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University of Medicine and Dentistry of New Jersey v. Grant

June 07, 2001

UNIVERSITY OF MEDICINE AND DENTISTRY OF NEW JERSEY -UNIVERSITY HOSPITAL, APPELLANT
v.
CHRISTINE GRANT, COMMISSIONER, DEPARTMENT OF HEALTH AND SENIOR SERVICES, AND MICHELE K. GUHL, COMMISSIONER, DEPARTMENT OF HUMAN SERVICES, RESPONDENTS



Before Judges Wallace, Lintner and Parrillo.

The opinion of the court was delivered by: Parrillo, J.S.C. (temporarily assigned)

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 2, 2001

On appeal from a final decision of the Department of Health and Senior Services.

This is an appeal by University of Medicine and Dentistry of New Jersey University Hospital (UMDNJ), the largest provider of charity care in New Jersey, from a final determination by the Department of Health and Senior Services (DHSS) that decreased its FY2000 charity care subsidy by $9,215,646 from its FY1999 allocation. UMDNJ attributes error in the DHSS's calculation to the use of wrong charity care charges data and cost reports as well as the failure to take into account its "nominal charge provider" status when valuing its documented charity care. We agree only with the latter and therefore remand for valuation of UMDNJ's documented charity care at the same rate paid by the Medicaid program as is statutorily required.

In 1991, New Jersey enacted the Health Care Cost Reduction Act (Act), which, in relevant part, subsidizes hospitals that serve a disproportionate number of low-income patients who are unable to pay their hospital bills. N.J.S.A. 26:2H-18.51 to -18.70. Charity care subsidies are distributed from the Health Care Subsidy Fund, which the DHSS administers. N.J.S.A. 26:2H-18.58.

The DHSS uses a standard statutory formula to determine the amount of the subsidy an eligible hospital may receive. N.J.S.A. 26:2H-18.59e. Eligible hospitals, however, do not necessarily receive a full "reimbursement" covering all of their actual charity care expenses; rather, a hospital receives only its proportionate share of the total subsidy funded by the Legislature for that year. Ibid. For FY2000, the year involved in this case, the Legislature appropriated $320,000,000 for charity care subsidy payments. N.J.S.A. 26:2H-18.59(e). UMDNJ was one of forty-six eligible hospitals that sought a share of the FY2000 charity subsidy.

The statutory distribution formula requires a determination of how much charity care an eligible hospital has provided, valued not at its usual and customary charges but rather on the amount Medicaid would pay for such services ("documented charity care"). N.J.S.A. 26:2H-18.59e(a)(1). To this end, hospitals seeking charity care subsidies are "required to submit all claims for charity care cost reimbursement . . . to the department in a manner and time frame specified by the Commissioner of Health and Senior Services. . . ." N.J.S.A. 26:2H-18.59(b)(3). The information to be submitted concerns services rendered to charity care patients in the most recent calendar year, in this case 1998. N.J.S.A. 26:2H- 18.59e(a)(1).

Pursuant to the Act, the DHSS contracted with the UNISYS corporation (UNISYS) to process charity care claims and price them at the appropriate Medicaid rate. UNISYS developed the Essential Health Services Claims Pricing System Manual (ECPS Manual), which sets forth the manner and time frame for hospitals submitting subsidy claims.

The ECPS Manual encourages hospitals to submit claims for charity care on a monthly basis according to a schedule published by the DHSS. If a claim is submitted in a timely manner, UNISYS then issues a "remittance advice" to the hospital "by the 5th working day after the monthly adjudication cycle date." The ECPS Manual also provides that "[i]f a submitter fails to receive the requested remittance tape(s) or if there are problems with the remittance tape(s), it is the responsibility of the submitter to notify UNISYS in writing within fourteen days from the remittance date." Furthermore, "[t]he individual provider is ultimately responsible for the accuracy and validity of every ECPS claim submitted for payment." See Northwest Covenant Medical Center v. Fishman, 167 N.J. 123, 129 (2001).

The actual dollar amount of charity care provided by the hospital must be "verified in the department's most recent charity care audit. . . ." N.J.S.A. 26:2H-18.59e(a)(1) (". . . documented charity care shall be equal to the audited Medicaid-priced amounts for the most recent calendar year"). In other words, the DHSS must perform charity care audits of all charity care claims submitted by eligible hospitals for the reporting year.

Hospitals record the value of the charity care they provide at their ususal and customary charges, but, as noted, the charity care subsidy is based on the amount Medicaid would pay for such services. N.J.S.A. 26:2H-18.59e(a)(1). Therefore, the initial value must be converted or "priced" to the Medicaid value to determine ultimately the "documented charity care" for each eligible hospital.

Prior to July 1998, the auditing and pricing processes were separate functions. Hospitals created quarterly lists of charity care claims audited by Horizon Blue Cross Blue Shield (HBCBS). They would also submit a sampling of their claims to UNISYS, which created a pricing ratio (reflecting the ratio of the Medicaid rate to the actual billing rate for the claims) and used it to set the Medicaid value of the charity care claims and, hence, the hospital's "documented charity care" by multiplying the pricing ratio by the audited list of claims.

In July 1998, after ample notice to all hospitals, the DHSS combined the auditing and valuation steps into a unified, streamlined process. Hospitals were no longer required to create audit lists of charity care claims and UNISYS no longer calculated a pricing ratio to be applied against the audited claims. Instead, hospitals were to submit information directly to UNISYS, which would process every claim, issue quarterly ...


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