As reimbursement discussions continue across the Office for People With Developmental Disabilities (OPWDD) provider community, providers face uncertainty around the structure, timing, and implementation of future rates. The next phase may involve continued rate rationalization, broader rate reform, or a combination of both. To begin preparing now, providers should understand their current rate drivers, strengthen internal data, and model the potential financial impact of future changes.
Why This Matters Now
Rate reform and/or rate rationalization remain among the most important areas of focus for New York providers serving individuals with intellectual and developmental disabilities. As providers budget for future years and develop long-term plans, potential changes due to rebasing or wholesale rate reform, including factors like acuity measurement, regional assumptions, and budget neutrality, could materially impact future reimbursement and make long-term financial planning more difficult.
This article focuses on major OPWDD Home and Community-Based Services (HCBS) programs currently reimbursed under rate rationalization, including Supervised Individualized Residential Alternative (IRA), Supportive IRA, Group Day Habilitation, and Prevocational Services. The objective is not to predict the final methodology, but to help providers understand the current environment and prepare for possible changes.
Background & History
The OPWDD 1915(c) HCBS Waiver serves as the federal authority and program framework through which New York state delivers community-based services to individuals with developmental disabilities. The statewide Medicaid waiver process had been in use in New York for more than three decades. The current CMS-approved Waiver cycle, 0238.R07.00, is effective October 1, 2024 through September 30, 2029.
Since the waiver was first introduced, reimbursement for OPWDD HCBS programs has progressed through several major phases. For many years, voluntary providers operated under a budget-based rate system with appeal opportunities. New York moved toward a more standardized, cost-based system using regional factors, acuity, wage equalization, and budget neutrality adjustments into rate calculation as part of the agreement with CMS in 2013. That transition became the foundation for rate rationalization, which began affecting rates on July 1, 2014 and has shaped provider reimbursement for more than a decade.
Rate Rationalization: How We Got Here
When rate rationalization was first introduced, the methodology contemplated a two-year rebasing cycle using the expenses reported in the Consolidated Fiscal Report. The COVID-19 pandemic and related operational disruptions interrupted that cycle. Appendix K of the Waiver was approved during the time to allow temporary rules for OPWDD HCBS services, including changes of certain programs’ reimbursement during the pandemic period. Later waiver language changes allowed OPWDD to update cost data within five years from the previous rebasing using an available and complete Consolidated Fiscal Report (CFR).
This distinction matters because providers often plan around the base year used for future rates, as a change in base year can materially affect reimbursement depending on a provider’s cost structure, service mix, staffing model, utilization, and regional assumptions.
Rebasing language before the pandemic: Beginning one year after the initial period, the methodology would rebase the costs used in the methodology using the January 1 to December 31 and July 1 to June 30 CFRs from one and one-half and two years prior to the rate period, respectively.
Current rebasing language: Effective October 1, 2020, or after, the methodology will update cost data within five years from the previous rebased rate period using an available and complete CFR.
Base-Year History & Current Cycle
The base year matters because the costs reported in that year become the foundation for future reimbursement. Under current waiver amendment, if a provider’s staffing, vacancy, utilization, or cost structure has changed significantly since the base year, future rates set by that base year may not reflect current operating reality.
The table below summarizes the base years used for rate periods from fiscal year 2015 through the upcoming years included in the current waiver cycle. The starred years assume that the base year will remain unchanged unless OPWDD amends the waiver or otherwise changes the methodology.
Base-Year Timeline Under Rate Rationalization
| Rate Period | Fiscal CFR Base Year | Calendar CFR Base Year |
|---|---|---|
| 7/1/14–6/30/15 | 2010/11 | 2011 |
| 7/1/15–6/30/17 | 2012/13 | 2013 |
| 7/1/17–6/30/19 | 2014/15 | 2015 |
| 7/1/19–6/30/24 | 2017/18 | 2017 |
| 7/1/24–6/30/27 | 2021/22 | 2021 |
| 7/1/27–6/30/29* | 2021/22* | 2021* |
*Expected based on current waiver language; subject to OPWDD amendment or methodology change.
Near-Term Outlook
Based on the current waiver cycle and OPWDD’s stated interest in reimbursement methodology reform, providers may not see a major methodology change before the next waiver renewal effective October 1, 2029. The fiscal 2021/22 and calendar 2021 base years may remain in place in the near term, although OPWDD could still pursue a waiver amendment if it elects to change the base year or adjust the methodology before the next renewal.
OPWDD officials and industry discussions have also pointed to a future shift in how acuity is measured for residential services, including use of the Coordinated Assessment System (CAS) in place of the Developmental Disabilities Profile (DDP-2) for certain rate-setting purposes.
Room and board reimbursement does not appear to be the primary focus of current reform discussions, and significant changes are not anticipated in this area.
Group Day Habilitation and Prevocational Services may continue to follow a rebasing approach while reform efforts remain more heavily concentrated on residential programs. Significant changes to day and prevocational programs may be less likely until residential rate reform is further developed.
Areas to Watch
Occupancy Adjustments
Providers should closely monitor the treatment of occupancy adjustments. Although providers have continued to receive up to a 5% occupancy adjustment, the waiver amendment effective April 1, 2025 includes the following language, “The occupancy adjustment for Supervised IRAs is being reduced to 0% effective on or after 10/1/2024 to maximize the use of existing, approved capacity and incentivize the provision of residential supports to people who require such critical services.” This language may create risk for providers that have historically relied on occupancy adjustments to offset residential vacancies or operational losses.
Budget Neutrality Factors
As Federal Medical Assistance Percentage (FMAP)-related dollars phase out and increased costs are reflected in a newer base year, budget neutrality factors may move to 1.0 under a future rebasing or reform cycle. And if New York state experiences mandatory budget reductions, budget neutrality could also serve as a mechanism for systemwide adjustments. In either case, providers may experience reimbursement impacts that are outside their direct control.
Transportation Reimbursement
Transportation is updated on a different cycle from the operating component. Beginning July 1, 2024, transportation moved from a two-year update cycle to an annual update cycle. Under the current waiver, transportation is also subject to budget neutrality factors, which may inflate current reimbursement levels and should be monitored closely.
Acuity & Assessment Data
It appears a future methodology will rely more heavily on the CAS. Providers will need to understand whether assessment data accurately reflects staffing intensity, behavioral support needs, medical complexity, and other service drivers.
How Can Providers Prepare?
Providers do not need to wait for a final rebasing or reform decision to start preparing. The following actions can help strengthen readiness under either continued rate rationalization or a future rate reform model:
- Monitor OPWDD reimbursement initiatives, waiver amendments, strategic planning updates, and industry discussions.
- Validate CAS and other assessment-related information to confirm that support needs are captured consistently and accurately.
- Understand current rate components and reimbursement drivers.
- Analyze cost structure by program and site, including cost per unit, staffing ratios, utilization, overtime, vacancies, and margin trends.
- Model multiple future scenarios, including rebasing, acuity-based reform, and budget neutrality changes.
- Strengthen communication among fiscal, program, and executive leadership so reimbursement planning reflects actual service delivery needs.
How Forvis Mazars Can Help
Forvis Mazars can help providers evaluate how current and potential OPWDD reimbursement changes may affect operations, financial projections, and strategic planning. Support may include rate component analysis, CFR-based modeling, site-level margin review, scenario modeling, strategic planning, and board or management-level education.
As your organization is evaluating the potential impact of OPWDD rate rationalization, rebasing, or future rate reform, please reach out to a professional at Forvis Mazars to discuss how these developments may affect your programs and the strategies available to prepare.