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                                                       Calendar No. 541
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-233

======================================================================



 
           MOTHERS AND NEWBORNS HEALTH INSURANCE ACT OF 2002

                                _______
                                

                 August 1, 2002.--Ordered to be printed

                                _______
                                

   Mr. Baucus, from the Committee on Finance, submitted the following

                              R E P O R T

                         [To accompany S. 724]

    The Committee on Finance, to which was referred the bill 
(S. 724) to amend title XXI of the Social Security Act to 
provide for coverage of pregnancy-related assistance for 
targeted low-income pregnant women, reports favorably thereon 
and refers the bill to the full Senate with a recommendation 
that the bill pass.

                             I. BACKGROUND

    Lack of health insurance is a significant barrier to 
receiving prenatal care, and contributes greatly to America's 
high levels of infant and maternal mortality. With 4.3 million 
uninsured mothers living below 200 percent of the Federal 
poverty level, the United States currently ranks 21st in the 
world in infant mortality and 26th in maternal mortality. These 
are the worst rates of any developed nation.
    In recent years, the United States has made significant 
progress toward extending health insurance coverage to children 
in low-income families. Unfortunately, the mothers of these 
children remain at high risk of going uninsured. Mothers in 
low-income families account for nearly three of every four 
uninsured mothers in the country. These women often lack access 
to affordable, employer-based health insurance coverage and are 
excluded from public programs such as Medicaid and the State 
Children's Health Insurance Program (SCHIP).
    While a majority of states provide health insurance 
coverage through Medicaid or SCHIP to children in families up 
to 200 percent of the Federal poverty level, or about $24,000 
for a family of two, the same level of coverage generally does 
not apply to their mothers. Current law only requires states to 
cover pregnant women under Medicaid if they are under 133 
percent of poverty, which is approximately $16,000 per year for 
afamily of two. States also have the option to extend this 
coverage up to 185 percent of poverty, or about $22,000 a year, for 
that same family. Pregnant women are not eligible to receive coverage 
under SCHIP, unless a state is granted a Section 1115 waiver of current 
law to do so.
    There is no valid policy rationale for the existing 
disparities in health insurance coverage between mothers and 
their children. Current law essentially dictates that low-
income children receive health insurance coverage only after 
their mothers have gone through nine months of pregnancy 
without crucial prenatal coverage. This disparity in coverage 
levels exposes both mothers and children to unnecessary health 
risks. Moreover, it is not cost-effective. Recent studies have 
shown that infants born to mothers receiving late or no 
prenatal care are more likely to face complications--which can 
result in hospitalization, expensive medical treatments, and 
increased costs to public programs. Closing the gap in coverage 
between mothers and their children will improve the health of 
both, while reducing costs for taxpayers.

                      II. DESCRIPTION OF THE BILL

    The legislation reported by the Finance Committee consists 
of the following provisions:

Section 1. Short title

Section 2. State option to expand or add coverage of certain pregnant 
        women under Medicaid and SCHIP

            (a) Medicaid

                              PRESENT LAW

    States are required to provide Medicaid coverage to 
pregnant women with no other children who have family income up 
to 133 percent of the Federal poverty level (FPL), and have the 
option to extend such coverage to pregnant women with no other 
children who have family income above 133 percent FPL up to 185 
percent FPL. Both of these eligibility categories are commonly 
referred to as ``poverty-related pregnant women.'' These 
pregnant women are entitled only to pregnancy-related services 
(e.g., prenatal, delivery and postpartum care up to 60 days 
after delivery). States may increase the effective income level 
above these standards by modifying applicable income and 
resource methodologies. In addition, states may seek waivers of 
program rules to extend Medicaid to pregnant women at higher 
income levels.
    The State Children's Health Insurance Program (SCHIP) 
allows states to cover uninsured children under age 19 in 
families with income above applicable Medicaid financial 
standards. States may choose from among three benefit options 
when designing their SCHIP programs. They may expand Medicaid, 
create a new separate state program that must meet minimum 
benefit requirements, or devise a combination of both 
approaches. Among the many services available under SCHIP are 
prenatal care and hospital services. Pregnant women ages 19 and 
above are eligible for SCHIP only through special waivers of 
program rules, or when employer-sponsored family coverage 
subsidized by SCHIP includes adults in families with eligible 
children.
    The Federal share of Medicaid costs is equal to the Federal 
medical assistance percentage (FMAP) of those costs. The FMAP 
is determined annually according to a formula designed to pay a 
higher Federal matching rate to states with lower per capita 
incomes relative to the national average. The law establishes a 
minimum FMAP of 50 percent and a maximum FMAP of 83 percent. 
Under SCHIP, an enhanced FMAP (E-FMAP) is available. The E-FMAP 
is defined as the FMAP under Medicaid increased by 30 percent 
of the number of percentage points by which the FMAP for the 
state is less than 100 percent. E-FMAP ranges from 65 percent 
to 85 percent (the statutory upper limit).
    Under Medicaid presumptive eligibility rules, states are 
allowed to temporarily enroll children whose family income 
appears to be below applicable Medicaid income standards, until 
a formal determination of eligibility is made. Payments made on 
behalf of Medicaid children during periods of presumptive 
eligibility are matched at the regular Medicaid FMAP, but are 
paid out of state SCHIP allotments.
    Federal funds for SCHIP were appropriated in the original 
enacting statute for FY1998 through FY2007. From each year's 
appropriation, a state is allotted an amount as determined by a 
formula set in law. Expenditures associated with presumptive 
eligibility for children under Medicaid are counted against a 
state's SCHIP allotment.

                        EXPLANATION OF PROVISION

    The bill allows states meeting two conditions to cover 
under Medicaid additional pregnant women (up to 60 days 
postpartum) with no other children in families with income 
exceeding 185 percent FPL, up to the SCHIP income level for 
children in effect as of January 1, 2002. The two conditions 
include: (1) the state must cover under Medicaid and SCHIP such 
pregnant women in lower income families before or in addition 
to pregnant women in higher income families, and (2) the state 
must apply an income level to the new group of pregnant women 
that is no lower than the effective income level in place for 
pregnant women already covered under the state Medicaid plan as 
of January 1, 2002.
    For states expanding coverage to additional pregnant women 
with incomes exceeding 185 percent FPL, the SCHIP enhanced FMAP 
applies and all payments are counted against the state's SCHIP 
allotment.
    Finally, the bill eliminates the requirement that 
expenditures associated with presumptive eligibility for 
children under Medicaid be counted against a state's SCHIP 
allotment.

                           REASONS FOR CHANGE

    The Committee bill includes provisions based on S. 724, 
introduced by Senator Breaux, and S. 1016, introduced by 
Senator Bingaman, to extend Medicaid and SCHIP coverage to 
pregnant women. The provisions attempt to restore balance in 
eligibility levels between mothers and their children by 
allowing states to cover pregnant women in these programs up to 
the income eligibility level available for their children. The 
provision offers an incentive to states to raise income 
eligibility levels for pregnant women byproviding the enhanced 
SCHIP matching rate to states that expand coverage above the current 
limit of 185 percent of poverty.
            (b) SCHIP

                              PRESENT LAW

    In general, SCHIP allows states to cover uninsured children 
under age 19 in families with incomes that are either: (1) 
above the state's Medicaid financial eligibility standard but 
less than 200 percent of the federal poverty level, or (2) in 
states with Medicaid income levels for children already at or 
above 200 percent FPL, within 50 percentage points over the 
state's Medicaid income eligibility limit for children in 
effect on March 31, 1997.
    Generally, states cover SCHIP-eligible kids by either 
enrolling them into Medicaid expansion programs, or into 
separate state health insurance plans that meet specific 
standards for benefits and cost-sharing, or through a 
combination of both.
    States covering SCHIP-eligible children through Medicaid 
must provide the full range of mandatory Medicaid benefits, 
including maternity care, and all optional services specified 
in their state Medicaid plans. Coverage for pregnant women 
under Medicaid is limited to services related to the pregnancy 
(e.g., prenatal, delivery, and postpartum care up to 60 days 
after delivery); complications of pregnancy; and family 
planning services. Alternatively, states operating separate 
state insurance plans may choose any one of three other benefit 
options: (1) a benchmark benefit package, (2) benchmark 
equivalent coverage, or (3) any other health benefits plan that 
the Secretary determines will provide appropriate coverage for 
the targeted population of uninsured children. These three 
additional benefit options may include maternity care. However, 
apart from requiring coverage of inpatient and outpatient 
hospital services, and physicians' surgical and medical 
services, there is no specific language in the federal statute 
that requires provision of prenatal, delivery and postpartum 
services with these non-Medicaid benefit plan options.
    The SCHIP program does not include pregnancy status among 
its eligibility criteria, and does not cover individuals over 
age 18. There are two circumstances under which uninsured 
pregnant women over 18 years would be eligible for SCHIP. 
First, SCHIP has a ``family coverage option'' that allows 
states to provide coverage under a group health plan that may 
include maternity care to adult females in eligible families. 
States may cover entire families including parents if the 
purchase of family coverage is cost effective when compared 
with the cost of covering only the targeted low-income children 
in the families involved, and would not substitute for other 
health insurance coverage. Alternatively, states may apply for 
waivers of program rules to extend coverage to adults such as 
parents and pregnant women.
    Cost sharing refers to the out-of-pocket payments made by 
beneficiaries of a health insurance plan. States that chose to 
implement SCHIP as a Medicaid expansion must follow the nominal 
cost sharing rules of the Medicaid program. Under separate 
state programs, total annual aggregate cost-sharing (including 
premiums, enrollment fees, deductibles, copayments, 
coinsurance, and other similar charges) for any family may not 
exceed 5 percent of total income in a year. Preventive services 
are exempt from cost-sharing.
    For each fiscal year, the states and the District of 
Columbia are allotted a proportion of the total amount of 
Federal SCHIP dollars available. From that amount, Federal 
matching funds are disbursed quarterly to each state by a 
formula set in statute. The original authorizing legislation 
for SCHIP requires that 0.25 percent of the program's total 
authorization be set-aside for five territories. This total is 
distributed among these territories based on specific 
percentages defined in statute.

                        EXPLANATION OF PROVISION

    The Committee bill allows states to cover additional 
pregnant women under SCHIP. The SCHIP expansion group includes 
pregnant women with family income above the state's Medicaid 
financial eligibility standard for pregnant women in effect on 
January 1, 2002, up to the income eligibility for SCHIP 
children in effect as of January 1, 2002. The provision also 
requires states to meet the following conditions before they 
are permitted to expand their eligibility. First, the state 
must have already expanded Medicaid eligibility for pregnant 
women up to at least 185 percent FPL. Second, the same two 
conditions required of states choosing to expand coverage to 
pregnant women under Medicaid must also be met: (1) the state 
must cover under Medicaid and SCHIP pregnant women in lower 
income families before or in addition to pregnant women in 
higher income families, and (2) the state must apply an income 
level to the new group of pregnant women that is no lower than 
the effective income level in place for pregnant women covered 
under the state Medicaid plan as of January 1, 2002. Coverage 
for pregnant women is limited to services related to the 
pregnancy (e.g., prenatal, delivery, and postpartum care up to 
60 days after delivery); complications of pregnancy; and family 
planning services.
    The provision prohibits: (1) excluding pregnancy-related 
services based on a preexisting condition; (2) imposing a 
waiting period for the purpose of minimizing substitution; and 
(3) cost sharing for pregnancy-related services.
    Children born to women receiving pregnancy-related services 
under SCHIP Medicaid expansions or separate state plans are 
automatically enrolled in such program at the time of birth and 
remain eligible for such assistance until the child attains 1 
year of age. Unless the state issues a separate eligibility 
number for the child, such child retains the medical assistance 
eligibility identification number of the mother during this 
eligibility period.
    For each of fiscal years 2003 through 2006, the Committee's 
provision adds an additional appropriation, in the amount of 
$200 million, out of funds not otherwise appropriated from the 
Treasury. A total of 98.95 percent of such funds are 
distributed among the states in the same manner as SCHIP funds 
are distributed under current law. The remaining funds are 
distributed among the territories also in the same manner as 
defined in current law. Funds added to the SCHIP program may be 
used for child health assistance for targeted low-income 
children, as well as for pregnancy-related assistance for 
pregnant women. Funds are available to states that expand 
coverage to pregnant woman under title XXI (SCHIP), or title 
XIX (Medicaid) beyond those covered as of January 1, 2002. 
Additional funds are not available to the states before October 
1, 2002.

                           REASONS FOR CHANGE

    Current Federal law enables low-income pregnant women to 
receive coverage under SCHIP through age 18, but it does not 
provide such coverage to women ages 19 andabove. While states 
have the ability to add SCHIP coverage for pregnant women over age 18 
through Section 1115 waivers, states find this process to be both time-
consuming and administratively burdensome. The Committee bill allows 
states to cover pregnant women under SCHIP regardless of age and gives 
states the flexibility to expand coverage to pregnant women through the 
simpler state plan amendment process. The committee bill also 
eliminates the disparity in coverage levels between pregnant women and 
infants that has been created through SCHIP, enabling both mothers and 
their newborn children to immediately receive health coverage under the 
program.
            (c)(1) Other amendments to Medicaid: Eligibility of a 
                    newborn

                              PRESENT LAW

    A child born to a woman eligible for and receiving medical 
assistance under a Medicaid state plan on the date of the 
child's birth, is deemed to have applied for, and to have been 
found eligible for such assistance. The child remains eligible 
for such assistance until that child attains 1 year of age as 
long as the child is a member of the woman's household, and the 
woman remains (or would remain if pregnant) eligible for 
Medicaid.

                        EXPLANATION OF PROVISION

    For a child born to a woman eligible for and receiving 
medical assistance under a Medicaid state plan on the date of 
the child's birth, the Committee's bill removes current law 
requirements that the child remain a member of the woman's 
household; and the woman continues to be eligible (or would 
remain eligible if pregnant) for Medicaid.

                           REASONS FOR CHANGE

    The Committee bill ensures that children born to women 
enrolled in Medicaid or SCHIP are immediately enrolled in the 
program for which they are eligible, regardless of the 
eligibility status of the mother. The provision prevents 
newborns eligible for SCHIP from being subject to enrollment 
waiting periods that may apply to other, older children 
eligible for the program and helps ensure that infants receive 
appropriate health care in their first year of life.
            (c)(2) Other amendments to Medicaid: Application of 
                    qualified entities to presumptive eligibility for 
                    pregnant women under Medicaid

                              PRESENT LAW

    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. Entities qualified 
to make presumptive eligibility determinations include Medicaid 
providers, agencies that determine eligibility for Head Start, 
subsidized child care, or the Special Supplemental Food Program 
for Women, Infants and Children (WIC). BIPA 2000 added several 
entities to the list of those qualified to make Medicaid 
presumptive eligibility determinations. These include agencies 
that determine eligibility for Medicaid or the State Children's 
Health Insurance Program (SCHIP); certain elementary and 
secondary schools; state or tribal child support enforcement 
agencies; certain organizations providing food and shelter to 
the homeless; entities involved in enrollment 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.

                        EXPLANATION OF PROVISION

    For purposes of presumptive eligibility determinations, the 
Committee bill clarifies that qualified providers be included 
under qualified entities as defined in current law. The bill 
further clarifies that qualified entities be permitted to make 
presumptive eligibility determinations for pregnant women in 
addition to children.

                           REASON FOR CHANGE

    Given the established value of early prenatal care for 
ensuring the health of both mother and child, it is important 
to clarify and extend presumptive eligibility rules to pregnant 
women.
            (d) Effective date
    Section 2 of the Committee bill applies to items and 
services furnished on or after October 1, 2002, regardless of 
whether implementing regulations have been issued.

Section 3. Review of State agency blindness and disability 
        determinations

                              PRESENT LAW

    State agencies are required to conduct blindness and 
disability determinations to establish an individual's 
eligibility for: (1) Title II, (Federal Old-Age, Survivors, and 
Disability Insurance (OASDI) benefits); and (2) Title XVI 
(Supplemental Security Income, (SSI)). Disability 
determinations are made in accordance with disability criteria 
defined in statute as well as standards promulgated under 
regulations or other guidance.
    Under current law, the Commissioner of Social Security is 
required to review the state agency's Title II initial 
blindness and disability determinations in advance of awarding 
payment to individuals determined eligible under such 
requirements. This requirement for review is met when: (1) at 
least 50 percent of all such determinations have been reviewed, 
or (2) other such determinations have been reviewed as 
necessary to ensure a high level of accuracy.

                        EXPLANATION OF PROVISION

    After a 1-year phase-in, the bill aligns the initial review 
requirements for Title XVI with those currently required under 
Title II. As under Title II, the Commissioner of Social 
Security is required to review initial Title XVI SSI blindness 
and disability determinations made by state agencies in advance 
awarding payments. For FY2003, the SSI review is required for 
25 percent of all state-determined allowances. In FY2004 and 
thereafter, review is required for at least 50 percent of 
state-determined allowances. To the extent feasible, the 
Committee's bill requires the Commissioner to select for 
review, determinations that are most likely to be incorrect.

                           REASON FOR CHANGE

    The Committee bill includes a requirement that 
determinations in the SSI program be reviewed to improve 
program integrity.

                             EFFECTIVE DATE

    Section 3 of the Committee bill is effective at the time of 
enactment of such Act.

          III. REGULATORY IMPACT STATEMENT AND RELATED MATTERS


                          A. Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact of the Mothers and 
Newborns Health Insurance Act of 2002.

                  IMPACT ON INDIVIDUALS AND BUSINESSES

    Section 2(a) creates a state option for states to cover 
additional pregnant women under Medicaid. Because the provision 
merely creates an option for states to consider, it does not 
impose any additional paperwork or regulatory burdens on 
individuals or businesses.
    Section 2(b) creates a state option for states to cover 
additional pregnant women under the State Children's Health 
Insurance Program (SCHIP), and it appropriates additional funds 
for the SCHIP allotment of states that chose to take up the 
option. Because the provision merely creates an option for 
states to consider enacting, it does not impose any additional 
paperwork or regulatory burdens on individuals or businesses.
    For a child born to a woman receiving Medicaid on the date 
of the child's birth, Section 2(c)(1) removes current law 
requirements that the child remain eligible only as long as the 
child is a member of the woman's household and the woman 
remains eligible for Medicaid. Because it removes requirements 
for eligibility for infants, the provision reduces paperwork 
and regulatory burdens on individuals, and does not impose 
additional paperwork or regulatory burdens on businesses.
    Section 2(c)(2) clarifies that qualified providers are 
qualified entities for purposes of determining presumptive 
eligibility for children for Medicaid. It also allows qualified 
entities to make presumptive determinations of eligibility for 
pregnant women. This provision reduces the paperwork and 
regulatory burdens on qualified providers and qualified 
entities, and it does not impose additional paperwork and 
regulatory burdens on other businesses or individuals.

                       IMPACT ON PERSONAL PRIVACY

    The Committee bill permits states to provide health 
coverage through Medicaid or SCHIP to pregnant women who are 
not presently eligible. To establish their eligibility for 
coverage in states that take up the new options, pregnant women 
may be required to provide information regarding their income, 
their assets, and their medical condition, but they would not 
be required to provide any more information than presently 
eligible pregnant women would have to provide. Infants who were 
born to mothers eligible for and receiving Medicaid would have 
to provide less information about household and income to 
maintain their Medicaid coverage for one year. Finally, because 
the law clarifies that certain private entities may make 
presumptive eligibility determinations, it would give children 
and pregnant women the option to obtain eligibility by sharing 
income, asset, and medical condition information with private 
and public entities. However, no child or pregnant woman would 
be required to share the information.

                     B. Unfunded Mandates Statement

    Due to time constraints, the Congressional Budget Office 
estimate was not included in the report. When received by the 
Committee, it will appear in the Congressional Record at a 
later time.

                           IV. BUDGET EFFECTS

    Due to time constraints, the Congressional Budget Office 
estimate was not included in the report. When received by the 
Committee, it will appear in the Congressional Record at a 
later time.

                                V. VOTES

    On July 11, 2002, a substitute for S. 724, entitled, the 
``Mothers and Newborns Health Insurance Act of 2002,'' was 
ordered favorably reported by a voice vote. A quorum was 
present.
    No amendments were offered.

                      VI. CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of the rule XXVI of the 
Standing Rules of the Senate, 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 italic, existing law in which no changes 
is proposed is shown in roman):

                          SOCIAL SECURITY ACT

           *       *       *       *       *       *       *



 TITLE XVI--GRANTS TO STATES FOR AID TO THE AGED, BLIND, OR DISABLED

           *       *       *       *       *       *       *



                             ADMINISTRATION

    Sec. 1633. (a) Subject to subsection (b), the Commissioner 
of Social Security may make such administrative and other 
arrangements (including arrangements for the determination of 
blindness and disability under section 1614(a)(2) and (3) in 
the same manner and subject to the same conditions as provided 
with respect to disability determinations under section 221) as 
may be necessary or appropriate to carry out the Commissioner's 
functions under this title.

           *       *       *       *       *       *       *

    (e)(1) The Commissioner of Social Security shall review 
determinations, made by State agencies pursuant to subsection 
(a) in connection with applications for benefits under this 
title on the basis of blindness or disability, that individuals 
who have attained 18 years of age are blind or disabled as of a 
specified onset date. The Commissioner of Social Security shall 
review such a determination before any action is taken to 
implement the determination.
          (2)(A) In carrying out paragraph (1), the 
        Commissioner of Social Security shall review--
                  (i) at least 25 percent of all determinations 
                referred to in paragraph (1) that are made in 
                fiscal year 2003; and
                  (ii) at least 50 percent of all such 
                determinations that are made in fiscal year 
                2004 or thereafter.
          (B) In carrying out subparagraph (A), the 
        Commissioner of Social Security shall, to the extent 
        feasible, select for review the determinations which 
        the Commissioner of Social Security identifies as being 
        the most likely to be incorrect.

           *       *       *       *       *       *       *


      TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS


                   STATE PLANS FOR MEDICAL ASSISTANCE

    Sec. 1902. (a) A State plan for medical assistance must--

           *       *       *       *       *       *       *

    (e)(1)(A) * * *

           *       *       *       *       *       *       *

    (4) A child born to a woman eligible for and receiving 
medical assistance under a State plan on the date of the 
child's birth shall be deemed to have applied for medical 
assistance and to have been found eligible for such assistance 
under such plan on the date of such birth and to remain 
eligible for such assistance for a period of one year [so long 
as the child is a member of the woman's household and the woman 
remains (or would remain if pregnant) eligible for such 
assistance]. During the period in which a child is deemed under 
the preceding sentence to be eligible for medical assistance, 
the medical assistance eligibility identification number of the 
mother shall also serve as the identification number of the 
child, and all claims shall be submitted and paid under such 
number (unless the State issues a separate identification 
number for the child before such period expires).

           *       *       *       *       *       *       *

    (l)(1) Individuals described in this paragraph are--
          (A) women during pregnancy (and during the 60-day 
        period beginning on the last day of the pregnancy),
          (B) infants under one year of age,
          (C) children who have attained one year of age but 
        have not attained 6 years of age, and
          (D) children born after September 30, 1983 (or, at 
        the option of a State, after any earlier date), who 
        have attained 6 years of age but have not attained 19 
        years of age,
who are not described in any of subclauses (I) through (III) of 
subsection (a)(10)(A)(i) and whose family income does not 
exceed the income level established by the State under 
paragraph (2) for a family size equal to the size of the 
family, including the woman, infant, or child.
    (2)(A)(i) For purposes of paragraph (1) with respect to 
individuals described in subparagraph (A) or (B) of that 
paragraph, the State shall establish an income level which is a 
percentage (not less than the percentage provided under clause 
(ii) and not more than 185 percent (or such higher percent as 
the State may elect for purposes of expenditures for medical 
assistance for pregnant women described in section 
1905(u)(4)(A)) of the income official poverty line (as defined 
by the Office of Management and Budget and Budget, and revised 
annually in accordance with section 673(2) of the Omnibus 
Budget Reconciliation Act of 1981) applicable to a family of 
the size involved.

           *       *       *       *       *       *       *


                              DEFINITIIONS

    Sec. 1905. * * *
    (b) Subject to section 1933(d), the term ``Federal medical 
assistance percentage'' for any State shall be 100 per centum 
less the State percentage; and the State percentage shall be 
that percentage which bears the same ratio to 45 per centum as 
the square of the per capita income of such State bears to the 
square of the per capita income of the continental United 
States (including Alaska) and Hawaii; except that (1) the 
Federal medical assistance percentage shall in no case be less 
than 50 per centum or more than 83 per centum, (2) the Federal 
medical assistance percentage for Puerto Rico, the Virgin 
Islands, Guam, the Northern Mariana Islands, and American Samoa 
shall be 50 per centum. The Federal medical assistance 
percentage for any State shall be determined and promulgated in 
accordance with the provisions of section 1101(a)(8)(B). 
Notwithstanding the first sentence of this section, the Federal 
medical assistance percentage shall be 100 per centum with 
respect to amounts expended as medical assistance for services 
which are received through an Indian Health Service facility 
whether operated by the Indian Health Service or by an Indian 
tribe or tribal organization (as defined in section 4 of the 
Indian Health Care Improvement Act). Notwithstanding the first 
sentence of this subsection, in the case of a State plan that 
meets the condition described in subsection (u)(1), with 
respect to expenditures (other than expenditures under section 
1923) described in subsection (u)(2)(A) [or subsection (u)(3)], 
(u)(3), or (u)(4) for the State for a fiscal year, and that do 
not exceed the amount of the State's available allotment under 
section 2104, the Federal medical assistance percentage is 
equal to the enhanced FMAP described in section 2105(b), for 
purpose of this title and title XXI, the Federal medical 
assistance percentage for the District of Columbia shall be 70 
percent and (4) the Federal medical assistance percentage shall 
be equal to the enhanced FMAP described in section 2105(b) with 
respect to medical assistance provided to individuals who are 
eligible for such assistance only on the basis of section 
1902(a)(10)(A)(ii)(XVIII).

           *       *       *       *       *       *       *

    (u)(1) The conditions described in this paragraph for a 
State plan are as follows:
          (A) The State is complying with the requirement of 
        section 2105(d)(1).
          (B) The Plan provides for such reporting of 
        information about expenditures and payments 
        attributable to the operation of this subsection as the 
        Secretary deems necessary in order to carry out the 
        fourth sentence of subsection (b).
    (2)(A) For purposes of subsection (b), the expenditures 
described in this subparagraph are expenditures for medical 
assistance for optional target low-income children described in 
subparagraph (B).
    (B) For purposes of this paragraph, the term ``optional 
targeted low-income child'' means a targeted low-income child 
as defined in section 2110(b)(1) (determined without regard to 
that portion of subparagraph (C) of such section concerning 
eligibility for medical assistance under this title) who would 
not qualify for medical assistance under the State plan under 
this title as in effect on March 31, 1997 (but taking into 
account the expansion of age of eligibility effected through 
the operation of section 1902(l)(1)(D)).
    (3) For purposes of subsection (b), the expenditures 
described in this paragraph are expenditures for medical 
assistance for children who are born before October 1, 1983, 
and who would be described in section 1902(l)(1)(D) if they had 
been born on or after such date, and who are not eligible for 
such assistance under the State plan under this title based on 
such State plan as in effect as of March 31, 1997.
    (4) For purposes of the fourth sentence of subsection (b) 
and section 2105(a), the expenditures described in this 
paragraph are the following:
          (A) Certain pregnant women.--If the conditions 
        described in subparagraph (B) are met, expenditures for 
        medical assistance for pregnant women described in 
        subsection (n) or under section 1902(l)(1)(A) in a 
        family the income of which exceeds 185 percent of the 
        poverty line, but does not exceed the income 
        eligibility level established under title XXI for a 
        targeted low-income child.
          (B) Conditions.--The conditions described in this 
        subparagraph are the following:
                  (i) The State plans under this title and 
                title XXI do not provide coverage for pregnant 
                women described in subparagraph (A) with higher 
                family income without covering such pregnant 
                women with a lower family income.
                  (ii) The State does not apply an effective 
                income level for pregnant women that is lower 
                than the effective income level (expressed as a 
                percent of the poverty line and considering 
                applicable income disregards) that has been 
                specified under the State plan under subsection 
                (a)(10)(A)(i)(III) or (l)(2)(A) of section 
                1902, as of January 1, 2002, to be eligible for 
                medical assistance as a pregnant woman.
          (C) Definition of poverty line.--In this subsection, 
        the term ``poverty line'' has the meaning given such 
        term in section 2110(c)(5).
    [(4)](5) The limitations on payment under subsections (f) 
and (g) of section 1108 shall not apply to Federal payments 
made under section 1903(a)(1) based on an enhanced FMAP 
described in section 2105(b).

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               PRESUMPTIVE ELIGIBILITY FOR PREGNANT WOMEN

    Sec. 1920. (a) A State plan approved under section 1902 may 
provide for making ambulatory prenatal care available to a 
pregnant woman during a presumptive eligibility period.
    (b) For purposes of this section--
          (1) the term ``presumptive eligibility period'' 
        means, with respect to a pregnant woman, the period 
        that--

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          (2) the term ``qualified provider'' means any 
        provider that--
                  (A) is eligible for payments under a State 
                plan approved under this subchapter,
                  (B) provides services of the type described 
                in subparagraph (A) or (B) of section 
                1396d(a)(2) of this title or in section 
                1396b(a)(9) of this title,
                  (C) is determined by the State agency to be 
                capable of making determinations of the type 
                described in paragraph (1)(A), and
                  (D)(i) receives funds under--
                          (I) section 330 or 330A of the Public 
                        Health Service Act
                          (II) title V of this Act, or
                          (III) title V of the Indian Health 
                        Care Improvement Act;
                  (ii) participates in a program established 
                under--
                          (I) section 17 of the Child Nutrition 
                        Act of 1966, or
                          (II) section 4(a) of the Agriculture 
                        and Consumer Protection Act of 1973,
                  (iii) participates in a State perinatal 
                program; or
                  (iv) is the Indian Health Service or is a 
                health program or facility operated by a tribe 
                or tribal organization under the Indian Self-
                Determination Act (Public Law 93-638).
The term ``qualified provider'' includes a qualified entity as 
defined in section 1920A(b)(3).

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          TITLE XXI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM


   GENERAL CONTENTS OF STATE CHILD HEALTH PLAN; ELIGIBILITY; OUTREACH

    Sec. 2102. (a) General Background and Description.--A State 
child health plan shall include a description, consistent with 
the requirements of this title, of--

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    (b) General Description of Eligibility Standards and 
Methodology.--
          (1) Eligibility standards.--
                  (A) In general.--The plan shall include a 
                description of the standard used to determine 
                the eligibility of targeted low-income children 
                for child health assistance under the plan. 
                such standards may include (to the extent 
                consistent with this title) those relating to 
                the geographic areas to be served by the plan, 
                age, income and resources (including any 
                standards relating to spenddowns and 
                disposition of resources), residency, 
                disability status (so long as any standard 
                relating to such status does not restrict 
                eligibility), access to or coverage under other 
                health coverage, and duration of eligibility. 
                Such standards may not discriminate on the 
                basis of diagnosis.
                  (B) Limitations on eligibility standards.--
                Such eligibility standards--
                          (i) shall, within any defined group 
                        of covered targeted low-income 
                        children, not cover such children with 
                        higher family income without covering 
                        children with a lower family income[, 
                        and ];
                          (ii) may not deny eligibility based 
                        on a child having a preexisting medical 
                        condition[.]; and
                          (iii) may not apply a waiting period 
                        (including a waiting period to carry 
                        out paragraph (3)(C)) in the case of a 
                        targeted low-income pregnant woman.

         COVERAGE REQUIREMENTS FOR CHILDREN'S HEALTH INSURANCE

    Sec. 2103. (a) Required Scope of Health Insurance 
Coverage.--The child health assistance provided to a targeted 
low-income child under the plan in the form described in 
paragraph (1) of section 2101(a) shall consist, consistent with 
subsection (c)(5), of any of the following:

           *       *       *       *       *       *       *

    (e) Cost-Sharing.--
          (1) Description; general conditions.--
                  (A) Description.--A State child health plan 
                shall include a description, consistent with 
                this subsection, of the amount (if any) of 
                premiums, deductibles, coinsurance, and other 
                cost sharing imposed. Any such charges shall be 
                imposed pursuant to a public schedule.
                  (B) Protection for lower income children.--
                The State child health plan may only vary 
                premiums, deductibles, coinsurance, and other 
                cost sharing based on the family income of 
                targeted low-income children in a manner that 
                does not favor children from families with 
                higher income over children from families with 
                lower income.
          (2) No cost sharing on benefits for preventive 
        services or pregnancy-related services.--The State 
        child health plan may not impose deductibles, 
        coinsurance, or other cost sharing with respect to 
        benefits for services within the category of services 
        described in subsection (c)(1)(D) or for pregnancy-
        related services.

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                               ALLOTMENTS

    Sec. 2104. (a) Appropriation; Total Allotment.--For the 
purpose of providing allotments to States under this section, 
subject to subsection (d), there is appropriated, out of any 
money in the Treasury not otherwise appropriated--

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    (b) Allotments to 50 States and District of Columbia.--
          (1) In general.--Subject to paragraph (4) and 
        subsection (d), of the amount available for allotment 
        under subsection (a) for a fiscal year, reduced by the 
        amount of allotments made under subsection (c) 
        (determined without regard to paragraph (4) thereof) 
        for the fiscal year, the Secretary shall allot to each 
        State (other than a State described in such subsection) 
        with a State child health plan approved under this 
        title the same proportion as the ratio of--

           *       *       *       *       *       *       *

    (c) Allotments to Territories.--
          (1) In general.--Of the amount available for 
        allotment under subsection (d) for a fiscal year 
        subject to subsection (d), the Secretary shall allot 
        0.25 percent among each of the commonwealths and 
        territories described in paragraph (3) in the same 
        proportion as the percentage specified in paragraph (2) 
        for such commonwealth or territory bears to the sum of 
        such percentages for all such commonwealths or 
        territories so described.

           *       *       *       *       *       *       *

    (d) Additional Allotments for Providing Coverage of 
Pregnant Women.--
          (1) Appropriation; total allotment.--For the purpose 
        of providing additional allotments to States under this 
        title, there is appropriated, out of any money in the 
        Treasury not otherwise appropriated, for each of fiscal 
        years 2003 through 2006, $200,000,000.
          (2) State and territorial allotments.--In addition to 
        the allotments provided under subsections (b) and (c), 
        subject to paragraphs (3) and (4), of the amount 
        available for the additional allotments under paragraph 
        (1) for a fiscal year, the Secretary shall allot to 
        each State with a State child health plan approved 
        under this title--
                  (A) in the case of such a State other than a 
                commonwealth or territory described in 
                subparagraph (B), the same proportion as the 
                proportion of the State's allotment under 
                subsection (b) (determined without regard to 
                subsection (f)) to the total amount of the 
                allotments under subsection (b) for such States 
                eligible for an allotment under this paragraph 
                for such fiscal year; and
                  (B) in the case of a commonwealth or 
                territory described in subsection (c)(3), the 
                same proportion as the proportion of the 
                commonwealth's or territory's allotment under 
                subsection (c) (determined without regard to 
                subsection (f)) to the total amount of the 
                allotments under subsection (c) for 
                commonwealths and territories eligible for an 
                allotment under this paragraph for such fiscal 
                year.
          (3) Use of additional allotment.--Additional 
        allotments provided under this subsection are not 
        available for amounts expended before October 1, 2002. 
        Such amounts are available for amounts expended on or 
        after such date for child health assistance for 
        targeted low-income children, as well as for pregnancy-
        related assistance for targeted low-income pregnant 
        women.
          (4) No payments unless election to expand coverage of 
        pregnant women.--No payments may be made to a State 
        under this title from an allotment provided under this 
        subsection unless the State provides pregnancy-related 
        assistance for targeted low-income pregnant women under 
        this title, or provides medical assistance for pregnant 
        women under title XIX, whose family income exceeds the 
        effective income level applicable under subsection 
        (a)(10)(A)(i)(III) or (l)(2)(A) of section 1902 to a 
        family of the size involved as of January 1, 2002.

                           PAYMENTS TO STATES

    Sec. 2105. (a) Payments.--
          (1) In general.--Subject to the succeeding provisions 
        of this section, the Secretary shall pay to each State 
        with a plan approved under this title, from its 
        allotment under section 2104, an amount for each 
        quarter equal to the enhanced FMAP [(or, in the case of 
        expenditures described in subparagraph (B), the Federal 
        medical assistance percentage (as defined in the first 
        sentence of section 1905(b)))] of expenditures in the 
        quarter--
                  (A) for child health assistance under the 
                plan for targeted low-income children in the 
                form of providing medical assistance for which 
                payment is made on the basis of an enhanced 
                FMAP under the fourth sentence of section 
                1905(b);
                  [(B) for the provision of medical assistance 
                on behalf of a child during a presumptive 
                eligibility period under section 1920A;]
                  (B) for the provision of medical assistance 
                that is attributable to expenditures described 
                in section 1905(u)(4)(A);

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SEC. 2111. OPTIONAL COVERAGE OF TARGETED LOW-INCOME PREGNANT WOMEN.

    (a) Optional Coverage.--Notwithstanding any other provision 
of this title, a State may provide for coverage, through an 
amendment to its State child health plan under section 2102, of 
pregnancy-related assistance for targeted low-income pregnant 
women in accordance with this section, but only if--
          (1) the State has established an income eligibility 
        level for pregnant women under subsection 
        (a)(10)(A)(i)(III) or (l)(2)(A) of section 1902 that is 
        at least 185 percent of the income official poverty 
        line; and
          (2) the State meets the conditions described in 
        section 1905(u)(4)(B).
    (b) Definitions.--For purposes of this title:
          (1) Pregnancy-related assistance.--The term 
        ``pregnancy-related assistance'' has the meaning given 
        the term child health assistance in section 2110(a) as 
        if any reference to targeted low-income children were a 
        reference to targeted low-income pregnant women, except 
        that the assistance shall be limited to services 
        related to pregnancy (which include prenatal, delivery, 
        and postpartum services and services described in 
        section 1905(a)(4)(C)) and to other conditions that may 
        complicate pregnancy.
          (2) Targeted low-income pregnant woman.--The term 
        ``targeted low-income pregnant woman'' means a woman--
                  (A) during pregnancy and through the end of 
                the month in which the 60-day period (beginning 
                on the last day of her pregnancy) ends;
                  (B) whose family income exceeds the effective 
                income level (expressed as a percent of the 
                poverty line and considering applicable income 
                disregards) that has been specified under 
                subsection (a)(10)(A)(i)(III) or (l)(2)(A) of 
                section 1902, as of January 1, 2002, to be 
                eligible for medical assistance as a pregnant 
                woman under title XIX but does not exceed the 
                income eligibility level established under the 
                State child health plan under this title for a 
                targeted low-income child; and
                  (C) who satisfies the requirement of 
                paragraphs (1)(A), (1)(C), (2), and (3) of 
                section 2110(b).
    (c) References to Terms and Special Rules.--In the case of, 
and with respect to, a State providing for coverage of 
pregnancy-related assistance to targeted low-income pregnant 
women under subsection (a), the following special rules apply:
          (1) Any reference in this title (other than in 
        subsection (b)) to a targeted low-income child is 
        deemed to include a reference to a targeted low-income 
        pregnant woman.
          (2) Any such reference to child health assistance 
        with respect to such women is deemed a reference to 
        pregnancy-related assistance.
          (3) Any such reference to a child is deemed a 
        reference to a woman during pregnancy and the period 
        described in subsection (b)(2)(A).
          (4) In applying section 2102(b)(3)(B), any reference 
        to children found through screening to be eligible for 
        medical assistance under the State medicaid plan under 
        title XIX is deemed a reference to pregnant women.
          (5) There shall be no exclusion of benefits for 
        services described in subsection (b)(1) based on any 
        preexisting condition and no waiting period (including 
        any waiting period imposed to carry out section 
        2102(b)(3)(C)) shall apply.
          (6) Subsection (a) of section 2103 (relating to 
        required scope of health insurance coverage) shall not 
        apply insofar as a State limits coverage to services 
        described in subsection (b)(1) and the reference to 
        such section in section 2105(a)(1)(C) is deemed not to 
        require, in such case, compliance with the requirements 
        of section 2103(a).
          (7) In applying section 2103(e)(3)(B) in the case of 
        a pregnant woman provided coverage under this section, 
        the limitation on total annual aggregate cost-sharing 
        shall be applied to such pregnant woman.
          (8) The reference in section 2107(e)(1)(D) to section 
        1920A (relating to presumptive eligibility for 
        children) is deemed a reference to section 1920 
        (relating to presumptive eligibility for pregnant 
        women).
    (d) Automatic Enrollment for Children Born to Women 
Receiving Pregnancy-Related Assistance.--If a child is born to 
a targeted low-income pregnant woman who was receiving 
pregnancy-related assistance under this section on the date of 
the child's birth, the child shall be deemed to have applied 
for child health assistance under the State child health plan 
and to have been found eligible for such assistance under such 
plan or to have applied for medical assistance under title XIX 
and to have been found eligible for such assistance under such 
title, as appropriate, on the date of such birth and to remain 
eligible for such assistance until the child attains 1 year of 
age. During the period in which a child is deemed under the 
preceding sentence to be eligible for child health or medical 
assistance, the child health or medical assistance eligibility 
identification number of the mother shall also serve as the 
identification number of the child, and all claims shall be 
submitted and paid under such number (unless the State issues a 
separate identification number for the child before such period 
expires).