The Child Health Insurance Program: Early Implemenation in Six States. Chapter II: Chip in Alabama

07/01/1999

History and Implementation
Alabama had no separate children’s health insurance program prior to implementation of CHIP. However, the state legislature moved quickly to take advantage of the new Federal legislation, recognizing that it provided a new opportunity to expand health coverage for uninsured children.

At the time CHIP was authorized, there were significant political dynamics in Alabama. The State Legislature was in a special session because the Governor had vetoed the state budget; and the Lieutenant Governor was running against the incumbent Governor. CHIP became a major campaign issue because the candidates had different ideas about the urgency of applying for the new Federal funds for children’s health insurance. The Republican Governor wanted to wait before deciding how to proceed, but the state legislature (with a Democratic majority, led by the Lieutenant Governor) wanted to proceed immediately.

The end result was that the legislature passed a Joint Resolution establishing a Children’s Health Insurance Program Commission to plan the program and authorized $5 million for the program over the Governor’s objection. The Commission was chaired by the State Health Officer, who runs the Department of Public Health (DPH). That agency was given authority to use the appropriation to begin planning CHIP. The decision to name DPH as the lead agency reflects several political and fiscal factors. At the time, the Medicaid agency was facing very serious budget overruns, as well as the potential loss of additional revenue under new Federal rules, and the agency had little support among the legislature, provider community, or child advocates.

The Commission, working with a broad-based Advisory Council and DPH, developed a two phase program that both expands Medicaid and also implements a new state children’s health insurance program.

Alabama was the first in the country to have its CHIP plan approved on January 30, 1998 and began implementation February 1, 1998. It is also the first state to have a major expansion approved through a Plan Amendment to HCFA(now known as CMS). The expansion, approved August 18, 1998, authorized implementation of ALL KIDS on September 1, 1998. Alabama has two phases for its CHIP program:

  • Phase I: Expands Title XIX Medicaid program (SOBRA) to extend coverage for children ages 15-18 under 100% FPL. This phase was implemented in February 1998. Previously, Medicaid only covered children from birth to age five, up to 133% FPL and children through age 14 up to 100% FPL.
  • Phase II: Creates ALL KIDS, a new separate state program to cover children under age 19 in families with incomes up to 200% FPL who are not eligible for Medicaid. This phase was implemented in September 1998, with coverage effective October 1, 1998.
    • Its benefits are the same as those offered by the HMO with the largest commercial enrollment in state.
    • Its coverage is available through Blue Cross/Blue Shield statewide and the family can select any ALL KIDS provider from their network. In one region of the state, a second insurer, Prime Health, is available.
    • Premiums are only charged for children living in families whose incomes are above 150 percent FPL. To date, 68 percent of the children are eligible for no-fee coverage.
    • It emphasizes providing primary and preventive care to previously uninsured children through a "medical home" that can ensure regular health care.

When the RFP was first issued for private insurers to bid for the ALL KIDS contract, DPH realized that it was too expensive to select a fully insured model where the vendor bears the risk. Consequently, DPH selected a self-insured model and the agency bears the risk for children enrolled in ALL KIDS. The plan costs between $6.32 and $7.77 per member per month depending on the number of children enrolled.

Several state agencies have already begun discussing a possible Phase III to enhance benefits for children with special health care needs through a CHIP Plus program; they hope to submit a second plan amendment to HCFA(now known as CMS) in 1999.

Federal State Financing
Alabama’s Title XXI allocation of Federal funds in the first year was up to $85 million. Its state matching rate is 21 percent and it state match is $23.4 million.

Current Enrollment

  • For the Phase I Medicaid expansion, the state is targeting to enroll up to 17,000 children and by February 1999 had enrolled almost 11,000 teenagers.
  • For Phase II, they are targeting to enroll 20,000 children in ALL KIDS during the first year and in its first three months, enrolled just over 13,000 children. The state legislature budgeted funds to cover 20,000 children and the Department of Public Health will ask for additional funds if enrollment exceeds the current target. The program is averaging 800 applications each week. One day in October 1998, ALL KIDS received 6,000 applications. The surge in applications was probably a function of an outreach campaign that mailed applications to all public schools in the state (see Exhibit 1).

Key Factors in Alabama’s Implementation

  • Timing was critical. The legislature was meeting for a special budget session during the month after Title XXI was authorized so CHIP was added to its agenda quickly.
  • The political climate was right. State politics, especially the gubernatorial race, created a climate where people wanted to discuss "What is best for Alabama’s uninsured children?"
  • A lengthy legislative debate was avoided. By appointing the Children’s Health Insurance Program Commission, instead, the Commission — comprised of state legislators, executive agency staff, and non-profit representatives — met to discuss major policy decisions.
  • Stakeholder involvement proved useful. The Commission received extensive help from a broad-based Advisory Council that provided a mechanism for stakeholders from a variety of constituencies to share their expertise, opinions and recommendations. See page Appendix 1 for a list of entities represented on the Council.
  • ALL KIDS (the new separate children’s health insurance program) was placed in a state agency—the Department of Public Health—that does not report to the Governor. The State Health Officer, who runs DPH, is appointed by and reports to the State Committee of Public Health, which is the governing board of DPH. Final decisions about program design and operation were made by DPH staff after the Commission discussions.
  • Phased implementation was a sound approach. The Commission, Advisory Council, state agency personnel and advocates all believed it was important to provide access to good primary care with reasonable in- and outpatient benefits for children who were previously uninsured. The logical first step, given the basic needs of the uninsured population, was to expand Medicaid for teenagers and plan a new state program as the second phase.
  • Commission members discussed whether establishing a new state program might create a two-tiered system by providing more resources for a program serving higher income children than what Medicaid-eligible children receive. However, they concluded that to raise the level of care for all low-income children, it was wiser to invest in a new children’s health insurance rather than an existing program with a problematic history. Members believed that a new public-private partnership between DPH and the private insurance industry could provide primary and preventive care and help establish a "medical home" for these children.

OUTREACH

State Approach
The original intent was to have both statewide efforts and local partnerships to implement both the Medicaid expansion and ALL KIDS. Since there were only a few months to get enrollment started, DPH and Medicaid focused on reaching a large number of families across the state.

Phase I outreach included:

  • Mailing notices to all 300,000 Medicaid households, where uncovered teenagers might reside, and all 10,000 Medicaid providers.
  • Distributing 150,000 brochures to a variety of service providers including: out-stationed Medicaid workers; public health workers; county human resources workers; family services centers; primary health care centers and hospitals; advocacy and professional organizations; educational professionals (school systems, principals and guidance counselors); and appropriate professional groups at statewide meetings (social workers, pediatricians).

Outreach in Phase II is broader.

  • Building upon existing relationships among other public agencies and private organizations, the Department of Public Health used a "shot gun approach" to reach as many families as possible through: a statewide media campaign; satellite teleconference for a wide variety of child-serving providers; videotapes for specific professional audiences; and mailed applications to all public school districts to distribute to students.
  • DPH distributed posters and information through schools, health and human service agencies, medical providers and their associations and community-based organizations.
  • Public service ads were provided to newspapers and radio stations.

As a result of these initial efforts, the volume of applications for Medicaid increased tremendously, especially during outreach for Phase II, the ALL KIDS program.

Key Players and Administration
Several state agencies as well as private organizations play important roles in outreach.

  • Department of Public Health (DPH)
  • Medicaid Agency
  • State Employees Insurance Board (SEIB), under contract to DPH, performs all eligibility determinations, enrollment work and premium collections for ALL KIDS. SEIB was established by the State Legislature in 1965 to provide a health insurance plan for state employees, but its role has expanded in recent years.
  • Medicaid out-stationed workers
  • Numerous collaborations with other state agencies and private organizations (described below)

Collaboration with Other Agencies and Organizations on Outreach

State Medicaid Agency

  • For CHIP Phase I (expanding Medicaid for teenagers), additional eligibility workers were hired and trained to process applications and certify children for either Title XXI, or if eligible but not enrolled, for Medicaid. There are 119 out-stationed workers serving the 67 counties who are placed in county health departments, hospitals, clinics, and community health centers. Out- stationed workers are all electronically connected to the state Medicaid computer system to expedite the eligibility process.
  • The capacity of the Medicaid toll-free information number was expanded. There was a state hiring freeze so women inmates from a pre-work release program were trained to answer the telephones and provide information about Medicaid and Title XXI.
  • In Phase I, Medicaid staff believed it was most cost-effective to focus its outreach to families already enrolled because it assumed that many new eligible teenagers were members of families where younger children are already receiving Medicaid. Using its mailing lists, the agency sent information to all current recipients and providers and all children received a brochure about Phase I expansion at their annual review. To expedite enrollment, a new simplified Medicaid application was developed to add CHIP-eligible teenagers living in families where children are already enrolled.

Other State Agencies

  • The Superintendent of the Department of Education was very supportive of CHIP. Immediately after the Phase II began, mailings were sent to all 129 school systems across the state so that virtually all school-age children received a program brochure and application with a self-addressed stamped envelope to return to SEIB. Over 750,000 applications were distributed.

Private Organizations

  • During Phase II, Children’s Hospital provided information through its Sports Medicine Clinic, its toll-free 800 telephone number, and its financial counselors who help families plan payment of medical expenses. It also distributed applications at United Way agencies and provided information through its community contacts. The hospital identified all the self-pay/uninsured children seen by the hospital over the last 18 months (about 9,000 children for either out- or inpatient services). It sent a letter explaining the new program along with an application package and a self-addressed return envelope to the Department of Public Health.
  • The State Hospital Association sent two informational packages to all 120 members that explained the program and described how hospitals could help educate families about the new program.
  • Children’s Rehabilitation Services used its computer records to identify, among its population of families with children who have special health care needs, those who lack insurance; they discovered it was approximately 19 percent of the 14,000 children they serve. CRS then contacted these families to explain CHIP, especially for their teenagers who may now qualify for Medicaid. Applications were available in the 15 CRS offices across the state and staff were educated about CHIP so they could explain it to families.
  • The State Medical Association paid the costs of printing 500 ALL KIDS t-shirts. The t-shirts were distributed to CHIP commission members, Medical Association members, the CHIP Advisory Council, children and others who attended the kick-off to promote ALL Kids in the community. The t-shirts are also used as door prizes at meetings where CHIP presentations were made.

Media Activities
When the State Plan was first approved, there was a joint press conference with the Medicaid Commissioner, the Department of Public Health’s State Health Officer, and CHIP Commission members. A second media event was held at the State Capitol when ALL KIDS (Phase II) began. The Capitol event was broadcast to eight local press conferences across the state hosted by members of the Hospital Association. The local press conferences followed the 20-minute State Capitol kick-off, with presentations by local dignitaries, in order to personalize and promote CHIP for the local TV market.

Additional media activities included distributing:

  • news releases and camera-ready materials for newspapers;
  • radio spots; and
  • articles published in health care provider newsletters (e.g., State Medical and Hospital Associations).

Provider Outreach
Two free, live satellite video conferences (45 minutes) were produced by DPH, which has its own sophisticated television studio and recording facility. They were available for viewing at county health departments and other facilities with satellite downlinks in multiple sites on two different dates. For those who could not attend the live broadcast, copies of the conference were made on video and distributed to a wide range of service providers including: educators and school guidance counselors; social workers; hospital staffs including nurses and other clinical personnel; dental staff; pediatricians/family practitioners; pharmacists; child care providers; social service personnel; clergy; and others who help parents complete ALL KIDS applications.

The Department of Public Health also produced videos for five special professional audiences who serve children potentially eligible for ALL KIDS. The videos target pediatricians, family practitioners, dentists, pharmacists and emergency room doctors.

Creating a Seamless Health Care System for Eligible Children

Presumptive Eligibility
Alabama does not have presumptive eligibility for Medicaid for ALL KIDS.

Continuing eligibility
Alabama Medicaid changed its internal data systems to ensure 12 months of continuous eligibility for all children. ALL KIDS provides continuous coverage for one year before re-determining eligibility, unless the child reaches the age of 19.

Simplified Application and Eligibility Decisions

  • ALL KIDS has no income verification because the Department of Public Health did not want to create unnecessary barriers for families. The Department of Revenue will audit a sample of tax returns to check the income reported to each agency; if there is evidence of excessive under-reporting of income to ALL KIDS, then DPH will consider imposing more stringent policies.
  • Medicaid and ALL KIDS have a joint application. Eligibility questions for ALL KIDS were added to the existing Medicaid application. Since the state ALL KIDS and Medicaid offices are located only two blocks apart, employees can manually transfer eligibility application forms from one agency to the other.
  • ALL KIDS has a 1-888 enrollment telephone line that is staffed, under contract, by employees of the State Employees Insurance Board. Specially-trained staff answer questions and take applications over the telephone, although the families must send certain documents to finalize the process. Twice a week, approved application data is transmitted to Blue Cross/Blue Shield to begin a child’s coverage.

Funding for Outreach
DPH used the bulk of its outreach budget to print 1.5 million program brochures, applications and return envelopes with postage paid. The agency made a conscious decision to use an attractive color brochure that makes ALL KIDS look different from a typical government program.

Expenses for outreach activities were minimized by asking other state agencies to use their existing contacts with lower income families. Many expenses were covered through in-kind contributions from non-governmental organizations that worked with DPH and Medicaid to help locate potentially eligible children and young people.

DPH decided to use its administrative funds to hire consultants to provide expertise that was not available within the agency. Through these contracts, the agency obtained actuarial information, project management services and an enrollment broker. The three consultant arrangements are:

  • William A. Mercer — an acturial analysis firm — estimated the population of potential eligibles; helped design the RFP for private vendors and assessed bids after it was issued; and provided actuarial information when DPH negotiated ALL KIDS benefits. Having worked in Alabama before, Mercer knew the state’s insurance market and was also familiar with child health insurance programs in other states. The firm also helped plan outreach and marketing activities and will help evaluate the program.
  • Draper Associates—a project management and professional services firm—managed the technical administrative details while providing timelines and accountability checks for the implementation schedule. This allowed DPH staff to focus on developing policy and taking the actions necessary for implementation of ALL Kids.
  • The State Employees Insurance Board (SEIB) serves as the enrollment broker. The Department of Public Health hired SEIB, which manages and designs a health benefit program for its 100,000 members, to run the ALL KIDS program. SEIB staff has experience negotiating with insurance companies and administering an insurance plan. SEIB hired and trained staff to run the ALL KIDS enrollment process through its toll-free telephone number. Senior SEIB staff provide assistance when DPH negotiates with insurance vendors about benefits. SEIB receives $500,000 each year for its services.

Marketing to Hard-to-Reach Populations

  • The Department of Public Health has consulted with local Native American representatives. The Poarch Band of Creek Indians wants to train its own outreach workers and provide information through monthly newsletters distributed to each household and through schools and PTA meetings. Members want to develop fact sheets for health care providers explaining tribal beliefs about health that affect prevention and treatment of medical conditions. For example, tribe members do not eat meat during the summer so health professionals should not prescribe more red meat when children are anemic at that time of year.

Woodwork Effect
As a result of Phase II outreach efforts, applications for Medicaid soared. Among the 25,000 Phase II applications received, half were referred to the Medicaid agency. Prior to Title XXI, in January 1998 there were about 162,000 children enrolled in Alabama’s Medicaid program. By June 1998, the numbers had increased to about 180,000 and six months later, to about 190,000. Although Medicaid staff anticipated that CHIP outreach would increase their enrollment, the agency was surprised by how quickly families responded and how large a backlog of applications it caused.

Potential Future Outreach
DPH is considering additional outreach strategies. These include:

  • Use child-related programs such as: child care agencies; MCH clinics; WIC clinics; community health centers; Indian Health Services; school nurse programs; school counselor programs; and other social service agencies.
  • Develop local partnerships and establish one major point of contact in each county, allowing each county to select the responsible individual and agency performing this role.
  • Run more public service announcements on radio and television during the next phase of ALL KIDS outreach.
  • Continue existing contacts with child service and health providers and schools, but target outreach for younger children through child care agencies.
  • Organize hospitals to inform families when children are born and target parents of newborns, especially their first children.

Advice for Other States on Outreach

  • Establish a strong program identity so families are attracted to enroll their children.
  • Establish a sufficient infrastructure—either within a state agency or contractor—that can sustain an organized recruitment and enrollment campaign and respond to resulting program inquiries.
  • Identify one or two key people in each geographical area to maintain on-going outreach activities.
  • Inquire whether the Postal Service loans its executives to help local non-profit organizations as it does in some places around the country. In one small town, a Postmistress helped organize outreach activities that was very successful because she knew everyone in town.
  • Develop easy-to-understand information about the children’s health insurance program.
  • Send program information to both the medical office/clinic administrators as well as the administrative office managers and staff who file insurance claims. They often have direct contact with families and can explain the benefits of the new program.

Crowd-Out Prevention

State’s Response
Alabama has a multi-strategy approach to the issue of crowd-out although there is some doubt about whether it is a real threat given the state’s low average family income. The state believes the following mechanisms will help reduce crowd-out:

  • A joint application for Medicaid Title XIX and ALL KIDS Title XXI so that children found eligible for Medicaid are referred for enrollment in that program.
  • A question on the joint application about whether the applicant has insurance coverage or has had it in the last three months.
  • A requirement that applicants sign a statement giving DPH the authority to verify the information presented on the application.
  • A three month waiting period for ALL KIDS for families who currently have or voluntarily dropped health insurance coverage. ALL KIDS sends enrollment information electronically to Blue Cross/Blue Shield to check if the child is insured or recently dropped coverage. This is easy to check because "the Blues" cover over 80 percent of those who have health insurance in Alabama. The plan is to include additional insurance vendors in a master patient index of private health coverage by April 1999.
  • Premiums for families whose incomes are above 150 percent FPL. Since the ALL KIDS benefits are similar to the standard benefits in private plans available to most employees, requiring premiums further reduces any incentive to drop employer-based dependent coverage.
  • The Alabama Child Caring Foundation for uninsured children who are not eligible for Medicaid or ALL KIDS due to access to insurance, immigrant status, and income. Blue Cross/Blue Shield runs this program; there are currently 20,000-30,000 children enrolled who pay a $240 premium each year for a very limited benefit package.

Premiums

  • No premiums for families with incomes under 150 percent FPL.
  • Families above 150 percent FPL pay an annual premium of $50/child or $60/child if premiums are paid in ten monthly installments. A Family’s total premium cannot exceed three times the selected annual payment method, (i.e., only $150 with annual premium payment or $180 with installment payments). Coupon books are sent to enrolled children by SEIB and premiums can be paid through state banks.
  • Children’s Rehabilitation Services pays any premiums or co-payments for families in its Children with Special Health Care Needs program. The agency projected potential savings of $750,000, annually, due to ALL KIDS and CHIP coverage for children served by CRS for whom drugs, surgery or other medical services will now be covered by CHIP, rather than CRS. CRS used these savings to reintroduce cardiac care services that were previously eliminated because of funding limitations. Families can now request reimbursement for lodging, transportation and medical care expenses when their children need specialized cardiac treatment.

Lock-out Periods
There is no lock-out period, but children cannot re-enroll at the end of a year unless premium payments are current.

Co-payments

  • Families above 150 percent FPL have a $5 co-payment for inpatient hospital stays, physician office visits, emergency room visits where the patient is not admitted, urgent care services, confinement for inpatient chemical dependency, and dental services. Prescription drugs cost $3 for brand names and $1 for generics.
  • DPH is not worried about family cost sharing exceeding the statutory cap of five percent of annual income, because the premiums and co-payments are so low that few families are likely to exceed the $500 annual limit on out-of-pocket expenses or the percent-of-income limit.
  • Nevertheless, families are informed about the $500 limit through ALL KIDS brochures and by social service agencies. Families are encouraged to keep receipts for all co-payments and premiums in a "shoe box," so if they reach the maximum, they have the necessary documentation to stop cost-sharing and reclaim occasional over-payments of co-payments or premiums.

Employer Buy-In
No program is planned at this time to subsidize premiums for employer-provided insurance.

Data Collection and Evaluation

Alabama has no existing system to identify the total number of uninsured children, which presented a major challenge while planning the two phases of CHIP. While it is too soon to have any meaningful data, DPH is laying the groundwork to track the State Plan’s performance measures. For the data collection work, DPH staff will have assistance from Advisory Council members, SEIB (which has statewide Blue Cross/Blue Shield claims data and will have Medicaid claims data) and outreach partners (which have utilization data by zip code).

Program Design Data
To help plan Phase I (Medicaid expansion for teenagers), Medicaid staff estimated the number of young people in the age range statewide who would qualify through the CHIP/Medicaid expansion and then subtracted the number of children who were already enrolled. This calculation produced a very rough estimate of the number of young people who could enroll. The staff factored in some reduction in that number based on the assumption that not all eligible teenagers would respond. Using this estimate, the Medicaid agency predicted that 20,000 would enroll in CHIP/Medicaid.

Evaluation Data

  • The CHIP Commission filed its first report with the State Legislature in January 1998 and will file its second in March 1999.
  • SEIB has an information system in place through its existing computer software that provides financial expenditures, demographics and encounter data. This information is provided monthly after claims are adjudicated.
  • The Medicaid agency gives its claims information to a company under contract to SEIB that will put it in a format for DPH to evaluate enrollment, claims encounter data and HEDIS measures.
  • The Department of Public Health plans to work with the University of Alabama at Birmingham (UAB) School of Public Health to develop a mechanism to assess the quality and appropriateness of care provided through ALL KIDS. The state wants to use both process and outcome measures for this assessment. Among the items to track may be the following:
    • Do children have a "medical home"?
    • Are children receiving appropriately scheduled well-child examinations?
    • Are children immunized at the appropriate times?
    • Is non-trauma emergency room use decreasing?
    • How are referrals made?
    • Are specialty care and related services provided?
    • What are the patterns of prescription drug use?
  • The state also may use other data that provides general indicators of child health and well-being such as: immunization registry (after fully operational); adolescent pregnancy rate; health care utilization patterns; and results of mandatory child death reviews. These data will come from other public health initiatives.

Other Data Collection Methods
Other DPH data collection mechanisms include the following:

  • Consumer and provider satisfaction surveys; and
  • A Center for Disease Control survey called the Behavioral Risk Factor Survey. Alabama officials have added ten questions about CHIP to this existing survey and are distributing it to 4,000 families.

Challenges to Implementation

Ten Percent Cap on Administrative Expenses
The Department of Public Health realizes that its costs may exceed the legislated cap on administrative expenses eligible for the Federal match. The agency will reallocate or request additional state funds to cover the administrative expenses, if necessary. The agency will also carry forward into future years of CHIP reimbursement, CHIP start-up expenses.

Some individuals interviewed expressed concern that this cap is too restrictive, especially in a state that is organizing a new program that requires a substantial investment for start-up expenses.

DPH did much of its initial outreach by collaborating with other state agencies and private organizations. This approach provided the flexibility to use administrative funds to hire outside experts to help plan and administer ALL KIDS.

Web Sites for More Information
For additional information, visit their web site:
http://www.alapubhealth.org/chip/index.htm.

 

Appendix 1: Advisory Council Membership

Alabama Medicaid Agency
Alabama Department of Public Health
Children’s Health Systems
Alabama Arise
Family Health Care Corporation (a Federally qualified health center)
University of South Alabama, Children’s and Women’s Clinic
Alabama Department of Rehabilitation
Alabama Department of Human Resources
Alabama Department of Education
Prime Health
Alabama Child Caring Foundation
Alabama Department of Mental Health and Mental Retardation
Alabama Hospital Association
Alabama Primary Health Care Association
Alabama Department of Industrial Relations
Medical Association of the State of Alabama
Alabama Dental Association
Alabama Psychological Association
Alabama Chapter of the American Academy of Pediatrics
Alabama Academy of Family Physicians
American Academy of Pediatrics — Alabama Chapter
Blue Cross Blue Shield
Children’s First
Family Voices
Health Maintenance Organization Association
Legislative Fiscal Office
Legislative Reference Service
University of Alabama at Birmingham
United Health Care
Voices for Alabama’s Children
State Employee’s Insurance Board
State Insurance Department
Poarch Band Creek Indians