Provides for oversight of DHS contracts with providers serving persons with developmental disabilities.

S4488

SENATE, No. 4488

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 22, 2026

Sponsored by:

Senator� LINDA R. GREENSTEIN

District 14 (Mercer and Middlesex)

SYNOPSIS

���� Provides for oversight of DHS contracts with
providers serving persons with developmental disabilities.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning contracting by the Department of Human
Services and supplementing Title 30 of the Revised Statutes.

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

���� 1.��� As used in this act:

���� "Commissioner" means
the Commissioner of Human Services.

���� "Department" means
the Department of Human Services.

���� "Division" means the
Division of Developmental Disabilities in the Department of Human Services.

���� "Expenditure report"
means a report which contains summary information for each budgetary category
specified in a contract, including, but not limited to, equipment, personnel,
supplies, and general and administrative costs.

���� "Negative contracting
action" means conditional renewal, non-renewal, imposition of a
probationary period or termination of a contract, and also includes nonpayment
pending compliance with corrective or remedial action specified by the Department
of Human Services.

���� "Office of the State
Comptroller" or "office" means the office established pursuant
to P.L.2007, c.52 (C.52:15C-1 et seq.).

���� "Provider" means a
for-profit or nonprofit entity that is under contract with the Department of
Human Services to provide services to persons with developmental disabilities.

���� "Services" means
services as defined in section 3 of P.L.1977, c.82 (C.30:6D-3).

���� 2.��� a.� The Commissioner of
Human Services shall require a provider to submit to the Division of
Developmental Disabilities, no later than 30 days after the end of a quarter or
at more frequent intervals as specified by the department, an expenditure
report for each contract for services for persons with developmental
disabilities the provider has entered into with the department.

���� b.��� If a provider fails to
submit an expenditure report for a contract pursuant to this section, such
contract shall be subject to negative contracting action.

���� c.���� The Office of the State
Comptroller shall review, on a random basis, and the division shall review, on
an ongoing basis, expenditure reports submitted to the division pursuant to
this section and include in their reviews, at a minimum, an analysis of whether:

���� (1)�� an expenditure contained
in the report and identified by the division or office is appropriate and
reasonable;

���� (2)�� proper documentation is
available to support the expenditure; and

���� (3)�� expenditures for general
and administrative costs are within the 10 percent limit specified in section 3
of this act.

���� d.��� The office shall conduct
the review required by this section and submit a report of its findings
pursuant to P.L.2007, c.52 (C.52:15C-1 et seq.).

����
3.��� a.� A contract
for services for persons with developmental disabilities entered into between
the department and a provider on or after the effective date of this act,
including the renewal of a contract entered into prior to the effective date,
shall stipulate that the expenditure of State funds for general and
administrative costs shall not exceed 10 percent of the provider's annual
expenditure of State contract funds.

���� b.��� In the case of a
provider whose contract is in effect on the effective date of this act and
whose general and administrative expenses exceed the 10 percent limit specified
in this section, the department shall attempt to modify the contract to limit
general and administrative costs to 10 percent, in accordance with this
section.

���� c.���� If a provider exceeds
the 10 percent limit on general and administrative costs stipulated in a
contract entered into with the department, such contract shall be subject to
negative contracting action.

���� 4.��� The director of the
division, or the director�s designee, shall review a provider's performance to
determine whether services for which the provider is under contract with the
department are being performed, and whether the provider's performance contributes
to the success of a person with a developmental disability in attaining the
goals and objectives specified in the person's individualized habilitation plan
developed pursuant to section 10 of P.L.1977, c.82 (C.30:6D-10), in accordance
with the provisions of this section.

���� a.���� A contract
administrator shall, at least once every 12 months, conduct an unannounced
visit of a provider to review whether the provider is performing the services
specified in the provider's contract and whether those services are
contributing to the success of a person with a developmental disability in
attaining the goals and objectives specified in the person's individualized
habilitation plan.� The contract administrator shall summarize the findings of
the visit in a report which shall be submitted to the director, or the
director�s designee, no later than 30 days following the date of the visit.

���� b.��� Prior to renewal of a
contract of a provider, the director, or the director�s designee, shall
evaluate the report submitted pursuant to subsection a. of this section and the
summary of the results from the survey about the provider, as specified in
section 5 of this act.

���� c.���� If the director, or the
director�s designee, after evaluating a report of an unannounced visit and a
summary of the results from the survey about a provider, determines that
persons with developmental disabilities are not succeeding in attaining the
goals and objectives specified in their individualized habilitation plans as a
result of the provider's inability to contribute to the success of a person
with a developmental disability in attaining those goals and objectives, the
contract of that provider shall not be renewed and may be subject to other
negative contract action, as appropriate.

���� 5.��� a.� The division shall
prepare a form to survey: (1) the employees and other persons who perform
contracted services on behalf of a provider for persons with developmental
disabilities eligible for services from the division; and (2) the parents or
legal guardians of the persons with developmental disabilities receiving those
services from the provider.� The survey shall provide the employees and other
persons who perform the contracted services, and the parents or guardians, with
an opportunity to provide feedback to the division about the ability of the
provider to provide services that contribute to the success of a person with a
developmental disability in attaining the goals and objectives specified in the
person's individualized habilitation plan.

���� b.��� The division shall
distribute the survey form to a provider who shall require completion of the
form by an employee and any other person who performs contracted services for
persons with developmental disabilities on behalf of the provider.

���� c.���� The division shall
distribute the form to a parent or legal guardian of a person with a
developmental disability receiving services from that provider.

���� d.��� An employee or other
person performing contracted services on behalf of a provider and a parent or
legal guardian shall submit the completed survey form to the division.� The
division shall compile, review, and issue a summary of the results of the survey,
which shall be included in a determination whether to renew a contract of a
provider or take negative contracting action against a provider, in accordance
with subsection c. of section 4 of this act.

���� 6.��� Before taking negative contracting
action pursuant to this act, the department shall give notice to a provider
personally or by mail to the last known address of the provider with return
receipt requested.� The notice shall afford the provider the opportunity to be
heard and to contest the department's action.� The hearing shall be conducted
in accordance with the "Administrative Procedure Act," P.L.1968,
c.410 (C.52:14B-1 et seq.).

���� 7.��� The department shall
examine the feasibility of adopting an outcome-based contracting payment system
for the division that specifies desired outcomes for persons with developmental
disabilities receiving services from a provider under contract with the
department, and confers payment to the provider as the persons with
developmental disabilities who are receiving services from the provider reach
pre-defined steps along the way to achieving the specified desired outcomes.

���� 8.��� The Commissioner of
Human Services shall adopt rules and regulations, pursuant to the
"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.),
to carry out the provisions of this act.

���� 9.��� This act shall take
effect on the first day of the seventh month next following the date of
enactment, but the Commissioner of Human Services may take such anticipatory
administrative action in advance thereof as shall be necessary for the
implementation of this act.

STATEMENT

���� This bill provides for
oversight of the contracts the Department of Human Services (DHS) enters into
with providers serving persons with developmental disabilities who are eligible
for services from the Division of Developmental Disabilities (DDD).� In August
2009, the Office of the State Comptroller issued a report concerning DDD
entitled "A Performance Audit of Oversight of Third-Party Contracts,"
which raised several concerns and made recommendations to DHS about contracts
for DDD services.� This bill addresses some of those concerns and
recommendations by establishing requirements for provider expenditure reports,
a 10 percent cap on providers' general and administrative costs, and provider
performance reviews, in order to ensure that State funds are spent on services
that help improve outcomes for persons with developmental disabilities.

���� Specifically, the bill
provides that, with regard to expenditure reports, the Commissioner of Human
Services is to require a provider of services to persons with developmental
disabilities to submit to DDD, no later than 30 days after the end of a quarter
or at more frequent intervals as specified by DHS, an expenditure report for
each contract the provider has entered into with DHS.� If a provider fails to
submit the report, the provider's contract would be subject to "negative
contracting action," which is defined in the bill as conditional renewal,
non-renewal, imposition of a probationary period, or termination of a contract,
and also includes nonpayment pending compliance with corrective or remedial
action.� The Office of the State Comptroller, on a random basis, and the DDD,
on an ongoing basis, are to review expenditure reports and include in their
reviews, at a minimum, an analysis of whether: �an expenditure contained in the
report and identified by the office is appropriate and reasonable; proper
documentation is available to support an expenditure; and expenditures for
general and administrative costs are within the 10 percent limit specified in
the bill.� The office would conduct the review and submit a report of its
findings pursuant to P.L.2007, c.52 (C.52:15C-1 et seq.).�

���� With regard to the 10 percent
cap on general and administrative costs, the bill provides that a contract
entered into on or after the effective date of the bill, including renewal of an
earlier contract, is to stipulate that the expenditure of State funds for general
and administrative costs of the provider shall not exceed 10 percent of the
provider's annual expenditure of State contract funds.� In the case of a
provider whose contract is in effect on the bill�s effective date and whose
general and administrative expenses exceed 10 percent, DHS is to attempt to
modify the contract to include the 10 percent cap.� If a provider exceeds the
10 percent cap stipulated in a contract, the contract would be subject to
negative contracting action.

���� With regard to performance
reviews, the bill requires the Director of DDD, or the director�s designee, to
review a provider's performance to determine whether services for which the
provider is under contract are being performed and whether the provider's
performance contributes to the success of a person with a developmental
disability in attaining the goals and objectives specified in the person's
individualized habilitation plan developed pursuant to section 10 of P.L.1977,
c.82 (C.30:6D-10).� Specifically, a contract administrator will be required, at
least once every 12 months, to conduct an unannounced visit of a provider to
review whether the provider is performing the services specified in the
provider's contract and whether those services are contributing to the success
of a person with a developmental disability in attaining the goals and
objectives specified in the person's individualized habilitation plan.� The
contract administrator is to summarize the findings of the visit in a report to
be submitted to the director, or the director�s designee, no later than 30 days
following the date of the visit.�

���� Prior to renewal of a
provider�s contract, the director, or the director�s designee, will be required
to evaluate the contract administrator's report and a summary of the results
from a survey of:� 1) the provider's employees; 2) other persons providing
services on behalf of the provider; and 3) the parents and legal guardians of
persons with developmental disabilities who are receiving services from the
provider.� DDD is to prepare a survey form for completion by these persons.�
The survey is to provide these persons with an opportunity to provide feedback
to the division about the ability of the provider to provide services that
contribute to the success of a person with a developmental disability in
attaining the goals and objectives specified in the person's individualized
habilitation plan.� If, after the evaluation of a report of an unannounced
visit and the review of the provider�s survey results, the division director,
or the director�s designee, determines that persons with developmental
disabilities are not succeeding in attaining the goals and objectives specified
in their individualized habilitation plans as a result of the provider's
inability to contribute to the success of a person with a developmental
disability in attaining those goals and objectives, the provider�s contract may
not be renewed and may be subject to other negative contract action, as
appropriate;

���� Before taking negative
contracting action, DHS will be required to give notice to a provider, either
personally or by mail to the last known address of the provider with return
receipt requested.� The notice would afford the provider the opportunity to be
heard and to contest the department's action.�

���� DHS will be required to
examine the feasibility of adopting an outcome-based contracting payment system
for DDD that specifies desired outcomes for persons with developmental
disabilities receiving services from a provider and that confers payment to the
provider as the persons with developmental disabilities who are receiving
services reach pre-defined steps or "milestones" along the way to
achieving the specified desired outcomes.� This type of payment system, known
as the "Milestone Payment System," is used in about 15 other states,
including, Oklahoma, Massachusetts, Texas, and New York.