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Medicaid Cost Savings - Massachusetts

2007 Best Practices

Published: January 1, 2007
Information About:
State/Local Child Support Agencies
Case Management, Medical Support, Family Services & Referrals, Health Care Coverage
Promising Practices
Toolkit & Training

Goal: To reduce State Medicaid costs by enrolling dependent children in private health insurance.

Description: Cost savings have resulted from the data exchange between the Medicaid agency and the Child Support Enforcement agency (CSE) and a resulting match with third party health insurer files. The steps involved in this process are as follows:

  1. CSE provides the Medicaid agency with a list of employed noncustodial parents who have a child support order requiring them to obtain health insurance coverage for their dependents. The Medicaid agency matches these lists with a list of dependents who are recipients of Medicaid and then a vendor, under contract with the Medicaid agency, matches these lists with third party health insurer files to determine if the noncustodial parent's employer provides group health insurance coverage.

    CSE and the Medicaid agency then send a letter to the employer instructing them to comply with the National Medical Support Notice (NMSN) that CSE has already sent and to enroll the noncustodial parent's dependents in the group health plan.

  2. CSE also matches its wage-reporting file and 14-day new hire information with individuals who are associated with the Medicaid agency's programs. This match process uncovers new employer and new employer-sponsored health insurance information for noncustodial parents whose dependents also receive Medicaid.
  3. The Medicaid agency then sends a letter to the new employer of the noncustodial parent who has been linked to a dependent who is receiving Medicaid benefits asking if the child is currently enrolled in the employer-sponsored group health plan. If the child is not enrolled, the Medicaid agency follows up with CSE to enforce enrollment.

The cost savings from the data exchanged between the Medicaid agency and the CSE and the resulting match with third party health insurer files is calculated by using $207 per member per month rate for each individual who is now using private health insurance instead of Medicaid. The State multiplies the $207 by the number of individuals using private health insurance and then by the number of months (or years) the individual receives private health insurance. This last number is an average.

Another source of cost savings is a one-page form that CSE and the Medicaid agency developed to accompany the NMSN when it is transmitted to an employer. This form captures more detailed information about health insurance coverage than just the policy number and group number which is on the Part B response to the NMSN. The vendor, under contract with the Medicaid agency, then utilizes the information on these forms to pursue third party liability and seek reimbursement from any liable third party health insurer.

CSE and the Medicaid agency continue to work together to devise new methods of enrolling dependent children in private health insurance, thereby avoiding costs that might otherwise fall to the State.

Results: In State FY2007, Massachusetts saved over $63 million. Since 2001, when CSE and the Medicaid agency began tracking cost savings, Massachusetts has avoided $326 million in Medicaid costs.

Location: Statewide

Funding: Regular IV-D funds are used.

Replication Advice: The Interagency Service Agreement between Child Support Enforcement Agency and Medicaid needs to be drafted carefully. Special attention should be given to how information is transmitted and who has access to the information, particularly if either agency has vendors.


Melissa Cummings Phone: (617) 626-4247 Email: Cummingsmf@DOR.State.MA.US