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26:2h-18.51. Findings, Declarations

1. The Legislature finds and declares that:

a. It is of paramount public interest for the State to take all necessary and appropriate actions to ensure access to and the provision of high quality and cost-effective hospital care to its citizens.

b. The highly regulated system under which acute care hospitals have been forced to operate in New Jersey since the enactment of P.L.1978, c.83 was intended to control health care costs and promote the efficient and effective delivery of health care; however, because health care costs have continued to increase at an alarming rate, the State clearly needs to eliminate the current Diagnosis Related Group (DRG) rate setting methodology it initiated in 1980 and move in the direction of a deregulated hospital reimbursement system which will provide hospitals with a truly competitive market environment and strong incentives to offer only those services which meet the demands of health care purchasers and consumers.

c. Access to quality health care shall not be denied to residents of this State because of their inability to pay for the care; there are many residents of this State who cannot afford to pay for needed hospital care and in order to ensure that these persons have equal access to hospital care, it is necessary to provide disproportionate share hospitals with a charity care subsidy supported by a broad-based funding mechanism.

d. In order to provide financial support to those hospitals with a disproportionately large number of Medicare patients, it is also necessary to provide for a Medicare hospital subsidy, also supported by a broad-based funding mechanism, as a temporary means to distribute payments to disproportionate share hospitals which experience a significant shortfall in their revenues due to the difference between the hospital's actual rates for health care services and the rates paid by the Medicare program for those services.

e. There is a need to continue this State's current system of providing disproportionate share payments to hospitals in the State, and in order to ensure continuity of these payments, this act establishes the Health Care Subsidy Fund.

f. In order to ensure a smooth transition to a new, deregulated hospital reimbursement system that significantly alters the State's policy towards the delivery of health care, it is necessary to establish an independent commission which is not tied to past practices of hospital rate regulation.


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Local Government
New Jersey
Phil Murphy
Phil Murphy
January 16, 2018 -
125 West State Street, Trenton, NJ, 08625