State shifts to fee for service reimbursements for mental health providers

Mental health providers say under the new payment system there's a looming crisis in care.

“It’s been a lifeline when I’ve been down and out. I call, they take me almost immediately. I would be worse if I didn’t come here,” said Deborah DeFabees.

DeFabees gets therapy at Vantage Health System and fears what may happen, now that as of Saturday the State Department of Human Services has switched from paying providers upfront under contracts to a fee-for-service. That is, paying after services have been delivered.

“I think it’s a crime,” she said. “I think that if they take the funding away from this place we’re going to have a lot more trouble. You’re going to see a lot of victims of suicide.”

In a letter to the Asbury Park Press in June, DHS’ acting commissioner wrote with the contract payment system, “consumers of state-funded and Medicaid mental health and addiction services have limited choices for service because contracts restrict the use of treatment appointments and beds.”

The acting DHS commissioner also wrote, “In a fee-for-service system, state and Medicaid dollars pay for actual services rendered, New Jerseyans have broader choice in where they go and what services they access, and providers can make many business model decisions without state oversight.”

“A contract is a predictable funding source with a set dollar amount, whereas fee-for-service it’s like the retail concept where whatever is bought you get the money for and that’s it,” said Debra Wentz, president and CEO of the New Jersey Association of Mental Health and Addiction Agencies.

Wentz says providers are struggling. The association says a $90 million safety net bill to help providers transition to the new model is not in the new budget.

“I would like to believe and hope that safety net wouldn’t be needed, but on the ground where providers are serving, they have already made significant cuts,” Wentz said.

“It’s devastating … I’ve had to reduce my budget by one million dollars which meant layoffs of psychiatrists, social workers, support staff and management staff which means less people will be served and we’re not quite sure how we’re going to make that work,” said Victoria Sidrow

Sidrow is the president and CEO of Vantage Health System, one of the oldest treatment centers in the state. She says Vantage is surviving financially because revenue from its residential buildings and group homes makes up for the cuts it had to make.

“Our concern, Michael, is that emergency rooms are going to get hit, maybe jails, maybe homelessness, crises might happen. In this day and age, when mental health is touched upon in every area of our lives and has become more important after 9/11 and all the tragedies we’ve had, really, to have this happen now is just unfathomable to us,” Sidrow said.

To adapt to the new reality, Sidrow says Vantage closes on Tuesdays and three months ago, it began turning away the insured because the reimbursement rate is less than Medicaid’s payout.

“Instead of coming here and paying $20 for co-pay and then we bill, they have to go pay $200 cash, which they’re telling us they can’t afford to do. So, the people who have insurance will actually be the worst off because we don’t know where to send them,” said Sidrow.

DHS says its more than doubled its Medicaid rates for treatment. But providers say the first hike in 20 years still falls short of the cost of care and the same for the increase in what the state pays.

Sidrow says the fee-for-service approach removes the safety net that accounts for the time and work put in to collaborating with courts, contacting doctors and schools, writing reports and much more.

“So for them to say they only want to pay us because they’ve been paying us for almost not working, that’s not true,” she said. “So, now, if somebody doesn’t come up I’m still paying staff and I don’t get paid.”

At a meeting two weeks ago with DHS, providers were told to negotiate higher rates for services from insurance companies.

“Some of us have tried to do that. There’s nothing in the insurance company for them to do that right now,” said Sidrow.

Sidrow is among the providers bracing for, but hoping to avert a crisis in care for a population that needs to avoid uncertainty.

“It’s a bit overwhelming, emotional. It’s tough because people are going to suffer,” Sidrow said.

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