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Lawsuit seeks to stem rate cuts for disability services

Ability Building Center, which serves 750 people, is one of the agencies affected by a planned 7 percent cut to rates paid through Minnesota’s Medicaid waiver program.
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Already facing staffing challenges, Linda Driessen said a planned 7 percent cut to rates paid through Minnesota’s Medicaid waiver program would hamper Bear Creek Services’ ability to provide needed support for the disabled residents in 13 of its 14 local properties.

"I truly feel the full 7 percent of this cut would decimate the system," said the Bear Creek executive director, who noted the Medicaid waivers can be used to provide services in residential homes with up to five occupants.

The waivers help thousands of vulnerable adults throughout the state pay for support services, such as transportation and caregiving, so they can continue to live and work in their local communities.

While estimates are still being calculated at Bear Creek Services, Driessen said the cuts, which are set to start on July 1, could result in a $400,000 reduction in the organization’s anticipated 2019 budget.

Legislation produced this year sought to counter the planned cuts, which were part of a federal move to standardize rates following earlier state increases. However, the latest planned state adjustment was part of a larger budget bill, which Gov. Mark Dayton vetoed when he opposed unrelated measures.


In hopes of stemming the impact of Dayton’s veto pen, the Association of Residential Resources in Minnesota and the Minnesota Organization for Habilitation and Rehabilitation filed a class-action lawsuit this week on behalf of organizations offering day and residential programs, as well as their clients.

The lawsuit seeks to force the state’s Department of Human Services to continue to fund waiver-supported services at previously announced rates.

Rich Pavek, executive director of Cedar Valley Services, as well as a member of the MOHR board, said few choices are available as cuts loom.

"We really didn’t have any alternative. With July 1 coming around the corner, we had to do something," he said, noting Cedar Valley Services would likely see an estimated $300,000 reduction in its planned annual budget for day programs in Austin, Albert Lea and Owatonna.

Rep. Tina Liebling, a member of the House’s Health and Human Services Finance Committee, said the funding’s inclusion in a larger bill and the governor’s veto were an unfortunate turn of events, especially since the rate adjustment appeared to have bipartisan support.

"Everyone knows this funding needs to be out there," the Rochester DFLer said.

Drew Henry, an ARRM spokesman, said providers are relying on that support to restore funding levels, but the lawsuit needs to be in place to provide the time for future legislative action.

For her part, Minnesota Human Services Commissioner Emily Piper said the agency will review the lawsuit but is taking steps required by existing federal regulation.


"DHS has initiated and supported numerous efforts focused on the needs and wants of people with disabilities and to create a more transparent, consistent and fair system statewide," she said in a prepared statement.

"We are required by the federal government to adjust some rates on July 1 to remove previous adjustments that were not based on cost data. This is part of a new rate-setting methodology for disability services that results in overall higher rates for providers than previous rate-setting methods."

Sen. Carla Nelson, R-Rochester, who sits on the Senate’s Health and Human Services Finance and Policy Committee, agreed with Liebling that the proposed legislative fix had broad support. Both said they support the lawsuit to delay the planned rate cut from taking place, which would allow time to take future action.

"I have no doubt that the next Legislature will address this issue," Nelson said.

Bruce Remme, executive director of Ability Building Center, said the action will be needed to ensure agencies like his can continue to care for clients. With 750 participants in the Rochester program, he said some referrals are already on hold due to the lack of staff.

"The 7 percent that was put into the funding mechanism in the last legislative cycle in 2017, that’s now being used, and we put it in our budgets to shore up our wages and benefits so we could attract the staff we need," he said, estimating the planned cuts would reduce ABC’s two-year budget by $600,000, if enacted.

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