Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

JUNE 2000 

OEI-07-97-00500 

Medical Insurance For 

Dependents Receiving Child Support 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG) mandated by Public Law 95-452, as 

amended by Public Law 100-504, is to protect the integrity of the Department of Health and 

Human Services programs as well as the health and welfare of beneficiaries served by them. This 

statutory mission is carried out through a nationwide program of audits, investigations, 

inspections, sanctions, and fraud alerts. The Inspector General informs the Secretary of program 

and management problems and recommends legislative, regulatory, and operational approaches to 

correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 

Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the public. The 

inspection reports provide findings and recommendations on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

OEI's Kansas City Office prepared this report under the direction of James H. Wolf, Regional 

Inspector General and Brian Pattison, Deputy Regional Inspector General. Principal OEI staff 

included: 

REGION 

Ray Balandron, Project Leader 

Hugh Owens, Program Analyst 

Perry Seaton, Program Analyst 

Dennis Tharp, Program Analyst 

Michael Barrett, Program Analyst 

Mike Craig, Program Analyst 

HEADQUARTERS 

Linda Hall, Program Specialist

Susan Burbach, Program Specialist

Barbara Tedesco, Mathematical Statistician

Scott Horning, Program Analyst

To obtain copies of this report, please call the Kansas City Regional Office at (816) 426-3697. 

Reports are also available on the World Wide Web at our home page address: 

http://www.dhhs.gov/progorg/oei 
EXECUTIVE SUMMARY 

PURPOSE 

To determine if State Child Support Enforcement (CSE) agencies have made progress in 

the detection of available dependent health insurance. 

BACKGROUND 

Between 1980 and 1998, numerous legislative and regulatory changes have been made 

governing identification and enforcement of medical support as it relates to court or 

administrative child support orders. Some of the changes that have taken place include: 

requiring child support agencies to collect medical support information; requiring that a 

health care provision is in all child support orders; and ensuring that the noncustodial 

parent obtain medical insurance if available at a reasonable cost. This means, in some 

cases, that the child support agency must send notice to an employer to enroll the child in 

its health care plan, and notify the State Medicaid agency of the existence and specifics of 

medical coverage. Also, there is currently a National Medical Support Notice being 

developed that will be used by States as a withholding mechanism to enforce the health 

care coverage provisions in the child support order. 

This inspection is an update on two previous Office of Evaluation and Inspections’ studies 

entitled, “Child Support Enforcement/Absent Parent Medical Liability” and “Coordination 

of Third Party Liability Information Between Child Support Enforcement and Medicaid.” 

In this study we sampled 360 court ordered cases from nine States covering the period of 

July-September 1997 and projected our results nationally. We reviewed court orders and 

case files, and interviewed various State CSE, Medicaid, employer, and insurance 

company staff to determine availability of dependent health insurance and any improper 

payments made by the Medicaid program. 

FINDINGS 

Considerable Progress Has Been Made in the Identification and Enforcement of 

Medical Support 

We estimated that 93 percent of the child support orders in our study included a provision 

requiring medical coverage for the dependent children. This compares to 24 percent in 

our previous study. Since our last study, we also determined that potential savings 

dropped dramatically. Previously we found 48 percent of the cases reviewed had 

undetected health insurance available to the dependents with projected potential savings to 

Medicaid of over $32 million. Currently, we found 30 percent of the child support cases 

with undetected health insurance available. We estimated potential fee-for-service savings 

of just under $3 million and Medicaid managed care premiums of $2.3 million made on 

behalf of children whose noncustodial parents had employer based insurance, but had not 

enrolled their children. This projected annual loss for all States of 

Medical Insurance Payments for CSE 1 OEI-07-97-00500 
$5.2 million is a significant reduction when compared to the loss of $32 million Medicaid 

paid out in fee-for-service payments 10 years ago. 

However, Weaknesses Still Exist in the Detection of Health Insurance Availability 

and Enrolling Dependents 

We found child support agencies deficient in pursuing health insurance availability in 

126 cases out of 247 that had noncustodial employer information in the file. We contacted 

the employers for 115 of these cases and determined that dependent health care coverage 

was available to the noncustodial parents in 36 percent of the cases. In this regard, child 

support staff indicated that they do make limited efforts to gather employment and health 

insurance information. However, they strongly believe that their primary efforts should be 

spent in retrieving cash support payments. 

Managed Care Premiums Present a New Challenge in the Enforcement of Medical 

Support for Child Support Children 

With managed care becoming a major means of coverage for Medicaid-eligible children’s 

medical care, new issues have arisen regarding the ability of States to coordinate their 

managed care benefits with the employer based insurance of the noncustodial parents. 

One possibility would be to collect either all or part of the State Medicaid monthly 

premiums from the noncustodial parent. However, it was beyond the scope of this study 

to determine the processes needed to do so. We understand that there are various types of 

contracts established between the State Medicaid agencies and the different managed care 

organizations. These contracts include such requirements as disenrolling the children from 

the managed care plan when private insurance is available, keeping the children enrolled in 

Medicaid managed care regardless of the existence of private insurance, or reducing the 

premium by a specific amount when there is private insurance available. We believe to 

fully address this issue, additional study is required. 

RECOMMENDATIONS 

The Administration for Children and Families Should Ensure That State Child 

Support Agencies Comply with Current Regulations Requiring Them to Fully 

Enforce Medical Support 

The Administration for Children and Families (ACF) should ensure that State child 

support agencies are persistent in following through to determine if health insurance is 

available to the noncustodial parent and his/her dependents. This should include cases 

where the child is enrolled in Medicaid managed care programs or could be enrolled in an 

employer based managed care program. However, these situations may require new 

approaches discussed in the next recommendation. 

Medical Insurance Payments for CSE 2 OEI-07-97-00500 
The Administration for Children and Families, in Conjunction With The Health 

Care Financing Administration, Should Examine Alternatives to Recover The 

Costs of Managed Care Premiums From The Noncustodial Parents 

The ACF, in conjunction with the Health Care Financing Administration (HCFA), should 

examine alternatives to address the loss of State/Federal funds for children enrolled in 

Medicaid managed care. We realize there are various State practices regarding 

coordination of benefits whenever children are enrolled in a Medicaid managed care plan. 

Depending on the unique State practices, they could consider the option of requiring the 

noncustodial parent to enroll the child in private coverage or pay toward the Medicaid 

managed care coverage. The following could be considered. 

< If insurance is available at a reasonable cost to a noncustodial parent but 

he/she prefers not to enroll in it or to enroll himself/herself only and not the 

children, he/she could have the option of paying the State Medicaid 

managed care premium. 

< If insurance is not available at a reasonable cost to a noncustodial parent 

and there is no employer based health plan, he/she could have the option of 

paying the State Medicaid managed care premium. 

< If insurance is available at a reasonable cost to a noncustodial parent and 

the parent and child are enrolled in it, the Medicaid managed care 

coverage, unless discontinued, could be assessed as a secondary payer to 

the noncustodial parent’s insurance. 

We realize that the actual implementation and administration of such a policy would entail 

addressing many factors such as cost-efficiency, identification and enforcement, billing and 

collection of the managed care premium, and need for legislative changes. 

AGENCY COMMENTS 

In their comments, the Administration for Children and Families expressed their 

commitment to working with the Health Care Financing Administration and the States to 

improve access to medical coverage for children. In addition, they described various 

efforts and initiatives being undertaken that will further strengthen medical child support. 

The ACF also noted that the Medical Child Support Working Group will be issuing 

recommendations to improve medical support and coordination between child support 

agencies and Medicaid. We are aware of the working group’s upcoming report to 

Congress and have provided information to them on our prior and present efforts on these 

topics. 

While recommendations in the draft report were not directed to HCFA, they did provide 

comments. The HCFA indicated that they will continue to work with ACF to assure every 

effort is made to identify parents who can provide or contribute to the coverage of 

Medical Insurance Payments for CSE 3 OEI-07-97-00500 
health insurance for their children and to see that Medicaid dollars are spent 

appropriately. 

Where appropriate, we made revisions to the report to address various technical 

comments offered by ACF and HCFA. The full text of their comments are included in 

Appendix E. 

Medical Insurance Payments for CSE 4 OEI-07-97-00500 
TABLE OF CONTENTS

PAGE

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

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

FINDINGS

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

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

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

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

APPENDICES

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

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

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

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

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

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

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

Medical Insurance Payments for CSE 5 OEI-07-97-00500 
INTRODUCTION

PURPOSE

To determine if State Child Support Enforcement (CSE) agencies have made progress in 

the detection of available dependent health insurance. 

BACKGROUND

CSE Legislation and Regulations

For some time, policy makers have expressed concern about the responsibility of 

noncustodial parents to provide medical support for their dependent children. Various 

laws have been passed requiring court ordered decrees to include medical support by the 

noncustodial parent, and establishing mechanisms for their enforcement. 

The Social Security Act requires that the Medicaid program pay for beneficiary medical 

services secondary to other health insurance that may exist for beneficiaries, e.g., private 

health insurance or an employer group health plan. This provision also pertains to 

dependents of noncustodial parents for whom a court or administrative order exists that 

requires them to provide medical insurance. 

Federal regulations published in February 1980 implemented Section 1912 of Title XIX of 

the Social Security Act. These regulations promoted cooperative agreements between 

State child support and Medicaid agencies to obtain information about medical insurance 

where it is available in an effort to reduce or eliminate Medicaid payments. However, 

under the Child Support Enforcement provisions of Title IV D, States received a higher 

percentage of Federal funding for collections of child support payments than for 

enforcement of medical support under the Medicaid program. This could provide an 

incentive for States to use available resources to collect child support payments since this 

effort produces a higher rate of return than the identification of noncustodial parents’ 

private health insurance. 

Congress passed the 1984 Child Support Enforcement amendments (P.L. 98-378), adding 

Section 452(f), to the Social Security Act. This section required the Secretary of Health 

and Human Services (HHS) to issue regulations requiring State child support agencies to 

gather specified medical support information in all child support cases involving Medicaideligible children in the Aid to Families with Dependent Children program, and to take 

steps to enforce medical support ordered by the court. 

In response to these amendments, the Secretary issued Federal regulations in October 

1985 requiring State Child Support Enforcement agencies to collect 1) the policy name(s) 

and number(s) of any health insurance available to the noncustodial parent, and 2) the 

names of persons covered if the noncustodial parent has available health insurance. Child 

support agencies are also required to submit medical support information obtained to the 

Medical Insurance Payments for CSE 6 OEI-07-97-00500 
State Medicaid agency for use in coordinating benefits. The 1985 regulations allowed for 

manual or automated exchange of third-party liability information from State child support 

agencies to Medicaid, but required them to provide it as specified in the State Plan, in a 

timely manner, and by the most efficient and cost-effective means available. They are also 

required to inform the Medicaid agency of any new or modified orders that include 

medical support. 

In addition, these regulations require State Child Support Enforcement agencies to seek 

the inclusion of medical support in all court and administrative orders, whether or not 

health insurance is available to the noncustodial parent at a “reasonable cost” at the time 

the order is entered or modified. State child support agencies must also make every effort 

possible to ensure that the noncustodial parent obtains the required medical insurance, if it 

is available at a reasonable cost, and enrolls the children. The regulations define “health 

insurance to be reasonable in cost if it is employment-related or other group health 

insurance, regardless of service delivery mechanism.” 

Revised Federal regulations published in 1988 expanded these requirements to include 

modification of existing court or administrative orders for the sole purpose of obtaining 

medical support. This expansion required State child support agencies to: 

< develop written criteria to identify cases with a high potential for obtaining medical 

support; 

< petition the court or administrative authority to modify support orders to include 

medical support for targeted cases, even if they anticipate no other modification; 

and 

< petition the court or administrative authority to include medical support in all child 

support orders, even if health insurance coverage is unavailable at the time of the 

order, thus enabling the child support agency to enforce it if coverage should 

become available in the future without returning to court to obtain a new order. 

The Omnibus Budget Reconciliation Act of 1993 (OBRA), P.L. 103-66, contained 

provisions intended to remove some of the impediments to State child support agencies’ 

attempts to secure and enforce medical coverage. OBRA contained many improvements 

that facilitated obtaining and enforcing medial coverage, including: prohibiting 

discriminatory health care coverage practices; creating “qualified medical child support 

orders” to obtain coverage from group health plans subject to the Employer Retirement 

Income Security Act of 1974 (ERISA); and allowing employers to deduct the costs of 

health insurance premiums from the noncustodial parents’ income. 

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 

(PRWORA), P.L. 104-193, requires that all child support orders enforced under the Act 

specifically include a provision for health care coverage. Child support agency staff carry 

out the orders by determining employment of the noncustodial parent and insurance 

availability for dependent coverage. If the noncustodial parent changes jobs and the new 

Medical Insurance Payments for CSE 7 OEI-07-97-00500 
employer provides health care coverage, the State sends notice of required coverage to the 

new employer. This will require them to enroll the child(ren) in its group health plan. 

More recently, Congress followed PRWORA with the Child Support Performance and 

Incentive Act of 1998, which stipulated that the Secretary, in consultation with State Child 

Support Directors, develop a measure based on the effectiveness of States in establishing 

and enforcing medical support obligations and to make recommendations for 

incorporating the measure, in a revenue neutral manner, into the current incentive payment 

system established by section 458A of the Social Security Act, which is based on cash 

support collections. 

The Child Support Performance and Incentive Act of 1998 also required the Secretaries of 

HHS and Department of Labor to jointly establish a Medical Child Support Working 

Group, and to develop and promulgate by regulation a National Medical Support Notice. 

Such Notice will make it possible to readily enforce enrollment of children in ERISA 

medical insurance plans without obtaining a new qualified medical child support order. 

This will permit more effective enforcement of OBRA health care coverage provisions in 

compliance with the child support order. 

Previous OIG Reports 

A 1987 Office of Inspector General report entitled “Child Support Enforcement/Absent 

Parent Medical Liability”1 revealed that 60 percent of the noncustodial parents in the 

sampled cases had dependent health insurance available through their employers and that 

Medicaid would have saved almost $34 million nationally if this insurance had been used 

to pay for their dependents medical care. Also, a second report, released in 1989,2 

showed that third-party liability health insurance coverage was available to dependent 

children through noncustodial parents’ employers in 48 percent of the sampled child 

support cases. The projected potential savings to Medicaid in this study were more than 

$32 million. The study also detected that State child support agencies were not routinely 

collecting health insurance information. 

METHODOLOGY 

This report is a follow-up to the two prior studies. For comparison purposes, we chose to 

conduct this national inspection in a manner similar to the previous inspections except for 

the selection of the sample States. We examined nine States in all three studies, reviewing 

samples of child support court orders for a 3-month period and analyzing them for 

1 Child Support Enforcement/Absent Parent Liability, Office of Inspector General, HHS, 

September 1987. 

2 Coordination of Third-Party Liability Information Between Child Support Enforcement 

and Medicaid, Office of Inspector General, HHS, December 1989. 

Medical Insurance Payments for CSE 8 OEI-07-97-00500 
covered medical insurance. We also determined the accuracy of Medicaid payments for 

our sample. In the two prior studies, we selected the nine States based on a probability 

proportional to size using a two-stage sampling design. In this study, we selected the nine 

States using a stratified-cluster design, which allows us to project our results nationally. 

All the States were divided into three strata to produce a broader mix of States than those 

in the previous studies. The three strata are: 

< Strata 1 - includes nine States which various child support and Medicaid 

representatives recommended for review during our preliminary research. They 

suggested these States because of their effective detection efforts or innovative 

processes. 

< Strata 2 - includes six States considered “large States” (based on Fiscal Year 

1995 Aid to Families with Dependent Children and Foster Care average caseload 

greater than 240,000) but not included in Strata one. 

< Strata 3 - includes the remaining 33 continental States and the District of 

Columbia. 

We randomly selected nine States for this study, five from Strata 1, two from 

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

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

Strata 3 - Oklahoma and Vermont.

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

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

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

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

1) check the listing against the support payments they have received and to only include 

cases where at least one support payment had been made during our review period, and 2) 

that the child(ren) was Medicaid eligible. Once we received the lists of cases from each 

State child support agency, we randomly selected 40 cases for review from each State. 

These 360 cases constituted the total number of cases included in our study; however, 

many of these represented multiple children. We considered all children in carrying out 

the study. We determined later in the study that 21 cases were not Medicaid-eligible and 

one could not be located, leaving us with 338 cases in our sample. 

We requested the States to send us a copy of the court order or administrative order for 

each of the selected cases. We reviewed these orders to determine whether or not they 

included a medical support requirement. In addition, we checked with each State’s 

Medicaid agency to see if their claims history records showed any third-party medical 

insurance information on any of the sampled cases. Following receipt and review of the 

child support orders, we visited each of the nine States to review the actual child support 

case files and to interview State Child Support Directors, local child support caseworkers 

and supervisors, Medicaid Directors and Recovery Unit personnel, local TANF income 

maintenance staff, and, as necessary, State insurance commissioners, child support 

attorneys and judges or court administrators. Through our onsite review of the CSE case 

Medical Insurance Payments for CSE 9 OEI-07-97-00500 
files and contacts with noncustodial parents’ employers and insurance companies, we 

determined if employer group health insurance was available to the noncustodial parents 

for coverage of their dependent children. We identified three cases where health insurance 

was available to the noncustodial parents, although the child support order did not include 

a provision for medical support. 

We examined Medicaid payment histories for the dependent children named in the court 

orders to determine whether the State Medicaid agency was adequately receiving and 

processing information when medical support was ordered. We also looked to see if 

group health insurance existed and if the dependent(s) were enrolled. In such cases, if 

Medicaid had made payments for medical care, we determined the third-party’s liability 

against Medicaid expenditures to determine the amount of potential savings. Based upon 

the results of our sample review, estimates have been weighted according to the sample 

design and we projected national savings to the Medicaid program. See Appendix D for a 

summary of confidence intervals pertinent to report data. 

This inspection was conducted in accordance with the Quality Standards for Inspections

issued by the President’s Council on Integrity and Efficiency. 

Medical Insurance Payments for CSE 10 OEI-07-97-00500 
FINDINGS 

Over the past several years, numerous changes have been made to the regulations 

governing the identification and enforcement of medical support as it relates to the child 

support court order. These changes include such things as requiring child support 

agencies to collect medical support information, including medical insurance coverage in 

all child support orders, and ensuring that the noncustodial parent obtains health insurance 

if available at a reasonable cost. Enforcement mechanisms include the child support 

agency notifying the employer to enroll the child in the health care plan, and the 

subsequent transfer of medical coverage information from child support agencies to State 

Medicaid agencies. Our study indicates that while the State child support agencies have 

made strides toward progress in these areas, the need for improvement still exists. 

Considerable progress has been made in the identification 

and enforcement of medical support 

We estimated in our study that 93 percent of the child support cases included a provision 

requiring that medical coverage be provided for the dependent child(ren). This compares 

to 24 percent in our previous study. Much of this improvement is because these States 

generally use a uniform support order form that includes the required medical support 

provision. This is considered an important tool by the child support staff and court 

personnel. Appendix A shows unweighted sample data by State. 

Since our last study, we also determined that potential savings dropped dramatically. Ten 

years ago, we identified that 48 percent of the child support cases had health insurance 

coverage available to dependent children through noncustodial parents’ employers which 

was not identified by Child Support Enforcement or Medicaid. The projected potential 

savings to the Medicaid program for these cases were more than $32 million. Our current 

study identified 30 percent of the child support cases had health insurance coverage 

available to the noncustodial parent. Nationally, States spent an annual projected 

$5.2 million in fee-for-service and managed care payments on behalf of children where 

other insurance is available but they were not enrolled. This improvement demonstrates 

that Child Support Enforcement has progressed in the identification and enforcement of 

medical support for child support children. 

Of the $5.2 million, just under $3 million was for children for whom Medicaid made 

payments under a fee-for-service arrangement.3 The additional $2.3 million was for 

3 See Appendix C for a summary of our calculation of potential savings where we 

identified insurance available to dependent children and Appendix D for the projected 

potential savings. 

Medical Insurance Payments for CSE 11 OEI-07-97-00500 
capitation payments made for children enrolled in Medicaid under a managed care 

arrangement. While we are aware that States are responsible for payment of Medicaid 

covered services that are not included in the contracted benefit package with the managed 

care plan, we determined that 7 of the 9 sampled States enroll Medicaid-eligible children in 

managed care and, and for the most part, pay the monthly premiums. To determine the 

extent that managed care premiums were being paid when medical insurance was available 

for the children, we looked at three factors of their insurance coverage: the noncustodial 

parent had health insurance available to him/her; the children were not enrolled for 

coverage in this insurance; and the children were covered by the State in a managed care 

plan for which premiums were being paid. Considering these factors for the 7 States, we 

estimated that 43 percent of the child support cases had beneficiaries enrolled in a 

managed care plan with Medicaid paying premiums projected to exceed $2.3 million. 

However, weaknesses still exist in the detection of employer 

health insurance availability and enrolling dependents 

We identified 247 cases where child support agencies had noncustodial parent employer 

information in the file. In 126 of these cases, the child support agency did not pursue 

health insurance availability with these employers. We contacted the employers in 

115 of these cases and determined that health insurance was available to the noncustodial 

parent through their employer in 36 percent of these cases. In developing our contacts 

we inquired as to the availability of health insurance and whether or not the dependent 

children were included on the policy. See Appendix B for unweighted sample data by 

State. 

Although State child support staff indicated that they make an initial attempt to gather 

employment and health insurance information when an individual applies for child support 

services, child support staff make only limited efforts to pursue medical support after this 

because they believe their primary efforts should be spent in retrieving cash support 

payments. A major justification for this approach is that the Federal match is greater for 

collection of these cash payments than pursuit of medical support. However, as noted in 

the background section of this report, the Child Support Performance and Incentive Act 

of 1998 has addressed the issue by calling for a performance measure based on the 

effectiveness of States enforcing medical support. It also deals with how this measure 

could be made part of the existing incentive payment system established by section 458A 

of the Social Security Act which is based on cash support collections. 

Hopefully, with the development and the States’ implementation of the National Medical 

Support Notice (NMSN), child support agencies and employers should find the process 

of enforcing medical support greatly facilitated.4 The NMSN must comply with the 

requirements of section 609(a)(3) and (4) of ERISA, which means it will be deemed 

4 Required as part of the provisions of the “Child Support Performance and Incentive Act 

of 1998.” 

Medical Insurance Payments for CSE 12 OEI-07-97-00500 
to be a “qualified medical child support order.” In addition, the NMSN must include a 

severable employer withholding notice informing the employer of: (1) the requirement to 

withhold the employee’s contributions due under any employer-related health plan; (2) 

the duration of the withholding requirement; (3) the applicability of limitations on any 

such withholding under title III of the Consumer Credit Protection Act; (4) the 

applicability of any prioritization required under State law between cash support and 

medical support amounts to be withheld if the funds available are insufficient for full 

withholding of both; and (5) the name and telephone number of the appropriate unit or 

division to contact at the State child support agency regarding the NMSN. 

Managed care premiums present a new challenge in the 

enforcement of medical support for child support children 

The noncustodial parent’s responsibility for the children’s medical care is established 

through the court requirement to provide medical insurance coverage unless it is 

financially unreasonable. This is supported further by the requirement that State child 

support agencies enforce such coverage by seeking out employment information and 

insurance entitlement. Since our previous studies when Medicaid reimbursed for medical 

care with fee-for-service payments, managed care has become a major means of medical 

care coverage for children who are Medicaid-eligible. With the exception of those 

services not covered by the managed care program, there would be limited fee-for-service 

claims payment liability by the Medicaid program. 

To further quantify the full impact of this evolution, we identified all children in our study 

enrolled in managed care plans for whom Medicaid paid premiums. We found that 

Medicaid agencies were paying managed care premiums in 140 cases and these payments 

projected to more than $10 million. In fact, as noted in the prior finding, Medicaid 

agencies provided $2.3 of this $10 million in premiums for managed care coverage even 

when insurance was available from the noncustodial parent’s employer. 

It might be appropriate for States to make even these premium payments when we 

consider the difficulty that States could have in coordinating benefits under their managed 

care programs with other insurance available to the noncustodial parent. 

It was beyond the scope of this study to determine the processes needed to collect the 

managed care premiums from the noncustodial parents who do not enroll their children in 

the employer’s insurance plan or for whom insurance is not available on the market at a 

reasonable cost. We understand that there are various types of contracts established 

between State Medicaid agencies and the different managed care organizations. State 

practices may include disenrolling the children from the managed care plan when private 

insurance is available, or keeping the children enrolled in Medicaid managed care 

regardless of the existence of private insurance, while reducing the premium to account 

for possible third party coverage. We believe to fully address these issues, additional 

study is required and joint consideration of the various contingencies that exist from 

establishing the support amount to collection of the premiums. 

Medical Insurance Payments for CSE 13 OEI-07-97-00500 
RECOMMENDATIONS 

Our review indicates a high level of medical support provision in court orders and an 

increase in medical support compared to prior studies, but there still are weaknesses in the 

detection of available health insurance and its enforcement. While we are aware of the 

difficulties in following the population of noncustodial parents, some of whom may 

frequently move from job to job, we believe that increased efforts toward compliance of 

the court order and detection of health insurance can result in substantial savings 

nationally to the Medicaid program. We offer the following recommendations: 

The Administration for Children and Families should ensure 

that State child support agencies comply with current 

regulations requiring them to fully enforce medical support 

Whenever child support identifies cases where a high potential exists for obtaining medical 

support, such as noncustodial parents’ employment information, they should be persistent 

in following through to determine if health insurance is available to the noncustodial 

parent and to his/her dependents. This should include cases where the child is enrolled in 

Medicaid managed care programs or could be enrolled in an employer based managed care 

program. However, these situations may require new approaches discussed in the next 

recommendation. 

The Administration for Children and Families, in conjunction 

with the Health Care Financing Administration, should 

examine alternatives to recover the cost of managed care 

premiums from the noncustodial parents 

The Administration for Children and Families (ACF), in conjunction with the Health Care 

Financing Administration (HCFA), should examine alternatives to address the loss of 

State/Federal funds for children enrolled in Medicaid managed care. We realize there are 

various State practices regarding coordination of benefits whenever children are enrolled 

in a Medicaid managed care plan. Depending on the unique State practices, they could 

consider the option of requiring the noncustodial parent to enroll the child in private 

coverage or pay toward the Medicaid managed care coverage. The following could be 

considered. 

< If insurance is available at a reasonable cost to a noncustodial parent but 

he/she prefers not to enroll in it or to enroll himself/herself only and not the 

children, he/she could have the option of paying the State Medicaid 

managed care premium. 

Medical Insurance Payments for CSE 14 OEI-07-97-00500 
< If insurance is not available at a reasonable cost to a noncustodial parent 

and there is no employer based health plan, he/she could have the option of 

paying the State Medicaid managed care premium. 

< If insurance is available at a reasonable cost to a noncustodial parent and 

the parent and child are enrolled in it, the Medicaid managed care 

coverage, unless discontinued, could be assessed as a secondary payer to 

the noncustodial parent’s insurance. 

We realize that the actual implementation and administration of such a policy would entail 

addressing many factors such as cost-efficiency, identification and enforcement, billing and 

collection of the managed care premium, and need for legislative changes. 

AGENCY COMMENTS 

In their comments, the Administration for Children and Families expressed their 

commitment to working with the Health Care Financing Administration and the States to 

improve access to medical coverage for children. In addition, they described various 

efforts and initiatives being undertaken that will further strengthen medical child support. 

The ACF also noted that the Medical Child Support Working Group will be issuing 

recommendations to improve medical support and coordination between child support 

agencies and Medicaid. We are aware of the working group’s upcoming report to 

Congress and have provided information to them on our prior and present efforts on these 

topics. 

The ACF had technical comments regarding the sampling and weighting schemes used in 

the study. We have revised the report to address these comments. The full text of ACF’s 

comments are included in Appendix E. 

While the recommendations in the draft report were not directed to HCFA, they did 

provide comments. The HCFA indicated that they will continue to work with ACF to 

assure every effort is made to identify parents who can provide or contribute to the 

coverage of health insurance for their children and to see that Medicaid dollars are spent 

appropriately. 

Where appropriate, we also made revisions to the report to address HCFA’s technical 

comments. The full text of HCFA’s comments are included in Appendix E. 

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APPENDIX A 

CHILD SUPPORT ORDERS WITH A PROVISION 

FOR MEDICAL SUPPORT 1 

State Yes % No % Know 

Don’t 

% Dropped 

Cases 

2 % 

Massachusetts 28 70.0 10 25.0 2 5.0 0 0 

Michigan 34 85.0 0 0 0 0 6 15.0 

Minnesota 20 50.0 18 45.0 2 5.0 0 0 

North Carolina 38 95.0 2 5.0 0 0 0 0 

Oklahoma 37 92.5 2 5.0 0 0 1 2.5 

Texas 25 62.5 0 0 0 0 15 37.5 

Vermont 35 87.5 5 12.5 0 0 0 0 

Washington 40 100 0 0 0 0 0 0 

Wisconsin 37 92.5 2 5.0 1 2.5 0 0 

Unweighted sample data only. 1 

Cases dropped were non-Medicaid or not located. 2 

Medical Insurance Payments for CSE 16 OEI-07-97-00500 
APPENDIX B 

HEALTH INSURANCE AVAILABILITY 

Cases where OIG Determined Health Insurance is Available 

Through Contacting Employers 1 

State in File 

Employer 

Insurance 

Pursued 

CSE 

Insurance 

Pursue 

Didn’t 

CSE 

Insurance 

OIG Did Pursue 

CSE Didn’t Pursue, 

Employer in File, 

Available 

Insurance 

Found 

OIG 

Massachusetts 30 11 19 18 8 

Michigan 16 10 6 6 3 

Minnesota 35 12 23 22 6 

North Carolina 29 18 11 9 3 

Oklahoma 29 15 14 12 6 

Texas 15 8 7 6 2 

Vermont 31 19 12 8 1 

Washington 24 21 3 3 2 

Wisconsin 38 7 31 31 13 

Totals 247 121 126 115 44 

Unweighted sample data only. 1 

Medical Insurance Payments for CSE 17 OEI-07-97-00500 
APPENDIX C 

MEDICAID PAYMENTS MADE 

WHEN HEALTH INSURANCE EXISTED 

BUT DEPENDENTS NOT ENROLLED 1 

State of Cases 

Total 

Number 

Cases 

of 

Sample 

Number 

Paid 

Total 

Dollars 

Insurance 

Number 

with 

Enrolled 

Dependents 

Not 

With 

Number 

Enrolled 

Dependents 

Not 

for 

Payments 

Fee-forService 

Massachusetts 1,714 40 $33,576 12 6 $891.76 

Michigan 2,666 34 $6,669 10 6 $481.37 

Minnesota 1,185 40 $20,622 11 7 $251.16 

North Carolina 1,539 40 $23,672 17 10 $2,029.26 

Oklahoma 295 39 $9,944 11 6 $33.69 

Texas 15,128 25 $5,675 6 1 $0 

Vermont 363 40 $12,824 15 7 $31.92 

Washington 994 40 $10,311 17 7 $0 

Wisconsin 599 40 $12,388 16 8 $65.77 

Total 24,483 338 $135,681 115 58 $3,784.93 

Unweighted sample data only 1 

Medical Insurance Payments for CSE 18 OEI-07-97-00500 
APPENDIX D 

WEIGHTED ESTIMATES

Data Estimate 

Weighted 

Interval 

90% Confidence 

Sample cases reviewed (338) 

Medical Support included in order (294) 93% +/- 4.7% 

Insurance available to noncustodial parent (115) 30% +/-5.6% 

Medicaid enrolled dependents in managed care 

plan (140) 23% +/-12.2% 

Insurance available to noncustodial parent (115) 

Dependents enrolled in insurance plan (57) 57% +/- 11.2% 

Dependents not enrolled in insurance plan (58) 43% +/- 11.2% 

Dependents in managed care plan (30) 43% +/- 15.3% 

Employer information in file, but state did not 

pursue. OIG did pursue (115) 

OIG determined insurance available (44) 36% +/-11.0% 

Total dollars paid for premiums to managed care 

plans $10,082,312 +/- $2,643,508 

Managed Care Premium payments where insurance 

exists and children not enrolled $2,320,669 +/-$1,199,244 

Fee-for-Service Dollars paid by States for children 

not enrolled, but insurance is available $2,923,944 +/- $2,172,028 

Total dollars paid by the State on behalf of children 

where other insurance is available, but not enrolled $5,244,613 +/- $3,271,272 

Weighting of the sample was performed using standard statistical formulas for a stratified-cluster 

sample; therefore, the weight was based on both the probability of picking the State and the 

probability of choosing the case within the selected State. There were a total of nine weights used 

depending on the strata and the number of cases for that State. 

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APPENDIX E 

AGENCY COMMENTS

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