The rise and fall of New Jersey's uncompensated care fund

Since 1982, acute care hospitals in New Jersey have been reimbursed on a diagnosis-related group (DRG) basis along with a provision for 100 percent reimbursement of uncompensated care (bad debts and charity care). Initially, that system was based on a hospital-specific surcharge. Eventually, that was replaced with a uniform charge for all hospitals, including reimbursement by Medicare. But the growth in the number of uninsured, an inequitable financing system, increases in bad debts, and the elimination of Medicare payments led to the program's demise. An extended legislative stalemate has resulted in a pair of temporary extensions--aided by an infusion of federal Medicaid dollars--but the state still must find a permanent solution.