CAPE MAY COURT HOUSE — Donna Richardson picked up prescriptions for her heart condition at Volunteers in Medicine, a free, nonprofit clinic in Middle Township.

Richardson, 64, of Lower Township, has relied on free medical care provided by local hospitals and clinics for years. Her job as a one-on-one school aide does not provide medical insurance. And with serious medical issues — she had open-heart surgery and suffers from kidney disease — she is dependent on medicine and regular doctor’s visits just to survive.

“To be honest, I probably wouldn’t be here today without this clinic and the charity care,” she said.

Richardson is one of a growing number of uninsured patients in New Jersey who are straining hospital resources and free clinics in the wake of the recession.

As a result, hospitals are paying closer attention than ever to the complicated formula the state uses each year to reimburse this care.

Suburban hospitals such as Shore Memorial Hospital in Somers Point get far less state assistance than urban hospitals, such as AtlantiCare Regional Medical Center in Atlantic City, which also benefit from federal aid for caring for a disproportionately large percentage of poor, elderly or disabled patients.

“It’s an annual debate,” said Betsy Ryan, president of the New Jersey Hospital Association.

“Demands are increasing with the poor economy. There’s more uninsured. We seek to get fair funding for New Jersey hospitals that have a mandate to provide care for all.”

Some suburban hospitals get reimbursed as little as 5 cents on the dollar compared with more than 90 cents for urban counterparts.

It’s a matter of fairness, said Jim Foley, chief financial officer at Shore.

New Jersey reimbursed Shore Memorial $745,000 for its charity care last year, he said.

AtlantiCare said it spent $45 million overall in charity care in 2009 and was reimbursed just $20 million. The state reimbursed AtlantiCare Regional Medical Center’s City Division $16 million in 2010.

Shore Memorial provided about $20 million in charity and uncompensated care in 2010 compared with $17 million in 2009.

But unlike urban hospitals, most suburban hospitals are not eligible for federal reimbursement for the charity care they provide, he said. This discrepancy is a sore point because suburban communities may have more unemployed or uninsured patients than larger cities during a recession.

“Most people who have been laid off from casinos can’t afford to keep COBRA insurance,” Foley said of the temporary health coverage program.

“Patients first start canceling elective care. Then you have patients who no longer see a primary care physician,” he said. “People are just choosing not to go to the hospital for a couple stitches or they’re self-medicating with over-the-counter pain medications. Patients we’re seeing in the emergency room are sicker.”

Foley said the recession is revealing the disparity in public compensation for charity care between urban and suburban hospitals.

“A patient who lives in Egg Harbor Township or Ocean City is worth less to the state than a patient who lives in Atlantic City, Camden or Newark,” he said. “But the delivery of health care is not different here from Passaic or other counties.”

He said the smaller subsidies for suburban hospitals exacerbate the situation.

“It makes it very difficult for us to cover all the losses inherent in charity care,” Foley said. “If you can count on getting reimbursed at 96 cents on the dollar, it’s easier than if you’re getting 7.5 cents. The difference is huge.”

Besides charity care for uninsured patients, Shore Memorial offers a supplemental program for working patients who have no insurance but whose income exceeds the limits that would make them eligible for Medicaid. The hospital bills these patients at the same reduced rates as Medicare patients, Foley said.

“One thing we’ve seen numbers grow in during the recession is more patients qualifying for charity care under state guidelines,” Foley said. “We’ve also seen more patients qualify for supplemental charity that we provide at the Medicare rate.”

Hospitals and free clinics have been seeing a spike in demand for charity care, even as many patients postpone medical treatment until their conditions become critical.

“We are swamped,” said Jackie Meiluta, director of Volunteers in Medicine of Cape May County, a nonprofit group that provides medical care for people who do not have insurance.

“We get more calls every day,” she said. “We just had a young woman come in today. She makes $50 more than the Medicaid limits allow but does not have insurance.”

The clinic in Middle Township had 3,667 patient visits in the 2010 fiscal year — up 33 percent over 2009.

Cape May County’s unemployment rate spikes in the winter when seasonal jobs dry up. But Meiluta said the recession has been harder on office workers and the county’s skilled tradesmen.

“We always catered to seasonal workers. Now we’re seeing more white-collar workers and people who have had insurance before but are now out of work,” she said. “They don’t know how to navigate the system.”

Many of these first-time patients are ashamed of their financial situation, she said. But the clinic treats them with dignity, she said.

The center’s staff secured $1 million in free medications from pharmaceutical foundations that give to the poor. And they spent an additional $90,000 last year on supermarket pharmacy prescriptions for the clinic’s patients, Meiluta said.

Hospitals, too, have seen a dramatic increase in the amount of charity care they provide in response to the high unemployment rate resulting in more New Jersey residents who have no medical insurance.

New Jersey reimburses hospitals for the charity care they provide. Reimbursements increased from $320 million in 2001 to $605 million in 2010. But hospitals said this reimbursement does not nearly cover their actual expenses for care they offer to the indigent, the unemployed and patients who default on their bills.

Cape Regional Medical Center in Middle Township spent $21 million on charity care in 2010 — a 23 percent increase over 2009. This reflects nearly 1,200 new charity care patients in 2010. The hospital projects it will spend as much as 20 percent more on charity-care cases in 2011, spokesman Tom Piratzky said.

Southern Ocean Medical Center in Stafford Township provided $10.5 million in charity care in 2010 compared to $9.7 million in 2009.

And the state reimbursed $2.4 million to South Jersey Healthcare Regional Medical Center in Vineland.

South Jersey Healthcare President and CEO Chester B. Kaletkowski recently joined a state committee that examines charity care spending in New Jersey.

“The purpose of the committee is to recognize that hospitals provide a lot of charity care and make sure that we get paid for it and to monitor the formula,” he said. “We try to make it as equitable as we can for all parties.”

South Jersey Healthcare operates in Cumberland County, the poorest of New Jersey’s 21 counties.

“Everyone would like more than 7 cents on the dollar,” said John DiAngelo, senior vice president of finance at South Jersey Healthcare.

“Nobody is arguing that hospitals up in Newark, where the majority of their patient base is on Medicaid, don’t deserve reimbursement,” he said. “We realize safety-net hospitals need more than the rest of us. But we don’t want nothing for the charity we treat. We sit in the poorest county in the state. What we’re saying is everyone is providing charity care. We’d like everyone to get more.”

Meanwhile, some doctors said federal Medicare reimbursement rates have gotten so small compared to actual costs that patients are starting to get turned away for treatments.

Dr. Alieta Eck, a Piscataway internist, runs a free clinic in Somerset County. She proposes that doctors volunteer a few hours a week in exchange for the state paying for their malpractice insurance.

“We can’t be forced to take care of people for no compensation,” she said. “New Jersey spends $9 billion on Medicare and Medicaid each year. The (insurance companies) are salivating, they’re so happy. The only people making money are the bureaucrats.”

Hospitals in southern New Jersey said they are budgeting more for charity care in 2011. Shore Memorial’s Foley said there is reason for economic optimism.

“Hope springs eternal,” he said. “I hesitate to say things will get better, but they are not expected to get worse.”

Contact Michael Miller:

609-272-7247