Pascrell, Menendez Applaud HHS’s Final Rule with Provisions to Increase Funding for NJ Hospitals, Tackle Doctor Shortage

Bill Pascrell and Bob Menendez

The key provisions authored by Pascrell and Menendez will support NJ hospitals, ensure high-quality patient care

PATERSON, NJ – U.S. Rep. Bill Pascrell, Jr. (D-NJ-09) and Senator Bob Menendez (D-NJ), senior members of the House Ways and Means and Senate Finance Committees that respectively oversee national health policy, applauded the FY2022 Centers for Medicare and Medicaid Services’ (CMS) final rule that includes provisions from the American Rescue Plan Act of 2021 pushed by Sen. Menendez and Rep. Pascrell to increase funding for New Jersey hospitals and help address the doctor shortage in the state. The New Jersey Hospitals Association (NJHA) estimates $150M in funding increase.

“New Jersey hospitals have stood resolutely at the epicenter of this pandemic,” said Rep. Pascrell. “Toiling on the frontlines, Garden State first responders, doctors, and nurses have kept our state running and our communities in one piece. So this flow of millions in annual federal dollars will lift up our heroes when they need it most by allowing New Jersey hospitals to retain doctors and nurses and continue saving lives. Senator Menendez and I have fought hard for this provision and I am delighted it is permanent.”

“I am pleased to see the imputed rural floor return for New Jersey in this final CMS rule as well as other provisions I have been fighting for,” said Sen. Menendez “At a time when New Jersey’s hospitals, doctors and nurses are still on the frontlines of the COVID-19 pandemic, the injection of millions of dollars in annual federal funding into our hospitals will help them attract and retain the best talent as well continue to provide high-quality care for New Jerseyans.”

“The elimination of the imputed floor in 2019 cost New Jersey hospitals millions of dollars in Medicare payments, placing them at a serious disadvantage against other states in attracting healthcare workers,” said Cathleen Bennett, President & CEO of the New Jersey Hospital Association. “The reinstatement of this provision ensures that our state’s hospitals are able to compete on a level playing field to keep these critical caregivers right here in New Jersey. This would not have been possible without Sen. Menendez and Representative Pascrell’s commitment to correcting this problem with a more equitable policy.”

With this final rule, CMS will move to make permanent the so-called imputed rural floor, which will generate millions more annually in Medicare reimbursements for New Jersey’s hospitals. CMS first established the imputed rural floor in FY2005 in order to ensure equitable payment policies for rural hospitals located in states designated as “all-urban” by CMS. The Trump Administration abruptly ended the policy in 2018, putting New Jersey hospitals at a competitive disadvantage due to depressed Medicare wage payments and costing them millions annually.

New Jersey is currently one of only three states, along with Delaware and Rhode Island, designated by CMS as “all-urban” based upon geographic size and statewide population, but that designation ignores the realities that there are rural areas within those densely populated states and hospitals operating in those communities that face the same challenges as rural hospitals located in other states. Sen. Menendez and Rep. Pascrell have, for years, successfully led efforts to extend the so-called imputed rural floor policy. Permanently restoring the imputed rural floor allows New Jersey’s hospitals to effectively compete for the highest quality health care talent available by providing parity with neighboring states. NJHA estimates that 37 hospitals will benefit from the provision in FY 2022 through an additional $146.5 million in Medicare inpatient and outpatient PPS payments.

Also with this rule, CMS will extend the transition cap to help those adversely affected by the changes to the labor markets made in FY 2021. Per the FY 2022 final rule, CMS will apply an extended transition to the FY 2022 wage index for hospitals that received the 5 percent transition in FY 2021. For those hospitals only, CMS will apply a 5 percent cap on any decrease in the hospital’s FY 2022 wage index compared to its wage index for FY 2021 to mitigate significant negative impacts of, and provide additional time for hospitals to adapt to, the revised CBSA delineations.

NJHA estimates that 9 hospitals (in Monmouth and Ocean counties) will benefit from this provision by $3.5 million in FY 2022. This amount is in addition to the benefit from the imputed floor wage index.