EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES

FISCAL YEAR 2013 BUDGET HEARING BEFORE THE JOINT COMMITTEE ON WAYS AND MEANS

SUFFOLK UNIVERSITY LAW SCHOOL

BOSTON, MA

WEDNESDAY, FEBRUARY 22, 2012

Testimony of Secretary JudyAnn Bigby, M.D. Executive Office of Health and Human Services

Joint Hearing of the House and Senate Committees on Ways and Means February 22, 2012

Introduction Good morning Chair Flanagan, Chair Walz, and members of the Joint Committee on Ways and Means. I am JudyAnn Bigby, Secretary of Health and Human Services, and it is my privilege to oversee the Commonwealth’s 16 health and human services agencies. Thank you for the opportunity to speak about the vital programs and services we provide for some of the most vulnerable members of our community. The Executive Office of Health and Human Services (EOHHS) is the largest Commonwealth secretariat. Our work touches the lives of all Massachusetts residents. From ensuring the public’s health with safe drinking water and access to health care to ensuring community living for persons with disabilities and from programs for children to services for the elderly, EOHHS helps to make Massachusetts a better place to live. Our collective mission as a secretariat is to improve the quality of life for the people of Massachusetts by supporting the safety, health and overall well-being of individuals, families and communities. Hubert H. Humphrey, Jr. once said “…the moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life, the sick, the needy and the handicapped.” These are the individuals we at EOHHS strive to serve. Each of the agency heads will speak about their own budgets. I want to take this opportunity to thank them and their staffs for their work on very difficult budget options. I am humbled by the work they do each day and for their commitment to the people and to the Commonwealth. I will use my time to provide an overview of the budget and on the EOHHS strategic priorities Budget Overview

Last year at this time, we were discussing a Fiscal Year (FY) 2012 proposal that statewide was equivalent to $570 million less than projected FY11 spending. This year, the Governor’s fiscal year 2013 House 2 proposal (H.2) proposes $32.3 billion or $936 million more than projected fiscal year 2012 spending. The Governor’s budget offers responsible, balanced and innovative solutions to address ongoing fiscal challenges facing the Commonwealth. While revenues are beginning to recover from the Great Recession, this growth is being eclipsed by increases in health care, safety net and other fixed costs. The spending plan before you relies on far-reaching reforms, targeted revenue proposals and tough cuts to close the circle.

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At the same time, however, we are not wavering from our commitment to building a stronger Commonwealth. The Governor’s budget makes important investments in programs and services that will accelerate our economic recovery and meet our generational responsibility to leave a stronger Massachusetts for those who follow. Through the budget and other legislative initiatives, the Patrick-Murray Administration is making significant progress on the Governor’s key priorities: creating jobs, closing the achievement gap, reducing health care costs, ending youth violence and making our community colleges a central part of our strategy to build a skilled workforce and put people to work. Our approach to fiscal management is working. We have one of the largest rainy day funds in the nation and our credit rating is at its highest rating in history. Our growth strategy of education, innovation and infrastructure has made Massachusetts 5th in the nation in job growth in the last two years. Our schools prepare students that lead the nation in student achievement and the world in math and science. Secretariat Approach to Managing in Challenging Fiscal Times Consistent with the approach taken in prior fiscal years, EOHHS agencies sought to ensure the following when developing their budget requests for FY13:

1. Maintain support for those in our care 24/7 whether in institutions or in community residences;

2. Maintain our efforts to respond to court ordered initiatives, settlement agreements, legislative and other mandates;

3. Prevent cost shifting to other cost centers within EOHHS or in other Secretariats; and

4. Sustain our maintenance of effort and, therefore, enable the state to collect FMAP, and federal matching on certain grants and other important sources of revenue.

EOHHS House 2 Summary $15.86 billion, or 49%, of the total state budget is dedicated to agencies within the Executive Office of Health and Human Services. The $15.86 billion figure represents a $617.5 million, or 4.1%, increase over FY12 projected spending. Net State Cost of EOHHS Programs

While EOHHS programs represent 49%1 of the state budget much of the cost of these programs is shared with the federal government or offset by other departmental revenue. While H.2 recommends $15.86 billion in spending on EOHHS programs, these costs are offset by $7.59 billion in projected revenue. As such, consistent with Fiscal Year 2012, for every dollar appropriated to EOHHS, the net cost to the state is 52 cents.                                                             1 These figures exclude section 2E appropriations, including the Delivery System Transformation Initiatives Trust Fund and the Medical Assistance Trust Fund, from total EOHHS spending. If these transfers are included as EOHHS appropriations, the EOHHS portion of the state budget is 51%.

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EOHHS Total Spending vs. Net State Cost

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

FY08 F09 FY10 FY11 FY12 Projected FY13 H.2

Spen

ding

(in

billi

ons)

0%

10%

20%

30%

40%

50%

60%

% N

et S

tate

Cos

t

EOHHS Spend Net State Cost % Net State Cost

*Net state costs in FY09, FY10, and FY11 decreased as a result of enhanced Federal Medical Assistance Percentages.

(During FYs 2009 -2011, Massachusetts received enhanced FMAP due to the federal American Recovery Act, thus decreasing net state costs for MassHealth and other programs.) Alternatively, while EOHHS represents 49.1% of the state budget on a gross basis (33.9% MassHealth, 15.2% other EOHHS), it represents 39.2% on a net basis (24.9% MassHealth, 14.3% other EOHHS).

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FY13 H.2 Recommendations: Gross Cost

50.9%

33.9%

15.2%

All Other/Non-EOHHSMassHealthOther EOHHS

FY13 H.2 Recommendations: Net Cost

60.8%

24.9%

14.3%

All Other/Non-EOHHS

MassHealth

Other EOHHS

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SECRETARIAT PRIORITIES You will hear directly from agency heads about their agency goals and priorities. EOHHS priorities reflect the secretariat’s commitment to advancing the Governor’s priorities and include: 1. Promoting Wellness and Health Care Access, Quality and Affordability 2. Promoting Self-Sufficiency 3. Ensuring that Children are Ready to Learn 4. Safe Communities and Reducing Youth Violence 5. Community First You will hear how each of the EOHHS agencies individually and collectively advance these priorities through direct services to individual, employment programs, re-balancing funding for long term supports from institutions to the community, collaborations with local municipalities to support high risk youth, and cross-agency and cross-secretariat initiatives to strengthen services for children, youth and families. I will focus on a few of the priorities. Promoting Wellness and Health Care Access, Quality and Affordability Health Care Reform and Cost Containment

More than 98% of Massachusetts residents have coverage, the highest rate in the nation, with nearly all children (99.8%) and seniors (99.6%) insured. Massachusetts has been a model for the nation in expanding access to health care services, and now it is taking the lead in controlling costs and improving quality through payment and delivery system reform initiatives. Providing access to comprehensive, high quality care not only protects our most vulnerable residents’ physical health but also their financial health. The Administration’s approach to ensuring that we maintain access and improve quality and lower costs includes:

• Promoting wellness and decreasing the prevalence of chronic diseases. The Department of Public Health’s Mass in Motion is a state-wide partnership with local communities that fosters healthy eating and physical activity. We are very proud of the federal funding we have received to help communities promote wellness.

• Enhancing health care quality by holding providers accountable for improved quality such as decreased readmissions to the hospital and fostering the implementation of electronic health records by assisting providers to access Medicaid incentive payments.

• Reforming the way we pay for care, moving from volume based fee-for-service payments to payments based on maintaining access and quality.

• Helping providers deliver more integrated care through the development of Patient-Centered Medical Homes and requiring care coordination for high risk populations with chronic diseases such as diabetes, asthma and behavioral health problems.

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EOHHS is ensuring that the state takes full advantage of the federal Affordable Care Act to support our goals of maintaining access, improving quality of care and health and decreasing costs. As Secretary, I lead an implementation team with representatives from across state government to ensure that Massachusetts residents will take full advantage of the opportunities in the ACA and maintain the successes we have seen with state reform. To date we have received more than $186 million in grant funding from ACA. The Commonwealth’s continued success in maintaining near universal coverage necessitates that we control health care costs in all state programs. Proposed FY13 spending for MassHealth $10.95 billion, which is $519 million (or 5%) above the fiscal FY12 projected spending of $10.43 billion. The H.2 budget allows for 2.8% enrollment growth or 38,000 new members. MassHealth has preserved all services that were offered to members in FY12. MassHealth will address the projected FY13 maintenance gap of $606 million by:

• Implementing payment reform initiatives with managed care organizations and hospitals;

• Strengthening community long-term care services for elders and disabled members;

• Continuing program integrity efforts and expand audit activities to address waste, fraud, and abuse; and

• Pursuing new federal revenue opportunities.

In addition, MassHealth will continue to promote efficiencies through the management of provider rates and utilization of services. H.2 also supports additional transformational initiatives that advance the Governor’s goal of achieving real and lasting health care cost containment. These include: Patient-Centered Medical Home Initiative (PCMHI)

The Administration has committed $10 million to assist 46 primary care practices enrolled in the Patient Centered Medical Home Initiative to transform into NCQA-certified medical homes focused on providing integrated and patient-centered care. PCMHI is a statewide, multi-payer demonstration project that began in April 2011 and continues through April 2014. The practices include community health centers, hospital-affiliated primary care offices, and group and solo family medicine, internal medicine and pediatric practices. PCMHI establishes a foundation for transforming the primary care landscape in Massachusetts through these pilot sites. The initiative targets the elimination of fragmented and uncoordinated care that lead to emergency department and hospital over utilization and emphasizes enhanced chronic disease management through team-based care. Patient-centered practices recognize the patient as an individual, respect the patient’s values, language and culture, and promotes the exchange of information about care options between patients and providers.

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Duals Initiative (Medicare and Medicaid Integration)

Massachusetts is one of 15 states that received a $1 million planning contract from the CMS Center for Medicare and Medicaid Innovation to support the development of a design proposal for a State Demonstration to Integrate Care for Dual Eligible Individuals. I am pleased to inform you that we submitted our proposal to CMS last week. The proposal promotes person-centered models that integrate the full range of acute care, behavioral health services and care, and long term supports and services for approximately 115,000 members between the ages of 21-64 who are eligible for Medicaid and Medicare. These dual eligible adults have disproportionately experienced the shortcomings of the fee-for-service payment system and fragmented, uncoordinated care. The Duals Demonstration will provide a strong foundation for payment and delivery system reform in the Commonwealth by providing dually eligible MassHealth members with access to an integrated, accountable model of care and support services financed jointly with Medicare through global payments. The model provides flexibility to cover services and supports based on individuals’ needs and recognizes that younger duals want support to live independently in their communities, not simply to be cared for in their homes. The demonstration provides a mechanism to pay for supports that we know work to keep people out of the hospital and institutions. MassHealth’s goal is to develop a Medicare and Medicaid integrated service delivery model for dual-eligible adults that:

• Builds on Massachusetts’ knowledge and experience with integrated care programs by enabling either managed-care entities (MCOs) or provider-based entities (ACOs) to serve as Integrated Care Organizations;

• Offers access to the benefits of integrated care, similar to what exists now for seniors through the SCO program;

• Breaks down the silos between primary, acute, behavioral health, and long-term services and supports; and

• Expands the range of available community-based, long-term services and supports and behavioral health diversionary services that promote members’ ability to live independently in the community.

As part of our process to develop our proposal, MassHealth engaged in robust discussions with stakeholders and the public at large to ensure that this new integrated care model meets the needs of the younger dual eligible population. The new model’s care entities will be accountable for the delivery, coordination, and management of health and community support services that promote improved outcomes and living with dignity and independence in the community. We look forward to continuing to collaborate with our partners during implementation of our proposal. Electronic Health Record (EHR) Initiative

The Administration is committed to the implementation of the MassHealth Electronic Health Record (EHR) initiative, which offers Medicaid health care providers incentive payments with 100% federal financial participation to encourage them to adopt,

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implement, upgrade, or meaningfully use certified EHR technology. MassHealth plans to distribute up to $500 million over the life of the program (through 2021) to eligible health care providers to support transitions to electronic health record systems. Since this program was launched in November 2011, we have already approved over $40 million in incentive payments for 228 providers. Adoption and meaningful use of interoperable EHRs can improve patient care by simplifying administrative procedures, enhancing health care quality by making patient health information available at all points of care, reducing costs through earlier diagnosis and characterization of disease, and increasing coordination of information for patients, caregivers, and clinical staff. Health Care Cost Containment Legislation

Last February, the Governor made a significant step toward enabling transformation of the health care delivery and payment system by filing “An Act Improving the Quality of Health Care and Controlling Costs by Reforming Health Systems and Payments.” This bill will begin moving providers and payers – including state purchasers of health care such as MassHealth, the GIC and the Connector – away from fee-for-service methods of payment and instead encourage the use of alternatives to fee-for-service such as global payments, bundled payments, and other alternatives. These kinds of payments provide for more integrated and coordinated care for patients to reduce costs and improve quality. This new coordinated system will benefit patients by giving providers the flexibility to provide the right services to patients in the right way, at the right time and in the right place. We look forwarding to working with you and your colleagues to move forward legislation on this important issue. Ensuring that Children are Ready to Learn Coordination of Children’s Services

Every day, the Commonwealth serves thousands of children and their families through a diverse array of Children, Youth, and Family (CYF) services. These services support some of the most vulnerable populations in the state – individuals and families who turn to state agencies as a result of child abuse or neglect, abandonment, delinquency, poverty, mental illness, substance abuse, disability, or other special needs. While the Department of Children and Families and the Department of Youth Services provide many of these programs, children are served by a number of other agencies, including the Department of Mental Health, the Department of Public Health, the Department of Developmental Services, MassHealth, the Department of Early Education and Care, the Department of Housing and Economic Development, and other government agencies, provider partners and education entities. The challenges families face are complex, and the Commonwealth is committed to working more collaboratively across state government and with families in order to be more responsive to the diverse needs of children. Working across state government, we must continue to think critically about the evolving needs of families and how we can better serve children and families to achieve better outcomes.

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Governor Patrick has made it a priority to improve the Commonwealth’s children, youth, and family service system. Over the past year, EOHHS engaged in an effort to develop recommendations and solicit as much feedback and input as possible from families, advocates, providers, subject matter experts, legislators, and other interested parties. Families have shared with us the need for a family-centric service delivery model that serves the whole child and family in a well-coordinated and effective manner, ensuring access to the right services at the right time. The current CYF system is fragmented and places an unintentional burden on individuals and families, many of whom must navigate among multiple government agencies to identify and obtain services. In response to families’ expressed need for more coordinated services and in recognition of the importance of a more holistic system, EOHHS and the Children, Youth, and Families (CYF) Advisory Committee have taken a careful look at the way we deliver services in Massachusetts. The major areas of opportunity highlighted by the CYF Advisory Committee include: 1. Improving access to information and resources and simplifying families’ interactions

with the system; 2. Streamlining eligibility processes; 3. Coordinating services and plans across CYF programs; 4. Strengthening coordination across the education system and CYF services; 5. Optimizing joint, local, state, and federal funding; 6. Ensuring workforce competency; and 7. Investing in proven services as measured by performance outcomes and reporting. To ensure successful progress is made toward implementing the recommendations, the FY13 budget reflects an emphasis on developing a tighter connection between schools and human service agencies. It is with this goal in mind that EOHHS and EOE will work together to develop a set of strategies for providing the services and supports necessary to ensure all students can achieve positive results in school. EOHHS and the Executive Office of Education (EOE) will convene an advisory council to develop recommendations for regulations to strengthen communication and allow appropriate data sharing between state and local education authorities as it pertains to students served by EOHHS agencies. The H.2 budget also includes a critical investment of $2.9 million in new funding to begin implementation of the CYF Advisory Committee recommendations and to strengthen coordination between EOHHS and the Executive Office of Education (EOE). These funds will support:

• Enhancements to information and resource telephone and internet systems for families accessing support or services;

• Enhancements to Family Access Centers to facilitate one-stop consumer access to multiple state agencies in a single location;

• Establishment of interagency data-sharing protocols and enabling technology within EOHHS;

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• Service coordination among children, youth and family-serving agencies within EOHHS; and

• Establishment of regulations to develop protocols to facilitate appropriate communication between health and human service and education agencies.

We owe it to the Commonwealth’s children and families to develop a more collaborative and integrative system of care for families and I hope for your support for this investment. Reducing Youth Violence The Safe and Successful Youth (SSY) Initiative intends to bring additional services and supports to young men ages 14-21 who are likely to be perpetrators or victims of serious violence. House 2 supports the continuation of the $10 million grants targeted to communities with high levels of youth-related homicides, non-fatal assaults, and serious injuries. In FY12, the state provided funding to eleven communities including Boston, Brockton, Chelsea, Fall River, Holyoke, Lawrence, Lowell, Lynn, New Bedford, Springfield and Worcester. These communities are in the process of implementing coordinated intervention strategies focused on “proven risk” youth and are intended to fill gaps in direct services currently available. The House 2 funding of $10 million will allow EOHHS to sustain these youth violence prevention initiatives throughout FY13. Community First The Administration’s commitment to Community First is embedded in people with disabilities rights to live, learn, work and socially engage in the community in the least restrictive setting. Our focus on this fundamental right as advanced by the Supreme Court’s Olmstead ruling has informed our policies related to the way we deliver services, for example, to children with serious emotional disturbance, individuals with developmental disabilities, individuals with physical disabilities, frail elders, and individuals with chronic serious mental illness. Children who were once stuck in locked psychiatric hospitals now are cared for in community settings with appropriate supports for their families and with services provided through the Children’s Behavioral Health Initiative which is funded at $221.7 million in the House 2 budget. DDS is in the final stages of closing Fernald, which has a current census of 14 residents, and has reduced the overall census in the other three institutions slated for closure to 161. We fully anticipate that we will be able to complete the additional three institutional closures by the end of FY13. In addition, DDS has continued to meet its obligations under the Rolland court settlement. Over the last three years, the Department has transitioned 489 individuals from nursing homes into the community, and in calendar year 2012, DDS will complete its obligation under this settlement. In addition, DDS reports that they have diverted the admission of 2,545 individuals from nursing facilities over the past three years.

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DMH has successfully increased supports available in the community for those in need. Since Fiscal Year 2004 and projected through FY 2013, DMH will have increased funding for adult community services by approximately $60 million, including $9.9M in funding contained within the Governor's House 2 budget. This investment will provide DMH with the annualized funding to fully support the cost of 80 additional community placement opportunities. This funding is critical as more than 90 percent of DMH clients are served in the community. The Department has also re-aligned its inpatient bed system, supporting the shift from institutional residences to supportive community environments. As part of our continued emphasis on community first, and in preparation of the opening of the new state-of-the-art Worcester Recovery Center and Hospital this summer, the Governor’s budget also includes the closure of Taunton State Hospital. This plan will maintain the current number of continuing care inpatient beds available across the state, while providing the financial supports for the new hospital and community supports. In addition, the Office of Medicaid and the Massachusetts Rehabilitation Commission are meeting the obligations of the Hutchinson settlement for individuals with acquired brain injury. To date have transitioned 65 individuals from nursing homes and other institutional settings into the community. There are approximately 70 more individuals in active care planning for transition; we fully expect that a total of 300 individuals will be transitioned by the close of FY13. Through an expansion of long-term options counseling, a collaborative effort between the Executive Office of Elder Affairs, MRC, and our community-based Aging and Disability Resource Consortia (ADRCs), we have prevented nursing home admissions for those who do not require that level of care and support the transition to nursing homes for those who do. Money Follows the Person Demonstration Project

In April 2011, Massachusetts was awarded a five year, $110 million “Money Follows the Person Rebalancing Demonstration” (MFP) grant. The Office of Medicaid, in collaboration with EOHHS agencies and EOEA, launched the Money Follows the Person Demonstration Project this year. Through this project, we will target over 2000 individuals to be transitioned into the community over five years. As part of this initiative, in FY13, the Massachusetts Rehabilitation Commission will initiate two new Home and Community Based Services waivers for individuals with disabilities which will provide ongoing services and supports for 750 people in the community over the next four years. This project will strengthen the Administration’s Community First initiative to transition long term care residents to the community from facility settings, and improve MassHealth’s quality infrastructure, data resources, and reporting capabilities. This federal support provides programmatic and financial tools to rebalance the use of long-term care resources away from institutions to the community through:

• increasing the use of home and community-based services (HCBS) for elders and disabled persons;

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• decreasing the use of institutional care; and • eliminating barriers that restrict flexible use of Medicaid funds;

MassHealth also plans to seek approval for two new Home and Community-Based Waivers for MFP Demonstration participants who will need more intensive supports on an ongoing basis once they transition from facilities. Other priorities and reforms POS Reform

Chapter 257 of the Acts of 2008 requires EOHHS to establish rates of payment for social services that are reasonable and adequate to meet the costs incurred by efficient operated social service providers. It presents a significant opportunity to reform not only the approach to rate determination, but also to streamline procurement and contract management. Benefits of this comprehensive approach include increased transparency and consistency in rate setting practices, predictability and standardization in the thousands of individually negotiated contracts, better coordination among departments purchasing similar services, increased opportunities for provider and consumer engagement and input, and streamlined administrative practices. Today, approximately 20% of the $2.3 billion purchase of service (POS) system has proceeded to fully adopted regulated rates. There are a dozen Chapter 257 rate development projects in various stages of completion that will bring an additional 22% of the POS system under rate regulation within the next two months. EOHHS will continue to refine Chapter 257 data analyses and implementation approaches so that social services are reimbursed fairly and adequately. In addition to uniform financial reporting and contract data, rate development includes examination of a range of external and market based data to ensure fairness and adequacy in rate development.

Governor Patrick’s FY13 budget recommendation includes a total increase of $32 million over current EOHHS agency spending to support the implementation of new rate regulations for services including:

• Services provided through the Aging Service Access Points (ASAPs) • Clubhouse services • Family Stabilization and Support services • Adult Community Based Day Supports • Inpatient Detox / Adult Short-Term Intervention and Stabilization • Youth Short-Term and Intermediate-Term Stabilization services • Family Partner services • Family Transitional Supports, including domestic violence residential services • Supported Employment

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Redesigning the Core Operations of Agencies

Throughout this fiscal crisis, EOHHS has pursued operational efficiencies to mitigate the overall impact of reductions on the clients of EOHHS services. In order to meet the continuing fiscal challenges as well as enhance customer service, EOHHS has been pursuing several administrative initiatives, including: The Creation of HHS Centers: Wherever possible, and as existing leases expire, EOHHS agency offices are being co-located in order to provide cost effective, professional working environments, with geographic location decisions based on the client demographic data and implied needs, service density criteria, shared agency clients, and flexibility of tenant use of space. Through co-location, EOHHS believes we can improve the overall experience for HHS clients, and substantially reduce space lease and energy costs. The first such Center opened in June 2010, in Hyannis, and has been extremely successful. We have opened two more Centers in Lynn and Chelsea, with a Center in North Adams coming soon. Over the next 18 months, we plan to open additional Centers across the state including Boston, Brockton, Framingham, Lawrence, Springfield, and Worcester. Consolidate eligibility determinations: To gain efficiencies and improve customer service, EOHHS is committed to examining ways in which we can merge various intake and eligibility functions from across our agencies. Leveraging ACA funding, as well as other federal funding, EOHHS, in partnership with the Connector, the Information Technology Division (ITD), and UMass Medical School, is developing an integrated eligibility system for Massachusetts health care programs. With the support of the unions and staff, we are piloting new intake procedures in a number of our offices that will improve customer service and increase staff efficiency. Consolidate agency administrative and facility management functions: EOHHS began consolidating administrative functions, including human resources, revenue management, and space leasing, as well as some aspects of information technology (IT) administration, in 2004. The signing of Executive Order 510, which called for consolidation of IT services at the secretariat level, provided further impetus to consolidate administrative functions. To date, all IT staff formerly funded at the agency level have become EHS employees, which is the first step toward optimizing our IT staffing pattern. The next phase of administrative consolidation is to better coordinate and consolidate facility management across EOHHS agencies – DMH, DPH, DDS, DYS, CHE and HLY – that oversee 24/7 facilities. Program management, however, would continue to be the responsibility of the respective agencies. Improving Government Effectiveness and Efficiency EHSResults

To ensure we actively monitor and manage our performance toward our strategic goals, EOHHS launched EHSResults in 2007 to foster transparency, accountability, and cross-agency collaboration throughout the Secretariat. EHSResults is building a foundation for performance management at EOHHS by identifying strategic goals, providing

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performance information for better internal decision making, and sharing examples of our progress with the public. EHSResults uses internal performance dashboards to evaluate a large amount of current and historical performance information, and report on progress toward strategic goals. We set targets and continually strive to improve not only the effectiveness of our programs, but also the efficiency of our internal operations. This information enables EOHHS to take action, improve programs, and make informed decisions about policies, strategies, and operations and compare our performance relative to other states to understand how/where we can improve results for residents; and foster cross-agency collaboration. Additionally, sample performance data is shared with the public via the internet to promote a culture of accountability and transparency. For an overview of performance management at EOHHS please see the additional attachment. An Alternative Budget Framework

As you know, our budget is complex. As is the case for all states, funding for health and human services is managed through multiple organizations. Many agencies serve similar populations and provide a continuum of services that may, if operating in a holistic fashion meet the needs of the populations we are serving. Over time, our system of organizations and funding accounts reflect their evolution over time rather than the vision going forward. Two years ago, in an attempt to address this complexity, I asked our team to develop a new way of looking at our non-MassHealth budget. Rather than displaying our spending across 16 agencies and over 150 line items, this framework organizes our spending according to the populations we serve and the core services we deliver. Once again, we have mapped the House 2 proposal to this framework; a copy is included at the end of this testimony for your review. By viewing our budget information in this framework, for example, you see that across the entire Secretariat 29% of all of our dollars - $1.39 billion - are invested in programs that serve children and youth. This $1.39 billion is managed in 64 different accounts held by 9 different departments. Likewise, we spend 33.6% on services for adults with disabilities. These dollars are managed in 32 accounts across 7 agencies. By allocating all of our accounts into a population-focused framework, we are able to see all of our spending for each of our major populations into a single place. This allows us to track program relationships across departments, understand the impact of cuts in one area on related areas, and to better understand how to manage services and programs across departments. We are offering this as a companion document to the traditional budget in fiscal year 2013 because we believe it offers a more transparent view of how the spending we are recommending aligns with the vulnerable populations we serve and the essential services we provide. Working Together These are difficult times and for those of us who come to this work because we believe

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we can make a difference it is particularly challenging. I joined the Patrick Administration because I believe that government should play a role in making sure that everyone has opportunity, safety and health, and that government must assure that the most vulnerable achieve these goals. I know that we are all committed to getting to the same goals. I believe, as the Governor does, that we can do this together. In the coming year, we must work together to face the challenges ahead. I look forward to working with all of you and your colleagues in the Legislature. Thank you.

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Addendum

An Alternative Look at EOHHS: Budgeting by Population and Core Service Area

Population 

Short Term 24 Hour or

Emergency Stabilization 

Transitnl. or Intrmed. Term

Care 

Long Term Group or

Supported Housing 

State Operated Institutions

Economic Support

Food and Nutrition

Support and Services

Group or Day Supports

Direct Client / Family Support

Education & Employment Services and

Supports Clinical

Psychiatric or Medical Care 

Community Prevention,

Screening and Public Health Grand Total

Children/Youth  34,394,903    315,739,925 

72,849 

20,148,935 

361,121,971

48,507,195

20,247,045

452,790,211

11,191,762 

60,741,039 

64,165,309

1,389,121,143

29.0%

Transition Age Youth 744,229 

36,424,137 

  4,320,043 

-   -

-

1,628,472

20,853,563

5,727,658 

2,650,172 

4,025,916

76,374,190

1.6%

Adults  1,171,725    10,882,369 

  8,584,432 

149,040,450    3,251,706

20,119,352

966,477

220,541,232

7,631,413 

15,698,902 

4,543,264

442,431,321

9.2%

Adults with Disabilities  3,570,428 

  4,910,459    948,122,159 

135,543,126 

  172,399,699

2,767,514

58,389,088

165,658,090

106,795,642 

13,754,085 

530,742

1,612,441,032

33.6%

Adults with Behavioral Health Needs  31,395,680 

  207,385,166    1,258,608 

127,511,909 

  -

-

29,511,509

172,069,405

570,018 

110,896,947 

4,931,604

685,530,847

14.3%

Veterans  7,128,595    9,244,501 

  -    38,925,477 

75,736,240

-

-

3,674,468

127,060 

875,491 

  -

135,711,834

2.8%

Elders  -   -

23,624,198 

  -   106,529,787

28,125,585

7,565,771

202,910,891

209,389 

- 

  3,927,425

372,893,046

7.8%

General Public  -   -

- 

  -   -

-

-

3,362,231

-

28,455,885 

50,601,055

82,419,171

1.7%

Grand Total  78,405,561    584,586,557 

  985,982,289 

471,169,898    719,039,403

99,519,646

118,308,362

1,241,860,090

132,252,942 

233,072,521 

132,725,316

4,796,922,585

1.6%  12.2%  20.6%  9.8%  15.0% 2.1% 2.5% 25.9% 2.8%  4.9%  2.8%

EOHHS CORE SERVICE AREAS

How the Alternative Budget Framework is Organized The alternative budget framework is organized according to nine populations and eleven service areas. The EOHHS population groupings include:

• Children/Youth • Transition Age Youth • Adults • Adults with Disabilities • Adults with Behavioral Health Needs • Veterans • Elders, and • General Public

The EOHHS service areas include:

• Short Term 24 Hour or Emergency Stabilization: Shelters, short term detention or child protective placements, or other placements in 24 hour care settings where the individual is not expected to stay for greater than several days.

• Transitional or Intermediate Term 24 Hour Care: A range of residential services in which the individual is not expected to stay long term. Rather, the goal is discharge, step-down to a lower level of care, or community re-integration.

• Long Term 24 Hour Group or Supported Housing: Residential programs that are intended to be long or permanent-term living arrangements. While transition to a less restrictive setting is ideal, it is not the primary goal for these programs.

• State Operated Institutions: Includes both acute and longer term care programs delivered in facilities that are owned and operated by the Commonwealth.

• Economic Supports: Financial assistance in the form of cash grants, annuities, or other benefits. Does not include SNAP benefits, which are included under Food and Nutrition Supports and Services.

• Food and Nutrition Supports and Services: Financial subsidies for food purchases, such as WIC and SNAP benefits. Also includes nutrition education & awareness programs, and home delivered & congregate meals.

• Group or Day Supports: Center-based programs (as opposed to services delivered in clients’ homes or in a community setting) delivering variety of day programming, social recreation, rehabilitative, or other non-clinical services. Examples include DDS day programs, adult day care, and after school programs.

• Direct Client / Family Supports: A broad range of services provided to enrolled – or specifically identified – clients. Includes department-provided case work, social work, service coordination, and protective services and programs providing in-home supports, homemaker, or personal care services to eligible individuals.

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• Education and Employment Supports and Services: All employment readiness, training, job placement and job support services are allocated to this category, as well as educational services provided to children in DYS custody.

• Clinical Psychiatric or Medical Care: All ambulatory or outpatient clinical care, most of which are MassHealth services. Non-MassHealth services include certain substance abuse treatment programs, Early Intervention services, and certain clinical psychiatric services funded by DMH.

• Community Prevention, Quality Assurance, and Public Health: All non-direct prevention, state laboratory and environmental health and inspection services, education and awareness programs, and lead prevention programs.

In order to reflect the full cost of managing and delivering direct services, administrative costs have been allocated proportionally across service areas.

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Testimony of Medicaid Director Julian Harris Joint Hearing of the House and Senate Committees on Ways and Means

February 22, 2012 Introduction Good morning, Chair Flanagan, Chair Walz, and other distinguished members of the Joint Committee on Ways and Means. Thank you for the opportunity to come before you to discuss the MassHealth program and our Fiscal Year 2013 budget proposal. MassHealth is the Commonwealth’s Medicaid program and, as you may know, it accounts for approximately 33.9% of the overall state budget.

I want to take a moment to thank the General Court for the financial commitments it has made to MassHealth members, even in difficult financial times for the Commonwealth and for the country. MassHealth pays for health care for more than 1.3 million people – approximately 1 out of every 5 Massachusetts residents. Our members are children, adults, seniors and individuals with disabilities. As you know well, the importance of the health care safety net is always heightened in difficult economic times; and without your support, we could not do our work to protect the health of the Commonwealth’s low-income children and families.

The Governor’s FY13 House 2 budget offers responsible, balanced and innovative solutions to address the ongoing fiscal challenges facing the Commonwealth. Specifically for MassHealth, this proposal reflects the Administration’s ongoing commitment to health care access for all of the Commonwealth’s residents. Ensuring access to comprehensive, quality care through the MassHealth program protects the health of the most vulnerable residents and ensures that their health care costs do not result in further personal financial strains. The proposed House 2 budget preserves member eligibility and benefits to maintain the Commonwealth’s historic commitment to health care reform, while reflecting this Administration’s commitment to managing health care cost growth responsibly through innovative strategies that pave the way for broader payment and delivery system reform in the Commonwealth. Specifically, the MassHealth budget supports the Secretariat goals to:

1. Maintain access to health; 2. Improve the health of individuals; 3. Enhance the quality of care; 4. Reduce costs; and 5. Improve care coordination for high-risk populations.

For FY12, we estimate that MassHealth spending will total $10.43 billion. The FY13 budget recommends MassHealth spending of $10.95 billion. This is a 4.97% growth over spending in FY12 and is a significant achievement as it preserves all member services without benefit cuts or increases in members’ out-of-pocket expenses. We project that overall program enrollment will increase by 38,000 members, or 2.8%, in FY13. Absent any cost savings measures, the maintenance budget in FY13 for the MassHealth program would require state spending of $11.46 billion, or a 9.1% increase. To avoid the need for an increase of this magnitude, we propose a combination of strategies that will yield $516 million in budget savings, and $90 million in

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revenue solutions. This is a net savings figure, and the proposed FY13 budget includes key investments designed to support longer-term cost containment and delivery system reform. Background Before I begin to outline our approach to the FY13 budget, I believe it is necessary to review what MassHealth has done over the past several years to control costs. I hope you will appreciate that our policy, program and fiscal staff take extra care to develop balanced budgets, allowing the more than 1.3 million people who need our assistance to receive it. Over the past several years, MassHealth has consistently implemented cost-saving programs while protecting member eligibility, coverage and services. In total, we have saved more than $1.5 billion since the first 9C reduction in FY09. While most of these savings represent reductions in provider reimbursements, many of these savings reflect improvements in program efficiency, program integrity, cost containment, and health promotion, including a successful smoking cessation project. You may have seen a recent independent study that documented savings to the Commonwealth of $3.12 for every dollar invested in a comprehensive MassHealth smoking cessation program. Despite necessary reductions and efficiencies, over the past five years, appropriations for MassHealth have grown by 29%. The major driver of this growth has been a significant increase in our caseload as a direct result of the recession. When you actually control for the caseload increase and health care reform, MassHealth’s budget has grown on average less than 3% since FY08, while growth of spending per capita has increased annually by only approximately 1.6% during the same period. FY12 Achievements In FY12, MassHealth pursued a variety of strategies that, taken together, produced budgetary savings of $588 million. Some rate enhancements for specific providers were eliminated, while new efficiencies, administrative changes, and cash management initiatives were implemented. By far the largest savings - $310 million - resulted from renegotiation of our contracts with Managed Care Organizations (MCO) to ensure that the Commonwealth’s investment in these services resulted in greater value for taxpayers, while improving quality of services for our members. FY13 Reform and Initiatives In FY13, MassHealth plans to further restrain cost growth through a set of management strategies, while also moving aggressively on several initiatives aimed at transforming the health care delivery system. I want to quickly outline these major initiatives:

Managed Care Organization (MCO) Contracts: We know that the current fee-for-

service system leads to unsustainable cost increases. To support payment reform and the necessary transition to integrated, accountable systems of care, we will continue to restructure managed care contracts. In FY13, we plan to work with contracted managed care partners to expand the use of innovative payment strategies that improve the quality of care and that focus providers on demonstrating value for our members and for the Commonwealth. We will offer a projected 2% payment increase for Managed Care Organizations to support expanded use of shared savings and other value-based

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We will also continue to implement the Primary Care Clinician (PCC) Plan managed behavioral health care re-procurement, which will result in more integration between behavioral health care and physical health care; provide targeted case management for the most complex cases; and introduce performance payment incentives.

Hospital payment changes: Currently, MassHealth does not pay separately for a

hospital outpatient visit on the same day as an inpatient admission. We are expanding the timeframe for this policy to align more closely with Medicare and other payers’ policies. This expansion would eliminate separate outpatient payments made to the hospital for outpatient services provided during the three days preceding an inpatient admission. This methodology would eliminate payments made to the same hospital for outpatient services provided during the three days preceding the emergency department visit. We are also expanding payment reductions for Potentially Preventable Readmissions (PPR), aligning reduction with our other values based purchasing initiatives. These efforts have potential savings of $9.6 million in FY13, alone.

Strengthen community long-term care services and supports: The Executive Office

of Elder Affairs (EOEA) and the Office of Long Term Services and Supports (OLTSS) will leverage the Aging Service Access Points (ASAP) model to develop a plan to transition care from nursing facilities to community-based services where appropriate. MassHealth will also change home health services payments to an episodic payment structure, similar to the Medicare prospective payment methodology. This change will apply to the 12,000 MassHealth members who use home health services for more than 60 consecutive days. Additionally, EOEA and OLTSS will increase audits and establish prior authorization processes for some long-term care services that have not been subject to independent prior authorization. MassHealth expects to further expand enrollment in Senior Care Organizations (SCOs) through the legislatively-mandated mailing to members, by pursuing a three-way contract with CMS and by enhancing member education in concert with the duals initiative. We expect the enhanced SCO enrollment will require an actuarial decrease of 1.6% in SCO capitation rates. These efforts will yield savings of $36.8 million in FY13.

Program Integrity: To further address program integrity, MassHeath will implement

prior authorization for certain specialty drugs, such as hormone treatment and treatments for rheumatoid arthritis. Additionally, we will expand pharmacy audits and third party recovery efforts, while requiring that our pharmacy providers also enroll as Medicare

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Implement the Affordable Care Act and support health systems transformation:

Although Massachusetts was the national model for the Affordable Care Act (ACA), significant transitions are needed to bring the Commonwealth into compliance with the ACA between now and 2014. Leveraging federal opportunities to support payment reform and implementing state-based reform efforts will also require expanded administrative resources at MassHealth. House 2 recommends a $5.125 million investment in the MassHealth budget to ensure that staffing is adequate to handle the many tasks associated with these important efforts, including providing vital enhancements to customer service for our members.

Delivery system transformation: House 2 also authorizes a $164 million investment in

Delivery Systems Transformation ($189M in transfers). The net cost to the Commonwealth is approximately half that amount due to the federal funding that was recently authorized in our 1115 Waiver renewal. This performance-based investment will enable Medicaid safety net hospitals that serve a very large percentage of MassHealth members throughout the Commonwealth to make fundamental changes to their care delivery models. For payment reform to truly succeed, we must incentivize positive and robust transformation of these Medicaid safety net institutions to enable them to deliver in more integrated models of care and to accept alternative payment methodologies. Other hospitals will have the opportunity to apply for $20 million in waiver-funded Infrastructure and Capacity Building Grants to support transformation efforts. Community Health Centers will also be able to apply for $3 million in grants to support Patient-Centered Medical Home implementation. House 2 also recommends funding for other innovative programs authorized by the 1115 Waiver, including a pediatric asthma bundled payment pilot program and enhancements to early intervention services for children on the autism spectrum.

FY13 Provider Rate Restructuring In FY13, MassHealth plans to achieve some budgetary savings by restraining the growth in rates for a variety of specific health care providers. Overall, these initiatives will produce $103.5 million dollars in savings in FY13. The changes include:

Hospital rates: We plan to implement various adjustments to the acute care hospital rate methodology, including case-mix adjustment corrections and recalculation of rates paid to out-of-state hospitals. MassHealth will also reduce pass-through adjustments for inpatient rates reflecting malpractice and capital costs. These adjustments are projected to save $30.4 million in FY13.

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Long-Term Care rates: The nursing home one-time rate increase of $29 million is eliminated and the contract with Hebrew Rehabilitation Center will be restructured to achieve a combined $30 million in savings.

Pharmacy rates: MassHealth plans to revise the rate structure for high cost and

biotechnology drugs, identify new therapeutic classes appropriate for negotiating additional rebates from manufacturers, and realign our reimbursement for generic drugs with recent federal guidelines. In addition, we plan to adjust the way we determine the “most favored payer rate” for the purpose of seeking the best price from drug manufacturers. Combined, these changes are projected to save $18 million in FY13.

Other provider rates: In order to conform with recommendations of the American

Dental Association, we plan to adjust payments to dental providers who visit nursing homes, while also establishing a cost-based day rate for reimbursing the McGinnis House. These changes will save $3.7 million in FY2013.

Additional savings and revenue initiatives MassHealth recently issued Pay for Performance payments due to hospitals for their performance in FY10. These payments were originally planned to be issued in FY13 so this reduces expected FY13 expenditures by $75 million. We also plan to identify new revenue sources. These include a revised drug rebate revenue forecast, the implementation of Health Home programs that qualify for a 90% federal match, and identification of Children’s Medical Security Plan expenditures that qualify for 65% federal matching payments under the State Children’s Health Insurance Program (SCHIP). Additionally, we also plan to continue cash management strategies in a variety of areas. Combined, these initiatives will save $331 million gross and increase revenue by $45 million in FY13. A Critical Year The FY13 MassHealth budget supports several transformational initiatives that advance the Governor’s goal of achieving real and lasting health care cost containment. These initiatives support the EOHHS strategic plan and the Secretariat’s priorities. 1115 Waiver Renewal The 1115 three-year waiver enables over $26.75 billion in federal funding for the Commonwealth, a $5.69 billion increase over the previous three-year renewal. The federal funding secured through this renewal assures the continuation of the reforms that supported MassHealth’s coverage expansions, as well as continued funding for other health reform programs created by Chapter 58, such as Commonwealth Care and the Health Safety Net. I have already mentioned some of the exciting new initiatives we will be pursuing as a result of this waiver. I’d also like to briefly highlight our Express Lane Eligibility Renewal Program. This first-in-the-nation initiative will simplify annual MassHealth eligibility renewals for approximately 140,000 MassHealth members who are concurrently enrolled in SNAP (formerly known as the “Food Stamp” program), which is administered through the Department of Transitional Assistance. The reduced paperwork and faster renewals will result in fewer gaps in coverage for our members.

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Money Follows the Person Demonstration Project In April 2011, Massachusetts was awarded a five-year, $110 million “Money Follows the Person Rebalancing Demonstration” (MFP) grant from CMS. This federal support affords MassHealth additional programmatic and financial tools to rebalance long-term care systems through:

• Increasing the use of home- and community-based services; • Decreasing the use of institutional care; • Eliminating barriers that restrict flexible use of Medicaid funds; and • Ensuring quality assurance and quality improvement.

The project will strengthen the Administration’s Community First initiative to transition long-term care residents to the community from facility settings wherever possible and improve MassHealth’s quality infrastructure, data resources, and reporting capabilities. MassHealth also plans to seek federal approval for two new Home and Community-Based Waivers for MFP Demonstration participants that require more intensive, ongoing supports once they have transitioned from facilities. MassHealth will continue to work collaboratively with other Executive Office of Health and Human Services agencies including EOEA, OLTSS, and MRC on this initiative. Patient-Centered Medical Home Initiative (PCMHI) The Administration has committed $10 million to assist 46 primary care practices enrolled in the Patient Centered Medical Home Initiative (PCMHI) to transform into National Committee for Quality Assurance (NCQA) certified medical homes focused on providing integrated and patient-centered care. PCMHI is a statewide, multi-payer demonstration project that began in April 2011 and continues through April 2014. Practices include community health centers, hospital-affiliated primary care offices, and group and solo practices. PCMHI establishes a foundation for transforming the primary care landscape in Massachusetts through these pilot sites. The initiative targets the elimination of fragmented and uncoordinated care, while emphasizing enhanced chronic disease management through team-based care. Patient-centered practices recognize the patient as an individual, respect the patient’s values, language and culture, and promote the exchange of information about care options between patients and providers. The Executive Office of Health and Human Services is overseeing this exciting demonstration project and will evaluate the pilot sites to further refine and expand the medical home model to additional practices in the future. Duals Initiative (Medicare and Medicaid Integration) The CMS Center for Medicare and Medicaid Innovation selected Massachusetts as one of 15 states awarded a $1 million planning contract to support the development of a design proposal for a State Demonstration to Integrate Care for Dual Eligible Individuals. The proposal will identify, support and evaluate person-centered models that integrate the full range of acute, behavioral health, and long-term supports and services to manage care for approximately 115,000 dually-eligible individuals in Massachusetts. These members are eligible for both Medicaid and Medicare and are between the ages of 21 and 64. The Duals Demonstration will

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provide a strong foundation for payment and delivery system reform in the Commonwealth by providing dually eligible MassHealth members with access to an integrated, accountable model of care and support services financed jointly with Medicare through global payments. MassHealth’s goal is to develop a Medicare and Medicaid integrated service delivery model option for dual-eligible adults that:

• Builds on Massachusetts’ knowledge and experience with integrated care programs by enabling either managed-care organizations (MCOs) or provider-based entities (ACOs) to serve as Integrated Care Organizations;

• Offers access to the benefits of integrated care, similar to what exists now for seniors through the SCO program;

• Breaks down the silos between primary, acute, behavioral health, and long-term services and supports; and

• Expands the range of available community-based long-term services and supports and behavioral health diversionary services that promote members’ abilities to live independently in the community.

MassHealth has engaged in robust discussions with stakeholders and the public at-large to ensure that this new integrated care model meets the needs of the younger dual eligible population. The new model’s care entities will be accountable for the delivery, coordination, and management of health and community support services that promote improved outcomes and living with dignity and independence in the community. Electronic Health Record (EHR) Initiative The Administration is committed to the implementation of the MassHealth Electronic Health Record (EHR) initiative, which offers providers incentive payments with 100% federal financial participation (FFP) to encourage Medicaid health care providers to adopt, implement, upgrade or meaningfully use certified EHR technology. Over the life of the program, which runs through 2021, MassHealth plans to distribute up to $500 million to eligible health care providers to support their transitions to electronic health record systems. Since this program was launched in November 2011, we have already approved $39.7 million in incentive payments for 228 providers. Adoption and meaningful use of interoperable EHRs can improve patient care by simplifying administrative procedures; enhancing health care quality by making patient health information available at all points of care; reducing costs through earlier diagnosis and characterization of disease; and increasing coordination of information for patients, caregivers, and clinical staff. Looking Ahead From implementation of health care cost containment to scaling up implementation of the Affordable Care Act, FY13 will be a pivotal year for our health care system in the Commonwealth. At MassHealth, we look forward to working in close partnership with the General Court to ensure that we meet our challenges and best leverage the exciting opportunities that FY13 will bring. Thank you for your time and for your continued support.

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Testimony of Marcia Fowler, Commissioner, Department of Mental Health

Joint Hearing of the House and Senate Committees on Ways and Means February 22, 2012

Introduction I would like to thank the honorable Chairs and members of the Joint Committee on Ways and Means for this opportunity to testify before you today. On behalf of the Department of Mental Health (DMH), we thank you for your continued support of the Department and we look forward to working with you to promote recovery and assure the provision of services that meet the needs of citizens with serious and persistent mental illness. Our vision that mental health be fully integrated as an essential part of health care is reflected at the core of our mission. As the State Mental Health Authority, DMH assures and provides access to services and supports that are person-centered and recovery-focused to meet the behavioral health needs of individuals of all ages, enabling them to live, work and fully participate as valuable, contributing members of our communities. DMH establishes standards to ensure effective and culturally competent care to prevent illness and promote recovery. DMH sets policy, promotes self-determination, protects human rights and supports mental health training and research. This critical mission is accomplished by working in partnership with our sister state agencies, individuals, families, providers and communities. With a statewide organizational structure, DMH operates three Area and 27 Site Offices, as well as state-operated hospitals and community mental health centers. This network provides services to approximately 21,000 individuals with severe and persistent mental illness across the Commonwealth, including children and adolescents with serious emotional disturbance and their families through a continuum of care. While some (approximately 10%) of these individuals will require inpatient services at any given time during the year, over 90% receive all or most of their services in the community. All of the programs, services and functions of the Department are aligned with the Governor’s priorities of reducing health care costs and ending youth violence, and support the Secretariat’s goals to: promote access to health care; improve the health of individuals, families and communities; enhance health care quality; and improve care coordination for high-risk populations, including those with mental and behavioral disorders. The Department works very closely with our Secretariat partners to create innovative and genuine opportunities for individuals with mental illness to participate fully and meaningfully in, and contribute to, their communities as valued members. It is our goal to continue to promote equality, empowerment and productive independence of individuals by enhancing and encouraging personal choice. DMH Continuum of Care The Department’s continuum of care for adults and adolescents includes both community and inpatient services. The Department’s Community Services provide support to 21,000 individuals per year. Services include:

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• Community-Based Flexible Supports (CBFS) programs: This is the cornerstone of the

DMH community service system. CBFS provides rehabilitation, support, and supervision with the goal of stable housing, participation in the community, self management, self determination, empowerment, wellness, improved physical health, and independent employment.

• Emergency Services Programs (ESP): ESPs provide mobile behavioral health crisis assessment, intervention, stabilization services, 24/7, 365 days per year. Services are either provided at an ESP physical site or in the community.

• Assertive Community Treatment Programs (PACT): PACT programs are a multidisciplinary team approach to providing acute and long term support; community based psychiatric treatment, assertive outreach and rehabilitation services to persons served.

• Clubhouses: Clubhouse Services provide skills development and employment services that help individuals to develop skills in social networking, independent living, budgeting, accessing transportation, self-care, maintaining educational goals, and securing and retaining employment.

• Case Management Services: These services provide an assessment of needs, service planning development and monitoring, service referral and care coordination, and family/caregiver support.

• Crisis Stabilization Services • Respite Services or temporary short-term, community-based clinical and rehabilitative

services that enable a person to live in the community as fully and independently as possible.

• Homeless Outreach Team Programs: This program provides comprehensive screening, engagement, stabilization, needs assessment, and referral services for adults living in shelters.

• Outpatient Treatment & Medication Management Services • Mental Health Courts: This mental health courts are an example of a Community First

initiative that enhances services for mental health consumers who may have criminal justice involvement. To date, the participants have included both DMH and non-DMH clients and the participating consumers have shown the ability to obtain work, avoid re-arrest, and remain engaged in treatment services.

• Partial Hospitalization: Partial Hospitalization services provide short term day/evening mental health programming available five to seven days per week. These services consist of therapeutically intensive acute treatment within a therapeutic milieu and include daily psychiatric management.

The Statewide Inpatient System consists of various components, largely in the private sector with some state-operated services.

• Acute inpatient psychiatric care provides short-term, intensive diagnostic, evaluation, treatment and stabilization services to individuals experiencing an acute psychiatric episode.

• There are more than 65 general hospital psychiatric units or private acute psychiatric hospitals licensed by the Department, including more than 360 beds in DMH licensed

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facilities in the Southeast. More than 70,000 individuals, most of whom are not involved with DMH, are admitted to inpatient psychiatric hospital settings each year.

o There are 32 DMH operated acute inpatient psychiatric care beds at Community Mental Health Centers in the Southeast. These state-operated beds often allow slightly longer lengths of stay than can be provided in private psychiatric facilities, which can reduce the need for continuing care referrals. They provide enhanced linkages to Southeast Area services through the state operated network of community services in the region.

• Continuing inpatient psychiatric care provides ongoing treatment, stabilization and rehabilitation services to the relatively few individuals who require longer term hospitalization that are beyond the capacity of the acute inpatient system. These individuals are generally transferred to DMH after the conclusion of an acute inpatient course of treatment in a general hospital psychiatric unit or private psychiatric hospital licensed by DMH and admitted to the first available bed in a DMH-operated inpatient unit or state hospital.

o There are 626 DMH adult continuing inpatient care psychiatric beds across the Commonwealth. Of the 626 DMH continuing care beds, 231 are on DMH units located within Department of Public Health Hospitals.

o In addition to the 626 adult beds, there are two DMH contracted continuing care inpatient units for 30 adolescent beds are at Worcester State Hospital. These 30 beds will move to the new Worcester Recovery Center and Hospital.

• DMH contracts for six Intensive Residential Treatment Programs (IRTP) for adolescents (85 beds total). Two programs are located in Tewksbury, two in Worcester, one in Taunton, and one in Westborough. The two in Worcester will move to the new Worcester Recovery Center and Hospital. The Taunton IRTP, which is currently located on the grounds of Taunton State Hospital, will be moved but DMH plans to keep the program in the Taunton area. IRTPs are locked residential treatment settings that provide intensive residential supports and often prevent the need for longer term inpatient hospitalizations.

• DMH also contracts for one Clinically Intensive Residential Treatment Program (CIRT) for children ages 6-12 (12 beds total). This service is located in Springfield and provides intensive treatment for children to help prevent longer inpatient care, transition from acute treatment and prepare for community-based care with their families.

In addition to the 21,000 individuals served, DMH provides forensic evaluation and treatment services to approximately 9,000 individuals each year that are referred to DMH by the Juvenile, District and Superior Courts. The Department also provides step-down treatment for persons coming out of Bridgewater State Hospital and re-entry supports for inmates with serious mental illness returning from incarceration. Further, the Department supports approximately 14 towns and police departments to provide supports for jail diversion services for persons with mental illness. Research is also a critical part of the DMH mission and is one of the Department's statutory requirements. DMH conducts research into the causes of serious mental illness. The vitality and strength of research into serious mental illness in Massachusetts is an important and powerful tool in the treatment of these diseases. Our research community carries the message of hope -

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hope for more effective treatments and hope for an eventual cure for mental illness. The Department of Mental Health is committed to this vision and to putting research results into practice. At any given time, approximately 100 research studies are taking place at DMH-funded Research Centers of Excellence located in Boston and Worcester. This research is done in partnerships with some of the world’s leading institutions, including Harvard Medical School, Beth Israel Deaconess and UMass Medical. Department Accomplishments 2012 marks an important watershed for DMH. Over the last 20 years, the Department has significantly increased the range and scope of community-based mental health services, resulting in decreased reliance on inpatient care and a spending shift in support of community-based services. We now see the vast majority of individuals served by DMH successfully living in their communities with most benefiting from critical Community Based Flexible Supports. It is the Administration’s priority to ensure that all – across the full spectrum of care – have access to the community-living opportunities and supports required to live with dignity and independence. This commitment to Community First strengthens consumer choice; is client-centered, family-focused and driven by client outcomes; relies on an extensive peer workforce; and focuses on recovery and enhanced ability to move through the community and inpatient systems of care. In reflection of that commitment, since Fiscal Year (FY) 2004 and projected through FY 2013, DMH will have increased funding for adult community services by approximately $60 million, including $9.9M in funding contained within the Governor's FY 2013 House 2 budget. This investment will provide DMH with the annualized funding to fully support the cost of 80 additional community placement opportunities being developed in FY 2012. While the Department is committed to serving those in the community, there are also individuals that need inpatient services. As part of our inpatient continuum of services, this year, we are opening the new, state-of-the-art Worcester Recovery Center and Hospital (WRCH). The opening of the new hospital is the culmination of nearly a decade of work and dedication on the part of our many partners, staff and consumers. We are grateful for the support of the Legislature throughout the development, planning, design and construction of a project of this magnitude. The Administration fully supports the Worcester Recovery Center and Hospital and the dignity, respect and opportunity for recovery that it will bring to citizens of the Commonwealth living with serious mental illness. The 320-bed recovery center and hospital will serve adults and adolescents through an innovative design, providing an unmatched environment for patients and staff. The final anticipated cost of the hospital is $305 million, making it the largest non-road state-funded building project in history. It has provided over 500 construction jobs and will result in 850 permanent jobs in the Commonwealth. The annual operating cost of WRCH is approximately $60M. The design of the Recovery Center and Hospital reflects stages of recovery from serious mental illness by using familiar environments, ranging from “house” to “neighborhood” to “downtown.” The low-rise scale emphasizes the residential character of the new Center and strives to minimize the stigma often attached to psychiatric facilities. Other features that enhance care and support

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recovery include single bedrooms and bathrooms; the joining of “neighborhoods” to serve multiple units and support a more effective mix of professional skills in the staff; and village green and downtown activity areas which provide secure, safe rehabilitation areas for patients. As the Department prepares for the new hospital to open, it must make some challenging decisions in order to complete the necessary re-alignment of inpatient capacity and identify the necessary operating dollars to support WRCH. Our priorities in devising a plan to identify those funds were to: maintain DMH’s current statement capacity of 626 continuing care beds; stay within the operating funds available for DMH facilities; and continue our efforts to expand the community system. To achieve this, the Department will close Taunton State Hospital by December 31, 2012, and consolidate 124 of Taunton’s beds into the new facility. Additionally, 45 beds will be transferred to Tewksbury Hospital. This option permits the Department to maintain its current capacity of 626 inpatient beds, while preserving the greatest amount of job opportunities for staff. All Taunton State Hospital employees will be offered new employment opportunities within the Department and all other community mental health services in Southeastern Massachusetts will be maintained. The Governor’s proposed FY13 House 2 budget addresses this transition, while offering the necessary financial support to both open the new hospital in Worcester and provide adequate community services. This plan emphasizes the Administration’s Community First initiatives, and importantly promotes the necessary shift from an institutional residence in antiquated facilities to an emphasis on community supports. Finally, the Administration’s decision will continue to allow the Department to use available funds for community placements, providing critical mental health supports to those that are living in our communities. The Department understands that this will have an impact on the community of Taunton and the Southeastern region of the Commonwealth and we are committed to working collaboratively with city and state officials, local stakeholders and members of the statewide mental health community, during the transition. DMH will work closely with patients and guardians to ensure a smooth transition. Transfers to the community or alternative facilities will be based upon clinical determinations and the wishes of patients and their guardians, and assessments and transfers will occur throughout the closure process. Preserved Programs and Services The Governor’s budget offers responsible, balanced, and innovative solutions to address the ongoing fiscal challenges facing the Commonwealth. The Governor’s FY13 House 2 budget recommends a total of nearly $666 million for DMH, which is a 3.7% increase above projected FY12 spending, for the Department to continue to deliver cost-effective, high quality services. This budget supports the overall programmatic and operational needs to maintain the current levels of services delivered by DMH and its provider partners. Additionally, the Governor’s budget proposes an increase to the community mental health services account by $9.9M or 3% from FY12 estimated spending levels, while preserving funding for community placements for high acuity patients currently in DMH inpatient facilities.

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House 2 will also allow DMH to maintain its inpatient bed capacity at 626 with an increase of $6.69 million or 4.6% from FY12 estimated spending levels. This recommendation supports the full operation of the new Worcester Recovery Center and Hospital by December 31, 2012. Additionally, this budget preserves DMH Clubhouse services. Finally, I want to stress my support for the many Administration initiatives that will lead to better services and improved quality for people with mental illness. House 2 supports several transformational initiatives that advance the Governor’s goal of achieving real and lasting health care cost containment, including the Money Follows the Person (MFP) Demonstration Project, the Patient Centered Medical Home Initiative (PCMHI), and the Duals Initiative. We know that providing integrated and coordinated care for patients leads to reduced health care costs and improved quality, which is especially critical for those with disabilities. We must continue to do everything we can to continue to reform the system and provide better health care to all in Massachusetts. Conclusion I am proud to share that this department continues to do extraordinary things considering the extraordinary fiscal challenges we have faced as a Commonwealth. We are creating new opportunities for the public mental health system to be solidly grounded in recovery, resiliency, partnership and consumer choice. It is important to acknowledge that the Department’s work reflects the vital principles of consumer voice, self-direction and recovery. Massachusetts has been a leader in caring for people with mental illness since it built the nation’s first public asylum in Worcester in 1833. Since then, the DMH system has evolved into a community-based network of care. Clients and stakeholders in the mental health community have increased their participation in planning and policy development, helping us further our priority to create a client outcome-driven system that is supported through the use of data and focused on promoting full and productive life expectations for adults and children, including employment, housing and education. I thank you for the opportunity to address this committee. I would be pleased to provide you with more detailed information or answer any questions you may have.

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Testimony of Kenn Turner, Deputy Secretary, Department of Veterans’ Services

Joint Hearing of the House and Senate Committees on Ways and Means February 22, 2012

Introduction Good morning, Chair Flanagan, Chair Walz and distinguished members of the Joint Committee on Ways and Means. My name is Kenn Turner, and I am the Deputy Secretary of the Department of Veterans’ Services. On behalf of Secretary Nee who is away on a business trip with veterans, I thank you for the opportunity to testify before you today about the Department’s mission, priorities, and our proposed Fiscal Year 2013 (FY13) budget. The mission of the Department of Veterans’ Services (DVS), in collaboration with our municipal counterparts, is to serve the almost 500,000 men and women veterans and their families who call Massachusetts home. Our strategic goals for the future include: ensuring access to all veterans’ benefits and services available throughout the Commonwealth; ending veterans’ homelessness and increasing access to transitional and permanent housing options for veterans; and maximizing opportunities for adults to move toward self-sufficiency and independence through employment, education and/or job training. Since September 11, 2001, more than 37,000 Massachusetts veterans have returned home from humanitarian relief operations, armed conflicts, and peacekeeping operations abroad. Our goal is to reach-out to all returning veterans and military family members across the Commonwealth and inform them about eligibility for state and federal veterans’ benefits that they have earned and deserve for serving our country. We at Veterans’ Services are mindful of the uphill challenges posed by the economic climate, and we recognize and appreciate this Committee’s arduous undertaking to devise a budget that best serves the people of the Commonwealth. We are grateful that our Department has been afforded increased funding during these stressful fiscal times, ensuring that we have the necessary resources to continue to serve the many Massachusetts men and women who have worn the uniform, served our nation with honor during times of stress and who now find themselves experiencing their own time of distress. To this end, I would like to give you an overview of the important programs and services administered by the Department of Veterans’ Services including:

• The Department coordinates with local Veterans Service Officers (VSOs) throughout the Commonwealth who are the employees of our municipal counterparts to provide guidance and training for the administration of Chapter 115 veterans’ benefits. The financial assistance through the Chapter 115 benefits provides critical support for shelter, home heating fuel, and medical needs of veterans and their eligible family members, including widows and dependents whose income is under 200% of the federal poverty level.

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• Chapter 115 Annuities are administered to veterans with service-connected blindness, paraplegia, and disabilities rated 100% by the U.S. Department of Veterans Affairs (VA), and to both Gold Star Spouses who have not re-married and Gold Star Parents for veterans whose deaths are service-connected. This includes a semi-annual payment (February and August) annuity of $2,000 to eligible annuitants.

• Persian Gulf War bonus under chapter 153 of the acts of 1992. The bonus ranges between $300 to $500 to eligible veterans for combat zone service.

• As part of the work of the Women Veterans’ Network, a newsletter is distributed to members of the Network (approximately 14,000 women). DVS also sponsors an annual Women Veterans Conference.

• The Statewide Advocacy for Veterans Empowerment (SAVE) Outreach Program includes peer-to-peer suicide intervention and prevention supports. These supports are administered by the SAVE Outreach Team for veterans returning from Iraq and Afghanistan who may be at greater risk for suicide and need assistance reintegrating after deployments.

• Two state veterans’ cemeteries located in Agawam and Winchendon provide burials for veterans and eligible spouses. These cemeteries are also funded by the VA for operation and maintenance.

Department Accomplishments The Department is committed to ensuring that access to all veterans’ benefits and services is available through the Commonwealth and that we are doing everything we can to end veterans’ homelessness and increase access to transitional and permanent housing options for veterans. The steps the Department has taken over the past year are in line with these goals and also support the Executive Office of Health and Human Services’ (EOHHS) overall strategic plan. Last month, DVS was proud to join officials from the U.S. Department of Veterans Affairs (VA) and the U.S. Interagency Council on Housing and Homelessness to announce a new report which shows that homelessness among veterans in Massachusetts has dropped 21% since January 2011, nearly twice the rate of reduction nationally. By working across agencies and in partnership with many advocates and service providers, Massachusetts continues to make great strides in providing needed resources for our military servicemen and women. In conjunction with this, we have also announced a new pilot program that will supplement these efforts by offering comprehensive, peer-to-peer services to chronically homeless veterans receiving HUD-Veterans Affairs Supportive Housing (VASH) vouchers in the Boston-area. The Statewide Housing Advocacy for Reintegration and Prevention (SHARP) initiative, to be administered by the Department, will offer peer support, mental health services, psychiatric evaluation and linkages to emergency shelter to veterans recently placed in supportive housing at a veteran-centric facility. The program’s team will also identify and enroll new homeless veterans into the HUD-VASH program. Through a $323,000 grant from the VA, this initiative will rely on an existing network of veteran service providers dedicated to supporting homeless veterans. Using these new funds, DVS has

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contracted four peer support specialists, one substance abuse counselor and one psychiatrist to provide integrated care coordination services. The Commonwealth has also established working agreements with the Soldiers’ Home in Chelsea, HopeFound, the Lynn Housing Authority, the New England Center for Homeless Veterans, the Pine Street Inn, St. Francis House, and Veterans’ Northeast Outreach Center in Haverhill to both identify veterans and work with DVS to move these veterans towards supportive housing. In addition to the Statewide Housing Advocacy for Reintegration and Prevention Program (SHARP), there are 16 Outreach Programs and 13 Transient Housing and Homeless Shelters operated by non-profit contractors, and 3 federal grants for employment training and homelessness. DVS oversees the appropriations for these contractors who provide outreach services and operate housing and homeless shelters for indigent veterans. I am proud to share that Massachusetts leads the nation in providing benefits and services to our veterans and their families. By coordinating the resources of federal, state, local and not-for-profit entities working with veterans, we have been able to serve more people, establish better outcomes and maximize public dollars to their fullest potential. Fully utilizing all existing resources, as well as employing new methods, such as peer-to-peer outreach and Housing First initiatives, the Department will continue to dramatically reduce the number of homeless veterans in Massachusetts in the years ahead. In FY11, our SAVE Outreach Coordinators, in partnership with the Department of Public Health, had direct contact with approximately 4,000 veterans, totaling more than 18,000 contacts since the program’s inception in 2008. All clients were given information on veterans’ benefits and a direct referral to the suicide prevention hotline operated by the VA. The veterans’ community at-large reported wide-spread awareness of the SAVE program. As a result, SAVE has been receiving a higher number of referrals to the program than ever before and has received attention from the VA as a national model. Additionally, the Department has reinforced its commitment to the Commonwealth’s many women veterans. The Women Veterans’ Network continues to expand in scope, outreach and participation for the more than 26,000 women veterans living in Massachusetts. In 2011, the network held its 7th Annual Women Veterans’ Appreciation Day on Beacon Hill where the Department honored our many women veterans. Last summer, the network held its 3rd annual conference for women veterans at Salem State University. We had workshops on benefits, integrative therapies for mind-body-health, reintegrating with families after deployment and supports for Survivors of Military Sexual Trauma. The conference was attended by over 260 women, and we had over 40 service providers exhibiting. The network is currently working on plans for this year’s conference at Bristol Community College. In October of last year, the Department held a retreat for women veterans in collaboration with Project New Hope and There & Back Again. Over 60 women attended, with several of these women dealing with serious issues and injuries resulting from their service. We found many of

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these women tremendously grateful for the opportunity to come together for support, to hear us reinforce that we are committed to serving them, and to learn about other services available to them. The Women Veterans’ Network has also collaborated with the Department of Labor Women’s Bureau, holding a conference in November of 2010 focused on employment for women veterans, followed by large participation in Stand Down in August of 2011. As women veterans are four times more likely to become homeless than compared to their male counterparts, the Department is deeply committed to preventing homelessness among our women veterans and their families. I am pleased to report that our Women’s Network coordinator has provided direct assistance to over 500 women veterans just this year in the areas of employment, education, housing, benefits and mental health referrals. In FY11, DVS received renewals for three federal grants to help homeless and recently returned veterans transition back into the workplace. Under this, Massachusetts has secured an additional $1 million in renewed workforce grants from the U.S. Department of Labor’s Veterans’ Employment and Training Service under the Veterans’ Workforce Investment Program and Homeless Veterans’ Reintegration Program (HVRP) Grants. In 2010, 344 Veterans were employed under these grants, including 63 in green jobs. Over the three years of this grant DVS has assisted more than 800 veterans by helping them secure consistent employment. Also, DVS is partnering with the Massachusetts Broadband Institute (MBI) to implement $4.1 million in federal stimulus funding, which funds a comprehensive web portal for veterans and family members to make online access of veterans' services more streamlined, safe and effective Commonwealth-wide. This portal will be launched this year. FY 13 Budget Turning to the Fiscal Year 2013 House 2 proposal, I am very pleased to report that the Governor’s recommendation includes the resources necessary for the Department of Veterans’ Services to remain as a national leader of veterans’ services. The budget reflects a strong, ongoing commitment by the Administration to the over 385,000 veterans of our Commonwealth, their families, as well as to the many veterans returning home from both Iraq and Afghanistan, many with complex needs. These priorities are reinforced by several core recommended investments, including:

• A recommended net increase of 13% over FY12 estimated spending, largely due to the increase in caseload for veterans receiving Chapter 115 benefits and annuities, as well as increased investments in veterans’ programs. In total, DVS receives $78.5 million in funding for FY13.

• Together, funding for Veterans’ Services and Soldiers’ Homes is increased by 8% or $9.3

million over FY12 estimated spending, ensuring that Massachusetts’ returning veterans, as well as our aging veteran population, receive the appropriate benefits and services.

• Funding for Chapter 115 veterans’ benefits has been increased to $45.9 million, which is

an 18% or $6.9 million increase over FY12 estimated spending. The majority of this

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recommended increase is due to increasing caseload stemming from a more aggressive outreach strategy and stronger compliance initiatives by the Department. The FY13 caseload for veterans' benefits is projected to increase by 10% to 10,009 veterans. Additionally, $872,000 of this increase is tied to the Administration’s initiative to fund cities and towns with homeless shelters or transitional housing for veterans at 100% (from 75% previously), providing municipal relief for those cities and towns that support these vulnerable populations.

• A recommended funding increase for Veterans' Annuities to $21.8 million, or an 8% or

$1.7 million increase over FY12 estimated spending. This annuity is paid biannually in two installments of $1,000 each. Starting in FY13, DVS will no longer pro-rate the first payment made to annuitants. Every annuitant will receive a $1,000 benefit when they first qualify for the annuities program. Approximately half of this increase is due to the Administration’s initiative to fully fund annuities, in addition to a projected caseload increase by 5.5% to approximately 11,054 veterans.

• Finally, the Governor has codified DVS’ plans to combine three appropriations, which

cover over 30 outreach centers and homeless shelters, in order to implement population-based, regionalized homelessness services. This effort will allow DVS to target the needs of veterans more effectively, while ensuring our providers are complying with the best operating practices in the field. This recommended DVS funding would support services for more than 9,100 homeless veterans in FY13

Additionally, the Administration has recommended the following investments:

• DVS will continue to provide $125,000 in funding to support the Train Vets to Treat Vets program at the Massachusetts School of Professional Psychology. This funding supports a behavioral health career development program for returning veterans.

• Funding increase of 7% over FY12 estimated spending for the operation and maintenance

of the Agawam and Winchendon Veterans’ cemeteries. • The Massachusetts Manufacturing Extension Partnership (MassMEP) will continue and

expand upon its innovative partnership with DVS and the Executive Office of Labor and Workforce Development for veteran’s job training. The FY13 budget includes $500,000 to train and employ veterans who qualify for Chapter 115 benefits in manufacturing trade skills.

• This funding supports the Governor and Lt. Governor’s initiative to get our returning

veterans back to work. In November, Governor Patrick launched an Interagency Task Force on Hiring Veterans and directed all Executive Branch agencies to promote the benefits of hiring veterans. This announcement builds on existing partnerships and business collaborations initiated by Lt. Governor Tim Murray, Chairman of the Governor's Advisory Council on Veterans' Services.

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• The economic downturn has hit veterans hard. The unemployment rate for post 9-11 veterans is 11.5%, with the rate as high as 26.9% for those between the ages of 18 and 24. The unemployment rate for veterans of all eras is 8.7%. These stats are well above our statewide unemployment rate which was just reduced to 6.8%, the lowest number since 2008. These facts reflect the harsh realities that veterans face when they return to civilian life. This is tragic, not only because of the special contributions of servicemen and women in the military, but also because of the special opportunity for employers to benefit from the training, discipline and skill sets of veterans.

• As part of the initiatives to combat these statistics and get our returning veterans employed, Lt. Governor Murray and DVS together reached out to major trade associations to encourage them to hire veterans and circulate information on veterans’ benefits. The Massachusetts Association of Chamber of Commerce Executives (MACCE), the Greater Boston Chamber of Commerce, the Massachusetts Business Roundtable, the Associated Industries of Massachusetts, the Massachusetts Biotechnology Council, the Mass High Tech Council, the Defense Technology Initiative, and the Retailers Association of Massachusetts are among the growing list of major trade associations committed to working with the Administration and the Massachusetts veteran community. All of these associations have members in your districts and are working with us to educate their members about the federal tax breaks and other benefits of hiring veterans. This initiative affirms that Massachusetts is a national leader in providing services and supports to our veterans and families and funding for MassMEP will get veterans back to work and transition them from Chapter 115 benefits, ultimately saving the Commonwealth money.

• The Governor’s FY13 budget proposal includes $700,000 for Department of Public Health (DPH) to formalize the Veterans Quit Smoking Patch Giveaway. This funding will make permanent the past successful pilot programs to offer free patches to veterans and military family members to help them quit smoking. This includes counseling through the quit-line, nicotine patches, as well as an informational and promotional campaign. DPH anticipates serving 4,500 people through this initiative.

• Additionally, Gold Star spouses will be permanently exempt from property taxes.

Surviving spouses of those who have died while on active duty service will receive an extension to the property tax abatement. Currently, Gold Star spouses are exempt from paying property taxes for five years after the death. After the five years, the exemption is capped at $2,500 per year. This proposal will make the total tax exemption permanent until the Gold Star spouse dies or remarries.

House 2 also supports several transformational initiatives that advance the Governor’s goal of achieving real and lasting health care cost containment. We know that providing integrated and coordinated care for patients leads to reduced health care costs and improved quality, which is especially critical for veterans that have complex needs. We must continue to do everything we can to provide better, coordinated care for those in need.

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Conclusion The Department of Veterans’ Services is grateful to the Governor, Lieutenant Governor and all in the Legislature for the level funding provided in Fiscal Year 2012. We understand that we have a responsibility to use these dollars wisely and as such, we are currently engaged in a stem-to-stern review of our entire department to ensure that we are operating both as efficiently and effectively as possible. Governor Patrick, Lt. Governor Murray, EOHHS and the Department of Veterans’ Services have made veterans’ services a priority by the proposals outlined today. We understand that increases during these times are rare. However I would like to stress that the work this new funding will support and the veterans and families it will impact directly, all have a direct correlation to your districts, your constituents, and the overall mission of Commonwealth. I encourage this Joint Committee to support this proposal and educate your colleagues on how these investments are the right thing to do for the veterans and their family members who have earned our support. The Patrick-Murray Administration continues to demonstrate its strong support for Massachusetts veterans and their families by maintaining and investing in the critical work of the Department of Veterans’ Services, ensuring that we can serve the increased needs of our veterans across the Commonwealth’s 351 cities and towns. This increased funding will enable the Department to ensure that Massachusetts will continue to be the national leader in providing for those who have borne the battle for our many liberties and freedom. Thank you for your continued and dedicated support. I will be happy to respond to questions from the Committee and I look forward to working with you during this legislative session to ensure all of our heroes receive the welcome and compassionate care they so deserve.

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Testimony of Paul Barabani, Superintendent, Soldiers’ Home in Holyoke

Joint Hearing of the House and Senate Committees on Ways and Means February 22, 2012

 Introduction Good morning, Chair Flanagan, Chair Walz and distinguished members of the Joint Committee on Ways and Means. My name is Paul Barabani, and I am the Superintendent of the Soldiers’ Home in Holyoke. I want to thank you for the opportunity to testify before you today about the Home’s mission, priorities, and our proposed Fiscal Year 2013 (FY13) budget. The mission of the Soldiers’ Home in Holyoke is to provide quality health care services to Massachusetts Veterans with “Honor and Dignity.” Our goal is to be recognized as the health care provider of choice for all Veterans throughout the Commonwealth of Massachusetts. I believe that we accomplish this mission in a manner that is cost effective for the state. Our mission is also supportive of the Secretariat’s goals and the EOHHS strategic plan.

We know that providing integrated and coordinated care for patients leads to reduced health care costs and improved quality. Massachusetts has been a model for the nation in expanding access to health care services, and now it is taking the lead in controlling costs and improving quality through payment and delivery system reform initiatives. Improving the quality of care and reducing health care costs is important for everyone in Massachusetts but it is especially critical for our elderly and those with disabilities, and we must do everything we can to continue to reform the current system.

During FY11, the Home provided long-term care to 416 Veterans and 38 domiciliary Veterans, maintaining occupancy rates of 99% and 97%, respectively. This translates into over 100,000 days of care to our Veterans. In addition to the long-term care provided to our inpatient Veterans, the Home also provides a general medicine outpatient clinic, dental services, podiatry, urology, general medicine, dietary counseling, optometry, hematology and pharmacy services to both inpatient and outpatient Veterans. Recent Accomplishments

We are proud of our accomplishments and the efficiencies achieved in FY12, as well as our vision for the future of the Soldiers’ Home in Holyoke. Areas of particular focus include:

• Fiscal Stewardship - By pursuing all available sources of revenue, in FY11 the Home collected over $13.5 million, equating to 69% of the state appropriation to the Home. This results in the actual state cost per “Bed Day of Care” being $59.98 per day. FY12 projections indicate an increase in revenue to 73%; thus, further reducing the state cost per Bed Day of Care to $52.96. The anticipated FY13 cost represents a 38% decrease from the FY08 rate of $85.33 per Bed Day of Care.

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• Reinstatement of Outpatient Dental Services - In May of 2011, in a public-private partnership with Holyoke Health Center, dental services were reinstated for outpatient veterans, addressing a significant un-met need for veterans.

• Opening of 12 New Long Term Care Beds - We are grateful that the FY12 budget

provided for the funding of 12 additional long term care beds. Most of these beds are occupied by Veterans with service-connected disabilities of 70% or greater. This has generated revenue through reimbursements from the Veterans Administration, thereby funding the operation of the unit at no additional cost to the Commonwealth.

• Energy Efficiency - The current fiscal year also included the finalization of the energy

efficient window installation project. This Division of Capital Asset Management (DCAM) funded project improved both the energy efficiency of the facility and the comfort of our inpatient Veterans. Furthermore, as a VA-approved project, the Home received 65% federal reimbursement on the $1.6 million cost of this project, for a total reimbursement of $960,000.

• Facility-Wide Wireless Network - The Soldiers’ Home in Holyoke has installed a

facility-wide wireless network, funded through the License Plate account. This will provide Veterans with access to the internet, as well as improve staff efficiency by allowing bedside data entry via laptop computers.

• Prompt Payment Act Honor Roll - The Soldiers’ Home in Holyoke was recognized

by the State Comptroller for excellence in capturing the greatest percentage of available Prompt Payment Discounts. This is a testament to the efficiency of fiscal operations at the Home and helps improve the image of the state among contractors that do business with the Soldiers’ Home.

• Future Needs Study - In December 2011, the Soldiers’ Home, in conjunction with

DCAM, initiated a study on the future capital needs of the Soldiers’ Home in Holyoke. The study will evaluate existing conditions, our core mission and the potential need for future services. This study will determine the capital program for upgrades, renovations and/or expansion for the Soldiers’ Home in Holyoke, consistent with the EOHHS strategic master plan. The study will result in a phased state capital plan taking advantage of the federal grant program administered through the Department of Veterans Affairs, which would reimburse the state for 65% of the construction cost of the project. At a minimum, this study will address the following:

• Whether all resident rooms meet current Department of Veterans Affairs and other guidelines and standards, while maintaining current occupancy levels;

• Whether the facility is in compliance with all Federal Codes and Regulations for Accessibility and Life Safety; and,

• An evaluation of possible new services to eliminate gaps in Veteran care.

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FY13 Funding The Governor’s proposed House 2 funding request for operating the Holyoke Soldiers’ Home has been increased to $20,882,810, or 1.32%, over FY12 estimated spending. Additionally, two specific facility projects have been included in the Governor’s FY12 Capital Plan: Elevator Modernization $ 300,000 Fire Pump Replacement/Water Tank Removal $ 100,000 Finally, the Governor’s proposed budget also provides the Home with increased access to proceeds from the sales of Veteran License plates from $250,000 in FY12 to $290,320 in FY13. These funds will be used to directly benefit the residents in the Holyoke Soldiers’ Home. Revenue The Soldiers’ Home is budgeted (projected) to generate revenue of $15,080,369, or 73% of our total appropriation. The Department of Veterans Affairs (VA) provides the single largest portion of our revenue, or over $ 10,000,000, in the form of per diem payments of approximately $95 for nursing care and $39 for the domiciliary. Additionally, the Home generates revenue from room and board, projected at approximately 14% of our budget ($2,746,810 in FY11), while Medicare and other third-party insurance providers reimburse the Home for some health care and pharmacy services. Conclusion The Governor’s budget offers responsible, balanced and innovative solutions to address ongoing fiscal challenges facing the Commonwealth, while demonstrating our commitment to building a stronger Commonwealth. As we look towards FY13 and the proposed House 2 budget, we are thankful for Governor Patrick, Lt. Governor Murray and Secretary Bigby’s continued commitment to Veterans and the Soldiers’ Home in Holyoke, as well as their support of the Executive Office of Health and Human Services. The Governor’s proposed FY13 House 2 budget has provided an increase to our License Plate account, ensuring that funds generated through the sale and renewal of Veteran license plates benefit the state’s two Soldiers’ Homes. The Soldiers’ Home in Holyoke is proud of our mission and accomplishments and we look forward to continuing in our role of providing care to the nations’ most cherished assets: our veterans. Thank you for this opportunity to testify before you and I would be happy to take any questions you may have at this time.

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Testimony of Michael Resca, Commandant, Soldiers’ Home in Chelsea

Joint Hearing of the House and Senate Committees on Ways and Means February 22, 2012

Introduction Good morning, Chair Flanagan, Chair Walz and distinguished members of the Joint Committee on Ways and Means. My name is Mike Resca, and I am the Commandant of the Soldiers’ Home in Chelsea. I want to thank you for the opportunity to testify before you today about the Home’s mission, priorities, and our proposed Fiscal Year 2013 (FY13) budget. The Chelsea Soldiers' Home is a state-funded agency that is part of Executive Office of Health and Human Services. Our mission is to provide comprehensive, quality health care services; housing, as well as transitional and other types of human services to all eligible Massachusetts veterans with “Honor and Dignity.” Our goal is to be recognized as the health care provider of choice for all Veterans in Eastern Massachusetts, and I believe that we can accomplish this mission in a manner that is cost effective for the state. The Chelsea Soldiers’ Home is committed to ensuring that our veteran clients attain the highest possible level of health and well-being, and our goal is to give every veteran the finest and most comprehensive care necessary to prevent disease and to preserve health. We know that providing integrated and coordinated care for patients leads to reduced health care costs and improved quality. Massachusetts has been a model for the nation in expanding access to health care services, and now it is taking the lead in controlling costs and improving quality through payment and delivery system reform initiatives. Improving the quality of care and reducing health care costs is important for everyone in Massachusetts, but it is especially critical for our elderly and those with disabilities, and we must do everything we can to continue to reform the current system. Furthermore, all of our services support and complement the EOHHS strategic plan and the Administration’s standing priorities of ending homelessness; reducing hunger and encouraging nutritional health; promoting public health, wellness and disease prevention; delivering high-quality disability services and promoting the transition to community based services when possible. Our Long Term Care and Skilled Nursing Facility has a capacity of 174 beds and operates at approximately 95% occupancy. Our Domiciliary Services, which include assisted living and our new Transitional unit, has a daily census of approximately 270 veterans. We have seen a significant increase in the census of veterans from the Persian Gulf, peacetime era, Iraq and the ongoing war in Afghanistan in need of these services. The current domiciliary consumers include 27 veterans who served during World War II or Korea; 163 who served in Vietnam or the Vietnam era; and 78 who served in Desert Storm, the Persian Gulf, peacetime or the wars in Iraq and Afghanistan.

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The Home has experienced an increase in younger veterans who have unique issues and are in need of services, and we have found that we must continue to adapt to serving this population. Eleven of our current residents are under forty years of age, and we have had many experiences with residents under thirty years of age. Currently, 158 dorm residents receive disability pensions, and 191 have been admitted from a homeless environment. To better serve our diverse population, we have developed a Transitional Unit within the domiciliary, in partnership with the federal Department of Veteran Affairs and the Commonwealth’s Department of Veterans’ Services. This unit provides highly structured case management with the goal of getting veterans back living and working in the community within 24 months. During that time period, these veterans receive comprehensive services that include independent living skill development, mental health and substance abuse counseling, employment search assistance, legal advocacy and housing search assistance. In partnering with Secretary Coleman Nee and the Department of Veterans’ Services, we are striving to ensure that all of our Commonwealth’s veterans receive the benefits and supports they have earned in order to be successfully reintegrated as valued members of our communities. Department Accomplishments FY12 has seen many successes at the Chelsea Soldiers’ Homes, including:

• Successful implementation of an assisted living program allowing older veterans to live in the domiciliary setting longer. This program provides veterans an opportunity to continue to maintain their independence and further delay moves into alternative long-term care or skilled nursing facilities;

• Implementation of a program to insure that all patients and residents comply with the state’s mandate for health insurance coverage;

• Expansion of the Home’s ability to provide increased and enhanced case management services to our residents by creating a Masters in Social Work intern program;

• Collaboration with the Department Veterans’ Services to provide office space and general assistance to the Statewide Advocacy for Veterans’ Empowerment (SAVE) Program at our agency;

• Successful completion of surveys from the Joint Commission for Accrediting Healthcare Organizations, the Veterans’ Administration, and Department of Public Health; and,

• The launch of several facility improvements currently funded by the Division of Capital Asset Management (DCAM), including:

o Headquarters Building Roof Replacement $ 370,000 o Campus wide water backflow prevention $ 225,000 o Keville House Bridge Roof Replacement $ 155,000 o Sullivan Roof Replacement $ 165,000

I am proud to share with you today these and many other successes at the Home over the course of the last fiscal year. At the same time we are preparing to address the following in the coming years:

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• Upkeep of our existing buildings and physical plant with buildings ranging in construction from 1882 to our newest, built in 1952;

• Recruitment and retention of certified medical personnel; and • Maintenance of the facility in order to comply with standards established by the Joint

Commission for Accreditation of Healthcare Organizations (JCAHO), Department of Public Health (DPH), as well as the Veterans Administration (VA).

Funding The Governor’s proposed House 2 funding request for operating the Chelsea Soldiers’ Home has been increased to $26,931,978, or 4% over FY12 estimated spending. This funding increase is targeted to facility repairs and dietary and pharmacy services. Three specific facility projects have been included in the Governor’s FY12 Capital Plan:

o Facility Improvement Study $ 100,000 o Water Tank Repairs $ 696,000 o Life Safety Upgrade in Dorm Buildings $ 2,440,000

Finally, the Governor’s proposed budget also provides the Home with increased access to proceeds from the sales of Veteran License plates from $370,000 in FY 12 to $438,480 in FY 13. These funds will be used to directly benefit the residents in the Chelsea Soldiers’ Home. Revenue The Soldiers’ Home is budgeted to generate revenue of $13,387,000, or 49.7% of our total appropriation. The Department of Veterans Affairs (VA) provides the single largest portion of our revenue, or $10,125,000, in the form of per diem payments of approximately $95 for nursing care and $39 for the domiciliary. Additionally, Medicare and other third-party insurance providers reimburse the Home for some health care and pharmacy services. Conclusion The Commonwealth has been a proven, national leader in the care and support of veterans. I want to acknowledge and thank Governor Patrick, Lt. Governor Murray and Secretary Bigby for their continued leadership and support. The Governor’s FY13 budget proposal represents a responsible, balanced and innovative approach to solving the many fiscal issues facing our Commonwealth, while continuing to focus on the key areas that will make Massachusetts stronger. I urge you to join me in supporting these recommendations. I look forward to continuing to partner with members of this Committee and the entire Legislature to ensure that no Veteran goes without the supports and services they have earned. Thank you for this opportunity to testify before you and I would be happy to take any questions you may have at this time.

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Testimony of Ann L. Hartstein, Secretary, Executive Office of Elder Affairs

Joint Hearing of the House and Senate Committees on Ways and Means February 22, 2012

Introduction Good morning, Chair Flanagan, Chair Walz and members of the Committee. Thank you for the opportunity to provide testimony today on the funding allocated in the Governor’s Fiscal Year (FY) 2013 budget for the programs and services administered by the Executive Office of Elder Affairs. Our mission at the Executive Office of Elder Affairs is to promote the independence and well-being of individuals, their families, and caregivers. This is accomplished through the development and delivery of quality services; by providing consumers with access to a full array of health and social support services in the settings of their choice; by informing consumers about all of their long-term care options; by delivering elder protective and advocacy services; and through a real emphasis on healthy, community-based aging. We work each and every day to achieve this mission for the 1.3 million people in the Commonwealth over the age of 60, as well as for their families and caregivers, and for those individuals who - like a portion of people over 60 - have lifelong or acquired disabilities. Today, I want to start with demographics. You've heard from many others and from me about the Baby Boomers who are now turning 65 at the rate of approximately 8,000 individuals per day across the country. Life expectancy in the Commonwealth is 80.2 years, which is two years older than the national average. In the next decade, the number of people age 60 or older in Massachusetts will increase by more than a quarter of a million, to nearly 1.6 million people Of all of the people who have ever been born on this earth and who have reached the age of 65, two-thirds are alive today. Of these, statistically speaking, two-thirds will need some assistance at some point in their lives. People over 85 are the fastest growing segment of our population, and it is this group of individuals whom are more likely to need assistance to sustain an independent and quality life. The 2010 Census shows that 145,200 (or 2.2%) of Massachusetts residents are over the age of 85. People who reach the age of 85 are often likely to experience the indignity of suffering from some cognitive impairment, including Alzheimer’s disease or other related disorders, as well as multiple chronic diseases, such as heart disease, diabetes, hypertension or arthritis. As a Commonwealth, we have been preparing for this demographic eventuality for many years. The Legislature was insightful in the late 1960’s to set up a network of Councils on Aging (COA) across the Commonwealth, with state funding allocated beginning in 1982. In the late 1970’s, Massachusetts set up a statewide home care program to address the needs of aging individuals and their families. Independent Living Centers were developed in 1978 to assist

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people with disabilities across the lifespan. In the past ten years, the Commonwealth has been developing other important support structures, including high quality home- and community-based services through MassHealth and Aging and Disability Resource Consortia. All of these and other structural developments are needed to prepare the Commonwealth for meeting the challenges of this changing demographic. This support structure, made up of all of these networks, works together to encourage residents of all ages to do all they can to maintain their health, remain active and socially involved, to work together to create a Commonwealth whose people support, care, and value one another. The Executive Office of Elder Affairs helps build this kind of Commonwealth through the implementation of our strategic goals, Aging Agenda, the Administration’s Community First agenda and initiatives that promote high quality, effective, and appropriate health and long-term care across the lifespan. To do so, we will continue to work in coordination and cooperation with EOHHS and other state, local and federal agencies, businesses, and stakeholders to address the needs and strengths of elders and people of all ages with similar functional needs. Our work is made possible through our strong and diverse network of local community-based organizations that offer a continuum of integrated service options to provide information, assistance, socialization, employment support and civic opportunities for elders and others. Preserved Programs and Services and Department Accomplishments The continuum of services and cohesive system of organizations has grown stronger in the last year in spite of the challenging economic times we continue to face. Working with other EOHHS agencies and those entities under the Elder Affairs umbrella, we are focusing on our strategic goals and building a long-term supports system for the future. This system is made possible by an especially vibrant collaborative spirit held between the 349 Councils on Aging (COA); 11 Independent Living Centers (ILC); more than 400 community service vendors; the network of 30 Aging Service Access Points (ASAPs)/Area Agencies on Aging (AAAs); and the 11 Aging and Disability Resource Consortia (ADRCs), along with the many agencies associated with other EOHHS agencies. All are truly committed to providing effective services for those in need. I would like to take a moment to highlight a few of our strategic goals which are resulting in exciting initiatives. One of our strategic goals is to expand access to home and community-based long-term supports. To this end, the Executive Office of Elder Affairs has worked in conjunction with the Department of Public Health (DPH) and our community partners to build a sustainable system for statewide access to Chronic Disease Self Management Programs. Since March 2010, we have held 248 workshops in a variety of locations, among them health centers, senior centers, adult day health centers, public libraries, churches, and residential settings. More than 2,700 older adults have attended workshops to learn strategies to help them better manage their chronic conditions and lead healthier lifestyles. Another one of our goals is to develop a plan related to Alzheimer’s Disease. I am happy to note that we have just released the Alzheimer’s Disease and Related Disorders State Plan Report, which provides a roadmap for the Commonwealth to use in moving forward with the partnerships, programs and policies that will provide better supports for people living with

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Alzheimer’s and related disorders. In addition, this report will help family members; businesses; the long-term care and health care workforce; government; and other stakeholders better understand and prepare to offer appropriate assistance to those who will be affected by these disorders. I want to thank Senator Jehlen and Representative Wolf who helped lead the development of this report. Another of our strategic goals is to improve long-term care system capacity, quality and availability to people of all ages in need of long term supports. With the administrative reorganization in 2003, the MassHealth Office of Long Term Care was integrated with the Executive Office of Elder Affairs, thus streamlining and maximizing the programmatic, fiscal, advocacy and policy components of support services for elders and people of all ages with disabilities and thereby eliminating fragmentation and duplication. This change integrated the management of Medicaid funding, which pays for a range of home and community based long term care, medical services and services provided in nursing facilities for people of all ages. The Office of Long Term Care, now called the Office of Long Term Services and Supports (OLTSS) is responsible for working with Elder Affairs and MassHealth to manage the state funding for care management and non-medical support services for elders and persons with disabilities. This integration also supports the Administration’s commitment to Community First allowing individuals of all ages in need of services to remain in their homes or in the least restrictive settings of their choice. In 2010, the federal Health Resources and Services Administration awarded EOHHS a three-year grant (totaling $738,993) to create, evaluate and disseminate a core competency-based curriculum for direct care workers in the health and human services sector. With this project, EOHHS and Elder Affairs are working closely with the Massachusetts Council for Home Care Aid Services, the PCA Council, Independent Living Centers and Bristol Community College to improve and enhance existing curricula for home care aides and personal care assistants as part of the state’s response to the growing long-term support needs of elders and people with disabilities. With this grant, we will achieve standardization of core training components for all direct care workers currently hired for community-based, long-term care. This year, three more classes of trained attendants will graduate from this program and have the skills necessary to provide services necessary to keep elders and people with disabilities in their homes. This initiative represents a significant step toward improving the overall quality of long-term care services provided by direct care workers in Massachusetts. Reinforcing this innovative program, Governor Patrick has proposed to make community colleges a key component of his efforts to help people get back to work by unifying the fifteen individual community college campuses into a strengthened, state-wide system. Right now, there are currently 120,000 job openings in Massachusetts and 240,000 people looking for work. The challenge before our Commonwealth is to match the talent of job seekers with the skills needed to fill these open jobs. To do that, we need to create an integrated and unified workforce talent pipeline. I believe that the Governor’s proposal will help to ensure that we have a trained workforce ready to serve the fastest growing segment of our population—people over 85 years of age. All of these will strengthen services and supports for residents of the Commonwealth.

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FY13 Budget Turning to the Fiscal Year 2013 House 2 proposal, I am very pleased to report that the Governor’s recommendations offer responsible, balanced and innovative solutions to address the ongoing fiscal challenges facing the Commonwealth. Furthermore, the Governor’s proposal reflects a strong, ongoing commitment to the elders of our Commonwealth, to the Community First Agenda, and to the maintenance of the home- and community-based system of care we need for people of all ages. The recommended funding levels for EOEA keep most programs fully intact at FY12 funding levels, ensuring sustainable progress towards our strategic goals and initiatives. Protective Services, Home Care, and grants to Councils on Aging are maintained, along with the EOHHS account 4000-0600, which provides long-term support services for eligible MassHealth members. This account includes support for the Options Counseling program at 2012 funding levels. This program helps individuals in need of long-term care support to make informed choices about the services and settings that best meet their needs, encouraging the widest possible use of community-based options. We know that providing integrated and coordinated care for patients leads to reduced health care costs and improved quality. Massachusetts has been a model for the nation in expanding access to health care services, and now it is taking the lead in controlling costs and improving quality through payment and delivery system reform initiatives. Improving the quality of care and reducing health care costs is important for everyone in Massachusetts but it is especially critical for our elderly and those with disabilities, and we must do everything we can to continue to reform the current system. One of the difficult decisions made as part of the House 2 proposal was a reduction in funding for the State Elder Nutrition Program. This program, which served more than 8.8 million meals last year, serves elders living in the community who visit senior centers and other congregate meal sites for weekday meals. This program is not needs-based, and it is important to note that this reduction will not affect any elder who receives his or her meal as part of a service plan in any of the Elder Affairs programs. This impact of this reduction will result in the available statewide meal count decreasing by approximately 242,000 meals for FY13. Although challenging, this reduction reflects a prioritization of funds for elders with higher levels of needs, which is demonstrated by the funding maintained for important community programs such as the Home Care programs and the Prescription Advantage Program. Fraud, Waste and Abuse

Fraud, waste and abuse are areas of great concern – and of focus – for the Executive Office of Elder Affairs. Each year, our Adult Protective Services program receives thousands of reports, ranging from abuse and neglect to financial exploitation. In addition, thousands of complaints each year are addressed by our Ombudsman Programs, which serve as an exceptional resource for elders and families with concerns and complaints involving long-term care and assisted living facilities, as well as those who experience a problem with a health or social service provided in their home or community. These programs work to ensure that elders and their families have a strong voice at the table and that their issues and concerns are addresses appropriately and in a timely manner.

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Another ongoing effort to combat fraud and abuse is the Massachusetts Senior Medicare Patrol Program. This program operates under the leadership of Elder Services of the Merrimack Valley (a local Aging Service Access Point, or ASAP) and the Executive Office of Elder Affairs, empowering Medicare and Medicaid beneficiaries with an understanding of their health insurance benefits. The program also educates elders on how to detect, protect and report Medicare and Medicaid errors, fraud and abuse. In closing, I would like to reiterate my unwavering commitment to improving the quality, capacity and delivery of the programs and services we offer to elders, their families and people with disabilities of all ages. I want to thank you for all you do to support this office and our many seniors and persons with disabilities across the Commonwealth’s 351 communities. Thank you for the opportunity to testify today. I would be happy to take any questions you may have at this time.

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Testimony of John Auerbach, Commissioner, Department of Public Health

Joint Hearing of the House and Senate Committees on Ways and Means February 22, 2012

 Good morning, Chair Flanagan, Chair Walz and distinguished members of the Joint Committee on Ways and Means. My name is John Auerbach, and I am the Commissioner of the Department of Public Health. Thank you for the opportunity to testify before you today about the Department’s mission, priorities, and our proposed fiscal year 2013 (FY13) budget.

As I approach my five-year anniversary at the Department, I cannot tell you what a privilege it is for me to lead this remarkable agency, which is comprised of a very dedicated and committed staff. These people work hard each and every day to improve the health of the residents of the Commonwealth, and it is a sincere honor to be a partner with these individuals in working towards our goals. While our work touches every Massachusetts resident across our 351 communities, it is most important for those who are frail, diagnosed with a chronic illness or a disability or whose life circumstances or social conditions place them at higher risk.

Like every state agency, our biggest challenge right now is meeting our many obligations as we begin to recover from the greatest economic downturn since the Great Depression. I don’t have a quick and simple answer, but I can tell you that we will continue, as we have since the beginning of this recession, to be thoughtful and diligent with respect to every programmatic decision that we make, to minimize the negative impact of cuts, and to do our best to protect core public health services. And whenever possible, we have and will continue to strengthen our work and address both existing and emerging issues with up-to-date, state-of-the-art approaches.

As we have seen in recent fiscal years, the Governor’s FY13 budget proposal for the Department of Public Health is lean and responsible. The Department’s appropriation of $564 million includes funding for the work of all ten bureaus, our nearly 100 public health programs, our four public health hospitals, as well as the Hinton State Laboratory Institute. This appropriation represents a budget that is $3.2 million under the estimated FY13 maintenance level.

FY13 is a challenging year, requiring us to manage expectations as we anticipate additional significant reductions in federal funding. The Executive Office of Health and Human Services (EOHHS) encourages innovation in the development of important health programs, such as the Department of Public Health’s Mass in Motion Initiative, which promotes conditions that will lead to good health, prevent illness and injury among our residents, while decreasing health care costs. Together, with broad coalitions that include local elected leaders, community-based organizations, employers, faith-based groups and many others, Mass in Motion encourages healthful eating and active living.

Additionally, the Department is working together with the Secretary’s Office and other agencies within EOHHS to meet the Governor’s goal of containing health care costs while strengthening health care quality. I want to stress my support for the many Administration initiatives, within

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House 2 and beyond, that will lead to better services and improved quality of care for people across the Commonwealth.

The Department of Public Health is committed to managing our budget in a manner that prioritizes direct service and preserves vital public health programs, policies and infrastructure as much as possible. As such, the Department’s FY13 proposed budget includes increased or maintenance funding in a number of key areas:

• Support for the Department’s tobacco control efforts will increase by $1.7 million, affording us the opportunity to expand proven efforts to prevent illness and premature deaths. Additional smoking cessation funding will allow us to provide services to 4,500 veterans and their families members, who smoke at significantly higher rates than the general population. In addition, we will expand our smoking cessation and prevention efforts among teenagers by providing funding to 75 high schools to decrease the use of tobacco by youths.

• House 2 preserves level funding for several violence prevention programs such as youth at-risk matching grants, youth violence prevention grants, Sexual Assault Nurse Examiners (SANE), sexual and domestic violence service programs, and suicide prevention.

• An increase in the Vital Records account will help the Department resolve a significant backlog in entering vital records data. Keeping these records up-to-date is critical to fraud prevention, public health tracking, and facilitating the work of our sister agencies around child support payments, MassHealth enrollment and transitional assistance.

• Finally, this budget preserves and strengthens support for substance abuse and addiction services, totaling $85.8 million. This funding will assist the Department in our efforts to stabilize the state’s detox facilities.

In addition to these funding priorities, the Governor’s budget includes a number of new initiatives, including:

• The transfer of forensic drug testing functions from DPH to the Executive Office of Public Safety and Security, and specifically, the State Police. $1.5 million in reductions in the State Lab line item represents this shifting of responsibility. This is an administrative change scheduled to take place effective July 1, 2012. There will be no staff reductions or immediate relocations necessitated by this move; it is strictly a transfer of supervisory authority of these particular functions. As EOPSS currently operates other similar crime laboratories, this change will result in a more coordinated, streamlined and efficient state effort under the public safety umbrella.

• The Department will implement regulations to license adult day health facilities – something new to Massachusetts – and an important service that allows vulnerable residents to remain in their homes, with their families, and continue to contribute as a member of their community. We will ensure that such facilities meet the necessary standards to protect the health and safety of those they serve.

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• The introduction of a retained revenue account for Tewksbury Hospital will enable DPH to expand its partnership with the Department of Developmental Services (DDS) and allow the Administration to better meet the unique needs of the DDS population.

• The recent approval by the federal government of the MassHealth 1115 Demonstration Waiver includes coverage for the first time for certain services for children diagnosed with autism and developmental delays. House 2 recognizes this change, and the savings that will result from it, by decreasing the Early Intervention line item by $5.4 million and transferring this funding to MassHealth to cover the anticipated cost. This will occur without any reduction in the number of children served or the benefits offered by the Early Intervention Program.

As you can see, we are working to implement this budget in a manner that best preserves critical public health services and minimizes any negative impact on our Commonwealth’s most vulnerable populations.

The Department will continue to emphasize the importance of promoting wellness and combating obesity and the chronic diseases associated with it. We will continue our efforts to implement sensible public health regulations, such as those that ensure that nutritious foods are provided in all of our schools. DPH will also continue to ensure that local municipalities have the supports the need to encourage healthy behavior and will strengthen, when necessary, our policies related to infectious disease and injury prevention.

Furthermore, we will continue to work on successful implementation of health care reform, anticipate action on payment reform by ensuring more coordinated and preventative care, and by integrating changes required under the federal Affordable Care Act. This budget emphasizes all of these key priorities, and I ask that you join me in support of this proposal.

This year will surely be full of difficult challenges; however, public health has a history of dealing with adversity. This budget offers responsible, balanced and innovative solutions to address the ongoing fiscal challenges facing the Commonwealth, making important investments in programs and services that will accelerate our economic recovery and meet our responsibility to those who follow.

We appreciate your help and support as we move forward, and I promise you that my DPH colleagues and I will continue our efforts to preserve, promote, and enhance the health of all of the Commonwealth’s residents. Thank you.

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Testimony of Áron Boros, Commissioner, Division of Health Care Finance and Policy

Joint Hearing of the House and Senate Committees on Ways and Means February 22, 2012

Introduction Good morning Chair Walz, Chair Flanagan, and distinguished members of the Joint Committee on Ways and Means. My name is Áron Boros and I am the Commissioner of the Division of Health Care Finance and Policy. I want to thank you for the opportunity to testify before you today about the Division’s mission, priorities, and our proposed Fiscal Year 2013 (FY13) budget. The mission of the Division of Health Care Finance and Policy is to improve health care quality and contain health care costs by critically examining the Massachusetts health care delivery system and providing objective data, developing and recommending policies, and implementing strategies that benefit the people of the Commonwealth. The Division’s key priorities are to:

• Facilitate the successful implementation of health care reform and the transition to integrated care in order to make health care more affordable and reduce the cost of care;

• Develop and implement a robust statewide performance measurement framework designed to measure, reward and enhance quality, high-value health care;

• Continue the successful implementation of the All-Payer Claims Database; • Manage the Health Safety Net; and • Support Purchase of Services (POS) reform.

In fulfilling our mission, our key priorities are aligned with the health goals and cost containment strategy of the Executive Office of Health and Human Services, Secretary Bigby, and the Governor. As a collaborative partner in this endeavor, we are working purposefully and diligently with other state agencies to: (1) maintain access to health care, (2) improve the health of individuals, families and communities, (3) enhance health care quality, (4) reduce the cost of health care, and (5) improve care coordination for high risk populations. Department Accomplishments I want to take this opportunity to share with you our accomplishments in 2011 and highlight a few of the initiatives that are currently underway. Chapter 305 of the Acts of 2008 The Division has an important role in promoting health care quality and affordability in the Commonwealth. In the summer of 2011, the Division held a multi-day public hearing on trends in health care costs, issuing recommendations for health care delivery and payment system reform. This was the second annual hearing related to the Division’s role under Chapter 305 of the Acts of 2008 in monitoring health care costs and providing relevant data to both the public

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and policymakers. This hearing fostered an open and engaging discussion among diverse stakeholders and served as a forum for reviewing material from preliminary findings on premiums, expenditures, price variation, and the health care landscape, as well as for presentations and panel discussions involving national experts and Massachusetts stakeholders. Chapter 288 of the Acts of 2010 The Division also fulfilled critical obligations under Chapter 288 of the Acts of 2010. Working with Chairman Steven Walsh, Chairman Richard Moore, Secretary Gonzalez, health care providers and representatives from the health insurance industry, the Division issued a final report of the Special Committee on Provider Price Reform. This Commission began meeting in the summer of 2011 and released a report within six months, following hard work by the Commission members and Division staff. In this report, the Commission offered recommendations for reducing provider price variation in Massachusetts as part of the effort to mitigate rising health care costs and make health care more affordable. Last year, the Division, in partnership with the Department of Public Health (DPH), successfully convened the Statewide Quality Advisory Committee, which included representatives from small businesses, consumers, and physicians. This committee is responsible for evaluating and recommending measures for a Standard Quality Measure Set to support the DPH’s efforts to promulgate regulations establishing quality reporting requirements for health care providers in Massachusetts. The work of this committee will promote the delivery of high quality health care in the Commonwealth. The committee will also help the Commonwealth identify what types of quality outcomes should be rewarded in integrated care models. Additionally, the Division led a statewide taskforce on bundled payments, which produced analyses of potential cost savings associated with different models and held a public symposium to educate stakeholders about available resources in integrating care and supporting payment models. The Division issued a report on Bundled Payment models over the summer and we are currently drafting a follow up report. Moving forward, the Division will partner with public health care payers, including MassHealth, to provide analytic support as they endeavor to undertake bundled payment arrangements. The primary goal of bundled payments is to contain the cost of services delivered during an episode, while encouraging efficient delivery of high quality services and better coordination of care. Efforts to Promote Cost Efficiency In an effort to promote cost efficiency and make health care more affordable, the Division continues to disseminate information about the health care delivery system. In 2011, the Division enhanced cost and financial reporting and determined uniform methodologies, promulgating regulations for calculating and reporting health status-adjusted total medical expenses, hospital costs and expenses, and relative prices paid by insurers to providers. Furthermore, in June 2011, the Division published the first annual Total Medical Expense or “TME” report, which examined how total health care expenditures for groups of patients vary by different insurers, types of health services received, region, and income. The Division also collected data and is currently conducting analysis for the first annual Relative Price (RP) report,

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which will compare, within each insurer’s network, health care provider price levels based on a standardized set of criteria. Pricing Support and Purchase of Service Reform The Division continues to provide analytic support to the Executive Office of Health and Human Services (EOHHS) by supporting the Secretary in establishing rates to be paid to providers for health care services by governmental units, including MassHealth and the Division of Industrial Accidents. The Division has developed pricing models that promote coordinated care, including those services provided as part of the Children’s Behavioral Health Initiative. The Division ensures that the rates paid to providers meet the costs incurred by efficiently and economically operated facilities providing care and services. The Division has also supported EOHHS in the area of Purchase of Services (POS) reform. The Division has met the Year One POS implementation requirements as outlined in Chapter 257 and is in the process of concluding Year Two. POS reform includes standardizing rate setting methodologies for human services programs. This robust process entails comingling under single rate regulations, POS services purchased by MassHealth with similar services previously priced with non-regulated, department-specific rates through individually negotiated contracts. Today, approximately 20% of the $2.3 billion purchase of service (POS) system has proceeded to fully adopted regulated rates. There are a dozen Chapter 257 rate development projects in various stages of completion that will bring an additional 22% of the POS system under rate regulation within the next two months. The Division’s work on Purchase of Service reform aids EOHHS in implementing the Community First agenda allowing individuals with disabilities and elders to stay in their communities. The Division’s role in this effort is to provide a pricing mechanism that promotes efficiency among human service providers and ensures that the Commonwealth is getting the most for its investment. Pediatric Immunization Program Assessment Creating critical revenue for public health and prevention in the Commonwealth, the Division implemented the Pediatric Immunization Program Assessment regulation, which collects a surcharge from insurers that will fund the purchase and distribution of childhood vaccines for the Department of Public Health Pediatric Immunization Program. These vaccines will be an important measure to protect our Commonwealth’s children and families. Student Health Program To ensure that Massachusetts’ community college and state university students continue to have access to affordable health care, the Division participated in the multi-agency Student Health Program (SHP) Group Purchasing Initiative to expand high-value student health plan options. Key improvements made to Student Health Programs offered in the 2011-2012 academic year include adding prescription drug coverage for community college students, maintaining high-value programs for state university students, and eliminating benefit caps and improving access to care for many UMass students. The Division has worked with our sister agencies in state government to improve the quality of the health insurance products that our students are receiving.

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All-Payer Claims Database In 2011, the Division continued its efforts to implement the All-Payer Claims Database (APCD) with the collection of health care claims data and information from more than 130 payers. Prior to the APCD, many of these payers provided similar types of data to state agencies in various formats; however, no single dataset offered a full view of the health care delivery system in Massachusetts. Creating a central repository of health care data, the APCD—which is comprised of medical claims, pharmacy claims, dental claims, and information from member eligibility files, provider files, and product files encompassing fully-insured, self-insured, Medicare, and Medicaid data—is a key opportunity to facilitate administrative simplification by allowing payers to submit data to one agency in one, complete format. To that end, government agencies, particularly those that have collected health care claims data or reports from payers, have recognized the need for, and the benefits of, utilizing the APCD and have partnered with the Division. To date, the Division has strong commitments through signed or drafted Interagency Service Agreements with the Group Insurance Commission, the Division of Insurance, the Commonwealth Connector Authority, the Health Care Quality and Cost Council, and MassHealth, with each of these agencies committing to the needed time and resources to collaboratively develop business and project plans. Recognizing that the APCD can be a valuable tool both for administrative simplification and for the benefit of consumers, the Division has frequently hosted open forum events and symposiums with external stakeholders—including employers, consumers, researchers, providers, and policymakers—in order to address specific concerns and provide information about the progress of the APCD. As states across the country see the benefits of the APCD and begin to consider their own implementation efforts, they are looking to New England as the early adopters of APCDs for guidance. Although Massachusetts’ neighbors New Hampshire, Vermont, and Maine have well-established APCDs, these neighboring states have approached the Commonwealth to express preliminary interest in contracting the Division to handle their data collection and data cleansing. This gives the Division confidence in our overall ability to produce a dataset that will garner recognition for reducing administrative burdens for health care payers. This is an important opportunity to position our state for both payment reform and the implementation of national health care reform, both of which will include the intersection among APCDs, health information exchanges, and health insurance exchanges. Preserved Programs and Services The Division continues to administer the Health Safety Net (HSN). Although Massachusetts has made tremendous gains in reducing the number of uninsured persons in Massachusetts, the Health Safety Net remains a critical payment of last resort for acute hospitals and community health centers that provide uncompensated care for low-income Massachusetts residents. Additionally, the Division has continued to undertake new innovative initiatives and projects without a major increase in our line item. The Division’s role and responsibilities began to

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expand with the passage of the Chapter 58 of the Acts of 2006. Since then, the Division has been given additional responsibilities, including those mandated by Chapters 288 and 305 of the Acts of 2010. I am proud to say that upon receiving each new challenge, the Division has risen to the occasion. I am fortunate to have the privilege to serve with a very motivated and hard working staff, and we remain focused on fulfilling these new initiatives and responsibilities. Fraud, Waste and Abuse In a major step to combat fraud, waste and abuse, the Division has partnered with MassHealth to initiate a project to transition Health Safety Net (HSN) claims processing to MassHealth’s Medicaid Management Information System (MMIS). This transition will streamline claims processing and allow the Health Safety Net to take advantage of the robust MMIS claims infrastructure and clinical editing capabilities. This transition is expected to conclude in 2012.

This transition will also help combat fraud, waste, and abuse in the program as the MassHealth MMIS system will put in place a more robust claims adjudication system and will further protect the Commonwealth from fraudulent billing. FY2013 Funding Finally, I would like to comment on the Division’s FY13 funding appropriation. House 2 recommends an FY13 appropriation of nearly $22 million dollars to support the agency’s existing responsibilities. The Division is funded by assessments on acute hospitals and surcharge payers, as well as by federal financial participation (FFP) revenue for administrative expenses related to our work to support the administration of the MassHealth program. In FY11, the Division generated more than $21 million in revenue, and we anticipate generating more than $22million in revenue in FY12. It is anticipated that the Division will also generate revenue to cover at least one hundred percent of our expenditures in FY13. The Governor’s budget offers responsible, balanced and innovative solutions to address ongoing fiscal challenges facing the Commonwealth and I urge you to support this proposal. I appreciate this opportunity to discuss the Division's responsibilities, accomplishments and ongoing priorities and I look forward to continuing to work with this Committee and the entire Legislature.