POLICY STATEMENT

Medicaid Policy Statement

abstractMedicaid insures 39% of the children in the United States. This revisionof the 2005 Medicaid Policy Statement of the American Academy of Pe-diatrics reflects opportunities for changes in state Medicaid programsresulting from the 2010 Patient Protection and Affordable Care Act asupheld in 2012 by the Supreme Court. Policy recommendations focuson the areas of benefit coverage, financing and payment, eligibility, out-reach and enrollment, managed care, and quality improvement. Pe-diatrics 2013;131:e1697–e1706

HISTORY OF MEDICAID PROGRAM

The Medicaid program was enacted in 1965 as Title XIX of the SocialSecurity Act with funding streams derived from both federal and stategovernments. All states have participated in this voluntary programsince Arizona joined in 1982. Federal law designates which groups ofpeople must be eligible for Medicaid enrollment and what core medicalbenefits must be provided. Each state may then expand eligibilitycriteria, enhance benefits, contract with managed care organizations(MCOs) to administer the Medicaid program, and apply for waivers todevelop specialized programs for particular populations. For instance,states have had the option to enroll children whose families have anincome at or below 200% of the federal poverty level (FPL) in Medicaid,although only 6 states had chosen to do so by 1997 when the StateChildren’s Health Insurance Program (CHIP) was enacted by Congressas Title XXI of the Social Security Act.

By 2009, total Medicaid enrollment had grown to include 34.2 millioninfants, children, and adolescents younger than 21 years. Medicaidprovided benefits to 39% of the US pediatric population and covered48% of all births. In 2009, Medicaid payments to providers for all agegroups had expanded to $326.0 billion.* Although children youngerthan 21 years represented 53% of all Medicaid enrollees, they

*These figures differ from the Medicaid data provided by the Centers for Medicare andMedicaid Services (CMS) Office of the Actuary1 for several reasons. The higher CMS estimateof total Medicaid costs for fiscal year 2009 of $380.6 billion includes nonprovider expensessuch as disproportionate share hospital payments, administration costs, the Vaccines forChildren Program, and other adjustments. Calculated costs per participant also differ for 3reasons: (1) CMS uses estimated “person-year equivalents” (50.1 million) for fiscal year2009 rather than “ever participants” (62.9 million unique participants covered by Medicaidfor at least 1 month) as the basis for the calculation; (2) the AAP considers 19- and 20-year-old participants to be children, whereas CMS considers them to be adults; and (3) CMSsegregates both children and adults who are blind and/or disabled into a separate“disabled” category.

COMMITTEE ON CHILD HEALTH FINANCING

KEY WORDSMedicaid, Child Health Insurance Program, benefits, coverage,financing, payment, eligibility, outreach, enrollment, managedcare, quality improvement

ABBREVIATIONSAAP—American Academy of PediatricsAARA—American Recovery and Reinvestment ActACA—Patient Protection and Affordable Care ActCHIP—Children’s Health Insurance ProgramCMS—Centers for Medicare and Medicaid ServicesCPT—Current Procedural TerminologyDHHS—Department of Health and Human ServicesEHB—essential health benefitsEPSDT—Early and Periodic Screening, Diagnosis and TreatmentFMAP—federal medical assistance percentageFPL—federal poverty levelHMO—health maintenance organizationMCO—managed care organizationMOE—maintenance of effortPCMH—patient-centered medical home

This document is copyrighted and is property of the AmericanAcademy of Pediatrics and its Board of Directors. All authorshave filed conflict of interest statements with the AmericanAcademy of Pediatrics. Any conflicts have been resolved througha process approved by the Board of Directors. The AmericanAcademy of Pediatrics has neither solicited nor accepted anycommercial involvement in the development of the content ofthis publication.

All policy statements from the American Academy of Pediatricsautomatically expire 5 years after publication unless reaffirmed,revised, or retired at or before that time.

www.pediatrics.org/cgi/doi/10.1542/peds.2013-0419

doi:10.1542/peds.2013-0419

PEDIATRICS (ISSN Numbers: Print, 0031-4005; Online, 1098-4275).

Copyright © 2013 by the American Academy of Pediatrics

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accounted for only 29% of all Medicaidprovider payments. In 2009, Medicaidexpenditures averaged $2630 per childyounger than 21 years compared with$6459 per adult between the ages of 21and 64 years and $11 812 per seniorcitizen 65 years or older.2

Except for a few special programs (eg,family planning services, AmericanIndian/Alaskan Native populations, ad-ministrative costs), the federal govern-ment funds a different proportion ofeach state’s Medicaid budget.3 Thisfederal medical assistance percentage(FMAP) for each state is based ona formula that relates the 3-year rollingaverage per capita income in the stateto that for the entire United States. Bylaw, the minimum and maximum FMAPsare 50% and 83%, respectively.3 Beforethe passage of the 2009 American Re-covery and Reinvestment Act (ARRA: PubL No. 111-5), the FMAP varied acrossstates from 50% to 76%. Under ARRAand other FMAP “extension legislation”(Education, Jobs, and Medicaid Assis-tance Act of 2010 [Pub L No. 111-226]),FMAPs temporarily increased throughJune 2011 (eg, to a range of 62%–85%in the second quarter of fiscal year2010). These enhanced FMAPs tran-siently decreased state Medicaidexpenditures for fiscal year 2009through fiscal year 2011. However, withthe sunset of ARRA FMAP legislation andmore Medicaid beneficiaries due tocontinued poor economic conditionsand other factors, state Medicaid costsincreased sharply in fiscal year 2012and are expected to continue to climbthrough fiscal year 2019.†

IMPACT OF THE ACA AND THE 2012SUPREME COURT DECISION ONTHE MEDICAID PROGRAM

Passage of the Patient Protection andAffordable Care Act (ACA)‡ in 20104

profoundly changed the Medicaid pro-gram through its expansion of Med-icaid eligibility to all legal residentsyounger than 65 years with individualor family incomes at or below 138%of the FPL.x Hence, the ACA not onlyadded a large population of adults(ages 19 through 64) who becamenewly eligible for Medicaid, but inmany states, the expansion also in-creased the number of eligible chil-dren (through age 18) by mandatinga higher minimum income eligibility.‖

The ACA directed the federal govern-ment to fund Medicaid expansion infull through 2016 and then at lowerbut still significant levels thereafter(tapering to 90% funding by 2020). Thelandmark Supreme Court decisionupheld the constitutionality of the ACA

with respect to the contested “in-dividual mandate” for every Americanto obtain health insurance by a 5 to4 margin.5 However, the Court alsostruck down as unconstitutional anenforcement provision of the ACA thatwould have allowed the Department ofHealth and Human Services (DHHS) towithhold all federal Medicaid fundingfrom states that declined to partici-pate in Medicaid expansion. By a 7 to2 majority, the Court ruled that thisprovision constituted undue coercionon states by the federal government;in a remedy, however, the Court up-held the constitutionality of the Med-icaid expansion as an individual stateoption.

Legal scholars generally agree that thenarrowly written Court decision didnot invalidate other changes made bythe ACA to the Medicaid program thatpertained to existing populations.6

The constitutionality of 3 provisions inparticular has special importance forthe pediatric population. First, Section2001(b) of the ACA imposes a “main-tenance of effort” (MOE) requirementthat disallows states from restrictingeligibility or reducing benefits forcurrent child Medicaid beneficiariesuntil 2019. Second, Section 2001(a) (5)(b) expanded Medicaid eligibility forchildren under 19 by raising the mini-mum qualifying family income level to138% of the FPL. Third, the ACA re-quired states to improve outreach toand simplify enrollment of any personcurrently eligible for Medicaid.6

Many children now covered byMedicaidlose health insurance as they becomeyoung adults, so that how states chooseto respond to the opportunity affordedby the ACA to participate in the adultMedicaid expansion can have a greatimpact on many pediatric patients. It islikely that additional negotiations willensue in the future between the sec-retary of the federal DHHS and stateMedicaid agencies that have initially

†Beginning in 2020, the federal government willstill fund 90% of the additional costs associatedwith newly eligible participants under the ACA. Ifthe ACA Medicaid expansion were to be adopted byall states, the Congressional Budget Office hadestimated that the total increased cost of theMedicaid program attributable to Medicaid ex-pansion from 2014 to 2019 would be $564 billiondollars, of which $500 billion, or 89%, would havebeen funded by the federal government.3

‡Encompassing the Patient Protection and Afford-able Care Act and the amendment law associatedwith that act, the Health Care and Education Rec-onciliation Act (Pub L No. 111-152).xThe ACA established a new national floor ofMedicaid coverage at 133% of the FPL witha standard 5% of income disregard that consti-tuted part of a simplified modified adjusted grossincome calculation designed to harmonize means-tested eligibility (Medicaid disregards the first 5%of one’s income before calculating the proportionto the FPL). The ACA had mandated a minimumincome level for Medicaid eligibility at 138% of theFPL beginning in 2014.‖The number of children newly eligible for Med-icaid in a given state as a result of the change inqualifying FPL will depend on that state’s currentchoice of percentage of FPL as the eligibility cri-terion for Medicaid for older children as well asthat state’s implementation of and enrollmentwithin CHIP. There are currently 2.8 million chil-dren below 138% of the FPL who are not currentlyinsured by Medicaid or by CHIP. In addition, anunknown number of children with family incomesbetween 100% and 138% of the FPL who are cur-rently insured by CHIP would rollover to Medicaidcoverage and about 4.3 million children withfamily incomes between 100% and 138% of the FPLwho are now covered by private insurance wouldpotentially be eligible for Medicaid.

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signaled reluctance to pursue full-scaleMedicaid expansion.6

This revision of the American Academyof Pediatrics (AAP) Medicaid PolicyStatement advocates for the provisionand funding of children’s services inthe Medicaid program and highlightschanges in or new opportunities forstate advocacy efforts as a result ofthe passage of the ACA and the 2012Supreme Court decision.

The AAP continues to voice strongsupport for the Medicaid program andover the years has offered a continu-ing series of recommendations aimedat enhancing care and improvingoutcomes for children.7 In particular,the AAP has long advocated innovativeapproaches to care (such as pediatricmedical homes) that aim to achievebetter health outcomes while re-ducing costs of care. The AAP standsready to support newer populationhealth-based programs (eg, Medicaidaccountable care organizations) thatseek to attain those same objectives.AAP members have been integral pro-viders in both regular Medicaid and instate-specific Medicaid waiver pro-grams and consequently have workingexperience with reform efforts ofvarying success.

BENEFITS AND MEDICAL HOME

Beyond a core set of mandated ben-efits, federal guidelines provide stateswith wide discretion in benefit design.The AAP recommends that all stateMedicaid agencies:

1. Provide all children at a minimumthe Early and Periodic Screening,Diagnosis, and Treatment (EPSDT)benefit and all other mandatoryand optional benefits as outlinedin the AAP statement “Scope ofHealth Care Benefits for ChildrenFrom Birth Through Age 26.”8 En-sure that the medical necessitydefinitions used by each state for

purposes of justifying medical ser-vices covered by Medicaid paymentare consistent with the EPSDT pol-icy. Furthermore, each state’s pro-cess for determining medicalnecessity should rely on the ex-pertise of pediatricians, pediatricmedical subspecialists, and pediat-ric surgical specialists. Ensure thatin the process of making decisionson the basis of medical necessity,the medical, behavioral health, anddevelopmental care needs of thechild are fully considered and thatappropriate comprehensive bene-fits are available to address the fullrange of these needs.9

Develop appropriate benefits thataddress the needs of pregnant wo-men. Pregnant women should beafforded the full range of maternitycare (preconception, prenatal, la-bor, delivery, and postpartum) rec-ommended in the Guidelines forPerinatal Care issued jointly by theAmerican College of Obstetriciansand Gynecologists and the AmericanAcademy of Pediatrics. Detail thefull scope of pediatric Medicaidbenefits in consumer brochures,on Web sites, and, most importantly,in state plan documents and man-aged care contracts. State agenciesshould provide a clear comparisonof pediatric Medicaid benefits andnetworks among managed care plansso that families can choose a planthat is most appropriate for theneeds of their child(ren).

2. Provide pharmacy benefits appro-priate for children and broadenough to pay for medicines andspecialized nutritional products re-quired for children with specialhealth care needs and for childrenwith rare diseases. State MedicaidPharmacy and Therapeutics com-mittees should populate and oper-ate a pediatric formulary with therecognition that less expensive

(usually generic) drugs may notbe as effective as alternative butmore costly (usually brand name)drugs of the same class in allpatients under all circumstances.Pharmacy benefits should acknowl-edge that many medications areappropriately prescribed to chil-dren in the absence of a pediatriclabel indication or dosing infor-mation. Optimally, states shouldmandate that all Medicaid MCOsoperating in the state adopt thesame state pediatric Medicaid for-mulary to ensure continuous andconsistent treatment of patients(especially those with special healthcare needs or rare diseases) be-cause they often transition betweenMedicaid insurers.

3. Ensure that all children have timelyaccess to appropriate services fromthose qualified pediatric medicalsubspecialists and pediatric surgi-cal specialists who are needed tooptimize their health and well-being.

4. Ensure that Medicaid provider net-works are sufficient to guaranteethat children who transition from pe-diatric to adult care providers do notexperience disruption in services.

5. Adopt periodicity schedules as de-fined in the AAP guidelines.10 Immu-nization schedules should also beconsistent with national guidelinesas periodically revised by the Advi-sory Committee on ImmunizationPractices of the Centers for Dis-ease Control and Prevention, theAmerican Academy of Pediatrics,and the American Academy of Fam-ily Physicians.11

New or continuing efforts in which theAAP and its members can participatethat can result in enhanced benefitsfor children enrolled in Medicaidprograms include the following:1. Develop and then facilitate the

implementation of a working pedi-atric medical home model that

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incorporates Bright Futures guide-lines12 and treatment services ascodified in EPSDT.

2. Work with Medicaid and private in-surance companies to standardizeparameters for the medical homeconcept.13,14 The wide variation inboth panel size and family demo-graphics encountered across pedi-atric practices suggests that avariety of models may be needed.

3. Develop and direct a program thateducates parents, patients, andphysicians about the advantagesof a pediatric medical home.15

4. Partner with AAP state chapters,other pediatric health care pro-viders, and families with childrenwho are Medicaid beneficiaries tomonitor and recommend improve-ments to state Medicaid programsand to the Centers for Medicareand Medicaid Services (CMS).

5. Assist parents, patients, and physi-cians to understand the full scopeof Medicaid benefits.

FINANCING AND PAYMENT

Medicaid fee schedules and capitatedpayments to primary care and sub-specialty providers are significantlylower than payments for comparableservices from Medicare and privateinsurance companies. Low Medicaidpayment is the primary reason thatphysicians limit participation in theprogram with resulting barriers topatient access for primary care andsubspecialty health care services.16–22

Even at academic medical centers thatserve as “safety nets” for uninsuredor underinsured patients, reduced ac-cess may be reflected by significantlylonger wait times for subspecialtycare.23 Hence, the initial intent of TitleXIX to provide truly equal access toquality primary and subspecialty carehas not been fulfilled. Other documen-ted reasons why providers decline or

limit participation in Medicaid includedelayed or unpredictable payments, con-fusing or burdensome payment policiesand paperwork, and nonadherence toscheduled visits.17,18,22

Although the MOE provision in the ACAproscribes states from restrictingtheir current Medicaid eligibility rulesuntil 2019 for children, states maychoose instead to reduce their ex-penses by limiting nonmandatory ser-vices for adults, trimming paymentsfor services, revoking any higherpayments to specific groups of physi-cians, and cutting hospital payments.States have voiced alarm that highunemployment rates and increasingnumbers of families enrolled in Med-icaid will critically affect their budgets.In addition, as the US population ages,the growing number of seniors whobecome eligible for Medicare will alsoswell the ranks of seniors dually eli-gible for Medicaid coverage. The CMSOffice of the Actuary has estimated thatif each state fully implemented the ACAMedicaid expansion, state Medicaidexpenditures would more than doubleover the decade from 2009 to 2019,from $132.3 billion to $313.3 billion.24

To the extent that any state chooses toparticipate in the ACA Medicaid ex-pansion, it will be vital that federaland state governments not compro-mise necessary coverage for childrennor fail to provide adequate paymentfor pediatric care. In addition, statesmust be cognizant that ACA discon-tinued federal disproportionate sharehospital payments to all states, antic-ipating that Medicaid expansion tothe adult population would providereplacement revenue for safety nethospitals. Hence, states that choosenot to participate in Medicaid expan-sion may risk the viability of somesafety net hospitals.

In 2011, Medicaid payments for eval-uation and management services ac-ross all states averaged ∼64% of the

Medicare rates and lagged even far-ther behind payments by privateinsurers.25 The ACA provides federalfunding to Medicaid programs andstate-financed Medicaid managed careplans to pay eligible physicians atMedicare rates for certain evaluationand management services, preventivecare, and immunization administra-tion during 2013 and 2014 (but notsubsequently), including well-child(“checkup”) codes (Current ProceduralTerminology [CPT] codes 99381–99385;99391–99395). Payment at this levelshould be sustained beyond 2014 andexpanded to include all Medicaid serv-ices. This will require intense federaland state-specific advocacy.

The AAP proposes the following rec-ommendations for federal and/or stateaction:

1. Ensure that Medicaid payments toproviders for the goods and serv-ices involved in caring for chil-dren not only pay for the relatedwork and practice expenses butalso provide a sufficient returnto make continued operation ofa practice or facility economicallyfeasible. In a broader context,payments should be sufficient toenroll enough providers and facil-ities so that, as required by fed-eral law, Medicaid patients have“equal access” to care and serv-ices as do nongovernmentally in-sured patients in that geographicregion. Failure to provide this fairlevel of payment will lead to con-tinued early attrition of currentpediatric providers as well asfailure to attract physicians topursue careers in primary or sub-specialty pediatric care. To achievethis aim, the AAP recommends thefollowing:

a. Increase base Medicaid pay-ment rates for all CPT codes,including pediatric specific CPTcodes (eg, well-child checkup,

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counseling, and developmentalassessment), to all providers tothe 2012 or 2009 regional Medi-care fee schedule rate, which-ever is higher, or, in the caseof preventive services withouta Medicare payment, to a ratecalculated by applying Medi-care fee schedule methodolo-gy to the published values ofwork, practice expense, andprofessional liability insurancerelative value units adjustedfor the geographic region.These payment rate principlesshould be made permanent(ie, extended beyond the 2014termination date) with theminimum level of paymentper CPT code established asthe greater of the 2012 Medi-care actual or calculated rateor the current year’s rate.

b. Establish a methodology to pro-vide additional fair payment toa practice that recognizes theextra resources that might beinvested on behalf of its Med-icaid patients to promote well-ness (eg, to pay for morevigorous outreach to increaseparticipation rates with well-child checkups) and to providecare coordination of infantsand children with complicatedphysical and/or mental healthillnesses (eg, to pay for carecoordinators, social workers,extended office hours, homevisitations, dental care, dura-ble medical equipment, etc).At present, fee-for-service pay-ments (even if increased toMedicare rates) and currentFederally Qualified Health Cen-ter payments do not fully payfor these extra resources.

c. Reward practices that meet orexceed AAP-approved prede-fined quality and performance

metrics with incentive pay-ments.26

d. Require Medicaid managed careplans to determine paymentbased on the principles outlinedin (a) and (b) so that pediatricproviders and patient-centeredmedical home (PCMH) pro-grams are appropriately com-pensated. Similarly, requiremanaged care plans to makeproviders eligible for addition-al incentive payments, as in(c), if, for instance, providers de-monstrate improved outcomes,reduction of total Medicaidcosts, and robust efforts totransition children with spe-cial health care needs to adultcare. Provide input to Medicaidmanaged care plans aboutpossible designs and imple-mentations of structured incen-tive programs based on qualityand performance parametersadvocated by the AAP.

e. Explore the feasibility of adjust-ing fee-for-service or capitatedpayments to a provider on thebasis of a risk-adjustment mech-anism that accounts for the ex-tra costs associated with caringfor children with chronic condi-tions and other key pediatric di-agnoses among the children inthe provider panel.

f. Establish a mechanism withinstate Medicaid agencies andMedicaid MCOs for rapid ad-justment of fee-for-service orcapitated payments to pro-viders for recommended newvaccines and other new tech-nologies that rapidly achievetranslation from clinical trialsto standard clinical practice.

g. Require that paperwork insupport of claims is not undulyburdensome and that cleanclaims are paid within 30 to

45 days of submission, so thatpractices can meet their cashflow obligations.

2. Oppose the conversion of Medic-aid financing to an annual allot-ment or block grant programswith a fixed budget. Block grantproposals typically result in costshifting from federal to statebudgets and do not reduce overallhealth costs or improve quality ofcare. In fact, institution of blockgrants in combination with revo-cation of the MOE provision in ACAwould likely restrict eligibility andreduce benefits for children to re-sult in the loss of the individualchild’s guarantee to access Med-icaid services. Recently, the con-cept of using “per capita caps”to control Medicaid expenditureshas resurfaced, but ultimately,this mechanism of funding posesthe same risks for children as doblock grants.

3. Work with the AAP to study thefeasibility of implementing pediatric-specific accountable care organiza-tions through carefully structureddemonstration projects.27,28

4. Pay primary care physicians for be-havioral health services that physi-cians are qualified and competentto provide. Eliminate carve-outs forbehavioral health coverage.

5. Mandate that states perform anin-depth assessment of the fiscalviability of any health plan beforecontracting with that plan to ad-minister a Medicaid program andconduct annual audits to verifycontinued fiscal stability of thehealth plan. Require states thatcontract with MCOs to publishtheir physician payment methodol-ogies and rates for each child eli-gibility group on an annual basis.

6. Advocate for federal and stateagencies to partner with organiza-tions, such as the AAP, to educate

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physicians about programmaticchanges in Medicaid fee-for-serviceor managed care environments (eg,pay-for-performance and PCMH pro-grams). Physicians should under-stand the quality and cost controlobjectives of new initiatives and thelinkage between fully documentingachievement of these goals and pay-ments to physician practices.

7. Pay for the administration of im-munizations (including multianti-gen vaccines) and for counselingusing the current CPT code set. Pay-ments for vaccines should be atleast 125% of the current Centersfor Disease Control and Preventionprivate sector price list and pay-ment for immunization administra-tion should be, at minimum, 100%of the Medicare rate for each vac-cine administration CPT code.

8. Ensure, wherever possible, theavailability of at least 2 financiallyviable Medicaid MCOs in every re-gion to allow for patient choice.Requests for proposals for organ-izations to serve as Medicaid third-party administrators and the ensuingselection process should be fullytransparent.

9. Explore innovative methods to estab-lish trust funds to support graduatemedical education specific to theprovision of primary and subspe-cialty care for Medicaid participantsthat will help maintain a qualifiedpediatric provider workforce.

10. Require Medicaid to provide fullpayment for trained interpreterservices for patients with limitedEnglish proficiency. This will assistin thorough and accurate commu-nication between provider andparticipant, increased accuracy ofdiagnosis and more appropriatetreatment plan, and increased par-ticipant understanding and adher-ence to treatment, thus avoidingadverse clinical consequences.

11. Pay for observational care, urgentcare, day medicine services, andnecessary interhospital transportservices, including transport ofneonates from tertiary or quater-nary neonatal or pediatric intensivecare units to step-down convales-cent units.

12. Implement policies and proceduresto ensure equitable and promptpayment to providers and facilitiesfor pediatric services rendered toMedicaid patients out of state.States should work together andwith the federal government toachieve uniform and seamless pro-cesses to pay for these services.

13. Require all payers to report finan-cial data on an annual basis sothat the medical loss ratios (thepercentage of total funding that isspent on patient care functions)are clearly delineated and trans-parent to the public.

14. Require states to develop clearand transparent rules and regula-tions related to ACA provisions forrecovery audit contracting pro-cesses. Each state must ensurethat physicians who are licensedand have practiced in the statesupervise the work of certifiedprofessional coders with exper-tise in pediatric primary and sub-specialty care. Key stakeholders,including physicians and the pub-lic, must have direct input in theprocess to avoid flawed statisticalanalysis. Payment errors due toboth undercoding and overcodingshould be included in a final rec-onciliation report. A clear and fairappeals procedure that is accom-plished in a timely manner mustbe part of the formal recoveryaudit contracting process.

ELIGIBILITY

The AAP endorses the ACA-mandatedexpansion of Medicaid eligibility to

include all children who live in familieswith an income below 138% of FPL.{

The AAP recommends that states im-plement the following additional mea-sures to facilitate enrollment of childreneligible for Medicaid or CHIP benefits:

1. Remove the 5-year waiting periodfor eligible children and/or pregnantwomen who are lawfully residing inthe United States consistent with theprovisions of the CHIP Reauthoriza-tion Act (Pub L No. 111-3).

2. Identify uninsured children whoare not financially eligible for Med-icaid and if possible facilitate en-rolling them in CHIP.

3. Ensure that children who aremoved by the state into a fostercare program are tracked and im-mediately enrolled in and coveredby Medicaid until age 21 using theChafee option.# In 2014, if chosenby the foster child alumna, Medic-aid coverage becomes mandatoryunder the ACA until age 26.

4. Ensure that newborn infants eligi-ble for Medicaid are assigned to aspecific plan immediately after birthso that timely provision of servicesin the first few months of life is notimpeded by anticipated difficultiesin payments of claims.

OUTREACH, ENROLLMENT, ANDRETENTION

The AAP recommends that statesstrengthen their outreach, enrollment,and retention efforts to enroll all eli-gible uninsured children in Medicaid,CHIP, or exchange coverage.

{For fiscal year 2012, the FPL thresholds are $15415 for a single adult and $31 809 for a family of 4,with the exception of Alaska and Hawaii, wherethresholds are 25% and 15% higher, respectively.#A Medicaid option, known as the Chafee option,allows states to extend Medicaid to former fosterchildren but only up to age 21. Currently, there are21 states that use the Chafee option to providehealth care coverage to former foster youth(Chafee Foster Care Independence Act of 1999).

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1. Use multiple sites and replicateother effective strategies as havebeen implemented in CHIP to max-imize and maintain enrollment ofindividuals eligible for Medicaid.

2. Optimize coordination of Medicaid,CHIP, and exchange program out-reach through the use of stream-lined eligibility determination,redetermination and enrollmentprocesses including the use ofshort and easily understood com-mon application forms, and ex-panded use of online enrollment.Once a child is enrolled, coverageshould continue for 12 months.

3. Consider using the medical hometo enroll patients and provide a fairpayment for the administrative ex-pense of this procedure.

4. Adopt practices that result in a “nowrong doors” approach to enroll-ment. All venues for Medicaid, CHIP,and exchange program enrollmentshould be able to evaluate an appli-cant’s eligibility for any of theseprograms and to process the ap-propriate application.

5. Advocate support for federal poli-cies to provide incentives to statesto increase enrollment and reten-tion in Medicaid and to continuethose incentives for CHIP programs.

MANAGED CARE

In recent years, fiscal and policy con-siderations have encouraged states tocontract with MCOs to administer theMedicaid program. As of fiscal year2009, an estimated 61% of Medicaidbeneficiaries 0 through 20 years of agewere enrolled in a Medicaid healthmaintenance organization (HMO).2 TheAAP recommends that all MCOs shouldadopt a pediatric medical home modelfor all children that adequately ad-dresses their needs, including thosewith special health care needs. Net-work adequacy should be determined

by periodic evaluation of the number ofMedicaid providers whose panels areopen to all new Medicaid patients.29

The AAP recommends that states adoptthe following minimum set of practicesand standards in their approach toMedicaid MCOs:

1. Ensure that MCOs (these may beeither HMOs or provider-sponsorednetworks) provide educational ma-terials to families that are culturallyeffective and written at literacylevels and in languages used byMedicaid recipients. The use ofaudiovisual aids should be en-couraged.

2. Provide appropriate written, oral,and Web-based information andcounseling to Medicaid eligiblepatients that allow informed pa-tient choice of MCO-based net-work options for primary carephysicians, pediatric medical sub-specialists and pediatric surgicalspecialists, and pediatric hospitaland ancillary services.

3. Assign Medicaid participants toan MCO that allows retention ofthe patient’s medical home.

4. Recognize that pediatricians areprimary care physicians who areeligible for pediatric patient as-signment in all default enrollmentsystems.

5. Ensure that the provider networkof all Medicaid MCOs contains thefollowing components:

a. Sufficient numbers of providerstrained in primary care andsubspecialty pediatrics, as wellas pediatric surgical specialists.

b. Sufficient numbers of physiciansand other licensed providers oforal health, mental health, de-velopmental, behavioral, andsubstance-abuse services so thatmedically necessary servicesare accessible within a reason-able length of time.

c. When possible, a minimum of 1hospital that specializes in thecare of children.

d. Vendors of durable medicalequipment and home healthcare agencies that have experi-ence caring for children, espe-cially those with special healthcare needs.

6. License an MCO as a pediatricMedicaid provider only if its com-prehensive pediatric network canprovide children with quality careacross the full continuum of careand hold that MCO accountable.

7. For Medicaid programs to be re-sponsive to the needs of bothpatients and providers, it is essen-tial that the programs be subjectto either competition among atleast 2 and when possible 3 MCOsin a region or to regulation that isregularly updated to reflect con-tinuing input from patients andproviders. Provider service net-works (not-for-profit organizationscreated and governed by pro-viders) should be evaluated andapproved on a level playing fieldwith HMOs.

8. Require that Medicaid administra-tive processes such as site visitsand audits are simplified to mini-mize the burden for providersand office staff. Results of theseprocesses should be available asa report card and transparent toprospective Medicaid enrollees.

9. Implement dedicated planning andoversight when MCOs contract forcare delivery to children with spe-cial health care needs (includingchildren with complex and/or rarediseases, children with behavioral/mental health conditions, and fos-ter care children).

10. Establish an All Payer Claims Da-tabase and require MCOs to partic-ipate fully in reporting encounter

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data. This would allow health pol-icy analysts and researchers ingovernment, academia, and theprivate sector to examine regionalpatterns of utilization, access tocare, and quality of care and in-form efforts to construct “bestpractice” models of care.

QUALITY IMPROVEMENT ANDPROGRAM INTEGRITY

The AAP recommends that, as appro-priate, CMS and the AAP, or state Med-icaid agencies and state AAP chapters,should work collaboratively to developand/or enhance quality-improvementactivities that can benefit all children.

1. CMS should encourage collabora-tion among the Agency for Health-care Research and Quality, theNational Committee for Quality As-surance, the National Quality Forum,the AAP, and the CHIP Reauthoriza-tion Act Pediatric Healthcare QualityMeasures Centers of Excellence.These organizations can evaluatecurrent quality and performancemeasures with a goal of recom-mending modifications or achievingconsensus around new measuresthat pertain to pediatric patients, in-cluding children with special healthcare needs. These measures shouldalign with the recommendationsoutlined in the AAP policy statement“Principles for the Development andUse of Quality Measures.”26

2. States should require health plansto use the core set of pediatricquality improvement measures thatwere created as part of the CHIPReauthorization Act. These mea-sures quantitate access to care, uti-lization of services, effectiveness ofcare, patient outcomes, and satisfac-tion of both patients and providersrelated to preventive, primary, acute,and chronic care for children. Statesshould develop mechanisms forpublic reporting of these measures

that allow Medicaid beneficiariesto compare outcomes amongMCOs. Consistent with federal stat-ute, states should require that allMedicaid programs provide accessto quality primary and subspecialtypediatric care that is equal to thatachieved through private payers(“equal access” mandate).

3. At a minimum, states should estab-lish Medicaid Advisory Committeeswhose membership includes pediat-ric primary care and subspecialtyproviders. These committees canadvise state Medicaid agencies onissues related to the identification,implementation, and evaluation ofquality measures and improvementprograms as well as issues relatedto eligibility, enrollment, formulary,network adequacy, access, and med-ical necessity. To achieve maximalbenefit, each state Medicaid agencyshould employ a physician with pe-diatric expertise who can continu-ously assist the agency with theseissues as they relate to pediatrics.

4. Federal and state agencies shouldwork with the AAP to develop toolsand measures to monitor potentialchanges in the quality of pediatriccare and the outcomes of the pedi-atric population. These tools andmeasures will be helpful in evalu-ating the effect of PCMHs and theimpact of reform on children withspecial health care needs.

5. States should assume central re-sponsibility for key administrativeprocedures that pertain to all Med-icaid providers. These procedurescould include meaningful providerassessment, education (eg, fraudand abuse training), and creden-tialing activities that would applyfor all payers within the Medicaidor CHIP programs.

6. States should report results ofpeer review and reviews of medi-cal records in a timely manner to

providers, plans, and beneficiariesconsistent with applicable federaland state laws related to confiden-tiality, peer review privilege, andcare review privilege.

7. States should monitor enrollmentpatterns and develop prospectivemeans to assess reasons forchanges in enrollment to ensurethat MCOs do not encourage chil-dren with a high level of need toswitch to other plans.

8. States should provide timely, mean-ingful, linguistically and culturallyappropriate summaries of qualityand performance measure and pro-grams to beneficiaries to guide theirchoice of Medicaid plan.

CONCLUSIONS

By 2019, if the ACA Medicaid expansionwere to be implemented by all states,16 million additional individuals wouldgain insurance coverage throughMedicaid and CHIP. Regardless of statevariations in participation in the ACAMedicaid expansion, Medicaid will re-main as the largest single insurer ofchildren.30 Additional legal proceed-ings and federal/state negotiationsmay clarify how DHHS will implementMedicaid expansion in the new adultpopulation. In the meantime, the AAPsupports state chapter advocacy ef-forts to expand Medicaid to the newlyeligible population. Although AAP chap-ters might not take the lead in advo-cacy, they can provide pediatricexpertise to coalition efforts and high-light the positive effects expansion willhave on young adults.

To date, governmental health policy onboth state and federal levels has notadequately met the medical, behavioral,and developmental needs of children.The ACA has provided a framework toredress some of these deficiencies. TheAAP, through its network of chapters,sections, committees, councils, andstaff and in partnership with other

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allied organizations, can collaboratewith both federal and state agenciesto monitor implementation of thoseaspects of the ACA that promise toenhance the care and outcomes ofchildren and young adults and perhapssuggest refinements for future regu-lations. Success in these endeavors willnot only enhance the health and well-being of the children for whom pedia-tricians care but also will enrich our

ability to provide the quality of care towhich we aspire.

LEAD AUTHORSThomas Chiu, MD, MBAMark L. Hudak, MDIris Grace Snider, MD

COMMITTEE ON CHILD HEALTHFINANCING, 2012–2013Thomas F. Long, MD, ChairpersonNorman “Chip” Harbaugh, Jr, MDMark Helm, MD, MBA

Mark L. Hudak, MDAndrew D. Racine, MD, PhDBudd N. Shenkin, MDIris Grace Snider, MDPatience Haydock White, MD, MA

PAST COMMITTEE MEMBERSThomas Chiu, MD, MBARussell Clark Libby, MD

STAFFEdward P. Zimmerman, MSDan WalterRobert Hall, JD, MPAff

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