Commonwealth of MassachusettsExecutive 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, 2011

www.mass.gov/hhs/chapter257 eohhspospolicyoffice@state.ma.us

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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

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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.

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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, 2012.

• 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.

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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 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 1 Year 2 Year 3 Year 4

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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Fall 2011 Summer 2012Winter 2012Summer 2011Spring 2011

Department Service Design Finalized and Rate Development

Executive Sign-Off EO 485 to ANF Public Hearing

Rates Adopted Rates Effective

Provider Sessions and Feedback

• 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

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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 ClassSpending Mapped to Service Class

DCF RESS Residential Shelter 100% $ 839,588

DPH 4928 Youth Stabilization 100% $ 1,000,000

DYS

2501 Secure Detention 100% $ 9,340,154

2502 Assessment 100% $ 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 MassachusettsExecutive Office of Health and Human Services

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

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Total Costs per Day• The total costs per day ranged from around $200.00 to $341.00 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.

DYS Youth Short- and Intermediate-Term Stabilization Daily Rates

$150

$200

$250

$300

$350

$400

Dai

ly R

ate

Intermediate-Term Short-Term

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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.

DYS Youth Short- and Intermediate-Term Stabilization Cost Category Percentages

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Manag

em

ent

Clin

ical

Dire

ct C

are

Suppor

t

Oth

er

Direc

tC

are

Tax &

Fring

e

Occup

ancy

Oth

er

Pro

gra

m

Adm

in M

&G

Short-Term Intermediate-Term

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Cost Category Percentages

• The trend remains consistent, even after removing Transition programs from the Intermediate-Term dataset.

DYS Youth Short- and Intermediate-Term Stabilization* Cost Category Percentages

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Ma

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ge

me

nt

Clin

ica

l

Dir

ect C

are

Su

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ort

Oth

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Dir

ect

Ca

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x &

Fri

ng

e

Occu

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ncy

Oth

er

Pro

gra

m

Ad

min

M&

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Short-Term Intermediate-Term* Excluding Transition Programs excluded

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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.

DYS Youth Short-Term Stabilization Daily Rates by Staffing Costs per Unit

R2 = 0.3568

$150

$170

$190

$210

$230

$250

$270

$290

$310

$100 $110 $120 $130 $140 $150 $160 $170 $180

Staffing Costs per Unit

Dail

y R

ate

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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.

DYS Youth Intermediate-Term Stabilization Daily Rates by Staffing Costs per Unit

R2 = 0.369

$160

$200

$240

$280

$320

$360

$400

$100 $120 $140 $160 $180 $200 $220 $240 $260 $280

Staffing Costs Per Unit

Dai

ly R

ate

• 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.

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Direct Care Staffing Ratios

Clients per Direct Care FTEs

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Mo

re In

ten

se

---

Le

ss

Inte

ns

e

Youth Intermediate-Term Stabilization Youth Short-Term Stabilization

• 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.

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Sample Model Budget showing Cost Category Percentages

Consumers: 15 - 17 Days: 365

Client to Staff Ratio FTE

% of Overall Costs

Management 2.15 8%Clinical 3.00 10%

Direct Care 0.94 16.49 31%Direct Care Relief 3.23 6%

Support 3.00 5%Total Direct Care Staffing 27.87 60%

FactorTaxes & Fringe 25.58% 15%Total Compensation 76%

Occupancy 7%Other Program Costs 7%

Total Reimbursable Expense (excl. M & G) 89%

Administration Allocation (M & G) 12.11% 11%TOTAL 100%

Cost Adjustment Factor 4.11%Utilization Factor Varied

RATE TBD

Standard, Provider Owned, 15 - 17 Bed Program • 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%.

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Sample Model Budget showing Cost Category Percentages

Consumers: 18 - 22 Days: 365

Client to Staff Ratio FTE % of Overall Costs

Management 2.15 6%Clinical 4.00 11%

Direct Care 0.85 23.59 38%Direct Care Relief 4.63 7%

Support 1.00 2%Total Direct Care Staffing 35.37 64%

FactorTaxes & Fringe 25.58% 16%Total Compensation 80%

Occupancy 2%Other Program Costs 7%

Total Reimbursable Expense (excl. M & G) 89%

Administration Allocation (M & G) 12.11% 11%TOTAL 100%

Cost Adjustment Factor 4.11%Utilization Factor Varied

RATE TBD

Higher Need Youth, State Owned - Colocated, 18 - 22 Bed Program • 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%.

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Youth Intermediate-Term Stabilization Model: Relief Assumptions

Direct Care FTE Relief Assumptions

  Days Hours

Vacation 15 120

Sick/ Personal 15 120

Holidays 13 104

Training 8 64

  Total Hours per FTE: 408

  % of FTE 19.6%

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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?