State Insurance Program (SCHIP)

Medicaid Provisions
Of the Balanced Budget Act of 1997
(PL 105-33)

OVERVIEW
ELIGIBILITY
REIMBURSEMENT
MANAGED CARE
CONSUMER PROTECTIONS
CONSUMER INFORMATION
QUALITY ASSURANCE

For more assistance with Medicaid advocacy, visit the Academy’s Help Us Grow: Strengthen Medicaid for Kids Campaign pages.

OVERVIEW

States can now implement mandatory Medicaid managed care for most groups of Medicaid recipients without applying for a waiver. A number of consumer protection/quality assurance measures have been added. States also have the option of establishing presumptive eligibility for all children under 19 years of age and 12 months of continuous eligibility. The requirement that states provide sufficient reimbursement to ensure access to pediatric services has been eliminated. Medicaid coverage was continued to children who lost their SSI coverage because of the changes to the definition of disability in last year’s federal welfare legislation.

SUMMARY OF KEY PROVISIONS

ELIGIBILITY

States have the option of guaranteeing 12 months of continuous eligibility for all children under age 19. Once they are eligible and enrolled, their eligibility does not need to be determined for 12 months. This minimizes paperwork for the family, the pediatrician, and the state and supports the development of a medical home.

States also have the option of adopting presumptive Medicaid eligibility for children under age 19. This allows providers to gather a few income details about a family, presume they are eligible, and commence treatment. Even if they are later found ineligible, Medicaid will still reimburse the physician or hospital. Under previous law, states could only do this for pregnant women and infants. States can use physicians, hospitals, Head Start programs, child care programs and WIC offices to assist in Medicaid enrollment.

Recommended Actions for Pediatricians
• Urge your state officials to adopt 12 months of continuous eligibility for children under age 19.
• Urge your state officials to adopt presumptive eligibility for children under age 19 (and for pregnant women if your state has not already done so).

REIMBURSEMENT FOR PEDIATRIC SERVICES

Section 1926 of Title XIX of the Social Security Act, regarding reimbursement for pediatric and obstetrical services, has been eliminated. This provision required states to reimburse pediatric and obstetric services at rates that are sufficient enough to enlist providers so that care and services under Medicaid are available at least to the extent they are to the general population in the same geographic area.

Recommended Actions for Pediatricians
• States are still required to meet screening rate goals for the EPSDT program. Pediatricians can work with state Medicaid officials on strategies for meeting these goals and advocate for adequate reimbursement in the context of ensuring adequate physician participation to provide EPSDT services to all eligible children.
• Build coalitions with parent and consumer groups to advocate for continued improvement in access to pediatric services.

GREATER FLEXIBILITY FOR IMPLEMENTING MANAGED CARE

States no longer need 1915 (b) waivers (freedom of choice) to institute mandatory Medicaid managed care for most groups of Medicaid recipients. Waivers are still required for children under age 19 with special health care needs (those who are eligible for SSI or in foster care or adoption assistance).

The process for extending 1115 waivers (research and demonstration waivers) was simplified. At the written request of the state, the Secretary of Health and Human Services is authorized to extend 1115 waivers (current, pending and future) for an additional period of up to 3 years.

The 75:25 requirement that prohibited "Medicaid only" MCOs was eliminated. Medicaid MCOs are no longer required to have at least 25% of their covered lives enrolled in private commercial plans. Some advocates fear this could put recipients at risk.

Recommended Actions for Pediatricians
• Contact your state Medicaid agency to find out if there are new plans to expand mandatory Medicaid managed care in your state.
• Urge your state officials to continue to follow the 75:25 rule.
• Visit the new
Medicaid Managed Care pages on the Academy’s Web site for information to assist you with your advocacy.

DEFAULT ENROLLMENT PROCESS IN MANAGED CARE

Under mandatory Medicaid managed care, if an individual does not select a managed care organization (MCO), the state assigns him or her to one. Pediatricians have encountered many problems with this default enrollment process, such as being excluded from the primary care list. Since there are many low utilizers of services in this group, this population is very attractive under capitated reimbursement arrangements.

The new law requires states to develop a process that takes into consideration existing relationships with providers. However, if maintaining previous relationships is not possible, states must assign individuals equitably between eligible managed care entities.

Recommended Actions for Pediatricians
• Urge your state Medicaid officials to make every effort, including the use of personal counselors (sometimes called “enrollment brokers”), to allow beneficiaries to choose among health plans.
• Urge your state officials to adopt a more comprehensive default enrollment strategy than required by law. In addition to existing provider-individual relations, states should take into account: previous relationships with primary care and specialty providers, location of providers, assignment of other family or household members, and capacity of managed care organization to provide special care or services appropriate for the individual. Random assignment should not be allowed, if these criteria cannot be taken into account.
• Be certain that pediatricians are defined as primary care providers.

CONSUMER PROTECTIONS

The legislation contains a number of consumer protections. These include:
• requiring MCOs to establish an internal grievance process
• allowing recipients to switch managed care organizations (MCOs) or primary care case managers (PCCMs) once during the first 90 days of enrollment, at least every 12 months, and for cause at any time
• establishing a prudent layperson definition of emergency medical condition and prohibiting ‘gag’ clauses
• requiring state approval of marketing materials and prohibiting direct ("cold call" marketing)

Recommended Action for Pediatricians
• Contact your state officials to review contracts with managed care organizations to ensure that these requirements are included. Use the Academy’s
Medicaid RFP/Contract Checklist.

CONSUMER INFORMATION

The legislation includes a number of consumer information provisions and all of this information must be provided in an "easily understood form."
• MCOs must provide information on participating providers, enrollee rights and responsibilities, grievance and appeals procedures, and covered items and services.
• States must provide comparative information on all Medicaid managed care entities in the state.
• States and/or managed care organizations must provide information about what services are available to enrollees but not provided under the organization and how the individual may access those services.

Recommended Actions for Pediatricians
• Contact your state officials to review contracts with managed care organizations to ensure that these requirements are included. Use the Academy’s
Medicaid RFP/Contract Checklist.

QUALITY ASSURANCE STANDARDS

States using Medicaid managed care are required to develop a quality assessment and improvement strategy to include: access, grievance procedures, marketing and information standards, and the quality and appropriateness of care.

Recommended Actions for Pediatricians
• Contact your state officials to find out how to provide input on the development of this strategy.

For further information, please e-mail us at staccess@aap.org, or call us at 847/434-7799. Due to the complex nature of legislative issues, we request that you include your name, e-mail address, mailing address, phone number, and/or fax number in your e-mail correspondence, so that we may contact you for more information if necessary.