Lilo H. Stainton, NJ Spotlight

Problems with fee-for-service model could be further exacerbated if President-elect Trump ditches Affordable Care Act

Proceeding with state plans to reform the payment system for community mental health providers will leave tens of thousands of vulnerable patients stranded without proper care, advocates warned, while also ripping larger holes in New Jersey’s longstanding safety net for those with serious psychiatric issues. 

Nonprofit organizations that operate housing, day programs, and healthcare services for clients with mental illness warned that under the new reimbursement system they will be forced to close down parts of their operations and lay off hundreds of workers, shunting thousands of desperate patients to overcrowded hospital emergency rooms. While Gov. Chris Christie directed $127 million, primarily federal funding, in the current budget to help fund the transition, providers insist that the new billing model will still leave them short. 

And the impact of the payment reform is likely to be far worse than they originally predicted, advocates told the Assembly Human Services committee on Monday, especially given President-elect Donald Trump’s plans to dismantle the federal law that would cover much of these patient costs. 

The committee voted to approve a proposal (A-4146) for the state to closely monitor the reform and report back on the process, sponsored by Assemblywoman Valerie Vainieri Huttle (D-Bergen), the committee chair, and several of her Democratic colleagues. A Senate version was approved in September.

Advocates supported the measure but worried it wouldn’t be enough to protect patients from the impact of the fee-for-service transition, in which the state is switching from a system that pays providers through annual contracts to one that reimburses them set fees for specific treatments. “In my opinion, the train has already left the station,” said Joe Masciandaro, president and CEO of CarePlus, in Bergen County.

Masciandaro warned that the payment reform “is the biggest catastrophe that community mental health has faced in 40 years or longer” and predicted that the “vast majority” of CarePlus’s 20,000 annual patients will be impacted by the change. 

Vainieri Huttle urged the providers to “hang in there” while lawmakers review the process and explore other opportunities to help. “There’s no debating the issue that this will cause a very negative impact on your clients,” she said. “This bill can help monitor it, but it won’t bring back the funding that you need.”

State officials have sought to temper the impact of change by increasing rates for certain treatments, providing some funding in advance, and allowing organizations to delay their transition to the new system. But they insist that New Jersey must press forward with the move to access additional federal dollars and keep pace with policy changes in other states. Substance-abuse treatment providers have largely made the switch; those that offer mental health services are now scheduled to transition in July. 

But advocates for the mentally ill and their providers said continuing with the transition would be a serious mistake — both for those that depend on existing programs and for others that may need community mental health services in the future. While these organizations have long survived on a shoe-string budget, the fee-for-service reform — estimated to cost some providers up to $6 million a year -- could be the final blow for some groups, they warned.

Jim Cooney, chief executive officer with Ocean Mental Health Services, said that under the new rate structure his organization stands to lose $75 each time it counsels one of nearly 3,000 clients about their medication. “I can’t do that — I’ll go out of business,” he said, warning that efforts to square their budget will leave hundreds of clients without care. 

“There are tens of thousands of people like this around the state of New Jersey, and all are at risk for losing their medication management and losing the stability they’ve gained over the years,” Cooney continued. “It’s going to cost the state millions and millions of more dollars in ancillary services.” 

Community based mental health programs have played a growing role in recent decades, as public agencies have increasingly tried to integrate those with mental illness into larger society, instead of committing them to inpatient psychiatric hospitals as was common in the past. But funding for these safety-net providers has always been hard to come by, and the transition to a fee-for-service model could spell the end for some organizations, advocates warned.

“People who have lived in the hospital for 15 or 20 years — we are the ones keeping them safe and helping them grow,” explained Robert L. Parker, CEO of NewBridge, which treats some 8,500 patients in Morris, Passaic, and Sussex counties. And without funds to cover the salaries of those who work directly with clients, reminding them of their appointments or arranging transportation, the system will falter, he said. 

“The social supports go out of the equation,” explained Masciandaro. 

Debra Wentz, CEO of the New Jersey Association of Mental Health and Addiction Agencies, testified that while most states have already moved to a fee-for-service system, the model has not always worked well. “We don’t hear success stories,” she said, describing difficulties encountered in Michigan, Massachusetts, and New York, even though some of these states took longer to implement the changes. “We hear about people getting less service.”

Wentz also said it was “rather irresponsible” to proceed with the transition now that Trump will take office and has pledged to repeal the Affordable Care Act, which expanded the Medicaid coverage that New Jersey is depending on to fund the reimbursements. A spokesperson for the Department of Human Services, which oversees the system, declined to speculate on potential impact of any federal policy changes.