New Jersey lawmakers took a first step toward allocating $90 million to mental-health and substance-abuse treatment providers who say a change in how they’re reimbursed could cripple their finances.

Most providers receive a monthly payment at a predetermined contract rate, regardless of the actual services provided to clients. At the end of the contract year, those payments are reconciled with actual costs, and any excess payments return to the state.

It’s now switching to a fee-for-service model under which providers submit claims after delivering services. One benefit is that the approaches maximizes federal matching funds through Medicaid. But providers say some reimbursement levels are too low and that they’ll be pressured to cut back on clients with spotty records of keeping appointments and support services that can’t be billed.

“The projected deficits are putting services for tens of thousands of consumers at risk, necessitating the safety net funding to fill those gaps,” said Mary Abrams, senior health policy analyst for the New Jersey Association for Mental Health and Addiction Agencies.

Patients who go off their medications and miss appointments will be dropped, said Robert Parker, chief executive officer of Pequannock-based NewBridge Services.

“In order for NewBridge to survive, we need every billable possible, at the expense of that extra care and love of our clients,” Parker said. “That is what’s going away. And people with persistent, chronic mental illness need that kind of attention. Reaching out, nurturing, engaging – all those pretty words, which will go away with fee-for-service because we’re not going to get paid.”

“NewBridge isn’t sure how much service we’re going to able to provide,” Parker said. “So the limited service, limited access to service, is going to crush our system of care and put the emphasis in emergency rooms. If NewBridge can’t treat them, where are they going to go?”

The Senate health committee voted Monday to advance legislation providing transition funding every three months to providers whose reimbursements under the new system fall short of what’s needed.

Such payments would stop after a year, said Sen. Robert Gordon, D-Bergen, the bill’s chief sponsor.

“We’re hearing from the provider organizations that are caring for people with some of the most severe mental health problems that they could go under,” Gordon said.

Three senators voted to abstain, including Sen. Richard Codey, D-Essex, who said he’s not optimistic Christie would sign the bill into law. Parker had conceded as much, saying that “to get it signed into law is going to be a struggle.”

“That’s not going to happen,” said Codey, who alluded to how Christie’s term ends in January. “But hopefully right around the corner, nine months from now, this will turn around.”

At an Assembly budget hearing Monday, acting Human Services Commissioner Elizabeth Connolly told lawmakers the change began last July and is going smoothly, despite some complaints.

“Many of you likely have heard the concerns of a few mental health providers reluctant to transition to this model,” Connelly said. “But the addiction providers and the 16 mental-health providers that moved to fee-for-service in January have adjusted well and are appreciating the budget flexibility and the timely Medicaid reimbursements that fee-for-service provides.”

Providers at the Senate hearing insisted they don’t oppose fee-for-service generally, only the details of how it’s being done and the level of some reimbursements, particularly for outpatient services.

“The way that it’s conceived and the way the rates were set did not account for the costs that are now covered by the state contract,” said Corey Storch, chief executive officer of Bridgeway Rehabilitation Services. “And for the most needy, something needs to be fixed.”

“If the state’s calculations are right with these Medicaid increases, we won’t use a dime of it. They’ll get it all back, every dollar,” said James Cooney, chief executive officer of Ocean Mental Health Services. “But if there are some gaps in the calculations, then we’ll be able to save some money and not go out of business and the state will not lose these services.”

Staff and psychiatric services would be cut without the temporary funding, said Joseph Masciandaro, president and chief executive officer of Care Plus NJ.

“It would be like if towns did not have fire departments but you created one every time there was a fire,” Masciandaro said. “That’s in essence what from a capacity standpoint it means. Instead of having available staffing, it would have to be made up in a moment.”

Cooney said it’s not about stalling until a new governor takes office to push for fee-for-service to be scrapped.

“We don’t need to do that. We just need to have one year in which we can really study to see the impact of this issue, before agencies go out of business,” he said.

New Jersey: Decoded cuts through the cruft and gets to what matters in New Jersey news and politics. Follow on Facebook and Twitter.

Michael Symons is State House bureau chief for New Jersey 101.5 and the editor of New Jersey: Decoded. Follow @NJDecoded on Twitter and Facebook. Contact him at

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