Children’s Health Insurance Program: Taking the long view
The Children’s Health Insurance Program (CHIP) provides health insurance to low-income children who do not otherwise qualify for Medicaid. Administered by states and jointly funded with state and federal funds, CHIP provides healthcare access to over 5.6 million children nationally. CHIP, which is currently authorized through Sept. 30, 2017, is headed to the reauthorization process, and funding is expected to be the primary issue of this next health care debate.

As demographic groups go, children on average, are low-cost healthcare consumers, but the benefits of well-child visits, vaccines, and other primary care services are widely acknowledged. CHIP provides access to these and other essential health care services, which can lower long-term health care costs and provide necessary public health benefits.

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A common assumption among policy makers and administrators is that children who are covered by CHIP have no other health insurance coverage, while this is generally true, and is the primary reason the program exists, audits have revealed that 3 percent – 7 percent of CHIP recipients also had other insurance coverage.

This can occur when a CHIP recipient gains interim coverage under a family member’s employer-sponsored or other group health care plan. Three percent to 7 percent may not sound like a compelling number, but when you apply these percentages nationally it would mean that at any given time, between 170,000 and 390,000 CHIP recipients have other health insurance coverage. In fact, based on the same audits, an estimated $400 - $900 million dollars can be saved annually by making other available health insurance coverage the primary payer to CHIP, thereby moving CHIP to secondary payer status.

The secondary payer concept is common in health care—Medicare is by law a secondary payer to commercial insurance, and Medicaid is legally the “payer of last resort” to all other insurance programs—but there is no provision in the CHIP law that enables it to be a secondary payer to other insurance programs. Without this status, CHIP cannot easily identify other insurance coverage available to CHIP recipients, nor can it coordinate benefits with other programs and recoup dollars that the program has spent but should have been covered by another insurance plan. One way to remedy this, and make CHIP a more sustainable program, is to use the reauthorization process to give CHIP secondary payer status and adopt assignment of rights language.

The primary reason this provision was not previously included in the law is the assumption that children on CHIP do not have other coverage. This may be the case at enrollment, but as audits have revealed, it is not necessarily the case throughout the child’s time on the program.

Some may think an easy solution is to drop the child from CHIP once other insurance is discovered, but that may not be the best course of action. First, without secondary payer status and the rights to data sharing that comes along with it, discovery of other insurance is difficult and most cases will go undetected. Next, allowing children with access to other insurance to remain on CHIP encourages the use of other health insurance and promotes the use of preventive health services while preserving CHIP funds.

Allowing children with other health insurance coverage to remain on CHIP also allows states to avoid churn resulting from changes to private coverage (i.e. due to parental job changes), which can be administratively burdensome and costly. At the same time, children with complex medical needs or inadequate private insurance, but still eligible for CHIP, will benefit from the continuity of care and wrap around coverage provided by CHIP.

This is the long-term view that will lead to better cost management, improved health outcomes and transform CHIP into a more sustainable program. I urge members of Congress to consider this important program enhancement when they take up the CHIP reauthorization debate next month.

Bill Lucia is Chairman and CEO of HMS Holdings (NASDAQ: HMSY), a healthcare technology company that provides services to more than 45 Medicaid and CHIP agencies and over 200 Medicaid health plans.