Health Conditions, Utilization, and Expenditures of Children in Foster Care. Implications of This Study for Policymakers


These findings have important implications for policy and practice aimed at improving the delivery of health care services to children in foster care, especially in the changing health care environment. The first implication of this study is the importance of continuity of health insurance coverage within the foster care population.(1) Children in foster care were less likely to be continuously enrolled in Medicaid for a full year than adoption assistance or SSI children. This may not be surprising given that placement in foster care is often a pathway to Medicaid eligibility for children in crisis. Nevertheless, this result held when we examined the extent of continuous 12-month coverage over a 24-month period and still, foster care children were less likely than other vulnerable populations to be continuously enrolled in Medicaid. (We cannot tell from Medicaid eligibility data whether some children had other forms of public or private coverage during periods in which they were not enrolled in Medicaid.)

There is growing literature documenting the adverse effects of discontinuities of health insurance coverage (see, for example, Weissman et al. 1999; Berman et al. 1999; Burstin et al. 1998/99). Consequently, states are implementing strategies to increase retention rates, including less frequent redeterminations (such as every six months or annually instead of monthly) and less onerous reapplication requirements (such as mail-in or telephone rather than face-to-face procedures). Eleven states are offering 12-month continuous coverage (Ross and Jacobson 1998). It remains to be seen how foster care children will be affected by these policies in terms of their continuity of health insurance coverage and access to health care (both while they are in foster care and during other periods of Medicaid eligibility). In the meantime, policymakers should focus explicitly on ways to improve continuity of health insurance coverage among foster care children. This would include more timely determination of eligibility when children are removed from the home as well as continuation of eligibility when they return home (Rawlings-Sekunda 1999).

A second implication of this study is that states have considerable flexibility in how they use Medicaid to pay for services for children in foster care. Florida, for example, funded case management services through Medicaid. Children in Pennsylvania  especially those in foster care  had greater access to services through the EPSDT program. Medicaid can fund a comprehensive continuum of care  ranging from screening and assessment to follow-up treatment and ongoing therapies  to meet the wide-ranging needs of children in foster care. Evidence of state-level variation in Medicaid expenditures suggests that states differ in the use of Medicaid to serve children in foster care.

A third implication of this study is the importance of developing mechanisms to better coordinate services for children in foster care, whether they are receiving care in a managed care or fee-for-service environment. The analysis of utilization before and after foster care placement revealed that the majority of foster care children are not receiving CWLA-recommended services during the initial placement period (or at least these services are not being billed to Medicaid). Care coordination strategies are designed to minimize discontinuities of care during transitions (for example, from one foster care placement to another or from one provider to another). In some states, care coordination may be designed to provide access to both covered and noncovered services (that is, services that are not included in the Medicaid benefit package) (Rosenbach and Young 2000). A broad-based concept of care coordination is especially relevant for foster care families, whose needs may involve multiple systems of care, such as public health, child welfare, mental health, schools, and juvenile justice, to name a few. What often differentiates the care coordination process from traditional case management is the advocacy orientation and creative problem-solving approaches used by care coordinators to ensure that individuals get the care they need, regardless of who pays. In other words, care coordinators can help families navigate the boundaries of Medicaid and obtain services provided through other systems of care. The use of proactive care coordination, however, requires a shift away from controlling access and utilization and toward advocating for the needs of children and their families. Whether such services are provided in a managed care environment or on a fee-for-service basis, care coordination may help foster care families get the care they need for their children. More research is needed, however, about the costs and benefits of care coordination (Rosenbach and Young 2000).

A fourth implication of this study is the critical importance of tailoring managed care programs to meet the special needs of the foster care population. Although they represent only 1 to 3 percent of the child Medicaid population, foster care children clearly have higher needs. Policymakers may lose sight of these needs when they consider the larger and more visible Medicaid populations. Payment mechanisms  such as risk adjustment approaches  need to take into account the differential utilization and expenditure profile among children in foster care, especially their higher use of mental health services.

The higher level of mental health conditions (as reflected in Medicaid claims data) and more intensive utilization of mental health/substance abuse treatment also have important implications for the design of programs to adequately serve the foster care population, both in terms of the benefit structure and the composition of provider networks. Covered benefits should reflect the full continuum of care, while networks may need to include both public and private providers to ensure continuity of care. Managed care organizations may not be aware of the special needs of this population when developing provider networks or applying their standard medical necessity criteria. Education of managed care providers is essential to ensure that this small, but vulnerable, population does not fall through the cracks.