Expand EPSDT Participation to Obtain More Federal Funding and Improve Health Care

The state should expand participation in the Early and Periodic Screening, Diagnosis and Treatment (EPSDT) program and work with higher education and public schools to use existing funds to bring additional federal money to Texas.


Background
Texas can incre ase the health care services available to children on Medicaid and bring more federal funds to the state without spending more state or local funds. The state also can use currently unmatched state or local dollars instead of general revenue to match federal funds, thereby freeing up general revenue for other purposes.

The Early and Periodic Screening, Diagnosis and Treatment (EPSDT) program is a required benefit for Medicaid-eligible persons under the age of 21. Its purpose is to find any physical and mental defects as early in a child s life as possible and to treat, correct or reduce any discovered problems or chronic conditions.

The Omnibus Budget Reconciliation Act of 1989 (OBRA 89) strengthened EPSDT in two ways. First, all states must achieve an 80 percent participation rate by federal fiscal 1995 (the 12 months beginning October 1, 1994). Texas reached only 24 percent of its eligible children in fiscal 1989 (the last year for which federal data is available). Failure to reach the mandated goal woul d put Texas at risk of losing all federal Medicaid funding. Although most states do not take the possibility of this sanction seriously, it is in federal law and could place the state in jeopardy of losing Medicaid funds.

Secondly, OBRA 89 required any Medicaid-eligible child receiving a screening under the EPSDT program to be provided any federally allowable diagnostic and treatment services found medically necessary, regardless of whether the state includes the service i n its Medicaid plan.

These manda tes are expected to increase some types of state spending, while decreasing others. For example, requiring higher EPSDT participation and a wider range of services will increase spending, particularly for children with special needs, such as developmental disabilities and mental retardation.

If the state uses the EPSDT program to cover Medicaid-eligible children who are already receiving totally state-funded services, those services will become eligible for federal financial participation (FFP), that is a 64 percent federal match. In addition, to the extent that Texas is able to increase its EPSDT participation rates, it will avoid federal sanctions.

Some universities in other states have found a no-cost way to increase EPSDT participation rates and to expand university health care opportunities. EPSDT provides for a 75 percent match to pay for skilled professional medical personnel, such as physicia ns, health practitioners, medical social workers and other specialized personnel, such as medical administrators. A comparable match also is available to pay for support staff who assist in effective utilization of health care available under EPSDT or arrange for the availability and accessibility of EPSDT services. Outreach activities are specifically included as health-related administrative services. 1~

If public universities choose to participate, they could provide the 25 percent match to draw down 75 percent in federal funds for EPSDT outreach services. Universities could even use existing indirect cos t allocations to meet the 25 percent match requirements.

The federal funds could provide staff, such as nurses, provider liaisons and health technicians and pay for expenses, such as project materials and equipment, travel and per diem, technical assistance, reporting systems and training.

University medical schools and state-owned teaching hospitals, health science centers and community colleges would all benefit from administering the EPSDT outreach program. EPSDT participation rates would increase and university participation could offset current general revenue costs of matching EPSDT outreach program funds.

Besides colleges and universities, public schools offer another source of funding for EPSDT outreach activity. Existing state and local funds in the state s school districts could be used as match for the program.

Responsibility for administering the EPSDT program shifts from the Department of Human Services (DHS) to the Texas Department of Health (TDH) after August 31, 1993.


Recommendations
A. The Legislature should mandate that the colleges and universities develop Early and Periodic Screening, Diagnosis and Treatment (EPSDT) outreach programs and use indirect cost allocations when appropriate or other funds to match federal funds for EPSDT ou treach activities. The Legislature should require the Department of Human Services (DHS) and the Texas Department of Health (TDH) after August 31, 1993, to enter into contracts with colleges and universities to provide EPSDT outreach programs.

B. The Legi slature should mandate that DHS, and TDH after August 31, 1993, work with the Texas Education Agency and the independent school districts to use existing state and local school district funds as state match for federal EPSDT outreach dollars.

C. To achieve the savings identified in the fiscal impact table below, the Legislature should reduce TDH s appropriation for this program by the specified amount.


Implications
The state is under substantial pressure to increase EPSDT participation and faces a severe sanction the loss of all Medicaid funding if it does not meet participation requirements by 1995. Although some policy makers are skeptical that the federal government would enforce this sanction, the federal government has the legal authority to do so.

Meeting participation rates also would mean that 80 percent of Medicaid-eligible children receive preventive health care an important step toward reducing health care costs for these children over time.

Since universities and community colleges are spr ead throughout the state, frequently offer health care curricula and often have or use health care facilities, they are an excellent service delivery vehicle for EPSDT outreach activities. Given that they also have unmatched, existing indirect cost funds t hat could be used as match for this activity, they make good candidates to provide EPSDT outreach services.

School districts, because of their access to older children, also are ideal candidates for operating EPSDT outreach activities.


Fiscal Impact
The fiscal estimate below assumes that no state funds would be used to draw down federal dollars for EPSDT outreach activities beyond fiscal 1993. However, an existing match could and should be used to bring new federal dollars to Texas at a 75 percent federa l matching rate. No cap currently exists on federal dollars for the EPSDT program.

The savings below assume that universities, community colleges and school districts take over all EPSDT outreach responsibilities and use existing state and local dollars for match, offsetting general revenue dollars previously used to fund these activities. EPSDT outreach activities were funded at $12.5 million for fiscal 1993. The state share was 25 percent, or $3,125,000.

Savings to the
Fiscal General Revenue Change in
Year Fund 001 FTEs

1994 $3,125,000 0
1995 3,125,000 0
1996 3,125,000 0
1997 3,125,000 0
1998 3,125,000 0



Endnotes
1 Social Security Act, Section 1903(a)(2).