House Energy & Commerce Committee Issues Report to Extend Funding for Children’s Health Insurance Program (Part 2 of 2)

WASHINGTON, Oct. 22 -- The House Energy and Commerce Committee issued a report (H.Rpt. 115-358) on legislation (H.R. 3921) to extend funding for the Children's Health Insurance Program. The report was advanced by Rep. Greg Walden, R-Ore., on October 19.

Continues from Part 1 of 2

Federal Mandates Statement

The Committee adopts as its own the estimate of federal mandates prepared by the Director of the Congressional Budget Office pursuant to section 423 of the Unfunded Mandates Reform Act.

Statement of General Performance Goals and Objectives

Pursuant to clause 3(c)(4) of rule XIII, the general performance goal or objective of this legislation is to reauthorize the Children's Health Insurance Program for five years, provide funding for Puerto Rico's Medicaid program, and delay the DSH cuts by one year.

Duplication of Federal Programs

Pursuant to clause 3(c)(5) of rule XIII, no provision of H.R. 3921 is known to be duplicative of another federal program, including any program that was included in a report to Congress pursuant to section 21 of Public Law 111-139 or the most recent Catalog of Federal Domestic Assistance.

Committee Cost Estimate

Pursuant to clause 3(d)(1) of rule XIII, the Committee adopts as its own the cost estimate prepared by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974.

Earmark, Limited Tax Benefits, and Limited Tariff Benefits

Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the Committee finds that H.R. 3921 contains no earmarks, limited tax benefits, or limited tariff benefits.

Disclosure of Directed Rule Makings

Pursuant to section 3(i) of H. Res. 5, the Committee finds that H.R. 3921 contains no directed rule makings.

Advisory Committee Statement

No advisory committees within the meaning of section 5(b) of the Federal Advisory Committee Act were created by this legislation.

Applicability to Legislative Branch

The Committee finds that the legislation does not relate to the terms and conditions of employment or access to public services or accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act.

Section-by-Section Analysis of the Legislation

Section 1. Short title

Section 1 provides that the Act may be cited as the "Helping Ensure Access for Little Ones, Toddlers, and Hopeful Youth by Keeping Insurance Delivery Stable Act of 2017" or the "HEALTHY KIDS Act."

Section 2: Table of contents

Section 2 provides the table of contents for the Act.

TITLE I--CHIP EXTENSION AND OTHER MEDICAID AND CHIP PROVISIONS

Section 101. Five-year funding extension of the Children's Health Insurance Program

Section 101 would extend federal CHIP funding for five years. The funding amounts are:

$21.5 billion for FY 2018;

$22.6 billion for FY 2019;

$23.7 billion for FY 2020;

$24.8 billion for FY 2021, and;

$25.9 billion for FY 2022.

The funding for FY 2022 would be structured as it was FY 2017, with semiannual appropriations of $2.85 billion, plus a one-time appropriation in the amount of $20.2 billion, which would be provided for in the first six months of the fiscal year and would remain available until expended.

Section 101 would extend the funding mechanism for the Child Enrollment Contingency Fund, payments from the fund, the qualifying state option, and authority for Express Lane eligibility determinations through FY 2022.

Section 101 would also extend the CHIP MOE requirements for children in families with annual income of less than 300 percent of the federal poverty level for three years from October 1, 2019, through September 30, 2022.

Section 101 also creates an option that would allow a state to run a CHIP Look-Alike plan, also known as CHIP buy-in plans. Generally, a buy-in program requires families to pay what the state pays for the coverage and, in some instances, the program's administrative costs. Buy-in programs have the potential to offer families a lower premium level than what is available in the private market or exchanges because of administrative efficiencies and the size and composition of the risk pool.

According to a Georgetown Center for Children and Families 2009 report, in 2008, there were eight states who operated a CHIP buy-in program for ten years or more (Connecticut, Florida, Maine, Minnesota, New Hampshire, New York, North Carolina, and Wisconsin). In 2016, the Secretary of the Department of Health and Human Service (HHS) determined that there was not a single health plan offered through the federal marketplace for any state, that provided benefits at least comparable to those offered through the CHIP program. A CHIP buy-in program that has health benefits at least identical to the CHIP benefits provides proven, child-centric coverage suited to the special needs of children.

CHIP buy-in programs were never formally established in statute under Title XXI of the Social Security Act (SSA) (although buy-in program benefits may mirror the CHIP benefits). Therefore, they are not exempt from the Minimum Essential Coverage (MEC) requirements of the ACA like CHIP is. Additionally, some states have blended the buy-in population with the traditional CHIP population for purposes of establishing family premiums, which increases the size of the risk pool and tends to reduce those premiums for the buy-in population.

Recognizing past state successes in operating CHIP buy-in programs that offer high-quality, affordable coverage for children, this provision recognizes CHIP buy-in programs as meeting the minimum essential coverage test under current law, and allows states to blend the risk pools between the CHIP program and the CHIP buy-in program. This change does not increase federal spending or deficits.

Section 102. Extension of certain programs and demonstration projects

Section 102 would extend funding for the Childhood Obesity Demonstration Project for FY 2018 through FY 2022 and would appropriate $25 billion for the program.

Section 102 would also appropriate funding in the amount of $75 million for the period of FY 2018 through FY 2022 to be used to carry out the pediatric quality measures.

Section 103. Extension of outreach and enrollment program

Section 103 would appropriate $100 million for CHIP outreach and enrollment grants for the period of FY 2018 through FY 2022.

Section 104. Extension and reduction of additional federal financial participation for CHIP

Section 104 continues the 23 percent increased E-FMAP rate under in current law (section 2105(b) of the SAA) for two years from FY 2018 to FY 2019. The rate would then decrease compared to the previous year to 11.5 percent in FY 2020, with no increased E-FMAP in FY 2021 and FY 2022.

Section 105. Modifying reduction in Medicaid DSH allotments

The Medicaid statute requires states to make DSH payments to hospitals treating large numbers of low-income patients. The federal government provides each state an annual DSH allotment, which is the maximum amount of federal matching funds that each state can claim for Medicaid DSH payments. The ACA included a provision directing the Secretary of HHS to make aggregate reductions in Medicaid DSH allotments in specified annual amounts for FY 2014 through FY 2020. Since the ACA, a number of laws have amended the ACA Medicaid DSH reductions by eliminating the reductions for FY 2014 through FY 2016, changing the reduction amounts, and extending the reductions through FY 2024. Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) followed suit by eliminating the FY 2017 reductions and extending the reductions to FY 2025.

Section 412 of MACRA amended the Medicaid DSH reductions by pushing the Medicaid DSH reductions out one year

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, and existing law in which no change is proposed is shown in roman):

SOCIAL SECURITY ACT

MINORITY VIEWS

Committee Democrats unanimously oppose H.R. 3921, the "Helping Ensure Access for Little Ones, Toddlers, and Hopeful Youth by Keeping Insurance Delivery Stable Act of 2017", or the HEALTHY KIDS Act. While we strongly support the policy in the legislation that would provide a robust reauthorization of the Children's Health Insurance Program (CHIP), we cannot support doing so using the harmful offsets that Republicans have proposed in this bill which undermine the Affordable Care Act (ACA) and our Medicare and Medicaid programs. This legislation offers a false choice--provide health care for some, at the expense of others. Committee Democrats do not support such an approach, and must oppose this legislation.

Committee Democrats are deeply concerned that Congress has allowed funding for the Children's Health Insurance Program to expire. Since its creation in 1997, the Children's Health Insurance Program has been a lifeline for 8.9 million children nationwide.1 Together with Medicaid, CHIP has helped to bring the children's health coverage rate to an all-time high of more than 95 percent.2 Put simply, states deserve the certainty that timely federal financing provides and children deserve the certainty of access to health care. Congress created CHIP to ensure that no American child fell through the cracks of our nation's health care system. Yet, by wasting months attempting to repeal the ACA instead of working together to reauthorize this important program, Congress has jeopardized the certainty that our states and families need and deserve. Now, states are taking steps to wind down their CHIP programs, actively putting millions of children and pregnant women at risk.3

1Kaiser Family Foundation. Total Number of Children Ever Enrolled in CHIP Annually. (Feb. 2017) (https://www.kff.org/other/state- indicator/annual-chip-enrollment/ ?currentTimeframe=sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22 asc%22%7D).

2Georgetown University Health Policy Institute, Center for Children and Families, Children's Health Coverage Rate Now at Historic High of 95 Percent (Nov. 2016) (https://ccf.georgetown.edu/wp-content/ uploads/2016/11/Kids-ACS-update-11-02-1.pdf).

3National Academy for State Health Policy. Increasing Urgency for States on Congressional Action for CHIP. (Aug. 2017) (http://nashp.org/ increasing-urgency-for-states-on-congressional-action-for-chip/).

Committee Democrats urge Republicans to join together to reauthorize the CHIP program immediately with responsible offsets that do not harm coverage for others.

THE MINORITY MEMBERS OPPOSE POLICIES THAT WOULD CUT OR RESTRICT ACCESS TO HEALTH COVERAGE FOR MEDICARE AND MEDICAID BENEFICIARIES

The minority members oppose paying for the reauthorization of CHIP with a policy that shifts additional costs onto seniors that rely on the Medicare program. The majority's proposal to add additional income-related premiums in the Medicare Part B and Part D programs will hurt seniors and undermine the Medicare program, by encouraging high-income beneficiaries to drop out. This in turn could affect the risk pool, resulting in higher premiums for seniors who remain in the Medicare program. The minority notes that high-income seniors already pay more for Part B and Part D premiums, and are being asked to pay 80 percent of the average per capita cost of Medicare Part B and D coverage beginning in 2018. Asking these seniors to now pay 100 percent of the costs of coverage before the new premium increases go into effective is unfair and inappropriate. Additionally, Democrats oppose additional income-related premiums because they undermine the universality of the Medicare program, paving the way for additional policies that we oppose--such as efforts to convert Medicare into a premium support or voucher program.

The HEALTHY KIDS Act also includes a policy to offset the costs of enacting the legislation that would change how lump sums are calculated for purposes of eligibility in the Medicaid program. Specifically, under the legislation a state would be required to count such sums for purposes of determining eligibilty for coverage:

For amounts less than $80,000, in the month in which the lump sum was received;

Over a period of two months, if the amount is at least $80,000 but less than $90,000;

Over a period of three months, if the amount is at least $90,000 but less than $100,000; and

Over an additional one-month period for each increment of $10,000 received, up to a period of 120 months.

This policy essentially "locks out" very low-income individuals from coverage for receiving lump sum payments that are not large enough in the majority of cases to realistically move such individuals out of poverty permanently. Thus, this policy derives its savings primarily from churning individuals off of Medicaid coverage for varying periods of time.

Furthermore, the ACA created a streamlined approach to determining eligibility for Medicaid, CHIP and both the premium tax credits (PTCs) and cost-sharing subsidies (CSRs) that help people afford coverage. To accomplish this, the ACA redefined the way that Medicaid counts income, and eliminated the asset test for most beneficiaries in order to align Medicaid rules with the definition of income that is used in the tax code and hence is used to determine eligibility for the ACA's premium tax credits. This revision in Medicaid eligibility rules was essential to coordinate Medicaid with Marketplace coverage. Assets are counted, but simply in a different way. This provision would undermine the streamlined, coordinated eligibility approach the ACA established and would add additional administrative burden to states.

Finally, the minority members have concerns with certain provisions in the HEALTHY KIDS Act that would, under the guise of strengthening Medicaid third party liability rules, result in delayed payment to prenatal and pediatric care providers, potentially impacting access to care for children and pregnant women. Democrats are not willing to risk even the potential of a barrier to prenatal and pediatric well-child care. For more than thirty years Congress has held two general exceptions with respect to Medicaid third party liability rules:

If the claim is for prenatal care or for preventive pediatric care, including services under Medicaid's early and periodic screening, diagnosis, and testing (EPSDT) benefit; and

If the claim is for Medicaid services provided to any child on whose behalf child support enforcement is being carried out, if the third party liability in question is derived from the parent whose obligation to pay child support is being enforced and the third party has not paid within 30 days of services being provided.

In these situations only, a state must pay providers for care provided first, and recover payments from any relevant third party after. These protections were put in place in recognition of the very special circumstances surrounding such beneficiaries, the overwhelming need and volume of children and pregnant women in the Medicaid program, and the catastrophic consequences should such providers leave the Medicaid program or restrict their availability to take new Medicaid patients.

The Bipartisan Budget Act of 2013 (Budget Act) weakened these protections slightly, by allowing states to hold payments for 90 days in such instances. Recognizing this misguided policy, Congress, on a bipartisan basis, has delayed this provision twice, first in the Protecting Access to Medicare Act of 2014 and most recently in the Medicare Access and CHIP Reauthorization Act of 2015. The HEALTHY KIDS Act would delay the Budget Act changes to these protections once again for two years, but then subsequently remove them entirely. Democrats are strongly concerned about the potential creation of barriers to care for highly vulnerable populations; as such, we cannot support an outright repeal of these protections.

THE MINORITY MEMBERS OPPOSE POLICIES THAT ARE INADEQUATE AND FAIL TO ADDRESS OUR NATION'S HEALTH NEEDS

The HEALTHY KIDS Act includes two additional policies that Democrats believe are inadequate.

First, the legislation proposes to eliminate a scheduled $2 billion cut in FY 2017 to Medicaid's Disproportionate Share Payments (DSH) made to safety net hospitals. The legislation would offset the elimination of this cut by adding $8 billion in cuts for both the years 2026 and 2027.

The minority members appreciate the Majority's recognition of the significant financial hardship that would be caused by such a cut to safety net providers. However, the Majority's policy would leave an even greater $3 billion cut in place, which is scheduled to take effect in less than one year in FY 2018, and would further add an additional $16 billion in cuts to the later half of the budget window. This is not responsible policy. Congress should eliminate two years of the scheduled DSH cuts at a minimum in order to provide safety net hospitals with the operational certainty that they need while Congress comes to an agreement regarding a permanent solution for the remaining schedule of Medicaid DSH cuts.

The HEALTHY KIDS Act, as amended, also includes a provision intended to provide additional Medicaid dollars to the Puerto Rico and United States Virgin Islands (USVI) territories. This provision is wholly insufficient to the meet the needs of both territories given the recent and catastrophic hurricanes. Hurricanes Irma and Maria made landfall on September 6, 2017 and September 20, 2017, respectively, causing massive power outages, flooding and structural damage in both Puerto Rico and the USVI. A significant proportion of the population has Medicaid health insurance in both territories, and the need will only grow as people struggle to rebuild their lives. Significant infrastructure needs are also present for both programs.

Unfortunately, the territories cannot respond to the needs of their citizens because they are statutorily required to operate under a capped Medicaid program with a lower Federal Medical Assistance Percentage (FMAP) than the mainland states. The HEALTHY KIDS Act proposes to increase the growth rate of the base annual funding ceiling amount by 1 percent for a period of two years. The legislation would also allow for a one time influx of $880 million, with an additional $120 million available with the requirement of majority approval by Puerto Rico's Control Board, plus a commitment that Puerto Rico will use the dollars for reducing fraud, reducing excessive spending, improving availability of data or improving quality. The legislation would also increase the fraud detection and medical personnel review matching rate from 75 percent to 90 percent.

The HEALTHY KIDS Act provision is not acceptable because it is not enough funding to meet the need, and more importantly, does not address fundamental financing issues. Specifically, the $1 billion in funds is not enough to address Puerto Rico's Medicaid needs over two years, the length the provision contemplates, even at pre-hurricane circumstances. Furthermore, the policy does not address the already low (55 percent) matching rate for Puerto Rico and the USVI. Puerto Rico and the USVI cannot maintain their share of the costs when considering both the increased demand and the collapse of revenue, which will only exacerbate and lengthen challenges to recovery. In 2005, Congress allowed for full federal financing for expanded Medicaid for Hurricane Katrina Victims through the Deficit Reduction Act of 2005. Hurricane Irma and Maria have caused unprecedented damage to Puerto Rico and USVI, with substantial financial and human costs. Committee Democrats believe Congress should undertake, at the very least, similar coordinated efforts to protect the health and lives of Medicaid beneficiaries living in Puerto Rico and the USVI. This provision does not go far enough to address the needs of these individuals.

Frank Pallone, Jr.,

Ranking Member.

Gene Green,

Ranking Member, Subcommittee on Health.

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