Current Legislative and Regulatory Issues Affecting Misericordia

With a new administration in Washington, D.C., a number of legislative proposals are before Congress that could adversely affect Misericordia. There is also a new regulatory initiative in Springfield that can be detrimental to Misericordia’s future plans. Below is a brief summary of these federal and state initiatives. I am always happy to provide additional information or answer any questions. The best way to reach me is at scott.mendel@klgatescom.

Federal Legislative Proposals

               The American Jobs Plan

The Biden Administration has proposed its infrastructure plan, called the American Jobs Plan. The Plan includes a proposal to spend an additional $400 billion on home and community-based settings (HCBS). Misericordia’s off-campus homes, its CILAs, are HCBS.

There are no details yet on how the Administration proposes to spend the $400 billion. The Plan indicates only that a portion of the money will be spent on addressing the direct care workforce crisis in HCBS. Addressing the workforce crisis in HCBS will benefit Misericordia’s off-campus homes. However, the same direct care workforce crisis affects Misericordia’s on-campus homes. These homes are not HCBS. They are considered intermediate care facilities for the developmentally disabled (ICFs). The American Jobs Plan does not include any provision to provide additional funding or assistance to ICFs.

ICFs were also excluded from assistance under the Biden Administration’s American Rescue Plan, the legislation passed last month to provide pandemic relief to many individuals and businesses. The American Rescue Plan increased federal Medicaid funding for HCBS by 18% so that home and community-based settings could cover the increased costs resulting from COVID. ICFs, including Misericordia’s on-campus homes, face these same increased costs, but no additional funding was provided to help ICFs cover these costs.

It is apparent that the people and organizations advising the Biden Administration on disability policy strongly favor HCBS and disfavor ICFs. They believe that campus settings like Misericordia isolate and segregate men and women with disabilities. We know they are wrong. Misericordia is working with Together for Choice to combat this misguided point of view. We are reaching out to members of Congress and members of the Biden Administration to try to get ICFs included in any additional funding from the federal government.

               Phase-Out of Section 14(c) of the Fair Labor Standards Act

Under Section 14(c) of the federal Fair Labor Standards Act, an employer can pay an individual with a disability a special wage based on the individual’s productivity. The purpose of this section is to encourage the hiring of individuals with disabilities even if they are less productive than a non-disabled person. An employer must receive a certificate from the federal Department of Labor and meet stringent regulations before it can pay special wages to individuals with disabilities. Today, the vast majority of employers that have 14(c) certificates are non-profit organizations like Misericordia who have developed work programs specially designed for men and women with intellectual disabilities. Misericordia uses 14(c) wages for a number of its jobs programs on campus, including the bakery and coffee packaging. All of Misericordia’s work programs lose money, even with the use of special wages. If Misericordia were required to pay all of the residents in its work programs minimum wage, the cost of these programs would increase significantly. In order to reduce losses, Misericordia could be forced to reduce the number of men and women in its work programs and the number of hours each person spends in the work programs. These lost jobs and hours would be replaced by less productive and satisfying activities.

There are several proposals before Congress seeking to phase-out Section 14(c). The Biden Administration’s American Jobs Plan proposes to end this program. Phase-out provisions are also included in the Raise the Wage Act (the principal purpose of which is to raise the federal minimum wage nationally) and the Transformation to Competitive Employment Act.

Again, Misericordia is working with Together for Choice to try to preserve Section 14(c). We are reaching out to members of Congress and the Biden Administration to explain the importance of preserving Section 14(c) for men and women with significant intellectual disabilities engaged in work programs developed by non-profit agencies serving these men and women. Congressman Schneider from north suburban Chicago has offered to sponsor an amendment to the pending legislation that would preserve Section 14(c) for those who need it. We are working to find other members of Congress to support Rep. Schneider’s proposal.

               The Home and Community–Based Services Access Act

Senators Hassan, Casey, and Brown and Congresswoman Dingell have proposed the Home and Community-Based Services Access Act (HAA). The HAA proposes to end waiting lists for HCBS. Nationwide, it is estimated that over 800,000 men and women are on waiting lists for HCBS and it often takes years for these men and women to receive services. In Illinois, the waiting list is 18,000 and the State is providing services to individuals on the list at a rate of between 500 and 1,000 per year. Ending waiting lists for HCBS is a good idea. Unfortunately, the HAA does a lot more. Under its provisions, it is likely that ICFs all across the country would be forced to close. The HAA proposes to make HCBS a mandatory Medicaid service and have the federal government fund 100% of HCBS. It would end the requirement that states also offer ICF services, and those states that elected to continue to offer such services would have to cover, on average, 44% of the cost of ICF services. States would therefore have a choice – force all men and women with disabilities out of ICFs and into HCBS covered 100% by the federal government or continue to spend hundreds for millions of dollars a year offering ICF services. States under severe financial constraints, like Illinois, would have no choice but to end ICF services so that the cost of serving individuals with disabilities could be shifted entirely to the federal government. This would have a huge negative impact on Misericordia’s ICFs, its on-campus homes.

For this reason, we are opposing the HAA. My letter to the members of Congress sponsoring this legislation explaining our concerns can be found on Together for Choice’s website at        

State Regulatory Proposal

Illinois is in the process of reviewing and amending its various regulations governing residential and vocational services for individuals with disabilities. Rule 115 is the Rule that governs residential services provided in CILAs like Misericordia’s off-campus homes. Illinois is proposing a number of revisions to Rule 115. The proposed revisions of greatest concern are those dealing with the geographic location of CILAs under proposed Rule 115.310.

Rule 115.310 proposes to place the following restrictions on CILAs:

1.            CILAs must be located to avoid concentrating individuals in CILAs in a community or in the same neighborhood. (115.310(b))

2.            CILAs must not be located on the same property as a nursing facility or an ICF. (115.310(c))

3.            A CILA cannot be next to, across from, immediately behind, or in close proximity to another CILA or a day program. (115.310(d))

4.            In a multi-unit building (i.e., an apartment building), no more than 25% of the units can be CILAs. (115.310(e))

These restrictions make it impossible for a campus setting, farmstead, or intentional community to qualify for Medicaid waiver funding in Illinois. Only small homes or apartments in neighborhoods would qualify for wavier funding. Misericordia’s current off-campus homes, its CILAs, would not be affected by these restrictions because all of them comply with the proposed rule. Misericordia’s on-campus homes are not affected by this proposed rule because they are ICFs and funded under separate Medicaid funds. Nonetheless, we feel that this proposed Rule is unduly restrictive and limits residential options and choice. The government should not dictate where individuals with disabilities live. That decision must be left to the individual and her family. The government should support all high quality options.

The restrictions proposed in Rule 115.310 are discriminatory and likely unlawful. No other individuals or groups are prohibited from living in neighborhoods where others of their ethnicity, religion or race are “concentrated.” No other individuals or groups are prohibited from choosing a home that is “next to, across from, immediately behind, or in close proximity to another” home occupied by someone like them. No other individuals or groups are prohibited from living in an apartment building because more the 25% of the units are occupied by “their kind.” This proposed rule singles out individuals with disabilities for these restrictions. This is discrimination on the basis of disability.

We asked Misericordia families to file comments objecting to proposed Rule 115.310.


In my discussion above of pending federal legislative proposals, I have made a number of references to the Biden Administration. Please understand that we are strictly non-partisan, we do not support or oppose the Biden Administration. We work with Democrats and Republicans. We support legislative and regulatory proposals that we believe will improve the lives of men and women with disabilities without regard to which party is sponsoring those proposals. We also oppose legislative and regulatory proposals that we believe are misguided or harmful, without regard to party.

Please do not hesitate to contact me with any questions or comments at the email address provided above.

Scott M. Mendel