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Update on the Formation of the

Community Mental Health Affiliation of Mid-Michigan

September 13, 2001

Background

In December, 1999, the CMH Board of Directors reviewed a number of potential partnerships that CMH could pursue, criteria for the formation of partnerships, by CMH, and the types of partnerships that could be created. In the fall of 2000, DCH, released the REVISED PLAN FOR PROCUREMENT OF MEDICAID SPECIALTY PREPAID HEALTH PLANS, in which was specified the minimum size that a CMH must be to obtain a Specialty Health Care Services contract with the Department. In addition to specifying this minimum size, the plan outlined the method by which CMHs below that size could retain their authority to manage and provide care under the Medicaid program. These requirements are spelled out below, in an excerpt from the plan.

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3.1. MINIMUM COVERED LIVES CRITERIA

Single CMHSPs that have at least 20,000 Medicaid beneficiaries (covered lives) within their respective catchment area boundaries will be eligible (as individual stand-alone organizations) to apply for designation as a specialty Prepaid Health Plan for their catchment area. CMHSPs that do not meet the covered lives criteria will be afforded a range of options for program participation, including an opportunity for multiple contiguous CMHSPs to make a consolidated application for PHP designation.

The state has determined that an eligibility base of roughly 20,000 is the point at which scale economies for PHP administrative activities begin to develop. Since specialty PHPs will have enhanced administrative responsibilities in the future (as promulgated regulations related to several federal statutes take effect), achieving some measure of scale economies becomes more important than in previous contracting periods.

3.1.1. Options for CMHSPs with Less Than 20,000 Medicaid Beneficiaries

Single CMHSPs with less than 20,000 Medicaid covered lives may choose among several options for participation in the Medicaid managed specialty services program.

3.1.1.1. Affiliation & Consolidated Application for PHP Designation

Multiple CMHSPs - with contiguous boundaries - that collectively have at least 20,000 Medicaid beneficiaries in their combined catchment areas may submit a consolidated application for PHP designation. The consolidated application must describe the relationship that exists among the affiliated entities, including any legal agreements that define or circumscribe these relationships.

MDCH will accept consolidated applications that conform to one of the following structural arrangements:

The affiliated CMHSPs submitting a consolidated application identify one CMHSP in the affiliation to serve as the "hub" for regional efforts. This CMHSP would serve as the Prepaid Health Plan for the region. The affiliated CMHSPs may designate the hub CMHSP formally (through the Intergovernmental Transfer of Functions and Responsibilities Act) or simply by informal agreement. In any case, only the hub-CMHSP will be considered for designation as the specialty PHP for the region, and it must meet all other qualifications established by MDCH to be awarded this status. The other CMHSPs in the affiliation would be eligible for a special provider designation – that of "Comprehensive Specialty Service Network" (CSSN) – that affords them special consideration in the provider network and qualifies them to receive a sub-capitation from the PHP or hub-CMHSP.

The affiliated CMHSPs may submit a consolidated application along with a declaration - supported by legal documentation - that they have, or are in the process of creating, a new organizational entity (under the Urban Cooperation Act) which they are nominating for consideration as the specialty PHP for the region. The new entity would have to meet all qualifications established by MDCH before it could be designated as the specialty PHP for the region.

3.1.1.2. Inability of CMHSPs to Form Affiliations or Select an Option

In the event that various contiguous CMHSPs cannot form affiliations or PHP regions that meet the minimum covered lives standard, or if a CMHSP does not indicate its preferred participation option for the Medicaid managed specialty services program, the department may open the region for competitive procurement or designate an adjacent qualifying CMHSP to serve as the specialty PHP for the region.

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Over the past year, as a result of the establishment of the minimum size requirement, several CMHs have approached CEI to discuss the potential of forming a partnership with CMH. The CMHs that have approached CEI in this regard are Ionia County CMH, Gratiot County CMH, and Newaygo County CMH. The CEI Board of Directors reviewed these requests, examined these potential partnerships against the criteria, developed earlier for the consideration of such partnerships, and approved the pursuit of a partnership with Ionia, Gratiot, and Newaygo County CMHs.

While Ionia, Gratiot, and Newaygo Counties sought affiliation with CEI to meet the size requirements contained in the state’s procurement plan and to capture the efficiencies that can be gained through such an affiliation, CEI sought such an affiliation for a different set of reasons:

Ensure that CEI has enough covered Medicaid lives to meet what is expected to be the eventual "floor" size for a specialty prepaid health plan - 50,000 Medicaid lives (enrollees). Joining with the three partner CMHs ensures that such a size is reached.

Ensure the strength of the public system. If Ionia, Gratiot, or Newaygo could not form an affiliation large enough to meet the minimum standards, those counties would be considered "open" to be bid upon by other parties, including private care management firms. The loss of the mental health services in these counties from the public sector, so close to CEI, could threaten the continuation of public-sector mental health services here and in other adjacent counties.

Progress to Date

The following has been accomplished, by the four CMHs relative to the development of a potential affiliation/partnership, over the past several months.

First things first: Determine principles and decision making process before anything else: The general rule of thumb that is used to guide the development of the affiliation, is that the fundamental principles of the relationship and the structure and process for dialogue and decision making must be worked out prior to operational and governance decisions. This rule has proven to be very effective in moving the affiliation effort along at a very rapid pace and with high levels of openness, cooperativeness, and the ability and willingness to deal with conflict. This is in stark contrast to a number of other affiliations forming around the state. It is hoped that these principles will also become part of the formal agreement that ties the affiliation members together.

Board involvement: Representatives of the Boards of Directors of Ionia, Gratiot, and CEI met, twice (the second one with Pat Barrie, DCH Director of Managed Care) to review the potential formation of an affiliation. The meetings were very positive and set the stage for a very fruitful process. Newaygo’s Board members nor staff were at these meetings, given that Newaygo joined the effort subsequent to these meetings. Efforts to involve Newaygo Board members will be taken over the next several months.

Broad representation: A Core Group, made up of five representatives of each CMH, was formed. This group meets bi-weekly to discuss the status of a number of affiliation development efforts. This group is not a governing body and has no power that CMH do not normally have in developing and maintaining relationships with other organizations. When formal decisions are to be made, they are brought to each Affiliate’s Board of Directors for review and approval. The expansion of this group, to include consumers, Board members, and others is currently being discussed.

Hub and spoke structure: The Core Group is recommending that the affiliation use a hub and spoke structure, with CEI serving as the hub (the pre-paid health plan (PHP) that holds the Medicaid contract with DCH) and Ionia, Gratiot, and Newaygo CMHs serving as the spokes. Such an arrangement avoids the cost and lack of control that would emerge with the creation of another body to serve as the PHP for the Affiliation. The Core Group is recommending that when there is a need to refer to the affiliation, as a whole, that the name Community Mental Health Affiliation of Mid-Michigan be used.

Several agreements to formally structure the Affiliate’s relationships: The Core Group members will be recommending, to their respective Boards of Directors, that the relations between the affiliation members be built upon several separate agreements:

purchase of service agreements (two party, between buyer and seller of services))

affiliation agreements (multi-party or two party, between hub and each spoke) This agreement, must be signed prior to the submission of the Application for Participation (AFP) in March, 2002.

Integration and Sharing: Numerous integration, resource sharing, and knowledge transfer efforts are occurring between affiliation members. These efforts include:

Recipients Rights: Provision of RR services, to Ionia and Gratiot, by CEI: Ionia, effective June 1, 2001; Gratiot, September 1, 2001.

Information Services: Provision, by CEI, of comprehensive services to Ionia and Gratiot and data integration services (for submission to DCH) for Newaygo.

Contract/Network management: Development of a uniform provider application for use by all four affiliates. Development of increased standardization in contract/network management by all four affiliates

Quality Improvement: Integration of QI systems across all four affiliates, via: quarterly integration DCH mandated performance indicators, for all four affiliates, into a single set of graphs; formation of a QI Core Group, made up of representatives of all four affiliates, to review performance indicators; formation of cross-affiliate work groups around QI categories.

Financial Management: Development of a uniform administrative costing method for application across all four affiliates; joint review of proposed DCH contract.

Corporate Compliance/HIPAA: Development of a common corporate compliance/HIPAA approach, across all four affiliates.

Future Efforts

With the very strong start outlined above, the Affiliation is examining the future along a number of dimensions. These include:

Review and approval of all three types of agreements: These agreements, see above, will be brought to each Affiliate’s Board of Directors for review and approval, over the next several months.

Broadening parties involved in planning: As noted above, now that some of the logistic groundwork has been laid, methods for involving consumers, community partners, and Board members into the Affiliation’s planning efforts will be developed and implemented over the next several months. Steps will also be taken to allow Board members of the four affiliates to meet and discuss the Affiliation.

Sharing of clinical expertise and methods across the Affiliation. Because the requirements of the AFP revolve around the method by which an affiliation will legally structure its relationship, carry out care management, and bring about administrative efficiencies, all of the affiliation-building efforts have, to date, focused in these areas. The potential for sharing within the clinical dimension of the CMH operations is very great and will be pursued after the lion’s share of the care management, administrative dimensions, and contractual of the relationship are completed.

Integration of the substance abuse coordinating agency into the Affiliation: Preliminary discussions with the Mid-South Substance Abuse Commission, along these lines, have gone very well. This integration, however, will not be broached until after the Affiliation submits and receives approval of its AFP, in the summer of 2002.

Joint legislative briefings: One of the strengths of a regional affiliation is increased access to elected state officials beyond those to whom a single CMH has access. Joint legislative briefings will promote a single message, with local flavor, to be shared with a diverse set of legislators.