Strategies for Tough Fiscal Times

SCHIP and Medicaid

The State Children’s Health Insurance Program (SCHIP) was created to provide coverage for children whose families earn too much to qualify for Medicaid, but not enough to afford private insurance. Both are state-federal programs, and states have flexibility to shape their programs within broad federal parameters.

What Can Policymakers Do?

• Maximize enrollment of individuals currently receiving state or locally funded treatment.   Review all participants in state and/or locally-funded health coverage and health care programs to determine eligibility for Medicaid or SCHIP, including uninsured patients at public hospitals and other health facilities, and expedite enrollment of those who qualify. The District of Columbia’s review of the DC HealthCare Alliance estimated that up to $15 million in annual savings could be realized from moving eligible Alliance members to Medicaid.

• Maximize Retroactive Claiming.  Use intensive outreach to obtain Medicaid and SCHIP reimbursement for treatment previously provided to patients who were uninsured but eligible for Medicaid. The Florida Hospital Association found that 5% of uncompensated hospital care charges are converted to Medicaid charges through retroactive eligibility but many rural community and other safety net hospitals lack the resources to follow up with uninsured patients.

• Integrate Medicaid and SCHIP programs. Ensure that all SCHIP-eligible children are enrolled in SCHIP, at the enhanced match rate, rather than in Medicaid, by conducting reviews of the state’s Medicaid enrollment, employment records and other relevant data.

• Provide presumptive eligibility. Presumptive eligibility expedites care for uninsured children and increases federal reimbursement by providing access to the full range of Medicaid- or SCHIP-covered services until eligibility is confirmed. [i]

• Maximize administrative claiming.   Administrative claiming for Medicaid defined by the Medicaid state plan or an approved cost allocation plan allows open-ended reimbursement for activities that include eligibility determination, outreach, information management, EPSDT administration, third party liability activities, and utilization review. Reimbursement rates range from 50 to 90%.

• Streamline eligibility determination and application processes.  States can improve enrollment in SCHIP and Medicaid by adopting automated, user friendly systems that make it easier for eligible applicants to enroll. 

• Review Medicaid utilization.  In addition to the potential for cost recovery, the expense of conducting reviews is an administrative cost that is eligible for Medicaid reimbursement. New Mexico is recouping an estimated $18 million from managed care organizations that spent less than the required 85% on direct medical services. [ii]  Ohio’s review produced over $9.2 million in savings , and the state’s investigation of medical care provided to incarcerated men and women yielded credits of $200,000 per month. 

• Consider state plan amendments to expand coverage. Section 1931(b) expansions allow states to move higher income parents from state or locally-funded coverage to Medicaid by disregarding all family income between the 1996 AFDC eligibility level and a higher level. Maine expanded coverage of working parents first to 107% and then to 157% of the poverty line. [iii] California’s expansion , coupled with a change to the definition of unemployed parent, provided Medicaid coverage to 250,000 adults whose children were already fully or partially covered. [iv]  Although most states have obtained waivers to accomplish these expansions, amending the state Medicaid plan may be quicker.

• Maximize use of the Medicaid Early Periodic Screening, Diagnosis and Treatment (EPSDT) Program. State Medicaid programs are required to provide EPSDT services. Early screenings can help prevent serious and costly problems and expedite treatment. [v] Children are eligible for routine screenings for a variety of potential problems starting at birth, periodic check-ups (including dental), and treatment of detected problems. Arizona’s Health Care Cost Containment System developed age-specific EPSDT tracking forms to help providers deliver comprehensive, age-appropriate, screening exams and to monitor providers’ performance. [vi]