Revises requirements for annual state CHIP allotments to create a formula including: (1) a coverage factor, based on a state's prior spending adjusted for health care cost growth and child population growth; and (2) an uninsured children factor, based on the number of low-income uninsured children.

Requires: (1) a two-year initial availability of CHIP allotments for all states and territories; and (2) reallocation to a shortfall state or territory of amounts equal to the projected shortfall.

Extends the authority for qualifying states to use CHIP allotments for certain expenditures under SSA title XIX (Medicaid).

Gives states the option to expand coverage of children under CHIP to up to 300% of the poverty line.

Prescribes conditions for state plan amendment expansion of CHIP eligibility beyond the highest income eligibility permitted.

Prescribes requirements for an Express Lane option for a state agency to determine a child's eligibility for Medicaid or CHIP.

Provides for enhanced administrative funding for: (1) information technology used to simplify eligibility determinations; and (2) translation or interpretation services.

Authorizes conveyance to a state Medicaid agency by a federal or another state agency or private entity of data potentially pertinent to Medicaid eligibility determinations.

Provides for enhanced coverage cost assistance for states with increasing or high coverage rates among children.

Gives states the option to require satisfactory documentary evidence for proof of citizenship or nationality for Medicaid eligibility purposes.

Gives states the option to expand or add coverage of: (1) certain pregnant women and legal immigrants under Medicaid and CHIP; and (2) targeted low-income pregnant women under CHIP.

Requires CHIP coverage of dental and mental health services.

Requires a childhood obesity demonstration project.

Establishes the Medicaid and CHIP Payment and Access Commission (MACPAC).

Requires updating and enhancement of quality of care measures for children

Permits coverage of children of employees of a public agency in the state under CHIP.