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Advocates for Addicts, Mentally Ill Still Worried About New Medicaid Rates

As state shifts to fee-for-service model, some providers are concerned that funding shortages could force them to close their doors

elizabeth connolly
Acting Human Services Commissioner Elizabeth Elizabeth Connolly (right).

State officials responsible for the Medicaid program assured lawmakers on Tuesday that they have been working closely with the independent agencies that coordinate community mental-health and substance-abuse programs to ensure New Jersey’s transition to a new payment model rolls out smoothly over the coming 14 months.

Representatives for these agencies have welcome the additional $127 million Gov. Chris Christie promised to Medicaid, which pays for much of the behavioral health services they provide. But they remained concerned about holes in the state’s new reimbursement formula. They fear these flaws will result in systemic funding shortages that could force certain providers to close their doors, leaving some of the state’s [link|most vulnerable residents] without access to consistent, quality care.

Debra Wentz, President and CEO of the New Jersey Association of Mental Health and Addiction Agencies, said member organizations of all sizes from around the state are “extremely concerned about not being able to serve thousands upon tens of thousands” of patients if the state doesn’t soon revise certain Medicaid reimbursement rates -- particularly for outpatient mental-health services. Many agencies need answers from the state to solidify their own budgets, plan programs, and determine staffing levels for the coming fiscal year, she said.

“The department has been very diligent in listening, but we are still waiting for a solution,” Wentz said Tuesday. “And that solution is going to take more funding, because the numbers are just not adding up.”

Christie announced plans to increase Medicaid reimbursements in his January state-of-the-state address as part of an effort to increase the availability of treatment options for the growing number of opiate addicts in New Jersey. The Department of Human Services, which oversees the program, worked with providers over the months that followed to develop proposed reimbursement rates that reflect the additional funding -- more than $100 million of which comes from federal sources.

The new rates are set to take effect in July -- but that’s only one part of the policy change. In January, mental-health agencies will start to move to fee-for-service billing, in which they are reimbursed a set amount for each treatment. Providers currently operate under a “deficit funding contract” in which the state covers any costs left over after the agency collects all the county payments, patient fees, or philanthropic dollars it can find. (Many substance-abuse programs already bill Medicaid through a fee-for-service structure, state officials said.)

Acting Human Services commissioner Elizabeth Connolly told the Senate Budget Committee Tuesday that the department has worked diligently and carefully to craft rates that reflect the real costs of wages and other operating expenses. Her staff held some 40 meetings with various stakeholder groups, posted webinars explaining the process online, and continues to work with community providers. Last week senior staff joined a meeting in Morris County organized by Sen. Anthony R. Bucco (R-Morris), a member of the budget committee, and his son, Assemblyman Anthony M. Bucco, (also R-Morris).

“We continue to work with the provider community. I understand, this is a shift for them -- and in preparation we are raising the reimbursement rates,” Connolly told the committee. “It’s hard to move the system,” she continued, “and we are one of the last states in the nation to go to fee-for-service.”

Connolly noted that DHS has readjusted several rates after agencies raised concerns about the new numbers, and the department continues to consider other changes. In addition, the state will provide each agency a cash payment equivalent to two months worth of their anticipated annual Medicaid payments to help ease the transition.

“Cash flow has been a concern and we will provide them a two-month bridge,” she testified.

Several members of the budget committee -- including Bucco and Sen. Teresa Ruiz (D-Essex) -- said agencies in their districts have raised concerns about the fee-for-service transition. But the senators welcomed the new funding and generally praised the department’s effort to work with community providers.

“We don’t often get good news like that,” Sen. Linda Greenstein (D-Mercer) said of the federal funding that largely enabled the increases.

But Wentz, who attended the hearing, said she wished it had provided more resolution for her members. She and others insisted they do not oppose the transition to the new model, but they want to ensure the new rates will cover their true costs. And while the bridge payments are appreciated, they aren’t going to provide real stability, she said.

“As we’re moving to a new system and we’re protecting vulnerable people -- something is better than nothing,” Wentz said. “But our feedback from our members is it is not enough to meet the needs of transition.”

The association and its members have also urged the DHS to maintain the deficit-contract model as a sort of backstop over the first 12 months of the new billing system. Robert Parker, the CEO of NewBridge, an agency that treats some 8,500 patients in Morris, Passaic, and Sussex counties, said this is the best way to protect front-line community providers during this transition, which shifts away from a model that’s been in use for nearly 30 years.

“The current argument about the rates that are ‘under review’ and may be changed, will not guarantee the safety net will be maintained -- there are too many unknowns and unclear operational policies,” Parker said. “We want the state to be successful with this implementation.”

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