ARRM's Daily Dispatch

Judge’s Ruling Issued: An Update to the Random Sample Extrapolation Rule Change

You may remember that I reported at the end of January that ARRM and other interested parties had testified before an Administrative Law Judge (ALJ) on changes to the rule on random sample extrapolation in monetary recovery proposed by the Department of Human Services (DHS). This rule applies to providers that serve people in Minnesota’s Medicaid program, including home and community based services waivers, and ARRM and the other testifiers were opposed to the proposed changes.

On March 26, the ALJ issued a report that disapproved the rules, and on April 1, the Chief ALJ concurred with the ruling. Good news!

Not to get too far into the weeds, but ARRM objected to the proposed rule changes on several fronts. Sam Orbovich, an attorney with Fredrickson & Byron, submitted a brief on our behalf that: 1) questioned DHS’ authority to modify the rule; 2) asserted that the proposed changes would decrease the statistical validity of extrapolations; and 3) objected to the removal of a provision that requires providers to be notified of the sampling methodology BEFORE a sample is drawn.

In her 41-page ruling, the judge found that DHS had satisfied all legal and procedural requirements in filing the proposed changes, issuing notifications, and accepting public comments. She also ruled that DHS had the authority to propose changes to the rule. However, she found that the proposed changes did not meet the standard of need and reasonableness required by law. In fact, the judge found that the rule, if amended as proposed, would actually be less clear in many respects than it is currently. As she wrote, “The Department has not established that the proposed rules are needed and reasonable due to material defects in operative portions of the proposed amendments.”

So what happens next? That is up to DHS. They must first make the judge’s report available for review by anyone who wishes to review it for at least five working days before they may take any further action to adopt final rules or to modify or withdraw the proposed rules. If they make changes in the rules, they must submit the rules, along with the complete hearing record, to the Chief Administrative Law Judge for a review of those changes before they may adopt the rules in final form.

At this time, DHS is considering options for how to proceed. If they take any further action, information will be posted on their Surveillance and Integrity Review Section (SIRS) rulemaking page.

-Ken Bence, Director of Research, Analysis and Policy

Update on Random Sample Extrapolation Public Hearing

Most of you are aware that the Minnesota Department of Human Services (DHS) filed a notice of their intent to amend the rules regarding random sample extrapolation in monetary recovery (Minnesota Rules, Part 9505.2220) late last year. I wrote about the proposed changes in this very blog, and asked you to join me in requesting a public hearing. Twenty-five valid requests were required in order for a public hearing to proceed, and you all helped reach that threshold – and then some! DHS received 147 total requests, and I personally know at least 25 of them came from ARRM members. Great job!

Well, the hearing was held as scheduled on Thursday, January 28 before Administrative Law Judge Jessica Palmer-Denig. ARRM engaged our friend Sam Orbovich, an attorney with Fredrickson and Byron, to prepare a written response and testify on our behalf. The hearing was held virtually, as is the norm these days, and there were 70 total participants during the course of the nearly 2-hour hearing. I counted at least 22 ARRM members and staff on the call.

Sam was the first to testify and prepared a very detailed and thorough analysis of the concerns we have with the proposed changes. He was able to draw on legal precedent and case law to support his arguments, not to mention several cases where he has represented providers of long-term services and supports and successfully fought large payment recoveries. Some of the key arguments raised by Sam were:

• DHS lacks authority to use random sample extrapolations, because it was never granted by the Legislature
• The proposed changes grant unreasonable subjective authority to DHS that would result in less reliability and validity in calculating monetary recoveries
• An existing requirement to notify providers of the sampling methodology BEFORE samples are drawn would be removed, which would make the process less transparent and appeals more difficult for providers
• An existing requirement to adhere to rigorous statistical methods would be loosened, potentially giving DHS and its auditors great latitude in sample extrapolation
• The proposed changes would result in more ambiguity in the payment recovery process, which would lead to more, and more expensive, appeals

There were a few other testifiers who spoke at the hearing, all in opposition to the proposed changes, as well as over 80 written comments submitted during the initial comment period that closed on December 31.

So what comes next? Following the hearing, a new period for public comment will be opened on the DHS rulemaking page (it is not open as of this writing), and comments will be accepted until 4:30 pm on Wednesday, February 17, 2021. Judge Palmer-Denig will then take all the testimony, comments and legal reasoning into consideration in reaching a verdict at some time in the future.

Please feel free to contact me with any questions.

Ken Bence, Director of Research, Analysis and Policy

DHS OIG SIRS Notice of Proposed Changes to Rules on Random Sample Extrapolation

Did I make the title above obscure and confusing enough for you by throwing together several acronyms and a term like “random sample extrapolation?” What does that mean, anyway? Well, don’t let that minimize the importance of the topic to providers that participate in Minnesota Healthcare Programs, which includes services paid for under the disability waivers. Read below for clarity and a call to action.

Minnesota Rule 9505.2220 addresses how the commissioner of the Department of Human Services (DHS) may use a statistical method known as random sample extrapolation to calculate the amount of money they may recover from a provider if there is an overpayment. The rule allows the calculation to be based on a random sample of claims when the number of recipients or claims to be examined exceeds specific thresholds. In its current form, the rule spells out detailed requirements for the method of sampling, and specifies that DHS shall tell the provider how they will conduct the sampling BEFORE the sample is drawn.

DHS recently notified providers via bulletin of their intent to make changes to this rule. In our estimation, the proposed changes dilute the rigor with which DHS shall conduct the statistical processes, and more importantly, remove the requirement that providers be notified of the sampling method before it is done. While providers would have the ability to appeal any judgements, we believe it is important that the sampling methodology be disclosed up front for full transparency.

DHS invites public comments on the proposed changes by December 31, and they have scheduled a public hearing before an administrative law judge on Thursday, January 28, 2021 at 9:30 am. But they are seeking to waive the public hearing on the changes UNLESS at least 25 people request one in writing. ARRM will make such a request, and we encourage providers to do the same to ensure that enough requests are received.

The process to request a public hearing is as follows:

“You must make your request for a public hearing in writing, which the agency contact person must receive by 4:30 p.m. on Thursday, December 31, 2020. You must include your name and address in your written request. In addition, you must identify the portion of the proposed rules that you object to or state that you oppose the entire set of rules. Any request that does not comply with these requirements is not valid and the agency cannot count it when determining whether it must hold a public hearing. You are also encouraged to state the reason for the request and any changes you want made to the proposed rules.”

Below is suggested text you may use in making a request, which should be sent via email to Vanessa Vogl in the DHS Administrative Law Office.

“On behalf of {Organization}, I request the Department of Human Services hold the scheduled public hearing on the proposed changes to MN Rule 9505.2220. I oppose the entire set of changes to the rule.”

If you want more details on any of this information, feel free to contact me.

P.S. If you are burning with curiosity about meanings of the acronyms used in the title, the full text is Department of Human Services Office, of Inspector General, Surveillance and Integrity Review Section.

Ken Bence
Director of Research, Analysis and Policy

Minnesota's Budget Challenge

In a significant departure from the regular schedule of producing budget forecasts in November and February, Minnesota Management and Budget (MMB) and the Department of Human Services (DHS) released an updated budget projection in response to the COVID-19 pandemic in May, 2020. This forecast factored in the unprecedented macroeconomic forces that have impacted the state, federal and global financial outlooks in the last 2 months, such as surging unemployment, shut-downs of businesses and sectors of the economy, and the resulting drop in consumer confidence and spending. Also, due to the still-emerging nature of this response, and the level of uncertainty over the long term, this state forecast only looked at the current biennium (FY 2020-21) and left the outlook for next biennium (FY 2022-23) for the regularly scheduled November forecast.

The May interim budget projection focused its analysis of changes in state expenditures on the Health and Human Services (HHS) sector, because the other sectors of the budget are not expected to experience immediate impacts related to the pandemic and associated economic downturn.

Current Biennium: FY 2020-21 General Fund Expenditures Change From February 2020 Forecast
($ in millions)	May Projection	Enacted Change	Projection Change
E-12 Education	$19,999	$ -	$ -
Property Tax Aids & Credits	3,883	11	-
Health & Human Services	14,815	292	(160)
Debt Service	1,130	-	-
All Other	8,937	248	0
Total Expenditures	$48,763	$550	$(160)

Despite the overall change to the state forecast of a $3.611 billion (7.4%) reduction in revenues and $391 million increase in expenditures, the HHS portion of the budget is projected to net a $160 million decrease in expenditures from the General Fund.

The factors that DHS identified as contributing to this net positive impact include:

Projected Increases:

• Increased program caseloads due to higher unemployment and/or waivers to state and federal laws adopted in response to the COVID-19 pandemic.
• Increased nursing facility costs of care due to the COVID-19 pandemic.

 

Projected Decreases:

• Enhanced Federal Medical Assistance Percentage (FMAP) during the COVID-19 emergency period which provides additional federal funding in certain forecasted programs.
• Lower nursing facility caseloads due to higher mortality rates and reduced new placements.
• Reduced day services provided in congregate settings for Intermediate Care Facility (ICF) residents and HCBS waiver recipients due to the COVID-19 pandemic.

Other Items:

• Assumption that new COVID-19 treatment costs are offset by other expected health care costs that are not being provided.

Of particular interest to our disability services stakeholders are the projected changes to HCBS waiver programs and long-term care facilities, which include ICFs/IID. The Governor’s executive order that forced the interruption in day services applies to both HCBS and institutional settings, and is projected to continue through FY2021 for an aggregate reduction in expenditures of 3.7%. Other executive orders gave the DHS commissioner authority to suspend certain requirements and seek federal waivers to allow flexibility in supporting vulnerable populations, which contributed to increases in expenditures for some programs. The Minnesota Department of Health (MDH) was also given additional appropriations to cover emerging healthcare needs and mitigation activities, and respond to outbreaks.

Long-term care facilities, including ICFs/IID are projected to experience increased costs per individual due to additional healthcare services related to the pandemic, but these will be more than offset by reductions in case loads (residents) due to increased numbers of deaths and slowed recruitment of new residents.

Other factors that impact the broader healthcare sector include enhanced federal matching funds from the federal government for people served by public programs, including HCBS waivers, significantly higher unemployment rates that eventually add to the number of people served by public insurance programs, and lower costs due to providers and consumers putting off elective procedures and preventive care while concerns about the virus are dominating the system.

For more details and numbers, open the spreadsheet under the COVID-19 Information heading here.

-Ken Bence, Director of Research, Analysis and Policy

Competitive Workforce Factor: Where Are We Now?

UPDATE: Published December 18, 2019

CMS Approves the Competitive Workforce Factor

In an announcement today, the Minnesota Department of Human Services informed all counties and providers it has received approval from the federal Centers for Medicare and Medicaid Services to apply the 4.7 percent Competitive Workforce Factor to Disability Waiver Rate System framework rates. Yay!

Providers and support teams can now move forward projecting the rates for service agreements renewing on or after Jan. 1, 2020 with full confidence in how the the frameworks will be calculated.

As a reminder, the overall impact of this implementation is projected to be an average increase to DWRS rates of 4 percent, equivalent to more than $150 million dollars over the next four years. It is paramount to forecast the impact for your own organization by reviewing each agreement, as the Competitive Workforce Factor only applies to direct staffing costs. Find information and resources in the ARRM Training Archive.

The department is moving quickly to update the Rate Management System, which should take place this evening.

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A Tale of Two Surveys

By Ken Bence, Director of Research, Analysis and Policy

Adding breadth and depth to the data-backed analysis of key industry factors is an effort which will improve ARRM’s ability to continue its leadership in promoting the strength and future of home and community-based services (HCBS). It will also help our association more effectively craft and advocate for policy to address members’ primary pain points.

Ongoing complimentary analysis efforts will help us gain these insights.

ARRM Industry Survey

The ARRM Industry Survey measures key benchmarks for HCBS providers around staffing, service utilization and certain outcomes. Collected from ARRM members, it is the most consistent source of data reporting on the state of the private Minnesota HCBS network.

We have worked hard this year to strengthen the response rate, and say thank you to our members for responding. We sent numerous emails, promoted it to primary and secondary organization contacts via our newsletters, and even utilized the United States Postal Service to make sure every organization received at least one hard copy. This approach seems to have helped because we are nearly at 50 percent response going into the preliminary analysis phase.

I am excited to share early results at the November Business and Finance Forum. And I hope that those organizations that weren’t able to complete their surveys by the initial deadline will still submit their responses during the month of November so they can be included in the final analysis.

State Labor Market Survey

Just before we kicked off our Industry Survey in early October, the Minnesota Deparment of Human Services (DHS) conducted their labor market report survey, a new reporting requirement passed during the 2019 legislative session. The purpose of directing DHS to conduct this new annual survey was to inform state decision-makers, and the public, about the direct support labor market, including its size and scope, wages and benefits, as well as issues related to service access.

The survey applies to providers of:

1. home and community-based services for people with developmental disabilities under section 256B.092;
2. home and community-based services for people with disabilities under section 256B.049;
3. services with rates determined under section 256B.4914, subd. 3 (the Disability Waiver Rate System (DWRS));
4. community first services and supports under section 256B.85;
5. nursing and home health services under section 256B.0625, subd. 6a;
6. day training and habilitation services for residents of intermediate care facilities for persons with developmental disabilities under section 256B.501;
7. financial management services who serve participants in various programs;
8. other services as enumerated in statute

If you don’t remember getting information on this survey, don’t worry. Only a relatively small, random sample of providers will be chosen for the DHS survey each year, a sample that will provide statistically relevant data across geography, organization size and other differentiators.

Complimentary, not competing

Some members have asked us what the difference is between the 2 surveys, and why is ARRM conducting its own. There are a few reasons:

• Quite simply, it’s important that whenever possible, ARRM should conduct independent reporting efforts to effectively represent its members. In just one example, while by number ARRM represents less than 10 percent of HCBS organizations, by size ARRM represents half the HCBS provider capacity in the state.
• It’s beneficial for ARRM and its members to have the data to compare against “statewide” averages, so we can identify potential issues unique to ARRM Members, and celebrate areas where our members are leaders.
• Extracting data from the department for our own analysis takes extra time and bureaucratic hassle which having our own data sets negates.

To hopefully ease some of the data gathering burden for you, we modelled this year’s ARRM survey on DHS’ labor market report survey as much as possible so that similar data wouldn’t have to be reported in slightly different ways. If you saw both surveys, you hopefully noticed many of the same questions.

We realize that gathering and reporting the data we asked for in our survey takes significant time and effort to compile, in many cases requiring input from multiple employees and/or departments. On behalf of the ARRM staff and board of directors, thank you for your commitment to our efforts. Because of your contributions, we will have a powerful story to tell and reliable data to draw on when we are speaking with decision makers and stakeholders to develop and enhance their understanding of the forces that affect your day-to-day operations, and your ability to help those you support live to their fullest potential.

 

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Contact Ken at [email protected].

Update on the Competitive Workforce Factor

Members will hopefully recall that implementation of the Competitive Workforce Factor is scheduled for January 1^st, 2020 on a rolling basis, dependent on final approval by the federal Centers for Medicaid and Medicare Services (CMS).

In order to get this federal approval, the state must submit a waiver amendment to CMS. ARRM has had conversations with department leads on the current status of the waiver amendment wanted to share the most recent information with you.

As of last Friday, August 16, it was shared with ARRM that the department anticipates the waiver amendment to be made available for public comment within the next couple weeks. Public comment must last for thirty days and following that, the department can send the waiver amendment to CMS; the department feels confident that this will happen in October.

The department also shared with ARRM that they have had conversations already with CMS about the Competitive Workforce Factor and will have follow up conversations once the amendment has been sent. Additionally, they shared that they are already in the process of updating their systems so they will be ready for implementation on January 1, 2020. They also wanted to note that if there is concern with any other items that are included in the waiver amendment, they would pull those items out and move the Competitive Workforce Factor separately, to ensure as quick an approval as possible.

It is important to remember that CMS does review public comment, both good and bad. Once the amendment is open for public comment, ARRM will be providing comments, and also providing information to our members on the steps to take to provide your own public comment.

We will continue to monitor the progress of the Competitive Workforce Factor and update you when we have any new information.

--Sara Grafstrom, Director of State and Federal Policy

Key HCBS Billing and Documentation Changes from the 2019 Legislative Session

Several amendments to documentation and billing requirements were passed during the 2019 Legislative Session for HCBS organizations to comply with. These include specifications around the detail needed for service and equipment documentation, from the language the documentation must be recorded in to the information required for service verification. These changes were specifically made in Minnesota Statute 256B.4912.

Download the reference sheet detailing all new HCBS Billing and Documentation changes, prepared exclusively for ARRM members.

Each of these requirements goes into effect on July 1, 2019. Failure to comply with these requirements may result in payments being recovered by the state. Please follow up with ARRM staff with any questions or clarifications.

What Didn't Make It In the 2019 HHS Omnibus Bill, Wins and Setbacks

Equally important as the policy items that were included in the final Health and Human Service (HHS) Omnibus bill, are policy items that were not included. ARRM counts both wins and setbacks in this category this year.

WINS

ARRM put many resources into fighting against several damaging provisions proposed during the 2019 Legislative Session which would have both harmed providers’ abilities to operate, but more importantly restricted access to the supports and services sought by Minnesotans with disabilities.

Adult Foster Care Bed Closure Proposal

Early on in session, a bill was introduced by Human Services Reform and Finance Committee Chair, Sen. Jim Abeler (R-Anoka). This proposal would automatically decrease adult foster care bed capacity by one for every two beds left vacant for longer than six months.

ARRM had serious concerns about potential un-intended consequences to this proposal and testified in opposition to bill two separate times during the Human Services Reform and Finance Committee. Our testimony highlighted:

• The destabilization of adult foster care this proposal would cause
• The lack of consideration of regional variables or provider specific services
• The lack of cost savings this proposal would bring

Despite our opposition, this proposal did end up in the Senate HHS Omnibus bill.

As soon as the final HHS Conference Committee was announced we were able to activate our members in House Conferee’s districts. Thanks to member outreach, House members spoke against this proposal during Conference Committee and the language was NOT included in the HHS Omnibus Bill.

DD and CADI Waiver Caps

Similarly to the Adult Foster Care Bed Closure proposal, a proposal to cap the number of DD and CADI waivers at June 30, 2019 levels was also included in the Senate HHS Omnibus bill.

Many advocacy groups testified against this proposal during the Human Services Reform and Finance Committee, including ARRM. Thanks to the strong outpouring of opposition, this proposal was also NOT included in the HHS Omnibus Bill.

HCBS Licensing Fee Increase

As we have seen in past years, the Department of Human Services presented, and Governor Walz included in his initial budget, a proposal to increase licensing fees for Home and Community-Based Services providers. This proposal would have raised fees for providers based on revenue with increases ranging from 20 percent all the way up to 300 percent. One of the primary purposes of this new revenue is to support additional inspectors for the Office of the Inspector General.

While ARRM supports a strong and effective investigation process, the association raised strong concerns with generating new revenue from an unfunded mandate on providers already struggling to maintain wages and operations budgets. The association proposed alternative language which would have increased DWRS rates by an amount equal to the fee increases, keeping the proposal cost neutral. This was included in the Senate Health and Human Services Omnibus bill, while the House included language similar to the Governor’s proposal. Ultimately, neither were included in the final HHS Omnibus bill.

In the end, thanks to strong advocacy against these fees from our members, and strong advocacy on our behalf from key Senators, the increase to Home and Community-Based Services licensing fees was NOT included in the final HHS Omnibus bill.

SETBACK

ICF Variable Rate and Services During the Day Legislation

One of ARRM’s top legislative priorities this session was legislation that would allow all ICFs to request a variable rate and change the Services During the Day rate from 75 percent of the DT&H rate to 100 percent of the rate.

This legislation got off to an early start, with an early hearing in the Senate. Unfortunately the bill was not able to get a hearing in the House prior to the mandated committee deadlines.

Going into the end of the legislative session, the language was included in the Senate HHS Omnibus bill and there was momentum in the House, mainly driven by members of the minority party, to do something this session to address rates for ICF providers.

Unfortunately, due to a low final conference committee target, the ICF proposal was not included in the HHS Omnibus bill. This is a disappointment for ICF providers and in the coming months the ARRM ICF Taskforce will focus on re-capping what worked and didn’t work this legislative session and begin discussing ARRM’s priorities for the 2020 legislative session.

Thank you to Members

As indicated above, many of the provisions that we were successful in defending against were due to our member’s strong advocacy voice. Thank you to members who were able to contact their legislators in opposition to these harmful proposals!

--Sara Grafstrom, Director of State and Federal Policy

Possibly More Than You Ever Wanted To Know About Competitive Workforce Factor

The 2019 Legislative Session delivered many changes which impact Home and Community-Based Service (HCBS) rate setting, including key provisions targeting the workforce shortage issue. These changes will benefit HCBS providers’ financial stability and ability to invest in the Direct Support Professional (DSP) workforce both in the short- and long-term. It will also require organizations to adjust the way they forecast revenue and the data they need to collect and report to the Minnesota Department of Human Services (DHS).

Competitive Workforce Factor

As previously reported in “What You Need To Know About Competitive Workforce Factor” (05/28/2019), a new Competitive Workforce Factor (CWF) of 4.7 percent has been added to the Disability Waiver Rate Setting system (DWRS). This policy, a key priority of ARRM and the Best Life Alliance, was crafted and passed by legislators with the explicit intention of supporting wage increases for DSPs. It’s important to keep this in mind as we walk through how CWF will work.

Calculation

System wide, the CWF will add an estimated $64.2 million to HCBS waiver revenue over the next four years, or an average 4 percent increase to service rates.

But wait…we said the CWF is 4.7 percent; why the difference? Because CWF is a component factor of the DWRS formula which applies only to direct staffing costs and not a flat rate increase.

Therefore, it will generate a different increase for each individual’s rate based on the specific direct staffing costs associated with that service agreement and the other factors which compose the overall rate. We won’t know all the specifics until DHS releases their guidance and updated frameworks, but providers should begin to evaluate the impact of the new factor to their bottom line, To estimate how much new revenue will be generated by the CWF, providers should:

1. Look at the direct staffing part of the appropriate DWRS framework worksheet for each individual client
2. Apply a 4.7% adjustment to the amounts for on-site and remote awake staff, excluding supervision, RN and LPN
3. Add the 4.7% adjustment amount (the CWF) to the framework daily rate
4. Multiply the CWF by the employee related expenses amount (currently 23.6 percent) and add this amount to the framework daily rate for the total estimated daily rate

Encumbrance, or lack thereof

Beyond understanding the business impact, why is it important for providers to start calculating this?

Remember how we said earlier that the intent of this provision was to support DSP wage increases?

• While the new legislation DOES NOT REQUIRE an encumbrance of any new revenue for DSP wages and benefits…
• It DOES REQUIRE providers to identify the additional revenues generated from the CWF and prepare a written distribution plan for them, which must then be available and accessible to all direct care staff for at least a year

DHS is also directed to provide an analysis of the CWF to the legislature every two years, and the department will certainly be tracking the comparison of revenue increases from CWF to changes in wages during that time (as will ARRM). The legislature will have to take further action to authorize future adjustments to the CWF.

To ensure your organization stays ahead of questions from legislators, DHS, and your staff, it will be important to complete these internal analyses. ARRM is developing a webinar for additional guidance this issue which will be free for members and tentatively scheduled for July 19. Watch for more details.

Timing

The CWF will not change any rates until at least January 1, 2020. After that date, two milestones must have occurred for the CWF to begin delivering increases to a service rate:

1. The federal Centers for Medicaid and Medicare Services must have approved the new DWRS changes, including the CWF
2. Individual clients must be off banded rates. For clients that were previously banded, this will occur their first service renewal after January 1, 2020

Because the timing of these two factors will vary, again we cannot say exactly when providers will begin to see revenue increases but still encourage all providers to begin analyzing what the impact will be once CWF goes into full effect.

 

Download the accompanying fact sheet on CWF

***Have more questions about CWF? Ask them below -- others might have the same question.