Children's Health Insurance
Inspector General Reviews Should Be Expanded to Further Inform the Congress Gao ID: GAO-02-512 March 29, 2002Congress created the State Children's Health Insurance Program (SCHIP) in 1997 to reduce the number of uninsured children in families with incomes that are too high to qualify for Medicaid. Financed jointly by the states and the federal government, SCHIP encourages state participation by offering a higher federal matching rate than the Medicaid program. Concerns have been raised that states might inappropriately enroll Medicaid-eligible children in SCHIP and thus obtain higher federal matching funds than allowed under Medicaid. The Department of Health and Human Services Office of Inspector General (OIG) concluded that Medicaid-eligible children were not being enrolled in SCHIP by the 13 states that administer separate child health care programs. Furthermore, the issue of appropriate enrollment is not limited to states with completely separate child health programs but also applies to those states with combination programs and Medicaid expansions, which also receive the higher SCHIP matching rate. The OIG could not conclude whether states were reducing the number of uninsured children and meeting the objectives and goals they established in their SCHIP programs. The OIG found that some states had set program goals without considering how they might be measured and that states' staffs often lacked adequate evaluation skills.
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Director: Team: Phone:GAO-02-512, Children's Health Insurance: Inspector General Reviews Should Be Expanded to Further Inform the Congress
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United States General Accounting Office:
GAO:
Report to Congressional Committees:
March 2002:
Children's Health Insurance:
Inspector General Reviews Should Be Expanded to Further Inform the
Congress:
GAO-02-512:
Contents:
Letter:
Results in Brief:
Background:
OIG's Assessment of Appropriate Enrollment Would Benefit From an
Expanded Selection of States:
While States' Evaluations Offered Limited Results, Future OIG Reviews
May Benefit from Improved Data Sources:
Conclusions:
Recommendations to the HHS Inspector General:
Agency Comments and Our Evaluation:
Appendix I: Comments from the Department of Health and Human Services'
Office of Inspector General:
Related GAO Products:
Tables:
Table 1: OIG Sampling Framework for SCRIP Analysis, Fiscal Year 1999:
Table 2: Enrollment Practice of 12 States from Which the Random Sample
Was Drawn:
Table 3: States' Design Choices and Percentage of Nationwide SCRIP
Enrollment, Fiscal Year 1999:
Table 4: Limitations to Five States' SCRIP Evaluations Identified by
the OIG, February 2001:
Figures:
Figure 1: States' Design Choices Under SCRIP, as of February 2002:
Abbreviations:
BBRA: Medicare, Medicaid and SCHIP Balanced Budget Refinement Act:
CMS: Centers for Medicare and Medicaid Services:
CPS: Current Population Survey:
EPSDT: Early and Periodic Screening, Diagnostic, and Treatment:
HCFA: Health Care Financing Administration:
HTIS: Department of Health and Human Services:
HRSA: Health Resources and Services Administration:
OIG: Office of Inspector General:
SCHIP: State Children's Health Insurance Program:
[End of section]
United States General Accounting Office:
Washington, DC 20548:
March 29, 2002:
The Honorable Max Baucus:
Chairman:
The Honorable Charles E. Grassley:
Ranking Minority Member:
Committee on Finance:
United States Senate:
The Honorable W.J. "Billy" Tauzin:
Chairman:
The Honorable John D. Dingell:
Ranking Minority Member:
Committee on Energy and Commerce:
House of Representatives:
The Congress created the State Children's Health Insurance Program
(SCHIP) in 1997 to reduce the number of uninsured children in families
with incomes that are too high to qualify for Medicaid.[Footnote 1]
For SCHIP, the Congress appropriated $40 billion over 10 years, with
funds allocated annually to the 50 states, the District of Columbia,
[Footnote 2] and the U.S. commonwealths and territories. Financed
jointly by the states and the federal government, SCHIP offers a
strong incentive for states to participate by offering a higher
federal matching rate”that is, the federal government pays a larger
proportion of program expenditures”than the Medicaid program.[Footnote
3] While this incentive encourages efforts to reduce the number of
uninsured children through state participation in SCHIP, concerns
existed that states might inappropriately enroll Medicaid-eligible
children in SCHIP and thus obtain higher federal matching funds than
allowed under Medicaid.[Footnote 4] Inappropriate SCHIP enrollment
also can affect what benefits are available for children because the
SCHIP statute allows states to (1) expand their Medicaid programs,
thus affording SCHIP-eligible children the same benefits and services
that the state Medicaid program provides, (2) construct separate child
health programs distinct from Medicaid that could provide more limited
benefit packages and could include copayments that are generally not
permitted for children in Medicaid, or (3) use a combination of both
approaches. To address concerns regarding inappropriate enrollment,
the SCHIP statute requires states to screen all SCHIP applicants for
Medicaid eligibility and, if they are eligible, enroll them in
Medicaid.
Even with the requirement for Medicaid screening in place, concerns
remained that children who were eligible for Medicaid might have been
inappropriately enrolled in SCHIP.[Footnote 5] Additionally, there was
interest in assessing the progress states had made to reduce the
number of uninsured children, including the extent to which states had
met objectives and goals, which they established in their SCHIP
programs.[Footnote 6] In the Medicare, Medicaid and SCHIP Balanced
Budget Refinement Act of 1999 (BBRA), the Congress directed the
Department of Health and Human Services (HHS) Office of Inspector
General (OIG) to conduct a series of studies on these issues.[Footnote
7] BBRA specified that the OIG should review states that provide SCHIP
coverage separately from their Medicaid programs.
BBRA also directed that we review and report on the OIG's work. In
response, we assessed the OIG's efforts to inform the Congress on (1)
determining whether Medicaid-eligible children were improperly
enrolled in SCHIP and (2) assessing states' progress in reducing the
number of uninsured children, including the progress states have made
in meeting the objectives and goals initially established in their
SCHIP programs.
To examine these issues, we reviewed the OIG's approach and
methodology for selecting its sample of states for the first in its
series of studies to evaluate states' performance in screening SCRIP
applicants for Medicaid eligibility and to assess states' progress in
reducing the number of low-income uninsured children. We examined the
OIG's findings in the context of other research, including our own
work.[Footnote 8] In some cases, we reviewed work released after the
OIG's studies were completed and published to determine the extent to
which other research corroborated the OIG's findings. Finally, we
examined OIG's recommendations to the Health Care Financing
Administration (HCFA) and the Health Resources and Services
Administration (HRSA), which jointly oversee SCHIP.[Footnote 9] Our
work was conducted from December 2001 through March 2002 in accordance
with generally accepted government auditing standards.
Results in Brief:
In responding to the mandate, the OIG published two reports, the first
addressing whether Medicaid-eligible children were enrolled in SCHIP
and the second assessing states' progress in reducing the number of
uninsured children.[Footnote 10] The scope of the OIG studies included
sampling 5 of the 13 states that only enrolled children in separate
child health programs during 1999. The OIG concluded that Medicaid-
eligible children were not being enrolled in SCHIP by the 13 states
that administer separate child health programs. However, because of
variations in the administration of state programs, generalizing from
the findings in 5 states to the 13 states may not be appropriate.
Furthermore, the issue of appropriate enrollment is not limited to
states with completely separate child health programs, but also
applies to those states with combination programs and Medicaid
expansions, which also receive the higher SCHIP matching rate for
state program expenditures. Because the scope of the study was limited
to the 13 states with separate SCRIP programs, the experience of other
states”-particularly the 13 states that operated SCHIP combination
programs--was not addressed. Had the scope of review included the 13
additional states that offered separate child health programs under
combination plans, the proportion of children represented would have
increased from 16.5 percent to 65 percent of SCHIP enrollees in 1999.
Future OIG reviews that consider differences in enrollment practices
across states and a wider universe of states could provide more
information on the effectiveness of states' efforts to ensure
appropriate enrollment.
Due to limitations the OIG identified in states' SCHIP evaluations,
the OIG was unable to conclude whether states were making progress in
reducing the number of uninsured children and in meeting the
objectives and goals they established in their SCHIP programs. For
example, the OIG found that the 5 states it reviewed generally did not
have sound methodologies to determine reductions in the number of
uninsured children, in part because they did not always take into
account other factors”such as changes in the economy or private
insurance coverage”that also may affect the number of uninsured
children. Furthermore, the OIG found that some states had set program
goals without considering how they might be measured and that states'
staffs often lacked adequate evaluation skills. Based on its findings,
the OIG made recommendations to HCFA and HRSA to help improve states'
ability to conduct more rigorous evaluations of their programs.
Because of the limitations identified by the OIG, it may wish to look
beyond states' own evaluations and analyze other sources of analysis
for its next review. Over time, other federal initiatives”such as
improvements in state-level estimates of the number of uninsured”may
help states to improve their measurement of progress under SCHIP.
We are recommending that the HHS inspector general expand the scope of
analysis to include a broader array of states to further inform the
Congress on states' progress in ensuring appropriate SCHIP enrollment.
The OIG concurred with our recommendations, and provided general
comments regarding approaches to designing future reviews.
Background:
States provide health care coverage to low-income uninsured children
largely through two federal-state programs”Medicaid and SCHIP. Since
1965, Medicaid has financed health care coverage for certain
categories of low-income individuals”over half of whom are children.
To expand health coverage for children, the Congress created SCHIP in
1997 for children living in families whose incomes exceed the
eligibility limits for Medicaid. Although SCRIP is generally targeted
at families with incomes at or below 200 percent of the federal
poverty level, each state may set its own income eligibility limits
within certain guidelines.[Footnote 11] As of February 2002, 16 states
have created Medicaid expansion programs, 16 states have separate
child health programs, and 19 states have combination Medicaid
expansions and separate child health components. (See figure 1.)
Figure 1: States' Design Choices Under SCHIP, as of February 2002:
[Refer to PDF for image: map of the U.S.]
Medicaid expansion (16):
Alaska:
Arkansas:
District of Columbia:
Hawaii:
Idaho:
Louisiana:
Minnesota:
Missouri:
Nebraska:
New Mexico:
Ohio:
Oklahoma:
Rhode Island:
South Carolina:
Tennessee:
Wisconsin:
Separate child health program (16):
Arizona:
Colorado:
Delaware:
Florida:
Georgia:
Montana:
Nevada:
North Carolina:
Oregon:
Pennsylvania:
Utah:
Vermont:
Virginia:
Washington:
West Virginia:
Wyoming:
Combination program (19):
Alabama:
California:
Connecticut:
Illinois:
Indiana:
Iowa:
Kansas:
Kentucky:
Maine:
Maryland:
Massachusetts:
Michigan:
Mississippi:
New Hampshire:
New Jersey:
New York:
North Dakota:
South Dakota:
Texas:
Note: Since the period reviewed by the OIG (1999), 8 states have
altered their design choices under SCHIP. Seven states”Illinois,
Indiana, Maryland, Mississippi, North Dakota, South Dakota, and Texas”
have changed from Medicaid expansions to combination programs. West
Virginia changed from a combination program to a separate child health
program.
Source: Centers for Medicare and Medicaid Services (CMS).
[End of figure]
SCHIP offers significant flexibility in program design and benefits
provided by allowing states to use existing Medicaid structures or
create child health programs that are separate from Medicaid. Medicaid
expansions must follow Medicaid eligibility rules and cost-sharing
requirements, which are generally not allowed for children. A Medicaid
expansion also creates an entitlement by requiring a state to continue
providing services to eligible children even when its SCHIP allotment
is exhausted.[Footnote 12] In contrast, a state that chooses a
separate child health program approach may introduce limited cost-
sharing. Additionally, a state with a separate child health program
under SCHIP may limit its own annual contribution, create waiting
lists, or stop enrollment once the funds it budgeted for SCHIP are
exhausted. States choosing combination programs take both approaches.
For example, Connecticut's combination SCHIP program has a limited
Medicaid expansion”increasing eligibility for 17 to 18 year olds up to
185 percent of the federal poverty level. Additionally, the state
created a separate child health program, which covers all children in
families with incomes over 185 percent, up to 300 percent of the
federal poverty level.
With regard to program benefits, the choices states make in designing
SCHIP have important implications. For example, a state opting for a
Medicaid expansion under SCHIP must provide the same benefits offered
under its Medicaid program. These benefits are quite broad and include
Early and Periodic Screening, Diagnostic, and Treatment (EPSDT)
services for most children.[Footnote 13] EPSDT services are designed
to target health conditions and problems for which children are at
risk, including iron deficiency, obesity, lead poisoning, and dental
disease. These services are also intended to detect and correct
conditions that can hinder a child's learning and development, such as
vision and hearing problems.[Footnote 14] In contrast, states opting
for separate child health programs may depart from Medicaid
requirements and provide benefits based on coverage standards in the
SCRIP legislation.[Footnote 15] SCRIP separate child health programs
generally cover basic benefits, such as physician services, inpatient
and outpatient hospital services, and laboratory and radiological
services. Other benefits, such as prescription drugs and hearing,
mental health, dental, and vision services, may be provided at the
states' discretion. States also may place limits on services provided
and require cost-sharing, while Medicaid generally does not permit
cost-sharing for children.
In addition to having flexibility in program design and benefits
offered, states participating in SCHIP have a larger proportion of
their program expenditures paid by the federal government than for
Medicaid. A state's Medicaid program expenditures are matched by the
federal government using a formula that is based on a state's per
capita income in relationship to the national average. Federal
matching rates for SCRIP are "enhanced"”they are established under a
formula that takes 70 percent of a state's Medicaid matching rate and
adds 30 percentage points, with an overall federal share that may not
exceed 85 percent.[Footnote 16] For 2001, federal shares of SCRIP
expenditures ranged from 65 to 84 percent, with the national average
federal share equaling about 72 percent. In contrast, 2001 federal
shares for Medicaid ranged from 50 to 77 percent of expenditures, with
the national average at about 57 percent. The SCRIP statute requires
states to screen all SCHIP applicants for Medicaid eligibility and, if
they are eligible, enroll them in Medicaid.[Footnote 17]
OIG Studies:
BBRA included a mandate that the OIG conduct a study every 3 years,
beginning in fiscal year 2000, to (1) determine the number, if any, of
enrollees in SCHIP who are eligible for Medicaid and (2) assess
states' progress in reducing the number of uninsured low-income
children, including progress in achieving the strategic objectives and
performance goals in their SCHIP plans, which set forth how states
intend to use their SCHIP funds to provide child health assistance.
[Footnote 18]
BBRA directed the OIG to review states with approved SCHIP programs
that do not provide health benefits under Medicaid;[Footnote 19]
consequently, the OIG focused on the 15 states that in 1999 operated
separate child health programs under SCHIP.[Footnote 20] Of these 15
states, the OIG excluded 2 states-”Washington and Wyoming-”because the
delayed start-up of their programs resulted in no enrollees in fiscal
year 1999, the year that the OIG reviewed. From the remaining 13
states, the OIG used a two-stage sampling plan to select 5 states for
review. The OIG first divided the 13 states into two strata, selecting
Pennsylvania separately as stratum I because it had a large number of
children-81,758”enrolled in its program in fiscal year 1999.
Enrollment across the remaining 12 states ranged from 1,019 in Montana
to 57,300 in North Carolina. The OIG randomly selected 4 of the 12
states (North Carolina, Oregon, Utah, and Vermont) for inclusion in
its study. (See table 1.)
Table 1: OIG Sampling Framework for SCHIP Analysis, Fiscal Year 1999:
Stratum: I (Selected by OIG);
Pennsylvania;
SCHIP enrollment: 81,758.
Stratum: II (Universe of states for purposes of random selection);
State: Arizona;
SCHIP enrollment: 26,807.
State: Colorado;
SCHIP enrollment: 24,116.
State: Delaware;
SCHIP enrollment: 2,433.
State: Georgia;
SCHIP enrollment: 47,581.
State: Kansas;
SCHIP enrollment: 14,443.
State: Montana;
SCHIP enrollment: 1,019.
State: Nevada;
SCHIP enrollment: 7,802.
State: North Carolina[A];
SCHIP enrollment: 57,300.
State: Oregon[A];
SCHIP enrollment: 27,285.
State: Utah[A];
SCHIP enrollment: 13,040.
State: Vermont[A];
SCHIP enrollment: 2,055.
State: Virginia;
SCHIP enrollment: 16,895.
[A] State was randomly selected for the OIG's review.
Source: CMS enrollment figures for 1999.
[End of table]
For the 5 sample states, the OIG reviewed a variety of documents the
states submitted to HCFA, such as their SCHIP plans and SCHIP
evaluation reports, which are states' assessments of the effectiveness
of their programs.[Footnote 21] OIG staff conducted site visits and
met with officials responsible for administering SCHIP in all 5
states. The OIG also randomly selected 100 active SCHIP case files
from each of the 5 states in order to evaluate whether Medicaid-
eligible children were incorrectly enrolled in SCHIP. The OIG did not
verify accuracy and completeness of the state case files; rather, it
focused on whether the information in each file supported the
conclusion reached by the state.
OIG's Assessment of Appropriate Enrollment Would Benefit From an
Expanded Selection of States:
In determining whether Medicaid-eligible children were improperly
enrolled in SCHIP, the OIG reported that, based on a sample of 5
states, SCHIP enrollees in the 13 states with separate child health
programs were generally appropriately enrolled. However, because of
variations in the administration of state programs, generalizing from
the 5 states to the 13 states may not be appropriate. In addition,
focusing on only those states with separate SCHIP programs does not
capture the experience of the majority of states or the majority of
SCHIP-enrolled children. Ensuring appropriate enrollment in SCHIP is
important regardless of a state's SCHIP design, because any child
eligible for Medicaid that is incorrectly enrolled in SCHIP results in
a state receiving a higher federal matching rate. Reviewing states,
for example, that operate separate child health programs as part of a
combination program would have increased the proportion of children
under consideration from 16.5 percent to 65 percent of all SCHIP
children enrolled in 1999, and thus provided more comprehensive
information regarding states' enrollment practices.
Alternative Sampling Methodologies May More Fully Account for
Variation among States:
To determine whether states were improperly enrolling Medicaid-
eligible children in SCHIP, the OIG separated the 13 states with
separate child health programs into two strata. The first stratum was
the state of Pennsylvania, which the OIG intentionally selected
because it had the most children enrolled in SCHIP among the 13
states. Four states were then randomly selected from the remaining 12
states. Among the 5 states it reviewed, the OIG identified only a few
cases in which Medicaid-eligible children were inappropriately
enrolled.[Footnote 22] For example, it reported that 1 state had a
single case in which a Medicaid-eligible child was enrolled in SCHIP,
while 2 other states had three and five such cases. The report also
found that 2 states did not have any Medicaid-eligible children
enrolled in SCHIP. The OIG concluded from these findings that most
SCHIP enrollees were correctly enrolled in the 13 states administering
separate child health programs.
Variations in states' enrollment practices, however, raise questions
about the extent to which results from a sample of 5 states can be
generalized to 13 states. Had the OIG drawn its random sample of
active SCHIP cases across the 13 states in its sampling universe, it
would have been better able to generalize its results. An OIG official
told us that the office chose to analyze a sample of 5 states rather
than all 13 states because of time and resource constraints.
Recognizing that analyzing a pure random sample of cases across a
large number of states may be too resource intensive, choosing a
stratified sample of states may provide more information on the extent
to which accurate enrollment may vary with different states'
practices. Even with a stratified sample, however, generalization to
all states may be problematic.
The OIG did select a stratified sample and chose one characteristic”
size of a state's SCRIP program”to develop two strata While dividing
states in terms of size is potentially useful, additional distinctions
may be important because program characteristics vary considerably
from state to state. For example, states with differing administrative
structures (New York uses health plans to determine eligibility and
enroll eligible individuals, Colorado uses an enrollment contractor,
and Oregon uses its Medicaid staff to determine SCRIP eligibility)
could be grouped by certain characteristics for review. This could
help determine whether such differences in administrative structures
have a bearing on appropriate enrollment in SCRIP.
To examine whether the OIG's sampling approach reflected variations in
states' administrative structures, we categorized the 12 states in the
second stratum based on whether they had the same program staff
determine eligibility for both the SCRIP and Medicaid programs, which
can help achieve consistency in eligibility decisions. We found that
the random sample of 4 states did not include any states where
different employees were responsible for determining SCRIP and
Medicaid eligibility, thus raising concerns as to whether conclusions
could be generalized. (See table 2.)
Table 2: Enrollment Practice of 12 States from Which the Random Sample
Was Drawn:
OIG stratum II: Randomly selected:
State: North Carolina;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Same.
State: Oregon;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Same.
State: Utah;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Same.
State: Vermont;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Same.
OIG stratum II: States not selected:
State: Arizona;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Different.
State: Colorado;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Different.
State: Delaware;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Same.
State: Georgia;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Different.
State: Kansas;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Same.
State: Montana;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Different[A].
State: Nevada;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Different.
State: Virginia;
Who determines SCHIP and Medicaid eligibility”same staff or different
staff? Same.
[A] Montana generally uses a different staff to determine eligibility
for each program; however, the state's annual report notes that when
children lose Medicaid coverage due to increases in family income, the
Medicaid eligibility staff can enroll the children in SCHIP. In these
circumstances, the same staff members would enroll children in both
Medicaid and SCHIP.
Source: SCHIP annual reports and state evaluations, 1999, 2000 and
2001.
[End of table]
Increasing the Number of States under Consideration Would Better
Inform the Congress:
Because the scope of the study was limited to the 13 states with
separate child health programs, the OIG examined 322,534, or 16.5
percent, of the approximately 2 million children enrolled in SCHIP in
fiscal year 1999. A review that also included separate SCHIP programs
in states that opted for a combination approach under SCHIP would have
expanded the available universe to 26 states and to 65 percent of all
SCHIP children enrolled in 1999.[Footnote 23] Moreover, using the
OIG's general audit authority, the scope of future reviews could
include states with SCRIP Medicaid expansions, which would provide the
Congress with more complete information on the extent to which states
are enrolling low-income children in the appropriate programs.
[Footnote 24] If this approach had been used in 1999, 23 states and
almost one-fourth of all children enrolled in SCHIP would have been
added. (See table 3.)
Table 3: States' Design Choices and Percentage of Nationwide SCHIP
Enrollment, Fiscal Year 1999:
SCHIP design choices: Separate child health program (15 states);
States: Arizona, Colorado, Delaware, Georgia, Kansas, Montana, Nevada,
North Carolina, Oregon, Pennsylvania, Utah, Vermont, Virginia,
Washington, and Wyoming;
Percentage of total SCHIP enrollment: 16.5%.
SCHIP design choices: Combination (13 states);
States: Alabama, California, Connecticut, Florida, Iowa, Kentucky,
Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York,
and West Virginia;
Percentage of total SCHIP enrollment: 48.7%[A].
SCHIP design choices: Medicaid expansion (23 states);
States: Alaska, Arkansas, District of Columbia, Hawaii, Idaho,
Illinois, Indiana, Louisiana, Maryland, Minnesota, Mississippi,
Missouri, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, Rhode
Island, South Carolina, South Dakota, Tennessee, Texas, and Wisconsin;
Percentage of total SCHIP enrollment: 23.3%.
[A] States with SCHIP combination programs have both a separate child
health program and a Medicaid expansion component. The 48.7 percent
cited in the table does not include the 11.1 percent of children who
are enrolled in SCHIP Medicaid expansion components in these states.
Source: CMS.
[End of table]
While States' Evaluations Offered Limited Results, Future OIG Reviews
May Benefit from Improved Data Sources:
The OIG identified important limitations to states' evaluations that
made it unable to conclude whether states were making progress in
reducing the number of uninsured children and in meeting the
objectives and goals that they established under SCHIP. For example,
the OIG found that states made inappropriate assumptions in reporting
data about the relationship of SCHIP enrollment to the rates of
uninsured, which undermined the credibility of states' results, and
that states often had poor baseline data against which to measure
progress. The OIG also found that states set goals without considering
how to evaluate progress, and that little emphasis was placed on
evaluation by the states. As a result, the OIG made recommendations to
both HCFA and HRSA on ways that the federal government could assist
and guide states in making improvements in their analyses. While the
initial OIG reviews were inconclusive due to weaknesses in states'
evaluations, future efforts may benefit from federal initiatives under
way aimed at improving state-level data and analyses of SCHIP. These
initiatives, however, may not have been in place long enough to
benefit the OIG's next review, since results are due in 2003. As a
result, the OIG may wish to select a different approach”such as
identifying states with more rigorous practices in evaluation, or
augmenting its review with other sources beyond those provided by the
states.
Weaknesses in States' SCHIP Evaluations Limited the OIG's Ability to
Measure Progress:
The OIG identified limitations to the 5 states' SCHIP evaluations and
thus was unable to draw conclusions about states' progress in reducing
the number of uninsured children or meeting their stated objectives
and goals. For example, the OIG cited concerns regarding the
reliability of states' reports of reductions in the number of
uninsured, including inadequate data and evaluation practices. In
cases in which states were unable to measure objectives that were
established at the beginning of their SCHIP programs, their
evaluations generally provided descriptive information on activities
but did not assess the effect that such activities had on achieving
specific goals. (See table 4.) For example, the OIG reported that none
of the 5 states it reviewed attempted evaluations of their outreach
programs or offered explanations of how such programs affected their
measurable progress in enrollment or the number of uninsured children.
Table 4: Limitations to Five States' SCHIP Evaluations Identified by
the OIG, February 2001:
Limitation: Data problems and evaluation practices impaired
evaluations:
Description:
* State-collected data were deficient or outdated.
* State-level estimates based on national survey data were unreliable,
particularly for smaller states.
* States assumed that increased SCHIP enrollment meant reductions in
uninsured.
Limitation: State reports were descriptive, not evaluative;
Description:
* Evaluations described activities without determining whether the
activities were effective.
* Information provided was qualitative and subjective.
Limitation: Goals were set without evaluation in mind;
Description:
* Goals could not be measured.
* Evaluation practices were not established.
Limitation: Evaluation was not considered a priority;
Description:
* Administrators were focused on implementing programs rather than
evaluating their success.
Limitation: Staff members lacked evaluation skills and training;
Description:
* SCHIP staff members were trained program administrators, but
generally lacked thorough understanding of evaluation concepts and
practices.
* SCHIP staffs were small, making it unlikely that additional
evaluation staff members would be hired.
Source: HHS OIG, State Children's Health Insurance Program: Assessment
of State Evaluations Reports, 0E1-05-00-00240 (Washington, D.C.: Feb.
2001).
[End of table]
Of particular concern were limitations in measuring how well states
are meeting the primary objective of the SCHIP program”reducing the
number of uninsured. As noted by the OIG, states”-and other
researchers”-have been hampered by limited reliable state-level data
regarding children's insurance status. When SCHIP was enacted,
estimates of the number of low-income uninsured children were derived
from the annual health insurance supplement to the Current Population
Survey (CPS), the only nationwide source of information on uninsured
children by state. CPS is based on a nationally representative sample
and is considered adequate to produce national estimates.[Footnote 25]
However, CPS data have well-recognized shortcomings, particularly with
regard to state-level estimates, which can be unreliable and exhibit
volatility from year to year because of small samples of uninsured low-
income children, particularly in states with smaller populations. For
example, using the 1994 through 1996 CPS data, estimates of the number
of uninsured children in Delaware ranged from 12,000 to 32,000. In
part because of these data limitations, some states”including 3 of the
states sampled by the OIG”moved to special surveys or studies that
were conducted locally in an effort to develop more precise estimates
of the number of uninsured children.
Despite efforts by states to better estimate the number of uninsured
children, the OIG cited concerns regarding states' analyses. For
example, the OIG reported that some states estimated reductions in the
number of uninsured children by subtracting the number of SCHIP
enrollees from their original baseline estimates. However, such an
approach does not ensure that increases in SCHIP lead to reductions in
the number of uninsured because increases in SCHIP enrollment can
result from children moving from private insurance coverage to public
insurance under SCHIP, an effect known as "crowd-out." Additionally,
changing economic factors can further complicate assessments of a
state's progress in reducing the number of uninsured children. For
example, a state may significantly increase enrollment in SCHIP but”
because of declines in the economy and increased unemployment”continue
to see an increase in the number of uninsured. Under these
circumstances, "progress" in reducing the number of uninsured may be
more difficult to identify.
Based on its findings, the OIG recommended that HCFA identify a core
set of evaluation measures that will enable all SCHIP states to
provide useful information.[Footnote 26] It further recommended that
HCFA and HRSA provide guidance and assistance to states in conducting
useful evaluations of their programs. The OIG noted that SCHIP staffs
would benefit from assistance and training regarding the type of data
to collect and how to conduct evaluations. HCFA concurred with these
recommendations and cited efforts under way to improve states'
evaluations of their SCHIP programs.[Footnote 27]
Subsequent OIG Reviews May Benefit from Efforts to Improve Data
Sources:
Several federal efforts are under way that should help improve states'
data sources and their evaluations of the extent to which their SCHIP
programs are reducing the number of uninsured children. If implemented
on a timely basis, efforts such as the following should help inform
the OIG's subsequent evaluations.
* The Congress appropriated $10 million each year beginning in fiscal
year 2000 to increase the sample size of CPS. Beginning in 2001,
larger sample sizes are being phased into CPS, which should help
improve the accuracy of state-level CPS estimates of uninsured
children.[Footnote 28]
* CMS is working with states to develop consistent performance
measures for SCHIP, with a focus on ensuring appropriate methodology
and consistency of data.
* As a condition of their state SCHIP plans, some states are required
to assess whether the SCHIP program is "crowding out" private health
insurance in their states. These studies could help assess the extent
to which SCHIP is drawing its enrollment from uninsured children”or
from children who were previously insured.
* BBRA requires HHS to conduct an evaluation of SCHIP to determine the
effectiveness of the program and to provide information to guide
future federal and state policy. To comply with BBRA, HHS plans a
series of reports addressing a variety of major topic areas, ranging
from program design to access and utilization; the first report is
expected in spring 2002. HHS plans to use multiple research
strategies, including case studies, surveys, and focus groups, to
address questions of interest.
As the OIG continues to analyze states' progress in SCRIP, its future
reviews are likely to benefit from improvements in state-level
estimates of the number of uninsured children and evaluations of
program implementation. Moreover, improvements in states' analyses and
available data should help the OIG identify and address areas in need
of additional review. However, to the extent that these improvements
are not in place by the time the OIG undertakes its second analysis
due in 2003, it may benefit from expanding its scope of work to
identify and assess states with more rigorous analyses. The OIG may
also wish to review other sources that have assisted states in making
evaluation improvements. For example, while some states have received
private grant funds to help with SCHIP enrollment, they have also
received technical assistance for the purpose of conducting
evaluations on the success of their enrollment strategies.[Footnote
29] Other states have paired with universities or research
organizations to improve their information on the uninsured. By also
drawing on the experience of states with strong evaluations or data
sources, the OIG will be better able to identify approaches that could
further strengthen federal and states' approaches and inform the
Congress on progress in implementing SCHIP.
Conclusions:
Through its periodic evaluations of states' efforts to ensure
appropriate SCHIP enrollment and to reduce the number of uninsured
children, the OIG is in a position to provide objective information to
the Congress and others about the program's operation and success. To
better capture the experience of all states, regardless of the design
of their SCRIP programs, the OIG should expand its scope beyond the 13
states in its first review to also include states that operate
separate child health programs within SCRIP combination programs and
consider including Medicaid expansion programs as well. This would
provide a broader base for understanding how well states are screening
for Medicaid eligibility and identifying issues related to reducing
the number of uninsured children. Such an expansion of scope may also
help identify states with more rigorous evaluations of their SCHIP
programs, and thus provide information on effective approaches to
SCRIP evaluation as well as more complete information for the Congress.
Recommendations to the HHS Inspector General:
In order to better inform the Congress on states' efforts to implement
SCHIP, we recommend that the HHS inspector general:
* expand the scope of the statutorily required periodic reviews to
include all states with separate child health programs, including
those with combination programs, and;
* consider using its general audit authority to explore whether issues
of appropriate SCHIP enrollment also exist among states that have
opted for Medicaid expansions under SCHIP, and should therefore be
included in future OIG reviews.
Agency Comments and Our Evaluation:
We provided the inspector general of HHS an opportunity to comment on
a draft of this report. In its comments, the OIG concurred with our
recommendations, and agreed that expanding the scope of its
inspections to include combination programs that include separate
child health programs would give a greater breadth of information. It
also agreed that including SCHIP Medicaid expansions would broaden the
perspective and present more conclusive information regarding the
status of states' SCHIP programs.
The OIG also provided general comments regarding its approach and
possible approaches to designing future reviews. For example, the OIG
stated that it would consider including differing state processes as a
factor in its next sample design. The OIG also noted the importance of
focusing on states' measurement of their own program performance. We
agree with the OIG that properly conducted state evaluations serve a
vital function and we believe that continued review of these efforts
by the OIG is an important contribution to better understanding
states' progress under SCHIP. In response to the OIG's oral and
written comments, we revised the report to better clarify the scope of
the BBRA mandate. The full text of the OIG's written comments is
reprinted in appendix I.
We are sending copies of this report to the inspector general of the
Department of Health and Human Services and other interested parties.
We will also make copies available to others on request. If you or
your staffs have questions about this report, please contact me on
(202) 5127118 or Carolyn Yocom at (202) 512-4931. JoAnn Martinez-
Shriver and Behn Miller also made contributions to this report.
Signed by:
Kathryn G. Allen:
Director, Health Care”-Medicaid and Private Health Insurance Issues:
[End of section]
Appendix I: Comments from the Department of Health and Human Services'
Office of Inspector General:
Department Of Health & Human Services:
Office of Inspector General:
Washington, D.C. 20201:
March 26, 2002:
Ms. Kathryn G. Allen:
Director, Health Care - Medicaid and Private Health Insurance Issues:
United States General Accounting Office:
Washington, D.C. 20548:
Dear Ms. Allen:
Enclosed are the Office of Inspector General's comments on your draft
report, "Children's Health Insurance: Inspector General Reviews Should
be Expanded to Further Inform Congress," (GA0-02-512). The comments
represent the tentative position of the Office of Inspector General
and are subject to reevaluation when the final version of this report
is received.
The Office of Inspector General appreciates the opportunity to comment
on this exposure draft report before its publication.
Sincerely,
Signed by:
Janet Rehnquist:
Inspector General:
Enclosure:
Comments Of The Department Of Health And Human Services On The U.S.
General Accounting Office's Draft Report, "Children's Health
Insurance: Inspector General Reviews Should Be Expanded To Further
Inform Congress"
The Office of Inspector General (OIG) for Health and Human Services
(HITS) appreciates the opportunity to review GAO's draft report
Children's Health Insurance: Inspector General Reviews Should Be
Expanded To Further Inform Congress, GA0-02-512. This report offers
salient observations regarding two studies issued by the OIG in
February 2001. The OIG reports, State Children's Health Insurance
Program - Ensuring Medicaid Eligibles are not Enrolled in SCHIP, OEI-
05-00-00241 and State Children's Health Insurance Program - Assessment
of State Evaluations Reports 0E1-05-00-00240 were produced to meet the
mandate specified in the Balance Budget Refinement Act of 1999 (BBRA)
for the OIG to prepare such reports and to offer States, the Center
for Medicare and Medicaid, and Congress information regarding certain
facets of the SCHIP program. We concur with GAO's recommendations.
General Comments:
As pointed out by GAO, the sample for the 2001 reports was stratified
by size. GAO has noted that other sampling methods could have been
used and suggested that a more effective technique would have been to
stratify the sample based upon administrative features used by the
States, such as the separation of SCHIP and Medicaid staffs for making
eligibility determinations. No sampling method guarantees unbiased
results. We believe that our sampling method was appropriate. It is
possible that the differences in enrollment processes between the
various States could affect the results of this study but we cannot be
certain of this. Nevertheless there may be merit in GAO's suggestion.
When we select the sample for the 2003 studies, we will consider the
State processes as a factor in the sample design.
The GAO suggested that we consider data sources other than those
available from States in our future reviews. The OIG will bear in mind
the suggestions made regarding our future measurement of the
reliability and validity of States' evaluation efforts. However, we
utilized the most complete and accurate data available at the time of
our review. As GAO pointed out, it is unlikely that the Federal
efforts to improve States' data sources will be completed and States
may still be experiencing problems with the reliability and validity
of the baseline data utilized as part of their evaluations.
While we will consider the other data sources available to measure
State performance, the OIG maintains that it will remain important to
continue focusing on what States are doing to measure their own
program performance. We believe that future reports should evaluate
what progress has been made by States related to establishing
measurable goals and training staff so that they can perform the
evaluation process. Properly conducted State evaluations serve a vital
function. They not only inform the Secretary of Health and Human
Services of the progress being made to meet the States' performance
goals but they also serve as program management tools for the States.
GAO Recommendation:
We recommend that the HHS Inspector General expand the scope of the
statutorily required periodic reviews to include all States with
separate child health programs, including those with combination
programs.
Department Comment:
We agree that expanding the scope of our inspections to include
combination programs would give a greater breadth of information. The
OIG is presently in the process of developing the FY 2003 Work Plan,
and will consider expanding the scope of our work to include
combination programs in our future work and data analysis.
GAO Recommendation:
We recommend that the HHS Inspector General consider using its general
audit authority to explore whether issues of appropriate SCHIP
enrollment also exist among States that have opted for a Medicaid
expansion under SCHIP, and should therefore be included in future OIG
reviews.
Department Comment:
As with the previous recommendation, the OIG agrees that the inclusion
of such programs in our analysis would broaden our perspective and
present more conclusive information regarding the status of SCHIP
programs. Inclusion of these programs will be considered in our future
work.
[End of section]
Related GAO Products:
Medicaid and SCHIP: States' Enrollment and Payment Policies Can Affect
Children's Access to Care. [hyperlink,
http://www.gao.gov/products/GAO-01-883]. Washington, D.C.: Sept. 10,
2001.
Children's Health Insurance: SCHIP Enrollment and Expenditure
Information. [hyperlink, http://www.gao.gov/products/GAO-01-993R].
Washington, D.C.: July 25, 2001.
Medicaid and SCHIP: Comparisons of Outreach, Enrollment Practices, and
Benefits. [hyperlink, http://www.gao.gov/products/GAO/HEHS-00-86].
Washington, D.C.: April 14, 2000.
Children's Health Insurance Program: State Implementation Approaches
are Evolving. [hyperlink, http://www.gao.gov/products/GAO/HEHS-99-65].
Washington, D.C.: May 14, 1999.
[End of section]
Footnotes:
[1] Medicaid is a federal-state program that provides health care
coverage to certain categories of low-income adults and children.
SCRIP was established as title XXI of the Social Security Act by P.L.
105-33 and is classified to 42 U.S.C. § 1397aa et seq.
[2] The District of Columbia is considered a state for purposes of
this report.
[3] SCHIP offers an "enhanced" federal matching rate that is derived
from a state's Medicaid rate. Each state's match from SCHIP is equal
to 70 percent of its Medicaid matching rate plus 30 percentage points,
not to exceed a federal share of 85 percent. While the federal share
of expenditures for Medicaid can range from 50 to 77 percent, federal
shares of SCHIP expenditures can range from 65 to 84 percent.
[4] See U.S. General Accounting Office, Children's Health Insurance
Program: State Implementation Approaches Are Evolving, [hyperlink,
http://www.gao.gov/products/GAO/HEHS-99-65] (Washington, D.C.: May 14,
1999).
[5] See H.R. Rep. No. 106-199, at 60 (1999).
[6] The SCRIP statute includes a provision requiring states, in
establishing their programs, to specify strategic objectives and
performance goals for providing child health assistance under SCRIP.
See 42 U.S.C. §1397gg.
[7] BBRA amended the Social Security Act to require the HHS OIG to
audit a sample of states beginning in fiscal year 2000 and every third
fiscal year thereafter.
[8] See the related products listed at the end of this report.
[9] In June 2001, the secretary of BHS announced that HCFA's name
would be changed to the Centers for Medicare and Medicaid Services.
For this report, we will continue to refer to HCFA where our findings
apply to the organizational structure and operations associated with
that name.
[10] See Department of Health and Human Services, Office of Inspector
General, State Children's Health Insurance Program: Ensuring Medicaid
Eligibles Are Not Enrolled in SCHIP, OEI-05-00-00241 (Washington,
D.C.: Feb. 2001), and Department of Health and Human Services, Office
of Inspector General, State Children's Health Insurance Program:
Assessment of State Evaluations Reports, OEI-05-00-00240 (Washington,
D.C.: Feb. 2001).
[11] In general, the SCRIP statute targets children in families with
incomes at or below 200 percent of the poverty level, which equates to
$36,200 for a family of four in 2002. The statute allows a state to
expand eligibility up to 50 percentage points above its Medicaid
income eligibility standard in 1997. See 42 U.S.C. §
1397jj(b)(1)(B)(6)(1).
[12] However, states that expend their available SCHIP funds may then
claim Medicaid matching rates for benefits and services provided under
Medicaid expansions.
[13] EPSDT is optional for the medically needy population, a category
of individuals who generally have too much income to qualify for
Medicaid but have "spent down" their income by incurring medical
and/or remedial care expenses. See 42 U.S.C. § 1396 (a)(10)(C).
[14] For additional information on EPSDT, see U.S. General Accounting
Office, Medicaid: Stronger Efforts Needed to Ensure Children's Access
to Health Screening Services, [hyperlink,
http://www.gao.gov/products/GAO-01-749] (Washington, D.C.: July 13,
2001).
[15] In prescribing a package of benefits, states with separate child
health programs choose among four coverage standards. First, the
benchmark standard provides coverage equivalent to that received by
federal employees, state employees, or those enrolled in a state's
health maintenance organization with the largest insured commercial
non-Medicaid enrollment. Second, the benchmark equivalent standard
provides basic coverage for inpatient and outpatient hospital care;
physicians' surgical and medical services; laboratory and x-ray
services; and well-baby and well-child care, including age-appropriate
immunizations. Third, existing comprehensive state coverage includes
benefit packages for state-operated children's health insurance
programs in Florida, New York, and Pennsylvania. Fourth, states may
receive approval from the secretary of health and human services for
benefit packages that provide appropriate coverage for low-income
children but do not match the first three standards.
[16] For example, a state with the minimum 50-percent Medicaid match
receives a 65-percent match under SCHIP.
[17] See 42 U.S.C. § 1397bb(b)(3).
[18] The OIG is charged with protecting the integrity of HHS programs,
as well as the health and welfare of the beneficiaries of those
programs. The OIG's duties are carried out through a nationwide
network of audits, investigations, inspections, and other mission-
related functions. The OIG informs the secretary and the Congress of
program and management problems and recommends legislative,
regulatory, and operational approaches to correct them. The OIG may
conduct its own evaluations or those mandated by the Congress.
[19] The BBRA mandate provides that "A state described in this
[mandate] is a state with an approved state child health plan...that
does not, as part of such plan, provide health benefits coverage under
the State's Medicaid program." 42 U.S.C. § 1397hh(d)(2).
[20] The 15 states were Arizona, Colorado, Delaware, Georgia, Kansas,
Montana, Nevada, North Carolina, Oregon, Pennsylvania, Utah, Vermont,
Virginia, Washington, and Wyoming.
[21] A state's SCHIP evaluation was required to address several areas
of analysis, including (1) the quality of health coverage provided,
(2) its choices of health benefits coverage, (3) activities in
coordinating SCHIP with other public and private programs, (4) changes
in trends in the states that affect the provision of health insurance,
and (5) recommendations for improving SCHIP.
[22] Based on a two-stage stratified-cluster sample, the OIG estimated
that, at a 90-percent confidence level, from 97.6 to 99.6 percent of
SCHIP enrollees were correctly enrolled in the 13 states administering
separate child health programs in fiscal year 1999.
[23] Some states have altered their design choices under SCRIP since
1999, which has resulted in more combination and separate child health
programs in SCHIP (19 states and 16 states, respectively, as of
February 2002). If the OIG were to include in its scope the experience
of states with combination programs for the 2001 SCRIP enrollment of
4.6 million, it would have selected a sample from 35 states, or 74
percent of all children enrolled.
[24] See 5 U.S.C. Appendix 3, § 4(a)(1).
[25] CPS is a monthly survey of about 50,000 households. It is the
primary source of information on the labor force characteristics of
the U.S. population, and estimates obtained from CPS include
employment, unemployment, earnings, and hours of work.
[26] HHS OIG, State Children's Health Insurance Program: Assessment of
State Evaluation Reports, OEI-05-00-00240 (Washington, D.C.: Feb.
2001).
[27] HRSA did not comment on the recommendations made by the OIG.
[28] Data from the expanded sample are expected to appear in all CPS-
based reports beginning in 2002.
[29] For example, the Robert Wood Johnson Foundation funds initiatives
that assist states and others to expand health insurance coverage.
Among other things, the foundation has published an evaluation tool to
guide policymakers throughout the evaluation process.
[End of section]
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