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Milestones Payment System. Topics. Motivation for change to the milestones payment system Conceptual basis for the milestones payment system Outcomes achieved by changing payment systems Application of milestones payments to other settings.
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Topics • Motivation for change to the milestones payment system • Conceptual basis for the milestones payment system • Outcomes achieved by changing payment systems • Application of milestones payments to other settings
"There are two types of speakers: those that are nervous and those that are liars." Mark Twain
Motivations for Change • States want to improve outcomes for citizens while containing costs • Funding methods can distort services • What gets paid for gets done– pay for process/get process • How payment is made may work against the achievement of desired outcomes, creating unintended consequences & perverse incentives
Motivations for Change • Bad experiences prompt business change
1986 • Space Shuttle Challenger exploded on launch, killing all seven astronauts aboard. • IBM unveiled the first laptop computer. • “Top Gun” was #1 film of the year. • Actor Arnold Schwarzenegger married television journalist Maria Shriver. • The Chernobyl nuclear disaster occurred. • The Oprah Winfrey show premiered. • A U.S. postal worker in Edmond gunned down 14 people, then himself…
Motivation for Change • In 1986 the Rehabilitation Services Administration issued an RFP for a second round of systems change projects to help states move people with significant disabilities from sheltered employment to competitive employment. • DRS was awarded $2.2 million grant in October 1986 for a 5 year systems change grant.
Motivation for Change • “A man who carries a cat by the tail learns something he can learn in no other way.” Mark Twain • 1987 Began to set up a statewide system of services using the systems change grant funds for providers. • First providers funded through competitive grants for cost reimbursement.
Motivation for Change • Grants/contracts are relatively easy to write; • Ideally, funded entities have tight fiscal controls and high integrity for achieving programmatic outcomes; • Require time-consuming monitoring from contractor staff; • Contracts may have measurements but generally lack built-in motivations for “good” behavior.
Motivation for Change • October 1987 DRS received $350,000 in formula grant funds in addition to the systems change grant. • Desired to change payment system without a history to set rates. • As did virtually every state, Oklahoma adopted Virginia Commonwealth University’s hourly rate system at $23 per hour.
VCU’s Model of Service Delivery Job Coach time “Fading” as individual learns the job Stabilization Intensive Training Job Coach Hours per day On-going support 4 10 17 Weeks on the job
Motivation for Change Counselor authorizes hours of service Provider delivers service pre-authorized by counselor Provider Counselor Submits documentation & invoice for hourly services to counselor Counselor reviews documentation; makes judgment about legitimacy; he pays OR doesn’t pay invoice; may ask for additional information.
Motivation for Change Counselor Provider Dispute settlements Grant Staff
Motivation for Change • The $65,000 lesson in the effects of perverse incentives
Motivation for Change • Paying an hourly rate for activities can be incredibly expensive; • Doesn’t naturally produce desired outcomes; • Requirements for justification of hours of service only add to the time, effort and cost burdens.