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CMS Issues Guidance on Aug. 17 SCHIP Directive

By Mary Agnes Carey, CQ HealthBeat Associate Editor

May 7, 2008 -- New guidance from the Bush Administration concerning an Aug. 17 directive on coverage under the State Children's Health Insurance Program (SCHIP) has done little to calm critics' charges that the directive will hurt states' ability to expand health care coverage to uninsured children.

Among its provisions, the guidance CMS issued last August requires states seeking to expand SCHIP to first assure the government they have covered 95 percent of children in families earning less than 200 percent of the poverty level before covering children from families making 250 percent or more. The restrictions infuriated advocates of wider coverage of uninsured children, who said the rules set conditions that can't be met for covering children above 250 percent of the poverty level.

That standard is not too difficult to meet, CMS said Wednesday, adding that states could use data demonstrating Medicaid, SCHIP, or private coverage to show they had reached the 95 percent requirement. "This is an achievable goal and based on conversations with states, we are convinced that a number of states have already reached this goal," Herb B. Kuhn, CMS deputy administrator and acting director for the agency's Center for Medicaid and State Operations, wrote in a letter to state health officials.

The letter also told states that they can suggest other ways to prevent "crowd-out," or the substitution of public health care coverage for insurance offered in the private sector, and the letter also reiterates that the Aug. 17 directive does not apply to children currently enrolled in the program. States need not apply the 12-month waiting period or any cost-sharing requirements to children in families with incomes at less than 250 percent of the federal poverty level, nor should states apply crowd-out policies to unborn children eligible for SCHIP, according to CMS.

Lawmakers and child health advocates said the CMS letter stops far short of their goal of overturning the Aug. 17 directive. An aide to Senate Finance Committee Chairman Max Baucus, D-Mont., said late Wednesday that while committee staff has just begun to review the document, "it is immediately clear that this letter does not seek to reverse the August 17th directive, as requested by Chairman Baucus. The directive was issued in violation of the Congressional Review Act."

Sen. John D. Rockefeller IV, D-W.Va., who is sponsoring legislation (S 2049) that would nullify the Aug. 17 SCHIP directive, said CMS' action Wednesday "doesn't change the fact that the policy outlined in the August 17 CHIP directive is illegal." CMS officials have testified before Congress that they believe the agency had the power to issue the Aug. 17 SCHIP guidance.

Bruce Lesley, president of the child advocacy group First Focus, said the CMS letter "really doesn't do much" other than clarify the Aug. 17 guidance does not apply to children currently enrolled in the program and that the one-year waiting period for coverage does not apply to unborn children and other special circumstances.

But the directive issued last August, Lesley said, "is still illegal and it's bad for kids ... The policy has to go away."

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