Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

DECEMBER 2000 

OEI-06-98-00321 

Federally Funded Health Centers and 

Low Income Children’s Health Care 

Improving SCHIP Enrollment and 

Adapting to a Managed Care Environment 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 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 Region VI prepared this report under the direction of Chester B. Slaughter, Regional 

Inspector General and Judith V. Tyler, Deputy Regional Inspector General. 

Principal OEI staff included: 

DALLAS HEADQUARTERS 

Nancy Juhn, Ph.D., Project Leader Joan Richardson, Program Specialist

Nancy Watts

Scott Whitaker

Lisa White

To obtain copies of this report, please call the Dallas Regional Office at 214-767-3310. 

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

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

PURPOSE 

To examine the experience of Federally funded health centers in implementing the State 

Children’s Health Insurance Program (SCHIP) and in delivering health care to children 

covered by SCHIP. 

BACKGROUND 

Federally funded health centers have been major safety-net providers for low income families 

since the 1960s. These centers have struggled in the 1990s to continue their mission as States 

move toward Medicaid managed care. Beyond adapting to their changing health care 

environment, SCHIP have underscored a need for assertive outreach by health centers to 

enroll uninsured children, many of whom are already their patients. Although there are two 

types of SCHIP programs, Medicaid expansion programs and separate child health programs, 

this report, we will use SCHIP inclusively without differentiating program types. To study 

health centers and their role under SCHIP, we conducted a national survey of a 

representative sample of 405 health centers from all 50 States, including the District of 

Columbia and Puerto Rico. A few States were not yet able to address all aspects of a fully 

operating SCHIP program, but could still respond regarding their experiences in the changing 

health care environment. 

FINDINGS 

As trusted health care providers within needy communities, these centers can serve as one of 

the most appropriate agents for enrolling children in the SCHIP. For health centers, 

emergence of the SCHIP provides a significant additional funding source as they continue to 

make health care available to uninsured children. Thus, the mutual needs of both States and 

health centers can be well-served through their stronger collaboration. However, the health 

centers must also be prepared for changes in reimbursement methods. 

Outreach and Enrollment 

Eighty-three percent of health centers conduct their own SCHIP outreach, which primarily 

entails screening current clients for SCHIP eligibility. Forty-two percent have also relied on 

outside resource assistance, such as funds and/or manpower, to aid their outreach efforts. 

State SCHIP enrollment training for health center staff is four times more likely to increase 

reported health center enrollment success. 

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Sixty-one percent of health centers do not have “outstationed eligibility workers”, even 

though only 7 percent are designated as “low use” sites, i.e. having few Medicaid eligible 

clients. 

Health centers that have outstationed eligibility workers or are authorized to use presumptive 

eligibility are substantially more likely to receive State enrollment training which, in turn, 

increases reported enrollment success. 

Two-thirds of health centers cited welfare stigma, fear that applying for SCHIP will 

jeopardize immigration status, and complicated application forms as barriers to enrollment. 

Lengthy processing times for eligibility determinations reduce the likelihood of having 

children actually enroll in SCHIP. 

Adapting to a Changing Health Care Environment 

Sixty-three percent of health centers contracted with a managed care organization that covers 

children, although half of these centers obtained their contracts recently. Those centers 

involved in managed care are beginning to accept financial risk for patient care and move 

away from traditional cost-based reimbursement. However, “enabling services” such as 

transportation, translation and outreach, critical for access to care, are not always reimbursed 

under managed care. 

Only 32 percent of centers indicated that their States required Medicaid managed care 

organizations to include them in provider networks. Health centers are more likely to form 

their own managed care organizations, in part, when the States do not require inclusion of 

health centers in Medicaid managed care provider networks. 

Relatively few health centers (21%) were making changes to specifically adapt to the phaseout of Medicaid cost-based reimbursement. However, health centers were altering their 

business infrastructures in response to changes in the general health care environment. 

RECOMMENDATIONS 

The Health Care Financing Administration (HCFA) should: 

Promote enrollment of children in SCHIP through the health centers by encouraging 

States to provide enrollment training for health center staff and to increase the 

number of health centers with outstationed eligibility workers and designated as 

presumptive eligibility sites, where applicable. 

Encourage States to promote inclusion of health centers, that are ready for managed 

care, in the Medicaid and/or SCHIP managed care provider networks, and to expand 

reimbursement to include enabling services. 

The Health Resources and Services Administration (HRSA) should continue to help health 

centers prepare for the phase-out of Medicaid cost-based reimbursement. 

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AGENCY COMMENTS 

The HCFA and HRSA generally concur with our recommendations. The HCFA states that it 

is already addressing many of our recommendations, particularly with regard to eligibility and 

outreach issues. 

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TABLE OF CONTENTS 

PAGE 

EXECUTIVE SUMMARY i

INTRODUCTION 1

FINDINGS

Outreach Activities ...................................................... 5

Enrollment ............................................................. 5

Adapting to a Changing Health Care Environment ............................... 8

RECOMMENDATIONS 11

ENDNOTES 14

BIBLIOGRAPHY 17

APPENDICES

A: Discussion of Regression Model ........................................ A-1

B: Chi-square Test Results ............................................... B-1

C: Point Estimates and Confidence Intervals from Key Survey Questions ............ C-1

D: Agency Comments .................................................. D-1

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INTRODUCTION 

PURPOSE 

To examine the experience of Federally funded health centers in implementing the State 

Children’s Health Insurance Program (SCHIP) and in delivering health care to children 

covered by SCHIP. 

BACKGROUND 

State Children’s Health Insurance Program 

Title XXI of the Social Security Act, under The Balanced Budget Act of 1997, created 

SCHIP. Authorized for ten years, and funded at $20.3 billion from 1998-2002,1 the program 

targets children in low-income families (generally under 200% of the Federal poverty level) 

with the intent of providing States with an opportunity to design health care delivery systems 

that are similar in scope and structure to coverage that is available through private insurance. 

Nearly two million children were enrolled in SCHIP during Federal Fiscal Year 1999.2 The 

Health Care Financing Administration (HCFA) is responsible for administering SCHIP, with 

joint oversight by the Health Resources and Services Administration (HRSA). 

The authorizing legislation provides States flexibility in designing their SCHIP programs by 

allowing them to adopt one of three models. According to HCFA at the time of this study,3 

27 States, including Puerto Rico and the District of Columbia, opted to expand their 

Medicaid programs, 13 States selected a combination of Medicaid expansion and a separate 

SCHIP program, while 16 States elected only to create a separate SCHIP program.4 Most 

States that created a separate SCHIP program also established an independent agency to 

administer the program. 

Program benefits vary by model chosen. If Medicaid expansions are used, the same benefits 

and administrative rules used by the existing Medicaid program apply. States which 

previously expanded Medicaid for children, or created a separate SCHIP program, are 

allowed to expand eligibility beyond 200 percent of the Federal poverty level to 50 

percentage points higher than their existing eligibility limits.5 Some States that created a 

separate SCHIP program had established additional benefits above Federally legislated 

SCHIP minimum standards. 

Federally Funded Health Centers 

Generally located in communities with low to moderate family incomes, Federally funded 

health centers have been major safety-net providers for low income children since the 1960s. 

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 Centers are funded by Section 330 of the Public Health Service Act, which is administered 

by HRSA, with some receiving State and local funds as well. In addition to primary health 

care services, these clinics also provide enabling services such as translation, health 

education, and transportation which are important to serving the SCHIP population. Since 

services for children are a large program component for many of these centers, they hold 

considerable promise in helping realize the goals of the SCHIP legislation. Our prior OIG 

study of health centers showed that, due to the level of trust and service they have established 

in their communities, they possess great aptitude for outreach and enrollment.6 

Besides SCHIP implementation, Federally funded health centers have experienced other 

substantial changes in the health care system, particularly due to State movement towards 

Medicaid managed care in the 1990s. Recognizing the need to adapt to this environment, 

some centers have assertively joined or created managed care organizations or undertaken 

special developmental efforts like infrastructure enhancements.7 Our prior case study report 

indicated that HRSA also makes technical assistance and training opportunities available to 

aid centers in adapting to managed care.8 The transition from Medicaid cost-based 

reimbursement9 continues to challenge centers as they seek to better manage costs and devise 

appropriate reimbursement formulae within their health plan contracts.10 

Other Recent SCHIP Studies 

Another OIG report, The Children’s Health Insurance Program, State’s Application and 

Enrollment Processes: An Early Report From the Front Lines (OEI-05-98-00310), found 

that application length and complexity were barriers to enrollment in Medicaid and the 

SCHIP. Additional work in the field by the United States General Accounting Office (GAO) 

focused on outreach mechanisms and enrollment between Medicaid and SCHIP and a 

comparison of optional benefits. The GAO report stated that outreach activities for Medicaid 

and SCHIP were similar; however, more documentation was required for Medicaid than for 

SCHIP eligibility determinations in half of the ten States they sampled.11 

METHODOLOGY 

In 1999, we published CHIP’s Impact on Changing Service Delivery of Federal Health 

Centers: Six Case Studies, OEI-06-98-00320 which employed a case study approach to focus 

on the experiences of individual centers in implementing SCHIP. Based on issues developed 

from this case study report, we designed a structured survey to obtain representative, national 

information on centers’ experiences and issues regarding separate child health programs and 

Medicaid expansions. The results of this national survey are reported here. For the rest of 

this report, we will use SCHIP inclusively for the separate child health program and Medicaid 

expansions without differentiating model types unless otherwise noted12. 

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Study Focus 

The survey focused on health centers’ involvement in SCHIP planning, outreach activities 

and enrollment, and health centers’ adjustments to the changing health care environment, 

particularly for provision of children’s health care services. The term outreach by health 

centers as used in this report means encouraging clients to establish SCHIP eligibility rather 

than encouraging a choice of a particular provider. Health centers’ executive directors were 

the primary survey respondents. Having conducted in-person interviews with them for our 

case study report, we learned that they are highly knowledgeable about various aspects of 

their health centers and SCHIP’s impact on them. Since our study focused on the health 

centers’ perspectives, we did not attempt to validate center responses, including statements 

about the SCHIP activities of their States and/or State Primary Care Associations (PCA). 

Sample 

Using the HRSA 1998 Uniform Data System (UDS) database, we selected a simple random 

sample of 462 centers from the total of 615 Federally funded health centers receiving Section 

330 grant funding. These grantees include Community Health Centers, Homeless Centers 

and Migrant Heath Centers. In this report, for brevity, we use the term “health centers” to 

represent each of these Section 330 grantees. 

The HRSA 1998 UDS provided general information regarding the centers in our sample. 

Our study sample included a diverse population of health centers. Forty percent of the 

patients served by health centers in our sample were between the ages of 0-19, totaling over 

two million children. These centers also serve a high proportion of racial/ethnic minority 

populations, including Native Americans (2%), Asians/Pacific Islanders (3%), African 

Americans (22%) and Hispanics (28%). 

Data Collection 

The survey data were collected primarily via the Internet and also by mail. On December 10, 

1999, we initially mailed structured survey forms to 94 health centers lacking Internet access. 

During the first week of January 2000, the remaining 368 health centers in our sample 

received an e-mail message containing a link to an electronic survey at an Internet site.13 

Data collection was completed by February 19, 2000. 

A total of 405 (88%) of the sampled health centers returned completed surveys, and included 

responses from health centers in all 50 States, the District of Columbia and Puerto Rico. 

Throughout this report, the term “States” is also applied to the District of Columbia and/or 

Puerto Rico. At the time of our survey, a few States (Hawaii, Washington, Wyoming and 

Puerto Rico) had approved SCHIP plans, but were not yet enrolling children. As a result, 

some of these centers were not able to address all aspects of a fully operating program, but 

could still respond regarding their experience in the changing health care environment. 

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Statistical Analysis 

This sample design and our strong response rate yield national results that are statistically 

significant at a 95 percent degree of confidence with a 5 percent margin of error, unless 

otherwise noted in the Appendix. Descriptive data are expressed as proportions (%), and 

statistical differences between categorical variables were assessed using a Chi-square test. 

For this analysis, we also used logistic multivariate regression models to further 

explain/predict key variables. Of particular interest is understanding what factors contribute 

to health centers’ success in enrolling eligible children in SCHIP. The actual number of 

children enrolled in SCHIP by each health center was not available. Therefore, the regression 

model employed a dichotomous dependent variable that simply indicates whether or not the 

center reported SCHIP enrollment. After controlling for other factors, these explanatory 

variables for enrollment outcomes were: date of SCHIP plan approval, State SCHIP model, 

outreach activities, enrollment training for health centers, use of presumptive eligibility, use 

of outstationed eligibility workers, and application processing times.14 

The tables in the Appendix present relevant statistics for key survey questions, including 

standard errors and confidence intervals based on t-statistics. For calculating standard errors, 

we used finite population correction factors since our sample represents two-thirds of the 

true population. Consequently, findings presented in this report are based upon strong 

statistical inference about population characteristics. The Appendix also includes values of 

the Chi-square test and parameter estimates of the regression results. All tests were 

performed at a significance level of á=0.05. 

Non-Respondent Analysis 

To detect non-respondent bias, we tested data for significant differences between respondents 

(405 centers) and non-respondents (57 centers) by the following characteristics: State, 

SCHIP model type and number of children a health center serves. We did not find significant 

differences between these two groups. 

We conducted our study in accordance with the Quality Standards for Inspections issued by 

the President’s Council on Integrity and Efficiency. 

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FINDINGS 

OUTREACH ACTIVITIES 

Most health centers (83%) conduct their own SCHIP outreach, which primarily 

entails screening current clients; 42 percent have relied on outside resource 

assistance. 

The most frequent outreach methods are screening and identifying eligible children from 

existing clients (76%), posting SCHIP information fliers and/or posters in their health centers 

(73%), and providing SCHIP information through their health providers (64%). It appears 

that center outreach was mainly limited to existing clients since most centers utilized in-house 

activities rather than reaching out to new SCHIP eligible populations. Although one health 

center in our case study report was aggressively canvassing its local community for eligible 

applicants, we didn’t find this type of outreach activity common among the centers in our 

national survey. 

Outside resources received for outreach were funds and/or manpower. The top sources of 

outside resources were grants (42%) and contracts (19%) for SCHIP. Some centers (38%) 

reported that they also received outside resources from various State or local organizations. 

Eleven percent of the centers indicated that the Robert Wood Johnson Foundation provided 

outreach resources. 

ENROLLMENT 

Understanding factors contributing to health centers’ enrollment of eligible children in SCHIP 

is of particular interest. By February, 2000, when we concluded data collection, 73 percent 

of responding health centers reported they had already enrolled children in SCHIP. The 

logistic regression analysis explains what events or activities most influenced these early 

enrollments (See Appendix A). 

State outreach activities enhance health centers’ SCHIP enrollment. 

Centers which reported State outreach (74%), were 2.5 times more likely to have enrolled 

children than those centers who said their States had not conducted outreach. (25%)15 

Among this 25 percent of centers, 13 percent indicated that State outreach activities were in 

the planning stage. The fact that not all centers were aware of State outreach activities is not 

necessarily an indicator of actual State activity, but may suggest the degree to which State 

activity is perceptible or the effectiveness of methods used in reaching community level 

providers. Also, a few States had not fully implemented SCHIP, which may have affected 

their outreach activities. 

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Of those centers which reported State outreach, the most frequent State outreach methods 

cited by health centers were public service announcements (60%), information distribution 

through schools (46%) and newspaper advertisements (42%). 

State SCHIP enrollment training is four times more likely to increase health center 

enrollment, and centers that have outstationed eligibility workers or are a 

presumptive eligibility site are more likely to receive such State training. 

Health centers are almost four times more likely to enroll children if they are receiving 

SCHIP enrollment training from their States.16 Enrollment training provides health center 

staff with a better understanding of the SCHIP enrollment process and the ability to assist 

clients in completing enrollment forms. A related factor underpinning enrollment success is 

that centers with outstationed eligibility workers or a presumptive eligibility site designation 

are more likely to receive this State training. Health centers with outstationed eligibility 

workers are 2.4 times more likely to be trained, and health centers designated as presumptive 

eligibility sites are 1.7 times more likely.17 

States have the option of employing presumptive eligibility, which extends immediate 

Medicaid or SCHIP coverage to children until a formal eligibility determination is made. 

Determinations are made by designated presumptive eligibility sites, which can include health 

centers, hospitals or other providers. Health centers designated as presumptive eligibility 

sites reported enrolling children in SCHIP more often than those centers that were not.18 

Fifty-seven percent of centers indicated that presumptive eligibility was applicable in their 

States. Of those centers, 44 percent reported that they were a presumptive eligibility site for 

SCHIP. 

Sixty-one percent of health centers do not have outstationed eligibility workers, 

even though only 7 percent are designated as “low use” sites. 

Among the 61 percent of the health centers that did not have outstationed eligibility workers, 

only 7 percent were reported to be “low use” sites. According to HCFA Medicaid 

regulations governing low-income eligibility groups, “the State agency must have staff 

available at each outstation location during the regular office hours of the State Medicaid 

agency to accept applications and to assist applicants with the application process.”19 The 

proposed rule on implementing regulations for SCHIP specifies that States that implemented 

Medicaid expansions must follow the existing Medicaid rules on application assistance.20 As 

one of the designated outstation locations, health centers are exempted when they are “low 

use” sites, i.e., “outstation locations that are infrequently used by the low-income eligibility 

groups.” However, States have the discretion to determine what constitutes a “low use” site 

without regard to a minimum standard.21 

Thirty-nine percent of the health centers had outstationed eligibility workers with most 

receiving some State funding. Of the health centers with outstationed eligibility workers, 45 

percent indicated that the State provided full funding for the position and another 30 percent 

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indicated that the positions were partially funded by the State. Twenty-five percent of 

centers provided their own funding for outstationed eligibility workers. Bearing in mind that 

patient load varies widely, the number of outstationed eligibility workers in terms of full time 

equivalents (FTEs) ranged from 0.1 FTE to 13 FTEs per center, with 68 percent reporting up 

to 1.0 FTE in their center. 

Two-thirds of health centers reported enrollment barriers, citing welfare stigma, 

immigration status, and complicated application forms as key concerns. 

Sixty-four percent of the health centers perceived that their clients were experiencing 

enrollment barriers, indicating these are national issues. The top three barriers cited were: 

client’s negative perceptions of government welfare programs (68%), concerns that 

application may affect immigrant status (59%) and complicated application forms (41%). 

Our earlier case study report of selected States, confirmed that some applicant families fear 

that applying for SCHIP benefits would jeopardize their immigration status, under public 

charge provisions, or alert the Immigration and Naturalization Service (INS) if they were 

here illegally. Likewise, another OIG study found that language complexity and application 

length were deterrents to potential applicants.22 

Short processing times for eligibility determinations increase the likelihood of 

having children actually enroll in SCHIP. 

Centers, for which enrollment decisions were made within one month, were twice as likely to 

have enrolled children in SCHIP.23 Of health centers that had experience with the SCHIP 

enrollment process, 43 percent said that eligibility was determined in less than one month. 

However, more centers (50%) indicated that it took more than one month; 37 percent 

reported that it took one to two months and another 13 percent indicated it took more than 

two months. Eight percent of centers did not know the time frame for enrollment decisions. 

State SCHIP models influence health center SCHIP enrollment outcomes, but use of 

enrollment brokers has little effect. 

The SCHIP model chosen by a State seems to affect enrollment outcomes.24 Health centers 

under a combined model or a separate SCHIP program are about three times more likely to 

enroll children than centers operating under a Medicaid expansion model.25 A GAO report26, 

which compared Medicaid and SCHIP application processes, noted that Medicaid 

applications required more documentation than SCHIP applications. This added burden for 

those who can only apply under a Medicaid expansion plan might be a barrier to enrollment 

as well. 

Twenty-four percent of the health centers indicated that their States were using enrollment 

brokers, State contractors who administer the enrollment process. The use of enrollment 

brokers showed no significant relationship with centers’ reported success in enrolling 

children.27 

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ADAPTING TO A CHANGING HEALTH CARE ENVIRONMENT 

Although the introduction of the SCHIP program provides a potentially valuable funding 

source for health centers, they must also be prepared for other changes in reimbursement 

methods. The recent challenges to health centers in the health care environment are the 

general movement of Medicaid programs to managed care and the phase-out of Medicaid 

cost-based reimbursement to health centers. 

Sixty-three percent of health centers had managed care contracts that cover 

children, although half of these centers obtained their contracts recently. 

Health centers either had no managed care experience, or extensive but sometimes recent 

experience. Health centers have faced critical changes in their health care delivery systems, 

most notably conversion of State Medicaid programs from fee-for-service to managed care. 

Those centers with managed care contracts appeared adept at gaining inclusion, with 82 

percent of them having garnered contracts with more than one managed care organization 

(MCO). Yet, the managed care experience for many centers has been relatively recent with 

over half (53%) first entering into a contract between 1996 and 1999. 

The health centers are more likely to form their own managed care organizations, in 

part, when the States do not require inclusion of health centers in Medicaid 

managed care provider networks. 

Our findings revealed that health centers were significantly more likely to have a managed 

care contract if their State requires Medicaid MCOs to include safety-net providers, such as 

health centers, in their provider networks.28 However, only 32 percent of the Federally 

funded health centers indicated that their States had such requirements. Nine percent of the 

centers reported that their States offered incentives for MCOs to include them in their 

provider networks, while some States employed both strategies. When such State 

requirements do not exist, health centers are more likely to form their own MCOs.29 

If center-owned managed care organizations were available, centers tended to be involved in 

them. Thirty-four percent said that a health center-owned MCO operated in their State. Of 

these centers, 63 percent indicated that a center-owned MCO was currently operating in the 

area they served, and 90 percent of those centers were involved. The nature of center 

involvement with these MCOs varied, but most reported their center was contracted to 

provide services (96%), had a financial investment (68%) and/or was represented on the 

board of directors (69%). 

Health centers involved in managed care are beginning to accept financial risk for 

patient care. 

Although these centers receive various types of reimbursement under their managed care 

contracts, almost half were assuming some financial risk through primary care capitation 

reimbursement. While the reimbursement methods reported are not mutually exclusive, the 

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most common ones centers reported under their largest SCHIP and/or Medicaid managed 

care contract included: cost-based (55%), primary care capitation (48%), full capitation 

(17%), and risk withholding (12%). Thus, beyond the cost-based reimbursement30 all centers 

experienced previously under Medicaid, some centers are gaining operating experience under 

other reimbursement structures common to the growing managed care environment. 

However, 37 percent of centers are still outside of managed care altogether and have yet to 

adjust to these other reimbursement methods. 

Enabling services, critical to health center patients for accessing care, are not 

always reimbursed under managed care. 

Not considered routine medical services in the private sector, “enabling services” such as 

transportation, translation, outreach, case management, health education, and other social 

services to assist patients, are often essential for the populations served by these centers to 

access health care.31 In addition to primary and preventive health services, most Federallyfunded health centers provide some level of enabling services. However, only 19 percent of 

the health centers under a managed care contract receive direct reimbursement for enabling 

services. Among those centers, reimbursement for these services were most frequently 

reported for: case management (49%), transportation (41%), health education (33%) and 

outreach (31%). Centers that receive cost-based reimbursement have enabling services built 

into their cost report and are thereby paid for them. 

Just 18 percent of centers were receiving reimbursement from their contracted MCO for 

translation services, although 34 percent indicated that one or more languages, other than 

English, were predominantly spoken in the community they serve. Thirty-five percent of 

health centers reported that SCHIP applications were not available in a language other than 

English, or they were not aware of the availability of bilingual applications. As indicated 

earlier, health centers serve a high proportion of ethnic minority populations for whom 

English is a second language. HCFA’s proposed SCHIP implementation regulations32 

suggest that “a State may overcome language barriers by establishing a methodology for 

determining the prevalent language or languages in a geographic area and making information 

available in the languages that prevail throughout the State or in limited geographic areas 

where appropriate.”33 

Relatively few health centers (21%) were making changes to specifically adapt to 

the phase-out of Medicaid cost-based reimbursement. 

Under the Balanced Budget Act of 1997, Medicaid cost-based reimbursement to health 

centers is being phased out, although the Balanced Budget Refinement Act of 199934 

extended the phase-out period by two years until 2005. Some States, at their option, may 

continue to pay 100% of Medicaid reasonable costs although most are expected to phase-out 

of Medicaid cost-based reimbursement. Consequently, many health centers are anticipating a 

reduction in revenues under the Medicaid expansion component of SCHIP. Medicaid is, and 

has been, the largest funding source for these centers, followed by HRSA’s Section 330 

grants.35 Current funding levels indicate that SCHIP will provide a significant portion of 

health center revenues. 

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Only 21 percent of health centers reported making changes to adapt to the phase-out of cost 

based reimbursement. Within that group, one strategy employed by 61 percent of those 

centers, has been to seek out foundation grants/contracts and more State and local subsidies 

to supplement their revenues. Other options, pursued to a lesser degree, were to reduce 

administrative staff (47%) and/or reduce clinical staff (39%). Few centers chose to increase 

administrative staff (4%) or eliminate children’s programs/services (5%). However, many 

centers have presently been able to put off adjusting to new reimbursements, with 52 percent 

having received an extension to continue under cost-based reimbursement for an additional 

period of time. 

Health centers are altering their business infrastructures in response to changes in 

the health care environment. 

Whether a direct response to SCHIP, managed care, or changing reimbursement methods, 

health centers indicated some changing dynamics in their operations. Sixty-two percent of 

centers made changes to their administrative procedures. Of those centers, 90 percent were 

upgrading their management information system (MIS) and 49 percent were increasing front 

desk staff for public/private insurance verifications. For some, the introduction of the SCHIP 

program created a center need to add a marketing budget (41%). Among the 36 percent of 

centers that increased clinical staff, the most common additions were: more nursing staff 

(54%), medical assistants (47%) and family physicians (41%). These changes were intended 

to increase productivity of physician time.36 

Health centers played a role in SCHIP planning, and are positive about their 

continued role in serving children. 

Federally funded health centers have been major safety-net providers for low income children 

since the 1960s. In regard to SCHIP particularly, the health centers have contributed to 

planning for its implementation and are optimistic about their part in its future. 

Health centers were primarily involved in SCHIP planning through their States’ Primary Care 

Associations (PCA), although some were also active individually as well. Seventy-one 

percent of centers reported involvement in the planning process in some capacity. Of these, 

77 percent felt that their involvement had a positive impact on the outcome of their States’ 

SCHIP plans. The centers that did not participate in the planning process reported that their 

States did not request their input, or that they were unaware of opportunities to participate.37 

Despite challenges, most health centers appear optimistic about the future, with 80 percent 

expecting to serve more children and 12 percent expecting to serve the same number of 

children. Only eight centers (2%) thought that they would serve fewer children in the future, 

while 24 centers (6 %) indicated that they did not know if they will serve more or less. 

Losing children to other managed care providers and reduction in Medicaid eligibles, due to 

welfare reform, were the main reasons why some centers believed they would serve fewer 

children in the future. 

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RECOMMENDATIONS 

As trusted, established health care providers within needy communities, Federally funded health 

centers are one of the most appropriate agents to help fulfill the goals of the SCHIP program. In 

return, SCHIP enables these centers to benefit from additional funding as they continue to make 

health care available to the uninsured. While HCFA and HRSA have assisted States and health 

centers with SCHIP implementation, more work lies ahead for both agencies, States and health 

centers to ensure health centers’ future viability. 

We believe that close coordination among HCFA, HRSA, and State Medicaid and SCHIP agencies 

that work with under-served populations can be highly effective in providing health care to needy 

children through Medicaid and SCHIP. To continue improving and supporting health centers’ 

performance in those areas indicated by our findings, we recommend the following: 

HCFA should encourage State actions and policies that promote successful 

enrollment of children in SCHIP through the health centers. HCFA should: 

Encourage States to provide SCHIP enrollment training to all health centers. Health 

centers that received enrollment training from their States were more likely to enroll children 

in SCHIP than those centers that received none. State enrollment training was the most 

significant factor that influenced successful enrollment for health centers. 

Promote State adherence to regulations which require the States that implemented 

Medicaid expansions to appropriately allocate outstationed eligibility workers to health 

centers. Our findings indicate that outstationed eligibility workers play a key role in health 

center enrollment of children in SCHIP. While only a few centers indicated that they were a 

“low-use” site, more than half of them did not have outstationed eligibility workers in their 

facilities. 

Encourage States to designate more health centers as presumptive eligibility sites, 

where applicable. Under the Balanced Budget Act of 1997, States may establish 

presumptive eligibility for the Medicaid program. States with separate or combined SCHIP 

models have considerable flexibility in incorporating presumptive eligibility in their SCHIP 

program. We found that being a presumptive eligibility site increases the likelihood that a 

health center will receive enrollment training and, subsequently, enroll children in SCHIP. 

Support continued State outreach activities and enhanced outreach at local community 

levels where health centers are. States’ outreach activities such as public service 

announcements, information distribution through schools and newspaper advertisements 

stimulate health centers’ SCHIP enrollment. However, one-fourth of the centers indicated 

that either their States were in the outreach planning stage or they were not yet aware of any 

outreach activities conducted by the State. States should continue with their current SCHIP 

outreach efforts while monitoring to see that the outreach activities are conducted in 

communities where health centers are present. 

Federally Funded Health Centers and SCHIP __________ OEI-06-98-00321 

11 
Promote quicker SCHIP eligibility determinations. We found that centers whose States

made enrollment decisions within one month, were twice as likely to

have enrolled children in SCHIP. 

Encourage States to promote inclusion of health centers, that are ready for managed

care, in Medicaid and/or SCHIP managed care provider networks. Thirty-seven percent

of health centers indicated that they did not have managed care contracts that cover children. 

However, health centers are more likely to have managed care contracts if the State requires

the MCOs to include safety-net providers, such as health centers. 

Recommend that States promote MCO reimbursement for enabling services. “Enabling

services” such as transportation, translation and other social services are often critical for the

patients served by these centers to access health care. However, only 19 percent of

respondent health centers were receiving direct reimbursement for enabling services from

their managed care contracts.

HRSA should continue to support health center adjustments to the changing health 

care environment. HRSA should: 

Continue preparing health centers for the phase-out of Medicaid cost-based 

reimbursement. Only 21 percent of health centers reported making changes to adapt to the 

phase-out of Medicaid cost based reimbursement. Of those, most (61%) sought out 

additional subsidies rather than making operational changes. Moreover, more than half of the 

centers under managed care contracts were still reimbursed using traditional cost-based 

methods. Health centers should be encouraged to aggressively utilize managed care training, 

managed care contract review and on-site technical assistance from HRSA’s Bureau of 

Primary Health Care's Office of Program and Policy Development to help prepare for the 

conversion from cost-based reimbursement. 

Promote the formation of health center managed care networks to assure effective 

health center participation in Medicaid and/or SCHIP managed care programs. If 

States do not require MCOs to include health centers and/or one is not available in a center’s 

service area, then HRSA should provide assistance to aid health centers that are ready for 

managed care in forming center-owned MCOs in communities that will support them. In 

cases where a center-owned MCO was currently operating in their service area (63%), most 

centers (90%) were participants. 

HRSA, in coordination with HCFA, should consider further examination of the 

impact of SCHIP outreach activities. 

To better understand the effectiveness of outreach activities, future review or evaluations 

which are consolidated with existing Department initiatives are needed. 

Federally Funded Health Centers and SCHIP __________ OEI-06-98-00321 

12
Agency Comments 

For this report, both HCFA and HRSA provided written comments, the full texts of which 

are included in Appendix D. Both agencies generally concur with our recommendations, and 

both offered technical comments which are reflected in our revisions. As HCFA points out, 

many of the recommendations are already being addressed by them, particularly with regard 

to eligibility and outreach issues. 

Outstationed Eligibility Workers – HCFA and HRSA suggested revisions to our 

recommendation to HCFA regarding outstationed eligibility worker requirements. HCFA 

suggested reframing the recommendation to focus on States ensuring outstationed eligibility 

workers are located in the most appropriate settings and on States expanding the use of 

outstationing as an enrollment technique. HRSA suggested the need for informing States of 

their obligation for outstationing workers and providing reimbursement for them, as they 

believe our data indicate that most States are not adhering to the requirement. 

Since the sole focus of our study was to examine the experiences of health centers in a 

SCHIP environment from their perspective, we do not believe our data warrant the changes 

regarding State roles and responsibilities suggested by HCFA and HRSA. Conceptually, we 

agree that schools and community centers are probably valuable points of entry for children 

into SCHIP, but we cannot claim that in this report. We believe that we have clearly 

indicated that health centers, except low-use sites, are required to have outstationed 

eligibility workers placed by States. 

MCO Reimbursement For Enabling Services – HCFA thought it would be helpful for us 

to define “enabling services” so that they can determine which ones are already mandatory 

Medicaid services and which are optional. A full list of enabling services is referenced in the 

report. 

HCFA’s assuring that States provide reimbursement to MCOs for mandatory enabling 

services is a good plan in our view. However, whether the particular enabling service is 

mandatory or not, we urge HCFA to promote State support of MCO reimbursement for all 

these services. We found that enabling services are often critical for the patients served by 

these health centers. Only 19 percent of health centers indicated that they were receiving 

direct reimbursement for enabling services from their managed care contracts. 

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13
ENDNOTES 

1. Sara Rosenbaum, Kay Johnson, Colleen Sonosky, Anne Markus and Chris DeGraw, “The 

Children’s Hour: The State Children’s Health Insurance Program,” Health Affairs, 

January/February 1998, pp. 75-89. 

2. The State Children’s Health Insurance Program Annual Enrollment Report, October 1, 

1998-September 30, 1999 

3. The HCFA SCHIP website, State Children’s Health Insurance Program (SCHIP) Status 

Report. (updated as of October 27, 1999). 

4. The HCFA SCHIP website, Status of State Plan (as of June 21, 2000) states that Illinois, 

Indiana, North Dakota, New York and Texas, have changed to a Combined program. 

Thus, there are 23 Medicaid expansion States, 18 Combined program States and 15 

Separate SCHIP program States. 

5. Neal Halfon, Moira Inkelas, Helen DuPlessis and Paul W. Newacheck, “Challenges in 

Securing Access to Care for Children,” Health Affairs, March/April 1999, pp. 48-63. 

6. CHIP’s Impact on Changing Service Delivery of Federal Health Centers: Six Case 

Studies, October 1999, OEI-06-98-00320. 

7. Ibid. OEI-06-98-00320 

8. HRSA created the Center for Managed Care in 1996 to assist centers in adapting to 

changes in the health care system. 

9. Cost-based reimbursement is the full reimbursement of allowable expenses from an 

annual cost report. 

10. Ibid. OEI-06-98-00320. 

11. Medicaid and SCHIP: Comparisons of Outreach, Enrollment Practices, and Benefits, 

GAO, GAO/HEHS-00-86, April 2000. 

12. During our data collection stage, States had chosen a variety of SCHIP models, and were 

at different levels of implementation. Because of this, we asked health centers to 

comment on the parts of the SCHIP program model and/or implementation with which 

they were familiar. In this report, we used “SCHIP” as the term to cover all the different 

model types and implemented programs described by the health centers. 

13. The Internet survey was created using the Raosoft Ezsurvey software. 

14. See Appendix A for complete logit regression models. 

Federally Funded Health Centers and SCHIP __________ OEI-06-98-00321 

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15. See Appendix A for the regression results. The remaining 1 percent of the centers

indicated that they did not know whether or not their States were conducting outreach. 

16. See Appendix A for the regression results.

17. See Appendix A for auxiliary logit regression model. 

18. See Appendix B for the Chi-Square test results.

19. Code of Federal Regulations, Title 42, Volume 3, 42CFR435.904 passim (revised as of 

October 1, 1999).

20. Federal Register, Vol. 64, No. 215, 42CFR457.110 (November 8, 1999).

Page 60892 of the preamble for the proposed rule on implementing regulations for SCHIP

specifies under “Enrollment simplification” that “States that implement Medicaid

expansions must follow all Medicaid rules relating to application assistance and eligibility

determination.” States selecting a separate child health program are encouraged to

consider outstationing eligibility at sites that are frequented by families with children.

21. Code of Federal Regulations, Title 42, Volume 3, 42CFR435.904 passim (revised as of 

October 1, 1999).

22. The Children’s Health Insurance Program: States’ Application and Enrollment

Processes: An Early Report From the Front Lines, May 1999, OEI-05-98-00310.

23. See Appendix A for the regression results.

24. See Appendix A for the regression results. 

25. See Appendix A for the regression results.

26. Ibid. GAO, April 2000.

27. Chi-Square test for this relationship was not significant.

28. See Appendix B for the Chi-Square test results.

29. See Appendix B for the Chi-Square test results.

30. Capitation payment is a fixed monthly payment of a specified set of services for each

enrollee.

31. Helen Halpin Schauffler, Jessica Wolin, “Community Health Clinics under Managed

Competition: Navigating Uncharted Waters,” Journal of Health Politics, Policy and Law,

Vol. 21, No. 3, Fall 1996, pp. 461-488.

32. Federal Register, Vol. 64, No. 215, 42CFR457.110 (November 8, 1999).

33. Ibid. 42CFR457.110.

Federally Funded Health Centers and SCHIP __________ OEI-06-98-00321

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34. Balanced Budget Refinement Act of 1999, (P.L. 106-113), section 603. 

35. Health Care Access: Programs for Underserved Populations Could Be Improved, GAO, 

GAO/T-HEHS-00-81, March 2000. 

36. Anecdotal evidence from the qualitative case study report, OEI-06-98-00320. 

37. It is unclear whether centers believed that their influence affected the SCHIP models 

chosen by States or SCHIP implementation after the State model had been selected. 

Federally Funded Health Centers and SCHIP __________ OEI-06-98-00321 

16
BIBLIOGRAPHY 

Feld, Peter, Courtney Matlock, and David R. Sandman, Insuring the Children of New York City’s 

Low-Income Families: Focus Group Findings on Barriers to Enrollment in Medicaid and Child 

Health Plus, The Commonwealth Fund, December 1998. 

The George Washington University Center for Health Policy Research, “Expansions of Coverage, 

Managed Care Create New Outreach Challenges,” Health Policy, Child Health, Vol. 2, No. 1, 

Winter 1995. 

Grogan, Colleen M. and Michael K. Gusmano, “How Are Safety-Net Providers Faring Under 

Medicaid Managed Care,” Health Affairs, March/April 1999, pp. 233-237. 

Halfon, Neal, Moira Inkelas, Helen DuPlessis and Paul W. Newacheck, “Challenges in Securing 

Access to Care for Children,” Health Affairs, March/April 1999, pp. 48-63. 

Immigration and Naturalization Service, Department of Justice, “Public Charge Fact Sheet,” May 25, 

1999. 

Lipson, Debra J., “Medicaid Managed Care and Community Providers: New Partnerships, Health 

Affairs, July/August 1997, pp.91-107. 

Office of Inspector General, Department of Health and Human Services, CHIP’s Impact on 

Changing Service Delivery of Federal Health Centers, OEI-06-98-00320, October 1999. 

Office of Inspector General, Department of Health and Human Services, The Children’s Health 

Insurance Program: State Application and Enrollment Processes An Early Report from the Front 

Lines, OEI-05-98-00310, 1999. 

Rosenbaum, Sara, Kay Johnson, Colleen Sonosky, Anne Markus and Chris DeGray, “The Children’s 

Hour: The State Children’s Health Insurance Program,” Health Affairs, January/February 1998, pp. 

75-89. 

Rosenbaum, Sara, Barbara M. Smith, Peter Shin, Marcie H. Zakheim, Karen Shaw, Colleen A. 

Sonosky and Lee Repasch, Negotiating The New Health System: A National Study of Medicaid 

Managed Care Contracts, The George Washington University Center for Health Policy Research, 

February 1998. 

Ross, Donna Cohen and Wendy Jacobson, Free and Low-Cost Health Insurance: Children You 

Know are Missing Out, Center on Budget and Policy Priorities, 1998. 

Selden, Thomas M., Jessica S. Banthin, and Joel W. Cohen, “Medicaid’s Problem Children: Eligible 

But Not Enrolled,” Health Affairs, May/June 1998, pp.192-200. 

United States General Accounting Office, Medicaid and SCHIP: Comparisons of Outreach, 

Enrollment Practices, and Benefits, GAO/HEHS-00-86, April 2000. 

Federally Funded Health Centers and SCHIP __________ OEI-06-98-00321 

17 
APPENDIX A 

Discussion of Regression Model 

Empirical Model and Data 

We used the logit model to explain which factors had significant impact on SCHIP enrollment 

outcomes in health centers. This model allows us to estimate the probability of a health center 

enrolling children in SCHIP (p), or center not enrolling children(1-p), based on the linear 

combination of independent variables. That is, Ln(p/ 1-p) =$ 0+ $1X1 +$2X2+ . . . . +$kXk + μ. 

More explicitly, our model of health center’s SCHIP enrollment can be written: 

Model 1: Base Model

Enroll = b0 + b1 Combi + b2 Separate 

+ b3 ST_Out + b4 HC_Out + b5 ST_HC_Out 

+ b6 Out_worker + b7 Presump + b8 Train 

+ b10 ST_Out + b11 HC_Out + b12 ST_HC_Out 

+ b13 Month + b14 App_Time 

+ b15 Q2_Kid + b16 Q2_Kid + b17 Q2_Kid + g

Model 1a : Auxiliary Model

Train = b0 + b1 Out_worker + b2 Presump + g

Variable descriptions are included in Table A-2 below. 

Results 

Empirical findings of the Base Model indicate that receiving SCHIP enrollment training from the 

State had the strongest impact on a health center’s SCHIP enrollment outcome. However, variables 

that indicate health centers with outstationed eligibility workers and centers designated as 

presumptive eligibility sites were not significantly related to the probability of enrolling children (See 

Table A-2). This finding was contrary to our prior expectation based on results from our qualitative 

studies, and Chi-Square statistics indicating that there was a significant association (p < 0.001) 

between those two variables and the dependent variable. As a result, we examined the relationship 

between SCHIP training and outstationed worker and presumptive eligibility site variables. We 

found that there was an indirect effect of these variables on enrollment. As indicated earlier, we 

employed an auxiliary regression model. The results showed that although outstationed worker and 

presumptive eligibility site did not have direct impact on health center’s SCHIP enrollment, the 

effects of these variables were working through enrollment training. Table A-1 presents the auxiliary 

regression results. 

Table A-1: Auxiliary Regression Estimates 

Dependent Variable: TRAIN (N=371 ,Concordant=47.5%) 

Independent Variables Parameter Estimate Standard Error Pr > Chi-Square Odds Ratio 

OUT_WORKER 0.8880 0.2251 0.0001 2.430 

PRESUMP 0.5089 0.2525 0.0439 1.663 

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State’s SCHIP model type also had a significant effect on a health center’s SCHIP enrollment 

outcome. Health centers under a combined model or a separate SCHIP program are about three 

times more likely to enroll children than centers under the Medicaid expansions model. State 

outreach activities were also significant and health centers that reported State outreach were 2.5 

times more likely to have enrolled children than those centers which reported their States had not 

conducted outreach. In addition, eligibility determination time and approval date of State’s SCHIP 

plan also had a significant effect on health centers’ enrollment. Table A-2 presents the base model 

regression results with the variable descriptions. 

Table A-2: BASE Regression Model 

Dependent Variable: ENROLL 

(n =371, c =82.7%) 

Independent 

Variables 

odds 

ratio 

Descriptions 

(All variables are binary, except MONTH is a continuous variable.) 

MEDI_EXP reference State SCHIP model is Medicaid Expansion 

COMBI 3.141* State SCHIP model is Combined program 

SEPARATE 2.947* State SCHIP model is Separate program 

ST_OUT 2.500* health center reporting their State’s SCHIP Outreach Activities 

HC_OUT 0.996 health center reporting their own center SCHIP outreach Activities 

ST_HC_OUT 0.167 Interaction variable between ST_OUT * HC_OUT 

OUT_WORKER 1.430 health center has outstationed eligibility workers at their site 

PRESUMP 1.882 health center is designated as presumptive eligibility site for SCHIP 

enrollment 

TRAIN 3.922* health center received SCHIP enrollment training from their State 

MONTH 1.113* number of month each State had their SCHIP plan approved. 

(subtracting State’s approval date from January, 2000) 

SHORT_APP_TIME 2.143* eligibility determination took less than one month 

Q1_KID^ reference number of kids(<1622) served in health center falls in 0-25% 

distribution 

Q2_KID^ 1.472 number of kids(1623-3567) served in health center falls in 26-

50%distribution 

Q3_KID^ 1.133 number of kids(3568-7049) served in health center falls in 51-75% 

distribution 

Q4_KID^ 0.925 number of kids(>7049) served in health center falls in 76-100% 

distribution 

MCO 1.418 health center has a managed care contract 

* significant at 0.05. 

^Using 1998 HRSA UDS data, number of children (ages 0-19) served by sampled health centers. 

Federally Funded Health Centers and SCHIP __________ OEI-06-98-00321 

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APPENDIX B 

Chi-square Test Results 

Frequency 

Column percent 

Center a presumptive eligibility site for SCHIP 

Actually enrolled children under 

SCHIP 

Yes No Not 

applicable 

TOTAL 

Yes 86 

85.15 

87 

66.92 

109 

76.22 

282 

75.4 

No 15 

14.85 

43 

33.08 

34 

23.78 

92 

24.60 

Total 101 

27.01 

130 

34.76 

143 

38.24 

374 

100 

Statistic a DF Critical chi-sq Value Computed chi-sq Value Probability 

Chi Square 0.01 2 9.21 10.264 0.006 

Frequency 

Column percent 

State requiring managed care contractors to mandate health centers 

in their provider network 

Health centers that have managed 

care contracts that include children 

Yes No Don’t Know TOTAL 

Yes 71.85 

97 

69.81 

74 

52.67 

79 

63.94 

250 

No 28.15 

38 

30.19 

32 

47.33 

71 

36.06 

141 

TOTAL 135 

34.53 

106 

27.11 

150 

38.36 

391 

100 

Statistic a DF Critical chi-sq Value Computed chi-sq Value Probability 

Chi Square 0.01 2 9.21 13.518 0.001 

Frequency 

Column percent 

State requiring managed care contractors to mandate health centers 

in their provider network 

Health center-owned managed care 

organizations in the State 

Yes No Don’t Know TOTAL 

Yes 37.78 

51 

42.20 

46 

27.81 

42 

35.19 

139 

No 48.15 

65 

55.05 

60 

39.07 

59 

46.58 

184 

Don’t Know 14.07 

19 

2.75 

3 

33.11 

50 

18.23 

72 

TOTAL 135 

34.18 

109 

27.59 

151 

38.23 

395 

100 

Statistic a DF Critical chi-sq Value Computed chi-sq Value Probability 

Chi Square 0.01 4 13.28 41.642 0.001 

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APPENDIX C 

Point Estimates and Confidence Intervals from Key Survey Questions 

All Health Centers -- Point Estimates and Confidence Intervals 

for Key Survey Questions 

Proportion of All Health Centers (in percent) 

Point Estimate 

(in percent) 

Standard Error 

Interval 

95% Confidence 

Are States conducting outreach activities 

(n=405) 

< yes 

< no 

< no, but funds allocated 

< no, but developing 

< don’t know 

74 

12 

8 

5 

1 

1.3 

0.9 

0.8 

0.6 

0.3 

71.5 - 76.5 

10.1 - 13.9 

6.5 - 9.5 

3.8 - 6.2 

0.4 - 1.6 

Centers reporting they do conduct 

outreach activities 

(n=405) 

Center received outside resources for 

outreach (funds/manpower) 

(n=405) 

83 

42 

1.1 

1.4 

80.9 - 85.1 

38.9 - 44.5 

Actually enrolled children under SCHIP 

(n=405) 

< yes 

< no 

73 

27 

1.3 

1.3 

70.3 - 75.4 

24.6 - 29.7 

State provided training on CHIP enrollment 

to center’s staff 

(n=405) 

< yes 

< no 

< don’t know 

55 

41 

4 

1.4 

1.4 

0.6 

52.5 - 58.1 

37.9 - 43.5 

2.8 - 5.1 

Centers having outstationed eligibility 

workers 

(n=405) 

39 1.4 36.2 - 41.8 

Of centers having outstationed eligibility 

workers, State funds the position 

(n=159) 

< Fully 

< Partially 

< Not at all 

45 

30 

25 

3.4 

3.1 

3.0 

38.3 - 51.7 

23.9 - 36.1 

19.1 - 30.9 

Of centers not having outstationed 

eligibility workers, State designated as 

“low use” 

(n=246) 

< yes 

< no 

< don’t know 

7 

82 

11 

1.3 

1.9 

1.5 

4.5 - 9.5 

78.3 - 85.7 

8 - 14 

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All Health Centers -- Point Estimates and Confidence Intervals 

for Key Survey Questions 

Proportion of All Health Centers (in percent) 

Point Estimate 

(in percent) 

Standard Error 

Interval 

95% Confidence 

How long to know eligibility from a 

completed application 

(n=295) 

< Few days 

< One to two weeks 

< Less than one month 

< One to two months 

< More than two months 

< Don’t know 

7 

12 

24 

37 

13 

8 

1.1 

1.4 

1.8 

2.0 

1.4 

1.1 

4.7 - 8.9 

9.2 - 14.5 

20.2 - 27.2 

32.6 - 40.6 

10.4 - 16.0 

5.6 - 10.0 

Center a presumptive eligibility site for 

SCHIP 

(n=405) 

< IS a presumptive eligibility site 

< is NOT presumptive eligibility site 

< Not applicable in our State 

< Don’t know 

25 

32 

36 

7 

1.3 

1.4 

1.4 

0.7 

23.0 - 27.9 

29.4 - 34.8 

32.8 - 38.3 

5.5 - 8.4 

Experiencing enrollment barriers 

(n=405) 

< ARE experiencing 64 1.4 61.2 - 66.7 

Have managed care contract that covers 

children 

(n=405) 

< no 

< yes 

37 

63 

1.4 

1.4 

34.0 - 39.5 

60.5 - 66.0 

Type or reimbursement currently receiving 

under largest SCHIP and/or Medicaid 

managed care contract 

(n=256) 

< Cost-based 

< Full capitation 

< Primary care capitation 

< Primary care case management 

< Risk withholding 

55 

17 

48 

10 

12 

2.4 

1.8 

2.4 

1.4 

1.6 

50.8 - 60.1 

13.7 - 20.7 

43.0 - 52.3 

7.3 - 13.0 

9.1 - 15.2 

Center receiving direct reimbursement for 

enabling services through MCO 

(n=256) 

< yes 

< no 

19 

81 

1.9 

1.9 

15.5 - 22.8 

77.2 - 84.5 

State requires MCO to include health 

centers in provider networks 

(n=405) 

< yes, Medicaid/Medicaid expansion only 

< yes, separate SCHIP program only 

< yes, for both programs 

< no 

< don’t know 

18 

1 

13 

27 

41 

1.1 

0.3 

1.0 

1.3 

1.4 

16.1 - 20.5 

0.4 - 1.6 

10.9 - 14.7 

24.6 - 29.7 

37.9 - 43.5 

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All Health Centers -- Point Estimates and Confidence Intervals 

for Key Survey Questions 

Proportion of All Health Centers (in percent) 

Point Estimate 

(in percent) 

Standard Error 

Interval 

95% Confidence 

Is there a health center-owned MCO in 

State 

(n=405) 

< yes 

< no 

< don’t know 

34 

46 

20 

1.4 

1.4 

1.2 

31.6 - 37.0 

42.8 - 48.5 

18.0 - 22.5 

Does center-owned MCO operate in your 

service area 

(n=139) 

< yes 

< no 

63 

37 

3.6 

3.6 

55.5 - 69.7 

30.3 - 44.5 

Which best describes action taken by 

center to adapt to phase-out of cost-based 

reimbursement 

(n=365) 

< Center not affected due to 

freestanding program 

< Center received an extension to 

continue cost-based reimbursement 

< Center has made changes 

16 

52 

32 

1.2 

1.7 

1.6 

13.8 - 18.6 

48.2 - 54.8 

29.3 - 35.4 

Has center made changes in 

ADMINISTRATIVE PROCEDURES 

(n=405) 

< yes 

< no 

62 

38 

1.4 

1.4 

59.2 - 64.7 

35.3 - 40.8 

Has center made changes in CLINICAL 

STAFFING 

(n=405) 

< Not made any changes 

< Decreased clinical staff 

< Increased clinical staff 

48 

16 

36 

1.5 

1.1 

1.4 

44.8 - 50.5 

14.0 - 18.1 

33.6 - 39.0 

Health centers expect to serve more, fewer, 

or same number of children three years 

from now (n=405) 

< More 

< Fewer 

< Same 

< Don’t know 

80 

2 

12 

6 

1.2 

0.4 

0.9 

0.7 

78.0 - 82.5 

1.4 - 3.1 

9.8 - 13.4 

4.8 - 7.5 

Note: Some estimates are based on a sample size of less than 405. Not all centers in our sample were able to respond 

to all the questions in the survey because some questions were not applicable to the centers and/or their States. 

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APPENDIX D 

Agency Comments 

In this appendix, we present comments from the Health Care Financing Administration and the 

Health Resources and Services Administration. 

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Page 2 - June Gibbs Brown 

considered "enabling" such as translation services are required of all Medicaid providers,

however, we believe that most other enabling services would only be optional services for States

under Medicaid. 

It is often difficult to separate "assertive outreach" by health centers or health plans from

marketing. It might be useful t6 point out that the term outreach as used in this report means

encouraging clients to establish Medicaid eligibility rather than encouraging a choice of a

particular provider. 

Our specific comments are as follows: 

OIG Recommendation 

HCFA should encourage State actions and policies that promote successful enrollment of children

in SCHIP through the health centers. 

HCFA Response 

In general we concur with this recommendation. Please see below for specific discussion of each

sub -recommendation. 

C Encourage States to provide SCHIP enrollment training to all health centers. 

We believe that this report needs to more fully discuss what is meant by enrollment training. 

Specifics should be given as to what type of training is envisioned and the specific type of training 

each worker within the center should be receiving. However, in principle we agree that enrollment 

training should be provided to these health centers in I order to further the efforts States are 

already making to simplify enrollment processes. Such training is necessary to ensure that parents 

understand the enrollment process and are able to understand and can fill out enrollment forms. 

Information is one key to success. 

C Promote State adherence to regulations which require the States that implemented 

Medicaid expansions to appropriately allocate outstationed. eligibility workers to 

health centers. 

We suggest re-framing this recommendation to focus on working with States to ensure that 

outstationed eligibility workers are being located in the most appropriate settings (e.g., health 

centers, schools, community centers) and to encourage States to expand the use of outstationing 

as an enrollment technique. We believe that establishing outstationed eligibility workers in areas 

convenient to families is another key step to achieving successful enrollment. For example, in rural 

areas it may be necessary to provide door-to-door outreach and establish outstations so families 

can sign up near their homes. 

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C Encourage States to designate more health centers as presumptive eligibility sites, 

where applicable. 

We agree that States should be encouraged to designate health centers as presumptive eligibility 

sites. Federally funded health centers can do presumptive eligibility (PE) determinations for 

Medicaid or Medicaid expansions under Title XXI. Currently there is no explicit presumptive 

eligibility authority in Title XXI, however, States can do PE-like eligibility determinations within 

the current eligibility guidelines in SCHIP. 

C Support continued State outreach activities and enhanced outreach at local 

community levels where health centers are. 

We agree with this recommendation, however there needs to be more recognition of current State 

outreach and enrollment simplification activities, including targeted outreach through health 

centers. 

C Promote quicker Medicaid/SCHIP eligibility determinations. 

We agree with this recommendation and are already making efforts in this area. We believe that 

one way to promote quicker eligibility determinations is to simplify eligibility applications. States 

may want to explore the use of electronic applications to improve the speed and ease of 

application submittal. Some States are cutting once lengthy applications down to a few pages, are 

accepting applications by mail and are -eliminating unnecessary verification requirements. We are 

also encouraging States, through 1115 demonstration proposals, to incorporate innovative 

outreach strategies to find and enroll eligible children. 

C Encourage States to promote inclusion of health centers, that are ready for 

managed care, in Medicaid/SCHIP managed care provider networks. 

We agree with the recommendation. For this population it is imperative that managed care 

networks include safety-net providers, such as health centers, as they are the backbone of a health 

care delivery system for low-income children. 

C Recommend that States promote MCO reimbursement for enabling services 

We agree that States should be promoting MCO reimbursement for enabling services. However, 

as stated above we think it would be helpful for the report to highlight what is meant by 

"enabling" services. It can then be determined which of these enabling services are already 

mandatory Medicaid services and which are optional. We can then accurately delineate which 

services (e.g., translation) States should already be providing reimbursement to MCOs and which 

services we should encourage states to employ. 

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OIG Recommendation 

HRSA should continue to support health center adjustments to the changing health care

environment. 

HCFA Response 

We concur with this recommendation. 

OIG Recommendation 

HRSA, in coordination with HCFA, should consider further examination of the impact of

SCHIP/Medicaid expansions outreach activities. 

HCFA Response 

Several efforts are currently underway to look at the effectiveness of outreach, including the

States' evaluations and annual reports; the overall evaluation of SCHIP that is underway by

Mathematica Policy Research; as well as the ongoing HCFA/HRSA monitoring efforts. We have

heard concerns from several States noting the many site visits and evaluations that are being done

simultaneously and seemingly with the same purpose. We would recommend giving the States'

programs additional time to further develop and expand their programs before HCFA increases its

monitoring and evaluation of the effectiveness of outreach efforts. We also recommend that any

future review or evaluations be consolidated with existing Department initiatives. 

Attachment 

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TECHNICAL COMMENTS 

C In general, the references to SCHIP/Medicaid expansions throughout the report are 

misleading and not consistent with the terminology in the forthcoming final SCHIP 

regulation. As a rule, references to SCHIP programs are references to any program 

that receives enhanced Federal matching funds up to the amount of the available 

SCHIP allotment. There are two types of SCHIP programs - Medicaid expansion 

programs and separate child health programs - that may be referred to. Although 

the Medicaid rules apply in States that implement Medicaid expansion SCHIP 

programs, the funding is structured differently. 

C On page 1, the reference to the intent to provide the same "quality" of health care 

as private insurance may be misleading. We recommend characterizing the intent of 

SCHIP as providing States with an opportunity to design health care delivery 

systems that are similar in scope and structure to coverage that is available through 

private insurance. 

C On page 6, it would be useful to provide some examples of "enrollment training. 

What activities does enrollment training encompass? 

C In the second paragraph on page 6, we are concerned about the references to 

States using "presumptive eligibility." Our analysis of the States' SCHIP 

evaluations (submitted to HCFA in March/April 2000) has concluded that States 

are using the term presumptive eligibility in very different ways and in varying 

degrees. In fact, most States are not using presumptive eligibility for children in 

either Medicaid or SCHIP. This point is consistent with the third recommendation 

to expand the availability of presumptive eligibility providers. 

C On page 9 of the draft report, there is a discussion of the "phase out" of "Medicaid 

cost-based reimbursement" and the same phrase is used throughout the draft 

report. HCFA has taken the position that the phase-out was of the mandatory 

levels of cost-based reimbursement; States, at their option, may continue to pay 

100% of Medicaid reasonable costs. In other words, the statute no longer says that 

States MUST pay 100% of reasonable costs, but a State MAY still do so. 

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Health Resources and Services Administration's Comments on the Office of the 

Inspector General Draft Report "Federally Funded Health Centers and Low Income 

Children's Health Care: improving SCHIP Enrollment and, Adapting to a Managed 

Care Environment (code OEI-06-98-00321) 

General Comments 

Ile Health Resources and Services Administration (HRSA) appreciates the opportunity to 

provide our comments on the Office of Inspector General (OIG) draft report, "Federally 

Funded Health Centers and Low Income Children's Health Care: Improving SCHIP 

Enrollment and Adapting to a Managed Care Environment" (Code OEI-06-98-00321). 

Technical Comments 

On Page 2, under the bold heading, "Methodology", second sentence beginning "The first 

phase in a two part study, that inspection employed a case study approach.......”, doesn't 

make sense and needs to be rephrased. 

On Page 3, the first paragraph titled "Sample", second sentence beginning "These grantees 

include Primary health Centers, .........”, we suggest an alternate clarification: "These grantees 

include Community Health Centers,........” 

On Page 6, in the next to last paragraph discussing "sixty-one percent of health centers.......”, 

this section should include a statement to the effect that all FQHC's except low-use sites, are 

required by Federal regulations to have out stationed eligibility workers and that the cost of 

these workers are born by Medicaid. This requirement needs to be clearly indicated on this 

page. In addition, we recommend an addition of the finding that most states are not adhering 

to this requirement. 

On Page I 1, under the bold heading "HCFA should.......”, we suggest that an added 

paragraph is placed that would include verbiage regarding the requirement for placement and 

payment for out stationed eligibility workers. For example, the paragraph could start out: 

Inform states about their obligation to place out stationed eligibility workers in FQHCs and 

to provide Medicaid reimbursement for these workers. 

On Page 12, under the bold heading "HRSA should continue....., while we agree with it 

conceptually, the second recommendation is of concern because of the financial risk of such 

an organization and that the success of such an entity is beyond the role of the Federal 

funding agency but rather lies with the support of both the state and local community and 

agencies. It is critical to look closely at the particular marketplace before determining what to 

do in the community. At this point we are supporting the development of health center 

owned plans only through the Loan Guarantee Program. 

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