AppId is over the quota
During the 1990s, the federation, which provides care for developmentally disabled people, filed for bankruptcy protection twice, once while owing the Internal Revenue Service over $3 million. Its executive director and chief financial officer were charged with embezzling over $2 million.
In 2006, the federation’s board hired as chief executive a retired police officer without experience in the field. It later gave him annual compensation of $350,000 and allowed him to put his son, two sisters and a sister-in-law on the payroll.
And in the years since, the federation has amassed more citations for serious lapses of care than any other organization in the state licensed to run group homes for developmentally disabled people — those with autism, Down syndrome or cerebral palsy. An analysis by The New York Times of state inspection data from 2004 to 2010 found that the federation had been cited 27 times; most providers of similar size were cited no more than twice.
Like a spouse trapped in a bad marriage, however, the state never sought to extricate itself. It continues to pay the federation about $20 million a year in Medicaid money.
The relationship underscores the degree to which New York State has given control of its system to nonprofit providers, who receive more than $5 billion a year in Medicaid money to house and care for developmentally disabled people.
The problem stems from hasty decisions made four decades ago, when New York faced a court order to stop warehousing developmentally disabled people in huge institutions. The state turned to then-small nonprofit groups, many led by parents of developmentally disabled children, to open group homes quickly.
State officials saw the groups as allies, in need of support more than supervision. And as the organizations matured into multimillion-dollar enterprises, the state’s oversight system did not keep pace.
As a result, from the 1970s until this fall, the nonprofit providers, unlike nursing homes or hospitals, never faced fines when their care was found lacking. The state conducts inspections of their facilities, but the visits are rarely a surprise and are intended to be a collaborative learning experience.
Speaking of the state’s Office for People With Developmental Disabilities, Walter E. Saurack, a former official of a state watchdog agency, said: “They don’t view themselves as an oversight agency. They view themselves as a conduit of money to the nonprofits.” Mr. Saurack was chief of the fiscal investigations unit of the Commission on Quality of Care and Advocacy for Persons With Disabilities.
Another significant factor is that taxpayers underwrote the nonprofits’ purchase of buildings to house their group homes. That complicates any move to shutter a poor performer. A better approach, people who have studied the issue say, is to have independent landlords or the state own the real estate, so that providers can be quickly replaced if problems persist.
That is the way Community Living Services, a nonprofit organization that oversees group homes and other services for the developmentally disabled in the Detroit area, structures contracts. “We were pretty bright in the early days in not letting the providers own the homes,” Jim Dehem, its chief executive officer, said.
To be sure, many of the nonprofit organizations in New York provide exemplary care, using the state’s generous reimbursement rates to devise and operate excellent programs.
Courtney Burke, commissioner of the Office for People With Developmental Disabilities, said she had taken steps to “shore up oversight” of the providers. In March, amid an investigation by The Times into problems at the agency, Gov. Andrew M. Cuomo appointed Ms. Burke to overhaul the office.
This fall, for the first time in its history, the office fined four nonprofit providers. Ms. Burke also tightened the process through which nonprofits appeal for more money. She described the changes as “reforms that were long overdue,” but as only initial steps while she pursues federal approval for a sweeping plan.
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