RD343 - Report on Virginia’s Part C Early Intervention System - July 1, 2008 – June 30, 2009


Executive Summary:
In the 2009 Appropriation Act, paragraph K.2 of Item 316 directs the Department of Mental Health, Mental Retardation and Substance Abuse Services (now called the Department of Behavioral Health and Developmental Services) to report the following information to the Chairmen of the Senate Finance and House Appropriations Committee on October 1 of each year: (a) total revenues used to support Part C services, (b) total expenses for all Part C services, (c) total number of infants and toddlers and families served using all Part C revenues, and (d) services provided to those infants and toddlers and families.

Overview of Fiscal Climate for Part C in FY2009

As indicated in the Department’s October 2008 Report on Virginia’s Part C Early Intervention System, Virginia’s Part C system faced a challenging fiscal situation in FY2009:

• The amount of unspent funds from FY2008 available for carry-over into FY2009 was less than half what was available for carry-over from FY2007 into FY2008;
• Federal Part C funds for Virginia have decreased. As a result, all local systems received slightly smaller allocations of federal Part C funds in FY2009 than in FY2008;
• Governor Kaine’s October 2008 Budget Reduction Plan for Fiscal Year 2009 included an across the board State General Fund reduction of 5% in (SGF) grants to localities. As SGF dollars for Part C services are in this category, many local lead agencies had to make cuts in state funding for Part C;
• Whereas there has previously been a large amount of additional federal Part C funds available to assist local systems that experienced budget shortfalls during the fiscal year (due to an unexpectedly large increase in child count, for example), in FY2009 there was only $1,075,000 in additional federal Part C funds available. Even with this additional one-time funding, a number of local systems received less Part C funding in FY2009 than they had in FY2008;
• The number of children and families served in Part C continued to increase; and
• Costs associated with meeting the requirement to provide services in natural environments continued to increase.

Extensive efforts were made at both the state and local levels to minimize the impact of budget reductions and other fiscal constraints by looking further at possible reductions in administrative costs, including administrative costs in direct services, such as staff travel not related to serving children and families, attendance at conferences, and consolidating managerial, supervisory, and administrative support functions wherever possible. The Department also worked closely with local systems to examine Medicaid reimbursement and related data to assist in identifying any steps that could be taken by local systems to maximize Medicaid reimbursement in FY2009. Despite these efforts, the fiscal challenges impacted Virginia’s Part C system in a number of ways, including the following:

• The additional $1,075,000 that could have been used to accomplish the comprehensive data system enhancements planned for implementation July 1, 2009 was allocated to local systems to provide needed services to infants, toddlers and their families;
• Some local systems were cited for noncompliance with the federal Part C natural environment requirements because local Part C budget shortfalls necessitated moving services into clinic settings in order to ensure services to all eligible children;
• Some local provider positions were eliminated due to lack of funding;
• Two local lead agencies determined they were no longer able to meet state and federal Part C requirements given the level of funding available and decided not to continue serving in that capacity; and
• The Annual Early Intervention Conference, which is part of the federally-required Comprehensive System of Personnel Development and provides 10-15 hours of continuing education on evidence-based practices to early intervention providers, was cancelled.

Toward the end of the fiscal year, Virginia received its allocation of American Recovery and Reinvestment Act (ARRA) funds for Part C. A portion of these funds were allocated to local systems that identified a need for additional funds to ensure services to eligible infants, toddlers and families for the remainder of the fiscal year. This allocation of ARRA funds enabled some local systems to move services from clinic settings back into natural environments.

Moving into FY2010, the remaining ARRA funds will provide critical bridge money to help stabilize the Part C system as we implement a series of system transformation initiatives designed to facilitate long-term stability for the funding structure that supports the Part C early intervention system (please see Impact of Virginia’s Part C System Transformation, page 14).

At the local level, ARRA funding will not only help to ensure necessary early intervention services are available and provided in natural environments in FY-2010 and FY-2011, but will also support provider training and child find efforts that will have a positive impact on services to children and families. At the state level, ARRA funds will be used for data system and workforce development and to strengthen the system of monitoring and oversight.

Together, the efforts supported under the ARRA bridge funding followed by the ongoing increase in Medicaid are expected to have a lasting effect on the early intervention services system by facilitating expansion of the provider network, increased training opportunities for providers, improved compliance with federal and state Part C requirements, and identification of and availability of supports and services for all eligible children and families.

Data System Update

The existing early intervention data system, ITOTS, was developed and implemented in 2001 to primarily meet annual federal reporting requirements related to child data and now presents a number of challenges to the Department in meeting federal and state reporting requirements, including the following:

• Child data is collected in ITOTS only at entry into the early intervention system and is not collected as child status or service needs change.

• No financial cost data for Part C services is collected through ITOTS, and, therefore, the Commonwealth is unable to determine reliably the cost of providing services or the resources that are accessed in providing services.

• Data reports are limited and the analysis of the data is burdensome.

Following a detailed analysis of ITOTS in the spring of 2006, a first phase of data system improvements were implemented to address data integrity and better reporting. As a second phase of the project, the Department analyzed other existing data systems within the Commonwealth and other states’ Part C data systems in State Fiscal Year 2008 and, based on that analysis, took steps to acquire the software from the Alaska Part C data system for use and customization in Virginia. Initial plans called for the functionality necessary to enter and report on delivered services and to have more complete and accurate revenue and expense data to be operational by July 1, 2009. However, for the following reasons, the enhancements necessary to ensure complete and reliable reporting of the data required in K.2 of Item 316 have been postponed to FY2011:

• The state General Fund reduction required in Governor Kaine’s October 2008 Budget Reduction Plan for Fiscal Year 2009 resulted in many local lead agencies having to make cuts in state funding for Part C. In order to minimize the impact of these reductions on services to infants, toddlers and their families, the Department allocated additional federal Part C funds to local systems. This reduced the funding available for data system enhancements.

• As described later in this report, the Department of Behavioral Health and Developmental Services and the Department of Medical Assistance Services have collaborated to expand Medicaid reimbursement for Part C early intervention services through the new Medicaid Early Intervention Program, which begins on October 1, 2009. In order to implement this new program, some changes were required in ITOTS to ensure collection and exchange of necessary data between the two departments. These data system enhancements were prioritized in FY2009 since the additional revenue available through the Medicaid Early Intervention Program is critical to ensuring adequate funding for early intervention services in the Commonwealth.

With the data system changes completed to allow for the exchange of provider and child enrollment data with the Department of Medical Assistance Services and reimbursement for a broader array of early intervention services through Medicaid, the Department will resume work in FY2010 on the broader data system enhancements necessary to meet federal and state reporting requirements. This work will be supported with funding received for Part C through the American Recovery and Reinvestment Act (ARRA) and is targeted for completion in FY2011.

DBHDS Activities

The Department has taken a number of steps to continue improving the scope and accuracy of data available for reporting the required information. ITOTS improvements targeted for implementation on July 1, 2009 have been delayed due to fiscal constraints and the need to prioritize data system changes necessary for implementation of a Medicaid Early Intervention Initiative that will significantly increase Medicaid revenue for Part C early intervention services. However, with implementation of the Medicaid Early Intervention Initiative on October 1, 2009 and availability of funding for Part C through the American Recovery and Reinvestment Act (ARRA), work on ITOTS expansion has recommenced and is scheduled for completion in FY2011. In the meantime, the following reporting improvements are being implemented in FY2010:

• The revenue and expenditure reporting form and process have been revised to require reporting of the number of children receiving each service in each quarter of the fiscal year.
• A separate revenue and expense reporting form, developed in collaboration with private providers, has been implemented and will facilitate providers’ ability to report accurate financial data on a quarterly basis.
• Through a data exchange agreement between the Department of Behavioral Health and Developmental Services and the Department of Medical Assistance Services (DMAS), the Department will be able to report the exact amount of Medicaid funds used to support Part C services each year.