Medicaid’s Role for Children with Special Health Care Needs: A Look at Eligibility, Services, and Spending MaryBeth Musumeci and Julia Foutz Medicaid and CHIP covered about half (48%) of all children with special health care needs in 2016. This issue brief describes the role that Medicaid plays for children with special health care needs and includes 50-state data on children with special health care needs covered by Medicaid/CHIP. Key findings include the following:  Less than one in five (19%) children with disabilities receives Medicaid because they also receive federal Supplemental Security Income (SSI) benefits. Other Medicaid coverage pathways for children with disabilities are offered at state option. Reflecting different state policy choices, the share of children with special health care needs covered by Medicaid/CHIP varies by state from 23% to 67%.  Medicaid’s benefit package for children, Early and Periodic Screening Diagnostic and Treatment, covers physical and behavioral health services as well as long-term care services that enable children with chronic needs to live at home with their families. Medicaid supplements special education services and fills in coverage gaps for privately insured children with special health care needs.  Annual per enrollee spending is over seven times higher for Medicaid children who qualify through a disability pathway ($17,831) compared to those who qualify through another pathway, such as family income ($2,484) as of 2013. This reflects the greater intensity and variety of needs among most children who qualify based on a disability compared to most children who qualify through another pathway. Legislative proposals that would reduce and cap federal Medicaid funding may pose a particular risk to children with special health care needs. While Congress did not pass such legislation in 2017, similar proposals could be considered in 2018, and the Trump Administration’s FY 2019 proposed budget continues to advance these proposals. An estimated 14.2 million children, or 19% of all children in the U.S., have special health care needs.1 According to the U.S. Department of Health and Social Services, these children “have or are at increased risk for chronic physical, developmental, behavioral, or emotional conditions and also require health and related services of a type or amount beyond that required by children generally.”2 Their needs result from a range of conditions, such as Down syndrome, cerebral palsy, and autism. They may require services such as nursing care to live safely at home, therapies to address developmental delays, and mental health counseling. Medicaid and CHIP covered about half (48%) of children with special health care needs in 2016 (Figure 1). Medicaid provides a wide range of medical and long- Figure 1 term care services, many of which are not covered at Health insurance status of children with special health care needs, 2016. all or only available in limited amounts through Medicaid/CHIP Unspecified Uninsured private insurance, and makes coverage affordable for and Private 2% 4% Insurance many children with special health care needs and 7% their families. Legislative proposals that would Total Medicaid/ reduce and cap federal Medicaid funding may pose a CHIP Private Insurance 48% Only particular risk to children with special health care Medicaid/CHIP 47% Only needs. While Congress did not pass such legislation 41% in 2017, similar proposals could be considered in Total = 14.2 million children with 2018, and the Trump Administration’s FY 2019 special health care needs proposed budget continues to advance these NOTES: Includes non-institutionalized children ages 0-17. Totals may not sum to 100% due to rounding. SOURCE: Kaiser Family Foundation analysis of the 2016 National Survey of Children’s Health, Topical File. proposals. This issue brief describes the role that Medicaid plays for children with special health care needs. It explains common eligibility pathways, covered services, and program spending for these children. The Appendix includes 50-state data on the number of children with special health care needs covered by Medicaid/CHIP. A companion brief compares key characteristics of Medicaid/CHIP children with special health care needs to those covered by private insurance. Most Medicaid/CHIP children with special Figure 2 health care needs live in low or middle income Demographics of Medicaid/CHIP children with special health care needs, 2016. families. This is due to program eligibility rules Household Income Race/Ethnicity Age which generally include financial eligibility limits. Non- Just under half (43%) of Medicaid/CHIP children 400% FPL or above Hispanic 7% Other Race 9% with special health care needs reside in a household 0-5 200- years with income below the federal poverty level (FPL, less 399% FPL 0-99% FPL Non-Hispanic 12-17 19% White years 18% 43% Hispanic than $20,780/year for a family of three in 2018). 29% Non- 40% 38% 6-11 100-199% FPL Three-quarters (75%) of Medicaid/CHIP children Hispanic years 33% 42% Black 22% with special health care needs live in families with incomes below 200 percent of the federal poverty Total = 6.8 million Medicaid/CHIP children with special health care needs NOTES: Includes non-institutionalized children ages 0-17 with Medicaid/CHIP only or Medicaid/CHIP and private insurance. Totals level (less than $41,560/year for a family of three in may not sum to 100% due to rounding. 100% FPL for a household of 3 in 2016 was $20,160/year. Persons of Hispanic origin may be of any race; all other racial/ethnic groups are non-Hispanic. SOURCE: Kaiser Family Foundation analysis of the 2016 National Survey of Children’s Health, Topical File. 2018) (Figure 2). Two in five (40%) Medicaid/CHIP children with special health care needs are non-Hispanic white. About three in 10 (29%) are Hispanic, just under a quarter (22%) are non-Hispanic black, and nine percent are a member of another racial/ethnic group (Figure 2). Medicaid's Role for Children with Special Health Care Needs 2 Most Medicaid/CHIP children with special health care needs are school-aged (Figure 2). Just under one in five (19%) of Medicaid/CHIP children with special health care needs are age 5 or younger, with the remainder about evenly split between the 6-11 (42%) and 12-17 (38%) age groups. Some children with special health care needs qualify for Medicaid based solely on their Figure 3 Medicaid eligibility pathways for children with special health care family’s low income. Under the Affordable Care needs, 2018. Act, states must cover all children in families with Financial eligibility level as a percent of 2018 annual federal poverty level (FPL): incomes up to 138% of the federal poverty level (FPL, Federal Minimum State Option $28,676/year for a family of three in 2018) (Figure 300% $62,340 3); although some of these children have special 222% $27,000 health care needs, their Medicaid eligibility is based 138% $28,676 entirely on their family’s low income, without regard 74% $9,000 to their health status.3 States can opt to expand financial eligibility for children above 138% FPL, and Family Income Child Disability Buy-In SSI Beneficiary Child's Own Income all do: as of January, 2017, the median financial and Disability FPL for Family of 3 FPL for Individual eligibility level for Medicaid and CHIP children SOURCE: Kaiser Family Foundation analysis of Medicaid eligibility pathways. nationally is 255% FPL ($52,989/year for a family of three in 2018). Other children with special health care needs qualify for Medicaid through a disability-related pathway. States must provide Medicaid to children who receive federal Supplemental Security Income (SSI) benefits; these children live in poor families and have disabilities that result in marked and severe limitations in their ability to function at home, at school, and in the community (Figure 3). Nearly all states choose to expand Medicaid financial eligibility for children with special health care needs at higher incomes through optional disability-related pathways (Figures 3 and 4). As of 2015, 50 states opt to cover children with significant disabilities living at home under the “Katie Beckett” pathway; this pathway disregards parental income Figure 4 and assets, just as they are for children with State adoption of optional Medicaid eligibility pathways for children with special health care needs, 2015. disabilities living in an institution, which makes it WA VT ME possible for children with disabilities to receive MT ND MN NH OR WI NY MA necessary care while remaining at home with their ID SD MI WY PA CT RI IA NJ NE OH DE families. The child’s own income, up to 222% FPL NV UT CO MO IL IN WV VA MD DC KS KY CA ($27,000/year for an individual in 2018), and assets CA OK AR TN* SC NC AZ NM AK (generally limited to $2,000) are counted. Katie TX LA MS AL GA Beckett children also must meet SSI medical FL disability criteria and otherwise qualify for an HI Katie Beckett state plan option only (11 states) HCBS waiver comparable to Katie Beckett only (27 states, including DC) institutional level of care according to functional Both Katie Beckett state plan option and comparable waiver (7 states) Both Katie Beckett comparable waiver and Family Opportunity eligibility criteria set by the state. Some states cover Act buy-in (5 states) NOTES: *TN covers “medically eligible” children in households with income below 200% FPL; enrollment in this pathway is closed except for rollovers from traditional groups. SOURCE: KCMU Medicaid Financial Eligibility Survey for Seniors and People with Disabilities (2015), supplemented with states’ HCBS waivers targeted to comparable populations available on CMS Medicaid.gov. Medicaid's Role for Children with Special Health Care Needs 3 Katie Beckett children as an optional state plan group, while other states use a Medicaid home and community- based services (HCBS) waiver; using a waiver allows states to cap enrollment, which is not permitted under state plan authority. States also can allow children with special health care needs in middle income families to “buy in” to Medicaid. As of 2015, five states elect the Family Opportunity Act (FOA) option, a Medicaid buy-in for children with significant disabilities in families with income up to 300% FPL ($62,340/year for a family of three in 2018) (Figures 3 and 4). FOA children must meet SSI medical disability criteria, and states may charge them premiums up to 5% of gross countable family income. Less than one in five (19%) children with disabilities covered by Medicaid also receives SSI benefits (Figure 5). Children with disabilities are a subset of the larger population of children with special health care needs. Most Medicaid children with special health care needs (81%) do not receive SSI, indicating that they instead qualify for Medicaid on another basis; other data indicate that many of these children are eligible based on low family income.5 Some Medicaid children with special health care needs could qualify in a disability-related pathway but are instead enrolled Figure 5 through a poverty-related pathway because it is Medicaid/CHIP children with disabilities by SSI status, 2016. administratively easier and faster to establish eligibility based on low family income than based on disability. Other Medicaid children with special Does not receive SSI health care needs still use health services to a greater 81% extent than other children as a result of their health Receives SSI 19% conditions, even though their health needs do not rise to the stringent level of disability required to receive SSI or qualify for an institutional level of care. Total = 2.3 million Medicaid/CHIP NOTES: Disability includes difficulty with hearing, vision, cognition, ambulation, self-care, or independent living. SSI = Supplemental Security Income. Includes non-institutionalized children ages 0-17. Medicaid/CHIP children who do not receive SSI include those As reflected by different state policy choices who are eligible through another disability-related pathway (such as Katie Beckett/TEFRA or an HCBS waiver) and those who are eligible based on low family income; according to other analyses, many are eligible based on low family income. SOURCE: Kaiser Family Foundation analysis of 2016 National Health Interview Survey. about optional eligibility expansions for children with special health care needs, the Figure 6 share of children with special health care Share of children with special health care needs covered by Medicaid/CHIP, 2016. needs covered by Medicaid/CHIP varies by state (Figure 6). Twenty-two states provide WA VT ME MT ND NH Medicaid/CHIP to between 35% and 49% of the OR ID SD MN WI NY MA MI CT RI children with special health care needs living in their WY PA IA NJ NE OH DE NV IL IN MD state. Another 22 states provide Medicaid/CHIP to UT WV VA CO KS MO DC CA KY NC TN between one-half and two-thirds of all children with AZ NM OK AR GA SC MS AL special health care needs living in their state. Seven TX LA FL states cover between 23 and 34 percent of children AK 23-34% (7 states) HI 35-49% (22 states) with special health care needs. Table 1 in the U.S. = 48% 50-67% (22 states) Appendix includes state-level data on the share of NOTES: Includes non-institutionalized children ages 0-17 with special health care needs with Medicaid/CHIP only and Medicaid/CHIP and private insurance. SOURCE: Kaiser Family Foundation analysis of the 2016 National Survey of Children’s Health, Topical File. children with special health care needs covered by Medicaid/CHIP. Medicaid's Role for Children with Special Health Care Needs 4 Medicaid covers a wide range of medical and long-term care services for children with special health care needs. Medicaid’s Early and Periodic Screening Diagnostic and Treatment (EPSDT) benefit includes regular medical, vision, hearing, and dental screenings as well as the services necessary to “correct or ameliorate” physical or mental health conditions. These services must be provided for children, regardless of whether a state chooses to cover them for adults. Medicaid’s benefit package for children covers traditional medical services like doctor visits, hospitalizations, x-rays, lab tests, and prescription drugs. It also includes behavioral health, dental, hearing, and vision care as well as physical, occupational, and speech therapy and medical equipment and supplies. Some children may receive therapy through special education at school, and Medicaid supplements those services by covering additional therapies that are necessary for a child to function outside of school, at home and in the community. For children with chronic needs, Medicaid covers long-term care services, such as private duty nursing, attendant care, and assistive technology, that help children with special health care needs remain at home with their families. It also offers non-emergency medical transportation to appointments and case management through which a social worker coordinates medical, social, and other services for children with multiple needs. Medicaid fills in coverage gaps for privately insured children with special health care needs. Private insurance typically is designed to meet the needs of a generally healthy population rather than people with more intensive or chronic needs. As a result, private insurance usually does not cover long-term care services and may offer limited coverage of other services important to children with special health care needs. For example, privately insured children may experience unmet needs for dental care, mental health services, or physical, occupational, or speech therapy. Some privately insured children with special health care needs access Medicaid for wrap-around coverage for the medically necessary services on which they and their families depend to keep them healthy and safe at home and in the community (Figure 1). For an example, see Sam’s story in Box 1 below. Sam was born with Fragile X syndrome, a genetic condition that causes intellectual disability. He also has mild autism. Sam’s mother, Robin, noticed that he was not reaching his developmental milestones around age one. He has difficulty communicating and learning skills such as how to brush his teeth and dress himself. Sam’s private insurance does not cover all of the specialists and services, such as physical, occupational, and speech therapy, that he needs. Medicaid fills these gaps and supplements his private insurance by covering those services. Robin says that the services Sam receives through Medicaid are helping him to learn the skills he needs to “be part of society and with his peers.” Medicaid's Role for Children with Special Health Care Needs 5 Annual per enrollee spending is over seven times higher for Medicaid children who are eligible through a disability pathway ($17,831) Figure 7 compared to those who are eligible through a Medicaid spending per child enrollee, FY 2013. non-disability pathway ($2,484) as of 2013 (Figure 7). This reflects the greater intensity and variety of needs among most children who qualify for Medicaid based on a disability, compared to most $17,831 children who qualify through another pathway, such as family income. As described above, the Medicaid definition of “disability” is generally more restrictive $2,484 that the definition of “special health care needs.” As Eligible Through Disability Pathway Eligible Through Non-Disability Pathway Number of of 2013, 1.7 million Medicaid children qualified Enrollees: 1.7 million 34.2 million NOTES: Individuals with disabilities under the age of 19 are categorized as children. through a disability pathway, while 34.2 million SOURCE: KFF estimates from FY 2013 Medicaid Statistical Information System (MSIS) and Urban Institute estimates from CMS-64 reports. KFF and Urban Institute estimates from FY 2011 MSIS used for Colorado, because 2013 data was unavailable. KFF estimates from FY 2012 MSIS used for Rhode Island, Kansas, and North Carolina, because 2013 data was unavailable for Rhode children qualified through a non-disability pathway Island, and full years of data were unavailable for Kansas and North Carolina. (Figure 7). Medicaid plays an important role for children with special health care needs. Most Medicaid/CHIP children with special health care needs live in low or middle income families and 40 percent are non-Hispanic white. Nearly all states choose to expand Medicaid eligibility for children with special health care needs at higher incomes through optional disability-related pathways. Reflecting different state policy choices in this area, the share of children with special health care needs covered by Medicaid/CHIP varies by state from 23% to 67%. Medicaid provides a wide range of medical and long-term care services, many of which are not covered at all or only available in limited amounts through private insurance, and makes coverage affordable for many children with special health care needs and their families. These services keep children with intensive and chronic needs living at home with their families. Legislative proposals that would reduce and cap federal Medicaid funding may pose a particular risk to children with special health care needs. Proposals that would exempt spending for children who are eligible based on a disability would not reach all children with special health care needs, many of whom are eligible based on low family income. While Congress did not pass such legislation in 2017, similar proposals could be considered in 2018, and the Trump Administration’s FY 2019 proposed budget continues to advance these proposals. Children who use Medicaid long-term care services have higher per enrollee spending than other Medicaid children. Consequently, policies that lead states to limit per enrollee spending or limit costly optional coverage groups could disproportionately affect these children by limiting their access to expensive but necessary services that are unavailable through private insurance. While nearly all medically necessary services for children are mandatory under the EPSDT benefit, states can provide – and may look to scale back – some optional home and community-based long-term care services offered through Section 1915 (c) waivers. Medicaid's Role for Children with Special Health Care Needs 6 Additionally, many Medicaid eligibility pathways for children with disabilities are optional. All states but one currently choose to expand coverage for these children, but optional pathways are potentially at risk if states must adjust to reduced federal funding. If optional eligibility pathways are not eliminated, budgetary pressures could lead states to scale back provider payments and/or the limited services offered to children through optional waivers, with impacts on these children’s access to care and coverage that are less visible than a reduction in eligibility pathways. Finally, Medicaid is an important source of revenue for children’s health care providers, particularly children’s hospitals. Reductions to Medicaid payment rates, especially for children’s specialty services, or reductions in optional children’s coverage pathways, could impact those providers’ revenue streams. Because proposals to restructure federal Medicaid financing could have significant consequences for enrollees and the health care system, the potential implications warrant careful consideration for their impact on children with special health care needs. Medicaid's Role for Children with Special Health Care Needs 7 Alabama 235,500 56% 52% Alaska 29,900 46% 38% Arizona 316,700 57% 49% Arkansas 162,100 65% 60% California 1,409,500 52% 48% Colorado 221,000 35% 33% Connecticut 155,200 40% 37% Delaware 46,600 47% 33% DC 21,400 55% 46% Florida 891,100 52% 50% Georgia 494,300 60% 51% Hawaii 42,100 23% 16% Idaho 75,300 47% 34% Illinois 572,200 37% 33% Indiana 355,900 51% 43% Iowa 128,500 50% 35% Kansas 147,300 41% 35% Kentucky 255,900 54% 51% Louisiana 263,800 56% 50% Maine 58,700 49% 41% Maryland 250,000 34% 33% Massachusetts 286,600 36% 25% Michigan 444,600 42% 29% Minnesota 228,700 42% 31% Mississippi 176,700 67% 57% Missouri 316,100 38% 30% Montana 41,800 61% 54% Nebraska 78,100 33% 27% Nevada 102,100 52% 38% New Hampshire 52,200 37% 25% New Jersey 350,200 32% 28% New Mexico 98,100 59% 48% New York 765,100 52% 37% North Carolina 489,600 49% 44% North Dakota 30,900 28% 17% Ohio 598,400 46% 39% Oklahoma 210,500 48% 37% Oregon 158,700 42% 32% Pennsylvania 517,200 54% 43% Rhode Island 45,500 50% 40% South Carolina 219,300 61% 51% South Dakota 32,700 41% 32% Tennessee 282,600 57% 53% Texas 1,308,700 49% 40% Utah 149,000 27% 21% Vermont 25,200 65% 58% Virginia 391,400 33% 29% Washington 299,100 46% 37% Medicaid's Role for Children with Special Health Care Needs 8 West Virginia 91,100 55% 45% Wisconsin 245,700 43% 31% Wyoming 28,100 44% 30% 14,197,000 NOTES: Includes non-institutionalized children ages 0-17. *Includes those with Medicaid/CHIP as sole source of coverage and those with both Medicaid/CHIP and private insurance. SOURCE: Kaiser Family Foundation analysis of the 2016 National Survey of Children’s Health, Topical File. Medicaid's Role for Children with Special Health Care Needs 9 1 Kaiser Family Foundation analysis of the 2016 National Survey of Children’s Health, Topical File. 2 U.S. Dep’t of Health & Human Services, Health Resources & Services Administration, Maternal & Child Health, Children with Special Health Care Needs (Dec. 2016), https://mchb.hrsa.gov/maternal-child-health-topics/children-and-youth-special-health-needs#ref1. 3 It may not be possible to easily identify all of these children in the Medicaid administrative data, based on their service use. 4 This share is based on data from the National Health Interview Survey which does not identify whether children are eligible for Medicaid in a poverty-related pathway vs. a disability-related pathway, and may be a conservative estimate of the total number of children with SSI. The Social Security Administration reports about 1.2 million child SSI beneficiaries in 2016. Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin (2017), Table 7.A9 (preliminary data), https://www.ssa.gov/policy/docs/statcomps/supplement/2017/7a.html#table7.a8. These two sources report differ numbers due to differences in underlying data collection methods, but the difference does not change the overall conclusion that most Medicaid children with special health care needs do not qualify through a disability-related pathway. 5 For example, MSIS data show 34.8 million Medicaid children eligible based on low family income as of 2014, and 1.6 million Medicaid children eligible based on a disability (including SSI, Katie Beckett, HCBS waivers, and other disability-related pathways) as of 2011. The Henry J. 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