Senate Budget and Taxation Chair Sen. Guy Guzzone (D-Howard). (File photo by Bryan P. Sears/Maryland Matterrs)
It’s a good thing state leaders found money to defer cuts to the Developmental Disabilities Administration, and not just because it will allow services to continue.
Turns out the state may not have had permission to make some of the cuts they were proposing to start on April 1.
State analysts said last week that the Moore administration “was not accounting for” required approval from the Centers for Medicare & Medicaid Services when it unveiled plans in January to cut the DDA by as much as $200 million by the end of this fiscal year.
Budget and Taxation Chair Sen. Guy Guzzone (D-Howard) said the failure to account for CMS approval for the initial proposal was “clearly a mistake.”
“It shouldn’t have happened. They should have known. They should have known that it would have been an issue to try to make that apply in (fiscal) ’25,” he said at a Friday press conference. “There’s no other answer to that.”
The issue may be moot for fiscal 2025: Gov. Wes Moore (D) and legislative fiscal leaders said in a joint statement last week that they had found funding to defer most of the fiscal 2025 cuts from April 1 to July 1.
But it could still apply to cuts the administration has discussed for fiscal 2026, which also have yet to receive the needed waivers amendments from CMS.
Developmental Disability budget cuts delayed for now, but still loom for next year
In briefing papers last week, the Department of Legislative Services said that state officials had not even applied for CMS waiver amendments for some of the cuts being proposed. Requests for such amendments typically include a 90-day review period and a 30-day public comment period.
One of the biggest cuts for fiscal 2025 that would need approval is the proposal to do away with the “geographical differential,” which boosts pay for providers of developmental disability services in Calvert, Charles, Frederick, Montgomery and Prince George’s counties.
“A waiver amendment has not yet been submitted for any of the items that require CMS approval,” according to DLS’ Feb. 20 report. “Since the geographical differential elimination is not able to go into effect in fiscal 2025, the savings of $28.0 million ($14.0 million in general funds) for this item in fiscal 2025 will not be included in the cost containment reductions.”
When asked if the timeline for the geographical differentials was a “mistake,” a spokesperson for the governor said in a prepared statement that “The Moore-Miller Administration is working closely with legislators and stakeholders to identify paths forward on DDA funding.”
The DDA helps support those with developmental disabilities, usually through a Medicaid waiver that uses state and federal funds to help provide services to some 20,000 Marylanders.
In January, Moore presented his budget proposal, which included a $200 million cut to the DDA at the end of the fiscal year 2025 and to continue into fiscal 2026.
Even though those cuts have now been deferred until fiscal 2026, time is running out for the state to get CMS approval to cut the geographic differential, along with other proposed DDA cuts, in time for the July 1 start of the fiscal year, DLS said.
“The timeline for CMS approval of waiver changes includes a 90-day review period and a 30-day public comment period. Considering this timeline, the earliest that DDA could receive approval for cost containment actions approval for cost containment actions is July 1, 2025,” the report said.
“This would require DDA to submit a waiver amendment by February, 26, 2025. Because of the timeline required for CMS approval, it is unclear whether the geographical differential … will be fully implemented in fiscal 2026,” it said.
Two other cost-containment efforts planned for fiscal 2026 also require CMS approval.
One would place a $5,000 cap on items purchased through the Individual and Family Directed Goods and Services program, for those who self-direct their developmental disabilities services. If approved by CMS, the cap would save the state around $14.5 million in general funds in the next budget year, or $29 million once federal funds are included.
The other proposed cut that would need federal approval is a plan to direct new DDA participants away from self-directed services and toward community group programs. The state education system supports students with developmental disabilities until they are 21, which is when the DDA takes over their services.
Those who self-direct their DDA services hire their own staff to help them in their day-to-day lives, opposed to those who join an established program through an organization such as the Arc of Maryland. Officials at the Department of Health say the self-directed services program has had “unsustainable” growth in recent years, which has contributed to higher-than-anticipated spending.
The department is hoping to nudge more transitioning youth to community services, potentially saving the state around $9.2 million.
But Guzzone says that while the cuts originally intended for FY ’25 have been pushed off until July 1, there is still a lot of discussion ahead on which cuts will actually stick around to the final budget for fiscal ’26.
“We’ve still got a long way to go, hundreds of millions of dollars at issue for ’26 that we have to go through,” Guzzone said Friday. “This is a very complicated department, complicated formulas. You may have heard the director of Legislative Services saying this was a ‘black box’ … that’s because it’s confusing.”
“The (fiscal) ’26 part is really uncertain. We will do what we can as we move along,” he said.