Chairperson Neuzil called the Johnson County Board of Supervisors to order in the Johnson County Administration Building at 10:54 a.m. Members present were: Pat Harney, Mike Lehman, Terrence Neuzil, Sally Stutsman, and Carol Thompson.

Mental Health/Developmental Disabilities Director Elaine Sweet explained that the purpose of this work session is to update the Board on where MH/DD is at in the process to negotiate 28 contracts. She said that Johnson County is the most complex MH/DD delivery service in Iowa, some of which is derived from the Iowa Association of Counties’ County Rate Information System (CRIS) process, which is used now by approximately 50 counties. She said that MH/DD works with the CRIS program and local agencies during this process. She explained that there has been a great deal of improvement in the reliability of the CRIS data this year, since the first few years were primarily data collection. Sweet said that this past year they shifted from one year to 3-year contracts, with the ability to negotiate rates each year.

Sweet said that last year they began implementing a cost based reimbursement method by trying to identify the provider’s cost to provide each individual service, then adjusting for inflation and other factors as needed. She said that providers are required to submit their audited financial statements to CRIS who then reviews them, collects additional data, and then gives feedback on costs and rates to the counties Statewide. Sweet said that they have identified some agencies with costs less than their rates when this program began, so they froze those rates. She said that as MH/DD has been working with CRIS providers to address next year’s rates, they’ve identified a wide range of costs within the agencies. Sweet said that there were several providers with costs less than their rates, so she spoke with Assistant County Attorney Janet Lyness regarding rates, payments and the public purpose of what the County pays. She said that they came to the conclusion that an appropriate course of action is to work with those providers to make sure they are appropriately identifying the costs and work towards a proper rate.

Sweet asked Doug White to present their current working drafts of provider rates. White explained that the draft is organized by service type displaying the prior year’s audited CRIS report, the current year’s audited CRIS report, the provider’s projected 2005 cost, the current rate and the percent change between the projected cost and current rate. The information from the current CRIS report includes the percentage that each service is of the provider’s total business, how efficient each provider performs that service, and the cost per unit of service. He said that this information gives MH/DD the impact of a certain service on a business, how efficiently they handle that service, how costs change from year to year and how their current contracts relate to that information in order to determine where to go with next year’s rate. White said that there is a wide variation in percentage, which are only projections and can be driven by large increases in insurance premiums, wage changes, benefit costs, or changes in the number of units provided. Sweet stressed that this work sheet is only a draft to show the Board what MH/DD is currently seeing, not a proposal for next year’s rates. She explained that several providers have different year-ends, which leads to variability in their costs as well. MH/DD asked the providers to provide an amended cost report projection for the end of Fiscal Year 2005, which includes everything they think will impact the cost of doing business and everything they would like to have built into their rates. Sweet explained that the percentage of business information becomes important because adjusting rates can have a large impact on a provider depending on the percentage of a provider’s total business. She said that she is not sure the agencies understand how the units staffed should be reported, but she is comfortable with the financial reporting in the process. Sweet said that looking at the audited cost and provider’s projection allows them to see which agencies are projecting their costs will be lower or higher than their current rates.

Sweet said that every agency provides a different array of services and has various funding sources as well. She said that Johnson County’s MH/DD is very strong financially because of the team effort between the department and the provider agencies to identify other funding sources. Sweet said that waiver slots have increased, as have the services included in the program, but as more services shift towards waiver for reimbursement MH/DD must take into consideration what percentage of their business falls under the waiver program because it does not reimburse by cost. She said that if Johnson County’s providers remain competitive, other counties and State agencies will continue to use those services, which allows more revenues for providers and spreads the direct cost over more units of service that Johnson County does not fund. She said that MH/DD must be fair to the providers and at the same time serve the public purpose of the department.

Lehman asked if CRIS provides guidelines on how to make rate adjustments. Sweet replied that there is an additional step where she and White project a provider’s 2005 costs to compare with the provider’s estimate. She said that they have met with each provider in order to make sure the costs are accurate, but they still have to be sure each cost is reported where appropriate because a provider may be providing services that do not fall under the MH/DD umbrella. Sweet said that they then adjust the CRIS reports as needed and factor in the anticipated increased costs like new services. Lehman asked how CRIS has affected rate disputes between other counties and MH/DD. Sweet replied that legal settlements to not factor into the rate process, but will affect where other counties send patients. However, CRIS counties agree to accept each other’s negotiated rates and other counties have not questioned Johnson County’s rates as much as in the past. Neuzil said that Johnson County has a large impact on the area’s rates because of the agencies and patient volume in the County. Lehman said that there are 3 main factors including ensuring clients are serviced, efficient use of funds, and the providers are adequately compensated so they can continue to adequately provide services to consumers.

Neuzil asked what direction Sweet needs from the Board. Sweet replied that she would like to know what inflationary factor to apply and if that factor should be the same for salaries as for other expenses. Neuzil asked if she would like direction as to freezing or increasing rates depending on the differences between estimated cost and current rate. Sweet said that she would like to continue to work with providers and their projected cost reports to make sure they have accurate numbers in the areas costs are increasing and then calculate their rates based on a reasonable cost of doing business and inflationary factors. She said that they would then bring those numbers back to the Board for approval of increased rates. Sweet said that she wants to freeze the rates of those providers whose costs are below their current rate in order to have time to work with those providers to make sure they are accurate capturing the cost and to prepare for rate reductions if necessary. She said that she is not comfortable in recommending a large decrease in rates, especially when a large percentage of the service is in that area or they have a high volume of waiver services.

Stutsman asked if the benchmark for Cost of Living increases for providers should be what the Board provides for their employees. Harney said that their benefit costs may vary from the County’s costs. Sweet said that the County can provide the same percentage increase to providers for their salaries only and then look at the cost of living for other operating expenses as well. She said that they can also work with the provider to decrease their costs if large increases are identified in those areas. She said that they need to be consistent across the board on how they factor those items into rate increases. Stutsman said that she is very impressed with the information provided and the thought Sweet and White have put into the process. Sweet replied that this process is one of MH/DD’s most important functions because clients, agencies and the entire service delivery system depends on these rates.

Stutsman said that Johnson County is unique in their COLA increases and asked if they will price their agencies out of the market by passing these increases on to the agencies as well. Sweet pointed out that the agencies whose costs are below their current rates have high efficiency rates meaning those agencies are using their resources and their costs are decreasing. She said that MH/DD also asked providers to report their salary levels for beginning, 3 year, 5 year and the highest level. Sweet said that there is very little range between providers’ salaries. Thompson commented that the rates are evening out compared to last year. The Board decided to provide agencies with the same COLA as they provided County employees. Thompson asked what inflation factor they will use for the other costs. Sweet replied that she will revisit that number. Neuzil said that the Federal cost of living was around 1.45%. Sweet said to keep in mind that the numbers they are using have approximately a 2 year gap from when they were received a year ago and being implemented in 2005. Thompson said that the County’s increases do not include the health insurance costs, so the COLA would be substantially more in total. Sweet said that it is really hard to project the COLA for other factors without looking at the providers because there are several providers who want to increase their services and the change of legislation will also have an impact on several rates. Sweet said that recently individuals who live in residential care facilities will become eligible for home and community based services, which will change how costs are allocated.

Neuzil said that CRIS is asking when Johnson County will have rates established. Sweet said that the deadline was April 15, 2004, but they do not have the cost data until late March or April, which does not allow enough time to negotiate the contracts Johnson County has before the deadline. She said that if she met with each provider to negotiate from this point, it would still take one and a half weeks to finish. Sweet said that MH/DD also has an accreditation survey in June as well. Neuzil said that CRIS has the message that the process does not work that quickly with Johnson County.

Community Mental Health Center Director Steven Trefz said that he really appreciates what everyone is trying to accomplish, especially in regards to salaries. He said that although salaries between providers are similar, they are still far below the County’s salaries. He explained that the difficulty is not in hiring staff, but retaining staff once they have developed expertise. Stutsman said that the work Sweet and White have put into the process shows that the County is being fair to the taxpayers, the providers, and the clients.

Mike Townsend said that he appreciates that the MH/DD staff realizes the costs must be met because not all counties do. However, he would prefer a free market economy where prices are set by demand, especially since it is very rare for a customer to set the price instead of the seller. Sweet said that type of market would work if all the clients paid the cost and there were not individuals with needs who have to be met regardless of cost.

Sweet announced that the MH/DD Planning Council will be holding ethics training for the chairperson or entire board of directors of each provider to attend. She said that there will also be a team building exercise for staff member training on June 10, 2004 from 1:00 p.m. to 3:00 p.m., which MH/DD is inviting provider’s staff who works closely with case managers to attend as well. She said that MH/DD hopes to have more functions in the future as well to bring together case managers and provider’s staff. Neuzil commented that with this process, MH/DD and the providers seem to be working together very well as a team.

Adjourned at 11:45 a.m.

Attest: Tom Slockett, Auditor

By Kate Darnold, Recording Secretary