Financial Management Service (FMS) in California

When a Regional Center client enters the Self-Determination Program (SDP), they have to work with a financial management service (FMS) to coordinate paying for their services. Finding and working with an FMS adds an extra layer of complexity to the SDP process, but it’s required for all participants, so it’s important to know how it all fits together and where to turn when you need help.

For insights and tips on choosing an FMS and working with them, we reached out to Independent Facilitator and founder of Bridge Builders CA, Iris Barker.

Broadly speaking, a financial management service provides administrative and fiscal support — like handling payroll, taxes, and bookkeeping — for people in self-directed care or consumer-directed programs. In California, an FMS helps participants in the Self-Determination Program and their families manage their budget, pay bills to vendors, and process payroll for support workers who are hired.

The financial management service provider is essentially the account holder for your Regional Center budget. The FMS is responsible for paying 100% of your providers and other goods/services in your spending plan throughout the year.

Once your Regional Center has authorized your budget and spending plan, you’ll work with your FMS to fund services and pay providers. Each FMS works a little differently, but they are all accountable to federal law because Medicaid funds are used in part to pay for SDP. Barker says, “They do all have to follow certain policies, procedures, and whatnot. But definitely, they are their own entities, so there's certain things that they do differently.”

What does an FMS cost?

The FMS you work with will require a fee for its services, so you need to factor this into your child’s spending plan. California’s Department of Developmental Services (DDS) sets the rates that an FMS can charge based on how many services are authorized in the spending plan.

If your spending plan includes employees, such as a personal assistant or in-home care provider, the FMS will also add an employer burden fee, which is used to set aside funds for sick time and workers comp to cover your support workers. This fee varies by FMS and might be listed as a percentage of the budget or a set amount for every hour that an employee works.

Barker breaks it down in this clip:

Do I really need an FMS?

Yes, working with an FMS is required in the Self-Determination Program under state law. The FMS is responsible for ensuring adherence to tax laws, making sure providers are qualified to work in California, and checking for compliance with other requirements set by DDS.

When your child uses their SDP funds to pay support workers, you are their employer; you tell them when to work and how, but your FMS is responsible for payroll. Here are some tasks the FMS should manage for you:

• Making sure providers are qualified to deliver services by completing background checks and verifying credentials
• Helping employees complete enrollment paperwork such as tax forms
• Making sure employees are covered by workers comp
• Issuing paychecks
• Setting aside funds for employee sick time

You as the employer are responsible for selecting and training your employees as well as setting their rates. Most FMS companies have an app so that employees can log on in real time to record their working hours. You likely have to approve the timesheet so that they can get paid. Pay attention because mistakes can be hard to fix later.

Exactly what the FMS manages for you will depend on your FMS model. There are three program models to choose from:

• Sole employer: you are the legal employer of any workers you hire. The FMS will be your payroll agent and will pay employees directly as well as handle all payroll taxes. This model gives you the most control. You might be required to obtain your own employer liability insurance.

• Co-employer: the FMS is the legal employer of record, but you and the FMS will share employer responsibilities. You will still be in control of choosing, hiring, scheduling, and training your workers. Since employees are jointly employed with the FMS, some FMS-specific policies may apply to your employees.

• Bill payer: this model, also known as fiscal agent, is chosen when your FMS is only responsible for paying bills for goods or services to businesses. The FMS pays vendors for the items approved in your spending plan. This model is not used when you are directly hiring support workers.

Here’s how Barker explains the differences between these models:

Your Independent Facilitator and/or your Regional Center service coordinator should be able to help you understand which model would work best for you and your family.

Labor laws for support workers

When you employ support workers, it’s your responsibility as employer to follow California and local labor laws for things like employee breaks and overtime pay. Barker says that an FMS can help you understand what laws apply, “But ultimately, they feel the families should be involved. I think families are doing the best that they can. [FMSs] provide you information, but at the end of the day, enforcing it is kind of on the families.”

Barker admits that California labor laws can get complicated and intimidating for families, but she recommends learning what you can in addition to getting information from your FMS. The Division of Labor Standards Enforcement offers free seminars, and some organizations like the Autism Society periodically offer trainings.

A provider in your child’s spending plan, such as a swim instructor or executive functioning coach, will need to become a vendor with your FMS in order to get paid. This is typically straightforward and involves completing some paperwork so that invoices can be processed. Your provider doesn’t need to become a Regional Center vendor, but they must still become an FMS vendor.

Each FMS has a different system for entering invoices to be paid; some have an app that allows vendors to upload an invoice, and others ask you to email invoices to them. Either way, you will have to approve invoices before the vendor can be paid.

The FMS may have certain requirements of what needs to be on the invoice before they can pay it out. Make sure your vendor knows what the FMS requires to be on the invoice. For example, vendors typically must have a business licence and may need insurance. The FMS will only pay your service provider if the item is in the spending plan, the expenditure is authorized by you, and it lists the correct service code. The dates on the invoice will also have to match the dates on your service plan.

Note that FMS companies set their own pay schedule, such as every two weeks or every month, so it’s important to find out what their schedule is and communicate that clearly to vendors.

Barker recommends asking your FMS for a monthly statement (some do them bi-weekly) that “allows you to see what the clients had spent money on, what they haven't spent, if they're running out of funds here, if they're overspending here or underspending.” Review these for accuracy and timeliness. Some FMSs even provide an app where you can see these transactions in real time instead of waiting for a statement.

Paying by credit card

Many goods and services through SDP can be paid for online, such as adaptive equipment or a deposit for a social-rec program. In this situation, you might fill out a vendor form and have the FMS go online, enter the website with your credentials, and pay for the item on your behalf. Some FMSs offer limited virtual credit cards or digital payment systems.

Important note: FMSs cannot reimburse parents for purchases because there is no reimbursement in SDP. You must always work out payment details with your FMS in advance.

Contact your Regional Center service coordinator to request the current list of approved FMS providers for you to review and select from. You can find a list of statewide approved FMS providers here and filter based on your Regional Center. This tool from Acierto can also help you find an FMS based on your budget, preferred employer model, and other criteria.

More and more FMS companies are becoming available and improving their platforms as they see what's working and what's not working. Barker recommends that you interview them and ask about their process.

Questions to ask an FMS

You should ask your IF and other parents how they feel about working with the FMS. You should also reach out to the FMS directly and ask about their process. Here are some questions to ask:

• Do they have a waitlist? How long do they estimate the wait?
• Do they have a budget limit?
• Do they have many other clients working in your area?
• Do they already have vendors in your area?
• Which employer models do they offer? (Not every FMS offers all three.)
• What is their process for onboarding employees?
• How much money do they add to your employee’s pay rate for the employer burden (which comes out of your budget)?
• Do they process payments bi-weekly or monthly?
• If they have an app, can you take a look and see how easy it is to use?
• Do they have an app for employees? Is it easy for employees to use? Do they have an app for participants to approve employee timesheets?
• What is their process for vendors to send in invoices? How do you see when an invoice is pending, paid, or rejected?
• How easy is it to start a new service? Will they require you to change your spending plan every time you want to add a new vendor?
• What is their preferred contact method when there is an issue? Do you have a person you can connect with immediately on the phone, or do you have to wait for an email response?
• Can they provide the specific support you need (for example, translation/interpretation services)?

Since there could be a waiting list, you may want to put your name on one or more. Once your chosen FMS is available, reach out to ask about the next steps.

How to narrow down your options

Barker says that there's no perfect FMS. One might do one thing well, but another FMS does something else better. Some are more flexible or lenient than others. What you choose is a personal preference in the end.

Barker says, “Number one consideration is: do they have the level of support or the type of support that my family needs? Many [families] need more holding of the hand, and there's some FMSs that will probably not do that. They keep to emails, or you leave a voicemail, and then they'll return the call. Whereas we do have some FMSs that will pick up a phone call for you. So sometimes making sure that we get that communication, that line where you could speak to someone, might be a lot more relevant to some people than others.”

Another consideration is your family’s ability to use the FMS’s platform. Some companies have streamlined platforms and apps, which can be great for seeing budget updates in real time, but they may not be a good fit for less tech-savvy families who would just prefer a phone call to get answers. Ask the FMS about their willingness to walk you through the technology they’re using.

She also recommends looking for an FMS that communicates clearly about the expected timeline, especially for families first transitioning into SDP. There’s a lot of demand, so it takes some patience, but you should have clear expectations about the onboarding process and how long payments take.

If you’re experiencing trouble with delays and talking directly with the FMS doesn’t address your concern, there are a few options:

• Let your Regional Center service coordinator know
• Reach out to the SDP Ombudsman
• Reach out to DDS

Barker encourages families to have patience and give things two or three weeks to resolve before escalating. As more Regional Center clients transition to SDP, caseloads for SDP specialists (also called participant choice specialists) are increasing without additional support, which can bottleneck requests.

Barker also wants families to keep in mind that FMS companies have to follow regulations set by DDS, such as making sure vendors are HCBS compliant or not allowing parent reimbursement. She says, “If there are certain ways of doing things, mostly it’s because they really want to stay compliant rather than want to make your life difficult.” You can advocate for more flexibility in some areas, but your FMS might be rigid in other areas. “They need to follow DDS guidelines to continue within the Self-Determination Program. Because at the end of the day, we want the program to continue, and if we don't stay within guidelines, we're risking the program disappearing.”

If your FMS is unresponsive, has repeated issues with payments, or has rules that make it difficult to get what your child needs, you may want to switch to a different FMS.

Barker says, “The beauty of all these FMSs popping up is now we have options. Back in the day, we only had a handful, and they were so impacted that there were months of waitlists. Nowadays, most of the FMSs that I work with don't even have a waitlist, so you're able to switch whenever you want.”

The problem can be switching in the middle of your SDP year. Any employees you have will need to onboard with your new FMS, which could take up to a month if new background checks are needed. You’ll also need to get a spending plan established with the new FMS. You may have late invoices that come in and need to be paid by the former FMS. It can result in disrupted payments if details aren’t exact in onboarding with the new FMS and submitting your spending plan, so verify everything. Barker says, “The best is to wait until the new SDP year.” But if working with your FMS is no longer feasible, you might have to switch mid-year.

How do you know if it’s time to switch your FMS or if you should troubleshoot and stick it out? Barker says that as FMS companies get established and DDS enforces requirements, there are some “growing pains,” especially as FMSs try to handle the influx of new Regional Center clients switching to SDP. They might have difficulties with a new platform or deal with delays in payments. She’s seen instances where some clients stick it out and others decide the hassle of switching to a new FMS is worth it — it depends on the family.

“Clearly communicate with your FMS as to what is going on, what is the timeline, and if this is something that you could wait a bit or if you really need to jump ship,” Barker says. “I've seen it all, and I've seen these corrections being done, and FMSs come back afloat and do a great job moving forward. Everybody's just trying to do their best, for the most part, and working collaboratively is best.”