'Wage floor' extension means an extra $90M for New Jersey hospitals

Executives and physicians at nearly 40 New Jersey hospitals will have an extra $90 million in their collective pockets, thanks to the extension this week of a special rule that helps Garden State hospitals keep pace with the rest of the nation for Medicare reimbursement. 

Minimum Medicare reimbursement levels in most states are based on the labor costs of their most rural areas--known as a wage index floor. According to Medicare, however, New Jersey has no rural areas, and thus, no true wage floor. An artificial floor was therefore created in 2004 to remedy the situation. 

That floor was extended by the Centers for Medicare & Medicaid Services on Tuesday through 2013. It mostly benefits hospitals in the southern portion of the state, the Newark Star-Ledger reports. 

"Being able to effectively compete for labor is critical to allowing hospitals to fulfill their care delivery missions," New Jersey Hospital Association (NJHA) Senior Vice President Sean Hopkins said in an announcement. "Extending the imputed wage index floor will infuse a greater potential for stability that wouldn't exist if it was discontinued." 

The extension follows news that New Jersey hospitals are set to gain an additional $54 million thanks to a new rule adopted by Medicare based on an amendment to the Affordable Care Act that requires money for Medicare hospital wage reimbursements to be a fixed amount nationwide. That amendment, which was cosponsored by Massachusetts Sen. John Kerry (D) and New Jersey Sen. Robert Menendez (D)--the latter of whom lobbied for the wage floor extension--has been heavily criticized by state hospital associations throughout the nation, as only seven states are set to see financial gains. 

To learn more:
- here's the NJHA announcement
- read this Newark Star-Ledger article 

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