Health Conditions, Utilization, and Expenditures of Children in Foster Care. Use of Medicaid Managed Care


There has been a trend in recent years toward the use of managed care for Medicaid-eligible children in general and foster care children in particular (Battistelli 1997). By 1996, 22 states had enrolled at least some foster care children into capitated (prepaid) Medicaid managed care, and 17 of these states required at least some of these children to enroll in managed care (NASHP 1997). The use of Medicaid managed care poses significant challenges for this study because the claims data for children in capitated managed care plans are missing from the SMRF files. And without claims data, we cannot answer the research questions posed in this study.

Of the seven states with at least 10,000 Medicaid foster care children, all but one had overall Medicaid managed care penetration rates of 20 percent or less in 1994:

State Managed Care
Medicaid Eligibles Managed Care
Penetration Rate
California 811,838 6,778,152 12.0 %
Pennsylvania 348,409 1,728,068 20.2
Florida 351,885 2,202,774 16.0
New Jersey 35,343 859,628 4.1
Washington 319,966 792,441 40.4
Wisconsin 124,280 642,240 19.4
Georgia 2,400 1,169,937 0.2
*  Includes enrollment in capitated plans. Excludes primary care case management (PCCM) enrollment.

Sources:  National Institute for Health Care Management 1995; U.S. Department of Health and Human Services 1995.

One caveat is that the managed care penetration rate was likely to vary across age groups and eligibility categories and children may have had above average rates of managed care enrollment. Our strategy, therefore, was to choose the three states with the largest foster care populations  California, Pennsylvania, and Florida  to ensure adequate sample sizes for the foster care analyses, while recognizing that the sample sizes in the other categories of eligibility would be more than adequate for our purposes.

California had by far the largest foster care population (nearly 100,000 in 1995), and, for that reason alone, was of great interest as a potential study state. Pennsylvania and Florida were next in size of foster care population, with 24,000 and 21,000 Medicaid children in foster care, respectively. We concluded that the relatively large size of the foster care population compensated for the level of managed care enrollment in these two states (20 percent in Pennsylvania, 16 percent in Florida). These large sample sizes have afforded us the opportunity to compare patterns of utilization and expenditures within the foster care population.