Initially, I wish to concur with the previous posters-- the guidance document does plainly contradict the plain text of the regulation and creates a new regulatory requirement by excluding consideration of projected revenues, and unused line of credit would be difficult if not impossible to maintain in perpetuity, an “untouched” reserve fund is onerous/unwise and the guidance for sponsors is unwarranted, excessively restrictive and counterproductive.
In addition, as regards the requirement for providers I would add that the current list of acceptable/unacceptable proof documents requires more clarity and/or revision. Specifically, the distinction between a “savings” account which is acceptable and a “retirement” account which is not acceptable under the current guidance document. While the guidance document and proofs place a heavy emphasis on credit and this option should be available, providers who take a safer route and maintain the 90 day requirement in cash or cash equivalents should not be punished for taking this extra precaution; particularly because the required amount is so large as to make the penalty significant. The idea of a savings account is not what it used to be and the excessively low interest rates available, occasionally coupled with fees if it’s not regularly used (as the regulation requires) is a very poor way to utilize reserve capital. Rather this reserve capital can be much better utilized in alternative types of accounts (short-term CDs, investment accounts, bond accounts etc.), where the funds would be readily available in the event of an emergency or lapse of income but earn a much higher rate of return while they sat idle waiting for that day to come. The guidance document is unclear as to what would constitutes a “retirement account” is this limited to a very specific type of account, such as an IRA, (if so why since you could cash this out, pay the penalty and use the funds to meet emergency needs -anybody facing a true emergency would)? If not very limited, what would count as a “retirement account” for example I keep almost 2 months of excess funds in the checking account for the licensed business, but as a sole proprietor should I ever retire I calculate those excess funds to be part of my retirement – does this mean I’m no longer allowed to count those excess funds I’ve held in the business for years now as part of meeting the 90 day requirement? Clearly, some clarification is needed. Providers who avoid reliance on credit and take the safe route of assuring that the required funds are available in cash or cash equivalents at all times should not be punished with reduced flexibility on how they store those assets, particularly when they are excessively sufficient.
A much more significant concern, is the portion of the guidance document creating new regulatory requirements for sponsors that are redundant, excessively interfere in good business practices and are overly restrictive creating a burden that will be counterproductive to service access/provision and far exceeds the statutory/regulatory text/intent.
1 – the requirement is redundant. If the provider standards are enforced then the provider would have 3 months of emergency funds to assure the sponsor continued to receive payment for the individuals served for the full 90 days, which would provide the sponsor with more than sufficient time to seek out a new provider, find new placement for the individuals or make other adaptations to address the concern. This would become then in essence become a 180 day requirement never envisioned by the regulation and completely unnecessary.
2 – the requirements prohibit good business practice. It creates a requirement that the “sponsors themselves, not the sponsor’s employer” must demonstrate these funds are available, which is inconsistent with an age-old and often considered best practice of business to provide seed money and backing to startups that can serve the larger business’s interest/needs. Many sponsors currently providing excellent services would not have been able to start if this requirement was in place as it creates a significant barrier to entry; that is frequently quickly resolved once the sponsor gets going. Specifically consider a provider who is able to provide acceptable proof documents that they can meet their organizational, personal and all sponsor financial needs for 90 days and has a legally enforceable contract with the sponsor that requires them to retain and provide those funds should they be needed, which would clearly accomplish the statutory and regulatory intent but would be forbidden under the guidance document unnecessarily. It is also important to note that many sponsors are independent contractors and the provider is not their “employer” – with this type of sponsor be exempt from the requirement in the guidance document and if not why not?
3 – the acceptable proof for the sponsor is excessively restrictive and far exceeds both the regulation and what should be required to meet the regulatory intent. As written the guidance document requires “these resources must be kept separate from accounts from which personal daily operating expenses are withdrawn or from which payments received from residents living in the home are deposit”. This appears to create a requirement that the sponsor set aside a cash hoard in a separate account” untouched” to meet the 90 day regulation. The current regulation has no such onerous requirement and it would permit a provider to consider other sources of income into the home (besides the payments for individuals receiving services in the home) in evaluating their ability to meet the regulatory requirements; the sponsors spouse may have a full-time job that independently meets all the daily operational needs of the home on an ongoing basis, room and board payments can be considered, pension payments, Social Security or disability payments, annuity payments, legal settlement agreement payments… etc. could all quite easily meet the need identified in the legislative/regulatory intent without forcing the sponsor to set aside an unproductive pile of cash. Additionally, this would prevent a sponsor who was able to demonstrate a clear line of credit to meet emergency needs for 90 days or more from qualifying. For example, a homeowner with no mortgage who has an established home equity line of credit that far exceeds the needed funds and/or unused credit card balances that could be used to meet the need in an emergency – if this is sufficient proof for a provider which could impact hundreds of people why is it not sufficient proof for a sponsor who impacts one or 2? Finally, I would note that the guidance is poorly worded, because if the account were ever used it would be for personal daily operating expenses and the guidance prohibits withdrawals from that account for that purpose and after it was used it would prohibit payments received from being deposited to build the account back up; truly self-defeating in concept.
4 – the sponsor requirement in the guidance document would for the reasons indicated above reduce sponsor entry into the system, cause some existing sponsors to leave the system and others to forgo service improvements (which they would need to finance, thus increasing the cash required in the separate untouchable account) which is clearly counterproductive for improved access/services. Although the reduced reimbursement rate for sponsors is clear evidence otherwise, the state continues to claim that they want individuals in smaller homes consistent with best practices and HCBS integration requirements. This guidance document would make the smallest homes (Sponsored Homes) less available and thus be counterproductive to their professed goals/values.
While the intent of both the provider and sponsor requirements in the regulations is laudable and adequate protections should be enforced, the guidance document under consideration is unwarranted, unjustified, vague, excessively restrictive and counterproductive to the provision of access and services in the Commonwealth and creates additional regulatory burdens that fall excessively on Small providers in favor of large bureaucratic provider models. As a result, it should receive serious reconsideration and submittal as a regulatory change with a full review prior to implementation of any of its proposed onerous barriers.