Some wary as N.J. changes payment system for mental health services

Some advocates are worried about a shift in how New Jersey will pay for mental health care services.

Payments for Medicaid services are going up by more than $120 million in New Jersey, thanks to a combination of state and federal dollars. Overall, providers now get higher reimbursement rates than before.

But the state is also switching from a contract system to a fee-for-service model, which has concerned advocates.

Mental health involves doing auxiliary work — like reaching out to a patient who is missing appointments, said Robert Davison, executive director of the Mental Health Association of Essex County in Montclair.

“There’s a lot of time working with families and with systems and transportation. So, in the fee-for-service model, that auxiliary stuff is not going to be reimbursed,” he said.

He anticipated that his organization and others will probably have to reduce staff because they won’t have the revenue to support them.

But Davison said his biggest worry is that the system will work better for patients who can make all of their appointments because organizations will have more of an interest in pursuing them.

“My concern is is that the system will shift toward people who are healthier and who are more willing to be served,” he said.

Ellen Lovejoy, a spokeswoman from the Department of Human Services, said the fee-for-service system makes sense because “state resources are being expended on the actual provision of services.” The switch has been a long time coming and was developed in concert with providers, she said.

Rates were increased to reflect overhead, training, productivity and staffing costs, Lovejoy said. Maryland already uses this model.

The state says it will provide two months of bridge funding to help with cash-flow problems.

The new system will go into effect in January for some agencies and then in July for others.