Federal officials have rejected New Jersey's request for $450 million in Medicaid reimbursements the state was counting on to balance the fiscal 1993 budget, state Treasurer Samuel Crane announced yesterday.
Officials at the Health Care Financing Administration, which made the decision, were not available for comment yesterday. But Treasurer Crane said the ruling appears to be based on a technicality, and he called on New Jersey leaders to seek a reversal of the decision.
"We believe that New Jersey is entitled to the full Medicaid reimbursement, and we are seeking the support of legislative leaders and the state congressional delegation to appeal to the Bush administration to reverse this decision," Mr. Crane said.
New Jersey requested $380 million for retroactive Medicaid reimbursements related to psychiatric hospital expenses dating back to 1989, as well as $70 million for the first half of fiscal 1992.
State officials earlier this week informed the state's legislative leadership and officials at the rating agencies of the federal agency's decision.
New Jersey's newest budget hole comes on the heels of a $608 million gap the state Legislature created last month with its repeal of a one-cent sales tax increase.
Steven Hochman, assistant director of state ratings at Moody's Investors Service, said the loss of $450 million, in combination with the loss of the sales tax revenues, "makes achieving a balanced budget for '93 more difficult yet all the more important."
Treasurer Crane said the gap could be bridged by utilizing a portion of $1 billion in cuts the Legislature is contemplating to compensate for its sales tax cut.
The rejection of Medicaid reimbursements for New Jersey followed a ruling last week by a federal judge that the state's surcharge system for hospitals' uncompensated care was invalid. In addition to the uncertain fiscal implications for state hospitals, the ruling also places at risk another $320 million in federal matching funds pegged to the surcharges.