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Chapter 8: Health and Human Services
Fund Expanded Medical
Services for Children with
Serious Medical Problems
Summary
Texas can refinance expanded services for seriously ill and disabled children
in the Children with Special Health Care Needs (CSHCN) program by creating a
“wrap-around” program for the expanded services with federal
Children’s Health Insurance Program (CHIP) funding. Because CHIP draws
down a higher percentage of federal matching funds (about 72 percent) than the
CSHCN program, Texas can pay for some expanded services for children with
serious medical problems while saving general revenue.
Background
The Texas Department of Health (TDH) operates a state and federally funded
Children with Special Health Care Needs (CSHCN) program that pays for
rehabilitative and corrective medical services for seriously ill and disabled
children. Generally, these children with cancer, heart problems, physical,
orthopedic or other disabilities live in families that earn 200 percent or less
of the federal poverty level.
The 1999 Legislature redesigned the CSHCN program to broaden its medical
eligibility requirements and expand its services. Expanded services proposed by
TDH to be included in the CSHCN program include: inpatient psychiatric care,
emergency care, nutritional services and products, vision services, home health
nursing care, hospice care, family support services, and other services. The
category of family support services includes respite care, specialized child
care, counseling, minor home remodeling of up to $3,600 per client, and special
equipment, plus other services.[1] The new
services are to be effective July 1, 2001.
CSHCN expects to spend an estimated $25 million in general revenue funds and
$12.2 million in federal Maternal and Child Health funds in state fiscal
2001.[2] TDH plans to fund the expanded services
with existing appropriations of general revenue and federal Maternal and Child
Health funds, and establish a waiting list if the expanded services cost more
than available funding.[3]
At the same time CSHCN services were expanded, the Legislature created a
Children’s Health Insurance Program (CHIP) with federal and state funds to
be administered by the Texas Health and Human Services Commission (HHSC). CHIP
provides comprehensive health care insurance coverage similar to that provided
by a health maintenance organization. Texas receives about 72 percent federal
matching funds to pay for CHIP services.
Effective July 1, 2000, the CSHCN program and CHIP will offer similar medical
benefits.[4] Texas children who live in families
with incomes at 200 percent or less of the federal poverty level qualify for
both CSHCN and CHIP.
In August 2000, TDH and HHSC, which administers CHIP, began discussions to
move eligible CSHCN children into CHIP, where the state would receive federal
matching funds for about 72 percent of the program’s medical costs. The
agencies plan to require all CSHCN children who are eligible for CHIP to apply
for CHIP benefits by May 1, 2001.
Some 2,800 of 5,300 children who received CSHCN services in fiscal 1999 would
be eligible for CHIP.[5] Ineligible children
could continue in CSHCN, including 19- and 20-year-olds, adults with cystic
fibrosis, undocumented residents, children with third-party insurance who are
denied payment for certain costs, and children whose family incomes are more
than 200 percent of the federal poverty level, but whose medical bills put them
below that level.[6] In addition, services not
currently eligible under CHIP could continue under CSHCN.
TDH plans to manage costs of the expanded CHSCN services by establishing
waiting lists. The program previously limited participation by paying for
medical care only for children with certain medical
conditions.[7] Children on the list, ranked by
urgency of need or severity of illness, will receive no services until funding
becomes available. This may force the families of children on the list to seek
care from public, district, and local hospitals.
Refinancing Expanded CSHCN Services
Texas could help pay for expanded CSHCN services by designing
“wrap-around” CHIP services for seriously ill and disabled children.
“Wrap-around” services are extra medical services which only
children with special health care needs would receive. Texas could define the
“wrap-around” services as the expanded CSHCN services. Most of the
children in CHIP do not have special health care needs and would not qualify for
the “wrap-around” services.
Thus, Texas could obtain 72 percent federal matching funds in CHIP to pay for
the expanded services and spend more of the state’s CHIP federal funds
allocation. In contrast, Texas does not receive additional federal maternal and
child health funding for spending more general revenue in CSHCN.
Recommendation
State law should be amended to refinance expanded
services in the Children with Special Health Care Needs (CSHCN) as
Children’s Health Insurance Program (CHIP) “wrap-around”
services.
The Legislature should require the Texas Department of Health (TDH) to use
existing general revenue funding as match for the federal CHIP
“wrap-around” services for children with special health care needs.
This should not include general revenue that is required to match federal
Maternal and Child Health funds.
Some expanded CSHCN services now funded by general revenue would be paid for
by CHIP, for which Texas gets about 72 percent in federal matching funds. The
Legislature should reduce the CSHCN budget by an estimated $9.7 million in
general revenue funds for the biennium.
At the discretion of the Legislature, these savings and other available
general revenue funding could be used to refinance other CSHCN services for
CHIP-eligible children.
Refinancing expanded services through CHIP “wrap-around” services
could ameliorate the difficulties for children anticipated when TDH institutes
its waiting list for the expanded program. Immediate medical care through CHIP
allows for continuity of care, which is often essential for critically ill
children. It would also lessen the shifting of costs to local hospitals.
Fiscal Impact
Some expanded CSHCN services could be funded by using general revenue in
CSHCN to match $9.7 million in federal CHIP funding. The source of the general
revenue match in CSHCN is general revenue that TDH reports is not needed to meet
federal Maternal and Child Health spending
requirements.[8] Because using CHIP would result
in a $9.7 million gain in federal funding for expanded CSHCN services, general
revenue savings would come from reducing the TDH budget by that amount. The
result shown below is obtained using a portion of unmatched general revenue
funding in CSHCN to match federal CHIP funding, thus achieving general revenue
savings.
The estimate below assumes a six-month phase-in period and that CHIP-eligible
children receiving CSHCN services will be enrolled in CHIP. The total fiscal
impact for the biennium would be $9,668,000 in general revenue savings and
increased federal funding of $9,668,000. The total impact over five years would
be $29,006,000 in general revenue savings and $29,006,000 in increased federal
funding. To achieve these savings, TDH’s appropriations should be reduced
by $9,668,000 in general revenue and $9,668,000 in additional federal funds
should be appropriated to HHSC for the 2002-03 biennium. Matching funds required
to draw CHIP federal dollars would remain in the TDH budget.
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Fiscal
Year
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Savings/(Cost) to the General Revenue Fund
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Gain in
Federal Funds
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2002
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$3,222,000
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$3,222,000
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2003
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$6,446,000
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$6,446,000
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2004
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$6,446,000
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$6,446,000
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2005
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$6,446,000
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$6,446,000
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2006
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$6,446,000
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$6,446,000
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[1] Texas Department of
Health, Proposed Rules, Chapter 38, “Chronically Ill and Disabled
Children’s Services Program,” 25TexReg 10639-10644, October 27,
2000.
[2] Memorandum from Lori
Roberts, Texas Department of Health, Children with Special Health Care Needs
Program, to Jack Baum, associate commissioner, Community Health and Resources
Development, Texas Department of Health, June 15, 2000.
[3] Texas Department of
Health, Proposed Rules, Chapter 38, “Chronically Ill and Disabled
Children’s Services Program,” 25TexReg 10644, October 27,
2000.
[4] V.T.C.A. Texas Health and
Safety Code, §35.0032.
[5] Memorandum from Lori
Roberts to Jack Baum.
[6] Interview with Susan
Penfield, director, Children with Special Health Care Needs Program, Texas
Department of Health, Austin, Texas, May 10, 2000.
[7] Interview with Susan
Penfield, director, Children with Special Health Care Needs Program, Texas
Department of Health, Austin, Texas, August 3, 2000.
[8] Interview with Debra
Wanser, Title V Maternal and Child Health director, Texas Department of Health,
Austin, Texas, September 13, 2000, and Texas Department of Health, Fiscal
Years 2002-2003 Legislative Appropriations Request, Volume 1, (Austin,
Texas, September 6, 2000), p. 67.
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