Commonwealth of Massachusetts Executive Office of Health and Human Services Chapter 257 of the Acts of 2008 Clubhouse Provider Information & Dialogue Session November 3,

2 Agenda Chapter 257 Review Discussion of Rate Setting Process to Date Methodologies and Inputs Salary Considerations Update on RFR Development Procurement and Rate Setting Timeline

3 Chapter 257 of the Acts of 2008 Regulates Pricing for the POS System Chapter 257 places authority for determination of Purchase of Service reimbursement rates with the Secretary Of Health and Human Services under MGL 118G. The Division of Health Care Finance and Policy provides staffing and support to EOHHS for the development of CH 257 Pricing. Chapter 257 requires that the following criteria be considered when setting and reviewing human service reimbursement rates: Reasonable costs incurred by efficiently and economically operated providers Reasonable costs to providers of any existing or new governmental mandate Changes in costs associated with the delivery of services (e.g. inflation) Substantial geographical differences in the costs of service delivery Some current rates within the POS system may not reflect consideration of these factors. Additional funding was not appropriated to finance any potential cost increases associated with the law. The statute specifies a four year implementation timeframe. FY10FY11FY12FY13 Statutory Requirement: Percent of POS System with Regulated Rates 10%30% Spending Base Associated with Statutory Percentage (based on current projection of $2.1B POS Baseline to be implemented) ~ $215M~ $645M

4 The Cost Analysis and Rate Setting Effort has Several Objectives and Challenges Objectives and Benefits Development of uniform analysis for standard pricing of common services Rate setting under Chapter 257 will enable: A.Predictable, reimbursement models that reduce unexplainable variation in rates among comparable, economically operated providers B.Incorporation of inflation adjusted prospective pricing methodologies C.Standard and regulated approach to assessing the impact of new service requirements into reimbursement rates Transition from “cost reimbursement” to “unit rate” Challenges Ambitious implementation timeline Constrained resources for implementation Cross system collaboration and communication Data availability and integrity (complete/correct) Coordination of procurement with rate development activities Pricing Analysis, Rate Development, Approval, and Hearing Process Data Sources Identified or Developed Provider Consultation Cost Analysis & Rate Methods Development Provider Consultation Review/ Approval: Departments, Secretariat, and Admin & Finance Public Comment and Hearing Possible Revision / Promulgation

5 Agenda Chapter 257 Review Discussion of Rate Setting Process to Date Methodologies and Inputs Salary Considerations Update on RFR Development Procurement and Rate Setting Timeline

6 Survey Responses 22 responses out of 30 Clubhouses (73% response rate) Average Members Served Daily (on and off site) Average Hours of Participation Per Day HoursCount hours hours hours1 AVG59 MED55 MIN14 MAX123

7 The current costs per member per day range from about $9 to $67.

8 Regional Variation Analysis showed no significant regional differences in total reimbursable expenses per unit.

9 Total staffing costs per member per day explain about 94% of the overall variation in total reimbursable expenses per member per day.

10 The differences between the staffing ratios for different sized programs are statistically significant. Part of the variation in staffing ratios across Clubhouses is explained by differences in client volume. Clubhouses with greater average daily participation operate with larger member per staff ratios due to economies of scale. Due to the variation in staffing ratios by Clubhouse volume, there will be separate rates based on ranges of projected average daily served.

11 The reimbursable unit is a “service day” per member. DMH has defined a service unit as a day on which an enrolled Clubhouse member: 1.Participates for at least two hours in the course of a day in Clubhouse activity(ies) directly related to his or her IAP. This can occur: –at either the Clubhouse’s physical site and / or –off-site, accompanied by Clubhouse staff. ~ And/ Or ~ 2.Receives employment support provided by Clubhouse staff off-site for 30 or more minutes and the employment activity(ies) is directly related to his or her IAP.

12 Rate Setting Approach Model budgets were developed for small, medium and large volume Clubhouses, measured by average members served daily. Under – The model budget assumes 350 days of operation per year. While assumptions are used to develop the model budgets based on current Clubhouse cost structures and staffing patterns, providers may manage their budgets given the assigned rate and projected client volume to select staffing and compensation levels they deem appropriate to meet DMH Clubhouse RFR requirements. Requested Feedback: Do the draft ranges of average members served per day reflect the points at which Clubhouses are able to serve more members per staff? Should there be different rates for three size ranges of Clubhouses? Only two?

13 Staff Categories SchB Line #Staff Line Description Direct Care Management 1SProgram Director (UFR Title 102) 2SProgram Function Manager (UFR Title 101) 3SAsst. Program Director (UFR Title 103) Non-Management Direct Care 24S*Social Worker - L.C.S.W., L.S.W (UFR Title 125 & 126) 26S*Cert. Voc. Rehab. Counselor (UFR Title 128) 28SCounselor (UFR Title 130) 31SDirect Care / Prog. Staff Superv. (UFR Title 133) 32SDirect Care / Prog. Staff III (UFR Title 134) 33SDirect Care / Prog. Staff II (UFR Title 135) 34SDirect Care / Prog. Staff I (UFR Title 136) *Clubhouses do not currently report position lines 24 or 26S. Average UFR salaries for these positions were included in analysis of an appropriate non management benchmark salary. Requested Feedback: Is the Assistant Program Director position more similar in practice to a Direct Care Program Staff Supervisor?

14 DRAFT Sample Clubhouse Model Budget: Under 40 Average Daily Served The model budget FTE ratios and unit costs reflect measures of central tendency within the FY10 contract data. FTE ratios vary for different sized Clubhouses. Actual FTE levels supported by the rate will vary based on the specific average daily members served for each Clubhouse. DMH has selected a non-management salary benchmark that represents an increase over the current average salary. The tax and fringe and indirect administrative allocation percentages reflect measures of central tendency from FY09 UFR data. A cost adjustment factor is applied to account for inflation between FY11 and FY13, when the rates are scheduled to be reviewed.

15 DRAFT Sample Clubhouse Model Budgets: 40 – 89 and 90 + Average Daily Served

16 Agenda Chapter 257 Review Discussion of Rate Setting Process to Date Methodologies and Inputs Salary Considerations Update on RFR Development Procurement and Rate Setting Timeline

17 Update on RFR Development & Procurement Vehicle DMH will release the RFR in mid-December, rather than the previously stated mid-November. DMH and EOHHS intend for the release to coincide with the official rate proposal which is also scheduled for mid-December in the draft timeline. DMH intends to adjust the length of the procurement’s response period - as feasible for a contract effective date of July 1, so that providers will have additional time to respond once the rates are adopted. The procurement will utilize a Master Agreement structure. The RFR will include estimated expenditure levels per Clubhouse based on expected levels of daily participation.

18 Agenda Chapter 257 Review Discussion of Rate Setting Process to Date Methodologies and Inputs Salary Considerations Update on RFR Development Procurement and Rate Setting Timeline

19 Planned Procurement Approach and Draft Timeline for Implementation DMH will re-procure all contracts under their 3034 Clubhouse Services in mid-December for contracts effective on July 1, 2011 DHCFP regulated rates will be adopted in mid winter 2011, but will not be effective until contracts are executed in July 2011.