Sen. Menendez, Rep. Pascrell Lead Call for HHS to Halt Trump-Era Policy That Will Cost N.J. Hospitals Millions

WASHINGTON, March 26 -- Rep. Bill Pascrell Jr., D-New Jersey, issued the following news release:

U.S. Senator Bob Menendez and Congressman Bill Pascrell, Jr. (N.J.-09), senior members of the Senate Finance and House Ways and Means committees that set national health policy, today led a delegation letter urging U.S. Health and Human Services Secretary Xavier Becerra to cease implementation of a Trump-era policy that will cost Central Jersey hospitals over $100 million and undermine their ability to attract the best talent at a time when they are at the frontlines of the pandemic.

"As we enter the second year of this pandemic, hospitals in our state continue to provide essential care to New Jersey residents while incurring the dual impact of skyrocketing expenses and plunging revenue. Despite the federal financial relief provided by Congress, 41 percent of New Jersey hospitals are operating in the red," the lawmakers wrote. "We write today with a sense of urgency to ask that the Centers for Medicare and Medicaid Services (CMS) address a payment policy decision made by the previous administration that has created unprecedented financial harm to hospitals and other health providers in New Jersey."

Last year, the Trump Administration finalized a rule to create a new Medicare Area Wage Index by removing three Central Jersey counties--Middlesex, Monmouth, and Ocean--from the New York-Newark-Jersey City core-based statistical area (CBSA). The move cuts Medicare reimbursements by 17% for providers operating in those counties, costing them approximately $100 million, according to estimates by the New Jersey Hospital Association (NJHA). It also puts hospitals in Middlesex, Monmouth and Ocean at a competitive disadvantage in attracting the best talent when nearby hospitals in northern New Jersey or New York City are reimbursed by Medicare at a higher rate.

"This decision further exacerbated the existing inequitable labor market conditions for New Jersey health care providers," the letter continued. "Not only was this massive restructuring of New Jersey's health care labor market adopted without the benefit of accurate and up-to-date census data, CMS acknowledged that it was implementing the policy despite being unable to 'complete an extensive review and verification of the changes' to labor market statistics provided by the Office of Management and Budget (OMB) in March 2020. Moreover, there is reason to believe that the underlying data used to delineate the new CBSAs was collected during the economic upheaval that resulted from Superstorm Sandy--the deadly and destructive 2012 hurricane that resulted in economic losses totaling $30 billion in New Jersey alone."

The lawmakers asked Secretary Becerra to halt implementation until at least the 2020 decennial census data is released.

"CMS should not have implemented this CBSA policy change until the decennial census data became available. But to advance the policy in the midst of the COVID-19 crisis that heavily impacted our hospitals showed a lack of foresight and understanding of this policy's impact," the letter stated.

In addition to Sen. Menendez and Rep. Pascrell, the letter was cosigned by Sen. Cory Booker and Reps. Frank Pallone, Jr. (N.J.-06), Josh Gottheimer (N.J.-05), Bonnie Watson Coleman (N.J.-12), Tom Malinowski (N.J.-07) and Andy Kim (N.J.-03).

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March 26, 2021

To: The Honorable Xavier Becerra, Secretary of Health and Human Services, U.S. Department of Health and Human Services, 200 Independence Avenue, S.W., Washington, DC 20201

Dear Secretary Becerra,

Congratulations on your recent confirmation as the Secretary of Health and Human Services. We look forward to working with you and your team to address the numerous health care challenges facing our nation during these unprecedented times. We write today with a sense of urgency to ask that the Centers for Medicare and Medicaid Services (CMS) address a payment policy decision made by the previous administration that has created unprecedented financial harm to hospitals and other health providers in New Jersey.

The COVID-19 pandemic has taken a particularly cruel toll on our state. New Jersey hospitals rose to the challenge in the early, dark days of the pandemic when little was known about the virus and how to treat it. Last year, in the midst of the ongoing pandemic, the Trump Administration finalized a rule that removes three New Jersey counties - Middlesex, Monmouth, and Ocean - from the New York-Newark-Jersey City core-based statistical area (CBSA) for purposes of calculating the Medicare Area Wage Index adjustment in the FY21 Final Inpatient Prospective Payment System Rule [CMS-1735-F].

CMS typically adopts major revisions to CBSAs based on labor data gleaned from each decennial census. Relying on inaccurate and out-of-date employment and commuting data, CMS opted to break from this historical practice by adopting what they describe as "significant rearrangement in the constituent counties among the New York City Area Metropolitan Divisions" - rearrangements that the agency itself noted will result in a nearly 17 percent decrease in the wage index for the impacted providers. The New Jersey Hospital Association estimates that the hospitals impacted by this policy will experience a reduction in Medicare payments by well over $100 million per year beginning in FY 2022.

This decision further exacerbated the existing inequitable labor market conditions for New Jersey health care providers. Not only was this massive restructuring of New Jersey's health care labor market adopted without the benefit of accurate and up-to-date census data, CMS acknowledged that it was implementing the policy despite being unable to "complete an extensive review and verification of the changes" to labor market statistics provided by the Office of Management and Budget (OMB) in March 2020. Moreover, there is reason to believe that the underlying data used to delineate the new CBSAs was collected during the economic upheaval that resulted from Superstorm Sandy - the deadly and destructive 2012 hurricane that resulted in economic losses totaling $30 billion in New Jersey alone.

CMS should not have implemented this CBSA policy change until the decennial census data became available. But to advance the policy in the midst of the COVID-19 crisis that heavily impacted our hospitals showed a lack of foresight and understanding of this policy's impact.

As we enter the second year of this pandemic, hospitals in our state continue to provide essential care to New Jersey residents while incurring the dual impact of skyrocketing expenses and plunging revenue. Despite the federal financial relief provided by Congress, 41 percent of New Jersey hospitals are operating in the red. We strongly urge the agency to protect New Jersey providers and promote payment stability by ceasing implementation of the policy until the census data is released. In addition, we ask that CMS honor previously approved Geographic Classification Review Board reclassifications for facilities that applied for reclassification to the New York City-White Plains, NY-NJ CBSA.

We appreciate the role that you and your department will play in the coming months and years as we work to address the long-term impacts of COVID-19 pandemic. We recognize the enormity of the task ahead and stand ready to serve as your partners. We ask that you recognize the essential role that New Jersey hospitals have played in responding to the public health emergency, and halt implementation of the harmful CBSA policy.

Thank you for your consideration on these critical issues.

See signatures here: https://www.menendez.senate.gov/imo/media/doc/Menendez-%20Pascrell%20Letter%20to%20HHS%20Secretary%20Becerra%20on%20CBSA%20FINAL%2003622020%5b1%5d%5b2%5d.pdf