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Rate reform moves into final implementation; providers, department and LAO flag technical fixes and oversight needs
Summary
Officials described the Jan. 1, 2025 completion of the rate-reform schedule and an ongoing quality-incentive program tied initially to provider validation in the new statewide provider directory; stakeholders urged legislative oversight and technical adjustments to avoid unintended destabilization.
The Department of Developmental Services told the subcommittee that the rate‑reform program — a multi‑year restructuring of provider rates — reached its final scheduled implementation step on Jan. 1, 2025, but that key technical issues and quality‑incentive measures remain under development.
Director-level witnesses described the shift to a rate-model approach that includes a 90/10 structure: 90 percent of a modeled base rate is the sustainable payment and 10 percent is a quality incentive to be earned by providers based on performance and outcome measures. DDS said the department will continue to refine rate models, including adjustments to employment supports and service codes, and emphasized that rate models will be revisited every two years as required by statute.
The department also described a new statewide provider directory that aims to create a single view of providers and vendorizations; as of the hearing, DDS reported roughly 60 percent of providers had validated their directory records. Providers and trade groups said the directory and the quality incentive program are foundational but urged careful measure selection and legislative oversight. Barry Giardini of the California Disability Services Association and other stakeholders urged rethinking whether the 10 percent quality incentive and its structure could destabilize providers if metrics are not reasonable and achievable.
The committee asked the department and LAO to prepare draft trailer‑bill language to require publication of provider‑directory analyses (to identify service gaps) and to codify quality‑incentive program reporting and implementation expectations so the Legislature can exercise oversight during the ongoing rollout. DDS described technical fixes already underway, including rate adjustments for certain services and a hold‑harmless provision that currently protects some providers until June 30, 2026.
