DEPARTMENT OF HEALTH & HUMAN SERVICES Office of Inspector General

Washington, D.C. 20201

September 13, 2010

TO: Donald M. Berwick, M.D.

Administrator
Centers for Medicare & Medicaid Services

FROM: /George M. Reeb/

Acting Deputy Inspector General for Audit Services

SUBJECT: Review of Concurrently Enrolled State Children’s Health Insurance Program and
Medicaid Beneficiaries in Florida From April 1, 2007, Through March 31, 2008
(A-04-09-03046)

Attached, for your information, is an advance copy of our final report on concurrently enrolled
Children’s Health Insurance Program and Medicaid beneficiaries in Florida. We will issue this
report to the Florida Agency for Health Care Administration within 5 business days.

If you have any questions or comments about this report, please do not hesitate to call me, or
your staff may contact Robert A. Vito, Acting Assistant Inspector General for the Centers for
Medicare & Medicaid Audits, at (410) 786-7104 or through email at [email protected]
or Peter J. Barbera, Regional Inspector General for Audit Services at (404) 562-7750 or through
email at [email protected]. Please refer to report number A-04-09-03046 in all
correspondence.

Attachment
 DEPARTMENT OF HEALTH & HUMAN SERVICES OFFICE OF INSPECTOR GENERAL

Office of Audit Services, Region IV

61 Forsyth Street, S.W., Suite 3T41
Atlanta, GA 30303

September 15, 2010

Report Number: A-04-09-03046

Mr. Thomas W. Arnold

Secretary
Florida Agency for Health Care Administration
2727 Mahan Drive—Mail Stop #1
Tallahassee, FL 32308

Dear Mr. Arnold:

Enclosed is the U.S. Department of Health & Human Services (HHS), Office of Inspector
General (OIG), final report entitled Review of Concurrently Enrolled State Children’s Health
Insurance Program and Medicaid Beneficiaries in Florida From April 1, 2007, Through
March 31, 2008. We will forward a copy of this report to the HHS action official noted on the
following page for review and any action deemed necessary.

The HHS action official will make final determination as to actions taken on all matters reported.
We request that you respond to this official within 30 days from the date of this letter. Your
response should present any comments or additional information that you believe may have a
bearing on the final determination.

Section 8L of the Inspector General Act, 5 U.S.C. App., requires that OIG post its publicly
available reports on the OIG Web site. Accordingly, this report will be posted at
http://oig.hhs.gov.

If you have any questions or comments about this report, please do not hesitate to call me, or contact
John Drake, Audit Manager, at (404) 562-7755 or through email at [email protected]. Please
refer to report number A-04-09-03046 in all correspondence.

Sincerely,

/Peter J. Barbera/
Regional Inspector General
for Audit Services

Enclosure
Page 2 – Mr. Thomas W. Arnold

Direct Reply to HHS Action Official:

Ms. Jackie Garner

Consortium Administrator
Consortium for Medicaid and Children’s Health Operations (CMCHO)
Centers for Medicare & Medicaid Services
233 North Michigan Avenue, Suite 600
Chicago, IL 60601
 Department of Health & Human Services
OFFICE OF
INSPECTOR GENERAL

REVIEW OF CONCURRENTLY
ENROLLED STATE CHILDREN’S
HEALTH INSURANCE PROGRAM AND
MEDICAID BENEFICIARIES IN FLORIDA
FROM APRIL 1, 2007, THROUGH
MARCH 31, 2008

Daniel R. Levinson
Inspector General

September 2010
A-04-09-03046
 Office of Inspector General
http://oig.hhs.gov

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is
to protect the integrity of the Department of Health & Human Services (HHS) programs, as well as the
health and welfare of beneficiaries served by those programs. This statutory mission is carried out
through a nationwide network of audits, investigations, and inspections conducted by the following
operating components:

Office of Audit Services

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with
its own audit resources or by overseeing audit work done by others. Audits examine the performance of
HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are
intended to provide independent assessments of HHS programs and operations. These assessments help
reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS.

Office of Evaluation and Inspections

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress,
and the public with timely, useful, and reliable information on significant issues. These evaluations focus
on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of
departmental programs. To promote impact, OEI reports also present practical recommendations for
improving program operations.

Office of Investigations
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and
misconduct related to HHS programs, operations, and beneficiaries. With investigators working in all 50
States and the District of Columbia, OI utilizes its resources by actively coordinating with the Department
of Justice and other Federal, State, and local law enforcement authorities. The investigative efforts of OI
often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties.

Office of Counsel to the Inspector General

The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering
advice and opinions on HHS programs and operations and providing all legal support for OIG’s internal
operations. OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS
programs, including False Claims Act, program exclusion, and civil monetary penalty cases. In
connection with these cases, OCIG also negotiates and monitors corporate integrity agreements. OCIG
renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides
other guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement
authorities.
 Notices

THIS REPORT IS AVAILABLE TO THE PUBLIC

at http://oig.hhs.gov

Section 8L of the Inspector General Act, 5 U.S.C. App., requires

that OIG post its publicly available reports on the OIG Web site.

OFFICE OF AUDIT SERVICES FINDINGS AND OPINIONS

The designation of financial or management practices as

questionable, a recommendation for the disallowance of costs
incurred or claimed, and any other conclusions and
recommendations in this report represent the findings and
opinions of OAS. Authorized officials of the HHS operating
divisions will make final determination on these matters.
 EXECUTIVE SUMMARY

BACKGROUND

Pursuant to Title XIX of the Social Security Act (the Act), Medicaid pays for medical assistance
for certain individuals and families with low income and resources. Pursuant to Title XXI of the
Act, the State Children’s Health Insurance Program (SCHIP, now known as CHIP) provides free
or affordable health care coverage to uninsured children in families whose incomes are too high
to qualify for Medicaid but too low to afford private health care coverage.

The Federal and State Governments jointly fund and administer both Medicaid and SCHIP. The
Centers for Medicare & Medicaid Services (CMS) administers both programs at the Federal
level. To participate in the programs, a State must receive CMS’s approval of a State plan. The
State plan is a comprehensive document that defines how each State will operate its programs,
including program administration, eligibility criteria, service coverage, and provider
reimbursement.

The Florida Agency for Health Care Administration (the State agency) operates both Medicaid
and SCHIP. The Florida Department of Children and Families (DCF) determines Medicaid
eligibility. The State agency contracts with other entities to provide various SCHIP services; the
largest of these is the Florida Healthy Kids Corporation (FHKC), which determines SCHIP
eligibility and pays most SCHIP capitation payments.

The Federal medical assistance percentages (FMAP) are used to determine the amount of Federal
financial participation (FFP), or matching funds, for State expenditures in Medicaid and other
certain social services. For Medicaid, section 1905(b) of the Act specifies the formula for
calculating the FMAPs. The Federal Government uses enhanced FMAPs to determine the
amount of FFP for State expenditures in SCHIP. The formula for calculating the enhanced
FMAP is found under section 2105(b) of the Act. The State agency reports its expenditures to
CMS for FFP on Forms CMS-64 (Medicaid) and CMS-21 (SCHIP). In Florida, the FMAP
ranged from 56.83 percent to 58.76 percent and the enhanced FMAP ranged from 69.78 percent
to 71.13 percent during our audit period. During our audit period, the State agency claimed FFP
of $7,957,995,310 and $272,971,981 for Medicaid and SCHIP, respectively.

OBJECTIVE

Our objective was to determine whether the State agency claimed SCHIP FFP for individuals
who were also enrolled in Medicaid from April 1, 2007, through March 31, 2008.

SUMMARY OF FINDINGS

The State agency claimed enhanced FFP for SCHIP enrollees who were also enrolled in
Medicaid. Of the 100 concurrent enrollment-months in our sample, 93 totaling $8,304 FFP were
not allowable for Federal reimbursement under SCHIP because the beneficiaries were also
enrolled in Medicaid. We found no errors in the remaining seven enrollment-months. Based on
our sample results, we estimated that from April 1, 2007, through March 31, 2008, the State

i
agency claimed $5,348,853 in FFP for SCHIP enrollees who were concurrently enrolled in
SCHIP and Medicaid for a total 65,121 enrollment-months.

The concurrent enrollments occurred primarily because:

• Medicaid enrollment can be retroactive for up to 3 months, during which time the
individual may also have been enrolled in SCHIP.

• The State agency’s partners (DCF and FHKC) that administer the Medicaid and SCHIP
programs did not have adequate internal controls to prevent or correct concurrent
enrollments promptly.

RECOMMENDATIONS

We recommend that the State agency:

• make a financial adjustment of $5,348,853 on Form CMS-21 for FFP claimed on behalf
of SCHIP enrollees who were also enrolled concurrently in Medicaid,

• make regular financial adjustments on future Forms CMS-21 to correct FFP claimed on
behalf of SCHIP enrollees who are enrolled concurrently in Medicaid, and

• develop additional policies and procedures to prevent or recoup SCHIP payments made
on behalf of individuals who are enrolled concurrently in Medicaid.

STATE AGENCY COMMENTS

In written comments on our draft report, the State agency disagreed with our overall findings. In
addition, the State agency said that four instances we cited were not errors because it made a
Medicaid capitation but no SCHIP capitation payment. The State agency provided
documentation to support that no SCHIP payment had been made.

The State agency said that in most cases, Medicaid claims were not paid for the audit month.
The State agency further said that because it took reasonable action to comply with its approved
State plan and duplicate payments were minimal, the Office of Inspector General should limit its
recommended disallowance to duplicate payments rather than to improper SCHIP payments
based on duplicate enrollment. Appendix C contains the State Agency’s response, excluding the
additional documentation it provided. We excluded the additional documentation because it
contained personally identifiable information.

OFFICE OF INSPECTOR GENERAL RESPONSE

Based on our analysis of additional information the State agency provided, we reduced: (1) the
number of unallowable concurrent enrollment months from 97 to 93, (2) the estimated total
concurrent enrollment months from 68,982 to 65,121, and (3) the recommended overpayment
recovery from $5.6 million to $5.3 million.

ii
In regard to the State agency’s comments that our recommended disallowance should be limited
to duplicate payment rather than to improper SCHIP payments based on duplicate enrollment,
Federal law prohibits SCHIP payments for expenditures for child health assistance provided for a
targeted low-income child under its SCHIP State plan for which payment has been made or can
reasonably be expected to be made under any other Federal health insurance program. Further, if
a child does not meet the definition of a targeted low income child for SCHIP eligibility, i.e., a
child who is eligible for Medicaid, he or she is ineligible for SCHIP. Therefore, no SCHIP
payment is allowable for health care coverage, unless presumptive eligibility is applicable.
Therefore, our findings on this issue remain unchanged.

iii
 TABLE OF CONTENTS
Page

INTRODUCTION.........................................................................................................................1

BACKGROUND ...................................................................................................................... 1

Medicaid and State Children’s Health Insurance Program ........................................... 1

Florida’s Medicaid and State Children’s Health Insurance Program ........................... 1

OBJECTIVE, SCOPE, AND METHODOLOGY .................................................................... 2

Objective ....................................................................................................................... 2
Scope ............................................................................................................................. 2
Methodology ................................................................................................................. 2

FINDING AND RECOMMENDATIONS .................................................................................. 3

CONCURRENTLY ENROLLED INDIVIDUALS ................................................................. 4

Federal and State Requirements.................................................................................... 4

State Children’s Health Insurance Program Payments Made on Behalf
of Individuals Enrolled in Medicaid .......................................................................... 4
Retroactive Medicaid Enrollment and Inadequate Controls Between Programs.......... 5
Improperly Claimed Federal Financial Participation .................................................... 7

RECOMMENDATIONS .......................................................................................................... 7

STATE AGENCY COMMENTS ............................................................................................. 7

OFFICE OF INSPECTOR GENERAL RESPONSE ............................................................... 7

APPENDIXES

A: SAMPLE DESIGN AND METHODOLOGY

B: SAMPLE RESULTS AND ESTIMATES

C: STATE AGENCY COMMENTS

iv
 INTRODUCTION

BACKGROUND

Medicaid and State Children’s Health Insurance Program

Pursuant to Title XIX of the Social Security Act (the Act), Medicaid pays for medical assistance
for certain individuals and families with low income and resources. Pursuant to Title XXI of the
Act, the State Children’s Health Insurance Program (SCHIP 1) provides free or affordable health
care coverage to uninsured children in families whose incomes are too high to qualify for
Medicaid but too low to afford private health care coverage.

The Federal and State Governments jointly fund and administer both Medicaid and SCHIP. The
Centers for Medicare & Medicaid Services (CMS) administers both programs at the Federal
level. To participate in the programs, a State must receive CMS’s approval of a State plan. The
State plan is a comprehensive document that defines how each State will operate its programs,
including program administration, eligibility criteria, service coverage, and provider
reimbursement.

The Federal medical assistance percentages (FMAP) are used to determine the amount of Federal
financial participation (FFP), or matching funds, for State expenditures in Medicaid and other
certain social services. For Medicaid, section 1905(b) of the Act specifies the formula for
calculating the FMAPs. The Federal Government uses enhanced FMAPs to determine the
amount of FFP for State expenditures in SCHIP. The formula for calculating the enhanced
FMAP is found under section 2105(b) of the Act.

Florida’s Medicaid and State Children’s Health Insurance Program

The Florida Agency for Health Care Administration (State agency) operates both Medicaid and
SCHIP. The Florida Department of Children and Families (DCF) determined Medicaid
eligibility. The State agency makes payments to providers on behalf of Medicaid-eligible
individuals for fee-for-service claim or monthly capitation payments.

The State agency contracts with other entities to provide various SCHIP services; the largest of
these is the Florida Healthy Kids Corporation (FHKC), which determines SCHIP eligibility and
pays SCHIP monthly capitation payments.

If an individual is eligible for Medicaid, he or she is ineligible for SCHIP. Concurrent

enrollment arises when an individual is enrolled in both SCHIP and Medicaid. Payment for a
concurrently enrolled beneficiary could take three forms:

1. FHKC makes an SCHIP capitation payment on behalf of an enrolled individual and the
State agency makes a Medicaid capitation payment on behalf of the same individual.

1
This program was renamed the Children’s Health Insurance Program as of February 4, 2009.

1
 2. FHKC makes an SCHIP capitation payment on behalf of an enrolled individual and the
State agency pays Medicaid fee-for-service claims for the same individual.

3. FHKC makes an SCHIP capitation payment on behalf of an enrolled individual who is

also eligible for Medicaid but the State agency does not pay any Medicaid fee-for-service
claims for that individual.

The State agency reports its expenditures to CMS for Federal reimbursement on Forms CMS-64
(Medicaid) and CMS-21 (SCHIP). In Florida, the Federal medical assistance percentage
(FMAP) ranged from 56.83 percent to 58.76 percent and the enhanced FMAP ranged from
69.78 percent to 71.13 percent during our audit period. During our audit period, the State agency
claimed FFP of $7,957,995,310 and $272,971,981 for Medicaid and SCHIP, respectively.

OBJECTIVE, SCOPE, AND METHODOLOGY

Objective

Our objective was to determine whether the State agency claimed SCHIP FFP for individuals
who were also enrolled in Medicaid from April 1, 2007, through March 31, 2008.

Scope

From a population of 74,630 enrollment-months, we reviewed 100 during which individuals

were concurrently enrolled in SCHIP and Medicaid from April 1, 2007, through March 31, 2008.
We did not evaluate the State agency’s eligibility determinations for our enrollment-months
beyond determining whether SCHIP enrollees were concurrently enrolled in Medicaid.

We performed fieldwork at the State agency and FHKC in Tallahassee, Florida, from February
through August 2009.

Methodology

To accomplish our objective, we:

• reviewed Federal and State laws, regulations, and other guidance related to Medicaid and
SCHIP enrollment;

• interviewed State agency officials to identify the State agency’s policies and procedures
for coordinating Medicaid and SCHIP enrollment;

• obtained Medicaid and SCHIP enrollment files from April 1, 2007, through March 31,
2008;

• matched Medicaid and SCHIP enrollment files for the same months to identify
individuals who were enrolled in both programs during the same month, i.e., a concurrent
enrollment-month;

2
 • selected a sample of 100 concurrent enrollment-months from the matched enrollment file;

• for all 100 sampled enrollment-months, reviewed available Medicaid and SCHIP
records—including enrollment applications, case notes, correspondence, and other
supporting documentation—and verified concurrent enrollment with State agency
officials;

• for all 100 sampled enrollment-months, calculated the amount of unallowable payments
by subtracting the monthly family contribution from the monthly SCHIP payment and
multiplying the net amount by the applicable FMAP; and

• estimated the number of concurrent enrollment-months and the total amount of

unallowable payments in our sampling frame.

See Appendix A for a complete description of our sampling methodology and Appendix B for
our sample results.

We conducted this performance audit in accordance with generally accepted government

auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a reasonable basis
for our findings and conclusions based on our audit objective.

FINDING AND RECOMMENDATIONS

The State agency claimed FFP for SCHIP enrollees who were also enrolled in Medicaid. Of the
100 concurrent enrollment-months in our sample, 93 totaling $8,304 FFP were not allowable for
Federal reimbursement under SCHIP because the beneficiaries were also enrolled in Medicaid.
We found no errors in the remaining seven sampled enrollment-months. Based on our sample
results, we estimated that from April 1, 2007, through March 31, 2008, the State agency claimed
$5,348,853 in FFP for SCHIP enrollees who were concurrently enrolled in SCHIP and Medicaid
for a total 65,121 enrollment-months.

The concurrent enrollments occurred primarily because:

• Medicaid enrollment can be retroactive for up to 3 months, during which time the
individual may have been enrolled in SCHIP.

• The State Agency’s partners (DCF and FHKC) that administer Medicaid and SCHIP did
not have adequate internal controls to prevent or correct concurrent enrollments
promptly.

3
CONCURRENTLY ENROLLED INDIVIDUALS

Federal and State Requirements

Pursuant to section 2105(a)(1)(A) of the Act, SCHIP is available to targeted low-income

children. Section 2110(b)(1)(C) of the Act defines targeted low-income children as those not
found to be eligible for Medicaid or covered under a group health plan or other health insurance
coverage.

Section 2105(c)(6)(B) of the Act specifically prohibits SCHIP payments for which payment has
been made or can reasonably be expected to be made under any other Federal health care
insurance program.

Federal regulations (42 CFR § 457.350(a)(1)) require States to use screening procedures to
ensure that only targeted low-income children are furnished child health assistance. If the
children are potentially eligible for Medicaid, the State must facilitate application to Medicaid.
Otherwise, the State screens the children for SCHIP eligibility (42 CFR § 457.350(a)(2)).

Section 4.3 of the Florida SCHIP State Plan requires, as a condition for SCHIP eligibility, that
the child is uninsured and ineligible for Medicaid.

Because only targeted low-income children are eligible for coverage through SCHIP, and by
definition such children are ineligible for Medicaid, there should not be concurrent enrollment in
Medicaid and SCHIP.

State Children’s Health Insurance Program Payments Made On Behalf of

Individuals Enrolled in Medicaid

Of the 100 concurrent enrollment-months in our sample, 93 totaling $8,304 FFP were not
allowable for Federal reimbursement under SCHIP because the beneficiaries were also enrolled
in Medicaid.

Of the 93 sampled enrollment-months:

• 12 were for individuals concurrently enrolled for 1 month or less;

• 42 were for individuals concurrently enrolled for 2 months;

• 35 were for individuals concurrently enrolled for 3 months; and

• 4 were for individuals concurrently enrolled for more than 3 months.

The longest period for which an individual was concurrently enrolled was 7 months. The State
agency did not credit the Federal Government for FFP claimed during the individuals’ months of
concurrent enrollment.

4
Of the 93 sampled enrollment-months:

• 12 were for individuals on whose behalf the State agency also made Medicaid capitation
payments, totaling $1,248;

• 11 were for individuals on whose behalf the State agency also paid Medicaid fee-for-
service claims, totaling $2,797; and

• 70 were for individuals enrolled in Medicaid on a fee-for-service basis but on whose

behalf the State agency did not pay any Medicaid claims.

Retroactive Medicaid Enrollment and Inadequate Controls Between Programs

Retroactive Medicaid Enrollment

The combination of retroactive Medicaid enrollment and prospective SCHIP coverage can result
in monthly SCHIP capitation payments being made before an individual’s eligibility for
Medicaid is established. Florida provides Medicaid coverage for the full month if an individual
is eligible at any time during the month. 2 In addition, Medicaid enrollment can be retroactive for
up to 3 months if the individual would have been eligible during the retroactive period. 3 SCHIP
eligibility, however, is determined prospectively, as is its annual redetermination. Once an
individual is enrolled in SCHIP, the individual is eligible for continuous coverage for 12 months.
Thus, an SCHIP enrollee may apply for Medicaid coverage and be determined retroactively
eligible for Medicaid while still enrolled in SCHIP.

For example:

• FHKC referred an SCHIP enrollee to Medicaid on December 12, 2007. The individual
was then enrolled in Medicaid retroactively to December 1, 2007. This individual was
already covered under SCHIP for the month of December, thus creating a concurrent
enrollment-month.

• An individual was enrolled in SCHIP effective April 1, 2007. The individual then
applied for Medicaid on May 14, 2007, and was retroactively covered for Medicaid
effective March 1, 2007. The period of concurrent enrollment lasted for 3 months, from
April through June.

• An individual was enrolled in SCHIP effective July 1, 2007. On August 7, 2007, the
individual was referred from SCHIP to Medicaid. The individual’s Medicaid coverage
was retroactive to July 1, 2007. The period of concurrent enrollment lasted for 5 months,
from July through November.

2
42 CFR § 435.914(b) and Attachment 2.6-A of the Florida Medicaid State Plan
3
Section 1902(a)(34) of the Act and 42 CFR § 435.914(a)

5
State agency officials knew of no provision in contracts with SCHIP providers to retroactively
cancel SCHIP coverage when retroactive Medicaid coverage has been established. In addition, if
an SCHIP enrollee appeals the determination that he or she is no longer eligible for SCHIP
because of entitlement to Medicaid, the enrollee’s coverage under SCHIP will continue during
the appeal.

Inadequate Controls Between Programs

The State agency’s partners (DCF and FHKC) that administered Medicaid and SCHIP did not
have adequate internal controls to prevent or correct concurrent enrollments promptly. All new
SCHIP applicants were screened to ensure they were not enrolled in Medicaid. Based on
periodic screenings during redeterminations or upon inquiry from enrollees, FHKC identified
enrollees that were potentially Medicaid-eligible and referred them to DCF. Also, the State
matched Medicaid and SCHIP enrollment records monthly to identify concurrent enrollment. 4
However, the results from the referrals and data matches were not always acted on promptly,
allowing concurrent enrollments to continue.

Some of our concurrent enrollment-months involved individuals with multiple Medicaid and
SCHIP referrals, primarily due to fluctuations in the individuals’ income. For these individuals,
careful program coordination and prompt followup on data matches is critical to prevent
concurrent enrollments from continuing for multiple months.

For example:

• FHKC referred an SCHIP enrollee to Medicaid on December 12, 2007. The enrollee’s
Medicaid eligibility became effective on December 1, 2007; however, the enrollee did
not receive a letter from FHKC until February 5, 2008, indicating that the individual was
enrolled in Medicaid and the enrollee’s SCHIP coverage would terminate at midnight on
March 1, creating 3 concurrent enrollment-months.

• Another SCHIP enrollee’s file indicated that both Medicaid and SCHIP coverage began
in November 2007. FHKC did not identify the concurrent enrollment until January 2008.
The individual was concurrently enrolled for 3 months from November 2007 through
January 2008.

• One individual was enrolled in Medicaid effective January 1, 2008. FHKC sent a letter
to the individual dated March 6, 2008, over 2 months after the Medicaid effective date,
indicating that FHKC received information that the individual was enrolled in Medicaid
and that his SCHIP coverage would terminate at midnight on April 1, 2008. Ultimately,
the individual was concurrently enrolled for 3 months during our audit period.

4
After our audit period, FHKC increased the frequency of these data matches to daily.

6
Improperly Claimed Federal Financial Participation

We estimated that from April 1, 2007, through March 31, 2008, the State agency claimed
$5,348,853 in FFP, which was based on the enhanced FMAP, for individuals who were
concurrently enrolled in SCHIP and Medicaid.

While these payments were ineligible for Federal reimbursement, services that were eligible for
reimbursement under Medicaid may have been provided to individuals under SCHIP.
Determination of the specific services provided to the individuals in our sample, and whether
these services were reimbursable under Medicaid, was beyond the scope of our audit.

RECOMMENDATIONS

We recommend that the State agency:

• make a financial adjustment of $5,348,853 on Form CMS-21 for FFP claimed on behalf
of SCHIP enrollees who were enrolled concurrently in Medicaid,

• make regular financial adjustments on future Forms CMS-21 to correct FFP claimed on
behalf of SCHIP enrollees who are enrolled concurrently in Medicaid, and

• develop additional policies and procedures to prevent or recoup SCHIP payments made
on behalf of individuals who are enrolled concurrently in Medicaid.

STATE AGENCY COMMENTS

In written comments on our draft report, the State agency disagreed with our overall findings. In
addition, the State agency said that four instances we cited were not errors because it made a
Medicaid capitation but no SCHIP capitation payment. The State agency provided
documentation to support that no SCHIP payment had been made.

The State agency said that in most cases, Medicaid claims were not paid for the audit month.
The State agency further said that because it took reasonable action to comply with its approved
State plan and duplicate payments were minimal, the Office of Inspector General should limit its
recommended disallowance to duplicate payments rather than to improper SCHIP payments
based on duplicate enrollment. Appendix C contains the State Agency’s response, excluding the
additional documentation it provided. We excluded the additional documentation because it
contained personally identifiable information.

OFFICE OF INSPECTOR GENERAL RESPONSE

Based on our analysis of additional information the State agency provided, we reduced: (1) the
number of unallowable concurrent enrollment months from 97 to 93, (2) the estimated total
concurrent enrollment months from 68,982 to 65,121, and (3) the recommended overpayment
recovery from $5.6 million to $5.3 million.

7
In regard to the State agency’s comments that our recommended disallowance should be limited
to duplicate payments rather than improper SCHIP payments based on duplicate enrollment,
Federal law prohibits SCHIP payments for expenditures for child health assistance provided for a
targeted low-income child under its SCHIP State plan for which payment has been made or can
reasonably be expected to be made under any other Federal health insurance program. Further, if
a child does not meet the definition of a targeted low income child for SCHIP eligibility, i.e., a
child who is eligible for Medicaid, he or she is ineligible for SCHIP. Therefore, no SCHIP
payment is allowable for health care coverage, unless presumptive eligibility is applicable.
Therefore, our findings on this issue remain unchanged.

8
APPENDIXES
 Page 1 of 2

APPENDIX A: SAMPLE DESIGN AND METHODOLOGY

Population

The population consisted of individuals in Florida who were concurrently enrolled in Medicaid
and the State Children’s Health Insurance Program (SCHIP) for at least a portion of the same
month from April 1, 2007, through March 31, 2008.

Sampling Frame

We downloaded a database of enrolled Medicaid individuals from April 1, 2007, through

March 31, 2008, from the Medicaid Statistical Information System. We also obtained a database
of enrolled SCHIP individuals from April 1, 2007, through March 31, 2008, from the Florida
Healthy Kids Corporation. We matched the Medicaid data with the SCHIP data to create a
database of concurrent enrollees. This database contained 42,217 individuals with 74,630
concurrent enrollment-months during our 1-year audit period.

Sample Unit

The sample unit was a concurrent enrollment-month.

Sample Design

We used a simple random sample.

Sample Size

We selected a sample of 100 concurrent enrollment-months.

Source of Random Numbers

The random numbers used in our sample were generated by Office of Inspector General/Office
of Audit Services (OIG/OAS) statistical software.

Method of Selecting Sample Items

We consecutively numbered the sample units in the frame from 1 to 74,630. After generating
100 random numbers, we selected the corresponding frame items.

Treatment of Missing Sample Items

There were no missing sample items.

 Page 2 of 2

Estimation Methodology

We used the OIG/OAS statistical software to estimate the amount of Federal financial
participation (FFP) related to SCHIP payments for concurrently enrolled individuals that the
State agency claimed improperly.

Description of How Results Are Reported

Our estimates are reported at the lower limit for a 90-percent confidence interval. See
Appendix B for the complete listing of sample results.
 APPENDIX B: SAMPLE RESULTS AND ESTIMATES

Number of Ineligible
Value of Ineligible
Frame Sample Value of Concurrent
Payments
Size Size Sample Enrollment-Month
(FFP)
Payments

74,630 100 $14,061 93 $8,304

Estimates
(Limits Calculated for a 90-Percent Confidence Interval)

Estimated Number of
Estimated Dollar Value of
Concurrent Enrollment-
Ineligible Payments (FFP)
Months
Point Estimate 69,406 $6,197,021
Lower Limit 65,121 $5,348,853
Upper Limit 72,142 $7,045,188
 Page I of3

APPENDIX C: STATE AGENCY COMMENTS

CHARLIE CR IST THOMAS W ARNOtD

BettIN HNIth Care rex ,II FJorldI.n.
GOVERNOR SECRETARY

June 30, 20 I 0

Mr. Peter J. Barbera

Regional lnspeclorGeneral fol' Audit Services
Department ofHeallh and Human Services
Office orlnspcctOl" General, Region IV
61 Forsyth Street, S.w., Room 3T41
Atlanta, GA 30303-8909

RE: A-04-09·03046

Dear Mr. Barbera:

Thank you for the opponunity 10 respond 10 the Office of Inspector General ', draft: repon,
Review ojCmICU"elllly NlJ'olJed Chi/dren '.f Health InSI/Tan" Program and Medicaid
Beneficiorie.I' in Florida From April I, 2007, Through March 3/, 2008. We would like 10 take
this opportunity respond to the findings in general and point oul our findings on four individual
children cited as being in error.

The fo llowing four children only had a Title XIX Medicaid capitation paid during the audit
month. FMMlS screen prints are enclosed, sbowing capitation payments made under a Medicaid
category code.

I.
Sam Ie #

J2
Momh Evaluated
August 2007
June 2007
CHIP Pa 0",
0
0
Medicaid Pa 001
$106.85
$ 99.28
34 Se tember 2007 0 $117.55
60 AuguS12007 0 S 99.28
Total Not in Error $422.96

We are not in agreement with your overall findings. Tille XXI policy and procedures were
followed according 10 our approved Title XXI State Plan Amendment #17, in effect during 2007
and 2008. The following sections pertain to Medicaid refe!l1lis:

• Section 4.3 (page 49) discusses Ihat a referral will be made to Medicaid when a dC(;rease
in the family income makes the child potentially eligible for Medicaid .

2727 M.'II" 0.,"' . M.II Slop ' I V,.'t AHCA on lln• •1

Tell.h. . . . . . Fl 32308 . ~c • . mytlo.ld. com
 Page 2 of3

Peter 1. Barbera
June 30, 2010
Page Two

• Section 4.3 (page 50) discusses the CHIP renewal process and timeframes.

• Section 4.4.1. discusses the assurances that the screening process preventS children
eligible for Medicaid or other health care coverage from gening CHIP coverage.

• Section 4.4.2. discusses the assurances that the screening process identifies children
potentially eligible for Medicaid and refers to Medicaid.

• Section 2.3 discusses the coordination between CHIP and other public and private health
insurance plans,

• Section S.7. J discusses the assurances that reasonable notice is provided to families when
changes are made to a child's CHJP coverage.

Tn almost all of the cases, on the first day of the audit month when the CHlP coverage was
provided. the child was not Medicaid elig ible. The Depanmenl of Children and Families (DCF),
determines el igibility for Medicaid. DCF determi ned Medicaid eligibility after the beginning of
the audit month and aut horized Medicaid coverage back to the month of the Mcdicaid referral.
DCF authorized Mcdicaid coverage according to 42 CFR 435.930 and 42 CFR 435.9 14 which
requi res that Medicaid coverage begins on the fir51 day oftht: month of application, or in these
instances. the first day ofthe month of the Medicaid referra l.

In most cases, a CHI·P capitation was paid to a CtUP health plan at the beginning of the audit
month and services were provided through the CfUP plan. Then, at the later date when DCF
detcnnined Medicaid eligibility, Medicaid fee-for.service coverage was provided. In most cases.
Medicaid claims were not paid for the audit month. There were only 12 cases where a Medicaid
fee-for-service claim was paid and 13 cases where a Medicaid capitation was paid to a Medicaid
provider.

Recognizing thai our approved Siale Plan can result in dual enrollment, we minimize il by
running a Medicaid match each month on all active CHIP enrollees, and since 2008, we also run
a dail y match for pending applicants. We intend 10 slart running a second Medicaid malch each
month to identify individuals enrolled later in that month. This will help identify children
approved for Medicaid later in the month who were not included in the earlier malch process.

We are in agreement Ihat it serves no purpose to have a child dually enrollcd and is not an
effective use of state and federal funds; however, CHIP funding should not be subject to
recoupment w hen the State took reasonable action 10 comply wilh our approved State Plan and
duplicate payments were minimal. As a result, we request that DIG reconsider the overpayment
and refine the amount so that it is limited to duplicate payment instead of duplicate enroll ment.
 Page 3 of3

Peter J_ Barbera
Ju ne 30, 2010
Page Three

The Agency for Health Care Administration is exploring additional methods for minimizi ng or
avoiding dual enroll ment as we go forward . With guidance from the Centers for Medicare and
Medicaid Services and consultations wit h the Agency's legal counsel, we hope to implement a
new process to avoid dual enrollment.

Thank you for the opportunity to respond to th is draft audit report. Should you have any
questions regarding our request, please contact Gail Hanse n, Program Administrator over CHlP,
at (850) 4 12.-4195.

Sincerely.

~UJ CJrP
Thomas W. Arnold
Secretary

TWNgh
Enclosures