Office of Legislative Services
State House Annex
P.O. Box 068
Trenton, New Jersey 08625
Legislative Budget and Finance Office
Phone (609) 847-3105
Fax (609) 777-2442
www.njleg.state.nj.us
LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
SENATE, No. 1895
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JULY 6, 2023
SUMMARY
Synopsis: Increases Medicaid reimbursement for in-person partial care
behavioral health and substance use disorder treatment services, and
associated transportation services, for adults.
Types of Impact: Annual increases in State expenditures and revenue; General Fund.
Agency Affected: Department of Human Services.
Office of Legislative Services Estimate
Annual State Expenditure Increase $16,200,000
Annual State Revenue Increase $10,530,000
The Office of Legislative Services (OLS) estimates that this bill will increase annual State
Medicaid expenditures incurred by the Department of Human Services by $16.2 million, due
to the increase in the Medicaid reimbursement rates for certain partial care behavioral health
services, partial care substance use disorder services, and intensive outpatient services, as well
as for transportation services provided to Medicaid beneficiaries accessing those services. As
eligible State Medicaid expenditures, these increased costs will grow annual State revenue in
the form of federal Medicaid cost reimbursements by $10.5 million, for a net State cost of $5.7
million. This estimate assumes an aggregate federal Medicaid matching rate of 65 percent.
BILL DESCRIPTION
This bill increases Medicaid reimbursement rates for partial care behavioral health services,
substance use disorder treatment services, and intensive outpatient services by 35 percent, when
such services are provided to an adult Medicaid enrollee on an in-person basis. The bill also
increases the aggregate Medicaid reimbursement rate for transportation services and mileage to or
from a partial care or intensive outpatient services provider to no less than $10 for each one-way
trip. These rate increases apply to services provided through the fee-for-service and the capitation
rate-based managed care delivery system. FE to S1895 [2R]
2
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received. However, upon request, the Department of Human Services provided the
following information, which materially informs the OLS fiscal estimate.
Partial Care – Mental Health Fee-For-Service Delivery System
Month/Year Recipients Service Units Total Payments
October 2022 839 36,734 $688,878
November 2022 1,108 56,275 $1,047,438
December 2022 1,057 46,711 $837,471
Partial Care – Substance Use Disorder Fee-For-Service Delivery System
Month/Year Recipients Service Units Total Payments
October 2022 37 284 $22,718
November 2022 36 326 $26,372
December 2022 34 269 $21,544
Intensive Outpatient Fee-For-Service Delivery System
Month/Year Recipients Service Units Total Payments
October 2022 2,399 18,818 $2,142,049
November 2022 2,604 24,161 $2,753,190
December 2022 2,375 18,564 $2,119,014
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that this bill will increase annual State Medicaid expenditures incurred by
the Department of Human Services by $16.2 million, due to the increase in the Medicaid
reimbursement rates for certain partial care behavioral health services, partial care substance use
disorder services, and intensive outpatient services, as well as for transportation services provided
to Medicaid beneficiaries accessing those services. As eligible State Medicaid expenditures, these
increased costs will grow annual State revenue in the form of federal Medicaid cost
reimbursements by $10.5 million, for a net State cost of $5.7 million. This estimate assumes an
aggregate federal Medicaid matching rate of 65 percent.
New Jersey Medicaid currently covers partial care behavioral health services, substance use
disorder treatment services, and intensive outpatient services for most adults through the fee-for-
service delivery system, as opposed to the capitation rate-based managed care delivery system.
For fee-for-service recipients, the OLS projects that increasing the provider rates for partial
care behavioral health services, partial care substance use disorder services, and intensive
outpatient services delivered to adults by 35 percent will cost the State $13.6 million per year,
offset by an additional $8.8 million in federal Medicaid reimbursements. This estimate is based
upon the above usage data provided by the Department of Human Services for the months between
October 2022 and December 2022. For context, fee-for-service rates would change under the bill
as shown in the following table.
FE to S1895 [2R]
3
Type of Partial Care Current Fee-For-Service Rate Fee-For-Service Rate Under Bill
Behavioral Health $18.82 per hour $25.41 per hour
Substance Use Disorder $78.31 per diem $105.72 per diem
Intensive Outpatient $114.95 per diem $155.19 per diem
In addition, for fee-for-service recipients, the OLS projects that increasing the reimbursement
rate for transportation services and mileage to or from partial care and intensive outpatient services
provider from $7 to $10 for each one-way trip will cost the State $2.4 million per year, offset by
an additional $1.6 million in federal Medicaid reimbursements. This estimate assumes that 50
percent of all service units provided require round-trip transportation services.
Outside of the fee-for-service delivery system, the State provides partial care behavioral health
services, substance use disorder treatment services, and intensive outpatient services through the
managed care delivery system to an unknown number of Medicaid beneficiaries as follows: clients
of the Division of Developmental Disabilities; individuals enrolled in a Fully Integrated Dual
Eligible Special Needs Plan; and enrollees in the Medicaid Managed Long Term Services and
Supports program. Medicaid reimbursement rates provided under managed care are proprietary
and embedded in the State’s contracted capitation payments to the Medicaid managed care
organizations; and therefore the State cost and revenue impacts for these beneficiaries under the
bill are not readily quantifiable. The OLS notes, however, that the vast majority of partial care
and intensive outpatient services described under this bill are provided under the fee-for-service
system. Accordingly, the OLS assumes that the annual managed care State cost increase under
this bill will be no more than $200,000, offset by up to $130,000 in additional federal Medicaid
cost reimbursements.
Section: Human Services
Analyst: Sarah Schmidt
Lead Research Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).