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Concerns Continue to Grow Over State’s Medicaid Payment Reform

Some healthcare providers fear the transition to a ‘fee-for-service’ system could lead to program closures and staff layoffs

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Behavioral healthcare providers, patients, and their advocates have stepped up their campaign to secure additional funding and flexibility for New Jersey’s Medicaid payment system, despite Gov. Chris Christie’s recent insistence that reforms of that system must continue on schedule.

Community organizations that provide mental health and substance abuse treatments to outpatients, many covered by Medicaid, are working to enlist the help of state representatives to protect these safety-net programs. Earlier this month, a handful of Democratic lawmakers introduced legislation that calls for greater oversight and analysis of the reform process.

Healthcare providers in northern New Jersey have also launched a petition urging state regulators to slow the pace of the next phase of the reform—which involves a transition to fee-for-service reimbursements for hundreds of provider organizations. And, across the state, these groups are working with patients and their families to increase awareness about the process, which they say could end services for tens of thousands of patients statewide.

Concerns have existed for months about the impact of the reform, in which the state is shifting from a system of annual contracts to one that reimburses organizations for each treatment they provide patients. These fears were exacerbated late last month, when Christie announced that the Department of Human Services, which oversees Medicaid and behavioral health services, would enforce the timeline now in effect.

While the vast majority of states shifted behavioral healthcare systems to fee-for-service payments years ago — and some are evolving even further, exploring managed care “bundled” payments designed to encourage more comprehensive and quality care — New Jersey is still in flux. Many substance abuse providers here have already made the switch to service-specific reimbursements from Medicaid, but others only began the transition in July. Mental health programs that have not yet made the switch were originally told to begin in January, but have since been granted an extension until July 2017. (The transition impacts behavioral healthcare providers; the state has already shifted most “physical” medical care to managed-care contracts for Medicaid clients.)

“We are one of just a few states left who continue to pay for these things in a blanket way rather than pay fee-for-service. We’re not going to do that any longer. The extensions that we’ve given are over,” the governor announced. His office, and DHS, declined additional comment yesterday.

Christie has championed his decision to include $127 million in new funding – more than $100 million from federal sources – in the current budget to boost Medicaid reimbursement rates; low payment levels are among the reasons there is a chronic lack of doctors who will accept patients with government insurance. But while providers welcomed the promise of additional dollars, they remain concerned that — even with this increase — other budget reductions will mean there are fewer total dollars available for these programs.

Debra Wentz, president and CEO of the New Jersey Association of Mental Health and Addiction Agencies, which represents more than 150 providers, said organizations aren’t looking for further delays or an excuse not to enact fee-for-service billing — just an assurance they will have the funding in place to continue to serve those in need. Other states, like Massachusetts, have stretched the process over several years and supported providers during the change with additional funds, she noted.

“We’re committed to making fee for service work,” she said, noting that members have been preparing for the change for five years, but only received critical budget details last spring. “It all translates into, ‘What funding is available to pay for the cost of services’.”

While the state has offered to give providers in transition a portion of payments up front, NJAMHAA members said programs would be better protected if the state phased in the new fee-for-service system while maintaining aspects of the old contract funding as a backup. This would also enable organizations to retain “dedicated and professional staff,” a critical resource, noted Greg Speed, CEO of Cape Counseling, based in Cape May Court House.

Speed said if the state is concerned about how providers might spend any extra dollars made available during the transition, they should establish an audit system. He also supports the idea of an independent oversight body to monitor the transition.

Legislation (A-4146/S-2521) introduced earlier this month by Assemblywoman Valerie Vainieri Huttle (D-Bergen) and Assemblyman Daniel Benson (D-Mercer), along with Sen. Joseph Vitale (D-Middlesex) and Sen. Robert Gordon (D-Bergen) calls for an independent body to monitor the transition and a hired consultant to track and analyze the process. The bill has yet to have a hearing in either house, but advocates hope it will see action soon.

Improved guidance and monitoring has long been a goal for NJAMHAA, Wentz said. “It’s important to have adequate oversight as the plan is transitioning,” she said, but it won’t solve the problems at hand without appropriate funding levels.

“The reality is, at a certain point, providers have to start developing plans for staff layoffs” – which has already begun for some organizations – “and program closures, and the big question is, when do they start telling consumers,” many of whom are already struggling to remain emotionally stable, Wentz said. “Soon this is going to happen,” she added, and with shortages anticipated statewide it’s not clear where patients will be able to go for treatment.

Providers also hope to build support among lawmakers through a series of legislative breakfasts and forums, including one organized by the Essex County Mental Health Coalition for early next month; that event is scheduled to include remarks from Assemblyman John McKeon (D-Essex), Assemblywoman Shavonda Sumter, (D-Passaic) and U.S. Congressman Donald Payne Jr. (D-Essex). Organization leaders will also host an advocacy workshop as part of a mental health summit planned for Thursday.

In mid-August, Joe Masciandaro, president and CEO of Care Plus NJ, a provider network based in Paramus, posted an online petition to draw attention to the issue. Masciandaro has said he plans to present it to legislative leaders at a breakfast event scheduled for mid-October.

The petition, which has received nearly half of the 1,000 signatures desired, calls on the state to delay the fee-for-service transition and ensure safety-net providers are fully funded. “Without proper action, the current decisions may leave your friends and family unable to afford the care they need or unable to access the doctors who can help,” it reads, encouraging signers who have experience with the mental health system to share it through social media.

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