Government Spent $1.3 Million Per Year to Care for One Mentally Retarded “Resident,” Times 1,688

A report from the federal government’s Department of Health and Human Services reveals that the folks at HHS are on top of things. They are seeing to it that spending is kept under control.

It seems that the State of New York submitted a bill in 2010 for $1.3 billion for expenses in fiscal 2009. The state’s officials said that this was Medicaid’s share of a $2,266,625,233 expenditure to care for 1,688 mentally retarded New Yorkers for the year.

I got out my handy Texas Instruments BA-35 solar-powered business calculator and made this calculation. I divided $2,266,625,233 by 1,688. That is $1,342,787.46 per assisted Medicaid beneficiary. For one year.

Each beneficiary gets a bed, food, and training of some kind.

I got to thinking about this. So did the good folks at the Department of Health and Human Services. They want to do a first-rate job. Let’s see. This is 2012. The bill was submitted in 2010. They are looking into this.

“Our objective was to determine whether the payment rate for developmental centers met the Federal requirement that payment for services be consistent with efficiency and economy.”

Yes, I see, Efficiency and economy. The U.S. government needs more of both, I feel sure.

The folks at HHS summarized the situation. It seems that the care facilities are mostly run by the State of New York.

“In New York State (the State), the Office for People With Developmental Disabilities (OPWDD) provides services to both Medicaid and non-Medicaid eligible beneficiaries with intellectual and developmental disabilities under a cooperative agreement with the Department of Health (DOH), which administers the State’s Medicaid program.

“For State fiscal year (SFY) 2009, DOH claimed Medicaid reimbursement on behalf of 1,688 beneficiaries at developmental centers totaling $2,266,625,233 ($1,133,312,609 Federal share). The State’s actual costs for the developmental centers totaled $577,684,725.”

The HHS people are on a mission.

“Our objective was to determine whether the payment rate for developmental centers met the Federal requirement that payment for services be consistent with efficiency and economy.”

The HHS is not going to make hasty judgments, you understand. There may be a good reason that the state spent $1.3 million to house and train one mentally retarded person for a year, and then housed 1,687 more. But, looking at things objectively, and not wanting to be accusative, the HHS concluded this:

“Based on our assessment of the State’s rate-setting methodology, we determined that the payment rate for developmental centers might not have met the Federal requirement that payment for services be consistent with efficiency and economy.”

That seems like a reasonable initial assessment. Doesn’t it to you?

It appears that there have been cost increases in the New York program over the years.

“Specifically, the growth of the daily Medicaid reimbursement rate for the developmental centers has significantly outpaced those of both State-operated and privately operated ICFs — from $195 per day in SFY 1985 to $4,116 per day in SFY 2009, which is the equivalent of $1.5 million per year for one Medicaid beneficiary.”

Let’s see. Dividing $4,116 by $195, in round numbers, that is a 21-fold increase since 1985.

Using the inflation calculator of the Bureau of Labor Statistics, we learn that consumer prices have gone up by a factor of 2.1 since 1985. So, the increase in the expenditures by New York state is exactly ten times the increase in the rate of price inflation.

The HHS discovered the same thing, more or less.

“This rate is more than nine times the average rate for all other ICFs for the same period.”

Private facilities charged less. How much less?

“We also determined that the array of services provided to residents of a privately operated ICF was comparable to the array of services provided to residents of a nearby developmental center; however, the developmental center’s Medicaid reimbursement rate was nearly 10 times that of the privately operated ICF.”

The State of New York spent ten times more than private facilities. So, the sharp-eyed folks at HHS reached a conclusion.

“We recommend that CMS work with the State to ensure that the State’s Medicaid daily rate for developmental centers meets the Federal requirement that payment for services be consistent with efficiency and economy. Use of such a rate might have saved the Federal Medicaid program approximately $701 million in SFY 2009.”

There will be no retroactive penalties, of course. Bureaucrats show professional courtesy to other bureaucrats. But there will have to be changes. There will have to be more meetings.

“In written comments on our draft report, DOH stated that it, along with OPWDD, agreed to work with CMS to ensure that the State’s Medicaid daily rate for developmental centers meets the Federal requirement that payment for services be consistent with efficiency and economy. In separate comments, CMS concurred with our recommendation and stated that it was working with State officials to develop a revised payment methodology that will result in developmental center payment rates that are consistent with efficiency and economy.”

A revised payment methodology. Yes. That is what we need. Representatives of the DOH and the HHS and the OPWCC and the CMS will sit down and come up with a payment methodology for the IFCs. This will all be straightened out.

Now, about the bills for fiscal 2010 and 2011. . . .

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