Existing law, the Lanterman Developmental Disabilities Services Act, requires the State Department of Developmental Services to contract with regional centers to provide services and supports to individuals with developmental disabilities. Existing law sets forth the departments and a regional centers authority to establish provider rates. Existing law prohibits a regional center from paying a greater rate to a provider of certain services or supports, as specified, or from approving a service level for a residential service provider that would result in an increase in state costs, unless the regional center demonstrates that the approval is necessary to protect the consumers health or safety and the department has granted prior written authorization or, in certain circumstances, unless the increase is required by a contract between the regional center and the vendor, as specified.

This bill would deem a request from a regional center for prior written authorization approved by the department if the department does not act on the request within 30 calendar days of receipt of the request, unless the director, in his or her discretion, determines that additional time is reasonably necessary to fully and fairly evaluate the request, as specified. If the director determines that additional time is necessary, the bill would grant the department an additional 30 calendar days to act on the request. The bill would authorize additional extensions of time only upon agreement of all parties, as specified.

The bill would, for a request from a regional center for prior written authorization involving cases in which there is an imminent and serious threat to the health and safety of the individual consumer, as defined, require the department to notify the regional center of its decision to grant or deny the request within 3 working days from receipt of the request. The bill would authorize the department to request additional information from a regional center under those circumstances, and would prescribe the procedure for making that request. If requested, once that information is provided to the department, the bill would require the department to make a decision to grant or deny the request within 3 working days.

The bill would also, for a request from a regional center for prior written authorization, require the department to provide receipt of those requests and the contact information of the department representative handling the request to the regional center. The bill would authorize the consumer or the regional center to request a meeting with the department representative handling the request, as prescribed.

The bill would require the department to provide an accounting annually to the Legislature with regard to regional center requests for prior written authorization, as specified.

Existing law prohibits a regional center from negotiating a rate with new residential service providers, new supported living service providers, or other certain service providers, as specified, that is higher than the statewide or regional centers median rate for the same service code and unit of service, whichever is lower.

This bill would make an exception to the above prohibition if the regional center demonstrates that the approval is necessary to protect an individual consumers health or safety and the department has granted prior written authorization. The bill would also make the 30-day and 3-day time frames described above applicable to these provisions.

Existing law requires the department to promulgate regulations for payment for community-based programs, including a procedure for appealing rates. Existing law prohibits certain rate increases for residential service providers, but, commencing July 1, 2017, authorizes increases to those rates as necessary to adjust employee wages to meet the state minimum wage law.

This bill would, on or before July 1, 2019, require the department to adopt regulations to create a process to review requests from regional centers in order to resolve systemic issues with service provider rates that have the potential to create economic distress for service providers or disrupt services to consumers, including, but not limited to, local minimum wage ordinances. The bill would require the department to include in the review process regulations a requirement that the department render a decision on the requested review no later than 60 calendar days after receipt of the review request unless the director, in his or her discretion, determines that additional time is reasonably necessary to fully and fairly evaluate the request, as specified.

Date of Hearing: April 11, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2244

Author:(Acosta) – As Introduced Ver:February 13, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill makes a number of changes to the health and safety waiver (HSW) request process for requests submitted to the Department of Developmental Services (DDS) by specified providers. Specifically, this bill:

1. Deems an HSW request approved by DDS if DDS does not act on the request within 30 calendar days of receiving the request, unless the DDS director determines additional time is necessary to evaluate the request and notifies the regional center of the determination.
2. Grants DDS an additional 30 calendar days to act on the request if the director determines additional time is necessary and allows additional extensions to be granted if the extension is agreed upon by relevant parties.
3. Specifies parameters and timelines DDS must follow regarding HSW notifications, requests for additional information, meeting requests, and public information.
4. Requires DDS, on or before July 1, 2019, to adopt regulations to establish a process to review HSW requests from regional centers to resolve systemic issues with service provider rates, including minimum wage ordinances.

FISCAL EFFECT:

Ongoing costs to DDS of $275,000 ($220,000 GF) for two additional staff positions and the associated operational expenses to address backlog and meet the requirements of the bill.

COMMENTS:

1. Purpose. This bill is intended to relieve pressure on the existing DDS rate cap waiver process for persons with developmental disabilities by clarifying that the existing waiver request system is intended for individual situations (not systemic ones), improving the responsiveness of the process for individuals, and directing DDS to create a separate process for handling systemic issue requests, such as minimum wage ordinances.

According to the author:

Larger systemic issues with developmental disability provider rates have resulted in an overwhelming increase in the number of HSW requests filed with DDS. A process originally intended to address a limited number of waiver requests for individual circumstances was never meant to handle broader systemic issues with the rates themselves. This has resulted in those who need the waiver most, not being able to access the services that could be available to them. [This bill] is an important step to ensure consumers will be able to receive the services they desperately need while also making sure DDS develops a plan to address the systemic issues impacting the entire community.

1. Background. Current law allows vendors to request exemptions or changes to rates, and DDS is authorized to approve exemptions to rate freezes, in order to mitigate any potential risks to a consumer’s health and safety or due to extenuating circumstances that affect the ability of regional centers to pay vendors appropriate rates, such as local minimum wage ordinances.

Advocates suggest that consumers often wait long periods before DDS approves or denies HSWs. According to data provided by DDS, the average time elapsed between the date an HSW request was received and the date a formal determination was issued to the regional center was 95 days. In addition, as of February 28, 2018, there were 36 HSW requests that had been pending for an average of 332 days.

Between July 1, 2014, and February 28, 2018, 234 waiver requests affecting 6,479 consumers cited local minimum wage ordinances as the underlying reason for the request. In addition, the number of local minimum wage-related requests has increased each year from 11 in FY 2014-15 to 98 in FY 2016-17. In FY 2017-18 (through February 28), DDS has received 93 waiver requests related to local minimum wage ordinances.

1. Prior Legislation. AB 279 (Holden), 2017, would have provided DDS and regional centers with the statutory authority to adjust rates for providers who operate in regions where the local minimum wage is higher than the minimum wage provided for in state law. It was held on the Suspense File in the Senate Appropriations Committee.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: March 20, 2018

ASSEMBLY COMMITTEE ON HUMAN SERVICES

Blanca Rubio, Chair

ABPCA Bill Id:AB 2244 (

Author:Acosta) – As Introduced Ver:February 13, 2018

SUBJECT: Developmental services: regional centers: provider rates

SUMMARY: Deems health and safety waiver (HSW) requests submitted by certain providers as approved by the Department of Developmental Services (DDS) if DDS does not act on the request within 30 calendar days of receiving the request, with certain allowable extensions, and instructs DDS to adopt regulations to establish a separate process to review requests from regional centers to resolve systemic issues.

Specifically, this bill:

1. Makes a number of changes to the HSW request process for requests submitted by, as specified, regional centers, residential service providers, community living facilities, Adult Residential Facilities for Persons with Severe Health Needs (ARFPSHNs), new and existing supported living service providers, and new and existing service providers of nonresidential services, including, as specified:
   1. Deems an HSW request approved by DDS if the department does not act on the request within 30 calendar days of receiving the request, unless the director determines that additional time is necessary to evaluate the request and notifies the regional center of that determination;
   2. Grants DDS an additional 30 calendar days to act on the request if the director determines that additional time is necessary and allows additional extensions to be granted if the extension is agreed upon by relevant parties;
   3. Defines “imminent and serious threat to the health and safety of the individual consumer” as including, but not limited to:
      1. consumers who are currently placed in, or would otherwise be at risk of admission to the acute crisis center at Fairview Developmental Center or Sonoma Developmental Center, an out-of-state placement, an institution for mental disease, or a facility using secure perimeters, as specified; or
      2. consumers who would otherwise be at risk of placement in a more restrictive or less integrated setting.
   4. Requires DDS to notify a regional center of its decision to grant or deny an HSW request within three working days of receiving the request in cases where there is an imminent and serious threat to the health and safety of the individual consumer;
   5. Allows DDS, if additional information is required from a regional center regarding an HSW request, to make a single request for that information within three working days of receiving the regional center’s request, and further requires DDS to reach a decision within three working days of receiving the additional information from the regional center;
      
   6. Requires DDS, within three working days of receiving either an oral or written request from a regional center for an HSW, to send a written acknowledgement of receipt to the regional center, which includes at least the date the request was received and the contact information of the department representative handling the request review, and specifies that an email from the department may satisfy this requirement for written acknowledgement;
      
   7. Allows a consumer or regional center to request a meeting with the department representative handling the review and requires the department to grant the meeting, if requested, and hold the meeting prior to the department making a decision about the request; and
   8. Requires DDS to provide to the Legislature, on an annual basis, an accounting of the age of each request during the previous calendar year to be organized by regional center, and requires that information be made available on the department’s Internet Web site.
2. Requires DDS, on or before July 1, 2019, to adopt regulations to establish a process to review HSW requests from regional centers to resolve systemic issues with service provider rates, including minimum wage ordinances, and requires the review process to include a requirement that DDS render a decision on the requested review no later than 60 calendar days after receipt of the review request, unless the director determines additional time is necessary, as specified.
3. Makes technical changes.

EXISTING LAW:

1. Establishes an entitlement to services for individuals with developmental disabilities under the Lanterman Developmental Disabilities Services Act (Lanterman Act). (WIC 4500 et seq.)
2. Grants all individuals with developmental disabilities, among all other rights and responsibilities established for any individual by the United States Constitution and laws and the California Constitution and laws, the right to treatment and habilitation services and supports in the least restrictive environment. (WIC 4502)
3. Establishes a system of 21 nonprofit regional centers throughout the state to identify needs and coordinate services for eligible individuals with developmental disabilities and requires DDS to contract with regional centers to provide case management services and arrange for or purchase services that meet the needs of individuals with developmental disabilities, as defined. (WIC 4620 et seq.)
4. Creates a process by which regional centers may “vendorize” service providers, thereby providing a path to contract for services with that provider and ensuring maximum flexibility and availability of appropriate services and support for persons with developmental disabilities. (WIC 4648)
5. Requires DDS to adopt regulations that specify rates for community care facilities serving persons with developmental disabilities, as specified. (WIC 4681.1 et seq.)
6. Prohibits a regional center from paying rates for services, including supported living services, mobile day programs, and creative art programs, among others, a rate that is greater than the rate that is in effect on or after June 30, 2008, unless the increase is required by a contract between the regional center and the vendor, or the regional center demonstrates that the approval is necessary to protect the consumer’s health and safety, and the department has granted prior written authorization. (WIC 4648.4 (b))
7. Prohibits a regional center from approving a service level for a residential service provider if the approval would result in an increase in state costs or a rate to be paid to the provider that is greater than the rate that is in effect on June 30, 2008, or unless the regional center demonstrates to the department that the approval is necessary to protect the consumer’s health or safety and the department has granted written prior authorization. (WIC 4681.5 (a))
8. Prohibits a regional center from paying an existing residential service provider, as specified, a rate higher than the rate in effect on June 30, 2008, unless the regional center demonstrates that the approval is necessary to protect the consumer’s health or safety and the department has granted prior written authorization. Further prohibits a regional center from negotiating a rate with a new residential service provider that is higher than the regional center’s median rate for the same service code and unit of service, or the statewide median rate for the same service doe and unit of service, whichever is lower. (WIC 4681.6 (a) and (b))
9. Prohibits a regional center from paying to any Adult Residential Facility for Persons with Special Health Care Needs (ARFPSHN) for any consumer a rate that exceeds the rate in the DDS’ approved community placement plan for that facility unless the regional center demonstrates that a higher rate is necessary to protect a consumer’s health and safety, and the department has granted prior written authorization. (WIC 4684.55 (a))
10. Prohibits a regional center from paying an existing living service provider for certain services, as specified, a rate higher than the rate in effect on June 30, 2008, unless the regional center demonstrates that the approval is necessary to protect the consumer’s health or safety and the department has granted prior written authorization. (WIC 4689.8)
11. Prohibits a regional center from paying an existing service provider, as specified, a rate higher than the rate in effect on June 30, 2008, unless the regional center demonstrates that the approval is necessary to protect the consumer’s health or safety and the department has granted prior written authorization. Further prohibits a regional center from negotiating a rate with a new residential service provider that is higher than the regional center’s median rate for the same service code and unit of service, or the statewide median rate for the same service code and unit of service, whichever is lower. (WIC 4691.9 (a) and (b))
12. Requires DDS, on or before March 1, 2019, to submit a rate study to the Legislature addressing the sustainability, quality, and transparency of community-based services for individuals with developmental disabilities. (WIC 4519.8)
13. Allows a local jurisdiction to adopt local minimum wage ordinances that are higher than the federal minimum wage provided for in the Fair Labor Standards Act. (29 U.S.C. Chapter 8)
14. Requires an employer to comply with the more restrictive requirement when state and federal minimum wage laws differ. (LAB 1182.12)

FISCAL EFFECT: Unknown.

COMMENTS:

Developmental Services: The Lanterman Developmental Disabilities Act in 1969 established that individuals with developmental disabilities and their families have a right to receive the necessary supports and services required to live independently in the community. The Lanterman Act enumerates the rights of individuals with developmental disabilities, as well as the rights of their families, what services and supports are available for these individuals, and how regional centers and service providers are to work together to provide the necessary supports and services. The term “developmental disability” is defined as a disability that originates before a person reaches 18 years of age, is expected to continue indefinitely, and is a significant disability for those individuals; such disabilities include, among others: epilepsy, autism spectrum disorder, and cerebral palsy.

In addition to establishing the rights of individuals, the Lanterman Act also created California’s regional center system comprised of 21 regional centers throughout the state whose primary purpose is to connect individuals with services in the community. While regional centers do not directly provide services to individuals and their families, they are charged with providing information and coordinating the delivery of services to consumers.

Regional center vendors: Prior to the provision of services, vendors must undergo an approval process known as “vendorization,” wherein providers apply for contracts that enable them to serve individuals with disabilities. Through the vendorization process, regional centers verify that an applicant meets specific requirements and standards required to best serve the needs of regional centers consumers. While the vendorization process deems a vendor as eligible to provide services, it does not guarantee that a regional center will refer consumers. Vendors are also allowed to be vendorized by more than one regional center.

Regional center rates: Because regional centers coordinate the provision of services from vendors for consumers, regional centers must purchase services from vendors, which is largely dictated by rates set by DDS or negotiated between a regional center and a vendor. Rates at which services are purchased vary depending on the type of service and the type of provider and are established based on a variety of factors, such as rate schedules, statute or regulations, or historical cost statements. The complex nature of rate-setting methodologies as well as attempts to control budgetary increases have contributed to rate restrictions and freezes over recent years.

Beginning in 2008-2009, median rates and an upper limit were placed on new service providers. Median rates prevented regional centers from negotiating rates that exceeded the statewide median rate or the regional center median rate for the service, whichever is lower. Provider payment reductions were implemented between 2009 and 2011 such that all providers, with the exception of supported employment providers, experienced a reduction in rates. However, funding for provider payments was restored by 2013-14.

Special session legislation: Governor Brown convened a special Legislative session in June 2015 to examine health and human services issues, including sufficient funding and rate increases for community service providers serving individuals with disabilities. AB 2x1 (Thurmond), Chapter 3, Statutes of 2016, was signed into law and directly appropriated $287 million General Fund for select increases to regional centers and community service providers for 2016-17. The legislation also required DDS to submit a rate study to the Legislature no later than March 2019 addressing the sustainability, quality, and transparency of community-based services for individuals with developmental disabilities.

Health and Safety waivers: Current law allows for vendors to request exemptions or changes to rates, and DDS is authorized to approve exemptions to rate freezes, in order to mitigate any potential risks to a consumer’s health and safety or due to extenuating circumstances that affect the ability of regional centers to pay vendors appropriate rates, such as local minimum wage ordinances.

It has been reported that consumers often wait long periods of time before these HSWs are approved or denied. According to data provided by DDS, the average length of time elapsed between when DDS received a HSW request and the date a formal determination was issued to the regional center was 95 days. In addition to this, as of December 12, 2017, there were 42 HSW requests that had been pending for an average of 262 days. Between Fiscal Years (FYs) 2012-13 and December 2017, 131 HSWs were approved, 77 were denied, 41 were rescinded, and 74 are pending. Since 2013, 126 waiver requests affecting 5,202 consumers cited local minimum wage ordinances as the underlying reason for the request; since 2012, the number of local minimum wage related requests has increased each year from 9 in FY 2013-14 to 98 in FY 2016-17; since the beginning of FY 2017-18, DDS has received 28 waiver requests related to local minimum wage ordinances.

Need for this bill: According to the author, “Larger systemic issues with developmental disability provider rates have resulted in an overwhelming increase in the number of HSW requests filed with DDS. A process originally intended to address a limited number of waiver requests for individual circumstances was never meant to handle broader systemic issues with the rates themselves. This has resulted in those who need the waiver most, not being able to access the services that could be available to them. [This bill] is an important step to ensure consumers will be able to receive the services they desperately need while also making sure DDS develops a plan to address the systemic issues impacting the entire community.”

Staff comments: The overarching goal of this bill, described by the author as ensuring regional center consumers receive much-needed supports and services as expeditiously as possible, is both important and timely. Writing in support of the bill, the California Disabilities Services Association states, “…consumers with significant medical or behavioral issues are at risk of losing necessary services and supports when providers do not receive adequate reimbursement to provide those services. Unfortunately, the current process to increase reimbursement rates for these individuals is overwhelmed, resulting in ever-increasing wait times for waiver determinations.”

SB 3, (Leno), Chapter 4, Statutes of 2016, increased the California state minimum wage over the course of several years, depending on the size of a business, such that the minimum wage will reach $15 per hour in 2023. Federal law allows local entities, including cities and counties, to enact local minimum wage ordinances in an effort to address higher costs of living, particularly in regions such as the Bay Area and parts of Los Angeles. Current law also requires that if there is a discrepancy in minimum wage rates such that a local minimum wage is higher than the state or federal minimum wage, businesses must comply with the stricter standard. The provisions of this bill instruct DDS to establish a separate process to review requests from regional centers to resolve systemic issues, such as minimum wage, as local minimum wage is often cited as hindering service provision to regional center consumers under current state budget constraints. While HSW requests for purposes related to local minimum wage have increased over time, delays in request decisions cannot be directly attributed to HSW requests related to local minimum wage ordinances. Further, data provided by DDS indicates that the processing time of requests can be delayed due to missing or inaccurate information, thereby requiring additional follow up with regional centers and vendors which often takes weeks or months.

In addition to AB 2x1, in 2017, AB 107 (Assembly Committee on Budget), Chapter 18, Statutes of 2017, instructed DDS to convene a working group consisting of regional centers, service providers, advocates, family members, and consumers to consider simplified processes for providers seeking rate adjustments through HSWs. Trailer bill language authorized the working group to make recommendations on alternative criteria and procedures for considering requests for rate adjustments, and instructed DDS to report on the working group process and product during the 2018 budget subcommittee process. On March 7, 2018, Director of DDS, Nancy Bargmann, testified before Assembly Budget Subcommittee 1 in accordance with AB 107 requirements and reported that the workgroup has proven to be helpful in identifying ways to make the HSW process more efficient. According to Director Bargmann, the workgroup assisted in identifying solutions to how DDS can identify the backlog of health and safety waiver requests, including: prioritization of individuals moving from developmental centers into the community, prioritizing individuals who reside in less restrictive settings and who are at risk of moving to more restrictive settings, and authorizing provisional approvals if additional information is needed in order to issue a final approval, among others.

This bill aims to expedite the HSW process for individuals by deeming waiver requests approved within 30 days of receipt of the request absent department approval or denial within that timeframe. However this bill also permits the director of DDS to grant an additional 30 days to act on the request; subsequent extensions are also permissible if all relevant parties agree, such that in certain circumstances, consumers may continue to wait for 90 days or more to receive approvals or denials for their waiver requests. Additionally, nothing in this bill precludes DDS from denying HSWs 29 days after they are received in order to be compliant with the provisions of this bill, should it become law. Current efforts – including the pending rate study and DDS’s recent adoption of new processes to expedite HSW determinations – are underway to address some of the key issues for which this bill proposes to create additional and separate processes; it is unclear how the proposals contained in this bill will supplement or detract from those current efforts. Should this bill move forward, the author may wish to address how this bill will interact with current efforts to review and improve the HSW process and the appropriateness of regional center rates, with a focus on ensuring the health and safety of consumers.

PRIOR LEGISLATION

AB 279 (Holden), 2017, would have provided DDS and regional centers with the statutory authority to adjust rates for providers who operate in regions where the local minimum wage is higher than the minimum wage provided for in state law. It was held in the Senate Appropriations Committee.

AB2x1 (Thurmond), Chapter 3, Statutes of 2016, appropriated, among other things, $287 million General Fund for increases to regional centers and community service providers in 2016- 17, and imposed reporting requirements to ensure proper allocation of funds and program accountability.

SB 3 (Leno), Chapter 4, Statutes of 2016, among other things, incrementally increased the state minimum wage each year to $15 by 2022 for employers with over 25 employees and by 2023 for employers with 25 or fewer employees, after which it required an annual adjustment of the minimum wage per a specified formula.

REGISTERED SUPPORT / OPPOSITION:

Support

California Disability Services Association

Opposition

None on file.

Analysis Prepared by: Kelsy Castillo / HUM. S. / (916) 319-2089