New Jersey State Policy Lab: Reimbursement for Behavioral Health Services in New Jersey

July 25, 2022

by Nduka Vernon M.D., M.P.H

In New Jersey, most behavioral health services for Medicaid patients are reimbursed by NJ FamilyCare–New Jersey’s Medicaid.  NJ FamilyCare/Medicaid reimbursement for a myriad of behavioral health services is enabled through the Medicaid State Plan and the NJ Comprehensive 1115 Medicaid waiver, enacted in 2012. This category of waivers allows states to provide patients with services provided by “non-traditional health providers or in non-traditional settings” with funding via Medicaid.1 The NJ waiver was created to better integrate services for patients, enable more patients to participate in home and community-based programs, reduce administrative burden, and increase savings.2 Covered services include inpatient psychiatric hospitalization, adult group homes, partial hospitalization, and case management, among others. After expiring on July 31, 2017, the New Jersey Medicaid waiver was renewed through June 2022.3 The Centers for Medicare and Medicaid Services (CMS) recently approved a temporary extension of the waiver through December 2022.3

As part of the agreement between the State of New Jersey and CMS, treatment for behavioral health (BH) conditions has been “carved-out,” or separated from payment for medical services.2 The State contracts directly with Behavioral Health Organizations (BHOs), or Managed Behavioral Health Organizations (MBHOs) to reimburse BH care provided in traditional healthcare settings (i.e., hospitals and clinics).3 In NJ, BHOs are also responsible for providing additional services, including 24/7 call centers, care coordination, care management, and utilization management.3 They are contracted to operate on a “non-risk basis” (i.e., they bear no financial risk if the cost of care of patients exceeds the money supplied by Medicaid) as Administrative Service Organizations.3

Alternatively, certain community- and home-based BH services are reimbursed on a unit-by-unit basis through  fee-for-service (FFS). In 2017, the Division of Mental Health and Addiction Services established the Mental Health Fee-For-Service program (MH FFS Program). However, the State-funded program is the payer of last resort; as such, if a service is Medicaid-eligible or reimbursable by other means, it will be reimbursed by those external sources of payment first. The NJ Mental Health Fee-For-Service Provider Manual, published in February 2022, details those offerings.4 Reimbursement generally depends on where the client is at the time of receiving services. For example, NJ Medicaid Rules prevent payment when patients are incarcerated or hospitalized; thus certain programs that are generally reimbursed under BHOs/MCOs may be paid via FFS during these episodes.4

An example of this lies in Integrated Case Management Services (ICMS), which is generally reimbursed via NJ FamilyCare. ICMS “include, but are not limited to assessment, service planning, service linkage, ongoing monitoring, ongoing clinical support and advocacy” with the goal of enabling patients’ independence and integrating them into society at large.4 However, if a patient receiving this service is incarcerated or hospitalized, that service is reimbursed via FFS.4 In addition, a program can request reimbursement for services rendered to an individual who was not enrolled in ICMS prior to admission or incarceration.4

Other services that are strictly reimbursed via FFS include: 1) Programs of Assertive Community Treatment (PACT), in which patients receive intensive treatment at home; 2) Supported Employment, which allows providers to identify vocational interests and create a job search plan for those with “severe mental illness;”  3) Supported Education, which assists patients in their educational pursuits; and 4) Community Support Services, which allow patients “to attain the skills necessary to achieve and maintain their valued life roles in employment, education, housing, and social environments.”4 All of New Jersey’s mental health FFS offerings are home- and community-based and address socioeconomic barriers that limit the advancement of patients with behavioral health issues.4

Fee-for-service reimbursement was implemented for several reasons. First, the State sought to  ensure equity in reimbursement for behavioral health services by eliminating variability due to contracts between providers and insurance companies.5 Second, the transition to FFS increased federal funding for BH services through NJ Medicaid.5 As part of this, reimbursement for psychiatric evaluation increased almost two-fold.5 However, there are some cons to the FFS system. Because it is state funded, it is limited to yearly appropriations. Thus, it cannot function as supplemental payments for providers (i.e., if a service can be covered by charity care, FFS cannot be utilized for reimbursement).6 In addition, FFS can underpay certain services, which limits access since providers cannot afford to offer those services to patients. While BHOs operate on a non-risk basis with limited concern for costs patients may be incurring, community-based services may be stymied because of financial restrictions. A significant portion of our patients’ health is impacted by their realities outside of our clinics and hospitals; we must do all we can to ensure that their social situations do not hinder their progress. We must ensure that home- and community-based BH service providers are financially stable in order to be able to continue providing services to those who need them the most.

Dr. Nduka Vernon (nv277@rutgers.edu) is a current Emergency Resident at Rutgers New Jersey Medical School.

Definitions

  • Administrative Service Organization–an organization that provides administrative support (i.e., tracking claims, resolving disputes) to payers
  • Adult Group Homes–assisted living for individuals with chronic disabilities in which various services can be provided to meet clients’ overall needs
  • Behavioral Health Organization–a health plan that specializes in the provision of behavioral health services.
  • Care Coordination–“deliberately organizing patient care activities and sharing information among all of the participants concerned with a patient’s care to achieve safer and more effective care”7
  • Case Management–a service that “links clients with appropriate providers and resources throughout the continuum of health and human services and care settings, while ensuring that the care provided is safe, effective, client-centered, timely, efficient, and equitable”.8
  • Charity Care–“The New Jersey Hospital Care Payment Assistance Program (Charity Care Assistance) is free or reduced charge care which is provided to patients who receive inpatient and outpatient services at acute care hospitals throughout the State of New Jersey.”9
  • Partial hospitalization–“Individualized, outcome-oriented psychiatric service which provides a comprehensive, structured, non-residential, interdisciplinary treatment and psychiatric rehabilitation to assist individuals who have serious mental illness in maximizing independence and community living skills”4
  • Utilization management­–monitoring and management of provided services to ensure they meet established guidelines for appropriate care
  • Administrative Service Organization–an organization that provides administrative support (i.e., tracking claims, resolving disputes) to payers
  • Adult Group Homes–assisted living for individuals with chronic disabilities in which various services can be provided to meet clients’ overall needs
  • Behavioral Health Organization–a health plan that specializes in the provision of behavioral health services.
  • Care Coordination–“deliberately organizing patient care activities and sharing information among all of the participants concerned with a patient’s care to achieve safer and more effective care”7
  • Case Management–a service that “links clients with appropriate providers and resources throughout the continuum of health and human services and care settings, while ensuring that the care provided is safe, effective, client-centered, timely, efficient, and equitable”.8
  • Charity Care–“The New Jersey Hospital Care Payment Assistance Program (Charity Care Assistance) is free or reduced charge care which is provided to patients who receive inpatient and outpatient services at acute care hospitals throughout the State of New Jersey.”9
  • Partial hospitalization–“Individualized, outcome-oriented psychiatric service which provides a comprehensive, structured, non-residential, interdisciplinary treatment and psychiatric rehabilitation to assist individuals who have serious mental illness in maximizing independence and community living skills”4
  • Utilization management­–monitoring and management of provided services to ensure they meet established guidelines for appropriate care

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