December 5, 1997

FUNDING FOR COMMUNITY SERVICES IN JEOPARDY!!!

In a letter, dated December 4, 1997, from Elizabeth C. Abbott, Regional Administrator, Region IX, Health Care Financing Administration (HCFA), U.S. Department of Health and Human Services to Kim Belshe, Director, California Department of Health Services, HCFA states that "Because of the severity of the deficiencies found in the review, HCFA will not entertain a request for renewal of this waiver", referring to California's application for renewal and expansion of the Medicaid Home and Community-Based Services waiver (HCBS) which provides approximately $250 million Federal funds to California for community services and supports to persons with developmental disabilities.

This action resulted from a monitoring review begun by HCFA on California's HCBS waiver program in June 1997. In the letter, HCFA states that "The results of our review show that the State is not in compliance with the statutory and regulatory requirements set forth to protect the health and welfare of waiver participants and to safeguard the integrity of Federal funds expended". With the letter, HCFA issued a draft report detailing its findings and recommendations; giving the State 30-days to respond to the draft and develop a plan to remedy the problems outlined. The report will not be public until the State has responded and its comments are included in the final report.

California's Medicaid HCBS waiver expired on September 30, 1997. It is currently on a temporary 90-day extension that expires December 29, 1997. HCFA states that it "does not wish to penalize individuals currently receiving waiver services", therefore will allow no more than two more temporary 90-day extensions. During this time, the State is "expected to demonstrate that it has established and implemented policies and procedures that conform with the statute and regulations" and "tangible results of any actions taken".

As part o the temporary extensions, HCFA imposed the following restrictions:

1. "HCFA will not approve any amendments to the waiver which increase the number of individuals services". Currently there are 35,105 persons served under the waiver, the State was proposing to expand it to cover to a total of 47,000 consumers.

2. "Effective immediately, HCFA will impose a freeze on new admissions to the waiver (emphasis added). California may continue to provide waiver services to individuals currently receiving them under this program, but Federal financial participation (FFP) will not be available for any new admissions to the program."

3. "California must comply with the actions, timetables, and deadlines set forth in the recommendations in the report."

According to HCFA "failure to adhere to these requirements, or to make progress toward protecting the health and welfare of the recipients of these waiver services, will result in immediate termination of the waiver."

In a press release issued on December 4, 1997, HCFA outlined the following "problems" found during its review:

1. "Enrollee health and welfare is at risk. Some enrollees' health and ability to function are markedly declining, mortality rates are of concern. Many centers operating under the waiver are unsanitary, lack appropriate supervision, fail to provide adequate nutrition, and employ staff who lack skills and training necessary to serve this population."

2. "Psychotropic drugs are being used improperly. Psychopharmacological medication are overly prescribed and improperly administered to patients who should not be receiving them at all. Individuals with mental illnesses are being enrolled at waiver sites, although the waiver does not include services to meet their needs." (Editors note: Without seeing the full report, it is unclear if this item recognizes that people with developmental disabilities can also have mental health needs, therefore they are appropriately served in the developmental services system, yet need mental health services.)

3. "Beneficiaries are not being allowed to choose. Enrollees are shifted without consent in and out of the waiver, which affects their services and rights, and churns enrollment in a way that maximizes federal reimbursements. This resulted in an $8.7 million overpayment in FY 1996 alone. Beneficiaries are being denied impartial complaint resolution and allegedly suffer reprisals when they complain."

The release outlined the following HCFA requirements:

1. "The state Medicaid agency (Department of Health Services) must reclaim authority. Scattered and inadequate oversight efforts by the State Department of Developmental Services, 21 regional centers, and numerous subcontractors, vendors and providers are not working."

2. "Rigorous monitoring of health and welfare must begin immediately. The state Medicaid agency must provide or closely oversee efforts to ensure that individuals receive high quality care and service from qualified personnel in safe and sanitary conditions."

3. " Participants who are primarily mentally ill must be moved to appropriate settings. The state must remove enrollees who are not receiving the care their mental illness requires to settings that provide the services these individuals need."

4. Beneficiaries must be allowed to choose. The state must revise procedures so individuals may choose among waiver services and institutional care. The state also should establish a complaint resolution process including independent review and privacy protections."

Finally, HCFA outlined the following actions:

1. "New enrollments are prohibited. No new individuals can be admitted to programs under the waiver until problems are corrected."

2. "The waiver will not be renewed. It expires Dec. 29, 1997. Up to two 90-day extensions will be granted so appropriate placements can be found for individuals being served in the waiver after consultation with those individuals and families."

3. "The state has 30 days to respond. It must lay out a plan detailing how it will fix problems."

4. "The federal government will work with the state. We will work with the state to develop a system so that needed home and community based services can be provided as originally intended."

While the official public report is not expected for 30-days, it is likely that more details on the HCFA review will become apparent before that time. Watch this page for updates on this issue.