New Jersey has started refusing to pay some community vendors that bill the Division of Developmental Disabilities (DDD) for classes and activities for adults with I/DD, telling several of them to enroll as Medicaid providers and accept the Medicaid rate instead. The New Jersey Monitor reported Nov. 9 that families and operators say art, fitness, music and life-skills programs are being cut off; DDD's own August 20 and September 24, 2026 webinar slides lay out the rules the division says it is enforcing.

What DDD says it is doing

DDD's position is that nothing in its policy has changed. Department of Human Services spokesman Tom Hester Jr. told the Monitor the state is applying existing rules more strictly and working with affected organizations. His explanation matches a line in the division's August slides: "Accurate billing is essential to maintain Medicaid compliance and protect federal funding, particularly as states face increased federal scrutiny of Medicaid spending."

The service at issue is called Goods and Services. It lets a person spend part of their DDD budget on an item or a community activity that is not covered elsewhere, paid through a fiscal intermediary (Easterseals NJ or Acumen, depending on the person's self-direction model). The division's intended example is a swim class at the YMCA.

According to the September webinar, a class or program can be approved under Goods and Services only if:

  • the vendor exists primarily to serve the general public, not people with I/DD;
  • the class is open to and attended by the public, in an integrated community setting;
  • no more than 12 people with I/DD attend at one time; and
  • the person attends no more than 12 hours of such classes a week, tied to an assessed need.

The slides add that if most of a vendor's revenue comes from DDD or Medicaid, that generally shows it mainly serves DDD participants. A business that primarily serves people with I/DD must instead apply to become a DDD/Medicaid provider of the matching service, such as Community Inclusion Services, Respite or Day habilitation, and bill Medicaid at the set rate. DDD's August slides note that Goods and Services vendors don't have to meet the requirements licensed providers do, including background checks, Central Registry checks, incident reporting and DDD-required staff training.

What families and vendors are reporting

The Monitor reported that payment denials began last summer, sometimes for programs that had been paid for years. State officials told the paper that paid Goods and Services claims grew more than fivefold, from $10.4 million in 2020 to more than $54.2 million in the last budget year. Some vendors were told their rates were too high; others that their programs weren't inclusive enough. One life-coaching operator said she charges $180 for a bundle of services that Medicaid would reimburse at $30, and that at least 20 clients lost services after denials this fall.

Disability Rights New Jersey told the Monitor it has heard from several people who lost programs and that members should get written notice so they can appeal. DDD's September slides draw a line here: when a specific vendor is denied, for example because its rate isn't "reasonable and customary," the support coordinator is told to find a new vendor; when the service itself is denied, the final denial includes Fair Hearing information. Vendors also told the Monitor they learned about the webinars only after the fact.

What this means for providers and DSPs

  • Expect referrals to shift. If small vendors can't or won't enroll as Medicaid providers, some people who relied on them may look to licensed provider agencies for Community Inclusion Services or day services. Agencies may want to check capacity and staffing before those requests arrive.
  • Know the provider path. Vendors that enroll take on the same rules as any DDD provider, including background checks, incident reporting and staff requirements, and are paid at the Medicaid fee schedule rather than their own rates.
  • Help families with the paperwork. Support coordinators submit Goods and Services requests, and DDD's reviewers check the vendor's own website or brochure to confirm a class is open to the public. A description like "open to all adults, including adults with developmental disabilities" fits; "for adults with autism" does not, per the August slides.
  • Watch for notices. People whose services are denied, rather than only a vendor, should receive Fair Hearing information. Staff who notice a person suddenly losing a regular activity can flag it to the support coordinator.
  • Plan for the gap. For DSPs, a lost weekly class can mean more unstructured time at home or in day settings. Teams may need to plan new community activities that meet the criteria.

DDD hasn't published a count of denied vendors or affected participants. Direct Support News will follow up if the division issues new guidance.