Milestones Payment System

1. Milestones Payment System

2. Topics • Motivation for change to the milestones payment system • Conceptual basis for the milestones payment system • Outcomes achieved by changing payment systems • Application of milestones payments to other settings

3. "There are two types of speakers: those that are nervous and those that are liars." Mark Twain

4. Motivations for Change • States want to improve outcomes for citizens while containing costs • Funding methods can distort services • What gets paid for gets done– pay for process/get process • How payment is made may work against the achievement of desired outcomes, creating unintended consequences & perverse incentives

5. Motivations for Change • Bad experiences prompt business change

6. 1986 • Space Shuttle Challenger exploded on launch, killing all seven astronauts aboard. • IBM unveiled the first laptop computer. • “Top Gun” was #1 film of the year. • Actor Arnold Schwarzenegger married television journalist Maria Shriver. • The Chernobyl nuclear disaster occurred. • The Oprah Winfrey show premiered. • A U.S. postal worker in Edmond gunned down 14 people, then himself…

7. Motivation for Change • In 1986 the Rehabilitation Services Administration issued an RFP for a second round of systems change projects to help states move people with significant disabilities from sheltered employment to competitive employment. • DRS was awarded $2.2 million grant in October 1986 for a 5 year systems change grant.

8. Motivation for Change • “A man who carries a cat by the tail learns something he can learn in no other way.” Mark Twain • 1987 Began to set up a statewide system of services using the systems change grant funds for providers. • First providers funded through competitive grants for cost reimbursement.

9. Motivation for Change • Grants/contracts are relatively easy to write; • Ideally, funded entities have tight fiscal controls and high integrity for achieving programmatic outcomes; • Require time-consuming monitoring from contractor staff; • Contracts may have measurements but generally lack built-in motivations for “good” behavior.

10. Motivation for Change • October 1987 DRS received $350,000 in formula grant funds in addition to the systems change grant. • Desired to change payment system without a history to set rates. • As did virtually every state, Oklahoma adopted Virginia Commonwealth University’s hourly rate system at $23 per hour.

11. VCU’s Model of Service Delivery Job Coach time “Fading” as individual learns the job Stabilization Intensive Training Job Coach Hours per day On-going support 4 10 17 Weeks on the job

12. Motivation for Change Counselor authorizes hours of service Provider delivers service pre-authorized by counselor Provider Counselor Submits documentation & invoice for hourly services to counselor Counselor reviews documentation; makes judgment about legitimacy; he pays OR doesn’t pay invoice; may ask for additional information.

13. Motivation for Change Counselor Provider Dispute settlements Grant Staff

14. Motivation for Change • The $65,000 lesson in the effects of perverse incentives

15. Motivation for Change • Paying an hourly rate for activities can be incredibly expensive; • Doesn’t naturally produce desired outcomes; • Requirements for justification of hours of service only add to the time, effort and cost burdens.