrect and incomplete, as per SAPA
While the DOH’s list of costs to the FIs is deficient, based on the actual jobs being conducted, their calculations for the costs of the services often cannot be replicated, and no methodology or explanation of the data analysis is provided, as is required under the State Administrative Procedures Act (SAPA).
For the purpose of attempting to recreate the DOH’s calculations, we use an estimated amount based on all the DOH’s numbers, without conceding to their accuracy or viability. If a FI had 10,000 consumers, which is not currently the case for any agency of which we are aware, we assume they have 17,000 PAs (7,000 consumers with one PA each, 2,000 consumers with 2.5 PAs each, and 1,000 consumers with five PAs each). Of course, because the DOH would be reimbursing based on a per member per month basis, and many of their calculations are provided on a per PA per month basis, we calculated the average PA to consumer ratio of this FI at 1.7 PAs per consumer (17,000 PAs/10,000 consumers).
The DOH notes that the cost of “processing payroll and performing payroll related services” is $8.78 per PA, per month. At the above ration, this would translate to $5.16 per member per month. It is unclear what services the DOH has determined actually fall under this provision and they provide no deeper analysis as to how they came to this estimate. Because of this, it is impossible to determine the accuracy of their number, or accurately refute it.
SAPA requires the DOH to “identify and provide an abstract… for every study or data analysis your agency used to draft the proposed rule.” If this abstract were provided, FIs would be able to identify whether or not the formula used in the analysis of their data accurately captured the true costs of the proposal. The failure to provide this information prevents us from accurately assessing their number and should invalidate the proposed rule.
Similar to the SAPA problems created by the determination of the cost of payroll and payroll related tasks is the DOH’s assessment of the cost of health status assessments and immunizations. The DOH claims that an allocation is made to account for “one-quarter of personal assistants who do not have health insurance to cover the cost of health status assessment and immunizations.” However, they do not state how much this would actually amount to, nor do they state how they came to the number that one-quarter of PAs lack health insurance. They do not even provide the estimated cost used for health assessments and immunizations for us to analyze their statement.
To attempt to recreate what this cost would actually be, CDPAANYS found the costs for each provision of the health assessment required by DOH. According to StatCare, an Urgent Care and Walk-In medical care center serving New York City and Long Island, the cost of each service is as follows:
- Health assessment – $100, $60 if done via telemedicine;
- A two-step PPD for tuberculosis – $80; and
- An MMR titer – $100.
Even if we were to assume that a FI was able to get all of their PAs to be assessed via telemedicine, which is unlikely, the per PA cost for the health assessment and other related requirements would be $240, or $20 per month. If one-quarter of PAs at the hypothetical FI serving 10,000 consumers required this, the monthly cost would be approximately $85,000. Divided across all consumers, as the PMPM is based on the number of consumers, not PAs, this cost would be $8.50 per consumer, per month. Again, because the DOH did not include how much they allocated in the PMPM for this, we do not know if it is the cost they used, or even whether they actually determined a cost.
The DOH also failed to provide an analysis of how it came to a determination that $0.75 per personal assistant, per month was sufficient for the overhead costs of the FI, or even how they calculated it in this manner since their payment methodology would be per consumer, not per personal assistant (a measurement problem that exists in many of these areas). However, while not excusing the failure, this number is so low that we are confident that the reason for forgoing the explanation is that there is none to support it.
Using the same calculation of PAs for a FI with 10,000 consumers, with the same disclaimers, the FI would be afforded $12,500 per month for overhead expenses, or $1.25 per consumer, per month. While we do not know exactly what would fall into this category, typically overhead expenses would include rent, billing software, electronic visit verification technologies, data protection practices, Internet, power, and more.
The FI serving 10,000 consumers would require 250 staff. Most businesses average approximately 150 sq. ft. per worker. Based on market research, the lowest possible rent in New York City is approximately $34.30 per square foot; however, these are for 1-2-star properties that are often not accessible via the Americans with Disabilities Act (ADA). For a 3-star property, rent would typically be at least $47.67/sq. ft. Using the DOH’s own staffing methodology of one staff per 40 consumers, without conceding to its accuracy or viability, this means that the FI would require, at minimum, 37,500 sq. ft., for a cost of $107,000 per month on the low end, and $149,000 per month for a mid-level accommodation. Therefore, leasing costs alone would mean that the overhead costs of a FI operating in New York city are almost $107,000 to $149,000. This means that rent alone would be eight and a half to twelve times the cost of overhead allocated to the FI.
When other factors are added in, these shortfalls only escalate. For instance, telephony-based EVV systems, which many FIs currently use and will be required under Federal law as of January 1, 2021, cost an FI as much as $0.27 per call. That means one PA shift would cost $0.54, or two-thirds of the monthly overhead allotment for overhead. When all the other costs are factored in, it is clear that the insufficient allocation on overhead costs alone would quickly cause problems for any FI as they attempt to remain in business.
The wages for FI staff do not reflect the actual cost of the workforce and are discriminatory
The DOH assumes that all FI staff, regardless of their geographic location, make $15 per hour, with an unspecified amount added on for “fringe, payroll taxes, overtime, in-service training, etc…” This allocation for FI staff wages is completely out of line with market rates for the positions that FIs hold. Further, due to the different minimum wages around the state, it is actually discriminatory against the highest cost of living areas by allowing FIs in upstate communities, where the cost of living is generally less expensive and wages are lower, to offer a higher salary for their staff than those downstate, who would be forced to offer minimum wage.
New York currently has four different minimum wages. All sectors in New York City are at $15 per hour. Long Island and Westchester are at $13 per hour. The rest of the state is at $11.80 per hour. The fast food industry, outside of New York City, operates under a different minimum wage of $13.75. The rationale provided for this distinction, outside of the fast food industry, was that the cost of living in New York City is substantially higher than the remainder of the state, and that the cost of living in the immediate Metro area, Long Island and Westchester, while potentially lower than New York City, is substantially higher than the rest of the state.
Therefore, the decision to allocate wages for FI staff in direct contradiction to the minimum wage policy does not make sense and will result in poor protection of public dollars, as FIs will not be able to attract qualified staff to perform the work. For instance, a full year wages at $15/hour is $31,200. Meanwhile, according to wage reports, a Medicaid Compliance Specialist in Albany, paid at the minimum, earns $43,000/year, with the average being $62,004. The same position in New York City has an identified minimum annual salary of $58,000, with the average being $82,432.
Similarly, a Human Resources Generalist in the health sphere in New York City would be paid an average of $55,169, with the low being $42,000. In the Albany area, the average annual salary is almost $51,000, with the low being $38,000. These reported salaries do not account for the higher costs that managers in these departments would demand. In Albany, a Human Resources Manager would command a minimum of $55,000 per year, and an average of just over $78,300, and in the New York City area the necessary salary would be $65,000 at the low end, and $92,369 at the average.
Reports from our member FIs actually indicate that, in the current labor market, these costs are actually low. One member, located in the Upstate market, indicated that they are having difficulty hiring a front office person at a wage in excess of $15 per hour. They are currently not receiving interest for a Medicaid Compliance officer when offering six figures.
It is clear from just a small sample of the necessary positions a FI must recruit and hire, along with actual information from FIs, that the wages offered in the regulation are insufficient and not based on the realities of the labor market. These wages do not even account for the premiums demanded by those with extra skills, such as multi-lingual abilities. The offered rates jeopardize state Medicaid dollars by insisting that FIs hire unqualified individuals to fill positions that demand a high level of skill and training.
Further, in mandating that all FIs pay their staff only $15 and allocating that amount in an across-the-board manner, the DOH is de facto stating that the value of the work performed in Upstate communities is 27% more valuable than the same work conducted in New York City 10% more valuable than the same work done in Westchester and Long Island. That the job performed in Long Island and Westchester is 15% more valuable than the same work provided sometimes less than a mile away in New York City.
While geographic location is not a protected class, the fact that cost of living demands higher salaries in New York City than other communities, and higher wages in the surrounding Metro area than upstate, means that this upside-down salary structure is not only inadequate, it is discriminatory. One can justify paying higher wages in the New York City market as opposed to Albany due to cost of living; however, there is no rational justification for the alternate. It is no different than the practice decried by the Governor himself that pays women $0.21 on the dollar less than men for the same work, only in this instance the discrimination occurs based on where one works as opposed to gender.
The claim that there is no cost impact to private regulated parties is demonstrably false
As part of the Regulatory Impact Statement, the DOH maintains that “There will be no additional costs to private regulated parties as a result of the proposed regulation”. This is demonstrably false.
Because the proposed methodology will be based on the number of hours that each consumer receives in a month, FIs will need to closely monitor and track this data and report it out to MCOs and the FFS system in a new method. Due to differences in the number of days in a month, and the manner in which consumers may schedule hours in weeks at the beginning and end of a month, the FI will be forced to undertake completely new reporting and tracking techniques. In some cases, they will be unable to anticipate their actual revenues from month to month. Additionally, their billing and reimbursement systems, all of which have been built on the current reimbursement system, will have to be updated, at a cost the reimbursement no longer supports.
FIs have historically had problems working with MCOs when month lapses in the middle of the week. Issues with hours and authorizations have been complicated tremendously in these weeks. This new reimbursement methodology will only compound that. If a month ends on a Tuesday, the consumer may have scheduled hours over the course of the week in a manner that causes them to fall on one side or another of a given tier. This would snowball into ramifications for the following month, in which the number of hours they report will again vary. With only 28 days, February will force FIs to calculate the hours yet again. The variance of days in a month combined with the variance in how a consumer schedules his or her hours of the course of that week means that a host of consumers who are on the edge of a tier will swing back and forth month to month, creating significant paperwork and an unreasonable administrative burden.
In order to account for and track these changes, as well as to accommodate the new reimbursement methodology overall, FIs will have to invest in substantial changes to their billing platforms and other computer systems. Whereas the old FFS rate saw an allocation that was explicitly for capital investments of this sort, the new reimbursement has no such category. As overhead costs are already significantly under-reimbursed per this proposed rule, these infrastructure costs will go unreimbursed for the FIs, as will additional investments in the future.
The Regulatory Flexibility Analysis was not adequately completed as there will be substantial impact to small businesses
The DOH’s claims that the new rule does not impact small businesses or impose new record keeping requirements is false. Further, they do not provide details as to their agency’s finding and the reasons upon which their findings were made, including what measures they took to ascertain that the rule would not impose such compliance requirements, or adverse economic impact on small businesses, as SAPA requires. Instead, they merely state that they have the legal authority to change the rate, which is not the purpose of this section.
When the rule was in place from September 1 to October 13 in 2019, there was substantial impact on small businesses. At least one small business, North Country Home Services, was forced to close their fiscal intermediary as a result of the rule. ARISE, an independent living center in Syracuse, laid off their entire fiscal intermediary staff. Western New York Independent Living laid off over 30 people throughout their family of agencies and anticipated a deficit of over $1.5 million for 2020. Countless home care agencies, independent living centers, and fiscal intermediaries only throughout the state were forced to reassess operation based on the implementation of the rule.
DOH’s own use of this rule on two separate occasions points to the fact that they believe there will be a chilling effect on fiscal intermediaries as a result. On June 30, 2019, when it announced the now void Managed Care policy that implemented this reimbursement scheme, it included acceleration of a transition policy for fiscal intermediaries that instructed them on how to go about closing.
Similarly, when the RFO was issued on December 23, 2019, seeking applications from the approximate 450 organizations currently operating as fiscal intermediaries around the state, a draft of this rule also was released, with the publication coming about one week later. This confluence had its intended effect of preventing numerous organizations from even attempting to bid on the RFO because of the unsustainability of the rates being proposed.
The rule also implements new compliance requirements, as previously noted. FIs will be forced to alter their record keeping and software to track the hours that consumers utilize on a month to month basis, as for many consumers, these will change on a month to month basis.
DOH’s failure to provide the proper analyses under this section and note the impacts on small businesses should void this proposed rule.
The Rural Area Flexibility Analysis was not adequately completed, as there will be substantial impact on rural area
The proposed rule has significant impact on rural areas, and DOH once again fails to note their analysis that indicated no such impact exists. As reported above, when the rule had previously been in place from September 1 to October 13, 2019, North Country Home Services was forced to close. This left Essex County with only one fiscal intermediary, contrary to Social Services law §365-f, which mandates two FIs in each county.
If the rule is implemented again, it is certain that numerous agencies will be forced out of business, with rural areas facing the most immediate impact. Given that rural areas are facing the worst of the home care workforce crisis, this loss will not only impact businesses in these communities, it will dramatically and negatively impact the ability of Medicaid recipients in these areas to access community-based long-term care services.
Once again, the failure of the DOH to conduct a reasonable analysis of the impact of this rule on rural areas, or even include the analysis of their decision that it will not, should invalidate this rule. The impact on rural communities should be a key determining factor in choosing not to resubmit.
The Job Impact Statement is woefully deficient and undeniably inaccurate
DOH’s statement under the Job Impact Statement is woefully lacking and contrary to not just the factual data from the previous implementation of this rule; but, also common sense.
The DOH maintains that no Job Impact Statement is necessary because “it is apparent” from the text of the rule that it will have “no substantial adverse impact on jobs or employment opportunities.” This is demonstrably false and given that the rule would eliminate up to 80% of the funding needed to run a FI in some instances, not even remotely believable.
As reported above, when the rule was in place from September 1 to October 13, 2019, ARISE terminated almost their entire FI department. Western New York Independent Living was forced to terminate over 30 individuals. North Country Home Care Services stopped offering FI services. The Rochester Chamber of Commerce has worked in opposition to this rule, both in the Fall and currently, due to the impact not just on FI jobs in the Rochester area, but on the broader local economy.
FIs around the state began to implement emergency financial procedures which resulted in layoffs to sustain the cuts. In instances where layoffs did not immediately occur, agencies were bracing for the future impact. Many organizations reported to CDPAANYS that they were going to close or dramatically downsize. Others indicated they would continue for as long as they could out of a sense of mission, but they would not be able to sustain operations beyond a year.
With overwhelming proof contradicting the DOH’s statement, they at least needed to include, as required by law, their analysis as to why they felt it was “apparent” that there would be no “substantial impact” on jobs. Their failure to acknowledge the very real impact on jobs that this rule has already had or to even provide the analysis that was utilized to come to their conclusion should void the proposed rule.
The proposed rule would have a dramatic negative impact on FIs, consumers, PAs, and local economies around the state. Due to this, as well as the DOH’s failure to meet basic legal requirements of the rulemaking process, the rule should be invalidated, and thus rejected.