[First Reprint]

ASSEMBLY, No. 4091




DATED:  JUNE 14, 2022


      The Assembly Appropriations Committee reports favorably Assembly Bill No. 4091 (1R).

      This bill makes the County Option Hospital Fee Pilot Program permanent and expands the definition of “participating county” under the program.  The County Option Hospital Fee Program was established in November 2018 to support local hospitals in designated high-need areas to ensure continued access to critical healthcare services for vulnerable populations.  To effectuate this goal, the program authorizes participating counties, and hospitals within those counties, to partner with the State through a provider assessment mechanism that enhances financial support through the Medicaid program.

      Under existing law, the program is to be a pilot program, expiring five years after each participating county has collected a local health care-related fee, or Fall of 2026.  Under the bill, the program becomes permanent.

      The bill, while maintaining the existing statutory definition of "participating county" notwithstanding the provisions of any other law or regulation to the contrary, also expands the definition of "participating county" to mean, based on the 2019 ACS 5 Year Survey Data, a county that chooses to participate in the program and contains a municipality with a population greater than 30,000 whose 2020 Municipal Revitalization Index Distress score is greater than or equal to 35, (1) excluding counties with a municipality with a population greater than 125,000, (2) excluding counties with a population less than 150,000, and (3) excluding counties with a median income of $110,000.  Existing law limits the program to certain qualifying seven counties; the bill would expand the qualifying criteria to include additional counties.



      The Office of Legislative Services (OLS) estimates that the bill will cause indeterminate annual revenue and expenditure increases for the State and certain county governments.  Considering the mechanism of the federal revenue maximization initiative, the annual net fiscal gain of the County Option Hospital Fee Program will be enhanced federal cost reimbursements under the Medicaid program.  The net fiscal gain is largely intended to accrue to hospitals in counties participating with the State and participating county governments serving as conduits with additional State and county expenditures and revenues largely offsetting one another.

      For currently participating counties (Atlantic, Camden. Essex, Hudson, Mercer, Middlesex, and Passaic) by making the County Option Hospital Fee Pilot Program permanent, the largely offsetting revenue and expenditure increases will occur beyond the pilot program’s current expiration date in the Fall of 2026, if the counties remain in the program.

      The bill also expands program to include additional counties (Bergen, Burlington, Cumberland, Monmouth, and Ocean).  To the extent that new counties participate in the program, concerned counties and the State will collect additional annual revenues and incur expenditures that will largely offset one another.

      Lastly, University Hospital, which is an instrumentality of the State, is located in the currently participating county of Essex.  As such, the bill will increase expenditures, in the form of imposed fees, and revenues, in the form of enhanced Medicaid payments, for University Hospital beyond the pilot program’s current expiration date in the Fall of 2026, if the County of Essex remains in the program.  The net effect of the two fiscal effects on University Hospital is presumed to be positive.