Are you losing money on your tuition based programs? Many programs are, as they find it increasingly more difficult to work within the rate structure established by SED, especially with the limited rate increases over the last 7 years.
Have you investigated what is giving rise to such losses? For some agencies, it has partially been attributable to an increase in the acuity of children served within the program.
To calculate acuity, take the mandated units of service per SED-4 (column 4e) and divide it by the care days for the program (SED-1 line 110). If you look at the last few years, and your agency’s acuity is trending up, you may have the ability to request a waiver for a portion of the loss.
There are several factors that come into play to determine if such a waiver would be granted by SED:
- As part of the loss, you have to have incurred an increase in the cost of your related services (either from paid staff or outside contractors).
- Your productivity levels on SED-4 (column 6) are strong (you want these over 75%). If they are not, it will be more difficult for you to obtain a waiver.
Even if your productivity levels are lower, that doesn’t necessarily eliminate your ability to obtain a waiver. You need to understand why your productivity levels are low. If you have a low productivity level, and a low delivery rate (delivered services divided by mandated services per SED-4), this doesn’t bode well for you with SED. This could mean that you are not effectively performing make-ups. Not something your RA wants to hear when they analyze your data to determine if they would support such a waiver request.
If on the other hand, your productivity levels are low because you are charging your related service supervisors to the respective discipline (e.g. PT, OT, ST), you may still qualify for a waiver. Clinical staff supervision should be charged to code 342 (clinical supervisor) and not the respective discipline. Too many programs don’t take the time to capture this information. You need to have your staff members complete time studies identifying how much of their time is attributable to direct service and how much time is spent in a supervisory capacity. In addition, supervisory functions, such as performance evaluations, should be clearly identified and documented.
While it may take time for a waiver to be granted, if you properly record your staff to the right position title codes, keep your staff productivity maximized, and regularly calculate staff acuity, there could be a way to recoup some of your programmatic losses.
This article was also featured in our newsletter Special Ed-ition Vol. 15
Kenneth R. Cerini, CPA, CFP, FABFA
Managing Partner
Ken is the Managing Partner of Cerini & Associates, LLP and is the executive responsible for the administration of our not-for-profit and educational provider practice groups. In addition to his extensive audit experience, Ken has been directly involved in providing consulting services for nonprofits and educational facilities of all sizes throughout New York State in such areas as cost reporting, financial analysis, Medicaid compliance, government audit representation, rate maximization, board training, budgeting and forecasting, and more.