For nearly two decades, New York’s Consumer Directed Personal Assistance Program (CDPAP) was a model of how government and community could work together. Established in 1995 and expanded under the state’s 1115 waiver, CDPAP empowered more than 250,000 New Yorkers with chronic illnesses or disabilities to hire, train, and supervise their own caregivers—often family members or close friends—while Medicaid covered the cost.
Behind the scenes, over 600 fiscal intermediaries (FIs) handled payroll, taxes, benefits, and compliance. The program created tens of thousands of jobs, kept care local and personal, and gave vulnerable populations unprecedented control over their daily lives.
Then, in May 2023, reform arrived. CDPAP had grown quickly—from roughly $1 billion in 2013 to more than $12 billion by 2023—and state officials began to question whether the structure was sustainable. Reports of fraudulent billing and improper enrollments, some involving millions of dollars, intensified pressure to act. The FY 2024–2025 budget introduced a seismic shift: CDPAP would be consolidated under “one or more” statewide FIs by April 2025.
In the fall of 2024, Public Partnerships LLC (PPL) was selected as the sole statewide contractor and everyone in the program was required to reenroll. However, non-registered consumers temporarily lost payroll processing for several months in early 2025 until they moved to PPL. By November 2025, roughly 93% of consumers had transitioned to PPL. The remainder either were reassigned to traditional personal care services or remained under short-term court extensions.
The reform also negatively affected all of the agencies and employees supporting CDPAP. Legacy FIs saw their authorization codes deactivated, their software and leases rendered useless, and their compliance teams dismantled almost overnight.
Behind the headlines, caregivers and consumers bore the brunt of the transition. Tens of thousands of families faced temporary interruptions in payroll, reenrollment paperwork, and the loss of familiar coordinators. While eligibility and authorized hours largely remained intact, the administrative chaos hit hardest in rural and non-English-speaking communities.
Some improvements followed—wage increases, premium assistance, and new benefits—but the loss of local relationships left a mark. The personal touch that once defined CDPAP gave way to a centralized platform.
Dozens of small agencies shuttered. Others tried to pivot to new service lines or merged with larger players. Only a few—particularly union-affiliated FIs backed by major networks—managed to adapt, aided by new wage floors exceeding $20 per hour in New York City. While a coalition of FIs filed suit over unannounced rate cuts, the verdict was that the consolidation was legal and final.
The Fragility of Government-Centric Business Models
Once reform began, the transition exposed the fragility of an entire industry. In a matter of months, over $12 billion of annual program revenue was effectively reallocated away from more than 600 fiscal intermediaries to a single statewide administratorleaving thousands of people jobless and owners high and dry.
CDPAP is not an isolated case. It is a clear example of a broader category: policy-dependent business models, where a company’s revenue is largely derived from a single government program or regulatory framework. When the government is both client and regulator, stability lasts only as long as political priorities remain aligned. Currently, multiple healthcare sectors are in business models depending on a single government player.
ABA businesses are highly dependent on reimbursement policy across both Medicaid and commercial insurance. While Medicaid often represents a significant portion of revenue, commercial insurers—subject to state mandates, utilization management, and authorization controls—also play a critical role. For example, some states provide ABA coverage to children under 21 through Medicaid Early and Periodic Screening, Diagnostic, and Treatment benefit. An ABA business operating in a state without this limit is likely to have a significant client base of people over 21 years of age. If the state imposes the age limit, then a clinic’s patient base or service hours can drop immediately, similar to what happened with CDPAP.
Skilled nursing facilities (SNFs) are also typically heavily dependent on government reimbursement, especially through Medicare and Medicaid. For example, a reduction of even 2% to 3% in the SNF Prospective Payment System can significantly affect SNF margins. Additionally, policies that affect minimum hours per resident per day (HPRD) and registered nurse staffing requirements, such as the CMS minimum staffing requirements for nursing homes, can require facilities to hire more nurses or reduce margins if rates do not rise in conjunction.
How Health Care Sectors Can Proactively Diversify
No company can eliminate policy risk entirely. Other health care sectors that are built on the scaffolding of policy should learn from the lessons of CDPAP and take proactive measures now to reduce risk. But leaders in regulated sectors can mitigate it by planning and building for adaptability if the day arrives that the policy supporting the program changes.
Run “What If” Scenarios
Private businesses should continually evaluate their business by running “what if” scenarios and asking the hard questions. If the rule changes tomorrow, what survives? If the answer is “nothing,” the business isn’t truly independent—it’s subsidized. With these questions, businesses can identify weaknesses in the business model and target areas to focus on for risk reduction.
Diversify Revenue
When an entire business is built on government contracts, the time to diversify is now. Because CDPAP served Medicaid exclusively, private-pay expansion would have required new billing systems, pricing models, and marketing infrastructure, making it too late to diversify once the policy changed.
Policy-based businesses can increase the odds of longevity by proactively looking for other revenue sources before disruption. Instead of relying only on the government, they aim for at least 20% to 30% of revenue from nongovernmental or commercial contracts. Businesses should evaluate their current areas of expertise and resources to identify services marketable to the private sector.
For example, ABA companies, which typically rely heavily on government funding streams, such as Medicaid, school districts, and state agencies, can expand into adjacent behavioral health services. By using current expertise in speech therapy, occupational therapy, and mental health counseling, these companies can offer these as stand-alone services. Other revenue sources may include private-pay coaching programs for parents or social skills groups for teens and young adults. With this approach, ABA companies can evolve into comprehensive multidisciplinary development centers.
Design for Agility
Because businesses built on government policies typically have all of the processes designed specifically for that government program, it’s almost impossible for the company to quickly shift direction. By building modular systems and flexible financing, the company can quickly pivot when funding streams shift without rebuilding every operational process.
For example, a SNF largely dependent on Medicaid contracts is at high risk for disruption due to policy changes. To create agility, facilities can develop formal partnerships with hospitals to provide post-acute care bundles, hospital step-down programs, rapid discharge units, and transitional care programs. This allows the organization to capture revenue across the entire post-acute care continuum, not just from inpatient beds. By also designing processes for payment and billing that work for health care systems and private-pay options, the facilities can quickly expand these diversified income streams.
Avoiding a Blindside Due to Policy Changes
Many of the organizations affected by the CDPAP reform felt like the changes were sudden and out of the blue. In addition to widespread fraud and investigations, the New York Legislature was in discussions about reform for several years. Even though lawmakers held hearings about the program and discussed consolidation of fiscal intermediaries, businesses not closely monitoring the policy and program may have missed these signals.
Policy-based businesses should create processes for tracking any potential changes or increasing attention to related policies, similar to the attention put on financial metrics. For example, businesses should follow all related legislative sessions and read all Medicaid bulletins related to their industry. Additionally, businesses should monitor fraud reports and investigations because reform often follows increased scrutiny.
While policy-based businesses are often lucrative while at the same time providing a valuable service, leaders must proactively prepare for government changes that disrupt their business. By taking proactive action, especially creating diverse revenue streams—businesses can prepare for the inevitable shift that happens. Instead of being blindsided by disruption, businesses can adapt quickly, make targeted adjustments, and continue advancing their mission.
This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
