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Painful service cuts are likely

Providers of Medicaid Waiver-funded services are facing a dire threat to their ability to provide quality residential and day services for people with intellectual disabilities and autism.

This is true nationally, and impacts local providers including Adelante Development Center.

The proposed U.S. Department of Labor Overtime Exemption Rule threatens many providers who are already seriously challenged by a myriad of federal and state unfunded mandates.

The regulation, which is being finalized and expected to be released later this year, would update the Fair Labor Standards Act to more than double the salary threshold at which workers are exempt from overtime requirements, with the salary level increasing automatically over time.

According to an analysis performed by Avalere, a highly respected national consulting firm, this rule, if finalized as proposed, will cost providers serving people with disabilities between $1 billion and $2 billion.

Though well-intended, if this rule is implemented as proposed, with no additional funding, providers will have to make painful choices about the services they provide and many may be unable to stay in business.

Neither ANCOR nor any of the 1,000 providers in the association that include Adelante are opposed to paying employees more. Direct support professionals serve a critical function in their communities; the work they perform requires patience, skill and dedication. They deserve robust compensation, benefits and opportunities for professional development.

Quality services require a stable workforce – trusted, skilled workers who assist people with disabilities to obtain employment, access the community and help with the most basic personal needs.

However, the way providers are currently funded makes this nearly impossible.

Most providers, overwhelmingly nonprofits, are funded almost entirely by Medicaid Waiver dollars. They have no power to negotiate higher rates, even as operating costs rise and demand for services increases.

Most states have seen little or no funding increases in the last decade, with many states forced to cut funding. Major cuts have happened twice in New Mexico in the past five years. Providers have almost no margin to absorb cost increases or ability to raise wages without dramatically cutting services.

Without additional funding, the added costs of the Overtime Exemption Rule would leave many providers with very tough choices — cutting wages of their nonexempt staff (including direct support professionals), serving fewer people with disabilities, or both. At a time when more people are relying on these services, and with thousands more on waiting lists, this would be devastating.

Adelante and ANCOR agree that the Overtime Exemption Rule should be modernized and the salary level increased, but unless the change is accompanied by additional funding for providers or approached more gradually, it will harm the very workers it seeks to protect, as well as the people who rely on them.

That is why we are calling on Congress to pass legislation to provide states with temporary assistance to increase Medicaid funding support for providers accordingly so that they can afford to comply with this rule and other unfunded mandates.

Until adequate funding can be provided for compliance, we urge the Department of Labor to implement a more manageable threshold and increase the salary threshold more gradually.

We take our mission of supporting people with disabilities in their communities seriously. We urge Congress and the administration to recognize the threat this regulation poses to our ability to continue to fulfill this mission.

ANCOR is the American Network of Community Options and Resources, a national association representing more than 1,000 private providers of community living and employment services to more than 600,000 individuals with intellectual and developmental disabilities. Adelante Development Center is a nonprofit that supports people locally.

 

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