SENATE, No. 67
STATE OF NEW JERSEY
Introduced Pending Technical Review by Legislative Counsel
PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION
By Senator CASEY
An Act providing for financial and management audits of certain hospitals by the New Jersey Essential Health Services Commission and amending and supplementing P.L.1992, c.160.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) This act shall be known and may be cited as the "Hospital Quality and Accountability Act."
2. (New section) As used in this act:
"Commission" means the New Jersey Essential Health Services Commission established pursuant to section 4 of P.L.1992, c.160 (C.26:2H-18.54).
"Department" means the Department of Health.
3. (New section) a. The commission shall provide for the performance of a financial and management audit conducted independently of the department, in accordance with the provisions of this act and rules and regulations adopted by the commission, of a hospital in which the licensed bed occupancy rate decreases by 20 percent or more during a period of two consecutive calendar years, or falls below 50 percent during a single calendar year, commencing with occupancy rate reports submitted to the department for calendar year 1990 as contrasted with the rates reported for 1989. The department shall make available to the commission copies of all hospital occupancy rate reports submitted for the period since 1989 and all such reports submitted after the effective date of this act.
b. A hospital which meets the audit criteria established pursuant to subsection a. of this section shall submit a financial statement to the commission no later than the 60th day after issuing its occupancy rates for a calendar year, or in the case of a hospital which meets the audit criteria based upon occupancy rates for the years 1989 through 1992 no later than the 60th day after a date to be established by the commission, supplying such information as the commission shall require in order to effectuate the purposes of this act.
c. No later than the 30th day after receipt of the hospital financial statement, the commission shall designate an audit team to evaluate the financial statement and to perform an audit of the financial condition and management of the hospital.
d. The audit shall be performed in accordance with generally accepted accounting principles, and shall include the financial activities and transactions of the hospital, its owners and management with respect to that hospital, and, if the facility is a member of a hospital group, the other hospitals within that group, including any changes in hospital operations to which the decrease in occupancy rates may be attributable. The audited hospital shall provide the auditors with access to all records and information deemed relevant by the auditors, and shall assume the costs of performing the audit.
e. The audit team shall prepare a report of its findings for the commission, which shall include any recommendations for changes in operations or management to increase the occupancy rate at the audited hospital as deemed appropriate by the auditors. A copy of the audit report shall be issued to the hospital and the commission concurrently.
Upon receipt of the audit report, the commission shall review and evaluate the audit findings, determine the cause of the decrease in occupancy rates at the audited hospital, and make specific recommendations regarding changes in operations and management to increase the occupancy rate, as well as more general recommendations regarding continued licensure of the facility.
The commission shall immediately report to the appropriate agency any findings of improper financial activities or violations of State or federal law or regulations by the audited hospital.
Prior to the issuance of its recommendations, the commission shall afford the audited hospital an opportunity to respond to the audit report in writing and may, as it deems necessary, conduct one or more public hearings to obtain additional information relevant to the audit.
The commission shall submit a copy of its recommendations to the hospital and the department. Copies of the audit report and the commission recommendations shall be made available to members of the public upon request.
4. Section 5 of P.L.1990, c.160 (C.26:2H-18.55) is amended to read as follows:
5. The commission shall:
a. Administer the fund and establish a mechanism to allocate monies received from the Commissioner of Labor pursuant to section 29 of P.L.1992, c.160 (C.43:21-7b) to the appropriate accounts in the fund as specified in this act;
b. Establish eligibility determination and claims processing systems for the charity care component of the disproportionate share subsidy, including the development of uniform forms for determining eligibility and submitting claims. The commission may contract with a private claims administrator or processor for the purpose of processing hospital claims for charity care pursuant to this act;
c. Establish a schedule of payments for reimbursement of the charity care component of the disproportionate share payment for services provided to emergency room patients who do not require those services on an emergency basis;
d. Develop and provide for the implementation by January 1, 1994 of the New Jersey SHIELD program pursuant to section 15 of this act;
e. Study and, if feasible, establish hospital cost and outcome reports to provide assistance to consumers of health care in this State in making prudent health care choices;
f. Compile demographic information on recipients of, and types of services paid for by, the charity care component of the disproportionate share payment and include a summary of this information in the commission's annual report to the Governor and Legislature. The demographic information shall include, at a minimum, the recipient's age, sex, marital status, employment status, type of health insurance coverage, if any, and if the recipient is a child under 18 years of age who does not have health insurance coverage or a married person who does not have health insurance coverage, whether the child's parent or the married person's spouse, as the case may be, has health insurance;
g. Review the level of hospital charges and assess their appropriateness in relation to hospitals in neighboring states;
h. Review and assess the adequacy of Medicare hospital reimbursement rates as established by the federal government;
i. Review and assess the level of Medicaid reimbursement rates for physicians and other health care providers with the purpose of encouraging their increased participation in less costly and more appropriate methods of treatment, particularly, preventive care services and managed care;
j. Assess adherence by third party payers and hospitals to recognized fair market contracting standards and recommend to the Governor and Legislature whenever the commission deems appropriate, safeguards to prevent unfair or discriminatory contracting or pricing policies;
k. Ensure that charity care services financed pursuant to this act are provided in the most appropriate and cost effective manner and assess the feasibility of shifting services received by hospital charity care patients to a managed care system;
l. Encourage the use of centralized data storage and transmission technology that utilizes personal and image identification systems as well as identity verification technology for the purposes of enabling a hospital to access medical history, insurance information and other personal information, as appropriate;
m. Review and examine medical malpractice reform initiatives, including but not limited to, mediation programs and practice protocols established by the United States Agency for Health Care Policy and Research and include any recommendations for legislative action the commission deems appropriate for implementing the use of such reform initiatives in the commission's annual report to the Governor and the Legislature;
n. Consult with the Health Care Facilities Financing Authority on the development of a program to establish a hospital bond reserve fund;
o. Take such other actions to provide for efficient and effective health care financing as the commission deems necessary and appropriate pursuant to this act, including providing for the performance of financial and management audits of hospitals pursuant to P.L. , c. (C. )(pending before the Legislature as this bill); and
p. Report annually to the Governor and the Legislature by November 1 of each year on the status of the fund and the activities of the commission, and include in the report any recommendations for legislative action the commission deems appropriate.
(cf: P.L.1992, c.160, s.5)
5. This act shall take effect immediately.
STATEMENT
This bill requires the New Jersey Essential Health Services Commission to conduct a financial and management audit of a hospital in which the licensed bed occupancy rate decreases by 20 percent or more during a period of two consecutive calendar years, or falls below 50 percent during a single calendar year, commencing with occupancy rate reports submitted to the Department of Health for calendar year 1990 as contrasted with the rates reported for 1989. The department shall make available to the commission copies of all hospital occupancy rate reports submitted for the period since 1989 and all such reports submitted after the effective date of this bill.
The audit shall be performed in accordance with generally accepted accounting principles, and shall include the financial activities and transactions of the hospital, its owners and management with respect to that hospital, and, if the facility is a member of a hospital group, the other hospitals within that group, including any changes in hospital operations to which the decrease in occupancy rates may be attributable. The audited hospital shall provide the auditors with access to all records and information deemed relevant by the auditors, and shall assume the costs of performing the audit.
The audit team shall prepare a report of its findings for the commission, which shall include any recommendations for changes in operations or management to increase the occupancy rate at the audited hospital as deemed appropriate by the auditors. A copy of the audit report shall be issued to the hospital and the commission concurrently.
Upon receipt of the audit report, the commission shall review and evaluate the audit findings, determine the cause of the decrease in occupancy rates at the audited hospital, and make specific recommendations regarding changes in operations and management to increase the occupancy rate, as well as more general recommendations regarding continued licensure of the facility.
The commission shall immediately report to the appropriate agency any findings of improper financial activities or violations of State or federal law or regulations by the audited hospital.
The commission shall submit a copy of its recommendations to the hospital and the Department of Health. Copies of the audit report and the commission recommendations shall be made available to members of the public upon request.
This bill is intended to enhance the quality of health care in this State by requiring hospitals to be more accountable for their performance in an increasingly competitive environment, while at the same time providing the public with a clear understanding of why community hospitals may be unable to operate profitably or comply with certain regulatory standards.
Designated the "Hospital Quality and Accountability Act."