Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Medical Insurance For 
Dependents Receiving Child Support 
JUNE GIBBS BROWN 
Inspector General 
JUNE 2000 
OEI-07-97-00500  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG) mandated by Public Law 95-452, as 
amended by Public Law 100-504, is to protect the integrity of the Department of Health and 
Human Services programs as well as the health and welfare of beneficiaries served by them.  This 
statutory mission is carried out through a nationwide program of audits, investigations, 
inspections, sanctions, and fraud alerts.  The Inspector General informs the Secretary of program 
and management problems and recommends legislative, regulatory, and operational approaches to 
correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General.  It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public.  The 
inspection reports provide findings and recommendations on the efficiency, vulnerability, and 
effectiveness of departmental programs. 
OEI's Kansas City Office prepared this report under the direction of James H. Wolf, Regional 
Inspector General and Brian Pattison, Deputy Regional Inspector General.  Principal OEI staff 
included: 
REGION  HEADQUARTERS 
Ray Balandron, Project Leader  Linda Hall, Program Specialist

Hugh Owens, Program Analyst  Susan Burbach, Program Specialist

Perry Seaton, Program Analyst  Barbara Tedesco, Mathematical Statistician

Dennis Tharp, Program Analyst  Scott Horning, Program Analyst

Michael Barrett, Program Analyst 
Mike Craig, Program Analyst 
To obtain copies of this report, please call the Kansas City Regional Office at (816) 426-3697. 
Reports are also available on the World Wide Web at our home page address: 
http://www.dhhs.gov/progorg/oei  E X E C U T I V E   S U M M A R Y  
PURPOSE 
To determine if State Child Support Enforcement (CSE) agencies have made progress in 
the detection of available dependent health insurance. 
BACKGROUND 
Between 1980 and 1998, numerous legislative and regulatory changes have been made 
governing  identification and enforcement of medical support as it relates to court or 
administrative child support orders.  Some of the changes that have taken place include: 
requiring child support agencies to collect medical support information; requiring that a 
health care provision is in all child support orders; and ensuring that the noncustodial 
parent obtain medical insurance if available at a reasonable cost.  This means, in some 
cases, that the child support agency must send notice to an employer to enroll the child in 
its health care plan, and notify the State Medicaid agency of the existence and specifics of 
medical coverage.  Also, there is currently a National Medical Support Notice being 
developed that will be used by States as a withholding mechanism to enforce the health 
care coverage provisions in the child support order. 
This inspection is an update on two previous Office of Evaluation and Inspections studies 
entitled, Child Support Enforcement/Absent Parent Medical Liability and Coordination 
of Third Party Liability Information Between Child Support Enforcement and Medicaid. 
In this study we sampled 360 court ordered cases from nine States covering the period of 
July-September 1997 and projected our results nationally.  We reviewed court orders and 
case files, and interviewed various State CSE, Medicaid, employer, and insurance 
company staff to determine availability of dependent health insurance and any improper 
payments made by the Medicaid program. 
FINDINGS 
Considerable Progress Has Been Made in the Identification and Enforcement of 
Medical Support 
We estimated that 93 percent of the child support orders in our study included a provision 
requiring medical coverage for the dependent children.  This compares to 24 percent in 
our previous study.  Since our last study, we also determined that potential savings 
dropped dramatically.  Previously we found 48 percent of the cases reviewed had 
undetected health insurance available to the dependents with projected potential savings to 
Medicaid of over $32 million.  Currently, we found 30 percent of the child support cases 
with undetected health insurance available.  We estimated potential fee-for-service savings 
of just under $3 million and Medicaid managed care premiums of $2.3 million made on 
behalf of children whose noncustodial parents had employer based insurance, but had not 
enrolled their children.  This projected annual loss for all States of 
1 
Medical Insurance Payments for CSE  OEI-07-97-00500  $5.2 million is a significant reduction when compared to the loss of $32 million Medicaid 
paid out in fee-for-service payments 10 years ago. 
However, Weaknesses Still Exist in the Detection of Health Insurance Availability 
and Enrolling Dependents 
We found child support agencies deficient in pursuing health insurance availability in 
126 cases out of 247 that had noncustodial employer information in the file. We contacted 
the employers for 115 of these cases and determined that dependent health care coverage 
was available to the noncustodial parents in 36 percent of the cases. In this regard, child 
support staff indicated that they do make limited efforts to gather employment and health 
insurance information.  However, they strongly believe that their primary efforts should be 
spent in retrieving cash support payments. 
Managed Care Premiums Present a New Challenge in the Enforcement of Medical 
Support for Child Support Children 
With managed care becoming a major means of coverage for Medicaid-eligible childrens 
medical care, new issues have arisen regarding the ability of States to coordinate their 
managed care benefits with the employer based insurance of the noncustodial parents. 
One possibility would be to collect either all or part of the State Medicaid monthly 
premiums from the noncustodial parent.  However, it was beyond the scope of this study 
to determine the processes needed to do so.  We understand that there are various types of 
contracts established between the State Medicaid agencies and the different managed care 
organizations.  These contracts include such requirements as disenrolling the children from 
the managed care plan when private insurance is available, keeping the children enrolled in 
Medicaid managed care regardless of the existence of private insurance, or reducing the 
premium by a specific amount when there is private insurance available.  We believe to 
fully address this issue, additional study is required. 
RECOMMENDATIONS 
The Administration for Children and Families Should Ensure That State Child 
Support Agencies Comply with Current Regulations Requiring Them to Fully 
Enforce Medical Support 
The Administration for Children and Families (ACF) should ensure that State child 
support agencies are persistent in following through to determine if health insurance is 
available to the noncustodial parent and his/her dependents.  This should include cases 
where the child is enrolled in Medicaid managed care programs or could be enrolled in an 
employer based managed care program.  However, these situations may require new 
approaches discussed in the next recommendation. 
2 
Medical Insurance Payments for CSE  OEI-07-97-00500  The Administration for Children and Families, in Conjunction With The Health 
Care Financing Administration, Should Examine Alternatives to Recover The 
Costs of Managed Care Premiums From The Noncustodial Parents 
The ACF, in conjunction with the Health Care Financing Administration (HCFA), should 
examine alternatives to address the loss of State/Federal funds for children enrolled in 
Medicaid managed care.  We realize there are various State practices regarding 
coordination of benefits whenever children are enrolled in a Medicaid managed care plan. 
Depending on the unique State practices, they could consider the option of requiring the 
noncustodial parent to enroll the child in private coverage or pay toward the Medicaid 
managed care coverage.  The following could be considered. 
<	 If insurance is available at a reasonable cost to a noncustodial parent but 
he/she prefers not to enroll in it or to enroll himself/herself only and not the 
children, he/she could have the option of paying the State Medicaid 
managed care premium. 
<	 If insurance is not available at a reasonable cost to a noncustodial parent 
and there is no employer based health plan, he/she could have the option of 
paying the State Medicaid managed care premium. 
<	 If insurance is available at a reasonable cost to a noncustodial parent and 
the parent and child are enrolled in it, the Medicaid managed care 
coverage, unless discontinued, could be assessed as a secondary payer to 
the noncustodial parents insurance. 
We realize that the actual implementation and administration of such a policy would entail 
addressing many factors such as cost-efficiency, identification and enforcement, billing and 
collection of the managed care premium, and need for legislative changes. 
AGENCY COMMENTS 
In their comments, the Administration for Children and Families expressed their 
commitment to working with the Health Care Financing Administration and the States to 
improve access to medical coverage for children.  In addition, they described various 
efforts and initiatives being undertaken that will further strengthen medical child support. 
The ACF also noted that the Medical Child Support Working Group will be issuing 
recommendations to improve medical support and coordination between child support 
agencies and Medicaid.  We are aware of the working groups upcoming report to 
Congress and have provided information to them on our prior and present efforts on these 
topics. 
While recommendations in the draft report were not directed to HCFA, they did provide 
comments.  The HCFA indicated that they will continue to work with ACF to assure every 
effort is made to identify parents who can provide or contribute to the coverage of 
3 
Medical Insurance Payments for CSE  OEI-07-97-00500  health insurance for their children and to see that Medicaid dollars are spent 
appropriately. 
Where appropriate, we made revisions to the report to address various technical 
comments offered by ACF and HCFA.  The full text of their comments are included in 
Appendix E. 
4 
Medical Insurance Payments for CSE  OEI-07-97-00500  T A B L E   O F   C O N T E N T S 
PAGE

EXECUTIVE SUMMARY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6

FINDINGS

Child support agencies have progressed  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11

Weaknesses still exist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12

Managed care presents a new challenge  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

APPENDICES

A: Child support orders with medical support . . . . . . . . . . . . . . . . . . . . . . . . . .  16

B: Health insurance availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

C: Medicaid payments made when health insurance exists  . . . . . . . . . . . . . . . .  18

D: Weighted estimates for data collected during study  . . . . . . . . . . . . . . . . . . .  19

E: Agency comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20

ACF comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21

HCFA comments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26

5 
Medical Insurance Payments for CSE  OEI-07-97-00500  I N T R O D U C T I O N 
PURPOSE 
To determine if State Child Support Enforcement (CSE) agencies have made progress in 
the detection of available dependent health insurance. 
BACKGROUND 
CSE Legislation and Regulations 
For some time, policy makers have expressed concern about the responsibility of 
noncustodial parents to provide medical support for their dependent children.  Various 
laws have been passed requiring court ordered decrees to include medical support by the 
noncustodial parent, and establishing mechanisms for their enforcement. 
The Social Security Act requires that the Medicaid program pay for beneficiary medical 
services secondary to other health insurance that may exist for beneficiaries, e.g., private 
health insurance or an employer group health plan.  This provision also pertains to 
dependents of noncustodial parents for whom a court or administrative order exists that 
requires them to provide medical insurance. 
Federal regulations published in February 1980 implemented Section 1912 of Title XIX of 
the Social Security Act.  These regulations promoted cooperative agreements between 
State child support and Medicaid agencies to obtain information about medical insurance 
where it is available in an effort to reduce or eliminate Medicaid payments.  However, 
under the Child Support Enforcement provisions of Title IV D, States received a higher 
percentage of Federal funding for collections of child support payments than for 
enforcement of medical support under the Medicaid program.  This could provide an 
incentive for States to use available resources to collect child support payments since this 
effort produces a higher rate of return than the identification of noncustodial parents 
private health insurance. 
Congress passed the 1984 Child Support Enforcement amendments (P.L. 98-378), adding 
Section 452(f), to the Social Security Act.  This section required the Secretary of Health 
and Human Services (HHS) to issue regulations requiring State child support agencies to 
gather specified medical support information in all child support cases involving Medicaid-
eligible children in the Aid to Families with Dependent Children program, and to take 
steps to enforce medical support ordered by the court. 
In response to these amendments, the Secretary issued Federal regulations in October 
1985 requiring State Child Support Enforcement agencies to collect 1) the policy name(s) 
and number(s) of any health insurance available to the noncustodial parent, and 2) the 
names of persons covered if the noncustodial parent has available health insurance.  Child 
support agencies are also required to submit medical support information obtained to the 
6 
Medical Insurance Payments for CSE  OEI-07-97-00500  State Medicaid agency for use in coordinating benefits.  The 1985 regulations allowed for 
manual or automated exchange of third-party liability information from State child support 
agencies to Medicaid, but required them to provide it as specified in the State Plan, in a 
timely manner, and by the most efficient and cost-effective means available.  They are also 
required to inform the Medicaid agency of any new or modified orders that include 
medical support. 
In addition, these regulations require State Child Support Enforcement agencies to seek 
the inclusion of medical support in all court and administrative orders, whether or not 
health insurance is available to the noncustodial parent at a reasonable cost at the time 
the order is entered or modified.  State child support agencies must also make every effort 
possible to ensure that the noncustodial parent obtains the required medical insurance, if it 
is available at a reasonable cost, and enrolls the children.  The regulations define health 
insurance to be reasonable in cost if it is employment-related or other group health 
insurance, regardless of service delivery mechanism. 
Revised Federal regulations published in 1988 expanded these requirements to include 
modification of existing court or administrative orders for the sole purpose of obtaining 
medical support.  This expansion required State child support agencies to: 
<	 develop written criteria to identify cases with a high potential for obtaining medical 
support; 
<	 petition the court or administrative authority to modify support orders to include 
medical support for targeted cases, even if they anticipate no other modification; 
and 
<	 petition the court or administrative authority to include medical support in all child 
support orders, even if health insurance coverage is unavailable at the time of the 
order, thus enabling the child support agency to enforce it if coverage should 
become available in the future without returning to court to obtain a new order. 
The Omnibus Budget Reconciliation Act of 1993 (OBRA), P.L. 103-66, contained 
provisions intended to remove some of the impediments to State child support agencies 
attempts to secure and enforce medical coverage.  OBRA contained many improvements 
that facilitated obtaining and enforcing medial coverage, including:  prohibiting 
discriminatory health care coverage practices; creating qualified medical child support 
orders to obtain coverage from group health plans subject to the Employer Retirement 
Income Security Act of 1974 (ERISA); and allowing employers to deduct the costs of 
health insurance premiums from the noncustodial parents income. 
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA), P.L. 104-193, requires that all child support orders enforced under the Act 
specifically include a provision for health care coverage.  Child support agency staff carry 
out the orders by determining employment of the noncustodial parent and insurance 
availability for dependent coverage.  If the noncustodial parent changes jobs and the new 
7 
Medical Insurance Payments for CSE  OEI-07-97-00500  employer provides health care coverage, the State sends notice of required coverage to the 
new employer.  This will require them to enroll the child(ren) in its group health plan. 
More recently, Congress followed PRWORA with the Child Support Performance and 
Incentive Act of 1998, which stipulated that the Secretary, in consultation with State Child 
Support Directors, develop a measure based on the effectiveness of States in establishing 
and enforcing medical support obligations and to make recommendations for 
incorporating the measure, in a revenue neutral manner, into the current incentive payment 
system established by section 458A of the Social Security Act, which is based on cash 
support collections. 
The Child Support Performance and Incentive Act of 1998 also required the Secretaries of 
HHS and Department of Labor to jointly establish a Medical Child Support Working 
Group, and to develop and promulgate by regulation a National Medical Support Notice. 
Such Notice will make it possible to readily enforce enrollment of children in ERISA 
medical insurance plans without obtaining a new qualified medical child support order. 
This will permit more effective enforcement of OBRA health care coverage provisions in 
compliance with the child support order. 
Previous OIG Reports 
A 1987 Office of Inspector General report entitled Child Support Enforcement/Absent 
Parent Medical Liability1 revealed that 60 percent of the noncustodial parents in the 
sampled cases had dependent health insurance available through their employers and that 
Medicaid would have saved almost $34 million nationally if this insurance had been used 
to pay for their dependents medical care.  Also, a second report, released in 1989,2 
showed that third-party liability health insurance coverage was available to dependent 
children through noncustodial parents employers in 48 percent of the sampled child 
support cases.  The projected potential savings to Medicaid in this study were more than 
$32 million.  The study also detected that State child support agencies were not routinely 
collecting health insurance information. 
METHODOLOGY 
This report is a follow-up to the two prior studies.  For comparison purposes, we chose to 
conduct this national inspection in a manner similar to the previous inspections except for 
the selection of the sample States.  We examined nine States in all three studies, reviewing 
samples of child support court orders for a 3-month period and analyzing them for 
1 Child Support Enforcement/Absent Parent Liability, Office of Inspector General, HHS, 
September 1987. 
2 Coordination of Third-Party Liability Information Between Child Support Enforcement 
and Medicaid, Office of Inspector General, HHS, December 1989. 
8 
Medical Insurance Payments for CSE  OEI-07-97-00500  covered medical insurance.  We also determined the accuracy of Medicaid payments for 
our sample.  In the two prior studies, we selected the nine States based on a probability 
proportional to size using a two-stage sampling design.  In this study, we selected the nine 
States using a stratified-cluster design, which allows us to project our results nationally. 
All the States were divided into three strata to produce a broader mix of States than those 
in the previous studies.  The three strata are: 
<	 Strata 1 - includes nine States which various child support and Medicaid 
representatives recommended for review during our preliminary research.  They 
suggested these States because of their effective detection efforts or innovative 
processes. 
<	 Strata 2 - includes six States considered large States (based on Fiscal Year 
1995 Aid to Families with Dependent Children and Foster Care average caseload 
greater than 240,000) but not included in Strata one. 
<	 Strata 3 - includes the remaining 33 continental States and the District of 
Columbia. 
We randomly selected nine States for this study, five from Strata 1, two from 

Strata 2, and two from Strata 3.  The nine States are:  Strata 1 - Massachusetts,

Minnesota, Texas, Washington, Wisconsin; Strata 2 - Michigan, North Carolina; and

Strata 3 - Oklahoma and Vermont.

We contacted the child support agency in each of the sampled States and requested a

listing of all new or modified court or administrative child support orders established

during the period July through September 1997 for dependent children entitled under the

Temporary Assistance to Needy Families (TANF) program.  In addition, we asked them to

1) check the listing against the support payments they have received and to only include 
cases where at least one support payment had been made during our review period, and 2) 
that the child(ren) was Medicaid eligible.  Once we received the lists of cases from each 
State child support agency, we randomly selected 40 cases for review from each State. 
These 360 cases constituted the total number of cases included in our study; however, 
many of these represented multiple children.  We considered all children in carrying out 
the study.  We determined later in the study that 21 cases were not Medicaid-eligible and 
one could not be located, leaving us with 338 cases in our sample. 
We requested the States to send us a copy of the court order or administrative order for 
each of the selected cases.  We reviewed these orders to determine whether or not they 
included a medical support requirement.  In addition, we checked with each States 
Medicaid agency to see if their claims history records showed any third-party medical 
insurance information on any of the sampled cases.  Following receipt and review of the 
child support orders, we visited each of the nine States to review the actual child support 
case files and to interview State Child Support Directors, local child support caseworkers 
and supervisors, Medicaid Directors and Recovery Unit personnel, local TANF income 
maintenance staff, and, as necessary, State insurance commissioners, child support 
attorneys and judges or court administrators.  Through our onsite review of the CSE case 
9 
Medical Insurance Payments for CSE  OEI-07-97-00500  files and contacts with noncustodial parents employers and insurance companies, we 
determined if employer group health insurance was available to the noncustodial parents 
for coverage of their dependent children.  We identified three cases where health insurance 
was available to the noncustodial parents, although the child support order did not include 
a provision for medical support. 
We examined Medicaid payment histories for the dependent children named in the court 
orders to determine whether the State Medicaid agency was adequately receiving and 
processing information when medical support was ordered.  We also looked to see if 
group health insurance existed and if the dependent(s) were enrolled.  In such cases, if 
Medicaid had made payments for medical care, we determined the third-partys liability 
against Medicaid expenditures to determine the amount of potential savings.  Based upon 
the results of our sample review, estimates have been weighted according to the sample 
design and we projected national savings to the Medicaid program.  See Appendix D for a 
summary of confidence intervals pertinent to report data. 
This inspection was conducted in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
10 
Medical Insurance Payments for CSE  OEI-07-97-00500  F I N D I N G S  
Over the past several years, numerous changes have been made to the regulations 
governing the identification and enforcement of medical support as it relates to the child 
support court order.  These changes include such things as requiring child support 
agencies to collect medical support information, including medical insurance coverage in 
all child support orders, and ensuring that the noncustodial parent obtains health insurance 
if available at a reasonable cost.  Enforcement mechanisms include the child support 
agency notifying the employer to enroll the child in the health care plan, and the 
subsequent transfer of medical coverage information from child support agencies to State 
Medicaid agencies.  Our study indicates that while the State child support agencies have 
made strides toward progress in these areas, the need for improvement still exists. 
Considerable progress has been made in the identification 
and enforcement of medical support 
We estimated in our study that 93 percent of the child support cases included a provision 
requiring that medical coverage be provided for the dependent child(ren).  This compares 
to 24 percent in our previous study.  Much of this improvement is because these States 
generally use a uniform support order form that includes the required medical support 
provision.  This is considered an important tool by the child support staff and court 
personnel.  Appendix A shows unweighted sample data by State. 
Since our last study, we also determined that potential savings dropped dramatically.  Ten 
years ago, we identified that 48 percent of the child support cases had health insurance 
coverage available to dependent children through noncustodial parents employers which 
was not identified by Child Support Enforcement or Medicaid.  The projected potential 
savings to the Medicaid program for these cases were more than $32 million.  Our current 
study identified 30 percent of the child support cases had health insurance coverage 
available to the noncustodial parent.  Nationally, States spent an annual projected 
$5.2 million in fee-for-service and managed care payments on behalf of children where 
other insurance is available but they were not enrolled.  This improvement demonstrates 
that Child Support Enforcement has progressed in the identification and enforcement of 
medical support for child support children. 
Of the $5.2 million, just under $3 million was for children for whom Medicaid made 
payments under a fee-for-service arrangement.3  The additional $2.3 million was for 
3 See Appendix C for a summary of our calculation of potential savings where we 
identified insurance available to dependent children and Appendix D for the projected 
potential savings. 
11 
Medical Insurance Payments for CSE  OEI-07-97-00500  capitation payments made for children enrolled in Medicaid under a managed care 
arrangement.  While we are aware that States are responsible for payment of Medicaid 
covered services that are not included in the contracted benefit package with the managed 
care plan, we determined that 7 of the 9 sampled States enroll Medicaid-eligible children in 
managed care and, and for the most part, pay the monthly premiums.  To determine the 
extent that managed care premiums were being paid when medical insurance was available 
for the children, we looked at three factors of  their insurance coverage:  the noncustodial 
parent had health insurance available to him/her; the children were not enrolled for 
coverage in this insurance; and the children were covered by the State in a managed care 
plan for which premiums were being paid.  Considering these factors for the 7 States, we 
estimated that 43 percent of the child support cases had beneficiaries enrolled in a 
managed care plan with Medicaid paying premiums projected to exceed $2.3 million. 
However, weaknesses still exist in the detection of employer 
health insurance availability and enrolling dependents 
We identified 247 cases where child support agencies had noncustodial parent employer 
information in the file.  In 126 of these cases, the child support agency did not pursue 
health insurance availability with these employers.  We contacted the employers in 
115 of these cases and determined that health insurance was available to the noncustodial 
parent through their employer in 36 percent of these cases.  In developing our contacts 
we inquired as to the availability of health insurance and whether or not the dependent 
children were included on the policy.  See Appendix B for unweighted sample data by 
State. 
Although State child support staff indicated that they make an initial attempt to gather 
employment and health insurance information when an individual applies for child support 
services, child support staff make only limited efforts to pursue medical support after this 
because they believe their primary efforts should be spent in retrieving cash support 
payments.  A major justification for this approach is that the Federal match is greater for 
collection of these cash payments than pursuit of medical support.  However, as noted  in 
the background section of this report, the Child Support Performance and Incentive Act 
of 1998 has addressed the issue by calling for a performance measure based on the 
effectiveness of States enforcing medical support.  It also deals with how this measure 
could be made part of  the existing incentive payment system established by section 458A 
of the Social Security Act which is based on cash support collections. 
Hopefully, with the development and the States implementation of the National Medical 
Support Notice (NMSN), child support agencies and employers should find the process 
of enforcing medical support greatly facilitated.4  The NMSN must comply with the 
requirements of section 609(a)(3) and (4) of ERISA, which means it will be deemed 
4 Required as part of the provisions of the Child Support Performance and Incentive Act 
of 1998. 
12 
Medical Insurance Payments for CSE  OEI-07-97-00500  to be a qualified medical child support order.  In addition, the NMSN must include a 
severable employer withholding notice informing the employer of:  (1) the requirement to 
withhold the employees contributions due under any employer-related health plan; (2) 
the duration of the withholding requirement; (3) the applicability of limitations on any 
such withholding under title III of the Consumer Credit Protection Act; (4) the 
applicability of any prioritization required under State law between cash support and 
medical support amounts to be withheld if the funds available are insufficient for full 
withholding of both; and (5) the name and telephone number of the appropriate unit or 
division to contact at the State child support agency regarding the NMSN. 
Managed care premiums present a new challenge in the 
enforcement of medical support for child support children 
The noncustodial parents responsibility for the childrens medical care is established 
through the court requirement to provide medical insurance coverage unless it is 
financially unreasonable.  This is supported further by the requirement that State child 
support agencies enforce such coverage by seeking out employment information and 
insurance entitlement.  Since our previous studies when Medicaid reimbursed for medical 
care with fee-for-service payments, managed care has become a major means of medical 
care coverage for children who are Medicaid-eligible.  With the exception of those 
services not covered by the managed care program, there would be limited fee-for-service 
claims payment liability by the Medicaid program. 
To further quantify the full impact of this evolution, we identified all children in our study 
enrolled in managed care plans for whom Medicaid paid premiums.  We found that 
Medicaid agencies were paying managed care premiums in 140 cases and these payments 
projected to more than $10 million.  In fact, as noted in the prior finding, Medicaid 
agencies provided $2.3 of this $10 million in premiums for managed care coverage even 
when insurance was available from the noncustodial parents employer. 
It might be appropriate for States to make even these premium payments when we 
consider the difficulty that States could have in coordinating benefits under their  managed 
care programs with other insurance available to the noncustodial parent. 
It was beyond the scope of this study to determine the processes needed to collect the 
managed care premiums from the noncustodial parents who do not enroll their children in 
the employers insurance plan or for whom insurance is not available on the market at a 
reasonable cost.  We understand that there are various types of contracts established 
between State Medicaid agencies and the different managed care organizations.  State 
practices may include disenrolling the children from the managed care plan when private 
insurance is available, or keeping the children enrolled in Medicaid managed care 
regardless of the existence of private insurance, while  reducing the premium to account 
for possible third party coverage.  We believe to fully address these issues, additional 
study is required and joint consideration of the various contingencies that exist from 
establishing the support amount to collection of the premiums. 
13 
Medical Insurance Payments for CSE  OEI-07-97-00500  R E C O M M E N D A T I O N S  
Our review indicates a high level of medical support provision in court orders and an 
increase in medical support compared to prior studies, but there still are weaknesses in the 
detection of available health insurance and its enforcement.  While we are aware of the 
difficulties in following the population of noncustodial parents, some of whom may 
frequently move from job to job, we believe that increased efforts toward compliance of 
the court order and detection of health insurance can result in substantial savings 
nationally to the Medicaid program.  We offer the following recommendations: 
The Administration for Children and Families should ensure 
that State child support agencies comply with current 
regulations requiring them to fully enforce medical support 
Whenever child support identifies cases where a high potential exists for obtaining medical 
support, such as noncustodial parents employment information, they should be persistent 
in following through to determine if health insurance is available to the noncustodial 
parent and to his/her dependents.  This should include cases where the child is enrolled in 
Medicaid managed care programs or could be enrolled in an employer based managed care 
program.  However, these situations may require new approaches discussed in the next 
recommendation. 
The Administration for Children and Families, in conjunction 
with the Health Care Financing Administration, should 
examine alternatives to recover the cost of managed care 
premiums from the noncustodial parents 
The Administration for Children and Families (ACF), in conjunction with the Health Care 
Financing Administration (HCFA), should examine alternatives to address the loss of 
State/Federal funds for children enrolled in Medicaid managed care.  We realize there are 
various State practices regarding coordination of benefits whenever children are enrolled 
in a Medicaid managed care plan.  Depending on the unique State practices, they could 
consider the option of requiring the noncustodial parent to enroll the child in private 
coverage or pay toward the Medicaid managed care coverage.  The following could be 
considered. 
<	 If insurance is available at a reasonable cost to a noncustodial parent but 
he/she prefers not to enroll in it or to enroll himself/herself only and not the 
children, he/she could have the option of paying the State Medicaid 
managed care premium. 
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Medical Insurance Payments for CSE  OEI-07-97-00500  <	 If insurance is not available at a reasonable cost to a noncustodial parent 
and there is no employer based health plan, he/she could have the option of 
paying the State Medicaid managed care premium. 
<	 If insurance is available at a reasonable cost to a noncustodial parent and 
the parent and child are enrolled in it, the Medicaid managed care 
coverage, unless discontinued, could be assessed as a secondary payer to 
the noncustodial parents insurance. 
We realize that the actual implementation and administration of such a policy would entail 
addressing many factors such as cost-efficiency, identification and enforcement, billing and 
collection of the managed care premium, and need for legislative changes. 
AGENCY COMMENTS 
In their comments, the Administration for Children and Families expressed their 
commitment to working with the Health Care Financing Administration and the States to 
improve access to medical coverage for children.  In addition, they described various 
efforts and initiatives being undertaken that will further strengthen medical child support. 
The ACF also noted that the Medical Child Support Working Group will be issuing 
recommendations to improve medical support and coordination between child support 
agencies and Medicaid.  We are aware of the working groups upcoming report to 
Congress and have provided information to them on our prior and present efforts on these 
topics. 
The ACF had technical comments regarding the sampling and weighting schemes used in 
the study.  We have revised the report to address these comments.  The full text of ACFs 
comments are included in Appendix E. 
While the recommendations in the draft report were not directed to HCFA, they did 
provide comments.  The HCFA indicated that they will continue to work with ACF to 
assure every effort is made to identify parents who can provide or contribute to the 
coverage of health insurance for their children and to see that Medicaid dollars are spent 
appropriately. 
Where appropriate, we also made revisions to the report to address HCFAs technical 
comments.  The full text of HCFAs comments are included in Appendix E. 
15 
Medical Insurance Payments for CSE  OEI-07-97-00500  A P P E N D I X  A  
CHILD SUPPORT ORDERS WITH A PROVISION 
FOR MEDICAL SUPPORT 1 
Dont  Cases 
State  Yes  %  No  %  Know  %  Dropped 2  % 
Massachusetts  28  70.0  10  25.0  2  5.0  0  0 
Michigan  34  85.0  0  0  0  0  6  15.0 
Minnesota  20  50.0  18  45.0  2  5.0  0  0 
North Carolina  38  95.0  2  5.0  0  0  0  0 
Oklahoma  37  92.5  2  5.0  0  0  1  2.5 
Texas  25  62.5  0  0  0  0  15  37.5 
Vermont  35  87.5  5  12.5  0  0  0  0 
Washington  40  100  0  0  0  0  0  0 
Wisconsin  37  92.5  2  5.0  1  2.5  0  0 
1 Unweighted sample data only.
2 Cases dropped were non-Medicaid or not located.
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Medical Insurance Payments for CSE  OEI-07-97-00500  A P P E N D I X  B  
HEALTH INSURANCE AVAILABILITY 
Cases where OIG Determined Health Insurance is Available 
Through Contacting Employers 1 
CSE  Employer in File,  OIG 
CSE  Didnt  CSE Didnt Pursue,  Found 
Employer  Pursued  Pursue  OIG Did Pursue  Insurance 
State  in File  Insurance  Insurance  Insurance  Available 
Massachusetts  30  11  19  18  8 
Michigan  16  10  6  6  3 
Minnesota  35  12  23  22  6 
North Carolina  29  18  11  9  3 
Oklahoma  29  15  14  12  6 
Texas  15  8  7  6  2 
Vermont  31  19  12  8  1 
Washington  24  21  3  3  2 
Wisconsin  38  7  31  31  13 
Totals  247  121  126  115  44 
1 Unweighted sample data only.
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Medical Insurance Payments for CSE  OEI-07-97-00500  A P P E N D I X  C  
MEDICAID PAYMENTS MADE 
WHEN HEALTH INSURANCE EXISTED 
BUT DEPENDENTS NOT ENROLLED 1 
Fee-for-
Service 
Number  Payments 
Number  With  for 
Total  of  Total  Number  Dependents  Dependents 
Number  Sample  Dollars  with  Not  Not 
State  of Cases  Cases  Paid  Insurance  Enrolled  Enrolled 
Massachusetts  1,714  40  $33,576  12  6  $891.76 
Michigan  2,666  34  $6,669  10  6  $481.37 
Minnesota  1,185  40  $20,622  11  7  $251.16 
North Carolina  1,539  40  $23,672  17  10  $2,029.26 
Oklahoma  295  39  $9,944  11  6  $33.69 
Texas  15,128  25  $5,675  6  1  $0 
Vermont  363  40  $12,824  15  7  $31.92 
Washington  994  40  $10,311  17  7  $0 
Wisconsin  599  40  $12,388  16  8  $65.77 
Total  24,483  338  $135,681  115  58  $3,784.93 
1 Unweighted sample data only
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Medical Insurance Payments for CSE  OEI-07-97-00500  A P P E N D I X  D  
WEIGHTED ESTIMATES

Weighted  90% Confidence 
Data  Estimate  Interval 
Sample cases reviewed (338) 
Medical Support included in order (294)  93%  +/- 4.7% 
Insurance available to noncustodial parent (115)  30%  +/-5.6% 
Medicaid enrolled dependents in managed care 
plan (140)  23%  +/-12.2% 
Insurance available to noncustodial parent (115) 
Dependents enrolled in insurance plan (57)  57%  +/- 11.2% 
Dependents not enrolled in insurance plan (58)  43%  +/- 11.2% 
Dependents in managed care plan (30)  43%  +/- 15.3% 
Employer information in  file, but state did not 
pursue.  OIG did pursue (115) 
OIG determined insurance available (44)  36%  +/-11.0% 
Total dollars paid for premiums to managed care 
plans  $10,082,312  +/- $2,643,508 
Managed Care Premium payments where insurance 
exists and children not enrolled  $2,320,669  +/-$1,199,244 
Fee-for-Service Dollars paid by States for children 
not enrolled, but insurance is available  $2,923,944  +/- $2,172,028 
Total dollars paid by the State on behalf of children 
where other insurance is available, but not enrolled  $5,244,613  +/- $3,271,272 
Weighting of the sample was performed using standard statistical formulas for a stratified-cluster 
sample; therefore, the weight was based on both the probability of picking the State and the 
probability of choosing the case within the selected State.  There were a total of nine weights used 
depending on the strata and the number of cases for that State. 
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Medical Insurance Payments for CSE  OEI-07-97-00500  A P P E N D I X  E  
AGENCY COMMENTS

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