MEDICAID, SCHIP, AND OTHER HEALTH PROVISIONS IN H.R. 5661: MEDICARE, MEDICAID, AND SCHIP BENEFITS IMPROVEMENT AND PROTECTION ACT OF 2000

CRS Report for Congress
H.R. 5661: Medicare, Medicaid, and SCHIP
provement and Protection Act of 2000
Updated January 4, 2001
Jean Hearne
Elicia Herz
Specialists in Social Legislation
Evelyne Baumrucker
Analyst in Social Legislation
Domestic Social Policy Division


Congressional Research Service ˜ The Library of Congress

Medicaid, SCHIP and Other Health Provisions in H.R. 5661:
Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000
Summary
While largely comprised of Medicare provisions, the Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of 2000 (H.R. 5661), a compromise
agreement between House and Senate committees and the leadership, includes a
number of important changes to Medicaid and the State Children’s Health Insurance
Program (SCHIP). It also includes major provisions amending other programs. The
provisions of H.R. 5661 are incorporated, by reference into H.R. 4577, the
Consolidated Appropriations Act 2001. H.R. 4577 was passed by the House and
Senate on December 15, 2000 and was signed into law on December 21 (P.L. 106-

554).


Among the major Medicaid modifications are several provisions affecting
disproportionate share hospital (DSH) payments provided to hospitals that treat a
disproportionate share of uninsured and Medicaid enrollees. The agreement
increases the disproportionate share hospital allotments for states. It also extends a
special DSH payment rule for public hospitals in California to qualifying facilities
in all states, and provides additional funds to certain public hospitals not receiving
DSH payments. In addition to these DSH provisions, the bill replaces cost-based
reimbursement with a prospective payment system for Federally Qualified Health
Centers (FQHCs) and Rural Health Centers (RHCs). The agreement also modifies
proposed rules governing upper payment limits on inpatient and outpatient services
provided by certain types of facilities, and requires that the final regulations be issued
by the end of 2000.
One major SCHIP provision extends the availability of unused funds from
FY1998 and FY1999 and redistributes these unused funds among both those states
that spend and those that do not spend their full original allotments for these years.
Current law requires that these unused funds be distributed only to those states that
spend their allotments.
Among other major provisions, the agreement requires that outreach efforts be
implemented to identify individuals who may be eligible for Medicaid payment of
Medicare cost-sharing and to notify these persons of the availability of such
assistance. It increases the authorization of annual appropriations for the Maternal
and Child Health Services Block Grant under Title V. In addition, the bill extends
for 1 year, to FY2003, the authority for grants to be made for both the Special
Diabetes Program for Type I Diabetes and the Special Diabetes Programs for Indians
and increases total funding for FY2001 through FY2003. Finally, the agreement
provides an additional FY2001 direct appropriation for the Ricky Ray Hemophilia
Relief Fund.
For information on the Medicare provisions, see CRS Report RL30707,
Medicare Provisions in H.R. 5661: Medicare, Medicaid and SCHIP Benefits
Improvement and Protection Act of 2000 (available upon request).



Contents
In troduction ......................................................1
Recent Legislative Activity......................................3
Medicaid, SCHIP, and Other Provisions in the Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of 2000..............6
Title VII. Medicaid................................................6
Disproportionate Share Hospital Payments..........................6
New Prospective Payment System for FQHCs and RHCs..............9
Requests for Extension of Medicaid Waivers.......................10
Medicaid County-Organized Health Systems.......................11
Medicaid Upper Payment Limits.................................12
Alaska FMAP................................................13
Welfare-to-Work Transition....................................14
Determination of Medicaid Presumptive Eligibility for Low-Income
Children ................................................15
Development of Uniform QMB/SLMB Application Form.............15
Technical Corrections.........................................16
Title VIII. State Children’s Health Insurance Program....................17
Continued Availability and Redistribution of Unused SCHIP Funds.....17
Authority to Pay for Medicaid Expansion SCHIP Costs From
Title XXI Appropriation...................................18
Application of Medicaid Child Presumptive Eligibility Provisions......19
Title IX. Other Provisions..........................................20
Extension of Transition for Current PACE Waivers..................20
Continuing Certain PACE Operating Arrangements..................21
Flexibility in Exercising Waiver Authority.........................21
Outreach for Medicare Beneficiaries Eligible for Medicaid
Cost-Sharing Assistance ...................................22
Maternal and Child Health Block Grant...........................22
Diabetes ....................................................23
Appropriations for Ricky Ray Hemophilia Relief Fund...............23
Information on Nurse Staffing...................................24



Medicaid, SCHIP and Other Health Provisions
In H.R. 5661: Medicare, Medicaid,
And SCHIP Benefits Improvement and
Protection Act of 2000
Introduction
Medicaid is a joint federal-state entitlement program that pays for medical
assistance primarily for low-income persons who are aged, blind, disabled, members
of families with dependent children, and certain other pregnant women and children.
Within broad federal guidelines, each state designs and administers its own program.
Total program outlays in FY1999 were $180.9 billion. Federal outlays were $102.5
billion and state outlays were approximately $78.4 billion. The federal government
shares in a state’s Medicaid costs by means of a statutory formula designed to
provide a higher federal matching rate to states with lower per capita incomes. In
FY1999, federal matching rates ranged from 50% to 76% of a state’s expenditures
for Medicaid items and services. Overall, the federal government finances about

57% of all Medicaid costs.



The 105th Congress made important changes to the Medicaid program through
the Balanced Budget Act of 1997 (BBA 97; P.L. 105-33).1 That legislation included
provisions to achieve net Medicaid savings of about $13 billion between FY1998 and
FY2002, largely from reductions in supplemental payments to hospitals that serve a
disproportionate share of Medicaid and low-income patients. BBA 97 also
significantly increased the flexibility that states have to manage their Medicaid
programs. In particular, it gave states the option of requiring most beneficiaries to
enroll in managed care plans without seeking a federal waiver, and replaced federal
reimbursement requirements imposed by the Boren amendments with a public notice
process for setting payment rates for institutional services. The Act also required that
the previously existing cost-based reimbursement system for Federally Qualified
Health Centers (FQHCs) and Rural Health Clinics (RHCs) be phased out over a 6-
year period. Spending items in the Act included Medicaid coverage for additional
children, and increased assistance for low-income individuals to pay Medicare Part
B premiums.
The 106th Congress made additional changes to Medicaid in 1999. On
November 29 of that year, the President signed the Consolidated Appropriations Act
for FY2000 (P.L. 106-113). Included in that bill by reference was the Medicare,
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA 99), a bill
largely comprised of Medicare provisions, but which also included a number of
changes to Medicaid and the State Children’s Health Insurance Program (SCHIP;
described below).
In addition to technical amendments to BBA 97, BBRA 99 included provisions
allowing for increased Medicaid disproportionate share payments to hospitals for
certain states and the District of Columbia, and for extended access to a special $500
million fund to pay for Medicaid eligibility determinations resulting from welfare
reform for a longer period of time than allowed under previous law. BBRA 99 also
modified the schedule for phasing out cost-based reimbursement for FQHCs and
RHCs that had been included in the BBA 97.
SCHIP, enacted in BBA 97, is targeted at uninsured children who live in
families with income below twice the federal poverty level and who would not
otherwise be eligible for Medicaid. The program began in October 1997 with total
federal funding of nearly $40 billion for the period FY1998 through FY2007. States
may use SCHIP funds to provide coverage through health insurance that meets
specific standards for benefits and cost-sharing (known as separate state programs),
or through expansions of eligibility under Medicaid, or through a combination of
both options. SCHIP entitles states with approved SCHIP plans to pre-determined,
annual federal allotments based on a distribution formula set in law. Each state has
flexibility to define the group of targeted, low-income children who are eligible for
its SCHIP. Eligibility criteria may include, for example, geography, age, income and
resources, residency, disability status, access to other health insurance, and duration
of eligibility for SCHIP. All 50 states, the District of Columbia and five territories
had approved SCHIP plans. Among these, 22 are Medicaid expansions, 16 are new


1 For a detailed description of the changes to Medicaid under BBA 97, see CRS Report 98-

132, Medicaid: 105th Congress, by Melvina Ford and Richard Price.



or expanded separate state programs, and 17 will use both a Medicaid expansion and
a separate state program.
Changes to SCHIP in BBRA 99 included provisions to improve state-level data
collection; to evaluate the SCHIP (and Medicaid) programs with respect to outreach
and enrollment practices; and to create a clearinghouse to coordinate and consolidate
federal databases and reports on children’s health. In addition, BBRA 99 included
a number of changes to the formula used to distribute federal SCHIP funds among
the states, increased the amounts available for U.S. territories, and minor technical
changes.2
BBA 97 established the Program of All-Inclusive Care for the Elderly (PACE)
as a permanent provider under Medicare and as a special optional benefit under
Medicaid. Individuals eligible for PACE are those over age 55 who require a nursing
facility level of care covered in a state Medicaid program, and who meet other
eligibility requirements imposed under the program agreement. PACE providers
include public entities or private, not-for-profit organizations providing health and
long-term services on a capitated basis to eligible beneficiaries. They must provide
all items and services covered under Medicare and Medicaid. There are no limits on
amount, duration or scope of services and there are no cost-sharing requirements for
PACE enrollees.
The Maternal and Child Health (MCH) Services Block Grant Program (Title V
of the Social Security Act) has three components – formula block grants to 56 states
and territories for primary care services to mothers and children, Special Projects of
Regional and National Significance (SPRANS), and Community Integrated Service
Systems (CISS) grants. The formula grant program uses appropriated funds for a
wide variety of activities, including but not limited to, capacity and systems building,
public information and education, outreach and program linkage, technical
assistance, and direct health care services where no services are available. SPRANS
activities include maternal and child health research, training, genetic services,
hemophilia diagnostic and treatment centers, and maternal and child health
improvement projects. CISS grants seek to reduce infant mortality and improve the
health of mothers and children through development and expansion of integrated
services at the community level. The block grant requires that states match $3 in
funds or resources for every $4 in federal funds received, and that a minimum of 30%
of block grant funds be used to support programs for children with special health care
needs. For FY1994 forward, Title V authorizes to be appropriated $705 million
annually.
BBA 97 created two diabetes grant programs under the Public Health Service
Act. One grant program supports research into the prevention and cure of type I
diabetes, or insulin-dependent diabetes. The second grant program supports
prevention and treatment of diabetes in Indians. For FY1998 through FY2002, each


2 For a detailed description of changes to Medicaid and SCHIP under BBRA 99, see CRS
Report RL30400, Medicaid and the State Children’s Health Insurance Program (SCHIP):
Provisions in the Consolidated Appropriations Act for FY2000, by Jean Hearne and Elicia
Herz.

program receives $30 million annually through funds transferred from the SCHIP
appropriation. BBA 97 also required evaluations of these grant programs with an
interim and final report due to Congress on January 1, 2000 and January 1, 2002,
respectively.
The Ricky Ray Hemophilia Relief Fund Act of 1998 (P.L. 105-369) established
a 5-year trust fund to make compassionate payments of $100,000 to certain
individuals with blood clotting disorders, such as hemophilia, who contracted HIV
(human immunodeficiency virus) through the use of anti-hemophiliac factor between
July 1, 1982 and December 31, 1987. The Act authorized appropriations to the trust
fund totaling $750 million. The fund received an initial appropriation of $75 million
in FY2000. H.R. 5661 provides a direct appropriation of $475 million for FY2001,
in addition to $105 million appropriated in the FY2001 Miscellaneous
Appropriations Act (H.R. 5666). The trust fund has, therefore, received a total of
$655 million, which is estimated to be sufficient to pay all the eligible claims.
Recent Legislative Activity
In late September and early October of 2000, the committees with jurisdiction
over the programs described above – the House Committee on Commerce and the
Senate Committee on Finance – introduced legislation that would affect these
programs. On September 27, 2000, the House Commerce Committee ordered
reported a bill, the Beneficiary Improvement and Protection Act of 2000 (H.R. 5291).
On October 5, 2000 William V. Roth Jr., the Senate Finance Committee Chairman,
introduced the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
of 2000 (S. 3165).
On December 15, 2000, the Consolidated Appropriations Act 2001 (H.R. 4577)
was passed by the House and Senate; it was signed into law on December 21 (P.L.
106-554). It included, by reference, the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (H.R. 5661), a compromise agreement
between House and Senate committees and the leadership, which contained a
number of important changes to Medicaid and the State Children’s Health Insurance
Program (SCHIP). It also included major provisions amending other health
programs.
With respect to Medicaid, a number of changes are made to disproportionate
share hospital (DSH) funding. First, the agreement sets each state’s FY2001 DSH
allotment equal to its allotment for FY2000, increased by the percentage change in
the consumer price index for FY2000, subject to a ceiling of 12% of that state’s total
medical assistance payments. A parallel change is made for FY2002 allotments.
The bill also applies the 175% hospital-specific DSH limit to certain public hospitals
in all states (not just those in California as under current law) for a 2-year period.
Additional funds are provided for certain state public hospitals not receiving DSH
payments and having a low-income utilization rate in excess of 65%.
The are two other major Medicaid provisions in the agreement. The bill
replaces the current cost-based reimbursement arrangements for Federally Qualified
Health Centers and Rural Health Clinics with a new Medicaid prospective payment
system. The agreement also modifies proposed HHS rules governing upper payment



limits on inpatient and outpatient services provided by certain types of facilities, and
requires that final regulations be issued by the end of 2000. The proposed rules and
modifications made by the agreement close a loophole under which some states are
maximizing federal Medicaid payments arguably beyond the intent of federal statute.
Finally, the bill extends by 1 year the availability of transitional medical assistance
(TMA) for certain families no longer eligible for Medicaid on the basis of meeting
former Aid to Families with Dependent Children (AFDC) rules and adds several
entities to those qualified to make Medicaid presumptive eligibility determinations
for children. Under Medicaid presumptive eligibility rules, states are allowed to
temporarily enroll children whose family income appears to be below Medicaid
income standards, until a final formal determination of eligibility is made.
With respect to SCHIP, the agreement extends the availability of unused
FY1998 and FY1999 SCHIP allotments.3 Following specific formulas, these unspent
funds are redistributed to both those states that have and those that have not fully
exhausted their original allotments within required time frames. Current law
redistributes unused funds only to those states that spend their allotments. The bill
also authorizes the payment of costs of SCHIP Medicaid expansions and costs of
benefits provided during periods of presumptive eligibility from the SCHIP
appropriation rather than the Medicaid appropriation and clarifies states’ authority
to conduct presumptive eligibility determinations, as defined in Medicaid law, under
separate (non-Medicaid) SCHIP programs.
With respect to other programs, the agreement requires that outreach efforts be
implemented to identify individuals who may be eligible for Medicaid payment of
Medicare cost-sharing and that those individuals are notified of the availability of
such assistance. The agreement increases the authorization of annual appropriations
for the MCH Services Block Grant from $705 million to $850 million for FY2001
and thereafter. In addition, the bill extends for 1 year, to FY2003, the authority for
grants to be made for both the Special Diabetes Programs for Type I Diabetes and
the Special Diabetes Programs for Indians. It also increases total funding to $100
million each for FY2001 through FY2003. For FY2001 and FY2002, a portion of
these funds are transferred from the SCHIP appropriation. Finally, the agreement
provides for a direct appropriation of $475 million for FY2001, in addition to funds
appropriated in the FY2001 Labor-HHS-Education appropriations bill, for the Ricky
Ray Hemophilia Relief Fund.
The Congressional Budget Office (CBO) has released preliminary cost estimates
for the Benefits Improvement and Protection Act of 2000. CBO estimates that the
Medicaid , SCHIP and other program provisions would decrease federal outlays by
$16.6 billion over the 5-year period 2001 to 2005 and $69.2 billion over 10 years
(2001-2010). Among all of these provisions, the most significant in terms of its
impact on the federal budget is the revision to Medicaid’s upper payment limit


3 For a detailed description of changes to the allotment redistribution rules, see CRS Report
RS20628, State Children’s Health Insurance Program (SCHIP): Proposed Fundingth
Changes in the 106 Congress, by Evelyne P. Baumrucker (available upon request).

(UPL). The UPL changes in the bill would result in savings of $21.5 billion over 5
years and $76.7 billion over 10 years.4
The following side-by-side comparison provides a brief description of current
law and the changes to these programs under the Medicare, Medicaid and SCHIP
Benefits Improvement and Protection Act of 2000. These provisions start at Title VII
of the bill, the previous six titles being devoted to Medicare.
See CRS Report RL30703, Medicaid and SCHIP Provisions in H.R. 5291 and
S. 3165 (the 2000 Medicare “Refinement Bills”) for a side-by-side comparison of the
provisions in recent related bills. For detailed information on the Medicare
provisions contained in the Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000, see CRS Report RL30707, Medicare Provisions in H.R.
5661: Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of

2000 (available upon request).


4 For a detailed description of changes to the Medicaid upper payment limit rules, see CRS
Report RS20726, Medicaid Upper Payment Limits and Intergovernmental Transfers:
Current Issues and Changes Made in H.R. 5661, by Elicia J. Herz (available upon request.)

CRS-7
dicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000
Title VII. Medicaid
re Hospital Payments
Current LawAgreement
n 701. (a) Modifications to DSHThe federal share of Medicaid disproportionate share hospitalFor FY2001, sets each state’s DSH allotment equal to its allotment
tments(DSH) payments, i.e., payments for hospitals that treat afor FY2000 increased by the percentage change in the consumer
disproportionate share of uninsured and Medicaid enrollees, isprice index for that year, subject to a ceiling that would be equal to
capped at specified amounts for each state for FY1998 through12% of that state’s total medical assistance payments in that year.
FY2002. A state’s allotment for years after 2002 will be equal to
its allotment for the previous year increased by the percentageFor FY2002, sets each state’s DSH allotment equal to its allotment
iki/CRS-RL30718change in the consumer price index for the previous year. Infor 2001 as determined above, increased by the percentage change
g/waddition, each state’s DSH payments for FY2003 and beyond arein the consumer price index for FY2001, subject to a ceiling equal
s.orlimited to no more than 12% of spending for medical assistance forto 12% of that state’s total medical assistance payments in that
leakthat year.year.
://wikiFor extremely low DSH states, i.e., states whose FY1999 federal
httpand state DSH expenditures (as reported to HCFA on August 31,
2000) are greater than zero but less than one percent of the state’s
total medical assistance expenditures during that fiscal year, the
DSH allotments for FY2001 would be equal to 1% of the state’s
total amount of expenditures under their plan for such assistance
during that fiscal year. For subsequent fiscal years, the allotments
for extremely low DSH states would be equal to their allotment for
the previous year, increased by the percentage change in the
consumer price index for the previous year, subject to a ceiling of
12% of that state’s total medical assistance payments in that year.
Effective on the date that the final regulation for Medicaid upper
payment limits is published in the Federal Register.



CRS-8
Current LawAgreement
n 701. (b) Assuring IdentificationStates are required to provide disproportionate share payments toEffective for Medicaid managed care contracts in effect on January
edicaid Managed Care Patientsthose hospitals whose Medicaid inpatient utilization rate is at least1, 2001, the provision would clarify that Medicaid enrollees of
one standard deviation above the mean Medicaid inpatientmanaged care organizations (MCO) and primary care case
utilization rate for all hospitals receiving Medicaid payments in themanagement organizations are to be included for the purposes of
state, and those with a low-income utilization rate above 25%. Thecalculating the Medicaid inpatient utilization rate and the low-
Medicaid inpatient utilization rate includes the number of inpatientincome utilization rate. Also effective January 1, 2001, states must
days attributable to Medicaid beneficiaries. The low-incomeinclude in their MCO contracts information that allows the state to
utilization rate includes the total revenues paid on behalf ofdetermine which hospital services are provided to Medicaid
Medicaid beneficiaries.beneficiaries through managed care, and would also require states
to include a sponsorship code for the managed care entity on the
Medicaid beneficiarys identification card.


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CRS-9
Current LawAgreement
ion 701. (c) Application of MedicaidIn all states but California, DSH payments to each inpatient generalRevises BBA97, as modified by BBRA 99, so that the 175%
H Transition Rule to Public Hospitalshospital are limited to no more than the costs of providing inpatienthospital-specific DSH limit allowing DSH payments in amounts up
ll statesand outpatient services to Medicaid and uninsured patients at thatto 175% of each hospitals cost of unreimbursed care, formerly
hospital, less payments received from or on behalf of Medicaid andapplied only to certain public hospitals in California, applies to
uninsured patients. These costs are considered to be unreimbursedqualifying public hospitals in all states. The higher limit would
costs. This cap the hospital-specific or facility-specific DSH capapply for two state fiscal years beginning on the first day of the
– was phased-in for certain public hospitals. During state fiscalstate fiscal year that begins after September 30, 2002 and ends on
years beginning before January 1995, those hospitals could receivethe last day of the succeeding state fiscal year. Hospitals that
DSH payments equal to 200% of unreimbursed costs. Afterwould qualify for the higher hospital-specific limit would be those
January 1995, all hospitals except those in California, were limitedowned or operated by a state and meet the minimum federal
to no more than 100% of unreimbursed costs. Hospitals qualifyingrequirements for disproportionate share hospitals. The permanent
for the 200% cap during the transition period were those with aceiling for California would not be affected.
“high disproportionate share”. Hospitals with a “high
disproportionate share” were defined as those owned or operatedFor states operating under waivers approved under Section 1115 of
iki/CRS-RL30718by a state (or by an instrumentality or unit of government within astate) with a very high Medicaid inpatient utilization rate or withthe Social Security Act, increased payments for public hospitalsunder this provision would be included in the baseline expenditure
g/wmore Medicaid inpatient days than any other hospital in the state.limit for the purposes of determining budget neutrality.
s.or
leakBBA 97 increased the hospital-specific limit for public hospitals in
California to 175% of unreimbursed costs. The 175% hospital
://wikispecific cap for California was effective for a transition period that
httpended in 1999. BBRA 99 later permanently extended this
hospital-specific limit for qualifying public hospitals in California.
Budget neutral Section 1115 waivers allow states to forego certain
Medicaid rules to implement demonstrations.
ion 701. (d) Assistance for CertainNo provision.Provides additional funds for certain public hospitals that are:
blic Hospitalsowned or operated by a state (or by an instrumentality or unit of
government within a state); are not receiving DSH payments as of
October 1, 2000; and have a low-income utilization rate in excess
of 65% as of the same date. Funds provided under this section to
states with eligible hospitals are in addition to DSH allotments.
The total assistance under this section for all states cannot exceed
the following amounts: $15 million for FY2002; $176 million for
2003; $269 million for 2004; $330 million for 2005; and $375
million for FY2006 and each year thereafter.



CRS-10
Current LawAgreement
ction 701. (e) DSH Payment HospitalBBA 97 required each state to submit to the Secretary an annualRequires the Secretary to implement accountability standards to
Standardsreport describing the disproportionate share payments made toensure that DSH payments are used to reimburse states and
each disproportionate share hospital.hospitals that are eligible for such payments and are otherwise in
accordance with Medicaid statutory requirements.


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CRS-11
Prospective Payment System for FQHCs and RHCs
Current LawAgreement
ion 702. New prospective paymentStates are required to pay FQHCs and RHCs amounts that are atCreates a new Medicaid prospective payment system for FQHCs
r Federally Qualified Healthleast a percentage of the facilities’ reasonable costs for providingand RHCs. Beginning in January of FY2001, existing FQHCs and
nters (FQHCs) and Rural Healthservices 100% of costs for services during FY1998 and FY1999;RHCs would be paid per visit payments equal to 100% of the
nters (RHCs)95% for FY2000, FY2001 and FY2002; 90% for FY2003; 85% foraverage costs incurred during 1999 and 2000 adjusted for any
FY2004. Cost-based reimbursement expires in 2005. In the caseincrease or decrease in the scope of services furnished. For entities
of a contract between an FQHC or RHC and a managed carefirst qualifying as FQHCs or RHCs after 2000, the per visit
organization (MCO), the MCO must pay the FQHC or RHC atpayments would begin in the first year that the center or clinic
least as much as it would pay any other provider for similarattains qualification and would be based on 100% of the costs
services. States are required to make supplemental payments to theincurred during that year based on the rates established for similar
FQHCs and RHCs, equal to the difference between the contractedcenters or clinics with similar caseloads in the same or adjacent
amounts and the cost-based amounts.geographic area. In the absence of such similar centers or clinics,
the methodology would be based on that used for developing rates
iki/CRS-RL30718for established FQHCs or RHCs or such methodology or
g/wreasonable specifications as established by the Secretary. For each
s.orfiscal year thereafter, per visit payments for all FQHCs and RHCs
leakwould be equal to amounts for the preceding fiscal year increased
by the percentage increase in the Medicare Economic Index
://wikiapplicable to primary care services, and adjusted for any increaseor decrease in the scope of services furnished during that fiscal
httpyear. In managed care contracts, States must make supplemental
payments to the center or clinic equal to the difference between
contracted amounts and the cost-based amounts. Alternative
payment methods would be permitted only when payments are at
least equal to amounts otherwise provided.
Directs the Comptroller General to provide for a study on how to
rebase or refine cost payment methods for the services of FQHCs
and RHCs. The report would be due to Congress no later than 4
years after the date of enactment.



CRS-12
of Medicaid Waivers
Current LawAgreement
ion 703. Streamlined approval ofUnder Section 1115 of the Social Security Act, states may obtainDefines the process for submitting requests for and receiving
inued state-wide Section 1115waivers of compliance with a broad range of Medicaidextensions of Medicaid demonstration waivers authorized under
aiversrequirements to conduct experimental, pilot, or demonstrationSection 1115 of the Social Security Act that have already received
projects. Waivers are approved for a period of 5 years. Statesinitial 3-year extensions. It would require each state requesting
wishing to obtain approval for periods beyond 5 years may submit,such an extension to submit an application at least 120 days prior
during the 6-month period ending 1 year before the date the waiverto the expiration date of the existing waiver. No later than 45 days
would otherwise expire, a written request for an extension of up toafter the Secretary receives such application, the Secretary would
3 years.be required to notify the state if she intends to review the existing
terms and conditions of the project and would inform the state of
proposed changes in the terms and conditions of the waiver. If the
Secretary fails to provide such notification, the request would be
deemed approved. During the 30-day period beginning after the
iki/CRS-RL30718Secretary provides the proposed terms and conditions to the state,
g/wthose terms and conditions would be negotiated. No later than 120
s.ordays after the date that the request for extension was submitted (or
leaksuch later date as agreed to by the chief executive officer of the
state) the Secretary would be required to approve the application
://wikisubject to the agreed upon terms and conditions or, in the absenceof an agreement, such terms and conditions that are determined by
httpthe Secretary to be reasonably consistent with the overall objective
of the waiver, or disapprove the application. If the waiver is not
approved or disapproved during this period, the request would be
deemed approved in the terms and conditions as have been agreed
to (if any) by the Secretary and the state. Approvals would be for
periods not to exceed 3 years and would be subject to the final
reporting and evaluation requirements in current law.



CRS-13
dicaid County-Organized Health Systems
Current LawAgreement
ction 704. Medicaid County-OrganizedHealth insuring organizations (HIOs) are county-sponsored healthAllows the current exemption for three California Health Insuring
lth Systemsmaintenance organizations (HMOs). Up to three HIOs designatedOrganizations (HIOs) from certain Medicaid HMO contracting
by the state of California are exempt from certain federal statutoryrequirements to apply as long as no more than 14% of all Medicaid
requirements for Medicaid HMO contracts. The exemption onlybeneficiaries in California are enrolled in those HIOs. Effective as
applies if the HIOs enroll no more than 10% of all Medicaidif included in the enactment of the Consolidated Omnibus Budget
beneficiaries in California (not counting qualified MedicareReconciliation Act of 1985.


beneficiaries) .
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CRS-14
ent Limits
Current LawAgreement
ion 705. Deadline for Issuance ofMedicaid statute requires states to set payment rates for servicesRequires the Secretary to issue final regulations governing upper
nal Regulation Relating to Medicaidthat are consistent with efficiency and economy. In accordancepayment limits (UPLs) for inpatient and outpatient services
per Payment Limitswith these requirements, the Secretary has established, throughprovided by certain types of facilities no later than December 31,
regulation, upper payment limits (UPLs) for inpatient and2000. Requires that the final regulation establish a separate UPL
outpatient services provided by certain types of facilities.for non-state-owned or operated government facilities based on a
Payments may not exceed estimates of what would have been paidproposed rule announced in October, 2000.
for those services under Medicare payment principles. Recently,
the Secretary determined that current regulations create a financialRequires the final regulation to stipulate a third set of rules
incentive for states to make higher than usual payments to non-governing the transition period for certain states. This additional
state government facilities (e.g., county and city providers)set of rules would apply to states with payment arrangements
allowing them to claim higher federal matching dollars. Thoseapproved or in effect on or before October 1, 1992, or under which
matching funds may be transferred from these facilities back to theclaims for federal matching were paid on or before that date, and
iki/CRS-RL30718state and used to cover the state share of Medicaid costs and/or forfor which such payments exceed the UPLs established under the
g/wother purposes. Proposed rules to modify Medicaid UPLs establishfinal regulation. For these states, a 6-year transition period would
s.ora separate UPL for inpatient services provided by non-stateapply, beginning with the period that begins on the first state fiscal
leakgovernment facilities. Aggregate payments for inpatient servicesyear that starts after September 30, 2002 and ends on September
provided by non-state public hospitals may not exceed 150% of30, 2008. For each year during the transition period, applicable
://wikiestimated payments based on Medicare payment principles.Parallel rules are proposed for outpatient hospital and clinicstates must reduce excess payments by 15%. Full compliance withfinal regulations is required by October 1, 2008.


httpservices. The proposed rules also specify two transition periods for
states that are currently noncompliant. These rules vary by when
enhanced payment arrangements were in effect (before versus on
or after October 1, 1999), the starting point for the phase-out of
existing payment arrangements, the percentage reduction in
payments each year, and the overall length of time permitted for
full phase-out. State fiscal year 2000 will serve as the base period
for determining the amount of excess payments above proposed
UPLs that must be phased out.

CRS-15
aska FMAP
Current LawAgreement
ion 706. Alaska FMAPThe federal share of the cost of Medicaid services is equal to theChanges the formula for calculating the state percentage and thus
federal medical assistance percentage (FMAP) of those costs. It isthe federal matching percentage for Alaska for FY2001 through
determined annually according to a statutory formula designed toFY2005. The state percentage for Alaska would be calculated by
pay a higher federal matching assistance percentage to states withusing an adjusted per capita income calculation instead of the
lower per capita incomes relative to the national average. state-wide average per capita income generally used. The
adjusted per capita income for Alaska would be calculated as the
BBA 97 included a provision that set the FMAP for Alaska atthree year average per capita income for the state divided by 1.05.


59.8% for FY1998 through FY2000.
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CRS-16
Transition
Current LawAgreement
ion 707. 1-Year Extension of Welfare-to-WorkIn 1996, Temporary Assistance for Needy FamiliesExtends by 1 year (to September 30, 2002) the availability
ansition.(TANF) replaced Aid to Families with Dependentof TMA for families no longer eligible for Medicaid on
Children (AFDC) as the major cash assistance program forthe basis of meeting former AFDC rules.


low-income families. TANF eligibility does not confer
automatic Medicaid eligibility. Medicaid entitlement was
retained for individuals who meet the requirements of the
former AFDC program in effect on July 16, 1996 (and
subsequently modified, if applicable). Transitional
medical assistance (TMA) is provided for individuals who
would otherwise lose Medicaid due to certain changes in
employment or income. Specifically when eligibility
under old AFDC rules is lost due to hours of or income
iki/CRS-RL30718from employment, or loss of a time-limited earned income
g/wdisregard, (and the person qualified for Medicaid on the
s.orbasis of old AFDC rules in at least 3 of the preceding 6
leakmonths), TMA is available for the subsequent 6 to 12
mo nt hs.
://wikiTMA will sunset at the end of FY2001.
http

CRS-17
ination of Medicaid Presumptive Eligibility for Low-Income Children
Current LawAgreement
s Qualified to DetermineUnder Medicaid presumptive eligibility rules, states areAdds several entities to the list of those qualified to make
icaid Presumptive Eligibility for Low-Incomeallowed to temporarily enroll children whose familyMedicaid presumptive eligibility determinations for
ildren.income appears to be below Medicaid income standards,children. These include agencies that determine eligibility
until a final formal determination of eligibility is made.for Medicaid or the State Childrens Health Insurance
For children, entities qualified to make presumptiveProgram (SCHIP); certain elementary and secondary
eligibility determinations include Medicaid providers, andschools; state or tribal child support enforcement agencies;
agencies that determine eligibility for Head Start,certain organizations providing emergency food and
subsidized child care, or the Special Supplemental Foodshelter to the homeless; entities involved in enrollment
Program for Women, Infants and Children (WIC).under Medicaid, TANF, SCHIP, or that determine
eligibility for federally funded housing assistance; or any
other entity deemed by a state, as approved by the
Secretary of HHS. Effective upon enactment.
iki/CRS-RL30718
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s.orvelopment of Uniform QMB/SLMB Application Form
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Current LawAgreement
://wiki
httporm QMB/SLMBication FormNo provision.Requires the Secretary of HHS to develop a simplified,national application form to be used, at state option, by
Qualified Medicare Beneficiaries (QMBs) and Specified
Low-Income Medicare Beneficiaries (SLMBs) applying
for medical assistance with Medicare cost-sharing.
Effective 1 year after the date of enactment.



CRS-18
Current LawAgreement
ion 710. Technical Corrections Medicaid statute prohibits the distribution of federalMakes technical amendments that exempt from the upper
matching funds for medical assistance provided toincome limit rule those individuals made eligible for
individuals whose family income exceeds 133a% of theMedicaid, at state option, under the Foster Care
amount that would be paid to a family of the same sizeIndependence Act of 1999 and under the Breast and
under old AFDC rules (as modified). Certain costs to theCervical Cancer Prevention and Treatment Act of 2000.


family are subtracted to determine the applicable
countable income. Specified eligibility groups are exempt
from this upper income limit rule.
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CRS-19
Title VIII. State Children’s Health Insurance Program
ntinued Availability and Redistribution of Unused SCHIP Funds
Current LawAgreement
ion 801. Special Rule forFunds for the SCHIP Program are authorized and appropriated forEstablishes a new method for distributing unspent FY1998 and
distribution and Availability of UnusedFY1998 through FY2007. From each year’s appropriation, a stateFY1999 allotments. States that use all their SCHIP allotments (for
1998 and FY1999 SCHIP Allotmentsis allotted an amount as determined by a formula set in law.each of those years) would receive an amount equal to estimated
Federal funds not drawn down from a state’s allotment by the endspending in excess of their original exhausted allotment. Each
of each fiscal year continue to be available to that state for 2territory that spends its original allotment would receive an amount
additional fiscal years. Allotments not spent at the end of 3 yearsthat bears the same ratio to 1.05% of the total amount available for
will be redistributed by the Secretary of Health and Humanredistribution as the ratio of its original allotment to the total
Services (HHS) to states that have fully spent their originalallotment for all territories.
allotments for that year. Redistributed funds not spent by the end
of the fiscal year in which they are reallocated officially expire.States that do not use all their SCHIP allotment would receive an
iki/CRS-RL30718All administrative expenses including outreach activities areamount equal to the total amount of unspent funds, less amounts
g/wsubject to an overall limit of 10% of total program spending perfiscal year.distributed to states that fully exhausted their original allotments,multiplied by the ratio of a state’s unspent original allotment to the
s.ortotal amount of unspent funds. States may use up to 10% of the
leakretained FY1998 funds for outreach activities.
://wikiTo calculate the amounts available for redistribution in each
httpformula described above, the Secretary would use amounts
reported by states not later than December 15, 2000 for the
FY1998 redistribution and November 30, 2001 for the FY1999
redistribution as reported on HCFA Form 64 or HCFA Form 21,
and as approved by the Secretary. Redistributed funds would be
available through the end of FY2002.



CRS-20
thority to Pay for Medicaid Expansion SCHIP Costs From Title XXI Appropriation
Current LawAgreement
ion 802. Authority to Pay forStates allotments under SCHIP pay only the federal share of costsAuthorizes the payment of the costs of SCHIP Medicaid
edicaid Expansion SCHIP costs fromassociated with separate (non-Medicaid) SCHIP programs. Theexpansions and the costs of benefits provided during periods of
Appropriationfederal share of costs associated with SCHIP Medicaid expansionspresumptive eligibility from the SCHIP appropriation rather than
are paid for under Medicaid. State SCHIP allotments are reducedfrom the Medicaid appropriation, and as a conforming amendment,
by the amounts paid under Medicaid for SCHIP Medicaidwould eliminate the requirement that state SCHIP allotments be
expansion costs.reduced by these (former) Medicaid payments. In addition,
codifies proposed rules regarding the order of payments for
Presumptive eligibility allows pregnant women and children inbenefits and administrative costs from state-specific SCHIP
families with income that appears to be below a state’s Medicaidallotments. For fiscal years 1998 through 2000 only, authorizes
income standards to enroll temporarily in Medicaid, until a finalthe transfer of unexpended SCHIP appropriations to the Medicaid
formal determination of eligibility is made. There is no expressappropriation account for the purpose of reimbursing payments
iki/CRS-RL30718provision for presumptive eligibility under SCHIP. However, theassociated with SCHIP Medicaid expansion programs.


g/wSecretary of HHS permits states to develop equivalent procedures
s.orfor separate (non-Medicaid) SCHIP programs through other Title
leakXXI authority.
://wiki
http

CRS-21
edicaid Child Presumptive Eligibility Provisions
Current LawAgreement
ion 803. Application of Medicaid Child PresumptiveUnder Medicaid presumptive eligibility rules, states areClarifies states’ authority to conduct presumptive
ibility Provisions.allowed to temporarily enroll children whose familyeligibility determinations, as defined in Medicaid law,
income appears to be below Medicaid income standards,under separate (non-Medicaid) SCHIP programs.


until a final formal determination of eligibility is made.
There is no express provision for presumptive eligibility
under separate (non-Medicaid) SCHIP programs.
However, the Secretary of HHS permits states to develop,
for separate (non-Medicaid) SCHIP programs, procedures
that are similar to those permitted under Medicaid.
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CRS-22
Title IX. Other Provisions
for Current PACE Waivers
Current LawAgreement
ion of Transition for Current WaiversOBRA 86 required the Secretary to grant waivers ofPermits the Secretary to continue to operate the Program
certain Medicare and Medicaid requirements to not moreof All-Inclusive Care for the Elderly (PACE) under
than 10 public or non-profit private community-basedwaivers for a period of 36 months (rather than 24 months),
organizations to provide health and long-term careand states may do so for 4 years (rather than 3 years).


services on a capitated basis to frail elderly persons at risk
of institutionalization. These projects, known as the
Program of All-Inclusive Care for the Elderly (PACE),
were intended to determine whether an earlier
demonstration program, On-Lok, could be replicated
iki/CRS-RL30718across the country. OBRA 90 expanded the number oforganizations eligible for waivers to 15. BBA 97
g/westablished PACE as a permanent provider under
s.orMedicare and as an optional benefit under Medicaid. State
leakMedicaid programs are permitted to limit the number of
://wikipersons enrolled in PACE programs. The Secretary wasrequired to issue regulations establishing requirements for
httpPACE providers (and did so with an effective date of
November 24, 1999). The Secretary may continue to
operate programs under the prior law waivers for a
transition period of 24 months after publication of the
regulations, and states may elect to continue to operate a
PACE program under special arrangements for 3 years
after the Secretarys regulations.

CRS-23
ain PACE Operating Arrangements
Current LawAgreement
ion 902. Continuing of Certain OperatingBBA 97 established PACE as a permanent part of theIf prior to becoming a permanent component of Medicare,
rangements PermittedMedicare and Medicaid programs and provided for aa PACE demonstration project had contractual or other
transition of PACE from demonstration project status tooperating arrangements that are not recognized under
permanent program status.permanent program regulations, requires the Secretary, in
consultation with the state agency, to permit it to continue
under such arrangements as long as it is consistent with
the objectives of the PACE program.
uthority
Current LawAgreement
iki/CRS-RL30718Exercising Waiver AuthorityThe law and regulations for PACE require that programsEnables the Secretary to exercise authority to modify or
g/woperate according to a protocol.waive Medicare or Medicaid requirements to respond to
s.orthe needs of PACE programs related to employment and
leakthe use of community care physicians. The Secretary must
approve requests for such waivers within 90 days of the
://wikidate the request for waiver is received.


http

CRS-24
ciaries Eligible for Medicaid Cost-Sharing Assistance
Current LawAgreement
Outreach on Availability ofMedicaid covers the costs of certain Medicare financial obligationsRequires the Commissioner of the Social Security Administration
edicare Cost-sharing Assistance tofor qualified Medicare beneficiaries (QMBs), specified low incometo conduct outreach efforts to identify individuals who may be
ible Low-income MedicareMedicare beneficiaries (SLMBs) and two groups ofqualifiedeligible for Medicaid payment of Medicare cost sharing and to
eficiariesindividuals referred to as QI-1s and QI-2s. QMBs are aged ornotify these persons of the availability of such assistance. The
disabled persons with incomes at or below the federal poverty lineCommissioner would also be required to furnish, at least annually,
and assets below twice the SSI level. The other groups area list of such individuals who reside in each state to that state’s
comprised of other low income-individuals who meet all but theagency responsible for administering the Medicaid program as well
income definition for QMB eligibility.as to any other appropriate state agency. The list should include
the name and address, and whether such individuals have
experienced reductions in Social Security benefits. Also requires
the General Accounting Office to conduct a study of the impact of
iki/CRS-RL30718the outreach activities of the Commissioner to submit to Congress
g/wno later than 18 months after such outreach begins. Effective 1
s.oryear after date of enactment.
leak
://wikiternal and Child Health Block Grant
httpCurrent LawAgreement
ion. 921. Increase in AuthorizationTitle V of the Social Security Act authorizes an appropriation ofIncreases the authorization of appropriations for this grant program
Appropriations for the Maternal and$705 million for FY1994 and each fiscal year thereafter for theto $850 million for FY2001 and each fiscal year thereafter.


ild Health Services Block GrantMaternal and Child Health Services Block Grant.

CRS-25
Current LawAgreement
ion 931. Increase in AppropriationsThe Balanced Budget Act of 1997 amended Title III of the PublicExtends for 1 year, to FY2003, the authority for grants to be made
Special Diabetes Programs for TypeHealth Service Act to create two grant programs supporting thefor both the Special Diabetes Program for Type I Diabetes and for
iabetes and Indiansprevention and treatment of, and research relating to, diabetes. Thethe Special Diabetes Programs for Indians. Also expands funding
first targets diabetes research and the second supports theavailable for these programs. For each grant program, increases
prevention and treatment services of diabetes in Indians. Eachtotal funding to $100 million each for FY2001, FY2002 and
program receives $30 million for each of the fiscal years 1998FY2003. For FY2001 and FY2002, $30 million of the $100
through 2002, transferred from the SCHIP appropriation.million for each program would be transferred from SCHIP; the
remaining $70 million would be drawn from the Treasury out of
funds not otherwise appropriated. In FY2003, the entire $100
million would be drawn from the Treasury out of funds not
otherwise appropriated. In addition, extends the due date on final
evaluation reports for these two grant programs from January 1,
iki/CRS-RL307182002 to January 1, 2003.
g/w
s.oricky Ray Hemophilia Relief Fund
leak
Current LawAgreement
://wiki
httpion 932. Appropriations for RickyThe Ricky Ray Hemophilia Relief Fund Act of 1998 (P.L. 105-Provides for a direct appropriation to the Ricky Ray trust fund of
y Hemophilia Relief Fund369) established a 5-year trust fund to make compassionate$475 million for FY2001. [Note: an additional $105 million was
payments of $100,000 to hemophiliacs who contracted HIVappropriated to the fund in the FY2001 Miscellaneous
through the use of anti-hemophiliac factor between July 1, 1982Appropriations Act (H.R. 5666).]


and December 31, 1987. The Act authorized appropriations to the
fund totaling $750 million. The trust fund received an initial
appropriation of $75 million in FY2000.

CRS-26
ation on Nurse Staffing
Current Law Agreement
ting Of Information on Nursing FacilityMedicare and Medicaid statute delineates certainRequires Medicare skilled nursing facilities and Medicaid
vicesrequirements for skilled nursing and nursing facilities,nursing facilities to post licensed and unlicensed nurse
respectively. With regard to staffing, facilities muststaffing information daily for each shift in the facility, and
provide 24-hour licensed nursing service sufficient to meetto make such information publicly available, upon request.
the nursing needs of residents and must, in general, use theEffective January 1, 2003.


services of a registered nurse at least 8 consecutive hours
a day, 7 days a week. Nurse aides must complete training
and competency evaluation programs. No staffing-to-
resident ratios are specified in federal statute.
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