To: JudyAnn Bigby, M.D.

, Secretary
Executive Office of Health and Human Services
From: Michael Weekes, President/CEO
Massachusetts Council of Human Service Providers, Inc.
Re: Testimony on Development of the FY 2012 State Budget
Date: December 13, 2010

Thank you Secretary Bigby and members of the Executive Office of Health and Human Services
for this opportunity to address you. The Providers' Council is a statewide association of home-
and community-based caregivers that contract with state purchasing agencies to deliver a wide
array of rehabilitation, education, health and social services. The Council is the state’s largest
association of human service providers, and it represents a sector that employs more than
185,000 individuals, serves one in 10 state residents and receives more than $2.1 billion from the
state – about 8% of the state’s budget.

Our society has asked the elected and appointed officials of the Commonwealth to enable our
most vulnerable residents to live safely in the community with full and independent lives. The
Commonwealth depends on the contract human service provider sector to fulfill these important
responsibilities. Today, we turn to you for the support necessary for the provider community to
offer the quality services we have all promised to deliver. We hope to raise three issues with you
– Chapter 257 Implementation, Workforce Pay and Health Insurance – and then offer some
responses to the questions you asked in your invitation to submit testimony.

Issue: Chapter 257 Implementation

The steep decline in our economy has increased the demands on the purchase-of-service system
and our providers. A major problem, however, involves human services agencies being asked to
continually do more with less. This is particularly stressful because unlike many other state-
funded sectors, the human services sector has historically endured poor financial conditions.

Chapter 257 was passed unanimously by both branches of the legislature and signed into law by
the governor to improve the financial condition of the human services sector. The EOHHS 2007
report titled, “Financial Health of the Providers in the Massachusetts Human Service Systems”
include among its findings that:

 Almost half of providers do not generate sufficient cash to pay for operations
 Sixty percent of providers have less than one month of cash on hand at year-end
 One-third of providers have over 45 days of unpaid receivables

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Recommendation: Work with providers to implement Chapter 257

We ask that the state work more closely with the provider community in ensuring
the full and fair implementation of Chapter 257. We appreciate that the state’s
economy has made it more challenging to implement the law. However, we look forward
to working with you and the Administration to seek methods of accomplishing the goals
of this important legislation. Only through our concerted efforts will we achieve the type
of reform mandated by the legislature and supportive of the public’s interest.

Issue: Workforce Pay

The Administration is well aware of the low compensation levels of our workforce. Our
primarily female workforce has wages that are among the lowest in the Commonwealth, and
some comparable positions in other sectors offer wages that are at least $15,000 higher. While
we expect the full and proper implementation of Chapter 257 will address this, our workforce
waits. For the third consecutive year, direct care workers this year again went without wage
increases as a result of the economy, and we are compelled to request relief. Please understand
that state employees have received salary adjustments and wage increases, while the community
human services workers have been operating with the same fixed salaries they received since a
salary reserve in FY ’08.

These low-paid workers – many of whom make less than $12 per hour – have incredibly
demanding jobs. Without even a basic cost-of-living adjustment, these 30,000 employees will,
due to inflation, see what amounts to a decrease in pay as their salaries remains stagnant. They
are also subject to rising health insurance costs, pushing them further away from wage self
sufficiency.

Recommendation: Salary Reserve

We ask that a Salary Reserve account of $28 million is appropriated to direct care
human services workers making $40,000 and under per year. We recognize that the
Governor has made both human services and jobs a priority next year. No greater action
can be undertaken other than the inclusion of a salary reserve until Chapter 257 is fully
implemented with rates that support our dedicated workforce. This salary adjustment – of
less than $20 per employee per week – will simply allow the salary for direct care
workers to be kept in line with inflationary increases. If averaged over the past three
years, it represents an increase of less than $7 per week.

Issue: Health Insurance

The rising cost of health insurance is another critical issue for the human services sector. These
nonprofits cannot afford the double-digit percentage increase they are seeing year after year to
provide health insurance to their employees. As it becomes more unaffordable to purchase health
insurance, organizations find more of their employees declining insurance, facing penalties or
entering into health insurance plans with minimal coverage. It is ironic that many of those who
dedicate their lives to helping others cannot themselves receive affordable health insurance.

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Recommendation: Support Council’s Health Insurance agenda.

We ask that you begin a dialogue with the human services sector on affordable
health insurance solutions for this dedicated employee pool that works on your
behalf. We believe that it is in the Commonwealth’s interest to reduce the cost of health
insurance that is reimbursed by the state, increase the percentage of workers covered and
support the productivity of this workforce. Our agenda includes at least three approaches:

1. Group Insurance Commission: Please support legislation that will allow human
service employers to negotiate for inclusion in the GIC. While we recognize that the
rates will not always be lower, we also understand that their rates do not increase to a
cost-prohibitive level for our low-paid workers. Having this as an option will help us
to negotiate better rates.

2. Human Service Health Insurance Group Purchasing: We ask that you support
legislation that will allow the establishment of a human services business health
buying cooperative. Under this plan, human service agencies, regardless of size,
would be able to join an aggregator designed to improve health and wellness, contain
costs, negotiate group rates with carriers and provide transparency and efficiency for
individuals and employers in the community human services sector. As you are
aware, ours is a workforce intensive industry, and health insurance is the number one
cost providers face after payroll. We hope you will work with us to advance
legislation enabling all organizations to contain health insurance costs so that more of
our funding goes into programs that serve our state’s most vulnerable residents.

3. Health Connector: We ask that the Administration consider eliminating the barriers
for our sector to access the Connector’s products and services. Our recommendation
is allow human service organizations to access these products and services, regardless
of their current status. Again, dollars saved from these activities directly benefit the
Commonwealth, which reimburses providers for their reasonable costs.

Our sincere interest is to work with the Administration in forging solutions that make a
difference. We hope that you will be willing to join with us in discussion about these approaches
or others that you may propose.

Other Questions

You also asked three questions in your invitation to submit testimony. I would like to briefly
respond to these questions:

Are there areas where you believe EOHHS can regionalize, consolidate or streamline services,
programs or offices to better serve clients, increase efficiencies and achieve savings?

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 A. In response to your first question, I would direct your attention to the report The Utility of
Trouble, published by the Boston Foundation and the Massachusetts Taxpayers
Foundation in July 2010. The report cites two main ways for EOHHS to save money:

 Consolidate the 149 individual area offices into 20 to 24 comprehensive EOHHS centers.
It is estimated this could save $15 million annually and improve services to clients.

 Close the ten antiquated and expensive state institutions, reducing expenditures by $50
million annually and ensuring clients can receive services in their communities, close to
their families.

Implementing these two recommendations would save more than $65 million annually.
This report is available on the organizations’ websites.

Are there areas where you believe EOHHS can use technology to better serve clients, increase
efficiencies and achieve savings?

B. In response to your question on technology, we believe any technology that would allow
all of EOHHS systems to interact with each other would be most welcome by the human
services sector. For the past decade, EOHHS has been developing electronic health data
and record systems that have created significant problems for providers, resulted in
additional costs to providers and caused less efficiency in service delivery. For example,
DDS and DCF have both created separate systems that do not talk to each other. As a
result, a provider serving both DDS and DCF clients has to make independent entries and
manage each system differently.

Additionally, procedures to grant provider employees privileges to use the system are
complicated and have delays; these state systems do not allow systems built by providers
to interact electronically; and these systems are being forced on providers with little
meaningful input prior to their implementation.

We ask that before building more systems that will simply create more unfunded
mandates the state appoint a consultant to work with human services agencies and
investigate how our technology can interface with the state’s technology. If the state
upgrades its services, but nonprofits cannot use them, it does not increase efficiency.

Lastly, providers cannot afford these new technologies that the state is simply mandating
that we switch to. The sector can only afford to spend between 1 and 1.5 percent of
operating income on IT, while hospitals and general healthcare often spend as much as 5
percent. If it is determined we need new hardware, software or equipment to work with
the state’s new technology, we would ask a fund be set aside to assist providers with
these purchases.

Are there ways you believe EOHHS can reduce expenditures while maintaining essential and
core services?

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 C. We would like the state to convene a task force to review current mandates and determine
those that can be reduced or eliminated without affecting the quality of services or
seriously comprising the state’s monitoring and oversight role. We appreciate your
review of the Uniform Financial Report, and we will work with you to improve this
document. For some providers, the completion of this report and the ancillary systems to
support the data collection can cost an additional $10,000 above their average audit
expenses.

Finally, we again mention The Utility of Trouble report by the Massachusetts Taxpayers
Foundation. We concur with their findings that savings from closing institutions and
consolidating locations can be used to support more services or improve quality to a level
that we believe the clients and consumers in the Commonwealth deserve.

Conclusion

We are keenly aware of the fiscal situation in the state and across the nation, because our
members and the entire human services sector are dealing with it as well. Our sector provides
services to one in ten vulnerable individuals throughout the Commonwealth, and to continue
providing high-level services for them, we need the state’s assistance. Our programs must
receive proper and predictable funding, and we ask for that as you make your budget allocations
for FY ’12. We are asking for both programmatic and financial investments in the human
services sector to support the provision of services and support the sector that employs tens of
thousands in the Commonwealth.

We appreciate your time, and we thank you for your important attention to these issues.