This bill mandates that teaching hospitals in New Jersey, which are licensed and accept State funding for graduate medical education programs, must prioritize applicants who are residents of the State or are enrolled and in good academic standing at an accredited State-supported medical school when considering placements for residency or fellowship programs. If a hospital fails to grant this priority consideration, it will face a reallocation of 20 percent of its Medicaid funding for graduate medical education programs. Additionally, the bill requires these hospitals to give priority for third and fourth year student clerkships to medical students from accredited State-supported medical schools, with similar consequences for non-compliance regarding Medicaid funding.

Furthermore, the bill stipulates that teaching hospitals must respond to written requests from accredited State-supported medical schools for clerkship placements, either by reducing the number of clerkships available to students from out-of-state medical schools or facing the same 20 percent Medicaid funding reallocation. The Commissioner of Human Services is authorized to seek necessary amendments or waivers to secure federal financial participation for State Medicaid expenditures and will work with the Commissioner of Health to implement the bill's provisions effectively.