California Institute for Mental Health (CiMH) Behavioral Health Financial Managers' Fiscal Leadership Institute May 20, 2014 Short Doyle Modernization Project

Background 1 Existing Short Doyle claims processing system was designed as stand alone system prior to the use of Certified Public Expenditures (CPE) as the basis for Medi-Cal Federal Financial Participation (FFP) Under the CPE protocol, County MHPs are reimbursed an interim amount throughout the fiscal year based on approved Medi-Cal claims Cost Report ultimately determines CPE and Medi-Cal FFP SD2 system has design and platform issues that require extensive modifications and SD2 still does not adjudicate claims effectively and efficiently CMS, through the Medicaid Information Technology Architecture (MITA) process, is providing incentives for states to replace stand alone behavioral health systems with systems that are interoperable, seamless and integrated across all health care systems

Background 2 Services are defined, reported and tracked by California- specific service function codes County MHPs required to track and report majority of outpatient services based on minutes of service County MHP claims processing systems have to translate service function codes into HCPC codes Vendors required to develop California specific claims processing systems to accommodate service function codes State required to develop specific system for processing Medi- Cal Specialty Mental Health claims Most County MHPs cannot reconcile approved claims with services provided and entered into claims processing system, or with payments from the state

Background 3 Some of the California-specific requirements were created to minimize exposure to the State General Fund Results in managed care approach to service delivery with a quasi fee-for-service reimbursement system Limited flexibility in contracting Complex contract monitoring More services=more revenue

Short Doyle Modernization Project 4 Short Term Goals Increase the efficiency and accuracy of interim federal reimbursement for cash flow as well as timely access and accuracy of the information used for cost settlement purposes Long Term Goals County Mental Health Plan (MHP) representatives participate in the development of the MITA state assessment and implementation plan to assure that behavioral health is fully integrated into the proposed products

Considerations for Reimbursement Policy 5 Supported by information technology, not driven by information technology Reimbursement not tied to submission and adjudication of individual service level claim data Consistent with federal requirements Foster better quality of service and performance outcomes rather than quantity of service Reduced state and County MHP administration Eye towards future federal reimbursement Case rates and/or capitation Inter-Governmental Transfers

Short Term Proposal 6 Interim payments based on CPE County MHPs incur CPEs in the form of payments to providers and costs incurred by county operated providers Interim payment should represent the best approximation of actual costs in providing services Not necessarily a state adjudicated claim based on state business rules 42 CFR Section 413, OMB Circular A-87 and the Provider Reimbursement Manual key factors in determining CPE Focus on identification and allocation of allowable and non- allowable costs Focus on identification and allocation of direct and indirect costs Replace service function code minutes of service reporting with CPT code episodic reporting

Short Term Proposal 7 Methodologies to determine CPE Encounter based approach – similar to FQHC cost reporting Staff cost approach – similar to Medi-Cal Administrative Activity claiming 837 and 835 file data used to support determination of CPE Pilot test in several counties

Long Term Proposal 8 Develop reimbursement system more consistent with goals of Affordable Care Act (ACA) Performance driven Case rates/capitation/sub-capitation Transition from CPE to Inter-Governmental Transfer (IGT) approach MITA behavioral health self assessment Incorporate behavioral health into the State’s certified MMIS