NJ Division of Developmental Disabilities moving to Medicaid-based Fee-for-Service system

January 5, 2018

Fee-for-Service System Replacing Contract-Based System

If you care about someone with a developmental disability, it’s a term that you may have been hearing lately – Fee-for-Service.  Besides adding another acronym – FFS – to the alphabet soup you must understand in order to navigate the disability service system, what does it mean for the developmental disability community?

New Jersey is changing their contract-based system of care to a Medicaid-based Fee-for-Service system.  For providers, this means that instead of receiving funding in monthly allotments for the contract they have with DDD to provide a program for individuals with developmental disabilities, they will instead bill Medicaid for specific services provided to each individual after the provision of that service to the individual.  In other words, instead of SCARC having a contract with DDD to run a day program, such as the Clark Center, they will now be required to bill Medicaid for “day habilitation” services for each individual participating in that program.  Anytime the individual is not present to participate in a planned service, SCARC will not be able to bill for that service even though staffing and facility costs will still be incurred by the organization.

Each service, such as day habilitation, has a specific fee or rate.  The Fee-for-Service Rate Schedule is a rather imposing two page chart of all of those rates.  Let’s look at one scenario as an example of how to read the chart. Sharon attends the Clark Center.  Sharon has been assigned a tier of “C” (for more about tiers, see paragraph 6).  If you look at the Day Habilitation service, the Standard Rate per Unit (third column) for a Tier C is $3.73 and the Billing Unit (next column) is 15 minutes.  That means that SCARC will need to bill Medicaid for every 15 minutes that Sharon attends the Clark Center and SCARC will receive a fee of $3.73 for each of those 15 minutes. As you can see in the chart, most services are billed in 15 minute increments but others may be daily, single, or even per mile units.

In anticipation of the change in service system, DDD brought in a national firm, JVGA, to study DD supports in New Jersey and develop appropriate rates for all of the approved services.  At this time, New Jersey is funding those rates at eighty percent of the cost determined by JVGA in 2014.

The Fee-for-Service system will be utilized to provide supports to all individuals receiving services from DDD under the Supports Program and the Community Care Program (formerly known as the Community Care Waiver).  All individuals in these programs will have individual budgets, a specific amount of funding assigned to provide their supports. Those budgets are determined by the outcome of the completion of an assessment – NJCAT – by each individual or their representative. (For more information about the NJCAT visit DDD’s NJCAT Resource Page)

Budget amounts are divided into funding “tiers”, A, B, C, D, or E. Individuals needing a high level of medical or behavioral support may be assigned an “acuity differentiated factor” (represented by a small “a” – Aa, Ba, Ca, Da, Ea), which will be reflected in their budget amounts. An individual’s tier reflects the amount of funding available to them for “purchasing” needed services and supports.  For specific tier amounts, please refer to the Fee-for-Service System Individual Budgets: Quick Reference Guide

The services that can be purchased by individuals include community based supports, day habilitation, career planning, physical therapy, behavioral supports, etc.  For a full list of services available, check out the Supports Program Manual or the Community Care Program Manual (section 17).

The switch to a Fee-for-Service system is an effort by New Jersey to standardize rates and increase flexibility, consistency, and quality in the provision of supports to individuals with developmental disabilities.  By eliminating a contract-based system, DDD is endeavoring to provide more freedom of choice to individuals in where, when, and how they access needed supports. Fee-for-Service proponents expect that individuals with very specific or uncommon needs will have more flexibility and freedom in finding the supports that will best meet their needs. The switch is also intended to bring additional federal Medicaid dollars into New Jersey that can be used to expand services and sustain them in the future.  Medicaid will match each dollar that New Jersey spends on services and supports, effectively doubling the funding available in the state, as long as services are provided based on Medicaid rules.

Critics of the system point out that the focus on specific Medicaid-approved services, rather than on the comprehensive, lifespan supports needed by individuals with developmental disabilities, will result in unmet needs and raise the risk of institutionalization. Individuals who wish to self-direct services are especially at risk because of the large gaps in support options and inaccessible tools and resources required to access and manage alternative supports.   In addition, support coordination, which is an integral part of the Fee-for-Service system, is responsible only for facilitating the use of Medicaid- approved services rather than coordinating the many programs and assistance opportunities that are essential to building a community-based life for individuals with the lifelong challenges of developmental disabilities.

The Fee-for-Service system will bring more federal dollars into the state, but it will also result in the elimination of the more flexible, state-only funded programs.  Critics fear that in addition to a loss in flexibility in supports for an incredibly diverse population, this will also increase the vulnerability of all individuals with developmental disabilities as their supports and services become heavily reliant on the Medicaid dollars repeatedly threatened these days by spending cuts in Washington.   Cuts to federal Medicaid funding would undoubtedly result in cuts to the supports that individuals with developmental disabilities are dependent on to live community-based lives and curtail the much needed expansion of services for this underserved population.

Currently, DDD is in the process of rolling out the Fee-for-Service system to all individuals that it serves.  There is no definitive plan for when each individual will transition into the new system.  However, all individuals are expected to have been moved into the new system by July 1, 2018.  For information about when a specific individual can anticipate switching to the Fee-for-Service system, it is best to contact the individual’s support coordinator.