Democrats’ Budget Sweetens NJ’s Charity-Care Pot By $50 Million

Lilo H. Stainton | June 29, 2016 | Health Care
Additional $10 million allocated for Newark Beth Israel and St. Francis in Trenton

crowded hospital waiting room

New Jersey hospitals — along with their staff and patients — are among those who stand to benefit from a state budget Democrats quickly adopted this week that would enable acute-care facilities to collect an additional $50 million in charity-care funding.

Democrats restored $25 million for hospital charity care in the $34.8 billion spending plan they proposed last week as an alternative to the fiscal year 2017 budget Gov. Chris Christie introduced in February. The money, which triggers a federal match of $25 million, goes to help hospitals cover the cost of caring for uninsured patients, which they are legally required to do.

Amid a flurry of last-minute legislation on Monday, lawmakers also voted to kick in nearly $10 million extra to help two specific hospitals: $7.8 million for Newark Beth Israel Medical Center and $1.8 million for St. Francis Medical Center, in Trenton. While other hospitals provide more documented charity care, supporters said these urban safety-net sites were in need of special assistance because they both stood to suffer significant funding cuts under the state’s latest formula for distributing charity care dollars.

The measure (S-2413/A-4003), a supplement to the Democratic budget bill, was approved by both the Assembly and Senate late Monday with little debate and largely along party lines. Like the budget itself, it still requires the Republican governor’s signature to become law.

Garden State hospitals were originally expecting to share nearly $350 million in charity-care dollars during FY2017, which starts July 1, down from a $500 million allocation in this current fiscal year. Christie trimmed an extra $25 million, which also cost the state the $25 million federal match, when revenue numbers came in far below anticipated levels last month.

[related] “Everybody had losses, but for these two it was particularly bad,” explained Assemblywoman Eliana Pintor Mirin (D-Essex), one of the lead sponsors. Beth Israel alone stood to lose more than $17 million this year, she said, or more than $22 million if the $50 million Christie had cut was not restored through the Democratic spending plan. “This bill will help them overcome the challenges of providing healthcare in some of our poorest communities in order to continue delivering these essential services to our most vulnerable populations.”

Charity-care dollars are distributed among the state’s 72 acute care hospitals according to a formula devised annually by the Department of Health to account for their volume of uncompensated care, the demographics of the surrounding community, and other factors. As more residents are enrolled in health insurance plans through mandates in the Affordable Care Act, these uncompensated costs have declined and state payments have dropped sharply.

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Charity care claims dropped a whopping 44 percent between 2013 and 2014 alone, the most recent years for which the state has data.

While state officials have continued to defend the funding levels as appropriate, hospital leaders said the formula doesn’t reflect their true costs. The numbers are based in part on Medicaid payments, which cover 70 cents of every $1.00 hospitals actually spend.

“We are very grateful — and relieved — that the Legislature has restored this $50 million additional cut to charity care,” said Betsy Ryan, president and CEO of the New Jersey Hospital Association, which represents all acute-care facilities. “The loss of $50 million more would cause significant harm as hospitals work to fulfill their obligation to provide round-the-clock care to their communities — including those in need and without health insurance.”

“It’s not in our best interest to make a cut that also costs our state federal-matching funds,” Ryan added. “We look forward to working with the governor to maintain this crucial funding that supports hospitals in providing quality healthcare to our state’s uninsured residents.”

While Ryan did not address the additional $10 million allocation specifically, the measure was heralded by leaders at the state’s largest healthcare network, RWJBarnabas Health, which now operates Newark Beth Israel. They praised Pintor Marin and her colleagues, as well as Senate sponsors Teresa Ruiz and Ron Rice (both D-Essex) for rallying behind the urban hospital as it expands its efforts to support Newark residents.

“RWJBarnabas Health is greatly appreciative of the efforts of the Legislature and the bill’s sponsors in particular for their understanding of the tremendous challenges faced by urban hospitals with exceptionally vulnerable residents,” said Barry H. Ostrowsky, president and CEO of RWJBarnabas Health.