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Medicaid Reimbursement Rates Still in Flux for Behavioral Health Services

Some providers expect to see reimbursement cut for mental health and addiction services -- even with an infusion of new funding

New Jersey officials have continued to tweak proposed reimbursement rates for behavioral health services for the state’s most vulnerable residents as they fine-tune plans to overhaul aspects of the state’s Medicaid program.

But with just under four weeks to go before the end of the fiscal year, when some elements of the transition are set to begin, leaders of the organizations that provide these mental health and addiction treatments have reiterated concerns that the new system will leave them, and their patients, far short.

Gov. Chris Christie included an extra $127 million -- $107 from federal sources -- in the upcoming budget, scheduled to start in July, to boost historically low Medicaid rates in an effort to improve and expand services across the state. Representatives of the nonprofit provider community have welcomed the infusion of new funding and praised program leaders for their efforts to expand the system’s capacity.

But, after the detailed rates were announced this spring, providers became concerned that the total funding wouldn’t be enough to cover their full costs; they have also raised questions about the timeline for a transition from the current system of annual contracts to a fee-for-service model. An industry survey suggested the changes could interrupt or end critical services for some 20,000 low-income residents who truly lack other options.

Particularly worried are those who run certain “residential support service” programs that help patients with serious mental illness -- and often a history of regular stays at state psychiatric hospitals -- to remain emotionally stable and capable of living in community settings. Experts said this requires a range of assistance depending on the individual and can include help organizing medications and managing other diseases, like diabetes, coordinating medical appointments, or dealing with anxieties that make daily life a major challenge.

“These are people who have no friends, no families to depend on,” said Louis A. Schwarcz, the president and CEO of the Mental Health Association of Morris County, which provides an array of residential support programs. “If you take away these services, they’ve got nothing.”

In the past, not all these services have been reimbursable under Medicaid -- but they are covered under the current contract-billing system, providers said. In the new model, many of these services will be paid under a newly created code for “Community Support Services,” or CSS. Since this represents a new accounting mechanism for these programs, providers are struggling to figure out how the new numbers will add up.

“For my agency, clearly they are taking away more Medicaid dollars than I can bill under the new rates,” Schwarcz explained. “We’re going to lose money as a net, and my concern is that services will be lost or significantly reduced for people in the community who have significant psychiatric impairments and have no other resources.”

Late last month the state Department of Human Services, which oversees the federal Medicaid program, informed providers of the latest adjustment to the original rate structure: an increase from $31.42 per hour to $35.85 per hour for certain licensed social workers involved with some CSS work. In the May 24 letter, DOH explained the new calculation and credited “continued assistance from certain agencies” for encouraging them to reconsider the original rate.

Schwarcz said he appreciated the extra dollars, but “we’re still not in the ballpark.”

Some providers said the confusion has been exacerbated by a lack of detail about the new CSS codes and rates. After weeks of uncertainty among the nonprofits, the department confirmed last week that it anticipated regulations for the program would be finalized by late July.

Kimberly Higgs, executive director of the New Jersey Psychiatric Rehabilitation Association, which represents about 20 of the smallest provider organizations, largely focused on community support services, said once the regulations are finalized, organizations seeking to provide CSS services will also have to receive special licenses from human services. While they can sign a pledge to their abilities and offer treatments until the licensing process is complete, Higgs is concerned about compliance issues that could result down the road.

In New York State, Higgs noted, state officials gave providers two years to make the transition to FFS and kicked in funding to help pay for key infrastructure, like information technology, that are critical parts of modern healthcare but not reimbursable under Medicaid. New York also hired a consultant to work directly with nonprofits to help them navigate the changes.

“We know it needs to occur, we understand the reasons,” Higgs said. But in New Jersey, “the state has had a terrible time understanding what they are paying for and monetizing it.”

While some aspects of the FFS transition are set to begin this summer, additional changes are anticipated in January. In May the DOH granted mental health providers the option of delaying the switch an additional six months, until July 2017, and offered to provide some bridge funding to help ease the transition. Most of the new rates are scheduled to take effect this July; a spokesperson for the department said the CSS rate won’t take effect until after the regulations are finalized.

For Debra Wentz, president and CEO of the New Jersey Association of Mental Health and Addiction Agencies, which has been working closely with the department on the transition, the questions have continued to mount. “We don’t want to be contentious, but we still aren’t getting answers,” Wentz said. “It’s difficult to make decisions without full information. And with what’s been announced thus far, people are looking at some massive layoffs and downsizing once the move to FFS takes place.”

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