Waiver Approval Clears Way for Massive Medicaid Reform in New Jersey

The federal government has approved New Jersey’s request for a complete overhaul of its Medicaid program, a move that will give the state more flexibility in delivering Medicaid, as well as the opportunity to maintain or improve patient care at lower costs.

The changes to the program will have sweeping implications not just for poor families eligible for Medicaid, but also for seniors facing the prospect of nursing home; those that obtain behavioral health or addiction services from the state; and New Jersey residents with developmental disabilities.

It also changes the formula that Medicaid uses to compensate hospitals and other healthcare institutions.

Although there were few details regarding the approval of what is known as the Comprehensive Medicaid Waiver, the decision was widely hailed by both healthcare advocates and those in the delivery system as a positive step toward Medicaid reform. The negotiations have been going on for a year, and it is still unclear when the changes will take affect.

“The waiver is pretty cool,” said David Knowlton, president and CEO of the New Jersey Health Care Quality Institute, a healthcare consultancy. “It’s very smart of the [state] because it allows them to maximize federal dollars and give the best care for the cost.”

Gov. Chris Christie released a statement boasting that the decision demonstrates New Jersey as a model of reform, saying it will “not only strengthen the focus on treating and serving the individual first, but do so in a way that is cost effective and sustainable for our state over the long run.”

Most of those in the healthcare industry were still awaiting the actual written decision, which will detail how the reforms will affect every category of care. But they were hopeful that after more than year of study, along with expert advisory commissions investigating the specific implications and best practices from other states, New Jersey’s Division of Human Services will adopt many of the industry’s recommendations and be able to truly provide better care for a lower cost.

Keeping Clients at Home

The major impetus of the Medicaid restructuring is to allow more patients to stay out of institutions and remain in their homes, whether they are aging seniors, behavioral health patients, or those with developmental disabilities.

The federal government and state share the cost of Medicaid 50/50, and the waiver agreement will allow the state to take the total amount of Medicaid spending and deploy it in the way it thinks best. Patients will be moved to a managed care system and insurance companies will be compensated based on care outcomes and number of patients, rather than fee for service.

This model could save the state money while providing a better quality of life for patients over a longer period of time.

Current Medicaid guidelines, for example, are very strict when it comes to funding things such as home construction to accommodate wheelchairs or certain kinds of home nursing care. The waiver will allow managed care providers to determine when those accommodations make sense in order to keep someone in the community and out of a nursing home.

“Generally speaking, we are in favor of these developments,” said Jeff Abramo, executive director of the New Jersey AARP. “Done carefully, and phased in, in the proper way, this is a good step in the right direction.”

Nevertheless, Abramo expressed caution about possible oversight of the program, since it shifts dollars from healthcare providers to insurance companies. He also noted that the timing of implementation will be crucial. The Division of Human Services did not offer a deadline for implementation Thursday, and Abramo noted that the current deadline of January was too soon for an organized rollout of some provisions.

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