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Pou Bill to Maximize Federal Medicaid Funding Through HMO Assessment OK’d by Budget Panel

Trenton – Legislation proposed by Senator Nellie Pou that would increase the assessment on Health Maintenance Organization (HMO) premiums to fund charity care payments to hospitals was approved by the Senate Budget Committee today.


“In a time of great anxiety given the deadly coronavirus pandemic, not to mention uncertainty in regard to the future of Obamacare, and when tens of thousands of New Jerseyans are worried about where they’ll find the money to pay for basic and quality health care, this HMO assessment is a shot in the arm, and will help bolster the resources that shore up our safety net for those most at risk,” said Senator Pou (D-Passaic).


“Because the overwhelming majority of HMO enrollees in New Jersey are covered by Medicaid, the bulk of the $162 million in revenue raised will come back to the state in the form of increased federal Medicaid payments,” Senator Pou said.


The Pou measure would continue to build on an assessment that dates back to 2004. It would take effect immediately and would provide an estimated $102.7 million in net revenue over the next nine months for the FY21 state budget and would continue in future years.


Receipts from the increase in the HMO assessment from 3 percent to 5 percent remain statutorily allocated to the Health Care Subsidy Fund to provide charity care payments to hospitals in accordance with the formula used for the distribution of charity care subsidies.


“In this time of pandemic, society must make provisions for those most vulnerable among us who depend on charity care just to live their lives and protect their families, and who deserve to live without the fear of catastrophic illness,” said Senator Pou.


Almost all of New Jersey’s 1.7 million Medicaid recipients are enrolled in HMOs, and the cost of these managed care programs – and the increase in assessments – would be funded about 37 percent by the state and 63 percent by the federal government.


The law prohibits the additional expense from being passed on to patients through the imposition of an additional premium, fee, or surcharge on its premium or enrollee charge.