Florida Benefit Recovery Assessment

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Proprietary and Confidential

Florida Department of Children and

Families

Benefit Recovery AssessmentFinal Report

December 19, 2012

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The Stephen Group Assessed BR

• 70 in-person interviews

• Florida BR, DPAF, AG

• Five states: Texas, Georgia, Mississippi, Connecticut, Pennsylvania

• US program representatives: FNS & CMS

• Nearly 2 million data records extracted from IBRS and evaluated

• 6 years of transactions, personnel and financial information

• Findings Volume 1 (+ 200 pages)

• Recommendations Volume 2 (+ 60 pages)

• Leadership Action Item Spreadsheet with Benefit Case

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Claim AmountsSnap claims grow 11.3%, Medicaid drops 26% and TANF drops 76% • Slight rise in number of new

claims estimated for FY 2013

• SNAP claims largest - $28 MM in FY -12

• Medicaid claims $6 MM in 2008 falling to $3 MM in 2012

• TANF claims $4.8 MM in 2008 falling to $1.8 MM in 2012

• Medicaid represents largest average amount of claim ($2000) versus TANF ($1000)

• IHE almost 50% of all claims

• AE close to 25% and on rise

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Collections by Program

• SNAP Collections Increasing Significantly While All Others Decreasing from FY 08 to FY 12

• SNAP - $12.2 MM to $18.2 MM

• Medicaid $1 MM to $600K

• TANF collections $1.6 MM to $900 K

• Low Medicaid collections:• Lack of enforcement tools

• No personal responsibility

• DCF BR culture

• TANF collections most difficult to collect

• SNAP IHE collections 50% of collections, AE 25%

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Collection Activity (cont.)

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Claims Backlog is Growing

• BR was not keeping up with referrals before the July 2012 staff cuts

• As of August 2012:

• 43,304 claims open and not worked

• Backlog growing from 9500 in 2011 to 15,000 in 2012

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High Percentage of Claims Result in

Cancellations205,737 Referrals to BR since

201046% cancelled, 12% remain open and 41% result in claims

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BR Faces Automatic Staff Loss In July

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2008-9 2009-10 2010-11 2011-12 2012-13 2013-14 Est

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BR Workforce Size

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BR Faces its Own Sort of “Fiscal Cliff”

• The job is not getting done – referrals are sliding into backlog, and many claims are not being collected

• A high % of claims are being cancelled

• BR staffing inadequate to meet the need today – and 24% of staff will be gone in June

• Even worse:

• BR is not serving as a key source of feedback to front-end eligibility…Florida is not learning from errors to improve program performance

• The “woodwork effect” of PPACA could increase BR workload

Florida is leaving $ millions on the table

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Finding: BR Must Address Many Deeply

Rooted Issues

• Organization structure is not matched to the work

• BR management lacks meaningful, accurate information

• Personnel are not managed consistently

• Processes are not managed well

• Policies are not managed well

• No formal training since IBRS was implemented in 2006

• Systems leave the key work to be done manually

• TOP system not fully automated to maximize recoveries

• PCG is restricted from performing effective collections

• BR lacks key tools that have made other states effective

• Florida IPV Process Results in Inherit Delays and Inefficiencies

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BR Lacks Key Tools That Have Made

Other States Effective

Better Practices We Observed:

• Prioritizing claim initiation by the expected size of the claim

• TOP system fully automated

• Effective alerting system

• Collection and recoupment efforts in administrative hearing process much more timely and effective

• Tougher tools to enforce payment

• Better collection incentives

• “Household” TOP initiative rather than “individual” liability like in Florida

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Florida IPV Process Results in Inherit

Delays and Inefficiencies

• DPAF and BR functions integrated under one department in all states we examined

• Florida system contributing to increased backlog (DPAF 3000 case backlog)

• Inter-department handoffs result in unnecessary delay

• DPAF Investigators cancelling many IPV referrals that could have resulted in more speedy resolution at BR. Most of these referrals re-opened as IHE at BR

• BR Unit sending many cases cancelled by DPAF back to AI

• DPAF waits until IPV case has been with State Attorney for one year before taking action

• State Attorney cases on average take between 1 and 3 years

• DPAF administrative disqualification cases take up to 6 to 7 months before completion

• Unnecessary delay in sending waivers to Tallahassee after signed by recipient

• DPAF investigators sending cases back to BR for claims establishment

• Threshold amount to send case to State Attorney varies

• No standards in determine to take case as ADH

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Despite These Issues, DCF Can

Successfully Re-Engineer BR Functions

To Meet:

Four Main BR Transformation Goals:

1. Improved Collection Activity

2. Enhanced Claiming

3. Backlog Reduction

4. Cost Avoidance

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We Recommend 61 Changes To

Achieve…

• New organization: everything else depends on managing to one, statewide work method—which in turn depends on statewide management through a statewide organization.

• Continuous improvement: BR should adapt a proven quality management process such as LEAN Six Sigma

• Training and documentation: BR cannot improve process until it first wrests control out of individual hands. To do that, it must write things down and start teaching workers to expect process management

• New collection services contract: the current contract is counterproductive and should be immediately re-negotiated to permit innovation and more collections activity.

• Legislation for new collection authority needs to be submitted immediately

• FNS and CMS regulatory support

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Continuous Improvement Will Double

BR Performance

Continuous Improvement will “buy” back time that is now wasted on transactions that add nothing to amounts collected :• “Reconciliations” inspect every

new claim—a sure way to destroy both performance and accuracy

• Regional transfers both add work and confuse performance orientation

• Many claims are cancelled and re-entered in the process of handoffs. We observed processes that have 5 or more handoffs—these waste time and confuse the client

• BR posts 30,000 Credit & Debit Memos annually, compared to only 31,000 actual claims

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The Benefit Can Be $120 Million Over

Five Years

Cash Cost

One-Time Annual Avoidance

Investigate 43,000 claims not yet

worked 5 MM

Investigate referrals previously

cancelled 5 MM

Open companion claims associated

with recent claims 2 MM

Investigate DPAF backlog 1 MM

Collect from State employees 1 MM

Prioritizing referrals 10 MM

Investigate all referrals (after

prioritizing) 1.2 MM

Finding additional companion claims 2 MM

Improve collection effectiveness 8.5 MM

Medicaid post-partum and Transitional

Medicaid 2 MM

Increase research into SSI assets 2 MM

Tapping into lump sum payments 2 MM

Total 14.3 MM 21.7M 6 MM

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First Benefit to Pursue: Improve

Collection Activity

Collection Improvement

Annual Benefit ($000)

Various garnishments $1,000

Apportionment 1,000

Monthly late-payment collection calls 1,000

TOP Program Expansion - Medicaid and TANF claims 1,000

Collecting by credit card on line or by phone 500

TOP collection system changes, including adding households 2,000

Medicaid Managed Care liability for IHE and IPV capitation overpayment 2,000

$8,500

BR should re-procure the PCG contract encouraging innovation through incentive

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Second: Enhance Claiming

• Develop an ad-hoc, automated tool to prioritize claims

• Source more data automatically• Automate assignment—get the

supervisor out of the gatekeeper role• FNS Waiver • $10 MM benefit from prioritizing• $2 MM additional benefits for

investigating companion cases• $1.2 MM additional benefit from

investigating all referrals and decreasing cancellations

$13+ Million more in annual collections—with no added staff

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Third: Backlog Reduction

• Work the 43,000 backlog at BR and the 3000 at DPAF• 17,000 of BR claims pre-date 2006, but a fair amount can be claimed

and collected • Effort could result in 9700 new claims being initiated for $5 MM in

additional recoveries • Cancellations number over 95,000 in last few years. If able to re-

investigate and open 8% would result in 7600 new claims and approximately $5 MM in new recoveries

• Additional case companion to backlog and cancelled cases could result in additional $2 MM in new collections

• Implementation:• Must re-allocate resources, wait for Step 3 to free up enough resources, or• Hire a SWAT team on a contingent basis to finish the job in less than 12

months (BR has15 months of backlog)

• Use the one-time program to both kick-start and amplify the process and system improvements

$14 million left on the table

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Fourth: Use What BR Learns to Improve

Eligibility Front End

Examples:• Post-partum Medicaid – Over $500K in FY 2012 for only

Medicaid claims that were opened

• Transitional Medicaid - Over $500 K per year

• SSI Asset Verification

• Other front end adjustments, including stepped up re-determinations

Benefit could be $6 to $60MM

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Our Report Lays Out Seven Families of

RecommendationsInvestment Categories->

ProcessCollection

tools Systems Policy LegislativeQuality

Management RegulatoryFront end Pilot

Repro-curementRecommendations:

SSDI and SSA disability lump sum payment offset

Upgrade call center (insource)

System of collection calls for late monthly payments

Redesign the form letters for clarity

Customer service measurement

Ad hoc tool to automatically determine claim size

Create automated data links into claims investigation tool

Data base integration VA, SSA, labor, UI

Implement case management software

Implement document management

Implement work flow software

SSI electronic asset search capabilities

Access to FMMIS decision support

Texas overpayment limits with exceptions ?

DPAF reorganization

Redesign at-home working to promote better performance

Reengineer claims process to eliminate handoffs & delays

Review and change AE determinations to IHE

-- Recommendation (row) supports the family (columns)

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Recommendation Keys

• Many interrelated changes to each of the fundamentals of BR, not an easy fix…no silver bullet

• Will require focused management attention

• Will not require added staff—increase efficiency and effectiveness to “buy” added resource

• No major up-front system investment required—pay as you go, through added collections

• Organizational change

• Process improvement

• Legislation, policy, regulatory Fixing BR is a world class management challenge but DCF

has the leadership to make it happen

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Good News: BR Can Implement Many

of These Recommendations Without

Additional Funding

• Eliminate regional transfers

• Expedite Admn IPV collections

• Repeal 2006 AE Medicaid capitation policy

• Decrease cancellations

• Work companion cases

• Investigate companion cases

• Bankruptcy filings

• Expedite re-evaluations in IPV

• Change AE to IHE

• Redesign forms

• Re-organize to “virtual central” (“Functional Model”)

• TOP Household change

• Post-partum front end change

• Performance metrics

• Beef up late payment policies including TOP

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Good News: BR Can Begin Many of

These Recommendations Without

Additional Funding (cont.)• Access FMMIS Decision Support • Implement Backlog Reduction

Plan • Revise Roberts v. Austin policy• Allow payments by credit card • Enhance Front End dialogue• Update policy and practice

manual • Prioritization method and work

referrals • Automated collection

apportionment • Implement formal training and

quality control functions –continuous improvement

• Provide more updated address information to collection vendor

• Re-bid collection contract and add proper incentives

• Seek legislation to:

• Garnish bank accounts

• Garnish state employee wages

• MCO liability

• Suspend drivers and recreational licenses

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Better News: BR Can Learn From The

Texas Experience

Claims Established

Program SFY 2012 SFY 2011 SFY 2010

SNAP $51,745,021 $52,502,073 $41,875,411

TANF $1,162,652 $1,490,701 $1,302,986

Medica

id $2,550,581 $2,871,725 $3,986,987

WIC $22,677 $58,748 $43,003

$55,480,931 $56,923,247 $47,208,387

Collections

Program SFY 2012 SFY 2011 SFY 2010

SNAP $34,953,045 $26,438,194 $22,598,457

TANF $599,879 $694,526 $799,778

Medicaid $1,257,154 $1,564,795 $1,092,317

WIC $27,722 $19,586 $17,078

$36,837,800 $28,717,101 $24,507,630

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Texas OIG is the “Best Practice” Model

BR Should Emulate

• Texas had a backlog in 2010 of 80,000 claims and today it has been reduced to almost zero

• In 2011, Texas OIG faced similar staff reduction issues in that OIG lost 67 staff that were transferred to Medicaid provider fraud

• Texas re-deployed internal front end eligibility staff to handle backlog of claims

• Texas was able to obtain a FNS waiver to establish claims only in excess of $500

• Texas sends claims to prosecution only if in excess of $5000 unless priors or aggravating circumstances

• Texas has automated collection systems and also collects on households and not individuals

• Florida’s SNAP population is higher than Texas (1.8 to 1.6 million)

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However, To Be “World Class” DCF Will have to

Seek Additional Funding in Future For:

• Predictive analytic claims investigations tool

• Automated data linkage to claims investigation

• Data base integration with SSA, VA, Labor, UI

• Case Management and Document Management Software

• Workflow Software

• Front end enhancements

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BR Will Also Have to Build State-wide Process and

New “Functional” Organization

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Next Steps

• Launch a series of process improvement teams—recover enough time to withstand loss of 29 people in July…set target of doubling performance in 24 months

• Launch efforts to marshal regulatory and legislative support

• Start a series of mini-IT projects to build key work-arounds—especially prioritizing and managing late payments

• Start major re-procurement of PCG to be completed by July 1 (decide on sourcing strategy)

• Reorganize BR, establish and baseline performance metrics

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Florida Benefit Recovery Assessment

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