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Newsletter Vol. 29, No.12
New Jersey Medicaid·NJ · Psychiatry, Critical Care·Provider Notice
Effective date
Oct 1, 2018
We identified it
Jun 20, 2026
Summary
New Jersey Medicaid has shifted inpatient psychiatric hospital payment responsibility to managed care organizations (MCOs) effective October 1, 2018. DMHAS Diversion Bed Contracts now only cover uninsured patients, FFS Medicaid patients ages 22-65, and patients with insufficient third-party insurance. Medicaid managed care beneficiaries are NO LONGER eligible for DMHAS Diversion Bed Contract payment, even if admitted to the same facilities.
Action Required
Immediately: Billing team must update insurance eligibility screening and billing workflows to identify all Medicaid managed care beneficiaries BEFORE admission to DMHAS Diversion Beds. For any Medicaid MCO patient admitted to a Diversion facility, bill claims to the MCO directly, NOT to the DMHAS Diversion Contract. Update billing system rules to route MCO psychiatric inpatient claims to managed care plans, not DMHAS. Train front desk and authorization staff to collect MCO information and verify coverage type (FFS vs. managed care) at registration. Failure to bill to the correct payer will result in claim denials and payment delays. For consensual status patients from STCFs transferring to Diversion facilities: Medicaid MCO patients receive acute coverage if they meet commitment criteria; once they no longer meet commitment criteria, they become eligible for administrative payment only if receiving clinical services and facility is working toward discharge.