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Audit (A-04-10-06123)

06-29-2011
Review of Florida's Children's Health Insurance Program Experience Adjustment and Refund Submission Reports

Executive Summary

Our review found that the Florida Agency for Health Care Administration (State agency) recouped approximately $10.8 million in State Children's Health Insurance Program (SCHIP) refunds due from 22 experience adjustment reports that insurers submitted during our audit period (October 2003 through September 2007). However, 13 experience adjustment reports incorrectly reported premium payments from Florida Healthy Kids Corporation (FHKC). As a result, FHKC did not receive appropriate refunds, and the Federal Government was not credited with refunds totaling $3.1 million ($2 million Federal share).

The State agency operates SCHIP in Florida and contracts with FHKC to provide health insurance to families not eligible for Medicaid. During our audit period, FHKC entered into 27 multiyear medical service agreements with 11 insurers to provide comprehensive health care services to eligible SCHIP participants in exchange for per member, per month capitated payments. Insurers must file an annual experience adjustment report in which they calculate whether they have spent a minimum of 85 percent of total premiums on medical services and determine the appropriate refund, if any.

We recommended that the State agency (1) credit the Federal Government $2 million for its share of underpaid refunds and (2) develop and implement oversight procedures to ensure that FHKC recoups required refunds and reconciles experience adjustment reports to accounting records and supporting documents. The State agency concurred with our recommendations.

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