Self-Direction, Episode IV

I'm smart for a fish. I'll skip the bait of the Governor's budget and continue with writing about self-direction.

In terms of savings, I am convinced that a Self-directed system can provide equal or better care at lower cost. My concern at the outset is that the new marketplace needs time to develop and if the cost-savings required by the State at the outset are greater than those immediately generated by the new model, the deprivation of funding will starve the political interest in the model.

The requirements that the State plans to implement include a 5% aggregated savings, and an additional 5% (basically an insurance policy) which will be aggregated and reallocated in case of emergency. So the goal is that clients will have a budget that averages out to 90% of what their regional-center funded services would have cost. In addition, each client will be required to hire a fund manager from the budget remaining. What this means is that there is a number, somewhere over 10% that clients will have to immediately realize in order to be as well off as they were under the previous model. By year two or three, I'd be suprised if that level of savings were difficult to realize. In year one, it's pretty dicey.

The political question becomes important. Clients and their families have driven the development of the SD service model. If the model has early success, I suspect a significant portion of clients and their families will want to replace the old model with this one. If the initial roll-out is seen as a failure by the enrolled clients, we do know how to oppose things. In the minds of clients and their families, success or failure will not be measured by the State's savings but by improvements in their ability to acquire the support they need.

As I mentioned earlier, I can estimate a 12% ballpark level of savings with a random sample of our clients. If this is close to the right number, the current requirements are too high in the short run for SD to maintain its popularity. In the long run, the savings generated will probably exceed the current requirements. Here's why I think so:

To comply with both our internal sense of quality and state law, there are costs related to training, administration, supervision and staff development which are universal to all of our counselors and applies to every hour the help clients. Some of their activities are of extremely high value, other demand less of them than their preparation. For example, shopping. Some of our clients, due to their disability, need some slight assistance in order to buy groceries. For the reason given above, that work can't be done by us for less than our standard rate. For many clients, that support could be provided by someone else at lower cost. Probably 60% lower cost. The problem for the present is that many clients will not have someone on hand, with a vehicle, ready to take them shopping. The market for satisfactory, lower-cost alternatives to traditional services will take some time to develop and until it does, the largest savings won't materialize.

My concern with the 10% and a fiscal manager rule is that in the first year (or two,) clients will not have access to the same quality and quantity of support that they have had under the traditional system, and, as a result, self-directed services will lose the interest of many of those who would eventually benefit from it.

So, here are some possible remedies:
The Medicaid Waiver only requires cost-neutrality so the State may wish to eliminate the initial 5% of savings until, say the third year.
Because the fiscal manager will be performing functions currently provided through regional centers, use some of the operations appropriation to pay for the FSM.
Use a phased system, including a 2.5% savings requirement and a 2.5% "insurance premium" in the first year, with a planned increase in the third year.
A final possibility, as long as a client is free to move back and forth between the traditional system and self-direction, is to eliminate the "insurance premium" initially, first to allow time for the State to calculate the appropriate level and second to improve the success rate in the first year. The traditional system can be the resource of last resort.