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Bill to Establish Annual Cost of Living Adjustment for Certain Health Services Advances

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Trenton – Today the Senate Health, Human Services and Senior Citizens Committee advanced legislation sponsored by Senator Linda Greenstein, Senator Joseph Vitale and Senator Vin Gopal that would establish an annual cost of living adjustment based on the consumer price index for certain services.


“As the cost of medical services and programs continues to rise faster than the general rate of inflation, the rate at which these services and programs are reimbursed has not,” said Senator Greenstein (D-Mercer/Middlesex). “This bill would help close the gaps between health care costs and reimbursements, ensuring that programs providing mental health services, substance use treatments or services to individuals with developmental disabilities are reimbursed an amount fair to the services that they are providing.”


The bill, S-2668, would require that programs under the Divisions of Mental Health and Addiction Services and Developmental Disabilities in the  Department of Human Services (DHS) providing the aforementioned services must include an annual cost of living adjustment to the payments received by the organizations.


“Over the 12 months ending in June 2022, the Consumer Price Index increased 9.1 percent. This increase in the all items index was the largest 12-month increase in over 40 years,” said Senator Vitale (D-Middlesex). “The costs to providers for programs and services – such as wages, costs of supplies, and overhead costs – are increasing too. It is imperative that we take steps now to help these service providers by raising their reimbursement rates in line with the CPI to ensure future financial stability.”


Under the bill, the cost of living adjustment would be based on the consumer price index for the previous 12-month period that begins on October 1 and ends on September 30. The DHS would be required to announce the rate of the increase on October 1 of each year.


“DHS programs providing mental health services, substance use treatment services, or services to persons with developmental disabilities are essential to our Medicaid population across the state,” said Senator Gopal (D-Monmouth). “With this bill in place, program and service providers reliant on Medicaid dollars will be fairly compensated in the face of rising costs of living.”


The bill was released from committee by a vote of 7-0.