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ACA Medicaid Expansion Helped NJ Save Millions in Charity Care

With Republicans talking repeal and replace, where will hospitals find the money to care for the state’s most vulnerable residents?

charity care

New Jersey has saved hundreds of millions of dollars on hospital support since the federal Affordable Care Act took full effect in 2014, according to a state analysis of charity-care payments that fueled concerns among healthcare leaders about Republican efforts to repeal the landmark law.

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The state has budgeted $252 million — half state, half federal dollars — for the coming fiscal year, starting in July, to help hospitals cover the cost of treating uninsured patients who they are obligated to help, regardless of their insurance status. That’s down $100 million from the previous year and nearly $400 million less than the $650 million New Jersey committed to these expenses in 2015.

State officials note the reduction largely reflects the ACA’s Medicaid expansion, which has added 550,000 Garden State residents to the insurance rolls in recent years. Hospital bills documenting the charity care they provided dropped 53 percent in the past two years alone, they said in a report released Thursday.

Budgeting for healthcare

Gov. Chris Christie’s budget proposal for fiscal year 2018 includes more than $700 million in state and federal dollars for hospital assistance, with $218 million in funding for graduate medical education and nearly $167 million in targeted support, in addition to the charity care. The state also released a proposed breakdown Thursday of how these funds would be distributed, details that show some hospitals stand to gain or lose more than $13 million when compared with last year’s payments — and spark an annual struggle among industry leaders and state officials over how this funding will be doled out.

“This proposed funding furthers the state’s investment in a strong healthcare workforce and healthcare quality and reflects the governor's ongoing commitment to the growth of New Jersey's medical schools and the expansion of hospital-based teaching programs,” said New Jersey Health Commissioner Cathleen D. Bennett.

But charity-care payments don’t cover the full cost of this uncompensated care, and hospital leaders have long been concerned about the yearly trend in diminished state support. Funding was cut by $150 million in the current budget as well.

Worried about ‘repeal and replace’

Their worries are further magnified by fear that the Republican proposal to replace the ACA, now moving through Congress, would leave millions of patients without the coverage they recently gained — driving up the amount of care hospitals will once again need to provide for free. Among other things, the proposal drastically changes the way the federal government would pay for Medicaid, forcing the states to pick up a far greater portion of the tab.

“Gov. Christie made the right decision for our state to expand Medicaid to more individuals, and it has had a real impact,” Betsy Ryan, president of the New Jersey Hospital Association, wrote in an op-ed published recently in NJ Spotlight. “But if the ACA is repealed without an adequate replacement, the number of uninsured will spike. Hospitals will provide the care needed, but it will require a reinvestment of state dollars into the charity-care pool to adequately pay hospitals for that care. If the reinvestment doesn’t occur, many New Jersey hospitals will struggle financially.”

“It’s a simple, but alarming, formula: Fewer patients with insurance + less money to pay for charity care = a fiscal crisis for New Jersey’s healthcare community,” Ryan wrote.

The Garden State’s 72-acute care hospitals submitted to state officials more than $1 billion in unpaid healthcare bills in 2013, the year before the ACA’s Medicaid expansion began, the report released Thursday states. By 2014, these invoices had dropped to $570 million and by 2015 the bills totaled $480 million, according to the state’s report. (Since it takes several years to compile invoices, charity-care payments are based on bills submitted several years earlier; fiscal 2018 funding reflects the need demonstrated by bills from 2015, for example.)

Individual hospitals are reimbursed for these costs according to a formula that takes into account the dollar amount of the charity-care bills they submitted, the facility’s “payer mix” —the blend of private and public payments it receives — and other factors. In fiscal 2018, the proposed payment distribution ranges from $18,400 for Memorial Hospital of Salem County to more than $48 million for University Hospital, a safety-net facility in Newark that has traditionally depended on significant public support.

Suzanne Ianni, president and CEO of the Hospital Alliance of New Jersey, which represents safety-net hospitals like University, praised the charity-care distribution outlined by DOH and thanked the administration for increasing funding for graduate medical education. “This year’s funding distribution continues the governor’s commitment to protecting access for New Jersey’s most vulnerable residents by prioritizing safety-net hospitals,” she said.  

In the proposal released Thursday, University Hospital stands to gain more than $13.2 million over last year’s funding level — nearly $8 million more in charity care and a $5 million boost in graduate medical education. In all, University will receive $79.4 million. Hoboken University Medical Center, owned by the for-profit CarePoint Health, would see a $7.9 million hike, almost entirely due to charity-care increases. In all, Hoboken could get $12.9 million.

On the other hand, Jersey City Medical Center stands to lose more than $13.8 million in this year’s budget, almost exclusively due to a drop in charity-care funding; in total, JCMC is slated to get $25.6 million. Raritan Bay Medical Center, in Perth Amboy, could see its state support drop by nearly $8 million, all in charity care. Last year the hospital received $10.7 million in graduate medical funds and charity care, while this year the facility is scheduled to receive less than $3 million total.

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