LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 4635
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JULY 3, 2025
SUMMARY
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Synopsis: |
Revises assessment imposed on nursing homes if permissible under federal law. |
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Type of Impact: |
Annual increase in State expenditures and revenue. |
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Agencies Affected: |
The Department of the Treasury and Department of Human Services. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
Annual |
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State Expenditure Increase – Nursing Home Reimbursements |
Indeterminate |
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State Revenue Increase – Nursing Home Assessment Revenue |
Indeterminate |
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State Revenue Increase – Federal Medicaid Revenue |
Indeterminate |
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· The Office of Legislative Services (OLS) concludes that this bill will increase State revenues collected under the existing nursing home assessment, and deposited into the Nursing Home Quality of Care Improvement Fund, by an indeterminate amount. This estimate assumes that, in order to comply with the bill’s provision that revenues generated under the assessment are to equal six percent of the aggregate amount of annual revenues received by all nursing homes, the Department of the Treasury will need to increase the existing assessment rate imposed on nursing homes.
· The revenues collected from the nursing home assessment are dedicated to increasing State expenditures on Medicaid reimbursements for nursing home services, thereby generating federal Medicaid matching funds. Therefore, the annual increase in State revenue from the nursing home assessment under the bill will result in increased State Medicaid expenditures that also increase State revenue in the form of federal Medicaid reimbursements.
BILL DESCRIPTION
This bill provides that the existing assessment imposed on nursing homes, under N.J.S.A.26:2H-96, is to be either six percent of the aggregate amount of annual revenues received by all nursing homes in accordance with 42 C.F.R. s.433.68(f)(3)(i) or the maximum percentage that is permissible under federal law. Under current State law, the assessment is not to exceed six percent of the aggregate amount of annual revenues received by all nursing homes.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that this bill will increase State revenues collected under the existing nursing home assessment, and deposited into the Nursing Home Quality of Care Improvement Fund, by an indeterminate amount. The bill requires that revenue collections under the assessment are to equal either: six percent of the aggregate amount of annual revenues received by all nursing homes; or the maximum percentage of such revenues that is permissible under federal law, which is also currently six percent. Under current State law, it is permissible for the assessment to collect revenues up to and including this six percent limit.
According to the Division of Taxation, the current nursing home assessment rate of $14.67 per non-Medicare patient day was adjusted in FY 2020 to ensure that revenue collections under the assessment equaled six percent of the aggregate revenues received by nursing homes, as permitted under existing law. This OLS estimate assumes that aggregate revenues received by nursing homes have grown since FY 2020, and that the existing assessment rate no longer meets this six percent limit. Therefore, under the bill, the Department of the Treasury would be required to increase the assessment rate to align with the six percent limit. While the OLS does not have access to current data regarding all applicable nursing home revenue used to determine the assessment limit, the State’s nursing home costs under Medicaid alone are anticipated to be approximately $650 million higher in FY 2026 than in FY 2020, suggesting revenue growth since the assessment rate was previously adjusted.
The revenues collected from the nursing home assessment are dedicated to increasing State expenditures on Medicaid reimbursements for nursing home services, thereby generating federal Medicaid matching funds. Therefore, the annual increase in State revenue from the nursing home assessment under the bill will result in increased State Medicaid expenditures that also increase State revenue in the form of federal Medicaid reimbursements. For reference, absent the bill, the Executive anticipates the nursing home assessment to generate $140.0 million in revenue in FY 2026. In a February 2025 document entitled “Modeling Impact to NJ Medicaid of Congressional Budget Proposals,” the Department of Human Services stated that the nursing home assessment results in $93.0 million in annual federal Medicaid matching funds for associated nursing home expenditures.
According to KFF, there were 40,318 residents in New Jersey’s nursing homes in 2024, and Medicaid or other non-Medicare payers covered roughly 84 percent of the State’s nursing home residents at any given time in 2021, according to Brown University’s analyses of federal nursing home certification data. Assuming that a similar percentage of New Jersey’s nursing home patient days are subject to the assessment in FY 2026 because they are not covered by Medicare, a $1.00 increase in the nursing home assessment rate would increase State revenue by approximately $20.6 million annually — $12.4 million in dedicated revenue from the assessment itself and $8.2 million due to federal Medicaid reimbursements received for associated nursing home expenditures, if such federal funds continue to be generated at the same rate.
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Section: |
Human Services |
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Analyst: |
Principal Research Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).