Menendez: Reimbursement Extensions Will Help NJ Hospitals

The Imputed Wage Index Floor Extended Through September 2014

Washington, DC – U.S. Senator Robert Menendez (D-NJ) today applauds the Center for Medicare and Medicaid Services’ (CMS) announcement that it will extend the imputed wage index floor for New Jersey.

“New Jersey is home to some of the nation's finest hospitals. However, operating a hospital in our state is extremely expensive and without this policy New Jersey hospitals face a significant disadvantage when compared to those in neighboring states. The announcement is proof that CMS recognizes the unique set of circumstances facing New Jersey hospitals and is willing to provide them reimbursements reflecting that,” said Senator Menendez. “I have long championed policies such as the imputed wage index, which appropriately recognize the unique situation facing our hospitals. … I applaud this announcement and look forward to continuing to partner with CMS and our local health care providers to offer the people of the Garden State the best health care possible.”

This policy, which was announced in the final Medicare hospital inpatient prospective payment (IPPS) rule for fiscal year 2014, appropriately recognizes the cost of operating a hospital in New Jersey. The imputed floor policy was set to expire next month but will now be extended until September 30, 2014.

In 2014, 25 New Jersey hospitals are expected to receive a total of $29 million in additional payments as a result of the imputed floor policy. From 2005 to 2013, the imputed floor will have brought New Jersey hospitals roughly $500 million.

Senator Menendez is the New Jersey delegation's leading voice on this issue. Earlier this year he led a delegation-wide letter to CMS explaining the importance of continuing the imputed floor policy. This letter resulted in CMS including an extension of the rural floor policy in the proposed IPPS rule, released this past April. Senator Menendez led another delegation during the rule's comment period, which CMS recognized as a crucial determining factor in their decision to keep the imputed floor in the final rule.

Background on the Imputed Wage Index Floor from the New Jersey Hospital Association
In 2004, through the FY 2005 IPPS rule, CMS created the imputed wage index floor for states, like New Jersey, that are considered by the federal government to be all-urban states for Medicare payment purposes for three years. The imputed wage index floor corrected years of unequal treatment for New Jersey’s hospitals by providing them with benefits similar to those granted to healthcare institutions in 48 other states through the longstanding application of a rural hospital wage index floor. This is the third time the imputed floor has been extended to continue providing the appropriate reimbursement to the nation's only two rural states, New Jersey and Rhode Island.