BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 1024 (Hancock) - Developmental services: supported employment ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: March 29, 2016 |Policy Vote: HUMAN S. 4 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 2, 2016 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- 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 SB 1024 (Hancock) Page 1 of ? 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 SB 1024 (Hancock) Page 2 of ? 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 SB 1024 (Hancock) Page 3 of ? 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. -- END -- SB 1024 (Hancock) Page 4 of ?