Georgia Association of Homes and Services for Children   

Work Group #3
Innovative Financing for Child in Out-of-Home Placements
Preliminary Findings as of June 24, 2002 

Issue:  In a seamless system of placements that are appropriate, community-based, and community supported what can the state do to ensure that financial resources are maximized and that all available funds are accessible to the child as they move throughout the continuum of placements and services? 

Tentative Findings: 

1. The state has invested considerable funding into out-of home placements for children.

-         During the period of Fiscal Year 1996 to 2002 expenditures for children in out-of-home placements increased significantly (152%) from $171,762,854 to $432,349,325.

-         At the same time the number of children in placements also increased (complete data pending). 

-         Detail will be included here on the types of services and placements purchased with increased expenditures - data pending.

 2.      Georgia has made substantial progress at maximizing financial resources. 

-         In Fiscal Year 2001, the state began a major initiative known as revenue maximization to ensure that all federal reimbursement programs are utilized to the fullest extent possible. 

-         Both DHR and DJJ have taken steps to ensure that children in out-of-home placements are eligible for reimbursement under the Social Security Act Title IV-E Foster Care and Title XIX Medicaid programs.

-         One area targeted by the revenue maximization initiative is the provision of out-of-home care through DFCS and DJJ.

-         In Fiscal Year 2002, DFCS will generate an estimated $36 million in federal funds and DJJ will generate an estimated $9.5 million in federal funds. These funds have been reinvested back into agency programs and services including the Governor’s $42 million Child Protective Services package in Fiscal Year 2002.  This package funded an additional 100 caseworkers, provided caseworker salary increases, service expansions and a increased the family foster care per diem based on the age of the child.

3.  Both the length of time and the severity of behavior disorders for children in out-of-home placement have increased.  As a result, the demand for services to address the therapeutic needs of children has grown significantly; however, funding to support the provision of these services has not kept track with the demand for therapeutic care.

(Note – this is a possible finding based on workgroup discussions.  Data to support this finding is pending)   

4.      Funding, because of agency roles and responsibilities and the restrictive and/or categorical nature of most financial resources, does not follow the child as they move through the current continuum of placements in Georgia. 

5.      State agencies that place children in out-of-home settings use different definitions and terms to describe children, their eligibility and the type of placement. 

6.      The current system of financing residential therapeutic placements is inefficient and costly to both the state and providers and does not meet on the needs of children or the goals or providers and the state.

-         Under current system there are no incentives for efficiency.  The financing of residential therapeutic placements is determined according to reported provider costs so that the payment rate varies by provider and thus there is no budget predictability for the state.

-         MATCH providers receive 100% of cost while Institutional Foster Care providers receive 62% of cost.  So the system does not treat providers equally.  Providers also do not receive predictable rate increases and have stated that they are not adequately reimbursed for their services.

-         The rates paid to providers are not based on the needs of children and often providers of similar services may receive very different rates.

7.      Financial and programmatic data systems vary across agencies and at the state and local level.  In the case of DHR there are numerous data systems that require county and state level input.  This data often lags behind and is incomplete.  This has made it extremely difficult to budget and plan for services to support children in out-of-home placements. 

8.      The state, with the cooperation of public and private providers of out-of-home placements has made great progress in monitoring and measuring the effectiveness of placements and treatment services.

-   Finding is based on the use of the Child and Adolescent Functional Assessment Scale (CAFAS) by the MATCH Program.  Providers submit outcome data on a regular basis so that a child’s progress can be assessed during treatment and for twelve months following discharge from MATCH.  The system has been in place since FY 1998.  In FY 2003, funding has been appropriated to expand the use of CAFAS to all out-of-home placements provided by DFCS. 

A finding will also be added on Department of Education funding related to out-of-home placements. 

Tentative Recommendations: 

Financing to support a full and seamless continuum of placements that are appropriate, community-based, and community supported is a concept that makes good sense but is difficult to implement.  To function well a system of effective financing must be based on the following premises:

 1.      Funding must be focused on the needs of the child.

 2.      Funding must be consistently available to the child regardless of the agency that is responsible for the child. 

 3.      Agencies must coordinate with each other on an on-going basis to ensure that funding is consistently available for the child.

 4.      To the maximum extent possible, agencies must use consistent placement criteria and definitions.

 5.      To the maximum extent possible, state agencies should leverage available federal resources to support out-of-home placements.

 6.      Funding decisions should be performance-based to ensure that all services have positive outcomes for the child.

 Based on these premises the following actions are recommended: 

1.            The state should proceed with the development of a level of care system to finance placements based on the needs of the child.  

-         In a Level of Care Placement System the child’s needs are determined through a standardized assessment tool.  The child is then placed in the appropriate level of therapeutic residential or family foster care. 

-         The levels are defined according to increasing severity.  A fixed rate is paid for each level of care; however, the rate increases with the level of severity.

-         Children in a level of care system are independently assessed for placement and monitored for progress on a quarterly basis. 

2.            The state should begin using “performance-based” contracts in the delivery of placement services for children. 

-         Performance-based contracts clearly define deliverables and reward providers for positive outcomes for children. 

-         Outcomes can include placement permanency or improvements in the child’s emotional and behavioral diagnosis so that the child can transition to a less restrictive environment. 

-         By developing contracts that reward providers for positive outcomes – rather than reimbursing them by caseload count – the state can improve its placement performance.  High performing agencies will be referred new cases while poor performing providers face the possibility of losing state business. 

3.            State agencies should continue their efforts to maximize federal resources and should be allowed to keep these resources.   

-  Savings should be reinvested to preserve the out-of-home placement system’s infrastructure, to address unmet needs and to institute prevention and early intervention initiatives.  

4.            The state should publish a Children’s Budget so that the accountability of government programs and expenditures for children can be monitored and presented annually to policy makers and the public. 

-         The state provides services for children through several different agencies and programs using a variety of fund sources, therefore, it is often difficult for policy makers and the public to understand what is being spent on children, for which services and by which agency or program as well as the impact of these services on children’s lives.  

-         To address this problem, several states and municipalities have developed a Children’s Budget to compile this information into one document and to monitor expenditures, interventions and outcomes related to children’s programs. 

-         A Children’s Budget can be used to assist state government to improve coordination and efficiency between agencies and programs, to build partnerships among public and private sector organizations, to make informed decisions about programs serving children and to reallocate resources according to program effectiveness and need. 

5.            State agencies should develop strategies to enable the pooling of resources and the coordination of services where possible. 

6.            The state must develop an effective data system to maintain and track programmatic and financial information on children in its custody.