For more than 30 years, federal law has provided comprehensive health coverage for low-income children through Medicaid. The children eligible for such care have made up a significant and growing portion of the nation’s population, as eligibility for Medicaid benefits has expanded to cover increasing numbers of previously uninsured children. In 1998, Medicaid covered more than one-third of young children ages 0 through 5, and more than one-fourth of children under age 21 (see figure 1). The 21 million children covered by Medicaid that year composed slightly more than half of the 41 million people in the program while the $32 billion spent for their care was about 23 percent of the $142 billion spent on the program by the federal government and states. An increasing number of children are also becoming eligible for EPSDT services, as federal policy designed to cover the growing number of uninsured children allows states to provide Medicaid services through the federally supported State Children’s Health Insurance Program (SCHIP). To implement SCHIP, states have the option of expanding their Medicaid programs, developing separate SCHIP programs, or doing some combination of both. If a state elects Medicaid expansion, it must offer the same comprehensive benefit package, including EPSDT services, to SCHIP beneficiaries as it does to Medicaid beneficiaries. In 2000, more than 1 million children were enrolled in SCHIP Medicaid expansion programs and were therefore also eligible for EPSDT services. Although many coverage, eligibility, and administrative decisions are left to individual states, the federal government sets certain requirements for state Medicaid programs. Coverage of screening and necessary treatment for children is one of these requirements. EPSDT components are designed to target health conditions and problems for which growing children are at risk, including iron deficiency, obesity, lead poisoning, and dental disease. They are also intended to detect and correct conditions that can hinder a child’s learning and development, such as vision and hearing problems. For many children, especially those with special needs because of disabilities or chronic conditions, EPSDT is an important help in identifying the need for essential medical and supportive services, and in making these services available. The federally required EPSDT components that constitute an EPSDT “screen” include a comprehensive health and developmental history, a comprehensive unclothed physical exam, appropriate immunizations, laboratory tests (including a blood lead-level assessment), and health education. Other required EPSDT services include vision services, including diagnosis, treatment, and eyeglasses; dental services, including relief of pain and infections, restoration, and hearing services, including diagnosis, treatment, and hearing aids; and services for other conditions discovered through screenings, regardless of whether these services are typically covered by the state’s Medicaid plan for other beneficiaries. While state Medicaid programs must cover EPSDT, they have some flexibility in determining the frequency and timing of screens. States develop, in consultation with recognized medical and dental organizations, their own “periodicity schedules,” which contain age-specific timetables that identify when physical examinations and certain laboratory tests and immunizations should occur. These tables vary somewhat from state to state. For example, the number of recommended EPSDT screens ranged from 15 to 29 across the five states we visited (see table 1). States have increasingly turned to managed care as a way to deliver Medicaid services, including EPSDT. From 1991 to 1999, the proportion of all Medicaid beneficiaries enrolled in managed care—either capitated or in primary care case management models—rose from about 10 percent to about 56 percent. Only two states do not have at least some Medicaid beneficiaries in managed care plans. Managed care, with its emphasis on preventive and primary care, is philosophically an ideal model for delivering EPSDT-type services. Under a capitated managed care model, states contract with managed care plans, such as health maintenance organizations, and pay a fixed monthly fee per Medicaid enrollee (a capitated fee) to provide most medical services. This model, with its fixed prospective payment for a package of services, creates an incentive for plans to provide preventive and primary care to reduce the chance that beneficiaries will require more expensive treatment services in the future. However, capitated managed care can also create a financial incentive to underserve or deny beneficiaries access to needed care. Moreover, Medicaid beneficiaries required to enroll in managed care may find it difficult to seek alternative care if their plan providers fail to meet their needs. Because of the potential to underserve, states must build in safeguards and accountability measures, such as grievance and appeals processes, to ensure that beneficiaries receive appropriate care. The Congress has given states greater flexibility in moving Medicaid beneficiaries into mandatory managed care plans. Before the Balanced Budget Act (BBA) of 1997, a state could require Medicaid beneficiaries to enroll in managed care only if it first obtained approval from HCFA to waive certain statutory provisions, such as the freedom to choose providers. Under HCFA waivers, states have implemented a variety of mandatory managed care programs, ranging from programs serving limited populations in just a few counties to state-wide programs covering all Medicaid beneficiaries, including children with special needs. The BBA gave states new flexibility in implementing mandatory Medicaid managed care programs, allowing them to implement programs through an amendment to their state Medicaid plan without first obtaining a HCFA waiver. The Omnibus Budget Reconciliation Act of 1989 (OBRA 89) made significant changes to improve the provision of EPSDT services to children in Medicaid. It required that the Secretary of HHS set state- specific annual goals for children’s participation in EPSDT; mandated state-established periodicity schedules for screening in dental, vision, and hearing services; required blood lead assessments appropriate for age and risk factors; and imposed new reporting requirements. To fulfill the state-specific goal requirement, in 1990 HCFA set a participation goal of 80 percent by 1995 for every state. To measure progress towards participation goals and in accordance with the OBRA 89 requirement that states report certain EPSDT statistics, HCFA required, starting in 1990, that states submit annual EPSDT reports (known as the form 416). The EPSDT report captures, by age group, the number of children who (1) received EPSDT health screens; (2) were referred for corrective treatment; (3) received dental treatment or preventive services; and (4) were enrolled in managed care plans. Since fiscal year 1999, states also are required to report the number of blood tests provided to screen children for lead poisoning. Lawsuits have been filed in many states alleging shortcomings in the provision of EPSDT services. According to information from the National Health Law Program, at least 28 states have been sued by beneficiaries or advocates since 1995 for failing to provide required access to EPSDT services. These lawsuits range from single-issue suits—such as coverage of selected services including mental health services in Maine—to alleged programwide failures and deficiencies in Texas, Tennessee, and Washington, D.C. In several instances, the outcomes, including court orders and settlements agreed to by both parties to remedy known concerns, illustrate the difficulties states have encountered in providing services and also suggest strategies to remedy established EPSDT deficiencies. Despite statutory reporting requirements, reliable national data are not available on the extent to which children in Medicaid are receiving EPSDT services. However, a number of studies of limited scope indicate that many children in Medicaid are not receiving EPSDT services. These studies also show that several factors are at work in limiting the successful delivery of EPSDT services. Some factors are program-related, such as a lack of providers or systems to ensure access to covered services. Others are related to beneficiaries themselves, such as the beneficiaries’ lack of awareness about the importance of preventive health care and about services covered, or their difficulty in maintaining continuity of care with one provider. HCFA’s efforts to assemble reliable information about EPSDT participation in each state have so far been unsuccessful. State-reported data, upon which HCFA depends, are often not timely or accurate. For example, states were required to submit their fiscal year 1999 reports by April 1, 2000. As of January 2001, 15 states had not submitted their 1999 reports and another 15 states’ reports had been returned by HCFA because they were deficient. HCFA and state officials acknowledge long-standing difficulties that states face in their efforts to collect complete and reliable data, which are used as the basis for the EPSDT reports. These difficulties continue despite HCFA’s attempts to improve the reliability of state EPSDT reports by revising the report format and guidance. One reason for the continued difficulty involves collecting data on EPSDT services provided under managed care. Under the more traditional fee-for- service approach, data on service delivery are often relatively easy to collect as part of the payment process because states pay providers for each service for which they bill the state. Under capitated managed care, however, states pay the managed care plan a prospective monthly per- enrollee fee that is not tied to the individual services provided. As a result, data on service utilization (often referred to as “encounter data”) are not necessarily captured. Instead, states have to rely on managed care plans to collect and report these data separately. Managed care plans, particularly those that also pay their participating providers on a capitated basis, often have difficulty collecting and reporting complete and accurate data. States face continuing challenges in determining how to minimize the administrative burden on managed care plans and providers while still collecting information at the level needed to administer the program. For example, to facilitate the collection of EPSDT data, California uses a special EPSDT form for providers to use in documenting the components of EPSDT services provided. California’s managed care contracts also call for managed care plans to collect the EPSDT forms from their providers and submit detailed encounter data to the state. However, the state has had difficulty enforcing these requirements across the several layers of contractors involved in its managed care delivery system. For example, in the Los Angeles area, the state contracts with two large managed care organizations that subcontract with multiple commercial and nonprofit health plans, such as Blue Cross, that further subcontract with a network of providers. Most of these contracts are on a capitated basis.