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N.J. investigating health care

Two audits turned up wasteful spending in state-run programs designed to help the poor.

TRENTON - Wealthy people are enrolled in a state-run health-care program for working poor families, and criminal investigators are examining another state health program for the poor, according to new state audits that found shocking displays of wasted money.

The reviews by the state auditor found people earning as much as $295,000 enrolled in a program designed to help low-income working parents receive health care.

They also found the state failing to properly oversee medical equipment purchases and revealed that the state New Jersey Division of Criminal Justice has subpoenaed records from a state Medicaid program that paid a contractor to sanitize and refurbish medical equipment even though the contractor only inventoried new equipment.

The contractor isn't named, and the state Attorney General's Office did not immediately respond to a request for comment. The audit said the records were subpoenaed in March 2007 and remain under investigation.

That was among numerous problems found by the two new audits reviewing the state's Medicaid and NJ FamilyCare programs.

Senate Budget Chairwoman Barbara Buono deemed the findings "outrageous" and vowed to convene a hearing.

"It's indefensible that the audit has found such major weaknesses in several areas," Buono (D., Middlesex) said.

Medicaid serves more than one million poor residents. NJ FamilyCare serves about 212,000 low-income children and working parents. Both use state and federal money.

The audits, which come while the state is struggling to pay for health care for the poor and uninsured, found:

Some beneficiaries failed to report all income on NJ FamilyCare applications. Applicants authorize the program to match applications with their tax return, but the state isn't checking all tax files, allowing people with ineligible incomes to enroll.

About 13,000 NJ FamilyCare participants weren't sent renewal applications, 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 whether they remained eligible.

The state failed to try to collect $4.6 million owed to NJ FamilyCare by 16,300 people.

The state paid $2.1 million from July 2005 to December for medical equipment that should have been paid for by nursing facilities.

The state is failing to monitor medical equipment providers. For example, a provider billed the Medicaid program $30,000 for 48,000 adult incontinence briefs, though the audit found only 10,000 briefs were bought. Auditors said they've referred this and other examples to state criminal investigators.

The state spent $6.7 million more in state and federal money than was needed to rent oxygen equipment and buy adult incontinence briefs.

"The audit's findings are very troubling," Assemblyman Richard Merkt (R., Morris), said.

In a written response to the audits, John R. Guhl, a division director with the state Department of Human Services, disagreed with some findings and said the division lacks sufficient staff.

He said he believes officials have resolved computer problems that led to missed renewal applications.

Guhl also defended the contract under criminal investigation, saying the state did nothing wrong in paying for a company to refurbish medical equipment even though it was never done.

Human Services spokeswoman Suzannne Esterman said officials are working on a way to match applications with tax returns and will report inaccurate applications to authorities.