• Subpart 635-12 was promulgated on Feb. 15, 2009 and establishes the obligations of providers and individuals receiving or requesting services related to liability for services. Generally, the Subpart requires that individuals obtain and maintain Medicaid which would pay for the services, and, if necessary, apply for enrollment in OMRDD’s Home and Community Based Services (HCBS) Waiver, or that the individuals (or other liable parties) pay for the services themselves.

• Related emergency regulations were also promulgated on Feb. 15, 2009. The emergency regulations, which have been maintained in force since that time, exempted certain services from compliance with Subpart 635-12.

SUMMARY OF PROPOSED REGULATIONS:

• Applies Subpart 635-12 to the services which were exempted by the emergency regulations. These services are: Medicaid Service Coordination; Day Treatment Services; At Home Residential Habilitation Services, Prevocational Services, Supported Employment Services, Respite Services; and Blended Services and Comprehensive Services (OPTS Services).

• Establishes a schedule of compliance activities for the exempted services listed above. The compliance activities are the same as those required for the original services, except that different dates are substituted. The schedule consists of the following:

Preexisting Compliance Date – March 15, 2010. This is the date which distinguishes between “preexisting services” and “other than preexisting services.”

Notice Date – May 15, 2010. Notices are required to be provided to individuals and liable parties by this date (for preexisting services).

Payment Start Date – June 15, 2010. Individuals and liable parties who are responsible for paying for services will receive bills for services delivered on or after this date (for preexisting services).

• Restores all provisions of the original regulation related to the exempted services that had been deleted by the emergency regulation, including a provision that OMRDD may approve a reduction or waiver of fees for Medicaid Service Coordination (MSC) for up to 3 months if an individual does not have Full Medicaid Coverage and MSC is necessary to assist the individual in obtaining Full Medicaid Coverage.

• Establishes a limited exception for some individuals receiving supported employment services or respite services. The exception applies to individuals who are receiving supported employment services but are not receiving any of the other services covered by Subpart 635-12. Similarly, the exception applies to individuals who are receiving respite services but are not receiving any of the other services covered by Subpart 635-12. This exception does not apply to individuals who have Full Medicaid Coverage and are enrolled in the HCBS waiver on or after the effective date of the amended regulation. Various notice requirements are established related to the limited exception.

• Requires providers of “other than preexisting services” to inquire whether an individual applying for services is already receiving or also applying for supported employment services or respite services. If the individual is receiving or also applying for either or both of those services and has (or is expected to have) the limited exception, the regulations impose notice requirements on these providers.

• Includes three technical corrections that were included in the emergency regulations.

The proposal clarifies that the provider’s duty to gather information concerning liable parties and the ability to pay and qualify for Medicaid is limited to what is reasonably necessary to gather this information, not everything that is possible to gather the information.

The proposal includes a clarification that the add-on for educational services is to be excluded from the ICF/DD fee that can be charged to individuals and liable parties.

The proposal includes a conforming amendment to section 671.7(h), making that section consistent with the requirements of Subpart 635-12 for OMRDD payments.

1. Statutory Authority:

a. New York State Mental Hygiene Law Section 13.07 establishes the New York State Office of Mental Retardation and Developmental Disabilities' (OMRDD) statutory responsibility for seeing that persons with mental retardation and developmental disabilities are provided with services.

b. New York State Mental Hygiene Law Section 13.09(b) establishes OMRDD's authority to adopt rules and regulations necessary and proper to implement any matter under its jurisdiction.

c. Section 41.25 of the Mental Hygiene Law requires that fees charged or payments requested take into account costs and ability to pay, considering resources available from private and public health insurance and medical aid programs.

d. Section 43.02 of the Mental Hygiene Law establishes OMRDD's responsibility for setting Medicaid rates and fees for services in facilities licensed or operated by OMRDD.

e. Section 43.03 of the Mental Hygiene Law establishes liability for fees for services. The individual, his/her estate, spouse, parents or guardian if the individual is under 21, and representative payee or fiduciary holding assets for the individual are jointly and severally liable for the fees. Parents or spouses of parents are not liable for fees for services rendered to a disabled child under 21 if the child does not reside in the common household.

2. Legislative Objectives: These proposed amendments further the legislative objectives embodied in sections 13.07, 13.09, 41.25, 43.02 and 43.03 of the Mental Hygiene Law by promoting personal responsibility to contribute to the cost of care and equity in the application of liability to individuals and other liable parties for developmental disabilities services provided by not-for-profit agencies operating under the auspices of OMRDD. The proposed amendments establish a compliance schedule for certain specified services which were excluded by emergency regulations and create a limited exception. OMRDD has determined that individuals in need of those services might be unable to access the services or might otherwise be adversely impacted if Subpart 635-12 were to remain unchanged.

3. Needs and Benefits: OMRDD filed a notice of adoption which added a new 14 NYCRR Subpart 635-12, Liability for Services, effective February 15, 2009. Subpart 635-12 established the obligations of providers and individuals receiving or requesting services related to liability for services. Generally, the regulations required that individuals obtain and maintain Medicaid which would pay for the services, and, if necessary, apply for enrollment in OMRDD's Home and Community Based Services (HCBS) Waiver, or that the individuals (or other liable parties) pay for the services themselves. The new requirements were applied to a list of specific service types included in the regulation.

A number of concerns were raised by regulated parties prior to the adoption of the permanent regulations. Providers were concerned that they would not be able to fulfill the mandatory requirements within the timeframes established for all services and requested a deferral of applicability for services which had not already been the subject of a similar administrative effort. Issues were identified concerning recipients of supported employment services, that some individuals transitioning from VESID services and other individuals who only received state-funded supported employment services could be adversely affected by applying the regulations in specific situations. In addition, concerns were voiced that some families accessing respite services would be deterred from accessing these essential services, and that it might actually be more costly to the state if the individuals complied with the new requirements.

In response to concerns raised by regulated parties, OMRDD adopted emergency regulations, effective February 15, 2009 to coincide with the effective date of the adoption of the new Subpart 635-12. The emergency regulations, which have been maintained in force since that time, exempted certain services from compliance with Subpart 635-12. The exempted services are: Medicaid Service Coordination; Day Treatment Services; the following HCBS Waiver Services: At Home Residential Habilitation Services, Prevocational Services, Supported Employment Services, and Respite Services; and Blended Services and Comprehensive Services.

The proposed regulations restore the applicability of the regulation to the services exempted by the emergency regulations, and schedule compliance activities for the exempted services in a manner similar to the original services. Without the promulgation of the proposed regulations, the exempted services would be restored with all compliance requirements being effective on the date the emergency regulations expire. The schedule of compliance activities includes a specific date that notices must be provided to individuals and liable parties and a date that billing will occur. The schedule of compliance activities gives individuals and liable parties time to be notified about the regulatory requirements and time to come into compliance by applying for Medicaid and HCBS waiver enrollment before being billed for services. It also gives providers time to evaluate requests for fees to be waived or reduced and to apply to OMRDD for approval of fee waivers or reductions, and gives OMRDD time to respond to these applications.

The proposed regulations will create a limited exception in some cases of individuals receiving or applying for supported employment or respite services, but not for any of the other services in the regulation. The limited exception language preserves the definitions in Subpart 635-12 and the provisions concerning the effect of the regulation on liability and entitlements, and establishes special requirements that apply in limited exception cases. As long as all criteria for the limited exception continue to be met, providers, individuals and liable parties will not have to meet the general requirements of Subpart 635-12.

After extensive analysis and discussion, OMRDD determined that the applicability of the general requirements of Subpart 635-12 in the specified situations would in some cases be detrimental to individuals and families and/or would actually be more costly for the State. In some instances, individuals might forgo receipt of necessary supported employment services which could lead to the loss of the individual's employment. This is counter to the OMRDD's Employment First initiative and could lead to the individual's requiring more costly day program services. Similarly, caregivers might be deterred from receiving necessary respite services, and later the state could incur the much greater cost of out-of-home placement for the individual when the caregiver was unable to cope with the situation. In some cases, the state cost of the provision of service coordination (a requirement for HCBS waiver enrollees) could significantly offset or even exceed the state savings realized by the receipt of the federal portion of Medicaid for the respite or supported employment services. Without the promulgation of the proposed regulations, both supported employment services and respite services would be fully applicable without the limited exception, upon the expiration of the emergency regulations.

The proposed regulation also includes three technical corrections that had been incorporated into the emergency regulations. First, the proposal clarifies that the provider's duty to gather information concerning liable parties and the ability to pay and qualify for Medicaid is limited to what is reasonably necessary to gather this information, not everything that is possible to gather the information. Second, the proposal includes a clarification that the add-on for educational services is to be excluded from the ICF/DD fee that can be charged to individuals and liable parties. Finally, the proposal includes a conforming amendment to section 671.7(h), making that section consistent with the requirements of Subpart 635-12 for OMRDD payments.

4. Costs: It is difficult to quantify the fiscal impact of the proposed regulations.

As noted above, OMRDD promulgated emergency regulations to temporarily delay the applicability of the Subpart to the exempted services. The exempted services are: Medicaid Service Coordination; Day Treatment Services; the following HCBS Waiver Services: At Home Residential Habilitation Services, Prevocational Services, Supported Employment Services, and Respite Services; and Blended Services and Comprehensive Services.

Minor administrative and paperwork costs to providers and individuals will be incurred associated with the limited exception for respite services and supported employment services. However, these administrative costs are less than the administrative and paperwork costs that would be incurred by the imposition of the general requirements of Subpart 635-12 which would occur if the emergency regulations expired without the promulgation of these proposed regulations. For example, both the original and proposed regulations impose the requirement that providers give notices. However, the original regulation also requires additional compliance activities, such as requiring providers to request financial information and bill individuals and liable parties. These additional activities are not required in limited exception cases by the proposed regulations. Providers and individuals therefore will realize modest savings overall related to administrative costs by the promulgation of these proposed regulations.

Related to the effect on the state portion of Medicaid costs and other state costs, OMRDD has, after consideration of the variables involved, arrived at the conclusion that the limited exception will likely significantly reduce the savings projected in the original permanent regulations effective February 15, 2009. If the original permanent regulations were made effective to all individuals receiving supported employment services and respite, some services paid for by 100% state dollars would be funded by Medicaid with 50% state funding and 50% federal funding. In other cases, individuals would privately pay for services or would choose to stop receiving services. All of these scenarios would generate state savings. However, it is difficult to quantify the impact due to the potential impacts on service delivery and offsets due to the requirement for that enrollees in the HCBS waiver receive service coordination as noted above under "Needs and Benefits."

There will be no additional costs to local governments as a result of these specific amendments, regardless of its effect on Medicaid costs, because Chapter 58 of the Laws of 2005 places a cap on the local share of Medicaid.

5. Local Government Mandates: There are no new requirements imposed by the rule on any county, city, town, village; or school, fire, or other special district.

6. Paperwork: The proposed amendments will reduce paperwork by creation of the limited exception, so that individuals and liable parties will not be supplying financial and other information to providers, or applying for Medicaid or enrollment in the HCBS waiver when detrimental to the individual. Providers will avoid paperwork in billing costs and in applying to OMRDD for a waiver or reduction of the fees. Administrative paperwork requirements that providers give notice to individuals in these situations will be roughly similar to the notice requirements that would exist if the limited exception was not created.

7. Duplication: The proposed amendments do not duplicate any existing State or Federal requirements that are applicable to the above cited services for persons with developmental disabilities.

8. Alternatives: The alternative would require that subpart 635-12 be applied, across the board, to all services as originally contemplated and adopted. After careful consideration of the concerns expressed by providers and advocates, OMRDD has determined that the proposed amendments creating a schedule of compliance activities and a limited exception for the specified services is the prudent course of action.

9. Federal Standards: The proposed regulations do not exceed any applicable federal standards.

10. Compliance Schedule: OMRDD delayed implementation of subpart 635-12 with respect to certain services while it considered whether uniformly applying the regulations to all services would be cost-effective and desirable, from a public policy perspective. This implementation delay was achieved by a series of emergency adoptions of amendments limiting the applicability of Subpart 635-12. From the adoption of Subpart 635-12 effective February 15, 2009, regulated parties have been involved in OMRDD's deliberations regarding the temporarily exempted services. The proposed amendments will permanently create a limited exception for the specified services, which will result in compliance activities related to giving notices to individuals and, occasionally, to other providers. These compliance activities are less extensive than the compliance activities that would be required without the limited exception.

OMRDD intends to adopt these regulations as soon as possible within the time constraints imposed by the State Administrative Procedure Act. The regulations contain specific dates by which certain compliance activities must take place, for services that had been exempted by the emergency regulations.

1. Effect on small businesses and local governments: These proposed regulatory amendments will apply to agencies which provide developmental disabilities services under the auspices of OMRDD. While most services are provided by voluntary agencies which employ more than 100 people overall, many of the facilities and services operated by these agencies at discrete sites employ fewer than 100 employees at each site, and each site (if viewed independently) would therefore be classified as a small business. Some smaller agencies which employ fewer than 100 employees overall would themselves be classified as small businesses. As of December, 2008, OMRDD estimates that there are approximately 274 provider agencies that would be affected by the proposed amendments.

The amendments have been reviewed by OMRDD in light of their impact on these small businesses and on local governments. OMRDD has determined that the proposed regulations would have a positive effect on affected providers. As discussed in the Regulatory Impact Statement, this proposed regulation amends the Liability for Services regulation to establish a schedule of compliance activities for services which had been exempted by emergency regulation and to establish a limited exemption for certain individuals receiving supported employment services or respite services.

The proposed amendments will have no effect on local governments.

2. Compliance requirements: The proposed regulations establish a schedule of compliance activities for services which had been exempted by the emergency regulations. The exempted services are: Medicaid Service Coordination; Day Treatment Services; the following HCBS Waiver Services: At Home Residential Habilitation Services, Prevocational Services, Supported Employment Services, and Respite Services; and Blended Services and Comprehensive Services. The compliance activities are the same as those originally required by the permanent regulations adopted February 15, 2009. However, the proposed regulations specify new dates by which these activities must occur.

The proposed regulations establish a limited exception for some individuals applying for or receiving supported employment services or respite services. New compliance activities are required in these situations, such as new notice requirements. However, as noted in the Regulatory Impact Statement, these compliance activities are substantially less than the activities that would be required without the creation of this limited exception.

3. Professional services: There are no additional professional services required as a result of these amendments and the amendments will not add to the professional service needs of local governments.

4. Compliance costs: There will be a minor savings in compliance costs for providers and no compliance costs for local governments as a result of the proposed amendments. The original permanent regulation included the services that were exempted by emergency regulations, so the compliance costs that may be associated with implementing the schedule of compliance activities for these services would be incurred without these proposed regulations. Compliance costs will be reduced for providers related to those individuals qualifying for the limited exception, as providers will be able to forgo activities such as billing and requesting financial information.

5. Economic and technological feasibility: The proposed amendments do not impose on regulated parties the use of any new technological processes.

6. Minimizing adverse impact: The amendments will not result in any adverse economic impacts for small businesses, local governments and other regulated parties.

7. Small business and local government participation: OMRDD conducted extensive outreach to providers related to the regulations proposed in November 2008 which added the new Subpart 635-12, effective February 15, 2009. OMRDD facilitated discussions of the proposed regulations in numerous meetings including the provider associations, the Benefit Development Workgroup which includes regulated parties, and a subcommittee of the Commissioner's Advisory Council. Many of the features of the amendments that are now being proposed are an outgrowth of input received regarding the original regulations. OMRDD also informed all providers of the original regulations proposed in November 2008 as well as the final regulations and emergency regulations effective February 2009, and developed and distributed a variety of materials to assist providers in complying with the regulatory requirements (see www.omr.state.ny.us, News & Publications, Benefits Information). OMRDD continued its outreach efforts with regulated parties and other stakeholders during the development of the amendments that are now proposed. In particular, the Benefit Development Workgroup discussed the proposed amendments at several meetings.

A Rural Area Flexibility Analysis for this rule making is not submitted because the amendments will not impose any adverse impact or significant reporting, record keeping or other compliance requirements on public or private entities in rural areas. As discussed in the Regulatory Impact Statement, this proposed regulation amends the Liability for Services regulation to establish a schedule of compliance activities for services which had been exempted by emergency regulation and to establish a limited exception for certain individuals receiving supported employment services or respite services.

A Job Impact Statement for this rule making is not being submitted because it is apparent from the nature and purposes of the amendments that they will not have a substantial impact on jobs and/or employment opportunities. As discussed in the Regulatory Impact Statement, this proposed regulation amends the Liability for Services regulation to establish a schedule of compliance activities for services which had been exempted by emergency regulation and to establish a limited exemption for certain individuals receiving supported employment services or respite services.