Commonwealth of Massachusetts Executive Office of Health and Human Services Chapter 257 of the Acts of 2008 Provider Information & Dialogue Session: Adult Long-Term Residential Service Class December 14,

2 Agenda Chapter 257 Implementation and Status Update Implementation Strategy Setting Rational Rates Service Classification System Contract Reform Overview of Adult Long-Term Residential Service Class Definition and Overview of Department Programs Procurement Approach Timeline for Implementation Facilitated Breakout Sessions Reporting Back and Concluding Comments

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 Chapter 257 Requires Successful Achievement of Three Strategies Number of different POS contracts Cost reimbursement contracts 3. Reform Contracting Use of Master Agreements Contracts w/ performance features Contracts shared across departments 1. Create Service Classes Establish new cross- Secretariat organizational and governance structure Develop Service Class structure to group similar services & programs Build out process & technology to manage codes & classes Align activity codes to Service Classes Enabling Rate analysis and establishment Contract consolidation across agencies Improved reporting 2. Develop Reimbursement Methodology & Rates Maximize FY09 Develop Implementation Plan Develop Service Classes Cumulative Statutory Requirement Service Value FY10 10% of System $215M FY11 40% of System $860M FY12 70% of System $1.50B FY13 100% of System $2.15B Minimize

6 The Chapter 257 Implementation Plan is Organized by Newly Defined POS Service Classes Why were Service Classes Created? Rate setting and procurement reform require an overall organizing structure for the classification of POS services There were no Secretariat standards for categorizing or describing similar services within or across Departments. The use and functionality of MMARS codes vary widely from Department to Department– as a result, it is very difficult to report on the performance, costs, and volume of services delivered across EOHHS. How were Service Classes Created? Departments formed POS Service Classification Working Groups Working groups met with the EOHHS POS Policy Office over the course of three months Current POS Services Reviewed, Described, and Catalogued EOHHS Suggested Service Groupings Departments Verified / Modified and Developed Definitions Current MMARS Codes were “Mapped” to New Service Classes

7 Reduced contract complexity and redundancy Greater amendment flexibility for providers and agencies Greater opportunity for provider engagement Streamlined, centrally-managed procurement cycles managed Thousands of individually negotiated contracts Multiple contracts within and across departments with the same providers. Services with core similarities purchased individually by agencies and regions Low capacity for rate management, cross-agency coordination, performance assessment In Many Cases, Contract Reform is Necessary to Implement Chapter 257 TodayVision for FY13 Purchasing Department Providers Dept Providers Secretariat or Department Master Agreements By Service Class DHCFP rate schedules Panel of qualified providers Departments purchase via rate agreements

8 Master Agreements Simplify Management of the POS System for Providers and Departments Benefits to Providers Single bidding cycle for similar services Bid once – engage many times under a single bid Standard reporting formats Rate transparency Potential to engage with new purchasing Departments Streamlined contract management Benefits to EOHHS Departments Reduced procurement burden Potential to expand pool of providers Enable statewide coordination Eliminate multiple procurements for the same service Streamlined contract management

9 Procurement Management Master Agreements: Approach, Opportunities, and Decision Points Goal: Replace multiple, individually-negotiated and procured contracts with a single contract model that: Maximizes procurement and contract management efficiency for providers and departments and Maintains necessary department decision making and governance authority Initial Procurement: EOHHS and Departments will develop the RFR to reflect current program design(s) unless Departments elect to make changes Scope will be sufficiently broad to enable the addition of new service models and segments over time as needed by departments The RFR will have a core of service requirements as well as secondary requirements specific to the needs of participating departments The RFR and response requirements will be simple and streamlined Meeting the qualification threshold is not a guarantee that a provider will be selected by a participating department to deliver services under the MA POS Contract Reform Goals: Efficiency, simplification, departmental flexibility and governance authority Contract Management Departmental Selection Process Initial Procurement

10 Contract Reform Goals: Administrative Simplification, Flexibility, Departmental Governance Departmental Selection Process: Once providers are qualified, participating Departments may employ a Department- level selection process to engage any provider from the qualified list based on criteria determined relevant to that department. This procurement will employ the concept of “Consumer Choice”, which will drive the provider selection process. Contract Management: Departments can elect to use the MA as a rate agreement with or without provider- specific obligations in MMARS. Departments encumber and manage their own funds under the MA. Ready payment is optional but supported based on a departments choice. Procurement Management MA procurements can reopened as needed to enable new providers to qualify. Re-opening may also involve amendment of the procurement to include a new program model and/or regulated rate schedule.

11 Agenda Chapter 257 Implementation and Status Update Implementation Strategy Setting Rational Rates Service Classification System Contract Reform Overview of Adult Long-Term Residential Service Class Definition and Overview of Department Programs Procurement Approach Timeline for Implementation Facilitated Breakout Sessions Reporting Back and Concluding Comments

12 Adult Long-Term Residential Service Class Service Class Definition: Programs that provide individuals a place of overnight housing for a long- term period of time in a specialized residential facility with necessary daily living, physical, social, clinical and/or medical support. Transition to a less restrictive setting, while ideal, is not a common goal for individuals receiving services in these settings. Department Activity Code MMARS Program Name Percentage Mapped to Service Class Spending Mapped to Service Class MCB 2143*Residential Day Services - SR90% $7,457,908 MRC 2226*SHIP - Residential99% $19,222,150 DDS Hour Residential Services100% $522,132, Blanket Residential100% $4,239,199 Total Service Class Spending$553,051,962 *2226 and 2143 services that do not fall under the Adult Long-Term Residential service class will be reclassified under new activity codes, which MRC and MCB are currently developing.

13 The Adult Long-Term Residential Service Class is a Strong Candidate for Procurement Reform 77% of MRC and 98% of MCB spending in the Adult Long-Term Residential Service Class goes to providers under contract for long- term residential services with DDS Each purchasing Department operates on a different procurement schedule– a coordinated procurement would greatly simplify RFR and contracting processes. The activities within this Service Class share many cost drivers, client populations, delivery locations, and intended service outcomes for residents. Why? Sample of Provider Organizations Under Contract with Multiple Departments Bridgewell Inc Brockton Area Multi-Services Inc Advocates Inc Berkshire County Arc Inc Community Systems Inc ServiceNet Inc Waltham Committee Inc North Suffolk Mental Health Associates Institute Of Professional Practice Comprehensive Mental Health

14 Planned Timeline for Implementation Implementation Challenges: Alignment with competing agendas and mandates- EOHHS, HCFP and Departments will be working closely with one another to address the sequencing and coordination issues presented by competing procurement deadlines, finance law requirements, and reform mandates Procurement simplification- EOHHS is working with Departments to minimize the administrative burdens for joining a secretariat or cross-departmental master agreement, particularly for service providers who have recently responded to departmental requests for proposals

15 Agenda Chapter 257 Implementation and Status Update Implementation Strategy Setting Rational Rates Service Classification System Contract Reform Overview of Adult Long-Term Residential Service Class Definition and Overview of Department Programs Procurement Approach Timeline for Implementation Facilitated Breakout Sessions Reporting Back and Concluding Comments

16 Breakout Session Discussion How are the programs purchased by different Departments in this Service Class similar to and different from one another from cost and contracting perspectives? What does the spectrum of care look like? What are the different needs of people involved? What are the intended outcomes that service organizations work to achieve? Do these vary by Department and/or program, site, client need? How are programs structured to reach intended outcomes? What activities are clients involved in during the day, inside and outside the program? How do staff positions, professional qualifications, and level of staff intensity necessary to achieve the intended outcomes vary by purchasing Department? How do residential sites determine the appropriate type and number of staff for the program? How do administrative and reporting requirements vary by Purchasing Department? What other factors drive program costs and/or present fiscal challenges when providing these services? How does geographical region or setting affect program costs (transportation, occupancy, etc)? What affects a provider’s ability to receive SNAP, SSI, Section 8 and other offsets to client costs? What other efficiencies are available or have been used to manage cost growth? What other information do you think is important to consider when developing these rates? Questions for Discussion: