BILL ANALYSIS Ó SENATE COMMITTEE ON HUMAN SERVICES Senator McGuire, Chair 2015 - 2016 Regular Bill No: SB 1024 ----------------------------------------------------------------- |Author: |Hancock | ----------------------------------------------------------------- |----------+-----------------------+-----------+-----------------| |Version: |March 29, 2016 |Hearing |April 12, 2016 | | | |Date: | | |----------+-----------------------+-----------+-----------------| |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Taryn Smith | |: | | ----------------------------------------------------------------- Subject: Developmental services: supported employment SUMMARY This bill would require the Department of Developmental Services (DDS) to provide a clear financial incentive in order to encourage the development of and support for consumers in individual supported employment in integrated work settings. The bill would require the incentive to establish at least a 10% rate differential for individual supported employment services. The bill would authorize the department to adjust the rate for individual supported employment services to administer the incentive payment, as specified. The bill would also require the department to review the need for clarifying placement fees and bonus payments, as specified. ABSTRACT Existing law: 1) Establishes the Lanterman Developmental Disabilities Services Act, which declares California's responsibility for providing an array of services and supports to meet the needs of each person with developmental disabilities in the least restrictive environment, regardless of age or degree of disability, and to support their integration into the mainstream life of the community. (WIC 4500, et seq.) SB 1024 (Hancock) PageB of? 2) Establishes a system of nonprofit Regional Centers to provide fixed points of contact in the community for all persons with developmental disabilities and their families, to coordinate services and supports best suited to them throughout their lifetime. (WIC 4620) 3) Establishes an Individual Program Plan (IPP) and defines that planning process as the vehicle to ensure that services and supports are customized to meet the needs of consumers who are served by regional centers. (WIC 4512) 4) Establishes an individual habilitation services plan and specifies areas in which consumers must meet individual employment goals. (WIC 4853, WIC 4854) 5) Defines habilitation services as activities purchased for regional center consumers, including services provided under the Work Activity and Supported Employment programs to prepare and maintain consumers at their highest level of vocation functioning or to prepare them for referral to vocational rehabilitation services. (WIC 4851) 6) Requires a regional center to authorize appropriate services for a consumer while he or she is on a waiting list for services from the Department of Rehabilitation (DOR), as specified. (WIC 4855) 7) Establishes fees and hourly rates for service providers who work with consumers in various job development and support activities. (WIC 4860) 8) Establishes an Employment First Policy in California to prioritize opportunities for integrated, competitive employment for individuals with developmental disabilities, regardless of the severity of their disabilities, as specified. (WIC 4869) SB 1024 (Hancock) PageC of? 9) Establishes in federal law state reimbursements for achieving work outcomes for individuals with disabilities, as specified. (CFR 411.582) 10)States that individualized services may be provided on or off the jobsite; shall consist of job coaching and other supported employment services for regional center-funded consumers in a supported employment placement at a job coach-to-consumer ratio of one-to-one; shall decrease over time until stabilization in the employment is achieved; consumers in Supported Employment Programs receiving less than the minimum wage shall be paid according to productivity level on the basis of appropriately conducted productivity studies, as specified. [Title 17 CCR section 58830(e)(3)] 11) Defines stabilization to mean the consumer has reached the employment outcomes as specified in the Individualized Plan for Employment and IPP, the consumer has learned and maintained the job for a minimum of sixty (60) consecutive work days, and is expected to continue in the employment. Stabilization rates (the ratio of job coaching hours to the consumers work hours per month) for consumers receiving individualized services in supported employment require the following percentages of intervention be achieved: (A) 20% intervention or less for 60 days; or (B) 25% intervention or less for 90 days; or (C) 30% intervention or less for 120 days. (Title 17 CCR section 58801(e)(67) Special Session Legislation: Assembly Bill X2-1 makes a number of changes to the community-based developmental services system. While the rate changes provided in AB X2-1 take effect on July 1, 2016, the changes in law will take effect 91 days after special session ended, which is June 9, 2016. AB X2-1 makes the following changes that relate to supported employment in integrated work settings: 1) Requires the DDS to submit a rate study to the Legislature by March 1, 2019, addressing the sustainability, quality, and transparency of SB 1024 (Hancock) PageD of? community-based services for individuals with developmental disabilities. 2) Provides an 11.1% rate increase (from $30.82 to $34.24) for the supported employment program at DDS. 3) Provides a 7.5% rate increase for the purpose of enhancing wages and benefits for staff who spend a minimum of 75% of their time providing direct services to consumers. The actual percentage rate increase shall be determined based on a random sample of service providers in each service category eligible for the rate. DDS shall use this information to determine a rate increase, to be the same for eligible providers in each service category, which shall be based on the proportion of the rate that is for direct services in each category. 4) Provides for a 2.5% rate increase for administrative costs for regional centers and clients' rights advocates contracts. 5) Requires DDS to conduct a survey of all providers on how these rate increases were used by providers. This survey shall include, but not be limited to, the number of employees and their salary, wage, and benefit costs; percentage of time each employee spends providing direct services; administrative expenses; and additional information determined by the department. 6) Establishes a program to increase paid internship opportunities for individuals with developmental disabilities and to provide additional payments to supported employment services providers for initial placements, placements lasting a continuous six months, and placements lasting 12 consecutive months. Placements for this program must be into competitive, integrated work environments. This bill: 1) Makes a series of legislative findings and declarations regarding employment opportunities for individuals with disabilities. SB 1024 (Hancock) PageE of? 2) Declares legislative intent that, in enacting this act, both of the following occur: a) Consistent with California's Employment First Policy and the forthcoming federal Home- and Community-Based Services rules, incentivize individualized services to transition individuals with intellectual and developmental disabilities into competitive, integrated employment, and protect federal financial participation. b) Direct DDS to review the rate setting methodology for individual placement supported employment as a priority in the state's rate study that is required on or before March 1, 2019. 1) Requires DDS, to the extent funds are appropriated by the annual Budget Act or by Chapter 3 of the Second Extraordinary Session of the Statutes of 2016, to provide for a clear financial incentive in order to encourage the development of and support for consumers in individual supported employment in integrated work settings. The incentive shall establish at least a 10 percent rate differential for individual supported employment services. 2) Permits DDS to adjust the rate for individual placement supported employment services to administer the incentive payment, as specified. 3) Requires the department to consider a new rate setting methodology for employment and habilitation services as a priority to ensure consumers are offered choice and opportunity in community living under the provisions of the Lanterman Developmental Disabilities Services Act. 4) Requires the department to review the need for clarifying placement fees and bonus payments in the state's employment programs under the jurisdiction of both the DDS and the Department of Rehabilitation, as specified. SB 1024 (Hancock) PageF of? 5) Requires the department to report each year to the Legislature during the annual budget process regarding the number of people serviced and information concerning the priority consumers have about access to employment opportunities. The report shall also present relevant information regarding wages paid to these consumers, educational and skill development activities, and the relative poverty indicators linked to the service population served by the Lanterman Developmental Disabilities Services Act. FISCAL IMPACT This bill has not yet been analyzed by a fiscal committee. BACKGROUND AND DISCUSSION Purpose of the bill: California's Employment First Policy and the federal Workforce Innovation and Opportunity Act recognize that competitive, integrated employment is an essential component for individuals with intellectual and developmental disabilities to lead productive and meaningful lives, be a part of their communities, make friends and earn money to help improve their economic outcome and status. However, in 2012, only 12.4 percent of working age individuals with developmental disabilities (approximately 13,410 out of 108,000) reported any income at all. The majority of these individuals received income through work activity programs, with only 4,341 consumers receiving income through individualized services. According to the author, a key service for helping individuals with developmental disabilities to obtain and maintain competitive, integrated employment is individual placement supported employment, which consists of support by a job coach to an individual to help him or her adapt to the work environment and learn to perform the work. The author states that since 2008, when the supported employment rate was reduced by 10 percent, at least 500 fewer individuals with developmental disabilities are competitively employed. SB 1024 (Hancock) PageG of? According to the author, years of frozen rates and the fact that this is the only rate set in statute has had the unintended consequence of shutting this critical service out of fiscal relief in restorations for increased costs like sick leave and minimum wage increases. Until this year's funding in ABX2-1, this service has received no cost relief since 2006. ABX2-1 restored the rate for group and individual supported employment to the 2006 level and permits an additional adjustment pursuant to the wage and benefit and administrative cost increase contained in that bill. The author further states that the hourly rate for providers of individual placement supported employment for consumers with intellectual and developmental disabilities is not sufficient to ensure the availability of this service. As a result, fewer consumers have access to this critical service. California's rate for supported employment also lags behind other states nationally. New York, Oregon, Washington, and Arizona all have rates that exceed $56 per hour, which is more than 60 percent higher than California for the same services. Federal regulatory requirements specify that group supported employment can only be used for short-term development on an individual's path to competitive integrated employment. According to the author, the incentivized rate proposed in SB 1024 would allow providers to offer individual placement supported employment without enduring significant losses as a result of offering this service. The author states that this bill would provide a clear fiscal incentive to providers of individual supported employment by establishing at least a 10 percent rate differential for individual placement supported employment in an effort to increase the capacity of this service, protect federal financial participation, and allow the department to adjust the rate to effectuate this provision. The incentivized rate would be funded with existing appropriations. Regional Centers California's 21 nonprofit regional centers are part of a system of care for individuals with developmental disabilities overseen SB 1024 (Hancock) PageH of? by DDS. DDS is responsible for coordinating care and providing services for nearly 290,000 people who receive services and supports to live in their communities, as well as approximately 1,000 people who lived in developmental centers as of March 2016. Regional centers provide diagnosis and assessment of eligibility and case managers help to plan, access, coordinate and monitor the services and supports that are needed because of an individual's developmental disability. Services for consumers are determined through an individual program plan (IPP). Employment First Efforts AB 287 (Beall, Chapter 231, Statutes of 2009) required that the State Council on Developmental Disabilities establish a standing Employment First Committee to identify strategies, best practices, and incentives, and to develop an Employment First Policy. The goal of the policy was to increase the number of people with developmental disabilities who are employed in integrated work, self-employment, and microenterprises, and in the number earning wages at or above minimum wage. A subsequent report, released in 2011, found that 26.5 percent of working-age adults with developmental disabilities live below the federal poverty line compared with 13 percent of same-aged adults in the general population. Other findings included a need for additional supports for individuals to prepare for and maintain employment. That report, and a subsequent report in 2012, prompted a number of legislative efforts.<1> There are a variety of ways for consumers to be supported in a work environment. Typically, regional centers contract with employment services programs and providers to address the employment needs of individuals with developmental disabilities. Consumers are placed in jobs according to their individual skills, needs and choices, and provided support services on an individual bases or in a group. --------------------------- <1>http://www.scdd.ca.gov/res/docs/pdf/Employment_First/2012%20EF C%20Annual%20Report%20Jan%2016%202013.pdf SB 1024 (Hancock) PageI of? Work Activity Programs are employment services programs in a sheltered work environment for consumers who have acquired basic vocational and independent living skills. Consumers are paid at a daily per capita rate based on productivity. Supported Employment Programs are community-based rehabilitation programs that focus on helping consumers obtain, retain or maintain employment in integrated settings either individually or in groups, such as landscaping crews. Individual placement supported employment is a service that requires one job coach to one consumer. Group supported employment, has a 1:3 job coach to consumer ratio. Support is usually provided by a job coach who meets regularly with the individual on the job to help him or her learn the necessary skills and behaviors to work independently. As the individual gains mastery of the job, the support services are gradually phased out. For individual supported programs, providers are paid only for certain activities, such as one way transportation and time actually spent on the job, but not for time spent preparing the consumer for employment. For example, developing soft skills, like interview preparation, are not reimbursable. Consumers participating in individual supported employment often require more services than those in group programs, which make individual supports more expensive to operate. Providers say they are not reimbursed for the actual cost of the services. According to data from the State Council on Developmental Disabilities, the number of consumers participating in individual supported employment programs has fallen from a high of 5,065 in Fiscal Year 2008/09 to 4,373 in Fiscal Year 2014/15, a decrease of 692 consumers. ---------------------------------------------------------------- | | Supported Employment Programs | | | | | Fiscal Year | | | | | ---------------------------------------------------------------- SB 1024 (Hancock) PageJ of? |-------------+--------------------------+-----------------------| | | Consumers Participating | Consumers | | | in Individual Programs |Participating in Group | | | | Programs | |-------------+--------------------------+-----------------------| | 2005/06 | 4,842 | 4,548 | |-------------+--------------------------+-----------------------| | 2006/07 | 4,976 | 5,264 | |-------------+--------------------------+-----------------------| | 2007/08 | 5,004 | 5,623 | |-------------+--------------------------+-----------------------| | 2008/09 | 5,065 | 5,863 | |-------------+--------------------------+-----------------------| | 2009/10 | 4,841 | 5,903 | |-------------+--------------------------+-----------------------| | 2010/11 | 4,684 | 5,932 | |-------------+--------------------------+-----------------------| | 2011/12 | 4,505 | 5,425 | |-------------+--------------------------+-----------------------| | 2012/13 | 4,345 | 5,589 | |-------------+--------------------------+-----------------------| | 2013/14 | 4,341 | 5,729 | |-------------+--------------------------+-----------------------| | 2014/15 | 4,373 |5,912 | ---------------------------------------------------------------- According to DDS, as of May 2015, there were 188 vendors offering individual employment placements and 167 vendors offering group placements. It should be noted that most vendors provide both individual and group placements. Home and Community-Based Services Waiver Changes Centers for Medicare and Medicaid Services (CMS) regulations adopted in 2014 for Home and Community-Based Services (HCBS) will require programs to meet new criteria in order to qualify for federal financial participation. The purpose of the rule is to ensure that individuals receive services in settings that are integrated in and support full access to the greater community, including opportunities to seek employment and work in SB 1024 (Hancock) PageK of? competitive and integrated settings.<2> CMS requires states to submit their plans for changes to its service delivery system to comply with the final rule. California's Department of Health Care Services (DHCS) is coordinating the state's response, with input from DDS and other affected departments. On August 14, 2015, DHCS, submitted the Statewide Transition Plan for home and community-based settings to CMS for approval. The state is currently negotiating elements of its plan with CMS. The state must be in full compliance with the federal HCBS guidelines in order to receive federal funding by March 17, 2019. Related legislation: AB 287 (Beall, Chapter 231, Statutes of 2009) established an "Employment First" effort for the State to undertake, which has led to the State Council on Developmental Disabilities to put together an "Employment First" policy and several attempts to get that policy passed into law. AB 1041 (Chesbro, Chapter 677, Statutes of 2013) expanded the definition of competitive integrated employment and required regional centers to ensure that consumers, beginning at 16 years of age, are provided with information about options for integrated competitive employment and other services, including postsecondary education. SB 577 (Pavley, Chapter 431, Statutes of 2014) established a four-year pilot project to create and evaluate whether community-based vocational development services are determined to be a necessary step to achieve a supported employment outcome. The pilot has not been enacted. ABX2-1 (Thurmond, Chapter 3, Second Extraordinary of Session --------------------------- <2>https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By- Topics/Long-Term-Services-and-Supports/Home-and-Community-Based-S ervices/Home-and-Community-Based-Services.html SB 1024 (Hancock) PageL of? 2016) implemented targeted rate increases for the community based developmental services system. AB 1183 (Committee on Budget, Chapter 758, Statues of 2008) reduced from $34.24 to $30.82, the hourly rate for supported employment services, and decrease specified fees paid to providers upon intake, and retention of a consumer under the program. COMMENTS As previously discussed, ABX2-1 provides an 11.1% rate increase (from $30.82 to $34.24 per hour) for both individual and group supported employment programs. This restored the rates to the level in effect in 2006. ABX2-1 also allows for additional rate increase, which will be determined and established by the department by July 1, 2016. SB 1024 will require that services for individual supported employment in integrated work settings are paid at a rate that is at least 10% higher than the yet to be determined rate for group supported employment, pursuant to ABX2-1. According to the author, the incentivized rate would be funded with existing appropriations that have not yet been allocated. ABX2-1 also requires the department to establish guidelines and oversee a program that increases paid internship opportunities for individuals with developmental disabilities and to provide additional payments to supported employment services providers for initial placements, placements lasting a continuous six months, and placement lasting 12 consecutive months. Placements for this program must be into competitive, integrated work environments. Additionally, ABX2-1 requires DDS to submit a rate study to the Legislature on or before March 1, 2019. The study shall address the sustainability, quality, and transparency of community-based services for individuals with developmental disabilities. SB 1024 requires DDS to consider a new rate setting methodology for employment and habitation services as a priority; review the need to clarify placement fees and bonus payments; and report annually regarding the number of people served. SB 1024 also sates legislative intent that DDS review the rate setting SB 1024 (Hancock) PageM of? methodology for individual placement supported employment as a priority in the state's rate study that is required by ABX1-2 on or before March 1, 2019. Federal and state laws and regulations encourage and support individuals receiving services in settings that are integrated in and support full access to the greater community, including opportunities to seek employment and work in competitive and integrated settings. According to the author, in order to encourage providers to offer the individualized service, an incentivized rate is necessary and would increase the capacity of this service, protect federal financial participation, and allow the department to adjust the rate to effectuate this provision. POSITIONS Support: California Disabilities Services Association (Co-sponsor) State Council on Developmental Disabilities(Co-sponsor) Alliance Supporting People with Intellectual and Developmental Disabilities County of Alameda Futures Explored The Alliance Supporting People with Intellectual and Developemental Disabillities Oppose: None received. -- END -