New Jersey Revises Hospital Assessment; Pennsylvania Enacts New Hospital Tax - July 27, 2010

On June 30, New Jersey Governor Chris Christie (R) signed legislation effective July 1, that removes a $40 million cap on the state's assessment on hospital operating revenues. The new law is estimated to net the state an additional $38.7 million in fiscal year (FY) 2011. In addition, the $200,000-per-facility cap on ambulatory care was raised to $350,000, while the assessment for such facilities was lowered from 3.5 percent to 2.95 percent; together this is anticipated to bring in an additional $6.5 million in FY 2011. The hospital and ambulatory care assessment changes will generate a federal match which will be used to provide an increase in charity care funding from $605 million in state fiscal year (SFY) 2010 to $665 million in SFY 2011.

On July 9, Pennsylvania Governor Edward Rendell (D) approved enactment of a new "quality care assessment" on net inpatient revenue at a rate of 2.69 percent in FY 2011, 2.84 percent in FY 2012 and 2013. The assessment is authorized to be increased up to 2.95 percent by going through public comment, with consent from the governor. The Pennsylvania Department of Public Welfare intends to use the assessment to pay for Medicaid inpatient hospital services. The assessment will sunset in June 2013 and is subject to federal approval of Pennsylvania's Medicaid waiver necessary for implementation.