Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
F C C  U
OSTER  ARE  HILDREN S  SE OF 
M S
EDICAID  ERVICES IN 
N J
EW  ERSEY 
INSPECTOR GENERAL 
JULY 2003 
OEI-02-00-00360  O I G
FFICE OF  NSPECTOR  ENERAL

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 OIG's Office of Audit Services (OAS) provides all 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 in 
order to reduce waste, abuse, and mismanagement and to promote economy and efficiency throughout the 
Department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management and program 
evaluations (called inspections) that focus on issues of concern to the Department, the Congress, and the 
public.  The findings and recommendations contained in the inspections reports generate rapid, accurate, 
and up-to-date information on the efficiency, vulnerability, and effectiveness of departmental programs. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 
allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by 
providers.  The investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil 
monetary penalties.  The OI also oversees State Medicaid fraud control units which investigate and 
prosecute fraud and patient abuse in the Medicaid program. 
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 in OIGs internal 
operations.  The OCIG imposes program exclusions and civil monetary penalties on health care providers 
and litigates those actions within the Department.  The OCIG also represents OIG in the global settlement 
of cases arising under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops model compliance plans, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  E X E C U T I V E  S U M M A R Y  
OBJECTIVE 
To determine whether sampled foster care children are receiving Medicaid health care services 
in New Jersey. 
BACKGROUND 
Currently, there are an estimated half a million children in foster care nationwide, many of whom 
are reportedly in poor health. Compared with children from the same socioeconomic 
background, foster children suffer much higher rates of serious emotional and behavioral 
problems and chronic physical disabilities. Despite their need, it appears that many foster 
children are not receiving adequate health care. 
This inspection focuses on the state of New Jersey and is one of eight states being evaluated. 
FINDINGS 
Foster care children are deemed eligible for Medicaid services in New Jersey.  However, our 
analysis of 2 years of Medicaid claims for 50 foster children in New Jersey show that few of 
these children are receiving Medicaid services, particularly Early and Periodic Screening, 
Diagnosis and Treatment (EPSDT) services. In addition, interviews with the caseworker and 
caregiver for each of the 50 children reveal that caseworkers and caregivers are not informed 
about the Medicaid program and they have received very little training in Medicaid services for 
foster children.  Also, most caseworkers and caregivers did not receive their foster childs 
medical information, and they report difficulty finding Medicaid providers. 
Claims Data Indicate That Only Half the Children in our Sample are 
Receiving Medicaid Services Despite Every Child Having Coverage 
Although all 50 children in the sample have Medicaid coverage, New Jersey Medicaid claims 
data show that only 24 of the 50 children have had a health care claim between April 1999 and 
April 2001. Only 11 children have claims for mandated EPSDT services. 
i 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  Sampled Caseworkers and Caregivers Are Not Informed About the 
Medicaid Program, Do Not Have Their Foster Childs Medical 
Information, and Have Difficulty Finding Medicaid Providers 
Just one of the caseworkers reports having received any training in Medicaid services for foster 
children. In addition, few caregivers have been given the tools necessary to negotiate the 
Medicaid system, such as a list of Medicaid providers and a schedule of appointments that 
children need. Although the Centers for Medicare and Medicaid Services (CMS) requires that 
state Medicaid agencies inform eligible individuals about the EPSDT program, few caregivers 
and caseworkers have heard of EPSDT. In New Jersey, enrollment in Medicaid managed care 
is voluntary for foster care children, yet 76 percent of the caregivers interviewed are not aware 
of the managed care option.  Also, most caseworkers and caregivers report difficulty finding 
Medicaid providers. 
Caseworkers for half the children in our sample say they either did not receive the childs 
medical records or they received only partial records. Caregivers for 34 children also report 
that they did not receive a medical history or that the information they received was incomplete. 
According to New Jersey state law, the Division of Youth and Family Services is responsible 
for establishing and maintaining a foster childs health care record. 
CONCLUSION 
This inspection identifies several shortcomings in New Jerseys child welfare and Medicaid 
systems that cause concern.  We documented that, although all the children in our sample are 
covered by Medicaid, less than half have Medicaid claims and less than a quarter show EPSDT 
claims for preventive health care.  Caseworkers and caregivers are not informed about the 
Medicaid system.  They also do not have complete medical information about the children, 
perhaps compromising the childrens health care needs. The lack of training for both 
caseworkers and caregivers, the lack of effort to promote Medicaid managed care despite 
caseworker and caregiver concerns about access to Medicaid providers, and the lack of 
communication and coordination between the Division of Youth and Family Services and New 
Jersey Medicaid reveal that New Jersey may not be making reasonable efforts to assure that 
foster care children are receiving appropriate and necessary health care. 
RECOMMENDATIONS 
We believe that the Administration for Children and Families (ACF), CMS, and the State of 
New Jersey need to address the shortcomings in New Jerseys child welfare and 
ii 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  Medicaid systems. Accordingly, to help ensure that all eligible foster care children receive their 
entitled health care services, we recommend that: 
	 ACF work with New Jersey to provide more training to caseworkers and caregivers 
on the Medicaid program, EPSDT, and managed care to help them better negotiate 
these health care systems.  Two possible vehicles through which ACF may bring about 
such a change are the Child and Family Service Reviews and the annual Joint Planning 
Process; and 
	 ACF and CMS work with the State of New Jersey to address the concerns of 
caseworkers and caregivers regarding the lack of access to Medicaid providers. They 
should also work together to promote communication between New Jersey Medicaid 
and the Division of Youth and Family Services so that the Division and caseworkers 
have better information about the health care that foster children are receiving. 
COMMENTS 
We received comments from ACF, CMS, and the State of New Jersey.  Both ACF and CMS 
agree with our recommendations. The ACF, through the Child and Family Services Plans, will 
address the need for New Jersey to provide training to caseworkers and caregivers to ensure a 
greater level of service for foster children from Medicaid providers. The Child and Family 
Services Review for New Jersey in 2004 will determine if the efforts to improve training have 
led to improved medical health outcomes for foster children. 
The CMS agrees that New Jersey Medicaid should work with the Division of Youth and 
Family Services to provide information on the availability of Medicaid providers.  The CMS 
offers to provide technical assistance to the state to promote this process. 
Both ACF and CMS made a number of technical comments that we incorporated into the 
inspection report, when appropriate.  The full text of the comments received from ACF and 
CMS are included in Appendix D. 
The State of New Jersey indicated that, subsequent to our field work, several projects intended 
to impact the health care needs of foster children were initiated. The full text of those 
comments can also be found in Appendix D. 
iii 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  T A B L E    O F    C O N T E N T S
           PAGE
EXECUTIVE SUMMARY ...................................................... i
INTRODUCTION .............................................................1
FINDINGS
Only Half of the Children Are Receiving Medicaid Services..........................6
Caseworkers and Caregivers Not Informed, Lack Medical Information and Providers  .....9
CONCLUSION .............................................................13
RECOMMENDATIONS ......................................................14
APPENDICES
A: New Jersey Foster Care ................................................16
B: New Jersey State Laws and Regulations .....................................17
C: New Jersey EPSDT Schedule ............................................19
D: Comments ...........................................................20
ACKNOWLEDGMENTS .....................................................32
iv
Foster Care Childrens Use of Medicaid Services in NJ    OEI-02-00-00360  I N T R O D U C T I O N  
OBJECTIVE 
To determine whether sampled foster care children are receiving Medicaid health care services 
in New Jersey. 
BACKGROUND 
Currently, there are over half a million children in foster care nationwide, many of whom are 
reportedly in poor health. Compared with children from the same socioeconomic background, 
foster children suffer much higher rates of serious emotional and behavioral problems, chronic 
physical disabilities, birth defects, developmental delays, and educational difficulties.1 Half of all 
children in the child welfare system suffer from developmental delays or mental health problems 
that are serious enough to need clinical intervention.2 A General Accounting Office (GAO) 
report reviewed foster care populations from California, New York, and Pennsylvania in 1986 
and 1991. Compared to the 1986 population, the 1991 foster care children had more health-
related problems, were at a higher risk for problems due to prenatal drug exposure, and 
entered foster care to a greater extent due to some form of neglect.3 In addition to the needs 
they share with other children, such as immunizations, routine well-child examinations, and 
treatment of childhood diseases, foster children clearly have a greater need for specialized 
health care services. 
Despite their need, it appears that many foster children are not receiving adequate health care. 
Many foster parents report difficulty in finding health care professionals who are willing to care 
for their children. It is estimated that 60 percent of all children in out-of-home care have 
moderate to severe mental health problems, yet less than one third of 
1Chernoff, R. et. al., Assessing the Health Status of Children Entering Foster Care, Pediatrics, 93:2, 1994. 
2
Ensuring the Healthy Development of Foster Children, New York State Permanent Judicial Commission on 
Justice for Children, 1999. 
3
Foster Care: Parental Drug Abuse Has Alarming Impact on Young Children, General Accounting Office, 
GAO/HEHS-94-89, 1994. 
1 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  those children receive mental health services.4  A second GAO report issued in May 1995, 
entitled Health Needs of Many Young Children are Unknown and Unmet, found that a 
significant proportion of young foster children did not receive critical health-related services in 
the three locations studied (Los Angeles County, New York City, and Philadelphia County).5 
In fact, GAO estimated that only 1 percent of these children received Early and Periodic 
Screening, Diagnostic and Treatment (EPSDT) services6, a federal entitlement to 
comprehensive medical services for Medicaid-eligible children under the age of 21. 
Medicaid for Foster Children 
The Medicaid program provides health care to low income persons and long term care to the 
disabled and low income elderly. It is administered by the Centers for Medicare and Medicaid 
Services (CMS) and jointly funded by the federal and state governments. Within broad 
national guidelines, each of the states does the following: establishes its own Medicaid eligibility 
standards; determines the type, amount, duration, and scope of services; sets the rate of 
payment for services; and administers its own state Medicaid program.  In 1999, Medicaid 
payments for foster care children nationwide approached $2.9 billion.7 
According to Section 1902 (a)(10)(A)(i)(I) of the Social Security Act, foster children covered 
under Title IV-E of the Social Security Act are eligible for Medicaid. Foster children who are 
not eligible for Title IV-E usually qualify for Medicaid through other eligibility categories set 
forth by each state. 
New Jersey 
New Jerseys foster care system is centrally managed. The New Jersey Department of Human 
Services is responsible for all the children in foster care within the state. At the time of this 
inspection, the state had just over 9,500 children in foster care. Within the Department, the 
Division of Youth and Family Services (the Division) handles the states family and child welfare 
services. New Jersey has five regional offices, 32 district offices and six adoption resource 
centers.  Regional offices supervise district offices and adoption resource centers and provide 
administrative and support services. Caseworkers in district offices are responsible for 
placement, supervision, and coordination of services 
4
Factsheet: The Health of children in Out-of-Home Care. Child Welfare League of America. Retrieved 
3/14/03 from: http://www.cwla.org/programs/health/healthcarecwfact.htm. 
5
Healthy Needs of Many Young Children are Unknown and Unmet, General Accounting Office, 
GAO/HEHS-95-114, 1995. p 2. 
6
Healthy Needs of Many Young Children are Unknown and Unmet, General Accounting Office, 
GAO/HEHS-95-114, 1995. p 5. 
7
HCFA-2082 Report for Fiscal 1999: http://cms.hhs.gov/medicaid/msis/99total.pdf. 
2 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  for children; those in adoption resource centers have the added responsibility of preparing 
cases for parental rights termination court actions. See Appendix A for a more detailed 
description of New Jersey foster care. 
Also within the New Jersey Department of Human Services is the Division of Medicaid 
Assistance and Health Services.  It administers the Medicaid program in New Jersey and is 
responsible for the Medicaid claims data. We refer to this division as New Jersey Medicaid. 
METHODOLOGY 
This inspection is based on information gathered from multiple sources: Medicaid claims data, a 
review of state laws and policies, and interviews with state agency officials, caseworkers, and 
caregivers. 
Reasons for State Selection 
This inspection focuses on the State of New Jersey and is one of eight states being evaluated. 
New Jersey was selected because of its size, centralized child welfare system, and geographic 
proximity to the OIG regional office in New York City. 
Sample 
We constructed a two-stage sample of foster children.  First, we randomly selected five 
Division of Youth and Family Services district offices in New Jersey.  Second, we randomly 
selected 10 children from each office.  This sample was pulled from all the children in those 
district offices who had been in continuous foster care placement for at least 6 months prior to 
April 2001.  Because of our sample design, we do not generalize our findings to the universe of 
all New Jersey foster care children. 
We grouped placement types into two categories: 1) family care, in which a child lives in a 
family setting with non-relatives or relatives; and 2) residential care, in which a child is placed in 
a group home or larger residential facility with paid staff.  Of the 50 children, 22 were in 
residential care and 28 were in family care at the time of data collection. We included the one 
case of an 18-year-old child living independently in the residential care category because a 
caseworker, not a foster parent, is responsible for the child. 
3 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  Review of Medicaid Claims Data and State Laws and Policy 
Medicaid Claims Data.  New Jersey Medicaid provided a paid claims history for 2 years for 
the children in our sample.  The data include claims paid between April 1999 and April 2001. 
New Jersey Medicaid also provided encounter data. The vast majority of foster children in 
New Jersey are not in managed care and none of the children in our sample showed encounter 
data for our inspection period.  As mentioned above, all the children in our sample had been in 
continuous care for at least 6 months prior to April 2001. Half the children were in continuous 
foster care the entire 2-year period. The other half of the children were in foster care for 
shorter lengths of time or were in and out of care over the 2-year period.  We determined the 
periods of time the child was in foster care based on information given by the caseworkers and 
caregivers. 
In reviewing the Medicaid claims, we paid particular attention to the types of services, dates of 
service, settings, and diagnoses, where available.  We excluded claims that were not health 
care-related, such as those for administrative or transportation costs.  We also excluded claims 
with a service date for a time our data clearly show that the child was not in foster care or for a 
time after the study period.  If it was not clear that the child was in foster care during a certain 
period of time, we included Medicaid claims corresponding to that period in our analysis. 
Several children in the sample have more than one Medicaid number. When a child enters 
foster care in New Jersey he or she receives a Medicaid number.  If that child already has a 
Medicaid number through some other program, such as Temporary Assistance for Needy 
Families or Supplemental Security Income, the child will then have two Medicaid numbers. 
The Division of Youth and Family Services and New Jersey Medicaid program staff report that 
these numbers should be reconciled to leave a child with one Medicaid number, but in some 
instances the reconciliation does not occur.  In these instances, Medicaid services could be 
billed under each of that childs Medicaid numbers.  New Jersey Medicaid program staff took 
this situation into account when compiling the claims data. 
In addition, New Jerseys Department of Human Services provided a list of services paid by 
the Division of Youth and Family Services for children in the sample. The same methods used 
to analyze the Medicaid claims were used to analyze these health care payments. 
State Law and Policy Reviews. We reviewed state laws pertaining to the health care of 
foster children. We also collected and reviewed licensing requirements for foster homes and 
residential facilities, the current and proposed revisions of the foster parent handbook, and 
state-issued EPSDT-related information. 
4 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  Interviews 
Caseworker Interviews.  We interviewed each childs caseworker either in person or by 
telephone. Some children had the same caseworker, giving us a total of 34 caseworkers for the 
50 children in our sample.  Each interview focused on the caseworkers understanding of and 
training in Medicaid, their experience accessing services for foster children, and any barriers to 
health care faced by foster children in general. Each caseworker spoke specifically about the 
sample childs case and generally about his or her own experiences working in foster care. 
Caregiver Interviews. We interviewed the foster parents of the 28 children in family care and 
residential facility staff for the 22 children in residential care. We use the term caregiver to 
refer to a foster parent or a staff member of a residential facility who is responsible for the child. 
Like the caseworker interviews, our interviews with caregivers focused on training, Medicaid, 
and procuring health care services for the child.  We analyzed the responses and compared 
them to those of the caseworkers, noting any consensus or disagreement within and between 
the two groups. 
State Agency Officials. We held several meetings, both in person and by telephone, with 
officials from the Division of Youth and Family Services and New Jersey Medicaid.  Our 
discussions covered a wide spectrum of information to help us understand how the states 
foster care and Medicaid systems are organized. 
This inspection was conducted in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
5 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  F I N D I N G S  
Foster care children are deemed eligible for Medicaid services in New Jersey.  However, our 
analysis of 2 years of Medicaid claims for 50 foster children in New Jersey show that few of 
these children are receiving Medicaid services, particularly EPSDT services.  In addition, 
interviews with the caseworker and caregiver for each of the 50 children reveal that 
caseworkers and caregivers are not informed about the Medicaid program and they have 
received very little training in Medicaid services for foster children. Also, most caseworkers 
and caregivers did not receive their foster childs medical information, and they report difficulty 
finding Medicaid providers. 
Claims Data Indicate That Only Half the Children in our Sample are 
Receiving Medicaid Services Despite Every Child Having Coverage 
Federal law requires that foster children covered under Title IV-E of the Social Security Act be 
deemed eligible for Medicaid (see  1902 (a)(10)(A)(i) of the Social Security Act). In New 
Jersey, foster children who are not covered under Title IV-E are eligible for Medicaid under 
New Jersey state law (Appendix B). Every child in the sample had a valid Medicaid number at 
the time of this inspection. 
Although all 50 children in the sample have Medicaid coverage, New Jersey Medicaid claims 
data show that only 24 of the 50 children have had a health care claim between April 1999 and 
April 2001.  This number is far lower than expected in light of two facts: 1) New Jersey state 
law requires the Division of Youth and Family Services to make every reasonable effort to 
assure that foster children receive appropriate and necessary health care8 and 2) foster care 
children generally have more medical problems than both children outside of foster care and 
children in the general Medicaid population. 
The 24 children have a total of 1,701 paid health care claims over a 2-year period. 
Prescription medication is the most common type of claim: Twenty children have a total of 550 
prescription claims. See Table 1 below for other frequent claims. The children with claims 
have an average of six different types of services.  The 26 children without Medicaid claims 
appear to have the same characteristics as those children with Medicaid claims. 
8
NJ AC 10:122D-2.5(a) 
6 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360 Table 1 
Health Care Claims 
Number of Children  Claim Type  Number of Claims 
21  Office Visits  105 
21  Diagnostic/Laboratory  262 
12  Dental Services  126 
3  Hospital Visits  172 
Source: New Jersey Medicaid Claims Data, 2001 
There are circumstances where a child may receive some type of health care service that is not 
billed through New Jersey Medicaid. A child in residential care, for instance, may get a health 
care service through the facility that is not billed to Medicaid because residential facilities often 
have providers on staff or under contract.  At the time of data collection, 22 of the 50 children 
were in residential facilities. Eleven of these 22 have a Medicaid claim. Mental health 
professionals work with 14 of the facilities.  Doctors and nurses work with 11 facilities and 
dentists work with six facilities. 
Also, a New Jersey foster child can be placed in foster care in another state.  In those cases, 
Medicaid claim information is usually included in the childs placement states data, not in New 
Jerseys data.  Our records show that five children were in out-of-state placements at the time 
of data collection. That does not mean, however, that they were out of New Jersey for the 
entire study period.  Our data show that two of the five were in foster care in another state 
during the entire study period.  Interestingly, one of these two has a New Jersey Medicaid 
claim. 
Only 22 Percent of Children Have Claims for Screening Services 
While states have the flexibility to design their own Medicaid programs, the EPSDT program 
requires each state to provide coverage for comprehensive and preventive child health services 
to Medicaid eligible individuals under the age of 21. In general, EPSDT treatment services 
include all mandatory and optional services available under the Medicaid program. Specifically, 
these services cover screening, vision, dental, and hearing services.9 Optional services include 
case management, physical therapy, rehabilitative services, and private-duty nursing. 
Diagnostic services are covered whenever there is a medical need to conduct further 
examination. Treatment or medical care must be provided for any physical or mental conditions 
discovered by the screening services. 
9
Social Security Act 1905 (r) 
7 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360 New Jersey has set its own EPSDT periodicity schedule, based in large part on the one 
developed by the American Academy of Pediatrics. New Jerseys schedule can be found in 
Appendix C.10  New Jersey law requires that the Division of Youth and Family Services 
ensure that foster children receive medical and dental examinations at least annually after the 
initial medical examination performed at the time of placement.  The type and frequency of the 
exam shall be based on the foster child's age and medical needs. 
However, only 11 of the children have an EPSDT claim. Of these children, eight have a dental 
EPSDT claim, two have a preventive EPSDT claim, and one child has both types. 
This finding is further supported by CMS data that show New Jersey has had low EPSDT 
participation rates. The latest year of available data from CMS, 1998, show 35 percent of all 
New Jersey children who were eligible for both Medicaid and EPSDT services participated in 
EPSDT.11 In 1995, New Jerseys EPSDT participation rate was 32 percent, 12 percent in 
1996, and 4 percent in 1997.12 In January 2001, New Jersey began distributing $10 incentive 
payments to providers to increase reporting of EPSDT visits. 
State Funds for Services Not Covered by Medicaid are Also Used, But Few 
Children Receive These Services 
The caseworkers report that they turn to the Division of Youth and Family Services for 
assistance when they feel a foster child needs a service that is not covered by Medicaid. The 
Division will sometimes pay for a health care service that is not covered by Medicaid, such as 
replacement eyeglasses. It appears that there may be as many as three pools of funds that 
caseworkers can access for foster childrens health care needs.  One is at the headquarters 
level, one is at the district offices, and one is through a cost-reimbursement contract in which a 
contracted agency provides services. 
The Division provided data on payments it made for health care services dated between April 
1999 and April 2001. These data show that the Division paid for health care services for 11 of 
the 50 children in our sample. The most common types of paid service are assessment and 
evaluation and maternity home care. In only one instance is the service a medical examination. 
Six of the 11 children who had health-related services paid by the Division do not have any 
Medicaid claims. 
10
AAP Policy Statement Volume 105, Number 03, March 2000, pp 645 Recommendations for Preventive 
Pediatric Health Care (RE9939). 
11
http://cms.hhs.gov/medicaid/epsdt/ep1998.pdf, July 7, 2002. 
12
http://cms.hhs.gov/medicaid/epsdt/ep1995.pdf, http://cms.hhs.gov/medicaid/epsdt/ep1996.pdf, 
http://cms.hhs.gov/medicaid/epsdt/ep1997.pdf, January 9, 2003. 
8 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  Most caseworkers and caregivers say that their foster child had the Division mandated 
comprehensive medical evaluation upon first entering foster care. But caseworkers point out 
that this exam is often performed by a nurse from a district office of the Division of Youth and 
Family Services, and one caseworker indicates that this is a quick check and not 
comprehensive. 
Sampled Caseworkers and Caregivers Are Not Informed About the 
Medicaid Program, Do Not Have Their Foster Childs Medical 
Information, and Have Difficulty Finding Medicaid Providers 
Caseworkers and Caregivers Report Very Little Medicaid Training 
Just one of the caseworkers reports having received any training in Medicaid services for foster 
children. This caseworker is responsible for four children in our sample. The lack of training is 
significant, given the important role that the caseworker plays in the health care of foster 
children and how frequently caregivers rely on caseworkers. The caseworker is the main 
source of information and assistance for caregivers. Caregivers turn to their caseworker when 
they need help accessing services or seek information regarding Medicaid cards or Medicaid 
providers. 
In addition, few caregivers have been given the tools necessary to negotiate the Medicaid 
system. Only eight of the caregivers say someone explained to them which services might not 
be covered under Medicaid. Sixteen report they were given a list of health care professionals 
who accept Medicaid.  Twenty mention they were given a schedule of appointments that 
children need. Just five caregivers say they were given all three of these tools. 
Among caregivers, foster parents report that they do not receive general Medicaid training. 
Some say they learn about Medicaid informally from their caseworker, while other foster 
parents say they teach themselves. We examined the package given to foster parents at their 
general training and found that it does not address Medicaid.  In correspondence with the 
Office of Inspector General, the Division of Youth and Family Services reported that another 
handbook is supposed to be distributed to all foster families, usually at the time of the home 
study or at the time of approval. The handbook briefly describes Medicaid and EPSDT. It 
also includes recommended medical appointment schedules. Our inspection did not determine 
whether or not foster parents received this handbook. 
Foster parents receive little training related to the health care of a foster child. Most of the 28 
foster parents say they have not received any training in regard to the health care of foster 
children. Six parents report that they have received some training. This training 
9 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  ranges from a first aid course to simply receiving some information regarding Medicaid or 
getting checkup schedules. In contrast, residential facilities often have trained health care 
professionals on staff. 
Few Caregivers and Caseworkers Have Heard of EPSDT 
The CMS requires that state Medicaid agencies must provide for a combination of written and 
oral methods designed to inform effectively all EPSDT eligible individuals (or their families) 
about the EPSDT program.13 Only 15 of the caregivers, however, say they have heard of 
EPSDT and even fewer of the caseworkers have heard of it. For all 50 children, fewer than 
half have a caseworker or caregiver who has heard of EPSDT. Of the caregivers, residential 
facilities report knowing about EPSDT more often than foster parents. 
New Jersey Medicaid program staff report having problems mailing EPSDT forms and 
reminders to caregivers due to difficulty in obtaining foster childrens correct address from the 
Division of Youth and Family Services. 
Seventy-six Percent of the Caregivers are Not Aware of Managed Care 
Option 
Most states enroll Medicaid populations in managed care.14 A managed care organization 
offers third-party financing of necessary medical care and provides coverage for a defined set 
of medical and health benefits. Managed care also describes a system in which an individual 
primary care provider coordinates all care, including referrals to specialty services.  Certain 
Medicaid populations, such as foster care children, may be carved out (not included) of the 
state managed care contract. 
In New Jersey, enrollment in Medicaid managed care is voluntary for foster care children. 
There are five managed care organizations in New Jersey, two of which operate throughout all 
21 counties. Caregivers may choose one of these managed care organizations and pick a 
primary care physician for the child.  The primary-care provider performs routine checkups, 
provides general care and refers to a specialist, if necessary. It appears very few foster 
children are enrolled in managed care in New Jersey.  Foster children not in Medicaid managed 
care are covered by Medicaid fee-for-service. 
1342 CFR 441.50; 42 CFR 441.56 
14
Summary Statistics: Medicaid Managed Care Enrollment Report, June 2000, 
http://www.hcfa.gov/medicaid/omchmpg.htm. 
10 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  Forty-one caregivers say their child is not in managed care. Of these, only three say that 
someone explained to them that their child could be enrolled in Medicaid managed care. 
According to the Division of Youth and Family Services and New Jersey Medicaid program 
staff, the Division does not actively encourage caregivers to enroll their foster children in 
managed care.  Division staff feel that foster children would not benefit from managed care 
because they move often and would frequently have to change their primary care physician. 
Another reason given is that one home or facility may have children in different managed care 
organizations and would not be able to take all of the children in that placement to the same 
provider. 
We note that there is some confusion regarding managed care. The Division of Youth and 
Family Services tells us that one child in the sample was enrolled in managed care at the time of 
this study. New Jersey Medicaid program staff, however, report that none of the children in 
our sample was enrolled in managed care at the time of the study. Adding to the confusion, the 
caregivers for four children report that the children are in managed care, but the caseworkers 
for those four children say they are not. Caseworkers for two other children mention that the 
children are in managed care, but the caregivers say the children are not. Other caseworkers 
report that they simply do not know whether their foster child is in managed care or not. 
Most Caseworkers and Caregivers Do Not Have Complete Information 
About their Foster Childs Medical History 
According to New Jersey state law, the Division of Youth and Family Services is responsible 
for establishing and maintaining a foster childs health care record. The Division needs to 
update and provide this record to the foster parent. The Division must also share health care 
information about the child with the childs parents and foster parents (Appendix B). 
Caseworkers for half the children in our sample say they either did not receive the childs 
medical records or they received only partial records. For example, the childs immunization 
history can be missing or outdated. Caregivers for 34 of the children in our sample report that 
they did not receive a medical history on their foster child or that they did receive some 
information, but that it was incomplete.  We found that the caseworkers and caregivers are not 
always aware of certain health problems that their child may have because they do not have 
enough information about their childs medical history.  In only four of the 22 cases in our 
sample where the child is identified by their caregiver as having a chronic medical condition, 
does the caregiver mention that he or she learned of the condition from the medical history.  It is 
important to note that the primary source for a foster childs medical history is the biological 
parents, and they may not be available or cooperative. 
11 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  The consequences of not knowing a childs medical background could be serious.  Because 
information about the childs medical background is limited or unavailable, a child could arrive 
at a placement with a medical problem that goes unnoticed.  Food allergies could be missing 
from the background, as was the case for a foster mother we interviewed during our pre-
inspection process.  She says she discovered that her foster child, who is not in our sample, 
was allergic to peanuts only after the child had eaten some. 
Most Caseworkers and Caregivers Report Difficulty Finding Medicaid 
Providers 
Most caseworkers report that finding providers is a problem. They cite the distant location of 
dentists and mental health professionals as barriers to getting care. Caregivers, too, report 
difficulty finding providers.  Almost half of the caregivers say that the lack of Medicaid 
providers is a problem for foster children.  Among the caregivers, residential facilities, more 
often than foster parents, complain about a lack of Medicaid providers, despite the connections 
that facilities have with health care providers.  Half of the facilities cite problems with finding a 
provider, while 18 percent of foster parents cite problems. Caregivers also mention trouble 
either finding a dentist or making a timely appointment. 
12 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  C O N C L U S I O N  
This inspection identifies several shortcomings in New Jerseys child welfare and Medicaid 
systems that cause concern.  We documented that, although all the children in our sample are 
covered by Medicaid, less than half have Medicaid claims and less than a quarter show EPSDT 
claims for preventive health care.  Caseworkers and caregivers are not informed about the 
Medicaid system.  They also do not have complete medical information about the children, 
perhaps compromising the childrens health care needs. The lack of training for both 
caseworkers and caregivers, the lack of effort to promote Medicaid managed care, despite 
caseworker and caregiver concerns about access to Medicaid providers, and the lack of 
communication and coordination between the Division of Youth and Family Services and New 
Jersey Medicaid reveal that New Jersey may not be making reasonable efforts to assure that 
foster care children are receiving appropriate and necessary health care. 
13 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  R E C O M M E N D A T I O N S  
We believe that the Administration for Children and Families (ACF), CMS, and the State of 
New Jersey need to address the shortcomings in New Jerseys child welfare and Medicaid 
systems. Accordingly, to help ensure that all eligible foster care children receive their entitled 
health care services, we recommend that: 
	 ACF work with New Jersey to provide more training to caseworkers and caregivers 
on the Medicaid program, EPSDT, and managed care to help them better negotiate 
these health care systems.  Two possible vehicles through which ACF may bring about 
such a change are the Child and Family Service Reviews and the annual Joint Planning 
Process; and 
	 ACF and CMS work with the State of New Jersey to address the concerns of 
caseworkers and caregivers regarding the lack of access to Medicaid providers. They 
should also work together to promote communication between New Jersey Medicaid 
and the Division of Youth and Family Services so that the Division and caseworkers 
have better information about the health care that foster children are receiving. 
COMMENTS 
We received comments from ACF, CMS, and the State of New Jersey.  Both ACF and CMS 
agree with our recommendations. The ACF, through the Child and Family Services Plans, will 
address the need for New Jersey to provide training to caseworkers and caregivers to ensure a 
greater level of service for foster children from Medicaid providers. The Child and Family 
Services Review for New Jersey in 2004 will determine if the efforts to improve training have 
led to improved medical health outcomes for foster children. 
The CMS agrees that New Jersey Medicaid should work with the Division of Youth and 
Family Services to provide information on the availability of Medicaid providers.  The CMS 
offers to provide technical assistance to the state to promote this process. 
Both ACF and CMS made a number of technical comments that we incorporated into the 
inspection report, when appropriate.  The full text of the comments received from ACF and 
CMS are included in Appendix D. 
The State of New Jersey indicated that, subsequent to our field work, several projects intended 
to impact the health care needs of foster children were initiated. The full text of those 
comments can also be found in Appendix D. 
14 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  It is noteworthy that the State of New Jersey reached a settlement in a class-action lawsuit 
regarding their foster care system.  The Settlement Agreement establishes an oversight panel, 6 
areas for emergency action, and 11 outcome measures for children in the foster care system. 
With the increased oversight and funding and an outcome measure focused on service needs, 
we are optimistic that concerns raised in this report will be addressed. 
15 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX A 
New Jersey Foster Care 
The New Jersey Department of Human Services is responsible for all the children in foster care 
within the state.  Within the Department, the Division of Youth and Family Services handles the 
states family and child welfare services. The Division has over 3,000 employees whose tasks 
include investigating reports of abuse and neglect, providing protective and foster care services, 
licensing families and facilities that care for children, and supervising public/private contracts.15 
Within this Division is the Child Health Unit, which focuses on the health of foster children. The 
responsibilities of the Child Health Unit range from reviewing relevant agency policies and 
procedures to providing consultative services to caseworkers. 
The Division of Youth and Family Services employs 28 pediatric nurses throughout the state, 
located in district offices and adoption resource centers.  Their job is to provide direct services 
for caseworkers, caregivers, and community agencies, such as performing assessments of 
children, training and answering health-related questions.  According to a recent study, child 
health nurses completed 346 pre-placement assessments and provided over 1,000 training 
sessions to caregivers, Division staff, and community agencies.16  The Child Health Program 
Planner, located in the Divisions central office, serves as a liaison between the Division and the 
Child Health Program, taking on initiatives such as increasing health assessments for children 
entering foster care in certain district offices.17 
The Division cites its involvement with several programs addressing the health care needs of 
foster children. These programs include case management, placement, and many other services 
for medically fragile children. The Division also lists several services, such as assessment, for 
child abuse and neglect cases. In addition, the State of New Jersey is currently piloting a new 
project in select counties called Childrens System of Care Initiative. Its goal is to help 
children and adolescents with emotional and behavioral disturbances and their families across 
child-serving systems.18 
15http://www.state.nj.us/humanservices/dhsabout.html, June 28, 2002. 
16
Ryan, Constance M. and Storm, Deborah., Child Health Program Year One Evaluation, New Jersey. 
Francois-Xavier Bagnoud Center, University of Medicine & Dentistry of New Jersey, January 2002. 
17
Ibid., p11. 
18
http://www.njkidsoc.org, June 28, 2002. 
16 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX B 
New Jersey State Laws and Regulations 
Medicaid Eligibility 
The New Jersey Administrative Code provides that persons eligible under the New Jersey 
Medicaid program include:  "Persons for whom adoption assistance agreements are in effect 
pursuant to Section 473 of the Social Security Act (42 U.S.C. 673) or for whom foster or 
adoption assistance is paid under Title IV-E of the Act." N.J.A.C. 10:49-2.2(b)8. 
The regulations do not explicitly address foster children not eligible under Title IV-E of the 
Social Security Act. However, it appears that any child in foster care in New Jersey is eligible 
for Medicaid. Under New Jersey law: 
"an individual under 21 years old who, without regard to resources, would be except 
for dependent child requirements, eligible for the aid to families with dependent children 
program under the State Plan for Title IV-A of the Federal Social Security Act as of 
July 16, 1996, or groups of such individuals, including but not limited to, children in 
foster placement under supervision of the Division of Youth and Family Services whose 
maintenance is being paid in whole or in part from public funds, children placed in foster 
home or institution by a private adoption agency in New Jersey or children in 
intermediate care facilities, including developmental centers for the developmentally 
disabled or in psychiatric hospitals."  N.J. ST 30-40-3(6). 
The official state web site for the New Jersey foster care program also states that the costs of 
health care for "foster children are covered by Medicaid, which covers all necessary care and 
treatment."  See www.njfostercare.org/faq.html 
States Responsibilities for the Health of Children in Foster Care 
The New Jersey Administrative Code at 10:122D-2.5, et. seq. delineates basic health care 
services for children in foster care as follows: 
(a) The Division shall make every reasonable effort to assure that each child in foster home 
placement receives appropriate and necessary health care, including mental health services. 
17 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX B 
(b) For each child initially entering foster home placement, the Division shall obtain a medical 
examination at the time of placement. The Division shall establish a health care record for each 
child and shall provide the foster parent with a health care record which documents health 
information concerning the foster child, including, but not limited to: 
1. The names and addresses of the foster childs health care providers; 
2. A record of the foster childs immunizations; 
3. The foster childs known medical problems, if any; 
4. The foster childs medications, if any; and 
5. The foster childs allergies, if any. 
(c) The Division shall maintain a health care record for each child.  The Division shall review 
and update the foster childs health record at the time of each placement into a foster home and 
shall provide the updated record to the foster parent. 
(d) The Division shall assure that the foster child receives a medical and dental examination at 
least annually after the initial medical examination performed at the time of placement. The type 
and frequency of the exam shall be based on the foster child's age and medical needs. 
(e) The foster parent shall be responsible for arranging and providing care to meet the foster 
childs health needs, including, but not limited to, medical and dental examinations as agreed to 
with the Division, and shall provide the Division with information concerning the foster childs 
health care and needs. 
(f) The Division shall share health care information concerning the foster care child with the 
foster child's parents and foster parents. 
18 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX C 
New Jersey EPSDT Schedule 
The EPSDT recommended health checkup schedule for children is an initial exam at birth 
followed by one well-child exam: 
Age 6 weeks to 3 months 
3 months to 5 months 
5 months to 11 months 
11 months to 14 months 
14 months to 17 months 
17 months to 20 months 
between 20 and 24 months 
After 2 years of age, the child should be examined once a year through the age of 20. 
19 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
20 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
21 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
22 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
23 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
24 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
25 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
26 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
27 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
28 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D 
29 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  APPENDIX D  APPENDIX D 
31 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360  A C K N O W L E D G M E N T S  
This report was prepared under the direction of John I. Molnar, Regional Inspector General for 
Evaluation and Inspections in New York and Jodi Nudelman, Assistant Regional Inspector 
General. Other principal Office of Evaluation and Inspections staff who contributed include: 
Nancy Harrison, Project Leader  Linda Hall, Program Specialist 
Natasha Besch, Lead Analyst  Barbara Tedesco, Statistician 
Nicole Gillette, Program Analyst 
Laura Torres, Program Analyst 
32 
Foster Care Childrens Use of Medicaid Services in NJ  OEI-02-00-00360