Planning Resources for
Minnesota State Government Shutdown 2011


Please feel free to browse the resources related to the potential Minnesota state government shutdown effective July 1, 2011.

UPDATE: EXPANDED CRITICAL SERVICES LIST


In an announcement Monday, June 20, Governor Dayton said he will be filing an expanded critical services list with the court sometime on Tuesday, June 21. This may eliminate some of the concern we've been talking about since last week about agencies being unable to process payroll and continue offering services in the event of a government shutdown. The Governor?s original response, filed June 15, noted that benefits to individuals in health and economic assistance programs are critical because they are necessary to prevent an immediate threat to public health and safety. The original response did not include provider payments necessary to support these services. This oversight is corrected in the new filing. In addition to provider payments, Gov. Dayton will also advise the Court that he intends to allow newly eligible people to enroll in those programs. Programs covered by this announcement include Medicaid (Medical Assistance), MFIP/DWP, General Assistance, Minnesota Supplemental Aid, Refugee Cash Assistance, Group Residential Housing, MinnesotaCare, Food Support, Minnesota Food Assistance Program, and Adoption Assistance.

JUNE 2011 PAYMENT DELAY -- NON-TARGETED PROVIDERS, TARGETED?


According to MHCP Provider Update (LEG-11-01) released June 9, 2011, "MHCP is required by law to delay payment for services in Medical Assistance. The law requires that payments that normally would have been made in June of 2011 be delayed until the first payment after June 30, 2011. These payment delays apply to inpatient hospital services, as well as, non-hospital services. The payment delays do not apply to long term care services."

The referenced law, 2010 First Special Session, Ch 1, art 15, sec 3, subd 4 (b) states the following:

Nonhospital Fee-for-Service Payment Delay Payments from the Medicaid Management Information System that would otherwise have been made for nonhospital acute care services for Minnesota health care program enrollees must be delayed as follows: for fiscal year 2011, June payments must be included in the first payments in fiscal year 2012. This payment delay must not include nursing facilities, intermediate care facilities for persons with developmental disabilities, home and community-based services, prepaid health plans, personal care provider organizations, and home health agencies. The provisions of Minnesota Statutes, section 16A.124, do not apply to these delayed payments. This payment delay includes, and is not in addition to, the payment delay for nonhospital acute care services in Laws 2009, chapter 79, article 13, section 3, subdivision 6, paragraph (c)
.

Were your June payments for PCA or home health care services delayed? If so, did they provide additional explanation as to the justification for the delay? Please let us know by contacting Lance by calling 763-218-1433 or e-mailing lhhegland@precisainc.com.

SURVEY OF IMPACT UPON MHCP PROVIDERS


With the Minnesota state government shut down looming for July 1st and uncertain payments for Minnesota Health Care Program (MHCP) providers and contractors, we are asking: How long will your organization be able to provide services before you exhaust your cash and credit reserves? Complete our very quick and anonymous survey to let us know. The statistical summaries gathered will be shared (i.e. no individual responses will be shared) with elected officials and the media so they understand the impact to state providers and especially individuals and families relying on these services.

You may already have a good sense for how long your organization can operate without state revenue. If not, a sample calculation appears below.

ESTIMATING OPERATIONAL LIMITS WITHOUT STATE REVENUE


DISCLAIMER: This information and the reference spreadsheets are provided "as is" for awareness and educational purposes only. They should not be relied upon as an estimate for your particular situation, which may be much different. Please consult an accountant, finance specialist, or operations consultant that has been trained in managerial accounting and cash flow projections to perform an accurate assessment of your specific situation.

Before you can begin these calculations, you need to gather the following pieces of information from your bookkeeping, accounting, or finance department:

Now, complete the following calculations [or use the Microsoft Excel workbook template or Google spreadsheet template (which you will need to save a copy of into your documents before being allowed to edit)]:

  Estimated Total Credit Limits at the Close of Business on June 30, 2011
- Estimated Total Credit Used at the Close of Business on June 30, 2011
= Estimated Total Available Credit at the Close of Business on June 30, 2011
+ Estimated Total Cash Reserves at the Close of Business on June 30, 2011
= Estimated Total Operational Reserves at the Close of Business on June 30, 2011


  Estimated Total Operational Expenses per Month (or Biweekly Pay Period)
- Estimated Total Non-State Operational Revenue per Month (or Biweekly Pay Period)
= Estimated Total Operational Deficit without State Revenue per Month (or Biweekly Pay Period)


  Estimated Total Operational Reserves at the Close of Business on June 30, 2011
 Estimated Total Operational Deficit without State Revenue per Month (or Biweekly Pay Period)
= Estimated Operational Limit in Months (or Biweekly Pay Periods) without State Revenue

For example: It is June 30th. ABC Company has a total line of credit of $150,000 between three separate financial institutions (e.g. $100,000 revolving credit with XYZ Bank for payroll, $25,000 line of credit with XYZ Bank for special purchases, $15,000 with MNO Credit Card, and $10,000 with GHI Credit Card). Also, they have a total credit balance of $15,000 (e.g. $0 revolving credit with XYZ Bank, $0 standard credit with XYZ Bank, $12,000 with MNO Credit Card, and $3,000 with GHI Credit Card). They have total cash reserves of $43,000 (e.g. $13,000 in checking with XYZ Bank and $30,000 in a money market account with XYZ Bank). Their operational expenses per month are estimated to total $87,500. Their payroll checks are due to be delivered July 1. Non-state revenue per month is estimated to total $14,000. How long can they operate without receiving state reimbursements for services delivered?

  $150,000 [Estimated Total Credit Limits at the Close of Business on June 30, 2011]
-   15,000 [Estimated Total Credit Limits Used at the Close of Business on June 30, 2011]
= $135,000 [Estimated Total Available Credit at the Close of Business on June 30, 2011]
+   43,000 [Estimated Total Cash Reserves at the Close of Business on June 30, 2011]
= $178,000 [Estimated Total Operational Reserves at the Close of Business on June 30, 2011]

  $ 87,500 [Estimated Total Operating Expenses per Month]
-   14,000 [Estimated Total Non-State Revenue per Month]
= $ 73,500 [Estimated Total Operational Deficit without State Revenue per Month]

  $178,000 [Estimated Total Operational Reserves at the Close of Business on June 30, 2011]
   73,500 [Estimated Total Operational Deficit without State Revenue per Month]
=   2.4218 Months [Estimated Operational Limit without State Revenue]
-   0.4552 Months [Estimated Reduction for July 1, 2011 Payroll]
=   1.9666 Months [Adjusted Operational Limit Estimate without State Revenue]
   4.3333 Weeks per Month
=   8.5219 Weeks [Adjusted Operational Limit Estimate without State Revenue]

ABC Company can operate for roughly 6 weeks without State revenue. After that, it will need to obtain roughly $74,000 per month (or $34,200 per biweekly pay period) from a financial institution or investors or go out of business. Remember, just because you stop providing services, you still need to cover your fixed costs. So, if you do not plan to go out of business (i.e. filing bankruptcy), you will need to be sure you save some of your reserves to cover those fixed costs until you can begin providing services and receiving revenue again. For example, ABC Company may need to stop providing services after 3 weeks before it goes into a "hibernation mode", where it only pays the absolute minimum required fixed costs. As soon as the state shut down is over and ABC Company receives the state revenue payments for services provided before it went into "hibernation mode", it can start planning to come out of "hibernation" and providing services again.

DISCLAIMER: This information and the reference spreadsheets are provided "as is" for awareness and educational purposes only. They should not be relied upon as an estimate for your particular situation, which may be much different. Please consult an accountant, finance specialist, or operations consultant that has been trained in managerial accounting and cash flow projections to perform an accurate assessment of your specific situation.

EMERGENCY PLANNING ASSISTANCE


If you would like affordable assistance performing cash flow analysis plus creative yet effective emergency operations planning to help sustain your organization during the potential shutdown, please contact Lance as soon as possible by calling 763-218-1433 or e-mail at him at lhhegland@precisainc.com. Lance has worked as an organizational and operations consultant for the past 8 years. He earned an MBA focusing on health care management and an BA degree majoring in mathematics/actuarial science from the University of St. Thomas. He has been an active advocate throughout the disability and aging community for over 10 years, working with the Minnesota Homecare Association, Access Press, Consortium for Citizens with Disabilities, and the Department of Human Services.

ADDITIONAL RESOURCES

For more information about the shut down and impact to organizations in your industry, please visit any of the following information sources:

ADDITIONAL INFORMATION CONTACT


For additional information, please contact the following team member:

Lance H. Hegland, MBA, Consultant/Manager View Lance Hegland's profile on LinkedIn View Lance Hegland's profile on Facebook
PRECISA, Inc.

701 Main Street Southeast, #517
Minneapolis, Minnesota 55414-2958

Voice: 612-378-7028
Mobile: 763-218-1433
E-mail: lhhegland@precisainc.com

Page Updated: Wed, 22 Jun 2011 02:10:00 GMT ♦ Page Generated: Sun, 17 Dec 2017 02:06:45 GMT
If you have any questions, comments, or suggestions regarding the content or layout of this page, please e-mail webmaster@precisainc.com.
©2004-2017 PRECISA, Inc.. All Rights Reserved.

701 Main Street Southeast, #517 • Minneapolis, Minnesota 55414-2958 ♦ E-mail: info@precisainc.com ♦ Web: http://www.precisainc.com/ ♦ 612.378.7028

Best Viewed with Spread Firefox Affiliate Button