ASSEMBLY APPROPRIATIONS COMMITTEE
STATEMENT TO
ASSEMBLY COMMITTEE SUBSTITUTE FOR
ASSEMBLY, No. 1532
STATE OF NEW JERSEY
DATED: MAY 1, 1996
The Assembly Appropriations Committee reports favorably a committee substitute for Assembly Bill No. 1532.
This substitute provides a cost-effective mechanism for providing health care services on a managed care basis to indigent and low income persons in the State. The health care program will be implemented by the Commissioner of Health, in consultation with the Commissioner of Human Services and the State Treasurer.
Specifically, the substitute provides that, subject to the receipt of a waiver from the federal Department of Health and Human Services, the State Treasurer shall contract with one or more entities to administer a Statewide program of health care services, that are provided on a managed care basis, for all eligible low income residents in the State that are in need of the health care services.
The contract shall include, but not be limited to, provisions for:
(1) the provision of charity care services on a managed care basis as specified by the Commissioner of Health, in consultation with the Commissioner of Human Services and the State Treasurer. An administrator shall be responsible for determining the most appropriate and cost-effective means of providing the health care services required by an eligible person and for directing the person to that means for receipt of the services;
(2) the determination of eligibility criteria for health care providers who choose to participate in the program;
(3) a methodology established by the Commissioner of Health for reimbursement of participating hospitals and other health care providers;
(4) the development and use of a uniform method for determining eligibility of State residents for health care services under the program; and
(5) the submission of quarterly reports to the Department of Health and the Department of the Treasury, in a form and manner required by the department, detailing expenditures of health care funds in the program.
The contract shall also provide that provider participation in the program shall ensure the maximum receipt by the State of federal disproportionate share monies pursuant to Pub.L.89-97 (42 U.S.C.§1396a et seq.) and Pub.L.102-234.
The Commissioner of Health shall report annually to the standing reference committees on health and appropriations of the Senate and General Assembly and the Governor on:
(1) expenditures related to the provision of health care services on a managed care basis, the number of persons served, the types of services provided, the hospitals participating in the program, the number and types of other health care providers participating in the program and such other information as may be required by the Legislature;
(2) the effectiveness of the program in containing or reducing costs for providing health care services to qualified low income residents of the State; and
(3) recommendations developed in consultation with the Commissioner of Human Services and the State Treasurer concerning additional cost containment actions that may be adopted for the provision of health care services to qualified low income persons.
The substitute provides that nothing in the substitute shall be construed to expand covered health care services to include services not covered by the charity care program currently in effect.
The substitute provides that the implementation of the health care program or other subsidies for charity care that affect the Medicaid State plan shall be contingent upon receipt of federal approvals that assure continuation of an acceptable level of federal Medicaid matching funds, including disproportionate share monies, as determined by the Director of the Division of Medical Assistance and Health Services in the Department of Human Services and the Director of the Division of Budget and Accounting in the Department of the Treasury.
Also, in order to achieve even greater efficiency in the delivery of health care on a managed care basis, the substitute directs the Commissioner of Health to establish a technology infrastructure to support the Statewide health care program established in the substitute. The State Treasurer, in consultation with the Commissioners of Health and Human Services may also, if deemed to be in the State's best interests, include system features and provisions in the technology infrastructure to satisfy the requirements of multiple programs and purposes, including, but not limited to, programs such as Medicaid, food stamps and public assistance, and purposes such as the exchange and consolidation of health care information permitted by law, eligibility and identity verification, claims processing, the use of electronic patient identification technology and electronic data interchange.
The substitute also clarifies that the Health Care Subsidy Fund is the payer of last resort, and that a hospital or other health care provider shall not submit a claim for charity care or managed health care services reimbursement on behalf of any individual for whom the hospital or health care provider is eligible to receive reimbursement under any State or federal program or other third party payer. The substitute also amends N.J.S.A.26:2H-18.63 concerning penalties for false statements or misrepresentation of a material fact in the receipt of charity care benefits to clarify that the provisions apply to any person or entity.
The substitute also continues the Hospital Health Care Subsidy account (known as the Hospital Relief Fund) in the Division of Medical Assistance and Health Services. This account provides assistance to hospitals which treat large numbers of patients with AIDS, tuberculosis, substance abuse, complex births, mental illness and developmental disabilities. The substitute provides $35 million in State funds in calendar year 1996 and $71 million in calendar year 1997 to this account. These monies will be matched by an equal amount of federal funds.
For the interim period before the new health care program is implemented, the State shall distribute charity care funding to hospitals pursuant to a methodology similar to that used in 1995 for the distribution of charity care subsidies. The substitute provides that $310 million shall be allocated for charity care subsidies for calendar year 1996 and up to $300 million shall be allocated for 1997. Part of the funding from the 1997 allocation may be used for the new health care program, pending the receipt of a federal waiver to implement the program.
The funding for the charity care subsidies and Hospital Health Care Subsidy account will be provided from a combination of employer and employee contributions and General Fund revenues. In calendar years 1996 and 1997, $330 million each year will be provided from employer and employee contributions and $15 million in 1996 and $41 million in 1997 will be appropriated from the General Fund.
Beginning in 1998, the new health care program will be supported with revenues derived from efficiencies achieved by State use of an electronic data interchange system for health care claims and related information.
The substitute also makes changes in the funding of the unemployment compensation fund as follows:
1. No payroll taxes are collected from workers for the unemployment compensation fund starting April 1, 1996 and ending December 21, 1997 and, starting on January 1, 1998, the rate is set at 0.4%, compared to the current rate of 0.6%. However, payroll taxes from workers are continued at their current rate through December 31, 1996 and reduced to 0.5% in calendar year 1997 to provide revenues for the Health Care Subsidy Fund.
2. Starting on July 1, 1997, the fund reserve ratios used to determine which tax schedule is applied to employers are reduced, which will make it easier in the future for tax schedules to go into effect which will result in lower tax rates for employers in most cases. The fund reserve ratio that "triggers" tax schedule "A," which provides the lowest tax rates, is reduced from 10% to 5%. The trigger for schedule "B" is reduced from 7% to 4%, the trigger for schedule "C" is reduced from 4% to 3% and the trigger for schedule "D" is reduced from 2.5% to 2%. The only increased reserve ratio is the trigger for a 10% tax surcharge, which is increased from 0 to 1%.
3. If the fund reserve ratio declines to a level below 3.00% on March 31 of either 1998 or 1999, the Treasurer will transfer the amount necessary to raise the reserve ratio to a level of 3.00%, thereby making impossible the imposition of tax schedule "D" on employers during those years.