Department of Health and Human Services
 

OFFICE OF 

INSPECTOR GENERAL 

SEPARATE STATE CHILDREN’S 


HEALTH INSURANCE PROGRAM
 

ENROLLEES’ ELIGIBILITY FOR
 

MEDICAID IN 2006 


Daniel R. Levinson
 

Inspector General 


July 2008
 

OEI-06-07-00310
 
 

 

 

 

 

 

 

Office of Inspector General
 http://oig.hhs.gov 

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

amended, is to protect the integrity of the Department of Health and Human Services (HHS) 

programs, as well as the health and welfare of beneficiaries served by those programs. This 

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

inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities. 
 

 

 

 

Δ EXECUTIVE SUMMARY 

OBJECTIVE 

To determine the extent to which children enrolled in separate State 

Children’s Health Insurance Programs (SCHIP) were eligible for 

Medicaid in 2006. 

BACKGROUND 

The Balanced Budget Refinement Act of 1999 requires that, every 

3 years, the Office of Inspector General (OIG) review a sample from 

States with separate SCHIPs to: (1) determine the number, if any, of 

SCHIP enrollees who are eligible for the Medicaid program; and 

(2) assess States’ progress in reducing the number of uninsured 

low-income children. This study addresses the first mandate. 

The Balanced Budget Act of 1997 created SCHIP to provide health 

insurance coverage to uninsured low-income children. The Federal 

match for SCHIP expenditures is greater than the Federal match for 

Medicaid expenditures. Federal regulations require States to screen 

SCHIP applicants for Medicaid eligibility, in part, to prevent States 

from inappropriately enrolling Medicaid-eligible children in SCHIP. 

To determine the extent to which children enrolled in separate SCHIPs 

were eligible for Medicaid, we examined case records of a random 

sample of 400 children enrolled in separate SCHIPs on June 1, 2006, 

from 36 States with separate SCHIPs. We reviewed case records for 

each child based on the eligibility criteria and requirements for that 

State’s Medicaid program. 

FINDING 

An estimated 4 percent of children enrolled in separate SCHIPs were 

eligible for the Medicaid program in 2006. We determined that 

4 percent of children enrolled in separate SCHIPs (16 sample cases) 

were eligible for their States’ Medicaid program. Eight of these cases 

involved miscalculations of income, and the remainder involved clerical 

mistakes and unclassified errors. Projected to the population of all 

children enrolled in separate SCHIPs in 2006, the 4-percent error rate 

corresponds to about 105,000 children nationally. An additional 

4.5 percent (18 cases) lacked sufficient documentation for us to make a 

determination regarding Medicaid eligibility. This lack of 

documentation leaves open the possibility that the actual number of 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 i 
 

EXECUTIVE SUMMARY 

children enrolled in separate SCHIPs who were eligible for the Medicaid 

program in 2006 could have been higher than our projection. 

RECOMMENDATION 

We found that an estimated 4 percent of children enrolled in separate 

SCHIPs were eligible for the Medicaid program in 2006 and an 

additional 4.5 percent of cases lacked sufficient documentation. 

Enrollment errors can result in the inappropriate use of Federal 

matching funds and limited SCHIP resources being expended on 

Medicaid-eligible children. 

To address these deficiencies, we recommend that the Centers for 

Medicare & Medicaid Services (CMS): 

Take further action to ensure the appropriate enrollment of 

Medicaid-eligible children. 

•	 To address miscalculations of incomes and clerical mistakes, CMS 

could emphasize to States the need for accuracy in enrollment 

casework and encourage States to perform quality checks to detect 

such errors. 

•	 CMS could also use the eligibility measurement component of 

Payment Error Rate Measurement, which examines eligibility for 

both SCHIP and Medicaid enrollment, to identify problems that 

lead to enrollment errors and to assist States in implementing 

corrective actions. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

In its written comments on the draft report, CMS stated that it 

“supports the spirit of the OIG recommendations” and “will continue to 

undertake a number of activities to prevent the types of errors 

identified” in the report. To help it enhance monitoring of States in this 

area, CMS requested additional information on some of the 16 cases 

identified as having enrollment errors. OIG will provide CMS with 

detailed information about each of the 16 cases with enrollment errors. 

To address CMS’s additional comments, we made revisions or added 

information in the appropriate sections of the report to clarify each topic 

or question. 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 ii 
Δ TABLE OF CONTENTS 

EXECUTIVE SUMMARY ..................................... i 
 

INTRODUCTION ........................................... 1 
 

FINDING ................................................... 9 
 

An estimated 4 percent of SCHIP enrollees were eligible for 

Medicaid in 2006........................................ 9 
 

RECOMMENDATION ...................................... 12 
 

Agency Comments and Office of Inspector General Response . . . 12 

APPENDIXES ............................................. 14 
 

A: States’ Separate SCHIP Enrollment..................... 14 
 

B: Estimates, Projections, and Confidence Intervals .......... 15 
 

C: Agency Comments ................................... 16 
 

ACKNOWLEDGMENTS .................................... 21 
 
 

DESIGN ~ DRAFT Δ INTRODUCTION 

OBJECTIVE 

To determine the extent to which children enrolled in separate State 

Children’s Health Insurance Programs (SCHIP) were eligible for 

Medicaid in 2006. 

BACKGROUND 

Section 703 of the Medicare, Medicaid, and SCHIP Balanced Budget 

Refinement Act (BBRA) of 1999 requires that, every 3 years, the Office 

of Inspector General (OIG) review a sample from States with separate 

SCHIPs to: (1) determine the number, if any, of SCHIP enrollees who 

are eligible for the Medicaid program; and (2) assess States’ progress in 

reducing the number of uninsured low-income children.1 This study 

addresses the first mandate. OIG addressed the second mandate in a 

separate study.2 

State Children’s Health Insurance Program 

The Balanced Budget Act of 1997 created SCHIP to provide health 

insurance coverage to uninsured low-income children.3 The program’s 

overall goal is to expand coverage to uninsured children in households 

with incomes greater than States’ Medicaid eligibility but below 

200 percent of the Federal poverty level.4 States have the option of 

(1) instituting a separate children’s health insurance program; 

(2) expanding Medicaid eligibility; or (3) instituting both a separate 

SCHIP and a Medicaid expansion, known as a combination program.5 

As of January 1, 2006, 18 States administered only a separate SCHIP, 

and 21 States administered both a separate SCHIP and a Medicaid 

expansion SCHIP. Three of these thirty-nine separate SCHIPs cover 

only unborn children for health benefits coverage, including prenatal 

care and delivery.6 Ten of the remaining eleven States and the District 

of Columbia had only Medicaid expansion programs, and one State did 

1 P.L. No. 106-113; Social Security Act, § 2108(d)(1), 42 U.S.C. § 1397hh (d)(1). 

2 OIG, “Assessing States’ Progress in Meeting State Children’s Health Insurance 

Program Goals” (OEI-05-07-00330), September 2007. 

3 P.L. No 105-33; Social Security Act §§ 2101–2110, 42 U.S.C. §§ 1397aa–jj. 

4 42 U.S.C. §§ 1397aa and 1397jj(b). 

5 42 U.S.C. § 1397aa(a), 42 CFR § 457.70(a). 

6 42 CFR § 457.10. 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 1 
 

 

 

 

 

INTRODUCTION 

not have any SCHIP. At the end of fiscal year (FY) 2006, separate 

SCHIPs had almost 3 million enrollees.7 

The Federal match for SCHIP expenditures is greater than the Federal 

match for Medicaid expenditures.8 For FY 2006, the average Federal 

match for Medicaid was 60 percent, and the average for SCHIP was 

72 percent.9 

Screening Applicants for Medicaid Eligibility 

Federal regulations require States to screen SCHIP applicants for 

Medicaid eligibility to prevent States from enrolling Medicaid-eligible 

children in SCHIP.10 Appropriate enrollment of Medicaid-eligible 

children is important to ensure that limited SCHIP enrollment slots are 

not taken by children who should be enrolled in Medicaid and that the 

enhanced Federal matching funds are used as intended. 

Based on a variety of factors, such as family income and the child’s age, 

a child may be eligible for Medicaid or SCHIP, but never both. States 

must screen each SCHIP applicant’s income to identify whether the 

applicant is potentially eligible for the State’s Medicaid program.11 If a 

child is found to be potentially eligible, a full Medicaid eligibility 

determination must ensue. Within limits set by Federal law, Medicaid 

eligibility criteria vary somewhat among States.12 

Federal regulations permit States’ discretion to allow families to 

self-declare eligibility factors, such as income, in lieu of providing 

documentation, so long as the State implements controls and procedures 

“to ensure the integrity of the eligibility determination process.”13 

7 Centers for Medicare & Medicaid Services (CMS), “2006 Fourth Quarter – Program 

Enrollment Last Day of Quarter by State.” Available online at 

http://www.cms.hhs.gov/NationalSCHIPPolicy/SCHIPER. Accessed on October 5, 2007. 

8 Social Security Act § 2105(a) 42 U.S.C. § 1397ee(a). 

9 OIG calculation based on information provided in 69 Fed. Reg. 68380 (Nov. 24, 2004). 

10 42 CFR § 457.350. 

11 States that have resource (asset) tests must also screen for a family’s resources.
 

42 CFR § 457.350(d). 

12 42 U.S.C. §§ 1396a(l)(2)(b) and (c). Federal Medicaid funds will match State funds for 

children under the age of 6 whose family income is under 133 percent of the Federal poverty 

level and for children ages 6 through 18 at 100 percent of the Federal poverty level. 

13 42 CFR §§ 457.380(a) and (b). 

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INTRODUCTION 

In 2006, 9 of the 39 States with separate SCHIPs allowed some form of 

self-declaration of income.14 

SCHIP agencies must facilitate timely enrollment into the Medicaid 

program of those children found eligible for Medicaid.15 To accomplish 

timely enrollment, section 2102(c)(2) of the Social Security Act requires 

coordination between the State Medicaid and separate SCHIP agencies. 

Further, Federal regulations require Medicaid agencies to determine 

eligibility within 45 days for most applicants, barring extenuating 

circumstances.16 Finally, SCHIP agencies must monitor their screening 

and enrollment processes to ensure that children are enrolled in the 

right program.17 

Payment Error Rate Measurement 

CMS has recently implemented the Payment Error Rate Measurement 

(PERM) program, which is designed, in part, to detect any inappropriate 

enrollment in State Medicaid programs and SCHIPs.18 Specifically, 

starting in FY 2006 for Medicaid and FY 2007 for SCHIP, the eligibility 

measurement component of PERM determines whether randomly 

selected beneficiaries enrolled in Medicaid and SCHIP were eligible for 

the program in which they are enrolled. The PERM is administered 

annually in 17 States, such that error rates are measured in each State 

every 3 years. States selected for review are required to provide CMS 

with, among other things, a corrective action report for purposes of 

reducing any payment error rates measured by the eligibility 

component of the program. 

Prior State Children’s Health Insurance Program Enrollment Reviews 

OIG has issued two previous reports based on the reviews mandated 

under the BBRA regarding SCHIP enrollees who are eligible for 

14 Kaiser Commission on Medicaid and the Uninsured, “Resuming the Path to Health 

Coverage for Children and Parents: A 50-State Update on Eligibility Rules, Enrollment and 

Renewal Procedures, and Cost-Sharing Practices in Medicaid and SCHIP in 2006,” Table 6, 

January 2007. Data based on a national survey conducted by the Center on Budget and 

Policy Priorities for January 2007. Available online at 

http://www.kff.org/medicaid/upload/7608.pdf. Accessed on October 5, 2007. 

15 42 CFR §§ 457.350(c), (d), and (f)(4). 

16 42 CFR § 435.911(a)(2). 

17 42 CFR § 457.353. 

18 71 Fed. Reg. 50489 (Aug. 31, 2007). 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 3 
 

 

 

INTRODUCTION 

Medicaid.19 For 2000, OIG found that 1.8 percent of SCHIP enrollees 

were eligible for Medicaid from a sample of 500 children from 

five selected States with separate SCHIPs. For 2003, OIG found that 

1 percent of SCHIP enrollees were eligible for Medicaid from a sample of 

400 children from 36 States with separate SCHIPs. 

The BBRA also requires the Government Accountability Office (GAO) to 

monitor OIG reviews of SCHIP.20 Regarding OIG’s review of 2000 

SCHIP enrollment, GAO recommended that OIG (1) expand the scope of 

reviews to include all States with separate SCHIPs, including those 

with combination programs; and (2) consider exploring issues of 

appropriate SCHIP enrollment among States that have opted for 

Medicaid expansions under SCHIP.21 OIG agreed with the 

recommendations and expanded its 2003 review and the current review 

to include all States that administer separate SCHIP programs, 

including those with combination programs. The 2003 OIG review also 

examined the eligibility of children enrolled in Medicaid expansion 

SCHIPs.22 GAO made no recommendations regarding OIG’s 2003 

review.23 

Beyond the mandated national studies, OIG also conducted 

State-specific reviews of SCHIP eligibility in California, Florida, and 

New York using payment and enrollment data from 2005.24 Among the 

three States, error rates, i.e., cases in which SCHIP enrollees were 

eligible for the State’s Medicaid program, ranged from a low of 0 percent 

(no errors) to a high of 5.5 percent. The percentage of cases that lacked 

sufficient case file documentation to support the State’s eligibility 

determination ranged from a low of 6.3 percent to a high of 11 percent. 

OIG made recommendations for improvement to each State. These 

19 OIG, “State Children’s Health Insurance Program: Ensuring Medicaid Eligibles Are 

Not Enrolled in SCHIP” (OEI-05-00-00241), February 2001; and “Determining if Children 

Enrolled in Separate SCHIPs Were Eligible for Medicaid” (OEI-07-03-00220), June 2005. 

20 42 U.S.C. § 1397hh(d)(3). 

21 GAO, “Children’s Health Insurance: Inspector General Reviews Should Be Expanded 

To Further Inform the Congress” (GAO-02-512), March 29, 2002. 

22 OIG, “Determining if Children Classified as Medicaid SCHIP Expansion Meet 

Eligibility Criteria” (OEI-07-03-00221), October 2005. 

23 GAO, “Children’s Health Insurance: Recent HHS-OIG Reviews Inform the Congress 

on Improper Enrollment and Reductions in Low-Income, Uninsured Children” 

(GAO-06-457R), March 9, 2006. 

24 OIG, “Review of State Children’s Health Insurance Program Eligibility in California” 

(A-09-06-00022), July 2007; “Review of State Children’s Health Insurance Program 

Eligibility in Florida” (A-04-06-00021), July 2007; and “Review of State Children’s Health 

Insurance Program Eligibility in New York State” (A-02-06-01003), July 2007. 

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INTRODUCTION 

studies provide examples of State-specific enrollment error rates 

identified in recent years. 

METHODOLOGY 

Scope 

To determine the extent to which children enrolled in separate SCHIPs 

were eligible for Medicaid, we included in our sample 36 of the 39 States 

with a separate SCHIP program as of January 1, 2006. We did not 

include the three States in which the separate SCHIP program covers 

only unborn children.25 We examined the SCHIP case file documents of 

400 randomly selected children, 18 years of age or younger, who were 

enrolled in separate SCHIPs on June 1, 2006. Using each State’s 

Medicaid eligibility criteria, we determined whether the selected child 

was eligible for the State’s Medicaid program.26 We did not assess 

whether the enrollees met their States’ SCHIP eligibility criteria. 

Sample Selection 

From each of the 36 States, we obtained a list of all children enrolled in 

their separate SCHIPs on June 1, 2006. Selecting a single date within 

the year helped avoid complications regarding children who might have 

moved between the SCHIP and Medicaid programs during the year. We 

chose June 1 to be consistent with the methodology of the 2003 review. 

We combined the State lists into a single universe of approximately 

2.6 million children. From this universe, we selected a simple random 

sample of 400 cases for review—the same sample size as OIG’s 2003 

review. The sample included at least one case from each of 31 States 

with separate SCHIPs and, because of random selection, did not include 

cases from 5 States with separate SCHIPs: Idaho, Maine, North 

Dakota, South Dakota, and Vermont. See Appendix A for a list of each 

State’s separate SCHIP enrollment and the number of cases selected for 

review. 

25 Arkansas, Minnesota, and Rhode Island reported that their separate SCHIPs cover 

only unborn children. 

26 Not included in this study are children enrolled in SCHIP Medicaid Expansion 

programs. 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 5 
 

 

INTROD 
 UCTION 

Case File Documentation 

We requested case file documentation from SCHIP agencies for the 

400 sample cases. For each case, we requested copies of case file 

documents that the State used for its most recent SCHIP eligibility 

determination decision prior to June 1, 2006. Typical case file 

documentation included applications for enrollment or reenrollment in 

SCHIP, worksheets used by caseworkers to determine eligibility, 

printouts from automated eligibility systems, and copies of paychecks or 

tax returns to support the family’s income information. We received 

initial responses from SCHIP agencies for each of the 400 cases but, as 

discussed below, additional documentation was needed for some cases. 

State Medicaid Eligibility Criteria 

From each State with sample cases, we obtained information about the 

State’s eligibility criteria and requirements applicable at the time of the 

child’s last SCHIP determination prior to June 1, 2006.27 These criteria 

and requirements included, but were not limited to, age limitations, 

income limits based on Federal poverty limits, rules regarding what 

income should be counted, income disregards or deductions, asset or 

resource limits, definitions of family size, and any automatic qualifiers. 

We also downloaded information from State Medicaid and SCHIP 

Web sites and consulted with SCHIP officials and other State personnel 

(hereinafter referred to as State officials) for clarification as needed. 

Case Reviews and Analysis 

We reviewed case file documentation for each child based on eligibility 

criteria for the State’s Medicaid program. We analyzed the following 

elements of each case in accordance with each State’s criteria for 

Medicaid eligibility: 

• date of application or redetermination; 

• age of the child at the time of the SCHIP eligibility determination; 

• household or family composition; 

27 Any questions regarding the timing of applicable criteria affecting specific cases were 

discussed with States in follow-up contacts. 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 6 
 

 

 

INTRODUCTION 

•	 percentage of Federal poverty limit allowed by the State according 

to the age of the child;28 

•	 family income; 

•	 family resources and asset limits (if applicable); 

•	 presence of automatic qualifiers (as applicable by State, including 

Supplemental Security Income, children in foster care, adoption, 

and participation in the Temporary Assistance for Needy Families 

program); and 

•	 documentation used to support family income, such as pay stubs 

and income tax returns. 

More specifically, to determine whether a child’s family income qualified 

the child for his or her State’s Medicaid program, we: 

•	 calculated the family’s gross monthly income (earned and 

unearned) using supplied income documentation; 

•	 subtracted any applicable income disregards or deductions 

allowed by the State’s Medicaid criteria, e.g., child care expenses; 

and 

•	 compared the calculated net income to the State’s Medicaid 

income limit applicable for the age of the child and size of the 

family. 

For cases lacking any documentation listed above, we recontacted State 

officials to obtain the missing documentation. For those States that 

allow SCHIP applicants to self-declare income, we calculated net income 

using the amount self-reported on the application. If the self-reported 

income differed from the income used in the State’s calculations, we 

contacted the State for further clarification. We also discussed with 

State officials any apparently conflicting information found in the 

provided documents (e.g., inconsistent income amounts or family size) to 

28 70 Fed. Reg. 8373–8375 (Feb. 18, 2005) for 2005; 71 Fed. Reg. 3848–3849 

(Jan. 24, 2006) for 2006. OIG used the Federal poverty limit guidelines in effect for the 

State-reported date of determination. Annual poverty-level guidelines for 2006 were 

effective on January 24, 2006. Therefore, in reviewing case files with determinations dated 

prior to January 24, 2006, we used 2005 Federal poverty limit guidelines. For applications 

dated on or after January 24, 2006, we used 2006 Federal poverty limit guidelines. Any 

questions regarding the applicable Federal poverty level for specific cases were discussed 

with States; however, this issue did not affect any of the eligibility errors identified in this 

report. 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 7 
 

INTROD 
 UCTION 

ensure that we were using the most appropriate information for our 

determinations. 

Enrollment errors. When our case reviews determined that an enrollee 

did not qualify for his or her State’s Medicaid program, no further 

review was conducted for that case. For any child whom we identified 

as potentially eligible for the Medicaid program, we contacted State 

officials to determine whether they agreed. If State officials did not 

dispute our preliminary results, we determined that the child was 

eligible for Medicaid. (Hereinafter, we refer to these situations as 

“enrollment errors.”) 

If State officials disputed our preliminary results, we asked them to 

provide additional information or documentation to demonstrate that 

the child was not eligible for Medicaid. We rereviewed these cases using 

the additional information and documentation and, as necessary, 

followed up with State officials until we could make a final 

determination regarding whether the case represented an enrollment 

error. For cases that had been referred by the SCHIP agency to the 

Medicaid agency for a full Medicaid eligibility determination, we 

examined the elapsed time after the date of the referral. We considered 

children in these cases to be potentially eligible for Medicaid if the 

SCHIP agency had referred the case to the State Medicaid agency at 

least 45 days prior to June 1, 2006. 

Unable to determine. We refer to cases as “Unable to determine” if the 

State did not, after multiple requests, provide sufficient documentation 

for us to determine whether a child was Medicaid eligible. 

Error rates and projections. We calculated the percentage of SCHIP 

enrollees who were eligible for the Medicaid program in 2006 and the 

percentage of cases for which we were unable to determine Medicaid 

eligibility. We projected the results to the universe of about 2.6 million 

children enrolled in separate SCHIPs in 36 States in 2006. Confidence 

intervals for estimates and projections contained in this report are 

listed in Appendix B. 

Standards 

This study was conducted in accordance with the “Quality Standards for 

Inspections” issued by the President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency. 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 8 
 

Δ FINDING

An estimated 4 percent of children enrolled 

in separate SCHIPs were eligible for the 

Medicaid program in 2006 

We determined that 4 percent of 

children enrolled in separate SCHIPs 

(16 sample cases) were eligible for their 

States’ Medicaid program (see Table 1). 

A 4-percent error rate equates to an estimated 105,178 children enrolled 

in separate SCHIPs nationwide in 2006 being eligible for the Medicaid 

program. An additional 4.5 percent (18 sample cases) lacked sufficient 

documentation for us to determine whether the children were Medicaid 

eligible. 

Table 1: Medicaid-Eligible Children Enrolled in Separate 

SCHIPs in 2006 

Determination Status 

Sample Cases 

(n=400) Percentage 

Estimated 

Number of 

Children 

Nationally 

Enrollment Errors 

Unable To Determine 

16 

18 

4.0% 

4.5% 

105,178 

118,559 

Source: OIG review of case file documents for 400 children randomly selected from the 

universe of 2,629,462 children enrolled in separate SCHIPs on June 1, 2006, in 36 States. 

Enrollment errors 

Eight of the sixteen cases with enrollment errors had miscalculations of 

net income. In three of the eight miscalculation cases, caseworkers 

failed to apply all applicable income disregards to the family’s 

self-employment income. Among the other five cases, we found few 

similarities or patterns that caused the miscalculations. 

Clerical mistakes caused enrollment errors in 3 of the 16 cases. For 

example, in one of these cases, the caseworker correctly determined that 

the child should be enrolled in the Medicaid program but improperly 

entered into the automated system a code to indicate eligibility for the 

separate SCHIP. 

The causes for the remaining five cases with enrollment errors were 

either unknown or not specified by the State. For example, in one case, 

the State Medicaid agency informed the SCHIP agency that a child who 

was identified as potentially Medicaid eligible had not cooperated with 

the Medicaid agency and was, therefore, no longer eligible for either 

program. State officials acknowledged that the SCHIP agency did not 

immediately end the child’s enrollment in the separate SCHIP as 

required, but did not indicate why the agency failed to take the required 

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FINDING 

action.29 In another of these cases, the State official simply stated 

“we concur” that the child should have been enrolled in the Medicaid 

program but did not identify what mistake caused the enrollment error. 

Unable to determine 

For the 18 sample cases that lacked sufficient documentation, we found 

a variety of circumstances that prevented us from determining Medicaid 

eligibility. In nine cases, some documentation was provided but 

particular documents or specific information was not provided. In 

another six cases, no documents were provided, and State officials 

reported that the case files could not be located for various reasons. In 

three of these cases, which were from one State, the children had been 

referred from the Medicaid agency to the separate SCHIP, and 

information needed for our review was apparently not forwarded from 

the Medicaid agency. The files in the remaining three cases had been 

lost, destroyed by a flood, or not forwarded from a previous contractor. 

Finally, in each of the remaining three cases, the child had been 

identified by the SCHIP agency as potentially Medicaid eligible, and the 

case was referred to the Medicaid agency for a full Medicaid eligibility 

determination. In the meantime, the child remained enrolled in the 

separate SCHIP, as allowed under the SCHIP State plan for each case. 

At the time of the review, the elapsed time since the referral ranged 

from 4 to 8 months among the three cases, each beyond the 45-day 

timeframe allowed by Federal regulations for making a Medicaid 

eligibility determination. However, documentation was not sufficient 

for us to determine in each case whether a Medicaid eligibility 

determination had been made by the date of our review or to rule out 

the possibility of extenuating circumstances that would have allowed an 

exception to the 45-day timeframe. 

For all 18 cases that lacked sufficient documentation, we could not 

determine whether the children were eligible for Medicaid and 

represented additional enrollment errors. These “unable to determine” 

cases leave open the possibility that the actual number of children 

enrolled in separate SCHIPs who were eligible for the Medicaid 

program in 2006 could have been higher than our projection. Hence, 

taking into account cases that lacked documentation, we project an 

29 42 CFR § 457.350(g)(2). The SCHIP eligibility rules prohibit children who have been 

designated as potentially eligible for Medicaid from being enrolled in separate SCHIPs 

(other than provisional temporary enrollment while a final determination is being made, 

which no longer applied in this case). 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 10 
 

FINDING 

estimated enrollment error rate that could range from a low of 

4 percent, if no additional cases involved errors, to a high of 8.5 percent, 

if all cases lacking documentation involved enrollment errors. 

OEI-06-07-00310 S EPARATE SCHIP E NROLLEES ’ E LIGIBILITY FOR MEDICAID IN 2006 11 
 

 

 

Δ RECOMMENDATION 

We found that an estimated 4 percent of children enrolled in separate 

SCHIPs were eligible for the Medicaid program in 2006. Additionally, 

another 4.5 percent of cases lacked sufficient documentation for us to 

determine whether the children involved were eligible for Medicaid. 

This lack of documentation leaves open the possibility that the actual 

number of children enrolled in separate SCHIPs who were eligible for 

the Medicaid program in 2006 could have been higher than our 

projection. Enrollment errors can result in the inappropriate use of 

Federal matching funds and in limited SCHIP resources being expended 

on Medicaid-eligible children. 

To address these deficiencies, we recommend that CMS: 

Take Further Action To Ensure the Appropriate Enrollment of 

Medicaid-Eligible Children 

To address miscalculations of incomes and clerical mistakes, CMS could 

emphasize to States the need for accuracy in enrollment casework and 

encourage States to perform quality checks to detect such errors. CMS 

could also use the eligibility measurement component of the PERM, 

which examines eligibility for both SCHIP and Medicaid enrollment, to 

identify problems that lead to enrollment errors and assist States in 

implementing corrective actions. The newly implemented PERM 

includes an eligibility review for a random sample of beneficiaries in 

both the SCHIP and Medicaid programs for each State every 

3 years. Further, because the PERM requires States to develop and 

implement corrective actions for errors detected, CMS could utilize the 

PERM to address enrollment errors, such as those identified by this 

review. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

In its written comments on the report, CMS stated that it “supports the 

spirit of the OIG recommendations” and “will continue to undertake a 

number of activities to prevent the types of errors identified” in the 

report. CMS indicated that it will continue to work with States to 

improve caseworker performance in making eligibility determinations 

and to ensure Medicaid “screen and enroll” accuracy through automatic 

eligibility systems. 

Specifically, CMS indicated that it will include the findings of the report 

on a monthly call with Associate Regional Administrators and regional 

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RECOMMENDATION 

offices and ask these entities to reiterate to States the requirement to 

include the facts essential to the determination of eligibility in the case 

file documentation. Further, CMS indicated that it will conduct onsite 

reviews and monitoring of SCHIPs “screen and enroll” processes and 

identify States that may need a focused review on this topic. Finally, 

CMS indicated that it will review initial PERM results regarding 

eligibility determinations and target appropriate States for technical 

assistance. 

CMS noted that OIG’s 2003 and 2006 reviews used different methods. 

For the 2003 review, OIG first determined whether a separate SCHIP 

enrollee’s family income fell within the separate SCHIP guidelines and, 

if so, did not attempt to determine whether the child was eligible for the 

Medicaid program. For this 2006 review, we directly determined 

whether separate SCHIP enrollees were eligible for the Medicaid 

program. CMS pointed out that the difference in study design affects 

any comparisons between the findings of the two studies. OIG agreed 

and revised the report to avoid comparisons between the studies’ 

findings. 

CMS requested additional information on some of the 16 cases 

identified as having enrollment errors. To facilitate CMS’s monitoring 

and followup with States, OIG will provide CMS with detailed 

information about each of the 16 cases with enrollment errors. In 

response to CMS’s other comments, we added information in the 

appropriate sections of the report to clarify each topic or question. 

The full text of CMS’s comments is provided in Appendix C. 

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APPENDIX A 

 

Δ APPENDIX~A 

Number of Children Enrolled in Separate State Children’s Health Insurance Programs on 

June 1, 2006, and Number Reviewed by Office of Inspector General 

State Number of Children Enrolled 

Children Selected for 

Review 

Alabama 66,295 7 

Arizona 58,639 5 

California 764,269 122 

Colorado 44,922 8 

Connecticut 14,215 2 

Delaware 5,516 2 

Florida 220,243 31 

Georgia 65,413 9 

Idaho 2,429 0 

Illinois 45,018 12 

Indiana 17,586 2 

Iowa 20,659 2 

Kansas 37,672 7 

Kentucky 15,204 3 

Maine 4,416 0 

Maryland 11,546 3 

Massachusetts 21,266 1 

Michigan 34,190 7 

Mississippi 60,298 11 

Montana 13,153 3 

Nevada 27,931 4 

New Hampshire 7,222 2 

New Jersey 79,470 12 

New York 283,803 52 

North Carolina 115,207 15 

North Dakota 5,339 0 

Oregon 29,384 6 

Pennsylvania 137,090 18 

South Dakota 2,410 0 

Texas 292,636 42 

Utah 35,646 1 

Virginia 46,112 5 

Washington 10,862 3 

West Virginia 25,032 2 

Wyoming 5,262 1 

Vermont 3,107 0 

Total 2,629,462 400 

Source: Data collected by Office of Inspector General in April 2007 from 36 States with separate State Children’s Health 

Insurance Programs. 

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Δ APPENDIX~B 

Estimates, Projections, and Confidence Intervals for Medicaid-Eligible 

Children Enrolled in Separate State Children’s Health Insurance Programs 

In 2006 

Estimated Percentage of Medicaid-Eligible Children Enrolled in Separate SCHIPs 

Case File Review Findings Estimate 95-Percent Confidence Interval* 

Lower Limit Upper Limit 

Enrollment Errors 4.0% 2.3% 6.4% 

Unable To Determine 4.5% 2.7% 7.0% 

Cases With Enrollments Errors 

and Unable To Determine 8.5% 6.0% 11.7% 

Source: Office of Inspector General review of case file documents for 400 children randomly selected from the 

universe of 2,629,462 children enrolled in separate State Children’s Health Insurance Programs on June 1, 2006, in 

36 States. 

*Confidence intervals calculated with an exact method based on the binomial distribution. 

Projected Number of Medicaid-Eligible Children Enrolled in Separate SCHIPs 

Case File Review Findings Estimate 95-Percent Confidence Interval* 

Lower Limit Upper Limit 

Enrollment Errors 105,178 60,564 168,672 

Unable To Determine 118,326 70,690 184,559 

Cases With Enrollments Errors and 

Unable To Determine 223,504 156,669 306,990 

Source: Office of Inspector General review of case file documents for 400 children randomly selected from the 

universe of 2,629,462 children enrolled in separate State Children’s Health Insurance Programs on June 1, 2006, in 

36 States. 

*Confidence intervals calculated with an exact method based on the binomial distribution. 

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Δ APPENDIX~C 

Agency Comments 

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APPENDIX ~ C 

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A P P E N D I X ~ C 

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APPENDIX ~ C 

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APPENDIX ~ C 

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Δ ACKNOWLEDGMENTS 

This report was prepared under the direction of Kevin K. Golladay, 

Regional Inspector General for Evaluation and Inspections, and 

A. Blaine Collins, Deputy Regional Inspector General for Evaluation 

and Inspections, in the Dallas regional office. 

Leah Bostick served as the team leader for this study, and Deborah 

McGurk served as the project leader. Other principal Office of 

Evaluation and Inspections staff from the Dallas regional office who 

contributed to this report include Dana McClellen and Margaret 

McKnight; central office staff who contributed to this report include 

Alan Levine and Barbara Tedesco. 

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