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State Launches Review of Human Services Payment Reform

New Jersey has improved the way it reimburses community-based organizations that help people with behavioral-health and other issues. Advocates say there is still huge unmet need for services

Carole Johnson, new DHS commissioner
Carole Johnson, commissioner, Department of Human Services

The way community-based organizations are paid by the state to support hundreds of thousands of low-income individuals with behavioral-health and other needs is changing. And although New Jersey has made strides in how the organizations are reimbursed, advocates say still more money is required to deal with a huge unmet need for services — since many of those needing help for substance abuse don’t get the care they need.

In December, Gov. Phil Murphy appointed two independent oversight panels to advise Garden State officials on these payment evolutions; one group will focus on behavioral health providers, the other, on organizations that assist individuals with disabilities. Both boards have met at least once.

Since then, the Department of Human Services, which operates these programs, has taken steps to address the reimbursement rates paid to many of these providers, a longtime concern among advocates. The department has committed $8.5 million a year in state and federal funds to boost payments for certain psychiatric evaluations, based on feedback it received from providers, officials said, and is now seeking to hire an outside expert to review its overall rate structure.

“The transition of the payment model for mental health and substance use disorder services has involved learning while building, and we are continuing to monitor progress and make adjustments such as our recent announcement about psychiatric evaluation rates as the process evolves,” DHS Commissioner Carole Johnson said. “We will always put the needs of the individuals we serve first, and are committed to continuing to work with the provider community on a successful transition.”

These new initiatives were required as part of a law signed nearly two years ago by former Gov. Chris Christie to increase oversight of what had been a controversial transition in how the state pays local nonprofits which serve these vulnerable residents.

New method involves fee-for-service

Since then, the state has made significant strides and has managed to shift nearly all the providers from a system of annual contracts with set monthly payments, to a fee-for-service model in which providers get reimbursed after the fact for each service or treatment. The change is designed to improve accountability and increase the state’s share of federal Medicaid dollars.

“As New Jersey adjusts to this new payment system, it is critical that we ensure that this transition does not have an adverse effect on persons suffering from mental health conditions or those with disabilities,” said Assemblywoman Valerie Vainieri Huttle (D-Essex), lead sponsor of the bill Christie signed into law. “As our state undergoes these changes, our focus must be on protecting those who need services and ensuring that providers can continue to deliver the best care possible,” she added.

Debra Wentz, president and CEO of the New Jersey Association of Mental Health and Addiction Agencies, which has led the push for greater oversight, said these moves were good news for her members and those they serve. (The association represents dozens of providers who care for some 500,000 consumers annually.) She also praised the state for delaying the fee-for-service transition for certain types of providers, allowing more time to address providers’ concerns.

But Wentz and others said there is still necessity for more state funding for this work, given the unmet need. According to state data shared by NJAMHAA, more than 90,000 adults sought treatment for substance use disorders in 2016, but fewer than three in five got services. When it came to serious mental illness, state-funded programs covered care for just over a third of those seeking help that year.

“It will be critical that rates are increased significantly to cover the costs of outpatient and long term residential substance use disorder services in order to have open doors for those who need mental health and substance use disorder services and supports,” Wentz said. “ We look forward to making significant progress to encourage wellness and recovery and save lives.”

Deadline extended twice

According to the DHS, all 200 community-based organizations that provide substance abuse or mental health services have been shifted into the new fee-for-service system. So have many organizations that work with individuals who have developmental disabilities, as well as most of the groups that offer community support services (CSS), or assistance with nonmedical issues like case management, housing and job training.

However, the state has twice extended the deadline for CSS providers to make the switch. Most have done so, DHS said, but the 11 remaining under contract now have until July 2020 to adopt the fee-for-service model.

Wentz said she was heartened by the DHS’s decision to again delay this move for remaining CSS groups. While many providers have acknowledged that the fee-for-service transition — already completed in many states — needed to happen, it has been a difficult evolution for some. “To maintain and increase access, there must be adequate funding to attract and retain staff, especially psychiatrists and advanced practice nurses,” Wentz said.

A NJAMHAA member survey in February found 16 out of 19 responding organizations were operating at a deficit and had been forced to cut staff; statewide, that meant the loss of more than 100 positions, including counselors, case managers, nurses, psychiatrists, psychologists, residential aides and social workers. The survey showed that, together, the 19 organizations had lost $16 million in state funding through the changes, with six taking a hit of more than $1 million each.

State officials have taken steps to increase the funding available to pay providers for this work, in part because the change has allowed them to tap into additional federal Medicaid dollars. Christie included $137 million — with just $10 million from state coffers — for reimbursement rate increases in his last two budgets. That enabled DHS to hike, in some cases doubling, the rates on some 90 specific treatments.

Trying to improve relationship with providers

Murphy has continued this rate benefit in his own budget plans and his administration has taken other steps to improve its relationship with community-based providers. While Christie moved the division that oversees much of this work from the DHS to the state Department of Health to better integrate behavioral and medical services, Murphy returned most of these programs back under Human Services’ umbrella, a move endorsed by most advocates.

In addition, Johnson and her staff have tried to improve communication with behavioral health advocates and providers, resulting in regular meetings and conference calls with many community-based organizations. Murphy’s budget also included an extra $500,000 to help all providers with this transition, in addition to the additional funding for mental health screenings. In late March, the state issued a request for proposals for expert advice on the larger rate structure.

Plus, just before Christmas — on a day when he named more than 100 citizens to multiple boards — Murphy announced his picks for the two fee-for-service boards. Members represent a number of well-known providers and advocacy organizations, including NJAMHAA. (Panel member Mary Abrams is the association’s senior health policy analyst.)

Wentz said that, although nearly two years overdue, she is grateful that panel was created and that it included so many of the organization’s members. “This means that the input will reflect the reality of the cost of service delivery with the hope that the outcomes of the work of this group will result in increased rates and ensuing access to treatment and supports for those in need of treatment and other services,” she said.

The board members are:

Independent Mental Health and Addiction Fee-for-Service Transition Oversight

Marie D. Verna, MPAP (Titusville, Mercer); Barbara G. Johnston (Bradley Beach, Monmouth); The Honorable Phil Lubitz (Stockton, Hunterdon); Theresa L. Edelstein, MPH, LNHA (Livingston, Essex); Vera Sansone (Fair Haven, Monmouth); Mary R. Abrams (Yardville, Mercer); Kathleen F. Powers, CPA, CGMA, PSA (Jackson, Ocean); Tonia Ahern (Petersburg, Ocean); Susan Loughery, MBA (Wall, Monmouth); James M. Cooney, LCSW (Toms River, Ocean); Robert J. Budsock (Cranford, Union); Kendria McWilliams (Spring City, PA)

Independent Developmental Disability Fee-for-Service Transition Oversight

Eric M. Eberman, M.S., Ed.D. (Tabernacle, Burlington); Daniel J. Keating, Ph.D. (Downington, PA); Laura A. Williams (Point Pleasant, Ocean); Deborah M. Spitalnik, Ph.D. (Stockton, Hunterdon); Valerie Sellers (Bell Mead, Somerset); Mercedes Witowsky (Boonton, Morris); Kathleen F. Powers, CPA, CGMA, PSA (Jackson, Ocean); Peter A. Phillips, CPA (Far Hills, Somerset); Audrey Winkler (South Orange, Essex); Erin R. White, Ph.D., BCBA (Paramus, Bergen)

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