New Jersey Department of Health (DOH) 

Office of Special Education Programs (OSEP) 

Fiscal Monitoring Instrument (FMI): 

FFY 2018 

New Jersey Department of Health (DOH) 

Please note the following abbreviations are used in the Fiscal Monitoring Instrument 

(FMI): 

EI – early intervention 

EIS provider – early intervention service provider 

FFY – Federal fiscal year 

IDEA – Individuals with Disabilities Education Act 

IFSP- individualized family service plan 

LA – lead agency 

SoP –System of Payments 

Scope of Monitoring: 

OSEP’s IDEA Part C Fiscal Monitoring in 2018 examined implementation by the State lead 

agency (LA) of the State’s System of Payments (SoP) as funding sources to pay for the 

provision of IDEA Part C early intervention (EI) services. 

Regarding the New Jersey’s SoP, OSEP examined how the State LA ensures compliance with 

IDEA Part C if the State uses one or more of the following three sources of funding to pay for 

IDEA Part C services: 

(I) Private health insurance; 

(II) Public health insurance benefits; and 

(III) Family Fees. 

In conducting the monitoring, OSEP reviewed the State’s SoP policies and procedures and

other related State-submitted documentation. OSEP also conducted onsite monitoring with 

State LA staff on May 29, 2018. 
New Jersey Department of Health (DOH) 

IDEA Part C 

Summary of Monitoring Criteria 

Monitoring Area 1, IDEA Part C: System of Payments (SoP)

Under IDEA Part C, a State may adopt SoP policies to fund early intervention (EI) services consistent with 34 CFR §§303.13(a)(3) 

and 303.203(b). The SoP can include cost participation fees consistent with 34 CFR §§303.520 and 303.521. States must also

demonstrate compliance with the requirements regarding the use of IDEA Part C funds. The focus of this monitoring activity is to 

examine New Jersey’s implementation of its SoP policies and procedures.

I. Description of New Jersey’s Early Intervention System

The New Jersey Department of Health (DOH) is the lead agency (LA) responsible for the development and implementation of the 

New Jersey Early Intervention System (NJEIS). According to the State’s Federal fiscal year (FFY) 2018 IDEA Part C grant 

application, the LA allocates a portion of its IDEA Part C grant funds to contract with four Regional Early Intervention Collaboratives

(REICs) and with 13 Service Coordinator Units (SCUs). The REICs are responsible for: 1) regional system point of entry for referral 

to the NJEIS; 2) facilitating access and availability of EI services; and 3) assisting the LA with data collection, child find/public 

awareness, family support and personnel development. The SCUs are responsible for ensuring that service coordinators are 

accurately completing family cost share and income verification forms and for maintaining and updating IFSP’s and income forms 

and submitting them to the REIC’s in a timely manner. Under its SoP, the LA utilizes public insurance, and family cost participation to 

support its NJEIS program. According to its SoP, there are no costs associated with the use of public benefits in NJ and NJEIS does 

not include the use of private insurance. Family cost participation is based on family size, income and federal poverty level 

guidelines. In addition to utilizing IDEA Part C funds, a State appropriation, public insurance and family cost participation fund EI 

services to infants, toddlers and their families. During monitoring discussions, the LA reported that NJEIS has established billing 

rates for EI services and the services provided to each child on the IFSP must be authorized by NJEIS to be provided and billed. The 

LA also reported that it has a centralized management office that provides payments to local early intervention service providers and 

collects reimbursements from public insurance sources. The LA described its model as a “pay and chase” system and funds that are 

collected from payor sources are reallocated back into the program.

During fiscal monitoring discussions with OSEP, the LA reported that it had not conducted fiscal monitoring of the REICs or other 

NJEIS contractors since 2009. The LA stated that it has a desk audit and risk assessment process and that those processes 

primarily focus on programmatic indicators such as IDEA’s State Performance Plan indicators. When OSEP asked the LA if there 

were any oversight mechanisms in addition to the programmatic monitoring, the LA reported that it meets with REICs monthly and 
New Jersey Department of Health (DOH) 

3 

conducts onsite monitoring of its local EI provider agencies when there is an issue that needs to be addressed. The LA reported it is 

still working with its new data system1to produce more local level reporting and SoP implementation accountability. This concern is 

addressed in the findings and corrective actions below. 

Criterion Number Description

Noncompliance 

identified? Applicable Requirements

I. General Requirements: 

Criterion 1.1 The State is implementing its SoP policies and 

procedures consistently with the payor of last resort 

requirements for the use of IDEA Part C funds, including 

ensuring that IDEA Part C funds are not used for 

services that would have been otherwise paid for from 

another public or private source. 

No 34 CFR §303.510(a) and 

(b).

Criterion 1.2 If families are charged out of pocket costs such as 

copayments, deductibles, or family fees, the State is 

implementing its SoP policies and procedures 

consistently with the State’s:

 definition of inability to pay/ability to pay;

 definition of income, family expenses, and 

extraordinary medical expenses; and

 process for determining ability or inability to pay.

Yes 34 CFR §303.521(a)(3)

Criterion 1.3 The State is implementing its SoP policies and 

procedures consistently with the requirement that fees 

will not be charged to parents for the following services 

that a child is entitled to receive at no cost including;

 child find, evaluations and assessments, service 

coordination services, administrative and 

coordinative activities related to procedural 

safeguards, and the development, review and 

evaluation of IFSPs and interim IFSPs.

No 34 CFR §§303.521(a)(4)(i)

and 303.521(b)

 

1

 In 2017 the State began updating its NJEIS data system in order to account for more data and oversight of the Part C program. 
New Jersey Department of Health (DOH) 

4 

Criterion Number Description

Noncompliance 

identified? Applicable Requirements

Criterion 1.4 The State ensures that the inability of the parents of an 

infant or toddler with a disability to pay for services will 

not result in a delay or denial of Part C services.

No 34 CFR §303.521(a)(4)(ii)

Criterion 1.5 The State ensures that Part C services are not delayed 

or denied to parents or families determined unable to 

pay under the State’s definition of inability to pay. 

No 34 CFR §303.520(c)

Criterion 1.6 The State ensures that parents are provided with

documentation that identifies their procedural safeguard 

options with regard to any disputes for payment for Part 

C services under the State’s SoP.

Yes 34 CFR §303.521(e)

II. Use of Public Benefits or Public Health Insurance: A State may use public health benefits or public insurance to pay for 

IDEA Part C services. If the State uses such public benefits or insurance, it must: (1) obtain prior written parental consent for the 

use of public benefits or insurance if the child or parent is not already enrolled in the program, or if the use of public insurance or 

benefits would result in certain specified costs; and (2) provide written notification to parents prior to using a child’s or parent’s 

public benefits or insurance, regardless of whether or not parental consent is required.

Criterion 1.7 The State ensures compliance with the requirement that

parents cannot be required to sign up for public benefits 

or insurance as a condition of receiving IDEA Part C EI 

services.

No 34 CFR §303.520(a)(2)(i)

Criterion 1.7.1 The State ensures compliance with the requirement that

consent must be obtained prior to using a child’s or 

parent’s public benefits or insurance when that child or 

parent is not already enrolled in the public benefits or 

insurance.

No 34 CFR §303.520(a)(2)(i)
New Jersey Department of Health (DOH) 

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Criterion Number Description

Noncompliance 

identified? Applicable Requirements

Criterion 1.7.2 The State ensures compliance with consent 

requirements when the use of public insurance or 

benefits to pay for Part C services would result in 

specified costs such as: 

 A decrease in the available lifetime coverage or 

any other insured benefit for that child or parent 

under that program; 

 The child’s parents paying for services that would 

otherwise be covered by the public benefits or 

insurance program;

 Any increase in premiums or discontinuation of 

public benefits or insurance for that child or that 

child’s parents; or risk of loss of eligibility for the 

child or that child’s parents; or

 Loss of eligibility for the child or that child’s 

parents for home and community-based waivers 

based on aggregate health-related 

expenditures). 

No 34 CFR §303.520(a)(2)(ii).
New Jersey Department of Health (DOH) 

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Criterion Number Description

Noncompliance 

identified? Applicable Requirements

Criterion 1.7.3 The State ensures that, prior to using a child’s or 

parent’s public insurance to pay for EI services, parents 

are provided with written notification that includes:

 The requirement that parental consent must be 

obtained (where applicable) before the State lead 

agency or EIS provider discloses a child’s 

personally identifiable information (PII) to the 

State public agency responsible for the 

administration of the State’s public benefits or 

insurance program for billing purposes;

 Information about IDEA Part C public 

benefits/insurance no-cost protection provisions;

 Information about the parent’s right to withdraw 

consent for sharing PII (where such consent is 

required); and

 Categories of costs that parents might incur as a 

result of participating in a public benefits or 

insurance program.

Yes 34 CFR §303.520(a)(3) 

and 34 CFR §303.414

Finding: 

Criteria 1.2, 1.6 and 1.7.3: Based on OSEP’s interviews with LA staff, a review of documents submitted by the LA including but not 

limited to: the New Jersey Early Intervention System, System of Payments and Family Cost Participation Handbook, NJEIS cost 

participation forms and an onsite demonstration of its web-based Early Intervention Information Management System, the State was 

unable to demonstrate that it has a monitoring system or effective controls in place to ensure compliance with the following 

requirements: 

1.2: Implementing its SoP policies and procedures consistently with the State’s process for determining ability or inability to pay as 

required when the State charges out of pocket costs to families such as family fees (34 CFR §303.521(a)(3)). During monitoring 

discussions with OSEP, the LA reported that service coordinators are responsible for collecting family income documentation, filling 

out the family cost participation form and having the family attest to its accuracy. Income information is entered into an electronic 

database to generate the family cost share or determine a family’s ability or inability to pay. Under the State’s SoP, SCUs are 

responsible for “ensuring that the individual service coordinator accurately completes the Family Cost Participation Income 
New Jersey Department of Health (DOH) 

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Verification Form, reviews and verifies supporting documentation, and maintains appropriate documents in the child’s early 

intervention service coordination file”. The LA reported that SCUs do not retain supporting income documents from service 

coordinators aside from the NJEIS family cost share forms, and the LA relies on families to report billing mistakes that arise from an 

incorrect determination of a family’s ability to pay for EI services. The LA acknowledged that it has had concerns with the accuracy of 

the information entered into its data base to calculate family cost share and determine ability to pay. The LA told OSEP that a 

decision not to keep the supporting income documentation was made in 2010 and the current data system does not allow for 

documents to be uploaded at this time.2

 The LA reported that although SCUs maintain family cost share documentation including a 

family’s attestation of income, it does not have a process of monitoring or adequate controls in place to determine the accuracy of the 

documents to ensure that the family cost share is performed correctly. 

1.6: Parents are informed of their procedural safeguard options with regard to payment for Part C as required by 34 CFR 

§303.521(e). During monitoring discussions, the LA explained that parents are informed of their rights through various methods. 

Specifically, the LA reported that service coordinators are responsible for providing parents with the Family Cost Participation 

Handbook at intake. Once found eligible for services the NJEIS Family Cost Participation Income Documentation form which 

contains information related to family’s rights around payment for Part C services is signed by parents. As part of the monitoring 

process the LA provided OSEP with evidence of two family cost share income documentation forms. One form that OSEP reviewed 

was signed and dated while the other form was filled out but not signed or dated by the family demonstrating inconsistent practices 

within the program. When OSEP asked if the LA reviewed local level information to ensure parents receive their procedural 

safeguard options with regard to payment for Part C services, the LA reported that it does not have a system in place that would 

require this information to be reviewed unless a problem was brought to their attention. 

1.7.3: Prior to using a child’s or parent’s public insurance to pay for EI services, parents are provided with written notification 

consistent with 34 CFR §303.520(a)(3) and 34 CFR §303.414. During monitoring discussions, the LA told OSEP that when parents 

sign up for public insurance the Department of Human Services (DHS), Division of Medical Assistance and Health Services, the 

State agency that administers Medicaid, provides families with the required written notification. The NJEIS SoP policy on file with 

OSEP, states that “prior to using a child’s or parents’ public benefits or insurance to pay for Part C services, the DOH provides 

written notification to the child’s parents.” The LA depends on DHS to provide the notice to parents and was unable to produce 

evidence demonstrating its oversight of this requirement. 

Citation: 

Criteria 1.2, 1.6, and 1.7.3: Under 34 CFR §303.120(a)(1), each State’s system must include a single line of responsibility in a LA, 

designated or established by the Governor, “that is responsible for the general administration and supervision of programs and 

activities administered by agencies, institutions, organizations, and EIS providers receiving assistance under part C of the Act.” This 

 

2

 The LA noted that the State auditor and the New Jersey Office of Management and Budget have recommended that NJEIS keep income 

information in order to determine accuracy in income reporting.
New Jersey Department of Health (DOH) 

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includes the NJEIS monitoring and enforcing the implementation of Part C of the IDEA by its REICs and SCUs to ensure the State 

complies with Part C of the Act. If the LA identifies noncompliance, it must ensure that the noncompliance is corrected as soon as 

possible and in no case later than one year after the LA’s identification of the noncompliance consistent with 34 CFR 

§303.120(a)(2)(iv). Further under 2 CFR §200.303, the LA must establish internal controls in order to “comply with Federal statutes, 

regulations, and the terms and conditions of Federal awards,” and the LA must monitor its compliance with the requirements of the 

Federal award. 

Specific to criterion 1.2, the LA must also have a system in place to ensure that accurate information is obtained from parents to 

ensure that family cost share is calculated correctly. Under 34 CFR §303.224(b) the LA must “keep records and afford access to those 

records as the Secretary may find necessary to ensure compliance with the requirements of this part, the correctness and verification of 

reports, and the proper disbursement of funds provided under this part.” Also, under 2 CFR §200.333 of the Office of Management and 

Budget’s Uniform Guidance (OMB Uniform Guidance), “financial records, supporting documents, statistical records, and all other 

non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of 

the final expenditure report.” Under 34 CFR §303.521€, a family’s supporting documentation of reported income would be relevant if 

a family wishes to content the imposition of a fee through the State’s due process procedures. Although OSEP does not prescribe 

specific documents that must be maintained by a State, due to the LA’s inability to ensure that it is meeting its monitoring 

requirements under 34 CFR §303.120(a)(2) to ensure compliance with 34 CFR §303.521(a)(3), OSEP finds that the State is not 

meeting the Federal record retention requirements as stated above. 

Additionally, specific to criterion 1.7.3, based on OSEP’s review of documents submitted by the LA including the NJ Family Care 

Application, Notice of Privacy Practices and related documents for public insurance that the LA reported is provided to parents by the 

NJ DHS, OSEP found that the documentation does not contain all of the required information consistent with 34 CFR §303.520(a)(3) 

and 34 CFR §303.414. Specifically, OSEP found that the Notice of Privacy Practices did not include the requirements that: (1) 

parental consent must be obtained (where applicable) before the State lead agency or EIS provider discloses a child’s PII to the 

State public agency responsible for the administration of the State’s public benefits or insurance program for billing purposes; (2) 

information about IDEA Part C public benefits/insurance no-cost protection provisions and; (3) categories of costs that parents might 

incur as a result of participating in a public benefits or insurance program. Under 34 CFR §303.520(a)(3) and 34 CFR §303.414, prior 

to using a child’s or parent’s public insurance to pay for EI services, the LA must provide parents with written notification that 

includes: 1) the requirement that parental consent must be obtained (where applicable) before the State lead agency or EIS provider 

discloses a child’s PII to the State public agency responsible for the administration of the State’s public benefits or insurance program 

for billing purposes; 2) information about IDEA Part C public benefits/insurance no-cost protection provisions; 3) information about 

the parent’s right to withdraw consent for sharing PII (where such consent is required); and 4) categories of costs that parents might 

incur as a result of participating in a public benefits or insurance program. As part of the State’s IDEA Part C grant application, the LA 

also provides an assurance to OSEP that it is meeting this requirement. 
New Jersey Department of Health (DOH) 

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Further Action Required: 

Within 120 days of receipt of this letter, DOH must: 

1. Provide OSEP with a plan outlining how DOH will monitor programs and activities used by the State to carry out the 

requirements of IDEA Part C consistent with IDEA section 635(a)(10) and 34 CFR §303.120(a)(2). The monitoring of 

programs and activities must include oversight of the State’s SoP including criteria 1.2, 1.6 and 1.7.3. 

2. Provide OSEP with policies and/or procedures to ensure that it is keeping the necessary documentation related to a family’s 

ability and inability to pay and family cost participation in order for the LA to meet the requirements listed in corrective action 

1, specific to criterion 1.2. 

3. Provide OSEP with revised written notification forms consistent with 34 CFR §303.520(a)(3) and 34 CFR §303.414, related to 

criterion 1.7.3 

4. Amend its SoP policy to ensure its practice under 34 CFR §303.520(a)(3) and 34 CFR §303.414 is consistent with its policy 

on file with OSEP, specific to criterion 1.7.3, or the State will have to respond with “No” and a date for Section II.A.3a in its 

FFY2019 IDEA Part C grant application. 

Additionally, within one year of the receipt of this letter, DOH must provide OSEP with evidence of implementation such as 

monitoring reports or other supporting documentation demonstrating the State’s oversight of the requirements and implementation of 

internal controls as listed in corrective actions 1, 2 and 3.