ASSEMBLY, No. 4146

STATE OF NEW JERSEY

217th LEGISLATURE

INTRODUCED SEPTEMBER 19, 2016

 


 

Sponsored by:

Assemblywoman† VALERIE VAINIERI HUTTLE

District 37 (Bergen)

Assemblyman† DANIEL R. BENSON

District 14 (Mercer and Middlesex)

Assemblywoman† PAMELA R. LAMPITT

District 6 (Burlington and Camden)

Assemblyman† GORDON M. JOHNSON

District 37 (Bergen)

Assemblywoman† ANGELA V. MCKNIGHT

District 31 (Hudson)

 

Co-Sponsored by:

Assemblywoman Jones

 

 

 

 

SYNOPSIS

†††† Provides for monitoring and evaluation of transition of mental health and substance use disorder treatment service system to fee-for-service reimbursement model.

 

CURRENT VERSION OF TEXT

†††† As introduced.

††


An Act concerning the transition by community-based mental health and substance use disorder treatment service providers to a fee-for-service reimbursement model and making an appropriation.

 

†††† Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

†††† 1.††† a.† The Legislature finds the following:

†††† (1)†† The Division of Mental Health and Addiction Services (DMHAS) in the Department of Human Services has historically used a cost reimbursement system to provide most State-level funding for community-based mental health and substance use disorder treatment services in New Jersey. †The DMHAS has begun to transition most community-based mental health and substance use disorder treatment services from a cost reimbursement system to a fee-for-service reimbursement system, beginning in July 2016, and plans to require all providers to complete the transition by July 2017.†

†††† (2)†† Under the cost reimbursement system, community-based mental health and substance use disorder treatment providers receive a monthly payment at a predetermined contracted rate, regardless of the actual services provided to consumers, and a close-out process is used at the end of the year to reconcile each providerís actual costs with the payments made. †Under the new fee-for-service reimbursement model, monthly reimbursement will not be predetermined, and each provider will instead be required to submit a reimbursement claim for each specific unit of service that it has actually delivered to a consumer.

†††† (3)†† The DMHAS has proposed new reimbursement rate schedules that would take effect as part of the transition to a fee-for-service model.† The new rates cannot easily be compared to the cost reimbursement system, since the actual payments that providers will receive under the new fee-for-service model will be based on submitted claims, rather than on predetermined monthly amounts.† While the Executive Branch estimates that the new rates will result in an overall increase in funding to providers, those providers that have high overhead costs and low service volume may nonetheless find that the new rates are insufficient to cover their expenses.†

†††† (4)†† Because the new fee-for-service reimbursement system will allow reimbursement only for those services that have actually been provided and claimed, and will not allow community-based providers to be paid for vacant treatment slots or for lower service levels, the conversion to a fee-for-service reimbursement system may negatively affect provider cash flow during the transition and make revenue unpredictable, thereby reducing the providersí ability to provide adequate services to persons in need.† The conversion may simultaneously force providers to increase their marketing expenditures in an attempt to maximize billable services, while forcing them to maintain a greater reserve of cash on hand in order to ensure their ability to absorb costs when vacancies inevitably arise.

†††† (5)†† Providers engaged in the transition to a fee-for-service reimbursement model will also be required to be approved by Medicaid, which will necessitate their compliance with extensive administrative regulations, and their use and administration of new billing systems and software, both of which may require additional and unanticipated financial expenditures.

†††† b.††† The Legislature therefore declares that it is both reasonable and necessary, and in the public interest, for the State to establish procedures for monitoring the transition by community-based mental health and substance use disorder treatment providers to a fee-for-service reimbursement system, in order to ensure that reimbursement rates established under the new fee-for-service system are adequate, that patient access to care is maintained, and that continuity of care and quality or care are not harmed as a result of the transition.

 

†††† 2.††† a.† There is hereby established an advisory board to be known as the Independent Fee-for-Service Transition Oversight Board.† The purpose of the board shall be to monitor and oversee the transition by community-based mental health and substance use disorder treatment providers to a fee-for-service reimbursement system; determine the adequacy of fee-for-service reimbursement rates; and provide recommendations to better facilitate the transition.†

†††† b.††† The board shall be comprised of 11 members, appointed by the Governor, as follows:

†††† (1)†† two representatives of provider entities that receive State funds for mental health services;

†††† (2)†† two representatives of provider entities that receive State funds for substance use disorder treatment services;

†††† (3)†† a certified public accountant, upon the recommendation of the New Jersey Society of Certified Public Accountants (NJCPA);

†††† (4)†† a current consumer of State-funded mental health services, or the parent or guardian of such consumer;

†††† (5)†† a current consumer of State-funded substance use disorder treatment services, or the parent or guardian of such consumer;

†††† (6)†† one person upon the recommendation of the New Jersey chapter of the National Association on Mental Illness (NAMI);

†††† (7)†† one person upon the recommendation of the New Jersey Association of Mental Health and Addiction Agencies (NJAMHAA);

†††† (8)†† one person upon the recommendation of the New Jersey Psychiatric Rehabilitation Association; and

†††† (9)†† one person upon the recommendation of the New Jersey Hospital Association.

†††† c.†††† The members of the board shall be appointed within 45 days after the effective date of this act, and the board shall hold its initial organizational meeting as soon as practicable, but no later than 30 days, after the appointment of its members.† The board shall select a chairperson from among its members, and shall meet and hold hearings at such places and times as the chairperson may designate.† The chairperson may appoint a secretary who need not be a board member.

†††† d.††† The members of the board shall serve without compensation, but may be reimbursed for travel and other necessary expenses incurred in the performance of their duties, within the limits of funds appropriated or otherwise made available to the board for its purposes.

†††† e.†††† The Department of Human Services shall provide professional and clerical staff to the board as may be necessary for the boardís purposes.† The board shall also be entitled to call upon the services of any other State, county, or municipal department, board, commission, or agency, as may be available to it for its purposes.

†††† f.†††† In executing its duties under this act, the board shall consult with the community-based mental health and substance use disorder treatment providers and their clients who are being affected by the transition to a fee-for-service reimbursement model.

†††† g.††† The board may solicit and receive grants or other funds that are made available for its purposes by any governmental, public, private, not-for-profit, or for-profit agency, including funds that are made available under any federal or State law, regulation, or program.

 

†††† 3.††† a.† The board shall evaluate and report on the status and effects of the transition by community-based mental health and substance use disorder treatment providers to a fee-for-service reimbursement model, in accordance with the provisions of this section.† The boardís evaluation of the transition shall primarily focus on its effects on access to care, continuity of care, and quality of care.† In order to determine the relationship between the transition to fee-for-service on these measures, the board shall consider information included in reports issued by the selected contractor pursuant to subsection c. section 4 of this act, and may also independently evaluate providersí costs, revenues, revenue shortfalls, and other needs including technical assistance, training, and business infrastructure needs that are affected by the transition, and how these factors affect providersí ability to serve their patients.† The board may make recommendations to the contractor selected pursuant to section 4 of this act with regard to its evaluation.

†††† b.††† The board shall submit a written status report to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Governor, and to the Division of Mental Health and Addiction Services in the Department of Human Services, at the following intervals:† (1) an initial status report shall be submitted six months after the boardís organizational meeting; (2) an interim status report shall be submitted one year after the boardís organizational meeting; and (3) a final status report shall be submitted two years after the boardís organizational meeting.†

†††† Each written report prepared pursuant to this subsection shall:†

†††† (1)†† evaluate the adequacy of fee-for-service reimbursement rates as of the time of the reporting;

†††† (2)†† identify the positive and negative effects revealed during the reporting period that have been associated with the transition to a fee-for-service reimbursement system;

†††† (3)†† identify the number and percentage of community-based mental health and substance use disorder treatment providers that are having difficulties with the transition;

†††† (4)†† identify any specific problems that are hampering the transition;

†††† (5)†† identify any actions that have been undertaken by any entity during the reporting period to counteract or remedy the negative effects identified pursuant to paragraph (2) of this subsection, or the specific problems identified pursuant to paragraph (4) of this subsection;

†††† (6)†† indicate the number and percentage of consumers who have been served by community mental health and substance use disorder treatment providers during the course of the reporting period; identify whether the number or frequency of consumer contacts has been reduced as a result of the transition; and approximate the number and percentage of consumers who have been unable to obtain service as a result of the transition to a fee-for-service model; and

†††† (7)†† provide recommendations for the modification of applicable reimbursement rate schedules, and recommendations for other actions that could be undertaken to better facilitate the transition or otherwise ease the burden on community-based mental health and substance use disorder treatment providers, and to avoid or redress any unintended lapses in service provision or reductions in service quality or capabilities that may result from the transition.†

†††† c.†††† The board shall dissolve 30 days after it submits its final report pursuant to paragraph (3) of subsection b. of this section.

 

†††† 4.††† a. The Division of Purchase and Property in the Department of the Treasury, in consultation with the Department of Human Services and the New Jersey Association of Mental Health and Addiction Agencies, shall issue a request for proposals to perform an independent evaluation of the transition of the mental health and substance use disorders treatment service system to fee-for-service.† The evaluation shall assess the impact of the transition to fee-for-service and the particular rates adopted in the fee-for-service system on the financial sustainability of provider agencies, and on patientsí access to care, continuity of care, and quality of care.† Proposals shall be submitted no later than April 1, 2017.† The criteria for selection shall include, but need not be limited to, demonstrated competence in developing and evaluating reimbursement systems for state health care programs. †The division shall review all submissions and select one proposal, with the contract to begin no later than July 1, 2017.†

†††† b.††† The selected contractor shall be responsible for evaluating, on a continual basis, the impact of the transition of the community-based mental health and substance use disorder treatment services system to a fee-for-service reimbursement model and the particular rates adopted in the fee-for-service system on the financial sustainability of provider agencies, and on patientsí access to care, continuity of care, and quality of care.† The contractor shall conduct its evaluation in accordance with its contract and, to the maximum extent practicable, with the recommendations of the Independent Fee-for-Service Transition Oversight Board established pursuant to section 2 of this act.†

†††† c.†††† The contractor shall issue periodic written reports to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), the Governor, the Division of Mental Health and Addiction Services in the Department of Human Services, and the Independent Fee-for-Service Transition Oversight Board.† At a minimum, the contractor shall issue written reports evaluating the transition for the following reporting periods:† (1) the start of the transition through September 30, 2017; (2) October 1, 2017 through December 31, 2017; (3) January 1, 2018 through June 30, 2018; and (4) July 1, 2018 through June 30, 2019.† Each report shall be submitted no later than one month following the end of each reporting period.† The contract will terminate after the submission of the final report.

 

†††† 5.††† There is appropriated from the General Fund such funds as are necessary for the execution of section 4 of this act.

 

†††† 6.††† This act shall take effect immediately, and shall expire on the later of: (1) the 30th day after the board submits its final report pursuant to subsection b. of section 3 of this act or (2) the 30th day after the contractor submits its final report pursuant to subsection c. of section 4 of this act.

STATEMENT

 

†††† This bill would establish a formal system of oversight for the planned transition by community-based mental health and substance use disorder treatment service providers to a fee-for-service reimbursement model.† The bill would establish two oversight mechanisms: (1) an Independent Fee-for-Service Transition Oversight Board; and (2) a contracted evaluator with demonstrated competence in developing and evaluating reimbursement systems for state health care programs.

†††† The Division of Mental Health and Addiction Services (DMHAS) in the Department of Human Services has historically used a cost reimbursement system to provide most State-level funding for community-based mental health and substance use disorder treatment services in New Jersey.† The DMHAS has begun to transition most community-based mental health and substance use disorder treatment services from a cost reimbursement system to a fee-for-service reimbursement system, beginning in July 2016, and plans to require all providers to complete the transition by July 2017.

 

Independent Fee-for-Service Transition Oversight Board

†††† The Independent Fee-for-Service Transition Oversight Board would be comprised of 11 members, appointed by the Governor, as follows:† two representatives of provider entities that receive State funds for mental health services; two representatives of provider entities that receive State funds for substance use disorder treatment services; a certified public accountant, upon the recommendation of the New Jersey Society of Certified Public Accountants (NJCPA); a current consumer of State-funded mental health services, or the parent or guardian of such consumer; a current consumer of State-funded substance use disorder treatment services, or the parent or guardian of such consumer; one person, upon the recommendation of the New Jersey chapter of the National Association on Mental Illness (NAMI); one person, upon the recommendation of the New Jersey Association of Mental Health and Addiction Agencies (NJAMHAA); one person, upon the recommendation of the New Jersey Psychiatric Rehabilitation Association; and one person, upon the recommendation of the New Jersey Hospital Association.† The members of the board are to be appointed within 45 days after the billís effective date, and the board is to hold its initial organizational meeting as soon as practicable, but no later than 30 days, after the appointment of its members.†

†††† The members of the board would serve without compensation, but may be reimbursed for travel and other necessary expenses incurred in the performance of their duties, within the limits of funds appropriated or otherwise made available to the board for its purposes.† The DHS would be required to provide professional and clerical staff to the board, and the board would also be entitled to call upon the services of any other State, county, or municipal department, board, commission, or agency, as may be available to it for its purposes.

†††† In executing its duties, the board will be required to consult with the community-based mental health and substance use disorder treatment providers that are being affected by the transition to a fee-for-service reimbursement model.

†††† The boardís evaluation of the transition is to primarily focus on the transitionís effects on access to care, continuity of care, and quality of care.† In order to determine the effect of the transition on these measures, the board is to consider information included in reports issued by the contractor pursuant to the bill, and may also independently evaluate providersí costs, revenues, revenue shortfalls, and other needs including technical assistance, training, and business infrastructure needs that are affected by the transition, and how these factors affect providersí ability to serve their patients.† The board may make recommendations to the contracted evaluator with regard to its evaluation.

†††† The bill would require the board to submit written status reports to the Legislature, the Governor, and the DMHAS, at the following intervals:† (1) an initial status report is to be submitted six months after the boardís organizational meeting; (2) an interim status report is to be submitted one year after the boardís organizational meeting; and (3) a final status report is to be submitted two years after the boardís organizational meeting.† The board would dissolve 30 days after the boardís final report is submitted.

 

Contracted Evaluator

†††† Separately from the Independent Fee-for-Service Transition Oversight Board, the bill also requires the Division of Purchase and Property in the Department of the Treasury, in consultation with the Department of Human Services and the New Jersey Association of Mental Health and Addiction Agencies, to issue a request for proposals to perform an independent evaluation of the transition of the mental health and substance use disorders treatment service system to fee-for-service.† The evaluation will assess the impact of the transition and the particular rates adopted in the fee-for-service system on the financial sustainability of provider agencies, and on patientsí access to care, continuity of care, and quality of care.† Proposals will be submitted no later than April 1, 2017.† The criteria for selection are to include, but need not be limited to, demonstrated competence in developing and evaluating reimbursement systems for state health care programs.† The contract would begin no later than July 1, 2017.†

†††† The contractor will issue periodic written reports to the Legislature, the Governor, the Division of Mental Health and Addiction Services in the Department of Human Services, and the Independent Fee-for-Service Transition Oversight Board.† At minimum, the contractor will issue written reports evaluating the transition for the following reporting periods:† (1) the start of the transition through September 30, 2017; (2) October 1, 2017 through December 31, 2017; (3) January 1, 2018 through June 30, 2018; and (4) July 1, 2018 through June 30, 2019.† Each report shall be submitted no later than one month following the end of each reporting period.† The contract will terminate after the submission of the final report.

†††† The bill would expire on the later of: (1) the 30th day after the board submits its final report pursuant to subsection b. of section 3 of this act or (2) the 30th day after the contractor submits its final report pursuant to subsection c. of section 4 of this act.