30:9-12.33. Determination of fulfillment of conditions; contracts with public general hospital and local government; schedule; provisions

a. The commissioner shall determine whether:

(1) The calculation by the hospital of total patient-days and nonthird party patient-days is accurate;

(2) The medical and hospital care and services provided nonthird party patients are reasonable and necessary;

(3) The hospital is making its best efforts to collect accounts receivable from nonthird party patients who are not medically indigent as defined by the commissioner;

(4) The charges imposed upon nonthird party patients by the hospital do not exceed the reasonable cost of health care services provided; and

(5) The charges imposed upon nonthird party patients are proportional to such patients' ability to pay;

(6) The current liabilities of the hospital exceed its cash balance in such manner or proportion as to render the hospital financially distressed.

b. Upon determination that all of the conditions in subsection a. (1-5) have been satisfied, the commissioner is authorized to enter into contracts with public general hospitals, together with the municipality or county by which the hospital is maintained or operated, according to the following schedule:

(1) Where the number of nonthird party patient days is less than 10% of the total number of patient days actually provided by the hospital, no payment shall be made; and

(2) Where the number of nonthird party patient days exceeds 10% of the total number of patient days actually provided by the hospital, payment shall be made under one of the following formulas:

(a) Where the Medicaid reimbursement for the hospital is based on a per diem rate system, payment shall be made at the rate of 100% of the final current Medicaid per diem rate for all nonthird party patient days in excess of 3% of such total.

(b) Where the Medicaid reimbursement for the hospital is based on a system other than a per diem rate, payment shall be made at the rate of 100% of the total costs of services rendered, calculated at the Medicaid rate, to nonthird party patients, multiplied by the ratio of the percentage of nonthird party patient days, of the total number of actual patient days, minus 3% to the percentage of nonthird party patient days, of the total number of patient days.

c. Upon the commissioner's determination that a hospital, which has received assistance pursuant to the "Public General Hospital Assistance Act," P.L.1977, c. 289 (C. 30:9-12:29 et seq.), meets the condition described in subsection a. (6) of this section, the commissioner is authorized to enter into contracts with such public general hospital, together with the municipality or county by which the hospital is maintained or operated, for assistance in an amount consistent with a formula developed by the commissioner based on the hospital's financial needs, available assets and potential operating deficiencies, but not less than the amounts appropriated pursuant to this act for the benefit of such hospital during fiscal year 1979. Such assistance shall be conditioned on receipt from the county of not less than $1.1 million and from the municipality of not less than $2 million for the management and operation of the hospital for each fiscal year after their fiscal year 1980.

d. Such contracts shall provide that:

(i) The hospital receiving assistance agrees to an annual audit of all expenditures by the hospital, according to procedures established by the commissioner in consultation with the State Treasurer;

(ii) The hospital receiving assistance agrees to cooperate fully in any review by the commissioner or his designee of operating procedures or management.

e. Such contracts may provide that:

(i) Certain services provided by the hospital be maintained, increased, modified, or continued; provided, however, that no additions or modifications may be imposed if the effect of such additions or modifications would be to increase the total cost of uncompensated services provided by the hospital;

(ii) Specific changes in management or operating procedures, which the commissioner has determined will improve efficiency, be implemented; and

(iii) The municipality or county by which the hospital is maintained issue or cause to be issued bonds in order to provide capital improvements to increase operating efficiency. No such provisions, however, shall be construed to require such an issue unless such an issue is authorized by law.

f. The commissioner shall promptly negotiate all necessary contracts in order that the purposes of this act may be fulfilled to provide assistance to qualifying public general hospitals.

L.1977, c. 289, s. 5, eff. Dec. 1, 1977. Amended by L.1981, c. 26, s. 2, eff. Feb. 9, 1981.