Department of Health and Human Services
 
OFFICE OF 

 
INSPECTOR GENERAL 

 
 
 
 
 
 
 
 
SEPAR ATE STATE CHILDRENS 

 
H I P  
EALTH  NSURANCE  ROGRAM 

 
 
E  E  
NROLLEES   LIGIBILITY FOR 

 
M  2006 

EDICAID IN 
 
 
 
 
Daniel R. Levinson 
  
Inspector General 

 
July 2008 
 
OEI-06-07-00310 
   
Office of Inspector General

http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as  
amended, is  to protect the integrity of the Department of  Health and Human Services (HHS)  
programs, as  well as  the health and welfare  of  beneficiaries served by  those programs.  This 
statutory mission  is  carried  out through a nationwide  network of audits, investigations, and 
inspections conducted by  the following operating components:  
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  conducting  
audits  with its own audit resources or by  overseeing  audit work done by others.  Audits  
examine the performance of HHS programs and/or its grantees and contractors in carrying  
out their respective responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office of Evaluation and Inspections  
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving  program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of  fraud and misconduct  related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office of Counsel to the Inspector General 
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and abuse cases involving HHS programs,  including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In  connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program  guidance, publishes fraud alerts, and provides other  
guidance  to  the health care industry concerning the anti-kickback statute and other  OIG  
enforcement authorities.  
   
  E X E C U T I V E   S U M M A R Y
OBJECTIVE 
 
To determine the extent to which children enrolled in separate State 
Childrens Health Insurance Programs (SCHIP) were eligible for 
Medicaid in 2006. 
BACKGROUND 
The Balanced Budget Refinement Act of 1999 requires that, every  
3 years, the Office of Inspector General (OIG) review a sample from 
States with separate SCHIPs to:  (1) determine the number, if any, of 
SCHIP enrollees who are eligible for the Medicaid program; and   
(2) assess States progress in reducing the number of uninsured   
low-income children. This study addresses the first mandate. 
The Balanced Budget Act of 1997 created SCHIP to provide health 
insurance coverage to uninsured low-income children.  The Federal 
match for SCHIP expenditures is greater than the Federal match for  
Medicaid expenditures.  Federal regulations require States to screen 
SCHIP applicants for Medicaid eligibility, in part, to prevent States 
from inappropriately enrolling Medicaid-eligible children in SCHIP. 
To determine the extent to which children enrolled in separate SCHIPs 
were eligible for Medicaid, we examined case records of a random 
sample of 400 children enrolled in separate SCHIPs on June 1, 2006, 
from 36 States with separate SCHIPs.  We  reviewed case records for  
each child based on the eligibility criteria and requirements for that 
States Medicaid program.  
FINDING 
An estimated 4 percent of children enrolled in separate SCHIPs were 
eligible for the Medicaid program in 2006.   We determined that  
4 percent of children enrolled in separate SCHIPs (16 sample cases) 
were eligible for their States Medicaid program.  Eight of these cases 
involved miscalculations of income, and the remainder involved clerical 
mistakes and unclassified errors.  Projected to the population of all 
children enrolled in separate SCHIPs in 2006, the 4-percent error rate 
corresponds to about 105,000 children nationally.  An additional 
4.5 percent (18 cases) lacked sufficient documentation for us to make a 
determination regarding Medicaid eligibility.  This lack of  
documentation leaves open the possibility that the actual number of 
OEI-06-07-00310          SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  i    
E X E C U T I V E   S U M M A R Y   
children enrolled in separate SCHIPs who were eligible for the Medicaid 
program in 2006 could have been higher than our projection. 
RECOMMENDATION  
We found that an estimated 4 percent of children enrolled in separate 
SCHIPs were eligible for the Medicaid program in 2006 and an 
additional 4.5 percent of cases lacked sufficient documentation.  
Enrollment  errors can result in the inappropriate use of Federal 
matching funds and limited SCHIP resources being expended on 
Medicaid-eligible children. 
To address these deficiencies, we recommend that the Centers for 
Medicare &  Medicaid Services (CMS): 
Take further action to ensure the appropriate enrollment of 
Medicaid-eligible children.   
 	  To address miscalculations of incomes and clerical mistakes, CMS 
could emphasize to States the need for accuracy in enrollment 
casework and encourage States to perform quality checks to  detect 
such errors.  
 	  CMS could also use the eligibility measurement component of 
Payment Error Rate Measurement,  which examines eligibility for 
both SCHIP and Medicaid enrollment, to identify problems that 
lead to enrollment errors and to assist States in implementing  
corrective actions. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
In its written comments on the draft report, CMS stated that it 
supports the spirit of the OIG recommendations and will continue to 
undertake a number of activities to prevent the types of errors  
identified in the report.  To help it enhance monitoring of States in this 
area, CMS requested additional information on some of the 16 cases 
identified as having enrollment errors.  OIG will provide CMS with 
detailed information about each of the 16 cases with enrollment errors.  
To address CMSs additional comments, we made revisions or added 
information in the appropriate sections of the report to clarify each topic 
or question.  
OEI-06-07-00310          SEPARATE SCHIP  E NROLLEES   ELIGIBILITY FOR MEDICAID IN  2006  ii    
  T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
  
 
 
I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1 
  
 
 
F I N D IN G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9 
  
An estimated 4 percent of SCHIP enrollees were eligible for    

Medicaid in 2006. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9 
  
 
 
R E C O MMEN D A T ION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12 
  
Agency Comments and Office of Inspector General Response . . .  12 

 
 
APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14 
  
  A:  States Separate SCHIP Enrollment. . . . . . . . . . . . . . . . . . . . .  14 
  
  B:  Estimates, Projections, and Confidence Intervals . . . . . . . . . .  15 
  
  C:  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16 
  
 
 
A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21 
    
D E S I G N   ~   D R A F T  
  I N T R O D U C T I O N
OBJECTIVE 
To determine the extent to which children enrolled in separate State 
Childrens Health Insurance Programs (SCHIP) were eligible for 
Medicaid in 2006. 
BACKGROUND 
Section 703 of the Medicare, Medicaid, and SCHIP Balanced Budget 
Refinement Act (BBRA) of 1999 requires that, every 3 years, the Office 
of Inspector General (OIG) review a  sample from States with separate 
SCHIPs to:  (1) determine the number, if any, of SCHIP enrollees who 
are eligible for the Medicaid program; and (2) assess States progress in 
reducing the number of  uninsured low-income children.1  This study 
addresses the first mandate.  OIG addressed the second mandate in a 
separate study.2  
State Childrens Health Insurance Program 
The Balanced Budget Act of 1997 created SCHIP to provide health 
insurance coverage to uninsured low-income children.3  The programs  
overall goal is to expand coverage  to uninsured children in households 
with incomes greater than States Medicaid eligibility but below  
200 percent of the Federal poverty level.4  States have the option of  
(1) instituting a separate childrens health insurance program; 
(2) expanding Medicaid eligibility; or  (3) instituting both a separate 
SCHIP and a Medicaid expansion, known as a combination program.5  
As of January 1, 2006, 18 States administered only a separate SCHIP, 
and 21 States administered both a separate SCHIP and a Medicaid 
expansion SCHIP.  Three of these thirty-nine separate SCHIPs cover 
only unborn children for health benefits coverage, including prenatal 
care and delivery.6  Ten of the remaining eleven States and the District 
of Columbia had only Medicaid expansion programs, and one  State did 
 
1 P.L. No. 106-113; Social Security Act,  2108(d)(1), 42 U.S.C.  1397hh (d)(1). 
2 OIG, Assessing States Progress in Meeting State Childrens Health Insurance 
Program Goals (OEI-05-07-00330), September 2007. 
3 P.L. No 105-33; Social Security Act  21012110, 42 U.S.C.  1397aajj. 
4 42 U.S.C.  1397aa and 1397jj(b). 
5 42 U.S.C.  1397aa(a), 42 CFR  457.70(a). 
6 42 CFR  457.10. 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  1    
I N T R O D U C T I O N   
not have any SCHIP. At the end of  fiscal year (FY) 2006, separate 
SCHIPs had almost 3 million enrollees.7    
The Federal match for SCHIP expenditures is greater than the Federal 
match for Medicaid expenditures.8  For FY 2006, the average Federal 
match for Medicaid was 60 percent,  and the average for SCHIP was  
72 percent.9  
Screening Applicants for Medicaid Eligibility   
Federal regulations require States to screen SCHIP applicants for 
Medicaid eligibility to prevent States from enrolling Medicaid-eligible 
children in SCHIP.10  Appropriate enrollment of  Medicaid-eligible 
children is important to ensure that  limited SCHIP enrollment slots are 
not taken by children who should be enrolled in Medicaid and that the 
enhanced Federal matching funds are used as intended. 
Based on a variety of factors, such as family income and the childs age, 
a child may be eligible for Medicaid or SCHIP, but never both.  States 
must screen each SCHIP applicants income to identify whether the 
applicant is potentially eligible for the States Medicaid program.11 If a 
child is found to be potentially eligible, a full Medicaid eligibility 
determination must ensue.  Within limits set by Federal law, Medicaid 
eligibility criteria vary somewhat among States.12  
Federal regulations permit States discretion to allow families to  
self-declare eligibility factors, such as income, in lieu of providing 
documentation, so long as the State implements  controls and procedures 
to ensure the integrity of the eligibility determination process.13     
 
 
7 Centers for Medicare & Medicaid Services (CMS), 2006 Fourth Quarter  Program 
Enrollment Last Day of Quarter by State.  Available online at 
http://www.cms.hhs.gov/NationalSCHIPPolicy/SCHIPER. Accessed on October 5, 2007. 
8 Social Security Act  2105(a) 42 U.S.C.  1397ee(a). 

9 OIG calculation based on information provided in 69 Fed. Reg. 68380 (Nov. 24, 2004).  

10 42 CFR  457.350. 

11 States that have resource (asset) tests must also screen for a familys resources.
          
42 CFR  457.350(d). 
12 42 U.S.C.  1396a(l)(2)(b) and (c).  Federal Medicaid funds will match State funds for 
children  under the age of 6 whose family income  is under 133 percent of the Federal poverty  
level and for children ages 6 through 18 at 100 percent of the Federal poverty level. 
13 42 CFR  457.380(a) and (b). 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  2    
I N T R O D U C T I O N   
In 2006, 9 of the 39 States with separate SCHIPs allowed some form of 
self-declaration of income.14    
SCHIP agencies must facilitate timely enrollment into the Medicaid 
program of those children found eligible for Medicaid.15  To accomplish 
timely enrollment, section 2102(c)(2) of the Social Security Act requires 
coordination between the State Medicaid and separate SCHIP agencies.  
Further, Federal regulations require Medicaid agencies to determine  
eligibility within 45 days for most applicants, barring extenuating 
circumstances.16  Finally, SCHIP agencies must monitor their  screening 
and enrollment processes to ensure that children are enrolled in the  
right program.17  
Payment Error Rate Measurement 
CMS has recently implemented the Payment Error Rate Measurement 
(PERM) program, which is designed, in part, to detect any inappropriate  
enrollment in State Medicaid programs and SCHIPs.18  Specifically, 
starting in FY 2006 for Medicaid and FY 2007 for SCHIP, the eligibility 
measurement component of PERM  determines whether randomly 
selected beneficiaries enrolled in Medicaid and SCHIP were eligible for 
the program in which they are enrolled.  The PERM is administered  
annually in 17 States, such that error rates are measured in each State 
every 3 years.  States selected for review are required to provide CMS 
with, among other things, a corrective action report for purposes of  
reducing any payment error rates measured by the eligibility 
component of the program. 
Prior State Childrens Health Insurance Program Enrollment Reviews  
OIG has issued two previous reports based on the reviews mandated  
under the BBRA regarding SCHIP enrollees who are  eligible  for  
 
14  Kaiser Commission on Medicaid and the Uninsured, Resuming the Path to Health  
Coverage for Children and Parents:  A 50-State Update on Eligibility Rules, Enrollment and 
Renewal Procedures, and  Cost-Sharing Practices in Medicaid and SCHIP in 2006, Table 6, 
January 2007.  Data based on  a national survey conducted by the Center on Budget and  
Policy Priorities for January 2007.  Available online at 
http://www.kff.org/medicaid/upload/7608.pdf. Accessed on October 5, 2007.  
15 42 CFR  457.350(c), (d), and (f)(4). 

16 42 CFR  435.911(a)(2). 

17 42 CFR  457.353. 

18 71 Fed. Reg. 50489 (Aug. 31, 2007). 

OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  3    
I N T R O D U C T I O N   
Medicaid.19  For 2000, OIG found that 1.8 percent of SCHIP enrollees 
were eligible for Medicaid from a sample of 500 children from  
five selected States with separate SCHIPs.  For 2003, OIG found that  
1 percent of SCHIP enrollees were eligible for Medicaid from a sample of 
400 children from 36 States with separate SCHIPs.   
The BBRA also requires the Government Accountability Office (GAO) to 
monitor OIG reviews of SCHIP.20 Regarding OIGs review of 2000 
SCHIP enrollment, GAO recommended that OIG (1) expand the scope of 
reviews to include all States with separate SCHIPs, including those 
with combination programs; and (2) consider exploring issues of 
appropriate SCHIP enrollment among States that have opted for 
Medicaid expansions under SCHIP.21  OIG agreed with the 
recommendations and expanded its 2003 review and the current review 
to include all States that administer separate SCHIP programs, 
including those with combination programs.  The 2003 OIG review also 
examined the eligibility of children enrolled in Medicaid expansion 
SCHIPs.22  GAO made no recommendations regarding OIGs 2003 
review.23    
Beyond the mandated national studies, OIG also conducted  
State-specific  reviews of SCHIP eligibility in California, Florida, and 
New York using payment and enrollment data from 2005.24  Among the 
three States, error rates, i.e., cases in which SCHIP enrollees were 
eligible for the States Medicaid program, ranged from a low of 0 percent 
(no errors) to a high of 5.5 percent.  The percentage of cases that lacked  
sufficient case file documentation to support the States eligibility 
determination ranged from a low of 6.3 percent to a high of 11 percent.  
OIG made recommendations for improvement to each State.  These 
 
19 OIG, State Childrens Health Insurance Program:  Ensuring Medicaid Eligibles Are 
Not Enrolled in  SCHIP (OEI-05-00-00241), February 2001; and Determining if  Children 
Enrolled in Separate SCHIPs Were Eligible for Medicaid (OEI-07-03-00220), June 2005. 
20 42 U.S.C.  1397hh(d)(3).  
21 GAO, Childrens Health Insurance:  Inspector General Reviews Should Be Expanded  
To Further Inform the Congress (GAO-02-512), March 29, 2002.  
22 OIG, Determining if Children  Classified as Medicaid SCHIP Expansion Meet 
Eligibility Criteria (OEI-07-03-00221), October 2005. 
23 GAO, Childrens Health Insurance:  Recent HHS-OIG Reviews Inform the Congress 
on Improper Enrollment and Reductions in Low-Income, Uninsured Children              
(GAO-06-457R), March 9, 2006. 
24 OIG, Review of State Childrens Health  Insurance Program Eligibility in California 
(A-09-06-00022), July 2007;  Review of State Childrens Health Insurance Program 
Eligibility in Florida (A-04-06-00021), July 2007; and Review of State Childrens Health 
Insurance Program Eligibility in New York State (A-02-06-01003), July 2007. 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  4    
I N T R O D U C T I O N   
 
studies provide examples of State-specific enrollment error rates 
identified in recent years. 
 
METHODOLOGY 
Scope 
To determine the extent to which children enrolled in separate SCHIPs 
were eligible for Medicaid, we included in our sample 36 of the 39 States 
with a separate SCHIP program as of January 1, 2006.  We did not 
include the three States in which the separate SCHIP program covers  
only unborn children.25   We examined the SCHIP case file documents of 
400 randomly selected children, 18 years of age or younger, who were 
enrolled in separate SCHIPs on June 1, 2006.  Using each States 
Medicaid eligibility criteria, we determined whether the selected child 
was eligible for the States Medicaid program.26  We did not assess 
whether the enrollees met their States SCHIP eligibility criteria.   
Sample Selection 
From each of the 36 States, we  obtained a list of all children enrolled in 
their separate SCHIPs on June 1, 2006.  Selecting a single date within 
the year helped avoid complications regarding children who might have 
moved between the SCHIP and Medicaid programs during the year. We  
chose June 1 to be consistent with the methodology of the 2003 review.   
We combined the State lists into a single universe of approximately 
2.6 million children. From this universe, we selected a simple random 
sample of 400 cases for reviewthe  same sample size as OIGs 2003 
review.   The sample included at least one case from each of 31 States 
with separate SCHIPs and, because of random selection, did not include 
cases from 5 States with separate SCHIPs:  Idaho, Maine,  North  
Dakota, South Dakota, and Vermont.  See Appendix A for a list of each  
States separate SCHIP enrollment  and the number of cases selected for 
review.  
 
25 Arkansas, Minnesota, and Rhode Island  reported that their separate SCHIPs cover 
only unborn children. 
26 Not included in this study  are children enrolled in SCHIP Medicaid Expansion  
programs. 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  5    
I N T R O D
  U C T I O N   
Case File Documentation 
We requested case file documentation from SCHIP agencies  for the  
400 sample cases.  For each case, we requested copies of case file 
documents that the State used for its most recent SCHIP eligibility 
determination decision prior to June 1, 2006.  Typical case file 
documentation included applications for enrollment or reenrollment in 
SCHIP, worksheets used by caseworkers to determine eligibility, 
printouts from automated eligibility systems, and copies of paychecks or 
tax returns  to support the familys income information. We received 
initial responses from SCHIP agencies for each of the 400 cases but, as 
discussed below, additional documentation was needed for some cases.  
State Medicaid Eligibility  Criteria 
From each State with sample cases, we obtained information about the 
States eligibility criteria and requirements applicable at the time of the 
childs last SCHIP determination prior to June 1, 2006.27   These criteria 
and requirements included, but were not limited to, age limitations, 
income limits based on Federal poverty limits, rules regarding what 
income should be counted, income disregards or  deductions, asset or  
resource limits, definitions of family  size, and any automatic qualifiers.  
We also downloaded information from State Medicaid and SCHIP 
Web sites and consulted with SCHIP officials and other State personnel 
(hereinafter  referred to as State officials) for clarification as needed.  
Case Reviews and Analysis 
We reviewed case file documentation for each child based on eligibility 
criteria for the States Medicaid program.  We analyzed the following 
elements of each case  in accordance with each States criteria for 
Medicaid eligibility: 
   date of application or redetermination; 
   age of the child at the time of the SCHIP eligibility determination;  
   household or family composition; 
 
27 Any  questions regarding the timing of applicable criteria affecting specific cases were 
discussed with  States in follow-up contacts.  
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  6    
I N T R O D U C T I O N   
 
 	  percentage of Federal poverty limit allowed by the State according 
to the age of the child;28  
 	  family income; 
 	  family resources and asset limits (if applicable); 
 	  presence of automatic qualifiers (as applicable by State, including 
Supplemental Security Income, children in foster care, adoption, 
and participation in the Temporary Assistance for Needy Families 
program); and 
 	  documentation used to support family income, such as pay stubs 
and income tax returns.  
More specifically, to determine whether a childs family income qualified 
the child for his or her States Medicaid program, we: 
 	  calculated the familys gross monthly income (earned and 
unearned) using supplied income documentation;  
 	  subtracted any applicable income disregards or deductions 
allowed by the States Medicaid criteria, e.g., child care expenses; 
and 
 	  compared the calculated  net income to the States Medicaid  
income limit applicable for the age of the child and size of the 
family. 
For cases lacking any documentation  listed above, we recontacted State 
officials to obtain the missing documentation. For those States that 
allow SCHIP applicants to self-declare income, we calculated net income 
using the amount self-reported  on the application.  If the self-reported  
income differed from the income used in the States calculations, we  
contacted the State for further clarification.  We also discussed with 
State officials any apparently conflicting information found in the 
provided documents (e.g., inconsistent income amounts or family size) to 
 
28 70 Fed. Reg. 83738375 (Feb. 18, 2005) for 2005; 71 Fed. Reg. 38483849                 
(Jan. 24, 2006) for 2006.  OIG used the Federal poverty limit guidelines in effect for the 
State-reported date of determination.  Annual poverty-level guidelines for 2006 were 
effective on January 24, 2006.   Therefore, in reviewing case files with determinations dated 
prior to January 24, 2006, we used 2005 Federal poverty limit guidelines.  For applications 
dated on or after January 24, 2006, we used 2006 Federal poverty limit  guidelines.  Any 
questions regarding the applicable Federal poverty level for specific cases were discussed  
with States; however, this issue did not affect any of the eligibility errors identified in this 
report. 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  7    
I N T R O D
  U C T I O N   
 
ensure that we were using the most  appropriate information for our 

determinations. 

Enrollment errors.  When our case reviews determined that an enrollee 
did not qualify for his or her States Medicaid program, no further 
review was conducted for that case.  For any child whom we identified  
as potentially eligible for the Medicaid program, we contacted State 
officials to determine whether they agreed.  If State officials did not 
dispute our preliminary results, we  determined that the child was 
eligible for Medicaid.  (Hereinafter, we refer to these situations as 
enrollment errors.)   
If State officials disputed our preliminary results, we asked them to  
provide additional information or  documentation to demonstrate that 
the child was not eligible for Medicaid.  We rereviewed these cases using 
the additional information and documentation and, as necessary, 
followed up with State officials until we could make a final 
determination regarding whether the case represented an enrollment 
error.  For cases that had been referred by the SCHIP agency to the  
Medicaid agency for a full Medicaid eligibility determination, we 
examined the elapsed time after the date of the  referral.  We considered  
children in these cases to be potentially eligible for Medicaid if the 
SCHIP agency had referred the case to the State Medicaid agency at 
least 45 days prior to June 1, 2006.   
Unable to determine.  We refer to cases as Unable to determine if the 
State did not, after multiple requests, provide sufficient documentation 
for us to determine whether a child was Medicaid eligible.   
Error rates and projections.  We calculated the percentage of SCHIP 
enrollees who were eligible for the Medicaid program in 2006 and the 
percentage of cases for which we were unable to  determine Medicaid  
eligibility. We projected the results to the universe of about 2.6 million 
children enrolled in separate SCHIPs in 36 States in 2006.  Confidence 
intervals for estimates and projections contained in this report are 
listed in Appendix B. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  8    
  F I N D I N G  
 
An estimated 4 percent of children enrolled   We determined that 4 percent of 
in separate SCHIPs were eligible for the  children enrolled in separate SCHIPs 
(16 sample cases) were eligible for their 
Medicaid program in 2006 
States Medicaid program (see Table 1). 
A 4-percent error rate equates to an estimated 105,178 children enrolled  
in separate SCHIPs nationwide in 2006 being eligible for the Medicaid 
program. An additional 4.5 percent (18 sample cases) lacked sufficient 
documentation for us to  determine whether the children were Medicaid 
eligible. 
 
Table 1: Medicaid-Eligible Children Enrolled in Separate 
SCHIPs in 2006 
Estimated 
Number of  
Sample Cases  Children 
Determination Status   (n=400)  Percentage  Nationally  
Enrollment Errors   16  4.0%  105,178 
Unable To Determine  18  4.5%  118,559 
Source: OIG review of case file documents for 400 children randomly selected from the 

universe of 2,629,462 children enrolled in separate SCHIPs on June 1, 2006, in 36 States. 

 
Enrollment errors   
Eight of the sixteen cases with enrollment errors  had miscalculations of 
net income.  In three of the eight miscalculation cases, caseworkers  
failed to apply all applicable income  disregards to the familys 
self-employment income.  Among the other five cases, we found few 
similarities or patterns that caused the miscalculations.   
Clerical mistakes caused enrollment errors in 3 of the 16 cases.  For 
example, in  one of these cases, the caseworker correctly determined that 
the child should be enrolled in the Medicaid program but improperly 
entered into the automated system a code to indicate eligibility for the 
separate SCHIP. 
The causes for the remaining five cases with enrollment errors were  
either unknown or not specified by the State.  For example, in one case, 
the State Medicaid agency informed  the SCHIP agency that a child who 
was identified as potentially Medicaid eligible had not cooperated with 
the Medicaid agency and was, therefore, no longer eligible for either 
program.  State officials acknowledged that the SCHIP agency did not 
immediately end the childs enrollment in the separate SCHIP as 
required, but did not indicate why the agency failed to take the required 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  9    
F I N D I N G   
action.29  In another of these cases, the State official simply stated  
we concur  that the child should have been enrolled in the Medicaid  
program but did not identify what mistake caused the enrollment error.    
Unable to determine 
For the 18 sample cases that lacked sufficient documentation, we found 
a variety of circumstances that prevented us from determining Medicaid 
eligibility. In nine cases, some documentation was provided but 
particular documents or specific information was not provided.  In 
another six cases, no documents were provided, and State officials 
reported that the case files could not be located for various reasons.  In  
three of these cases, which were from one State, the children had been 
referred from the Medicaid agency to the separate SCHIP, and 
information needed for our review was apparently not forwarded from 
the Medicaid agency.  The files in the remaining three cases  had been 
lost, destroyed by a flood, or not forwarded from  a previous contractor.     
Finally, in each of the remaining three cases, the child had been 
identified by the SCHIP agency as potentially Medicaid eligible, and the 
case was referred to the Medicaid agency for a full Medicaid eligibility 
determination.  In the meantime, the child remained enrolled in the 
separate SCHIP, as allowed under the SCHIP State plan for each case.   
At the time of the review, the elapsed time since the referral ranged 
from 4 to 8 months among the three cases, each  beyond the 45-day 
timeframe allowed by Federal regulations for making a Medicaid 
eligibility determination. However, documentation was not sufficient 
for us to determine in each case whether a Medicaid eligibility 
determination had been made by the date of our review or to rule out 
the possibility of extenuating circumstances that would have allowed an 
exception to the 45-day timeframe.   
For all 18 cases that lacked sufficient documentation, we could not 
determine whether the children were eligible for Medicaid and 
represented additional enrollment errors.  These unable to determine 
cases leave open the possibility that the actual number of children 
enrolled in separate SCHIPs who were eligible for the Medicaid 
program in 2006 could have been higher than our projection.  Hence, 
taking into account cases that lacked documentation, we project an 
 
29 42 CFR  457.350(g)(2).  The SCHIP eligibility rules prohibit children who have been 
designated as potentially eligible for Medicaid from being enrolled in separate SCHIPs 
(other than  provisional temporary enrollment while a final determination is being made, 
which no longer applied in this case). 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  10    
F I N D I N G   
estimated enrollment error rate that could range from a low of  
4 percent, if no additional cases involved errors, to a high of 8.5 percent,  
if all cases lacking documentation involved enrollment errors. 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  11    
  R E C O M M E N D A T I O N
 
We found that an estimated 4 percent of children enrolled in separate 
SCHIPs were eligible for the Medicaid program in 2006.  Additionally, 
another 4.5 percent of cases lacked sufficient documentation for us to 
determine whether the children involved were eligible for Medicaid.  
This lack of documentation leaves open the possibility that the actual 
number of children enrolled in separate SCHIPs who were eligible for 
the Medicaid program in 2006 could have been higher than our 
projection.   Enrollment  errors can result in the inappropriate use of 
Federal matching funds and in limited SCHIP resources being expended 
on Medicaid-eligible children.  
To address these deficiencies, we recommend that CMS: 
Take Further Action To Ensure the Appropriate Enrollment of  
Medicaid-Eligible Children 
To address miscalculations of incomes and clerical mistakes, CMS could 
emphasize to States the need for accuracy in enrollment casework and  
encourage States to perform quality checks to detect such errors.  CMS 
could also use the eligibility measurement component of the PERM, 
which examines eligibility for both SCHIP and Medicaid enrollment, to  
identify problems that lead to enrollment errors  and assist States in 
implementing corrective actions.   The newly implemented  PERM  
includes an eligibility review for a random sample of beneficiaries in 
both the SCHIP and Medicaid programs for each State every  
3 years.  Further, because the PERM requires States to develop and 
implement corrective actions for errors detected, CMS could utilize the 
PERM to address enrollment errors, such as those identified by this 
review.  
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
In its written comments on the report, CMS stated that it supports the 
spirit of the OIG recommendations and will continue to undertake a 
number of activities to prevent the types of errors identified in the 
report. CMS indicated that it will continue to work with States to 
improve caseworker performance in making eligibility determinations 
and to ensure Medicaid screen and enroll accuracy through  automatic 
eligibility systems. 
Specifically, CMS indicated that it will include the findings of the report  
on a monthly call with Associate Regional Administrators and regional 
OEI-06-07-00310         SEPARATE SCHIP  E NROLLEES   ELIGIBILITY FOR MEDICAID IN  2006  12    
R E C O M M E N D A T I O N   
offices and ask these entities to reiterate to States the requirement to  
include the facts essential to the determination of eligibility in the case 
file documentation. Further, CMS indicated that it will conduct onsite  
reviews and monitoring of SCHIPs screen and enroll processes and 
identify States that may need a focused review on this topic.   Finally, 
CMS indicated that it will review initial PERM results regarding 
eligibility determinations and target appropriate States for technical 
assistance.  
CMS noted that OIGs 2003 and 2006 reviews used different methods.  
For the 2003 review, OIG first determined whether a separate SCHIP 
enrollees family income fell within the separate SCHIP guidelines and, 
if so, did not attempt to determine whether the child was eligible for the 
Medicaid program.  For this 2006 review, we directly determined 
whether separate SCHIP enrollees were eligible for the Medicaid 
program.  CMS pointed out that the difference in study design affects 
any comparisons between the findings of the two studies.  OIG agreed 
and revised  the report to avoid comparisons between the studies 
findings. 
CMS requested additional information on some of the 16 cases 
identified as having enrollment errors.  To facilitate CMSs monitoring 
and followup with States, OIG will provide CMS with detailed 
information about each of the 16 cases with enrollment errors.  In 
response to CMSs other comments, we added information in the 
appropriate sections of the report to  clarify each topic or question. 
The full text of CMSs comments is provided in Appendix C. 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  13    
A P P E N D I X   A  
  A P P E N D I X ~ A
 
Number of Children Enrolled in Separate State Childrens Health Insurance Programs on   
June 1, 2006, and Number Reviewed  by Office of Inspector General  
Children Selected for 
State  Number of Children Enrolled  Review  
Alabama  66,295  7 
Arizona  58,639  5 
California  764,269  122 
Colorado  44,922  8 
Connecticut  14,215  2 
Delaware  5,516  2 
Florida  220,243  31 
Georgia  65,413  9 
Idaho  2,429  0 
Illinois  45,018  12 
Indiana  17,586  2 
Iowa  20,659  2 
Kansas  37,672  7 
Kentucky  15,204  3 
Maine  4,416  0 
Maryland  11,546  3 
Massachusetts  21,266  1 
Michigan  34,190  7 
Mississippi  60,298  11 
Montana  13,153  3 
Nevada  27,931  4 
New Hampshire  7,222  2 
New Jersey  79,470  12 
New York  283,803  52 
North Carolina  115,207  15 
North Dakota   5,339  0 
Oregon  29,384  6 
Pennsylvania  137,090  18 
South Dakota   2,410  0 
Texas  292,636  42 
Utah  35,646  1 
Virginia  46,112  5 
Washington  10,862  3 
West Virginia   25,032  2 
Wyoming  5,262  1 
Vermont  3,107  0 
Total  2,629,462  400 
Source: Data collected by Office of Inspector General in April 2007 from 36 States with separate State Childrens Health 
Insurance Programs. 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  14    
  A P P E N D I X ~ B
 
Estimates, Projections, and Confidence Intervals for Medicaid-Eligible 
Children Enrolled in Separate State Childrens Health Insurance Programs 
In 2006 
 
Estimated Percentage of Medicaid-Eligible Children Enrolled in Separate SCHIPs 
Case File Review  Findings   Estimate   95-Percent Confidence Interval*  
    Lower Limit   Upper Limit  
Enrollment Errors  4.0%  2.3%  6.4% 
Unable To Determine  4.5%  2.7%  7.0% 
Cases With Enrollments Errors 
and Unable To Determine   8.5%  6.0%  11.7% 
Source: Office of Inspector General review of case file documents for 400 children randomly selected from the 
universe of 2,629,462 children enrolled in separate State Childrens Health Insurance Programs on June 1, 2006, in 
36 States. 
*Confidence intervals calculated with an exact method based on the binomial distribution. 
 
Projected Number of Medicaid-Eligible Children Enrolled in Separate SCHIPs 
Case File Review  Findings   Estimate   95-Percent Confidence Interval*  
    Lower Limit   Upper Limit  
Enrollment Errors  105,178  60,564  168,672 
Unable To Determine  118,326  70,690  184,559 
Cases With Enrollments Errors and 
Unable To Determine  223,504  156,669  306,990 
Source: Office of Inspector General review of case file documents for 400 children randomly selected from the 
universe of 2,629,462 children enrolled in separate State Childrens Health Insurance Programs on June 1, 2006, in 
36 States. 
*Confidence intervals calculated with an exact method based on the binomial distribution.   
 
 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  15    
  A P P E N D I X ~ C
Agency Comments 
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  16   
  
  A P P E N D I X   ~   C  

OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  17 
  
  
AA PP PP EE NN DD II XX   ~~   CC  

OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  18
   
A P P E N D I X   ~   C  

OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  19   
  
A P P E N D I X   ~   C  

OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  20   
  
  A C K N O W L E D G M E N T S
 
This report was prepared under the direction of Kevin K. Golladay, 
Regional Inspector General for Evaluation and Inspections,  and   
A. Blaine Collins, Deputy Regional Inspector General for Evaluation 
and Inspections, in the Dallas regional office. 
Leah Bostick served as the team leader for this study, and Deborah 
McGurk served as the project leader.  Other principal Office of 
Evaluation and Inspections staff from the Dallas regional office who 
contributed to this report include Dana McClellen and Margaret 
McKnight; central office staff who contributed to this report include 
Alan Levine and Barbara Tedesco.  
OEI-06-07-00310         SEPARATE SCHIP  ENROLLEES  ELIGIBILITY FOR MEDICAID IN  2006  21