Innovative State Strategies to Insure Children. Colorado


I. Overview


A. History and General Description of Program

The Colorado Child Health Plan (CCHP) was established in 1992 as a community-based health care reimbursement program for low-income children. CCHP operates as a health maintenance organization that is administered by the University of Colorado Health Sciences Center. The program initially targeted rural counties with a low number of safety net providers, and it built its own network of physicians. Recent legislation established the Children’s Basic Health Plan (CBHP), a program which will expand eligibility under CCHP up to age 18 and extend the network into every county in the state (HB 1304). CBHP will be a full benefit program administered by private HMOs. The CBHP will be funded in part by the Title XXI block grant.

Colorado initially chose to create CCHP rather than apply for a 1115 Medicaid waiver with the hope that more providers would be willing to participate in the program. Colorado’s political climate includes a very strong anti-government sentiment and a substantial push to privatize. Because of this, Colorado officials are pleased that the Title XXI legislation will not force them to write an 1115 waiver to draw down the new funds.

B. Support/Opposition for Program in State

The Colorado Children’s Campaign was a big force behind passage of both the original Colorado Child Health Plan and the new Children’s Basic Health Plan (HB 1304). The local chapter of the American Academy of Pediatrics is also very involved. The Governor’s wife was a spokesperson for the original CCHP.

When the Colorado Child Health Plan was initially marketed in the Northeast region of the state, it was presented as a private insurance plan costing $25 per year. The reason for this marketing campaign was to avoid the "welfare stigma." The effort was unsuccessful in enrolling large numbers of children because residents apparently thought the plan was a scam. In the Western region of the state, however, county resource centers, public health departments, schools, and other community groups rallied around the program. These Western counties set up a system so those individuals rejected from Medicaid automatically received a Colorado Child Health Plan application.

Community program buy-in has been an ongoing problem in Colorado. The greatest difficulty advocates faced was not setting up a subsidized insurance plan for children, but convincing the legislature to set up an insurance plan run by the state. The new Children’s Basic Health Plan legislation includes clauses that specifically call for certain parts of the program to be privatized.

C. Number of Uninsured Children in State

The number of children under 19 years of age whose family income is at or below 200 % FPL, and who are reported to be not covered by health insurance is 72,000 in Colorado. The U.S. Bureau of the Census determined this number based on the arithmetic average of the number of low-income children and low-income children with no health insurance as calculated from the 1995-1997 March supplements to the Current Population Survey.1 Approximately 40,344 of these children are eligible for the Colorado Child Health Plan.2



II. Program Design


A. Options Considered for Coverage

The primary rationale for forming the Colorado Child Health Plan was to give families access to the health care system. This meant helping families to overcome the cost of health care and to gain trust in a children's health insurance program. In order to encourage both enrollment and utilization of the health care system, CCHP identified a vast number of potential access problems for families and worked to overcome them. The CCHP application form was made simple enough so that people would not be discouraged from applying. The program was set up as an health maintenance organization (HMO) to reduce costs. However, this decision may have actually had a bigger impact on quality than on cost, since the CCHP population is very transient. Without CCHP, children tended to drift from physician to physician, in part because parents would build up bad debt at one physician's office and be too embarrassed to go back. Having an assigned primary care physician through the HMO structure of CCHP provides children with a medical home and some consistency in their medical care.

B. Target Population

The target population of the Colorado Child Health Plan is children age twelve and under with incomes up to 185% of the poverty level who are not eligible for Medicaid. Under the new Children’s Basic Health Plan, the target population will expand to include children up to age eighteen. Enrollment in FY 1996 was 4,893 children. In FY 1997 target enrollment is 6,217 children, and in FY 1998 target enrollment is 12,041 children.

It was estimated that in FY 1996, 40,344 children were eligible for CCHP by virtue of age and income. CCHP hired Mathematica Policy Research, Inc. and RAND under a Robert Wood Johnson Foundation grant to calculate the number of children eligible for the program and to project those figures out to FY 1998.3

C. Services Included in the Benefit Package

The benefit package was modeled after the Blue Cross/Blue Shield Caring Programs. There is a maximum annual benefit of $10,000 per child. The program expansion under the Children’s Basic Health Plan will include inpatient and mental health care. Benefits include:4

Doctor visits: Yes.

Health screenings: Yes.

Immunization: Yes.

Emergency: Yes. Requires approval by primary care physician.

Outpatient: Yes. Pays current Medicaid + 20%. Allows 48 hour patient observation.

Prescriptions: Yes.

Dental care: No.

Routine Vision Services: Yes.

Eyeglasses/Contact Lenses: Yes.

Mental Health: No.

Inpatient-hospital care: No.

D. Provider Network

CCHP is administered by the state of Colorado through the University of Colorado Health Sciences Center. The program has a statewide network of pediatric physicians. Primary care physicians are reimbursed on a capitated basis and bear risk. Medical specialists are reimbursed on a fee-for-service basis.

E. Sources of Financial Support for the Program

Funding is obtained through a combination of state appropriations and private donations. Sources include: the state General Fund; public funds consisting of a portion of the Medicaid teaching adjustment paid to University Hospital; cash reserves and interest paid on those reserves; private donations; and enrollment fees. Blue Cross/Blue Shield HMO donates all claims processing services.

FY 97-98:5

State General Fund Appropriation-- $1,013,598

Used $571,345 of University Hospital’s funding for Indigent Care Program to obtain federal funds match of $650,000 from Medicaid in the form of a teaching hospital adjustment payment. University Hospital makes quarterly payments of $162,500 to CCHP.

Legislation appropriated $211,300 of spending authority to the program in enrollment fees.

Legislation appropriated $650,000 of spending authority for private donations-- including $100,000 from Blue Cross/Blue Shield. Colorado Group Insurance Association funds a scholarship program for families who can not pay the $25 enrollment fee.

BVP Media, Inc. donated TV and radio public service announcements.

113 pharmacies donate 5 common pediatric drugs for a $2 co-pay.

Miles Advertising donated the development of the CCHP logo and the early outreach literature.

F. Estimation of Initial Costs

No information on initial costs is available at this time.

G. Cost-Sharing Arrangements

$2 co-payments for doctor visits, health screenings and prescriptions.

Providers are not required to collect these co-payments, but they are encouraged to collect them in order to instill the value of health care services received onto the families whose children participate in CCHP.

The enrollment fee is a $25 per child yearly payment in lieu of premium contributions, with a $150 per family maximum fee. CCHP does have formal sponsorship of any families who can not pay the $25.

H. Marketing of Program

The Colorado Child Health Plan devoted 11.3% of its total program budget to outreach and marketing in the most recent year for which information was available.6 Colorado cites the "back to school enrollment program" as their single best outreach vehicle. The Colorado Child Health Plan operates under the philosophy that people need to be exposed to the program three times before they will react. The back to school program tries to reach them three times in close succession. Television ads, radio ads, and fliers are used at the same time. In 1996 over 210,00 pamphlets were distributed to 848 Colorado schools in 42 counties.7 Outreach pamphlets featuring "Honey Bear" are available in both English and Spanish. Spanish speakers are also available to assist Colorado residents in filling out applications through the toll-free phone line.

Five CCHP staff members work very closely with communities and conduct local outreach training. The state staff created a database of county public and social service agencies that work with low-income families with children. The database helps state outreach workers coordinate efforts with local groups. CCHP works with schools, health departments, county resource centers, WIC, prenatal and nutrition programs, the Colorado Indigent Care Program, and with HCP, a program for children with special health care needs. CCHP cites word of mouth as their single greatest source of referral.

I. Eligibility Criteria

The target population of CCHP is children age twelve and under with incomes up to 185% of the poverty level who are not eligible for Medicaid. Under the new Children’s Basic Health Plan, the target population will expand to include children up to age eighteen.

Families must renew for the Child Health Program each year when a letter is mailed as a reminder. Of children enrolled in CCHP during FY 96, 42.6% did not renew. CCHP sent out a survey to determine the reasons. 29% moved out of area, 23% "aged out" of the program, 11.5% became Medicaid eligible, and 11.5% increased their assets and were no longer eligible. Approximately 14% of those who did not renew reported that they had acquired other insurance.8

CCHP is on the brink of launching an Internet based eligibility system. This will give anyone (providers, clinics, etc.) the ability to process enrollment applications.

J. Verification Process

CCHP verifies eligibility by asking for a birth certificate, documentation of any extraordinary expenses (day care, medical bills due in the next 12 months, child support/alimony, and other health insurance costs), and three months worth of paycheck stubs. If applicants cannot provide this, they must submit copies of bills as proof of monthly expenses.

CCHP also offers an easy enrollment process. If a child is enrolled in the free meal program, HCP, WIC, state prenatal program, or two other food programs, the child may automatically enroll in CCHP, provided they are not on Medicaid. If people enter the CCHP program through WIC or any of these other programs, assets are verified through the other program. CCHP realizes that people who are not really eligible for CCHP may enroll, but at the same time, they want to enroll as many needy children as possible.

K. Enrollment Process and Waiting Period

CCHP uses a mail-in application with a $25 enrollment fee per child. English and Spanish speaking operators on the toll-free phone line offer assistance in filling out the application. Families can use a full documented application to receive a Colorado Indigent Care Program (CICP) rating or one of three "short form easy enrollment" applications. Short forms are available through WIC, HCP, CICP, Commodity Supplemental Foods, or the Free and Reduced-Price Meal Programs available through all public schools. No waiting period has ever existed for CCHP.


III. Implementation

A. Amount of Time it took to Implement the Program and Begin Enrollment

The legislation for CCHP was enacted in July, 1990. Enrollment began in six Colorado counties in 1992. By the end of FY ’97, CCHP will be in 54 of Colorado’s 63 counties.9 Once the new Children’s Basic Health Plan is merged with CCHP, the program will be in every county in the state.


IV. Administration


A. How Program Fits within the State Structure

The Colorado Child Health Plan was legislatively established and is administered by the University of Colorado Health Sciences Center. CCHP is funded through a combination of state appropriation and private donations. Senate Bill 90-25, the "Children’s Health Plan Act," was enacted by the Colorado General Assembly in 1990 and took effect on July 1, 1990. Two additional pieces of legislation, Senate Bills 93-29 and 93-36, extended the plan’s sunset date and expanded eligibility, respectively.

B. Administrative Costs of the Program

At the end of FY 96, administrative costs represented 30% of total program costs. The staff of CCHP prepared a working document for the Joint Budget Committee and presented it on December 11, 1996. From this, "research provided in Colorado Managed Care Review (1996), in FY 97-98 shows the Colorado Child Health Plan with $6.93 per member per month administrative expenses".10 This is reportable administrative costs only and does not include BC/BS donations. Administrative costs are contained in a variety of ways. All employees are state employees and do not have large salaries. The University of Colorado donates all indirect costs of the program including computer infrastructure. CCHP has no quality assurance or credentialling service. Because clients can simply switch primary care physicians whenever they want, providers are motivated to do a good job. Basically, the program operates as an "any willing provider" managed care organization.

C. How Premiums, Copays, and Deductibles are Collected

Doctors and pharmacies collect co-pays directly and keep them.

D. Cost-Shifting to Medicaid

Most of the special needs kids that MCH deals with are seriously ill and eventually spend down into Medicaid if they are not already eligible. No cost-shifting to Medicaid exists.

E. Interaction with Other Children’s Programs at the State Level

Interaction especially occurs between CCHP and WIC, prenatal and nutrition programs, the Colorado Indigent Care Program, and HCP, a program for children with special health care needs. Public Health Nurses make an effort to enroll anyone eligible into CCHP. A short enrollment form was developed for families enrolled in one of six other programs. The nurses provide the form on the spot and help families complete it. Applications are available at all of the clinics. County social service offices refer families for Medicaid enrollment.

F. Coordination with Medicaid

If children are eligible for Medicaid, the enrollment form is returned, and the family is advised to apply for Medicaid at the county department of Social Services. The State takes no responsibility for moving people into Medicaid. They depend a lot on the sites that do both Medicaid and CCHP.

It is difficult to have a seamless system between Medicaid and CCHP because their identification numbers do not match. Medicaid assigns each Medicaid enrollee a separate ID number while CCHP uses social security numbers. The new Children’s Basic Health Plan will be comparable to Medicaid so that people will not flip-flop and fall out of the system altogether as easily.

CCHP also offers a year of continuous enrollment, regardless of whether children become eligible for Medicaid. CCHP does not disenroll children within that time frame. If it is determined that a family has gone on Medicaid, CCHP simply discontinues capitation for the months that the child is covered. Some benefit and usage information is coordinated with the Medicaid program since HMO Blue covers both Medicaid and CCHP populations.

G. Coordination with Other Children’s Programs

The difficulty in translating Title V users into CCHP enrollees is that Title V users are not required to register and report any finances to the state. Title V programs are not entitlements, so financial screening is not mandated. It is sometimes difficult to tell people on the spot whether they would be eligible for CCHP. No standardized registration form exists for both CCHP and Title V programs.

H. State Laws the Program is Required to Comply With

CCHP is only required to comply with three pieces of CCHP legislation. The plan’s founding legislation, Senate Bill 90-25, denies Colorado Child Health Plan enrollment to any child eligible for Medicaid and binds eligibility determination to the policies and procedures developed by the Colorado Indigent Care Program. Legislation passed in 1993 extended the plan’s sunset date to July 1, 1998. In addition, Senate Bill 36 increased the age limit for eligibility from 9 to 13 and allowed automatic health plan eligibility for families already enrolled in any of six other state programs for low-income families.


V. Policy Issues


A. Adverse Selection

CCHP has not tracked adverse selection. It is speculated that CCHP is not the type of program that really sick children and their parents would gravitate to because it does not provide inpatient care. The parents who are fortunate enough to establish a care network for their children are not likely to drop it for CCHP. Most chronically sick children are on SSI or in HCP; however, CCHP could be used for preventive care. Families could then buy another policy to cover catastrophic illness. The fact that anyone over 185% FPL has to pay the whole CCHP premium might also discourage adverse selection from happening.

The effects of welfare reform are yet to be seen. Some children currently on SSI will lose their eligibility. They may or may not end up going to CCHP.

In order to protect physicians, CCHP shifts some of the risk back on themselves when a primary care physician gets a "high user" enrollee. The physician simply has to mail in 6 months of medical records. Based on his or her patient diagnoses, the physician is awarded some multiple of the original capitation payment. The CCHP medical director does all reviews.

B. Substitution of Employer Coverage

It has not been determined whether CCHP is directly responsible for any "crowding out" or not, but the substantial number of Colorado employers that refuse to provide coverage for their employees is an important issue for the state.

The private sector in Colorado has shown unwillingness to provide part-time employees with any type of coverage. Some companies hire only part-time employees to avoid offering any benefits at all. The unemployment rate in Colorado is currently the lowest it has been in 30 years, but a significant number of uninsured people remain, particularly children.

The new Children’s Basic Health Plan will allow buy-in by employers into the plan, but the current program does not.

Some families in CCHP have access to employer coverage. In fact, CCHP encourages families to carry other health insurance if it is available and to the extent that they can afford it. Some families use employer-based coverage to cover older kids who are not eligible for CCHP and use CCHP to help with the rest of the kids. This makes coverage for the whole family affordable. Currently only 15% of enrollees report having or canceling an insurance program in the past. Generally, the lower the federal poverty level of the enrollee, the worse their history of coverage becomes.


VI. Program Impact


A. Impact on Number of Uninsured Children in State

71,000 kids are eligible and only 7,000 kids are enrolled at present.11 Growth has been largely limited by the way that the program expanded geographically. In counties where CCHP is present, most of which are rural, the penetration level is 40-50%.

Rural populations are more difficult to reach because fewer chances exist to convey information by word of mouth. The Colorado rural population has also historically been less likely to accept any form of charity. Historically, the urban populations in Colorado have been more willing to accept help when it is available.

The University of Colorado is currently conducting an evaluation of the program under a grant from Blue Cross/Blue Shield. The evaluation will look at well-child care in the 0-2 age group and asthma treatment in the 3-18 year old group.

B. Other Direct Impacts

As more kids are moved onto CCHP, providers can concentrate their resources on serving other populations.


VII. Future of Program


A. Lessons Learned

Respondents characterized several changes that they would consider if they were to "establish the CCHP children's health insurance program again":

Set up Medicaid as a sliding scale premium insurance buy-in program from the beginning. Medicaid could be established as a private/public sector cooperation.

The cost of insurance for small businesses in the private sector might be subsidized. The importance of insurance coverage for the private sector has not been emphasized enough in the past. The goal should be to ensure that all partners in the community are helping to alleviate the uninsurance problem.

The need for a seamless health care system so that families do not fall between the cracks when they leave a particular program. A better public health infrastructure must be maintained so that kids can access care.

The initial cost of CCHP was underestimated. More start-up money was needed.

If CCHP had it to do over again, it would offer a full benefit package from the start.

CCHP underestimated the depth of need for mental health programs.

CCHP also underestimated the difficulty in getting children to enroll in the program.

B. Vision of the Future of the Program

CCHP is "going out of business" and merging with the new Children’s Basic Health Plan (CBHP). CBHP is viewed as a way to change how managed care is delivered to the indigent population. The CBHP will probably enjoy better community support if parts of it are privatized.

1. Final Federal Register notice: State Children's Health Insurance Program; Reserved Allotments to States for Fiscal Year 1988; Enhanced Federal Medical Assistance Percentages -- September 9, 1997

2. Colorado Child Health Plan Annual Report to the Colorado General Assembly. Submitted by the University of Colorado Health Sciences Center. Appendix K. March 1, 1997

3. Colorado Child Health Plan Annual Report to the Colorado General Assembly. Submitted by the University of Colorado Health Sciences Center. March 1, 1997. (p.22).

4. Colorado Child Health Plan Benefits Booklet. 1996

5. Colorado Child Health Plan Annual Report to the Colorado General Assembly. Submitted by the University of Colorado Health Sciences Center. March 1, 1997

6. Interview, Fall 1997.

7. Colorado Child Health Plan Annual Report to the Colorado General Assembly. Submitted by the University of Colorado Health Sciences Center. March 1, 1997. (p. 20).

8. Colorado Child Health Plan Annual Report to the Colorado General Assembly. Submitted by the University of Colorado Health Sciences Center. March 1, 1997. (p. 12).

9. Colorado Child Health Plan Annual Report to the Colorado General Assembly. Submitted by the University of Colorado Health Sciences Center. March 1, 1997. (p. 22).

10. Colorado Child Health Plan Annual Report to the Colorado General Assembly. Submitted by the University of Colorado Health Sciences