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DHS Official Defends Medicaid Payment Reform; Mental Health Providers Worried

Meeting at Greystone Park Psychiatric Hospital is told transition to new system going well, but providers remain concerned

greystone psychiatric
Greystone Park Psychiatric Hospital

Just two weeks before dozens more community mental health providers are scheduled to shift to a controversial new Medicaid “fee-for-service” payment system that ties state payments to specific services, New Jersey officials stressed that the transition is on track and glitches discovered earlier will help smooth the process for those still to come.

But many of those provider organizations remain highly concerned that the reform will leave them without the critical funding to continue the same level of service. They are worried that a growing number of vulnerable individuals — particularly those with serious mental illness — will be shut out of community programs and forced to seek care in state psychiatric hospitals or acute care facilities.

greystone meeting
The board meeting yesterday at Greystone Psychiatric Park was addressed by Valerie Mielke of the Department of Human Services on the subject of Medicaid changes.

The issue was the focus of Thursday’s pointed but polite meeting of the board of Greystone Park Psychiatric Hospital, the state’s largest psychiatric hospital, which Valerie Mielke, assistant commissioner at the state Department of Human Services, attended to share an update on the Medicaid changes. Mielke’s visit was in response to a letter several weeks ago from Greystone’s board chairman, Eric John Marcy, in which he expressed his “grave reservations” over the pending reform.

"Community mental health providers will have to turn away people who either do not have insurance or who have insurance but cannot afford their co-pays or deductibles," Marcy wrote. "Unless the state adds safeguards to the new funding system, New Jersey will very likely find itself in a mental health crisis that will exact a heavy financial and human toll."

Most other states have already switched

New Jersey is shifting from a system of annual contracts, in which providers get a block of state and federal funding to pay for services not covered by other sources, to the fee-for-service model in which providers are reimbursed for each service separately; most other states have already made this change. Among other things, the reform is designed to maximize the amount of federal Medicaid dollars the state can access and provide more fluidity in the funding process.

Organizations that provide services for substance use disorders made the switch last summer and mental health providers were scheduled to do so in January. But after a growing chorus of concerns about the potential impact — which an industry group said could leave 20,000 people without services as some organizations lost millions from their budgets — the state allowed for a delay. Some 16 mental health providers went ahead in January, but another 70 chose to hold off until the July 1 deadline.

Mielke, who spoke for more than an hour before taking questions from board members and other providers who joined the meeting at the Morris Plains facility, stressed how the new payment rates that accompany the shift were developed carefully with help from a consultant and plenty of input from providers. Payments for all but one service have been increased, one by as much as 650 percent. To fund these hikes, Gov. Chris Christie added $127.5 million to the program last year and for fiscal year 2018, which starts in July, he has called for that same $127.5 million plus an additional $17 million, she said.

In general, feedback from the mental health providers who transitioned to the new system in January has been positive, Mielke continued, noting that those who made use of the DHS’s webinars and training services have been the most successful. “For our providers that are transitioning in July, they will benefit from the feedback that we have received” from others, she said. Additional changes are also possible “as the system matures in future months,” Mielke added.

‘More work for less money’

J. Michael Armstrong, the CEO of Community Hope, a Morris County residential program for those with mental illness, was among those with strong praise for the work of Mielke and her staff at the Division of Mental Health and Addiction Services. Community Hope made the shift to fee-for-service payments in January and, while the change hasn’t been monumental, he said providing these services has become increasingly challenging over the years.

“This is kind of just like old wine in new bottles,” Armstrong said. “But with fee-for-service we are going to have to do more work for less money,” he continued. “Valerie and her staff have been great. But I think this is an issue that goes above Valerie. We’ve got a system that’s been underfunded for decades… There’s just not enough money to provide the quality of care.”

The Mental Health Association of Essex also switched to the new payment system in January and executive director Robert Davison said the organization has already tracked a $60,000 loss in one outpatient program. MHA Essex is now serving 150 people through this program, most of them with a serious psychiatric diagnosis and more than a third who have been hospitalized.

“If we close down the service, there is no place for people to go. We are the safety net,” explained Davison, who recently agreed to a merger with the Mental Health Association of Morris in order to trim administrative costs and protect programs. “We can merge till the cows come home. At some point I have to pay a psychiatrist,” and other professionals, he said. “This is where the rubber meets the road,” Davison continued, “and the most impaired clients are going to end up back in the acute care system.”

Laurie Becker, who runs Morris County’s mental health program, said that in addition to the MHA Morris merger with MHA Essex, another agency has said it will downsize and community members are already reporting a struggle to obtain services. A representative of a Bergen County provider warned they could lose more than $6 million under the new system.

Safety-net fund

Mental health providers have pushed state officials to delay the transition and for greater oversight. Christie signed a bill last month that created a panel to monitor and report back on the process, and Sen. Robert Gordon (D-Bergen) and Sen. Anthony Bucco (R-Morris) have teamed up on a measure that would provide tens of millions in safety-net funding to help these organizations navigate the first year of the new system.

“If the division is right (with its predictions), not a penny will be drawn down” from the safety net funding proposed in the bill, noted Robert Parker, CEO of Morris County-based NewBridge Services, and a vocal critic of the transition as planned. Shifts to fee-for-service systems in other states have left thousands of residents without care, increased wait times and forced clinics to close, he said. “Yes we will work like dogs to collect every penny,” by carefully documenting care and pursuing other funding on the side, he said, “but the safety net (bill) would guarantee us success.”

The prospect of a shrinking network of community providers was a key concern for Marcy and other Greystone board members, who are already struggling to fill key staff positions to care for the patients they have. While a previous version of Greystone once cared for thousands of patients, the current campus has room for around 500 individuals.

Marcy said these worries are only magnified by massive potential changes now under discussion on the federal level. “The concern I have is not only with the immediacy of services that will be lost,” he said, “but are we going to kick the can down the road and then find out the supplemental (federal) funding won’t be available?”

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