Key provisions in childrens insurance law
Kids Insurance Law
While allowing the states great flexibility, Congress set some of the following rules for use of children’s health insurance funds:
• Benefits—If a state chooses to use money on a health insurance program instead of a Medicaid expansion, the benefits plan must be equal to or better than one of three possible benchmarks:
—the standard Blue Cross/Blue Shield preferred provider plan for federal employees;
—the commercial HMO with the largest insured, non-Medicaid coverage in the state;
—a health benefits plan offered and generally available to state employees; or
With HHS approval, a state can develop a benefits plan that is actuarially equal to one of those plans. New York, Florida and Pennsylvania have the option of continuing to offer the benefits provided under their existing children’s insurance programs.
• Outreach and direct contracting—Up to 10% of a state’s allotment may be used for purposes other than to provide insurance. The allowable uses include outreach and administrative expenditures as well as health initiatives. The law also allows the money to be used for direct-contracting with providers. HHS may permit more than 10% of a state’s allotment to be used for contracts with community-based health systems, including federally qualified health centers and disproportionate share hospitals (DSH). Peters Willson, vice president, public policy, for the National Association of Children’s Hospitals, says that, under the law, pediatric networks could contract directly with states to provide care.
• Family coverage—Funds may be used to purchase family coverage for parents as well as children, either through employers or otherwise, so long as HHS finds that such purchasing is cost-effective and does not substitute for coverage that otherwise would have been provided.
• Medicaid maintenance of effort—New federal grant funds may not go to a state adopting more restrictive resource and income standards and methodologies under Medicaid than those in effect June, 1, 1997.
• Private insurance—Insured children may not be excluded from coverage under a private program because they are eligible for assistance under this program.
• Income limits—Generally, only children with incomes at or below 200% of poverty may be assisted. Exceptions will be made for states that have previously extended Medicaid to children with family incomes above 150% of poverty. Those states can use funds to benefit children with family incomes 50% above the applicable Medicaid standard in effect June 1, 1997.
• Cost sharing-Families with incomes below 150% of poverty are subject to the same limits on cost-sharing as the Medicaid population. Cost-sharing for children in families with incomes above 150% of poverty may be set on sliding scale developed by the state, but total charges may not exceed 5% of family income. For all children, well-baby care, well-child care and immunizations are exempt from any cost-sharing.
The process for applying for funds from HHS remains somewhat murky. HHS is under the gun to develop at least basic regulations for the program before funds become available Oct. 1.
What is known is that to receive funds, a state must submit a plan to HHS that explains how such funds will be used; the plan must meet the requirements of the bill; and the plus must be approved by HHS. The state plan must specify the quarter in which the new program or medicaid expansion begins and it must describe the method used to involve the public in the program’s initial design and implementation as well as to promote ongoing public involvement.
Plans shall be deemed approved unless HHS notifies a state, within 90 days of receiving the plan or amendment, that it is disapproved or that additional information is needed.
• Funding—The program is partially funded by a 10 cent per pack increase in tobacco taxes, effective in 2000, and an additional 5 cent tax, effective in 2002. Congress also is saving at least $10.4 billion over five years by capping disproportionate share funds distributed to the states.
• Abortion-Federal funds distributed under this program may not be used to pay for abortion except in case of rape, incest, or if necessary to save the life of the mother. State, local or private funds used outside the context of a state plan under the bill may pay for abortions in other
cases.
Key provisions in childrens insurance law
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