Hospitals Warn More Funding Cuts Will Hurt Indigent, Immigrants

Administration could trim as much as $175M over two years, arguing more patients covered by insurance, Medicaid thanks to ACA

Credit: NJ Office of Information Technology
Gov. Chris Christie attending opioid addiction forum in Neptune, NJ
For some hospital officials, enough is enough when it comes to state funding cuts.

Gov. Chris Christie has trimmed some $300 million in state and federal dollars from New Jersey’s charity-care fund over the past two years, nearly slicing in half funding to reimburse hospitals for treating uninsured patients.

Last week the administration floated two additional funding cuts impacting charity care and Medicaid rates that would cost the state’s healthcare system another $175 million between this July and the summer of 2018. Treasury officials pointed to the fact that with 700,000 more residents enrolled in health insurance plans, including the federal Medicaid program, since the Affordable Care Act took full effect in 2014, hospitals are now providing far less “uncompensated care” than in the past.

But hospital advocates have insisted many facilities are still struggling to cover the shortfalls in their budgets. They fear that additional cuts would be felt statewide and could particularly hurt safety-net hospitals that treat a large share of the Garden State’s low-income and immigrant population. And they have started to push back, encouraging state officials to protect the original funding levels, at least in the coming years.

“We are disappointed that healthcare funding for the most vulnerable population has been targeted by these cuts,” said Betsy Ryan, president and CEO of the New Jersey Hospital Association, which represents the state’s 72 acute-care facilities. “We look forward to working with the Legislature and the governor on this important issue.”

News of the new cuts surfaced Wednesday, when acting Treasurer Ford Scudder told members of the Assembly budget committee that weak tax collections would result in a $600 million gap in the proposed $34.8 billion budget, which lawmakers must approve by the end of June. Scudder said the administration would make a number of reductions to balance the proposed budget, including trimming $25 million from charity care. Because this funding triggers a one-to-one federal match, the full impact would be $50 million.

As a result, the charity-care budget for fiscal year 2017 would shrink from the $352 million budgeted in February to $302 million. Scudder said the impact would be offset in part by the new funding flowing to hospitals through the insurance plans, including the federal Medicaid program, that cover the cost of treating all these newly enrolled patients.

[related]The following day, Christie told healthcare providers gathered at Jersey Shore Medical Center in Neptune for an event to showcase the state’s work to battle opioid addiction that he would withhold $127 million proposed for fiscal year 2017 in future years if the substance-abuse programs funded with the money didn’t show positive results. The FY17 dollars are dedicated to increasing historically low Medicaid reimbursement rates for healthcare providers who treat mental health and addiction issues. But if the money isn’t spent wisely, Christie reportedly said it would not be included in the FY2018 budget.

Representatives of the state’s hospital industry were quick to raise concerns about any additional cuts to charity care and the loss of future Medicaid dollars. Even at the existing levels, charity care does not cover the full cost of treating those who lack insurance or are covered by Medicaid, which pays 70 cents for each $1.00 spent.

Suzanne Ianni, president and CEO of the Hospital Alliance of New Jersey, which represents safety net facilities in particular, said the organization “is working with the Legislature and administration to explain why another cut to charity care just can’t happen.” She added, “While we understand that balancing New Jersey’s budget is no easy feat, our policymakers must find $25 million somewhere else to plug the budget gap. “

Even with the insurance expansion in recent years, as many as a million people still lack coverage, according to the Hospital Alliance. Ryan, with NJHA, said this includes roughly 500,000 undocumented immigrants who “fell through the cracks” of the ACA.

Both Ryan and Ianni also raised concerns about the governor’s suggestion that he might not continue to support the higher Medicaid reimbursement rates beyond the coming year. They praised the governor’s plan to boost these rates in FY17 — an increase fueled largely by federal dollars — but underscored that the increase still won’t close the gap between the cost of care and the reimbursement provided through Medicaid.

“So while it is true that additional Medicaid revenue has been paid to hospitals, if that money doesn’t cover the cost of care to Medicaid patients, how can that funding be used to justify a further cut to charity care,” Ianni wondered.

Debra Wentz is president and CEO of the New Jersey Association of Mental Health and Addiction Agencies, a network of providers that treat hundreds of thousands of Medicaid patients statewide for mental-health and substance-abuse issues. She had a slightly different take on Christie’s comments on future Medicaid funding.

“I think the governor was strongly making a point to his own administration staff, saying that the funds should be used wisely and effectively in enabling more people to access treatment and helping to address the opioid crisis and that with this additional infusion of funds, he was expecting results,” said Wentz, who attended the event at Jersey Shore Medical Center.

Either way, Wentz reiterated her organization’s established position that even with the additional $127 million the proposed rates are not high enough to cover the cost of certain mental-health and substance-abuse treatments. These providers are also bracing for an overhaul in the state’s payment system which some fear will leave them millions of dollars short.