Pursuant to a congressional request, GAO reviewed the Health Care Financing Administration's (HCFA) and the states' efforts to implement safeguards to protect children with disabilities who are enrolled in Medicaid managed care programs, focusing on the: (1) implications of the Balanced Budget Act of 1997 (BBA) provisions defining this population; (2) number of states enrolling children with special needs in capitated health plans; and (3) steps HCFA has taken to establish appropriate safeguards for this population.

GAO noted that: (1) the BBA definition of children with special needs does not cover some children in Medicaid whose health conditions could merit recognition as exceptional; (2) some children qualify for Medicaid because of high medical expenses but were not included in the BBA definition; (3) other children who qualify for Medicaid simply because of low income may also have disabilities or chronic conditions whose treatment in a managed care setting deserves to be more closely monitored; (4) even though the five categories used by the BBA include many children acknowledged as having special needs, those needs can vary considerably; (5) the lack of a homogeneous special needs population requires determining how best to apply certain safeguards, such as access to specialists and care coordination of the medical and social services delivered by various providers; (6) state Medicaid agencies often cannot readily identify some categories of children covered by the BBA definition and served by other programs such as title V and foster care; (7) improved coordination between state Medicaid agencies and other federal and state agencies that administer these programs would help resolve this problem; (8) nationwide data on the number of states with children with special needs in capitated managed care plans are available for only two of the five BBA categories of children with special needs--Supplemental Security Income and foster care; (9) HCFA is unable to determine the number of BBA-defined children with special needs who are enrolled in capitated Medicaid plans; (10) HCFA has not traditionally required separate identification or tracking of all of the BBA categories of children with special needs; (11) HCFA is taking steps to address these data limitations; (12) in June 1999, HCFA began applying mandatory interim criteria to review state waiver requests that require the enrollment of children with special needs in capitated managed care plans; (13) the interim criteria include some generic safeguards that emerged from these earlier efforts as well as some that are specific to children with special needs; (14) several safeguards HCFA identified in earlier efforts were not included in the interim criteria, which also did not specifically address the need to collect individual-level data to monitor the delivery of services or to adopt criteria for the approval of medical services that maintain rather than improve a person's functioning; and (15) HCFA has indicated the interim criteria will be revised to become more focused and rigorous as the agency learns more about best practices by states.

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