[Federal Register Volume 67, Number 190 (Tuesday, October 1, 2002)]
[Notices]
[Pages 61632-61638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24846]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-2160-N]
RIN 0938-ZA38
State Children's Health Insurance Program; Final Allotments to
States, the District of Columbia, and U.S. Territories and
Commonwealths for Fiscal Year 2003
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice.
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SUMMARY: Title XXI of the Social Security Act (the Act) authorizes
payment of Federal matching funds to States, the District of Columbia,
and U.S. Territories and Commonwealths to initiate and expand health
insurance coverage to uninsured, low-income children under the State
Children's Health Insurance Program (SCHIP). This notice sets forth the
final allotments of Federal funding available to each State, the
District of Columbia, and each U.S. Territory and Commonwealth for
fiscal year 2003. States may implement SCHIP through a separate State
program under title XXI of the Act, an expansion of a State Medicaid
program under title XIX of the Act, or a combination of both.
EFFECTIVE DATE: This notice is effective on October 31, 2002. Final
allotments are available for expenditures after October 1, 2002.
FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.
SUPPLEMENTARY INFORMATION:
[[Page 61633]]
I. Purpose of This Notice
This notice sets forth the allotments available to each State, the
District of Columbia, and each U.S. Territory and Commonwealth for
fiscal year (FY) 2003 under title XXI of the Social Security Act (the
Act). Final allotments for a fiscal year are available to match
expenditures under an approved State child health plan for 3 fiscal
years, including the year for which the final allotment was provided.
That is, the FY 2003 allotments will be available to States for FY
2003, and unexpended amounts may be carried over to FYs 2004 and 2005.
Federal funds appropriated for title XXI are limited, and the law
specifies a formula to divide the total annual appropriation into
individual allotments available for each State, the District of
Columbia, and each U.S. Territory and Commonwealth with an approved
child health plan.
Section 2104(b) of the Act requires States, the District of
Columbia, and U.S. Territories and Commonwealths to have an approved
child health plan for the fiscal year in order for the Secretary to
provide an allotment for that fiscal year. All States, the District of
Columbia, and U.S. Territories and Commonwealths have approved plans
for FY 2003. Therefore, the FY 2003 allotments contained in this notice
pertain to all States, the District of Columbia, and U.S. Territories
and Commonwealths.
II. Methodology for Determining Final Allotments for States, the
District of Columbia, and U.S. Territories and Commonwealths
This notice specifies, in the table under section III, the final FY
2003 allotments available to individual States, the District of
Columbia, and U.S. Territories and Commonwealths for either child
health assistance expenditures under approved State child health plans
or for claiming an enhanced Federal medical assistance percentage rate
for certain SCHIP-related Medicaid expenditures. As discussed below,
the FY 2003 final allotments have been calculated to reflect the
methodology for determining an allotment amount for each State, the
District of Columbia, and each U.S. Territory and Commonwealth under
section 2104 of the Act, as amended.
Section 2104(a) of the Act provides that, for purposes of providing
allotments to the 50 States and the District of Columbia, the following
amounts are appropriated: $4,295,000,000 for FY 1998; $4,275,000,000
for each FY 1999 through FY 2001; $3,150,000,000 for each FY 2002
through FY 2004; $4,050,000,000 for each FY 2005 through FY 2006; and
$5,000,000,000 for FY 2007. However, under section 2104(c) of the Act,
0.25 percent of the total amount appropriated each year is available
for allotment to the U.S. Territories and Commonwealths of Puerto Rico,
Guam, the Virgin Islands, American Samoa, and the Northern Mariana
Islands. Section 2104(c) of the act also specifies that the total
amounts are allotted to the U.S. Territories and Commonwealths
according to the following percentages: Puerto Rico, 91.6 percent;
Guam, 3.5 percent; the Virgin Islands, 2.6 percent; American Samoa, 1.2
percent; and the Northern Mariana Islands, 1.1 percent.
Section 2104(c)(4)(B) of the Act provides for additional amounts
for allotment to the Territories and Commonwealths: $32,000,000 for FY
1999; $34,200,000 for each FY 2000 through FY 2001; $25,200,000 for
each FY 2002 through FY 2004; $32,400,000 for each FY 2005 through FY
2006; and $40,000,000 for FY 2007. For FY 2003, title XXI of the Act
provides $25,200,000 for allotment to the U.S. Territories and
Commonwealths. Therefore, the total amount available for allotment to
the U.S. Territories and Commonwealths in FY 2003 is $33,075,000 (that
is, $25,200,000 plus $7,875,000 (0.25 percent of the FY 2003
appropriation of $3,150,000,000)).
For FY 2003, there is no reduction to the total amount available
for allotment to the 50 States and the District of Columbia under
sections 4921 and 4922 of the Balanced Budget Act of 1997 (BBA) (Pub.
L. 105-33, enacted on August 5, 1997). From FYs 1998 to 2002 only, the
total amount available for allotment to the 50 States and the District
of Columbia was reduced by a total of $60,000,000; $30,000,000 of which
was allocated to the Public Health Service for a special diabetes
research program for children with Type I diabetes, and $30,000,000 of
which was for special diabetes programs for Indians.
Therefore, the total amount available nationally for allotment for
the 50 States and the District of Columbia for FY 2003 was determined
in accordance with the following formula:
AT = S2104(a) - T2104(c)
AT = Total amount available for allotment to the 50
States and the District of Columbia for the fiscal year.
S2104(a) = Total appropriation for the fiscal year
indicated in section 2104(a) of the Act. For FY 2003, this is
$3,150,000,000.
T2104(c) = Total amount available for allotment for the
U.S. Territories and Commonwealths; determined under section 2104(c) of
the Act as 0.25 percent of the total appropriation for the 50 States
and the District of Columbia.
For FY 2003, this is: .0025 x $3,150,000,000 = $7,875,000.
Therefore, for FY 2003, the total amount available for allotment to
the 50 States and the District of Columbia is $3,142,125,000. This was
determined as follows:
AT ($3,142,125,000) = S2104(a) ($3,150,000,000) -
T2104(c) ($7,875,000)
For purposes of the following discussion, the term ``State,'' as
defined in section 2104(b)(1)(D)(ii) of the Act, ``means one of the 50
States or the District of Columbia.''
Under section 2104(b) of the Act, the determination of the number
of children applied in determining the SCHIP allotment for a particular
fiscal year is based on the three most recent March supplements to the
Current Population Survey (CPS) of the Bureau of the Census officially
available before the beginning of the calendar year in which the fiscal
year begins. The determination of the State cost factor is based on the
annual average wages per employee in the health services industry,
which is determined using the most recent 3 years of those wage data.
The data are reported and determined as final by the Bureau of Labor
Statistics (BLS) of the Department of Labor and are officially
available before the beginning of the calendar year in which the fiscal
year begins. Since FY 2003 begins on October 1, 2002 (that is, in
calendar year 2002) in determining the FY 2003 SCHIP allotments, we are
using the most recent official data from the Bureau of the Census and
the BLS, respectively, available before January 1 of calendar year
2002.
Number of Children
For FY 2003, as specified by section 2104(b)(2)(A)(iii) of the Act,
the number of children is calculated as the sum of 50 percent of the
number of low-income, uninsured children in the State, and 50 percent
of the number of low-income children in the State. The number of
children factor for each State is developed from data provided by the
Bureau of the Census based on the standard methodology used to
determine official poverty status and uninsured status in the annual
CPS on these topics. As part of a continuing formal process between the
Centers for Medicare & Medicaid Services (CMS) and the Bureau of the
Census, each
[[Page 61634]]
fiscal year we obtain the number of children data officially from the
Bureau of the Census.
Under section 2104(b)(2)(B) of the Act, the number of children for
each State (provided in thousands) was determined and provided by the
Bureau of the Census based on the arithmetic average of the number of
low-income children and low-income children with no health insurance as
calculated from the three most recent March supplements to the CPS
officially available from the Bureau of the Census before the beginning
of the 2002 calendar year. In particular, through December 31, 2001,
the most recent official data available from the Bureau of the Census
on the numbers of children were data from the three March CPSs
conducted in March 1999, 2000, and 2001 (representing data for years
1998 through 2000).
State Cost Factor
The State cost factor is based on annual average wages in the
health services industry in the State. The State cost factor for a
State is equal to the sum of: 0.15 and 0.85 multiplied by the ratio of
the annual average wages in the health industry per employee for the
State to the annual wages per employee in the health industry for the
50 States and the District of Columbia.
Under section 2104(b)(3)(B) of the Act, as amended by the Balanced
Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113, enacted on
November 29, 1999) the State cost factor for each State for a fiscal
year is calculated based on the average of the annual wages for
employees in the health industry for each State using data for each of
the most recent 3 years as reported and determined as final by the BLS
in the Department of Labor and available before the beginning of the
calendar year in which the fiscal year begins. Therefore, the State
cost factor for FY 2003 is based on the most recent 3 years of BLS data
officially available as final before January 1, 2002 (the beginning of
the calendar year in which FY 2003 begins); that is, it is based on the
BLS data available as final through December 31, 2001. In accordance
with these requirements, we used the final State cost factor data
available from BLS for 1998, 1999, and 2000 in calculating the FY 2003
final allotments.
The State cost factor is determined based on the calculation of the
ratio of each State's average annual wages in the health industry to
the national average annual wages in the health care industry. Since
BLS is required to suppress certain State-specific data in providing us
with the State-specific average wages per health services industry
employee due to the Privacy Act, we calculated the national average
wages directly from the State-specific data provided by BLS. As part of
a continuing formal process between CMS and the BLS, each fiscal year
CMS obtains these wage data officially from the BLS.
Under section 2104(b)(4) of the Act, as amended by the BBRA, each
State and the District of Columbia is allotted a ``proportion'' of the
total amount available nationally for allotment to the States. The term
``proportion'' is defined in section 2104(b)(4)(D)(i) of the Act and
refers to a State's share of the total amount available for allotment
for any given fiscal year. In order for the entire total amount
available to be allotted to the States, the sum of the proportions for
all States must exactly equal one. Under the statutory definition, a
State's proportion for a fiscal year is equal to the State's allotment
for the fiscal year divided by the total amount available nationally
for allotment for the fiscal year. In general, a State's allotment for
a fiscal year is calculated by multiplying the State's proportion for
the fiscal year by the national total amount available for allotment
for that fiscal year in accordance with the following formula:
SAi =Pi x AT
SAi = Allotment for a State or District of Columbia for
a fiscal year.
Pi = Proportion for a State or District of Columbia for
a fiscal year.
AT = Total amount available for allotment to the 50
States and the District of Columbia for the fiscal year. For FY 2003,
this is $3,142,125,000.
In accordance with the amended statutory formula for determining
allotments, the State proportions are determined under two steps, which
are described below in further detail.
Under the first step, each State's preadjusted proportion is
calculated. This is done, first, by multiplying the State's number of
children and the State cost factor to determine a ``product'' for each
State. The products for all States are then summed. Finally, the
product for a State is divided by the sum of the products for all
States, thereby yielding the State's preadjusted proportion.
Application of Floors and Ceilings
Under the second step, the preadjusted proportions are subject to
the application of proportion floors, ceilings, and a reconciliation
process, as appropriate. The amended SCHIP statute specifies three
proportion floors, or minimum proportions, that apply in determining
States' allotments. The first proportion floor is equal to $2,000,000
divided by the total of the amount available nationally for the fiscal
year. This proportion ensures that a State's minimum allotment would be
$2,000,000. For FY 2003, no State's preadjusted proportion is below
this floor. The second proportion floor is equal to 90 percent of the
allotment proportion for the State for the previous fiscal year; that
is, a State's proportion for a fiscal year must not be lower than 10
percent below the previous fiscal year's proportion. The third
proportion floor is equal to 70 percent of the allotment proportion for
the State for FY 1999; that is, the proportion for a fiscal year must
not be lower than 30 percent below the FY 1999 proportion.
Each State's allotment proportion for a fiscal year is limited by a
maximum ceiling amount, equal to 145 percent of the State's proportion
for FY 1999; that is, a State's proportion for a fiscal year must be no
higher than 45 percent above the State's proportion for FY 1999. The
floors and ceilings are intended to minimize the fluctuation of State
allotments from year to year and over the life of the program as
compared to FY 1999. The floors and ceilings on proportions are not
applicable in determining the allotments of the U.S. Territories and
Commonwealths; they receive a fixed percentage specified in the statute
of the total allotment available to the U.S. Territories and
Commonwealths.
As determined under the first step for determining the States'
preadjusted proportions, which is applied before the application of any
floors or ceilings, the sum of the proportions for all the States and
the District of Columbia will be equal to exactly one. However, the
application of the floors and ceilings under the second step may change
the proportions for certain States; that is, some States' proportions
may need to be raised to the floors, while other States' proportions
may need to be lowered to the maximum ceiling. If this occurs, the sum
of the proportions for all States and the District of Columbia may not
exactly equal one. In that case, the statute requires that the
proportions will need to be adjusted, under a method that is determined
by whether the sum of the proportions is greater or less than one, such
that the sum of the proportions exactly equal one.
The sum of the proportions would be greater than one if the
application of the floors and ceilings resulted in raising the
proportions of some States (due to the floors) to a greater degree than
the proportions of other States were lowered (due to the ceiling). If,
after application of the floors and ceiling, the sum of the proportions
is greater than
[[Page 61635]]
one, the amended statute requires the Secretary to determine a maximum
percentage increase limit, which, when applied to the State
proportions, would result in the sum of the proportions being exactly
one.
If, after the application of the floors and ceiling, the sum of the
proportions is less than one, the statute requires the States'
proportions to be increased in a ``pro rata'' manner so that the sum of
the proportions again equals one. It is also possible, although
unlikely, that the sum of the proportions (after the application of the
floors and ceiling) will exactly equal one, and therefore, the
proportions would require no further adjustment.
Determination of Preadjusted Proportions
The following is an explanation of how we applied the two State-
related factors specified in the statute to determine the States'
preadjusted proportions for FY 2003. The term ``preadjusted,'' as used
here, refers to the States' proportions before the application of the
floors and ceiling and adjustments, as specified in the amended SCHIP
statute. The determination of each State and the District of Columbia's
preadjusted proportion for FY 2003 is in accordance with the following
formula:
PPi = (Ci x SCFi) / [Sigma]
(Ci x SCFi)
PPi = Preadjusted proportion for a State or District of
Columbia for a fiscal year.
Ci = Number of Children in a State (section
2104(b)(1)(A)(i) of the Act) for a fiscal year. This number is based on
these number of low-income children for a State for a fiscal year and
the number of low-income uninsured children for a State for a fiscal
year determined on the basis of the arithmetic average of the number of
those children as reported and defined in the three most recent March
supplements to the CPS of the Bureau of the Census, officially
available before the beginning of the calendar year in which the fiscal
year begins. (See section 2104(b)(2)(B) of the Act.)
For fiscal year 2003, the Number of Children is equal to the sum of
50 percent of the number of low-income uninsured children in the State
for the fiscal year and 50 percent of the number of low-income children
in the State for the fiscal year. (See section 2104(b)(2)(A)(iii) of
the Act.)
SCFi = State Cost Factor for a State (section
2104(b)(1)(A)(ii) of the Act). For a fiscal year, this is equal to:
0.15 + 0.85 x (Wi/WN)
Wi = The annual average wages per employee for a State for
that year (section 2104(b)(3)(A)(ii)(I) of the Act).
WN = The annual average wages per employee for the 50 States
and the District of Columbia (section 2104(b)(3)(A)(ii)(II) of the
Act).
The annual average wages per employee for a State or for all States
and the District of Columbia for a fiscal year is equal to the average
of those wages for employees in the health services industry (SIC 80),
as reported and determined as final by the BLS of the Department of
Labor for each of the most recent 3 years officially available before
the beginning of the calendar year in which the fiscal year begins.
(See section 2104(b)(3)(B) of the Act).
[Sigma](Ci x SCFi) = The sum of the products of
(Ci x SCFi) for each State (section 2104(b)(1)(B)
of the Act).
The resulting proportions would then be subject to the application
of the floors and ceilings specified in the amended SCHIP statute and
reconciled, as necessary, to eliminate any deficit or surplus of the
allotments because the sum of the proportions was either greater than
or less than one.
Section 2104(e) of the Act requires that the amount of a State's
allotment for a fiscal year be available to the State for a total of 3
years; the fiscal year for which the State child health plan is
approved and the 2 following fiscal years. Section 2104(f) of the Act
requires the Secretary to establish a process for redistribution of the
amounts of States' allotments that are not expended during the 3-year
period to States that have fully expended their allotments.
III. Table of State Children's Health Insurance Program Final
Allotments for FY 2003
Key to Table
Column/Description
Column A = State. Name of State, District of Columbia, U.S.
Commonwealth or Territory.
Column B = Number of Children. The number of children for each
State (provided in thousands) was determined and provided by the Bureau
of the Census based on the arithmetic average of the number of low-
income children and low-income uninsured children, and is based on the
three most recent March supplements to the CPS of the Bureau of the
Census officially available before the beginning of the calendar year
in which the fiscal year begins. The FY 2003 allotments were based on
the 1999, 2000, and 2001 March supplements to the CPS. These data
represent the number of people in each State under 19 years of age
whose family income is at or below 200 percent of the poverty threshold
appropriate for that family, and who are reported to be without health
insurance coverage. The number of children for each State was developed
by the Bureau of the Census based on the standard methodology used to
determine official poverty status and uninsured status in its annual
March CPS on these topics.
For FY 2003, the number of children is equal to the sum of 50
percent of the number of low-income uninsured children in the State and
50 percent of the number of low-income children in the State.
Column C = State Cost Factor. The State cost factor for a State is
equal to the sum of: 0.15, and 0.85 multiplied by the ratio of the
annual average wages in the health industry per employee for the State
to the annual wages per employee in the health industry for the 50
States and the District of Columbia. The State cost factor for each
State was calculated based on the wage data for each State as reported
and determined as final by the BLS in the Department of Labor for each
of the most recent 3 years and available before the beginning of the
calendar year in which the fiscal year begins. The FY 2003 allotments
were based on final BLS wage data for 1998, 1999, and 2000.
Column D = Product. The product for each State was calculated by
multiplying the number of children in Column B by the State cost factor
in Column C. The sum of the products for all 50 States and the District
of Columbia is below the products for each State in Column D. The
product for each State and the sum of the products for all States
provides the basis for allotment to States and the District of
Columbia.
Column E = Proportion of Total. This is the calculated percentage
share for each State of the total allotment available to the 50 States
and the District of Columbia. The percent share of total is calculated
as the ratio of the product for each State in Column D to the sum of
the products for all 50 States and the District of Columbia below the
products for each State in Column D.
Column F = Adjusted Proportion of Total. This is the calculated
percentage share for each State of the total allotment available after
the application of the floors and ceilings and after any further
reconciliation needed to ensure that the sum of the State proportions
is equal to one. The three floors specified in the amended statute are:
(1) A floor of $2,000,000 divided by the total amount available for all
allotments for the fiscal year; (2) an annual floor of 90 percent of
(that is, 10 percent below) the
[[Page 61636]]
preceding fiscal year's allotment proportion; and (3) a cumulative
floor of 70 percent of (that is, 30 percent below) the FY 1999
allotment proportion. There is also a cumulative ceiling of 145 percent
of (that is, 45 percent above) the FY 1999 allotment proportion.
Column G = Allotment. This is the SCHIP allotment for each State,
Commonwealth, or Territory for the fiscal year. For each of the 50
States and the District of Columbia, this is determined as the adjusted
proportion of total in Column F for the State multiplied by the total
amount available for allotment for the 50 States and the District of
Columbia for the fiscal year.
For each of the U.S. Territory and Commonwealths, the allotment is
determined as the Proportion of Total in Column E multiplied by the
total amount available for allotment to the U.S. Territories and
Commonwealths. For the U.S. Territories and Commonwealths, the
Proportion of Total in Column E is specified in section 2104(c) of the
Act. The total amount is then allotted to the U.S. Territories and
Commonwealths according to the percentages specified in section 2104 of
the Act. There is no adjustment made to the allotments of the U.S.
Territories and Commonwealths as they are not subject to the
application of the floors and ceiling. As a result, Column F in the
table, the Adjusted Proportion of Total, is empty for the U.S.
Territories and Commonwealths.
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IV. Impact Statement
We have examined the impacts of this notice as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA) (September 16, 1980, Public Law
96-354), section 1102(b) of the Social Security Act, the Unfunded
Mandates Reform Act of 1995 (Public Law 104-4), and Executive Order
13132.
[[Page 61638]]
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, when rules are
necessary, to select regulatory approaches that maximize net benefits
(including potential economic environments, public health and safety,
other advantages, distributive impacts, and equity). We believe that
this notice is consistent with the regulatory philosophy and principles
identified in the Executive Order. The formula for the allotments is
specified in the statute. Since the formula is specified in the
statute, we have no discretion in determining the allotments. This
notice merely announces the results of our application of this formula,
and therefore does not reach the economic significance threshold of
$100 million in any 1 year.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $6 to $29
million in any one year. Individuals and States are not included in the
definition of a small entity.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a notice may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds.
The Unfunded Mandates Reform Act of 1995 requires that agencies
prepare an assessment of anticipated costs and benefits before
publishing any notice that may result in an expenditure by State,
local, and tribal governments, in the aggregate, or by the private
sector, of $110 million or more (adjusted each year for inflation) in
any 1 year. Because participation in the SCHIP program on the part of
States is voluntary, any payments and expenditures States make or incur
on behalf of the program that are not reimbursed by the Federal
government are made voluntarily. This notice will not create an
unfunded mandate on States, tribal, or local governments because it
merely notifies States of their SCHIP allotment for FY 2003. Therefore,
we are not required to perform an assessment of the costs and benefits
of this notice.
Low-income children will benefit from payments under SCHIP through
increased opportunities for health insurance coverage. We believe this
notice will have an overall positive impact by informing States, the
District of Columbia, and U.S. Territories and Commonwealths of the
extent to which they are permitted to expend funds under their child
health plans using their FY 2003 allotments.
Under Executive Order 13132, we are required to adhere to certain
criteria regarding Federalism. We have reviewed this notice and
determined that it does not significantly affect States' rights, roles,
and responsibilities because it does not set forth any new policies.
For these reasons, we are not preparing analyses for either the RFA
or section 1102(b) of the Act because we have determined, and we
certify, that this notice will not have a significant economic impact
on a substantial number of small entities or a significant impact on
the operations of a substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
(Section 1102 of the Social Security Act (42 U.S.C. 1302))
(Catalog of Federal Domestic Assistance Program No. 93.767, State
Children's Health Insurance Program)
Dated: August 6, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Dated: August 23, 2002.
Tommy G. Thompson,
Secretary of Health and Human Services.
[FR Doc. 02-24846 Filed 9-27-02; 8:45 am]
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