Providers Fight Minnesota’s Cut to Disability Services

MINNEAPOLIS (CN) – A class action filed by Minnesota disability service providers claims the state’s plan to cut funding for those services will hurt thousands of people who rely on them for housing and jobs.

The Minnesota Organization for Habilitation and Rehabilitation (MOHR) and the Association of Residential Resources in Minnesota (ARRM) sued Minnesota Department of Human Services Commissioner Emily Piper in federal court on Tuesday, alleging violations of due process, the American with Disabilities Act and the Rehabilitation Act.

The groups, represented by lead attorney Samuel Orbovich with Fredrickson & Byron, claim DHS is trying to enforce a 7 percent cut to waiver payment rates for community-based supportive services.

The rates are paid through Minnesota’s Medicaid waiver program, which helps disabled residents pay for support services, such as transportation and caregiving, so they are able to sustain a more independent lifestyle and live and work in their communities.

The cut is set to take effect July 1.

“This cut will cause irreparable harm to our members and the people with disabilities they support as we are already in the midst of a workforce crisis due in large part to lack of wage competition,” ARRM CEO Sue Schettle said in a statement. “Since the complete breakdown of the legislative process failed to produce a sustainable fix to the regulatory dispute driving DHS to enact the cut, we are forced to seek injunctive relief from federal court to address this critical issue.”

The lawsuit claims DHS is legally obligated to fully fund service rates paid through the state’s Medicaid waivers.

“Minnesota is currently facing a severe workforce labor shortage crisis. This crisis impairs the ability of members of ARRM and MOHR to attract or retain the staff needed to provide services to the members of the putative plaintiff class,” the complaint states. “If not enjoined, defendant’s 7 percent cuts will aggravate this workforce crisis by jeopardizing plaintiffs’ respective abilities to provide—and receive – necessary waiver services.”

DHS announced the cut on May 24 after Governor Mark Dayton vetoed an omnibus bill that would have repealed and replaced funding established by laws passed in 2013 and 2014 that increased waiver rates for disability service providers.

The groups argue DHS wrongly assumes that it has the authority to circumvent or ignore those rate increases.

The 7 percent cut will reduce state and federal Medicaid waiver funding by $36.8 million in fiscal year 2019, and by $46.1 million in fiscal year 2020, according to the lawsuit.

The disability service providers say the cuts will negatively impact more than 32,000 waiver recipients and their providers.

DHS Commissioner Piper said in a statement that her department “has initiated and supported numerous efforts focused on the needs and wants of people with disabilities and to create a more transparent, consistent and fair system statewide.”

“We are required by the federal government to adjust some rates on July 1 to remove previous adjustments that were not based on cost data,” she said. “This is part of a new rate-setting methodology for disability services that results in overall higher rates for providers than previous rate-setting methods. We will carefully review the lawsuit filed today.”

The plaintiffs’ attorney, Orbovich, did not immediately respond to a request for comment Wednesday morning.

MOHR President Mike Burke, whose organization represents more than 100 day service providers in Minnesota, said disability service providers are only looking for “some sense of long term stability.”

“Stability in a system that will allow us to pay our staff competitive wages, which ultimately helps thousands of people with disabilities across the state who rely on our services for their quality of life,” Burke said in a statement.

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