WASHINGTON, D.C. – Congressman Chris Smith (R-Hamilton), who led a New Jersey delegation effort urging the implementation of a new Medicare rule that will help steer more than $110 million annually to New Jersey hospitals, announced tonight that Medicare officials have just approved the new rule.

Smith, the dean of the state’s 15-person Congressional delegation, organized the New Jersey effort that resulted in the movement of three Northern New Jersey Counties – Bergen, Hudson, and Passaic – into the New York City Metropolitan Statistical Area (MSA) for the purposes of computing Medicare reimbursement payments. The move will also help significantly increase reimbursement rates for hospitals throughout the state.

“This is a landmark victory for our state’s hospitals, which have for decades been mistreated by Medicare when it comes to being reimbursed for the critical care they provide.  I’m thankful that Medicare officials have now realized that New Jersey hospital’s healthcare costs are just as high as the costs incurred by New York City facilities and that our hospitals deserve to be reimbursed fairly by Medicare,” Smith said.

“The bottom line is that hospitals in New York City and most of New Jersey are part of one labor pool and compete against one another for health care talent.  It is thus unfair to provide some hospitals in the same pool with a higher reimbursement rate, as they will have an undue advantage over their competitors when it comes to hiring qualified employees,” he added.

“This new rule, which will be implemented October 1, will produce a significant positive ripple affect that will be felt by hospitals in every county of New Jersey.  I’m pleased to have led this successful effort, and I thank each of my colleagues who lent their assistance.” Smith said.

Smith noted that the new rule will also make it easier for hospitals throughout the state to successfully argue that their costs are more reflective of a higher MSA and that they should be reclassified into a region to receive a higher payment.  For example, the new rule will enable hospitals in Ocean and Monmouth Counties to reclassify into the Middlesex County MSA, which will therefore provide them with a higher reimbursement rate.

Additionally, the new rule will help establish a higher “rural floor” payment for all hospitals statewide. Because the “floor” payment is determined by averaging the highest and lowest MSA in the state, New Jersey’s “floor” will rise significantly, accounting for between $50 million to $60 million of the annual increase. Hospitals in New Jersey’s Fourth District could see Medicare payments increase by as much as $4.3 million a year via the “rural floor” improvement.