Governor Signs Law Calling for Oversight of Mental Health Payment Reform

Advocates call it a ‘positive step, yet only half of the solution’

Gov. Chris Christie
New Jersey will appoint independent monitors to oversee its payment-reform process for community mental health providers, an ongoing transformation that has prompted concerns about the impact it could have on local programs and their patients.

Gov. Chris Christie signed legislation on Thursday that would establish an advisory board to monitor the fee-for-service transition, determine if the state’s payment rates are appropriate, and make recommendations for future reforms. The law also requires the state Department of Human Services, which is in charge of the process, to hire an independent contractor to evaluate the shift and report back to the Legislature on a regular basis.

Advocates eagerly welcomed the news, but noted that oversight alone won’t protect some providers or their vulnerable patients, many of whom suffer significant mental illnesses and cycle between state hospitals, correctional facilities, and local shelters. They have predicted the reform will leave some organizations with multimillion-dollar budget shortfalls and could imperil treatment for 20,000 people.

‘Half of the solution’

“This is a very positive step, yet only half of the solution,” said Debra Wentz, president and CEO of the New Jersey Association of Mental Health and Addiction Agencies, which has led opposition to the reform.

While he approved the measure, Christie used the opportunity to remind its Democratic sponsors that the reform has allowed New Jersey to tap into hundreds of millions of dollars in additional federal funding. He also stressed that the state is among the last in the nation to make the change from a system of annual contracts with community providers to one in which they are reimbursed by a set amount for specific services.

“Additionally, while I am signing this bill, I am not doing so in a vacuum,” Christie wrote in a message that accompanied his signature. In an effort to avoid duplication, he directed the DHS to revisit the information compiled by consultants hired six years ago to help craft a plan for the fee-for-service transition before it hired new consultants to review the process underway. “By doing so, I am seeking to ensure that this bill is being used appropriately to add value to the transition that has already benefited so many in this state,” he added.

The reform process

New Jersey has been in the process of reforming the way it pays for community behavioral health and support services for disabled residents for several years. Most addiction treatment providers have already made the switch and 16 mental health organizations changed their systems in January; some 70 more are slated to shift to fee-for-service payments in July. Providers of support services for disabled individuals are also going through a similar transition, but on a slower timeline, lawmakers said.

To ease the transition, Christie directed additional funding — $127 million in federal funding, mostly, in the past two budgets — toward the transition. This funding allowed officials at the DHS to raise rates for 90 different Medicaid treatments, more than doubling a number of payments that providers have long complained are too low.

The law, based on legislation (A-4146) sponsored by Assemblywoman Valerie Vainieri Huttle, (D-Bergen), who chairs the human services committee, would establish two independent oversight boards — one for mental health providers and another for disability-related services. The boards, made up of members appointed by the governor, would oversee the transition, evaluate the fee schedule, and provide input for future conversions. Their focus would be to ensure access, continuity, and quality of care.

In addition, the law calls for an independent evaluation of both the mental health transition and the one involving services for disabled residents that focuses on the impact of the new rates on provider sustainability and patient care. The contractor hired for this work is required to issue regular reports to lawmakers, the governor, the DHS, and the oversight boards.

Joining forces

Two 60-year-old organizations in north Jersey have already decided to combine forces out of concern about a potential loss in revenue. The Mental Health Association of Morris County decided that, under the new rates, it would be unable to sustain its work, so its leadership formed a partnership with the Mental Health Association of Essex County to reduce administrative costs and maintain patient coverage.

“Our primary concern is to ensure that the transition to a fee-for-service payment system doesn’t end up having a negative impact on the delivery of treatment by forcing service providers out of business and effectively limiting treatment options,” Vainieri Huttle said. “We need to ensure that the administration is not recklessly toying with a system that could end up cutting off treatment for many people who suffer from severe mental illnesses or have developmental disabilities — those who need it most, but can least afford it.”

Wentz, with NJAMHAA, called the law a victory for “its members and other providers, as well as the state, as it establishes a collaborative system of checks and balances to ensure adequacy of FFS reimbursement rates, access to services, continuity of care and quality of care. It will also serve to identify gaps in these areas and an avenue for recommendations.”

But additional protection is required, Wentz said. The organization supports another bill (S-3121), introduced late last month by Sen. Robert Gordon (D-Bergen), that would provide $90 million for the state to reimburse providers who fell short under the new system over the first year. Vainieri Huttle has sponsored an Assembly version of the measure.

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