Fiscal intermediaries sue Health Department over Consumer Directed Personal Assistance Program

ALBANY, N.Y. (NEXSTAR) — A group of independent living centers (ILCs) filed a lawsuit against the New York Health Department (DOH) and its commissioner, Dr. James McDonald, on Monday. They allege that DOH abused its power to illegally change how the Consumer Directed Personal Assistance Program (CDPAP) works.

The lawsuit claims that the defendants—McDonald and DOH—didn’t follow the rules when they created and implemented a new way to process CDPAP reimbursements. The plaintiffs—including the Consumer Directed Personal Assistance Association of New York State (CDPAANYS)—accused them of failing their legal duties and violating CDPAP regulations. The lawsuit is available to read at the bottom of this story.

The lawsuit represents the latest strategy in the battle between these plaintiffs and New York, where Gov. Kathy Hochul is working with legislators like Assembly Speaker Carl Heastie to address the CDPAP program, which Hochul notoriously called a “racket.” All of the plaintiffs in the DOH lawsuit—many concentrated downstate—act as fiscal intermediaries (FIs) in CDPAP.

CDPAP aims to give eligible consumers—the elderly, ill, or disabled—control over the health services they receive at home. It’s supposed to give them freedom to customize their care. ILCs—like nursing homes and assisted living facilities—are community organizations that help such consumers learn to live on their own. They hold support groups, teach skills, and help with housing.

“CDPAP was originally conceived by and for the Disability Community,” wrote a spokesperson from the Resource Center for Accessible Living (RCAL) in Kingston. “ILCs have successfully administered the program with integrity for over 30 years, fostering peer support networks and employment opportunities for people with disabilities.”

The lawsuit estimates that 250,000 Medicaid beneficiaries in New York are enrolled in CDPAP, served by 300,000 home care aides or personal assistants providing care, and working with hundreds of FIs. These FIs process wages, taxes, records, and benefits for those providers and consumers, who are often family members. The new reimbursement methodology for CDPAP would affect all FIs, per the lawsuit, because their work includes significant out-of-pocket expenses.

Medicaid Managed Care Organizations (MMCOs) figure out how many hours of CDPAP service a consumer can get. FIs report to and negotiate with MMCOs, and reimbursements to FIs flow through those MMCOs, too.

According to the lawsuit, DOH privately told MMCOs in June that, depending on geography, some FI reimbursements would shrink by about 10% to 13%. And DOH publicly announced in July that, “Effective August 1, 2024, Fiscal Intermediary (Fl) administrative payments will move to a non-risk distribution methodology for Medicaid Managed Care enrollees.”

The lawsuit charged DOH with implementing the change unilaterally—without a public comment period or notice of the proposed change to the Secretary of State—and thus illegally. It further argued that DOH ignored its own regulations without any analysis to justify the change.

Although the lawsuit does not name any lawmakers or the governor in the lawsuit, the case still connects to Hochul and Democrats “cracking down on CDPAP fraud.” In an on-camera interview, she told Bloomberg News last week, “When you look on TikTok and you see ads of young people saying, ‘Guess what, you can make $37 an hour by sitting home with your grandma. You know, here’s how you sign up’—it has become a racket.”

In that interview, Hochul called CDPAP “one of the most abused programs in the entire history of the state of New York.” But advocates who acknowledge the potential for such fraud nonetheless contend that the state already has more appropriate weapons in its arsenal.

“There is no disagreement that bad actors are using the CDPAP program as a Medicaid mill to enrich themselves and their insurance company partners,” said Maximino Rodriguez from the Center for Disability Rights (CDR) in Rochester. “The state already has the tools to address that issue, but has simply refused to use them. For example, over half of the existing fiscal intermediaries have not filed required financial reports. The state could simply eliminate them for their noncompliance.”

When proposing the 2024-2025 budget, Hochul said that “[CDPAP] costs have gone up over 1,200% just in the last couple of years. So, we’ll be instituting a single statewide fiscal intermediary. What that means is we’ll be like states like California that have one fiscal intermediary managing this program—not the 700 that have proliferated.” She argued that shifting CDPAP to a single FI would provide better oversight and save the state hundreds of millions.

And after negotiations, Heastie appeared to agree. “The budget also rejects proposed cuts in worker wages and fully maintains wages for home care aides who perform Medicaid-reimbursed work,” read a press release from his office at the time. “[It] shifts the Consumer Directed Personal Assistance Program (CDPAP) to a single fiscal intermediary to provide better oversight of the program with a focus on individual care.”

Ultimately, S8307 / A8807C —signed on April 20—authorizes a single, statewide FI in 2025. However, “I am deeply disappointed with the decision to eliminate multiple FIs and transition to a single FI,” said Democratic State Sen. Shelley Mayer on April 30. “The transition to a single fiscal intermediary is a source of anxiety and concern for families who rely on CDPAP.”

And on Tuesday, July 23, Republican Congressmember Marc Molinaro spoke out about the issue. “Governor Hochul’s comments were as insulting as they are ignorant and she needs to apologize,” read part of his statement. “The real racket is the Governor who preaches about caring, while plugging a budget hole she created on the backs of those who can afford it least.”

The CDR also responded to Hochul calling CDPAP a racket. “Governor Hochul will be hosting an American with Disabilities Act celebration at the Governor’s Mansion in Albany on July 29,” they wrote online on July 24. “This would be an ideal opportunity to meet and discuss her position on these services.” To that end, CDR President Bruce Darling wrote a letter requesting a meeting.

You can read the letter below, followed by the lawsuit from CDPAANYS.

My name is Bruce Darling, President/CEO of the Center for Disability Rights, an independent living center (ILC) and fiscal intermediary for the Consumer Directed Personal Assistance Program (CDPAP) in New York. I am writing to request a meeting with Governor Hochul regarding CDPAP and the policy decisions being made about us without us by her administration.

As you are aware, the CDPAP proposals in this past year’s budget, as well as the several preceding budgets, have involved intense discussions between various stakeholders (including ILCs) and the state. While ILCs fought against the proposal, we were somewhat relieved when we were told we would retain the ability to continue to provide fiscal intermediary services to the individuals we support. We were also told by the Governor’s Deputy Secretary for Health and Human Services, Angela Profeta, and her staff that we would be able to remain “whole.” We were, however, extremely disappointed when the RFP was released. Our roles as fiscal intermediaries were not clearly defined and, depending on the interpretation of the RFP, may actually even be more limited than in the original budget language.

We agree that there is a need for the State to address bad actors and abuse of the program, particularly as a mechanism to advertise for insurance companies. However, we believe that the State has and is continuing to make a grave mistake by not working with independent living centers and the other disability-led organizations that created this program.

CDR, itself, played a significant role in establishing the state statute that mandated access to the program. As UNPAID VOLUNTEERS, we wrote the 200-page policy report, titled Early to Bed/Late to Rise, that underpinned state advocacy for this program .

It is our intimate knowledge of the program and unique perspective as a Disability-led organization that makes us indispensable to ensuring the program continues to responsibly provide services to those that need it the most.

We have used this program—not only to support Disabled individuals in being integrated into society—but to uplift our community. We provide jobs to Disabled individuals. Funds that would otherwise enrich non-disabled people are reinvested in our communities and the efforts to fight for our liberation. This platform underpinned our well-documented work that saved Obamacare and Medicaid in 2017.

We understand that the Statewide Fiscal Intermediary policy was proposed by SEIU, but SEIU has told us they advocated for – and continue to support – the ILCs as remaining full fiscal intermediaries including all payroll functions. They have told us that despite the union’s efforts, the Hochul administration has been unwilling to maintain our role in the system. We simply don’t understand why your administration (and the legislature for that matter) would take a position that further disenfranchises an already deeply disenfranchised community. While there are people who make a lot of money off the system (referred to as the Disability Industrial Complex), WE ARE NOT THOSE PEOPLE. We sincerely agree that this is an issue that must be addressed, but this can be done without leaving our community behind as collateral damage.

We expected better.

In addition to his other deeply problematic issues, Governor Hochul’s predecessor was outright hostile to Disabled people. We had been hopeful that Governor Hochul – who clearly understood the dynamics of power and privilege which were being weaponized against women – would recognize how those same dynamics play out for the Disability Community. Instead of addressing this bias and elevating our community, her administration has now chosen to crush our community, even in the face of unified opposition of SEIU and the Disability Community.

We are happy to meet with the Governor’s staff, but we feel that a Governor committed to equity and transparency should, herself, meet directly with us – Disabled individuals who have been leading the fight for our own integration. She needs to understand – herself – how her actions are being seen by Disabled people. Some of us will be in Albany for the ADA reception. This would be an ideal time to meet.

Finally, I have been advised that some people in the administration may take offense at my framing and words. If so, please consider how these words would sound if they were coming from an LGBTQ group that established HIV/AIDS services in the 1980s and was now being forcibly removed from that system, or a network of women’s health clinics—run by women—that were being defunded to support a national organization led by men. Marginalized people should be centered in the systems that support their community, not sidelined. The Disability Community should be no different.

Thank you.

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