department of health - new jersey legislature...m. teresa ruiz (d), 29th district (part of essex)...

Prepared by the

April 2019

Of f i c e o f Of f i c e o f L E G I S L AT I V E S E R V I C E SL E G I S L AT I V E S E R V I C E SNew Jersey LegislatureNew Jersey Legislature

DEPARTMENT OF HEALTH

A N A LY S I S O F T H E N E W J E R S E Y B U D G E T

F I S C A L Y E A R 2019-2020

S E N AT E B U D G E T A N D A P P R O P R I AT I O N S C O M M I T T E E

Paul A. Sarlo (D), 36th District (Parts of Bergen and Passaic), ChairSandra B. Cunningham (D), 31st District (Part of Hudson), Vice-ChairDawn Marie Addiego (D), 8th District (Parts of Atlantic, Burlington and Camden)Bob Andrzejczak (D), 1st District (All of Cape May, Parts of Atlantic and Cumberland)Nilsa Cruz-Perez (D), 5th District (Parts of Camden and Gloucester)Patrick J. Diegnan Jr. (D), 18th District (Part of Middlesex)Linda R. Greenstein (D), 14th District (Parts of Mercer and Middlesex)Declan J. O’Scanlon, Jr. (R), 13th District (Part of Monmouth)Steven V. Oroho (R), 24th District (All of Sussex, and parts of Morris and Warren)M. Teresa Ruiz (D), 29th District (Part of Essex)Troy Singleton (D), 7th District (Part of Burlington)Samuel D. Thompson (R), 12th District (Parts of Burlington, Middlesex, Monmouth and Ocean)

G E N E R A L A S S E M B LY B U D G E T C O M M I T T E E

Eliana Pintor Marin (D), 29th District (Part of Essex), ChairJohn J. Burzichelli (D), 3rd District (All of Salem, parts of Cumberland and Gloucester), Vice-ChairDaniel R. Benson (D), 14th District (Parts of Mercer and Middlesex)Robert D. Clifton (R), 12th District (Parts of Burlington, Middlesex, Monmouth and Ocean)John DiMaio (R), 23rd District (Parts of Hunterdon, Somerset and Warren)Gordon M. Johnson (D), 37th District (Part of Bergen)Patricia Egan Jones (D), 5th District (Parts of Camden and Gloucester)John F. McKeon (D), 27th District (Parts of Essex and Morris)Raj Mukherji (D), 33rd District (Part of Hudson)Nancy F. Munoz (R), 21st District (Parts of Morris, Somerset and Union)Carol A. Murphy (D), 7th District (Part of Burlington)Edward H. Thomson (R), 30th District (Parts of Monmouth and Ocean)Benjie E. Wimberly (D), 35th District (Parts of Bergen and Passaic)

O F F I C E O F L E G I S L AT I V E S E R V I C E S

Frank W. Haines III, Legislative Budget and Finance Offi cerThomas Koenig, Assistant Legislative Budget and Finance Offi cer

Marvin W. Jiggetts, Director, Central Staff Brian J. McCord, Section Chief, Human Services Section

NEW JERSEY STATE LEGISLATURENEW JERSEY STATE LEGISLATURE

This report was prepared by the Human Services Section of the Offi ce of Legislative Services under the direction of the Legislative Budget and Finance Offi cer.

The primary author was Michael D. Fahncke.

Questions or comments may be directed to the OLS Human Services Section (Tel: 609-847-3860) or the Legislative Budget and Finance Offi ce (Tel: 609-847-3105).

DEPARTMENT OF HEALTH

Budget Pages....... C-5, C-11, C-12, C-18, C-19, C-23, D-143 to D-168, G-3, H-11

Fiscal Summary ($000)

Expended FY 2018

Adjusted Appropriation

FY 2019 Recommended

FY 2020

Percent Change

2019-20

State Budgeted $967,314 $956,810 $973,023 1.7%

Federal Funds 474,097 635,274 635,274 0.0%

Other 493,798 504,984 503,969 (0.2%)

Grand Total $1,935,209 $2,097,068 $2,112,266 0.7%

Personnel Summary - Positions By Funding Source

Actual FY 2018

Revised FY 2019

Funded FY 2020

Percent Change

2019-20

State 4,687 4,784 4,786 0.0%

Federal 428 398 397 (0.3%)

Other 372 375 382 1.9%

Total Positions 5,487 5,557 5,565 0.1% FY 2018 (as of December) and revised FY 2019 (as of January) personnel data reflect actual payroll counts. FY 2020 data reflect the number of positions funded.

Link to Website: http://www.njleg.state.nj.us/legislativepub/finance.asp

Department of Health FY 2019-2020

Highlights

2

• The Governor’s FY 2020 Budget provides a total of $2.11 billion for the Department of

Health, an increase of $15.2 million (0.7 percent) from the total FY 2019 appropriation. This change incorporates a $16.2 million (1.7 percent) increase in State funding, no change in federal funding, and a $1.0 million (0.2 percent) decrease in funding from All Other Funds.

• FY 2020 hospital funding is recommended to remain virtually unchanged from FY 2019. For formulaic programs, the recommended FY 2020 distribution formulas are substantively identical to this year’s formulas, except that the source data are updated. Consequently, any change in a hospital’s FY 2020 allocation reflects the use of updated source data in the calculation rather than policy changes. The following table shows hospital funding details for FY 2018, FY 2019, and FY 2020.

Hospital Funding

Program FY 2018

Actual FY 2019

Adj. Approp. FY 2020

Recommended Charity Care* $252,000,000 $262,000,000 $262,000,000 Graduate Medical Education* $218,000,000 $218,000,000 $218,000,000 Supplemental Graduate Medical Education Subsidy*

$0 $24,285,714 $24,000,000

Hospital Delivery System Reform Incentive Payments

$166,600,000 $166,600,000 $166,600,000

Hospital Mental Health Offset Payments (Budgeted in Department of Human Services)

$24,601,239 $24,654,000 $24,654,000

TOTAL $661,201,239 $695,539,714 $695,254,000 * The allocation of the recommended FY 2020 appropriation is available at: https://nj.gov/health/hcf/documents/proposed_hf_summary2020.pdf.

• The Governor recommends newly conditioning Charity Care subsidy payments in FY 2020 on hospitals participating in the New Jersey Health Information Network, a unified electronic health records system. In addition, new recommended language would authorize the department to withhold a hospital’s final Charity Care installment if the hospital does not report to the department key indicators of connections to care provided to patients who are eligible for Charity Care.

• Page H-11 of the Governor’s FY 2020 Budget shows $106.4 million more in projected dedicated Health Care Subsidy Fund (HCSF) revenues in FY 2020 than in FY 2019. A proposal to raise the HMO Premiums Assessment from two percent to three percent is to contribute an estimated $100.0 million to the projected HCSF revenue increase. The added HCSF revenues allow for the supplanting of expenditures that otherwise would have to be made out of general State resources or federal funds. In the Department of Health, the added HCSF resources make possible the recommended non-recurrence in


Highlights (Cont’d)

3

FY 2020 of a $6.8 million supplemental appropriation to be made to the HCSF out of the General Fund in FY 2019.

• The Governor recommends appropriating $21.0 million for the regulation of adult-use cannabis in FY 2020. In addition, the Executive anticipates $60.0 million in State revenue from the regulation of adult-use cannabis in FY 2020. The State still has to enact legislation authorizing and regulating adult-use cannabis.

• The Governor’s FY 2020 Budget proposes supporting the administrative expenditures of the medicinal marijuana program with an $857,000 State appropriation, which is unchanged from the FY 2019 Appropriations Act, and an estimated $1.5 million in dedicated program fee collections. The Administration also anticipates $20 million in sales and use tax revenues from the expanded medicinal marijuana program that would be available for general State purposes.

• Out of the $100.0 million appropriated in FY 2019 for “Expanded Addiction Initiatives” the department received $13.7 million to fund six opioid-related initiatives. The Governor recommends renewing the $100.0 million appropriation for “Expanded Addiction Initiatives” in FY 2020 but the allocation thereof is unspecified. The six funded FY 2019 DOH initiatives are: $5.4 million for the “Health Information Technology Interoperability Upgrade;” $2.6 million to implement the single license for facilities providing integrated primary care, mental health care, and substance use disorder treatment services; $2.5 million for the Syringe Access Program; $1.2 million for residential treatment for pregnant women and new mothers; $1.0 million for the integrated population health data project; and $1.0 million for the Alternatives to Opioid (ALTO) program for hospital emergency departments.

• The Governor recommends a new $2.5 million appropriation for a public health infectious disease control grant program. The grants would be distributed to local health departments to address core public health initiatives, including developing and administering infectious disease and outbreak response through Statewide infection control initiatives.

• The Governor’s FY 2020 Budget does not continue $100,000 in funding which was added to the FY 2019 Appropriations Act pursuant to a Legislative budget resolution for Princeton Healthcare System - CHOP New Jersey Transition to Adulthood Comprehensive Care Program.


Fiscal and Personnel Summary

AGENCY FUNDING BY SOURCE OF FUNDS ($000)

4

Adj. Expended Approp. Recom. Percentage Change

FY 2018 FY 2019 FY 2020 2018-20 2019-20

General Fund

Direct State Services $398,436 $357,018 $377,911 (5.2%) 5.9%

Grants-In-Aid 567,749 599,263 594,583 4.7% (0.8%)

State Aid 0 0 0 ---- ----

Capital Construction 642 0 0 (100.0%) ----

Debt Service 0 0 0 ---- ----

Sub-Total $966,827 $956,281 $972,494 0.6% 1.7%

Property Tax Relief Fund

Direct State Services $0 $0 $0 ---- ----

Grants-In-Aid 0 0 0 ---- ----

State Aid 0 0 0 ---- ----

Sub-Total $0 $0 $0 ---- ----

Casino Revenue Fund $487 $529 $529 8.6% 0.0%

Casino Control Fund $0 $0 $0 ---- ----

State Total $967,314 $956,810 $973,023 0.6% 1.7%

Federal Funds $474,097 $635,274 $635,274 34.0% 0.0%

Other Funds $493,798 $504,984 $503,969 2.1% (0.2%)

Grand Total $1,935,209 $2,097,068 $2,112,266 9.1% 0.7%

PERSONNEL SUMMARY - POSITIONS BY FUNDING SOURCE

Actual Revised Funded Percentage Change FY 2018 FY 2019 FY 2020 2018-20 2019-20

State 4,687 4,784 4,786 2.1% 0.0%

Federal 428 398 397 (7.2%) (0.3%)

All Other 372 375 382 2.7% 1.9%

Total Positions 5,487 5,557 5,565 1.4% 0.1% FY 2018 (as of December) and revised FY 2019 (as of January) personnel data reflect actual payroll counts. FY 2020 data reflect the number of positions funded.

AFFIRMATIVE ACTION DATA

Total Minority Percentage 72.1% 73.8% N/A ---- ----


Significant Changes/New Programs ($000)

Budget Item Adj. Approp.

FY 2019Recomm.FY 2020

DollarChange

PercentChange

BudgetPage

5

HEALTH SERVICES

General Fund, Grants-in-Aid: Princeton Healthcare System – CHOP New Jersey Transition to Adulthood Comprehensive Care Program $100 $0 ($100) (100%) D-152

The Governor’s FY 2020 Budget eliminates $100,000 in funding for the Princeton Healthcare System – CHOP New Jersey Transition to Adulthood Comprehensive Care Program. This initiative received funding in both the FY 2018 and FY 2019 Appropriations Acts pursuant to Legislative budget resolutions. As of April 4, 2019, the entire FY 2019 appropriation had been either expended or encumbered. The Children’s Hospital of Philadelphia (CHOP) Transition to Adulthood Program is comprised of a number of programs designed to assist minors who have special health care needs with the process of becoming adults through the use of educational programs, career planning and employment assistance, skills training, peer support, and related services. CHOP operates a network specialty care center on the campus of the University Medical Center of Princeton. General Fund, Grants-in-Aid: Public Health Infectious Disease Control $0 $2,500 $2,500 ---- D-152

The DOH would distribute the proposed new funding as grants to local health departments to address core public health services, including developing and administering infectious disease and outbreak response through Statewide infection control initiatives. The Governor’s FY 2020 Budget also newly includes recommended language that would authorize the use of an unspecified amount of the $2.5 million to pay for program administrative costs.


Significant Changes/New Programs ($000) (Cont’d)



DollarChange

PercentChange

BudgetPage

6

HEALTH PLANNING AND EVALUATION

General Fund, Grants-in-Aid: Health Care Subsidy Fund Payments

$35,155 $6,794 S $35,155 ($6,794) (16.2%) D-158

The Governor’s FY 2020 Budget recommends discontinuing $6.8 million in funding from an FY 2019 supplemental appropriation for the Health Care Subsidy Fund (HCSF). As of April 4, 2019, the supplemental appropriation is still to occur. The FY 2019 financial plan for the HCSF suggests that the $6.8 million supplemental appropriation will be needed for the HCSF to end FY 2019 with a positive balance (page H-11 of the Governor’s FY 2020 Budget). The HCSF is primarily funded by dedicated revenue, but draws on the General Fund appropriation as a final source of funding when other revenues are insufficient to pay the fund’s expenses. Administered under P.L.1997, c.263, the HCSF receives its revenues from several State taxes, including the cigarette tax, the HMO Premiums Assessment, and the 0.53 percent Hospital Assessment. It is anticipated to collect $918.4 million in FY 2020 (page H-11 of the Governor’s FY 2020 Budget). Fund expenditures support Statewide health care initiatives. In FY 2020, the HCSF is expected to spend $955.9 million, as follows: NJ FamilyCare – $553.6 million; Charity Care – $262.0 million; Children’s Health Insurance Program – $75.3 million; FQHCs – $32.0 million; Delivery System Reform Incentive Payments – $20.7 million; and Hospital Mental Health Offset Payments – $12.3 million. The General Fund is anticipated to provide a total of $37.5 million, including this $35.2 million appropriation, in FY 2020 to ensure that HCSF expenditures match available resources.

MENTAL HEALTH AND ADDICTION SERVICES Federal Funds, Patient Care and Health Services $38,307 $40,762 $2,455 6.4% D-164

Federal Funds, Administration and Support Services $14,693 $12,238 ($2,455) (16.7%) D-164

The Governor’s FY 2020 Budget proposes reallocating $2.5 million in federal Disproportionate Share Hospital (DSH) funding for three State psychiatric hospitals – Greystone Park Psychiatric Hospital, Trenton Psychiatric Hospital, and Ancora Psychiatric Hospital – from the Administration and Support Services program classification to the Patient Care and Health


Significant Changes/New Programs ($000) (Cont’d)



DollarChange

PercentChange

BudgetPage

7

Services program classification. There would be no change in the overall amount of DSH funding received by the three hospitals. The Office of Management and Budget attributes the reallocation of DSH funding to an increased need for critical care staff at the three psychiatric hospitals.

HEALTH ADMINISTRATION General Fund, Direct State Services: Special Purpose: Regulation of Adult-Use Cannabis $0 $21,000 $21,000 -- D-167

The Governor’s FY 2020 Budget proposes $21 million for the regulation of adult-use cannabis. The Governor also recommends associated language that would provide general transfer authority so that departments that would incur costs related to the regulation of adult-use cannabis would have these costs defrayed out of the $21 million appropriation. In addition, the Governor’s FY 2020 Budget anticipates $60 million in State revenue from the regulation of adult-use cannabis. The above funding anticipates the enactment of legislation that would authorize the sale of adult-use cannabis in New Jersey and that would establish a regulatory framework for the adult-use cannabis industry. The State has not yet enacted legislation authorizing and regulating adult-use cannabis. Accordingly, details pertaining to the actual use of the proposed appropriation are to be determined.


Significant Language Changes

EXPLANATION: FY 2019 language not recommended for FY 2020 denoted by strikethrough. Recommended FY 2020 language that did not appear in FY 2019 denoted by underlining.

8

Public Health Infectious Disease Control Grant Program

Addition 2019 Handbook: N/A 2020 Budget: p. D-155

Of the amount hereinabove appropriated for Public Health Infectious Disease Control, such amounts as determined by the Director of the Division of Budget and Accounting may be transferred to Direct State Services accounts in the Department of Health to cover administrative costs of the program, subject to the approval of the Director of the Division of Budget and Accounting.

Explanation

The Governor’s FY 2020 Budget includes a new $2.5 million appropriation for a Public Health Infectious Disease Control grant program. The grants would be distributed to local health offices to address core public health services, including developing and administering disease and outbreak response through Statewide infection control initiatives. The new recommended language would authorize the use of an unspecified amount of the $2.5 million to pay for program administrative costs.

Placing Conditions on Charity Care Disbursements

Addition 2019 Handbook: N/A 2020 Budget: D-159 to D-160

Notwithstanding the provisions of any law or regulation to the contrary, the amount hereinabove appropriated for the Charity Care Subsidy is subject to the condition that participating hospitals shall demonstrate participation in the New Jersey Department of Health’s New Jersey Health Information Network (NJHIN). For purposes of this paragraph, demonstrated participation in the NJHIN shall mean: (1) the hospital has directly, or indirectly through another Trusted Data Sharing Organization, executed the NJHIN Data Use and Reciprocal Support Agreement and the NJHIN Business Associate Agreement; (2) the hospital executed and participates in the NJHIN Core Use Case; and (3) the hospital executed and participates in the Statewide Admission, Discharge, Transfer Notification Use Case, as determined by the Commissioner of Health. Provided further, that notwithstanding the provisions of any law or regulation to the contrary, participating hospitals also shall report to the Commissioner of Health key indicators of connections to care provided to patients who are eligible for Charity Care, as defined by the Commissioner of Health; in the event that a hospital does not report such information as determined by the Commissioner of Health, the final 1/12 of the hospital’s Charity Care subsidy may be withheld, subject to the approval of the Director of the Division of Budget and Accounting.


Significant Language Changes (Cont’d)


9

Explanation The Governor’s FY 2020 Budget conditions a hospital’s full Charity Care subsidy payment on the hospital joining the New Jersey Health Information Network (NJHIN), which is a unified electronic health records system. The DOH has indicated that establishing a single electronic system to connect health care facilities and enable data exchange is a priority intended to improve health outcomes. The budget language is intended to provide an incentive for the facilities that have not yet jointed the NJHIN to participate in the network. According to the DOH, approximately 90 percent of acute care hospitals are now participating in the NJHIN. Additionally, the proposed language authorizes the DOH to withhold a hospital’s final 1/12 installment of the hospital’s Charity Care subsidy if the hospital does not report to the department key indicators of connections to care provided to patients who are eligible for Charity Care. The Commissioner of Health will define the key indicators. Acute care hospitals are required by State law to provide all necessary care to patients regardless of ability to pay, pursuant to P.L.1992, c.160 (N.J.S.A.26:2H-18.52 et al.). To offset the costs to hospitals of uncompensated care delivered to low-income uninsured patients, the State provides subsidies through the New Jersey Hospital Care Payment Assistance Program (Charity Care). Each hospital’s FY 2020 subsidy would be calculated through a recommended formula specified in the Governor’s FY 2020 Budget. The Governor’s FY 2020 Budget maintains the Charity Care appropriation at its FY 2019 level of $262.0 million. The recommended FY 2020 distribution formula is substantively identical to the FY 2019 formula, except that the source data are updated. Consequently, any change in a hospital’s FY 2020 allocation is the result of the use of updated source data in the calculation rather than policy changes.


Significant Language Changes (Cont’d)


10

Regulation of Adult-Use Cannabis

Addition 2019 Handbook: N/A 2020 Budget: p. D-168

Of the amount hereinabove appropriated for the Regulation of Adult-Use Cannabis, such amounts as are determined by the Director of the Division of Budget and Accounting in consultation with the departments that incur costs related to Adult-Use Cannabis, may be transferred to those State departments to cover the costs of the program.

Explanation

The Governor’s FY 2020 Budget includes $21 million for the regulation of adult-use cannabis. The Governor also recommends associated language that would provide general transfer authority so that departments that would incur costs related to the regulation of adult-use cannabis would have these costs defrayed out of the $21 million appropriation. In addition, the Governor’s FY 2020 Budget anticipates $60 million in State revenue from the regulation of adult-use cannabis. The recommended $21 million appropriation anticipates the enactment of legislation that would authorize the sale of adult-use cannabis in New Jersey and that would establish a regulatory framework for the adult-use cannabis industry. The State has not yet enacted legislation authorizing and regulating adult-use cannabis. Accordingly, details pertaining to the actual use of the proposed appropriation are to be determined.

The Office of Legislative Services provides nonpartisan assistance to the State Legislature in the areas of legal, fiscal, research, bill drafting, committee staffing and administrative

services. It operates under the jurisdiction of the Legislative Services Commission, a bipartisan body consisting of eight members of each House. The Executive Director

supervises and directs the Office of Legislative Services.

The Legislative Budget and Finance Officer is the chief fiscal officer for the Legislature. The Legislative Budget and Finance Officer collects and presents fiscal information for the Legislature; serves as Secretary to the Joint Budget Oversight Committee;

attends upon the Appropriations Committees during review of the Governor’s Budget recommendations; reports on such matters as the committees or Legislature may direct;

administers the fiscal note process and has statutory responsibilities for the review of appropriations transfers and other State fiscal transactions.

The Office of Legislative Services Central Staff provides a variety of legal, fiscal, research and administrative services to individual legislators, legislative officers, legislative

committees and commissions, and partisan staff. The central staff is organized under the Central Management Unit into ten subject area sections. Each section, under a section

chief, includes legal, fiscal, and research staff for the standing reference committees of the Legislature and, upon request, to special commissions created by the Legislature.

The central staff assists the Legislative Budget and Finance Officer in providing services to the Appropriations Committees during the budget review process.

Individuals wishing information and committee schedules on the FY 2020 budget are encouraged to contact:

Legislative Budget and Finance Office State House Annex

Room 140, PO Box 068 Trenton, NJ 08625

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department of health - new jersey legislature...m. teresa ruiz (d), 29th district (part of essex)...

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