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Sacramento Bee
April 21, 2005
By Aurelio Rojas
California spent more than $120 million
during a three-year period to re-enroll children who were
dropped from Medi-Cal because of untimely or incomplete paperwork,
according to a new study.
The report -- "How Much Does Churning
in Medi-Cal Cost?" -- was funded by the California Endowment,
a nonpartisan foundation that works to expand health care
in underserved communities.
The state was lauded in the report for successful
outreach efforts. About 3.4 million children were enrolled
in Medi-Cal in 2003; nearly half had been in the program for
three years or more.
But the report said a substantial segment
of this subgroup -- about 600,000 eligible children -- were
removed from the program at some point. Most were re-enrolled
within four months.
"Churning has significant implications
for cost, in that administrative dollars to process applications
diminish funds available for actual coverage," says
the report by Gerry Fairbrother, a researcher at Cincinnati
Children's Hospital Medical Center.
In a telephone interview, Fairbrother noted
that a recent analysis by PricewaterhouseCoopers estimated
it would cost California $119 million to $331 million to cover
the 10 percent of children in the state without health insurance.
Reducing Medi-Cal administrative costs, she said, could provide
a significant share of that money.
According to the study, the state spends $180
per person to process beneficiaries into Medi-Cal and then
into a managed care plan. "This means that California
is spending over $120 million to reprocess eligible children
who have been disenrolled in a three-year period," the
study found. Costs included $28 per application to Maximus,
a Virginia-based government-consulting company, and an additional
$26 to the health plan, the report calculated.
Stan Rosenstein, deputy director of the Office
of Medical Care Services in the state Department of Health
Services, said the report provided "valuable" information.
But he said "the cost figures aren't entirely accurate."
"If the child comes back in (the program)
within the first month -- and the report shows about 28 percent
do -- there is no intake cost.
"If they come back in the first two months
-- which is 61 percent -- (the application) doesn't go through
Maximus. ... We automatically reassign that child to the
health plan."
Medi-Cal is partially funded by the federal
government, which requires the state to do annual reviews
of recipients.
Rosenstein said the report does not take into
account the great improvement the state has made in retention.
In 1999, he said, the average Medi-Cal enrollment period for
children in California was nine months.
Spurred by California's $9.1 billion budget
deficit, the Schwarzenegger administration has been working
to streamline Medi-Cal, which consumes more state money than
anything except education.
"The governor is very committed to providing
coverage for kids who aren't covered," Rosenstein said.
"We're looking at a number of things to address the
churning issue, including redesigning the (renewal) form
to make it easier for families to use."
To qualify for Medi-Cal, children must be
in families with incomes up to 133 percent of the poverty
level. But unlike Healthy Families, another state program
for poor children, Medi-Cal has more complicated rules.
Frank Mecca, head of the County Welfare Directors
Association, said "exceedingly and unnecessarily complex"
eligibility rules are the biggest impediment to reducing
Medi-Cal administrative costs.
"While we think that the report may,
to a degree, overstate the cost to the state for re-enrolling
eligible children, clearly the cost is significant,"
Mecca said.
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