Delegation Fights to Protect Jobs, Quality of Care at New Jersey Hospitals

Mar 4, 2013 Issues: Health

WASHINGTON, D.C. – In an effort to ensure that New Jersey hospitals and healthcare facilities are properly reimbursed for services, Congressman Jon Runyan, Senator Robert Menendez, Congressman Rob Andrews and the rest of the New Jersey Delegation wrote a letter to the Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), Marilyn Tavenner.  The letter was sent to urge CMS to make the Medicare imputed floor wage index provision permanent in the Fiscal Year 2014 inpatient prospective payment system (IPPS) rule.

In 2005, the final IPPS rule created an imputed rural floor for states like NJ to correct years of unequal treatment by providing the state with benefits similar to those granted to healthcare institutions in 48 other states through the longstanding application of a rural hospital wage index floor. New Jersey and only one other state are classified as “all-urban” under Medicare. New Jersey is the most densely populated state, with more than 1,200 residents per square mile. New Jersey’s geographic disadvantage remains as significant today as it was when the floor was created. New Jersey hospitals continue to compete for labor resources and patients in each of the neighboring labor markets. This is why the New Jersey Delegation is urging that CMS to permanently extend NJ’s imputed wage index floor in the upcoming FY2014 IPPS rule.

“On behalf of New Jersey's hospitals and the 18 million individuals they serve each year, NJHA thanks the members of New Jersey's congressional delegation for their support on this issue,” said Betsy Ryan the President and CEO of the New Jersey Hospital Association.  “Our delegation is in complete bipartisan agreement on this issue -- evidence of its great importance to all of us who count on access to healthcare services in our communities.”

The full text of the letter to the Acting Administrator of the Centers for Medicare and Medicaid Services is as follows:

Dear Ms. Tavenner:

As members of the New Jersey Congressional Delegation, we write to strongly urge the Center for Medicare and Medicaid Servicers (CMS) make the Medicare imputed floor wage index provision permanent in the FY2014 inpatient prospective payment system (IPPS) rule.

As you know, the FY2005 IPPS final rule (69 FR 49109) created an imputed floor wage index for “all-urban” States, defined as “a State with no rural areas… or a State in which there are no hospitals classified as rural.”   Currently only New Jersey and one other state are classified as “all-urban” for Medicare payment purposes.  This imputed floor provision corrected years of unequal treatment New Jersey hospitals faced by providing them with a wage index floor similar to the one available to hospitals in the forty-eight states with rural hospitals.   By establishing the imputed rural floor, CMS recognized the need to provide a fair and equitable payment to New Jersey hospitals as well as ensure uniformity throughout the Medicare hospital wage index system nationwide.  This policy has been continued ever since, but is currently set to expire on October 1, 2013.

New Jersey, situated in close proximity to some of the most competitive labor markets in the country, competes for workers with both New York City and Philadelphia.  Our state is also unique in that it is the most densely populated in the country, with approximately 1,200 residents per square mile.  The average national population density is less than 90 people per square mile, while neighboring New York has a population density of 411 and Pennsylvania’s is only 284.  For employment opportunities, healthcare workers in New Jersey can choose from among 173 acute care hospitals located in the New York City and Philadelphia metropolitan areas.  This discrepancy in population density, coupled with differing employment opportunities and employees’ commuting needs, serve to only intensify the competition between the region’s hospitals for New Jersey’s finite healthcare workforce.  The continuation of the imputed rural floor is a vital step to ensure our state’s hospitals are able to fairly and equitably compete for skilled health care workers with hospitals in our neighboring states, which are both able to benefit from the rural floor policy.  

Finally, as required by the Affordable Care Act the Secretary recently submitted a report to Congress highlighting recommendations for reforming the Medicare wage indexing system.  While we maintain some reservations with the policy recommendations in this report, it serves to underscore the need to address the wage index system as a whole.  As such, we ask that the imputed floor policy be maintained until such time as Congress is able to act to reform the entire wage index system.  We think you will agree that ending this policy now only serves to put New Jersey hospitals at a severe competitive and financial disadvantage, while allowing hospitals in every other state to continue benefiting from their rural floors.

We appreciate your consideration of this important issue as you work to finalize the FY2014 IPPS proposed rule.  Should you have any questions or need any additional information about this policy’s impact on our state, please do not hesitate to contact us.


Signatories of this letter were Senators Frank R. Lautenberg and Robert Menendez, Congressmen Robert Andrews (01), Frank LoBiondo (02), Jon Runyan (03), Chris Smith (04), Scott Garrett (05), Frank Pallone (06), Leonard Lance (07), Albio Sires (08), Bill Pascrell (09), Donald Payne Jr (10), Rodney Frelinghuysen (11), and Rush Holt (12).