The state's business functions and funding mechanisms operate on a fiscal year instead of a calendar year. The fiscal year runs from July 1st through June 30th.
If the legislature authorizes rate increases for providers and/or the provider is awarded a new contract, the PCSP Budget Rollover process is used to implement the changes. Rate increases or a new (replacement) contract require old Provider Approvals associated with the contract to be closed and new approvals opened at the new rate (e.g. effective for July 1st) or at the new contract's effective start date.
A Provider Approval defines the maximum rate the provider can be paid for a given service code / unit type within a specified time period. The approval's time period is defined by the terms of the contract. That is, the duration of one Provider Approval cannot overlap with the duration of another based on the same service code and unit type. Likewise, the approval's start or end dates cannot exist outside of the contract's duration.
Some service codes have a fixed rate the provider is paid regardless of the code's ancillary/associated data while others have a variable rate set by a worksheet based on items like the number of staff serving the person (i.e. the staffing ratio), the number of hours the person is served by the staffing ratio, etc. When the code's maximum rate value changes (either increases or decreases), the old approval based on the old rate must be closed for the date immediately prior to the new rate's effective start date (i.e. such that no gap in the date range between the two approvals exist).
The line on the PCSP Budget for a given provider, service code and unit type is based on (and controlled by) the Provider Approval. Consequently, when the approval changes, the PCSP Budget Line must have a corresponding change based on the same date range. That is, the PCSP Budget Line cannot start before the Provider Approval it's based on does. Likewise, if the Provider Approval is closed early in order to accommodate a rate/contract change, the PCSP Budget Line's end date must have a corresponding change.
PCSP Budget Rollover Based on a Rate Change:
When the legislature authorizes a rate increase or decrease, the change is implemented in two areas. The Pro Forma Budget and the PCSP Budget. The Pro Forma Budget establishes the spending cap the person can have in their PCSP Budget. The PCSP Budget prescribes the service code's duration, rate and units.
1. DHS Rate Implementation: The provider's contract is amended with the new service code rates they deliver.
2. Provider Approvals: The old provider approvals based on the old rates are closed (typically for June 30th). Then, new provider approvals are created for the new rate (typically for July 1st).
3. Pro Forma Budgets: The Pro Forma budgets are increased by the percentage of the rate increase or decreased by the percentage of the decrease.
The Pro Forma Budget: The Pro Forma contains several control numbers that establish how much the person can spend. Two of them are: the Annual (Authorized) Spending Limit (ASL) and the Plan Max. The ASL represents the total amount of ongoing money the person's plan is expected to have when it starts a new cycle. The Plan Max represents the maximum amount of funding the person can have in the current Active plan and can consist of a blended amount of one-time and ongoing money.
When the legislature authorizes a rate increase or decrease (i.e. a cost of living adjustment [COLA]), the Pro Forma Budget is updated by the COLA's percentage in July just prior to the date when the rollover process runs.
2. Each service code on the PCSP budget scheduled to receive the rate change is closed for June 30th and the units are adjusted to match the amount paid for the service from the plan's effective start date through June 30th. Then, a new budget line is created starting July 1st based on the new rate and the number of remaining units (i.e. the difference between the units spent and the original amount prescribed for the service).
PCSP Budget Rollover Based on Only a Contract Change:
If the provider has been awarded a new contract, all of the services they deliver to the person on the PCSP Budget have to be migrated over to its corresponding Provider Approvals. A change of this kind done independently of the fiscal year COLA or when the legislature has not authorized one for the new fiscal year means the Pro Forma Budget will not change. Instead, each service code on the PCSP Budget affected by the contract change is closed for June 30th (or whatever else the effective date of the change happens to be) and the units are adjusted to match the amount paid for the service from the plan's effective start date through the closure date. Then, a new budget line is created starting July 1st (or whatever else the approval's effective start date happens to be) based on the number of remaining units (i.e. the difference between the units spent and the original amount prescribed for the service).
Basic PCSP Budget Rollover Sequence:
If the rollover involves the classic fiscal year change where a COLA is applied to service code rates, then a specific set of events occur before the PCSP Budgets are updated. The events are:
1. The Bureau of Contract Management System's (BCMS) service code rates are updated effective for July 1st. The change is typically implemented around July 1st.
2. Just prior to the PCSP Budget Rollover:
a. The old fiscal year provider approvals are closed for June 30th at the old fiscal year rate.
b. New provider approvals are created for the provider's contract based on the new fiscal year's rates.
c. The ongoing money in the Pro Forma Budget's ASL is increased by the percentage of the COLA.
3. USTEPS is typically taken offline while the rollover process does the following:
a. The old budget line is ended using June 30th as its end date and the service code's "Plan Units" are set equal to the units spent from the start date of the plan to June 30th.
b. The sum of the units spent is subtracted from the original amount of units prescribed for the service.
c. A new budget line is created using July 1st as its start date, the rate is set equal to the service code's new fiscal year rate, and the units remaining from the calculation described above are loaded in the service code's "Plan Units".