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Requirements reduced for ‘Real Lives’ law contractor to DDS
Due to what appears to be an open-ended provision in a bid document in 2008, the Department of Developmental Services dropped contractual work requirements and yet increased administrative fee payments to a private firm to manage “self-directed services” for clients with developmental disabilities in Massachusetts.
Documents received by COFAR under a Public Records law request indicate that several key work requirements listed in the 2008 bid document for two self-directed services contracts were later dropped from those contracts with Public Partnerships, LLC (PPL). Yet, according to information available on an online state contract tracking site, PPL’s administrative fees under the contracts rose from $529,435 to $969,282 between fiscal 2010 and 2014 — an 83 percent increase.
PPL appears to play a major role in managing self-directed services programs around the country. Audited financial statements for the company disclose that PPL and a Colorado affiliate managed more than $1 billion in funding from state, county, and local public agencies for self-directed services in fiscal 2014.
PPL’s website states that the company has been managing self-directed services programs since 1999, and that it is now operating in 21 states and the District of Columbia. PPL is a subsidiary of Public Consulting Group, a Boston-based consulting firm, to which PPL pays millions of dollars in “management fees” each year, according to the audited financial statements.
Self-directed services are billed as an alternative to the traditional method under which public agencies provide services to developmentally disabled clients either directly or via contracts with providers. Under self-directed services, program clients reportedly plan their own services, manage their “individual budgets” for care, and hire support workers of their choosing.
While DDS has been operating self-directed services programs since the late 1990s, the Massachusetts Legislature authorized a major expansion of those programs last year with passage of the “Real Lives” law.
States are required by the federal government to hire private “fiscal intermediaries” to manage self-directed programs on behalf of program participants, according to DDS.
In Massachusetts, there appears to have been little competition in the selection process that led to the PPL contracts in 2008. PPL was one of only two firms that submitted proposals in response to a Request for Response (RFR) issued by DDS that year for fiscal intermediary services. The losing proposer was Non Profit Care Coordination, Inc., a Boston-based nonprofit with zero assets and less than $300,000 in revenues in 2014, according to Guidestar, a financial tracking service for nonprofits.
Federal requirements for fiscal intermediaries for self-directed services appear to be vague. COFAR has reported that PPL’s contracts in Massachusetts essentially require the firm to perform what appear to be check-processing and basic accounting services in connection with three self-directed services programs.
Contract amendments, signed the same year as the RFR was issued, state that PPL would not be required to carry out several services specified in the RFR. Those dropped services included hiring care workers under the self-directed service programs, performing reference checks on the care workers, and managing “support broker” services. Support brokers are employed by participants in self-directed services to help in managing their care.
It is also unclear whether PPL’s contracts require the company to help participants manage their “individual budgets” under the self-directed services programs. Helping participants manage their budgets had been a requirement in the RFR as well.
Meanwhile, a third self-directed services program was added since 2008 to PPL’s contracts, 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.
The three self-directed services programs for which PPL is currently contracted to act as fiscal intermediary in Massachusetts include an adult “Participant Directed Program,” an “Autism Waiver Program,” and a “Department of Elementary and Secondary Education Program.” The 2008 RFR had specified that the selected contractor would serve as the fiscal intermediary only for the first two programs.
State regulations prohibit the practice of dropping or adding substantial requirements or costs specified in an RFR; but that prohibition is waived under the regulations if the RFR authorizes such changes (801 CMR 21.07). An open-ended statement in the 2008 RFR appears to have provided that authorization to make major changes to the PPL contract.
The 2008 RFR stated the following:
During the life of these contracts, additional funding may become available; new individuals may enter the POS (Purchase of Services) funding system; existing resources may be reassigned; service needs of individuals funded from the contract may change; or service delivery costs of the provider may change. The contract(s) that result from the RFR may be amended to accommodate any of these needs, subject to the service delivery goals expressed in this RFR. (my emphasis)
In a May 4 letter to COFAR, Marianne Meacham, DDS general counsel, maintained that PPL’s contract requirements “far exceed” basic accounting functions, and that “the functions performed by PPL have expanded, not been reduced, since 2008.”
However, a contract amendment, dated June 15, 2008, explicitly deleted the work requirements noted above in the RFR, which was dated February 2008.
In a June 18, 2015,email to DDS Commissioner Elin Howe, COFAR asked for comment regarding the deletions of the requirements in the contract. As of September 22, no response was forthcoming from the Department to the email request.
In addition to the specified deletions from the RFR, the June 2008 contract amendment stated that PPL would not be required to provide the following services, which had been proposed in the firm’s response to the RFR. PPL’s RFR response was dated March 28, 2008:
- Support brokerage, network development and training for non-DMR staff
- Web-based directory of credentialed providers for ISO (adult) program
- Consumer online budget access
The final version of the Real Lives law dropped a number of provisions in earlier drafts of the legislation that appeared to unduly benefit corporate providers of DDS services. Nevertheless, COFAR continues to have concerns that the new law will transfer decision-making authority from guardians and family members of disabled individuals to private financial management companies.
‘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:
- PDP program: PPL receives a monthly fee of 6 percent of consumer’s total self-directed budget allocation.
- ASD program: PPL receives $131.25 per member per month.
- 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.
It’s time to stop playing budget games with the ‘Real Lives’ bill
Once again, proponents of the ‘Real Lives’ bill have attempted an end-run around the normal legislative process by inserting the measure into the state budget bill in the House.
As we’ve pointed out many times, while the Real Lives bill is intended to provide intellectually disabled persons with choice and “self-determination” in obtaining services from the Department of Developmental Services, it has been drafted with a number of provisions that have turned it into a vehicle to benefit DDS corporate providers.
Using the same tactic he employed last year, Rep. Tom Sannicandro, the perennial sponsor of the proposed legislation, inserted the measure into the Fiscal Year 2015 budget bill, which was debated last week in the House. Only this time, Sannicandro and the providers appear to have ignored a thoughtful re-draft of the bill by state Senator Michael Barrett that is reportedly due to be approved by the Children, Families, and Persons with Disabilities Committee any day now. In his redraft, Barrett, who is Senate chair of the Children and Families Committee, removed the overtly provider-friendly provisions from Sannicandro’s version.
Sannicandro seems to be continuing to file his version of the bill at the behest of the Association of Developmental Disabilities Providers (ADDP) and the Arc of Massachusetts, which don’t appear to like Barrett’s redraft. That appears to be because Barrett’s redraft includes a provision intended to prevent those organizations from benefiting financially from the legislation.
We’ve blogged many times about what we see as serious conflicts of interest posed by Sannicandro’s version of the bill, including the fact that it would put the Arc and ADDP on an advisory board created to help DDS develop the self-determination program, and would establish a “contingency fund” that would compensate providers financially when residential clients leave them for other providers (effectively paying them for not providing services). Barrett’s redraft not only removes the contingency fund as well as all references to the Arc and the ADDP from the bill, it states that more than 50 percent of the advisory board must be made up of individuals who are financially independent of any DDS provider.
Yet, the vote in favor of Sannicandro’s amendment in the House last Wednesday was unanimous. We can only hope that most of the 150 House members who voted for Sannicandro’s budget amendment were not aware of Sen. Barrett’s redraft. But certainly Sannicandro has known about Barrett’s redrafted version. After all, he was invited by Barrett’s staff earlier this year — just as we, the Arc and ADDP were — to comment on the redraft.
I talked on Tuesday to a member of Sannicandro’s legislative staff, who said he didn’t know what Sannicandro’s position is on Barrett’s redraft. The staff member, however, did maintain that passage of Sannicandro’s version of the bill as part of the budget would not necessarily “cut off” passage of Barrett’s version of the bill. But I didn’t receive a clear answer from the staff member as to why Sannicandro would file his version of the bill as a budget amendment if he is not opposed to Barrett’s version.
We hope Sannicandro’s version of the bill will not appear in the Senate budget as it did in the House. We don’t think any version of this complex bill should be decided as part of the budget debate. A staff member in Barrett’s office said this week that the Senate leadership is aware “we’ve (Barrett and his staff) worked hard on our redraft.” The staff member said they were not aware of anyone planning to file an amendment to the Senate budget similar to Sannicandro’s.
We have a number of concerns even with Barrett’s version of the Real Lives bill. But it’s a lot better than Sannicandro’s version, and it is, moreover, moving through the appropriate legislative process.
‘Real Lives’ bill proponents are abandoning the democratic process
It appears the supporters of the flawed ‘Real Lives’ bill are trying an end-run around the normal democratic process for getting bills enacted in the state Legislature.
Their latest strategy has been to insert the language of the proposed legislation into the state budget bill for the coming fiscal year via an amendment process that does not require any recorded votes or public hearings. The fate of the proposed legislation therefore will now be decided as part of the closed-door horse-trading that is going on among the six members of a House-Senate conference committee on the budget.
I’ve written before about our concerns with the Real Lives bill, which is intended to give clients of the Department of Developmental Services more choice in the services they receive. While we support the overall concept of the bill, our concerns about it center around provisions that we believe are primarily intended to benefit corporate providers to DDS. As we see it, one of those provisions will essentially compensate providers for not providing services.
The prime sponsor of the bill, Representative Tom Sannicandro, has tried without success in recent years to get the bill enacted through the normal legislative process. That process of course involves first referring the measure to the appropriate legislative committee (or committees).
The appropriate committee — in this case, the Children, Families, and Persons with Disabilities Committee — would then schedule the bill for a public hearing and vote the measure up or down. If approved by the committee, the measure would ultimately be voted up or down by the full membership of the House and Senate, whose votes on the measure would be recorded.
Last year, the Real Lives bill was passed by the House, but the Senate declined to take it up, so it died at the end of that session as a result. We first expressed our concerns about the provider-friendly provisions of the bill to Sannicandro during the debate on it last year.
Unfortunately, when Sannicandro re-introduced the bill (now H. 151) at the start of the current legislative session in January, he made no changes to it, despite our concerns. The corporate-friendly provisions were all still there.
The bill was duly referred on January 22 to the Children and Families Committee. To date, the committee has not scheduled the bill for a public hearing. I called the committee this week to ask why no public hearing had yet been scheduled and was told it was because Sannicandro had asked that a hearing on the bill not be scheduled because the language in the bill was being proposed as a budget amendment.
Sannicandro’s budget amendment was in fact adopted by the House during its budget deliberations in April, meaning the House leadership agreed to put the amendment in the “yes pile” of amendments approved as a bloc by an unrecorded voice vote on the House floor. However, an identical amendment was subsequently placed by Senate leaders in the “no pile,” meaning it got rejected in that chamber by a similar unrecorded voice vote. As a result, it’s now up to the conference committee to decide whether the Real Lives bill lives or dies.
We don’t think the “yes pile” and “no pile” process used in the House and the Senate for deciding budget amendments is a particularly good or democratic one. We understand the rationale for it is that it saves a lot of time taken up by debate on budgetary issues — something we understand used to occur in the distant past in the Massachusetts Legislature.
But while there may be a valid rationale for taking up budget-related amendments in blocs that are not subject to debate or recorded votes, we don’t think that rationale applies to something like the Real Lives bill. The Real Lives bill is intended to make far-reaching changes in the way services are delivered to people with developmental disabilities. It appears to be only marginally a budgetary measure, and that’s only because of the special fund it sets up to compensate providers for not providing services.
For that reason, we wrote to Sannicandro yesterday, urging him to prevail on the conference committee not to adopt his bill, but to let the measure take the normal, democratic course in the Children and Families Committee. We think that’s the right way to go on this important issue.
The ‘Real Lives’ bill hasn’t gotten any more real
Last year, we raised a number of questions and concerns about the “Real Lives” bill, which its supporters claim would give people with intellectual disabilities more choice in the services they receive.
The measure was passed by the state House last year, but died in the Senate. It has been reintroduced this year by its chief sponsor, Representative Tom Sannicandro.
Unfortunately, it doesn’t appear any substantive changes were made in this year’s version of the bill (HD 1379), which, once again, would give corporate service providers both unnecessary subsidy payments from the state and a disproportionate say in how the program is designed and run.
We also don’t believe the bill, as written, would accomplish its supporters’ intent, which is to “limit government intrusion into people’s lives and allow them to be more creative in how they design services to meet their needs.”
Aside from failing to adequately define many of the terms in the bill (as we previously pointed out about last year’s bill), the measure this year would appear to still leave it up to the Department of Developmental Services to make the key decisions about which services an individual would receive.
The bill would provide individuals with an “allocation of resources” to allow them to plan their own services and choose where they would live and who they would live with, according to the bill’s supporters. This planning process is referred to as “self-direction.” The Arc of Massachusetts, one of the bill’s key supporters, maintains that the legislation would “allow people with developmental disabilities…to use their money as they see fit…”
But the actual language of the bill states that “The Department (DDS) shall determine an individual’s prioritization for services and the amount allocated for an individual’s services…” (my emphasis). It sounds as though the individual’s amount of self-direction under the bill would be quite limited.
But our main reservation about this bill still centers around the potential benefits that the corporate providers would appear to get from it.
In a written response to our blog post last year, the Arc maintained that far from being the intended beneficiaries of the bill, the state-funded providers almost didn’t support the measure as originally drafted because it supposedly gave so much independent power to individuals and guardians.
Maybe, but as written now, the bill seems to be overly generous to the providers. For instance, it contains the same language as last year in establishing a “contingency fund” that would, among other things, “mitigate the impact to providers” if individuals were to choose to leave them for other providers.
This, in our view, amounts to a subsidy to the providers and has nothing to do with the stated purpose of the bill. The provision would essentially compensate providers for not providing services — sort of like paying farmers not to grow crops.
In addition, as was the case with last year’s version, the bill would create a “Self-Determination Advisory Board,” which would “evaluate and advise the Department on efforts to implement self-direction.” The legislation specifies that the Advisory Board would include providers, the Association of Developmental Disabilities Providers (the ADDP, which represents the providers), the Arc, “support brokers” (more about them in a minute), and a number of community-based advocacy organizations. No state employee unions or organizations such as ours with a different point of view would be included.
Also, this same provider-dominated Advisory Board would somehow “assist” DDS in developing the contingency fund, mentioned above, which would provide those subsidies to the providers.
And, if that weren’t enough, the contingency fund would be “comprised of 40% of the savings from the closure of Monson, Glavin and Templeton (developmental centers)….” In our view, this fund is being established on the backs of the residents who are being evicted from those facilities and being moved, in many cases, to provider-run residences.
No wonder the providers are supporting this legislation. But it doesn’t end there. Let’s go back to those support brokers, which are defined in the bill as persons who would “assist” individuals in developing their “person-centered plans” for services. A support broker would operate in conjunction with a “fiscal intermediary,” which the bill defines as “a financial management service…to assist an individual who self-directs in disbursing funds allocated to an individual.”
The employment of support brokers and fiscal intermediaries sounds like more business opportunities for corporate providers. In fact, one of the concerns we raised about it last year was that the support brokers sounded duplicative of the current function of state service coordinators. Service coordinators are state employees who already plan and monitor individualized services for people in the community system.
We remain concerned that the privatized support brokers and fiscal intermediaries established under the bill could take jobs away from service coordinators and other state employees who currently provide many of those same functions in carrying out DDS clients’ Individual Support Plans. This was reportedly a concern of the SEIU, a state employee union, which was engaged in negotiations over the bill last year. Unfortunately, it doesn’t appear the SEIU was very successful in those negotiations.
We understand, for instance, that there was a proposal or agreement at one point late last year to include explicit language in the bill about using service coordinators as support brokers, but this apparently didn’t happen. The current bill does state that “the support broker shall be made available through the Department or through a qualified private sector broker of the individual’s choice.” But that still doesn’t seem to us to guarantee any of this work for service coordinators or that DDS would necessarily even select state employees as support brokers.
Finally, the only substantive change from last year that we could find in the bill was a 90-day deadline to DDS to transfer someone who wants to leave their provider to “an available alternative.” Of course, this might hinge on whether the Department determines that an alternative is available.
We’re not saying this last provision isn’t worthwhile (although we disagree, of course, with subsidizing providers who lose any of those clients), but, in itself, we don’t think it justifies the bill. Why not make this 90-day provision a stand-alone bill?
In sum, it is disappointing to us that Representative Sannicandro, after talking to us and listening to our concerns last year, appears to have made little or no substantive changes to the bill. As such, we cannot support this bill as it stands so far. We would be happy to talk again with Rep. Sannicandro if he is open to our input on this measure.
We sent an email listing our continuing concerns this week to Rep. Sannicandro’s office. We’ll report on what we hear back.
COFAR blog 