2007 BEST PRACTICE COST ALLOCATION PLANS & GUIDANCE FOR DEVELOPING FY 2008 PLANS

1. 2007 BEST PRACTICE COST ALLOCATION PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS July 23, 2007 Constitution Hall

2. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Welcome and Introductions • Purpose of the Session • Plan for the Day

3. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Findings and Observations about FY 2007 Cost Allocation Plans • Items expected and commonly found missing in original cost allocation plans • Certification • Description of method used to assign costs to funding sources • Schedule of costs assigned to funding sources • Summary of allocations of costs • Schedule of 460 costs • Service description • Expense items included in the allocated cost center

4. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Findings and Observations about FY 2007 Cost Allocation Plans • Helpful items found in some of the 460 cost allocation plans and requested from all plans with June 15, 2007 addendum • General narrative describing the entity • County Relationship • County charges (direct or indirect) • Description of accounting system • Method of Staff costing • CA relationship

5. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Findings and Observations about FY 2007 Cost Allocation Plans • Other helpful items found in some of the 460 cost allocation plans • Table of contents • Single document instead of Multiple files • Excel schedules with narrative explanations • Organizational charts that include prime subcontractors • CA Narratives with supporting schedules with financial data

6. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Findings and Observations about FY 2007 Cost Allocation Plans • Items included in plans but not needed • Employee job descriptions • Employee staffing Charts • Cost centers listing all accounts including unused accounts

7. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Findings and Observations about FY 2007 Cost Allocation Plans • Other issues found in the reviews • Narratives indicating predetermined cost allocations between funding sources • Inconsistent treatment of Information System costs • Plans that appeared to follow managed care administration functions not the Section 460 cost allocation requirements and definitions for administration • Reference to contracted cost allocation plan prepared by outside company but no detail as to compliance with the 460 cost allocation standards.

8. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Best Practices: Three Cost Allocation Plans • All 46 plans were some what unique which was expected • Difference approaches for addressing the needs • Table of contents vs read me first files • Schedule based verses narrative based • During the development of the plans several CMHSPs requested model plans to review • 460 cost plans are so specialized that no models existed. • MDCH found Uniformity would be helpful to evaluate plans • MDCH decided to select five plans to hold out as best practice models

9. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Best Practices: Three Cost Allocation Plans • The following criteria were used to select the models • Plans that included most of the items expected by MDCH based on the November 6, 2006 training • Plans that included the helpful items that were included in the addendum request but not in the original training • The plans included other helpful items and designs that made them user friendly

10. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Best Practices: Three Cost Allocation Plans • Specific examples of criteria include • A general description of the organization • Reconcilement of the 460 cost report with the FSR • Clear identification of affiliation members and their costing methods • Sections on direct service cost, administrative costs and allocable overhead costs. • Clear flow of information through the plan • Packaged as a single document

11. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Best Practices: Three Cost Allocation Plans • Specific examples of criteria include • Comprehensive organizational charts • Schedules and narratives that clearly showed • Expenses in a cost center • Method used to assign or allocate the cost center • Cost centers that received the cost assignment or allocation • Descriptions of the relationship with the County and/or CA • Descriptions of the accounting system and/or method of staff costing

12. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Best Practices: Three Cost Allocation Plans • Copies of 5 plans will be posted on the MDCH web site for your review • Those five proposed best practice models are the plans submitted by • Summit Point • CEI • CMHCM • Network 180 • North Country/Northern Affiliation

13. 2007 BEST PRACTICE PLANS & GUIDANCE FOR DEVELOPINGFY 2008 PLANS • Best Practices: Three Cost Allocation Plans • An overview of the plan development and underlying theory will be presented today for three of the plans • Network 180 • CMHCM • North Country/Northern Affiliation • The order was chosen to show the examples of • CMHSP/PIHP that contracts out for services • CMHSP/PIHP with a mix of contract and direct run services • CMHSP/PIHP affiliation with Hub and spoke model

14. SECTION 460 COST ALLOCATION PLANSNetwork180 CMH for Central Michigan  North Country CMH

15. Network180 Who we are: including general ledger cost centers Review each GL cost center and allocations for Section 460 reporting Spread Sheet 1- Division of costs between Administrative and Direct Service Spread Sheet 2 – Admin and Direct Service totals by funding sources What I would/will do differently

19. Network180General Ledger Cost Centers 01 – Administration 35 – Claims 02 – Human Resources 40 - Grants 03 – Information Systems 50 – SUD (Sub Abuse) 15 – Training 53 – MI (Mental Illness 20 – Access Center Support 56 – Children/Families 23 – Access Center Services 59 - DD 29 – Med Clinic 62 – Children’s Waiver

23. Network180 Who we are: including general ledger cost centers Review each GL cost center and allocations for Section 460 reporting Spread Sheet 1- Division of costs between Administrative and Direct Service Spread Sheet 2 – Admin and Direct Service totals by funding sources What I would/will do differently

24. CMHCM COST ALLOCATIONPLAN

25. Objectives 1. Keep it Simple 2. All in One Excel File 3. Meet the A-87 and DCH Requirements 4. Create a tool to produce the 460 Reports

26. Table of Contents

27. Certificate

28. Descriptions (very short) Agency 115 words County Relationship 63 words Accounting System 152 words Services 114 words

29. Org Chart

30. Expenses by Line Item

31. Expenses by Program Type

32. Expenses by County

33. Overhead Cost Centers

34. DISTRIBUTIONS

35. Vehicle Cost Center

36. Vehicle Distribution

37. First Line Supervisors

38. Contracted Services

39. Prime Sub-Contractor

40. Allocation Summary

41. Allocation by Funding Source

42. PIHP 460 Report

43. CMHSP 460 Report

44. NEXT . . .

45. North Country Community Mental Health Section 460 Cost Allocation Plan

46. North Country Community Mental HealthSection 460 Cost Allocation Plan

47. North Country CMH-Overview

48. North Country CMH-Affiliation Overview

49. Organizational Chart

50. Program Descriptions and Allocation Costing Methods