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History and Implementation
The state legislature has authorized health insurance programs for low-income Colorado children for more than a decade. However, the legislature has not appropriated much general fund money to support the programs. The reluctance to appropriate state funds reflects two political realities in Colorado. First, there is a statutory limit on annual revenue and spending increases. Second, there is skepticism among legislators and segments of the public toward government-run programs. Both realities have led to legislative mandates to privatize child health insurance programs as much as possible. The legislature reinforced privatization for the state’s CHIP program.

Pre-Title XXI

This chronology occurred in an environment of statutory limits on annual revenue and spending growth. The statutes index revenue and spending growth to population plus inflation, which has amounted to a limit of roughly 6 percent, annually, over the past several years. One statute requires excess revenues above 6 percent to be returned to the taxpayers in a rebate, unless they vote in a referendum to spend some of it. The limit cannot apply to growth in federal entitlement programs like Medicaid. When Medicaid is experiencing runaway growth, as it was during the early 1990s, legislators must appropriate state matching funds to it. This restricts their ability to fund discretionary programs.

Title XXI
Colorado was one of the earliest states to receive federal approval of their Title XXI State Plan and the first to receive approval for a non-Medicaid program. The plan builds upon the existing Colorado Child Health Plan. The new program, Child Health Plan Plus (CHP+) offers a more comprehensive set of health care benefits to children that includes inpatient hospital services, extends eligibility to older children up to age 19, and expands to residents in all 63 counties.

When Title XXI passed in August 1997, with funding to become available in October, Colorado still had another year before its CCHP expansions were to take effect. So the legislature passed a fast track bill to correct the following discontinuities between CCHP and Title XXI:

Phase I of CHIP/CHP+ began in April 1998 and included the following features: In Phase II the state plans to pilot an employer buy-in program.

Federal/State Financing

Current Enrollment Key Factors for Colorado’s Implementation
Many circumstances facilitated the authorization and implementation of CHIP in Colorado. Statutory limits on revenue increases, which constrain the growth of programs, served to temper enrollments during early CHIP implementation.

State Approach
Faced with statutory constraints on funding for CHIP/CHP+ and the capped enrollment target in the first year, attitudes toward outreach were initially mixed. Although there was interest in reaching out to the maximum number of children, there was concern about "being too successful" and creating waiting lists. As one person explained the trepidation: "Can we serve them if they come?" As it has recently become clear that total enrollment would not exceed 25,000 during the first fiscal year, state officials expressed renewed interest in more vigorous marketing and outreach.

Key Players and Administration
A Policy Board recommended overall CHP+ policy. Two state agencies and a private foundation played a direct role in early CHP+ administration, and there is collaboration with a third state agency and another private organization.

HCPF contracted for outreach and enrollment functions to the Foundation for Children and Families.3 These sessions train attendees to help families understand the health plan and complete applications, and include information on eligibility, premiums, and providers. In addition, all Satellite Eligibility Determination (SED) sites received materials and policy and procedure updates. Approximately 800 individuals attended these training sessions during 1998. Collaboration with Other Agencies and Organizations on Outreach
Several other agencies and organizations conduct outreach for CHP+: The Foundation, Department of Public Health and Environment, and Health Network have worked closely together with HCPF. The main feature of Colorado’s outreach is marketing through community-based direct service workers.

The Department of Public Health and Environment houses the Early Periodic Screening, Diagnosis, and Treatment (EPSDT) program in their Title V agency administering maternal and child health programs. DPHE contracts with the 63 county public health agencies, who hire case managers backed up by public health nurses.

Colorado Community Health Network works under contract to HCPF to conduct selected outreach activities. The Health Network works with the State Primary Care Association, whose members operate 85 primary care clinics for the uninsured (including 20 school-based sites). The Primary Care Association receives 80 percent of its funding from the federal Health Resources and Services Administration (HRSA) in HHS. The Community Health Network has a grant from HRSA for CHP+ and Medicaid outreach. Finally, Colorado Indigent Care Program providers, many of whom are community health centers, received information about CHP+ and are encouraging their families to apply. Creating a Seamless Health Care System for Eligible Children
Presumptive Eligibility
Colorado does not offer presumptive eligibility to children applying for CHP+, but there was provisional eligibility. Once an application was received, the child was made provisionally eligible during the approximately 60 days it took to process the application and make a final determination. Continuing Eligibility
CHP+ children, once certified and enrolled, enjoy a 12 month continuous eligibility period before re-certification must occur.

Simplified Application and Eligibility Decisions

Funding for Outreach Marketing to Hard-to-Reach Populations Woodwork Effect
Staff in both public and private agencies noted the dilemma they faced near the end of 1998 over engaging in too aggressive an outreach campaign that may create more demand for CHP+ than the budget permits them to meet. This would create waiting lists. On the other hand, others felt that the cost sharing requirements of CHP+ would deter enough families from enrolling their children that the target enrollment numbers might not be met in the first year. In the spring of 1999, staff recognized they were falling short of their enrollment targets.

Still others were more concerned that CHP+ outreach would surface more Medicaid-eligibles and drive up Medicaid costs. The legislature is particularly sensitive to this scenario, given the painful experience of the early 1990s. To date, at least 2500 children have been referred to Medicaid since July 1998, but HCPF is unable to estimate the number of children who enrolled. It is likely that enrollments in Medicaid would be larger were it not for the low asset test in Colorado’s Medicaid program. Since a family with a car worth $1500 may be ineligible for Medicaid, staff believe that many of these families will have incomes below the FPL and be eligible for CHP+, with its asset limit of $4500.

Potential Future Outreach
Colorado’s plans for future outreach include:

Advice for Other States
Crowd-Out Prevention
State’s Response
The state legislature, Policy Board, and departmental officials were seriously concerned about crowd-out. Their concerns influenced the choice of FPL eligibility level for CHP+, the benefits package, adoption of waiting periods, premiums and co-payments, and investigation of an employer buy-in program.

FPL Eligibility Level
The legislature was apprised of the research from Minnesota and elsewhere that seemed to document that crowd-out does not occur at least until a health insurance program’s eligibility levels reach 200 percent of the federal poverty level. To be cautious, they chose to leave the FPL level for CHP+ at the same 185 percent as it was in the earlier state program.

Benefits Package

Waiting Periods
As an explicit employee crowd-out measure, the legislation states that children are ineligible who are covered under an employer plan with at least a 50 percent employer contribution to premiums during the three months before application. There was some discussion about whether to impose this wait also on families who had access to employer coverage but opted not to enroll. A consensus developed that it was too complex to assess availability to, and affordability of, employer insurance coverage.

The state charges monthly premiums as follows:

Advocates and even some state officials fear these premiums are too high and deter enrollment in CHP+. They point to the forty-percent response rate to letters sent to families with children enrolled in CCHP, inviting them to convert to CHP+. They also point to the high number of families remaining in the free Colorado Indigent Care Program. Finally, some worry about the "cliff effect" — where one extra dollar of income or assets makes a family ineligible for Medicaid, but unable to afford the premiums in CHP+.

Lock-out Periods
Colorado has developed a policy, to be implemented, wherein families failing to pay premiums will be given three written notices and a 90-day grace period. If they still fail to pay, the children will be excluded from coverage for 90 days.

Families with incomes above 100 percent of poverty in CHP+ face different co-payment schedules depending on whether they earn 100-150 percent FPL or 151-185 percent. Generally, physician visits, clinic services, vision care, occupational, physical and speech therapy, mental health and substance abuse treatment services are either $2 or $5, respectively. Prescriptions cost $1 or $3, respectively, for generic drugs, but $5 for brand names. Officials are less worried about any deterrent effect on enrollment from the co-payments than they are the premiums.

Employer Buy-In
Colorado officials in the Division of Insurance’s Office of Policy and Research are working with HCPF to develop an employer buy-in program. In November 1998, staff were developing a "white paper" raising the issues to consider and questions that need to be answered to help select program features. The paper was to be presented to the Policy Board in December, 1998. Among the issues and questions they were considering:

Colorado plans to conduct a pilot test of employer buy-in, to test the most appropriate responses to these and other questions. They are looking into piloting the program with a purchasing cooperative of employers that offer a standardized benefit package.

Data Collection and Evaluation

State policymakers and agency staff relied on a variety of data to design their program, and plan to collect data from other sources to evaluate outreach, crowd-out, cross-program referrals, and cost-sharing.

Data for Program Design

Data for Program Evaluation
Challenges to Implementation
State officials cited several challenges to implementation. Staff turnover in HCPF and the few FTEs the legislature authorized to administer CHP+ slowed implementation. Delays were attributed to the time spent writing an RFP and evaluating proposals for a contract to the new private, non-profit organization conducting day-to-day administration. More delays were attributed to the time Foundation staff spent responding to the RFP, and transitioning to the private, non-profit organization.

Some officials stated that, in retrospect, it might have been easier to get a brand new program off the ground than to transition from CCHP to CHP+. The most pressing administrative barrier they face is the ten percent cap on federal match for administrative expenses.

Ten Percent Cap on Administrative Expenses
By November 1998, Colorado estimated their administrative expenses had already reached 17 percent of total expenses for CHP+, with recent projections that it might average 16 percent. In a report to the legislature in 1998, HCPF stated that they projected health care costs of $14.3 million (net premiums) and $3.3 million in administrative expenses, with federal reimbursement of the latter expected to be $1.4 million. The difference of $1.8 million must be paid with state-only funds.

Officials pointed to various causes for their high administrative costs, including: the transition costs from a previous to new state program; expanding to inpatient coverage; and developing a new automated, rules-based eligibility determination system (Colorado Benefits Management System) that will include CHP+ and other public assistance programs. One official said that the ten percent cap must cover fifty percent of what Colorado is trying to do.

Other Challenges
Funding limitations and a consequent enrollment cap initially tempered what might otherwise have been vigorous outreach and enrollment efforts. However, more recent projections of enrollment suggest that CHP+ might fall short of its target, so outreach has become more aggressive.

Moreover, staff turnover in HCPF and legislative authorization for only 3.5 positions to implement CHP+ are reported to have been a barrier to implementation.

Finally, staff believe the integration of the Application Form has improved the process for Medicaid but hindered the process for CHP+. This is because Medicaid rules require collection of information to determine "blood lines" and establish "the Medicaid budget unit", a requirement that is unnecessary for CHP+.

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1 - For example, if the net asset value of the family vehicle exceeds $4500, the excess is treated as additional family income.
2 - Since the time of the site visit for this case study, the foundation has been replaced by a private, non-profit contractor.
3 - The Foundation has been replaced, since the site visit, by Child Health Advocates—a private, non-profit organization.  To ensure continuity of operations, the new contractor hired most of the Child Health Plan staff from the Foundation for Children and Families.
4 - State contracts with a primary care provider network provide for no risk-shifting to the providers.
5 - The processing time has recently been reduced from 60 days to 15 days.
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