Children’s Health Insurance Program

In 1997, a significant milestone was established in health care delivery for children in the United States of America. The United States Congress made a special provision in the Balanced Budget Act of 1997. The Act established the State Children Health Insurance Program (CHIP), which is Title XXI of the Social Security Act.

Texas Medicaid and Children's Health Insurance Program (CHIP) change in response to legislative requirements at the state and federal levels. This appendix provides a brief legislative history of Medicaid and CHIP, including highlights of key federal and state legislation by topic.

Medicaid Founding Legislation
In 1965, the Social Security Act (SSA) of 1935 was amended to add Title XIX, which created Medicaid as a state-administered health care program, jointly funded by the federal government. The SSA was further amended in 1967 to mandate inclusion of the Early and Periodic Screening, Diagnosis and Treatment (EPSDT) program for children in Medicaid, and again in 1972 to allow states to cover care for children and youth in inpatient psychiatric care. In 1977, the Centers for Medicare and Medicaid (CMS) was created to oversee and manage Medicare, Medicaid and CHIP programs.
The SSA dictated the principles that state Medicaid programs must fulfill, including: • Section 1902(a)(1): required that state Medicaid programs be in effect "in all political subdivisions of the state." • Section 1902(a)(10): required that state Medicaid programs provide services to people that are comparable in amount, duration and scope. • Section 1902(a)(23): required that state Medicaid programs ensure that clients have the freedom to choose any qualified provider to deliver a covered service.
Also included within the SSA are sections that allowed states to waive various Medicaid requirements and implement different service delivery models, eligibility criteria and benefits: • Section 1115(a): allowed states to waive provisions of Medicaid law to test new concepts consistent with the goals of the Medicaid program. System-wide changes are possible under this provision. Waivers must be approved by CMS. • Section 1903(m): allowed state Medicaid programs to develop risk contracts with managed care organizations (MCOs) or comparable entities. • Section 1915(b): allowed states to waive freedom of choice. States may require that beneficiaries enroll in MCOs or other programs. Waivers must be approved by CMS. • Section 1915(c): allowed states to waive various Medicaid requirements to establish alternative, community-based services for individuals who qualify to receive services in an intermediate care facility for individuals with an intellectual disability or related condition (ICF/IID), nursing facility, institution for mental disease, or inpatient hospital. Waivers must be approved by CMS. • Section 1915(i): allowed states to offer a variety of services under a state plan Home and Community-based Services (HCBS) benefit. Individuals must meet state-defined criteria based on need and typically get a combination of acute-care medical services and long-term services in home and community-based settings. • Section 1929: allowed states to provide a broad range of home and community-based care to individuals with functional disabilities, as an optional state plan benefit. In all states but Texas, the option can serve only people age 65 and older.
In Texas, individuals of any age may qualify to receive personal care services through Section 1929 if they meet the state's functional disability test and financial eligibility criteria.

Program Reforms and Expansions
Federal and state laws also determine which populations are eligible for Medicaid and what Medicaid covers. Federal and state legislation have reformed and expanded the program over time-adjusting program eligibility criteria, as well as the type, amount, duration and scope of services provided through Medicaid.

Federal Legislation
Historically, all Medicaid clients either had Supplemental Security Income (SSI) or welfare. Beginning in the 1980s, several federal laws were passed that expanded Medicaid coverage to populations ineligible for SSI or Temporary Assistance for Needy Families (TANF) and, eventually, de-linked financial assistance from Medicaid eligibility. A few of these federal laws are highlighted below: The Omnibus Budget Reconciliation Act of 1986 (OBRA of 1986): • Mandated states cover emergency care services, including labor and delivery, for undocumented immigrants and required them to cover homeless people. • Allowed states to cover infants and pregnant women under 100 percent of the federal poverty level (FPL); to create a phase-in for children age 4 and younger under 100 percent of the FPL; and to cover prenatal care while a Medicaid application is pending, along with guaranteed coverage for the full term of pregnancy and postpartum care. States may waive asset tests for this group.

The Omnibus Budget Reconciliation Act of 1987 (OBRA of 1987):
• Required states to extend coverage to children age 6 and younger born after September 30, 1983, whose families meet TANF financial standards-even if the family does not qualify for TANF. Extension through age 7 is at the state's option.
• Allowed states to cover infants age 1 and younger and pregnant women under 185 percent of the FPL, with immediate coverage (no phase-in) for children age 4 and younger under 100 percent of the FPL. • Mandated sweeping changes in nursing facility standards, including the creation of the Preadmission Screening and Resident Review process-a requirement that all current and prospective nursing facility clients be screened for mental illness, intellectual disability or related conditions.

The Medicare Catastrophic Coverage Act of 1988:
• Expanded Medicaid coverage for infants, young children and pregnant women.
• Provided phased-in coverage of infants through their first birthday and pregnant women under 100 percent of the FPL. • Required more comprehensive coverage of hospital services for infants, and expanded payments for hospital services for infants in all hospitals and for children age 5 and younger in disproportionate share hospitals. • Amended eligibility criteria and services provided to dually eligible Medicare clients-including providing phased-in coverage of out-of-pocket costs (premiums, deductibles and co-insurance) for Qualified Medicare Beneficiaries under 100 percent of the FPL and establishing minimum standards for income and asset protection for spouses of Medicaid clients in nursing homes. The BBA was later amended by the Balanced Budget Refinement Act (BBRA) of 1999, which provided approximately $17 billion in "BBA relief" over five years. The BBRA also extended the phaseout of cost-based reimbursement for Federally Qualified Health Centers (FQHCs) and rural health clinics (RHCs), and changed Medicaid Disproportionate Share Hospital (DSH) payments and rules. It also prohibited states from using CHIP federal funds for DSH.

The Affordable Care Act (ACA) of 2010:
Made several important changes to the health care system in the U.S., including: • Prohibiting coverage denials based on a pre-existing condition.
• Allowing children to remain on their parent's health plan until age 26.
• Requiring persons to have health insurance or pay a penalty; however, the Tax Cut and Jobs Act of 2017 eliminated this penalty starting in 2019. • Requiring states to establish health insurance marketplaces or refer people to the federally facilitated marketplace to assist individuals and small employers in accessing health insurance. Texas currently utilizes the federally facilitated marketplace. • Mandating states modify their Medicaid and CHIP programs, including their state plans and financial eligibility criteria. • Giving states the option to expand Medicaid eligibility up through 133 percent of the FPL for individuals age 64 and younger, with federal funds paying 100 percent for the first three calendar years of the expansion. Effective in 2017, the federal matching rate decreased gradually each year. From 2020 onward, the matching rate will be 90 percent. Texas has not expanded Medicaid eligibility to this optional adult group.
Additionally, in anticipation that the uninsured population would decrease following Medicaid expansions and the implementation of the state health insurance marketplaces, the ACA intended to decrease DSH allotments. Since 2010, various pieces of legislation have delayed the implementation of DSH funding cuts under the ACA and changed the amounts of the reductions. Currently, the Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 has delayed the reductions in DSH allotments until December 1, 2020, and has reduced the amount of the reduction scheduled for fiscal year 2021 (see Chapter 4, page 88).
The ACA also made changes to the federal drug rebate program created under OBRA of 1990-increasing the minimum federal rebate percentages that drug manufacturers are required to pay to participate in the Medicaid program, and also expanding the rebate program to cover claims paid by Medicaid MCOs (see page 109).

State Legislation
Senate Bill (S.B.) 11, 85th Legislature, Regular Session, 2017: • Required the Department of Family and Protective Services (DFPS) to ensure that children who are taken into state conservatorship receive an initial medical exam within three business days, if they are removed from their home as the result of: ▫ Sexual abuse, physical abuse or an obvious physical injury.
▫ A chronic medical condition, a medically complex condition or a diagnosed mental illness. • Prohibited a physician or other health care provider from administering a vaccination as part of the required exam-except for an emergency tetanus vaccinationwithout parental consent and until DFPS has been named managing conservator. • Required DFPS to ensure that any child who enters state conservatorship receives any necessary emergency medical care as soon as possible.
House Bill (H.B.) 2466, 85th Legislature, Regular Session, 2017: • Required Medicaid and CHIP to cover a maternal depression screening for mothers of children who are eligible for Medicaid. This screening occurs during the covered well-child visit, which takes place before the child's first birthday. OBRA of 1990 was later amended under the DRA of 2005, which extended the rebate program to outpatient drugs administered in a physician's office or another outpatient facility.

Federal Legislation
The ACA also made changes by increasing the minimum federal rebate percentages that drug manufacturers are required to pay in order to participate in the Medicaid program, and by expanding the rebate program to cover claims paid by Medicaid MCOs. The federal government keeps 100 percent of the increased rebate amount.
The Vendor Drug Program (VDP) manages the federal manufacturer drug rebate program and collects rebates for medications-that are dispensed by pharmacies and administered by physicians-to people enrolled in fee-for-service (FFS) and managed care. Texas negotiates additional state rebates for preferred drugs. The Health and Human Services Commission (HHSC) also collects rebates for drugs provided to people enrolled in CHIP and three state health programs, including Healthy Texas Women (HTW).

Economic and Public Health Crises
Since Medicaid primarily serves low-income individuals, a rise in unemployment can result in an increase in the number of people eligible for Medicaid. During the 2008 economic recession, for example, the rise in unemployment-and subsequent federal legislation passed to meet the crisis-caused sudden growth in Medicaid enrollment.
Similarly, the recent public health crisis caused by the novel coronavirus  pandemic spurred federal legislation to address an economic recession and assist state and local governments, which included changes to the Medicaid and CHIP programs. ARRA also included reforms and financial incentives for health care technology under the Health Information Technology for Economic and Clinical Health (HITECH) Act (see page 115).

The Families First Coronavirus Response Act (FFCRA) of 2020:
• Required private and public health insurers-including Medicare, Medicaid and CHIP-to provide coverage for COVID-19 testing. • Temporarily increased the Medicaid FMAP by 6.2 percentage points from January 1, 2020, throughout the duration of the emergency period. Because this period could be extended, the FY21 FMAP should not be considered final. As a condition of receiving the increased FMAP, states were required to maintain eligibility and services for any Medicaid recipients eligible as of March 18, 2020. • Provided paid emergency sick leave and family medical leave for individuals and families impacted by the public health emergency.
The FFCRA has been extended through January 21, 2021.

Federal Legislation and Policy
The Americans with Disabilities Act (ADA) of 1990: • Prohibited discrimination based on disability in the areas of employment; public services provided by state and local governments; and public services operated by private entities, transportation and telecommunications.

The Ticket to Work and Work Incentives Improvement Act (TWWIIA) of 1999:
• Expanded the eligibility options and funding for Medicaid Buy-in programs for individuals age 16 through age 64. • Extended Medicare coverage for disabled individuals returning to work. • Created the Ticket to Work Program, which enables SSI and Social Security Disability Insurance (SSDI) recipients to obtain employment services from both private and public providers. • Allowed state supported living centers (SSLCs) to provide certain non-residential Medicaid services to support individuals with IDD and directed HHSC to establish reimbursement rates for SSLCs for these services.

Home and Community-based Services and Promoting Independence
The 1999 Supreme Court decision, Olmstead v. L.C., determined that individuals with intellectual disabilities or serious mental illnesses have the right to live in community-based settings rather than in institutions. The ruling mandated that publicly run programs provide the option for community-based services to individuals with disabilities, when such services are appropriate and can be reasonably accommodated. In response to the Olmstead decision and other federal policy priorities, Texas Medicaid has expanded coverage for a broad range of LTSS.
The These settings must provide full access to the greater community, opportunities to work in integrated settings, and opportunities for individuals to control their schedules and activities.
They must also ensure individual rights to privacy, dignity and respect, and freedom from coercion and restraint-and allow for choice regarding services and who provides them.

Federal Legislation
The Paul Wellstone and Pete Domenici Mental Health Parity and Addition Equity Act (MHPAEA) of 2008: • Required group health plans, that offer behavioral health benefits, to provide those services at parity with medical and surgical benefits. This does not impact FFS, but does apply to Medicaid and CHIP managed care programs.

The Substance Use Disorder Prevention That Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act of 2018:
• Directed funding to federal agencies and states to increase access to addiction treatment and to take mitigating steps, such as preventing over-prescribing opioids. • Required Medicaid to report on adult behavioral health outcome measures, expand drug utilization reviews, share data between Medicaid and the state's prescription drug monitoring databases, expand the "qualified practitioners" who can prescribe buprenorphine for opioid treatment, and ensure health insurance coverage continuity for former foster youth to age 26 in any state they reside. • Required HHSC to develop performance metrics to increase accountability of MCOs for members with severe mental illness (SMI). These metrics must include integrated care, jail and emergency department diversion, post-release linkage to care, homelessness reduction, supportive housing, and medication adherence. • Required HHSC to improve outcomes, care integration and enhanced cost control -against an established baseline for members with SMI-and report to the Legislative Budget Board (LBB) and the governor by November 1, 2018, detailing HHSC's performance metrics on providing services to members with SMI. If cost effective, Rider 45 mandates the development and procurement of a managed care program, in at least one service delivery area, to serve members with SMI. After conducting extensive research and data analysis on the rider's specific outcomes related to SMI, HHSC did not procure a managed care program for SMI population. Per the rider, a report was submitted outlining the results of the research and data analysis to the Legislature.

Federal Legislation
The Health Insurance Portability and Accountability Act (HIPAA) of 1996: • Mandated that all health plans, health care clearinghouses and health care providers must protect all individually identifiable health information that is held or transmitted by a covered entity or business associate. Protected health information includes digital, paper and oral information. • Required standardized electronic exchange of administrative and financial health services information for all health plans, including Medicaid. All health care organizations must implement secure electronic access to health data and remain in compliance with privacy regulations set by the U.S. Department of Health and Human Services. • Implemented the National Provider Identifier (NPI) system-in which each health care entity, including individuals, employers, health plans and health care providers-must have a unique 10-digit NPI number.

The Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009:
• Incentivized providers to adopt and meaningfully use electronic health records (EHRs) and advance health information exchange (HIE) systems. The EHR incentive program is set to end in 2021. • Established health information exchange and data breach notification rules that build upon HIPAA privacy and security regulations. States that choose to expand their Medicaid programs are required to provide all mandatory benefits and all optional services covered under their Medicaid state plan, and they must follow the Medicaid cost-sharing rules. States that choose to implement a separate program have more flexibility. Within federal guidelines, they may determine their own SCHIP benefit packages.

State Legislation
Texas originally opted to expand Medicaid eligibility using SCHIP funds. In July 1998, Texas implemented Phase I of SCHIP, providing Medicaid to children age 15 through age 17 whose family income was under 100 percent of the federal poverty level (FPL). Phase I of SCHIP operated from July 1998 through September 2002. The program was phased out as Medicaid expanded to cover those children. Texas CHIP was designed and operates as a separate child health program. Texas elected secretary-approved coverage for CHIP.

Federal Legislation
The Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000: • Texas has implemented additional changes in accordance with CHIPRA guidance-including applying certain Medicaid managed care safeguards to CHIP, expanding dental services, and implementing mental health parity in CHIP.

Children's Health Insurance Program Reauthorization Act (CHIPRA) of 2018:
• Reauthorized CHIP funding through FFY 2027. The reauthorization legislation also extended the MOE provision, but phased out the associated super-enhanced federal match rate. In FFY 2020, the 23 percent bump reduced to 11.5 percentage points, and in FFY 2021, the match will return to the standard CHIP enhanced rate.
Federal funding for CHIP lapsed from October 2017 through February 2018. While some states received additional grant funding from the Centers for Medicare and Medicaid (CMS), Texas continued to fund CHIP using fiscal year 2017 carry-over funds.

The Substance Use Disorder Prevention That Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act of 2018:
• Required mental health and substance use disorder (SUD) services to be included as a category for basic services in CHIP (Section 5022). These services include inpatient and outpatient services, psychosocial rehabilitation, and crisis stabilization.

State Legislation
The 2006 Required HHSC to create an incentive program that allows MCOs to increase the percentage of default enrollment clients they receive based on quality, efficiency and effectiveness, and performance metrics.

H.B. 4533
Required HHSC to implement a pilot program for individuals with intellectual and developmental disabilities (IDD), traumatic brain injury, and similar functional needs in STAR+PLUS. Established new timelines and processes for transitioning IDD long-term services and supports (LTSS) into managed care.

H.B. 1576
Required HHSC to add non-emergency transportation services to managed care for coordination by the MCO.
Nonmedical transportation services, which are a subset of demand response transportation services, will be provided for certain trips requested with less than 48-hour notice.
S.B. 750 HHSC must assess the feasibility of providing services in the Healthy Texas Women (HTW) program though managed care (see Maternal Health, page 121, for additional legislation related to managed care).

H.B. 253
Required HHSC to develop a postpartum depression strategic plan.

S.B. 750
Required HHSC to apply for federal funds to implement a model of care to improve the quality and accessibility of care for pregnant women with opioid use disorder. In December 2019, CMS awarded HHSC funding under the Maternal Opioid Misuse (MOM) Model.
Required HHSC to develop a postpartum depression treatment network.
Required HHSC to collaborate with MCOs to develop and implement cost-effective, evidence-based and enhanced prenatal services for high-risk pregnant women covered under Medicaid.
HHSC must also assess the feasibility of providing services in the HTW program though managed care, and implement policies to improve the quality of maternal health in managed care.
Required HHSC to develop an enhanced, cost-effective and limited postpartum care services package in HTW, and to implement strategies to ensure continuity of care for women transitioning from Medicaid to the HTW program.

S.B. 748
Established two separate pilot programs for pregnant women. One will provide services to pregnant women through a pregnancy medical home, while the other will provide prenatal and postpartum services through telemedicine and telehealth.
Required a variety of program evaluations related to maternal health.

S.B. 1096
Required HHSC to make changes to pharmacy benefit requirements for the Medicaid STAR Kids population. Specifically, S.B. 1096 removes all Preferred Drug List (PDL) prior authorizations (PAs) and requires coverage of any drug without PA-including those produced by a manufacturer that has not entered into a federal rebate agreement with CMS. HHSC requires CMS approval prior to implementing changes (see STAR Kids, MDCP and STAR Health, page 122, for other drug-related PA legislation).

S.B. 1780
Allowed HHSC to enter into a value-based arrangement with a prescription drug manufacturer.

S.B. 1207
Required HHSC to establish time-frame guidelines for MCOs to issue decisions on PA requests, which must be published on MCO websites.
Required HHSC to establish a uniform process and timeline for MCOs that receive an insufficient or inadequate PA request.
Allowed a physician to discuss a PA request with another physician, who has a similar professional specialty, before a decision about the PA is determined.
Required providers and members to receive a detailed notice when there is insufficient documentation for a PA request.

H.B. 3041
Required MCOs to publish information about submitting a PA and the process for communicating with the MCO about a PA request on their website.
Required HHSC to allow, if practicable, renewal of a PA within 60 days of expiration for managed care and FFS.

H.B. 4533
Required HHSC to phase out use of the Texas Provider Identifier (TPI) and switch to only using the National Provider Identifier (NPI) in order to identify providers.

S.B. 1991
Allowed service providers to utilize their own proprietary electronic visit verification (EVV) system and to be reimbursed by MCOs.
Required HHSC to adopt rules that amend the MCO payment recovery and recoupment efforts process.

S.B. 1207
Directed, for MDCP only, that the MCOs implement measures to ensure STAR Kids service coordinators provide results of the STAR Kids Screening Assessment Instrument (SK-SAI) to the child's parent or legally authorized representative (LAR). The legislation also required MCOs to offer an opportunity for a peer-to-peer with a physician whom the member chooses.
In addition, HHSC must: 1. Streamline the SK-SAI and reassessment process. 2. Create guidelines for providing wraparound services when a child has private insurance coverage.

Create a Medicaid escalation helpline for individuals in MDCP and with Deaf
Blind with Multiple Disabilities (DBMD) waivers. 4. Allow a child denied MDCP the option to: (a) be placed at the top (first position) of the MDCP interest list in order to receive a new assessment from a different MCO, or (b) join another waiver interest list in a position based on the date the child was first placed on the MDCP interest list.

S.B. 1096
Limited the ability of MCOs in the STAR Kids program to impose drug-related prior authorizations.

H.B. 4533
Required HHSC to expand the availability of the Consumer Directed Services (CDS) option in the MDCP waiver program.

H.B. 72
Directed HHSC to change managed care enrollment rules for children and young adults in the Adoption Assistance (AA) and Permanency Care Assistance (PCA) programs. Beginning September 1, 2020, as children transition from foster care to AA or PCA, they will remain in STAR Health for an additional two months to improve continuity of care. Certain AA and PCA children with disabilities have a choice between enrolling in STAR Kids or staying in STAR Health.

H.B. 1063
Expanded home telemonitoring to pediatric patients who have been diagnosed with end-stage solid organ disease; have received an organ transplant; or require mechanical ventilation.
Directed HHSC to assess whether telemedicine, telehealth and home telemonitoring services are cost-effective for the Medicaid program in its biennial report on telemedicine, telehealth and home telemonitoring services.

S.B. 748
Established a pilot program that provides prenatal and postpartum services through telemedicine and telehealth (see Maternal Health, page 121, for additional telehealth-related legislation).

S.B. 670
Removed the requirement for a health professional to be present with a client during a school-based telemedicine service.
Required HHSC to ensure MCOs meet specified requirements for reimbursing telemedicine and telehealth services and promoting patient-centered medical homes.
Granted Medicaid MCOs greater flexibility in determining which covered services to reimburse as telemedicine or telehealth services, but prohibited MCOs from denying coverage solely because the service was delivered remotely.
Authorized HHSC to allow Federally Qualified Health Centers (FQHCs) to be telemedicine distant and patient site providers, contingent on appropriations.

Legislative Impacts on Caseload
Enrollment in Texas Medicaid and the Children's Health Insurance Program (CHIP) can change in response to legislative requirements at the federal and state level. The figure below illustrates Texas Medicaid enrollment trends in response to legislative actions described throughout this appendix. S e p -8 1 S e p -8 3 S e p -8 5 S e p -8 7 S e p -8 9 S e p -9 1 S e p -9 3 S e p -9 5 S e p -9 7 S e p -9 9 S e p -0 1 S e p -0 3 S e p -0 5 S e p -0 7 S e p -0 9 S e p -1 1 S e p -1 3 S e p -1 5 S e p -1 7 S e p -1 9

Recipient Months
Medicaid eligibility was historically linked to receiving financial assistance. In the 1980s, several federal laws were passed that extended coverage to populations ineligible for financial assistance programs. This expansion-to include a greater number of people with disabilities, children, pregnant women and older individuals-fueled the growth of the Medicaid program.

Appendix B
Texas Medicaid and CHIP services

Mandatory and Optional Services
The Social Security Act specifies a set of benefits that state Medicaid programs must provide and a set of optional benefits that states may choose to provide. A state may choose to provide some, all or no optional services specified under federal law. Some optional services that Texas chooses to provide are available only to clients (a) age 20 and younger, or (b) age 20 and younger or age 65 and older and who are in an institution for mental disease. If the client is age 20 and younger, all federally allowable and medically necessary services must be provided.

Demographics
The number of Texas Medicaid and Children's Health Insurance Program (CHIP) clients can be expressed as a monthly average count or an annual unduplicated count. The monthly average count is the average number of clients on Medicaid or CHIP per month. The unduplicated count is the total number of individual Texans who received Medicaid or CHIP services over a period of time. In 2019, the monthly average count for Medicaid was 3,915,000 clients, and the monthly average count for CHIP was 408,000 clients.
In 2019, about 25 percent of Texas Medicaid clients were recipients due to age and disability-related reasons, 7 percent of clients were non-disabled adults, and 68 percent were non-disabled children. CHIP covers children, birth through age 18, who are not eligible for Medicaid due to income, but cannot afford private health insurance.
The following figures breakdown the total statistics for unduplicated clients, who received Medicaid or CHIP in 2019, by age group and ethnicity. As previously indicated, most Medicaid clients in any given year are children. In addition, Hispanics accounted for the largest portion of Medicaid clients, comprising 49 percent of the population. Meanwhile, 24 percent of CHIP clients were age 5 and younger, 56 percent were age 6 through age 14, and 20 percent were age 15 through age 18.