1. Commonwealth of Massachusetts Executive Office of Health and Human Services Chapter 257 of the Acts of 2008 Congregate Housing Services Coordination and Supportive Senior Housing Provider Information & Dialogue Session February 14, 2011 www.mass.gov/hhs/chapter257

2. 2 Agenda Introductions and Overview Chapter 257 Implementation Infrastructure Service Classification System Setting Rational Rates Case Management Service Class Definition and Overview of Programs Update on Congregate Housing Services Coordination Results of Analysis Summary of Findings Supportive Senior Housing Understanding Program Components and Cost Drivers Timeline

3. 3 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 DHCFP consider the following criteria 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 Additional funding was not appropriated to finance any potential cost increases associated with the law. The statute, with proposed amended language, specifies a three year implementation timeframe. Jan 2012Jan 2013Jan 2014 Statutory Requirement: Percent of POS System with Regulated Rates 40%70%100% Cumulative Spending Base Associated with Statutory Percentage (based on current projection of $2.1B POS Baseline) ~ $861M~ $1,507M~ $2,153M

4. 4 Implementation of Chapter 257 Requires Successful Achievement of Three Strategies Number of different POS contracts / procurements Cost reimbursement 3. Reform Contracting Use of Master Agreements Contracts w/ performance features Contracts shared across departments 1. Create Service Classes Establish new cross- Secretariat or Department governance structure Develop Service Class structure to group similar services & programs Build out process & technology to manage codes & classes Align activity codes to Service Classes Enabling Rate analysis and establishment Contract consolidation across agencies Improved reporting 2. Develop Reimbursement Methodology & Rates Maximize FY09 Develop Implementation Plan Develop Service Classes Original Cumulative Statutory Requirement Service Value FY10 10% of System $215M FY11 40% of System $860M FY12 70% of System $1.50B FY13 100% of System $2.15B Minimize

5. 5 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 inexplicable 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 (Extremely) fast paced 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 Option Development Provider Consultation Review/ Approval: Departments, Secretariat, and Admin & Finance Public Comment and Hearing Possible Revision / Promulgation

6. 6 Supportive Senior Housing Services Congregate Housing Services Coordination As part of the Chapter 257 Implementation process, Supportive Senior Housing and Congregate Housing Services Coordination have been classified under the Case Management Service Class, which is defined as programs that provide the management, planning, or referrals of services delivered to an individual or family. Exec. Office of Elder Affairs Activity CodeProgram NameFY10 Spending 8015Supportive Senior Housing $ 4,052,722 8017Congregate Housing Services Coordination $ 2,070,010 Today’s discussion of rate analyses and methodologies will only include the Supportive Senior Housing and Congregate Housing Services Coordination programs. Rate discussions regarding EOEA’s Home Care/Respite Care Purchased Services (8006), Home Care/Respite Care Case Management and Administration (8014), and Enhanced Community Options Program (8011) are separate and will be reviewed with ASAPs at a later date. This class also includes a number of other services purchased by the Departments of Public Health, Children and Families and Developmental Services.

7. 7 Congregate Housing: Preliminary Analysis Calculated Monthly Unit Cost Analysis centered on monthly cost per room Monthly unit costs were calculated from FY2009 UFR data for Congregate Housing Providers: 447 of 693 units (rooms) Range from $147.31 to $231.89

8. 8 Congregate Housing: Percent of Unit Cost by Expense Category

9. 9 Congregate Housing: Analysis of Cost Drivers Direct Care Staffing Compensation Direct Care Staff Compensation (includes fringe benefits and taxes) is a strong predictor of variation at 86%

10. 10 Congregate Housing: Analysis of Cost Drivers FTEs vs Monthly Unit Cost FTEs are not a strong predictor of variation

11. 11 Congregate Housing: Analysis of Cost Drivers FTEs vs. Units FTEs and Units have some measure of correlation

12. 12 Congregate Housing: Analysis of Cost Drivers Monthly Unit Monthly Unit Cost vs. Number of Units The number of units is not a strong predictor of variation

13. 13 Congregate Housing: Regional Variation Statistical tests* have been conducted to examine the effect of regional location on the following cost elements: –Total reported per unit cost –Occupancy unit cost –Non-specialized DC salary unit cost No statistically significant differences were observed * (Analysis of Variance- ANOVA)

14. 14 Congregate Housing: Summary of Findings Current recommendation is that the rate structure be a monthly rate per room Statistical analysis does not show the need for rates to be varied by: –Regional location –Intensity of service –Program size

15. 15 Supportive Housing Services Coordination Programs The following are discussion topics that will help facilitate our discussion: How are your programs currently structured in terms of program components and intended outcomes? What should the units of service be for the Supportive Housing service coordination (hour, day, month, etc)? What staff positions, qualifications and staff to client ratios are necessary to achieve the intended outcomes in each program? How do case management services fit within the spectrum of the purchase of service system (i.e. with ASAP Home Care services)? Are there interdependencies between these services and others in a continuum of care? How does capacity and case-mix (particularly when residents are also ASAP eligible) affect costs? What effect does geography have on costs?

16. 16 Rate Setting Regulatory Timeline Target effective date: July 1, 2011 The POS rate regulations should be promulgated in the Spring 2011.

17. 17 Additional Feedback Questions? Written feedback - send to: EOHHSPOSPolicyOffice@state.ma.us