Study: Babies wrongfully lose state insurance at first birthday

Thousands of infants inadvertently lose Medicaid coverage after their first birthday because of a confusing eligibility process that occurs when the state Department of Social Services changes the way the babies are categorized, according to a report released Friday.

Families of the 1-year-olds who lose coverage can struggle to get it reinstated because DSS sends them a form that asks for information not typically required for health coverage, including documentation of assets such as life insurance policies and prepaid funeral contracts, according to the report by Connecticut Voices for Children Senior Policy Fellows Mary Alice Lee and Sharon Langer.

The problem, which occurred to more than 40 percent of babies in one coverage group, can lead a child to lose Medicaid coverage even if the rest of his or her family is still covered. Lee said some parents only learned their children had become uninsured when they went to the pediatrician or tried to fill a prescription.

“We’re very concerned about the gaps in coverage that occur at the age of 1. This is a time when babies are going in frequently for care,” she said. “It may lead these families to delay or avoid care if it’s unaffordable to them.”

DSS Director of Medical Care Administration Mark Schaefer said officials have drafted a plan to address the problems.

“We’re committed to improving this,” he said.

DSS has multiple coverage groups used to categorize people in HUSKY, the state’s Medicaid-funded health insurance program for low-income children and their parents. The coverage groups exist for administrative purposes and are required by the federal government, but they do not make a difference in the type of benefits a child or family receives. Children who no longer fit the criteria of one coverage group could still be eligible for HUSKY in another category.

From January 2008 through September 2009, 5,621 children covered through a “newborn” category lost their health insurance in the month after their first birthday, even though they could have still been eligible for coverage, according to the report. That represents more than 40 percent of the children in the newborn coverage group and more than one in five of all babies in HUSKY. Overall, 1-year-olds lost coverage at 10 times the rate of 5- and 10-year-olds.

Newborns can be placed in one of several categories, including two that are based on the family’s income and one for newborns until their first birthday. Under federal law, all children born to women who qualify for Medicaid are entitled to one year of Medicaid coverage, even if the mother loses Medicaid eligibility. Placing a child in the newborn coverage group ensures that he or she won’t lose coverage if the family is deemed ineligible at some point in the next year.

But ironically, being in that coverage group leaves babies more vulnerable to losing coverage after turning 1, Lee and Langer found: 41.6 percent of children in the newborn category were not enrolled in HUSKY–in any coverage group–in the month after their birthday, compared to just 5.8 percent of 1-year-olds in the other coverage groups.

“There are 14,000 infants in this overage group, so this is a significant problem for a lot of families,” Lee said.

The actual percentage of infants who lose coverage is likely higher than reported, she said, because the data used in the analysis does not account for those who lost coverage but later had it reinstated retroactively.

Lee and Langer pointed to problems in the transition from the newborn coverage category to others.

Around the beginning of the month of the child’s birthday, the family receives a notice that the baby’s coverage is being discontinued because “YOU ARE NOT THE RIGHT AGE TO BE ELIGIBLE FOR THIS PROGRAM.” In fact, all children under 19 are potentially eligible for HUSKY; the issue is whether DSS is categorizing them in the proper coverage group, and whether the infant’s family meets the income requirements.

Families are then sent another notice telling them that the baby has been disenrolled. For other children, DSS sends families a 4-page, pre-filled HUSKY renewal form, but the report says that DSS sends the 1-year-olds’ families a blank 8-page form used to apply for Medicaid and other public assistance programs. It asks for information that isn’t typically required for a HUSKY application, and caseworkers also sometimes require additional documentation, the report says.

“The problem may be particularly acute for babies born to undocumented mothers who are not themselves eligible for coverage and for babies whose families do not read English well enough to understand the notices,” they wrote.”

The findings are similar to a problem Lee and Langer pointed out last fall, when they reported that nearly one in six teens lose HUSKY coverage when they turn 18, even though they are eligible for coverage until age 19. For some teens, maintaining coverage requires being moved to a different coverage category, which must be done manually by a DSS worker.

Lee noted that the eligibility management system the department uses to handle enrollment in public programs is more than 20 years old.

“The manual procedures that are required to change somebody from one coverage group to another always make the person vulnerable to losing coverage,” she said.

To keep babies from wrongfully losing coverage, Lee and Langer recommended that DSS revise its notices and procedures for alerting families about potential changes when their children turn 1. When family members are also enrolled in HUSKY, they recommended, the department should have a way to continue coverage for the baby. DSS should also develop automated processes and staff training to ensure that eligible infants don’t lose coverage when they turn 1, they said.

Lee said the Covering Kids network has already begun to work with community-based providers to let them know that families could have problems after a baby’s first birthday.

Schaefer said the department’s draft plan includes changing the notice sent to families, changing the alert process and the way workers are notified of pending changes in a child’s coverage group. The department could also reach out in different ways to families and advocates to make them more aware of the process and help them provide the needed information to keep their children enrolled, he said.

“We think that we can do much better than we’ve been doing,” he said.