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Report Number:

2006-046

Report Title:

Agency for Health Care Administration - KidCare Program - Monitoring and Other Issues - Operational Audit

Report Period:

07/2004-03/2005 and Selected Actions through 06/2005

Release Date:

10/28/2005

The Florida KidCare Program was created to provide health care benefits to previously uninsured, low-income children.  The Agency for Health Care Administration (AHCA) is the lead State agency for the Federally funded portion of the KidCare Program.  The Florida Healthy Kids Corporation (FHKC), under contract with AHCA, is the largest of several providers of KidCare services.  FHKC responsibilities include eligibility determination, collection of premiums, contracting with authorized insurers, and the development of benefit packages.  Approximately $531 million was budgeted for the KidCare Program (excluding Children’s Medicaid) for the 2004-05 fiscal year.  Of that amount, $398 million was budgeted for FHKC.

The audit, for the period July 2004 through March 2005, and selected actions taken through June 2005, disclosed the following issues related to Program monitoring and hurricane-related premium waivers: 

AHCA Monitoring

Finding No. 1:    AHCA should enhance procedures to ensure that funds advanced to FHKC are reflective of FHKC’s current level of spending.  Reductions in the level of enrollment resulted in a surplus of $20 million in State funds advanced over actual FHKC disbursements as of March 2005.

Finding No. 2:    AHCA did not document its approval of FHKC’s increase in the administrative rate from $3.33 to $6.00 per child per month.  Further, FHKC could not document the reasonableness of the rate. 

Finding No. 3:    AHCA did not periodically verify capitation rates and enrollment counts reported on monthly invoices submitted by FHKC.  In one instance, the capitation rate paid by FHKC to an insurance company was not in accordance with contracted rates, resulting in a $607,783 overpayment over a six-month period. 

Finding No. 4:    AHCA did not adopt rules relating to the KidCare Program as statutorily required.

FHKC Monitoring

Finding No. 5:    Although FHKC contracted with a third party administrator to perform eligibility determinations for the KidCare Program, FHKC retained certain monitoring responsibilities.  Given recent Program changes, FHKC monitoring efforts were insufficient to timely detect and correct errors in eligibility determinations.   

Hurricane-Related Premium Waivers

Finding No. 6:    FHKC, without prior authorization, waived clients’ insurance premiums during the 2004 active hurricane season.

Finding No. 7:    As of June 1, 2005, FHKC had not remitted premium payments totaling approximately $1.6 million collected on behalf of the Children’s Medical Services Program and the MediKids Program to AHCA as required by contract.

The Secretary of the Agency for Health Care Administration and the Executive Director of Florida Healthy Kids Corporation, respectively, provided responses which are included in their entirety at the end of this report as Exhibits B and C.