Board of Directors Meeting 1985 Tate Blvd., Hickory, NC 28602, Multi-Purpose Room November 21, 2019 - 6:00 PM I. CALL TO ORDER – Wil Neumann – Chair II. AGENDA REVISIONS – Wil Neumann (Board Members Only) III. CITIZEN RECOGNITION – Wil Neumann Persons wishing to appear before the Board of Directors during this portion of the meeting shall register their name and the subject they wish to address with the Clerk to the Board prior to the beginning of the meeting. IV. CONSENT AGENDA – Wil Neumann A. Approval of October 17, 2019 Board meeting minutes V. REPORTS – Wil Neumann A. Finance Committee Report – Debra Cheek, Finance Committee Chair 1. Action Items a. Approval of previous meeting minutes b. Budget Revision #4FY20 2. September 2019 Financial Statements – Susan Lackey B. CFAC Report – Ben Coggins C. CEO Report – Rhett Melton Pgs. 8-11 Pg. 12 Pgs. 13-24 VI. DISCUSSION AGENDA – Wil Neumann A. County Commissioner Advisory Committee Updates – Wil Neumann B. Executive Dashboard Report – September 2019 – Will Callison C. Approval of Partners Policies and Procedures – Wil Neumann 1. 2nd Quarter Subset Annual and Mid-Year Review (List) VII. CLOSED SESSION – Wil Neumann Pursuant to NC General Statute, Section 143-318.11, (a)(1); (a)(3); (a)(6); and 122C-126.1 VIII. ADJOURNMENT – Wil Neumann Next Regular Scheduled Meeting: January 16, 2020 – 6:00 PM Pgs. 25-30 Pgs. 31-32 Pgs. 2-7

Partners BHM Board of Directors Regular Meeting Minutes October 17, 2019 - 6:00 PM The Partners Behavioral Health Management Board of Directors met at the Hickory, North Carolina Office for its regular monthly meeting. Board Member Attendance Commissioner Susan Allen A Commissioner Anita McCall P Barbara Anderson P Linda McCrary P Commissioner Kitty Barnes P Henry Morphis P Debra Cheek - Treasurer P Wil Neumann – Chair P Ben Coggins P Commissioner Marvin Norman P Daryl Cook P Russ Perkins – Vice Chair P Steve Garrison A Pam Poteat P Commissioner Bill Goins A Joseph Ramey P Jane Hinson A Commissioner Maynard Taylor P Mike Hoffman P Commissioner Frank Zachary P Tim Lentz (non-voting) P Partners Staff Present Rhett Melton CEO Will Callison Chief Operating Officer Jane Harris Chief Clinical Officer Susan Lackey Chief Financial Officer Selenna Moss Chief Compliance and Performance Officer Rachel Porter Chief Communications Officer Andrew Walsh Chief Legal Officer Tammy Pyles Clerk to the Board Kim Powell Deputy Clerk to the Board Others Present Yvonne French DHHS Liaison Rachael Webster CliftonLarsonAllen - Auditors I. Call to Order A. Chair Wil Neumann called the meeting to order at 6:00 p.m. A quorum was acknowledged. Mr. Neumann acknowledged the reappointments of Ben Coggins, Pam Poteat, Chief Joseph Ramey, and himself. II. Agenda Revisions – Wil Neumann A. Mr. Neumann called for a vote to add the Medicaid Savings Reinvestment Plan to the agenda, under the CEO Report, and a handout was distributed. The vote passed unanimously. Page 2 of 32

III. Citizen Recognition – Wil Neumann A. There were no citizens in attendance. IV. Consent Agenda – Wil Neumann A. Previous Board Meeting Minutes for Approval The September 19, 2019 meeting minutes were included as part of the board meeting agenda packet. Chair Wil Neumann asked for a motion to approve. Joe Ramey made a motion to approve the previous meeting minutes, and Barbara Anderson seconded. The floor was opened for discussion. There being no discussion, the motion carried unanimously. V. Reports A. Finance Committee Report – Debra Cheek, Finance Committee Chair 1. CliftonLarsonAllen (CLA) – Partners 2018 DRAFT Audit Results Presentation – Copies of the presentation were included in the board agenda packet. Debra Cheek introduced Rachael Webster, Director of Engagement, CliftonLarsonAllen Auditors. Ms. Webster stated that Jeremy Hicks presented a detailed report to the Finance Committee, and that she would provide a high-level overview of the report to the board, with focus on the Required Auditor Communications and high-level summary information for results for the year, contained in the Draft Financial Statements sections of the report. Ms. Webster disclosed it is the responsibility of the auditors to express an opinion on the fair presentation of the financial statements in conformity with generally accepted accounting principles (GAAP); to plan and perform the audit to obtain a reasonable but not absolute assurance that the financial statements are free of material misstatement; evaluate internal controls over financial reporting; and because of the federal and state funding that Partners receives, additional testing is performed related to compliance around the use of those grant funds. She explained CLA utilizes a risk-based audit approach to determine the nature, timing and extended procedures based on their risk assessment and evaluation of internal controls. She stated the riskiest area typically would be incurred but non-reported claims liability, as it is the largest estimate. CLA performed a retrospective review of that number and she reported it is reasonable, and there are no indicators of management bias. The audit was performed in the plan, scope, and timing previously communicated in discussions with management, and she explained the last step in the audit process is the deadline to issue the final report by the end of October. After one last quality review process which should be completed in the next few days, the final report will be issued, pending Board approval today. She proceeded with a comprehensive review of the information contained in the report. After the presentation, Debra Cheek made a recommendation from the Finance Committee to accept the audit. The motion carried unanimously. 2. Approval of Previous Meeting Minutes – The September 12, 2019 Finance Committee meeting minutes were included in the board meeting agenda packet for approval. Debra Cheek set forth for board approval. Chair Wil Neumann called for a vote. There being no discussion, the motion carried unanimously. 3. Budget Revision #3 FY20 – Susan Lackey reviewed the budget revision which received prior approval from Finance Committee. Debra Cheek set forth for board approval. Chair Wil Neumann called for a vote. The motion carried unanimously. 4. Financial Statements – The August 2019 financial statements, along with a detailed summary, were included as part of the board meeting agenda packet. Ms. Lackey provided an overview of the Balance Sheet and Year-to-Date Income Statements, including Medicaid and non-Medicaid. B. CFAC Report – Ben Coggins reported that the CFAC met on Monday, October 14, 2019. He shared the following information with the board: • New members were welcomed to CFAC: Erica Hollar, from Burke County, who fills a vacancy for substance use; Allison Crotty and Alice Horton with Partners Member Engagement; and Bob Creighton from Alamance County/Central CFAC.

Page 3 of 32

• Rose Casey was recognized for recently receiving the Michael Meyer Advocate of the Year Award in Iredell County. • Shirley Moore's (Partners Member Engagement Specialist /CFAC Liaison) birthday was recognized with song, flowers, and cake. • Partners CEO Rhett Melton attended the meeting and discussed Medicaid transformation, Tailored Plan transition, the state budget standoff, and Partners Strategic Plan for the upcoming year. He commented on Partners commitment towards "Improving Lives and Strengthening Communities," and expressed his appreciation for and the importance of Partners CFAC. • New member orientation is scheduled for Monday, October 21, 2019 in Hickory. • A retreat is planned for March 9, 2020 with a presentation by Stacey Harward, Mental Health Program Coordinator with Community Engagement and Empowerment Team from NCDHHS. • Plans to host an event for the state in the coming year were discussed. • Reports were provided by the Executive, Marketing, Strategic and Community Involvement Committees. • The next meeting for CFAC is scheduled for November 18, 2019. C. CEO Report - Rhett Melton 1. State Budget – Mr. Melton reported the state budget remains at a standstill. The Senate has said they will adjourn and go home at the end of the month, whether there is a new budget in place or not. He explained the impact of this on Partners, including Partners position on recurring and non-recurring funding cuts. He stated if the governor’s veto is not overridden by November 15, 2019, DHHS has confirmed there will be further delays to implementation of the Standard Plan. He noted that the DHHS is operating on last year’s budget with no additional funds necessary to launch Medicaid managed care or for the ongoing preparations for implementation of Standard and Tailored Plans. He noted the setback of losing momentum for these programs, and that indications are that a new budget is not going to happen. 3. Strategic Plan – Mr. Melton reminded the board that Partners Strategic Plan goals were presented to the board at the August board meeting. The Operations Team will be presenting the Strategic Plan at the November meeting, and will provide an in-depth review of the goals and key indicators and how Partners is achieving those targets. He shared statistics from a recent DHHS report and provided insight into some of the super measures for which the state will begin imposing penalties on LME/MCOs when benchmark targets are not met. He highlighted Partners achievements and stated that Partners established goals exceed the thresholds required by the state.

Page 4 of 32

2. Tailored Plan Readiness – Mr. Melton explained that Partners continues with all hands-on deck to prepare for implementation of Tailored Plan, and completion of the application that could come out as soon as February 2020. He referred to a call that occurred last Friday, where each consultant introduced themselves to the Partners team and provided their background and the depth of expertise they bring to the table in areas such as IT, pharmacy, value-based contracting, integrated medicine, and procurement RFP responses. He reported an excellent team has been developed with the resources and talents directly related to Partners efforts to complete the application and for the successful transition to a Tailored Plan. Mr. Melton discussed a meeting that occurred in Raleigh where the Tailored Plan application process was discussed. Upon receipt of the application, Partners will have 60 days to complete the application. The same standards, process, and evaluation required for Standard Plan applications submitted by national insurance companies will be applied to the Tailored Plan applications submitted by LME/MCOs. He reported there will be items required to be in place for the Tailored Plan and Partners will highlight programs already in place such as the Casenet case management software. For other required elements, a concrete plan for implementation will be outlined in the application. He explained that the approach to the evaluation and scoring of the Tailored Plan applications has been very guarded at the state level. He explained the risks involved in putting all elements in place and ready for a hard go-live date and the costs incurred due to delays in implementation by the state.

4. Local Updates – Mr. Melton stated that Partners continues to meet and discuss collaboration opportunities with various partners. He reported there are no further details to report since previous conversations with the board. As meetings and conversations continue and there is the need for a decision to formalize a partnership, Partners will seek the board’s guidance and interest on the matter. 5. Other - Mr. Melton asked board member Mike Hoffman to mention his nomination of Rose Casey, TCLI Referral Specialist at Partners, for the 2019 Mike Meyer Advocate of the Year Award. Mr. Hoffman explained the award is given to a person who has made a significant impact in improving the lives of people living with mental illness and their families, and that Ms. Casey received the well-deserved award on October 11, 2019. distributed to the board and explained the Partners three-year reinvestment plan which represents Medicaid savings that have been accumulated and a plan for how those dollars are spent. He noted there has been a significant shift in Partners spend which is heavily weighted to preparations for transition to a Tailored Plan. He stated that new information reported in Raleigh is that the state will focus on three categories in their review of reinvestment plans: Tailored Plan Readiness; Access to Services and Provider Capacity; and Investments in Local Health Functions. He explained the maximum and minimum spend percentages contained on the report and stated that Susan Lackey has reviewed the report to assure Partners compliance with those requirements. He further explained the state’s quarterly solvency report which provides low and high targets and available cash; if an organization is on the low or high side of established targets, a corrective action report is required. He explained the most recent report shows that Partners available cash exceeds the high-end target and that a corrective action plan is required. He explained the fluidness of the report and stated that the board’s endorsement of the Medicaid Savings Reinvestment Plan, which realigns Partners to the state’s targets, is requested. Ms. Lackey reported the amount of cash overage is $8.2 million for the quarter. Discussion by the board ensued. Mr. Melton reminded the board of the work of former Senator Tommy Tucker, who is working to bring clarity and understanding to the narrative being shared at the state level and bring to light issues in the LME/MCO system. He stated he will keep the board updated on Senator Tucker’s work. Mr. Melton also reported that the state is scheduled to be on site at Partners in a few weeks to review the report, and he will report back to the board at the November meeting. Chair Wil Neumann asked for a motion to endorse the Medicaid Savings Reinvestment Plan. Joseph Ramey made a motion and Pam Poteat seconded. The motion carried unanimously. VI. Discussion Agenda A. County Commissioner Advisory Committee – Behavioral Health Focused Updates 1. Burke County – Commissioner Maynard Taylor provided the following report: a. Burke County Commissioners voted to accept the DSS Board’s recommendation to outsource its child support services to Veritas HHS. The child support program has had poor performance for 4-5 years. b. Resolution was passed to support Breast Cancer Awareness month. c. Contract was approved to purchase new building equipment. 2. Catawba County – Commissioner Kitty Barnes provided the following report: a. Work continues on the Arnold Ventures grant to gain more data, which will be used to provide greater services to inmates who leave jail. 3. Cleveland County – In the absence of Commissioner Susan Allen, Daryl Cook reported the following: a. In addition to the county hiring a Community Health Advisor, they have begun coordinating a Task Force aimed at mental health jail diversion. The Task Force team consists of EMS, Law Enforcement, Crisis Center, Detox Center, Partners, the County Manager and one (1) County Commissioner. Page 5 of 32

and she accepted her well-deserved award on October 11, 2019. Mr. Hoffman explained this 6. Medicaid Savings Reinvestment Plan (MSRP) – Mr. Melton referred to the document that was

b. Commissioners have contracted with Bowen National Research on a county-wide housing study, as one of the adoptive pathways in the Partnership for Prosperity program is access to safe and affordable housing. c. Project Accelerate has started its second class which has 14 students. All graduates of the first class are now employed in Cleveland County and business leaders praise the program. 4. Gaston County – Commissioner designee Joseph Ramey provided the following report: a. There have been no overdose deaths from opioids investigated by Gaston County Police since April 2019. Partners Behavioral Health, along with the Drug Coalition, continue to be important partners in the battle against the opioid crisis. Numbers have decreased significantly and reports from the state have indicated some drops as well. 5. Iredell County – Commissioner Marvin Norman provided the following report: a. Jeff Eads has been working with our charter schools, tutoring the teachers about how to handle certain situations involving kids with difficult home lives. b. New phase of jail is expected to open in November 2019. c. Commissioners are meeting with our legislators on October 18, 2019 to discuss lack of funding from the state (for roads, other projects). d. Retreat for Board of Commissioners will be held on November 15, 2019. 6. Lincoln County – Commissioner Anita McCall provided the following report: a. Open House was held for EMS, Jail and Animal Services. b. Ribbon cutting was held for the new Senior Center. c. Ribbon cutting will be held on November 14, 2019 for the new 911 Center. 7. Rutherford County – In the absence of Commissioner Steve Garrison, no report was provided. 8. Surry County – In the absence of Commissioner Bill Goins, no report was provided. 9. Yadkin County – Commissioner Frank Zachary provided the following report: a. Ground breaking has begun on the new Sheriff’s Department. b. Recently we have had several contacts from out of state regarding space in our hospital in Yadkinville that closed 4-5 years ago, which is encouraging. B. Executive Dashboard Report – August 2019 – The report was included as part of the board meeting agenda packet. Will Callison stated that the Dashboard numbers are widely consistent, with no areas of concern. He noted the highlights provided to the board as part of the CEO Report. He provided a detailed review of the report including: penetration rates for Medicaid and Non-Medicaid, financial ratios, grievances, Transitions to Community Living, access to primary care, preventative care for members under the Innovations Waiver, inpatient ambulatory follow up, claims processing, authorization requests and denials, days to pay clean claims, Innovations slot tracking, and program integrity. He noted that Partners meets or exceeds state and internal goals for these measures. Mr. Callison and Susan Lackey provided an update on addressing claims processing at Frye Regional Medical Center. C. FY19 Quality Assurance (QA) & Improvement Annual Program Evaluation – Copies of the presentation were included in the board agenda packet. Selenna Moss provided background information regarding the requirement to conduct an evaluation of the overall QA and Improvement Program and the recommendation that a high-level overview of the program evaluation be provided annually to the board. She explained that QA is not a department but is embedded throughout every department within Partners. QA & Improvement activities are reported to the board through various department reports and measures, and accrediting body reviews throughout the year. She explained that while Partners meets or exceeds the quality performance metrics and benchmarks established by the state, that Partners sees itself as a learning organization with opportunities to improve. Discussion ensued regarding Innovations. Jane Harris provided an overview of the state’s Innovations Waiver Program and eligibility requirements. She explained that the waiting list which can take ten years to get the service, is an issue across the state and is related to the specific number of slots allocated by the state. She discussed the application and assessment process, the use of emergency slots, the rigid guidelines established by the state for the program, and that budget amount and the services a person can Page 6 of 32

receive is based on need and set by the state for intellectual or developmental disability (IDD) consumers with the greatest need for services. She stated that Partners is in regular contact with people on the waiting list and their families about other services that may be available that they are eligible for while they wait for the Innovations slot. VII. Adjournment With there being no further discussion, Chair Wil Neumann asked for a motion to adjourn. At 7:20 p.m. Joseph Ramey entered a motion and Mike Hoffman seconded. The motion carried unanimously. Respectfully Submitted, Tammy Pyles Clerk to the Board Page 7 of 32

Partners BHM Board Finance Meeting Minutes Face to Face Meeting Hickory Multi-Purpose Room October 10, 2019 at 6:00 pm FINANCE COMMITTEE MEMBERS Debra Cheek p Barbara Anderson p Chief Ramey P Frank Zachary A Pam Poteat A Russ Perkins P GUESTS PRESENT: Jeremey Hicks, Principal with Clifton Larson Allen, LLP CALL TO ORDER: With a quorum present, Debra Cheek called the meeting to order at 6:14 PM. Susan Lackey INTRODUCED Jeremy Hicks with Clifton Larson Allen. Jeremy is a Principal with Partner’s independent auditor, Clifton Larson Allen and will review the 2019 audit results. Jeremy Hicks distributed copies of the 2019 Audit Results to the Committee. Mr. Hicks presented an overview of the Audit, focusing on the Required Auditor Communications and the Draft Financial Statements sections of the document. Mr. Hicks stated that the auditor’s responsibility is to express an opinion on the fair presentation of the financial statements in conformity with generally accepted accounting principles, and he provided a comprehensive review of the information contained within the distributed report. Mr. Hicks stated Clifton Larson Allen focused the audit procedures around high risk areas for the organization. This year Partners had no new standards or disclosures. Partners Management presented to the Auditors adjustments made related to the bonus accrual. The draft financial statements were discussed. Mr. Hicks stated the financial statement format was consistent with prior years. The Report on the financial statement was Unmodified as to Fairness of Presentation in accordance with generally accepted accounting principles which represents the highest level of assurance that may be achieved. PARTNERS BHM STAFF Elizabeth Biggerstaff Finance Director p Susan Lackey Chief Financial Officer p Alan Smith Internal Auditor p Terri Morton Executive Assistant p Page 8 of 32

Jeremy thanked Susan Lackey, Elizabeth Biggerstaff, and Partners entire finance team for their assistance during the audit, stating the team did an excellent job in providing the information asked for in a timely manner. The committee accepted the audit presentation. Chief Ramey made a motion to accept the audit as presented by Clifton Larson Allen and submit to the full board for approval. Russ Perkins seconded, and the motion carried unanimously. AGENDA REVISIONS Susan Lackey emailed Partners Non-Medicaid Funding Audit Report for SFY2016 to the Committee Members on 10-8-19 @ 3:51pm. This item will become a part of the Agenda. APPROVAL OF PREVIOUS MEETING MINUTES: Debra Cheek called for a motion to approve the September 12, 2019 meeting minutes. Chief Ramey entered a motion to approve the minutes, Russ Perkins seconded, and the motion carried unanimously. AUGUST 2019 FINANCIAL STATEMENTS: BALANCE SHEET for August 2019: Elizabeth Biggerstaff provided an overview of the contents of the August 2019 Balance Sheet. Total assets for Medicaid were $ 90.2 million, State & Federal $17.9 million; Local $9 million; for a combined total of $117.2 million in assets. Total liabilities and fund equity totaled $117.2 million, which balances back to the assets. Total MOE used was $ 786,000 in August. INCOME STATEMENT: Year-to-date (YTD): Medicaid revenue $53.2 million, Non-Medicaid revenue $10.1 million, combined total revenue $63.4 million. Service expenses for Medicaid net of recoveries $41.7 million; non-Medicaid service expenses $8.3 million; combined total service expenses $50 million. Medicaid administrative expenses $6.8 million including risk reserve; non-Medicaid administrative expenses $918,000. Combined total administrative expenses of $7.7 million. When added with risk reserve, total expenses $49.6 million medicaid, $9.2 million non-medicaid, for a total of $58.8 million total with a net profit of $5 million. 2019 EXECUTIVE DASHBOARD REPORT: Susan Lackey reviewed the August 2019 Executive Dashboard Reports noting the following: Service Penetration Rate for the end of August was 16.2%. Total Medicaid Expense Ratio was 97.4 %. (Benchmark 85%) Medicaid Loss Ratio 87.6% (Benchmark 85%). Consolidated current ratio is 2.16 to 1. with a target of 2.20. Partners had 67.4 days of consolidated service expenses in cash. The legislated minimum requirement is 30 days. Grievances: the total number of Medicaid grievances reported in August (for July) was 5 grievances against providers and 3 grievances against the MCO. On average, Partners took 10.3 working days to resolve the informal grievances in August (benchmark is 15 days); and 25.4 working days to resolve formal grievances with the benchmark being 30 days. Page 9 of 32

Super Measures: Transitions to Community Living (TCLI). We received requirements for FY20 from the State. At the end of FY20 we are required to have 331 members housed, which is an increase of 67 members over FY19. Inpatient Ambulatory Follow Up Medicaid Mental Health 57.3%, Medicaid Inpatient Substance Use Services 58.8%, State Inpatient Ambulatory follow up 66.7%, State Inpatient Ambulatory Follow up for Substance Use 75.9%. * Partners remains #1 in the State for all timely follow-ups. Denials: DLP Frye once again submitted replacement claims with invalid control numbers. This is what is driving the $2.1 Million number. Susan Lackey presented Budget Revision #3 to the Finance Committee. Budget Revision 3 for FY 20 is an increase to the current budget of $838,593 for a total revised budget of $393,185,897. Barbara Anderson entered a motion to accept Budget Revision # 3 and present it to the Full Board for approval, Chief Ramey seconded and the motion carried unanimously. DIVISION AUDIT Alan Smith reviewed the SFY16 Non-Medicaid Funding Audit Settlement Review that was emailed to the Committee from Susan Lackey on October 8, 2019 @ 3:51 pm. This review covers the 2016 Audit prepared by DMH. When DMH performs an audit they look at every transaction. Of the $23M in state funding there were two items noted and they were transpositions totaling $780.00. Alan Smith Page 10 of 32

commended Susan Lackey and Elizabeth Biggerstaff and their staff for the exceptional job. The $780.00 we owe the State for these transpositions comes to 0.003% of Partner’s total funding. Susan Lackey noted that of the $780 owed back to DMH, Phoenix Counseling is paying us back $890.00 thus resulting in a Net positive for Partners. No action is required on this item as the Finance Committee acts as Partner’s Audit Committee. Debra Cheek called for any additional questions or comments from the Committee. Russ Perkins questioned why the income statement numbers appear more positive than in the past. Susan stated she is currently holding bi-monthly meetings with UM management reviewing Medicaid dollars to ensure these funds are not over spent. Additionally, Russ questioned the money paid to the State for IGT Funds. Susan explained these funds were usually returned from the State in October and they had not yet been received. ADJOURNMENT: Debra Cheek called for final questions or comments from the Finance Committee. With there being none, Chief Ramey entered a motion to dismiss and Barbara Anderson seconded. Having no further business, Debra Cheek adjourned the meeting at 7:10 pm. Minutes Submitted By: Terri Morton Page 11 of 32

REVENUESBeginning Budget 393,185,897$

627,062 Letter # 27 ADATC Funding60,000 Letter # 29 MHBG Funding for Dream Connections Group Home

273 Frye Regional 3 Way Funding 687,335$

Revised Budget 393,873,232$

EXPENSES

Beginning Budget 393,185,897$ 687,062 NON UCR Expenses

273 3 Way Hospital Expense687,335$

Revised Budget 393,873,232$

PARTNERS BHMBUDGET REVISION NO.4 FY20November 14, 2019Description

Page 12 of 32

Medicaid State/Federal Local CombinedASSETS

Current AssetsCash and cash equivalents 29,684,730$ 1,644,486$ 4,928,825$ 36,258,041$ Medicaid capitation receivable 801,157 - - 801,157 Receivable from State - 2,418,088 - 2,418,088 Other current assets - 1,202,450 1,637,279 2,839,729

Total Current Assets 30,485,887 5,265,024 6,566,104 42,317,015

Other AssetsRisk reserve account 37,620,033 - - 37,620,033 Long Term Investments 22,333,294 - 22,333,294 Other non-current assets - 9,108,985 - 9,108,985

Total Other Assets 59,953,327 9,108,985 - 69,062,312

Property and EquipmentLand 315,201 341,467 906,374 1,563,042 Buildings 4,998,948 5,415,528 2,191,584 12,606,060 Leasehold Improvements 325,850 353,004 - 678,854 Furniture and equipment 2,101,108 2,276,200 - 4,377,308 Other property and equipment 492,376 533,407 - 1,025,783

Total Property and Equipment 8,233,483 8,919,606 3,097,958 20,251,047 Accumulated depreciation/amortization 5,122,345 5,549,208 - 10,671,553 Net Property and Equipment 3,111,138 3,370,398 3,097,958 9,579,494

TOTAL ASSETS 93,550,351$ 17,744,408$ 9,664,062$ 120,958,821$

LIABILITIES Current Liabilities

Accounts payable 5,269,178$ 929,855$ -$ 6,199,033$ Accrued administrative expenses 1,890,012 333,531 - 2,223,543 IBNR claims payable 12,586,268 - - 12,586,268 Other services payable - 126,730 - 126,730 Payable to State - 98,221 - 98,221 Other current liabilities 7,883,880 3,873,380 - 11,757,260

Total Current Liabilities 27,629,338 5,361,717 - 32,991,055 Other Liabilities

Other non-current liabilities 1,148,252 202,633 - 1,350,885 Total Other Liabilities 1,148,252 202,633 - 1,350,885 TOTAL LIABILITIES 28,777,590 5,564,350 - 34,341,940

FUND EQUITYFund Balances:Investment in Fixed Assets - 5,927,928 3,610,363 9,538,291 Other- Non Spendable - 1,035,290 - 1,035,290 Reserved: - Reserved - State Statute and Prepaids - 8,352,195 - 8,352,195 Reserved - Other* - - - - Restricted: Restricted -Medicaid Risk Reserve 37,620,033 - - 37,620,033 Restricted - Other 44,760,024 - 6,053,699 50,813,723 Unreserved: Unreserved - Medicaid Surplus (Deficit) prior years (35,769,792) - - (35,769,792) Unreserved - Medicaid Surplus (Deficit) current year 2,001,346 - - 2,001,346 Unreserved - State/Federal Surplus (Deficit) current year - (3,135,355) - (3,135,355) Unreserved - Other 16,161,150 - 16,161,150 TOTAL FUND EQUITY 64,772,762 12,180,058 9,664,062 86,616,881 TOTAL LIABILITIES & FUND EQUITY 93,550,351$ 17,744,408$ 9,664,062$ 120,958,821$

Medicaid State Total*MOE Beginning Balance 3,904,081$ -$ 3,904,081$ Amount Used 1,218,837 -$ 1,218,837$ Balance 2,685,244$ -$ 2,685,244$

Partners Behavioral Health ManagementBalance Sheet

September 30, 2019unaudited

Page 13 of 32

Actual Actual Combined Medicaid Non-Medicaid Total

REVENUEService Revenue 67,790,334$ 12,066,516$ 79,856,850$ Administrative Revenue 9,907,185 1,532,058 11,439,243 Risk Reserve Revenue 1,590,238 - 1,590,238 Other Income/Revenue - 1,162,829 1,162,829

TOTAL REVENUE 79,287,758 14,761,403 94,049,160 EXPENSEService Expense

Inpatient 2,238,649 1,875,118 4,113,767 Community Support 59,439 1,801,237 1,860,676 BH Long-Term Residential 4,548,914 2,382,869 6,931,783 PRTF 2,117,511 - 2,117,511 Case Management 226,965 - 226,965 Outpatient 7,039,952 2,397,601 9,437,553 ACTT 1,911,743 315,591 2,227,334 MST 270,858 - 270,858 IIHS 2,455,642 - 2,455,642 Partial Hospital/Day Treatment 1,537,293 83,382 1,620,675 Psych Rehab 1,184,803 120,814 1,305,617 Crisis Services 497,310 1,246,291 1,743,601 Innovations/IDD Hourly/Day Services 22,300,938 - 22,300,938 ICF/MR 16,824,836 - 16,824,836 1915 (b)(3) Services/(Other for Non-Medicaid) 1,628,881 2,758,964 4,387,845 Medicaid Reinvestment - -

Total Service Expenses 64,843,736 12,981,867 77,825,603 Recoveries

TPL/COB Recoveries - - - Fraud and Abuse Recoveries 419,055 - 419,055 Other Recoveries (describe) 63,030 - 63,030

Total Recoveries 482,085 - 482,085 Net Services Expenses, Net of Recoveries 64,361,651 12,981,867 77,343,518 Administrative ExpenseSalary & Wage Expense 3,524,253 617,441 4,141,694 Payroll Benefits & Expense 1,206,496 216,204 1,422,700 Professional Services 371,406 67,065 438,471 Supplies & Materials 109,915 18,460 128,375 Travel & Vehicles 60,410 13,128 73,538 Utilities & Postage 197,720 107,212 304,932

UnauditedPartners Behavioral Health ManagementIncome StatementFor Three Months Ending September 30, 2019Page 14 of 32

Capital Expense 33,931 41,255 75,186 Lobbying Costs 33,000 33,000 Other Expense 441,962 118,035 559,997 DD Treatment Planning 1,750,360 1,750,360 MH/SA Treatment Planning 1,855,444 1,855,444 Property Expense 420,220 105,728 525,948

Total Administrative Expense 10,005,117 1,304,528 11,309,645 Risk Reserve Set Aside 1,590,238 - 1,590,238 Total Administrative Expense, including Risk Reserve Set Aside 11,595,355 1,304,527 12,899,883 TOTAL EXPENSES & RISK RESERVE SET-ASIDE 75,957,006 14,286,394 90,243,400 EARNINGS FROM OPERATIONS 3,330,751 475,008 3,805,759 Other income/(loss) - - - REVENUE OVER (UNDER) EXPENDITURES BEFORE OTHER FINANCING SOURCES 3,330,751 475,008 3,805,759 Other income/(loss)Intergovernmental Transfers 478,716 478,716 Reinvestment Activities 272,028 272,028 Tailored Plan Readiness 578,663 578,663 REVENUE OVER (UNDER) EXPENDITURES BEFORE OTHER FINANCING SOURCES 2,001,344 475,008 2,476,352

OTHER FINANCING SOURCESAppropriated Fund Balance Medicaid 850,691 - 850,691 Appropriated Fund Balance MOE - 1,218,837 1,218,837 Appropriated Fund Balance Other - 38,617 38,617 TOTAL OTHER FINANCING SOURCES 850,691 1,257,454 2,108,145

NET PROFIT (LOSS) 2,852,037$ 1,732,462$ 4,584,501$

Page 15 of 32

Year to-date Budget

Year-to-Date Actual

Budget to Actual Variance

Year- to-date Budget

Year-to-Date Actual

Budget to Actual Variance Total Variance

Under (Over) Under (Over) Under (Over)REVENUE

Service Revenue 67,744,944$ 67,790,334$ (45,390)$ 14,230,341$ 12,066,516$ 2,163,825$ 2,118,435$ Administrative Revenue 9,867,918 9,907,185 (39,267) 864,369 1,532,058 (667,689) (706,956)Risk Reserve Revenue 1,583,937 1,590,238 (6,301) 0 - 0 (6,301)Other Income/Revenue 0 0 0 277,500 1,162,829 (885,329) (885,329)

TOTAL REVENUE 79,196,800 79,287,758 (90,958) 15,372,210 14,761,403 610,807 519,849EXPENSEService Expense

Inpatient 2,448,324 2,238,649 209,675 2,172,684 1,875,118 297,566 507,241Community Support 359,022 59,439 299,583 1,678,641 1,801,237 (122,596) 176,987BH Long-Term Residential 3,774,708 4,548,914 (774,206) 2,430,501 2,382,869 47,632 (726,574)PRTF 2,747,508 2,117,511 629,997 0 - 0 629,997Case Management 157,920 226,965 (69,045) 0 - 0 (69,045)Outpatient 7,633,983 7,039,952 594,031 2,849,499 2,397,601 451,898 1,045,929ACTT 2,293,746 1,911,743 382,003 304,650 315,591 (10,941) 371,062MST 244,335 270,858 (26,523) 0 - 0 (26,523)IIHS 2,657,754 2,455,642 202,112 0 - 0 202,112Partial Hospital/Day Treatment 1,480,962 1,537,293 (56,331) 57,051 83,382 (26,331) (82,662)Psych Rehab 1,191,750 1,184,803 6,947 94,845 120,814 (25,969) (19,022)Crisis Services 643,245 497,310 145,935 1,303,239 1,246,291 56,948 202,883Innovations/IDD/Hourly Services 21,607,590 22,300,938 (693,348) 0 - 0 (693,348)ICF/MR 17,846,343 16,824,836 1,021,507 0 - 0 1,021,5071915 (b)(3) Services/(Other for Non-Medicaid) 2,657,754 1,628,881 1,028,873 4,291,577 2,758,964 1,532,613 2,561,486

Total Service Expense 67,744,944 64,843,734 2,901,208 15,182,687 12,981,867 2,200,820 5,102,028Recoveries

TPL/COB Recoveries 0 0 0 0 0 0 0Fraud and Abuse Recoveries 0 419,055 (419,055) 0 0 0 (419,055)Other Recoveries (describe) 0 63,030 (63,030) 0 0 0 (63,030)

Total Recoveries 0 482,085 (482,085) 0 0 0 (482,085)Total Service Expense, Net of Recoveries 67,744,944 64,361,649 3,383,295 15,182,687 12,981,867 2,200,820 4,619,943Administrative ExpenseSalary & Wage Expense 3,580,532 3,524,253 56,279 680,980 617,441 63,539 119,818Payroll Benefits & Expense 1,321,301 1,206,496 114,805 250,830 216,204 34,626 149,431Professional Services 531,520 371,406 160,114 99,520 67,065 32,455 192,569Supplies & Materials 418,430 109,915 308,515 91,490 18,460 73,030 381,546Travel & Vehicles 88,957 60,410 28,547 15,699 13,128 2,571 31,118Utilities & Postage 266,036 197,720 68,316 54,243 107,212 (52,969) 15,346

Capital Expense 176,896 33,931 142,965 31,217 41,255 (10,038) 132,927Lobbying Costs 33,000 33,000 0 0 0 0Other Expense 470,666 441,962 28,704 94,994 118,035 (23,041) 5,663DD Treatment Planning 1,909,506 1,750,360 159,146 0 0 159,146MH/SA Treatment Planning 1,818,498 1,855,444 (36,946) 0 (36,946)Property Expense 264,807 420,220 (155,413) 46,731 105,728 (58,997) (214,410)

Total Administrative Expenses 10,880,150 10,005,117 875,032 1,365,703 1,304,528 61,175 936,207Risk Reserve Set Aside 1,583,937 1,590,238 (6,301) 0 0 0 (6,301)Total Administrative Expense, including Risk Reserve Set Aside 12,464,087 11,595,355 868,731 # 1,365,703 1,304,528 61,175 929,906TOTAL EXPENSES, including RISK RESERVE SET-ASIDE 80,209,031 75,957,003 4,252,027 # 16,548,390 14,286,395 61,175 929,906Earnings From OperationsOther income/(loss)Intergovernmental Transfers 478,716 478,716 0Reinvestment Activities 272,028 272,028 0Tailored Plan Readiness 578,663 578,663 0 #

REVENUE OVER (UNDER) EXPENDITURES BEFORE OTHER FINANCING SOURCES (2,341,638) 2,001,348 (4,342,985) # (1,176,163) 475,008 (1,651,188) (5,030,001)OTHER FINANCING SOURCES - Appropriated Fund Balance Medicaid 2,341,637 850,691 1,490,946 0 - 0 1,490,946Appropriated Fund Balance MOE 0 0 0 976,020 1,218,837 (242,817) (242,817)Appropriated Fund Balance Other 0 0 0 200,143 38,617 161,526 161,526Total Appropriated Fund Balance 2,341,637 850,691 1,490,946 1,176,163 0 (81,291) 1,409,655NET PROFIT OF LOSS 0$ 2,852,038$ (2,852,037) 0$ 1,732,462$ (1,732,452)$ (4,584,501)$

Partners Behavioral Health ManagementIncome StatementBudget to Actual ComparisonFor Three Months Ending September 30, 2019UnauditedMedicaid Non-MedicaidPage 16 of 32

Actual Actual Combined Medicaid Non-Medicaid Total

REVENUEService Revenue 22,258,824$ 3,874,301$ 26,133,125$ Administrative Revenue 3,254,499$ 489,441$ 3,743,940$ Risk Reserve Revenue 522,391$ -$ 522,391$ Other Income/Revenue - 209,817$ 209,817$

TOTAL REVENUE 26,035,715 4,573,559 30,609,271EXPENSEService Expense

Inpatient 565,241 491,362 1,056,603Community Support 3,226 521,582 524,808BH Long-Term Residential 1,534,572 695,662 2,230,234PRTF 758,940 - 758,940Case Management 99,609 - 99,609Outpatient 2,531,248 752,409 3,283,657ACTT 584,716 93,459 678,175MST 96,662 - 96,662IIHS 846,451 - 846,451Partial Hospital/Day Treatment 508,274 9,560 517,834Psych Rehab 390,298 15,559 405,857Crisis Services 184,942 451,817 636,759Innovations/IDD Hourly/Day Services 7,655,399 - 7,655,399ICF/MR 6,433,845 - 6,433,8451915 (b)(3) Services/(Other for Non-Medicaid) 529,593 1,630,612 2,160,205

Total Service Expenses 22,723,017 4,662,022 27,385,039Recoveries

TPL/COB Recoveries - - - Fraud and Abuse Recoveries 108,953 - 108,953Other Recoveries (describe) 2,010 - 2,010

Total Recoveries 110,963 - 110,963Net Services Expenses, Net of Recoveries 22,612,054 4,662,022 27,274,076Administrative ExpenseSalary & Wage Expense 1,119,655 177,777 1,297,432Payroll Benefits & Expense 392,325 66,565 458,890Professional Services 105,677 20,077 125,754Supplies & Materials 2,803 485 3,288Travel & Vehicles 23,194 4,756 27,950Utilities & Postage 72,541 39,425 111,966

Capital Expense 16,158 8,209 24,367Lobbying Costs 11,000 0 11,000Other Expense 172,602 34,447 207,049DD Treatment Planning 555,760 0 555,760MH/SA Treatment Planning 567,565 0 567,565Property Expense 139,120 34,571 173,691

Total Administrative Expense 3,178,400 386,312 3,564,712Risk Reserve Set Aside 522,391 - 522,391

Total Administrative Expense, including Risk Reserve Set Aside 3,700,791 386,312 4,087,103TOTAL EXPENSES & RISK RESERVE SET-ASIDE 26,312,846 5,048,334 31,361,180EARNINGS FROM OPERATIONS (277,131) (474,775) (751,909)Other income/(loss)Intergovernmental Transfers 159,572 159,572 Reinvestment Activities 150,205 150,205 Tailored Plan Readiness 105,144 105,144 REVENUE OVER (UNDER) EXPENDITURES BEFORE OTHER FINANCING SOURCES (692,052) (474,775) (1,166,830)

OTHER FINANCING SOURCES

Appropriated Fund Balance Medicaid 286,643 286,643Appropriated Fund Balance MOE 432,477$ 432,477Appropriated Fund Balance Other - 6,579 6,579 TOTAL OTHER FINANCING SOURCES 286,643 439,056 725,699NET PROFIT (LOSS) (405,409)$ (35,719)$ (441,128)$

Partners Behavioral Health ManagementIncome StatementFor the Month Ending September 30, 2019UnauditedPage 17 of 32

Actual Actual Combined Actual Actual Combined Medicaid Non-Medicaid Total Medicaid Non-Medicaid Total Service: Revenue $22,258,824 $3,874,301 $26,133,125 $67,790,334 $12,066,516 $79,856,850 Expense 22,612,054 4,662,022 27,274,076 64,361,651 12,981,867 77,343,518Net Service (353,230) (787,721) (1,140,951) 3,428,683 (915,351) 2,513,332Administrative: Revenue 3,254,499 489,441 3,743,940 9,907,185 1,532,058 11,439,243 Expense 3,593,321 386,312 3,979,633 11,334,524 1,304,528 12,639,052Net Administrative (338,823) 103,129 (235,694) (1,427,340) 227,530 (1,199,810)Net Operating Income (692,053) (684,592) (1,376,645) 2,001,343 (687,821) 1,313,522Other:

Risk Reserve Revenue 522,391 522,391 1,590,238 1,590,238Other Income/Revenue 209,817 209,817 1,162,829 1,162,829Other Financing Resources 286,643 439,056 725,699 850,691 1,257,454 2,108,145809,034 648,873 1,457,908 2,440,929 2,420,283 4,861,212Risk Reserve Expense 522,391 522,391 1,590,238 1,590,238Net Other 286,643 648,873 935,517 850,691 2,420,283 3,270,974Net Income ($405,409) ($35,719) ($441,128) $2,852,037 $1,732,462 $4,584,501For the Month of September, 2019 For Three Months ending September 30, 2019PARTNERS BEHAVIORAL HEALTH MANAGEMENT

Page 18 of 32

1 | P a g e

October 24, 2019

To: Finance Committee From: Finance Team RE: Review of September 2019 Financial Statements and Dashboard Results

Summary:

Three months into FY20 Partners BHM has positive results overall. As of September 30, we were below

budgeted levels for both Medicaid and non-Medicaid funding with a net surplus overall for the fiscal

year of $4,584,501 including fund balance.

The September Executive Dashboard:

Service Penetration Rate:

The service penetration rate calculation is on a rolling 12-month calendar basis and includes Rutherford

County beginning July 1, 2019. Between October 2018 and September 2019, Partners catchment area

had 192,629 unduplicated Medicaid-eligible members and 31,458 members received at least one

billable service during the year, or a 16.3% penetration rate.

Partners BHM received a capitation payment for 160,833 member months in September, based on the

month of payment rather than the month of eligibility. We continue to experience inconsistencies

between eligibility data and the member count in our capitation payments and are reconciling these

differences each month, retroactively, and reporting them to DMA for corrections. We are also working

with DMA on the eligibility corrections related to the Rutherford transition as well as the correction to

the July 2019 PMPM rates. The NCTracks system recoups any PMPM that is within a given time span if

any additional payment or change is needed. If the span is from January to July and only July needs an

adjustment, January to July is recouped and repaid. The 24-month estimated AR capitation we reported

to DMA for September 2019 was $1,053,628. We use 24 months because DMA will only allow us that

amount of time to resolve unpaid eligibility issues.

Page 19 of 32

2 | P a g e

Over the last year, the trend of Unduplicated Medicaid Members is declining when looking at 10 months

of actuals with a slight uptick in July 2019 because of the Rutherford transition. Over the same period,

the trend in the number of Unduplicated Members Receiving Services is flattening out. Claims lag

negatively impacts the count of Medicaid Members served in the most recent 2 months.

The comparison between the number of members served in a specific Category of Aid (or County of

Medicaid Eligibility) to the total Medicaid-eligible population in the same Category of Aid (or County) is

the Average Penetration Rate by Category of Aid (or County).

It is difficult to compare year over year change in penetration rate because of the Rutherford transition.

However, the overall penetration rate (both by Category of Aid and by County) saw a slight decrease in

percentage points because we are only looking at 2 months of actuals for Rutherford county members

compared to 12 months of actuals for the remaining counties in our catchment area. The rolling 12-

month penetration rate has been essentially flat over the last 12 months.

The overall Annualized Penetration Rate by County of Medicaid Eligibility for September 2019 has

decreased slightly when compared to YTD September 2018 going from 16.4% to 16.3%. All the counties

in our catchment area saw a slight increase in penetration rate likely due to the decrease in member

eligibility. The decline in overall penetration rate can be attributed to the lack of historical data for

Rutherford County.

Financial Statements:

Overall Comments

Partners BHM shows an overall net income of $4,584,501 as of September 30. There is a

Medicaid net surplus of $2,852,037. The non-Medicaid category has a net surplus of $1,732,462

for the month of September including fund balance.

Service Expense

Service Cost: Medicaid service cost consists of paid claims adjusted for estimated outstanding

claims or IBNR. Our IBNR estimate for September was $12,586,277. For the month of September

Partners had $20,871,590 in Paid Claims.

Service Expense Ratio: The Medicaid Service Expense Ratio for fiscal year to date was 94.2%

(including Fund Balance if any).

The State/IPRS Service Expense Ratio was 100.6% (including MOE if any).

A new graph has been added that will track usage of MOE over the course of the fiscal year.

There was $1,218,837 in MOE used FYTD September 30, 2019.

The Total Medicaid Expense Ratio consists of Medicaid service and administrative expense

compared to Medicaid revenue, exclusive of risk reserve funds. The Total Medicaid Expense

Ratio in September 2019 was 101.9%.

Page 20 of 32

3 | P a g e

The Medical Loss Ratio is a comparison of the capitation payment against the expenditures that

improve the quality of service and care (I/DD and MH/SU Care Management treatment

planning), medical claim expenses, payments made outside of the claim system, and the IBNR

estimate. The benchmark for this measure is 85%. As of September 30, 2019, the Medical Loss

Ratio was 88.6%.

Key Balance Sheet Ratios:

Given the new solvency formula in SB99, the MCO’s financial ratios are viewed on a

consolidated basis, so we are only including one year-end estimate for each ratio. The reduction

of our Medicaid fund balance by funding non-Medicaid services takes away any meaningful use

of the Medicaid fund balance compared to the total fund balance. We do not, in fact, really

have a State fund balance related to income. That has been used up early in the Legislative

single stream reduction process. Any cash related to State fund balance is only a residual left

over from MOE transfers from Medicaid to State. It is also important to note that although we

have more assets in September, our liabilities are also higher (driven by IBNR and Accounts

Payable). This is driving down our current ratio but is expected to swing back in line in the

coming month(s).

Current Ratio

The Consolidated current ratio for Partners BHM as of September 30, 2019, is 1.96 to 1. The

current ratio for September includes long-term investments. The minimum solvency

requirement is 1 to 1. The internal FY20 year-end estimate for Partners is 2.0.

Defensive Interval

As of September 30, 2019, Partners BHM had 68.2 days of consolidated service expenses in

cash. The defensive interval includes long-term investments. The legislated minimum

requirement is 30 days. The internal year-end estimate for Partners is 60 days. The basis of this

calculation is total cash to total operating expenses, adjusted for non-cash expenses. The

expected decrease in our financial ratios are the Legislative-Mandated Maintenance of Effort

and Medicaid Reimbursement expenditures.

Grievances:

The total number of grievances reported in September for August was 13 with 15% (2) being against the

MCO and 85% (11) against Providers. On average, Partners BHM took 13 working days to resolve

informal grievances in August with the benchmark being 15 days. On average, Partners BHM took 30

calendar days to resolve formal grievances in August with the benchmark being 30 days. The State

requires formal grievance resolutions to be reported in calendar days.

Super Measures:

Transition to Community Living:

Page 21 of 32

4 | P a g e

Partners BHM uses the TCLI Performance Dashboard from the State to identify our completion

of slot allocation. As a result, TCLI results are reported on a two-month lag. For FY20 Partners is

required to have a net increase of 67 individuals housed for the fiscal year. This means at the

end of FY20 we should have a total of 331 individuals in housing. At the end of August 2019, we

had a net of 285 members in housing which represents 31.3% of the FY20 annual target. (To

date Partners has not received the TCLI Performance Dashboard from the State so this report is a

reflection of our internal tracking.)

Innovations Integrated Care Super Measure:

The Innovations Integrated Care measure looks at the percentage of continuously enrolled

Medicaid enrollees under the Innovations Waiver who received a primary care or preventive

health service. For persons ages 3 to 6 and ages 20 through 64, the person received the service

during the measurement period. For persons ages 7 to 19, the person received the service

during the measurement period OR the year prior to the measurement period.

For the period from October 2018 through September 2019, the grand total of Innovations

members eligible for services across all of our counties was 571 with 554 receiving services for

an overall percentage of 97%. The performance standard is 90% of the eligible population will

have received a primary care or preventive health service within the measurement period.

Ambulatory Follow Up:

Ambulatory follow up is a Super Measure report starting January 1, 2018. The formula used to

calculate the Medicaid measure is being finalized.

Ambulatory follow up looks at those members with Inpatient discharges who have a follow-up

service (from paid claims) within 1-7 days of the date of discharge from inpatient care. This is an

evidence-based best practice that reduces recidivism of inpatient care. We report on two

primary disabilities (Mental Health and Substance Use). There is a two-month lag, which means

this report is based on July 2019 data. There is a retroactive update of this data each month.

The performance standard for this measure for both Medicaid and State services is that 40% or

more of individuals discharged shall receive a follow-up visit within 1-7 days after discharge.

In July 2019, 145 Medicaid members were discharged from Inpatient MH services and 54.9%

had follow up services within 1-7 days. During this same reporting period, 42 Medicaid members

were discharged from Inpatient SU services and 50.0% had services within 1-7 days. While

Partners internal benchmark of 75% was not met, Partners exceeded the external performance

standard.

In July 2019, 154 State members were discharged from Inpatient MH services and 51.9% had

follow up services within 1-7 days. During the same reporting period, 152 State members were

discharged from Inpatient SU services and 72.4% had follow up services within 1-7 days. While

Page 22 of 32

5 | P a g e

Partners internal benchmark of 75% was not met, Partners exceeded the external performance

standard.

For State-funded members, discharge information is based on paid claims data for Facility-Based

Crisis and 3-Way services.

Claims Processing:

In September, Partners BHM processed $26,196,130 in claims. We paid out $20,871,589 in

claims, or 79.7% of those that were processed. In September, there were $5,324,541 (20.3%) in

denied or pended claims. On average, Partners is paying claims within 9.3 days from the

received date and Providers are submitting claims for payment 24 days from the date of service.

Overall, Partners BHM paid Providers within 33.3 days from the date of service.

The top five reasons for denials make up approximately $3 million of total denied claims for

September. Duplicate claim submission, claims submitted for services without authorization,

claims received after the billing period, claims submitted with a taxonomy that is not associated

with the NPI, and claims submitted where there is no coverage available for the

patient/service/provider combination make up the top 5 reasons for claims denials in

September.

Duplicate claim $940,475

Service is not authorized 686,657

Claim received after billing period 490,992

Billing taxonomy submitted is not associated with the billing NPI

458,706

No coverage available for patient/service/provider combo

381,348

TOTAL $2,958,178

Service Authorization Request Processing:

The Utilization Management Department processed 100% of Standard Service Authorization

Requests within 14 days. UM approved 93.0% of authorizations. Of those denied in September

33.2% were for administrative reasons and 66.8% were for clinical reasons.

Innovations Slot Tracking:

Partners Innovations entered a new waiver year on July 1, 2019. Partners Slot Availability for

September was 1,589. This includes slots associated with the Rutherford transition. As of

September 30, 6 Regular Slots remain unassigned. The Emergency, CAP-C and Money Follows

the Person (MFP) Slots are part of the 18 Reserved Slot allocation that Partners receives at the

Page 23 of 32

6 | P a g e

beginning of the Waiver Year. Of the 18 reserved slots, 8 were unassigned (1 Emergency, 2 CAP-

C Transition and 5 MFP Slots). Members must meet specific criteria to receive one of the

reserved slots.

Program Integrity:

Case Activity

As of September 2019, there were 56 open investigations. Program Integrity opened 7 new

investigations and closed 13 investigations in September. There were 0 cases reopened.

Recovery Activity

As of September 2019, on a fiscal year-to-date basis, there were 9 overpayments to Providers

identified for a total of $1,363,425. This amount takes into consideration any adjustments due

to interest, penalties, or reductions.

FYTD PI has collected $408,392 against outstanding overpayments and $61,896 from Provider

self-audits.

The total outstanding balance of overpayments is $7,629,121, inclusive of any amounts that may

have remained unpaid to Partners at the end of prior fiscal years. About a third of the

outstanding balance is for TNO’s that are working through the disputes/appeals process. The

remaining balance is from providers that are no longer in Partners network. Once out of our

network, these companies generally no longer have a revenue stream, greatly complicating our

ability to collect these funds.

Services:

Medicaid

On a fiscal year-to-date basis, Partners BHM has underspent Medicaid service dollars by

$3,839,754 (including IBNR), which is 5.6% under compared to our FY20 budgeted numbers and

inclusive of Medicaid Reinvestment in services and recoveries. The Medicaid categories of

service that are over budget three months into FY20 are Case Management (44%), BH Long-

Term Residential (21%), MST (11%), Partial Hospital (4%), and Innovations (2%).

State

On a fiscal year to date basis, Partners has underspent State service dollars by $2,213,221, or

16.9% (approximately $1.6M of the positive variance is related to non-UCR). The IPRS

categories of service that are over budget three months into FY20 are Inpatient (113%), Partial

Hospital (46%), Psych Rehab (27%), Community Support (11%), and ACTT (4%).

Page 24 of 32

Executive Dashboard, September 2019

Access to Services Report as of September 30, 2019

Executive Dashboard Report

September 30, 2019

12-Month Average Member Months

160,553

Annualized MCD

Unduplicated Served16.3%

Annualized Medicaid Penetration Rate

TotalUnduplicated

Eligibles

31,458 192,629

Unduplicated # Received Services

8.2%

Members Receiving Servicesfor the month of September 2019

Unduplicated Count

146,376 11,934

Annualized Non-MCD Unduplicated

Served12.2%

Annualized Non-Medicaid Penetration Rate

Non-Medicaid inCatchment Area

12,508

102,790

Penetration Change from

Month: September Served Eligible Rate Prior Year

Burke 3,259 18,542 17.6% 0.1%

Catawba 4,811 29,518 16.3% 0.6%

Cleveland 4,413 26,462 16.7% 0.1%

Gaston 8,502 46,431 18.3% 0.0%

Iredell 3,939 26,470 14.9% 0.3%

Lincoln 2,551 13,872 18.4% 0.9%

Rutherford 1,304 12,141 10.7% 10.7%

Surry 2,114 15,946 13.3% 0.3%

Yadkin 989 6,906 14.3% 1.2%

Annualized Penetration Rate by County of Eligibility

Page 1 of 6

Page 25 of 32

Executive Dashboard, September 2019

Financial Statements Report as of September 30, 2019

Medicaid Total Medicaid Total

Cash $29,684,730 $36,258,041 Accounts Payable $5,269,178 $6,199,033

Other Current Assets 801,157 6,058,974 IBNR-Claims Payable 12,586,268 12,586,268

Total Current Assets 30,485,887 42,317,015 Other Current Liabilities 9,773,892 14,205,754

Total Current Liabilities 27,629,338 32,991,055

Net Property and Equipment 3,111,137 9,579,494 Other Liabilities 1,148,252 1,350,885

Fund Balance:

Investment in Fixed Assets 0 9,538,291

Long-Term Investments 22,333,294 22,333,294 Other Non-Spendable 0 1,035,290

Other Assets 0 9,108,985 Restricted 82,380,057 96,785,951

Risk Reserve 37,620,033 37,620,033 Accumulated Net Surplus (Deficit) (35,769,792) (35,769,792)

Unreserved 18,162,496 15,027,141

64,772,761 86,616,881

Total Assets $93,550,351 $120,958,821 Total Liabilities and Fund Balance $93,550,351 $120,958,821

Assets Liabilities and Fund Balance

Partners Behavioral Health Management

Balance Sheet as of September 30, 2019

Medicaid Non-Medicaid Combined Total YTD Budget Variance

Service:

Revenue $67,790,334 $12,066,516 $79,856,850 $81,843,071 $1,986,221

Expense 64,633,679 12,981,867 77,615,546 82,795,349 5,179,803

Net Service 3,156,655 (915,351) 2,241,304 (952,278) (3,193,582)

Administrative:

Revenue 9,907,185 1,532,058 11,439,243 10,732,287 (706,956)

Expense 10,005,117 1,304,528 11,309,645 13,575,261 2,265,616

Intergovernmental Transfers 478,716 0 478,716 0 (478,716)

Tailored Plan Readiness 578,663 0 578,663 0 (578,663)

Net Administrative (1,155,311) 227,530 (927,781) (2,842,974) (1,915,193)

Net Operating Income 2,001,347 (687,821) 1,313,527 (3,795,252) (5,108,779)

Other:

Risk Reserve Revenue 1,590,238 0 1,590,238 1,583,937 (6,301)

Other Income/Revenue 0 1,162,829 1,162,829 277,500 (885,329)

Other Financing Resources 850,691 1,257,454 2,108,145 3,517,800 1,409,655

Total Other 2,440,929 2,420,283 4,861,212 5,379,237 518,025

Risk Reserve Expense 1,590,238 0 1,590,238 1,583,937 (6,301)

Net Other 850,691 2,420,283 3,270,974 3,795,300 524,326

Net Income (Loss) $2,852,037 $1,732,462 $4,584,501 $0 ($4,584,501)

Partners Behavioral Health Management

Income Statement

For the Three Months Ending September 30, 2019

Page 2 of 6

Page 26 of 32

Executive Dashboard, September 2019

Financial Risk Report as of September 30, 2019

Medicaid Service Expense Ratio (includes Fund Balance) 94.2%

Medicaid Net Service (Over)/Under $3,156,655

State Service Expense Ratio (includes Fund Balance, if any) 100.6%

State Net Service (Over)/Under excluding Fund Balance ($1,280,484)

Medicaid Report as of September 30, 2019

Maintenance of Effort:Financial Ratios (YTD):

Category of Service Annual Budget Budget Actual Variance Budget Actual Variance % Variance

Inpatient $9,793,299 $816,108 $565,241 $250,868 $2,448,325 $2,238,649 $209,676 9%

Community Support 1,436,084 119,674 3,226 116,448 359,021 59,439 299,582 83%

BH Long-Term Residential 15,098,834 1,258,236 1,534,572 (276,336) 3,774,709 4,548,914 (774,206) (21%)

PRTF 10,990,036 915,836 758,940 156,896 2,747,509 2,117,511 629,998 23%

Case Management 631,677 52,640 99,609 (46,970) 157,919 226,965 (69,046) (44%)

Outpatient 30,535,928 2,544,661 2,531,248 13,412 7,633,982 7,039,952 594,030 8%

ACTT 9,174,985 764,582 584,716 179,866 2,293,746 1,911,743 382,004 17%

MST 977,335 81,445 96,662 (15,217) 244,334 270,858 (26,524) (11%)

IIHS/FCT 10,631,015 885,918 846,451 39,467 2,657,754 2,455,642 202,112 8%

Part Hosp/Day Treatment 5,923,849 493,654 508,274 (14,620) 1,480,962 1,537,293 (56,331) (4%)

Psych Rehab 4,767,003 397,250 390,298 6,953 1,191,751 1,184,803 6,947 1%

Crisis Services 2,572,984 214,415 184,942 29,473 643,246 497,310 145,936 23%

Innovations 86,430,355 7,202,530 7,655,399 (452,869) 21,607,589 22,300,938 (693,349) (3%)

ICF-MR 71,385,374 5,948,781 6,433,845 (485,064) 17,846,344 16,824,836 1,021,508 6%

1915(b)(3) 10,631,015 885,918 529,593 356,325 2,657,754 1,628,881 1,028,873 39%

Medicaid Reinvestment 2,913,950 242,829 150,205 92,624 728,488 272,028 456,460 63%

Recoveries 0 0 (110,963) 110,963 0 (482,085) 482,085

Total $273,893,723 $22,824,477 $22,762,259 $62,218 $68,473,431 $64,633,677 $3,839,754 5.6%

Fiscal Year Medicaid Services Cost

(includes IBNR) Monthly Fiscal YTD

$2,685,244

$1,218,837

$3,904,081

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

Remaining Balance

Used to Date

Beginning Balance

101.9%

88.6%

85.0% 85.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

Medicaid ExpenseRatio

Medical Loss Ratio(YTD)

Financial Ratios

Sep-19 Target

1.96

2.00

1.93

1.94

1.95

1.96

1.97

1.98

1.99

2.00

2.01

Consolidated Current Ratio

Sep-19 Target

68.2

60.0

54.0

56.0

58.0

60.0

62.0

64.0

66.0

68.0

70.0

# Days Service Expense in Cash

Sep-19 Target

Key Financial Indicators(Includes Long-Term Investments)

Page 3 of 6

Page 27 of 32

Executive Dashboard, September 2019

IPRS Report as of September 30, 2019

Quality Improvement Feedback Report as of September 30, 2019

Grievances: * Grievance data reported on a 1-month delay (following State reporting specs)

12.0

15.0

9.311.0

7.3

11.8 12.2

14.0

8.8

11.8

13.0

10.3

13.0

0

5

10

15

20

25

30Average Number of Days to Resolve a

Informal Grievance

Avg Working Days for Informal Grievances Goal to Resolve Informal Grievances

Category of Service Annual Budget Budget Actual Variance Budget Actual Variance% Variance

Inpatient $204,198 $17,017 $25,900 ($8,884) $51,050 $108,867 ($57,817) (113%)

Community Support 6,496,741 541,395 521,582 19,813 1,624,185 1,801,237 (177,051) (11%)

BH Long-Term Residential 9,722,000 810,167 695,662 114,504 2,430,500 2,382,869 47,631 2%

Outpatient 11,271,264 939,272 752,409 186,863 2,817,816 2,397,601 420,215 15%

ACTT 1,218,604 101,550 93,459 8,091 304,651 315,591 (10,940) (4%)

Part Hosp/Day Treatment 228,204 19,017 9,560 9,457 57,051 83,382 (26,331) (46%)

Psych Rehab 379,384 31,615 15,559 16,057 94,846 120,814 (25,968) (27%)

Crisis Services 5,212,960 434,413 451,816 (17,403) 1,303,240 1,246,291 56,949 4%

3-Way Hospitals 8,486,541 707,212 465,463 241,749 2,121,635 1,766,251 355,384 17%

Non-UCR 9,284,793 773,733 1,190,184 (416,451) 2,321,198 690,050 1,631,148 70%

Total $52,504,689 $4,375,391 $4,221,593 $153,797 $13,126,172 $10,912,951 $2,213,221 16.9%

Fiscal Year IPRS Services Cost Monthly Fiscal YTD

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000 IPRS Non-UCR FYTD Budget to Actual

YTD Actual YTD Budget

16.0

22.5 24.2 22.9 23.0 24.3 24.526.7

24.9 22.7

28.225.4

30.0

0

10

20

30

40

50Average Number of Days to Resolve a

Formal Grievance

Avg Calendar Days for Formal Grievances Goal to Resolve Informal Grievances

2 15%

11 85%

0 0%

GrievancesAugust, 2019

Grievances Against MCO Grievances Against Providers

Grievances Against Other

Page 4 of 6

Page 28 of 32

Executive Dashboard, September 2019

Super Measures

Transitions to Community Living

as of July 31, 2019

Ambulatory Follow Up Reported on 2-Month Lag

Performance Standard = 90%Source: Innovations Super Measure (Reports Manager - DMA-DMH Super Measures: DMA Innovations Integrated Care Super Measure)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Jul-19

Follo

w U

p P

erc

enta

ge

Inpatient Ambulatory Follow Up(from Claims Data)

MCD MH MCD SU State MH

State SU Internal Benchmark Performance Measure

Innovations Members Receiving Services

97.0%

Access to Primary/Preventive Care for Individuals Under the Innovations Waiver as of September 30, 2019

554

EligibleMembers

571

Fiscal Year-End Benchmark: 67

285 Placements q 46 Below Target

285

0 50 100 150 200 250 300 350

Benchmark (67) Current (285) Target (331)

Source: TCLI Manager

Page 5 of 6

Page 29 of 32

Executive Dashboard, September 2019

Operational Performance Report as of September 30, 2019

Claims:

Number of Days to Process and Pay All Claims:

Jul'19 Aug'19 Sept'19

Service Date to Received Date 23.0 21.8 24.0

Received Date to Paid Date 8.4 9.1 9.3

Service Date to Paid Date 31.4 30.9 33.3

Top 5 Reasons for Denied Claims:

Jul'19 Aug'19 Sept'19

Duplicate Claim 510,314.71$ 985,403.70$ 940,474.79$

Service is not authorized 810,969.30$ 958,736.17$ 686,656.76$

Claim received after billing period 515,027.49$ 490,992.32$

No coverage available for

Patient/Service/Provider combo 369,358.72$ 356,474.63$ 381,348.25$

Invalid DCN (Document Ctrl #) or

resubmission ref # 2,189,711.48$

Billing Taxonomy submitted is not associated

with the Billing NPI 449,997.32$ 458,705.80$

Referenced claims has already been resubmitted. Multiple resubmissions not allowed336,737.78$

$2,140,640.05 $5,005,353.47 $2,958,177.92

#1 Denial Code #2 Denial Code #3 Denial Code

#4 Denial Code #5 Denial Code

Treatment Authorization Requests (TAR):

Authorization Requests Jun-19 Jul-19 Aug-19

Total Number of Auth Requests Received 4,338 2,965 2,934

% Processed in 14 Days 100.0% 100.0% 100.0%

# Auth Requests requiring Expedited

Decisions, inclusive of Inpatient 166 167 189

% Processed in 3 Days 100.0% 100.0% 100.0%

Total % of Auth Requests Processed in Required

Timeframes 100.0% 100.0% 100.0%

# of Auth Requests Denied for Clinical Reasons 145 125 137

# of Administrative Denials 54 42 68

Total # of Auth Requests Denied 199 167 205

% of Total Auth Requests Approved 95.4% 94.4% 93.0%

Program Integrity

Innovations Slot Tracking

$5,324

$26,196

$20,872

9.3%10.8%

9.0%7.8%

9.5% 9.2% 8.7%9.7% 9.6%

14.2%

10.5%

13.0%

7.9%5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Perc

en

t of D

en

ied

Cla

ims

Cla

ims (

$0

00

)Claims Processing

Claims Denied and Pended Total Claims Processed (000)

Total Claims Paid (000) Claims Percent Denied

8.9 8.7 8.9

11.4

8.9 8.9 8.7 8.8 9.1

8.1 8.4 9.1 9.3

4.0

6.0

8.0

10.0

12.0

14.0

# o

f D

ays

Days to Pay Clean Claims *

Average Number of Days * Clean claims contain all

Calculation of percentage of denied claims does not include claims denied for either of the following reasons:- Non-Billable Service- Non-Covered Ancillary Services

TNO Prior Years FY'2018 FY'2019 FY'2020-TD

Initial TNO Amount $2,415,696 $4,569,188 $2,651,069 $1,363,872

Number of TNOs Issued 158 23 31 9

Adjusted TNO Amount $967,055 $4,544,475 $2,268,570 $1,363,425

% Reduction of Initial TNO -60% -1% -14% 0%

* Amount Collected During the Fiscal Year $796,200 $142,809 $237,991 $408,392** Total Amount of Adjusted TNO

Recouped $825,922 $109,170 $578,872 $440

% of Adjusted TNO Recouped 85.41% 2.40% 25.52% 0.03%

Outstanding Balance $141,133 $4,435,304 $1,689,698 $1,362,985

(some recoupments cross over fiscal years)

** Total amount of the TNO that was recouped

Note: TNO recoupments are reported on a Cash Basis

Total TNO Outstanding Balance $7,629,121

Total Self-Audit Recoveries YTD $61,896

New Cases 7

Closed Cases 13

Reopened 0

Total Open Cases 56

* Actual Recoupment: Amount received during the fiscal year

Page 6 of 6

Page 30 of 32

3.00 Accounting by Funding Source 03.02U Business Practices/Financial Incentives 13.03 Claims Adjudication 23.04 Claims Quality Monitoring and Review 23.05 Compliance with State and Federal Requirements 13.06 Conflict Resolution with Contracting Parties 03.07 Coordination of Benefits and Use of Public Funds 33.08 Eligibility Reconciliation 13.09 Financial Statement Publication and Distribution 03.10 Financial Control of Contracts/Purchase Orders/Fixed Assets/Bank Deposits 33.11 Fleet Vehicles of the Agency 13.13 Management of Financial Risk 13.14 Management of Restricted Risk Reserve 13.16 Prohibition for Use of Federal Funds for Political Activities/Contributions 03.17 Prompt Pay Guideline Compliance 13.18 Property Capitalization and Depreciation 03.19 Provider Agreements 03.20 Provider Prepayment Policy 03.21 Rate Setting 13.22 Services to Undocumented Aliens 13.23 Transporting members in Personal Vehicles 23.24 Use of Public Funds for Members of Target Populations 03.25 Cash Management and Investments 03.26 Provider Payback Interest and Penalties 03.27 Prohibition of Payments to Institutions Outside the United States 03.28 Claims and Encounters Reconciliation 03.29 Encounter Data Submission and Tracking 03.30 Medical Expense Risk Management 03.31 Reinvestment of Medicaid Savings 13.32 Alternative Payment Arrangements 13.33 Finance Procedure Manual 03.34 Claims Telephone Requests 5

4.00 Accounting of Disclosures of Confidential Information 14.01 Assurance of Confidentiality 14.02U Policy, Procedure, Plan and Program Description Compliance Policy 04.03 member Privacy Rights 24.04 member Records Management 14.05 member Request for Amendment of Health information 24.06 member Request to Access Protected Health Information 24.07 Facsimile (Fax) Transmission 14.08 Legal Proceedings Involving Confidential member Information 44.09 Minimum Necessary 14.10 Program Integrity Provider Monitoring/Auditing Protocol 14.11 Record Retention and Disposition 14.12 Release of Information With member Consent 44.13 Release of Information Without member Consent 34.14 Security and Accessibility of member Information 24.15 Verbal Consent 14.16 Records Retention - Provider Closure or Termination from Network 24.17 Provider Claims/Records Sampling 14.18 Conflict of Interest Disclosure and Attestation Statement Policy and Procedure 14.19 Fees for Copies of Medical Records 24.20 Maintenance of Confidentiality with Shredding Vendors 04.21 Regulatory Compliance and Non-Retaliation 14.22 Scanned Electronic Records Audit 04.23 Scanned Electronic Records Destruction 04.24 Program Integrity Prepayment Claims Review 14.25 Provider Overpayment Recovery Policy 14.26 HIPAA Breach Notification4.27 Business Associate Policy 25.25 HIPAA Security Incident Response and Reporting 0

5.30 Data Integration 5

N/A Quality Management Plan and Program Description 5

8.21 MCO-Issued Provider Sanctions 38.22U Network Program Scope 48.29 Provider Directory Maintenance Policy 48.30 Continued Access to Care 5N/A Credentialing Program Description (PN) 4

N/A Complex Case Management Plan & Program Description 5

13.04U Clinical Utilization Management Appeals 4N/A Utilization Management Plan (UM) 4

MHSU Care Coordination

Clinical - Utilization Management

Provider Network

Policy

NumberPolicy Name

Finance

Regulatory Compliance

IT (Information Technology)

Quality Management

LOR

MT

Revised 9/23/2016Page 31 of 32

N/A Alcohol Screening in Members with Mental Health Conditions-Program Description 57.07 Behavioral Health Screening 5N/A Depression Screening among Adults with Substance Use Disorders-Program Description 57.06 Self Management Tools 5

Member Engagement-Formerly Consumer Relations

Revised 9/23/2016Page 32 of 32