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‘Real Lives’ contract with private firm raises questions

As part of a push toward so-called self-directed services for the developmentally disabled, the state has established a payment system for those services that has exclusively benefited a Boston-based consulting firm.

The Department of Developmental Services is paying Public Partnerships LLC (PPL) close to $1 million a year in fees to perform what appear to be primarily check-processing and basic accounting services in connection with three self-directed services programs, according to records obtained from the Department under a Public Records Law request and to online contracting information.  Those programs currently appear to serve less than 1,000 people in the DDS system.

In a written response to us, Marianne Meacham, the DDS general counsel, said it would be “inaccurate” to characterize PPL’s services as check processing and basic accounting, and maintained that “the functions performed by (PPL) far exceed” those services.

However, with the exception of requirements to elicit feedback from participants in one program and to handle customer service calls in another, the tasks or requirements listed in PPL’s contractual Scopes of Work for Fiscal Years 2014 and 2015 all appear to be check processing, accounting, or website management functions.  When we had previously asked DDS for records showing or describing “all services provided to DDS by PPL” for fiscal 2014 and 2015, the Department referred us to the contractual Scopes of Work for those fiscal years.

Moreover, there were significantly fewer requirements listed in those Scopes of Work than in a Request for Response (RFR) issued by DDS to prospective bidders for a contract in 2008 for “fiscal intermediary services” for two of the self-directed services programs. PPL was selected in response to that RFR process.

The requirements in the 2008 RFR included helping program participants manage individual budgets for care.  Individual budgets are a key feature of self-directed services.  That requirement, however, was not included in either the 2014 or 2015 Scopes of Work.

In addition, a third self-directed services program appears to have been added since 2008 to PPL’s contract, potentially increasing the company’s fees; yet it does not appear that PPL was required to bid to become the fiscal intermediary for that additional program.  It also does not appear that the addition of the new program to PPL’s Scope of Work resulted in a net increase in PPL’s work requirements.

According to information on file on the state Operational Services Division website at www.mass.gov/ufr, PPL has received administrative fees from DDS that grew from $529,435 in fiscal 2010 to $969,282 in fiscal 2014, an increase of over 80 percent.

Under the three self-directed programs, total state revenues processed by PPL increased by about 14 percent in that same time period. PPL processed about $14 million in state payments in Fiscal 2014, up from about $12.4 million in Fiscal 2010.

Meacham stated in her response that the contract with PPL incorporates all of the requirements in the original 2008 procurement solicitation. She did not address the apparent addition of the new self-directed services program to PPL’s contract without bidding.

Under self-directed or “person-centered” services, participants prepare “individual budgets” for care and services. Fiscal intermediaries are generally private firms that contract with the state to manage and direct payments from those individual budgets to service providers.

The stated goal of self-directed services is to give participants more choice and say in the care they receive.  In what appears to have been a key effort to expand those programs, the Legislature passed the ‘Real Lives’ law last year, which appears to formalize the self-directed services process.

We have raised concerns, however, about the level of oversight of self-directed programs and whether the Real Lives law, in particular, will put too much decision-making power over an individual’s funds into the hands of private companies.

Traditionally, DDS itself has paid providers of direct-care and other services, and has managed those services in accordance with each client’s care plan, known as an Individual Support Plan (ISP).  While ISPs still govern self-directed services provided in the DDS system, DDS appears to have given up at least some of its traditional control over the funding of those services.

Meacham’s response stated that the federal government has encouraged states to develop self-directed services programs, and requires that payments for those services be made by a private fiscal intermediaries.  In 2008, DDS issued an RFR for fiscal intermediary services for two self-directed services programs in Massachusetts: the Adult Participant-Directed Program (PDP) and the Child Autism Spectrum Disorder program (ASD).

Subsequently, a third program, as noted, was added to PPL’s contract: the DDS/Department of Elementary and Secondary Education (DDS/DESE) home-based care program for children.

PPL was awarded the contract for the first two programs in 2008, and the contract has been extended each year since then.  Fiscal 2016 may be the last year of the contract before it has to be re-bid through a new RFR.

Under PPL’s latest contractual Scope of Work for the three self-directed services programs for fiscal 2015, PPL is responsible for performing the following functions:

  • Processing and sending checks to providers of services to participants in the self-directed services programs.
  • Maintaining invoices which document expenditures.
  • Maintaining a list of those providers and processing CORI or criminal background checks of providers in the PDP and ASD programs.  The Scope of Work states that the DDS/DESE program is excepted from this process.
  • Measuring performance of the providers, although the Scope of Work does not specify how that is to be done. The Scope of work referred to an “Appendix A” regarding “the performance measurements and performance measurement process.” However, no such appendix exists, according to a DDS assistant general counsel, who stated to us in an email that the reference to an Appendix A was inadvertent.”
  • Eliciting feedback on the PDP program from participants through focus groups and a yearly satisfaction survey.
  • Handling what are called “Tier 1” customer service calls and inform families and providers about forms and website processes for the DDS/DESE program.
  • Training designated DDS staff on forms and processes for the DDS/DESE program.

The 2008 RFR, which resulted in the ongoing contract with PPL, includes requirements similar to those above, but also has what appears to be a much more extensive list of requirements for the fiscal intermediary.  Those additional requirements in the 2008 RFR include “maintaining” individual budgets for participants and “helping participants manage their individual budgets.”  This includes monitoring the participant’s spending and assuring that spending is only for approved services.

Other requirements in the 2008 RFR that do not appear in either the 2014 or 2015 contractual Scopes of Work for PPL include the following:

  • Protecting program participants from abuse and neglect.
  • Hiring service providers and developing their contracts.
  • Serving as liaison between participants, their service coordinators, and service providers.
  • Assisting providers in qualifying for waivers under the federal Medicaid program for Home and Community Based Services.
  • Managing a network of Support Brokers, who are also hired to help participants manage their individual budgets and services.
  • Tracking all complaints from participants and reporting quarterly on those complaints to DDS.

In her response, Meacham stated that PPL does track all complaints from participants and does take actions to protect participants from abuse and neglect, although she didn’t specify what those actions are.  She also said PPL manages workers compensation policies and withholds state and federal taxes on behalf of program participants who hire caregivers out of their individual budgets.

Whether or not PPL’s contractual requirements have been reduced, it is apparently legal to negotiate a state contract with the winning bidder on an RFP to reduce work requirements; but a state contracting  guidelines document states that those reductions must be minor in nature.

In her written response, Meacham also contended that it was not accurate to state that less than 1,000 people currently participate in the three self-directed service programs.  However, Meacham’s response stated only that “over 300 families were enrolled as participants” in the ASD program in the last two fiscal years; that the PDP program “serves over 500 individuals” per year, and that the DDS/DESE program “has remained at a low level due to individuals not electing self direction.”

According to DDS information forwarded in March from state Senator Jenifer Flanagan’s office, a total of 784 people were self-directing their services in the DDS system.  DDS was projecting that that number would double over the next four years to 1,568.

According to the PPL Scopes of Work for Fiscal 2014 and 2015, PPL gets paid under each of the three programs in different ways:

  1. PDP program: PPL receives a monthly fee of 6 percent of consumer’s total self-directed budget allocation.
  1. ASD program: PPL receives $131.25 per member per month.
  1. DDS/DESE program: PPL receives 8 percent of funds expended under the program.

In the final analysis, PPL may be charging DDS the market rate in fees for the services it performs under its contract. But payments of close to $1 million a year in fees to one firm to process payments under three relatively small programs raise questions for us about the value and price of these fiscal intermediary services.

We think the federal government should re-examine the amounts states such as Massachusetts are paying for fiscal intermediary services and should assess whether those services could be provided more cost-effectively in house.

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