Background

States’ Medicaid and SCHIP programs are governed by various federal  requirements regarding eligibility, covered services, and access to care.  Under these requirements, states generally have some discretion in  determining the amount, duration, and scope of services their programs  will provide, and the delivery and financing systems through which  beneficiaries will receive care—that is, FFS, managed care, or both.  Federal requirements relating to Medicaid beneficiaries’ access to care are  established in statute; for managed care service delivery systems, detailed  federal regulations regarding access were recently issued. SCHIP  requirements are also set out in statute but are less specific than those for  Medicaid and do not include detailed managed care requirements or  regulations comparable to those for Medicaid.

		Populations Covered and Program Characteristics

Since 1965, Medicaid has financed health care coverage for certain  categories of low-income individuals—including over 22 million children  in 2000. Federal law requires states to extend Medicaid eligibility to  children aged 5 and under if their family incomes are at or below 133  percent of the federal poverty level and to children aged 6 through 18 in  families with incomes at or below the federal poverty level. At their  discretion, most states have set income eligibility thresholds for families  with children that expand their Medicaid programs beyond the minimum  federal statutory levels.
In 1997, the Congress established SCHIP, which provides health care  coverage to low-income, uninsured children living in families whose  incomes exceed the eligibility limits for Medicaid. SCHIP covered over 4.6  million children in fiscal year 2001, generally targeting children in families  with incomes up to 200 percent of the federal poverty level. Compared  with Medicaid, which has specific minimum federal eligibility and benefit  requirements, the SCHIP legislation provides states more flexibility in how  they choose to structure their programs. States have three options in  designing SCHIP: They may expand their Medicaid programs, develop a  separate child health program that functions independently of Medicaid,  or create a combination of the two approaches. (See table 1 for the  program designs of the 16 states in our sample.) While Medicaid expansion  programs under SCHIP must use Medicaid’s provider networks and  delivery systems, SCHIP separate child health programs may depart from  Medicaid requirements particularly with regard to covered benefits and  the plans, providers, and delivery systems available to beneficiaries.
Medicaid and SCHIP differ in terms of the share of their program  expenditures that come from federal funds. No overall federal budget limit  exists for the Medicaid program; it is an open-ended entitlement whereby  state expenditures for services that are provided under a CMS-approved  state Medicaid plan are matched by the federal government using a  formula that results in federal shares that currently range from 50 to 76  percent of expenditures, depending on a state’s per capita income in  relationship to the national average. The federal share of Medicaid  expenditures is about 57 percent. In contrast to Medicaid, federal funding  for SCHIP is limited. The Congress appropriated $40 billion over 10 years  (from fiscal years 1998 to 2007), with a specified amount allocated  annually to each of the 50 states, the District of Columbia, Puerto Rico,  and 4 U.S. territories. State SCHIP expenditures are matched by federal  payments up to the state’s annual appropriated allotment. The SCHIP  statute provides for an “enhanced” federal matching rate, with each state’s  SCHIP rate exceeding its Medicaid rate. The federal share of each state’s  SCHIP expenditures ranges from 65 to 83 percent; the federal share of  total SCHIP expenditures is about 72 percent.

		Delivery Systems

States provide Medicaid and SCHIP services through two distinct service  delivery and financing systems—managed care and FFS, with the latter  including PCCM. Under a capitated managed care model, states contract  with a managed care organization and prospectively pay the plans a fixed  monthly fee per patient to provide or arrange for most health services.  Plans, in turn, pay providers either retrospectively for each service  delivered on a FFS basis or through prospective capitation payment  arrangements. In contrast, in a traditional FFS delivery system, the  Medicaid program reimburses providers directly and on a retrospective  basis for each service delivered. The PCCM model is similar to a  traditional FFS arrangement except that PCCMs are paid a monthly, per  capita case management fee, usually around $3, to coordinate care for  beneficiaries, in addition to FFS reimbursement for any health care  services they provide. PCCMs, which are selected by beneficiaries upon  enrollment, are responsible for treating and coordinating the care for  those beneficiaries. Coordination may involve referrals to specialists and  other providers. In some cases, receipt of specialty and other services may  require PCCM approval.
The 16 states we reviewed often structured their Medicaid and SCHIP  service delivery systems differently. As shown in table 2, the exclusive use  of managed care was less prevalent in Medicaid than in separate SCHIP  programs (3 and 6 states, respectively), with 3 states—Maryland,  Michigan, and Tennessee—using managed care for virtually all children in  both Medicaid and SCHIP. The states were more likely to use a  combination of managed care and FFS approaches for their Medicaid  programs than for SCHIP (11 and 5 states, respectively). Despite the  recent growth in states’ use of managed care, FFS is still a major  component of many states’ programs, especially for Medicaid.

		Federal Requirements for Access to Care

A state is required by federal statute to ensure that its payment and  delivery systems will afford beneficiaries’ access to services similar to that  of its general population; further, Medical assistance must be provided  with reasonable promptness. While Medicaid traditional FFS delivery  systems have no additional access requirements, managed care and PCCM  delivery systems do. States are required to ensure that beneficiaries’  access to care in managed care and PCCM is equal to that available to  beneficiaries in traditional FFS. On June 14, 2002, CMS published final  rules to implement new provisions the Balanced Budget Act of 1997 set  out for states’ Medicaid managed care programs. These new rules address  the requirements, prohibitions, and procedures for the provision of  different types of Medicaid managed care and PCCM delivery systems.  Under these rules, which became effective August 13, 2002, states have  until August 13, 2003, to bring all aspects of their state managed care  programs into compliance with the new requirements.
States that wish to use managed care and PCCMs to deliver Medicaid  services must have CMS approval to do so. CMS approval is in part  intended to ensure that adequate protections are in place to safeguard the  interests of beneficiaries enrolled in managed care who may find their  freedom to seek the care of any participating provider at any time more  restricted than in FFS. In managed care, states may “lock in” beneficiaries  to one managed care plan and its network of providers for up to 1 year in  order to provide the plan sufficient time and opportunity to manage the  care of its enrollees most efficiently and appropriately. States request CMS  approval for their managed care programs through one of two methods:  (1) as a waiver from certain statutory requirements or (2) as an  amendment to the state’s Medicaid plan. Fifteen of the 16 states we  reviewed received CMS approval to provide managed care through two  types of waivers of statutory provisions, program and demonstration  waivers, while one state—Nevada—received approval through a state plan  amendment.
Of the states we reviewed, 12 had approved “freedom-of-choice” program  waivers, under section 1915(b) of the Social Security Act, which permitted  them to direct beneficiaries to enroll in a managed care system. In  reviewing and approving program waivers, CMS requires states that wish  to limit beneficiaries’ enrollment to managed care to offer a choice of at  least two managed care plans or allow beneficiaries to choose between  one managed care plan and a PCCM system. CMS also requires states to  ensure that (1) managed care plans’ physician networks under the waiver  include approximately the same number or more physicians than were  available before the waiver’s implementation and (2) services under  program waivers are provided within reasonable time frames and are  furnished within reasonable distances for the beneficiaries to travel. As a  condition of waiver approval, during the period of our review CMS asked  states to specify whether they had established access-related requirements  for participating plans in areas such as provider capacity, or maximum  times frames for beneficiaries to schedule appointments, travel to  physicians’ offices, or wait in physicians’ offices to be seen. CMS did not  require states to establish specific requirements in these areas, but if they  did, they were asked to describe in their waiver applications how they  planned to monitor compliance with any established requirements. Initial  approval of a program waiver is for a 2-year period, at which time the  waiver can be reviewed and approved for renewal by CMS. Waiver  renewals can result in changes in specific requirements for states.
Six of the states we reviewed—Arkansas, California, Maryland,  Massachusetts, New York, and Tennessee—had approved comprehensive  research and demonstration waivers, authorized by section 1115 of the  Social Security Act, to test concepts likely to further program objectives.  A demonstration waiver provides a state with greater flexibility to design  its Medicaid programs in areas such as eligibility standards, covered  benefits, and reimbursement rules. In reviewing and approving  demonstration waivers, CMS often establishes terms and conditions with  which states must comply that are more prescriptive than requirements for  program waivers. For example, in approving demonstration waivers, CMS  has required states to (1) specify ratios that set the maximum number of  enrolled beneficiaries per participating PCP, (2) establish the maximum  time or distance for beneficiaries to travel to a physician’s office, and   (3) limit beneficiaries’ waiting times when scheduling appointments for  urgent, routine, or specialty care. Initial approval of a demonstration  waiver is for a 5-year period, at which time the waiver can be reviewed and  approved for renewal by CMS.
In contrast to Medicaid, in their SCHIP programs states may require  mandatory beneficiary enrollment in managed care without offering a  choice among health plans. Federal SCHIP access-related requirements  are also less extensive than those for Medicaid. The SCHIP statute requires  that states have methods in place to ensure access to covered services,  including emergency services, but does not specify precise requirements.  States must describe their methods to ensure access to covered services,  including any monitoring procedures, in their SCHIP state plans. In  addition, the SCHIP statute required each state to submit to the Secretary  of HHS a one-time program evaluation in March 2000. States must also  submit to the Secretary annual reports that show their progress toward  reaching their strategic objectives and performance goals, some of which  may relate to access to care.

	In Medicaid Managed Care, States Focused More on Setting Plan Network Requirements than on Monitoring Plans or Analyzing Service Utilization

In attempting to ensure access to care in Medicaid managed care, states  focused more on setting requirements for managed care plans than on  monitoring compliance with these requirements or on analyzing  beneficiaries’ use of services. The 14 states we reviewed with Medicaid  managed care programs reported varying levels of effort (1) to establish  certain requirements and standards for participating plans’ physician  networks and to monitor their implementation and (2) to collect and  analyze data on service utilization, such as encounter data from  participating plans and beneficiary satisfaction surveys. State  requirements for plans’ physician networks varied widely in their  specificity, from broad statements that health plans must have “adequate”  physician networks serving their enrolled members to very specific  standards that set, for example, a maximum average number of  beneficiaries per PCP or a maximum time frame for scheduling a first  appointment. All but 1 of the 14 states required managed care plans to  routinely submit lists of physicians participating in their networks, ranging  from weekly to quarterly reporting. However, fewer states independently  verified or routinely monitored aspects of the submitted data on managed  care plans’ provider networks. For example, 8 of the 13 states receiving  plans’ routine lists of participating physicians periodically verified the  number of physicians accepting new Medicaid patients, but only 5 states  analyzed the number of physicians to identify those participating in  multiple plans, which could overstate overall physician capacity.  Moreover, only 5 states routinely or independently assessed plans’  compliance with maximum waiting times for beneficiaries’ scheduling  appointments. In some cases, states left it to plans to establish time frames  for scheduling appointments, rather than setting statewide standards for  all plans.
Beyond network-related requirements and any associated monitoring,  states attempted to assess beneficiaries’ actual use of services through  various routine data sources and occasional special studies. Routine data  sources included encounter data, where states require health plans to  submit data for each service provided to each enrollee, periodic  assessments of plans’ performance against standardized measures, and  beneficiary satisfaction surveys. But continuing problems with the  reliability of encounter data—and the fact that standardized data on plan  performance and beneficiary satisfaction surveys were not representative  of all Medicaid managed care enrollees—tended to undermine the utility  of these data sources in describing the experiences of beneficiaries and  their service utilization. The four states we visited that had experienced  the withdrawal of managed care plans from their Medicaid programs had  taken various steps to help minimize disruption in care for affected  beneficiaries. However, it is not clear to what extent these states  monitored service utilization for beneficiaries affected by such changes  and their experiences in transitioning to new plans and physicians.

		Most States Set Plan Network Requirements but Less Frequently Monitored Plans’ Compliance

To oversee access to care in their Medicaid managed care programs, the  states we reviewed established requirements for participating plans that  most often focused on the size and structure of their physician networks,  such as the number and geographic location of PCPs and specialists, and  beneficiaries’ ability to schedule appointments. Some states, such as  Colorado, Texas, and Washington, had broad requirements that physician  networks must be adequate to serve beneficiaries, as shown in figure 1.  Among the 14 states that used managed care in their Medicaid programs,  broad network requirements were more prevalent for specialists than for  PCPs. In contrast, 11 of 14 states set specific standards or ratios relating to  the number of enrolled beneficiaries per PCP, and 13 set standards for  providers’ geographic proximity to beneficiaries, such as the maximum  distance or travel time for a beneficiary to reach a provider’s office. More  variation was evident in states’ requirements for plans in terms of  appointment scheduling for beneficiaries. All 14 states set maximum time  frames to schedule routine and urgent appointments, while 6 states also  set maximum time frames for a newly enrolled beneficiary’s first  appointment and 8 states set maximum in-office waiting times.
States took varying approaches in setting their requirements for plan  networks and appointment waiting times, as shown in table 3. For  example, Florida required physicians to certify that their overall practice  did not exceed 3,000 patients, whereas other states established specific  Medicaid beneficiary-to-PCP ratios ranging from 1,000 to 1 in Pennsylvania  to 2,500 to 1 in Tennessee. With regard to appointment waiting times,  some states required plans to set their own standards rather than  establishing a consistent statewide standard.
Routinely monitoring plan performance, especially with established  network requirements and standards, is critical because providers can— and do—change their participation in Medicaid managed care, which in  turn can affect beneficiaries’ access to care. In some cases, a state may not  have set a specific network requirement but nonetheless independently  monitors plan performance. States that monitor the extent to which  participating plans’ network providers are actually available to  beneficiaries are better able to systematically identify and respond to  access problems. For example, see the following.
In 1999, Tennessee reviewed each managed care plan’s contracts with its  providers and contacted providers directly to independently verify their  participation with the plan and whether they were open to new Medicaid  patients. The state found that, for one health plan, only 44 percent of the  participating PCPs accepted new Medicaid patients; of the remaining 56  percent of PCPs, 33 percent had Medicaid patients but would not accept  any new ones, and 23 percent either did not accept any Medicaid patients  or could not be reached by telephone. Determining that the plan did not  comply with requirements for PCP availability, the state required the plan  to add providers who would accept new Medicaid beneficiaries before  assigning any additional beneficiaries to the plan. State officials also  reported that they now conduct a regular telephone survey of providers to  verify the provider data that participating plans submit.
Washington has a broad requirement that physician networks be adequate  to serve enrolled beneficiaries but does not set as many additional specific  standards as do some other states. The state does, however, require  participating plans to routinely report which physicians are participating  in their Medicaid networks and independently verifies plan reports by  periodically placing test calls to physicians. Washington also compiles the  physician-level information into a centralized database to review physician  participation across health plans in order to better ensure that capacity is  not overstated.
To monitor plan performance in terms of provider availability to  beneficiaries, 13 of the 14 states we reviewed routinely obtained periodic  data from participating plans on the number of physicians in their  networks, ranging from weekly reports in Maryland to quarterly reports in  California, Massachusetts, and New York. As a part of this routine data  collection, 12 states also reviewed the geographic distribution of  physicians in their networks. Fewer states, however, took additional steps  to determine, on an ongoing basis, whether the plan-submitted data  adequately reflected network capacity to serve Medicaid beneficiaries. For  example, in 9 states the plans’ provider lists identified those physicians  who were accepting new Medicaid patients, which would help indicate the  extent to which plan networks were open to new public beneficiaries, and  7 states independently verified the accuracy of the submitted provider  lists. Five states analyzed information across the plans’ provider lists to  help identify the unduplicated number of PCPs available to the Medicaid  managed care population and to help avoid overstating overall physician  availability. (See fig. 2.)
Compared to state monitoring of provider network information, even  fewer states monitored compliance with their requirements for  appointment waiting times. Five of the 14 states with Medicaid managed  care—California, Massachusetts, New York, Tennessee, and Washington— routinely collected data or otherwise independently verified health plans’  compliance with specific appointment-related standards such as maximum  time frames to schedule an initial health assessment (first visit) or routine- care appointment and in-office waiting times. To determine whether  beneficiaries newly enrolled in a plan received initial health assessments  within 120 days of enrollment, California regularly reviews health plan  reports and physician office medical records for a sample of new  beneficiaries in each plan. To verify physician compliance with  appointment scheduling standards, New York makes random calls to  physicians (200 offices per plan service area per year), requesting  information on the next available appointment for a specified need, such  as routine care, urgent care, or after-hours care. In contrast,  Massachusetts directs plans to develop and monitor compliance with their  own appointment scheduling requirements, and the state annually reviews  and critiques the methodology and results reported by each plan.
Absent routine verification or monitoring of plans’ compliance with  network and availability requirements, states do not have an adequate  assurance that such requirements are having their intended effect on  beneficiaries’ access to managed care providers. Officials in one state that  did not verify requirements indicated that the standards served as a basis  for legal recourse in the event that beneficiaries raised complaints  regarding appointment availability. Undertaking additional measures to  verify plan compliance, as Tennessee did, can identify more  comprehensive network problems that limit access to care for Medicaid  beneficiaries and that might otherwise go undetected.

		New Regulations May Alter States’ Approaches to Monitoring Managed Care

The new Medicaid managed care regulations, effective August 13, 2002,  and to be fully implemented by August 13, 2003, will likely require some  states to alter their approaches to requirements for their participating  plans and provider networks. In general, the regulations require that states  ensure—through their contracts with managed care plans—that  participating plans demonstrate their capacity to serve the needs of their  enrollees for any specific standards that states set for access to care.  Among other things, the regulations require states to ensure that  participating plans    maintain and monitor their networks of providers to provide adequate and  timely access to all services covered under their contracts with the states,  including monitoring the numbers of network providers who are not  accepting new Medicaid patients;    ensure that network providers offer hours of operation that are no less  than the hours offered to commercial enrollees or comparable to those of  Medicaid FFS;    make services included in the contract available 24 hours a day, 7 days a  week, when medically necessary; and    establish mechanisms to ensure compliance by providers with state  standards for access to care.
The regulations require states to certify to CMS—at the time the state  enters into a contract with a plan or when there are significant changes  that would affect the ability of plans to provide adequate capacity or  services—that plans have complied with state requirements for the  availability of services covered by managed care contracts. To the extent  that states have not made specifications regarding health plan physician  network capacity or assurances of access to care, states may need to  revise their contracts with plans to comply with this new requirement.  States that verify or monitor participating plans’ actual compliance with  the terms of their contracts will likely have greater direct and routine  information on whether the access-related requirements they have set out  for participating plans are achieving their intended benefit for covered  beneficiaries.

		Routine Monitoring of Service Utilization Often Handicapped by Poor Data

Determining the extent to which Medicaid beneficiaries are utilizing—and  are satisfied with—covered program services is an important test of the  effectiveness of any state requirements for managed care plans’ network  capacity and accessibility. To assess beneficiaries’ service utilization and  satisfaction, the states we reviewed generally required participating plans  to routinely provide data from two key sources: encounter data, which are  individual-level data on service use, and HEDIS, which provides  comparative information across participating plans for designated service  measures. Most states also administered CAHPS, which is a standardized  beneficiary satisfaction survey. However, for the majority of states we  reviewed, the utility of these data for routine monitoring was often  handicapped because of the frequent failure of plans to submit reliable  encounter data and the exclusion of significant shares of beneficiaries  from the HEDIS and CAHPS data. CAHPS survey results were further  limited by poor response rates in most states. A few states reported  making sufficient progress in their efforts to improve the quality of their  encounter data that they could use them to routinely analyze service  utilization in their Medicaid managed care programs. In addition to these  routine data sources, a few states reported conducting occasional special  studies that enabled them to identify and focus on access issues pertaining  to beneficiaries’ use of services or satisfaction with services received.

			Encounter Data

Encounter data are intended to capture information on beneficiaries’ use  of primary and preventive care as well as other services, such as  emergency room visits. These data can help states identify patterns of care  along several dimensions, such as by type of visit or patient (such as well- child visits by age), by health condition or disorder (such as asthma or  diabetes), and by plan. As a condition of their approved federal managed  care waivers, states must require Medicaid managed care plans to submit  encounter data. But obtaining reliable and useful encounter data has  proven to be a difficult undertaking, as we have earlier reported.  According to CMS and several of the states we reviewed, many states  continue to struggle with obtaining reliable and complete encounter data.  One state we contacted found that the lack of standardized provider  coding and formatting procedures resulted in missing and incomplete  data. As a result, only 16 percent of the provider identifiers in the  submitted encounter data could be matched to the state’s Medicaid  provider master file. Another state noted that its encounter data were of  limited use because many health plans were unable to obtain complete  data from their providers. Two of the 14 states we reviewed reported that  obtaining complete encounter data was more problematic for health plans  that paid their physicians a monthly capitated payment that is not linked  to the delivery of specific services.
For states providing Medicaid services through managed care, encounter  data often are the basis for states’ responses to federal reporting  requirements under Medicaid’s Early and Periodic Screening, Diagnostic  and Treatment (EPSDT) services. EPSDT is designed to provide children  and adolescents with access to comprehensive, periodic evaluations of  health, developmental, and nutritional status, as well as hearing, vision,  and dental services. The EPSDT annual reports that states must submit to  CMS are designed to capture, by age group, information such as the  number of children who (1) received EPSDT health screenings, (2) were  referred for corrective treatment, (3) received dental treatment or  preventive services, and (4) were enrolled in managed care plans.  However, we have previously reported that managed care plans,  particularly those that pay their participating physicians on a capitated  basis, often had difficulty collecting and reporting complete and accurate  EPSDT data. Thus, EPSDT reports that are based on encounter data are  often incomplete or inaccurate, compromising the reliability of states’ data  on use of these services.
Despite these widespread problems with encounter data, a few states we  reviewed noted that the reliability and usefulness of their encounter data  have improved over time. Maryland, New York, and Michigan, for example,  reported sufficient progress with improving the quality of their encounter  data that they are now able to use them to analyze service utilization in  their Medicaid managed care programs, as indicated below.
Maryland officials noted that after spending several years developing and  refining its system for obtaining encounter data, the state is now able to  use them as the basis to make risk-adjusted payments to plans and to  routinely assess Medicaid managed care beneficiaries’ utilization of well- child, ambulatory, and emergency room visits. The state publicly reports  performance information by health plan, creating a strong incentive for  health plans to ensure that all encounters are reported. To ensure that the  reported encounter data accurately portray services delivered, the state  conducts validation studies on the data submitted by health plans. The  state also reviews the distribution and frequency of diagnoses reported  through the encounter data over time to monitor whether the mix of  diagnoses across the population changes.
New York established a data warehouse for Medicaid managed care in  1997. The warehouse includes encounter data submitted by health plans as  well as data from other providers’ FFS claims for reimbursement for  services provided to managed care beneficiaries outside of their health  plan. A variety of reports on utilization and access data are generated and  shared with plans on a restricted access web site.
Michigan is developing a data warehouse that will combine managed care  encounter data with FFS claims and public health data, such as vital  statistics and immunization records, into a single information system that  it will use to analyze beneficiaries’ service utilization. The data warehouse  will also be able to create utilization profiles by managed care plan. The  state has begun testing the data warehouse that is expected to be  operational within the next year.
HEDIS is a set of standardized performance measures that helps  purchasers and consumers compare the performance of managed health  care plans. HEDIS performance measures are organized into eight  categories, four of which include measures directly related to beneficiary  service utilization. The Medicaid version of HEDIS includes various  access-related measures that attempt to capture beneficiaries’ use, often  by age, of various preventive and other services from specified providers,  as illustrated in table 4. (See app. I for a more detailed list of Medicaid  HEDIS measures related to service utilization.)
Twelve of the 14 states we reviewed used HEDIS measures to help assess  Medicaid beneficiaries’ utilization of services. Eleven states required  participating plans to submit HEDIS performance results, while 1 state— Ohio—conducted its own HEDIS analysis using encounter data submitted  by plans. Some states used the full set of HEDIS measures, while others  used selected measures corresponding to areas of interest.
Despite the potential of HEDIS to provide valuable information regarding  beneficiaries’ use of managed care services, its narrow focus in identifying  beneficiaries to be included in the assessments often limits the ability to  generalize results to all beneficiaries within a plan or within a state. Many  HEDIS measures require beneficiaries to have 12 months of continuous  enrollment in a single managed care plan in the assessment year in order  to be included in the measures. As a measurement criterion, the  continuous enrollment requirement is intended to ensure that  comparisons of performance across health plans are made on the basis of  sample populations that have been enrolled for similar periods of time.  However, because beneficiaries’ average length of time in the Medicaid  program can be less than 12 months—ranging from 6 to 9 months in three  states—this 12-month enrollment requirement excluded at least one  quarter of Medicaid beneficiaries from most of the states we reviewed and  more than half in four states, as shown in table 5. Consequently, HEDIS  measures may not provide a representative measure of service utilization  for a significant share of children covered by Medicaid managed care.  Another limitation of the HEDIS measures is that they are often based on  encounter data and are thus subject to the reliability concerns previously  raised.
Several states we reviewed provided examples of how they used the  HEDIS data they received from participating plans. These included using  the information to compare each plan’s performance against national  Medicaid averages for selected measures and developing report cards to  compare results across plans. Given issues we identified with the  completeness of the data, however, such uses and comparisons may not  be reliable indicators of beneficiaries’ use of services and may render a  false impression of beneficiaries’ actual experience in service utilization.
State Medicaid managed care programs are required to have an internal  quality assurance system, which can involve administering beneficiary  satisfaction surveys. Thirteen of the 14 states we reviewed reported using  CAHPS to assess beneficiaries’ experiences with their Medicaid managed  care plans. CAHPS is a standardized survey designed to compare the  performance of managed care plans on the basis of beneficiaries’  perceptions regarding the care they received through their plans. The  CAHPS survey covers a range of topics related to service utilization,  including appointment scheduling, waiting time in a physician’s office, and  the use of specialty services, as shown in table 6.
Like HEDIS, however, information from CAHPS is only gathered from a  subset of beneficiaries. CAHPS has a 6-month continuous enrollment  requirement for Medicaid beneficiaries to be included in the survey  sample. While this is a shorter minimum enrollment period than for  HEDIS, it still resulted in excluding about one quarter or more of covered  beneficiaries in five states we reviewed, and nearly half or more in two  states, as shown in table 7. Moreover, several states using CAHPS reported  that they had low response rates from the sampled population; in some  cases, surveys targeted only those beneficiaries with telephones, a  practice that has the potential to bias the results for beneficiaries who  could not be reached by that method.
Gauging beneficiary satisfaction with services solely through a satisfaction  survey is an inherently difficult process, especially when a sample is not  representative or response rates are low. To augment information on  beneficiary satisfaction, states also had available the results of their  complaints and grievances processes, which they are required to have as a  condition of their managed care programs. Nearly all of the states we  reviewed with Medicaid managed care operated a central hotline or  complaint number, where beneficiaries could obtain program information  or request assistance locating providers in addition to filing complaints.  The states we reviewed generally focused on ensuring that complaints and  questions raised by beneficiaries’ calls were addressed. For example, five  states—Ohio, Maryland, Michigan, New York and Washington—had  information databases that tracked complaints from their inception to  their resolution. New York, Ohio, and Washington complaint reports were  also analyzed by managed care plan, which allowed officials to identify  any trends in beneficiary complaints.
As a tool to assess overall problems with access to care, records of  complaints and grievances had several limitations. In some cases, states’  hotline or complaint data did not distinguish between requests for  assistance and complaints about provider services, thus making it difficult  to assess the extent of any systemic access problems. In addition, a small  number of complaints could be difficult to interpret at face value; while  few complaints or grievances could indicate overall satisfaction with care,  it could also indicate a general lack of knowledge about or ability to file a  formal complaint or grievance. A small number of complaints also could  limit the state’s ability to identify any specific trends of systemic problems  with access to care with a specific plan or within a state’s Medicaid  managed care program as a whole.

			Special Studies

A few states we contacted reported that they occasionally conducted  special studies, in addition to any routine monitoring they did, to assess  service utilization issues for their Medicaid beneficiaries. For example,  Maryland’s 4-year evaluation of its Medicaid managed care program,  published in January 2002, concluded that providers and consumers felt  that PCP networks were “under stress” in certain areas of the state, with a  notable lack of physicians in rural areas of the state. The evaluation also  identified significant inaccuracies with plan-submitted data on physician  providers, including duplicate provider entries, incorrect provider  affiliation status with participating plans, and missing information. As a  result, the state took steps to develop and implement more rigorous  methods of monitoring plan-submitted data. In particular, the state now  monitors plans’ PCP networks, including verification calls to samples of  physicians, so that PCP shortage areas can be identified and addressed. In  the future, the state also plans to develop more specific standards for  commonly used specialists and monitor plans’ compliance with these  standards.
In 2001, Washington conducted a survey of new Medicaid managed care  beneficiaries in 14 counties as a result of concerns raised by beneficiary  advocates in light of managed care plans’ withdrawal from program  participation. The study examined these beneficiaries’ experiences with  accessing medical care, including emergency room use. The study found  that 90 percent of new beneficiaries reported having a PCP after  enrollment in Medicaid, compared to 62 percent having a PCP before  enrollment in Medicaid managed care. Additionally, there were no  significant differences between the experiences of managed care and FFS  beneficiaries who had obtained medical, specialist, or emergency room  care. However, the study did find that the majority of beneficiaries were  unfamiliar with several key processes concerning their managed care  plans, such as how to change PCPs within a health plan, contact their  health plans when questions or problems arose, and make complaints.  Based on these findings, the state plans to work with managed care plans  to improve beneficiaries’ awareness regarding PCP selection and  communication with their health plans.

		States Attempted to Minimize Impact of Managed Care Plan Withdrawals on Access to Care, but Effect on Beneficiaries Is Uncertain

The managed care industry—in the commercial as well as public sectors— has experienced considerable changes in recent years following periods of  rapid entry of multiple managed care plans in certain markets and  subsequent retrenchment based on plans’ willingness or ability to compete  in those markets. Many communities and states have experienced changes  in the number of managed care plans as a result of numerous health plan  mergers, acquisitions, and closures as the managed care industry has  evolved and matured. State Medicaid programs have often been affected  by the withdrawal of some managed care plans from their programs; in  some cases, states have intentionally acted to reduce the number of  participating plans. The four states we visited—Massachusetts, Ohio,  Tennessee, and Texas—had experienced such changes to varying degrees.  These states had taken various measures to help minimize any adverse  effects on beneficiaries’ access to care due to participating plans leaving  the Medicaid program. It is not clear, however, to what extent these states’  efforts had been successful in helping beneficiaries transition smoothly to  new health plans and physicians and thus avoid problems with access to  care.
The potential amount of disruption that occurs when a health plan  withdraws from a state or community can vary considerably, depending on  a number of circumstances. Health plan mergers can result in minimal  changes for beneficiaries if they are able to maintain established  relationships with their providers and can even strengthen the network of  available providers within a plan. In Massachusetts, for example, a merger  between two health plans in the early 1990s was considered by state  officials to have increased physician availability for Medicaid beneficiaries  enrolled in managed care. Officials in Massachusetts also noted that  reductions in the number of health plans ensured that participating plans  have enough enrolled beneficiaries to spread the costs and risks  associated with capitation payments. In other cases, however, the extent  of disruption may be more severe, particularly when large numbers of  beneficiaries are affected and a significant number of plans struggle to  remain financially viable.
Each of the four states we visited experienced varying levels of health plan  withdrawals from their Medicaid managed care programs. Plan  withdrawals over several years have affected almost 50 percent of  beneficiaries in Tennessee and over 15 percent in Ohio, raising concerns  about the accessibility of care to beneficiaries in these states. The  magnitude of health plan withdrawals in Tennessee necessitated state  efforts to recruit additional plans, at least one of which was later found by  the state to have deficiencies related to failure to pay physicians  accurately and promptly. In Ohio, at least one health plan that withdrew  from the state program also failed to pay some of its network providers for  services already rendered. In such cases, delayed reimbursement by  managed care plans can seriously jeopardize providers’ willingness to  continue participating in the Medicaid program and provide services to  eligible beneficiaries. In contrast to Tennessee and Ohio, plan withdrawals  in Massachusetts and Texas have affected a smaller share of beneficiaries.  Massachusetts estimated that about 4 percent of its beneficiaries were  affected by an early period of plan fluctuation as the state was  implementing its mandatory managed care program; since 2000, however,  the program has been stable with the same four managed care plans  participating. In Texas, approximately 1 percent of beneficiaries have been  affected by withdrawals of participating plans since the state implemented  managed care in 1996.
To avoid disruptions in care for beneficiaries when plans ceased their  participation in the Medicaid program, these states had implemented  various procedures to help smooth beneficiaries’ transition to other plans  or providers. For example, in cases where a withdrawing health plan  intended to sell its membership to another plan, Ohio first compares the  provider network of the withdrawing plan with the health plan that is  purchasing the membership. The state does not approve the sale of  membership unless most of the providers participating in the withdrawing  plan also participate in the purchasing plan. In other cases, a state’s  contract with its managed care plans required certain actions. Ohio’s  contract, for example, requires a minimum of 75 days advance notice of a  plan’s intention to terminate its participation in the program and includes  provisions to collect a monetary assurance from the withdrawing plan or  to withhold payments until all contractual requirements are completed,  including required payments to network providers. Ohio and Texas  provided examples of efforts to inform beneficiaries directly affected by a  plan’s withdrawal about options available to them to continue care, such  as information on other participating plans and how to choose another  plan. These four states indicated that they believed their efforts to respond  to changes in managed care participation were sufficient to minimize  disruption to care for Medicaid-eligible beneficiaries. However, the extent  to which the states’ efforts adequately ensured beneficiaries’ access to  continuous care was uncertain. Appendix II provides more detail on  managed care plan withdrawals in these four states.

	For Medicaid FFS, State Requirements for Providers and Monitoring of Service Utilization Were More Limited

For states’ FFS-based Medicaid delivery systems, which continue to serve  the majority of children in half of the states we reviewed, requirements for  participating providers and monitoring of provider availability were  significantly more limited than for managed care. State analysis of service  utilization data to assess the frequency and patterns of care that  beneficiaries received was also more limited, despite the ready availability  of such data through states’ claims payment systems. For traditional FFS  programs, beneficiaries may seek care from any providers participating in  the Medicaid program and may change providers at any time if they are  dissatisfied. However, Medicaid beneficiaries’ ability to easily change  providers is dependent on the number, type, and location of providers  willing to take new Medicaid patients, which in turn is strongly influenced  by Medicaid payment rates and associated administrative processes. We  found that Medicaid FFS payment rates were significantly lower than rates  for comparable Medicare services in the majority of states we reviewed,  which can discourage provider participation and thus restrict  beneficiaries’ access to a broad supply of providers. States that used  PCCM programs as part of their FFS service delivery systems were  somewhat more prone to set certain requirements for participating  PCCMs, such as a maximum number of assigned beneficiaries and their  geographic proximity to beneficiaries, than were states with traditional  FFS systems. States with FFS programs generally did not set requirements  for specialists or for physicians’ appointments, such as maximum waiting  times to schedule an appointment, as they did for their managed care  plans. States were more likely to conduct beneficiary satisfaction surveys  for their PCCM programs than for their traditional FFS systems; the survey  results, however, had the same constraints as previously discussed for  managed care due to the limited share of beneficiaries participating in the  surveys and low response rates.

		Low FFS Payment Rates Can Reduce Provider Participation and Restrict Access to Care

States are required to ensure that their Medicaid service delivery and  payment systems will afford beneficiaries access to services similar to  those provided to the state’s general population. To do this, states  determine which providers may enroll in the Medicaid program to provide  services, set payment rates for covered services, and pay claims that  providers submit for the services they provide. In several of the states we  reviewed with Medicaid FFS programs, program officials said that  provider survey information and beneficiary complaint data suggested that  low payment rates, slow payment, and other administrative issues  deterred physicians in primary care or in some specialties from  participating in the program. As we reported earlier, if payment rates  decline to the point that they cause physicians to leave Medicaid or to  reduce the number of beneficiaries they serve, then beneficiary access  may be restricted.
Our analysis of payment rates indicated that Medicaid FFS payments to  physicians for primary and preventive services for children were often  significantly lower than what Medicare paid for comparable services in  many of the states we reviewed. For the 13 states that paid physicians on a  FFS basis for Medicaid-eligible children, payment rates ranged from 32  percent to 89 percent of Medicare rates. Nine of these states’ Medicaid  rates were two-thirds or less of Medicare rates for comparable services.  (See app. III for more detail.) Officials in many of these states said that  Medicaid rates were also below those of commercial payers, although they  generally had not conducted systematic studies to document these  differences.

		Most Traditional FFS Programs Set Few Goals Regarding the Number of Providers, and Conducted Minimal Monitoring of Service Utilization

Despite the potential for low FFS rates to limit the number of providers  willing to participate in the program, the nine states we reviewed with  traditional FFS programs did not set specific goals for the number of  physicians participating in their Medicaid programs and did not actively  monitor the number and location of providers. While states had lists of  physicians who were enrolled as Medicaid providers and who submitted  claims for services provided, in most cases these lists were not frequently  or comprehensively updated and thus did not provide an accurate count of  actively participating physicians. Some states’ Medicaid physician  databases included physicians who had not provided services to Medicaid  patients for years. In one state, the database doublecounted providers who  had more than one service location or billing identifier. In addition,  although states have claims data that serve as the basis for paying  providers for services rendered, only some analyzed this information to  identify PCPs, specialists, or other providers who were actively treating  Medicaid beneficiaries. Even when they did, states often defined “active”  providers to include those who submitted a single claim during the past  year. With respect to appointments, such as maximum waiting times to  schedule a routine or urgent appointment, none of the states we reviewed  with traditional FFS programs had specific standards comparable to those  we saw for managed care programs.
States also did little to monitor service utilization by Medicaid  beneficiaries participating in traditional FFS care despite having a ready  source of data in their claims payment systems. Claims data contain the  type and frequency of services Medicaid beneficiaries have received and  the type of provider delivering the care, which can be used to analyze  service utilization. States did report using claims data to develop  utilization statistics to meet federal requirements for annual reporting on  EPSDT services for children. However, we have reported earlier that state  EPSDT reports are often incomplete and unreliable, thus compromising  their utility in assessing whether children are receiving required services.  Beyond EPSDT, only one state with a Medicaid traditional FFS system  reported analyzing claims data to evaluate access to care on primary and  preventive services, such as annual well-child and dental visits. Rather  than evaluate access to primary care, at least three states used claims data  to assess inappropriate utilization of higher-cost services, such as  emergency room care. For example, Texas collects and analyzes  information on beneficiaries who potentially overuse care—defined as  those at or above the 90th percentile of use for particular services,  including physician, emergency room, and pharmacy services. Patients  suspected of misusing services may be restricted to using a specific  physician or pharmacy, with the goal of reducing their use of services to a  more appropriate level.
Four of the nine states with traditional FFS systems reported periodically  using beneficiary satisfaction surveys, such as CAHPS, to help assess  issues regarding access to care. These states were Colorado, Illinois, Ohio,  and Washington. As with Medicaid managed care, however, the utility of  these surveys is diminished when there are low response rates and a lack  of beneficiary representation in the sample selection. In one state, the  survey sample was limited to individuals who had received at least one  service in the prior 6 months, thus excluding individuals who may have  tried but failed to obtain services. Another state reporting a low  beneficiary response rate found that while the cooperation rate was high  among those who were reached, many potential respondents in the survey  sample could not be contacted because of address or telephone number  changes.

		PCCM Programs Had Some Requirements for Providers, but Monitoring of Service Utilization Was Limited

States’ PCCM programs are a hybrid of FFS and managed care service  delivery approaches. They emulate FFS programs in the sense that the  state has a direct relationship with providers who are enrolled to  participate in the program and paid retrospectively for services actually  delivered. PCCM programs share characteristics of managed care in the  sense that beneficiaries are assigned to a PCCM—a physician, or a  practice or other entity—that is responsible for coordinating their care as  a case manager. The seven states we reviewed with PCCM programs had  more requirements for participating PCCMs than they did for providers in  traditional FFS programs, but fewer than PCPs in managed care  programs. Similar trends were evident in terms of states’ routine  monitoring of PCCM availability and beneficiaries’ service utilization:  more than FFS, less than managed care.
The states we reviewed with Medicaid PCCM programs most often set  requirements for the maximum number of beneficiaries that a PCCM could  serve and the geographic proximity of PCCMs to their enrolled  beneficiaries. None set limits on the number of beneficiaries a specialist  could serve, and few set specific standards for appointment waiting times  with their PCCMs; overall, PCCM programs had fewer standards than  those imposed under managed care, as shown in figure 3.
States’ PCCM capacity requirements were most often based on setting a  maximum number of beneficiaries that a PCCM or practice could serve,  ranging from 1,000 beneficiaries per PCCM in Arkansas and Pennsylvania  to 1,500 in Florida and Massachusetts. Louisiana set a limit of 1,200  beneficiaries per PCCM, or 4,800 for a group practice, and allowed an  additional 300 beneficiaries to be enrolled for each nurse practitioner.  With regard to geographic requirements, all five of the PCCM programs  that had requirements for this standard specified a basic maximum of 30  minutes or 30 miles for beneficiaries to reach their PCCMs. Four of these  states set a higher maximum for rural areas—such as 50 miles in Colorado  or 60 minutes in Pennsylvania—or allowed general exceptions to the 30- minute standard for beneficiaries living in some rural areas.
States typically monitored provider participation in their PCCM programs  by compiling weekly or monthly lists of participating PCCMs and the  number of beneficiaries each PCCM was assigned, which could serve as  the basis for paying the monthly PCCM fee. Monitoring these relative  numbers also allowed states to ascertain whether PCCMs could be  assigned additional beneficiaries. States therefore had current information  on those providers actively participating as PCCMs and the numbers of  assigned beneficiaries. This information alone, however, would not yield  insights into how easily beneficiaries could see their PCCMs.
When states had both managed care and PCCM delivery systems, they less  frequently set requirements for PCCM appointment waiting times than  they did for managed care. Three states that operated both PCCM and  managed care programs—Colorado, Florida, and Pennsylvania—did not  set any appointment waiting time standards for PCCMs as they did for  managed care. In contrast, Massachusetts required its PCCMs to see new  patients within a specific time frame in its PCCM program, but not in  managed care. Of the four states that did set specific requirements for  appointment waiting times, only Texas reported conducting routine  monitoring to assess PCCM compliance with those requirements. Texas  officials reported conducting audits of a random sample of 20 PCCMs per  quarter per service area to evaluate compliance with respect to  appointment scheduling and in-office waiting time.
To monitor service utilization within their PCCM programs, states most  often relied on analyses of their FFS claims data. Six of the seven states  with PCCM programs provided PCCMs that had a certain minimum  number of assigned beneficiaries with periodic data profiles that compare  service utilization patterns in their Medicaid practices with those of the  overall program or other PCCMs. These data profiles often focused on  high-cost services or those at risk of overutilization, such as inpatient  hospitalization or emergency room use. Three states also included  information related to primary and preventive services use. For example,  see the following.
Massachusetts provided PCCM practices that had 200 or more enrolled  beneficiaries with practice-specific and comparative information about the  percentage of children who received a recommended number of well-child  visits, by age group. The state further identified, for each practice,  individual patients who had not received the recommended number of  well-child visits. State program staff members met with each provider  twice annually to discuss approaches to address problems identified in  these data that may indicate limited access.
Texas provided participating PCCMs with comparative information on  selected services per beneficiary, including EPSDT visits, family planning,  and immunizations.
In contrast, states typically did not monitor the utilization of services  provided by specialists, although several state PCCM programs required  documentation of PCCM referrals to specialists. Officials in several states  were aware of problems with access to some types of providers and  specialists in their PCCM programs, including dentists, dermatologists,  and pediatric neurosurgeons. In an attempt to address such problems,  Arkansas conducted a survey of dentists and Florida conducted a survey  of physicians to identify obstacles to their willingness to accept Medicaid  patients. While such one-time surveys can provide insightful information  about problems and potential solutions in a specific period, they do not  take the place of routine or targeted monitoring that can more  systematically pinpoint problems for particular specialties, geographic  areas, or beneficiaries.
Each of the states we reviewed with PCCM programs conducted  beneficiary satisfaction surveys. In addition, Colorado administers its  CAHPS survey to individuals participating in all three of the states’  Medicaid service delivery systems—managed care, traditional FFS, and  PCCM—in order to help assess experiences of program beneficiaries  relative to one another. However, given the shortcomings identified  earlier—low response rates and exclusions of certain beneficiaries from  sample selection—states could not with confidence generalize the results  of these beneficiary surveys to the larger population.

	Distinct SCHIP Programs Had Fewer Network Requirements and Less Monitoring of Service Utilization

States have used the flexibility provided by SCHIP to take varying  approaches for their service delivery systems for eligible children. Of the  16 states we reviewed, 9 states chose to serve their SCHIP beneficiaries  through programs that were primarily designed as expansions of Medicaid  or modeled on their Medicaid programs in terms of benefits and provider  networks. These 9 states used the same health plan contracts for  Medicaid and SCHIP managed care, and the same provider lists for both  programs’ FFS-based delivery systems. In these cases, the extent of SCHIP  monitoring would mirror that of the states’ Medicaid programs. On the  other hand, 7 states designed at least part of their SCHIP programs to be  distinct from Medicaid. These programs relied almost exclusively on  managed care to deliver services. Although most of these states also had  significant shares of their Medicaid beneficiaries in managed care, they set  significantly fewer provider network requirements for their distinct SCHIP  programs than for Medicaid and did less monitoring of providers enrolled  in their SCHIP programs and of children’s use of services in SCHIP. In  general, few states with distinct SCHIP programs routinely collected and  analyzed data to ensure that SCHIP-eligible children were receiving  covered services.

		States with SCHIP Programs Distinct from Medicaid Set Few Provider Requirements

The seven states that chose to serve all or most of their SCHIP  beneficiaries through programs that were distinct from Medicaid used  managed care delivery systems almost exclusively. These states were not  bound by access-related requirements comparable to those for Medicaid  PCCM or managed care programs. As such, they set provider network  requirements and monitored service utilization less often in their distinct  SCHIP managed care programs than they did in their Medicaid managed  care programs. As shown in figure 4, only two of these seven states set  specific beneficiary-to-PCP ratios for SCHIP, compared to five states for  Medicaid, and no state set specific requirements for specialists, compared  to three states for Medicaid. Similarly, only one of the seven states with  distinct SCHIP programs set a maximum waiting time for a first  appointment with a PCP and none had a requirement for in-office waiting  times; in contrast six of these states’ Medicaid managed care programs set  specific requirements for one or both of these access measures. Only four  of the distinct SCHIP programs in these states set any specific standards  for appointment scheduling, compared to all seven of the states’ Medicaid  managed care programs.
The seven states with distinct SCHIP programs also monitored the  availability of PCPs in plan provider networks less frequently than in  Medicaid. In contrast to Medicaid managed care where nearly all states  monitored providers at least quarterly, just three states required plans to  submit provider lists periodically throughout the year—Colorado, New  York, and Texas. To confirm provider information submitted by plans  participating in SCHIP, only New York systematically contacted physicians  to verify information about whether network PCPs were accepting new  SCHIP patients. Four states required SCHIP plans to submit physician  data annually or every several years during state licensure reviews or for  the contract renewal process. Among these, California’s SCHIP program  required plans to indicate the number and percentage of PCPs and  specialists accepting new patients and also to notify the state when there  was a change in the provider network that resulted in disruption of 25 or  more beneficiaries.
The extent of states’ monitoring of participating plans’ SCHIP provider  networks did not appear to be related to whether SCHIP-eligible  beneficiaries had access to commercial or noncommercial networks  within the plans. Some states—such as New York and Texas—did not  know whether SCHIP-eligible beneficiaries had access to the same  providers as were participating in plans’ commercial networks. Other  states—such as Florida, Michigan, and Pennsylvania—stated that most if  not all of their SCHIP populations did have access to the same providers  as in the plans’ commercial networks. However, without direct monitoring  of PCPs enrolled in SCHIP plan networks, states had little or no direct  knowledge of the extent to which PCPs would see SCHIP beneficiaries,  including whether enrolled PCPs would accept new SCHIP patients at all  or limited their practice to only a small number.

		Distinct SCHIP Programs Monitored Service Utilization Less than Medicaid

States with SCHIP programs distinct from Medicaid reported fewer efforts  to monitor children’s utilization of services than in their Medicaid  managed care programs. This held true for their use of encounter data as  well as for HEDIS measures and CAHPS beneficiary satisfaction survey  data.
CMS does not require states to collect encounter data from managed care  plans participating in SCHIP, as it does in Medicaid managed care. Of the  states we reviewed with distinct SCHIP programs, we found that two  states—Florida and Texas—were attempting to collect as well as analyze  encounter data for SCHIP-eligible children in order to assess the type and  frequency of services they received. Florida’s distinct SCHIP program uses  encounter data to compare the number of ambulatory visits made by  SCHIP beneficiaries to the number of visits that would be expected for  those children based on their diagnoses. Texas’ distinct SCHIP program,  which was initiated in 2000, has used encounter data to compare  immunization rates by plan with rates in commercial plans.
Four of the seven states—California, Michigan, New York, and  Pennsylvania—required plans to submit HEDIS data so that the states  could assess plans’ performance with respect to access to various  preventive and other services. Compared to Medicaid, these HEDIS data  may be more complete in three of these states—California, Michigan, and  Pennsylvania—because they had opted to provide SCHIP-eligible children  with continuous eligibility for a 12-month period, thus increasing the  likelihood that a more representative share of eligible children and their  families would be included in the assessments.
Five of the seven states—California, Florida, Michigan, Pennsylvania, and  Texas—used CAHPS to assess beneficiaries’ satisfaction with care.  Compared to Medicaid, the CAHPS data for four of these states’ SCHIP  programs may be more complete than for their Medicaid programs  because these states provide continuous eligibility for a 12-month period.

	Agency and State Comments and Our Evaluation

We provided a draft of our report for comment to HHS, as well as to  Medicaid and SCHIP officials in the 16 states included in our analysis. We  received comments from HHS and from 13 states. Three states did not  respond with comments.

		HHS Comments

With regard to states’ Medicaid managed care programs, HHS highlighted  new requirements included in CMS’s June 2002 regulation implementing  Medicaid managed care provisions of the Balanced Budget Act of 1997.  HHS commented that, among other things, the regulation requires states to  develop a quality strategy setting access standards for network adequacy  and timeliness of access to care. HHS described this new regulation as  also making clear the states’ responsibility to continually monitor plans’  compliance with these standards. While many states, including 13 of the 14  states we reviewed with Medicaid managed care delivery systems, were  already subject to certain access requirements as a condition of receiving  waivers of federal Medicaid requirements to operate their managed care  programs, these requirements were not consistent from state to state. This  new regulation, which must be fully implemented by August 13, 2003, has  the potential to bring a more systematic approach to access requirements.  More importantly, its emphasis on state monitoring could better ensure  that such requirements are achieving their intended purposes.
For states’ Medicaid FFS delivery systems, HHS acknowledged the  relationship between reimbursement rates and provider participation,  noting that states can increase payment rates in geographic areas and  specialties where access has been demonstrated to be a problem. Beyond  reimbursement rates, HHS commented that our draft report pointed out a  lack of data to quantify whether there is an access problem in Medicaid  FFS. To the contrary, our report indicates that despite a ready source of  information—claims data—for evaluating access to care in a FFS  environment, states generally did not do so.
HHS agreed that our placement of PCCM programs in the FFS category  was accurate from a reimbursement standpoint, but stated that PCCM  should be considered a managed care delivery system because PCPs are  expected to coordinate care. We continue to believe that a PCCM program  is better described as an FFS-based delivery system because the  differences between PCCM and managed care reimbursement approaches  can differentially affect provider incentives in providing covered services.  Our report does distinguish, however, the degree to which managed care,  traditional FFS, and PCCM programs employ access standards and  monitoring. Overall, states with PCCM programs tended to establish more  standards and conduct somewhat more monitoring than for their  traditional FFS programs, but less than for their managed care programs.
With regard to our finding that states with distinct SCHIP programs did  significantly less to monitor access to care than for their Medicaid  managed care programs, HHS stated there was a key difference in design  and intent by the Congress between SCHIP and Medicaid. HHS  commented that SCHIP allows states to have the flexibility to design  programs that mirror private insurance and rely on private insurance  mechanisms to ensure access to and quality of care, rather than laying out  specific requirements. Acknowledging that states may not have  comparable requirements for SCHIP and Medicaid monitoring provider  participation and beneficiary service utilization, HHS said that states are  monitoring enrollment, health access, and outcomes in their SCHIP  programs. However, with regard to access, we found that few states with  distinct SCHIP programs monitored provider network participation or  routinely collected and analyzed data to ensure that SCHIP-eligible  children were receiving covered services. We did not intend to suggest  that states should use the same processes for their SCHIP and Medicaid  programs, but rather simply to contrast states’ monitoring of access to  care for low-income children eligible for these two programs.
HHS’s comments are reprinted in appendix IV. Additionally, HHS provided  technical comments, which we incorporated as appropriate.

		State Comments

Several states provided clarifying comments regarding their oversight of  access to care in Medicaid and SCHIP. These comments generally  pertained to additional factors affecting access to care, the relationship  between monitoring and access, and the extent of monitoring in traditional  FFS and distinct SCHIP programs.
Two states identified factors that affect access to care within their  Medicaid and SCHIP programs but are not easily controlled by the states.  One state noted that the supply of physicians is severely limited in some  states and in some regions of states, affecting all payers, including  commercial payers as well as Medicaid and SCHIP. Another state raised  the point that the extent to which children receive health care services is  influenced by how well their parents or guardians understand and comply  with recommended levels of health care set by providers or by the  Medicaid program. We agree that provider supply and parental decision  making are important determinants in children’s access to care and can be  difficult factors for state programs to address. However, the type of  monitoring activities addressed in this report can help to identify such  factors and areas or locations where problems may be more pronounced,  thus leading to more targeted solutions.
Four states identified certain activities that they believed facilitated access  to care, but were not addressed in the report. One state, for example,  noted that its Medicaid program helped beneficiaries locate a source of  medical care, and another state described an initiative to send letters to  parents of beneficiaries reminding them to schedule medical  appointments. Although we recognize that these activities may help  promote access to care for the Medicaid and SCHIP populations, this  report did not address activities that primarily facilitated access, such as  providing outreach to beneficiaries or offering provider payment  incentives. Instead, we focused on states’ efforts to (1) establish and  monitor requirements for provider availability and (2) gather and analyze  data on receipt of care. In this regard, one state commented that the report  had a “narrow perspective” on what constitutes monitoring in managed  care and cited a range of indicators that it used, including beneficiary  complaints, grievance reports, state fair-hearing requests, utilization data,  and immunization rates. While such sources of data and activities hold  strong potential for providing information concerning access to care, this  report identified certain shortcomings of some of these indicators as  programwide measures of access. For example, complaint and grievance  system data can yield important information about problematic providers  or services, but are not reliable measures of programwide access.
Four states cautioned against what they saw as a correlation made in the  report between the amount of monitoring that a state does and the degree  of access to care for program beneficiaries. For example, one state said  that the report suggested that if monitoring is limited, access is also  limited, and disagreed that this is necessarily the case. We did not intend  to present such a direct correlation. However, if a state does not monitor  data related to its access standards and to utilization of services, it may  not know the extent to which beneficiaries encounter problems locating  and obtaining services. During the course of our work, we identified  instances where state data collection and monitoring revealed access  problems that were then addressed to improve beneficiary access.
A few states emphasized that they considered HEDIS and CAHPS  important tools that had helped them monitor health plan performance or  achieve improvements in quality of care for Medicaid and/or SCHIP  beneficiaries. One state noted that HEDIS was important in identifying and  helping to reduce gaps between commercial and Medicaid plan  performance. Another state questioned whether the continuous  enrollment requirements for HEDIS (12 months) and CAHPS (6 months)  would in fact bias the results of any analysis of beneficiaries’ access to  care because it excludes some beneficiaries. In particular, this state  believed that the benefits of improvements made by health plans are not  limited to individuals enrolled for the full 6- or 12-month period. We agree  that HEDIS and CAHPS are important tools in monitoring and comparing  performance across plans, which necessitates that the sample population  be defined by a comparable enrollment period. However, we do not  believe that states can assume that all beneficiaries have access to care on  the basis of HEDIS and CAHPS results that exclude a significant portion of  the program population from their samples.
Two states discussed the extent to which they monitored access in  Medicaid traditional FFS compared with Medicaid managed care delivery  systems. One state said it analyzes data on key health outcomes for  children, such as ambulatory-sensitive hospital admissions and trends in  health care utilization. Both states specifically noted their efforts to  comply with federally required reporting of EPSDT utilization for their  FFS programs. Nevertheless, most of the states in our sample had few or  no goals regarding the number of providers available to FFS beneficiaries  and, with the exception of federally required EPDST reporting, few  analyzed data related to access to primary care.
Similar to HHS’s view, one state noted that the report did not account for  the fact that distinct SCHIP programs may choose approaches to program  design and monitoring that differ from Medicaid, including approaches  used in monitoring states’ commercial managed care plans. For example,  this state and others reported relying on state insurance department  licensure of health plans as the means of monitoring provider network  adequacy, rather than imposing additional SCHIP-specific requirements.  We acknowledge in our report that states’ SCHIP programs may rely on  different design and monitoring options than Medicaid. Overall, however,  states with distinct SCHIP programs reported fewer efforts to monitor  children’s access and use of services than in their Medicaid managed care  programs.
Several states also provided technical comments, which we incorporated  as appropriate.
As arranged with your offices, unless you release its contents earlier, we  plan no further distribution of this report until 30 days after the issue date.  At that time, we will send copies of this report to the Administrator of the  Centers for Medicare & Medicaid Services and the Administrator of the  Health Resources and Services Administration. We also will make copies  available to others upon request. In addition, the report will be available at  no charge on the GAO Web site at http://www.gao.gov.
If you or members of your staffs have any questions regarding this report,  please contact me on (202) 512-7118. Other contributors to this report are  listed in appendix V.

Appendix I: Medicaid HEDIS Measures Related to Service Utilization

Four of the eight general categories of the Health Plan Employer Data and  Information Set (HEDIS) measures for Medicaid managed care plan  performance relate directly to beneficiary service utilization. These four  categories include effectiveness of care, access/availability of care, use of  services, and satisfaction with the experience of care. Many of the  measures in these categories require beneficiaries to be continuously  enrolled for some period, often 12 months, in order to be assessed. Table 8  details selected HEDIS measures that pertain to service utilization for  children and adolescents enrolled in Medicaid managed care programs and  the length of continuous enrollment required.

Appendix II: Managed Care Plan Withdrawals from Medicaid in Four States

Four states we visited—Massachusetts, Ohio, Tennessee, and Texas—had  varying experiences in terms of the number and impact of managed care  plan withdrawals from their Medicaid managed care programs. In some  cases, as in Massachusetts, the changes occurred early in the states’  implementation of their programs and the number of plans has been stable  in recent years; in other cases, as in Ohio and Tennessee, the changes in  participating plans continued over time and presented ongoing challenges  to the states in managing their programs and ensuring appropriate access  to care for their beneficiaries. The proportion of Medicaid beneficiaries  affected by withdrawals of participating managed care plans ranged from  about 1 percent in Texas to almost 50 percent in Tennessee. Following is a  brief description of managed care plan withdrawals in each of the four  states and examples of some of the measures states took to minimize  disruption to beneficiaries’ care as a result of the changes.

	Massachusetts

Health plan participation in Massachusetts’ Medicaid managed care  program has slowly stabilized, with four plans participating in the program  since 2000. Earlier fluctuations occurred, however, as the state shaped its  program to limit the number of participating plans and as some health  plans decided to consolidate or leave the market. These early changes in  participating plans affected about 4 percent of the state’s Medicaid  population.
Massachusetts began its current Medicaid managed care program in July  1997 with nine participating health plans. Two of the health plans, created  by hospital systems that had traditionally provided services to lower  income individuals, were formed specifically for this program. Of the  remaining seven plans participating in the state’s Medicaid program, many  were commercially available. Within the first 2 years of the program,  however, the number of participating health plans declined to five. This  reduction was partially a result of the state’s decision to contract with  fewer health plans and to provide each health plan with a greater volume  of beneficiaries. As a result of this decision, contracts were not renewed  with two health plans and approximately 42,000 beneficiaries (about 4  percent of the state’s Medicaid population) had to select other plans. In  addition, during this period several health plans merged and at least one  plan left the Massachusetts health care market altogether. State officials  reported that some plans lost interest in participating because of  Medicaid’s administrative and reporting requirements. Additionally,  commercial plans found that the Medicaid benefit package included  certain services—such as behavioral health services—that the health plans  did not provide their other members. This meant that health plans had to  establish networks specifically for Medicaid beneficiaries; without a  “critical mass” of Medicaid beneficiaries, however, health plans had  difficulty remaining financially viable in the program. When participating  plans withdrew from the state’s Medicaid program, state officials said that  beneficiaries enrolled in the affected plans were informed that the plans  would no longer be participating in the program and were provided an  opportunity to choose other plans or enroll in the state’s primary care case  manager program.

	Ohio

Since the inception of its mandatory managed care program in 1996, Ohio  has faced a large number of health plan withdrawals. As of January 2002,  10 plans had completely withdrawn from program participation, while 3  additional plans had withdrawn from specific counties in the state. Over  224,000 Medicaid beneficiaries—over 15 percent of the state’s Medicaid  population—were affected by plan withdrawals. As a result of these  withdrawals and providers’ growing reluctance to participate in managed  care, Ohio changed from mandatory to voluntary managed care enrollment  in some counties and fee-for-service (FFS) in others. As of April 2002,  Ohio had 7 managed care plans serving Medicaid beneficiaries in 15  counties, with mandatory enrollment in only 4 of the counties.
Ohio Medicaid officials expected to see some fluctuations in plan  participation in the early years of its program. They anticipated that some  plans would withdraw due to the state’s requirement that plans that did  not have significant enrollment—from 10 to 15 percent of the eligible  population—within 2 years of the program’s inception would be required  to leave the program. Several reasons were provided for the number of  plans that eventually withdrew from the program, including voluntary  withdrawal and court-ordered liquidations. In many cases, health plans  sold their Medicaid membership to other plans. State officials  acknowledged that the relatively large number of plan withdrawals  affected individuals’ perception of the program and led to changes in the  state’s managed care enrollment policy, with some counties switching  from mandatory to voluntary managed care enrollment. Concerns about  the program’s viability and stability were increased when the state  insurance department liquidated one Medicaid health plan in 1998 and  some of its network providers did not receive compensation from the plan.
State officials did not believe that beneficiaries’ access to care was  affected by these plan withdrawals. In cases where a health plan’s  membership was sold to another plan, the state attempted to ensure  continuity of care by requiring that at least 90 percent of the current plan’s  primary care providers (PCP) were included in the provider network of  the purchasing plan. In other cases, we were told, beneficiaries were  notified of their health plan’s impending withdrawal and provided an  opportunity to select another plan if available. If a beneficiary did not  select a health plan, or there was no alternative plan available, then the  beneficiary returned to the state’s FFS program. In areas with mandatory  managed care enrollment, however, beneficiaries were not allowed to  remain in FFS indefinitely; they were required to select another plan or be  automatically assigned to one.

	Tennessee

In establishing its mandatory managed care program in January 1994,  Tennessee expanded Medicaid eligibility to hundreds of thousands of  previously uninsured individuals and enrolled them into 1 of 12 capitated  managed care plans. Four plans left the program or were sold from 1994  through 1999. Since 2001, plan withdrawals have increasingly been an  area of concern, with large numbers of Medicaid beneficiaries affected by  changes to the state’s 2 largest health plans. For example, in 2001, almost  580,000 beneficiaries, or 41 percent of the state’s Medicaid population,  were affected when 1 plan withdrew from the western and central  portions of the state and a second plan’s contract was terminated due to  solvency issues. In response to the first of these two withdrawals, the state  took two actions: (1) it recruited two new health plans to join the market  and (2) it created a self-insured plan to serve as a backup in areas of the  state where beneficiaries could not be adequately served by other health  plans.
As of April 2002, 10 health plans were participating in Tennessee’s  Medicaid managed care program although 2 plans, covering 21 percent of  the state’s Medicaid beneficiaries, were considered to be at financial risk.  The state announced its intention in March 2002 to terminate its contract  with 1 health plan, which would necessitate the transfer of approximately  135,000 beneficiaries to other health plans. A second plan, with over  160,000 beneficiaries, was under rehabilitation by the state’s insurance  department.
In view of the instability of the program and participating plans, Tennessee  has taken several steps to help ensure continuous access to care for  Medicaid beneficiaries. In order to provide time to plan ahead in the event  of plan withdrawals, the state’s contract with participating plans requires 6  months of advance notice of an intended withdrawal and a transition plan  to assure uninterrupted care to beneficiaries. When plans stopped  participating in the program, beneficiaries were either provided the option  to select new health plans or were assigned to health plans.

	Texas

Texas began its capitated Medicaid managed care program in1996 in four  areas of the state. Since 1996, managed care was expanded to three  additional service areas and now exists in 46 of the state’s 254 counties.  Since the rollout of managed care began, only three plans have withdrawn  from participation in Texas’ Medicaid managed care program, affecting  less than 20,000 beneficiaries, or approximately 1 percent of the state’s  Medicaid population. Two of these withdrawals were from the same  service delivery area, leaving three plans participating in that area.  However, the state contends that prior to the withdrawals there was a  saturation of health plans in that service delivery area. As of July 2002, 11  plans were participating in the Medicaid managed care program.
In one instance, a participating plan gave the state less than 3 weeks’  notice of its intent to leave the program. Because of the limited notice,  beneficiaries were automatically assigned to other plans in order to  minimize disruption in their access to care. Although these assignments  were initially made without direct input from the affected beneficiaries,  their prior PCP and specialist utilization patterns were taken into account  during this assignment process and beneficiaries were later given an  opportunity to change plans. The state paid particular attention to the  number of complaints during these transition periods and did not see a  dramatic change. As such, state officials believe that the transitions went  smoothly. Texas has a number of other measures in place to facilitate  beneficiaries’ enrollment in alternative plans when their plans leave the  program, as illustrated in table 9 along with additional examples from  other states we visited.

Appendix III: Analysis of Medicaid FFS Payment Rates in Selected States

Nationally, low Medicaid physician fees have been a long-standing area of  concern because they can affect the degree to which physicians  participate in Medicaid, and thereby affect beneficiaries’ access to care.  The relative fees paid by different insurers—Medicare, Medicaid, and  SCHIP—can also affect providers’ willingness to participate in these  programs. Since many children in Medicaid remain in fee-for-service  (FFS)-based programs, we compared Medicaid fees for selected office visit  and pediatric preventive medical care services to the corresponding  Medicare fees. While Medicare is a federal health insurance program  primarily for the elderly and persons with disabilities, some children do  receive Medicare benefits and thus its fee schedule includes fees for  pediatric medical services. Among the 13 states we reviewed that used  FFS-based delivery systems as a key care delivery system for Medicaid  children, Medicaid fees for primary and preventive care ranged from 32  percent to 89 percent of what Medicare would pay for similar services.  (See table 10.) Concerns with the adequacy of Medicaid physician payment  levels were also identified in studies of Medicaid physician payment in  California, Washington, and Maryland.

	Methodology for Comparison of FFS Payment Rates

For our comparative analysis of Medicaid and Medicare FFS payments, we  obtained fee schedules from 13 of the 16 states we reviewed, compiling  fees for 12 medical services using selected codes from a commonly used  procedural coding system—the standard Physicians Current Procedural  Terminology, 4th edition (CPT 4). (See table 11.) For each state, we  weighted the Medicaid and corresponding lowest Medicare fees for that  state by the relative utilization of the service among pediatricians,  identified from a 1999 American Academy of Pediatrics survey. The sum  of the weighted Medicaid fees was then expressed as a percentage of the  sum of the Medicare payments in order to develop a single, weighted  payment rate.

Appendix IV: Comments from the Department of Health and Human Services

Appendix V: GAO Contact and Staff Acknowledgments

	GAO Contact

	Acknowledgments

Catina Bradley, Karen Doran, Laura Sutton Elsberg, Mary Giffin, Michelle  Rosenberg, and Ann Tynan made key contributions to this report.

Related GAO Products

Mental Health Services: Effectiveness of Insurance Coverage and Federal  Programs for Children Who Have Experienced Trauma Largely  Unknown. GAO-02-813. Washington, D.C.: August 22, 2002.
Children’s Health Insurance: Inspector General Reviews Should Be  Expanded to Further Inform the Congress. GAO-02-512. Washington, D.C.:  March 29, 2002.
Medicaid and SCHIP: States’ Enrollment and Payment Policies Can  Affect Children’s Access to Care. GAO-01-883. Washington, D.C.:  September 10, 2001.
Medicaid: Stronger Efforts Needed to Ensure Children’s Access to Health  Screening Services. GAO-01-749. Washington, D.C.: July 13, 2001.
Medicaid Managed Care: States’ Safeguards for Children With Special  Needs Vary Significantly. GAO/HEHS-00-169. Washington, D.C.:  September 29, 2000.
Oral Health: Factors Contributing to Low Use of Dental Services by Low- Income Populations. GAO/HEHS-00-149. Washington, D.C.:   September 11, 2000.
Medicaid and SCHIP: Comparisons of Outreach, Enrollment Practices,  and Benefits. GAO/HEHS-00-86. Washington, D.C.: April 14, 2000.
Oral Health: Dental Disease Is a Chronic Problem Among Low-Income  Populations. GAO/HEHS-00-72. Washington, D.C.: April 12, 2000.
Children’s Health Insurance Program: State Implementation Approaches  Are Evolving. GAO/HEHS-99-65. Washington, D.C.: May 14, 1999.
Medicaid Managed Care: Challenge of Holding Plans Accountable  Requires Greater State Effort. GAO/HEHS-97-86. Washington, D.C.:   May 16, 1997.

Summary:
Why GAO Did This Study

Over 25 million children have health insurance coverage through Medicaid or the State Children's Health Insurance Program (SCHIP). Coverage alone, however, does not guarantee that services will be available or that children will receive needed care. GAO was asked to evaluate states' efforts to facilitate and monitor access to primary and preventive services for children in these jointly funded federal-state programs. The study surveyed 16 states, covering over 65 percent of the Medicaid and SCHIP population. GAO analyzed requirements relevant to managed care and fee-for-service (FFS) delivery systems, including the number and location of physicians and their availability to see beneficiaries, monitoring of health plan or physician compliance with these requirements, and collection and analysis of beneficiary service utilization data.

What GAO Found

Overall, states imposed more access-related requirements on participating providers and more actively monitored children's use of services in their Medicaid managed care programs than in their Medicaid FFS or SCHIP programs. Medicaid managed care: State requirements for managed care plans ranged from very broad provisions that health plans must have "adequate" physician networks for serving their enrolled members to very specific standards, such as the number and geographic proximity of physicians and maximum time frames within which a new beneficiary receives a first appointment. States less often verified data that plans submitted to show compliance with these requirements or independently monitored physicians' availability. In one instance of verification, a state found that a third of a health plan's physician network was not accepting new Medicaid patients, thus limiting access for new beneficiaries. The value of plan-submitted data that states used to monitor children's use of services was often compromised by continuing problems with their completeness and reliability. Furthermore, information derived from beneficiary satisfaction surveys was not necessarily representative of all Medicaid managed care beneficiaries. Medicaid FFS: Most states did not set goals for or analyze the availability of participating primary care physicians even though a majority of Medicaid-eligible children in half of the states reviewed are still served in FFS programs. In most FFS programs, beneficiaries may seek care from any providers participating in the Medicaid program and may change providers at any time if they are dissatisfied. However, when FFS payment rates are lower than those paid by other purchasers--which was the case in most states reviewed--providers can be discouraged from participating in Medicaid and thus restrict beneficiaries' access. States did little to monitor the use of services by Medicaid-eligible children in FFS programs despite having a ready source of data in their claims payment systems. SCHIP: Nine of the 16 states used the same providers, administrative systems, and monitoring approaches for their SCHIP programs as they did for Medicaid. The remaining 7 states, whose SCHIP programs were distinct from Medicaid and used managed care almost exclusively, set few requirements for or monitored providers' availability to SCHIP-eligible children. States with distinct SCHIP programs also reported fewer efforts to monitor children's use of services than in their Medicaid programs. Comments on our report from the Department of Health and Human Services highlighted new federal requirements for state oversight of managed care, and design differences between Medicaid and SCHIP that can affect monitoring approaches. States we reviewed provided clarifying or technical comments regarding their oversight of access, which we incorporated in the report as appropriate.