December 2, 2013
Cara Camacho
Attention: Pay for Success Incentive Fund RFI
U.S. Department of the Treasury
1500 Pennsylvania Avenue N.W., Room 1325
Washington, DC 20220
Re: Comments
PFS Incentive Fund RFI
Docket ID TREAS-DO-2013-0006
Submitted through: Federal eRulemaking Portal: www.regulations.gov
Dear Ms. Camacho:
Following are comments from the American Public Human Services Association in
response to the October 2, 2013, Request for Information, “Strategies to Accelerate the
Testing and Adoption of Pay for Success (PFS) Financing Models.” We appreciate the
opportunity this RFI offers to provide information on effective approaches and
promising programmatic areas for improving human services outcomes through
financing mechanisms that pay for results. In our comments, we will also identify
opportunities for flexibility within existing authorities to support PFS and similar
outcomes-based efforts.
APHSA is a nonprofit, bipartisan organization that has represented state and local
human service professionals for more than 80 years. Our member agencies are
responsible for implementing federally funded, state-administered programs including
food assistance, housing, employment training, child protection, child support, and
care for the elderly and disabled.
APHSA is now actively implementing Pathways, our members’ policy and practice
agenda for transforming the present health and human service system. Pathways calls
for an integrated, holistic, and accountable system that results in more efficient and
effective delivery of services that are person- and family-centered and focused on
outcomes. Pathways also cites the critical need for more flexibility and more
innovation in policy and funding; for specific alternative funding models including PFS;
and for a strengthened federal-state partnership that includes all relevant stakeholders
in mapping out policy and funding alternatives to the present human services
construct.
We support engaging a Federal Interagency Council on PFS to advise Treasury on
specific programmatic and policy matters related to the use of the fund but
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recommend that this engagement be expanded to include state and local government
representatives and related stakeholders (such as national associations representative
of the government sector) as relevant. In consulting these government representatives,
we urge you to consider the many advantages of a focused and structured effort to
identify alignment and flexibility, modeled along the lines of, for example, the work
group on cost allocation that the Office of Management and Budget facilitated in 20112012.
Turning to the specifics of this RFI, we outline below our comments under each key
question area posed in the RFI.
Broad scope for the fund
We strongly support a broad scope that allows for a variety of fresh ideas and flexible
approaches to existing program funding. The current inability to move funding among
human service programs or to address needs and purposes outside of statutory and
regulatory limits has long been a challenge to states as they seek to innovate or to
more appropriately serve individual and community variations. The flexibility and
incentives to innovate that a broad scope promotes will be especially useful
considering the likely continuing decline in federal funding and the additional
pressure on states and counties to accelerate their efforts to streamline and integrate
services.
Best-suited agencies and program areas. Most federal PFS initiatives to date have
originated within the Department of Justice and are designed to support programs that
lower recidivism—a straightforward outcome. We believe that with careful planning
and sufficient time, baseline measures can be also established for other, more complex
human service programs and outcomes where the causal relationship between multiple
inputs (and their interactions) and outcomes is more difficult to discern. Creative
efforts along these lines are already underway in a number of human service agencies
in the areas of child welfare, youth behavioral health programs, school readiness,
controlling costs in high-quality preschool programming, and health outcomes of
mothers and newborns in Medicaid; we will be pleased to provide additional details.
Threshold of evidence and other factors to consider. The interest in programs based
solely on evidence-based practices is important to pursue, although there is still much
yet to learn about what contributes to success. In the meantime we must not stifle
promising innovations that are still at the “evidence-informed” stage or even those that
have not yet been fully validated by conventional research but still have promising
results. At the same time, resources for additional study and research are needed to
understand fully the causes of results and to help replicate and scale up initiatives that
are having positive effects.
As a framework for selecting innovative programs for PFS funding, APHSA proposes
programs that:
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are enhancements of existing successful innovations or couple existing
innovations with new features as long as the cost benefit analysis is clear and
convincing;
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PFS Incentive Fund RFI
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are proposed by a group of stakeholders representing the various levels of
government, associations, customers, and the private sector;
reflect strong community partnerships that are focused on rebalancing and
shifting investments from institutions to the community;
have suitable IT systems and other necessary infrastructure in place;
possess the capacity to collect data that are relevant to measuring meaningful
outcomes; and
have an agency governance and leadership structure that promotes strong
cross-sector engagement (for example, statutes in several states that provide a
blended pool of funding while the state retains cost allocation responsibilities).
Maximizing the leverage of federal funds
Other groups and constructs. Demonstration project candidates for PFS should be
governed through existing state or local health and human service agencies where they
are currently housed; through newly formed consortia of multiple counties or states;
through partnerships at the local level based on mutual agreement between governing
bodies and performance contracts with service providers; or similar governance
structures suited to the initiative in question. State and local agencies are ready to
initiate and design their own projects; they should do so within clear guidelines (such
as those described above) that, if satisfied, would result in federal approval.
Possible uses of PFS must allow for a range of constructs and organizations that can
successfully demonstrate the capacity to successfully link and leverage programs,
engage levels of government, and use multiple funding sources. One possibility would
be establishing governor-appointed local or state-level boards with the necessary
authority to keep the focus on outcomes and to overcome traditional silo and turf
issues. Other models could include the “children’s cabinets” now in place in many
states but with their status raised from advisory to actual administrative authority.
Low-cost, rigorous measures. To contain costs, governmental agencies should look to
leverage the abundant data currently available about public services and expenditures.
Flexibility is needed to allow state governments to use federal technology
appropriations to fund upgrades to systems across departments and build enterprise
systems for effective and relevant data sharing (including standardized data sharing as
proposed in several examples of recent and pending legislation). This would help
address the concerns that human service agencies express about how data collected by
government is frequently siloed and cannot be shared across departments, even when
its relevance to holistic service and comprehensive case management – and its
significant usefulness in establishing a comprehensive measure of return on
investment – is unquestioned. Lowering these barriers can allow reliable program
metrics to be established that could measure the results across multiple agencies and
sectors, allowing the services delivered in one program to be linked to the outcomes in
others.
For example, training is selected as a strategy to lower unemployment; the output
could be the number of people trained; and the outcomes would be the result of the
training, such as the number of people who find and can sustain employment. The
measure of the success would be evident in reduced need for Temporary Assistance
for Needy Families (TANF) and other government services such as Medicaid.
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Limitations to the use of administrative data. Administrative data when used alone
can skew priorities and inhibit the ability to determine progress toward the outcomes
that provide long-term improvements in the lives of the people served. Most current
measures that come under the broad label of program integrity can be categorized as
administrative. These measures are immediate indicators of such metrics as accuracy
of payments, technically correct determinations of eligibility, and compliance with
cost-allocation rules within a given program. They remain important and should be a
standard element of any large public program, but illuminate only one element of the
full picture of human service results and impacts.
Splitting funds between two forms of assistance
The criteria for allocating funds between outcome payments and financing support
(e.g., credit enhancement, loans or advances) as defined by the RFI should remain open
and flexible until sufficient data is available to understand and compare their
advantages. Making the decision prematurely could stifle valuable innovation and
potentially set the course for restrictive and fragmented funding.
Payments and implementation structures
“Progress payments” based on achievement. APHSA supports “progress payments”
based upon clear evidence that interim benchmarks—including those having to do with
social return on investments—have been reached ahead of schedule.
Bonus payments for extraordinary performance. Recognition for extraordinary
performance in the form of bonus payments will sustain high performance and
stimulate further innovation and higher productivity.
Trade–offs of adapting different structures versus a standardized approach. APHSA
believes flexibility to adapt structures or apply a standardized approach is critical in
these early experimental stages of PFS as a funding mechanism. It is too early in the
process to identify many clear trade-offs. As more PFS initiatives are implemented and
evaluated, the best balance between variable structures and standardized outcomes
should become more apparent.
Financing support in PFS structure
All the various forms of PFS financing support—credit enhancements, loans, or
advances—may be appropriate depending on the program, needs, and governance of
the jurisdiction. We believe it would be a mistake to preclude any of these forms of
financing support in this formative stage.
Examples of promising PFS projects
We support the broad scope of the fund and offer here several proposed ideas as
examples of initiatives that could be strengthened through PFS support; we would be
pleased to examine these and other possibilities with you in detail.
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Domestic human sex trafficking of minors. The U.S. Department of Justice estimates
that of the roughly 450,000 children who run away from home each year, at least onethird of teens end up homeless and lured toward prostitution within 48 hours of
leaving home. This year, bipartisan measures to address the issue have been
introduced in both the House (H.R. 1732) and Senate (S. 1518).
Dealing with sex trafficking of minors is a multi-dimensional challenge that covers a
number of public agencies (human services, behavioral health, justice, housing, and
education) and requires multiple interventions. As a result, finding ways to mount a
coordinated policy and funding approach to this problem is difficult. A single source
of funding for a sex trafficking initiative would be ideal to bridge the many sectors and
interests who must be aligned to make inroads against this problem.
The numbers of teens in question in each agency’s current population could provide
the baseline metrics. However, there are many variables when measuring outcomes in
human service populations, and both human and fiscal returns on investment would
have to be incorporated. For this population, early indicators of success might be
reducing the number of runaways; improving health and self-care; and maintaining the
child in mental health services and in an educational program. More concrete results
might come in a decrease in the number of youth who are incarcerated or require
hospitalization within a five-year period or who are maintained in a safe environment
rather than returning to the streets as minors or young adults.
Initiative to incentivize healthier food choices and to support locally grown fresh
fruits and vegetables. Several groups are interested in this initiative, as are a number
of state and local human service agencies. Similar to the “double-up bucks” program
that exists in a few areas in connection with the Supplemental Nutrition Assistance
Program, this program would incorporate incentives for choosing fresh fruits and
vegetables with federal nutrition benefits. It would be combined with similar incentives
for local growers to supply these fresh items to retail outlets, especially those in urban
or rural “food deserts.” Again, the variety of stakeholders involved – private
agricultural and retail interests plus government agencies in the areas of human
services, health, and agriculture – makes an alternative financing source ideal for such
an initiative. Examples of outcome measures could include the volume of such foods
purchased and surveys of participants to determine foods consumed and associated
increases in positive health indicators.
Most helpful process to states, local government and tribes
State and local human service agencies are ready to embrace PFS but there is not an
easy and clear path to implementation. A better understanding of what PFS is, how to
seek intermediaries and funders, and how to implement is needed. The hands-on
technical assistance that is offered through the Harvard SIB Lab to assist states to
develop PFS contracts is a good example of a helpful process.
Another key requirement for successful transformation of human services is to review
restrictive federal requirements attached to funding streams and enable state and local
agencies to flexibly apply existing policies and use available funding to demonstrate
new alternatives for achieve meaningful and lasting outcomes.
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Fund functions to accelerate adoption of the PFS model
To accelerate testing and adopting the PFS model, the Fund could minimize risk by
allowing for progressive payments, bonus payments, and reinvestment of any savings
to sustain successful programs. The Fund could also enhance existing programs that
are demonstrating they are productive and achieving meaningful outcomes. Allowing
states to retain a percentage of savings to test new promising practices would provide
an additional strong incentive for moving forward.
In addition, the federal government may use the Fund to ensure investors are following
the example of some states who have taken legislative action that backs PFS with the
full faith and credit of the state. On June 29, 2012, the Massachusetts State Senate
enacted legislation that established the Social Innovation Financing Trust Fund with
$50 million to back bonds. In 2011, the Minnesota legislature enacted the Pay for
Performance Act, which guarantees payment to service providers: (1) when they
achieve outcomes that lower costs or increase revenues to the state at a rate that
exceeds the debt service needed to repay the bonds, and (2) when programs achieve
ongoing savings or increased revenues.
Other considerations for fund development and enhanced PFS implementation
PFS is only one alternative mechanism. One of the key requirements for successful
transformation of human services is the ability of state and local agencies to
demonstrate that they can use policy and funding flexibly to impact meaningful and
long-term outcomes. Under the present federal policy framework, the ability to
implement and scale up such innovations is limited in scope, duration, and available
funds; the overall impact of the few available pilots and demonstrations remains
marginal. The principles of the President’s February 2011 memorandum on state and
local government flexibility are directly applicable to cross agency programming,
accountability and blending funding mechanisms.
We look forward to working further with you to develop a more balanced and flexible
approach to the important system testing and implementation tasks raised here.
Thank you for the opportunity to comment. If you have any questions, please contact
Larry Goolsby, Director of Strategic Initiatives, [email protected], (202) 682-0100 ext.
239.
Sincerely,
Tracy L. Wareing
Executive Director
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