State Budget Funding for Hospitals to Hold Steady but Individual Impacts Vary

Lilo H. Stainton | April 10, 2019 | Health Care
While the overall allocation remains the same, some facilities are set to receive more than this year and some less

Credit: Luis Melendez/Unsplash
New Jersey’s 72 acute-care hospitals are set to share at least $670 million in public funding in the next fiscal year, according to the governor’s budget proposal, the same amount as was distributed this year.

But changes in patient volume and other factors could mean big changes for individual facilities, with one gaining $14 million over last year and another slated to receive nearly $18 million less. The largest amount of funding — nearly $100 million — will go to Newark’s University Hospital, the state’s only public facility, which has been undergoing reform since state officials detected a number of clinical and operational concerns there.

The state Department of Health on Tuesday released details for several categories of budget funding, including $262 million in charity care, which is used to reimburse a portion of the costs hospitals incur treating patients who don’t have insurance. Half of this comes from state sources, the other half from federal dollars.

Another $218 million will be distributed to 42 teaching institutions, through the graduate medical education program; two-thirds of this money is from the federal government, with the state covering the rest. An additional $24 million will be shared by 14 teaching hospitals that treat high numbers of poor patients, with funds generated through an increased fee charged to patients admitted to hospital.

In addition, some $166.6 million in federal funding will be shared among 42 facilities thanks to the eight-year-old Delivery System Reform Incentive Payment program; details of this distribution are still pending. (Additional money will be provided for the state’s four psychiatric hospitals as well as from other sources.)

Funds for charity care have declined

“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.”

The hospital funding is among one of the largest single investments made through the health department in Gov. Phil Murphy’s $38.6 billion budget proposal for fiscal year 2020. Lawmakers must approve the new budget by July in order for Murphy to sign it into law.

Years ago, the state allocated more than twice as much funding to charity care costs, which are paid out based on the uninsured-patient costs incurred by hospitals, their financial picture, and other factors. But the need has declined significantly since the federal Affordable Care Act was fully enacted in 2014, which added more than 800,000 patients to insurance rolls in the Garden State.

But, while the uninsured rate is now at a record low in New Jersey — less than 9 percent among those under 65 — un-covered patients, including immigrants who may lack the documentation needed to obtain coverage, must receive care if they arrive at a hospital. That leaves hospitals with hundreds of millions of dollars in unpaid costs each year.

Leaders at the New Jersey Hospital Association — which represents all facilities — were not available for comment late yesterday, but the overall numbers offer little surprise. Former Gov. Chris Christie allocated $252 million for the cause in FY2018, his last year in office; Murphy proposed the same level in his first budget, but later added $10 million more after consultation with lawmakers. Graduate Medical Education funding and DSRIP have also remained stable since Christie’s tenure.

Expanded admission fee

What’s new is the so-called GME supplemental, which Murphy signed into law last August. The measure enables the DOH to expand the use of a $10 hospital admission fee, which would be assessed on a greater diversity of patients to generate at least $24 million annually in new revenue, in part through a federal match. The money is designed to benefit hospitals in low-income communities.

The latest details may come as a shock to some hospital administrators. For example, St. Joseph’s Medical Center in Paterson is slated to receive some $65.4 million, roughly $10 million more than it was allocated this year, as a result of higher charity-care funding. University Hospital could collect nearly $14 million more than it did this year, for a total of $97.5 million.

Cooper University Medical Center, in Camden, is due to collect nearly $51.5 million, some $4.7 million more than last year, thanks to increases in charity care and GME. The other facilities in the top five for total allocations include Trinitas Regional Medical Center, in Elizabeth, proposed to get nearly $32 million and Newark Beth Israel, which could collect $26.8 million; both of these facilities collected several million more last year, however.

Jersey City Medical Center, an RWJ Barnabas facility, is likely to get nearly $12 million, some $18 million less than it received last year. According to the DOH’s Donna Leusner, the change reflects “a decline in documented charity care relative to overall revenue.”