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With the ongoing caregiver shortage, the Consumer Directed Personal Assistant Program (CDPAP) is a lifeline for elderly or disabled Medicaid beneficiaries to self-direct and manage their own homecare services by choosing family and friends to be their personal assistants (PAs). Currently, the New York State Department of Health (DOH) contracts with approximately 700 fiscal intermediaries (FIs) to handle payroll, benefits and onboarding for all PAs.

Changes to CDPAP’s Management and Reimbursements

As of August 1, 2024, CDPAP is under a new reimbursement methodology that severely alters the structure of how the DOH will reimburse FIs who administer the program. The new methodology is based on a per member per month (PMPM) three-tiered payment system with a split between direct care and administrative costs. Up until this change, Medicaid processed CDPAP reimbursements on a single hourly rate to include both administrative and direct care costs. Therefore, the new payment system conflicts with the previous Medicaid fee-for-service (FFS) payment model that FIs rely on for reimbursement.

While the program has expanded significantly, the state is concerned with ballooning costs, misuse and mismanagement. Every year within the state budget, the governor enacts new legislation to address these challenges and this year’s state budget is no exception. As a way to circumvent the legislative process, the DOH can also enact new regulations that do not have to be voted on by legislators.

In addition to the new PMPM payment change, a new law will reduce the number of FIs to a single FI with a limited number of subcontractors which will include only 1 of the eleven independent living centers and a few other existing FIs. The aim is to eliminate all the other operating FIs by April 1, 2025. Naturally, this has advocates in an uproar as the Department of Health (DOH) provides no guidelines as to how they will implement the change and what precautions will take place to protect ongoing services.

A Pending Lawsuit and PMPM Payment Ramifications

On July 22, 2024, a group of FIs along with the Consumer Directed Personal Assistance Association of New York State (CDPAANYS) filed a lawsuit against the DOH and Commissioner James McDonald for implementing a new set of regulations of how CDPAP reimbursements will be processed using the three-tiered PMPM methodology. While the DOH held closed-door meetings regarding the new regulations, the FIs were not invited to attend either the meeting on May 9, 2024 nor the one held on June 28, 2024. The only announcement came as an online Medicaid update on July 2, 2024. The lawsuit contends that the DOH went against its own set of requirements to propose new changes without giving time for public comment and review of existing rates and policies.

The new PMPM payment system is based upon the number of direct care hours a consumer is allocated in a given month and not the amount of hours used.The plaintiffs are seeking intervention by the court to stop the state’s alleged abuse of power requiring all FIs to adhere to these arbitrary new reimbursment rules. While the cuts are estimated to reduce Medicaid payments by $200 million, these new rules would inevitably prove unsustainable for the majority of FIs who provide payroll and administrative services for the program. FIs will struggle to adapt to the new rule adding additional financial strain, compromising their daily operations and causing widespread closures.

The three-tiered PMPM payment system is yet another attempt by the state to reduce costs and require FIs to show accountability and transparency by reducing opportunities for mismanagement and fraud. Accompanying the plan is also the requirement for greater financial reporting and compliance audits which will put an extra burden on FIs, especially the smaller ones. Larger FIs with more resources are better equipped to handle additional compliance costs and changes leading smaller FIs to consolidate resulting in less competition, less choice among consumers and ultimately putting at risk the level of quality care provided.

Opposition and Advocacy

Disability groups and others oppose the new PMPM payment methodology as they see it leading to a disruption of quality care and services to a vulnerable population. With no room for public debate and feedback, CDPAP participants are at risk of losing the care they currently self-direct with the assistants they hire, train and supervise, which are often family members or friends.

The Consumer Directed Personal Assistants Association (CDPAANYS) continues to be a major player in supporting the CDPAP program and works with lawmakers in Albany to ensure its longevity. CDPAANYS argues that while accountability is vital, new changes should be implemented carefully and not threaten or impact the effectiveness or accessibility of the program.

Future Outlook

The sustainability of CDPAP requires a careful balance of fiscal responsibility without compromising the high quality of care needed to protect the very people the program aims to serve. Implementing sweeping changes to the current system with the PMPM payment model and the move to a single state-wide FI will cause upheaval unless handled with thoughtful and detailed guidelines and procedures. While cost reductions, accountability, and transparency are necessary, so is maintaining a program that serves the disabled and the elderly with a vital service they need.