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PO Box 360
Trenton, NJ 08625-0360

For Release:
March 10, 2008

Heather Howard

For Further Information Contact:
Thomas Slater

Charity Care Formula Revised to Distribute Funds to Safety Net Hospitals


Given the severity of the State’s financial situation and the resulting program reductions in Governor Corzine’s proposed FY 2009 budget for the Department of Health and Senior Services, the Department has put forward a revised charity care formula to minimize cuts in services and programs.

“We have a duty to ensure access to health care for the state’s most vulnerable citizens.  Therefore, it was necessary to focus our limited resources and revise the charity care formula to protect safety net hospitals – hospitals that serve a disproportionately high percentage of uninsured and low-income residents,” said Health and Senior Services Commissioner Heather Howard.

Governor Corzine’s proposed budget will provide $608 million in charity care, a reduction of $108 million from the current level of $716 million.  The total amount for charity care is similar to the amount proposed in the FY 2008 budget.

Within the revised charity care funding formula, hospitals will be classified into three tiers.  Each tier is defined based on the percentage of charity care (care for the uninsured) provided by the hospital relative to their total revenues, or the charity care payer mix.  Hospitals that focus more heavily on serving charity care patients will receive a greater percentage of charity care than other institutions.

  • Hospitals with a charity care payer mix of 8% or more will receive a 5% reduction in funding.
  • Hospitals with a charity care payer mix between 3.6% and 8% will receive a 34% reduction in funding.
  • Hospitals with a charity care payer mix of less than 3.6%, will receive no funding.

The revised formula will be based on 2007 claims data, addressing a request by hospitals that funding be based on the most recent service data.  This ensures that the distribution most accurately reflects the current volume of charity care services being rendered by each hospital.  The updated 2007 claims data will be available in June.

The Governor’s proposed budget also creates a Health Care Stabilization Fund of $35 million to address the financial needs of health care providers in maintaining access in the community.

“The Stabilization Fund is based on a recommendation in the Reinhardt Report and will be used to ensure that the most vulnerable residents have continued access to care when hospitals are in distress or close,” said Commissioner Howard.  Funding will be subject to strict requirements.

Commissioner Howard will answer questions about the formula during a teleconference today at 1 p.m.  Please see details on the call in information below.

Teleconference Information:

Call in phone number: 1-866-233-3842

Participant Access Code: 915050


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