Anticipating $450 million in payments for charity care provided in 1993, New Jersey hospitals reacted angrily to a state panel's decision last week to trim the subsidy by $135 million.
The state's Essential Health Services Commission voted last week to distribute $315 million for charity care, even though the law allows the panel to subsidize as much as $450 million. The lower amount is based on a New Jersey Department of Health audit of hospitals' charity-care services.
The New Jersey Hospital Alliance, which represents 22 urban hospitals, is pressing for changes in the rules and process for determining charity-care payments. And the 100-member New Jersey Hospital Association is weighing legislative and legal options for relief.
According to the health department, 67 hospitals provided $315 million in charity care. Another 17 hospitals, which provided $21.5 million in charitable services, won't be eligible for reimbursements because only the top 80% of hospitals-ranked by charity care as a percentage of revenues-are eligible for subsidies, the department said.
Cathedral Healthcare System in Orange documented $3.8 million in charity care but won't get a dime because it ranks among the bottom 20%. But it provided millions more in charity care that it couldn't fully document under stringent state requirements. "Obviously, it creates a significant challenge to the bottom line this year," said Nancy Dean, Cathedral's chief financial officer.
Charging that the process for determining charity-care payments is seriously flawed, the New Jersey Hospital Alliance last week petitioned the Essential Health Services Commission and the state Medicaid program to change the rules.
The alliance, whose members provide care to the inner-city poor, homeless and illegal aliens, said the rules by which charity-care subsidies are determined were written behind closed doors. It's seeking a public hearing on the subject and new rules that are subject to public review and comment.
The process for distributing charity-care relief was overhauled as part of the state's 1992 healthcare reform legislation. Under the new rules, hospitals must collect seven pieces of documentation from every charity-care patient to qualify for subsidies.
Hospitals said illegal aliens and homeless patients often can't or won't provide identification and proof of income, as required by the state.
As a result, St. Joseph's Hospital and Medical Center in Paterson was able to document less than $13 million of the more than $19 million in charitable services it says it provided.
"We're a perfect example of what's wrong with the system," said Sister Jane Frances Brady, St. Joseph's chief executive officer and president of the New Jersey Hospital Alliance. "You have to collect seven pieces of data from a homeless person. That's not possible."
However, additional relief may be on the way. The Essential Health Services Commission is seeking to distribute another $68 million to cover charity care that hospitals incurred but were unable to fully document, according to Ronald J. Del Mauro, a commission member and president and CEO of Saint Barnabas Medical Center in Livingston.