Review of Premium payments for Iowa's Separate State Children's Health Insurance Program for the Period July 1, 2000 Through June 30, 2002

EXECUTIVE SUMMARY:

The objective of our review was to determine whether HAWK-I premium payments complied with Federal and State requirements and the approved State child health plan. We found that not all HAWK-I premium payments complied with Federal and State requirements and the approved State child health plan during the 2-year period that ended June 30, 2002. In 42 of 114 cases in our statistically valid sample, the applicants' records did not support the eligibility determinations or the administrator made duplicate premium payments to commercial insurers on behalf of HAWK-I eligible children. Some cases had multiple errors. Specifically, the errors included: (1) income exceeding maximum limits for HAWK-I eligibility, (2) unverified or missing eligibility documentation (3) no documentation that children were uninsured, (4) HAWK-I not canceled upon Medicaid eligibility determination, (5) coverage during the waiting period, (6) coverage beyond the 12-month eligibility period, and (7) duplicate premium payments.

We recommended that the State agency: (1) refund $3,521,032 to the Federal Government for HAWK-I overpayments, (2) work with CMS to resolve $1,504,405 in payments for set-aside cases, (3) amend the contract with the administrator to include quality control requirements and incorporate similar provisions in Iowa's State child health plan, (4) strengthen the administrator's quality control requirements to ensure that HAWK-I applications and the supporting documentation adequately substantiate eligibility, (5) strengthen controls to ensure appropriate oversight of the administrator, and (6) direct the administrator to improve its computer edits to prevent duplicate premium payments. In written comments to our draft report, the State agency disagreed with many of our findings that HAWK-I premium payments did not comply with Federal and State requirements. The State agency provided an explanation and, in some cases, additional documentation supporting its position. However, the State agency did agree with some of the findings and indicated that it has already implemented a number of changes to address issues raised by the OIG in this audit.