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Journal Issue: U.S. Health Care for Children Volume 2 Number 2 Winter 1992

The Role of Medicaid and Other Government Programs in Providing Medical Care for Children and Pregnant Women
Ian T. Hill

Medicaid and Its New Role as the Primary Vehicle for Expanding Care for Pregnant Women

By 1985, the research literature had demonstrated that lack of health insurance was an important barrier to prenatal care for low-income women.16 Yet the Medicaid program no longer held the capacity to provide appropriately for these populations because of a steady erosion in eligibility limits, which were tied to income eligibility thresholds for AFDC programs.17 In response to this problem, the Omnibus Budget Reconciliation Act of 1986 (OBRA-86) allowed states the flexibility to sever the traditional links between Medicaid and AFDC and to establish special income eligibility thresholds above those established for their AFDC programs that could be as high as the federal poverty level for pregnant women, infants, and children up to the age of 5.

In subsequent years, eligibility rules were liberalized further. The Omnibus Budget Reconciliation Act of 1987 (OBRA-87) gave states the additional option of raising income thresholds for pregnant women and infants up to 185% of the poverty level, and to raise poverty-level coverage of older children up to the age of 8. The Medicare Catastrophic Care Amendments (MCCA) of 1988 transformed what had been optional authority into a mandate by requiring states that had not already expanded coverage of pregnant women and infants to the poverty level to do so over a 2-year phase-in period. The Omnibus Budget Reconciliation Act of 1989 (OBRA-89) superseded MCCA's mandate schedule by requiring all states to cover, at minimum, pregnant women and children up to 6 years of age at 133% of poverty, beginning in April 1990. Finally, OBRA-90 called for states to phase in by the year 2001 coverage for all children up to age 19 in families with incomes below 100% of the poverty level.

States Respond Aggressively to New Flexibility

States responded quickly to the passage of the various Medicaid expansion measures. Within 2 years of the initial effective date of OBRA-86, 44 states and the District of Columbia had established coverage at 100% of poverty or higher; eighteen had elected to raise eligibility up to 185% of poverty using OBRA-87 flexibility.18 The impact of OBRA-89 and OBRA-90 were felt more broadly. As a result, all states are today covering children up to the age of 9 in families with poverty-level incomes or below.19 Combined, OBRA-89 and OBRA-90 have established a uniform, minimum floor of coverage for pregnant women and children across all states at income levels two to three times higher than those that existed in the average state a mere 4 years earlier. Figure 1 illustrates the status of states' income eligibility thresholds for pregnant women and children as of January 1992.

Legislative provisions in the various OBRAs opened new doors for states through which financial access to health care could be extended to hundreds of thousands of families. However, by themselves, these actions did nothing to address the broad range of issues and problems confronting publicly funded perinatal programs which more directly prevent women from giving birth to healthier babies. The much more complex and difficult challenges included:


  • Making eligibility systems more "user friendly," so that large proportions of eligible women and children could be successfully enrolled in Medicaid;
  • Overcoming the general public's negative impression of the Medicaid program, informing women and families of the importance of early and continuous prenatal care, and persuading them to come forward and apply for the new coverage;
  • Confronting the severe shortage of obstetrical providers and working to recruit more providers into the system, so that women seeking prenatal care could be assured of finding a caregiver; and
  • Addressing the quality of care covered under Medicaid and developing strategies to improve the scope, appropriateness, comprehensiveness, and continuity of perinatal services and service delivery systems.

Fortunately, a majority of states have not only expanded eligibility for pregnant women and children, but also used OBRA-86 as a catalyst for more comprehensive reforms aimed at resolving many of the problems outlined above. These efforts required cooperation and collaboration among Medicaid, MCH, WIC, public assistance, and other programs working to improve the accessibility and effectiveness of public perinatal programs.

Streamlining Eligibility for Medicaid

The Medicaid eligibility system, itself, can present a significant barrier to access for pregnant women in the following ways:17


  • The traditional welfare stigma attached to applying for public aid can discourage many women who might need or want prenatal care;
  • Medicaid eligibility workers are typically located in county welfare offices, rather than at prenatal care provider sites, which creates an access barrier because applying for the coverage involves a second, separate trip to the welfare office;
  • Medicaid application forms, which are often used to determine eligibility for AFDC and many other public programs, are frequently complex and require extensive verification of income and resources; and
  • States generally use up to 45 days to finalize their determinations of eligibility, causing a critical 6-week delay in coverage for pregnant women attempting to receive care early in pregnancy.

These factors combine to create a situation whereby many women who apply for assistance are denied because they do not "comply with procedural requirements." Federal AFDC data have consistently shown that approximately 60% of all AFDC application denials result from women not keeping an appointment with an eligibility worker or not providing sufficient documentation of earnings, citizenship, resources, and the like.17

Since 1986, many states have begun to address these system barriers. Each of the strategies described below required that state Medicaid and AFDC agencies cooperate closely in designing reforms that meet the dual objectives of facilitating and streamlining access to care while preserving the integrity of the screening process.

Dropping Assets Restrictions

Nearly every state has elected to remove assets restrictions from its eligibility test for pregnant women and children as originally allowed in OBRA-86. By July 1991, 48 states had determined that eliminating such limits would greatly simplify their application processes.20

Allowing Continuous Eligibility

State policies traditionally require AFDC (and thus Medicaid) recipients to reconfirm their eligibility status on a regular basis. Now, however, following a period of experimentation by a number of states, all states are required to guarantee pregnant women continuous eligibility throughout their pregnancies and a 60-day postpartum period, regardless of fluctuations in income.21

Granting Presumptive Eligibility

A third option contained in OBRA-86 permitted states to extend temporary, 45-day eligibility to pregnant women who appear to be eligible for Medicaid benefits. This presumptive eligibility provision permits certain providers of prenatal care to perform a simplified income test and, based on its results, grant short-term coverage on the same day. By doing so, these providers also guarantee for themselves Medicaid reimbursement for the services they render. Despite numerous complexities, 26 states had, by January 1992, elected to adopt the option.22

One drawback of presumptive eligibility, however, is that it still requires women to make a second official contact with the welfare agency to gain full Medicaid eligible status. This has stimulated many states to develop alternative eligibility system reforms that accomplish the same results with fewer complexities.

Outstationing Eligibility Workers

Rather than permitting providers to grant short-term eligibility, many states have opted to post their own eligibility workers at provider sites that render a high volume of prenatal care services.20 This strategy allows women to access the state's eligibility system directly at a provider site rather than at a county welfare office. OBRA-90 mandated that all states outstation eligibility workers in two particular provider settings: federally qualified health centers (essentially, C/MHCs) and hospitals that serve an especially high volume of Medicaid recipients.

Shortening Application Forms

As of January 1992, 33 states had adopted shortened application forms for pregnant women.22 Given the ability to exclude assets restrictions from eligibility considerations, many states now require only those pieces of information needed to determine maternity-related eligibility. Shorter application forms possess several advantages: they are more easily completed by applicants; they can be processed more swiftly by state agencies, thereby reducing waiting periods; and with less information to verify, they reduce the chance that applicants will be rejected for procedural reasons. In many states, short forms are so simple that state welfare agencies leave blank forms in providers' offices. This allows women either to take the form home and complete the process by mail, or to receive assistance from a provider's administrative staff and complete the application in the caregiver's office.

Vermont's initiative merits special attention. The state elected to expand eligibility for Medicaid to 185% of poverty and developed a one-page form that is used to determine income eligibility for both Medicaid and WIC coverage. This model is being studied closely by many states and during 1991, Ohio had plans to implement a similar form.20

Expediting Maternity-related Applications

Recognizing that the typically long delays inherent in existing eligibility systems jeopardize the timely initiation of prenatal care, 14 states had, by January 1992, developed policies that require eligibility agencies to process maternity-related applications more quickly than applications made by other populations.22 As a result, turnaround times in these states range from 5 to 10 days.

Table 1 illustrates which states have adopted the strategies described above. Most states have combined several strategies for greater impact. For example, a state that outstations eligibility workers may equip those workers with a shortened form so that the intake of larger numbers of clients can take place during a health department's prenatal clinic hours.

Designing More Effective Outreach and Public Education Campaigns

In addition to revamping Medicaid eligibility procedures for pregnant women, many states have also implemented new outreach initiatives aimed at informing these women of the availability of the new coverage and of the importance of early and continuous prenatal care. These campaigns, coupled with eligibility streamlining strategies, are intended to maximize client enrollment among the thousands of potentially eligible women who have been extended financial access to Medicaid. By combining the financing know-how of Medicaid agencies with the clinical expertise of Maternal and Child Health (MCH) programs, states have taken significant strides in developing more creative and effective outreach campaigns.

Two major challenges inhibiting states' efforts to develop effective outreach programs have been identifying an ongoing source of funding for the campaigns and selecting a strategy that is broad enough to spread its messages to all pregnant women yet targeted enough to reach that subset of the population which is most in need of assistance. In a development that addressed the first of these challenges, the Health Care Financing Administration stated in 1989 that outreach activities could be eligible for federal matching payments at the rate of 50%.23 And while the second question may never be fully resolved, the multifaceted nature of state perinatal outreach efforts in recent years has attracted a high number of women into care.

Making Effective Use of Mass Media

Realizing that the traditional stigma attached to the receipt of welfare could discourage women from seeking Medicaid, many states have consciously developed program materials with the intention of creating a new image for the program. Utilizing softer, more positive images, bright colors, creative photography, graphic arts, and video, and employing friendlier themes like "Baby Love" (North Carolina), "First Steps" (Washington), "Baby Your Baby" (Utah), and "Beautiful Babies Right from the Start" (District of Columbia), state programs are attempting to disassociate themselves from their welfare history and alter the public's perception of them. By doing so, they hope to attract many new clients.

More states have taken steps to tap the broadcast media's creative and persuasive talents. Understanding the media's need not only to make a profit and get high audience ratings, but also to earn the public's favor by demonstrating concern about social issues, Utah's MCH and Medicaid programs initiated this trend by enlisting the involvement of an NBC affiliate station in Salt Lake City in the design and implementation of a multimedia outreach campaign. That station, seeing value in establishing its identity as the one that "cares about moms and kids," donated in-kind support in the form of free air time, art work, materials design, and targeted marketing in return for a relatively small financial fee. In the 3 years since the "Baby Your Baby" campaign was begun, the program achieved a 90% recognition rate among the state's population, and state evaluation studies have documented its success in drawing women into care.17

Providing Toll-free Hotlines

As a component of their outreach efforts, nearly all states have incorporated toll-free hotlines. Displayed prominently on printed materials as well as in video and radio spots, hotlines provide women with an immediate source for information about where to apply for assistance, where to find prenatal care providers, and general advice and counsel in response to any questions they might have about pregnancy. Hotlines have also played a key role in helping states assess the relative effectiveness of various outreach efforts—telephone operators can ask clients "Where did you hear of this program?"—and in pinpointing which areas of the state seem to be exhibiting the most interest or greatest need. OBRA-89 mandated that all state MCH programs provide or support such telephone access for maternal and child populations because of its demonstrated effectiveness. By December 1990, 40 states had complied with this mandate.24

Supporting Case-finding Programs

Many believe that mass media campaigns do not succeed well in reaching those women most in need-women in remote, rural areas, those living in extreme poverty in inner city ghettos, or women suffering from serious problems such as drug or alcohol dependence. For such groups, more targeted, door-to-door case-finding projects have been employed in a limited number of states and communities. Using either time-limited foundation support or state program administrative dollars, these efforts have typically utilized indigenous community members and/or former welfare recipients to seek out peers in need of prenatal care. Data demonstrating these programs' successes or failures are extremely hard to come by; therefore, many observers question the cost-effectiveness of this extremely staff- and labor-intensive strategy.17

Building Statewide Community Networks

Building statewide community efforts is an intermediate strategy that may combine the best of both mass media campaigns and door-to-door efforts. Many states have worked to develop a statewide network of community organizations to disseminate information on state services while also serving as a referral link between needy women in the community and Medicaid and MCH programs. North Carolina and Florida have conducted hundreds of orientations with organizations such as churches, United Way agencies, community action programs, Healthy Mothers/Healthy Babies coalitions, women's support groups, minority and youth groups, Head Start programs, legal services groups, victims assistance programs and shelters, migrant councils, child care centers, and food banks that have contact with low-income families.17 States have distributed program information and materials widely and enlisted the cooperative assistance of these groups to act as referral points.

Increasing Provider Participation

Assuring adequate provider participation has been a general concern for Medicaid programs. As states have begun extending Medicaid coverage to thousands of newly eligible women, they have also confronted a severe shortage of obstetrical care providers. Given the confluence of these two trends, one may question what access has actually been provided to low-income pregnant women if they are unable to find a provider willing to serve them.

Over the years, low provider fees, administrative and programmatic complexity, and problems with Medicaid recipients have been the principal explanations offered for poor provider participation. Today, the rising cost of malpractice insurance and the fear of malpractice suits are additionally cited as factors influencing an obstetrician's decision about whether to accept Medicaid clients. A 1988 survey revealed that 89% of MCH programs and 63% of Medicaid programs were experiencing significant problems in retaining adequate numbers of obstetrical providers in their systems and, as a result, program administrators believed that access for pregnant women was being compromised.25 In response to this trend, states have increasingly implemented multiple strategies both to recruit new doctors and to retain existing physicians in the system.

Raising Reimbursement

Public programs like Medicaid have a long history of paying providers at rates below those prevailing in the community for private-pay patients. Data from the National Governors' Association for 36 states indicated that, in 1986, the median state Medicaid program paid providers about 44% of the approximate community charge for total obstetrical care. To help offset this problem, nearly one half of the states raised obstetrical fees between 1987 and 1989, some to levels comparable to or even higher than existing private insurance rates.25 In addition, OBRA-89 required states to demonstrate that obstetrical and pediatric fees were sufficient to guarantee that services were available to Medicaid clients to the same extent that they were available to the general population. A provision that defies operationalization, this move has nonetheless succeeded in stimulating more states to raise obstetrical provider fees. Unfortunately, most analysts and state program managers believe that fee increases, by themselves, will not significantly raise the rate of obstetrician participation in Medicaid. Therefore, states are also pursuing additional strategies, such as those described below.26

Simplifying Billing Procedures

An ongoing complaint among physicians is that the complexity and inefficiency of Medicaid claims submission and payment procedures frequently create a real disincentive to participate. To counter these complaints, nearly one fifth of the states have attempted to improve billing procedures. For example, California has instituted a more efficient and logical claims editing system that provides for more prompt payment, special training seminars for providers' staffs on how to fill out Medicaid claims properly, and a toll-free hotline for physicians to call when they have billing questions.25

Using Alternative Providers

Given a shrinking pool of participating physicians, many states are attempting to expand their use of alternative providers such as certified nurse-midwives and nurse practitioners in maternity care programs. More than one half of the states have already implemented such endeavors, either in Medicaid payment policies or in staffing MCH clinics.26

Recruitment and Retention Strategies

Many states have attempted to build stronger links with medical societies to improve recruitment and retention of obstetrical providers. Some states have been more aggressive. In Minnesota, Title V grant monies have been used to hire nurses who travel around the state to inform private obstetrical providers of the changes made to the Medicaid and MCH programs and to attempt to persuade them to participate. Arkansas has designated personnel within the state Medicaid agency to act as provider liaisons who will respond to specific problems and situations. Washington has developed a computer alert program that notifies the Medicaid agency when a provider drops out of the program, thereby giving the state an opportunity to contact the physician and attempt to resolve whatever problems caused him or her to quit. The same state is currently devising a system that will notify Medicaid when physicians become licensed to practice, permitting the state to contact these providers and attempt to persuade them to enroll. Ohio and North Carolina have developed systems of peer recruitment whereby participating physicians approach their nonparticipating colleagues and attempt to recruit them into Medicaid.20

Addressing Malpractice Concerns

A few states have attempted to address directly the problems associated with malpractice liability and cost. In Florida and Virginia, no-fault liability coverage for newborn birth-related injuries provides payments through a workers' compensation-type system. Participation is voluntary for both physicians and hospitals, who pay fees to support the compensation fund. Missouri adopted a program that uses the state's general liability fund for malpractice claims made against physicians who contract with local health departments to serve indigent women.25 A program in Louisiana will pay up to $100,000 for any judgment made against a provider whose practice is made up of at least 10% indigent women. North Carolina is using public funds to subsidize directly a portion of the costs of malpractice insurance premiums for obstetrical providers serving in rural areas under the Rural Obstetrical Access Program.20

Unfortunately, very few data are available to evaluate the ability of any of these efforts to increase provider participation in Medicaid.27 Until further evidence emerges demonstrating the relative effectiveness of these strategies, the lack of provider participation will persist as perhaps the most complex and insoluble problem facing government perinatal programs.

Enhancing the Scope, Quality, and Coordination of Prenatal Care

Improving the health status of mothers and children by reducing rates of infant mortality and low birth weight also requires that attention be paid and reforms be made to the content and quality of medical care. (See the Racine, Joyce, and Grossman paper in this journal issue.) An impressive body of literature (most recently the report produced by the U.S. Public Health Service's Expert Panel on the Content of Prenatal Care, 1989)28 has suggested that prenatal care should combine nutritional, psychosocial, and educational services with routine and specialized medical care. Most states have recognized the need to develop broader coverage of nonmedical psychosocial support services within the package of prenatal benefits.

As illustrated in Figure 2, the aftermath of OBRA-86 has seen 38 states develop progressive programs of comprehensive prenatal care services.22 With Medicaid contributing financing strategies and MCH providing clinical guidance and protocols, these benefit packages represent the cutting edge of prenatal care and are already demonstrating their ability to have a positive impact on the birth outcomes of high-risk women.

Relying predominantly on optional authority contained in the Consolidated Budget Reconciliation Act of 1985 (COBRA), states typically have added a core of new services including care coordination/case management, risk assessment, nutritional counseling, psychosocial counseling, health education, home visiting, and transportation.

Care Coordination

Care coordination (or case management) is considered by many states as the most critical component of their enhanced packages. In 38 states, it is the glue that holds the delivery system together.22 These services typically consist of determining the various needs of a client by assessing the risk factors she is experiencing; developing a plan of care to address those needs; coordinating referrals of the client to appropriate service providers identified by the plan of care; and monitoring to ensure that those services are received. Care coordinators also assist clients with establishing Medicaid eligibility, perform outreach and community education, and assist families with arranging transportation.29

Risk Assessment

In 38 states, risk assessments are used to help identify the various problems being experienced by a client and to enable providers to plan for and organize the various services she needs.22 Risk assessment can also be used to identify those women with the most pressing need for enhanced care. Most states consider multiple medical and psychosocial risk factors in their assessment instruments and will reimburse providers for the performance of several risk assessments over the course of a pregnancy.30

Nutritional Counseling

Thirty states have added coverage of nutritional counseling and education to their list of Medicaid-reimbursable services.22 State protocols generally highlight the relationship between proper nutrition and good health, special dietary needs during pregnancy, instructions for infant feeding (both breast and bottle), and guidance on weight gain and exercise. A few states specify interventions for women at special nutritional risk, such as those with gestational diabetes mellitus, gastrointestinal or renal disease, or metabolic problems. Most of the states that have added this benefit have also had to specify how best to coordinate enhanced nutritional services with those already being offered and financed under the WIC program.30

Psychosocial Counseling

Psychosocial counseling services, offered in 24 states, attempt to assist women with the numerous stresses that families face and that can adversely affect birth outcomes, such as inadequate income and/or housing, insufficient food, and unreliable transportation.22 Alcohol and/or drug use, physical abuse, depression, and other social and psychological problems are also treated in most of the 24 states through one-on-one counseling.30

Health Education

Childbearing women need to understand an enormous amount of information regarding the physiology of pregnancy, healthy behaviors during pregnancy, the process of labor and delivery, and the fundamentals of infant care and parenting skills. To provide such information, 30 states have added health education services to their service list.22 While the specific educational curricula vary, many states supplement teachings on these topics with additional guidance on other pregnancy-related issues. States employ both classroom and one-on-one teaching models.30

Home Visiting

Home visiting, a traditional component of American public health models in years past and an integral part of perinatal delivery systems in many western European countries today, has been incorporated into 31 states' prenatal initiatives.22 The service, it is believed, allows providers (typically nurses or social workers) to assess patient needs better and to teach health behaviors more effectively by meeting with women in their own environment. Some states use visiting programs to assist women during the prenatal period, while others also emphasize postpartum support of both mother and child.30


A few states have tried to meet the transportation needs of pregnant women by having perinatal care coordinators arrange transportation for women to and from their prenatal visits. A few states provide direct financial assistance to clients to help them defray the costs of buses, taxis, and gasoline.30

Results of Early Evaluations of Perinatal Care Reforms

At this time, politicians, policymakers, program managers, and advocates are all eager to know whether federal and state perinatal medical care reforms have improved the health status of mothers, infants, and children and increased pregnant women's use of prenatal care. Unfortunately, it is still too early to determine the impact of the vast majority of initiatives that are under way.

Many reasons exist for the current paucity of both program data and evaluations. For example, complex program changes take time to implement properly at the state and local levels and experience significant delays before accurate and meaningful descriptive data can be produced. Even after bugs are worked out of new programs, the collection of sufficient data measuring changes in utilization or birth outcomes can take several years. The use of certain indicators, such as infant mortality, is inherently problematic both because infant deaths are statistically rare events and because of the lags that occur while annual statistics are compiled. Finally, the fact that data collection practices in the 50 states vary greatly in both approach and quality makes it difficult to develop national indicators of impact.31,32

These factors combine to frustrate policymakers who need to decide whether to expand or redirect efforts to improve maternal and child health. These individuals are understandably looking for concrete evidence that particular program strategies are either producing desired results or failing to do so.

Fortunately, this situation should improve in the very near future. Nearly 5 years have passed since the implementation of the first Medicaid expansions for pregnant women and children. Both federal and state agencies have begun either sponsoring or conducting program evaluations, and results from these efforts should emerge over the next several years. Two important evaluations have recently come to light that provide critical early insight into the effects of particular program initiatives. These evaluations are briefly summarized below.


  • In the spring of 1991, the U.S. General Accounting Office (GAO) reported that states were experiencing early success in enrolling pregnant women into expanded Medicaid programs. Based on case studies in 10 states, the GAO study monitored changes in Medicaid enrollment after implementation of eligibility expansions and measured rates of increase against a projected target estimate of potentially eligible pregnant women in each state. Results indicate that between two thirds and three quarters of potentially eligible women enrolled within 2 years of these states' program expansions—an encouraging rate given the past dismal performance of Medicaid programs in attracting newly eligible populations. While a direct correlation between positive enrollment rates and individual eligibility streamlining efforts was not measured, it was observed that states which had simultaneously implemented presumptive eligibility and dropped assets tests experienced the most rapid growth in enrollment.33
  • North Carolina has released a study illustrating the positive impacts of its Baby Love maternity care coordination program. The program's effect on prenatal care utilization and birth outcomes was assessed by comparing pregnant Medicaid recipients who did and did not receive care coordination services. The state found that women on Medicaid who received maternity care coordination obtained more prenatal care, participated in WIC at higher rates, and received greater amounts of both postpartum care and well-child care for their infants. Women not receiving care coordination were found to deliver low birth weight infants at a rate 21% higher than those that did. Similarly, rates of very low birth weight infants were 62% higher, and rates of infant mortality were 23% higher for women not receiving care coordination. The study also estimated that, for each $1.00 the state spent on care coordination, $2.02 was saved in Medicaid newborn medical costs.34

The GAO and North Carolina studies provide policymakers with valuable insight into the positive effects that can be derived from perinatal system reforms. One can only hope that similar evaluations will soon emerge to give policymakers further guidance for future action.