DWRS compensation thresholds policy

Beginning Jan. 1, 2025, home and community-based Services (HCBS) provider organizations are required to spend a specified percentage of their DWRS revenues to compensate direct care staff. Direct care staff compensation may include costs such as:

Wages
Taxes
Workers' compensation policies
Insurance premiums paid by the employer
Other items of monetary value provided to direct care staff or other staff while they are providing direct care.

Some HCBS provider organizations might also offer other benefits to their employees that aren’t explicitly listed in statute. These may include employee assistance programs, self-funded staff compensation or self-insured health insurance benefits. While these costs can’t be allocated directly to individual employees, they may still be considered part of a direct care worker compensation package.

Data collected from the DWRS cost reporting system will be used to confirm HCBS provider organizations’ adherence to this required compensation threshold policy.

Background
Definitions
FAQ
Compensation threshold tracking
Resources

Background

The Minnesota Legislature directed the Department of Human Services to develop and implement a cost review for HCBS provider organizations that are paid with rates determined by DWRS (Minn. Stat. 256B.4914, subd. 3). The data gathered through DWRS cost reporting will be used to make evidence-based recommendations to the Legislature about the payment rates for disability waiver services.

During the 2023 session, the Legislature passed a new requirement that a minimum portion of DWRS revenues must be paid as compensation to direct care staff starting Jan. 1, 2025. The amount of revenues is different by service bucket, but aligns with rate framework assumptions (Minn. Stat. 256B.4914, subd. 10d):
- Residential requires minimum compensation of 66% of DWRS revenues.
- Day requires minimum compensation of 45% of DWRS revenues.
- Unit-based requires minimum compensation of 60% of DWRS revenues.
Compensation includes more than just wages, such as cost to the employer for benefits, taxes or other items of monetary value given to direct care staff.

DHS will use the costs submitted by providers through DWRS cost reporting to collect cost data to confirm organizations are meeting the DWRS compensation threshold requirement. Note: Tracking of the required compensation thresholds will begin during the 2026 DWRS cost reporting period.
Definitions

Compensation is a mix of wages and benefits provided to an employee in exchange for their work. This can include more than just wages, such as costs to the employer for benefits, payroll taxes or other items of monetary value given to employees for use at their discretion. The compensation threshold requirement applies to any employee providing direct care activities. The definitions listed below are common terms relating to DWRS compensation thresholds.
- Benefit: Benefits may include payments or gifts of monetary value; employer share of payroll taxes; employer share of health, dental, vision, life, disability, long or short-term care insurance; employer contribution to retirement accounts; paid leave; and/or tuition reimbursement.
- Cost reporting: A process of reporting the actual costs of providing services.
- De minimis: Personal use of something that has such a low cost that it couldn’t realistically be tracked.
- Direct care activities: Activities that are connected both to a particular service as a billable activity and to a specific person for the corresponding service. These activities may include face-to-face care; assistance with ADLs, IADLs, medication support and person-centered activities and support; program support; and wages provided to employees for time spent in trainings.
- Direct care staff compensation: All wages and benefits that are allocated toward an employee (direct care staff, administrative staff, supervisors or otherwise) providing direct care activities.
- DWRS (Disability Waiver Rate System): An initiative that determines individualized payment rates for certain home and community-based services waivers.
- Monetary value: Refers to the amount of money an item would yield if sold in a fair market.
- Non-wage compensation: Additional benefits given by the employer that can be used at the discretion of the staff on their own time which are not part of an employee’s hourly wage/salary.
- Program support: Time and activities that are not direct care activities but are related to providing direct care. Program support includes, but is not limited to:
  - Documentation
  - Service preparation activities
  - Sharing information between shifts to other staff members
  - Supervision.
- Reimbursement: The process of an employer paying back an employee for out-of-pocket expenses incurred while on the job. This is not compensation.
- Wage: A fixed regular payment to an employee, typically paid on a daily or weekly basis.
FAQ

For answers to frequently asked questions about the new DWRS compensation thresholds policy, see the DWRS compensation thresholds FAQ page.
Compensation threshold tracking

Beginning during the 2026 DWRS cost reporting period, DHS will use the cost data submitted by providers in their cost reports to confirm adherence to the DWRS compensation threshold requirements.

The amount of revenues is different by service bucket, but aligns with rate framework assumptions (Minn. Stat. 256B.4914, subd. 10d):
- Residential requires minimum compensation of 66% of DWRS revenues.
- Day requires minimum compensation of 45% of DWRS revenues.
- Unit-based requires minimum compensation of 60% of DWRS revenues.
All wages and benefits listed on the following DWRS cost report pages that have been allocated to direct care services will count toward the compensation threshold requirement:
- Administrative and program support wages
  - Note: Refer to the DWRS Cost Reporting Instruction Manual for further guidance on how to appropriately allocate administrative staff's time when performing direct care duties.
- Direct care and supervisor wages
- Other benefits.
Direct care services include the following allocation program service types:
- DWRS day services
- DWRS unit-based services with programming
- DWRS unit-based services without programming
- DWRS residential services
- DWRS customized living.
Questions

Email the cost reporting team. Please allow up to three business days for a reply.
Resources
- Minn. Stat. 256B.4914, subd. 10d, DWRS compensation threshold statute
- DWRS cost reporting webpage
- DWRS Cost Reporting Instruction Manual
- List of all DWRS services
- DWRS cost reporting overview
- DSD legislative reports