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Fate of Medicaid Waiver Faces Budget Review

New Jersey’s fate in its Medicaid waiver application was the center of attention in the Statehouse yesterday, as the state’s top human services official testified before the Assembly to the cost and the policy benefits of the state winning approval in the lengthy process.

State Department of Human Services Commissioner Jennifer Velez, testifying on her proposed 2013 budget before the Assembly Budget Committee Wednesday, said she expects a response shortly from the federal Centers for Medicare and Medicare Services on New Jersey’s application outlined in the state’s comprehensive Medicaid waiver, which officials said will both allow the state to get more federal Medicaid dollars and spend the money more wisely.

New Jersey could receive millions in new federal matching funds for Medicaid, Velez said, as the state implements major changes planned for the $11 billion, state/federal funded healthcare program for 1.3 million low-income residents, who include children, frail elderly, and those with behavioral health and substance abuse problems.

A key – and controversial -- DHS initiative in the application is moving the state’s 28,000 Medicaid nursing home residents into managed care, a change designed to improve the coordination of home and community-based services to help seniors avoid moving to a nursing home for as long as possible.

DHS plans on Jan 1, 2013 to transfer the Medicaid long-term care program to the four managed care companies that already deliver services to the vast majority of the state’s Medicaid members.

At the same time, Medicaid reimbursement rates to nursing homes were reduced in the current fiscal year, and while the 2013 budget proposed by Gov. Chris Christie partially restores that cut, several committee members questioned whether the state is doing enough to maintain the nursing home safety net. They noted the need only growing as baby boomers continue to age, to live longer, and seek nursing facility when they can no longer stay in their homes and communities.

“Nursing homes have been one of the biggest issues with this budget and there are concerns,” said State Assemblyman Vincent Prieto (D-Hudson), chair of the committee.

He noted that the current budget cuts Medicaid nursing home rates by about $60 million in state and federal fund; the 2013 budget proposes restoring $10 million of those cuts, which the nursing home industry has called insufficient. “Does the department monitor nursing home, and keep track of how healthy they are -- is their financial status monitored?” Prieto asked Velez.

In her testimony, Velez had some progress to report to the committee in the ongoing talks over the waiver, a process that she said has consumed her department. The application went to CMS in September, and has been the subject of near-daily meetings, telephone conferences and negotiations ever since, she said.

For instance, Velez said last Thursday New Jersey got word that CMS supports New Jersey plans to make changes in how the state delivers Medicaid services, and gave a green light to several proposed pilot programs, including the creation of “health homes” to coordinate physical and mental health services.

In addition, Velez said CMS supports New Jersey’s plan to reduce its current bias toward institutional care of the elderly and those with developmental disabilities, a move that could lead to additional federal revenues.

The federal government is giving the state “flexibility in federal matching dollars for home and community-based services,” Velez said. “This represents the prospect of new revenue for some of what we currently pay for with all state dollars.”

Still, Velez said the move to managed care is a big transition for nursing homes, and she noted that a stakeholder committee that been created and has met several times. “The nursing homes are right there with us at the table,” she said.

Velez said she anticipate that there will be a decline in the nursing home population in the future, as the state’s efforts to build up community supports takes hold, and the elderly are able to get more of their medical care and other support in their homes.

She has had discussions with some county nursing homes that are exploring ways to “repurpose” some of their beds to prepare for a future where there is less demand for nursing home placements.

Once the state moves to managed care, the managed care companies will provide all the care that an elderly Medicaid member needs, and according to many long-term care stakeholders, the companies will have a financial incentive to provide the care in the home, for as long as possible. “Once this is all working as it should, only the people who could not be kept in their own home, with supports -- only those people who need to be in institutional settings will go there,” Velez said.

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