Agenda 

•	Chapter 257 of the Acts of 2008

•	Overview of Adult Long Term Care Services 
•	Definition and Overview of Programs
•	Procurement Approach

•	Review of Pricing Analysis and Methodologies
•	Data and Initial Review
•	Trends and Cost Drivers
•	Pricing Structure

•	Timeline and Key Milestones

Chapter 257 of the Acts of 2008 Regulates Pricing for the POS System
In implementing Chapter 257, EOHHS will leverage three POS Reform Strategies to improve services and client outcomes
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:
•	Predictable, reimbursement models that reduce unexplainable variation in rates among comparable, economically operated providers 
•	Incorporation of inflation adjusted prospective pricing methodologies 
•	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

In Many Cases, Contract Reform is Necessary to Implement Chapter 257
Agenda

•	Chapter 257 of the Acts of 2008
•	Overview of Adult Long Term Care Services 
•	Definition and Overview of Programs
•	Procurement Approach
•	Review of Pricing Analysis and Methodologies
•	Data and Initial Review
•	Trends and Cost Drivers
•	Pricing Structure
•	Timeline and Key Milestones

Adult Long Term Care Service Class
Master Agreements simplify management of the POS system for providers and departments.

•	Benefits to Providers:
•	Single bidding cycle for similar services
•	Bid once – engage many times under a single bid
•	Standard reporting formats
•	Rate transparency
•	Potential to engage with new purchasing Departments

•	Benefits to EOHHS Departments
•	Reduced procurement burden
•	Potential to expand pool of providers
•	Enable statewide coordination 
•	Eliminate multiple procurements for the same service

Adult Long Term Care Procurement Plan
•	DDS will issue an RFR on behalf of itself, MRC, and MCB and will result in a multi-department Master Agreement. This decision was based in part on the following issues:

•	DDS currently contracts with 145 provider organizations and is due to re-procure the system.
•	73% of MCB providers and 91% of its spending overlap with MRC and DDS.
•	61% of MRC providers and 78% of its spending overlap with MCB and DDS.

•	DDS will issue this RFR in early 2013 once Chapter 257 rates are adopted with a target effective date of July 1, 2013 for contracts.

Agenda
•	Chapter 257 of the Acts 2008
•	Overview of Adult Long Term Care Services 
•	Definition and Overview of Programs
•	Procurement Approach
•	Review of Pricing Analysis and Methodologies
•	Data and Initial Review
•	Trends and Cost Drivers
•	Pricing Structure
•	Timeline and Key Milestones

Adult Long Term Care Services:
Data Sources

•	DDS Contract Data from Fiscal Year 2011 and EIM claims units provided. The data represents a wide mix of program models and levels of participant need.

•	Salary data from Bureau of Labor Statistics, Salary.com, and other applicable sources.

•	MRC gathered data on current programs.

•	Facility/Occupancy Cost Survey –issued February 28, 2012.

•	UFR, if needed to enrich data analysis of specific cost elements.

Provider Occupancy Survey
•	The Purchasing Departments, EOHHS, and DHCFP designed an online survey to gain a better understanding of the features of facilities and their cost that could affect the development of standard pricing of physical space for human service providers that provide long-term residential care.  

•	To complete this survey, please collaborate with staff familiar with both fiscal and programmatic aspects of your organization in order to provide the most accurate answers.

•	If your organization provides services to multiple residential sites: 
–	Please answer all questions for each of your site locations

•	Please complete this survey by Friday, March 23, 2012

Adult Long Term Care Services:
 Observations from Initial Review of Data
Unit Cost Data Distribution: DDS vs. MRC
Cost Summary Analysis: DDS Data
•	Staffing costs, along with related tax & fringe expenses, average over 60% of total per-site spending 
•	Non-specialized direct care (DC1, DC2 & DC3) account for the majority of staffing costs.
•	Supervisory/management, clinical/medical and support staffing account for a smaller portion of staffing costs
•	Combined, expenses related to occupancy, administrative costs and other program costs account for less than 30% of total per-site spending

Major Cost Driver - Staffing
Non-Specialized Direct Care Staffing
Transportation Cost
Occupancy Cost
Regional Variation
Draft Pricing Structure

•	Rates per bed day, as under current system
•	Rates for an array of program models that flow along a continuum of level reflected in varying staffing patterns
•	Program size 

Draft Pricing Structure: Specialty and Add-on Services

•	Acknowledge the opportunity for extraordinary individual needs, such as the rare instance when a program serves a single individual 
•	Add-ons allow for variations in models not reflected in the standard rates
•	Can be temporary, as needed

•	Types of add-ons:
•	Nursing
•	Additional Direct Care Staff
•	Clinical
•	Specialized vehicles
•	Day services
•	Others?

Draft Pricing Structure (cont’d)
Agenda
•	Chapter 257 of the Acts of 2008
•	Overview of Adult Long Term Care Services 
•	Definition and Overview of Programs
•	Procurement Approach
•	Review of Pricing Analysis and Methodologies
•	Data and Initial Review
•	Trends and Cost Drivers
•	Pricing Structure
•	Timeline and Key Milestones

Updated Implementation Timeline and Key Milestones for Adult Long Term Care
Questions/Feedback

eohhspospolicyoffice@state.ma.us 

Or Visit the Chapter 257 Website:

www.mass.gov/hhs/chapter257