Commonwealth of Massachusetts Executive Office of Health and Human Services Chapter 257 of the Acts of 2008 Provider Information and Dialogue Session: DYS Youth Short-Term Stabilization, Emergency Placement April 12,

2 Agenda Chapter 257 Implementation and Status Update Impact of Governor’s FY12 Supplemental Budget Filing Updated Implementation Timeline and Key Milestones Implementation Strategy Setting Rational Rates Overview of DYS Youth Short-Term Stabilization, Emergency Placement Services Definition and Overview of Programs Procurement Approach Review of Cost Analysis and Methodologies

3 Impact of Governor’s FY12 Supplemental Budget Filing Governor’s supplemental budget filed on January 26 will establish new deadlines for implementation as well as require that related procurements not go forward until after the rate setting process. EOHHS is developing communication to be posted on the Chapter 257 website and disseminated to departments and providers regarding the legislation, implementation plan, and activities that will be undertaken.

4 How will this legislation impact planned implementation? New implementation dates require meeting the current work schedule so that 40% of the POS system will have rates adopted by January 1, Delay reflects the amount of time needed to not only develop rate proposals, but to also plan for effective implementation. Allows for better alignment with the Commonwealth’s budget cycle; fiscal and client impact of proposed rates will be incorporated into Department spending plans and Governor’s budget proposal. Subsection (E) requires that departments not procure services prior to rate setting. New procurements may only be issued with the written approval of the Secretary based on a documented finding that the procurement is necessary to assure: Continuity of consumer health, safety, or access, Program integrity, where a new contract is necessary to replace an existing contract that terminated early due to unanticipated circumstances, or Compliance with a court order, settlement agreement, or statutory requirement.

5 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 Chapter 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. Year 1Year 2Year 3Year 4 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

6 Department Service Design Finalized: All service components, staffing ratios, staff qualifications, other program inputs have been decided by the purchasing department. Executive Sign-Off: Commissioner and C257 Executive Committee sign-off on draft rates and implementation plan. EO485 Submitted to ANF: Draft rate regulation to ANF; Will better align the rate regulation proposal with budget planning. Procurement Issuance: Where a procurement is warranted, the procurement will be issued after the rates have been adopted. Rates Effective: Where possible, reimbursement under regulated rates will align with beginning of SFY to minimize mid-year contract amendments for both purchasing Departments and providers. Updated Implementation Timeline and Key Milestones for DYS Youth Short-Term Stabilization, Emergency Placement Services

7 Youth Short-Term Stabilization, Emergency Placement Service Class Service Class Definition: Programs that provide a child or adolescent a place of overnight housing in a specialized residential setting for a short term-period, generally less than 45 days, to promote stabilization, determine appropriate long-term placement, or provide integration and ongoing services. Department Activity Code MMARS Program Name Percentage Mapped to Service Class Spending Mapped to Service Class DCF RESSResidential Shelter100% $ 839,588 DPH 4928Youth Stabilization100% $ 1,000,000 DYS 2501Secure Detention100% $ 9,340, Assessment100% $ 8,769,467 Total Service Class Spending$ 19,949,209 While DYS Secure Detention and Assessment services fall under the Youth Short-Term Stabilization, Emergency Placement service class, the POS Policy Office, with the support of HCFP and DYS, is exploring the possibility of implementing these in conjunction with the DYS Youth Intermediate-Term Services, given the similarity of services, vendor and client populations, service providers, and cost drivers. DYS has a goal of simplifying contracting efforts for all of their 24/7 programs, including Secure Detention and Assessment, following the adoption of regulated rates. DYS will engage providers at a future time regarding the release of 24/7 related procurements.

Commonwealth of Massachusetts Executive Office of Health and Human Services Division of Health Care Finance & Policy: Procurement and Rate Setting for DYS Youth Short-Term Residential Services

9 Total Costs per Day The total costs per day ranged from around $ to $ for both Youth Short- and Intermediate-Term Stabilization programs. Daily rates were calculated from FY2011 contract budget data for the Assessment and Detention programs and FY2010 contract budget data for the Secure Treatment, Group Care, Revocation and Transitional Living programs.

10 Cost Category Percentages Direct care salaries account for the largest amount – between 34 and 38% - of program expenses, while tax & fringe and M & G are also significant costs.

11 Cost Category Percentages The trend remains consistent, even after removing Transition programs from the Intermediate-Term dataset.

12 All Staffing Related Costs: Youth Short-Term Stabilization Note: The chart does not include teacher or education coordinator salaries, as those will be considered separately in the data analysis. These expenses include salaries for all direct care positions, as well as overtime, relief, consultants and temporary help costs. Staffing costs explain about 36% of the overall variation in daily rates.

13 All Staffing Related Costs: Youth Intermediate-Term Stabilization Note: The chart does not include teacher or education coordinator salaries, as those will be considered separately in the data analysis. Similarly, staffing costs for the Intermediate Term programs explain about 36% of the overall variation in daily rates. These expenses also include salaries for all direct care positions, as well as overtime, relief, consultants and temporary help costs.

14 Direct Care Staffing Ratios The direct care staffing ratios ranged from 0.50 to 1.30 for both Youth Short- and Intermediate-Term Stabilization programs. Again, the data shows very similar amounts for both the Short-Term and Intermediate-Term programs.

15 Sample Model Budget showing Cost Category Percentages The model budget reflects measures of central tendency within FY10 and FY11 budget data. Capacity ranges from 15 to 17 slots. Direct Care relief is calculated at 19.6% of direct care FTEs. Occupancy costs reflect that this is a model for provider- owned facilities. A cost adjustment factor is applied to account for inflation between the base year FY10 through FY14, when the rates are scheduled to be reviewed. The utilization factor will vary from 50-90%.

16 Sample Model Budget showing Cost Category Percentages The model budget reflects measures of central tendency within FY10 and FY11 budget data. Capacity ranges from 18 to 22 slots. Direct Care relief is calculated at 19.6% of direct care FTEs. Occupancy costs reflect that this is a model for state owned – co-located facilities. A cost adjustment factor is applied to account for inflation between the base year FY10 through FY14, when the rates are scheduled to be reviewed. The utilization factor will vary from 50-90%.

17 Youth Intermediate-Term Stabilization Model: Relief Assumptions Direct Care FTE Relief Assumptions DaysHours Vacation15120 Sick/ Personal15120 Holidays13104 Training864 Total Hours per FTE:408 % of FTE19.6%

18 Questions Is there a great deal of similarities between cost drivers in the Secure Treatment / Group Care / Revocation and Assessment / Detention programs? What are the significant differences related to cost drivers, if any?