Quick answer
New Jersey’s patient-care ratio allocates permitted expenses to Medicaid using Medicaid bed days divided by total bed days, then compares that share with recognized Medicaid revenue. Cash receipts alone cannot support the annual report or a rebate calculation.
A New Jersey nursing facility can receive the right amount of Medicaid cash and still prepare the wrong patient-care ratio report. The annual calculation requires recognized revenue, a supported expense population and a bed-day allocation. The controller’s output is a facility-level reconciliation that survives review across the facility and its management company.
The adopted N.J.A.C. 10:49A rules set the framework. The October 2026 HHS OIG report also examines New Jersey’s approach, using historical data. Its findings are not a substitute for a facility’s current report.
Reconcile receipts to the reporting year
Assume a fictional calendar-year facility collected $5.8 million from Medicaid fee-for-service and managed care. Of that cash, $300,000 settled prior-year services. Another $500,000 of current-year recognized Medicaid revenue remains unpaid.
The simplified revenue bridge is $5.8 million − $300,000 + $500,000 = $6 million. Assume there are no other recognition adjustments. Retain the service-period detail behind both reconciling items. The deposit date proves cash movement; it does not by itself place revenue in the correct PCR year.
The facility has 30,000 total billed bed days, including 18,000 Medicaid days. The cost-share percentage is 18,000 ÷ 30,000 = 0.600. Uncollected billed days remain in the appropriate population under the reporting rules. Removing them merely because cash is missing would distort the allocation.
Build one permitted-expense population
Suppose the initial expense extract totals $8.9 million. Review identifies $100,000 of nonreportable bad debt and $100,000 of debt principal mistakenly included as expense. Remove both, leaving $8.7 million before resolving a management allocation.
The management company charged $400,000, already included in the $8.7 million. Supporting records show that $350,000 relates to this facility under the selected consistent service-allocation method. The remaining $50,000 belongs elsewhere and is removed. The reviewed expense population is $8.65 million.
| Control | Evidence retained | What the reviewer can decide |
|---|---|---|
| Facility identity and year | Provider identification and annual report period | Whether the extract belongs to this report |
| Related-party charge | Relationship, services, amount and competitive-price analysis | Whether the charge has the required support |
| Shared service allocation | Source pool and actual allocation basis | Whether this facility bears its supported share |
| Expense uniqueness | Ledger account and report category | Whether an amount appears only once |
| Excluded items | Separate $200,000 adjustment schedule | Why cash outlays differ from reportable expenses |
These figures are assumptions for a reconciliation exercise. They do not determine whether a real service is allowable. An unsupported management amount should remain an identified review issue; distributing it among cost centers does not cure the missing evidence.
Calculate the ratio and rebate bridge
The Medicaid share of reviewed expenses is $8.65 million × 0.600 = $5.19 million. Dividing by $6 million of recognized Medicaid revenue yields 0.865, or 86.5%. The shortfall from 90% is 0.035. On these assumed final inputs, the rebate calculation is $6 million × 0.035 = $210,000.
The rule rounds each ratio to three decimal places, each intermediate dollar amount to cents, and the final rebate to whole dollars, rounding half up at each stage. This example uses exact values; a production calculation must preserve that sequence. Calculated rebates below $1,000 are exempt from payment, although reporting remains required.
A cash-only denominator of $5.8 million would produce a different ratio and conceal the period error. A numerator that included the $50,000 unsupported allocation would also understate the rebate. The working file should explain both differences separately.
Finish the annual reporting decision
The adopted rules require an individual facility report by the first day of the sixth month after the calendar reporting year and any payable rebate by the first day of the seventh month. Confirm the active submission instructions and actual notice before filing. Ownership changes do not justify omitting the predecessor portion of the year; obtain the necessary records as part of the reporting handoff.
The final package joins the revenue bridge, bed days, permitted expenses, allocation support, rounding steps and submitted version. For a system evaluation, ask a reviewer to trace the $350,000 management amount back to its source pool and then remove a disputed portion. The useful result is a revised facility calculation with a visible explanation of what changed.
Questions & answers
Is the New Jersey ratio a cash-basis test?
No. The adopted rules use GAAP revenue recognition, specified paid or accrued expense categories, and billed but uncollected bed days.
Can several facilities submit one combined ratio?
No. Each facility reports separately; group expenses need supported allocations.
Do all management-company charges count?
No. Reportable charges require the applicable allocation and related-party support; a paid invoice alone does not establish eligibility.
Primary sources
- New Jersey adopted N.J.A.C. 10:49A nursing facility patient care ratio rules
- HHS OIG nursing home spending requirements audit
Use the cited source and its applicable version when making a facility-specific decision. These guides explain operational evaluation methods; they are not individualized clinical, coding, or legal advice.