chapter 257 of the acts of 2008 provider information and dialogue session: adult long term care

Commonwealth of MassachusettsExecutive Office of Health and Human Services

Chapter 257 of the Acts of 2008

Provider Information and Dialogue Session:

Adult Long Term Care

June 20, 2012

www.mass.gov/hhs/chapter257 [email protected]

http://www.usembassy.de/usa/stateimages/massachsuettsseal.jpg

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Agenda

• Chapter 257 of the Acts of 2008

• Overview of Adult Long Term Care Services

• Definition and Overview of Programs

• Residential Rate Precepts

• Review of Preliminary Occupancy Survey Results

• Updated Draft model Budget Framework

• Breakout Discussions

• Timeline and Key Milestones

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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 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

• Many 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.

• Chapter 9 of the Acts of 2011 establishes new deadlines for implementing POS rate regulation as well as requires that related procurements not go forward until after the rate setting process is completed.

Jan 2012 Jan 2013 Jan 2014

Statutory Requirement: Percent of POS System with Regulated Rates 40% 30% 30%

Spending Base Associated with Statutory Percentage (based on current projection of $2.278B POS Baseline to be implemented) ~ $880M ~ $660M ~ $660M

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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

• Data availability and integrity (complete/correct)

• Unexplained historical variation in reimbursement rates resulting from long-term contracts and individual negotiations between purchasers and providers

• Constrained financial resources for implementation, especially where pricing analysis warrants overall increases in reimbursement rates

• Cross system collaboration and communication

• 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









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Adult Long Term Care Service Class

Service Class Definition: Programs that provide individuals a place of overnight housing for a long-term period of time in a specialized residential facility with necessary daily living, physical, social, clinical and/or medical support. Transition to a less restrictive setting, while ideal, is not a common goal for individuals receiving services in these settings.

Service Class Agency Activity Code

Program NameTotal Projected

Program Spending ~

MCB 2143 RESIDENTIAL/DAY PROG. - SR 8,489,639$ DDS 3161 BLANKET RESIDENTIAL 2,420,000$ DDS 3153 24 HOUR RESIDENTIAL SERVICES 578,610,000$ MRC 2242 TBI Residential 5,710,212$ MRC 2245 Rolland Waiver Residential 1,305,202$ MRC 2247 Rolland Residential 4,004,604$ MRC 2226 SHIP - RESIDENTIAL 7,439,251$

607,978,908$

Adult Long-Term Care

Total Spending

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Adult Long Term Care Services:Residential Rate Precepts

• House rates will be assigned at the program level, rather than at the individual level • All existing residential programs will be placed into a program model that best

reflects the needs of most of the individuals living in the program • The funding level in a program model should be the same across all programs of

the same type and capacity

• There is a different staffing pattern for each model of service that reflects the differences in the populations served.• Program models that require direct care workers to have higher-level skills and

experience will reflect higher paid direct care staff than more basic models.

• PSS is omitted for now as part of the rate- this is an individualized service that will be added on top of the rate model that serves a particular group of people.

• Occupancy and related expenses should be considered separately for pricing purposes from the actual program pricing models.

• Program expense models will cover everything but occupancy. That is, program rates should include funding for staffing, vehicles and program furnishings, among other operational considerations.

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Agenda









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EOHHS Occupancy Survey Background

• The 2012 EOHHS Occupancy Survey gathered information on the occupancy costs for the Adult Long Term Residences. The data collected will inform the pricing structure and rates to be developed for the facility component of Adult Long Term Residential services.

• The 2012 Occupancy Survey was electrically submitted to over 200 Residential providers.

• The data from 2012 Occupancy Survey represents the responses from over 1,400 caregiver sites across Massachusetts.

• Survey Gizmo was the survey tool used to administer the survey.

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Statistics: What do we look for?

• R2 is a statistical method that explains how much of the variability of a factor can be caused or explained by its relationship to another factor.

• An R2 of 1.0 indicates that the two factors are perfectly aligned. • A R2 value of .023 reflects a weak relationship between two factors where an R2

value of .98 indicates a very strong relationship between them. • In this data, a strong relationship would indicate that a factor is an occupancy cost

driver, a weak relationship would indicate that the factor does not significantly influence occupancy unit cost.

• ANOVA tests are used to analyze two variables where one of the variables is represented by categories (e.g., type of heating fuel or DDS regional location).

• The ANOVA is represented by a P-Value. • A P-Value of 0.05 or less indicates a possible relationship.

• Opposite from the R2, a P-value of .023 reflects a strong relationship where a P-value of .98 indicates a weak relationship.

• An F-Crit score of greater than 2.0 is desirable.• >= 25 pieces of data must be present in each category data group.

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EOHHS Occupancy Survey Results: Unit Cost

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Majority of caregiver sites fall within approximately $10.09 - $49.73 cost per client per day range.

Notice the sharp upturn at the $50.00 cost per client per day indicator.

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EOHHS Occupancy Survey: List of Variables Explored

• Physical Condition

• Type of Site (Apartment or House)

• Type of Heat

• Improvements for Accessibility

• Economies of scale

• Type of Ownership

• Location

• Year site placed into service

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EOHHS Occupancy Survey Results: Physical Condition of Facility

Physical condition of the facility is not a cost driver.

75% of EOHHS sites are functional and not in need of immediate repair.

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EOHHS Occupancy Survey Results: Site Layout

P-value 0.191932

*The site layout is not statistically significant. Site layout is not a cost driver.

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EOHHS Occupancy Survey Results: Heat

P-value0.473681

The majority of sites (55%) use natural gas as heat.

• Overall cost of utilities (Water + Heat + Electricity) is relatively the same, regardless of type of heat used at a site.

•Additionally there is a high P-Value indicating that the type of heat used is not an occupancy cost driver.

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EOHHS Occupancy Survey Results:Impact Of Accessibility Features

Accessibility Features:

-Wheelchair Ramp

-Widened Hallways

-Handicapped BR

-Hoyer Lift

-Elevator

-Sprinkler

-Adaptive Equipment for Blind

-Security Alarms

• The Accessibility Score is the sum of any specific modifications that have been done to the site. • The R2 score is not close to 1.00 so there is no correlation the Accessibility Score and Cost Per Client Per Day.

R2 = 0.0226

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EOHHS Occupancy Survey results:Dynamic Capacity (Economies of Scale)

“Base Units” was calculated by finding the greater number of either bedrooms or client occupancy then multiplied by 365.

This comparison looks for economies of scale. The R2 calculation is very low thus there appears to be no relationship.

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EOHHS Occupancy Survey Results:Mortgage and Rent Overview

Both Mortgage and Rent are significant cost drivers.

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EOHHS Occupancy Survey:Ownership

_______________________________________________________________________

P-value0.021533

P-value0.184778

The majority (52%) of caregiver facilities are owned. With a P-Value of less than 0.05, there appears to be statistical value here.

Caregiver facilities that were leased in any manner were grouped together resulting in the “Lease Group” category. The resulting P- Value was greater than 0.05 demonstrating a a lack of statistical value.

F crit2.61113

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EOHHS Occupancy Survey:Leases from Related Parties

There is statistical significance between the unit costs of facilities that are “Lease from Related Party” when compared to all others categories combined.

Leased from Related Party does have a cost impactLease + Own + Lease to own

VS.Leased from Related Party

No cost impact without Lease From Related PartyLease

VS.Lease to Own

VS.Own

*Lease from Related Party removed

P-Value: 0.014084

P-Value:0.172641

No cost impact without Lease From Related PartyLease

VS.Own + Lease to own

*Lease from Related Party removed

Without “Lease from Related Party” there is no statistical significance among ownership types.

P-Value:0.160725

Yet, when “Lease from Related Party” is removed, the statistical significance is lost.

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EOHHS Occupancy Survey Results:EOHHS and HUD Rental Values

- The EOHHS/HCFP/DDS/MCB/MRC team used the data to compare the monthly rental values of DDS residences with regionally-equivalent HUD rental allowances.

- The analysis took an “apples to apples” approach; additional amenities provided and factored into EOHHS site cost were removed to align HUD payments to those paid by DDS regions for the closet comparison possible.

- EOHHS spends more on rental costs per client than HUD does.

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EOHHS Occupancy Survey Results:EOHHS and HUD Rental Values

DDS Regions and HUD Regions Comparisons DDS Includes only RENTALS

DDS Central West HUD Worcester and Springfield Metro

BEDS

COST PER

MONTH AVERAGE

BEDS COST PER

MONTH

1BR $780 1BR $755

2BR $1,088 V. 2BR $937

3BR $1,711 3BR $1,1214BR $2,097 4BR $1,242

DDS Metro, NE, SE HUD Boston Metro

BEDS

COST PER

MONTH AVERAGE

BEDS COST PER

MONTH

1BR $983 1BR $1,149

2BR $1,596 V. 2BR $1,349

3BR $2,282 3BR $1,6134BR $2,965 4BR $1,773

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EOHHS Occupancy Survey Results: Respondents by DDS Region

Sites are very evenly distributed amongst the DDS regions.

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EOHHS Occupancy Survey Results: Regional Variation by DDS Region

DDS Regions:Central West Metro North East South East

The DDS region in which the site is located is not a cost driver. Site location has no significance within the scope of DDS Regions.

Anova: Single Factor

SUMMARYGroups Count Average

Central West 289 30.41995Metro 322 30.03272North East 339 29.17039South East 393 26.13283

ANOVAP-value0.331414

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EOHHS Occupancy Survey Results: Respondents by HUD Region

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There are not 25 pieces of data in each data group so the HUD regions must be consolidated to evaluate whether region is a cost driver.

EOHHS Occupancy Survey Results: Regional Variation by DDS Region

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EOHHS Occupancy Survey Results: Respondents by Consolidated HUD Region

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Site location is a significant cost driver when looked at by consolidated HUD Regions.

P-value F crit

0.027936 2.01701

HUD region consolidated

Western Worcester to Worcester

Eastern Worcester to Worcester

Berkshire to Pittsfield

Franklin County to Springfield

Easton/Raynham,Taunton, New Bedford to Brocton

Lawrence to Lowell

EOHHS Occupancy Survey Results:Regional Variation by Consolidated HUD Region

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EOHHS Occupancy Survey Results:

Year Site was Placed Into Service

Cost per client per day increases slightly in more recently opened sites.

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P-value0.128072

No valid cost driver conclusions can be made as each data group does not contain 25 data samples.

Consolidation of data into the last 20 years and prior also does not yield a significant relationship.

Average cost per client per day does increase as sites are put into service in more modern times. This encouraged further analysis.

EOHHS Occupancy Survey Results:

Year Site was Placed Into Service

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There is a strong relationship between unit cost and the decade that a residence was placed into service.

P-value F crit

9.11E-08 2.611614

EOHHS Occupancy Survey Results: Unit Cost by Year Site was Placed Into Service

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EOHHS Occupancy Pricing Draft Construct: Consolidated HUD Regions and Categories of Year Site Placed into Service

KEY-Numbers in boxes represent the number of EOHHS sites within the region and decade of service.

- Box color represents HUD region.

Region/Year In Service

1975-1984 1985-1994 1995-2004 2005-2012

Barnstable Town

14 25 16

Boston-Cambridge-

Quincy50 145 227 227

Brockton+Easton/Rayn+FallRiv+NewBed+Ta

4 33 61 85

Lowell + Lawrence

3 22 40 29

Pittsfield + Berkshire

5 9 16

Springfield+Franklin

1 7 52 60

Worcester+East+West

1 22 24 26

Fitchburg-Leominster

9 11 14

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EOHHS Occupancy Pricing Draft Construct: Lease From Related Party Sites by Consolidated HUD Region

The numbers under “Total” represent the number of Lease From Related Party EOHHS Sites within each HUD region.

Total

Barnstable Town 0

Boston+Cambridge+Quincy 29

Brockton + Easton/Raynham+FallRiver+NewBedford+Taunton 3

Lowell + Lawrence 3

Pittsfield + Berkshire 25

Springfield+Franklin 3

Worcester+East+West 1

Fitchburg-Leominster 0

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Draft Model Budget – DDS Basic 2 Basic Level 2 Model Budget (Capacity 4)

Beds: 4 Bed Days: 1,460

FTE ExpenseManagement 0.32 $XX.XX DC Supervisor 1.00 $XX.XX DCI + DCII + DC III 4.725 $XX.XX Overnight Asleep 0.00 $XX.XX Overnight Awake 1.40 $XX.XX Relief A 0.94 $XX.XX Relief B 0.00 $XX.XX Support 0.13 $XX.XX Total Program Staff 8.52 $XX.XX

ExpensesTax and Fringe 21.71% $XX.XX Total Compensation $XX.XX

[Consulting Services] Hourly Rate

Hours per year Expense

Registered Nurse (RN) $xx.xx 52.00 $XX.XX Psychologist (BA level) $xx.xx 52.00 $XX.XX Total Consulting Services $XX.XX

Unit CostOccupancy $0.00 $XX.XX Food $XX.XX $XX.XX

Client Transportation $XX.XX $XX.XX Staff Mileage $XX.XX $XX.XX Vehicle Expenses/Depreciation $XX.XX $XX.XX Other Expenses - (Food+CT+SM+VED) $XX.XX $XX.XX Direct Admin Expenses $XX.XX $XX.XX

$XX.XX $XX.XX

Total Reimb excl M&G $XX.XXAdmin. Allocation 10.98% $XX.XX

TOTAL $XX.XX

CAF: 3.93% $XX.XX UNIT RATE: TBD

• Now, Consulting Services are separated out from FTEs.

• Occupancy Expense is removed from service model budget . DHCFP is conducting facility related expense analysis and this rate will be set under separate provision.

• Transportation Expenses include Client Transportation, Staff Mileage, and Vehicle Expenses/Depreciation. These components are individually presented in the model budget.

• An estimated cost adjustment factor (Source: Health Care Cost Review from Global Insight MA CPI-Forecast – Spring 2012), 3.93% would be applied to account for inflation between the FY12 base year through the prospective rate period FY15.

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Staffing, Models and Occupancy: Provider Break-Out Groups

• DDS, MCB and MRC will now lead break out group discussions to gather your feedback on the proposed programs, models and occupancy approach.

Among other items, these groups will touch upon:

• What aspects of these proposed programs and structures appear most adaptable for general use?

• What is your general reaction to the occupancy construct?

• Are the resources assigned to each model in line with the needs of the clients that would be in those model’s homes?

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Fall 2012 Summer 2013Winter 2013Summer 2012Winter/Spring 2012

Procurement Process

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.

• Provider Sessions: For each rate setting project, EOHHS conducts an average of 3 provider input sessions prior to Executive Sign-Off and the Public Hearing Process to allow for greater depth in understanding core program components, cost drivers, and procurement considerations.

• 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.

• Public Hearing: DHCFP and purchasing departments consider testimony in advance of rate adoption.

• Procurement Process: 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 Adult Long Term Care

July 1

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Questions/Feedback

Please Email Questions & Comments to:

[email protected]

Please Visit the Chapter 257 Website:

www.mass.gov/hhs/chapter257

chapter 257 of the acts of 2008 provider information and dialogue session: adult long term care

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