TESTIMONY
BEFORE THE NEW JERSEY ASSEMBLY BUDGET COMMITTEE
ON THE GOVERNOR’S FISCAL YEAR 2015 BUDGET
BY THOMAS H. PYLE
50 BALSAM LANE, PRINCETON, NJ 08540 T: 609-924-7895 E: THPYLE@GMAIL.COM W: WWW.PSYCHODYSSEY.NET
FOR THE NEW JERSEY PSYCHIATRIC REHABILITATION ASSOCIATION
AT MONTCLAIR STATE UNIVERSITY
MARCH 12, 2014
To the Honorable Gary S. Schaer, Chairman, New Jersey State Assembly Budget Committee:
Thank you for this chance to testify before the Assembly Budget Committee regarding the
fiscal year 2015 budget. My name is Tom Pyle, of Princeton. I am a member of the New Jersey
Mental Health Planning Council. I am also a member of New Jersey Psychiatric Rehabilitation
Association (NJPRA), a professional association of mental health providers of psychiatric
rehabilitation (PsyR) services, mostly community based, to over 250,000 New Jerseyans with
schizophrenia, bipolar disorder, and clinical depression pursuing and achieving recovery.1 More
important, I am a father of a New Jersey Medicaid beneficiary with a psychiatric disability. For seven
years I have been helping my son navigate the maelstrom of mental illness—and the sometimes
rocky shoals of the state’s system that tries to care for it. A former banker who shares your peculiar
interest in budgets, I was so swamped by the mental illness tsunami that I went back to school for a
second degree in psychiatric rehabilitation (from Rutgers) to be more effective in the search for better
public mental health care.
Knowing the challenges of my colleagues, my son, my family, and all others likewise
typhooned by mental illness, I pledge my partnership as I also plead my position. Psychiatric
rehabilitation is a critical component of Medicaid-funded mental health recovery. Medicaid is the
1
dominant funder of the public mental health care in this country.2 New Jersey’s Medicaid rates are
currently the lowest in this country.3 Our loved ones with mental illness deserve better. The decisions
that you honorable representatives will make about this budget, particularly about New Jersey
Medicaid’s funding of public mental health services, and especially in light of the controversial and
possibly contentious forthcoming move of our behavioral health system to managed care, are as
serious as schizophrenia.
The Role of Psychiatric Rehabilitation in Mental Health Recovery
Since 2006, the official policy of the Division of Mental Health and Addiction Services has
been “recovery”4, best achieved by community integration of all citizens with psychiatric disabilities
to the fullest extent possible. Indispensable to such recovery is the practice of psychiatric
rehabilitation. What do I mean by that?
I have learned that an optimal mental health system has three components, as shown in
Attachment 1. The medical component consists of hospitals, doctors, and medications that stabilize
function. The rehabilitation component teaches skills and provides supports that foster community
integration. The empowerment component generates the energy, resolve, and hope that helps a
person through and to recovery. All three components must work together to foster recoveries of the
highest value for the most people over the longest period for the lowest cost. The science of the
medical component is psychiatry. The science of personal empowerment is psychology. The science
of the rehabilitation component is psychiatric rehabilitation, comprised of federally designated
evidence-based practices (also referenced in the 2014 budget on pages D-172 and D-1735), such as:

Program of Assertive Community Treatment (PACT)6

Illness Management and Recovery (IMR)7,8

Integrated Dual Disorder Treatment (IDDT)9,10
2

Supported Housing (SH)11

Supported Employment (SEP)12

Supported Education (SEd)13,14

Family Psychoeducation (FPE)15-17
As I personally know from my own studies, New Jersey is considered a national leader of
psychiatric rehabilitation knowledge and practice, much due to our extraordinary “Jersey Strong”
Rutgers Department of Psychiatric Rehabilitation and Counseling Professions, as seen in Attachment
2, a pioneering powerhouse in psychiatric rehabilitation education, training, and research.4,18-24
Psychiatric rehabilitation is a transdisciplinary practice at work in our state’s hospitals, community
agencies, residences, and private practices. For instance, it helps service users secure sufficient and
seamless services when transitioning between the state hospitals, other institutions, and communities.
It implements housing requirements to arrange for care in least restrictive environments as mandated
by the Supreme Court’s Olmstead decision. It gives New Jerseyans in need skills and supports to
sustain their recoveries with good health and wellness self-management, thus reducing relapses and
rehospitalizations.
The Coming Challenge of Medicaid-Funded Managed Mental Health Care
Right now New Jersey is shifting its public mental health care to “managed care”. The
Department of Human Services (DHS) will soon contract a private company to manage New Jersey’s
public mental health care, including its Medicaid payments. Monthly provider-based contract
payments will be changed to incident-based fee-for-service payments. A critical part of this
transition is setting new Medicaid rates, a process now engaged by DHS and its consulting firm,
Myers & Stauffer. By this process the State is redefining eligible services and resetting rates for all
Medicaid-funded public mental health services.
3
How DHS concludes these will affect all New Jersey’s mental health service consumers and
their providers for years to come. At stake is the adequacy of New Jersey’s public mental health
system. If this rate-setting is not done right, Medicaid in the new fee-for- service system could fail to
fund full and fair value for services. If this occurs, New Jersey’s community mental health care
system could deteriorate to a crisis, affecting tens of thousands. Eighteen years ago Tennessee
crashed its public mental health system when it made such a move.25 Other states have had varied
results.26 Fortunately, things are better now, but we cannot be complacent.
New Jersey has been neglecting its community mental health workforce. Over the past 6
years the state has imposed an unreasonable freeze on cost-of-living increments for provider agency
contracts. This has caused workforce compensation to be mostly flat over the period, while the CPI
index rose in the same time by over 13%, as seen in Attachment 3. This sad circumstance has sapped
community direct care worker morale and crippled recruitment and retention. Meanwhile, as
Medicaid is poised to expand its rolls by 25%, adding 245,000 new beneficiaries in New Jersey
alone,27 workforce case loads are about to explode. My provider friends also tell me that agency
operations are another concern. Strict new compliance regulations, without sufficient funds for
training to abide by them, threaten to overwhelm agency capacities. The proposed change of the
State’s Medicaid payment basis to incidental fee-for-service will squeeze provider cash flows.
Coverage of indirect costs for psychiatric rehabilitation service mobilization (e.g., utilization review
and compliance activities, billing capacity, and working capital) is also uncertain.
Specific Problems with Medicaid
Unfortunately, New Jersey’s Medicaid reimbursement today is severely deficient. Both
“catch-up” and “correction” are needed to ensure that psychiatric rehabilitation services receive
proper specification and sufficient funding under Medicaid. Consider the following:
4

New Jersey’s Medicaid rates are currently the lowest in the nation.28 (See Attachment 4.)
Thus many New Jersey providers no longer accept Medicaid29, the fewest of any state. For
example, because of miserly Medicaid reimbursements, not one private psychiatrist in my
son’s home county of Mercer accepts Medicaid, according to the New Jersey Medical
Assistance Customer Center.30 This disgrace hobbles effective PsyR practice and hurts those
with mental illness.

Medicaid’s definition of “medical necessity” does not apply to many PsyR practices,
which preempts many effective, efficient, and cost-saving aspects of PsyR that can greatly
help.

Gaps abound. Medicaid funds only some but not other elements of certain PsyR practices
(e.g., Supported Employment and Supported Housing), creating enormous discontinuities and
wasting public money.
What new rates the State will set, and for what services, now pose the greatest public health policy
challenge to face the Garden State in years.
The FY 2015 Budget: Psychiatric Rehabilitation’s specific needs
So, what do I recommend?

Stop being last in Medicaid rates. Might the Legislature adopt the goal of funding New
Jersey’s Medicaid rates, now dead-least 50th in the country, to at least the national average—
even it that would not even fully address our highest-in-the-nation cost of living in this state?
It should also fund rates sufficiently to enable linkage of compensation increases to the rate
of inflation (COLA).

Catch up the compensation. The critical work of helping those with psychiatric disabilities
achieve true community integration is long, hard, slow, and undercompensated, especially in
5
light of the state’s unreasonable 6 year freeze on agency contract adjustments. The
Legislature should fund an adjustment to the state’s current contracts with community mental
health agency sufficient for a 10% catch-up compensation adjustment for the direct care
psychiatric rehabilitation workforce. This would reverse part of the 12.6% shortfall caused by
the state’s 6 year contract adjustment freeze under the existing Medicaid contract payment
system.

Fill the gaps. We should fund the full continuum of PsyR practices. Funding should provide
for services in a selectively expanded NJ Medicaid definition of “medical necessity”, include
a) all PsyR practices, b) all elements of each PsyR practice (e.g., for Supported Employment,
from pre-employment through on-going support services), and c) activities necessary to
support psychiatric rehabilitation (e.g., utilization reviews and compliance, billing, and
related working capital).

Fund more Supported Employment. As a group of people, people with psychiatric
disabilities endure an unconscionable unemployment rate of 85%! Research shows that
supported employment is particularly effective for advancing community integration and
recovery.31 Work is good therapy for everybody’s recovery, especially those with psychiatric
disabilities. Supported employment in FY 2014’s budget estimate supported 2,371 service
users with 96,029 service hours for only $5.3 million at an effective rate of $55 per hour.5
This program easily could be doubled to serve 5,000 service users.

Fund for safety and flexibility in special situations. For another means by which to save
money and improve services over the long-run, the Legislature should specify and
sufficiently fund sensible adjunctive services when necessary for safety or flexibility in
special situations (e.g., paired rather than single visits by mobile treatment/support teams,
telephonic rather than face-to-face dialogues of consumers with prescribing specialists and
6
care managers). That would more efficiently and inexpensively activate and sustain PsyR and
related recovery practices.

More legislative oversight—and support! The current Medicaid rate-setting process is the
most important public health policy question that has faced New Jersey in a decade, yet few
outsiders know about it, much less are engaging in the debate about it. This seems a major
opportunity for our legislators to be more involved in a critical public policy oversight
matter, the Medicaid rate-setting debate, to help New Jersey transform its current rate status
from the worst in America. In spite of our current economic woes, how can we not heed the
higher call of the higher ideal: more properly to arrange and provide this utterly basic
funding, thus better to protect and care for the most vulnerable amongst us, our loved ones
with severe mental illness, as is their meager entitlement, our government’s fundamental
purpose, and our society’s moral obligation?
So, this concludes my presentation. I hope it has been helpful. I thank you for your time, and
I, my family, and my colleagues of the New Jersey Psychiatric Rehabilitation Association look
forward to working to working with you.
7
Attachment 1
Recovery: To Most, An Outcome
time
9
Recovery: Actually, A Process
time
10
8
Medical
Recovery Process: 3 Components
Psychiatric Rehabilitation
Medical
Individual Empowerment
time
11
So... A Whole Recovery System
Illness Management & Recovery
Supported Housing
Medical
Hospitals
Supported Education
Doctors
Psychiatric Rehabilitation
Medical
Meds
Supported Employment
Assertive Community Treatment
Family Psychoeducation
Psychotherapy
Peer Groups & Services
Individual Empowerment
time
17
9
Medical
Recovery Process: 3 Essential Sciences
Psychiatric
Rehabilitation
Psychiatric Rehabilitation
Psychiatry
Medical
Psychology
Individual Empowerment
time
22
The Common Misperception of Relativity
18
10
Attachment 2
Psych Rehab: “Jersey Strong” Expertise
16
Psych Rehab: Evidence-Based Practices
(Pratt, Gill, Barrett, & Roberts, 2007)








Illness Management and Recovery
Integrated Dual Disorder Treatment
Assertive Community Treatment
Family Psychoeducation
Supported Employment
Supported Education
Supported Housing
Other “promising” practices
Psychiatric Rehabilitation  Recovery
15
11
Attachment 3
Inflation: CPI vs. Direct Care COL
Year
Inflation
Rate(%)
Direct
Care
COL(%)
2005
3.4
2006
2.5
2007
4.1
2008
0.1
0.0
2009
2.7
0.0
2010
1.5
0.0
2011
3.0
0.0
2012
1.7
0.0
2013
1.5
0.5
Source: U.S. Bureau of Labor Statistics
Inflation: CPI vs. Direct Care COL
PsyR Community Direct Care COL
= 12.6%
Source: U.S. Bureau of Labor Statistics
12
Attachment 4
Critical Problem: Medicaid Rate Ratio...
(Zuckerman et al., 2009)
US
0.72
WY
AK
DE
PA
CA
NY
1.43
1.40
1.00
0.73
0.56
0.43
NJ
0.37
36
Critical Problem: Provider shortage
(Decker, 2013)
% doctors accepting
37
13
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