Inflation/Pandemic Costs/Workforce Costs

  • Provider agencies, with outdated rates and swiftly escalating costs, are struggling to keep programs open and staffed adequately, with many at reduced capacity.
  • Costs to agencies has been compounded by the major cost drivers of Inflation which has been as high as 9.1% in June according to the Bureau of Labor Statistics for year-over-year. These increased costs reflect a significant jump in inflation, for example, energy (23.8%), housing (6.2%), vehicles (10%), and food (11.4%), with the addition of 7% inflation over the preceding years (beginning in 2014 to 2021) have all contributed to the financial frailty of some agencies, if not many. All of these costs are associated with operating a group home, a supervised apartment, a day program and other services and supports offered by agencies.
  • The fee for service system was fully implemented in 2018 but rates are based on 2012/2013 data and the rates were only funded at 87% of cost for residential.
  • Maryland providers received an 18% rate increase spread over two years (9.5% year one and 8.5% year two) as well as Delaware and Pennsylvania also received double digit rate increases and New York just received a 5.4% rate enhancement. With costs rising these states recognized their providers could not keep pace and continue to sustain and expand services.
  • There was a minimal increase of 1% for residential rates in the FY 23 budget, for which agencies are grateful, however, with compounded inflationary costs, lingering pandemic costs, and workforce costs in terms of significant unreimbursed overtime costs just to keep some programs open, a much higher percentage increase is necessary.
  • Providers are unlike retail and food establishments that can cost shift and must find a way to budget for the increases with existing funding.
  • The pandemic continues in this community and has worsened the already ongoing staffing/workforce shortage. Providers are already exceeding their annual allotments for overtime costs that have skyrocketed since the pandemic.
  • Without an increase in rates, especially in the residential area, providers will be unable to expand and meet needs, threatening 30 years of progress in delivering IDD services. NJACP supports a two-fold approach:
    • NJACP, as well as the other two provider associations in the state, support at a minimum, a 5.5% increase in residential rates in the FY 24 budget.
    • Support for A-508/S-2268, establishing an annual cost of living increase (COLA) for IDD services (as well as mental health and substance abuse). An annual COLA will help agencies to meet costs when inflation increases year after year, thereby, strengthening and sustaining the system. NJACP is requesting lawmakers consider co-sponsoring the bill.