State’s Annual Report Shows a $48.8 Million Increase in 6-Year Trend

New Jersey hospitals delivered more than $1 billion in charity care services to state residents in need last year, an increase of $26 million, according to new data released from the N.J. Department of Health.

The state’s annual report of “documented charity care” shows that charity care services increased statewide by 2.6 percent ($26 million) in 2013 to a total of $1.02 billion. This increase expands on a six-year growth trend totaling $48.8 million, or 5 percent, in documented charity care.

The state’s report measures hospitals’ charity care services at the rates that the Medicaid program would have paid hospitals for the same services. However, those rates cover just 70 percent of the true costs of the care. Adjusting for those low Medicaid rates, the actual value of statewide charity care services exceeds $1.3 billion.

Last year, the state provided $650 million to reimburse hospitals for those services. The remaining amount is absorbed by the hospitals.

Charity care is New Jersey’s unique policy approach to ensuring access to healthcare services for the uninsured. Under state law, all hospitals are required to provide services to all patients, regardless of their ability to pay. As part of the law, the state reimburses hospitals for a portion of the care they provide. Unlike most other states, New Jersey’s charity care system ensures that the uninsured will receive the care they need in all parts of the hospital – including inpatient and follow-up care – and not just emergency room services.

New Jersey’s hospitals are represented by five not-for-profit associations that support their efforts to provide quality and accessible healthcare. Those five associations – the New Jersey Hospital Association, the Hospital Alliance of New Jersey, the N.J. Council of Teaching Hospitals, the Fair Share Hospitals Collaborative and the Catholic HealthCare Partnership of New Jersey – are united in support of continued commitment to these essential charity care services during this time of transition in the nation’s healthcare delivery system.

“The increase in charity care claims for 2013 is no surprise to our hospitals who proudly serve as the safety net for their respective communities,” said NJHA President and CEO Betsy Ryan.  “Although we are committed to insuring as many people as possible under the Affordable Care Act, it is clear that we are at least a year away from seeing the positive effects of the ACA.”

“In fact, the new federal healthcare reforms stemming from the ACA make protecting hospitals more important than ever,” added Suzanne Ianni, president and CEO of the Hospital Alliance. “Due to pent-up demand from new patients enrolled in Medicaid as a result of New Jersey’s Medicaid expansion, hospitals are treating higher volumes of low-income patients. In order to continue to provide access to care to all New Jerseyans, charity care dollars must be preserved.”

Rick Pitman, executive director of the Fair Share Hospitals Collaborative, agreed: “All N.J. hospitals have endured Medicare cuts and more reductions are scheduled. All N.J. hospitals are dealing with an underfunded Medicaid program. It is an inappropriate time to give consideration to the reduction of resources dedicated to the charity care program.”

Sister Patricia Codey, president of Catholic HealthCare Partnership of New Jersey, noted the many economic contributions of hospitals, in addition to their important role as healthcare safety nets. “Maintaining charity care funding helps promote the health and well-being of all New Jerseyans – especially those in our most under-served communities,” she said. “New Jersey hospitals take pride in their commitment to providing healthcare to all patients, regardless of their ability to pay. Moreover, as their communities’ largest employers, hospitals play an essential role as economic engines. As we continue to provide care to New Jersey’s poor and most vulnerable families, it is critically important that our hospitals receive stable levels of charity care funding.”

Charity care is the largest of a number of state funding streams that support different components of the healthcare system. For the last six years, the Governor and the Legislature have maintained their commitment to New Jersey hospitals by keeping overall hospital funding stable at $985 million.

“We thank the Governor, Senate and Assembly leadership and the entire Legislature for their commitment to healthcare services for all the residents of our state. With the most recent data showing an increase in charity care services, we urge them to maintain last year’s funding level in the upcoming fiscal year 2016 budget so that New Jerseyans will continue to benefit from high-quality, accessible hospital care,” added Ryan.