NJ Hospital Association President Says Sequestration Could Hurt Medicare Reimbursement

Health care is making headlines during New Jersey budget hearings in Trenton from the expansion of Medicaid to the possible effects of sequestration. NJ Hospital Association President and CEO Betsy Ryan told NJ Today Managing Editor Mike Schneider that the Medicaid expansion should leave fewer residents uninsured and ensure they get treatment from primary care physicians rather than in emergency rooms. She also said sequestration could make hospitals’ finances more challenging as Medicare reimbursements get cut by 2 percent.

Ryan took part in the budget hearings today. “I think the most important thing I had to say was we are appreciative for stable funding on the state side because we have so much at risk and in play on the federal side,” she said.


She said she is hopeful that expanding Medicaid will mean fewer uninsured patients and that they will be seen in the appropriate setting, which isn’t necessarily a hospital emergency department. Hospitals treat the uninsured through charity care. Ryan said she’s unsure what effect the Medicaid expansion will have.

“Time will tell. We are estimating that over the expansion period — not just the one year, but over the expansion period — about 440,000 New Jerseyans who currently lack insurance will get insurance. Whether or not they are the charity care patients we are seeing tomorrow will be proven by the documentation we are required to keep under law,” Ryan said.

Hospitals receive about $675 million per year from the state for charity care, according to Ryan. She added that if Medicaid paid out at the same rate, hospitals would receive $1 billion per year.

“It is our hope that the Medicaid population will seek primary care in physicians’ offices and not wait to come to the emergency department. So hopefully over time, documented charity care will go down. But again we’ll see what the documentation shows us,” Ryan said.

Many in the health care field have expressed displeasure with the amount of compensation they receive from Medicaid for reimbursements. “Medicaid and Medicare are not great payers for health care providers in the state of New Jersey. They don’t measure up to what commercial rates will pay so we would prefer the commercial rate,” Ryan said. “But the state is cash strapped. We respect that. The federal government is cash strapped. We respect that.”

The effects of sequestration could make that problem worse. Ryan explained that at the end of this month, when health care providers submit their bills to Medicare, they will have 2 percent taken off the top.

“Health care providers are in the first couple months of their budget year but 2 percent off of Medicare, which for some providers is a large payer and covers a lot of people, is a lot of money,” Ryan said.

When asked if she believes the effects of the economic climate and sequestration will cause hospitals to close, Ryan said, “I think time will tell. My crystal ball is murky right now. I am an optimist so I believe Congress and the president will come to an agreement on sequestration and find some other way to enact cuts rather than a broad base 2 percent cut. So stay tuned.”