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State Shifts Way It Pays for Medicaid Mental-Health, Addiction Treatments

Providers want to ensure they don’t lose funding, go without payments during transition

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New Jersey is changing the way that it pays for Medicaid mental-health and addiction treatment, with the goal of making payments more efficient and consistent. But providers want to make sure that they don’t see large funding cuts or cash-flow problems.

Under the change, the state would pay behavioral healthcare providers a fee for each service they deliver, a shift from the current system, which pays them based on contracts. But that approach lets providers get paid even if patients don’t show up for appointments.

The state Department of Human Services is making the change as part of a long-planned shift toward better integrating behavioral healthcare -- which has long been managed separately -- with other medical services offered through Medicaid. Behavioral healthcare is a term that covers both mental healthcare and drug and alcohol treatment.

Providers want to make sure that the state sets the payment rates -- which are due midsummer -- at a high enough level so that they won’t see sharp drops in funding. In addition, they want the state to help them move to the new payment system by paying some fees upfront, to avoid running out of cash while they await payments.

“Many times, people are supposed to come into treatment that day, and they don’t show up,” said Eileen Bradley, executive director of Damon House Inc., a long-term residential drug-treatment facility in New Brunswick.

State officials say that they are working with the providers to ensure that they won’t have cash-flow problems.

Bradley said she appreciates that officials are listening to providers’ concerns, but she remains apprehensive.

“Everybody is working together, but there is a real concern on the survival -- during these next couple years as we go through the transition -- that we are able to pull through it together,” she said.

By moving toward fee-for-service, the state will be able to better measure exactly the of services supplied by each behavioral-health provider. This data could be used in the future if behavioral healthcare is moved to managed care, in which an insurer or a group of insurers manages treatment.

New Jersey Medicaid already uses managed care for medical care like visits to hospitals or doctor’s offices and -- beginning last July 1 -- for long-term supports and services, such as nursing care for seniors and residents with disabilities.

But behavioral healthcare has long been carved out of the managed-care system for most Medicaid recipients.

The New Jersey Association of Mental Health and Addiction Agencies (NJAMHAA) has recommended that the state take a series of steps to ease the transition. They include extending a “line of credit” to agencies that would allow them to receive funding for a brief period of time based on billing for future services and periodically re-evaluating the new rates once they are in place, to ensure that they are effective for consumers, providers, and the state.

NJAMHAA CEO Debra L. Wentz said that an advantage of the current system is that providers could rely on predictable funding -- once the new fee-for-service system is in place, they will lose that predictability.

Under a five-year comprehensive Medicaid waiver from federal rules, New Jersey planned to hire a single company -- known as a managed behavioral health organization -- to manage behavioral health services. But these plans have been delayed, perhaps due to the start-up costs. Despite that delay, the state is moving forward with plans to start paying for behavioral health on a fee-for-service basis. of managed care provided for medical and long-term care by multiple insurers, instead of having a single insurer do the work. It’s not clear whether the state is considering this option.

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