2025 advocacy piece

in New Jersey’s Medicaid rates is necessary, as they are among the lowest in the nation. An 8 % increase for FY2026 5 % increase cost of living adjustments to rates and contracts Goals of the increase: Make wages competitive. Address additional burdens from managed care. Fully cover operational costs. 1 2 3 5 Sustainability is Imperative The sustainability of community-based mental health and substance use treatment services and supports is at risk at a time when investment should be ensuring expansion to better meet the immense unmet demand. After 15 years (FY2008 to FY2023) with no across-the-board cost of living adjustments to rates and contracts, there were 5% increases in both FY2023 and FY2024. These increases were greatly appreciated, but insufficient to bring reimbursement to a level that covers the actual costs of providing care, let alone enabling community-based providers to compete in the current labor market. New Jersey Community-based Behavioral Health Care: The Story of Inadequate Rates Recognizing that New Jersey’s FY2026 budget is restrained by decreased revenues, NJAMHAA is recommending an initial FY2026 investment of $43.2 million (state funds) to provide an 8% across-the-board increase to rates and contracts. Such an investment would be matched by $16.8 million in federal funds, for a total investment of $60 million. This amount reflects the minimum investment needed to sustain community-based providers, with additional increases needed in subsequent years to fully cover the costs incurred for the services they are contracted to deliver. With outpatient behavioral health programs being carved into Medicaid managed care effective January 1, 2025, there are also new and increased costs providers are facing. These include additional billing staff, new and/or updated electronic health record systems, and other administrative and clinical staff to provide the necessary effort for obtaining prior authorizations and claims reimbursement. Providers also anticipate an increase in denied claims, as has been the experience of providers serving the already carved-in special populations, which will reduce revenues. It is imperative that rates and contracts be increased for sustainability and expansion. It is estimated that a 33% increase to New Jersey’s Medicaid rates, currently among the lowest in the nation, is needed in order to: make wages competitive; support the additional burdens of managed care; and fully cover the cost of care, including all operational costs. Operations include a wide variety of costs, such as capital improvements, fleet maintenance, health insurance and more – all of which have increased exponentially over the time rates and contracts stagnated.