CMS Directive Restricts SCHIP Coverage
On August 17th, the Centers for Medicare and Medicaid Services (CMS) issued a directive to State Childrens Health Insurance Program directors bypassing the legislative process and altering the practices that have governed SCHIP for the last ten years. The directive introduces eight new restrictions and conditions on states' abilities to cover children over 250% FPL and limits the flexibility states have to design their programs effective August 17, 2008. The directive asserts that states meet several conditions before they can cover children in families with incomes above 250 percent of the federal poverty level. One condition is that states must prove they are covering 95 percent of the children whose families are at 200 percent of poverty level ($42,400 for a family of four). A second condition asserts that private employer-based coverage in the state has not declined by more than 2% over the last five years. If states can satisfy these two requirements, they may provide coverage to children over 250% FPL. However, a second layer of the directive imposes two additional conditions: (1) children must be uninsured for an entire year before they are permitted to enroll and (2) out-of-pockets costs must equal the maximum allowed by SCHIP (5% of family income) or no less than they would pay for private coverage minus 1% of family income. Implications for California
If the directive were to be met in California, approxi-mately 34,000 kids could lose coverage. The directive may also affect the state's ability to expand coverage to thousands of children up to 300% FPL, as supported by the Governor and other key policymakers. It is also unclear whether California could meet the 95% participation rate provision as the August 17th letter did not indicate what data standard would be utilized. Additionally, enrollment levels fluctuate throughout the year and are impacted largely by changes in the economy. The requirement that 95% of eligible children must be enrolled is unrealistic. Studies have shown that in a given year over 10%more than 300,000 childrenfall off the Medi-Cal program, only to return a short time later (see Churning and Racial Disparities in Medi-Cal available through The California Endowment). The Governor's cuts to last year's budget for outreach and enrollment services in California made it even more difficult to sign up eligible, but unrolled children to meet the 95% participation condition. Finally, the directive will result in increased administrative costs at the state and local levels. The costs of making the necessary changes to enrollment systems, applications and eligibility would be significant. The Push Back
Children and families are counting on Congress to fix this problem by suspending the implementation of the CMS directive. Several lawsuits have already been filed on behalf of states and advocates are being urged to contact their representatives. For more information, please visit MRMIB . April 4, 2008
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