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Medicaid Rate Changes Could Leave Addicts, Mentally Ill Without Consistent Care

Many programs should see generous boosts in funding, but others -- like day programs for psychiatric outpatients -- could see cuts

homeless mentally ill

When Gov. Chris Christie announced in January that he would invest an extra $127 million in the Medicaid program to boost reimbursement rates for behavioral healthcare, advocates welcomed the news for its potential to expand treatment options for poor and disabled patients in New Jersey.

But details released by state officials over the months that followed Christie’s State of the State have sparked growing concerns for organizations that provide these mental health and substance abuse-treatment to Medicaid patients.

Advocates for these caregivers said the proposed changes could result in budget and financial chaos as the state overhauls a 30-year-old payment system during the next 14 months. According to a survey of some providers, as many as 20,000 patients could be squeezed out of treatment.

The new Medicaid funding -- more than $100 million of which comes from federal sources -- is one of several efforts Christie has backed to help address the state’s soaring addiction rates. According to the Department of Human Services, which oversees Medicaid, the proposed rate changes more than double some current payments for substance-abuse treatments. They also offer first-time funding for buprenorphine, an opiate-replacement therapy that has shown tremendous success.

Proposed rates for mental-health services also reflect significant funding increases; individual therapy would be reimbursed at twice the current rate and payments for group homes and other residential facilities would also jump.

But the reimbursements proposed for some outpatient treatments, including programs for those transferring out of psychiatric facilities, would actually be reduced.

Another concern for providers is the pending transition from annual “deficit funding” contracts to fee-for-service payments. Currently, most Medicaid providers collect funds from every source possible -- county contracts, foundation grants, patient fees -- and the state will eventually make up any budget gap that remains But starting this July, it will begin shifting to a model where the state reimburses providers for specific patient services.

“The numbers just don’t add up,” said Joseph A. Masciandaro, president and CEO of CarePlus NJ, which treats some 20,000 patients a year at sites in Bergen, Passaic, Essex, and Union counties. Based on his calculations with the new rates, Masciandaro predicts CarePlus will develop a $6 million shortfall over the first six months. “This is going to be the worse disaster we’ve ever witnessed,” he said, looking back over his three-decade career.

Debra Wentz, President and CEO of the New Jersey Association of Mental Health and Addiction Agencies, said her members welcomed the infusion of new funding for behavioral healthcare. “But where the money is going and how it is impacting the different services has caused a lot of concerns.”

“We are not asking that the system doesn’t move forward,” Wentz added, “just hoping to slow it down in terms of the transition.” The association is urging state officials to extend the deficit funding so that it overlaps with the new system for a full year, in an effort to keep organizations financially whole during the implementation process.

“We are a business and we want the opportunity to grow the business,” added Robert L. Parker, CEO of NewBridge, which treats some 8,500 patients in Morris, Passaic and Sussex counties. “But they need to extend deficit funding so we don’t have to worry about going out of business in the process.”

Providers are also concerned that the fee-for-service payments don’t cover a number of key outpatient services -- including medication-monitoring visits with a psychiatrist, and certain group sessions -- or the general administrative costs involved with operating a healthcare facility. While these costs had been covered in the past through deficit funding, it is not clear where the funding will come from now. And providers won’t be paid for patients who don’t show up for sessions, a common problem when dealing with mental illness.

The cost of hiring psychiatry staff to provide medication monitoring is a big issue for Masciandaro’s facility, which also treats court-mandated cases and Meghan’s Law clients. “We are the folks who see the poor and the working poor who can’t afford any co-pays,” he said. “I’ve hesitated to tell our patients because I don’t want to cause them the stress associated with that.”

But the growing concerns prompted Assemblyman Anthony M. Bucco, (R-Morris) to organize a summit in Denville on Wednesday with provider organizations, county representatives, and staff from the state Department of Human Services, which oversees Medicaid. Participants welcomed the new funding and thanked the state for its willingness to work through the changes, but also stressed the importance of resolving these outstanding issues.

“We were hearing more and more of the providers concerned about not having enough funding and not being able to treat and care for the individuals who are most in need,” Bucco said, adding that he and his father -- Sen. Anthony R. Bucco (also R-Morris) -- have worked with some of these providers for years. “These are really the most vulnerable patients and we need to make sure that no one slips through the cracks.”

DHS officials were unable to respond yesterday afternoon to specific questions about the rates or the rollout process. Spokeswoman Nicole Brossoie issued a statement that said the department has had many meetings with providers to gather feedback. “In fact, several rates were adjusted as a result of these meetings. Overall, the Division receives constructive, productive, and insightful reactions and it values the partnerships of its contracted agencies and the shared mission we have in helping clients seek and sustain recovery.”

Wentz praised DHS for their willingness to hear the concerns of her member organizations. “Already some changes have bee made. But it is not resolved, so the dialog is continuing.”

Assemblyman Bucco echoed this sentiment. “It’s going to be one of those things that as it rolls out we really need to keep an eye on it.”

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