Memorandum of Agreement: Illinois Mental Health System Restructuring Initiative

This Memorandum Of Agreement is entered into effective July 1, 2004 by and between the Illinois Department Of Human Services Division Of Mental Health ("DHS" or "Department") and the System Restructuring Initiative Task Group (formerly the Fee for Service Task Group, hereafter the "SRI Task Group") consisting of the undersigned individuals and, applicable, the organizations they represent.

  1. PURPOSE OF THE AGREEMENT

    Illinois's system of publicly funded mental health services and supports must improve its ability to meet the expectations of consumers, families of individuals needing services, taxpayers, elected officials, payers, and providers.  Moreover, the continuing effects of the state's fiscal condition require the mental health system to adopt changes intended to optimize the use of available funding.  These short term changes must be managed and evaluated so that they do not hinder Illinois's ability to maintain its current level of access or make the longer term restructuring impossible.  This Agreement establishes a framework for the Illinois System Restructuring Initiative ("SRI"), which encompasses short term and longer term activities directed toward the overall improvement goals and addressing the current fiscal situation. The Agreement sets forth responsibilities of DHS and the "SRI Task Group" (formerly the Fee for Service Task Group.  The SRI will consist of a structured, facilitated, and collaborative process for identifying, testing, adjusting, and implementing a series of changes, including expanding Fee for Service reimbursement, to ensure the availability of affordable, accessible, accountable, high quality community services that respect and are responsive to individuals from all cultures and ethnic groups.

  2. Core Principles FOR THE SRI PROCESS

    DHS and the SRI Task Group agree that above all the mental health system must strive to become more recovery and consumer oriented, maintain fiscal sustainability, and improve efficiency and accountability.  In addition, the DHS and the SRI Task Group agree to adopt these principles during the SRI process:

    1. The SRI will use an approach that involves consumers, providers, and the state as equal partners charged with accomplishing the purpose of this Agreement.
    2. The SRI will use strategies based on the efficient use of available resources. 
    3. The strategies will promote consumer access, choice/portability, culturally and multiethnic competent services, and continuity of care.
    4. The SRI will seek to minimize increased risks to DHS, providers, and consumers during the transition period. 
    5. Strategies that expand available resources and improve system efficiency should be identified and be agreed to by the legislative and executive branches and stakeholders.
    6. Provider sustainability is to be promoted, based on equitable reimbursement for quality services in response to demonstrated need.
    7. Planning must occur to develop an appropriate infrastructure to implement the SRI.
    8. During the transition to expanded fee for service reimbursement, the identical rates will be paid for the same services, regardless of the source of state or federal funding.
    9. Strategies, assumptions, and current state and provider system performance will be assessed.  Significant changes will be field tested before they are mandated.
    10. The SRI process will include activities designed to identify and eliminate redundant state rules, regulations, monitoring and date reporting requirements.
    11. The SRI will be implemented in a manner that is consistent with the provisions of the July 2, 2004 Memorandum of Understanding between DHS, Governor's Office of Management and Budget, the Vice-Chairperson and Republican Spokesperson for the Senate Health and Human Services Committee, the Chairperson and the Republican Spokesperson of the House Special Committee on Fee-For-Service Initiatives, and federal and state law (as amended from time to time).  The Memorandum of Understanding (Attachment A) is incorporated herein as if fully set forth.
  3. RESPONSIBILITIES OF DHS AND THE SRI TASK GROUP

    DHS and the SRI Task Group agree to do the following:

    1. Accomplish the SRI under the direction of and with support from (an) expert consultant(s). DHS agrees to retain an expert consultant(s), to provide facilitation, technical assistance, guidance, and expert consultation necessary to actualize the requirements of this Agreement.  The expert consultant(s) will serve as SRI project manager.  The expert consultant(s) will assist DHS to make periodic reports to the Senate Health and Human Services Committee, the House Special Committee on Fee-For-Service Initiatives (or its successor, if any, in the 94th General Assembly) and the Governor.
    2. Use the activities, assumptions and timeline set forth in Attachment B as the foundation for developing and implementing a more detailed plan to manage the transition to a FFS payment mechanism during FY05 and work to improve the state's services, financing, billing and monitoring systems consistent with the purpose of this Agreement.
      • DHS and the SRI Task Group agree to make all reasonable efforts to increase appropriate Medicaid claiming throughout FY05 to achieve the $25 million target.
      • The detailed SRI plan and implementation process must enable Illinois to:
        1. Articulate a shared strategic vision for its mental health system;
        2. Identify and begin to implement long term, specific strategies to realize the vision
        3. Continue, refine, test, and implement a purchase of service (FFS) payment mechanism, seeking to minimize increased risks to DHS, providers, and consumers
        4. Evaluate, define, refine, implement, and monitor key components of the SRI plan
        5. Implement the FFS reimbursement system in a phased approach, beginning with a Test Phase and Evaluation.  The SRI work plan will provide detailed FFS transition tasks, which will prepare DHS and providers to conduct a statewide trial reconciliation of fee for service claims to grants-in-aid during the 4th Q.
        6. Assess the achievability of the Medicaid targets during the Test Phase
        7. Improve state and provider processes associated with retroactive claiming, moving toward the use of automated processes to the greatest extent possible
        8. Remove barriers to improved access to services
        9. Increase state and provider capacity to submit Medicaid reimbursable claims and  to maintain adequate documentation to support the claims being submitted
        10. Explore methods for accessing additional funds through Medicaid Administrative support and claiming
        11. Recommend to DHS more equitable and strategic methods for distributing FFP available to DHS 
        12. Access expertise and experiences of other states
        13. Facilitate the exchange of knowledge between departments and divisions within departments, across branches of state government, and among consumers, families and providers 
        14. Reduce inefficiencies, including redundant state rules, regulations, procedural and reporting requirements
        15. Explore the feasibility of standardized clinical forms.
      • To accomplish this, DHS and the SRI Task Group agree to the following:

        1. DHS and the provider associations and agencies participating as members of the SRI Task Group will work with consumers to provide them with easy access to needed services.
        2. DHS and the SRI Task Group agree to work with consumers and provider agencies throughout the state to achieve an orderly and successful transition to increase the use of Fee for Service purchasing and reimbursement, in conjunction with advances, grants-in-aid, and other financing vehicles, utilizing financial, technological, and administrative infrastructures to access and account for such funding sources.
        3. DHS and the SRI Task Group agree to ensure that consumers and families are given adequate opportunities to "speak for themselves" on matters assigned to the SRI Task Group and are able to voice directly their own statements of principles, vision, strategies, proposals, and concerns.
        4. Similarly, the SRI Task Group will afford organization-based advocates and  providers adequate opportunities to speak for their organizations.

          DHS and the SRI Task Group recognize that support for consumers and their families is an essential element of the System Restructuring Initiative (SRI).  DHS and the SRI Task Group will identify consumer and family support needs for an infrastructure to encourage organized participation in system governance, management, training, and communication.

        5. e) A Steering Committee will be formed to represent the issues of the larger SRI Task Group while facilitating timely discussion and decisions on matters requiring immediate resolution.
    • EFFECT ON OTHER CONTRACTS

      Nothing in this Agreement precludes DHS and/or an agency provider from proposing amendments to the FY05 Contract.  Contracts for FY05 require all services to be delivered consistent with all applicable federal, state, and local rules and regulations, including the Medicaid Rule 132.  Providers not now certified pursuant to Rule 132 will become certified.  The contracts include capacity grants-in-aid and Medicaid targets.  The contracts introduce flexibility in what services are provided.  DHS and the SRI Task Group agree to evaluate the terms of the FY 05 and FY06 Contracts in relation to the assessments and evaluations of the SRI.

    • RECONCILIATION

      Providers will reconcile FY05 services to the Grant Funds Recovery Act.

    • RETROSPECTIVE FEE FOR SERVICE CLAIMING TO CONTINUE

      Retrospective Fee for Service claiming will continue on a statewide basis so that the mental health system can achieve the $25 million additional FFP target, while preparing to implement FFS claiming and reconciliation on a statewide basis. Evaluation information resulting from the Test Phase may lead to proposals from DHS or the providers to amend the implementation plans, and/or recommendations from the expert consultant, in order to correct, adjust, and improve any element of the SRI. 

    • Advanced Payments to Providers/RECONCILIATION

      Payments to providers for FY05 will continue to be advanced to providers in 1/12 payments before the provider reports service data.  A projection for federal Medicaid reimbursement, based on FY04 estimated federal Medicaid revenue, is included in the 1/12 advance payments received by providers.  Achievability of Medicaid performance targets for each Test Phase agency provider will be assessed during the Test Phase.

    • Unique Client Identifiers

      Medicaid Recipient Identification Numbers (RINs), or unique client identifiers, will be used for all mental health community and state facility consumers, effective FY05.  For existing consumers without RINs, the Department agrees to distribute the RINs by July 2, 2004.  For new consumers, provider agencies will access RINs via by use of various technologies including a toll free telephone line, facsimile, or electronic communications including e-mail.  RINS are not required in order to begin providing services to a consumer but are required for service reporting.  The RINs will not have to change if the consumer's Medicaid eligibility changes.  Non-Medicaid eligible clients will be tracked as DHS only. The RINS will be maintained to preserve confidentiality.  Other DHS clients without Medicaid eligibility will also have RINs.  Consumers with a RIN and no Medicaid eligibility will not receive a card.  Initial training has occurred during FY04.  Additional training responsibilities, frequency and evaluation will be formulated as part of the SRI work plan development. Directions and access numbers were provided via the DMH website June 30, 2004.  The SRI Test Phase includes steps to refine or improve the RIN process.

    • LEGACY INFORMATION SYSTEMS CHANGES (ROCS/CRS/FTP)

      DHS and the SRI Task Group acknowledge that state and provider data systems will continue to require updates and enhancements.  Such activities are a "cost of doing business."  Costs associated with the interim changes should be addressed through the reconciliation to the Grants Recovery Act process.  Costs associated with subsequent, more substantial information system changes should be identified and a plan for funding devised.

      Previously, third party vendors were provided with specifications for interim changes.  Moreover, all third party vendors have been identified for contact on future updates.  Beginning with July 2004 service reporting, providers will be able to submit data electronically (File Transfer Protocol, FTP). Providers in the process of transitioning to FTP may continue sending diskettes, at least until the end of 1st Q service reporting.

      DHS and the SRI Task Group acknowledge that coordinating specifications and timing for changes with third party vendors can be challenging, and the ability of providers and their third party vendors to respond to these changes varies by provider and vendor, and also varies with the scope, frequency, and timeframes for the changes. The SRI will examine data systems design and performance (expected and actual), funding mechanisms, HIPAA compliance, and study retrospectively the ability of vendors to make the initial changes. The SRI will include recommendations for improving future performance and resources needed to support future changes, if recommended.

    • Status, Training, 90 day hold harmless for Revised Rule 132

      As of the Agreement's effective date, proposed revisions to Rule 132 are pending before the Joint Committee on Agency Rules.  The proposed revisions seek to streamline requirements in the existing rule, at the providers' request, and to improve providers' ability to maximize Medicaid claiming.  JCAR is expected to consider proposed changes July 13, 2004.  Following JCAR approval,  providers will be given 90 days to come into compliance with the new rule. During the ninety day period, providers must comply with either the current rule, or the new rule. Training on the new rule will commence immediately following adoption of the rule and will include training on the definitions of and documentation requirements for covered services.  Training scheduled to occur on July 27, 28, and 29, August 3 and 4, 2004 may be subject to change if JCAR does not approve Rule 132 at its July meeting.

    • TECHNICAL ASSISTANCE and TRAINING

      DHS and the SRI Task Group agree to address training and technical assistance in its  detailed SRI work plan, to include:

      1. Responsibilities, frequency, and method for training and technical assistance
      2. Utilizing Peer-Based and Learning Environment approaches 
      3. Resources and technical assistance SRI Task Group members can make available to the constituents and organizations they represent; and
      4. Methods for evaluation of training and technical assistance provided.
      5. Resources available and needed to support training and technical assistance effort

      Topics will include Rule 132, RIN, ROCS, CRS, FTP, and other topics DHS, the SRI Task Group, and the expert consultant(s) identify. 

    • COVERED SERVICES

      Attachment C sets forth the covered mental health services/service taxonomy being funded by DHS in FY05. The SRI, at the earliest possible date, will study whether  the detailed service definitions, billing codes, billing procedures, documentation requirements, provider qualifications, units of service and rates: 

      1. are consistent with prevention, recovery and resiliency oriented approaches to service delivery;
      2. advance investment and efficiency strategies
      3. can reasonably be expected to be consistent with the mental health system Strategic Vision to be articulated during FY 05;
      4. can be adequately documented for compliance and Medicaid reimbursement purposes; and
      5. are suitable to meet the current service needs of adults, children and their families, especially the priority populations, and individuals with "special needs" and the provider system's capacity to deliver them.

      The expert consultant will provide technical assistance to DHS with regard to service taxonomy and Medicaid reimbursement issues.

      Implementing recommended changes to covered services funded by Medicaid will require further revisions to Rule 132, and the submission of a Medicaid state plan amendment to the Center for Medicare and Medicaid Services, to occur during FY05 per the activities and timeline in Attachment B. 

    • Consumer and Families System Governance Role

      DHS and the SRI Task Group agree to foster broad and meaningful participation and decision making by consumers and families in the SRI, the Test Phase, the Evaluation, the assessment of the covered services, and the Strategic Vision process.

    • OTHER STATE AGENCIES

      During the Strategic Vision Phase, state agencies other than DHS will have an opportunity to identify additional services which could be useful to advance consumers' recovery and resilience or to enhance investment and efficiency strategies.

    • RETROSPECTIVE CLAIMING/ERROR CORRECTION

      The mental health system and DHS will continue efforts at retrospective claiming and error correction.  The SRI will assess these efforts.  The SRI will address technical assistance needed to improve the system's ability to obtain allowable Medicaid reimbursement. DHS will utilize its website to post instructions for error correction, etc.  During the Test Phase, DHS and the SRI Task Group will use an expert consultant to automate the process. Current system performance with regard to maintaining program integrity will also be examined.  The SRI will incorporate the results into the overall transition process.

    • Strategic Vision Report

      DHS and the SRI Task Group will oversee a participatory process which will result in DHS producing a Strategic Vision report to serve as the foundation for subsequent analysis and system improvements. The DHS, SRI Task Group, Test Phase participants, other state agencies, members of DHS committees and work groups, community consumers, families and system stakeholders, and others, will be convened to articulate a Strategic Vision for the mental health system. The Strategic Vision will identify any additional services needed to advance consumers' health through prevention, recovery and resiliency, increase efficiency, and to make optimum use of available resources, including allowable Medicaid reimbursed services. The Strategic Vision Report will be completed by April 30, 2005.  Service changes will be included in further revisions to Rule 132.  The Department will submit a state plan amendment to the Center for Medicare and Medicaid Services as necessary. 

    • TEST PHASE

      DHS and the SRI Task Group agree that a six month Test Phase will precede the full, statewide transition to FFS. Test Phase Participants will be selected in accordance with Attachment A. The Test Phase will begin as soon as practicable following JCAR approval of the revisions to Rule 132.  In the event that Revised Rule 132 is not approved by August, 2004, the Test Phase will proceed using the current rule. 

      Prior to September 2004 DHS will provide extensive training to the Test Phase agencies. Beginning January 2005 the Test Phase agencies will begin trial reconciliation to contract advances using fee for service claiming and service reporting. 

      DHS, the SRI Task Group (especially its consumer and advocate members), the expert consultant, and the Test Phase Participants will identify ways to help consumers receiving services in the agencies understand what the SRI is, what the Test Phase is, and to ensure consumers and families are involved in the SRI.  Consumers and families will  educate providers, payers and policymakers regarding service needs and efficiency strategies.  Consumers and families will be directly involved in problem-solving, quality monitoring, and development of the Strategic Vision. 

    • MONTHLY MEETINGS

      DHS and the SRI Task Group will meet at least monthly.  DHS will also organize monthly meetings with the Test Phase Participants.  The project manager may require that the groups meet together on occasion.  DHS will record and distribute meeting minutes, and post draft and approved minutes on its website. 

    • TEST PHASE EVALUATION

      Prior to and during the FFS Test Phase, the expert consultant will assist DMH and the SRI Task Group to evaluate system performance.  The focus for the evaluation is:

      1. Access to services (penetration, intake and utilization patterns for grants vs. FFS)
      2. Feasibility and costs of using the Washington Circle Model's approach  to measuring access
      3. Feasibility and costs of measuring service quality through fidelity scales for Evidence Based Practices
      4. Methods for, and feasibility and costs of, closing service quality gaps
      5. Consumer satisfaction (MHSIP and/or Consumer Quality Reviewers) and targeted surveys with regard to how consumers and families feel about changes occurring in the system during FY05
      6. Current and Test Phase maintenance of program integrity
      7. Whether fee for service reimbursement, in combination with all other public funding accessed by a particular provider agency, is reasonably consistent with efficiency, economy, and quality of care, as required by federal Medicaid law, adequately reimburses providers for care the state is purchasing, and can result in fiscal sustainability
      8. Validity of agency provider-specific Medicaid claiming targets
      9. The impact of the conversion initiative's primary objectives
      10. The benefits and viability of converting to FFS
      11. The impact of conversion on each provider participating in the Test Phase
      12. Effectiveness of state and provider processes in increasing Medicaid revenue
      13. State and provider system readiness to advance consumer ownership, recovery, resilience and program integrity and costs to implement improvements
      14. Clinical/utilization changes caused by the changed reimbursement methodology
      15. Whether the streamlined Rule 132 reduces or increases the proportion of Medicaid reimbursable services, and/or compliance risks/costs
      16. Evaluation of training and technical assistance provided
      17. Identification of and methods for financing state and provider conversion costs
      18. The service and case mix of Medicaid and non Medicaid consumers that can be supported once Illinois moves to increased reliance on FFP.

      The SRI Task Group will refine the evaluation design at the earliest date possible. 

      A preliminary written evaluation report will be completed by December 30, 2004. A final written evaluation report, with recommendations, will be completed by April 30, 2005. The preliminary and final reports, along with recommendations to address findings for each evaluation component, will be reviewed by the SRI Task Group and the Test Phase participants.  Comments and recommendations will be provided to DHS, which will provide a written response.  The reports, SRI Task Group and Test Phase Participants' recommendations and the DHS responses will be submitted in writing to all members of the Senate Health and Human Services Committee and of the House Special Committee on Fee-For-Service Initiatives (or its successor in the 94th General Assembly, if any), Legislative Leadership, and the Governor. 

    • RISK MANAGEMENT (Safety Cushion) DURING TRANSITION

      DHS and the SRI Task Group agree to monitor the extent to which the SRI is being implemented without increasing risks to consumers and providers.  SRI components intended to reduce these risks include 1) financial arrangements for F05, including no financial risk and trial reconciliation of FFS claims to advances;  2) assessment of retrospective billing, including compliance risks; 3) maintaining current consumer eligibility; 4) utilizing regular meetings in the collaborative project management process to allow for early identification of problems; 5) the Test Phase and Evaluation reports; 6) training and support initiatives for providers and for consumers; 7) the use of the expert consultant;(s); and 8) close supervision by the executive and legislative branches. 

    • Effective and Efficient SRI Communications

      Ongoing, productive and efficient communication is essential to the success of the SRI. Using peer based and learning environment approaches, the department will establish a web-based mechanism to facilitate rapid exchange of information on issues relevant to the SRI. Draft and approved minutes will record the meetings associated with the SRI.  Drafts of documents will be distributed to solicit feedback. DHS and the SRI TaskGroup will monitor the types of questions and problems being encountered during the transition and respond with propose adjustments, training and support activities.

    • Improving Access to Medicaid Eligibility

      DHS will implement state and provider processes to ensure that persons with serious mental illnesses or emotional disturbances otherwise meeting Medicaid eligibility requirements are actually able to gain or retain that Medicaid eligibility.  Tools and training will be provided, first to state hospital staff and community hospitals with contracts with DMH (CHIPS), and then to community agencies and other hospitals.

      DHS will continue efforts with the Department of Healthcare and Family Services to ensure that mental health consumers retain their eligibility for Medicaid while receiving services in State mental health hospitals.  These efforts should ensure that general Medicaid eligibility will not be lost automatically by a person residing in an Institute for Mental Diseases.  While federal law prohibits Medicaid from paying for any Medicaid services during the person's residence in an IMD, this change improves the likelihood that consumers can link with needed mental health services and other Medicaid services upon discharge.

      The SRI Task Group agrees to encourage all providers to pursue Medicaid eligibility on behalf of consumers as an essential part of the case management process. 

    • Proposal FOR Medicaid Administrative Funds

      DHS will engage the services of a contractor to assist the state in developing the State Plan amendment and implementing processes necessary to substantiate and claim Medicaid administrative support in the community mental health system. 

      In consultation with the SRI Task Group, the expert consultant serving as project manager will review the proposals for consistency with the FFS reimbursement mechanisms and applicable federal law,  compliance risks, the status of the infrastructure required to implement the proposals, and any potential ancillary or direct impacts on clinical services and/or the fee-for-service reimbursement system.

    • Counterparts, electronic evidence of Execution

      DHS and the SRI Task Group members agree to execute this Agreement in the most efficient means possible, and agree to accept in lieu of a handwritten mark an electronic indication of agreement in the form of an electronic mail message replying to the message circulating this Agreement. The handwritten marks and electronic mail messages will operate to execute the Agreement.

This agreement entered into effective JULY 1, 2004, by: