Nevada subcommittees debate shift to fee-for-service for early intervention providers; members lean to delay change

CARSON CITY — The Assembly Committee on Ways and Means and the Finance Subcommittee on Human Services held a work session April 8 to review the governor's recommendation (decision unit E266) to change payment for early intervention community providers from a monthly capitated payment to a fee-for-service model, fiscal staff said.

Kimber Ellsworth, senior program analyst with the Legislative Counsel Bureau Fiscal Analysis Division, told lawmakers the governor's recommendation would change the current cost-per-eligible capitated rate to fee for service and include transitional add-on payments. Fiscal staff presented projected general fund savings of $10,900,000 per year in the 2025—27 biennium based on March 2025 caseload projections, but also warned the change could jeopardize compliance with the Federal Individuals with Disabilities Education Act Part C maintenance-of-effort requirement.

Why it matters: Early intervention services identify and serve infants and toddlers with developmental delays; the federal IDEA Part C grant requires the state to maintain a baseline of state and local spending. Lawmakers and providers said any payment change must protect continuity of services for children under age 3 and preserve a viable community provider network.

Fiscal staff and agency presenters described the current system and why the governor proposed a change. Under the existing model, community providers receive a monthly capitated payment per child and are expected to bill Medicaid and private insurers where appropriate. Fiscal staff told the subcommittees the state's practice did not align with federal 'payer of last resort' expectations and Medicaid's payment-in-full rules, and that a recently implemented case management and billing system now allows more complete tracking of insurance claims, denials and unpaid claims.

Ricky Robb, deputy administrator for the Aging and Disability Services Division (ADSD) at the Department of Health and Human Services, said the program's caseload is about 3,800 children across state and community providers, with roughly 45% served by community providers and 55% by state staff. Robb said providers have reported the transition would be impactful to their operations but that the agency is working on amended provider scopes of work and modified agreements to support consistent billing practices.

Fiscal staff summarized six options for committee consideration (A through F). Option A (the governor's recommendation) would implement fee-for-service for insured children effective July 1, 2025, add a temporary monthly add-on payment for insured children and continue the per-child monthly payment for uninsured children; staff projected provider payments of $6.9 million per year in the 2025—27 biennium under Option A and general fund reductions of $10.9 million per year compared with the current model. Option E would retain the current capitated monthly payment model and would increase provider payments to an estimated $17.9 million per year, which staff said would keep state funding above the FY2024 baseline and therefore better assure compliance with the IDEA Part C maintenance-of-effort requirement. Other options described a phased down approach and varying levels of insurance-assistance to underinsured families.

Providers and lawmakers raised practical concerns about shifting to fee-for-service quickly. Marnie Lance, director of Therapy Management Group and a licensed early childhood special education teacher, said billing timelines and in-home service delivery complicate prompt reimbursement: "We do ask for permission to bill ... but we have to go ahead and get services started regardless if we have prior authorization." She added that travel, lower productivity for in-home visits, workforce shortages and non-billable federally required activities are not fully compensated under typical insurance rates.

Robert Burns, owner of Therapy Management Group, and Dana Aronson, co-owner of TheraPlace Solutions, said their organizations are billing for services and have expanded billing capacity, but that the projected reimbursement under some fee-for-service scenarios would be inadequate to sustain operations. Mark James of Therapy Management Group told the committee: "We bill for these kids ... We may not get paid on all these kids, but we definitely bill."

Several members signaled caution. Assemblymember Lisa Hafen praised the program's benefits and said she favored Option C if funds are available; Assemblymember Brown-May and Chair pro tem Monroe Moreno said they were leaning toward Option E (retain current model) and recommended adding a letter of intent requiring agency reporting. Senator Pat Titus said the agency "has done the homework" and expressed support for Option A on fiscal grounds, noting the budget difference between options.

The committee directed staff and the agency to return with updated projections at budget closing (April 30) and discussed issuing a letter of intent to the interim finance committee to require regular reporting on implementation, billing performance and any potential impacts on provider capacity. No formal vote was taken during the work session.

Next steps: Fiscal staff will provide updated cost projections at subcommittee budget closing. Several lawmakers asked the agency to pursue Medicaid options — including potential bundled or capitated approaches with Medicaid rate teams — and to provide follow-up reports to the interim finance committee on the status of billing implementation and provider sustainability.