Assessing the California Children’s C A L I FOR N I A Services Program H EALTH C ARE F OU NDATION Introduction for an overhaul of the program and outlines key The California Children’s Services (CCS) program areas for further analysis and action on the part of provides coverage for essential health care services policymakers. to more than 165,000 children with special health care needs, including cancer, diabetes, and The Fundamentals of CCS conditions related to premature birth. Established Issue Brief in 1927, it is one of the oldest health coverage Eligibility programs in the nation and preceded the federal Children under the age of 21 in California mandate under Title V of the Social Security Act. qualify for CCS if they meet specific residential, Today, it is perhaps California’s most complex medical, and financial criteria. A child must have health program in terms of financing structure, what is defined by the state as a “CCS-qualifying administration, and care delivery. condition.” These conditions are defined in the California Code of Regulations and generally The CCS program is at a crossroads. For almost a include serious, chronic, and disabling medical decade, providers, families, and many policymakers conditions such as congenital anomalies, cerebral have been calling for reform of CCS, not just to palsy, hearing loss, cancer, and diabetes.2 The control costs but to improve delivery of essential California program’s limited definition of children care.1 The state’s fiscal crisis has increased pressure with special health care needs, which includes on state and county administrators to rein in CCS only physical conditions, is different from many program expenditures, which continue to rise other states’ Title V programs. The federal despite few changes in enrollment. Indeed, the definition of this population is “those who have state budget for 2009 – 10 directs the California or are at increased risk for a chronic physical, Department of Health Care Services to develop a developmental, behavioral, or emotional condition proposal for the federal government to restructure and who also require health and related services of Medi-Cal for children with significant medical a type or amount beyond that required by children needs in order to better serve these children and generally.”3 Many other states include children slow the long-term growth of the program. who are developmentally disabled or mentally ill. This issue brief provides an overview of the Children are considered financially eligible for CCS program, including eligibility and coverage CCS if they are: policies, program administration and financing, the delivery system, the size and characteristics ◾◾ Enrolled in Medi-Cal; of the enrolled population, and expenditures and ◾◾ Enrolled in Healthy Families; spending trends. It also discusses the state of the CCS program, describing its strengths and the ◾◾ Uninsured with an annual family income of challenges it is facing. The final section argues less than $40,000; or A ugust 2009 ◾◾ Projected to require more than 20 percent of annual 2007 of the state Department of Health Services. The adjusted gross family income for treatment of the CCS program was placed within DHCS, which also CCS condition. administers Medi-Cal, while other Title V programs are administered by the Department of Public Health. Children in California also may be eligible for the CCS Medical Therapy Program (MTP). The program operates The state administers the program through policy letters Medical Therapy Units staffed by CCS physical and and regulation. The state’s primary CCS functions are occupational therapists in designated public schools. approving participating providers, facilitating payment Children are eligible for services at no cost if they meet of providers, and developing and implementing quality specific medical eligibility criteria or have Independent standards for providers.8 Other administrative functions Education Plans that include MTP services.4 There is include eligibility determination, authorization of services, no income requirement for this program because federal and case management of enrollees. These functions are disability law requires states to provide children with county-administered in mid-size and large counties. For “free appropriate public education” and necessary related counties with populations under 200,000 — referred services.5 to as dependent counties — program administration is shared between the county and one of three state Coverage regional offices. The number of case managers and The CCS program pays for diagnosis and treatment level of case management services varies by county, and of qualifying conditions, as well as care coordination staffing standards are developed by the state. Due to and utilization management. Each county or regional changes in state funding allocations for administration, office authorizes services that may include specialty and many counties reduced case management positions in subspecialty care, outpatient and inpatient care, physical fiscal year 2008 – 09. In Los Angeles County, 54 case therapy, oral health, and prescription drugs. CCS does management positions were cut: As of May 2009, there not cover health care services unrelated to the child’s CCS were approximately 124 full-time case managers in condition. Consequently, families with a child in CCS Los Angeles County and 49,350 enrolled children. often do not experience it as a distinct program but rather as one payer amid a much larger system that may include Caseload and Conditions services from regional centers, services provided by special As of December 2008, 163,845 children were enrolled education programs, in-home support services, mental in CCS, excluding children who receive MTP services.9 health treatment, and other services. Many children with The majority (74 percent) were CCS/Medi-Cal recipients, a CCS-eligible condition who are eligible for Medi-Cal, yet CCS children are a very small population (3 percent) and all children with a CCS-qualifying condition enrolled among all children in Medi-Cal. According to the best in Healthy Families, are enrolled in a managed health care data available, the total number of children in CCS plan. Services related to the CCS condition are generally appears to have declined 8 percent since FY2003 – 04 carved out of health plans’ payments and responsibilities.6 (see Figure 1 on page 3). However, DHCS attributes the decline to the implementation of a statewide master Administration eligibility file in 2004 that purged inactive cases from The California Department of Health Care Services local and state records, as well as a change in policy (DHCS) administers the CCS program.7 Administration to exclude pending cases. Despite a lack of wholly of the program was decoupled from other Title V-funded comparable data, it appears that the proportion of programs in California following the reorganization in CCS children enrolled in CCS/Healthy Families has 2  |  California HealthCare Foundation increased significantly, perhaps as much as 34 percent longer and will remain enrolled in CCS until they are no since FY2003 – 04, but still this group accounted for only longer eligible for the program at age 21. 14 percent of the total CCS population in 2008. Expenditures Figure 1.  CS Caseload, by Payer, FY03 – 04 to FY07– 08 C Total CCS expenditures in 2007-2008 were $2.1 billion. Expenditures for services — diagnosis or treatment — were CCS Only CCS/Health Families CCS/Medi-Cal $1.9 billion and averaged about $11,000 per child.10 Approximately 8 percent of expenditures were for C A S E S (IN TH O U S A NDS) admini­ tration, including case management (Figure 2). s 150 CCS/Medi-Cal recipients make up 74 percent of the CCS caseload yet account for 89 percent of total CCS 120 diagnosis and treatment expenditures. CCS/Healthy Families expenditures for diagnosis and treatment have doubled over the past five years; however, when adjusted 90 for caseload, expenditures per recipient have increased more for CCS/Medi-Cal (47 percent) than for CCS/ 60 Healthy Families (33 percent) during the same time period. 30 0 Figure 2.  CS Expenditures, by Service Category, FY07– 08 C 2003–04 2004–05 2005–06 2006–07 2007–08 FISCAL YEAR T O T A L EX P END IT UR ES: $ 2 .0 6 9 B IL L IO N Source: California Department of Health Care Services, February 2009. Other Services Outpatient 8% 4% Children enrolled in CCS present with a wide variety of conditions, including a very small number of rare conditions, many of which are unique to pediatric Admin.* medicine. The top five conditions are congenital 8% anomalies, congenital heart disease, cerebral palsy, hearing loss, and fractures (excluding head injuries). Examples of Rx Inpatient 11% 54% other CCS-qualifying conditions include cystic fibrosis, muscular dystrophy, and spina bifida. Each of these Medical/ conditions requires intensive and high-cost long-term Physician treatment. Treatment for many conditions, such as cancer 15% and cystic fibrosis, is rapidly changing as research efforts result in more efficacious protocols and higher rates of survival. The true impact on CCS caseload is unknown. *Administrative and case management Source: California Department of Health Care Services, February 2009. For example, some children whose conditions improve, such as some cancer survivors, become ineligible for CCS. Others, such as those with cystic fibrosis, may survive Assessing the California Children’s Services Program  |  3 Inpatient care is the largest major expenditure area in Despite relatively few changes in caseload, CCS CCS, followed by medical/physician expenses. expenditures for diagnosis and treatment have increased at an average annual rate of 8.6 percent during this period. While pharmaceuticals account for only about Administrative costs have increased at an average annual 11 percent of CCS program expenditures (before rate of 6.3 percent. CCS expenditures for particular rebates), spending on prescription drugs increased conditions have increased dramatically, with the two 136 percent over the five-year period from FY2003 – 04 largest increases for cystic fibrosis (84 percent) and to FY2007 – 08. Although expenditures for inpatient premature births (56 percent). care did not grow as quickly during this period, the 81 percent growth in spending for inpatient care had Financing a much bigger impact, adding nearly $500 million CCS is financed by a combination of federal, state, and to CCS expenditures (Figure 3). The largest increase county funds. The financing formula is different for each in spending — 236 percent — was for the DHCS specific CCS program. With the exception of CCS-only, expenditure category “Other Services.” Additional data the federal government provides at least half of all funding were not available, but examples of costs in this category for administration and services. California is required are in-home nursing services, transportation, optometry, to spend 30 percent of funds from its Title V Maternal and dental care. and Child Health Block Grant on children with special health care needs, and a portion of these federal funds is allocated to the CCS program. Figure 3.  otal Program Expenditures, by Service T Category, FY03 – 04 to FY07– 08 The financing structure for the non-Medi-Cal-funded CCS program changed significantly in 1991 with Pharmaceuticals Inpatient Outpatient Medical/Physician Other Services the realignment of state and county health, social Administrative and Case Management service and mental health program responsibilities. Realignment increased the counties’ share of funding for ( I N MIL L ION S ) CCS-only diagnosis and treatment from 25 percent to $1,200 50 percent. In addition, a statutory maintenance-of-effort requirement for the county share of cost was established $1,000 based on 1991 program costs. Each year counties contribute funds well beyond their maintenance-of-effort $800 requirement, roughly $50 million in aggregate. In 2008, due to state budget pressures, DHCS implemented a new $600 methodology for allocating state and federal funding to $400 counties for CCS administration, capping the funding available to individual counties. $200 Medical System of Care $0 Specialty medical care for children in California is 2003–04 2004–05 2005–06 2006–07 2007–08 FISCAL YEAR organized quite differently from adult care. In general, pediatric specialty care is delivered within a small number Source: California Department of Health Care Services, February 2009. of large pediatric tertiary care facilities designed to 4  |  California HealthCare Foundation serve large areas of the state rather than just individual The State of the CCS Program communities. This care model stems from recognition In December 2008, the California HealthCare in the 1980s of the need for a regional approach toward Foundation commissioned a series of more than treating critically and chronically ill children due to the 30 interviews with selected stakeholders to identify the rare and complex nature of their conditions. Regional greatest challenges facing the CCS program. Stakeholders models were developed prior to the growth of managed included consumer advocates, providers, health care. Many of the CCS-designated Special Care Centers plans, state and county program administrators, and and hospitals with pediatric tertiary serve CCS children policymakers. This research also explored other states’ from multiple counties. In contrast, CCS administration, programs for children with special health care needs; including medical eligibility determinations and treatment examined proposed CCS-related legislation; and reviewed authorization for services, is county-based with the state and national policy research into the population. exception of the small dependent counties. Program Strengths DHCS approves individual providers and institutions The CCS program plays an essential role in the California for participation in the CCS program based on a set of health care system. It has been implemented as an established standards. All providers must also participate entitlement program and in many cases it is the only in Medi-Cal. CCS providers are paid by the state on a source of health coverage for some of the state’s sickest fee-for-service basis. Historically, CCS physicians were children. CCS estimates that approximately 61 percent paid the Medi-Cal rate. In 2001, in response to concerns of CCS families had a medical home in 2005 while only about a shortage of specialty providers participating in 42 percent of all families with such children in California CCS, the California Legislature approved a supplemental reported having a medical home that same year.11, 12 physician payment rate for services provided to CCS children equivalent to the Medi-Cal rate plus 39 percent. There was general consensus among stakeholders that This increase applies to specified physician services CCS is a unique program with a mission that must be only. Hospital inpatient services, medical equipment, preserved. Stakeholders agree that CCS covers necessary prescription drugs, and other CCS services continue to be treatment for qualifying benefits. Relative to other paid at the Medi-Cal rate. states, CCS coverage for required medical equipment is considered good. Among all families with children It is important to note that CCS is one piece of a much who have special health care needs — not just those larger system that parents and caregivers navigate for with CCS — California fares better than the national children with special health care needs. Obtaining all average when it comes to the percentage who report that of the care necessary for comprehensive treatment of a their child’s condition causes financial problems for the complex condition often requires services from programs household (15.5 percent in California versus 18.1 percent administered by other state agencies or departments such in the United States).13 as the departments of developmental services, mental health, education, and rehabilitation. CCS provides direct access to high-quality providers for children regardless of income. Unlike Medi-Cal for adults with disabilities or chronic but intensive health needs, CCS children have access to the same centers of excellence as do privately insured children. Through the approval of providers, CCS serves as the primary Assessing the California Children’s Services Program  |  5 credentialing entity for all pediatric specialty care. The There are no standard tools for the needs assessments program establishes the quality and care standards for all conducted by CCS case managers. In some counties the children with special health care needs in California. needs assessment is limited to required authorizations, while other counties use the process to develop a larger Program Challenges plan for care coordination. These variations are directly Stakeholders identified multiple challenges the program linked to each county’s definition of the case management presents to families, providers, and policymakers. Many of function. Many stakeholders are concerned that recent these challenges echoed findings from earlier assessments changes in state funding and capped allocations to of the CCS program from the Senate Office of Research counties for CCS administration will further reduce care and the Legislative Analyst’s Office.14 The increased coordination as staff cuts result in increased caseload for fiscal strain on the state and counties has heightened individual case managers. stakeholders’ concern about the sustainability of the program in its current form. Complex and burdensome financing structure. There is a strong desire among stakeholders to simplify Program variation across counties. Due to the and streamline funding sources. Stakeholders generally financing and administrative structure of the CCS agree that the current funding structure is unnecessarily program, counties effectively operate very different CCS complicated and outdated. programs across the state. Not surprisingly, the most significant differences, according to those interviewed, are Many say multiple funding streams and the payment in those areas administered by counties: medical eligibility reconciliation process between counties and the state has determinations, needs assessments, and case management. created an inflexible and inefficient system. Stakeholders described the amount of time spent on budgeting, CCS medical directors in each county determine medical claiming, reconciling, and reporting that could be spent eligibility by applying their interpretations of qualifying instead on addressing many other areas of the program. conditions. Providers who serve children from multiple Providers also expressed concerns about the ability counties report having the same diagnosis repeatedly to make any kind of systematic change or improve denied by some counties yet accepted by others. Some standards of care when faced with a patchwork of funding managed care plans and providers maintain lists of mechanisms. In addition, the current structure places eligible conditions by county to avoid these denials. A much of the financial risk, particularly for CCS-only group of pediatric provider organizations and hospitals, cases, on counties. County-level CCS treatment costs can family support organizations, and county CCS programs vary significantly from year to year. For small counties, in 14 counties in Northern California — the Children’s one unanticipated premature infant hospitalized for six Regional Integrated Service System — is working to months might use the bulk of an annual CCS budget. standardize the medical eligibility process and has Several stakeholders expressed concern that the new implemented processes for CCS medical directors to caps on state funding allocations would further decrease communicate privately with one another and compare budget flexibility within county CCS programs. cases. The state participates in a workgroup with these stakeholders and is aware of the need for broader Inefficient authorization processes. There was general standardization. consensus among stakeholders that the authorization process for CCS services, though varied by county, is unnecessarily long and complicated. Recent budget woes 6  |  California HealthCare Foundation probably will exacerbate this problem if left unaddressed. in rural areas, and can result in longer than necessary Lengthy authorizations may lead to delays in accessing hospitalizations for children who must wait to be appropriate care, unnecessarily long hospitalizations, discharged until an appropriate provider can be located loss of funds for providers, and increased administrative in the child’s community. With tertiary care centers also expenses for health plans. Stakeholders reported waiting reporting bed shortages, unnecessary hospitalizations not two or three months for an authorization for service. only have financial consequences for CCS but may also Delays in authorizations for outpatient care appear to be delay care for non-CCS children. greater than those for inpatient care. Some stakeholders believe this creates an incentive for services to be provided The extent to which CCS program standards and in the more costly hospital settings. This is consistent operations affect provider access is not clear. Many with findings from a report issued by the Legislative stakeholders reported delays in the CCS provider Analyst’s Office in 2004.15 certification process for both hospitals and individual providers. Hospital site visits, required for certification or The extent of authorization delays varies by county, recertification, are often delayed due to staffing shortages with state regional offices reportedly having the greatest at the state level. Some stakeholders expressed concerns difficulties. The most significant concerns relate to cases that the process of becoming a certified provider was requiring multiple authorizations for similar services or unnecessarily restricting the pool of CCS providers. Other continual care. CCS authorization standards are more stakeholders, however, stated that particular subspecialties stringent than Medi-Cal program standards. In addition, may have shortages reflecting physician supply issues there is no retroactive CCS coverage for children with unrelated to the CCS program, and the pool is generally Healthy Families, which also differs from the rules for adequate. children with Medi-Cal. Many stakeholders expressed a desire to see a simplified authorization processes across Lack of monitoring and oversight. Although the counties with the hope that CCS case management staff federal government funds more than half of CCS could be redeployed to care coordination functions. expenditures through Medicaid, Healthy Families, and Title V, it provides states with a high level of discretion Provider access problems. California parents of children when it comes to implementing systems of care for with special health care needs report significantly higher children with special health care needs. The lack of state rates of difficulty getting a referral for care than elsewhere leadership in ensuring access to quality health care for in the country.16 The rare and unique type of medical children in CCS was an often-repeated criticism. Many conditions, compounded by geographic disparities and stakeholders were particularly concerned that the state historically low provider rates, have created what one does not monitor administrative standards related to stakeholder described as a “perfect storm” for a shortage eligibility and authorization timeliness. As a result, access of participating specialists and subspecialists. Unlike to coverage and care may differ dramatically by county. specialists who care for adults, many of these specialists The “need for better state oversight and enforcement of have a lower proportion of privately insured patients to program standard” was a central finding in the Senate offset lower Medi-Cal rates. Office of Research report on CCS in 2000.17 Some state policymakers point to financing structure, lack There is also a shortage of primary care physicians capable of regulatory authority, and staffing shortages as major of handling the complexities of primary care services obstacles to playing a larger role in monitoring and for these children. These shortages are particularly acute oversight of counties’ CCS activities. Assessing the California Children’s Services Program  |  7 Lack of information and data. Many stakeholders were Into the Future also concerned about the lack of data on quality of care California can no longer afford to spend more than and on services certified, authorized, and paid for by $2 billion a year on a vital program without better CCS. There was consensus that policy discussions about understanding and managing the care, costs, and health CCS are driven by entrenched and narrow interests and outcomes for the children it is designed to serve. CCS often are not informed by updated information based on faces many of the same challenges of the larger health national research regarding family-centered care. Further care systems in California, including rapidly increasing analysis of CCS-related data could be very instructive for costs and a shortage of some types of physicians in some not only monitoring quality and performance but also areas of the state, as well as several challenges specific to highlighting what is working well in the CCS program. CCS, including an outdated administrative and financing Concerns about cost-shifting between programs that serve structure that hasn’t kept pace with changes in health care children with special health care needs continue to be delivery. The CCS program doesn’t simply need updating: raised. Increased access to information and data analysis It needs an overhaul. CCS reform must account for the may validate these concerns or provide better information current and future needs of the children who depend on how to approach cost-containment. upon it; anticipate the changing health care environment; incorporate incentives for evidence-based, family-centered Other issues. Individual stakeholders raised additional care; and acknowledge the interconnection between CCS issues that warrant further exploration: services and other public programs. Reforming the CCS program, while necessary, must be done with careful ◾◾ The income eligibility level for the CCS-only consideration of the impact on financing and care delivery program has not been adjusted since the 1970s; for all children who need special health care services, not ◾◾ There is a need to revisit eligible diagnoses as well as just those in CCS. incentives for inpatient versus outpatient procedures; The mission of CCS is sound but the system needs ◾◾ Medical advancements in cancer treatment, neonatal policymakers’ focused attention. The future requires care, and other areas translate into a rapidly growing state leadership and a dedicated group of stakeholders number of CCS children needing assistance with the willing to collaborate, innovate, and advocate on behalf of transition to adulthood; children with special health care needs. ◾◾ There is potential for cost-shifting of MTP children as state education and county CCS budgets face increasing fiscal pressures; and ◾◾ Access to durable medical equipment is becoming increasingly difficult for children in this population. 8  |  California HealthCare Foundation Author Endnotes Valerie Lewis, M.P.H., M.P.A., is a health policy consultant 1. Senate Office of Research. May 2000. California’s Ailing based in the San Francisco Bay Area. System of Caring for Children with Special Health Care Needs; Hansel, P., C. Reiffman, and Legislative Analyst’s A c k n ow l e d g m e n t s Office. 2003. Missed Opportunities for General Fund The author is indebted to the many individuals who shared Savings in the CCS Program, in Analysis of the 2003 – 04 their knowledge and perspectives on the CCS program and on Budget Bill. promising efforts in other states to serve children with special 2. 22 California Code of Regulations §§ 41800 – 41872. health care needs. The author also thanks those who provided 3. U.S. Department of Health and Human Services, Health feedback on a draft of this issue brief. Resources and Services Administration, Maternal and Child Health Bureau. 2008. The National Survey of About the F o u n d at i o n Children with Special Health Care Needs Chartbook The California HealthCare Foundation is an independent 2005 – 2006. philanthropy committed to improving the way health care 4. California Government Code § 7575 (a)(1). is delivered and financed in California. By promoting 5. U.S. Department of Education, Office for Civil Rights. innovations in care and broader access to information, our 2007. Free Appropriate Public Education for Students goal is to ensure that all Californians can get the care they With Disabilities: Requirements Under Section 504 of the need, when they need it, at a price they can afford. For more Rehabilitation Act of 1973. information, visit www.chcf.org. 6. With the exception of residents of Napa, San Mateo, Santa Barbara, Solano, and Yolo counties. 7. California Health and Safety Code §§ 123800–123995. 8. California contracts with Electronic Data Systems for provider payment. 9. DHCS MTP case data includes cases counted in other payer categories. 1 0. Excludes MTP expenditures. 1 1. California Department of Health Services, Children’s Medical Services. July 2005. California Five-Year Needs Assessment for Children with Special Health Care Needs 2006 –2010, Appendix 8. 1 2. See note 3. 1 3. See note 3. 1 4. See note 1. 1 5. Hansel, P., C. Reiffman, and Legislative Analyst’s Office. 2003. Missed Opportunities for General Fund Savings in the CCS Program, in Analysis of the 2003 – 04 Budget Bill. 1 6. See note 3. 1 7. See note 1. Assessing the California Children’s Services Program  |  9