1. Washtenaw Community Health Organization Proposed FY 2014 – 2015 ANNUAL BUDGET Presented to the Board September 16, 2014

2. WCHO MISSION STATEMENT Provide high quality, effective integrated behavioral health, physical health and social support services to persons with Chronic and/or Severe Mental Illness, Developmental Disabilities, Substance Use Disorders and Severe Emotional Disturbances Provide leadership and education to the community Develop and provide models to make these integrated services available to all residents of Washtenaw Count y

3. WCHO VALUES Consumer and Family Involvement Comprehensive, Quality Services Community Based Services Public Accountability Integrated Care Research and Medical Education Adaptability

4. What is the WCHO? The Washtenaw Community Health Organization (WCHO) is a multifaceted entity created by Washtenaw County and the University of Michigan. It is a Community Mental Health Services Program (CMHSP) under the state Mental Health Code, and a creating partner of the Community Mental Health Partnership of Southeast Michigan (CMHPSM) that jointly administers specialty behavioral health services as the Medicaid Prepaid Inpatient Health Plan (PIHP) for Washtenaw, Lenawee, Livingston and Monroe counties.

5. Who We Serve As the CMHSP, the WCHO is responsible for contracting or providing a specified array of mental health services within Washtenaw County and it is required to direct its services to individuals who are seriously mentally ill, seriously emotionally disturbed, and/or developmentally disabled. Within these priority groups, preference must be given to persons with the most severe forms of illness and/or in urgent or emergency situations.

6. The WCHO As A Partner Of The CMHPSM As a Partner of the CMHPSM, the WCHO is the sole sourced behavioral health contractor/provider for particular Medicaid benefits included under Michigan’s Medicaid specialty services waiver programs. These waiver programs are aimed at the same conditions (serious mental illness/serious emotional disturbance, developmental disabilities, and substance abuse disorders) as those targeted under the Mental Health Code priority populations.

7. Medicaid & GF Consumers Served

8. FY 2014 – 2015 ANNUAL BUDGET

9. FY 2015 Budget Vs. FY 2014 Projected Revenues FY 2015 BudgetFY 2014 Full YearFY 2015 Budget Projection O/(U) FY 2014 Revenues Medicaid $ 61,213,858.00 $ 61,216,173.56 $ (2,315.56) Healthy Michigan Plan 3,905,966.00 2,133,574.00 1,772,392.00 Health Homes 1,061,851.00 - State General Funds 5,500,000.00 6,679,349.00 (1,179,349.00) ABW - 900,592.00 (900,592.00) Child Waiver Fee-For-Service Revenue 1,100,000.00 1,010,224.00 89,776.00 J-Code Fee-For-Service Revenue 1,891,112.60 1,879,812.33 11,300.27 Funding From Washtenaw County 1,528,080.00 1,128,080.00 400,000.00 Use Of WCHO Local Fund Balance 247,824.51 - Affiliate, CMHPSM & U of M Billings 1,518,334.60 1,559,551.25 (41,216.65) Grants And Earned Contracts Incl. OBRA 1,261,018.00 1,679,453.00 (418,435.00) All Other 729,548.01 688,813.00 40,735.01 Total Revenues $ 79,957,592.72 $ 78,875,622.14 $ 1,081,970.58

11. REVENUE ASSUMPTIONS AND KEY POINTS Medicaid Revenue – Total Regional Entity Capitated Medicaid revenue is projected at $134.0 million – $119.7 million (after CMHPSM costs) appropriated to LEN, LIV, MON & WCHO – Projected FY 2014 Carry Forward of $4.2 mil. has also been appropriated to the Partners Healthy Michigan Plan (Medicaid) Revenue – Based On August 29, 2014 reduced rate of $51.57 ($38.69 for MH & $12.88 for SUD) and Plan enrollment level as of August 25, 2014 – Rates for FY 2014 are 31.5% lower than rates presently being paid for FY 2014 Health Home Project (Medicaid) Revenue – WCHO is paid $137.19/month for each Enrolled Consumer who receives a service – WCHO is assuming 645 Consumers/month (75% of the 860 who qualify in Wash. Co.) State General Fund Appropriation – FY 2014 Budget was set at $8.4 million (same as FY 2013 Actual) – FY 2014 Final State General Fund Authorization is $7.0 million – FY 2015 Budget set at $5.5 million (FY 2014 Final GF Auth. less non-recurring appropriations) Washtenaw Co. Local Funding is of $1,528,080 ($400,000 increase from FY 2014)

12. FY 2015 Budget Vs. FY 2014 Projected Expenses FY 2015 BudgetFY 2014 Full YearFY 2015 Budget Projection O/(U) FY 2014 Expenses Total Administrative Expenses $ 5,175,915.83 $ 5,921,992.54 $ (746,076.71) Core Provider Contract CSTS -- BU 211 $ 31,477,708.40 $ 29,987,025.06 $ 1,490,683.34 OBRA 798,137.00 682,766.40 115,370.60 Total Core Provider Costs $ 32,275,845.40 $ 30,669,791.46 $ 1,606,053.94 Specialty Service Contracts Community Inpatient $ 3,080,006.65 $ - Community Living Supports 21,405,478.72 21,905,478.72 (500,000.00) Autism Services 256,185.94 - If needed, Licensed Facilities 8,226,520.27 8,526,520.27 (300,000.00) Regionally held Peer Supports/Drop-In 288,496.09 - Carryforward or PERS 157,873.87 - FY 2015 PSR/Clubhouse 542,278.15 -Medicaid Respite 680,463.56 - Surplus Skill Building 1,555,928.59 1,705,928.59 (150,000.00) Specialty Services 72,872.46 - State Facilities Full Mgmt 1,560,740.00 1,917,836.40 (357,096.40) State Facilities Local Share 446,784.00 - Supported Employment 448,891.34 - Supports Coordination 8,994.35 - All Other Contracted Services 325,594.19 - Total Specialty Service Contracts $ 39,057,108.18 $ 40,364,204.58 $ (1,307,096.40) Other Non-Service Costs $ 2,985,842.31 $ 3,262,134.56 $ (276,292.25) Grants And Contracts $ 462,881.00 $ 1,277,693.36 $ (814,812.36) Total Expenses $ 79,957,592.72 $ 81,495,816.50 $ (1,538,223.78)

14. EXPENSE ASSUMPTIONS AND KEY POINTS Administrative Costs – FY 2015 Budget of $5.2 million -- $0.7 million under FY 2014 Projection and $1.0 million under FY 2014 Budget (includes $300,000 tbd Administration efficiency reduction) – Net Administrative Expense of $3.7 million after $1.5 million of billings to Partners, U of M & CMHPSM Core Provider Costs – FY 2015 Budget of $31.5 million to fund Washtenaw County’s CSTS Department – Base services such as Case Management, Supports Coordination, Skill Building/Supported Employment and Outpatient – OBRA Nursing Home screenings Contracted Service Costs – Costs paid to the WCHO’s Specialty Services Network – FY 2015 Budget set at FY 2014 Projected levels except for: Community Living Supports (CLS) -- $21.4 million, $500,000 under FY 2014 Projection Licensed Residential Facilities -- $8.2 million, $300,000 under FY 2014 Projection Skill Building -- $1.6 million, $150,000 under FY 2014 Projection State Hospital Costs -- $1.6 million, $357,000 under FY 2014 Projection Other Non-Service Costs – Primarily $2.1 million for J-Code Drug Costs and $689,948 for Medicaid Local Match

15. FY 2015 REVENUE & EXPENSE BY CATEGORY Revenue & Expense By Category DollarsPercent Of Total Revenues Medicaid (Including Health Home Funding) $ 62,275,70978% Healthy Michigan Plan 3,905,9665% State General Fund 5,500,0007% Child Waiver Fee-For-Service Revenue 1,100,0001% Washtenaw County Local Funding 1,528,0802% Affiliation Charges And Reimbursements 1,518,3352% Grants And Earned Contracts (OBRA) 1,261,0182% J-Code Revenue 1,891,1132% All Other (Including WCHO Fund Balance) 977,3721% Total Revenues $ 79,957,593100% Expenses Administrative Costs $ 5,175,9167% Core Provider Costs (CSTS) 31,477,70839% Contracted Services Costs 39,057,10849% Other Costs (Including J-Code Drugs) 2,985,8434% Grants And Earned Contracts (OBRA) 1,261,0182% Total Expenses $ 79,957,593100% Revenues Over/(Under) Expenses $ -

16. FY 2015 REVENUE & EXPENSE BY FUND SOURCE Revenue & Expense By Fund Source RevenueExpense Revenue O/(U) Funding Source Budget Expense Medicaid (Including Health Home Funding) $ 62,275,709 $ 62,381,424 $ (105,715) Healthy Michigan Plan 3,905,966 - Medicaid Autism 83,996 - State General Fund 5,500,000 - Child Waiver Fee-For-Service Revenue 1,100,000 1,410,474 (310,474) Serious Emotionally Disturbed Waiver (SEDW) 1,000 - MIChild 91,431 - MIChild Autism 20,754 - County Of Financial Responsibility (COFR) 186,242 - Local 2,106,856 1,495,717 611,139 All Other (Including J-Code Drugs FFS Billings) 3,424,621 3,619,571 (194,950) Grants And Earned Contracts (OBRA) 1,261,018 - Total Budget $ 79,957,593 $ -

17. REVENUE & EXPENSE BY FUND SOURCE KEY POINTS Fee-For-Service Revenue shortfalls are projected for Child Waiver Services ($310,474) and J-Code Drugs ($194,950) Local Funds, including $247,825 of WCHO Fund Balance, will be used to cover the deficits noted above.

18. FY 2015 Administrative Cost Detail Total Administrative Costs FY 2015 BudgetFY 2014 BudgetFY2015 O/(U) 2014 Budget FTEsAmount FTEsAmount FTEsAmount Salary & Fringe Administration 5.75 $ 802,552 7.50 $ 923,084 (1.75) $ (120,532) Compliance 1.00 161,224 1.00 157,103 - 4,121 Finance 7.00 746,428 10.00 890,342 (3.00) (143,914) Information Management 6.00 677,343 7.00 760,065 (1.00) (82,722) Customer Service 0.25 - 0.50 77,858 (0.25) (77,858) Provider Network 1.00 87,610 2.00 249,286 (1.00) (161,676) Office Of Recipient Rights 12.00 1,136,131 12.00 1,106,117 - 30,014 Total WCHO 33.00 $ 3,611,288 40.00 $ 4,163,855 (7.00) $ (552,567) Total Administrative Contracts 1,096,208 996,307 99,901 Total Other Administrative Costs 850,775 1,079,308 (228,533) TBD Administrative Efficiencies (302,355) - Grand Total Administrative Costs $ 5,255,916 $ 6,239,470 $ (983,554) Memo: Salary & Fringe Billed To Partners 7.20 $ 692,516 7.20 $ 682,095 Salary & Fringe Excl. Amount Billed 25.80 2,918,772 32.80 3,481,760

19. Challenges For FY 2015 Identify and implement Administrative cost efficiencies Identify Contract Services savings (presently focused on CLS, Licensed Residential and Skill Building) Notify Organizations/Individuals that their contracts will be reduced or not renewed for FY 2015 Contain General Fund Expenses within the $5.5 million budget (and hope that GF Funding is not cut any further)

20. CONTRACTS INCLUDED IN THE BUDGET Administrative Expenses (Total Cost of $5.3 million) – $1,096,208 worth of contracts are included in the Budget. Contracted Services (Total Cost of $39.1 million) – Specialty Service Main Panel Provider Contracts o Comprised of Community Living Supports, Licensed Residential, Case Management/Supports Coordination, Supported Employment, Skill Building and Respite o Contract term from 10/1/2014 through 9/30/2015 o All contracts are fee-for-service based on authorizations within the FY 2015 Service Budgets – Other Mental Health Service Contracts o Includes COFR, Community Hospitals, State Hospitals, Club House and Drop-In Center o All contracts except the Drop-In Center are fee-for-service based on authorizations within the FY 2015 Service Budgets

21. CONTRACTS CONTINUED Administrative & Other Contracts – Michigan Department Of Community Health (MDCH) Contracts – Community Mental Health Partnership Of Southeast Michigan Contract – Contracts with Lenawee, Livingston and Monroe – CSTS Core Provider Contract – Other non-direct Service Contracts Lease Contracts (Total Cost Of $460,927) – Licensed Residential Group Homes – Various Landlords ($324,360) – Clubhouse – State Street Enterprises ($68,976) – Drop-In Center – Washtenaw County ($67,591) In addition to leasing eleven Licensed Residential Group Homes, the WCHO owns nine Licensed Residential Group Homes and a tenth home that is rented to Consumers who receive CLS services paid for by the WCHO.

22. BOARD ACTION REQUESTED 1.Approve the WCHO CMHSP Budget As Presented Revenue$80 million Expense 80 million Revenue O/(U) Expense$ 0 million 2.Approve The Contracts As Presented, Excluding Those With Potential Conflicts Of Interest (NAMI And Washtenaw Community College) 3.Separately Approve The Following Two Contracts: a)NAMI b)Washtenaw Community College