S2326

SENATE, No. 2326

STATE OF NEW JERSEY

INTRODUCED DECEMBER 11, 1997

By Senators ADLER and MATHEUSSEN

An Act concerning payment for charity care health care services 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. Section 8 of P.L.1992, c.160 (C.26:2H-18.58) is amended to read as follows:

8. There is established the Health Care Subsidy Fund in the Department of Health and Senior Services.

a. The fund shall be comprised of revenues from employee and employer contributions made pursuant to section 29 of P.L.1992, c.160 (C.43:21-7b), revenues from the hospital assessment made pursuant to section 12 of P.L.1992, c.160 (C.26:2H-18.62), revenues pursuant to section 11 of P.L.1996, c.28 (C.26:2H-18.58c), revenues from interest and penalties collected pursuant to this act, federal disproportionate share monies received by the State for care to low-income persons in hospitals and revenues from such other sources as the Legislature shall determine. Interest earned on the monies in the fund shall be credited to the fund. The fund shall be a nonlapsing fund dedicated for use by the State to: (1) distribute charity care and other uncompensated care disproportionate share payments to hospitals and other eligible providers, and provide subsidies for the Health Access New Jersey program established pursuant to section 15 of P.L.1992, c.160 (C.26:2H-18.65); and (2) assist hospitals and other health care facilities in the underwriting of innovative and necessary health care services.

b. The fund shall be administered by a person appointed by the commissioner.

The administrator of the fund is responsible for overseeing and coordinating the collection and reimbursement of fund monies. The administrator is responsible for promptly informing the commissioner if monies are not or are not reasonably expected to be collected or disbursed.

c. The commissioner shall adopt rules and regulations to ensure the integrity of the fund, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

d. The administrator shall establish separate accounts for the charity care component of the disproportionate share hospital subsidy, other uncompensated care component of the disproportionate share hospital subsidy, hospital and other health care initiatives funding and the payments for subsidies for insurance premiums to provide care in disproportionate share hospitals, known as the Health Access New Jersey subsidy account, respectively.

e. In the event that the charity care component of the disproportionate share hospital subsidy account has a surplus in a given year after payments are distributed pursuant to the methodology established in section 13 of P.L.1995, c.133 (C.26:2H-18.59b) and section 7 of P.L.1996, c.28 (C.26:2H-18.59e) and within the limitations provided in subsection e. of section 9 of P.L.1992, c.160 (C.26:2H-18.59), the surplus monies in calendar years 1996 and 1997 shall lapse to the unemployment compensation fund established pursuant to R.S.43:21-9, and each year thereafter shall lapse to the charity care component of the disproportionate share hospital subsidy account for distribution in subsequent years.

(cf:P.L.1996,c.28,s.3)

2. Section 9 of P.L.1992, c.160 (C.26:2H-18.59) is amended to read as follows:

9. a. The commissioner shall allocate such funds as specified in subsection e. of this section to the charity care component of the disproportionate share hospital subsidy account. In a given year, the department shall transfer from the fund to the Division of Medical Assistance and Health Services in the Department of Human Services such funds as may be necessary for the total approved charity care disproportionate share payments to hospitals for that year.

b. For the period January 1, 1993 to December 31, 1993, the commission shall allocate $500 million to the charity care component of the disproportionate share hospital subsidy account. The Department of Health and Senior Services shall recommend the amount that the Division of Medical Assistance and Health Services shall pay to an eligible hospital on a provisional, monthly basis pursuant to paragraphs (1) and (2) of this subsection. The department shall also advise the commission and each eligible hospital of the amount a hospital is entitled to receive.

(1) The department shall determine if a hospital is eligible to receive a charity care subsidy in 1993 based on the following:

Hospital Specific Approved Uncompensated Care-1991

____________________________________________________

Hospital Specific Preliminary Cost Base-1992

= Hospital Specific % Uncompensated Care (%UC)

A hospital is eligible for a charity care subsidy in 1993 if, upon establishing a rank order of the %UC for all hospitals, the hospital is among the 80% of hospitals with the highest %UC.

(2) The maximum amount of the charity care subsidy an eligible hospital may receive in 1993 shall be based on the following:

Hospital Specific Approved Uncompensated Care-1991

______________________________________________________

Total approved Uncompensated Care All Eligible Hospitals-1991

X $500 million

= Maximum Amount of Hospital Specific Charity Care

Subsidy for 1993

(3) A hospital shall be required to submit all claims for charity care cost reimbursement, as well as demographic information about the persons who qualify for charity care, to the department in a manner and time frame specified by the Commissioner of Health and Senior Services, in order to continue to be eligible for a charity care subsidy in 1993 and in subsequent years.

The demographic information shall include 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.

(4) A hospital shall be reimbursed for the cost of eligible charity care at the same rate paid to that hospital by the Medicaid program; except that charity care services provided to emergency room patients who do not require those services on an emergency basis shall be reimbursed at a rate appropriate for primary care, according to a schedule of payments developed by the commission.

(5) The department shall provide for an audit of a hospital's charity care for 1993 within a time frame established by the department.

c. For the period January 1, 1994 to December 31, 1994, a hospital shall receive disproportionate share payments from the Division of Medical Assistance and Health Services based on the amount of charity care submitted to the commission or its designated agent, in a form and manner specified by the commission. The commission or its designated agent shall review and price all charity care claims and notify the Division of Medical Assistance and Health Services of the amount it shall pay to each hospital on a monthly basis based on actual services rendered.

(1) (Deleted by amendment, P.L.1995, c.133.)

(2) If the commission is not able to fully implement the charity care claims pricing system by January 1, 1994, the commission shall continue to make provisional disproportionate share payments to eligible hospitals, through the Division of Medical Assistance and Health Services, based on the charity care costs incurred by all hospitals in 1993, until such time as the commission is able to implement the claims pricing system.

If there are additional charity care balances available after the 1994 distribution based on 1993 charity care costs, the department shall transfer these available balances from the fund to the Division of Medical Assistance and Health Services for an approved one-time additional disproportionate share payment to hospitals according to the methodology provided in section 12 of P.L.1995, c.133 (C.26:2H-18.59a). The total payment for all hospitals shall not exceed $75.5 million.

(3) A hospital shall be reimbursed for the cost of eligible charity care at the same rate paid to that hospital by the Medicaid program; except that charity care services provided to emergency room patients who do not require those services on an emergency basis shall be reimbursed at a rate appropriate for primary care, according to a schedule of payments developed by the commission.

(4) (Deleted by amendment, P.L.1995, c.133.)

d. (Deleted by amendment, P.L.1995, c.133.)

e. The total amount allocated for charity care subsidy payments shall be: in 1994, $450 million; in 1995, $400 million; in 1996, $310 million; and in 1997 $300 million. [Total payments to hospitals shall not exceed the amount allocated for each given year.] In 1998 and each year thereafter, the amount allocated for charity care subsidy payments shall be sufficient to cover the cost of all documented and audited charity care provided to eligible persons pursuant to P.L.1992, c.160 (C.26:2H-18.51 et al.).

f. Beginning January 1, 1995:

(1) The charity care subsidy shall be determined pursuant to section 13 of P.L.1995, c.133 (C.26:2H-18.59b).

(2) A charity care claim shall be valued at the same rate paid to that hospital by the Medicaid program, except that charity care services provided to emergency room patients who do not require those services on an emergency basis shall be valued at a rate appropriate for primary care according to a schedule of payments adopted by the commissioner.

(3) The department shall provide for an audit of a hospital's charity care within a time frame established by the commissioner.

(cf:P.L.1996,c.28,s.4)

3. (New section) The State shall deposit in the Health Care Subsidy Fund established pursuant to section 8 of P.L.1992, c.160 (C.26:2H-18.58) all federal disproportionate share monies received by the State for care to low income persons in hospitals. The disproportionate share monies shall be used solely for the purpose of providing charity care subsidy payments as provided in P.L.1992, c.160 (26:2H-18.51 et al.) and section 8 of P.L.1996, c.28 (C.26:2H-18.59f). The disproportionate share monies received by the State and deposited pursuant to this section, shall not include those federal funds received in connection with the provision of hospital reimbursements from the Hospital Health Care Subsidy account pursuant to section 4 of P.L. , (C. )(pending before the Legislature as this bill).

4. (New section) a. The Commissioner of Health and Senior Services shall transfer to the Hospital Health Care Subsidy account, known as the Hospital Relief Fund, in the Division of Medical Assistance and Health Services in the Department of Human Services from the Health Care Subsidy Fund, $71 million each year beginning in calendar year 1998, according to a schedule to be determined by the Commissioner of Health and Senior Services in consultation with the Commissioner of Human Services. These funds shall be distributed to eligible disproportionate share hospitals according to a methodology adopted by the Commissioner of Human Services pursuant to N.J.A.C.10:52-8.2, using hospital expenditure data for the most recent calendar year available for reimbursements from these funds.

b. In calendar year 1998 and each year thereafter, the Governor shall recommend and the Legislature shall appropriate to the Hospital Health Care Subsidy account for distribution to disproportionate share hospitals which are eligible for reimbursement pursuant to subsection a. of this section, those federal funds received in connection with the provision of hospital reimbursements from that account.

5. This act shall take effect on January 1, 1998.

STATEMENT

This bill provides that in 1998 and each year thereafter, the amount allocated for charity care subsidy payments shall be sufficient to cover the cost of all documented and audited charity care provided to eligible persons. In prior years, the amount allocated for charity care was capped at a specific dollar amount, regardless of the actual cost of the care provided by the State's hospitals.

Further, the bill provides that all federal disproportionate share monies received by the State for care to low income persons in hospitals shall be deposited in the Health Care Subsidy Fund and shall be used solely for the purpose of providing charity care subsidy payments to hospitals. Currently, federal disproportionate share monies are deposited in the General Fund and are not dedicated to payment for charity care services.

Finally, the bill provides that the Hospital Relief Fund, which provides subsidies to hospitals which provide a high percentage of care to patients with HIV, mental illness, tuberculosis, substance abuse and addiction or neonatal complexity, shall be allocated $71 million each year in State funds and $71 million each year in federal (matching) funds.

Provides that hospitals will receive full funding for charity care and dedicates disproportionate share monies to charity care fund.