Interim Evaluation Report: Congressionally Mandated Evaluation of the State Children’s Health Insurance Program. B. Program and Policy Characteristics


Every state except Louisiana has implemented mandatory, risk-based managed care arrangements for SCHIP in at least the more populated urban areas of the state (Table 16). In

TABLE 16: 
Proportion of State Covered by Mandatory Risk-Based Managed Care Arrangements
State Number of Counties in State Number of Counties with Mandatory Risk-Based Managed Care Arrangements in SCHIP Number of Counties with Mandatory Risk-Based Managed Care Arrangements in Medicaid
CA 58 43 22
CO 63 38 38
NY 62 61 14
TX 254 84 In 50 urban counties, enrollees must select an HMO or PCCM
LA 64 None None
MO 115 37 37
Proportion of Program Participants in Mandatory Risk-Based Managed Care Arrangements
  SCHIP Medicaid
CA Nearly 100% 52% a
CO Roughly 66% Roughly 40%b
NY Nearly 100% 25% b
TX 58% 32% b
LA None (6-7% in PCCM) None
MO 58% 41-44% c
Number of Capitated Managed Care Plans Serving Program Enrollees
  SCHIP Medicaid Both SCHIP and Medicaid
CA 26 26 22
CO 6 5d d
NY 30 30 28
TX 12 12 6
LA None None N.A.
MO 9 9 9
Special Arrangements in Rural Areas
  SCHIP Medicaid
NY PCCM (one county) FFS
LA Limited PCCM; FFS Limited PCCM; FFS
Populations and Services Carved Out from Managed Care
  CSHCN/SSI Behavioral Health Dental Prescription Drugs Other Services
CA SCHIP and Medicaid        
NY Medicaid   Medicaid (option) Medicaid (option)  
TX Medicaid Medicaid SCHIP and Medicaid SCHIP and Medicaid  
LA N.A. N.A. N.A. N.A. N.A.
MO   SCHIP and Medicaid     SCHIP and Medicaide

Notes: CSHCN = Children with special health care needs; EPO = Exclusive provider organization; SSI = supplemental security income; N.A. = Not applicable; PCCM = Primary care case management. 
a "Medi-Cal Managed Care," Medi-Cal Facts, No. 8. Oakland, CA: the Medi-Cal Policy Institute, March 2000. 
bSeptember 2001 GAO report, Medicaid and SCHIP: States' Enrollment and Payment Policies Can Affect Children's Access to Care. 
cFrom the State of Missouri Department of Social Services, Division of Medical Services. As of June 2001, pregnant women, children, and their caregivers covered under the state's section 1915(b) managed care program. 
dAlthough Colorado requires all SCHIP plans to participate in Medicaid, one of the SCHIP plans meets the Medicaid participation requirement indirectly through another SCHIP/Medicaid plan, of which they are part owner. The two plans share the same provider network; under SCHIP, the parent plan manages care directly, while under Medicaid, care is managed through its subsidiary plan. eIndividualized Education Plan (IEP) and Individualized Family Service Plan (IFSP) services, environmental lead assessments, bone marrow and organ transplants, protease inhibitors, sexual assault and child abuse assessments, and abortion services.

Source: State program officials.

New York, such arrangements are being used in all but one rural, upstate county; and in California, such arrangements are in place in all but 15 rural counties. Thus, in both New York and California, nearly all SCHIP participants are enrolled in risk-based managed care. In Colorado, Missouri, and Texas, managed care participation rates are closer to 60 percent, because such arrangements are not available in many rural areas within these states.

States typically build on managed care arrangements already in place for Medicaid, although, in most of the study states, managed care's reach is more extensive in SCHIP than in Medicaid. In New York, three times as many counties and an equally large proportion of participants are enrolled in risk-based managed care for SCHIP, compared to Medicaid. In California and Texas, mandatory risk-based arrangements operate in many more counties for SCHIP than for Medicaid, and the proportion of program participants enrolled in risk-based arrangements under SCHIP is twice as high as that under Medicaid. In Colorado, Medicaid and SCHIP operate managed care in a similar number of counties, and there is nearly full alignment among health plans participating in SCHIP and Medicaid, although the proportion of program participants enrolled in managed care is slightly greater in SCHIP than in Medicaid. Managed care is the same for SCHIP and Medicaid enrollees in Missouri, because as a Medicaid expansion program the same delivery system serves both groups.

In the five states with risk-based managed care, most plans participate in both Medicaid and SCHIP. When the same plans participate, families find it easier to make a transition from one program to the other. In three states, plan participation is the same (Colorado and Missouri) or nearly the same (New York) across the two programs. The SCHIP authorizing legislation in Colorado specifically requires that plans participating in SCHIP also participate in Medicaid, a provision that has helped ensure alignment between the two programs. 52 In New York, the only difference between the two programs is that one large New York City plan participates in SCHIP but not in Medicaid.

More plans in California and Texas participate in only one of the two programs. Although, in California, the same number of plans participate in Medicaid and SCHIP, eight plans (four per program) participate in one program, but not the other; and managed care systems differ considerably across the two programs. Moreover, in California, SCHIP operates managed care in many more counties than Medicaid does; also, whereas contracts with plans are statewide for SCHIP, Medicaid managed care systems and contracting arrangements are county-based.

In part because SCHIP is more streamlined and utilizes managed care throughout the state, California was able to secure SCHIP contracts with three large commercial insurers that participate in Medicaid, either in selected counties only, or that do not participate in Medicaid at all. Case study respondents in California noted that these "mainstream" health plans are very popular among families because they offer broad provider networks throughout the state. Enrollees switching from SCHIP to Medicaid, however, might not have access to the same plans and providers. Lack of alignment between SCHIP and Medicaid managed care plans is perhaps greater in Texas than in other states. There, only 6 of the 12 plans participating in Medicaid have submitted bids to participate in SCHIP. The networks of these six plans, along with six others that do not participate in Medicaid, are dominated by traditional safety net providers. In Texas, plans with larger commercial enrollment typically did not bid on SCHIP because they deemed it not profitable. Some of these plans with experience in Medicaid saw SCHIP as merely "more of the same."

Although a few states have contracted with mainstream commercial insurers in SCHIP, managed care enrollment in three of the five study states with risk-based managed care programs is concentrated in plans with strong links to traditional safety net providers. SCHIP managed care enrollment in Texas is exclusively in these types of plans. In New York, 70 percent of SCHIP enrollment is with plans that participate only in Medicaid or SCHIP; safety net providers play a large role in the provider networks for these plans. Roughly half of SCHIP managed care enrollment in Colorado is with a plan formed by community health centers and safety net hospitals. In Missouri and California, a larger share of SCHIP managed care enrollment is in plans with significant commercial enrollment.

Medicaid and SCHIP delivery systems typically are similar in urban areas, where both programs operate managed care arrangements. In geographic areas where delivery system features vary, provider participation in SCHIP is considered comparable to--and, in some cases, better than--participation in Medicaid. Case study respondents described SCHIP's more extensive use of managed care as giving participants in some areas access to a larger and/or better selection of providers--because either the program's image was more appealing to providers or payments were better.

In rural areas, the case studies found distinct differences between the SCHIP and Medicaid delivery systems. New models for delivering care in rural areas have emerged in the SCHIP programs of several states--California, Colorado, and Texas each operate a form of exclusive provider organization (EPO) in rural communities. 53 In California and Colorado, access to providers reportedly is better in areas with these organized networks than it is under Medicaid fee-for-service arrangements, both because SCHIP has attracted more providers, and because the programs are able to provide families with a list of participating doctors from whom to select a primary care physician, rather than leaving families to find a physician willing to accept Medicaid. California recently launched a program to stimulate innovative delivery models in rural areas. Meanwhile, health plans and providers have competed to obtain special funding to develop and test new approaches for serving the populations of Alaska Natives, American Indians, and forestry, fishery, and migrant workers. Some ideas being explored for bringing specialty care to rural areas are longer clinic hours and the use of mobile vans and telemedicine.

In the study states, carve-outs are less common in SCHIP than they are in Medicaid; that is, states have tended to include all (or more) populations and services within the managed care contracts with health plans. However, California's SCHIP contracts exclude services for children with qualifying special health care needs, and plans refer these children to county-based specialty health and mental health systems in which providers are paid directly by the state on a fee-for-service basis. Health plan contracts in Missouri include carve-outs for some behavioral health care services and a few other specialized services for both SCHIP and Medicaid enrollees (listed in Table 16). In Texas, SCHIP and Medicaid contracts exclude dental care and prescription drugs while Medicaid contracts also exclude behavioral health services (all such covered services and paid for by the state using fee-for-service payment). In New York, SCHIP contracts with health plans include the full scope of benefits, whereas the state's Medicaid contracts in New York exclude children with special health care needs on SSI; plans have the option to provide dental care and prescription drugs.

Dental care arrangements differ across the study states. As with other services, dental care more often is included in managed care arrangements in SCHIP than in Medicaid. Under SCHIP in New York and Missouri, health plans are responsible for dental care (although plans typically subcontract with dental managed care organizations to meet this obligation). In California's SCHIP program, the state contracts directly with five managed dental care plans to provide coverage to SCHIP enrollees. Texas had hoped to secure contracts with dental plans; but when none applied they carved this care out of health plan contracts and pay for this care directly on a fee-for-service basis.

Under SCHIP, several states negotiate payment rates individually with health plans (California, Missouri, and New York); others set payment rates based on historic Medicaid data (Colorado and Texas). Because SCHIP is a relatively new program, most states used Medicaid cost and utilization data to set or evaluate health plan capitation rates. As plans have gained experience serving SCHIP enrollees, some states have begun using actual cost data from plans to reassess rates when contracts are renegotiated. It is difficult to compare SCHIP and Medicaid plan payment rates directly since the programs cover different population groups and different services. Health plan officials interviewed for the study reported that, generally, after adjusting for population and service differences, capitation rates were roughly comparable for Medicaid and SCHIP in Colorado and Texas, and slightly higher under SCHIP than Medicaid in New York and California. Plans in California and New York also noted that the process they undergo in responding to and negotiating contracts with the state is more streamlined in SCHIP than in Medicaid.

SCHIP provider payments are similar to Medicaid provider payments, regardless of the payment arrangements (which vary widely within and across states). 54 Some fee-for-service rates and provider capitation payments under SCHIP are tied to existing Medicaid fee schedules, while others are enhanced by health plans in order to increase provider participation. Many providers in managed care arrangements are paid at levels comparable to those of Medicaid. According to state officials, provider payment rates in fee-for-service regions are the same for SCHIP and Medicaid in Texas; but they tend to be slightly higher for SCHIP in California, Colorado, and New York.

52. One of the six SCHIP plans in Colorado is able to meet its Medicaid participation requirement through its affiliation with another plan.

53. In Colorado, the network began before SCHIP to serve mainly rural areas; but it has since become statewide. Under SCHIP, network providers also serve as primary care providers for SCHIP participants until the managed care plan enrollment process is complete.

54. Some health plans pay providers on a capitated basis, whereas others pay fee-for-service rates. Health plans most often use capitation arrangements for routine primary care, but pay fee-for-service rates for specialty and ancillary services. Some plans, however, offer partial-risk contracts or restrict capitation to urban and/or larger-volume providers. Outside managed care areas, providers usually are paid on a fee-for-service basis; but, in some EPO regions, providers receive a capitation payment for primary care and care-coordination services.

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