New Jersey Administrative Code › Title 8 - HEALTH › Chapter 31B - HOSPITAL FINANCIAL REPORTING › Subchapter 4 - FINANCIAL ELEMENTS AND REPORTING › Part I - REPORTING PRINCIPLES AND CONCEPTS › Section 8:31B-4.15 - Revenues and deductions from revenue

Current through Register Vol. 56, No. 14, July 15, 2024
(a) If a hospital
				  receives less than its full charges for the services it renders, it shall report to
				  the Department both the gross revenue and revenue "adjustments" resulting from
				  failure to collect full charges for services provided. These revenue adjustments are
				  called Deductions from Gross Revenue. The specific deductions required for reporting
				  Revenue Related to Patient Care, as defined in
				  8:31B-4.32 are defined in (a)1 through
				  11 below. Any individual allowance must be reported in only one of the 10 deduction
				  categories and three contra categories (although individual transactions may be
				  distributed among several if appropriate):
1.
				  Third party payor allowances: These adjustments represent the differences between
				  full charges for services and the payment anticipated from major third party payors
				  according to contractual agreements or government mandated payor differentials.
				  These adjustments exclude any deductions made by any third party payor for any other
				  allowances which are more appropriately categorized in one of the following classes
				  of deductions from gross revenue.
2.
				  Prompt payment discounts: These adjustments are the difference between charges and
				  payments received due to the prompt payment of a bill.
3. Personnel health allowance: These deductions
				  represent adjustments from charges for services rendered to employees of the
				  hospital and their families under a formal self-insurance or coinsurance plan of the
				  hospital.
4. Courtesy adjustments: These
				  deductions represent adjustments from charges for services rendered to any
				  individual other than employees of the hospital and not otherwise more appropriately
				  categorized, including any patient accounts written off contrary to the hospital's
				  formal policies relative to credit, bad debts and indigency care.
5. Other Administrative Adjustments: These
				  deductions represent adjustments made by the hospital as a matter of policy because
				  of immateriality. Examples of these types of adjustments would include insignificant
				  balances not billed to the patient or third party payor because of late billing
				  occurring after payment has been received.
6. Medical denials: These deductions represent
				  amounts not due from patients or third party payors because of a ruling by
				  appropriate utilization review or certification processes which determine that the
				  services rendered were not medically appropriate or necessary, but excluding medical
				  denials classified as Nursing Home Placement.
7. Nursing home placement: These deductions
				  represent amounts not due from patients or third party payors because of rulings by
				  appropriate utilization review or certification processes which determine that the
				  services rendered were not medically appropriate to an acute care setting for
				  patients who were unable to be placed in a skilled nursing facility because of a
				  lack of available beds.
8. Charity care:
				  These deductions represent charges for patients determined to be eligible for
				  charity care pursuant to
				  8:31B-4.38.
9. County government grants for the medically
				  indigent; municipal government grants for the medically indigent; other grants for
				  the medically indigent:
i. These three categories
				  represent all amounts received from governmental or other agencies for the care of
				  medically indigent patients.
10. Bad debt provision:
i. These deductions represent the hospital's
				  estimate of the amount of charges for Services Related to Patient Care during the
				  reporting period (not otherwise accounted for as a deduction from Gross Revenue
				  Related to Patient Care) which will not be received, net of recoveries of previously
				  written-off accounts. Collection agency expense should not be included as a
				  deduction from revenue but rather should be reported as operating expense and Cost
				  Related to Patient Care as defined in
				  8:31B-4.32 and 4.118;
ii. The bad debt provision explicitly excludes
				  deductions for contractual allowances, indigent patients, courtesy care, medical
				  denials, finance charges or other non-medical service costs such as late fees and
				  patient convenience items, and nursing home placement medical denial cases.
				  Estimates of the bad debts incurred for the reporting period are to be reconciled to
				  actual bad debts incurred for the reporting period and reconciled in the next
				  reporting period's bad debt provision.
11. Other operating gross revenue: This account
				  represents the amount of billings for services normal to the day-to-day activities
				  of the hospital (net of any items reported as expense recovery) for Services Not
				  Related to Patient Care.