Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

MEDICAID MANAGED CARE AND EPSDT 

JUNE GIBBS BROWN 

Inspector General 

MAY 1997 

OEI-O5-!&00290 
OFFICE OF INSPECIYOR 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 Chicago Regional Office prepared this report under the direction of William C. 

Moran, Regional Inspector General, and Natalie Coen, Deputy Regional Inspector 

General. Principal OEI staff included: 

REGION HJXADQUMTERS 

Joseph L. Pet&rot (Project Leader) Winnie Walker 

Jean DuFresne 

Erin Fleming 

To obtain a copy of this report, call the Chicago Regional Office at (312) 353-4124. 
EXECUTIVE SUMMARY 

PURPOSE 

This inspection examines the extent to which Medicaid managed care providers deliver 

Early and Periodic, Diagnostic, Screening and Treatment (EPSDT) to Medicaid children. 

BACKGROUND 

Under EPSDT, State Medicaid agencies must provide eligible children services that 

include comprehensive, periodic health assessments beginning at birth and continuing 

through age 20. All medically appropriate immunizations are required. Age appropriate 

assessments must be provided at intervals following defined periodicity schedules. 

State Medicaid agencies have turned to managed care to rein in escalating health care 

costs, difficult to do in a fee-for-service environment, while ensuring health care access 

for Medicaid enrollees. Medicaid managed care has grown exponentially. Between 1983 

and 1995, Medicaid managed care enrollment increased from 750,000 to 9.8 million and 

now includes over 400 managed care plans. 

FINDINGS 

Fewer than one in three Medicaid children enrolled in managed care plans receive timely 

EPSDT services. Six of ten receive none at all. 

Based on our review, we estimate that only 28 percent of Medicaid managed care 

children receive all of the EPSDT screens called for by the periodicity schedule used in 

their State. Sixty percent of Medicaid managed care children do not receive any EPSDT 

services called for in the States’ periodicity schedules. Older adolescents receive 

significantly fewer required EPSDT services than other children. We find no significant 

differences in EPSDT performance between health maintenance organizations and 

primary care case management plans, or between large or small managed care plans. 

We find there is no difference in EPSDT performance if a break in managed care 

enrollment occurred. 

Most of the visits Medicaid children make to managed care plans are sick visits. In our 

review of medical records, when children made sick visits to managed care providers, 

only the symptoms that generated the sick visit were treated, with very few exceptions. 

There were few visits treating conditions discovered as a result of a previous EPSDT 

screen. 

Children receive significantly more EPSDT services from Medicaid managed care plans 

when states inform the managed care plans which children are due for EPSDT. 

A comparison of the EPSDT results in Michigan and Nevada to the others in our sample 
shows that there is a very strong statistical difference in managed care plan performance. 

These States identify children currently due for EPSDT screens to their managed care 

plans and closely monitor EPSDT performance by managed care plans for these children. 

In our sample, 54 percent of the Medicaid children enrolled in these plans received all of 

their EPSDT services compared to 19 percent of those enrolled in other managed care 

plans. 

RECOMMENDATIONS 

The Health Care Financing Administration should revise their EPSDT reporting 

requirements and data collection to emphasize the number of children who receive all of 

their EPSDT screens in a timely fashion. 

Current EPSDT reporting methods obscure the low EPSDT rates we found, especially 

for adolescents. The Health Care Financing Administration (HCFA) should revise their 

EPSDT data collection so States identity children of different ages who receive all of the 

required EPSDT screens. The HCFA and the States should monitor the age groups to 

determine where progress is being made and where additional efforts are required. This 

revision will improve EPSDT data collection for both fee-for-service and managed care 

programs. 

The Health Care Financing Administration should encourage States to actively not@ 

managed care plans of enrollees due for EPSDT exams and to follow up if EPSDT 

services are not rendered shortly thereafter. 

Our study dramatically demonstrates the value added to EPSDT performance when 

States continue to track and monitor plan performance at the individual patient level. 

The Health Care Financing Administration should work with States to ensure timely 

managed care EPSDT reporting. 

Current State EPSDT reports to HCFA do not distinguish services rendered by managed 

care plans. The HCFA collects combined managed care EPSDT and fee-for-service 

EPSDT information from States annually. In 1994, HCFA surveyed the States and 

discovered that States collect EPSDT data from managed care plans in inconsistent ways. 

All managed care plans should report EPSDT services to States in a timely and uniform 

manner. At present, managed care plans subcontract with numerous individual 

providers. Consequently, reporting of EPSDT services is inconsistent, not always timely, 

and underreporting may occur. Without consistent reporting of EPSDT data, 

determining whether States meet participation goals becomes problematic. 

ii 
The Health Care Financing Administration should emphasize to States the need to 

define and clarify EPSDT requirements in their Medicaid contracts with managed care 

plans. 

Our study confirms the findings of earlier studies pointing out the lack of contractual 

specificity regarding EPSDT in States’ Medicaid contracts with managed care plans. 

AGENCY C0MMENl.S 

We received comments from HCFA and the Acting Assistant Secretary for Health. 

Their comments are included in Appendices B and C respectively. Both fully agree with 

the recommendations. The Acting Assistant Secretary for Health suggested additional 

recommendations. These additional suggestions are quite consistent with the 

recommendations in our report. We suggest that HCFA consider them in developing 

their implementation plan. 

We made appropriate revisions to the report based on their technical comments. 

... 

111 
TABLE OF CONTENTS 

PAGE 

EXECUTIVESUMMARY 

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

FINDINGS ..................................................... 7 

�  One in three receive timely EPSDT ................................ 7 

�  State monitoring improves EPSDT performance ....................... 9 

RECXXMMENDATIONS ........................................... 11 

AGENCYCOMMENTS ........................................... 13 

APPENDIX 

A: Variance table ............................................. A-l 

B: HCFA comments ............................................. B-l 

C: Assistant Secretary for Health comments .......................... C-l 
INTRODUCTION 

PURPOSE 

This inspection examines the extent to which Medicaid managed care providers deliver 

Early and Periodic, Diagnostic, Screening and Treatment (EPSDT) to Medicaid children. 

BACKGROUND 

EPSDT 

Congress created the EPSDT program in 196’7to provide initial and periodic 

examinations and medically necessary follow-up care for Medicaid-eligible children, 

The Omnibus Budget Reconciliation Act of 1989 (OBRA 1989) expanded EPSDT to 

cover most Medicaid-eligible children under age 21. In July 199C, the Health Care 

Financing Administration (HCFA) established participation goals for EPSDT requiring 

that States screen 80 percent of eligible children by 1995. Medicaid provides health care 

coverage for more than 20 million children. In 1992, the Assistant Secretary for Planning 

and Evaluation estimated that less than half of Medicaid eligible children receive any 

Medicaid reimbursed services in a given year. 

Under EPSDT, State Medicaid agencies must provide eligible children services that 

include comprehensive, periodic health assessments beginning at birth and continuing 

through age 20. All medically appropriate immunizations are required. Age appropriate 

assessments, known as “screens,“’ must be provided at intervals following defined 

periodicity schedules. Additional examinations are also required whenever anyone 

suspects the child may have a health problem. Medicaid also covers treatment for all 

medically necessary services discovered during EPSDT screening. Preventive, restorative 

and emergency dental care is also covered by EPSDT. 

Poor children and their parents comprise 73 percent of the Medicaid population, but 

account for only a third of Medicaid expenditures. The balance is spent on the aged and 

disabled. Overall, the younger Medicaid patients require less care and less costly services 

than the aged and disabled, and very little long-term care. 

State Medicaid agencies have turned to managed care to rein in escalating health care 

costs, difficult to do in a fee-for-service environment, while ensuring health care access 

I States mustprovide for medical, vision, hearing and dental screens. An EPSDT medical screen must include: a comprehensive health 

and developmental history, including a physical and mental health assessment; a comprehensive unclothedphysical; appropriate immunizations; 

laboratory tests, buluding lead blood level assessment appropriate for age and tik factors, and; health education, including anticipatory 

guiailnee. 

1 
for Medicaid enrollees. The Federal Government encourages the switch to managed 

care by approving Medicaid experiments in some States that require Medicaid recipients 

enroll in managed care plans. 

Medicaid hfanaged Care 

Medicaid managed care has grown exponentially. Between 1983 and 1995, Medicaid 

managed care enrollment increased from 750,000 to 9.8 million. In 1983, less than one 

percent of Medicaid enrollees were covered by managed care programs. By 1995, 

Medicaid managed care covered nearly 1 in 3 Medicaid recipients. Between 1993 and 

1994, an additional 3 million Medicaid recipients joined managed care programs, a 1 year 

rise of 63 percent, and in 1995 almost 4 million more Medicaid enrollees had managed 

care health care coverage. By June 1995, 44 States, Puerto Rico and the District of 

Columbia had contracted with 403 Medicaid managed care plans to serve almost 10 

million recipients. 

Managed care aims to reduce unnecessary services”, lower health care costs, increase 

access to services and monitor the quality of medical care provided to its beneficiaries. 

At one type of managed care plan - a health maintenance organization (HMO), 

“gatekeepers” direct patients to needed care, usually within the managed care plan.2 

The HMOs receive a contracted amount from the State, a fixed capitated rate per 

member, to provide for the health care of its Medicaid members. The HMOs do not 

submit individual claims for payment for services rendered to the State. Roughly 75 

percent of Medicaid recipients in managed care belong to HMO-type plans. 

A second type of managed care program, Primary Care Case Management (PCCM), also 

uses a gatekeeper to refer patients for necessary services. The PCCMs are reimbursed a 

fixed amount for case management services only. Individual medical services are billed 

on a fee-for-service basis by the individual provider of services. 

Although some basic tenets of managed care - to provide preventive medical services and 

education - mirror those of the EPSDT program, some factors work against Medicaid 

managed care plans delivering EPSDT services to Medicaid children. Managed care 

plans receiving a capitated rate have a financial incentive to deliver fewer services. Since 

EPSDT candidates are generally healthy, not providing required preventive and/or 

educational services can represent a short term way for managed care plans to avoid 

expenses at minimum risk. To discourage these tendencies, some States build EPSDT 

performance measures into their contracts with managed care plans. In addition, 

Federal, State and managed care plan quality assurance activities work to ensure that 

managed care plans and providers fulfill their contractual obligations to deliver 

appropriate medical services. 

The on-again, off-again nature of welfare and Medicaid entitlement is at odds with 

2 Other types of numagzd care plans - Prepaid Health Plans and Health Insumnce Organization - are similar to HMOs. For the 

purpose of this evaluation, we treat these types of managed care organizations like HMOs. 

2 
managed health care delivery. Some patients are enrolled for very short periods of time 

and do not receive any services from their managed care plan. Some managed care 

plans or Medicaid patients may not see any benefit in establishing a medical relationship 

that will be short-lived. Likewise, many Medicaid patients use the emergency care system 

for their health care needs and are unfamiliar with preventive approaches that managed 

care plans use. 

Dtmmenhg EPSDT Services in a Mznaged Care Setting 

In 1991, the Office of Inspector General issued a report entitled “Early and Periodic 

Screening, Diagnosis, and Treatment - Performance Measurement” OEI-07-90-00130, that 

found, among other EPSDT reporting problems, that children enrolled in Medicaid 

managed care plans were considered to have received their EPSDT services strictly on 

the basis of their enrollment. Since that time, HCFA changed their policy and now 

requires that States report specific EPSDT encounter data for children covered by 

managed care plans as well as fee-for-service. 

In 1994, HCFA reported that States capture EPSDT data from its capitated plans in 

different ways. Some States require HMOs submit “dummy” claims which their systems 

would process for tally purposes. Two States require different reporting standards 

depending on the capabilities of the HMO to provide data. Massachusetts reconciles 

HMO reported amounts by auditing a sample of medical records. States rely on PCCMs 

to report EPSDT services accurately to ensure prompt payment for services. 

Annually, HCFA collects combined managed care EPSDT and fee-for-service EPSDT 

information from States on Form HCFA-416. This report emphasizes the ratio of 

EPSDT encounters to the total EPSDT eligible population. The HCFA-416 does not 

capture the number of Medicaid managed care children who received all of the EPSDT 

visits required by the State for that year. Also, since States report combined managed 

care EPSDT and fee-for-service EPSDT information to HCFA, no definitive comparisons 

of EPSDT performed by fee-for-service providers and managed care programs exist. 

EPSDT and Managed Care Contmcts 

State contracts with managed care plans often do not specify EPSDT requirements. A 

1995 Children’s Defense Fund study of 100 Medicaid 1991 managed care contracts found 

that less than half delineated EPSDT responsibilities. In September 1996, HCFA issued 

Integrating EPSDT and Medicaid Managed Care, which also indicates that some State 

contracts with managed care plans do not adequately spell out what EPSDT services are 

required. This HCFA report cites the managed care contract with States as the blueprint 

for patient care, and recommends that States define and specify EPSDT program 

requirements. By mandating managed care plan performance in the State contract, 

managed care plans would be more likely to specify similar EPSDT details when 

contracting with individual providers. 

Managed care plans who contract with individual providers must rely on those providers 

3 
for accurate data. A University of North Carolina study of EPSDT services in North 

Carolina indicated many problems with providers’ inaccurate reporting of services. A 

managed care plan in Wisconsin reported to us that 1 of 5 providers they audited had 

EPSDT documentation problems. 

SCOPE AND METHODOIDGY 

This inspection analyzes how well Medicaid managed care plans deliver timely EPSDT 

services to children. We did not examine managed care services to children with special 

health care needs. There are several studies of this area already proposed or underway. 

Likewise, we did not focus on specific EPSDT requirements like immunizations, which 

has been studied extensively.3 We make no comparisons of the individual managed care 

plans sampled in this inspection. 

Data Gathering 

We base our findings on data we collected from several sources, including interviews with 

State and managed care officials, and a review of a national sample of medical records 

for children enrolled in managed care programs. We used SAS and SUDAAN 

quantitative software plans to assist in our analysis and projections. 

We interviewed State personnel and Medicaid managed care plan managers for the plans 

chosen in our sample. These interviews focused on access and barriers to providing 

EPSDT, including outreach and transportation activities, EPSDT contractual 

arrangements, and reporting and verifying services. 

We examined medical records for a national sample of children covered by Medicaid 

managed care plans. 

To draw the sample, we first stratified managed care plans treating Medicaid-enrolled 

children as of January 1, 1994 into two groups - PCCM model and HMO model. These 

two strata then were further stratified into two more strata - Medicaid enrollees of 50,000 

or more, and less than 50,000 Medicaid enrollees. We compiled our stratified list using 

HCFA data published in the “Medicaid Managed Care Enrollment Report” as of June 

30, 1994. 

We then randomly selected six plans from the large HMO strata, and two from the small 

HMO strata. Two large PCCM plans and two small PCCM plans were also randomly 

selected for a total of twelve plans from all strata. This sampling methodology ensured 

that we have accurate representation from both large and small plans, as well as 

3 An April, 1996 Ofice of Inspector General report, “Children’s Dental Services Under Medicaid: Access and Utilization” (OEI-09-

93-W240) focused on EPSDT dental services 

4 
adequate representation from PCCM-type models for comparison purposes. The 12 

managed care plans in the sample represent 10 different States. 

The 12 plans selected in the sample provided us with the names of all children in their 

plans who met the criteria of being in Medicaid and under age 21, and who were 

enrolled in their plan for any period of time between January 1, 1994 and December 31, 

1995. From each plan, we randomly selected 30 names, a total sample of 360 children. 

Twenty-two children were subsequently dropped from the sample when we found they 

had less than 4 months of managed care enrollment and had received no EPSDT 

services. Final projections were based on the remaining 338 children in the sample. 

To account for the sampling plan and provide results that accurately reflect the 

distribution of cases in the population studied, all percentages in the report reflect the 

proper weighting of the data. This will also be true of the totals presented. When we 

present sample based results, we identify them. 

Reviewing the Midcal Records 

To examine the extent of EPSDT services actually being performed, we reviewed the 

medical records for this sample to see if EPSDT was reported accurately, whether 

EPSDT services were provided in line with periodicity schedules, and to make a national 

projection of EPSDT services rendered. We did not address issues of quality of care. In 

instances where rendering of EPSDT services was in doubt based on the medical records, 

we credited the services as having been rendered. We credited EPSDT as being 

performed whenever screens were performed or if subsequent treatment resulting from 

EPSDT screens took place. 

We reviewed the managed care medical records and the State’s fee-for-service data for 

each child for at least 6 months prior to and after the study period. In this way, if the 

EPSDT services fell outside of our study timeframe, we would credit them as being 

performed. By reviewing the fee-for-service billings, we were able to credit any EPSDT 

services rendered out of plan. 

During the study timeframe of 1994 and 1995, children might require multiple EPSDT 

services depending on their age and the State’s periodicity schedule. For example, an 

infant requires six EPSDT screens the first year of life in most States. But a 17 year old 

may require an EPSDT visit annually or less frequently, depending on the State. Our 

analysis accounted for these variables. In determining the age of the child, we used the 

age as of January 1, 1995. If not enrolled on that date, we used the age at the period of 

coverage. 

OtherData Gathered 

We also conducted interviews with 27 physicians randomly chosen from the plans’ 

directories. We limited these interviews to pediatricians, family practitioners and 

internists since these providers would most likely be the primary physicians for children 
receiving EPSDT. The physician discussions covered contractual arrangements with the 

managed care plan and knowledge of the EPSDT (or by its local name) program. 

We contacted all States to obtain copies of any standard contract they use with Medicaid 

managed care providers. We analyzed these contracts to determine the extent of 

EPSDT-specific requirements. 

Our review was conducted in accordance with the QuaZityStandards for Inspections issued 

by the President’s Council on Integrity and Efficiency. 

6 
FINDINGS 

Fewer than one in three Medicaid children enrolled in managed care plans receive timely 

EPSDT services. Six of ten receive none at all. 

Based on our review, we estimate that only 28 percent of Medicaid managed care 

children receive all of the EPSDT screens called for by the periodicity schedule used in 

their State. Another 12 percent of children enrolled in managed care receive some, but 

not all of the EPSDT services they should. Sixty percent of Medicaid managed care 

children do not receive any EPSDT services called for in the States’ periodicity schedules. 

When we separate these data into age cohorts, we estimate older adolescents enrolled in 

Medicaid managed care receive significantly fewer required EPSDT services than other 

children. 

Age of Child Receive all Receive some Receive no 

EPSDT EPSDT EPSDT 

Birth - age 5 30% 22% 48% 

ages 6 - 14 32% 1% 67% 

ages 15 - 20 14% 0 86% 

all ages 28% 12% 60% 

Our results approximate those recently found by the Oregon Medical Professional 

Review Organization (OMPRO) in a review of Washington Medicaid managed care 

EPSDT performance. The OMPRO used the Medicaid Health Plan Employer Data and 

Information Set (HEDIS), a voluntary standardized performance measurement tool for 

managed care plans, to review immunizations in infants, and EPSDT screens for 

4-6 years old and 12-21 years old. They found that 26 percent of the 4-6 year old 

children and 16 percent of the adolescents received EPSDT services in a 12 month 

period. 

We tested for other variables that might affect delivery of EPSDT services. We find no 

significant differences between HMO and PCCM plans or between large or small 

managed care plans. We find there is no difference in EPSDT performance if a break in 

managed care enrollment occurred. Besides the age of the child discussed above, the 

only variable that is significant is the State’s EPSDT monitoring, which is discussed in the 

next finding. 

The mean age of the children in the sample is 7 years. The sample averaged 16 months 

enrollment in Medicaid managed care. The children averaged 2.75 visits (including .8 

7 
EPSDT services) to the managed care plan during the study period. 

Medical Record Reviews 

Most of the visits Medicaid children make to managed care plans are sick visits, based on 

our review of medical records. In a few exceptions, we found these visits were expanded 

to become full EPSDT services. 3ut in most cases, only the symptoms that generated the 

sick visit were treated. Likewise, we found few visits treating conditions discovered as a 

result of a previous EPSDT screen. 

As could be expected, documentation of EPSDT services varied greatly between States, 

managed care plans, and providers. Frequently, we found more complete EPSDT 

documentation when providers used preprinted forms that detail the appropriate services 

for a child at a given age. These forms correspond to the State’s periodicity schedule 

and are usually provided by the managed care plan to individual providers. One plan 

color-coded the forms to make each age cohort distinctive in order to alert the provider 

that different services, tests, guidance and observations are required for each age group. 

However, many medical records failed to detail all of the EPSDT components. Lead 

testing was absent from many records. Frequently, vision and dental examinations do not 

appear to be performed, although in some States, dental services are not part of the 

managed care contracts. If health education, growth and development and anticipatory 

guidance for the child to the responsible adult were provided, they were seldom part of 

the medical record. One managed care plan said that in a capitated environment, there 

are few incentives for providers to provide the full range of services. Another managed 

care plan pointed out that with capitated payments, there was little incentive to report 

EPSDT services timely. 

The philosophy of some States and managed care plans may work against EPSDT 

services being provided. One managed care plan explained it is the parent’s 

responsibility to ensure their children receive all the necessary screens. In that plan, 

individual physicians do not know what families have chosen them as their primary care 

provider until that family makes an appointment for services. One State said that using 

primary care physicians as gatekeepers is a way to ease the physician community into 

accepting managed care. 

State Contract3 

As stated in our background, studies show that States vary widely in emphasizing EPSDT 

in their managed care contracts. Our survey tends to confirm these earlier findings. 

Forty-one States responded to our request for contract information. Nine of these States 

do not contract with any managed care plans for services to Medicaid children. We 

found 13 States spell out managed care EPSDT responsibilities in detail in their contracts 

with managed care plans, and Oregon does the same without mentioning EPSDT by 

name. Three States are in the process of revising their managed care contracts. The 

other States’ managed care contracts mention the EPSDT requirement without providing 

8 
specific detail. 

E~orts to &mote EPSDT 

Medicaid providers face many obstacles in attracting Medicaid patients for 

non-emergency health care. Barriers include the on-again, off-again nature of Medicaid 

coverage, transient addresses and phone numbers, the high number of “no-show” 

appointments, and convincing parents of the need for preventive care for healthy 

children. Some States specifically require managed care plans to provide transportation 

to patients and conduct outreach activities to overcome some of these barriers. 

In addition to sending reminder postcards and phone calls to parents and providing 

needed transportation to EPSDT exams, managed care plans and individual providers 

have taken many innovative steps to foster EPSDT screens and treatments. One Nevada 

physician distributes coupons for McDonald’s “Happy Meals” to every parent who brings 

in a child for an EPSDT screen. He reports buying more than 500 coupons this year. 

The restaurant sells the coupons to him at a bulk discount rate. Another physician 

provides drug store discount coupons for those receiving their EPSDT exams. One 

managed care plan held a lottery to win a ‘big wheel” bicycle. Chances to win this 

prominently displayed prize were distributed when children came for their EPSDT 

screens. 

Providers routinely distribute promotional material including EPSDT refrigerator 

magnets, coloring books, and coupons for baby shoes and diapers. Managed care plans 

may send a nurse for a personal home visit to newborns. While most of these attractions 

are aimed at infants and small children, one managed care plan is starting a teen health 

plan. 

Managed care plans and school-based health centers are beginning to work together. 

Some States require or encourage coordination between managed care plans and schoolbased health centers, community health centers and local health departments in an 

attempt to bring health care services to hard-to-reach populations. 

Children receive significantly more EPSDT services from Medicaid managed care plans 

when States inform the managed care plans which children are due for EPSDT 

Two States in our sample, Michigan and Nevada, identity children who are currently due 

for EPSDT screens to their managed care plans. Michigan notifies their plans by an 

electronic file transfer listing all of the children due that month. The State requires each 

plan to respond for each child by electronic file transfer by month’s end. 

For children enrolled in Nevada’s PCCM, the State sends a listing of children due for 

EPSDT screens to the PCCM, who sends notices to the responsible adult for the child 

advising of the need for EPSDT testing. They follow up as appropriate. If the State has 

not received a bill for EPSDT services within 3 months, phone calls to the responsible 

9 
adult are made. 

A comparison of the EPSDT results in these States to the others in our sample shows 

that there is a very strong statistical difference in managed care plan performance. 

Managed Care State received all EPSDT received me, not all EPSDT -wEPm 

Michigaa/Nevada 54% 7% 38% 

All others 19% 13% 68% 

Administratively, a large State and a small State, have adapted EPSDT monitoring to 

their State’s environment. Michigan’s monitoring affects capitated managed care plans, 

while Nevada’s tracks PCCM performance. The approaches they take, while basically the 

same, vary in terms of the number of children to be monitored and the systems 

sophistication of the States and managed care plans. 

10 
RECOMMENDATIONS 

The managed care philosophy stressing preventive services now to avoid costly expenses 

later for medical care complements EPSDT program objectives. Medicaid managed care 

plans are potentially very conducive to delivering EPSDT services. Managed care plans 

serve as a medical home and as gatekeeper to medical care and emphasize prevention 

and wellness for millions of children. Capitated plans especially feature many advantages 

over individual providers in being able to provide outreach and transportation to clients. 

They benefit from economies of scale and a steady funding stream. However, many of 

our findings indicate that managed care plans have not yet realized their full potential in 

providing EPSDT services. 

The Health Care Financing Administration should revise their EPSDT reporting 

requirements and data collection to emphasize the number of children who receive all of 

their EPSDT screens in a timely fashion. 

Current EPSDT reporting methods obscure the low EPSDT rates we found, especially 

for adolescents. The HCFA should revise their EPSDT data collection so States identify 

children of different ages who receive all of the required EPSDT screens. This revision 

will improve EPSDT data collection for both fee-for-service and managed care programs. 

The HCFA and the States should monitor the age groups to determine where progress is 

being made and where additional efforts are required. 

States currently report only the number of children receiving at least one screen during 

the defined time period. Since the EPSDT requirements vary with State and age, revised 

reporting data should identify not only the number of children who receive an EPSDT 

screen, but also the number of EPSDT screens those children should be receiving. 

Presently, EPSDT reporting presents data in a way to suggest that most children receive 

EPSDT services. One State advised us that reporting HCFA-416 data “always shows us 

over 100 percent. We’ve been stuck at 52 percent forever.” This anomaly occurs 

because current reporting overemphasizes the greater number of required medical 

services provided to very young children. 

We support States using Medicaid HEDIS as a measurement tool to evaluate the nature 

of EPSDT services performed in managed care settings. States should be encouraged to 

evaluate both HMO and PCCM type plans. Our study shows that more than half the 

children enrolled in Medicaid managed care plans receive no EPSDT services, regardless 

of plan type. 

The HCFA should encourage States to actively notify managed care plans of enrollees 

due for EPSDT exams and to follow up if EPSDT services are not rendered shortly 

thereafter. 

11 
Our study dramatically demonstrates the value added to EPSDT performance when 

States continue to track and monitor plan performance at the individual patient level. In 

some States, this responsibility may belong at the County level, but regardless, the 

technique should be emulated. The techniques used in Michigan and Nevada could serve 

as models for States to identify the children due for, and receiving timely EPSDT screens. 

Beginning in 1997, Virginia’s Medicaid Management Information System will notify 

PCCMs twice annually of children due for EPSDT exams. 

The HCFA should work with States to ensure timely managed care EPSDT reporting. 

The breakout of managed care EPSDT services from fee-for-service is important. The 

HCFA needs specific data to determine whether managed care is living up to its promise 

of access and care to children, who represent more than half the total Medicaid 

population. 

Current State EPSDT reports to HCFA do not distinguish services rendered by managed 

care plans. The HCFA collects combined managed care EPSDT and fee-for-service 

EPSDT information from States annually. Immunization records may lag behind as well. 

In 1994, HCFA discovered that States collect EPSDT data from managed care plans in 

inconsistent ways. 

All managed care plans should report EPSDT services to States in a timely and uniform 

manner. At present, managed care plans subcontract with numerous individual 

providers. Consequently, reporting of EPSDT services is inconsistent, not always timely, 

and underreporting may occur. Without consistent reporting of EPSDT data, 

determining whether States meet participation goals becomes problematic. 

The HCFA should emphasize to States the need to define and clarify EPSDT 

requirements in their Medicaid contracts with managed care plans. 

Our study confirms the findings of earlier studies, including HCFA’s, pointing out the 

lack of contractual specificity regarding EPSDT when States contract with managed care 

plans to provide Medicaid services. In omitting EPSDT programmatic details from 

managed care contracts, States have less leverage in persuading managed care plans to 

deliver timely EPSDT services and fewer ways to evaluate individual plan performance. 

The HCFA needs to continue working with States to provide examples of effective 

contracts. 

12 
AGENCY COMMENT!3 

We received comments from HCFA and the Acting Assistant Secretary for Health. 

Their comments are included in Appendices B and C respectively. Both fully agree with 

the recommendations. The Acting Assistant Secretary for Health suggested additional 

recommendations. These additional suggestions are quite consistent with the 

recommendations in our report. We suggest that HCFA consider them in developing 

their implementation plan. 

We made appropriate revisions to the report based on their technical comments. 

13 
APPENDIX A 

VARIANCETABLE 

A-l 
VARIANCE AND ESTIMATED 

Medicaid managed care 

children who receive all 

required EPSDT services 

Medicaid managed care 

children who receive some 

required EPSDT services 

Medicaid managed care 

children who receive no 

required EPSDT services 

Estimate 

28.10% 

11.52% 

60.38% 

CONFIDENCE INTERVALS 

Standard 

Error 

8.30% 11.83% 44.37% 

1.79% 8.01% 15.03% 

13.37% 47.01% 73.75% 

A-2 
APPENDIX B 

HCFA COMMEiNTS ON DRAFI’ REPORT 

B-l 
DEPARTMENT OF HEALTH & HUMAN SERVICES Health Care Financing Administration 

The Administrator 

Washington, D.C. 20201 

4% 2 9 1997 DATE: 

TO: June Gibbs Brown 

Inspector General 

FROM: Bruce C. Vladec 

Administrator 

SUBJECT: Office of Inspector General (OIG) Draft Report: “Medicaid Managed Care 

and EPSDT,” (OEI-05-93-00290) 

We reviewed the above-referenced report that examined the Early aqd Periodic 

Screening, Diagnosis, and Treatment (EPSDT) services Medicaid children enrolled in 

managed care plans receive. 

Our detailed comments on the report recommendations are attached for your 

consideration. Thank you for the opportunity to review and comment on this report. 

Attachment 

B-2 
Comments of the Health Care Financing Administration (HCFA) 

on Office of Inspector General (OIG) 

Draft Report: “Medicaid Managed Care and EPSDT.” 

(OEI-05-93-00290) 

OIG Recommendation 

HCFA should revise its Early and Periodic Screening, Diagnosis, and Treatment 

(EPSDT) reporting requirements and data collection to emphasize the number of children 

who receive all of their EPSDT screens in a timely fashion. 

HCFA Response 

We concur. HCFA convened a Workgroup of representatives from the public and private 

sectors to assess and recommend changes to the current EPSDT reporting and data 

collection tool, the HCFA-416. The Workgroup will focus on, among other issues: 

(1) developing an instrument that will collect more consistent, meaningful data from 

states regarding the furnishing of EPSDT services, especially services provided under 

managed care arrangements; (2) reviewing the effectiveness of periodic&y schedules that 

VW by state to determine if there is a better way to measure each state’s participation 

goal against the actual periodicity requirement in the state; and (3) determining if Health 

Plan Employer Data and Information Set (HEDIS) measures will be a useful tool in 

measuring EPSDT services in managed care settings. 

It should be noted the current HCFA-416 collects data that identifies children of different 

ages. It also uses the periodicity schedule of the American Academy of Pediatrics to 

measure the number of screens children should be receiving in order to adjust the figure 

(i.e., 6 screens for the less than 1 year old, 50 screens for the 15-20 years old who should 

receive one every other year). 

OIG .. _ Recommendation 

HCFA should encourage states to actively notify managed care plans of enrollees due for 

EPSDT exams and follow-up if EPSDT services are not rendered shortly thereafter. 

HCFA Response 

We concur. We will address this as part of the follow-up activities resulting from George 

Washington University’s recently released study of Medicaid managed care contracts, or 

as part of the Medicaid Managed Care Team’s outreach efforts. 

B-3 
Page 2 

OIG Recommendation 

HCFA should work with states to ensure timely managed care EPSDT reporting. 

HCFA Resuonse 

We concur. This issue has been an ongoing concern of HCFA and wiIl be addressed by 

the Workgroup mentioned above. 

OIG Recommendation 

HCFA should emphasize to states the need to define and clarify EPSDT requirements in 

their Medicaid contracts with managed care plans. 

HCFA Resnonse 

We concur. In addition to encouraging states through ongoing technical assistance, 

HCFA will continue to encourage states through its review and approval of new and 

existing waivers to include speci& EPSDT programmatic requirements in their contracts 

with managed care programs. 

Technical Comments 

Page 2, Paragraph 1 - The enrollment figures published in the (1995) Medicaid Managed 

Care Enrollment Report contain double counts. The figures have been revised to 

estimate unduplicated figures. As a result, total Medicaid managed care enrollment as of 

June 30,1995, is estimated to be 9.8 million., or 29.4 percent of the total Medicaid 

population. This 9.8 million figure represents a growth of about 2 million beneficiaries 

from the previous year. .. _ 

HCFA recently published the 1996 enrollment figures. The total Medicaid managed care 

enrollment as of June 30, 1996, is reported to be 13.3 million (see HCFA’s Home Page 

on the World Wide Web for the full report). 

The reference to managed care plans to which people are being enrolled should be 

changed to managed care programs. The term programs more accurately describes the 

variety of systems into which people are enrolling. Of the 403 Medicaid managed care 

arrangements in 1995,48 are primaty care management programs and 355 are some form 

of managed care organization. 

B-4 
Page 3 

Page 2, Paragraph 2, frost sentence - We suggest the following to replace the first 

sentence: “Managed care aims to reduce the utilization of services that are not medically 

necessary, lower health care costs, increase access to services, and provide a vehicle to 

better monitor the quality of care provided to beneficiaries.” 

Page 2, Paragraph 3 - Managed care plan is more accurately managed care program. 

Page 2, Paragraph 4 - Quality assurance activities at the Federal, state government, and 

plan levels are designed to ensure Medicaid beneficiaries are provided access to the 

services to which they are entitled and that providers and managed care organizations are 

fXfilhng their contractual obligations. This point should be made more clearly in the 

discussion of fraudulent activities. 

Page 3, Paragraph 1 - Mention should be made that the contracts discussed in the 1995 

Children’s Defense Fund study were from 1991. Since that time, increased attention has 

been focused on child health, which is likely reflected in newer contracts. In the second 

sentence, please change showed to indicated, since no contract language was provided in 

Integrating EPSDT and Medicaid Managed Care. 

Page 4, Paragraph 2 - Managed care plan is more accurately managed care program. 

Page 7, Paragraph 3 - The Medicaid HEDIS was issued by the National Committee for 

Quality Assurance, not HCFA. 

Page 9, Paragraph 4 - Federally Qualified Health Centers (FQHCs) have protections not 

realized by school-based health centers, community health centers, and local health 

departments. States are required to provide Medicaid beneficiaries with access to 

FQHCs, which is not the case for the other entities. Either this distinction should be 

clear, or FQHCs should be removed from this provider list. 

Page 9, Last Paragraph - Nevada has a Health Maintenance Organization program, which 

means the state pays managed care organizations a capitated fee to provide a defined set 

of services to the Medicaid beneficiaries enrolled in the plans. In the description of 

Nevada’s approach, mention is made of bills not being received by the state. In a 

capitated situation, bills are never received by the state. Please clarify Nevada’s 

approach. 

It would be useful if the OIG report indicates what age groupings would provide more 

useful information than those currently used. 

It would be more accurate if the report used managed care program rather than managed 

care plan. 

B-S 
APPENDIX C 

k%%STANT SECRETARY FOR HEALTH COMMENTS ON DRAFT REPORT 

C-l 
DEPAkTMENTWHEALTHAND-S=w- Offica of the socwtrry 

As&ant Se~crutmryfor Hodth 

offiwofPublkcarldmd 

MAR27l997 Wmhiqton D.C. 20201 

TO: June QibbeBrow 

In8pwtorGulcral 

FROhfz Acting Awhtant Sac- forHealth 

SUBJECT OIG Drd Repoh “Medicaid Managed Care and EPSDT” 

OBI-05-93-00290 

Thankyou fortheoppommityto review andcommenton theinitialdraf?lbspectionreport: 

f’hfedicaidManagedCareundEPSDT’.O&OS-9340290. Thestudymakw an important 

contniiutionto the evolvinglmowlalge of theu8eof man@ camplansin providingnewswry 

prcvmti~e and treatmat tices to Medicaidrecipients. 

I havelimitedmy commentato twoapccificareaa:(1) Report Findings; and (2) Additional 

Recmmaxlad~. Ovexall, I agree fhlly with your recommuxi8tiom aud have inoludedscverai 

cI~on88ndariditi~ ttcainm~ons for yau conaidadion. I look Wwml to your 

MmU.S. Publk Hedth Suvb 

c-2 
Page 2 - Ms. June Gibbs Brown 

Was the study limited to managed care or PCCM providm that were under contract, or 

o&wise expectal, to provide the f%Uarray of EPSBT services? If not, what procedures 

were used to determine additional services acquiredby be&cities outside of the 

designated provida or plan? 

Second, various pxwentive sdgs arc not well documented and are difEcult to 

identie in the medical record. For example, health education andcoweeliag are 

commoaly not documulted in the medical record during clinic vilJi&especially for 

sensitive or illegal activities. This does not. howeva, indicate 8 total d of the8e 

6ervice6.The rtxamnendation of collecting f&rre dataon am BPSDT 

rcportillg for?&izlcludingutlls ofhealth e&at-i* courl8eHn&d rmtiw 

guidaucc, fbr all Msdioaid tnaeficisrics (m&r 21) would solve this rcp@g problem. 

3, Intereetingly, no st&tical differarces were obsav&l between maoaged OQCand PCCM 

beneficiaries. I would have hypothesized thatPKM pzuvidar had a higher mte of 

suocws due to the financial and treatmentincentives mt in the fbc-far_arvice 

reimbursementsystem. This tiding raises iasuear&al to the efIisctleof the Stati: or the 

individual in the acquisition of such BcIvicts.The man@ care plan and Strte bear 

direct msponaibifity in providing many of these caabiing services. 

A8part of your evalt&ioll of effbrta used by providers to iucrmcp8ticnt compliance, 

were you able @mihte the use of tmqof@on ~c&J& locrbkn df pmvider, or 

iltxamibility of aeEviH+sthat may dvcrstly effect m to &X+ceB? 

c-3 
Page 3 - Ms. June Gibbs Brow 

1. The advantages of managed care, as part of the introductoqr paragraph of the 

Recommendation’s section, have yet to be reahed or demonsti4 specifically, 

outreach programs, transportation services, and stressing preventive se&es to avoid 

“costly expense8late?’ fir medical care. I nxomm end revisions bared on our curznt 

state of knowledge on these issues, 

2. In Recommendation #1, require additional data r+ting within specific catcgorier:of 

BPSDTClQviccafor each age group. These categmiea include: complcta phy+cal exam; 

vision and he&n& dental; dcve~opmentaland bahpvioral screaning; PI-O+UW 

(laboratory and inmnhtions); md health education and anticipatory guidance. 

3. In Recommedation #!2,the State must continue to not@ beneficiari= of the availability 

of EPSDT services, how to obtain them, and transportation and scheduling assistance. 

Additionally, if the State contractason&es to partial providers, they must develop a 

mechanism to coIlect EPSDT data from all 8ourcc.11of cam; thus, demonstrating 

compliance with providing the fill range of EPSDTservices. 

4. In Rccummendation #3, the development and implem&ation of a aandsrdized reporting 

form is vital to the State’8and HCFA’ecflbrts in monitoriq ~qticipotiop goal+ The lack 

of mtaPingfulhealthinfhuhion is fiutk complicated by theloss of l@dipsid 

reimbureemant claimafilestlnnu@theuseof caphtai paymentpqjram& Thi6 form 

6hould include the broai range of wxvicea availabk to eligibk bu~eficiaiics, as dimwed 

above.~lemcntltionofsuchrEonnshwldbelinLc4toHCPA’r1915(b)or111s 

Dt?momdoll w8ivern. 

5. 

6. 

. 

7 

C-4