Press release




In response to questions from states, and noting that it is imperative that the State Children’s Health Insurance Program (SCHIP) cover the lowest-income children first and prevent substitution of public health benefits over private insurance coverage, the Centers for Medicare & Medicaid Services (CMS) today addressed state questions about the CMS review strategy to achieve those goals.

“SCHIP was intended to provide health insurance to children in working families with incomes too high to qualify for Medicaid, but too low to afford private insurance,” said CMS Acting Administrator Kerry Weems. “Over the course of the SCHIP, we have become increasingly concerned that these programs might be expanded to kids with higher incomes while not assuring that children in poorer circumstances had coverage.  We have to ensure that children with the lowest incomes and without health insurance are helped first.”

In a letter sent to state health officials today, CMS addressed questions raised about a review strategy it first set out in a letter sent to those officials on August 17, 2007.  The August 2007 letter notified states that the agency in accordance with existing statutory and regulatory requirements would use this review strategy to ensure that when a states raises SCHIP eligibility levels to include children in families with incomes above 250 percent of the federal poverty level (FPL), or $53,000 for a family of four in 2008, it has reasonable procedures in place to prevent “crowd-out” or the dropping of private coverage in favor of SCHIP.

Notable in the August 2007 review strategy was the crowd-out prevention procedure of at least one year of non-coverage prior to enrollment. The review strategy also asked assurance from states that lower income children had health care coverage by demonstrating that at least 95 percent of its children in families with incomes below 200 percent of poverty had SCHIP, Medicaid or private coverage prior to enrolling children in families at higher incomes. (200 percent of the FPL for a family of four in 2008 is $42,400)

Today’s letter addresses concerns raised by some states about the review strategy set out in the August 2007 letter.  The new letter also reinforces that states have the opportunity to suggest other strategies to prevent crowd-out at high income levels. For instance, the letter notes, CMS will consider alternatives to the one-year non-coverage waiting period if the state shows it has an equally effective alternative to prevent crowd out.

“CMS has and will continue to work cooperatively with states to cover children and avoid substitution of existing coverage,” Weems said.  “The August 2007 letter was intended as policy guidance that would be applied on an individualized state-by-state basis.”

Today’s letter also reiterates that none of the crowd-out strategies outlined last year need to be applied to children currently enrolled in SCHIP, as some states had believed.  As long as a child maintains continuous SCHIP enrollment, that child is “grandfathered” into the program and need not be subject to any restrictions or changes in cost-sharing, the letter explains.

Also, states do not need to apply the 12-month waiting period or any cost-sharing requirements to children in families with incomes at less than 250 percent of FPL, nor should states apply any crowd-out policies to unborn children eligible for SCHIP.

Today’s letter also addresses concerns that it is too difficult for states to meet the goal of covering 95 percent of the state’s low-income children. “Based on conversations with states,” Weems said, “we are convinced that a number of states have already reached this goal.  We will continue to work with them on ways to document compliance using several different, yet reliable, data sources.”

“We, like our state partners in SCHIP, want first and foremost to assure that SCHIP is serving as many low-income uninsured children as possible while at the same time complying with the laws and regulations that were put in place to protect the most vulnerable among them.”

Today’s letter to state health officials can be seen at  

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