After rocky legislature, disability agency’s self-directed care may still face budget challenges

Early in this year’s legislative session, state officials looking to close a $3 billion budget gap targeted the “unsustainable growth” in developmental disabilities services as one of the main drivers of the deficit and set out to cut $457 million from the program.

What followed was 90 days of emotion, rallies, negotiating and arguing that ended with both sides getting to a place they could live with: Advocates were able to claw back close to $300 million in cuts and got program reductions to a level they said was regrettable but survivable, at least.

But after all that, both sides now wonder if they fixed the problem they set out to solve, of unsustainable growth in the self-directed care portion of the Developmental Disabilities Administration. One lawmaker said all of this year’s wrangling may amount to a Band-Aid on a problem they could be visiting again next year.

“I’m not sure that the legislature was able to address some of the underlying concerns with needs of the community being balanced against spending that seems to continue to increase,” said Sen. Clarence Lam (D-Anne Arundel and Howard) who serves on the Senate Finance Committee.

“I think there are still fundamental issues that are outstanding that probably need a deeper review, and agreement upon on what approach to take to bring spending on DDA services to a level that the state can sustain,” he said.

A spokesperson with the Department of Health said in a written statement Wednesday that the agency “expects to continue discussions on DDA program sustainability.”

“The Maryland Department of Health is deeply committed to providing high-quality services that support Marylanders with disabilities,” the statement said. “To drive that effort forward, the department will work in partnership with the Maryland General Assembly and key stakeholders.”

In early discussions on the fiscal 2026 budget, former Health Secretary Laura Herrera Scott pointed to an increase in enrollment for the “self-directed service” model of care as a contributing factor for the agency’s budget woes.

Enrollment for self-directed services grew more than 30% in both 2023 and 2024, particularly among young people moving from school into the Medicaid waiver program, according to the health department. Budget analysts have suggested that self-directed services tend to cost the state more than community-based services.

The DDA administers Medicaid waivers that allow Marylanders with developmental disabilities to receive a wide variety of services, from live-in caregiver supports to transportation, respite care, employment services and more.

At the end of 2024, there were about 16,800 Marylanders who selected a community model Medicaid waiver, where people join an established organization for disability care. Another 3,600 waiver recipients elected the self-directed model, where the waiver recipient or their family hires individual employees for services.

“It is true that people are choosing self-direction,” said Alicia Wopat, president of the Self-Directed Advocacy Network of Maryland. “I think COVID-19 gave people a glimpse into what self-direction is like, because providers sadly couldn’t provide during that period of time … I don’t think the growth is unexpected.”

Wopat hopes that the increased interest will mean that self-directed services can be protected in future budget discussions, not slashed with budget cuts.

“It’s important for all of us to have choices in how we run our lives, and it should be no different for people with a disability,” Wopat said.

The General Assembly ultimately cut some $164 million from the DDA in fiscal 2026, as part of the larger budget wrangling this year. For self-directed services, that means cuts to a program that helps families afford one-time expenses to support their family member with developmental disabilities, as well as caps on wage bonuses for some of the self-directed service care providers.

But despite those cuts, Lam said that there are still some details that need to be understood regarding the DDA budget. The “restored” funding this year serves as a “Band-Aid” on the issue, while lawmakers and community leaders figure out how to fund the developmental disabilities programs sustainably, he said.

“There are still questions on why the cost of these services continue to rise so significantly, why self-directed care seems to be rising significantly,” Lam said.

“That discussion is hard to have during the throes of session, and so what took place this session was a Band-Aid to hold the community over,” Lam said, “but it doesn’t address the underlying issues there that have been festering for a while.”

Temporary factors

There were other factors that led to the financial woes at the DDA, some of which were temporary and should not play as much of a role in future budget discussions as they did this year, said Laura Howell, CEO of the Maryland Association of Community Services.

Howell noted service providers have now all transitioned from the old payment model to a fee-for-service payment model, that should allow for better spending forecasts for the agency.

The previous model paid providers up-front and expenses would be reconciled at a later date. The department periodically needed to account for unexpected costs, as the older system did not accurately project spending needs to deliver services. The new model, which was being phased in over the past few years, providers are reimbursed for services delivered.

The health department agrees that the new payment system will help the state officials better understand the DDA’s spending.

How did we get here?: Analysts, officials unsure how disability agency overspent

Meanwhile, lawmakers have boosted reporting requirements from the health department so they can also keep tabs on spending at the DDA.

Other factors that contributed to some of budget deficit at the DDA were higher pay increases for staff from an increase in the state’s minimum wage, and the expiration of COVID-era relief dollars that had been supporting the agency.

“So all of those things led to the [spending] issues that we saw this year. We shouldn’t be seeing those things moving forward, nothing should be a surprise,” Howell said.

Howell agrees that the “unanswered question” in future DDA budget talks is whether the state is able to support funding for self-directed services.

“It’s hard to imagine that we could possibly be anywhere close to the same situation where were with this year,” she said. “I can’t see any reason why the DDA shouldn’t be able to adequately and accurately project the cost moving forward, because all the data should be there. The only question is what happens with self-direction budgets.”

As for Wopat, she hopes that the state includes more voices from the self-directed services community so that the model can be protected for those who rely on care that is more individualized.

“I hope everyone is included in those conversations as to how to best manage what’s happened with the state’s finances,” Wopat said. “That stakeholders of all kinds have opportunities to collaborate and come up with solutions that are best for people.”