N.J. Admin. Code § 10:52-13.4

Current through Register Vol. 56, No. 11, June 3, 2024

Section 10:52-13.4 - Eligibility for disproportionate share hospital payments from the Charity Care Component of the Health Care Subsidy Fund

(a) The recommendation from the Department of Health shall be calculated in the following manner pursuant to N.J.S.A. 26:2H-18.

1. The determination of the value of the Charity Care Component of the Health Care Subsidy Fund shall be calculated in the following manner:

i. The Department of Health shall use the results of the charity care audit conducted as its definition of charity care incurred by all hospitals.

ii. The New Jersey Department of Health shall report the results of its audit of New Jersey acute care hospital's charity care that was conducted in accordance with N.J.A.C. 10:52-11 to the Division of Medical Assistance and Health Services.

(1) For purposes of determining annual charity care costs, the criteria in N.J.A.C. 10:52-11shall not apply to a patient who is investigated by a county adjuster and found to be indigent by a court of competent jurisdiction pursuant to 30:4-1 et seq. A patient so found shall qualify for 100 percent charity care coverage. Hospitals with patients who qualify under this provision shall include the appropriate documentation from the court in the patient's file for audit.

(b) All charity care accounts shall be valued in accordance with the Medicaid methodology as follows:

1. For inpatient accounts, the New Jersey Department of Health and the New Jersey Department of Human Services shall value each account at the rate Medicaid would have reimbursed hospitals for the services(s).

2. For outpatient accounts, outpatient charity care accounts submitted during the calendar year will be valued as follows: annual outpatient charity care charges multiplied by the ratio of the annual outpatient Medicaid/NJ FamilyCare interim payments to the annual outpatient Medicaid charges associated with paid claims. This Medicaid/NJ FamilyCare outpatient payment-to-charge ratio excludes billings for HealthStart and dental services.

3. Disproportionate share adjustments and final rate settlements for the service period shall not be taken into account for the recognition of charity care costs.

(c) For eligible hospitals, charity care subsidy amounts are determined as follows:

1. Eligible hospitals annual charity care subsidy amount is equal to charity care costs as determined by the audit and valued at Medicaid/NJ FamilyCare rates.

2. In no instances shall payments made during a calendar year exceed the preceding years audited and Medicaid/NJ FamilyCare rate valued amounts inflated by TEFRA rates used in the hospital rate setting system.

3. Any overpayments which result from interim payments exceeding the audited payment levels shall be recovered by offsetting all Medicaid/NJ FamilyCare payments.

(d) For periods in which the data source excludes Direct Graduate Medical Education (GME) and Indirect Medical Education (IME) in the Medicaid/NJ FamilyCare rate, the Medicaid/NJ FamilyCare rate shall be adjusted by hospital-specific GME and IME add-ons. Effective for periods after State Fiscal Year 1999, the hospital-specific GME and IME add-ons shall be calculated using the most recent hospital data as of February 1 of each State fiscal year preceding the distribution year. These GME and IME add-ons shall not be revised as a result of any subsequent settlement and/or retrospective Medicaid/NJ FamilyCare rate adjustments. For the purpose of pricing charity care claims under this section, unless otherwise indicated, the Medicaid/NJ FamilyCare rate shall be defined as the Medicaid/NJ FamilyCare rate in effect on the date of discharge. The add-ons shall be calculated as follows:

1. The GME add-on shall be calculated as follows:

i. For charity care payments made after State Fiscal Year 1999, the charity care GME add-on shall be calculated based on the charity care share of the teaching hospital's aggregate approved GME amount from Worksheet E-3 Part IV as reported on the most recent submitted Medicare cost report as of February 1 of each year preceding the distribution year. The hospital-specific charity care share shall be calculated using the sum of the hospital's total charity care gross charges from the New Jersey Hospital Cost Report as reported on Forms E-5 and E-6, divided by the sum of the hospital's gross charges from the New Jersey Hospital Cost Report as reported on Forms E-5 and E-6, after desk audit.

2. The IME add-on shall be calculated as follows:

i. For charity care payments made after State Fiscal Year 1999, the IME add-on shall be calculated based on Medicare's IME formula, at 42 C.F.R. 412.105, incorporated herein by reference, as amended and supplemented. The teaching hospital's IME factor, as calculated by the Medicare IME calculation, shall be multiplied by the hospital-specific charity care inpatient claims priced at the Medicaid rate to arrive at the charity care IME add-on. The components of the IME formula, IME intern and resident FTEs and maintained beds shall be taken from the most recent available Medicare submitted cost report as of February 1 of each year preceding the distribution year. The IME formula used shall be the Medicare formula approved for the most recent available Medicare submitted cost report used for the calculation.

(e) As provided in N.J.S.A. 26:2H-18.59e, the charity care subsidy shall be determined according to the following methodology:

1. The hospital-specific "documented charity care" shall be calculated from the dollar amount of charity care provided by the hospital that is submitted to the charity care fiscal intermediary and valued at the same rate paid to that hospital by the Medicaid/NJ FamilyCare program. A sample of the claims submitted by the hospital to the fiscal intermediary shall be subject to an audit conducted pursuant to charity care eligibility criteria. For each fiscal year, documented charity care claims shall be equal to the Medicaid/NJ FamilyCare-priced amounts of charity care claims submitted to the fiscal intermediary for the most recent calendar year, adjusted as necessary to reflect the audit results, as well as GME/IME, in accordance with (d) above.

2. The hospital-specific "operating margin" shall be calculated using data from the three most current years' New Jersey Hospital Cost Reports (see 8:31B-3.16 ) and shall be equal to income from operations minus charity care subsidies divided by total operating revenue minus charity care subsidies. After calculating each hospital's operating margin, the Department shall determine the Statewide median operating margin.

3. The hospital-specific "profitability factor" shall be determined annually as follows. Those hospitals that are equal to or below the Statewide median operating margin shall be assigned a profitability factor of "1." For those hospitals that are above the Statewide median operating margin, the profitability factor shall be equal to:

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4. The hospital-specific "adjusted charity care" shall be equal to a hospital's documented charity care times its profitability factor.

5. The hospital-specific "revenue from private payers" shall be equal to the sum of the gross revenues reported to the Department in the hospital's most recently available New Jersey Hospital Cost Report (see N.J.A.C. 8:31B-3.16) for all non-governmental, or private third party payers, including, but not limited to, Blue Cross and Blue Shield plans, commercial insurers and the non-governmental, or private accounts of managed care organizations. Gross revenue derived from governmental accounts of managed care organizations from the Medicare, Medicaid, NJ FamilyCare (including NJ FamilyCare-Children's Program) programs, will not be included in the category of "revenue from private payers."

6. The hospital-specific "payer mix factor" shall be equal to a hospital's adjusted charity care divided by its revenue from private payers.

7. The "Statewide target payer mix factor" shall be equal to the lowest payer mix factor to which all hospitals receiving charity care subsidies can be reduced by spending all available charity care subsidy funding for that year.

8. The hospital-specific "income from operations" shall be defined by the Department of Health (DOH) in accordance with financial reporting requirements established pursuant to N.J.A.C. 8:31B-3.3.

9. The hospital-specific "total operating revenue" shall be defined by the DOH in accordance with financial reporting requirements established pursuant to N.J.A.C. 8:31B-3.3.

10. Charity care subsidy payments shall be based upon hospital-specific documented charity care.

11. If the Statewide total of adjusted charity care is less than available charity care funding, a hospital's charity care subsidy shall equal its adjusted charity care.

12. If the Statewide total of adjusted charity care is greater than available charity care funding, then the hospital-specific charity care subsidy shall be determined by allocating available charity care funds so as to equalize hospital-specific payer mix factors to the Statewide target payer mix factor. Those hospitals with a payer mix factor greater than the Statewide target payer mix factor shall be eligible to receive a subsidy sufficient to reduce their factor to that Statewide level. Those hospitals with a payer mix factor that is equal to or less than the Statewide target payer mix factor shall not be eligible to receive a subsidy.

(f) The charity care subsidy payment schedule for the fiscal year shall be implemented the first month after the Department distributes the schedule to all disproportionate share hospitals. The charity care subsidy payment schedule constitutes advice to the hospitals of the allocation of charity care subsidies available for that fiscal year. Hospitals shall receive the charity care subsidy payments in 12 monthly installments.

1. A hospital which suspects that the charity care subsidy payment schedule reflects a calculation error shall notify the Commissioner of DOH in writing of the suspected calculation error within 15 days of issuance of the schedule. Failure by the charity care subsidy payment schedule to reflect specific charity care claims or hospital cost report data, including corrections, shall not constitute a calculation error. If, upon review, the Commissioner determines that a calculation error did occur, a revised charity care subsidy payment schedule shall be issued.

2. A notice by a hospital of an intent to appeal the amount of its charity care subsidy indicated on the charity care subsidy payment schedule, for reasons other than a calculation error, shall be submitted in writing to the Commissioner within 15 calendar days of issuance of the charity care subsidy payment schedule. Within 30 calendar days of issuance of the charity care subsidy payment schedule, the hospital shall submit to the Commissioner two copies of its appeal, describing in detail the basis of its appeal of the charity care subsidy payment schedule. Appeals shall not include new submissions pertaining to claims and/or cost report data that was not previously submitted in accordance with the time frames and procedures specified in N.J.A.C. 10:52-11 and 12 and N.J.A.C. 8:31B. The appeal document shall list all factual and legal issues, including citation to the applicable provisions of the charity care rules, and shall include written documentation supporting each appeal issue. If the hospital fails to submit the required documentation within the prescribed time frame, such hospital shall have forfeited its right of appeal and the charity care subsidy payment schedule shall be deemed to have been accepted by the hospital.

3. The Commissioner of the Department of Health shall schedule a detailed review to be conducted by the Department with the hospital not more than 45 calendar days following receipt of the appeal document. If the hospital fails to appear on the established date, it shall have forfeited its right of appeal and the charity care subsidy payment schedule shall be deemed to have been accepted by the hospital.

4. At the detailed review with the hospital, the Department representative shall indicate whether the appeal is supported by sufficient documentation to permit a resolution, and the hospital shall be permitted 10 calendar days after the date of the review in which to submit the additional documentation which the Department indicates is needed for resolution. Following receipt of this documentation, the Department shall neither request nor require further documentation. The Commissioner shall give consideration only to documentation submitted pursuant to the deadlines set forth in this section in deciding upon any of the hospital's appeal issues.

5. Within 30 calendar days of the review with the hospital, the Commissioner will render detailed findings on the factual and legal issues concerning whether an adjustment to the Charity Care Subsidy Payment Schedule is warranted. The Commissioner's decision shall constitute the final agency adjudication.

N.J. Admin. Code § 10:52-13.4

Amended by 50 N.J.R. 1261(a), effective 5/21/2018