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NJ strategy to fund Medicaid through counties multiplies complexity

NJ strategy to fund Medicaid through counties multiplies complexity

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Studies often find that while Americans pay the most for health care, they don’t get the best outcomes. Maybe one reason is that complexity defeats efficiency in U.S. health care.

The Affordable Care Act (Obamacare) aimed to bring private health insurance to millions who had none. The vast majority of the new coverage, however, was through the ACA’s expansion of the federal Medicaid program for those with low incomes.

The ACA left it to states whether to expand Medicaid for their residents and share in the increased costs. That required complex and changing formulas for cost-sharing — and created opportunities for states to work the system to their advantage.

New Jersey found one such way in 2018. If counties charged hospitals Medicaid fees and sent them to the state, the state could get federal Medicaid matching funds equal to or greater than the fees collected. These could be used to fund services to areas with a concentration of low-income patients.

The federal government already provides almost two-thirds of the $15 billion a year that New Jersey spends on its 1.8 million Medicaid beneficiaries.

The County Option Hospital Fee Pilot Program created that year allows up to seven counties and hospitals within them to participate in the funding strategy. To be eligible, they must have at least 250,000 residents and at least one large economically distressed municipality.

This month the Atlantic County commission voted to join the five-year pilot program. The other six in it are Camden, Essex, Hudson, Mercer, Middlesex and Passaic counties.

The county and its four hospitals — AtlantiCare Regional Medical Center, Shore Medical Center, Bacharach Institute for Rehabilitation and Acuity Specialty Hospital of New Jersey in Atlantic City — specify the fees that each hospital will pay for certain medical procedures (and can’t pass on to patients or insurers). Atlantic County will collect the fees and send them to the state Department of Human Services, which will get matching or greater federal Medicaid funds, increase Medicaid payments to the hospitals and provide a small share to the county and itself to cover administrative costs.

AtlantiCare, which by far provides the most services to uninsured and underinsured people in the county, will pay about $22 million in fees, according to President and CEO Lori Herndon. Consultant Barbara Eyman said AtlantiCare will get back about $49 million in increased Medicaid payments, for a net gain of about $27 million to cover such services.

For its work in the program, Atlantic County will receive about $2.4 million.

This is an unusually good deal for the county while it lasts. Not often does a program help a segment of residents and increase revenue.

The hospitals and Medicaid beneficiaries stand to benefit too.

Federal taxpayers will have to spend a little more on health care for others.

But surely everyone wishes that the provision of health care in America could be simpler, competitive, more efficient, at least as effective and cost less.

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