ASSEMBLY APPROPRIATIONS COMMITTEE
STATEMENT TO
[Second Reprint]
ASSEMBLY, No. 3364
with committee amendments
STATE OF NEW JERSEY
DATED: JUNE 24, 2024
The Assembly Appropriations Committee reports favorably and with committee amendments Assembly Bill No. 3364 (2R).
This bill amends the “County Option Hospital Fee Program Act,” P.L.2018, c.136 (C.30:4D-7r et seq.). 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 fee mechanism that enhances financial support through the Medicaid program.
As amended, the bill removes the existing requirement that the fee implemented under the program be subject to a cap as determined by the Commissioner of Human Services, and instead stipulates that the fee be subject to review and approval by the commissioner. The bill also specifies that the fee is not to exceed the aggregate amount specified in 42 C.F.R. s.433.68(f)(3) minus one percent of total net patient revenues. Current law requires that the fee is to be implemented in accordance with federal law.
The amended bill provides that, if a participating county submits a proposed fee and expenditure report that includes plans to increase Medicaid or NJ FamilyCare payments for any hospital within its jurisdiction that exceeds the calculated value of its hospital-specific disproportionate share limit, the report is to include an attestation from that hospital’s chief executive officer confirming that the hospital is subject to a reduction in disproportionate share hospital payments. The bill provides that any hospital that exceeds its hospital-specific disproportionate share limit as a result of payments received under the program or any other State or federal funding mechanisms or pools will be liable to the State for any funds the State may be required to reimburse the federal government.
Under the bill, as amended, with the exception of the period of time during which a participating county or Medicaid Managed Care Organization is in possession of payments prior to disbursement, neither a participating county nor Medicaid Managed Care Organization is to be liable for any amount related to an approved expenditure plan determined to be impermissible by a federal agency.
The amended bill provides that the administrative provisions established by a board of County commissioners regarding the imposition of a hospital fee under the program may include the application of liens.
As amended, the bill modifies the definition of a “participating county” under the program. Under existing law, a county is deemed a “participating county” via two pathways. This bill modifies a single component of one of these pathways, providing that a “participating county” means a county that contains a municipality with a population greater than 20,000, and with a Municipal Revitalization Index Distress score, as last calculated by the New Jersey Department of Community Affairs prior to the effective date of P.L.2018, c.136 (C.30:4D-7r et seq.), that exceeds 55. Under the current law, the Municipal Revitalization Index Distress score must exceed 60.
COMMITTEE AMENDMENTS:
The committee amendments:
1) revise the definition of “participating county”;
2) revise requirements for a participating county submitting a proposed fee and expenditure report;
3) remove paragraph (1) of subsection h. in section 2 of the amended bill;
4) revise the provision concerning a hospital that exceeds its hospital-specific disproportionate share limit; and
5) make various technical changes involving usage, numbering, and a revision of the synopsis to reflect the amendments.
FISCAL IMPACT:
The Office of Legislative Services (OLS) concludes that this bill will produce an annual net revenue gain for the State and certain county governments as a result of increasing the existing cap on the fee a participating county can impose on a hospital from 2.5 percent to five percent of a hospital’s total net patient revenues under the County Option Hospital Fee Program. Increasing the cap will result in an additional $667.3 million in hospital fees collected under the program. The OLS estimates that the $667.3 million in fee collections will generate $1.24 billion in federal Medicaid cost reimbursements, for an estimated $1.91 billion in program revenues. The revenue would be allocated as detailed in the table below.
Additionally, the OLS finds that, in revising the definition of “participating county,” the bill will expand eligibility under the County Option Hospital Fee Program thereby producing an indeterminate annual net revenue gain to the program in the form of additional county hospital fees and the federal Medicaid cost reimbursements received by the State due to those additional fees. The net gain will primarily accrue to hospitals in counties newly eligible to participate in the program under the bill. For reference, according to the most recent program county cost reports, annual hospital fees collected under the program at the current 2.5 percent cap ranged from a low of $13.0 million in Cumberland County to ta high of $109.0 million in Bergen County. Generally, under the bill, in their role as conduits, the State and participating counties, including any newly eligible counties, will experience annual revenue and expenditure increases. These impacts will largely offset one another, although the State and participating counties will realize some net revenue gains from fees retained to cover their administrative costs.