1. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ VD-HCBS Training Series Identifying Your VD-HCBS Business Model PT II January 12, 2012: Lori Gerhard, U.S. Administration for Community Living Kevin Foley, U.S. Administration for Community Living

2. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Learning Objectives At the end of this session, participants should: 1.Understand the business acumen required to operate programs at AAA/ADRCs. 2.Know how the business acumen principles described in this presentation can be applied in the development of a VD-HCBS Program. 3.Understand the importance of communication between the program office and fiscal office and between the AAA/SAA and FMS and AAA/SAA and VAMC. 4.Identify the Financial and Fiscal Processes of VD-HCBS Workflow

3. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Agenda Definition of key terms Policy guidance and procedures Decision points Lessons learned and recommendations Next steps and timelines Questions and answers

4. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Definition of Key Terms Accounts Receivable - Money owed by customers or third party payers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. For VD-HCBS program, accounts receivable are the Assessment Fee, the monthly bundled rate for each veteran (Veteran-Directed Budget + VD-HCBS Administrative Fee). This is money coming into the AAA/SAA. Additional accounts receivables for AAA/SAAs may include payment for Care Transition services, payment for Options Counseling provided to individuals in health plans. Accounts Receivable System - Key part of an organization’s business infrastructure and is used to assure timely receipt of payment for services rendered. Includes billing and invoicing, receipt and deposit of funds, generation of monthly A/R Report and collection process. Accounts Payable - Money which a company owes to vendors for products and services. For the VD-HCBS program, the primary accounts payable are to FMS Contractor and employees of Vendors (if applicable). This is money leaving the AAA/SAA.

5. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Definition of Key Terms Accounts Payable System – Key part of an organization’s business infrastructure and is used to assure that vendors are paid for services rendered. Includes process to approve vendor invoices, process to record liability/obligation, process to generate payment to vendor, generation of monthly Accounts Payable (A/P) Report that reflects liabilities/obligations satisfied during the month and liabilities/obligations outstanding. Operating Budget – A detailed projection of all estimated income, expenses and surplus (margin/loss) based during a given period (usually one year). The operating budget is the financial plan to achieve the goals of the organization. Operating Statement – A statement issued monthly that reports monthly and year to date (YTD) totals on the company's financial state, most notably statements on revenue, expenses, and surplus (margin/loss). The operating statement compares actual versus projected experiences.

6. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Definition of Key Terms Occupancy/Census Report – This report collects enrollment in programs on a monthly and cumulative basis. Variables to show in the census report could include: cumulative participants enrolled in the program, current # of participants enrolled, total # of discharged participants, participants discharged in the previous month, new enrollees in the previous month and future enrollment projections. Cash Flow Management – A Cash Flow Management Report compares available cash with current and future obligations (A/P & Payroll). The report may include sources of cash and balances on those account. Sources of cash may include cash on hand, bank accounts and lines of credit. This report should ensure that the AAA/SUA has the funds required to satisfy its obligations where A/R may lag behind. Some organizations use a performance metric (Days Cash on Hand) to manage Cash Flow. Break-even Analysis – The break-even point is the point at which cost or expenses and revenue are equal: there is no net loss or surplus/margin, and one has "broken even". AAA/SUAs needs to identify the number of enrolled participants needed in order to satisfy obligations (A/P& Payroll) and overhead.

7. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Business Acumen Business Plan Operating Budget Operating Statement & Census Report Accounts Receivable System Accounts Payable System Cash Flow Management Annual Program Performance

8. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Business Plan Executive Summary Market Analysis Program Description Organizational Management Marketing and Sales Management A business plan provides a roadmap for a new or established business that is offering goods or services to the public. Robust business plans are critical to ensuring the success of different programs and services. New service offerings should be incorporated into the organization's detailed business plan. Essential components of a sound business plan, which include the following: Service or Product Line Income Projections Break-even Analysis Financials

9. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Operating Budget Content Census Projections Monthly Rate Assumptions Revenue Projections Expense Projections – Payroll – Contracts – Expenses Margin/Loss Projections Purpose/Use Financial Plan to achieve goals of organization Guide to Program Managers Day to Day Program Management Tool to inform key stakeholders

10. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Operating Statement Content Current Month & YTD information: Actual Census compared to Projections Actual Revenue compared to Projections Actual Expenses compared to Projections Margin/Loss compared to Planned Margin/loss Purpose/Use Tracking actual performance to budget/projected performance Inform Continuous Quality Improvement (CQI) Manage operations (reducing or increasing activity) Monitor organization’s progress in achieving goals. Assure financial health of organization

11. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Accounts Receivable System Key Components Invoicing/Billing Cash Receipts Accounts Receivable Report Days Cash Outstanding ( performance metric ) Purpose/Use Generate bills to consumers and/or third party payers Assure timely receipt of payment for services rendered Monitor and manage payment collection process

12. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Accounts Payable System Key Components Payment of Goods and Services A/P Invoice Receipt A/P Invoice Approval Process A/P Report Purpose/Use Assure services or goods billed were provided or received Generate payment to vendors Monitor/manage outstanding obligations/liabilities Manage payments to take advantage of discounts for early payment and/or avoid financial penalties for late payment

13. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Cash Flow Management Content Cash Flow Management Report Sources of Cash – Cash on Hand – Bank Accounts – Lines of Credit Current & Future Obligations/Liabilities Days Cash on Hand (performance metric) Purpose/Use Compares available cash to current and future obligations Assures the organization has available cash to satisfy obligations Day to Day Management of Organization – Informs management regarding need and/or use of lines of credit – Identifies cash flow issues

14. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Annual Program Performance Goal Achievement (financial & program) Quality Assurance – Price charged/Operating costs of delivery – Staff efficiency rating – Length of Stay info of individuals – Market penetration/reach Informs Organization’s Business Plan for future years. (goals/performance metrics) Program sustainability and impact on larger systems

15. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Business Acumen Business Plan Operating Budget Operating Statement & Census Report Accounts Receivable System Accounts Payable System Cash Flow Management Annual Program Performance

16. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Reports Reimbursement Authorization of Plan AAA bills 1 time full assessment fee Authorization of Plan AAA bills 1 time full assessment fee Authorization of Plan AAA bills 1 time full assessment fee Authorization of Plan AAA bills 1 time full assessment fee 8 A/R= (Accounts Receivable) Money coming in Referral Intake Assessment Candidate Not Appropriate for PD Bill 1 time half assessment fee Candidate Not Appropriate for PD Bill 1 time half assessment fee Candidate Appropriate for PD Candidate Appropriate for PD Authorization of Budget Amount 6 Propose Veteran Monthly Budget 5 Develop Plan Plan Distribution Employer Paperwork Hiring Assistance 11 Employee Paperwork Establish Employment Initiate Services 14 Quality Assurance Monitoring Reports Planned Savings Fund Rainy Day Fund Timesheets and Invoices 13 Payments 16 Reassessment Reimbursement Quarterly Reconciliation Quality Assurance Monitoring 4a 11 8 3 2 1 7 12 910 15 2017 1819 24 232221 4b VD-HCBS Model Work Flow A/P= (Accounts Payable) Money going out Initiate Services 14

17. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Lessons Learned & Recommendations Important to understand how a veteran flows through the VD- HCBS process and how the cash flows through the process. Cash flow management should be developed to provide real time information that enables leadership (CEO, CFO) to make decisions and leverage opportunities. Communication between fiscal and program office early and often is vital. Billing based on approved spending plan expedites receipt of cash because the bill is generated on the first day of the next month rather than waiting for actual expenditures.