REPORT DIGEST COVERING ALL KIDS HEALTH INSURANCE PROGRAM PROGRAM AUDIT FOR THE YEAR ENDED: JUNE 30, 2015 Release Date: August 2016 State of Illinois, Office of the Auditor General FRANK J. MAUTINO, AUDITOR GENERAL To obtain a copy of the Report contact: Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703 (217) 782-6046 or TTY (888) 261-2887 This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov Public Act 95-985 amended the Covering ALL KIDS Health Insurance Act (215 ILCS 170/63) directing the Auditor General to annually audit the EXPANDED ALL KIDS program beginning June 30, 2008, and each June 30th thereafter. This is the seventh annual audit (FY15), and follows up on the Department of Healthcare and Family Services’ (HFS) and the Department of Human Services’ (DHS) actions to address prior audit findings. The audit found: 1. In FY15, children enrolled in EXPANDED ALL KIDS increased by 25% to 102,182. 2. The total number of recipients increased from 52,075 on June 30, 2014 (FY14) to 66,258 on June 30, 2015 (FY15). The number of undocumented immigrant recipients decreased from 30,441 in FY14 to 26,183 in FY15. 3. The number of citizen/documented immigrant recipients (Premium Level 2) almost doubled from 21,634 in FY14 to 40,075 in FY15. 4. Of the 29,881 EXPANDED ALL KIDS recipients that required an annual redetermination of eligibility in FY15, we found 3,715 (12%) were not redetermined annually as required. 5. We tested 40 initial eligibility cases from FY15, and determined HFS and DHS were missing documentation needed to verify residency in 30 percent of cases, birth/ age in 38 percent of cases, and one month’s income in 38 percent of cases. 6. We tested 40 cases redetermined in FY15, and determined HFS and DHS were missing documentation needed to verify residency in 20 percent of cases and birth/age in 78 percent of cases. Of the 35 cases tested where recipients reported having some income, we found 30 days of income was reviewed in all cases; however, we did identify 2 of the 35 cases (6%) where caseworkers did not calculate the income correctly. 7. In FY15, 157 recipients received 1,276 services totaling $104,704 after the month of their 19th birthday. Additionally, there were 477 individuals who were enrolled with more than one identification number. 8. We tested initial eligibility cases and cases redetermined during FY15. We found that 44 percent of the initial cases (17 of 39), and 23 percent of the redetermined cases (9 of 40), were coded as “undocumented” even though we found evidence supporting citizenship or documented immigrant status. 9. HFS and DHS did not identify the correct citizenship status for 5,999 recipients, and as a result, the State lost $2.8 million in federal matching Medicaid funds in FY15. This issue has been reported since the first ALL KIDS audit, which was for FY09. 10. In 2011, HFS made the procedures for orthodontic services less stringent, which increased orthodontia services from $322,892 in FY10 to $3.6 million by FY14. We recommended that HFS review and monitor eligibility for orthodontic services more effectively. AUDIT SUMMARY AND RESULTS Effective July 1, 2006, Illinois’ KidCare program, which included Medicaid and State Children’s Health Insurance Program (SCHIP) populations, was expanded by the Covering ALL KIDS Health Insurance Act (Act) to include all uninsured children not previously covered. The expansion added children whose family income was greater than 200 percent of the federal poverty level and all undocumented immigrant children. At that time, the KidCare program was renamed ALL KIDS. Throughout this audit, we will refer to the portion of the ALL KIDS program that serves the uninsured children not previously covered by KidCare as “EXPANDED ALL KIDS.” Since the EXPANDED ALL KIDS program is a subset of a much larger ALL KIDS program, many of the recommendations in this report may be relevant to the program as a whole. Public Act 95-985 amended the Covering ALL KIDS Health Insurance Act (215 ILCS 170/63) directing the Auditor General to annually audit the EXPANDED ALL KIDS program beginning June 30, 2008, and each June 30th thereafter. The Public Act was effective June 1, 2009. This is the seventh annual audit (FY15). This FY15 audit of the EXPANDED ALL KIDS program follows up on the Department of Healthcare and Family Services’ and the Department of Human Services’ actions to address prior audit findings. (pages 1-3) ALL KIDS PROGRAM According to HFS, in FY15, Illinois’ ALL KIDS program as a whole had a total of 1.8 million enrollees and HFS paid almost $3.2 billion in claims. The program included 102,182 EXPANDED ALL KIDS enrollees at any point during FY15, an increase of 25 percent from the previous year (FY14) when there were 81,440 enrollees. On June 30, 2015, there were 66,258 enrollees as a result of the Covering ALL KIDS Health Insurance Act. Forty percent or 26,183 of the enrollees were classified as undocumented immigrants in the HFS data. Digest Exhibit 1 breaks out enrollment by fiscal year, by plan, and by whether the child was classified as a citizen/ documented immigrant or as undocumented. According to claim data provided by HFS, the cost of services for EXPANDED ALL KIDS in FY09 totaled $78.8 million. The cost for services increased to $89 million in FY10, and to $89.3 million in FY11. During the next three years, the total cost for services dropped to $87.8 million in FY12, to $75.2 million in FY13, and to $70 million in FY14. Much of the decrease in the program in FY13 was due to the change in eligibility criteria, which eliminated Premium Level 3 through Level 8. In FY15, the cost for services increased by more than $16 million or 24 percent to almost $86.5 million. Digest Exhibit 2 breaks out the payments for services by whether the child had documentation for citizenship/immigration status or whether the child was classified by HFS as undocumented for both FY14 and FY15. In the past, a large portion of the cost for services for the EXPANDED ALL KIDS Program was for undocumented immigrants. In FY14, undocumented immigrants accounted for 60 percent of the total costs for the EXPANDED ALL KIDS program; however, in FY15, undocumented immigrants accounted for 44 percent of the total cost for services. The total cost for undocumented immigrants has decreased in each of the last three years. The cost for services for undocumented immigrants totaled: $54.9 million in FY09; $60.2 million in FY10; $54.9 million in FY11; $55.7 million in FY12; $48.8 million in FY13; $42.3 million in FY14; and $38.3 million in FY15. HFS received $8.3 million in premiums from enrollees in FY14 and $13.4 million in FY15. As a result, the net cost of EXPANDED ALL KIDS, after premium payments, was approximately $61.7 million in FY14 and $73.1 million in FY15. (pages 7-15) FOLLOW-UP ON FY14 RECOMMENDATIONS In FY14, there were five recommendations which included areas related to redeterminations, data reliability, classification of documented immigrants, eligibility documentation, and policies covering orthodontic treatment. All five issues from our previous FY14 audit released in February 2016 were repeated during the FY15 audit: 1. Redetermination of Eligibility During our review of all eligibility redeterminations for EXPANDED ALL KIDS recipients made in FY15, we found that HFS and DHS did not complete redeterminations of eligibility annually for all recipients as required by the Covering ALL KIDS Health Insurance Act. According to the data provided by HFS, 29,881 EXPANDED ALL KIDS recipients required a redetermination of eligibility in FY15. Our analysis of the data showed that 3,715 of the 29,881 (12%) were not redetermined annually as required by the Act. (pages 16-18) 2. ALL KIDS Data Reliability During our review of the FY15 EXPANDED ALL KIDS eligibility data, we continued to find that eligibility data contained individuals who were enrolled in ALL KIDS more than once. In the FY15 data, we identified 477 individuals who appeared to be enrolled with more than one identification number. We also identified 157 recipients that received 1,276 services totaling $104,704 after the month of their 19th birthday. (pages 18, 19) 3. Classification of Documented Immigrants During testing of eligibility determinations, we determined HFS and DHS did not identify the correct citizenship status for recipients, and as a result, the State is losing federal matching Medicaid funds. We found in past audits, and continue to find, EXPANDED ALL KIDS recipients coded as undocumented that should not be coded as undocumented. Many recipients had verified social security numbers, alien registration numbers, or a combination of both. According to DHS, “verified” means the social security number has been verified through an electronic match with the Social Security Administration. Recipients with verified social security numbers and/or alien registration numbers appear to be documented immigrants and would, therefore, be eligible for federal matching funds. We determined the FY15 eligibility data contained 5,999 “undocumented” recipients who had social security numbers that were verified, of which 614 also had an alien registration number. We reviewed the services provided to the 5,999 “undocumented” recipients in FY15 and determined they had 105,695 services for a total cost of almost $5.3 million. This recommendation related to the miscoding of documented immigrant status has been an issue since the first ALL KIDS audit, which was for FY09. It continues to be an issue that has not been adequately addressed by either HFS or DHS. As a result of the miscoding errors, the State is annually losing federal matching dollars. In FY15, the total federal reimbursement lost was $2.8 million. Initial Eligibility Testing During our testing of 40 new cases that were approved during May and June 2015, only one was not classified as undocumented. We found that 17 of the cases were coded as undocumented but likely should have been coded as citizens/ documented immigrants, as there was documentation to support citizenship or documented immigrant status for each of the 17 classified as undocumented. Many of the cases had documentation verifying the recipient’s social security number and/or alien status. Therefore, a total of 17 of 39 recipients sampled (44%) who were coded as undocumented were likely citizens or documented immigrants. We provided these 17 to DHS, and DHS officials agreed they were likely documented. Eligibility Testing for Redetermination During our review of 40 recipients that were redetermined during May or June 2015, we found 9 of the 40 (23%) were coded as undocumented even though the enrollees had a verified social security number or other evidence supporting they were likely citizens or documented immigrants. We provided these nine to DHS, and DHS officials agreed they were likely documented. (pages 19-21) 4. Eligibility Documentation HFS and DHS attempt to determine eligibility for undocumented immigrants using various data matching techniques to determine residency, income, and immigration/citizen status. During our review of the new and continued eligibility process for EXPANDED ALL KIDS, we determined the data matching component used by the Integrated Eligibility System (IES) or the Illinois Medicaid Redetermination Project cannot be utilized for the undocumented recipients in the EXPANDED ALL KIDS program. Electronic data matches and searches based on social security numbers are ineffective for the undocumented portion of this population because they do not have social security numbers. Therefore, in many instances, the auditors, along with DHS officials, searched through IES for scanned copies of documents to determine residency, income, birth/age, and immigration/ citizenship status for all recipients, including undocumented recipients. Initial Eligibility Testing We randomly selected 40 of the 409 new cases approved during May and June 2015 and found significant issues. Residency was not verified in 12 of the 40 (30%) cases tested, and birth/age information was not verified in 15 of the 40 (38%) cases tested. Of the 40 cases tested, only 13 reported having some income. We found 30 days of income was not reviewed in 38 percent (5 of 13) of the cases where income was reported. Eligibility Redetermination Testing We tested 40 of the medical only redeterminations that occurred during May and June 2015 and found issues regarding Illinois residency, birth/age, and income documentation. Residency was not verified in 8 of the 40 (20%) cases tested, and birth/age information was not verified in 31 of the 40 (78%) cases tested. Of the 35 cases tested where recipients reported having some income, 30 days of income was reviewed in all cases. However, we did identify 2 of the 35 cases (6%) where caseworkers did not calculate the income correctly. (pages 21-26) 5. Policies Covering Orthodontic Treatment Expenditures by the State for orthodontic services for children in EXPANDED ALL KIDS increased dramatically from FY10 to FY14. In FY10, the EXPANDED ALL KIDS program paid for only $322,892 in orthodontic services. By FY14, 4,020 EXPANDED ALL KIDS recipients had orthodontic services totaling $3.6 million. This increase corresponds to the time when the scoring tool used to determine medical necessity for orthodontic services was revised. A review conducted by the HFS Office of the Inspector General concluded that revisions and clarifications to policies establishing medical necessity should be made, as well as requiring additional documentation to support medical necessity. HFS agreed with this recommendation and indicated it would review the issues raised and take appropriate action. Since our FY14 audit was released in February 2016, and the audit period for this audit ended earlier on June 30, 2015, this part of the recommendation is repeated and we will follow up during our next audit which covers FY16. (pages 26-30) RECOMMENDATIONS The audit report contains five recommendations. Two recommendations were specifically for the Department of Healthcare and Family Services. Three recommendations were for both the Department of Healthcare and Family Services and the Department of Human Services. The Department of Human Services agreed with its three recommendations. The Department of Healthcare and Family Services agreed with all five of its recommendations. Appendix F to the audit report contains the agency responses. FRANK J. MAUTINO Auditor General FJM:saw AUDITORS ASSIGNED: This performance audit was conducted by the staff of the Office of the Auditor General.