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Research & Reports

Review of States’ Approaches to Establishing Wage Assumptions for Direct Support Professionals When Setting I/DD Provider Rates

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This report reviews the assumptions that inform states' approaches to rate-setting for I/DD services and the role those approaches play in determining wages for direct support professionals.

More than 1,350,000 individuals with intellectual and developmental disabilities (I/DD) such as Down syndrome, cerebral palsy, and autism across the United States received long-terms services and supports
(LTSS) through state I/DD agencies in fiscal year 2018. Supports include residential services delivered in group homes, host homes, family homes, and independent living arrangements; center- and community-based
training services; employment supports; and respite for family caregivers.

State I/DD agencies contract with private nonprofit and for-profit agencies to deliver most LTSS. States employ a variety of approaches for paying their contracted service providers. For example, a state may negotiate payment rates with individual service providers or may cost settle with providers based on submitted cost reports. The majority of states, however, have established fixed fee schedules wherein the state defines the rate for a given service that any provider wishing to deliver that service must accept.

States have substantial discretion in setting their rates. Most states with fixed fee schedules have developed rate models that detail assumptions related to various categories of provider expenses made to develop the total rate. The wages and benefits paid to direct support professionals (DSPs) – the staff who provide direct care – comprise the largest component of these rate models. Given the significance of DSP compensation in the determination of overall rates as well as the importance of the work performed by DSPs, the American Network of Community Options and Resources (ANCOR, at ancor.org) contracted with the Burns & Associates division of Health Management Associates (HMA-Burns) to summarize the
approaches use to estimate DSP wages and benefits.

For 50 years, ANCOR has been a leading advocate for the critical role service providers play in enriching the lives of people with I/DD. As a national nonprofit trade association, ANCOR represents nearly 2,000
organizations employing more than a half-million DSPs. ANCOR’s mission is to advance the ability of its members to support people with I/DD to fully participate in their communities.

This review sought to answer the following questions:

  • What data source was used to establish DSP wage assumptions
  • Recognizing that wage data from the United States Department of Labor’s Bureau of Labor Statistics (BLS) is a common data source, which job classifications and wage benchmarks are used
    to estimate DSP wages?
  • To what extent do states inflate wage data in order to bring the data current and, if they inflate wages, what benchmark is used?
  • What benefit rate for DSPs is incorporated in the rate models?

Importantly, this evaluation does not seek to assess the adequacy of DSP wage assumptions or to critique state’s methods for establishing these assumptions. Direct support is important and challenging work and DSPs deserve compensation that reflects the value of this work. However, the question of what constitutes appropriate compensation is outside of the scope of this review.