Wisconsin's system for reimbursing costs associated with the residential care of people with disabilities is being scrutinized, due to a class action lawsuit filed last week.

According to the complaint filed last week in the U.S District Court Western District of Wisconsin, some clients with developmental disabilities are being unfairly singled out for rate cuts. The suit was brought on behalf of 17 individuals with disabilities whose care is being jeopardized due to the state's declining rate structure.

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The lawsuit claims that the Wisconsin Department of Health Services has been slashing the Family Care program budget the past couple years and clients are being caught in the crosshairs.

The DHS contracts with regional Managed Care Organizations to provide residential care for people with disabilities. Those MCOs then determine the level of payment each client receives for their care. Over the past few years, those rates can vary widely, putting a client's current care situation at risk.

A number of Family Care clients, and their families or guardians, from St. Croix and Pierce counties are among those involved in the lawsuit.

Michael Amundson, who lives in an Aurora Residential Alternatives home in Hudson, is one of the plaintiffs in the lawsuit that has been hit the hardest by cuts.

According to the lawsuit, Amundson's daily rate dropped from $177.51 in 2008 to just $56.66 in June of this year. As a result, the group home he's been living in for nine years will no longer be able to afford providing 24-hour care and supervision for the 44-year-old man.

Amundson's mother, Ella Amundson of Port Wing, Wis., said the family hasn't received any explanation about why her son's rates have dropped so much. The level of care he requires daily hasn't changed, she claimed, yet the rates aren't being maintained.

"It's very frustrating," she said in a phone interview last week. "My son has settled into a situation where he's comfortable and he has friends. You couldn't ask for anything more."

To uproot him now, Amundson said, would be upsetting for Michael.

Others served by Community Health Partnership, the MCO covering St. Croix, Pierce, Eau Claire, Dunn and Chippewa counties, have experienced similar frustrations, the lawsuit outlines.

Chuck Anderson, 73, a former New Richmond resident, currently lives in a group home in Baldwin. His daily rate has dropped from $276.14 in 2008 to $169.35 in March of 2012. The group home provider has given notice that they can no longer afford to provide the 24-care and supervision for Anderson.

Chuck Hogan, 69, who lives in a group home in River Falls, requires constant care and supervision. His daily rate has fluctuated wildly in recent months, rising from $123.68 in 2008 to $329.29 in June of 2010, then down to $155.72 in March of 2012 and up to $220.09 in August of 2012.

"These rate fluctuations make it impossible to budget for Mr. Hogan's care," the lawsuit states.

Even though Hogan's rate has risen in recent months, because others in his four-person group home have experienced cuts in their daily rates, the home can no longer operate efficiently. In the past, higher rates received from other clients in the group home have helped subsidize Hogan's care. That is no longer the case, and Aurora now claims that they are losing money providing care to Hogan.

Beckie Hines, the wife of Hogan's nephew, said she has been constantly fighting for her relative's rights through the rate setting process. She said Hogan's case was re-evaluated and she was told his required level of care was downgraded.

Hines said Hogan supposedly was getting better, when in fact he's getting worse. Because his medical assistance won't cover physical therapy any more, his wheelchair-bound body is becoming weaker and he's requiring even more care than before.

"He's losing muscle tone and losing more function. There should never be a reduction of rates for someone like him," she said. "In fact, it went the wrong way. He should be getting more."

Because his group home is receiving much less income now that CHP has dropped its payments, staff members have had to be cut and it has severely limited what the residents can do every day, Hines said.

Where once the group home could go to the YMCA or on other field trips, they can no longer go out on a regular basis because there is only one person on staff at any given time, she said.

Hines said she continues to advocate for her husband's uncle, and has been successful in forcing DHS and CHP to make concessions.

She said she joined the lawsuit, on Hogan's behalf, in order to correct inequities in the state's system.

"My fight isn't just for Chuck," she said. "There are a lot of people that need to have someone fighting for them. They're not abusing the government dollars, yet these people are just being neglected."

Matt Dansdill, 24, a Hudson native who lives in an Aurora group home in Eleva, Wis., saw his rate rise from $213.33 in 2010 to $287.27 in 2012. But again, because Dansdill's care needs are so significant and because others in his group home have had their daily rates cut, the care provider is losing money.

"Aurora has notified CHP and the guardians that it cannot continue to provide services at that rate," the lawsuit states.

Joleen Garaghty, 27, who lives in a group home in New Richmond, saw a drop in her daily rate. As a result, she had to cut back her hours at her job with St. Croix Industries, which offers employment opportunities for clients with disabilities.

Milwaukee attorney Rock Pledl filed the lawsuit against the Wisconsin Department of Health Services, DHS Secretary Dennis Smith, and three managed care organizations in the Family Care program (Care Wisconsin, Community Health Partnership and Northern Bridges.)

The suit seeks to restore the necessary rates so that the plaintiffs can continue to live in their current group home facilities and continue to participate in employment and other services.

The suit alleges that recent rate cuts instituted by DHS and the MCOs discriminate against individuals with developmental disabilities, as other clients with different disabilities have not suffered cuts of a similar magnitude.

Pledl said the class action lawsuit was ready to be filed last year, but rate cuts made at that time were reinstated.

"But obviously it was a short-lived situation," he said.

Since then, several rounds of cuts have placed the care of some clients at risk, Pledl said. He said the cuts have nothing to do with a lessened need for care, but have everything to do with financial difficulties experienced by the MCOs.

Pledl said his office has talked to about 120 clients who face similar rate cut situations. The 17 included in the lawsuit are "pretty representative" of the stories the class action group has to tell.

DHS Communications Director Stephanie Smiley said the department could not comment directly about any pending litigation.

Dean Mathwig, marketing and communications manager, said his organization was "not at liberty to discuss" the lawsuit and the clients who are involved in the action.