An Act concerning providers of services to persons with mental illness or developmental disabilities and amending P.L.1965, c.59.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 4 of P.L.1965, c.59 (C.30:1-15.2) is amended to read as follows:

4. a. Prior to the department's issuing or renewing a license of a facility or organization for the diagnosis, care, treatment, rehabilitation, or maintenance of persons with mental illness or developmental disabilities, the Office of Auditing in the department shall be permitted to review the facility's or organization's books, records and accounts. If it is determined that the facility or organization's liabilities significantly exceed their current assets, that fact shall be documented, and the commissioner or the commissioner's designee shall be so advised. The commissioner or the commissioner's designee may instruct the licensing agency to deny the issuance of a license or to take negative licensing action against the facility or organization as the commissioner deems necessary to ensure that facilities and organizations are financially capable of providing services to persons with mental illness or developmental disabilities.

b. The premises, books, records, and accounts of any facility or organization to which payments are made from the treasury of the State, directly or indirectly, for or on account of the diagnosis, care, treatment, rehabilitation, or maintenance of persons with mental illness or developmental disabilities shall be open to the inspection of the commissioner or his agents, and shall be subject to random inspections by the Office of Auditing at least three times during the calendar year; such books, records and accounts shall be available for inspection and audit by the [State Auditor or any of his agents] Office of Auditing insofar as they relate to the receipt and expenditure of State moneys, in order to determine whether the amount so paid by the State is a proper charge, which question the commissioner shall determine.

c. In order to encourage the continual improvement of standards of care, the commissioner shall make available, within the limits of appropriations therefor, professional consultative services to those facilities in the State which minister to persons with mental illness or developmental disabilities.

d. As used in this section, "negative licensing action" means an action taken that imposes a restriction on a licensee and may include suspension of admissions, issuance of a provisional license of a residence, reduction in the licensed capacity, non-renewal of a license, suspension of a license, or revocation of a license.

(cf: P.L.2010, c.50, s.22)

2. This act shall take effect immediately.

STATEMENT

This bill provides that, prior to the Department of Human Services issuing or renewing a license of a facility or organization for the diagnosis, care, treatment, rehabilitation, or maintenance of persons with mental illness or developmental disabilities, the Office of Auditing in the department shall be permitted to review the facility's or organization's books, records, and accounts. If it is determined that the facility or organization's liabilities significantly exceed its current assets, that fact shall be documented, and the commissioner or the commissioner's designee shall be advised. The commissioner or the commissioner's designee may instruct the licensing agency to deny issuing a license or to take negative licensing action against the facility or organization as the commissioner deems necessary to ensure that facilities and organizations are financially capable of providing services to persons with mental illness or developmental disabilities. This action may include suspension of admissions, issuance of a provisional license of a residence, reduction in the licensed capacity, non-renewal of a license, suspension of a license, or revocation of a license.

The bill also provides that the premises, books, records, and accounts of any facility or organization to which State payments are made for the diagnosis, care, treatment, rehabilitation, or maintenance of persons with mental illness or developmental disabilities shall be subject to random audits at least three times during the calendar year

This bill responds to the State Auditor's report on the Division of Developmental Disabilities Community Programs Grants-in-aid, issued December 30, 2013. Among the recommendations made in that report is a recommendation that "the division should ensure that contracted providers are financially sound."