As you are hopefully aware at this point, the 2023 legislative session outcomes included some pretty significant changes to the Disability Waiver Rate System (DWRS) component values and the schedule of updates, which will result in rate increases beginning in 2024. That's good news! Following is a digest of those changes. Read to the end to learn about new tools available to help you see the impacts for your organization.
The wage component values in the DWRS rate frameworks are set in statute, and are based on Standard Occupational Classification (SOC) codes, which are published annually by the federal Bureau of Labor Statistics (BLS). While specific SOC codes exist for some care workers, such as Registered Nurse (RN) and Licensed Practical Nurse (LPN), no code exists for the position we commonly refer to as Direct Support Professional (DSP). So the Legislature "made up" wage values for DSPs in the rate frameworks by creating formulas using combinations of SOC codes and including these in the original DWRS statute in 2013. They even created different DSP wages for different DWRS services. (If you are interested, you can see the 2022 formulas in MN Statute 256B.4914, Subd. 5a.) The 2023 Legislature updated 2 SOC codes to reflect the most recent federal data, and these changes impacted (increased) the DSP wage in both residential and employment exploration services, beginning on January 1, 2024.
While the DWRS statute had periodic wage updates built in from the beginning, the 2023 Legislature changed the timing and age of the data used to update the wage component values. The date of the next update was moved up from November 1, 2024 to January 1, 2024, and the version of the BLS data that will be used was moved up from data published in the spring of 2021 to data published in the spring of 2022. Also, the schedule of future SOC code updates was changed from every 2 years beginning on July 1, 2026, to every 2 years beginning on January 1, 2026, with BLS data that is available 1 year later than previously specified. These changes will also result in increases to rates.
The next change impacting rates has to do with inflationary adjustments. In the DWRS rate frameworks, the client programming and support, transportation, and program facility component values are subject to adjustments (usually increases) based on changes to the Consumer Price Index (CPI), which is published monthly by the BLS. The 2023 Legislature moved the date of the next adjustment up from November 1, 2024 to January 1, 2024, and changed the version of the data to be used from data available as of December 31, 2021 to December 31, 2022. And, similar to the SOC code updates, the schedule of future CPI updates was changed from every 2 years beginning on July 1, 2026, to every 2 years beginning on January 1, 2026, with data that is available 6 months later than previously specified. All of these changes will be phased in over 12 months, as authorizations renew.
The final wage-related change was to the Competitive Workforce Factor (CWF). The CWF was first introduced in 2020 and was designed to close the gap between the wage values for direct care in the DWRS, and average wages paid to employees in "comparable" occupations that had similar entry requirements. When the CWF was added to the rate frameworks and set at 4.7% 4 years ago, it was recognized that it did not completely close the gap, but was a significant first step. The original statute required DHS to analyze the CWF and report to the Legislature every 2 years, and make recommendations to update the CWF - with no requirement that the Legislature had to act on those recommendations. Since the introduction of the CWF, DHS has submitted 2 analytical reports, both of which showed the wage gap was larger than 4.7%. The statute limited any proposed increase to the CWF to 2 percentage points, so both reports recommended increasing the CWF to 6.7%, and that is what the 2023 Legislature finally did. Beginning January 1, 2024, and phasing in over 12 months as authorizations renew, the CWF will be 6.7%. The limit of 2% for future increases was also eliminated.
I'm sure all these changes seem very technical and complex. And you are probably wondering, "Isn't there an easy way to understand what these changes mean for my organization?" Well, the answer is, "Yes!" Your friends at ARRM have created worksheets for all DWRS services to allow you to model the new rates for each of the individuals you support. They can easily be downloaded from the DWRS page on our website. Look for the link called "2024 Rate Modeling Worksheets."
DHS generally releases the official rate framework worksheets in October for the following year, but they are sometimes delayed if substantial changes are made by the Legislature, and if federal approval is required. That is likely to be the case this year, but I hope that since there were no structural changes to the frameworks, just updates to values and timing, that federal approval will be swift and will not delay implementation of the changes.
If you have any questions about this information or the worksheets, contact me.
-Ken Bence, Director of Research, Analysis and Policy
P.S. If your organization operates ICFs, there were significant rate increases passed by the 2023 Legislature for those as well. We have also created a spreadsheet tool for modeling ICF rates that will go into effect for all ICF residents on January 1, 2024. It is available on request. Let me know if you would like me to send it to you.