Medicaid Managed Care: States' Safeguards for Children With Special Needs
Vary Significantly (Letter Report, 09/29/2000, GAO/HEHS-00-169).

Pursuant to a congressional request, GAO reviewed the Medicaid managed
care services for children with special needs, focusing on the: (1)
extent to which states are enrolling children with special needs, as
defined by the Balanced Budget Act (BBA), in capitated managed care
plans; and (2) scope and effectiveness of the safeguards states are
implementing to ensure that children with special needs receive
appropriate care within Medicaid managed care.

GAO noted that: (1) following the general trend of serving more Medicaid
beneficiaries through managed care delivery systems, many states are
enrolling a range of children considered to have special needs in
capitated managed care programs; (2) however, the number of children
involved is uncertain, because many of the states could not readily
report the number of affected children; (3) the 36 states GAO surveyed
enroll some or all of the BBA categories of children in capitated
managed care: (a) 14 states mandated enrollment; (b) 11 states allowed
families to make a choice between capitated managed care and some form
of fee-for-service coverage; and (c) another 11 states had both
mandatory and voluntary enrollment for children in different categories
or in different parts of the state; (4) of the 6 categories of children
with special needs identified by the BBA, Supplemental Security Income
(SSI) children are the most likely to be enrolled in capitated plans;
(5) between 1996 and 1999, the number of states enrolling SSI children
in capitated health plans increased from 17 to 31; (6) Katie Beckett
state plan children were the least likely to be enrolled; (7) adoption
and implementation of safeguards for these children vary significantly
across the 36 states GAO surveyed; (8) some types of safeguards have
been more widely adopted by states than others; (9) 31 of the 36 states
have at least one measure designed to ensure adequate pediatric provider
capacity; (10) however, 18 states do not inform health plans of the
presence of special needs when enrolling children, and 18 do not require
health plans to conduct a needs assessment soon after enrollment; and
(11) additionally, some safeguards may be less effective because states
have made them optional rather than mandatory, have not adopted rigorous
approaches in their design and use, or do not target the safeguard
specifically for children with special needs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-00-169
     TITLE:  Medicaid Managed Care: States' Safeguards for Children
	     With Special Needs Vary Significantly
      DATE:  09/29/2000
   SUBJECT:  Managed health care
	     State-administered programs
	     Health care programs
	     Children with disabilities
	     Eligibility criteria
	     Health services administration
	     Health insurance
IDENTIFIER:  Medicaid Program
	     Supplemental Security Income Program
	     Medicaid Katie Beckett State Plan Option
	     Maternal and Child Health Services Block Grant
	     HHS Adoption Opportunities Program
	     Title IV-E Foster Care Program
	     Maryland
	     Oregon
	     Michigan
	     District of Columbia
	     Florida
	     Delaware
	     State Children's Health Insurance Program

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GAO/HEHS-00-169

A

Report to Congressional Requesters

September 2000 MEDICAID MANAGED CARE

States' Safeguards for Children With Special Needs Vary Significantly

GAO/ HEHS- 00- 169

Letter 5 Results in Brief 8 Background 9 Many States Are Enrolling BBA-
Defined Children With Special

Needs in Capitated Plans 12 Adoption and Effectiveness of Safeguards Vary
Among States 15 Observations 29 Agency Comments 30

Appendixes Appendix I: Scope and Methodology 34 Appendix II: Medicaid
Managed Care for Children With

Special Needs 37 Appendix III: State Managed Care Enrollment Policies for

Children With Special Needs 40 Appendix IV: State- Reported Numbers of
Children in BBA

Categories Enrolled in Capitated Health Care Plans 43

Appendix V: Care Coordination for Children With Special Needs in Four States
45

Appendix VI: Health- Based Risk- Adjustment Systems Used by Maryland,
Michigan, and Oregon 53

Appendix VII: Selected Quality- Monitoring Activities That Can Be Targeted
to Children With Special Needs 55

Appendix VIII: Comments From the Department of Health and Human Services 58

Appendix IX: GAO Contacts and Staff Acknowledgments 62 Related GAO Products
63 Tables Table 1: Descriptions of Safeguards for Children With Special

Needs Enrolled in Capitated Medicaid Managed Care That Were Identified by
Experts and Advocates 10 Table 2: State Enrollment Policies for Children
With Special

Needs as of October 31, 1999 (36 states) 13 Table 3: BBA Categories of
Children With Special Needs by

Enrollment Type as of October 31, 1999 (36 states) 13

Table 4: Numbers of States Using Various Requirements to Ensure Provider
Access for Children With Special Needs 21 Table 5: Comparison of Annual
Capitation Payments for 31

Selected Children Moved From Michigan's General Medicaid Program to Its
Specialty Health Plan 26 Table 6: State- Reported Quality Assurance Measures
Specific

to Children With Special Needs 28 Table 7: Overview of Medicaid Managed Care
Programs in Florida,

Maryland, Michigan, and Oregon That Enroll Children With Special Needs 36
Table 8: Summary of HCFA's Interim Review Criteria for

Children With Special Needs 39 Table 9: Number of Enrolled Children 43 Table
10: Care Coordination Activities for Children With Special

Needs in Four States 51 Table 11: Health- Based Risk- Adjustment Systems
Used by

Maryland, Michigan, and Oregon 54 Table 12: Measures or Processes States and
Health Plans Can

Use to Monitor the Quality of Care for Children With Special Needs 57

Figure Figure 1: Managed Care Enrollment Policies as of October 31, 1999 41

Abbreviations

ACG Adjusted Clinical Groups AFDC Aid to Families With Dependent Children
AIDS acquired immunodeficiency syndrome BBA Balanced Budget Act CCR
Continuity of Care Referral Form CMS Children's Medical Services CSHCN
children with special health care needs CSHCS Children's Special Health Care
Services DPS Disability Payment System ENCC exceptional needs care
coordinator EPSDT Early and Periodic Screening, Diagnostic, and Treatment
HCFA Health Care Financing Administration HHS Department of Health and Human
Services HIV human immunodeficiency virus HMO health maintenance
organization IHCP individualized health care plan PCCM primary care case
management PLCC plan level care coordinator SNC special needs coordinator
SSI Supplemental Security Income

Health, Education, and Human Services Division

Lett er

B- 283257 September 29, 2000 The Honorable Robert Kerrey The Honorable
Charles E. Grassley The Honorable Lincoln Chafee The Honorable Daniel
Patrick Moynihan United States Senate

The Honorable Diana L. DeGette House of Representatives

Since the mid- 1990s, states have accelerated the enrollment of children
with special needs in capitated Medicaid managed care programs, which
deliver medical services to beneficiaries for a fixed per- person fee.
States see capitated managed care, with its emphasis on primary care,
restricted access to specialists, and control of services, as both a
mechanism to restrain program cost increases and a way to provide the
general Medicaid population with consistent preventive and primary health
care. However, these same features may be less appropriate for children with
special needs, who often require highly specialized and costly medical
services. The Balanced Budget Act (BBA) of 1997 continued to require federal
approval for state Medicaid programs that mandate that these children
enroll, 1 while providing state Medicaid agencies the authority to mandate
enrollment for the majority of other beneficiaries without seeking such
approval.

Although there is no consensus definition used by states to identify
children with special needs, the BBA enumerated four federal programs and a
Medicaid optional coverage category that are likely to include individuals
under age 19 with disabilities or chronic conditions and refers to these
children as having “special needs.” 2 Children covered by these

1 The BBA also continued to require federal waivers for freedom of choice
among participating providers and other statutory provisions for managed
care programs that mandate the enrollment of children with special needs and
two other vulnerable groups: beneficiaries eligible both for Medicare and
Medicaid and Indians who are members of federally recognized tribes.

2 See P. L. No. 105- 33, sec. 4701, 111 Stat. 489.

programs receive income support or other services and generally qualify for
Medicaid:

Supplemental Security Income (SSI) under the Social Security Act. SSI
provides cash assistance to low- income adults and children with
disabilities, as well as low- income aged individuals. SSI focuses its
resources for children on those with a high level of need- that is, those
with marked and severe functional limitations. The Katie Beckett state plan
option. This Medicaid coverage category is

optional for states. It allows children who need a level of care provided in
an institution to be cared for at home. Maternal and Child Health Services
Block Grant for children with

special health care needs (CSHCN) under title V of the Social Security Act.
Title V is designed to promote coordinated care and communitybased systems
of services. Though defined differently by each state, title V generally
applies to children with physical disabilities, filling in gaps in coverage
for services not covered by Medicaid or private health insurance. Federal
adoption assistance or foster care programs under title IV- E of

the Social Security Act. These programs provide federal assistance in
finding adoptive homes for children who are difficult to place- including
those with a physical or emotional disability- and assist foster care
families in caring for children from low- income families. 3 Foster care or
out- of- home placements funded from other sources.

States often provide assistance to children who are not eligible for title
IV- E assistance because they do not meet income or other standards. The
characteristics of these children are similar to those of title IV- E foster
children.

About a year after enactment of the BBA, the Senate Appropriations Committee
emphasized the need for greater federal scrutiny of mandatory

3 Title IV- E adoption assistance is provided to families who adopt a child
who is either eligible for SSI or whose biological family's income meets the
Aid to Families With Dependent Children (AFDC) eligibility standard in
effect on July 16, 1996, and who is deemed by the state to be a child with
special needs. Children with special needs are defined by title IV- E as
being in a certain situation or having a specific condition- such as being a
teenager or having a mental, emotional, or physical handicap- that would
prevent placement without special assistance. Title IV- E foster care
assistance is available for children whose biological family's income level
does not exceed the state's AFDC standards in effect on July 16, 1996.

managed care programs that enroll children with special needs. 4 The
Committee noted that the Congress lacked both experience with and knowledge
of this population and expressed an expectation that states would be
required to establish managed care safeguards in order to receive federal
approval for mandatory enrollment. Safeguards are intended to encourage the
delivery of appropriate, quality care and include measures for access to
specialty providers, care coordination, and quality monitoring. These
safeguards can be instituted through state Medicaid contracts with managed
care organizations or by state or federal Medicaid policies or regulations.

This report is the second of a two- part study we conducted at your request.
The first report examined the BBA definition of children with special needs
and described the limited data available about their participation in
Medicaid managed care. 5 It also assessed steps taken by the Department of
Health and Human Services' (HHS) Health Care Financing Administration (HCFA)
to establish safeguard criteria for these children in the agency's waiver
review and approval process. This report (1) presents data on the extent to
which states are enrolling children with special needs, as defined in the
BBA, in capitated managed care plans and (2) assesses the scope and
effectiveness of the safeguards these states are implementing to ensure that
children with special needs receive appropriate care within Medicaid managed
care.

Using the limited data available on state enrollment of children with
special needs, we identified 36 states that enrolled SSI children, foster
care children, or both in capitated managed care. We surveyed the Medicaid
directors of these states to identify their policies on enrolling the
categories of children with special needs cited by the BBA and the available
safeguards. Additionally, we more closely examined the safeguards operating
in Florida, Maryland, Michigan, and Oregon, states that have either included
children with special needs in managed care plans along with other
beneficiaries or have also created distinct programs to serve some of these
children. We conducted our work between September 1999 and September 2000 in
accordance with generally accepted government

4 See S. R. 105- 300, accompanying S. B. 2440, the fiscal year 1999
appropriations bill for the Departments of Labor, Health and Human Services,
and Education and related agencies. 5 See Medicaid Managed Care: Challenges
in Implementing Safeguards for Children With Special Needs( GAO/ HEHS- 00-
37, Mar. 3, 2000).

auditing standards. See appendix I for details regarding our scope and
methodology.

Results in Brief Following the general trend of serving more Medicaid
beneficiaries through managed care delivery systems, many states are
enrolling a range of

children considered to have special health needs in capitated managed care
programs. However, the number of children involved is uncertain, because
many of the states could not readily report the number of affected children.
The 36 states we surveyed enroll some or all of the BBA categories of
children in capitated managed care: 14 states mandated enrollment, 11 states
allowed families to make a choice between capitated managed care and some
form of fee- for- service coverage, and another 11 states had both mandatory
and voluntary enrollment for children in different categories or in
different parts of the state. Of the six categories of children with special
needs identified by the BBA, SSI children are the most likely to be enrolled
in capitated plans. 6 Between 1996 and 1999, the number of states enrolling
SSI children in capitated health plans increased from 17 to 31. 7 Katie
Beckett children were the least likely to be enrolled.

Adoption and implementation of safeguards for these children vary
significantly across the 36 states we surveyed. Some types of safeguards
have been more widely adopted by states than others. For example, 31 of the
36 states have at least one measure designed to ensure adequate pediatric
provider capacity. However, 18 states do not inform health plans of the
presence of special needs when enrolling children, and 18 do not require
health plans to conduct a needs assessment soon after enrollment.
Additionally, some safeguards may be less effective because states have made
them optional rather than mandatory, have not adopted rigorous approaches in
their design and use, or do not target the safeguard specifically for
children with special needs. Examples follow.

While 34 of the 36 states surveyed include a medical necessity definition in
their health plan contracts that helps delineate which services will be

6 Although the BBA cited five categories of children with special needs, we
report separately on the foster care and adoption assistance programs under
title IV- E of the Social Security Act.

7 The District of Columbia is included within state totals.

covered, only 19 specifically cover services these children need to
maintain, as opposed to improve, their functioning. Many of the states we
surveyed have limited requirements for health

plans to provide ready access to specialty or out- of- network providers.
Instead, states often permit health plans to decide whether to use pediatric
specialists as primary care providers; allow standing referrals to
specialists; and let children use pediatric, as opposed to adult,
specialists. Although all states surveyed make at least some children with
special

needs eligible for services that coordinate care provided by various
providers, 14 states leave the decision regarding actual receipt of these
services to the sole discretion of the health plan, and most states could
not identify the number of children actually receiving care coordination
services. Only 17 states adjust rates paid to health plans to reflect the
health

status or expected utilization of services of the children enrolled. Only
five of the states we surveyed target their managed care plan

monitoring activities in ways that allow them to focus on the experience of
children with special needs. Rather, states rely on more generalized
monitoring activities to help assess whether Medicaid beneficiaries in
managed care have adequate access to and quality of care. Because children
with special needs are usually a small proportion of the overall Medicaid
population, general monitoring may not capture sufficient information to
adequately assess such children's care.

Background Medicaid is a joint federal- state entitlement program that
annually finances health care coverage for more than 40 million low- income
individuals, over

half of whom are children. Many children with special needs qualify for
Medicaid through eligibility for federal programs targeted at children with
chronic conditions or disabilities, such as SSI. Most states' Medicaid
programs offer a wide array of therapies and services that are important for
children with special needs. These benefits, such as physical, occupational,
and speech therapies, as well as rehabilitative and case management
services, are all commonly offered to Medicaid- eligible individuals.

In designing and implementing Medicaid managed care programs for children
with special needs, various experts and advocates identified six areas as
important safeguards to provide adequate and appropriate care. As described
in table1, these safeguards are:

program development,

enrollment procedures, provider networks, care coordination, reimbursement,
and targeted quality monitoring.

Table 1: Descriptions of Safeguards for Children With Special Needs Enrolled
in Capitated Medicaid Managed Care That Were Identified by Experts and
Advocates

Safeguard area Description

Program development Public input Involve key stakeholders, such as advocacy
groups and families, in program development, implementation, and monitoring.
Medical necessity Include the concept of maintenance of function in the
definition of necessary medical services (medical necessity) in health plan
contracts, because medical necessity standards that require substantial
improvement or restoration of function can conflict with the needs of
children with special needs.

Enrollment procedures Identify children's special needs before or soon after
enrollment to ensure that children benefit from safeguards. Educate
beneficiaries about accessing services and available protections in managed
care and provide assistance in choosing a health plan. Allow children with
special needs to change plans or opt out of managed care when appropriate.

Provider networks Ensure that health plans develop provider networks that
are sufficient to meet the anticipated needs of children with special needs,
for example, by including pediatric specialists. Institute various
requirements, such as standing referrals, to ensure access to specialized
providers both within health plan networks and through arrangements for out-
of- network care if needed.

Care coordination Provide beneficiaries assistance to organize and
facilitate access to relevant services, either through independent entities
or through requirements for health plans.

Reimbursement Adjust payments to plans to reflect the varying health needs
of enrollees, design payment methods to minimize incentives for underservice
and to protect plans from extraordinary financial risk, or both.

Targeted quality Target quality- monitoring activities, such as beneficiary
satisfaction surveys, focused clinical studies, and monitoring analyses of
complaints and grievances or disenrollments from health plans, toward
children with special

needs.

HCFA has addressed each of these safeguard areas, to varying degrees, in its
guidance to states with mandatory capitated Medicaid managed care programs
for children with special needs. In order to mandate the enrollment of
children with special needs in managed care, states must apply to HCFA to
receive a waiver of certain federal statutory requirements, such as the
requirement to guarantee beneficiaries' freedom to choose among
participating providers. In June 1999, HCFA implemented the first
requirements for states applying for or renewing federal waivers to enroll
children with special needs in mandatory capitated managed care programs.
The “Interim Review Criteria for Children with Special Needs”

include requirements that states implement certain safeguards when requiring
capitated managed care enrollment of children with special needs. 8 The
interim criteria, summarized in appendix II, cover 11 areas, including
access to specialists, payment methodology, and provider capacity. However,
as we reported earlier, the interim criteria are not as specific as those
outlined in previous HCFA guidance on using managed care for populations
with special needs, particularly in such areas as determining medical
necessity, involving the public in program implementation and oversight, and
collecting encounter data. 9 The criteria are brief and self- contained;
there are no accompanying standards, guidelines, or definitions for the
criteria, and they do not address how best to apply the safeguards in light
of the multiple and divergent care requirements of children with special
needs. HCFA plans to release revised criteria in the fall of 2000 that will
be more specific and reflect recent research.

As of June 2000, HCFA had used the interim criteria in reviewing 15 waiver
applications in 12 states (states may have multiple waivers, used for
different counties or populations). Waiver requests are reviewed when a new
application is submitted or when existing waivers are under consideration
for renewal. Waivers are granted for 2- or 5- year periods, depending on the
statutory provisions being waived, and the BBA granted a 3- year extension
to waivers being considered for renewal if there are no proposed changes
(see app. II). At the time of our survey (October 1999), few states had been
required to use HCFA's interim criteria safeguards for children with special
needs because their waivers had been approved before the criteria's June
1999 effective date. Therefore, survey responses generally reflected
safeguards that states had chosen to implement for children with special
needs prior to the HCFA mandate.

8 When states allow voluntary enrollment in managed care, they do not have
to seek a waiver from HCFA. 9 See GAO/ HEHS- 00- 37, Mar. 3, 2000, pp. 29-
31.

Many States Are Our survey of 36 states that enroll SSI or foster children
or both in

Enrolling BBA- Defined capitated Medicaid health plans- the only two
categories of children with

special needs tracked by HCFA prior to the BBA- found that half enroll
Children With Special

children with special needs in multiple BBA categories. The number of Needs
in Capitated

mandatory programs slightly exceeds those that are voluntary. The number
Plans

of states that enroll SSI children- the largest and most consistently
tracked group of children with special needs- grew from 17 to 31 between
1996 and 1999. Katie Beckett children are the least likely to be enrolled,
with only 11 states including them in capitated managed care. While many
children with special needs are enrolled in capitated plans, there is no
measure of the total number because some states could not readily provide
counts by each of the BBA- defined categories.

States Enrolled Most The variety of enrollment policies makes it difficult
to generalize about

Categories of Children With state managed care programs for children with
special needs. States vary

Special Needs in Capitated with regard to whether enrollment is mandatory or
voluntary, how many of

Managed Care but Did Not the categories of children with special needs they
enroll, and whether

policies allowing or mandating enrollment apply statewide or only to Report
the Number Enrolled

selected areas. Of the 36 states we surveyed, 14 have only mandatory
enrollment, 11 have only voluntary enrollment, and 11 have mandatory
enrollment for some groups and voluntary enrollment for others. The 11
states with both mandatory and voluntary enrollment either have mandatory
programs in certain counties and voluntary programs in others or mandate
enrollment for certain categories of special needs children, leaving
enrollment for others as voluntary. 10 (See table 2.)

10 States may have different enrollment arrangements for the BBA categories
in different areas of the state. For example, California has some county-
based waivers (such as for Caloptima and the Health Plan of San Mateo) that
mandatorily enroll SSI children and other county- based waivers (such as for
Sacramento Geographic Managed Care and the Two- Plan Model Program) that
voluntarily enroll SSI children.

Table 2: State Enrollment Policies for Children With Special Needs as of
October 31, 1999 (36 states) Program type Number of states States

Mandatory 14 Arizona, Connecticut, Delaware, Hawaii, Kentucky, Maryland,
Nebraska, New Mexico, Oregon, Tennessee, Utah, Vermont, Virginia, West
Virginia

Voluntary 11 Colorado, Florida, Georgia, Maine, Minnesota, Mississippi,
Montana, New Hampshire, New York, South Carolina, Wisconsin

Mandatory and voluntary 11 California, District of Columbia, Indiana,
Massachusetts, Michigan, Missouri, North Carolina, Ohio, Pennsylvania,
Texas, Washington

Note: States may have both mandatory and voluntary enrollment because (1)
programs in some states are county- based, which may result in mandatory
programs in certain counties and voluntary programs in others, or (2) some
states mandate enrollment for certain categories while enrollment for others
is voluntary.

Source: GAO survey of state Medicaid directors.

SSI and title V, the categories with the largest number of beneficiaries,
are most often included in either a mandatory or voluntary program. Nineteen
of the 36 states enroll five to six BBA categories in capitated plans, while
10 states typically enroll two or three BBA categories. Although many states
do not offer the optional Medicaid coverage for Katie Beckett children, 11
states enroll these children in capitated managed care. Seventeen states
prohibit the enrollment of children in certain BBA categories in capitated
managed care. For example, seven states prohibit title IV- E foster children
from enrolling in capitated health plans. Table 3 summarizes BBA categories
by enrollment policies, and appendix III presents detailed state enrollment
policies by BBA category, including the categories excluded from enrollment.

Table 3: BBA Categories of Children With Special Needs by Enrollment Type as
of October 31, 1999 (36 states)

Mandatory and BBA categories Mandatory Voluntary voluntary Total

SSI children 14 12 5 31

Katie Beckett children a 2 7 2 11

Title V CSHCN children 13 10 4 27

Children receiving adoption assistance under title IV- E 12 7 3 22

Children receiving foster care under title IV- E 13 11 3 27

(Continued From Previous Page)

Mandatory and BBA categories Mandatory Voluntary voluntary Total

Other children in foster care or otherwise in an out- of- home placement 14
8 3 25

a According to HCFA, 14 of the 36 states use a 1902( e)( c) state option to
enroll Katie Beckett children in Medicaid. However, of the 11 states that
reported enrolling Katie Beckett children in capitated health plans, only 5
states were reported as using the 1902( e)( c) state option: Delaware,
Massachusetts, Mississippi, New Hampshire, and South Carolina. The other
states enroll children similar to those covered by the Katie Beckett state
option through other types of waivers (Colorado, New York, and Ohio) or
generally identify similar children in their regular Medicaid program
(Montana, New Mexico, and Washington).

Source: GAO survey of state Medicaid directors.

Program Characteristics of Almost all of the 25 states that mandate
enrollment in at least part of the

States With Mandated state or for some populations include many children
with special needs in

Enrollment health plans with other populations. For example, children with
special

needs in mandatory arrangements are included with the rest of the population
on a statewide basis in Maryland and Oregon, and in the general managed care
program in Michigan. In addition, Michigan and the District of Columbia
enroll some of these children in a separate, specialized, voluntary program
and enroll others mandatorily in health plans with other populations, while
Texas operates a separate program with mandatory and voluntary enrollment
for some children with special needs.

Limited Enrollment Data Many states were not able to readily report an
unduplicated count of the children in the BBA- defined categories who are
enrolled in capitated Medicaid managed care. Only 19 of the 36 states we
surveyed provided enrollment data for at least one BBA category of children
with special needs in capitated Medicaid programs, so we could not determine
the total number of children enrolled (see app. IV). Moreover, some of the
statereported enrollment figures are from different points in time, are
combinations of enrollment in two or more BBA categories, or both. On the
basis of our analysis of available federal program data, we estimate that
the total number of children in the BBA categories ranges from 1. 5 million
to 2.4 million. 11

11 The lower end of this range excludes title V children because some are
not eligible for Medicaid. The higher end includes title V children who are
not Medicaid- eligible and represents some double counting of children who
are eligible for both title V and SSI. See GAO/ HEHS- 00- 37, Mar. 3, 2000,
pp. 38- 41.

Enrollment Exclusions and Most of the 36 states reported that they exclude
certain categories of

Exemptions children with disabilities that are not in the BBA- defined
categories from

capitated Medicaid managed care. Thirty- two of the 36 states exclude
children in nursing facilities, intermediate care facilities for the
mentally retarded, and institutions for those with mental diseases from
enrollment in capitated Medicaid managed care. Twenty- three of these 32
states also exclude children receiving home- and community- based waiver
services, and 9 states exclude other children with special needs. 12 Two
states do not allow children with special needs to be excluded from
enrollment in capitated Medicaid managed care (the remaining two states did
not respond to this question).

Eleven of the 25 states with mandatory enrollment allow exemptions from
enrollment in capitated Medicaid health plans for one or more of the
following reasons:

the child is undergoing a plan of treatment (6 states), the child's provider
is not in the capitated health plan (3 states), enrollment would disturb
long- standing care arrangements (3 states), or the parent prefers the child
not to be enrolled (3 states).

Five of these 11 states allow exemptions on a case- by- case basis. Another
11 states with mandatory enrollment have no policy regarding exemptions (3
states did not respond).

Adoption and States vary in the safeguards they adopt and implement for
children with

Effectiveness of special needs. Moreover, some states believe the BBA
categories do not

include all children with special needs, such as children who are severely
Safeguards Vary

emotionally disturbed or those aged 19 to 21, and have therefore expanded
Among States

12 Home- and community- based waiver services participants are those
receiving long- term care services in the community under section 1915( c)
of the Social Security Act. Children receiving services under this waiver
must be eligible for Medicaid if institutionalized and must require the
level of care furnished in an institution. Other children with special needs
excluded from enrollment in capitated Medicaid health plans include those
eligible for both Medicare and Medicaid; children with acquired
immunodeficiency syndrome (AIDS); medically needy children (also referred to
as spend- down children- that is, children whose family income, minus
incurred medical expenses, falls below the state's medically needy income
and resource standards [see GAO/ HEHS- 00- 37, Mar. 3, 2000, p. 11]); and
children covered by both private health insurance and Medicaid.

the population protected by their safeguards. 13 All the states we surveyed
addressed safeguards in one or more of the areas that we identified as being
important for children with special needs: (1) program development, (2)
enrollment procedures, (3) provider capacity and accessibility, (4)
comprehensive care coordination, (5) appropriate reimbursement to health
plans, and (6) targeted quality monitoring. Some types of safeguards have
been more widely adopted by states than others. For example, 31 of the 36
states we surveyed have at least one measure that addresses adequate
pediatric provider capacity. On the other hand, 18 states do not inform
health plans of the presence of special needs when enrolling children, and
18 do not require health plans to conduct a needs assessment soon after
enrollment. Additionally, other safeguards may be less effective for
children with special needs because states have made them optional rather
than mandatory, have not adopted more rigorous approaches for their design
and use, or do not target them specifically to these children.

Program Development During the development of their capitated managed care
programs, states

Offers Opportunities to may incorporate various safeguards for children with
special needs, such

Build in Safeguards for as a public input process and an appropriate medical
necessity definition.

Children With Special Needs Our interviews with HCFA and state officials
indicate that states often use

public input processes that involve relevant advocacy groups and families in
the planning and operation of their managed care programs to ease the
transition of children with special needs into Medicaid managed care
programs. However, in one critical area- developing their managed care
program's definition of medical necessity (a standard used to determine
whether a service will be covered for a specific individual)- 14 states did
not include the concept of maintaining function to justify coverage. This
omission is significant given that many children may have conditions that
will not improve, yet they need services to maintain functioning or prevent
further deterioration.

According to a HCFA official, states responding to the interim criteria
often used public input processes to coordinate with other agencies and
advocacy groups in designing their managed care programs. Furthermore, all
four states we visited involved advocates and families to some degree in
planning their managed care programs, and at least three of the states
(Florida, Maryland, and Michigan) involve advocates on a continuous basis

13 For more discussion of children who are not covered by the BBA definition
but who may have special needs, see GAO/ HEHS- 00- 37, Mar. 3, 2000, pp. 16-
18.

through standing advisory committees. 14 For example, in Maryland, seven
work groups composed of advocates, providers, and legislators met on a
weekly basis throughout the planning process to focus on populations such as
children with special needs, the developmentally disabled, and the
physically disabled. 15 Currently, Maryland has three advisory committees,
including one focused on children with special needs whose membership
includes two parents as well as an advocate for disabled children. In
addition, Florida and Michigan require their specialized health plans for
children with special needs to have a family representative on staff, while
Maryland requires health plans' advisory boards to include a family
representative.

Only 19 of 34 states that include a definition of medical necessity in their
contracts with capitated plans include the concept of maintenance of
function in that definition. In contrast, 14 states base their medical
necessity definition on the concept of cure or rehabilitation (one state did
not respond). Of the two states we visited that enroll children with special
needs in their general managed care programs, only Maryland includes the
concept of maintenance of function as a qualifying criterion for coverage of
health services in state regulations. Florida and Michigan, the two states
we visited that have separate programs for a portion of their children with
special needs, include maintaining function in their specialized programs'
medical necessity standard. However, neither includes maintaining function
in its general Medicaid capitated programs, even though children with
special needs may enroll in these plans.

States' Use of Enrollment Although many states have adopted various
enrollment procedure

Procedures to Protect safeguards, a significant number have not. Enrollment
procedure

Children With Special Needs protections include identifying children with
special needs, providing their

Varies families adequate information about managed care during the health
plan

selection process, and allowing children to disenroll from a plan or managed
care if their needs are not being met.

14 As we reported in 1996, state officials involved in tailoring managed
care programs for people with disabilities stressed the need to involve
beneficiaries and advocates both in the planning process and in overseeing
program implementation. See Medicaid Managed Care: Serving the Disabled
Challenges State Programs (GAO/ HEHS- 96- 136, July 31, 1996).

15 Other work groups focused on the homeless, individuals with human
immunodeficiency virus (HIV)/ AIDS, pregnant and postpartum women, and
substance abusers.

While many states surveyed have some procedures in place for identifying
children with special needs, about one- third do not. Eighteen states do not
inform health plans of the presence of special needs when enrolling
children, and 18 do not require health plans to conduct a needs assessment
soon after enrollment. Moreover, 10 states, many of which have mandatory
enrollment in capitated health plans, do not have either procedure in place
to identify children with special needs during or soon after enrollment,
which means plans may not know about the children with special needs who are
enrolled. Maryland provides an example of how multiple steps may improve the
odds that health plans know when special needs children enroll and receive
information about their needs. To begin with, Maryland health plans know the
Medicaid eligibility status (such as SSI or foster care) and the risk status
(which is based on the receipt of a higher payment for individuals with
higher expected costs) of all new beneficiaries. In addition to this
information, Maryland health plans also receive a copy of each beneficiary's
health risk assessment form. This form, which is completed by most
beneficiaries during Medicaid enrollment, allows beneficiaries to indicate
whether a child has special needs, a developmental or physical disability,
certain health problems (such as asthma or cerebral palsy), or the need for
pharmaceutical or medical equipment. Within 15 days of receiving a
beneficiary's health risk assessment, health plans are required to conduct
an initial health visit for individuals who identify themselves as having a
high- risk condition. 16

In responding to our survey, 26 states reported that they assist at least
some of their families of children with special needs in selecting a health
plan, though the type or level of assistance provided varied among our site
visit states. In the four states we visited, help in selecting a plan often
is limited to the general assistance afforded to all Medicaid beneficiaries
through phone conversations with states' enrollment brokers and Medicaid
informational brochures. 17 In contrast, Michigan's enrollment broker has
counselors specially trained to assist families of children with special

16 Maryland considers the following seven groups of people to be high- risk:
pregnant and postpartum women, substance abusers, the physically disabled,
individuals with HIV/ AIDS, children with special needs, the developmentally
disabled, and the homeless. These seven groups were the focus of the
previously mentioned work group meetings involving advocates, providers, and
legislators.

17 Enrollment brokers, private companies under contract with the state,
generally offer Medicaid enrollees assistance by making sure they understand
what managed care is and what options are available to them.

needs as well as a disability services worker who is available to make home
visits.

While 13 of the 25 states that have a mandatory program have at least one
special disenrollment provision for children with special needs, children in
the remaining 11 states have no special options (one state did not answer
this question). Nine of the 13 states allow children with special needs to
switch among capitated health plans at any time without cause. In addition,
children with special needs can opt out of capitated health plans without
cause in five states. None of these five states have only mandatory
enrollment for children with special needs; that is, all of these states
enroll at least one category of BBA children in managed care on a voluntary
basis. In Michigan, for example, because the specialty health plan program
is voluntary, each month enrolled children have the option to switch to
feefor- service care.

Making Some Provider Most of the states we surveyed take some action to
ensure that Medicaid

Access Safeguards Optional capitated health plans have a sufficient number
of pediatric providers and

May Limit Effectiveness specialists in their networks to serve children with
special needs. However,

while they attempt to make providers available, states are less likely to
impose consistent requirements to ensure that these providers and
specialists are readily accessible. Instead, many leave to health plans the
decision about whether to adopt such measures as using pediatric specialists
as primary care providers or granting standing referrals to specialists.

Ensuring Adequate Provider Almost all of the 36 states we surveyed (31
states) impose at least one

Networks requirement intended to ensure that the capacity of pediatric
providers in

their health plans is adequate to serve children with special needs. States
can require, for example, (1) access to pediatric specialty centers; (2)
specific contract conditions regarding participation by pediatric providers;
(3) the incorporation of providers experienced in serving children with
special needs into health plan networks; and (4) provisions to address a
lack of available providers, such as allowing children to use providers
outside the health plan network. Several of the state officials we
interviewed said that plans' pediatric provider capacity was evaluated prior
to contracting for services through an initial provider panel approval
process. However, Maryland officials noted that states face difficulties in
prospectively setting requirements for pediatric specialists: No general
criteria or standards exist- in fee- for- service or managed care- for the

number and mix of specialists needed to serve a population or for when and
how often referrals to specialists should be made.

Specialty centers. Just over half of the 31 states that impose at least one
requirement require health plans to demonstrate access to pediatric
specialty centers or children's hospitals. For example, in Oregon health
plans are required to have contracts with centers of excellence such as the
Child Development and Rehabilitation Center, a statewide agency that offers
specialty clinics and serves children with special needs. Florida's contract
with Medicaid capitated health plans requires them to assure beneficiaries
of access to one or more of the state's regional perinatal intensive care
centers, which are specialized units within hospitals with a full range of
newborn intensive care services. 18

Contract requirements. Fourteen of 31 states have specific requirements in
their contracts with managed care plans regarding the number and type of
providers with pediatric expertise that must participate in the health plan
network or be available through other arrangements.

Experienced providers. Fourteen states require plans to demonstrate that
primary care providers in their network have experience in serving children
with special needs. 19 For example, Maryland requires health plans to
“flag” physicians with experience in providing care for children
with special needs to be able to refer children to the most appropriate
provider. In shifting to a capitated arrangement, Florida's specialized
program is requiring interested health plans to detail the availability of
board- certified specialists and pediatric providers.

Unanticipated need. Fourteen states require plans to have policies in place
that address the unanticipated need for, or limitations in the availability
of, providers with pediatric specialty expertise. Of the states we visited,
Florida, Maryland, and Oregon required plans to have arrangements for

18 Plans may request a waiver of this provision if unable to reach an
agreement with centers that are within a reasonable travel time. Florida
told us that effective July 1, 2000, after the date of our site visit,
Florida's Medicaid contract changed to provide health plans the option to
ensure access to either a regional perinatal intensive care center or a
hospital licensed for neonatal intensive care unit level III beds.

19 There is some evidence that the use of experienced health care providers
and institutions can result in better health outcomes. For children with
special needs, relevant experience may include expertise in pediatric care
as well as an understanding of special risk factors that affect health, such
as the risk of abuse among foster children.

children to see out- of- network providers should the need arise. In
addition, in Oregon children may use out- of- network providers even if they
are outside the state, and health plans must pay the travel expenses for
such out- of- state care.

Ensuring Access to Providers Many of the states we surveyed have limited
requirements for specialty or out- of- network provider access for children
with special needs. Instead, they often let health plans decide whether to
adopt these measures, as shown in table 4. Leaving implementation of access
safeguards to health plans may have the effect of limiting the safeguards'
use, both across states and among different health plans within states, if
plans decide not to voluntarily incorporate these safeguards. The scarcity
of specialists in rural areas, or their reluctance to serve as primary care
physicians for children with special needs, further complicates attempts to
ensure access to pediatric specialists.

Table 4: Numbers of States Using Various Requirements to Ensure Provider
Access for Children With Special Needs

States in which requirement

States in which applies to some

plans have option or all children

to adopt with special

requirement or States that have Requirements

needs not no requirement

Pediatric specialists must be allowed to be primary care providers 17 15 4

Standing referrals to specialists are allowed a 10 13 13

Children have access to pediatric rather than adult specialists b 12 16 5

Newly enrolled children may be cared for by nonnetwork providers 22 8 6 a
Standing referrals allow enrollees to obtain ongoing care for specific
medical conditions from a specialist without seeking repeated referrals from
a primary care provider. b Thirty- four of the 36 states polled responded to
this question. Additionally, one state responded that it

did not know or was not sure of the answer to this question. Source: GAO
survey of state Medicaid directors.

Of the four states we visited, Florida, Michigan, and Oregon generally
permit health plans to decide whether to allow specialists to serve as
primary care providers, and Maryland, Michigan, and Oregon permit plans to
decide whether to authorize standing referrals. 20 In contrast, while
provider access safeguards generally are not left to the discretion of
health plans in Michigan's Children's Special Health Care Services (CSHCS)
specialty program and Florida's planned capitated Children's Medical
Services (CMS) program, only title V children are enrolled in these
programs.

Michigan and Oregon officials said the use of pediatric specialists as
primary care providers in their general Medicaid programs varies by health
plan. Neither of the two health plans whose representatives we interviewed
in Oregon generally uses pediatric specialists as primary care providers,
though one plan noted limited exceptions for oncologists. Each of the total
of four health plans we visited in Oregon and Maryland has different rules
for addressing standing referrals. One Oregon health plan specifies that the
primary care physician may authorize up to six visits within a 3- month
period if the plan verifies the referral. The second health plan also allows
a specific number of visits for a standing referral but said that the length
of the referral is flexible. In Maryland, one health plan usually allows at
least two specialist visits within a certain time frame, depending on the
duration of the treatment needed, while the other allows individual
providers to determine the need for standing referrals.

Even when states require some access to pediatric specialists, health plans
may face difficulties when attempting to meet those requirements. For
example, there are generally a small number of pediatric providers in a
given area. Additionally, health plans and advocates in several of the
states said pediatric specialists might not be located in more rural areas,
requiring families either to travel to urban areas or to substitute other
providers. Some states and health plans found that specialists who are
qualified to serve children's intensive needs may not want to act as primary
care physicians because of their responsibilities to provide for coordinated
general health care and to act as “gatekeepers” in determining
referrals for specialty services. For example, Maryland requires primary
care physicians to become certified as providers of Medicaid Early and
Periodic Screening,

20 Michigan requires health plans to designate a specialist as a primary
care provider when appropriate for an enrollee's health condition. The
determination is made on a case- by- case basis by the health plan and must
be requested by the child's family.

Diagnostic, and Treatment (EPSDT) program services; 21 state officials said
some specialists might not want to be accountable for immunizations and
well- child care and therefore might decline to act as primary care
physicians.

Availability of Care Children with special needs tend to be eligible for
care coordination

Coordination Services services in most states; however, states often provide
health plans the

Differs Among States discretion to decide who actually receives these
services. Therefore, in

many states being eligible for care coordination services does not guarantee
access to these services. Care coordination can include conducting a
comprehensive assessment of needs; developing a plan of care; facilitating
access to the medical and nonmedical services identified in the care plan;
and providing assistance in planning for transitions in care, such as
hospital discharge.

In 20 of the states surveyed, all children with special needs are eligible
for care coordination services. In the remaining 16 states, a child's
eligibility for care coordination is determined on the basis of factors such
as the severity of illness, the existence of multiple or co- occurring
conditions, or membership in a certain categorical group (such as SSI or
foster care). Of the 34 states that provided information regarding the
receipt of care coordination, only 3 states retain sole authority to
determine which children with special needs should actually receive these
services (1 state did not answer the question and another state did not know
the answer to the question). In 14 states, health plans are allowed to make
this decision, and in the remaining 17 states, the health plans and the
state share the responsibility for determining which children with special
needs should receive care coordination. For example, Oregon makes SSI and
foster children eligible for special care coordination services; however,
the service must be requested from the health plan, since it is not
automatically provided. A 1997 parent satisfaction survey found that the
majority of Oregon parents surveyed were not aware of the availability of
this service.

Because decisions regarding the receipt of care coordination are most often
either shared with or left to capitated health plans, the majority of

21 EPSDT provides comprehensive health screening (for example, physical
examinations, health and developmental history, laboratory tests, blood lead
level testing, and health education); immunizations; vision screening and
treatment; hearing screening and treatment; dental screening and treatment;
and other necessary diagnostic and treatment services to all categorically
needy Medicaid- enrolled individuals under age 21.

states were unable to say what percentage of children with special needs
actually receive care coordination services. Only four states were able to
provide figures on the percentage of children with special needs who receive
care coordination. For example, Michigan and Florida said that all of the
children in their specialized programs receive care coordination services,
but they did not know how many children with special needs in their general
Medicaid program receive such services.

In addition, it is unclear what level of care coordination is provided in
most states- that is, the extent to which services include the child's
social needs, such as education and housing, in addition to medical service
needs. The specialized programs in two of the four states we visited,
Florida and Michigan, require the coordination of both the child's medical
and social needs. However, both states' special programs are limited to
title V children. If they receive any care coordination, children with
special needs enrolled in Florida's and Michigan's regular capitated managed
care programs receive only coordination of their medical needs. Medicaid
health plans in Maryland and Oregon have employees who are responsible for
coordinating care for some children with special needs; however, the types
of service provided vary by plan. Appendix V provides a description of the
care coordination systems in the four states visited.

In addition to providing care coordination services, most states require
health plans to coordinate with at least one of the agencies that frequently
serve children with special needs. For example, 28 states require health
plans to coordinate with mental health programs, and 26 states require
coordination with early intervention programs, which provide developmental
services for children under age 3 with developmental delays. 22 In states
such as Maryland, where many services, including mental health and therapy
services, are carved out of managed care and provided separately under other
plans, it is essential that health plans have ongoing coordination with
these other providers in order to provide seamless care. However,
representatives of both Maryland health plans we interviewed

22 Twenty- three states require health plans to coordinate with special
education programs, and 24 require coordination with other developmental
disability programs. Coordination is required with child protective or
social services in 23 states and with title V programs in 22 states.
Although there are no statutory requirements for Medicaid agencies to
coordinate services and activities with educational entities, the
Individuals With Disabilities Education Act does require that educational
entities bear the responsibility for coordinating services with other
agencies, such as Medicaid. See Medicaid and Special Education: Coordination
of Services for Children With Disabilities Is Evolving( GAO/ HEHS- 00- 20,
Dec. 10, 1999), p. 9.

are concerned that carving out these services makes providing coordinated
care more difficult.

Payment Mechanisms in 17 Research suggests that using health- related
factors such as clinical

of 36 States Include Risk diagnoses or prior utilization of medical services
helps predict future care

Adjustment Based on costs. State managed care payment mechanisms that adjust
rates states pay

Beneficiaries' Health Needs to health plans for the variation in costs
associated with different types of

disabling conditions help mitigate plans' financial risks associated with
providing services to children with special needs. At the same time,
researchers have identified significant variation in medical costs among
people who fall into the same subcategories of conditions. 23 However,
disabled individuals, including children with special needs, generally have
a larger proportion of costs for chronic needs, which are by definition more
consistent over time. Therefore, health- related factors may better predict
the costs for children with special needs than they would for all children.
Aligning rates paid to health plans with expected costs helps reduce
incentives for health plans to attempt to limit enrollment of or services
for high- cost children. To varying degrees states are using (1) risk
adjustment to more closely match payments with the expected costs of the
enrolled population of beneficiaries or (2) risk corridors to share profits
and losses between states and health plans. 24

Most of the states we surveyed (31 states) are using some form of risk
adjustment to align capitation rates with expected beneficiary care costs.
Many of the states using risk adjustment attempt to account for beneficiary
differences by segmenting populations into broad subgroups, or cells, of
individuals with similar characteristics. Twenty- eight states pay rates on
the basis of demographic variables, such as age or sex; 26 states use
category of Medicaid eligibility, such as SSI eligibility; and 22 states
vary

23 For more detail regarding this research, see GAO/ HEHS- 00- 37, Mar. 3,
2000, p. 19, and GAO/ HEHS- 96- 136, July 31, 1996, p. 49. 24 Risk
corridors, a part of funding agreements between states and health plans,
reimburse plans for a portion of losses but also require plans to return
part of the profits exceeding a specified level. See GAO/ HEHS- 96- 136,
July 31, 1996, p. 48. Another mechanism often used by health plans is
reinsurance. Twenty- eight states said health plans use reinsurance, also
called stop- loss protection, to contain financial risk. Reinsurance
provides retrospective adjustments to reimburse plans for losses resulting
from very high- cost individuals or disproportionate numbers of enrollees
with above- average costs. However, while reinsurance relieves some of the
financial pressure on health plans, it does not remove the negative
incentives to avoid enrolling high- cost beneficiaries or to underserve
them.

rates by geographic area, such as county or region. For example, Florida
uses four eligibility categories, eight age groups, 10 geographic areas, and
gender to develop different payment levels for all beneficiaries. 25

Only 17 of the states we surveyed use measures based on the actual health
needs of beneficiaries, including children with special needs, to risk-
adjust capitation rates. Fourteen states use either clinical diagnosis or
prior utilization to develop their risk- adjusted rates, while three states
use both factors. For example, for some beneficiaries, Maryland's risk
adjustment uses prior medical claims to assign beneficiaries to risk
categories, while Oregon's and Michigan's risk- adjustment methods identify
high- cost diagnoses (see app. VI).

Risk adjustment can result in large differences in payments to plans for
particular enrollees. For example, in reviewing the records of Medicaid
children with high medical costs enrolled in Michigan's general Medicaid
managed care program, one health plan identified 31 children who later were
found eligible for the separate program for children with special needs.
Michigan's health- based capitation payments for these children are
significantly higher than its capitation payments in the regular program, as
shown in table 5. For example, one child's capitation rate increased from
$612 per year to $19, 140 per year (capitation payments are paid monthly).

Table 5: Comparison of Annual Capitation Payments for 31 Selected Children
Moved From Michigan's General Medicaid Program to Its Specialty Health Plan

Lowest annual Highest annual

Average annual Program capitation payment capitation payment capitation
payment

General Medicaid program $372 $4, 296 $969

Specialty program 2,376 19, 140 9, 386

Problems with health data reliability and completeness can serve as
obstacles to states in developing and implementing risk- adjusted capitation
rates. Some state and health plan officials we interviewed said that, as
more Medicaid beneficiaries with special needs are enrolled in managed

25 Florida told us that as of July 1, 2000, their risk- adjustment
methodology changed, increasing from six to eight age groups and adding
gender as a factor.

care, collecting reliable encounter data from health plans is becoming an
important component in developing appropriate risk- adjusted rates. 26 For
example, before Michigan began collecting encounter data from health plans
in mid- 1999, health plans were not required to submit specific diagnosis
and treatment data as a condition for receiving capitated payments, which
led to problems in obtaining this information, state officials said.

Eight states have developed risk corridor arrangements that share the risk
of profits or losses between the state and health plan. Such arrangements
can protect both sides from potentially large losses that may result from
inadequate adjustment of capitation rates. We reported in 1996 that risk
corridors appeared to have the greatest potential for reducing plans'
incentives to underserve or to attempt to avoid enrollment of beneficiaries
with greater health care needs. 27

Quality- Monitoring Efforts Most of the quality- monitoring efforts employed
by the states that

Are Seldom Specifically responded to our survey are used for all populations
in Medicaid managed

care, or for all populations with special needs (see app. VII). 28 Only five
Targeted to Children With

states surveyed indicated that they specifically developed qualitymonitoring
Special Needs

activities for some children with special needs: Delaware, the District of
Columbia, Maryland, Michigan, and Oregon (see table 6). Quality- monitoring
activities afford an opportunity to hold health plans accountable for
providing the more specialized and coordinated care required by children
with special needs. Researchers suggest that three

26 As more states move beneficiaries into managed care, fee- for- service
claims data become less available and less suitable for use in rate- setting
for capitation payments and for riskadjusting capitation. See GAO/ HEHS- 96-
136, July 31, 1996, p. 57.

27 See GAO/ HEHS- 96- 136, July 31, 1996, p. 48. 28 Populations with special
needs are defined in various ways. For example, Maryland's definition of
populations with special needs includes children with special health care
needs, individuals with a physical disability, individuals with a
developmental disability, pregnant and postpartum women, individuals who are
homeless, individuals with HIV/ AIDS, and individuals in need of substance
abuse treatment. HCFA's draft report to the Congress, intended to identify
safeguards needed by populations with special needs in Medicaid managed
care, includes as Medicaid managed care beneficiaries with special health
care needs individuals with serious and persistent mental illness, substance
abuse, or both; homeless individuals; older adults with disabilities; and
nonelderly adults who are disabled or chronically ill with physical or
mental disabilities, in addition to children with special health care needs.

characteristics of the care for children with special needs have
implications for effective monitoring: (1) few children experience any of
the many health conditions affecting children, making monitoring for
individual conditions of limited use; (2) childhood chronic conditions need
to be monitored in relation to children's various developmental stages; and
(3) children's care must be monitored in the context of their family
situation. 29 Therefore, general monitoring may not capture enough
information about these children to provide the specificity needed for
assessing their care.

Table 6: State- Reported Quality Assurance Measures Specific to Children
With Special Needs

Establishes Reports on

separate Monitors

Conducts specific

quality grievance

satisfaction quality

oversight resolution

State survey

indicators entities

procedures

Delaware X District of Columbia X X X Maryland X a X X a Michigan b X X X X
Oregon X a Maryland reports on specific quality indicators only for children
with asthma and has conducted focused studies of children with a diagnosis
of cerebral palsy and with sickle cell disease. Regarding grievance
procedures, the state tracks and monitors the complaints of eight categories
of children who either have a specific diagnosis, such as cerebral palsy, or
are part of a specific group, such as statesupervised children. b Michigan's
specialty children's program, rather than the general Medicaid managed care
program,

incorporates these monitoring activities. The specialty program also uses
several other quality assurance measures specific to children with special
needs.

Source: GAO survey of state Medicaid directors and follow- up telephone
interviews.

The five states with targeted quality monitoring generally conducted
satisfaction surveys focused on the experience of families whose children
have special needs, reported on specific quality indicators, or established
separate quality oversight bodies. The value of this focused approach is
illustrated by Oregon's experience. Oregon's 1997 satisfaction survey of
parents of children with special needs informed the state that while these

29 Karen Kuhlthau and others, “Assessing Managed Care For Children
With Chronic Conditions,” Health Affairs, Vol. 17, No.4 (1998), p. 43.

parents were basically satisfied with care coordination, few parents were
aware of a specific care coordination program for SSI recipients and foster
children. Oregon is collaborating with the Foundation for Accountability 30
to jointly conduct a second survey that will focus on access to care,
satisfaction, and quality of services. Maryland, which has a separate
quality oversight committee, told us that it is also working with the
Foundation to pilot a tool to identify children with special needs that will
be used to develop a survey with a focus on this population. Maryland
officials noted that they have been hampered by the lack of identification
tools and techniques needed to develop satisfaction surveys and specific
quality indicators related to children with special needs.

Florida's planned capitated specialty CMS program will include various
monitoring activities specifically for children with special needs. Michigan
and Florida have no targeted activities for children with special needs in
their general Medicaid managed care programs. However, both states have
developed a wide variety of quality- monitoring activities that are either
currently implemented or planned for their separate children's programs,
such as collecting and analyzing encounter data specifically for children
with special needs and performing focused clinical studies. These targeted
quality assurance mechanisms are specific to children who qualify for title
V services, and therefore they do not cover all of the BBA- defined children
with special needs. 31

Observations While the number of states enrolling children with special
needs in capitated Medicaid health plans has grown significantly since the
mid1990s,

diversity exists among states' approaches. States vary considerably in terms
of both enrollment characteristics and requirements adopted to ensure that
health plans address these children's expected additional needs for health
care and services.

States recognize the need to adopt some additional health plan requirements
to ensure adequate care for children with special needs, but the scope of
their requirements varies, and sometimes the requirements are

30 The Foundation for Accountability is a nonprofit institution that
develops consumerfocused quality measures and supports public education
about health care quality. 31 Michigan officials said that title V children
may also qualify for SSI or Katie Beckett.

optional. The usefulness of some safeguards may be lessened when states
choose to delegate to health plans decisions on whether and how to provide
various measures. Additionally, difficulties in implementing some of these
safeguards likely influence their effectiveness- for example, there are
fewer pediatric specialty providers, especially in rural areas, and the
development of health- based, risk- adjusted capitation rates is affected by
considerable administrative and data requirements.

Because the interim criteria are applied only to mandatory capitated
programs that are new or up for renewal, not all states' programs are
subject to the criteria, and those that are may not undergo review for some
time. Additionally, because they are required only for the BBA- defined
children with special needs, the interim criteria may inherently fail to
protect all children with special needs, because some states have identified
other children outside the BBA categories whom they acknowledge as having
special needs.

HCFA's planned revisions to the interim criteria provide an opportunity to
add additional safeguards and to address the lack of specificity in some
safeguards in the initial version. While the interim criteria are fairly
general, HCFA intends to revise the requirements to provide increased
specificity and to reflect recent research and proposed federal regulations
for Medicaid managed care. In light of the increase in the number of states
enrolling children with special needs in capitated managed care and states'
limited implementation of some safeguards, HCFA's efforts to develop more
comprehensive waiver review criteria for programs enrolling these children
are important for ensuring that they receive necessary care and services.

Agency Comments We provided HHS and officials from the four states we
visited an opportunity to review a draft of this report. HHS and the states
generally

concurred with our findings. HHS' comments are included as appendix VIII.
HHS indicated it was concerned about the report's finding that more rigorous
work needs to be conducted to ensure that adequate health care is delivered
to children with special needs in mandatory and voluntary Medicaid managed
care plans. The Department commented that it has implemented safeguards
contained in the draft interim review criteria, which are applied when
states seek to renew existing waiver and demonstration programs that
mandatorily enroll children with special needs. HHS said that the interim
criteria are undergoing revisions intended

to improve their focus, as we suggested in a previous report, and to address
many of the issues discussed in this report.

HHS noted that the report points to good practices already in place in
states to ensure that children with special needs receive appropriate care,
but that the report also suggests that some states may leave significant
discretion to health plans on which safeguard protections are implemented
and how they are implemented. The Department said that it believes it is not
sufficient for such safeguards to be optional or discretionary and added
that the interim criteria require mandatory implementation of safeguards in
areas such as enrollment, care coordination, and specialist access when BBA-
defined categories of children with special needs are enrolled in capitated
managed care. Currently, not all states with capitated managed care programs
have responded to the criteria.

HHS highlighted the following issues or related initiatives in progress: The
Department agreed with our finding that adequate reimbursement

of managed care organizations and providers is a key concern and noted that
it will research issues related to adequate payment methodologies-
specifically, the development and implementation of risk- adjustment
methodologies appropriate for children. It also agreed with us that the
absence of a uniform definition of

children with special needs hinders data collection efforts intended to
determine the number of children enrolled in managed care systems and to
evaluate the services these children receive in Medicaid managed care. In
December 2000, the Department said it will review existing tools and
strategies for identifying and monitoring children with special needs and
determine what additional resources are needed by states and managed care
organizations. The National Center for Health Statistics will conduct a
telephone

survey, to be tested in the autumn of 2000, that is intended to provide
states with national data on health and insurance status for children with
special needs. HHS said that it is collaborating with other researchers to
develop

sample purchasing specifications to guide and assist state Medicaid agencies
and managed care organizations on approaches for providing quality care to
children with special needs.

Finally, HHS commented, and we agree, that although our report focused on
Medicaid managed care, these same issues apply to children with

special needs who are enrolling in the State Children's Health Insurance
Program.

Michigan commented that it had concerns regarding establishment of a
national definition of children with special needs and concurrent national
safeguard standards because states differ in how they define and identify
these children and in the Medicaid- covered services that are offered.
Therefore, Michigan said that states may be in a better position to
establish standards for children with special needs and that state
participation with HHS in addressing these issues is important. We agree
that states can offer valuable assistance to HHS in defining children with
special needs and developing safeguards for them; however, we believe that
national minimum standards like those HHS is formulating are needed to set a
floor. States, of course, may always choose to provide more protections to
more children than the minimum required by HHS.

Maryland's comments focused on quality- monitoring efforts, with the state
noting that it defined children with special needs more broadly to include
children who may have a health or functional impairment, regardless of
whether they qualify for a specific program category included in the BBA
definition. State officials said that this broader definition is more
difficult to administer when attempting to survey children with special
needs for quality monitoring because the few assessment tools that exist are
in the design and development stage. Responses from Florida and Oregon were
limited to technical comments and clarifications. We incorporated technical
comments from HHS and the four states where appropriate.

As arranged with your offices, unless you release its contents earlier, we
plan no further distribution of this report until 30 days after its issuance
date. At that time, we will send copies to the Honorable Donna E. Shalala,
Secretary of Health and Human Services; the Honorable Nancy- Ann Min
DeParle, Administrator of HCFA; the Honorable Claude Earl Fox, Administrator
of the Health Resources and Services Administration; state officials in the
four states we visited; appropriate congressional committees; and other
interested parties. We will also make copies available to others upon
request.

If you or your staff have any questions about this report, please call me at
(202) 512- 7118 or Walter Ochinko at (202) 512- 7157. See appendix IX for
other GAO contacts and staff acknowledgments.

Kathryn G. Allen Associate Director, Health Financing

and Public Health Issues

Appendi Appendi xes xI

Scope and Methodology We surveyed 36 selected state Medicaid directors
concerning safeguards in place for children with special needs in capitated
Medicaid managed care. 1 The states were chosen on the basis of data from
the Health Care Financing Administration (HCFA) indicating states that, as
of July 1, 1999, enrolled children receiving Supplemental Security Income
(SSI) benefits and children in foster care (two of the five categories of
children with special needs cited in the Balanced Budget Act [BBA] of 1997)
in capitated Medicaid managed care plans. 2 States not sampled may enroll
children in other BBA- cited categories in their capitated programs, but
data indicating enrollment by the other categories were not readily
available. The survey focused on state policies for the identification of
children with special needs, enrollment and disenrollment options, access to
pediatric primary and specialty care providers, care coordination, risk
adjustment/ rate setting, and quality assurance mechanisms. 3

Our survey was based on programmatic safeguards cited as important
mechanisms to protect children with special needs in capitated Medicaid
managed care plans. We identified the safeguards through a review of the
research literature and our previous work. Experts in the field provided
comments on draft versions of the surveys.

In addition to the surveys, we conducted site visits to four states that
enroll children with special needs in capitated managed care health plans:
Florida, Maryland, Michigan, and Oregon. These states were selected after
consulting with a number of experts from HCFA, the Health Resources and
Services Administration, advocacy groups, and research organizations. The
four states provide a cross section of approaches to serving children with
special needs in capitated Medicaid managed care. Maryland and Oregon have
demonstration waivers authorized by section 1115 of the Social Security Act,
and Florida and Michigan have program waivers authorized

1 The District of Columbia is included within state totals. 2 Fifteen states
were not surveyed because as of July 1, 1999, they did not enroll SSI or
foster children in capitated managed care programs. Alabama, Arkansas,
Idaho, Louisiana, and South Dakota had primary care case management (PCCM)
programs but not capitated plans. Illinois, Iowa, Kansas, Nevada, North
Dakota, Oklahoma, and Rhode Island had managed care organizations but,
according to HCFA data, SSI and foster children were not eligible for
enrollment. Alaska and Wyoming do not have managed care programs, and New
Jersey does not have a waiver to enroll children with special health care
needs.

3 The survey was mailed to 32 states. The four states we visited (Florida,
Maryland, Michigan, and Oregon) answered the survey questions during our in-
person interviews. In some cases, we contacted selected states by phone to
clarify their responses.

by section 1915( b) of the Social Security Act. Appendix II provides more
information on waivers used in states' managed care programs. In addition,
Maryland and Oregon enroll children with special needs in mainstream managed
care, while Florida and Michigan have separate managed care programs for
some children with special needs (see table 7). During our site visits, we
used a structured interview protocol to obtain information on the care of
children with special needs. We interviewed various people involved in the
care of these children, including officials with the state Medicaid and
title V programs, health care plan administrators and providers, advocates
for children with special needs, and family members of children with special
needs.

In the course of this study, we analyzed numerous documents, such as federal
law, state regulations, policy statements, and quality guidance. In
addition, we reviewed journal articles and other publications on children
with special health care needs and managed care. For the four states, we
reviewed waiver applications and renewals, requests for proposals to
contract for capitated Medicaid managed care plans, program evaluations,
enrollment and disenrollment reports, and risk- adjustment methodology
reports.

In addition, we interviewed officials from HCFA headquarters and its
regional offices that are responsible for the states we studied. We
discussed HCFA's interpretation of the BBA, general waiver review, and the
interim criteria developed by HCFA for children with special needs in
capitated Medicaid managed care plans.

Table 7: Overview of Medicaid Managed Care Programs in Florida, Maryland,
Michigan, and Oregon That Enroll Children With Special Needs

Florida Maryland Michigan Oregon Children's Medical

CSHCS Special Comprehensive

Oregon Health Services HMO option a HealthChoice b Health Plan c Health Plan
Plan

Date implemented 1998 1991 1997 1998 1997 1994-Phase I 1995-Phase II d

Waiver type 1915( b) 1915( b) 1115 No waiver 1915( b) 1115 General or

Separate General General Separate General General separate program Program
area Statewide Statewide Statewide Seven counties in

Statewide Statewide southeast portion of state

Enrollment policy Voluntary Voluntary Mandatory Voluntary Mandatory
Mandatory Children with

Title V SSI, foster SSI, title V, foster

Title V SSI SSI, title V, foster special needs

care, adoption care, adoption

care, adoption enrolled

assistance assistance

assistance Children with

e Title V, Katie Katie Beckett e Title V, foster care,

e special needs

Beckett Katie Beckett excluded

Enrollment of 17,425 as of

25,908 as of 24, 910 as of

821 as of Not available Not available children with

Sept. 1, 1999 Aug. 1999 June 1999 Aug. 1, 1999 special needs a In Florida,
Medicaid beneficiaries are mandatorily enrolled in managed care. Once
enrolled, beneficiaries choose between a health maintenance organization
(HMO) and a PCCM option. However, if no choice is made, an SSI child could
be assigned to either option, while foster, adoption assistance, and other
out- of- home placement children would only be assigned to the PCCM option.
b In Maryland, children with chronic, complex medical conditions may be
eligible to enroll in the Rare

and Expensive Case Management fee- for- service program, instead of in
HealthChoice. c Under the Children's Special Health Care Services (CSHCS)
program, title V children may choose

between a fee- for- service program and a capitated health plan, referred to
as a CSHCS Special Health Plan. d In 1994, Oregon began enrolling its
Medicaid population, except for the disabled and elderly, in

capitated health plans. The state refers to this as phase I. Approximately a
year later, the state began phase II, in which the aged, blind, and disabled
(SSI) and foster children were enrolled in capitated health plans. e These
programs did not note any specific exclusions of BBA categories of children.

Source: GAO analysis.

Medicaid Managed Care for Children With

Appendi xII

Special Needs Medicaid expenditures for children who qualify because of a
disability represent a disproportionate share of program costs. HCFA
identified 1 million children with disabilities in the Medicaid program,
which may not include all BBA categories of children with special needs.
These children constituted 7 percent of beneficiaries under age 21, but they
accounted for 27 percent of the $26 billion of payments for children. 1

States commonly enroll beneficiaries in two types of Medicaid managed care:
capitation and primary care case management (PCCM). Under capitation, a
health plan receives a fixed monthly fee per enrollee (the capitation fee)
in exchange for providing all needed covered services. The PCCM model is
similar to a fee- for- service arrangement except that a primary care
provider is paid a monthly, per- capita case management fee to coordinate
care for beneficiaries. About five times as many beneficiaries are enrolled
in capitated health plans as in PCCM enrollment arrangements. Capitated
plans typically emphasize primary care and cost containment efforts and thus
may place limitations on access to the highly specialized and costly medical
services that populations with special needs often require. Thus, the
greatest concern for children with special needs in managed care has focused
on capitated programs.

States must comply with certain federal statutory requirements for the
development and oversight of their managed care programs. The BBA allowed
states to establish mandatory capitated programs for most Medicaid
beneficiaries through a state plan amendment that states submit to HCFA, the
federal agency responsible for Medicaid. However, this provision does not
apply to children with special needs, Indians who are members of federally
recognized tribes, and beneficiaries eligible for both Medicare and
Medicaid. For mandatory enrollment of these beneficiaries, states must
obtain HCFA approval in the form of a waiver of certain statutory
provisions, such as beneficiaries' freedom to choose their providers.
Waivers are of two types: program and demonstration. The program waiver,
known as the 1915( b) freedom- of- choice waiver, allows states to require
that each beneficiary enroll in a capitated managed care or a PCCM plan.
Demonstration waivers authorized by section 1115 of the Social Security Act
allow states to have most Medicaid requirements waived in order to test
concepts likely to assist in promoting program objectives. The nature of
HCFA's requirements for and oversight of waiver

1 Our figures for payments for children and the percentage of payments for
disabled children are based on 1997 data because separate 1998 data for
these populations were not available.

programs depends on the type of waiver that is authorized- generally,
section 1115 demonstration waivers are subject to more terms and conditions
and undergo more oversight than 1915( b) waivers.

While states have sought to include children with special needs in Medicaid
managed care programs, there is some debate regarding the appropriateness of
managed care for children with special needs. Because of their need for
highly specialized and costly medical services, and the likelihood that
these children have established relationships with providers, children with
special needs may face difficulties in managed care plans, which have
incentives to limit the choice of or access to providers and to emphasize
primary care and cost containment efforts. As a result, in June 1999, HCFA
instituted the “Interim Review Criteria for Children with Special
Needs”- the first set of requirements for states mandating the
enrollment of children with special needs in capitated managed care
programs.

HCFA's interim criteria, summarized in table 8, cover 11 areas, such as
provider capacity, access to specialists, and plan payment methodology.
These 11 areas can be grouped into the 6 areas of safeguards discussed in
this report. HCFA plans to issue a revision of the interim criteria in the
fall of 2000 to reflect states' best practices and findings from a BBA-
required report on appropriate safeguards for special needs populations. 2
Additionally, the revised criteria will draw on regulations implementing BBA
Medicaid managed care standards, which are expected to be published in the
fall of 2000. 3

2 The BBA mandated a report to the Congress on safeguards needed to ensure
that the health care needs of individuals with special needs are adequately
met under Medicaid managed care arrangements. HCFA completed a draft report
of the study in the summer of 1999; however, a final version had not been
issued by July 2000. HCFA did not have an estimated issuance date.

3 In September 1998, HCFA published a Notice of Proposed Rule Making to
amend Medicaid regulations to implement many of the BBA provisions related
to Medicaid managed care. See Medicaid Program; Medicaid Managed Care;
Proposed Rule, 63 F. R. 52,021, 52, 092 (1998). HCFA officials said the
final regulations will include provisions for populations with special needs
in such areas as medical necessity, reimbursement, and quality assurance.

Table 8: Summary of HCFA's Interim Review Criteria for Children With Special
Needs HCFA's interim criteria General safeguard area safeguard area HCFA
requirements for state managed care programs a

Program development Public process Stakeholders such as advocates,
providers, and consumer groups are included during waiver development.

Definition of children with Definition includes at least the BBA categories
of children with special special needs needs.

Enrollment procedures Identification Children with special needs are
identified, and specific data are collected on these children.

Enrollment/ disenrollmentï¿½ Enrollment includes outreach activities and
assistance from specially trained personnel, and children with special needs
can disenroll or reenroll in another plan for good cause. The auto-
assignment process assigns these children to an existing or otherwise
capable provider. b

Provider networks Provider capacity Health plans should have sufficient
experienced providers to serve children with special needs, and the state
will monitor provider capacity.

Specialists Health plans should have sufficient specialists to whom children
with special needs have direct access or can use as primary care physicians.
Specific specialist types are either included in health plan networks or
children are allowed to see specialists not in the networks.

Care coordination Coordination Children with special needs must receive a
needs assessment and subsequent treatment plan, along with case management
services. Coordination is required among agencies, advocates, and other
systems of care or funding sources serving children with special needs.

Reimbursement Payment methodology The payment methodology accounts for
children with special needs enrolled in capitated managed care.

Targeted quality Quality of care Specific performance measures and
performance improvement projects monitoring addressing children with special
needs must be developed.

Plan monitoring Access to specialists and to services, quality of care,
coordination of care, and enrollee satisfaction is monitored. Americans With
Disabilities Act access standards are monitored. Medical necessity is
defined for health plans, and its application is monitored. a The interim
criteria also include a requirement that the state adequately address HCFA
guidance regarding BBA provisions relevant to Medicaid managed care. b Auto-
assignment is the process by which individuals who do not select a health
plan or a provider

within a designated time are automatically assigned to a plan or provider.
Source: HCFA's “Interim Review Criteria for Children with Special
Needs.”

State Managed Care Enrollment Policies for

Appendi xI II

Children With Special Needs Enrollment of the categories of children with
special needs identified in the BBA in capitated managed care programs
varies among states (see fig. 1). Some states did not provide data on all
categories of children with special needs.

Figure 1: Managed Care Enrollment Policies as of October 31, 1999

Note: The states we visited are in bold lettering. a Other children in
foster care or otherwise in an out- of- home placement.

b This state has no state option/ waiver for Katie Beckett.

c Colorado, Florida, Massachusetts, Mississippi, Montana, New York,
Washington, and Wisconsin allow voluntary enrollment in capitated managed
care plans of children with special needs who do not fall into a BBA
category. d This state did not provide data for this category.

e Tennessee and Utah have mandatory enrollment in capitated managed care
plans of children with special needs who do not fall into a BBA category. f
According to HCFA, as of July 1, 1999, West Virginia was enrolling SSI and
foster children through a

1915( b) waiver and, therefore, was selected for our survey. As of October
31, 1999, West Virginia was no longer enrolling these children in capitated
managed care programs.

Source: GAO survey of state Medicaid directors.

State- Reported Numbers of Children in BBA Categories Enrolled in Capitated
Health Care

Appendi xI V

Plans Table 9 shows data from 20 states on the number of children with
special needs enrolled in capitated Medicaid managed care plans. Nineteen
states provided data through our survey; Florida provided its data to HCFA
during the recent review of the state's 1915( b) waiver renewal application,
and we obtained the data from HCFA. States' enrollment figures are from
different points in time, are combinations of enrollment in two or more BBA
categories, or both.

Table 9: Number of Enrolled Children Other children in foster Katie

Foster care Adoption

care or otherwise in an State SSI Title V Beckett (title IV- E) (title IV-
E)

out- of- home placement

Colorado 3, 091 a 54 a b 610 25 c Connecticut 3, 451 d b e 5,500 f 2,000 f
2,500 f Delaware 3, 600 b b b b b District of Columbia 2, 036 b e g g g

Florida 21, 900 g g 1,447 1, 254 430 Maryland 12, 000 b g 10,910 h 2,000

Massachusetts 2,002 i b b 539 j j Minnesota g 86 b 1,491 g 805 Mississippi
566 b 4 10 k b Missouri l b g 3,466 3, 595 4, 204 Montana 6 m 0 0 1 m g 7 m
Nebraska b g g 4,780 g n New Hampshire o b 28 42 37 b New Mexico 6, 637 b p
2,331 q q New York 11, 676 r b b b g g Utah 1,013 b b 804 914 1,404 s
Vermont b b g 481 249 405 Virginia 8,509 t b g g g g West Virginia b 529 b b
b b Wisconsin 189 b g g g g

Notes: Data are as of June 1, 1999, unless otherwise specified. The data for
the states we visited are in bold lettering. a SSI data are as of October 1,
1999, and title V data are as of June 30, 1999.

b This state did not provide data for this category. c The figure for foster
care (title IV- E) includes other children in foster care or otherwise in an
out- ofhome placement as of August 20, 1999.

d SSI data are as of November 1, 1999. e This state has no state option/
waiver for Katie Beckett. f Data for foster care (title IV- E), adoption
assistance (title IV- E), and other children in foster care or otherwise in
an out- of- home placement are as of September 1, 1999. g This state
excludes this BBA category from enrollment.

h The figure for foster care includes adoption assistance. i SSI data are as
of September 28, 1999. j The figure for foster care includes adoption
assistance and other children in foster care or otherwise in an out- of-
home placement as of September 28, 1999. k The figure for foster care
includes adoption assistance.

l Missouri does not use its SSI eligibility criteria to determine Medicaid
eligibility: it is one of several states allowed to use 1972 state
assistance eligibility rules to determine Medicaid eligibility for disabled
recipients. These states are often called “209( b)” states
because the origin of this requirement was sec. 209( b) of the Social
Security Amendments of 1972. Missouri is therefore unable to determine the
number of SSI children who are enrolled in its capitated Medicaid program. m
The data for SSI, foster care, and other children in foster care or
otherwise in an out- of- home

placement are as of October 1999. n The figure for foster care includes
other children in foster care or otherwise in an out- of- home

placement. o New Hampshire is also a 209( b) state and is therefore unable
to determine the number of SSI children

who are enrolled in its capitated Medicaid program. p The figure for SSI
includes Katie Beckett children as of October 1999.

q The figure for foster care includes adoption assistance and other children
in foster care or otherwise in an out- of- state placement as of October
1999. r The figure for SSI includes children through age 20.

s The figure for other children in foster care or otherwise in an out- of-
home placement includes other categories of children considered by Utah to
have special needs. t SSI data are as of May 27, 1999.

Source: GAO survey of state Medicaid directors, unless otherwise specified.

Care Coordination for Children With Special

Appendi xV

Needs in Four States While each of the four states we visited has a care
coordination system to assist children with special needs in accessing
needed services, the systems are all different. For example, in Florida
children are assigned to different types of care coordinators on the basis
of their level of need, while in Michigan families can access the services
of three different types of care coordinators. Furthermore, in both Maryland
and Oregon, health plans are required to have a designated contact person
for individuals with special needs, although the health plans are given
discretion in deciding the role of this individual. Finally, state- employed
nurses or social workers serve as care coordinators in Florida, while
Michigan's specialty program uses both health plan and community- based care
coordinators. In both Maryland and Oregon, care coordinators are hired by
the health plans. The care coordination systems in each of the four states
are summarized in table 10.

Florida's Children's All children enrolled in the state's CMS program (for
title V children)

Medical Services receive care coordination services. Upon enrolling in CMS,
the family

works with one of the state's nurses to complete a Child and Family (CMS)

Database Form, a three- page form that details the child's and the family's
medical history, the child's physiological information, and a family support
assessment. 1 On the basis of the complexity of their case, children in CMS
are generally assigned to one of two types of case managers. Children with
more severe and complex cases are assigned to a nurse specialist, while
senior community health nurses handle individuals with less complicated
cases. 2 The main difference between these two types of case managers is
that nurse specialists are required to make home visits for each child every
6 months, while community health nurses do not visit beneficiaries' homes.
In addition, nurse specialists tend to have much smaller caseloads because
the children they assist have more complicated needs. According to the
nursing director of the CMS Tampa regional office, the average caseload is

1 Possible physiological concerns are tracked for ten basic areas: vision,
hearing, language, respiration, circulation, integument (pertaining to the
skin), neuro- musculo- skeletal function, digestion/ hydration, bowel
function, and genitourinary function. The family support assessment asks
parents to list environmental (food, shelter, work); psychosocial
(schooling, child care); health- related (child development, medications,
therapies); and physiological (medical equipment, emergency contacts)
concerns they have regarding their child's condition or the family's
situation.

2 In addition to nurse specialists and community health nurses, some case
managers coordinate care for children with specific diagnoses, such as HIV/
AIDS and brain and spinal cord injuries, or who obtain services from other
programs, such as early intervention.

50 children for nurse specialists and 150 children for community health
nurses.

CMS case managers, who are either nurses or social workers employed by the
state, undergo a preservice training in which they learn about family
support services and how to access community resources outside the medical
field. Furthermore, CMS has a contract with a university- affiliated center
for child development to provide additional training for its case managers.
At the time of our visit, CMS was also in the process of revamping its case
manager training with the hope of providing clinical updates through
distance learning in the future.

In addition to coordinating beneficiaries' medical services, CMS case
managers are expected to coordinate with other entities from which the child
receives services, including schools, day care and respite care agencies,
and other community agencies. Case managers also attend court on the CMS
enrollee's behalf, as well as foster care and school meetings. For example,
CMS case managers have worked with parents and the schools to transfer
children from schools without a full- time nurse to those that have a nurse
on staff and are therefore better prepared to serve the child. However,
according to families we interviewed, some case managers take a more active
role in a child's care than others. CMS officials agreed that some case
managers, regardless of training, are simply better than others at
addressing all of the child's needs.

When the CMS program moves to a risk- based, capitated program, children's
medical care will be provided by an integrated care system, as opposed to by
independent providers. Although the integrated care system will be
responsible for authorizing and paying for services and for routine
utilization management, the CMS state agency will continue to be responsible
for care coordination. 3 Therefore, the care coordination system will remain
unchanged.

3 According to the American Association of Health Plans' Web site,
utilization review or management comprises a set of procedures used by
purchasers of health benefits to contain health care costs through
assessment of the appropriateness of care, usually before the care is
provided. (www. aahp. org/ services/ consumer_ information/ definitions/
definit. html).

Maryland's In Maryland, all children with special needs are eligible for
care

Healthchoice coordination services, but according to state officials, not
all these children

receive such services since many families do not request or want the
assistance. However, all Medicaid health plans in the state make the
services of a special needs coordinator (SNC) available to all individuals
with special needs, including children with special needs, who request the
service. 4 In addition to SNCs, health plans have other case managers on
staff or under contract. SNCs, who are usually nurses or social workers,
serve as liaisons among Medicaid, the health plan, populations with special
needs, and other case managers. In some health plans, SNCs have
responsibility for coordinating beneficiaries' care, while in other plans
they serve more as patient advocates and leave the coordination services to
case managers. However, training from the state regarding populations with
special needs is targeted to the SNCs who are responsible for informing
other case managers.

Maryland leaves much of the organization of the care coordination system for
populations with special needs- which includes the type of services
provided, staff qualifications, and caseload- to the discretion of the
health plan. State regulation provides that health plans be responsible for
“assessing, planning, coordinating, monitoring and arranging the
delivery of medically necessary and appropriate health- related
services.” Within these general guidelines, health plans have
considerable leeway to set up programs. We spoke with representatives of one
health plan that requires its SNC to be either a registered nurse or a
social worker and to have at least 3 years of experience with a health or
human services organization. This plan's SNC acts as a patient advocate and
a case manager, while SNCs in other plans may not serve as case managers but
may have the responsibility of managing high- cost cases.

Generally, case managers conduct an initial assessment of beneficiaries
referred for care coordination and tend to be mobile, allowing them to visit
beneficiaries' homes for an environmental assessment if necessary. From this
assessment and input from the primary care physician, a care plan is
developed that includes an evolving set of short- and long- term goals and
may address medical, social, and educational needs. If a case manager

4 Maryland defines seven populations as having special needs: children with
special needs, individuals with developmental disabilities, individuals with
physical disabilities, pregnant and postpartum women, the homeless,
individuals with HIV/ AIDS, and substance abusers.

elects to involve the SNC in a case, then the case manager may be
responsible for the medical aspects of the individual's care, while the SNC
may deal with some of the social aspects, such as ensuring the family home
has working electricity. To keep abreast of the beneficiary's progress, the
case manager remains in touch with the family and the primary care
physician. Case mangers in one plan have an active caseload of about 30
beneficiaries, while there is no limit on the SNC's caseload. However, other
plans may have vastly different systems.

Michigan's Children's The CSHCS Special Health Plans are a Medicaid managed
care option

available to title V children. The special health plans provide care Special
Health Care

coordination services to all enrollees. 5 Three different types of care
Services (CSHCS)

coordinators, each with distinct responsibilities, are available to plan
Special Health Plans

enrollees. Upon enrollment, each family is contacted by the plan level care
coordinator (PLCC), an individual who works for the health plan as a
reviewer and authorizer of services and is available to answer enrollees'
questions. The PLCC works with new enrollees to help them find an
appropriate local care coordinator, the second type of coordinator involved
with enrollees. Local care coordinators, often nurses who work in a
community agency, such as the local title V program, the local health
department, or a home health agency, are paid by the special health plan to
assist families in developing an individualized health care plan (IHCP)- the
centerpiece of the system's care coordination program. One health plan pays
each local care coordinator a flat fee to cover the preparation of the IHCP
and any ongoing care coordination provided, while a second plan pays the
coordinator a smaller fee for the completion of the IHCP and preauthorizes
payment for two other contacts per year. Additional contacts beyond these
two must be authorized in order for the local care coordinator to be
reimbursed. Finally, each plan has a parent of a child with special needs on
staff to serve as the plan's family- centered care coordinator. The family-
centered care coordinator's primary responsibility is to provide guidance
and assistance to enrolled families and to provide a family perspective to
the plan. According to enrolled families, having a parent of a child with
special needs on staff who can empathize with their situation is essential
to the program's success.

5 CSHCS Special Health Plans also enroll title V children who are not
Medicaid- eligible.

The IHCP contains a comprehensive record of the child's medical, social, and
educational needs. Information detailed on an IHCP includes demographic
information; a list of the child's providers; all of the child's medical,
equipment, and supply needs (for example, durable medical equipment, home
health services, and medications); and therapy, transportation, and
educational needs. Once it is compiled, the family, the PLCC, and the
child's principal coordinating doctor must approve the IHCP before it can
take effect. 6 In addition to communicating the overall plan of care to the
various providers, the IHCP also serves as a referral and prior
authorization for care. IHCPs are supposed to be completed for each new
enrollee within 60 days of enrollment and must be updated annually. In
addition, the IHCP may be amended as new care needs arise.

Although advocates believe that the special health plans' care coordination
programs cover the necessary services, there have been implementation
problems. An advocate has reported that the health plans are not being given
enough funding from the state to build the infrastructure necessary to
provide coordinated medical and social services, making it difficult for the
plans to build their care coordination systems. In fact, at least one
special health plan reported difficulty in finding individuals who are
capable and willing to serve as local care coordinators and to develop
IHCPs. In addition, some physicians in one of the special health plans are
unwilling to serve as principal coordinating doctors or to agree on the
IHCPs written by the local care coordinators. As a result, the plan is
unable to complete many IHCPs in a timely fashion.

The Oregon Health Oregon's care coordination program is targeted to
individuals who meet the

Plan state's own definition of special needs individuals, since
beneficiaries in the

state's phase II population- including SSI and foster care children- can
access the services of an exceptional needs care coordinator (ENCC). The
ENCC serves as the health plan's point of contact for members, medical
providers, and others with an interest in the health care of elderly or
disabled beneficiaries. Although the state did specify that the ENCC service
should include a specialized case management function housed in managed care
plans to assist the phase II population in obtaining services and
coordinating care, it provided health plans with broad discretion in
implementing the program. As a result, the roles, responsibilities, and

6 A principal coordinating doctor- a pediatrician, specialist, or
subspecialist- is selected by the family to ensure that providers of care
are working together.

backgrounds of ENCCs vary across plans. For example, one health plan uses
the ENCC to conduct utilization review for high- cost cases, while in
another plan the ENCC serves solely as a patient advocate. Generally,
however, the ENCC assists beneficiaries in accessing needed medical services
and may also advocate on their behalf and refer them to appropriate agencies
that are able to meet their social needs. Since ENCCs' functions differ
among plans, their active caseload may range from as few as 25 cases to as
many as 100. Finally, some health plans seek trained social workers to fill
their ENCC position, while others prefer nurses with knowledge of community
agencies or utilization review.

Although all phase II beneficiaries are eligible to receive the services of
an ENCC, not all of the population actually receives the service. In most
health plans, ENCCs do not initiate contact with a beneficiary; rather,
either the beneficiary must request the service or the beneficiary's case
must be referred to an ENCC. At the time of health plan enrollment,
individuals may be referred to the ENCC for services through the use of the
state's Continuity of Care Referral Form (CCR). The CCR, which may be filled
out by the enrollment caseworker, contains information about the
beneficiary's living arrangements, health status, medical needs, and any
special concerns. Although the CCR provides enrollment caseworkers with a
tool to convey a beneficiary's needs to an ENCC, there is no requirement
that the CCR be completed for each enrollee or at any specific time.
Therefore, it is unclear how many eligible individuals are actually referred
to an ENCC using this mechanism. Parents may also request the services of an
ENCC for their eligible child with special needs. However, a 1997
satisfaction survey of parents of children with special needs found that 86
percent of phase II parents were not aware of the availability of the ENCC
service. Thus, many children who may have benefited from the assistance of
an ENCC have not received the service.

Table 10: Care Coordination Activities for Children With Special Needs in
Four States Medical

Location of BBA children

Medical services plus

care Program enrolled services only a

others b coordinator Primary features

Florida's Medicaid SSI, title IV- E foster

X Health plan Medicaid HMOs are required to HMO option care and adoption

provide care coordination services to assistance, out- of only two
populations: individuals with

home placement developmental disabilities and children

with mental health needs. For individuals with a chronic disease, health
plans are required to develop a follow- up program to ensure appropriate
treatment to minimize deterioration.

Florida's CMS c Title V X State Each child enrolled in CMS is assigned to
one of two different types of case managers on the basis of the complexity
of the child's needs and an assessment of available family support. d

Maryland's SSI, title V,

X e Health plan All Medicaid health plans are required HealthChoice title
IV- E foster care

to designate an SNC to serve as the and adoption

point of contact for individuals assistance, out- of belonging to one of the
state's seven home placement

populations with special needs, which includes children with special needs.
The care coordination structure and service provision differ by plan.

Michigan's SSI f f f f Comprehensive Health Plan

Michigan's CSHCS Title V X Health plan,

All enrolled children receive the Special Health Plan community services of
two different care

coordinators: a PLCC, whose role is to review and authorize services, and a
local care coordinator, who helps develop a detailed health care plan for
each child.

Oregon Health Plan SSI, title V, title IV- E X g Health plan Oregon's SSI
and foster children can

foster care and request the services of an ENCC, a

adoption assistance, designated advocate to assist in

out- of home organizing their care needs. However,

placement ENCCs do not initiate contact with

beneficiaries; unless their assistance is requested, no services are
provided.

a The care coordinator assists the child only in coordinating medical
services, such as doctors' appointments and referrals to specialists. b In
addition to coordinating medical services, the state requires care
coordinators to assist children in

coordinating other social, behavioral, or educational services, such as
special education and family support services. c CMS is not currently a
capitated system, but its case management services will remain unchanged

when the system becomes capitated. Although children will soon be served by
integrated care systems, the responsibility for care coordination will
remain with the state agency. d Children with HIV/ AIDS or brain and spinal
cord injuries, or those in early intervention programs, are

assigned to special case managers. e In Maryland, there is no requirement
that children's social needs be coordinated, although some

SNCs do assist beneficiaries in obtaining needed social services. f
Michigan's Comprehensive Health Plan does not require health plans to
provide care coordination to

their beneficiaries. g Although some ENCCs may refer beneficiaries to
community agencies that can serve their social

needs, ENCCs' efforts are concentrated on beneficiaries' medical needs.

Health- Based Risk- Adjustment Systems Used

Appendi xVI

by Maryland, Michigan, and Oregon Three of the four states we visited use
health- based risk- adjustment systems for at least some of their
beneficiaries enrolled in managed care programs (see table 11). Since 1997,
Maryland has adjusted capitation rates using a variation of the Adjusted
Clinical Groups (ACG) system, which assesses beneficiaries' prior use of
health services to assign them to various risk categories. 1 Maryland
estimates that about two- thirds of beneficiaries who qualify for SSI are in
ACG- adjusted categories, while only about 50 percent of generally healthy
families and children have the necessary prior health data to be included in
ACG- adjusted categories. When the state begins using encounter data from
health plans in 2001, replacing its reliance on older and increasingly
limited fee- for- service information, it expects to increase the number of
beneficiaries with ACGadjusted capitation payments to health plans. 2 Since
1998, Oregon has used a form of the Disability Payment System (DPS), a risk-
adjustment system developed specifically for Medicaid programs. 3 Oregon
applies risk adjustment to the capitation rates paid primarily for SSI
beneficiaries. 4 Michigan uses a specially designed system to address the
higher expected costs of treating children with special needs in its
Children's Special Health Care Services Special Health Plans. 5 In the fall
of 2000, Michigan plans to implement the DPS system of risk adjustment for
people with disabilities

1 For those beneficiaries without sufficient diagnostic data, Maryland
relies on adjustment by two eligibility categories (families and children,
or the disabled); age; sex; and region (city or county).

2 Encounter data are individual- level data from managed care plans for each
service provided to each enrollee. The data allow states to identify the
care received by individuals and the provision of any procedure.

3 For more information regarding the DPS, see Richard Kronick, Tony Dreyfus,
Lora Lee, and Zhiyuan Zhou, “Diagnostic Risk Adjustment for Medicaid:
The Disability Payment System,” Health Care Financing Review, Vol. 17,
No. 3 (spring 1996).

4 Oregon's risk- adjustment system is applied to two additional groups:
those Medicaid beneficiaries receiving state- provided assistance until they
receive approval for SSI benefits and a category of newly eligible
beneficiaries, most of whom are single adults and childless couples older
than 19 years of age.

5 In part because of concerns that program enrollment was so small that
appropriate capitation rates could not be developed (593 children had
enrolled as of Aug. 18, 1999), Michigan amended its health plan contracts
soon after the program began in 1998 to add additional protections from
financial losses. The state agreed to conduct a study at the end of the
contract period comparing actual costs with those that might be expected for
similar children in a fee- for- service system, and to reimburse health
plans for higher- than- expected costs if necessary.

enrolled in its general Medicaid program, which include children eligible
for SSI.

Table 11: Health- Based Risk- Adjustment Systems Used by Maryland, Michigan,
and Oregon State Description

Maryland Risk adjustment is conducted for two groups: families and children,
and the disabled population. Within these two separate categories, the ACG
classification is used to assign Medicaid beneficiaries to 1 of 52 unique
groups on the basis of their age, sex, and inpatient and ambulatory
diagnoses identified in prior medical claims. The state then uses these ACG
data to define nine risk- adjustment categories that reflect relatively
similar uses of resources. Each beneficiary is then assigned to one of the
nine risk- adjustment categories according to the original ACG
classification. Maryland also includes other adjustments: children under 1
year, pregnant women, and people with AIDS are in separate categories, and
various other programs are “carved out” of the state's
riskadjusted payments, including costs for the Rare and Expensive Case
Management program, specialty mental health services, various HIV/ AIDS
services, services for infants, and long- term care services.

Michigan CSHCS The risk- adjustment system includes five variables: (1) four
diagnostic categories that incorporate the 2, 700 Special Health Plans
diagnoses identified by the state title V program, (2) the age of the child
with special needs, (3) the county of

residence, (4) whether the child also has private insurance, and (5)
Medicaid eligibility. a Oregon The state uses a form of the DPS system
developed specifically for Medicaid programs that employs past feefor-
service claims data to identify high- cost diagnoses. Specifically, the DPS
uses claims data to count

diagnoses and estimate the cost in a given year for a person with a specific
disability in a previous year. The system uses 18 groupings corresponding to
a body system, type of illness, or disability. These groupings are further
distributed to 43 subcategories according to relative costs. The state also
adjusts capitation rates according to maternity and newborn prevalence
within each plan, and several adult eligibility categories for methadone
treatment rates within each plan and region. In the fall of 2000, Oregon
will move to a revision of the DPS- the Chronic Disease and Disability
Payment System. This system is designed specifically for Medicaid
populations and will use fee- for- service data from seven states to
identify high- cost diagnoses, which will then be categorized into 19 major
categories and 58 subcategories.

a Because the Michigan special health plans are a component of the state's
CSHCS program, which also enrolls non- Medicaid- eligible children, a fifth
variable addresses whether the child is Medicaideligible.

Source: State interviews and reports.

Selected Quality- Monitoring Activities That Can Be Targeted to Children
With Special

Appendi xVII

Needs Many of the quality- monitoring requirements for managed care programs
are specified in Medicaid law and regulations, which were amended in 1997 by
the BBA. 1 However, most of this monitoring activity is not specifically
targeted to any eligibility group. Each state must develop and implement a
quality assessment and performance improvement strategy that includes
procedures for monitoring and evaluating the quality and appropriateness of
care and services to beneficiaries. Additionally, managed care organizations
are required to have an internal quality assessment and performance
improvement program whereby the health plan must achieve minimum performance
levels on standardized quality measures and undertake performance
improvement projects in various clinical and nonclinical areas. State
agencies also must provide for an annual independent, external review of the
quality of services furnished under each state agency contract with a
managed care organization. 2

Quality monitoring can be carried out using various measures or processes,
including clinical studies, beneficiary satisfaction surveys, and medical
record audits (see table 12). These quality- monitoring activities can be
modified to include a specific focus on children with special needs within a
current Medicaid- wide program, or can be developed specifically for these
children. States can focus activities by increasing sample sizes for
children with special needs, holding focus groups, or conducting enrollee
interviews. For example, because the number of children with special

1 For more information on the major federal requirements for monitoring
Medicaid managed care programs, see GAO/ HEHS- 00- 37, Mar. 3, 2000, app.
II, p. 42. Federal requirements pertaining to monitoring are specified in
sec. 1903( m) of the Social Security Act and 42 C. F. R. 434.

2 HCFA has collaborated with various public and private agencies to develop
a range of technical assistance tools and guidance to provide resources for
states in implementing quality assurance and improvement programs in
Medicaid. Among them is “A Health Care Quality Improvement System for
Medicaid Managed Care- A Guide for States,” the product of the
agency's Quality Assurance Reform Initiative in 1993. This guide includes a
framework for quality improvement systems for managed care programs,
guidelines for internal quality assurance programs for health plans,
guidelines for clinical and health services focus areas and use of quality
indicators and clinical practice guidelines, and guidelines for the conduct
of external quality reviews. HCFA updated the guide in 1998 with the
“Quality Improvement System for Managed Care,” which contains a
new set of approaches, tools, and techniques for performance improvement.
HCFA also collaborated with other entities to produce a Medicaid version of
the Health Plan Employer Data and Information Set, a standardized quality
performance measurement system. Additionally, the Agency for Healthcare
Research and Quality produced the Consumer Assessment of Health Plans survey
instrument, which includes measures and tools specifically designed for use
by state agencies.

needs is small relative to the overall Medicaid population, it is unlikely
that a large enough number would be included in a randomly chosen sample of
beneficiaries for a systemwide satisfaction survey. To target children with
special needs, a state or health plan can stratify the sample of those
interviewed to intentionally include a large enough number of families with
children with special needs for significant conclusions to be drawn about
their experiences. Alternatively, a state may administer a special
beneficiary survey only among families of children with special needs.

Table 12: Measures or Processes States and Health Plans Can Use to Monitor
the Quality of Care for Children With Special Needs

Monitoring measure or process Description

Beneficiary surveys Periodic satisfaction surveys- administered statewide or
within individual health plans- can help measure the degree to which
Medicaid beneficiaries are happy with the providers and services offered in
their managed care plan. Some states have used analyses of such data to help
identify problems that Medicaid beneficiaries have with managed care, such
as difficulty in accessing specialists. Statewide surveys allow states to
compare results across plans for various access and quality measures, such
as use of specialty services and beneficiary perception of the quality of
care provided. Indicators of beneficiary satisfaction can complement other
analyses of provider network capacity and provided services.

Analysis of encounter data Encounter data are individual- level data on all
services provided to all patients. Analyses of encounter data allow states
to examine patterns of care across plans, such as differences in service
delivery by selected types of services, beneficiary groups, and providers.

Random audits of medical Medical record audits document problems with
patient medical records, such as incomplete patient records histories, lack
of indication of follow- up care, and illegibility and unavailability of
records. Audits have

the potential to assess the appropriateness of the care provided as well as
to determine whether patients' medical records properly document the health
care and services that they received.

Grievance/ disenrollment studies Health plans must operate an internal
grievance process through which beneficiaries can report their
dissatisfaction with plan providers, services, and benefits. States can
assess individual beneficiary grievances to identify specific and localized
problems or can monitor the volume of grievances filed- particularly across
plans- to reveal problems. Moreover, beneficiaries who disenroll from
managed care plans may do so because of dissatisfaction with the care
received. Therefore, collecting and analyzing data on disenrollments can
provide insights into plan performance.

Focused clinical studies A clinical study focuses on certain aspects of
health care services, such as preventive care or care of chronic and acute
conditions, to answer questions about the quality and appropriateness of
care that has been provided.

Use of quality indicators An indicator is a variable reflecting either a
discrete event, such as whether an older adult has received a flu shot in
the last 12 months, or a status, such as whether a person's hypertension is
under control. An organization's performance on selected topics can be
measured using one or more quality indicators. States and health plans can
adopt standard indicators, such as those available in instruments like the
Health Plan Employer Data and Information Set, which has a Medicaid version,
or develop their own indicators.

Separate quality oversight States can operate specific managed care quality
divisions responsible for monitoring health plans. In entities order to
target activities specifically for children with special needs, states can
develop separate

oversight entities, or subdivisions, within existing programs. For example,
Florida's specialty children's program has a quality management unit that
operates separately from the state's general Medicaid quality agency.

Comments From the Department of Health

Appendi xVI II and Human Services

Appendi xIX

GAO Contacts and Staff Acknowledgments GAO Contacts Walter Ochinko, (202)
512- 7157 Karen Doran, (202) 512- 6812 Staff

In addition to those named above, Deborah Miller, Mike Piskai, Michelle
Acknowledgments

Rosenberg, and Behn Miller made key contributions to this report.

Related GAO Products Medicaid Managed Care: Challenges in Implementing
Safeguards for Children With Special Needs( GAO/ HEHS- 00- 37, Mar. 3,
2000).

Medicaid and Special Education: Coordination of Services for Children With
Disabilities Is Evolving( GAO/ HEHS- 00- 20, Dec. 10, 1999).

Medicaid Managed Care: Four States' Experiences With Mental Health Carveout
Programs( GAO/ HEHS- 99- 118, Sept. 17, 1999).

Medicaid Managed Care: Challenge of Holding Plans Accountable Requires
Greater State Effort( GAO/ HEHS- 97- 86, May 16, 1997).

Medicaid Managed Care: Serving the Disabled Challenges State Programs (GAO/
HEHS- 96- 136, July 31, 1996).

(101869) Lett er

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GAO United States General Accounting Office

Page 1 GAO/ HEHS- 00- 169 Children With Special Needs

Contents

Contents Page 2 GAO/ HEHS- 00- 169 Children With Special Needs

Contents Page 3 GAO/ HEHS- 00- 169 Children With Special Needs

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Page 5 GAO/ HEHS- 00- 169 Children With Special Needs United States General
Accounting Office

Washington, D. C. 20548 Page 5 GAO/ HEHS- 00- 169 Children With Special
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Appendix I

Appendix I Scope and Methodology

Page 35 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix I Scope and Methodology

Page 36 GAO/ HEHS- 00- 169 Children With Special Needs

Page 37 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix II

Appendix II Medicaid Managed Care for Children With Special Needs

Page 38 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix II Medicaid Managed Care for Children With Special Needs

Page 39 GAO/ HEHS- 00- 169 Children With Special Needs

Page 40 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix III

Appendix III State Managed Care Enrollment Policies for Children With
Special Needs

Page 41 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix III State Managed Care Enrollment Policies for Children With
Special Needs

Page 42 GAO/ HEHS- 00- 169 Children With Special Needs

Page 43 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix IV

Appendix IV State- Reported Numbers of Children in BBA Categories Enrolled
in Capitated Health Care Plans

Page 44 GAO/ HEHS- 00- 169 Children With Special Needs

Page 45 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix V

Appendix V Care Coordination for Children With Special Needs in Four States

Page 46 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix V Care Coordination for Children With Special Needs in Four States

Page 47 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix V Care Coordination for Children With Special Needs in Four States

Page 48 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix V Care Coordination for Children With Special Needs in Four States

Page 49 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix V Care Coordination for Children With Special Needs in Four States

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Appendix V Care Coordination for Children With Special Needs in Four States

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Appendix V Care Coordination for Children With Special Needs in Four States

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Appendix VI

Appendix VI Health- Based Risk- Adjustment Systems Used by Maryland,
Michigan, and Oregon

Page 54 GAO/ HEHS- 00- 169 Children With Special Needs

Page 55 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix VII

Appendix VII Selected Quality- Monitoring Activities That Can Be Targeted to
Children With Special Needs

Page 56 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix VII Selected Quality- Monitoring Activities That Can Be Targeted to
Children With Special Needs

Page 57 GAO/ HEHS- 00- 169 Children With Special Needs

Page 58 GAO/ HEHS- 00- 169 Children With Special Needs

Appendix VIII

Appendix VIII Comments From the Department of Health and Human Services

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Appendix VIII Comments From the Department of Health and Human Services

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Appendix VIII Comments From the Department of Health and Human Services

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Appendix IX

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