Children in foster care tend to exhibit more numerous and serious medical conditions than other children, including mental health problems. Foster care begins when children are removed from their parents or guardians and placed under the responsibility of a state child welfare agency. Removal from the home can occur for several reasons. For example, parental violence, substance abuse, severe depression, or incarceration may have led to the children’s removal from the home. Other children and youth are referred when their own behaviors or conditions are beyond the control of their families or pose a threat to themselves or the community. The realities of foster care may further contribute to the challenges in meeting these children’s health care needs. Once children are removed from their homes, obtaining information on their health status and health history from their parents or guardians may be challenging. Also, children often move to several different foster homes or treatment facilities during the course of their stay in foster care, which may result in having different health care providers. Changes in placement pose significant challenges for agencies, foster parents, and providers with regard to providing continuity of health care services and maintaining uninterrupted information on children’s medical needs and course of treatment. Finally, in addition to specific characteristics or circumstances that complicate their care, children in foster care encounter some health care challenges in common with other health care users. Child welfare agencies generally expect that foster parents or other caregivers will recognize when children need medical attention and obtain the needed health services, but such services may be in short supply or difficult to access because of a lack of providers who serve Medicaid patients—particularly for some specialties or geographic areas. Children entering foster care may lack medical care prior to entry, and children with prior medical care may have experienced disruptions in care, changes in providers, and have missing or incomplete records. Figure 1 illustrates the steps that are typically involved in addressing health needs of children in foster care. All state child welfare agencies receive federal funds from ACF for children in foster care under two parts of title IV of the Social Security Act. The larger source of federal funds, under title IV-E, provides open-ended reimbursement for a portion of states’ foster care expenses for children meeting federal eligibility criteria, who represented about 43 percent of children in foster care in 2006. Title IV-E provided $4.8 billion to states in 2007 for the federal share of the expense of housing and feeding these children. States cover the remaining costs and 100 percent of the costs to house and feed children in foster care who do not meet federal eligibility criteria. State child welfare agencies also receive funds under title IV-B to provide services to children in foster care and to those remaining in their homes for the purpose of preventing conditions leading to the need to remove children from their homes. In 2007, about $700 million was available under title IV-B. State child welfare agencies cannot use title IV-E or most IV-B funds for the direct provision of health care services. Limited IV-B funds may be used for some health care services but are intended primarily for the support and preservation of families, rather than for children in foster care. Foster children who meet title IV-E eligibility criteria, on the other hand, are explicitly identified as a group that is eligible for coverage under Medicaid. As a condition of receiving federal funds, state child welfare agencies must agree to meet certain federal requirements, including requirements related to the health of children in foster care. Under both titles IV-B and IV-E, states must submit plans to ACF that contain a number of statutorily required elements. For title IV-E, state agencies must have a written case plan for each child that includes specific health information, such as records of immunizations and medications, to be shared with foster care providers at the time of placement. The agencies must also have standards to ensure that children are provided services to protect their safety and health. Because these standards have not been further defined in statute or regulation, states have some flexibility with respect to their form and content. For safety and health standards, some states have cited standards for licensing foster care facilities, training foster care parents, or credentialing staff. In recent years, Congress has twice amended title IV-B, subpart 1 to add new state plan requirements related to the health of children served by child welfare agencies. Congress initially required that state plans describe the involvement of physicians and other medical professionals in the assessment and treatment of children in foster care. This requirement was effective with state plans approved by ACF in 2007. In October 2008, as we completed our review, Congress further amended title IV-B, subpart 1 to require state agencies to develop plans for the ongoing oversight and coordination of health care services for children in foster care. This new requirement expanded on the earlier requirement by mandating that the agencies include in their plans schedules for initial and follow-up health screenings that meet reasonable standards of medical practice; steps to ensure continuity of health care services, which may include the establishment of a medical home—a primary health care provider or group—for every child in care; oversight of prescription medications; and information on how children’s needs identified through screenings will be monitored and treated and how their medical information will be updated and appropriately shared—as for example, by using electronic health records. These requirements apply to all children in foster care, regardless of whether or not the children meet federal eligibility criteria. Starting in 2001, ACF took a new, results-oriented approach to its oversight of state child welfare programs, focusing on whether children and their families served by these programs achieved positive outcomes. This oversight effort involved four phases of Child and Family Services Reviews (CFSR), as shown in figure 2. ACF expects to complete the final phase of the initial round of CFSRs in 2009. In the second phase of the initial round of the reviews completed in 2004, ACF identified significant performance challenges, particularly with respect to meeting children’s mental health needs. ACF assessed state child welfare agency performance on 45 indicators across a wide range of areas, such as children’s safety and statewide information systems. On the two health indicators addressing physical and mental health, ACF identified 20 states as showing strengths in providing services to meet children’s physical health needs, and 4 states also showed strengths in meeting the mental health needs of children in foster care and children remaining in their homes under agency supervision. Nearly all states were required to implement program improvement plans because they did not show strengths in physical health, mental health, or both. ACF is required by statute to offer technical assistance, to the extent feasible, to help such states develop and implement plans to improve outcomes for children, including health outcomes. When ACF determines that a state has not met the jointly developed goals and action steps identified in these plans within 2 years of approval of the improvement plan, ACF regulations specify that it will withhold a portion of the state’s grant funds. In the course of its oversight, ACF identified several challenges that states faced in meeting the health needs of children in their care, as summarized in table 1. Medicaid is the primary health care funding source for most children in foster care. The Medicaid program is administered at the federal level by the HHS’s Centers for Medicare & Medicaid Services (CMS) and is jointly financed by the states and the federal government. All state Medicaid agencies receive federal funds for the Medicaid program under title XIX of the Social Security Act. Within broad parameters set by federal statute and regulation, state Medicaid agencies are responsible for determining eligibility and establishing the services and payments offered. Although many coverage, eligibility, and administrative decisions are left to individual states, the federal government sets certain requirements for state Medicaid programs, such as coverage of certain screening and treatment services. Children who meet federal eligibility criteria for IV-E foster care are required to be covered by state Medicaid programs under federal law. In addition, states have chosen to extend Medicaid coverage to other children in foster care. In 2004, Medicaid expenditures for children in foster care exceeded $5 billion. Children in foster care who are enrolled in Medicaid may receive services through one of two distinct service delivery and financing systems— managed care and fee-for-service. Under a capitated managed care model, states contract with a managed care organization and prospectively pay the plans a fixed monthly fee per patient to provide or arrange for most health services. Plans, in turn, pay providers. In the traditional fee-for- service delivery system, the Medicaid program reimburses providers directly and on a retrospective basis for each service delivered. States are required to offer certain screening and treatment services to children enrolled in Medicaid. Termed Early and Periodic Screening, Diagnostic, and Treatment services (EPSDT), these screenings must include, but are not limited to, a comprehensive health and developmental history, a comprehensive unclothed physical exam, appropriate immunizations, laboratory tests, and health education. The required services include vision, dental, hearing, and services for other conditions discovered through screenings, regardless of whether these services are typically covered by the state’s Medicaid program for other beneficiaries. The state Medicaid agencies establish standards for the timing and frequency of these screening and treatment services and set their own payment rates for fee-for-service providers of these services. Federal regulations require that EPSDT screening services be provided in accordance with reasonable standards of medical and dental practice determined by the state after consultation with recognized medical and dental organizations involved in child health care. In addition to EPSDT, states may choose to offer optional Medicaid benefits, such as rehabilitative services and targeted case management for children in foster care. States have used the rehabilitative services option for children in foster care who have mental or developmental problems as a means of providing a wide range of services designed to help them achieve their highest level of functioning. States have used targeted case management in order to provide case management services to a defined group of Medicaid-eligible individuals, such as children in foster care.