Individual Funding Model for WA. Discussion Paper. Developed by the Working Group. August 2012

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1 Individual Funding Model for WA Discussion Paper Developed by the Working Group August 2012 Page 1 of 18

2 Contents Introduction Overview of Individual Funding Individual Funding Principles Access to Information and Planning Flexibility in the range of strategies for an outcomes focus Pricing and Funding Allocation Changed Needs Stepped journey for change...18 Enquiries to: Svetlana (Lana) Naumovski Senior Contract Management Officer Service Contracting and Development Disability Services Commission Ph: Page 2 of 18

3 Introduction As at 30 June 2012, over 80% of Western Australian State Government funding (approximately $340 million dollars) for disability services is allocated through individual funding packages. The individual is central to the planning and service design process and has the opportunity to choose and change their preferred service provider(s). The Delivering Community Services in Partnership policy, introduced in July 2011, promotes flexibility, innovation and community responsiveness in the funding or contracting of services to better meet community needs. It also encourages a more productive working relationship between Public Authorities and the community sector based on trust, collaboration, accountability and effective and sustainable services. In keeping with the intent of the policy, and the disability sector s demonstrated commitment to continuous improvement, an across sector working group was formed to consider ways to improve the existing arrangements for individual funding in Western Australia. The working group represented the following stakeholders: People with disability Carers 1 Community Sector service providers Central government procurement advice The Disability Services Commission Group participants were as follows: Sector Representatives Government Andrew Jefferson Darren Ginnelly Gabriella Di Perna People with Disabilities WA Individualised Services National Disability Services Ron Chalmers Peter Batini Geoff Holden Gordon Trewern Nulsen Lana Naumovski Lynne Darby Rob Holmes Directions Family Support Association Enable SW Brooke Fowles Disability Services Commission Disability Services Commission Disability Services Commission Disability Services Commission Department of Finance Shane Mauger Sue Howard Tara Ludlow and Donna Turner Terry Simpson Activ Foundation Inc Community Vision Inc Carer s Association of WA National Disability Services 1 A Carer is a person who (without being paid) provides ongoing care or assistance to another person who has a disability, a chronic illness or a mental illness, or who is frail (Carers Recognition Act 2004). Page 3 of 18

4 The Group participated in a series of workshops which were established as part of an initiative driven by the Steering Group for Disability Sector Procurement Reforms in December 2011, focusing on the: clear identification of the features required in the individual funding procurement model, consistent with the across government procurement policy and ease of use by consumers exploration of options and implications for change to existing processes, and establishment of clear and reasonable timelines for implementation of the recommendations generated. The key deliverable was to develop this discussion paper that highlights the current issues, considers the options, develops strategies and makes suggestions for the way forward. The intent of the paper is to guide on-going discussions on the issues that will have an impact on Individual Funding throughout the procurement reforms journey. Following is an outline of the key areas explored and the suggestions made for the way forward. 1. Overview of Individual Funding Individual funding began in Western Australia in the late 1980s. With the lack of regional service providers, and insufficient numbers of people to establish economies of scale for the service models operating at that time, funding was allocated directly to the consumer to enable them to engage their own supports. The benefits quickly realised were: Individual control over the timing and nature of the supports Ability to take funding with them (portability) when they moved to another location within the state, and Empowers the individual and provides an additional safeguard over the use of funds. In the 1990s there were growing concerns over inequities in the amount of support that people were receiving. In an attempt to strike a balance between meeting people's needs and supporting as many people as possible within available resources, the Commission developed the Estimate of Required Staff Support Instrument (ERSSI). Following the development of the ERSSI, a maximum price per hour was set (pricing benchmark). This multiplied by the number of hours and support required determined the maximum funding limit for a person. This model established equity in the funding amounts that people were being allocated. In the early 2000s, the pricing benchmark for accommodation support was formally reviewed. The review also revisited the pricing model and activities that should be funded. According to the data provided by the sector at that time, the revised price was above the actual costs for all but three of the service providers. However, the price was based on the historically funded services that continued to be difficult for the sector to manage. The Business Rules rate has only been applied to the funding of new services. Since the inception of the Business Rules framework, the issues of concern for pricing new services have been: Page 4 of 18

5 Continued inadequacy of the budgeted indexation rate, that controlled wages growth and in turn limited the adjustments to the Business Rules rate Higher costs of regional service provision, experienced more acutely as those organisations have expanded and taken on the role of being the employer of support workers Policy to not fund depreciation on major capital items (e.g. to fund head office refurbishment) Capacity of the 15% Program Support allocation to meet staff training and professional development costs as well as other head office costs, and the focus on support hours to establish the funding level meet people's needs. Currently (July 2012) there are over 7000 people who have an individual funding package being supported via disability sector organisations. The proportion of funding involved is over 80% of the Commissions total funding for all services. The current Individual Funding Model is largely based on the strategy of delivering a certain number of support worker hours, priced at a benchmarked rate, resulting in a fixed allocation (with indexation) until the individual needs change significantly enough to warrant an application for increased hours. Diagram 1 below captures the components of Individual Funding, and it is evident that in considering options for Individual Funding in the future, all components will need to be reviewed as they are intricately linked, i.e. any change in one component will have an impact on the others. Diagram 1: The Components of Individual Funding. Page 5 of 18

6 Other key issues to be considered are: People having access to comprehensive information and planning prior to any consideration of funding A range of strategies (beyond support worker hours) to be explored to meet the individual s needs/outcomes Any changes to the pricing of service provision, if not met with changes to funding allocation, could negatively affect the 7000 people with existing funding packages Funding allocations being considered, at present, in the light of finite resources and unmet need Adjustments to funding allocations to be more dynamic to give people more confidence that future adjustments can be made if needs change, and More emphasis to be placed on the attainment of individual outcomes. While the existing funding and contracting model is relatively simple to use, it limits creativity and responsiveness. The ideal would be to have a system that is more dynamic, flexible and outcomes focussed. 2. Individual Funding Principles The following Individual Funding Principles were generated and it is suggested that they are to be applied in the decision making process for any changes to the future Individual Funding Model. The term 'people' refers to the individual with disability, their families and carers. If there are conflicting interests, the primary focus is the individual with disability. The model should: a) Promote continuous improvement through flexibility, innovation and community responsiveness in the funding or contracting of services, in order to meet the support needs of people with disability, their families and carers b) Recognise people s capacity to access and be involved in the system with a view to encouraging self-direction c) Ensure equitable and transparent funding allocation processes d) Maximise self-determination, choice and control for people e) Encourage a productive working relationship between the Disability Services Commission, Disability Sector Organisations and people based on trust, collaboration, accountability and effective and sustainable service delivery f) Encourage a straight-forward, understandable Individual Funding Model that is manageable from a budgeting perspective and provides a community benefit, and Page 6 of 18

7 g) Reduce red tape through standardised reporting and compliance requirements which are consistent with risk. Suggested way forward: 2.1: The above Individual Funding Principles are to guide decision making on the future Individual Funding Model. 3. Access to Information and Planning An effective human service system is one that connects prospective service users as early as possible with people who are knowledgeable about the system and helpful in their approach. An effective system is also one that offers a range of access points to accommodate the diversity of the population seeking support. For example, an effective initial point of access for people living in an urban environment is likely to be different to a preferred access point for people living in remote communities. While many people with disability will choose to seek information about the system via web-based portals, others will require face-to-face engagement on one or more occasions. The latter will be particularly relevant for people with intellectual disability and/or cognitive impairment. Assumptions 1. The diversity of the potential population accessing the disability service system will require the system to provide information, advice and support via a range of mechanisms and media 2. People should be able to access information, advice and support via a range of sources and access points 3. Many people seeking information, advice and support in relation to the disability service system will require face-to-face interaction within their homes and in community settings rather than via over-the-counter transactions 4. Many people accessing the disability service system will require technical support that can be provided via a range of mechanisms 5. Many people with disability will require proactive engagement from the system rather than having to initiate contact for information, advice and/or support, and 6. Disability supports and services are best managed, planned, coordinated and delivered as close as possible to people with disability, their families and carers. Multiple access and information points It is important to recognise that the individual will enter the system at whatever point he/she is most comfortable. It is proposed that the Western Australian disability service system has multiple access and information points. These could include: 1. A centralised consumer information resource team (3 staff members) within the Disability Services Commission to provide accurate, up-to-date information on all aspects of disability services for people with disabilities/family members/members of the public and service provider organisations 2. A web based information portal Page 7 of 18

8 3. Local community based coordinators 4. Mainstream service points in remote locations (e.g. nursing posts, HACC service points) 5. A small number of disability sector organisations funded specifically to provide information and engagement. While many people with disability, their families and carers will use one or more of these access points, others will gravitate towards a particular service organisation for information and advice. While some funded service organisations will be prepared to become a source of information and advice, it will not be an expectation that they take on this role. Where funded service organisations are contacted by people seeking information, the organisation will be encouraged to provide a pre-prepared fact sheet on the multiple access and information points. It is proposed that the initial points of information and contact will be networked to ensure consistency of information available across the state. The network of access and information points will also be responsible for proactively ensuring that advocacy organisations and disability support groups have access to the full range of information about the disability service system. The roles and responsibilities need to be defined in the Initial Point of Contact and Planning stages of the Access to Information framework, i.e. who does what and what skill sets are required. It is a challenge for one person to have all of the necessary skills and information to be involved in both the initial exploration of options and individual planning phases. It is noted that the sector will need to work jointly to address the capacity issues. It is further proposed that each of the initial points of information and contact will provide people with disability and their families/carers with the opportunity to engage in discussions about community based supports and mainstream services that may be appropriate for their support requirements. Currently, many thousands of people with disability access supports and services from informal networks, community supports and mainstream services. Every effort should be made to link people with disability to these supports as appropriate. These connections will continue to be made without any reference to a formal disability service system. Over two decades the Local Area Coordination system in Western Australia has linked people with disability to mainstream and community supports rather than directing them to funded specialist disability services. For many people, access to a local coordinator and local supports is all that is needed to ensure that a person with a disability can lead a good life in their community. These opportunities need to be available at the time when people initially engage with the system. The overall aim, however, is to ensure that any member of the Western Australian community will be able to obtain accurate information about the supports and services available within their community, from mainstream services and from the disability service Page 8 of 18

9 system. Access to timely and accurate information will enable people with disability to navigate the system and to make decisions about supports and services. Access to support for effective planning Without effective planning, people can end up in places they never intended to be or wanted to be. The Western Australian disability service system should proactively support people with disabilities and, when appropriate their families/carers, to engage in effective planning processes that encourage the development of support options that will match desired life goals. This support in planning should be available at any time in a person s life journey and especially before any focus on assessments and funding allocations. Human service systems that have as their starting point a formal assessment that leads to a funding allocation tend to become bureaucratic and welfare focused. These systems tend to become de-personalised, technocratic and insensitive to the people seeking to access support. These systems tend to become fixated on the levels of funding allocated to individuals rather than on building good lives. On the other hand, systems that start with engagement, information, relationships and effective planning tend to build good lives for people requiring support. The funding focused system tends to result in the following pathway: Formal assessment funding allocation selection of service provider access to services The relationship, planning system tends to result in the following pathway: Information exploration planning development of support plan access to funding implementation of support plan evaluation. In seeking to build a person-centred disability service system, it is important that the individualised funding system in Western Australia provides a range of planning opportunities from the individuals earliest stages of engagement with the system. Planning can take many forms and can be undertaken for many purposes. From time to time people with disability may require planning support that can best be described as technical support. This may include financial planning, decision making support, and brokerage support. Planning related to individual funding, however, will tend to be associated with support plans, specialist services, cost of services, choice and control, and quality of services. Planning may also be undertaken in conjunction with other supports such as counselling. Regardless of the mechanisms selected for providing planning, support will require the following essential attributes and qualities: Engagement, relationship and trust Investment of time in planning Access to accurate information Creativity and innovation Skills in planning, and No (or effectively managed) conflict of interest. Page 9 of 18

10 Choice is important in planning support options. For this reason it is proposed that the Western Australian disability service system includes a range of funded planning support options that will be available for people with disability to access when required. To ensure a range of planning support options, the system could include: 1. Local community based coordinators 2. A small number of disability sector organisations funded specifically to provide planning support 3. Funded community-based support groups operated by people with disability, their families and carers. While many people with disability, their families and carers will use one or more of these planning support options, others will gravitate towards a particular funded service organisation for this support. While some funded service organisations will be prepared to assist with planning, it will not be an expectation that they take on this role. Any inherent conflicts of interest in providing information, planning and exploration could be mitigated through: - an advocate or a consumer peak agency representative being included at the request of the consumer - development of a sector code of conduct, and - a requirement that all participants declare conflict of interest where it occurs. In the sequencing of the steps in the Information, Exploration, Planning, and Support System, the question At what stage should funding be decided? remains to be resolved. Dollars can inform individual planning in terms of what is possible, however, can also act to limit thinking about the possibilities (confined to what the funding can achieve). Diagram 2 on the next page depicts the proposed pathways that can be used by the individual, their families and carers to navigate the Information, Exploration, Planning and Support System. Page 10 of 18

11 Diagram 2: Information, Exploration, Planning and Support System Page 11 of 18

12 Suggested ways forward 3.1: The system should have multiple access and information points and a range of information and planning options. 3.2: The system should allow the individual to enter at whatever point he/she is most comfortable. 3.3: Further work is to be undertaken to ensure that people have access to accurate information about the supports and services available within their community, from mainstream services and the disability service system. 3.4: That the attributes and qualities to apply to any Commission funded access, information and planning support system should be: 1. Engagement, relationship and trust 2. Investment of time in planning 3. Access to accurate information 4. Creativity and innovation 5. Skills in planning, and 6. No (or effectively managed) conflicts of interest. 4. Flexibility in the range of strategies for an outcomes focus The current funding model, which is based on providing and reporting support worker hours, is limiting. While exceptions have been made to the use of funds in individual circumstances, there needs to be greater support and encouragement to the sector facilitate creating thinking about different ways to meet peoples needs. In addition, a greater focus is required on how the service made a difference for the individual. A recent pilot project demonstrated that small amounts of funding used in innovative ways can have profound effects on the long term support requirements for individuals. Suggested ways forward: 4.1: Disability sector organisations are to be encouraged and supported to adopt a range of strategies to meet individual outcomes. 4.2: Disability sector organisations are expected and supported to have in place mechanisms to determine their effectiveness in meeting individual service outcomes : The Commission should adopt a more holistic and flexible approach to the use of individual funding packages by considering the removal of funding program restrictions. 2 Individual service outcomes relate to the particular outcomes that the individual is aiming to achieve with that service. Page 12 of 18

13 5. Pricing and Funding Allocation A key component of Individualised Funding is the interplay between pricing and funding. In the Individualised Funding system pricing refers to the price that Service Providers are contracted by the Commission to provide a strategy for, while funding refers to the money that a person is allocated by the Commission. This section of the report presents options for pricing of services and allocating individual funding. Options The following are the various options for funding and pricing methodologies in an Individualised Funding system. They do not need to be used exclusively; for example, different strategies in the same contract might have different pricing methodologies, depending on what best suits the strategy. Funding allocation based on: An assessment: of the individual's strengths and opportunities across a number of characteristics associated with the Commission's consolidated outcomes of the individual's condition, or done through the Estimate of Requirement for Staff Support Instrument (ERSSI). An individual plan: developed by an individual or third party who is not Disability Services Commission or a Service Provider developed by Disability Services Commission employee, or developed by a Service Provider. A combined approach: An estimate of the individual allocation from an assessment which is refined and finalised through the development of a personalised plan (using approaches above). Pricing of services based on: A Disability Services Commission standard price, such as: Business Rules Rate for a standard unit of some strategies, with providers able to offer prices and details for alternative strategies and quality. A price driven by the Service Provider, that is: The Potential Service Provider offers a per unit price (which may be fixed, variable or indicative, depending on the strategy) for any of the following: o recognised strategies (general and well known strategies - probably specified by the Commission), o innovative strategies (specific to the provider) and o flexible strategies (specific to the individual). Page 13 of 18

14 Discussion A price set by the Service Provider at the time of finalising the individual plan, that is: Once an individual's personalised plan has been developed, the market is tested by the individual, or a person or organisation supporting them to procure the strategies required to meet their outcomes. The price for each service is negotiated and agreed between the individual and the Service Provider at that time, for a specified period of time, such as a year. A price set by the market at the time of purchase, that is: All services are purchased, provided or brokered by, or on behalf of, the individual at the time they are required, at a rate set by the market on the day. A Service Agreement between the Commission and the provider of the strategy may or may not exist, and if it does, there is no contracted price. It was concluded that a person s ability to navigate the Individual Funding system must be a fundamental driver in the appropriateness of any particular model of pricing or funding. That means the system needs to ensure that people who can make decisions in a highly self-directed manner must be able to, while people who cannot, or do not wish to take on all the self-direction in the planning, delivery, management and evaluation of their funding and services must be assisted by adequate safeguards and supports. There is no one size fits all solution. The vision is for much greater flexibility in the choice of strategies available to meet people s needs and how an individual s funding is allocated and reviewed. Funding In the future, individuals should have access to a range of funding allocation methods. The first step can be that the current funding allocation method remains in place, with benchmark rates for services used to equitably allocate funding. An improved changed needs process, and greater emphasis on flexibility will support people to better achieve their outcomes while a new allocation process is developed. Pricing In the future, organisations should be invited to offer a range of strategies that they know will result in the changes to the individual that the Commission is looking to support. Organisations should be able to price these strategies with a pricing methodology that best suits the strategy. The first step can be the introduction of various strategies at a fixed price for a range of strategies, some of which are recognised strategies and some of which are innovative strategies. Flexible strategies will continue to be managed through the Individual Funding Management Committee. It was recognised that the sector, and the Commission s current funding system, is not yet prepared for wholesale changes to pricing. Firstly, organisations have varying ability to develop and price different strategies; and secondly, individual packages are currently fixed and the Commission has very limited ability to absorb wholesale changes to pricing while ensuring that individuals are not disadvantaged. To ensure that there is limited disruption to individuals current services when the new contracts commence, Service Providers should be asked to articulate in their Page 14 of 18

15 Offer the methodology and quality of an hour of support priced at the current Business Rules rate. This will then be assessed for value for money by an Evaluation Panel and, if a contract for that service is awarded, individuals currently receiving services will begin to receive the new methodology and quality of an hour of support at the Business Rules rate, until the person s plan can be reviewed. It is anticipated that higher standard rates for rural and remote areas and people with complex needs could be proposed immediately and given priority for funding adjustments. The vision is that all individuals are able to be provided with a statement on the balance of their funding at any time. At the moment organisations are able to internally reallocate part of an individual s unused funding to support others who may require more services than their current funding. Any move towards total transparency of an individual s funding must be supported by an effective and viable changed needs process, and a pricing methodology that acknowledges the issues of sustainability and economies of scale that service providers face in a market where volumes are not set. Suggested ways forward: 5.1: Pricing benchmarks should continue to be used to guide funding allocations, until such time that a more effective allocation process is established. 5.2: Changes to a disability sector organisations pricing should not automatically result in changes to individual funding levels. 6. Changed Needs Changed need occurs when an individuals support needs or their support circumstances change, and there is a subsequent need for a variation to formal supports. Some of the key causes of changed need are: Deterioration of skills including self-care skills Decline in health as a result of the disability Ageing of the individual Incorrect identification of support needs and allocation of appropriate funding level, and Changes in family circumstances. Currently, applications for changed need in the Accommodation Support and Intensive Family Support programs are considered within the Combined Applications Process and compete with applications from generally unfunded persons based on their urgent and critical need. The Independent Priority Assessment Panel members, disability sector organisations and Commission staff have expressed the view that applications for changed need are difficult to prioritise when assessed against people in crisis and that a separate process for assessment should be considered. Page 15 of 18

16 In 2009/10, approximately one third of applications for Accommodation Support Funding were for changed needs. In Round 1 for 2012/13, there were 160 people of 407 (39%) applying for Accommodation Support Funding, who were seeking additional (changed need) funding. Similarly, there were a further 41 people of 153 (27%) applying for Intensive Family Support, seeking additional (changed need) funding. Organisations have reported using the following strategies for managing changed need: o Managing unders and overs at the operational level o Going into recurrent or non-recurrent deficit o Flexible shift arrangements o Changing service models e.g. clients going into higher levels of congregate care o Utilising other community groups o Accessing social networks e.g. family and friends, where this may impose a burden, and o Notifying the Commission of intent to withdraw supports. Changed needs can also be a reduction in the need for funded supports, resulting from improvements in circumstances, transfers to other services/states, or death. When some or all of an individual s funding is returned to the Commission, it is currently reallocated via the Combined Application Process. Sometimes a reallocation of funds can threaten the sustainability of an option for a small to medium organisation. Current Commission policy provides approximately three months transition funding in these circumstances. The preferred option The vision is to establish a separate and ongoing process for meeting changed needs to ensure that that people with changed needs are not competing directly with urgent and critical need via the Combined Applications Process. The new process is to include the following features: That a separate source of recurrent money is found for the new Changed Needs Process, to be allocated annually but disbursed on a more responsive cycle (e.g. every two months) That the new Changed Needs Process has a built-in regular review of options to ensure that decreased need is also captured in the new process Principles to guide the process need to be developed, including which applications should be referred back to the Combined Application Process Applications would be considered by a panel similar to the Individual Funding Management Committee (perhaps as a sub-committee to the IFMC) A simple application form should be developed to assist the Committee The membership of the IFMC sub-committee could be expanded to include representatives from the sector, and A different rating scale could be used to the Risk Assessment Framework currently used by the Combined Applications Process (based on urgent and critical need). Page 16 of 18

17 Benefits The sector would have greater confidence in the system s ability to respond to changed needs and would therefore be more likely to facilitate funding returns People with disability whose needs vary regularly would know that regular reviews would occur and their situation would be assessed more regularly than the Combined Applications Process Reduction in the number of applications via the Combined Applications Process, which would improve the Panel s capacity to focus on the applications at hand, and A reduction of the overall degree of trauma for people with disability, their families and carers, Independent Priority Assessment Panel members, disability sector organisations. Funding Source Statistical information was considered that indicated it is possible to fund the Changed Needs Process recurrently by redirecting recurrent funding that is returned to the Commission as a result of client death and transfers to other states. However, this could take from five to ten years to fully resolve outstanding changed needs as it is reliant on the funds allocated for this purpose and the demographics of the aging population. Discussion Points Based on the benefits and efficiencies outlined above, the Working Group strongly supported the development of a new Changed Needs Process to ensure that people with changed needs are not competing with urgent and critical need via the Combined Applications Process. In building in a regular review of options in the new Changed Needs Process, it should be noted that organisations will have to regularly review the sustainability of services as clients enter and exit services due to choice and changed need funding. This requirement may impact more on smaller rather than larger organisations. As a result, the Commission may need to develop and provide service development and support options to smaller organisations. Suggested way forward: 6.1: A process for adjusting individual funding packages to meet changed needs and purchasing equity be developed along with a built-in regular review of individual funding packages. Page 17 of 18

18 7. Stepped journey for change As covered in the previous sections, the next step in changing the model should allow for: a range of strategies to be offered by providers, prices being fixed (and indexed) for the term of an Agreement for the standard items, and each individual s allocation to be indexed and reviewed regularly. As shown in Diagram 3 below, a staged transition is needed to move toward the ideal. This would allow for adjustments to be made that are manageable for all parties and this would involve moving from Step 1 to Step 3 (i.e. skipping Step 2). Diagram 3: A Stepped Journey for Change Suggested way forward: 7.1: The next step in changing the model should allow for a range of strategies to be offered by providers. Prices for standard items, such as regular support, should be being fixed (and indexed) for the term of an Agreement. Each individual s allocation should be regularly reviewed. W:\Service Contracting And Development\Sector Development\External Committees\Disability Sector Procurement Reforms Steering Committee\Discussion Paper From Workshops On Individual Funding Version 6-30 July 2012.Docx Page 18 of 18

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