U.S. Rep. Bill Pascrell, Jr. (D-NJ-09) and Senator Bob Menendez (D-NJ) today celebrated the inclusion of a key provision in the American Rescue Plan that will permanently unlock millions annually in Medicare dollars for New Jersey’s hospitals.  President Biden is expected to sign the bill into law Friday.

“For years our delegation has worked together in support of a wage index floor for all-urban states, a request that was always renewed until the Trump administration decided to reject it and unjustly target New Jersey. No more. Thanks to House and Senate Democrats, we are moving to permanently restore the imputed rural floor policy and allow millions of needed federal dollars to return to the Garden State,” said Rep. Pascrell, New Jersey’s only member of the House Ways and Means Committee that oversees the Medicare program.  “Making this policy permanent will allow New Jersey hospitals and health care facilities to compete for new workers and bolster our fleet of top-notch medical professionals. Senator Menendez and I fought vigorously to include this policy in our landmark American Rescue Plan. It will help save lives.”

“With President Biden’s signature, millions more in federal Medicare dollars will now flow into New Jersey’s hospitals,” said Sen. Menendez.  “This is about leveling the playing field and restoring fairness and equity for New Jersey’s hospitals at a time when their doctors, nurses and staff are on the frontlines courageously fighting the pandemic and saving lives.  The challenges our hospitals face, even in good times, to attract the best talent and continue to serve their patients are no less than their counterparts in other parts of our country.  Permanently restoring the imputed rural floor will inject millions in annual federal funding into New Jersey’s hospitals to pay doctors and staff and continue to provide excellent medical care.”

Sen. Menendez and Rep. Pascrell have for years successfully led efforts to extend the so-called imputed rural floor policy.  It was last extended in 2017, but the Trump Administration allowed it to lapse at the end of FY2018, putting New Jersey hospitals at a competitive disadvantage due to depressed Medicare wage payments and costing them millions annually.  The provision included in the American Rescue Plan permanently restores the imputed rural floor, allowing New Jersey’s hospitals to effectively compete for the highest quality health care talent available by providing parity with neighboring states. 

The Centers for Medicare and Medicaid Services (CMS) first established the imputed rural floor in FY2005 in order to ensure equitable payment policies for rural hospitals located in states designated as “all-urban” by CMS.  New Jersey is currently one of only three states, along with Delaware and Rhode Island, designated by CMS as “all-urban” based upon geographic size and statewide population, but that designation ignores the realities that there are rural areas within those densely populated states and hospitals operating in those communities that face the same challenges as rural hospitals located in other states.  The provision in the COVID relief bill permanently restores the imputed rural floor without impacting any funding for rural hospitals located in other states.