The Child Health Insurance Program: Early Implemenation in Six States. Chapter III: Chip in Colorado


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

  • The Colorado Indigent Care Program (CICP) began in 1983 to serve poor, non-Medicaid residents of all ages. This is not an insurance program, but a system for reimbursing participating physicians and other fee-for-service providers a portion of their costs for serving indigent uninsured individuals.
  • Legislation passed in 1990 that established the first insurance program for low-income, non-Medicaid children, the Colorado Child Health Plan (CCHP). CCHP provided outpatient and preventive services to children age nine and under in families with incomes below 185 percent of poverty. Services were focused in rural areas where there were few or no community health centers. The law stipulated that CHP be financed with "gifts, grants, and donations." The legislature, reflecting its skepticism about government-run, public assistance programs, authorized CHP in the higher education budget, to be administered by the University of Colorado Health Sciences Center. Claims processing, referral authorization, and card production were donated by HMO Colorado, a subsidiary of Blue Cross/Blue Shield of Colorado.
  • The legislature, in 1993, authorized but did not appropriate funds for expansion of CCHP to cover children through age 13.
  • During the 1996 legislative session, a bi-partisan group of legislators requested that the Joint Budget Committee appropriate funds for CCHP. The committee balked, then relented, and appropriated $1 million in what is described as a "one-time-only-and-don’t-come-back" appropriation for CCHP. This occurred during a period when Colorado was $100 million overspent in its Medicaid program and costs were escalating 20 percent annually.
  • That year, the legislature voted to drop out of the Medicaid program, but Governor Romer vetoed the legislation.
  • In the 1997 session, legislators considered:
    • Eliminating the indigent care program (CICP);
    • Requesting a waiver of some Medicaid rules from HCFA(now known as CMS);
    • Using some Medicaid funds to reimburse schools for health services;
    • Expanding CCHP statewide and raising the age limit from 13 to 17;
    • Submitting a Section 1115 waiver to HCFA(now known as CMS) to obtain a higher match and create the Children’s Basic Health Plan (CBHP) with comprehensive coverage that would include inpatient and mental health coverage.
  • At the same time, a bill was introduced to control rising Medicaid costs by enrolling many Medicaid recipients in HMOs. The bill projected Medicaid savings that would help fund the CBHP.
  • Simultaneously, Congress passed Title XXI so the legislature dropped the waiver idea in favor of submitting a State Plan for a CHIP program.

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:

  • Make inpatient coverage effective in July 1998.
  • Clarify that children through age 18 would be eligible.
  • Extend the sunset date of CCHP from July 1998 to July 1999.
  • Establish cost-sharing provisions for CHIP/CHP+.
  • Offer an option to children already enrolled in CCHP to remain there (without inpatient, mental health, and other services) until their certification period expires, or to enroll in CHP+ with cost-sharing. New applicants are enrolled in CHP+.

Phase I of CHIP/CHP+ began in April 1998 and included the following features:

  • It continued the income eligibility cutoff of the predecessor CCHP program, covering children up to age 19 living in families with incomes up to185 percent FPL.
  • It established an asset test which limits the dollar value of non-income resources available to applicants, such as a car, to $45001. Since the asset test in Medicaid is $1500, staff recognize that many children in families with incomes considerably below 100 percent FPL who are found ineligible for Medicaid (on asset grounds) will be eligible for CHP+.
  • Officials set a target to enroll no more than 25,000 children by June, 1999.
  • Day-to-day program administration — such as outreach, application processing, and enrollment — would be conducted by a private foundation, under contract to the state Department of Health Care Policy and Financing, the oversight agency.2
  • Other agencies and organizations actively participate in outreach.
  • The majority of CHP+ enrollees receive services through HMOs. Since the provider networks offered by the plans in many counties were found inadequate to serve enrollees’ needs, HMOs currently serve 29 of the 63 counties. However, this represents about sixty percent of the enrollees and about 80 percent of children eligible for CHP+ throughout the state.

In Phase II the state plans to pilot an employer buy-in program.

Federal/State Financing

  • Colorado’s Title XXI allocation of Federal funds in the first year was up to $42 million.
  • The state matching rate is 34 percent.
  • State matching funds of $7.2 million consist of a legislative appropriation from the general fund; an intergovernmental transfer from University Hospital (stipulated in state legislation); donations from the Blue Cross/Blue Shield Foundation and other businesses; an allocation of a portion of the state’s disproportionate share fees that would have gone to hospitals; and a legislative, one-time appropriation.
  • While counties in Colorado are required to fund part of the state match in other public assistance programs, like welfare, they are not required to do so for CHIP.

Current Enrollment

  • The state estimates there are 180,000 uninsured children, of whom approximately 75,000 live in families with incomes less than 185 percent FPL.
  • HCPF estimates there were 25,000 low-income children eligible for Medicaid who were not enrolled.
  • In November, HCPF estimated they had enrolled 12,000 in CHP+ toward their target of 25,000 by June 1999. Staff estimated there were another 3,000 applications in the pipeline, awaiting eligibility determination.
  • Following enactment of CHP+ there were 14,000 children enrolled in the predecessor CCHP, all of whom were eligible to roll over into CHP+. The families of these children received letters informing them of the new program and encouraging them to switch over. At the time of the first mailing, 40 percent of the families had responded; 79 percent of them — representing all premium levels — agreed to move into the new program when it became available.
  • Children in families that did not respond to the mailing, or did not agree to switch, were permitted to maintain their eligibility in the old program for one year beyond their enrollment date. As of March 1998, all new applicants to the program were required to enroll in CHP+ and all enrollment periods for existing CHP cases will terminate in March 1999.

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.

  • Precedence was helpful. A nine-year history of expanding eligibility in state-initiated health insurance programs for low-income children created a conducive atmosphere for consideration of CHIP.
  • Timing was critical. On the eve of Title XXI passage, the state legislature authorized submission of an 1115 waiver to HCFA(now known as CMS), so it was an easy step to modify the waiver provisions to comply with Title XXI requirements. The waiver request already included expansion of the earlier state program to include inpatient and mental health services, which was a big step toward complying with Title XXI requirements.
  • Existing public-private partnerships facilitated implementation. State initiated children’s health insurance programs already relied heavily on public-private partnerships. The presence of Foundation staff who had managed outreach and enrollment for the state program made it easy to continue the Foundation’s management of CHIP/CHP+.
  • One man’s tireless efforts on behalf of uninsured Colorado children facilitated legislative debate, as well as implementation. A pediatrician at the University of Colorado Health Sciences Center began advocating for the various health insurance programs in 1992, and testified on CHIP/CHP+, as well. He understood how the pieces would fit together. Under his direction, the University already had 3300 contracts in place with fee-for-service providers. This enabled CHP+ to get underway immediately while enrollees were selecting managed care plans.
  • A Policy Board, design teams, and work groups helped ensure buy-in by a wide array of private, as well as, public stakeholders.


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.

  • The Policy Board recommended policies on: coordinating CHP+ eligibility with Medicaid; designing the benefits package and cost sharing schedules; managing HMO, University, and systems information contracts; reporting and program evaluation; and quality assurance. Members included the CEOs of Kaiser-Permanente, Blue Cross/Blue Shield, past president of Colorado’s chapter of the American Academy of Pediatrics, the state manager of the nation’s largest private retirement fund, a representative from a benefits consulting firm, the pediatrician from University Hospital who has been instrumental in passage of various children’s health insurance initiatives, Executive Director of Valley-Wide Health Services, and the Executive Directors of four state agencies (Health Care Policy and Financing; Department of Public Health and Environment; Education; and Human Services).
  • The Department of Health Care Policy and Financing (HCPF) is the oversight agency for CHP+. Legislative staff and some executive branch staff observed that the Legislature envisioned little more than "the banking function" for HCPF. In fact, they administer contracts with the foundation, managed care organizations, the information systems vendor, and also manage the quality assurance reporting.
  • Foundation for Children and Families — under contract to HCPF — conducted marketing and outreach, handled customer service, processed applications and determined eligibility, and finalized enrollment of eligible children in CHP+. (The Foundation was recently replaced by a private, non-profit contractor). With a staff of 20, Foundation staff performed those functions and the "rating" function that determines income and assigns children’s families to the appropriate premium group. Foundation staff also developed and managed the information system and analyzed data to evaluate their outreach strategies. They administered the provider network in non-HMO counties.
  • Department of Public Health and Environment, maternal and child health staff help market CHP+, as part of their public health nurses’ marketing and outreach activities for other child health initiatives.
  • Colorado Division of Insurance staff, in collaboration with HCPF staff, are analyzing the complexities of employer buy-in, and will develop plans for a pilot test for Phase II. During the design phase, Division staff advised the Policy Board about benefits and cost-sharing provisions of CHP+.
  • Community Health Network staff operate community health centers, of which some are Satellite Eligibility Determination (SED) sites for CHP+, as well as outreach sites for Medicaid and the Indigent Care Program. More centers will be trained as SED sites this year.

HCPF contracted for outreach and enrollment functions to the Foundation for Children and Families.3

  • The Foundation designed and implemented a marketing plan that includes:
    • community outreach;
    • public relations;
    • media activities;
    • a phone bank;
    • distribution of materials;
    • outreach to schools; and
    • materials development.
  • Community Outreach. Orientation sessions were held with groups of public school nurses, social workers and psychologists, EPSDT workers, Family Resource Center personnel, community health center staff, Head Start staff, public health staff, and school-based health center staff. A few child support enforcement workers have also attended, and the number of Head Start attendees was on the rise. Sessions were held in 24 school districts identified as having 30 percent or more of the children in the school-lunch program.

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.
  • Public Relations. The Bawman Group, a public relations consultant, has a contract to generate continuous media coverage. The contract is for $2500 per month for three - six months. The firm’s responsibility is to network with media to cultivate an interest in CHP+ coverage, develop newsworthy stories about CHP+ participating families, providers, and enrollment projects, and write press releases and telemarketing scripts.
  • Media Activities. Airtime for TV ads was purchased for two blocks of time during the fall and early winter. The Colorado Broadcasters Association ran PSAs in the fall. Several staff reported that ads during the Jerry Springer show — a daytime TV talk show — generated the largest number of telephone inquiries.
  • Phone Bank. A 1-800 Family Health Line phone bank at Department of Public Health and Environment receives and tracks calls generated from advertising. The phone line is linked to the National Governors’ Association 1-800 CHIP information phone line. Staff of the phone bank record the source of referral (i.e., where the caller heard about CHP+), and send out application and enrollment information. If the caller is inquiring about CHP+, they are referred to the CHP+ special 1-800 line. If the caller lives close enough to a SED site, they are referred there. If the caller is inquiring about Medicaid, they are referred to their local Department of Social Services office.
  • Distribution of Materials. CHP+ outreach materials are distributed at community training sessions, in response to bulk requests from community agencies, and to individuals who call. Visitors to a Website can request materials. The Website address is Materials consist of applications, brochures and posters.
  • Outreach to Schools. Many thousands of applications and brochures are sent to contacts in Colorado’s school districts. As a result, staff report that nearly one-third of callers to the marketing phone bank report they heard about CHP+ from their school.
  • Materials development. Staff have developed the brochures, posters, enrollment packets, and benefits booklets in Spanish as well as English, as well as a five-minute informational video. A second version of the video was produced without reference to HMOs for use in areas of the state where no HMO contracts are in place.

Collaboration with Other Agencies and Organizations on Outreach
Several other agencies and organizations conduct outreach for CHP+:

  • Department of Public Health and Environment;
  • Colorado Community Health Network;
  • Facilities and individual providers participating in the Colorado Indigent Care Program.

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.

  • DPHE develops policies and strategies on outreach for all child health programs, including CHP+. These policies and strategies, with a special focus on access to care and special needs children, are communicated to the case managers and public health nurses in the 63 counties. The nurses actually conduct outreach with families and other community groups.
  • The Colorado Covering Kids Coalition, comprised of a diverse group of state and local partners and led by DPHE, is conducting additional outreach interventions with a grant from the Robert Wood Johnson Foundation for a "Covering Kids Initiative."

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.

  • The Network’s key outreach feature is its Satellite Eligibility Determination (SED)sites. SEDs are located at school-based health clinics and community health centers, county social service departments, family resource centers and hospitals where eligibility can be determined immediately. In the fall of 1998 36 sites were accepting CCHP and CHP+ applications, and another nine are expected by the summer of 1999. Five sites process applications via an Internet hookup to a central SQL server database. With the HRSA grant, the Health Network plans to purchase additional software and hardware to expand the Internet connection to half the sites by the end of 1999. This additional capacity is expected to greatly increase enrollments.
  • Under a "Covering Kids Initiative" awarded by the Robert Wood Johnson Foundation, the state and its private sector partners plan to develop and implement model outreach and enrollment initiatives statewide and in three designated Colorado counties.

Finally, Colorado Indigent Care Program providers, many of whom are community health centers, received information about CHP+ and are encouraging their families to apply.

  • Some CICP facilities, working with Foundation staff, helped with mass mailings to CICP participants about the availability and advantages of CHP+. The CHP+ legislation calls for moving all CICP children into CHP+. But some staff observed that at least three factors could deter that. One is the relatively high premiums imposed on families whose incomes place them above the poverty level. The second is the 25,000-child cap on targeted enrollments in CHP+. The third is a three month lock-out period (to be implemented) imposed on families who fail to pay their CHP+ premiums. Those families will continue to use CICP providers while they are locked out of CHP+.

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.

  • Staff in local sites, such as SED sites, took applications, entered data in the SQL server database via Internet, and conferred provisional eligibility. The file was transferred to Denver for final determination; verification that the applicant is not on or eligible for Medicaid; verification of immigration status; Quality Control checks; and verification of assets and income.
  • During the provisional eligibility period, the child was in a "fee-for-service", state contracted provider system until final eligibility was determined and the child was moved into managed care.4 Staff were concerned about the impact on benefit costs of covering children with fee-for-service for up to 60 days, and feared that provisional eligibility may be eliminated. In fact, the Policy Board recently directed the cessation of this practice.5

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

  • HCPF consolidated and simplified the application form for Medicaid and CHP+. The form is four pages with a fifth page of rights and responsibilities. Department of Public Health and Environment staff added seven questions designed to identify and facilitate referral of children with special health care needs both to SSI and the state’s Health Care Program for Children with Special Needs. The application also asks "How did you hear about CHP+ and/or Medicaid?"
  • HCPF believes the simplified, integrated, four-page application form has significantly improved the application process. They intend to collaborate with other agencies to make even more improvements this year.

Funding for Outreach

  • HCFP is spending approximately one-third of its administrative funds on outreach for Medicaid and CHP+. Because outreach for both programs is combined, they cannot estimate a separate amount for CHP+ outreach.
  • The maternal and child health staff in DPHE is piggybacking CHP+ outreach on outreach it already conducts for other child health insurance programs, so cannot disaggregate the costs.
  • The Covering Kids Initiative grant provides $1 million over three years for outreach on Medicaid and CHP+. Half must be allocated to the state’s local partners.
  • Colorado Community Health Network has a grant of $75,000 from HRSA for CHP+ and Medicaid outreach. In addition, Medicaid reimburses the Network $12.65 for each application processed by outstationed Medicaid sites, and CHP+ reimburses $10.00 for each application processed electronically at SED sites.

Marketing to Hard-to-Reach Populations

  • With the large proportion of Hispanics in Colorado’s population, virtually all outreach materials are produced in Spanish and English.
  • Newspaper ads were purchased in three-week blocks in rural newspapers.
  • DPHE placed ads on 40 Hispanic radio stations across the state.
  • Some public health nurses go door to door in trailer parks, and many nurses reach deeply into rural areas.

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:

  • Conduct more person-to-person outreach with trusted individuals visiting individual families; initiate a training program for this outreach and enrollment strategy;
  • Develop a single consolidated application and simplified enrollment process for Medicaid, CHP+, CICP, and the Health Care Program for Children with Special Needs. The application would be produced in several languages, and the enrollment system would allow mail-in applications;
  • Expand and enhance a central 1-800 Family Health Line to operate 12 hours daily, seven days a week, adding Russian and Southeast Asian languages to the current Spanish and English translation capabilities.

Advice for Other States

  • Public health nurses are a key asset for outreach. Colorado’s public health nurses have served tirelessly as the front line of outreach to eligible families at the county and local levels, encouraging enrollment at immunization and well-child clinics, promoting the program throughout their county, and persuading doctors to participate in the program.
  • One-on-one assistance to apply for CHP+ is the most effective way to enroll children in the program.
  • Community-designed outreach and enrollment is critical. People at the local level know best how and where to enroll eligible children in their own community. Colorado invited communities with over 30 percent of school children enrolled in the school meal program to develop community-based enrollment projects. Each project assembled a collaboration of local organizations and agencies, including the local Medicaid agencies, community health centers, schools, and family resources centers, to design their own enrollment plan.
  • Colorado’s CHP+ staff have a policy to treat all callers, families, intermediaries and providers with respect and dignity. This has gone a long way to promote the success of the program. Families all over the state know that they can count on CHP+ staff to listen to their concerns and respond courteously and with caring.

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

  • The working group which designed benefits and eligibility, with representatives from HMOs, providers, and other businesses, grappled with whether and what to add to the benefits package to make it richer than the old CCHP. They recognized trade-offs between making the benefits rich enough to equate with the Medicaid benefits package, or conserving on benefits in order to cover more children.
  • The legislature wanted the plan to be based on basic and standard plan benefits in the commercial arena. They adopted a package that includes mental health, substance abuse, a $50 annual benefit for eyeglasses, but no dental.

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:

  • Families below 100 percent FPL, no premiums;
  • Families at 100-149 percent FPL, $9 per child, $15 per family maximum;
  • Families at 150-169 percent FPL, $15 per child, $25 family maximum;
  • Families at 170-185 percent FPL, $20 per child, $30 family maximum;
  • Families above 185 percent FPL will pay full premiums. This provision is not yet operational, so no decision has been made on what the full premium will be.

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:

  • In accord with HCFA(now known as CMS) requirements, how can the state "bulk up" the benefits in employer-provided plans to be benchmark equivalent? Should the state purchase wrap-around coverage for benefits not included in an employer plan?
  • Can the state pay employers a certain amount per family per month to "buy up" benefits for children to a benchmark-equivalent level, when there are approximately 2400 different plans operating in Colorado?
  • How should the state accommodate employer plan coverage that includes co-payments that are higher than those in CHP+?
  • How can the state avoid having children in families working at very low incomes receiving more generous benefits at a lower cost with CHP+ than children in low-to-middle income families who have less generous employer coverage?
  • How can the state accommodate the HCFA(now known as CMS) requirement that children must lack insurance for six months before they can be eligible for an employer buy-in? This seems particularly inequitable for families who do not enroll immediately upon the onset of their employment, whom the employers will lock out of coverage until the next open enrollment period.
  • How can an employer buy-in program be marketed through employees, not employers, to avoid employer crowd-out?

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

  • An independent actuarial consulting firm (Leif Associates, Inc.) conducted actuarial and claims analysis to help the state design a benefits package. The analysis considered both children who would have to stay in fee-for-service coverage (approximately one-fifth of the state’s children) and those who would be covered by managed care.
  • The University of Colorado Health Sciences Center’s Department of Health Outcomes conducted a study comparing the earlier CCHP program to Medicaid and private health insurance on measures of quality of care and utilization. They looked at preventive care services (e.g., immunizations), care for acute illness, and care for children with asthma, the most common chronic illness of childhood. The results were used to advocate for certain features of the benefits package. The results can be found in, Colorado Child Health Plan Annual Report, The University of Colorado Health Sciences Center, March 1, 1998.

Data for Program Evaluation

  • To measure how well the state improves the health status of children — especially with the availability of preventive and early primary treatment — Plans must submit independently audited HEDIS data. Where possible, HCPF will obtain these data for the state-contracted provider network (fee-for-service) as well. HCPF will use the data to measure success in reaching performance goals regarding immunizations and well-child visits.
  • The state also plans to analyze questions on the joint Medicaid/CHP+ application related to children with special needs, to track what proportion of applicants are children successfully referred to the Health Care Program for Children with Special Needs and SSI.
  • To measure how much the proportion of uninsured children is reduced, the state will analyze CPS data. Baseline numbers of uninsured children will be calculated from a three-year average of the 1995, ‘96, and ‘97 March supplement to the CPS. New estimates of uninsured children will be calculated as more current data become available and will be used to compare trends from year to year. The CPS data has been used by analysts at the American Academy of Pediatrics (Colorado) and the Foundation to project county estimates of uninsured children. State analysts are concerned about accurately estimating the baseline since the proportion of employers providing coverage was already on the decline (i.e., employment in sectors that traditionally do not provide employer coverage was on the rise) prior to CHP+.
  • The Robert Wood Johnson Covering Kids grant includes funds for technical assistance to better estimate the numbers of uninsured children.
  • To assess how to reduce the financial barriers to affordable health care, clients who disenroll once their 12 months of eligibility have expired will be asked to explain why they are leaving. Responses will be tabulated. In addition, responses to a question on the application form, "How much would you be willing to pay for health insurance for your children?" will be analyzed and the results used to reassess the premium levels.
  • To measure the effectiveness of certain outreach strategies over others, staff will analyze responses to the phone bank operators’ inquiry: "Where did you hear about CHP+?" This analysis may alter next spring’s marketing campaign.
  • To measure employer crowd-out, analysts will obtain from CPS a three-year average estimate of the proportion of children under 185 percent FPL covered under an employer-based plan. They hope to devise a methodology that accounts for decreases due to increasing health care costs or a downturn in the economy. They expect to supplement this with Labor Department data on insurance coverage. This task will be challenging. For example, if a large company in Colorado has only ten percent of its employees earning under 185 FPL, and it drops dependent coverage from the firm’s Plan, it is unlikely to be attributable to CHP+. But when does attribution become credible? Is it at 20 percent or 40 percent of the company workforce earning under 185 percent FPL?
  • To measure employee crowd-out, analysts hope to study responses to questions on the application about current and recent employer health coverage. They want to develop a methodology to follow applicants denied CHP+ eligibility due to current or recent employer coverage (last three months), to determine whether they drop coverage, or whether they take up other coverage. They may interview a sample of families whose children are denied.
  • Numerous efforts are underway to measure quality in managed care. These efforts were originally intended to analyze quality of care for Medicaid recipients, but will apply to CHP+ recipients in the same managed care plans, as well. Examples include studies of continuity of client access to appropriate care; client satisfaction surveys; and collection of HEDIS data on utilization, access, and quality.

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+.

Web Sites for More Information

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.