BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1024 (Hancock) - Developmental services:  supported  
          employment
          
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          |Version: March 29, 2016         |Policy Vote: HUMAN S. 4 - 0     |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 2, 2016       |Consultant: Brendan McCarthy    |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  SB 1024 would require the Department of Developmental  
          Services to provide an incentive (of at least a 10% rate  
          differential) to encourage the provision of individual supported  
          employment services to regional center consumers.


          Fiscal  
          Impact:  
           Likely ongoing costs in the hundreds of thousand for the  
            regional centers to collect and report data to the Department  
            of Developmental Services and for the Department to analyze  
            that data and report to the Legislature (General Fund).

           Likely ongoing costs of about $2 million per year to provide a  
            rate increase for individual supported employment services  
            currently being provided to regional center consumers (80%  
            General Fund, 20% federal funds). About 4,300 individuals are  
            currently receiving individual supported employment services.  
            If the Department raises the current rate for supported  







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            employment services by 10% over the projected budget year  
            rate, the total annual cost will be about $2.1 million per  
            year.

           Likely ongoing costs in the hundreds of thousands per year to  
            provide individual supported employment services at the higher  
            rate to additional regional center consumers (General Fund and  
            federal funds). By raising the rate paid for individual  
            supported employment services, the bill may make it more  
            financially feasible for regional center vendors to offer  
            individual supported employment services to more regional  
            center consumers - either consumers who would otherwise  
            receive group supported employment services or consumers  
            receiving work activity services. It is likely that most  
            consumers newly receiving individual supported employment  
            services would shift from group supported employment services,  
            but it is possible that some consumers currently being served  
            by work activity programs could find competitive employment  
            with more individual supported employment services.

           Unknown annual savings due to consumers gaining and retaining  
            competitive employment (General Fund and federal funds). To  
            the extent that additional individual supported employment  
            services improves the employment prospects of regional center  
            consumers, it is possible that consumers will shift from more  
            expensive work activity programs to less expensive supported  
            employment programs (wherein consumers are employed in the  
            community, with ongoing assistance from regional center  
            vendors). It is important to note that regional centers spend,  
            on average, about $4,100 per consumer per year on individual  
            supported employment services, whereas the regional centers  
            spend on average $5,800 for work activity programs and $12,500  
            for group supported employment services. The extent of this  
            impact is difficult to predict and will be heavily influenced  
            by recent changes in federal regulations that are likely to  
            result in a reduction in the use of work activity programs.


          Background:  The Department of Developmental Services is responsible for  
          coordinating services and supports for about 250,000 people with  
          developmental disabilities. The vast majority of these people  
          are served by 21 regional centers, which are non-profit entities  
          that contract with the state. The regional centers, in turn,  
          contract with vendors to provide direct services to the  








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          developmentally disabled. Regional centers provide a variety of  
          services to consumers. Work activity programs provide consumers  
          the ability to work in a sheltered environment. Supported  
          employment programs provide services to consumers to prepare  
          them and support them in gaining and keeping employment in the  
          competitive labor market. Under current law, regional center  
          vendors are paid the same hourly rate to provide supported  
          employment services to individual consumers (i.e. one-on-one  
          training and support) or group supported employment services  
          (where multiple consumers are trained together). 

          The federal Centers for Medicare and Medicaid Services has  
          adopted revised program regulations for state Medicaid programs  
          that cover regional center consumers participating in the  
          state's Home and Community Based Services Waiver. Under the  
          changes, the state will be obligated to ensure that consumers  
          are integrated into the community, including having access to  
          work in competitive employment. The Department of Developmental  
          Services is in the process of developing a plan to bring its  
          waiver programs into compliance with the new federal  
          requirements.

          AB X2 1 (Thurmon, Statutes of 2016) raised a number of rates for  
          services provided through the regional center system, including  
          implementing an 11.1% rate increase for supported employment  
          services and a 7.5% increase for enhancing wages and benefits  
          for staff who spend most of their time providing direct services  
          to consumers. That bill also requires the Department to submit a  
          rate study to the Legislature by March 1, 2019.


          Proposed Law:  
            SB 1024 would require the Department of Developmental Services  
          to provide an incentive (of at least a 10% rate differential) to  
          encourage the provision of individual supported employment  
          services.
          Specific provisions of the bill would:
                 Require the Department to provide a clear financial  
               incentive to encourage the development of and support for  
               consumers in individual supported employment;
                 Require the incentive to establish at least a 10% rate  
               differential for individual supported employment services;
                 Authorize the Department to adjust the rate for  
               individual supported employment services to administer the  








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               incentive payment;
                 Require the Department to consider a new rate setting  
               methodology for employment and habilitation services a  
               priority;
                 Require the Department to collect data about regional  
               center consumers' access to employment and report annually  
               to the Legislature.


          



          Related  
          Legislation:
                 SB 577 (Pavley, Statutes of 2014) created a pilot  
               project to evaluate whether community based vocational  
               development services are necessary for supported  
               employment. That pilot project has not been implemented.
                 SB 1427 (Pavley) would require the Department of  
               Developmental Services to establish a Work Transition  
               Project to assist regional center consumers currently  
               placed in segregated work settings to transition to  
               competitive integrated employment. That bill will be heard  
               in this committee.


          Staff  
          Comments:  As noted above, the state is in the process of  
          planning for changes to the way that it provides services to  
          developmentally disabled individuals who are eligible for the  
          Home and Community Based Services Waiver. The intent of this  
          bill is in keeping with the new federal requirements for serving  
          individuals in an integrated manner with the larger community.  
          However, it is not yet clear how the requirements of this bill  
          will conform to the state's ultimate plan for compliance with  
          the new federal requirements.


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