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The Chips Are Down 

State audit finds massive problems with health program designed to help poor children

A two-year-old program designed to deliver health insurance to the children of Colorado's working poor is failing, with only a fraction of the qualified children signed up and the lion's share of the available funds being gobbled up in administrative costs, a recent audit has found.

Two-thirds of the more than 69,000 children from working poor families in Colorado are without health insurance because the state program set up to provide that service is ineffectively structured and poorly managed.

The Office of the State Auditor, which conducted the performance audit of the program from February and June, found the program to be plagued by excessive administrative costs, punitive rather than enabling eligibility criteria, needlessly complicated enrollment procedures, widespread billing errors and chronically underutilized funding.

The program, called Child Health Plan Plus (CHP+), is faring even worse in El Paso County, where a scant 1,500 of the roughly 9,200 kids eligible for assistance are getting it.

"CHP+ could be restructured and better administered to provide health insurance to all 9,500 needy kids in the county," said El Paso County Department of Health director Tisha Dowe. "As it stands now, though, this program is dropping the ball big-time."

The federal program was set up two years ago, after Congress passed a bill, sponsored by Colorado Rep. Diana DeGette, which requires all 50 states to establish health insurance programs for the children of working poor families.

DeGette's press secretary, Ed Santana, said the program was established to bridge the gap between Medicaid, a federal entitlement, and private insurance, which is unaffordable to the working poor.

The government defines working poor as a member of a family with income of up to 185 percent of the poverty level: $25,264 for a family of three, $30,477 for a family of four, making children from families earning less than these amounts eligible.

The program requires the federal government to pay $2 for every $1 spent by the state of Colorado to insure working poor kids. Colorado was allotted $42 million to help fund the first three years of the program.

Two years later, however, a significant chunk of that $42 million remains unused because CHP+ enrollment is so low, the audit found. Colorado, accordingly, will have to forfeit a projected $19.1 million of its allotment -- funds that, with proper management, could have been used to insure up to 28,000 needy kids.


Plagued with problems

The state audit uncovered other areas where the program is squandering funds, too. CHP+ administrators, for example, have been spending between 27 and 37 percent of the program's budget on administrative costs, which significantly exceeds the 10 percent limit set by federal law. In consequence, Colorado must reimburse Washington $2.9 million in administrative overruns.

Meanwhile, the program is riddled with errors on the administrative and financial sides. The audit revealed that in a three-month stretch of fiscal year 2000, CHP+ made $80,300 in overpayments to HMOs. In addition, nearly 12 percent of the children enrolled in the program were erroneously also getting benefits from Medicaid, and the state made billing errors in 21 percent of 67 family accounts examined.

Despite the severely critical findings of the audit, Barbara Ladon, the program's manager, defended her department's efforts in setting up the new program. Enrollment in Colorado, she noted, has doubled in the past two years, from 12,000 to 25,000. And their goal, she said, is to enroll every qualified child in Colorado.

But Ladon's boss, Gov. Bill Owens, was not as laissez-faire about the audit's dismal findings.

In a press conference last week, Owens conceded that "mistakes have been made" and that CHP+ has been plagued with problems since the program's inception. The high premiums, the governor said, play a role in discouraging enrollment, and too many children are being left behind.

Owens announced that he is rescinding the plan to sic the state collection agency on delinquent enrollees, that $650,000 in unpaid back payments will be forgiven, and that he will seek legislative approval to stop charging monthly premiums through the end of this year.

Instead, the governor proposed a single annual fee of $25 for single-child families, and $35 for families with more than one child.


Long overdue

The move has been widely applauded, but critics note that the audit findings left Owens no alternative. State Representatives Bob Hagedorn (D-Aurora) and Dan Grossman (D-Denver) note that Owens and his staff had long defended the user-unfriendly application of the program.

"I congratulate the governor for asking for changes in CHP+," noted Grossman in an interview this week, "but they're long overdue. The governor has had to be dragged, kicking and screaming, into a realization that CHP+ needs his support. His administration has an ideological problem with government-provided health care benefits. They feel it's not the government's place to provide health care to kids, needy or otherwise."

"Another factor at work here," added Hagedorn, "is that the three biggest programs driving the state budget are school finance, prisons and Medicaid. CHP+ applicants are screened for Medicaid eligibility first, and Owens fears that attempts to increase CHP+ participation will swell the Medicaid rolls.

"Frankly," said Hagedorn, a former Republican, "I think the Owens administration would prefer to ignore kids eligible for CHP+ if doing so would hold down the Medicaid rolls. If we truly believe in the written goals of this program -- 'achieve better service to citizens,' ... 'expedite access to medical care,' ... 'promote self-sufficiency and independent living' -- we need to find ways to make it easier to participate, not harder. We should be using all available dollars, not forfeiting them.

"If we don't do that, we're squandering a terrific opportunity to significantly assist the needy kids of Colorado."


Female cousins

The program is designed to give children access to a variety of benefits, including primary and preventative health care, prescriptions, hospital services, glasses, hearing aids and mental health services.

But growing numbers of increasingly vocal critics -- most notably Democratic members of the state legislature -- charge the program with a user-unfriendly bias that undercuts efforts in the field to enroll as many working poor kids as possible. The audit, they say, merely reinforces their concerns.

For one, Colorado is the only state that saddles participants with both premium costs and co-payments for every doctor visit. Colorado premiums, what's more, are the fifth highest in the country (up to $360 a year), and Colorado's program is the only one that doesn't provide dental benefits.

Another frequently voiced criticism is that the present structure of the program is a bureaucratic nightmare rife with unnecessary delays, paralyzing complications and poor communication between agencies and clients.

For example, the audit found basic language errors. The Spanish version of the application material, for example, translates "premium" into "prima," which means "female cousin." Applicants are warned in the Spanish forms that failure to pay their cousin could result in loss of coverage.

"The application process is unbelievably cumbersome and confusing," noted Jim Gibson, president of the Colorado Democratic Leadership Council, a Denver-based nonprofit think tank. "I took a look at one of the application forms, and I couldn't have filled it out. "I've heard from the field that enrollment red tape is as big an obstacle to participation as the high cost of premiums. Maybe that's why even 80 percent of the families who wouldn't have to pay a premium haven't enrolled."

County Health Department director Dowe also attributes chronic low enrollment to "hassle factors." She noted in a recent interview that Colorado Springs has only two HMO providers for the program.

One is Colorado Access, for whom the only participant is Community Health Centers, a nonprofit that runs 10 clinics in seven sites in El Paso, Teller and Park Counties. The other is Community Health Plan of the Rockies, for whom the sole provider for new patients is Dr. Charles Johnson.

"The system is such a bureaucratic nightmare for the doctors that they're declining to participate," Dowe said. "They don't know who's on the program and who's off; they don't get paid when they're supposed to. And some doctors are reimbursed under CHP+ only $9 to $15 a month per child, no matter how many times a month they see that child."

The program's underlying user-unfriendliness, say critics, is further exemplified by a vote of the CHP+ policy board this past June to unleash the state collection agency on families. Most of those families are barely making it as it is, and when they fall 60 days behind payments, their children get locked out of the program.


In good conscience

Jennifer Miles, associate director of the non-profit Colorado Community Health Network, said this punitive measure was causing enrollment counselors to think twice about enrolling families in CHP+.

"Can we in good conscience encourage a struggling family concerned about the cost of the premium to enroll, knowing that if they have difficulty keeping up they could be locked out and have problems with their credit later?" she asked.

The state audit subsequently revealed, what's more, that this approach would likely erode CHP+ enrollment even further. The report noted that not only are 4,800 out of 13,000 participating families (37 percent) "more than 30 days past due," but a significant number of those families weren't aware of their responsibility to pay monthly premiums.

Adding to the debacle, the audit noted that the state probably can't collect on these debts due to "a history of problems with tracking premiums accurately." The audit also found that collecting the debts would cost more money than would be gained, that collections "will increase the already high administrative costs," and that "if delinquency rates continue to be high after the rule goes into effect, it will be difficult to maintain [or increase] present enrollments."

Colorado is not the only state where the program has not been efficiently applied. This year, DeGette introduced another bill that would streamline the enrollment process and provide one uniform simplified application for both Medicaid and CHP+. The legislation would also provide more resources to educate families about the program's existence.

Though the bill has 120 co-sponsors, the Republican majority in Congress hasn't brought it forward to a vote, Santana said.

"Our goal is to cover people and not create more barriers," he said.

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