All eyes and ears were on Governor Christie Tuesday as he delivered his annual State of the State address. He covered a lot of ground in his remarks, but for a large population in need in our state, no section was more important than the Governor’s call for greater funding for behavioral health and substance abuse treatment.

The Governor said he will budget a $100 million increase in Medicaid payments for healthcare providers that provide mental health and addiction services. It is welcome news for our healthcare providers. Medicaid traditionally has had very low reimbursement rates – so much so that it can sometimes be difficult locating a provider that accepts Medicaid cases. This infusion of state funds will allow providers to increase access to these essential services.

Some of the money will be earmarked for Medicaid accountable care organizations. Their mission is to identify those individuals who are high-frequency/high-cost users of services. Finding them proactively and giving them care in the right setting will help us avoid what is all-too-often the current practice – episodic care in hospital EDs.

This is one of the times where the right policy approach is also the right human approach. We applaud the Governor for this important step.

The recent Morristown Memorial tax court decision in June created a great deal of uncertainty for hospitals, municipalities and, in fact, for nonprofit entities all across New Jersey. While not binding statewide, the ruling for the first time stated that part of a not-for-profit hospital was subject to local property taxes. Perhaps anticipating the hubbub his ruling would spark, Judge Vito Bianco acknowledged the issue might require a statewide legislative solution.

A solution – and we believe a very good one – is progressing through the New Jersey Legislature. S-3299/A-4903, introduced by Senate President Stephen Sweeney and Sens. Robert Singer and Joe Vitale, along with Assemblyman John Burzichelli, would establish a community contribution fee from not-for-profit hospitals that would flow to their host municipalities. The proposal provides an equitable statewide solution. Without it, the tax court ruling is likely to lead to a flurry of lawsuits involving lengthy and expensive litigation throughout the state.

To be clear, not-for-profit hospitals are entities that do not have owners or shareholders. They are led by a board of community volunteers, where any positive margins from their operations are reinvested back into the organization to serve the healthcare mission. Not-for-profit hospitals have been exempt from property taxes in New Jersey since laws were enacted in 1913. Our member hospitals are valued parts of their communities, always there to provide healthcare services to all who need them, as well as providing jobs and added community benefits that help keep local economies healthy. Recognizing this, NJHA convened a task force comprised of members of New Jersey’s not-for-profit hospitals who agreed to support legislation that contributed a reasonable amount of money, along with their existing community benefit contributions, to offset the costs of local services provided by their host municipalities.

S-3299/A-4903, which received unanimous support from the NJHA task force and our Board of Trustees, reaffirms the property tax exemption of New Jersey’s not-for-profit hospitals while creating a way for these hospitals to provide even greater support to their host municipalities. The legislation extends not-for-profit hospitals’ contributions by providing host municipalities with a community contribution fee that will raise roughly $20 to $25 million annually statewide – in addition to the local property taxes that not-for-profit hospitals already pay when leasing space like medical office buildings and other retail space. The new money is earmarked for municipalities’ public safety expenditures.

For hospitals, the commitment to community goes well beyond healthcare services. The accounting firm EY (formerly Ernst & Young) recently completed a study for NJHA, calculating that our hospitals provide more than $2.4 billion in community benefits annually. These contributions include free and discounted care for the poor, uninsured and senior citizens; community health offerings like immunization clinics and other wellness programs; education for future healthcare professionals; medical research; and a wide array of additional community programs. In one community I know, the local hospital has donated parcels of land for public use; others have donated Narcan to their local police departments to help prevent opioid overdoses. Charity care services alone – delivered to New Jersey residents who have no health insurance – total about $1 billion annually. And that charity care will continue uninterrupted, no matter what happens with this bill. That’s an obligation already written in state law – not to mention a key part of the mission of not-for profit hospitals.

This bill represents an extension of our hospitals’ longstanding commitments to the communities they serve, while providing certainty and predictability during one of the most dynamic periods of change ever experienced in our nation’s healthcare sector.

In addition to community benefits, not-for-profit hospitals are also prime drivers of economic activity within their communities, employing nearly 144,000 people whose wages and tax contributions ripple throughout the economy.

New Jersey’s hospitals are committed to doing their share to support their municipalities, while continuing to serve as good neighbors and answering the needs of their patients.  We urge the Legislature to pass S-3299/A-4903 and ask Governor Christie to sign this bill which will quell the legal uncertainty and ensure a balanced statewide solution. 

There’s plenty of reason to feel good about the state of your healthcare here in New Jersey. The accolades have been pouring in in recent weeks:

• New Jersey hospitals once again ranked 5th best nationwide for patient safety, according to the semi-annual Hospital Safety Score released by the Leapfrog Group in October.
• The U.S. Department of Health and Human Services reported this week that an estimated 87,000 fewer patients died in hospitals and nearly $20 billion in healthcare costs were saved as a result of a reduction in hospital-acquired conditions from 2010 to 2014. During this same period, New Jersey hospitals, working together with NJHA under the Partnership for Patients-NJ initiative, achieved measurable reductions in hospital-acquired conditions. That work averted 13,730 cases of patient harm and achieved $120 million in healthcare cost savings over the project’s initial three years.
• Also this week comes news that New Jersey has an impressive four hospitals on the Leapfrog Group’s list of the Top Hospitals of 2015 list. Only 98 of the 1,600 U.S. hospitals that submit data to Leapfrog make the list. How impressive is New Jersey’s showing? Consider that our neighbors in New York didn’t have any hospitals on the list, and Pennsylvania had one. Congratulations to Englewood Hospital and Medical Center, Saint Barnabas Medical Center, Virtua Marlton and Virtua Voorhees.
• And among the nation’s nursing homes, New Jersey facilities exceed the national average with 75 percent of our facilities scoring three stars or more on the national Nursing Home Compare’s 5-star rating system.

We’re proud to be among such great company, but even more proud to provide New Jersey residents with some of the nation’s finest healthcare services. 

We appreciate consumers’ concerns about healthcare costs, and it’s understandable that folks are alarmed when they see yet another report on hospitals’ high “charges.” But what those reports often fail to say is that charges are largely irrelevant to the vast majority of healthcare consumers. If you don’t mind, I’d like to take this space to try to add some helpful perspective for New Jersey healthcare consumers.

“Charges” are a price point listed on paper but actually are used very little in the real world. A 2009 state law caps the amount of hospital charges an uninsured individual must pay, and the vast majority of hospital payers such as insurance companies, Medicare and Medicaid all pay hospitals at rates much, much lower than these posted charges for the care they provide to you. In fact, about 62 percent of all claims for inpatient hospital care are covered by the government programs Medicare, Medicaid and charity care – and all three of those programs pay hospitals at rates that are less than it actually costs to deliver that care. Historically speaking, that’s one of the reasons charges have risen over the years – so hospitals could try to offset the losses that mount when they are underpaid by so many other programs.

Here’s why charges are increasingly irrelevant:

• A 2009 state law caps hospital charges for most uninsured patients at 115 percent of Medicare rates (and since Medicare reimburses hospitals an average of 91 percent of costs, that’s just slightly more than break-even.) These protections apply to individuals earning up to 500 percent of the federal poverty level – or up to $117,750 annually for a family of four.
• In the end, only about 4.5 percent of N.J. hospital consumers may potentially be billed at charges. These are the individuals who earn too much to qualify for a government-subsidized insurance program and who opt not to purchase insurance on their own.
• That small pool of uninsured individuals who may be billed at charges is expected to dwindle even further as more individuals are insured under the Affordable Care Act.

Yes, it’s complicated, and we admit that hospital charges don’t make much sense. No one actually designed this system; it just evolved over time as hospitals tried to adapt and survive in our broken reimbursement system.

For New Jersey healthcare consumers, the important thing to know is this: Whether you are covered by Medicare, Medicaid or private insurance, the rate paid to your hospital is much, much lower than these posted charges. And if you are uninsured, your obligation is capped by state law. N.J. hospitals also have signed on to a set of voluntary compassionate billing guidelines to work with those without insurance. Call your hospital if you are having trouble paying a medical bill to discuss the potential for discounts or a payment plan.

The federal Medicare program generated headlines this week when it released a big spreadsheet listing hospital charges for a number of different procedures. The numbers were compelling by the sheer fact that they varied so widely, across the nation and even within states. Seems like everyone from news anchors to Princeton economist Uwe Reinhardt debated whether this information on charges carries much relevancy. Virtually everyone acknowledged that what hospitals list as charges and what they actually get paid from Medicare, Medicaid and commercial insurance companies are two very different sets of numbers. But today, I want to cut through the clutter and just share three very important things that New Jersey healthcare consumers need to know about hospital charges and medical bills.

1. The overwhelming majority of you will never, ever see a bill that includes hospital charges. Only about 4.5 percent of N.J. hospital patients could potentially be billed at charges. These are the individuals who earn too much to qualify for a subsidized insurance program like Medicaid or NJ FamilyCare and who opt not to purchase insurance on their own.
2. A 2009 state law caps hospital charges for most uninsured patients. Any individual earning up to $117,750 annually for a family of four would have any hospital charges capped at 115 percent of what Medicare would pay for the same service. And since Medicare only pays N.J. hospitals about 90 percent of their costs, the “charge” to these patients would be just slightly above what it costs hospitals to provide their care.
3. And to the small group of individuals who may be billed at charges – or even for those insured patients who face major medical bills that their plans do not cover: Contact your hospital and ask about discounts and payment plans. Almost all New Jersey hospitals have a set of compassionate billing guidelines to work with patients who are struggling with medical bills.