NJ FamilyCare is meant to help working poor parents and children.
But the state auditor found vendors aren't performing eligibility checks and the state isn't checking applications for unreported income.
The state also failed to try to collect $4.6 million owed to the program by 16,300 people who were disenrolled, the audit found.
The findings come with the state struggling to pay for health care for the poor and uninsured.
The problems, the audit found, has allowed at least three people with self-employment incomes of $295,000, $186,000 and $177,700 to enroll in the program.
The program is supposed to serve, for example, parents in a family of four making up to about $28,000 per year.
The state is spending $535 million per year on NJ FamilyCare, which provides services such as immunizations, hospitalization, lab tests, X-rays, prescription drugs and dental and mental health services.
About 122,500 children and 89,000 adults are enrolled. Depending on income, some pay no copayments, while others pay fees much cheaper than private insurance.
The audit found:
- About 13,000 participants weren't sent renewal applications as of September, though regulations require eligibility be determined annually. The audit found $43.1 million was paid to these participants from July 2005 to September without knowing if they remain eligible.
- Some beneficiaries failed to report all income on FamilyCare applications, including income earned through self-employment, rentals, interest and dividends. Applicants authorize the program to match applications with their tax return, but the state isn't checking all tax files.
- Auditors found nearly 7,000 cases where the applicant reported $10,000 or more in self-employment income on their 2006 tax return, including those who failed to report self-employment incomes of $295,000, $186,000 and $177,700 on their NJ FamilyCare applications.
No names were included on the audit.
Besides recommending the state match all NJ FamilyCare applications with tax returns, the audit also recommended the state consider prosecuting enrollees who fail to accurately report income.
In a written response to the audit, John R. Guhl, a division director with the state Department of Human Services, said officials are working on a way to match applications with tax returns and will also report inaccurate applications to authorities.
Guhl also said he believes officials have resolved computer problems that led to missed renewal applications.
AP-NY-03-31-08 1357EDT
