Human Services foresees $300M in savings by end of FY12 due to Medicaid changes

TRENTON – Human Services Commissioner Jennifer Velez said this morning she’s confident that by the end of the 2012 fiscal year, the department will see the $300 million in savings it literally banked on through the Comprehensive Medicaid Waiver.

Velez said the savings will be the result of lower enrollment growth in the program than in prior years, higher rebates, and savings through implementation of managed care.

“We have experienced greater savings (than originally anticipated),” she said, but she could not provide an exact amount in savings immediately.

The DHS commissioner said she is looking to secure federal matching dollars for services for children with behavioral health challenges. One of the other goals of the waiver is to expand home and community-based services, serving as alternatives to nursing homes.

Department figures show an up-and-down trajectory in Medicaid enrollment, with 1,282,184 residents enrolled as of January. Last November, there were more than 1.285 million people enrolled. 

Velez said the savings could still be seen even though the federal government in October told the state it would not see the $107 million that was part of the waiver.

“It went to all governors,” she said about the denial. “It’s essentially money that all states are owed. It’s disappointing for all states,” Velez said.

Assembly Budget Committee Chairman Vincent Prieto asked where will the department make up the $107 million that the federal government has denied it.

Velez cited previous areas where savings could be realized, adding that she doesn’t see “draconian cuts” coming as a result of not receiving those funds.

Medicaid enrollment is down, state Medicaid director Valerie Harr said, because the economy is improving.

Assembly members wondered if nursing homes would be hurt by lower Medicaid reimbursement rates.

Harr said that’s a possibility, but added, “That’s something we want to avoid.”

According to the Department of Human Services, the goal of the Comprehensive Medicaid Waiver is to give the state “flexibility to define who is eligible, the benefits they receive and value-driven service delivery.”

The department said that Medicaid “started as an entitlement program for the very low-income, the elderly and people with disabilities,” but ” has burgeoned into an expanded insurance plan for an increasing number of people at higher income levels.”

In the upcoming fiscal year proposed state budget, the program will cost N.J. taxpayers nearly $5 billion.

Assemblyman Albert Coutinho, (D-29), Newark, asked when will the waiver application be finalized in order to determine the ramifications.

Assemblyman Declan O’Scanlon, (R-12), Little Silver, said it appears the department made adjustments to offset costs.

“You have dynamically made adjustments,” he said. “Folks receiving these services will not see service disruptions.”

Velez said, “There are system changes in the horizon but it’s not (meant to) reduce benefits to anybody.”

Assemblyman Gary Chiusano, (R-24), Augusta, said DHS has been able to streamline the Medicaid program without compromising service.

“None of our citizens have been underserved this year,” Chiusano said.

He added that a lot of people “perceive waivers to be negative,” when “they’re actually alternatives to providing better services. It’s not a negative. It’s actually a positive.”

However, Assemblyman John Burzichelli, (D-3), of Paulsboro, said the fact remains the state will not receive a reimbursement that the department could have used to provide valuable services.

He called for seeking the reimbursement through litigation.

“Let’s go get it,” he said. “We’re disappointed it’s not there.”

Following the hearing, Assemblyman Vincent Prieto (D-32) of Secaucus, who chaired his first Budget Committee hearing today, issued a statement, saying he was grateful for Velez’s testimony. However, he said there still remain unanswered questions about contingencies, in case the full savings isn’t realized.

“We’re two-thirds of the way through the fiscal year and much uncertainty remains,” Prieto said. “We must know sooner rather than later if this is a realistic plan that won’t blow a hole in the state budget and risk access to quality health care.

“The commissioner promised that any denial of the administration’s plan would neither cost taxpayers nor lead to draconian cuts in services,” Prieto continued. “We plan to hold the commissioner true to her word, but will also question any cut in health care services for working class residents and their families.” Human Services foresees $300M in savings by end of FY12 due to Medicaid changes