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Thorny Reform of Medicaid Payments Gets State Oversight, One Year Later

Twelve months after a law was signed requiring supervision of controversial changes in payments to community mental health providers, it’s about to happen

NJ Jersey Health Commissioner Shereef Elnahal
Credit: NJTV
New Jersey Health Commissioner Dr. Shereef Elnahal

State officials will begin to assemble a panel of independent advisers to oversee the controversial reform of Medicaid payments to community mental health providers, almost exactly a year since a law was signed requiring the creation of such a board.

Former Gov. Chris Christie approved a measure in May 2017 that called on the state to create a formal oversight system for the ongoing transition to a fee-for-service reimbursement system of community organizations that provide services for individuals with mental illness, addiction disorders, or developmental disabilities. Advocates said the panel was slated to hold its first meeting last July and issue its first report in January 2018, some four months ago.

The law also called for an outside consultant to review the controversial payment shift, which has been rolled out over the past few years and which has left a number of mental health providers without enough funds to cover their current workload, according to advocates. This has forced some groups to reduce services, cut staff or merge with neighboring organizations, all at a time of increased demand for community-based services.

“Last year we predicted these outcomes; now we have seen them happen and the trend is continuing,” noted Debra Wentz, president and CEO of the New Jersey Association of Mental Health and Addiction Agencies, which represents community-based organizations, including several dozen mental health providers under contracts with the state.

Changes to way payments are made

In the past, these groups were paid a set fee on an annual basis; in the fee-for-service system, which already has been implemented in most other states, they are reimbursed for specific treatments, per patient, after the fact. The change was designed in part to increase federal Medicaid reimbursements, something officials from the current New Jersey administration conceded has yet to come to full fruition.

Officials at the state Department of Health — which took charge of the Division of Mental Health and Addiction Services last year following its shift from the Division of Human Services at Christie’s direction — acknowledged the challenges these provider groups face in this process and said they have been meeting weekly with these organizations and monthly with other mental health leaders.

“We’re committed and remain committed to working with these community providers,” DOH commissioner Dr. Shereef Elnahal told Assemblyman Dan Benson (D-Mercer), who asked about the status of the transition — and the oversight panel — during an Assembly Budget Committee hearing on the department’s proposed budget late last month. “We want to continue to meet with providers and make sure we are listening to everyone involved and can support them in this process,” Elnahal added.

Yesterday, DOH officials said they also plan to establish the outside oversight panel outlined in the 2017 law. “The Department is working with the Governor’s Office to identify potential candidates for appointment to the Independent Mental Health and Addiction Fee for Service Transition Oversight Board,” DOH communications director Donna Leusner said, in response to questions from NJ Spotlight.

Long overdue

That was good news to Wentz, who said the panel is long overdue. She and some providers agreed that, while they appreciate the DOH’s efforts, an oversight process is still important; so is the consultant’s review of the transition and the underlying rate structure, Wentz added. Elnahal said the proposed budget includes $136 million to help boost these payments, but advocates insist more money is needed to ease this transition and help them maintain services for tens of thousands of the state’s most vulnerable patients.

“NJAMHAA is once again asking for safety net funding to keep providers fiscally viable and for implementation of the oversight law,” Wentz said, urging the DOH to consider extending the current contract status for payments on certain community support services, which are the last group of treatment codes scheduled to be shifted to the new system, starting in July.

“One of the Administration’s top priorities is to expand access to mental health care,” she noted, recalling pledges from Elnahal and Gov. Phil Murphy, a Democrat who took over from Christie in January.

Assemblywoman Valerie Vainieri Huttle (D-Bergen)
Assemblywoman Valerie Vainieri Huttle (D-Bergen)

Assemblywoman Valerie Vainieri Huttle (D-Bergen), a longtime advocate for mental health services who led the effort to pass the oversight law, said she would be following up with the Murphy administration to make sure the measure is fully implemented. She also raised questions about Christie’s plan to move DMHAS into the health department and has introduced legislation to shift it back to the DHS, if it makes sense.

Keeping an eye

“There should be some sort of (entity) looking at the fee-for-service concerns,” Vainieri Huttle said, noting this panel could also “see if the (DMHAS) transfer is working.”

DMHAS, which oversees the state’s psychiatric hospitals and contracts with scores of community-based mental health and addiction providers, involves some 4,300 employees and a budget of more than $1 billion. Elnahal told the Assembly Budget Committee that he is a strong supporter of integrated care, having focused on providing comprehensive treatment during his time with the Department of Veteran’s Affairs. But, he added, the administration is “considering all options on the table for optimizing these services.”

Joe Masciandaro, president and CEO of CarePlus, a community-based behavioral healthcare network in north Jersey, said the DMHAS shift is a “game changer, and hopefully for the better.” He said the oversight panel might not be necessary anymore, given the new leadership at both DOH and DHS, and their commitment to working with providers.

Masciandaro, however, questioned the underlying payment reform, suggesting that the “transition has been a rocky road” and that inadequate reimbursement rates means programs will continue to shut down.

According to NJAMHAA, the changes could leave as many as 20,000 residents without service. A survey the organization conducted in December found that 16 out of 17 member organizations are facing deficits of more than $8 million this year. “Several programs have cut staff, including psychiatric time, and all have otherwise adjusted their business models, yet they are still facing deficits,” Wentz noted.

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