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In re Meridian Health System -Jersey Shore Medical Center's State Fiscal Year 2009 Charity Care Allocation

February 25, 2010

IN THE MATTER OF THE MERIDIAN HEALTH SYSTEM -OCEAN MEDICAL CENTER'S STATE FISCAL YEAR 2009 CHARITY CARE ALLOCATION.
IN THE MATTER OF THE MERIDIAN HEALTH SYSTEM -JERSEY SHORE MEDICAL CENTER'S STATE FISCAL YEAR 2009 CHARITY CARE ALLOCATION.
IN THE MATTER OF THE MERIDIAN HEALTH SYSTEM -RIVERVIEW MEDICAL CENTER'S STATE FISCAL YEAR 2009 CHARITY CARE ALLOCATION.



On appeal from the Department of Health and Senior Services.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 26, 2010

Before Judges Skillman, Gilroy and Simonelli.

This is a consolidated appeal by three hospitals, Ocean Medical Center, Jersey Shore Medical Center and Riverview Medical Center, all members of the Meridian Health System, from final decisions of the Commissioner of Health and Senior Services denying their appeals of the Department of Health and Senior Services' (DHSS) determinations of their allocations of the legislative appropriation for charity care subsidies for the 2009 fiscal year (July 1, 2008 to June 30, 2009).

The Health Care Cost Reduction Act (HCCRA), N.J.S.A. 26:2H-18.50 to -18.69, authorizes charity care subsidies to hospitals that serve a significant number of indigent patients and are designated by the Commissioner as disproportionate share hospitals (DSHs). N.J.S.A. 26:2H-18.51(c).*fn1 In University of Medicine & Dentistry of New Jersey v. Grant, 343 N.J. Super. 162, 165-66 (App. Div. 2001), we outlined how this legislative subsidy program operates:

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. . . .

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).

See also Nw. Covenant Med. Ctr. v. Fishman, 167 N.J. 123, 128-29 (2001).

The determination of a hospital's charity care subsidy begins at the hospital level with an identification of patients who are eligible for charity care. N.J.A.C. 10:52-11.5. Because the charity care subsidy program is a payer of last resort, a hospital is obligated to verify that a patient is ineligible for coverage from third parties, such as Medicare and Medicaid, before qualifying him or her for charity care.

N.J.S.A. 26:2H-18.58b; N.J.A.C. 10:52-11.5. Thereafter, hospitals submit their charity care claims electronically to the DHSS's fiscal agent, UNISYS, in accordance with N.J.A.C. 10:52-12.2.

A hospital's aggregate charity care claim is subject to adjustments that may arise in a variety of ways. N.J.A.C. 10:52-11.15. For example, negative adjustments may be made as a result of annual and periodic audits by DHSS to account for "third-party payer payments [which] were not reflected," or erroneous determinations regarding patient eligibility.

N.J.A.C. 10:52-11.15(d); N.J.A.C. 10:52-11.1, -11.2. A hospital may also voluntarily report "void" claims to UNISYS, to account for claims which were previously submitted but later determined ...


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