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New Jersey Federation of Physicians and Dentists v. Klein

Decided: November 16, 1976.


Matthews, Seidman and Horn.

Per Curiam

[144 NJSuper Page 468] The New Jersey Federation of Physicians and Dentists, which describes itself as a "duly constituted Labor Organization affiliated with the American Federation of Physicians and Dentists," appeals under R. 2:2-3(a)(2) from a regulation adopted by the Commissioner of Institutions and Agencies on August 1, 1975 (see 7 N.J.R. 421(a)), substantially as proposed in a notice published July 10, 1975 (see 7 N.J.R. 317(b)). The regulation,

one of a series dealing with revisions of fees and services under the Medicaid program, effected a temporary fee reduction for certain providers of medical and related services:

Because of the projected budget deficit in the New Jersey Health Services (Medicaid) Program, a reduction of ten per cent in certain provider's reimbursement will become effective for all services performed on or after August 1, 1975. This will apply to all physicians, dentists, optometrists, opticians, podiatrists, chiropractors, psychologists, prosthetic and orthotic suppliers, medical suppliers, hearing aid dealers and transportation providers.

Appellant contends that the regulation in question is invalid because (1) the Commissioner made no effort nor took any steps to have the regulation in question incorporated into the State Plan and approved by the Secretary of Health, Education and Welfare; (2) it violates the intent of the Medical Assistance Program and therefore is beyond the power of the Commissioner; (3) it violates the requirements of the Social Security Act and the federal regulations thereunder, and (4) it is unreasonable, capricious and arbitrary, and adversely affects the fundamental policies on which the state program of medical assistance is based.

We shall address ourselves later to the issue of whether the regulation under review required prior approval by the Secretary of Health, Education and Welfare. As for the remaining contentions, we find no substance in the arguments advanced that the regulation violates the intent of or does not comply with federal and state enabling acts and regulations, or is unreasonable, capricious and arbitrary.

Subchapter XIX of the Social Security Act, 42 U.S.C.A. § 1396, provides for the establishment of federally-assisted, state-administered programs of medical assistance to needy persons. Participating states are required to submit to the United States Department of Health, Education and Welfare their Medicaid plans for the mandated medical services, 42 U.S.C.A. § 1396a(a)(13), and for such optional services as may be provided, 42 U.S.C.A. § 1396a(a)(10)(C). The

services are to be provided "as far as practicable under the conditions in [each] State * * *," 42 U.S.C.A. § 1396, and the "medical assistance" authorized by the act is defined as "payment of part or all of the cost" of the included mandatory or optional services, 42 U.S.C.A. § 1396d(a). See N.J. Pharmaceutical Ass'n. v. Klein , 140 N.J. Super. 16, 20 (App. Div. 1976).

Participation by this State in the program was authorized by the enactment of the New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 et seq. , which designated the Department of Institutions and Agencies as the single state agency to administer its provisions. The stated purpose of the act was to provide medical assistance, insofar as practicable , on behalf of persons whose resources were determined to be inadequate to enable them to secure quality medical care at their own expense, and to enable the State, within the limits of funds available for any fiscal year for such purposes , to obtain all benefits for medical assistance provided by the Social Security Act. N.J.S.A. 30:4D-2.

The act empowers the Commissioner to issue, or cause to be issued through the Division of Medical Assistance and Health Services,

While the fee schedule for physicians in existence on August 1, 1975 is not disclosed in the record, it is evident that one had been established by the Department pursuant to the provisions of the applicable statutes and the state ...

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