New Jersey Administrative Code
Title 10 - HUMAN SERVICES
Chapter 52 - HOSPITAL SERVICES MANUAL
Subchapter 13 - ELIGIBILITY FOR AND BASIS OF PAYMENT FOR DISPROPORTIONATE SHARE HOSPITALS
Section 10:52-13.7 - Calculation and distribution of disproportionate share hospital (DSH) payments as a result of a hospital closure; purpose, and procedure

Universal Citation: NJ Admin Code 10:52-13.7

Current through Register Vol. 56, No. 18, September 16, 2024

(a) The purpose of this rule is to provide a procedure to redistribute disproportionate share hospital (DSH) payments to provide for the patients who would have been served by a closed general hospital, had the hospital remained open. Hospital closure is defined as cessation of operations as a general hospital facility. When a hospital closes, DSH payments to the closed hospital will immediately cease. The DSH payments that would have gone to that hospital, had that hospital not closed, shall be reallocated and distributed to eligible hospitals, in accordance with Federal and State laws, rules and regulations. The eligible hospitals that are serving or are expected to serve the patients who would have gone to the closed hospital will receive the closed hospital's remaining allocation for the State fiscal year in which the hospital closed. This rule shall be applied to specify the eligible hospitals and the calculation and distribution of the closed hospital's DSH payments. Subsections (b), (c) and (d) below address the charity care subsidy allocated pursuant to N.J.S.A. 26:2H-18.5 9(e), and any supplemental charity care subsidy allocated pursuant to any appropriations act that may provide for supplemental charity care subsidies; subsection (e) below addresses the Hospital Relief Subsidy Fund.

(b) To be eligible for a portion of the closed hospital's charity care allocation and/or supplemental charity care allocation, a hospital shall satisfy all three of the following criteria:

1. The hospital shall have received a charity care subsidy allocation, under the methodology set forth in N.J.S.A. 26:2H-18.5 9e, and/or a supplemental charity care subsidy allocation, under the methodology set forth in any appropriations act that may provide for supplemental charity care subsidies, during the State Fiscal Year in which the closed hospital ceased operations as a general hospital;

2. The hospital shall draw its patients from the same market area, identified by United States Postal Service zip codes, which the closed hospital served. The market area served by the closed hospital shall be determined, based on the most recent available complete calendar year UB data maintained by the Department of Health, as follows:

i. Rank zip codes from highest to lowest, based on the percentage of total admissions drawn from each zip code by the closed hospital; and

ii. Include the ranked zip codes in the closed hospital's market area (beginning with the highest-ranked zip code) until the percentage of admissions, when added together, constitutes 75 percent of the closed hospital's total admissions; and

3. The hospital shall demonstrate that it has a market share of 25 percent or more of admissions from the market area that the closed hospital served, as defined in (b)2 above. This determination shall likewise be made based on the most recent available complete calendar year UB data maintained by DOH, but the closed hospital's UB data will not be included in making this determination.

(c) The available charity care and/or supplemental charity care funds to be reallocated, with respect to the State fiscal year in which the hospital closed, shall be distributed among eligible hospitals based upon each eligible hospital's market share of admissions as a percentage of the market share of admissions of all eligible hospitals, as determined from the results of the calculations in (b)3 above.

(d) In each year after the hospital closed in which the source hospital data precedes the year of closure and includes at least six months of hospital charity care claims data, a charity care and/or supplemental charity care allocation that would have gone to the closed hospital shall be initially calculated. Then the reallocation of the closed hospital's calculated charity care and/or supplemental charity care allocation shall be calculated and distributed to eligible hospitals, using the methodology set forth in (b) above to identify eligible hospitals. The available charity care and/or supplemental charity care funds to be reallocated under this subsection shall be distributed among eligible hospitals based upon each eligible hospital's market share of admissions as a percentage of the market share of admissions of all eligible hospitals, as determined from the results of the calculations pursuant to (b) above.

(e) In each year after the hospital closed in which the source hospital data precedes the year of closure and includes at least six months of hospital data, a Hospital Relief Subsidy Fund (HRSF) allocation that would have gone to the closed hospital shall be initially calculated. Then the reallocation of the closed hospital's calculated HRSF allocation shall be calculated and distributed to eligible DSHs using the same data as was used for the original allocation, with the exception of market share admission data, which shall be taken from the most recent available UB data in the following manner:

1. To be eligible to receive a portion of the closed hospital's HRSF allocation a hospital shall satisfy all three of the following independent criteria:

i. The hospital shall have received a HRSF allocation, under the methodology set forth in 10:52-13.5, during the State fiscal year in which the closed hospital ceased operations as a general hospital;

ii. The hospital shall draw its patients from the same market area, identified by United States Postal Service zip codes, which the closed hospital served. The market area served by the closed hospital shall be determined as defined in (b)2 above; and

iii. The hospital shall have a market share of 25 percent or more of problem-billed admissions. The market share problem-billed admissions shall be based on the number of admissions from the same market area, identified by zip code that the closed hospital served as defined in (e)1ii above, for the problem-billed categories specified in 10:52-13.5(a)1 i(2) and (a)1ii(1).

2. The available HRSF payments to be reallocated shall be distributed among eligible hospitals based upon each eligible hospital's market share of problem-billed admissions as a percentage of the market share of problem-billed admissions of all eligible hospitals, as determined from the results of the calculations in (e)1iii above. The reallocated funds shall be distributed on a monthly basis.

(f) Notwithstanding any other provision of this rule, if the Commissioner of Health and the Commissioner of Human Services agree that, in the case of closure of a hospital eligible to receive DSH funds, maintaining beneficiary access to health care services requires an alternative distribution of a closed hospital's DSH funds, they will do so in accordance with this subsection. Factors the Commissioners will consider in determining whether an alternative distribution will be made shall include, but shall not be limited to, the following:

1. Maintenance of continued timely access to hospital-based services for persons eligible to participate in the New Jersey Hospital Care Payment Assistance Program and/or persons receiving services in the Hospital Relief Subsidy Fund categories; or

2. Continued operation in the same or adjoining municipality as the closed hospital of an acute care hospital, eligible to receive Disproportionate Share payments, belonging to the same system as the closed hospital and serving substantially the same eligible population.

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