CMS Spreads Holiday Cheer to States Doing An Outstanding Job of Improving Enrollment of Uninsured Children in Medicaid – Say Ahhh! A Children’s Health Policy Blog

The holidays are looking a little brighter for fifteen
states that are receiving performance bonuses from the Center for Medicare and Medicaid Services (CMS) for their successful efforts to improve enrollment of uninsured children in
Medicaid.   These states
should be proud of their efforts, which are particularly impressive in the
context of the budget problems confronting states.

The states receiving an award for the first time this year are
Colorado, Iowa, Maryland, Ohio and Wisconsin.  These states join ten others that are receiving the award
for two years running – Alabama, Alaska, Illinois, Kansas, Louisiana, Michigan,
New Jersey, New Mexico, Oregon and Washington. Altogether, these 15 states
earned bonuses totaling $206 million, more than 2.5 times the $75 million
awarded in 2009. 

To earn a performance bonus, states must have in place at
least five of eight specific policies or procedures designed to enhance
enrollment and retention of eligible children. Additionally, a state must
demonstrate that it has increased enrollment of children in Medicaid above a
relatively ambitious target level.  The performance bonus, enacted as part of the Children’s
Health Insurance Program Reauthorization Act (CHIPRA), is designed to ease the fiscal impact on
states of enrolling the lowest income children who are already eligible for
Medicaid, as well as to encourage and recognize improvements in enrollment

The size of awards this year ranged from $2.6 million for Kansas to
almost $55 million for Alabama, which earned the top award for the second consecutive
year. All second year awardees received larger bonuses, and seven of the ten
more than doubled their 2009 
award. The actual bonus amount is based on a state’s
share of Medicaid costs and the extent to which its Medicaid enrollment of
children exceeds a target level.  States
exceeding the enrollment target by 10 percent get a much larger bonus. Ten of
the fifteen states earning bonuses reached the higher payment tier, while
Alabama was the sole state reaching that level in 2009.

So what about the other 36 states including DC?  With unemployment rates so high, nearly
all states should be experiencing major increases in enrollment as more
families lose jobs and access to employer-based coverage.  If they aren’t, it may be a troubling
sign that they need to do more to simplify enrollment. For example, California has
one of the highest
unemployment rates in the country (12.4% in November 2010, yet
Medicaid enrollment growth between 2007 and 2009 was the 6th lowest.

On the other hand, AZ, FL, NV and UT experienced at least a 20%
growth in Medicaid enrollment between December 2007 and December 2009 alone,
making it likely that they could have secured a performance bonus IF they had
adopted five out of eight simplification measures.  While these states had the sharpest enrollment increases, 17
others also had increases during this period above the cumulative needed to
secure a bonus (approximately 12%). By not implementing at least 5 of the 8
measures to streamline enrollment and retention (which also can result in
administrative efficiencies), all of these states are potentially leaving reward
money on the table.

Finally, to be fair, a few states do not receive a
performance bonus because they already are so far ahead of the game.  In Massachusetts, for example, 99.98 percent
of children have coverage, but the state still did not receive a performance bonus.
 This is because the state already
was performing at such a high level that it could not get significantly
better.  It is a bit like the
state’s favorite football player, Tom Brady.  He might well win the Superbowl again this year, but he is
already so good it is hard to imagine him getting markedly better and winning
an award for “most improved” NFL quarterback.

Looking ahead, states still have time to implement changes
that would help them qualify for performance bonuses in 2011. CMS gives credit
to states for new measures that are fully operational by April 1 of a given
year, so it’s not too late for states policymakers to add this to their list of
new year’s resolutions!

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