State Innovations in Child Welfare Financing. Pre-authorization


Traditional fee-for-service arrangements with contractors required that states purchase a specific bundle of services; any services not explicitly mentioned in the contract required the state’s permission before the contractor could provide them. Such arrangements reproduce traditional power arrangements between the state and agencies and have tended to restrict the flexibility of contractors in serving their clients. Many of the managed care initiatives undertaken over the past decade have sought to ease these limitations and to empower contractors to take more responsibility for their cases. Re-thinking pre-authorization procedures has been a feature of many?though not all?of the managed care initiatives.

Understanding this aspect of service provision sheds light on the autonomy of the contractor and how important decisions about a case are made. It is striking that none of the programs surveyed used the traditional model of having a formal process in which private caseworkers had to consult with state child welfare supervisors before initiating a new service for the client. Pre-authorization for some services remained necessary in at least three states (California, Connecticut, and Oklahoma). However, all of these services involve medical and mental health services that are paid by Medicaid. The pre-authorization is needed to meet federal Medicaid requirements, not because any of these states’ child welfare agencies mandated this process.

Based on the information collected from 22 states, there appears to be a continuum of collaboration. One pole of this continuum is represented by those states that only monitor outcomes, the other end by states that meet regularly with contractors to consult on case decisions and service provision. Table 2-2 below places each state along this continuum (referring to child welfare services only). No information is available on how child and family outcomes differ depending on the degree of collaboration.

Only Monitor Outcomes Some court or administrative involvement Monthly or quarterly reviews Frequent or continuous collaboration
Table 2-2
Degree of Collaboration
New York

The category “Only monitor outcomes” includes projects that privatized previously public services (Florida and Kansas) and implemented performance contracting (Illinois and Ohio). In most of these initiatives, no caseworkers from public agencies are assigned to a specific child; instead, contract monitors from the state or county evaluate overall contractor performance. In other initiatives, caseworkers from the state agency are assigned to monitor specific cases and are available for court appearances. For legal reasons, several states must provide caseworkers for court appearances even if their involvement in actually providing services is minimal (California, Michigan, Tennessee, and Texas). The category “monthly or quarterly reviews” refers not to administrative case reviews or other mandated procedures but to regular processes where various service providers (both public and private) meet to formulate case services. Finally, some states have devised projects in which there is constant collaboration between public and private agencies and often with the family as well. One example of this is Colorado’s Boulder County Managed Care Pilot Project. It has two interagency utilization review meetings a week, during which staff from state, county, and private agencies discuss cases and the appropriate services and outcomes for the clients.

It appears that in many cases the monitoring mechanisms of the state or county agencies have become embedded in the service provision process through these collaborative review processes. Minnesota’s collaboratives, for example, bring together various state and county agencies and private providers to pool funds and do assessment, coordination, planning, and purchasing of services. In Pennsylvania’s initiative, the extensive collaboration was a byproduct of the difficulty of the referral and assessment protocols, rather than an intentional feature of the pilot. The process never reached the point of cases making a smooth transition from county to contractor responsibility.

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