Volume 28, Issue 486 March 05, 2007 CONTENTS

Volume 28, Issue 486
March 05, 2007
Georgia Considers How to Adapt to SCHIP Funding Shortfall
Cash and Counseling Programs Given Major Boost
States Helping Youth Who “Age Out” of Foster Care
CO Helps Ill Kids…Rural Workforce Solutions…Organ Donor Tax Breaks…Coverage Subsidy in AZ
Health care will consume one out of every five dollars by 2016, according to a new report from CMS.
Anna C. Spencer
While Congress debates the reauthorization of the State Children’s Health Insurance
Program (SCHIP), states that are facing budget shortfalls are facing hard choices. On March
11, for example, Georgia will freeze enrollment in its SCHIP, PeachCare for Kids
(https://www.peachcare.org/Index.aspx). Unless Congress acts, Georgia—which confronts
a $131 million shortfall in federal SCHIP funding—will be one of 14 states that will run out of
program funds before the next federal fiscal year begins.
Roughly 273,000 children are covered by PeachCare. Each month, between 3,000 and 5,000
children enroll in the program, which means that through October, 12,000-15,000 children
will be denied PeachCare coverage because of the freeze. While the state has sufficient
funds to cover its portion of the program costs, without the federal matching dollars,
Georgia “had no choice but to freeze enrollment until further notice,” said Rebecca
Kellenberg, director of eligibility and quality control for PeachCare for Kids and Medicaid.
“PeachCare can’t continue to accept new kids into the program.”
The potential federal funding shortfall is leading state legislators to consider a number of
other measures to control growth in PeachCare. In early February, House Speaker Glenn
Richardson introduced a bill (http://www.legis.state.ga.us/legis/2007_08/sum/hb236.htm)
(HB263) that would lower the income eligibility for PeachCare. Currently, children in families
with annual incomes of up to 235 percent of the federal poverty level (FPL) are eligible; the
bill would lower that to 200 percent of FPL.
“Until Congress steps up and fulfills their commitment to the people of Georgia, it is prudent
to take some steps now to ensure that we can continue to provide PeachCare to our
citizens,” Senator Richardson told the Atlanta Chronicle. If enacted, the bill would affect
about 5.3 percent of PeachCare enrollees, resulting in nearly 15,000 kids losing coverage.
Nearly 70 percent of PeachCare beneficiaries have incomes lower than 150 percent of the
poverty level.
In addition, on February 23, the Senate’s PeachCare Task Force released an outline of
reform proposals, which includes raising premiums from 0.7 percent of household income to
1.5 percent; instituting a $25 co-pay for preventable emergency room visits; and, including
basic dental coverage in the plan (exams, x-rays, preventive care), but making
comprehensive dental and vision care an optional add-on. Georgia Rep. Ron Stephens
introduced HB620 (http://www.legis.state.ga.us/legis/2007_08/pdf/hb620.pdf), which
would move the poorest children from SCHIP to Medicaid. The proposed legislation would
expand eligibility for the state’s Medicaid program to children birth through age one in
families with incomes up to 200 percent of the FPL, and children ages one through 18 in
families with incomes up to 150 percent of the FPL.
The reauthorization crisis notwithstanding, a number of factors are putting extra stains on
PeachCare. Between 2000-2004 there was a 7.7 percent decline in the number of Georgia
employers offering health coverage to their employees, compared to the national average of
4.9 percent. At the same time, the state experienced a 27 percent jump in population
growth. Georgia is the ninth largest state in the Union, and PeachCare is the nation’s fourth
largest children’s health insurance program. An estimated 100,000 Georgia children are
eligible but not enrolled in PeachCare, leaving “no end in sight for potential growth in the
number of kids who need coverage,” said Kellenberg.
Georgia officials say the state also is at a disadvantage because the formula used to
calculate state allotments is “flawed”—funding is based in part on the number of low-income
and uninsured children. Because the state has “been so successful in implementing the
SCHIP program, the number of uninsured children has decreased, which means funding [per
enrollee] has decreased but the need has remained the same,” said Kellenberg. “It is our
hope that Congress will address the inequities in the current funding formula by, at the
least, adding a cost-of-maintenance factor.” (Georgia is not alone in being critical of the
funding formula, but other states want to change other specific provisions.)
Federal Action?
Lawmakers on Capitol Hill have been debating whether to provide stopgap funding for states
with SCHIP budget shortfalls, even before they take up possible changes to the funding
formula. In response to these rumblings, the Georgia Legislature announced March 2 that it
would take a two-week hiatus, putting on hold any deliberations about reforming the
PeachCare program. “We’re trying to give Congress a chance to act,” House Majority Leader
Jerry Keen said at a press conference. Federal lawmakers are currently considering a
supplemental appropriations bill that, among other things, would give $750 million to states
with SCHIP budget shortfalls through the end of September 2007.
Christina Kent
Policymakers have long discussed the importance of making the consumer the center of
care. Now a Medicaid program that does just that is catching on around the country, driven
by studies that show the model improves the quality of care without causing costs to
skyrocket; a provision in the 2005 Deficit Reduction Act (DRA); and start-up grants given to
15 states.
The program—Cash & Counseling (C&C)—allows disabled, frail and elderly individuals who
receive Medicaid personal care services to select those services and the person who should
provide them. Rigorous testing in Arkansas, Florida and New Jersey showed that C&C
improved the delivery of services, without leading to fraud or abuse of the care receiver.
Congress was so impressed that it included a provision in the DRA removing the
requirement that states get a waiver before instituting C&C. As of January 1, 2007, states
can write a C&C option into their state Medicaid plan.
“There’s no question that the Cash and Counseling model of self-directed personal
assistance services can help states…better serve the long-term care Medicaid population,”
said Kevin Mahoney, national program director of the Cash & Counseling Program Office at
Boston College.
Taking Care of Business
Medicaid gives states the option of covering personal care services (such as help in getting
out of bed and bathing) for disabled beneficiaries. Traditionally, case managers assess
beneficiaries’ needs and home care agency personnel deliver approved services.
Policy experts and advocacy groups theorized that Medicaid recipients might benefit if they
had more control over their own care. So in the late 1990s, The Robert Wood Johnson
Foundation (RWJF) and the Department of Health and Human Services (HHS) joined
together to provide grants to the three states listed above to help them establish C&C
programs. (The states had to obtain waivers from HHS to do so.)
Under the pilot project, enrollees got a budget based on the funds that would otherwise
have been spent on agency care. With the help of counselors, participants decided what
services (and/or devices such as wheelchair ramps or even a microwave oven) they needed
and which caregivers they wanted to hire to help them. Caregivers may be family members,
but all the services must be approved and obtainable within the budget. Those who desired
it also received help in managing their budgets from a fiscal representative.
Participants pilot were randomly assigned to either C&C or to home care agencies.
Mathematica analyzed the controlled experiment and reported that the large majority of
C&C participants said the program significantly improved the quality of their lives and the
lives of their primary caregivers. Concerns about fraud and abuse were unfounded.
Overall costs to Medicaid were somewhat higher for C&C participants in each state, but this
occurred mostly because the home care agencies failed to deliver all the care that was
approved for consumers in the control group. “In every state we wound up spending more
on personal care, but less on other Medicaid services,” such as admissions to nursing
homes, Mahoney said.
In 2004, RWJF and HHS came together again to help launch C&C programs in 12 additional
states, providing each—Alabama, Iowa, Kentucky, Michigan, Minnesota, New Mexico,
Pennsylvania, Rhode Island, Vermont, Washington and West Virginia—with a threeyear grant of up to $250,000. In addition, Illinois received a grant from the Retirement
Research Foundation to start up its own C&C effort. Currently, 10 of those states have their
programs up and running, and two more are in the process of creating them, said Mahoney.
A Wide Variety
No two state C&C programs are alike. “Each state adapts it to its own system, politics and
culture,” said Mahoney. Political support for the programs has generally been strong,
Mahoney added. “We’re one of those very rare instances where we’ve pretty much had solid
bipartisan support.”
To date, only two states have passed legislation authorizing C&C; others have relied on
administrative actions. The Florida Legislature passed enabling legislation (SB 1276
(http://www.cashandcounseling.org/resources/20060111-140727/floridabill.pdf)) in 2002,
and then, having received an 1115 waiver for the C&C program, “cashed out” the homeand community-based services covered under its Medicaid 1915(c) programs for disabled
children and adults. Florida, like many other states, sought to ensure budget neutrality by
discounting the enrollees’ monthly budgets—in Florida’s case by roughly 10 percent,
depending on the population served. (States also can keep costs down by controlling
enrollment—by, for example, allowing only those who are already receiving Medicaid home
care services to be eligible for C&C as opposed to opening the program to new applicants.)
In 2005, Kentucky enacted authorizing legislation (SB 116 (http://www.lrc.ky.gov/krs/20500/5606.pdf)) for its “Consumer Directed Option” program. State officials are enrolling
individuals who are covered under one of the Bluegrass State’s 1915(c) waivers, including
aged and disabled beneficiaries, and those with acquired brain injuries. The state plans to
enroll 250 participants in the first year.
“It wasn’t difficult to drum up support” in the Kentucky General Assembly, said bill sponsor
Representative Jimmy Lee. “But I was surprised that there were so many different ideas
about what independent living should be. We had a pretty good debate.”
One of the things legislators discussed was whether family members should be allowed for
C&C employment. “We decided, who better to give you a bath than your sister?” Lee said.
The program should be especially useful in rural areas, where home care personnel—and
jobs—may be in short supply, Lee added. “If you could get your sister to help, and help her
to get compensation, that’s a win-win.”
Far From Easy
C&C appears to make so much sense that it was endorsed by the Medicaid Commission that
recommended long-term Medicaid reforms to HHS Secretary Michael Leavitt late last year.
Nevertheless, implementation is far from easy, as it involves reeducating beneficiaries about
their home care delivery, hiring consultants to help individuals determine which services (or
devices) are desirable and helping beneficiaries to decide whether they need help from a
fiscal representative to manage the financial aspects of the program (enrollees must, for
example, pay taxes for their new home care employees).
The Mathematica report on Florida’s program noted that case management agencies often
have their clients’ trust and can easily discourage enrollment if they are opposed to the
concept of consumer direction. Also, Mathematic found, because the purchasing plan is
critical to ensuring that the allowance is not abused, it must be revised to accommodate
changes in consumer needs. Doing so requires a substantial amount of time from
consultants and other program staff.
Regardless of how popular C&C becomes, there always will be a need for home care
agencies, Mahoney said. Beneficiaries are allowed to choose between C&C and agency home
care, and some prefer agency care. Also, “what if the caregiver should move away or die?”
Mahoney asked.
Meanwhile, researchers are getting closer to weeding out program design features that
don’t work, from those that do. “We’re getting closer and closer to having national
guidelines” that states could tailor to their own needs, Mahoney said.
A wealth of information, including descriptions of individual state programs, is available at:
http://aspe.hhs.gov; www.aoa.gov
A detailed description of all the DRA provisions that affect long-term care (including C&C, a
home- and community-based state plan option, and a money follows the person
demonstration project) is at www.cashandcounseling.org/resources/20060404112138/BackgroundMemoFeb28TechAssistCall2-20-06.doc
Matthew Gever
If five more states act this year, all 50 will have expanded health coverage to a particularly
vulnerable population: the approximately 20,000 young people who “age out” of foster care
every year, generally by turning 18 years old. States have acted because the vast majority
of these youth face enormous difficulties transiting into adulthood.
The Urban Institute says that as many as 80 percent of this population requires some form
of mental health intervention, and over half have chronic conditions, such asthma, cerebral
palsy, obesity and substance abuse, according to Jerry Friedman, executive director of the
American Public Human Services Association (APHSA).
The APHSA has just released a report (http://www.aphsa.org/Home/Doc/Medicaid-Accessfor-Youth-Aging-Out-of-Foster-Care-Rpt.pdf) that examines how states are extending
coverage to emancipated youth and the cost estimates of doing so. The most popular route
has been to extend Medicaid to aged-out foster youth using the so-called “Chafee option.”
Contained in a 1999 law named after its sponsor former Sen. Lincoln Chafee, this option
allows states to extend Medicaid coverage up to age 21 for those residing in foster care on
their 18th birthdays. Seventeen states have used the Chafee option to extend coverage, and
officials in another five states reported they would consider doing so in the 2007 legislative
In 2001, Texas used the Chafee option when it enacted SB 51
(http://www.legis.state.tx.us/tlodocs/77R/billtext/html/SB00051F.htm). This bill amended
the Human Resources Code to extend Medicaid coverage to emancipated youth until the
month of their 21st birthday. “This provision at least provides these young adults with some
means of security for everything from regular appointments to emergencies which could
prevent them from spending unnecessary hours in an emergency room to the direness of
being homeless,” said Texas Sen. Carlos Uresti. For the 2007 session, Sen. Uresti has
introduced SB 938 (http://www.legis.state.tx.us/tlodocs/80R/billtext/pdf/SB00938I.pdf),
which provides for medical assistance to former foster care adolescents aged 21 to 25 who
are enrolled in higher education for at least 12 credits per semester.
The remaining 28 states and the District of Columbia use a variety of other methods to
extend coverage, such as the medically needy category, 1115 waivers, the State Children’s
Health Insurance Program and general assistance based on income and resources.
States now have an additional way to expand coverage—the 2005 Deficit Reduction Act
(DRA). The DRA allows states to create specific benefit packages for selected populations
without having to first obtain a federal waiver.
While no state has yet used the DRA to specifically address foster youth, at least four states
have enacted benefit flexibility options for various populations in their Medicaid programs.
For example, the Idaho Legislature used the DRA in 2006 to develop a series of populationspecific Medicaid benefit packages. Among these is the Benchmark Basic Plan
?tabID=0&ItemID=6246&MId=11697&wversion=Staging), which provides standard
Medicaid benefits as well as Early Periodic Screening, Diagnosis and Treatment (EPSDT)
services and enhanced mental health services to youth up to age 21. Many post-foster
youth would be eligible for these benefits.
Only time will tell if states will choose to use the DRA to create a special benefit package for
this admittedly rather small population. Last year, approximately 24,000 individuals aged
out of the system. In 1998, that number was just over 17,000.
Costs Vary, Needs Great
The costs for providing coverage to this group vary from state to state, ranging from $111
per person/per month in a managed-care setting in California, up to $350 per person/per
month in South Carolina, according to the APHSA survey, which was conducted in the fall
of 2006. “It does cost financial resources, but the gains by far outweigh the resources given
out in the long run,” said Sen. Uresti.
“These are kids who need more attention from the behavioral health system,” said Gary
Stangler of the Jim Casey Youth Opportunities Initiative (http://www.jimcaseyyouth.org/).
“For example, they’ve been on medication while in foster care. Suddenly they’re 18, they’re
released by the system and the medication that has stabilized their condition is no longer
According to the nonprofit Network on the Transitions to Adulthood
(http://www.transad.pop.upenn.edu/downloads/courtney--foster care.pdf), one recent
study found that 37 percent of foster youth aged 17–20 had not completed high school or
gotten a GED. Foster kids more often become involved in crime or are victims of crime than
their peers, they are more frequently homeless, less likely to be employed than their peers,
and more likely to rely on public assistance.
Several states have developed streamlined enrollment for foster care youth, as the process
of enrolling in coverage can be overwhelming. “I find it intimidating, and I ran three
different state human services programs,” said Friedman. For example, Texas, California,
Florida and South Dakota automatically enroll individuals into Medicaid once they age out
of the system, while Kansas has a specific application form for this group. “Teenagers are
not quick to apply for Medicaid,” said Stangler. “They don’t think about it until there is an
episode for which they need medical care.”
Terminally Ill Kids Get More Options
In February, Colorado became the second state in the nation to receive a waiver to
implement a children’s palliative care program as part of Medicaid. The waiver allows the
Centennial State to implement CHI PACC (http://www.chionline.org/whoweare/), the
Children’s Hospice International Program for All-Inclusive Care for Children and their
Families. Specifically, the CHI PACC waiver allows children who are receiving Medicaid
reimbursement for palliative care to also pursue curative treatments. Under current
Medicaid rules, a child may receive palliative care only if he or she has less than six months
to live and forgoes all other healing efforts. Florida is the only other state with a CHI PACC
waiver, which it received in 2005. The two states used two different waivers to set up the
programs; Colorado used a Section 1915(c) waiver, and Florida, a 1915(b) waiver. CMS
encourages states to use the 1915(c) waiver, since it provides more flexibility to states and
has an element of institutional care. Florida used a (b) waiver since it already had one in
place, making the process easier. States can also use state plan amendments or 1115
waivers to apply for this waiver, but CMS states that these options are not ideal for CHI
PACC. To learn more about what states are doing in children’s hospice care, see the Oct. 30,
2006 State Health Notes article at www.ncsl.org/programs/health/shn/2006/shn478b.htm.
Workforce Solutions
Legislators looking for solutions to health workforce shortages in rural areas can turn to a
new Web site created by the University of North Dakota Center for Rural Health. The Web
site highlights the latest findings by the federal Rural Health Research Centers. Sample
topics include whether home visitation programs by lay health workers can improve
pregnancy and birth outcomes; the lack of preventive care for diabetes in rural areas;
implementation of Medicaid disease management programs in rural areas; and current
trends in the clinical skills, prescriptive authority and geographic distribution of advanced
practice psychiatric nurses. "Rural health care can face significant challenges and it is hard
to find solutions when you are operating in a data-free zone," Mary Wakefield, director of
the Center for Rural Health, told AHA News. To view the website, visit
Tax Breaks for Organ Donors
Legislators in Connecticut are considering a bill that would provide significant tax
deductions to residents who donate an organ while living. The bill (SB 190
(http://www.cga.ct.gov/2007/TOB/S/2007SB-00190-R00-SB.htm)) would allow a living
donor to deduct up to $10,000 for expenses associated with donating an organ to another
human being. Eligible expenses include the cost of travel, lodging and lost wages. Some
have expressed concern that the deduction would not be beneficial to donors of lower
income, and they would prefer other benefits, such as paid leave. If passed, Connecticut
would become the 12th state to provide this deduction to donors, according to NCSL. Seven
other states are considering this legislation in this session. Wisconsin and Maryland
provide 30 days of paid leave to state employees who donate organs. The federal
government provides the same leave for its employees.
Coverage Subsidy Slow to Take Off
A premium assistance program in Arizona may be falling short of expectations, according
to The Arizona Republic. Under the program, the state provides low-income individuals (up
to 250 percent of the federal poverty level) and small businesses (2 to 25 employees) with
certificates ranging from $500 to $3,000. The parties then give the certificates to an
insurance company and receive a discount for that amount on annual premiums. In turn,
the insurance companies then receive credits on their state taxes based on the amount of
the certificates. The program was launched after the Legislature passed HB 2177
(http://www.revenue.state.az.us/Refunds and Credits/implementation_procedures.pdf) in
the 2006 session. So far, the state has issued 60 certificates to individuals and 335 to small
businesses. However, since several thousand individuals and businesses are eligible, some
critics have suggested that the program may be too complex for applicants. Others question
whether insurance companies are in fact discounting their rates. “We do not know if, in fact,
the insurance company made any reduction at all,” said Rep. Phil Lopes during a recent
hearing on expansion of the program. Supporters argue that the program will serve more
people over time as more become aware of it; they note that many business owners have
expressed interest and enthusiasm.
Christina Kent
National spending on health care will total $4.1 trillion by 2016, accounting for 20 percent of
every dollar spent, according to a report
(http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.2.w242) from the Centers
for Medicare & Medicaid, published in the Feb. 21 Health Affairs.
In 2006, per capita spending on public and private health-care programs was about $7,500;
that amount is forecast to rise to $12,800 by 2016. It’s expected that public programs will
shoulder ever-greater portions of spending, rising from about 40 percent of total health-care
spending in 1990, to nearly 49 percent by 2016.
It’s estimated that Medicaid spending in 2006 totaled $313.5 billion—about the same as in
2005. The deceleration in Medicaid spending reflects a one-time shift in prescription drug
spending, as dual eligibles’ drug costs were moved from Medicaid to Medicare Part D. In
2007, Medicaid spending is expected to again accelerate.
The two charts below show state-by-state variations in health spending and rates of
uninsured. The information is from An Overview of the U.S. Health Care System, a
chartbook published Jan. 31 by the Department of Health and Human Services. To download
the chartbook, click on:
© 2007 National Conference of State Legislatures, All Rights Reserved
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Washington Office: Tel: 202-624-5400 | Fax: 202-737-1069 | 444 North Capitol Street, N.W., Suite 515 | Washington,
D.C. 20001
Donna Folkemer, Forum Director
Anna C. Spencer, Managing Editor
Christina Kent, Editor
Contributors: Allison Colker, Carla Curran, Matthew Gever, Kala Ladenheim, Tara Lubin, Sarah Steverman
Anna C. Spencer, Managing Editor
Tel: 202-624-5400
Fax: 202-737-1069
email: [email protected]
State Health Notes is published biweekly (24 issues/yr.) by the FORUM FOR STATE HEALTH POLICY LEADERSHIP, an information and research
center at the National Conference of State Legislatures in Washington, D.C.
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