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Medicaid cuts will hurt non-profits serving people with disabilities

Rochester Business Journal
March 4, 2013

A new round of Medicaid cuts just announced by the state will badly hobble private non-profits serving the disabled, officials of a local agency serving physically and developmentally disabled clients said Monday.

CP Rochester, a local private non-profit affiliated with the Al Sigl Family of Agencies, is sounding the alarm over a 6 percent cut in Medicaid payments to it and other agencies that fall under the state’s Office for People with Developmental Disabilities.

Agencies under the OPWDD umbrella largely serve a population that used to be confined to state-run facilities. In a shift that began in the 1970s with a push to close down state-run institutions, privately run OPWDD-funded agencies got government support to create a network of community-based residences and services. These were supposed to provide an alternative to state-run mental hospitals that had come under heavy fire for warehousing and sometimes abusing inmates. 

With the budget ax falling, the alternative network’s future is in question, warned CP Rochester president and CEO Brian Klafehn.     

Formed 66 years ago as the United Cerebral Palsy Association of the Rochester Area Inc., CP Rochester now serves a range of disabled individuals. In addition to group homes serving some 60 residents, it runs day habilitation programs and physical and occupational therapy programs serving independently living disabled individuals and disabled children cared for by parents and other family members as well as residents of CP Rochester group homes.

The 6 percent cut in OPWDD Medicaid funding, which the state announced 30 days after outlining other Medicaid cuts in its initial release of a 2013-14 spending plan, will eliminate some $750,000 of CP Rochester’s revenues, Klafehn said.

The new cuts, which follow a five-year round of reductions in government funding and a steady drop off in private support since the economy’s 2008 plunge, leave CP Rochester with little choice but to consider cuts of undetermined scope to programs and staff, Klafehn said.

A host of similarly funded local agencies are affected, Klafehn said. Since the surprise announcement of the OPWDD Medicaid cuts last week, he and counterparts at area non-profits providing similar services have been abuzz with the news, he added.

The 20 or so local agencies rely on OPWDD Medicaid funding include the Arc of Monroe County, Lifetime Assistance Inc. and Heritage Christian Services Inc. Counterparts Klafehn has conferred with over the past week are frantically trying to determine how much of their programs will remain intact, the CP Rochester chief said. 

Medicaid and other insurance payments accounted for some $12.9 million—the largest single share—of CP Rochester’s $17.2 million 2001 budget. Medicaid supplied some 99 percent of that total and OPWDD Medicaid payments made up 85 percent of the Medicaid total, Klafehn said. The unexpected cut in OPPWD payments will reduce 2013 funding from $12 million to $11.3 million. 

Statewide, the OPWDD Medicaid reductions will reduce funding to scores of local non-profits by some $240 million.

The state’s announcement of the OPWDD Medicaid cuts comes after the federal Centers for Medicare and Medicaid Services accused New York of racking up $1.1 billion in annual overcharges to Medicaid for payments to the few state-run institutions that were not shut down under the 40-year old deinstitutionalization program.

Citing the alleged overcharges, CMS is promising to reduce New York’s annual Medicaid allotment going forward by $1.1 billion. 

(c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail

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