Cost disparity could jeopardize federal funds for DDS facilities

Legislative researchers said Tuesday that Connecticut has more people with developmental disabilities living in state-run residential facilities than any other state except New York, at a cost up to 2.5 times the expense of contracting with private group homes for the service.

“I was struck by the public-private cost difference,” said Rep. T.R. Rowe, the Republican co-chairman of the Program Review and Investigations Committee, which heard the researchers’ report. “That’s striking.”

“It is not a long-term sustainable system,” said Rep. Mary Mushinsky, a Democrat on the committee.

The huge cost disparity may soon put the state at risk of losing millions in federal Medicaid reimbursements, the staff told the committee.

Not only does it cost more to run public facilities, according to the staff report, but private facilities run by non-profits have fewer deficiencies on average than the state homes.

There are almost 4,500 people with developmental disabilities living in 24-hour facilities in Connecticut, with one-quarter of them living at public facilities. The Department of Developmental Services in recent years has decided to restrict placing new clients in public facilities, which has helped gradually reduce the ratio. But many who testified on behalf of the non-profit community say that decline in the use of public facilities has been too slow.

Several people also testified in support of the public facilities, saying the high turnover of staff at private facilities and less robust services offered make places like the Southbury Training School, the largest state-run home, the best option for many people.

“There are limitations of what you can do in community based facilities,” Martha Dwyer, whose brother lives at Southbury. She said specialized services necessary for her brother are only available at very few places in Connecticut.

Mary Ellen Duffy, a researcher with PRI, said labor costs are the driving factor in the difference between public and private facility expenses. She told the committee that public sector employees are typically paid about 50 percent more.

“The current system is not equitable,” she said.

That discrepancy could be a major issue with federal funding, as the Centers for Medicare and Medicaid Services has recently issued more stringent requirements that states have a standard rate-setting system and provide consumer choices.

The state receives millions of dollars from CMS for both public and private developmental-living facilities each year, about $747.1 million in fiscal 2010.

“If CMS tries to pull the plug, well that would be a problem,” Rowe said.

Terrence W. Macy, the commissioner of DDS, said he is not worried that federal funding is in danger in the near future.

“I don’t believe CMS is in any rush to penalize any state,” he said. “I don’t think we’re in imminent danger.”

Duffy said it remains unclear how much time CMS will give states to comply with the new standards, but estimates it would “optimistically” take the state at least four years to reform the rate system enough to comply.

“CMS is telling us that disparity in what we are paying for them is too great,” she said.

Macy told the committee that even if CMS gives the state time to comply, the current system is broken.

“It is an unsustainable paradigm,” he said. “I strongly believe we need to build a new paradigm.”