Understanding the prospective payment system

PART 3: UNDERSTANDING THE PROSPECTIVE PAYMENT SYSTEM

Certified Community Behavioral Health Clinics (CCBHCs) are available in eight pilot states through 2018 and will go to full release in January 2019. These CCBHCs can complete submissions under two prospective payment systems based on their state. However, there are key differences between the two.

Prospective payment system 1 (PPS-1)

CC PPS-1 is a cost-based, per clinic rate that applies uniformly to all CCBHC services rendered by a certified clinic, including those delivered by qualified satellite facilities established prior to April 1, 2014. This system pays CCBHCs a fixed daily rate for all services provided on any given day to a Medicaid beneficiary. In demonstration year one (DY1), the state uses cost and visit data from the demonstration planning phase, updated by the Medicare Economic Index (MEI) to create the rate for DY1. The DY1 rate will be updated again for DY2 by the MEI or by rebasing the PPS rate.

The Centers for Medicare and Medicaid Services (CMS) requires one full year of cost data and visit data, unless a state can justify a shorter time period. The CC PPS-1 rate is based on total annual allowable CCBHC costs divided by the total annual number of CCBHC daily visits and results in a uniform payment amount per day, regardless of the intensity of services or individual needs of clinic users. In developing the rates, states may include estimated costs related to services or items not incurred during the planning phase but projected to be incurred during the demonstration.

States also should include the cost of care associated with Designated Collaborating Organizations (DCOs). A DCO is an entity that is not under the direct supervision of the CCBHC but is engaged in a formal relationship with the CCBHC and delivers services under the same requirements. Payment for DCO services is included within the scope of the CCBHC PPS, and DCO encounters will be treated as CCBHC encounters for purposes of the PPS. DCO services are distinct from referred services in that the CCBHC is not financially and clinically responsible for referred services.

Prospective payment system 2 (PPS-2)

The CC PPS-2 is a cost-based, per clinic monthly rate that applies uniformly to all CCBHC services rendered by a certified clinic, including all qualifying sites of the certified clinic established prior to April 1, 2014.

CC PPS-2 includes these required elements: (1) a monthly rate to reimburse the CCBHC for services, (2) separate monthly PPS rates to reimburse CCBHCs for higher costs associated with providing all services needed to meet the needs of clinic users with certain conditions, (3) cost updates from the demonstration planning period to DY1 using the MEI and from DY1 to DY2 using the MEI or by rebasing, (4) outlier payments made in addition to PPS for participant costs in excess of a threshold defined by the state, and (5) QBP made in addition to the PPS 10 rates.

A CCBHC receives the monthly rate whenever at least one CCBHC service is delivered during the month to a Medicaid beneficiary by the CCBHC; states may pay this rate only after a CCBHC service has been delivered. Under this methodology, states will develop a standard rate and will also develop monthly PPS rates that vary according to users’ clinical conditions. For example, states could set different rates for adults with serious mental illness and co-occurring substance use disorders, and children and adolescents with serious emotional disturbance who require higher intensity services. The state has flexibility in determining how PPS rates may vary. An outlier payment is part of the CC PPS-2 and reimburses clinics for costs above a state-defined threshold. This helps ensure clinics can meet the cost of serving their users.

Finally, the CC PPS-2 rate methodology requires the state to select quality measure(s) as permitted and make bonus payments to incentivize improvements in quality of care. States should include in CC PPS-2 the cost of care associated with DCOs. A DCO is an entity that is not under the direct supervision of the CCBHC but is engaged in a formal relationship with the CCBHC and delivers services under the same requirements as the CCBHC. Payment for DCO services is included within the scope of the CCBHC PPS, and DCO encounters will be treated as CCBHC encounters for purposes of the PPS. Services of a DCO are distinct from referred services in that the CCBHC is not financially and clinically responsible for referred services.