Christie releases transition reports
January 22, 2010
PolitickerNJ

The reports:

Agriculture
Authorities
Banking & Insurance
Community Affairs
Community Affairs Appendix
Corrections & Homeland Security
Economic Development
Education
Energy & Utilities
Environmental Protection
Gaming, Sports, and Entertainments
Governor's Office
Health & Senior Services
Human Services - Children and Families
Labor & Workforce Development
Law & Public Safety
Military & Veterans' Affairs
State
Transportation
Treasury

Governor Christie’s transition reports are now public – the reports review the functioning of each of NJ Departments (ie, Labor, Health, Corrections, Education, Law and Public Safety). Though HPAE reached out to offer to work on these teams, and provide input, the members of the ‘teams’ are almost entirely corporate, without any input from labor, or front-line healthcare workers, for example.

My review of these reports will focus on health, will also summarize those from education, labor, corrections and others affecting our members and our patients, residents and clients.

There are a few central themes to all:

1. Identifying cost-savings for all programs
2. Reducing or eliminating staff, programs and divisions and reducing duplication and the role of commissions and boards within each department;
3. Outsourcing and privatizing of services in health, corrections, human services;
4. Freezing public employee salaries;
5. Challenging civil service and collective bargaining process and rules;
6. De-regulating the insurance industry;
7. Making departments friendlier to businesses.

Health:

The sub-committee on health focused heavily on cost savings, as opposed to development of any new initiatives to expand access, improve quality of care, make care more affordable or foster collaboration of services among providers.

At some points, the health report does note that some cost-saving proposals could harm patients and cost the state more in the long run and need to be carefully examined. While there is a cursory acknowledgment that two-thirds of the $3.6 billion budget is from federal and non-state aid (for example, fees and fines) , still, the focus is on privatization, consolidation, and elimination or reduction of funding and programs.

In other examples, the transition report side-steps important decisions, even those campaigned on by then candidate Christie, such as the decision to allow Hackensack University Hospital to re-open Pascack Valley Hospital. The report merely leaves it to the courts.

1. The report states that while the Hospital Stabilization Fund should not prop up failing hospitals and gives Hoboken Hospital as the prime example, but states that failing hospitals must have a ‘business model’ for success to receive funds. However, nowhere is the necessary ‘business model’ detailed or is any proposal made for how state resources to assist financially fragile but essential hospitals will be provided in the future. The threat, however, is in the report that funds already promised to hospitals may be rescinded.
2. Charity Care: The report points to the failure of charity care to adequately compensate hospitals for their provision of services – but there are no proposals to increase or re-distribute the enrollment of qualified uninsured in eligible programs and fails to define how it would redistribute funding.
3 The ‘Out of Network’ problem. The report acknowledges a growing set of contract disputes between hospitals and NJ insurers, with more hospitals beginning to function ‘out-of-network’, since they can charge higher rates and ‘waive’ co-pays for patients. The recommendations omit a strategy focused on bringing hospitals back into networks with insurers, with adequate and fair reimbursement. While establishing reasonable charges is a partial solution, establishing a fair rate schedule, transparency of rates and negotiations, with mandated mediation would provide a fairer contract process for hospitals.
4 Reinhardt Recommendations – The report notes that many of the Reinhardt recommendations have gone un-implemented, but fails to mention specific ones.
5 Government Efficiency and Reform. Instead of focusing on efficiency and reform in our hospitals fiscal management, the report once again shows its intent to shrink government at any expenses by suggesting cuts to the health benefits of retirees in the state health benefit plan. While mentioning $190 million in savings, the report provides no details.
6 The report recommends severely reducing or eliminating State OSHA (Occupational Safety and Health) without consideration for the fact that New Jersey is a ‘state-OSHA’ plan, covering the health and safety conditions of all public employees – from public health care nurses and staff in public hospitals and nursing homes, to firefighters, police and teachers; and is jointly administered by DHSS and the NJ Department of Labor and Workforce Development on behalf of the federal government, with matching funds from the federal government. Governor Christie would simply leave this workforce – many of whom protect our health and safety every day - unprotected.
7. The NJDHSS State Lab provides services critical for infection control, disease outbreaks, and national and state security crises, and is part of both CDC and national homeland security programs, with unique capabilities to investigate and act to curtail threats to NJ residents’ health and safety. As the report notes, $156 million has been spent to build the new facility – and only $19million more is needed to make the lab operational. Yet, the proposal is to privatize this lab – or outsource to UMDNJ.
8. The report also recommends outsourcing of nursing home rate-setting and call centers for senior and consumer services, including complaint lines for consumers. Already, the DHSS is stretched at providing, for example, staff to investigate patient care or staff complaints at NJ hospitals. It is hard to see how outsourcing even the complaint line addresses this central issue.
9. The report also recommends eliminating poison control and or contracting out the service, which is now housed at UMDNJ and HPAE members perform this service. Report also recommends consolidating maternal-child health consortia and privatizing the air ambulance services –
10. Hospital Inspections – The DHSS has discontinued regular inspections (currently biennial by law not annually as the report noted) and the report recommends promulgating the change in the rulemaking process. If quality of care is truly the mission of the hospital, these inspections should be re-instated, and staffing should be brought up the level necessary to conduct thorough inspections. If the law is changed, complaint inspections must be timely, with notification and accompaniment by workers.

Sections from the Report on Banking and Insurance

Key Recommendations:
1. Health Insurance
Similar to the Health Report, this transition report addresses the health insurance conflict with hospitals as a way to rein in costs, focusing on hospital charges: Its recommendations include:

• imposing a fee schedule for out-of-network costs;
• setting up a dispute resolution system outside of the current arbitration system to impose a greater degree of cost effectiveness; and/or
• re-examining how carrier and providers negotiate contracts to find a method that will encourage greater in-network participation while providing adequate compensation for services.

The report also raises concerns that NJ has over-regulated the health insurance marketplace; suggests expanding basic and essential health policies; allowing purchases of insurance across state lines; capping out-of-network charges by hospitals; and de-regulating health insurers (ending mandates) as a way of encouraging competition and lowering rates: Text below:

“the Department should examine the methods to make more affordable health insurance available to a greater percentage of the population, similarly to how the Legislature created the Basic and Essential Policy in 2001 (P.L.2001, c.368). This policy is significantly less expensive than typical health insurance policies offered in the state. This should include working with the Legislature to expand eligibility for this type of policy by eliminating the barriers that currently prohibit groups of individuals, such as those eligible for more expensive plans, from purchasing this coverage. This proposal mirrors Governor-Elect Christie’s during the campaign to make more affordable health care options available.

Of great concern, and what has been described by some as the problem with no light at the end of the tunnel, are payments to out-of-network providers. This is best highlighted by the recent decision of Bayonne Medical Center, which has severed in-network relationships with four of the five health insurance carriers in
the state, and the explosion of ambulatory surgery centers throughout the state in recent years*. Out-of-network providers are not capped at in-network reimbursement rates. This leads to higher health care bills even if health insurers negotiate the cost downward, which is done on a case-by-case basis, still routinely exceed in-network health care costs by multiples. Providers’ choice to waive co-payments and deductibles for patients appears to further undermine the system. Additionally, as costs increase for the system, they eventually increase for the consumer. A continued proliferation of the practice of providers moving out-of network will put inordinate strain on the health insurance marketplace.

This will be compounded by the anticipated enactment of S-114/A-132 which will permit an assignment of benefits to all out-of-network providers by patients. In its current form, this bill will leave no incentive for providers to remain in-network as payments as higher rates for services will be guaranteed.

(HPAE supported this legislation.)

"This over regulation of marketplace has led to an inability to create innovative health products to provide to consumers. The Legislature has limited this ability through the imposition of numerous mandates, increasing the required medical loss ratio of premiums, and limiting what particular products can be offered, among other things. Until New Jersey’s marketplace more closely resembles the marketplaces of other states, the lack of carriers and competition will continue. One needs to look only at the automobile insurance market; once New Jersey became a functional marketplace reflecting the practices of other states, carriers emerged."

Transition Team Education Report

HPAE members at UMDNJ are also affected by the education report, as are other AFT/NJ members. Highlights include:

1. Elimination of the Commission on Higher Education – though HPAE and AFT just recently won a new law establishing a Commissioner of Higher Education
2. Freezing of all public employee salaries, absent a source of funding (p 4)
3. Choice through expansion of charter schools and vouchers and tax-credits for corporations who provide education funding to their employees (p9)
4. Investment in higher education, capital expenditures and reform of the Stars and other student-aid programs.
5. Ending of ban on imposition by employers for K-12 – a ban HPAE has been seeking to expand to higher education, public employers and UMDNJ members.

Labor

This Transition report shows the serious anti-labor sentiment in the new Christie administration, starting with its first recommendation:

1. Change the name of the Department to the New Jersey Department of Business and Employment; New Jersey Department of Workforce and Employment; New Jersey Department of the Workforce; or, the New Jersey Department of Workforce Development. The current name suggests a bias toward organized labor, and a change in the name will help the Department more closely align with all stakeholders”
2. Clearly, the ‘clients’ are the employers: “All staff, Investigators in particular, must be cross trained to perform multiple tasks and must receive customer service training to improve the client experience. Under current conditions, each agency conducts its own audits, meaning that employers could be subject to multiple visits by different inspectors. Cross training would result in employers seeing one comprehensive inspection rather than three or four. In addition to cost efficiency for the Department, employers would not feel they are being persecuted by the government and not waste time showing the same documents several times to different employees of the Department.”
3. And the new Labor Commissioner ‘should have no connection to organized labor’
4. The report does support ending diversion of Unemployment Insurance Funds – but also then proposes to ‘raise the benefit qualification level for UI. And Restructure the benefit calculation to make it more evenly spread, so the majority of the burden does not fall unfairly on the employer.”
5. “While HPAE and other unions have hoped to reform the workers compensation system to end employer control over medical decisions, this report proposes the opposite:
“One of the most important components of New Jersey’s system involves the direction of medical care. In New Jersey, the employer and their insurer – not the employee – control the direction of care. This has two main advantages. First, and most importantly, it encourages referral to those medical providers best suited to diagnose a work-related injury and develop an appropriate care and return-to-work plan. This assures that quality medical care for injured workers is paramount to both the employer and the insurer. Second, it allows for improved cost containment through the establishment of managed care arrangements between insurers and medical providers. This “employer control” approach has served New Jersey well and is essential to the balance discussed above
6. The report also identifies the wage and hour division as problematic for employers and proposes and proposes changing the ‘rounding off’ policy to meet federal instead of state standards; and minimizing fines.
7. In addition, the report proposes charging a filing fee for “unfair practice suits” filed with PERC, to minimize the amount of faulty unfair practice claims that are filed every year. PERC must investigate every claim that is filed regardless of circumstance. As a result, PERC uses their limited resources investigating claims, a portion of which are less than legitimate and result in an unintended misuse of PERC resources and taxpayer dollars
8. The report proposes to repeal legislation to remove criminal penalties associated with wage and hour violations in the Department.

Governor Christie also issued an Executive Order to include unions in pay to play standards.

In 2008, Governor Corzine issued a series of Executive Orders (117-120), which dealt with the issue of pay-to-play regulations. These Executive orders should be evaluated to assure unions are held to the same standards as those regulating the private sector. This, so far, has been interpreted to mean every union with a collective bargaining agreement with the state (HPAE through UMDNJ) would be barred from making contributions to candidates or establishing a state PAC.

Human Services: Division of Child and Family Services

This report calls for the downsizing of the contract the state has with UMDNJ for providing medical assessments of children in the DYFSS system. Already our 300 members at UMDNJ who provide these assessments to at-risk children have case loads far too large to adequately perform these services.

Department of Corrections

Because HPAE represents nurses in the DOC, this report also impacts HPAE, and proposes:

1. Review Alternative Provision of Health-related Services. Health-related services are the biggest single contract for the DOC. Contracting with a single provider limits the ability of the DOC to control its health care costs over time. It is recommended that a pilot study be conducted of using a hybrid-public private model in which DOC employs the nursing staff and contracts for specialty services, such as doctors.
2. In other transition reports, proposals are made to subcontract nursing services within the Juvenile system to UMDNJ.