In mid-December, DHS received approval from CMS to implement all the waiver amendments DHS had proposed, including the Competitive Workforce Factor (CWF) that the Legislature passed in the 2019 special session (MN Statute 256B.4914, Subd. 5(b-h)). As a reminder, the CWF, which went into effect on January 1, 2020 is a 4.7% adjustment to the direct care staff wage component of the Disability Waiver Rate System (DWRS). The addition of this new factor adds another layer of complication to the rate calculations upon service renewal for individuals on a disability waiver. For all new and renewing service authorizations that go into effect on or after January 1, the following changes will be applied:
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End of banding: all individuals who were on historic or banded rates since the implementation of the DWRS in 2014 will be on the framework rate calculated by the Rate Management System going forward
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Increase in state minimum wage: the wage component for asleep staff in residential settings will increase from $9.86 to $10.00 per hour due to the increase in the state’s minimum wage
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New Competitive Workforce Factor: As described above, this new factor adds a 4.7% adjustment to the hourly wage for awake direct care staff. This factor does not apply to asleep, supervisory, or nursing staff wages.
Another provision of the legislation that created the CWF was a new requirement for providers to “identify additional revenues from the competitive workforce factor and prepare a written distribution plan for the revenues,” which, by December 31, 2020, must be made “available and accessible to all direct care staff for a minimum of one calendar year.” The plan must also be submitted to DHS upon request. By design, there is no additional guidance in the statute as far as requirements for these distribution plans, because DHS and the legislature intended to provide a great deal of flexibility for providers. This high degree of flexibility, however, can also be confusing because providers don’t know if the plans they create will satisfy the expectations. Through our involvement with the DWRS Advisory Committee, ARRM has been working with DHS to establish some parameters to guide providers as they prepare their distribution plans. Information is still evolving, but here’s what we know at this point:
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There are two elements that must be part of each distribution plan:
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Providers shall identify additional revenues received from the CWF, isolated from any other rate changes due to the end of banding, changes in an individual’s units of service, or rate exceptions
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Providers shall identify whether additional revenues are used to support staff compensation (wages, benefits, etc.), and if so, how
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Providers may not actually realize a net increase in revenue when the other rate changes mentioned above are factored in, and if they are unable to make changes in staff compensation, that needs to be explained
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Changes to staff compensation can be implemented at any time based on business needs
DHS intends to issue official guidance later this year, most likely in the late spring or early summer. The DWRS Advisory Committee, which meets every other month on the odd-numbered months, will be a primary venue for stakeholder input
ARRM will continue to monitor and participate in the development of the official guidance. If you are interested in joining the next DWRS Advisory Committee meeting on March 19, contact Ken Bence for more information. Also, if you think your organization might need some help with isolating and calculating the revenue attributed to the CWF, see the information and pricing structure for customized consultations on ARRM’s Competitive Workforce Factor web page.
Other Scheduled Rate Adjustments
As if all the Competitive Workforce Factor information wasn’t enough, the Legislature also passed some other new language in 2019 that will impact rates calculated by DWRS in the future. Both the update to the base wage index (MN Statute 256B.4914, Subd. 5(i)) and the inflationary adjustment to certain component values based on the Consumer Price Index (MN Statute 256B.4914, Subd. 5(k)), which will take place on July 1, 2022, will now be based on data that is available from the Bureau of Labor Statistics “30 months and one day prior to the scheduled update,” rather than the most recently available data. That translates to data that was available on December 31, 2019 – which means we can calculate the adjustments now. So let’s break it down.
Base Wage Index Amounts
There are 25 staff types enumerated in the statute, each with a wage value based on formulas that involve standard occupational classification codes (SOC) from the Bureau of Labor Statistics. The staff types, along with their current and new wage component values, can be found here. In short, the updates will amount to an aggregate wage component increase of about 11.4%, effective July 1, 2022.
Inflationary Adjustments
The inflationary adjustments on July 1, 2022, based on the percentage change in the CPI-U since the date of the previous update on July 1, 2017, will apply only to the client programming and supports and transportation component values in the rate structure. In corporate and family residential services, these components are specific dollar amounts, while in day services, unit-based services without programming except respite, and unit-based services with programming, the client programming and supports component is a percentage of the sum of direct staffing costs, employee-related expenses and program supports. The transportation component values in day services, when applicable, are based on a schedule that reflects the type of vehicle, mileage traveled, and whether the rides are individual or shared.
The CPI-U information available from the Bureau of Labor Statistics on December 31, 2019 was from November, 2019 and reported an aggregate increase of 4.8% between July 1, 2017 and November 30, 2019. In residential services, the component values to which this adjustment applies amount to approximately 5% of the total daily rate, so in other words, about a 0.25% overall increase to a daily rate. In unit-based services, the impact will vary based on the mix of services used by each individual.
So, where did I lose you in this complex walk through rate adjustments that won’t even go into effect for 2 years, assuming the Legislature doesn’t change or repeal them in the meantime. Remember, if you need help, we have assistance available through our customized consultation service, as mentioned above.
--Ken Bence, Director of Research, Analysis and Policy