In an update to our prior posting regarding the 10 percent FMAP increase for HCBS services, this installment discusses one of the options states are considering for use of the enhanced funding: increases to payment rates to support direct support professionals (DSPs) and to address labor shortages that can affect access to and quality of services delivered to consumers.

We note that these rate increases are occurring in many states at the same time as changes in federal or state minimum wages are being implemented. These changes have a direct impact on DSPs as they hold many positions that are entry level, do not require a degree, and are paid at minimum wage. States offering increases to payment rates for DSPs may wish to also consider if their labor shortage is not purely a reflection of entry wages for DSPs, but of wage compaction for those who are more experienced. 

Payment rates determined based on minimum wage levels do not necessarily address changes in the workforce that result from more experience or education that occurs over time for individual workers. Providers often express concern that payment rates do not adequately reward DSP knowledge and experience, resulting in turnover of staff and potentially higher costs as providers must work to recruit and train new staff.

States may wish to consider tiered reimbursement levels based on DSP knowledge and/or experience. To implement these tiers, the state would develop a modifier and corresponding rate for each service that increases as staff gain education, certifications, or years of experience. By offering a way for DSPs to be recognized and rewarded for increases in education or experience states can strengthen provider capacity to retain more experienced staff.

Our experienced rate setting team works from the premise that government health care reimbursement rates must be accurate, transparent, and predictable, but also sufficient to support the delivery of high quality, cost-effective services, and promote positive health outcomes. If you would like more information about how Myers and Stauffer can support your state’s HCBS rate setting, please contact one of our contributors listed below.

Contact the Contributors:

Catherine Sreckovich
Lesley Beerends, CPA
Senior Manager