[Federal Register Volume 62, Number 177 (Friday, September 12, 1997)]
[Notices]
[Pages 48098-48105]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24324]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[MB-115-N]
RIN 0938-AI23


State Children's Health Insurance Program; Reserved Allotments to 
States for Fiscal Year 1998; Enhanced Federal Medical Assistance 
Percentages

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice provides advance notification of the reserved 
fiscal year (FY) 1998 State allotments available to provide Federal 
funding to individual States, Commonwealths, and Territories for 
expenditures in the new State Children's Health Insurance Program 
established under title XXI of the Social Security Act. The notice also 
describes the methodology and process that HCFA used to determine these 
reserved allotments in accordance with section 2104 of the Act. These 
reserved State allotments are estimates of States' FY 1998 title XXI 
allotments, assuming that each State were to submit, and receive 
approval for, a State child health plan. Under title XXI the amount of 
a State's allotment for a fiscal year is available for 3 years for 
States with approved child health plans.
    This notice also specifies the enhanced Federal medical assistance 
percentages (FMAP) for child health assistance provided under Title XXI 
for fiscal year 1998.
    Established by section 4901 of the Balanced Budget Act of 1997 
(Pub. L. 105-33), the State Children's Health Insurance Program will 
provide Federal matching funds to States to initiate and expand health 
insurance coverage to uninsured, low-income children.
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FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.

SUPPLEMENTARY INFORMATION:

I. General Background on New Legislation

    Section 490l of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-
33,

[[Page 48099]]

signed into law on August 5, 1997), amended the Social Security Act 
(the Act) to add a new title XXI. Under title XXI, a new State 
Children's Health Insurance Program is established to assist State 
efforts to initiate and expand child health assistance to uninsured, 
low-income children. Under the program, child health assistance is to 
be provided primarily for obtaining health benefits coverage through 
(1) Providing coverage that meets requirements specified in the law 
under section 2103 of the Act; or (2) expanding coverage under the 
State's Medicaid plan under title XIX of the Act; or (3) a combination 
of both.
    In order to be eligible for Federal matching funds under the State 
Children's Health Insurance Program, States must submit to the 
Secretary, and receive approval for, a State child health plan that 
describes how the State intends to use the funds provided under title 
XXI. The plan must meet certain criteria specified in the statute, 
which include benefit packages, eligibility standards and 
methodologies, coverage requirements, basic and additional services 
offered, strategic objectives and performance goals, plan 
administration, and evaluations.
    The law limits the total amount of Federal funds for the State 
Children's Health Insurance Program and specifies the formula that is 
to be used to determine an allotment for each State from this total 
amount, as described under section III of this notice.

II. Purpose of This Notice

    We are issuing this notice to provide advance notification to 
States, Commonwealths, and Territories of the reserved allotments that 
will be available to them for FY 1998 for child health insurance 
expenditures if they choose to establish a State Children's Health 
Insurance Program under an approved State child health plan under title 
XXI of the Act, or to claim an enhanced FMAP rate for certain Medicaid 
expenditures under title XIX of the Act as specified in title XXI. 
States, Commonwealths, and Territories may submit State child health 
plans to HCFA for approval, to be effective as early as October 1, 
1997. We believe that this notification is necessary to enable States, 
Commonwealths, and Territories to conduct advance planning and 
budgeting.
    Section 2104(b) of the Act indicates that ``the Secretary shall 
allot to each State * * * with a State child health plan approved under 
this title.'' We believe that this language requires States to have an 
approved State child health plan for the fiscal year in order for the 
Secretary to provide a final allotment to that State for that fiscal 
year. We believe that if a State does not have an approved State child 
health plan for that fiscal year, the amount of that State's reserved 
allotment would be unavailable to that State and would be included in 
the final allotments for States with approved child health plans.
    The reserved allotment amounts in this notice were determined by 
application of the formula specified in title XXI of the Act and 
described in detail in section III of this notice. Final allotments for 
each State will be determined in accordance with statutory 
requirements; we plan to issue a notice of proposed rulemaking as soon 
as possible on the requirements for the allotment and payment process 
under title XXI. Although final allotments have not been determined, 
under section 2105(e), we have authority to make ongoing payments based 
on advance estimates of allowable expenditures. At this time, we intend 
to make advance payments to States with approval health plans based on 
these reserved allotments. All issues related to the allotment and 
payment process, however, will be open for public comment as part of 
the rulemaking process.

III. Methodology for Determining Reserved Allotments for States, 
Commonwealths, and Territories

    This notice specifies in Table I under section IV the reserved FY 
1998 allotments that would be available to individual States, 
Commonwealths, and Territories for child health assistance expenditures 
under approved State child health plans, assuming that each State, 
Commonwealth, or Territory qualifies for such an allotment. We have 
applied the applicable statutory formula specified in section 2104 of 
the Act in determining the reserved allotments for FY 1998, as 
discussed below.
    Section 2104(a) of title XXI provides that, for purposes of 
providing allotments to the 50 States and the District of Columbia, the 
following amounts are appropriated: $4.275 billion for each FY 1998 
through 2001; $3.15 billion for each FY 2002 through 2004; $4.05 
billion for each FY 2005 through 2006 and $5 billion for FY 2007. 
However, under section 2104(c) of the Act, 0.25 percent of the total 
amount appropriated each year is available for allotment to the 
Territories and Commonwealths of Puerto Rico, Guam, the Virgin Islands, 
American Samoa, and the Northern Mariana Islands. This total amount is 
allotted among the Commonwealths and the Territories according to the 
following percentages: Puerto Rico, 91.6 percent; Guam, 3.5 percent; 
the Virgin Islands, 2.6 percent; American Samoa, 1.2 percent; and the 
Northern Mariana Islands, 1.1 percent.
    Further, under sections 4921 and 4922 of the BBA, the total 
allotment available to the 50 States and the District of Columbia is 
reduced by an additional total of $60,000,000; $30,000,000 each for a 
special diabetes research program for Type I diabetes and special 
diabetes programs for Indians. The diabetes programs are funded from FY 
1998 through FY 2002 only.
    The total amount of the allotment available for the 50 States and 
the District of Columbia for FY 1998 was determined in accordance with 
the following formula:

ATA=S2104(a)-T2104(c)-D4921-
D4922

ATA=Total amount available for allotment to the 50 States 
and the District of Columbia for the fiscal year.
S2104(a)=Total appropriation for the fiscal year indicated 
in section 2104(a)of the Act. For FY 1998, this is $4,275,000,000.
T2104(c)=Total amount available for allotment for the 
Commonwealths and Territories; determined under section 2104(c) of the 
Act as 0.25 percent of the total appropriation for the 50 States and 
the District of Columbia. For FY 1998, this is: 
.0025 x $4,275,000,000=$10,687,500
D4921=Amount of grant for research regarding Type I Diabetes 
under section 4921 of the BBA. This is $30,000,000 for FYs 1998 through 
2002.
D4922=Amount of grant for diabetes programs for Indians 
under section 4922 of the BBA. This is $30,000,000 for FYs 1998 through 
2002.

    Therefore, for FY 1998 the total amount available for allotment to 
the 50 States and the District of Columbia is $4,204,312,500. This was 
determined as follows:

ATA($4,204,312,500)=S2104(a)($4,275,000,000)--
T2104(c)($10,687,500)--D4921($30,000,000)--
D4922($30,000,000)

    The total amount available for allotment to the 50 States and the 
District of Columbia is allotted to each State with a child health plan 
approved under title XXI based on the formula indicated at section 
2104(b)(1) of the Act. The fiscal year allotment for each State with an 
approved child health plan is determined on the basis of the product of 
two factors, the Number of Children and the State Cost Factor, for

[[Page 48100]]

each State divided by the sum of these products over all States.
    For FYs 1998 through 2000, the first factor, the Number of 
Children, is based only on the total number of low-income, uninsured 
children in the State. For FY 2001 only, the Number of Children is 
calculated as the sum of 75 percent of the low-income, uninsured 
children in the State, and 25 percent of the number of low-income 
children in the State. For FY 2002 and succeeding years through FY 
2007, the Number of Children is calculated as the sum of 50 percent of 
the low-income, uninsured children in the State, and 50 percent of the 
number of low-income in the State.
    For FY 1998 the Number of Children for each State (provided in 
thousands) was determined and provided by the Bureau of the Census 
based on the arithmetic average of the number of low-income children 
and low-income children with no health insurance as calculated from the 
three most recent March supplements to the Current Population Survey 
(1994, 1995, and 1996) prior to FY 1998. Because of time constraints we 
are using Bureau of Census data obtained prior to September 1, 1997. 
These data refer to information for calendar years 1993, 1994, and 
1995, respectively, and represent the number of people in each State 
under 19 years of age whose family income is at or below 200 percent of 
the poverty threshold appropriate for that family, and who are not 
reported to be covered by health insurance. The Number of Children for 
each State was developed by the Bureau of the Census based on the 
standard methodology used to determine official poverty status and 
uninsured status in their annual Current Population Reports on these 
topics. As part of a continuing formal process between HCFA and the 
Bureau of the Census, each fiscal year HCFA will obtain such Number of 
Children data officially from the Bureau of the Census.
    The second factor, the State Cost Factor, is based on annual 
average wages in the health services industry in the State. The State 
Cost Factor for a State is equal to the sum of: .15 and .85 multiplied 
by the ratio of the annual average wages in the health industry per 
employee for the State to the annual wages per employee in the health 
industry for the 50 States and the District of Columbia. The State Cost 
Factor for each State was calculated based on such wage data for each 
State as reported, determined, and provided to HCFA by the Bureau of 
Labor Statistics (BLS) in the Department of Labor for each of the most 
recent 3 years before the beginning of the fiscal year. Because of time 
constraints we are using BLS data obtained prior to September 1, 1997.
    The average of wages per employee for the 50 States and the 
District of Columbia was calculated by HCFA directly from the State 
specific data for each State provided by the BLS. This was necessary 
because BLS suppressed certain State specific data in providing HCFA 
with the State specific average wages per health services industry 
employee. BLS is required to suppress such data under the Privacy Act. 
The State Cost Factor is determined based on the calculation of the 
ratio of each State's average annual wages in the health industry to 
the National average annual wages in the health care industry. In order 
for such National average to appropriately reflect the State specific 
suppressed data, HCFA calculated the National average wages directly 
from the State specific data provided by BLS. As part of a continuing 
formal process between HCFA and the BLS, each fiscal year HCFA will 
obtain these wage data officially from the BLS.
    Under section 2104(b)(4) of the Act each of the 50 States and the 
District of Columbia will receive a minimum allotment of $2 million. 
Under this provision, to the extent any State's allotment is increased 
to $2,000,000 from a lower amount that would otherwise have been 
allotted to the State, the allotments to other States and the District 
and Columbia must be reduced in a ``pro rata manner'' (but not below 
$2,000,000) so that the total amount available for allotment to all 
States does not exceed the amount previously available. For FY 1998, no 
State's reserved allotment is below $2,000,000; therefore, no pro rata 
adjustment was necessary.
    Following is an explanation of how HCFA applied the two State-
related factors specified in the statute to determine the States' child 
health plan reserved allotments for FY 1998. The formula for 
determining each State's reserved allotment for FY 1998 of the total 
available allotment is: 
[GRAPHIC] [TIFF OMITTED] TN12SE97.000

Sai=Allotment for State i.
Ci=Number of Children. This is the number of certain low-
income children in State i as officially reported, defined, and 
provided to HCFA by the Bureau of the Census. For FY 1998, this is the 
number of children under age 19 with no health insurance whose family 
income is at or below 200 percent of the poverty line for a family of 
the same size. (section 2104(b)(2)(B))
SCFi = The State cost factor for State i (section 2104(b)(1)(A)(ii)). 
This is equal to: .15+.85 x (Wi/WN) (section 
2104(b)(3)(A)).
Wi=Certain annual average wages per health industry employee 
for State i.
WN=Certain annual wages per health industry employee for the 
50 States and the District of Columbia.

    The annual wages per employee for a State or for all States for a 
fiscal year is equal to the average of such wages for employees in the 
health industry, as reported by the Bureau of Labor Statistics of the 
Department of Labor.

(CixSCFi)=The sum of the products of Ci 
x  SCFi for each State (section 2104(b)(1)(B)).
ATA=Total amount available for allotment to all States for 
the fiscal year. For FY 1998, this is $4,204,312,500.

    Section 2104(e) of the Act requires that the amount of a State's 
allotment for a fiscal year be available to the State for a total of 3 
years, the fiscal year in which the State child health plan is approved 
and 2 years following. Section 2104(f) of the Act requires the 
Secretary to establish a process for redistribution of the amounts of 
States' allotments that are not expended during the 3-year period to 
States that have fully expended their allotments.
    HCFA will soon issue a notice of proposed rulemaking that will 
address the redistribution process and propose to incorporate the 
process in Federal regulations.
    In accordance with section 2104 (b) and (c) of the Act, the total 
allotment for all States for each fiscal year is available to the 50 
States and District of Columbia, the Commonwealths and the Territories. 
Although the statute precludes the Secretary from making an allotment 
to a specific State until it has an approved State child health plan, 
because of the statutory provisions for redistribution of unused 
amounts of allotments, the availability of allotments for 3 years, and 
the potential for retroactive effective dates of State child health 
plans back to October 1, 1997, we believe it is necessary to establish 
and publish these reserved allotment amounts for FY 1998 so that States 
can begin to plan operation, if they chose to establish a State 
children's health insurance program under title XXI, effective October 
1, 1997. No payments may be made from these allotments until a State 
has an approved State child health plan under title XXI.

[[Page 48101]]

    In developing the reserved allotment amounts for FY 1998, we 
applied the following principles, upon which we will be inviting public 
comment during the rulemaking process.
     For each fiscal year for FY 1998 through FY 2007, an 
allotment amount will be reserved for all 50 States and the District of 
Columbia and for the Commonwealths and Territories, regardless of 
whether every State, Commonwealth, or Territory has submitted and the 
Secretary has approved a State child health plan. This will provide 
States with the flexibility and time to develop their programs and 
submit their State child health plans.
     The formula for ``reserving'' an allotment amount for each 
State will be the same as the formula contained at section 2104(b) of 
the Act. The reserved amount is an estimate of the State's title XXI 
allotment upon submission and approval of the State's child health 
plan.
     Under sections 2101(b)(2) and 2105(a) of the Act, no 
payment of Federal funds from a State's allotment is available for 
expenditures under a State's title XXI program unless the State has an 
approved State child health plan. Therefore, States may be at risk for 
expenditures made under a title XXI child health plan that is 
submitted, but not yet approved.

IV. Table of Reserved State Children's Health Insurance Program 
Allotments for FY 1998

Key to Table II

Column/Description

    Column A = Name of State, Commonwealth, or Territory.
    Column B = Number of Children. The Number of Children for each 
State (provided in thousands) was determined and provided by the Bureau 
of the Census based on the arithmetic average of the number of low-
income children and low-income children with no health insurance as 
calculated from the three most recent March supplements to the Current 
Population Survey. These data represent the number of people in each 
State under 19 years of age whose family income is at or below 200 
percent of the poverty threshold appropriate for that family, and who 
are reported to be not covered by health insurance. The Number of 
Children for each State was developed by the Bureau of the Census based 
on the standard methodology used to determine official poverty status 
and uninsured status in their annual Current Population Reports on 
these topics.
    For FYS 1998-2000, the Number of Children is equal to the number of 
low-income children in each State with no health insurance for the 
fiscal year. For FY 2001, the Number of Children is equal to the sum of 
75 percent of the number of low-income children in the State with no 
health insurance and 25 percent of the number of low-income children in 
the State. This is also based on a 3-year average of Census data. For 
FY 2002 and succeeding years, the Number of Children is equal to the 
sum of 50 percent of the number of low-income children in the State 
with no health insurance and 50 percent of the number of low-income 
children in the State. This is also based on a 3-year average of Census 
data.
    Column C = State Cost Factor. The State Cost Factor for a State is 
equal to the sum of: .15, and .85 multiplied by the ratio of the annual 
average wages in the health industry per employee for the State to the 
annual wages per employee in the health industry for the 50 States and 
the District of Columbia. The State Cost Factor for each State was 
calculated based on such wage data for each State as reported, 
determined, and provided to HCFA by the BLS in the Department of Labor 
for each of the most recent 3 years before the beginning of the fiscal 
year.
    Column D = Product. The Product for each State was calculated by 
multiplying the Number of Children in Column B by the State Cost Factor 
in Column C. The sum of the Products for all 50 States and the District 
of Columbia is below the Products for each State in Column D. The 
Product for each State and the sum of the Products for all States 
provides the basis for allotment to States.
    Column E = Percent Share of Total. This is the calculated 
percentage share for each State of the total allotment available to the 
50 States and the District of Columbia. The Percent Share of Total is 
calculated as the ratio of the Product for each State in Column D to 
the sum of the products for all 50 States and the District of Columbia 
below the Products for each State in Column D.
    Column F = Allotment. This is the State Child Health Program 
allotment for each State, Commonwealth, or Territory. For each of the 
50 States and the District of Columbia, this is determined as the 
Percent Share of Total in Column E for the State multiplied by the 
total amount available for allotment for the 50 States and the District 
of Columbia for the fiscal year.
    For each of the Commonwealths and Territories, the allotment is 
determined as the Percent Share of Total in Column E multiplied by the 
total amount available for allotment to the Commonwealths and 
Territories. For the Commonwealths and Territories, the Percent Share 
of Total in Column E is specified in section 2104(c) of the Act.

                   State Children's Health Insurance Program Allotments for Fiscal Year: 1998                   
                                                                                                                
                    A                           B            C            D            E               F        
State                                        Number of                                                          
                                            low-income                                                          
                                              children                                                          
                                                 (000)   State cost                                             
                                                             factor      Product      Percent                   
                                                                                     share of                   
                                                                                    total (1)      Allotment (3)
----------------------------------------------------------------------------------------------------------------
Alabama..................................          154       0.9510       146.46         2.05        $85,997,312
Alaska...................................            9       1.0669         9.60         0.13          5,638,146
Arizona..................................          184       1.0472       192.69         2.69        113,138,521
Arkansas.................................           90       0.8871        79.84         1.12         46,878,527
California...............................        1,281       1.1365     1,455.92        20.33        854,864,484
Colorado.................................           72       0.9888        71.19         0.99         41,801,288
Connecticut..............................           53       1.1237        59.55         0.83         34,968,061
Delaware.................................           13       1.0553        13.72         0.19          8,055,533
District of Columbia.....................           16       1.2857        20.57         0.29         12,079,106
Florida..................................          444       1.0368       460.32         6.43        270,284,180
Georgia..................................          214       0.9923       212.36         2.97        124,692,179
Hawaii...................................           13       1.1722        15.24         0.21          8,947,603
Idaho....................................           31       0.8726        27.05         0.38         15,883,789
Illinois.................................          211       0.9892       208.73         2.92        122,560,067

[[Page 48102]]

                                                                                                                
Indiana..................................          131       0.9169       120.12         1.68         70,530,557
Iowa.....................................           67       0.8253        55.30         0.77         32,468,807
Kansas...................................           60       0.8704        52.22         0.73         30,664,400
Kentucky.................................           93       0.9146        85.06         1.19         49,945,361
Louisiana................................          194       0.8934       173.31         2.42        101,762,991
Maine....................................           24       0.8863        21.27         0.30         12,490,186
Maryland.................................          100       1.0498       104.98         1.47         61,643,199
Massachusetts............................           69       1.0576        72.97         1.02         42,847,242
Michigan.................................          156       1.0001       156.02         2.18         91,609,050
Minnesota................................           50       0.9675        48.37         0.68         28,403,279
Mississippi..............................          110       0.8675        95.43         1.33         56,031,502
Missouri.................................           97       0.9075        88.03         1.23         51,686,405
Montana..................................           20       0.8333        16.67         0.23          9,786,177
Nebraska.................................           30       0.8440        25.32         0.35         14,866,746
Nevada...................................           43       1.2046        51.80         0.72         30,414,882
New Hampshire............................           20       0.9760        19.52         0.27         11,461,349
New Jersey...............................          134       1.1241       150.62         2.10         88,440,626
New Mexico...............................          107       0.9169        98.11         1.37         57,605,226
New York.................................          399       1.0914       435.47         6.08        255,692,115
North Carolina...........................          138       0.9815       135.45         1.89         79,528,899
North Dakota.............................           10       0.8587         8.59         0.12          5,042,037
Ohio.....................................          205       0.9617       197.16         2.75        115,764,112
Oklahoma.................................          161       0.8588       138.26         1.93         81,182,913
Oregon...................................           67       0.9947        66.65         0.93         39,131,718
Pennsylvania.............................          200       1.0005       200.09         2.79        117,486,712
Rhode Island.............................           19       0.9580        18.20         0.25         10,687,168
South Carolina...........................          110       0.9843       108.27         1.51         63,574,155
South Dakota.............................           15       0.8559        12.84         0.18          7,538,311
Tennessee................................          115       0.9799       112.69         1.57         66,170,086
Texas....................................        1,031       0.9275       956.25        13.35        561,475,805
Utah.....................................           46       0.8977        41.30         0.58         24,247,390
Vermont..................................            7       0.8604         6.02         0.08          3,536,354
Virginia.................................          118       0.9862       116.38         1.63         68,332,474
Washington...............................           85       0.9352        79.49         1.11         46,673,207
West Virginia............................           45       0.8937        40.21         0.56         23,612,812
Wisconsin................................           71       0.9229        65.53         0.92         38,475,831
Wyoming..................................           15       0.8758        13.14         0.18          7,713,620
                                          ----------------------------------------------------------------------
      Total States Only..................  ...........  ...........     7,160.35       100.00      4,204,312,500
Allotments for Commonwealths and                                                                                
 Territories (2):                                                                                               
    Puerto Rico..........................  ...........  ...........  ...........        91.60          9,789,750
    Guam.................................  ...........  ...........  ...........         3.50            374,063
    Virgin Islands.......................  ...........  ...........  ...........         2.60            277,875
    American Samoa.......................  ...........  ...........  ...........         1.20            128,250
    N. Mariana Islands...................  ...........  ...........  ...........         1.10            117,563
                                          ----------------------------------------------------------------------
      Total Commonwealths and Territories                                                                       
       Only..............................  ...........  ...........  ...........       100.00         10,687,500
                                          ======================================================================
      Total States and Commonwealths and                                                                        
       Territories.......................  ...........  ...........  ...........  ...........      4,215,000,000
----------------------------------------------------------------------------------------------------------------
Footnotes:                                                                                                      
1 Total amount available for allotment to the 50 States and the District of Columbia is $4,204,312,500;         
  determined as the FY 1998 appropriation ($4,275,000,000) reduced by the total amount available for allotment  
  to the Commonwealths and Territories ($10,687,500) and amounts for Special Diabetes Grants ($60,000,000) under
  sections 4921 and 4922 of BBA.                                                                                
2 Total amount available for allotment to the Commonwealths and Territories is $10,687,500; determined as .25   
  percent of the FY 1998 appropriation ($4,275,000,000).                                                        
3 Percent share of total amount available for allotment to the Commonwealths and Territories is as specified in 
  section 2104(c) of the Social Security Act.                                                                   

V. Calculation of Enhanced Federal Medical Assistance Percentage

    In accordance with formulas in sections 1101(a)(8) and 1905(b) of 
the Act, the Secretary each year calculates and publishes the ``Federal 
percentages'' and ``Federal medical assistance percentages'' (FMAP) 
that are used in determining the amount of Federal matching in State 
welfare and medical assistance expenditures. Section 2105(b) of title 
XXI provides for an ``enhanced FMAP'' for child health assistance 
provided under title XXI that is equal to the current FMAP for fiscal 
year in the Medicaid Title XIX program, increased by 30 percent of the 
difference between 100 and the current FMAP for that fiscal year. The 
enhanced FMAP may not exceed 85 percent.

[[Page 48103]]

    The FMAPs for each State and Commonwealth and Territory for the 
title XIX Medicaid program that are applicable for FY 1998 have already 
been published in the Federal Register (on January 29, 1997, 62 FR 
4293). We are republishing the FY 1998 FMAPs in Table II, along with 
the enhanced FMAP for the State Children's Health Insurance Program, 
computed in accordance with the formula specified in section 2105(b) of 
the Act.

Key to Table I

Column/Description

    Column A = State. This contains the name of the State, 
Commonwealth, or Territory.
    Column B = Federal Medical Assistance Percentages FY 1998. This 
contains the title XIX FMAPs, previously published in the Federal 
Register (January 29, 1997, 62 FR 4293).
    Column C = Amount of FMAP Increase. This contains the amount of the 
FMAP increase calculated as 30 percent of the difference between 100 
percent and the title XIX FMAP rate in Column B.
    Column D = Enhanced FMAP FY 1998. This is the title XXI enhanced 
FMAP rate specified at section 2105(b) of the Act. The enhanced FMAP is 
limited to no more than 85 percent.

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VI. Impact Statement

    HCFA has examined the impact of this notice as required by 
Executive Order 12866. Executive Order 12866 directs agencies to assess 
all costs and benefits of available regulatory alternatives and, when 
rules are necessary, to select regulatory approaches that maximize net 
benefits (including potential economic environments, public health and 
safety, other advantages, distributive impacts, and equity). We believe 
that this notice is consistent with the regulatory philosophy and 
principles identified in the Executive Order.
    This notice merely provides advance notification of the reserved FY 
1998 State allotments available to provide Federal funding to 
individual States, Commonwealths, and Territories for expenditures in 
the new Children's Health Insurance Program and the assumption and 
methodology that HCFA used to determine these reserved allotments. The 
formula for State allotments is specified in the statute. This notice 
by itself has no economic impact. Final allotments will be calculated 
using the statutory formula and may vary from these reserved amounts 
depending upon the number of States that submit approved State plans 
under title XXI. (As noted above, the allotment process will be set 
forth in more detail in future rule making.)
    We believe this notice will have an overall positive impact by 
informing States of the extent to which they will be permitted to 
expend funds under approved State child health plans in FY 1998. States 
will be able to conduct advance planning necessary for implementation 
of the State Child Health Insurance Program if they choose, beginning 
October 1, 1997.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

(Section 1102 of the Social Security Act (42 U.S.C. 1302)

    Dated: September 8, 1997.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.

    Dated: September 9, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 97-24324 Filed 9-10-97; 8:45 am]
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