Commonwealth of MassachusettsExecutive Office of Health and Human Services

Chapter 257 of the Acts of 2008 Clubhouse Provider Information & Dialogue Session

November 3, 2010

www.mass.gov/hhs/chapter257

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Agenda

• Chapter 257 Review

• Discussion of Rate Setting Process to Date

• Methodologies and Inputs

• Salary Considerations

• Update on RFR Development

• Procurement and Rate Setting Timeline

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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.

FY10 FY11 FY12 FY13

Statutory Requirement: Percent of POS System with Regulated Rates 10% 30% 30% 30%

Spending Base Associated with Statutory Percentage (based on current projection of $2.1B POS Baseline to be implemented)

~ $215M

~ $645M

~ $645M

~ $645M

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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

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Agenda

• Chapter 257 Review

• Discussion of Rate Setting Process to Date

• Methodologies and Inputs

• Salary Considerations

• Update on RFR Development

• Procurement and Rate Setting Timeline

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Survey Responses

• 22 responses out of 30 Clubhouses (73% response rate)

• Average Members Served Daily (on and off site)

• Average Hours of Participation Per Day

Hours Count

5 - 6 hours 14

3 - 4 hours 7

1 - 2 hours 1

AVG 59

MED 55

MIN 14

MAX 123

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The current costs per member per day range from about $9 to $67.

Clubhouse Costs Per Member Per Day (using Average Members Served Daily)

$-

$10

$20

$30

$40

$50

$60

$70

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Regional Variation

• Analysis showed no significant regional differences in total reimbursable expenses per unit.

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Total staffing costs per member per day explain about 94% of the overall variation in total reimbursable expenses per member per day.

All Direct Staffing per Unit Cost by Total Reimbursable Expense

R2 = 0.9378

$-

$10

$20

$30

$40

$50

$60

$70

$80

$- $5 $10 $15 $20 $25 $30 $35 $40 $45

All Direct Staffing Per Unit Cost

To

tal

Rei

mb

urs

able

E

xpen

se

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Non-Management Staffing Ratios

5.28

9.32

11.70

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

< 40 40 - 89 90 +

Average Daily Attendance

Clie

nts

: F

TE

The differences between the staffing ratios for different sized programs are statistically significant.

• Part of the variation in staffing ratios across Clubhouses is explained by differences in client volume. Clubhouses with greater average daily participation operate with larger member per staff ratios due to economies of scale.

• Due to the variation in staffing ratios by Clubhouse volume, there will be separate rates based on ranges of projected average daily served.

Management Staffing Ratios

20.51

36.17

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

< 40 40 +

Average Daily Attendance

Clie

nts

: F

TE

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The reimbursable unit is a “service day” per member.

DMH has defined a service unit as a day on which an enrolled Clubhouse member:

1. Participates for at least two hours in the course of a day in Clubhouse activity(ies) directly related to his or her IAP.

This can occur: – at either the Clubhouse’s physical site and / or– off-site, accompanied by Clubhouse staff.

~ And/ Or ~

2. Receives employment support provided by Clubhouse staff off-site for 30 or more minutes and the employment activity(ies) is directly related to his or her IAP.

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Rate Setting Approach

• Model budgets were developed for small, medium and large volume Clubhouses, measured by average members served daily.• Under 40• 40 – 89• 90+

• The model budget assumes 350 days of operation per year.

• While assumptions are used to develop the model budgets based on current Clubhouse cost structures and staffing patterns, providers may manage their budgets given the assigned rate and projected client volume to select staffing and compensation levels they deem appropriate to meet DMH Clubhouse RFR requirements.

• Requested Feedback: • Do the draft ranges of average members served per day reflect the points at which

Clubhouses are able to serve more members per staff?• Should there be different rates for three size ranges of Clubhouses? Only two?

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Staff Categories

SchB Line # Staff Line Description

Direct Care Management

1S Program Director (UFR Title 102)

2S Program Function Manager (UFR Title 101)

3S Asst. Program Director (UFR Title 103)

Non-Management Direct Care

24S* Social Worker - L.C.S.W., L.S.W (UFR Title 125 & 126)

26S* Cert. Voc. Rehab. Counselor (UFR Title 128)

28S Counselor (UFR Title 130)

31S Direct Care / Prog. Staff Superv. (UFR Title 133)

32S Direct Care / Prog. Staff III (UFR Title 134)

33S Direct Care / Prog. Staff II (UFR Title 135)

34S Direct Care / Prog. Staff I (UFR Title 136)

*Clubhouses do not currently report position lines 24 or 26S. Average UFR salaries for these positions were included in analysis of an appropriate non management benchmark salary.

Requested Feedback:

Is the Assistant Program Director position more similar in practice to a Direct Care Program Staff Supervisor?

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SAMPLE Average Daily Served: 29 Days: 350

Clients : FTE FTE Expense %Direct Mgmt Staffing 20.5 1.4 13%Non-Management Staffing 5.3 5.5 38%

Sub-total Direct Care Staff 6.9 51%

FactorTaxes & Fringe 22.1% 11%

Total Staffing Costs 63%

Occupancy 10%

Other Program Exp. 15%

Total Reimbursable Exp. Excl. Admin. 88%

Admin. Alloc. (M & G) 13.5% 12%

Total 100%

CAF 3.62%Unit Rate TBD

UNDER 40 AVERAGE DAILY SERVED

DRAFT Sample Clubhouse Model Budget:Under 40 Average Daily Served

• The model budget FTE ratios and unit costs reflect measures of central tendency within the FY10 contract data.

• FTE ratios vary for different sized Clubhouses. Actual FTE levels supported by the rate will vary based on the specific average daily members served for each Clubhouse.

• DMH has selected a non-management salary benchmark that represents an increase over the current average salary.

• The tax and fringe and indirect administrative allocation percentages reflect measures of central tendency from FY09 UFR data.

• A cost adjustment factor is applied to account for inflation between FY11 and FY13, when the rates are scheduled to be reviewed.

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SAMPLE Average Daily Served: 64 Days: 350 SAMPLE Average Daily Served: 110 Days: 350

Clients : FTE FTE Expense % Clients : FTE FTE Expense %Direct Mgmt Staffing 36.2 1.8 11% Direct Mgmt Staffing 36.2 3.0 12%Non-Management Staffing 9.3 6.9 31% Non-Management Staffing 11.7 9.4 27%

Sub-total Direct Care Staff 8.6 42% Sub-total Direct Care Staff 12.4 39%

Factor FactorTaxes & Fringe 22.1% 9% Taxes & Fringe 22.1% 9%

Total Staffing Costs 51% Total Staffing Costs 48%

Occupancy 15% Occupancy 16%

Other Program Exp. 22% Other Program Exp. 24%

Total Reimbursable Exp. Excl. Admin. 88% Total Reimbursable Exp. Excl. Admin. 88%

Admin. Alloc. (M & G) 13.5% 12% Admin. Alloc. (M & G) 13.5% 12%

Total 100% Total 100%

CAF 3.62% CAF 3.62%Unit Rate TBD Unit Rate TBD

40 - 89 AVERAGE DAILY SERVED 90 OR MORE AVERAGE DAILY SERVED

DRAFT Sample Clubhouse Model Budgets:40 – 89 and 90 + Average Daily Served

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Agenda

• Chapter 257 Review

• Discussion of Rate Setting Process to Date

• Methodologies and Inputs

• Salary Considerations

• Update on RFR Development

• Procurement and Rate Setting Timeline

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Update on RFR Development & Procurement Vehicle

• DMH will release the RFR in mid-December, rather than the

previously stated mid-November. DMH and EOHHS intend for the

release to coincide with the official rate proposal which is also

scheduled for mid-December in the draft timeline.

• DMH intends to adjust the length of the procurement’s response

period - as feasible for a contract effective date of July 1, 2011 - so

that providers will have additional time to respond once the rates

are adopted.

• The procurement will utilize a Master Agreement structure. The

RFR will include estimated expenditure levels per Clubhouse based

on expected levels of daily participation.

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Agenda

• Chapter 257 Review

• Discussion of Rate Setting Process to Date

• Methodologies and Inputs

• Salary Considerations

• Update on RFR Development

• Procurement and Rate Setting Timeline

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Planned Procurement Approach and Draft Timeline for Implementation

• DMH will re-procure all contracts under their 3034 Clubhouse Services in mid-December for contracts effective on July 1, 2011

• DHCFP regulated rates will be adopted in mid winter 2011, but will not be effective until contracts are executed in July 2011.

Summer 2011Spring 2011Summer 2010 Fall 2010 Winter 2011

RFR Development, Review, and ApprovalResponse Evaluation,

Recommendations, and Selection

RFR Posting and Response

Cost Analysis

HCFP/ DMH

Approval

EHS/ANF Review & Approval Public Hearing

Rates Adopted Rates Effective

Provider Sessions and Feedback

Rate Options Development

Contract Execution