The retention rate in the HFP for all new enrollees from July 1998 through December 1999 is: 76%

Later groups of new enrollees were not included in the analysis because they have not had the opportunity to be enrolled for a year.

In evaluating the HFP retention rate, staff sought to identify comparable benchmarks. Enrollment in the HFP is most analogous to enrollment in the individual insurance market. It is an individual purchase decision. Families pay a premium. The consequence of non-payment is disenrollment.

• National Blue Cross/Blue Shield Association: Individual Market Data

Other possible benchmarks include:

• National Data on the Individual Insurance Market 60-70%
• California Medicaid (pre-adoption of 12 mo. CE) <50%
• California HIPC Employee Retention Rate (1993-97) 66%

The flip side of the retention rate is the coverage "lapse" rate or disenrollment rate. Many factors influence disenrollment rates:

Ineligibility at Annual Eligibility Review or attaining age 19

Obtaining other coverage

Failure to comply with program rules

Some of these factors are the result of "good news" — the family has found private coverage for their child, others are inevitable given current program rules —the child is no longer eligible for coverage in the program, while others are hard to evaluate in terms of whether they are good or bad news for the family — for example, it is unknown why many families stop paying their child’s premiums.

California is participating in a national study of disenrollments in SCHIP. The study is being conducted under the auspices of the National Academy for State Health Policy (NASHP). The work group overseeing the study has categorized all reasons for disenrollment as "unavoidable" given the rules within which the program operates in each state, and "possibly avoidable". This categorization provides a measure of the "adjusted disenrollment rate" for a state and suggests areas for improvement of retention rates.

California’s adjusted disenrollment rate is 16%. This means that for every 100 children that enroll, 16 are disenrolling for possibly avoidable reasons.

Unavoidable disenrollments:

Some disenrollments are "unavoidable" given current program rules. Unavoidable disenrollments in the HFP account for 8% of all children.

For example, when a subscriber attains age 19, they are required to be disenrolled. It is incorrect to view this disenrollment as a system failure of the HFP. (Observers may argue that it is a design flaw of federal law that restricts SCHIP eligible children to those under age 19.) Other "unavoidable" disenrollments include those that result from the child no longer being eligible at the Annual Eligibility Review, those that result from a family’s failure to provide citizenship or immigration documents, and those that are the result of an applicant’s request. While these are classified for analysis purposes as unavoidable, they are in some cases reflective of federal standards (immigration documentation) and in others of state policy choices (birth certificate documentation).

The largest groups of disenrolled children are those that have disenrolled for "possibly avoidable reasons". These account for 16% of children enrolled in the HFP.

The caveat "possibly" is used because the two largest reasons for possibly avoidable disenrollments are catch-alls; non-payment of premiums is recorded as the reason for disenrollment when the program does not have other information on why the family disenrolled — these disenrollments are the result of a variety of factors including financial hardship, attaining Medi-Cal or employer based coverage, moving out of state, family income increasing above eligibility levels or dissatisfaction with the program. For some families, the exact reason will never be known because the family can not be contacted. The other large catchall category is "non return of Annual Eligibility Review materials". All the reasons listed above may be the underlying reason for disenrollment of these families. In addition, the program’s Annual Eligibility Review materials may influence this category. Whether the materials are simple to understand and presented in the family’s language.

This analysis indicates that retention rates in the HFP compare favorably to retention rates in the insurance industry.

The analysis also suggests that there are opportunities to improve retention rates. Improvements in the billing process would appear to offer the greatest area for gains in retention rates. Ideas include:

In addition, more information is needed on disenrollments in the two large catchall categories of non-payment of premium and Annual Eligibility Review information not returned. Without this information, the following administrative improvements may decrease disenrollments for these two broad categories.

• Telephone survey/follow-up for Annual Eligibility Review packets not received
• 30-day reminder to applicants disenrolled for Annual Eligibility Review not received and incomplete still can turn in documents with break in coverage

Another area that may prove useful in increasing retention rates is to involve application assistants more fully in the Annual Eligibility Review process. Ideas in this area include:

• CAA authorization on application to permit CAAs to assist with problems on initial application and Annual Eligibility Review
• CAA authorization on application to inform or remind applicant that Annual Eligibility Review is due