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Vitale Bill To Protect Against Charity Care Fraud Signed Into Law

TRENTON – A bill sponsored by Senator Joseph F. Vitale which will improve State oversight over the hospital charity care subsidy program, which provides funding for emergency health care for the uninsured, was signed into law today by Governor Corzine.

“Charity care has been an essential part of the State’s response to providing access to health care for the uninsured,” said Senator Vitale, D-Middlesex, the Chair of the Senate Health panel. “However, the lack of oversight has created a program ripe for fraud and abuse, and millions of dollars each year are lost to illegitimate and fraudulent claims. With these added protections, we can ensure that State health care assistance is only available to those who legitimately need it.”

The bill, a Senate Committee substitute for S-2702, S-2727, and S-3007, known as the “Charity Care Fraud Prevention and Detection Act,” will establish greater oversight over the State’s charity care subsidy program. The new law will require the Commissioner of Health and Senior Services to require uniform procedures for hospitals acquiring information from charity care applicants, and will require the Commissioner and the Medicaid Inspector General to establish an inter-agency agreement to root out charity care fraud and recover money related to fraudulent claims. The law will also allow the Commissioner of Health to reduce a hospital’s annual charity care funding if it is determined that the hospital sought State funding for claims where they should have had reasonable cause to suspect the claim was fraudulent.

The Senate originally approved the bill in June, but it was returned for concurrence with the Governor’s recommendation to allow the Department of Health to work with the Department of Treasury and the Medicaid Inspector General to perform random checks of the personal State income tax returns of charity care applicants to ensure that they are truly eligible for subsidized health care. Those recommendations were approved by the Senate on Monday.

“By tapping existing fraud busters and requiring State agencies to work together to expose wasted funding, we’re taking a strong position against the defrauding of the charity care system,” said Senator Vitale. “Hospitals will have to bear a fair share of the oversight responsibility as well, and will be held accountable for fraudulent claims that should have been caught early in the charity care process. We cannot afford to let millions of tax dollars be wasted on fraudulent charity care claims, and this law puts in an oversight mechanism which will stop the hemorrhaging within the system.”

The bill was first proposed after the State Commission of Investigation (SCI) issued a report in April of this year, “Charity Care: An Ailing System.” The report detailed fiscal fraud and operational lapses which allowed for many fraudulent charity care claims to slip through the system unchallenged. The report concluded that the State loses tens of millions of dollars every year through fraud and the failure to recover funds from fraudulent claims.

“I think in many respects, the SCI’s report was a wake-up call to lawmakers about the abuse going on in charity care,” said Senator Vitale. “Up to that point, the funding of the charity care program had been done through a parochial lens, with legislators seeking funding on behalf of local hospitals, but not really scrutinizing where those funds were going. After the SCI, we took more of a systemwide look at how charity care was being abused and defrauded, and this legislation is in response to that.

“For too long, New Jersey’s charity care safety net has been a glaring example of good health care policy turned bad by lack of serious oversight,” added Senator Vitale. “With this new law in place, we can reclaim charity care, and ensure that we are getting the greatest return on our State’s health care investment.”

The bill was approved by both houses of the Legislature earlier in the month.

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