Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Friday, May 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

New Jersey Medicaid Rules Challenged

TRENTON, N.J. (CN) - Community health centers say New Jersey is denying them millions of dollars of desperately needed Medicaid funding for poor patients.

The New Jersey Primary Care Association sued the New Jersey Department of Human Services in Federal Court.

The association, representing 20 community health centers, claims New Jersey is preventing it and other qualified health centers from obtaining proper reimbursement for Medicaid services.

It claims the state's policies are arbitrary and capricious, violate the Medicaid law, and are unconstitutional and "unlawful taking of health center property without due process."

The group challenges New Jersey policies that require federally qualified heath centers to submit their claims to a managed care organization before they can receive any supplemental payments from the state.

"In the event that the [managed care organization] rejects a corresponding claim for any reason," the complaint states, "the Medicaid covered encounter will remain completely unpaid."

The association says the policies threaten not only the direct medical care they provide, but related transportation, dental, substance abuse and counseling services. Unless New Jersey is ordered to comply with Medicaid law, the association says, its members "will be forced to reduce staff, cut back services they currently provide to their Medicaid and other patients and reduce the number of patients they serve."

The association's attorney "detailed the detrimental effect of the state's new payment system in an October 18, 2011 letter to [defendant director of the state's Division of Medical Assistance and Health Services] Valerie Haar and requested reconsideration of the unlawful requirements," the complaint states.

The letter "noted that MCOs [Managed Care Organizations] currently reject between 20 and 30 percent of claims submitted by FQHCs [federally qualified heath centers] for reasons that have nothing to do with whether the claims reflect Medicaid covered encounters for which payment is entitled. ... In addition, NJPCA's counsel noted these changes were made effective for the third quarter of 2011, meaning that they were implemented retroactively to services provided (or 'visits') starting on July 1, 2011."

New Jersey requires health centers to submit "nine fields" of information for every Medicaid patient they treat.

The fields are: full name, Medicaid ID, HMO, HMO member ID, provider billing number, date of service, procedure codes, payment amount and payment date made by the managed care organization. The association says complying with these "time-consuming" requirements "entailed hiring temporary workers or paying overtime to staff for some health centers to complete all nine fields."

Lack of funding forced the association's members to use "grant funding to subsidize the New Jersey Medicaid program," the complaint states, diverting money that should be "reserved for services to the thousands of persons in low-income communities ... who are without insurance and lack the means to pay other health care providers to render needed care."

Due to the new policies and unpaid services, "health centers are now left with a substantial revenue shortfall for the 2011 third quarter. Even if the shortfall is ultimately paid, the health centers would have to suffer through an indefinite amount of time without a substantial amount - hundreds of thousands of dollars for some centers - of funds they would otherwise possess and to which they are entitled," according to the complaint.

In a single financial quarter, two health centers recorded shortfalls of $419,000 and $396,000. Another center experienced a $150,000 shortfall. "At least two had a greater than $100,000 shortfall. At least four health centers experienced a shortfall of over $40,000. These shortfalls encompassed only one calendar quarter of Medicaid covered encounters," the complaint states.

It adds: "The compounding revenue shortfalls will have a detrimental effect on the health centers' ability to provide services to New Jersey's most vulnerable citizens. Health centers will be forced to curtail services, downsize staff, and potential close down if the state continues its unlawful refusal to provide PPS [Medicaid Prospective Payment System] level payment for Medicaid covered encounters."

The association says the state is not complying with its own regulations on payments and funding and is violating federal Medicaid law. It wants the policies enjoined, and costs.

It is represented by Julie Williamson with Williamson & Petruzziello, of Moorestown.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.