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Another Delay in Medicaid Payment Reform for Mental Health Providers

Decision works in favor of providers of nonmedical services, like group housing, job training, and help with public transportation

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

New Jersey will provide a stable level of state Medicaid funding for community-based supportive housing services over the next year, a decision that delays the implementation of a payment reform process advocates have warned would reduce treatment options for vulnerable mentally ill residents.

The State Department of Health confirmed Friday that it would delay changes in how Medicaid reimburses providers for the nonmedical services they offer to help some 5,500 individuals remain stable in individual or group housing, assistance that includes case management, job training, and help navigating public transportation and social services.

The change means the state will continue to pay roughly 40 providers for these services on an annual contract basis through June 2019; originally, it had planned to transition to a fee-for-service reimbursement system, in which each treatment is paid individually, starting July 2018. Providers have protested these planned changes, which they said would force them to operate at a deficit or cut programs.

“It’s definitely good news,” said Debra Wentz, president and CEO of the New Jersey Association of Mental Health and Addiction Agencies, which represents many of these providers and has raised concerns about the fee-for-service transition in recent years. Earlier last week the state also announced it would implement an independent oversight system to monitor other aspects of this fee-for-service reform, a monitor that had failed to materialize under the previous administration.

Decision only applies to Medicaid

The state’s decision only relates to supportive housing services reimbursed through Medicaid; dozens of other behavioral health services, including counseling, psychiatric visits, and various types of substance-abuse care, have already been shifted to the fee-for-service reimbursement system over the past year. Organizations that serve developmentally disabled residents are also undergoing this transition, which most states completed years ago.

But mental health providers warned that supportive-housing services, which are designed to cover nonclinical care and things like travel time, are particularly hard to bill under the new model. Those concerns led the DOH to decide to extend the monthly contract system for another 13 months, allowing providers a much more stable revenue stream with which to plan this aspect of programming.

“We have been working closely with providers and we heard their concerns. We wanted to give providers more time to adapt to the new payment model,” said DOH commissioner Dr. Shereef Elnahal.

“Improving access and quality in mental healthcare is a top priority of the Murphy administration, and community supports are an integral element to treatment and sustained recovery,” said Elnahal, who has prioritized efforts to improve behavioral care and better integrate it with primary-care services.

The agenda outlined by Elnahal and Democratic Gov. Phil Murphy has also diverged from that of the administration of former Gov. Chris Christie, a Republican, in several ways. The Democratic team has called for expanding the state’s medical marijuana program and is reconsidering a controversial shift of the Division of Mental Health and Addiction Services to the DOH from the Department of Human Services. The administration is also reviewing investments Christie made in various programs to combat the state’s opioid epidemic.

Medicaid payment reform

Murphy’s team has also made slight tweaks to the unpopular Medicaid payment-reform process it inherited from the Christie administration. The former governor claimed those changes would create a more accountable system and allow the state to recoup more federal funding, something Murphy’s team has yet brought to full fruition.

And last week, in response to questions from NJ Spotlight, the DOH said it would be working with Murphy’s office to appoint a panel of independent experts to monitor the fee-for-service transition. The panel is required as part of a law Christie signed in May 2017, but failed to enact.

The fee-for-service transition impacts dozens of community mental health providers who provide outpatient, full-day, and residential programs for tens of thousands of the state’s most vulnerable mentally ill individuals — some of whom cycle in and out of state and county psychiatric hospitals. Member surveys by NJAMHAA suggest that the changes could leave many of these agencies facing multimillion-dollar deficits and could eliminate care for as many as 20,000 low-income New Jerseyans.

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