Mental Health, Addiction Agencies Facing Problems With New Billing Reforms
Providers say the shift to fee-for-service reimbursement may hurt ability to serve the neediest patients
Some New Jersey behavioral health providers fear an overhaul to the billing system designed to increase historically low Medicaid reimbursements may hurt their ability to provide treatment for those not covered by the government-subsidized plan and too poor to pay for their own treatment.
The concern comes amid wider confusion for community health providers and patient advocates about the widespread changes to the state’s Medicaid payment system that took effect a month ago. State officials have said the reform will improve efficiency and flexibility.
But the reform also has another, less-publicized goal: to shift much of the financial burden to the federal government. That means a shift to fee-for-service charging, ending the sliding scale many providers used to help patients with private insurance that does not cover behavioral health, those who can’t afford the copays required by their plans, and those not covered by Medicaid or any other insurance.
Providers have welcomed the new investment Gov. Chris Christie made to increase Medicaid rates, which have long been a source of concern. But they are concerned that, despite the higher reimbursements, they will not have enough to cover their operational costs.
“Suddenly the only thing that counts is who has Medicaid,” said Joe Masciandaro, president and CEO of, which provides behavioral care at two-dozen sites in Northern New Jersey. “The reality is, the cost of care out-of-pocket for some families is just prohibitive.”
Christie has heralded an additional $127.8 million he included in this year’s budget to help fund higher payments to a network of more than 100 community providers who treat some of the state’s most vulnerable and emotionally unstable adults. But the extra dollars – which allowed the state to more than double some rates – came with a requirement that providers start to shift their billing practices from an annual contract system to one under which they are paid for each patient service.
The state Department of Human Services, which oversees the network of private mental health and substance disorder providers, has staggered the rollout of this transition over the next 18 months and has met repeatedly with behavioral health leaders to share updates and answer questions. While most states have already undergone similar transitions, the changes are the most significant reform to New Jersey’s system in nearly 30 years.But despite the rate increases, providers on the front lines are still struggling with the new numbers, which they said won’t cover their full cost, and are worried that the shift to the fee-for-service model will force some agencies to close. While they praise DHS for its efforts to communicate, they said it is still hard to obtain definitive information on the evolving process. An industry survey this spring suggested 20,000 patients could lose access to timely quality services; the network now cares for more than 300,000 state residents, budget figures show.
“I call it a work in progress,” said Debra Wentz, president and CEO of the, a statewide advocate for providers and patients. “There are still a lot of unanswered questions. And you can’t answer questions in an information void.”
DHS spokeswoman Nicole Brossoie said that, because the state extended the transition period six months longer than first planned, the rollout has been “quite seamless.” Most substance abuse providers had already switched to fee-for-service billing, and the remainder started the changeover in July; mental health providers have the choice of beginning the transition in January or next July.
“With the extended transition timeline and various trainings, webinars and provider preparation meetings, we expect that transition to go smoothly, as well,” Brossoie added. In both cases, she said it will take more than a month to assess the process and address detailed billing concerns. She declined to answer a question about the impact on patients who don’t qualify for Medicaid.
Several providers also noted that, while the governor has spotlighted the new funding for the rate increase, the total amount of money allocated to mental health and addiction services has declined over the decades. The flow of money to these community organizations has changed significantly as programs merge or evolve, but Christie made clear that all but $20 million of the funding increase will be paid by federal dollars.
To tap into these federal funds, the state has required providers to enroll as many eligible patients as possible in Medicaid or NJ FamilyCare, the state’s version of the subsidized insurance program for low-income residents. Services for patients covered by these programs are paid with a mix of state and federal dollars – anywhere from a 50-50 match to 90 percent federal, depending on their income level – while bills for poor individuals without any insurance are paid by the state alone.
Christie also added language to the budget that allows DHS to transfer money between various divisions in order to help ensure federal Medicaid dollars can be spent on community behavioral health services. According to an analysis by the non-partisan Office of Legislative Services, the increase in federal funds assumed in this year’s budget, which started in July, allowed the state to trim $10 million from what it spent on these community services last year.
Masciandaro, with CarePlus, called the state’s budgeting process for the program a “sleight of hand” designed to stretch dollars further than they can go. He also said officials are playing a “public relations game” to make it appear that they are helping providers and patients, who in fact are struggling more each year. Brossoie declined to respond to these allegations.
“They’ve made some minor modifications on some rates,” Masciandaro said. “But when you add it all up it doesn’t come to the totals we need to operate at covered levels.”
In his budget address, Christie called the new money a “historic investment” of state and federal funds and the first significant rate hike in over a decade. “By providing more competitive reimbursement rates for services and providers, we have a chance to dramatically increase access to treatment,” he said.
Thewere developed over many months with input from providers. Payments for psychiatric evaluations and individual therapy more than double, and providers can now be reimbursed for prescribing and managing anti-addiction medications, some of which had not been covered in the past.
But the reimbursement grew by only a few dollars for family therapy, and payments actually declined for some outpatient programs for patients transferring from state or county psychiatric facilities and others with serious mental disorders.
Payments for Community Support Services, a class of reimbursement designed to cover a range of programs that were not covered by Medicaid in the past, require a new billing code. But before the code can be used, the state must adopt regulations, and that process has been delayed for months. Brossoie said the regulations are now scheduled for release in mid-August.
“We didn’t anticipate that everything would go perfectly,” Wentz, with NJAMHAA said. “But we’ve been advocating for more than a year for these rates to be adequate.”
While mental health providers have yet to make the switch, Wentz said they are still struggling to figure out how the new rates will impact their bottom line as they anticipate the transition to fee-for-service billing. Providers are concerned that, even with some rate increases, their total revenue will decline, and they won’t be able to afford skilled staff or to hold appointments open for patients whose illness often makes then a no-show. Others fear they will have to turn away those who don’t qualify for Medicaid and can’t pay on their own.
“And that really goes against their policy – and everything we try to do,” she said. “If we don’t advocate for more state assistance, those people aren’t going to get care anymore.”
The Association has created a series of videos featuring providers and patients who have concerns about the transition, including one titled
Of some two-dozen mental health providers Wentz surveyed recently, none were ready to make the fee-for-service transition in January, instead choosing to delay until July. Some providers “need more time to analyze their business practice” she said; for others, it “feels like too much of a gamble.”
Robert Parker, CEO of, which treats thousands of patients in Northern New Jersey, agreed many questions remained about the transition. Parker praised the state’s decision to extend the rollout and their offer to provide some additional up-front funding at the start to ease the process.
He urged officials to further strengthen that safety net by allowing providers to collect their traditional contract payments for some programs -- particularly those with reimbursement rates that didn’t rise, like outpatient services -- during the first year of the transition, until July 2018. “Clearly the outpatient rates cannot sustain current levels of service” on their own, he said. “This approach would ensure services would continue to be provided without fail for up to two years.”
Parker also called on DHS to create an oversight committee involving state officials, family members, and provider representatives to help guide the transition.