Initial Impacts of the Implementation of Chapter 257 of the Acts of 2008

A survey conducted by Bump’s office shows that human service providers are generally satisfied with the impact of the law.

A Survey of Human-Service Providers Indicates Mixed Results.

During our audit, we surveyed all 89 human-service providers operating in the Adult Long-Term Residential Services (ALTR) program during our audit period that had been receiving contracts funded under Chapter 257 of the Acts of 2008 for at least four years. The purpose of our survey was to obtain information on what effects, if any, the implementation of Chapter 257 pricing has had on these providers’ operations. Below is a summary of some of the questions from our survey and the information we received from the 78 providers that responded.

1. How has the implementation of Chapter 257 impacted your organization?

• Fifty-nine providers (76%) indicated that it had a positive impact.
• Seventeen providers (22%) indicated that there had been no noticeable impact.
• Two providers (3%) indicated that it had a negative impact.

The majority of the providers agreed that the implementation of Chapter 257 had enabled them to provide increased wages. Other comments included the following:

• Having uniform rates has allowed for streamlining budgeting and program monitoring. In addition, having transparency and consistency with rate structure instead of relying on rate negotiations for setting rates has allowed more consistent and predictable decision making.
• Initially Ch. 257 allowed us to address longstanding structural deficits in our programs. It allowed us to increase direct care staff salaries from $11 to $13 an hour. . . . However, these initial gains have been eroded since implementation, as there haven’t been the subsequent increases needed to maintain the initial improvements. . . . Ch. 257 raised the expectations for increased quality of service which has turned out to be an empty promise.
• Chapter 257 in its implementation has made some good progress but has fallen short of its objective to completely stabilize the Human Services Sector. Rate increases have had a positive impact but have not entirely addressed the wage and benefit disparity between actual costs and those provided under Chapter 257 rate increases. The result is that Providers have not met the goal of real wage and income growth for employees—this is particularly true in a low unemployment environment where we need to compete for the best employees to meet our Social Service missions.

2. How has the implementation of Chapter 257 impacted direct-care wages and fringe benefits at your organization?

• Fifty-six providers (72%) indicated that it had a positive impact.
• Sixteen providers (21%) indicated that there had been no noticeable impact.
• Six providers (8%) indicated that it had a negative impact.

A majority of providers commented that the initial implementation of Chapter 257 had allowed them to increase the salaries of their direct-care employees; however, a number of respondents also indicated that recently their ability to provide raises at or above the rate of inflation was becoming much more difficult. Other comments included the following:

• When 257 was first implemented, we gave significant raises to all staff with a positive evaluation. Many got raises of 10%. It also has enabled us to deal with the large increases in the cost of benefits, especially health care.
• The inconsistency of implementing Chapter 257 has led to inequitable . . . reimbursement levels for non-residential services that are inadequate to cover the ever-increasing costs of health insurance and payment rates necessary to adequately staff programs.
• Our health care benefits increase by double digits each year: anywhere from 10% to 15% increases. Program rate increases have been at 1 and 2%—not enough to cover significant increases in health insurance costs.

3. What has been the impact of Chapter 257 on direct-care staff ratios?

• Twenty-five providers (32%) indicated that it had a positive impact.
• Fifty-two providers (67%) indicated that there had been no noticeable impact.
• One provider (1%) indicated that it had a negative impact.

The majority of providers indicated that they had already maintained ratios as required by licensing regulations and that the rate-setting was based on preexisting ratios. However, some indicated that Chapter 257 was helpful, particularly in the area of recruitment and retention. Specifically, vendors stated the following:

• Ratios are primarily impacted by the number of people in a home and the intensity level assigned by the Department of Developmental Services [DDS] based on the needs of the individuals living in the home.
• Staffing ratios within DDS programs are prescribed by DDS as based on the acuity of client needs.
• The Chapter 257 chart for residential [services] provides set standards for staffing ratios. This makes it easier to staff and plan.

4. What has been the impact of Chapter 257 on direct-care staff vacancies/turnover?

• Twenty-five providers (32%) indicated it that had a positive impact.
• Forty-three providers (55%) indicated that there had been no noticeable impact.
• Ten providers (13%) indicated that it had a negative impact.

A common response was that the rate increases helped somewhat in reducing vacancies and turnover; however, mean vacancies and turnover are still an ongoing issue, because a strong economy and low unemployment rate offer many potential and current hires better employment/economic options. Other comments included the following:

• [Our] staff vacancy and turnover rates are the highest that they have ever been as a result of the low unemployment rate and low wages for staff.
• The ability to raise our starting salaries has made it easier to hire quality staff, but due to the current time of low unemployment, and the fact that we are located in a high cost of living area, we are still unable to pay as much as local fast food restaurants.
• Because Chapter 257 does not fund rates of pay consistent with state operated programs it is very difficult to attract and retain the best qualified staff, resulting in high turnover rates and a high percentage of overtime which is not adequately funded by the rates.

5. How has Chapter 257 affected patient care?

• Forty-nine providers (63%) indicated that it had a positive impact.
• Twenty-five providers (32%) indicated that there had been no noticeable impact.
• Four providers (5%) indicated that it had a negative impact.

The vast majority of vendors felt that Chapter 257 had either a positive or a neutral effect on patient care. Specifically, vendors stated the following:

• We have been able to improve the quality of services through more significant staff training. Everyone receives 20 hours of initial . . . training then an 8 hour annual refresher.
• Client care has improved as we have put into place more adequate monitoring, training, supervision and oversight.
• Patient care has been greatly improved as the organization is now able to provide a stronger management/administrative structure, improved staffed training, [and] improved internal capacity to support professional staff including nursing, case management, and clinical staff.

6. Overall, have the Chapter 257 rates had any financial impact on your organization?

• Fifty-one providers (65%) indicated that they had a positive impact.
• Nineteen providers (24%) indicated that there had been no noticeable impact.
• Eight providers (10%) indicated that they had a negative impact.

The majority of vendors felt that the initial impact was positive because it resulted in a surplus cash flow. However, some vendors have recently seen surpluses and available cash flows decrease for expenses such as healthcare. Other comments included the following:

• The introduction of Ch257 rates has had a significant impact on our financial position. In the first two years after Ch257 implementation, [we] could address a backlog of wage stagnation, eroding benefits, deferred maintenance and underfunded programming . . . substantially improving our agency’s long-term financial viability.
• Without the Chapter 257 rate increases [we] may not be able to continue to provide residential services into the future.
• Only residential programs are funded sufficiently to provide positive operating results. . . . To avoid losing ground even the residential service rate setting process needs to be revamped in such a way as to specifically target and address the need for higher staff salaries . . . and the increased costs of health insurance.

7. Did you participate in the rate-setting process, and if so, do you believe it was open and fair?

• Thirty-seven providers (47%) indicated that it was open and fair.
• Twenty-six providers (33%) indicated that they had neutral opinions on whether it was open and fair.
• Fifteen providers (19%) indicated that it was not open and fair.

Vendors’ positions on this question were mixed. Although the majority felt that the process was open, vendors felt that the historical Uniform Financial Statement and Independent Auditor’s Report (UFR) data used to set rates did not reflect the realities of the current labor market. In addition, rate reviews every two years have produced very low rate increases. Specifically, vendors stated the following:

• The rate review process is supposed to be done absent of consideration for the state and/or departmental budgets but instead on an evaluation of fair and equitable pricing for the services that [the Executive Office of Health and Human Services, or EOHHS] is purchasing. The data and timelines have been inconsistent throughout this process.
• Inexplicably, ALTR direct care benchmark salaries are lower than any other service that has gone through Chapter 257 despite the challenge of having a workforce work 24/7. Other DDS / [Massachusetts Rehabilitation Commission] funded programs have direct care salaries at $1–2 more an hour [for] work with the same population of people.
• As providers raise questions about adequacy of the rates, a typical answer is “it’s in there. . . .” I don’t find that reassuring.

A Key Financial Metric Indicates an Initial Positive Effect From Chapter 257 Pricing.

One of the purposes of Chapter 257 as stated in the report Reforms to Strengthen and Improve Behavioral Health Care for Adults, issued November 3, 2017 by EOHHS, was to improve the financial positions of service providers. To assess the initial effect of Chapter 257 in this area, we calculated the average operating results (ALTR program revenue less operating expenses) realized by the 89 human-service providers that operated in the ALTR program before and after they were required to use Chapter 257 pricing. As noted in the table below, the average operating results in this program increased significantly after Chapter 257 pricing for ALTR was implemented in fiscal year 2014. It should be noted that changes in program spending are affected by provider management decisions, which can vary from year to year and can affect a provider’s net operating results.

	Fiscal Year 2010	Fiscal Year 2011	Fiscal Year 2012	Fiscal Year 2013	Fiscal Year 2014	Fiscal Year 2015	Fiscal Year 2016	Fiscal Year 2017
Average Operating Results	$119,791	$115,749	$75,450	$14,093	$206,829	$600,375	$438,165	$404,007

Direct-Care Workers’ Salaries in Chapter 257–Funded Programs Have Only Increased Marginally.

One of the concerns raised by the Massachusetts Council of Human Service Providers’ report Help Wanted 2: Recruiting and Retaining the Next Generation of Human Services Workers in Massachusetts, dated April 4, 2007, was that direct-care workers were not fairly compensated. Using the UFR data for fiscal years 2010 through 2017, we calculated the average direct-care worker salaries for the three direct-care worker levels in the ALTR program. We then calculated the weighted average salary for all direct-care workers for each fiscal year from 2010 through 2017. We found that during this period, the average hourly rates paid exceeded the minimum wage, and the weighted average direct-care worker’s salary increased by approximately 24% in total, or about 3.1% per year on average. According to the United States Labor Department, the rate of inflation increased by 2% on average during this same period, indicating that the salary increases that direct-care employees received in these programs only exceeded inflation by about 1% per year. Therefore, the increases likely did not have any material effect on improving the financial wellbeing of these direct-care workers.

	Fiscal Year 2010	Fiscal Year 2011	Fiscal Year 2012	Fiscal Year 2013	Fiscal Year 2014	Fiscal Year 2015	Fiscal Year 2016	Fiscal Year 2017
Average Salary	$24,798.00	$25,033.00	$25,132.00	$25,573.00	$26,192.00	$28,773.00	$29,727.00	$30,705.00
Average Wage Per Hour	$11.92	$12.04	$12.08	$12.29	$12.59	$13.83	$14.29	$14.76
State Minimum Hourly Wage	$8.00	$8.00	$8.00	$8.00	$8.00	$9.00	$10.00	$11.00

Date published:	May 8, 2019