• Mental Health/Developmental Disabilities Director Elaine Sweet: Mental Health/Developmental Disabilities Services Provider Agency Contracts

• Discussion from the Public

Chairperson Harney called the Johnson County Board of Supervisors to order in the Johnson County Administration Building at 1:30 p.m. Members present were: Pat Harney, Mike Lehman, Terrence Neuzil, Sally Stutsman, and Carol Thompson.

Harney began the discussion of setting rates using the County Rate Information System (CRIS) for MH/DD provider agency contracts. He asked Mental Health/Developmental Disabilities Director Elaine Sweet to give the Board recommendations, followed by discussion of those recommendations. Stutsman mentioned that ISAC Representative Deb Westvold might be attending the meeting later. Sweet said that she isn’t prepared to give recommendations to the Board, but she is prepared to discuss, inform and seek direction from the Board. Sweet said Sue Novak from Linn County and Karen Jess with Eide Bailley were invited to attend, but were not available. She explained that Jess is a CPA assigned to the CRIS process. Thompson said that Jess does all the CRIS reports for the State and audits them. Sweet said she had asked Jess for her input on rate setting and her response was that the purpose of CRIS is not to establish rates based on cost. Jess called it a tool and added that they are moving in the direction of making it more accurate. Sweet said that at the beginning of CRIS, it was anticipated that year 3 the accuracy of the data would allow the department to move forward using it as a more effective tool. She said they are only a year and a half into the CRIS process and there’s been changes to the way things are reported, so the feeling is that they cannot take the cost indicated on the CRIS cost report and set rates based on it.

Thompson said that she didn’t mean to previously imply that the Board should use CRIS to set the rates, only that she feels strongly that when the County is using tax money to make a contract, the basis should be some estimation of the actual cost to provide the service. She said the other 2 factors are a negotiation of an appropriate rate and a cost of living that would be applied to all the contracts across the board. Thompson said the County joined CRIS because they thought it would help set the basis, but they could use other things, like audit spreadsheets. Stutsman said she thought Sweet was hired to take the CRIS rates, which are the tool, and then negotiate a rate. She asked Thompson what she was asking for that is different. Thompson said that in the past, rates were based off previous rates. Stutsman asked if that was true, which Sweet affirmed. Sweet said the Department agreed last spring to not give rate increases so they carried through the contracts based on rates that were in effect. She said when the decision was made to spend down the fund balance, there were several contracts in the stage of being renewed, so those contracts were put on hold and they are just now getting back to renewing those 5 or 6 contracts. She said she brought them to the Board the same way she did in the spring, only requesting the rates be renewed. Sweet said because of the State audit, timeliness was imperative in getting those contracts signed and they wanted to renew and have signed contracts as soon as possible. She said if the Board wanted her to take the remaining 1/3 of the contracts and take a different approach, she would have, but that was not the direction she received from the Board. She added that she hadn’t participated in any discussions with the State Auditor about rate setting. She said the Auditor’s spoke of having contracts in place and not reimbursing providers for things over and above the contract language, but not rate setting.

Stutsman asked the rest of the Board who attended the audit meetings, what they thought. Thompson called to Sweet’s attention the audit item about Chatham Oaks, where if the Department found out later that they didn’t base the contract on accurate costs, they can’t go back to make it up. Stutsman asked how that applies to today’s discussion. Assistant County Attorney Janet Lyness said her recollection is that the Department can’t retroactively change them. Thompson said that is why it is important to have an accurate contract to start. Lehman commented that they could amend the contracts. Lyness said if the Board found out in January that the rates set in July weren’t accurate, they can amend it for January through June. Stutsman said the Auditor didn’t say how the rates should be set. Lyness said it was really up to the County to negotiate with the provider and that the audit did not discuss it because the purpose was not to discuss setting future contract rates. Lehman said the Board should be in agreement that CRIS is just a reference point so providers can see how they compare to an average across the State. He said the Board wants to make sure they are getting what they’re paying for and the providers want to make sure they’re getting paid enough. Lehman said the Board needs to make sure the contracts include everything the Board wants and everything the providers are providing that they’re getting paid for.

Stutsman said the question today is how the Board is going to set the rates, either exactly to their cost as submitted by the CRIS report or allow the CPC to negotiate the rates. Thompson said when people call CRIS a tool, it’s because it’s where to start. She said the negotiation stage is really important because without it, the County wouldn’t get accurate rates. Stutsman said she hears Thompson saying she wants the rates the CRIS report says, end of discussion. Thompson said she wants to start with that, do the negotiation and then add on a COLA. Stutsman said that isn’t what Sweet has done in the past. Sweet said to her knowledge it has never been done in the past, although she can only speak to the time that she has been with Johnson County. Sweet said she found some correspondence from before she came which discussed a 5% across the board increase, which providers received in 1999. She isn’t sure if the contracts were amended, however. Sweet said during her employment with Johnson County, she’s only taken those rates that were in place and recommended either an across the board increase for all providers or specific rate increases for services that providers have been able to demonstrate have experienced a change. Sweet said at no point in time has she sat down and looked at cost and then tried to carry the cost over to the contracted rate. She said that would be an enormous project for the County due to the extensiveness of the provider network and number of services. She said if the County was going to fairly, equitably and consistently come up with those numbers, it would take far more resources than she has in MH/DD.

Stutsman told Thompson she understood what she was saying, but wondered what the best route actually is. Stutsman asked if the County would price themselves out of the market. Stutsman said when Systems Unlimited redid their cost, a lot of counties couldn’t afford it anymore so they quit buying the service. She asked if this could happen statewide since Johnson County is a host county. Sweet said she thought that could happen and she would be very conservative in moving to a system that would look at a cost based reimbursement without knowing the financial impact and studying it in detail. She said she isn’t saying they shouldn’t go that direction because in theory it’s wonderful, but getting from where the department is currently, to that method, isn’t something MH/DD can do in a short time period. Sweet said the County needs to give planful consideration and to know what the financial impact would be before moving to that. Sweet said she went to Chapter 25, which are the administrative rules for CPCs, that talks about financial accountability process and the process to ensure the ongoing financial accountability of the plan. Sweet said Chapter 25 states that financial accountability shall include the rate setting and reimbursement methods used to reimburse service and support providers, which may include vouchers and other non-traditional payment mechanisms. She said that currently MH/DD has a fairly constant system where the providers’ rates have been in place for several years or they’ve all received the same increase or changed their programming accordingly. In theory Sweet agrees wholeheartedly with Thompson because theoretically the Department needs to know what the cost of each service is and move to that. She said as Stutsman mentioned, that would affect other counties also. She said by participating in CRIS, counties agree that they’re going to accept the host county rates. Sweet said Johnson County has an array of services that many other counties use and whatever they do in Johnson County will impact other counties as well.

Thompson said if the County is setting rates too low so that rates are not based on the actual cost, then providers are not going to be able to do the service, or they’re going to have to subsidize it from another service, which doesn’t seem fair to the clients. She said if the County is setting the rate too high, then how does the Board explain that to their taxpayers, let alone another counties’ taxpayers. Stutsman asked if that was what the actual cost would determine. Thompson replied that they’re saying they’re not using actual costs. Sweet said if MH/DD uses actual costs, then some rates would go up considerably and others would go down considerably. She said looking at a few contracts, if MH/DD went to cost, then the Board would see a significant increase in a number of rates that would impact MH/DD with an increase in the expenditures. She said she couldn’t say that for sure without taking a considerable amount of time or having someone come in to look at each individual rate. Sweet said the information from the last fiscal year wasn’t even available to MH/DD until December. Sweet said looking at all that information and bring contracts to the Board within a few weeks, was not possible.

Lehman said legal settlement is the reason the contracts have to be on the numbers. He said if the County is too low, then the County or the providers will be subsidizing the cost of their service. He said if it’s too high, for another County to take it, even though it may be the figure in the cost that the providers have, it’s going to have to be their decision of what they’re going to do in the mean time. Thompson said if the Board reviewed the cost and found out some costs were way out of line, it might be good to adjust it over a period of time rather than have a huge jump. She said the County could say over a 3-year period that they’re going to increase or decrease at a certain percentage each time. Stutsman said she is confused with the audit, why Johnson County is being held to this standard, but it’s not done the same way across the rest of the State. Westvold said she couldn’t speak to the audit, but in terms of contracting, other counties have done contract amendments if their costs have gone up or there’s some reason for a rate adjustment mid-year.

Westvold said they are in the beginning phases of the County Rate Information System and feeling out how the host county relates, particularly for magnet counties that have many services that other counties are purchasing. Westvold said she thought there would be coordination and ISAC is having a training soon on how to use the information in the costs reports to set rates. Westvold said the information gives a basic understanding and then if a County wants to make changes or can anticipate cost of living adjustments, they can. She said the goal is to get to the point where counties can reimburse on actual cost, but they started so far away from that, that it could break a lot of counties if they were to change in one step. Westvold said there will be a meeting of CPCs who are participating in CRIS to talk about the negotiation process and how people should be working with host counties. She said hopefully down the line counties will be able to anticipate what the cost would be to the satisfaction of the provider and for the counties as well. Stutsman said a lot of questions have been raised that people never gave thought to. She asked how they could satisfy the audit while dealing with the realities of the system.

Thompson said she understands that CRIS is imperfect so far and it might require changes, but she looks at 3 factors: the actual cost, the negotiation, and the cost of living as variable. She said if the actual cost numbers aren’t very accurate then that would make the negotiation part more important because they would have to pin down the places where it’s not accurate and make adjustments. Westvold said in the first year CRIS was accurate in terms of what it cost providers, but how they identified the costs between programs or by line item might be off. She said it should correlate back to their audit in terms of costs. Thompson asked what would happen if not all the agencies divided their administration costs out by a percentage of units, or are they told they have to do it one way. Westvold said it is prescriptive in how it is filled out, but that is where they are refining it, because it was still open to interpretation. Westvold said the numbers are pretty accurate and added that the next set of costs reports should be even more accurate than the first year.

Westvold said the purpose of CRIS was not only to give Counties information to negotiate rates, but also then to be able to provide information statewide to make an analysis of the range of costs for different service types. She said it would also help determine factors that drive service to be more expensive in one area or another. She said they are not comfortable making those kinds of comparisons between agencies yet. Sweet said there have been a few minor changes, such as in SCL. Sweet said one of the things that comes up in her discussions with providers is that there’s such a swing in the staffing ratios. She said classifications jump from a one to one ratio, to a 2 to 5 ratio and then 6 to 10, so that the cost of providing services for the breakdown is 2 to 5 and 6 to 10. She said they break it down in such a wide range, the cost of providing a 1 to 2 ratio is a lot higher then the 1 to 5, but yet they all fall in the same classification. Sweet asked Westvold if CRIS has any mechanism in place that encourages providers to be cost effective and keep their costs at a minimum. Westvold replied that the CRIS Board has discussed that issue. She said the first step was to get a cost report that everybody was filling out to get some consistency, but there have been some discussions in terms of coming up with a number of different recommendations so there’s consistency. She added that one would be in terms of identifying acceptable methodologies for spreading overhead costs between programs to ensure they’re being equitably split. She said they’ve had some conversations about guidelines for administrative costs in terms of a reasonable range of administrative percentage. She said the data would give them the information they need to make those kind of recommendations, but at this point there have been no recommendations made although the Board has had those discussions. She commented that Eide Bailley has made some recommendations in terms of changes they should be making to different forms to make them more user friendly. Thompson said she was told that with an agency like Goodwill that has a program where clients work in a store, they show their cost to provide that and if the County would use that to set the rate, then it wouldn’t take into account any of the income that the clients earn. Westvold said there are instructions for providers on how to deal with that income so that it gets pulled out of the cost, but it wasn’t as clear as it probably should have been. She said that is one of the areas Eide Bailley has rewritten the instructions to make it clearer. Thompson said this year she thought that was a good example because if Sweet knows that the revenues aren’t accounted for, then part of her negotiation with Goodwill would have to be how much is backed out for the income. Lehman said if they didn’t the costs reported would be inflated. Westvold said the other area of concern is with providers that have a store, where there is income from the retail business as well. She said that was an area that came up where they needed to make modifications to the cost report to make sure they were capturing the income correctly and allocating it to the cost center. Thompson said for future years, it might be in the CRIS report but for now the County would have to negotiate that separately. Westvold agreed.

Lehman suggested a situation where a provider is staff heavy, where one staff person is dealing with 5 people versus somebody who is dealing with 2. He asked if there could be an efficiency rating stating where the provider was too heavy and the costs are high. Sweet said they’d need to determine who would do that and how it would be done because she doesn’t have staff to do that. She said MH/DD has 625 open cases and contracts with 16 agency providers. Lehman said the point is whether or not the Board expects MH/DD to go in and micromanage agencies to tell them to lower their costs so that the County could pay less. Sweet said they could look at micromanaging if the Board wants to staff it. Thompson said she thought that would be part of the negotiations, because if the chart shows that a provider is only serving 40% of the clients that they are staffed for, they would talk to them about whether they need all that staff. Lehman said it could change year to year though too and a provider’s clientele could go way up but then only get paid based off the year before. Sweet interjected that it’s based off 2 years ago. Westvold said the CRIS report doesn’t tell counties what their rates should be, but gives a starting point for negotiations because the numbers could fluctuate. She said since they are dealing with 2-year old data and there have been increases in staff salaries, there are COLAs that can be added. Lehman said the Auditors would have a heyday if the County didn’t pay a provider enough and they came back requesting a retroactive increase. Westvold said when the County is negotiating a contract for this year, they are looking forward into the next to see what kinds of staff increases they may have. Lehman asked if something happened mid year, if that was when they would have to adjust the contracts. Thompson said the County can adjust a contract for the remainder of the year, but cannot go backward to change it. Lyness said that the County can’t retroactively go back, but they can amend the contract or make new contract. Thompson said if the agencies knew that every year the County would set rates based on this pattern, they would as managers decide when they want to start a new program that would increase their costs, that they should do it at the end of the year and then negotiate the higher rate for the following year. She said they would be able to time their management decisions based on known income. Stutsman said that is the goal of where the County wants to be, but for her the issue is how to get there and when the County should start transitioning. She added that she was very nervous about doing it tomorrow because she thought there will be serious repercussions.

Sweet said another thing that should be considered is that last summer was first time the County had a Quality Assurance Initiative for providers. She said the Quality Assurance Initiative showed a number of areas where they need to direct some attention. She said in some cases what one provider considers supported community living isn’t exactly what another provider considers supported community living. Sweet said they need to get their basics in place before the County goes to a system where they actually look at cost and say this is firm and then add 2% or 5%. She said MH/DD’s providers are in very precarious positions now due to budget cuts from Johnson County and other counties. She said providers are seeing other counties pulling people out and reducing the level of services for people they’re willing or able to fund. She said there’s a lot going on operationally that needs to be considered.

Thompson said currently the question is moot because the County has already signed contracts based on previous rates. Stutsman said her understanding was that after this discussion the Board would amend the contracts if they decided to go to a straight cost of providing service. Thompson said she thought they were looking at the doing the contracts right in July. Lehman said they couldn’t wait until the end of June. Neuzil questioned what she meant by right. Thompson replied setting rates in a rational way based on actual costs, a negotiation process and a cost of living that’s the same for everyone. Harney said he didn’t think the term right was proper because they’ve been doing what’s been done in the past and if the Board wants to change it then that’s how they need to look at it. He said he wasn’t saying the way they’ve been doing it has been wrong. Sweet said their current contract language talks about renewal of contract and saying the parties agree to review the terms of the contract at least 60 days prior to the termination date. She said MH/DD has all of the agency contracts signed through June 30th of this year, but that means that no later than May 1st, they have to be talking to providers about what they’re going to do for FY 04. She said it’s not too early to be having this discussion.

Sweet suggested amending the contract document and the language in the contract so that the contract automatically renews so that when things happen, if MH/DD doesn’t get a contract renegotiated and signed that it will automatically renew for some length of time. She said she and the Board should also work with the County Attorney’s office to build language in about amending the contracts and giving retroactive rate increases. Sweet said she’d like to see some contract language that allows MH/DD to go in and change the rates mid-year or give retroactive increases based on supporting documentation. Stutsman asked if the County could do that. Lyness said she thought the County has gotten different opinions from the Auditors, because they said if there is a phrase in the contract that has been negotiated that if the County comes up with more money, then the rates can be increased. She said when they last talked to the Auditors, they would have a hard time saying we were retroactively going to do that, but there could be a clause in there being able to change the rates without having to renegotiate the entire contract. She said that as the Auditors pointed out to her several times, the Iowa Constitution prohibits retroactively amending a contract to pay more for services that were already received. However, the County could have something in the contract that would allow them to increase the rates if they got more money. She said there is some difference of opinion on whether or not MH/DD could put in the contract to retroactively do that, but she said at the last meeting the Auditor’s were pretty clear they wouldn’t accept a retroactive change. She said there could be a clause based off the County receiving more money and being able to provide them more since the County always pays the minimum. Thompson said as she understood it would be if the County started with the actual cost and the negotiated rate was less, then there could be a clause stating if the County gets more money, then they will pay the actual cost so that they could build the future rate into the contract. She added that if the County was paying actual costs, then she didn’t think they could pay more. She said that would mean that the County couldn’t have an across the board retroactive rate adjustment, which was what was done that the Auditors didn’t like. Sweet said it is very confusing to her because in their provider contract document, the contract specifically says that Attachment A gives service descriptions which describes the services to be provided and paid for by the County and attachment B lists the rates for those services, but yet a number of the grants that the County gave for projects were for things that weren’t listed on attachment A or B. She said she thinks there needs to be things clarified as they move forward.

Neuzil asked if the County is looking at paying the entire cost, what impact that would have on the current process and secondly, what kind of resources would MH/DD need to be able to complete that task. Sweet said that it would have a tremendous impact on what MH/DD does. She said the provider network would want to talk with their CPA firms, boards of directors and attorneys as to how that would affect them. Stutsman asked why that would have such an impact. Sweet said if the County changes their whole methodology on how they’re paying the providers, reducing some rates and increasing others then it would have a lot of impact on their operations and how it would affect their business. She said that some of the larger providers have over 50% of their business coming from other counties. She said the providers would want to be researching to see what the impact would be with the other counties. Harney said his opinion from previous conversations was that the actual cost was considerably higher then what they are paying. Sweet said that was not true for all cases. She said that she would want input from providers, but some of the larger providers would love cost based reimbursement because it would triple some of their rates. She said again she doesn’t have the information to share, but it could be pulled. Neuzil asked her what MH/DD would need to be able to do cost based rates. She said she’d need at least one full-time equivalent person who knew what they were doing with contracting and rate setting. Stutsman said that is what DHS did when they did purchase of service, they had people where that was all they did all day, every day. She commented that it is a big job. Stutsman said she understood why Sweet was saying it would take multiple steps. Sweet said she was the first to admit that the job is bigger than her current staffing would allow. She said there is no way she could do the cost base rates justice with the current staffing levels other then continuing what’s been there and renewing. She added that MH/DD also had to monitor the contracts and that the Quality Assurance Initiative was a major initiative. She reiterated that the provider network in Johnson County is complex.

Neuzil asked the Board if this is something they want to do. Stutsman said when DHS got out of purchase of service that was a reason they did it, to save cost. She said now Counties are being asked to pick that up. She asked if she correct in saying that the audit says the County doesn’t have a choice in the matter. Lyness said the Auditors didn’t speak to contract rates as much as having contracts and retroactively increasing rates. Stutsman promised she would never do another retroactive thing as long as she lives. Neuzil asked if this is happening in every county or if it was only Johnson as far as setting the rates exactly to what CRIS is. Westvold said she hasn’t been to other counties, but assumes that similar conversations are taking place in Boardrooms across the State. She said one thing she could take to the CRIS Board, is asking them to move into discussing guidelines for negotiating rates. She said if that is something the County wants to move forward to, then maybe make some recommendations back on how to move from where the County is to where the County needs to be. She said they have the data in terms of actual costs and what rate was negotiated so they have the information for every member of CRIS. She said that narrowing the gap needs to be done carefully, particularly with the financial strains with many counties today. Westvold said CRIS hasn’t totally perfected all the cost reports, but they are getting there. She said hopefully after this year, some of the things that have come up will be dealt with. Westvold said the difficulty comes in comparing between agencies because they didn’t necessarily use the same definition previously. Westvold said when she talked to the staff person at Eide Bailley, she reported that from the questions she was receiving, she could tell that organizations learned from last year. Westvold said that on an individual agency basis, the costs are accurate, but there may be some differences leading to costs for an individual service to be higher.

Thompson said she feels that the County is under pressure to be doing this accurately because of recent scrutiny. She said she would feel more comfortable if she knew the contracts the Board signed in June were based on accurate numbers. Lehman said there is also pressure on providers because they don’t want to be subsidizing services. Stutsman said she’s not hearing that the reports are inaccurate, but whether or not the County can afford the cost based rates. Thompson said the County must base the rates on the reports plus the negotiation, plus the cost of living. Stutsman said she heard Thompson saying that it is the negotiation she doesn’t agree with. Thompson replied that they need to have the negotiation and it’s at least as important as having actual costs and cost of living. Neuzil said there is no negotiation that will go under the rate of CRIS. Thompson said it might and said some services were only populated at 40% of staff. Neuzil asked what happens if the cost goes over CRIS. She then expected a rate based off the CRIS rate, but adjusted for the actual number of units of service. Stutsman said she understands what Thompson is saying, but she isn’t going to agree to it unless prior to July 1 the County has a staff person in place. She asked why Johnson County has to assume the whole cost and why isn’t Johnson County getting reimbursed for the work. She said it is an undo penalty to the Johnson County taxpayers to have to absorb the whole cost just because there is a lot of services here. Sweet commented that the County doesn’t absorb the cost of services. Stutsman clarified that she was talking about hiring another person. She added that she was not going to allow the Board to undercut the market and not be able to fill the position like has happened in the past. She said the Board would pay what the person is worth, so it would be a $50 to $60,000 a year position. She asked if they were adding that to the administrative cost of the MH/DD department, who would pay for it. She asked if Johnson County would pick up the whole cost just because they are the host county. She said this does impact other counties, which makes the negotiation even more important.

Lehman asked about places where the cost of living is lower for providers and if that is part of the negotiations. Westvold said that is why comparisons between agencies can’t be made because those types of things must be taken into consideration, but it can be brought into the discussion. Lehman said that he doesn’t know if Neuzil understands that CRIS is only a reference point. Neuzil said he understands that, but asked what the difference is between CRIS and what the County is currently doing. Stutsman said there is no justification for the rates. Westvold said they’ve never had the information before where they can compare apples to apples because they’ve defined the services. Neuzil said his understanding is that CRIS doesn’t have enough numbers yet to justify the rates. Westvold said they currently have comparative information and they are in the second year. She said there is more confidence that people are really reading and understand the forms. Thompson said the number the County would need to set a rate at cost per service is accurate. Westvold affirmed that, but added that CRIS was reluctant to make cross agency comparisons.

Neuzil asked what the ultimate impact this would have on being able to provide the service for people in Johnson County. He asked if there would be less money to go around. He said in his opinion providers would get more than they are getting right now. Sweet said she didn’t think there was any way to tell the impact without going through and doing a financial analysis by taking the number of units and looking at the affect. She said she has been looking at the last Statewide Actual Unit Rate Report and there was a work activity rate that is a specific code as identified by the service information forms. She said Johnson County has a provider whose unit rate is established at $29.06, but the same provider in an adjacent county has a rate of $29.75 while another provider in the adjacent county has a rate of $48.42. She said they can see how wide that discrepancy is. Sweet said it is a very long extensive report that would take generating numbers. She said she couldn’t tell the Board how it would come out. She said if MH/DD looked at every service they contract with Johnson County host providers for and multiplied it out for the number of units for each provider at what they are currently being paid and at the cost, she didn’t know where it would end up.

Lehman asked what the Board would do if they set a budget and 60 days before the Fiscal Year they find out that providers merit greater increases than expected. He said on a limited budget, something’s got to give. Neuzil added that there would also be $60,000 less if they hired a new person. Harney said maybe there would be something within MH/DD that could be restructured to make up some of the deficit. Sweet said it would be interesting to see what other counties with the same number of providers do for staffing. Stutsman asked Westvold what Polk County does. Westvold said that Polk County Health Services now has 6 to 7 people and they have a system in place now. She added that there was some up front expense when the new system is being implemented, but she didn’t know what the costs would be once the system is in place. Sweet asked Westvold if Novak did the contract for Linn County, and Westvold replied the contracting was done through the County Attorney.

Westvold said she will go to the CRIS Board to discuss whether or not the CRIS Board can provide more, because they haven’t been providing technical assistance in the past. Stutsman asked Westvold what she meant by technical assistance. Westvold said it would be similar to how they already provide for case management where they come in to help come up with guidelines for negotiating rates and then someone else who can come in to help with the process. Sweet said she likes the sound of that. Westvold said a lot of counties are struggling with how to negotiate the rates. Westvold said she would bring it up at a future CRIS Board meeting. She mentioned the Administrators meeting as well, where they are looking at where to go from here so they can make the process useful to counties. Sweet asked if would be reasonable to think that a standard contract document might be possible. Westvold replied that they are currently working on a standard contract document. She added that Anastasia Baker with ISAC is being asked to revise a previous contract to add a section that ties to the CRIS process. Sweet asked if it would be available before May 1st. Westvold said it should be.

Lehman asked if the CRIS Board is finding large discrepancies in numbers from different agencies if they are asking why or if it was just averaged without knowing. Thompson said she thought it was different from business in the fact that the clients are where they are, so nobody’s going to go to a different provider because a rate is cheaper because getting them there will cost more than the difference. Lehman asked if providers could be gouging a county. Westvold said that she thought that was the purpose of the cost report and hiring a CPA firm to review that. She said there could be red flags that go off in terms of costs being very different, then that information would be shared with the CPC to explore that because there may be some very good reasons why. She said that now that the system has been developed, if things look out of line it goes back to the host county. She said that with mental health and disabilities one must take into account the varying level of disabilities, because for severe disabilities it might take more involved care. Thompson said that inflated rates can be addressed during the negotiation stage. Westvold said that productivity rates can help determine if the inflated rates are justified because there is a difference between running full with high rates and running at 40% capacity with high rates. She said if there are high rates with low capacity, there are a lot of issues generated that need to be addressed. Lehman added that there could be issues like being over-staffed or client levels dropping off. Westvold said those aren’t accounting issues and that the accounting issues were already in place. Harney said the levels of need might change drastically throughout a year and as Sweet is saying there needs to be a measure to be able to make an adjustment for the providers to recoup their costs. Westvold said MH/DD should generally have an idea of what types of people are being targeted for each program, which shouldn’t fluctuate a lot. Sweet said Harney might be considering the MH/DD provider that did a change in programming last year by splitting work activity into an adult daycare and work activity. She said that had a significant impact on client service and the cost of providing the service. She said something like that the County would have to make an exception for. Westvold said the County could also plan for any changes and negotiate a rate based on those changes.

Stutsman asked if the Board wanted to start moving towards the new system. She said she wanted to know what that change would mean for Johnson County as well as the rest of the State. Thompson asked how quickly other counties are moving towards this system. Westvold said some counties have been subsidizing and at actual costs for awhile. Westvold said she would get that information for the Board. She said she knows that everybody is struggling with negotiating rates. She said she’d look at it in terms of how much money is available and commented that they haven’t gotten increases from the State. She said typically costs are going to go up X percent by going to actual cost, so she recommended taking a look at that. Thompson said the Board didn’t know costs would go up for sure. Stutsman asked if all the cost presented from Systems where higher with the exception of one. Sweet said that with the Systems rates that were just approved, the overall cost to the County was a decrease. Stutsman said that wouldn’t have been the case had the County taken what the actual costs were. Sweet said that was the new program so they didn’t have audited costs to work with. Thompson said the ones she added went both ways. She asked if the numbers from the income sheet and total expenses should correlate. Westvold said it should correlate on an individual agency’s cost report. Westvold said the CRIS Board would talk to Eide Bailley about doing an analysis of the actual versus negotiated costs by a host county. She said she thought a summary report of that information would be useful to do an analysis of the gap between the 2. Thompson said she’d like to see an analysis of the actual income versus their actual cost. Westvold said the cost report should account for that because agencies are supposed to pull out income that needs to be applied to a program. Thompson said she wondered if the totals of the expenses equal the amount of income they get from the counties or if the counties paid more or less than total expenses. Sweet asked if she is referring to the line item called fee for service county on the cost report. Thompson said yes. Westvold said she would talk to an accountant about that.

Systems Unlimited Representative Monica Adair said that the Board must understand that the only programs that are going to show up on the CRIS report are going to be current programs that agencies want to provide in the future. She said for Systems Unlimited, they have to show all their income for the whole year, but some of the programs that they were offering, they are no longer offering. She said if the Board added up all the County expenses, the CRIS report which only shows things that are on the service information form, are not going to equal. Thompson clarified that there were programs not included on the given information because they were closed out during the year. Adair said yes, because she was told by Jess not to put costs on there for programs that have been discontinued. Adair said CRIS only wants costs for current programs that appear on the service information form that agencies want to continue to provide in the future. She said she didn’t know how many providers would have that discrepancy. Thompson asked if there is any where on the form that says whether or not agencies discontinued programs. Westvold said CRIS asks for specific information regarding programs, but another place where the entire agency budget should be laid out. She said there is also a column for non-covered, so the costs would be included, but not included for that particular service the rate is being set for. Adair said for the report Thompson wanted, if the agencies added up all the different County services on the report, it should be close to the income received from the County and there may not be an additional cost to the County in negotiating a rate. Adair said she was just letting the Board know that there is an exception to that finding, but added that she didn’t know how many other people would have that exception. She described the mid-year change in programming made by her agency last year. She said agencies only report on services that they want to negotiate a rate for on the CRIS report. Thompson clarified that the agencies could show income for services that they no longer provide. Westvold said she thinks CRIS would want the history in terms of what costs were, so she would ask the CRIS Board. Adair said only costs from the service information form are allowed to be input. Thompson said the other option is to provide a way to back out the income.

Westvold said the CRIS Board has also discussed not just having a category called non-covered services, but asking for all services to be laid out. Reach for Your Potential Representative Ron Schaffer asked if even waiver services that CRIS doesn’t cover would need to be stated. Westvold said yes. Schaffer asked if it would be easier to just give CRIS their other cost report. Westvold said she was hoping to work with the State to get some consistency with other types of reports so agencies would only have to do one cost report. She said the important thing is to get the linkage between County and ARO total cost.

A Systems Unlimited Representative said that adding personnel to negotiate rates would take away from providing services. He said that counties and service providers are very different. He said if people try to impose a global mechanism, it won’t fit. He said the good thing is there’s always going to be an opportunity to sit down and explain the agency’s costs. He said that CRIS is a starting place, but isn’t going to answer all the questions. He said when CRIS was initiated they said they would take 3 years to gather baseline data, but they are only in year 2. He asked what the non-CRIS counties are doing and how they are not struggling with the issues Johnson County is currently struggling with. Harney asked Westvold what other counties are doing. Westvold said it varies. She said there is a cluster in southeast Iowa that has a contracted consortium, which is actually broader than CRIS. She said to her knowledge CRIS is the only program that’s contracted with a CPA firm to do the cost reports, but those southeastern counties have uniform cost reports created by the host county’s CPCs. She said it varies around the State. Sweet asked how many counties participate in CRIS now. Westvold said this year the number increased by 5, making the total 34 counties. She said as CRIS matures and starts to identify what types of things that will meet providers needs and the counties needs the CRIS Board will start expanding on the service side. Lehman asked if legal settlement will be a leverage because if someone isn’t a member of CRIS and they want a contract for service in a county that’s using it, they’ll have to conform. Stutsman said they would have to accept the fees of the host county. Westvold said there are many benefits beyond accepting the fees, because counties know there’s someone who knows that provider and is monitoring them.

The Systems Unlimited Representative said as a provider one of the things that makes him nervous is when costs are being thrown around. He said for costs they get a negotiated rate and their ability to negotiate that depends on the budget, what the State’s doing and how much money Johnson County has. He said essentially then there is a certain amount of money the agencies have and must live within those costs. He said if there is suddenly a big cost in pay, then the agencies must figure out how to reduce the costs in order to stay alive. He said in his opinion, a lot of the costs are held artificially low. He said if the Board would look at his costs currently, that’s where the real rub would come for Johnson County paying on costs. He said if the Board looked at what the costs are now, they would be close to what the rates are, but not what the actual costs should be based in the market place. He said he would like to be able to look at his staff and pay them what they’re worth instead of not being able to pay them what they’re worth but telling them they will feel real good inside at the end of the day. He said that he thinks agencies deserve to be able to do that. He said if an agency is ever going to pay their staff what they’re worth, by basing actual costs on history, the agency would have to eat the salary increases for a year at least because agencies can’t retroactively be paid back. Sweet said the history of that problem stems from the POS (Purchase of Service) system, which was in place for over 20 years. She said POS reimbursed on cost based on when the provider went into the system, so that a provider that was in business 25 years ago had their costs artificially reduced because, the agency only received what they started at and percentage increases per year. She said a new provider that came in after the old provider was able to set their salaries where they wanted them and set their rate based off that higher starting place. She said looking at salary and wage scales among providers now, will show discrepancies also.

Thompson said the financial system in its original form it was a very good cost setting measure and was very similar to CRIS. She said then when the State didn’t have money they would say that they knew based off cost of living they should get a COLA of 4%, but only gave 1% and then another year they wouldn’t give them anything even though costs are continually rising. She said Sweet was right when she commented that they froze agencies at the rate they began with. She said eventually the rates got so far behind, that when CRIS was started, rates weren’t based on anything. Westvold that CRIS built in negotiation to recognize that sort of thing. She said if they just based rates solely on last year’s costs, there could be perpetual inequities. She said that the negotiation phase allows the County and agencies to take a look at changes in programs or whatever changes are needed. She added that with the POS system before the freeze started, rates that were high one year and the agency over recovered, then the next year the rate would be driven down and would cycle from year to year.

Sweet presented a memo from Goodwill Industries Representative Mike Townsend to the Board. Schaffer agreed with the Systems Unlimited Representative in that CRIS is a good starting point. He said one thing that wasn’t mentioned is that the cost reports are 18 months to 2 years behind. He said for their adult day program, the cost report shows a cost that would have been from 1 1/2 ago at $48, but they are currently charging $50 for the day program. He said if the Board looked at the cost report, then what they’re charging is $2 a day more, but the cost report is from 1 1/2 ago. Schaffer said it is important to realize that there is that lapse from when the reports are submitted to the negotiations. Thompson said in Townsend’s memo he points out a number of problems he sees with CRIS, but he agreed that CRIS is the best currently for forming a rational base for contracts. Lehman said if the Board sits down May 1st, the agencies aren’t going to have their numbers ready for the current year, so they will have to use last year’s numbers. Thompson said that’s where the cost of living comes in. She said that recently there has been low cost of living increases, so the Board could assume that the COLA for last year is 1.8% and the COLA for this year is another 1.8%. She said with a 4% increase the Board can cover both years and then in the future only have to give COLAs for one year at a time. She said that if they changed over in a year where the COLA would be 8%, then that would be a hefty increase.

Neuzil asked the Board as a reality check, if they are going to be hiring someone for this position, what budget will it come out of and when will they start. Thompson said she doesn’t automatically assume the County needs to hire someone because it’s an intrinsic part of the CPC function that needs to be provided. She suggested looking at the table of organization for MH/DD to see if there is a position that could take on this responsibility. Thompson said Sweet should be closely involved in the process because it’s central to human services. Harney said that Westvold will come back with answers from the CRIS Board, which will help give the Board some direction. Westvold asked if the Board would like information from the larger counties on how they staff the negotiations. The Board said yes. Harney asked if there was consensus in principal for this type of change. Stutsman when the change will occur. Harney said he meant before the next fiscal year for the new contracts, but asked if that was too soon. Stutsman said she wants number to see the impact the change would have. Lehman said the Board is only 90 days from May 1st. Sweet said she sent the Board a status report on Friday. She said based on the department’s current status, changing methodologies of rates by May 1st, is not possible. She said her department has many other big projects going on that will be full time for the next few months. She said she wasn’t trying to be difficult, but there just isn’t the time.

Stutsman asked Sweet with the possibility of reorganizing if she saw the negotiations position as a full-time job. She said when DHS reorganized, the Director didn’t do the POS contracts, they were only involved. Thompson said that the staff person who was in charge of all the daycare centers also had more than one county, which totaled 35 or 50 contracts. Sweet said she didn’t think the contracting and the rate negotiation itself would be full-time because it’s sporadic. She said when the Board first began discussing this possibility, they were talking about monitoring the contracts and quality assurance at the same time. She said if the Board wants the full package, it would be a full-time job. She said they’ve got 16 agency contracts and 8 non-traditional providers. She said if the County is going to be refining the contracting process to the point where they’re basing it on identified costs, looking at the differences that affects those costs and going in to monitor the staffing ratios and quality assurance, will be a full-time position. She added if the Board wants something lesser, then it probably wouldn’t be. She said the Department will want to look at reorganization, because a lot of her time is being spent on jobs that could be done by a staff level position if she needs to be involved in this process. She said she doesn’t think the total hours are there, but they could look at it.

Neuzil said even if the County writes contracts that end July 1st, they could still continue to write contracts, cease those contracts and write new ones if the new rates couldn’t be negotiated on time. Lyness said the County could put an addendum on the current contract, but continue them at the same rate or a negotiated rate. She said if that new contract didn’t go into effect until September 1, it would only cover the rest of the fiscal year. Neuzil said in the meantime, MH/DD will have to run numbers in the different scenarios. Sweet said if the Board wants an overall financial impact on the County, one of the problems is MH/DD doesn’t have access to 2002 Fiscal Year data. She said MH/DD has a tremendous backlog of things to do because of it. Neuzil said an addendum would be more realistic than making the deadline for the next fiscal year. Stutsman agreed, but added that it seems the consensus of the Board is to move in that direction. Neuzil said anytime the Board can have numbers that are more accountable, that is what taxpayers would like to see. He said the State Auditor looks at some counties, but closes it’s eyes with others. Neuzil said they are heading in the right direction, but would like to know the impact it will have on the people MH/DD serves, on the providers and costs as well. Sweet asked the Board not to misinterpret her comments because she agrees this is where MH/DD wants to be. She said she is very glad the County decided to participate in CRIS because it gives her department excellent information. She said they want to be at a point where they can look at costs to have a more objective way to look at rates. She said her concern is moving in that direction too quickly without knowing what the impact will be.

Harney asked if there was money in the MH/DD budget to go towards a new staff. Sweet replied that the MH/DD budget is limited and that there is no way they can increase that dollar amount without finding a creative way to bring more monies in. She said the department’s allocations are fixed, the property taxes are fixed. Thompson said the Board couldn’t subsidize the position. Stutsman said it needs to be for services, but asked if it must for administrative costs. Sweet said she thought if it was MH/DD administrative costs, then it must come out of the MH/DD budget. She said at one point in time, they discussed the things that the County funds through MH/DD that could have been funded out of Fund 45. She said those are things that they could research further, but are only 5 months away from a new fiscal year. Stutsman said she was gun-shy about trying to be creative about finding ways to fund things. Harney said if Sweet had time she could take a look at restructuring or developing a position. Sweet said she was currently working on something she would bring to the Board as soon as she could get a job description, which was combing 1.25 FTEs into 1 FTE and maybe looking at delegating some responsibilities differently in order to accommodate what the department is doing. She said it was the administrative component of CPC functions that continues to increase as the funding becomes tighter and she starts to work with more administrative and financial situations. She said they would look at the situation though.

Stutsman said at this point the Board should be looking at a time frame when it would be appropriate to make this change. Sweet replied that CRIS was initially thinking 3 years and in talking with Jess, it should be correct. Westvold said in terms of getting the information, the 3-year deadline is different than moving towards cost based. She said she didn’t know that CRIS set a timeframe for getting the providers at cost based rates. She said that is a question she will take to the CRIS Board. Stutsman said the Board should have Sweet and Westvold communicate after the Board meeting and then get together again to discuss this. She said that it seems the Board wants to move in that direction, but the question is the time to implement and the impact it will have fiscally on Johnson County and on other counties as well. Westvold said she would run any questions past Sweet and then put together a summary memo of what was discussed at this meeting to send to the CRIS Board to get them thinking and have it available for the meeting with other County administrators. She said they could have a discussion on that and then come back with the reaction from other counties, particularly those that use a lot of Johnson County providers.

Thompson asked Westvold to help the Board assess their risk. She asked how likely it was that the Board would be cited in the future for not having rates based off a rational program. Stutsman said she thought that the audit was more concerned with the contracts themselves and not how the rates are set. Lyness said that Thompson has a good point because the audit commented on public purpose as well, which was being able to justify MH/DD’s expenditures. She asked how the County can justify paying these rates to certain providers. She said when the County negotiates, the assumption is from the County’s perspective coming to the lowest cost and for the provider what will enable them to provide the services, but CRIS is helping to provide that basis for negotiations and comparison to other counties. She said the process isn’t that much different than what the County is currently doing though. She commented that the audit found fault in how things were done and not having things in contracts or amending them. Westvold said one of the things the CRIS process can give is that there aren’t a lot of other funding sources for providers, so if the Board wants somebody to do something special, the County has to pay for it. She said the increased costs of computers and things like that is something where the additional administrative burden falls on the funders. She commented also that the CRIS reports can also help show providers other funding sources. She added that CRIS should give counties the information to justify negotiated rates to the Auditor.

Sweet asked if she should come back to the Board in a couple weeks after the CRIS meeting and after she visits with Westvold. Harney said yes. Schaffer commented that there has been a similar discussion at the work group, but didn’t have the discussion on costs for providers who are providing services to the County regarding removing dead deer from the ditches. He said that nobody wanted to see what their costs were before the contracts were signed. Thompson said the County took bids, but Stutsman disagreed. Stutsman said that Schaffer brings up good point. She said that she wanted clarification that the Board was going to have another work session to discuss the MH/DD Audit. She asked if these things apply just to the MH/DD fund or if they apply across the board. Lyness replied that it should be across the board for all County services. Stutsman said Schaffer has a good point. Lyness said that all public entities should be looking out for their taxpayers’ interests. Thompson explained that with the deer contracts, Secondary Roads obtained quotes from several people who would base them on their costs or how would they make money. Stutsman said to her it was the same thing the Board is talking about now. She said there was no documentation as to what the costs were. Lyness said the fact that the County got 5 or 6 people telling how much it cost, the Board can look to see the fee is within that range. She said with MH/DD the providers aren’t in the free market, but she said Stutsman was right in terms of the philosophy. She said the free market doesn’t always control providers because they’re constantly trying to figure out the lowest cost to provide a good service. She said as members of the Board, they need to constantly be looking out to see if decisions are in the interests of the tax base as well as providing the best services. Harney said that last year the Board purchased some equipment for Secondary Roads and they didn’t take the bottom bid, but looked at the entire picture. He said it really balances when taxpayers look at the whole picture.

Adair said she would like to see a move towards cost based, but it is unrealistic to implement CRIS by July 1. She said that the County and providers should decide if CRIS is where they want to go and start using the numbers to set rates by a certain date. She said they should start using the data that providers have been providing to negotiate. She said if they can say that they will implement it in a years time, and know the bottom line for how it would affect that County, then it would be great. Harney said that the consensus is to wait and change it later in the year, but stipulate next years contracts in a way that will allow the County to change the contracts down the road. Stutsman added that the Board agreed to move in that direction, but they need more information on the impact it will have locally, and on other counties as well as a reasonable time to implement it. Westvold said there isn’t a CRIS system of negotiation. She said the CRIS report shouldn’t be taken as established rates or as average rates because part of the process is negotiation. Adair asked when the negotiations will take place. Harney said the Board doesn’t know yet. Sweet said she wanted explicit directions for the Board including COLAs and what to accommodate for. She said she didn’t want there to be a lot of discretion on her part in the process. Stutsman asked if at the next meeting, Sweet would present the options to the Board and then the Board would give her guidance. Sweet said hopefully by the next meeting they would have a better idea of what it would cost the County

Harney asked Westvold if CRIS would hold the Board to 3 or 4 year old numbers or if everything will be taken into consideration. He said he would hate to have CRIS come back and tell the County they were out of line. Westvold said CRIS will not do that because that is not the process. She said the process is the information provided is only information to help negotiate the rates. She said what they don’t want is for the County to take that number and think it’s the number that must be the rate. Harney said he would hate to have an auditor tell the County that their rates are clear out of line based on these numbers. Stutsman said that to save money administratively, the County could just take the costs on the cost report and move on. Sweet said that while the Board is concerned with what the Auditor would say, she is concerned with what this would do for their clients. She said when the County starts paying providers cost as identified in the cost report, the County will have providers that aren’t going to be able to make it, clients that won’t have services and there will be utter confusion in the client base. She said the County has to be careful with what they do and has to keep the best interests of the clients in mind. Neuzil said an auditor would look and ask if the County was paying over cost how that is in the best interest of the taxpayers. Thompson said that the Auditor would look to see if the rates are based on actual cost, whether or not they have some rational for how they arrived at those rates. Neuzil said the Board showed the Auditor rational for public good and they did not listen. Westvold said the audit was a learning experience for the whole community in terms of how the data is presented because they don’t want it misinterpreted. She said prior to the report coming out they might need a cover sheet explaining what things mean and how they should be used so there is no misunderstanding on what the information means. Sweet asked if they could get direction from the State Auditor before they start the process.

Harney said Westvold and Sweet would discuss these matters and bring it back to the Board in the future. Westvold said she would bring these questions to the CRIS Board and the other counties to get responses and possible options. Stutsman said she wanted to come away from the discussions with a feeling that this is a learning process and everyone wants to do it right with the best interests of clients and taxpayers in mind. Harney said the bottom line is to reach as many clients as possible because people need these services.

Adjourned at 3:25 p.m.

Attest: Tom Slockett, Auditor

By Casie Parkins, Recording Secretary