New York Bills Medicaid $5,000 A Day To Keep A Kid In Foster Care

What makes this testimony so important is the fact that New York was known for years to over bill Medicaid.  Coined so well in the article below is New York's philosophy of "If it moves, bill Medicaid."

What makes this issue so perverse is that this is the end result of many youth in foster care.  Mental illness and developmental disabilities, whether a result of nature or nurture, is typically for children and youth, referred out for services through foster care programs.

Children aging out the system will typically spend their lives in foster care never having their mental or developmental issues addressed, transitioning many into these high priced, long term facilities that still believe it is better to hide away from society that which will bring the most profit.  As the residents do not have a voice to comment or even complain on the services provided, the State of New York, as well as many other states, will maximize revenue off the backs of the most vulnerable.

Even though the article following the Congressional testimony is a dated 2010, it foreshadows the wake of societal reform.  Instead of offering pennies in assistance to in-home and community caregivers, we prefer to pay $5,000 a day to pretend the state is doing such a great job with kids.

As you read this testimony, complete with graphics, keep in mind that nothing to date has been done to stop Medicaid fraud in child welfare nor the torture of these institutionalized children.
“Examining the Administration's Failure to Prevent and End Medicaid Overpayments” Testimony of: John Hagg D...

At $4,556 a day, N.Y. disabled care No. 1 in nation

Call it the Rolls-Royce of institutions for the mentally disabled. Call it the pot of gold at the end of the Medicaid rainbow. Call it anything, but don't call it cheap. Because the state and federal government pay $4,556 per day for each of 152 residents at the former Wassaic Developmental Center in eastern Dutchess County, as well as for the 1,265 residents of eight other aging and inefficient campuses around the state.

That's $1.7 million a year per person — the highest Medicaid rate in the nation by one university study and four times the next-highest facility cost. State officials admit the actual cost of care is about one-third of the rate and that the hundreds of millions in leftover cash underwrite other state programs for the developmentally disabled.

That Medicaid largesse, they say, has turned a system that was plagued by scandal in the 1970s into perhaps the best in the country today. Few dispute that New York has a superior system — and an expensive one. But a Poughkeepsie Journal investigation of developmental-center rates also found: 

•The closing of the nine state institutions, once a certainty, has been delayed for a decade as reimbursement rates have soared; closing would shut off a gushing faucet of cash in a state dogged by deficits.

• There has been little official scrutiny or oversight of institutional spending and rates, which generate more than $2 billion a year from the state and federal government.

• Nearly $36 million was spent to rehabilitate Wassaic's aging infrastructure since 2000 — money that feeds into higher reimbursement rates at a center that, on paper at least, is scheduled to close.

Prompted by Journal inquiries, federal Medicaid officials said they would review the program, while the state Medicaid inspector general, among others, expressed astonishment at the nearly $5,000 per diem, a little-known secret in state government. The rate at a developmental center in Southbury, Conn., by comparison, is $952.

Officials of the Office of Mental Retardation and Developmental Disabilities, the state agency that runs Wassaic, defended capital projects at Wassaic and elsewhere, saying they were necessary to meet standards and protect residents.

"Do I think it's better for the people living on this campus? Absolutely," John Mizerak, director of the regional office that runs Wassaic, said of improvements there. "We're talking about people's lives." 

Driving New York's rate is the paradoxical incentive under Medicaid to spend money in order to make it. The promise of the Medicaid match — the feds give a dollar for every state dollar spent — has turned the state's developmental centers into veritable cash registers, where $1.2 billion in state spending in fiscal year 2009 "generated" another $1.2 billion from the feds.

"On one level, it's fabulous the amount of federal money (New York) has brought in," said Charlie Lakin, a University of Minnesota researcher, who put New York's per-person spending for the mentally disabled at 77 percent above the nation's. But, he added, "Half the money has to come from people in New York; that's the other side of it."

'Medicaid it' 
One reason New York reaps so much federal cash is an agreement with the Centers for Medicare & Medicaid Services that allows the state to receive partial payment even after people have moved from institutions, an incentive to place them in the community.

Another is New York's proclivity — legendary among the states — to jack up Medicaid reimbursements by aggressively, and legally, including every state cost even remotely related to disability services, from pencils to power plants, clerks to commissioners.

Albany overhead, regulatory oversight, sidewalk maintenance — it all goes into the mix. "New York's strategy was, 'If it moves, Medicaid it,' " said Paul Castellani, former director of program research for the state Office of Mental Retardation and Developmental Disabilities, which runs developmental centers. "It's called 'cost mining.'

In a 2005 book, Castellani asserted that since the 1970s, when abuses of neglect and overcrowding were exposed at the Willowbrook State School on Staten Island, the federal Medicaid program has transformed the facilities, as the title of his book put it, "From Snake Pits to Cash Cows."

New York gets 17 percent of every federal dollar spent on two major programs for the developmentally disabled; that is three times the share of second-ranked California, which has almost twice the overall population.

The money has been essential to the movement of thousands from overcrowded, impersonal institutions that once held nearly 28,000 into more humane community-care homes. That's the good news. But Medicaid rates, which skyrocketed at developmental centers from $39 a day in 1975 to $2,149 by 2000, have become so lucrative that they may in fact be perpetuating institutional care in New York.

In 1991, then-Commissioner Elin Howe and Gov. Mario M. Cuomo called for the closure of developmental centers by 2000: "Independent fiscal analyses of closure demonstrate that it is the most cost-effective course to take," Howe wrote.

But rates today are 10 times what they were in 1991, making it difficult, analysts said, for states to walk away from them. "It's enhancing institutions instead of ending them," said Richard Hemp, a researcher at the University of Colorado who studies state spending on the developmentally disabled.

In New York, it may be keeping people institutionalized who shouldn't be. In December 2008, a lawsuit charged that residents of Wassaic and a Schenectady developmental center were "languishing" in the institutions, where some had lived since they were small children, the result of "system-wide neglect" to plan for their discharge to homes in the community. "…(T)he rights of residents, including their right to live in settings integrated into the community, continue to be violated," the suit asserted.

The state won the suit, which had sought access to records to prove that residents were being denied a life in the community.

But in an interview, officials acknowledged the lawsuit's assertions, as summarized by a reporter, of inadequate planning and delays in community placement. "I can't disagree with your statement, but I can tell you the commissioner (Diana Jones Ritter) is doing something about it," said James Moran, deputy commissioner for fiscal and administrative solutions.

Discharges to the community have since accelerated, he noted, and Wassaic's figures confirm this. Center closings cease.

The last time New York closed a developmental center was in 1998, and the state now says it plans to keep 1,000 to 1,100 people on its campuses, guaranteeing at today's rate more than $800 million in federal cash. This money underwrites care, by the state's estimate, that costs $100,000 a year more per person than in the community. It keeps contractors busy with construction at facilities built for another era and population. And it will pay off the bonds that finance that work — at Wassaic, for one, until 2039.

 Consider this: Even though Wassaic was supposed to close a decade ago — and officials say they plan to shutter most operations by 2013 —more than $28 million has been spent in the past five years to paste and patch the facility's Depression-era infrastructure.

In 2006, $7.1 million went toward upgrading a power plant whose towering smokestack looms over a community the size of a small city but serves a population the size of a nursing home.

In 2006 and 2007, $5.1 million bought new roofs on 14 buildings, and $2 million rehabilitated a steam tunnel and climate system. In 2008, $5.5 million underwrote mold removal and new fire alarms. In 2009, $6.5 million went to overhaul the water system.

Add to this another $7 million in improvements from 2000 to 2005. These dollars were spent on a campus now serving just 3 percent of its peak population of 4,500 in the late 1950s, a sliver of a census that has obliterated any economy of scale. And they were spent as Wassaic's overseers were drawing up a detailed plan, dated Dec. 30, 2008, to close all but one unit of the facility, which itself would be rebuilt as a self-sustaining entity not tied to the campus power plant.

"The scale and cost of the improvements necessary to maintain the Wassaic campus over the last ten years … is staggering," said Samuel Busselle, an architect and former official of the developmental center who led efforts in the 1990s to chart the campus' future use after closing. "It is the consequence of poor planning, and it didn't have to happen."

Officials disagreed, saying, for one thing, that facility wells had gas seeping into them that had forced the use of bottled water; they noted that the system may someday serve whatever development succeeds Wassaic. And an inquiry has been made about buying the power plant when the state is done with it, they said.

Beyond this, Moran said the state was obligated to maintain the campuses as a condition of the bonds that have financed construction. However, bonds continue to finance rehabilitation — making the campuses potentially self-sustaining. At Wassaic, $30.7 million in bonds are outstanding for work done by the Dormitory Authority of New York State alone; major projects are also done by the state Office of General Services.

What the dollars buy
Officials in Albany acknowledged that the $4,556 per-person daily rate at Wassaic and other developmental centers could be the nation's highest and that the state gets far more money than others. But Moran cautioned not to "get caught up in the numbers" and instead to look at what those dollars buy.

"We have one of the best systems in the country as it relates to supporting people with developmental disabilities," he said. "That's only been able to be achieved because of our agreements with (the federal Medicaid program) and how we establish our Medicaid reimbursement."

Those agreements have allowed the state, since the 1980s, to keep two-thirds of the federal reimbursement for residents who move from a developmental center to a community setting, where Medicaid also picks up the tab. The open-ended payments would stop, Moran acknowledged, if the institutions were to close.

Beyond this, the agreements establish a methodology under which New York state — not the federal government — sets its own Medicaid rate based on a wide variety of system costs. Said Mary Kahn, a press officer for the Medicaid program in Washington, "We match whatever the state decides it can afford to pay at its end."

In New York, that is considerable. According to a University of Minnesota survey, New York's developmental center reimbursement rate is four times higher than the second-ranking facility, the 120-resident Clover Bottom Developmental Center in Nashville, Tenn., with a reimbursement rate of $1,085 in 2008. Significantly, New York is the only state that reported its rate to the Minnesota surveyors as an apparent average of its state-run group homes and institutions, greatly understating the true developmental-center reimbursement. As a consequence, the 2008 New York rate was reported as $900 per day — when developmental centers were then getting $4,116. Moran acknowledged the rate was incorrect and said "definitional issues" regarding institution size may be why.

Shock at rates
In interviews, officials in agencies attending to the disabled as well as in state government expressed surprise, even shock, at the New York rate.

"This is a huge number, and I was not aware of it," said the state Medicaid Inspector General James G. Sheehan, who said he would look into it. "Wow we'd love to get that," said a Medicaid rate-setter in another state who asked not to be quoted by name. "A rate of $4,500 per day is outrageous, and the highest I have seen," said Elizabeth Lynam, deputy research director for the nonpartisan Citizens Budget Commission in New York City, which studies Medicaid spending. "Something is off."

Even officials of the federal Medicaid program — who stressed New York's primary role in rate-setting — seemed taken aback and said they would likely review New York's program.

"We've looked at the general program; we haven't done a focused review," said Michael Melendez, regional branch manager of the division of Medicaid and children's health for the Centers for Medicare & Medicaid Services. "We may now that you've brought this to our attention."

But federal officials declined, despite repeated requests, to say if they were aware of the $4,556 per diem. Melendez said that the rate-setting methodology is very long and gives a line-by-line breakdown of allowable costs, for example, for beds and staff.

"We don't approve the $2," said Jeffrey Hall, a Medicaid spokesman in a conference call with Melendez. "We approve the method by which they receive the $2."

Oversight scanty
Although more than a billion federal dollars flow yearly into New York for the developmentally disabled and the state theoretically matches it, the Poughkeepsie Journal found little evidence of meaningful state or federal oversight.

Medicaid's Melendez said that no "focused financial review" had been done in his four years in office and possibly longer. Neither the state inspector general nor comptroller had done reviews of Medicaid money flowing to developmental centers. And the federal Medicaid inspector general performed just one review in recent years; it disallowed $4 million in indirect administrative costs from 2003 to 2006. Committees of the Senate and Assembly that monitor developmental-disability issues, as well as the Department of Health, the lead agency on rate-setting, referred questions back to the Office of Mental Retardation and Developmental Disabilities.

Allan Shope, who bought 430 acres of Wassaic property in 2000 and wants to build an environmentally-sustainable development there, said the rate "makes each patient into a huge source of profit for OMRDD, and motivates OMRDD to keep … the Wassaic campus open." He will not proceed until the center closes, he said.

At the 2009 rate, New York's developmental centers generated $2.48 billion in reimbursements — half each from the state and federal government.

The actual cost to run the centers, according to information provided by the state to the Coleman Institute at the University of Colorado, was $674 million.

"I'm not saying reimbursement doesn't exceed costs … by any stretch, quite honestly," Moran said. "The reimbursement is what it is. … CMS (the Centers for Medicare & Medicaid Services) has supported it."

The money pays for the 10 percent of the system's $4.8 billion budget that is not funded by Medicaid, he said, underwriting programs vital to developmentally-disabled New Yorkers. The agency provided a list of costs and programs supported by the "reimbursement methodology" which included virtually everything it does from "support to 126,000 individuals with developmental disabilities" to "support for 37,000 individuals … to live in certified residential settings."

"It's been used to really enhance our system," Moran said, noting that this is "a very legitimate rate-setting methodology that states employ."

But New York has obviously worked the Medicaid system far better than other states. The average reimbursement of 141 facilities operating in 2008 was $472 a day, according to the Minnesota study. Rates at six Massachusetts centers range up to $858 a day, with all six slated to close by 2013.

Policy reversed
In New York, the future of its institutions is less clear. While planning documents assert that developmental centers will be "decommissioned" by 2013, that does not mean that campuses will close.

Instead, 1,000 people who were once developmental-center residents now live in "local intensive treatment" units and the like that will stay open for the long term — a reversal of the state's previous commitment to close institutions. Just one campus, in Erie County, is scheduled to close.

"We're committed to, and our budget commits to, continuing to move people out of institutions," the agency's Moran said. But "there is always going to have to be a residual capacity that's going to be needed for people with special needs."

Said the University of Colorado's Hemp: "That's been proven wrong by the 11 states that no longer have institutions."

Asked if the state is trying to hold on to lucrative Medicaid reimbursements by keeping developmental centers open, Moran said, "If it's just about money, all people would be in institutions."

At Wassaic, meantime, where 40 percent of residents are considered "mildly" intellectually disabled, a consolidation plan proposes to take up to five years to phase out two units serving 93 people, though Moran said it could happen by 2013.

A third unit will be rebuilt on some 30 acres at the campus' southern end, according to Mizerak, the agency regional administrator — but only if state money comes through in a tough budget environment.

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