Authorizes states to offer purchase of coverage for uncovered children under SCHIP who are not otherwise eligible for assistance under SCHIP or Medicaid.

Provides subsidies for employment-based coverage of children eligible for SCHIP or Medicaid.

Requires coverage of early and periodic screening, diagnostic, and treatment services, including dental services, federally-qualified health services, and rural health clinic services.

Establishes the Medicaid-SCHIP Payment Advisory Commission.

Provides for an increase in the federal medical assistance percentage (FMAP) for medical assistance for children for states that expand coverage of children.

Outlines state options for additional coverage expansions, including older children under Medicaid, targeted low-income pregnant women under SCHIP, and legal immigrants under both programs.

Establishes new base SCHIP allotments responsive to increases in health care costs and enrollment expansions.

Provides for a two-year initial availability of SCHIP allotments, and for redistribution of unused allotments to address state funding shortfalls.

Prescribes a special rule for school-based outreach and enrollment activities.

Gives states the option to require certain individuals to present satisfactory documentary evidence of citizenship or nationality for Medicaid eligibility.

Gives states the option to provide for "express lane" and simplified determinations of a child's financial eligibility for Medicaid or SCHIP.

Directs the Secretary of Health and Human Services to develop and disseminate a model process for the coordination of Medicaid and SCHIP enrollment and coverage of children who frequently change their state of residency or are temporarily outside such state.

Requires a state Medicaid plan to apply outreach procedures to all pregnant women and children.