GAO

United States General Accounting Office

Report to Congressional Requesters

September 2000 MEDICAID

MANAGED CARE

States’ Safeguards for

Children With Special

Needs Vary

Significantly

GAO/HEHS-00-169

Page 1 GAO/HEHS-00-169 Children With Special Needs

Contents

Letter 5

Results in Brief 8

Background 9

Many States Are Enrolling BBA-Defined Children With Special

Needs in Capitated Plans 12

Adoption and Effectiveness of Safeguards Vary Among States 15

Observations 29

Agency Comments 30

Appendixes Appendix I: Scope and Methodology 34

Appendix II: Medicaid Managed Care for Children With

Special Needs 37

Appendix III: State Managed Care Enrollment Policies for

Children With Special Needs 40

Appendix IV: State-Reported Numbers of Children in BBA

Categories Enrolled in Capitated Health

Care Plans 43

Appendix V: Care Coordination for Children With Special

Needs in Four States 45

Appendix VI: Health-Based Risk-Adjustment Systems Used

by Maryland, Michigan, and Oregon 53

Appendix VII: Selected Quality-Monitoring Activities That Can

Be Targeted to Children With Special Needs 55

Appendix VIII:Comments From the Department of Health and

Human Services 58

Appendix IX: GAO Contacts and Staff Acknowledgments 62

Related GAO Products 63

Tables Table 1: Descriptions of Safeguards for Children With Special

Needs Enrolled in Capitated Medicaid Managed Care That

Were Identified by Experts and Advocates 10

Table 2: State Enrollment Policies for Children With Special

Needs as of October 31, 1999 (36 states) 13

Table 3: BBA Categories of Children With Special Needs by

Enrollment Type as of October 31, 1999 (36 states) 13
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Table 4: Numbers of States Using Various Requirements to

Ensure Provider Access for Children With Special Needs 21

Table 5: Comparison of Annual Capitation Payments for 31

Selected Children Moved From Michigan’s General

Medicaid Program to Its Specialty Health Plan 26

Table 6: State-Reported Quality Assurance Measures Specific

to Children With Special Needs 28

Table 7: Overview of Medicaid Managed Care Programs in Florida,

Maryland, Michigan, and Oregon That Enroll Children

With Special Needs 36

Table 8: Summary of HCFA’s Interim Review Criteria for

Children With Special Needs 39

Table 9: Number of Enrolled Children 43

Table 10: Care Coordination Activities for Children With Special

Needs in Four States 51

Table 11: Health-Based Risk-Adjustment Systems Used by

Maryland, Michigan, and Oregon 54

Table 12: Measures or Processes States and Health Plans Can

Use to Monitor the Quality of Care for Children With

Special Needs 57

Figure Figure 1: Managed Care Enrollment Policies as of October 31, 1999 41
Contents

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Abbreviations

ACG Adjusted Clinical Groups

AFDC Aid to Families With Dependent Children

AIDS acquired immunodeficiency syndrome

BBA Balanced Budget Act

CCR Continuity of Care Referral Form

CMS Children’s Medical Services

CSHCN children with special health care needs

CSHCS Children’s Special Health Care Services

DPS Disability Payment System

ENCC exceptional needs care coordinator

EPSDT Early and Periodic Screening, Diagnostic, and Treatment

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

HIV human immunodeficiency virus

HMO health maintenance organization

IHCP individualized health care plan

PCCM primary care case management

PLCC plan level care coordinator

SNC special needs coordinator

SSI Supplemental Security Income
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Page 5 GAO/HEHS-00-169 Children With Special Needs

United States General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-283257 Letr

September 29, 2000

The Honorable Robert Kerrey

The Honorable Charles E. Grassley

The Honorable Lincoln Chafee

The Honorable Daniel Patrick Moynihan

United States Senate

The Honorable Diana L. DeGette

House of Representatives

Since the mid-1990s, states have accelerated the enrollment of children

with special needs in capitated Medicaid managed care programs, which

deliver medical services to beneficiaries for a fixed per-person fee. States

see capitated managed care, with its emphasis on primary care, restricted

access to specialists, and control of services, as both a mechanism to

restrain program cost increases and a way to provide the general Medicaid

population with consistent preventive and primary health care. However,

these same features may be less appropriate for children with special

needs, who often require highly specialized and costly medical services.

The Balanced Budget Act (BBA) of 1997 continued to require federal

approval for state Medicaid programs that mandate that these children

enroll,1 while providing state Medicaid agencies the authority to mandate

enrollment for the majority of other beneficiaries without seeking such

approval.

Although there is no consensus definition used by states to identify

children with special needs, the BBA enumerated four federal programs

and a Medicaid optional coverage category that are likely to include

individuals under age 19 with disabilities or chronic conditions and refers

to these children as having “special needs.”2 Children covered by these

1

The BBA also continued to require federal waivers for freedom of choice among

participating providers and other statutory provisions for managed care programs that

mandate the enrollment of children with special needs and two other vulnerable groups:

beneficiaries eligible both for Medicare and Medicaid and Indians who are members of

federally recognized tribes.

2

See P.L. No. 105-33, sec. 4701, 111 Stat. 489.
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programs receive income support or other services and generally qualify

for Medicaid:

• Supplemental Security Income (SSI) under the Social Security Act. SSI

provides cash assistance to low-income adults and children with

disabilities, as well as low-income aged individuals. SSI focuses its

resources for children on those with a high level of need—that is, those

with marked and severe functional limitations.

• The Katie Beckett state plan option. This Medicaid coverage category is

optional for states. It allows children who need a level of care provided

in an institution to be cared for at home.

• Maternal and Child Health Services Block Grant for children with

special health care needs (CSHCN) under title V of the Social Security

Act. Title V is designed to promote coordinated care and communitybased systems of services. Though defined differently by each state, title

V generally applies to children with physical disabilities, filling in gaps in

coverage for services not covered by Medicaid or private health

insurance.

• Federal adoption assistance or foster care programs under title IV-E of

the Social Security Act. These programs provide federal assistance in

finding adoptive homes for children who are difficult to place—

including those with a physical or emotional disability—and assist

foster care families in caring for children from low-income families.3

• Foster care or out-of-home placements funded from other sources.

States often provide assistance to children who are not eligible for title

IV-E assistance because they do not meet income or other standards.

The characteristics of these children are similar to those of title IV-E

foster children.

About a year after enactment of the BBA, the Senate Appropriations

Committee emphasized the need for greater federal scrutiny of mandatory

3

Title IV-E adoption assistance is provided to families who adopt a child who is either

eligible for SSI or whose biological family’s income meets the Aid to Families With

Dependent Children (AFDC) eligibility standard in effect on July 16, 1996, and who is

deemed by the state to be a child with special needs. Children with special needs are defined

by title IV-E as being in a certain situation or having a specific condition—such as being a

teenager or having a mental, emotional, or physical handicap—that would prevent

placement without special assistance. Title IV-E foster care assistance is available for

children whose biological family’s income level does not exceed the state’s AFDC standards

in effect on July 16, 1996.
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managed care programs that enroll children with special needs.4 The

Committee noted that the Congress lacked both experience with and

knowledge of this population and expressed an expectation that states

would be required to establish managed care safeguards in order to receive

federal approval for mandatory enrollment. Safeguards are intended to

encourage the delivery of appropriate, quality care and include measures

for access to specialty providers, care coordination, and quality

monitoring. These safeguards can be instituted through state Medicaid

contracts with managed care organizations or by state or federal Medicaid

policies or regulations.

This report is the second of a two-part study we conducted at your request.

The first report examined the BBA definition of children with special needs

and described the limited data available about their participation in

Medicaid managed care.5 It also assessed steps taken by the Department of

Health and Human Services’ (HHS) Health Care Financing Administration

(HCFA) to establish safeguard criteria for these children in the agency’s

waiver review and approval process. This report (1) presents data on the

extent to which states are enrolling children with special needs, as defined

in the BBA, in capitated managed care plans and (2) assesses the scope and

effectiveness of the safeguards these states are implementing to ensure

that children with special needs receive appropriate care within Medicaid

managed care.

Using the limited data available on state enrollment of children with special

needs, we identified 36 states that enrolled SSI children, foster care

children, or both in capitated managed care. We surveyed the Medicaid

directors of these states to identify their policies on enrolling the categories

of children with special needs cited by the BBA and the available

safeguards. Additionally, we more closely examined the safeguards

operating in Florida, Maryland, Michigan, and Oregon, states that have

either included children with special needs in managed care plans along

with other beneficiaries or have also created distinct programs to serve

some of these children. We conducted our work between September 1999

and September 2000 in accordance with generally accepted government

4

See S.R. 105-300, accompanying S.B. 2440, the fiscal year 1999 appropriations bill for the

Departments of Labor, Health and Human Services, and Education and related agencies.

5

See Medicaid Managed Care: Challenges in Implementing Safeguards for Children With

Special Needs (GAO/HEHS-00-37, Mar. 3, 2000).
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auditing standards. See appendix I for details regarding our scope and

methodology.

Results in Brief Following the general trend of serving more Medicaid beneficiaries through

managed care delivery systems, many states are enrolling a range of

children considered to have special health needs in capitated managed care

programs. However, the number of children involved is uncertain, because

many of the states could not readily report the number of affected children.

The 36 states we surveyed enroll some or all of the BBA categories of

children in capitated managed care: 14 states mandated enrollment, 11

states allowed families to make a choice between capitated managed care

and some form of fee-for-service coverage, and another 11 states had both

mandatory and voluntary enrollment for children in different categories or

in different parts of the state. Of the six categories of children with special

needs identified by the BBA, SSI children are the most likely to be enrolled

in capitated plans.6 Between 1996 and 1999, the number of states enrolling

SSI children in capitated health plans increased from 17 to 31.7 Katie

Beckett children were the least likely to be enrolled.

Adoption and implementation of safeguards for these children vary

significantly across the 36 states we surveyed. Some types of safeguards

have been more widely adopted by states than others. For example, 31 of

the 36 states have at least one measure designed to ensure adequate

pediatric provider capacity. However, 18 states do not inform health plans

of the presence of special needs when enrolling children, and 18 do not

require health plans to conduct a needs assessment soon after enrollment.

Additionally, some safeguards may be less effective because states have

made them optional rather than mandatory, have not adopted rigorous

approaches in their design and use, or do not target the safeguard

specifically for children with special needs. Examples follow.

• While 34 of the 36 states surveyed include a medical necessity definition

in their health plan contracts that helps delineate which services will be

6

Although the BBA cited five categories of children with special needs, we report separately

on the foster care and adoption assistance programs under title IV-E of the Social Security

Act.

7

The District of Columbia is included within state totals.
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covered, only 19 specifically cover services these children need to

maintain, as opposed to improve, their functioning.

• Many of the states we surveyed have limited requirements for health

plans to provide ready access to specialty or out-of-network providers.

Instead, states often permit health plans to decide whether to use

pediatric specialists as primary care providers; allow standing referrals

to specialists; and let children use pediatric, as opposed to adult,

specialists.

• Although all states surveyed make at least some children with special

needs eligible for services that coordinate care provided by various

providers, 14 states leave the decision regarding actual receipt of these

services to the sole discretion of the health plan, and most states could

not identify the number of children actually receiving care coordination

services.

• Only 17 states adjust rates paid to health plans to reflect the health

status or expected utilization of services of the children enrolled.

• Only five of the states we surveyed target their managed care plan

monitoring activities in ways that allow them to focus on the experience

of children with special needs. Rather, states rely on more generalized

monitoring activities to help assess whether Medicaid beneficiaries in

managed care have adequate access to and quality of care. Because

children with special needs are usually a small proportion of the overall

Medicaid population, general monitoring may not capture sufficient

information to adequately assess such children’s care.

Background Medicaid is a joint federal-state entitlement program that annually finances

health care coverage for more than 40 million low-income individuals, over

half of whom are children. Many children with special needs qualify for

Medicaid through eligibility for federal programs targeted at children with

chronic conditions or disabilities, such as SSI. Most states’ Medicaid

programs offer a wide array of therapies and services that are important for

children with special needs. These benefits, such as physical, occupational,

and speech therapies, as well as rehabilitative and case management

services, are all commonly offered to Medicaid-eligible individuals.

In designing and implementing Medicaid managed care programs for

children with special needs, various experts and advocates identified six

areas as important safeguards to provide adequate and appropriate care. As

described in table1, these safeguards are:

• program development,
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• enrollment procedures,

• provider networks,

• care coordination,

• reimbursement, and

• targeted quality monitoring.

Table 1: Descriptions of Safeguards for Children With Special Needs Enrolled in Capitated Medicaid Managed Care That Were

Identified by Experts and Advocates

HCFA has addressed each of these safeguard areas, to varying degrees, in

its guidance to states with mandatory capitated Medicaid managed care

programs for children with special needs. In order to mandate the

enrollment of children with special needs in managed care, states must

apply to HCFA to receive a waiver of certain federal statutory

requirements, such as the requirement to guarantee beneficiaries’ freedom

to choose among participating providers. In June 1999, HCFA implemented

the first requirements for states applying for or renewing federal waivers to

enroll children with special needs in mandatory capitated managed care

programs. The “Interim Review Criteria for Children with Special Needs”

Safeguard area Description

Program development Public input

• Involve key stakeholders, such as advocacy groups and families, in program development, implementation,

and monitoring.

Medical necessity

• Include the concept of maintenance of function in the definition of necessary medical services (medical

necessity) in health plan contracts, because medical necessity standards that require substantial

improvement or restoration of function can conflict with the needs of children with special needs.

Enrollment procedures • Identify children’s special needs before or soon after enrollment to ensure that children benefit from

safeguards.

• Educate beneficiaries about accessing services and available protections in managed care and provide

assistance in choosing a health plan.

• Allow children with special needs to change plans or opt out of managed care when appropriate.

Provider networks • Ensure that health plans develop provider networks that are sufficient to meet the anticipated needs of

children with special needs, for example, by including pediatric specialists.

• Institute various requirements, such as standing referrals, to ensure access to specialized providers both

within health plan networks and through arrangements for out-of-network care if needed.

Care coordination • Provide beneficiaries assistance to organize and facilitate access to relevant services, either through

independent entities or through requirements for health plans.

Reimbursement • Adjust payments to plans to reflect the varying health needs of enrollees, design payment methods to

minimize incentives for underservice and to protect plans from extraordinary financial risk, or both.

Targeted quality

monitoring

• Target quality-monitoring activities, such as beneficiary satisfaction surveys, focused clinical studies, and

analyses of complaints and grievances or disenrollments from health plans, toward children with special

needs.
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include requirements that states implement certain safeguards when

requiring capitated managed care enrollment of children with special

needs.8 The interim criteria, summarized in appendix II, cover 11 areas,

including access to specialists, payment methodology, and provider

capacity. However, as we reported earlier, the interim criteria are not as

specific as those outlined in previous HCFA guidance on using managed

care for populations with special needs, particularly in such areas as

determining medical necessity, involving the public in program

implementation and oversight, and collecting encounter data.9 The criteria

are brief and self-contained; there are no accompanying standards,

guidelines, or definitions for the criteria, and they do not address how best

to apply the safeguards in light of the multiple and divergent care

requirements of children with special needs. HCFA plans to release revised

criteria in the fall of 2000 that will be more specific and reflect recent

research.

As of June 2000, HCFA had used the interim criteria in reviewing 15 waiver

applications in 12 states (states may have multiple waivers, used for

different counties or populations). Waiver requests are reviewed when a

new application is submitted or when existing waivers are under

consideration for renewal. Waivers are granted for 2- or 5-year periods,

depending on the statutory provisions being waived, and the BBA granted a

3-year extension to waivers being considered for renewal if there are no

proposed changes (see app. II). At the time of our survey (October 1999),

few states had been required to use HCFA’s interim criteria safeguards for

children with special needs because their waivers had been approved

before the criteria’s June 1999 effective date. Therefore, survey responses

generally reflected safeguards that states had chosen to implement for

children with special needs prior to the HCFA mandate.

8

When states allow voluntary enrollment in managed care, they do not have to seek a waiver

from HCFA.

9

See GAO/HEHS-00-37, Mar. 3, 2000, pp. 29-31.
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Many States Are

Enrolling BBA-Defined

Children With Special

Needs in Capitated

Plans

Our survey of 36 states that enroll SSI or foster children or both in

capitated Medicaid health plans—the only two categories of children with

special needs tracked by HCFA prior to the BBA—found that half enroll

children with special needs in multiple BBA categories. The number of

mandatory programs slightly exceeds those that are voluntary. The number

of states that enroll SSI children—the largest and most consistently tracked

group of children with special needs—grew from 17 to 31 between 1996

and 1999. Katie Beckett children are the least likely to be enrolled, with

only 11 states including them in capitated managed care. While many

children with special needs are enrolled in capitated plans, there is no

measure of the total number because some states could not readily provide

counts by each of the BBA-defined categories.

States Enrolled Most

Categories of Children With

Special Needs in Capitated

Managed Care but Did Not

Report the Number Enrolled

The variety of enrollment policies makes it difficult to generalize about

state managed care programs for children with special needs. States vary

with regard to whether enrollment is mandatory or voluntary, how many of

the categories of children with special needs they enroll, and whether

policies allowing or mandating enrollment apply statewide or only to

selected areas. Of the 36 states we surveyed, 14 have only mandatory

enrollment, 11 have only voluntary enrollment, and 11 have mandatory

enrollment for some groups and voluntary enrollment for others. The 11

states with both mandatory and voluntary enrollment either have

mandatory programs in certain counties and voluntary programs in others

or mandate enrollment for certain categories of special needs children,

leaving enrollment for others as voluntary.10 (See table 2.)

10States may have different enrollment arrangements for the BBA categories in different

areas of the state. For example, California has some county-based waivers (such as for

Caloptima and the Health Plan of San Mateo) that mandatorily enroll SSI children and other

county-based waivers (such as for Sacramento Geographic Managed Care and the Two-Plan

Model Program) that voluntarily enroll SSI children.
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Table 2: State Enrollment Policies for Children With Special Needs as of October 31, 1999 (36 states)

Note: States may have both mandatory and voluntary enrollment because (1) programs in some states

are county-based, which may result in mandatory programs in certain counties and voluntary

programs in others, or (2) some states mandate enrollment for certain categories while enrollment for

others is voluntary.

Source: GAO survey of state Medicaid directors.

SSI and title V, the categories with the largest number of beneficiaries, are

most often included in either a mandatory or voluntary program. Nineteen

of the 36 states enroll five to six BBA categories in capitated plans, while 10

states typically enroll two or three BBA categories. Although many states

do not offer the optional Medicaid coverage for Katie Beckett children, 11

states enroll these children in capitated managed care. Seventeen states

prohibit the enrollment of children in certain BBA categories in capitated

managed care. For example, seven states prohibit title IV-E foster children

from enrolling in capitated health plans. Table 3 summarizes BBA

categories by enrollment policies, and appendix III presents detailed state

enrollment policies by BBA category, including the categories excluded

from enrollment.

Table 3: BBA Categories of Children With Special Needs by Enrollment Type as of

October 31, 1999 (36 states)

Program type Number of states States

Mandatory 14 Arizona, Connecticut, Delaware, Hawaii, Kentucky, Maryland, Nebraska,

New Mexico, Oregon, Tennessee, Utah, Vermont, Virginia, West Virginia

Voluntary 11 Colorado, Florida, Georgia, Maine, Minnesota, Mississippi, Montana,

New Hampshire, New York, South Carolina, Wisconsin

Mandatory and voluntary 11 California, District of Columbia, Indiana, Massachusetts, Michigan,

Missouri, North Carolina, Ohio, Pennsylvania, Texas, Washington

BBA categories Mandatory Voluntary

Mandatory and

voluntary Total

SSI children 14 12 5 31

Katie Beckett childrena 27 2 11

Title V CSHCN children 13 10 4 27

Children receiving adoption

assistance under title IV-E 12 7 3 22

Children receiving foster care

under title IV-E 13 11 3 27
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a

According to HCFA, 14 of the 36 states use a 1902(e)(c) state option to enroll Katie Beckett children in

Medicaid. However, of the 11 states that reported enrolling Katie Beckett children in capitated health

plans, only 5 states were reported as using the 1902(e)(c) state option: Delaware, Massachusetts,

Mississippi, New Hampshire, and South Carolina. The other states enroll children similar to those

covered by the Katie Beckett state option through other types of waivers (Colorado, New York, and

Ohio) or generally identify similar children in their regular Medicaid program (Montana, New Mexico,

and Washington).

Source: GAO survey of state Medicaid directors.

Program Characteristics of

States With Mandated

Enrollment

Almost all of the 25 states that mandate enrollment in at least part of the

state or for some populations include many children with special needs in

health plans with other populations. For example, children with special

needs in mandatory arrangements are included with the rest of the

population on a statewide basis in Maryland and Oregon, and in the general

managed care program in Michigan. In addition, Michigan and the District

of Columbia enroll some of these children in a separate, specialized,

voluntary program and enroll others mandatorily in health plans with other

populations, while Texas operates a separate program with mandatory and

voluntary enrollment for some children with special needs.

Limited Enrollment Data Many states were not able to readily report an unduplicated count of the

children in the BBA-defined categories who are enrolled in capitated

Medicaid managed care. Only 19 of the 36 states we surveyed provided

enrollment data for at least one BBA category of children with special

needs in capitated Medicaid programs, so we could not determine the total

number of children enrolled (see app. IV). Moreover, some of the statereported enrollment figures are from different points in time, are

combinations of enrollment in two or more BBA categories, or both. On the

basis of our analysis of available federal program data, we estimate that the

total number of children in the BBA categories ranges from 1.5 million to

2.4 million.11

Other children in foster care or

otherwise in an out-of-home

placement 14 8 3 25

(Continued From Previous Page)

BBA categories Mandatory Voluntary

Mandatory and

voluntary Total

11The lower end of this range excludes title V children because some are not eligible for

Medicaid. The higher end includes title V children who are not Medicaid-eligible and

represents some double counting of children who are eligible for both title V and SSI. See

GAO/HEHS-00-37, Mar. 3, 2000, pp. 38-41.
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Enrollment Exclusions and

Exemptions

Most of the 36 states reported that they exclude certain categories of

children with disabilities that are not in the BBA-defined categories from

capitated Medicaid managed care. Thirty-two of the 36 states exclude

children in nursing facilities, intermediate care facilities for the mentally

retarded, and institutions for those with mental diseases from enrollment

in capitated Medicaid managed care. Twenty-three of these 32 states also

exclude children receiving home- and community-based waiver services,

and 9 states exclude other children with special needs.12 Two states do not

allow children with special needs to be excluded from enrollment in

capitated Medicaid managed care (the remaining two states did not

respond to this question).

Eleven of the 25 states with mandatory enrollment allow exemptions from

enrollment in capitated Medicaid health plans for one or more of the

following reasons:

• the child is undergoing a plan of treatment (6 states),

• the child’s provider is not in the capitated health plan (3 states),

• enrollment would disturb long-standing care arrangements (3 states), or

• the parent prefers the child not to be enrolled (3 states).

Five of these 11 states allow exemptions on a case-by-case basis. Another

11 states with mandatory enrollment have no policy regarding exemptions

(3 states did not respond).

Adoption and

Effectiveness of

Safeguards Vary

Among States

States vary in the safeguards they adopt and implement for children with

special needs. Moreover, some states believe the BBA categories do not

include all children with special needs, such as children who are severely

emotionally disturbed or those aged 19 to 21, and have therefore expanded

12Home- and community-based waiver services participants are those receiving long-term

care services in the community under section 1915(c) of the Social Security Act. Children

receiving services under this waiver must be eligible for Medicaid if institutionalized and

must require the level of care furnished in an institution. Other children with special needs

excluded from enrollment in capitated Medicaid health plans include those eligible for both

Medicare and Medicaid; children with acquired immunodeficiency syndrome (AIDS);

medically needy children (also referred to as spend-down children—that is, children whose

family income, minus incurred medical expenses, falls below the state’s medically needy

income and resource standards [see GAO/HEHS-00-37, Mar. 3, 2000, p. 11]); and children

covered by both private health insurance and Medicaid.
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the population protected by their safeguards.13 All the states we surveyed

addressed safeguards in one or more of the areas that we identified as

being important for children with special needs: (1) program development,

(2) enrollment procedures, (3) provider capacity and accessibility, (4)

comprehensive care coordination, (5) appropriate reimbursement to health

plans, and (6) targeted quality monitoring. Some types of safeguards have

been more widely adopted by states than others. For example, 31 of the 36

states we surveyed have at least one measure that addresses adequate

pediatric provider capacity. On the other hand, 18 states do not inform

health plans of the presence of special needs when enrolling children, and

18 do not require health plans to conduct a needs assessment soon after

enrollment. Additionally, other safeguards may be less effective for

children with special needs because states have made them optional rather

than mandatory, have not adopted more rigorous approaches for their

design and use, or do not target them specifically to these children.

Program Development

Offers Opportunities to

Build in Safeguards for

Children With Special Needs

During the development of their capitated managed care programs, states

may incorporate various safeguards for children with special needs, such

as a public input process and an appropriate medical necessity definition.

Our interviews with HCFA and state officials indicate that states often use

public input processes that involve relevant advocacy groups and families

in the planning and operation of their managed care programs to ease the

transition of children with special needs into Medicaid managed care

programs. However, in one critical area—developing their managed care

program’s definition of medical necessity (a standard used to determine

whether a service will be covered for a specific individual)—14 states did

not include the concept of maintaining function to justify coverage. This

omission is significant given that many children may have conditions that

will not improve, yet they need services to maintain functioning or prevent

further deterioration.

According to a HCFA official, states responding to the interim criteria often

used public input processes to coordinate with other agencies and

advocacy groups in designing their managed care programs. Furthermore,

all four states we visited involved advocates and families to some degree in

planning their managed care programs, and at least three of the states

(Florida, Maryland, and Michigan) involve advocates on a continuous basis

13For more discussion of children who are not covered by the BBA definition but who may

have special needs, see GAO/HEHS-00-37, Mar. 3, 2000, pp. 16-18.
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through standing advisory committees.14 For example, in Maryland, seven

work groups composed of advocates, providers, and legislators met on a

weekly basis throughout the planning process to focus on populations such

as children with special needs, the developmentally disabled, and the

physically disabled.15 Currently, Maryland has three advisory committees,

including one focused on children with special needs whose membership

includes two parents as well as an advocate for disabled children. In

addition, Florida and Michigan require their specialized health plans for

children with special needs to have a family representative on staff, while

Maryland requires health plans’ advisory boards to include a family

representative.

Only 19 of 34 states that include a definition of medical necessity in their

contracts with capitated plans include the concept of maintenance of

function in that definition. In contrast, 14 states base their medical

necessity definition on the concept of cure or rehabilitation (one state did

not respond). Of the two states we visited that enroll children with special

needs in their general managed care programs, only Maryland includes the

concept of maintenance of function as a qualifying criterion for coverage of

health services in state regulations. Florida and Michigan, the two states we

visited that have separate programs for a portion of their children with

special needs, include maintaining function in their specialized programs’

medical necessity standard. However, neither includes maintaining

function in its general Medicaid capitated programs, even though children

with special needs may enroll in these plans.

States’ Use of Enrollment

Procedures to Protect

Children With Special Needs

Varies

Although many states have adopted various enrollment procedure

safeguards, a significant number have not. Enrollment procedure

protections include identifying children with special needs, providing their

families adequate information about managed care during the health plan

selection process, and allowing children to disenroll from a plan or

managed care if their needs are not being met.

14As we reported in 1996, state officials involved in tailoring managed care programs for

people with disabilities stressed the need to involve beneficiaries and advocates both in the

planning process and in overseeing program implementation. See Medicaid Managed Care:

Serving the Disabled Challenges State Programs (GAO/HEHS-96-136, July 31, 1996).

15Other work groups focused on the homeless, individuals with human immunodeficiency

virus (HIV)/AIDS, pregnant and postpartum women, and substance abusers.
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While many states surveyed have some procedures in place for identifying

children with special needs, about one-third do not. Eighteen states do not

inform health plans of the presence of special needs when enrolling

children, and 18 do not require health plans to conduct a needs assessment

soon after enrollment. Moreover, 10 states, many of which have mandatory

enrollment in capitated health plans, do not have either procedure in place

to identify children with special needs during or soon after enrollment,

which means plans may not know about the children with special needs

who are enrolled. Maryland provides an example of how multiple steps

may improve the odds that health plans know when special needs children

enroll and receive information about their needs. To begin with, Maryland

health plans know the Medicaid eligibility status (such as SSI or foster

care) and the risk status (which is based on the receipt of a higher payment

for individuals with higher expected costs) of all new beneficiaries. In

addition to this information, Maryland health plans also receive a copy of

each beneficiary’s health risk assessment form. This form, which is

completed by most beneficiaries during Medicaid enrollment, allows

beneficiaries to indicate whether a child has special needs, a

developmental or physical disability, certain health problems (such as

asthma or cerebral palsy), or the need for pharmaceutical or medical

equipment. Within 15 days of receiving a beneficiary’s health risk

assessment, health plans are required to conduct an initial health visit for

individuals who identify themselves as having a high-risk condition.16

In responding to our survey, 26 states reported that they assist at least some

of their families of children with special needs in selecting a health plan,

though the type or level of assistance provided varied among our site visit

states. In the four states we visited, help in selecting a plan often is limited

to the general assistance afforded to all Medicaid beneficiaries through

phone conversations with states’ enrollment brokers and Medicaid

informational brochures.17 In contrast, Michigan’s enrollment broker has

counselors specially trained to assist families of children with special

16Maryland considers the following seven groups of people to be high-risk: pregnant and

postpartum women, substance abusers, the physically disabled, individuals with HIV/AIDS,

children with special needs, the developmentally disabled, and the homeless. These seven

groups were the focus of the previously mentioned work group meetings involving

advocates, providers, and legislators.

17Enrollment brokers, private companies under contract with the state, generally offer

Medicaid enrollees assistance by making sure they understand what managed care is and

what options are available to them.
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needs as well as a disability services worker who is available to make home

visits.

While 13 of the 25 states that have a mandatory program have at least one

special disenrollment provision for children with special needs, children in

the remaining 11 states have no special options (one state did not answer

this question). Nine of the 13 states allow children with special needs to

switch among capitated health plans at any time without cause. In addition,

children with special needs can opt out of capitated health plans without

cause in five states. None of these five states have only mandatory

enrollment for children with special needs; that is, all of these states enroll

at least one category of BBA children in managed care on a voluntary basis.

In Michigan, for example, because the specialty health plan program is

voluntary, each month enrolled children have the option to switch to feefor-service care.

Making Some Provider

Access Safeguards Optional

May Limit Effectiveness

Most of the states we surveyed take some action to ensure that Medicaid

capitated health plans have a sufficient number of pediatric providers and

specialists in their networks to serve children with special needs. However,

while they attempt to make providers available, states are less likely to

impose consistent requirements to ensure that these providers and

specialists are readily accessible. Instead, many leave to health plans the

decision about whether to adopt such measures as using pediatric

specialists as primary care providers or granting standing referrals to

specialists.

Ensuring Adequate Provider

Networks

Almost all of the 36 states we surveyed (31 states) impose at least one

requirement intended to ensure that the capacity of pediatric providers in

their health plans is adequate to serve children with special needs. States

can require, for example, (1) access to pediatric specialty centers; (2)

specific contract conditions regarding participation by pediatric providers;

(3) the incorporation of providers experienced in serving children with

special needs into health plan networks; and (4) provisions to address a

lack of available providers, such as allowing children to use providers

outside the health plan network. Several of the state officials we

interviewed said that plans’ pediatric provider capacity was evaluated prior

to contracting for services through an initial provider panel approval

process. However, Maryland officials noted that states face difficulties in

prospectively setting requirements for pediatric specialists: No general

criteria or standards exist—in fee-for-service or managed care—for the
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number and mix of specialists needed to serve a population or for when

and how often referrals to specialists should be made.

Specialty centers. Just over half of the 31 states that impose at least one

requirement require health plans to demonstrate access to pediatric

specialty centers or children’s hospitals. For example, in Oregon health

plans are required to have contracts with centers of excellence such as the

Child Development and Rehabilitation Center, a statewide agency that

offers specialty clinics and serves children with special needs. Florida’s

contract with Medicaid capitated health plans requires them to assure

beneficiaries of access to one or more of the state’s regional perinatal

intensive care centers, which are specialized units within hospitals with a

full range of newborn intensive care services.18

Contract requirements. Fourteen of 31 states have specific requirements in

their contracts with managed care plans regarding the number and type of

providers with pediatric expertise that must participate in the health plan

network or be available through other arrangements.

Experienced providers. Fourteen states require plans to demonstrate that

primary care providers in their network have experience in serving

children with special needs.19 For example, Maryland requires health plans

to “flag” physicians with experience in providing care for children with

special needs to be able to refer children to the most appropriate provider.

In shifting to a capitated arrangement, Florida’s specialized program is

requiring interested health plans to detail the availability of board-certified

specialists and pediatric providers.

Unanticipated need. Fourteen states require plans to have policies in place

that address the unanticipated need for, or limitations in the availability of,

providers with pediatric specialty expertise. Of the states we visited,

Florida, Maryland, and Oregon required plans to have arrangements for

18Plans may request a waiver of this provision if unable to reach an agreement with centers

that are within a reasonable travel time. Florida told us that effective July 1, 2000, after the

date of our site visit, Florida’s Medicaid contract changed to provide health plans the option

to ensure access to either a regional perinatal intensive care center or a hospital licensed for

neonatal intensive care unit level III beds.

19There is some evidence that the use of experienced health care providers and institutions

can result in better health outcomes. For children with special needs, relevant experience

may include expertise in pediatric care as well as an understanding of special risk factors

that affect health, such as the risk of abuse among foster children.
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children to see out-of-network providers should the need arise. In addition,

in Oregon children may use out-of-network providers even if they are

outside the state, and health plans must pay the travel expenses for such

out-of-state care.

Ensuring Access to Providers Many of the states we surveyed have limited requirements for specialty or

out-of-network provider access for children with special needs. Instead,

they often let health plans decide whether to adopt these measures, as

shown in table 4. Leaving implementation of access safeguards to health

plans may have the effect of limiting the safeguards’ use, both across states

and among different health plans within states, if plans decide not to

voluntarily incorporate these safeguards. The scarcity of specialists in rural

areas, or their reluctance to serve as primary care physicians for children

with special needs, further complicates attempts to ensure access to

pediatric specialists.

Table 4: Numbers of States Using Various Requirements to Ensure Provider Access

for Children With Special Needs

a

Standing referrals allow enrollees to obtain ongoing care for specific medical conditions from a

specialist without seeking repeated referrals from a primary care provider.

b

Thirty-four of the 36 states polled responded to this question. Additionally, one state responded that it

did not know or was not sure of the answer to this question.

Source: GAO survey of state Medicaid directors.

Requirements

States in which

requirement

applies to some

or all children

with special

needs

States in which

plans have option

to adopt

requirement or

not

States that have

no requirement

Pediatric specialists must

be allowed to be primary

care providers 17 15 4

Standing referrals to

specialists are alloweda 10 13 13

Children have access to

pediatric rather than adult

specialistsb 12 16 5

Newly enrolled children

may be cared for by

nonnetwork providers 22 8 6
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Of the four states we visited, Florida, Michigan, and Oregon generally

permit health plans to decide whether to allow specialists to serve as

primary care providers, and Maryland, Michigan, and Oregon permit plans

to decide whether to authorize standing referrals.20 In contrast, while

provider access safeguards generally are not left to the discretion of health

plans in Michigan’s Children’s Special Health Care Services (CSHCS)

specialty program and Florida’s planned capitated Children’s Medical

Services (CMS) program, only title V children are enrolled in these

programs.

Michigan and Oregon officials said the use of pediatric specialists as

primary care providers in their general Medicaid programs varies by health

plan. Neither of the two health plans whose representatives we interviewed

in Oregon generally uses pediatric specialists as primary care providers,

though one plan noted limited exceptions for oncologists. Each of the total

of four health plans we visited in Oregon and Maryland has different rules

for addressing standing referrals. One Oregon health plan specifies that the

primary care physician may authorize up to six visits within a 3-month

period if the plan verifies the referral. The second health plan also allows a

specific number of visits for a standing referral but said that the length of

the referral is flexible. In Maryland, one health plan usually allows at least

two specialist visits within a certain time frame, depending on the duration

of the treatment needed, while the other allows individual providers to

determine the need for standing referrals.

Even when states require some access to pediatric specialists, health plans

may face difficulties when attempting to meet those requirements. For

example, there are generally a small number of pediatric providers in a

given area. Additionally, health plans and advocates in several of the states

said pediatric specialists might not be located in more rural areas, requiring

families either to travel to urban areas or to substitute other providers.

Some states and health plans found that specialists who are qualified to

serve children’s intensive needs may not want to act as primary care

physicians because of their responsibilities to provide for coordinated

general health care and to act as “gatekeepers” in determining referrals for

specialty services. For example, Maryland requires primary care physicians

to become certified as providers of Medicaid Early and Periodic Screening,

20Michigan requires health plans to designate a specialist as a primary care provider when

appropriate for an enrollee’s health condition. The determination is made on a case-by-case

basis by the health plan and must be requested by the child’s family.
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Diagnostic, and Treatment (EPSDT) program services;21 state officials said

some specialists might not want to be accountable for immunizations and

well-child care and therefore might decline to act as primary care

physicians.

Availability of Care

Coordination Services

Differs Among States

Children with special needs tend to be eligible for care coordination

services in most states; however, states often provide health plans the

discretion to decide who actually receives these services. Therefore, in

many states being eligible for care coordination services does not

guarantee access to these services. Care coordination can include

conducting a comprehensive assessment of needs; developing a plan of

care; facilitating access to the medical and nonmedical services identified

in the care plan; and providing assistance in planning for transitions in care,

such as hospital discharge.

In 20 of the states surveyed, all children with special needs are eligible for

care coordination services. In the remaining 16 states, a child’s eligibility

for care coordination is determined on the basis of factors such as the

severity of illness, the existence of multiple or co-occurring conditions, or

membership in a certain categorical group (such as SSI or foster care). Of

the 34 states that provided information regarding the receipt of care

coordination, only 3 states retain sole authority to determine which

children with special needs should actually receive these services (1 state

did not answer the question and another state did not know the answer to

the question). In 14 states, health plans are allowed to make this decision,

and in the remaining 17 states, the health plans and the state share the

responsibility for determining which children with special needs should

receive care coordination. For example, Oregon makes SSI and foster

children eligible for special care coordination services; however, the

service must be requested from the health plan, since it is not automatically

provided. A 1997 parent satisfaction survey found that the majority of

Oregon parents surveyed were not aware of the availability of this service.

Because decisions regarding the receipt of care coordination are most

often either shared with or left to capitated health plans, the majority of

21EPSDT provides comprehensive health screening (for example, physical examinations,

health and developmental history, laboratory tests, blood lead level testing, and health

education); immunizations; vision screening and treatment; hearing screening and

treatment; dental screening and treatment; and other necessary diagnostic and treatment

services to all categorically needy Medicaid-enrolled individuals under age 21.
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states were unable to say what percentage of children with special needs

actually receive care coordination services. Only four states were able to

provide figures on the percentage of children with special needs who

receive care coordination. For example, Michigan and Florida said that all

of the children in their specialized programs receive care coordination

services, but they did not know how many children with special needs in

their general Medicaid program receive such services.

In addition, it is unclear what level of care coordination is provided in most

states—that is, the extent to which services include the child’s social needs,

such as education and housing, in addition to medical service needs. The

specialized programs in two of the four states we visited, Florida and

Michigan, require the coordination of both the child’s medical and social

needs. However, both states’ special programs are limited to title V

children. If they receive any care coordination, children with special needs

enrolled in Florida’s and Michigan’s regular capitated managed care

programs receive only coordination of their medical needs. Medicaid

health plans in Maryland and Oregon have employees who are responsible

for coordinating care for some children with special needs; however, the

types of service provided vary by plan. Appendix V provides a description

of the care coordination systems in the four states visited.

In addition to providing care coordination services, most states require

health plans to coordinate with at least one of the agencies that frequently

serve children with special needs. For example, 28 states require health

plans to coordinate with mental health programs, and 26 states require

coordination with early intervention programs, which provide

developmental services for children under age 3 with developmental

delays.22 In states such as Maryland, where many services, including mental

health and therapy services, are carved out of managed care and provided

separately under other plans, it is essential that health plans have ongoing

coordination with these other providers in order to provide seamless care.

However, representatives of both Maryland health plans we interviewed

22Twenty-three states require health plans to coordinate with special education programs,

and 24 require coordination with other developmental disability programs. Coordination is

required with child protective or social services in 23 states and with title V programs in 22

states. Although there are no statutory requirements for Medicaid agencies to coordinate

services and activities with educational entities, the Individuals With Disabilities Education

Act does require that educational entities bear the responsibility for coordinating services

with other agencies, such as Medicaid. See Medicaid and Special Education: Coordination of

Services for Children With Disabilities Is Evolving (GAO/HEHS-00-20, Dec. 10, 1999), p. 9.
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Page 25 GAO/HEHS-00-169 Children With Special Needs

are concerned that carving out these services makes providing coordinated

care more difficult.

Payment Mechanisms in 17

of 36 States Include Risk

Adjustment Based on

Beneficiaries’ Health Needs

Research suggests that using health-related factors such as clinical

diagnoses or prior utilization of medical services helps predict future care

costs. State managed care payment mechanisms that adjust rates states pay

to health plans for the variation in costs associated with different types of

disabling conditions help mitigate plans’ financial risks associated with

providing services to children with special needs. At the same time,

researchers have identified significant variation in medical costs among

people who fall into the same subcategories of conditions.23 However,

disabled individuals, including children with special needs, generally have a

larger proportion of costs for chronic needs, which are by definition more

consistent over time. Therefore, health-related factors may better predict

the costs for children with special needs than they would for all children.

Aligning rates paid to health plans with expected costs helps reduce

incentives for health plans to attempt to limit enrollment of or services for

high-cost children. To varying degrees states are using (1) risk adjustment

to more closely match payments with the expected costs of the enrolled

population of beneficiaries or (2) risk corridors to share profits and losses

between states and health plans.24

Most of the states we surveyed (31 states) are using some form of risk

adjustment to align capitation rates with expected beneficiary care costs.

Many of the states using risk adjustment attempt to account for beneficiary

differences by segmenting populations into broad subgroups, or cells, of

individuals with similar characteristics. Twenty-eight states pay rates on

the basis of demographic variables, such as age or sex; 26 states use

category of Medicaid eligibility, such as SSI eligibility; and 22 states vary

23For more detail regarding this research, see GAO/HEHS-00-37, Mar. 3, 2000, p. 19, and

GAO/HEHS-96-136, July 31, 1996, p. 49.

24Risk corridors, a part of funding agreements between states and health plans, reimburse

plans for a portion of losses but also require plans to return part of the profits exceeding a

specified level. See GAO/HEHS-96-136, July 31, 1996, p. 48. Another mechanism often used

by health plans is reinsurance. Twenty-eight states said health plans use reinsurance, also

called stop-loss protection, to contain financial risk. Reinsurance provides retrospective

adjustments to reimburse plans for losses resulting from very high-cost individuals or

disproportionate numbers of enrollees with above-average costs. However, while

reinsurance relieves some of the financial pressure on health plans, it does not remove the

negative incentives to avoid enrolling high-cost beneficiaries or to underserve them.
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rates by geographic area, such as county or region. For example, Florida

uses four eligibility categories, eight age groups, 10 geographic areas, and

gender to develop different payment levels for all beneficiaries.25

Only 17 of the states we surveyed use measures based on the actual health

needs of beneficiaries, including children with special needs, to risk-adjust

capitation rates. Fourteen states use either clinical diagnosis or prior

utilization to develop their risk-adjusted rates, while three states use both

factors. For example, for some beneficiaries, Maryland’s risk adjustment

uses prior medical claims to assign beneficiaries to risk categories, while

Oregon’s and Michigan’s risk-adjustment methods identify high-cost

diagnoses (see app. VI).

Risk adjustment can result in large differences in payments to plans for

particular enrollees. For example, in reviewing the records of Medicaid

children with high medical costs enrolled in Michigan’s general Medicaid

managed care program, one health plan identified 31 children who later

were found eligible for the separate program for children with special

needs. Michigan’s health-based capitation payments for these children are

significantly higher than its capitation payments in the regular program, as

shown in table 5. For example, one child’s capitation rate increased from

$612 per year to $19,140 per year (capitation payments are paid monthly).

Table 5: Comparison of Annual Capitation Payments for 31 Selected Children Moved

From Michigan’s General Medicaid Program to Its Specialty Health Plan

Problems with health data reliability and completeness can serve as

obstacles to states in developing and implementing risk-adjusted capitation

rates. Some state and health plan officials we interviewed said that, as

more Medicaid beneficiaries with special needs are enrolled in managed

25Florida told us that as of July 1, 2000, their risk-adjustment methodology changed,

increasing from six to eight age groups and adding gender as a factor.

Program

Lowest annual

capitation payment

Highest annual

capitation payment

Average annual

capitation payment

General Medicaid

program $372 $4,296 $969

Specialty program 2,376 19,140 9,386
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care, collecting reliable encounter data from health plans is becoming an

important component in developing appropriate risk-adjusted rates.26 For

example, before Michigan began collecting encounter data from health

plans in mid-1999, health plans were not required to submit specific

diagnosis and treatment data as a condition for receiving capitated

payments, which led to problems in obtaining this information, state

officials said.

Eight states have developed risk corridor arrangements that share the risk

of profits or losses between the state and health plan. Such arrangements

can protect both sides from potentially large losses that may result from

inadequate adjustment of capitation rates. We reported in 1996 that risk

corridors appeared to have the greatest potential for reducing plans’

incentives to underserve or to attempt to avoid enrollment of beneficiaries

with greater health care needs.27

Quality-Monitoring Efforts

Are Seldom Specifically

Targeted to Children With

Special Needs

Most of the quality-monitoring efforts employed by the states that

responded to our survey are used for all populations in Medicaid managed

care, or for all populations with special needs (see app. VII).28 Only five

states surveyed indicated that they specifically developed qualitymonitoring activities for some children with special needs: Delaware, the

District of Columbia, Maryland, Michigan, and Oregon (see table 6).

Quality-monitoring activities afford an opportunity to hold health plans

accountable for providing the more specialized and coordinated care

required by children with special needs. Researchers suggest that three

26As more states move beneficiaries into managed care, fee-for-service claims data become

less available and less suitable for use in rate-setting for capitation payments and for riskadjusting capitation. See GAO/HEHS-96-136, July 31, 1996, p. 57.

27See GAO/HEHS-96-136, July 31, 1996, p. 48.

28Populations with special needs are defined in various ways. For example, Maryland’s

definition of populations with special needs includes children with special health care

needs, individuals with a physical disability, individuals with a developmental disability,

pregnant and postpartum women, individuals who are homeless, individuals with HIV/AIDS,

and individuals in need of substance abuse treatment. HCFA’s draft report to the Congress,

intended to identify safeguards needed by populations with special needs in Medicaid

managed care, includes as Medicaid managed care beneficiaries with special health care

needs individuals with serious and persistent mental illness, substance abuse, or both;

homeless individuals; older adults with disabilities; and nonelderly adults who are disabled

or chronically ill with physical or mental disabilities, in addition to children with special

health care needs.
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characteristics of the care for children with special needs have implications

for effective monitoring: (1) few children experience any of the many

health conditions affecting children, making monitoring for individual

conditions of limited use; (2) childhood chronic conditions need to be

monitored in relation to children’s various developmental stages; and (3)

children’s care must be monitored in the context of their family situation.29

Therefore, general monitoring may not capture enough information about

these children to provide the specificity needed for assessing their care.

Table 6: State-Reported Quality Assurance Measures Specific to Children With

Special Needs

a

Maryland reports on specific quality indicators only for children with asthma and has conducted

focused studies of children with a diagnosis of cerebral palsy and with sickle cell disease. Regarding

grievance procedures, the state tracks and monitors the complaints of eight categories of children who

either have a specific diagnosis, such as cerebral palsy, or are part of a specific group, such as statesupervised children.

b

Michigan’s specialty children’s program, rather than the general Medicaid managed care program,

incorporates these monitoring activities. The specialty program also uses several other quality

assurance measures specific to children with special needs.

Source: GAO survey of state Medicaid directors and follow-up telephone interviews.

The five states with targeted quality monitoring generally conducted

satisfaction surveys focused on the experience of families whose children

have special needs, reported on specific quality indicators, or established

separate quality oversight bodies. The value of this focused approach is

illustrated by Oregon’s experience. Oregon’s 1997 satisfaction survey of

parents of children with special needs informed the state that while these

29Karen Kuhlthau and others, “Assessing Managed Care For Children With Chronic

Conditions,” Health Affairs, Vol. 17, No. 4 (1998), p. 43.

State

Conducts

satisfaction

survey

Reports on

specific

quality

indicators

Establishes

separate

quality

oversight

entities

Monitors

grievance

resolution

procedures

Delaware X

District of Columbia X X X

Maryland Xa X Xa

Michiganb XX X X

Oregon X
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parents were basically satisfied with care coordination, few parents were

aware of a specific care coordination program for SSI recipients and foster

children. Oregon is collaborating with the Foundation for Accountability30

to jointly conduct a second survey that will focus on access to care,

satisfaction, and quality of services. Maryland, which has a separate quality

oversight committee, told us that it is also working with the Foundation to

pilot a tool to identify children with special needs that will be used to

develop a survey with a focus on this population. Maryland officials noted

that they have been hampered by the lack of identification tools and

techniques needed to develop satisfaction surveys and specific quality

indicators related to children with special needs.

Florida’s planned capitated specialty CMS program will include various

monitoring activities specifically for children with special needs. Michigan

and Florida have no targeted activities for children with special needs in

their general Medicaid managed care programs. However, both states have

developed a wide variety of quality-monitoring activities that are either

currently implemented or planned for their separate children’s programs,

such as collecting and analyzing encounter data specifically for children

with special needs and performing focused clinical studies. These targeted

quality assurance mechanisms are specific to children who qualify for title

V services, and therefore they do not cover all of the BBA-defined children

with special needs.31

Observations While the number of states enrolling children with special needs in

capitated Medicaid health plans has grown significantly since the mid1990s, diversity exists among states’ approaches. States vary considerably

in terms of both enrollment characteristics and requirements adopted to

ensure that health plans address these children’s expected additional needs

for health care and services.

States recognize the need to adopt some additional health plan

requirements to ensure adequate care for children with special needs, but

the scope of their requirements varies, and sometimes the requirements are

30The Foundation for Accountability is a nonprofit institution that develops consumerfocused quality measures and supports public education about health care quality.

31Michigan officials said that title V children may also qualify for SSI or Katie Beckett.
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optional. The usefulness of some safeguards may be lessened when states

choose to delegate to health plans decisions on whether and how to

provide various measures. Additionally, difficulties in implementing some

of these safeguards likely influence their effectiveness—for example, there

are fewer pediatric specialty providers, especially in rural areas, and the

development of health-based, risk-adjusted capitation rates is affected by

considerable administrative and data requirements.

Because the interim criteria are applied only to mandatory capitated

programs that are new or up for renewal, not all states’ programs are

subject to the criteria, and those that are may not undergo review for some

time. Additionally, because they are required only for the BBA-defined

children with special needs, the interim criteria may inherently fail to

protect all children with special needs, because some states have identified

other children outside the BBA categories whom they acknowledge as

having special needs.

HCFA’s planned revisions to the interim criteria provide an opportunity to

add additional safeguards and to address the lack of specificity in some

safeguards in the initial version. While the interim criteria are fairly general,

HCFA intends to revise the requirements to provide increased specificity

and to reflect recent research and proposed federal regulations for

Medicaid managed care. In light of the increase in the number of states

enrolling children with special needs in capitated managed care and states’

limited implementation of some safeguards, HCFA’s efforts to develop more

comprehensive waiver review criteria for programs enrolling these

children are important for ensuring that they receive necessary care and

services.

Agency Comments We provided HHS and officials from the four states we visited an

opportunity to review a draft of this report. HHS and the states generally

concurred with our findings. HHS’ comments are included as appendix VIII.

HHS indicated it was concerned about the report’s finding that more

rigorous work needs to be conducted to ensure that adequate health care is

delivered to children with special needs in mandatory and voluntary

Medicaid managed care plans. The Department commented that it has

implemented safeguards contained in the draft interim review criteria,

which are applied when states seek to renew existing waiver and

demonstration programs that mandatorily enroll children with special

needs. HHS said that the interim criteria are undergoing revisions intended
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to improve their focus, as we suggested in a previous report, and to address

many of the issues discussed in this report.

HHS noted that the report points to good practices already in place in

states to ensure that children with special needs receive appropriate care,

but that the report also suggests that some states may leave significant

discretion to health plans on which safeguard protections are implemented

and how they are implemented. The Department said that it believes it is

not sufficient for such safeguards to be optional or discretionary and added

that the interim criteria require mandatory implementation of safeguards in

areas such as enrollment, care coordination, and specialist access when

BBA-defined categories of children with special needs are enrolled in

capitated managed care. Currently, not all states with capitated managed

care programs have responded to the criteria.

HHS highlighted the following issues or related initiatives in progress:

• The Department agreed with our finding that adequate reimbursement

of managed care organizations and providers is a key concern and noted

that it will research issues related to adequate payment

methodologies—specifically, the development and implementation of

risk-adjustment methodologies appropriate for children.

• It also agreed with us that the absence of a uniform definition of

children with special needs hinders data collection efforts intended to

determine the number of children enrolled in managed care systems and

to evaluate the services these children receive in Medicaid managed

care. In December 2000, the Department said it will review existing tools

and strategies for identifying and monitoring children with special needs

and determine what additional resources are needed by states and

managed care organizations.

• The National Center for Health Statistics will conduct a telephone

survey, to be tested in the autumn of 2000, that is intended to provide

states with national data on health and insurance status for children

with special needs.

• HHS said that it is collaborating with other researchers to develop

sample purchasing specifications to guide and assist state Medicaid

agencies and managed care organizations on approaches for providing

quality care to children with special needs.

Finally, HHS commented, and we agree, that although our report focused

on Medicaid managed care, these same issues apply to children with
B-283257

Page 32 GAO/HEHS-00-169 Children With Special Needs

special needs who are enrolling in the State Children’s Health Insurance

Program.

Michigan commented that it had concerns regarding establishment of a

national definition of children with special needs and concurrent national

safeguard standards because states differ in how they define and identify

these children and in the Medicaid-covered services that are offered.

Therefore, Michigan said that states may be in a better position to establish

standards for children with special needs and that state participation with

HHS in addressing these issues is important. We agree that states can offer

valuable assistance to HHS in defining children with special needs and

developing safeguards for them; however, we believe that national

minimum standards like those HHS is formulating are needed to set a floor.

States, of course, may always choose to provide more protections to more

children than the minimum required by HHS.

Maryland’s comments focused on quality-monitoring efforts, with the state

noting that it defined children with special needs more broadly to include

children who may have a health or functional impairment, regardless of

whether they qualify for a specific program category included in the BBA

definition. State officials said that this broader definition is more difficult

to administer when attempting to survey children with special needs for

quality monitoring because the few assessment tools that exist are in the

design and development stage. Responses from Florida and Oregon were

limited to technical comments and clarifications. We incorporated

technical comments from HHS and the four states where appropriate.

As arranged with your offices, unless you release its contents earlier, we

plan no further distribution of this report until 30 days after its issuance

date. At that time, we will send copies to the Honorable Donna E. Shalala,

Secretary of Health and Human Services; the Honorable Nancy-Ann Min

DeParle, Administrator of HCFA; the Honorable Claude Earl Fox,

Administrator of the Health Resources and Services Administration; state

officials in the four states we visited; appropriate congressional

committees; and other interested parties. We will also make copies

available to others upon request.
B-283257

Page 33 GAO/HEHS-00-169 Children With Special Needs

If you or your staff have any questions about this report, please call me at

(202) 512-7118 or Walter Ochinko at (202) 512-7157. See appendix IX for

other GAO contacts and staff acknowledgments.

Kathryn G. Allen

Associate Director, Health Financing

and Public Health Issues
Page 34 GAO/HEHS-00-169 Children With Special Needs

Appendix I

Scope and Methodology ApApenednxidexiIs

We surveyed 36 selected state Medicaid directors concerning safeguards in

place for children with special needs in capitated Medicaid managed care.1

The states were chosen on the basis of data from the Health Care Financing

Administration (HCFA) indicating states that, as of July 1, 1999, enrolled

children receiving Supplemental Security Income (SSI) benefits and

children in foster care (two of the five categories of children with special

needs cited in the Balanced Budget Act [BBA] of 1997) in capitated

Medicaid managed care plans.2 States not sampled may enroll children in

other BBA-cited categories in their capitated programs, but data indicating

enrollment by the other categories were not readily available. The survey

focused on state policies for the identification of children with special

needs, enrollment and disenrollment options, access to pediatric primary

and specialty care providers, care coordination, risk adjustment/rate

setting, and quality assurance mechanisms.3

Our survey was based on programmatic safeguards cited as important

mechanisms to protect children with special needs in capitated Medicaid

managed care plans. We identified the safeguards through a review of the

research literature and our previous work. Experts in the field provided

comments on draft versions of the surveys.

In addition to the surveys, we conducted site visits to four states that enroll

children with special needs in capitated managed care health plans:

Florida, Maryland, Michigan, and Oregon. These states were selected after

consulting with a number of experts from HCFA, the Health Resources and

Services Administration, advocacy groups, and research organizations. The

four states provide a cross section of approaches to serving children with

special needs in capitated Medicaid managed care. Maryland and Oregon

have demonstration waivers authorized by section 1115 of the Social

Security Act, and Florida and Michigan have program waivers authorized

1

The District of Columbia is included within state totals.

2

Fifteen states were not surveyed because as of July 1, 1999, they did not enroll SSI or foster

children in capitated managed care programs. Alabama, Arkansas, Idaho, Louisiana, and

South Dakota had primary care case management (PCCM) programs but not capitated

plans. Illinois, Iowa, Kansas, Nevada, North Dakota, Oklahoma, and Rhode Island had

managed care organizations but, according to HCFA data, SSI and foster children were not

eligible for enrollment. Alaska and Wyoming do not have managed care programs, and New

Jersey does not have a waiver to enroll children with special health care needs.

3

The survey was mailed to 32 states. The four states we visited (Florida, Maryland, Michigan,

and Oregon) answered the survey questions during our in-person interviews. In some cases,

we contacted selected states by phone to clarify their responses.
Appendix I

Scope and Methodology

Page 35 GAO/HEHS-00-169 Children With Special Needs

by section 1915(b) of the Social Security Act. Appendix II provides more

information on waivers used in states’ managed care programs. In addition,

Maryland and Oregon enroll children with special needs in mainstream

managed care, while Florida and Michigan have separate managed care

programs for some children with special needs (see table 7). During our

site visits, we used a structured interview protocol to obtain information on

the care of children with special needs. We interviewed various people

involved in the care of these children, including officials with the state

Medicaid and title V programs, health care plan administrators and

providers, advocates for children with special needs, and family members

of children with special needs.

In the course of this study, we analyzed numerous documents, such as

federal law, state regulations, policy statements, and quality guidance. In

addition, we reviewed journal articles and other publications on children

with special health care needs and managed care. For the four states, we

reviewed waiver applications and renewals, requests for proposals to

contract for capitated Medicaid managed care plans, program evaluations,

enrollment and disenrollment reports, and risk-adjustment methodology

reports.

In addition, we interviewed officials from HCFA headquarters and its

regional offices that are responsible for the states we studied. We discussed

HCFA’s interpretation of the BBA, general waiver review, and the interim

criteria developed by HCFA for children with special needs in capitated

Medicaid managed care plans.
Appendix I

Scope and Methodology

Page 36 GAO/HEHS-00-169 Children With Special Needs

Table 7: Overview of Medicaid Managed Care Programs in Florida, Maryland, Michigan, and Oregon That Enroll Children With

Special Needs

a

In Florida, Medicaid beneficiaries are mandatorily enrolled in managed care. Once enrolled,

beneficiaries choose between a health maintenance organization (HMO) and a PCCM option.

However, if no choice is made, an SSI child could be assigned to either option, while foster, adoption

assistance, and other out-of-home placement children would only be assigned to the PCCM option.

b

In Maryland, children with chronic, complex medical conditions may be eligible to enroll in the Rare

and Expensive Case Management fee-for-service program, instead of in HealthChoice.

c

Under the Children’s Special Health Care Services (CSHCS) program, title V children may choose

between a fee-for-service program and a capitated health plan, referred to as a CSHCS Special Health

Plan.

d

In 1994, Oregon began enrolling its Medicaid population, except for the disabled and elderly, in

capitated health plans. The state refers to this as phase I. Approximately a year later, the state began

phase II, in which the aged, blind, and disabled (SSI) and foster children were enrolled in capitated

health plans.

e

These programs did not note any specific exclusions of BBA categories of children.

Source: GAO analysis.

Florida Maryland Michigan Oregon

Children’s

Medical

Services HMO optiona HealthChoiceb

CSHCS Special

Health Planc

Comprehensive

Health Plan

Oregon Health

Plan

Date implemented 1998 1991 1997 1998 1997 1994−Phase I

1995−Phase IId

Waiver type 1915(b) 1915(b) 1115 No waiver 1915(b) 1115

General or

separate program

Separate General General Separate General General

Program area Statewide Statewide Statewide Seven counties in

southeast portion

of state

Statewide Statewide

Enrollment policy Voluntary Voluntary Mandatory Voluntary Mandatory Mandatory

Children with

special needs

enrolled

Title V SSI, foster

care, adoption

assistance

SSI, title V, foster

care, adoption

assistance

Title V SSI SSI, title V, foster

care, adoption

assistance

Children with

special needs

excluded

e Title V, Katie

Beckett

Katie Beckett e Title V, foster care,

Katie Beckett

e

Enrollment of

children with

special needs

17,425 as of

Sept. 1, 1999

25,908 as of

Aug. 1999

24,910 as of

June 1999

821 as of

Aug. 1, 1999

Not available Not available
Page 37 GAO/HEHS-00-169 Children With Special Needs

Appendix II

Medicaid Managed Care for Children With

Special Needs ApendxiI

Medicaid expenditures for children who qualify because of a disability

represent a disproportionate share of program costs. HCFA identified 1

million children with disabilities in the Medicaid program, which may not

include all BBA categories of children with special needs. These children

constituted 7 percent of beneficiaries under age 21, but they accounted for

27 percent of the $26 billion of payments for children.1

States commonly enroll beneficiaries in two types of Medicaid managed

care: capitation and primary care case management (PCCM). Under

capitation, a health plan receives a fixed monthly fee per enrollee (the

capitation fee) in exchange for providing all needed covered services. The

PCCM model is similar to a fee-for-service arrangement except that a

primary care provider is paid a monthly, per-capita case management fee to

coordinate care for beneficiaries. About five times as many beneficiaries

are enrolled in capitated health plans as in PCCM enrollment

arrangements. Capitated plans typically emphasize primary care and cost

containment efforts and thus may place limitations on access to the highly

specialized and costly medical services that populations with special needs

often require. Thus, the greatest concern for children with special needs in

managed care has focused on capitated programs.

States must comply with certain federal statutory requirements for the

development and oversight of their managed care programs. The BBA

allowed states to establish mandatory capitated programs for most

Medicaid beneficiaries through a state plan amendment that states submit

to HCFA, the federal agency responsible for Medicaid. However, this

provision does not apply to children with special needs, Indians who are

members of federally recognized tribes, and beneficiaries eligible for both

Medicare and Medicaid. For mandatory enrollment of these beneficiaries,

states must obtain HCFA approval in the form of a waiver of certain

statutory provisions, such as beneficiaries’ freedom to choose their

providers. Waivers are of two types: program and demonstration. The

program waiver, known as the 1915(b) freedom-of-choice waiver, allows

states to require that each beneficiary enroll in a capitated managed care or

a PCCM plan. Demonstration waivers authorized by section 1115 of the

Social Security Act allow states to have most Medicaid requirements

waived in order to test concepts likely to assist in promoting program

objectives. The nature of HCFA’s requirements for and oversight of waiver

1

Our figures for payments for children and the percentage of payments for disabled children

are based on 1997 data because separate 1998 data for these populations were not available.
Appendix II

Medicaid Managed Care for Children With

Special Needs

Page 38 GAO/HEHS-00-169 Children With Special Needs

programs depends on the type of waiver that is authorized—generally,

section 1115 demonstration waivers are subject to more terms and

conditions and undergo more oversight than 1915(b) waivers.

While states have sought to include children with special needs in Medicaid

managed care programs, there is some debate regarding the

appropriateness of managed care for children with special needs. Because

of their need for highly specialized and costly medical services, and the

likelihood that these children have established relationships with

providers, children with special needs may face difficulties in managed

care plans, which have incentives to limit the choice of or access to

providers and to emphasize primary care and cost containment efforts. As

a result, in June 1999, HCFA instituted the “Interim Review Criteria for

Children with Special Needs”—the first set of requirements for states

mandating the enrollment of children with special needs in capitated

managed care programs.

HCFA’s interim criteria, summarized in table 8, cover 11 areas, such as

provider capacity, access to specialists, and plan payment methodology.

These 11 areas can be grouped into the 6 areas of safeguards discussed in

this report. HCFA plans to issue a revision of the interim criteria in the fall

of 2000 to reflect states’ best practices and findings from a BBA-required

report on appropriate safeguards for special needs populations.2

Additionally, the revised criteria will draw on regulations implementing

BBA Medicaid managed care standards, which are expected to be

published in the fall of 2000.3

2

The BBA mandated a report to the Congress on safeguards needed to ensure that the health

care needs of individuals with special needs are adequately met under Medicaid managed

care arrangements. HCFA completed a draft report of the study in the summer of 1999;

however, a final version had not been issued by July 2000. HCFA did not have an estimated

issuance date.

3

In September 1998, HCFA published a Notice of Proposed Rule Making to amend Medicaid

regulations to implement many of the BBA provisions related to Medicaid managed care.

See Medicaid Program; Medicaid Managed Care; Proposed Rule, 63 F.R. 52,021, 52,092

(1998). HCFA officials said the final regulations will include provisions for populations with

special needs in such areas as medical necessity, reimbursement, and quality assurance.
Appendix II

Medicaid Managed Care for Children With

Special Needs

Page 39 GAO/HEHS-00-169 Children With Special Needs

Table 8: Summary of HCFA’s Interim Review Criteria for Children With Special Needs

a

The interim criteria also include a requirement that the state adequately address HCFA guidance

regarding BBA provisions relevant to Medicaid managed care.

b

Auto-assignment is the process by which individuals who do not select a health plan or a provider

within a designated time are automatically assigned to a plan or provider.

Source: HCFA’s “Interim Review Criteria for Children with Special Needs.”

General safeguard area

HCFA’s interim criteria

safeguard area HCFA requirements for state managed care programsa

Program development • Public process • Stakeholders such as advocates, providers, and consumer groups are

included during waiver development.

• Definition of children with

special needs

• Definition includes at least the BBA categories of children with special

needs.

Enrollment procedures • Identification • Children with special needs are identified, and specific data are collected

on these children.

• Enrollment/disenrollment⋅ • Enrollment includes outreach activities and assistance from specially

trained personnel, and children with special needs can disenroll or reenroll

in another plan for good cause. The auto-assignment process assigns

these children to an existing or otherwise capable provider.b

Provider networks • Provider capacity • Health plans should have sufficient experienced providers to serve children

with special needs, and the state will monitor provider capacity.

• Specialists • Health plans should have sufficient specialists to whom children with

special needs have direct access or can use as primary care physicians.

Specific specialist types are either included in health plan networks or

children are allowed to see specialists not in the networks.

Care coordination • Coordination • Children with special needs must receive a needs assessment and

subsequent treatment plan, along with case management services.

• Coordination is required among agencies, advocates, and other systems of

care or funding sources serving children with special needs.

Reimbursement • Payment methodology • The payment methodology accounts for children with special needs

enrolled in capitated managed care.

Targeted quality

monitoring

• Quality of care • Specific performance measures and performance improvement projects

addressing children with special needs must be developed.

• Plan monitoring • Access to specialists and to services, quality of care, coordination of care,

and enrollee satisfaction is monitored.

• Americans With Disabilities Act access standards are monitored.

• Medical necessity is defined for health plans, and its application is

monitored.
Page 40 GAO/HEHS-00-169 Children With Special Needs

Appendix III

State Managed Care Enrollment Policies for

Children With Special Needs ApendxiI

Enrollment of the categories of children with special needs identified in the

BBA in capitated managed care programs varies among states (see fig. 1).

Some states did not provide data on all categories of children with special

needs.
Appendix III

State Managed Care Enrollment Policies for

Children With Special Needs

Page 41 GAO/HEHS-00-169 Children With Special Needs

Figure 1: Managed Care Enrollment Policies as of October 31, 1999

Note: The states we visited are in bold lettering.

a

Other children in foster care or otherwise in an out-of-home placement.

b

This state has no state option/waiver for Katie Beckett.
Appendix III

State Managed Care Enrollment Policies for

Children With Special Needs

Page 42 GAO/HEHS-00-169 Children With Special Needs

c

Colorado, Florida, Massachusetts, Mississippi, Montana, New York, Washington, and Wisconsin allow

voluntary enrollment in capitated managed care plans of children with special needs who do not fall

into a BBA category.

d

This state did not provide data for this category.

e

Tennessee and Utah have mandatory enrollment in capitated managed care plans of children with

special needs who do not fall into a BBA category.

f

According to HCFA, as of July 1, 1999, West Virginia was enrolling SSI and foster children through a

1915(b) waiver and, therefore, was selected for our survey. As of October 31, 1999, West Virginia was

no longer enrolling these children in capitated managed care programs.

Source: GAO survey of state Medicaid directors.
Page 43 GAO/HEHS-00-169 Children With Special Needs

Appendix IV

State-Reported Numbers of Children in BBA

Categories Enrolled in Capitated Health Care

Plans ApendxiIV

Table 9 shows data from 20 states on the number of children with special

needs enrolled in capitated Medicaid managed care plans. Nineteen states

provided data through our survey; Florida provided its data to HCFA during

the recent review of the state’s 1915(b) waiver renewal application, and we

obtained the data from HCFA. States’ enrollment figures are from different

points in time, are combinations of enrollment in two or more BBA

categories, or both.

Table 9: Number of Enrolled Children

Notes: Data are as of June 1, 1999, unless otherwise specified. The data for the states we visited are

in bold lettering.

a

SSI data are as of October 1, 1999, and title V data are as of June 30, 1999.

b

This state did not provide data for this category.

c

The figure for foster care (title IV-E) includes other children in foster care or otherwise in an out-ofhome placement as of August 20, 1999.

State SSI Title V

Katie

Beckett

Foster care

(title IV-E)

Adoption

(title IV-E)

Other children in foster

care or otherwise in an

out-of-home placement

Colorado 3,091a 54a b 610 25 c

Connecticut 3,451db e 5,500f 2,000f 2,500f

Delaware 3,600 bb b b b

District of Columbia 2,036 be g g g

Florida 21,900 g g 1,447 1,254 430

Maryland 12,000 b g 10,910 h 2,000

Massachusetts 2,002ib b 539 j j

Minnesota g 86 b 1,491 g 805

Mississippi 566 b 4 10 k b

Missouri lb g 3,466 3,595 4,204

Montana 6m 00 1m g 7m

Nebraska bg g 4,780 g n

New Hampshire o b 28 42 37 b

New Mexico 6,637 b p 2,331 q q

New York 11,676rb b b g g

Utah 1,013 b b 804 914 1,404s

Vermont bb g 481 249 405

Virginia 8,509tb g g g g

West Virginia b 529 bbb b

Wisconsin 189 bg g g g
Appendix IV

State-Reported Numbers of Children in BBA

Categories Enrolled in Capitated Health

Care Plans

Page 44 GAO/HEHS-00-169 Children With Special Needs

d

SSI data are as of November 1, 1999.

e

This state has no state option/waiver for Katie Beckett.

f

Data for foster care (title IV-E), adoption assistance (title IV-E), and other children in foster care or

otherwise in an out-of-home placement are as of September 1, 1999.

g

This state excludes this BBA category from enrollment.

h

The figure for foster care includes adoption assistance.

i

SSI data are as of September 28, 1999.

j

The figure for foster care includes adoption assistance and other children in foster care or otherwise in

an out-of-home placement as of September 28, 1999.

k

The figure for foster care includes adoption assistance.

l

Missouri does not use its SSI eligibility criteria to determine Medicaid eligibility: it is one of several

states allowed to use 1972 state assistance eligibility rules to determine Medicaid eligibility for disabled

recipients. These states are often called “209(b)” states because the origin of this requirement was

sec. 209(b) of the Social Security Amendments of 1972. Missouri is therefore unable to determine the

number of SSI children who are enrolled in its capitated Medicaid program.

mThe data for SSI, foster care, and other children in foster care or otherwise in an out-of-home

placement are as of October 1999.

n

The figure for foster care includes other children in foster care or otherwise in an out-of-home

placement.

o

New Hampshire is also a 209(b) state and is therefore unable to determine the number of SSI children

who are enrolled in its capitated Medicaid program.

p

The figure for SSI includes Katie Beckett children as of October 1999.

q

The figure for foster care includes adoption assistance and other children in foster care or otherwise in

an out-of-state placement as of October 1999.

r

The figure for SSI includes children through age 20.

s

The figure for other children in foster care or otherwise in an out-of-home placement includes other

categories of children considered by Utah to have special needs.

t

SSI data are as of May 27, 1999.

Source: GAO survey of state Medicaid directors, unless otherwise specified.
Page 45 GAO/HEHS-00-169 Children With Special Needs

Appendix V

Care Coordination for Children With Special

Needs in Four States ApendxiV

While each of the four states we visited has a care coordination system to

assist children with special needs in accessing needed services, the

systems are all different. For example, in Florida children are assigned to

different types of care coordinators on the basis of their level of need,

while in Michigan families can access the services of three different types

of care coordinators. Furthermore, in both Maryland and Oregon, health

plans are required to have a designated contact person for individuals with

special needs, although the health plans are given discretion in deciding the

role of this individual. Finally, state-employed nurses or social workers

serve as care coordinators in Florida, while Michigan’s specialty program

uses both health plan and community-based care coordinators. In both

Maryland and Oregon, care coordinators are hired by the health plans. The

care coordination systems in each of the four states are summarized in

table 10.

Florida’s Children’s

Medical Services

(CMS)

All children enrolled in the state’s CMS program (for title V children)

receive care coordination services. Upon enrolling in CMS, the family

works with one of the state’s nurses to complete a Child and Family

Database Form, a three-page form that details the child’s and the family’s

medical history, the child’s physiological information, and a family support

assessment.1 On the basis of the complexity of their case, children in CMS

are generally assigned to one of two types of case managers. Children with

more severe and complex cases are assigned to a nurse specialist, while

senior community health nurses handle individuals with less complicated

cases.2 The main difference between these two types of case managers is

that nurse specialists are required to make home visits for each child every

6 months, while community health nurses do not visit beneficiaries’ homes.

In addition, nurse specialists tend to have much smaller caseloads because

the children they assist have more complicated needs. According to the

nursing director of the CMS Tampa regional office, the average caseload is

1

Possible physiological concerns are tracked for ten basic areas: vision, hearing, language,

respiration, circulation, integument (pertaining to the skin), neuro-musculo-skeletal

function, digestion/hydration, bowel function, and genitourinary function. The family

support assessment asks parents to list environmental (food, shelter, work); psychosocial

(schooling, child care); health-related (child development, medications, therapies); and

physiological (medical equipment, emergency contacts) concerns they have regarding their

child’s condition or the family’s situation.

2

In addition to nurse specialists and community health nurses, some case managers

coordinate care for children with specific diagnoses, such as HIV/AIDS and brain and spinal

cord injuries, or who obtain services from other programs, such as early intervention.
Appendix V

Care Coordination for Children With Special

Needs in Four States

Page 46 GAO/HEHS-00-169 Children With Special Needs

50 children for nurse specialists and 150 children for community health

nurses.

CMS case managers, who are either nurses or social workers employed by

the state, undergo a preservice training in which they learn about family

support services and how to access community resources outside the

medical field. Furthermore, CMS has a contract with a university-affiliated

center for child development to provide additional training for its case

managers. At the time of our visit, CMS was also in the process of

revamping its case manager training with the hope of providing clinical

updates through distance learning in the future.

In addition to coordinating beneficiaries’ medical services, CMS case

managers are expected to coordinate with other entities from which the

child receives services, including schools, day care and respite care

agencies, and other community agencies. Case managers also attend court

on the CMS enrollee’s behalf, as well as foster care and school meetings.

For example, CMS case managers have worked with parents and the

schools to transfer children from schools without a full-time nurse to those

that have a nurse on staff and are therefore better prepared to serve the

child. However, according to families we interviewed, some case managers

take a more active role in a child’s care than others. CMS officials agreed

that some case managers, regardless of training, are simply better than

others at addressing all of the child’s needs.

When the CMS program moves to a risk-based, capitated program,

children’s medical care will be provided by an integrated care system, as

opposed to by independent providers. Although the integrated care system

will be responsible for authorizing and paying for services and for routine

utilization management, the CMS state agency will continue to be

responsible for care coordination.3 Therefore, the care coordination system

will remain unchanged.

3

According to the American Association of Health Plans’ Web site, utilization review or

management comprises a set of procedures used by purchasers of health benefits to contain

health care costs through assessment of the appropriateness of care, usually before the care

is provided. (www.aahp.org/services/consumer_information/ definitions/definit.html).
Appendix V

Care Coordination for Children With Special

Needs in Four States

Page 47 GAO/HEHS-00-169 Children With Special Needs

Maryland’s

Healthchoice

In Maryland, all children with special needs are eligible for care

coordination services, but according to state officials, not all these children

receive such services since many families do not request or want the

assistance. However, all Medicaid health plans in the state make the

services of a special needs coordinator (SNC) available to all individuals

with special needs, including children with special needs, who request the

service.4 In addition to SNCs, health plans have other case managers on

staff or under contract. SNCs, who are usually nurses or social workers,

serve as liaisons among Medicaid, the health plan, populations with special

needs, and other case managers. In some health plans, SNCs have

responsibility for coordinating beneficiaries’ care, while in other plans they

serve more as patient advocates and leave the coordination services to case

managers. However, training from the state regarding populations with

special needs is targeted to the SNCs who are responsible for informing

other case managers.

Maryland leaves much of the organization of the care coordination system

for populations with special needs—which includes the type of services

provided, staff qualifications, and caseload—to the discretion of the health

plan. State regulation provides that health plans be responsible for

“assessing, planning, coordinating, monitoring and arranging the delivery

of medically necessary and appropriate health-related services.” Within

these general guidelines, health plans have considerable leeway to set up

programs. We spoke with representatives of one health plan that requires

its SNC to be either a registered nurse or a social worker and to have at

least 3 years of experience with a health or human services organization.

This plan’s SNC acts as a patient advocate and a case manager, while SNCs

in other plans may not serve as case managers but may have the

responsibility of managing high-cost cases.

Generally, case managers conduct an initial assessment of beneficiaries

referred for care coordination and tend to be mobile, allowing them to visit

beneficiaries’ homes for an environmental assessment if necessary. From

this assessment and input from the primary care physician, a care plan is

developed that includes an evolving set of short- and long-term goals and

may address medical, social, and educational needs. If a case manager

4

Maryland defines seven populations as having special needs: children with special needs,

individuals with developmental disabilities, individuals with physical disabilities, pregnant

and postpartum women, the homeless, individuals with HIV/AIDS, and substance abusers.
Appendix V

Care Coordination for Children With Special

Needs in Four States

Page 48 GAO/HEHS-00-169 Children With Special Needs

elects to involve the SNC in a case, then the case manager may be

responsible for the medical aspects of the individual’s care, while the SNC

may deal with some of the social aspects, such as ensuring the family home

has working electricity. To keep abreast of the beneficiary’s progress, the

case manager remains in touch with the family and the primary care

physician. Case mangers in one plan have an active caseload of about 30

beneficiaries, while there is no limit on the SNC’s caseload. However, other

plans may have vastly different systems.

Michigan’s Children’s

Special Health Care

Services (CSHCS)

Special Health Plans

The CSHCS Special Health Plans are a Medicaid managed care option

available to title V children. The special health plans provide care

coordination services to all enrollees.5 Three different types of care

coordinators, each with distinct responsibilities, are available to plan

enrollees. Upon enrollment, each family is contacted by the plan level care

coordinator (PLCC), an individual who works for the health plan as a

reviewer and authorizer of services and is available to answer enrollees’

questions. The PLCC works with new enrollees to help them find an

appropriate local care coordinator, the second type of coordinator involved

with enrollees. Local care coordinators, often nurses who work in a

community agency, such as the local title V program, the local health

department, or a home health agency, are paid by the special health plan to

assist families in developing an individualized health care plan (IHCP)—the

centerpiece of the system’s care coordination program. One health plan

pays each local care coordinator a flat fee to cover the preparation of the

IHCP and any ongoing care coordination provided, while a second plan

pays the coordinator a smaller fee for the completion of the IHCP and

preauthorizes payment for two other contacts per year. Additional contacts

beyond these two must be authorized in order for the local care

coordinator to be reimbursed. Finally, each plan has a parent of a child with

special needs on staff to serve as the plan’s family-centered care

coordinator. The family-centered care coordinator’s primary responsibility

is to provide guidance and assistance to enrolled families and to provide a

family perspective to the plan. According to enrolled families, having a

parent of a child with special needs on staff who can empathize with their

situation is essential to the program’s success.

5

CSHCS Special Health Plans also enroll title V children who are not Medicaid-eligible.
Appendix V

Care Coordination for Children With Special

Needs in Four States

Page 49 GAO/HEHS-00-169 Children With Special Needs

The IHCP contains a comprehensive record of the child’s medical, social,

and educational needs. Information detailed on an IHCP includes

demographic information; a list of the child’s providers; all of the child’s

medical, equipment, and supply needs (for example, durable medical

equipment, home health services, and medications); and therapy,

transportation, and educational needs. Once it is compiled, the family, the

PLCC, and the child’s principal coordinating doctor must approve the IHCP

before it can take effect.6 In addition to communicating the overall plan of

care to the various providers, the IHCP also serves as a referral and prior

authorization for care. IHCPs are supposed to be completed for each new

enrollee within 60 days of enrollment and must be updated annually. In

addition, the IHCP may be amended as new care needs arise.

Although advocates believe that the special health plans’ care coordination

programs cover the necessary services, there have been implementation

problems. An advocate has reported that the health plans are not being

given enough funding from the state to build the infrastructure necessary to

provide coordinated medical and social services, making it difficult for the

plans to build their care coordination systems. In fact, at least one special

health plan reported difficulty in finding individuals who are capable and

willing to serve as local care coordinators and to develop IHCPs. In

addition, some physicians in one of the special health plans are unwilling to

serve as principal coordinating doctors or to agree on the IHCPs written by

the local care coordinators. As a result, the plan is unable to complete

many IHCPs in a timely fashion.

The Oregon Health

Plan

Oregon’s care coordination program is targeted to individuals who meet the

state’s own definition of special needs individuals, since beneficiaries in the

state’s phase II population—including SSI and foster care children—can

access the services of an exceptional needs care coordinator (ENCC). The

ENCC serves as the health plan’s point of contact for members, medical

providers, and others with an interest in the health care of elderly or

disabled beneficiaries. Although the state did specify that the ENCC service

should include a specialized case management function housed in managed

care plans to assist the phase II population in obtaining services and

coordinating care, it provided health plans with broad discretion in

implementing the program. As a result, the roles, responsibilities, and

6

A principal coordinating doctor—a pediatrician, specialist, or subspecialist—is selected by

the family to ensure that providers of care are working together.
Appendix V

Care Coordination for Children With Special

Needs in Four States

Page 50 GAO/HEHS-00-169 Children With Special Needs

backgrounds of ENCCs vary across plans. For example, one health plan

uses the ENCC to conduct utilization review for high-cost cases, while in

another plan the ENCC serves solely as a patient advocate. Generally,

however, the ENCC assists beneficiaries in accessing needed medical

services and may also advocate on their behalf and refer them to

appropriate agencies that are able to meet their social needs. Since ENCCs’

functions differ among plans, their active caseload may range from as few

as 25 cases to as many as 100. Finally, some health plans seek trained social

workers to fill their ENCC position, while others prefer nurses with

knowledge of community agencies or utilization review.

Although all phase II beneficiaries are eligible to receive the services of an

ENCC, not all of the population actually receives the service. In most health

plans, ENCCs do not initiate contact with a beneficiary; rather, either the

beneficiary must request the service or the beneficiary’s case must be

referred to an ENCC. At the time of health plan enrollment, individuals may

be referred to the ENCC for services through the use of the state’s

Continuity of Care Referral Form (CCR). The CCR, which may be filled out

by the enrollment caseworker, contains information about the beneficiary’s

living arrangements, health status, medical needs, and any special

concerns. Although the CCR provides enrollment caseworkers with a tool

to convey a beneficiary’s needs to an ENCC, there is no requirement that

the CCR be completed for each enrollee or at any specific time. Therefore,

it is unclear how many eligible individuals are actually referred to an ENCC

using this mechanism. Parents may also request the services of an ENCC

for their eligible child with special needs. However, a 1997 satisfaction

survey of parents of children with special needs found that 86 percent of

phase II parents were not aware of the availability of the ENCC service.

Thus, many children who may have benefited from the assistance of an

ENCC have not received the service.
Appendix V

Care Coordination for Children With Special

Needs in Four States

Page 51 GAO/HEHS-00-169 Children With Special Needs

Table 10: Care Coordination Activities for Children With Special Needs in Four States

Program

BBA children

enrolled

Medical

services onlya

Medical

services plus

othersb

Location of

care

coordinator Primary features

Florida’s Medicaid

HMO option

SSI, title IV-E foster

care and adoption

assistance, out-ofhome placement

X Health plan Medicaid HMOs are required to

provide care coordination services to

only two populations: individuals with

developmental disabilities and children

with mental health needs. For

individuals with a chronic disease,

health plans are required to develop a

follow-up program to ensure

appropriate treatment to minimize

deterioration.

Florida’s CMSc Title V X State Each child enrolled in CMS is assigned

to one of two different types of case

managers on the basis of the

complexity of the child’s needs and an

assessment of available family

support.d

Maryland’s

HealthChoice

SSI, title V,

title IV-E foster care

and adoption

assistance, out-ofhome placement

Xe Health plan All Medicaid health plans are required

to designate an SNC to serve as the

point of contact for individuals

belonging to one of the state’s seven

populations with special needs, which

includes children with special needs.

The care coordination structure and

service provision differ by plan.

Michigan’s

Comprehensive

Health Plan

SSI ffff

Michigan’s CSHCS

Special Health Plan

Title V X Health plan,

community

All enrolled children receive the

services of two different care

coordinators: a PLCC, whose role is to

review and authorize services, and a

local care coordinator, who helps

develop a detailed health care plan for

each child.

Oregon Health Plan SSI, title V, title IV-E

foster care and

adoption assistance,

out-of home

placement

Xg Health plan Oregon’s SSI and foster children can

request the services of an ENCC, a

designated advocate to assist in

organizing their care needs. However,

ENCCs do not initiate contact with

beneficiaries; unless their assistance

is requested, no services are provided.
Appendix V

Care Coordination for Children With Special

Needs in Four States

Page 52 GAO/HEHS-00-169 Children With Special Needs

a

The care coordinator assists the child only in coordinating medical services, such as doctors’

appointments and referrals to specialists.

b

In addition to coordinating medical services, the state requires care coordinators to assist children in

coordinating other social, behavioral, or educational services, such as special education and family

support services.

c

CMS is not currently a capitated system, but its case management services will remain unchanged

when the system becomes capitated. Although children will soon be served by integrated care

systems, the responsibility for care coordination will remain with the state agency.

d

Children with HIV/AIDS or brain and spinal cord injuries, or those in early intervention programs, are

assigned to special case managers.

e

In Maryland, there is no requirement that children’s social needs be coordinated, although some

SNCs do assist beneficiaries in obtaining needed social services.

f

Michigan’s Comprehensive Health Plan does not require health plans to provide care coordination to

their beneficiaries.

g

Although some ENCCs may refer beneficiaries to community agencies that can serve their social

needs, ENCCs’ efforts are concentrated on beneficiaries’ medical needs.
Page 53 GAO/HEHS-00-169 Children With Special Needs

Appendix VI

Health-Based Risk-Adjustment Systems Used

by Maryland, Michigan, and Oregon ApendxiVI

Three of the four states we visited use health-based risk-adjustment

systems for at least some of their beneficiaries enrolled in managed care

programs (see table 11). Since 1997, Maryland has adjusted capitation rates

using a variation of the Adjusted Clinical Groups (ACG) system, which

assesses beneficiaries’ prior use of health services to assign them to

various risk categories.1 Maryland estimates that about two-thirds of

beneficiaries who qualify for SSI are in ACG-adjusted categories, while only

about 50 percent of generally healthy families and children have the

necessary prior health data to be included in ACG-adjusted categories.

When the state begins using encounter data from health plans in 2001,

replacing its reliance on older and increasingly limited fee-for-service

information, it expects to increase the number of beneficiaries with ACGadjusted capitation payments to health plans.2 Since 1998, Oregon has used

a form of the Disability Payment System (DPS), a risk-adjustment system

developed specifically for Medicaid programs.3 Oregon applies risk

adjustment to the capitation rates paid primarily for SSI beneficiaries.4

Michigan uses a specially designed system to address the higher expected

costs of treating children with special needs in its Children’s Special Health

Care Services Special Health Plans.5 In the fall of 2000, Michigan plans to

implement the DPS system of risk adjustment for people with disabilities

1

For those beneficiaries without sufficient diagnostic data, Maryland relies on adjustment by

two eligibility categories (families and children, or the disabled); age; sex; and region (city

or county).

2

Encounter data are individual-level data from managed care plans for each service

provided to each enrollee. The data allow states to identify the care received by individuals

and the provision of any procedure.

3

For more information regarding the DPS, see Richard Kronick, Tony Dreyfus, Lora Lee, and

Zhiyuan Zhou, “Diagnostic Risk Adjustment for Medicaid: The Disability Payment System,”

Health Care Financing Review, Vol. 17, No. 3 (spring 1996).

4

Oregon’s risk-adjustment system is applied to two additional groups: those Medicaid

beneficiaries receiving state-provided assistance until they receive approval for SSI benefits

and a category of newly eligible beneficiaries, most of whom are single adults and childless

couples older than 19 years of age.

5

In part because of concerns that program enrollment was so small that appropriate

capitation rates could not be developed (593 children had enrolled as of Aug. 18, 1999),

Michigan amended its health plan contracts soon after the program began in 1998 to add

additional protections from financial losses. The state agreed to conduct a study at the end

of the contract period comparing actual costs with those that might be expected for similar

children in a fee-for-service system, and to reimburse health plans for higher-than-expected

costs if necessary.
Appendix VI

Health-Based Risk-Adjustment Systems Used

by Maryland, Michigan, and Oregon

Page 54 GAO/HEHS-00-169 Children With Special Needs

enrolled in its general Medicaid program, which include children eligible

for SSI.

Table 11: Health-Based Risk-Adjustment Systems Used by Maryland, Michigan, and Oregon

a

Because the Michigan special health plans are a component of the state’s CSHCS program, which

also enrolls non-Medicaid-eligible children, a fifth variable addresses whether the child is Medicaideligible.

Source: State interviews and reports.

State Description

Maryland Risk adjustment is conducted for two groups: families and children, and the disabled population. Within these

two separate categories, the ACG classification is used to assign Medicaid beneficiaries to 1 of 52 unique

groups on the basis of their age, sex, and inpatient and ambulatory diagnoses identified in prior medical claims.

The state then uses these ACG data to define nine risk-adjustment categories that reflect relatively similar uses

of resources. Each beneficiary is then assigned to one of the nine risk-adjustment categories according to the

original ACG classification. Maryland also includes other adjustments: children under 1 year, pregnant women,

and people with AIDS are in separate categories, and various other programs are “carved out” of the state’s riskadjusted payments, including costs for the Rare and Expensive Case Management program, specialty mental

health services, various HIV/AIDS services, services for infants, and long-term care services.

Michigan CSHCS

Special Health Plans

The risk-adjustment system includes five variables: (1) four diagnostic categories that incorporate the 2,700

diagnoses identified by the state title V program, (2) the age of the child with special needs, (3) the county of

residence, (4) whether the child also has private insurance, and (5) Medicaid eligibility.a

Oregon The state uses a form of the DPS system developed specifically for Medicaid programs that employs past feefor-service claims data to identify high-cost diagnoses. Specifically, the DPS uses claims data to count

diagnoses and estimate the cost in a given year for a person with a specific disability in a previous year. The

system uses 18 groupings corresponding to a body system, type of illness, or disability. These groupings are

further distributed to 43 subcategories according to relative costs. The state also adjusts capitation rates

according to maternity and newborn prevalence within each plan, and several adult eligibility categories for

methadone treatment rates within each plan and region. In the fall of 2000, Oregon will move to a revision of the

DPS—the Chronic Disease and Disability Payment System. This system is designed specifically for Medicaid

populations and will use fee-for-service data from seven states to identify high-cost diagnoses, which will then

be categorized into 19 major categories and 58 subcategories.
Page 55 GAO/HEHS-00-169 Children With Special Needs

Appendix VII

Selected Quality-Monitoring Activities That

Can Be Targeted to Children With Special

Needs ApendxiVI

Many of the quality-monitoring requirements for managed care programs

are specified in Medicaid law and regulations, which were amended in 1997

by the BBA.1 However, most of this monitoring activity is not specifically

targeted to any eligibility group. Each state must develop and implement a

quality assessment and performance improvement strategy that includes

procedures for monitoring and evaluating the quality and appropriateness

of care and services to beneficiaries. Additionally, managed care

organizations are required to have an internal quality assessment and

performance improvement program whereby the health plan must achieve

minimum performance levels on standardized quality measures and

undertake performance improvement projects in various clinical and

nonclinical areas. State agencies also must provide for an annual

independent, external review of the quality of services furnished under

each state agency contract with a managed care organization.2

Quality monitoring can be carried out using various measures or processes,

including clinical studies, beneficiary satisfaction surveys, and medical

record audits (see table 12). These quality-monitoring activities can be

modified to include a specific focus on children with special needs within a

current Medicaid-wide program, or can be developed specifically for these

children. States can focus activities by increasing sample sizes for children

with special needs, holding focus groups, or conducting enrollee

interviews. For example, because the number of children with special

1

For more information on the major federal requirements for monitoring Medicaid managed

care programs, see GAO/HEHS-00-37, Mar. 3, 2000, app. II, p. 42. Federal requirements

pertaining to monitoring are specified in sec.1903(m) of the Social Security Act and 42 C.F.R.

434.

2

HCFA has collaborated with various public and private agencies to develop a range of

technical assistance tools and guidance to provide resources for states in implementing

quality assurance and improvement programs in Medicaid. Among them is “A Health Care

Quality Improvement System for Medicaid Managed Care—A Guide for States,” the product

of the agency’s Quality Assurance Reform Initiative in 1993. This guide includes a

framework for quality improvement systems for managed care programs, guidelines for

internal quality assurance programs for health plans, guidelines for clinical and health

services focus areas and use of quality indicators and clinical practice guidelines, and

guidelines for the conduct of external quality reviews. HCFA updated the guide in 1998 with

the “Quality Improvement System for Managed Care,” which contains a new set of

approaches, tools, and techniques for performance improvement. HCFA also collaborated

with other entities to produce a Medicaid version of the Health Plan Employer Data and

Information Set, a standardized quality performance measurement system. Additionally, the

Agency for Healthcare Research and Quality produced the Consumer Assessment of Health

Plans survey instrument, which includes measures and tools specifically designed for use by

state agencies.
Appendix VII

Selected Quality-Monitoring Activities That

Can Be Targeted to Children With Special

Needs

Page 56 GAO/HEHS-00-169 Children With Special Needs

needs is small relative to the overall Medicaid population, it is unlikely that

a large enough number would be included in a randomly chosen sample of

beneficiaries for a systemwide satisfaction survey. To target children with

special needs, a state or health plan can stratify the sample of those

interviewed to intentionally include a large enough number of families with

children with special needs for significant conclusions to be drawn about

their experiences. Alternatively, a state may administer a special

beneficiary survey only among families of children with special needs.
Appendix VII

Selected Quality-Monitoring Activities That

Can Be Targeted to Children With Special

Needs

Page 57 GAO/HEHS-00-169 Children With Special Needs

Table 12: Measures or Processes States and Health Plans Can Use to Monitor the Quality of Care for Children With Special

Needs

Monitoring measure or

process Description

Beneficiary surveys Periodic satisfaction surveys—administered statewide or within individual health plans—can help

measure the degree to which Medicaid beneficiaries are happy with the providers and services

offered in their managed care plan. Some states have used analyses of such data to help identify

problems that Medicaid beneficiaries have with managed care, such as difficulty in accessing

specialists. Statewide surveys allow states to compare results across plans for various access and

quality measures, such as use of specialty services and beneficiary perception of the quality of care

provided. Indicators of beneficiary satisfaction can complement other analyses of provider network

capacity and provided services.

Analysis of encounter data Encounter data are individual-level data on all services provided to all patients. Analyses of encounter

data allow states to examine patterns of care across plans, such as differences in service delivery by

selected types of services, beneficiary groups, and providers.

Random audits of medical

records

Medical record audits document problems with patient medical records, such as incomplete patient

histories, lack of indication of follow-up care, and illegibility and unavailability of records. Audits have

the potential to assess the appropriateness of the care provided as well as to determine whether

patients’ medical records properly document the health care and services that they received.

Grievance/disenrollment studies Health plans must operate an internal grievance process through which beneficiaries can report their

dissatisfaction with plan providers, services, and benefits. States can assess individual beneficiary

grievances to identify specific and localized problems or can monitor the volume of grievances filed—

particularly across plans—to reveal problems. Moreover, beneficiaries who disenroll from managed

care plans may do so because of dissatisfaction with the care received. Therefore, collecting and

analyzing data on disenrollments can provide insights into plan performance.

Focused clinical studies A clinical study focuses on certain aspects of health care services, such as preventive care or care of

chronic and acute conditions, to answer questions about the quality and appropriateness of care that

has been provided.

Use of quality indicators An indicator is a variable reflecting either a discrete event, such as whether an older adult has

received a flu shot in the last 12 months, or a status, such as whether a person’s hypertension is

under control. An organization’s performance on selected topics can be measured using one or more

quality indicators. States and health plans can adopt standard indicators, such as those available in

instruments like the Health Plan Employer Data and Information Set, which has a Medicaid version, or

develop their own indicators.

Separate quality oversight

entities

States can operate specific managed care quality divisions responsible for monitoring health plans. In

order to target activities specifically for children with special needs, states can develop separate

oversight entities, or subdivisions, within existing programs. For example, Florida’s specialty children’s

program has a quality management unit that operates separately from the state’s general Medicaid

quality agency.
Page 58 GAO/HEHS-00-169 Children With Special Needs

Appendix VIII

Comments From the Department of Health

and Human Services ApendxiVI
Appendix VIII

Comments From the Department of Health

and Human Services

Page 59 GAO/HEHS-00-169 Children With Special Needs
Appendix VIII

Comments From the Department of Health

and Human Services

Page 60 GAO/HEHS-00-169 Children With Special Needs
Appendix VIII

Comments From the Department of Health

and Human Services

Page 61 GAO/HEHS-00-169 Children With Special Needs
Page 62 GAO/HEHS-00-169 Children With Special Needs

Appendix IX

GAO Contacts and Staff Acknowledgments ApendxiIX

GAO Contacts Walter Ochinko, (202) 512-7157

Karen Doran, (202) 512-6812

Staff

Acknowledgments

In addition to those named above, Deborah Miller, Mike Piskai, Michelle

Rosenberg, and Behn Miller made key contributions to this report.
Page 63 GAO/HEHS-00-169 Children With Special Needs

Related GAO Products

Medicaid Managed Care: Challenges in Implementing Safeguards for

Children With Special Needs (GAO/HEHS-00-37, Mar. 3, 2000).

Medicaid and Special Education: Coordination of Services for Children

With Disabilities Is Evolving (GAO/HEHS-00-20, Dec. 10, 1999).

Medicaid Managed Care: Four States’ Experiences With Mental Health

Carveout Programs (GAO/HEHS-99-118, Sept. 17, 1999).

Medicaid Managed Care: Challenge of Holding Plans Accountable Requires

Greater State Effort (GAO/HEHS-97-86, May 16, 1997).

Medicaid Managed Care: Serving the Disabled Challenges State Programs

(GAO/HEHS-96-136, July 31, 1996).

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