I. ELIGIBILITY CRITERIA AND THE VERIFICATION PROCESS

1. Overview

Over the past several years, states have approached the issue of children’s health insurance in many different ways and for a variety of reasons based on the needs of target populations and the basic premise upon which programs were established. Consequently, current eligibility standards and verification processes utilized by children’s health insurance programs differ widely across states.

Some states, such as Minnesota and Tennessee, have chosen to expand coverage for children as part of a larger statewide Medicaid expansion. The use of Medicaid waivers to extend eligibility has allowed many states to reach beyond the scope of "children's-only" initiatives in order to cover families and single adults as well. Eligibility guidelines for these state programs usually expand current Medicaid eligibility requirements, and the processing of applications is often done within the same agency.

Other states have chosen to establish separate children’s health insurance programs independent of the current Medicaid system. Establishing a separate program provides states with added flexibility to design eligibility requirements and a system for program administration.

• Eligibility for subsidized coverage through the Florida Healthy Kids program is determined by eligibility guidelines already established by the National School Lunch Program. In order to verify eligibility and administer the program, Florida has established the Healthy Kids Corporation, a program separate from Medicaid and other public assistance programs. In contrast, Pennsylvania established their Children’s Health Insurance Program (CHIP) within the Department of Insurance. However, the insurance plans contracting with CHIP, rather than state CHIP staff, are responsible for verifying the eligibility of applicants. The CaliforniaKids program exists as a private organization and therefore, its eligibility requirements are not subject to the same federal and/or state regulations.

This section examines states' approaches to the various aspects of developing and implementing eligibility and verification processes.

2. Eligibility Requirements

For each of the nine states examined, a core group of eligibility criteria were identified: age, family income, residency status, and access to health insurance. Table 1 exhibits basic eligibility criteria for the nine selected states.

1. Age

Age was initially identified as an important eligibility requirement, particularly for states establishing programs independent of Medicaid. The determination of the target population (i.e., the decision to serve children only versus all uninsured residents of the state) is a decision central to the structure of the program and consequently influences future program decisions. Several states suggested that as children are relatively inexpensive to insure, funds may be more effectively utilized by providing coverage for and services to younger children first, and then to consider establishing or expanding a program to insure more costly adults. States must also consider the cohort of children which they plan to insure, as this may impact total enrollment and, therefore, the scope and breadth of services to be provided by the program. States opting to implement Medicaid expansions have determined age eligibility by either utilizing or expanding the current standards.

Most states that have developed separate programs have established unique age eligibility standards.

• Programs in Colorado, Pennsylvania and New York initially limited eligibility to children under age 13.
• Due to low enrollment, budget surpluses and new funding, eight of the nine states now cover children up the age 18.
• The remaining state, Colorado, will be expanding coverage up to age 18 starting in July, 1998, when the current Colorado Children’s Health Plan (CCHP) is replaced by the new Children’s Basic Health Plan (CBHP).

2. Income

Income eligibility requirements are much more diverse across the nine state programs, ranging from 185% of poverty to no income limitations. State programs that have established income eligibility at higher income ranges have established cost sharing arrangements in which enrollees contribute to the cost of their insurance through premiums and copayments.

• MinnesotaCare, TennCare and New York’s Child Health Plus program determine premium contributions on a sliding scale based on total family income.
• Colorado Children's Health Plan extends eligibility to 185% FPL and requires an annual flat enrollment fee of $25 for all children enrolled in the program, regardless of family income.

3. Residency

States often institute residency requirements in order to prevent migration of uninsured persons from neighboring states. Programs employing residency requirements will usually require enrollees to be a resident of the state for some specified minimum period.

• MinnesotaCare requires enrollees to have established residency for a minimum of six months before becoming eligible for MinnesotaCare. This applies only to adults without children. The Medicaid criteria apply to families with children.
• Other states use residency requirements to prevent (or allow) illegal immigrant children to access their state program.
• Washington requires applicants to reside in the state and have United States citizenship.
• The CaliforniaKids program requires applicants to reside within the state, but it does not require enrollees to have already established legal residency in the United States.

4. Access to Coverage

Another common factor used to determine eligibility is the ability of an applicant to access other types of health insurance coverage (e.g., private/employer-based coverage, Medicaid, etc.). States that have established children's health insurance programs separate from Medicaid often require enrollees to be ineligible for Medicaid before being enrolled into their program. This requirement has been established to maximize the number of uninsured children a state can cover in their program while referring Medicaid-eligible children to the state Medicaid program. Nevertheless, the procedures needed to do this may be administratively burdensome especially if they find very few Medicaid-eligible children. For example, a study conducted by the state of Florida showed that only 0.42% of Florida Healthy Kids' enrollees were actually eligible for the state Medicaid program. Florida does not require Medicaid ineligibility, but Healthy Kids does prevent children currently enrolled in Medicaid from concurrently enrolling by cross-referencing each applicant in the current Medicaid beneficiary database.

Although states may have the ability to cross reference their applicants with a current Medicaid beneficiary list, it is difficult for states to clearly identify enrollees' ability to access private insurance. The intention of this restriction is to prevent families from dropping existing private coverage in order to enroll in a state-subsidized program, an effect identified by states as "substitution". Some states, such as Minnesota, have responded to the issue of substitution by requiring a period of uninsurance, a minimum amount of time in which a person has no access to insurance, before they are eligible to enroll in the state program.

5. Periods of Uninsurance

Periods of uninsurance can sometimes create barriers to enrolling individuals in need of coverage. For example, this type of restriction may prohibit individuals who have access to, but cannot afford the private insurance for them and their dependents. A similar situation may arise when private insurance benefit packages offered to employees and their dependents are limited and do not cover many essential services. Such concerns have prompted states to allow for exceptions to current uninsurance requirements.

• In Pennsylvania, if a family is able to document that copayments and/or premiums make it difficult to afford existing private insurance coverage, CHIP will waive the period of uninsurance requirement.
• MinnesotaCare has addressed this issue by defining "employer-based coverage" as private insurance coverage in which an employer contributes at least fifty percent or more to the cost of coverage. MinnesotaCare has also exempted children in families below 150% of poverty from periods of uninsurance when a benefit package offered under private coverage is less comprehensive than the package offered under the state's Medicaid program.

States interviewed suggested that it is difficult to verify and enforce limitations on coverage and periods of uninsurance among applicants. This has resulted in states dropping or modifying such provisions within their programs.

• Florida's Healthy Kids initially required families to have no access to private insurance for six months prior to becoming eligible for the program. As it was difficult for the program to verify applicants' access to coverage, Florida eliminated this requirement.
• The Washington Basic Health Plan had difficulty enforcing a requirement that permitted enrollees to have access to private insurance only if it was less comprehensive than that offered by BHP. As a result of the administrative burden involved with defining and verifying "less comprehensive" coverage, the Basic Health Plan dropped this provision.

Table 1: Basic Eligibility Criteria for Children

*The Colorado Child Health Plan also allows the children of migrant workers to enter the program if they meet three criteria: first, the child's parents must maintain a residence in Colorado for at least part of the year; second, the child must meet U.S. citizenship criteria; and third, one member of the child's family must be employed in Colorado.

Table 2: Eligibility Limitations Based on Access to Other State Programs

*Due to Title XXI restrictions, the new Colorado Basic Health Plan will require that families be without access to employer-based coverage (where the employer pays fifty percent or more of the cost) for a minimum of three months before becoming eligible for the program.
**The new Children's Basic Health Plan will require that a child be without employer-based coverage for the prior three months. Employer-based coverage is defined as health insurance coverage where the employer paid for 50% or more of the cost.

3. Eligibility Verification Process

The complexity of state eligibility verification processes is dependent upon the number of verification requirements and the resources available to program staff. Of the nine study states, seven had administrative staff employed by the program (or the state agency) to process enrollment and verify eligibility. New York and Pennsylvania were the two exceptions. Both New York and Pennsylvania require the health plans with which they contract to collect applications and determine the eligibility of applicants. Enrollment processing time is variable across states and programs. The time of application to actual program enrollment ranged from one day in Massachusetts and Tennessee to four months in Pennsylvania. The wait time in Minnesota is typically 30 days for processing and an additional 30 days, pending awaiting payment of the premium. There have been delays from time-to-time when program expansions create an influx of new applicants. Pennsylvania noted that the processing of an application requires approximately one month; however, as a result of their current waiting list, there may be a three to four month delay before coverage begins.

Some states utilized presumptive eligibility as a strategy to reduce the waiting time between the point of application and enrollment into the program. With presumptive eligibility, children are assumed eligible for a specific period of time until the documentation of their eligibility can be verified. Once complete, children are either officially enrolled or disenrolled in the program, depending on eligibility status. Currently, both Massachusetts' Children’s Medical Security Plan and New York's Child Health Plus Program use presumptive eligibility.

Table 3: Verification Methods

4. Length of Enrollment and Recertification

One of the most significant challenges faced by children’s health insurance programs, particularly the stand-alone programs, is the creation of a "seamless" system. Insurance status of some children fluctuates as family income and coverage change within a given year. Such children may be eligible for a separate state insurance program one month, covered under private insurance the next, and eligible for Medicaid in the following month. This fragmentation of coverage and the discontinuity of care that may result is an important issue policy makers have grappled with over the past year. Changes in insurance status for children has become a major barrier to accessing appropriate care. First, families may not realize that once they become ineligible for one program that they have become eligible for another. Second, the provider networks that provide care within one program may not have an arrangement to provide care under the other. This becomes problematic when families must seek care from new physicians under different plans on a regular basis. As a result, many children in publicly funded programs have decreased access to and a lack of continuity with health care services.

Several state programs have attempted to create a "seamless" system of care for children focused on those children in situations with rapidly changing family income.

• The Colorado Children’s Health Plan is considering continuous eligibility for their program in which children enrolled in the program are enrolled for one full year, regardless of their Medicaid eligibility status throughout that year. Colorado plans to establish continuous eligibility under their Title XXI plan, but they have not determined the method by which they will track income and eligibility changes throughout the enrollment period. The process will most likely require the Colorado Medicaid program to provide a monthly report identifying current Medicaid beneficiaries. CCHP will then cross-reference this list with the list of their enrollees. If a child enrolled in CCHP is found to be enrolled in Medicaid, CCHP will discontinue the capitated payment to the CCHP physician for the period in which the child is enrolled in Medicaid. If the child then becomes ineligible for Medicaid and returns to CCHP, payment to that child's physician will be reinstated.

It is important to examine the issue of continuous enrollment and recertification as the eligibility status of a substantial number of children will inevitably fluctuate: families move to different states, incomes rise and fall, employment status changes, and children begin to "age out" of state-sponsored programs. Most of the nine children’s health insurance programs presented require enrollees to be recertified on an annual basis. Of the states examined, annual turnover rates have been identified to be as high as 40%. This is an important finding, and may be due to some extent to the difficulty some families have in dealing with the enrollment process.

Several states are attempting to create simple enrollment processes in order to prevent children in need of coverage from dropping out of the system.

• Florida automatically recertifies children enrolled in Healthy Kids unless they are notified by the parent of a change in insurance status (e.g., private insurance or public assistance).
• CaliforniaKids distributes a renewal form to all parents two months prior to the deadline for recertification.

Table 4:
Continuous Eligibility and the Recertification Process