It is indeed fitting – with the holidays focused on children and giving – that HHS Secretary Kathleen Sebelius awarded more than $72 million in bonus payments last week to nine states for their success in enrolling low-income children in Medicaid. Like little kids during the holidays, we have awaited the announcement of these performance bonuses with excitement and gleeful anticipation. Drum roll, please…..Alaska, Illinois, Louisiana, Michigan, New Jersey, New Mexico, Oregon and Washington earned bonuses ranging from $1.5 to $9.1 million but Alabama is the big winner earning more than half ($39 million) of the total award.
The performance bonus is one of the new tools and options created through the Children’s Health Insurance Reauthorization Act (CHIPRA). It give states a financial incentive to meet specific Medicaid enrollment targets if they also adopt at least 5 of 8 enrollment and retention simplification strategies such as 12-month continuous eligibility and streamlined administrative renewals.
States qualifying for the bonus receive payments equal to 15% of the annual cost of Medicaid services for the number of children enrolled above the target enrollment. To meet the target, a state’s average monthly Medicaid enrollment for children in federal fiscal year 2009 (FFY 09) had to be approximately 8% above the average enrollment in FFY 07 with adjustments for any change (positive or negative) in the child population.
The significantly larger award was granted to Alabama because it was the only state to qualify for the higher “tier 2” bonus level. A state qualifies for the tier 2 bonus if the average number of enrollees exceeds the base (tier 1) enrollment target by 10%. At the tier 2 level, states receive a bonus equal to a joyful 62.5% of their share of Medicaid costs for the average number of children enrolled above the tier 2 target. For Alabama, this reduces the state’s share of Medicaid for children enrolled above the tier 2 target to less than 9%.
In announcing the awards, the Center for Medicaid and State Operations within CMS issued a State Official Letter (SHO) explaining the performance bonus calculations and describing the eight enrollment and retention strategies. This was the tenth in a series of SHO letters, which provide guidance to the states in implementing the provisions of CHIPRA. The public announcement of the bonuses also coincided with the re-launch of “Insure Kids Now” as a more robust website focused on Medicaid and CHIP including state specific program information.
We send our congratulations to the State Medicaid and CHIP agencies in the nine performance bonus states for a job well done and our wishes to all for a holiday season filled with warmth and laughter.
