Legislative Analyst's Office Analysis of the 2001-02 Budget Bill

Child Health and Disability Prevention Program

Program Fails as Gateway to Affordable Health Care

Background

Purpose of the Program. The state Child Health and Disability Prevention (CHDP) program was established by Chapter 1069, Statutes of 1973 (AB 2068, Brown), to provide preventive health, vision, and dental screens to children and adolescents in low-income families who do not qualify for Medi-Cal. It is modeled after the federal Medicaid benefit called Early and Periodic Screening, Diagnosis, and Treatment services. The CHDP program currently reimburses public and private providers for completing health screens and immunizations for children and youth under 19 years of age with family incomes at or below 200 percent of the federal poverty level (FPL). The program is jointly administered by the state Department of Health Services (DHS) and county health departments. An estimated 1.9 million screens will be provided in 2001-02.

The Changing Healthcare Landscape. When CHDP was established in 1973, the availability of subsidized health care for children was very limited. The CHDP program, though limited to coverage of preventive health screens and medically necessary follow-up treatment, filled a fundamental gap in the availability of care for low-income children. Today the landscape of affordable health care is very different. The Healthy Families Program has been implemented and now provides comprehensive health insurance coverage similar to Medi-Cal for children in families with income up to 250 percent of the FPL. As a result of the income eligibility expansions in Medi-Cal and Healthy Families, there are now overlapping income eligibility standards for these three programs.

Children using CHDP are now either (1) eligible to enroll for full Medi-Cal benefits, (2) eligible to enroll in Healthy Families, or (3) undocumented immigrants and, therefore, ineligible for either of these two programs. (Undocumented immigrants qualify for no-cost Medi-Cal, but only for emergency care, including labor and delivery services.) This evolution in the health care environment resulted in the state establishing a new role for CHDP—as a "gateway" facilitating children's enrollment in the Healthy Families Program. Figure 1 summarizes the eligibility criteria for CHDP, as well as those for the Healthy Families and Medi-Cal Programs. The figure illustrates the overlap in income eligibility that exists among the three programs.

The Governor's Budget. The proposed 2001-02 budget includes a total of $126 million for CHDP, an increase of $11 million, or 9.5 percent, above estimated current-year expenditures. Of that amount, $65 million would be allocated from tobacco settlement funds, $49 million from the General Fund, and the remaining $12 million from various federal and special funds. The increase is driven by a number of factors, including the addition of a new vaccine to protect children against meningitis and ear infections, the full-year cost of previously enacted rate increases, and projected growth of 108,000 in the number of screens.

The LAO Findings

Based on our analysis, few children are entering the Healthy Families Program through the Child Health and Disability Prevention (CHDP) program. This has resulted in missed opportunities to provide comprehensive health coverage for low-income children, as well as a missed opportunity to use available federal funds to help support the cost of providing the care. This situation appears to be the result of a number of factors, including a lack of coordination between the two programs, failure to coordinate county administered Healthy Families outreach activities with local CHDP programs, and outdated data systems for client tracking and claims auditing.

Few Children Enter Healthy Families Through CHDP Gateway. As a gateway program, CHDP services provided to children who enrolled in Healthy Families within a 90-day period are to be reimbursed by the Healthy Families Program. This retroactive payment allows the state to maximize federal funds and save state General Fund monies for the CHDP program. When the gateway concept was adopted, DHS assumed that 50 percent of Healthy Families enrollees would enter the program shortly after using CHDP services. However, CHDP clients are not enrolling in Healthy Families at the anticipated rate.

The best available indicator of the number of children enrolling in Healthy Families through CHDP is the level of reimbursement to CHDP for services provided to children who ultimately enroll in Healthy Families. In 1999-00, the most recent year for which data are available, only 4.5 percent of the new enrollees in Healthy Families had reimbursed CHDP claims. This represents a slight increase over 1998-99, when claims were reimbursed for only 3.4 percent of new Healthy Families enrollees. Due to a recent change in the retroactive claiming period—from 30 days to 90 days—we estimate that CHDP will be reimbursed for 9.6 percent of Healthy Families' enrollees in 2000-01. However, this is still a relatively small number of CHDP clients. Figure 2 shows initial expectations for CHDP reimbursements compared to actual reimbursements.

These figures probably underestimate somewhat the number of CHDP children enrolling in the Healthy Families Program. This is because they only reflect the number of children who were admitted into the program within the retroactive claiming period. However, the Managed Risk Medical Insurance Board (MRMIB)—the state department that administers the Healthy Families Program—has indicated that the 90-day retroactive claim period would capture approximately 90 percent of Healthy Families' new enrollees.

Lack of Effective Gateway Results in Missed Opportunities for Children and the State. There are several reasons why it is advantageous for CHDP clients who qualify for Medi-Cal or Heathy Families to be enrolled in the other two programs. First, Medi-Cal and Healthy Families offer free or low-cost comprehensive health coverage. Although all three programs provide coverage for preventive health screens and immunizations, Medi-Cal and Healthy Families provide a full range of medical benefits, as well as dental and vision care.

Second, Medi-Cal and Healthy Families provide a "medical home" by allowing the families to choose a health plan and regular doctor, as well as around-the-clock access to care. By contrast, in some counties, CHDP services are only available for a few hours on certain days of the week. Anecdotal evidence also indicates that CHDP clients needing follow-up care often wait months to be treated. This is especially the case for follow-up dental care.

Third, the federal government shares in the cost of the Medi-Cal and Healthy Families Programs, contributing approximately 50 percent and 67 percent, respectively. As mentioned previously, the state CHDP program is funded largely by the General Fund and tobacco settlement funds. Therefore, shifting children from the CHDP program to the other programs would produce immediate state savings. There would also be savings for counties which would otherwise have to spend county General Fund monies to supplement their Proposition 99 funds for CHDP follow-up treatment.

The DHS Has Not Developed a System of Coordination. Given data showing that large numbers of Healthy Families clients are not entering the program from CHDP, we examined the state and local efforts to incorporate CHDP into the Healthy Families Program. On the plus side, we found that DHS has distributed policy letters to CHDP health care providers encouraging them to promote enrollment in the Healthy Families Program. The DHS staff have also verbally encouraged promotion of enrollment at statewide meetings with local program officials. However, DHS has not incorporated Healthy Families enrollment activities into CHDP program procedures. For example, it has not required CHDP providers to facilitate enrollment in Healthy Families. Nor has DHS given local CHDP programs additional resources to take on new activities that would be necessary in order to effectively integrate the two programs. Additionally, DHS and MRMIB have not established any standard operating procedures for the provision of Healthy Families information or materials to local CHDP programs.

Overall, the absence of a statewide system to enroll CHDP clients in the Healthy Families and Medi-Cal Programs results in a lack of coordination at the local level. For example, we found that some county health departments receiving Medi-Cal/Healthy Families Outreach contracts—funds awarded to community-based organizations, school districts, and local governments—to provide outreach and education about Healthy Families and Medi-Cal for children failed to coordinate their outreach activities with CHDP staff.

The CHDP Information System Not Compatible With Medi-Cal and Healthy Families. The existing CHDP computer information system is not compatible with the Medi-Cal and Healthy Families information systems. The systems do not share common identifiers, such as client names, social security numbers, or other account numbers that permit records of CHDP clients to be linked to Medi-Cal or Healthy Families participants. This is because CHDP records track claims while the Medi-Cal and Healthy Families systems track individual members.

These differences limit the efficiency of CHDP as a gateway program. For example, the absence of a common identifier limits the state's ability to maximize federal funding and save General Fund monies by retroactively reimbursing CHDP when children enroll in Healthy Families. According to DHS, they are able to match clients for purposes of retroactive reimbursement only 70 percent to 80 percent of the time.

Moreover, since the state has no way of knowing if a child is enrolled in both Healthy Families and CHDP, the state is at risk of making duplicate payments for the same services. Under the current system, a child who is enrolled in Healthy Families could be seen by a CHDP provider. If the CHPD provider has no knowledge of the child's Healthy Families status, the provider could submit a claim and be reimbursed for those services under the CHDP program.

The extent of such double billing and its cost to the state are unknown. There is evidence, however, that such double billing is occurring. We compared our estimates of the number of uninsured children with family incomes below 200 percent of the FPL (the group eligible for CHDP) against DHS's estimates of children who utilize CHDP. The comparison shows that there are more children using CHDP than there are eligible uninsured children. This strongly suggests that children with health coverage (predominantly Healthy Families and Medi-Cal) are in fact utilizing CHDP services.

Recommendations for Improving the CHDP Gateway

Our analysis suggests that the gateway concept is a sound one and that an effective Child Health and Disability Prevention (CHDP) gateway could move the state closer to its goal of providing Healthy Families and Medi-Cal coverage to every eligible child. In this section we recommend a number of actions the Legislature can take to make CHDP an effective gateway.

Figure 3 summarizes our recommendations which are discussed in detail below.

Encourage CHDP Clients to Apply for Medi-Cal and Healthy Families. We recommend the enactment of legislation establishing new requirements for health care providers to encourage families to apply for Medi-Cal or Healthy Families. We believe such legislation could convert the CHDP program into a true point of entry for the Healthy Families and Medi-Cal Programs.

Under this proposal, in order for a provider to receive a reimbursement from CHDP for a health screen, the client for whom reimbursement is sought must have applied for Medi-Cal or Healthy Families. The provider would record on each CHDP claim the proof that the client's family has applied for Medi-Cal or for Healthy Families coverage. The family would be assisted in completing the application.

In theory, linking payments for CHDP screens to requirements that families apply for Medi-Cal and Healthy Families could prompt some families not to utilize CHDP. Some families might believe that completing the application is too much effort. Others, namely immigrant families—both documented and undocumented—might fear that applying for a government-sponsored program will jeopardize their residence in the U.S. or will deem them a liability to their U.S. sponsor.

In order to ensure continued access to CHDP health care services, we recommend that local CHDP offices or the Healthy Families community outreach contractor ensure that each provider has an up-to-date list of certified application assistants available in the area to assist each family. The larger CHDP providers, such as community clinics, might find it beneficial to have certified application assistants on site to expedite application completion and submission. (We note that many clinics already provide this assistance.) Community-based organizations that provide certified application assistance could further collaborate with providers to station application assistants in providers' offices.

We further recommend the enactment of legislation directing DHS and MRMIB to implement a coordinated education campaign to assure CHDP families that submitting their applications to Medi-Cal and Healthy Families will not result in any action against them by the Immigration and Naturalization Service.

New Data System Could Improve Gateway. If the CHDP program is to become an effective gateway to enrollment in the Healthy Families and Medi-Cal Programs, the state's information system must be able to distinguish CHDP clients from Healthy Families and Medi-Cal clients for client-tracking purposes—both to ensure the accuracy of payments and to measure enrollment outcomes. Therefore, we recommend that DHS explore ways to improve its data system.

Specifically, we recommend the adoption of supplemental report language to the 2001-02 Budget Act directing DHS to (1) analyze the limitations of the current CHDP data system in regard to its capacity to accurately compare client data among the CHDP, Medi-Cal, and Healthy Families Programs; (2) explore the feasibility of linking CHDP client data with Medi-Cal and Healthy Families Program data in order to accurately audit medical claims and track individuals across programs; and (3) examine technological alternatives for linking these data. These actions would prepare DHS for the procurement of an improved CHDP information system.

Single Point of Entry Needed for All Applications. Currently, there are two processes in place to determine eligibility for Medi-Cal. Under one method called the "single point of entry," the joint Medi-Cal/Healthy Families application is processed by Electronic Data Systems (EDS) under contract with the state. The EDS, as the fiscal intermediary for the Medi-Cal and Healthy Families Programs, is also responsible for making payments to providers. Under the other method, applications are processed by eligibility workers in county welfare offices.

The 2000-01 Budget Bill passed by the Legislature provided funding to allow all applications to be processed through a single point of entry. However, the Governor vetoed that appropriation. We recommend that the Legislature and Governor reconsider establishing a single point of entry for all applications. This approach would facilitate the implementation of changes we have recommended by (1) enhancing state oversight of enrollment in Healthy Families and Med-Cal and (2) creating a centralized database with which to compare CHDP claims.

Aligning Income Eligibility. Once CHDP has become a true gateway program for comprehensive health coverage, we recommend that the Legislature enact legislation to align income eligibility in CHDP and Healthy Families. Under current program requirements, children are eligible for CHDP services if their family income is no greater than 200 percent of the FPL. At the time that CHDP was proposed as a gateway program, Healthy Families' income eligibility was also limited to 200 percent of the FPL.

Policymakers have generally found that keeping income eligibility standards the same across similar programs facilitates a "seamless delivery system" by minimizing exclusion from eligibility and simplifying the application process. Given the prior decision of the Legislature to increase Healthy Families' income eligibility to 250 percent of the FPL, it should eventually consider increasing CHDP's income eligibility to the same level. By aligning eligibility standards, CHDP could encourage enrollment in Healthy Families for all children who are eligible for Healthy Families, not just for those whose family income is at or below 200 percent of the FPL.

Expanding income eligibility for CHDP would result in an increase in the program's caseload of one-time clients. However, most children who would become eligible for CHDP under this expansion would also be eligible for enrollment in the Healthy Families Program. Even their single CHDP screen then would be retroactively reimbursed by the Healthy Families Program. Therefore, we recommend that the Legislature enact legislation increasing the income eligibility standard for CHDP to the same level as the Healthy Families Program after the gateway model has been fully implemented.

Conclusion

The CHDP program was established at a time when low-income children had few options for affordable health care. Expansions in the Medi-Cal Program and the enactment of the Healthy Families Program have created an opportunity to transform CHDP from a limited "safety net" program for children into a true point of entry to comprehensive health coverage. However, in order to accomplish this, the state must take steps to open the gateway.

We believe our recommendations move the state in this direction by (1) establishing new requirements for health care providers to encourage families to enroll in Healthy Families and Medi-Cal, (2) encouraging counties to help families apply for health coverage and streamlining the application process with a new on-line computer program, (3) centralizing and simplifying the application process for public health coverage, (4) preparing to improve CHDP's data system, and (5) raising CHDP's income eligibility level to match the income limits of Healthy Families.

Our analysis suggests that the costs of making these improvements would be offset by savings to the state in the CHDP program, as CHDP clients enrolled in Healthy Families and Medi-Cal and as duplicate medical payments were eliminated.

Shifting the CHDP caseload to Medi-Cal would increase state costs for that program, but the enrollment of more CHDP clients in Healthy Families would not result in any significant additional state costs because the state has already budgeted for Healthy Families coverage for these children.

Figure 4 summarizes the benefits of our recommended approach. We believe that reforming the CHDP program and its data system will improve the health of low-income children by extending more comprehensive free or low-cost health coverage to additional children under the Medi-Cal and Healthy Families Programs.