Understanding the 1115 Waiver: How We Got Here and What We Really Need to Do Build a Stronger System for People with Developmental Disabilities

Note: This article comes to us from our New York City Chapter, AHRC New York City. This article is NOT about the nuts and bolts of the 1115 Waiver. It is about the situation we currently find ourselves  in, how we got here, and what we need to do to ensure that the people we are committed to serve continue to have the lives to which  they are entitled.

 Some History

Over the last more than thirty years, since the closing of the infamous Willowbrook State School, New York State OPWDD (then called OMRDD)  — working in partnership with families, individuals served and providers — built a system of services and supports for individuals with developmental disabilities that has surpassed any other system in the nation in its breadth and scope.

It was Medicaid (the federal, until now open-ended “entitlement” program which was established to assist states in the provision of health care and related services –selected by each state– to be provided to eligible needy persons) that in the 1970’s became the funding source for community residential development in New York beginning with ICF/MR’s. A decade later when Congress enacted the Home and Community-Based Medicaid Waiver program, becoming aware of substantial changes in how Medicaid dollars could be used to fund community-based services and truly allow the field to further the movement away from institutional care, New York State OPWDD became extremely adept at using the Medicaid program to create an array of long-term care community services to meet the needs of individuals with developmental disabilities. When establishing its Medicaid program New York State opted to not only provide the Mandated Services required for participation in the federal program, but also opted to offer Optional State Medicaid Services to all eligible Medicaid recipients. And New York State was willing and had the capacity to supply a high percentage of the requisite matching funds, 50% (as compared to the 30 – 40% match of most states.)

Deficit reduction packages in the 1990’s (all without major cuts in funding for programs serving low-income families and people with disabilities) changed the country’s fiscal situation from one of large deficits through the mid-90’s to one of large surpluses in the late 90’s. But there was a downturn in the early 2000’s with the country again facing enormous deficits and resulting deficit reduction efforts that this time focused on so-called entitlement spending, which included Medicaid. When President Obama took the reins two years ago, the economy was mired in astronomical deficits, relentlessly rising general health care costs, and states around the nation complaining of the enormous growth in Medicaid that was strangling their economies. The writing was on the wall as regards the changes in the Medicaid program that would be forthcoming.

Over the last twenty-five years, New York State OPWDD brought in sufficient Medicaid dollars through its developmental disabilities programs to fund the vast array of services for this population currently in existence, and to additionally add funds to the state’s general coffers. This has been a known fact for a long time, as has been the fact that people with developmental disabilities represent a relatively small percentage of Medicaid enrollees but use a large percentage of Medicaid dollars in New York. Nevertheless last year’s Poughkeepsie Journal Articles enumerating exactly how the federal Medicaid funds for individuals with developmental disabilities in New York were calculated — even though the federal Center on Medicaid Services (CMS) was aware of and had agreed on the formula – motivated a re-examination of New York State’s Medicaid situation.

The 1115 Waiver in New York State: How to Manage Care and Manage Costs?

At the current time, just like the federal economy, the New York State economy is in dire straits. Many other states struggling to deliver services and manage costs in this weak economy are, as is New York in its new 1115 Waiver, looking at managed care models as the new way to fund long-term services.

New York State’s OPWDD describes the 1115 Waiver as a way to make a good system even better with efficient financial resource distribution based on need and person centered care, greater access, choice, and flexibility. Although New York’s 1115 Waiver may be able to deliver on these offerings, the Waiver is ultimately and above all else about cutting costs and doing so through a managed care system using a model that includes all services in its capitation rate. It is important to truly understand that the perceived potential for savings is the key factor for instituting the new system. It is important in order to understand what is about to ensue and in order to truly protect the interests of people with developmental disabilities.

New York State and the states now entering the world of managed care for long term services are actually entering uncharted territory. The Kaiser Commission on Medicaid and the Uninsured issued a report last month (October 2011) entitled “Examining Medicaid Managed Long-Term Service and Support (MLTSS) Programs: Key Issues to Consider,” (www.kff.org/medicaid/8243.cfm). The report states that, “Relatively few states currently use capitated models to manage care for the elderly or individuals with disabilities, the populations most likely to require long-term service and supports (LTSS). Research to date indicates that relative to fee-for-service programs, MLTSS programs reduce the use of institutional services and increase access to home and community-based services, but there is little definitive evidence about whether the model saves money or how it affects outcomes for consumers.”

The Kaiser Commission report suggests that if MLTSS programs are to be successful, “… it is essential for states to have time, expertise, and financial resources to consult with stakeholders, shape programs, attend to administrative details, clarify expectations and monitor program operations so that they can strike the right balance between managing care and managing costs.” Although there has been some commentary suggesting that New York State’s OPWDD is moving too quickly to examine impact, they do appear to be trying to do what is enumerated above. Nevertheless many serious questions still remain and will undoubtedly be answered as we move forward. Hopefully needed direction will be arrived at through a process that will not only give lip-service to, but will truly include, input from the consumers who will be the recipients of LTSS and input from the community-based provider organizations that have earned consumer trust over the years and understand their strengths and needs.

Click here to read about “What We Really Need to Do to Build a Stronger System for People with Developmental Disabilities”

Shirley Berenstein
AHRC Director of Public Information