integrated services of kalamazoo · revenues projected - visuals major funding sources as % of...

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Integrated Services of Kalamazoo Formerly known as: Kalamazoo Community Mental Health & Substance Abuse Services

Fiscal Year 2020 Budget Table of Contents

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Executive Summary 1 Budget Overview 2 Revenues Projected 3 Revenues Projected - Visuals

Major Funding Sources As % of Budget 4 Expenditures Projected 5 Expenditures Projected - Visuals

Various Expenditures As % of Budget 6 Provider and Direct Operated As % of Budget 7 Budget Narrative Introductory Comments 8 - 9 Services for Youth and Family 9 - 10

Services for Adults with Intellectual/Developmental Disabilities 10 - 12 Services for Adults with Mental Illness and Co-Occurring Disorders 12 - 13

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Integrated Services of Kalamazoo Formerly known as: Kalamazoo Community Mental Health & Substance Abuse Services

Fiscal Year 2020 Budget Executive Summary

We are starting out our Fiscal Year 2020 with a new name! Integrated Services of Kalamazoo (ISK) will replace our old DBA: Kalamazoo Community Mental Health and Substance Abuse Services (KCMHSAS). Our legal name remains the same i.e.: Kalamazoo County Community Mental Health Authority. The fiscal year ’20 Budget (October 1, 2019 through September 30, 2020) is a reflection of new and on-going innovations and strategies for integrating and coordinating care. It incorporates current trends in services and their costs plus strategic initiatives targeted for implementation. The recommended budget for FY ’20 uses the same format (PIHP and ISK Risk) as FY ’19 to reflect our current operational and financial dynamics. Over 83% of the FY 20 budget is reflected as ISK functioning as an affiliate partner in the Southwest Michigan Behavioral Health (SWMBH) eight county affiliation. With the beginning of this Fiscal Year, the Children Waiver Programs (SED and CWP) have moved from a Fee For Service program to Capitated Funding. Although there is not a change in services provided, the revenue and expense are now being reflected on the SWMBH risk page instead of the ISK risk page. Medicaid, Healthy Michigan Medicaid Expansion and Autism Spectrum Disorder programming are projected at $73.4 million with corresponding revenues and expenses for these programs. This year’s funding includes a net funding increase of approximately $4.1 million for incremental cost and benefit expense adjustments. The Medicaid Settlement Income line reflects the amount of dollars that is anticipated to be either needed from or returned to SWMBH by funding category. The expense budget does include increases to both Providers and Staff. There continues to be significant growth in the Autism Spectrum services. Revenues and expenditures will be carefully monitored and reported monthly in these respective areas throughout the course of the fiscal year. The balance of 17% of the FY ’20 budget represents the portion that ISK is at financial risk. Over 25% of the ISK financial risk revenue comes from State General Fund to support individuals who do not qualify for the Medicaid specialty services or who are under-insured. We are projecting a small surplus in General Fund dollars, that could be carried over into next year should we meet the budget target. The remaining 75% of ISK Financial Risk comes from a variety of sources, including State and Federal Grants and County Allocation which provides some Federal matching dollars. A projected $12,320 deficit in our financial risk area, should it actually materialize, would reduce our Unrestricted Fund Balance. It is critical that expenditure controls and on-going monitoring for this funding source are in place in order to maintain our financial position in our Unrestricted Fund Balance. Finally, it should be noted that the adoption of the budget represents a first step in a continuous budget cycle. While monitoring, reporting and amending have always been important subsequent steps in our yearly budget process, the inherent financial uncertainties associated with the FY ’20 budget dramatically increase the need for these steps.

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FY 20 FY 19

Specialty Healthy Autism SUD Block State Other Funding Grand Grand

Services Michigan Spectrum Grant General Fund Sources * Totals Totals

Revenues Projected/Settlement 63,647,471$ 5,806,068$ 3,953,725$ 4,215$ 3,604,656$ 10,497,029$ 87,513,164$ 84,873,525$

Expenditures Projected 63,647,471 5,806,067 3,953,725 4,215 3,535,290 10,509,350 87,456,118 84,959,385

Income (Deficit) Projected - - - - 69,366 (12,320) 57,046 (85,860)

Unrestricted Fund Balance - - - (69,366) 12,320 (57,046) 85,860

Balanced Budget -$ -$ -$ -$ -$ -$ -$

*Other Funding Sources: Grants, County allocation, etc

Integrated Services of Kalamazoo

Fiscal Year 2020 Budget Overview

As Presented for Public Hearing and Board Adoption on September 23, 2019

Financial Risk Management: ISKFinancial Risk Management: SWMBH

Formerly known as: Kalamazoo Community Mental Health and Substance Abuse Service

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FY 20 FY 19

REVENUES Specialty Healthy Autism SUD Block State Other Funding Grand Grand

Services Michigan Spectrum Grant General Fund Sources Totals TotalsISK Operational Revenues:

Medicaid Revenue 60,386,709$ 60,386,709$ 57,628,358$

Medicaid Settlement Income (Payment) 3,080,762 (1,243,542) 415,248 (266,946) 1,985,522 2,844,639

DHS Fostercare Incentive Payments 180,000 180,000 55,610

Fees 411,750 411,750 381,328

Healthy Michigan Revenue 7,049,610 7,049,610 7,049,612

Autism Medicaid 3,538,477 3,538,477 3,330,594

SUD Block Grant 271,161 271,161 -

Other Federal and State Grants 6,746,301 6,746,301 4,653,617

Earned Revenue 1,181,145 1,181,145 2,300,471

OBRA Programs 171,733 171,733 174,074

General Fund 3,604,656 3,604,656 3,614,657

Interest Earnings 147,500 147,500 4,500

County Allocation (Local Match) 1,550,400 1,550,400 1,550,400

Veteran's Office - - 228,650

Donations 10,000 10,000 -

Projected GF Carryforward FY '19 - - -

Sub-Total: 63,647,471 5,806,068 3,953,725 4,215 3,604,656 10,218,829 87,234,964 83,816,510

ISK Restricted Revenues:

Non-Match Revenue 191,200 191,200 213,052

Restricted Interest 87,000 87,000 9,000

SED Waiver - 590,527

Childrens Waiver Program - 244,436

Sub-Total: - - - - - 278,200 278,200 1,057,015

Total: 63,647,471$ 5,806,068$ 3,953,725$ 4,215$ 3,604,656$ 10,497,029$ 87,513,164$ 84,873,525$


Fiscal Year 2020 Budget Revenues


Medicaid Unrestricted Fund Balance

Formerly known as: Kalamazoo Community Mental Health and Substance Abuse Services

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Integrated Services Fiscal Year ‘20 Budget Major Funding Sources As % of Budget

Medicaid73%

Healthy MI7%

Autism4%

State GF4%

Other Sources12%

Medicaid

Healthy MI

Autism

State GF

Other Sources

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FY 20 FY 19

EXPENDITURES Specialty Healthy Autism SUD Block State Other Funding Grand Grand

Services Michigan Spectrum Grant General Fund Sources Totals TotalsYouth Programs 6,715,313$ -$ 3,652,293$ -$ 139,508 525,342$ 11,032,456$ 12,063,204$

Childrens Waiver Program 225,019 - - - 225,019 296,825

MIA Programs 18,981,350 4,791,514 - 4,215 1,894,911 1,248,935 26,920,924 26,708,675

IDDA Programs 30,568,274 140,630 - - 175,875 257,608 31,142,387 29,197,468

Integrated Health Clinic 2,187,422 322,859 - - 828,472 127,148 3,465,901 3,416,307

Administration, Access, Training 4,823,922 445,744 301,432 - 292,000 605,166 6,468,264 6,153,798

Federal and State Grants - - - 181,412 6,771,302 6,952,714 5,404,947

Homeless Shelter 146,172 105,321 - - 23,112 199,725 474,329 715,375

Veteran's Office - - - - - - 228,662

Local Match Drawdown - - - - 774,124 774,124 774,124

Non Match Expense - - - - - - -

Total: 63,647,471$ 5,806,067$ 3,953,725$ 4,215$ 3,535,290$ 10,509,350$ 87,456,118$ 84,959,385$


Fiscal Year 2020 Budget Expenditures


Medicaid Unrestricted Fund Balance


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Integrated Services Fiscal Year ‘20 Budget Various Expenditures As % of Budget

Youth15%

Adult32%

IDDA34%

Integrated Clinic4%

Administration7%

Federal and State Grants

6%

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Integrated Services Fiscal Year ‘20 Budget Provider & Direct Operated As % of Budget

Provider70%

Direct Operated30%

Provider Direct Operated


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Integrated Services of Kalamazoo (formerly known as Kalamazoo Community Mental Health and Substance Abuse Services)

Fiscal Year 2020 Budget Budget Narrative

Introductory Comments

The fiscal year budget that runs from October 1, 2019 through September 30, 2020 (FY ’20 Budget) represents our rapid and constantly changing services and financial environment. The most significant changes can be summarized as follows:

This is an annual budget, although the State has not provided us with any budgetary numbers for FY20. They have estimated that the Statewide budget for Mental Health and Substance use service would increase approx. 8.4% statewide.

Additionally, the State Actuary has issued new methodology for calculating the Region Risk Factor associated with the State Capitated Rates. Based on the information provided in September, we could expect to see a 4.3% decrease from FY19 in Medicaid revenues in Fiscal year 2020.

Those two changes above are estimated to result in a net increase over FY19 Medicaid revenues of 4.1% or approximately $2.8M dollars which has been included in the budget numbers.

Staffing shortages still remain a critical issue with Residential Providers. These staffing shortages have eliminated some options for lower cost residential placements, thus increasing costs for Specialized Residential and Personal Care services.

A new threat is the FY19 trend of reduced Medicaid and Healthy Michigan eligible. Our capitated funding is based on the number of eligible participants in each plan.

It’s imperative that our financial management process (adoption, reporting, monitoring, amendment) continue to reflect the new financial dynamics. This means attention to ensuring right sized benefits for Consumers and close attention to data reporting and monitoring.

For our reporting purposes, we continue to separate our financial reporting to segregate Medicaid and Unrestricted Fund Balance. Segregating the Medicaid funded services accurately reflects that Southwest Michigan Behavioral Health (SWMBH) bears this financial risk for this area of our budget. The Unrestricted Fund Balance segregation more accurately reflects that the State General Fund and all other funding sources are our financial risk that ultimately impacts our unrestricted fund balance. Specifically, for the budget, we estimated current year costs based on FY19 actual costs adjusted for operational strategies. Our budget for Specialized Medicaid, Healthy Michigan and Autism revenue is estimated based on the projected high-level increase percentages from the Actuary. We are continuing to work through changes to current processes to help alleviate the continued, increased usage on Medicaid services while still providing the medically necessary services for which individuals are entitled.

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For the Medicaid portion of the budget, it is worth noting that Medicaid revenues attributed to ISK (based on State rates and Medicaid eligibles) do not cover the total cost of needed services and that additional settlement dollars will be required to provide the medically necessary and required services to the individuals. While this has also been the case in previous fiscal years, since the SWMBH Region is now projected to be over budget in Medicaid revenues, it is imperative that we adopt changes in our practices to meet service expectations at lowered costs. The SED and Children’s Waiver programs have previously been Fee for Service Medicaid programs in that we would bill Medicaid separately for those services. This year, those programs have become part of the Medicaid Capitated funding. This change is increasing the Medicaid deficit by a small amount as the Medicaid Capitated rates do not cover the cost of providing those services. Additionally, the dollars projected for Autism needs are not keeping up with the cost of services. As a result, service to the Autism, CWP, and SED Waiver populations are supplanting available resources for other populations. Healthy Michigan revenues attributed to ISK currently provide more revenue than needed to meet the needs of Consumers funded by Healthy Michigan. However, we are experiencing a drop in the number of both Medicaid and Healthy Michigan eligible, and are concerned that trend will continue. Throughout this year, staff will be reviewing expenditures and adopting new business practices to ensure the provision of medically necessary, yet least restrictive, services to bring total service costs more in line with expected revenues. Both Providers and staff are budgeted for increases in this budget in order to maintain a strong provider network and to recruit and retain staff.

As the budget relates to funding sources where ISK is at risk, the recommended budget reflects the current State General Fund allocation and approx. $2m increase in Federal and State Grants. The budget does indicate a deficit in other funding of $12,320 mainly attributable to projections of increased usage at State Hospitals for which we pay a 10% match out of local dollars. If these projections actually occur, this would result in a reduction to our Unrestricted Fund Balance.

Finally, it’s important to note that this recommendation for budget adoption is only the start of an on-going financial process that will extend throughout the fiscal year.

Services for Youth and Family STAKEHOLDER INPUT

The mission of Integrated Services of Kalamazoo (formerly known as Kalamazoo Community Mental Health and Substance Abuse Services) is to provide services that empower people to succeed. Positive outcomes valued by stakeholders include the areas of community inclusion, transition, home and school functioning, behavior towards others, moods/emotion, thinking, substance use, behavior in the community, health/wellness and family support. Community feedback also included the importance of services such as Community Living Supports and Respite. These outcome areas are reviewed at regular meetings with stakeholders including advocacy groups such as ASK Family Services, the Family Support Advisory Council (FSAC), self-advocates and provider partners. Financial status for the Services Youth and Family Division are reviewed as well. Additionally, meetings were held with the Juvenile Court, DHHS, Parent Advisory Group, and Calling All Youth. Stakeholder input included a public hearing held on Monday, June 24, 2019. These different stakeholder groups are solicited for continuing input and feedback. BUDGET PLAN FY 19/20

The overall budget strategy is to support the local systems of care for youth and to assure that services for those most in need are available. Capacity to serve has been an issue, more youth are presenting with severe needs and the most intensive services such as Wraparound and Home Based have State Medicaid mandated services caps. A challenge is to continue to implement a model of intensive services that can serve more youth. An important aspect of a successful system of care

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is to insure parent and youth voice, and these services will continue to be supported. These efforts will be supported by a federal System of Care 4-year grant that will end FY 19/20 therefore is funded at a reduced level. Incentive funding has been received to further support services for youth involved with MDDHS-foster care. SED-W Waiver opportunities have remained stable for youth involved with MDDHS. The SAMHSA budget also supports funding for at risk populations of youth on the school to prison pipeline, Latino families, and Youth placed in DHHS foster care. The number of youth eligible to receive the Autism services benefit continue to have a steady rise. All of the youth receiving that benefit are also eligible for Supports Coordination and other specialty mental health service which is reflected in the Budget Plan. Adjustments were made in the budget for to better match services to utilization, match funding to collaborative projects, and to better run the provider network. BUDGET HIGHLIGHTS

An increase for most providers was added to accommodate the anticipated rate increase for hospitals and for providers excluding autism services.

An increase in staff wages is being added

Budget Strategies implemented in FY18/19 are carried forward into FY19/20 to ensure fiscal stability.

Services for Adults with Intellectual/Developmental Disabilities STAKEHOLDER INPUT

The mission of Integrated Services of Kalamazoo (formerly known as: Kalamazoo Community Mental Health and Substance Abuse Services) is to provide services

and supports that empower people to succeed. Positive outcomes in the areas of relationships (friends and family), living arrangements, community inclusion,

employment, health/wellness and improvement in functioning ability are goals of the services we provide. These outcome areas are reviewed at regular meetings

with stakeholders including advocacy groups, self-advocates and provider partners. Integrated Services of Kalamazoo (ISK) staff solicit input from all of these

stakeholders on how to improve outcomes. These different stakeholder groups are solicited for continuing input and feedback. These include The Arc Community

Advocates, I/DD Directors, Kalamazoo Regional Educational Services Agency, Michigan Rehabilitation Services, Disability Network and more. ISK I/DD department

directly employs a Certified Peer Mentor who provides valuable feedback for regarding services and priorities. Further regular input comes from the Inclusion

Advisory Council, whose members are adults with Intellectual/Developmental Disabilities who also receive services from ISK.

BUDGET PLANNING for FY20

Financial Statements for the Services for Adults with Intellectual/Developmental Disabilities Division are reviewed with the I/DD Directors group each month. Budget

information is also shared with Community Advocates, Kalamazoo Regional Educational Services Association and Michigan Rehabilitation Services. Trends are

reviewed, and when possible, incorporated into planning.

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BUDGET HIGHLIGHTS

Provider agencies continue to struggle with staff vacancies. As part of Annual Needs Assessment, provider agencies reported 162.2 (full time

equivalent) for direct care position vacancies (prior year was 103.5 FTE vacancies). This is an increase of 56% from the prior year. These vacancies

remain and have caused agencies to close admissions to some services and stop providing some services altogether. While the legislature allocated

funding for a direct care wage increase ($.25 beginning in April 2019), this has not ameliorated the direct care crisis. Since 2014, the minimum wage has

increased by 25%, while provider increases have cumulatively totaled less than 5%. This budget is not able to address the direct care wage/staffing

crisis. The Direct Care Staff crisis is the single largest issue facing this Division. All services and initiatives have been scaled back due to lack of

staffing.

The Division budget for Specialized Residential increased. This is a result of the Direct Supports Staff shortage, causing a lack of options other than

Specialized Residential, thereby increasing utilization.

For the second consecutive year, agencies are currently not able to provide staffing for new Supported Independent Living arrangements ((24 hour

supports in individuals’ homes), decreasing options for all individuals, especially those with complex, unique needs where typical Specialized Residential

settings are not clinically indicated.

Some provider agencies have discontinued staffing for Supported Independent Living settings. Other agencies were able to provide staffing for some of

these individuals, in other cases, the individuals had to move to Specialized Residential settings.

The number of Supported Living arrangements has decreased by 17% in the past year, creating a direct increase in Specialized Residential use (both in

county and out of county.)

Most provider agencies are not accepting referrals for Community Living Services (intermittent supports in a family home or individual’s home). This has

caused a strain on families, some having family member move to Specialized Residential or Adult Foster Care).

The two largest Specialized Residential agencies in our community have discharged/are discharging residents from Specialized Residential homes due

to lack of staffing to meet the complex needs of the individuals. Previously, additional supports could be provided to individuals in crisis so their living

arrangement would not need to change due to a short-term issue.

In the past couple of years, the Michigan Department of Health and Human Services Department referred a few very high needs young adults with

complex needs. These young men had been placed in locked youth settings, both in state and out of state. The average cost of these four individuals is

$169,500 per year, per individual.

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Review of service trends and requests for services reflects an increase in young adults with complex and challenging needs, resulting in need for high

intensity (and costly) services.

We have traced many of the developmental disabilities, mental illnesses and complete lack of ability to bond or to cope back to trauma experienced as a

child. In the three most extreme cases, the individuals now require the most intensive of services, at an average of $252,705 per year, per individual.

These individuals have a co-occurring mental illness and aggressive or otherwise destructive behaviors. Involvement in the criminal justice system is

common. The Transitions program is meeting short term needs and stabilizing the individuals, however additional, long term, local resources are

required to safely and effectively meet the needs of this growing population.

The federal Home and Community Based Services (HCBS) regulations require services to be delivered in the most community included settings

possible. ISK and provider agencies have been moving toward community inclusion for many years, and the statewide HCBS plan pushes this further.

Providing services in the community can and does increase costs and increased staffing is often needed, as well as very small groups or individualized

services. In general, it may cost 50%-75% more to provide some services entirely in the community (vs. in provider owned settings.) There have been

no additional funds provided for this transition.

INDIVIDUALS SERVED

FY18/19 Budget 760 Actual 752 (through 5-31-19)

FY19/20 Budget 770

Services for Adults with Mental Illness and Co-Occurring Disorders STAKEHOLDER INPUT

Integrated Services of Kalamazoo (formerly known as: Kalamazoo Community Mental Health and Substance Abuse Services) holds to the mission of providing services that support recovery to empower people to succeed. Striving to assist individuals in building relationships, gaining employment, living independently, and increasing their health and wellness are goals consistent with the services provided. These outcome areas are reviewed at regular stakeholders including advocacy groups, self-advocates and provider partners. The different stakeholder groups are solicited for continuing input and feedback regarding service and financial areas. Stakeholder input comes from: a public hearing held on Monday June 24, 2019, NAMI meetings; Recovery Institute; monthly developmental disability/mental illness provider director meetings; and case management/supports coordination meetings. BUDGET PLAN FY19/20

Peer delivered services continue to be a priority for the department. All case management services employ peers within their service delivery system. Peer Services are utilized within our integrated health team – Whole Health Initiative, to assist with engagement and group wellness sessions. Recovery Institute continues to

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partner with Integrated Services of Kalamazoo (ISK) to provide peers within our outpatient clinic to promote engagement and connections to recovery activities offered at their location. Finally, Recovery Coaches are an integral part within our Opioid Recovery Outreach program – they provide 24 hours 7 day a week on call to anyone entering our hospital emergency departments with a substance use disorder. Wellness and recovery continue to be focuses. Working with our community partners, we continue to focus on increasing the skill and knowledge of those interacting directly with individuals we serve and linking them with primary care. (i.e. disease management protocols, on-line health integrations courses….). We continue to expand the participation within Whole Health Action Management, InShape, and Smoke Less/Live More along with care coordination that assist in connecting individuals with needed primary care supports. ISK continues to expand our outpatient services to meet the anticipated needs of our Certified Community Behavioral Health Clinic. This allows ISK to expand the services offered to individual with a substance use disorder along with further expanding our integrated health clinic. To increase our work on improving health indicators ISK has also added care coordinators to work with our designated collaborating organizations. ISK continues to monitor closely the utilization of our State General Fund dollars. Our contract program providers continue to evaluate for duplication or other community services availability.

BUDGET HIGHLIGHTS

Budgeted Beds per day for Borgess Hospitals decreased to 6.5 per day.

Budgeted Beds per day for Other Hospitals increased to 3.50 per day.

KPH and Forensic are budgeted to support 15.0 beds per day to fulfill the local match requirement for the state facility.

Specialized Residential Personal Care & Community Living Supports continue to increase in both units and costs.

INDIVIDUALS SERVED

FY18/19 Budget 4,000 Actual 3,824 (as of May 31,2019)

FY19/20 Budget 4,300

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