Florida: The Privatized State — Where Child Welfare Was Outsourced to the Highest Bidder

Where child welfare was outsourced to private nonprofits, Medicaid was handed to Centene, and permanency outcomes have declined for five consecutive years

Investigation by Project Milk Carton

Florida: The Privatized State

Florida is the only state in the country that has fully privatized its child welfare delivery system. The state investigates abuse and neglect through DCF, but every foster care case — placement, case management, reunification services — is outsourced to one of 18 private nonprofit Community-Based Care (CBC) lead agencies spread across 20 judicial circuits.

On top of that, all 17,000-plus children in DCF custody are enrolled in a single Medicaid managed care specialty plan operated by Sunshine Health — another Centene Corporation subsidiary — which holds the sole statewide Child Welfare Specialty Plan contract.

The result is dual privatization: private agencies managing the children, and a private corporation managing their healthcare. Both get paid per child, per unit of time. Both stop getting paid when a child goes home.

And permanency outcomes have declined for each cohort over the past five years.

The CBC Model: Privatized Child Welfare

In 1998, Florida began privatizing its child welfare system through Senate Bill 2260, creating the Community-Based Care model. By the mid-2000s, the entire state was covered. DCF retained investigation authority, but foster care case management, placement, and services were outsourced to private nonprofit lead agencies.

The funding structure creates a direct financial link between the number of children in custody and agency revenue. Under the current tiered model established by HB 1061 (2024):

• Tier 1 covers fixed operational costs — admin, leases, training. Not sensitive to the number of children served.

• Tier 2 covers variable costs — case management, direct services. Directly proportional to the number of children in care. More children equals more money.

• Tier 3 covers performance-based incentives tied to outcome metrics.

The problem is structural. Tier 2 — the largest variable component — pays agencies based on census. Every child reunified with their family reduces the agency's variable funding. No state or federal payment stream rewards faster reunification.

In 2023, forensic audits of six CBC lead agencies found non-compliant procurement, paycheck Protection Program loans not reimbursed to the state, officer compensation exceeding mandatory caps, and related-party fund transfers. ChildNet alone had $54,126 in documented overbillings and $22,062 in unallowable salary costs. As of February 2025, four of ten audited agencies still have open corrective action plans.

Sunshine Health: Centene's Florida Operation

Every child who enters DCF custody is automatically enrolled in Sunshine Health's "Pathway to Shine" — the Child Welfare Specialty Plan. Sunshine Health is a wholly owned subsidiary of Centene Corporation.

The pattern is identical to Texas and Missouri:

• Sole-source statewide contract — no competing MCO operates a child welfare specialty plan in Florida

• Automatic enrollment upon entry into custody

• No plan choice — Sunshine Health is the only option across all nine SMMC regions

• Capitation begins at custody, not at substantiation

Centene controls 41% of Florida's entire Medicaid market — 2.3 million members through Sunshine Health. The foster care specialty plan is a subset, covering approximately 17,000-20,000 children and generating an estimated $250-$400 million annually in capitation revenue.

The new SMMC 3.0 contract runs through December 31, 2030. Seven MCOs participate in the broader program. Only Sunshine Health operates the child welfare specialty plan.

The $67 Million Settlement and Hope Florida

Florida is one of more than 20 states that settled with Centene over pharmacy benefit manager (PBM) overbilling. The Florida settlement was $67 million.

The settlement became entangled in the Hope Florida scandal — a political controversy involving the state's handling of the funds and the relationship between DCF leadership and Centene. The details are still unfolding, but the core fact remains: the same company that overbilled Florida's Medicaid program by $67 million continues to hold the sole statewide contract for foster care Medicaid.

The Revenue Per Removal

When a Florida child enters DCF custody, the combined annual revenue across all streams ranges from approximately $27,000 at the basic level to over $300,000 for a child in residential treatment:

Every dollar flows because the child is in custody. Every dollar stops when the child is reunified. There is no reunification incentive payment at any level of the system.

What the Federal Government Found

Florida's CFSR Round 3 (2016): not in substantial conformity with any of the seven federal outcomes. Failed on safety, permanency, and well-being across the board. Failed four of seven systemic factors.

CFSR Round 4 (October 2024): failed six of seven outcomes and six of seven systemic factors. Overall case review performance: 67.69%. The state is in the program improvement plan development phase, focused specifically on permanency within 12 months — the metric that has been declining most sharply.

The permanency decline is the most critical finding. The percentage of children achieving permanency has declined for each cohort over the past five years. Only 5 of 18 CBC lead agencies met the federal 35.2% permanency target. This decline is occurring within a revenue model that financially rewards continued custody and provides no incentive for reunification.

The Medication Problem

The HHS Office of Inspector General audited Florida's psychotropic medication oversight for foster children in 2023. The findings:

• Close to half of sampled cases had psychotropic medications not recorded in the case management system

• 66% of case files had no medication logs documenting frequency, dosage, or adverse reactions

• More than one-third had no authorization records for psychotropic prescriptions

• 95% of sampled cases had opioid medications not recorded

• DCF did not have access to the Medicaid data that federal auditors used to identify medication records

• Training for investigators and case managers did not specifically address medication documentation requirements

One in three foster children ages 13 and older in Florida — approximately 33% — is on psychotropic medication. Seventy-three children age five and under were on psychotropics.

Florida's response to the OIG report: "elected NOT to provide comments on draft report." Both recommendations remain open and unimplemented.

The Fatality Undercount

The Miami Herald's "Innocents Lost" investigation documented 477 children who died whose families were known to Florida child welfare authorities between 2008 and 2014. When compared to DCF's own reports to the legislature, the discrepancies were severe: in 2009, DCF reported 69 deaths "with priors" while the Herald counted 107 — a 55% undercount. In 2010, DCF reported 41; the Herald counted 75 — an 83% undercount.

A Miami-Dade grand jury endorsed the Herald's findings of systematic undercounting.

The state's Child Abuse Death Review (CADR) committees reviewed only 237 of 471 child fatalities reported to the abuse hotline in 2022 — barely half.

The Dual-Privatization Problem

Florida is the only state where both child welfare case management and foster care Medicaid are fully privatized. This creates a structural arrangement with no parallel elsewhere:

The CBC lead agencies — private nonprofits — are funded based on the number of children in custody. Sunshine Health — a private corporation — is paid based on the number of children enrolled in the specialty plan. The state retains only the investigation function. Every downstream decision about placement, services, and reunification is made by entities whose revenue depends on keeping children in the system.

The permanency metrics confirm the structural prediction: declining performance for five consecutive years. The federal government has found the state out of compliance with every child welfare outcome across two consecutive reviews spanning eight years.

Florida is what a fully privatized child welfare machine looks like at scale. The oversight failures are built in. The financial incentives all point one direction. And the children who are supposed to benefit from this system are getting worse outcomes, not better, with each passing year.

This is Part 4 of the Forensic Structural Analysis Series by Project Milk Carton. Lead Investigator: JeremiahBullfrog.

Next: Oklahoma — Under Federal Court Supervision

Key Sources:

• Florida Statutes Chapter 39 (39.401, 39.402, 39.013)

• Florida AHCA, Statewide Medicaid Managed Care program documentation

• Sunshine Health Child Welfare Specialty Plan documentation

• Centene Corporation 2024 Annual Results

• DCF 2024 Results-Oriented Accountability Annual Performance Report

• ACF CFSR Round 3 Final Report — Florida (2016); Round 4 (2024)

• HHS OIG Report A-05-22-00009, "Psychotropic and Opioid Medication Documentation" (2023)

• Florida Legislature HB 1061 analysis (2024 CBC funding reform)

• DCF Multi-Year Review of Financial Position for Lead Agencies (2023, 2024)

• DCF CBC Forensic Audit findings (FY2019-2021, completed August 2023)

• Miami Herald, "Innocents Lost" investigative series

• KFF Health News, Centene Florida settlement reporting