Regional Variance Factor to be Updated in DWRS

By Ken Bence posted 05-24-2022 13:49


There have been a lot of moving parts to the Disability Waiver Rate System (DWRS) this year. As you may recall, changes made to the Home and Community Based Services (HCBS) waiver rate setting statute (256B.4914) in 2019 established a schedule for updating the wage values and inflationary adjustments going forward, beginning on July 1, 2022. But the 2021 Legislature passed a bill that moved the first updates up to January 1, 2022. (Don’t forget - an encumbrance report showing that at least 80% of this new revenue is due by December 31, 2022. See more information here.) Then, in early February of this year, DHS announced it was using its emergency powers to implement a temporary 5% rate increase on service dates from April 1 to June 30, 2022 to help address the ongoing worker shortage.

In addition to these rate adjustments, there were a number of proposals floated during the 2022 Legislative session that you may have heard about, that would have made further investments in rate adjustments. Unfortunately, the session ended this past Monday with no agreement on these new investments, so they will not be enacted. (There is still a faint glimmer of hope for a special session to pass some of the unfinished bills that may include some of these investments.)

However, there is one other adjustment scheduled to occur yet this year, that will have an impact on individual rate calculations, and that is the scheduled update of the Regional Variance Factor (RVF). According to MN Statute 256B.4914, Subd. 10(d), the RVF is to be adjusted every 6 years beginning on July 1, 2022. The RVF update is not considered a “rate adjustment” because the net effect across the DWRS system will be zero. The overall impact on a given provider should be small, but total waiver revenue could go up or down depending on the county(ies) in which the individuals they support reside. For a map and list of counties in each MSA, click here.

The DWRS rate frameworks include the RVF, which applies a multiplication factor to final rates, based on the county in which the individual resides. The multiplication factor represents the comparison of the region’s median wage to the statewide median. For counties where the regional median wage is lower than the statewide median, the factor will be less than one, and in counties where the regional median is greater than the statewide median, the factor will be greater than zero, just as it operates now. DHS has also created service bucket-level regional factors based on total spending for each service from 2018 to 2020. See the DHS bulletin, which includes links to further information, including the individual factors by region and service bucket.

DHS will update the DWRS frameworks before the July 1, 2022 effective date, and the new factors will be updated on a rolling basis over the next 12 months as service authorizations renew. The RVF will also apply to exception rates.

Contact DHS or me with any questions.

-Ken Bence, Director of Research, Analysis and Policy