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PEDIATRICS Vol. 107 No. 5 May 2001, pp. 1214-1220

AMERICAN ACADEMY OF PEDIATRICS:
Implementation Principles and Strategies for the State Children's Health Insurance Program

Committee on Child Health Financing

	ABSTRACT

Top Abstract Conclusion References

This policy statement presents principles and implementation and evaluation strategies recommended for the State Children's Health Insurance Program (SCHIP). The statement summarizes the current status of SCHIP, the needs of uninsured children, and the potential benefits of SCHIP programs. Principles and recommended strategies include expanding eligibility, maximizing funding, providing comprehensive benefits, including pediatricians in program design and evaluation, providing adequate reimbursement and access to pediatricians, ensuring choices for families and pediatricians, and establishing simple administrative procedures.

	THE CURRENT STATUS OF THE STATE CHILDREN'S HEALTH INSURANCE PROGRAM (SCHIP)

The Balanced Budget Act of 1997¹ established SCHIP as Title XXI of the Social Security Act.² This program is a historic milestone in the financing of health care for children. Not since the enactment of Medicaid has there been a greater investment in children's health care. Although SCHIP did not create universal coverage for all children, it did offer an unprecedented opportunity to expand insurance coverage to a large portion of uninsured children. Title XXI of the Social Security Act provides more than $40 billion in federal grants to states over a 10-year period to provide health insurance coverage to children through 18 years of age who are uninsured and ineligible for Medicaid. States must, however, contribute a defined share of funds to obtain federal matching funds. The legislation gives flexibility to states in designing and implementing their programs.

Under SCHIP, states selected from among 3 approaches to providing health insurance coverage to children. These approaches include: 1) expanding Medicaid; 2) creating or expanding a non-Medicaid children's health insurance program; or 3) combining both options. Most states have created a non-Medicaid SCHIP program for at least some of their SCHIP-eligible children. Sixteen states created a non-Medicaid SCHIP program only, and 17 created a state program in combination with a Medicaid expansion. The remaining 17 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands used SCHIP funds to expand Medicaid only.³ Whichever approach a state chose, they receive an enhanced federal matching rate above their Medicaid rate. In addition, states can request to provide coverage through direct service support. In certain circumstances, states can also subsidize the purchase of family coverage.

States have used SCHIP funds to significantly expand eligibility. By January 2001, 38 states and the District of Columbia had established eligibility levels at or above the congressional target family income of 200% of the federal poverty level (FPL).⁴ By October 2000, 3.3 million children were enrolled in SCHIP programs.⁵ Many states are moving forward to expand coverage for children and their parents. For example, New Jersey covers children in families with incomes up to 350% of the FPL and approved expansion of coverage for parents with a household income up to 200% of the FPL. Vermont provides insurance for children in families with incomes up to 300% of the FPL. Many more states are using their tobacco funds and taking advantage of prosperous economies to expand health care coverage for children.

This statement presents a set of principles and implementation and evaluation strategies that the American Academy of Pediatrics (AAP) recommends the federal government and states adopt as they amend their SCHIP programs. These principles address issues related to financing, eligibility, outreach, enrollment, benefits, cost sharing, reimbursement, managed care, and accountability. SCHIP offers an opportunity for every state to develop an effective program to reduce the number of uninsured children, but this will require a strong partnership of SCHIP lead agencies, public health programs, health plans and managed care organizations, pediatricians and other physicians, business and advocacy groups, consumers, and other coalitions interested in the welfare of children.

	THE NEEDS OF UNINSURED CHILDREN AND THE POTENTIAL BENEFITS OF SCHIP

Despite the eligibility expansions of SCHIP, the number and proportion of American children lacking health insurance remains high. In 1999, 10.8 million children younger than 19 years were uninsured.⁶ Between 1998 and 1999, the percentage of children who were uninsured dropped from 15.5% to 14.1%, the first significant decrease since 1993. Among children younger than 19 years with family incomes near the poverty level (between 100% and 125% of the FPL), the decline was even more dramatic, falling from 27.2% to 19.7%, according to analysis of US Census Bureau survey results (American Academy of Pediatrics, Division of Health Policy Research, unpublished data, 2000). Adolescents and young adults continue to be most likely to be uninsured, although they also experienced a drop in the rate of uninsured; 29.0% of those 18 through 24 years of age did not have insurance in 1999, down from 29.7% in 1998.⁷ Factors contributing to the decrease in the number of uninsured children include the establishment of SCHIP, a philosophic shift toward increasing enrollment, the simplification of the Medicaid application process in many states, the unprecedented outreach and enrollment efforts, and the improving economy, in which increasing numbers of employers are offering health insurance.⁸

Children who are eligible for SCHIP (Medicaid expansions and non-Medicaid state programs) are more likely to have parents who are self-employed or employed in industries and occupations in which health insurance coverage is less available or less affordable. Compared with children who are privately insured, SCHIP-eligible children are twice as likely to be in poor health and 3 times as likely to be Hispanic.⁹

Health insurance is a critically important determinant of access to and use of health care services among children. The uninsured are 3 times as likely as the privately insured to go without needed medical care.¹⁰ Uninsured low income children are 4 times as likely to rely on an emergency department or have no regular source of care.¹¹

Although complete evaluations of the first year of SCHIP implementation are not yet available, preliminary results from New York State's Child Health Plus^12,13 and Pennsylvania's BlueCHIP and Caring programs,¹⁴ prototype models for the SCHIP program, demonstrate the positive impact of health insurance programs and the potential impact of SCHIP. After enrollment in New York's Child Health Plus between 1991 and 1993, participants' access to and use of primary care increased, continuity of care improved, and many quality-of-care measures improved. Use of specialty, emergency, and inpatient care did not change. Many parents reported improved health status for their children as a result of enrollment in the insurance program. Similarly, after extending health insurance to uninsured children in western Pennsylvania in 1995, health insurance resulted in better access to health care, more appropriate use, and reduced family stress.¹⁴ It is not clear how generalizable results from these 2 states are to all programs.

	FACTORS AFFECTING ENROLLMENT OF ELIGIBLE CHILDREN AND USE OF SERVICES

Children are often uninsured because parents do not know they qualify for public coverage, according to a study funded by The Robert Wood Johnson Foundation. Six of 10 parents of uninsured children think that because they work and are not on welfare, their children do not qualify for federal health programs. Four of 5 parents said they would enroll their children in federal health programs if they knew they were eligible.¹⁵

Expanding coverage to parents may increase the number of children enrolled. Although most children without health insurance have an employed parent, their parents are likely not offered health benefits for children by their employers or they cannot afford to pay the premium contributions. A study of 3 states that implemented Medicaid expansions that included parents had greater Medicaid participation rates among low-income children than states that did not expand coverage to parents.¹⁶

Cost sharing may decrease participation in SCHIP and use of health services needed by children. Higher premium charges were associated with lower participation rates, according to a study of 4 states with sliding-scale premium health insurance programs.¹⁷ Direct and indirect effects of cost sharing negatively affect the receipt of preventive counseling in health maintenance organizations and preferred provider organizations.¹⁸

Adequate physician participation is critical to ensuring that enrolled children have access to services. Pediatrician participation in Medicaid and non-Medicaid SCHIP programs varies substantially among states. The reasons cited by pediatricians to be most important for limiting participation in Medicaid and SCHIP are low payment, paperwork concerns, and unpredictable payment. States with the lowest pediatrician participation in Medicaid and SCHIP have the lowest rates of reimbursement and the highest rates of complaints about paperwork.¹⁹

Involuntary disenrollment of children from health plans plagues Medicaid and SCHIP. The dropping of individuals from plans may occur because of plan requirements for frequent reenrollment, excess paper work, or other vestiges of the philosophy to limit Medicaid enrollment. Changes in enrollment affect the integrity of the state's insurance programs, continuity of care, and the financial stability of safety net hospitals and community health centers.²⁰ It has been demonstrated that intermittent coverage compromises continuity of care.²¹ This process also adds costs for outreach and reenrollment efforts.

	PRINCIPLES AND RECOMMENDED IMPLEMENTATION AND EVALUATION STRATEGIES

As states continue to refine their SCHIP programs, the Academy suggests that the following principles and implementation and evaluation strategies be incorporated in their efforts:

1.

Expand Comprehensive Coverage. SCHIP programs should provide comprehensive, quality health care coverage to the largest number of uninsured children possible.

A.

Congress should expand SCHIP to allow states to include children through 21 years of age. States should adopt the highest income eligibility allowable and should discontinue asset testing to determine eligibility. To reach even more children, more flexible income limits should be considered.

B.

States should allow adolescent emancipated minors to be evaluated for SCHIP eligibility based on their own income.²²

C.

States should consider offering a SCHIP buy-in option for children whose family incomes are above their state's SCHIP eligibility level but who do not have access to or cannot afford comprehensive private insurance.

D.

States should consider applying for Section 1115 Research and Demonstration waivers from the Health Care Financing Administration (HCFA) to expand coverage for pregnant women or other parents if they have already maximized comprehensive coverage and full enrollment of children.

E.

Although they will not be able to receive federal matching funds, states should consider using the SCHIP delivery system to provide health care to immigrant children who are not eligible for SCHIP.

F.

States should offer 12-month continuous eligibility for Medicaid- and SCHIP-enrolled children. Continuous eligibility saves on outreach and enrollment so administrative costs for certifying income eligibility on a monthly basis are not incurred.

G.

States should also implement presumptive eligibility for all children, allowing health care providers and other designated agencies, including schools and child care centers, to grant eligibility for up to 60 days while a child goes through the enrollment process.²³ Although the Academy understands that there must be some safeguards to ensure appropriate use of this option, this process should be administratively simple. Pediatricians' offices should be included as enrollment sites, when feasible. By doing so, children will receive health services and insurance coverage as rapidly as possible. If the child is determined ineligible, pediatricians and other caregivers should still be reimbursed for services rendered. Failure to pay for these services is a disincentive for physician participation. Presumptive eligibility offers qualified entities an added incentive to engage in outreach to their patients and clients.

H.

States should adopt program eligibility rules that promote coordination between SCHIP and Medicaid and ease enrollment. Ending age-based income eligibility would enable all children from the same family to become enrolled in the same program. Currently, in many states the income eligibility for Medicaid varies by age.

I.

Public and private, statewide, and community-based outreach programs to families and their employers should be designed to enroll all families with eligible children in SCHIP programs. Although the start-up of such efforts has been successful, sustaining the efforts may be another challenge. Creative approaches should be encouraged and supported. For example, using electronic application processes targeted to minority children served in child care centers, linking children receiving school lunch subsidies with health care coverage, and conducting door-to-door outreach to families in farming communities have been tried. State Medicaid and SCHIP agencies should coordinate outreach efforts and use consistent income assessment and documentation methods and enrollment procedures for the best long-term results. Outreach efforts should develop a seamless system to process applications for Medicaid and non-Medicaid programs. States should use community-based agencies for outreach, including offices where parents apply for government-subsidized programs, such as the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); child care centers; schools; and other resource and referral agencies that provide services to families with young children. Community health programs and personnel and outreach workers for the Early and Periodic Screening, Diagnosis, and Treatment Program (EPSDT) can be used to enroll potential applicants. For example, the Agricultural Risk Protection Act of 2000²⁴ allows states to share information between SCHIP and school lunch programs. AAP chapter leaders and community pediatricians should be actively involved in developing outreach plans including education of peers and other physicians about program activities.

J.

Simplified, joint application forms and expedited eligibility determination processes for SCHIP should be offered and coordinated with the state's Medicaid program and other public assistance programs offered for children in the state. From the family's perspective, a simplified process eases enrollment paperwork. States with a short application form, no asset testing, and similar documentation requirements for Medicaid and SCHIP have been most efficient.

K.

States should implement proactive enrollment processes. Children who are found to be ineligible for Medicaid should be enrolled in SCHIP, if eligible, (or vice versa) through the use of automatic enrollment in the appropriate program without requiring families to submit additional application forms.²⁵ Reasonable fees or incentive payments with safeguards to prevent abuse may be provided to nonprofit agencies, community-based organizations, and safety net hospitals to enroll children in SCHIP or Medicaid. Use of 1 program name, 1 agency to determine eligibility, a SCHIP/Medicaid simplified joint application, and the same point of entry promotes coordination. Operational enhancements occur when simplified verification requirements are the same for both programs, easy transitions between programs occur when eligibility is redetermined, and a common service delivery system is used.²⁶ Pediatricians should be involved in the design and implementation of these administrative strategies. Frequent communication among agency staff is critical; single-agency governance may be more efficient.

L.

Meaningful implementation of SCHIP must include an effort to maintain continuous health care coverage. Expanding health insurance programs and increasing enrollment in existing programs is not sufficient to reap maximum benefits for children. States should strive for full enforcement of existing state guaranteed eligibility laws, integration of plans into the recertification process, a streamlined recertification process, and where possible, multiple-year eligibility reviews. States should also link government-subsidized health care programs so that low-income children can move automatically from 1 program to another while maintaining continuity of care relationships with the same physicians and health plan, whenever possible.²⁰ States concerned about families or employers dropping private insurance coverage in favor of SCHIP, referred to as "crowding out," should monitor their policies so they do not penalize families who do not have access to coverage or only have access to individually purchased health insurance plans. If a state requires applicants to be uninsured for a period of time before becoming eligible, that time period should be short and allow for exceptions, for example, for children with special health care needs or acute catastrophic health events.

2.

Maximize Funding and Flexibility. States should optimize their ability to draw down their full federal match for SCHIP. HCFA and Congress should allow greater flexibility for funding outreach and maximize appropriations for expanded coverage of uninsured children. SCHIP funds must be preserved for the primary purpose of increasing coverage of uninsured children.

3.

Provide Comprehensive Benefits. All SCHIP plans should include a comprehensive scope of benefits. Because non-Medicaid programs often offer limited coverage for many special or chronic care services for children, states with such programs should consider expanding their benefit packages. This could be accomplished by emphasizing the use of the EPSDT provision in Medicaid to pay for services considered medically necessary or by creating wraparound programs for children meeting specific chronic or serious condition criteria.

A.

Each benefit package should cover the services defined in the AAP policy statement "Scope of Health Care Benefits for Newborns, Infants, Children, Adolescents, and Young Adults Through Age 21 Years," including dental services and the full range of mental health services including substance abuse treatment.²⁷ Preventive care, immunization standards, and periodicity schedules should be consistent with current AAP requirements. Limited benefits packages limit the long-term cost-effectiveness for children.

B.

Congress should ensure that all children enrolled in non-Medicaid SCHIP programs are eligible for the Vaccines for Children program.

C.

To determine medical necessity and approval of services, states should use guidelines of recognized national professional organizations such as the Academy or recommendations of professional peer-review panels if evidence-based guidelines do not exist. Services should be reimbursed if they meet 1 or more of the following criteria: 1) the service is appropriate for the age and health status of the individual; 2) the service will prevent or ameliorate the effects of a condition, illness, injury, or disorder; 3) the service will aid the overall physical and mental growth and development of the individual; or 4) the service will assist in achieving or maintaining functional capacity.²⁸

D.

States should carefully assess the impact of premium cost sharing on participation and service use. States that impose cost sharing should eliminate differences in copayments and coinsurance for physical and mental health services. Tracking mechanisms for determining when families reach the 5% cost-sharing maximum should be handled at the plan level. Requiring families to track out-of-pocket expenditures should be discouraged.
  Cost-sharing policies should be carefully designed so they do not simply shift cost to pediatricians, hospitals, and other providers. They should not deter the use of medically necessary services and should ensure that children with needs above and beyond the usual have access to necessary health care. Point-of-service cost sharing holds the greatest risks for children failing to seek or receive needed care and preventive services.
  The Academy is not opposed to premium sharing with families, as long as the cost to families is moderate and based on a sliding income scale. For families with 1 child, individual premiums should be charged. For families with 2 or more children, a single premium rate should be charged to cover all children. Copayments for all SCHIP beneficiaries should be limited to the nominal level legislated for children in families with incomes up to 150% of the FPL. The Academy opposes the use of deductibles and coinsurance for any SCHIP-eligible children.
  Consistent with SCHIP legislation and AAP policy, all preventive services should be exempt from copayments. The Academy believes that eliminating patient cost sharing for selected preventive services is a relatively easy and effective means of improving the rates of delivery for recommended clinical preventive care.²⁹

4.

Include Pediatricians in Program Design and Outcome-based Evaluation. States should ensure that pediatricians, pediatric medical subspecialists including pediatric mental health professionals, and pediatric surgical specialists are involved in developing and reviewing the SCHIP program, annual reports, and evaluations that are required through the SCHIP legislation. States should have an ongoing SCHIP monitoring and advisory panel that includes pediatricians. State SCHIP evaluations, ideas, and forms can be found on the HCFA and AAP Web sites (http://www.hcfa.gov/init/chpa-map.htm and http://www.aap.org/advocacy/evaluation.htm, respectively).

A.

Primary care pediatricians, pediatric medical subspecialists, and pediatric surgical specialists are critical stakeholders in developing SCHIP performance measurements. States are encouraged to use the AAP SCHIP Evaluation Tool, which includes Health Employer Data Information System measures. Process indicators should include age-appropriate immunization and comprehensive well child visit rates. Outcome indicators should include rates of hospitalization for ambulatory sensitive conditions and injuries, percent of SCHIP-enrolled children reporting missed school because of health problems as well as unmet medical, dental and vision needs, percent of SCHIP-enrolled adolescents reporting risky health behaviors and attempted suicide, and percent of family income used for health care.³⁰ States should develop uniform quality performance measurements for children insured by Medicaid and SCHIP and encourage use of these standards for employer-based plans.

B.

Performance goals should include short-term and long-term health care outcomes. Important features of SCHIP evaluation include monitoring eligibility thresholds and projected enrollment volume, program retention, transitions in coverage, access to medical care, assessments of process and outcomes of pediatric care, and family and provider satisfaction.³¹

C.

Congress should adopt proposals to authorize more funding for SCHIP evaluations and allow greater access to state data for research.

D.

States, local communities, and managed care organizations should publish pediatric-specific quality data that allow consumers and purchasers to evaluate and compare quality performance, including pediatric provider network composition among competing SCHIP plans.

5.

Provide Adequate Payment and Access to Pediatricians. SCHIP plans should provide reimbursement for pediatric services comparable to rates offered in private insurance plans.

A.

In states with low provider payment rates for Medicaid services, SCHIP plans should engage in concurrent efforts to raise Medicaid rates to levels that are at least 90% of the usual, customary, or reasonable rates or equivalent to Medicare rates, whichever is higher. States with better levels of physician participation should serve as benchmarks for other states. Historically, states with low Medicaid reimbursement rates have lower participation rates. Efforts should be made by states to base payment rates for Medicaid and SCHIP on current market rates, although in some cases they may be inadequate.

B.

States should ensure that physicians receive adequate payment when new vaccines are recommended, particularly when physicians receive payment under a capitated arrangement. State should ensure that provisions are made to reimburse physicians for the cost of the new vaccines until new contracts are negotiated. In addition, physicians should receive payment for the expenses associated with the administration of each vaccine.

C.

In states using managed care models as a health delivery system for SCHIP, different strategies should be evaluated, such as pediatric risk-adjusted capitation rates and risk pools. The goal of such strategies is to reduce the negative financial consequences for health plans that enroll and pediatricians who serve high-risk children and the positive financial consequences for plans that enroll and pediatricians who serve low-risk children. Risk adjustment is a corrective tool designed to reorient the current incentive structure of the insurance market. Health plans should develop risk adjusted capitation at the primary care level. Enhanced payments for providing case management and care coordination for children with special health care needs should also be considered. Reimbursement levels must ensure reasonable clinician compensation in relation to the increased time required to coordinate and provide care for children, particularly those with special health care needs.³²

D.

All health plans should provide access to pediatric primary care and pediatric medical subspecialty and pediatric surgical specialty services, as described in the AAP policy statement "Guiding Principles for Managed Care Arrangements for the Health Care of Newborns, Infants, Children, Adolescents, and Young Adults."²⁸

E.

HCFA and states must monitor network capacity and pediatrician participation when developing plans. Failure to do so results in less adequate access to care providers for children.

6.

Ensure Choices for Families and Pediatricians. SCHIP plans should allow choices to be made by patients and pediatricians.

A.

Parents should have the ability, with proactive outreach and information from the state, to choose their child's pediatrician and managed care plan. Securing a medical home and continuity of care should be encouraged when families choose or are assigned to managed care plans. Families should be allowed to disenroll with cause at any time. However, to support the medical home optimally, families should be required to adhere to their choices or assignments for 1 year unless there is due cause to change.

B.

Pediatricians, pediatric medical subspecialists, and pediatric surgical specialists are discouraged from accepting exclusive contracts with a single managed care plan. They should consider contracting with several plans to ensure that parents and children have a choice and to ensure that access to primary and specialty pediatric services is not lost if a single plan fails.

7.

Establish Simple Administrative Procedures. SCHIP plans should establish simplified and efficient administrative systems.

A.

States should streamline and simplify their eligibility determination and enrollment process, cost-sharing policies, and copayment collection procedures.

B.

Health plans should simplify or eliminate procedures for preauthorization, obtaining second opinions, utilization review and quality assurance administration, claims processing, specialty referrals, and physician payment.³³

C.

States should provide training for pediatricians, other physicians, and their office staff about how to participate in SCHIP. State Medicaid agencies can provide grants to optimize physician use of Medicaid and SCHIP. States should provide education and training to physicians about how to refer patients for SCHIP enrollment.

	CONCLUSION

Top Abstract Conclusion References

SCHIP has the potential to dramatically increase and maintain the number of children in the United States with health insurance coverage. To maximize the benefits of this legislation, states have an obligation to implement programs created in such a way that the most children receive the most comprehensive health care services available. To do this, states must ensure that all children who are eligible for coverage are enrolled and have access to high-quality care. The success of these programs will depend on the number of previously uninsured children who are now insured, the resulting increase in their access to health care services, and the ultimate improvement in their health and well-being. Although SCHIP does not create universal coverage for all children, it is an important step toward the goal of ensuring that all children in the United States have health insurance and, ultimately, access to high-quality health care.

Committee on Child Health Financing, 2000-2001

Richard P. Nelson, MD, Chairperson

Jeffrey M. Brown, MD, MPH

Wallace D. Brown, MD

Beverly L. Koops, MD

Thomas K. McInerny, MD

John R. Meurer, MD, MM

Maria E. Minon, MD

Mark J. Werner, MD, CPE

Jean A. Wright, MD, MBA

Consultant

Margaret McManus, MHS

Staff

Jean Cilik

	FOOTNOTES

The recommendations in this statement do not indicate an exclusive course of treatment or serve as a standard of medical care. Variations, taking into account individual circumstances, may be appropriate.

	ABBREVIATIONS

SCHIP, State Children's Health Insurance Program; FPL, federal poverty level; AAP, American Academy of Pediatrics; HCFA, Health Care Financing Administration; EPSDT, Early and Periodic Screening, Diagnosis, and Treatment Program.

	REFERENCES

Top Abstract Conclusion References

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