LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
SENATE, No. 3729
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JULY 6, 2023
SUMMARY
Synopsis: Provides for coverage of community-based palliative care benefits
under Medicaid.
Type of Impact: Countervailing impact on State expenditures and revenue; General
Fund.
Agencies Affected: Department of Human Services.
Office of Legislative Services Estimate
Fiscal Impact Annual
State Cost Savings $375.7 million to $563.5 million
State Revenue Loss $244.2 million to $366.3 million
 The Office of Legislative Services (OLS) determines that providing for coverage of
community-based palliative care benefits under Medicaid will result in countervailing impacts
on State expenditures and revenue resulting in a State cost savings of between $375.7 million
to $563.5 million, partially offset by a loss of $244.2 million to $366.3 million in federal
Medicaid reimbursements, for a net State cost savings of $131.5 million to $197.2 million.
 The costs associated with this bill will result from an increase in Medicaid expenditures due to
reimbursement for the new benefit. Alternatively, cost savings will be achieved as a function
of community-based palliative care services being associated with the prevention of health
crises and more expensive hospital-based services. Revenues under the bill will be realized as
the loss or gain of federal Medicaid reimbursements, which will be incurred in correspondence
to the increase or decrease of State Medicaid expenditures.
 This estimate assumes the annual uptake of the benefit will be 56,062 Medicaid beneficiaries,
or 2.5 percent of Medicaid enrollment, with a net combined State and federal cost savings per
beneficiary between $6,696 and $9,936 per year.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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BILL DESCRIPTION
This bill provides coverage for community-based palliative care benefits under the Medicaid
program. Under the bill, the Medicaid community–based palliative care benefit is to include, but
not be limited to, all of the following:
1) specialized medical care and emotional and spiritual support for beneficiaries with serious
advanced illnesses;
2) relief of symptoms, pain, and stress of serious illness;
3) improvement of quality of life for both the beneficiary and the beneficiary’s family; and
4) appropriate care for any age and for any stage of serious illness, along with curative
treatment.
Providers authorized to deliver the Medicaid community–based palliative care benefit will
include Medicaid-approved licensed hospice agencies, Medicaid-approved home health agencies,
and other Medicaid-approved licensed health care providers.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS determines that providing for coverage of community-based palliative care benefits
under Medicaid will result in countervailing impacts on State expenditures and revenue resulting
in a State cost savings of between $375.7 million to $563.5 million, partially offset by a loss of
$244.2 million to $366.3 million in federal Medicaid reimbursements, for a net State cost savings
of $131.5 million to $197.2 million. The costs associated with this bill will result from an increase
in Medicaid expenditures due to reimbursement for the new benefit. Alternatively, cost savings
will be achieved as a function of community-based palliative care services being associated with
the prevention of health crises and more expensive hospital-based services. Revenues under the
bill will be realized as the loss or gain of federal Medicaid reimbursements, which will be incurred
in correspondence to the increase or decrease of State Medicaid expenditures. This estimate
assumes an aggregate federal Medicaid matching rate across all Medicaid eligibility groups of 65
percent.
This estimate is based upon a study prepared by the National Academy for State Health Policy,
which indicated that the effective administration of a Medicaid palliative care benefit for the
highest service utilizers could produce cost avoidance savings ranging between $231 and $1,165
per Medicaid beneficiary per month. For the purposes of this estimate, the OLS assumes 20
percent above and below the midpoint of this range, or $558 to $828, as the cost avoidance savings.
This study concludes that cost savings under the palliative care benefit is associated with a reduced
number of hospital readmissions experienced by those utilizing the palliative care services.
Preliminary analysis of California’s implementation of a community-based palliative care benefit
affirms the National Academy for State Health Policy’s study and shows that when comparing a
member’s total cost of care prior to and after enrollment in the palliative care benefit, reductions
in costs are between 42 and 51 percent, with the majority of the cost reduction occurring for
hospital-related expenditures.
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At present, four percent of all Americans have a serious illness. For reference, examples of
serious illness include, but are not limited to: cancer, heart failure, chronic obstructive pulmonary
disease, Alzheimer’s disease, Parkinson's disease, multiple sclerosis, AIDS, and amyotrophic
lateral sclerosis (ALS). Assuming seven percent of the existing State Medicaid population, an
increase to the base national rate due to the higher prevalence of chronic illness among Medicaid
beneficiaries, provides that 160,176 Medicaid beneficiaries in the State have a serious illness. This
estimate further assumes that only 35 percent of these beneficiaries, or 56,062, would seek
community-based palliative care services under this bill as the National Academy for State Health
Policy indicates that successful home-based palliative care programs cite an engagement rate of
35 percent.
The OLS further notes several variables that may affect this estimate, such as: the
administrative costs associated with implementing the benefit; the unpredictability of benefit
uptake; the reimbursement rate established for the benefit following enactment; the length of time
services are provided per beneficiary; and provider capacity to deliver community-based palliative
care services to beneficiaries.
Section: Human Services
Analyst: Sarah Schmidt
Lead Research 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.).


Statutes affected:
Introduced: 30:4D-6