History of APD Medicaid Waiver Cuts:

The DD System Needs Stability

  • ·         In July 2003, the State of Floridaadopted the Mercer Rate system that contained up to 720 billing options for residential habilitation rates and new rates for most of the 30+ services funded by the Home and Community Based Services Waiver.  Transportation, Special Medical Homes and Intensive Behavior services continued to have negotiated rates.  The legislature basically bought a reimbursement system that was based on direct care wages funded at the 25th percentile compared to national averages for wages.
  • ·         In November 2003, the Agency reduced Residential Habilitation rates by 14.3% and Live In Residential Habilitation by 7%.  Also, billable days were limited to 350 per year for homes having more than 3 individuals.  ADT rates were reduced by about 9.5%.  The actions were taken to prevent deficit spending although the state actually realized a surplus at the end of the fiscal year.  The annualized reductions totaled about $45 million for three services.  According to Medicaid claims data, the Agency realized a $37 million surplus for the same year.
  • ·         In 2004, the Agency implemented a residential habilitation matrix approach which limited billings by looking more at the number of hours needed per home to adequately staff it.  The impact was significant in that in many cases the last two admissions to a six-bed group home received reduced hours (typically 2). 
  • ·         In 2006, agencies received a 2.81% Cost of Living Adjustment that applied to all waiver services.   This action added about $21 million back into the system.
  • ·         During the 2007 Legislative Session, the Florida Legislature mandated changes in Senate Bill 1124 that resulted in limitations and eliminations of Developmental Services Home and Community Based Services (HCBS) Waiver services funded through the Medicaid program.   Although implemented, the limitations and eliminations have resulted in little if any savings in waiver expenditures because clients often shifted to other services to meet their needs.

–     Chore, Non-residential Support Services, and Homemaker Services were eliminated for a projected $12.7 million savings to APD.  However, the definition of In-Home Support Services has been expanded to include some activities previously provided in the eliminated services.

–     Massage Therapy and IQ Testing (Psychological Assessments) services were eliminated for a projected $2.2 million savings to APD.

–     APD will be implementing a uniform rate for individuals with intense needs for and estimated $1.3 million savings, but a date for implementation has yet to be set.

–     Supported Living Coaching has been limited to no more than 20 hours a month for persons who also receive in-home support services for a $4.4 million savings.

–     Support Coordination to all persons under the age of 18 who live in the family home are limited to Limited Support Coordination only for a $1.7 million savings to APD.

–     Personal Care Assistance (PCA) services have been limited to 180 hours a month unless the person has intensive needs and all rate modifiers have been eliminated. Additional hours may be authorized if there is a substantial change in circumstances.  Projected savings were at $2.3 million.  APD and AHCA have reached an agreement which allows for people under the age of 21 to receive more than 180 hours of PCA, if medically necessary. TheMedicaidStateplan is to cover the cost of the additional hours.

  • ·         In December 2007, residential habilitation rates were collapsed and reduced overall by 7%; however, a settlement agreement reduced the reductions to 4.25%.  Some providers actually realized increases because of an averaging effect.  The net savings was about $11 million.
  • ·         As a result of the 2007 legislation, AHCA in consultation with APD sought and obtained federal approval for two additional waivers to implement a four-tiered waiver system. The tiers were implemented in the fall of 2008 and were intended to remove $120 million from expenditures in the waiver system.  However, due to rate reductions and other changes the annualized savings will be about $74 million per year.  

–     Tier 1 – Current DD Waiver with No Monetary Cap: Limited to individuals with intensive medical, behavioral, and adaptive needs that cannot be met in other tiers.  

–     Tier 2 – Capped at $55,000: Limited to clients whose service needs include support in a licensed residential facility and at least minimal moderate levels of residential habilitation with behavior focus services as well as clients in supported living who receive more than six hours of in-home support services. This tier applies only to individuals who receive residential habilitation or supported living and in-home support services.

–     Tier 3 – Capped at $35,000: Includes all individuals who do not fall into Tier 1 or Tier 2.

–     Tier 4 – Current FSL Waiver with a Cap of $14,792: Includes most families with children under 21 who are to receive Personal Care Assistance services via the Medicaid State Plan.

  • ·         In May 2008, proviso language passed that implemented a $43 million across the board rate cut for waiver services that was implemented in July 1, 2008.  Residential Habilitation and Support Coordination received a 3% cut effective July 1, 2008, (in addition to the 4% reduction taken in December 2007 for residential habilitation) and other waiver services received a 7.21% reduction in rates.  Other changes included:

–       In May 2008, legislation passed reducing the rate paid to Personal Care Assistants by four percent.

–       Support coordinator’s caseloads can increase to 43 people per month, up from 36.  APD will no longer require support coordinators to conduct a customer’s needs assessment or develop their cost plan.  Support coordinators will still be able to earn up to $68,000 a year if they have a full caseload.

–     In July 2008, South Florida providers had geographic rate differentials reduced for residential habilitation services by 2.5% in Broward,Palm Beach, andDadeCounties. MonroeCountyrealized a 5% reduction. 

  • ·         In October 2008, the APD began a rebasing exercise which was intended to freeze individual service expenditures as of January 2009 at the FY 07-08 level plus no more than a 5% increase until June 30, 2009.  Because of inaccurate data, the exercise was delayed until late December.  The intent was to control a projected 9% utilization creep that results in deficit spending.  APD projects saving $20 million per year from this exercise although the methodology used will likely result in higher savings.
  • ·         In January 2009, during a Special Session the Florida Legislature approved a 3% rate reduction ($21 million) for DD waiver services.  However, the rate reduction was vetoed by the Governor and was not implemented.
  • ·         Per the 2009 Legislature, effective October 1, 2009, Medication Administration Review services will be eliminated as a waiver service for a total reduction of $301,907 and effective January 1, 2010, consolidation of durable and consumable medical supply purchases will save another $932,093.  The 2009 legislature did add $5,934,889 to the DD Medicaid Waivers to maintain a geographic differential for residential habilitation service providers in fourSouth Floridacounties.   Also, one-time funding of approximately $19 million was added to maintain service delivery.
  • ·         The 2010 Legislature decreased the overall funding level for the waiver by $43.8 million, and did not continue anticipated federal stimulus (FMAP) dollars that would continue Florida’s current enhanced FMAP ratio from January 2011 through June 30, 2011.  The cuts are as follows:

–       $3,075,000 transfer to the Agency for Health Care Administration (AHCA) to provide disposable incontinence supplies to children ages 4-20 through the Medicaid state plan. 

–       $4,196,362 savings as a result of reducing the caps for Tiers 2, 3, and 4 by 2.5%.  Notices of reductions were sent in December 2010 with an effective date of February 2011.

–       $1,393,145 savings by limiting Tier 1 annual expenditures to $150,000 annually and excluding Intensive Behavior and Special Medical Care homes from the cap effective January 1, 2010.

The proviso language approved by the 2010 legislature included $16,811,989 for a 2.5% provider rate reduction for most waiver services excluding:  Support Coordination, transportation, personal care assistance, durable medical equipment, consumable medicals supplies, and environmental and home accessibility services are specifically excluded from this reduction target.  Governor Crist vetoed the rate cut language but did not reinstate the dollars.  The allocation also included an additional $18,396,571 in cuts that were removed as one-time funding.  These two actions reduced the appropriation by $35,208,560.

While theGeneralRevenue portion of the appropriation actually increased by about $38.9 million, the Trust Fund portion was reduced by $78,790,410. 

The following shows the funding history of the HCBS and FSL Medicaid Waivers since FY 03-04 when the System Redesign was implemented. 


DD Medicaid Waivers Summary

FY Appropriation Expenditures Surplus/Deficit Served Ave. Cost
FY 03-04 $687,255,720 $654,883,720 $32,372,000 24,257   $26,998
FY 04-05 $734,118,671 $644,339,179 $89,779,492 25,848   $24,928
FY 05-06 $798,141,900 $749,150,257 $48,991,643 30,936   $24,216*
FY 06-07 $851,549,572 $905,954,703 -$54,405,131 30,991   $29,233
FY 07-08 $961,599,474 $927,531,579 $34,067,895 30,585   $30,326
FY 08-09 $833,529,770 $882,784,502 -$49,254,732 30,166   $29,264
FY 09-10 $849,699,685 $928,167,201 -$78,467,516 30,275   $30,658
FY 10-11 $805,826,618        

From the above, we see the funding level for FY 10-11 is only about $7 million more than it was in FY 05-06 and the program is now in deficit spending status.  The deficit appears to be attributable to the fact that in FY 05-06, about 5,000 new enrollees were added late in the fiscal year but the total cost of care was not realized until FY 06-07, and this began a history of deficit spending.  In FY 07-08, funding was added to sustain the program for one year until cost control measures could be implemented; however, the anticipated savings have not materialized. 

The above data show about 660 fewer individuals are being served per year than were served in FY 05-06.  Concurrently, thousands of individuals on the waiver are receiving fewer services as a result of tier caps, rebasing, and other cost savings measures.  Also, only limited numbers of new enrollees are being added and these are typically individuals who are in crisis status.

A modest increase in average expenditures per recipient is noted and is considered reasonable (less than 2% per year), especially considering only those who are most in need of services (crisis status) are enrolled and will have higher costs than non-crisis enrollees.  Also, as the annualized cost for the FY 05-06 additional enrollees was realized in FY 06-07, average costs had to increase as shown in the above chart. 

Florida ARF opines the cost of this program is being managed; however, the program simply is not funded at the level needed to serve the number of individuals enrolled.

Florida ARF Summary of DD Waiver Cuts

Prepared: December 2008

Updated May 2009, June 2010, January 2011, March 2011