Rate Rationalization


Rate rationalization has significantly restricted the interchange of funds between the various waiver programs, which is essential to maintaining program continuity and viability. In many instances, providers are being held to revenue levels that are lower than actual cost. Rate rationalization also acts as a disincentive to providers that might otherwise wish to operate more efficiently because if the provider achieves program savings, these savings will simply be stripped away in the next round of re-basing.  

Prior to cost-based rate rationalization, providers were funded under a budget-based methodology for their largest programs (i.e., Individualized Residential Alternatives (IRA); Residential Habilitation; Day Habilitation; and Intermediate Care Facilities). Such methodology provided the flexibility necessary to generate an operating surplus in one program and use it to support another program in the midst of a financial challenge.


Rate Rationalization, unless addressed, will adversely affect the delivery of necessary services to people with intellectual and developmental disabilities. We will continue to work with DOH and OPWDD to resolve a growing number of problems, but also recognize that a legislative route may be necessary. We propose the following:

  • apply annual trend factors. OPWDD and DOH are no longer able to identify our field for selective receipt of annual trend factors, as was done in the past;

  • incorporate a vacancy factor into the day program methodology to recognize that costs cannot be shed on days when facilities are forced to close and/or attendance and billing is limited by external factors such as flu quarantines;

  • eliminate usage of budget neutrality factors lower than 1;

  • increase retainer days. The annual IRA limit of 14 retainer days for hospitalization is tied to the state’s nursing home retainer day limit, and per CMS requirement cannot be decoupled. Therefore, our request to exceed 14 days cannot be met;

  • increase Article 16 and 28 clinic fees. DOH and OPWDD are open to further consideration of the need to increase such clinic fees; and

  • adopt a policy that supports proactive auspice change and access to “higher of rate” rather than waiting for a crisis.