Cost-effective definition · meeting companion

Prepared for the DDS cost-effective definition committee · June 2026

Tap a topic. Read the headline and the line for the room. Expand a point for the receipts. Open the data for the full backup.

Cost-effective definition meeting companion. Eight topics, each with a headline, a line to read in the room, the one number, key points, and the supporting data.

Topic 3

Most states don't define it at all. The few that do say "no more than institutional care." California already has the strongest protection in the country.

Say this in the room

"Most states do not even define 'cost-effective.' The ones that do, like Minnesota, define it as 'no more than institutional care,' not 'the cheapest option.' California already has the strongest anti-cheapest protection in the country. The job is to keep it, not lose it."

11states give families less self-direction than California.

Key points · tap to open the receipts

Most states never define "cost-effective" in words. They bury it in how they set the budget.

The most important finding first: most states have no standalone definition of "cost-effective." They build it into a budget formula or a rate schedule and never write it down. The few states with real definitional language are the ones worth borrowing from.

How the field actually splits, from the 50-state sweep:

  • About 19 states set the budget with an assessment algorithm.
  • About 12 states use a fee schedule (units times rate).
  • 6 states, including California, use prior cost.
  • Texas caps the budget at 210% of institutional cost.
  • Tennessee uses benefit-group caps plus an institutional ceiling.

The full state-by-state breakdown is in the data layer at the bottom of this topic.

Minnesota has the cleanest definition in the country, and it is not "cheapest."
"'Cost-effective' means community services and living arrangements that cost the same as or less than institutional care." Minn. Stat. §256B.0911

It measures cost at the system level, against the institution, not item by item at the lowest price.

Minnesota adds a second lever: a service must be "the least costly and effective means to meet the person's needs" (Minn. Stat. §256B.4911). That one phrase, "and effective," turns a cheapest-wins rule into a value rule.

The federal frame backs this up. The only federal cost test is aggregate cost-neutrality against institutional care, not a per-person lowest-cost rule, and federal law even bars CMS from turning that estimate into a hard cap (42 U.S.C. §1396n(c)(6)).

California is structurally unusual, and more generous, not less.

California's Self-Determination Program sets the budget from prior cost, one of only about six states that work this way, and it is uniquely broad in letting families move money between services.

That clincher number, unpacked: 11 states give families less self-direction than California.

  • 9 offer worker-hiring authority only, with no reallocable budget: Arizona, Alaska, Delaware, Kansas, South Carolina, Texas, Utah, Virginia, Washington.
  • 2 offer no self-direction at all: Mississippi, Nevada.

That is a clean answer to anyone who claims California is too loose, or an outlier in cost flexibility.

California already owns the strongest protective language in the country. The DDS draft would quietly drop it.
The consumer "shall not be required to use the least costly provider if it will result in the consumer moving ... to more restrictive or less integrated services or supports." Welfare and Institutions Code §4648(a)(6)(D). The Self-Determination Program inherits it via §4685.8.

No other state says it this plainly.

The risk in front of us. AB 143 has DDS writing California's first standalone definition of "cost-effective," and the current DDS draft weakens that protection. It drops the integration safeguard and treats "reasonable rate" as a reason to deny a service.

The move. Borrow Minnesota's institutional-comparison definition, add the words "and effective," add the federal downstream-cost language, and make sure the new definition restates California's integration protection rather than quietly dropping it.

Data Show the data: the full 50-state classification

Every state's I/DD self-direction individual-budget method (the Self-Determination Program analog), grouped by how cost is constrained. Every row rests on a primary or official source.

Assessment-based resource allocation · 19 states (the dominant model)

StateHow the budget is set
ColoradoSupports Intensity Scale → support level caps total funds (CDASS)
ConnecticutLevel of Need → review team sets the allocation
FloridaQSI regression "Model 5b" → per-person algorithm amount (iBudget)
GeorgiaSIS plus health-risk screening → support category → budget
HawaiiSIS-A 7-level plus living arrangement → tiered supports budget
IdahoAssessment formula → individualized dollar amount
IndianaICAP plus addenda → "algo level" → budget cap
LouisianaResource level (1 of 6) → hours times rate. Explicitly not capped.
Minnesota70% of average cost for the person's need group, with a 30% exception. Also defines cost-effective in statute.
MontanaResource-allocation protocol → funding tier. Reallocation needs team approval.
NebraskainterRAI → case-mix index → 5 tiers → annual budget
New JerseyNJ CAT → tier A to E plus acuity → fixed annual budget, with carryover
New YorkCAS assessment → Personal Resource Account ceiling
North CarolinaSIS levels → base budget. "A guideline, not a binding limit," with medical-necessity overrides.
Rhode IslandSIS-A → tier A to E → fixed annual budget ($60.7K to $199K, FY26)
VermontSIS-A → 6 support levels plus setting → budget range
West VirginiaBase by residential setting plus ICAP add-ons (max +$18,895)
WisconsinFunctional-screen regression → monthly budget, with near-full flexibility (IRIS)
WyomingICAP level-of-need plus setting plus age → budget equations

Fee-schedule / service menu, built bottom-up · 12 states

StateHow the budget is set
AlabamaSpending plan = need times units times rates ("not a limit"). Aggregate cost-neutral to ICF/IID.
Washington DCBottom-up from the service plan. Capped at $75K per year.
KentuckyUnits times upper payment limits plus per-service caps. Overall under ICF/IID cost.
MaineAuthorized services times rate under category caps. SIS-A tiering phasing in for 2026.
MarylandPlan-authorized services times state rates. Wages "reasonable and customary."
MassachusettsBudget from person-centered staffing needs. "Should equal the traditional-service budget."
MichiganBudget = estimated cost of plan services. No per-person cap, no institutional ceiling.
New HampshireItemized bottom-up budget. No assessment-derived dollar figure.
North DakotaBudget from assessed needs times fee schedule. Level-of-support ceiling plus 40 hr/wk.
OregonNeeds assessment → service level = max monthly hours. Hours times set rate.
PennsylvaniaPlan units times statewide fee schedule. Some waivers capped, the Consolidated waiver uncapped.
South DakotaAuthorized services times fee schedule, with per-service monthly caps

Prior-cost / historical baseline · 6 states, including California

StateHow the budget is set
CaliforniaBudget = the regional center's prior 12 months of purchase-of-service for the person (or the average for similar people), with unique-need exceptions
ArkansasOnly a Cash-and-Counseling personal-care allowance. The DD waiver has no budget authority.
IowaAuthorized services times average unit cost times a utilization factor. Aggregate cost-neutral.
MissouriPlan hours times statewide base rate. "Shall not exceed agency-provider support."
New MexicoHistorical waiver budgets minus case management minus a 10% discount (Mi Via)
OklahomaPlan-of-care dollars for traditional services become the budget. Bottom-up, reallocable.

Flat statutory / statewide per-capita cap · 2 states

StateHow the budget is set
IllinoisFlat monthly allotment = 3 times the SSI federal benefit rate. Uniform, not scaled to need.
OhioReal budget authority and rate negotiation, but bounded by a flat statutory cap ($62,136 adult / $41,424 child, SELF waiver)

Managed-care benefit-group caps plus institutional ceiling · 1 state

StateHow the budget is set
TennesseeUnits times rate from a fixed benefit menu, bounded by a benefit-group cap plus an institutional cost limit for high need (ECF CHOICES)

Less self-direction than California · worker / employer authority only · 9 states

These cover hiring, managing, and setting wages for workers, but the family gets no reallocable dollar budget.

StateWhat self-direction covers
ArizonaMember is the legal employer of the attendant. The plan authorizes hours. No reallocable budget.
AlaskaWorker-hire option in the IDD waiver (employer authority). The main waiver has no participant direction. Flagged provisional.
DelawareLimited to personal care plus respite. $5,000 per year combined cap. No budget authority.
KansasEmployer authority only. Budget set by assessment tier. (Budget authority only in the new flat-$20K waiver.)
South CarolinaEmployer authority only. The agency builds the budget from units times fee schedule.
TexasEmployer authority (set wages within allocated funds). Agency budget capped at 210% of ICF/IID.
UtahEmployer authority. Agency budget via line items times rates, capped at 100% of ICF/IID.
VirginiaEmployer authority only (3 services). Agency budget = services times fee schedule.
WashingtonEmployer authority only (personal-care hours times rate). A flexible budget exists only in a tiny separate waiver.

Less self-direction than California · no self-direction at all · 2 states

StateWhy
MississippiThe I/DD waiver elects no participant direction.
NevadaThe I/DD waiver has no participant-directed budget.

Two more archetypes frame the field.

The federal floor (aggregate cost-neutrality against institutional care, with no per-person cap) has no pure state example. The institutional-cost ceiling shows up as a cap rather than a budget method, most cleanly in Texas at 210% of institutional cost.

What this adds up to

  • California's Self-Determination Program is structurally unusual: one of only about 6 prior-cost states, and uniquely broad in free reallocation.
  • 11 states give less self-direction than California (9 employer-authority only, 2 with none). A clean counter to any "California is an outlier in cost flexibility" framing.
  • Closest structural analogs: New York, Rhode Island, and Wisconsin (IRIS).

Sourcing: every state rests on a primary or official source (a state agency, a CMS-approved waiver application, state code, or an operations manual). Remaining medium confidence is on specific dollar figures, not on the classification. Alaska's worker-hire option is flagged provisional. Full citations are in the National Component Library backing document.