Starting Financial Management Services in CLP & VD-HCBS: Strategic Considerations National Resource Center for Participant-Directed Services 6/3/10 Mollie Murphy
Today FMS: What is it? Why have it? Models of FMS: Which is right for you? Providing FMS: Approaches Piggybacking on an existing in-state program Procuring services from a qualified provider “In-house” at the AAA or SUA Pure Do-it-yourself A hybrid model 2
FMS: What is it? FMS is Financial Management Services FMS is a participant-directed support; FMS supplements a participant-directed program Successful FMS ensures the following: Participants act as employers or co-employers in compliance with federal, state and local laws Employment taxes, workers’ compensation and other insurances are managed and paid in compliance with relevant laws Payments are made in accordance with program rules and participant budgets 3
FMS: Why have it? Directing and controlling one’s service and individual budget requires more than selecting workers/vendors and choosing how funds will be spent Early research in the Cash & Counseling program showed that, given the option, participants much prefer that someone other than them ensure taxes are paid, insurance is correct, workers are paid in compliance with regulations and spending is in accordance with the budget Robust FMS allows participants to focus on directing and controlling their service, while administrative duties are handled by professionals with a particular expertise 4
Primary FMS Duties Enrollment Employer enrollment Worker enrollment Vendor enrollment Budget Management Payments Taxes and Insurance Reporting Communication 5
Models of FMS Fiscal/Employer Agent Government Fiscal/Employer Agent Vendor Fiscal/Employer Agent Agency with Choice 6
Fiscal/Employer Agent Participant (or his/her representative) is common law employer Participant/representative employer designates the FMS entity to be the agent = Fiscal/Employer Agent (F/EA) As agent, the F/EA has joint tax liability and manages all administrative functions of being an employer (payments, taxes, insurances, reporting, enrolling participants as employers, providing paperwork and support to hire employees and contract with vendors) IRS has specific procedures outlining the relationship between the employer and agent, the tax liability, and the methods for filing and paying federal taxes 7
Government & Vendor Fiscal/Employer Agent The duties of these models of Fiscal/Employer Agent are the same (aside from how IRS Form 2678 is filed on behalf of each employer) The difference is what kind of entity acts as the F/EA Government Fiscal/Employer Agent: government entity is agent and takes on joint tax liability with the employer Government entity is responsible for performing F/EA duties OR Government entity can contract with a sub-agent Sub-agent can be a vendor and the sub-agent ALSO takes on joint liability for federal taxes Vendor Fiscal/Employer Agent: a non-government entity (vendor) is agent and takes on joint tax liability with the employer Non-government entity is responsible for performing F/EA duties Government entity contracts with vendor; government entity takes on no liability 8
Agency with Choice Agency (not participant) is common law employer Participant or representative may act as co- employer Participant or representative can identify workers and refer them to the agency for hire In general, Agency with Choice is considered a less participant-directed model of FMS, but one that can be easier to get going than F/EA 9
Comparing FMS Models Agency with Fiscal/Employer Choice Agent Who is the employer? The agency, but participants The participant can refer workers to the agency Who pays workers and The Agency with Choice The F/EA manages taxes and insurance? Who has liability for The Agency with Choice The F/EA has joint liability taxes? with the participant 10
Comparing FMS Models Agency with Fiscal/Employer Choice Agent Who trains workers? The agency has ultimate The participant, but a responsibility for this, but counselor can help significant input can come from the participant Who makes decisions The participant refers The participant, but the about hiring workers? workers to the agency, but program may have rules the agency makes the final about worker qualifications decision about hiring workers In whose name is the The Agency with Choice The participant, but the workers’ compensation F/EA procures and policy? manages the policy 11
Comparing FMS Models Agency with Fiscal/Employer Choice Agent Who sets the rate of pay The agency has ultimate The participant, but a for workers? responsibility for this, but program may have a set rate significant input can come range from the participant; the agency must maintain equity across employees per state & federal law Who determines whether a The Agency with Choice The participant, but the worker’s criminal program can set parameters background disqualifies the worker from being hired? What is the cost of these Usually between $65 and Usually between $65 and services? $125 per participant, per $125 per participant, per month month 12
Decide what model is right for your program F/EA supports “pure” participant direction: the participant maintains full control, but has support from the F/EA Agency with Choice can be easier to establish because traditional agencies can provide it See the handout: FMS Model Quiz 13
How will you provide FMS?: Piggybacking Identify other, established participant direction programs in your state and “piggyback” by using the same FMS provider Pros The cost of FMS is influenced heavily by economies of scale (more participants served means a lower FMS cost per participant). By using the same FMS provider as another program in the state and therefore increasing the number of participants served by the provider, you may be able to secure lower costs 14
How will you provide FMS?: Piggybacking ( Pros, continued) Pros The performance of the FMS provider will be known by the program you are piggybacking on An RFP may not be necessary since the FMS provider is already operational in the state The FMS provider may be able to launch services very rapidly since it is already operational in the state The FMS provider should already be familiar with participant direction and the culture of your state FMS providers may be apprehensive about investing in serving a program that can only commit to 1-2 years of operation; by piggybacking, you may be able to get a competitive rate because the provider has another long-term contract in the state 15
How will you provide FMS?: Piggybacking, Other Considerations Other Considerations All participant-directed programs are not alike and therefore all FMS is not alike The VD-HCBS program is a pure “Cash and Counseling” model; many participant direction programs are not This means that the duties of the FMS provider in an existing program could vary greatly from what your program needs the FMS provider to do Therefore, the FMS provider’s capabilities may not fit what your program needs or the costs may be different 16
How will you provide FMS?: Piggybacking, Recommendations Get in-depth information from other programs in your state that use the FMS provider about the provider’s performance Develop a comprehensive list of what you need the FMS provider to do in your CLP/VD-HCBS program (contact NRCPDS for help developing this list; there are many different ways to structure what the AAA/SUA does and what the FMS provider does) Get complete information from other programs in your state and/or the FMS provider on the duties and responsibilities of the FMS provider in the existing program Find out from the FMS provider if they have the capability to perform the duties your program requires Find out what the FMS provider’s fees would be to serve your program Is there a standard monthly or transaction fee? What is it? Are there any “start-up” or other fees? 17
Piggybacking: Example 1 VD HCBS & CLP program used an F/EA provider already serving a Medicaid program with 8000 participants The existing Medicaid program did not have budget authority, did not allow participants to purchase non- employee goods or services; participants could not set rate of pay for workers and only three service codes are allowed The VD HCBS program planned full budget authority, purchase of goods and services, participant rate-setting and other flexible options The AAA and F/EA had to develop many aspects of the VD HCBS program separately from the Medicaid program, with the VD HCBS program requiring a broader range of services from the F/EA than the Medicaid program 18
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