Transformation
Changing the MR System
to Make Every Day Lives a Reality
December 03, 2001
Dennis W. Felty
ASSUMPTIONS
 This
is a time of great opportunity for individuals
and their families
 This is a best effort to describe a rapidly changing
system
 Much of what we talk about may change
 This is the biggest change ever
AN EVERY DAY LIFE
An every day life is a life rich in the
qualities a person most desires; one that
shows how connected we are to each
other. It is a life that grows from a
person's own choices, desires and dreams
and is not controlled by what
kind of services happen to be currently
available. It goes beyond just meeting
a person's basic needs, to reaching a rich quality of life in all aspects of a
person's life. It is always changing throughout a person's entire life
experience. It is the kind of life we all want and is not unique to people
who happen to have disabilities.
TRENDS
 Waiver entitlement (Olmstead letter #4)
 Olmstead/ADA entitlement
 Federalization of MR funding & policy
 CMS requirement for equitability
 CMS requirement for consistency
 Choice, Individualized Funding and Self Determination
 Data requirements for legislative initiatives & full funding
 OMR & DPW Information Technology initiatives
 Baby boomer demographics & waiting list
 $1,600,000,000 provided for services in Pennsylvania
POLICY OPTIONS
 State
fee schedule (EPSTD, partial, outpatient)
 Managed care model with MCO (Health Choices)
 Limited access & utilization (commercial behavioral health)
 Withdraw from Medicaid
 Continue with current system
 Comprehensive resource management system
OLMSTEAD LETTER #4
42 CFR 441.303(f)(6) “The State must indicate the number of unduplicated
beneficiaries to which it intends to provide waiver services in each year of its
program.This number will constitute a limit on the size of the waiver program
unless the State requests and the Secretary approves a greater number of waiver
participants in a waiver amendment.
Thus, unlike Medicaid State plan services, the waiver provides an assurance of
service only within the limits on the size of the program established by the State
and approved by the Secretary. The State does not have an obligation under
Medicaid law to serve more people in the HCBS waiver than the number
requested by the State and approved by the Secretary. If other laws (e.g.,ADA)
require the State to serve more people,the State may do so using non-Medicaid
funds or may request an increase in the number of people permitted under the
HCBS waiver. Whether the State chooses to avail itself of possible Federal
funding is a matter of the State ’s discretion.Failure to seek or secure Federal
Medicaid funding does not generally relieve the State of an obligation that
might be derived from other legislative sources, such as the ADA.”
OLMSTEAD LETTER #4
“A State is obliged to provide all people enrolled in the
waiver with the opportunity for access to all needed services
covered by the waiver and the Medicaid State plan. Thus, the
State cannot develop separate and distinct service packages
for waiver population subgroups within a single waiver. The
opportunity for access pertains to all services available under
the waiver that an enrollee is determined to need on the basis
of an assessment and a written plan of care/support. This
does not mean that all waiver participants are entitled to
receive all services that theoretically could be available under
the waiver. The State may impose reasonable and
appropriate limits on utilization.”
OLMSTEAD LETTER #4
“Once in the waiver, an enrolled individual enjoys
protection against arbitrary acts or inappropriate
restrictions, and the State assumes an obligation to
assure the individual’s health and welfare.”
page 6, paragraph 3
OLMSTEAD LETTER #4
“We appreciate that a State’s ability to provide timely
access to particular services within the waiver may be
constrained by supply of providers, or similar factors.
Therefore, the promptness with which a State must
provide a needed and covered waiver service must be
governed by a test of reasonableness. The urgency of
an individual’s need, the health and welfare concerns
of the individual, the nature of the services required,
the potential need to increase the supply of providers,
the availability of similar or alternative services and
similar variables merit consideration in such a test of
reasonableness.”
page 6, paragraph 4
OLMSTEAD LETTER #4
“The fact that states have the authority to limit the
total number of people who may enroll in a waiver
provides states with reasonable methods to control
the overall spending. This means that states should be
able to manage their waiver budgets without
undermining the waiver purpose or quality by
exceptional restrictions applied to services that will be
available within the waiver.”
page7, paragraph 5
MEDICAID WAIVERS

Person/Family Driven Supports Waiver (PFDS)
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Non entitlement re having all needs met
IER
$21,125 maximum funding
Implemented as pilot in July 2002 then state wide in Jan 2003
Home and Community Based Services Waiver (HCBS)

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Entitled to have all needs met
IER
No cap on maximum funding
Includes residential services
PFDS PILOT COUNTIES
July 1, 2002
 Dauphin
 Delaware
 Westmoreland
 Berks
Other counties my choose to begin implementation July 1, 2002
TIME LINE
 PFDS
Pilot
 PFDS Statewide
 ITQ
 HCBS
 MAMIS
July 2002
Jan 2003
Jan 2003
July 2003
Nov 2003?
PFDS WAIVER SERVICES
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Day service (licensed 2380 and unlicensed)
Pre - Employment and Supportive Employment
Community Habilitation
Physical Therapy
Occupational Therapy
Visiting Nurses
Behavior Therapy
Visual Mobility Therapy
Transportation
Speech and Language Therapy
Respite
Personal Support for Community Integration
Vendor
SERVICE DESCRIPTIONS
“Services Descriptions” define the services that
are available under the PFDS Waiver. People
enrolled in the Waiver can only receive services
described and approved in the Waiver. Similarly,
providers can only bill for service activities
described in the service descriptions of the
Waiver. The provider will be responsible to
assure that all services billed meet the
specifications of the service descriptions.
SYSTEM ELEMENTS
Choice & Self Determination
 Entitlement & equity driven
 Geographic choice
 Individual Service Plan (ISP)
 Individual Estimated Resources (IER) Target Budget
 Individualized funding
 Invitation to Qualify (ITQ)
 Prospective Fee based
 State wide waivers with consistent benefits
 Comprehensive web based data system

WAIVER FUNDING
Waiver
1000 enrollees $20,000,000
ISP 1001
$100,000
Emergency
Services & Waiting
List Funding
100/year
$2,000,000
County
Contingency
Fund
$400,000
To meet increased needs
of people enrolled in the waiver
Provider
Provider
Provider
COUNTY CONTINGENCY FUND
HCBS Waiver
1000 enrollees $20,000,000
ISP 1001
$100,000
County
Contingency
Fund
$400,000
To meet increased needs
of people enrolled in the waiver
Emergency
Services & Waiting
List Funding
100/year
$2,000,000
1
2
3
1000
= $20,000,000
1
2
3
1001
= $20,100,000
1
2
3a
1000
= $20,000,000
1
2
3
1100
= $22,000,000
1
2
3
999
= $20,000,000
1
2
3
1000
= County Allocation
ISP + ISP + ISP …. ISP
ISP + ISP + ISP …. ISP
ISP + ISP + ISP ….ISP
ISP + ISP + ISP …..ISP
ISP + ISP + ISP …. ISP
ISP + ISP + ISP …. ISP
COUNTY CONTINGENCY FUND
HCBS Waiver
1000 enrollees $20,000,000
County
Contingency
Fund
$400,000
To meet increased needs
of people enrolled in the waiver
1
2
3
1000
= $20,000,000
1
2
3
1000
= $20,800,000
Year 1 - ISP + ISP + ISP …. ISP
Year 2 - ISP + ISP + ISP …. ISP
ISP/PAYMENT PROCESS 2003
ITQ
Invitation to
Qualify
Rate
Negotiation &
Contract
County
Approves Rate
MAMIS Fee
Schedule
Need
Assessment
IER Target
Budget
Individual
Service Plan
Selection of
Provider
Invoice
MAMIS
Service
Encounter
Service
Contract
County pays
Invoice
OMR
Allocation
MAMIS
Claims Payment
Payment
Authorization
to County
HCSIS DATA SYSTEM
Home & Community Services Information System
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State wide
Web based
Invitation to Qualify
Incident Management
Needs assessment data
Individual’s Estimated Resources (IER)
Individual Service Plan (ISP)
Individualized budget
Claims payment (MAMIS)
Provider performance data
Longitudinal
Statistical analysis of needs assessment & cost
SYSTEM STRUCTURE
OMR/County
MCO
ISO
Consumer
Family
Provider
Consumer
Family
Consumer
Family
Provider
Consumer
Family
Provider
Provider
Provider
Provider
FEE OPTIONS
 County
set fee
 Provider County negotiated fee
 Vendor fees
PFDS RATE SETTING
The provider will propose a rate for each service in each
county they designate in their ITQ declaration. Each
rate proposal will be negotiated by each county and the
provider. When the county and provider reach
agreement, the county will issue a contract on the rate
and when the contract is signed the rate will be entered
into the HCSIS county fee schedule. The provider may
propose different rates for the same service provided in
different locations. The 4300 fiscal regulations will not
apply to PFDS Waiver services, however the provider
will disclosure profits by contracted rate in their audit.
PFDS RATE SETTING COMPONENTS
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Rates will be prospective.
There will be no cost settlement.
The 4300 regulations will not apply to PFDS services.
Rates will be effective on the date they are approved by the
county and are entered into the HCSIS Fee Schedule.
Rates may not be applied retroactively.
With the agreement of the county and the provider, rates may be
changed mid year.
OMR may publish guidelines on rate setting and appropriate cost
components of proposed rates.
Providers may be required to report profit levels in their audit.
Such information may by used in subsequent rate setting.
There may be multiple rates for different provider sites.
RATE SETTING COMPONENTS
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Cost per hour of work
Hours available that are
scheduled
Travel time per visit
Phone time per visit
Case coordination per visit
Cost of marketing
Cost of capital
Service Descriptions
HIPAA compliance costs
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Cost of compliance
No shows
Administration
Training
Rejected invoices
Profit/retention
Cost of infrastructure
Direct travel cost per visit
Incident management
Unit rounding
A rate setting model is available at:
http://www.keystonehumanservices.org/links.html#rate
THE IMPORTANCE OF A CAPITAL BASE
 Working
capital
 A more dynamic commercial market
 Choice
 Compliance risk
 Increased loss exposure
 Infrastructure investment
 Business development
DOWNSIDE LOSS EXPOSURE
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Choice
Unfunded ISP Components
High transaction costs
Infrastructure costs
Utilization loss
Marketing costs
Compliance & audit risk
Rates
No retroactive contract adjustments
Claims payment loss
Cost of capital
Start up & business development
CLAIMS PAYMENT
MAMIS, the state Medicaid Claims Payment
system will be utilized. Providers will submit
invoices for each encounter (hour, 1/4 hour
or day of service). MAMIS will validate the
invoice against: the ISP, the IER, the
individualized budget (frequency) and the
county fee schedule. If all screens pass,
MAMIS will authorize the county to make
payment.
Note: The MAMIS system will not be available until 2003.
CLAIMS PAYMENT
Prior to MAMIS being available for
claims payment processing, providers
will submit invoices to the county.
SERVICE AUTHORIZATIONS
When the ISP is completed and is
within the IER, the county will
authorize the services. The provider
may continue to provide the services
and bill for services as long as the
county service authorization is in effect.
MAMIS - CLAIMS PAYMENT
MAMIS, the state Medicaid Claims Payment
system will be utilized in 2003. Providers will
submit invoices for each encounter (hour, 1/4
hour or day of service). MAMIS will validate
the invoice against: the ISP, the IER, the
individualized budget (frequency) and the
county fee schedule. If all screens pass,
MAMIS will authorize the county to make
payment.
Note: The MAMIS system will not be available until 2003.
COMPLIANCE
In a Medicaid fee for service environment, a
provider has a very significant responsibility to
assure that invoices submitted are valid and
that all services billed were fully delivered.
Incorrect invoices, regardless of intent, may be
defined as Medicaid fraud with very serious
penalties including criminal liability for both
individuals and corporations. Providers may
want to give very serious consideration to
establishing a Corporate Compliance Program.
COMPLIANCE
In a Medicaid fee for service, anyone, who has
knowledge of incorrect bills has an obligation to
disclose that information to the office of Medical
Assistance. Consistent with direction from the Office of
Medical Assistance the provider may be required to do
a self audit (outside independent auditors) to review all
bills for the defined period. The provider may be
required to make restitution plus penalties for all
incorrect payments. The Office of Medical Assistance
provides for an informant to be eligible for a cash
reward of up to 25% of the recovered funds.
HIPAA COMPLIANCE
Under the Health Insurance Portability
and Accountability Act - provider
agencies are responsible for full
compliance with HIPAA regulations
relevant to the confidentiality and safe
keeping of health care information
under Transformation and HICSIS.
“The doctor’s lawyer will see you now.”
New Yorker Book of Doctor Cartoons
Rigorous compliance environments,
within systems that require increasing
precision, risk compliance and
infrastructure costs that will not be cost
effective and may have an adverse effect
on viability.
INDIVIDUALIZED SERVICE PLAN
The team, comprised of the individual, family,
friends and other persons who care about the
individual, will develop an ISP (Individual
Service Plan). The ISP is designed to meet the
person’s needs, service and support
preferences. The ISP will be developed within
the context of an individual Estimated
Resource budget (IER). The IER is a threshold
number that sets an estimate of resources
available to the individual.
PERSONAL SUPPORTS BROKER
One of the exciting services
available is a Personal
Supports Coordinator. This
option would permit an
individual or their family
to select a consultant or
advocate to support and/or participate in the ISP
and provider selection process. This person could
assist in planning, advocacy, identifying natural
supports, preferences, service model options, costs,
innovative alternatives, evaluating and selecting
providers. The cost of this service can be funded
through the person's ISP.
INVITATION TO QUALIFY
In order to maximize choice and competition, an ITQ
(Invitation To Qualify) process will be used where all
provider agencies that meet state qualifications will
be entitled to be on the County’s approved provider
list. After completing the ISP, an individual or family
may then select any provider or combination of
providers on the list to carry out the ISP. Providers
will then be reimbursed at their approved rate for the
contracted service. Families will have the option of
using existing providers, starting a new provider
agency, or use of informal supports including
friends, family and neighbors.
“I’m sorry. The doctor no longer makes phone calls.”
New Yorker Book of Doctor Cartoons
INVITATION TO QUALIFY
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Single qualification at state level
Provider determines which county(s) they want to
provide services in
Provider determines which services they will provide
in each county
Provider submits rate proposal for each service in each
county
Provider county(s) negotiate a rate for each service
the rate is entered into county HCSIS rate schedule
ISP costs are developed against provider rate schedule
Provider agrees to provide service
GEOGRAPHIC CHOICE
The Waivers are state wide waivers and, as
such, a family or consumer has the right to
receive services to which they are entitled
anywhere in the state. If a family wants to
receive services in an adjoining county, they
may do so. The provider they select will have to
be placed on their home county ITQ list and the
provider will be paid by the family’s home
county at the rate approved in the county
where the services are delivered.
CHOICE
Choice is a foundation principle in Transformation.
It provides the person using services and their
family with greater control over resources and the
selection of the people and providers that will be
providing their supports. Choice operates within
the parameters of the ISP, the IER, ITQ, service
descriptions and providers’ willingness and ability
to provide services. The ISP is the central document
that ultimately defines decisions around Choice
and provides the formal authorization for services
to be funded by the county.
CHOICE ISSUES
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Who speaks for the person being served
CMS requirement that a person’s needs be met
Competency and informed consent
The individuals Needs Assessment
Individual Service Plan (ISP)
Individual Estimated Resources (IER)
# of Providers on Invitation to Qualify List (ITQ)
Provider and county capacity
Waiver Service Descriptions
Enrollment in PFDS or HCBS Waiver
Number of providers willing and able to provide services
County authorization for services
CHOICE & SYSTEM CAPACITY
An essential element of Choice
is that there are several, perhaps
three or more providers willing
and able to provide the services
described in the ISP.
INTERMEDIARY SERVICE
ORGANIZATION
Each county will have an Intermediary Service
Organization or ISO. The role of the ISO is to
serve as an agent that will pay bills for services
that are not offered by provider agencies
through the County ITQ process.
These include services that tend to be informal
and offered on an hourly basis. The ISO may
also serve as the employer for these persons and
can also arrange for the purchase of adaptive
equipment and accessibility modifications.
SERVICE COORDINATOR
The Service Coordinator will
have extensive influence on the
ISP process including the
integrity of the process and
family and consumer satisfaction
and confidence. They will carry
significant responsibility for
presenting options including
creative solutions specific to the
needs and preferences of the
consumer.
INDIVIDUAL ESTIMATED
RESOURCES
The IER will be a statistical calculation based
on a correlation between the 63 questions on
the needs assessment and historical costs of
care for the individuals assessed. Needs
assessment questions that have a statistically
significant correlation with cost will be used
to calculate individual IERs. IERs will be
based on state wide data adjusted for cost of
living differences.
The Individual Estimated Resources
The IER is an estimated funding amount
intended to meet each person’s needs.
 The funding amount is portable and moves
with the person.
 The IER is a threshold that will require review
and approval for funding at levels above the
IER.
 Is intended to provide equity and consistency.
 Is an important tool to better plan and budget
for future needs.

The Individual Estimated Resources
 People
currently receiving services will have
their funding level grandfathered so they will
not experience any reduction in service.
 The IER will be piloted in PFDS services.
 The IER must be adequate to meet peoples
needs who are enrolled in the HCBS Waiver.
 The IER must be adequate to assure choice.
INDIVIDUAL ESTIMATED
RESOURCES
Each question in the needs assessment
that is determined to be statistically
significant in relation to historical costs
will be assigned a specific dollar value
determined by the correlation. ie
Residential
Medication
Behavioral
yes
yes
yes
$30,000
$5,000
$10,000
INDIVIDUAL ESTIMATED
RESOURCES
IER = x1 + x2 + x3 + x4 + ……. X64
IER = $450 + $3,000 + $32,000 …..
IER = $75,210
STATISTICAL & VALIDITY ISSUES
Normal statistical variation
 Individual needs assessment’s validity
 Model effectiveness impact
 Direct care compensation impact
 Variation in costs driven by model
 ISP costs based on historical data
 Reliability, validity and complexity issues
around “total life” needs assessments
 Provision for synergistic cost efficiencies
 Correlation between need assessment & IER

Individualization
RATES
ISP
IER
CHOICE
“You'll be coughing up money for some time.”
New Yorker Book of Doctor Cartoons
RESOURCE
CONTROL POINTS
 Consumer
choice
 Needs Assessment
 IER
 ISP Process
 Service Coordinator
 Fee Schedule
 Legislative Allocation
 IER Formula
“You don’t know how lucky you are! A quarter of an inch either way,
and it would have been outside the area of reimbursable coverage!”
New Yorker Book of Doctor Cartoons
“Competitive industry
forces will ultimately be as
powerful as public policy
forces.”
OPPORTUNITY
 Choice
& Self Determination
 Individualized Budget
 Invitation to qualify
 More consistent policy
 Secure Medicaid funding
 Entitlement
 Potential for full funding
 Valid and reliable data
 More equitable allocation of resources
“The ringing in your ears - I think I can help.”
New Yorker Book of Doctor Cartoons
RESOURCES

Overview of the Transformation Process
http://www.keystonehumanservices.org/transformationoverview.html

Links on human services, transformation, family resources and
self determination.
http://www.keystonehumanservices.org/links

Dauphin County Self Determination Web Site
http://www.dauphinselfdetermination.org/

Pennsylvania Office of Mental Retardation Web Site
http://www.dpw.state.pa.us/omr/dpwmr.asp

Rate setting model
http://www.keystonehumanservices.org/links#rate

This presentation
http://www.keystonehumanservices.org/links#dctrans
P/FDS Waiver Services-Definitions Required for Rate Setting
Summary: Bucket Approach with Modifiers
ITQ Service
Category
Service
Description
Staff
Unit Require
ment
1.1.0 Day Services (2380)
1.1.1
Day Services (2380)-Health Supports
1.1.2
Day Services (2380)-Behavioral Supports Level 1
1.1.3
Day Services (2380)-Behavioral Supports Level 2
1.2.0
Day Services (Unlicensed)
1.2.1
Day Services (Unlicensed)-Health Supports
1.2.2
Day Services (Unlicensed)-Behavioral Supports Level 1
1.2.1
Day Services (Unlicensed)-Behavioral Supports Level 2
1.3.0
Pre-Employment Services (2390)
1.3.1
Pre-Employment Services (Licensed)-Health Supports
1.3.2
Pre-Employment Services (Licensed)-Behavioral Supports Level 1
1.3.3
Pre-Employment Services (Licensed)-Behavioral Supports Level 2
Licensed in for 4 or
more.
Hour
2.Employment services
2.1.0 Supported Employment
Support to maintain
competitive
employment
3. Services to people
where they live (Home
and Lifestyle Services)
4. Specialized Supports
3.1.0 Community Habilitation
3.1.1 Community Habilitation-Health Supports
15
min.
4.1.0
4.2.0
4.3.0
4.4.0
4.5.0
4.6.0
5.1.0
5.1.1
5.1.2
15
min.
1. Services to people
outside of where they live
(Day Services
5. Respite Services
Service Name
Physical Therapy
Occupational Therapy
Speech and Language Therapy
Visiting Nurse
Visual/Mobility Therapy
Behavioral Therapy
Respite – In Home
Respite – Out-of-Home
Respite – Camp
Hour
Hour
15
min.
Hour
Licensure
requirements
(e.g. LPN)
ITQ Service
Category
6. Transportation
Services
7. Personal Supports
8. Vendor Services (NonITQ Services
Service Name
Service
Description Unit
6.1
Transportation
Trip Mileage
7.1
8.1
8.2
8.3
Personal Supports for Community Integration
Environmental Adaptations
Adaptive Appliances/Equipment
Homemaker/Chore
15 min.
Each
Each
Each
Staff Requirement