Preliminary Results and Recommendations from the FMS Technical Assistance Project

1
Preliminary Results and Recommendations from the
FMS Technical Assistance Project

• Presented to
• Systems Transformation Task Team 2 Members and
• Invited Guests
• Presented by
• Susan A. Flanagan, Ph.D., M.P.H.
• The Westchester Consulting Group
• January 13, 2009

2
I. Overview of the FMS Technical Assistance
Project

• In August 2008, the Kansas Department of Social
  and Rehabilitation Services (SRS) executed a
  consulting contract with Susan Flanagan, Ph.D.,
  M.P.H. of the Westchester Consulting Group in
  Washington, DC to conduct the Financial
  Management Services (FMS) Technical Assistance
  Project associated with Task 2 of the States
  FY06 CMS Systems Transformation Grant.
• The components of the Project include
• Conducting an Environmental Scan of the Five
  Kansas Medicaid 1915 (c) HCBS waivers that offer
  self direction and the Medicaid Work Program
  related to implementation of Participant Employer
  Authority and related supports and the
  feasibility of implementing Participant Budget
  Authority in the future
• Reviewing CMS HCBS waiver rules, application,
  instructions and
• technical guidance
• Identifying promising practice state self
  direction program features related to Participant
  Employer Authority, FMS and Participant Budget
  Authority

3
I. Overview of the FMS Technical Assistance
Project (continued)

• Preparing a report that summarizes the (1) CMS
  requirements for Employer Authority, FMS and
  Participant Budget Authority, (2) the findings of
  the environmental scan, and provides (3)
  recommendations for enhancing Participant
  Employer Authority and the provision of FMS and
  for possibly implementing Participant Budget
  Authority in future Kansas Medicaid 1915 HCBS
  waiver renewals.
• This presentation will provide
• - An overview of Self Direction, Participant
  Employer and Budget
• Authorities, Supports Facilitating the
  Use of Self Direction (FMS and IA)
• and associated CMS requirements
• - A description of Project activities
• - A summary of preliminary finding from the
  Environmental Scan
• - A description of some promising practice state
  self direction program
• features related to Participant Employer
  Authority and Supports (FMS
• and IA) and
• - A summary of preliminary recommendations.

4
II. What Are Self-Directed Services?

• Participant/self direction of waiver services are
  defined by the Centers for Medicare and Medicaid
  (CMS) as
• When the waiver participant has authority to
  exercise decision-making
• authority over some or all of his/her waiver
  services and accepts the
• responsibility for managing all aspects of
  service delivery in accordance
• with the participant-centered service plan.
  Participant direction promotes
• personal choice and control over the
  delivery of waiver services including
• who provides the services and how they are
  delivered. When a waiver service
• is provider-managed, a provider selected by
  the participant carries out these
• responsibilities (CMS 1915(c)
  Instructions, Technical Guide Review Criteria,
• version 3.5).

5
II. What Are Self-Directed Services? (continued)

• National Institute on Consumer-directed Long-term
  Services at the National Council on the Aging
  defines consumer/self-direction as
• A philosophy and orientation to the delivery of
  HCB services whereby
• informed individuals assess their service
  needs, determine how and by
• whom these needs should be met, and monitor the
  quality of services
• received.
• Self-directed services are based on the belief
  that the person with the disability should be
  empowered to make decisions about the services
  they receive and the individuals who provide
  them, including having choice and control over
  the types of support services they receive and
  the who, what when and where of service delivery.
• Self-directed services emphasize that it is the
  individual - - as opposed to medical and social
  work professionals - - who know best about
  his/her needs and how to address them.

6
II. What Are Self-Directed Services? (continued)

• Self-directed services do not reflect one
  strategy. They reflect a continuum of approaches
  based on individuals and their representatives
  abilities and the level of autonomy and control
  they wish to exercise related to the support
  services they receive and the individuals who
  provide them.
• Although there is no single service delivery
  model that encompasses the entire range of
  self-directed services, in general, a service can
  be considered self-directed if the individual
  receiving the service or his/her representative
  is responsible for
• Recruiting and selecting/hiring his/her HCBS
  worker,
• Orienting and training his/her HCBS worker,
• Determining his/her HCBS workers duties and work
  schedule,
• Supervising his/her HCBS workers daily
  activities
• Managing his/her HCBS workers payroll (or have
  an entity to perform the payroll task (e.g.,
  Financial Management Service (FMS) Entity) on the
  individuals behalf),
• Reviewing performance of his/her HCBS worker, and
• Discharging his/her HCBS worker, when necessary.
• HCBS workers are referred to as personal
  assistance, aides, attendants,
• habilitation and/or support service workers and
  other titles.

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II. What Are Self-Directed Services? (continued)

• Over the past 20 years there has been a
  tremendous growth in interest and implementation
  in publicly-funded self determination and
  self-directed service programs for persons of all
  ages with disabilities and chronic conditions.
• A growing number of programs also allow
  participants to have a representative (family,
  friend, guardian) to assist them with the
  participant responsibilities of self direction.
• In 2002, CMS implemented the Independence Plus
  (IP) Initiative and released the IP waiver
  application template, provided the first formal
  guidance on how participant/self-directed
  services and supports were to be implemented
  within the 1915(c) and 1115 waivers, and what
  safeguards were to be implemented.
• Version 3.5 of the Medicaid 1915(c) Waiver
  application incorporates principal features of
  self/participant direction from the IP Initiative
  and Waiver Template.
• CMS continues to award the IP designation to
  recognize a state that provides all participants
  the opportunity to direct their services and
  makes available to them the full range of
  supports to use self/participant-directed
  services.

8
II. What Are Self-Directed Services? continued)

• The Deficit Reduction Act (DRA) of 2005
  (1915(j)) allowed states to include the
  self-directed personal assistance service option
  in their HCBS offerings. Specifically, the DRA of
  2005
• Permits states to offer participants the
  opportunity to direct the State Plan Personal
  Care (PC) option
• Permits states to develop State Plan
  self-directed service programs that provide not
  only the authority to recruit, train, supervise
  and dismiss HCBS workers, but also to purchase
  approved non traditional goods and services and
  to cash out all or part of their PC benefit to
  increase independence and/or decrease the need
  for human assistance and
• Recognizes explicitly the role of Financial
  Management Services (FMS) as a service that makes
  payments to providers, tracks costs and issues
  management reports to participants and state
  administrative staff.

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II. What Are Self-Directed Services?
(continued)

• Current knowledge on how best to implement
  self-directed services and supports comes from a
  body of research and evaluation projects and
  efforts of pioneering state programs over the
  past 20 years to refine and implement the self
  direction concept. These efforts include
• The National Cash and Counseling Demonstration
  and Evaluation Project (1995-2005) jointly-funded
  by the Robert Wood Johnson Foundation (RWJF) and
  the US DHHS/ Office of the Secretary for Planning
  and Evaluation (AR, FL NJ)
• The National Self-Determination for Persons with
  Developmental Disabilities Program, (1996-2001)
  also sponsored by RWJF (18 Grantee states
  including AZ, CT, FL, HI, IA, KS, MD, MA, MI, MN,
  NH, OH, OR, PA, TX, UT, VT, WI)
• The Florida Freedom Initiative, operated by the
  Florida Agency for Persons with Disabilities
  which implemented Freedom Accounts that can cover
  items such as home modifications
• Numerous pioneer state programs (CA, MA, MI, PA,
  WA State)

10
II. What Are Self-Directed Services?
(continued)

• A series of studies commissioned by US DHHS/OASPE
  to identify and examine the key features and
  challenges of successfully operating
  self-directed service programs including
• Sabatino, Charles, P. and Litvak, Simi (1992).
  Liability Issues Affecting Consumer-directed
  Personal Assistance Services, Report and
  Recommendations.
• Flanagan, Susan (1994). Consumer-Directed
  Attendant Services How States Address Tax, Legal
  and Quality Assurance Issues.
• Flanagan, Susan and Green, Pamela. (1997). Using
  ISO to Facilitate the Use of CD-PAS key
  Operational Issues for State Program
  Administrators.
• Doty, Pamela and Flanagan, Susan (2002).
  Highlights Inventory of Consumer-directed
  Support Programs.
• Flanagan, Susan (2004). Accessing Workers
  Compensation Insurance for Consumer-Employed
  Personal Assistance Service Workers Issues,
  Challenges and Promising Practices.
• Hughes, Sandra and Sabatino, Charles (2005).
  Addressing Liability Issues in Consumer-directed
  Personal Assistance Services (CD-PAS) The
  National Cash Counseling Demonstration.

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II. What Are Self-Directed Services?
(continued)

• The CMS web-based HCBS 1915(c) waiver
  application and instructions/technical assistance
  guide
• The 2004 National Cash Counseling Replication
  Project (2004-2008), sponsored by the RWJF,
  DHHS/OASPE and the Administration on Aging (AoA)
  replicating the cash counseling approach to
  self-directed care in AL, IA, KY, MI, MN, NM, PA,
  RI, VT, WA State, and WV and
• CMS FFY05 and FFY06 Systems Transformation
  Grants that are implementing Task 2 Increased
  Choice and Control Development/ Enhancement of
  Self-directed Service Delivery System.
• Three FFY05 Grantee States ME, NH and OR
• Five FFY06 Grantee States KS, MI, NC, NY
  and VA

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III. Incorporating Self Direction Into a HCBS
1915(c)Waiver

• According to CMS, incorporating participant
  direction into a waiver involves five
  interrelated dimensions. These include
• Participant Choice the waiver may be designed
  to exclusively serve individuals who want to
  direct some or all of their waiver services.
  When this is the case there is usually another
  waiver program that is available to individuals
  who dont want to direct their services.
  Alternatively, a waiver may permit participants
  to direct some or all of their services or opt to
  receive provider-managed services exclusively. A
  waiver also may specify participant direction
  opportunities limited to individuals who reside
  in designated types of living arrangements.
• Geographic Limitation the waiver may make
  participant direction opportunities available in
  some but not all geographic regions where the
  waiver is in effect.

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III. Incorporating Self Direction Into a HCBS
1915(c)Waiver (continued)

• Service Specifications each service under the
  waiver may be specified as provider-managed,
  self-directed or both.
• Participant Direction Opportunities there are
  two basic participant/self direction
  opportunities that may be made available through
  a waiver Participant Employer Authority and
  Participant Budget Authority. These
  opportunities may be used on combination to
  promote full-featured participant/self direction
  of waiver services and are not mutually
  exclusive.
• Supports for Participant Direction when a HCBS
  1915(c) waiver offers participant/self
  direction opportunities, two types of supports
  must be made available to facilitate individuals
  use of self-directed services Information and
  Assistance in Support of Participant Direction
  and Financial Management Services. These
  supports may be furnished as a waiver service or
  under another Medicaid payment authority
  (principally as a Medicaid administrative
  activity) (CMS 1915(c) Instructions, Technical
  Guide Review Criteria,
• version 3.5).

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IV. What are the Self Direction Opportunities
Approved by CMS?

• There are two participant/self direction
  opportunities approved by CMS for states to
  implement self-directed services
• Participant Employer Authority Under Employer
  Authority, the participant (with or without the
  assistance of a representative) exercises choice
  and control over workers who provide them with
  supports (i.e., personal care attendants). The
  principal defining characteristic of this
  authority is the participant functions as the
  employer of workers. The participant selects and
  supervises these workers directly. The
  participant can exercise employer authority
  either by being the common law employer (legally
  responsible) or co-employer (with another agency
  entity) of the worker.
• - When Participant Employer Authority is
  offered, it must apply to at least one
• waiver service.
• - The minimum supports that must be provided
  must include
• 1. Assist participants in verifying HCBS
  workers citizenship and legal alien
• status
• 2. Collect and process HCBS workers
  timesheets
• 3. Process payroll including the
  withholding, filing and depositing of Federal,
• state and locality-related
  employment-related taxes and insurance (CMS
• 1915(c) Instructions, Technical
  Guide Review Criteria, version 3.5).
• .

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IV. What are the Self Direction Opportunities
Approved by CMS? (continued)

• Under the common law employer approach, the
  participant is considered the
• the legally responsible employer of the
  HCBS workers s/he hires directly and is
• responsible and liable for performing all
  employer-related tasks, with the
• exception of using a Government or Vendor
  Fiscal/Employer Agent FMS. Activities include
• Recruiting and hiring HCBS workers,
• Specifying HCBS workers qualifications based on
  participants needs,
• Determining HCBS workers duties that are
  consistent with State service specifications
• Obtaining criminal history, background and/or
  reference checks,
• Scheduling HCBS workers,
• Supervising HCBS workers,
• Verifying time worked by HCBS workers and approve
  their timesheets,
• Determining staff wages and benefits subject to
  applicable State limits,
• Evaluating HCBS workers performance, and
• Dismissing HCBS workers.

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IV. What are the Self Direction Opportunities
Approved by CMS? (continued)

• Under the co-employer approach the agency
  provider and the participant are co or
  joint-employers of the HCBS workers whom the
  participant recruits and refers into the agency
  for hire and assignment back to the participant.
• The agency is the primary employer or employer of
  record of the participants HCBS worker for the
  purpose of human resource and payroll management
  and Medicaid provider requirements.
• The program participant is the secondary or
  managing employer of his/her HCBS worker
  performing or actively participating in
  recruiting, training, supervision and dismissal
  of their HCBS workers.
• It is important to note that under the
  joint-employer scenario, each party (agency and
  program participant) may have discrete duties and
  responsibilities related to the HCBS worker,
  however, both parties are equally liable for any
  employment related issues that may arise as a
  result of joint- employment.

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IV. What are the Self Direction Opportunities
Approved by CMS? (continued)

• Participant Budget Authority Under Budget
  Authority, the participant exercises
  decision-making authority and management
  responsibility for an participant-directed budget
  from which the participant authorizes the
  purchase of waiver goods and services that are
  authorized in the participants service plan.
  He/she also may be afforded the flexibility to
  shift funds among authorized services within the
  total amount of the budget without prior review
  and approval (however changes that affect the
  service plan must be documented). Participants
  must be afforded the opportunity to request a
  Fair Hearing when their request for a budget
  adjustment is denied or the amount of the budget
  is reduced (CMS 1915(c) Instructions, Technical
  Guide Review Criteria, version 3.5).
• - When Participant Budget Authority is offered,
  it must apply to at least one
• but usually two or more waiver services.
• - The minimum supports that must be provided
  must include
• 1. Maintain a separate account for
  participants budget funds,
• 2. Track and report disbursements and
  balances of participant funds,
• 3. Process and pay invoices for goods
  and services approved in the
• service plan and
• 4. Provide participant with periodic
  reports of expenditures and the status
• of participant directed budgets.

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IV. What are the Self Direction Opportunities
Approved by CMS? (continued)

• Appendix E Participant Direction of Services in
  CMSs HCBS 1915(c) Waiver Application is where
  states report whether or not it will offer
  self-directed service opportunities under their
  waivers.
• Appendix E-1, Overview. States must indicated
  which authority(s) they will be implement and how
  they will implement them.
• Appendix E-2 Opportunities for Participant
  Direction. For Participant Employer Authority
  the state must describe the (1) employer status
  of waiver participants (common law employer or
  co-employer) and the (2) participant
  decision-making authority. For Participant
  Budget Authority, the state must describe (1)
  participant decision-making authority, (2) how
  participants will be informed of their
  participant-directed budget, (3) how participants
  can exercise budget flexibility, and (4) the
  safeguards that have been established for the
  timely prevention of premature depletion of
  participant-directed and any potential service
  delivery problem associated with budget
  underutilization).
• From version 3.3 to 3.5, CMS made one change to
  Appendix E-2 requiring state to specify not only
  the types of agencies that serve as Agency with
  Choice FMS but also the State standards and
  qualifications for these entities and the
  safeguards the State has in place to ensure
  participants maintain control and oversight of
  the employee.

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V. What are Some Challenges/Issues Related to
Using Self-directed Services?

• Managing the employer-related tasks associated
  with self-directed services can be a challenge
  for individuals and their representatives.
• Initially, state program agencies and
  individuals/representatives tried to reduce the
  employer-related burden by classifying home-based
  service workers as independent contractors.
• However, the IRS has determined, in general, that
  home-based workers (e.g., support service
  workers) are employees and not independent
  contractors ( FY 2001 IRS National Taxpayer
  Advocate Report and IRS Notice 2003-70).
• Under IRS common law rules, anyone who performs
  services for an entity is the entitys employee
  if the entity can control what will be done and
  how it will be done even if the entity gives the
  employee freedom of action. What matters is that
  the entity has the right to direct and control
  the details of how the services are provided and
  the outcomes (IRS Publication 15A, 2008).
• CMS requires states offering Medicaid
  self-directed waiver services to provide supports
  to individuals in managing their self-directed
  services. These supports generally are referred
  to as self-directed supports (CMS 1915(c)
  Instructions, Technical Guide Review Criteria,
  version 3.5).
• .

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VI. What Are Self-directed Supports?

• Self-directed supports assist elders and
  individuals with disabilities and their
  representatives in using self-directed services
  and also can provide protections and safeguards
  for both participants/ representatives and state
  program agencies.
• Two types of self-directed supports are
• Financial Management Services (FMS) is defined by
  CMS as
• A service/function that assists the family
  or participant
• to (a) manage and direct the distribution
  of funds
• contained in the participant-directed
  budget (b) facilitate
• the employment of staff by the family
  or participant by
• performing as the participants agent
  such employer
• responsibilities as processing
  payroll, withholding and
• filing federal, state, and local
  taxes, and making tax
• payments to appropriate tax
  authorities and, (c)
• performing fiscal accounting and
  making expenditure
• reports to the participant and/or
  family and state
• authorities (CMS 1915(c)
  Instructions, Technical Guide
• Review Criteria, version 3.5).

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VI. What Are Self-directed Supports? (continued)

• Financial Management Services (FMS) is CMS
  umbrella term for fiscal supports. Three FMS
  models have been recognized by CMS.
• Government Fiscal/Employer (F/EA) Agent
• Vendor Fiscal/Employer (F/EA) Agent
• Agency with Choice Provider
• A 2001 Inventory of Self-directed Service
  Programs found the most popular FMS model with
  states at the time was the Vendor F/EA FMS
  followed by the Agency with Choice and Government
  F/EA FMS models. Since IRS now allows Government
  F/EA FMS to delegate agent tasks to a reporting
  agent or subagent (effective 2003), this model
  has gained in popularity with states.
• Using reporting agents and subagents has caused
  some problems in some states due to their lack of
  knowledge and experience related federal, state
  and local tax agencies requirements for
  Government F/EA FMS and household employers.
• It should be noted that a reporting agent has no
  liability for any unfulfilled federal tax
  obligations, including penalties and interest, in
  the eyes of the IRS.

22
VI. What Are Self-directed Supports? (continued)

• On the other hand, subagents, in the eyes of the
  IRS, are co-liable with the Government F/EA FMS
  and the individual/representative employer for
  any unfulfilled federal tax obligations,
  including penalties and interest but may not be
  liable for state or local tax obligations.
• So, it is important for Government and Vendor
  F/EA FMS to have effective contracts with
  subagents and reporting agents (as appropriate)
  they use that hold them accountable for any
  unfulfilled federal tax obligations as a result
  of errors and omissions they might make and be
  able to monitor these entities performance
  effectively.

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VI. What Are Self-directed Supports? (continued)

• Under the Government Fiscal/Employer Agent model,
  a state or local government entity may apply for
  and receive approval from the IRS to be an
  employer agent on behalf of individuals/representa
  tives performing all that is required of an
  employer for wages paid on their behalf and all
  that is required of the payer for requirements of
  back-up withholding, as applicable. It receives,
  disburses and tracks public funds on behalf of
  individuals assists with completing participant
  enrollment and worker employment forms and
  conducts criminal background checks of
  prospective workers and verify workers
  citizenship status. It also prepares and
  distributes workers payroll including
  withholding, filing and depositing of Federal and
  state income tax withholding and employment taxes
  and locality taxes and may process and pay vendor
  invoices for approved goods and services
  generate reports for state program agencies,
  Information Assistance (I A) providers and
  individuals/ representatives and broker workers
  compensation and other insurance, as required.
• A Government F/EA FMS operates under section 3504
  of the IRS code, IRS Rev. Proc. 80-4,1980-1 C.B.
  581 and as modified by IRS Proposed Notice
  2003-70 without being considered the common law
  employer of the participants workers.
• A Government F/EA may or may not choose to
  delegate employer agent tasks to a reporting or
  subagent in accordance with IRS Proposed Notice
  2003-70.
• Examples of promising practice states that use
  the Government F/EA FMS model include AZ and
  WVA.

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VI. What Are Self-directed Supports? (continued)

• Under the Vendor Fiscal/Employer Agent (F/EA)
  model, a private or public vendor entity may
  apply for and be approved by the IRS to act as an
  employer agent on behalf of individuals/representa
  tives and perform similar tasks as a Government
  F/EA.
• A Vendor F/EA FMS operates under section 3504 of
  the IRS code and IRS Rev. Proc. 70-6, 1970-1 C.B.
  420 without being considered the common law
  employer of the participants workers.
• In accordance with IRS Form 2678, Payer
  Appointment of Agent (May 2007 version of Form
  forward), a Vendor F/EA FMS may delegate agent
  tasks to a reporting agent.
• Under the Kansas WORK Program, participants are
  the common law employer of their personal care
  workers and the Program uses one Vendor
  Fiscal/Employer Agent (payroll agent -KATCO) to
  provide FMS to participants.
• When the common law/Government or Vendor F/EA
  approach is used by a state to implement
  self-directed services, CMS requires either the
  government program agency or the Government or
  Vendor F/EA (task delegated to F/EA by the
  program agency) must execute Medicaid provider
  agreement with each HCBS in order for the worker
  to provide services to a program participant.
• Examples of promising practice states that use
  the Vendor F/EA model include MA, NJ, PA and VA.

25
VI. What Are Self-directed Supports? (continued)

• Under the Agency with Choice model, a variety of
  types of agencies (e.g., centers for independent
  living, social service agencies, home health and
  area agencies for the aging or developmental
  disabilities, and organizations developed
  specifically to fulfill the role), provide
  services to individuals in a self-directed
  manner. The agency and the individual/representat
  ive enter into a co-employer arrangement (e.g.,
  agency typically is the primary employer
  (employer of record) for human resources,
  payroll, and Medicaid provider requirements and
  individual /representative acts as the secondary
  or managing employer for recruiting/ selecting
  workers and referring them to the agency for
  hire, participating in training workers and
  determining the terms and conditions of work,
  supervising workers activities and discharging
  them from the work site). The agency also may
  provide employer supports such as establishing
  and maintaining a worker registry, assisting
  with/providing emergency back-up staff, providing
  individual/representative and worker training and
  providing worker management supports when
  requested by the individual/representative.
• Agency with Choice providers do not act as a
  neutral bank for participants public funds
  since they are direct care service providers.
  Potential conflicts of interest and service
  steering may exist if these providers provide
  the banking function.
• Examples of promising practice states that use
  the Agency with Choice FMS model include ME, MT,
  and NH.

26
CMS Approved Financial Management Service (FMS)
Entities
27
VI. What Are Self-directed Supports? (continued)

• In the five Kansas Medicaid 1915(c) waivers that
  offer self-direction, the waiver documents
  indicate that the co-employer, Agency with Choice
  FMS option is being used. But FMS is not
  indicated as being provided in Appendix E h.
• In Kansas, Agency with Choice FMS is provided
  under the particular direct care waiver
  service(s) and the entity providing the service
  is called a payroll agent.
• FMS Reimbursement
• CMS has approved a variety of methods for
  determining reimbursement for FMS and
  acknowledgement that these policies are
  continually evaluated for their efficacy.
• Basic Transaction-based Reimbursement Method.
  The most basic reimbursement method is
  transaction-based. This approach closely links
  reimbursement for FMS services to the actual cost
  of providing services. Using this method, key FMS
  tasks are identified and their associated costs
  computed by program staff. Then program staff
  develop a fee schedule for each identified task
  and pay the FMS for transactions completed in
  accordance with the fee schedule. Some states
  have found the basic transaction-based F/EA
  payment system problematic, particularly when
  program enrollment is low (e.g., during the
  initial start-up period). This is because the
  total reimbursement provided for a small number
  of transactions often does not cover the FMS
  initial start-up expenses, costs of base level
  staffing, and/or other fixed costs.

28
VI. What Are Self-directed Supports? (continued)

• Modified Transaction-based (Per Member Per Month)
  Reimbursement Method. Another CMS-approved FMS
  reimbursement method, is to reimburse the FMS for
  services rendered as a function of
  transaction-based costs and anticipated service
  volume for a specific period or a modified
  transaction-based, per member per month (PMPM)
  rate.
• - Under a modified PMPM rate, a state costs out
  the FMS services by tasks
• and estimates the service volume for the
  rate period. This information is
• used to compute a total annual
  reimbursement amount to be paid to the
• FMS. Using that amount, the state then
  computes a per member per
• month (PMPM) FMS rate (e.g., MA for
  Vendor F/EA ME and MT for
• Agency with Choice).
• - Some states have further adapted the
  modified transaction-based PMPM
• reimbursement methodology by establishing
  a minimum monthly
• fee for the initial implementation period
  (i.e., up to a certain number of
• active participants) and then implement a
  PMPM rate after the initial
• enrollment target is met to address both
  the initial start-up period and
• ongoing FMS operations costs. This
  reimbursement strategy provides
• states with an incentive to efficiently
  enroll individuals with the FMS while
• ensuring it receives sufficient
  reimbursement for services rendered.

29
VI. What Are Self-directed Supports? (continued)

• - It should be noted that some participants
  have raised the issue of the
• equity of using a flat PMPM rate for FMS
  services when these services are
• paid, in whole or in part, from their
  individual budgets. For example, they
• ask Is it equitable to charge a
  participant who needs two payroll checks
• and one vendor payment processed in a
  month the same FMS fee as a
• participant who needs six payroll checks
  and two vendor payments
• processed in a month?
• - States need to balance administrative ease
  and cost effectiveness with
• equity concerns and participants costs
  when establishing payment
• methods for FMS services.
• - Some states have developed discrete
  payments for the
• completion of a one-time activity (i.e.,
  development of participant
• enrollment and worker employment packets,
  and a state-specific FMS
• Policies and Procedures Manual-NJ Personal
  Preference Program).
• These payments are in addition to the PMPM
  rate paid to the FMS for
• services delivered on an ongoing basis.

30
VI. What Are Self-directed Supports? (continued)

• Percent of Budget Reimbursement Method. Finally,
  some states use an FMS reimbursement method
  called the percent of budget method. This is
  when the FMS payment is based on a percent of
  total program budget.
• - This method is not approved by CMS because
  the payment does not
• reflect the costs associated with
  performing the FMS related tasks.
• Currently, CMS affords states that use Agency
  with Choice FMS the choice of reporting it as an
  FMS (reporting yes in E-1-h of the waiver
  application) and using the reimbursement methods
  described above (e.g., ME, MT, NH Nursing Home
  Transition Project, PA ODP) or using traditional
  Medicaid payment mechanisms (reporting no in
  E-1-h of the waiver application) (e.g., NH
  Medicaid State Plan PCA and PCSP HCBS waiver
  service, ME HCB Physically Disabled Program).
• - The five Kansas waiver programs that offer
  self-directed services
• reported no in E-1-h of the waiver
  application and reimburses payroll
• agent services using a traditional
  Medicaid payment mechanism.

31
VI. What Are Self-directed Supports? (continued)

• Monitoring the Quality of FMS
• When a state indicates that they provide FMS in
  their HCBS 1915(c),
• CMS requires they specify the methods used
  to
• Monitor and assess the performance of FMS
  entities including the
• integrity of the financial transactions they
  perform
• The entities responsible for the monitoring of
  FMS providers and
• How frequently FMS provider performance is
  assessed (CMS 1915(c)
• Instructions, Technical Guide
  Review Criteria, version 3.5, Appendix
• E-(i)(iv), Oversight of FMS
  Entities).
• Performance monitoring can include conducting
  reviews of entities readiness to perform as an
  FMS and/or periodic audits of FMS activities
  requiring that FMS entities conduct
  participant/representative satisfaction surveys
  and periodically reporting the results and other
  methods/procedures.

32
VI. What Are Self-directed Supports? (continued)

• In Appendix E, CMS is less specific about the
  monitoring requirements for Agency with Choice
  FMS provided by traditional service provider paid
  through traditional Medicaid payment mechanisms.
• In this case, a State must make sure the FMS are
  monitored in accordance with the requirements
  outlined in Appendix H through the States
  Quality Improvement Strategy (QIS). The
  components of a QIS include
• The measures and processes the state will use to
  determine that each waiver assurance is met
  during the period that the waiver is in effect
  (discovery)
• The measures and processes employed to correct
  identified problems (remediation)
• The roles and responsibilities of the parties
  involved in measuring performance and making
  improvements
• The processes employed to aggregate and analyze
  trends in the identification and remediation of
  problems,
• The processes employed to establish priorities,
  develop strategies for, and assess implementation
  of system improvements (system improvement)
• The process and timelines for compiling the
  information and communicating to waiver
  participants, families, service providers, other
  interested parties, and the public and
• The frequency and processes used to evaluate and
  revise the QIS.

33
VI. What Are Self-directed Supports? (continued)

• States need to make sure any monitoring protocol
  includes how well the Agency with Choice FMS
  embrace and apply the philosophy of self
  direction and the elements of participant choice
  and control in order for the Agency with Choice
  FMS to be effective.
• In version 3.5, CMS requires that when Agency
  with Choice FMS is used, states must describe the
  entities serving as co-employers (Agency with
  Choice FMS), the standards and qualifications
  that the State requires of such entities, and the
  safeguards in place to ensure that individuals
  maintain control and oversight of the employee
  (CMS 1915(c) Instructions, Technical Guide
  Review Criteria, version 3.5).

34
VI. What Are Self-directed Supports? (continued)

• Information and Assistance (IA) in Support of
  Self Direction
• In addition to FMS, participants must have access
  to information and assistance to support their
  direction of services. A states Medicaid HCBS
  1915(c) waiver must provide ensure that these
  services are available to participants, however,
  participants may elect whether to avail
  themselves of these supports and may determine
  the extent of support they need (within any
  limits established by the state).
• Supports available also depend on the extent of
  decision-making authority a participant elects to
  exercise.
• The type of IA that must be made available
  depends on the type of
• self direction opportunities available under the
  waiver and how they are defined in Appendix E-2
  and should be tailored to support participants
  using Employer Authority, Budget Authority or
  both as defined by a State.
• Federal financial participation in the cost of
  IA may be claimed as a waiver service, or as an
  administrative activity (CMS 1915(c)
  Instructions, Technical Guide Review Criteria,
  version 3.5).

35
VI. What Are Self-directed Supports? (continued)

• IA can be underwritten in three ways. They
  include
• Case Management Activity
• - I A can be an element of waiver case
  management.
• Waiver Service Coverage
• - IA may be offered as one or more distinct
  waiver services.
• - Freedom of choice among willing and qualified
  provider must be
• available to participants.
• - Some states use a variety of terms (e.g.,
  supports broker/brokerage,
• consultants, counselors, or personal agent
  services) for IA services.
• - Usually both FMS and IA must be covered
  as distinct services (e.g.
• NM Mi Via Program and NJ Personal
  Preference Program) (CMS
• 1915(c) Instructions, Technical Guide
  Review Criteria, version

36
VI. What Are Self-directed Supports? (continued)

• - An exception is Employer-Authority-re
  lated supports may be
• included as part of the scope of
  FMS. When this occurs, FMS
• providers may furnish IA when
  they meet applicable qualifications.
• However, participants may not be
  required to receive both FMS
• and IA from the same waiver
  service provider (e.g., NJ Personal
• Preference Program, WV Personal
  Options Program).
• Administrative Activity
• - IA supports can be provided as a
  Medicaid administrative activity,
• by Medicaid agency personnel or
  by one or more contracted
• entities.
• More than one payment authority may be used to
  provide IA (CMS 1915(c) Instructions, Technical
  Guide Review Criteria, version 3.5).
• The Kansas PD and FE waivers reported providing
  IA as waiver service coverage. The Childrens
  TA, TBI, and MR/DD waivers reported it being
  provided under case management, and the MR/DD
  waiver also reported it being provided by the
  CDDOs as an administrative activity.

37
VII. Issues To Consider When Implementing FMS

• Offering FMS as a Distinct Service or Included in
  the Direct Care Service
• Offering FMS as a distinct waiver service allows
  a state to develop specific qualifications and
  standards and a performance monitoring protocol
  for FMS to ensure that all participants have
  access to effective and efficient FMS that
  reflects the philosophy of self direction and
  individual choice and control.
• Offering Freedom of Choice of Provider or
  Limiting FMS the Number of FMS Providers
• Offering freedom of choice of FMS provider allows
  a state to claim Federal service match (6040 in
  KS) which often is greater than administrative
  match(5050 in KS).
• It provides participants/representatives with
  choice of FMS provider. However, it has been
  found since FMS (in particular Vendor F/EA FMS)
  is more of an administrative function, choice of
  FMS provider tends not as important as choice of
  IA or direct care service provider.
• Allowing any qualified and willing FMS provider
  means significant service monitoring that can
  ultimately cost more than the federal service
  match a State receives.

38
VII. Issues To Consider When Implementing FMS
(continued)

• FMS is complicated and having a limited number of
  FMS providers makes it easier for a state to
  monitor FMS performance effectively on an ongoing
  basis.
• Having a limited number of FMS providers can
  maximize efficiency (maximize service volume)
  resulting is a more effective cost per unit of
  FMS.
• Contracting for FMS
• Most states that contract for FMS through a
  Request for Proposal (RFP) or similar procurement
  process often limit the number of FMS providers.
• Contracting provides the State with the
  opportunity refine qualifications, standards and
  performance standards as they gain experience and
  change FMS providers and remove poor performers
  easier than through the Medicaid provider
  certification and de-certification processes.
• However, State procurement policy can make
  re-contracting with a known and valued FMS
  contractor uncertain and can possibly causing a
  disruption in FMS delivery.

39
VIII. Activities Associated with the FMS
Technical Assistance Project

• A number of activities were conducted as part of
  the FMS Technical Assistance Project.
• Environmental Scan of Five Kansas Medicaid
  1915(c) HCBS Waiver Programs That Offer Self
  Direction and the Work Program
• - Five Kansas Medicaid 1915(c) HCBS Waiver
  Programs included the (1)
• Physically Disabled, (2) Aging, (3)
  Mental Retardation Developmental
• Disabilities, (4) Traumatic Brian
  Injury, and (5) Childrens Technology
• Assistance.
• - The WORK Program, a State Plan Secretary
  Approved Benchmark
• Benefit Package authorized und the DRA of
  2005, is administered by the
• Kansas Health Policy Administration
  (KHPA). It employs the cash
• counseling model of self direction and
  provides an assessment, self-
• directed personal assistance, assistive
  technology and independent living
• skills counseling for individuals
  enrolled in the Kansas Working Healthy
• Program (Medicaid Buy-in Program).

40
VIII. Activities Associated with the FMS
Technical Assistance Project (continued)

• - Activities include
• 1. Conducting initial in-person interviews
  with the five waiver program managers
  and the manager of the WORK Program
• 2. Reviewing SRS, KDOA, and KHPA waiver
  applications, manuals and
• handbooks
• 3. Reviewing CMS HCBS waiver rules,
  application, instructions and
• technical guidance
• 4. Conducting in depth phone interviews
  with selected payroll agents
• regarding their operations
• 5. Developing and
  implementing a Waiver Program Manager Survey
• for each Program and
  analyzing the results

41
VIII. Activities Associated with the FMS
Technical Assistance Project (continued)

• 6. Preparing for and implementing a
  participant/representative and a
• payroll agent focus group in
  each SRS region (12 in total) and
• analyzing the results and
• 7. Developing and implementing a Payroll
  Agent Survey and analyzing
• the results.

42
IX. Promising Practice States

• Agency with Choice FMS Model
• Montana Big Sky Bonanza HCBS 1915(c) Waiver
  Program
• - Waiver effective 4/1/06 and currently serving
  16 participants (FE, PD).
• - Developed and implemented Agency with Choice
  FMS and IA as a
• Medicaid waiver service with associated
  qualifications and standards.
• In the process of further refining the
  FMS definition and associated
• certification qualifications and standards.
• - Developed and implemented separate rates for
  FMS, IA and HCBS worker wages and benefits
  reimbursement.
• - IA and FMS services can be provided by
  separate entities or an entity
• (IA or FMS) can provide both services.
• - A participant can use one entity for IA
  and another for FMS or use the
• same entity for both services.

43
IX. Promising Practice States (continued)

• - DPHHS offers freedom of choice of both IA
  and Agency with Choice
• FMS provider.
• - To be an Agency with Choice FMS in MT, the
  FMS must submit a self-
• reported readiness review demonstrating
  the entity meets the minimal
• requirements. This information can be
  verified through the annual
• quality assurance reviews done by the
  State.
• - If the FMS passes the readiness review, it
  receives training from DPHHS
• staff and completes the Medicaid provider
  certification process for FMS.
• - IA providers go through a similar training
  and Medicaid provider
• certification process.
• - The performance of IA FMS providers are
  monitored annually, and
• as needed by DPHHS field staff.
• - DPHHS has developed an agreement between the
  participant, FMS and
• IA when they select them. It can be
  two agreements if the participant

44
IX. Promising Practice States (continued)

• The Medicaid provider agreement executed between
  DPHHS and the Agency with Choice FMS differs from
  that used for traditional direct care service
  providers. It reflects the fact that the Agency
  with Choice FMS is a co-employer with the
  participant/representative-employer and performs
  the human resource paperwork and payroll
  functions and for monitoring the self-directed
  services provided in accordance with the tasks
  delegated to it by the States Quality Monitoring
  System.
• The Medicaid provider agreement implies that the
  Agency with Choice FMS is not a provider of
  direct care service, just the provider of FMS and
  direct care service monitoring.
• Key MT Department of Public Health and Human
  Services, Senior LTC Division contact person
• Robin Homan
• [phone]
• rhoman_at_mt.gov

45
IX. Promising Practice States (continued)

• Pennsylvania DPW/ Office of Developmental Program
  (ODP) Consolidated and Person/Family Directed
  Service Waiver Programs
• - ODP implemented both the Vendor F/EA and
  Agency with Choice FMS
• options for individuals enrolled in both
  waivers.
• - Implemented Agency with Choice FMS provider
  Bulletin 8/1/08. The two
• waivers serve approx. 1,000 participants
  with DD.
• - Agency with Choice is a distinct Medicaid
  waiver service and PA ODP
• offers freedom of choice of Agency with
  Choice FMS provider to
• waiver participants.
• - Agencies with choice FMS providers provide
  payroll and limited payment
• of goods and services and service
  monitoring.
• - ODP is collecting and analyzing cost data to
  establish standard per
• member, per month rates for Agency with
  Choice FMS administrative fee.

46
IX. Promising Practice States (continued)

• - Developed and implemented an Agency with
  Choice FMS provider
• bulletin that describes FMS policy,
  FMS and HCBS worker qualifications
• and standards, role and
  responsibilities of Agency with Choice FMS,
• waiver participants and their
  surrogates (representatives), supports
• coordination entities (IA), county/
  administrative entities, establishment
• of FMS administrative fee and HCBS
  worker wages, and process for
• monitoring the quality of direct care
  and FMS service provided.
• Developing an Agency with Choice Readiness Review
  Protocol,
• Developing an Ongoing Performance Review Protocol
  (using accuracy rates and confidence intervals to
  measure performance), and
• Developing a standard participant/representative
  satisfaction survey to be used by all Agency with
  Choice FMS providers.
• Key PA ODP contact person
• Jeannie Meinkrantz
• [phone]
• c-jmeikran_at_state.pa.us

47
IX. Promising Practice States (continued)

• Vendor Fiscal/Employer Agent FMS Model
• Massachusetts Medicaid Personal Care Attendant
  Program
• - Medicaid state plan PCA service using the
  Vendor F/EA FMS model (3
• entities) since 1999 and serves 16,000
  self-directing individuals (PD, FE,
• DD, medically fragile).
• - Issues an RFP and executes an administrative
  performance-based
• contract and a Medicaid provider
  agreement with each of the three
• Vendor F/EAs.
• - Limits freedom of choice of FMS provider (3)
  and receives federal
• administrative match.
• - Provides and reimburses Vendor F/EA FMS and
  IA (28 PCA agencies)
• separately.
• - Developed and administered an abbreviated FMS
  cost report to collect

48
IX. Promising Practice States (continued)

• Developed and performs F/EA performance reviews
  based on the
• requirements included in the contract and using
  accuracy rates and confidence intervals to
  measure/rate performance. Closed one F/EA FMS as
  a result of the review (3 now operating). They
  also conduct performance reviews of the PCA
  Agencies (I As).
• Vendor F/EAs and PCA Agencies (I As) are
  responsible for conducting an annual
  participant/surrogate satisfaction survey and
  reporting the results to MassHealth.
• MassHealth also conducts periodic reviews of
  Vendor F/EAs and PCA Agencies.
• Developed and implemented a personal care
  specific workers compensation insurance rate
  classification and affordable and
  administratively effective workers compensation
  insurance coverage
• for each participant.
• Key MassHealth contact person
• Lois Aldrich
• [phone]
• lois.aldrich_at_state.ma.us

49
IX. Promising Practice States (continued)

• New Jersey Personal Preference Program
• - One of the original Cash and Counseling states
  (1999).
• - Transitioned their 1115 waiver to a 1915(j)
  state plan service in 2008,
• - Contracts for Vendor F/EA FMS with 1 statewide
  FMS provider that also
• provides IA, restrict freedom of choice
  of provider and receives
• federal administrative match.
• - Serves 740 individuals (FE, PD).
• - FMS processes payroll and invoices for
  approved goods and
• services, manages participants budget
  funds, generates financial
• reports to the State and provides IA for
  participants.
• - Participants have individual spending plans
  and can determined HCBS
• worker wages and benefits.
• - F/EA and IA fees are separate and distinct
  from HCBS wages and
• hours.
• - Reimbursed the Vendor F/EA FMS a disc