Agenda

1. Executive Order No. 536: Establishing the Chapter 257 of the Acts of 2008 Provider and Consumer Advisory Council Initial Meeting - May 17, 2012

2. Agenda Welcome and Introductions Chapter 257 Implementation Status Update Overview of Executive Order No. 536 Chapter 257 PCAC Governance Charter Chapter 257 PCAC Member Recommendations and Priority Setting Proposed Meeting Schedule

3. Chapter 257 of the Acts of 2008 Regulates Pricing for the POS System • Passed unanimously by the Legislature, Chapter 257 places authority for determination of Purchase of Service reimbursement rates with the Secretary Of Health and Human Services under MGL 118G. The Division of Health Care Finance and Policy provides staffing and support for the development of Chapter 257 pricing. • In order to establish rates of payment for social services pursuant to Chapter 257, the EOHHS Purchase of Service (POS) Policy Office conducted a comprehensive review of social service programs purchased by state agencies to classify groups of programs into “service classes.” • Service classes are comprised of programs that share common cost drivers, primary service populations, delivery locations, and intended outcomes. • This effort will standardize the definition of services and the establishment of rates across EOHHS agencies.

4. Chapter 257 of the Acts of 2008 Regulates Pricing for the POS System • Chapter 257 requires that the following criteria be considered when setting and reviewing human service reimbursement rates: • Reasonable costs incurred by efficiently and economically operated providers • Reasonable costs to providers of any existing or new governmental mandate • Changes in costs associated with the delivery of services (e.g. inflation) • Substantial geographical differences in the costs of service delivery • Many current rates within the POS system may not reflect consideration of these factors. • Chapter 9 of the Acts of 2011 establishes new deadlines for implementing POS rate regulation as well as requires that related procurements not go forward until after the rate setting process is completed.

5. The Cost Analysis and Rate Setting Effort has Several Objectives and Challenges Objectives and Benefits Development of uniform analysis for standard pricing of common services Rate setting under Chapter 257 will enable: Predictable, reimbursement models that reduce unexplainable variation in rates among comparable, economically operated providers Incorporation of inflation adjusted prospective pricing methodologies Standard and regulated approach to assessing the impact of new service requirements into reimbursement rates Transition from “cost reimbursement” to “unit rate” Coordination of procurement with rate development activities Challenges Continued ambitious implementation timeline Data availability and integrity (complete/correct) Unexplained historical variation in reimbursement rates resulting from long-term contracts and individual negotiations between purchasers and providers Constrained financial resources for implementation, especially where pricing analysis warrants overall increases in reimbursement rates Cross system collaboration and communication Coordination of procurement with rate development activities Pricing Analysis, Rate Development, Approval, and Hearing Process Data Sources Identified or Developed Provider Consultation (s) Cost Analysis & Rate Methods Development Provider Consultation (s) Review/ Approval: Departments, Secretariat, and Admin & Finance Public Comment and Hearing Possible Revision / Promulgation

6. Updated timeline reflects critical milestones in meeting statutory requirements. • Department Service Design Finalized: All service components, staffing ratios, staff qualifications, other program inputs have been decided by the purchasing department. • Provider Input Sessions: For each rate setting project, EOHHS conducts an average of 3 provider input sessions prior to Executive Sign-Off and the Public Hearing process to allow for greater depth in understanding core program components, cost drivers, and procurement considerations. • Executive Sign-Off: Commissioner and C257 Executive Committee sign-off on draft rates and implementation plan. • EO485 Submitted to ANF: Draft rate regulation to ANF; Will better align the rate regulation proposal with budget planning. • Procurement Issuance: Where a procurement is warranted, the procurement will be issued after the rates have been adopted. • Rates Effective: Where possible, reimbursement under regulated rates will align with beginning of SFY to minimize mid-year contract amendments for both purchasing Departments and providers.

7. For all services under rate regulation, EOHHS reviews existing pricing methodologies, gathers input from departments and providers, and conducts analyses of existing cost and utilization changes to existing rates or proposed new rates. The following factors are considered in all Chapter 257 rate-setting: EOHHS Approach to Rate Development under Chapter 257

8. Executive Order 536, signed by Governor Patrick on August 25, 2011, establishes a Provider and Consumer Advisory Council to gather input from providers and consumers of social services regarding strategies for addressing system-wide factors in the establishment of rates of payment for social service programs that have cross-cutting implications across purchasing departments.  Although EOHHS conducts an average of 2-3 provider sessions for each specific Chapter 257 pricing project prior to the public hearing process, the purpose of this Advisory Council is to facilitate the involvement of Massachusetts social service providers and consumers, in an advisory capacity, in the development of policies, plans, and initiatives to address issues that have system-level impact on the implementation of Chapter 257 across all agencies and programs subject to Chapter 257. The Advisory Council does not have a role in the operations, management, or development of rates of reimbursement under Chapter 257. The Advisory Council will meet as deemed necessary by the Governor-appointed chairperson to provide timely and comprehensive input into developments within the system. The Advisory Council shall include: The Secretary of Health and Human Services, the Secretary of Administration and Finance, and the Commissioner of the Division of Health Care Finance and Policy. 6 members selected from individuals nominated by the boards of the leading trade organizations. 2 members representing social service provider organizations who are not members of one or more of the leading trade organizations. 2 members representing consumers of social services. Executive Order No. 536Provider and Consumer Advisory Council

9. Chapter 257 Provider and Consumer Advisory Council (PCAC) Governance Charter Background and Authority The Chapter 257 PCAC is established by EXECUTIVE ORDER 536, ESTABLISHING THE CHAPTER 257 OF THE ACTS OF 2008 PROVIDER AND CONSUMER ADVISORY COUNCIL. Governor Patrick has designated the Secretary of Health and Human Services as Chairperson to convene and preside at Chapter 257 PCAC meetings. Mission and Role The role of the Chapter 257 of the Acts of 2008 Provider and Consumer Advisory Council (PCAC) is to facilitate the involvement of Massachusetts human service providers and consumers, in an advisory capacity, in the development of policies, plans and initiatives to address issues that have the system-level impact on the implementation of Chapter 257 across all agencies and programs subject to Chapter 257. Responsibility and Scope of Activities The role of the Chapter 257 PCAC is advisory in matters of policy development and priority setting. The Chapter 257 PCAC does not have a role in the operations, management, or development of rates of reimbursement under Chapter 257 of the Acts of 2008. Membership and Designation The Chapter 257 PCAC shall consist of the following members: Secretary of EOHHS; Secretary of the Executive Office of Administration and Finance; Commissioner of the Division of Health Care Finance and Policy (or the designees of such officers); and such additional employees of departments under EOHHS as the Secretary of EOHHS determines necessary for the Council to effectively carry out its functions; 6 members selected from individuals nominated by the boards of the leading trade organizations. 2 members representing social service provider organizations who are not members of one or more of the leading trade organizations. 2 members representing consumers of social services.

10. Chapter 257 Provider and Consumer Advisory Council (PCAC) Governance Charter Responsibility and Scope of Activities (continued) Functions The role of the Chapter 257 PCAC is: To gather input and guidance from providers and consumers of human services, and of other members of the local community, regarding strategies for addressing factors in the establishment of rates of payment for social service programs that have cross-cutting implications across purchasing departments; To advise the Secretary of EOHHS on how best to encourage and facilitate community, consumer and human service provider involvement in the development of rates of payment for social service programs; System-wide factors that have implications on the development of rates of payment for social service programs and on overall implementation of Chapter 257 include but are not limited to: Definitions and strategies for determining standards of “efficiency and economical operation” as stated in the Chapter 257 statute Investment requirements to meet quality and safety standards in conformity with federal and state law and regulations Data and processes to identify reasonable benchmarks and address any significant and logical variation in: Facility costs, wages, staffing intensity, transportation costs Data and processes to adjust for: Program utilization, staff productivity and training, necessary relief staff Larger policy trends in the purchase of human services as they relate to the establishment of reimbursement structure and rates, including: Implementation of consumer choice, payments for “bundled” services, and implementation of Money Follows the Person

11. Chapter 257 Provider and Consumer Advisory Council (PCAC) Governance Charter Project Identification, Selection, and Prioritization The Secretary of Health and Human Services holds final decision making authority regarding Chapter 257 PCAC priorities, activities, and selected projects. However, the Secretary of Health and Human Services will seek to build member consensus for decisions about the Chapter 257 PCAC’s focus of work and prioritization of projects. Estimated Number and Frequency of Meetings The Secretary of Health and Human Services, or designee, will chair meetings of the Chapter 257 PCAC. The Chapter 257 PCAC shall meet at least quarterly and shall establish ad hoc working groups consisting of individuals with specific technical expertise to address the details of factors outlined above. A member of the Chapter 257 PCAC may designate any person who is part of the member’s agency or Secretariat to perform functions of the Chapter 257 PCAC working groups on the member’s behalf. Working groups will be formed and prioritized by mutual decision among the Advisory Council and EOHHS, with consideration taken for the schedule of work and relevance of certain issues to certain rate development projects and to the staffing capacity of EOHHS. Meetings will occur at least until after rates have been set for all social service programs as defined in Section 1 of Chapter 257 of the Acts of 2008 under the purchase of service system, in accordance with the dates set forth in sections 16-18 Chapter 257 of the Acts of 2008 as amended by Chapter 9 of the Acts of 2011.