Organizations that provide daytime social and medical care for adults who are elderly or disabled say they need more money to continue these programs. Lawmakers appear to be listening and ready to raise rates while insurance companies responsible for the bills worry where such changes will lead.
The Assembly unanimously approved legislation Thursday to raise the rate New Jersey Medicaid pays for adult medical day care services to nearly $90 a day per person — an increase of $3.44 over the current per diem payment. If approved, it would be the third rate hike for these programs in three years.
The bill also appropriates $3.6 million to fund higher payments in the current fiscal year, which ends July 1. The total price tag of the proposal is unknown, however, as legislative staff has not been tasked with calculating the full fiscal impact of the proposed change on New Jersey’s $20 billion state and federally funded Medicaid program.
Organizations that provide adult day care in New Jersey say these services are essential options for people who are elderly or disabled and might otherwise need nursing home-level care. Instead, they can spend five or more hours at a day program that provides for certain medical, therapeutic social needs, plus daily transportation and occasional outings, and return home at night. Business groups and nursing homes have also supported the proposed increase.
Helping people to maintain independence
Participation in adult medical day care saves Medicaid $115,000 a year per person, according to Barry Lefkowitz, a lobbyist for the New Jersey Adult Medical Day Services Coalition, when compared to the cost of a nursing home. New Jersey has 170 adult medical day care centers, he testified earlier this year, helping some 20,000 people to remain independent.
‘We desperately need this rate increase. Our rate is currently only 22 cents above what it was in 2008….’ — John Indyk, New Jersey Adult Day Services Association
“The surrounding states actually reimburse the adult day center for transportation,” Lefkowitz told members of the Senate health committee in February. “Our state does not do that. We are absorbing that cost and other costs that continue to rise and that makes it very difficult for adult medical day care services to survive.”
During the COVID-19 pandemic, some adult day programs provided a version of these services online but saw participation and revenue decline. Some programs laid off staff as a result. In addition to seeking another rate increase, these organizations are lobbying lawmakers to pay them to provide rides to program participants and allow them to bid on other nonemergency transportation services for Medicaid members.
“We desperately need this rate increase. Our rate is currently only 22 cents above what it was in 2008 and yet significant cost increases and fear of COVID has reduced our census significantly,” John Indyk, who represents the New Jersey Adult Day Services Association, told the Senate health committee.
Companies providing adult medical day care services have seen their daily reimbursement grow nearly 10% in recent years. That’s risen from $78.50 — a level set in 2012 — to $82 in 2021, then to $86.10 in 2022, according to the bill, which would establish a per diem rate of $89.54. This change has added more than $5 million to the taxpayer tab for this service, according to insurance companies that manage the benefits for New Jersey’s 2.2 million FamilyCare, or Medicaid members.
Insurance company concerns
These insurance companies have repeatedly raised red flags about this proposal — and some 31 similar rate-setting bills — which they say is akin to picking winners and losers, while further burdening the state budget in the future. “I know I sound like a broken record on this issue,” Ward Sanders, president and CEO of the New Jersey Association of Health Plans, which represents the insurers, told the Senate health committee in February when opposing the bill. “Why adult medical day, not pediatric medical day? Why not behavioral health? There’s any number of provider classes, facility classes in Medicaid.”
The state currently contracts with five companies through the Medicaid program, paying them a set amount per person to cover the cost of hospitalizations, doctor visits, medications and more and manage individual care. The insurance companies pay these providers based on rates negotiated as part of a package that includes incentives for quality care and better health outcomes. If these rates are set by the state, it undermines their ability to secure discounts and effectively manage care, insurers say.
“We don’t have concerns with additional financial resources being directed at the state’s Medicaid program,” Sanders said. “We just ask that you consider a more holistic approach that better aligns payments with quality metrics moving forward.”
Higher rates also drive up the cost for taxpayers, insurance companies say. When lawmakers approved a plan in 2019 to increase the pay for home health aides, it was predicted to add nearly $200 million to the Medicaid tab over five years. Gov. Phil Murphy altered the measure to set the pay at $18 an hour for this work, not the $20 — rising to $25 — envisioned by the Legislature. But even this reduced rate drove up Medicaid spending by nearly $60 million, according to insurance companies.
The medical day-care rate increase proposal is sponsored by Assemblywoman Eliana Pintor Marin (D-Essex), the budget committee chair and nine Democratic colleagues. A bipartisan companion bill in the Senate has been approved by two committees but has yet to be posted for a full vote. Both versions were introduced in October and sailed through committee votes unopposed, despite the opposition from insurance providers.
