Handful of states now allow state employee children to be insured by CHIP
ATLANTA – Georgia state officials are planning to implement a little-known provision of the Affordable Care Act allowing states to move the children of state employees onto the Children's Health Insurance Program, something only a handful of states have done so far.
According to information provided by the Centers for Medicare & Medicaid Services, five states have received approval from CMS and only one state – Georgia – has a request pending with the agency. States approved to make the switch so far include Alabama, Texas, Kentucky, Pennsylvania and Montana.
In Georgia, the Department of Community Health expects that as many as 40,000 kids will join the state CHIP program – called PeachCare for Kids – in 2012 as a result of the change and in the process save the state $32 million, which would largely come from the federal matching funds provided to the program.
Provider groups have expressed concern over the move of so many children to the state-funded CHIP, which currently reimburses doctors at a rate of only 83 percent of costs and is 12 percent lower than reimbursement rates through the state employee plan.
"Our concerns are two-fold: One, is that this is an access issue. Here in Georgia, like so many states, the Medicaid program is under duress and because reimbursements are so low many doctors are choosing not to care for Medicaid patients, including PeachCare patients and that is creating a major access dilemma," said Kevin Bloye, vice president of communications with the Georgia Hospital Association. "From our standpoint moving more people into Medicaid or the PeachCare for Kids program has the potential to make the problem even worse."
The second concern, Bloye added, was for the providers who would be subjected to the lower reimbursement rates of PeachCare. "Anytime you add tens of thousands of people to a program that is already underfunded, it is going to create more issues for healthcare providers."
While budgetary concerns have driven Georgia to make the switch, such is not the case in other states. In Pennsylvania, state employee parents can move their kids to CHIP only if they can demonstrate that more than five percent of their income goes to medical expenses – a scenario that affects only 1 percent of state employees, according to the Pennsylvania Department of Insurance. And in Alabama, state officials received federal approval as a means to right what they considered an inequity in the original 1997 CHIP legislation that barred children of state employee from participation.
"There were children that met every eligibility requirement to participate in the program, but couldn't because of this rule," said Cathy Caldwell, director of Alabama ALL Kids. "Most CHIP directors felt this was unfair to the kids."
Unlike Georgia, the move by Alabama earlier this year was met by no opposition, since the ALL Kids program is run by Blue Cross and Blue Shield of Alabama and pays the going PPO rate to providers.
With reasons for switching kids of state employees to CHIP so varied, it is not clear why more states, especially where state coffers could benefit from a switch, have not made the move.
An April letter to state CHIP programs from CMS director Cindy Mann detailing the change in law, noted the provision was added to PPACA "in response to States' repeated requests for Federal support in this area."
With five states already approved for a plan amendment, only Georgia's application was pending at press time and officials at CMS would not speculate on why more states hadn't taken advantage of this new provision of the law.
For more on reimbursement, see bit.ly/hfn-reimbursement