COFAR blog

Is it really more costly per resident to operate state-run congregate care centers, such as the Wrentham and Hogan centers, than to operate group homes for people with intellectual and developmental disabilities (I/DD)?

That is one of the key assumptions behind decisions by a succession of administrations in this and other states to close state-run Intermediate Care Facilities (ICFs) and move the residents into privatized Home and Community Based Services (HCBS) settings.

But a new cost analysis of ICF versus HCBS group home care in Massachusetts supports previous calls by COFAR to reexamine that assumption. The report, “Hidden in Plain Sight: The True Cost of I/DD Services in Massachusetts and the Case for Restoring Choice,” was produced by COFAR’s partner organization, The Saving Wrentham and Hogan Alliance (The Alliance).

The report makes the overall point that the community-based group home system incurs an estimated $1.3 billion in taxpayer costs each year that are not included in the Department of Developmental Services (DDS) $3.3 billion budget.

COFAR made similar critiques a number of years ago of cost-comparisons issued by the then Patrick administrations to justify decisions to close the former Fernald Developmental Center and three other ICFs.

Today, Wrentham and Hogan are the only two remaining ICFs in Massachusetts, and we are concerned that the Healey administration is letting those facilities die by attrition.

The cost justification for closing the ICFs has been based on comparisons of two line items in the state budget: 1) the community-based residential line item (5920-2000), and 2) the ICF or state facilities line item (5930-1000).  But while that analysis provides an accurate account of the cost of serving ICF residents, it is inaccurate as a basis for calculating the cost of serving clients in HCBS group homes.

As the Alliance report explains, ICF costs are bundled into a single rate, which is reflected in the ICF line item in the state budget each year. Those include staffing costs, clinical care, food, housing, and facility costs. All of those costs are included in the state-funded line item for Wrentham and Hogan. The full cost of care is visible in one place.

In contrast, the costs of serving people in group homes show up in several state and federal budgets, including MassHealth, Housing and Urban Development (HUD) subsidies and in SNAP benefits, in addition to the DDS community residential line item. So the argument by ICF opponents that those facilities are more expensive per client than group homes is flawed because only the DDS line item spending per resident is considered in each case.

The Alliance report points out that there are many areas in which spending on group homes occurs outside of the DDS community-based residential line item. A number of those “hidden costs” are calculated in the report, including the following:

• $411 million in day habilitation costs paid by MassHealth
• $385 million–$595 million in medical costs, and $28 million–$75 million in dental costs for adults with I/DD
• $53 million in SNAP benefits
• $33.6 million in transportation costs
• $750,000–$4.5 million in police response to group home crises

The Alliance also discussed a number of other structural reasons for higher-than-expected costs of residential care in HCBS settings, including the high salaries of the executives of corporate residential providers funded by DDS.

A 2022 COFAR survey found that between Fiscal Years 2012 and 2020, total compensation of CEOs, executive directors, and other corporate provider executives in Massachusetts rose from $102.4 million to $125.5 million. That is a 23% increase. Also, the survey found that the average compensation paid per executive rose from approximately $161,000 to $184,000 — a 14% increase.

The Alliance report also found that the HCBS system shifts costs for clinical, medical, and police behavioral responses to cities and towns. HCBS providers are not required to have on-site nursing or medical staff, behavioral crisis responders, or emergency response staff, all of which are provided by ICFs. Instead, the HCBS system relies on calling 911 and on local police, EMS and emergency rooms in hospitals and clinics.

This is why it is misleading to compare the ICF line item with the line item for group homes and divide by the number of residents. A valid comparison must include all major service components, including day habilitation and other supports funded outside the DDS community-based residential line item.

Comparing the DDS ICF budget to multiple budgets that affect group homes leads to the misleading conclusion that the cost of ICF care is higher per resident than group home care, when that isn’t necessarily the case. The Alliance report doesn’t dismiss the ICF costs; rather it says many group home costs are hidden in other budgets, which makes those costs less transparent.

Apples-to-apples cost comparisons are needed

The hidden costs that the Alliance report calculates, some of which COFAR has reported as well, may not prove ICFs are less expensive than HCBS group homes on a per-resident basis, but they effectively rebut the claim that closing ICFs saves money.  Without a comprehensive, apples-to-apples analysis, claims of cost savings from closing ICFs are not adequately supported.

The Alliance report makes the reasonable and sensible recommendations to:

• Increase transparency across all funding streams supporting I/DD services, including MassHealth, SSA, HUD, USDA, municipal budgets, and development finance agencies.

• Restore access to state-operated ICF care as a choice for individuals with severe and profound disabilities. COFAR is proposing language in the Fiscal Year 2027 state budget stating that persons found to be eligible for ICF-level care have a right to that care in Massachusetts.

• Reinvest public funds to improve direct care wages, reduce turnover, and strengthen clinical supports.

• Conduct independent audits of HCBS provider finances, real estate holdings, and service delivery practices.

The report correctly concludes that:

Massachusetts’ I/DD service system is far more costly and fragmented than the public budget suggests. By acknowledging hidden costs, restoring balanced service options, and strengthening oversight, the commonwealth can better serve individuals with I/DD, support families, and ensure responsible stewardship of taxpayer dollars.

The Alliance report provides important new data rebutting the argument that state-run, ICF-level care is necessarily more expensive than privatized care.