An examination of state Medicaid financing arrangements for early childhood development services

To determine the extent to which Medicaid finances early childhood development services, either on a capitated or fee-for-service basis, and to gauge future interest in financing such services.

We analyzed state Medicaid managed care contracts in effect in April 1998 in 45 states using capitated arrangements for children at the end of 1997 to ascertain whether state Medicaid agencies financed any of six types of early childhood development services, including parent counseling, home visiting, comprehensive assessments, telephone advice lines, parent education classes, and case management. We also conducted structured telephone surveys with the same 45 states' Medicaid managed care directors.

Overall, state Medicaid agencies finance few early childhood development services on a capitated or fee-for-service basis. Case management was the most popular service to be paid for fee-for-service. Parent education was the most popular service required in managed care contracts. Parent counseling and telephone advice lines for information on child development or parenting issues were the services least likely to be reimbursed through either Medicaid financing mechanism.

To date, Medicaid agencies generally have not required managed care plans to cover early childhood development services, nor have they paid for such services on a fee-for-service basis. However, 17 states expressed an interest in expanding early childhood development services, particularly home visiting, parent education, and telephone advice lines. Nonetheless, several challenges exist in expanding Medicaid financing, including the need for more evidence on cost-effectiveness and greater political support for promoting early childhood development.