Jersey Hospitals Facing Loss Of Millions In Medicaid Funds

According to the June 8, 2009 edition of the Star-Ledger newspaper, two-thirds of New Jersey’s hospitals stand to lose money under a proposal that would change how the state doles out $400 million for patients on Medicaid. The change, slated to occur this August, has nothing to do with New Jersey’s budget woes. It’s being proposed because state officials have finally updated a 1980s-vintage computer system that paid hospitals based on the types of services they provided two decades ago.

The new system means some hospitals would suddenly lose millions, while others would get big cash influxes. A New Jersey Hospital Association analysis showed that the hospitals which would hurt the most under the new funding formula appear to be those that operate mental health programs, which state officials say have been getting too much from Medicaid. The biggest losers include Bergen Regional Medical Center, Trinitas Regional Medical Center in Elizabeth and Saint Clare’s Health System in Morris and Sussex counties. Hospitals slated for big increases include University Hospital in Newark, Newark Beth Israel Medical Center and Robert Wood Johnson University Hospital in New Brunswick. In total, 42 hospitals would lose money and 24 would get more, the hospital association analysis concludes.

A spokesman for the Department of Human Services said the new system “calculates more fairly the reimbursement level for medical procedures.” Since the state last set Medicaid reimbursement rates 20 years ago, mental health services have become less costly. In that time, hospital stays for mental illnesses dropped from 53 days to 11 days because more patients are treated with medication. On the other hand, hospitals haven’t been getting as much as they should for medical advances made during the past two decades. For example, there were far fewer lung transplants when the payment and computer coding system was created.