FINANCIAL ANALYSIS FOR CBO & ASO SUSTAINABILITY LEVERAGING OPPORTUNITIES IN MEDICAID REFORM National Alliance of State & Territorial AIDS Directors Technical Assistance Conference July 31, 2015
Medicaid > 50% of HIV/AIDS Spending Source: Kaiser Family Foundation. Medicaid and HIV: A National Analysis. October 2011.
Medicaid Supports Community-Based HIV/AIDS Service Providers Licensed medical and behavioral health services Some states have secured Medicaid reimbursement for services that were previously grant funded (AIDS Adult Day Health Care, Care Management, Peer Support, etc.) Significant requirements: staffing, facility, QI/QA, finance, billing and IT. Breakeven is achieved with high volume of services due to fixed costs described above
Existing Strategies to Enhance Viability of Medicaid Funded CBOs & ASOs Federally Qualified Health Center Program Independent Provider Association (IPA) Other Strategic Partnerships Merger/Asset Consolidation Vertical growth: integrated service delivery Horizontal growth: expanded service capacity
Medicaid Delivery System Reform: Building Upon HIV/AIDS Models Ensure access to primary, preventive care and population health Integrate and coordinate care onestop shop Focus on behavioral health Care management to reduce preventable admissions Consumer engagement and empowerment
Medicaid Delivery System Reform Medicaid is transitioning from Fee-for-service to Value-based payment methodology Rewards for achieving better care, better health and lower cost (Triple Aim) Instead of being paid by the number of visits and tests (fee-for-service), payments are based on the value of care Expected to drive improvements to the delivery of care by mandating better care at a lower cost
Medicaid Delivery System Reform: Pay for Value vs. Volume
Social Determinants of Health Drive Value 8
Addressing the Social Determinants of Health Increases Providers Margins Social Determinant of Health Lack of Social Support Services Lack of Connection to Primary Care Substance Use Issues Financial Distress Mental Health Issues Unstable Housing Cost Driver 10% higher costs 12% higher costs 89% higher costs 25% higher costs 38% higher costs 16% higher costs Data from Montefiore Medical Center presentation at Crain s Business Value Based Payments Conference, May 2015
Expansion of Home & Community-based Services Source: Kaiser Family Foundation. Medicaid and HIV: A National Analysis. October 2011. Note: Figures updated annually and may not correspond with previous reports. Data Sources: KCMU and UCSF analysis of CMS Form 372 data and program surveys.
Home & Community Based Services Supported by Medicaid Through Waivers Psychosocial Rehabilitation Community Psychiatric Support and Treatment (CPST) Crisis Intervention Peer Supports Habilitation Residential Supports/ Supported Housing Respite Non-medical transportation Family Support and Training Employment Supports Education Support Services Information and Assistance in Support of Participation Direction Financial Management Services
Calculating Value of Community-Based Care Management Benefit Costs Value
Determining Benefit In New York State, there are 22,252 highcost/high-need individuals with co-occurring HIV/AIDS and behavioral health conditions Historical Medicaid funding for individuals with behavioral health conditions is $1,540 PMPM Propose to provide care management services for 1,000 individuals with co-morbid HIV/AIDS and behavioral health conditions Propose to reduce health care spending by 15%
Determining Benefit (cont.) Total savings of $231 PMPM (annual savings of $2,772) Inpatient care and pharmacy are highest costs in HIV/AIDS care Avoiding one inpatient stay saves approximately $8,000 Projected savings in inpatient care are partially offset by increases in community-based medical and behavioral health services
Determining Cost of Care: Number and Type of Services Provided Service Low Need (10%) Medium Need (60%) High Need (30%) Utilization Total Utilization Total Utilization # Mins Hours # Mins Hours # Mins Total Hours Total Hours Intakes 1 30 50 1 45 450 1 60 300 800 Assessments 1 30 50 1 45 450 1 60 300 800 Reassessments 1 30 50 1 45 450 1 60 300 800 Care Plans 2 45 150 2 60 1,200 4 75 1,500 2,850 Home Visits 1 180 300 1 180 1,800 3 180 2,700 4,800 Face to Face 2 60 200 4 60 2,400 9 60 2,700 5,300 Phone Calls 6 8 80 12 8 960 20 8 800 1,840 Engagements 1 150 250 1 150 1,500 1 150 750 2,500 Crisis Srvs. 0.25 240 100 0.5 240 1,200 1.5 240 1,800 3,100 Total Hours 1,230 10,410 11,150 22,790
Determining Cost of Care: Personnel Determine who will be included in staffing the program: Administrative: Ensure capacity for oversight, planning & advocacy Providers: Projected direct service total hours/1,232 hours (80 percent of total 1,540 hours for direct services) Quality Management: Ensure sufficient capacity and staff qualifications to track, analyze and report outcome data Position Salary FTE Expense Director $75,000 1.00 $75,000 Care Managers $40,000 18.50 $739,935 Outreach Worker $30,000 3.50 $105,043 Billing Manager $50,000 1.00 $50,000 Quality Management $60,000 1.00 $60,000 Total Salary 23.00 $1,029,978 Total Fringe (30%) $308,993
Determining Cost of Care: OTPS Project all anticipated other than personnel services (OTPS) expenses Review comparable programs financial statements Include expenses that may not currently be budgeted, such as electronic health records, RHIO fees, Health Home upstream administrative fees When possible, project expenses using allocations: Unit of service Cost per visit Cost per facility square foot Cost per provider
Determining Cost of Care OTPS Expenses (cont.) Expense Professional Fees $30,000 Program Supplies $100,000 Facility (Rent, Utilities, Insurance) $86,249 Staff Training $27,600 EMR/EHR Fees $18,400 Health Home Fees $65,000 RHIO Fees $25,000 Printing, Publications, and Postage $2,500 Dues & Subscriptions $3,500 Equipment Rental $5,000 Subtotal $363,249
Determining Cost of Services Overhead/Administrative Expenses Costs of shared resources/programs Emanate from support provided by: Finance Human Resources Contracts and Compliance Information and Technology Centralized Evaluation Property and Construction All Administrative Departments
Determining Realistic Overhead Expense From the Bridgespan Group s 2008 Nonprofit Overhead Costs study.
Total Cost of Care Management Services Income Statement Revenue (Proposed Value Based Payment) $2,152,485 Expenses Personnel Services $1,029,978 Fringe Benefits $308,993 Other than Personnel Services (OTPS) $363,249 Indirect (20%) $340,444 Total Expenses $2,042,664 Surplus/(Deficit) $109,821
Care Management Services Value Proposition BENEFIT: 15% reduction in costs for 1,000 highneed PWHA $2,772,000 COST: Personnel, OTPS & Indirect Expenses $2,152,485 VALUE: Improved patient experience, population health & reduced cost $619,515
Research Potential Partners and Present Value Proposition State Medicaid Programs Managed Care Organizations Accountable Care Organizations Performing Provider Systems (DSRIP entities) Federally Qualified Health Centers Partnering Healthcare Organizations
Negotiate and Develop Contracts Payments are directly tied to achieving outcomes/benefits Inability to achieve outcomes will result in lower payments and an unsustainable financial position Be conservative about the benefits that can be achieved and the degree of financial risk that your organization/partnership can assume.
Resources Available to Assist Providers: Example: NYCT Learning Lab Innovative capacity building model funded by New York Community Trust (NYCT) in consultation with Jill Markowitz and Holly Hartstone. Purpose of the Learning Lab: Support knowledge acquisition and skills development among the leadership of the selected organizations to guide the identification and implementation of strategies to respond to the evolving healthcare environment to meet the needs of their residents and community-based clients. Overall Approach: Conduct organizational self-assessments to help participating organizations identify their service delivery strengths, understand costs of services, define current and potential target populations, and develop strategies or options to participate in the evolving healthcare environment.
Rob Bannon, Principal rbannon@bannon-consulting.com Kristin Wunder, Senior Project Associate kwunder@bannon-consulting.com 446 West 33 rd Street, 6 th floor, New York, NY 10001 www.bannon-consulting.com