Financing Structures and Strategies

Effective systems of care and those that make services and systems work for children and families try to achieve several goals related to financing.  These are:

• Maximizing federal reimbursement (principally through Medicaid and Title IV-E); 
• Redirecting dollars from costly "deep-end services," such as inpatient hospitalization, residential treatment, and out-of-home care in general to home-and community-based services and supports; and
• Realigning and reallocating spending from traditional systems and traditional ways of doing business. (Building Systems of Care: A Primer, 2002)

These and other systems building issues are highlighted in:

• Building Systems of Care: A Primer
• Building Systems of Care: A Primer Training
• Building Systems of Care: A Primer PowerPoint Presentation - Financing in a System of Care

 DEFICIT REDUCTION ACT 2005

The Deficit Reduction Act (DRA) signed into law by the President on February 8, 2006, includes many critical changes to Medicaid rules affecting children and families and creates new options for state Medicaid programs. The ultimate effect of the DRA on children and families will depend largely on state response to the new program options.[1] To assist states in making the many choices they face, it is extremely important for policy makers, administrators, providers, families, advocates and researchers to be familiar with  the changes brought about by the DRA. To learn more, click on the links below.

• The Bazelon Center's most recent issue of Mental Health Policy Reporter includes a summary of "What Deficit Reduction Means for People with Mental Disabilities."

• The Deficit Reduction Act: A Review of Key Medicaid Provisions Affecting Children and Families, produced by the Georgetown University Health Policy Institute provides a summary of several provisions in the Act.

• For a much more detailed comparison of Medicaid, Medicare, and SCHIP provisions in the 2005 DRA, review the Congressional Research Service Report - Side by Side Comparison of Medicare, Medicaid, and SCHIP Provisions in the Deficit Reduction Act of 2005. 

Family Opportunity Act

A scaled back version of the Family Opportunity Act has been included within the DRA. It provides the option for states to allow families (with incomes up to 300% of the federal poverty level) to purchase Medicaid coverage.  It also creates a five-year demonstration that allows up to 10 states to test the cost-effectiveness of providing home- and community-based alternatives for children who would otherwise require services in psychiatric residential treatment centers. To learn more about the Family Opportunity Act:

• Read the following sections Bazelon Center publication mentioned above
  • Optional Buy-in for Children with Severe Disabilities
  • Home and Community-Based Services Waivers for Children
• Review Chapter 6 of the CRS Report described above.

Five Year Study of Financing Structures and Strategies

To enhance knowledge of effective financing structures and strategies, the National Technical Assistance Center is participating with the University of South Florida, the Human Service Collaborative of Washington, DC, and Family Support Systems, Inc. in a 5-year study beginning in 2004 to test how an hypothesized set of financing structures and strategies support effective financing policies for systems of care. A second study question will determine how these financing components operate separately and collectively, within a community and systemic context, to create effective financing policy. See a complete description of the study.

A related goal of the study is to promote policy change through dissemination, targeted technical assistance, and utilization of study findings. 

 The first technical assistance tool, Developing a Comprehensive Financing Plan to Support Effective Systems of Care: A Self-Assessment and Planning Guide, published in April 2006, is available here.

This Guide is based on a set of critical financing strategies and outcomes that were created by the study team and an expert panel. It is intended to assist states, communities, tribes, territories, and organizations to:

• Assess their current financing structures/strategies
• Identify outcomes to achieve
• Consider a variety of financing strategies
• Prepare to develop a strategic financing plan.

A printed copy may be purchased from Department of Child and Family Studies, Division of State and Local Support, Louis de la Parte Florida Mental Health Institute, University of South Florida, 13301 Bruce B. Downs Boulevard, Tampa, FL 33612-3899, 813/974-6271 or ordered on line at  http://rtckids.fmhi.usf.edu/publications.html

For more information, contact:

Beth Stroul, vice president of Management and Training Innovations, consultant to the TA Center at Georgetown, and co-principal investigator to the study (bethstroul@aol.com).

The study also will address the use of child welfare system funding in building systems of care and the potential impact of child welfare financing reforms. For information on this aspect of the study, contact: Jan McCarthy, Director of Child Welfare Policy at the TA Center, consultant on the project (jrm33@georgetown.edu)

[1] The Deficit Reduction Act: A Review of Key Medicaid Provisions Affecting Children and Families, Georgetown University Health Policy Institute, March 2006 ? http://ccf.georgetown.edu/