While programs and services are being cut throughout state government as a result of projected budget shortfalls, corporate human services providers have gotten hundreds of millions of dollars in additional state funding due, at least in part, to a lawsuit they filed against the state.
The irony is that the U.S. Supreme Court has just ruled in a separate case that providers cannot sue to raise Medicaid service rates. So, it’s not clear to us that the Massachusetts providers were on solid legal ground in filing their lawsuit.
In June 2014, the providers sued the then Patrick administration, arguing that the administration was not boosting state funding to them fast enough to satisfy a timetable set in a 2008 law known as Chapter 257. Chapter 257 established formulas and timetables for increasing provider funding rates.
As a result of the lawsuit, both the Patrick administration and the incoming Baker administration approved major funding increases to the provider-run group-home line item in the Department of Developmental Services budget, even as it was becoming clear the state was facing major budget shortfalls in the current and coming fiscal years.
In a press release issued on March 4, the day he submitted his Fiscal Year 2016 budget to the Legislature, Governor Baker stated that his administration had allocated $30 million “to resolve litigation and adjust Chapter 257 rates for human service providers.”
The $30 million referred to in the governor’s press release may have understated the impact of the lawsuit. Baker’s proposed funding for the provider group-home line item in the DDS budget for fiscal 2016 is more than $230 million higher than the amount appropriated for that line item in fiscal 2014 when the provider lawsuit was filed. That is a 28 percent increase.
In contrast, the line item for the state developmental centers would be cut in that same period by almost 9 percent, and state-operated group homes would get an increase of about 13 percent in that time period.
In what sounds like a similar lawsuit to the the litigation in Massachusetts, service providers in Idaho had argued in federal court that Idaho had failed to raise Medicaid payments to them as outlined in a federally approved formula. But the U.S. Supreme Court ruled on March 31 that private providers cannot sue for higher Medicaid reimbursement rates.
In the suit filed by the Massachusetts providers, state Superior Court Judge Mitchell Kaplan ruled in January that the state had violated Chapter 257 by not setting higher rates for providers. In response to the suit, the then Patrick administration had initially argued that Chapter 257 could be fulfilled only if the state itself had adequate revenues to do so.
But Judge Kaplan ruled that the state had to comply with the higher rates required under Chapter 257 regardless of whether the funding was available or not. That would mean that in order to fulfill the requirements of Chapter 257, funding would have to be cut in other areas, which is what has happened.
Like the Idaho providers, the Massachusetts providers had argued that the inadequacy of the state funding was causing them to fail to keep up with rising costs and was resulting in lower paid staff and high staff turnover as well as poorer quality services. We have maintained, though, that the funding has been adequate to support high salaries for executives running the provider corporations. Close to $100 million a year is spent on those executive salaries in Massachusetts.
As we’ve noted before, the major funding increases in the provider line item in the past year have increased an already existing imbalance in funding between that line item and accounts for state-run services.
One example of that imbalance is the state-run developmental center line item, which will be some $10.6 million less under Baker’s fiscal 2016 budget than it was in fiscal 2014. This has led to the necessity of closing several cottages at the Wrentham Developmental Center in the past several months, requiring residents to be moved from long-time residential locations.
An April 2 memo sent to Wrentham Center staff referred to an “immense challenge” in meeting budget constraints facing the Center in the current fiscal year, and a “yet another difficult budget forecast for Fiscal Year 2016.”
At the time the Massachusetts providers filed their suit, a spokesman for the providers explained that they had rejected an offer from the then Patrick administration to meet them more than part-way by providing 90 percent of the full funding increase specified under Chapter 257 as of January 2015.
“…in the end, it wasn’t enough,” the spokesman for the providers said. “At this point, we’ve been as patient as we can be and the law is the law and we want the Commonwealth to abide by the law. Every day that full implementation is delayed, the imbalance and the unfairness grows.”
The providers and the Baker administration, however, do not seem to be as concerned about the continuing and growing imbalance in funding between provider and state-run services.