U.S. Department of Health and Human Services

An Exploratory Analysis of the Medicaid Expenditures of Substance Exposed Children Under 2 Years of Age in California

Executive Summary

Marilyn Rymer Ellwood, E. Kathleen Adams, William H. Crown and Suzanne Dodds

SysteMetrics

September 1993

This report was prepared under contracts #PHS-282-92-0047, #HHS-100-88-0041, #HCFA-90-0045 between the Department of Health and Human Services (HHS) and SysteMetrics. In addition to HHS's Office of Social Services Policy (now the Office of Disability, Aging and Long-Term Care Policy), additional funding was also provided by the Health Care Financing Administration (now CMS). For additional information about this subject, you can visit the ASPE home page at http://aspe.hhs.gov. The Project Officer was Laura Feig.

The authors would like to express their appreciation to Sharman Stephens and Laura Feig of the Office of the Assistant Secretary for Planning and Evaluation, and Marilyn Hirsch of the Health Care Financing Administration's Office of Research for the leadership and direction they provided for this study. In addition, Samira Al-Qazzaz of California's Medi-Cal program was an enormous asset to the project team in helping us understand the State's Medicaid data and reviewing the study results.

EXECUTIVE SUMMARY

This project was designed to explore the utilization and expenditures to Medicaid of substance exposed children, using data on the experience of children born in California in 1986,1987 and 1988. The Medicaid experience of these children in their first two years of life was the focus of the analysis. The study also included a randomly sampled comparison group of Medicaid children in California without identified substance exposure problems. The analysis was conducted in two phases. In the first phase, data from the Medicaid Tape-to-Tape data set for California were analyzed. Tape-to-Tape is a multi-State Medicaid data base developed by the Office of Research and Demonstrations at the Health Care Financing Administration (HCFA). In the second phase of the analysis, the Medicaid Tape-to-Tape data were merged with California Vital Statistics data (birth records). This merger enabled the analysis of factors (substance exposure and others) associated with low birth weight among Medicaid infants, as well as the subsequent impacts of low birth weight, substance exposure, and other factors upon Medicaid expenditures.

There are numerous problems with identifying substance exposed infants. For example, physicians are reported to be reluctant to identity children as having substance exposure problems. Pregnant women are also reported to be hesitant to seek treatment for their substance abuse problems during pregnancy. They fear losing custody of their children or other legal problems if their substance abuse is known. Finally, many treatment programs refuse to treat pregnant women.

To identity a study cohort of young children with a potential drug/alcohol exposure problem, a broad definition of substance exposure was used. The inpatient and outpatient claims files of all women who delivered under Medicaid from 1986-1988 were searched for the two years prior to delivery and six months post delivery to see if there were diagnoses indicating drug or alcohol abuse problems. The rationale for going beyond the immediate period of pregnancy was that if there was substance abuse in the period preceding pregnancy or immediately after delivery, there was a reasonable probability that abuse (and thus exposure for the child) occurred during the period of pregnancy. The claims files of all Medicaid children born in 1986-1988 in California were also searched to identity children with a direct diagnosis code indicating drug or alcohol exposure problems.

With this approach, 8,862 children under age 2 with diagnoses related to substance exposure were identified in preliminary study data. Of these, 74.3% were identified solely through some indication of drug/alcohol abuse in their mothers' files. Another 21.4% were identified solely through diagnoses related to drug or alcohol exposure problems in their own Medicaid files. A final 4.2% had indications of drug/alcohol problems in both their mothers' files and their own files. There were 15,814 children in the randomly selected comparison group sample.

The study methodology did not identity nearly as many substance exposed children in the Medicaid population as other researchers have suggested. The final study cohort of 7,802 children represented 1.4% to 1.9% of the children born in 1986, 1987 and 1988 who were enrolled in California's Medicaid program.1 However, without direct testing, the study methodology was limited in its ability to identity children with substance exposure. Other researchers have found that the identification rate of substance exposed infants is increased from 3 to 5 times if direct testing is utilized. There were also limitations regarding the diagnosis coding in California Medicaid claims data.

Nevertheless, the number of substance exposed children enrolled in the California Medicaid program increased substantially over the three year study period. The number of substance exposed children identified from Medi-Cal data was 3,113 for those bom in 1988, compared to 2,159 for those children bom in 1986. This represented an increase of 44.2%. The number of substance exposed children was growing at a faster rate than the overall enrollment of children under age 1 in California's Medicaid program. From 1986 to 1988, the number of child enrollees under age 1 on Medicaid grew by only 8.8%.

There were differences between the substance exposed cohort and the control group in the distribution of children by Medicaid eligibility group. The most striking difference is the higher proportion of substance exposed children in foster care. About 24% of children in the study cohort were in foster care, compared to 2% in the control group. Other researchers have also reported a high proportion of substance exposed children in foster care.

Substance exposed children showed a stronger attachment to the Medicaid program in their first two years of life than children in the control group. Children in the study cohort averaged about 18 months enrollment over a 24 month period, compared to 13 months for children in the control group. Over half the study cohort children were enrolled for 22-24 months, compared to only about 30% of the control group.

An important study question was whether or not substance exposed children have greater health care needs and thus higher rates of Medicaid utilization than other Medicaid children in the first two years of life. Generally, study data showed that substance exposed children were more likely to be inpatient hospital users in both the first and second years of life than other children on Medicaid. Adjusting study data for length of enrollment only did not change this basic pattern.

Substance exposed children also had higher use rates for physician/ambulatory care services, and they averaged more visits per user than children in the control group. However, this difference was reduced in the first year of life and disappeared in the second year of life, using data adjusted for length of enrollment.

Generally, study data indicated that substance exposed children were considerably more expensive to the Medicaid program than other Medicaid children of the same age. The average Medicaid expenditure per substance exposed child over the first two years of life was $2,285, compared to $1,551 for the control group. This represents a difference of about 47%. However, much of this expenditure difference is attributable to longer average lengths of enrollment for the study cohort. With adjustments for enrollment, the Medicaid expenditure per child year of enrollment was $1,664 for the study cohort, compared to $1,472 for the control group. This represents a difference of about 13%, or $192 per person year of enrollment ($384 for two years).

Thus, substance exposed children had greater utilization and expenditures under Medicaid than other children. However, much of this difference was attributable to longer length of enrollment, not greater health care needs. This result is important because some anecdotal information has implied that thy long-term health care needs (and expenses) of substance exposed children far exceed those of other children. Study data over a two year period do not support this conclusion, when a broad definition of substance exposure for children is used.

As with most insured groups, a majority of children did not have expenditures nearly as great as the average. The median expenditure per substance exposed child was $465 over the two year study period, compared to a median expenditure of $240 per child for the control group. Related to this result, 10% of the children in the study cohort accounted for 73% of the total Medicaid expenditures for the substance exposed group. Similarly, 10% of the children in the comparison group accounted for 79% of that group's total Medicaid expenditures.

The sensitivity of study data was tested, using more conservative definitions of substance exposure. One analysis focused on only those children with direct diagnoses of substance exposure in their own claims records. With this approach, the expenditure difference between substance exposed children and other Medicaid children was substantially greater. Children who were directly diagnosed with substance exposure problems had expenditures almost twice the rate of other Medicaid children in the first two years of life, even with adjustments for length of enrollment. Due to their high costs, this group of children with direct diagnoses of substance exposure in their records may be good candidates for case management under State Medicaid programs.

As mentioned earlier, study results confirmed both the growing numbers and high proportion of substance exposed children in foster care. Further, substance exposed children in foster care had higher Medicaid expenditures than other substance exposed children. The higher Medicaid costs of the substance exposed foster care subgroup, coupled with their costs in foster care payments, add a growing burden on a system already under financial pressure.

One unexpected study finding was that many of the substance exposed children had mothers with strong attachments to the Medicaid program. Mother and child Medicaid files were linked for 87% of the study cohort, indicating that these infants had Medicaid-covered deliveries. Generally, the mothers of substance exposed children were older than mothers of the control group children, and the study cohort mothers showed longer enrollment on Medicaid prior to delivery. For example, over one-quarter of the study cohort mothers had been on Medicaid for the entire two years preceding delivery, compared to only 14% of the comparison group mothers. This result reinforces the need for Medicaid treatment services directed to adults with substance abuse problems.

To examine the effects of substance exposure on birth outcomes, the 1986, 1987, and 1988 California Tape-to-Tape data for the study cohort and control group were linked to California Vital Statistics data for the same years. Approximately 77% of the originally identified children were successfully matched with the Vital Statistics Data. There were two main reasons for unsuccessful matches. First, not all children who were enrolled in California Medicaid sometime during their first two years of life were born in California. Second, the Vital Statistics file contained only the mother's last name. For common last names, this limited the ability to match Vital Statistics and Tape-to-Tape records.

The California Vital Statistics data provided information on a number of variables not available in the Tape-to-Tape data, including the race/ethnicity and marital status of the mother, pregnancy and delivery histories, and birth outcomes. Substantial differences in the race/ethnicity compositions of the study cohort and control groups were found. Mothers of children in the study cohort were much more likely to be Black than mothers of children in the control group; the converse was true for mothers of Hispanic origin. Thirty percent of the mothers in the study cohort were Black--twice the percentage for the control group. Twenty-six percent of the mothers in the study group were of Hispanic origin compared to 41.5% of the mothers in the control group.

Mothers in the study cohort were also more likely to have had previous pregnancy terminations, pregnancy complications, and complications with delivery. In addition, more than 74% of the mothers in the study cohort had previously given birth, compared to about 60% of the control group.

One of the most significant findings pertained to the relationship between substance exposure and premature birth and low birth weight. Over 19% of the study group infants were premature (or very premature) versus 12.4% of the control group infants. Moreover, these figures probably underestimate the actual incidence of premature births because gestational age was not available for 7.9% of the study cohort and 5.5% of the control group.

The incidence of low birth weight among the study cohort was even more striking. Over 18% of the infants in the study cohort had a birth weight of less than 2,500 grams; the same was true of only 7.7% of the control group.

In addition to substance exposure, a number of other factors were found to be associated with low birth weight. For both the study and control groups, mothers of very low birth weight infants (under 1,500 grams) were more likely to be Black than to be members of other race/ethnicity groups. Study cohort mothers of low birth weight infants (1,500 to 2,499 grams) were also more likely to be Black, but this was not true of low birth weight infants in the control group.

In the study cohort, mothers of low (or very low) birth weight infants were more likely to be age 30 or older. The percentage of control group mothers age 30 or older was substantially lower than for the study cohort in each birth weight category (e.g., 15.8% of mothers of very low birth weight infants in the control group were age 30 or older, compared to 38.7% of mothers in the study cohort).

Finally, for both the study cohort and the control group, mothers of low or very low birth weight infants were more likely to have experienced previous pregnancy terminations, complications with pregnancy, or complications with delivery. Mothers of low or very low birth weight infants were also more likely to live in urbanized counties, especially in the study cohort.

The descriptive findings demonstrated that substance exposed children had higher average Medicaid expenditures and were more likely to have low birth weights than other Medicaid children. The link between low birth weight and Medicaid expenditure levels has been well-established in the literature. Consequently, it seemed plausible that substance exposure might affect Medicaid expenditures both directly and indirectly through low birth weight. For several reasons, however, the relationship between substance exposure and Medicaid costs was complex. First, the demographic characteristics of the study cohort and control group were very different. Second, study group membership increased the likelihood of having an underweight birth, but low (and very low) birth weight was also related to other factors, such as the demographic characteristics of the mother. Thus, to the extent that substance exposure influenced Medicaid costs, some of this effect might be explained by demographic characteristics, low birth weight, and other factors.

To examine the effects of substance exposure on Medicaid expenditures, controlling for the effects of other variables, a two-step multivariate analysis was conducted. The first step examined the factors associated with the probability of under weight births. This analysis confirmed the descriptive findings. The probability of low (or very low) birth weight was found to be associated with the race/ethnicity of the mother, mother's marital status, age, pregnancy and delivery history, length of Medicaid enrollment, and the sex of the infant. After controlling for all of these other factors, substance exposure was found to have a strong additional positive influence on the probability of an under weight birth.

The second stage of the analysis examined the predictors of Medicaid expenditures (adjusted for length of enrollment). As expected, under weight births were found to be an important predictor of higher Medicaid expenditures. In addition, Medicaid expenditures were influenced by the age and race/ethnicity of the mother. One or more congenital malformations, cesarean delivery, child foster care status, and male children were also associated with higher expenditures. A mother's history of previous live births (still living), urban county of residence, child medically needy status, and the dummy variable for 1988 were all associated with lower Medicaid expenditures. After controlling for all of these influences, substance exposure was found to have a separate and identifiable effect of increasing Medicaid expenditures.

The research indicated that the effects of substance exposure on Medicaid expenditures were extraordinarily complex. For example, the indirect effect of substance exposure on Medicaid expenditures, through the influence on low birth weight, was examined in this study. But it is reasonable to expect that there are similar interactions of substance exposure with race, foster care status, and other variables. More research on these interactions is necessary for a fuller understanding of the Medicaid expenditure impacts and policy implications of substance exposed children.

NOTES

1. For 1,060 children, only the mothers' records were available. These children were excluded from the final study cohort for analysis.