CMS Guidance Increases Urgency for Congress to Extend CHIP Funding

Last week, the Center for Medicaid and CHIP Services (CMCS) released an informational bulletin with guidance for states in the event they exhaust remaining CHIP funds before Congress acts. This is just another sign of how perilously close we are to seeing children’s coverage disrupted. And even if Washington can be counted on to eventually get CHIP done, lessons learned from prior funding shortfalls show that the impact of even temporary program closures could leave tens of thousands of kids uninsured and would threaten our nation’s success in covering 95 percent of children.

The CMCS Information Bulletin makes it clear that in the absence of federal CHIP funding, separate CHIP programs are not subject to the CHIP maintenance-of-effort provision (MOE). States may close or freeze their separate CHIP programs, although they also have the option to transition some or all of the children and pregnant women covered by CHIP into Medicaid.

On the other hand, CHIP-funded Medicaid expansions in place on March 23, 2010 remain protected by the Medicaid MOE. Although in a number of states, the stairstep kids – those children, ages 6 – 18, in families with income between 100 and 133 percent FPL – were not enrolled in Medicaid at that time, they must continue to be covered as a mandatory group in Medicaid.

It’s important to note, however, that states will only receive the traditional Medicaid match, which is between 24 and 38 percentage points lower than the current enhanced CHIP match for these children in Medicaid. All but two states have some children in Medicaid expansion coverage, so almost all states will be impacted financially, with the 15 states that cover all CHIP children in Medicaid being hit the hardest.

The CMCS bulletin goes on to discuss the operational aspects of closing down CHIP, and they are very similar to those we noted in this blog and our recent brief on the consequences of delayed Congressional action on CHIP.  These include conferring with tribes and other stakeholders; making eligibility systems changes; amending contracts with managed care organizations, call centers, and other vendors; training staff; communicating with families and key partners; and devising continuity of care strategies for children receiving long-term treatment.

While the exact date that states will run out of money may still change a bit, we are getting much closer to pinning down the month in which states will exhaust both leftover allotments and redistribution funds. MACPAC recently updated its interim projections, although the share of the $3 billion in redistribution funds will be adjusted based on the latest expenditure data no later than November 30, 2017.

According to MACPAC, nearly half of the states will exhaust all available federal funding before the end of February. Two states (AZ and MN) run out in December, followed by six states (CA, DC, NC, OR, VT, and WA) in January. Then it snowballs with 14 more states (CO, CT, DE, FL, HI, ID, LA, MA, MT, NV, OH, PA, RI, and UT) exhausting funds sometime in February.

Important caveat: the MACPAC projections do not mean that the 14 states running out of federal funds in February have sufficient funding to provide coverage for the full month of February, especially if they contract with managed care organizations to deliver services. The MACPAC estimates do reflect that 1.2 million children enrolled in separate CHIP programs in the 22 states noted above are at risk of losing coverage as early as the end of January if Congress fails to extend CHIP funding in time.

States continue to face a dilemma – take action and risk alarming families or continue to hold their breath in hopes that Congress will deliver on its promises to extend CHIP funding. Congress can resolve this dilemma and send a sigh of relief to states and the millions of families whose children depend on CHIP. But every day that passes without a CHIP funding extension makes it far more difficult for states to sit idly on the sidelines and do nothing.