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
[Third Reprint]
SENATE, No. 1895
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JANUARY 5, 2024
SUMMARY
Synopsis: Increases Medicaid reimbursement for in-person partial care and
intensive outpatient 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 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 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.
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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 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 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 partial care, under the fee-for-service delivery system, the
reimbursement rate is differentiated by whether the service is to treat an individual with a mental
health diagnosis or a substance use disorder diagnosis.
For fee-for-service recipients, the OLS projects that increasing the provider rates for partial
care 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.
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3
Type of Service Current Fee-For-Service Rate Fee-For-Service Rate Under Bill
Partial Care – Mental
Health
$18.82 per hour $25.41 per hour
Partial Care - Substance
Use Disorder
$78.31 per diem $105.72 per diem
Intensive Outpatient $114.95 per diem $155.18 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 a 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 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.).