Department of Health Announces Delay In Distribution of Medicaid DSH Subsidies

by Paul L. Croce

On Tuesday, June 6, 2018, the Commissioner of the New Jersey Department of Health, Shereef Elnahal, conducted a conference call with the Chief Executive Officers of New Jersey’s 70 acute care hospitals alerting them of delays in the distribution of their Disproportionate Share Hospital (DSH) subsidies which would ordinarily be received in mid-June.

The delayed payments include $21 million in charity care subsidies, which are intended to offset the costs incurred by New Jersey hospitals in treating uninsured, low income patients.   $18.2 million in general medical education (GME) subsidies due to 43 New Jersey hospitals which are used to support teaching programs will also be delayed.

The Commissioner indicated the delay was ordered by the Treasurer and the Office of Management and Budget.  No specific reason for the delay was provided; however, it appears to be related to the ongoing budget dispute in the Legislature.  The Commissioner stated that he hoped the payments would be made in a timely manner.  However, there was no guaranty on when, or even if, the payments would be made.

The delay in these DSH payments could have a meaningful impact on New Jersey’s hospitals, who are already dealing with significant cuts to their Medicaid DSH funding over the past several years.  Indeed, the charity care subsidy has been cut from a total state wide distribution of $675 million in the 2014 SFY to $252 million in the current fiscal year. While the GME subsidy has increased from $100 million to $218 million in the same timeframe, the overall amount of these DSH subsidies has decreased by more than $300 million in only four years.

There is no doubt that New Jersey hospitals rely on these subsidies to ensure treatment to the State’s residence.  Indeed, Gary S. Horan, President and CEO of Trinitas Regional Medical Center was quoted in a NJ.com article describing the subsidies as the hospital’s “lifeblood.”

For now, New Jersey hospitals can only hope that this will be just a short delay in receiving payment, and not a precursor to additional cuts in the Medicaid DSH subsidies they rely upon. In the time since the Commissioner’s conference call, there has been no further word from the State regarding how this matter will resolve or when it is anticipated to resolve.