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In the Matter of Hackensack

September 9, 2011

IN THE MATTER OF HACKENSACK UNIVERSITY MEDICAL CENTER'S APPEAL OF THE 2010 GRADUATE MEDICAL EDUCATION PAYMENT ALLOCATION.


On appeal from the Division of Medical Assistance and Health Services, Department of Human Services.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 20, 2011

Before Judges Fuentes, Gilroy and Nugent.

Hackensack University Medical Center (Medical Center or HUMC) appeals the final determination of the New Jersey Division of Medical Assistance and Health Services (DMAHS or the Division) finding the Medical Center ineligible for the Graduate Medical Education (GME) reimbursement subsidy for state fiscal year 2010. The Medical Center argues that the decision must be overturned because it was arbitrary, capricious, unreasonable, and not supported by the record. The Division contends it applied the correct methodology for determining eligibility for the reimbursement according to the regulations governing it, as well as the Division's own precedent. Based on the standard of review applicable to decisions made by state administrative agencies, we affirm.

I

As required under N.J.A.C. 10:52-8.5(a), DMAHS performs an annual calculation to determine the distribution of funds for (GME) reimbursement payments. GME reimbursements are funding allocations made to eligible teaching hospitals based on the number of resident and intern physicians the hospitals employ, as well as the amount of services provided by the hospitals to certain Medicaid patients. N.J.A.C. 10:52-8.6(a) establishes the following formula for determining a hospital's eligibility for GME reimbursement in a given year:

Effective for payments on or after July 6, 1998, the amount appropriated for GME shall be distributed to all eligible acute care teaching hospitals. An eligible acute care teaching hospital is defined as an acute care teaching hospital that has a combined Medicaid and NJ FamilyCare-Plan A*fn1 fee-for-service*fn2 utilization at or above the median of all New Jersey acute care hospitals. The Medicaid and NJ FamilyCare-Plan A fee-for-service utilization is calculated using the hospital-specific Medicaid and NJ FamilyCare-Plan A fee-for-service days divided by the hospital-specific total days.*fn3

Under this formula, a percentage (termed the "utilization rate") is calculated for each acute care teaching hospital in the state by dividing the number of Medicaid and NJ FamilyCare-Plan A days the hospital provided during the relevant calculation period by the total number of days of patient care provided by the hospital. The hospitals are then ranked based on their designated utilization rates, and the median percentage is determined. GME funding is made available to the hospitals with a utilization rate at or above that median.

N.J.A.C. 10:52-8.5 provides further information about the GME reimbursement calculation:

(a) Effective for payments on or after July 6, 1998, the GME payment shall be distributed in 12 monthly lump sum payments during the State Fiscal Year [SFY]. The amount distributed shall be considered the final GME payment and shall not be reconciled.. . . .

(b) The source of the data used to allocate the GME payment is the most recent Medicare submitted cost report with corresponding 24-month fee-for-service Medicaid and NJ FamilyCare-Plan A inpatient paid claims data as of February 1 prior to the year of distribution. GME resident full-time-equivalents [for purposes of the calculation made under N.J.A.C. 10:52-8.6(b)] and total hospital days shall come from the Medicare submitted cost report. The hospital-specific Medicaid and NJ FamilyCare-Plan A fee-for-service days shall come from the 24-month data fee-for-service Medicaid and NJ FamilyCare-Plan A inpatient paid claims data.

For SFY 2010, the year at issue in this appeal, the Legislature appropriated $60,000,000 for GME reimbursement. On July 15, 2009, DMAHS released the SFY 2010 GME reimbursement allocation report ("the report"), along with supporting figures. The report provided for zero dollars in GME reimbursement to HUMC. The report indicated that, in the previous year, HUMC received $4,111,820 in GME reimbursement out of $68,000,000 in total reimbursement allocated to eligible hospitals.

The report indicated that appellant's SFY 2010 utilization rate, for purposes of eligibility under N.J.A.C. 10:52-8.6(a), was calculated at 5.44%, which placed appellant one slot below the median percentage of 5.45%, thus disqualifying it from reimbursement. The report stated appellant's utilization rate was calculated based on a finding of 12,641 Medicaid and NJ FamilyCare-Part A fee-for-service days and 232,448 total hospital days*fn4 ((12,641 / 232,448) X 100 = 5.44). Riverview Hospital, the facility ranking immediately ahead of HUMC and thus ...


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