Assessing the New Federalism Occasional Paper No. 67
The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
This report is available in its entirety in the Portable Document Format (PDF).
About the Series
Assessing the New Federalism is a multiyear Urban Institute project designed to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily on health care, income security, employment and training programs, and
social services. Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, the project studies changes in family well-being. The project aims to provide timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively.
Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia, available at the Urban Institute's web site. This paper is one in a series of occasional papers analyzing information from these and other sources.
Introduction and Background
Collecting Information on Application and Eligibility
Collecting and Analyzing Redetermination Outcomes Data
SCHIP Eligibility Redetermination Processes
Administrative Responsibility for Determining Eligibility
SCHIP Eligibility Redetermination Processes and Efforts to Simplify
SCHIP Redetermination Outcomes
Rates of Approval, Denial, and Referral to Medicaid at Redetermination
Reasons for Denial at Redetermination
Conclusions and Implications for Future Policy
About the Authors
This is one of a series of reports exploring policy issues that have emerged during states' early implementation of the State Children's Health Insurance Program, or SCHIP. These reports seek to identify important challenges states have faced, explore the availability of data to analyze these issues, provide initial analysis of the effects of alternative policies and implementation strategies, and raise questions for further study. Because of the limited scope of these analyses, it is important to exercise restraint in drawing conclusions from study results; these reports are intended to provide preliminary analyses of complex issues and early insights into their nature and possible resolution.
The authors would like to extend sincere thanks to the many people who assisted with the completion of this project. Caroline Taplin, our project officer at the Office of the Assistant Secretary for Planning and Evaluation, Department of Health and Human Services, provided strong leadership, guidance, and support through the paper's development. The federal interagency workgroup, put in place to guide the work of the task order contract, also played an integral role in setting the objectives for the study and providing feedback on all data collection instruments and drafts. Specifically, we want to extend our gratitude to Tanya Alteras, Steven Finan, Julia Paradise, Barbara Richards, Adelle Simmons, and Jennifer Tolbert at ASPE; Wendy
Wolf, formerly of the Health Resources and Services Administration (HRSA); Karen Raykovich at HRSA; Cindy Shirk, formerly at the Centers for Medicare and Medicaid Services (CMS); and Christina Moylan, Angela Corbin, and Johanna Barraza-Cannon of CMS.
At the Urban Institute, we would like to thank John Holahan, Genevieve Kenney, and Lisa Dubay for their helpful comments and feedback on our drafts, and in particular for helping us navigate and analyze state enrollment data.
Finally, and most importantly, we would like to thank the many state officials who gave generously of their time, freely shared state data, and provided us with critical assistance in interpreting and analyzing the implications of these data. These officials included Gayle Sandlin and Cathy Caldwell of Alabama; Sandra Shewry of California; Dorothy Sweringen of Colorado; Rose Naff and Bridgett Singleton of Florida; Denise Holmes and Bob Stampfly of Michigan; Greg Vadner, Charles Bentley, and Pamela Victor of Missouri; Judy Arnold of New York; and June Milby, Barbara
Brooks, and Patsy Slaughter of North Carolina.
The Balanced Budget Act of 1997 established Title XXI in the Social Security Act, creating the State Children's Health Insurance Program (SCHIP). Title XXI provided states the authority and funding to expand health insurance coverage to low-income children by expanding Medicaid, developing new "separate" child health programs, or a combination of both approaches. During the first three years of SCHIP, considerable policy attention was directed at state efforts to enroll eligible children and, over time, states implemented numerous strategies to streamline the application process with the goal of achieving higher enrollment. As state SCHIP programs have matured, national enrollment has steadily increasedbetween the second quarters of federal fiscal year 1999 and 2000, enrollment grew by 90 percent (Rosenbach et al. 2001). More recently, the Centers for Medicare and Medicaid Services (CMS) reported that in federal fiscal year 2001, 4.6 million children participated in SCHIP. Still, even as states made headway in enrolling eligible children, anecdotal evidence emerged as early as mid-1999 that large proportions of SCHIP enrollees were losing eligibility, or disenrolling, at the end of their period of coverage. Early work by groups like the National Governors Association revealed that states had done little to streamline their eligibility renewal processes (compared to their efforts to simplify initial enrollment) and that the need to improve rates of retention was an important emerging challenge for the states.
Given policymakers' continued interest in enrolling eligible children into SCHIP and a more recent focus on improving retention rates in the program, the U.S. Department of Health and Human Services' Office of the Assistant Secretary for Planning and Evaluation (ASPE) asked the Urban Institute to conduct a study of state efforts to enroll and retain children in SCHIP. Specifically, the Institute was asked to collect and analyze information about states' application and eligibility redetermination processes under SCHIP, as well as data on the outcomes of these processes. This report focuses on our findings related to retention; findings from our study of enrollment are examined in a companion report (Hill and Lutzky 2003).
Information and data were collected from eight states, selected based on a variety of demographic and programmatic variables, during the spring and summer of 2000. The states were queried on such issues as
- administrative responsibility for SCHIP eligibility redetermination;
- the process for notifying families of the need to renew SCHIP eligibility and how it differs from that of Medicaid;
- the procedures families must complete in establishing ongoing coverage under SCHIP and Medicaid;
- strategies used to facilitate eligibility renewal under SCHIP and Medicaid; and
- the processes by which applications are denied and families are notified of this denial.
We also discussed the lessons state officials had learned through the operation of these systems about the barriers that persist for families renewing SCHIP coverage, and strategies for overcoming these barriers.
The second component of the study involved the collection and analysis of eligibility redetermination outcomes data. Specifically, we collected data on
- the number of SCHIP enrollees coming up for eligibility renewal and, of these, the number approved for SCHIP coverage, denied SCHIP coverage, and referred to Medicaid;
- the number of referrals to Medicaid that were approved, denied, or withdrawn;
- the number of eligibility denials that were due to "failure to meet eligibility criteria;"
- the number of eligibility denials that were due to "failure to comply with procedures;" and
- the number of cases that appeared to be "lost" from the system at the point of eligibility redetermination.
We typically found that states had a difficult time producing outcomes data, varied considerably in their data collection and reporting practices, and that no state could produce all of the measures of interest.
Findings and Implications for Future Policy
By collecting and analyzing information on the eligibility redetermination processes states use for SCHIP and Medicaid, as well as administrative data on the outcomes of these processes, we had hoped to make informed observations regarding how various policy strategies have affected rates of retention, approval, and denial of coverage in the sample of eight states. Because of limitations of state data systems and similarities in policies among our small sample, we were in most cases unable to draw such clear links.1 However, we did learn a great deal about the procedures states follow in their redetermination efforts; the strengths and weaknesses of state systems; the rates at which children are approved and denied for ongoing eligibility under SCHIP; and the various reasons children lose eligibility at redetermination. The major findings of this study and their implications for future policy include the following:
- States' procedures for conducting SCHIP eligibility redetermination are quite similar to one another. However, these processes have not undergone the same level of reform in the interest of simplification as have initial enrollment processes. By and large, the eligibility redetermination processes in the study states were quite similarall primarily relied on computer-generated notices, mailed to families between 60 and 90 days before the end of a child's
eligibility period, as the means for informing parents that their children's SCHIP eligibility needed to be renewed. Every state we studied sends reminder notices to families that do not respond to initial letters, but few consistently make more personal contact with these families either by phone or in person. And with the exception of one stateFloridaall of our study states disenroll children whose parents do not ever respond to redetermination notices.
In comparison to initial application procedures, much less attention appeared to have been paid to exploring strategies for simplifying or streamlining the SCHIP redetermination process. Although we identified states that were employing such strategies as simplifying the redetermination form, preprinting redetermination forms with information already on hand, and passively continuing children as enrollees even if their parents do not participate in redetermination, these efforts were used by a minority of states included in this study. Each of the participating states, however, identified the need to simplify redetermination as an emerging
priority and speculated that future efforts would be focused on this issue.
- Less than 50 percent of children appeared to be retaining SCHIP eligibility at redetermination. But further research is needed to understand what is reasonable to expect for this program. In four of the five states that submitted comparable data, only between 26 and 48 percent of children up for renewal were approved for continued eligibility under SCHIP at redetermination. On the surface, these numbers seem low. Yet state officials pointed out that they are unclear as to what to expect with this population. For example, our findings suggest
that a relatively large portion of children live in families whose incomes drop during their enrollment period in SCHIP, enough so that they are referred to Medicaid at redetermination. At the same time, we found that other children were denied because their parents' income had risen above upper income thresholds, or because they now possessed private insurance. All of these causes are appropriate grounds for terminating SCHIP eligibility and do not necessarily
result in a child becoming uninsured.
Families with children enrolled in SCHIP appear to live in dynamic circumstances that may see them move in and out of employment, and offered private insurance as an outgrowth of that employment. As such, retention rates for this population may inherently be somewhat low. It will be necessary for future research to monitor these dynamics more closely.2
- High rates of parents who do not respond to renewal notices nor submit renewal applications for their children may be cause for concern. Between 10 and 40 percent of all children were reportedly "lost" to the system at redetermination that is, their parents never responded to renewal notices or submitted renewal applications. (This was the leading reason for denial in three of the five states that submitted comparable data.) While the potential reasons for such nonresponses are manyranging from families whose addresses have changed and, thus, never received their notices, to families that have obtained private health
insurance and thus no longer need SCHIPthere was a strong sense among state officials that a significant portion of "lost" cases may be families that don't reapply because they are confused about the rules and procedures they are to follow to keep their children's coverage up to date. This confusion may well grow from the computer-generated letters and notices that that were typically described as "not user-friendly" and "difficult" to understand. To the extent that this is true, it suggests that systems are insufficient to ensure that eligible children retain the coverage for which they are eligible, and that systems need to improve their ability to maintain current contact information and convey, in simple terms, the steps families must complete to renew their children's coverage. Once again, further research is needed to understand more precisely why a large number of families do not respond to renewal notices and reapply for their children.3
- Denial of eligibility for "failure to pay premiums" may or may not address whether SCHIP cost sharing is affordable. We were particularly interested in how many children lost eligibility because their parents failed to pay the premiums required by their state's SCHIP program, presuming that this would shed light on the question of whether premiums under SCHIP were affordable. As it turns out, our findings on this score were inconclusive. Instead, we learned that the denial code of "failure to pay premiums" could actually reflect a number of possible outcomesthat families moved out of state and, as a result, stopped paying their premiums; that families picked up insurance from their employers and, as a result, discontinued their SCHIP participation; that families were unsatisfied with their experiences with SCHIP coverage and chose to stop paying for it; or, indeed, that premiums were deemed unaffordable and thus families stopped sending them in.
- State SCHIP and Medicaid data systems are highly variable in their capacity to report eligibility and redetermination outcome data. One of the most important conclusions of this study is that state administrative data systems are unable to report precisely on the outcomes of the eligibility redetermination process. Even among states that could provide the data we requested, the codes, definitions, and classifications of various data elements were inconsistent
across states, making aggregation and cross-state comparisons difficult, if not impossible.
If states are to make informed improvements in their eligibility renewal policies, then they will need either to make investments to improve their administrative data systems, or periodically conduct disenrollee surveys, parent focus groups, or other research to better understand what happens to children once they lose their SCHIP eligibility. At the national level, policymakers should consider whether developing standardized approaches for collecting, compiling, and reporting SCHIP and Medicaid redetermination outcomes data might be beneficial.
This report is available in its entirety in the Portable Document Format (PDF).
1. For further information on the effects of alternative state policies on SCHIP disenrollment, see Dick et al. (2002).
2. Two recently published studies shed further light on these issues. See Dick et al. (2002) and Riley et al. (2002).
3. Riley et al. found evidence that states may be overestimating the number of children whose coverage inappropriately "lapses."
This report is part of the Urban Institute's Assessing the New Federalism project, a multiyear effort to monitor and assess the devolution of social programs from the federal to the state and local levels. Alan Weil is the project director. The project analyzes changes in income support, social services, and health programs. In collaboration with Child Trends, the project studies child and family well-being.
This study was primarily funded through a contract with the Office of the Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services. Additional support was provided by the Robert Wood Johnson Foundation under the Urban Institute's Assessing the New Federalism project.
The Assessing the New Federalism project is currently supported by The Annie E. Casey Foundation, The Robert Wood Johnson Foundation, the W. K. Kellogg Foundation, The John D. and Catherine T. MacArthur Foundation, and The Ford Foundation.