LEGISLATIVE FISCAL ESTIMATE

[Second Reprint]

SENATE, No. 2606

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: JULY 2, 2024

 

 

SUMMARY

 

Synopsis:

Requires Medicaid reimbursement of mental health rehabilitation services provided via clubhouse program.

 

Type of Impact:

Indeterminate increase in State Medicaid expenditures in Year 1, indeterminate savings to State Medicaid program in Years 2 and beyond; indeterminate annual increase in State revenues.

Agencies Affected:

Department of Human Services.

 

 

Office of Legislative Services Estimate

Fiscal Impact

Year 1 

Year 2 and Beyond

 

State Expenditures

Indeterminate increase

Indeterminate savings

 

State Revenues

Indeterminate increase

Indeterminate increase

 

 

 

 

·         The Office of Legislative Services (OLS) concludes that State Medicaid expenditures will increase during the first year following the bill’s effective date, in order for the State to fund mental health rehabilitation services, via an undetermined number of clubhouse programs, for adults with serious mental illness. 

·         While some states have received federal approval to provide Medicaid reimbursement for certain services delivered through a clubhouse program, not all clubhouse services will be eligible for Medicaid coverage; at this time, however, the OLS cannot anticipate which specific clubhouse services the federal government may approve for reimbursement under the State’s Medicaid program. 

·         To the extent that some services for adults with serious mental illness are approved for reimbursement under the State Medicaid program, the State may begin to realize some amount of savings in the second year of clubhouse operations, and will likely realize greater cost savings in the following years, in the form of inpatient hospitalizations or inpatient rehabilitation service costs avoided for clubhouse members. 

BILL DESCRIPTION

 

     This bill requires Medicaid reimbursement of mental health rehabilitation services provided via a clubhouse program.  Under the bill, “clubhouse program” is defined as a non-residential, community-based psychosocial rehabilitation program accredited by Clubhouse International that is membership based and is designed to alleviate a member's emotional or behavior problems with the goal of transitioning the member to a less restrictive level of care, reintegrating the member into the community, and increasing social connectedness.  Members of the program, with staff assistance, operate all aspects of the program, including the provision of services such as employment training, housing assistance and educational support.  The bill stipulates that coverage of mental health rehabilitation services provided via a clubhouse program will not preclude the coverage of mental health services prescribed in conjunction with participation in a clubhouse program.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS concludes that State Medicaid expenditures will increase during the first year following the bill’s effective date, in order for the State to fund mental health rehabilitation services, via an undetermined number of clubhouse programs, for adults with serious mental illness.  Costs for the State Medicaid program to establish a clubhouse model will largely be driven by the number of programs that the State authorizes, as well as the scope of services provided to clubhouse participants.  By way of context, a 2018 Washington State Health Care Authority report on clubhouse programs noted that clubhouse advocates recommended an annual clubhouse operating budget ranging from $600,000 per clubhouse program for a smaller program to $800,000 for a larger program.  To the extent that federal Medicaid reimbursements are available for State expenditures for clubhouse program services, State revenues will increase accordingly. 

      While some states have received federal approval to provide Medicaid reimbursement for certain services delivered through a clubhouse program, not all clubhouse services will be eligible for Medicaid coverage; at this time, however, the OLS cannot anticipate which specific clubhouse services the federal government may approve for reimbursement under the State’s Medicaid program.  The clubhouse model of mental health rehabilitation services extensively incorporates peer support for participants’ recovery.  However, the State’s current Medicaid comprehensive demonstration program, which was approved by the federal Centers for Medicare and Medicaid Services in 2023, includes peer support services as one element of the substance use disorder treatment benefits provided to beneficiaries. 

      To the extent that some services for adults with serious mental illness are approved for reimbursement under the State Medicaid program, the State may begin to realize some amount of savings in the second year of clubhouse operations, and will likely realize greater cost savings in the following years, in the form of inpatient hospitalizations or inpatient rehabilitation service costs avoided for clubhouse members.  The amount of any potential State savings for inpatient treatment costs avoided will largely be determined by the uptake rate for clubhouse services available to beneficiaries with serious mental illness, the proximity of the State’s clubhouses to behavioral health services for program participants, and the reimbursement rates provided for clubhouse program services under the State Medicaid program. 

 

Section:

Human Services

Analyst:

Anne Cappabianca

Senior Fiscal Analyst

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.).