COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE COUNCIL COMMITTEE ON PUBLIC HEALTH & HUMAN SERVICES - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, December 9, 1999 10:30 a.m. - - - BILL 990809 - Authorizing the Health Commissioner, on behalf of the City of Philadelphia, to enter into an agreement with the Commonwealth of Pennsylvania, acting through its Department of Public Welfare, for the City to manage the HealthChoices Behavioral Health Program, under which behavioral health services will be provided to Philadelphia residents who are eligible for medical assistance, under certain terms and conditions. PRESENT: COUNCILWOMAN MARIAN B. TASCO, Chair COUNCILWOMAN DONNA MILLER REED COUNCILMAN MICHAEL A. NUTTER COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK DICICCO COUNCILMAN RICHARD T. MARIANO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 I N D E X Michael Covone. . . . . . . . . . . . . . . . 4 Deputy Health Commissioner 3 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 P R O C E E D I N G S
Good morning. The Committee on Public Health and Human Services will come to order. We have a quorum in the presence of Councilman Ortiz, Councilman Mariano, Councilman DiCicco, and myself. We ask the clerk to read the bill.
Bill No. 990809, an ordinance authorizing the Health Commissioner, on behalf of the City of Philadelphia, to enter into an agreement with the Commonwealth of Pennsylvania, acting through its Department of Public Welfare, for the City to manage the HealthChoices Behavioral Health Program, under which behavioral health services will be provided to Philadelphia residents who are eligible for medical assistance, under certain terms and conditions.
Thank you very much. Is there anyone here to testify on behalf of this bill? (Witnesses come forward.) 4 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809
We would also like to recognize that Councilwoman Donna Miller has also joined the committee.
Good morning Committee Chair Tasco and committee members. I'm Deputy Health Commissioner Michael Covone, testifying on behalf of Health Commissioner Richman. I thank the --
Just a minute. Is his mike on? Okay, put the mike closer to your mouth, please.
Okay. Good morning, Committee Chair Tasco and committee members. I'm Deputy Health Commissioner Michael Covone, testifying on behalf of Health Commissioner Richman. Thank you for the opportunity to testify before you in support of the proposed HealthChoices ordinance bill, 990809 before you today for consideration. With me today are Ellen Steiker, Deputy Health Commissioner of Finance and Administration, Mark Bencivango, Assistant Health Commissioner, Coordinating Office of Drug and Alcohol Abuse 5 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 Programs. The proposed ordinance, if approved, will authorize the Health Commissioner to enter into a two-year full-risk agreement with the Commonwealth of Pennsylvania, Department of Public Welfare, substantially in the form attached to the ordinance, but with a term of two years. We are seeking approval in this matter pending receipt of the agreement from DPW prior to its commencement date of January 2, 2000. If approved, the ordinance will allow the City, through the Department of Public Health, to continue managing the HealthChoices Behavioral Health Program, through a contract with Community Behavioral Health, to administer behavioral health services under the program. We understand the Commonwealth of Pennsylvania expects to engage in a new competitive process for proposals to manage the program as of January 1, 2002 to be consistent with the expiration of the waiver approved by the Federal Health Care Financing Administration to implement this program. As you may recall, in response to a 6 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 successful bid submitted by the City to DPW, the City and Commonwealth entered into a 35-month full-risk contract approved by City Council, which commenced February 1, 1997, for management an administration of HealthChoices Behavioral Health Program. Under that contract, the City has provided funding to CVH to plan and coordinate the delivery of covered behavioral health services to eligible individuals to engage third-parties, including community providers, to provide mental health and substance abuse services and to monitor and evaluate the services provided by those third parties. However, all operational, financial, and policy decision-making associated with the program have remained subject to final review and approval by the City. Approval of the proposed ordinance will allow the City to continue medical assistance funding which, together with funding which supports the City's Office of Mental Health and Coordinating Office of Drug and Alcohol Abuse Programs, comprise the behavioral system. Since the commencement of the HealthChoices Program, the City's integrated behavioral health system has 7 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 ensured one point of accountability as well as flexibility and cost efficiencies in the design and delivery of services. The system has been the recipient of numerous national awards, including prestigious Innovations in Government Award from the Ford Foundation and Harvard University's Kennedy School of Government. Key contract terms, principally financial, under the proposed contract which differ from those which Council previously approved for the program include the following? Risk and contingency funds. The contract adds a new category of risk and contingency funds defined to mean "per-member, per-month capitation funds received by the City under the agreement and/or prior agreements between the City and Commonwealth for the HealthChoices Program, which are not expended on in-plan services or administrative functions and which are in excess of the equity reserve required to be maintained under the agreement. " 8 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 The agreement specifies uses and accounting of risk and contingency funds, including, with DPW approval, meeting an insolvency requirement, which I will discuss, and funding reinvestment plans, which I will also discuss.
The agreement provides that risk and contingency funds shall not exceed the equivalent of 90 days of unpaid claims at the end of the contract year. Again, this excludes funds under a reinvestment plan submitted to DPW. Reinvestment plans. The agreement specifies the parameters and the timing and the scope of the City's submission and DPW's review of reinvestment plans, including multi-year investment plans. Third is return of funds. The agreement specifies the circumstances under which the City is required to return funds to the Commonwealth as follows: Within 14 months from the expiration of this agreement, the City is required to return all unexpended program funds, excluding funds under a reinvestment plan approved by DPW or submitted to DPW upon which DPW has not taken positive or 9 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 negative action. Within six months after the time approved by DPW for expenditure of reinvestment funds, the City is required to return any investment funds unexpended to the City within the approved timeframe. Upon expiration of the agreement, the City is required to return unexpended funds, excluding funds under reinvestment plan and reserve funds held by the City in the event the City is awarded a new contract pursuant to the new procurement process for the HealthChoices Program. Within days' written notice from 15 DPW, the City is required to return any excess funds to the extent risk and contingency funds exceed the equivalent of 90 days of unpaid claims, excluding funds under a reinvestment plan. In addition to the reserve and reinsurance required under the agreement, the City is required to maintain a financial arrangement satisfactory to DPW to ensure payments to providers in the event of bankruptcy or insolvency. DPW has advised the City that the City's existing level of risk and contingency 10 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 funds is sufficient to satisfy this requirement. The agreement provides that the City is required to maintain risk and contingency funds dedicated to this insolvency agreement at a minimum of 60 days of unpaid claims, and that in the event this fund falls before the required level, DPW will contact the City to determine other options for meeting the requirement. I thank you for the opportunity to testify before you today and would be happy to answer any questions you may have.
Thank you very much. Would you please explain to us what you just read relative to the risk and contingency funds. And also, under the reinvestment plans, what limits does that place on CBH to use the excess funds for extended service or other additional terms? I think in laymen's terms, we'd like to have -- what does this mean as opposed to what we passed in Council before?
I think what this contract did is make explicit some of the things that 11 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 weren't fully clear in the original contract concerning risk and contingency. And what we tried to do in this contract and what the Law Department, I think, was successful in doing, was not having this contract potentially come to the end of a five-year program and have funds remain that we've submitted reinvestment forward to the Commonwealth but which they haven't acted upon, and have DPW come back and say, No, just return the funds. This gives us the ability, with an approved reinvestment plan, to do a multi-year plan, which may extend two and three years out. Some of the initiatives recently approved in City Council for reinvestment --
Just a moment, just a moment. Could we tone down the sidebar conversations, please? We are having difficulty hearing. Those people behind the press box, we ask them to please tone down their voices. Thank you.
Some of the reinvestment plans recently approved by Council actually extend 12 12/9/99 PUB. HEALTH/HUMAN SVCS. - BILL 990809 it for a period longer than a one-year period, and I think what this does is give us the ability as well to go out on a multi-year investment plan, if that exists. And it also gives us the ability and recognizes explicitly in the contract the need for a business risk and contingency fund. And that's what the ability to maintain up to 90-day reserves allows us explicitly to do.
Are there any other questions from members of the committee? Councilwoman Miller?
Good morning. I'd like to know the dollar amount of the reinvestment plans.
To date, we've had approved and are in the process of implementing in excess of -- I believe it's $20.2 million in reinvestment funds.
Are there any other questions? (No further questions.)
Thank you very much for your testimony. 13 12/9/99 PUB. HEALTH/HUMAN SVCS. - PUB. MEETING Is there anyone else here to testify on this bill? (No response.)
There being no 6 further testimony on this bill this concludes the public hearing on Bill No. 990809 - - -
The Committee on Public Health and Human Services will now go into the public meeting. Could we get a motion?
Madam Chair, I move that Bill 990809 be approved by the committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at the next session City Council. (Duly seconded.)
It's been properly moved and seconded that Bill 990809 be reported out of committee with a favorable recommendation and a recommendation for the suspension of rules of Council so that this bill will be read at the next Council session. All in favor will say aye? 14 12/9/99 PUB. HEALTH/HUMAN SVCS. - PUB. MEETING Any opposition? There being none, the motion is carried. The public hearing on Health and Human Services is now adjourned. Thank you very much. (Adjourned at 10:42 a.m.) - - - 15 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Thursday, December 9, 1999, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON PUBLIC HEALTH AND HUMAN SERVICES BILL NO. 990809 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter