Gary Smith, Director of Special Projects
National Association of State Directors of Developmental Disabilities Services, Inc., 113 Oronoco Street, Alexandria, VA 22314
February 5, 1999
The NASDDDS Special Studies Initiative...
In November 1998, the NASDDDS Board of Directors launched the Association's Special Studies Initiative. The Initiative's aim is to furnish in-depth information to the Association's member agencies concerning topics that they have identified as especially critical in improving publicly funded services and supports for people with developmental disabilities. Special studies focus areas are selected via membership survey.
Special Study Focus: Individual Resource Allocations
Many state developmental disabilities authorities (SDDAS) are keenly interested in employing Individual Resource Allocations (IRAs) to enable individuals and families to play a more direct role in managing the services and supports they receive. Various SDDA policy aims spark this interest, including:
Enabling individuals and families to assert a stronger role in selecting the services and supports they receive, deciding which agencies or individuals will furnish them, and actively managing their delivery. IRAs are a central feature of self-determination and consumer-directed supports strategies,
Promoting greater flexibility in deploying available dollars on behalf of the individual in order to encourage the best use of limited public dollars; and,
Making dollars "portable" (i.e., tying dollars to the individual rather than particular service agencies or program categories) and, thereby, avoiding the pitfalls associated with "program funding" or "slot-based contracting".
The Robert Wood Johnson Foundation Self-Determination projects that are underway around the nation have played a critical role in spurring SDDA interest in employing IRAs.
Prospectively allocating an overall budget to individuals and families is a substantial departure from conventional state developmental disabilities funding policies and practices. Such policies usually concern determining payment rates for specific services/providers and regulating expenditures by limiting "slots" by program or service category. These policies and practices are regularly criticized as undermining individual choice and creating serious obstacles to tailoring services and supports to individual needs, preferences and circumstances.
IRAs are a different matter altogether. Their use means decoupling dollars from specific service types or community service organizations in favor of setting an overall budget within which the individual or family has considerable discretion in making decisions concerning the services that will best meet their needs and the agencies/individuals who will furnish them. IRAs are a direct way of empowering and engaging individuals and families in deciding how public dollars are used so that the services and supports purchased are relevant and important to them. Since IRAs are tied to a specific individual or family rather than provider or service type, the dollars are portable. Portability is important in creating incentives for service agencies to furnish services and supports that are responsive to each person's preferences.
There are many compelling reasons for SDDAs to employ IRAs. But, the challenge SDDAs face is selecting a method for determining the dollar amount of each person's IRA. However this determination is made, it is important that the method yield fair and equitable results. That is, individuals and families in similar circumstances will have comparable allocations and the dollar amounts reasonably approximate the dollars needed to meet the person's needs. IRA determination methods also must recognize that support needs vary considerably among individuals and such needs are likely to change over time.
In some cases, states and/or localities determine the amount of a person's IRA based on the dollar value of the publicly funded services and supports the person presently is receiving. That is, the budget is what is presently spent on behalf of the individual and the individual may change how these dollars are used. Basing the IRA on current outlays is a pragmatic way for setting a budget mark. However, many SDDAs are seeking more generalized methods, especially with respect to determining IRAs for individuals and families who are new to the service system.
At this juncture, states are exploring various methods for determining IRAs. No single "best practice" has emerged. Since the development of such methods is in its formative stage, the Association's special study will include a series of policy and practice briefs that profile various methods on a case-by-case basis.
WYOMING DOORS: SETTING IRAS FOR HCB WAIVER SERVICES
In July 1998, the Wyoming Division of Developmental Disabilities (DDD) implemented its DOORS methodology for determining individual resource allocations (IRAs) for individuals who participate in the state's Medicaid home and community-based (HCB) waiver program for adults with developmental disabilities. In January 1999, the Division extended the use of IRAs to participants in the state's HCB waiver program for children with developmental disabilities.
The DOORS IRAs were developed through statistical analyses of the interplay among consumer characteristics, current services and costs. The DOORS IRA is an individually determined total budget mark within which a person's local/individual planning team develops his or her service plan and HCB waiver services are authorized. There has been broad acceptance of DOORS among stakeholders, especially because IRAs are regarded as having been fairly and equitably determined.
This policy and practice brief describes the development and key features of Wyoming's DOORS IRA determination methodology and how IRAs are employed m Wyoming. It also offers various observations concerning the applicability of the methodology elsewhere.
Background: Wyoming's Developmental Disabilities Service System
Until 1990, Wyoming's community service system for people with developmental disabilities (especially adults) was limited in scope. Most state dollars were earmarked for services at the Wyoming State Training School (WSTS) in Lander, the state's only large public mental retardation facility. Only 200 individuals received state-reimbursed community residential services. Wyoming stood alone among the states in not using federal Medicaid dollars (either by way of the ICF/MR or HCB waiver programs) to underwrite the costs of specialized long-term services and supports for people with developmental disabilities.
As an outgrowth of a lawsuit filed in 1990, state officials agreed to: (a) arrange for community services on behalf of WSTS residents who had been determined to be inappropriately placed at the facility; (b) obtain ICF/MR certification of WSTS; and, (c) take a variety of steps to expand and enhance the quality and availability of community services and supports. In order to finance the expansion of Wyoming's community service system, DDD officials turned to the Medicaid home and community-based waiver program rather than sponsor the development of community ICFs/MR. In 1991, the federal Health Care Financing Administration ( HCFA) approved Wyoming's request to launch an HCB waiver program for adults with developmental disabilities. In 1992, HCFA approved a second HCB waiver program for children and youth (up to age 2l) with developmental disabilities. Since going into effect, both of these waiver programs have played an enormously important role in underwriting the community placement of children and adults from WSTS as well as the expansion of community services for other citizens with developmental disabilities.
Between 1990 and 1996, Wyoming's total systemwide expenditures for developmental disabilities services more than doubled, increasing from approximately $30.0 million to $65.5 million. Between 1988 and the present, the number of WSTS residents has dropped from 374 to 124. In 1998, 672 individuals participated in the adult HCB waiver program at an overall annual cost of $29.3 million; the children's waiver program served 363 children at a cost of $5.1 million. Relative to state population, Wyoming today supports more individuals through its developmental disabilities HCB waiver programs than the vast majority of other states. In 1996, Wyoming ranked fourth among the states in its "fiscal effort" in support of people with developmental disabilities. Since 1990, Wyoming state tax dollar support of community services and supports has nearly quadrupled.
Wyoming's developmental disabilities service system today is vastly different than in 1990. The rapid-paced expansion of Wyoming's community service system in a compressed period of time posed many challenges for state officials and community service organizations alike. Certainly, one of the greatest challenges is that Wyoming is among the most rural of the states.
Development of DOORS
DOORS is the fourth community services funding system that DDD officials have implemented since 1990. During the initial expansion of Wyoming's community service system, the Division managed payments for HCB waiver services by employing conventional rate schedules, overall cost caps, and ad hoc negotiation with provider agencies. However, these funding policies and practices had several unsatisfactory results. DDD officials found themselves engaged in micromanaging the service system from Cheyenne, including conducting close reviews of consumer service plans to ensure cost-effectiveness. This practice, however, was at odds with the central role of the local/individual planning team in developing individual support plans and strategies. Division officials also were concerned that disparities had arisen in payments to community service organizations and that HCB waiver per capita costs were rising too quickly.
These concerns prompted the development of DOORS. Division officials decided that the new funding system should be based on the following principles:
Each person's local/individual planning team should be the primary manager of the dollars available to pay for HCB waiver services and supports. The team should work out the best mix of services and supports to meet the needs of the individual. Only rarely should the Division become involved in decisions concerning the authorization of specific services or second guess team decisions;
The budget mark established for each person should be an overall amount of dollars. The mark should not depend on the exact services selected by the team (because the team should have free rein in working out the best mix of services); nor should it be influenced by which organization(s) currently served or would serve the person (because individuals and families should have free choice among providers). Dollars should be portable. The amount should not change if the person selected another provider. In other words, the mark would be an IRA;
The amount of the IRA would be determined in the same way for all individuals. The method would apply equally to people presently receiving services and individuals new to the system. State officials and stakeholders agreed that funding authorization levels must reflect differences in the needs of individuals and be determined in an evenhanded fashion;
The new system would operate within available funds. In other words, implementation of the new system would be budget neutral.
In short, funding would be reconfigured to firmly place authority and responsibility for managing dollars and services squarely in the hands of the local/individual planning team. Instead of the Division's exercising close oversight of plans to ensure that spending remained within available dollars, the local/individual planning team would have the flexibility to work out the best use of the available dollars. The challenge that confronted DDD officials was how to determine each individual's IRA.
Division officials developed the DOORS methodology by conducting in-depth statistical analyses of the current costs of serving the individuals who participate in each HCB waiver program. The aim of this statistical analysis was to develop funding "models" that essentially would reduce or eliminate funding disparities among individuals that had arisen over the years. Statistical methods were used to "normalize" funding levels in each HCB waiver program.
The logic behind the development of DOORS is straightforward, although the underlying statistical methods are complex. Wyoming officials reasoned that the current distribution of resources among HCB waiver participants reflected rational decisions that had taken into account the needs of each individual. While decisionmaking had been carried out more or less consistently over the years, variance had crept into resource allocations. In other words, similarly situated individuals had different resource allocations. If IRAs were to be determined in an evenhanded fashion, this variance would need to be reduced or removed. The process that Wyoming officials followed was to identify factors that, from a policy perspective, should be the principal determinants of resource allocations and recalibrate individual authorizations against such factors. This recalibration process would reduce or eliminate the variances that arose due to other factors. The factors that state officials selected to serve as the basis of the DOORS IRAs were the following:
The HCB waiver services previously authorized for each person. Reflecting such services in the model affirmed that service plans had been developed to address legitimate needs of program participants;
Individual consumer characteristics as measured by the Inventory for Client and Agency Planning (ICAP) instrument. Here the aim was to take into account the characteristics that, on a face validity basis, would affect the intensity of supports that an individual is likely to require;
Economic factors that might affect the costs of serving an individual in one town versus another; and,
Provider agency characteristics that, from an efficiency standpoint, have a bearing on costs.
The goal was to develop a model that would generate IRAs based on the foregoing factors so that the amounts determined would yield the same allocation for similarly situated individuals. To the extent that individuals received different allocations, the difference would stem from the foregoing factors but no others.
It is just as important to point out that various factors were not included in the model. In particular
While the HCB waiver services that a person currently receives are included, their exact location, type and intensity are not. The model does not take into account the size of a person's living arrangement or whether a person may be receiving facility-based or "integrated" day services. The model solely reflects that a person is receiving residential supports, day supports or other types of services. To include the particulars of a person's current services would have worked at cross-purposes with an important principle: it is up to the local/individual planning team to decide on the specific mix of services and supports and how they will be furnished.
Other than provider efficiency measures, the model contains no adjustment for the individual's being served by one provider or another. The model does not calibrate the IRA amount to previous provider-by-provider payments. Not tying the IRA to specific providers and their costs reflects the principle that individuals have free choice of provider. In addition, it is important to keep in mind that DOORS is a system for determining IRAs; it is not a provider agency rate setting tool.
Not including the preceding factors means that they are not allowed to affect the amount of a person's IRA.
The derivation of the DOORS adult and children's models proceeded by applying multiple regression methods to reduce the variance in resource allocations with respect to the factors included in the model. Taking into account the factors that Division officials identified for the model, it was determined that, in the case of adult HCB waiver participants, the factors explained 51 percent of the variance in current resource allocation levels. In other words, there was a significant "residual" or "unexplained" variance in resource allocations that arose from factors other than the ones selected by state officials. Multiple regression methods was used to reduce this residual variance.
The development of the adult model went through nine iterations before it was finalized. In the first iteration, 40 variables were included. Where a consumer characteristic was included but its correlation with costs ran in an unexpected direction (i.e., "face validity" was violated), the variable was thrown out. Other variables also were tossed out to the extent that they did not contribute to reducing the amount of unexplained variance. The statistical methods employed permitted keeping a large number of variables in play all at once in order to continuously weigh the effects of including or excluding one or several variables and pinpoint the variables that would contribute most to the explanation of variance. The final adult models contains 23 variables, including 16 items from the ICAP. The statistical methods employed generate weighting values for each of these variables. In the end, the amount of unexplained variance in resource allocations for the adult waiver was reduced from 49 to 11 percent.
In the case of both the adult and children's DOORS models, the formulas that were developed describe the best statistical "fit" between existing resource allocations and the factors that DDD officials elected to include in the model. In other words, the models statistically describe the resource allocations that would result if all the various factors were taken into account in a consistent fashion for all individuals served. The effect on resource allocations of other factors that were excluded from the models was reduced or eliminated.
Neither of the DOORS models describes the "causes" of differences in the costs of supporting individuals. State officials are quick to point out that "correlation does not imply causality". Explanation of variance methods can be applied to normalize nearly any set of data against any of a wide variety of factors. The statistical analysis that underlies the DOORS models normalized funding on a person-by-person basis against the factors that state officials believed should serve as a legitimate basis for individual resource allocations.
Similarly, the ICAP factors incorporated into each model are not portrayed as "true" determinants of costs. In other words, Wyoming, officials do not argue that they have unearthed the Rosetta Stone that reveals the exact "universal" consumer characteristics that are the root causes behind the costs of serving one individual being higher or lower than another. The factors that are included in each model are those that state officials would expect on a face validity basis to affect costs and which have been determined to contribute the most to reducing the level of unexplained variance in Wyoming's allocations.
It also is important to point out that the ICAP factors included in each model nearly entirely consist of ICAP sub-elements. The aggregate ICAP "service score" is employed in the adult (but not the children's) model as one among a total of sixteen factors. DOORS does not directly translate the ICAP service score into a allocation amount. DOORS does not establish ICAP-based "levels of care" payments. The DOORS IRA amount is uniquely determined for each person, taking into account the factors included in each model. In both the adult and children's models there are non-ICAP factors in each formula. There are differences in the ICAP factors that are included in the children's and adult models, as one intuitively would expect. The children's model includes seven ICAP factors versus the sixteen in the adult model. The adult model includes economic and provider efficiency measures; the children's model does not.
In summary, the DOORS models are based on statistical analysis that normalizes resource allocations by taking into account services that have been determined as needed during service planning, various consumer characteristics and (in the case of the adult model) economic and provider measures to generate resource allocations on a formula basis. The formula ensures such resource allocations will be determined uniformly. The statistical methods aided in sorting out the various factors and assigning proper weights to them.
Operational Features of DOORS
DOORS-generated IRAs are produced in advance of the individual's planning meeting. When the planning team meets, it has the IRA amount in hand. The team's task is to produce a service plan/support strategy within this dollar amount making use of the broad service categories covered in Wyoming's HCB waiver program and other resources/supports that are available. The DOORS method does not dictate the exact services and supports that the team must select. Nor does DOORS include a rate setting methodology for specific providers or service types (see below). The team has an overall amount in hand, works within that amount in selecting services and supports as well as the community organization(s) that will supply them.
The DOORS IRAs are not inflexible "hard" budget limits. DDD has hold back a modest amount of reserve funds to address the needs of individuals when for some reason the IRA amount is not adequate. This reflects a clear understanding that the DOORS IRAs are statistically-based predictions or estimates of resource requirements and, consequently, subject to error. State officials recognize that legitimate problems can crop up in meeting the needs of some individuals within the amount allocated. In addition, DDD officials recognized that the DOORS methodology would not yield reliable IRAs for "outlier" cases. Such cases involve individuals who have very unique service needs that fall outside standard service models and support strategies. The cost of supporting such individuals inherently is difficult to predict and, therefore, cannot be readily described in a "model". In the case of "outliers", funding amounts are determined through "hand work".
As mentioned earlier, DOORS does not include a provider/service rate setting component. Instead, the specific rates paid to providers for billed services are worked out locally between the planning team and the provider (agency or individual). To guard against individuals being charged excessive rates, DDD has established "payment/rate screens".
A concern that arises concerning payment methods that factor in ICAP or similar consumer assessment data is that the assessments will be "gained" in order to generate higher dollar amounts (e.g., the person will be assessed as having more challenges in order to increase funding). In Wyoming, ICAPs are administered independently by state DDD field staff (ten staff members perform this function, although this is not their only responsibility). This is one way to avoid gaming. In addition, the exact ICAP factors that DOORS uses to generate IRAs have been masked. It also is worth pointing out that the factors actually included in each model are among the more concrete sub-elements of the ICAP instrument and thus the most readily verifiable.
The implementation of DOORS is still unfolding. Both the adult and children's models are being phased in as HCB waiver service plans come due for review by local/individual planning teams. Nonetheless, thus far, the results have been encouraging. The volume of cases where decisions are being made in Cheyenne has been reduced dramatically. So far, there have been no appeals of the IRA budget amounts or state decisions regarding requests to change those amounts.
DDD officials also report that DOORS appears to enjoy broad stakeholder acceptance. The system is perceived to be fair and equitable. It informs individuals and families of the amount available in clear terms. It has reduced the suspicion that individuals and families have been treated differently or that some providers have secured more favorable payments than others have. In addition, since DDD officials were able to fully simulate the results of applying the DOORS methodology prior to its implementation, they could identify in advance possible instances where community service organizations might face a significant overall decline in payments once DOORS took effect. They alerted these organizations to this potential problem so that they could begin make necessary operational changes. Wyoming officials decided not to use "circuit breakers" to mitigate the effects of payment changes on provider agencies as a result of the implementation of DOORS.
Wyoming's implementation of the DOORS and the adoption of IRAs is not tied to a formal self-determination initiative. Wyoming does not have an RWJ foundation grant. However, in operation, the IRAs are grounded in the fundamental principles of self-determination and consumer direction.
At this stage, it is still too early to tell what effect Wyoming's use of IRAs is having on per capita costs: namely, whether the flexibility afforded the planning team byway of providing each person an individual budget mark is leading to a reduction in per capita costs overall. The implementation of DOORS is being phased in as individual plans come due for review. Time will tell whether there is a difference in the amount allocated versus the amount actually used. The implementation of DOORS is not tied to a spending reduction plan. However, lower per capita costs would be a welcome result since, for the first time in several years, Wyoming is beginning to experience a waiting list for services and the service system faces flat funding.
It also is too early to tell the extent to which the changeover to IRAs is leading to significant modifications in services and/or the providers that individuals and families are selecting. It has been a long-standing policy in Wyoming that individuals can exercise free choice of provider. DDD officials observe that families with a son or daughter who participates in the children's waiver are more prone to play a proactive role in managing the service plan than many of the families and individuals who receive services via the adult waiver program. This difference may be attributable to the fact that families with children have been involved in early intervention and special education programs. For many individuals served in the adult waiver, the IRA framework is new and both the individuals and their families are feeling their way in this new environment.
Wyoming's systemwide implementation of DOORS is an important milestone in the use of IRAs in state developmental disabilities service systems. The principles upon which DOORS is based affirm the central role of individuals and families being the primary decision-makers in developing support strategies and making other key decisions. The DOORS IRAs inform individuals and families of the total resources available to them. They place individuals and families in a position of responsibility and authority in crafting support strategies within the funds available.
It is worth pointing out that Wyoming was especially well positioned to make this change. The overall funding available in Wyoming compares favorably to other states. The expansion of the community service system occurred nearly entirely through the HCB waiver program. One outgrowth of this is that the financing of Wyoming's system is more unified than is typical in many other states. Where multiple funding streams are present, they tend to breed disparate payment amounts and hence result in wider variance in per capita costs. When Wyoming's system was in its build out phase, state officials used relatively consistent decision-making rules concerning funding. In combination, these factors eased the implementation of DOORS because state officials did not face the prospect that normalizing the dollars available would result in massive reallocation of resources among consumers.
With respect to the DOORS models themselves and the methodology used in their development, it is important to emphasize their basis in policy. The aim in Wyoming was to normalize resource allocations against factors that had been selected by state officials. The factors that were selected were based on state officials' judgments concerning which among many possible factors should play a role in determining resource allocations. Therefore, the models are policy-based. The models are especially attractive because the factors included have considerable face validity.
The DOORS models are not cost models in the sense that they establish a hard and fast relationship between the factors contained in each model and the costs of supporting a particular individual. Again, correlation does not imply causality. Instead, the DOORS models are "best fit" models. Wyoming officials do not represent that the amounts generated by either model as predictors of the cost of serving an individual anywhere else than in Wyoming. The models are not represented as generating funding amounts that are "adequate" or "appropriate". The amounts calculated are consistent with Wyoming's funding levels and service practices. The fact that Wyoming's overall system funding level has supported the delivery of high quality community services lends confidence that the amounts the models generate is appropriate. Where current funding levels are regarded as especially problematic, there would be vastly less confidence in the amounts generated by the application of a DOORS-like methodology.
It also is important to point out that Wyoming officials were able to construct the DOORS models because the state possessed a comprehensive data base on consumer characteristics (the ICAP has been administered in Wyoming for many years) as well as information concerning current dollar allocations and service use patterns on a person-by-person basis. All this information is computerized and can be analyzed employing PC-based statistical software. To the extent that other states are interested in building models along the same lines as Wyoming, similar information must be available. The methodology is not ICAP-dependent. ICAP data happened to be what Wyoming had in hand to provide a reasonably complete picture of consumer characteristics. The ICAP instrument has known levels of reliability and validity. However, other instruments or sources of information concerning consumer characteristics can provide the necessary data as well.
Lastly, it is worth pointing out that the statistical methods and analysis used in developing DOORS have other possible applications independent of establishing IRAs. For example, the methods may be employed to determine where a state stands with respect to the factors that state officials believe ought to be determinant of resource allocations. The methodology permits measuring the extent to which present allocations deviate from such factors and the effects of reducing such deviations. This type of analysis can be invaluable in evaluating current resource allocations.
For More Information:
Jon Fortune, Adult Services Manager, Division of Developmental Disabilities, WY Department of Health, Herschler Building -- 1st Floor West, 122 W. 25th Street, Cheyenne, WY 82002, Tel: 307-777-6488,E-mail: email@example.com
Jon is happy to share extensive information concerning DOORS and talk with officials in other states interested in conducting a similar analysis.
|This paper is available for Jon Fortune, Adult Services Manager, Division of Developmental Disabilities, WY Department of Health, Herschler Building, First Floor West, 122 W. 25th Street, Cheyenne, WY 82002, Tel: 307-777-6488, E-mail: firstname.lastname@example.org, Web site: http://ddd.state.wy.us|