Administrative Claiming: New Guidelines, New Opportunities NAME Conference September 25, 2003

Agenda Administrative Claiming Guide Overview Summary of key changes Impact comparison across states Approaches to Implementation Interpretations and approval requirements Approaches in various states Challenges Affecting States & Schools Increased audit activity and documentation requirements Consistency across states and CMS regions Strategies to Address Challenges Statewide program models Technology solutions Alternative avenues for obtaining reimbursement Questions

OVERVIEW

Importance of Medicaid Funding for Schools Funding for State and Federal Mandates: - Immunizations and periodic health screenings - IDEA - NCLB Critical Relationship of Good Health and School Performance - Attendance -------- Academic Performance -------- Behavior - Schools traditionally had to use funds intended for instruction to address students’ health needs Congressional Intent: Clear expression of intent that schools access Medicaid reimbursement to support schools’ provision of FAPE

MAC Program Overview Since 1994 states have been participating in the MAC program to assist schools in partially funding the activities and services they are required to perform to address the unmet health needs of students. Reimbursable activities include those directed to individuals and families to provide information about the Medicaid Program, encourage individuals to apply, and assist in obtaining Medicaid services from available resources and providers of medical care. The MAC program is separate from but complimentary to the direct service (FFS) program. The MAC program allows school systems to function as an “administrative arm” of the State Medicaid Agency in support of the proper and efficient administration of the State Medicaid Plan.

Summary of Key Changes Change Impact Provider Participation in the Medicaid Program Administrative Activities are reimbursable to the extent the activity supports a Medicaid direct service and that the school is an enrolled and participating FFS provider Referrals only to Medicaid providers For many states, FFS rates do not currently include costs related to making referrals. States can document referrals or apply a provider participation rate. Child Find & IEP development related activities For most states, this provision reduces the scope of reimbursable activities compared to their existing program. This includes removing from the program all activities associated with Child Find and pre-IEP activities, IEP meetings, and review/revision of IEPs. Schools are reimbursed for these activities in a few states that authorize service coordination or targeted case management. MAC activities supporting services provided free of charge Reduces the scope of administrative activities to the time related to direct services listed on a Medicaid eligible student’s IEP or for which the district is billing third party insurance for non-Medicaid eligible students.

Summary of Key Changes Change Impact Elimination of SPMP This policy went into effect on January 1, 2003 and is confirmed in the guidelines. There is no longer a distinction of skill requirements for activities performed by school health professionals. Therefore, FFP of 75% is not allowed for activities performed by school health professionals, e.g. nurses, therapists, psychologists, etc. Time Study Mechanism Random moment sampling (RMS) is the CMS recommended time study mechanism. RMS requires participants to document activities in any given randomly selected 15-minute interval in the quarter. Effective Date New Programs – Guidelines are effective immediately Existing Programs – The Guidelines are effective at the beginning of the school year, i.e. the October-December 2003 quarter. Application of Medicaid Eligibility Discount All activity codes except for Medicaid Outreach and Facilitating Medicaid Application are to be discounted by applying the Medicaid Eligibility Rate (MER).

Evaluating the Impact of the Key Changes Issue How To Evaluate Impact Using Existing Time Study Results – By Activity Code (AC) Estimated Average Claim Reduction IEP Related Activities This includes all pre-IEP activities, IEP meetings, and review/revision of IEP. In the absence of more precise TS data, move 50% of time allocated to the AC that includes this activity to a non-reimbursable AC. 11 - 24% Child Find Includes all activities associated with Child Find. In the absence of more precise TS data, move 50% of the time units in the Medicaid Outreach AC to a non-reimbursable AC. 0 - 23% SPMP Enhanced FFP FFP of 75% not allowed for activities performed by school health professionals, e.g. nurses, therapists, psychologists Recalculate existing claim using only 50% FFP. 3 - 10% *Claim impact varies based upon each state’s prior implementation of these changes.

Evaluating the Impact of the Key Changes Issue How To Evaluate Impact Using Existing Time Study Results & Activity Codes (AC) Est. Average Claim Reduction Application of MER All time study results except for the two AC’s noted below must be discounted by the MER. Apply MER to TS results for all AC’s except Medicaid Outreach and Facilitating Medicaid Eligibility codes. 0 - 30% Provider Participation Schools must be enrolled and participating in the FFS program and the direct services must be included in the FFS program to claim for the majority of MAC activities. For a district that is not participating in the State’s FFS program make all codes except Medicaid Outreach and Facilitating Medicaid Eligibility non-reimbursable; OR For those MAC participants whose direct services are not included in the FFS program move their MAC reimbursable time to a non-reimbursable AC. 0 - 69% 30 - 75%

IMPLEMENTATION CONSIDERATIONS

Implementation Approaches: Key Considerations Timeframe for Implementation Based on state categorization under the guidelines: Category 1 States Must be in compliance no later than October 1, 2003 No impact on claims for prior periods Category 2 States Effective immediately; programs will be reviewed and approved based on the provisions contained in the final Guide Resolve claims for prior periods using a backcasting methodology Recommended Short-Term Action Steps Understand how CMS has categorized your state Determine necessary revisions to program or implementation plan If applicable, discuss how pending or unresolved claims will be paid If applicable, discuss appropriate methodology for reconciling past claims

Sample Approaches to Implementation Submit Implementation Plan The Guide recommends the submission of an implementation plan Many states have created and submitted implementation plans to address how their existing program will change to meet the guidelines Submit Revised Cost Allocation Plan CMS has indicated that if a State has already submitted a comprehensive Cost Allocation Plan, they may not need to submit a separate implementation plan States with existing Cost Allocation Plans may not need to submit an implementation plan, but may need to make modifications to their CAP Take No Action Some states have heard that the implementation timeframe is somewhat flexible and are taking no action at the present time Not a recommended approach; creates the highest level of risk for the state States should be proactive and make recommendations regarding their implementation plans with CMS. CMS has indicated a willingness to consider state-specific alternatives and recommendations.

CHALLENGES & SOLUTIONS

Challenges Affecting States MAC Program Changes Implementation of significant program changes Tight implementation timeframe Estimated loss in MAC revenue of 30-75% Increased Administrative Requirements & Regulations Increased documentation requirements Program administration & oversight CMS reviews and OIG audits Communication Each State approaches the guidelines uniquely Communication may be difficult to interpret Proactive communication is required State Budget Cuts Funding and staffing decreases Do more with less Potential Reduction in District Participation Levels

Strategies to Address These Challenges Increased Training & Communication Maintain high level of communication with Regional CMS staff Provide CMS with proactive implementation plan based on state’s needs Maintain strong communication between the state agencies and with the districts Consideration of a Statewide Model Administer the MAC program at the state level Opportunity to coordinate the administration of MAC and/or FFS programs to streamline documentation, program management and oversight Consideration of Technology Solutions for MAC and/or FFS Assist both the State and the schools with reporting and monitoring Enhance program oversight capabilities while reducing administrative burden for the State and districts Improve documentation and efficiency Scope Expansion of Fee-for-Service (FFS) Program Implementation of Targeted Case Management (TCM) Program

Training & Communication Inter-Agency Work collaboratively with both State Department of Education and Medicaid Develop a comprehensive plan to address the guidelines which meets the unique needs of the state and districts Ensure oversight and monitoring responsibility is adequately addressed CMS Maintain high level of communication with Regional CMS staff Provide CMS with proactive implementation plan based on state’s needs District Training Provide communication regarding the guidelines Resultant process and administration changes Estimated impact to district reimbursement for budget purposes Understand the districts’ key concerns and training needs Ensure adequate training is provided regarding the new changes, time study codes and documentation requirements

Consideration of a Statewide Model States may opt to administer the MAC program at the state level Current direction of the program supported by CMS Opportunity to coordinate the administration of MAC and/or FFS programs Streamline documentation, program management and oversight The schools, Medicaid, and Education may not have sufficient resources and/or technology to address these issues sufficiently Consider outsourcing statewide program implementation and oversight State Level Implementation: Funding Through Revenue Sharing Some States retain a portion of the Medicaid Revenue to cover administrative expenses Offset costs of statewide system Optimize revenue collection to the state and schools Align interests of state and schools for optimal program design

Potential Technology Solutions Total statewide MAC solution could include: Technology Solution Implementation Outsourcing Solution State could also elect to track all MAC & FFS activities in one system Solution can be created to package and automate residual MAC program with expanded and enhanced FFS program Improve documentation and efficiency for both MAC and FFS while reducing paperwork burden The solution should align everyone’s interests: Common issues & overlapping requirements Opportunity for enhanced reporting and monitoring An ideal solution should: Provide a state-wide, long-term vision and implementation approach Create the opportunity for enhanced reporting and monitoring Maintain district flexibility and independence Allow for creative financing alternatives

Sample Technology Opportunity & Benefits Medicaid Education Schools Implement a Statewide Technology Solution Electronic Web-based Ease of maintenance Data collection, State Reporting and Claims Processing is centralized, standardized and outsourced Ability to easily monitor statewide statistics, results and compliance at the State Help to ensure claim accuracy Position agencies as leaders in efficient use of technology and e-government Minimal technology requirements Simple to use, centralized tracking and reporting capabilities Easy to implement add-on solutions

Implementation/Expansion of FFS Program Opportunity Medicaid Education Schools Enhance FFS Program Implement a school-based FFS program Ensure high district participation to offset a portion of MAC reduction Expand list of reimbursable services in existing program Streamline program requirements Rebase existing rates, if outdated Offset the reduction of MAC revenue Reduce administrative documentation necessary to access funds Increase school district participation and understanding Increase federal Medicaid revenue to the State A simplified and streamlined FFS billing program Reduce any cumbersome FFS requirements Alleviate redundant paperwork

Implementation of Targeted Case Management Opportunity Medicaid Education Schools TCM Program States may provide targeted case management services TCM includes services which assist an eligible individual in gaining access to medical, social, educational and other services Reach out beyond the bounds of Medicaid program to coordinate a broad range of services necessary to the optimal functioning of a Medicaid client Increase federal Medicaid revenue to the State States desiring to provide these case management services may do so by amending their State plans Given the targeted nature of the program, States must submit a separate plan amendment for each target group Ability to obtain reimbursement for activities no longer reimbursable under MAC: Assessment Care Planning Referral & Linkage Monitoring / Follow-Up

Questions? For additional information regarding the Medicaid Administrative Claiming or Fee For Service Programs, please contact any of the individuals below: Deloitte Roberta Puffer rpuffer@deloitte.com (847) 753-8558 Ken Crow kecrow@deloitte.com (847) 753-8509 Lisa Carnes lcarnes@deloitte.com (847) 753-8729