New Jersey Hospitals Lobby for Increased Charity Care Payments from State

Hospital officials for New Jersey's Cooper Health System are lobbying state legislators for an increase in charity care reimbursements, saying the facility receives the "lowest reimbursement rate" in the state, the Philadelphia Inquirer reports. Reimbursement for charity care is based on several factors, including revenue received from public versus private payers. Hospitals that receive more public sources receive more aid for charity care, but Leslie Hirsch, president and CEO of Cooper Health System, said that reimbursements have not "kept up with" hospitals' charity care expenses. According to Hirsch, the funding formula is "shortchang[ing]" the hospitals. Under the system, Medicaid and Medicare fee-for-service programs are considered public funds, but Medicaid and Medicare managed care programs are considered private sources, as payment for services is made directly from the managed care company, not the federal government. Since South Jersey has a "disproportionate number" of patients in the Medicaid and Medicare managed care programs, the region's charity care reimbursement rate is lowered. The Inquirer reports that patients in South Jersey were the first in the state to shift from the fee-for-service programs to Medicaid and Medicare managed care plans. Under the current payment system, Cooper Hospital-University Medical Center will receive about 25 cents for every dollar spent on charity care. The five other "major teaching hospitals" in the state receive 66.5 cents to 95 cents per dollar spent. In the current fiscal year, Cooper is receiving $4.1 million in charity care reimbursements, half of last year's payment.

Budget Crunch
To increase the reimbursements, Hirsch is pushing for state lawmakers to set a "funding floor" of "no less than 80%" of the charity care expenses at the state's six urban teaching hospitals. However, state lawmakers are facing a "financial crunch" in completing work on next fiscal year's state budget. Originally, the budget was based on a $1 billion surplus, but after recalculating state revenues, the state will run a deficit unless cuts are made. Therefore, state Sen. Diane Allen (R) said creating a minimum of 80% reimbursement rate is "unlikely to happen." She added, "I believe there will be a move toward [a funding floor] in the [state] budget, but ... we're talking about a lower number." Last year, the state tried to reimburse hospitals at 30%, but was only able to pay hospitals a minimum of 21%. Acting Gov. Donald DiFrancesco's budget proposes increasing the "pot of money" for reimbursements from $356 million to $381 million. The New Jersey Hospital Association is also advocating an increase, but wants the pool of funds raised to $414 million (Kiely, Philadelphia Inquirer, 5/16).