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January 14, 2014

Part C Fiscal Overview. January 14, 2014. Overview Objectives. Introductory opportunity Increase understanding of Part C as a coordinated system of services and financing Background on basis in Law and Regulation Gain national context for financing challenges and state variations

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January 14, 2014

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  1. Part C Fiscal Overview January 14, 2014

  2. Overview Objectives • Introductory opportunity • Increase understanding of Part C as a coordinated system of services and financing • Background on basis in Law and Regulation • Gain national context for financing challenges and state variations • View the array of funds states use and how funds are used • Expanding knowledge • Broad scan of financing dynamics with structural contexts • Specific information highlighting breadth and complexity with potential areas for further state analysis and exploration • Opportunity for state teams to learn and plan together for strategic structural Part C system financing enhancements January 2014 Part C Fiscal Overview

  3. Overview Outline • Philosophy and Intent of Part C • Statutory and Regulatory Language related to Finance • National and State Context, Trends, and Considerations • Current Part C Financing – Results from the 2012 ITCA Finance Survey • Opportunities for Strategic and Structural Part C System Financing Improvements January 2014 Part C Fiscal Overview

  4. Philosophy of Part C January 2014 Part C Fiscal Overview

  5. Philosophy and Intent of Law • Part C would not be restricted to education/ special education services • Recognizes that all very young children develop and learn in family and community activities. • Established the requirement for family centered services using the typical routines, activities and settings in which families and young children live, learn, work and play January 2014 Part C Fiscal Overview

  6. Philosophy and Intent of Law • First federal legislation to mandate interagency coordination • Part C designed as “glue money” to bring things together for families and eligible children • No erosion of existing mandates establish other funds as “payor of first resort,” (non-supplantation) January 2014 Part C Fiscal Overview

  7. Philosophy and Intent of Law: Programmatic and financial management implications • Part C requires a coordinated system of intervention for families • Services and funding involve multiple federal, state and local entities and crosses traditional agency, department, and professional boundaries • Financing Part C is complex, varies state by state, and must take into account state and local • demographics, • structures and processes, • resources and supports, and • the current political and economic context and trends January 2014 Part C Fiscal Overview

  8. Statutory Language Related to Finance January 2014 Part C Fiscal Overview

  9. Statutory Language Related to Finance • Sec. 631 Findings and Policy • Sec. 635 Requirements for a Statewide System • Sec. 637 State Application and Assurance • Sec. 638 Use of Funds • Sec. 640 Payor of Last Resort January 2014 Part C Fiscal Overview

  10. Statutory Language Related to FinanceSec. 640: Payor of Last Resort • (a) NONSUBSTITUTION- Funds provided under section 643 may not be used to satisfy a financial commitment for services that would have been paid for from another public or private source, including any medical program administered by the Secretary of Defense, but for the enactment of this part, except that whenever considered necessary to prevent a delay in the receipt of appropriate early intervention services by an infant, toddler, or family in a timely fashion, funds provided under section 643 may be used to pay the provider of services pending reimbursement from the agency that has ultimate responsibility for the payment. January 2014 Part C Fiscal Overview

  11. Statutory Language Related to FinanceSec. 640: Payor of Last Resort • (c) REDUCTION OF OTHER BENEFITS- Nothing in this part shall be construed to permit the State to reduce medical or other assistance available or to alter eligibility under title V of the Social Security Act (relating to maternal and child health) or title XIX of the Social Security Act (relating to Medicaid for infants or toddlers with disabilities) within the State. January 2014 Part C Fiscal Overview

  12. Part C Finance Regulations January 2014 Part C Fiscal Overview

  13. Part C Finance RegulationsSubparts A and B • §303.1 Purpose of the early intervention program for infants and toddlers with disabilities. • §303.120 Lead agency role in supervision, monitoring, funding, interagency coordination, and other responsibilities. January 2014 Part C Fiscal Overview

  14. Part C Finance RegulationsSubpart C • §303.203 Statewide system and description of services. • §303.207 Availability of resources. • §303.225 Prohibition against supplanting; indirect costs. January 2014 Part C Fiscal Overview

  15. Part C Finance RegulationsSubpart C • §303.225 Prohibition against supplanting; indirect costs. (a) Each application must provide satisfactory assurance that the Federal funds made available under section 643 of the Act to the State: (1) Will not be commingled with State funds; and (2) Will be used so as to supplement the level of State and local funds expended for infants and toddlers with disabilities and their families and in no case to supplant those State and local funds. January 2014 Part C Fiscal Overview

  16. Part C Finance RegulationsSubpart C • §303.225 Prohibition against supplanting; indirect costs. • To meet the requirement in paragraph (a) of this section, the total amount of State and local funds budgeted for expenditures in the current fiscal year for early intervention services for children eligible under this part and their families must be at least equal to the total amount of State and local funds actually expendedfor early intervention services for these children and their families in the most recent preceding fiscal year for which the information is available. • Allowance may be made for— (1) A decrease in the number of infants and toddlers who are eligible to receive early intervention services under this part; and (2) Unusually large amounts of funds expended for such long-term purposes as the acquisition of equipment and the construction of facilities. January 2014 Part C Fiscal Overview

  17. Part C Finance RegulationsSubparts D and E • §303.344 Content of an IFSP. (d) Early intervention services. (1) The IFSP must include a statement of the specific early intervention services … including - (iv) The payment arrangements, if any. • §303.420 Parental consent and ability to decline services. • The lead agency must ensure parental consent is obtained before— (4) Public benefits or insurance or private insurance is used if such consent is required under §303.520; (5) Disclosure of personally identifiable information consistent with §303.414 January 2014 Part C Fiscal Overview

  18. Part C Finance RegulationsSubpart F • §303.500 Use of funds, payor of last resort, and system of payments. • §303.510 Payor of last resort. • §303.520 Policies related to use of public benefits or insurance or private insurance to pay for Part C services. • §303.521 System of payments and fees. January 2014 Part C Fiscal Overview

  19. National and State Context, Trends, and Considerations January 2014 Part C Fiscal Overview

  20. National and State Context: Challenges(reported from ITCA 2012 State Challenges and Responses) • Increased costs of the Part C system  • Program growth rate (screening and referral initiatives)   • Increased costs of children with complex needs • State budget availability • In the 2012 survey fourteen states indicated they faced a deficit in the current fiscal year – several others indicated it was too early to tell January 2014 Part C Fiscal Overview

  21. Context: Responses to Challenges(from ITCA 2012 State Challenges and Responses) Increase use of family resources • increased family fees and • required families to use their private insurance or be placed on a fee schedule Indirectly impacting service delivery • reduced provider reimbursement -- some providers decline to continue because of fiscal constraints • Positions left vacant Changes in service delivery • required prior approval for hours of service that exceed an identified  amount • narrowed eligibility January 2014 Part C Fiscal Overview

  22. National Context: Part C System Funding2004 and 2012 compared January 2014 Part C Fiscal Overview

  23. National and State ContextState structural differences State Lead Agency • Health, 26 states • Education, 13 states • Other (e.g. Rehab, Children’s) 17 states Common State Part C structures and payment implications • Individual providers often includes fee for service • Comprehensive (program) providers often includes cost reimbursement or up front payments • Regional Local/District Administration mixed payment systems January 2014 Part C Fiscal Overview

  24. LeadAgency Infrastructure Total Cost  TotalCost System Point(s) of Entry Eligibility Determination/ Initial IFSP/IEP Service Coordination Service or Treatment January 2014 Part C Fiscal Overview

  25. Context: State Structural Differences:Considerations in Resource Expansion Location of capacity and infrastructure to access, distribute, manage, and monitor the methods of finance • Which organization, at what level, accesses resources? • Where is eligibility for resources determined? • How are the resource funds accessed? • How is the funding distributed to providers? • Who reports expenditures and uses? • How are financial incentives and management controls impacting decisions at the provider levels? January 2014 Part C Fiscal Overview

  26. Context: State Population Differences:Considerations in Resource Expansion • State Part C Eligibility Criteria: • Broad criteria for developmental delay, 19 states • Moderate criteria for developmental delay, 19 states • Narrow criteria for developmental delay, 18 states • Demographic Differences: • Eligibility and access to public and private insurance • Geographic location of child population • Growth trends in child population • Incidence and prevalence of factors associated with developmental disabilities and delays January 2014 Part C Fiscal Overview

  27. Context: State Structural Differences: Considerations of Capacity • State systems require infrastructure to support the documentation and ongoing monitoring of the fiscal system • Mechanisms to establish and adjust rates or allocations • Mechanism for payment • Contracts • Vouchers • Central Finance • Data System • Evaluation Methodologies January 2014 Part C Fiscal Overview

  28. Context: State DifferencesConsiderations of Capacity Maintaining dynamic finance systems require ongoing monitoring and adjustments based on the environment • Changing demographics • Changing funding levels and financing methodologies in interdependent systems • Changing political and economic context • Changing partnerships and new interagency agreements • New funding sources • Revised policies • Better support and guidance • More state funding January 2014 Part C Fiscal Overview

  29. Structure for Developing and Sustaining a Part C Finance System Demographic information about the population of Part C eligible children in the state: What proportions of children are likely to be eligible for which sources of funds? Where are they in the state? Necessary agreements, negotiations, applications for use of funds: MOUs? Waivers? • Ongoing monitoring: • Changing demographics? • Changing political and economic context? • Need new interagency agreements? • New funding sources? • Revised policies? • Better support and guidance? • More state funding? • Narrower Part C eligibility criteria? Design a finance and data system based on the demographics, political and economic context of the state Information about possible fiscal resources: Requirements? What can each pay for? Who is eligible? Infrastructure to support the documentation of use of funds and/or billing Establishing a Vision Existing and potential political and economic context in the state: Traditional, current uses of funds? Existing resources? Competing priorities? Anticipated political changes? • Development of policies and procedures for accessing resources and supports and/or billing • Development of guidance and provision of ongoing support for localities and service providers in implementing policies and procedures January 2014 Part C Fiscal Overview

  30. Context: Evolving opportunities Data systems – increased state and national data • States have data and able to analyze current funding • Able to project demographic, service needs, and financial requirements Changes in systems funding Part C • Medicaid structure changes • Managed Care and Accountable Care • Increased focus on care coordination, cost containment, improve outcomes • Opportunities for access to insurance • Increasing numbers of children with insurance coverage • Increased coverage for habilitation • Increased coverage for services to children with Autism • Shifts in use of other funds (e.g. TANF) Opportunities for coordination and funding integration. Increases in funding for early education and prevention services to infants and toddlers January 2014 Part C Fiscal Overview

  31. State Financing of Part C SystemsResults 2012 ITCA Finance Survey January 2014 Part C Fiscal Overview

  32. ITCA Finance Survey Background: • Annual Performance Report (2004, 2005) • Surveys 2010 and 2012 • Survey Monkey format • Survey Distributed to all 56 states and jurisdictions January 2014 Part C Fiscal Overview

  33. ITCA Finance SurveyData source and Limitations • Forty‐nine states participated in the 2012 survey • Data not validated • Missing Data – Influenced by system structure • Inability to access data outside of lead agency; • Don’t ask provider organizations for fiscal data January 2014 Part C Fiscal Overview

  34. ITCA Finance Survey State Identification of Funds January 2014 Part C Fiscal Overview

  35. ITCA Finance Survey Key Findings: System Funding • 62% of survey respondents unable to provide total revenue for each fund source • Influence of state structure • Cost of resources to collect, report, and track • Over $3.5 billion in identified revenue • 2004: $1.5B • 2005: $2.3B • 2010: $3.0B • Total Federal Share was 38% as compared to 53% in 2004 January 2014 Part C Fiscal Overview

  36. ITCA Finance Survey Key Findings: System Funding Based on data provided: • 27% of revenue provide by State line item • 24% of revenue provided by Medicaid • 19% of revenue provided by State general funds • 12% of revenue provided by Federal Part C • 7% of revenue provided by local government funding January 2014 Part C Fiscal Overview

  37. ITCA Finance Survey Key Findings: Sources of Revenue Identified by StatesTotal: ~ $3.5 bn January 2014 Part C Fiscal Overview

  38. ITCA Finance Survey Key Findings: System FundingStates by Federal Part C grant % of Total Budget January 2014 Part C Fiscal Overview

  39. ITCA Finance Survey Part C System FundingFund Sources Used by Multiple States January 2014 Part C Fiscal Overview

  40. ITCA Finance Survey - System Funding% of States using Funds Compared to % of National System Funded by Source January 2014 Part C Fiscal Overview

  41. ITCA Finance Survey - System Funding% of National System Funding Compared to Highest % of a State’s System January 2014 Part C Fiscal Overview

  42. ITCA Finance Survey Part C Infrastructure FundingNumber of Funds Used by States January 2014 Part C Fiscal Overview

  43. ITCA Finance Survey Part C Direct Services Funding Number of Funds Used by States January 2014 Part C Fiscal Overview

  44. ITCA Finance Survey - System FundingNumber of States Using Funds by Lead Agency January 2014 Part C Fiscal Overview

  45. ITCA Finance Survey - System FundingStates with Family Cost Participation January 2014 Part C Fiscal Overview

  46. ITCA Finance Survey - System FundingStates by Insurance % (Public and Private) of Total Budget January 2014 Part C Fiscal Overview

  47. Opportunities for Financing Part C Early Intervention Systems January 2014 Part C Fiscal Overview

  48. Opportunities for Financing Part C Early Intervention Systems • States’ access to data is increasing knowledge of: • populations served, • services provided, and • funding resources accessed and used • National comparisons of funding and structural information facilitate state assessments of potential funding sources. • Changes in public and private insurance coverage and systems may offer opportunities for new Part C system roles and relationships. • Strategic funding initiatives include assessments of Federal and State laws and regulations, state structures, capacities, and trends. January 2014 Part C Fiscal Overview

  49. Opportunities for Financing Part C Early Intervention Systems • Engage and develop interagency relationships and teams (ICC and others) • Identify and analyze state information and resources • Participate in future webinars in this series • Share available resources on the web • Access technical assistance January 2014 Part C Fiscal Overview

  50. Thank you for your attention! This is the first of four webinars in a series on Part C Finance presented in 2014. Resources related to this call and other calls in the series are available at the following URL: http://ectacenter.org/~calls/2014/financepartc/financepartc.asp

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