Some “Nuts and Bolts” of Financing for Systems of Care

Technical AssistancePartnership for Child and

Family Mental Health

August 10, 2011

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Presenter:

Frank Rider- Technical Assistance Coordinator, Technical AssistancePartnership for Child and Family Mental Health

Some “Nuts and Bolts” of Financing for Systems of Care

Do You Have the Tools You Need?

Context/Overview

The Economics of Systems of Care:

∞ Macro-Economics∞ Micro-Economics∞ The Pursuit of A

Unified Theory?

Polling Question #1

At what stage of financial development is your SOC initiative?

∆ Graduated site – federal funding already ended∆ Graduating in just 50 days/funded October 2005∆ In 5th Year of 6/funded October 2006∆ In 3rd Year of 6/funded October 2008∆ In 2nd Year of 6/funded October 2009∆ In 1st Year of 6/funded October 2010∆ Forging ahead without any federal grant funding.

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Strategic Financing Approach: A Few Key Questions

1. Clarify “Financing for What?”

2. Estimate Your Fiscal Needs

3. Map Current Relevant Funding

4. Assess Gaps

5. Identify Financing Strategies and Funding Sources

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1. Clarify “Financing for What?”

Scope of Supports and Services

Scale of Supports and Services

Other Relevant Factors and

Cost Assumptions

Strategies and activities that we want to develop

and sustain

Over what time period will we

develop, implement and sustain them?

At what scale and pace will we build and sustain them?

Year 1 Year 2 Year 3

Financing for What? Worksheet

Questions?

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2. Estimating Fiscal Needs

Develop Information to Support:

$ Program costs¢ Start-up costs¢ Operating costs

$ Infrastructure costs

$ Ramp-up Strategy/Going to Scale

$ Assumptions

2010-11 2011-12 2012-13 2013-14

Strategies/Activities

Training and Consultation

Staff

Supplies

Travel

Subtotal

Evaluation/Data Collection

Staff

Travel

Subtotal

Management & Administration

Staff

Total

Sample Cost Estimates Worksheet

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3. Map Current Spending

Know What You Have to Work with Today: What are your current sources of funding~ Cash~ In-Kind

Are they restricted? Over what timeframe are they available? How stable and reliable is each source?

Kaiser Commission on Medicaid and the Uninsured (April 2011), MENTAL HEALTH

FINANCING IN THE UNITED STATES: A PRIMER

Strategies/ Activities

Available Resources

Source of Funds and In-Kind

Contributions

Amount Restriction on Uses of Funds,

if any

Expected Timeframe Funding is Available

Training and Consultation

Evaluation/Data Collection

Management & Administration

Resource Mapping Worksheet

Show Me the Money!$ Cooperative agreement funds$ Other grants$ Federal, state and local service

programs$ Partnering agencies: private

providers, community organizations , universities (e.g. in-kind services)

$ Private insurance claiming $ Redeployed funds into lower cost

services$ And leverage natural and other

informal supports!

4. Assessing the Spending Gap

What is the gap between our current spending and our projected fiscal needs?

$ by strategy/activity$ by fiscal year

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Strategies/ Activities

2011-12 2012-13 2013-14

Total Costs

Available Resources

Gap Total Costs

Available Resources

Gap Total Costs

Available Resources

Gap

Staff Positions

Training and Consultation

Evaluation/ Data Collection

Management & Administration

Funding Gap Analysis Worksheet

Questions?

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Micro-Economics of Systems of Care (CMHI Cooperative Agreements)

¢ “Venture Capital”¢ Annual Budgeting and

Accountability:$ Required Reports$ Continuing Application

¢ Carryforward and No-Cost Extensions

¢ Matching Funds¢ The Rules

What Are the Rules?Cooperative Agreement Requirements:• Semi-annual progress reports • Annual reapplication (continuing application)• Annual Financial Status Reports (SF-425) • Matching Funds requirements

Secure approval by CMHS for:• Change in scope of cooperative agreement• Change in contractor or subcontractors• Major budget modifications • Carryover funds/no-cost extension

Cooperative Agreement Funds: Information References

• SAMHSA Request for Applications (RFA)• US DHHS Grants Policy Statement (2007)• CMHS/Bazelon Center (2008):

Building Sustainable Systems Change: A Guide to Non-Federal Match Funding

Shifting Gears Now…

Macro-Economics of Systems of Care

Cost of Providing BH Treatment and Support:$ MH Service Delivery $ Maintaining “Ready” Capacity$ Lost Opportunity Costs

Cost of Not Providing Effective Treatment and Support :$ Costs of Providing Ineffective MH Services$ Immediate Related Costs $ Long-term/Societal Costs$ Intergenerational Costs

Review Strategic Financing Steps

Clarify what you need and when Review current funding mix Analyze promising options to pursue as

additional funding sources Determine most appropriate funding

sources to support your goals.

Four Potential Financing Strategies

1. Redeploy Existing Resources

2. Refinance to Maximizing Public Funds

3. Raise New Revenues

4. Create New (Boundary-Crossing)

Funding Structures

Pires, S.A. (Second edition, 2010),

Building Systems of Care: A Primer

1. Redeploy Existing Resources

…from service areas

that are producing

high costs and/or

poor outcomes

(e.g. out of home

placements), to

invest in promising

new approaches.

Example: Maine – July 2011 QI Data Snapshot: “The (Wraparound) results showed a 28% reduction in overall average per child MH expenditures in 12-month period and significant reductions in crisis intervention, residential treatment and in-patient hospital services.”

2. Refinance to Maximize Public Funds (e.g. Medicaid)

Multi-systemic therapyWraparound processFacilitationTeam Member Participation Intensive in-home servicesFamily psycho-educational

services Integrated MH-SA treatmentAssertive Community

Treatment (ACT) teams

Therapeutic foster care Respite care Family Peer Support Youth Peer Support Illness/Disability Self-

Management Telemedicine-Delivered BH

Services Traditional Healing

Modalities

Polling Question #2

Of the 15 services listed on the previous slide, how many are covered services in your state’s Medicaid program?___ None

___ Some, but fewer than 5

___ About half of them/6 to 10

___ All 15, or nearly all

___ I don’t know enough about the services in

my state’s Medicaid program to answer this

3. Raise New Revenues

• Fees, third party billing (e.g. ACA affordable benefits exchanges)

• Grants• United Way• Sponsorships• Trust funds

• Special taxes:– California -

Proposition 63– Missouri, Illinois -

County Tax Levies • Fundraising

4. Create New Funding Structures

• Blended Funding Pools (e.g. flex funds)

• Case Rates (examples: Wraparound Milwaukee, Impact SOC, MI)

• Braided Funding (example: Arizona ‘s Therapeutic Foster Care)

Look to the Future

Use the opportunity of federal cooperative agreement funding to lay a strong foundation for the future:

– Develop, test, demonstrate better approaches– Leverage cross-system investments, and secure

commitments now for later years’ funding– Build strategies to modify what permanent funding

streams will pay for later.– Provide services now to avoid costly high-end

placements, and secure commitments for reinvestment of saved funds to increase capacity for cost-effective supports and services that work!

And Remember…

Not ALL Worthwhile Sustainability Depends of Financing!

Questions?

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Polling Question #3Financing is a difficult area to master. Which of the following dimensions do you feel the strongest need to learn more about? ___ Medicaid

___ Non-Federal Matching Funds

___ Flexible Funds (“Flex Funds”)

___ Private Health Insurance

___ Primary Funding Streams of Non-Mental

Health Child Service Systems (Child Welfare,

Education, Juvenile Justice, etc.)

Presenter Contact Information

Frank Riderfrider@ffcmh.org

919-896-8309