New Jersey Administrative Code › Title 8 - HEALTH › Chapter 96 - HOSPITAL FINANCIAL TRANSPARENCY › Subchapter 1 - GENERAL PROVISIONS › Section 8:96-1.2 - Definitions

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The following words
				and terms, as used in this chapter, shall apply to both for-profit and nonprofit
				hospitals and have the following meanings unless the context clearly indicates
				otherwise. Financial terms should be interpreted consistently with Generally
				Accepted Accounting Principles (GAAP).
"35 percent controlled entity," means the same as that term is
				  described in the instructions to IRS Form 990, Glossary, as it may be amended or
				  superseded from time to time. Consistent with IRS Form 990, the term means an entity
				  that is owned, directly or indirectly (for example, pursuant to constructive
				  ownership rules of Internal Revenue Code Section 267(c)), by a given person, such as
				  the organization's current or former owners, officers, directors, trustees, or key
				  employees listed on IRS Form 990, Part VII, Section 1 regarding nonprofit hospitals
				  and for-profit hospitals, or the family members thereof (listed persons) as
				  follows:
1. A corporation in which listed
				persons own more than 35 percent of the total combined voting power;
2. A partnership in which listed persons own more
				than 35 percent of the profits interest; or
3. A trust or estate in which listed persons own
				more than 35 percent of the beneficial interest.
"American Institute of Certified Public Accountants" or "AICPA"
				  means the entity by that name for which the contact information is AICPA, 220 Leigh
				  Farm Road, Durham, NC 27707-8110, telephone (888) 777-7077, telefacsimile (800)
				  362-5066, website:
http://www.aicpa.org
.
"Asset" means the same as that term is defined in the Financial
				  Accounting Standards Board Statement of Financial Accounting Concepts Statement No.
				  8, incorporated herein by reference, as amended or superseded.
"Audited" means the same as described in the instructions to IRS
				  Form 990, as it may be amended or superseded from time to time. Consistent with the
				  instructions to IRS Form 990, the term means a formal examination of an
				  organization's financial records and practices by an independent, certified public
				  accountant with the objective of issuing a report on the organization's financial
				  statements as to whether those statements are fairly stated according to generally
				  accepted accounting principles (or other recognized comprehensive basis of
				  accounting).
"Audited financial statement" means the same as described in the
				  instructions to IRS Form 990, as it may be amended or superseded from time to time.
				  Consistent with the instructions to IRS Form 990, the term means financial
				  statements accompanied by a formal opinion or report prepared by an independent,
				  certified public accountant with the objective of assessing the accuracy and
				  reliability of the organization's financial statements.
"Business transactions" means the same as that term is described
				  in the instructions to Schedule L of IRS Form 990, as it may be amended or
				  superseded from time to time. Consistent with Schedule L of IRS Form 990, the term
				  means transactions for which payments are made during the hospital's tax year
				  between the hospital and an interested person. Business transactions include, but
				  are not limited to, joint ventures and contracts of sale, lease, license, insurance,
				  and performance of services, whether initiated during the organization's tax year or
				  ongoing from a prior year.
"Control" means, for the purposes of determining related
				  organizations, the same as that term is described in the instructions to IRS Form
				  990, Glossary, as it may be amended or superseded from time to time. Consistent with
				  the instructions to IRS Form 990, control means:
1. Control of a nonprofit organization (or other
				organization without owners or persons having beneficial interests, whether the
				organization is taxable or tax-exempt): One or more persons (whether individuals or
				organizations) control a nonprofit organization if they have the power to remove and
				replace (or to appoint, elect, or approve or veto the appointment or election of, if
				such power includes a continuing power to appoint, elect, or approve or veto the
				appointment or election periodically, of or in the event of vacancies) a majority of
				the nonprofit organization's directors or trustees, or a majority of members who
				elect a majority of the nonprofit organization's directors or trustees. Such power
				can be exercised directly by a (parent) organization through one or more of the
				(parent) organization's officers, directors, trustees, or agents, acting in their
				capacity as officers, directors, trustees, or agents of the (parent) organization.
				Also, a (parent) organization controls a (subsidiary) nonprofit organization if a
				majority of the subsidiary's directors or trustees are trustees, directors,
				officers, employees, or agents of the parent.
2. Control of a stock corporation: One or more
				persons (whether individuals or organizations) control a stock corporation if they
				own more than 50 percent of the stock (by voting power or value) of the
				corporation.
3. Control of a partnership
				or limited liability company: One or more persons control a partnership if they own
				more than 50 percent of the profits or capital interests in the partnership
				(including a limited liability company treated as a partnership or disregarded
				entity for Federal tax purposes, regardless of the designation pursuant to State law
				of the ownership interests as stock, membership interests, or otherwise). A person
				also controls a partnership if the person is a managing partner or managing member
				of a partnership or limited liability company which has three or fewer managing
				partners or managing members (regardless of which partner or member has the most
				actual control), or if the person is a general partner in a limited partnership
				which has three or fewer general partners (regardless of which partner has the most
				actual control). For this purpose, a "managing partner" is a partner designated as
				such pursuant to the partnership agreement, or regularly engaged in the management
				of the partnership even though not so designated.
4. Control of a trust with beneficial interests:
				One or more persons control a trust if they own more than 50 percent of the
				beneficial interests in the trust. A person's beneficial interest in a trust shall
				be determined in proportion to that person's actuarial interest in the trust as of
				the end of the tax year. See 26
				CFR 301.7701-2,
				3, and
				4 for more information on
				classification of corporations, partnerships, disregarded entities, and trusts.
				Control can be indirect. See the Schedule R (IRS Form 990) instructions for a
				description of indirect control.
"Controlled entity" means the same as that term is described in
				  the instructions to IRS Form 990, Glossary, as it may be amended or superseded from
				  time to time. Consistent with the instructions to IRS Form 990, the term means an
				  organization controlled by a controlling organization pursuant to I.R.C. §
				  512(b)(13). A controlled entity may be a nonprofit organization. For the definition
				  of control in this context, see I.R.C. § 512(b)(13)(D) and
				  26 CFR
				  1.512(b)-1(l)(4) (substituting
				  "more than 50%" for "at least 80%" in the regulation, for purposes of this
				  definition). Controlled entities are a subset of related organizations. For purposes
				  of this definition, controlled entities do not include disregarded entities of the
				  filing organization.
"Controlling organization" means the same as that term is defined
				  in I.R.C. § 512(b)(13) and the instructions to IRS Form 990, Glossary, as it
				  may be amended or superseded from time to time. Consistent with I.R.C. §
				  512(b)(13) and the instructions to IRS Form 990, the term means an exempt
				  organization that controls a controlled entity. The Internal Revenue Code Section
				  512(b)(13) treats payments of interest, annuity, royalties, and rent from a
				  controlled entity to a controlling organization as unrelated business taxable income
				  under certain circumstances. Control in this context means:
(i) in the case of a corporation, ownership (by
				vote or value) of more than 50 percent of the stock in such corporation;
(ii) in the case of a partnership, ownership of
				more than 50 percent of the profits interests, or capital interests in such
				partnership; or
(iii) in any other case,
				ownership of more than 50 percent of the beneficial interests in the entity. Section
				318 (relating to constructive ownership of stock) shall apply for purposes of
				determining ownership of stock in a corporation. Similar principles shall apply for
				purposes of determining ownership of interests in any other
				entity.
"Department" means the New Jersey Department of Health, for which
				  the contact information for submissions that this chapter requires is:
1. By regular mail:
Office of Health Care Financing
New Jersey Department of Health
PO Box 360
Trenton, NJ 08625-0360
2. By overnight delivery service or hand delivery:
Office of Health Care Financing
New Jersey Department of Health
55 N. Willow Street, 5th Floor
Trenton, NJ 08608
3. By electronic mail:
financial.reports@doh.nj.gov
"Director" or "trustee" means the same as that term is described
				  in the Glossary of the Instructions to IRS Form 990, as it may be amended or
				  superseded from time to time. Consistent with the Instructions to IRS Form 990, the
				  term means, unless otherwise provided, a member of the organization's governing body
				  at any time during the tax year, but only if the member has any voting rights. A
				  member of an advisory board that does not exercise any governance authority over the
				  organization is not considered a director or trustee.
"Disregarded entity" means the same as that term is described in
				  the Glossary of the Instructions to IRS Form 990, as it may be amended or superseded
				  from time to time. Consistent with the Instructions to IRS Form 990, the term means
				  an entity wholly owned by the organization that is generally not treated as a
				  separate entity for Federal tax purposes (for example, single-member limited
				  liability company of which the organization is the sole member). See
				  26 CFR
				  301.7701-2 and
				  3. A disregarded entity generally must
				  use the EIN of its sole member. An exception applies to employment taxes: for wages
				  paid to employees of a disregarded entity, the disregarded entity must file separate
				  employment tax returns and use its own EIN on such returns. See
				  26 CFR
				  301.6109-1(h) and
				  301.7701-2(c)(2)(iv).
"Electronic Data Gathering Analysis and Retrieval system" or
				  "EDGAR system" means an online web-based platform that the United States Securities
				  and Exchange Commission operates at
https://www.sec.gov/edgar.shtml
.
"Electronic Municipal Market Access system" or "EMMA(R) system"
				  means an online web-based platform that the Municipal Securities Rulemaking Board
				  operates at
http://emma.msrb.org
.
"Family member" or "family relationship" means the same as that
				  term is described in the Glossary of the Instructions to IRS Form 990, as it may be
				  amended or superseded from time to time. Consistent with the Instructions to IRS
				  Form 990, the term means, unless specified otherwise, the family of an individual
				  includes only his or her spouse (see IRS Revenue Ruling 2013-17 regarding same-sex
				  marriage), ancestors, brothers and sisters (whether whole or half-blood), children
				  (whether natural or adopted), grandchildren, great-grandchildren, and spouses of
				  brothers, sisters, children, grandchildren, and great-grandchildren.
"Financial statements" means, collectively, the statements,
				  schedules, and notes that GAAP requires for presentation of financial
				  statements.
"Generally accepted accounting principles" or "GAAP" means the
				  accounting principles that a reporting entity determines to be applicable, and that
				  are generally accepted in the United States as authoritative by:
1. The Financial Accounting Standards Board (FASB)
				with respect to nongovernmental entities, as articulated in the
Financial
				Accounting Standards Board Accounting Standards Codification
(R) (2009), as
				amended and supplemented, available at
www.fasb.org
, and from the FASB at 401 Merritt 7, PO Box
				5116, Norwalk, CT 06856; or
2. The
				Governmental Accounting Standards Board (GASB) with respect to State and local
				governmental entities, as articulated in the GASB
Codification of
				Governmental Accounting and Financial Reporting Standards
(2021), as
				amended and supplemented, available at
www.gasb.org
, and from the GASB at 401 Merritt 7, PO Box
				5116, Norwalk, CT 06856.
"Generally accepted auditing standards" or "GAAS" means the
				  auditing standards that are generally accepted in the United States as
				  authoritative, as specified in the AICPA
Professional Standards
(2021), as amended or superseded from time to time.
"Good and marketable" means a title that is free from all liens,
				  mortgages, security interests, encumbrances, and adverse claims or other
				  charges.
"Governing body" means the same as that term is described in the
				  Glossary of the Instructions to IRS Form 990, as it may be amended or superseded
				  from time to time. Consistent with the Instructions to IRS Form 990, the term means
				  the group of one or more persons authorized pursuant to state law to make governance
				  decisions on behalf of the organization and its shareholders or members, if
				  applicable. The governing body is, generally speaking, the board of directors
				  (sometimes referred to as board of trustees) of a corporation or association, or the
				  trustee or trustees of a trust (sometimes referred to as the board of
				  trustees).
"Highest-compensated employee" means the same as that term is
				  described in the Glossary of the Instructions to IRS Form 990, as it may be amended
				  or superseded from time to time. Consistent with the Instructions to IRS Form 990,
				  the term means one of the five highest compensated employees of the organization
				  (including employees of a disregarded entity of the organization), other than
				  current officers, directors, trustees, or key employees, whose aggregate reportable
				  compensation from the organization and related organizations is greater than $
				  100,000 for the calendar year ending with or within the organization's tax
				  year.
"Hospital" means a general hospital and specialty heart hospital
				  that the Department licenses pursuant to N.J.A.C. 8:43G.
"Interested person" means the same as that term is defined in the
				  instructions to Schedule L of IRS Form 990, as it may be amended or superseded from
				  time to time. Consistent with Schedule L of IRS Form 990, the term includes:
1. A current or former officer, director, trustee,
				or key employee of the hospital;
2. The
				creator or founder of the organization;
3. Any individual or organization that made
				contributions during the tax year in the aggregate of at least $ 5,000 and whose
				contributions are required to be reported on Schedule B of IRS Form 990, Schedule of
				Contributions, for the organization's tax year;
4. A member of a grant selection
				committee;
5. A family member of an
				entity or individual described above;
6.
				A 35 percent controlled entity; or
7. An
				employee of a substantial contributor or of a 35 percent controlled
				entity.
Additionally, regarding for-profit entities, an interested person
				  shall include an owner of the hospital or related organization or any family member
				  of an owner of the hospital or related organization.
"IRS Form 990" means Internal Revenue Service Form 990 and all
				  related schedules, instructions, and glossaries thereto, incorporated herein by
				  reference, as amended and supplemented.
"Joint venture" means the same as that term is described in the
				  Glossary of the Instructions to IRS Form 990, as it may be amended or superseded
				  from time to time. Consistent with the Instructions to IRS Form 990, that term
				  means, unless otherwise provided, a partnership, limited liability company, or other
				  entity treated as a partnership for Federal tax purposes, as described at
				  26 CFR
				  301.7701-1 through
				  301.7701-3.
"Key employee" means the same as that term is described in the
				  Glossary of the Instructions to IRS Form 990, as it may be amended or superseded
				  from time to time. Consistent with the Instructions to IRS Form 990, that term
				  means:
1. An employee of an organization
				(other than an officer, director, or trustee) who meets all three of the following
				tests applied in the following order:
i. $ 150,000
				Test. Receives reportable compensation from the organization and all related
				organizations in excess of $ 150,000 for the calendar year ending with or within the
				organization's tax year.
ii.
				Responsibility Test. The employee:
(1) Has
				responsibilities, powers, or influence over the organization as a whole similar to
				those of officers, directors, or trustees;
(2) Manages a discrete segment or activity of the
				organization that represents 10 percent or more of the activities, assets, income,
				or expenses of the organization, as compared to the organization as a whole;
				or
(3) Has or shares authority to
				control or determine 10 percent or more of the organization's capital expenditures,
				operating budget, or compensation for employees; and
iii. Top 20 Test. Is one of the 20 employees (that
				satisfy the $ 150,000 Test and Responsibility Test) with the highest reportable
				compensation from the organization and related organizations for the calendar year
				ending with or within the organization's tax year.
"Management company" means any company, organization, or person
				  engaged by the hospital to manage any portion of the hospital's operations or
				  provide consulting or supervisory services to the hospital regarding its operations,
				  property management, strategic planning, revenue cycle, or purchasing.
"Net patient service revenue" means the amount expected to be
				  realized in cash, that is, gross revenue at established rates less contractual
				  adjustments, discounts, and any other price concessions.
"Officer" means the same as that term is described in the Glossary
				  of the Instructions to IRS Form 990, as it may be amended or superseded from time to
				  time. Consistent with the Instructions to IRS Form 990 that term means, unless
				  otherwise provided (for example, signature block, principal officer in heading), a
				  person elected or appointed to manage the organization's daily operations at any
				  time during the tax year, such as a president, vice-president, secretary, treasurer,
				  and, in some cases, board chair. The officers of an organization are determined by
				  reference to its organizing document, bylaws, or resolutions of its governing body,
				  or as otherwise designated consistent with state law, but at a minimum, include
				  those officers required by applicable state law. For purposes of these rules, treat
				  the organization's top management official and top financial official as
				  officers.
"Owner" means any person, partnership, corporation, company,
				  trust, or any other organization that owns, directly or indirectly (including
				  ownership by any family members), more than five percent of the voting rights,
				  profit or beneficial interest in an organization, regardless of whether that
				  interest is evidenced by shares, certificates, stocks, contract, agreement, or any
				  other form used to represent a voting, profit, or beneficial interest, including any
				  person whose combined ownership, individually or through a controlling interest in
				  any other organizations, owns more than five percent voting, profit, or beneficial
				  interest in the organization.
"Related organization" means the same as that term is described in
				  the Glossary of the Instructions to IRS Form 990, as it may be amended or superseded
				  from time to time. Consistent with the Instructions to IRS Form 990, that term means
				  an organization, including a nonprofit organization, a stock corporation, a
				  partnership or limited liability company, a trust, and a governmental unit or other
				  government entity, that stands in one or more of the following relationships to the
				  filing organization at any time during the tax year:
1. Parent: an organization that controls the
				filing organization.
2. Subsidiary: an
				organization controlled by the filing organization.
3. Brother/sister: an organization controlled by
				the same person or persons that control the filing organization. However, if the
				filing organization is a trust that has a bank or financial institution trustee that
				is also the trustee of another trust, the other trust is not a brother/sister
				related organization of the filing organization on the ground of common control by
				the bank or financial institution trustee.
4. Supporting/supported: an organization that
				claims to be at any time during the tax year, or that is classified by the IRS at
				any time during the tax year as:
(i) a supporting
				organization of the filing organization within the meaning of I.R.C. §
				509(a)(3), if the filing organization is a supported organization within the meaning
				of I.R.C. § 509(f)(3); or
(ii) a
				supported organization, if the filing organization is a supporting
				organization.
5. Sponsoring
				organization of a voluntary employees' beneficiary association (VEBA): an
				organization that establishes or maintains a VEBA within the meaning of I.R.C.
				§ 501(c)(9) during the tax year. A sponsoring organization of a VEBA also
				includes an employee organization, association, committee, joint board of trustees,
				or other similar group of representatives of the parties that establish or maintain
				a VEBA. Although a VEBA must report a sponsoring organization as a related
				organization, a sponsoring organization should not report a VEBA as a related
				organization, unless the VEBA is related to the sponsoring organization in some
				other capacity described in this definition.
6. Contributing employer of a VEBA: an employer
				that makes a contribution or contributions to the VEBA during the tax year. Although
				a VEBA must report a contributing employer as a related organization, a contributing
				employer should not report a VEBA as a related organization, unless the VEBA is
				related to the contributing employer in some other capacity described in this
				definition.
"Reporting period" means the reporting period a hospital specifies
				  pursuant to N.J.A.C. 8:31B-4.6.
"Reporting threshold" for nonprofit hospitals means the minimum
				  amount of business transactions with interested persons that must be reported
				  pursuant to the instructions to Part IV of Schedule L of IRS Form 990, as it may be
				  amended or superseded from time to time. Consistent with Schedule L, an organization
				  must report business transactions with an interested person, if:
1. All payments during the tax year between the
				organization and the interested person exceeded $ 100,000;
2. All payments during the tax year from a single
				transaction between such parties exceeded the greater of $ 10,000 or one percent of
				the filing organization's total revenue for the tax year;
3. Compensation payments during the tax year by
				the organization to a family member of a current or former officer, director,
				trustee, or key employee of the organization listed in IRS Form 990, Part VII,
				Section A, exceeded $ 10,000;
4. In the
				case of a joint venture with an interested person, the organization has invested $
				10,000 or more in the joint venture, whether or not during the tax year, and the
				profits or capital interest of the organization and of the interested person each
				exceeds 10 percent at some time during the tax year; or
5. For for-profit hospitals, the reporting
				threshold shall be $ 10,000 or any excess thereof.
"Sale-leaseback agreement" means an agreement, affecting property
				  on which a hospital stands and/or a building in which a hospital operates, wherein,
				  the hospital or a director, officer, key employee, or highly compensated individual,
				  as well as any owner(s) of the hospital:
1.
				Agrees to sell the property and/or building to a purchaser; and
2. Agrees, or expresses an intention, to lease the
				transferred property from the purchaser upon completion of the sale.
"Statement of operations or income" means statement of operations
				  or income, as GAAP defines and/or describes that term, also commonly referred to as
				  statement of operations, income statement, statement of revenues and expenses,
				  earnings statement, or profit and loss statement.
"System hospital" means a hospital that is part of a network or
				  system of hospitals and/or other health care facilities that commonly is referred to
				  as a health care system.
"Unaudited," as used to describe financial statements, or a
				  statement of operations or income, means that an ICPA neither audited the subject
				  document(s) using GAAS, nor attested thereto as presented in accordance with
				  GAAP.