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Home > Advocacy > CWLA 2008 Children's Legislative Agenda > Medicaid


CWLA 2008 Children's Legislative Agenda


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  • Preserve the federal guarantee of Medicaid as an entitlement program for low-income children, youth, and families. Oppose efforts that attempt to restrict eligibility and reduce access and/or benefits for beneficiaries.

  • Ensure the availability of and accessibility to comprehensive preventive health care services guaranteed in federal law through the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefit.

  • Conduct oversight of efforts to implement provisions of the Deficit Reduction Act (DRA) that negatively impact Medicaid coverage for vulnerable children and families.

  • Ensure Medicaid targeted case management (TCM) and rehabilitative services remain strong and viable streams of care for children in the child welfare and foster care systems. Encourage collaboration between the state child welfare and Medicaid systems so that the physical and mental health needs of children in their care are properly addressed.

  • Pass legislation that guarantees Medicaid coverage for youth aging out of the foster care system until at least age 21.


Originally enacted in 1965 under Title XIX of the Social Security Act, today Medicaid provides health coverage and long-term care for some of our nation's neediest populations, including low-income families who lack access to private insurance, and children and adults with physical and mental disabilities.
The federal government and the states jointly fund Medicaid, with the federal government paying for approximately 57% of total Medicaid spending. 1 The federal contribution, or Federal Medical Assistance Percentage (FMAP), is inversely proportional to the state per capita income relative to the national average and, therefore, varies by state. The FMAP falls between 50% and 76%. 2 Even with significant assistance from the federal government, states spend about 18% of their general funds on Medicaid and have struggled tremendously in the past to reach their share. During the economic downturn from 2001 to 2004, in particular, when health care costs continued to rise as employer-sponsored coverage declined and more individuals became eligible for Medicaid due to high unemployment rates, total state budget shortfalls exceeded $250 billion. 3 After temporary fiscal relief from the federal government and slowed Medicaid spending growth and enrollment, in FY 2006 all states met or exceeded their revenue projections, permitting them to focus more on program enhancements. 4 Whether the balance is struck, however, remains a year-to-year concern and question.

Medicaid's Relationship to Children in Foster Care

To qualify for Medicaid, an individual must meet income and asset requirements and also fall into an eligible population category. Federal guidelines enumerate mandatory beneficiaries that states must provide services for pregnant women and children under age 6 with family incomes below 133% of poverty, children between the ages of 6 and 18 living in families below the poverty line, and all beneficiaries of Title IV-E Foster Care and Adoption Assistance. Virtually all non-IV-E eligible foster and adopted children are nonetheless eligible for Medicaid, either through another mandatory category or as a result of the states' discretion to expand eligibility to additional, needy populations. 5 Once individuals meet their state's Medicaid eligibility criteria, they have a legal right to enroll and obtain coverage for medically necessary services encompassed by their state's Medicaid benefit package, because Medicaid is an entitlement program. 6

In 2004, 935,225 children were enrolled in Medicaid on the basis of being in foster care. 7 The broad scale picture shows that, overall, children in foster care account for a very small percentage-just a little over 2%-of total Medicaid expenditures. 8 A more detailed look, however, reveals that a disproportionate amount is spent on children in foster care. In FY 2001, for example, children in foster care represented only 3.7% of the non-disabled children in Medicaid, but accounted for 12.3% of expenditures for that group. 9 This is largely due to the medical, developmental, and mental health needs of children in foster care that far surpass those of other children, even those living in poverty.

Many children entering the foster care system are at an extremely high risk for both physical and mental health issues as a result of biological factors and/or the maltreatment they were exposed to at home. Removing the child from his or her home, breaking familial ties, and the continued instability that often ensues, greatly exacerbate any original vulnerability. An estimated 60% of children in care have a chronic medical condition, and one-quarter have three or more chronic health problems. 10 When compared to the general population, children younger than 6 in out-of-home care have higher rates of respiratory illness (27%), skin problems (21%), anemia (10%), and poor vision (9%) 11. Regarding mental health, between 54% and 80% of children in out-of-home care meet clinical criteria for behavioral problems or psychiatric diagnosis 12. For the 20,000-25,000 youth who age out of care each year, often times their health needs linger into adulthood-an issue compounded by the fact that many of these former foster youth lack health insurance.

Importance of Medicaid and its Services to Children in Foster Care

Together with the State Children's Health Insurance Program (SCHIP), Medicaid has helped reduce the rate of uninsured low-income children by one-third over the past decade. Considering the sheer volume and intensity of their health needs, Medicaid's physical and mental health services that help children in foster care get on the road to recovery are unquestionably vital. Children covered by Medicaid are significantly more likely than uninsured children to have seen a doctor or health professional, had at least one wellchild visit, and received dental care in the past year. 13 The quality of care also improves, with all of these advancements contributing to healthier children.

To receive federal matching funds, state Medicaid programs must provide beneficiaries with certain mandatory services, including physician services, inpatient and outpatient hospital services, and medical and surgical dental services. A mandatory service that is particularly important for children is Medicaid's comprehensive Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit. EPSDT requires states periodically screen and ascertain physical and mental defects in children and provide any corresponding, necessary treatment that will correct or ameliorate the defects or chronic conditions found. EPSDT also mandates that states inform children of the availability of EPSDT services, their benefits, and where and how to obtain them, as well as provide transportation and scheduling assistance if requested.

Beyond mandatory services, states may cover and receive Medicaid matching funds for approved, optional services. Two optional services that many states have chosen to provide and that have proven to be extremely beneficial to children in care are targeted case management (TCM) and rehabilitative services. The TCM option allows states to target a select population (such as children in foster care) to receive in-depth case management services, thereby helping children access much needed medical, social, educational, and other services. At least 38 states employ the TCM option to provide greater coordination of care for children in foster care. Children who receive TCM services fare better in a wide array of areas. Specifically, TCM recipients are more likely to receive physician services (68% compared to 44%); prescription drugs (70% compared to 47%); dental services (44% versus 24%); rehabilitative services (23% versus 11%); inpatient services (8% versus 4%); and clinic services (34% compared to 20%). 14

The rehabilitative services option works to reduce the physical and/or mental disabilities that many children in foster care have, thereby restoring the child to his/her best possible functioning level, decreasing lingering and longterm negative impacts, and ultimately reducing costs. In line with both the President's New Freedom Commission on Mental Health and the U.S. Surgeon General's 1999 Report on Mental Health, rehabilitative services are provided in community-based settings such as therapeutic foster care and therapeutic group homes to vulnerable populations-for instance, seriously emotionally disturbed children who otherwise would require a more restrictive environment.

Obstacles, Potential Restrictions, and Solutions
Even with Medicaid's laudable role and significant positive impact on the health of children involved with the child welfare system, shortcomings remain and must be addressed. Due to low provider payment rates, heavy administrative burdens, and other factors, there is a shortage of providers willing to accept Medicaid patients. In turn, access and choice diminish, waiting lists become commonplace, and services for Medicaid-eligible and needy children are delayed or, even worse, simply not provided. Despite EPSDT's broad benefits aimed at helping the neediest children, for example, studies have repeatedly shown, and the Government Accountability Office (GAO) reported in 2001, that not all children are receiving the EPSDT services to which they are entitled by federal law. 15 Reasons cited by the GAO included low provider participation in Medicaid and parents unaware of their children's right to EPSDT. In addition, the Deficit Reduction Act of 2005 (P.L. 109-171) made changes to the EPSDT benefit that, arguably, will weaken its reach and assistance to all children, including those involved with the child welfare system. 16

Providers that do accept Medicaid patients may lack experience in treating the unique physical and mental health problems that children in out-of-home care experience. They may also face serious obstacles in obtaining comprehensive, accurate medical histories for children who have endured multiple placement changes and corresponding discontinuity in coverage and care. Distance to accepting providers and lack of transportation-especially in rural areas-and barriers to information sharing between the health care and child welfare systems, represent further challenges.

Targeted Case Management
Through Section 6052 of the Deficit Reduction Act (P.L. 109-171), Congress clarified the scope of the case management/ TCM benefit and in doing so, prominently iterated that the following remained permissible case management activities: assessment of an eligible individual to determine service needs for any medical, educational, social, or other social service (including taking client history or gathering information from other sources such as family members); development of a specific care plan; referral and related activities to help an individual obtain needed services; and monitoring and follow-up activities. Congress did exclude from the definition of case management services the direct delivery of certain underlying medical, educational, social, or other services -enumerating, for instance, that distinct foster care services such as research gathering and completion of documentation required by the foster care program, assessing adoption placements and making the placement arrangements, recruiting or interviewing potential foster care parents, and serving legal papers are not reimbursable under the case management benefit. CWLA accepts these boundaries and this policy as established by Congress.

As interim final rule (CMS-2237-IFC/72, Fed. Reg. 68077) issued in December 2007 by the Centers for Medicare and Medicaid Services (CMS) seeking to interpret Congress's changes, however, appears to go far beyond the DRA's statutory provisions on numerous fronts. The regulation vaguely disallows Medicaid reimbursement for case management/TCM services that are deemed "integral to" the administration of another non-medical program, such as child welfare and child protective services. CMS eludes that this exclusion could extend to case management services furnished by contractors to State child welfare and CPS agencies, as well as child welfare and CPS workers themselves, even if they are otherwise qualified Medicaid providers and to case management activities included under therapeutic foster care programs.

By drawing such sharp lines, opportunities for the systems to work together are diminished, undermining the efficient and effective coordination of care for children in custody- a result that seems directly contradictory to the very purpose of TCM. In addition, CMS estimates these dramatic adjustments will reduce federal Medicaid spending on case management and TCM by $1.28 billion over five years. In doing so, costs are expected to overwhelmingly shift to the federal IV-E foster care program, increasing federal spending on IV-E by $369 million over five years. Changing the structure of TCM and the corresponding expected financial toll to Title IV-E and state programs raise very real questions as to whether the serious health and other conditions facing children involved with the child welfare and foster care systems will be properly addressed. Issued in interim final form and rapidly going into effect on March 3, 2008, a moratorium such as that found in S. 2578/H.R. 5173 on this restrictive and overreaching rule must be enacted to ensure that Congressional intent and the statutory provisions of the DRA are upheld and access to legitimate case management and TCM services for vulnerable children is maintained.

Rehabilitative Services
In August 2007, CMS proposed a regulation (CMS-2261-P/72, Fed. Reg. 45201) that would significantly limit access to Medicaid rehabilitative services for many vulnerable populations that are both Medicaid-eligible and greatly in need of services, including children involved with the child welfare and foster care systems. The regulation would entirely take away federal Medicaid dollars for rehabilitative services that are deemed "intrinsic to" other programs, including child welfare and foster care, without providing any guidance on what constitutes "intrinsic to." Permitting Medicaid to completely step out of the picture defeats the Substance Abuse and Mental Health Services Administration's (SAMHSA) diligent work to promote a system of care and runs afoul of the essential concept that systems must work collaboratively to ensure the well-being and healthy development of each child in care.

Federal Medicaid dollars, the regulation proceeds, would not be available for rehabilitative services provided in a therapeutic foster care setting unless they are medically necessary, clearly distinct from packaged therapeutic foster care services, and given by a qualified provider. As a result, the continuum of care would likely be disrupted and children who cannot be maintained in regular foster care due to serious emotional or other health issues would be forced into more restrictive settings. Federal Medicaid dollars would also be summarily excluded for rehab services provided to residents of an institution for mental disease (IMD) who are under age 65, including residents of community residential treatment facilities with more than 16 beds.

While wholeheartedly supporting administrative and fiscal integrity of the Medicaid program, the proposed regulation seems to be a disproportionately large reaction with a devastating real world impact-both on the already struggling child welfare and foster care systems, and the children and families they serve. Such sweeping changes to vital, evidence- and community-based rehabilitative services should not be made solely through rulemaking, but must instead be debated thoroughly and decided through the legislative process. For these and other reasons, CWLA-working collaboratively with its members and other national impacted organizations- was able to secure a six-month moratorium that will halt the rehabilitative services regulation until June 30, 2008 in the Medicare, Medicaid, and SCHIP Extension Act of 2007 (S. 2499). A more permanent solution must be found, however, and Congress must ensure states can continue to rely on Medicaid rehabilitative services to better the lives of the children in the child welfare system, move them beyond any physical or mental life-altering trauma, and place them on a healthy trajectory.

Citizenship Documentation Requirement
The DRA also enacted extremely stringent requirements for individuals applying for or seeking to renew their eligibility for Medicaid to submit, in most cases, original or certified copies of "satisfactory documentary evidence of citizenship or nationality." Before these citizenship documentation requirements were made, most states permitted Medicaid applicants to attest to their citizenship, under penalty of perjury. 17

After much lobbying by child welfare advocates, including CWLA, Congress exempted from these requirements children who receive Title IV-E foster care or adoption assistance, as well as children for whom child welfare services are made available under Title IV-B. Concern remains, however, that citizen children and youth, who likely lack the required documentation, will be held to the standard and, thus, be blocked from enrolling in Medicaid and receiving needed health services. Even though the Medicaid citizenship documentation requirement has only been in effect since July 2006, numerous reports and studies indicate that it has caused noticeable enrollment declines and administrative burdens and, as such, has halted, if not reversed, significant state progress in streamlining access for Medicaid-eligible individuals. 18 A GAO survey reflected these unfortunate consequences, with 22 out of 44 states reporting delays in or losses of Medicaid coverage for individuals who they believe to be eligible citizens, all 22 affected states stating that children were negatively impacted, and all 44 states reporting having to take on additional administrative measures for uncertain fiscal benefits. 19

When debating the reauthorization of the State Children's Health Insurance Program (SCHIP), Congress attempted to extend the citizenship documentation requirement to SCHIP and more properly tailor the requirement to its purpose. H.R. 3963 would have accepted as sufficient documentation submission and verification of an applicant's name and Social Security Number-easing the burden on both eligible individuals and states, while also ensuring that Medicaid enrollees are, in fact, citizens. This legislation was vetoed, however, so the seemingly overly onerous requirements remain in place for Medicaid-eligible individuals. Congress must provide necessary oversight and, if necessary, an appropriate remedy to ensure Medicaid-eligible children and adults receive critical health care services in a timely manner.

Access for Youth Aging Out of Foster Care
Foster care alumni experience a disproportionate amount of both physical and mental health issues, including post-traumatic stress disorder and major depression. 20 Compounding this problem is the fact that 33% of foster care alumni lack health insurance-a rate almost twice as high as the general population. 21 States use a variety of mechanisms to cover this vulnerable population, including extension of Medicaid eligibility to youth ages 18 to 21 who have aged out of foster care through the Foster Care Independence Act of 1999's Chafee option, but more guaranteed support is needed to ensure they make a successful and healthy transition into adulthood. 22 The Medicaid Foster Care Coverage Act (H.R. 1376), introduced by Congressman Dennis Cardoza, would guarantee Medicaid coverage for former foster youth until the age of 21, and CWLA strongly urges its passage.

Key Facts

  • In 2004, 935,225 children were enrolled in Medicaid on the basis of being in foster care, representing approximately 3.4% of all children enrolled in Medicaid. 23

  • Although foster children represent only 3.7% of the nondisabled children enrolled in Medicaid, due to extreme health needs, they account for 12.3% of expenditures for the same group. 24

  • Studies show between one-half and three-fourths of the children entering foster care exhibit behavior or social competency problems that warrant mental health care. 25

  • More than half (54.4%) of adult participants surveyed who were placed in foster care as children have experienced symptoms of one or more mental health problems in the last 12 months, and 25% suffer from Post Traumatic Stress Disorder (PTSD), a rate nearly double that of U.S. war veterans. 26

  • In 2004, $350 million of total Medicaid spending for children in foster care was spent on TCM services, and $545 million was spent on Rehabilitative Services in the United States. 27

  • Children in foster care who receive TCM services are more likely to receive physician services (68% compared to 44%); prescription drugs (70% compared to 47%); dental services (44% versus 24%); rehabilitative services (23% versus 11%); inpatient services (8% versus 4%); and clinic services (34% compared to 20%). 28


  1. The Kaiser Commission on Medicaid and the Uninsured. (2007). Medicaid: A primer. Available online. Washington, DC: Author. back
  2. Ibid. back
  3. Smith, V., Gifford, K., Ellis, E., Rudowitz, R., O'Malley, M., & Marks, C. (2007). As tough times wane, states act to improve Medicaid coverage and quality: Results from a 50-state Medicaid budget survey for state fiscal years 2007 and 2008. Available online. Washington, DC: The Kaiser Commission on Medicaid and the Uninsured. back
  4. The Kaiser Commission on Medicaid and the Uninsured. (2007). State fiscal conditions and Medicaid. Available online. Washington, DC: Author. back
  5. The Kaiser Commission on Medicaid and the Uninsured, Medicaid: A primer;
    Rosenbach, M., Lewis, K., & Quinn, B. (2000). Health conditions, utilization and expenditures of children in foster care. Washington, DC: U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. back
  6. The Kaiser Commission on Medicaid and the Uninsured, Medicaid: A primerback
  7. Centers for Medicare and Medicaid Services (CMS). (2007) FFY 2004 Medicaid Statistical Information System (MSIS) annual summary file. Available online. Washington, DC: U.S. Department of Health and Human Services. back
  8. Geen, R., Sommers, A.S., & Cohen, M. (2005) Medicaid spending on foster children. Available online. Washington, DC: Urban Institute. back
  9. Ibid. back
  10. Simms, M.D., Dubowitz, H., & Szailagyi, M.A. (2000). Needs of children in the foster care system. Pediatrics, 106 (Supplement), 909-918. back
  11. Takayama, J.I., Wolfe, E., & Coulter, S. (1998). Relationship between reason for placement and medical findings among children in foster care. Pediatrics, 101, 201-207. back
  12. Clausen, J., Landsverk, J., Ganger, W., Chadwick, D., & Litrownik, A.J. (1998). Mental health problems of children in foster care. Journal of Child and Family Studies, 7, 283-296; Halfon et al. (1995); Urquiza, A.J., Wirtz, S.J., Peterson, M.S., & Singer, V.A. (1994). Screening and evaluating abused and neglected children entering protective custody. Child Welfare, 123, 155-171. back
  13. The Kaiser Commission on Medicaid and the Uninsured. (2007). Impacts of Medicaid and SCHIP on low-income children's health. Available online. Washington, DC: Author. back
  14. Geen, Medicaid spending on foster childrenback
  15. U.S. Government Accountability Office (GAO). (2001). Medicaid: Stronger efforts needed to ensure children's access to health screening services (GAO-01-749). Available online. Washington, DC: Author. back
  16. Rubin, D., Halfon, N., Raghavan, R., Rosenbaum, S., & Johnson, K. (2006). The Deficit Reduction Act of 2005: Implications for children receiving child welfare services. Available online. Washington, DC: Casey Family Programs. back
  17. Grady, A. (2007). Medicaid citizenship documentation. Washington, DC: Congressional Research Service. back
  18. U.S. Government Accountability Office (GAO). (2007). Medicaid: States reported that citizenship documentation requirement resulted in enrollment declines for eligible citizens and posed administrative burdens. (GAO-07-889). Available online. Washington, DC: Author; Cohen Ross, D. (2007). New Medicaid citizenship documentation requirement is taking a toll: States report enrollment is down and administrative costs are up. Available online. Washington, DC: Center on Budget and Policy Priorities. back
  19. U.S. Government Accountability Office (GAO). (2007). Medicaid: States reported that citizenship documentation requirement resulted in enrollment declines for eligible citizens and posed administrative burdens. (GAO-07-889). Available online. Washington, DC: Author. back
  20. Pecora, P.J., Kessler, R.C., Williams, J., O'Brien, K., Downs, A.C., English, D., White, J., Hiripi, E., White, C.R., Wiggins, T., & Holmes, K. (2005). Improving family foster care: Findings from the Northwest Foster Care Alumni Study. Available online. Seattle, WA: Casey Family Programs. back
  21. Ibid. back
  22. Patel, S., & Roherty, M. (2007). Medicaid access for youth aging out of foster care. Available online. Washington, DC: American Public Human Services Association. back
  23. CMS, FFY 2004 Medicaid Statistical Information System (MSIS) annual summary fileback
  24. Geen et al., Medicaid spending on foster childrenback
  25. Landsverk, J.A., Burns, B.A., Stambaugh, L.F., & Rolls Reutz, J.A. (2006). Mental health care for children and adolescents: A review of the literature. Available online. Seattle, WA: Casey Family Programs. back
  26. Pecora et al., Improving family foster care: Findings from the Northwest Foster Care Alumni Studyback
  27. CMS, FFY 2004 Medicaid Statistical Information System (MSIS) annual summary fileback
  28. Geen et al., Medicaid spending on foster childrenback

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