S.J. mental health agencies face budget cuts

CAMDEN - Mental health agencies in South Jersey that accept Medicaid are bracing for revenue shortfalls as they transition to New Jersey's new fee-for-service funding model this year.

Though Gov. Chris Christie said he will extend $127 million in additional funding for mental health and substance abuse treatment in next year's state budget, some agencies say they are weighing staff reductions and program cuts – and might be forced to turn away patients as a result. 

The fee-for-service funding model helps New Jersey attract millions in additional federal dollars. 

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Traditionally, community providers received contract funding from the state to provide services for people who can't afford it. The new model means Medicaid will pay only for services that are delivered, at rates set by the government. Much of the new funding went toward substantial increases in rates for mental health and addiction services. 

Even so, some agency leaders worry they won't be able to cover their costs, unless the state extends contract funding during the transition. Providers were given the option to switch to the new model on Jan. 1 or July 1 – most have decided to wait. 

John Zukauskas, CEO of NewPoint Behavioral Health Care in Gloucester County, isn't sure yet how his agency's finances will be affected, but he is concerned. 

"The quality of care that we provide to the severely and persistently mentally ill population may suffer," Zukauskas said. "There could be longer periods of time between visits, shorter visits with clients and reduced days in partial care."  

In response to providers' concerns, the state Legislature has approved a measure that will institute an independent oversight board and third-party review of Medicaid rates. The bill awaits Christie's signature. 

The state Department of Human Services recently raised a much-requested rate for medication monitoring, a decision praised by the N.J. Association of Mental Health and Addiction Agencies. 

The association is still pushing for what it calls safety net funding, so providers can maintain their service levels through the next fiscal year, while access to care and the adequacy of new rates are evaluated, said Debra Wentz, its executive director.

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Theresa C. Wilson, president and CEO of South Jersey Behavioral Health Resources, Inc., said her agency will be "on a respirator" after it makes the switch on July 1. 

While the recent rate increase gives the agency some life, Wilson said, "we know we will not look the same as we do today." 

The nonprofit provides outpatient and residential services, partial care, and services for the homeless. 

"If we’re not there, people will not be able to be stable in this community," Wilson said. "They may become a danger to themselves and others. They certainly will relapse in terms of mental health or addiction issues." 

Much of the fiscal uncertainty is related to the nature of behavioral health treatment, providers said. 

Patients with serious and chronic mental illness and patients with co-occurring addictions often miss appointments because of their illness, Wentz said. To compensate, agencies are double- and triple-booking their appointments.

Depending on their ability to pay, some patients could be turned away. The state will reimburse agencies for treating uninsured patients, at rates 10 percent lower than traditional Medicaid. But it will cap the number of uninsured clients an agency can serve each month.  

That means some patients could be denied services, noted Greg Speed, CEO of Cape Counseling Services in Cape May Court House. The agency expects to see a $900,000 deficit in its budget and staff reductions after July 1, even with the medication monitoring rate increase. 

"We can no longer treat everybody regardless of their ability to pay," Speed said.  

"It's not a good situation for providers," he added. "We are hoping the legislators will hear us." 

Monthly caps on uninsured clients place agencies in a difficult position, added Zukauskas, and agencies might have to tell people to come back at the beginning of the month.

"Our admission criteria have always been based on the clinical needs of clients and not based on their ability to pay for services," Zukauskas said. "Under a fee-for-service environment, reimbursement may now be a consideration along with the clinical needs of the client for receiving treatment." 

Even so, mental health agencies support the change to fee-for-service. New Jersey is one of the last states to do so.

Rates for addiction services soared after Christie's commitment to increase funding for treatment. And the state is working with mental health and addiction agencies to set rates that will keep them operating, noted Wentz. The rate increase for medication management was a "great step forward," she said, and the new rates should make many outpatient programs whole.

"We’re really glad the state has kept the door open and continues to have conversations and seriously looks anew at what will work and what won’t work, so everyone who is receiving services will have access to services," Wentz said.

Oaks Integrated Care CEO Derry Holland said her agency is eyeing the transition with healthy trepidation, since it also anticipates reduced revenue. The Mount Holly-based nonprofit has undergone two mergers in recent years and now serves 25,000 people in nine counties. The majority of its clients are on Medicaid.

Even so, Holland said her agency sees an opportunity to manage its business with fewer stipulations, while building stronger relationships with clients and their families to keep them in care.

"We’re all excited to see how it plays out and how it works – cautiously excited," Holland said. 

The transition to fee-for-service is long overdue, noted Harry Marmorstein, chief compliance officer for Legacy Treatment Services in Hainesport. 

But he offered a warning. The people most affected by program cuts are those who could wind up in hospital emergency departments and state psychiatric hospitals. 

"If fee-for-service providers can’t make the same amount of revenue they made on their grant funding to keep the doors open," Marmorstein said, "you’re going to see some real problems."  

Kim Mulford: (856) 486-2448; kmulford@gannettnj.com