U.S. Department of Health and Human Services
Consumer-Directed Personal Assistance Services: Key Operational Issues for State CD-PAS Programs Using Intermediary Service Organizations
Executive Summary
Susan A. Flanagan, M.P.H., and Pamela S. Green, J.D.
The MEDSTAT Group
October 24, 1997
This report was prepared under contract contract #282-92-0047 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the MEDSTAT Group. Additional funding was provided by HHS's Public Health Service. For additional information, you may visit the DALTCP home page at http://aspe.hhs.gov/daltcp/home.htm or contact Pamela Doty, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. Her e-mail address is: Pamela.Doty@hhs.gov.
This research has been conducted and the final report prepared through the receipt of funding from the Public Health Service at the U.S. Department of Health and Human Services under Contract 282-92-0047, Delivery Order 6. The statements and opinions expressed in this report are solely those of the authors and do not reflect the position of the Office of the Assistant Secretary for Planning and Evaluation or the U.S. Department of Health and Human Services.
I. Why Has This Study Been Undertaken?
This study was initiated by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) to identify best practices for implementing consumer-directed personal assistance (CD-PAS) programs through the use of various intermediary service organization (ISO) models. Twenty-three state and Medicaid-funded CD-PAS programs that used ISOs in eleven states were examined in the study.
The term personal assistance services (PAS) refers to a range of human and mechanical assistance provided to persons with disabilities of any age who require help with routine activities of daily living (ADLs) and health maintenance activities. These services, when provided in non-institutional settings, are also frequently referred to as "home and community-based long-term care." PAS is the term preferred by persons with disabilities as well as by professionals in the disability and aging fields who advocate consumer-directed PAS models as a means of maximizing the independence and autonomy of persons who need functional assistance from others. Although PAS is broadly defined as including assistive technologies, home modifications, psychosocial rehabilitation, and a host of other specialized products and services oriented to persons with disabilities and chronic conditions, the core service is personal assistance. PAS are typically provided by an unskilled person who is variously referred to as a personal care assistant (PCA), attendant or aide (Doty, Kasper and Litvak, 1996).
Consumer-directed modes of financing and delivering PAS permit the consumer-as opposed to medical or social work professionals--comparatively greater choice and control over all aspects of service provision including: (1) recruiting, hiring, and training attendants, (2) defining attendants' duties and work schedules (3) supervising attendants regarding how specific tasks are to be performed, (4) managing the payroll functions, including paying attendants, and (5) disciplining and discharging attendants. CD-PAS programs may be ranked on a continuum as more or less consumer-directed to the extent that the programs foster greater choice and control with regard to several of the above mentioned tasks (Doty, Kasper and Litvak, 1996). Consumer-direction is maximized when the consumer purchases his or her PAS with personal resources (unless he or she relinquishes the employer tasks to a provider agency). However, when a third party payor is involved in financing PAS (e.g., private insurance or publicly-funded programs such as Medicaid), certain limitations may be placed on the consumer's ability to exercise choice and control over his or her PAS.
Advocates of CD-PAS programs argue that persons with disabilities and chronic conditions should be afforded as much independence and autonomy as possible in decisions regarding the types, amounts, and sources of PAS they can access, especially related to PCA services. But, with choice and control come responsibility and risk for the consumer, as the attendant may be considered the consumer's employee rather than an independent contractor under the IRS and DoL definitions of domestic servants (Flanagan, 1994; Gibson, 1992; O.Neil and Nelsestuen, 1993; Sabatino and Litvak, 1995; Szabo, 1993). Moreover, persons with disabilities and chronic conditions vary greatly in their ability and desire to manage their PAS.
A number of states have implemented state and Medicaid-funded CD-PAS programs. The use of public funds raises significant questions related to program and fiscal accountability, regulatory compliance and liability for negligence affecting consumers or attendants which must be addressed. Because of these issues, states have begun to develop a variety of intermediary service organization (ISO) models to facilitate the use of CD-PAS programs by persons with disabilities and chronic conditions of all ages and to assist government policymakers in achieving an appropriate balance among the competing goals of: providing appropriate PAS that affords consumers' choice and control, while assuring program and fiscal accountability, regulatory compliance, protection from liability, service quality and consumer health and safety.
An intermediary service organization (ISO) is an entity that acts as an interagent between a CD-PAS program and eligible consumers for purposes of disbursing public funds and assisting consumers in performing tasks associated with the employment of PAS attendants. From the perspective of CD-PAS program, the core tasks of an ISO are: (1) to directly ensure compliance with legal requirements related to employment of PAS attendants and/or (2) to offer supportive services to enable consumer to perform the required employer tasks themselves.
When the ISO performs these tasks directly, it may, for example, calculate Social Security, Medicare (FICA), and federal and state unemployment tax (FUTA/SUTA) and make all appropriate tax filings with regard to the attendant. It may also broker and administer attendants' fringe benefits, if available. On the other hand, an intermediary may simply assist an eligible consumer by offering training in when and how to manage the employment tax and payroll responsibilities. In such cases, the ISO may monitor the consumer's performance of these tasks to ensure that the consumer is complying with all applicable federal and state requirements associated with employing household help such as a PAS attendant.
ISOs may provide administrative/fiscal and supportive services to eligible consumers. Administrative/fiscal services can include: disbursing public funds, withholding and filing employment taxes, brokering benefits, preparing and disbursing payroll checks and processing employment-related documents including the INS Form I-9, the IRS Form W-2, and timesheets. Supportive services can include: training related to hiring, firing and supervising attendants, managing employment taxes and payroll, assisting consumers in obtaining temporary or emergency "back-up" services, providing peer counseling, conducting and/or assisting consumers with checking attendant references and/or performing criminal background checks, client assessments, and providing case management.
There is no single set of services that an ISO must provide. Rather, the state CDPAS program agency should design ISOs that can meet the specific federal and state regulatory requirements and the needs of the service population(s). For example, one ISO may focus exclusively on performing administrative/fiscal tasks (e.g., payroll) on behalf of the consumer, whereas another ISO may focus on supportive services, such as training and assistance to enable consumers to perform the employer tasks themselves.
The ISO models examined in this study are the: Fiscal Conduit ISO, IRS Employer Agent Fiscal ISO, Vendor Fiscal ISO, Supportive ISO, Agency with Choice ISO, and the Spectrum ISO.
Prior to this study, little was known of the ISO models currently being used by states' CD-PAS programs, how well they meet the objectives of the various stakeholders (e.g., CD-PAS program administrators, the IRS and the U.S. Department of Labor, disability advocates, states' nurse licensing boards, and consumers and their attendants) and whether ISOs actually facilitate the use of CD-PAS and enhance consumers' choice and control. However, two earlier studies (Flanagan, 1994; Sabatino and Litvak, 1995) recommended that states use ISOs to manage the tax and labor law issues related to CD-PAS, and that states make available supportive services to consumers.
II. What Is The Purpose Of This Report?
This final report provides practical advice to state program administrators regarding the implementation of CD-PAS programs and ISOs. In particular, Chapter III, Chapter V, and Chapter VI, taken together, constitute an informal manual of advice from which state program administrators can design optimal CD-PAS programs using ISOs which are based on sound, regulatory principles and well-drafted contracts. Overall, this final report assists state program administrators in designing CD-PAS programs with ISOs that:
- comply with applicable federal tax and labor laws;
- make available supportive services that some consumers may want or need; and
- allow for the application and enforcement of any limitation or restrictions on consumer direction that may be required by state laws and regulations.
It should be noted that due to the significant variation in state tax, labor, worker's compensation and disability insurance law, the focus of this study was on federal Department of Labor (DoL) and Internal Revenue Service (IRS) laws and their effect on CD-PAS programs and ISOs.
III. How Was The Study Conducted?
Twenty three CD-PAS programs in eleven states that used six different models of intermediary service organizations (ISOs) were selected based on a sampling framework that included seven categories. The seven sampling categories were derived from the literature, information gathered from a brief phone survey of state CD-PAS program administrators, and comment received from the study's technical advisory panel (TAP). The eleven states selected for this study were: Georgia, Idaho, Maine, Massachusetts, Michigan, New Hampshire, New York, Pennsylvania, Virginia and Washington State. Semistructured interview guides were developed and used to interview the key stakeholder groups in each state.
Site visits and telephone interviews were conducted in the eleven study states between December 1, 1995 through August 30, 1996. One hundred fifty-eight interviews were conducted with one hundred eighty-nine respondents in the eleven states. Key stakeholders interviewed included: state CD-PAS program administrators, ISO administrators, executive directors of the states' board of nurses and home health agencies, advocates for the disabled and elderly, consumers and their attendants. Of the one hundred eighty-nine respondents interviewed, forty-one were consumers and twenty-two were attendants.
Meetings and briefings were held with key central office staff at the Internal Revenue Service and Department of Labor to discuss IRS and DoL rules and regulations pertinent to the study.
This final report addresses six policy relevant questions:
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What are the various models of ISOs and how do they operate?
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What are the federal laws and regulations issues that affect the development and operation of ISOs?
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What are the incentives and barriers that affect the development and operation of CD-PAS program with ISOs?
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How do states' nurse practice acts affect the development and operation of CD-PAS programs with or without ISOs?
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How do contracts facilitate the operation of CD-PAS programs that use ISOs?
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How well do the various ISO models facilitate the use of CD-PAS programs for state program administrators and consumers with disabilities and chronic conditions?
IV. What Are The Characteristics Of Consumer-Directed Personal Assistance (CD-PAS) And Intermediary Service Organizations (ISOs)?
Chapter Two describes the characteristics of consumer-directed personal assistance service (CD-PAS) programs and the various intermediary service organization (ISO) models used in the study states. In particular, this Chapter addresses the following questions.
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What are PAS and CD-PAS services?
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Why do public CD-PAS program administrators consider developing these programs and what are their concerns?
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Are personal service attendants independent contractors?
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What are the employer-related tasks associated with CD-PAS?
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What supportive services facilitate the use of CD-PAS?
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What are intermediary service organizations (ISOs) and what are their role in facilitating CD-PAS?
V. Tax, Labor, Workers's Compensation And Disability Insurance, And Immigration Law Issues Related to CD-PAS Programs
Chapter Three presents an overview of the important federal tax and labor, worker's compensation, disability insurance and immigration laws that are applicable to CD-PAS programs and sets forth alternative strategies for achieving compliance with such laws and regulations while preserving consumer choice and control. Each issue discussed is followed by best practice recommendations in cases where questions have arisen.
States designing these programs for consumers at all levels of desire and ability to manage their own affairs must find ways of ensuring that participants in the program comply with all applicable laws and regulations, state and federal. Program administrators must identify those consumers who are able to manage these responsibilities effectively and design program options consistent with these high levels of ability. At the same time, administrators must recognize that there may be other consumers who have neither the desire or the ability (in person or through a surrogate) to manage all of the fiscal and administrative tasks inherent in the modern employment relationship. These consumers may still wish to manage all other aspects of the employment relationship while delegating certain employment-related tasks to an intermediary service organization (ISO), which performs these services as the agent of the consumer.
A. Tax Rules Affecting CD-PAS Programs
Most of the tax issues affecting CD-PAS programs arise from federal income tax, social security and unemployment tax laws. Attendants appear to be employees of the consumer in most CD-PAS arrangements (except where an agency is the legal employer of record, as in the case of "Agency with Choice" ISOs). The level of control and supervision exercised by most consumers makes it difficult, if not impossible, to characterize the attendant as an independent contractor.
Whether the attendant is an independent contractor (unlikely) or an employee, income tax responsibility generally rests with the employee. The consumer-employer is not obliged to withhold income tax for a household employee (unless requested to do so), but the consumer must provide a statement of wages earned (IRS Form W-2) and must distribute notices and pay advance payments of the Earned Income Credit (EIC) to eligible employees.
With regard to employment tax issues, recent modifications to the Social Security Act to raise eligibility thresholds for covered workers and simplify filing requirements for householders have raised questions for consumers who receive assistance from ISOs. These ISOs (state and private vendors) have reported employment taxes on a quarterly basis and have been governed by depositing rules applicable to most other employers. Should such organizations alter their filing practices and procedures? Chapter Three offers best practice suggestions for resolving issues arising from the application of the new amendments to filing procedures previously adhered to by public and private ISOs acting as agents for consumer-employers in CD-PAS programs. Specifically, Chapter Three recommends that ISOs, acting on behalf of CD-PAS consumers:
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File quarterly reports of Social Security and Medicare (FICA) withholding from employee wages using federal Form 941 as advised in IRS Notice 95-18, adhering to the appropriate deposit rules.
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Apply for a separate federal Employer Identification Number (EIN) as directed by IRS Notice 95-18 for use solely in preparing tax filings as agent for CD-PAS consumers.
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Develop strategies to deal with refunds which must be made to any attendant whose earnings do not exceed $1,000 annually from an individual consumer-employer.
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Alternatively, if the ISO elects to prepare an IRS Schedule H on behalf of a CD-PAS consumer for his or her attendant(s) and not withhold and deposit the employment taxes, the ISO should remind the consumer periodically of the need to set aside monies to satisfy any employment tax liability arising from the employment relationship. In cases where the ISO withholds the necessary employment taxes, it must make sure to follow the appropriate IRS deposit rules and manage any accrued interest accrued appropriately.
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Issue IRS Form W-2 on behalf of the consumer to each attendant receiving wages for services performed by that consumer. List only the wages attributable to that consumer on the IRS Form W-2.
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Include in the total wage for each employee any co-payments made by the consumer.
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Confer frequently with IRS regional and central office personnel on any questions concerning appropriate filing methods, especially for any practice which departs from the methods authorized by IRS Notice 95-18.
B. Department of Labor (DoL) Rules Affecting CD-PAS Programs
Previous studies of labor laws affecting CD-PAS programs have identified a number of important requirements for program administrators to consider and incorporate in the design and rules pertaining to their state and/or Medicaid-funded CD-PAS programs (Flanagan, 1994; Sabatino and Litvak, 1995). This study's analysis is based on the findings and recommendations contained in these studies, updated to include recent communications from tax and labor authorities as well as reports from the fields as to current policies and practices of CD-PAS programs that use ISOs.
Personal care attendants (PCAs) are classified as domestic servants under the Department of Labor's (DoL) Fair Labor Standards Act (FLSA). Chapter Three discusses the federal minimum wage and overtime rules outlined in FLSA as they pertain to domestic servants, two exemptions to these rules as they pertain to companions and live-in help, the payment of night attendants and OSHA related issues.
State CD-PAS program, ISO administrators, and CD-PAS consumers, (particularly those who manage all of the employer-related tasks for their attendants), must be aware of the provisions of the federal Department of Labor's Fair Labor Standards Act (FLSA) regarding domestic service employees (including PAS attendants), including the exemptions for companion and live-in staff and the provision for night attendants. Moreover, they must be aware of any additional state DoL rules that differ from the federal rules in order to be in full compliance with state and federal DoL rules related to FLSA. CD-PAS and ISO administrators should also assess the feasibility of using the companion and live-in exemptions when designing their CD-PAS programs in order to take advantage of any cost efficiencies related to exemptions for these worker categories.
C. State Worker's Compensation and Disability Insurance Laws and Their Effect on CD-PAS Programs
Worker's compensation insurance laws are state laws that establish basic quid pro quo programs. Under worker's compensation insurance laws, an employee agrees to relinquish his or her right to sue his or her employer for damages arising from injuries on the job in return for receiving prompt payment of benefits related to medical care and loss of income due to an injury on the job. Each of the 50 states, the District of Columbia, Puerto Rico and the Virgin Islands has a worker's compensation program. However, some states allow small employers an exemption from otherwise applicable worker's compensation law. For example, in Missouri, employers need not pay worker's compensation insurance benefits if they have fewer than four employees, whereas in New Jersey, an employer of even a single employee must provide worker's compensation insurance benefits.
The number of worker's compensation insurance claims reported by CD-PAS program and ISO administrators in this study was extremely low. For example, only one worker's compensation case was reported in the three states. CD-PAS programs reviewed that used an IRS/EA Fiscal ISO model and one from the nine programs reviewed that used an Agency with Choice ISO model. One reason given was that the majority of attendants had not experienced a work-related injury. Another reason given was that many PCAs did not have the knowledge or the financial resources to file a claim. A third reason given was that the consumer's income and assets were very low, making any efforts to file a claim against the consumer not worthwhile. However, when an Agency with Choice ISO was the employer of record of the PCA, even though few claims were filed, there was considerable apprehension about the potential cost implications of such claims.
Five states -- California, Hawaii, New Jersey, New York and Rhode Island -- and Puerto Rico have statutes establishing state disability insurance programs. Under such laws, employees and, in most cases, employers must pay a special tax to fund the program or pay for private insurance coverage that meets state requirements (Sabatino and Litvak, 1995).
Generally, disability insurance programs are coordinated with a state's worker's compensation and/or unemployment insurance programs, so in most cases, both taxes or premiums are paid at the same time and the particular state statute defines "employer" and "employee." In general, employment paying less than $1000 in wages in a calendar quarter is exempt from providing disability and/or worker's compensation insurance, although some state's have lower dollar-amount thresholds. For example, in New York, employers of domestic workers in a private home need not pay temporary disability benefits tax unless they have employed one or more workers for forty hours per week for at least four weeks, and at least thirty days in the calendar year.
CD-PAS program and ISO administrators and consumers, (particularly those who manage all of the employer-related tasks related to their attendants), must be aware of any state statutes for worker's compensation and disability insurance and the scope of these statutes in order to make sure the CD-PAS program and its participants are in full compliance with state law. Moreover, where the laws do not apply, CD-PAS program administrators may wish to consider the positive implications of offering such benefits, such as allowing consumers to effectively recruit quality attendants and to avoid any cases where even an inappropriate claim by an attendant may result in the state being considered the attendant's employer by an administrative law judge or even a court of law.
D. Verifying Citizen or Legal Alien Status
Employers, including employers of domestic workers (e.g., personal care attendants), must verify and maintain records (e.g., completed INS Form I-9) showing that each employee hired after November 7, 1986, is a U.S. citizen, a national of the U.S., or a legal alien who is authorized to work in the U.S. (Sabatino and Litvak, 1995).
Failure of an employer to comply with the verification and record keeping requirements can result in fines ranging from $100 to $1000 for each violation. Moreover, an employer who hires a person known to be an unauthorized alien can be punished by a fine of $250 to $2,000 for the first offense, with higher fines applicable to subsequent offenses, and criminal penalties if convicted of a "pattern or practice" of knowingly hiring illegal aliens (Sabatino and Litvak, 1995).
All of the CD-PAS programs studied were in full compliance with the Immigration Reform and Control Act of 1986 and the regulations regarding the employment verification process. State designing and implementing CD-PAS program, ISO administrators and consumers (particularly those that manage all the employer-related tasks for their attendants) should obtain and become familiar with a copy of the Immigration Reform and Control Act of 1986, Public Law 99-603, 8 USC Section 1324 (1994). Moreover, whoever is responsible for the verification process (e.g., state IRS Employer Agent ISO, Vendor Fiscal ISO, Agency with Choice ISO or Spectrum ISO or consumer) should be able to perform all the necessary verification tasks and have a place to store the related documentation safely for the required amount of time.
VI. The Effect of State Nurse Practice Acts on the Development of CD-PAS Programs
Chapter Four presents an analysis of how state nurse licensing laws (i.e., state nurse practice acts) affect the design and implementation of CD-PAS programs. It also describes how state nurse licensing laws and CD-PAS program regulations overlap and discusses areas of actual and potential conflict. Two methods cited for resolving conflicts (i.e. exemption and delegation) are described, compared and evaluated.
A. Potential Conflicts Between State Licensing Laws and CD-PAS Program Regulations
State laws regulating the profession of nursing were not written with today's CDPAS employment relationships in mind. However, they may be construed to apply to tasks performed by unlicensed personnel such as personal care attendants (PCAs). Many CDPAS programs contain extensive lists of duties which may be performed by PCAs. Some of these duties, particularly those which relate to the maintenance of consumers. health and well being, may be seen as falling within the definitions of .nursing. or .nursing practice. contained in all state nurse practice acts. The first part of Chapter Four describes areas of potential conflict between these two areas of state law
B. Exemption and Delegation: Two Ways of Reconciling State Nurse Practice Acts with CD-PAS Program Regulations
CD-PAS program administrators may seek to resolve actual or potential conflicts in at least two basic ways if unable to construe the licensing laws to harmonize with CD-PAS program regulations: (1) Seek a specific exemption to the application of nurse practice acts for CD-PAS programs within a state; or (2) work with the State Board of Nurses representatives, consumer advocates and other interested parties to develop workable delegation protocols allowing health maintenance tasks that fall within the statute's definition of "nursing" or "nursing practice" to be performed by unlicensed personnel through delegation. Delegation is the process whereby licensed nursing professionals delegate their authority to perform specific tasks to other personnel serving an individual. If the CD-PAS program is exempt from the nurse practice limits on allowable tasks, PCAs may perform all health maintenance and health related tasks without formal authorization by a licensed nursing professional.
C. Exemption and Delegation Compared
A specific exemption from professional nurse licensing laws (i.e., nurse practice acts) is easy to administer and raises the fewest implementation issues. However, it may not be either feasible or desirable (from an equitable point of view) to obtain a specific exemption for CD-PAS attendants if other unlicensed personnel are still subject to the act. If no exemption is available through interpretation or by legislative amendment, delegation can work for those few tasks that are clearly within the exclusive province of licensed nurse professionals. CD-PAS program administrators should work closely with all affected parties to ensure that delegation protocols affecting unlicensed personnel within a state are designed to facilitate CD-PAS and to meet the goals of consumer-direction and the Independent Living philosophy.
VII. Effective Use of Contracts to Facilitate the Operation of CD-PAS Programs
Well designed CD-PAS programs emphasize both the independence desired by the consumer as well as the responsibilities that go with the increase in independence and authority. Chapter Five examines CD-PAS programs using ISOs, seeking to discover, among other things, whether, and how, contracts apportioning the rights and duties of the ISO, consumer and attendants facilitate these multi-party relationships. This study found considerable variation in the scope and subject matter of the contracts used in the twenty-three CD-PAS programs reviewed. However, it did appear that the very process of expressing rights, duties, responsibilities and expectations on paper was generally beneficial in helping the parties achieve the balance between consumer-direction and responsibility that worked best for all.
Chapter Five concluded that contracts that clearly spell out the duties, rights, responsibilities and expectations of the parties to these new and evolving relationships facilitate the efficient operation of CD-PAS programs that use ISOs. Although it takes time to draft a good contract, this time well spent can do much to anticipate and avoid future problems. No contract model fits all of the CD-PAS program relationships. However, a number of models can be developed by states to address the various relationships.
VIII. How Well Do Various ISO Models Assist State Program Administrators in Designing and Implementing CD-PAS Programs and Consumers in Using CD-PAS?
Chapter Six discusses the utility of employing various models of intermediary service organizations (ISOs) to improve the delivery of CD-PAS services to persons of all ages with disabilities and chronic conditions. However, no ISO model is optimal for every CDPAS consumer. This is because, as in the general population, the characteristics of persons with disabilities vary from person to person. The two principal characteristics CD-PAS administrators must focus on when designing CD-PAS programs are the (1) consumer's desire and (2) ability to perform the wide range of employer-related tasks associated with CD-PAS. This study examined the effectiveness of six ISO models in balancing individual consumers. desire and ability to perform the CD-PAS employer-related tasks independently with the states. desire to provide appropriate PAS to beneficiaries while ensuring regulatory compliance, program accountability, quality PAS and consumer health and safety.
Each ISO model was evaluated in terms of its performance related to specific evaluation criteria. These were access, program and cost efficiency, compliance/accountability, degree of consumer-direction afforded to consumers and level of administrative responsibility for the consumer.
Chapter Six describes the performance of each of the ISO models examined based on the study's six evaluation criteria (i.e., consumer access to CD-PAS, program efficiency, cost efficiency, regulatory compliance and program and fiscal accountability, level of consumer-direction afforded to consumers and level of consumer responsibility). It also includes conclusions and recommendations for optimal design and implementation strategies for CD-PAS program administrators. The following are the conclusions and recommendations made for each ISO model and some that cut across ISO models.
A. Fiscal Conduit ISO
1. Access, Level of Consumer-Direction and Responsibility
Fiscal Conduit ISOs offer consumers the highest level of consumer-direction and control. However, this ISO model tends to limit access to CD-PAS to consumers who are self-directing and who exhibit a high level of desire and ability to perform the employer-related responsibilities. The availability of effective consumer-employer skills training for consumers and their surrogates, when applicable, will increase consumer access to a certain extent.
2. Program and Cost Efficiency, Compliance and Accountability
CD-PAS programs that use Fiscal Conduit ISOs can significantly limit the state's administrative efforts related to operating the program. Moreover, if a state negotiates the Fiscal Conduit ISO's contract and fees effectively, this model can be a very cost effective one for a state.
Regulatory compliance can vary significantly with this ISO model since the consumer, as the employer of record, is responsible for complying with all employer mandates. Program and fiscal accountability can also be variable since the state has the least amount of control over the administration of the CD-PAS program under this ISO model.
| Conclusions and Recommendations Regarding Fiscal Conduit ISOs |
| Fiscal Conduit ISOs work "best" when (1) participating consumers have a high level of desire and ability, (2) consumer-employer training is made available to consumers, and (3) when there are strong oversight policies and procedures in place to monitor consumer compliance with employer mandates and program regulations, and to assure that Fiscal Conduit ISOs remain faithful to consumer-directed principles and the Independent Living philosophy. |
B. IRS Employer Agent Fiscal ISO
1. Access, Level of Consumer-Direction and Responsibility
The IRS Employer Agent Fiscal ISO offers consumers a high level of consumer-direction and control and greater access to the CD-PAS program than is afforded by the Fiscal Conduit ISO. Even though the consumer is the legal employer of record of his or her attendant(s), this ISO model reduces the consumer's employer-related responsibilities by managing the payroll function (managing employment taxes, benefits where appropriate, and preparing and disbursing payroll checks) for the consumer.
2. Program and Cost Efficiency, Compliance and Accountability
Under the IRS Employer Agent Fiscal ISO model, the state has a significant amount of control over the administration of the program. However, this model may not lead to significant program efficiencies since the state may have to establish dual financial and accounting systems in order to manage the fiscal agent functions effectively (e.g., one system for the CD-PAS attendants and one for the general state employee population). This model may not be the most cost efficient ISO model for states since they may have difficulties achieving cost efficiencies using existing state personnel and systems.
The IRS Employer Agent Fiscal ISO model affords states a high level of compliance with employer mandates, a high level of program and fiscal accountability (due to the fact that the state itself is performing the payroll function for consumers) and allows states to retain significant control over the operation of the CD-PAS program. However, attendants often erroneously consider the state to be their employer of record under this model. This confusion can result in an additional administrative burden for the CD-PAS program agency.
| Conclusions and Recommendations Regarding IRS Employer Agent Fiscal ISOs |
| States that wish to implement the IRS Employer Agent ISO model need to examine their existing payroll and fiscal accounting systems to assess their ability to accommodate the separate accounting and regulatory requirements needed for CD-PAS attendants. If a state's current systems can not accommodate the new and required functions, a state needs to assess the financial and operational feasibility of developing the additional capabilities. Finally, if the systems modifications are not operationally and/or financially feasible, then the state should consider implementing a Vendor Fiscal ISO model. |
C. Vendor Fiscal ISO
1. Access, Level of Consumer-Direction and Responsibility
Like the IRS Employer Agent Fiscal ISO, the Vendor Fiscal ISO offers consumers a high level of consumer-direction and control and allows greater access to the CD-PAS program than afforded by the Fiscal Conduit ISO. Although the consumer is the employer of record for his or her attendant, under this ISO model, a private Vendor Fiscal ISO reduces the consumer's employer-related responsibilities by managing the payroll function (managing employment taxes, benefits where appropriate, and preparing and disbursing payroll checks) for the consumer.
2. Program and Cost Efficiency, Compliance and Accountability
Unlike the IRS Employer Agent Fiscal ISO, the Vendor Fiscal ISO can offer states a reasonable level of program and cost efficiencies related to the administration of the program, particularly if the state effectively negotiates the state's Vendor Fiscal Agent ISO contract and the fees to the ISO. Since the state is using a vendor to perform fiscal and administrative functions on behalf of consumers and the state, it should develop explicit performance standards in the vendor contract so it can effectively monitor each vendor's ability to fulfill their responsibilities and their commitment to consumer-directed principles and the Independent Living philosophy.
As with the IRS Employer Agent ISO, the Vendor Fiscal ISO model can achieve a high level of compliance with IRS and DoL laws since the vendor is performing the payroll function for consumers. Moreover, this model can also achieve a high level of program and fiscal accountability if the state drafts and implements effective vendor performance standards in Vendor Fiscal ISOs' contracts.
| Conclusions and Recommendations Regarding Vendor Fiscal ISOs |
| This study concludes that the Vendor Fiscal ISOs offer states many advantages in terms of administrative and cost efficiencies while reflecting a high level of consumer-direction for consumers. While the states that used this ISO model appeared to be reluctant to permit participating consumers to use surrogates ( e.g., a person the consumer designates to act on his or her behalf such as a family member, friend, holder of the durable power of attorney, or guardian), there is no reason why consumers with surrogates cannot participate in a CDPAS program that uses this type of ISO, provided that appropriate monitoring policies and procedures related to surrogates' performance are in place. |
D. Agency with Choice ISO
1. Access, Level of Consumer-Direction and Responsibility
In this model, the ISO is the legal employer of record and the consumer is considered the managing employer. Agency with Choice ISOs can offer consumers varying levels of consumer-direction depending on the desires and abilities of the consumer and the philosophy of a particular ISO. This ISO model can significantly reduce the level of consumer responsibility depending on what employer-related tasks it performs for consumers other than the payroll function.
2. Program and Cost Efficiency, Compliance and Accountability
The Agency with Choice ISO can provide a high level of program efficiency since it manages a significant portion of the administrative work associated with CD-PAS programs. This ISO model can be cost efficient if the state CD-PAS program agency effectively negotiates its contract and fees with the ISO.
| Conclusions and Recommendations Regarding Agency with Choice ISOs |
| Agencies with Choice ISOs can offer states and consumers varied levels of consumer-direction depending on the type of consumers participating in the CD-PAS program and the ISO's commitment to consumer-direction and the Independent Living philosophy. Even if the ISO is agency-based, the ISO will not necessarily have high administrative costs similar to traditional home health agencies. Proper rate negotiation by the state can result in this model being quite cost effective. Moreover, if the proper consumer-directed philosophy is followed in agency practices, this ISO model can potentially serve consumers with a broad range of ages and disabilities. This study recommends that states using the Agency with Choice ISO model in the design of their CD-PAS program offer consumers varying levels of consumer-direction depending on the needs and desires of the consumer population. Moreover, states should consider allowing consumers to use Agency with Choice ISO in order to obtain relief attendant services. Finally, this study recommends that state CD-PAS programs that use Agency with Choice ISOs develop performance standards that effectively monitor an ISO's and its subcontractors' commitment to and application of consumer-direction principles. |
E. Supportive ISO
1. Access, Level of Consumer-Direction and Responsibility
Supportive intermediary services provided by either a stand-alone ISO or incorporated in one of the other ISO models, can enhance the level of access and consumer-direction afforded to consumers. These services can also assist consumers with the employer responsibilities associated with CD-PAS and in some cases (i.e., by maintaining an attendant registry), actually reduce such responsibilities for consumers.
2. Program and Cost Efficiency, Compliance and Accountability
Depending on how these services are administered, bundled and reimbursed, supportive services can be more or less efficient from a program and a cost perspective. They do enhance consumer compliance with regulatory mandates and can indirectly enhance CD-PAS program and fiscal accountability by developing more well informed consumers.
| Conclusions and Recommendations Regarding Supportive ISOs |
| Supportive services, whether offered by a "stand-alone" support agency or as part of an ISO's service package, are highly effective in enhancing consumers' access to and success with CD-PAS programs. The key to the effectiveness of these services seems to be the spirit in which the services are provided, not the institutional setting or organizational framework. If the provider of supportive services adheres to the Independent Living philosophy, consumers. access to and participation in CD-PAS programs are enhanced. Fees do vary significantly and must be effectively negotiated and monitored in order for the state CD-PAS program agency to be a prudent buyer of these services. This study recommends that supportive intermediary services either assist the CDPAS consumer with conducting criminal background checks on potential attendants or directly conduct them for consumers. The study also recommends that states develop global fees for a package of supportive services rather than purchasing each service separately. |
F. Spectrum ISO
1. Access, Level of Consumer-Direction and Responsibility
The Spectrum ISO model maximizes access and consumer-direction for consumers participating in a CD-PAS program while allowing consumers to assume the level of employer responsibility they feel comfortable with. Consumers may or may not be the employer of record of their attendant depending on the intermediary service option(s) selected by the consumer.
2. Program and Cost Efficiency, Compliance and Accountability
Well designed Spectrum ISOs can offer states program and cost efficiencies by developing a seamless CD-PAS service delivery system. This ISO model can also achieve a high level of regulatory compliance and program and fiscal accountability while allowing the consumer to select from a range of intermediary service options. The primary reason for this is because the Spectrum ISO has the ability to transfer unsuccessful consumers into an ISO option that reduces their employer responsibility (i.e., can move a client who is unable to comply with the employer responsibilities from the "cash" option to one where the ISO manages the payroll function for the consumer). This model may also be effective in assisting consumers to obtain relief attendants on weekends, holidays and when their attendants are absent for any reason.
| Conclusions and Recommendations Regarding Spectrum ISOs |
| Use of the "Spectrum" ISO model permits a state to offer consumers a wide range of intermediary service options through a single umbrella organization. Thus, a state maintains control over the CD-PAS program and ISO design and philosophy, while at the same time, offers consumers a broad range of intermediary services to assist them in accessing and successfully participating in CD-PAS programs. This ISO model can eliminate the need for and the costs associated with multiple CD-PAS programs that use a variety of ISOs and allow a state to develop a seamless CD-PAS service delivery model. The Spectrum ISO also allows consumers to access the intermediary services that meet their current and future needs. This report recommends that states consider implementing Spectrum ISOs when designing CD-PAS programs. The keys to a successful Spectrum ISO are: (1) good, testable performance standards in provider contracts, (2) a strong commitment from vendor ISOs' and their subcontractors to the principles of consumer-direction and the Independent Living philosophy, and (3) periodic monitoring and evaluation of Spectrum ISOs and their subcontractors. |
| Conclusions and Recommendations that Cut Across ISO Models |
| There are a number of conclusions and recommendation that are applicable to all ISO models. These include the following.
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| The Full Report is also available from the DALTCP website (http://aspe.hhs.gov/_/office_specific/daltcp.cfm) or directly at http://aspe.hhs.gov/daltcp/reports/cdpas.htm. |