Recommendations

October 2016 Department of Developmental Services It Cannot Verify That Vendor Rates for In-Home Respite Services Are Appropriate and That Regional Centers and Vendors Meet Applicable Requirements Report 2016-108 COMMITMENT INTEGRITY LEADERSHIP CALIFORNIA STATE AUDITOR 621 Capitol Mall, Suite 1200 | Sacramento | CA | 95814 916.445.0255 | TTY 916.445.0033 For complaints of state employee misconduct, contact us through the Whistleblower Hotline: 1.800.952.5665 Don’t want to miss any of our reports? Subscribe to our email list at auditor.ca.gov For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Affairs, at 916.445.0255 This report is also available online at www.auditor.ca.gov | Alternate format reports available upon request | Permission is granted to reproduce reports Elaine M. Howle State Auditor Doug Cordiner Chief Deputy October 25, 2016 2016-108 The Governor of California President pro Tempore of the Senate Speaker of the Assembly State Capitol Sacramento, California 95814 Dear Governor and Legislative Leaders: As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the rate-setting policies and oversight related to the in-home respite services program (in-home respite services) administered by the Department of Developmental Services (DDS). Californians with developmental disabilities can access services through the State’s network of 21 regional centers, which receive funding and oversight from DDS. This report concludes that DDS has chosen not to obtain and review information that could assist it in determining whether its hourly payment rates to vendors for providing in-home respite services are appropriate. Specifically, because of its interpretation of certain changes in state law that took effect in 1998 and 2003, DDS has since changed its approach to calculating payment rates and no longer requires vendors to submit cost statements, which detail vendors’ expenses. Rather, DDS currently adjusts the hourly vendor rates based on legislatively approved rate adjustments and changes to minimum wage or labor laws. However, we question DDS’s interpretation of these statutes as negating the need for cost statements, and we believe clarifying legislation is needed because DDS could have been assessing the appropriateness of payment rates based on vendors’ cost statements since 2003. Further, during the past few years, we found that the statewide weighted average hourly payment rate under what we refer to as the Full Service model, in which the vendor recruits the respite worker and schedules services, increased from $17.76 to $21.21, or by more than 19 percent, while the respite workers’ hourly wage increased from $9.89 to $11.14, or by roughly 13 percent. We also found that, unlike certain other services provided by DDS, in-home respite services is not subject to an administrative cost cap of 15 percent. Therefore, the four vendors that received over $7 million in revenue for providing in-home respite services in fiscal year 2014–15 reported a wide variance in terms of their administrative costs. Specifically, the amounts the four vendors reported spending on administrative costs ranged from 12 percent to nearly 30 percent. Without a cap on administrative costs, the State runs the risk that vendors are spending unreasonable amounts on these types of costs. Finally, for in-home respite services, we identified that regional centers perform minimal monitoring of vendors and that DDS performs limited oversight of the regional centers. For instance, DDS is not ensuring that vendors comply with state and federal requirements and limits its review of the program to its biennial fiscal audits of the regional centers. However, these audits have not been conducted in a timely manner and may not include a review of in-home respite services at all because it is a smaller program in comparison to others administered by DDS. Respectfully submitted, ELAINE M. HOWLE, CPA State Auditor 621 Capitol Mall, Suite 1200 Sacramento, CA 95814 916.445.0255 916.327.0019 fax www.auditor.ca.gov Blank page inserted for reproduction purposes only. California State Auditor Report 2016-108 v October 2016 Contents Summary 1 Introduction 7 Audit Results The Department of Developmental Services Cannot Verify That the Rates It Pays Vendors for In-Home Respite Services Are Reasonable and Appropriate 15 Vendors Earning More Than $7 Million in Revenue for In-Home Respite Services Reported High Administrative Costs 25 Vendors Providing In-Home Respite Services Receive Minimal Monitoring Once They Are Authorized by the Regional Centers 28 DDS Should Increase Its Oversight of Regional Centers’ Compliance With State and Federal Requirements 32 Recommendations 35 Appendices Appendix A—Total Number of Vendors, Consumers, and Respite Workers by Regional Center and Region in California 39 Appendix B—In-Home Hourly Respite Rates Paid to Vendors and Respite Workers’ Hourly Rate by Regional Center and Region in California 43 Response to the Audit Department of Developmental Services 55 California State Auditor’s Comments on the Response From the Department of Developmental Services 61 vi California State Auditor Report 2016-108 October 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2016-108 1 October 2016 Summary Results in Brief Audit Highlights . . . The Department of Developmental Services (DDS) is charged with Our audit of the Department of overseeing the in‑home respite services program (in‑home respite Developmental Services' (DDS) oversight services) for Californians with qualifying developmental disabilities; of the in‑home respite services program however, DDS has not recently assessed the appropriateness of the (in‑home respite services) highlighted hourly rates it pays to the vendors of these services and it provides the following: limited monitoring of the program. State law has established in‑home respite services to provide intermittent or regularly » DDS has not verified whether hourly vendor scheduled temporary assistance to families of developmentally payment rates for in‑home respite services disabled individuals (consumers) who are able to reside in their own are appropriate. homes in the care of family. Eligible consumers may obtain in‑home respite services through California’s network of 21 regional centers, • It changed its approach to which purchase in‑home respite services from a variety of private calculating payment rates because providers, referred to as vendors. In fiscal year 2015–16, the State of its interpretation of changes in spent more than $221 million on in‑home respite services that the state law that occurred between regional centers purchased for consumers. 13 and 18 years ago. • It does not require vendors to submit DDS has chosen not to obtain and review information that could cost statements, which were the basis verify whether its hourly vendor payment rates for in‑home respite of setting permanent payment rates services are appropriate. Depending on when vendors began in the past and ensuring rates reflect providing services, DDS currently pays them one of two types vendors’ costs. of rates: a temporary or a permanent hourly rate. Historically, DDS paid a vendor new to providing in‑home respite services a » The majority of the vendors we reviewed temporary rate, which was based on the average of the permanent at five regional centers receive a hourly rates paid to all vendors in California. Once the vendor had temporary hourly rate that is generally provided services and generated the necessary cost information less than the permanent hourly rate other for these services, DDS would convert its temporary rate to a vendors receive. permanent rate based on the cost statements the vendor submitted that detailed its costs and income. Every alternate year thereafter, » During a nearly two‑year period, vendors’ DDS required the vendor to submit cost statements, which DDS hourly rates increased at an average rate used to adjust the permanent hourly rate as necessary. However, that outpaced the hourly wages paid to because of its interpretation of certain changes in state law that respite workers; under one model, the took effect in 1998 and 2003, DDS has since changed its approach statewide average hourly vendor payment to calculating payment rates and no longer requires vendors to rate increased by 19 percent while that of the submit cost statements. Rather, DDS currently adjusts the hourly respite worker increased by only 13 percent. vendor rates—whether they are temporary or permanent—based on legislatively approved rate adjustments and changes to minimum » There is no cap on vendors’ administrative wage or labor laws. However, we question DDS’s interpretation costs for in‑home respite services; thus, of these statutes as negating the need for cost statements, and we vendors may be spending unreasonable believe clarifying legislation is needed because DDS could have amounts on these costs. One vendor been assessing the appropriateness of payment rates based on reported spending less than 15 percent on vendors’ cost statements since 2003. administrative costs while another vendor reported spending almost 30 percent on Moreover, our review of selected vendors at five regional centers those costs. found that the majority receive a temporary hourly rate and that this rate is generally less than the permanent hourly rate that other continued on next page . . . 2 California State Auditor Report 2016-108 October 2016 » Monitoring efforts and reviews of vendors vendors receive. Specifically, after a legislative cap on vendors’ and regional centers need improvement. permanent payment rates took effect on July 1, 2003, DDS has assigned only temporary hourly rates to vendors authorized • The regional centers could not to provide services, while vendors authorized before that time demonstrate that they conduct continue to receive a permanent hourly rate. Certain stakeholders biennial reviews of vendors’ files to have raised concerns that these newer vendors’ temporary hourly ensure the information required for rates, which are not established using cost statements, are typically providing in‑home respite services is higher than the permanent hourly rates of older vendors and, current, complete, and accurate. therefore, place older vendors at a disadvantage. However, for the vendors we reviewed, older vendors’ permanent rates, on • DDS’s monitoring of regional centers’ average, were higher than the temporary rates assigned to newer compliance with in‑home respite vendors. As of March 1, 2016, 19 of the 25 vendors we reviewed services’ requirements is inadequate. received an average temporary hourly rate of $21.97, while the remaining six received an average permanent hourly rate of $23.45. Nonetheless, because DDS does not obtain and review vendors’ costs statements and has not done so for more than a decade, the public lacks assurance that the differences in temporary and permanent hourly rates are appropriate and reasonably reflect vendors’ costs. From June 30, 2014, through March 1, 2016, vendors’ hourly rates increased at an average rate that outpaced the hourly wages paid to respite workers. Because the increases in vendors’ hourly payment rates are largely due to statutory changes in minimum wage and labor laws, we expected to find that the hourly wages of respite workers would increase at a similar rate. However, our review of selected vendors at the five regional centers found that vendors—depending on the type of service model they use— retained a large portion of their hourly payment rates compared to the hourly rate paid to respite workers. This appeared to be true on a statewide basis as well. For example, the statewide weighted average hourly vendor payment rate under what we refer to as the Full Service model, in which the vendor recruits the respite worker and schedules services, increased from $17.76 to $21.21, or by more than 19 percent, while the respite workers’ statewide weighted average hourly wage increased from $9.89 to $11.14, or by nearly 13 percent.1 We found similar differences when reviewing the hourly rates vendors reported they paid under the Employer of Record model; in this model, vendors receive a lower payment rate from DDS than in the Full Service model because the family selects the individual who will provide the services to the consumer.2 DDS has not conducted a study of whether the amounts vendors are 1 The average hourly wage paid to the respite worker at the statewide level and for each regional center is a weighted average. This average takes into consideration the numbers of consumers served by each vendor as a proportion of the total number of consumers served by the respective regional center. 2 Throughout the report we use the term Employer of Record model to indicate the process used when the family selects the individual who will provide the in‑home respite service. Certain vendors we reviewed refer to this model using other terms, such as the parent conversion rate. California State Auditor Report 2016-108 3 October 2016 retaining of their payment rates are reasonable in relation to their costs and profit margins. Without this information, DDS cannot verify whether the rates it pays to vendors are appropriate. Although DDS will be undertaking a required rate study of all of its community‑based services in the future, we believe it should conduct a rate study focusing on in‑home respite services sooner given the uncertainty we found related to the appropriateness of vendors’ rates under this program. Effective June 2016, state law requires DDS to submit a rate study of community‑based services for individuals with developmental disabilities by March 1, 2019. As part of this study, DDS stated that it will conduct a rate study of all of its rates, including in‑home respite services, to assess the effectiveness of its various rate‑setting methodologies. However, rather than wait nearly three years for the results of this study, we believe DDS should request and review vendors’ cost statements sooner and take any appropriate steps, such as seeking changes to state law if necessary, to ensure that its payment rates to vendors are appropriate. Although DDS believes that obtaining cost statements to evaluate in‑home respite services rates is not a productive use of time since it is already required to conduct a comprehensive analysis of rates, it could not provide any documentation of the methodology it formerly used when calculating in‑home respite rates. Thus, it is unclear on what information DDS is basing its statements that obtaining and evaluating cost statements would be overly time‑consuming. Of the more than 250 vendors that provided in‑home respite services in fiscal year 2014–15, four received more than $7 million in revenue specifically for these services. We requested that these vendors report specific financial information, including the revenue they received from public funds broken down by service model, their annual net income, and the amount and percentage of their administrative costs. The amounts these vendors reported spending on costs related to respite workers, including their hourly wages and payroll taxes, vary, as do the amounts the four vendors spend on administrative costs, which include wages and benefits for administrative staff and other operating expenses. For example, only one vendor, Premier Healthcare Services, Inc., reported that its administrative costs were less than 15 percent. The remaining three vendors reported spending between about 19 percent to nearly 30 percent on administrative costs. In‑Roads Creative Programs, Inc. reported a particularly high administrative cost at almost 30 percent. In‑home respite services, unlike certain other services DDS provides, has no cap on vendors’ administrative costs, which could explain some of the variance in these costs. Without a cap on administrative costs, however, the State runs the risk that vendors are spending unreasonable amounts on these types of expenses. 4 California State Auditor Report 2016-108 October 2016 The five regional centers we reviewed have adequate processes to authorize the vendors providing in‑home respite services, a process referred to as vendorization. The vendorization process requires regional centers to verify—before a vendor is allowed to provide services to consumers—that the vendor’s application meets the requirements specified in regulations. These requirements include a proposed or existing service design, a service provider agreement, and a disclosure statement form regarding any activities that would prevent the vendor from being eligible to receive federal funds. In addition, regulations require that regional centers review, at least biennially, all vendor files they maintain to determine that the information required for vendorization is current, complete, and accurate. Regional centers have the authority to terminate vendorization for noncompliance with vendorization requirements. However, while the initial vendorization process is adequate, our review of selected regional centers found that they could not demonstrate adequately, if at all, whether they conduct biennial reviews as required to ensure vendors continue to satisfy vendorization requirements. Three of the regional centers we reviewed claimed to have processes in place to conduct a review of vendors’ files; however, none could provide sufficient evidence demonstrating that the reviews took place. The remaining two regional centers acknowledged that they do not conduct such reviews. By not conducting biennial reviews as required, regional centers risk that some vendors may not currently meet all requirements for providing in‑home respite services. Additionally, DDS performs limited monitoring of regional centers’ compliance with state and federal requirements applicable to in‑home respite services. In fact, its current monitoring efforts consist solely of fiscal audits it is required to conduct every two years. However, DDS has fallen short of meeting this requirement, and for fiscal years 2013–14 and 2014–15, it completed only 14 of the 21 required regional center audits. Further, for those audits it did conduct, the review of in‑home respite services was minimal, if it occurred at all. DDS explained that delays are occurring in completing some regional center audit reports because audit staff is not available and because its internal reviews of these audit reports and the information submitted by the regional centers are sometimes lengthy. According to DDS, its audits division is working to improve recruitment efforts for auditors and identifying ways to streamline the lengthy internal review of audit reports and regional center information. Other than these audits, DDS performs no monitoring of in‑home respite services. Without effective monitoring, DDS has little assurance that the regional centers are complying with applicable requirements and consumers are receiving the intended in‑home respite services. California State Auditor Report 2016-108 5 October 2016 Recommendations Legislature To ensure that DDS is paying reasonable and appropriate hourly rates to vendors for in‑home respite services, the Legislature should clarify whether the rate freeze imposed by the 1998 legislation is still in effect despite the numerous legislative rate adjustments made since then. Further, the Legislature should clarify whether the 2003 legislation that imposed a cap on vendors’ hourly payment rates constitutes only a ceiling on increases of in‑home respite rates and require DDS to resume collecting cost statements and adjust the rates if appropriate. To ensure that vendors’ in‑home respite hourly payment rates are reasonable and appropriate, particularly when compared to their administrative costs and the hourly wages they pay to respite workers, the Legislature should require DDS to conduct an in‑depth review of its in‑home respite rates by November 1, 2017. In conducting this review, the Legislature should require DDS to perform the following: • Obtain and analyze all vendors’ cost statements to determine their costs of providing services and whether vendors’ administrative costs are reasonable. • Obtain information from vendors on the hourly wages they pay to respite workers and analyze this information to determine whether vendors’ hourly rates are reasonable. • Using information from the cost statements, identify whether vendors’ temporary hourly rates should be converted to permanent hourly rates. • Submit a report to the Legislature on the results of its review, including a proposal on the extent to which legislative changes are needed to ensure that in‑home hourly respite rates are appropriate. 6 California State Auditor Report 2016-108 October 2016 DDS To ensure that in‑home respite vendors comply with vendor requirements on an ongoing basis, DDS should require the regional centers to develop a process to conduct biennial reviews of the vendor files the regional centers maintain and document the outcome of the review in the files. DDS should require the regional centers to take appropriate action to ensure that vendors comply, up to and including terminating the vendorization, if necessary. To ensure that it is providing oversight in accordance with state law and federal requirements, DDS should ensure that it performs audits of each regional center every two years as required. In conducting these audits, DDS should consistently include a review of in‑home respite services. Agency Comments DDS disagreed with some recommendations in our report, particularly the recommendation to the Legislature that it require DDS to conduct an in‑depth review of its in‑home respite rates. However, DDS did indicate it would implement some of our recommendations. California State Auditor Report 2016-108 7 October 2016 Introduction Background According to the Lanterman Developmental Disabilities Services Act (Lanterman Act) passed in 1977, the State has accepted responsibility for providing services and support to people with developmental disabilities. State law defines a developmental disability as including intellectual disability, cerebral palsy, epilepsy, autism, and any other condition that is found to be closely related to, or requires similar treatment to that of, an intellectual disability. Californians with developmental disabilities may access services and support through the State’s network of 21 regional centers. These regional centers are private, nonprofit corporations that receive funding and oversight from the Department of Developmental Services (DDS). The regional centers contract for services such as transportation, dental care, respite care, and residential care from a variety of private providers for people with disabilities. The centers also help consumers—those with developmental disabilities as defined by state law—both to obtain services from local public entities such as school districts and transportation agencies and to secure sources of funding from other federal and state agencies. Together, these services are meant to meet the unique needs of these consumers so that they may live independent, productive, and typical lives. In total, regional centers coordinate the provision of more than 150 separate services to support the needs of people with disabilities. Some consumers are able to reside in their own homes in the care of family, and state law requires DDS to establish the in‑home respite services program (in‑home respite services) to assist their families with their care. In‑home respite services are intermittent or regularly scheduled temporary nonmedical care and supervision provided in the home for consumers who reside with family members; these services relieve family members from the constant demanding responsibility of caring for a developmentally disabled individual. In‑home respite services include nonmedical care and supervision to protect the consumer’s safety, and attention to basic self‑help needs and other activities that would ordinarily be performed by the caregiving family member. DDS administers this program through the network of regional centers, with each regional center servicing a specific geographic region. The regional centers generally operate over large areas and typically serve one or more counties. Although in‑home respite services represent a small part of the direct services that DDS provides to those with disabilities, at the end of fiscal year 2015–16 nearly 60,000 consumers were receiving these services through the State’s regional centers. Specifically, in fiscal year 2015–16 DDS spent nearly $4.6 billion on direct services 8 California State Auditor Report 2016-108 October 2016 that the regional centers purchased and that private vendors provided to consumers. Of the nearly $4.6 billion it spent on direct services, more than $221 million, or about 5 percent, was spent on in‑home respite services. Regional Centers and Coordination of Services State law delegates service coordination to regional centers. Regional centers assess individuals and determine whether they are eligible for services. If a person is eligible, the regional center’s service coordinators work with a planning team consisting of the consumer, parents or guardian (if the consumer is under age 18), and advocates to choose the services that will best meet the consumer’s needs and preferences. Specifically, state law requires the planning team to develop an individual program plan that includes goals for the consumer and states how these goals will be met, including the use of specific services and supports. Figure 1 illustrates the process families and individuals use to obtain in‑home respite services. When obtaining these services, the consumer can use authorized vendors or can select an individual with the skills, training, or education necessary to provide the respite services. Appendix A beginning on page 39 presents the total number of vendors, consumers, and respite workers by regional center. Regional Centers and Vendor Authorization State regulations require that a business, organization, or individual wishing to provide in‑home respite services to consumers must first become an authorized vendor of a regional center. The process by which a vendor becomes authorized requires the regional center to determine that the vendor has obtained the necessary licenses and certificates, has created a program design, and meets other service requirements. One of the requirements for an in‑home respite vendor, for instance, is the assurance that all workers maintain current CPR and first aid certifications. When the regional center has received all necessary information from a potential vendor, it has 45 days to approve or deny the service provider’s eligibility. If the regional center approves the vendor, the vendor then submits the information to DDS for final review. For in‑home respite care vendors, DDS then establishes an hourly rate of pay that the vendor will receive for its service. Once provided an hourly rate of pay, the vendor may then be used by any regional center in the State. However, regulations stipulate that such approval does not guarantee that any regional center will use that vendor’s services. Figure 2 on page 10 identifies the five regional centers we reviewed as part of our audit and includes key information regarding in‑home respite services. California State Auditor Report 2016-108 9 October 2016 Figure 1 Process Used by Families and Individuals to Obtain In‑Home Respite Services Family member or individual contacts Regional center provides information on available services. regional center to request assistance. Regional center assesses individual to determine whether the individual qualifies for services. Individual is Individual is eligible. not eligible. Regional center assigns a service coordinator who acts as the individual or family member’s point of contact and is responsible for both implementing and helping to develop the individual program plan (IPP). A planning team, which must include the individual, parents or guardian (if individual is under 18 years old), and regional center coordinator—and may include others—identifies the services necessary to address the individual’s needs, including respite care, and incorporates them into an IPP. If the IPP calls for respite services, the regional center secures such services. The individual, or where appropriate a family member, chooses a respite provider, which can be either an in-home respite vendor or an individual. Respite worker provides respite care to individual in his or her home. Source: Auditor generated based on review of state law and regional center documentation. 10 California State Auditor Report 2016-108 October 2016 Figure 2 Map of Regional Centers Selected for Review and Key In‑Home Respite Service Information as of June 30, 2016 COUNTIES WITHIN SELECTED REGIONAL CENTER SERVICE AREAS Alta California San Andreas ALTA CALIFORNIA REGIONAL CENTER North Los Angeles County • Total number of consumers: 6,246 Westside • Total number of vendors: 16 Inland • Total expenditures: $13,636,109 Sierra Yuba Nevada CALIFORNIA STATEWIDE • Total number of consumers: 59,781 Colusa Su Placer • Total number of vendors: 255 tter • Total expenditures: $221,569,099 Yolo El Dorado mento Alpine Sacra Santa Clara Santa Cruz INLAND REGIONAL CENTER San Benito • Total number of consumers: 9,871 • Total number of vendors: 31 Monterey • Total expenditures: $35,045,877 SAN ANDREAS REGIONAL CENTER • Total number of consumers: 5,833 • Total number of vendors: 35 • Total expenditures: $16,773,458 San Bernardino NORTH LOS ANGELES COUNTY Los Angeles REGIONAL CENTER* • Total number of consumers: 6,032 • Total number of vendors: 33 Riverside • Total expenditures: $21,327,114 WESTSIDE REGIONAL CENTER* • Total number of consumers: 3,390 • Total number of vendors: 6 • Total expenditures: $7,361,969 Sources: Information presented at the statewide level was provided by the Department of Developmental Services, whereas information presented for each regional center was provided by the respective regional center. Note: Expenditures presented are for fiscal year 2015–16. * North Los Angeles County Regional Center and Westside Regional Center are both located within Los Angeles County. California State Auditor Report 2016-108 11 October 2016 DDS’s Vendor Rate‑Setting Methodology Under the Lanterman Act, DDS is required to establish, maintain, and revise as necessary, an equitable process for setting hourly rates of state payment for in‑home respite services, and state regulations specify the methodology DDS should use when calculating those rates. However, DDS does not currently follow this methodology because of changes to state law dating back to September 1998. Two key pieces of legislation changed the approach DDS has taken when calculating the payment rates for vendors providing in‑home respite services. Before September 1998, the rate‑setting process set forth under state law required vendors to submit cost statements to DDS, which it used to calculate an appropriate hourly payment rate. This rate is called a permanent payment rate (permanent rate). The permanent rates all fall within a range of rates that have upper and lower limits. Because new vendors did not yet have a cost history that DDS could use to set a permanent rate, it assigned a temporary hourly payment rate (temporary rate) until the vendor had generated the necessary cost information. Once the new vendors had sufficient cost information, DDS used this information to establish their permanent rate. In 1998 the Legislature directed DDS to develop a performance‑based consumer outcome rate system for in‑home respite services. Subsequently, effective September 1 of that year, the Legislature froze in‑home respite rates until such time as a new rate system was implemented or funds were otherwise appropriated for rate adjustments. Since that time DDS has not adopted a new rate system. However, as we describe further in the Audit Results, since fiscal year 2000–01, the Legislature has appropriated funds for rate adjustments due, in part, to changes in minimum wage or labor laws. These adjustments have increased in‑home respite vendors’ hourly rates and respite workers’ hourly wages. Effective July 1, 2003, the Legislature revised state law to prohibit the conversion of temporary rates to permanent rates if the permanent rates would be higher than the temporary rates in effect at that time unless such increases were necessary to protect the health or safety of consumers. Similarly, vendors receiving a permanent rate cannot modify their program designs if such modifications would result in a rate increase or otherwise seek increases in their permanent rates unless such increases are necessary to protect consumers’ health and safety. Essentially, the 2003 legislation capped the amount that vendors could receive for temporary or permanent rates. At this time DDS stopped collecting cost statements. We discuss our concerns about DDS’s response to the 1998 and 2003 legislation in the Audit Results. 12 California State Auditor Report 2016-108 October 2016 Most vendors of in‑home respite services use what we refer to as the Full Service model. The rates for this model changed most recently on July 1, 2016, when DDS set the lower and upper limits of the range of hourly rates at $20.63 and $28.51, respectively, and set the temporary rate at $24.70 per hour, for the purpose of enhancing wages and benefits. As mentioned earlier, consumers have a choice of obtaining services from either an authorized vendor (the Full Service model) or from an individual whom the consumer has identified—usually a family member or friend (the Employer of Record model). Under the Full Service model, the vendor identifies the respite worker and incurs certain costs for recruiting and training as well as scheduling services for the consumer. As a result, DDS pays a higher hourly rate under the Full Service model than it does under the Employer of Record model.3 The hourly rates for the Employer of Record model are negotiated between the regional center and the vendor. In addition to the Employer of Record model, some regional centers also use the financial management service (FMS) model when family members have identified the person to provide the respite services. One key difference, however, is that the rates paid to FMS vendors and their respite workers are prescribed in regulations rather than being negotiated with the vendor. State Oversight of Regional Centers The regional centers operate under five‑year contracts with DDS, subject to annual appropriations by the Legislature. State law and certain federal program provisions require DDS to oversee the regional centers. One of the Lanterman Act’s requirements is that DDS also monitor the regional centers’ performance of contract objectives. To ensure that the regional centers comply with federal requirements, DDS conducts onsite program reviews and fiscal audits of the regional centers. Scope and Methodology The Joint Legislative Audit Committee (Audit Committee) directed the California State Auditor to provide independently developed and verified information related to the rate‑setting policies and expenditures for in‑home respite services administered by DDS. Table 1 outlines the Audit Committee’s objectives and the methods we used to address those objectives. 3 Throughout the report we use the term Employer of Record model to indicate the process used when the family selects the individual who will provide the in‑home respite service. Certain vendors we reviewed refer to this model using other terms, such as the parent conversion rate. California State Auditor Report 2016-108 13 October 2016 Table 1 Audit Objectives and the Methods Used to Address Them AUDIT OBJECTIVE METHOD 1 Review and evaluate the laws, rules, and Reviewed relevant federal and state laws, rules, and regulations. regulations significant to the audit objectives. 2 Evaluate whether the Department of • Interviewed key staff and obtained available documentation to determine the historic and Developmental Services’ (DDS) process current process used by DDS to establish vendors’ temporary or permanent hourly payment for setting payment rates for in‑home rates for in‑home respite services. respite services complies and is consistent • Reviewed the statutory changes related to minimum wage and labor laws effective during with relevant laws, rules, and regulations. fiscal year 2013–14 through March 1, 2016, to determine whether DDS appropriately Determine the impact of any noncompliance adjusted the vendors’ hourly payment rates. or inconsistency in payment rates that may affect state expenditures, respite • Reviewed the in‑home respite funding DDS provided to regional centers during fiscal workers, developmentally disabled year 2014–15 and selected five regional centers that received a significant amount consumers (consumers), or create a disparity of funding and that were located geographically across California. Additionally, for each of between vendors. these five regional centers, we selected five vendors, for a total of 25 vendors, that provided in‑home respite services to the largest number of consumers during fiscal year 2013–14 through March 1, 2016. • For the 25 vendors we selected, we reviewed the process DDS used to establish the hourly payment rate for each vendor. Specifically, we determined whether DDS assigned the vendor a permanent or temporary hourly payment rate. • Reviewed documentation to identify any instances of noncompliance or inconsistencies in hourly payment rates among in‑home respite vendors. To the extent possible, determined any impact of vendors’ hourly payment rates on state expenditures, respite workers, and consumers, or that created a disparity between vendors. 3 Compare and contrast payment rates by • Interviewed key staff at DDS and each of the five regional centers we selected for review the two types of respite models used— regarding vendors’ hourly payment rates for in‑home respite services. Full‑Service or Employer of Record. • Requested and obtained from each regional center in the State the hourly payment rates paid to all of their in‑home respite vendors for fiscal years 2013–14, 2014–15, and through March 1, 2016. • For the 25 vendors selected in Objective 2, we evaluated their hourly rates under the Full‑Service and, if applicable, Employer of Record models to determine whether the rates were established in accordance with applicable laws and regulations. 4 To the extent possible, compare by region the • Requested information from all vendors at each of the regional centers in the State to market rate for in‑home respite services and obtain detailed information about the hourly wages vendors pay their respite workers as the hourly rate paid to respite staff. of June 30, 2014, June 30, 2015, and March 1, 2016. We present this information in Table B beginning on page 44, by region in California. • To compare the market rate by region for in‑home respite services, we calculated a weighted average for the hourly wage paid to respite workers at the statewide level, each region in the State, and for each regional center. Specifically, using information reported by all vendors within each regional center, we calculated a weighted average that takes into consideration the number of consumers served by each vendor as a proportion of the total number of consumers served by the respective regional center. We present this information in Table B beginning on page 44, by region and regional center. 5 By region, identify the number of vendors Requested information from all regional centers in the State on the number of consumers providing in‑home respite services, the receiving in‑home respite services, the number of vendors providing these services, and the number of respite workers, and the number of number of respite workers. We present this information in Table A on page 41, by regional consumers receiving services. center and region in California, as of June 30, 2014, June 30, 2015, and March 1, 2016. 6 Describe the requirements, including licenses Obtained an understanding of the vendorization process, including any license and and insurance, for a vendor to become an insurance requirements, and described this information in the Introduction. authorized in‑home respite service provider. continued on next page . . . 14 California State Auditor Report 2016-108 October 2016 AUDIT OBJECTIVE METHOD 7 Evaluate the level of oversight performed on • Obtained any audits completed by DDS of the five regional centers for fiscal year 2013–14 in‑home respite service providers, including through March 1, 2016. Determined the extent to which in‑home respite vendors or processes to determine that providers meet services were reviewed. license and insurance requirements, comply • Interviewed key staff at the five selected regional centers and obtained available policies with applicable operational requirements, and and any supporting documentation to determine the level of oversight regional centers have reasonable payment rates. perform of their in‑home respite vendors. • Reviewed a selection of vendor files at each of the five selected regional centers and determined whether the respective regional center ensured that they satisfied all requirements to provide in‑home respite services, a process referred to as vendorization. Further, we determined whether the regional centers conducted biennial reviews of the vendor files they maintain to ensure that vendors continue to satisfy vendorization requirements. • Determined whether the five selected regional centers requested and received audited financial statements from a selection of vendors earning $500,000 or more in in‑home respite services revenue. • Determined whether the five selected regional centers reviewed and investigated any complaints received against their in‑home respite vendors during fiscal year 2013–14 through March 1, 2016. We identified only one such complaint and did not find any reportable concerns regarding the regional center’s processing of the complaint. According to the remaining four regional centers, they received no complaints against an in‑home respite vendor during our audit period. 8 For in‑home respite vendors whose total • Using financial information provided by DDS, we identified three in‑home respite vendors revenue provided by DDS exceeded $7 million who earned more than $7 million in revenue for fiscal year 2013–14, and four in‑home respite in fiscal year 2013–14, determine the vendors who earned that amount for fiscal year 2014–15. Requested these four vendors to following to the extent that this information provide the information specified in Objective 8 for these two fiscal years. To provide more can be obtained: current information, we focused our review on fiscal year 2014–15. a. Revenue received from public funds broken • For each vendor whose total revenue exceeded $7 million in fiscal years 2013–14 and 2014–15, down by applicable model. obtained and reviewed available audited financial statements. For those vendors that did not have recent audited financial statements to provide, we followed up to determine why they b. The hourly rate of in‑home respite workers. had not obtained the required audits. c. Annual net income. • Using the information reported by the four vendors, we assessed whether the expenditure d. The amount and source of revenue from categories they reported for in‑home respite services were allowable based on state law public funds. and determined whether their expenditures were reasonable based on their previous e. The amount and percentage of audited financial statements. administrative costs. f. Major categories of expenditures including, but not limited to, wages and benefits (management and in‑home respite workers broken out separately), in‑home respite worker recruitment and screening costs, staff training and orientation costs, travel costs, and other operating expenses. Determine whether expenditures were allowable and reasonable. 9 Examine the rationale for DDS establishing Reviewed relevant laws regarding the types of programs that are subject to administrative administrative cost caps for some contracts costs. Interviewed key staff at DDS and each of the five selected regional centers regarding but not for others, including contracts with administrative cost caps, the types of programs subject to such caps, and the reasons in‑home respite service vendors. in‑home respite services are not subject to administrative cost caps. 10 Review and assess any other issues that are Interviewed key staff and obtained documentation regarding the activities of the significant to the audit. Developmental Services (DS) Task Force, which was formed for the purpose of strengthening the delivery of services to the community. As of September 2016, we determined that the Task Force has been focused on the closure of developmental centers, whose mission is to provide 24‑hour habilitation and treatment services for residents with developmental disabilities designed to increase, for example, levels of independence and functioning skills. The DS Task Force has not begun work on reviewing DDS’s payment rate structure. Sources: California State Auditor’s analysis of Joint Legislative Audit Committee audit request number 2016‑108 as well as information and documentation identified in the column titled Method. California State Auditor Report 2016-108 15 October 2016 Audit Results The Department of Developmental Services Cannot Verify That the Rates It Pays Vendors for In‑Home Respite Services Are Reasonable and Appropriate The Department of Developmental Services (DDS) has not assessed the appropriateness of the hourly rates it pays to vendors for the in‑home respite services program (in‑home respite services) in more than a decade. DDS pointed to specific changes in state law, which impose certain limits on its payment rates, as its reason for no longer obtaining and reviewing vendors’ cost statements to ensure that the rates it pays to vendors are reasonable and appropriate. However, we question DDS’s interpretation of two key pieces of legislation, which went into effect in 1998 and 2003, and we believe it is missing a critical opportunity to collect vendors’ cost statements and ensure that the hourly rates vendors receive are appropriate. Without this information, which includes vendors’ actual costs for salary and wages, staff benefits, and operating and administrative expenses, DDS is hindered from determining the appropriateness of hourly rates paid to vendors. Specifically, in the past years, increases to vendors’ hourly payment rates have notably outpaced increases to respite workers’ hourly wages. DDS is responsible for setting in‑home respite rates; however, because of its questionable interpretation of law, which warrants clarification from the Legislature, coupled with its less than proactive approach to managing the program, the public has little assurance that vendors’ hourly payment rates are appropriate. DDS Has Not Reviewed the Appropriateness of Hourly Rates Paid for In‑Home Respite Services in More Than 10 Years DDS has chosen not to obtain and review critical information that can verify whether its hourly payment rates for in‑home respite services are appropriate. As described in the Introduction, depending on when vendors began providing services, DDS currently pays them using one of two types of rates: a temporary hourly payment rate (temporary rate) or a permanent hourly payment rate (permanent rate). Historically, DDS paid vendors new to providing in‑home respite services a temporary rate, which was based on the average of the permanent rates paid to all vendors in California. Once these vendors had provided services and generated the necessary cost information for these services, DDS would convert their temporary rate to a permanent rate based on the vendors’ cost statements, which detailed their costs and income. Thereafter, on a biennial basis, DDS required authorized vendors to submit cost statements, which it used to adjust their permanent rates as necessary. However, because of changes in state law that took effect in 1998 and in 2003, DDS changed its approach to calculating payment rates and no longer requires 16 California State Auditor Report 2016-108 October 2016 vendors to submit cost statements. Rather, DDS currently adjusts the hourly rates—whether they are temporary or permanent—based on We question DDS’s interpretation legislatively approved rate adjustments and changes to minimum wage of certain statutes and believe that or labor laws. However, we question DDS’s interpretation of these clarifying legislation is needed. statutes and believe that clarifying legislation is needed. Effective September 1, 1998, the Legislature froze in‑home respite service rates. In doing so, the Legislature specified that the rates would remain frozen until DDS adopted a performance‑based consumer outcome rate system for in‑home respite services or until funds were appropriated for rate adjustments. Since that time, DDS has not adopted a new rate system, for reasons that it could not explain, and despite several appropriations for legislated rate adjustments for in‑home respite services, it continues to believe this 1998 rate freeze is still in effect. The effect of such a freeze is that vendors’ hourly payment rates can neither increase nor decrease, even if the rates are not appropriate. We question this position because we believe that various appropriations over the last 15 years, each of which adjusted vendors’ hourly rates, may well have constituted an appropriation for rate adjustments as contemplated by the Legislature in 1998. For example, in fiscal year 2000–01, the Legislature provided a rate increase for in‑home respite service vendors to be used to increase salaries and benefits, representing a 10 percent wage increase for in‑home respite workers and a 5 percent rate increase for vendors for their associated administrative costs. We believe that this rate increase may well have constituted the kind of appropriation for rate adjustment the 1998 legislation intended. If this is the case, then the rate freeze ended in fiscal year 2000–01. Further, according to DDS, between fiscal years 2001–02 and 2015–16, the Legislature made a number of additional rate adjustments to cover vendors’ costs associated with increases in the minimum wage and certain overtime and sick leave benefits. Additionally, in 2006, all in‑home respite rate schedules were given an across‑the‑board rate increase of 3 percent. To the extent any of these adjustments constitutes an appropriation for rate adjustments as contemplated by the 1998 legislation, we believe the 1998 rate freeze would no longer be in effect. We also question DDS’s interpretation of legislation effective on July 1, 2003. This legislation essentially capped—or placed a ceiling on— the temporary and permanent rates vendors can receive. DDS’s chief counsel explained that it believes the purpose of this legislation was only to enable DDS to increase rates if needed to protect a consumer’s health or safety and that the 2003 legislation was not intended to allow DDS to reset any rates. Although this legislation limited increases in hourly payment rates, it did not prohibit decreases in rates where appropriate. Thus, DDS could have still used cost statements to determine the appropriateness of vendors’ hourly rates. However, DDS stopped collecting vendors’ cost statements at that time. We believe DDS should have continued to collect vendors’ cost statements to determine whether California State Auditor Report 2016-108 17 October 2016 any vendors’ hourly payment rates were too high and to reassign them lower permanent rates if appropriate. As a result, DDS could be missing the opportunity for cost savings for the State if any vendors’ payment rates were found to be too high and should be decreased. Further, because DDS ceased requiring vendors to submit cost statements in fiscal year 2003–04, as reported to us by its assistant deputy director of the Office of Federal Programs and Fiscal Support (assistant deputy director), it cannot know whether vendors’ hourly payment rates are appropriate in any event. In our review of certain vendors at five selected regional centers, we found that the majority of vendors are receiving a temporary rate and that this rate is generally less than the permanent rate that other vendors receive. Some stakeholders have raised concerns that the temporary rates newer vendors receive, which are not established using cost statements, are typically higher than the permanent rates of older vendors, whose rates were established using cost statements. However, for the vendors we reviewed, the permanent rates, on average, were higher than the temporary rates. As shown in Table 2 on the following page, 19 of the 25 vendors we selected for review received temporary rates because they were authorized to provide in‑home respite services after the cap on permanent rates became effective July 1, 2003. The remaining six vendors received permanent rates that averaged $23.45, exceeding the average temporary rate of $21.97 by nearly $1.50. These differences highlight the importance of DDS obtaining and reviewing Until DDS reviews current cost cost statements to ensure that a reduction in the permanent rates statements, the public lacks it pays vendors is not warranted. Until DDS reviews current cost assurance as to whether the statements, the public lacks assurance as to whether the differences in differences in temporary and temporary and permanent rates are appropriate and reasonably reflect permanent rates are appropriate and vendors’ costs. reasonably reflect vendors’ costs. When we asked the DDS assistant deputy director about DDS’s perspective on obtaining cost statements and evaluating the reasonableness of the rates it pays for in‑home respite services, he stated that while cost may be one consideration in establishing rates, it is not the sole factor in determining their appropriateness. He cited, as an example, that Medicaid, known as Medi‑Cal in California, requires states to ensure that payments are consistent with efficiency, economy, and quality of care, and that they are sufficient to enlist enough providers. However, we question this explanation because obtaining and evaluating cost statements is the first step in assessing whether in‑home respite hourly rates are appropriate, particularly as related to economy and whether they are sufficient to enlist enough providers. In fact, because DDS performs no assessment of the appropriateness of vendors’ in‑home respite hourly payment rates, it cannot demonstrate that it has satisfied the Medicaid requirement referenced by the assistant deputy director. This underscores the importance of DDS not delaying its assessment of vendors’ payment rates for in‑home respite services. 18 California State Auditor Report 2016-108 October 2016 Table 2 Selected Vendors’ Temporary or Permanent Hourly Rates as of March 1, 2016 PERMANENT OR CURRENT TEMPORARY HOURLY RATE FOR VENDOR DATE VENDORIZED HOURLY RATE FULL SERVICE Alta California Regional Center Family Respite Services 12/01/1996 Permanent $22.90 Maxim Healthcare Services 04/21/2005 Temporary 21.63 Pacific Homecare Services 12/27/2007 Temporary 22.00 Premier Healthcare Services 11/17/2006 Temporary 22.00 Tri‑Counties Caregiver Relief 07/25/1988 Permanent 21.78 Inland Regional Center Cambrian Homecare 11/19/2004 Temporary $22.00 Inland Respite, Inc. 11/15/1999 Permanent 25.26 In‑Roads Creative Programs, Inc. 06/01/2000 Permanent 22.71 Shella Care Management Services, LLC 11/01/2004 Temporary 21.97 United Cerebral Palsy of the 08/01/1990 Permanent 24.65 Inland Empire North Los Angeles County Regional Center Accredited Respite Services, Inc. 01/01/2012 Temporary $22.54 Choice Home Care, Inc. 08/01/2004 Temporary 21.85 In‑Home Respite and Caregivers 09/01/2002 Temporary* 21.63 Right Choice In‑Home Care, Inc. 10/01/2009 Temporary 21.90 Tender Touch Homecare 03/10/2005 Temporary 21.97 San Andreas Regional Center ComForCare Senior Center, Santa Cruz 10/01/2005 Temporary $21.95 Maxim Healthcare Services, San Jose 07/25/2008 Temporary 22.03 Premier Healthcare Services, San Jose 05/05/2011 Temporary 22.06 Quality Respite and Home Care, Inc., 10/06/2008 Temporary 22.56 Santa Clara Special Home Needs, Inc. 02/02/1987 Permanent 23.40 Westside Regional Center 24Hr HomeCare, LLC† 04/01/2009 Temporary $22.07 BrightStar Care 12/01/2009 Temporary 21.63 Maxim Healthcare Services 07/01/2004 Temporary 22.01 Premier Healthcare Services 03/01/2006 Temporary 22.01 ResCare HomeCare 05/01/2013 Temporary 21.63 Average hourly rates Average permanent rate $23.45 Average temporary rate 21.97 Difference $1.48 Sources: California State Auditor’s analysis of state law and information received from the five selected regional centers. * As of July 1, 2003, the Legislature revised state law and, as a result, the Department of Developmental Services (DDS) stopped converting temporary hourly payment rates (temporary rate) to permanent hourly payment rates (permanent rate), except under certain circumstances. Because this vendor’s temporary rate would have expired on May 31, 2004, after the legislative change, DDS did not convert this vendor's temporary rate to a permanent rate. † A regional center may use services from a vendor that was vendorized by another regional center, as was the case with this vendor. Westside Regional Center used this vendor to provide services to consumers. California State Auditor Report 2016-108 19 October 2016 Further, the assistant deputy director explained that since DDS is already required to conduct a comprehensive analysis of rates, described below, obtaining cost statements to evaluate in‑home respite rates does not seem like a productive use of time. However, DDS could not provide any documentation of the methodology it used before the 2003 cap when calculating in‑home respite rates. Thus, it is unclear what information the assistant deputy director is using to confirm that obtaining and evaluating cost statements would be overly time‑consuming. Although DDS does plan to conduct a required comprehensive rate study, which it states will include in‑home respite rates, the results of this study will not be known for nearly three years. Effective June 9, 2016, state law requires DDS to submit by March 1, 2019, a rate study to the appropriate fiscal and policy committees of the Legislature addressing the sustainability, quality, and transparency of its community‑based services for individuals with developmental disabilities. The assistant deputy director explained that DDS plans to contract with a consultant to conduct this rate study. He reported that DDS worked with the National Association of State Directors of Developmental Disabilities Services in developing a Request for Proposals, which is currently under review by DDS management. When we asked the assistant deputy director to provide details on how DDS plans to meet the deadline for the study, he did not offer additional information. Rather than wait nearly three years for the results of this study, we Rather than wait nearly three years believe the Legislature should require DDS to take action sooner to for the results of a comprehensive assess whether the in‑home hourly respite rates it pays to vendors rate study, the Legislature should are appropriate. For instance, the Legislature should require DDS to require DDS to assess whether the resume collecting vendors' cost statements; DDS could then evaluate in‑home hourly respite rates it pays these statements and determine whether it should seek changes to vendors are appropriate sooner. to state law. If its assessment demonstrated that a vendor’s hourly payment rates needed to be increased, it could proactively request that the cap on permanent rates be lifted. Until these changes are made, DDS will continue to not know whether its hourly payment rates to vendors are appropriate. A Difference Exists Between the In‑Home Respite Hourly Rates Vendors Receive and the Hourly Wages Vendors Pay to Respite Workers In the recent past, vendors’ rates have increased primarily from legislatively approved rate adjustments due in large part to changes in minimum wage or labor laws. However, the hourly wage that vendors reported they pay their respite workers has not seen the same percentage increase. As shown in the table in Appendix B beginning on page 44, on average, from June 30, 2014, through March 1, 2016, the vendors’ Full Service hourly payment rate increased from $17.76 to $21.21, or by more than 19 percent, while the respite workers’ hourly wage 20 California State Auditor Report 2016-108 October 2016 increased from $9.89 to $11.14, or by nearly 13 percent.4 In addition, Table 3 shows the Full Service hourly rate and hourly wages paid to respite workers for the five regional centers we reviewed. Because the increases in vendors’ hourly rates are largely due to statutory changes in minimum wage and labor laws, we expected that the hourly wages paid to respite workers would increase at a similar rate. According to the assistant deputy director, one explanation for the difference we observed is that vendors could be facing increased payroll costs from the increase in respite workers’ hourly wages. For example, he explained that a $1 increase in the hourly wage requires an investment of approximately $1.25 due to increased taxes, social security, and other costs. Notably, state law specifies that the increase in vendors’ hourly rates due to minimum wage increases shall be specific to payroll costs needed to bring respite worker hourly pay into compliance with increases in minimum wage and shall not constitute a general wage enhancement for employees paid above the minimum wage. However, DDS has not undertaken a study to ascertain whether vendors are retaining reasonable amounts of their hourly payment rates for their costs and profit margins. Until such a study is performed, it is unknown whether vendors are retaining a larger proportion of their payments than necessary. This uncertainty highlights the importance of DDS obtaining vendors’ cost statements to ensure that vendors are retaining a reasonable profit and administrative costs are reasonable. Table 3 Vendor Hourly Rates From the Five Selected Regional Centers by Payment Model and Respite Workers’ Hourly Wages as of June 30, 2014, June 30, 2015, and March 1, 2016 JUNE 30, 2014 JUNE 30, 2015 MARCH 1, 2016 FULL EMPLOYER AVERAGE FULL EMPLOYER AVERAGE FULL EMPLOYER AVERAGE SERVICE OF RECORD* WORKER SERVICE OF RECORD* WORKER SERVICE OF RECORD* WORKER VENDOR NAME RATE RATE HOURLY WAGE RATE RATE HOURLY WAGE RATE RATE HOURLY WAGE California— $17.76 $14.39 $9.89 $19.02 $15.05 $10.43 $21.21 $16.64 $11.14 weighted average Regional Centers Alta California $18.28 $13.80 $8.72 $19.41 $14.26 $10.17 $21.74 $15.84 $10.81 Regional Center Inland Regional Center 19.36 13.29 8.98 20.57 15.82 9.90 23.29 17.10 10.36 North Los Angeles 17.61 14.40 10.77 20.07 15.10 11.08 21.93 16.98 11.28 Regional Center San Andreas 17.54 13.65 9.75 18.96 14.35 10.61 20.92 16.53 11.78 Regional Center Westside 18.12 NA 9.80 19.29 NA 9.80 22.03 16.04 10.00 Regional Center Source: Information provided by the five selected regional centers and vendors for the period of June 30, 2014, through March 1, 2016. NA = Not applicable as the regional center did not provide services under this model. * Throughout the report we use the term Employer of Record model to indicate the process used when the family selects the individual who will provide the in‑home respite service. Certain vendors we reviewed refer to this model using other terms, such as the parent conversion rate. 4 The average hourly wage paid to the respite worker at the statewide level and for each regional center is a weighted average. This average takes into consideration the numbers of consumers served by each vendor as a proportion of the total number of consumers served by the respective regional center. California State Auditor Report 2016-108 21 October 2016 Further, we found in our review of selected vendors at the five regional centers we visited that vendors retained a large portion of their payment rates compared to the hourly rate paid to their respite workers, depending on the type of service model. Specifically, as shown in Table 4 on the following page, the majority of vendors we reviewed offer services under both the Employer of Record model and the Full Service model; they receive a lower hourly payment rate from DDS for the Employer of Record model because they have lower operating costs. As described in the Introduction, some families select an individual, such as a family member, to provide respite services to the consumer. A third model, the financial management service (FMS) model, is used under the same circumstances as the Employer of Record model; however, for reasons, some of which we describe later in this section, it is not as commonly used by the regional centers. The Employer of Record rates are negotiated between the regional center and the vendor. For example, Table 4 shows that as of March 1, 2016, the vendor— Inland Respite, Inc. (Inland Respite)—reported that it retained more than $7 per hour under the Employer of Record model; it received a payment rate of $17.27 per hour and paid its respite workers an hourly wage of $10. The disparity is even greater under the Full Service model, under which, for example, Inland Respite received $25.26 per hour, paid respite workers an hourly wage of $10, and retained more than $15 per hour for its operations and any costs associated with the respite worker, such as payroll taxes and benefits. These notable differences raise questions about the appropriateness of the hourly rate paid to vendors. Based on our review of four high‑earning vendors, vendors may be Based on our review of retaining more funds than reasonable to cover their administrative four high‑earning vendors, costs and remain profitable. To identify whether the differences vendors may be retaining more between the vendor hourly rates and the hourly wages paid to funds than reasonable to cover respite workers appear reasonable, we requested information their administrative costs and from the four vendors that each earned more than $7 million in remain profitable. revenue from providing in‑home respite services during our audit period. Table 5 on page 23 presents the proportion of the vendors’ payment rates that each reported spending on hourly wages, payroll taxes, training, administrative costs, and net profit. For example, Accredited Respite Services, Inc. (Accredited) reported retaining nearly 5 percent of its Full Service payment rate as net profit and reportedly spent 30 percent of the payment rate on administrative costs. Similarly, Inland Respite also reported spending about 30 percent of the payment rate on administrative costs and retaining roughly 12 percent as net profit. Premier Healthcare Services, Inc. (Premier Healthcare) reported administrative costs of roughly 39 percent. In the following section, we discuss in more detail these vendors’ administrative costs as they relate to each entity as a whole. 22 California State Auditor Report 2016-108 October 2016 Table 4 Selected Vendors’ In‑Home Respite Rates Compared to the Hourly Wages Paid to Respite Workers as of March 1, 2016 AS OF MARCH 1, 2016 EMPLOYER OF RESPITE WORKER VENDOR NAME FULL SERVICE RECORD* HOURLY WAGE Alta California Regional Center Family Respite Services $21.68 NA $10.75–12.25 Maxim Healthcare Services 21.63 $16.17 10.00–11.00 Pacific Homecare Services 22.00 14.97 10.00–11.00 Premier Healthcare Services 22.00 14.97 10.12–10.85 Tri‑Counties Caregiver Relief 21.78 NA 10.85–11.85 Inland Regional Center Cambrian Homecare $22.00 $16.97 $10.00–11.50 Inland Respite, Inc. 25.26 17.27 10.00 In‑Roads Creative Programs, Inc. 22.71 17.96 10.00–10.15 Shella Care Management Services, LLC 21.97 17.24 10.00–12.00 United Cerebral Palsy of the 24.65 NA 10.25–11.00 Inland Empire North Los Angeles County Regional Center Accredited Respite Services, Inc. $22.54 $17.27 $10.00–12.74 Choice Home Care, Inc. 21.85 17.26 10.00–14.75 In‑Home Respite and Caregivers 20.41 NA 10.00 Right Choice In‑Home Care, Inc. 21.90 NA 10.00–13.50 Tender Touch Homecare 21.97 17.39 10.00–12.00 San Andreas Regional Center ComForCare Senior Center, Santa Cruz $21.95 NA $10.00–11.00 Maxim Healthcare Services, San Jose 22.03 $17.08 10.00–16.50 Premier Healthcare Services, San Jose 22.06 16.69 10.00–13.50 Quality Respite and Home Care, Inc., 22.56 NA 10.30–16.50 Santa Clara Special Home Needs, Inc. 23.40 NA 10.30–12.50 Westside Regional Center 24Hr HomeCare, LLC $22.07 $16.05 $10.00 BrightStar Care (BrightStar) 21.63 NA No Response† Maxim Healthcare Services 22.01 16.03 10.00 Premier Healthcare Services 22.01 16.04 10.00 ResCare HomeCare 21.63 NA 11.00 Source: California State Auditor’s analysis of information received from the five selected regional centers. NA = Not applicable as vendor does not provide services under this model. * Throughout the report we use the term Employer of Record model to indicate the process used when the family selects the individual who will provide the in‑home respite service. Certain vendors we reviewed refer to this model using other terms, such as the parent conversion rate. † Westside Regional Center (Westside) predominately uses four vendors for in‑home respite services. We selected those four vendors for review. In addition, we selected BrightStar as our fifth vendor. However, BrightStar only provides services to one consumer. BrightStar did not respond to requests from Westside to provide us with the hourly wage it paid to the respite worker for the one consumer. California State Auditor Report 2016-108 23 October 2016 We asked the DDS assistant deputy director whether DDS knew what the appropriate level of net profit and administrative costs should be for in‑home respite vendors. He stated that DDS does not have information regarding the profit margins that in‑home respite vendors are making, and it has not undertaken a study of whether vendors are retaining reasonable amounts of their payment rates for their costs and profit. Further, he explained that DDS has not developed guidance or conducted any analysis on an appropriate or reasonable amount that vendors should be retaining for net profit or spending on administrative costs specifically for in‑home respite services. DDS does have guidance on appropriate administrative cost thresholds for other services—those that are subject to a 15 percent administrative cost cap. However, according to the assistant deputy director, this guidance is not specific to net profit. Services that are negotiated and obtained through a contract between vendors and regional centers are subject to the 15 percent administrative cost cap. However, services provided through a vendorization process, such as in‑home respite services, are not subject to any administrative cap. Obtaining and reviewing vendors’ cost statements would allow DDS to conduct such a study, and until it does so, there is risk that vendor rates are not appropriate. Table 5 Vendors Earning More Than $7 Million in Fiscal Year 2014–15 and Their Reported Breakdown of Their Full Service Rate as of January 1, 2016 ACCREDITED RESPITE IN‑ROADS CREATIVE PREMIER HEALTHCARE SERVICES, INC. INLAND RESPITE, INC. PROGRAMS, INC.* SERVICES NORTH LOS ANGELES COUNTY REGIONAL CENTER INLAND REGIONAL CENTER INLAND REGIONAL CENTER WESTSIDE REGIONAL CENTER AMOUNT PERCENTAGE AMOUNT PERCENTAGE AMOUNT PERCENTAGE AMOUNT PERCENTAGE Rate received as of January 2016 $22.54 100.0% $25.26 100.0% $22.71 100.0% $22.01 100.0% Category of Expenditure Respite worker hourly wage $12.25 54.3% $10.00 39.6% $10.15 44.7% $10.75 48.9% Respite worker payroll taxes 1.62 7.2 1.35 5.3 1.17 5.2 2.05 9.3† Respite worker benefits 0.78 3.5 3.25 12.9 0.22 1.0 Respite worker training 0.07 0.3 0.02 0.1 0.00 0.0 0.47 2.1 Administrative costs‡ 6.76 30.0 7.63 30.2 1.07 4.7* 8.68 39.4 Net Profit $1.06 4.7% $3.01 11.9% $10.10 44.4% $0.06 0.3% Source: Unaudited information reported by vendors earning greater than $7 million in revenue by providing in‑home respite services. * In‑Roads Creative Programs, Inc. provided some detail on its administrative costs; however, it was unable to provide all administrative costs, and therefore, its net profit is most likely overstated. † Premier Healthcare did not specify separate amounts for respite worker payroll taxes and benefits. Therefore, the amounts are combined in this table. ‡ For the purposes of this table, we have included all costs not directly related to the respite worker in this category of expenditure. 24 California State Auditor Report 2016-108 October 2016 Some of the regional centers use the FMS model, which is less costly than the Employer of Record and Full Service models. Specifically, DDS issued emergency regulations effective October 1, 2011, based on a federal requirement from the Centers for Medicare and Medicaid Services (CMS) that every state, including California, use a vendor when funding voucher services for in‑home respite care, among other services.5 Consumers choosing their own individual respite worker have the option of choosing how their respite services are coordinated, such as by selecting a vendor that uses the Employer of Record or the FMS model. One key difference, however, is that the rates paid to FMS vendors and their respite workers are defined in regulation unlike Employer of Record rates, which are negotiated. Therefore, under the FMS model, either the adult consumer or family member is vendorized and then hires the respite worker. The FMS vendor acts as the adult consumer's, or family member's, agent in performing payroll duties. Because the adult consumer or family member is vendorized under the FMS model, they are responsible for recruiting and scheduling the respite worker. As a result, the in‑home respite vendor sponsoring the respite worker has fewer responsibilities and thus lower operating expenditures. Based on information we received from one regional center, Eastern Los Angeles Regional Center, as of March 1, 2016, the highest hourly rate it paid an FMS vendor was $13.10. This rate was nearly $3.60 an hour less than the average statewide payment rate under the Employer of Record model shown in the table in Appendix B beginning on page 44. Vendors’ rates under the FMS model Vendors’ rates under the FMS service model are considerably lower than are considerably lower than under under the other models. Three of the five regional centers we reviewed the other models, but is not always use this approach, and each has done so on a limited basis. According a viable option because some cities’ to the resource district manager at San Andreas Regional Center, the minimum wage laws are above the FMS model is its preferred model. However, it is not always a viable pay rate identified in statute. option because some cities’ minimum wage laws are above the pay rate identified in statute; therefore, the Employer of Record model has to be used. Nevertheless, DDS has not taken steps to fully inform or encourage regional centers to use FMS vendors when feasible. The DDS assistant deputy director stated that the FMS model offers consumers and their families another choice as to how respite care is coordinated. He explained that the choice of how service is coordinated—and therefore which mode of service delivery to use—is determined based on the unique needs of the consumer and family and is part of the individual program plan process; therefore, DDS does not suggest one method over the other. Nonetheless, DDS is not precluded from informing regional centers about the cost savings to the State that can be realized by using an FMS model to provide in‑home respite services. Thus, DDS has likely missed an opportunity for additional regional centers to use FMS vendors, which might result in cost savings for the State. 5 Respite services can be obtained from a respite vendor by use of a voucher, which is a means by which a family may choose their own service provider directly through a payment, coupon, or other type of authorization. California State Auditor Report 2016-108 25 October 2016 Vendors Earning More Than $7 Million in Revenue for In‑Home Respite Services Reported High Administrative Costs Of the more than 250 vendors that provided in‑home respite services in fiscal year 2014–15, four received more than $7 million in revenue specifically for these services. For vendors earning this level of revenue, we were asked to determine specific financial information, including the revenue they received from public funds, categorized by service model; their annual net income; and the amount and percentage of their administrative costs. Table 6 on the following page presents this information, as reported by the vendors as of June 30, 2015.6 Two of the vendors, Premier Healthcare and Accredited, have several locations in the State and provide additional services to in‑home respite care. In addition, both Premier Healthcare and Accredited are vendorized by different regional centers. DDS provides funding to each vendorized company, treating each one as a separate vendor. Therefore, the financial information presented in Table 6 for Premier Healthcare and Accredited represents only the revenues and expenditures for in‑home respite care services for the vendors authorized by Westside Regional Center (Westside) and North Los Angeles County Regional Center (North Los Angeles), respectively. State law in effect during the audit period required all vendors All vendors that received $500,000 that received $500,000 or more in annual revenue from DDS or more in annual revenue from to submit audited financial statements to the regional center DDS were required to submit that vendorized them.7 However, our review determined that audited financial statements to the not all vendors had been complying with this requirement. For regional center that vendorized example, of the four vendors that received more than $7 million in them, yet not all vendors had been revenue during fiscal year 2014–15, only Accredited and Premier complying with this requirement. Healthcare submitted the required audited financial statements to North Los Angeles and Westside, respectively. Officials from In‑Roads Creative Programs, Inc. (In‑Roads) explained in September 2016 that they anticipate the audit of their most recent financial statements to be completed by October 2016. In‑Roads also told us that it has not obtained an audit of its financial statements for the years ending December 31, 2013, and December 31, 2014, and its chief executive officer stated that it plans to contract for these audits after it completes the audit of its most recent financial statements for the year ending December 31, 2015. The remaining vendor, Inland Respite, recently obtained an audit of its financial statements for the year ending December 31, 2013. 6 Accredited provided information for the period of April 1, 2014, through March 31, 2015. 7 State law effective June 9, 2016, requires vendors that receive at least $500,000 but less than $2 million in state funds to obtain an independent review of their financial statements for the most recent reporting period. Vendors that receive $2 million or more in state funds must obtain an independent audit of their financial statements. 26 California State Auditor Report 2016-108 October 2016 Table 6 Revenue and Expenditures Reported by Vendors Receiving More Than $7 Million in Fiscal Year 2014–15 in In‑Home Respite Services as of June 30, 2015 VENDOR AND ITS RESPECTIVE REGIONAL CENTER ACCREDITED RESPITE IN‑ROADS CREATIVE PREMIER HEALTHCARE SERVICES, INC.*† INLAND RESPITE, INC. PROGRAMS, INC. SERVICES* NORTH LOS ANGELES COUNTY REGIONAL CENTER INLAND REGIONAL CENTER INLAND REGIONAL CENTER WESTSIDE REGIONAL CENTER TOTAL REVENUE Full Service $745,505 $3,891,363 ‡ $334,408 Employer of Record 13,084,338 6,970,859 ‡ 15,603,497 Totals $13,829,843 $10,862,222 $7,249,889 $15,937,905 DIRECT SERVICE EXPENDITURES Respite Worker Wages and Benefits $9,054,383 $6,070,509 $4,215,694 $13,668,500§ Payroll Taxes 1,197,450 787,852 489,036 Recruitment and Screening 27,884 5,889 2,483 12,541 Training and Travel 11,513 26,642 26,005 22,568 Totals $10,291,230 $6,890,892 $4,733,218 $13,703,609 Percentage of Total Revenue 74.41% 63.44% 65.29% 85.98% ADMINISTRATIVE COSTS Wages and Benefits $1,909,954 $841,380ll $412,257 $1,190,854 Other Operating Expenditures 154,060 1,907,937ll $1,754,862 753,764 Provision for Income Taxes 588,106 359,716 — — Totals $2,652,120 $3,109,033 $2,167,119 $1,944,618 Percentage of Total Revenue 19.18% 28.62% 29.89% 12.20% NET INCOME Amount $886,493 $862,297 $349,552 $289,678 Percentage of Total Revenue 6.41% 7.94% 4.82% 1.82% Source: Unaudited information reported by the specified vendors. * Accredited Respite Services, Inc. (Accredited) and Premier Healthcare Services (Premier Healthcare) provide other services in addition to in‑home respite. The information presented in this table is specific to revenue and expenditures for in‑home respite services. † Information provided by Accredited is for the period April 1, 2014, to March 31, 2015. ‡ In‑Roads Creative Programs, Inc. did not provide a breakdown of its revenue by type of service model. § Premier Healthcare did not specify separate amounts for respite worker wages and benefits and respite worker payroll taxes. Therefore, the amounts are combined in the table. ll According to Inland Respite, Inc., a small percentage of wages, benefits, and other operating expenditures under the Administrative Cost category are direct service expenditures. In an attempt to obtain current financial information for these vendors, we requested that they provide information regarding their revenues and expenditures specific to in‑home respite services as of the fiscal year ending June 30, 2015. Table 6 presents information they reported and is specific to the regional center by which the vendor is authorized. Table 6 also shows the varying amounts that vendors reported spending on direct service expenditures or those related to their respite workers, such as wages, payroll taxes, and recruitment California State Auditor Report 2016-108 27 October 2016 costs. For example, Premier Healthcare reported that it spent nearly 86 percent of its in‑home respite revenue on costs related to the respite workers. This is markedly higher than the 63 percent spent on the same expenditure category by Inland Respite. Unlike certain other services that DDS provides, in‑home respite Unlike certain other services that services currently has no cap on vendors’ administrative costs, which DDS provides, in‑home respite could explain some of the variance seen in Table 6. Specifically, services currently has no cap on effective March 2011, state law required all contracts between vendors’ administrative costs. service providers and regional centers to specify that the service provider must not spend more than 15 percent of program funds on administrative costs. Regional centers may purchase services by way of vendorization, which is the process used to authorize vendors to provide in‑home respite services, or by entering into a contract with a service provider. Because there is no corresponding cap on administrative costs for services provided through the vendorization process, the 15 percent cap does not apply to vendors providing in‑home respite services. Table 6 shows that only one vendor, Premier Healthcare, reported administrative costs, which include wages and benefits of administrative staff and other operating expenditures, that were less than 15 percent. Yet, the portion of its full service rate spent on administrative costs shown previously in Table 5 on page 23 was 39.4 percent—significantly higher than the 12.2 percent shown in Table 6. The vendor did not fully explain why its administrative costs in Table 5 are higher, but one reason it did provide is that these costs include amounts such as program coordinator pay that Premier Healthcare believes are direct service costs. However, we included these costs as administrative costs because they were not specific to the cost of the respite worker. As previously discussed, Table 6 presents the revenues and expenditures for in‑home respite services for vendors as of June 30, 2015. Table 5 presents the breakdown of the Full Service hourly rate received by the vendor. When we followed up with Accredited, it provided us with a reasonable explanation for the difference in the administrative costs it reported and that we presented in tables 5 and 6. Specifically, Accredited stated that the 30 percent in administrative costs it reported, which we present in Table 5, reflects costs under the Full Service model, which is inherently more costly due to vendor responsibilities that include scheduling services and recruiting respite workers. In contrast, Accredited indicated that the roughly 19 percent it reported as administrative costs that we present in Table 6 includes costs for both the Full Service and Employer of Record models, and the Employer of Record model is less costly to operate. Accredited stated that most of its reported administrative costs that are presented in Table 6 relate to services provided under the Employer of Record model, which is why its administrative costs we present in this table are less than those we present in Table 5. 28 California State Auditor Report 2016-108 October 2016 Although the other three vendors did not cite this as a reason for their differences, this explanation could reasonably apply given they also offer services under the Employer of Record model. Further, Table 6 shows that In‑Roads reported the highest administrative cost, at almost 30 percent. Although the wages and benefits it reportedly paid to its administrative staff are significantly lower than the amounts the three other vendors reported, the amount reported by In‑Roads in the other operating expenditures category is substantially higher than two of the vendors. When we requested additional information about these expenditures, In‑Roads could not provide an exact breakdown of the costs that make up this category, but did explain various reasons for the high costs, including the use of attorneys to understand labor laws and rent for many outlying offices that its staff and consumers use. Inland Respite reported administrative costs at more than 28 percent and indicated that a substantial portion of its other operating expenditures were from mileage for respite workers. Accredited reported administrative costs of roughly 19 percent, which includes an amount for the provision for income taxes and a large amount dedicated to wages and benefits of administrative Without a cap on administrative employees. Without a cap on administrative costs, the State runs costs, the State runs the risk that the risk that vendors are spending unreasonable amounts on these vendors are spending unreasonable types of expenditures. Further, without obtaining cost statements amounts on these types from vendors and ensuring that they are promptly submitting of expenditures. audited financial statements, DDS remains unaware of the financial condition of these vendors or whether their rates are appropriate. The information provided by the four vendors in Table 6 also indicates that their reported net income ranged from nearly 2 percent to almost 8 percent. However, DDS officials explained that it does not have information regarding the profit margins in‑home respite vendors are earning. DDS also has not developed guidance or conducted any analysis on an appropriate or reasonable amount vendors should be retaining for net income or spending on administrative costs as it relates specifically to in‑home respite services. Although DDS has issued some guidance on what constitutes appropriate administrative costs for service providers subject to the 15 percent administrative cost cap, this guidance is not specific to net profit. Vendors Providing In‑Home Respite Services Receive Minimal Monitoring Once They Are Authorized by the Regional Centers The five regional centers we reviewed have adequate processes for initially authorizing vendors to provide in‑home respite services. The vendorization process requires regional centers to verify—before a vendor is allowed to provide services to consumers—that the vendor’s application meets the requirements specified in regulations. California State Auditor Report 2016-108 29 October 2016 Specifically, regulations state that a vendor’s application must contain a proposed or existing service design, a service provider agreement, and a disclosure statement form, among other things. The five regional centers we visited used varying approaches to review vendors’ applications. For example, the regional centers have checklists, guidelines, or policies and procedures to assist with their review. These types of documents can help staff identify the items that regulations require as well as additional information or documents that the regional center may require. For example, North Los Angeles explained that it has a detailed technical assistance process that includes conducting orientations to ensure that vendors are aware of the requirements to become authorized and to encourage each vendor to determine whether it has a sound business plan. Further, some regional centers have additional requirements, such as carrying workers’ compensation or abuse and molestation liability insurance, and they require vendors to certify that they will comply with various requirements, including those applicable to in‑home respite services. Once a regional center has authorized the vendor, the vendor sends the necessary information to DDS so that it can establish an hourly rate of pay that the vendor will receive for its service. DDS is required to perform another review of the program design to ensure that it satisfies applicable requirements, and if satisfied, it issues the vendor a temporary hourly rate. Regulations also require that regional centers at least biennially review all vendor files they maintain to determine whether the vendorization information is current, accurate, and complete. In addition, regional centers have the authority to terminate vendorization for noncompliance with vendorization requirements. Our review found that regional centers could not demonstrate Regional centers could not adequately, if at all, that they conduct reviews of vendor files at demonstrate adequately, if at all, that least every two years as required to ensure that vendors continue they conduct reviews of vendor files to comply with the vendorization requirements. In fact, although at least every two years as required three regional centers indicated they review the files to ensure to ensure that vendors continue to they are current, none could fully demonstrate that this review is comply with requirements. conducted. For example, North Los Angeles’s community services director explained that the regional center requires staff to use a checklist during its review of the files, but does not require staff to document or retain the completed checklist; she further explained that she will require the checklist to be documented and retained going forward. Westside’s director of community services stated that although the regional center does not have a formal policy to review vendor files, staff job duties require staff members to routinely review the files. She provided us with a job description for these staff members, which indicates they are to maintain accurate vendor records; however, there is no evidence to verify whether the staff members actually perform those duties. Inland Regional Center indicated that in accordance with regulations, it conducts a review of the vendors’ files at least biennially, but it 30 California State Auditor Report 2016-108 October 2016 could not provide any documentation of the review. The remaining two regional centers acknowledged that they do not review the files as required by regulations. Because the regional centers could not provide sufficient evidence demonstrating that they consistently perform a review of the vendor files, the regional centers risk that some vendors may not comply with vendorization requirements after initially being authorized to provide in‑home respite services. Nonetheless, we did observe that North Los Angeles takes steps to help ensure vendors comply with certain requirements. State law in effect during our audit period required that a vendor receiving $500,000 or more from one or more regional centers during the respective vendor’s fiscal year obtain an independent audit of its financial statements for the period. North Los Angeles includes information on its website regarding this requirement and emphasizes the need for vendors to submit the required audits. As part of this information, North Los Angeles states that regional centers are required by state law to take appropriate action, up to termination of vendorization, for the vendor’s failure to provide an independent audit report as well as adequate resolution of issues identified in the report. In addition, North Los Angeles sends notices to those vendors that fail to submit the independent audit report as required and informs the vendor that failure to meet this requirement will result in termination of its vendorization. As mentioned previously, Accredited, which is vendorized by North Los Angeles, was one of only two vendors that received more than $7 million in revenue during fiscal year 2014–15 that obtained a current audit of its financial statements. Further, North Los Angeles decided to terminate one of its vendors that consistently failed to satisfy this requirement, a decision that DDS upheld in May 2016. Without obtaining those reports, the regional centers are hindered in their ability to monitor a vendor’s financial condition and identify issues that could have an impact on regional center services. The regional centers do not have Moreover, although all regional centers we reviewed informed us procedures that include ensuring that they have a process to review information, such as billing and vendors provide sufficient training to payment authorizations, regarding vendors’ services provided to respite workers, that respite workers consumers, none have procedures that include ensuring vendors obtain the required certifications, provide sufficient training to respite workers, that respite workers and that the quality of services obtain the required certifications, and that the quality of services provided by the vendor for in‑home provided by the vendor for in‑home respite care is adequate and respite care is adequate. consistent across consumers. Although regional centers generally ensure that vendors have updated business licenses and insurance certificates, we did not identify any other actions that the regional centers are taking to monitor the vendors’ compliance with their program design and service outcomes. In addition, regulations require each vendor to perform certain activities, such as submitting to the regional center an annual self‑review of the vendor’s effectiveness in relation to its service design. This review includes a California State Auditor Report 2016-108 31 October 2016 self‑assessment of the vendor’s ability to meet the in‑home respite needs of consumers served, the number of consumers served, and the degree to which family members were satisfied with the service the vendor provided. However, in our review of vendor files, none None of the regional centers of the regional centers consistently ensured that vendors submitted consistently ensured that vendors these self‑reviews as required. Vendors’ submission of these reviews submitted annual self‑reviews was notably infrequent; in fact, at the time we conducted our audit, as required. only two of the 25 vendor files we reviewed included an annual self‑review for the vendor’s most recent fiscal year. One of the regional centers whose vendor files we reviewed that did not contain the self‑reviews stated that if it does receive them from the vendor, it places the self‑reviews in the vendor file; however, the regional center stated that the review is not something that it requires because the regional center believes it has limited value. The remaining four regional centers explained that they have not required vendors to submit self‑reviews or that they lacked the staff resources during the period of our review to ensure that they were collected. Nevertheless, ensuring that these self‑reviews are submitted and evaluated provides regional centers with an opportunity to gauge the vendors’ performance, evaluate consumer satisfaction, and identify any areas of needed improvement in their quality of service. Although there are no requirements that regional centers monitor vendors, they are not precluded from doing so, and we found that two regional centers had previously performed reviews of vendors but chose to stop doing so because of funding constraints. For example, in 2011 the Inland Regional Center formally conducted quality assurance audits of the program, employee, and consumer records for two of the five vendors we selected for review. One of these audits concluded that the respective vendor should require all routine respite workers to have ongoing training on developmental disability topics, among other things, and recommended conducting such trainings twice a year. The audit also found that not all of the employee files contained all of the required documentation, including CPR and first aid certifications. In the audit of the other vendor, Inland Regional Center had a similar finding related to training and noted that regular respite workers should be offered trainings on developmental disability topics. The conclusions reached in these quality assurance audits highlight the value of conducting such reviews, since Inland Regional Center identified key areas for needed vendor improvement in respite service delivery. Nevertheless, when we asked Inland Regional Center why it no longer conducts these audits, the director of community services stated that the auditing requirement is not mandated or funded; as a result, he cut funding for the auditing program about five years ago and shifted the resources toward other business needs. Similarly, the community services director of North Los Angeles, which conducted its last quality assurance review in 2004 for one of 32 California State Auditor Report 2016-108 October 2016 the five vendors we selected for review, explained that it no longer evaluates in‑home respite vendors annually because there is no requirement to do so and no funding to conduct such evaluations. The remaining three regional centers we reviewed had similar responses as to why they do not monitor vendors regularly. Although in‑home respite workers Finally, although in‑home respite workers provide direct services and provide direct services and care to care to individuals with developmental disabilities, these workers are individuals with developmental not required to undergo criminal background checks. In contrast, disabilities, these workers are a program implemented in 2016 that was established by state law not required to undergo criminal to create a home care aide registry, overseen by the California background checks. Department of Social Services, does require certain home care aides to undergo a criminal background check with the California Department of Justice to demonstrate they are of reputable and responsible character. Previous analysis related to similar proposed legislation indicates that services provided under the Lanterman Developmental Disabilities Services Act (Lanterman Act), which includes in‑home respite services, were excluded from this recent program because these services are provided in accordance with individual program plans that are developed, implemented, and monitored by regional centers, which in turn, are overseen by DDS. The analysis concluded that workers, including in‑home respite workers, providing services under the Lanterman Act are already subject to oversight, quality assurance, and training requirements that, for the most part, far exceed the requirements of the proposed legislation. Although we acknowledge this oversight framework exists, there is no requirement that in‑home respite workers undergo criminal background checks. Also, as noted in this report, we found the oversight exerted over the provision of in‑home respite services by the regional centers and DDS to be very limited. Further, in‑home respite services—the focus of this audit—is just one of many services offered under the Lanterman Act, and workers providing other services under the act may also not be required to undergo criminal background checks. Such a requirement could help ensure the health and safety of individuals with developmental disabilities that receive these services. DDS Should Increase Its Oversight of Regional Centers’ Compliance With State and Federal Requirements DDS performs limited monitoring of regional centers’ compliance with the state and federal requirements applicable to in‑home respite services. In fact, its current monitoring efforts in this area consist entirely of the fiscal audits of regional centers it is required to conduct at least every two years. However, these audits generally do not include a review of in‑home respite services. We are not alone in our concern with DDS’s limited monitoring. Several years ago CMS reported that, among other findings, DDS needed to do more to ensure that regional centers had methods for identifying, investigating, and referring vendor California State Auditor Report 2016-108 33 October 2016 fraud cases, and to ensure that vendors’ owners and key management disclose all required criminal conviction information. DDS needed to take these actions in order for the State to continue receiving federal funding. Although at that time DDS took some steps to address these concerns, we found that regional centers continue to not ensure their vendors’ compliance with these requirements. Without increased oversight from DDS to ensure that regional centers are complying with requirements related to in‑home respite services, DDS lacks assurance that services are being provided as intended. For certain eligible consumers, including those receiving in‑home respite services, the regional centers can purchase services from vendors using Medicaid funds made available to them through DDS. Medicaid, known as Medi‑Cal in California, is a jointly funded, federal‑state health insurance program that includes long‑term care benefits for certain low‑income persons and people in financial need. To ensure that regional centers implement the requirements of the Medicaid Home and Community‑Based Services Waiver (Medicaid Waiver), DDS conducts, among other activities, fiscal audits of the regional centers. In its Medicaid Waiver policy manual, DDS commits to conducting fiscal audits of each regional center at least every two years with follow‑up audits in alternate years. Further, the Lanterman Act requires DDS to audit state funds provided to the regional centers, which DDS can accomplish through the biennial fiscal audits it is supposed to conduct. DDS’s standard audit program directs its auditors to test a sample of the regional centers’ expenditures for services, which may include in‑home respite services, that are provided to consumers to ensure that the expenditures are allowable. However, DDS has not audited regional centers every two years DDS has not audited regional centers as required, and for those audits it has conducted, its review every two years as required, and for of in‑home respite services has been minimal or nonexistent. those audits it has conducted, its Specifically, we found that DDS completed 14 of the 21 fiscal review of in‑home respite services audits required for fiscal years 2013–14 and 2014–15. According to has been minimal or nonexistent. DDS’s deputy director of administration, the delays in completing its audit reports are due to audit staffing shortages and a lengthy internal review process for the audit report and the evaluation of information the regional centers submit. She stated that DDS is working with its personnel section on improving recruitment efforts for auditors and is moving toward a more streamlined internal review process. Even so, DDS’s fiscal audits are a key monitoring mechanism that, if not completed every two years, could allow any fiscal problems at an unaudited regional center to continue undetected. Further, these audits do not always include a review of vendor files maintained by the regional center or a review of expenditures related to vendors that provide in‑home respite services. Specifically, according to the deputy director of administration, in‑home respite vendors are part of the universe of vendors from which DDS selects a sample to review. A sample 34 California State Auditor Report 2016-108 October 2016 may not include any in‑home respite vendors because the audits cover all service types, and in‑home respite services is just a small percentage of regional centers’ expenditures. Further, DDS performs no other monitoring activities specific to in‑home respite services. When we requested information on its monitoring efforts of this program, DDS provided us with a list of various monitoring and oversight activities that it stated it performs on all its services. However, when we asked the assistant deputy director which of these activities were specific to in‑home respite services, he confirmed that only the biennial fiscal audits might include a review of in‑home respite services. Without effective monitoring of regional centers, DDS has little assurance regional centers are complying with applicable laws and regulations and whether consumers are receiving the intended in‑home respite services. As an example of the need for additional oversight by DDS, in January 2011 CMS published a comprehensive program integrity review of Medi‑Cal that identified concerns that regional centers were not always ensuring that vendors were eligible providers and were regardless allowed to receive federal funds. Specifically, CMS reported that the State does not capture all required ownership, control, and relationship information from vendors. In response to this finding, in December 2011 DDS adopted emergency regulations requiring all vendors to complete a disclosure form identifying certain individuals, such as their business owners and key managers. Further, biennially, the regulations require the regional centers to ensure that vendors disclose all required criminal conviction information for fraud involving government programs and are otherwise eligible for vendorization. Any such unqualified vendors are ineligible to receive federal funds. Nevertheless, although DDS has taken some steps to address these concerns, it can increase its oversight to ensure regional centers’ compliance with requirements regarding vendors’ disclosure forms. Specifically, in our review of the five regional centers and a selection of five vendor files at each center, for a total of 25 vendor files, we found that only one regional center—North Los Angeles—fully complied with this requirement. At the remaining four regional centers, we found problems in eight of the 20 vendor files we reviewed. In some cases, the regional centers could not demonstrate that they had collected the disclosure forms at all, and in other cases the regional centers could not demonstrate that they had verified that the individuals on the forms were not excluded from receiving federal funds. Three of the regional centers acknowledged that the issues we identified were caused by a lack of oversight on their part in ensuring that the forms were collected and verified in a timely manner. The remaining regional center, Inland Regional Center, could not explain why it did not collect the vendor disclosure form or verify whether the individuals were eligible to receive federal funds. California State Auditor Report 2016-108 35 October 2016 Although the responsibility for collecting and verifying these disclosure forms resides with the regional centers, DDS has a responsibility to ensure that regional centers are complying with applicable requirements. State law requires regional centers to review the disclosure information. According to the deputy director of administration, as part of its audit procedures, DDS reviews the disclosure forms and supporting documentation of the regional center’s verification that vendors are eligible to receive federal funding. However, we question how effective these reviews are, given that, as described previously, DDS has not conducted these audits in a timely manner as required, and we identified several problems with regional centers’ compliance with the requirements regarding vendors’ disclosure forms. Thus, until DDS implements appropriate oversight measures to ensure that regional centers are adhering to these requirements, it runs the risk that some vendors may not be eligible to receive federal funding. Recommendations Legislature To ensure that DDS is paying reasonable and appropriate rates to vendors for in‑home respite services, the Legislature should clarify whether the rate freeze imposed by the 1998 legislation is still in effect despite the numerous legislative rate adjustments made since then. Further, the Legislature should clarify whether the 2003 legislation that imposed a cap on vendors’ hourly payment rates constitutes only a ceiling on increases of in‑home respite rates and require DDS to resume collecting cost statements and adjust the rates if appropriate. To ensure that vendors’ in‑home respite hourly payment rates are reasonable and appropriate, particularly when compared to their administrative costs and the hourly wages they pay to respite workers, the Legislature should require DDS to conduct an in‑depth review of its in‑home respite rates by November 1, 2017. In conducting this review, the Legislature should require DDS to perform the following: • Obtain and analyze all vendors’ cost statements to determine their costs of providing services and whether vendors’ administrative costs are reasonable. • Obtain information from vendors on the hourly wages they pay to respite workers and analyze this information to determine whether vendors’ hourly rates are reasonable. 36 California State Auditor Report 2016-108 October 2016 • Using information from the cost statements, identify whether vendors’ temporary rates should be converted to permanent rates. • Submit a report to the Legislature on the results of its review, including a proposal on the extent to which legislative changes are needed to ensure that in‑home hourly respite rates are appropriate. To ensure the health and safety of individuals with developmental disabilities, the Legislature should require workers who provide in‑home respite services to consumers to undergo a criminal background check. For the other services that fall under the Lanterman Act, the Legislature should require DDS to conduct a review of the types of services provided directly to consumers and whether any oversight mechanisms are in place to ensure that workers providing these services do not have criminal backgrounds. The Legislature should require DDS to report the results of this review no later than December 31, 2017, and, using the results of this review, determine whether legislation requiring such workers to undergo criminal background checks is necessary to protect the health and safety of individuals with developmental disabilities. DDS To ensure that regional centers are aware of the benefits, including cost savings to the State that can be realized by using FMS vendors, DDS should formally communicate to regional centers regarding the model. To ensure that in‑home respite vendors are providing quality services and that vendors are adhering to state requirements, DDS should issue regulations requiring regional centers to conduct periodic and ongoing reviews of vendors’ programs, employees, and consumer records. To ensure that in‑home respite vendors comply with vendor requirements on an ongoing basis, DDS should require the regional centers to develop a process to conduct biennial reviews of the vendor files the regional centers maintain and document the outcome of the review in the files. DDS should require the regional centers to take appropriate action to ensure that vendors comply, up to and including terminating the vendorization, if necessary. To ensure that it is providing oversight in accordance with state law and federal requirements, DDS should ensure that it performs audits of each regional center every two years as required. In conducting these audits, DDS should consistently include a review of in‑home respite services. California State Auditor Report 2016-108 37 October 2016 We conducted this audit under the authority vested in the California State Auditor by Section 8543 et seq. of the California Government Code and according to generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives specified in the Scope and Methodology section of the report. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Respectfully submitted, ELAINE M. HOWLE, CPA State Auditor Date: October 25, 2016 Staff: Laura G. Kearney, Audit Principal Rosa I. Reyes Ryan T. Canady Veronica Perez, MPPA, CFE Legal Counsel: Heather Kendrick, Sr. Staff Counsel For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Affairs, at 916.445.0255. 38 California State Auditor Report 2016-108 October 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2016-108 39 October 2016 Appendix A TOTAL NUMBER OF VENDORS, CONSUMERS, AND RESPITE WORKERS BY REGIONAL CENTER AND REGION IN CALIFORNIA As of June 30, 2016, the 21 regional centers in California had authorized more than 250 vendors to provide in‑home respite services. Those vendors provide services to almost 60,000 consumers each year. Figure A on the following page shows the five regions we identified in California and the regional centers within those regions. Table A on page 41 shows the number of vendors, consumers, and respite workers by regional center and region in California as of June 30, 2014, June 30, 2015, and March 1, 2016. Over the past two and a half years, the number of vendors and respite workers providing in‑home respite services has generally increased, as has the number of consumers receiving this type of service. 40 California State Auditor Report 2016-108 October 2016 Figure A Department of Developmental Services' Regional Centers Identified by Region Source: Department of Developmental Services. California State Auditor Report 2016-108 41 October 2016 Table A Vendors, Consumers, and Respite Workers by Regional Center and Region in California as of June 30, 2014, June 30, 2015, and March 1, 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 NUMBER OF NUMBER OF NUMBER OF NUMBER OF NUMBER OF RESPITE NUMBER OF NUMBER OF RESPITE NUMBER OF NUMBER OF RESPITE REGIONAL CENTER BY REGION VENDORS CONSUMERS WORKERS VENDORS CONSUMERS WORKERS VENDORS CONSUMERS WORKERS Northern California 36 7,603 4,644 37 8,224 4,698 37 8,977 4,697 Far Northern 12 1,823 1,033 13 1,959 1,171 14 2,132 1,226 Redwood Coast 7 552 552 7 597 597 7 599 297 Alta California 17 5,228 3,059 17 5,668 2,930 16 6,246 3,174 Bay Area 62 12,256 8,762 71 12,709 9,144 73 14,283 9,343 Golden Gate 13 2,674 3,061 14 2,696 2,972 13 2,982 2,620 North Bay 7 792 996 8 793 927 8 1,657 824 East Bay 16 3,522 2,704 18 3,617 2,780 19 3,816 2,863 San Andreas 26 5,268 2,001* 31 5,603 2,465* 33 5,828 3,036* Central California 22 4,834 6,297 21 4,817 5,638 20 5,058 6,139 Central Valley 3 1,411 1,533 3 1,487 1,969 3 1,507 2,299 Kern 11 1,304 399 11 1,157 416 11 1,453 432 Valley Mountain 8 2,119 4,365 7 2,173 3,253 6 2,098 3,408 Los Angeles Area 88 16,087 19,328 99 17,268 21,274 107 17,772 22,015 Eastern Los Angeles 15 2,874 3,157 16 3,027 3,365 16 2,894 3,355 Harbor 2 3 4 4 6 12 4 11 17 Frank D. Lanterman 14 1,499 2,638 17 1,544 3,101 17 1,490 3,588 North Los Angeles County 28 5,070 5,594 31 5,590 6,069 33 6,284 5,946 San Gabriel/Pomona 17 1,239 2,609 17 1,614 2,918 19 1,652 3,126 South Central Los Angeles 8 3,037 3,953 9 3,040 4,433 12 3,045 4,702 Westside 4 2,365 1,373 5 2,447 1,376 6 2,396 1,281 Southern California 95 20,208 12,141 100 22,265 13,543 112 23,134 18,747 Inland 28 7,809 3,367* 29 8,823 4,111* 31 9,482 9,048 Orange County 24 4,057 1,849 24 4,545 1,849 27 4,779 1,939 Tri‑Counties 13 2,433 4,271 12 2,894 4,755 13 2,835 4,787 San Diego 30 5,909 2,654 35 6,003 2,828 41 6,038 2,973 Totals for California 303 60,988 51,172* 328 65,283 54,297* 342† 69,224 60,941* Source: Information provided by regional centers and vendors for the period of June 30, 2014, through March 1, 2016. Note: The five regional centers in italics are those we selected for review as discussed in Table 1 on page 13. * The number of respite workers is understated because some vendors did not provide information on the number of respite workers. † As of June 30, 2016, more than 250 vendors provide in‑home respite services; the number presented in this table is larger because in‑home respite vendors can provide services to consumers from various regional centers. Additionally, the 2016 information in this table is as of March 1, 2016. 42 California State Auditor Report 2016-108 October 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2016-108 43 October 2016 Appendix B IN‑HOME HOURLY RESPITE RATES PAID TO VENDORS AND RESPITE WORKERS’ HOURLY RATES BY REGIONAL CENTER AND REGION IN CALIFORNIA The 21 regional centers authorize vendors to provide in‑home respite services to consumers. The hourly rate the Department of Developmental Services (DDS) pays to each vendor varies, as does the amount the vendor pays its respite workers. Table B beginning on the following page shows the hourly vendor rates by payment model and respite workers’ hourly wages as of June 30, 2014, June 30, 2015, and March 1, 2016. Overall, Table B shows that the amount DDS pays the vendors has increased at a greater rate than the hourly wage vendors pay their respite workers. For example, as of June 30, 2014, vendors statewide received on average $17.76 per hour under the Full Service model, while the vendors paid their workers a weighted average hourly wage of $9.89.8 As of March 1, 2016, the statewide average hourly rate paid to vendors under the Full Service model had increased by $3.45 to $21.21, while the amount paid to respite workers had only increased by $1.25 to $11.14. We further analyzed the data by determining an average hourly rate and hourly respite worker wage by region. The Southern California region had the highest average hourly rate paid to vendors, yet it did not have the highest average hourly wage paid to respite workers. Specifically, page 50 of Table B shows that as of March 1, 2016, the average hourly rate paid to vendors in the Southern California region was $22.23 under the Full Service model, and the average hourly wage paid to respite workers was $11.42. In comparison, the Bay Area region shown on page 45 of Table B has the highest average rate paid to respite workers of $11.71. Although, the average hourly wage was the highest in the Bay Area region, the average rate paid to vendors in the region was $20.87. A key reason for the difference between the regions is the local wage increases that have taken effect in some cities in the Bay Area region. 8 The average hourly wage paid to the respite worker at the statewide level, region in the State, and for each regional center is a weighted average. This average takes into consideration the numbers of consumers served by each vendor as a proportion of the total number of consumers served by the respective regional center. 44 California State Auditor Report 2016-108 October 2016 Table B Vendor Rates by Payment Model and Respite Workers’ Hourly Wages as of June 30, 2014, June 30, 2015, and March 1, 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE California—weighted average $17.76 $14.39 $9.89 $19.02 $15.05 $10.43 $21.21 $16.64 $11.14 Northern California—weighted average $17.60 $14.35 $8.97 $18.71 $14.54 $10.04 $21.11 $15.79 $10.80 Far Northern Regional Center $15.91 $14.33 $9.62 $16.94 $14.46 $9.98 $19.41 $16.26 $10.90 Accredited Respite Services 14.33 10.12 14.33 9.38 16.80 12.50 ARC of Butte County, Inc. 15.61 8.81 16.78 9.81 19.39 10.81 Arcadi Home Care & Staffing—Redding 18.12 9.88 19.29 9.15 21.63 9.61 Carry On Special Care 19.29 10.00 21.63 10.50 Home Health Care Management, Inc. 18.34 10.00 19.51 12.00 21.87 15.00 Lassen Life Skills & Job Training 17.23 9.00 18.40 10.00 20.69 10.00 Mains'l California, LLC 10.71† 8.61 11.88† 9.40 13.10† 10.00 Maxim Healthcare Services 14.33 9.09 14.33 9.09 15.16 10.00 Modoc Work Activity Center 20.50 9.00 21.67 9.00 24.15 10.00 Plumas Rural Services, Inc. 19.00 12.90 20.17 10.81 22.56 11.30 Premier Healthcare Services 10.71† 8.77 11.88† 9.73 13.10† 10.79 Premier Healthcare Services 14.33 10.12 14.73 10.12 16.81 10.12 Rowell Family Empowerment 18.12 11.00 19.29 11.00 21.63 11.50 Work Training Center 21.63 10.50 Redwood Coast Regional Center $16.72 $14.91 $9.11 $17.91 $14.91 $9.50 $20.55 $15.27 $10.39 Community Care Respite 17.11 9.00 18.28 9.50 20.99 10.00 CTFS In Home Respite 16.24 9.00 17.41 9.50 20.03 10.00‡ DNADS Respite 16.38 9.00 17.55 9.50 19.90 10.00 Families United—Respite 15.39 9.00 16.56 9.50 19.15 10.65 HCAR In Home Respite 15.87 9.00 17.04 9.50 19.64 10.00 People Services, Inc./Konocti 18.66 9.00 19.83 9.50 22.55 10.00‡ Respite Services Premier Healthcare Services 18.12 14.91 9.50 19.29 14.91 9.50 22.01 15.27 11.00 Alta California Regional Center $18.28 $13.80 $8.72 $19.41 $14.26 $10.17 $21.74 $15.84 $10.81 AccentCare Unskilled Div § § 8.00‡ Accredited FMS 10.71† 8.00‡ 11.88† 9.76 13.10† 10.97 Colusa Support Services 21.27 9.00 22.44 10.00 24.97 10.00 Desire Home Care/Choice Home Care, Inc. 18.12 11.88 20.41 12.38 21.85 17.26 12.38 Elder Options 18.35 10.00 19.52 10.15 21.88 10.15 Family Respite Services 18.89 8.00‡ 20.06 11.03 21.68 11.50 Grace In Home Respite/ 21.27 9.25 22.44 9.50 25.17 10.00 Community Resource Mains'l California, LLC 10.71† 8.61 11.88† 9.40 13.10† 10.00 Mains'l California, LLC 10.71† 8.61 11.88† 9.40 13.10† 10.00 Manos Home Care 20.65 10.50 Maxim Healthcare 18.12 13.80 9.00 19.29 13.80 9.00 21.63 16.17 10.50 Maxim Healthcare Services 18.12 9.50 19.29 9.50 21.99 10.50 Pacific Homecare 18.12 13.80 9.61 19.29 13.80 9.61 22.00 14.97 10.50 Pacific Homecare 15.62 10.11 Premier Healthcare Services 10.71† 8.77 11.88† 9.73 13.10† 10.79 Premier Healthcare 18.12 13.80 8.00‡ 19.29 13.80 10.49 22.00 14.97 10.49 California State Auditor Report 2016-108 45 October 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE Personalized Homecare 18.12 10.00 19.29 9.00 21.63 10.00‡ Serenity Respite Services 19.29 10.06 21.63 11.75 Tri‑Counties Caregiver Relief 17.94 10.82 19.11 10.05 21.78 11.35 Bay Area—weighted average $17.30 $15.01 $9.88 $18.42 $15.20 $10.59 $20.87 $16.41 $11.71 Golden Gate Regional Center $14.09 $17.29 $9.43 $15.28 $17.29 $10.21 $17.71 $17.78 $11.34 24Hr HomeCare, LLC 19.29 13.50 22.18 15.00 Abilities United 21.27 8.00‡ 22.44 9.00‡ 25.25 10.00‡ Accredited Respite 18.71 11.88 21.04 12.00 22.54 11.37 Arcadia Health Care 18.12 17.29 11.59 19.29 17.29 11.92 21.63 17.78 12.38 Bay Respite 18.70 10.18 19.64 10.80 22.00 11.45 ComForCare Senior Services 18.12 13.25 19.29 13.75 21.63 14.50 Innovative Home Care Services § § 8.00‡ § § 9.00‡ Golden Valley Home Care, LLC 18.12 10.74 19.29 12.25 21.63 12.25 Kindred at Home/Professional Healthcare 21.27 10.50 22.44 10.50 24.97 11.38 Levana Autism Support Service, LLC 18.12 14.00 19.29 14.75 21.63 14.75 Neighborhood Nursing Care 19.20 8.00‡ 20.37 9.00‡ 22.78 10.00‡ Precious Heritage Respite Program 18.12 10.50 19.29 15.00 21.63 15.00 Public Partnerships 10.71† 8.00‡ 11.88† 9.00‡ 13.10† 10.00‡ Special Home Needs 19.21 12.25 20.38 11.25 23.40 11.40 North Bay Regional Center $18.62 $15.11 $10.16 $19.54 $15.11 $10.78 $22.02 $15.11 $11.54 AccentCare, Inc. 18.12 8.00‡ 18.12 9.00‡ 18.12 10.00‡ Accredited Respite Services 19.29 13.99 19.29 13.99 22.54 12.72 Arcadia Health Care 15.53 10.56 15.53 10.56 15.53 10.56 Bay Respite Care 18.70 14.76 10.18 19.64 14.76 10.80 22.00 14.76 11.45 Maxim Healthcare Services 14.52 10.00 14.52 11.00 14.52 11.00 Maxim Healthcare Services 19.29 10.00 19.29 11.00 21.63 11.00 Pacific Homecare 15.62 9.61 15.62 10.11 22.01 15.62 11.50 People Services 19.83 9.00 19.83 10.00 Regional Center of the East Bay $19.08 $13.99 $10.38 $19.66 $14.05 $10.91 $22.75 $16.23 $12.02 24Hr HomeCare, LLC 18.12 13.00 11.90 18.12 12.75 22.18 16.63 12.50 AccentCare 18.12 11.80 § § 12.45 20.41 12.50 Accredited Respite Services 18.71 9.50 21.04 10.08 22.54 16.51 12.50 Arcadia Employee Services 15.53 8.90 § § 9.15 16.21 9.87 Bay Area Caregivers 19.29 9.00 20.41 11.75 Bay Respite Care 18.70 14.76 10.18 19.64 14.76 10.80 22.00 14.76 11.45 ComForCare 18.12 11.00 19.29 11.00 20.41 12.25 East Bay Innovations 18.12 13.40 19.29 13.40 20.41 13.40 Family Support Services 20.72 11.25 21.89 12.00 26.51 13.00 FCSN 18.12 13.00 20.41 13.00 20.86 13.25 Hatch § § 12.50 20.41 13.63 21.63 13.63 Manos Home 20.65 10.50 20.85 11.50 23.88 16.60 12.00 Maxim Healthcare Services 18.12 12.00 20.41 11.50 21.97 14.75 Pacific Homecare 18.12 13.00 10.00 19.29 14.17 10.00 22.03 16.21 13.00 Praising Hands § § 13.00 21.63 13.00 Premier Healthcare Services 18.12 13.65 9.05 20.41 14.27 9.05 22.06 16.69 10.00 Professional Healthcare 21.27 9.50 22.44 9.50 24.97 11.00 Quality Respite 18.12 9.78 19.80 13.00 9.78 22.56 10.65 Superior Quality Home 21.63 12.88 continued on next page . . . 46 California State Auditor Report 2016-108 October 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE San Andreas Regional Center $17.54 $13.65 $9.75 $18.96 $14.35 $10.61 $20.92 $16.53 $11.78 24Hr HomeCare, LLC 19.29 18.00 14.50 22.17 14.50 24Hr HomeCare, LLC 22.07 10.00 Abilities United 21.27 8.00‡ 22.44 9.00‡ 25.25 10.00‡ AccentCare of California 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ Amelia Spencer, Mother's Nest Home Care 18.12 8.00‡ 20.41 9.00‡ § § 10.00‡ Arcadi Employee Services § § 9.00‡ Balance4Kids 18.12 11.25 20.41 11.25 21.63 11.25 Care at Home 18.12 10.58 19.29 10.58 22.15 10.30 CareFocus Companion Services 18.12 12.00 20.41 11.50 Caregivers That Deliver 19.29 8.00‡ 20.41 9.00‡ 22.46 10.00‡ ComForCare—Santa Cruz 18.12 10.13 19.29 10.13 21.95 10.50 ComForCare Home Care 20.41 9.00‡ 21.63 10.00‡ ComForCare Senior Services 18.12 8.00‡ 20.41 9.00‡ § § 10.00‡ Central Coast Kids & Families 18.12 8.00‡ 20.41 9.00‡ 21.63 10.00‡ Easter Seals Central 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ Friends of Children with Special Needs 18.12 13.00 19.29 13.00 21.99 11.50 Golden Valley Home Care, LLC 18.12 10.58 20.41 11.65 21.63 11.65 Home of Guiding Hands 22.30 10.93 Maxim Healthcare Services 19.29 13.80 9.00 21.63 16.17 10.50 Maxim Healthcare Services 22.02 10.75 Maxim Healthcare Services 21.27 13.65 9.40 22.44 14.67 9.85 25.36 16.19 12.50 Maxim Healthcare Services (FMS) 10.71† 8.00‡ 11.88† 9.00‡ 13.10† 10.00‡ Maxim Healthcare—San Jose 18.12 13.65 11.05 19.29 14.67 11.00 22.03 17.08 13.25 Neighborhood Nursing Care 20.37 8.00‡ 21.56 9.00‡ 22.78 10.00‡ NP Plus, LLC 18.12 8.00‡ 20.41 9.00‡ Orela, Inc. 19.29 9.00‡ 21.63 10.00‡ Organization of Special Needs Families 18.12 10.00 20.41 9.50 21.63 11.00 Praising Hands 21.63 13.00 Premier Healthcare—San Jose 18.12 13.65 8.00‡ 20.41 14.27 10.75 22.06 16.69 11.75 Premier Healthcare Services (FMS) 10.71† 8.00‡ 11.88† 9.00‡ 13.10† 10.00‡ Quality Respite—Santa Clara 18.12 11.83 19.80 12.13 22.56 13.40 Rowell Family Empowerment 18.12 11.00 Special Home Needs 19.21 12.25 20.38 11.25 23.40 11.40 Special Kids Crusade, Inc. (FMS) 11.88† 9.00‡ 13.10† 10.00‡ United Cerebral Palsy—San Joaquin 25.19 10.13 Victorian Home Care 18.12 8.00‡ 20.41 9.00‡ 21.63 10.00‡ Victorian Home Care 18.12 8.00‡ 20.41 9.00‡ § § 10.00‡ Central California—weighted average $15.53 $14.48 $9.79 $16.42 $15.03 $10.09 $18.42 $17.18 $10.99 Central Valley Regional Center $13.14 $9.83 $14.09 $10.29 $15.53 $11.72 Accredited Respite Services 13.75 10.78 14.92 11.12 14.92 10.27 Maxim Healthcare Services 14.52 10.22 15.69 10.50 18.17 13.67 Premier Healthcare Services 10.71† 8.77 11.88† 9.73 13.10† 10.26 Kern Regional Center $15.90 $14.34 $8.85 $16.59 $15.51 $9.34 $18.43 $17.55 $10.31 Accredited Respite Services 14.34 9.38 15.51 9.38 18.17 10.00 Alternative Care 18.12 9.50 19.29 10.00 21.63 10.50 Aven Care Providers 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ Delano Association Development 19.81 8.00 22.44 9.00 24.97 10.00 for Disabled California State Auditor Report 2016-108 47 October 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE Full Circle Support 18.12 14.34 9.81 19.29 15.51 9.81 20.47 16.80 10.75 In Home Respite 18.12 9.00 19.29 9.00 21.63 10.00 Maxim Healthcare 18.12 8.00‡ 19.29 9.00‡ 21.96 10.00‡ Maxim Healthcare Services 14.34 8.00‡ 15.51 9.00‡ 17.01 10.00‡ Premier Healthcare Services 14.34 9.67 15.51 9.67 18.23 10.00 Premier Healthcare Services (FMS) 10.71† 8.77 11.88† 9.73 13.10† 10.79 Respite Works 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ Valley Mountain Regional Center $16.90 $14.62 $9.86 $17.92 $14.55 $10.06 $20.48 $16.81 $10.59 Accredited Respite 13.85 11.88 13.90 12.00 16.24 11.37 Family Respite Services 18.89 9.50 Howard Training Center 18.12 12.00 19.29 12.00 21.63 12.00 Manos Home Care 19.38 9.50 Maxim Healthcare 13.65 10.22 18.17 13.67 Pacific Homecare Services 17.93 15.62 9.61 19.29 15.62 9.61 22.01 17.50 10.50 Premier Healthcare 14.27 9.50 Premier Healthcare Services 14.40 9.50 14.40 10.49 16.69 10.49 Quality Respite and Home 19.29 9.50 United Cerebral Palsy—San Joaquin 21.27 9.68 22.44 9.78 25.19 10.13 Los Angeles Area—weighted average $17.90 $13.80 $10.01 $19.43 $14.63 $10.26 $21.01 $16.27 $10.76 Eastern Los Angeles Regional Center $17.88 $9.70 $18.83 $10.17 $21.67 $10.95 24Hr HomeCare, LLC 22.07 10.38 Accredited Respite Services (FMS) 10.71† 8.88 11.88† 9.76 13.10† 10.97 Accredited Respite Services 18.71 9.10 19.88 9.84 22.54 10.31 Acumen Fiscal Agent 11.30 8.77 11.88 9.00 13.10 10.00 California Respite Care § § 9.00 21.97 10.00 Cambrian Homecare 18.12 10.00 18.12 10.10 18.12 10.10 Cherish Care Staffing and 19.29 10.00 20.41 10.00 Caregiving Services ComForCare, Inc. 18.12 9.50 19.29 10.00 19.29 10.50 Connections for Care 18.12 8.00‡ 19.29 9.00‡ Cordova Consulting 18.12 9.50 19.29 9.50 22.07 10.00 GSG Supported Services 18.12 10.50 Glen‑Park 24/7 Homecare 18.12 9.00‡ 18.12 10.00‡ Li, Jen Juan 18.80 8.00 Maxim Healthcare Services 18.12 10.31 19.29 11.25 22.00 12.50 Premier Healthcare Services 18.12 9.63 19.29 9.63 22.01 10.00 Premier Healthcare Services 10.71† 8.67 11.88† 9.73 13.10† 10.00 Respite Reachout 16.76 8.81 17.93 9.25 20.48 10.25 Tender Touch Homecare 18.12 9.00 19.29 9.00 21.97 10.00 Volunteers of America 16.94 8.81 18.11 9.81 20.38 10.81 Harbor Regional Center $18.12 $9.10 $18.18 $9.23 $19.79 $9.86 24Hr HomeCare, LLC 18.12 9.50 19.29 9.50 22.07 10.00 Libertana Home Health of Sherman Oaks 19.87 9.00‡ 20.59 10.00‡ Maxim Healthcare Services 18.12 8.31 19.29 9.38 22.01 9.50 Premier Healthcare Services 15.66 9.00‡ 16.22 10.00‡ Frank D. Lanterman Regional Center $17.71 $12.88 $9.24 $18.88 $13.82 $9.49 $21.17 $15.36 $10.87 24Hr HomeCare, LLC 19.29 9.50 21.63 11.00 continued on next page . . . 48 California State Auditor Report 2016-108 October 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE AccentCare, Inc. $21.63 $10.30 Accredited Respite Services $18.12 $9.50 $19.29 $9.50 21.63 11.00 Alternative Care 18.12 9.50 19.29 10.00 21.63 10.50 California Respite 18.12 9.50 19.29 9.50 22.00 10.00 Care 4 U 21.63 11.00 Caring Connection, Inc. 18.12 10.00 19.29 9.50 21.63 10.00 Choice Homecare 18.12 9.50 19.29 9.50 21.63 11.00 Connections for Care 18.12 9.50 19.29 9.50 Cordova Consulting 19.29 9.50 21.63 11.00 DCC Staffing Services, Inc. 18.12 10.00 19.29 10.00 21.63 10.50 Glen‑Park 24/7 Home Care 19.29 9.00‡ Helpful Hands Health Services 18.12 9.50 19.29 9.75 21.63 10.50 Maxim Healthcare Services $12.88 10.31 $13.82 11.25 $15.36 12.50 Maxim Healthcare Services 18.12 9.11 19.29 10.00 22.02 10.75 Premier Healthcare 18.12 9.50 19.29 9.50 21.63 11.00 Right Choice 18.12 11.00 20.41 11.00 21.90 11.75 Tender Touch Homecare 18.12 9.50 19.29 9.50 21.63 11.00 Volunteers of America 16.94 8.00‡ 18.11 9.00‡ 20.38 10.00‡ North Los Angeles County Regional Center $17.61 $14.40 $10.77 $20.07 $15.10 $11.08 $21.93 $16.98 $11.28 24Hr Homecare, LLC 18.12 14.33 8.00 19.29 15.26 9.50 22.05 17.45 10.50 24Hr Homecare, LLC (FMS) § 8.00 11.88† 9.00 13.10† 10.00 AccentCare, Inc. 18.12 14.33 8.00‡ 19.29 15.26 9.00‡ Accredited (FMS) 10.71† 9.00 11.88† 9.76 13.10† 10.97 Accredited Respite Services 18.71 11.88 21.04 12.00 22.54 11.37 All Saints Home Care 18.12 10.00 19.29 10.00 21.63 10.00 Assisted Healthcare Services 18.12 9.50 19.29 10.00 22.06 17.43 10.50 Aven Care Providers 18.12 10.25 19.29 10.25 21.63 17.12 10.50 Bell Homecare Staffing, LLC 18.12 9.75 19.29 9.75 21.63 17.12 10.00 Care 4 You, LLC 21.63 11.00 Caring Connection, Inc. 18.12 10.00 19.29 15.26 9.50 21.63 17.12 10.00 Channel Islands Social Services 21.27 10.25 22.44 11.25 25.41 12.50 Choice Home Care, Inc. 18.12 11.88 20.41 12.38 21.85 17.26 12.38 ComForCare Senior Services 21.63 17.12 11.00 Connections for Care 18.12 14.33 8.00‡ 19.29 15.26 9.00‡ 21.63 10.00‡ Continuity Care Staffing 18.12 9.00 19.29 10.00 21.63 10.00 DCC Staffing Services, Inc. 18.12 10.00 19.29 10.00 21.63 17.12 10.50 Helpful Hands Health Services § § 9.50 20.41 9.75 21.63 10.50 Home Care Solutions 21.63 12.00 In‑Home Respite and Caregivers 18.12 14.33 9.00 20.41 15.26 9.00 21.63 10.00 Libertana Home Health 18.12 9.50 19.29 10.00 22.01 17.40 11.00 Maxim Healthcare Services 18.12 10.08 19.29 10.50 22.03 17.41 10.75 Maxim Healthcare Services 12.88 10.31 13.82 11.25 15.36 12.50 California State Auditor Report 2016-108 49 October 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE Maxim Healthcare Services 18.12 10.19 19.29 10.35 22.01 16.03 10.00 Needed Respite Care 18.12 19.29 9.00 21.63 10.00 Noble Care Providers, LLC 21.63 17.12 11.00 Premier Healthcare Services 18.12 9.85 19.29 9.85 22.01 16.04 10.00 Respite Works, Inc. 18.12 9.88 19.29 11.00 21.63 11.50 Right Choice In‑Home Care 18.12 11.00 20.41 11.00 21.90 11.75 Road to Independence, Inc. 19.29 9.33 21.63 17.12 10.25 Tender Touch Homecare 18.12 10.00 19.29 15.26 10.50 21.97 17.39 11.00 Uni Healthcare, Inc. 18.12 14.33 10.00 19.29 15.26 10.00 21.63 11.00 Vincent Child and Health Care 18.12 8.00‡ § § 9.00‡ § § 10.00‡ Vincent Child and Health Care 19.29 15.26 9.00 § § 10.00‡ Volunteers of America 16.29 8.00‡ 9.00‡ San Gabriel/Pomona Regional Center $18.18 $14.13 $9.34 $19.35 $14.96 $9.71 $22.04 $16.70 $10.51 Accredited Respite Services 18.71 15.23 10.05 19.88 15.43 10.33 22.54 17.27 10.58 Assisted Health Care Services 18.12 14.50 19.29 14.50 22.08 15.50 California Respite Care 18.12 14.47 8.50 19.29 14.71 9.50 21.97 16.48 10.00 Care Unlimited Health 19.74 8.00‡ 20.91 9.00 23.35 10.00‡ Cherish Care Staffing 18.12 9.50 19.29 9.58 21.63 17.30 10.00 Choice Home Care, Inc. 18.12 8.00‡ 19.29 12.38 21.63 12.38 ComForCare, Inc. 18.12 16.23 8.00‡ 19.29 17.17 9.00 22.03 19.39 10.00‡ Cordova Consulting 18.12 9.50 19.29 9.50 22.07 16.23 10.00 Homewatch Caregivers 21.63 11.00 In‑Roads Creative Programs, Inc. 18.75 9.00 19.92 10.15 22.30 10.15 Inland Respite 21.27 12.72 8.69 22.44 12.88 9.50 24.97 16.32 10.00 Mary & Friends, Inc. 17.70 9.30 18.87 9.50 21.52 10.00 Maulin Home Care Services, Inc. 18.12 12.88 9.00 19.29 16.06 10.50 22.05 17.43 10.75 Maxim Healthcare Services 18.12 13.58 10.31 19.29 13.75 11.25 22.00 14.18 12.50 Pacific Homecare Services 15.62 10.00‡ Premier Healthcare Services 18.12 13.80 9.02 19.29 14.69 9.02 22.01 16.73 10.00 Respite Reachout 16.76 8.81 17.93 9.25 20.48 10.25 SGVTC/RF Respite Agency 18.48 13.50 19.65 13.50 22.01 15.00 Volunteers of America 16.94 8.00‡ 18.11 9.00‡ 20.38 10.00‡ South Central Los Angeles $18.19 $10.20 $19.32 $10.23 $17.08 $10.29 Regional Center 24Hr HomeCare, LLC 18.12 9.50 18.12 9.50 17.98 10.00 Accredited Respite Services 18.71 14.33 11.88 19.88 15.23 12.00 17.27 11.37 All About Loving Care 19.29 10.00 All Stints Homecare 20.41 10.00 Cambrian Homecare 19.64 10.75 Choice Homecare 18.12 11.88 19.29 12.38 20.63 16.01 Cordova Consulting 18.12 9.50 19.29 9.50 22.07 10.00 Manuel Green 10.71† 10.71 11.88† 11.88 11.88† 11.88 continued on next page . . . 50 California State Auditor Report 2016-108 October 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE Maxim Healthcare Services $18.12 $14.94 $9.85 $19.29 $15.90 $9.85 $18.15 $10.00 Premier Healthcare Services 18.12 14.77 9.85 19.29 14.77 9.85 16.04 10.00 Tender Touch Homecare 19.29 10.50 21.97 11.00 Volunteers of America 16.94 9.50 18.11 9.50 20.38 11.00 Westside Regional Center $18.12 $9.80 $19.29 $9.80 $22.03 $16.04 $10.00 24Hr HomeCare, LLC 18.12 9.50 19.29 9.50 22.07 16.05 10.00 BrightStar Care 18.12 11.00 19.29 11.00 21.63 10.00‡ Livewell Homecare, Inc. 21.63 13.00 Maxim Healthcare 18.12 10.19 19.29 10.35 22.01 16.03 10.00 Premier Healthcare 18.12 9.85 19.29 9.85 22.01 16.04 10.00 ResCare HomeCare 19.29 9.00‡ 21.63 11.00 Southern California—weighted average $18.53 $14.31 $10.10 $19.72 $15.87 $10.88 $22.23 $17.53 $11.42 Inland Regional Center $19.36 $13.29 $8.98 $20.57 $15.82 $9.90 $23.29 $17.10 $10.36 24Hr HomeCare, LLC 19.29 21.63 16.44 10.00‡ 24Hr HomeCare, LLC 18.12 9.50 19.29 9.50 22.07 10.00 24Hr HomeCare, LLC 19.29 14.87 9.00‡ 22.01 17.59 10.00‡ AccentCare, Inc. 18.12 8.00 19.29 14.41 9.50 21.63 15.25 10.00 Accredited Nursing Care Respite Registry 14.39 14.34 15.56 12.85 Accredited Respite Services, Inc. 18.12 9.50 19.29 10.00 22.06 10.50 Alta Home Care, Inc. 19.29 16.49 10.00 22.19 17.87 10.00 Angel Care 19.29 21.63 11.50 California Psychcare, Inc. 18.12 8.00‡ 19.29 21.63 California Respite Care 18.12 12.88 9.50 19.29 16.73 9.50 21.63 17.70 10.00 California Respite Care § § 8.00‡ California Respite Care 18.12 14.47 8.50 19.29 14.71 9.50 21.97 16.48 10.00 Cambrian Homecare 18.12 12.88 10.00 19.29 15.64 10.50 22.00 16.97 10.75 Care Unlimited Health Services, Inc. 20.91 9.00‡ 23.35 10.00‡ Care Unlimited Health Systems, Inc. 19.74 8.00‡ 20.91 9.00‡ Choice Home Care, Inc. 19.29 21.63 15.98 10.50 ComForCare, Inc. 18.12 16.23 8.00‡ 19.29 17.17 9.00‡ 22.03 19.39 10.00‡ Community Interface In Home Respite 18.12 9.55 Cordova Consulting 18.12 9.50 19.29 9.50 22.07 10.00 Desertarc 21.27 9.00 22.44 9.00 25.29 10.00 Desire Home Care 21.63 11.00 Extra Help at Home 18.12 9.00 19.29 9.00 20.41 10.00 Grace In Home Respite 19.29 21.63 10.00‡ Inland Respite, Inc. 21.27 12.88 8.69 22.44 15.93 9.50 25.26 17.27 10.00 In‑Roads Creative Programs, Inc. 18.75 12.88 8.48 19.92 16.62 10.08 22.71 17.96 10.08 Mary & Friends, Inc. § § 8.00‡ § § 9.00‡ § § 10.00‡ Maulin Home Care Services, Inc. 18.12 12.88 8.25 19.29 16.06 9.75 22.05 17.43 10.00 Maxim Healthcare Services, Inc. 18.12 12.88 8.91 19.29 16.35 9.50 22.01 17.71 11.00 Maxim Healthcare Services, Inc. 18.12 12.88 8.98 19.29 16.35 9.75 22.02 17.64 10.00 California State Auditor Report 2016-108 51 October 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE Maxim Healthcare Services, Inc. 12.88 10.31 13.82 11.25 15.36 12.50 Premier Healthcare Services 18.12 9.85 19.29 9.85 22.01 16.04 10.00 ResCare HomeCare 19.29 21.63 11.50 Respite, Inc. § § 8.00‡ § § 9.00‡ Rest & Relax Respite Agency 18.12 10.50 19.29 10.50 21.63 11.50 Right Choice in Home Care, Inc. 20.41 11.00 Shella Care Management 18.12 12.88 8.50 19.29 16.00 9.50 21.97 17.24 11.00 United Cerebral Palsy 20.62 9.25 21.79 9.75 24.65 10.63 We Care 4 You, LLC 18.12 12.88 11.25 19.29 16.17 12.00 22.10 17.54 12.46 Regional Center of Orange County $17.90 $13.97 $9.20 $19.09 $14.87 $9.77 $21.67 $17.35 $10.82 24Hr Homecare, LLC 18.12 13.97 8.00‡ 19.29 14.87 9.00‡ 22.01 17.59 10.00‡ AccentCare, Inc. 18.12 8.00‡ 19.29 14.87 9.00‡ 21.63 17.21 10.00‡ Accredited Respite Services 18.12 13.97 10.33 19.29 14.87 10.55 22.08 17.66 12.50 Alta Home Care, Inc. 21.63 10.00‡ BHH Services, Inc. 18.12 10.63 19.29 10.85 21.96 11.30 BrightStar Care of Huntington Beach 18.12 11.00 19.29 11.00 21.63 11.50 BrightStar of San Juan Capistrano 18.12 8.00‡ 19.29 9.00‡ California Respite Care, Inc. 21.97 16.48 10.00‡ Cambrian Homecare 18.12 13.97 8.00‡ 19.29 14.87 9.00‡ 21.63 17.21 10.00‡ Caring Matters Home Care 21.63 10.00‡ Choice Home Care, Inc. 18.12 13.97 8.00‡ 19.29 14.87 9.00‡ 21.63 17.21 10.00‡ College Nannies & Tutors 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ College Nannies & Tutors 18.12 11.00 19.29 11.50 21.63 12.00 ComForCare Home Care 21.63 12.00 Foreside Management Company 21.63 10.00‡ GSG Support Services 18.12 10.13 19.29 10.25 21.95 11.00 Mary & Friends, Inc. 17.70 9.30 18.87 9.50 21.52 10.00 Maxim Healthcare Services 18.12 13.97 10.25 19.29 14.87 10.38 22.00 17.58 14.00 Orange County Homecare, LLC 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ Oxford Services 18.12 13.97 8.00‡ 19.29 14.87 9.00‡ 21.99 17.57 10.00‡ Premier Healthcare Services 10.71† 8.00‡ 11.88† 9.00‡ 13.10† 10.00‡ Premier Healthcare Services 18.12 13.97 9.25 19.29 14.87 9.50 22.01 10.00 R&N Family Support Services 18.12 13.00 19.29 13.00 21.63 13.00 Respite Connection 21.27 13.97 10.03 22.44 14.87 10.91 25.34 17.77 12.19 Respite Works, Inc. 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ Right At Home 18.12 10.25 19.29 10.75 21.63 11.13 Roz Home Care 18.12 13.97 9.58 19.29 14.87 10.58 21.68 17.26 15.00 Shella Care Management Services 18.12 9.00 19.29 10.00 21.96 11.00 Straight Enteprises, Inc.—BrightStar 18.12 8.00‡ 19.29 9.00‡ Tri‑Counties Regional Center $18.86 $15.66 $10.99 $19.78 $16.91 $11.93 $21.16 $18.12 $13.24 24Hr Homecare, LLC 10.71† 11.00 11.88† 12.25 12.49† 15.00 24Hr Homecare, LLC 15.88 11.00 19.29 16.91 12.25 20.96 18.37 15.00 continued on next page . . . 52 California State Auditor Report 2016-108 October 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE AccentCare of California $21.63 $10.00‡ Accredited Respite Services $18.71 $14.33 $9.16 § § $9.38 § § 10.00 Acumen Fiscal Agent 10.71† 8.65 Channel Islands Social Services 21.27 10.25 $22.44 11.25 24.14 12.50 Choice Home Care, Inc. 18.12 15.88 11.88 19.29 $16.91 12.38 20.89 $19.35 12.38 Continuity Care Home Nurses § § 10.50 § § 11.00 20.41 11.50 Maxim Healthcare Services 18.12 15.88 9.38 19.29 16.91 9.50 16.91 10.00 Maxim Healthcare Services 18.12 15.88 8.00 19.29 16.91 9.00‡ 20.72 18.06 10.00‡ New Heights, Inc. 18.12 10.25 19.29 11.25 21.63 12.13 Premier Healthcare Services 18.12 15.88 9.20 19.26 16.91 9.68 22.07 18.13 10.40 Respite, Inc. 18.12 15.88 11.75 19.29 16.91 12.50 20.46 17.94 13.50 United Cerebral Palsy—San Luis Obispo 15.78 9.50 16.95 9.50 18.24 9.50 San Diego Regional Center $17.72 $10.70 $18.90 $11.28 $21.54 $12.09 24Hr Homecare, LLC 18.12 10.25 19.29 10.63 22.07 11.50 24Hr Homecare, LLC 22.17 10.00‡ A Better Solution In Home 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ A Subtle In Home Care 21.63 10.00‡ AccentCare, Inc. 18.12 10.75 19.25 10.25 21.63 11.90 Access Autism, Inc. 19.29 10.75 21.63 10.00 Accredited Respite Services 14.39 11.95 15.56 12.85 18.12 12.85 Accredited Respite Services 17.25 11.95 18.42 12.85 21.16 12.85 Act Respite Services 21.63 10.50 Affirmative Home Care 18.12 12.25 19.29 12.25 21.63 12.25 Affordable Home Care 18.12 11.80 19.29 11.80 21.91 12.30 All Valley Home Health 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ American Respite Services 18.12 9.50 19.29 9.50 21.63 9.50 ARCC Center In Home Respite 18.12 10.50 19.29 11.00 22.19 11.25 ARC—San Diego Respite Care 14.87 8.94 16.04 9.81 18.43 10.95 At Your Home Family Care 15.43 8.25 16.60 9.00 19.21 10.00 Avid Respite Services 19.29 12.50 22.16 12.50 BrightStar Care 21.63 12.00 BrightStar Care—Escondido 19.29 12.00 21.63 13.00 Cambrian Homecare 19.29 9.00‡ 21.63 10.00 Circle of Life 19.29 14.00 21.63 14.00 College Nannies & Tutors 18.12 11.00 19.29 12.63 22.08 13.00 ComForCare Home Care 21.63 10.00‡ ComForCare Home Care 18.12 9.00 19.29 10.00 22.08 10.00 Community Interface In Home 18.12 9.55 19.29 9.60 21.63 10.05 East County Respite 21.27 9.50 22.44 10.38 24.97 11.38 Home of Guiding Hands 18.37 8.00‡ 19.54 9.00‡ 22.30 10.00‡ Imperial Valley Respite 16.08 12.12 17.25 12.38 19.83 14.38 Inland Respite, Inc. 21.27 8.00‡ 21.27 9.00‡ 21.27 10.00‡ California State Auditor Report 2016-108 53 October 2016 AS OF JUNE 30, 2014 AS OF JUNE 30, 2015 AS OF MARCH 1, 2016 AVERAGE AVERAGE AVERAGE FULL EMPLOYER WORKER FULL EMPLOYER WORKER FULL EMPLOYER WORKER SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY SERVICE OF RECORD HOURLY VENDOR NAME* RATE RATE† WAGE RATE RATE† WAGE RATE RATE† WAGE Ivey Ranch Park Association 17.95 14.00 19.12 14.50 21.45 15.00 Maxim Healthcare Services 12.88† 10.00‡ Maxim Healthcare Services 18.12 10.63 19.29 11.13 22.01 11.50 Premier Healthcare Services 18.12 8.00‡ 19.29 9.00‡ 22.10 10.00‡ Premier Healthcare Services 10.71† 8.00‡ 11.88† 9.00‡ 13.10† 10.00‡ Rest & Relax Respite Agent 18.12 10.50 19.29 10.50 21.63 11.50 San Diego Respite Project 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ Shella Care Management 18.12 10.00 19.29 11.00 21.94 11.50 South Bay Respite 18.30 12.12 19.47 12.38 22.16 14.38 TERI—In Home Respite 21.27 10.88 22.44 12.38 25.35 13.28 Western Health Home Care 18.12 8.00‡ 19.29 9.00‡ 21.63 10.00‡ YMCA CRS 19.64 11.03 20.81 11.03 23.65 11.03 Sources: Information provided by regional centers and vendors for the period of June 30, 2014, through March 1, 2016. Notes: The five regional centers in italics are those we selected for review as discussed in Table 1 on page 13. Blank cells reflect that the vendor did not provide services under the respective service model and during the respective period of time. * As of June 30, 2016, more than 250 vendors provide in‑home respite services; the number presented in this table is larger because in‑home respite vendors can provide services to consumers from various regional centers. Additionally, the 2016 information in this table is as of March 1, 2016. † Although the rates paid under the financial management services (FMS) model are presented in this table in the column titled Employer of Record Rate, we removed them from our calculation of the average hourly rate for the Employer of Record model. Specifically, the FMS rates are considerably lower than the Employer of Record model rates and, had we included them in the average, the average for the Employer of Record model rates would have been understated. ‡ These rates were not reported by the respective vendor. Therefore, we presented the statewide minimum wage to ensure that the weighted averages would not be understated. § The vendor did not provide any information after numerous requests. 54 California State Auditor Report 2016-108 October 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2016-108 55 October 2016 * * California State Auditor’s comments begin on page 61. 56 California State Auditor Report 2016-108 October 2016 1 California State Auditor Report 2016-108 57 October 2016 2 2 58 California State Auditor Report 2016-108 October 2016 3 California State Auditor Report 2016-108 59 October 2016 4 5 5 6 60 California State Auditor Report 2016-108 October 2016 California State Auditor Report 2016-108 61 October 2016 Comments CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE FROM THE DEPARTMENT OF DEVELOPMENTAL SERVICES To provide clarity and perspective, we are commenting on the response to our audit report from the Department of Developmental Services (DDS). The numbers below correspond to the numbers we have placed in the margin of DDS’s response. We disagree with DDS and continue to believe it is important that it 1 assesses the hourly rates it pays to vendors for the in‑home respite services program (in‑home respite services) sooner than March 2019. As we note on page 15, DDS has not assessed the appropriateness of the hourly rates it pays to vendors for in‑home respite services in more than a decade. Specifically, as we state on pages 15 and 16, DDS changed its approach to calculating payment rates and no longer requires vendors to submit cost statements. Rather, DDS currently adjusts the hourly rates—whether they are temporary or permanent—based on legislatively approved rate adjustments and changes to minimum wage or labor laws. As we state on page 17, we believe obtaining and evaluating cost statements is the first step in assessing whether in‑home respite hourly rates are appropriate, particularly as related to economy and whether they are sufficient to enlist enough providers. Finally, although DDS contends that our recommendation does not include certain considerations, to the extent the Legislature implements our recommendation, DDS is not precluded from considering any other factors in its review of in‑home respite service rates that it believes are necessary. Further, nothing prevents DDS from revisiting its calculation of in‑home respite rates to the extent the rate study it is required to complete by March 2019 identifies a reason to revisit this calculation. In fact, beginning its efforts by focusing on one service, in this case in‑home respite service, could inform DDS’s efforts to evaluate the appropriateness of its rates for other services. Although we acknowledge there may be additional costs involved 2 with performing background checks on in‑home respite workers, we made this recommendation to the Legislature to ensure the health and safety of individuals with developmental disabilities. Additionally, to the extent the Legislature chooses to require DDS to conduct a review of the other services that fall under the Lanterman Developmental Disabilities Services Act, DDS can comment in the results of its review on any increased costs or other obstacles it believes the State will face by requiring background checks on workers providing these services. 62 California State Auditor Report 2016-108 October 2016 3 As stated in our report on page 31, although there are no requirements that regional centers monitor vendors, they are not precluded from doing so, and we found that two regional centers had previously performed reviews of vendors that led to important conclusions. For example, on that same page we describe that in 2011 Inland Regional Center formally conducted quality assurance audits of the program, employee, and consumer records for two of the five vendors we selected for review. One of these audits concluded that the respective vendor should require all routine respite workers to have ongoing training on developmental disability topics and that not all of the employee files contained required documentation, including CPR and first aid certifications. In light of these conclusions and regional centers’ minimal monitoring of vendors in general, which we describe on pages 28 through 32, we encourage DDS to identify cost‑effective methods to help ensure regional centers conduct periodic and ongoing reviews of vendors to identify key areas for needed improvement in in‑home respite service delivery. 4 DDS’s planned action does not fully address this recommendation. Specifically, as we state on page 29, our review found that regional centers could not demonstrate adequately, if at all, that they conduct reviews of vendor files at least every two years as required to ensure that vendors continue to comply with the vendorization requirements. In its response, DDS states that it will send a directive to regional centers to remind them of their responsibility to review vendor files; however, this action falls significantly short of our recommendation as DDS does not indicate the steps it will take to ensure regional centers develop a process to conduct biennial reviews as required. 5 DDS contends in its response that it is complying with the requirement that it conduct audits of regional centers every two years. DDS also acknowledges various reasons for delays in completing and issuing the audit reports, which we describe on page 33. Although DDS indicates it is working to minimize these delays, until it completes and issues audit reports of regional centers to the public every two years, it will continue to not meet the requirement. Further, as we point out on page 33, these audits do not always include a review of vendor files maintained by the regional center or a review of expenditures related to vendors that provide in‑home respite services. Thus, until DDS consistently includes a review of in‑home respite services in its audits, we remain concerned that any fiscal problems or other issues these audits may otherwise reveal could continue to go undetected. California State Auditor Report 2016-108 63 October 2016 The fiscal monitoring that DDS points to in its response is limited 6 to a review of vendors’ billings for services, which may or may not include in‑home respite services. However, as we indicate on page 30, we focused our review on more extensive monitoring efforts by determining whether regional centers ensure vendors provide sufficient training to respite workers, that respite workers obtain the required certifications, and that the quality of services provided by the vendor for in‑home respite care is adequate and consistent across consumers.