BY: James Cooney, LSCW, CEO OceanMHS

After years of delays, the Department of Human Services (DHS) has begun the transition of its long standing contract based business model to a “Fee for Service” model (FFS). The DHS contracts with various for profit and not for profit businesses to provide services.  DHS has two types of contracts and contracting   processes: Direct State Service Contracts those for services utilized by the State of New  Jersey and DHS Third Party Contracts those for services of benefit to our clients in the community.  DHS  Third Party Contracts are those that service our clients in the community and operate under a different authority. DHS has its own contracting policies and procedures, under the DHS Contracting Manuals, that must be complied with in order to do business with us. Examples of third party contracts include group home care, respite services, day care services, mental health services, etc.

Simultaneously, they have issued new Medicaid Rates and special State Rates for non Medicaid eligible individuals without Insurance. Together these fees are designed to replace the provider agencies contract dollars. By the end of fiscal year 2017, all contract dollars for the FFS programs will end.

Reactions to the new FFS rates have been mixed.

While some new Medicaid Rates will be satisfactory, many providers around the state are  projecting significant  deficits  that will put critical programs  such as Supportive Housing, PACT Teams and Outpatient Services, including psychiatric services, at risk of closure or significant downsizing. Statewide, more than 20,000 individuals with serious mental illness could lose  services and will have no other place to go. Mental health providers across the state are poised to lose between $900,000 and $6million if the proposed rates remain unchanged. Waits for service will go from weeks to months.

The projected impact on services at OceanMHS is not very different from that of services and agencies across the state. The new rate system will create deficits in our supportive housing programs, one of the 24 hour supervised group homes and our two PACT Teams. Our Outpatient programs will be severely impacted. The inadequate rates proposed for medication Monitoring and Psychiatric Services are the most difficult. Currently, Ocean MHS has about 2,700 active clients who depend on our Medication Monitoring Program for quarterly medication services.

Even more troubling, the State is proposing that for the non-Medicaid eligible individuals without insurance, for whom the state will pay the special state rate, agencies will be paid only 90% of the new Medicaid rate. And that reduced fee will be reduced even further by a state imposed sliding fee scale which these clients must pay out of pocket. At this time, no details of this state imposed fee scale has been made available.

This sliding fee scale is of particular interest to me. Already slated to be paid less for the same services, a state imposed sliding fee scale will be costly to implement and maintain for each State Rate Client. Implementing the scale will create multiple headaches for provides and yield more bad debt than revenue. In a funding environment that is driving non-profit, mission driven agencies to focus on FFS revenue generation, this group ma be forces out of services. For more than forty years, I have been rightfully proud to be able to say that in our Community based Mental Health System, “No one is ever turned away due to inability to pay”. I am no sure that our CMHC’s will be able to say that in the future.

After listening to the volume of complaints from the provider community, the State has agreed to re-examine Outpatient Mental Health Services, Community Support Services and other rates, and offered providers the option of continuing contract funding for an additional six months. However, if DHS proceeds with the transition to FFS without ensuring providers  remain fiscally viable, many community-based mental health services could still be lost.  Adequate  reimbursement rates, independent oversight and transparency are needed. Otherwise, individuals could lose services, not receive quality care and ultimately require more costly healthcare services.

Infographic courtesy of NJAMHAA