Children's Health Insurance:

Recent HHS-OIG Reviews Inform the Congress on Improper Enrollment and Reductions in Low-Income, Uninsured Children

GAO-06-457R: Published: Mar 9, 2006. Publicly Released: Mar 9, 2006.

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The Congress passed legislation creating the State Children's Health Insurance Program (SCHIP) in 1997 to reduce the number of uninsured children in families with incomes that are too high to qualify for Medicaid. For SCHIP, the Congress appropriated $40 billion over 10 years, with funds allotted annually to the 50 states, the District of Columbia, and the U.S. commonwealths and territories. States' participation in SCHIP is voluntary. States that do participate have three options in designing their SCHIP programs: expand the Medicaid program to include SCHIP-eligible children, develop a separate child health insurance program, or maintain a program that combines both of these options. Financed jointly by the states and the federal government, SCHIP offers a strong incentive for states to participate by offering a higher federal matching rate--that is, the federal government pays a larger proportion of program expenditures--than the Medicaid program. While this incentive encourages efforts to reduce the number of uninsured children through state participation in SCHIP, there have been concerns that states might inappropriately enroll Medicaid-eligible children in SCHIP and thus obtain higher federal matching funds than allowed under Medicaid. In addition, there has been interest in assessing the progress states made to reduce the number of uninsured children, including the extent to which states met the objectives and goals established in their SCHIP programs. In particular, states must report their progress in reducing the number of low-income, uninsured children and may rely on certain national data sets, such as the Current Population Survey (CPS), or conduct their own surveys, to do so. In the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA), the Congress directed the Department of Health and Human Services (HHS) Office of Inspector General (OIG) to conduct a series of studies on two issues--determining the number of children who were enrolled in separate SCHIP programs but were eligible for Medicaid and assessing states' progress in reducing the number of low-income, uninsured children--every 3 years, beginning in fiscal year 2000. This provision required the OIG to only include in its studies states with separate SCHIP programs. BBRA directed that we review and report on the OIG's work. The OIG issued its initial reports in February 2001, and our assessment of the OIG's work was published in March 2002. The OIG's most recent set of reports on these issues was published in 2004 and 2005. This report reflects our evaluation of the OIG's recent reports. Specifically, we assessed the OIG's efforts to inform the Congress on (1) the number of Medicaid-eligible children enrolled in separate SCHIP programs and (2) states' progress in reducing the number of uninsured children, including the progress they have made in meeting the objectives and goals initially established in their SCHIP programs.

The OIG's most recent set of reports on improper SCHIP enrollment and states' progress in reducing the number of low-income, uninsured children informed the Congress about these issues and included improvements from its initial studies. For example, in evaluating the number of children who were enrolled in separate SCHIP programs but were eligible for Medicaid, the OIG broadened the scope of its initial study to include a random sample of children's case files from the 34 separate SCHIP programs with available data. In its initial study responding to the BBRA mandate, the OIG only examined case files from 5 separate SCHIP programs. In its most recent report, the OIG estimated that only 1 percent of children were improperly enrolled in separate SCHIP programs. The confidence interval the OIG calculated for its enrollment error rate, which provides an estimated range of values that is likely to include the true error rate, was 0.3 to 2.6 percent. We believe that this confidence interval is relatively wide for such an analysis and is likely the result of the small sample of case files reviewed by the OIG. However, we recognize that even at its upper bound, the enrollment error rate for the population would be 2.6 percent. In addition, 7 percent of separate SCHIP case files did not include enough information to support enrollment decisions, but the OIG did not find any evidence in these case files to indicate that the enrollment decisions were inappropriate. In part to respond to our earlier recommendation that the OIG expand its scope beyond the separate SCHIP programs, the OIG further informed the Congress about improper SCHIP enrollment by conducting an additional study in 29 states with Medicaid expansion programs. This study, which also evaluated the enrollment decisions in a random sample of case files, identified 7 percent of sampled children as not meeting the state eligibility criteria for Medicaid expansion and 10 percent of case files as having missing documentation. Similarly, for its most recent review of states' progress in reducing the number of low-income, uninsured children, the OIG expanded its scope to include the 46 states that submitted SCHIP annual reports for fiscal year 2002. In its initial study responding to the BBRA mandate, the OIG only examined the annual reports of 5 states with separate SCHIP programs. The OIG also supplemented its most recent review by examining several national data sources on the uninsured. The OIG noted that states continue to face challenges in their efforts to measure the change in the number of low-income, uninsured children, and only 22 of the 46 states that submitted reports directly measured their progress in this area. One of the biggest challenges in measuring progress is the limitation in data sources--including the often-used CPS, which for various reasons, such as small sample sizes, has not produced reliable state-level estimates in the past. In light of these obstacles, the OIG recommended that CMS continue to work with states to address concerns about data sources used to measure such progress. We concur with this recommendation. In addition, absent state submission of data directly measuring changes in low-income, uninsurance rates through their SCHIP annual reports, the OIG suggested, and we concur, that CMS could itself measure such reductions by completing its own analysis of available CPS data, which now include the results of broader state samples.

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