DEPARTMENT OF HEALTH - New Jersey Legislature · 2012. 4. 30. · • TheFiscal Year 2013 budget for theDepartment of Health totals approximately $1.9 billion. Approximately $2.5

DEPARTMENT OFHEALTH

2012 - 2013FISCAL YEAR

ANALYSIS OF THE NEW JERSEY BUDGET

PREPARED BY OFFICE OF LEGISLATIVE SERVICESNEW JERSEY LEGISLATURE • APRIL 2012

NEW JERSEY STATE LEGISLATURE

SENATE BUDGET AND APPROPRIATIONS COMMITTEE

Paul A. Sarlo (D), 36th District (Parts of Bergen and Passaic), ChairBrian P. Stack (D), 33rd District (Part of Hudson), Vice-ChairJennifer Beck (R), 11th District (Part of Monmouth)Anthony R. Bucco (R), 25th District (Parts of Morris and Somerset)Sandra B. Cunningham (D), 31st District (Part of Hudson)Linda R. Greenstein (D), 14th District (Parts of Mercer and Middlesex)Steven Oroho (R), 24th District (All of Sussex, and parts of Morris and Warren)Kevin J. O'Toole (R), 40th District (Parts of Bergen, Essex, Morris and Passaic)Joseph Pennacchio (R), 26th District (Parts of Essex, Morris and Passaic)Nellie Pou (D), 35th District (Parts of Bergen and Passaic)M. Teresa Ruiz (D), 29th District (Part of Essex)Jeff Van Drew (D), 1st District (All of Cape May, and parts of Atlantic and Cumberland)Loretta Weinberg (D), 37th District (Part of Bergen)

GENERAL ASSEMBLY BUDGET COMMITTEE

Vincent Prieto (D), 32nd District (Parts of Bergen and Hudson), ChairmanGary S. Schaer (D), 36th District (Parts of Bergen and Passaic), Vice ChairmanAnthony M. Bucco (R), 25th District (Parts of Morris and Somerset)John J. Burzichelli (D), 3rd District (All of Salem, and parts of Cumberland and Gloucester)Gary R. Chiusano (R), 24th District (All of Sussex, and parts of Morris and Warren)Albert Coutinho (D), 29th District (Part of Essex)Gordon M. Johnson (D), 37th District (Part of Bergen)Declan J. O'Scanlon, Jr. (R), 13th District (Part of Monmouth)Troy Singleton (D), 7th District (Part of Burlington)Bonnie Watson Coleman (D), 15th District (Parts of Hunterdon and Mercer)Jay Webber (R), 26th District (Parts of Essex, Morris and Passaic)Benjie E. Wimberly (D), 35th District (Parts of Bergen and Passaic)

OFFICE OF LEGISLATIVE SERVICES

David J. Rosen, Legislative Budget and Finance OfficerFrank W. Haines III, Assistant Legislative Budget and Finance Officer

Marvin W. Jiggetts, Director, Central StaffMaureen McMahon, Acting Section Chief, Human Services Section

This report was prepared by the Human Services Section of the Office of Legislative Services under the direction of theLegislative Budget and Finance Officer. The primary author was David H. Drescher. Assistance was provided by Jay A.Hershberg, Thomas Koenig, and Nathan E. Myers.

Questions or comments may be directed to the OLS Human Services Section (609-292-1646) or the Legislative Budget andFinance Office (609-292-8030).

DEPARTMENT OF HEALTH

Budget Pages....... C-6; C-13 to C-14; C-21 to C-22; C-26; C-28; C-29; D-131 to D-153; G-3

The Fiscal Summary and Personnel Summary data for FY 2011 and FY 2012 below include funds and staff of the former senior services programs, which are being transferred to the Department of Human Services, effective in FY 2013. The FY 2013 funding and staffing information is reflected in the Department of Human Services budget. Similarly, the FY 2013 data below include appropriations on behalf of two hospital funding programs that are being transferred from the Department of Human Services, effective in FY 2013.

Fiscal Summary ($000)

Expended FY 2011

Adjusted Appropriation

FY 2012 Recommended

FY 2013

Percent Change

2012-13 State Budgeted 1,278,726 1,318,619 373,769 ( 71.7%)

Federal Funds 1,869,835 1,921,144 755,593 ( 60.7%)

Other* 324,250 404,501 807,820 99.7%

Grand Total $3,472,811 $3,644,264 $1,937,182 ( 46.8%)

*Other includes Revolving Funds not reflected in the FY 2013 budget. The FY 2011 and FY 2012 data include funding transferred to the Department of Human Services from the Department of Health for services to senior citizens but do not include funding for hospital subsidy programs being transferred to the Department of Health from the Department of Human Services in FY 2013.

Personnel Summary - Positions By Funding Source

Actual FY 2011

Revised FY 2012

Funded FY 2013

Percent Change

2012-13 State 631 574 370 ( 35.5%)

Federal 689 634 549 ( 13.4%)

Other 279 270 237 ( 12.2%)

Total Positions 1,599 1,478 1,156 ( 21.8%)

FY 2011 (as of December) and revised FY 2012 (as of January) personnel data reflect actual payroll counts. FY 2013 data reflect the number of positions funded. Actual FY 2011 and Revised FY 2012 personnel counts include positions transferred to the Division of Aging Services. The positions associated with this unit are reflected in the FY 2013 Department of Human Services position count.

Link to Website: http://www.njleg.state.nj.us/legislativepub/finance.asp

Department of Health FY 2012-2013 Highlights

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Organizational Changes

• The Department of Health and Senior Services is renamed the Department of Health.

Programs for senior citizens are transferred from the Department of Health to the Division of Aging Services in the Department of Human Services. Hospital funding programs previously located in the Department of Human Services are transferred to the Department of Health.

• The Fiscal Year 2013 budget for the Department of Health totals approximately $1.9

billion. Approximately $2.5 billion for aging programs are transferred to the Department of Human Services, while approximately $766 million for aid to hospitals is transferred from the Department of Human Services to the Department of Health.

• Excluding the changes for organizational transfers, State appropriations for all programs

in the Department of Health in FY 2013 decrease by approximately $17.1 million, from $390.9 million to $373.8 million.

Health Planning and Evaluation

• Total Charity Care and Health Care Stabilization Fund appropriations remain constant at

$675 million and $30 million, respectively. • The new Charity Care disbursement formula uses hospital-specific disbursements from

2012 as the basis for at least 90 percent of each hospital’s FY 2013 disbursements, with less than 10 percent of each payment reflecting changes in the amount of uncompensated care provided by each hospital.

• Graduate Medical Education and Hospital Relief Offset Payments are transferred from

the Department of Human Services to the Department of Health. The distribution formula is changed so that each hospital will receive the same amount in FY 2013 as it received in FY 2012. State appropriations are unchanged at $45 million and $62.6 million, respectively.

Health Services

• Funding for the Worker and Community Right to Know Act is reduced $0.8 million,

from $2.5 million to $1.7 million, reflecting a decline in revenues to the Worker and Community Right to Know Fund.

• The budget provides a total of $1.4 million to implement the New Jersey

Compassionate Use Medical Marijuana Act, including $0.8 million in State funds and $0.6 million in anticipated dedicated revenues.

• The State appropriation for the Early Childhood Intervention Program is reduced $4.2

million based on “trends.” Specific information on the trends which allow the reduction is not available to the OLS. Including federal funds and copayment revenues, total funding for the program decreases from $142.7 million to $138.5 million. No changes to eligibility, benefits, or copayments are proposed.

Department of Health FY 2012-2013 Highlights (Cont’d)

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Background Papers • Formulaic State Hospital Aid p. 19 • Health Care Subsidy Fund p. 26 • Health Care Stabilization Fund p. 29 • Federally Qualified Health Centers – Statistical Data p. 32

Department of Health FY 2012-2013

Fiscal and Personnel Summary

AGENCY FUNDING BY SOURCE OF FUNDS ($000)

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Adj. Expended Approp. Recom. Percent Change

FY 2011 FY 2012 FY 2013 2011-13 2012-13

General Fund

Direct State Services $73,768 $51,960 $40,148 ( 45.6%) ( 22.7%)

Grants-In-Aid 1,047,291 1,169,917 333,092 ( 68.2%) ( 71.5%)

State Aid 7,152 7,152 0 ( 100.0%) ( 100.0%)

Capital Construction 0 0 0 0.0% 0.0%

Debt Service 0 0 0 0.0% 0.0%

Sub-Total $1,128,211 $1,229,029 $373,240 ( 68.7%) ( 69.6%)

Property Tax Relief Fund

Direct State Services $0 $0 $0 0.0% 0.0%

Grants-In-Aid 0 0 0 0.0% 0.0%

State Aid 0 0 0 0.0% 0.0%

Sub-Total $0 $0 $0 0.0% 0.0%

Casino Revenue Fund $150,515 $89,590 $529 ( 99.6%) ( 99.4%)

Casino Control Fund $0 $0 $0 0.0% 0.0%

State Total $1,278,726 $1,318,619 $373,769 0.0% 0.0%

Federal Funds $1,869,835 $1,921,144 $755,593 ( 59.6%) ( 60.7%)

Other Funds* $324,250 $404,501 $807,820 149.1% 99.7%

Grand Total $3,472,811 $3,644,264 $1,937,182 ( 44.2%) ( 46.8%) *Other Funds includes Revolving Funds not reflected in the FY 2013 recommended budget. The FY 2011 and FY 2012 data include funding transferred to the Department of Human Services from the Department of Health for services to senior citizens but do not include funding for hospital subsidy programs being transferred to the Department of Health from the Department of Human Services in FY 2013.

PERSONNEL SUMMARY - POSITIONS BY FUNDING SOURCE

Actual Revised Funded Percent Change FY 2011 FY 2012 FY 2013 2011-13 2012-13

State 631 574 370 ( 41.4%) ( 35.5%)

Federal 689 634 549 ( 20.3%) ( 13.4%)

All Other 279 270 237 ( 15.1%) ( 12.2%)

Total Positions 1,599 1,478 1,156 ( 27.7%) ( 21.8%) FY 2011 (as of December) and revised FY 2012 (as of January) personnel data reflect actual payroll counts. FY 2013 data reflect the number of positions funded. Actual FY 2011 and Revised FY 2012 personnel counts include positions transferred to the Division of Aging Services. The positions associated with this unit are reflected in the FY 2013 Department of Human Services position count.

AFFIRMATIVE ACTION DATA Total Minority Percent 37.4% 36.8% 36.7% ---- ----

Department of Health FY 2012-2013 Significant Changes/New Programs ($000)

Budget Item Adj. Approp.

FY 2012 Recomm. FY 2013

Dollar Change

Percent Change

Budget Page

5

Health Services

Direct State Services: Worker and Community Right to Know $2,492 $1,678 ($ 814) ( 32.7%) D-138

Worker and Community Right to Know funding is reduced by over $0.8 million. The reduction is related to a decline in revenues transferred to the General Fund from the Worker and Community Right to Know Fund. The budget anticipates a reduced number of workplace inspections in FY 2013 (to 128, down from 190 in FY 2012 and 272 in FY 2011). Information is not available to indicate if additional program changes are planned as a result of the reduction. Under the Worker and Community Right to Know Act, P.L.1983, c.315 (C.34:5A-1 et seq.), the Department of Health administers surveys to employers regarding hazardous substances at their workplaces, inspects workplaces for hazardous substances, and writes and distributes fact sheets to employers whose facilities contain hazardous substances. Direct State Services: New Jersey Compassionate Use Medical Marijuana Act $0 $784 $ 784 — D-138

Funding for implementation of the New Jersey Compassionate Use Medical Marijuana Act is set slightly under $0.8 million. In addition, approximately $0.6 million in anticipated revenues are available to the program. No information has been provided as to how this funding is to be spent. Direct State Services: Additions, Improvements and Equipment $2,652 $1,826 ($ 826) ( 31.1%) D-139

Annual funding is reduced by approximately $0.8 million for Additions, Improvements, and Equipment at the Public Health and Environmental Laboratories. Approximately $1.3 million is currently uncommitted in this account and can be carried forward into FY 2013, so the funding reduction may not have an impact on the laboratories’ operations.

Department of Health FY 2012-2013 Significant Changes/New Programs ($000) (Cont’d)


FY 2012Recomm.FY 2013

DollarChange

PercentChange

BudgetPage

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Grants-in-Aid: Early Childhood Intervention Program $92,593 $88,373 ($4,220) ( 4.6%) D-139

State funding for the Early Childhood Intervention Program is reduced by $4.2 million. Federal funding is unchanged, providing $30 million in Medicaid reimbursement and $13 million in Part H funding. Total Early Intervention Program funding, including federal funds and dedicated revenue from copayments, decreases from $142.7 million to $138.5 million. The Budget Summary indicates that this reduction only reflects current participation trends, and that no program changes are proposed. As the anticipated number of infants in early intervention is expected to increase in FY 2013 by 1,092, to 25,118, it is not clear what trends account for the reduction in the recommended appropriation. Grants-in-Aid: Cancer Institute of New Jersey, South Jersey Program $5,400 $16,544 $11,144 206.4% D-139

The line-item appropriation for the Cancer Institute of New Jersey, South Jersey Program is increased by $11.1 million to offset the deletion of a language provision that appropriated $11.1 million in addition to the line-item appropriation. The deleted budget language stated that the additional funds were to be used for construction of the comprehensive cancer center in South Jersey, but provided that “no monies from this appropriation shall be disbursed until all funding from all other sources has been demonstrated by the South Jersey Program to be available for this purpose.” By shifting the appropriation to a line-item and removing the language, the recommended budget removes the restriction imposed by the budget language. As of this writing, none of the $11.1 million made available by budget language in the FY 2012 budget has been disbursed.

Health Planning and Evaluation Grants-in-Aid: Health Care Subsidy Fund Payments $31,802 $24,613 ($7,189) ( 22.6%) D-144

The General Fund appropriation related to Charity Care is reduced by $7.2 million, but the total amount of Charity Care funding to be distributed to hospitals remains constant at $675 million. An anticipated one-time transfer of $9.5 million from the New Jersey Medical Malpractice Reinsurance Association, along with changing revenue from other sources, allows the decrease in the General Fund appropriation.

Department of Health FY 2012-2013 Significant Changes/New Programs ($000) (Cont’d)


FY 2012Recomm.FY 2013

DollarChange

PercentChange

BudgetPage

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The distribution of Charity Care funds is specified by complex budget language on page D-145. The distribution formula bases at least 90 percent of each hospital’s allocation on the amount it received in FY 2012. As a result, while every hospital’s allocation changes, no hospital gains or loses more than 10 percent, and most payments change by less than 5 percent. Hospital-specific charity care disbursements can be found on page 25. Information provided to the OLS indicates that the federal government did not approve a proposed Medicaid State Plan Amendment to lift the cap on the ambulatory care facility assessment, resulting in a loss of $24 million in federal revenue. Total federal funding for Charity Care and related programs is unchanged at $352.5 million; the disapproval of additional federal matching funds is being offset primarily by higher revenue from the assessment on health maintenance organizations. Grants-in-Aid: Health Care Facilities Improvement Fund $5,000 $0 ($5,000) ( 100.0%) D-144

Grants-in-Aid: Hoboken Municipal Hospital Authority $11,000 $0 ($11,000) ( 100.0%) D-144

The FY 2012 budget allocated a total of $16 million to facilitate the sale of Hoboken University Medical Center – $11 million to the Hoboken Municipal Hospital Authority for debt payments and an additional $5 million to complete a bankruptcy settlement. As the hospital has been sold, these appropriations are unnecessary in FY 2013.

Department of Health FY 2012-2013 Significant Language Changes

EXPLANATION: FY 2012 language not recommended for FY 2013 denoted by strikethrough. Recommended FY 2013 language that did not appear in FY 2012 denoted by underlining.

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The Governor’s FY 2013 budget transfers all language provisions concerning programs that are transferred to the Division of Aging Services in the Department of Human Services to that section of the budget. As such, changes in relevant language provisions are discussed in the analysis of the budget of the Department of Human Services.

Health Services

Relocation of Public Health, Environmental and Agricultural Laboratory

Deletion 2012 Handbook: p. B-75 2013 Budget: ---

The unexpended balance at the end of the preceding fiscal year in the Services Other Than Personal account in the Division of Public Health and Environmental Laboratories is appropriated for the costs of relocating the Public Health, Environmental and Agricultural Laboratory.

Explanation

The relocation of the Public Health, Environmental, and Agricultural Laboratory to its new facility at the State Police Headquarters Complex in West Trenton was completed during FY 2012, so this language provision is unnecessary.

New Jersey Brain Injury Research Fund – Use of Resources


The Commissioner of Health and Senior Services shall ensure that all monies appropriated to the New Jersey Brain Injury Research Fund shall be used exclusively for the purposes of the fund pursuant to section 9 of P.L.2003, c.200 (C.52:9EE--9).

Explanation

The Brain Injury Research Fund is a dedicated nonlapsing revolving fund, so annual revenues and unspent money carried forward from one fiscal year to the next are to be used only for specified purposes. General budget language provisions, however, permit the Director of the Division of Budget and Accounting to transfer most dedicated funds to fill shortfalls in certain other funds. The Legislature included this language provision in the FY 2012 appropriations act to ensure that all funds in the Brain Injury Research Fund would be used solely for purposes set forth in law, principally grants for research projects. Deletion of the language provision would restore the Director’s authority to transfer unspent money out of the fund.

Department of Health FY 2012-2013 Significant Language Changes (Cont’d)


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Cancer Institute of New Jersey, South Jersey Program – Cooper University Medical School

Revision 2012 Handbook: p. B-73 2013 Budget: p. D-142

The unexpended balance at the end of the preceding fiscal year in the Cancer Institute of New Jersey, South Jersey Program account are appropriated to the program for cancer—related capital equipment, design, engineering and construction expenses, provided that $2,772,000 of said balance is appropriated for implementation of the new allopathic medical school in Camden.

Explanation

The FY 2012 appropriations act added language to the Governor’s recommended budget to appropriate $2.8 million in unexpended funds to the newly established Cooper Medical School in Camden. No information is available as to whether the school will require a similar appropriation in FY 2013. As of this writing, $5.4 million is unexpended in the Cancer Institute of New Jersey, South Jersey Program account, and may be carried forward into FY 2013.

Cancer Institute of New Jersey, South Jersey Program – Construction Costs

Deletion 2012 Handbook: p. B-73 2013 Budget: --

In addition to the amount hereinabove appropriated for Cancer Institute of New Jersey, South Jersey Program, an amount not to exceed $11,143,923 is appropriated for construction of the comprehensive cancer center in South Jersey, subject to the approval of the Director of the Division of Budget and Accounting, provided that no monies from this appropriation shall be disbursed until all funding from all other sources has been demonstrated by the South Jersey Program to be available for this purpose.

Explanation

This language is deleted, while the line-item appropriation for the Cancer Institute of New Jersey, South Jersey Program is increased by an identical amount. Deleting the language provision removes the requirement that funding from all other sources be demonstrated by the South Jersey Program to be available for the construction of the comprehensive cancer center in South Jersey. To date, no funds have been appropriated pursuant to this language provision; no information is available regarding the reason the funds have not been spent.



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AIDS Drug Distribution Program – Coverage of Non-AIDS-Related Drugs


Notwithstanding the provisions of any law or regulation to the contrary, the amount hereinabove appropriated for the AIDS Drug Distribution Program is conditioned upon the following: individuals whose income does not exceed 500% of the federal poverty level shall be eligible for coverage for all AIDS--related drugs and other drugs.

Explanation

This language provision is deleted as unnecessary. Pursuant to N.J.A.C. 8:61-3.4., individuals whose income exceeds 500% of the federal poverty level are ineligible to participate in the program. The AIDS Drug Distribution Program (ADDP) does not discriminate between AIDS-related and other drugs, except as proposed by new budget language, discussed immediately below.

AIDS Drug Distribution Program – Coverage of Certain Drugs and Medications

Addition 2012 Handbook: --- 2013 Budget: p. D-142

Notwithstanding the provisions of any law or regulation to the contrary, no amounts hereinabove appropriated for the AIDS Drug Distribution Program shall be expended for vitamins, cough/cold medications, drugs used for the treatment of erectile dysfunction, or cosmetic drugs, including but not limited to drugs used for baldness and weight loss.

Explanation

The recommended language reinstates limits on spending in the AIDS Drug Distribution Program (ADDP) for certain drugs and medications that do not directly treat AIDS or AIDS-related illnesses but otherwise promote the wellness of individuals with AIDS. The Legislature deleted this language when approving the FY 2012 appropriations act. No information is available to indicate the fiscal impact of this program change. It is noted that similar language limits expenditures through the Medicaid and Pharmaceutical Assistance for the Aged and Disabled (PAAD) programs on these types of drugs.



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Health Planning and Evaluation

Revenue from Cosmetic Medical Procedures Tax

Revision 2012 Handbook: p. B-76 2013 Budget: p. D-145

Notwithstanding the provisions of any law or regulation to the contrary, all revenues collected from the tax on cosmetic medical procedures pursuant to P.L.2004, c.53 (C.54:32E--1) shall be deposited in the Health Care Subsidy Fund established pursuant to section 8 of P.L.1992, c.160 (C.26:2H--18.58) for the support of payments to Federally Qualified Health Centers.

Explanation

The revised budget language requires that revenue collected from the tax on cosmetic medical procedures be dedicated to Federally Qualified Health Centers (FQHCs). The FY 2012 budget language would have allowed this revenue to support other functions of the Health Care Subsidy Fund, such as subsidies to hospitals or coverage of children in the NJ FamilyCare program. Available information indicates that approximately $7.1 million in revenue from the tax is anticipated in FY 2013, though due to a lag in revenue collections the full $7.1 million may not be available in FY 2013. It is noted that pursuant to P.L.2011, c.189 (C.54:32E-2), the tax on cosmetic medical procedures will begin to be phased out on July 1, 2012 and the tax will be eliminated beginning July 1, 2014.

Charity Care Disbursement Formula

Deletion and Addition 2012 Handbook: p. B-77 2013 Budget: p. D-145

Notwithstanding the provisions of section 3 of P.L.2004, c.113 (C.26:2H--18.59i) or any other law or regulation to the contrary, the appropriation for Health Care Subsidy Fund Payments in State Fiscal Year (SFY) 2012 shall be calculated using a multiple regression based formula such that: (a) source data used shall be from 1) Hospital Patient Discharge Uniform Billing Data (UB) from calendar year 2009 as released by the Department of Health and Senior Services (DHSS), 2) charity care subsidy allocation for SFY 2011 as announced by DHSS in July 2010, and 3) charity care subsidy allocation for SFY 2010 as announced by DHSS in July 2009 and including any subsequent reallocations; (b) the SFY 2010 charity care subsidy allocation shall be proportionately increased for each eligible hospital to increase the total subsidy to $675,000,000 for this calculation purpose; (c) the SFY 2012 charity care subsidy allocation calculation for each eligible hospital shall begin with a constant value of $674,269.40 and be increased by 88.38172% of its Charity Care subsidy allocation for SFY



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2010 as calculated in subsection (b) above; (d) the SFY 2012 charity care subsidy allocation calculated thus far for each eligible hospital shall be increased by 2.06784% of the total charges from the payer category “self pay” in the calendar year 2009 UB data and then decreased by 0.12446% of the total charges from all payer categories in the calendar year 2009 UB data; (e) the SFY 2011 charity care subsidy allocation for each eligible hospital shall be divided by the total charges for the payer category “self pay” in the calendar year 2009 UB data to generate a ratio for this calculation purpose and then multiplied by a constant value of $4,239,097; (f) the SFY 2012 charity care subsidy allocation calculated thus far in subsection (d) above for each eligible hospital shall be reduced by the amount calculated in subsection (e) above; (g) if the SFY 2012 charity care subsidy allocation calculated thus far is less than $175,000 for any eligible hospital, the SFY 2012 charity care subsidy allocation thus far shall be increased to $175,000; (h) the SFY 2012 charity care subsidy allocation calculated thus far for each eligible hospital shall be proportionately increased or decreased so that the total initial calculated SFY 2012 charity care subsidy shall be equal to $675,000,000; (i) the SFY 2012 charity care subsidy allocation calculated thus far for each eligible hospital shall be multiplied by 25%; (j) the SFY 2011 charity care subsidy allocation for each eligible hospital shall be multiplied by 75%; (k) the amounts calculated in subsections (i) and (j) above shall be added together for each eligible hospital producing the SFY 2012 charity care subsidy allocation for each eligible hospital; (l) The resulting number will constitute each eligible hospital’s SFY 2012 charity care subsidy allocation. A proportionate increase or decrease shall be applied to all hospitals if necessary such that the calculated SFY 2012 charity care subsidy allocation for all hospitals totaled shall not exceed $675,000,000. Notwithstanding the provisions of section 3 of P.L.2004, c.113 (C.26:2H--18.59i) or any law or regulation to the contrary, the appropriation for Health Care Subsidy Fund Payments in State Fiscal Year (SFY) 2013 shall be calculated in the following manner: (a) source data used shall be from calendar years 2009 and 2010 for documented charity care claims data and hospital--specific gross revenue for charity care patients and shall include all adjustments and void claims related to calendar years 2009, 2010 and any prior year submitted claims, as submitted by each acute care hospital or determined by the Department of Health (DOH); (b) source data used for CY 2010 documented charity care for each hospital’s total gross revenue for all patients shall be from the CY 2010 Acute Care Hospital Cost Report as defined by Form E4, Line 1, Column E data and shall be according to the DOH advance submission request dated February 10, 2011, as submitted by each acute care hospital by March 10, 2011, and source data used for Medicare Cost Report data shall be from CY 2009; (c) in the event that an eligible hospital failed to submit by March 10, 2011, its total gross revenue for all patients from the CY 2010 Acute Care Hospital Cost Report as defined by Form E4, Line 1, Column E data according to the DOH advance submission request dated February 10, 2011, source data from CY 2008 shall be used for hospital--specific gross revenue for charity care patients and for hospital total gross revenue for all patients as defined by Form E4, Line 1, Column E; (d) source data used for CY 2009 documented charity care for each hospital’s total gross revenue for all patients shall be from the CY 2009 Acute Care Hospital Cost Report as defined by Form E4, Line 1, Column E data and shall be according to the DOH



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advance submission request dated February 11, 2010, as submitted by each acute care hospital by March 11, 2010, and source data used for Medicare Cost Report data shall be from CY 2008; (e) in the event that an eligible hospital failed to submit by March 11, 2010, its total gross revenue for all patients from the CY 2009 Acute Care Hospital Cost Report as defined by Form E4, Line 1, Column E data according to the DOH advance submission request dated February 11, 2010, source data from CY 2008 shall be used for hospital--specific gross revenue for charity care patients and for hospital total gross revenue for all patients as defined by Form E4, Line 1, Column E; (f) each eligible hospital’s charity care subsidy allocation for SFY 2012 as announced by DOH in July 2011, for this calculation purpose only, shall be initially split into two pools, one that equals 90% of its SFY 2012 allocation and another that equals 10% of its SFY 2012 allocation; (g) for each eligible hospital the difference between its CY 2010 documented charity care and its CY 2009 documented charity care shall be calculated. Then the percentage change in documented charity care for each eligible hospital shall be obtained by dividing this difference by its CY 2009 documented charity care; (h) each eligible hospital, whose percentage change in documented charity care as initially calculated in accordance with subsection g. above that is greater than 15% shall be reduced to 15% for purposes of this calculation only and that is less than --50% shall be increased to --40% for purposes of this calculation only; (i) for each eligible hospital, the ratio of its CY 2010 documented charity care divided by the total CY 2010 documented charity care for all hospitals shall be calculated; (j) for each eligible hospital, the percentage change in documented charity care as calculated in accordance with subsection g. above, unless modified in accordance with subsection h. above in such case the modified percentage from subsection h. above shall be used, shall be multiplied by the CY 2010 documented charity care ratio calculated in subsection i. above and then multiplied by the total of the 10% pool for all eligible hospitals as calculated in subsection f. above; (k) for each eligible hospital, the amount calculated in subsection f. above for its 90% pool and subsection j. above for its adjusted 10% pool shall be added together producing the SFY 2013 charity care subsidy allocation for each eligible hospital; (l) notwithstanding the provisions above, an eligible hospital shall not receive a lower SFY 2013 charity care subsidy allocation than its SFY 2012 charity care subsidy allocation if it had increased documented charity care as calculated in subsection g. above, and an eligible hospital shall not receive a greater SFY 2013 charity care subsidy allocation than its SFY 2012 charity care subsidy allocation if it had decreased documented charity care as calculated in subsection g. above; (m) if necessary, a proportionate increase or decrease shall be applied to all hospitals based on their percentages of CY 2010 documented charity care such that the total calculated SFY 2013 charity care subsidy allocation for all hospitals shall equal $675,000,000, except that the proration applied to the subsidy for any eligible hospital shall be modified as necessary to comply with subsection l. above; (n) the resulting number will constitute each eligible hospital’s SFY 2013 charity care subsidy allocation.

Explanation

The formula that distributes of Charity Care is substantially revised in the FY 2013 recommended budget. In order to promote predictability and minimize fluctuation of annual



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hospital-specific funding, the formula bases at least 90 percent of its FY 2013 disbursements on the FY 2012 disbursements. The remaining portion is determined in part by the change in the amount of uncompensated care delivered by each hospital. OLS is still reviewing data to determine whether the language as proposed provides the hospital-specific distributions announced by the department. A more thorough explanation of the funding formula and hospital-specific Charity Care disbursements for FY 2013 can be found beginning on page 19.

New Jersey Medical Malpractice Reinsurance Association

Addition 2012 Handbook: -- 2013 Budget: p. D-146

In addition to the amounts hereinabove appropriated for Health Care Subsidy Fund Payments, such additional funds as paid by the New Jersey Medical Malpractice Reinsurance Association are appropriated to the Health Care Subsidy Fund for Charity Care payments.

Explanation

The proposed budget language anticipates receipt of $9.5 million from the New Jersey Medical Malpractice Reinsurance Association, and appropriates those funds to the Health Care Subsidy Fund. The Medical Malpractice Reinsurance Association is an unincorporated nonprofit association, created pursuant to the “Medical Malpractice Liability Insurance Act,” P.L.1975, c.301 (C.17:30D-1 et seq.) to address problems in the market for medical malpractice insurance. When the market stabilized, the association was deemed to be unnecessary and deactivated in 1982, but it was reactivated in 2003 when the market faced problems again. Available information is that the association will be deactivated again, and that the association plans to contribute most of its remaining funds to the support of hospitals.



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Graduate Medical Education Disbursement


The amount hereinabove appropriated to Graduate Medical Education (GME) is conditioned upon the following: Effective July 1, 2011, the new GME allocation shall be calculated based on the sum of Medicaid Primary (Title XIX of the federal Social Security Act) and Enhanced FamilyCare Part A Inpatient fee--for--service payments (Net of Administrative Payments and Medicaid Excluded unit payments) and data from the hospital’s most recent available submitted cost report as of February 1 of the year prior to the subsidy payment year for acute care general hospitals. The aforementioned hospital payments will be obtained using the hospital’s most recent fiscal year of data for which the Division of Medical Assistance and Health Services has 24 months of paid claims data prior to February 1 of the year prior to the rate year. An Indirect Medical Education (IME) Factor is calculated for each Medicaid identified acute care general hospital using a ratio of net available beds (less nursery beds) to submitted IME Resident Full Time Equivalencies (FTEs) and the Medicare IME Formula. This IME factor is applied to the above mentioned Medicaid and FamilyCare Part A payments to obtain a hospital--specific IME payment. Each Medicaid identified acute care general hospital’s IME payment amount is then divided by the sum of all Medicaid identified acute care general hospitals to arrive at a percent to total. This percentage is multiplied by the total appropriated GME amount to determine the hospital’s individual allocation. The Division will use a phase--in process to transition to the new methodology over a three--year period (SFY 2012--2014). During the transition period, the allocation amount will be determined using a sum of the previous three state fiscal year (SFY) allocation amounts plus the allocation amount calculated for the new year using the new formula. This hospital four year sum is divided by the sum of the four year allocation for all hospitals to arrive at a percent to total. This percent is multiplied by the total appropriated GME amount. The new one year methodology will be implemented beginning SFY 2015. The total amount of these payments shall not exceed an amount approved by the Director of the Division of Budget and Accounting in combined State and federal funds. Notwithstanding the provisions of any law or regulation to the contrary, the amounts hereinabove appropriated for Graduate Medical Education payments shall be distributed using the hospital specific allocation established and adjusted during the preceding fiscal year.

Explanation

The FY 2012 formula used to determine hospital-specific disbursements of Graduate Medical Education (GME) funding is eliminated. Instead of the complex formula used in FY 2012, the budget recommends that each hospital receive the same amount of GME funds in FY 2013 as in FY 2012. This discontinues a planned three-year phase-in of a new disbursement formula that was included in the FY 2012 appropriations act. Informal information is that the formula is



16

being revised to address federal concerns about aspects of the Comprehensive Medicaid Waiver. Information is not available as to what hospital-specific disbursements would be if the phase-in of the FY 2012 formula were continued in FY 2013. Hospital-specific GME disbursements can be found on page 25.

Hospital Relief Offset Payments Disbursement


Notwithstanding the provisions of any law or regulation to the contrary, the amount hereinabove appropriated to Hospital Relief Offset Payments is conditioned upon the following: those hospitals that are eligible to receive a Hospital Relief Subsidy Fund (HRSF) payment may receive enhanced payments from the Medicaid program for providing services to Medicaid and NJ FamilyCare beneficiaries. The HRSF payment shall be an amount approved by the Director of the Division of Budget and Accounting, determined for acute care general hospitals and is to be distributed using a new formula effective July 1, 2011. The new formula shall be based on hospital Medicaid utilization compared to industry--wide utilization for behavioral health, substance abuse, pregnancy, childbirth, and newborn services. Methodology for determining this payment is based on a HRSF factor for all acute care general hospitals, expressed as a percentage, and is defined as the sum of Medicaid primary discharges for Medicaid and NJ FamilyCare program (Title XIX and Title XXI respectively from the federal Social Security Act) fee--for--service and encounter (HMO) claims for all Diagnosis--Related Groups (DRGs) in Major Diagnostic Categories (MDCs) 14, 15, 19, and 20 (as specified in the All Patient Refined Diagnosis Related Groups Patient Classification System Definitions Manual published by 3M Health Information Systems), excluding discharges from Medicaid Excluded Units, divided by the industry--wide sum of these discharges. The aforementioned discharge count will be obtained for each hospital using the most recent calendar year of data available for which the Division of Medical Assistance and Health Services has 24 months of paid claims data as of February 1 of the year prior to the subsidy payment year. The HRSF factor for each hospital is then multiplied by the total appropriated HRSF amount, to arrive at the hospital’s individual allocation. The Division will use a phase--in process to transition to the new methodology over a three--year period (State Fiscal Year 2012--2014). During the transition period, the allocation will be determined using a sum of the previous three State Fiscal Year (SFY) allocation amounts plus the allocation amount calculated for the new year, using the new formula. The hospital four--year sum is divided by the sum of the four--year allocation for all hospitals to arrive at a percent to total. This percent is multiplied by the total appropriated HRSF amount. The new one year methodology will be implemented beginning SFY 2015. These total enhanced allocated amounts shall be equal to the total State and federal funds appropriated and are not to exceed an amount to be approved by the Director of the Division of Budget and



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Accounting. Of the amounts hereinabove appropriated in State and federal funds in the Hospital Relief Offset Payment accounts in the Department of Human Services, Division of Medical Assistance and Health Services, such sums as may be necessary shall be transferred to the Hospital Relief Subsidy Fund within the Health Care Subsidy Fund established pursuant to P.L.1992, c.160 (C.26:2H--18.51 et seq.) to maximize federal revenues related to these accounts and maintain an appropriate level of hospital payments, subject to the approval of the Director of the Division of Budget and Accounting. Notwithstanding the provisions of any law or regulation to the contrary, the amounts hereinabove appropriated for Hospital Relief Offset Payments shall be distributed using the hospital specific allocation established and adjusted during the preceding fiscal year.

Explanation

The FY 2012 formula used to determine hospital-specific disbursements of Hospital Relief Offset Payments is eliminated. Instead of the complex formula used in FY 2012, the budget recommends that each hospital receive the same amount in FY 2013 as in FY 2012. This discontinues a planned three-year phase-in of a new disbursement formula that was included in the FY 2012 appropriations act. Informal information is that the formula is being revised to address federal concerns about aspects of the Comprehensive Medicaid Waiver. Information is not available as to what hospital-specific disbursements would be if the phase-in of the FY 2012 formula were continued in FY 2013. Hospital-specific Hospital Relief Offset disbursements for FY 2013 can be found on page 25.

Sale of Hoboken University Medical Center


There is appropriated an amount not to exceed $11,000,000 to the Hoboken Municipal Hospital Authority established pursuant to P.L.2006, c.46 (C.30:9-23.15) for purposes of paying costs of and related to the retirement of the Hoboken Municipal Hospital Authority bonds issued pursuant to P.L.2006, c.46, subject to the approval of the Director of the Division of Budget and Accounting.



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Explanation

This language provision and its associated appropriation were intended to facilitate the sale of Hoboken University Medical Center. As the sale has been completed, the language and appropriation are no longer necessary.

Department of Health FY 2012-2013 Background Paper: Formulaic State Hospital Aid

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Budget Pages.... D-143 to D-146 The Governor recommends that the State disburse $931.6 million in formulaic aid to New Jersey’s acute care hospitals in FY 2013—the same amount as was appropriated for that purpose in FY 2012. The term “formulaic State hospital aid” encompasses Charity Care, Hospital Relief Subsidy Fund, and Graduate Medical Education payments. It does not include non-formulaic State hospital aid, such as the $30 million the Governor recommends for competitive Health Care Stabilization Fund awards to hospitals in FY 2013. Although the total appropriation for formulaic State hospital aid does not change under the Governor’s proposal, FY 2013 aid allocations to specific hospitals differ from their FY 2012 levels. The difference is ascribable to recommended revisions to the Charity Care formula. In contrast, proposed hospital-specific FY 2013 distributions under the Hospital Relief Subsidy Fund and Graduate Medical Education programs do not deviate from their FY 2012 amounts. For these latter two programs, the Administration’s recommendations thus effectively suspend the phase-in of the new distribution formulas that commenced in FY 2012. Table 1 at the end of this background paper delineates total formulaic State aid payments each hospital received in FY 2012 and would receive in FY 2013 under the Governor’s proposal, while Table 2 displays the components of each hospital’s formulaic State aid.

Charity Care Charity Care payments represent the largest component of formulaic State aid to acute care hospitals. They are intended to partially reimburse hospitals for the uncompensated services the State requires them to provide to uninsured and underinsured low-income patients. The program does not pay hospitals set reimbursement rates for each treatment delivered. Instead, it distributes payments each year in accordance with a multivariate formula. Table 2 at the end of this background paper displays for each hospital the Governor’s recommended FY 2013 Charity Care allocation and the actual FY 2012 distribution. Program Appropriation: The last language provision on page D-145 of the Governor’s FY 2013 Budget sets forth the Governor’s recommendation that $675.0 million be appropriated to Charity Care in FY 2013. This amount is unchanged from its FY 2012 appropriation. As in FY 2012, the $675.0 million draws on two funding sources: $509.2 million from the off-budget Health Care Subsidy Fund and $165.8 million in federal funds. Created pursuant to N.J.S.A.26:2H-18.58, the Health Care Subsidy Fund is an off-budget fund that supports several health care initiatives, including Charity Care, out of the proceeds of certain State revenues that are dedicated to the fund, such as portions of cigarette tax collections. FY 2013 Allocation Formula: The Administration recommends revising the formula determining each acute care hospital’s FY 2013 Charity Care subsidy. The last language provision on page D-145 of the Governor’s FY 2013 Budget describes the formula, which, if

Department of Health FY 2012-2013 Background Paper: Formulaic State Hospital Aid (Cont’d)

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enacted, would supersede the statutory formula laid out in N.J.S.A.26:2H-18.59i and the distribution formula that was newly instituted in the FY 2012 Appropriations Act. A hospital’s proposed FY 2013 Charity Care subsidy equals 90 percent of its FY 2012 Charity Care subsidy plus its calculated FY 2013 Charity Care Subsidy Allocation with the final subsidy amount prorated so that the program appropriation to all hospitals combined is $675 million:

I) Hospital-Specific FY 2013 Charity Care Subsidy= 0.9 * Hospital’s FY 2012 Charity Care Subsidy + Hospital’s FY 2013 Charity Care Subsidy Allocation

The calculation of a hospital’s FY 2013 Charity Care Subsidy Allocation has two components:

II) FY 2013 Charity Care Subsidy Allocation= A + B, where

A = 0.1 * Hospital’s FY 2012 Charity Care Subsidy B = $67,500,000 * (the value of a hospital’s calendar year 2010 documented

Charity Care services divided by the value of calendar year 2010 documented Charity Care services by all hospitals) * (the difference between the value of a hospital’s calendar year 2010 documented Charity Care services and its calendar year 2009 documented Charity Care services divided by the value of its calendar year 2009 documented Charity Care services; with the final quotient subject to a prescribed maximum and minimum, if applicable)

After performing that calculation each hospital’s FY 2013 Charity Care Subsidy Allocation is proportionately scaled so that the FY 2013 Charity Care Subsidy Allocation for all hospitals totals $67.5 million. An additional adjustment in the proration is made to ensure that hospitals that have a higher value of documented Charity Care services in calendar year 2010 than in calendar year 2009 receive a FY 2013 Charity Care payment that is not less than the amount they received in FY 2012. FY 2012 Allocation Formula: A different formula determined each acute care hospital’s FY 2012 Charity Care subsidy. The first language provision on page B-77 of the FY 2012 Appropriations Handbook outlines the formula, which superseded the statutory allocation mechanism described in N.J.S.A.26:2H-18.59i and whose full effect would have been gradually phased in absent the Governor’s proposed FY 2013 revision. A hospital’s FY 2012 Charity Care subsidy equaled 75 percent of its FY 2011 Charity Care subsidy plus 25 percent of its calculated FY 2012 Charity Care Subsidy Allocation with the final subsidy amount scaled proportionately until the total program appropriation reached $675 million (or multiplied by a factor of 1.0113):

I) Hospital-Specific FY 2012 Charity Care Subsidy= [(0.75 * Hospital’s FY 2011 Charity Care Subsidy) + (0.25 * Hospital’s FY 2012 Charity Care Subsidy Allocation)] * 1.0113


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The calculation of a hospital’s FY 2012 Charity Care Subsidy Allocation had five components:

II) FY 2012 Charity Care Subsidy Allocation= $674,269.40 + A + B – C – D, where

A = 0.8838172 * Hospital’s FY 2010 Charity Care subsidy multiplied by a factor representing the $675 million FY 2012 total Charity Care appropriation over the $605 million FY 2010 total Charity Care appropriation

B = 0.0206784 * Hospital’s calendar year 2009 “self-payer” category charges C = 0.0012446 * Hospital’s calendar year 2009 total charges D = Hospital’s FY 2011 Charity Care subsidy * $4,239,097 divided by hospital’s

calendar year 2009 “self-payer” charges

After performing that calculation, a hospital’s FY 2012 Charity Care Subsidy Allocation was adjusted to a $175,000 floor if the formula yielded an allocation under $175,000. Lastly, each hospital’s FY 2012 Charity Care Subsidy Allocation was proportionately increased so that the FY 2012 Charity Care Subsidy Allocation for all hospitals combined was $675 million.

Hospital Relief Subsidy Fund The second largest component of formulaic State aid to acute care hospitals is Hospital Relief Subsidy Fund (HRSF) payments. The HRSF is a Medicaid supplemental payment program for hospitals that the State and the federal government finance in equal measures as a part of New Jersey’s Medicaid State plan. It is made possible because the New Jersey Medicaid program pays hospitals lower reimbursement rates for services they provide to Medicaid patients than the upper limit allowed by the federal government, which are Medicare rates. Consequently, by not paying upper limit rates, New Jersey does not maximize its federal Medicaid matching funds. However, it can access the matching funds for the difference between the actual and the upper limit reimbursement rates by expending State resources on Medicaid supplemental hospital aid in an amount that represents up to the State’s hypothetical cost share of the difference between the two rates. The HRSF holds this aid payment and the federal match it secures. As to the use of HRSF balances, the State is not obligated to disburse the Medicaid supplemental hospital aid to the specific hospitals having provided services. Instead, it pools the aid and determines a distribution method subject to the approval of the Centers for Medicare and Medicaid Services in the United States Department of Health and Human Services. Program Appropriation: The Governor proposes that acute care hospitals receive $166.6 million in HRSF disbursements in FY 2013—the same amount as was appropriated in FY 2012. As in FY 2012, the proposed FY 2013 appropriation of $166.6 million draws on two funding sources: $83.3 million in State resources and $83.3 million in federal matching funds through the Medicaid program. Two budget lines compose the $83.3 million State contribution to the HRSF: the $62.6 million appropriated to “Hospital Relief Offset Payments” and $20.7 million of the $24.6 million appropriated to “Health Care Subsidy Fund Payments.”


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FY 2012 and FY 2013 Allocation Formula: The proposed hospital-specific distribution of FY 2013 HRSF payments is identical to the actual FY 2012 distribution, as expressed in the last language provision on page D-146 of the Governor’s FY 2013 Budget. This approach marks a departure from the planned four-year phase-in of a new allocation formula that began in FY 2012. Table 2 at the end of this background paper displays for each hospital the Governor’s recommended FY 2013 HRSF allocation and the actual FY 2012 distribution. The first language provision on page B-98 of the FY 2012 Appropriations Handbook outlines the formula determining each acute care hospital’s FY 2012 HRSF allocation, which superseded the regulatory formula detailed in N.J.A.C.10:52-13.5. (There is no statutory HRSF formula.) A hospital’s FY 2012 HRSF subsidy equaled the sum of its FY 2009, FY 2010, and FY 2011 HRSF payments plus the newly calculated FY 2012 payment. That sum was divided by total HRSF payments to all hospitals across the four years. The resulting factor of a hospital’s four-year payments over the program’s total four-year disbursements was then applied to the $166.6 million FY 2012 allocation to determine a hospital’s FY 2012 HRSF subsidy:

I) Hospital-Specific FY 2012 HRSF Subsidy= (Hospital’s Actual FY 2009, 2010, and 2011 HRSF Payments + Hospital’s Calculated FY 2012 HRSF Payment) * $166.6 million / Total HRSF Payments to all Hospitals in FY 2009, 2010, 2011, and 2012

The following formula was used to calculate a hospital’s FY 2012 HRSF payment:

II) FY 2012 HRSF Payment= ($166.6 million * A) / B, where

A = A hospital’s calendar year 2009 Medicaid primary discharges for Medicaid and the NJ FamilyCare program (Title XIX and Title XXI of the federal Social Security Act), fee-for-service and encounter claims, in Major Diagnostic Categories “behavioral health,” “substance abuse,” “pregnancy and childbirth,” and “newborn services”

B = Sum of all hospitals’ calendar year 2009 Medicaid primary discharges for Medicaid and the NJ FamilyCare program, fee-for-service and encounter claims, in Major Diagnostic Categories “behavioral health,” “substance abuse,” “pregnancy and childbirth,” and “newborn services”

Graduate Medical Education The third component of formulaic State aid to acute care hospitals is Graduate Medical Education (GME), which is available to teaching hospitals only. An element of the State’s Medicaid program, GME distributions provide teaching hospitals with funding for the training of future physicians. New Jersey and the federal government contribute equal amounts to the Medicaid GME program and the State determines by means of a formula the Medicaid GME allocation each hospital receives, subject to the approval of the Centers for Medicare and Medicaid Services in the United States Department of Health and Human Services. Teaching hospitals also receive federal GME funding through other federal programs, the most important being Medicare, but these amounts do not flow through the State budget.


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Program Appropriation: The Administration recommends expending $90 million on Medicaid GME in FY 2013, the same sum as in FY 2012. The State would contribute $45 million (page D-144 of the Governor’s Fiscal Year 2013 Budget) and the federal government the other $45 million in the form of Medicaid matching funds. FY 2012 and FY 2013 Allocation Formula: The proposed hospital-specific distribution of FY 2013 GME payments is identical to its FY 2012 distribution, as set forth in the second to last language provision on page D-146 of the Governor’s FY 2013 Budget. This approach marks a departure from the planned four-year phase-in of a new allocation formula that began in FY 2012. Table 2 at the end of this background paper displays for each hospital the Governor’s recommended FY 2013 GME allocation and the actual FY 2012 distribution. Hospitals that receive no Medicaid GME funding did not report any eligible full-time equivalent residents in 2009. The second language provision on page B-98 of the FY 2012 Appropriations Handbook outlines the formula determining each acute care hospital’s FY 2012 GME allocation, which superseded the regulatory formula delineated in N.J.A.C.10:52-8.6. (There is no statutory GME formula.) A hospital’s FY 2012 Medicaid GME subsidy equaled the sum of its FY 2009, FY 2010, and FY 2011 GME allocations plus the newly calculated FY 2012 allocation. That sum was divided by the GME program’s total, four-year outlay to all hospitals. The resulting factor of a hospital’s four-year payments over the program’s total four-year outlay was then applied to the $90 million FY 2012 allocation to determine a hospital’s FY 2012 GME subsidy:

I) Hospital-Specific FY 2012 Medicaid GME Subsidy= (Hospital’s FY 2009, 2010, and 2011 GME Payments + Hospital’s Calculated FY 2012 GME Payment) * $90 million / Total GME Payments to all Hospitals in FY 2009, 2010, 2011, and 2012

The following formula was used to calculate a hospital’s FY 2012 GME payment:

II) FY 2012 GME Payment = ($90 million * A * B) / C, where

A = Indirect Medical Education (IME) Adjustment Factor B = Calendar year 2009 Medicaid Primary (Title XIX of the federal Social Security

Act) and Enhanced FamilyCare Part A Inpatient fee-for-service payments (net of administrative expenses)

C = Sum of the product of each hospital’s IME Adjustment Factors and calendar year 2009 Medicaid Primary and Enhanced FamilyCare Part A Inpatient fee-for-service payments (net of administrative expenses)

The IME Adjustment Factor is calculated in accordance with the method set forth for the federal Medicare IME program in section 412.105 of title 42, Code of Federal Regulations:

III) IME Adjustment Factor= 1.35 * [(1 + A)0.405 – 1], where

A = IME Full-Time Equivalent Residents / Number of Hospital Beds (less nursery beds)


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Total Aid Total Aid Change ChangeFY 2013 FY 2012 ($) (%)

Atlanticare Regional Medical Center $33,003,482 $32,909,972 $93,510 0.3%Bayonne Medical Center $3,111,197 $3,082,705 $28,492 0.9%Bayshore Community Hospital $408,031 $409,377 -$1,347 -0.3%Bergen Regional Medical Center $51,983,703 $51,862,230 $121,472 0.2%Cape Regional Medical Center $1,373,069 $1,335,650 $37,419 2.8%Capital Health Regional Medical Center at Fuld $25,529,899 $25,648,719 -$118,820 -0.5%Capital Health System at Mercer $9,814,603 $9,814,563 $40 0.0%CentraState Medical Center $2,820,240 $2,893,847 -$73,607 -2.5%Chilton Memorial Hospital $746,574 $733,090 $13,484 1.8%Christ Hospital $15,228,680 $15,339,794 -$111,114 -0.7%Clara Maass Medical Center $7,200,345 $7,220,150 -$19,805 -0.3%Community Medical Center $3,268,623 $3,295,424 -$26,801 -0.8%Cooper Hospital/University Medical Center $51,726,876 $51,803,334 -$76,458 -0.1%Deborah Heart and Lung Center $6,960,238 $6,953,840 $6,398 0.1%East Orange General Hospital $13,951,944 $14,055,822 -$103,877 -0.7%Englewood Hospital and Medical Center $1,920,054 $1,917,199 $2,855 0.1%Hackensack University Medical Center $13,589,137 $14,026,984 -$437,847 -3.1%Hackettstown Regional Medical Center $474,880 $460,722 $14,158 3.1%Hoboken University Medical Center $17,198,235 $17,028,011 $170,224 1.0%Holy Name Hospital $1,233,770 $1,245,915 -$12,145 -1.0%Hunterdon Medical Center $1,790,457 $1,811,000 -$20,544 -1.1%Jersey City Medical Center $60,637,809 $60,493,326 $144,483 0.2%Jersey Shore University Medical Center $11,521,053 $11,219,761 $301,292 2.7%JFK Medical Center/A M Yelensics $4,841,777 $4,867,444 -$25,668 -0.5%Kennedy Hospitals/UMC - Cherry Hill $21,325,349 $21,291,197 $34,152 0.2%Kimball Medical Center $15,290,429 $15,144,712 $145,717 1.0%Lourdes Medical Center of Burlington Cty. $4,908,249 $4,842,935 $65,314 1.3%Meadowlands Hospital Medical Center $968,131 $982,992 -$14,861 -1.5%Memorial Hospital of Salem County $660,228 $659,920 $307 0.0%Monmouth Medical Center $19,631,624 $19,717,920 -$86,296 -0.4%Morristown Memorial Hospital $3,644,879 $3,816,941 -$172,062 -4.5%Mountainside Hospital $1,487,732 $1,601,829 -$114,097 -7.1%Newark Beth Israel Medical Center $59,311,889 $59,269,073 $42,815 0.1%Newton Memorial Hospital $1,181,307 $1,215,480 -$34,173 -2.8%Ocean Medical Center $1,402,952 $1,507,739 -$104,787 -6.9%Our Lady of Lourdes Medical Center $6,667,081 $6,556,423 $110,658 1.7%Overlook Hospital $1,736,847 $1,812,409 -$75,563 -4.2%Palisades Medical Center $7,894,774 $7,992,472 -$97,698 -1.2%Raritan Bay Medical Center - Old Bridge $14,753,248 $14,616,780 $136,468 0.9%Riverview Medical Center $2,780,885 $2,831,815 -$50,930 -1.8%Robert Wood Johnson University Hospital $23,107,658 $22,842,003 $265,654 1.2%RWJ University Hospital at Hamilton $773,586 $832,021 -$58,435 -7.0%RWJ University Hospital at Rahway $1,805,443 $1,828,821 -$23,377 -1.3%Saint Barnabas Medical Center $2,065,792 $1,969,335 $96,457 4.9%Saint Clare's Hospital - Denville $16,801,329 $16,755,789 $45,540 0.3%Saint Clare's Hospital - Sussex $396,925 $396,390 $535 0.1%Saint Francis Medical Center $16,131,760 $16,035,616 $96,144 0.6%Saint Joseph's Hospital and Medical Center $93,964,776 $93,697,513 $267,264 0.3%Saint Joseph's Wayne Hospital $356,360 $346,425 $9,935 2.9%Saint Mary's Hospital - Passaic $13,196,398 $13,117,489 $78,909 0.6%Saint Michael's Medical Center $35,635,660 $35,884,594 -$248,933 -0.7%Saint Peter's University Hospital $13,162,412 $13,087,840 $74,572 0.6%Shore Memorial Hospital $1,356,036 $1,277,241 $78,795 6.2%Somerset Medical Center $3,612,699 $3,667,370 -$54,671 -1.5%South Jersey Healthcare - Elmer $385,511 $368,181 $17,331 4.7%South Jersey Healthcare Regional M C $6,986,718 $6,865,310 $121,409 1.8%Southern Ocean County Hospital $554,174 $566,704 -$12,530 -2.2%Trinitas Hospital $55,651,622 $55,763,576 -$111,954 -0.2%Underwood Memorial Hospital $2,562,382 $2,494,707 $67,675 2.7%University Hospital - UMDNJ $129,184,202 $129,531,343 -$347,141 -0.3%University Medical Center at Princeton $1,743,787 $1,735,534 $8,253 0.5%Valley Hospital $819,478 $765,022 $54,456 7.1%Virtua-Mem. Hospital of Burlington County $2,781,349 $2,899,053 -$117,704 -4.1%Virtua-West Jersey Health System - Berlin $3,388,674 $3,393,184 -$4,510 -0.1%Warren Hospital $1,194,991 $1,189,426 $5,565 0.5%

TOTAL $931,599,999 $931,600,001 -$1 0.0%

Table 1: Total Formulaic State Hospital Aid by Hospital

Hospital


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HRSF GMETotal Aid Total Aid Change Change Charity Care Charity Care FY 2012 and FY 2012 andFY 2013 FY 2012 ($) (%) FY 2013 FY 2012 FY 2013 FY 2013

Atlanticare Regional Medical Center $33,003,482 $32,909,972 $93,510 0.3% $24,607,649 $24,514,139 $6,774,092 $1,621,741Bayonne Medical Center $3,111,197 $3,082,705 $28,492 0.9% $3,101,448 $3,072,956 $9,749 $0Bayshore Community Hospital $408,031 $409,377 -$1,347 -0.3% $385,453 $386,800 $22,578 $0Bergen Regional Medical Center $51,983,703 $51,862,230 $121,472 0.2% $37,359,579 $37,238,107 $14,253,027 $371,097Cape Regional Medical Center $1,373,069 $1,335,650 $37,419 2.8% $1,061,602 $1,024,183 $311,467 $0Capital Health Regional Medical Center at Fuld $25,529,899 $25,648,719 -$118,820 -0.5% $20,992,544 $21,111,364 $3,587,212 $950,143Capital Health System at Mercer $9,814,603 $9,814,563 $40 0.0% $7,812,272 $7,812,232 $1,926,721 $75,611CentraState Medical Center $2,820,240 $2,893,847 -$73,607 -2.5% $2,244,170 $2,317,777 $432,051 $144,019Chilton Memorial Hospital $746,574 $733,090 $13,484 1.8% $625,476 $611,992 $121,098 $0Christ Hospital $15,228,680 $15,339,794 -$111,114 -0.7% $12,652,044 $12,763,158 $2,236,151 $340,484Clara Maass Medical Center $7,200,345 $7,220,150 -$19,805 -0.3% $4,404,856 $4,424,661 $2,795,489 $0Community Medical Center $3,268,623 $3,295,424 -$26,801 -0.8% $2,809,376 $2,836,177 $459,247 $0Cooper Hospital/University Medical Center $51,726,876 $51,803,334 -$76,458 -0.1% $35,805,531 $35,881,989 $6,211,886 $9,709,459Deborah Heart and Lung Center $6,960,238 $6,953,840 $6,398 0.1% $6,863,314 $6,856,916 $513 $96,411East Orange General Hospital $13,951,944 $14,055,822 -$103,877 -0.7% $11,224,759 $11,328,636 $2,727,185 $0Englewood Hospital and Medical Center $1,920,054 $1,917,199 $2,855 0.1% $1,352,977 $1,350,122 $410,500 $156,577Hackensack University Medical Center $13,589,137 $14,026,984 -$437,847 -3.1% $8,971,164 $9,409,011 $1,501,404 $3,116,569Hackettstown Regional Medical Center $474,880 $460,722 $14,158 3.1% $312,219 $298,061 $162,661 $0Hoboken University Medical Center $17,198,235 $17,028,011 $170,224 1.0% $15,634,426 $15,464,202 $1,069,168 $494,640Holy Name Hospital $1,233,770 $1,245,915 -$12,145 -1.0% $952,064 $964,209 $281,706 $0Hunterdon Medical Center $1,790,457 $1,811,000 -$20,544 -1.1% $1,639,528 $1,660,072 $119,558 $31,371Jersey City Medical Center $60,637,809 $60,493,326 $144,483 0.2% $49,049,719 $48,905,236 $7,707,571 $3,880,519Jersey Shore University Medical Center $11,521,053 $11,219,761 $301,292 2.7% $5,390,588 $5,089,296 $3,581,469 $2,548,996JFK Medical Center/A M Yelensics $4,841,777 $4,867,444 -$25,668 -0.5% $4,324,729 $4,350,397 $414,092 $102,956Kennedy Hospitals/UMC - Cherry Hill $21,325,349 $21,291,197 $34,152 0.2% $10,447,735 $10,413,583 $6,496,326 $4,381,288Kimball Medical Center $15,290,429 $15,144,712 $145,717 1.0% $10,247,917 $10,102,200 $5,042,512 $0Lourdes Medical Center of Burlington Cty. $4,908,249 $4,842,935 $65,314 1.3% $2,706,306 $2,640,992 $2,077,619 $124,324Meadowlands Hospital Medical Center $968,131 $982,992 -$14,861 -1.5% $729,015 $743,876 $239,116 $0Memorial Hospital of Salem County $660,228 $659,920 $307 0.0% $481,147 $480,840 $179,081 $0Monmouth Medical Center $19,631,624 $19,717,920 -$86,296 -0.4% $8,568,738 $8,655,034 $7,754,659 $3,308,226Morristown Memorial Hospital $3,644,879 $3,816,941 -$172,062 -4.5% $2,524,861 $2,696,923 $458,221 $661,797Mountainside Hospital $1,487,732 $1,601,829 -$114,097 -7.1% $1,079,515 $1,193,612 $281,193 $127,025Newark Beth Israel Medical Center $59,311,889 $59,269,073 $42,815 0.1% $34,830,702 $34,787,887 $12,517,512 $11,963,675Newton Memorial Hospital $1,181,307 $1,215,480 -$34,173 -2.8% $1,016,081 $1,050,254 $165,226 $0Ocean Medical Center $1,402,952 $1,507,739 -$104,787 -6.9% $1,105,339 $1,210,126 $297,613 $0Our Lady of Lourdes Medical Center $6,667,081 $6,556,423 $110,658 1.7% $3,153,616 $3,042,958 $2,464,490 $1,048,975Overlook Hospital $1,736,847 $1,812,409 -$75,563 -4.2% $1,289,675 $1,365,238 $268,364 $178,807Palisades Medical Center $7,894,774 $7,992,472 -$97,698 -1.2% $6,983,977 $7,081,675 $910,797 $0Raritan Bay Medical Center - Old Bridge $14,753,248 $14,616,780 $136,468 0.9% $11,645,091 $11,508,623 $2,480,372 $627,785Riverview Medical Center $2,780,885 $2,831,815 -$50,930 -1.8% $2,441,196 $2,492,126 $339,689 $0Robert Wood Johnson University Hospital $23,107,658 $22,842,003 $265,654 1.2% $8,529,982 $8,264,328 $3,984,747 $10,592,929RWJ University Hospital at Hamilton $773,586 $832,021 -$58,435 -7.0% $564,231 $622,666 $209,355 $0RWJ University Hospital at Rahway $1,805,443 $1,828,821 -$23,377 -1.3% $1,803,904 $1,827,281 $1,539 $0Saint Barnabas Medical Center $2,065,792 $1,969,335 $96,457 4.9% $1,124,950 $1,028,493 $468,996 $471,846Saint Clare's Hospital - Denville $16,801,329 $16,755,789 $45,540 0.3% $11,189,181 $11,143,641 $5,612,148 $0Saint Clare's Hospital - Sussex $396,925 $396,390 $535 0.1% $387,176 $386,641 $9,749 $0Saint Francis Medical Center $16,131,760 $16,035,616 $96,144 0.6% $14,479,678 $14,383,534 $1,269,342 $382,740Saint Joseph's Hospital and Medical Center $93,964,776 $93,697,513 $267,264 0.3% $73,878,049 $73,610,785 $10,861,247 $9,225,481Saint Joseph's Wayne Hospital $356,360 $346,425 $9,935 2.9% $355,334 $345,399 $1,026 $0Saint Mary's Hospital - Passaic $13,196,398 $13,117,489 $78,909 0.6% $10,857,284 $10,778,375 $2,335,990 $3,125Saint Michael's Medical Center $35,635,660 $35,884,594 -$248,933 -0.7% $25,992,779 $26,241,712 $6,732,509 $2,910,372Saint Peter's University Hospital $13,162,412 $13,087,840 $74,572 0.6% $5,894,092 $5,819,520 $4,598,668 $2,669,652Shore Memorial Hospital $1,356,036 $1,277,241 $78,795 6.2% $1,009,163 $930,368 $346,873 $0Somerset Medical Center $3,612,699 $3,667,370 -$54,671 -1.5% $3,225,051 $3,279,722 $316,085 $71,563South Jersey Healthcare - Elmer $385,511 $368,181 $17,331 4.7% $322,397 $305,066 $63,114 $0South Jersey Healthcare Regional M C $6,986,718 $6,865,310 $121,409 1.8% $2,543,522 $2,422,113 $4,414,061 $29,135Southern Ocean County Hospital $554,174 $566,704 -$12,530 -2.2% $422,301 $434,831 $131,873 $0Trinitas Hospital $55,651,622 $55,763,576 -$111,954 -0.2% $43,903,861 $44,015,815 $9,559,967 $2,187,794Underwood Memorial Hospital $2,562,382 $2,494,707 $67,675 2.7% $1,731,244 $1,663,569 $774,333 $56,805University Hospital - UMDNJ $129,184,202 $129,531,343 -$347,141 -0.3% $100,664,935 $101,012,076 $13,715,183 $14,804,084University Medical Center at Princeton $1,743,787 $1,735,534 $8,253 0.5% $1,102,642 $1,094,389 $303,257 $337,888Valley Hospital $819,478 $765,022 $54,456 7.1% $664,514 $610,058 $154,964 $0Virtua-Mem. Hospital of Burlington County $2,781,349 $2,899,053 -$117,704 -4.1% $2,015,177 $2,132,881 $720,941 $45,231Virtua-West Jersey Health System - Berlin $3,388,674 $3,393,184 -$4,510 -0.1% $2,378,181 $2,382,691 $900,534 $109,959Warren Hospital $1,194,991 $1,189,426 $5,565 0.5% $1,131,973 $1,126,408 $24,117 $38,901

TOTAL $931,599,999 $931,600,001 -$1 0.0% $674,999,999 $675,000,000 $166,600,000 $90,000,000

Table 2: Components of Formulaic State Hospital Aid by Hospital

TOTAL COMPONENTS

Hospital

Department of Health FY 2012-2013 Background Paper: Health Care Subsidy Fund

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Budget Pages.... D-144 to D-146; D-153

BACKGROUND A significant portion of the State’s financial support for the health care system is delivered via the Health Care Subsidy Fund (the fund). Established as part of the Health Care Reform Act of 1992, P.L.1992, c.160 (C.26:2H-18.51 et al.), the fund distributes Charity Care and other subsidies to health care providers, reimburses Federally Qualified Health Centers (FQHCs) for care provided to the uninsured, and supports the cost of children enrolled in NJ FamilyCare. Despite the fund’s importance in the State’s financing of health care, the budget does not present specific information on the sources of revenue or the expenditures from the fund. Tables I and II provide general information on the components of the fund for the Fiscal Years 2011, 2012, and 2013. Table III provides information on federal revenues associated with Charity Care and Health Care Stabilization Payments. (Totals may not add due to rounding.) Table I. Health Care Subsidy Fund – State Revenues ($000)

FY 2011 Final

FY 2012 Approp. Act

FY 2012 Adjusted

FY 2013 Recommend

FUND BALANCE JULY 1 $ 6,166 $ 0 $ 13,450 $ 2,000 REVENUES CIGARETTE TAX 370,000 370,000 370,000 370,000 GENERAL FUND TRANSFER 70,910 31,802 31,802 24,613 NJ MMRA TRANSFER 9,500 .53% FUND 79,354 100,195 100,195 100,290 AMBULATORY FACILITY FEE 47,510 47,897 47,897 47,897 COSMETIC SURGERY TAX 10,763 10,000 10,000 7,066 HMO ASSESSMENT 116,706 110,000 131,000 136,000 CIGARETTE TAX - FY10 INCREASE 26,500 26,500 26,500 26,500 ALCHOHOL EXCISE - FY10 INCREASE 22,000 22,000 22,000 22,000 INVESTMENT EARNINGS 234 200 200 200 TOTAL REVENUES $ 743,978 $ 718,594 $ 739,594 $ 744,066 TOTAL RESOURCES $ 750,144 $ 718,594 $ 753,044 $ 746,066

Department of Health FY 2012-2013 Background Paper: Health Care Subsidy Fund (Cont’d)

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The Health Care Subsidy Fund derives more than half of its revenue from taxes on cigarettes and alcohol. Most of the remainder is generated by assessments on health care providers and health maintenance organizations (HMOs). Each year a transfer from the General Fund is made to the fund which covers the difference between anticipated revenues and expenses. In FY 2013, $24.6 million is recommended, about 3% of the fund’s total revenue. The FY 2013 budget also assumes a transfer of $9.5 million from the New Jersey Medical Malpractice Reinsurance Association.1 It should be noted that, pursuant to P.L.2011, c.189 (C.54:32E-2), the tax rate on cosmetic surgery procedures will be lowered from 6% to 4% in FY 2013. The rate will be reduced to 2% for FY 2014 and will be eliminated in its entirety beginning FY 2015. Table II. Health Care Subsidy Fund – State Expenditures ($000)

FY 2011 Final

FY 2012 Approp. Act

FY 2012 Adjusted

FY 2013 Recommend

EXPENDITURES FAMILYCARE CHILDREN 101,575 114,292 114,581 118,814 FQHC UNINSURED VISITS 44,980 46,400 46,400 46,400 CHARITY CARE 542,900 509,197 533,197 533,197 HEALTH CARE STABILIZATION FUND 15,000 15,000 15,000 15,000 HOSPITAL RELIEF 32,239 30,655 30,655 30,655 TOTAL EXPENDITURES $ 736,695 $ 715,544 $ 739,833 $ 744,066 Projected Surplus/Deficit $ 13,450 $ 3,050 $ 13,211 $ 2,000 Scored Lapse $ 11,211

The majority of annual expenditures from the Health Care Subsidy Fund are hospital subsidies: Charity Care, Health Care Stabilization Payments, and Hospital Relief Offset Payments.2 It should be noted that a portion of the Charity Care expenditures recorded here are offset by federal revenues which are recorded as revenue in the General Fund, rather than appropriated directly to Charity Care (see Table III below). Of the revenue generated by the 0.53% hospital assessment, $40 million is dedicated to compensating FQHCs for care provided to uninsured and underinsured individuals. The FY 1 The Medical Malpractice Reinsurance Association is a nonprofit association created by statute in 1976 to address problems in the medical malpractice insurance market. The budget anticipates that the association will be deactivated, and that it will contribute most of its remaining funds to the Health Care Subsidy Fund. 2 See the background papers titled “Formulaic State Hospital Aid” and “Health Care Stabilization Fund” beginning on page 19 and 29, respectively, for more information regarding these hospital subsidy programs.

Department of Health FY 2012-2013 Background Paper: Health Care Subsidy Fund (Cont’d)

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2013 budget recommends a language provision that also dedicates revenues from the cosmetic surgery tax to FQHCs. The assessment is anticipated to produce revenues of $7.1 million, but due to a time lag in the receipt of revenues, the full $7.1 million may not be available in FY 2013. A total of $46.4 million is recommended to support FQHCs. Table III. Federal Revenues and Expenditures Related to Charity Care ($000)

FY 2011

Final FY 2012

Approp Act FY 2012 Adjusted

FY 2013 Recommend

FEDERAL SHARE OF CHARITY CARE AND STABILIZATION 347,500 352,500 352,500 352,500 Appropriated to Charity Care 137,100 165,803 141,803 141,803

Appropriated to Stabilization 15,000 15,000 15,000 15,000 Revenue Placed on Schedule 1 (General Fund) 195,400 171,697 195,697 195,697

State spending on Charity Care and Health Care Stabilization payments is matched dollar-for-dollar by federal revenue, up to the amount authorized by the federal Disproportionate Share Hospital program. Some of these federal matching funds are appropriated for Charity Care or the Health Care Stabilization Fund. The remainder is recorded as revenue in the General Fund, as a part of the “Medicaid Uncompensated Care – Acute” revenue item in the Department of Human Services, and is allocated to the State share of the Medicaid program.


Background Paper: Health Care Stabilization Fund

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Funding ($000)

Expended FY 2011

Adj. Approp. FY 2012

Recomm. FY 2013

Health Care Stabilization Fund $30,000 $30,000 $30,000

SUMMARY

Of the 12 hospitals that received Health Care Stabilization Fund awards over the past three years, nine hospitals have received funds for two or more years.

Though the fund’s original intent was to provide short-term financial assistance to hospitals, it is not certain whether any of the nine hospitals would be able to continue to operate and provide services without this on-going financial assistance.3

BACKGROUND

P.L.2008, c.33 (C.262H-18.74 et seq.) implemented a key recommendation of the New Jersey Commission of Rationalizing Healthcare Resources and established a Health Care Stabilization Fund (the fund). The fund provides emergency grants to hospitals and other licensed health care providers to ensure access and availability of health care services in communities served by a hospital or health care provider facing closure or a significant reduction in services due to financial distress. The FY 2009, FY 2010, and FY 2011 annual appropriations acts provided $44 million, $40 million, and $30 million, respectively, to the fund. The FY 2012 appropriations act provided $30 million to the fund, though no money has been distributed as of April 1, 2012. Each hospital which receives funds must meet the following general conditions:

Provide monthly reports documenting progress on the performance and quality conditions.

Document existing procedures for enrollment in government programs and provide a baseline from which to measure progress.

Secure a contingency contract with a firm that specializes in revenue cycle improvements, if one has not been recently completed or undertaken.

Include a State official on the hospital board during the grant’s duration. Provide baseline data regarding 30-day readmission rates and managed care denials.

3 Hoboken University Medical Center is a possible exception to this observation as its operations were sold to a for-profit hospital operator.

Budget Pages.... D-131; D-146

Department of Health and Senior Services FY 2012-2013 Background Paper: Health Care Stabilization Fund (Cont’d)

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Hospitals must also meet “hospital specific” conditions imposed by the department in

exchange for the funding. For hospitals that received funds in FY 2011, the following are illustrative of some of the conditions that were imposed:

Christ Hospital. Pursue strategic partnerships. (The hospital filed for bankruptcy protection in February after discussions to sell the hospital to a for-profit health care provider were terminated.)

East Orange General Hospital. Present a long term strategy to maintain health care services without on-going stabilization funds.

Hoboken University Medical Center. Pursue strategic partnerships. (In late 2011, ownership of the facility was transferred to HUMC Opco, LLC.)

Jersey City Medical Center. On-going administrative review to improve operations. Kimball Medical Center. Address market conditions and provide services without on-

going stabilization funds. Our Lady of Lourdes. Take steps to partner with a federally qualified health center to

maintain services. Raritan Bay Medical Center. Address market conditions and provide services without

on-going stabilization funds. St. Mary’s Hospital. Present a long term strategy to maintain health care services

without on-going stabilization funds.4 St. Clare’s Hospital. Present a long term strategy to maintain health care services

without on-going stabilization funds. Trinitas Regional Medical Center. Present a long term strategy to maintain health care

services without on-going stabilization funds. Information is not readily available as to whether hospitals are meeting the specific conditions imposed by the department.

4 Available information is that Ascension Health Care Network, a Catholic hospital system, is in discussion with St. Mary’s and St. Joseph’s [Paterson] regarding the creation of a new Catholic healthcare network.

Department of Health and Senior Services FY 2012-2013 Background Paper: Health Care Stabilization Fund (Cont’d)

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Table I lists the hospitals that received Health Care Stabilization Funds and the amount

of funding received for the FY 2009 – FY 2011 period: Table I. Health Care Stabilization Fund Awards5 Hospital FY 2009 FY 2010 FY 2011 Christ Hospital $7,000,000 $7,000,000 East Orange General Hospital $5,000,000 2,500,000 3,053,000 Hoboken University Medical Center 7,000,000 4,100,000 Jersey City Medical Center/Liberty Health 22,000,000 7,000,000 3,053,000 Kimball Medical Center/St. Barnabas System 1,000,000 1,221,000 Newark Beth Israel Medical Center/St. Barnabas System

5,000,000 4,000,000

Our Lady of Lourdes Health Foundation 1,221,000 Raritan Bay Medical Center 4,000,000 1,000,000 4,000,000 St. Clare’s Hospital of Passaic 1,831,000 St. Clare’s Health Services 1,000,000 St. Mary’s Hospital (Passaic) 7,000,000 9,500,000 3,300,000 Trinitas Regional Medical Center 1,000,000 1,221,000 TOTAL $44,000,000 $40,000,000 $30,000,000

5 In FY 2009, 14 entities submitted grant requests which totaled $143.6 million. In FY 2010, 12 entities requested a total of $133.9 million. In FY 2011, 12 entities submitted requests for grants totaling $110.9 million.


Background Paper: Federally Qualified Health Centers – Statistical Data

32

BACKGROUND The State provides a minimum of $40 million to Federally Qualified Health Centers (FQHCs) from the 0.53% assessment on hospital revenues for costs associated with providing primary medical care to persons without health insurance coverage, including undocumented aliens. For FY 2012 it is anticipated that FQHCs will receive a total of $46.4 million from the State Health Care Subsidy Fund, paid on a per-visit basis. FQHCs also receive Medicaid and Medicare reimbursement for services provided to persons who are Medicaid/Medicare eligible. The FY 2013 budget recommends $46.4 million in State funding for FQHCs, the same amount appropriated in FY 2012.

The Department of Health collects little statistical or financial information on the FQHCs themselves.

The tables below provide various demographic, financial, and personnel data on the 20 FQHCs for Calendar Years 2009 and 2010, as reported to federal Health Resources and Services Administration.6 (Totals may not add due to rounding.) Table I. FQHC Patient Demographic Data CY 2009 CY 2010 % Change TOTAL PATIENTS 413,370 432,330 4.6% Age: Under 1 13,760 15,650 13.7% 1 – 9 70,380 67,830 -3.6% 10 - 19 61,410 62,900 2.4% 20 – 29 78,320 82,040 4.7% 30 – 49 114,030 123,100 8.0% 50 – 64 57,740 60,860 5.4% Over 65 20,720 19,950 -3.7% Sex: Male 159,320 168,780 5.9% Female 254,050 263,550 3.7%

6 Data are available for years prior to 2009. But as the data was based on fewer than 20 FQHCs, the data would not be comparable to data for 2009 and 2010.

Budget Pages.... D-131; D-142; D-145; D-153

Department of Health and Senior Services FY 2012-2013 Background Paper: Federally Qualified Health Centers – Statistical Data (Cont’d)

33

Race: Black/African American 119,740 123,840 3.4% White 160,400 182,530 13.8% Other 27,030 35,600 31.7% Unreported 106,200 90,360 -14.9% Ethnicity: Hispanic/Latino 192,710 213,840 11.0% Non-Hispanic/Latino 213,680 213,160 -0.2% Unreported/Refused to Report 6,979 5,325 -23.7%

Between 2009 and 2010, the number of patients seen by FQHCs increased by nearly

5%. The increase occurred in nearly all age groups (with the exception of those aged 1 – 9 and those over 65), sex, and racial groupings. Due to economic conditions and the loss of private health insurance coverage, more persons may be utilizing FQHCs for primary health care. Table II. FQHC Patient Income and Health Insurance Data CY 2009 CY 2010 % Change TOTAL PATIENTS 413,370 432,330 4.6% Income (% Federal Poverty Level): <100% FPL 266,430 269,530 1.2% 101% - 150% 49,410 54,210 9.7% 151% - 200% 19,790 20,180 2.0% > 200% 21,690 17,800 -17.9% Unavailable 56,050 70,620 26.0% Health Insurance Status: Medicaid 115,410 112,450 -2.6% CHIP (NJ FamilyCare) 70,340 86,990 23.7% Medicare 15,710 15,530 -1.1% Other Insurance 42,210 36,100 -14.5% Uninsured 169,710 181,270 6.8%

During the same time frame, the number of patients with incomes under 200% of the

Federal Poverty Level (FPL) who use FQHCs for primary health care increased approximately 2.5%. The number of patients covered by Medicaid/NJ FamilyCare who use FQHCs for primary health care increased by over 7%. Even though most Medicaid/NJ FamilyCare recipients are enrolled in a managed care program, FQHCs are the primary care provider for many recipients. Whether FQHCs are more convenient than the primary care provider network


34

of the managed care organizations or whether few primary care physicians maintain practices in the areas where recipients live cannot be readily determined. Table III. Medical Service Data (Number of Patients) CY 2009 CY 2010 % Change Total Patients: 413,370 432,330 4.6% Medical Services 350,200 371,280 6.0% Dental Services 96,680 104,970 8.6% Mental Health Services 7,130 10,040 40.8% Substance Abuse Services 1,550 1,530 -1.3% Other 50,650 47,230 -6.8% Selected Diagnosis (Primary): HIV Symptomatic/Asymptomatic 2,120 2,030 -4.2% Tuberculosis 130 220 69.2% Various Sexually Transmitted Diseases 1,840 1,720 -6.5% Hepatitis B/C Not reported 1,270 Asthma 13,120 12,800 -2.4% Diabetes 18,870 21,070 11.7% Heart Disease 3,400 3,520 3.5% Hypertension 36,120 37,830 4.7% Overweight/Obesity 10,200 11,660 14.3% Alcohol or Substance Disorders 2,260 3,180 40.7% Mental Health Related 18,220 22,370 22.8% Selected Medical or Dental Services: HIV Test 12,060 12,700 5.3% Hepatitis B/C Test Not reported 11,130 Mammogram 4,060 1,240 -69.5% Pap Test 55,970 54,910 -1.9% Immunizations 60,310 61,100 1.3% Seasonal Flu Vaccines 49,120 47,534 -3.2% H1N1 Flu Vaccines 23,598 11,755 -50.2% Contraceptive Management 28,860 30,320 5.1% Childhood Lead Test Screening 9,170 9,120 -0.5% Eye Examinations Not reported 3,500 Oral Dental Exams 75,590 85,090 12.6% Restorative Dental Services 26,370 32,300 22.5% Oral Surgery 16,770 17,510 4.4% Oral Rehabilitative Services 12,240 19,870 62.3%


35

The available data indicate the number of patients using medical and dental services

increased approximately 6 percent and 9 percent, respectively. The largest percentage increase was in mental health services, though a relatively small number of patients use this service. In terms of primary diagnoses, increases of over 10 percent were noted in diabetes, obesity, alcohol/substance disorders, and mental health issues.

The number of patients who received “contraceptive management” services increased 5.1 percent, exceeding the 3.7 percent increase in the number of women who visited FQHCs. Whether the 5.1 percent increase is related to the June 2010 elimination of funding for family planning services cannot be determined. Table IV. FQHC Expenditures ($000) CY 2009 CY 2010 % Change GRAND TOTAL $213,198 $231,377 8.5% Medical Care: Medical Staff 83,385 86,574 3.8% Laboratory and X-ray 2,638 3,010 14.1% Medical/Other 10,422 9,347 -10.3% Clinical Services: Dental 18,138 20,795 14.6% Mental Health 3,233 3,711 14.8% Substance Abuse 327 396 21.1% Pharmacy 324 421 29.9% Pharmaceuticals 1,032 2,156 108.9% Other Professional 1,777 1,813 2.0% Other Program Related Services: Case Management 2,835 2,602 -8.2% Transportation 620 669 7.9% Outreach 2,225 2,244 0.9% Patient and Community Education 3,249 3,698 13.8% Eligibility Assistance 1,852 2,060 11.2% Interpretation Services 334 410 22.8% Other Services 2 121 5950.0% Overhead: Facility 23,117 24,796 7.3% Administration 55,010 64,652 17.5% Donated Facilities, Services, and Supplies 2,679 2,901 8.3%


36

Though overall expenditures increased by about 8.5%, administrative costs and “patient and community education” (i.e. marketing) costs increased by nearly 18% and by nearly 14%, respectively.

While information regarding these increases is not available, as FQHCs expand their operations and increase the number of “sites” they operate, their administrative costs related to management, quality control, data collection, and reporting should increase. Also, FQHCs compete with other health care providers – most notably with hospitals which are expanding their outpatient operations. FQHCs must market their services to the community or potentially lose patients to other health care providers such as hospital-based primary care clinics. Table V. Full Time Equivalent (FTE) Staff CY 2009 CY 2010 % Change GRAND TOTAL 2,209.7 2,379.2 7.7% Physicians7 215.5 225.2 4.5% Other Medical Staff8 625.8 646.8 3.4% Dental 170.7 188.7 10.5% Mental Health 29.4 39.0 32.7% Substance Abuse 3.9 4.5 15.4% Other Professional Services 13.8 13.8 0.0% Vision Services - - 1.3 Pharmacy 0.1 0.3 200.0% Enabling Services9 199.5 233.3 16.9% Administration and Facility 951.1 1,036.2 8.9%

The overall number of Full Time Equivalent (FTE) staff employed by FQHCs increased

7.7%, with more significant increases occurring in the areas of Dental Health, Mental Health, Substance Abuse, Enabling Services, and Administration and Facility. The large proportional increase in pharmacy staffing is due to the very small number of personnel dedicated to this purpose. No category of FTEs decreased in size. The increase in overall FTEs is likely related to an overall increase in the number of “sites” operated by FQHCs.

7 Physicians include family physicians, general practitioners, internists, OB/GYNs, pediatricians, and specialty physicians. 8 Other medical staff include nursing personnel, physician assistance, and laboratory/x-ray personnel 9 Enabling staff/services include case managers, patient/community education, outreach, transportation, eligibility workers, and interpretation.


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Table VI. FQHC Revenues ($000) CY 2009 CY 2010 % Change GRAND TOTAL $244,345 $270,458 10.7% Patient Revenues: 139,375 155,510 11.6% Medicaid Related Revenues 85,467 94,811 10.9% Medicare Related Revenues 5,102 6,472 26.9% Other Public Insurance Revenues 24 381 1487.5% Private Insurance Revenues 6,055 5,264 -13.1% Self Pay 11,323 11,734 3.6% Retroactive Settlements, Receipts, Paybacks 31,405 36,848 17.3% Federal Grants: 43,714 51,177 17.1% Bureau of Primary Health Care Grants 34,911 35,125 0.6% Ryan White Part C HIV Early Intervention 1,667 1,878 12.7% American Recovery and Reinvestment Act Grants 5,933 12,552 111.6% Other Federal Grants 1,204 1,652 37.2% Total State/Local Grants or Contracts: 55,473 56,723 2.3% State Government Grants and Contracts 14,607 9,132 -37.5% State/Local Indigent Care Programs 38,134 44,889 17.7% Local Government Grants and Contracts 2,731 2,703 -1.0% Foundation/Private Grants and Contracts 4,663 4,591 -1.5% Other Revenue 1,120 1,626 45.2%

The Medicaid/NJ FamilyCare program is the largest payer source for FQHCs. Including

retroactive settlements, receipts, and paybacks – over 99% of which are attributable to Medicaid/NJ FamilyCare – these programs provide nearly 85% of patient-related revenue and almost half of all revenues. Federal grants made up 19% of total revenues in 2010, but a quarter of these revenues were attributable to temporary stimulus funding through the American Recovery and Reinvestment Act (ARRA). Excluding stimulus money, federal grants increased 2.3%. State and local grants and contracts provide about 21% of total revenue for FQHCs. Total funding from State and local grants and contracts increased 2.3% from 2009 to 2010. Private grants and contracts represent less than 2% of FQHCs total revenues.

OFFICE OF LEGISLATIVE SERVICES

The Office of Legislative Services provides nonpartisan assistanceto the State Legislature in the areas of legal, fiscal, research, bill

drafting, committee staffing and administrative services. It operatesunder the jurisdiction of the Legislative Services Commission, a biparti-san body consisting of eight members of each House. The ExecutiveDirector supervises and directs the Office of Legislative Services.

The Legislative Budget and Finance Officer is the chief fiscal officer forthe Legislature. The Legislative Budget and Finance Officer collects andpresents fiscal information for the Legislature; serves as Secretary to theJoint Budget Oversight Committee; attends upon the AppropriationsCommittees during review of the Governor's Budget recommendations;reports on such matters as the committees or Legislature may direct;administers the fiscal note process and has statutory responsibilities forthe review of appropriations transfers and other State fiscal transactions.

The Office of Legislative Services Central Staff provides a variety oflegal, fiscal, research and administrative services to individual legisla-tors, legislative officers, legislative committees and commissions, andpartisan staff. The central staff is organized under the Central StaffManagement Unit into ten subject area sections. Each section, under asection chief, includes legal, fiscal, and research staff for the standingreference committees of the Legislature and, upon request, to specialcommissions created by the Legislature. The central staff assists theLegislative Budget and Finance Officer in providing services to theAppropriations Committees during the budget review process.

Individuals wishing information and committee schedules on the FY2013 budget are encouraged to contact:

Legislative Budget and Finance OfficeState House Annex

Room 140 PO Box 068Trenton, NJ 08625

(609) 292-8030 • Fax (609) 777-2442

DEPARTMENT OF HEALTH - New Jersey Legislature · 2012. 4. 30. · • TheFiscal Year 2013 budget for theDepartment of Health totals approximately $1.9 billion. Approximately $2.5

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