R ecent advances in neurosciencehave demonstrated that parent-childinteractions and the family environ-

ment shape and advance the developmentof a young child�s brain.1 At the same time,decisionmakers in health policy, childhealth research, and pediatric practice havebegun to recognize the critical importanceof the first three years of life for the optimalgrowth and development of children.National guidelines for pediatric care, suchas Bright Futures, stress the delivery ofhealth care in a manner consistent with thisunderstanding of early development.2 Inaddition to good clinical health care, childrenage 3 and younger require services that promote cognitive and sensory stimulation.A growing body of literature suggests thatfamily behavior and activities can have aprofound impact on a child�s brain develop-ment, physical health, and emotional well-being.

This issue brief examines opportuni-ties for states to enhance the provision ofhealth-related developmental services tochildren in low-income families. In particular,it emphasizes the importance of preventivedevelopmental services�formal developmen-tal assessments, assessments of family andsocial risk factors, and enhanced parenteducation�in primary, pediatric practices.Current state efforts to encourage the deliv-ery of these services in the Medicaid pro-gram are also reviewed, including the speci-fication of developmental services in statecontracts with managed care plans, paymentfor enhanced services outside states� capitatedarrangements with plans, and revision ofthe Early and Periodic, Screening,Diagnostic, and Treatment (EPSDT)

encounter form to improve the quality ofphysician reporting.

Child Development ServicesImprove Children�s Health

B roadly speaking, child developmentservices fall into four categories:screening and developmental assess-

ment, health promotion, developmentalinterventions, and care coordination.Thefollowing discussion focuses on child devel-opment services delivered in the health caresetting that emphasize primary, preventivepediatric care, as opposed to special servicesfor children who demonstrate developmentaldelay.

The provision of health-relateddevelopmental services extends beyondgood, general pediatrics in two ways. First,it covers child development services thatmight not be provided in traditional well-child care, such as home visits, telephonecounseling on developmental milestones,and the use of methods to encourage earlyreading. Second, it requires that certaincomponents of well-child care�includinginfant development assessments and physician-patient counseling to help parents deal withtheir child�s eating, sleeping, routines, andself-control�be delivered in a more formalway.

Child development services improvethe health of children and families alike.Anevaluation of a home visitation program ina semirural community in upstate NewYork revealed that participating childrenmade 35 percent fewer visits to the emer-gency department, had 40 percent fewerinjuries, and had 45 percent fewer behavioral

ASSURING THE HEALTHY DEVELOPMENTOF YOUNG CHILDREN:

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February 2000

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physician�s record than did children in thecomparison group.3 Another study foundthat mothers visited by nurses attemptedbreastfeeding more frequently and providedhome environments that were more con-ducive to children�s development.4 In addi-tion, culturally appropriate literacy interven-tions in primary care settings, e.g., readingprograms, increased the odds that parentswould read to their children by threefold,according to a 1999 randomized, controlledtrial with Hispanic families.5 Such earlyresults suggest that the beneficial effects ofcomprehensive home visitation or pediatricprograms might well spill over into suchareas as welfare dependency, teen pregnancy,and violence. If so, society will save moneyin the long run.6

Medicaid and Child DevelopmentServices

S erving one-quarter of all Americanchildren age 6 and younger, andtwo-thirds of poor children that

age, Medicaid programs offer states anextremely important and regular point ofcontact with low-income children and theirfamilies (see figure 1).7 The Medicaid Act

requires state agencies to cover all devel-opmental screenings, including routinedevelopmental assessments.8 In addition,health education is a required componentof the EPSDT program and is considered apart of every health visit�an expectationthat precludes billing for it as a separateMedicaid service.

Consequently, all state Medicaid andChild Health Insurance Programs (CHIP)pay for some health-related developmentalservices. Only a handful of states, however,have established statewide comprehensiveprograms, and only a few of these combineMedicaid with other state dollars to pay fora broad array of pediatric developmentalservices.

Most states have at least one programdesigned to enhance child development.The approach, level of commitment, andservices of each depend on the individualpriorities of each state.A 1998 review ofinitiatives for young children and familiesby the National Center for Children inPoverty found that 24 states have one ormore statewide programs for children age 3and younger.9 Home visitation (18 states)and parent education programs (14 states)

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are the most common types. Eight statesdraw on Medicaid funds for statewide,health-related programs for children.10 Moststate programs tend to focus on high-riskgroups, such as teenage mothers, rather thantrying to reach all young children from low-income families. One state,Vermont, providessome level of service to all Medicaid families;more intensive services are targeted forthose at higher risk.

Some of the strategies adopted bystates to enhance child developmentinclude:

! Requiring the provision of servicesin Medicaid managed care contracts.State Medicaid programs have increasinglyturned to managed care as a vehicle todeliver pediatric services. In general, stateMedicaid agencies have placed few com-prehensive or specific requirements onmanaged care organizations (MCOs) toimplement and deliver these services.Ananalysis of 45 state Medicaid managedcare contracts revealed that fewer thanhalf included any provisions coveringhealth-related developmental services.Some states, however, do spell out plans�responsibility to deliver comprehensiveprograms. Michigan and Delaware, forexample, have explicit contractualarrangements requiring comprehensivehome visitation programs that includestandardized developmental assessments,parent education, nutritional counseling,and care management. Other states specifyonly one or two discrete services in theircontracts, such as newborn home visita-tion (New Jersey) or standardized develop-mental screenings (Massachusetts andVirginia).11

! Paying for services outside of man-aged care contracts. Some states havechosen to expand their health-relateddevelopmental programs outside of thecapitated arrangements, paying for serviceson a fee-for-service basis. Rhode Islandand Washington have created Medicaid�carve-out� arrangements to finance home

visitation, targeted case management, andcomprehensive developmental assessments.Hawaii pays out-of-contract for five childdevelopment support services furnishedthrough its early intervention program�parent counseling, home visitation, com-prehensive assessments, parent educationclasses, and case management.12

! Using improved forms to ensure thedelivery and quality of services. Somestates have worked with managed careplans to improve the reporting and qualityof well-child visits by using the mandatoryEPSDT form to report on the visit.Theforms serve to remind physicians of thevarious screenings to be administered ateach visit and help them document theservices provided.The NeighborhoodHealth Plan in Massachusetts, for example,studied the use of structured EPSDTforms in managed care settings and foundthem to be an effective tool for increasingthe rate of delivery of developmental ser-vices.13 Maine�s Medicaid agency developed11 different age-appropriate forms to correspond to each well-child visit forchildren under age 3.14

Medicaid Managed Care Supportfor Child Development Services

N early one-quarter of all childrenunder age 20 were enrolledthrough some type of managed care

arrangement in 1994, a proportion that isbelieved to have grown substantially sincethat time.15 The Congressional BudgetOffice estimates that from 85 to 90 percentof all Medicaid managed care enrollees arewomen of childbearing age or children.16

This rapid growth and the continuing trendtoward managed care in the United Stateswill have a profound effect on how low-income children receive care and, specifically,developmentally oriented services.

Currently, few MCOs offer a comprehensive array of child developmentservices.A 1998 nationwide mail survey ofMedicaid capitated health plans that servechildren examined current practice and

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interest in child development services.17 Thesurvey included several questions about specific services�reading programs, behaviorassessment, lactation counseling, counselingon feeding and nutrition, and supportingparent-child interaction�as well as the typesof incentives that would stimulate moreactivities in this area.

The majority of respondents indicatedthat they actively promote or require keychild development screenings and services.Most plans reported that they rely on office-based counseling and other, less intensivemethods to provide developmental services.Use of more intensive methods, such as casemanagement, home visitation, and parenteducation classes, was rare.Among plans thatwere not currently offering services, mostindicated interest in implementing a childdevelopment program.

Most plans that offer developmentalservices do so with no additional funding, orprovide them under the EPSDT program.Plans are often creative in their fundingmechanisms. Some plans reimburse specificallyfor screenings and other services, while othershave partnered with local agencies to providecare for certain enrollees (see figure 2).

About three-quarters of plans thatdo not currently offer services in a particulararea of child development indicated interest inadding such services.This interest, however,was largely contingent upon additionalfunding (see figure 3).

Most plans considered Medicaidcontract requirements and enhanced capitationrates to be powerful incentives for addingnew health-related developmental services.Respondents would also find empirical evidence of reduced health care utilizationcosts or improved developmental outcomesto be compelling reasons for adding services.Marketing value�either for the Medicaidpopulation or for the commercial parts oftheir plans�was not rated as an importantincentive (see table 1).

Among MCOs that already have achild development program in place, internalsupport appears to be essential to its success.Results from interviews with key officials innine Medicaid MCOs show that bothsenior-level administrators and pediatriciansneed to be behind their plan�s child develop-ment program to ensure the implementationand sustainability of these services.18 A senseof social responsibility�as opposed to a

primary focus on financial motivations ormarketing considerations�was also a common theme in a review of successful,long-term child development service programs.18 Most MCOs in the evaluationhad addressed such issues as transportation,literacy, and translation of materials intoEnglish�barriers that would otherwise prevent Medicaid enrollees from taking fulladvantage of services.19

As with the states, some especiallyinnovative practices among MCOs emergedfrom the evaluation�albeit with targeted,rather than comprehensive, child develop-ment services. CarePlus Health Plan, anMCO in New York serving primarily low-income families, implemented its HealthyBeginnings Program �to promote children�stotal health by addressing their emotional,cognitive, physical, and social development.�The program is designed for expectantmothers and for children age 3 and youngerand their mothers. It has three components:home visits and support for new mothers, atelephone information line, and a readingprogram. Support for new mothers involvestrained �Mom Coaches��women from thecommunity who coordinate care betweenthe plan and expectant and new mothers�

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Table 1Percentage of Plans Rating the

Importance of Incentivesfor Implementing ChildDevelopment Services

VeryIncentive Important

Required by Medicaid contract 81%

Plan savings through reduced 80health care utilization

Enhanced Medicaid capitation rates 76

Improved developmental outcomes 70

Scientific evidence of effectiveness 66

Helps plan comply with regulatory 65standards

Fulfills an aspect of plan�s mission 60

Targets population, based on 52medical necessity criteria

Matching dollars 46

Private external funding 38

Marketing advantage within 29Medicaid population

Professional education/continuing 14medical education credit

Marketing advantage for commercial 14part of plan

Source: P. Budetti et al., Institute for Health ServicesResearch and Policy Studies, Northwestern University,report to The Commonwealth Fund, September 1999.

who make monthly home visits to observeeach mother�s physical and emotional healthand provide referrals as needed. MomCoaches also look for potential hazards inthe home and use informational videos tohelp address newborn issues, such as sleeppatterns, feeding, and mothers� concernsand anxieties.The telephone informationservice, which links parents to the plan�searly childhood development office, allowsparents to discuss parenting issues, fears, andanxieties with trained staff.The readingprogram staff reads stories to children andteaches parents about the importance ofreading to their infants and toddlers athome.

Another program, Reading Rx,provides on-site reading corners in severalpediatric medical and dental waiting rooms.Developed at Minnesota-based HealthPartners,the program also distributes take-homebrochures on how and why to read aloudto children, how to create an atmosphere inthe home that fosters reading, and how toevaluate the appropriateness of televisionprograms, movies, video games, and othermedia.The office receptionist provides thefirst contact with children and their parentsat each visit and encourages families tomake use of the reading corners and takebrochures home with them. Primary careproviders who work in pediatric, obstetric,family practice, and dental clinics attend aformal education session on developmentalliteracy and receive training to enable themto communicate the importance of readingto families and encourage program partici-pation.

Opportunities to Broaden theReach of Child DevelopmentServices

S tate health agencies and Medicaidmanaged care organizations have asignificant opportunity to provide

pediatric care that includes health-relateddevelopmental services for children age 3 andyounger. Several states could build on currentprograms: for example, home visits and parent education provided during pregnancy

and the newborn period could be continuedthroughout early childhood. States couldalso test payment strategies such as carve-outs or enhanced capitation rates forproviders or plans that deliver comprehen-sive child development services. In addition,they could emphasize the scope of servicescovered by Medicaid and EPSDT to plansand pediatric providers. Improved encounteror EPSDT reporting forms facilitate report-ing strategies that document which servicesare being delivered and improve the qualityof care.

Furthermore, states could use theirflexibility in the design and administrationof health care programs for low-incomefamilies to take the lead in:

! Creating new strategies to enhance childdevelopment services and to complementand support the family�s medical home bylinking community providers with pediatricproviders and health plans.

! Developing contracts between the stateMedicaid program and Title V programsto leverage additional funds to supportchild development services and integrateservice delivery.

! Designing incentives for pediatricproviders to screen children and familiesfor risk factors and provide parent educa-tion and counseling.

Medicaid managed care offers additional, specific opportunities. Statescould work collaboratively with plans toimprove care, using their power as pur-chasers to ensure that important services are properly provided.These options mayinclude:

! Using specifications in contract languageto communicate policies on pediatricdevelopment services to managed careplans.

! Encouraging agreements between plansand public health agencies to ensure theproper delivery of services.

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! Making additional payments to MCOs tocover incremental costs associated withspecific child development services, andenhancing capitation rates for those plansand pediatricians that provide more com-prehensive child development services.

! Enhancing capitation payments for primarycare clinicians.

Health care services that enhancestandard well-child care with informationfor parents, early detection of factors thatmay impede normal development, and bettercoordination of care could improve the well-being of low-income families and theiryoung children. Providing children with sucha system of care is likely to have benefitsthat range from more appropriate use ofhealth care services, to reduced injuries, tostronger parent-child relationships. In thelong term, these services might reduce riskybehaviors among older children. States arein a particularly strong position to make suchimprovements for the millions of childrenof low-income families cared for throughMedicaid.

NOTES1 R. Shore, Rethinking the Brain: New Insights into

Early Development (New York: Families and WorkInstitute, 1997); Carnegie Task Force on Meetingthe Needs of Young Children, Starting Points:Meeting the Needs of Our Youngest Children (NewYork: Carnegie Corporation of New York,April1994).

2 M. Green (ed.), Bright Futures: Guidelines for HealthSupervision of Infants, Children, and Adolescents(Arlington,VA: National Center for Education inMaternal and Child Health, 1994).

3 D.H. Olds, C. Henderson, and H. Kitzman,�DoesPrenatal and Infancy Nurse Home Visitation HaveEnduring Effects on Quality of Parent Caregivingand Child Health at 25 to 50 Months of Life?,�Pediatrics 93 (January 1994):89�98.

4 H. Kitzman, D.H. Olds, C. Henderson et al.,�Effect of Prenatal and Infancy Home Visitation

by Nurses on Pregnancy Outcomes, ChildhoodInjuries and Repeated Childbearing,� Journal of theAmerican Medical Association 278 (August 1997):637�643.

5 N. Golova,A.J.Alario, P.M.Vivier et al.,�LiteracyPromotion for Hispanic Families in a PrimaryCare Setting:A Randomized, Controlled Trial,�Pediatrics 103 (May 1999):993�997.

6 L.A. Karoly, P.W. Greenwood, S.S. Everingham et al., Investing in Our Children: What We Knowand Don�t Know About the Costs and Benefits ofEarly Childhood Interventions (Santa Monica, CA:RAND, 1998).

7 P. Fronstin, Sources of Health Insurance andCharacteristics of the Uninsured: Analysis of the March1998 Current Population Survey, EBRI Issue Brief,December 1998.

8 Ibid.

9 J. Knitzer and S. Page, Map and Track: 1998 Edition(New York: National Center for Children inPoverty, 1998).

10 Knitzer and Page, 1998. States are Delaware,Florida, Kansas, Massachusetts, Michigan, Nevada,New York, and Vermont.

11 H. Fox, M. McManus, and D. Kim, State MedicaidManaged Care Contract Provisions RegardingDevelopmental Support Services for Families withYoung Children, report to The CommonwealthFund, December 1998.

12 Ibid.

13 J. Perkins and K. Olson,�Medicaid Early andPeriodic Screening, Diagnostic, and Treatment as a Source of Funding Early DevelopmentalServices,� draft report to The CommonwealthFund, January 1999, citing a letter from theCommonwealth of Massachusetts ExecutiveOffice of Health and Human Services to PrimaryCare Clinicians (May 1996).

14 Fourteen different forms are used for well-childvisits at 1�2 weeks, 1 month, 2 months, 4 months,6 months, 9 months, 1 year, 15 months, 18months, 2 years, and 3 years. Ibid., appendix 1.

15 S. Leatherman and D. McCarthy,�Opportunitiesand Challenges for Promoting Children�s Healthin Managed Care Organizations,� in Health Carefor Children: What�s Right, What�s Wrong, What�sNext, R.E.K. Stein (ed.) (New York: UnitedHospital Fund, 1997).

16 A. Schneider, Overview of Medicaid Provisions in theBalanced Budget Act of 1997, P.L. 105-33(Washington, D.C.: Center for Policy and BudgetPriorities, 1997).

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17 Surveys were mailed to all 409 Medicaid man-aged care plans in 1998; 155 plans completed andreturned the survey. P. Budetti, C. Berry, and P.Butler, draft report to The Commonwealth Fund,October 1999.

18 C. Berry, P. Butler, P. Budetti et al.,�DevelopmentalServices in Medicaid Managed Care:What DoesIt Take?,� submitted to Pediatrics, December 1999(under review).

19 The MCOs included Blue Cross of California,CarePlus Health Plan (New York), Group HealthNorthwest, Harvard Vanguard Medical Associates(Massachusetts), HealthPartners (Minnesota),

HealthNet Health Plan of Foundation Health(California), Kaiser Permanente of NorthernCalifornia, Keystone Mercy Health Plan(Pennsylvania), and Neighborhood HealthPlan(Massachusetts).

The Commonwealth Fund is a private foundation supporting independent research on health and social issues.

One East 75th StreetNew York, NY 10021-2692

Tel: 212.606.3800Fax: 212.606.3500E-mail: cmwf@cmwf.orgA

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Developing the Capacities of Young Children

Two goals inform the Fund�s current efforts on behalf of children: maximizing opportunities forhealthy development and ensuring access to high-quality health care. In particular, the Fund�s programsare based on the premise that early intervention�through developmental services and other efforts tofoster physical, cognitive, and emotional growth�can dramatically influence children�s lifelong healthand well-being.

The Fund�s goals are pursued through two major programs:

! The Healthy Steps for Young Children Program. Established in 1994, Healthy Steps is testingand disseminating a new approach to pediatric care, one that explicitly stresses the use of innovativehealth education and preventive health interventions aimed at supporting the role of parents inchild development during the first three years of life. Healthy Steps, which is cosponsored by theAmerican Academy of Pediatrics, is being implemented at 24 sites around the country.A nationalevaluation of this model is under way to examine outcomes for children, parents, and pediatricpractices.

! Assuring Better Child Health and Development Program (ABCD). The ABCD program isan action-oriented initiative that seeks to identify and implement effective health care practicesconducive to the healthy development of young children in low-income families. Program strategiesinclude working with Medicaid officials and others to improve the capacity of the health care sys-tem to provide well-child health care for low-income families, enhance parents� knowledge andpractices to promote healthy development, and help to identify family risk factors that can impedehealthy development.The ABCD program is working with four state Medicaid agencies to improvehealth and development for low-income children.These projects will serve as models for otherstates interested in incorporation of health-related developmental services.

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Copies of this issue brief are available fromThe Commonwealth Fund by calling our toll-free publications line at 1-888-777-2744and ordering publication number 367. Thebrief can also be found on the Fund�s websiteat www.cmwf.org.