Strengthen Medical Support Enforcement In the Child Support Enforcement Program

The Legislature should strengthen medical support enforcement in the Child Support Enforcement Program.


Background
State Child Support Enforcement (CSE) programs enforce medical support orders in addition to regular child-support orders. An absent parent can provide medical support either by enrolling a child in a group health insurance plan or by paying additional sup port to cover the child s insurance premiums if the child is enrolled in the custodial parent s health plan. CSE programs are required to s eek medical support orders in all cases involving the establishment of support orders. A recent report by the U.S. General Accounting Office criticizes the federal Office of Child Support Enforcement for failing to provide direction to states in pursuing m edical support enforcement. The report also criticizes the states for failing to be proactive regarding enforcement. 1

States confront two obstacles at the federal level in enforcing medical support. The first is the Employee Retirement Income Security Act of 1974 (ERISA), which includes a provision prohibiting states from regulating self-insurance plans. ERISA plans are not subject to any state laws regarding the provision of health insurance to children of absent parents.

The second problem is inherent in the CSE program s funding structure. Provision of medical support saves federal and state Medicaid costs. However, state CSE programs receive federal funding on the basis of actual dollars collected, not avoided costs. Therefore, CSE programs have no inc entive to pursue medical support enforcement other than their own sense of responsibility.

In addition to these obstacles, states must work with insurance company policies and procedures, such as open enrollment periods and geographic limits, to secure health coverage for children.

States have taken various approaches to this problem. Some, like Washington, Oregon and Arkansas, have responded by enacting laws providing CSE programs with enforcement authority and by monitoring cases electronically for medi cal support compliance. Washington reports referring medical support information to its state Medicaid agency in 5 percent of the CSE program s Aid to Families with Dependent Children (AFDC) caseload; Arkansas has reported referrals in 8.9 percent of all cases. Washington attributed $3.7 million in Medicaid savings to medical support enforcement in 1990. 2

However, many other states have done little work with medical support enforcement, often because they are already overwhelmed by the work of enforcing regular support payments. 3

Texas faces a special challenge in enforcing medical support because its Medicaid and CSE programs are housed in different agencies, unlike most states. Texas has enacted most of the legislation necessary to pursue medical support; the main stumbling block to efficient enforcement has been the lack of automated processes using electronic information transfers to systematically monitor and enforce medical support compliance. 4

In Texas, medical support enforcement consists of a se ries of information exchanges between the CSE program and the Medicaid Third Party Recovery (MTPR) office. Currently, this office resides in the Texas Department of Human Services (DHS), but will move to the Texas Department of Health on September 1, 1993.

First, the CSE program sends a data tape containing case information on CSE wage-withholding cases to DHS on a quarterly basis. The MTPR office matches this tape against its claims information. Then, it surveys all employers identified on the tape as em ploying absent parents whose children have received Medicaid coverage. The survey asks employers whether they make any group health insurance available to the employee, and if so, if the employee has enrolled his or her children who are due coverage.

Employers respond in one of four ways. If they indicate that the children are actually covered, DHS pursues Medicaid cost recovery from the insurance company. According to a 1989 audit, coverage exists in about 18 percent of these cases. 5

If the employer re sponds that coverage is available but that the employee has not enrolled the children, DHS sends the survey information back to the CSE program. (The information is sent on paper rather than by automated exchange.) About 24 percent of surveyed employers in dicate that they provide group coverage but that the employee has not enrolled his or her children. 6

The other two possibilities are that the employer does not provide group coverage or that the employer cannot identify the absent parent.

When informati on on absent parents who are not providing coverage is sent to the CSE office, it is forwarded to the child-support field offices, where caseworkers are responsible for following up by contacting employers and securing the support. Caseworkers are supposed to report back to DHS when they have succeeded in securing insurance for an absent parent s children.

Securing medical support can be a time-consuming process. Caseworkers may defer pursuing medical support in one child-support case in favor of performing other child-support activities affecting more cases. Caseworkers who do pursue medical support may be unsuccessful in securing it; even when they do secure medical support, they may neglect to report the information back to DHS. 7

The Texas Family Code requires employers to cooperate with the CSE program in enforcing medical support orders. The law specifies a penalty of not more than $50 for employers who fail to cooperate. The penalty is not specified in the section of the code ad dressing medical support, but is named in the section addressing wage withholding. Attorneys at the Attorney General s office indicate that the law is not clear and that enforcement remedies are not clearly specified in the relevant statute. 8

Texas will move away from a caseworker system toward even more specialization because of the new automated system design. However, medical support enforcement will still occur in field offices. It could be more efficient to centralize medical support enfor cement in one unit as some other states have done.

The essentially manual process for identifying the availability of group insurance takes months. Absent parents easily can have left the employer being surveyed long before coverage is identified.

Besides losing valuable time recovering Medicaid costs, the current medical support enforcement system wastes caseworker time. This not only costs the state the expense of caseworkers time, but also reduces the time available to work other cases, thereby decreasing collections.

Since 1985, Ca lifornia has required insurance companies to participate in data matches with the state Medicaid program, Medi-Cal. The insurance companies match their files against files containing the social security numbers of current and former Medi-Cal recipients. Th ey report to the state Medicaid agency the presence of coverage in the cases so that Medi-Cal can pursue third-party reimbursement and avoid future Medicaid expenditures.


Recommendations
A. Texas should centralize medical support enforcement activities in one unit, located in the state Child Support Enforcement (CSE) office.

Workers in field offices should not have the responsibility of pursuing medical support enforcement. Instead, one specialized team should handle all medical support enforcement activities.

B. The medical support enforcement referral system should be completely automated.

The new child support automated system, TEXCSES, scheduled to be installed in March of 1994, will contain an interface with the DHS system; this interface can b e used to exchange information electronically about the existence of health coverage in CSE cases.

C. The Legislature should raise the amount employers may be penalized for failure to cooperate in medical support enforcement to $200 per case.

This penalty should be stated in Section 14.061 of the Texas Family Code, the section of the code relating to medical support enforcement.

D. The Legislature should require insurance companies to participate in data matches with the Medicaid Third Party Recovery Program at Texas Department of Human Services (DHS). The Legislature should use California s statute as model legislation.

E. The Legislature should require state-regulated insurance companies to consider the establishment of a wage withholding order for child support to be the same as the birth or adoption of a child for enrollment purposes.

This should not be construed to affect regulations concerning coverage of pre-existing conditions.

F. The Legislature should direct the Attorney General to take action to improve medical support enforcement.

The Attorney General s office of intergovernmental relations should produce a report for the Texas Congressional delegation stating Texas need for changes in federal policies regarding medical support enforcement.

The Attorney General should develop a policy for enforcing existing medical support enforcement laws. The Legislature should direct the Attorney General to specifically mention the penalty for failure to comply with a medical support order in corr espondence with employers and to develop an agency policy for enforcing the penalty.

The Legislature should direct the Attorney General to develop a methodology for estimating cost savings to the state of improved medical support enforcement.

G. To achieve the savings indicated in the fiscal impact table, appropriations for Medicaid expenditures must be reduced accordingly.


Implications
Improving medical support enforcement would give children of absent parents improved access to health care while saving the state millions of dollars in Medicaid expenses.

Texas can take a proactive role in improving medical support enforcement in the state; however, only changes at the federal level will completely solve the issue.

Fiscal Impact
Based on the Health Care Financing Administration s review of Texas Medicaid program, Texas should be able to enforce medical support in at least 2 percent of the CSE program s AFDC caseload. Washington and Arkansas both enforce medical support in at least 5 percent of their respective CSE AFDC caseloads.

Enforcing medical support in 2 percent of the CSE AFDC caseload would net the state $3.3 million in recovered Medicaid expenditures for the biennium, and $11.6 million over five years.


Gross Savings to Net Savings to
Fiscal General Revenue Administrative General Revenue Change in
Year Fund 001 Costs Fund 001 FTEs

1994 $1,168,000 $234,000 $ 934,000 0
1995 2,584,000 258,000 2,326,000 0
1996 2,832,000 283,000 2,549,000 0
1997 3,080,000 308,000 2,772,000 0
1998 3,328,000 333,000 2,995,000 0



Endnotes
1 U.S. General Accounting Office, Medicaid: Ensuring That Noncustodial Parents Provide Health Insurance Can Save Costs (Washington, D.C.: U.S. Government Printing Office) June 1992.
2 Ibid.
3 Bee Moorhead, State Survey of Innovative Child Support Enforcement Practices (The University of Texas at Austin, September 1992). (Draft).
4 Interviews with Terry Cottrell, Director, Medicaid Third Party Recovery, Texas Department of Human Services, Austin, Texas, October 27, 1992.
5 James Oge, Health Care Financing Administration (HCFA), Dallas Region, Medicaid Oversight Report, Texas Medicaid Program, Third Party Liability-Medical Support Enforcement (Austin, Texas, August 1989).
6 Ibid.
7 Interview with Terry Cottrell, October 27, 1992.
8 Interviews with staff attorneys, Office of the Attorney General, Child Support Enforcement Division, Austin, Texas, November 1992.