Key Takeaways
- New Jersey S-3463/A-4790 raises the Medicaid Personal Care Assistance receipts threshold triggering a triennial health care service firm audit from more than $250,000 to more than $500,000 and establishes a September 30 audit filing deadline.
- All health care service firms must continue to submit annual financial statements, while firms with $10 million or more in gross income remain subject to an annual audit. Removal of the prior $1 million gross-income floor may also create new reporting obligations for smaller firms.
- The required report is narrower and no longer must be prepared by an independent third-party practitioner. The Division of Consumer Affairs, however, may request additional information, order corrective action and require a subsequent-year audit following an adverse finding.
New Jersey bill S-3463/A-4790 materially revises the financial reporting requirements applicable to health care service firms (HCSFs). The law, signed this month by Gov. Mikie Sherill, took effect immediately, establishing September 30 as the deadline for required audits and directing the Division of Consumer Affairs to adopt implementing regulations.
The legislation provides audit relief to certain firms while broadening the potential population subject to the separate HCSF report. Providers should, therefore, reassess their filing category rather than assume that the higher audit threshold eliminates their annual reporting obligations.
What Changed
An HCSF receiving more than $500,000 for New Jersey Medicaid Personal Care Assistance services is now subject to the triennial audit requirement. The prior threshold was more than $250,000. The audit remains due in the third calendar year after registration and every third year thereafter, but must now be submitted by September 30 of the year in which it is due.
This may eliminate the triennial audit requirement for firms with applicable receipts of more than $250,000 but less than $500,000, provided another audit trigger does not apply. An HCSF generating $10 million or more in gross income must still submit an annual audit regardless of its Medicaid Personal Care Assistance receipts.
The law also permits required audits to be performed by CPAs licensed in New Jersey or another U.S. jurisdiction, expanding the pool of qualified practitioners available to affected firms.
What Did Not Change
Every HCSF must continue to submit annual financial statements prepared by it and consistent with its New Jersey tax filing for the year covered. This obligation applies even when no audit is required.
The required audit must continue to cover the firm’s financial records and statements, general management and internal control systems. It must include financial and compliance components; an unmodified opinion and any management letters prepared in connection with the engagement.
Accordingly, firms should not wait until September to begin preparing. Unsupported balances, incomplete records or unresolved accounting matters could delay completion or prevent issuance of the required opinion.
The Revised Report Requirement
HCSFs receiving less than $500,000 for New Jersey Medicaid Personal Care Assistance services and generating less than $10 million in gross income, must submit a report for the applicable year.
The former law generally limited this category to firms with at least $1 million but less than $10 million in gross income. Removal of the $1 million floor means some smaller firms that previously fell outside the report requirement may now have a filing obligation. The law, therefore, reduces the audit burden for certain providers while potentially extending reporting requirements for others.
The report no longer must be prepared by an independent third-party practitioner. It must include information regarding the firm’s insurance coverage; litigation and regulatory actions, including their disposition, during the preceding three years; independent contractors used during the reporting year; and transactions and liabilities exceeding 50% of total billings or total liabilities, as applicable.
These disclosures focus on financial and operational risk, including insurance coverage or exposure, litigation exposure, contractor dependence and significant concentrations. Management should ensure the report agrees with the accounting records, legal information and annual financial statements.
Corrective Action and Financial Viability
The simplified report is not merely an administrative filing. If the Division questions a HCSF’s financial viability, it may request additional information, make an adverse finding and order corrective action.
The statute also provides for further review following an adverse finding and requires an audit for the next calendar year regardless of gross income. Providers should, therefore, fully support report disclosures and resolve inconsistencies before submission.
Preparing for the September 30 Audit Deadline
The September 30 audit deadline aligns with the HCSF registration cycle. The Division currently states that registrations expire September 30 and renewal applications must be submitted before October 1 with any required financial statements, reports or audits.
Firms requiring an audit should close and reconcile the applicable period, prepare complete financial statements, obtain support for significant balances and transactions, address proposed adjustments and control matters and allow sufficient time to finalize the audit and management representations.
Why This Matters for Providers
Providers should separately calculate gross income and receipts specifically attributable to New Jersey Medicaid Personal Care Assistance services, confirm their registration date and triennial audit cycle and document the basis for the selected filing category.
Implementing guidance will remain important because the law directs the Division to adopt rules to effectuate the revised requirements. The statute requires an audit of when applicable receipts exceed $500,000 and a report when they are below $500,000, but it does not expressly address exactly $500,000. A firm at that threshold should obtain clarification before filing.
Bottom Line
S-3463/A-4790 provides meaningful audit relief by increasing the Medicaid Personal Care Assistance threshold and establishing a September 30 deadline. It also simplifies the separate report and expands the pool of CPAs eligible to perform required audits.
The law is not blanket deregulation. Annual financial statements remain required for all HCSFs, the $10 million annual audit threshold remains and removal of the $1 million report floor may create new obligations for smaller providers. Firms should determine their filing category using supportable financial information, prepare early and monitor implementing guidance.
We Can Help
PKF O’Connor Davies works with home care providers and health care service firms to evaluate reporting requirements, prepare supporting documentation, assess audit readiness and address financial statement and compliance audit needs. As New Jersey implements the revised framework, providers should assess whether their records, systems and controls can support both current filings and continued regulatory oversight.
Contact Us
For questions about New Jersey’s revised health care service firm requirements or preparation for the September 30 deadline, please contact your PKF O’Connor Davies client service team or:
Keith Solomon, CPA
Partner, Health Care Practice Leader
ksolomon@pkfod.com | 914.341.7078
Michael Thilker, CPA, CITP
Partner
mthilker@pkfod.com | 856.441.0217