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4 N.J.A.R. 26

Medicenter of Lakewood v. Human Services, Department of
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Citation: 4 N.J.A.R. 26
Decision Date: 1983
Synopsis: Medicenter of Lakewod, a long-term nursing care facility challenged the determination of the Division of Medical Assistance and Health Services concerning the setting of reimbursement rates for the care of Medicaid patients. At issue in the case was the propreity of the method used of the Division in establishing a protion of the reimbursegment rate. The administrative law judge noted that, pursuant to N.J.A.C. 10:63-3, et seq., the reimbursement rate may be determined either: (a) on the basis of actual additional cost with a factor for a return on the net equity addes; or (b) on the basis of a screening formula, also containing a provision for return on the net equity. Whichever of the two calculations is lower is the figure used in detergmining the reim- bursement rate. In this case the parties disputed only the procedure used by the Department of Human Services in calculating the screened costs, specifically, the appropriate method of determining the capital facili- ties allowance portion of the rate under the screened cost approach. The administrative law judge concluded that the agency's action in setting the amortization rate in accordance with the lower actual interest rate paid by petitioner was correct. The judge determined that the adustment in the amortization rate was appropriate because of the financing of the addition to the facility (N.J.A.C. 10:63-3.10(a) and (k)), in this case the Economic Development Authority. Accordingly, the judge concluded that where a facility is able to obtain low cost financing for its addition, that in establishing the rate of reimbursement for the Medicaid patients in the addition, the agency is required to use the actual interest rate paid in establishing the amortization rate. State of New Jersey 27 Daniel C. Cohen, Esq., of the Pennsylvania Bar admitted pro hac vicae, for petitioner (Wolf, Block, Schorr & Solis-Cohen, attorneys) Steven E. Angstreich, Esq., for petitioner (Levy & Angstreich, at- torneys) Ivan Punchatz, Deputy Attorney General for respondent (Irwin I. Kimmelman, Attorney General of New Jersey, attorney)
Rule(s) Cited: 10:63-3 et seq.