Study Finds Children with Special Needs May Not Receive Treatment Under CHIP in Some States

A George Washington University study of the 34 state CHIP programs "separately administered" from Medicaid found that many states have developed programs that use "conventional insurance principles" to determine "medical necessity" for treatment rather than the "broader" standard used under Medicaid. As a result, such states may exclude treatment for children with special needs. According to the study, titled "Policy Brief #2: State Benefit Design Choices Under CHIP," the use of conventional insurance principles may lead to "denial of treatment -- or serious undertreatment" -- for children with chronic illnesses and conditions. The study found that in 2000, only 13 of the 34 states with separate CHIP programs determined medical necessity with the "preventive standard" required under Medicaid (George Washington University Center for Health Services Research and Policy release, 9/26). In addition, 32 of the states used "coverage exclusions that would not be permissible" under Medicaid. The study found that "when given the option to do so, states will adopt conventional insurance norms in lieu of Medicaid's special coverage rules for children" (Rosenbaum et al., "Policy Brief #2: State Benefit Design Choices Under CHIP," September 2001).

'Departure' from Medicaid
According to the study, conventional insurance principles "typically define medical necessity narrowly" and limit treatment to patients expected to have "significant improvement" in their conditions or a "full recovery" to "normal." However, researchers said that the definition -- a "significant departure" from the standard used under Medicaid -- often excludes treatment for children with chronic illnesses or conditions. In addition, the study found that state CHIP programs using conventional insurance principles also "appear to be moving toward the use of fixed and irrebuttable coverage" without "regard to special circumstances" for some children, such as those with more than one medical condition, that "might render such pre-set practice guidelines inappropriate." The study also found the use of conventional insurance principles "may be most pronounced" in the 26 states that use CHIP funding to purchase coverage for children through managed care (George Washington University Center for Health Services Research and Policy release, 9/26). None of the 26 standard managed care contracts used by states with separate CHIP programs prohibits the use of conventional insurance principles, a practice that "would not be permitted" under Medicaid (Rosenbaum et al., "Policy Brief #2: State Benefit Design Choices Under CHIP," September 2001). The study is available in PDF format online. Note: You must have Adobe Acrobat Reader to view the study.