Budget impasse worries hospital officials

Vince Calio//June 26, 2018//

Budget impasse worries hospital officials

Vince Calio//June 26, 2018//

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The budget impasse in Trenton is threatening to create another group of victims: low income residents who need health care but cannot afford insurance or out-of-pocket medical costs.

Without a fiscal 2019 budget, $252 million in charity care and $218 million in graduate medical education funding for hospitals has been delayed. Hospitals in the state – especially those that operate in low income regions – are beginning to push the panic button.

The deadlocked budget talks between Gov. Phil Murphy and the state legislature are ongoing, but the two sides still seem far apart on several issues, including a proposal to raise the corporate business tax to 12 percent and school funding issues. The state could face a government shutdown if a budget is not agreed upon by June 30.

As a result, New Jersey Health Commissioner Shereef Elnahal said June 13 that “the Treasurer and the Office of Management and Budget have informed the Department of Health the state will have to delay charity care and [graduate medical education] payments normally scheduled for distribution in mid-June.”

Added Elnahal. “It is our hope to make these payments in a timely manner. But the timing of distribution will be dependent on the ongoing budget process. This is not the news the department wants to deliver, but we have no choice at this time.”

Murphy has received criticism for delaying charity funding, but so far appears to be sticking to his policies.

“The so-called structural budget deficit is Murphy’s own making,” said Assemblywoman Nancy Munoz, R-21st District, in a recent statement. “If he found enough money in the general fund to give raises to his administration and public unions, why can’t he pay for the health care of the most vulnerable New Jerseyans?”

Charity care funding is money that hospitals receive from both the state and the federal government to provide care to low income patients, while GME funding provides some relief from graduate school debt for medical school graduates who are undergoing their residency programs.

Deborah Visconi, CEO of New Bridge Medical Center in Paramus, said that the delay in funding could be devastating. The hospital is slated to receive roughly $14.2 million in charity care funding in the 2018-2019 fiscal year.

“The delay/freeze on GME/charity care funding is a system wide health care concern that has the potential to be devastating to all safety net facilities, including New Bridge Medical Center,” said Visconi in an email.  “As a leading provider of services to the most vulnerable populations, any delay or reduction of this essential funding will significantly impact NBMC’s ability to continue to provide essential care to this population.”

Gary Horan, FACHE, CEO of Elizabeth-based Trinitas Regional Medical Center, called the charity care and GME funding the “lifeblood” of the hospital. Trinitas is set to receive $30.2 million and $3.3 million in charity care and GME funding, respectively, this fiscal year. He also noted the delay will cost the state millions of dollars in matching federal funds.

“Trinitas receives $2,500,000 per month in Charity reimbursement, and $250,000 per month for Graduate Medical Education. This reimbursement is now in limbo,” Horan said in an email. “In addition, there are delays in hospital reimbursement through the Delivery System Reform Incentive Payment (DSRIP), and further, there is uncertainty surrounding the proposed Medicaid managed care reimbursement for behavioral health. Trinitas is one of the state’s largest providers of Behavioral Health services.”

The DSRIP is a program run by the Centers for Medicare and Medicaid Services that makes reimbursement payments to hospitals based on the efficiency of their value-based care programs.

“For Trinitas, the delay in funding represents a triple hit to our bottom line,” Horan said. “Managing our operation is going to be very difficult, and we will be forced to delay hiring, slow down payment to vendors and possibly look at reducing services. Safety net hospitals that serve a large Charity Care, Medicaid and mental health population are being hit the hardest.

“Lastly, the NJ Hospital Alliance reported that the Medicaid State Plan dictates that these payments be made before [June 30] otherwise, New Jersey jeopardizes receipt of $23 million in federal matching dollars.”

Cathy Bennett, president of the New Jersey Hospital Association, noted that charity care funding accounts, on average, for 42 percent of medical costs for its member hospitals, but is confident that an agreement on a budget will be reached soon in Trenton.

“New Jersey’s hospitals remain committed to providing care to our state’s most vulnerable residents, despite this payment delay as well as recent legislation that would cut fee-for-service payments to hospitals and emergency department physicians when they care for low-acuity patients who chose the local emergency department for their care needs,” Bennett said. “The administration is aware that New Jersey will lose federal matching dollars and risk hospitals’ credit ratings if the payment is not made, and no one wants to see that happen. We appreciate the administration’s recognition of the importance of making sure New Jersey receives its full amount of federal funding.”

University Hospital in Newark is slated to receive the most in charity care and GME funding this year, at roughly $46 million $31.7 million, respectively. The top six hospitals that are set to receive the most are:

  CC Funding GME Funding
University Hospital $46.043M $31.653M
St. Joseph’s Medical Center $35.054M $17.320M
Trinitas Regional Medical Center $30.235M $3.301M
Jersey City Medical Center $20.329M $8.120M
Capital Health Regional Medical Center $15.668M $1.232M
Cooper University Medical Center $13.667M $28.027M

For more 2019 NJ budget: