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Hospital Aid Remains Stable, Following Years of Cuts

But charity care for mostly urban hospitals would be beefed up by Murphy’s decision not to take money away from the program

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Public financial support for New Jersey hospitals will remain stable in the coming year, following several years of annual budget cuts, a situation that allows for less severe funding reductions at some facilities — and small or moderate gains for more than a dozen others.

The state Department of Health released details late last week of how it will divvy up $636 million in state and federal dollars among New Jersey’s 71 hospitals. This includes $252 million in charity care to help cover uncompensated services, $218 million to support medical education, and nearly $167 million to reward quality and efficiency efforts.

“The department is committed to supporting New Jersey’s hospitals’ efforts to provide uncompensated care to our uninsured residents,” said state health Commissioner Dr. Shereef Elnahal. “This funding also provides for essential training of physicians to boost the healthcare workforce.”

Charity care falls short

But some hospital industry leaders say that, while the budget shows a “significant commitment” to healthcare, the dollars for one fund in particular — charity care, which helps hospitals cover the cost of treating uninsured and underinsured patients — still falls far short. Others, however, praised the administration’s efforts to target these limited resources to the safety-net facilities that need it most.

The proposal Democratic Gov. Phil Murphy created for fiscal year 2019, which starts in July, provides the same level of support the industry shared in the current year, following years of cuts under former Gov. Chris Christie, a Republican. Murphy’s $37.4 billion plan must be approved by the state Legislature, which is now hosting public hearings as part of its review.

Charity care is allocated based on uncompensated care, or services hospitals provide to uninsured or underinsured residents, and the number of Medicaid patients they treat. As insurance coverage expanded under the federal Affordable Care Act — which extended coverage to some 800,000 residents — hospitals saw this tab shrink significantly. Christie’s administration highlighted these changes when it announced the current year’s budget, which also included a total of $636 million, although it didn’t mention the ACA, or Obamacare, by name.

Free medical services

The New Jersey Hospital Association, which has embraced the ACA, said these gains haven’t erased their need for more support. Reimbursements are based on documented care, which doesn’t always capture all the services they offer at no charge, and some hospitals only receive pennies on the dollar for the claims they submit to the state.

“These uninsured patients are among the state’s most vulnerable, and they reside in communities all across our state,” NJHA president and CEO Cathleen Bennett told the Senate Budget Committee earlier this month. “Charity care helps offset the cost of lifesaving treatment that hospitals proudly provide around the clock — not just in the ED but throughout the hospital — regardless of a patient’s ability to pay.”

Bennett said an additional $100 million — an investment of $50 million for the state, since the federal government would kick in another $50 million — is needed to fully fund the current formula, ensuring that all facilities receive at least 43 cents on the dollar and that urban, safety-net hospitals collect 96 cents on the dollar for documented uncompensated care.

“Restoring charity care to full funding of $351 million would truly make a difference in the ability of hospitals to continue to provide quality, accessible care to every New Jerseyan and invest more in population-health strategies for healthier communities,” she said. That’s the amount Christie budgeted for 2017; overall, these providers have lost close to $400 million in state funding since 2015, when $650 million was allocated for charity care.

Suzanne Ianni, the president and CEO of the Hospital Alliance of New Jersey, which represents largely urban, safety-net facilities, praised Murphy and legislative leaders for dedicating the resources they did to operations that are most in need. These hospitals treat the “lion’s share” of low-income patients, she noted.

“Hospital Alliance truly appreciates the administration’s recognition that limited Charity Care dollars must be concentrated to safety-net communities that work to address the many challenges those living in vulnerable communities face,” Ianni said.

An urban advantage

The group representing some suburban and rural hospitals, however, said the current situation disadvantages facilities in these communities. According to the Fair Share Hospital Coalition (FSCHC), which represents these sites, 12 percent of the state’s acute care hospitals receive some 90 percent of the charity care dollars.

“All hospitals are safety-net providers in their community. FSHC members remain committed to caring for all New Jersey residents in need, regardless of their ability to pay,” spokeswoman Jennifer Mancuso said. “The program is underfunded and inequitable.

Christie made a point of prioritizing graduate medical education — which involves $2 federal dollars for each $1 the state spends — and added an extra $30 million for GME in the current budget, a level Murphy has proposed to sustain. Those funds are distributed among 43 facilities involved in teaching, based on a formula that considers spending on medical residents and interns, figures included in a Medicaid report facilities must file with the state, officials said. The funding covers programs that train interns and residents in various medical fields.

Hospital leaders welcomed these funds; Bennett said it will help address the state’s “looming physician shortage.” Both Ianni and Mancuso agreed Murphy’s continuation of the program will benefit the future of healthcare. “This is especially important in safety-net communities where attracting and retaining physicians is more challenging,” Ianni added.

The third fund involves the Delivery System Reform Incentive Payment Program, DSRIP, which is in its seventh year now; this money is also an even split of federal and state dollars. The payments, which go to 46 hospitals participating in the program, are designed to reward facilities that meet certain measures established by the state, with federal approval. It seeks to improve patient outcomes, benefit population health and lower costs by transitioning hospitals to a funding model that encourages quality, not quantity of care.

Drilling down on these numbers, a total of 14 hospitals will see more money in combined funding than they did this year, eight of which will collect at least an extra $1 million. And while several facilities lost big this year — including Jersey City Medical Center, which was allocated $13 million less than in 2017 — these reductions will be more moderate next year, with seven facilities seeing funding drop by $1 million or more as a result of changes in the care they provide, and how these fluctuations are reflected by the formulas the state uses to determine financial aid.

Facilities that lose funding in the fiscal year 2019 budget include St. Joseph’s Medical Center, in Paterson, which will see support drop $6.3 million, but collect a total of $52.4 million from all three funds. AtlanticCare Regional Medical Center, in Atlantic City, will lose $3.4 million, leaving it with $11.1 million overall. And NewBridge Medical Center — formerly Bergen Regional, a county-owned facility with a high number of behavioral health clients — will collect $3.3 million less than this year, with a total of $14.3 million.

Gains were small, overall; Jersey City Medical Center, part of the RWJ/Barnabas system, will collect $2.8 million more this year, for a total of $28.5 million in charity care, GME, and DSRIP. Capital Health Regional Medical Center, in Trenton, will see funding dip by $2.3 million, but collect $16.9 million overall.

The five hospitals that will collect the most overall include University Hospital, in Newark, slated to receive $77.7 million ($1.7 million less than this year); Paterson’s St. Joseph’s, at $52.4 million; Cooper Hospital University Medical Center, in Camden, at $41.7 million ($1.7 million less than this year); Trinitas Regional Medical Center, in Elizabeth, with $33.5 million (an increase of $1.7 million over this year); and JCMC, with $28.5 million.

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