CDPAP Fiscal Intermediary Takes Aim at DOH's Competitive Bidding Process

Another day, another legal challenge to New York's overhaul of the Consumer Directed Personal Assistance Program (CDPAP). In an emergency petition filed Nov. 25, 2024, by the state's largest fiscal intermediary (FI), Freedom Center LLC (FCL) alleges that the Department of Health's (DOH) FI bidding process was a “sham” that resulted in a multibillion-dollar contract being awarded to Public Partnerships LLC (PPL), a Georgia-based company "with no relevant prior experience in New York" and an "abysmal record in other states," to be the single statewide FI pursuant to the CDPAP amendments Gov. Kathy Hochul signed into law in April 2024. FCL is seeking emergency relief to annul the contract and prevent DOH from transitioning its customers to PPL.

CDPAP allows New York State Medicaid beneficiaries who are chronically ill or physically disabled (Consumers) to self-direct their home care with their own personal assistants. FIs manage the wages and benefits of those personal assistants, ensure compliance with tax and insurance requirements, maintain comprehensive personnel and Consumer records and generally oversee various administrative aspects of the program. The move to a single FI would displace the nearly 700 middlemen currently serving approximately 246,000 Consumers across the state.

The lawsuit claims DOH structured the Request for Proposal (RFP) to select the FI "with an apparent eye toward PPL, imposing eligibility requirements that eliminated almost all of PPL's potential competitors" by, for example, prohibiting the statewide FI from being owned by a New York-licensed home care services agency, but not imposing this requirement on out-of-state bidders. The lawsuit also claims that DOH failed its statutory mandate to select an FI proposing the "best value" for the state when FCL purportedly submitted a bid that was lower than PPL's on every metric. FCL's petition goes on to summarize PPL's "troubled history" in other states (including Pennsylvania and New Jersey), describing various fiscal and operational failures that should have disqualified PPL from statewide FI consideration.

In some ways, FCL's lawsuit is not unlike the Aug. 12, 2024, petition filed by Save Our Consumer Directed Home Care Inc., a not-for-profit association representing FIs and other entities, which alleges that the RFP process created nearly insurmountable barriers for entities aiming to qualify as the statewide FI such as having had provided statewide FI services in another state as of April 1, 2024, and securing a $100 million line of credit. Both lawsuits criticize DOH for its lack of transparency. FCL's petition notes that DOH failed to answer more than 200 questions during the process, while the earlier lawsuit alleged insufficient public dialogue and stakeholder input before the RFP's adoption.

This action is one of several lawsuits filed in state and federal courts that seek to halt the revamping of the CDPAP, which requires Consumers to begin transitioning to PPL on Jan. 6, 2025, and complete that transition by April 2025. Holland & Knight will continue to monitor these lawsuits and proposed legislation that could eliminate or modify the new CDPAP framework.