(Cross-posted from The COFAR Blog)
Due to what appears to be an open-ended provision in a bid document in 2008, the Department of Developmental Services dropped contractual work requirements and yet increased administrative fee payments to a private firm to manage “self-directed services” for clients with developmental disabilities in Massachusetts.
Documents received by COFAR under a Public Records law request indicate that several key work requirements listed in the 2008 bid document for two self-directed services contracts were later dropped from those contracts with Public Partnerships, LLC (PPL). Yet, according to information available on an online state contract tracking site, PPL’s administrative fees under the contracts rose from $529,435 to $969,282 between fiscal 2010 and 2014 — an 83 percent increase.
PPL appears to play a major role in managing self-directed services programs around the country. Audited financial statements for the company disclose that PPL and a Colorado affiliate managed more than $1 billion in funding from state, county, and local public agencies for self-directed services in fiscal 2014.
PPL’s website states that the company has been managing self-directed services programs since 1999, and that it is now operating in 21 states and the District of Columbia. PPL is a subsidiary of Public Consulting Group, a Boston-based consulting firm, to which PPL pays millions of dollars in “management fees” each year, according to the audited financial statements.
Self-directed services are billed as an alternative to the traditional method under which public agencies provide services to developmentally disabled clients either directly or via contracts with providers. Under self-directed services, program clients reportedly plan their own services, manage their “individual budgets” for care, and hire support workers of their choosing.
While DDS has been operating self-directed services programs since the late 1990s, the Massachusetts Legislature authorized a major expansion of those programs last year with passage of the “Real Lives” law.
States are required by the federal government to hire private “fiscal intermediaries” to manage self-directed programs on behalf of program participants, according to DDS.
In Massachusetts, there appears to have been little competition in the selection process that led to the PPL contracts in 2008. PPL was one of only two firms that submitted proposals in response to a Request for Response (RFR) issued by DDS that year for fiscal intermediary services. The losing proposer was Non Profit Care Coordination, Inc., a Boston-based nonprofit with zero assets and less than $300,000 in revenues in 2014, according to Guidestar, a financial tracking service for nonprofits.
Federal requirements for fiscal intermediaries for self-directed services appear to be vague. COFAR has reported that PPL’s contracts in Massachusetts essentially require the firm to perform what appear to be check-processing and basic accounting services in connection with three self-directed services programs.
Contract amendments, signed the same year as the RFR was issued, state that PPL would not be required to carry out several services specified in the RFR. Those dropped services included hiring care workers under the self-directed service programs, performing reference checks on the care workers, and managing “support broker” services. Support brokers are employed by participants in self-directed services to help in managing their care.
It is also unclear whether PPL’s contracts require the company to help participants manage their “individual budgets” under the self-directed services programs. Helping participants manage their budgets had been a requirement in the RFR as well.
Meanwhile, a third self-directed services program was added since 2008 to PPL’s contracts, potentially increasing the company’s fees; yet it does not appear that PPL was required to bid to become the fiscal intermediary for that additional program. It also does not appear that the addition of the new program to PPL’s scope of work resulted in a net increase in PPL’s work requirements.
The three self-directed services programs for which PPL is currently contracted to act as fiscal intermediary in Massachusetts include an adult “Participant Directed Program,” an “Autism Waiver Program,” and a “Department of Elementary and Secondary Education Program.” The 2008 RFR had specified that the selected contractor would serve as the fiscal intermediary only for the first two programs.
State regulations prohibit the practice of dropping or adding substantial requirements or costs specified in an RFR; but that prohibition is waived under the regulations if the RFR authorizes such changes (801 CMR 21.07). An open-ended statement in the 2008 RFR appears to provide that authorization to make major changes to the RFR.
The 2008 RFR stated the following:
During the life of these contracts, additional funding may become available; new individuals may enter the POS (Purchase of Services) funding system; existing resources may be reassigned; service needs of individuals funded from the contract may change; or service delivery costs of the provider may change. The contract(s) that result from the RFR may be amended to accommodate any of these needs, subject to the service delivery goals expressed in this RFR. (my emphasis)
In a May 4 letter to COFAR, Marianne Meacham, DDS general counsel, maintained that PPL’s contract requirements “far exceed” basic accounting functions, and that “the functions performed by PPL have expanded, not been reduced, since 2008.”
However, a contract amendment, dated June 15, 2008, explicitly deleted the work requirements noted above in the RFR, which was dated February 2008.
In a June 18, 2015,email to DDS Commissioner Elin Howe, COFAR asked for comment regarding the deletions of the requirements in the contract. As of September 22, no response was forthcoming from the Department to the email request.
In addition to the specified deletions from the RFR, the June 2008 contract amendment stated that PPL would not be required to provide the following services, which had been proposed in the firm’s response to the RFR. PPL’s RFR response was dated March 28, 2008:
- Support brokerage, network development and training for non-DMR staff
- Web-based directory of credentialed providers for ISO (adult) program
- Consumer online budget access
The final version of the Real Lives law dropped a number of provisions in earlier drafts of the legislation that appeared to unduly benefit corporate providers of DDS services. Nevertheless, COFAR continues to have concerns that the new law will transfer decision-making authority from guardians and family members of disabled individuals to private financial management companies.
