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New Jersey Bill Would Slow Down Rate-Cut Attempts by MCOs

December 11, 2014

New Jersey managed care organizations (MCOs) seeking to lower their reimbursement rates to providers of Medicaid-funded long-term services and supports would have to discuss potential cuts with home health agencies beforehand, if a bill making its way through the legislature is passed into law.

Introduced in the state senate in June and in the assembly in July, the bill was unanimously passed by the Assembly Financial Institutions and Insurance Committee with one minor amendment on December 4, NJ Spotlight reported.

Before an MCO could make a rate cut, it would have to meet individually with as many home care providers that, in total, represent at least 25 percent of the MCO’s consumer base.

At these meetings, MCOs would have to explain their proposed rate cuts and discuss “alternatives to the proposed reduction in reimbursement rates that maintain the quality of, and access to, care for affected clients,” according to the terms of the bill.

Additionally, after announcing a rate cut, MCOs would need to wait 90 days before enacting it.

Second Attempt to Pass a Bill

The bill has its origins in a rate cut enacted by the MCO Horizon NJ Health in 2012.

Horizon’s sudden 10 percent reimbursement rate cut — from $15.50 to $13.95 an hour — prompted a backlash from home health providers, who argued that the cuts would result in lower wages for workers and worse care quality for consumers.

The New Jersey legislature quickly passed a bill requiring all MCO rate cuts to receive approval from the state, but it failed to become law following a pocket veto from Governor Chris Christie (R).

— by Matthew Ozga

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