The end of the year is always a busy time for ARRM and the providers we represent. While we are finalizing plans and our budget for the next year, working to schedule meetings with legislators to line up sponsors for our bills, and talking with coalition members and other stakeholders to align messaging, providers are also finalizing their budgets and making sure they understand any upcoming changes to service rates that will impact their organizations.
DWRS Rate Changes
The only change to DWRS rates for 2025 will be the overnight asleep wages for Community Residential Services and Family Residential Services. These overnight rates are based on the state’s minimum wage, which will increase to $11.13 on January 1, 2025. That means the CRS overnight wage will also be $11.13, and the FRS wage will be 36% of that, or $4.01. These changes will be rolled out through the year as service authorizations renew. Unfortunately, there is no provision in the DWRS statute to allow for different wage amounts to be paid in jurisdictions where local minimum wages are higher than the state minimum wage.
Watch DHS bulletins and ARRM emails to keep on top of when the new frameworks are published, which typically happens in December. ARRM will also release the 2025 unlocked rate frameworks in January, 2025.
The new component values for 2025 have been published and can be found here.
DWRS Compensation Thresholds
The compensation thresholds that were passed into law in 2023 will become effective on January 1, 2025. As a reminder, providers of DWRS services will be expected to spend at least 66% of DWRS revenue on direct care compensation (wages, taxes and benefits) in residential services, 45% in day services, and 60% in unit-based services. Providers will be evaluated against these thresholds using their cost report submissions beginning in 2025, so the first evaluation won’t be until late 2026. Here are some key points we have heard from DHS to keep in mind.
- All levels of staff that provide direct care, whether DSPs, case managers, supervisors, directors, executives, nurses, and even contractors, can be included as long as a percentage of the expenses incurred by the provider are allocated to direct care in the cost report
- Administrative employees that also provides direct care services as a portion of their working time can also be included, as long as that portion of the employee’s work can be allocated to the direct care cost categories.
- Non-wage compensation may include any additional benefits provided by the employer that can be used at the discretion of the staff on their own time. Examples that could count include tickets to sporting events used outside of work hours, gym memberships, child care funding assistance or student loan payment support. Examples that would not count include pizza parties or on-shift meals paid for by the employer because the employees would not have discretion in choosing that benefit or using it on their own time (Note: this is new language from DHS and we are working to better understand the reason for this distinction)
- Revenue received as a result of rate exceptions will count in the denominator, but only expenses that can be allocated to direct care compensation will be included in the numerator
- Remote monitoring technology (equipment, software, etc.) costs should not be included in what qualifies as compensation. While wages of remote workers would be included in the compensation, the costs of technology would not be included
- Each provider will only be evaluated once in the 5-year cost reporting cycle
- DHS has a webpage on the compensation thresholds here
- Questions should be directed to dhs.costreport@state.mn.us
Keep in mind that there are no financial penalties for providers that are found to not be in compliance with the thresholds. The consequence will be that the provider’s name will appear on a webpage somewhere.
Other Items of Note
You may recall communications earlier this year about the federal final rule on overtime, which increased the thresholds for determining exempt vs. non-exempt status. A federal court in Texas recently struck down the new rule in its entirety, which returned the thresholds to their previous levels.
The 2025 Minnesota legislative session begins on Monday, January 13. The House will be evenly divided between DFL and Republican representatives, and House committees will be lead by co-chairs from each party.
All of us at ARRM wish you, your families, and those you support a safe and happy Thanksgiving.
-Ken Bence, Director of Research, Analysis and Policy