N.J. Admin. Code § 8:31B-4.15

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

Section 8:31B-4.15 - Revenues and deductions from revenue

(a) If a hospital receives less than its full charges for the services it renders, it shall report to the Department both the gross revenue and revenue "adjustments" resulting from failure to collect full charges for services provided. These revenue adjustments are called Deductions from Gross Revenue. The specific deductions required for reporting Revenue Related to Patient Care, as defined in 8:31B-4.32 are defined in (a)1 through 11 below. Any individual allowance must be reported in only one of the 10 deduction categories and three contra categories (although individual transactions may be distributed among several if appropriate):

1. Third party payor allowances: These adjustments represent the differences between full charges for services and the payment anticipated from major third party payors according to contractual agreements or government mandated payor differentials. These adjustments exclude any deductions made by any third party payor for any other allowances which are more appropriately categorized in one of the following classes of deductions from gross revenue.

2. Prompt payment discounts: These adjustments are the difference between charges and payments received due to the prompt payment of a bill.

3. Personnel health allowance: These deductions represent adjustments from charges for services rendered to employees of the hospital and their families under a formal self-insurance or coinsurance plan of the hospital.

4. Courtesy adjustments: These deductions represent adjustments from charges for services rendered to any individual other than employees of the hospital and not otherwise more appropriately categorized, including any patient accounts written off contrary to the hospital's formal policies relative to credit, bad debts and indigency care.

5. Other Administrative Adjustments: These deductions represent adjustments made by the hospital as a matter of policy because of immateriality. Examples of these types of adjustments would include insignificant balances not billed to the patient or third party payor because of late billing occurring after payment has been received.

6. Medical denials: These deductions represent amounts not due from patients or third party payors because of a ruling by appropriate utilization review or certification processes which determine that the services rendered were not medically appropriate or necessary, but excluding medical denials classified as Nursing Home Placement.

7. Nursing home placement: These deductions represent amounts not due from patients or third party payors because of rulings by appropriate utilization review or certification processes which determine that the services rendered were not medically appropriate to an acute care setting for patients who were unable to be placed in a skilled nursing facility because of a lack of available beds.

8. Charity care: These deductions represent charges for patients determined to be eligible for charity care pursuant to 8:31B-4.38.

9. County government grants for the medically indigent; municipal government grants for the medically indigent; other grants for the medically indigent:

i. These three categories represent all amounts received from governmental or other agencies for the care of medically indigent patients.

10. Bad debt provision:

i. These deductions represent the hospital's estimate of the amount of charges for Services Related to Patient Care during the reporting period (not otherwise accounted for as a deduction from Gross Revenue Related to Patient Care) which will not be received, net of recoveries of previously written-off accounts. Collection agency expense should not be included as a deduction from revenue but rather should be reported as operating expense and Cost Related to Patient Care as defined in 8:31B-4.32 and 4.118;

ii. The bad debt provision explicitly excludes deductions for contractual allowances, indigent patients, courtesy care, medical denials, finance charges or other non-medical service costs such as late fees and patient convenience items, and nursing home placement medical denial cases. Estimates of the bad debts incurred for the reporting period are to be reconciled to actual bad debts incurred for the reporting period and reconciled in the next reporting period's bad debt provision.

11. Other operating gross revenue: This account represents the amount of billings for services normal to the day-to-day activities of the hospital (net of any items reported as expense recovery) for Services Not Related to Patient Care.

(b) It is important to select the most appropriate classification of each deduction and the hospital is advised to establish procedures which will govern the approval and classification of transactions which will be recorded as deduction from Gross Revenue.

N.J. Admin. Code § 8:31B-4.15

Amended by R.1989 d.491, effective 9/18/1989.
See: 21 New Jersey Register 1487(a), 21 New Jersey Register 2991(b).
Added (a)4i, concerning Statewide add-on.
Amended by R.1992 d.62, effective 2/3/1992.
See: 23 New Jersey Register 3097(a), 24 New Jersey Register 425(a).
Exclusion of non-medical service costs from bad debt provision.
Amended by R.1993 d.593, effective 11/15/1993.
See: 25 New Jersey Register 3117(a), 25 New Jersey Register 5149(a).
Amended by R.2006 d.27, effective 1/17/2006.
See: 37 New Jersey Register 2165(a), 38 New Jersey Register 667(a).
In (a)8, rewrote reference as "N.J.A.C. 8:31B-4.38."