Policy Information Center Highlights: Vol. 13, No. 2




Welfare Time Limits:
State Policies, Implementation, and Effects on Families

Few features of the 1990s welfare reforms have generated as much attention and controversy as time limits on benefit receipt. Time limits first emerged in state welfare reform programs operated under federal waivers before 1996; they then became a central feature of federal welfare policy in the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA).

This report provides a summary of what was learned to date about time limits, state policies, their implementation, the effects of time limits on employment and welfare receipt, and the circumstances of families whose welfare cases have been closed because they reached a time limit. The report is designed to serve as a resource while Congress considers the reauthorization of PRWORA.

A central theme that emerges from all the study components is that time limits are far more complex than they seem. This complexity is evident in the states diverse policy choices, the way time limits are implemented at the local level, and the difficulties in interpreting data and studies about time limits.

States Policies and Early Experiences

The survey of states provides comprehensive, up-to-date data on the states time-limit policies and their experiences with time limits. Key findings of the survey indicate that responding to the broad flexibility allowed under the federal welfare law, states developed widely varying approaches to time limits. In addition, PRWORA prohibits states from using federal Temporary Assistance for Needy Families (TANF) block grant funds to provide assistance to most families for more than 60 months, but it allows states broad flexibility in designing time-limit policies. States can also impose a 60-month time limit, a shorter time limit, or no time limit.

All states provide exemptions or extensions from their time limits for certain groups of families, but the policies differ dramatically from state to state. The 60-month time limit on federal assistance applies nationwide, but not all families on welfare are subject to the limit. The survey of states found that about 55 percent of all families currently on welfare are subject to the federal 60-month time limit. Of those not subject to the federal limit, most are child-only cases, which now account for about one-third of the national welfare caseload. Nationally, about 231,000 families have reached either the federal time limit or a shorter state time limit.

The Implementation of Time Limits

The implementation of time limits is far more complex than many might assume. The complexity arises because states are seeking to identify and protect particularly vulnerable families without diluting the overall message that welfare is temporary. The states time-limit practices are as diverse as their policy choices. Even time-limit policies that look similar on paper may be implemented quite differently across states or even across welfare offices within states. Key findings from the survey and field visits indicate that in an effort to send a clear message to recipients, welfare staff tend to ignore or gloss over the complexities of their states time-limit policies.

The time-limit message can be complicated by earned income disregards and other state welfare policies. Many believe that welfare staff should urge recipients to leave welfare quickly in order to save, or bank, their months of assistance for future emergencies. However, this message can be a hard sell because many recipients feel that they have few alternatives in the short term.

Almost all states allow exemptions or extensions for recipients with serious medical problems, but the processes for identifying these recipients and verifying their condition vary. Some critics believe that recipients who should be exempted often fall through the cracks.

Effects of Time Limits on Employment and Welfare Receipt

Time limits are not designed simply to reduce long-term welfare receipt, but also to change the behavior of current or potential welfare recipientsto encourage them to get jobs or seek other income sources instead of welfare. Because time limits have almost always been implemented as part of a package of other welfare reforms, it is very difficult to isolate their effects. Nevertheless, the available data suggest that time limits can cause welfare recipients to find jobs and leave welfare more quickly, even before reaching the limit; however, the magnitude of this effect is not clear.

The Circumstances of Families After Time Limits

Some of the key questions about time limits concern how families fare after their benefits are terminated. Are they working? Are they receiving other forms of public assistance? Do they experience severe hardships such as homelessness or hunger?

Although it is too early to offer definitive answers, eight state and federally funded post-time-limit studies provide a wealth of data. Keeping these time limitations in mind, most studies found that individuals who lost benefits because of time limits were more likely to have large families and to live in public or subsidized housing, compared with people who left welfare for reasons other than time limits.

Another finding of the study is that the post-exit employment rates of time-limit leavers vary widely across states, ranging from less than 50 percent to more than 80 percent. Most of the variation in employment rates after leaving welfare is attributable to state policies that shape who reaches the time limit or who is eligible for a time-limit extension. For example, some states impose large numbers of full-family sanctions, so that most of the people who reach the time limit are either employed or complying with program rules.

Conclusions and Implications

The story of time limits is still unfolding. Very few families have reached the federal 60-month time limit, and it is too early to draw any broad conclusions about how states will respond as more families reach the limits, about how families will fare without benefits over the long term, and about whether the 20 percent hardship exemption in federal law will be adequate over time. There will be many opportunities to obtain additional data over the next two or three years, as a larger number of families reach time limits under varying economic conditions.


This report was prepared for the Department of Health and Human Services Administration for Children & Families by Manpower Demonstration Research Corporation. The Project Officer, Michael Dubinsky, may be reached at (202) 401-3442. A copy of the report may also be obtained by referring to acf.hhs.gov/programs/opre/welfare_timelimits/welfare_tl_title.html.


Privacy Issues in Mental Health and Substance Abuse Treatment:
Information Sharing Between Providers and Managed Care Organizations

Confidentiality is a key element of mental health and substance abuse treatment. In the absence of assured confidentiality, many patients with mental disorders or substance abuse problems might refuse or fail to seek treatment. As the payers of treatment, however, managed care organizations (MCOs) and insurance companies need to know the services for which payment is being requested and whether the treatment is appropriate. The dual, but opposing, needs for confidentiality and disclosure have created tension between providers and payers of services. MCOs are the greatest source of tension for providers because, compared with other insurers, they tend to collect more personal health information on a routine basis in their effort to control costs and protect quality.

This report clarifies the sources of the tension between providers and payers with regard to what personal information should be shared for patients receiving mental health or substance abuse treatment. It also provides information to support a more consistent application of privacy-sensitive approaches to collecting personal health information in the future.

Information Currently Collected by MCOs

MCOs collect personal information about enrollees receiving mental health and substance abuse services for several reasons. One reason information is collected is to support utilization review. In this review, the MCO determines the medical necessity of the request for services and approves the appropriate level of care. Often utilization review is the driver of requests for personal health information, but the information is also used for quality management.

MCOs access medical records during audits, to ensure providers are actually performing the services for which they are billing. They also request full medical records to investigate specific quality-of-care concerns, and to respond to patient and clinician appeals for reconsideration of an MCO decision to deny care.

The following is a list of the information collected by MCOs:

Outpatient Treatment Authorizations. Although there are some common elements, there are wide variations in the information collected by MCOs for authorizing outpatient treatment. The 11 forms used to collect information include administrative data, e.g., the patients name, date of birth, social security or insurance identification number, and other identifying information for the practitioner. Elements that vary widely across the forms include patient history, symptoms or presenting problems, and the risk level of harm to self or others.

Inpatient Authorizations were found to be much more intrusive, probably reflecting the fact that most of the costs in behavioral health are incurred on the inpatient side. The process for authorizing inpatient treatment varies considerably from plan to plan but, in general, consists of telephone discussions between hospital staff and MCO case managers.

Appeals and Audits. MCOs also collect information on patients who are appealing a denial of treatment if the request for reconsideration was not able to be resolved through a telephone call between the clinician and the reviewing MCO doctor. In this case, the plan often reviews the full medical record of the patient. MCO requests for complete medical records can be problematic from a privacy perspective because it was pointed out that many therapists do not separate their notes from the general medical record. These notes reflect the therapists thoughts and opinions during treatment and may also contain information on patients family members who may not have agreed to have their information disclosed to the therapist, let alone the MCO.

Views of Providers, Consumer Advocates, and Managed Care Organizations on What Information Is Minimally Necessary for Managing Care

The provider association representatives, clinicians, and consumer advocates who were interviewed agreed that many MCOs request more personal health information than they need to manage care. There was less than full agreement, however, on just how much information MCOs do need.

Administrative Data Should Suffice for Most Cases. For routine cases requiring outpatient treatment, health plans should not need more than the basic administrative data, such as patient and clinical identification information, procedure code, charges, and dates, type, and location of service.

Some Additional Summary Information Is Justified. Many respondents, including clinicians and patient advocates in the mental health and substance abuse fields, believe that it is acceptable for managed care plans to routinely collect additional summary information. Some noted that an MCOs ability to hold providers accountable both financially and from a quality perspective is an advantage for consumers.

Controversial Items. Although most of the respondents who believe that some sharing with MCOs beyond basic administrative information is acceptable, they nevertheless feel that many MCOs request more information than they need. Certain items in particular are viewed as troublesomethese include incidences of past substance abuse, physical and sexual abuse, medications, and risk of suicide.

Potential Next Steps

Confidentiality is essential to effective mental health and substance abuse treatment. The review of the status of privacy-sensitive approaches to collecting personal health information for managed care suggests that the Department of Health and Human Services (HHS) could take steps to advance current information-sharing practices so that they are more privacy-sensitive.

Many consumers of mental health services are consenting to the transfer of personal health information only in general terms and perhaps months prior to using these services, while health plans that work toward similar care management goals request vastly different amounts of personal health information. This picture seems inconsistent with the emphasis on ensuring consumer awareness of and control over the flow of personal health information called for in the health information privacy regulations under the Health Insurance Portability and Accountability Act (HIPAA).


This report was prepared for the Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation by Mathematica Policy Research, Inc. The Project Officer, John Fanning, may be reached at (202) 690-7100. A copy of the report may also be obtained by referring to aspe.hhs.gov/datacncl/reports/MHPrivacy/index.htm.


The National Evaluation Data Services (NEDS) was established
in 1997 to support the Center for Substance Abuse Treatments (CSATs) mission by increasing evidence-based knowledge of the effectiveness of substance abuse treatment and promoting access to treatment evaluation, analysis data, and
findings. NEDS furnished that support by supplying data management, scientific analysis, and technical support services. The following summaries refer to
a series of three documents within the same study.


The Cost and Components Of Substance Abuse Treatment

This document introduces a new tool available to study the costs of substance abuse treatment: the Center for Substance Abuse Treatments (CSATs) Substance Abuse Treatment Cost Allocation and Analysis Template (SATCAAT). The particular purpose and strength of the SATCAAT is the development of cost estimates for defined components and units of service that combine (often in different proportions by different providers) to constitute substance abuse treatment. The SATCAAT should be considered an example of an important approach to studying the costs of substance abuse treatment. The method for defined components and units of service that combine to constitute substance abuse treatment is described, and actual data are presented from a sample of providers in order to demonstrate the output and potential use. 

The most important use of unit cost data is for accurate reimbursement of the costs of substance abuse treatment. Providers used the rudimentary slot cost method for several decades when financing was largely grant-based. However, with the inclusion of treatment into general health insurance and managed care plans, providers must have accurate data about their costs in order to negotiate realistic reimbursement rates and improve their ability to manage their finances. The unit cost method (whether developed using the SATCAAT approach or some other) provides these data.

The purpose of this document is to lay out the approach and methods of this tool, and to give the reader a basic understanding of why and when this (or a similar) tool should be considered for use.

Cost Effectiveness and Cost Benefit Analysis of Substance Abuse Treatment:
A Literature Review

This literature review summarizes the major findings from books, published articles, research and evaluation studies, and government documents (including Web publications) published since 1980, which focus on the cost effectiveness and cost benefits of substance abuse treatment.

Cost effectiveness and cost benefit studies play an important role in evaluating existing and alternative substance abuse approaches and in assessing new treatment methods. Evaluating the outcomes and costs of treatment is necessary in order to determine how to more efficiently allocate scarce resources.

This document is intended to assist policymakers, researchers, evaluators, and treatment providers interested in this field to identify and acquire evidence-based information specific to their interests. Policymakers, researchers, and evaluators can use this information to help inform decisions of whether or not an increase in effectiveness justifies an increase in cost of a particular treatment. Treatment providers need this information when they seek funding from public agencies. This review also explores trends and areas where there are gaps in the literature.

Cost Effectiveness and Cost Benefit Analysis of Substance Abuse Treatment:
An Annotated Bibliography

This bibliography lists books, published articles, research and evaluation studies, and government documents (including Web publications) published since 1980 that focus on the costs of substance abuse treatment, methods for estimating the costs of treatment, and studies of the cost effectiveness and cost benefits of substance abuse treatment. This document also identifies trends and areas where there are gaps in the literature.


These reports were prepared for the Substance Abuse and Mental Health Services Administration by the Lewin Group. The Project Officer, Ron Smith, may be reached at (301) 443-7730. A copy of the reports may also be obtained from the Policy Information Center by referring to PIC ID No. 7811.


About the Policy Information Center

The Policy Information Center (PIC) at the Department of Health and Human Services (HHS), is a centralized source of information on policy research and program evaluation studies, completed as well as in progress, that are supported by HHS agencies or staff offices. PIC also includes studies on HHS programs that are conducted by other organizations. The PIC on-line database at http://aspe.hhs.gov/pic provides project descriptions of these studies. Inquiries about PIC services should be directed to (202) 690-6445 or pic@hhs.gov.


The ASPE Highlighter is now available as an electronic newsletter. If you wish to sign up to receive the ASPE Highlighter newsletter, please email listserv@list.nih.gov with SUBSCRIBE ASPE-HIGHLIGHTER as the message, or sign up here.

Return to Index