State Child Welfare Policy Guide: Part of the Policy Matters Series

7.3 Medical coverage

Many children in foster care do not receive adequate health care services.  In a 2005 analysis of state child welfare performance, the U.S. Department of Health and Human Services (HHS) found that only one state met federal standards for health and mental health services delivery to children involved with the child welfare system.  In more than 30 percent of the cases reviewed, child welfare agencies failed to provide adequate services [i] , despite a mandated responsibility for meeting the health and mental health needs of children in their custody.  In 2008, Congress included a provision in the Fostering Connections legislation that requires states to work with Medicaid agencies to develop a plan for oversight and coordination of health care services for children in foster care.  The plan must include specific steps that will be taken to assess, treat and monitor the comprehensive health care needs of foster children. [ii]

Medical coverage for children in foster care can be achieved through a mix of funding strategies that involve federal and state sources (See Policy Area 14.1 Interagency collaboration: Funding flexibility).  The interplay between Title IV-E and Medicaid is the first and most critical step in providing comprehensive medical coverage. Foster children who are eligible for Title IV-E foster care reimbursement are also Medicaid-eligible and all states also extend Medicaid eligibility to children in foster care who are not IV-E eligible.  At the same time, each state develops and administers its own Medicaid plan – determining eligibility standards, services, and payment rates in compliance with federal rules.  Relying upon existing Medicaid plans for foster children introduces the inherent challenges that can undermine the effectiveness of Medicaid services.  These challenges include lack of mental health services for children, an insufficient number of doctors and dentists willing to accept Medicaid, inconsistency in conducting adequate and timely health and mental health assessments, and inconsistent provision of preventive health and dental services. [iii]   In 2002, the federal government designated 3,216 geographic areas as “shortage areas” for primary care health providers; 1,953 are so designated for dental health providers; and 963 are designated as having mental health provider shortages. [iv]   Strategies for making health care available to under-served children and families are outlined in the Policy Matters publication, Promoting Better Family Health: Recommendations for State Policy. 

Funding Strategies : Because states have great leeway in determining their Medicaid programs, there is enormous variation in spending per child in foster care. For example, a 2005 Urban Institute analysis found that Medicaid spending per foster child ranged from $1,309 in Arizona to $19,408 in Maine.  The average expenditure per enrollee for all children in foster care is $4,336.   Twelve states expended more than $8,000, while 11 states spent less than $3,000 per enrolled foster child. [v]   States can begin to address these variations through an examination of Medicaid options and waivers.

Coordinating the funding streams to fund comprehensive health care for children in custody requires a cross-agency analysis of allowable uses and limitations. Many states have formed task forces to develop health care plans that include an evaluation of all potential funding sources, allowable uses, waivers and options. [vi]   Funding strategies that emerge blend funds that cover administrative costs versus clinical services, include state funds for non-reimbursable costs, and include funding from different agencies. Finally, incentives for providers should be explored (See Policy Area 10.3: Monitoring and Oversight Systems, Performance Based Contracting) to encourage the development and provision of special services.

Targeted case management .  Case management that can help an eligible individual gain access to needed services can be covered when a state is permitted a Medicaid-approved targeted case management (TCM) option.  Thirty-eight states have designated children in foster care as a targeted population for case management services.  TCM recipients are more likely than non-TCM recipients to receive a number of critical services, including physician services, prescription drugs, dental treatment, and rehabilitation. [vii]   It should be noted that this option is threatened by recent federal regulatory changes eliminating TCM for children in foster care.  The changes are being challenged by all states and some members of Congress.     

Continuous coverage .  There is wide variation among states in continuation of Medicaid coverage when children leave foster care to return to their families, or reach permanency through adoption or legal guardianship.  New York is among the states that provide this important benefit.  Lack of continuous coverage can prevent reunification of families whose children have intensive health or mental health needs, lead to re-entry into foster care, or result in poor outcomes for children after reunification.

Policy Options:   States can fund and authorize medical services in accordance with 1, 2, or 3 of the following policies:

·         State implements a comprehensive funding strategy that examines Medicaid spending per enrollee, strategic use of funding, use of state funds, provider incentives and interagency funding.

·         State provides Medicaid targeted case management services for children in foster care.

·         State continues Medicaid coverage for children leaving foster care to be reunified with their families.