Hospitals in Monmouth, Ocean and Middlesex counties will continue to receive New York City-level reimbursement rates from Medicare for another year, avoiding more than $100 million in potential cuts, New Jersey lawmakers said Friday.
The decision by the U.S. Centers for Medicare and Medicaid Services gives the hospitals a year to convince the Biden administration that for them, at least, there is no such thing as Central Jersey.
CMS released its decision as part of its final rules for fiscal 2022. It delayed a Trump-era proposal to move the hospitals out of the New York-Newark-Jersey City region and into the newly crafted New Brunswick-Lakewood core-based statistical area.
Any Central New Jersey designation usually is met locally with pride and joy, but this move came with a steep price. Hospitals’ Medicare reimbursements are tied in part to their labor costs. And the labor costs in their new region are about 17% lower than their old region.
The cuts in reimbursement rates would have saved money for federal taxpayers, but they also would have hit local hospitals hard. The industry during the pandemic was faced with higher expenses and forced to delay lucrative elective procedures.
As a result, 41% of New Jersey hospitals were losing money, according to the New Jersey Hospital Association, a trade group.
The group on Friday thanked the state’s congressional delegation for its help.
“NJHA has strongly advocated for the reversal of this ill-advised policy since it was first implemented last year, and this delay in further cuts in critical health care dollars to our state is welcomed news,” Cathy Bennett, the association’s president and chief executive officer, said.
U.S. Sen. Robert Menendez and U.S. Rep. Bill Pascrell Jr., both Democrats, led the campaign to stop the new classification at least until the 2020 U.S. Census data was released.
In a letter a month ago to U.S. Health and Human Services Secretary Xavier Becerra, the lawmakers said hospitals moved to the new statistical areas would have lost revenue, making it tougher to compete with hospitals in New York and northern New Jersey to attract skilled workers.
“This federal support will benefit patients by allowing our top-notch hospitals to retain and hire the best and the brightest,” Pascrell said in a statement Friday.