Pa. House Human Services hears update on performance-based contracting for developmental services

Deputy Secretary Kristen Ahrens of the Pennsylvania Office of Developmental Programs told the House Human Services Committee on an informational hearing that the department has begun implementing performance-based contracting for residential services for people with intellectual disabilities and autism and has submitted federal amendments to extend the model to supports coordination, with an expected Jan. 1 effective date if the federal government approves the amendments.

Ahrens said the performance-based contracting initiative aims to improve four areas: sustainability, access, workforce and clinical capacity. "We have 15,000 people receiving residential services, we have 11,000 people on a waiting list," she told the committee, and the department is using alternative payment methodologies under its 1915(b)(4) authority to tie payment to measurable outcomes.

The initiative, Ahrens said, folds about three residential service models — licensed community living arrangements (one-to-four residences), life sharing, and supported living — into a tiered contract system. Providers were evaluated and placed into tiers; higher-performing providers receive rate add-ons and pay-for-performance opportunities. Ahrens said the department assigned tiers to residential providers after public comment and a phased submission process and that the department published an online directory showing provider performance tiers to help families compare options.

Why it matters: Committee members were told performance-based contracting is intended to hold providers accountable for quality measures while building system capacity, expanding less staff-intensive settings, and reducing pressure on provider workforce and the waiting list. The department framed the change as both a quality-improvement and a capacity-building effort aimed at reducing inpatient and institutional stays and improving outcomes such as preventive screening and timely outpatient follow-up after psychiatric hospitalization.

Key early results and measures

Ahrens provided preliminary data from less than a year of residential performance-based contracting. She identified multiple early improvements: an approximately 15% increase in providers enrolling to serve people through life sharing or supported living, a 1% increase in competitive integrated employment among lower-acuity groups, an 80% reduction in the number of people with no required health screening and a 79% reduction in missed screenings, a 5% reduction in incident-reporting fidelity errors (including unreported instances of abuse or neglect from an already low baseline), and a roughly 20% increase in outpatient follow-up visits within 7 and 30 days after psychiatric inpatient hospitalization. Ahrens cautioned the department expects to report more comprehensive results after a full year of data collection for 2025.

Supports coordination and phased measures

Ahrens said the department submitted amendments in July and August to align supports coordination with performance-based contracting, because supports coordinators currently serve individuals across four waiver streams and targeted supports management. She described a different approach for supports coordination than residential contracts: instead of tiered provider designations, supports coordination measures will be phased in over contract years so organizations can build capacity, with monthly payments replacing the existing 15-minute unit billing and pay-for-performance opportunities layered in.

To reduce reliance on single staff members and address high turnover, Ahrens said the department will allow supports coordination organizations to use associate supports coordinators for certain functions while measuring organizational responsiveness rather than centering all outcomes on a single staffer. That approach, she said, is meant to improve retention and responsiveness while maintaining timeliness and person-centered outcomes.

Stakeholder input and continuity-of-care steps

Ahrens told the committee the change followed multiple stakeholder processes beginning in 2023, including a concept paper, public comment periods and stakeholder working groups that included people with disabilities, families, providers, counties and supports coordination organizations. She said the department added pay-for-performance incentives for rural provider capacity in response to public comment and emphasized intensive provider supports such as webinars, virtual office hours, a dedicated website and resource accounts to limit disruption to individuals receiving care.

Credentialing, workforce and technology

The department has pushed credentialing for direct support professionals (DSPs) through an established national credentialing pathway. Ahrens said Pennsylvania recently reached a milestone approaching 6,000 credentialed DSPs and that some providers report lower overtime, improved retention and higher-quality supports after adopting credentialed training. Ahrens also said the department is encouraging technology adoption (including electronic health records and technology that can substitute some staff time) and will measure staffing hours saved as part of pay-for-performance metrics.

Questions and follow-up

Committee members asked clarifying questions during the session. Representative Anne Flood asked whether life sharing can involve relatives; Ahrens said relatives may serve as life-sharers and that the 40/60 hour rule that applies to some nonresidential services does not apply the same way to life sharing. Representative John Schlegel asked whether performance-based contracting is used to determine if providers are doing an effective job; Ahrens described the initiative as an effort "to hold providers accountable for quality measures." Members also asked about the share of high-acuity individuals served by higher-tier providers and about the percentage of providers in conditional or provisional status; Ahrens said she would provide a specific percentage on conditional providers to the committee and that some of the conditional numbers have declined since the slide deck was created.

What the committee did not do

This was an informational hearing; there were no formal votes or motions recorded on the performance-based contracting items during the session.

Ending

Ahrens closed by saying the department intends to continue stakeholder engagement and monitoring during rollout and that the department's top priorities are continuity of care and supporting providers to meet new expectations. Committee members thanked her and said they will continue monitoring implementation as the department moves forward.