New Jersey plan would slash Medicaid eligibility

The state's series of proposals includes increasing fees for primary care doctors to match Medicare rates.

By Doug Trapp — Posted June 24, 2011

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New Jersey Gov. Chris Christie has proposed several changes to the state's Medicaid program in an effort to achieve $540 million in savings in one year. The proposals are mostly noncontroversial, with at least one big exception.

Christie's 2012 budget request would close Medicaid enrollment to parents who earn more than about 27.5% of the federal poverty level, or $5,100 for a family of three, according to details released in early June. That would be a decrease from the existing limit of 133% of poverty, which was a reduction from 200% last year.

New Jersey's Medicaid spending will grow by nearly $1 billion next year, even after subtracting $240 million of Medicaid savings in the fiscal 2012 budget proposal and $300 million in projected savings from Medicaid reforms, Christie said during his February budget presentation. "That is the definition of an out-of-control program."

The proposed eligibility reduction is part of a larger state effort to expand Medicaid managed care enrollment, hike Medicaid physician pay, increase scrutiny of managed care contracts and institute cost-sharing for Medicaid enrollees. About 1.3 million people in New Jersey are enrolled in Medicaid, said Nicole Brossoie, spokeswoman for the New Jersey Dept. of Human Services.

The parents' eligibility freeze would save about $9 million between October 2011 and June 2012, she said. The 119,000 parents already enrolled in Medicaid could remain in the program, but about 23,000 new parents would be turned away, according to state projections.

Some in the Democratic-controlled New Jersey Legislature have vowed to block the Medicaid eligibility freeze. The Legislature was not expected to approve a budget until June 30, the day before it is due. Some of the state's Democratic federal delegation also spoke out against the eligibility freeze.

"The state is effectively telling these families to wait until 2014 to get coverage again as part of the new health insurance law," said Sen. Robert Menendez (D, N.J.). "Unfortunately, there is no such thing as a waiver for getting cancer. Diabetes treatment can't wait for three years."

Consumer advocates argue that the Medicaid eligibility freeze will not save the state money because it would give up federal Medicaid matching dollars. The burden of caring for these ineligible parents would shift to hospitals and others who provide charity care, they said.

The state also would seek Medicaid savings by requiring about 130,000 existing aged, blind and disabled enrollees to sign up for a Medicaid managed care plan. About 75% of New Jersey Medicaid and Children's Health Insurance Program enrollees are in a managed care plan. That would increase to 92% under Christie's proposal.

However, Christie also proposed using an undetermined portion of the savings generated by the budget plan and Medicaid waiver request to increase Medicaid physician fees to match Medicare rates, beginning with primary care doctors. The proposal would cost about $259 million, with half of the cost covered by the federal government if enacted in fiscal 2012, Brossoie said. The health system reform law in 2013 and 2014 will increase Medicaid fees to match Medicare rates for primary care, with the entire cost covered by the federal government. Physician Medicaid fees in New Jersey are about 47% of Medicare rates and 25% of private fees, according to state estimates.

About $100 million of Christie's proposed Medicaid savings would come from federal reimbursement of local Medicaid overpayments for health care for enrollees who also were eligible for Medicare.

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