New Jersey may be getting closer to approving a controversial funding rule designed to send extra dollars to hospitals that serve lots of poor patients.
The big idea is simple: Supporters want to draw down more federal funding for hospitals that care for large numbers low-income Medicaid patients.
The mechanism to achieve that goal is more complicated. The bill would let certain local governments tax their hospitals. The federal government would match the money. Municipalities get to keep a portion of the federal dollars — perhaps 20 percent. Then, local medical centers get back the money they put up in the first place.
David Knowlton with the New Jersey Health Care Quality Institute said it's wrong to call the "local hospital fee pilot program" a tax.
"It's probably a misnomer to call it a tax," Knowlton said. "When's the last time you heard of a tax that actually had a net gain of revenue. It's because of the federal match that this creates — really — a grant for safety-net hospitals to provide for the poor."
Thirteen hospital organizations — representing 27 hospitals — oppose the bill.
"We think that once you cross that bridge of taxing not-for-profit, tax-free hospitals, the return trip may be impossible," said Rick Pitman, executive director of the Fair Share Hospitals Collaborative, which includes many suburban medical centers in New Jersey.
"We are not an anti-urban hospital organization. We fully support the concept that extra support has to go to certain hospitals that have an extraordinarily difficult set of circumstances," Pitman said.
The bill under debate focuses on hospitals with many Medicaid patients, but Pitman says New Jersey has many medical centers with small Medicaid populations that still struggle. They may have lots of Medicare patients, he said, or bad debt from patients who don't pay their bills.
"There is some degree support for charity care. There is zero support for bad debt," Pitman said. "The bad debt numbers have grown dramatically for our membership. They have grown all across the state. But in areas that once enjoyed very, very robust employment levels, this number is expanding every year."
One supporter of the bill is George Norcross, the South Jersey powerbroke,r who is also chairman of the board of Cooper Hospital in Camden.
Lawmakers have a lot of details to hammer out, and many questions linger among supporters and opponents.
"For example, is it a 2 percent tax, or a 5 percent tax? Is it on total [Medicaid] revenue or partial revenue? Huge questions," Pitman said.
Still, Knowlton said he'd bet the bill prevails.
"This is just one man's opinion as a political observer," he said. "I think it will absolutely will occur. I don't know what it will look like. Will it be limited to certain cities; will it be limited to certain hospitals? I don't know that yet. That's still being negotiated."