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State Delays Move to New Medicaid Payment Model for Mental Health Services

Some providers still worried that fee schedule is too low to support behavioral health, substance-abuse programs for poorest residents

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Some organizations that provide behavioral-health treatment for New Jersey’s poorest residents welcomed the state’s decision to slow the transition to a new government payment model, giving them time to better protect these vulnerable patients as the decades-old system evolves.

But others said they remain concerned that the state’s proposed Medicaid reimbursement rates for certain mental health and addiction services are still too low to cover the actual cost of treatments. These providers are concerned that the new system could leave them with multi-million dollar budget shortages and force them to cut programs that will leave up to 20,000 patients statewide without consistent, quality care.

The Department of Human Services announced last week that, based on detailed concerns raised by several providers, the state would allow some providers to delay for six months the move to a Medicaid fee-for-service reimbursement system, in which the government repays organizations for the specific treatments provided. Most providers now have “deficit funding” contracts that require DHS to cover any budget gaps after they collect from all other sources, including county payments, foundation grants, and patient fees.

According to a letter DHS issued Thursday, mental health providers now have the option of delaying this transition until July 2017; originally they were scheduled to make the change in January. Many substance-abuse programs are already under the fee-for-service system and the rest are scheduled to switch this July. Organizations using the fee-for-service model will benefit from the new rates, which are significantly higher in some areas -- but not all.

“The State of New Jersey is listening and that’s the good news,” said Robert L. Parker, CEO of NewBridge, which treats some 8,500 patients in Morris, Passaic, and Sussex counties. “There’s been an outcry by providers, elected officials, freeholders, and others with concerns that the safety net might go away.”

“We think this is moving in a positive direction,” agreed Debra Wentz, President and CEO of the New Jersey Association of Mental Health and Addiction Agencies, which represents many of the providers. Wentz praised the state’s Division of Mental Health and Addiction Services for its willingness to work with members. “But, at the end of the day, no matter which system you use” – fee-for-service or the traditional contract – “the rates have to add up. You have to be able to pay your staff, your overhead.”

Gov. Chris Christie pledged to invest an additional $127 million -- $100 million of which is federal funding -- in the upcoming budget to boost Medicaid rates, which have traditionally failed to cover the full cost of most treatments. DHS, which has been working on the fee-for-service transition for several years, held dozens of meetings with providers to get input on the new rates and the payment-model change.

Providers have eagerly embraced the extra funds and details released earlier this year show that proposed payments for some services, like individual therapy, are at least twice the current reimbursement. But the rates for other services, like certain outpatient day programs, are cut almost in half.

That’s a major concern for Greg Speed, CEO of Cape Counseling, the only mental health provider in Cape May County that treats Medicaid patients. Speed said the current proposal would force him to cut outpatient staff by roughly 40 percent; this in turn would leave as many as 2,000 people without treatment -- and force others to wait months, rather than weeks, to get an appointment.

“We appreciate DMHAS listening to our concerns. The providers want this to work as much as the state,” Speed said. “We are committed to our communities and want to see our clients get the proper care.”

“The bottom line is the rates must increase in certain areas for it to be viable,” Wentz added. “More time is great, but if the funds aren’t there, we won’t have the services.”

DHS acting commissioner Elizabeth Connolly reiterated her pledge to give providers a two-month advance on their estimated payments to help smooth any transition during her testimony Monday to the Assembly Budget Committee. She made the same offer two weeks ago at an appearance before the Senate Budget Committee, during which several members raised questions about the transition. Sen. Anthony R. Bucco (R-Morris), a member of the budget committee, and his son, Assemblyman Anthony M. Bucco, (also R-Morris), convened a meeting in their district earlier this month for DHS officials to discuss the changes with local providers.

Connolly and her staff have stressed the work the department has done to ensure the agencies that provide care are part of this process. While most states have already made the transition from contract payments to fee-for-service, few have had such an inclusive process. “Since 2012, we’ve worked closely to coordinate the strategy and to minimize any fiscal uncertainties for you and to prevent any disruption in service to your consumers,” DHS assistant commissioner Valerie L. Mielke wrote in last week’s letter. “Throughout the process, the Division will continue to meet with and assist providers.” Wentz and others continued to praise the department’s process, but said work remains to be done. “There’s been some progress, but there’s quite a lot to be made still on the rates,” she said.

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