II 109th CONGRESS 2d Session S. 3972 IN THE SENATE OF THE UNITED STATES September 28, 2006 Mr. Grassley (for himself, Mr. Isakson, Mr. Chambliss, Mr. Burr, and Ms. Murkowski) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XXI of the Social Security Act to reduce funding shortfalls for the State Children's Health Insurance Program (SCHIP) for fiscal year 2007.

1.

Short title

This Act may be cited as the Fiscal Accountability, Integrity, and Responsibility in SCHIP Act of 2006 or the FAIR-SCHIP Act of 2006.

2.

Funding of the SCHIP allotment shortfalls for fiscal year 2007

(a)

In general

Section 2104 of the Social Security Act (42 U.S.C. 1397dd) is amended by adding at the end the following new subsection: (h)

Special rules To address fiscal year 2007 shortfalls

(1)

Initial down payment on shortfall for fiscal year 2007

The provisions of subsection (d) shall apply with respect to fiscal year 2007 in the same manner as they apply to fiscal year 2006, except that, for purposes of this paragraph— (A)any reference to fiscal year 2006, December 16, 2005, 2005, 2004, September 30, 2006 and October 1, 2006 shall be deemed a reference to fiscal year 2007, December 16, 2006, 2006, 2005, September 30, 2007 and October 1, 2007 respectively; (B)there shall be substituted for the dollar amount specified in subsection (d)(1), and shall be treated as the amount appropriated under such subsection, $450,000,000; (C)paragraphs (3)(B) and (4) of subsection (d) shall not apply (and paragraph (4) of this subsection shall apply in lieu of paragraph (4) of such subsection); (D)if the dollar amount specified in subparagraph (B) is not at least equal to the total of the shortfalls described in subsection (d)(2) (as applied under this paragraph), the amounts under subsection (d)(3) (as applied under this paragraph) shall be ratably reduced. (2)

Funding remainder of shortfall for fiscal year 2007 through redistribution of certain unused fiscal year 2005 allotments

(A)

In general

Subject to subparagraph (C), the Secretary shall provide for a redistribution under subsection (f) from amounts made available for redistribution under paragraph (3), to each shortfall State described in subparagraph (B) that is one of the 50 States or District of Columbia, such amount as the Secretary determines will eliminate the estimated shortfall described in such subparagraph for the State. (B)

Shortfall state described

For purposes of this paragraph, a shortfall State described in this subparagraph is a State with a State child health plan approved under this title for which the Secretary estimates, on the basis of the most recent data available to the Secretary as of March 31, 2007, that the projected expenditures under such plan for such State for fiscal year 2007 will exceed the sum of— (i)the amount of the State's allotments for each of fiscal years 2005 and 2006 that will not be expended by the end of fiscal year 2006; (ii)the amount, if any, that is to be redistributed to the State during fiscal year 2007 in accordance with subsection (f) (other than under this paragraph); (iii)the amount of the State's allotment for fiscal year 2007; and (iv)the amount of any additional allotment to the State under paragraph (1). (C)

Proration rule

If the amounts available for redistribution under paragraph (3) are less than the total amounts computed under subparagraph (A), the amount computed under subparagraph (A) for each shortfall State shall be reduced proportionally. (3)

Treatment of certain States with fiscal year 2005 allotments unexpended at the end of the first half of fiscal year 2007

(A)

Identification of States

The Secretary— (i)shall identify those States that received an allotment for fiscal year 2005 under subsection (b) which have not expended all of such allotment by March 31, 2007; and (ii)for each such State shall determine— (I)the portion of such allotment that was not so expended by such date; and (II)whether the State is a described in subparagraph (B). (B)

States with funds in excess of 200 percent of need

A State described in this subparagraph is a State for which the Secretary determines, as of March 31, 2007, the total of all available allotments under this title as of such date, is at least equal to 200 percent of the total projected expenditures under this title for the State for fiscal year 2007. (C)

Redistribution and limitation on availability

(i)

Application to portion of unused allotments for certain States

In the case of a State identified under subparagraph (A)(i) that is also described in subparagraph (B), notwithstanding subsection (e), the percentage specified by the Secretary in clause (ii) of the amount described in subparagraph (A)(ii)(I) shall not be available for expenditure on or after April 1, 2007. (ii)

Percentage specified

The Secretary shall specify a percentage which— (I)does not exceed 75 percent; and (II)when applied under clause (i) results in the total of the amounts under such clause equaling the total of the amounts under paragraph (2)(A). (4)

Use of additional allotment

Additional allotments provided under this subsection are only available for amounts expended under a State plan approved under this title for child health assistance for targeted low-income children or child health assistance or other health benefits coverage for pregnant women. (5)

Retrospective adjustment

The Secretary may adjust the determinations made under paragraphs (2) and (3) as necessary on the basis of the amounts reported by States not later than November 30, 2007, on CMS Form 64 or CMS Form 21, as the case may be and as approved by the Secretary, but in no case may the percentage specified in paragraph (3)(C)(ii) exceed 75 percent. (6)

1-year availability; no redistribution of unexpended additional allotments

(A)

In general

Notwithstanding subsections (e) and (f), amounts allotted or redistributed to a State pursuant to this subsection for fiscal year 2007 shall only remain available for expenditure by the State through September 30, 2007, and any amounts of such allotments or redistributions that remain unexpended as of such date, shall not be subject to redistribution under subsection (f). Nothing in the preceding sentence shall be construed as limiting the ability of the Secretary to adjust the determinations made under paragraphs (2) and (3) in accordance with paragraph (5). (B)

Reversion upon termination of retrospective adjustment period

Any amounts of such allotments or redistributions that remain unexpended as of September 30, 2007, shall revert to the Treasury on December 31, 2007. . (b)

Extending authority for qualifying states To use certain funds for medicaid expenditures

Section 2105(g)(1)(A) of such Act (42 U.S.C. 1397ee(g)(1)(A)) is amended by striking or 2005 and inserting 2005, 2006, or 2007.