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State’s consolidation of services threatens stability of many nonprofits

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The Pennsylvania Department of Public Welfare on Jan. 5 announced its decision to consolidate the number of organizations that provide fiscal agent services, also known as financial management services, or FMS. These services are for Medicaid enrollees who receive home- and community-based services.

People with disabilities inPennsylvaniacurrently can hire a qualified attendant of their choice to provide assistance with daily activities like getting out of bed, bathing, preparing meals, travel and/or handling finances. Choosing a family member, friend or preferred individual is called the consumer control model. FMS allows people with disabilities to direct the benefits they receive from Medicaid to a company that then manages their financial, payroll, tax withholding and other employer expenses on their behalf.

Thirty-seven organizations, most of them nonprofits, currently provide FMS to approximately 22,000 people inPennsylvania. In an effort to “cut costs,” the Department of Public Welfare will dramatically consolidate services by appointing one to three entities to provide FMS throughout the entire state. Consumers will be assigned one provider based on where they reside.

Of course, this decision will have a dramatic impact on the quality of service people with disabilities will receive because there will be an elimination of competition, choice and options. But we also foresee the negative impact this decision will have on nonprofits from a business standpoint.

Many of the 37 providers of FMS will lose a core service area offered by their organization — a service that takes employees to handle and manage. Many of these providers — including my organization, the Center for Independent Living of Central Pennsylvania — hire persons with and without disabilities. Both will lose jobs based on the state’s decision to consolidate services. And many of the small nonprofit providers will simply not be able to recover from this loss and might be forced out of business altogether.

This one change made by the department and the Corbett administration also will have a snowball effect on many of the nonprofit organizations addressing the needs of persons with severe disabilities. Many of these nonprofits that are providers use funds generated from offering this service to supplement other supportive services to persons with disabilities, such as home modification, health and wellness, snow removal and emergency services for seniors with and without disabilities. Not only will these services be eliminated, but because of this wider impact, more nonprofits will be forced out of business.

Nonprofits have a long history of assisting the federal and state government with addressing social problems that, by law, they are required to address. But nonprofit organizations also are a major economic force in Pennsylvania. Nonprofits account for one out of every nine paid workers, according to a 2005 study by the JohnsHopkinsCenterfor Civil Society Studies and the Pennsylvania Association of Nonprofit Organizations. The more than 634,000 nonprofit employees in Pennsylvaniaearned more than
$21.1 billion in wages in 2003, or nearly 11 percent of the state’s total.

The truth is that nonprofit organizations contribute to the quality of life for allPennsylvaniacitizens, including those with disabilities. Nonprofit organizations also are a major force in the state’s economy and in the economies of all the state’s regions.

Therefore, there are many complexities to this decision to consolidate FMS that need to be fully considered. I think the negatives far outweigh any short-term cost savings that were anticipated.

Theotis Braddy is the executive director of the Center for Independent Living of Central Pennsylvania and is a wheelchair user due to a traumatic spinal cord injury in 1975 sustained from a high school football accident.

Write to the Editorial Department at editorial@cpbj.com

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