Overview of Participant-directed Services and Supports Models

1. Overview of Participant-directed Services and Supports Models Presented at: Webinar for CMS Direct Service Worker Resource Center Presented by: Susan A. Flanagan, Ph.D., M.P.H. Westchester Consulting Group November 28, 2007

2. I. What Are Participant-directed Support Services? • The Centers for Medicare and Medicaid Services (CMS) defines ParticipantDirection as an approach that presents individuals with the option to control and direct Medicaid funds identified in an individual budget and in which the participants live in their own homes. • National Institute on Consumer-directed Long-term Services at the National Council on the Aging defined consumer/participant direction as: A philosophy and orientation to the delivery of HCB services whereby informed individuals assess their service needs, determine how and by whom these needs should be met, and monitor the quality of services received. • Participant-directed support services are based on the premise that the person with the disability knows best about his/her needs and how to address them and should be empowered to make decisions about the services they receive, including having choice and control over the types of support services they receive and who, what, when and where the support services are delivered.

3. I. What Are Participant-directed Support Services? (cont’d) • Participant-directed support services do not reflect one strategy. They reflect a continuum of approaches based on individuals’ and representatives’ abilities and the level of autonomy and control they wish to exercise related to the support services they receive and the individuals who provide them. • Although there is no single service delivery model that encompasses the entire range of participant-directed support service programs, in general, a program may be considered participant-directed if the individual receiving the service or his/her representative is responsible for: - Recruiting and selecting/hiring his/her support worker, - Orienting and training his/her support worker, - Determining his/her support worker’s duties and work schedule, - Supervising his/her support worker(s), - Managing his/her support worker’s payroll (or having an entity to perform the task on the individual’s behalf such as a Government or Vendor Fiscal/Employer Agent or Agency with Choice provider), - Reviewing the performance of his/her support worker, and - Discharging his/her support worker, when necessary. • In October 2007, 50 states and the District of Columbia had either developed or were in the process of developing at least one publicly-funded participant-directed support service program.

4. II. What Participant Direction Opportunities Can States Implement Under Medicaid HCBS Waivers? • Appendix E of the instructions for Version 3.4 of the HCBS Waiver Application, describes two basic participant direction opportunities that may be offered through a HCBS waiver. They are not mutually exclusive and may be used in combination. Participant Employer Authority. Under this authority, the participant is supported to recruit, hire supervise and direct the worker who provides the supports. The participant functions as the common law employer or the co-employer of the workers. When Employer Authority is used, the participant, rather than the waiver provider agency, carries out the employer responsibilities for workers. Participant Budget Authority. Under this authority, the participant has the authority and accepts the responsibility to manage a participant-directed budget. Depending on the dimensions of the budget authority (as specified in Appendix E-2b) this authority permits the participant to make decisions about the acquisition of waiver goods and services that are authorized in the waiver service plan and to manage the dollars included in the participant-directed budget. • Under a Medicaid §1115 demonstration waiver and §1915(j) of the Social Security Act, program participants can receive their Medicaid benefit and manage all or part of the funds directly if the state affords that option to participants.

5. III. What Supports Must Be Available to Participants Who Use Participant-directed Support Services? • CMS requires states to offer two types of supports available to facilitate participants’ use of participant-directed waiver services and provide important protections and safeguards to participants who direct their own waiver services. Information and Assistance in Support of Participant Direction. These supports are made available to help manage their waiver services (i.e., assist the participant in developing his/her person-centered service plan). The type and extent of the supports that must be available to participants depends on the nature of the participant directed support services provided under the waiver. Entities that provide these services are commonly referred to as supports brokers, consultants or care coordinators. Financial Management Services (FMS). These services are provided for two purposes: (a) to address Federal, state and local employment tax, labor and workers’ compensation insurance rules and requirements that apply when the participant functions as the common law employer of his/her worker and (b) to make financial transactions on behalf of participants when he/she has budget authority. There are three types of FMS that may be employed to support participants who exercise Employer Authority: (1) Government or Fiscal/Employer Agent (F/EA) (operating under Section 3504 of the IRS code) where the entity is the employer agent to the common law employer (participant or his/her representative) or (2) Agency with Choice where the participant and the agency function as co-employers of the participant workers. Under a §1115 demonstration waiver or 1915(j) of the Social Security Act, a fourth type of FMS, Fiscal Conduit, may be used when a participant receives his/her Medicaid benefit and manages it directly. This FMS model often is provided in conjunction with a Government or Vendor F/EA.

6. IV. Why Are Financial Management Services Important? • Managing the employer-related tasks associated with participant-directed support services can be a challenge for individuals and representatives. • Initially, state program agencies and individuals tried to reduce the employer-related burden by classifying support workers as independent contractors. • However, the IRS has determined, in general, that home-based workers (e.g., support service workers) are employees and not independent contractors (see FY 2001 IRS National Taxpayer Advocate Report and IRS Notice 2003-70). • Under IRS common law rules, anyone who performs services for an entity is the entity’s employee if the entity can control what will be done and how it will be done even if the entity gives the employee freedom of action. What matters is that the entity has the right to direct and control the details of how the services are provided and the outcomes (IRS Publication 15A, 2006). • In response to IRS findings, states implemented a variety of Financial Management Services (FMS) models, to reduce the employer-related burden associated with self-directed service programs while ensuring compliance with federal, state and local program, tax and labor rules and regulations.

7. V. Types of Participant-directed Supports • See Attachment A.

8. VI. Examples of States Using Various Participant-directed Service and Supports Models • Participant Employer Authority • Massachusetts Medicaid (State Plan) PCA Program - 3 Vendor Fiscal/Employer Agents provide FMS - 28 Personal Care Management Agencies (PCM) provide information and assistance (I&A) services - Program participants or their representatives are the common law employer of workers they hire • Arizona Developmental Disability Participant-directed Services (Medicaid §1115 Demonstration Waiver) - State DDD Agency is the Government F/EA and uses a subagent - State DDD Agency case managers provide I&A services - Program participants or representatives are the common law employer of workers they hire • New Hampshire Medicaid §1915(c) HCBS PCSP Waiver Program - Four Agency with Choice providers in State • They provide both FMS and I&A services • Granite State Independent Living –Concord and Area Agency of Greater Nashua – Best Practice Examples - Participant or representative and the Agency with Choice provider are co-employers of the workers recruited and referred by participants/representatives

9. VI. Examples of States Using Various Participant-directed Service and Supports Models(cont’d) • Participant Budget Authority • No state program identified. • Participant Employer and Budget Authority Combined • RWJ Cash & Counseling States (AR, NJ, and FL) and replication states (AL, IL, IA KY, MI, MN, NM, PA, RI, VT, WV, WA State) • WV uses the Government F/EA FMS model with subagent, remainder use one or more Vendor F/EAs with or without the assistance of a reporting agent. • The number of Vendor F/EAs states use in conjunction with self-directed services range from 1-18. • All states offer I&A services. - For example, WV provides FMS and I&A services through one vendor entity while NM provides these services through separate vendor entities. • Participants or their representatives are the common law employer of the workers they hire directly.

10. VII. What are the Essential Elements of the Cash & Counseling Self-directed Service Model? • Person-centered planning for personal support services • Participant-directed individualized budgeting • Ability to purchase approved goods and services • Provision of participant direction supports including Government or Vendor Fiscal/Employer Agent FMS and Information and Assistance Supports (counseling or supports broker services) • Participants or their representatives are the common law employers of the workers they hire directly • Implementation of quality assurance and improvement systems

11. VIII. Participant Direction Service and Support Model and the Type of Training Provided to Participants and Representatives • Participant/representative training needs will vary by participant direction service and support model used. • Under the Cash & Counseling model (§1115 Demonstration Waiver or §1915(j) of the Social Security Act) where participants/representatives are allowed to “cash out” his/her Medicaid benefit, they need to receive: (1) orientation about their rights and responsibilities and the essential elements of participant-directed services; (2) employer skills training including good worker hiring, training, supervision and discharge practices, managing payroll and related Federal, state and local taxes and required insurances and human resource related paperwork (forms and time sheets); (3) developing and amending person-centered plans and individualized budgets; and (4) effectively using information and assistance support services. • Under the Cash & Counseling model where participants/representatives us a Government or Vendor F/EA, participants/representatives needs to: (1) receive orientation about their rights and responsibilities and the essential elements of participant direction; (2) employer skills training including good worker hiring, training, supervision and discharge practices and managing human resource related paperwork (i.e., forms and time sheets); (3) training on how to effectively use information and assistance support and F/EA services; and (4) developing and amending person-centered plans and individualized budgets. • Under the Agency with Choice co-employer model, training will vary based on the level of participant-direction the participant/representative choose to execute, but the majority would be trained similar to participants and representatives that use a Government or Vendor F/EA.

12. IX. Questions/Discussion