REPORT DIGEST

COVERING ALL KIDS HEALTH INSURANCE PROGRAM

PROGRAM AUDIT
For the Year Ended: June 30, 2013

Release Date: August 2014

State of Illinois, Office of the Auditor
General
WILLIAM G. HOLLAND, 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

SYNOPSIS

Public Act 95-985 amended the Covering ALL
KIDS Health Insurance Act [215 ILCS 170/63]
and directed the Auditor General to annually
audit the ALL KIDS program. This is the fifth
annual audit and covers FY13. The focus of
this audit is on “EXPANDED ALL KIDS,” which is
the portion of the ALL KIDS program that
serves uninsured children not previously
covered by KidCare (children whose family
income was greater than 200 percent of the
federal poverty level or who were undocumented
immigrants).

The population for this audit has decreased
since the FY12 audit due to the passage of PA
96-1501, which made children whose families’
household income was above 300 percent of the
federal poverty level (FPL) ineligible for
EXPANDED ALL KIDS.

This FY13 audit follows up on the Department
of Healthcare and Family Services’ (HFS) and
the Department of Human Services’ (DHS)
actions to address prior audit findings. Our
audit found:

• In FY13, 84,563 children were enrolled in
EXPANDED ALL KIDS.

• Services provided in FY13 for the EXPANDED
ALL KIDS enrollees totaled $75.2 million.

• Of the 34,952 EXPANDED ALL KIDS recipients
that required a redetermination of eligibility
in FY13, we determined that 11,328 (32%) were
not redetermined annually as required.

• HFS and DHS did not verify one month of
income for determining continued eligibility
as required by Public Act 96-1501.

• In FY13, 154 recipients received 1,966
services totaling $111,004 after the month of
their 19th birthday. Additionally, there were
283 individuals who appeared to be enrolled
with more than one identification number. We
also compared the FY13 duplicates with the
duplicates identified in our FY11 audit and
determined that 86 of the duplicates in FY11
were still duplicates in FY13.

• During our review in FY13, we found the
EXPANDED ALL KIDS data continued to have
recipients who appear to be incorrectly coded
as “undocumented.” Many recipients had
verified social security numbers, alien
registration numbers, or a combination of
both.

• During testing we found that residency was
not documented as verified in 6 of 37 (16%)
files sampled. We also found birth or identity
documentation, such as a birth certificate,
was not obtained for 11 of the 37 (30%)
recipients tested.

• While HFS and DHS took some action to
address the previous 10 recommendations, 8 of
the recommendations are repeated.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

BACKGROUND

Effective July 1, 2006, Illinois’ KidCare
program, which included Medicaid and
Children’s Health Insurance Program (SCHIP)
populations, was expanded by the Covering ALL
KIDS Health Insurance 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 (FPL) and all undocumented
immigrant children. At that time, the KidCare
program was renamed 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.

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.”

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 fifth annual audit (FY13). The
first audit (FY09) was released in May 2010
and contained 13 recommendations. The second
audit (FY10) was released in April 2011 and
contained 14 recommendations. The third audit
(FY11) was released in October 2012 and
contained 11 recommendations. The fourth audit
(FY12) was released in December 2013 and
contained 10 recommendations.

This FY13 audit of the EXPANDED ALL KIDS
program follows up on the Department of
Healthcare and Family Services’ (HFS) and the
Department of Human Services’ (DHS) actions to
address prior audit findings. While HFS and
DHS took some action to address the previous
recommendations, many were not implemented
during this audit period (FY13). (pages 4-7,
14)

Recent Changes to the Covering ALL KIDS Health
Insurance Program

Three events in recent years have had a
significant impact on the EXPANDED ALL KIDS
program and our audits. The first was the
passage of Public Act 96-1501, which added an
income limit for determining eligibility for
the EXPANDED ALL KIDS program. Effective July
1, 2011, children whose families’ household
income was above 300 percent of the federal
poverty level (FPL) were no longer eligible.
Children enrolled as of July 1, 2011, were
able to remain enrolled in the program until
June 30, 2012. As a result, there is a reduced
number of EXPANDED ALL KIDS participants and
expenditures to be audited.

The second event occurred on June 4, 2013. HFS
received a notification from the federal
Department of Health and Human Services (HHS)
that Illinois was approved to receive federal
reimbursement for citizens and documented
immigrant children in a family with income up
to 300 percent of the FPL under Title XXI of
the Social Security Act, as reauthorized under
the Children’s Health Insurance Program
Reauthorization Act of 2008 (CHIPRA). CHIPRA
was formerly titled the State Children’s
Health Insurance Program.

Our prior EXPANDED ALL KIDS audits have only
included children whose medical care was
totally State-funded. Now, with this change,
the federal government will reimburse for 65
percent of eligible costs for this population
(children from families with income between
200 and 300 percent of FPL). Additionally, the
State was granted retroactive reimbursement
dating back to July 1, 2008. According to HFS
officials, as of July 8, 2014, HFS had
recouped $34.31 million. HFS reported it had
requested recoupment of an additional $37.25
million; however, they were still waiting for
approval.

HFS was also given retroactive reimbursement
for documented immigrants back to April 1,
2009. This allowed federal reimbursement for
documented immigrants regardless of their time
in the country. Prior to this, for the State
to receive federal reimbursement, documented
immigrants had to be in the country for five
years. We will follow up on HFS’ recoupment of
these retroactive funds during our FY14 audit.
The third event affecting our audit is changes
in HFS’ payment cycle for EXPANDED ALL KIDS
claims. When we identified a large decrease in
payments in FY12, HFS indicated that the
decrease was due to the payment cycle and not
a decrease in services. This means that the
services were provided in FY12, but were not
paid until after the end of the fiscal year.
As a result, for this audit, we are reporting
on all costs for services that occurred during
the fiscal year regardless of when they were
paid. (pages 7-8)

ALL KIDS Program

According to HFS, in FY13, Illinois’ ALL KIDS
program as a whole had a total of 1.9 million
enrollees and HFS paid almost $3.6 billion in
claims. In FY13, enrollees that were eligible
at any point in the year as a result of the
July 1, 2006, ALL KIDS expansion totaled
84,563. On June 30, 2013, there were 58,822
enrollees as a result of the expansion of
which 39,859 (68%) were classified as
undocumented immigrants in the HFS data.

Over the last three fiscal years, total
enrollment has decreased from 74,975 at the
end of FY11 to 58,822 at the end of FY13. The
16,153 enrollee decrease from FY11 to FY13 was
due to the elimination of Levels 3 through 8
after June 30, 2012 as required by PA 96-1501
and a decrease in undocumented immigrants.
Digest Exhibit 1 breaks out enrollment by
fiscal year, by plan, and by whether the child
had documentation for citizenship/immigration
status or whether the child was undocumented.
(pages 8-9)

ALL KIDS Services Provided by Fiscal Year

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. The total cost for services
dropped to $87.8 million in FY12 and to $75.2
million in FY13. The majority of the cost for
services was for undocumented immigrants. Cost
for services for undocumented immigrants
totaled $55.1 million in FY09, $60.2 million
in FY10, $54.9 million in FY11, $55.7 million
in FY12, and $48.8 million in FY13. Therefore,
in FY13 undocumented immigrants made up 65
percent of the total costs for EXPANDED ALL
KIDS.

Digest Exhibit 2 breaks out the cost of
services by whether the child had
documentation for citizenship/immigration
status or whether the child was undocumented
for both FY12 and FY13. The Exhibit shows the
cost of services decreased by $12.6 million
from $87.8 million in FY12 to $75.2 million in
FY13. (pages 10-11)

Cost of Services and Premiums Collected

HFS received almost $10.5 million in premiums
from enrollees in FY12, and received $7.7
million in FY13. As a result, the net cost of
EXPANDED ALL KIDS after premium payments were
applied was approximately $77.3 million in
FY12 and $67.4 million in FY13. Digest Exhibit
3 shows both FY12 and FY13 cost of services
and premiums collected from the EXPANDED ALL
KIDS program. (page 13)

Follow up on FY12 Recommendations

While HFS and DHS took some action to address
the previous 10 recommendations, 8 of the
recommendations were not addressed and are
repeated. We determined that HFS implemented
past recommendations regarding premium
payments and optical edits. We will continue
to follow up on the eight recommendations that
were not implemented during our FY14 annual
audit. (pages 2-4, 14)

Redetermination of Eligibility

In the first annual EXPANDED ALL KIDS audit
(FY09), auditors concluded that the annual
reviews of ALL KIDS eligibility – also called
redeterminations – required by the Illinois
Administrative Code [89 Ill. Adm. Code
123.260] were not being adequately implemented
by HFS. In this audit (FY13), auditors
continued to find that redeterminations were
not conducted as required.

30 Days of Income Verification

HFS and DHS did not verify one month of income
for determining continued eligibility as
required by Public Act 96-1501. The
requirement for the verification of one month
of income was effective October 1, 2011. In
its response to the FY12 audit, DHS responded
that verification of 30 days of income began
on or after October 1, 2013, to coincide with
the implementation of the first phase of the
Integrated Eligibility System. Therefore,
since the 30 day income verification
requirement was implemented after the audit
period for this audit, it will be reviewed as
part of our next audit covering FY14.

Annual Eligibility Redeterminations

Public Act 97-0689, effective July 1, 2012,
required HFS to contract with an external
vendor to assist in completing eligibility
redeterminations. HFS contracted with Maximus
Health Services, Inc. (Maximus) to be the
vendor. In January 2013, Maximus began
performing electronic cross match eligibility
verifications and requesting documentation
from recipients in order to provide
recommendations to DHS regarding eligibility.
While reviewing the redetermination process
conducted by Maximus, we determined before a
recommendation was made, Maximus sent letters
to recipients requesting information and in
most cases attempted to contact the recipients
via telephone.

During our review of all eligibility
redeterminations for EXPANDED ALL KIDS
recipients made in FY13, 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, 34,952 EXPANDED ALL KIDS recipients
required a redetermination of eligibility in
FY13. Our analysis of the data showed 23,624
of the 34,952 (68%) were redetermined in FY13.
As a result, 11,328 (32%) were not
redetermined annually as required by the Act.
Maximus made recommendations for 2,874 of the
23,624 recipients. According to our review of
HFS documentation, the remaining
redeterminations were conducted by HFS or DHS
employees. By not conducting annual
redeterminations of eligibility, recipients
may continue to receive services when they are
no longer eligible.

Regarding the 2,874 redetermination
recommendations completed by Maximus for
EXPANDED ALL KIDS recipients, Maximus
recommended 2,779 recipients be canceled, 75
be continued, and 20 be changed to a different
eligibility level.

Using the recommendation and data collected by
Maximus, State caseworkers made the final
determination of eligibility. The review
completed by State caseworkers took an average
of 19 days. The longest was 196 days.
Our review showed that State caseworkers did
not always follow the recommendation made by
Maximus. Of the 2,874 recipients reviewed by
both Maximus and State caseworkers, Maximus
recommended 2,779 recipients be canceled,
while State caseworkers canceled 2,275. State
caseworkers also changed 143 to a different
eligibility level and continued 456.

We randomly sampled 66 recipients where
Maximus and State caseworkers agreed to cancel
eligibility. We determined 65 of 66 (98%)
recipients were recommended for cancellation
for not providing the required documentation
requested by Maximus. In many instances,
Maximus did not receive any response from the
recipient. One of the 66 was recommended for
cancellation due to aging out of the program
and being no longer eligible. During the
review, we also determined that 47 of the 65
(72%) recipients that were canceled had not
re-enrolled by February 2014.

This audit focused on the redetermination
recommendations performed by Maximus. In our
next audit, we will examine the
redeterminations conducted by HFS and DHS
caseworkers. Given that redeterminations were
not conducted for 32 percent of eligible
EXPANDED ALL KIDS recipients, the status of
this recommendation is repeated and will be
followed up on during the next audit cycle,
which covers the period July 1, 2013, to June
30, 2014. (14-17)

Non-Payment of Premiums

During the FY09 and FY10 audits, auditors
found that HFS did not terminate ALL KIDS
coverage when the enrollee failed to pay
premiums timely as required by 89 Ill. Adm.
Code 123.340(a). Auditors also found that HFS
and DHS did not have controls in place to
ensure that families who were previously
terminated from coverage met re-enrollment
requirements found in the Administrative Code.
The Administrative Code [89 Ill. Adm. Code
123.210(c)(2)] requires full payment of
premiums due, for periods in which a premium
was owed and not paid, before the child can be
re-enrolled. Additionally, the Administrative
Code [89 Ill. Adm. Code 123.210(c)(4)]
requires the first month’s premium be paid if
there was an unpaid premium on the date the
child’s previous coverage was canceled.

During the FY11 audit, HFS noted that it was
in discussion with DHS regarding system
enhancements that could be made to the
Automated Intake System so the proper coding
would be automatically applied to these cases
to prevent re-enrollment of children with
outstanding premium debt. According to HFS
officials, DHS has been providing reports to
HFS for individuals that did not pay premiums
since October 2012.

As part of this FY13 audit, we met with HFS
officials and reviewed a newly developed
report that identifies individuals re-enrolled
with unpaid past premiums. According to HFS,
due to human caseworker error some individuals
are re-enrolled without paying past premiums;
however, the report is designed to identify
these individuals. HFS also addressed this by
issuing an online Medical Morsel (written
communication to staff) documenting how to
check and enter information for past due
premiums. Since this recommendation was
addressed by HFS during the audit period, the
status of this recommendation is implemented.
(page 18)

ALL KIDS Data Reliability

Auditors identified issues associated with the
eligibility data provided by HFS during recent
audits dating back to FY09. These areas
included individuals that were older than 18
years of age, who are no longer eligible, and
eligibility data which included duplicate
enrollees with two different recipient
identification numbers and/or different birth
dates or addresses.

During our review of the FY13 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 FY13 data, we identified 283
individuals who appeared to be enrolled with
more than one identification number. We also
compared the FY13 duplicates with the
duplicates identified in our FY11 audit and
determined that 86 of the duplicates in FY11
were still duplicates in FY13.

We also identified 154 recipients that
received 1,966 services totaling $111,004
after the month of their 19th birthday.
Therefore, the status of this part of the
recommendation is also repeated and will be
followed up on during the next audit cycle,
which covers the period July 1, 2013, to June
30, 2014. (pages 18-19)

Classification of Documented Immigrants

HFS and DHS continue to have problems
correctly coding enrollees as documented
immigrants and undocumented immigrants. During
this FY13 audit, we identified numerous
instances where recipients were erroneously
coded as undocumented immigrants. Although
some of the inaccurate coding may have been
due to incorrect electronic matching of social
security numbers, we determined a lack of
specific policies and procedures for
caseworkers is also causing miscoding.

During the FY09 audit, auditors determined
that HFS did not accurately classify
documented immigrants who receive ALL KIDS
services. According to HFS officials, to
ensure that federal matching funds were not
requested for documented immigrants who were
ineligible for matching funds (i.e., those
documented immigrants who had not been in the
country for five years), those documented
immigrants were classified as undocumented
immigrants.

During the FY10 audit, HFS officials stated
they researched the cases from the FY09 audit
and found that a system error was causing the
misclassifications. HFS noted the error was
corrected on October 29, 2010.
In an updated response to the FY11 audit, HFS
noted that the recommendation was partially
implemented and new coding now more accurately
recorded immigration status. HFS noted that
manual reviews were being completed and as of
February 1, 2013, $1.2 million in federal
match for the individuals identified by the
audit had been received.

During the FY12 audit, HFS indicated that the
incorrect classification of immigrants was due
to a matching problem with the Social Security
Administration. We met with HFS to review the
matching process. According to HFS, the
matching process is done monthly to
continuously improve its data. HFS officials
noted that HFS continues to try to clean up
problems with social security numbers as they
are identified; however, it is hard to do
without additional staff.

Although HFS reported the miscoding of
undocumented immigrants to be implemented,
during our review in FY13, we found the
EXPANDED ALL KIDS data continued to have
recipients who appear to be incorrectly 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. HFS noted the
electronic match used to verify the social
security number is not an exact match and as a
result incorrect matches occur.

For recipients categorized by HFS and DHS as
“undocumented,” we determined the FY13
eligibility data contained:

• 8,602 recipients who had social security
numbers that were verified, of which 1,201
also had an alien registration number; and

• 193 recipients who had an alien registration
number, but did not have a verified social
security number.

We reviewed the services provided to these
“undocumented” recipients in FY13 and
determined the 8,602 recipients had 177,269
services for a total cost of $6.4 million. If
these recipients are classified as
undocumented in error, the State is not
receiving eligible matching federal funds.

We sampled 10 of the 1,201 undocumented
recipients who had both a verified social
security number and an alien registration
number to determine whether the recipient
should have been classified as undocumented.
For the recipients sampled, HFS confirmed that
none of the 10 recipients should be
undocumented. As a result, HFS and DHS should
ensure that children with verified social
security numbers and/or alien registration
numbers are coded properly and ensure that
federal matching funds are received for these
recipients.

During our review, we also identified 1,992
recipients that were classified as both U.S.
citizens and undocumented immigrants at some
point during FY13. The eligibility data showed
that 1,891 of the 1,992 had verified social
security numbers.

These 1,992 recipients had eligibility spans
that changed from citizens to undocumented
immigrants and back to citizens and spans that
changed from undocumented immigrants to
citizens and then back to undocumented
immigrants.

We determined that 1,827 of the 1,992
recipients were changed from undocumented
immigrant status to citizen or documented
immigrant status between August 1, 2012, and
December 1, 2012. When we questioned HFS about
the status changes, HFS officials noted HFS
ran a list of recipients coded as undocumented
immigrants that also had social security
numbers through its electronic citizenship
batch process and then had a worker update the
citizenship code on the ones that came back
with citizenship verified. According to HFS
officials, HFS then started getting calls from
DHS offices noting “they had something in the
physical file indicating that the person was
not a citizen or they had previously removed
the SSN because it did not belong to the
individual.” The correct coding of these
recipients is important to ensure the State is
receiving all eligible matching federal funds
and to ensure that matching funds are not
received for ineligible recipients.

During our eligibility testing of 37 new
cases, we identified 6 of 16 recipients coded
as undocumented that were likely coded as
undocumented in error. According to DHS, the
recipients tested should have been coded as
something other than undocumented. These
individuals had visas or social security cards
in the files we tested but were labeled in the
eligibility system as “Noncitizen child under
age 19 who does not have immigration
documents,” even though the recipients clearly
had immigration documentation.

We reviewed HFS/DHS policies and procedures
regarding the classification of citizenship
status and found the policies and procedures
to be deficient. For example, when an
immigrant applies for ALL KIDS and provides
documents such as an immigrant or non-
immigrant visa or social security card, it is
unclear from the policies and procedures what
citizenship code should be used.

Although HFS reported that problems related to
the coding of undocumented immigrants were
corrected on October 29, 2010, we continue to
have multiple issues in this area. Therefore,
the status of this recommendation is repeated
and will be followed up on during the next
audit cycle, which covers the period July 1,
2013, to June 30, 2014. Due to the incorrect
classification of documented and undocumented
immigrants, the enrollee and payment figures
in this report are overstated for undocumented
immigrants and are understated for documented
immigrants. (pages 19-23)

Duplicate Claims

As part of our review of EXPANDED ALL KIDS
payments, auditors analyzed FY10 claim data
and identified potential duplicate payments. A
sample of 20 pairs of potential duplicate
claims was chosen because the claims had the
same recipient, same service date, same
procedure, and both providers were paid the
State maximum rate for the procedure.

The judgmental sample of 20 possible duplicate
claims was provided to HFS for explanation.

HFS reviewed each of the 20 potential
duplicate pairs of claims and determined that
7 were duplicates. Examples of the seven
duplicates included: claims submitted by the
physician and by the hospital or clinic; and
claims submitted by two different physicians.
The seven duplicate claims totaled $1,428.

HFS officials indicated that implementation of
this recommendation is still in progress.
Since implementation of corrective action was
not taken during the FY13 audit period, this
recommendation is repeated. Detailed testing
will be performed in the next audit cycle.
(pages 23-24)

Eligibility Documentation

All four of the previous ALL KIDS audits found
that, due to the way HFS implemented the
Covering ALL KIDS Health Insurance Act, HFS
and DHS did not obtain documentation to
support eligibility in some instances. This
included documentation for residency, birth,
and income. As a result, auditors could not
determine whether eligibility was determined
correctly by HFS and DHS.

On January 25, 2011, Public Act 96-1501 was
adopted, which addressed some of this
recommendation. The Public Act mandated two
changes to eligibility documentation
requirements. These changes required one
month’s worth of income verification for
determining eligibility and required
verification of Illinois residency. These
changes were effective on July 1, 2011.

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 eligibility and
redetermination process for EXPANDED ALL KIDS,
we determined that the effectiveness of the
matching process is limited when reviewing
eligibility for undocumented immigrants. By
definition, these children and often their
parents are undocumented. Electronic matches
are conducted based on social security
numbers, which this population does not have;
therefore, searches based on social security
numbers are ineffective. As a result, only
actual copies of documents are sufficient to
determine residency, income, and
immigration/citizenship status for
undocumented recipients.

According to both HFS and DHS officials,
effective March 14, 2012, an automated
Secretary of State clearance was implemented
to verify residency. We selected 50 cases
identified by DHS that had eligibility
beginning in FY13. Both DHS and HFS provided
electronic and paper files for our review. HFS
and DHS could not locate 10 of the recipient
files, and 3 recipient files sampled were not
new in FY13. Of the remaining 37 files
reviewed, we found that residency was not
verified in 6 of the 37 (16%) files tested. Of
the 31 recipients verified, 17 had eligibility
verified by the Secretary of State residency
clearance and 14 were verified by various
forms of documentation. Documentation of
residency verification included a social
security number match with the Illinois
Secretary of State’s Office or hard copy
documentation such as addresses on bills,
Mexican Consular identification cards,
driver’s licenses, or pay stubs. Each of these
documents contained the applicant’s Illinois
address. We also found that for 11 of the 37
(30%) recipients, birth or identity
documentation such as a birth certificate was
not obtained. Therefore, this part of the
recommendation is repeated and will be
followed up on in future audits.

In addition, HFS and DHS indicated that the
new income requirement was not addressed in
FY13. As a result, since HFS and DHS have not
implemented the required one month’s worth of
income requirement, the status of this part of
the recommendation is repeated. This
recommendation will be followed up on during
the next audit cycle.

During our FY10 review, auditors found that
HFS and DHS did not properly determine whether
individuals actually were or were not self-
employed. Errors and inconsistencies in
determining the income of self-employed
individuals could again result in a family
paying a higher premium or co-pay, or could
result in the State paying for a greater
portion of a child’s medical services than
necessary. According to both HFS and DHS,
neither agency has addressed the portion of
the recommendation related to applicants who
are self-employed; therefore, the status of
this part of the recommendation is repeated.
(pages 24-26)

Transportation Claims

During the review of FY10 EXPANDED ALL KIDS
claim data, auditors determined that HFS did
not have effective controls over
transportation claims. As a result,
transportation providers were able to bill
multiple trips in a single day for the same
recipient. Additionally, controls in the
billing system do not contain edits for pick
up or drop off times or locations.

In its updated responses, HFS officials
indicated that corrective action was taken to
address this recommendation prior to the
current audit period. This included
implementing system edits to allow only one
round-trip per day and sending notices to
providers reminding them to submit accurate
claim details.

In our FY12 audit, we reviewed transportation
claims and continued to find duplicate
transportation claims and claims with
inaccurate details.

During this audit period, FY13, we identified
three providers that billed 374 duplicate
services totaling $3,074. In addition, we
found claims with inaccurate details,
including claims with no destination times and
claims with incomplete origin and destination
location details.

Since we continue to find issues with
transportation claims, the status of this
recommendation is repeated. This
recommendation will be followed up on during
the next audit cycle. (pages 27-28)

Optical Edits

During the review of FY10 EXPANDED ALL KIDS
claim data, auditors determined that HFS did
not have effective controls over optical
claims. HFS allows children to receive as many
eyeglasses as needed through the Department of
Corrections – Illinois Correctional Industries
without prior approval. As a result, optical
providers were able to bill for multiple
frames and fittings for the same recipient
during the year.

Specifically, auditors identified one provider
with a large number of recipients receiving
multiple frames and fittings during FY10.
Additionally, auditors also determined that
HFS did not have effective controls in place
over the number of eye exams billed for each
recipient. Due to this provider’s high
correlation of customers with multiple pairs
of frames received during FY10, auditors
reported this provider to HFS and to the HFS-
Office of the Inspector general (OIG) for
further investigation. We followed up with the
OIG in the FY11 audit; the OIG failed to act
on our referral and noted it could not find a
case on this provider.

During our FY12 review, the OIG had not
completed a review, but indicated it was
currently auditing the provider that was
identified in the FY10 audit.

During our follow up in FY13, HFS noted the
provider in question was investigated and “NO
criminal fraud activity was found, and the
issue with numerous glasses may have been due
to quality issues (consistently breaking).
Interview of recipients verified that the
children were getting numerous pairs of eye
glasses because they frequently broke beyond
repair. The matter has been referred back to
OIG, by law enforcement, for other educational
and administrative actions." Since the steps
were taken by the OIG to investigate this
provider, the status of this recommendation is
implemented. (page 28)

Guidance Over Preventive Medicine Service
Claims

During the review of FY10 EXPANDED ALL KIDS
claim data, auditors determined that HFS did
not have effective controls over the billing
of preventive medicine service claims. The
claims are for preventive medicine services
for healthy children who are established
patients. According to an HFS official,
preventive medicine services are used for
annual doctor visits and are not to be used
numerous times per year. These services
generally bill at a higher rate than a problem
focused visit. In the FY10 EXPANDED ALL KIDS
claim data, we identified 1,013 recipients
that received three or more preventive
medicine services for healthy children.

As a result, we recommended HFS more clearly
define how providers should bill preventive
medicine services and should ensure that
electronic billing edits exist to identify
potential abuse related to the billing of
preventive medicine services. HFS accepted
this recommendation and provided the following
updated response in May 2012: “A provider
notice was sent in May 2011 to remind
providers of the proper use and frequency
limits of preventative CPT codes. As of April
2011, the Bureau of Claims Processing has also
initiated a manual review of applicable
preventative CPT codes.”

During our review of the FY12 data, auditors
identified numerous EXPANDED ALL KIDS
recipients that received preventive medicine
services for healthy children during FY12 that
exceeded the benefit limitation. The Handbook
for Providers of Healthy Kids Services
establishes the number of preventive medicine
services allowed per year by age of the
recipient. In FY12, we identified 2,255
recipients that received 2,732 preventive
medicine services in excess of the limit.

According to HFS, controls were not set up to
address this until December 2012. As a result,
for our FY13 review, we only looked at
preventive services with service dates after
November 30, 2012. We continued to find
recipients exceeding the benefit limit. As a
result, the status of this recommendation is
repeated and will be followed up on during the
next audit cycle, which covers the period July
1, 2013, to June 30, 2014. (page 29)

Inconsistent Dental Policies

During our review of FY10 EXPANDED ALL KIDS
dental claims, we found deficiencies in
controls related to dental billings. Auditors
found instances in FY10 data where dental
services were paid for in excess of the
allowed benefit schedule. Auditors also found
instances where the allowed benefit schedule
differed from what officials said was allowed
and from what was posted on HFS’ ALL KIDS
Dental Services webpage. Additionally, we
identified billing outliers within the dental
claims. These irregularities were reported to
DHS for follow up and/or investigation.

Additionally, in the FY10, FY11, and FY12
audits, we recommended that HFS ensure that
dental policies or other information available
to the public accurately state frequency of
benefits. We found in our FY13 review, the ALL
KIDS Dental Services webpage still states that
children are limited to a periodic oral exam
once every 12 months per dentist, whereas the
Dental Office Reference Manual Schedule of
Benefits still states that children can
receive an oral exam once every 6 months in an
office setting and once every 12 months in a
school setting. HFS indicated that it was in
the process of revising the Dental Office
Manual and Administrative Rules to accurately
state frequency and benefits. As a result, the
status of this part of the recommendation is
repeated and will be followed up on during the
next audit cycle, which covers the period July
1, 2013, to June 30, 2014.

During this audit, we followed up on a
provider that we referred to the HFS OIG
during our FY10 audit and again in our FY12
audit. In past audits, this provider had a
high average cost per client or other
outliers. According to the OIG, the provider
is currently being investigated by the
Illinois State Police Medicaid Fraud Control
Unit. (page 30)

RECOMMENDATIONS

The audit report contains 8 recommendations.
Five 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 Healthcare and Family Services
and the Department of Human Services agreed
with all 8 recommendations. Appendix F to the
audit report contains the agency responses.

WILLIAM G. HOLLAND
Auditor General

WGH:SAW

AUDITORS ASSIGNED: This Program Audit was
performed by the Office of the Auditor
General’s staff.