Healthy New Jersey

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Health Care Financing

Hospital Subsidies Unit

Overview

The Hospital Subsidies Unit is responsible for overseeing the calculation and processing of Charity Care, Graduate Medical Education (GME), and GME-Supplemental (GME-S) subsidy payments to eligible NJ acute care hospitals, as required under applicable statutes and regulations. This Unit is also responsible for Charity Care audits as well as responding to all inquiries regarding Charity Care, GME and GME-S, among other related activities. A description of the Charity Care, GME, and GME-S subsidies is provided below.

Charity Care Subsidy:

All acute care hospitals in NJ are required by State law to provide all necessary care to patients regardless of ability to pay. Charity Care is free or reduced charge care that is provided to patients who receive their inpatient and outpatient services at acute care hospitals throughout the state. For more information about the Charity Care program, please see the Hospital Care Payment Assistance Program (Charity Care) Unit page.

Relative to the annual Charity Care subsidy, the source of funding is through the Health Care Subsidy Fund administered under N.J.S.A.26:2H-18.58. Relative to the annual Charity Care subsidy, the source of funding is through the Health Care Subsidy Fund administered under N.J.S.A.26:2H-18.58. The Charity Care subsidy amount paid to individually licensed hospitals is determined by statute and not paid on a Documented Charity Care (DCC) dollar-for-dollar basis; instead, it is based on State budget appropriation and a proportion (determined by statute) of Charity Care charges to total charges for all hospital services.

Current State Fiscal Year (SFY) Individual Hospital Allocations:

GME Subsidy

NJ implemented the GME subsidy to enhance the training of residents and fellows to attract and retain more physicians in the state. All hospitals with GME programs with interns and residents are eligible for funding. Please note that the federal Centers for Medicare and Medicaid Services (CMS) requires that the GME subsidy calculations be based on estimated Medicaid Managed Care payment rates, and the GME methodology includes two components:

1. Direct Medical Education (DME) payments help compensate teaching hospitals for costs directly related to resident physicians' education, such as resident salaries, supervising physicians' costs and administrative costs associated with running GME programs.

2. Indirect Medical Education (IME) payments cover the indirect costs associated with training residents. Teaching hospitals have higher costs than their non-teaching counterparts. Some indirect costs stem from the fact that, on average, teaching hospitals treat more severely ill patients who require specialized care. In addition, complex medical research takes place at these training centers.

Current SFY Individual Hospital Allocations:

GME-S Subsidy:

NJ implemented the GME-S subsidy in Fiscal Year 2019 after the enactment of P.L.2018, c.116, which was effective August 10, 2018. This subsidy applies only to the 14 hospitals that have the highest Relative Medicaid Percentage (RMP) of the participating hospitals that receive GME. The calculation of the GME-S subsidy follows the same methodology as the GME subsidy.

Current SFY Individual Hospital Allocations:

Annual DCC Report

On an annual basis, the Department prepares this report, which summarizes DCC data based on the Medicaid payment rate for all eligible general acute care hospitals in New Jersey for each facility’s calendar year (CY). At a high-level, the report provides both individual and aggregated data on general acute care hospitals, health systems, and regions (counties). The report also analyzes and provides commentary on historical year-over-year trends and observed increases and/or decreases for various data points.

Current CY Annual Report

Annual GME Survey:

Consistent with the requirements outlined in the State Budget Act for a particular SFY, each hospital receiving a GME allocation shall:

  • "…[P]rovide a report to the Commissioner of Health indicating the total number of physicians who completed their training during the calendar year, and the number of those physicians who plan to practice medicine within the State of New Jersey."; and
  • “…[P]rovide to residents and fellows participating in the GME program instruction concerning prevention of opioid addiction as well as diagnosis, assessment, and treatment strategies: provided, however, that such instruction may also be provided to other students and providers including, but not limited to, physicians, nurses, pharmacists, and social workers, working within the hospital or in the outpatient setting.”

On or about April 1st of each year, the Department releases its annual GME Survey to collect the required information, and responses are typically due by May 31st of each year, subject to change based upon the State Budget Act.

Federal Approvals & Public Notices

On an annual basis, the Department, in collaboration with the Department of Human Services (DHS) submit a State Plan Amendment (SPA) package to the CMS in conjunction with Charity Care, GME, and GME-S, in order to be eligible to receive federal matching. Information on SPA packages, including public notices, can be viewed on DHS’ website.


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