Health Conditions, Utilization, and Expenditures of Children in Foster Care. Selection of Study Sample


An important step in the file construction phase involved the selection of the study sample. The selection of the study sample took place in several steps, as follows:

Step 1: Create a Subset by Age

We created a subset of the administrative data containing records for children under the age of 19.

Step 2: Identify Foster Care Children

The SMRF person summary file contains SMRF eligibility codes that identify both the monthly Medicaid eligibility categories and the primary Medicaid eligibility category during the year. The SMRF eligibility codes were created by classifying state-specific eligibility codes according to the standardized set of eligibility codes that make up the SMRF coding system. During the file construction phase, we discovered a problem with the original mapping of Florida's state-specific eligibility codes into the SMRF eligibility code. We remapped the eligibility codes in Florida to correctly identify categories of Medicaid eligibility. We also discovered that the SMRF foster care category includes children receiving adoption assistance as well as those receiving emergency assistance in conjunction with child welfare services.

Table II.2 shows, for each of our three study states, the state-specific codes that identify which children are receiving foster care assistance, adoption assistance, or emergency assistance, and the number of children in each category of Medicaid eligibility (based on the main category of eligibility for the year).

Table II.2: State-Specific Eligibility Codes Identifying Children Receiving Foster Care, Adoption, or Emergency Assistance.

Table II.3 presents additional information on the number of children eligible for Medicaid due to foster care, adoption assistance, or emergency assistance. This table shows that the primary SMRF eligibility code  which reflects the main category of Medicaid eligibility for a child  understates the number of children who were eligible for Medicaid due to an out-of-home placement at any time during a given year. The number of children with any period of foster care ranges from 15 percent to 23 percent higher than the number of children whose main category of Medicaid eligibility was some form of foster care.


Table II.3:
Number of Foster Care Children, by State and Year(a)
State/Year Foster Care is Main
Category of Eligibility
During the Year
Any Foster Care Eligibility
During the Year
1994 106,376 130,992 23.1
1995 111,013 134,833 21.5
1994 22,283 25,876 16.1
1995 34754 28525 15.2
1993 26,602 30,969 16.4
1994 27,770 32,237 16.1
SOURCE: HCFA State Medicaid Research Files.

a. Includes children receiving adoption assistance or emergency assistance.

For the purpose of this study, we reconstructed variables related to Medicaid eligibility, to show whether a child had any period of foster care, adoption assistance, or emergency assistance. All results are shown separately for children in foster care and for those receiving adoption assistance. Children receiving emergency assistance are excluded from the main analysis, but basic descriptive information about this group is presented in Appendix A.

Step 3: Create Comparison Groups

Next, we defined three comparison groups of children enrolled in Medicaid: those receiving adoption assistance through Title IV-E or other sources, those receiving cash assistance through Aid to Families with Dependent Children (AFDC), and those receiving Supplemental Security Income (SSI) benefits.(5)

These groups were chosen to compare to the foster care population because they are of interest to policymakers. The SSI population includes children with disabilities, and there is considerable interest in understanding how this population is similar to or differs from foster care children. The AFDC population includes children receiving public assistance and, as we shall see in Chapter III, there is substantial overlap between the foster care and AFDC groups. Many of the foster care children were eligible for Medicaid through AFDC either before or after their foster care eligibility. Children receiving adoption assistance are also of interest to policymakers who would like to know to what extent these children are similar to or different from those who remain in foster care in terms of diagnoses, utilization, and costs.

In earlier work, we included a broader set of comparison groups, namely children eligible for Medicaid through poverty-related expansions, children who are medically needy, and children in other categories of Medicaid eligibility. Based on a preliminary assessment of the data, we decided (in consultation with ASPE and HCFA staff) to streamline the tabular displays to include only comparisons with children receiving adoption assistance, AFDC, or SSI. The totals, however, include all Medicaid children, regardless of category of Medicaid eligibility.

Step 4: Exclude Children Enrolled in Managed Care

Because providers do not submit individual claims for services provided to children enrolled in prepaid managed care, it was necessary to omit managed care enrollees from the analyses of diagnoses, utilization, and costs. Therefore, we developed specifications to identify children enrolled in prepaid, or capitated, managed care.

Identifying this group proved more complex than we anticipated because there is no direct, accurate approach to measuring managed care enrollment based on the SMRF eligibility or claims data. We developed state-specific algorithms to utilize the data available in each state. In Florida and Pennsylvania, we excluded children who had any premium payment during the year, that is, one or more claims reflecting a capitation payment to a managed care organization. In California, we were unable to use this approach because a large number of children had premium payments, but only for dental care. Thus, we relied on plan identifiers to exclude children enrolled for one or more months in managed care organizations. Children enrolled only in prepaid dental plans remained in the sample. Fortunately, the California Medicaid program, known as Medi-Cal, receives shadow claims for dental services from dental plans, which allowed us to analyze dental utilization in California even for those enrolled in prepaid dental plans.

Children enrolled in managed care plans are included in the demographic analyses and the analyses of Medicaid eligibility dynamics. They are excluded, however, from all analyses related to diagnoses, utilization, and costs. Managed care participation rates are discussed further in Chapter III.