NJ Hospitals Stand To Lose Under New Medicaid Rules

STATE – A change in the way New Jersey reimburses hospitals for patients on Medicaid could cause big problems for already cash-strapped health care facilities.

State officials are finally updating a 20-year-old system that paid hospitals based on the types of services they provided two decades ago. State Human Services spokeswoman Suzanne Esterman said the new system “calculates more fairly the reimbursement level for medical procedures.”

According to an analysis by the New Jersey Hospital Association, 42 hospitals would lose money under the news system and 24 would get more. The analysis concludes that facilities operating mental health programs will be hurt the most by the changes. Trinitas Regional Medical Center in Elizabeth will be one of the biggest losers under the new formulas, which are scheduled to go into effect in August.

Mental health services have become less costly since the last time New Jersey set Medicaid reimbursement rates 20 years ago, Esterman said. Average hospital stays for mental illnesses have dropped from 53 days to 11 days because more patients are treated with medication, she noted.

Hospitals haven’t been adequately covered for more recent medical advances, she said. Esterman noted that there were far fewer lung transplants when the payment and computer coding system was created. “Another good example is the stent for the heart. It wasn’t invented when our original codes were put in place,” she said.

Health care officials say the changes will take money from hospitals already hurt by rising costs, the recession and inadequate state aid.

“We do not believe this is the year to move forward, with the economic tsunami facing our state’s dwindling number of hospitals,” New Jersey Hospital Association president Betsy Ryan said in a letter asking Human Services Commissioner Jennifer Velez to delay the change.

Mental health services advocates say the plan could cripple programs already near collapse.

“Hospital-based behavioral health in New Jersey is on the brink at the same time we are struggling to deal with overcrowding in public psychiatric hospitals,” said Phil Lubitz, associate director of the National Alliance on Mental Illness in New Jersey.

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