LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
SENATE, No. 700
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JULY 22, 2025
SUMMARY
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Synopsis: |
Requires DHS to establish three-year Obstetric Discrimination Prevention and Mitigation Pilot Program. |
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Type of Impact: |
Three-year increase in State expenditures and revenues. |
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Agencies Affected: |
Department of Human Services. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
Year 1 |
Years 2 & 3 |
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State Expenditure Increase |
At least $1.4 million |
At least $700,000 each year |
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State Revenue Increase |
At least $700,000 |
At least $350,000 each year |
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· The Office of Legislative Services (OLS) determines that NJ FamilyCare costs will increase by an indeterminate amount to provide value-based payments for maternity care provided to eligible patients by hospitals and birthing centers that participate in the pilot program. Since the amount of the comprehensive value-based payment provided to each participating facility will be set by the Department of Human Services based on factors than cannot be quantified prior to the pilot program’s start, the OLS cannot anticipate the magnitude of these State cost increases.
· The OLS estimates that in the pilot program’s first year, the department will realize increased Medicaid administrative costs of approximately $1.4 million, based on the annual administrative costs incurred by the Department of Health for the Quality Improvement Program – New Jersey. In the second and third years of the pilot program, the OLS determines that administrative costs will decline to $700,000 annually for the department to provide ongoing oversight and value-based payments to participating facilities.
· The OLS estimates that State revenues, in the form of federal reimbursements for State Medicaid administrative expenditures under the federal Medicaid program, will increase by $700,000 in the first year, and $350,000 in each of the subsequent two years of the pilot program.
· Assuming federal approval of the pilot program, State revenues will further increase, albeit by an indeterminate amount, in the form of federal Medicaid reimbursements for State Medicaid expenditures on comprehensive value-based payments to hospitals and birthing centers under the pilot program.
BILL DESCRIPTION
The bill establishes a three-year Obstetric Discrimination Prevention and Mitigation Pilot Program in the Department of Human Services. The initiative will enroll a select number of maternity care hospitals and licensed birthing centers to utilize and evaluate the effectiveness of a perinatal quality improvement measurement tool in recognizing and reporting obstetric discrimination, assessing the prevalence and impact of obstetric discrimination, improving the maternal health care provided to Black mothers during childbirth, and reducing adverse pregnancy experiences and outcomes associated with obstetric discrimination.
The department will designate the perinatal quality improvement measurement tool to be utilized by the hospitals and birthing centers selected to participate in the pilot program. Participating facilities will require certain clinicians and staff to complete a department-selected training program on obstetric discrimination; require staff who administer the pilot program to complete training on promoting obstetric patient safety by addressing obstetric discrimination and on the use of the selected perinatal quality improvement measurement tool; recruit, screen, and enroll eligible Black and African American NJ FamilyCare patients in the pilot program; and analyze the resulting patient-reported information in order to assess the perinatal quality improvement tool’s efficacy in meeting the pilot program’s goals.
The pilot program will be funded through the NJ FamilyCare program using a value-based payment methodology, and the amounts paid to participating facilities will constitute total NJ FamilyCare reimbursement for the cost to provide maternity care to eligible NJ FamilyCare patients and the facilities’ administrative costs under the pilot program. The department will base the value-based payment rate on several factors, including the number of eligible NJ FamilyCare patients recruited to participate in the pilot program; the average anticipated per-patient cost of maternity care under the pilot program; and the anticipated reduction in adverse pregnancy experiences and outcomes associated with obstetric discrimination during the pilot program, as measured by the perinatal quality improvement measurement tool.
The value-based payment made to participating facilities will be limited to the rate established by the department and will not be increased if actual per capita costs for participating patients exceed the payment amount. However, if participating facilities reduce adverse experiences and outcomes associated with obstetric discrimination, the facilities will retain any unexpended amounts paid by the department under the pilot program.
Within four years, the department will submit a report to the Governor and Legislature analyzing the pilot program’s impact on reducing adverse pregnancy experiences and outcomes attributable to obstetric discrimination; provide recommendations concerning making the pilot program permanent; and recommend any executive or legislative actions to improve the quality of care provided to, and patient safety for, Black mothers during childbirth hospitalizations.
The bill requires the department to apply for any
State plan amendments or waivers necessary to implement the bill’s provisions
and secure continued federal financial participation for State Medicaid or
State Children’s Health Insurance Program expenditures under the respective
federal programs.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS determines that NJ FamilyCare costs will increase by an indeterminate amount for the Department of Human Services to provide value-based payments to participating facilities for maternity care services provided to eligible NJ FamilyCare patients under the pilot program. Since the amount of the comprehensive value-based payment will be determined by the department based on factors than cannot be quantified prior to the pilot program’s start, such as the number of eligible NJ FamilyCare patients expected to enroll in and receive maternity care through the pilot program, the average anticipated per-capita cost of maternity care services provided to enrolled patients, and the average reduction in adverse pregnancy experiences and outcomes associated with obstetric discrimination during the three year pilot program, the OLS cannot anticipate the magnitude of the increase in State costs under the bill.
Assuming that the federal Centers for Medicare and Medicaid Services approves the State’s waiver application for the value-based payment methodology to be developed for the pilot program, State revenues will increase by an indeterminate amount, in the form of federal reimbursements for State Medicaid expenditures under the federal Medicaid program.
According to the New Jersey State Health Assessment Data System, which is maintained by the Department of Health, of the 102,890 live births occurring to State residents in 2022, 7,919 were to mothers who identified as Black, African American, or two or more races and who also were enrolled in the NJ FamilyCare program.
By way of context, the Department of Health, in conjunction with the Department of Human Services, operates the Quality Improvement Program – New Jersey, which is a Medicaid managed care pay for performance initiative to improve the quality of behavioral health and maternity care services provided to NJ FamilyCare enrollees in the State’s acute care hospitals. Of the 57 hospitals that participate in this program, 43 elected to participate in the maternal health measurement set, which included 10 evidence-based quality measures in CY 2024. The State anticipated providing up to $63 million in maternal health quality improvement incentive payments to participating hospitals in FY 2025; the State contributes 40 percent of the incentive payments, with the federal government providing the balance.
The Department of Human Services will realize increased Medicaid administrative costs during the first year of the pilot program in order to select maternity care hospitals and licensed birthing centers to participate in the pilot program, review perinatal quality improvement measurement tools and select the tool for use in the pilot program, identify the clinician and staff training programs to be utilized by participating facilities, develop and apply to the federal Centers for Medicare and Medicaid Services for approval of the value-based payment methodology to be utilized in the pilot program, and administer the pilot program. The OLS, therefore, anticipates that the Department of Human Services’ costs in the first year of the pilot program will approximate the Department of Health’s annual costs to administer the Quality Improvement Program – New Jersey; according to the State accounting system, the Department of Health expended $1.4 million to administer this program in FY 2023. In each of the second and third years of the pilot program, the OLS concludes that annual Department of Human Services administrative costs will fall to $700,000 for routine management of program operations. Federal statute provides that the federal government will reimburse 50 percent of State costs to administer the NJ FamilyCare program. As such, the OLS expects federal revenues to increase by at least $700,000 in the pilot program’s first year, and by at least $350,000 in each of the subsequent two years of the pilot program.
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Section: |
Human Services |
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Analyst: |
Senior Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).