Be careful what you ask for: SC health center struggles with the flip side of successful CHIP implementation
Be careful what you ask for: SC health center struggles with the flip side of successful CHIP implementation
Successful implementation of the Children’s Health Insurance Program (CHIP) can have a downside. Ask Family Health Centers in Orangeburg, SC. The federally qualified health center is bracing for a cut in Medicaid payments the state says it needs to care for children newly insured by CHIP.
South Carolina’s program, a Medicaid expansion without a separate "pure CHIP" initiative, covers about 100,000 previously uninsured children in the state. About half are newly eligible under Medicaid expansions, the remaining half already were eligible but unenrolled.
Family Health Centers, a federally qualified health center in an economically depressed corner of the state, is a major player in CHIP implementation, according to a recent report from the Department of Health and Human Services Office of the Inspector General (OIG). Children and adolescents comprise some 43% of the center’s patients, says the OIG, the highest such proportion among all federally qualified health centers in South Carolina. Federal researchers give at least part of the credit to the state’s simplified enrollment process and aggressive outreach activities, the state’s early start in CHIP (South Carolina’s plan was among the first) as well as a specific focus on reaching potential CHIP enrollees.
The downside is that higher than expected CHIP enrollment and utilization has contributed to an anticipated $64 million Medicaid deficit in South Carolina for the year that ends June 30, 2000, and may force state legislators to implement a 5% reduction in the health centers’ cost-based Medicaid payments. If a cut implemented Oct. 1 sticks, it means legislators will be going back on their promise not to take the first cut in a ratcheting down of cost-based payments to federally qualified health centers allowed by the Balanced Budget Act of 1997.
"We don’t think it was a wise decision, because although they may be taking 5% from what they pay out, there’s the federal match that’s been lost by reducing what’s been paid to us," observes Family Health Centers president and CEO Carolyn Emanuel-McClain. The federal Medicaid match in South Carolina is 70%; for the Medicaid expansion under CHIP, the federal match is 80%. For Family Health Centers alone, the 5% cut means an annual loss of $119,000, enough to fund about 4,100 patient encounters, she says.
At the same time, the number and proportion of uninsured in the community is growing, says Ms. Emanuel-McClain. One of Orangeburg’s leading employers, a lawn mower manufacturer, is relying more heavily on temporary employees who don’t have health benefits, she says.
South Carolina’s health centers are trying to negotiate a deal under which they get the 5% back and work out a "relationship" with nearby hospitals to care for patients who arrive at hospital emergency departments with nonemergent conditions, Ms. Emanuel-McClain says. South Carolina’s deficit and state officials’ responses tell a cautionary tale for other states swelling the ranks of the insured through CHIP, she says. "They’re saying we have the deficit because CHIP is serving more kids than they thought it would. States are going to have to put money in the budgets to help out. If not, you’re going to be facing deficits like we’re facing in this state."
The spike in Medicaid enrollment "didn’t surprise anyone," but it did come on fast, says Frank Adams, spokesman for the South Carolina Department of Health and Human Services. "We began getting a spike in our April numbers. We’re not in a deficit, but we’re flat running into one."
The 5% cutback to community health centers will address only a small part of the budget shortfall, Mr. Adams says. The state also delayed from July to October implementation of budgeted hospital rate increases. It is reallocating money used to guarantee nursing home construction loans, and increasing the discount from Medicaid pharmacy vendors from 10% to 13%. With all those measures, the legislature still will be asked to approve a supplemental appropriation of $26 million when it reconvenes in January.
"In a large sense, we’re victims of our own success, but the dollars we spend with those children today should pay off in the classroom later," he says.
Full implementation of CHIP programs could end up costing states even more than they’re bargaining for now, suggests Linda Bilheimer, PhD, a senior program officer with the Robert Wood Johnson Foundation. That’s because point estimates of the number of uninsured children at any one time don’t reflect the "tremendous churning" of children in and out of the ranks of the uninsured.
For example, a study of health insurance coverage among children during 1992-1994 showed that 12% to 13% had no health insurance at any given point in time, but fully one-fourth of the children were uninsured at some time during the study period.
"This is a terribly important finding as we look at why we are expanding programs successfully and why we aren’t making a bigger dent," she told participants at the annual meeting of the National Association of State Medicaid Directors in Bethesda, MD, in late October. "We may be in a situation where we are enrolling a lot of children in our programs, and at the same time, the number of uninsured kids is growing all the time. Maintaining the line on the number of uninsured kids may be quite an accomplishment."
Contact Ms. Bilheimer at (609) 452-8701, Ms. Emanuel-McClain at (803) 533-0731, and Mr. Adams at (803) 898-2500. The full report describing successful CHIP implementation among six federally qualified health centers can be found at http://www.dhhs.gov/ progorg/oei/reports/a417.pdf.
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