Kansas Health Institute | Information For Policy Makers. Health for Kansans.

TOPEKA — The system that helps more than 6,000 physically disabled Kansans across the state live in their own homes instead of long-term care facilities is undergoing sweeping changes that have been launched by the administration of Gov. Sam Brownback.

Administration officials say the shake-ups ultimately will result in a more efficient and accountable system with potential for helping more people.

But those who deliver the services at the local level through the state’s 12 regional independent living centers say they don’t see how those outcomes will be possible given the problems associated with implementing the changes.

They also complain that they are being asked to simultaneously deal with multiple initiatives, any one of which could be difficult to execute while coping with budget cuts unlike any they have experienced since the system began developing in 1978.

“They (Brownback officials) think they have all these great ideas, and they may be great ideas,” said Shannon Jones, executive director of the Statewide Independent Living Council of Kansas. “But they're flying at 40,000 feet, and when it comes to implementing (the changes) in the field they don't get it. They think because it’s a great idea it’s just going to magically work.”

Administration officials have acknowledged some of the centers' concerns and say they are working as quickly as possible to resolve them.

"I recognize that many aspects of providing supports and services for persons with disabilities is undergoing change," Secretary on Aging Shawn Sullivan told members of a House committee last week. "Change is often challenging."

So many changes, so fast

Directors at various centers for independent living told KHI News Service that they are operating with deficits or tapping financial reserves even as they reduce staff or trim services and plan for additional cutbacks.

“We’ve never been in the situation we’re in now in the 18 years I’ve been in business,” said Shari Coatney, executive director of SKIL, the state’s largest independent living center based in Parsons. “This is the most dramatic that I’ve ever seen. So many changes coming so fast with so little cooperation with the people actually delivering the services, based on the idealisms of the new folks in town.”

“Our financial projections are dire,” said Audrey Schremmer-Philip, executive director of 3Rivers, an independent living center in Wamego that serves people in 10 counties and American Indians on the Prairie Band Potawatomi Reservation. “We are currently running a deficit, utilizing agency savings to operate, while the management team and board try to determine the best plan of action. With extreme changes to how we will do business in the future, we are unclear if we should keep fully staffed … or reduce staff by a third and start a waiting list for services.”

With so many changes thrown at them at once, some of the center directors are convinced they are being punished by state officials for encouraging complaints to federal officials about the lack of services available for the disabled in potential violation of the Americans with Disabilities Act.

Last week, the state’s top welfare officials appeared before the House Health and Human Services Committee to answer charges that they had “retaliated” against the centers.

That allegation was made by Jones in a Jan. 26 email to center directors, a copy of which ended up in the hands of Rep. Brenda Landwehr, the Wichita Republican who heads the committee. Jones later told KHI News Service that the email was not intended for a wider audience and that “retaliation” was perhaps not the best word to have used.

“I was totally blindsided by that,” she said of Landwehr’s disclosure of the email.

“Those are serious charges. I thought they (administration officials) deserved an opportunity to respond to them,” Landwehr said of the hearing about the email, which featured testimony from Sullivan and Michael Donnelly, director of rehabilitation services at the Kansas Department of Social and Rehabilitation Services.

Also at the hearing was acting SRS Secretary Phyllis Gilmore, though she did not speak.

Not a conspiracy

The two men each offered detailed responses that refuted the claim of retaliation, and Donnelly talked about the charge at length in an hour-long follow-up interview with KHI News Service.

“Quite simply, it is wrong to state that the (changes) are parts of a conspiracy to retaliate against the statewide network of centers for independent living,” Sullivan told committee members.

Donnelly told KHI News Service that the changes were all aimed at improving the system and the centers’ business operations while providing more accountability to taxpayers.

“We believe these are organizations that provide a critical service to Kansans,” he said. “If our intention was to destroy the organizations (as some have claimed) we would have stopped giving them any money at all, and that hasn’t occurred. I think that’s evidence by itself that that’s not our intention.”

Donnelly said it was true the centers were facing unusual pressures as a result of the changes.

“I think we can all sympathize with the fact that it’s a lot of pressure hitting at once,” he said. “I don't necessarily disagree with that.”

But, he said, the fact that several major initiatives were hitting the centers more or less at the same time was a coincidence. Some of the changes now coming to fruition were set in motion two or three years ago and by a previous administration, he said.

“We haven't done any coordination of when this stuff hit or anything of the sort,” he said. “I think that's frankly blowing smoke."

Sullivan told the committee that “substantive changes always require fresh attitudes and significant effort to achieve,” but that the changes had “everything to do with creating a better Medicaid system … and nothing to do with retaliation.”

The pressures

Chief among the problems cited by center directors are the budget cuts ordered or sought by the administration.

For the coming fiscal year, the governor has proposed spending almost $119 million on services for the physically disabled provided through a Medicaid program waiver. That’s about $2 million less for the program than the state is projected to spend this year and would be about $16 million less than was actually spent in fiscal 2011.

If the Legislature supports the administration’s proposed decrease, it would follow a significant cut most of the centers began experiencing in November 2011. That came after the administration reduced the fees it was paying organizations that serve as billing agents for disabled people who “self-direct” the care they get from the people paid to help them in their homes.

The fee paid to the billing agencies was dropped to $115 per person per month. Center directors said their actual costs ranged from about $160 to $200 per person per month for the services but that they had reached agreement with SRS during the administration of Gov. Mark Parkinson to accept $140 per person per month. But after Brownback took office, the agency cut the rate to $115.

Administration officials have said the $115 should be enough, citing a cost study SRS commissioned from a Topeka accounting firm, Myers and Stauffer, which had done similar studies for other states.

Sullivan told committee members that with information from the study, the administration had determined providers needed $100 per member per month to cover administrative expenses, slightly more than the national average rate of $98.10 paid in similar financial management arrangements.

But center directors say the administration cut one of the few areas of their operations in which they were able to make money. The money from the so-called Financial Management Services (FMS) helped them cover the costs of independent living services or targeted case management or other costs not fully covered by Medicaid.

The rate reduction was expected to save the state an estimated $6.6 million this fiscal year, good for its bottom line. But center directors said the cut put their finances in a tailspin.

“We are no longer able to provide health and 401(k) benefits to attendants under the new reimbursement model,” Schremmer-Philip told KHI News Service.

The 3Rivers director said she served on the committee SRS put together as it studied the rate structure.

“The cost study was to determine current costs,” she said, “not to set a reimbursement rate.”

She said if the governor’s proposed budget for fiscal 2013 is approved, her agency could go from serving 800 people to serving about 90.

Coatney said SKIL, which co-employs about 2,000 attendant care workers and has southeast Kansas satellite offices in Chanute, Columbus, Fredonia, Independence, Pittsburg and Sedan, will need to cut workers and perhaps close some satellites if something isn’t done to change the administration’s current course with respect to the centers.

“We’re operating with deficits,” she said. “We’re hanging on, hoping that something will come about to make it able for us to continue delivering services. In reality, in 2013 we’re either looking at fewer centers or a dramatic decrease in the services we deliver.”

Electronic timekeeping

The administration is in the process of implementing a new electronic verification and monitoring (EVM) system for attendant care workers. It requires each worker to call in from a phone upon arrival and departure from a client’s home.

Officials say the new system, called KS Authenticare, ultimately will streamline administrative processes, improve accuracy in reporting and save the state money, perhaps as much as $8.6 million a year, according to the Kansas Department on Aging.

First Data, the contractor, began implementing the system in January but is behind schedule. Completion now is expected sometime next month.

Managers at the independent living centers say the system might be a good idea and that they helped write the state’s request for proposal when the system was shopped. But so far, they say, it has been an administrative headache for them. Many of the attendant care workers are themselves disabled and the new system is not fully accessible to those with disabilities, particularly some with hearing problems, directors said.

Sullivan in testimony to the House committee last week described the setbacks as “hiccups” of the sort to be expected when a new system is launched.

“First Data has shared that most issues reported have been related to user error,” Sullivan said. “Certain other issues, such as the difficulty by some workers with hearing the phone system’s recorded message and the possible use of additional languages … are being addressed by First Data. There have been no reports of any adverse impact on services provided to consumers or payments to providers related to the implementation of the KS AuthentiCare system.”

Jones said her group had earlier supported the timekeeping initiative but that part of the problems it now faces were due to the state hurrying to implement the new system statewide all at once.

“They never did a pilot study,” she said, “which is why we have all these delays that Secretary Sullivan calls hiccups. I just heard from some more directors this morning that when you try to pull up a customer’s file, it will pull up a customer from outside their region and show their Social Security number and Medicaid number, HIPPA violations to the moon. They didn’t think this out, and because of their unpreparedness at the administrative level it makes all the people in the field look not credible.”

Some directors said that until the new system is debugged and fully operational, it will cost them precious staff time and money because of duplicated efforts involved with maintaining two reporting systems simultaneously.

Others have said it has complicated third-party billings.

Deone Wilson, deputy director of the Resource Center for Independent Living in Osage City, said KS AuthentiCare “now requires up to 62 processing steps” to achieve what once took four steps.

She called it a “monitoring nightmare.”

Competitive bids

For years, the state’s independent living centers have shared in a state grant program that helps them defray expenses. The grant funds available for the coming year total $1.8 million, a combination of state and federal dollars.

In the past, the centers for independent living were required to respond to a competitive request for proposal (RFP) before organizing to provide services. But after that, their annual grants generally were routine and automatic if the necessary paperwork was submitted to state officials.

The Brownback administration this year is requiring the centers to compete for the grants, which means each that wishes to continue its grant funding must submit a new request for proposal form.

It’s not clear if any agencies other than the established centers for independent living will bid on providing services.

Federal regulations are fairly strict regarding the centers or other potential awardees. They must have a governing board and staff that is made up of at least 51 percent of individuals with disabilities. They must be a nonprofit with demonstrable capacity to provide services in the community they propose to serve.

Donnelly of SRS said the only people who participated in a recent pre-bid conference for the RFP were representatives of the existing centers. He also said any entity that hoped to qualify for the RFP “would have a pretty difficult hill to climb” if it weren’t already an existing center for independent living.

For center directors, the fact that there are no likely qualified competitors raises the question why the state chose to make the process competitive in the first place and why now. For them, they say, that just means more paperwork. And given the other issues they are dealing with it has contributed to the idea that they are being targeted by the administration.

Christine Owens, director of the Prairie Independent Living Resource Center in Hutchinson, said she had no idea who might compete against her center in the RFP process but that she was struggling to get the paperwork ready for the 5 p.m. Feb. 29 deadline.

“Our grants end June 30,” she said. “But they haven’t told us when they’re going to let us know whether we’ll be in business” after that.

Donnelly said the competitive bidding would bring additional accountability to the centers. He also said it was possible that some centers might compete against one another for territory with more efficient operations growing and some others scaling back.

Jones predicted that wouldn’t happen, though.

“We have a gentleman’s agreement among ourselves because we know we’re being attacked,” she said, that each center would only bid on its current service area. “We’re a pretty tight bunch. There’s no CIL (Centers for Independent Living) police, but for that amount of money I think people just want to stay in the areas they know they can serve.”

Audits

The administration has been conducting a series of audits that go beyond the standard Medicaid utilization reviews to which the independent living centers are accustomed.

According to a timeline given to the House committee by Donnelly, the impetus for this new round of audits essentially began in October 2008 after SRS officials reviewed the audit submitted to them by the now-defunct Center for Independent Living for Southwest Kansas. An internal SRS memo was drafted noting concerns that the audit indicated “signficant deficiencies” in the center’s “internal controls and financial presentation.”

In 2009, a similar SRS memo was prepared after a review of the audit submitted by the Center for Independent Living of Northeast Kansas (now called ABLE).

In 2010, SRS auditors turned up documentation troubles at Ability Resources Inc., a home health agency that was based in Burlington, and sought to recoup $1.7 million. The organization went out of business. They also found documentation problems at the southwest Kansas center. SRS recommended the state try to recoup more than $1.1 million from that center and it, too, closed its doors.

By then, SRS officials had concluded that all the centers for independent living should be audited.

Currently, the agency has completed final audits on ABLE, based in Atchison, and Whole Person, a center based in Kansas City, Mo., which has clients in Wyandotte and Johnson counties.

It has returned draft audits to five other centers for their responses and is expected to have issued draft audits to all the remaining centers by the end of February.

Donnelly said the audits, so far, have found similar issues at each of the centers: problems with documentation and poor internal controls on agency finances.

Center directors say with the exception of the southwest center, most of the problems turned up by SRS auditors have been minor issues such as illegible timesheets or a case manager not affixing a credential along with a signature on a form, the sorts of violations that Rep. Jim Ward, a Wichita Democrat, characterized as SRS “ticky tacking … not going for quality of care issues but throwing penalty flags.”

So far, the final audits and the drafts audits, according to those who have seen them, mostly fault the agencies for poor paperwork. But they also include demands for repayment. In at least once instance, the draft audits seek recoupments up to $2 million, according to center directors.

Christine Owens said the draft audit issued to her center in Hutchinson demanded a $1.7 million recoupment.

“Honestly, if we can't come to some kind of an understanding, we'll be gone,” she said, because there is no way the center could afford to pay the money back. “The thing that really is difficult to accept is they're not saying that services weren’t provided. They're saying on one item it took too long for us to file so we didn't have proper policies and procedures in place. A timesheet might not have had the year on one line, yet we had date stamped it and all the other dates were on there. Those were the kinds of things they found. They're not saying we didn't do it ... they just don't feel like we have the proper internal controls.”

Apart from the southwest Kansas center, even SRS officials have not suggested any significant fraud was turned up in the audits released so far. They wouldn’t comment on draft audits. And in the case of the southwest Kansas center, which administration officials have described as the most problematic, no criminal charges have been filed.

Donnelly said the audits should help the centers become better stewards of tax dollars.

“I would say there's probably not a business in the state of Kansas who can't improve how they do business, and this is a great opportunity for them (the centers) to learn and to do better,” Donnelly said of the audits. “I don't believe there's anyone intending to put these businesses out of business. But we do, as a state, need to be accountable for the dollars we have and use … and we expect the biggest bang for our bucks from our state programs. The people of Kansas deserve to be served, and that's what we want to see happen."

KanCare

The centers also are concerned about the administration’s Medicaid makover plan, called KanCare. The new program would use managed care companies to oversee home- and community-based Medicaid services previously left to organizations such as the centers.

Brownback officials have said they expect the managed care companies to work with current service providers, but the prospect of a new layer of management focused on cost cutting has raised concerns among center officials, who have said they could support the plan if the administration included in it provisions for eliminating the waiting list for services or if their budgets already weren't being reduced.

Currently, about 3,400 physically disabled persons are on the waiting list.

Brownback officials haven’t spelled out any specific plan for eliminating the waiting list. But they have said that through more efficient operation of Medicaid, they will be able to provide services to more people needing them.