Fiscal Fitness: How States Cope - States’ SCHIP programs offer reduced preventive and developmental benefits
States’ SCHIP programs offer reduced preventive and developmental benefits
A new study by George Washington University’s Center for Health Services Research and Policy found that the majority of states that have implemented SCHIP as a separately administered program have opted for benefit and coverage design for early childhood preventive and developmental services that are considerably less comprehensive than the standard of coverage furnished to infants and young children under Medicaid.
Researchers Sara Rosenbaum, Anne Markus, and Colleen Sonosky say the study’s findings come at a particularly important time in federal child health policy as Congress and the administration consider whether to give states additional flexibility in designing coverage components of their Medicaid programs.
Medicaid coverage standards for near-poor children, whose Medicaid entitlement is considered optional, could be affected by proposals that would give states additional flexibility to curb benefits in optional Medicaid coverage categories.
"We wanted to say to policy-makers that if you are considering reforming Medicaid, this may be a good time to pause and reflect on the SCHIP experience and consider how to design a program," Ms. Markus tells State Health Watch.
The three say the findings also are important for informing future generations of SCHIP contracts as administration officials expressed hope to "build on the success of SCHIP." As a program that offers states more discretion over coverage, they say, SCHIP’s experience to date offers important insights into how states might use the added authority to control access to child health benefits.
The researchers say their report is the culmination of a multiyear project to get an in-depth understanding of state SCHIP implementation, especially with children with special health care needs, and to assess the implication of state choices.
Similar goals
SCHIP shares Medicaid’s mission in its coverage of low-income uninsured children, but its coverage, as formulated in federal and state policy, represents a dramatic departure from Medicaid rules and principles, the three write. That departure was the result of a legislative strategy, supported by some of the nation’s best known children’s advocacy organizations, which culminated in enactment of a "not-Medicaid" pediatric health care financing scheme offering a financially generous alternative to the Medicaid legal entitlement. "The strategy was brilliantly successful," they say. "States responded to the lure of good money with few strings attached by rapidly implementing SCHIP and extending assistance to several million additional uninsured low-income children ineligible for Medicaid because of state coverage limits. Yet even as this expansion strategy succeeded, it has left many questions in its wake, not merely because of the aggregate limitations placed on federal SCHIP funding, which in turn have led to enrollment caps and waiting lists, but also because of the implications of its program design for children whose health needs exceed the norm and who are heavily dependent on state health care and social supports."
The study report concentrates on two groups of children:
1. those with moderate to severe physical and mental disabilities, whose health care needs for both acute and long-term care services transcend what typically would be found in a commercial insurance plan;
2. low-income infants, toddlers, and young children who face an elevated risk of developmental disability and delay, and whose health circumstances dictate a cluster of services known as "early intervention."
"These children, in particular, are more at risk for developmental problems," Ms. Markus says. "They need a comprehensive benefit package."
Ms. Rosenbaum and her colleagues say they focused on these two groups not simply because of their elevated health care needs, but also because it is in the context of these needs that Medicaid’s singular coverage design comes into evidence. "We viewed state SCHIP implementation," they say, "undertaken during an exceptionally strong period of economic growth and strength, as a natural experiment of sorts, a test of how states would design health care assistance for lower income children in the absence of a federal legal entitlement to comprehensive coverage."
The study’s principal finding is when states are given the flexibility to do so, they tend to reduce the level of coverage to that found in standard health insurance products, rather than the level of coverage that has been the hallmark of Medicaid since the 1967 enactment of the Medicaid Early and Periodic Screening Diagnosis and Treatment (EPSDT) program.
Added to Medicaid in response to widespread evidence of long-term health and developmental disabilities among low-income children, EPSDT provides comprehensive coverage for preventive medical, dental, vision, and health care services, as well as extended coverage for children for whom sustained health care is necessary to ameliorate effects of suspected physical and mental conditions.
As a result, EPSDT covers services that commercial insurance typically excludes, such as comprehensive development assessments, extended physical and mental health therapies, and other services not found in standard commercial insurance plans.
EPSDT also uses a unique standard of medical necessity that requires that states to pay for health care interventions at the earliest possible juncture to promote growth and development rather than merely curing illnesses.
"We don’t want to say that states have been doing the wrong thing," Ms. Markus explains, "because they have been following the incentives they were given in developing programs very much like private insurance. The question is how should society deal with those who need more than the standard package."
Ms. Rosenbaum and her colleagues say their principal findings include:
Despite the fact that as a group both poor and near-poor children experience heightened levels of functional impairments, SCHIP and Medicaid benefits differ significantly in ways that cannot be explained by a markedly superior health status among near-poor children.
Among the 35 SCHIP programs that are separately administered outside of Medicaid’s comprehensive coverage rules and that contract with health plans to deliver capitated services, all states cover basic well-baby and well-child care in their service agreements. Wide variation was found among states in use of coverage standards that explicitly require participating health plans to cover child development services required under Medicaid such as anticipatory guidance (18%), lead screening (43%), and comprehensive developmental assessments (68%).
Only half the states with separately administered SCHIP managed care programs require participating health plans to employ a medical necessity standard that meets Medicaid’s comprehensive requirement that coverage be available to ameliorate the effects of physical and mental conditions. The other states use either a more limited definition of medical necessity that is more consistent with traditional commercial insurance principles and that permits insurers to limit coverage to those treatments that focus on coverage of defined medical conditions and that can be expected to restore a child’s health to a level of normal functioning, or fail to define medical necessity altogether.
By not defining medical necessity, states may have elected to delegate the authority to define medical necessity to contractors, which would be consistent with a state’s desire to use its SCHIP flexibility to foster conventional insurance design principles rather than the unique Medicaid standards.
Such a narrow standard would exclude many interventions necessary to help children with disabilities and delays attain more normal growth and development or avoid the loss of, or deterioration in, functioning.
Standards used by SCHIP agencies contain fewer contractual expectations related to continuity of care, coordination with early intervention services offered by other public agencies, such as state maternal and child health agencies, and other outreach and child development activities.
Will Medicaid’s support end?
"These findings raise exceedingly important issues for low-income child health policy," Ms. Rosenbaum notes. "Medicaid has played a historic and unique role in financing comprehensive services to low-income children, whose growth and development — and school readiness and performance — ultimately hinge in great measure on early investment in highly enriched health services. Medicaid’s pediatric coverage design under EPSDT is one of the program’s hallmarks and for nearly 40 years has clearly set the program apart from standard commercial product offerings. To the extent that Medicaid standards are revised, through Section 1115 waivers or legislation, to permit further movement toward commercial insurance limits for children, such a change in turn would raise major questions regarding how early intervention services will continue to be financed for children at risk."
The authors say they believe it is not too harsh to argue that in the long run, SCHIP may do less to help children and families than harm them by helping to further destabilize the already shaky Medicaid picture. "If total destabilization occurs and if SCHIP [along with the Bush administration’s Section 1115 demonstrations] is any indicator of what the successor program will look like, then there is indeed much to think about, particularly where the welfare of children and adults with significant health needs is concerned," they say.
While some laws need to be researched to determine legislative intent, the authors add, SCHIP’s true intent shows up on the face of the bill’s text itself, from the explicit assertion that "nothing in this title shall be construed as providing an individual with an entitlement to child health assistance" to the use of a premium support approach to coverage.
"A detailed inspection of both the law and subsequent implementation of its provisions confirms what one may have hypothesized might occur during an era notable for its rush to abandon social welfare entitlements for the poor: In the main, states used their SCHIP allotment to extend to low-income children a far more conventional and limited form of coverage than is possible under Medicaid," the authors write.
"Medicaid reflects an era of public policy support for legal entitlements for the poor and disenfranchised. Medicaid not only established what ultimately has been interpreted as a federal legal entitlement, but did so in remarkably clear and broad terms in the case of children. For children, Medicaid coverage operates at a level that has virtually no parallel in the insurance market. There is no actuarial benchmark’ for Medicaid," they note.
"SCHIP is a product of a different era. Under programs such as SCHIP, low-income persons no longer are entitled to benefits. They receive what Charles Reich termed largesse’ up to the limits of fixed aggregate expenditure caps, and without regard to individual need. Furthermore, the design of this largesse is what the market will bear. As the actuarial benchmark shifts ever downward in the face of a declining willingness on the part of insurers and group purchasers to invest in comprehensive coverage, so too, presumably, will SCHIP and similar benefits for the poor, since their terms of coverage are pegged to the market rather than objective tests of reasonableness," the authors say.
The study concludes that it is clear that the pediatric health system needs a source of funding with the flexibility and depth displayed by Medicaid. Evidence regarding the standard of care for children during early child development and later in life as they develop special health needs underscores the need to finance the range of health services that help achieve optimal growth and development among children, they point out. There is a need for child health financing that is unbound by insurance norms and that can respond to health problems in infancy and childhood that require long-term interventions in schools and community settings.
"We have to decide what society’s obligation is for all people as well as for those with special needs," Ms. Markus says. "We’re talking about a population that is disadvantaged in many ways. We’re talking about a population that is sicker and has more problems. A scaled-back coverage package isn’t necessarily bad, but you then have to decide what will be done for kids with more needs." She says some states have opted for SCHIP supplemental coverage to respond to those with special needs so there is precedent for such an approach.
Plausible policy option’
"The real question is whether the fundamental mission of Medicaid to support a broad range of health services for uninsurable populations of all ages can be met only though an individually enforceable legal entitlement," they authors say.
"Clearly, the answer to this question is No.’ . . . Thus, at least where children are concerned, a plausible policy option would be a universal child health insurance program with standard benefits and coverage rules, coupled with a comprehensive program of state grants to develop and support systems of care capable of furnishing supplemental child development and family support services in community settings where they are needed and where they rightfully should be furnished. . . . The critical issue in this plausible option is the universality of the model," they add.
"Where only poor children are relegated to benchmark coverage and grant supplementation, the inevitable result appears to be underfinancing. Another way to say this is that, were all children to be covered by SCHIP rather than merely a slice of low-income uninsured children, mental health benefits never would have been classified as an additional’ service, dental care would not be nonexistent, and there would not be waiting lists for coverage," the authors explain.
"Perhaps it seems foolish to consider universality at a time of retrenchment in social policy. On the other hand, the crisis in health care finance now leaves one in four children dependent on public insurance and fewer than two in five with employer coverage. If Medicaid is to be fully debated, then there may in fact be no more appropriate time to abandon backsliding and futile incrementalism in favor of bold reform, and no more appropriate population on whose behalf to do so," they add.
(The report is in the Suffolk University Law School’s Journal of Health & Biomedical Law and is available on request from author Anne Markus by e-mailing [email protected].)
A new study by George Washington Universitys Center for Health Services Research and Policy found that the majority of states that have implemented SCHIP as a separately administered program have opted for benefit and coverage design for early childhood preventive and developmental services that are considerably less comprehensive than the standard of coverage furnished to infants and young children under Medicaid.
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