A study conducted by the Arkansas Department of Human Services finds that reimbursement rates for supported living services in the state are 23% below the actual cost of providing care.
Syard Evans is the CEO of Arkansas Support Network, a statewide nonprofit that provides home- and community-based disability services for people who have lifelong intellectual and developmental disabilities. For a long time, the standard way to care for these individuals was in an institutional setting — think an asylum or a mental institution. But by the late 1980s, with the expansion of Medicaid, keeping people with these kinds of disabilities in a home or community-based setting led to happier and more fulfilling lives, and it also made it financially possible for families.
"Going back to 1991, when Medicaid waiver services were started in Arkansas, it was a new approach to Medicaid funding. And our state, like lots of other states, recognized that the way that we set rates for traditional Medicaid services — like pharmacy benefits, primary care physicians, doctors, emergency care — those Medicaid rates are all established based on the existing health care profession. And there's research that goes in, there's formulas that are put in place to be able to calculate those rates and come up with those rates. What will Medicaid pay your primary care physician for visiting the office and having your annual checkup?"
She says that long-standing rate is largely influenced by for-profit services, like the doctor who is billing both private insurance providers and public insurance providers like Medicaid. And because of that, there's been a consistency with how a service is billed.
"With home and community-based services, they never had that, not even from the beginning."
When we talk about home and community-based services, we mean a few things. It could be supported living, like a person who works to care for people with disabilities who live in a group setting, or supported employment — like a job coach. It can also include services like a specialized counselor or an occupational therapist.
"So in 1991, the rate-setting structure for supported living — the state established an annual plan of care process that required providers like Arkansas Support Network to submit a request for funding for a year, and that request for funding was based off of the wages that were paid to the direct support professionals who go into people's homes every day and provide those direct supports — support that individual with assistance in whatever areas of life that they're pursuing, which can be broad and diverse and often really require complex skill sets in order to implement successfully. And then that DSP wage was built into the plan. There was a cost-of-living increase every year, and then there was a 25 to 30% administrative overhead that allowed those providers to be able to operate human resources, payroll, benefits, taxes, facility, office space, those kinds of things. That structure was established in 1991, and at the time it really provided a functional, adequate environment for nonprofits to be able to operate."
But 1991 was a long time ago. And between 1991 and 2017, the state of Arkansas only made one adjustment to the funding. Evans says that put a financial strain on nonprofit providers like Arkansas Support Network to continue providing quality care to Arkansans. In 2017, the state did a rate study to look at starting to use a managed care model. That means instead of paying every doctor or care provider individually, Medicaid pays a middleman organization who then distributes those payments. In Arkansas, there are four Provider-led Arkansas Shared Savings Entities, also called PASSEs. Arkansas pays each PASSE a fixed amount each month per member, and those entities then pay the providers.
So that 2017 rate study looked at making an adjustment from a daily rate to a unit rate.
"And so providers started billing 15-minute increments for services that we'd previously billed daily rates for. The vast majority of supported living providers in Arkansas are nonprofit organizations that really don't have the operational infrastructure to make those kinds of adjustments. And that's been a barrier. But rates were adjusted at that point to the new model, and we have not had a rate increase since. So provider organizations have been advocating for a long time to say that we cannot keep up with the market. We can't recruit direct support professionals because we're often offering them close to minimum wage — entry-level rates that reflect no need for experience or education, despite there being a need for experience and education. And so probably for about three years, providers worked collaboratively and collectively in order to get to the place that in 2025, we had the passage of Act 1023."
That law mandates a new rate study of all home and community-based services, as well as mandating that the state make the adjustments to meet those new adjusted costs.
"It was not news to any of us who operate supported living services that the rate study came back and showed that there's a 23% discrepancy. What that discrepancy means is that nonprofit providers that are providing supported living services are paying out and paying to operate services 23% more than what managed care PASSEs are paying us for those services. And one of the critical aspects of the act is not only that it mandated the study be done — it mandated those increases go into effect. The rate study was completed on time. It was published on Oct. 1. But since that date, no action has been taken."
Arkansas Support Network says that between 2019 and 2024, the PASSEs reported more than $260 million in profits and have returned more than $640 million in money to the state, claiming that those funds were not directly spent on services. As Evans said, Act 1023 not only required a rate study be done, but it also mandates that increases go into effect. She says that COVID relief money is still in the system and covering some of these costs.
"And so because of that, the state's position has been that they are not making any changes to the rate study until those dollars run out. In addition to that, the state has recently extended their ARPA project that should have ended in March, extended to September. And so for those of us that have been operating at a 23% discrepancy for a long time, that's really alarming. We're a nonprofit organization doing everything in our power to hold on to our ability to serve people day in and day out. And the idea that a rate study that clearly identified a need for immediate action in October has been put off to March and now once again to September — it's not sustainable."
Evans says Arkansas Support Network helps close to 600 individuals and families across the state in some capacity, with about 400 of them receiving supported living services. She calculates that 23% discrepancy to be more than $8 million on the shoulders of the nonprofit.
"We're spent. We are out of runway. We have kind of starved the infrastructure of our organization's operating budget. We have made the adjustments that we can possibly make, and unfortunately we've consistently underpaid our employees based on what we know their value and worth is, just to be able to maintain and to continue to provide those services. And so for us, going into fiscal session, we're doing a lot of work just to make sure that people understand this situation. Very seldom do we have the solid evidence and research data and the state's own data that support our advocacy as clearly as what we have right now today. And we're really asking people — pick up the phone, make a phone call, let your elected officials know that this is something that you care about. Even if this is something you're just hearing about, the likelihood is that if you're a person who cares about people and you're a person who cares about the communities that you live in, this is an initiative that — whether it touches you directly or not — it's a value initiative for the communities that you live in. In addition to those 600 individuals and families that we support every year, we employ close to 1,000 people. This is a jobs issue for those folks, and those are issues that they care about. It's also a valuable and functional community issue."
You can find a link to that rate study and other supplemental materials at kuaf.com. The Arkansas State Legislature's fiscal session begins April 8. For Ozarks at Large, I'm Matthew Moore.
Ozarks at Large transcripts are created on a rush deadline and edited for length and clarity. Copy editors utilize AI tools to review work. KUAF does not publish content created by AI. Please reach out to kuafinfo@uark.edu to report an issue. The audio version is the authoritative record of KUAF programming.
