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Office of Mental Health

New York State Consolidated Budget and Claiming Manual Subject: Appendix Z In-Contract vs. Out-of-Contract (DMH Only) Section: 50
For the Periods:
January 1, 2009 to December 31, 2009
July 1, 2009 to June 30, 2010
Issued: September 9, 2009

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When the DMH allocates deficit funding to a service provider, it is expected that these limited resources will be maximized on behalf of mental hygiene recipients. Specifically, this means that surpluses for approved mental hygiene programs should be utilized to offset deficits in other approved mental hygiene programs, thus allowing for optimal use of DMH State dollars.

With an effort to continue to maximize State Aid dollars and to establish a consistent in-contract/out-of-contract policy, the following policy for OMH funded agencies was implemented July 1, 1994 for the New York City region and January 1, 1995 for all upstate regions:

OMH Policy Statement:  In-Contract/Out-of-Contract Reporting

The following medicaidable, ambulatory mental health programs must be reported as in-contract, even if net deficit funding is not supporting the program: Clinic Treatment; Continuing Day Treatment; Partial Hospitalization; Intensive Psychiatric Rehabilitation Treatment (IPRT); Intensive Case Management (ICM), Supportive Case Management (SCM); Assertive Community Treatment (ACT); and Day Treatment. Profits from any one of these programs must be used as an offset against net deficit funding in all other mental health programs except Community Residence, Family-Based Treatment, Personalized Recovery Oriented Services (PROS) and Sheltered Workshop Programs. Inpatient programs will continue to be eligible for out-of-contract status at the discretion of the OMH Community Budget and Fiscal Liaison Units and therefore profits from these programs would not be used to reduce deficits in the above-listed programs.

Although Community Residence, Family-Based Treatment, PROS, and Sheltered Workshop Programs are considered to be in-contract programs, by virtue of receiving State Aid net deficit funding, exempt income generated by one of these residential programs is not required to be used to offset in-contract deficits.

OMH Procedure:  Reporting of In-Contract/Out-of-Contract

The Consolidated Budget Report (CBR) must continue the practice of containing all mental hygiene program activities by providers. Programs that are designated as in-contract must be listed by the appropriate funding source code on Schedule DMH-3 (Program Funding Summary) of the CBR, while those that are eligible to be designated as out-of-contract are to be reported under funding source code 090-Nonfunded. As a reminder, all programs that are designated as in-contract on the CBR must continue to be reported as in-contract on the Consolidated Claims Report (CCR).

Profits (except for exempt income defined above) generated by a provider from programs designated as in-contract are to be used to reduce the net deficit payable to that provider's other in-contract programs except the following OMH programs: Community Residence; and Family-Based Treatment and Sheltered Workshops.  Application of these profits will be made during the desk audit of the CCR.

Comments or questions about the information on this page can be directed to the Community Budget & Financial Management (CBFM) Group.