A4233 FISCAL ESTIMATE

LEGISLATIVE FISCAL ESTIMATE

ASSEMBLY, No. 4233

STATE OF NEW JERSEY

216th LEGISLATURE

DATED: NOVEMBER 13, 2015

SUMMARY

Synopsis:	Provides Medicaid coverage for advance care planning.
Type of Impact:	Expenditure increase, General Fund.
Agencies Affected:	Department of Human Services.

Office of Legislative Services Estimate
Fiscal Impact		Year 1 through Year 3
State Cost		Indeterminate increase

· The Office of Legislative Services (OLS) estimates that Assembly Bill No. 4233 may result in an indeterminate increase in State General Fund appropriations for Medicaid services.

· Although it is not possible to determine the overall cost to the State of adding advance care planning as an approved Medicaid service, the OLS notes that each service provided will most likely cost the State between $18.50 and $21.50.

· There are currently 1.7 million Medicaid beneficiaries in New Jersey who would be eligible for this service; however, the demographics of Medicaid beneficiaries makes it likely that only a portion of the total 1.7 million individuals will choose to access advance care planning services.

BILL DESCRIPTION

Assembly Bill No. 4233 of 2014 provides Medicaid coverage for advance care planning services.

Advance care planning is the practice of making explicit written instructions to caregivers, family, and friends on measures for delivering health care and for preserving a person’s dignity in the event that the person is unable, because of incapacity, to make those instructions known when needed at a later time. This includes the use of advance health care directives, health care powers of attorney, and medical orders for life-sustaining treatment that can be administered effectively within the health care system. At least two state Medicaid programs, in Colorado and Oregon, cover advance care planning conversations between physicians and patients.

FISCAL ANALYSIS

EXECUTIVE BRANCH

None received.

OFFICE OF LEGISLATIVE SERVICES

The OLS estimates that this bill may result in an indeterminate increase in State General Fund appropriations to support the State’s required 50 percent reimbursement for services provided under New Jersey’s Medicaid program.[1] The OLS cannot determine with any certainty the total cost of this new service as the total cost is dependent upon the total number of advance care planning services billed and the amount reimbursed for these services by Medicaid. The number of providers who will choose to provide the service, the number of beneficiaries who will require the service, and the reimbursement rate that is approved for the service in New Jersey are not known at this time. However, it is possible for the OLS to ascertain the estimated reimbursement rate, and to determine that Medicaid will most likely reimburse for these services in New Jersey.

The OLS determines that if this bill were to become law, it is likely that the federal Centers for Medicare & Medicaid Services (CMS) will reimburse providers in New Jersey for advance care planning for two primary reasons. First, currently the CMS reimburses two states which provide advance care planning through their Medicaid programs. Additionally, the federal CMS issued a final rule allowing for Medicare to provide reimbursement for advance care planning, and designated two new billing codes associated with advance care planning. As CMS is the administrator of both the Medicare and Medicaid programs and already provides advance care planning for other state’s Medicaid programs, it is very likely that New Jersey providers will also be permitted to collect reimbursement for providing advance care planning.

Colorado and Oregon currently provide advance care planning to Medicaid recipients. According to a representative of Colorado’s Medicaid agency, that state classifies its advance care planning services as a subset of physician services, and it receives federal Medicaid matching funds accordingly. Advance care planning is not explicitly included in Colorado’s Medicaid state plan, but according to information provided to the OLS, the CMS has informally approved this mechanism for claiming federal funds.

Additionally, on October 30, 2015, the CMS issued a final rule which defines codes for reimbursement for advance care planning provided by Medicare providers. The final rule updating payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee schedule will be implemented on January 1, 2016. Included in this rule was the finalization of two new codes for advance care planning services to be reimbursed for providers of Medicare services. The relevant codes are 99497 and 99498 and are reimbursed at approximately $86.66 and $75.11 for 30 minutes, respectively. Code 99497 provides for the first 30 minutes of a face-to-face advance care planning with the patient, family member, or surrogate. Advance care planning includes the explanation and discussion of advance directives, such as standard forms including the completion of such forms, as necessary, by the physician or other qualified health care professional. Code 99498 provides for additional advance care planning services in 30 minute increments.

Although the inclusion of advance care planning as a defined service in the Medicare program does not automatically include the service as a Medicaid service, it appears likely that CMS will approve these services for Medicaid beneficiaries as well.

New Jersey currently reimburses Medicaid providers approximately 50 percent of the Medicare rate for most services.[2] If this reimbursement rate is consistent for advance care planning, then Medicaid would reimburse approximately $43 for the first 30 minute consultation, and $37 for each additional 30 minute consultation. This is similar to Colorado’s reimbursement rate of $40 per 30 minute advance care planning consultation. Since New Jersey is responsible for 50 percent of all Medicaid costs, the New Jersey portion of the cost for advance care planning would equal $21.50 for the first 30 minute consultation, and $18.50 for each additional 30 minute consultation.

It is not possible to ascertain how many of the current 1.7 million New Jersey residents who receive Medicaid[3] would access advance care planning, so it is not possible to determine the total cost of the added service. However, since advance care planning is generally used by individuals nearing the end of life, it is likely that many of the individuals currently receiving Medicaid would not access this service. Although not restricted to certain populations, advance care planning is generally used by people who have a serious illness or are aging. Over 840,000 of the individuals who receive Medicaid in New Jersey are under the age of 21. Of the remaining individuals receiving Medicaid, approximately 90,080 people are aged, 773 are blind, 174,644 are disabled, and 630,670 are individuals who are adults who are not aged, blind of disabled.[4]

Overall, this bill may result in an increased cost to the State of between $18.50 to $21.50 for each advance care planning service; however, it is unlikely that a very large number of Medicaid beneficiaries will access these services.

Section:

Human Services

Analyst:

Robin Ford

Senior Fiscal Analyst

Approved:

Frank W. Haines III

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.).

[1] Under federal “Affordable Care Act” (ACA) provisions, health care costs for individuals who are newly eligible for Medicaid/NJ FamilyCare under the ACA Medicaid expansion (non-elderly childless adults with incomes below 138 percent of the federal poverty level) are supported entirely with federal funds. The federal reimbursement rate for these expenditures will begin to phase down to 95 percent in calendar year 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020 and subsequent years.