Some of the grant money may go toward compensating hospitals that agree to share their nurses with teaching programs, officials said.

By court order, New Jersey had to change the way it compensated hospitals for unpaid care.

That fund exists to compensate hospitals for the cost of indigent health care and is financed by fees added to hospital bills.

The New York State statute that compensates hospitals for charity care expires July 1.

The policy involves the redistribution of money used to compensate hospitals for patient care that is longer or more expensive than designated under the Medicare reimbursement rules.

The same year, the state collected, through taxes on hospitals and insurers, only $635 million in a charity pool used to compensate hospitals for such care.

A volatile political issue, still unresolved, is how to compensate inner-city hospitals and isolated rural hospitals that have exceptionally high costs.

Administration officials argue that covering more people will diminish the need for government to compensate hospitals for indigent care.

A Federal district judge has ruled that Medicaid rates paid by Washington State failed to compensate hospitals adequately and thus were illegal.

The trust fund, which totaled $465 million in contributions this year, then compensates hospitals serving those who cannot pay for their own care.