[Federal Register Volume 67, Number 43 (Tuesday, March 5, 2002)]
[Proposed Rules]
[Pages 9936-9939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5217]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare and Medicaid Services

42 CFR Part 457

[CMS-2127-P]
RIN 0938-AL37


State Children's Health Insurance Program; Eligibility for 
Prenatal Care for Unborn Children

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: In order to provide prenatal care and other health services, 
this proposed rule would revise the definition of ``child'' under the 
State Children's Health Insurance Program (SCHIP) to clarify that an 
unborn child may be considered a ``targeted low-income child'' by the 
State and therefore eligible for SCHIP if other applicable State 
eligibility requirements are met. Under this definition, the State may 
elect to extend eligibility to unborn children for health benefits 
coverage, including prenatal care and delivery, consistent with SCHIP 
requirements.

DATES: We will consider comments if we receive them at the appropriate 
address, as provided below, no later than 5 p.m. on May 6, 2002.

ADDRESSES: In commenting, please refer to file code CMS-2127-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission. Mail written comments (one original and 
three copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention: 
CMS-2127-P, P.O. Box 8016, Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be timely 
received in the event of delivery delays.
    If you prefer, you may deliver (by hand or courier) your written 
comments (one original and three copies) to one of the following 
addresses:
Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201, or

Room C5-16-03, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and could be considered late.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Kathleen Farrell, (410) 786-3285.

SUPPLEMENTARY INFORMATION:   
    Inspection of Public Comments: Comments received timely will be 
available for public inspection as they are received, generally 
beginning approximately 3 weeks after publication of a document, at the 
headquarters of the Centers for Medicare and Medicaid Services, 7500 
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of 
each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view 
public comments, phone (410) 786-7195.

I. Background

    Section 490l of the Balanced Budget Act, (Public Law 105-33), as 
amended by Public Law 105-100, added title XXI to the Act. Title XXI 
authorizes the State Children's Health Insurance Program (SCHIP) to 
assist State efforts to initiate and expand the provision of child 
health assistance to uninsured, low-income children. Under title XXI, 
States may provide child health assistance primarily for obtaining 
health benefits coverage through (1) a separate child health program 
that meets the requirements specified under section 2103 of the Act; 
(2) expanding eligibility for benefits under the State's Medicaid plan 
under title XIX of the Act; or (3) a combination of the two approaches. 
To be eligible for funds under this program, States must submit a State 
child health plan (State plan), that meets the applicable requirements 
of title XXI and is approved by the Secretary.
    The State Children's Health Insurance Program is jointly financed 
by the Federal and State governments and is administered by the States. 
Within broad Federal guidelines, each State determines the design of 
its program, eligibility groups, benefit packages, payment levels for 
coverage, and administrative and operating procedures. Under section 
2102(b) of the Act, States have discretion to adopt eligibility 
standards that are related to age, and thus may extend SCHIP 
eligibility only to certain age groups of targeted low-income children 
(who must be under age 19). SCHIP provides a capped amount of funds to 
States on a matching basis for Federal fiscal years (FY) 1998 through 
2007. Regulations implementing SCHIP are set forth at 42 CFR part 457.

II. Provisions of the Proposed Regulations

    Section 2110 of the Act sets forth the definition of a targeted 
low-income child. In accordance with this section of

[[Page 9937]]

the Act, at Sec. 457.310 we define a targeted low-income child as a 
child who meets the standards set forth at Sec. 457.310 and the 
eligibility standards established by the State. The term ``child'' is 
defined at section 2110(c)(1) of the Act as an individual under 19 
years of age. Under this framework and in accordance with the 
regulations promulgated by the Secretary, a State may elect the age 
groups of targeted low-income children under age 19 that will be 
eligible for SCHIP coverage under their State plans. For example, a 
State plan may permit eligibility of children only through age 12. This 
statutory definition is currently repeated in the regulations at 
Sec. 457.10.
    For reasons set forth below, in interest of providing necessary 
pre-natal care to children, we propose in this regulation to clarify 
and expand the definition of the term ``child'' so that a State may 
elect to make individuals in the period between conception and birth 
eligible for coverage as well under their State plan. Specifically, we 
would expand and revise the definition to clarify that ``child'' means 
an individual under the age of 19 and may include any period of time 
from conception to birth through age 19. This clarification of the 
definition of child will provide States with the option to consider an 
unborn child to be a targeted low-income child and therefore eligible 
for SCHIP if other applicable State eligibility requirements are met. 
This clarification would be consistent with the general statutory 
flexibility given States to elect the age groups of targeted low income 
children who must be under 19 years of age. Absent this clarification, 
under SCHIP there is a significant population of children who would be 
eligible at birth but who would not have had the benefit of needed 
prenatal care and delivery services. Currently, a pregnant woman under 
age 19 could be eligible as a targeted low income child and her child 
would benefit from needed prenatal care and delivery services by virtue 
of the mother's eligibility status. Absent this clarification, a 
pregnant woman over age 19 could not be eligible as a targeted low 
income child, and her child thus would not necessarily have the benefit 
of needed prenatal care and delivery services. This clarification would 
permit States to ensure that these needed services are available to 
benefit unborn children independent of the mother's eligibility status.
    It is anticipated that the children covered by this regulation will 
become eligible for the SCHIP program after birth. By establishing 
eligibility prior to birth, the proposed change would improve 
continuity of care and simply allow states to establish eligibility at 
an earlier but medically critical point in time.
    It is well established that access to prenatal care can improve 
health outcomes during infancy as well as over a child's life. Prenatal 
care includes monitoring the health of both the mother and the unborn 
child. The importance of prenatal care is widely accepted for the 
reasons summarized in the Department's 1999 report, Trends in the Well-
Being of America's Children and Youth, ``Receiving prenatal care late 
in a pregnancy, or receiving no prenatal care at all, can lead to 
negative health outcomes for mother and child.'' This 1999 report shows 
that while the percentage of women who receive late prenatal care 
(defined as seventh month or later) has declined for women in all 
racial and ethnic groups and ages, there are still significant 
differences by race and ethnicity and age. For example, five percent of 
women aged 20 to 24 receive late or no prenatal care compared to 3.9 
percent of all women. This proposed rule change would allow states to 
provide coverage under SCHIP to the unborn children of those pregnant 
women if other eligibility criteria are met. Since low-income women are 
less likely to receive prenatal care, this rule would allow states to 
provide those needed services to a segment of the population that 
otherwise may not receive them.
    The report explains,


    Adequate prenatal care is determined by both the early receipt 
of prenatal care (within the first trimester) and the receipt of an 
appropriate number of prenatal care visits for each stage of a 
pregnancy. Women whose prenatal care fails to meet these standards 
are at a greater risk for pregnancy complications and negative birth 
outcomes.

    In the 2000 Trends in the Well-Being of America's Children and 
Youth, the Department states,

    Early prenatal care allows women and their health care providers 
to identify, and when possible, treat or correct health problems and 
health-compromising behaviors that can be particularly damaging 
during the initial stages of fetal development. Increasing the 
percentage of women who receive prenatal care, and who do so early 
in their pregnancies, can improve birth outcomes and lower health 
care costs by reducing the likelihood of complications during 
pregnancy and childbirth.

    The 2000 Report explains,

    Babies born weighing less than 2,500 grams face an increased 
risk of physical and developmental complications and death. These 
babies account for four-fifths of all neonatal deaths (deaths under 
28 days of age) and are 24 times more likely to die during the first 
year than are heavier infants.

    According to the Report, low birthweight infants account for 7.6 
percent of all infants born to mothers age 20 to 24 years.
    Medical care is continually advancing and offers opportunities for 
services specifically targeted to the care of the unborn child. ``Fetal 
medicine'' or ``fetology'' is emerging as a distinct and important 
medical specialty which includes: obstetrics, maternal-fetal medicine, 
neonatology, pediatrics and fetal/neonatal pediatric surgery. 
Physicians specializing in fetal medicine use the pre-partum period to 
diagnosis potentially life threatening conditions in utero (e.g. 
congenital cystic adenomatoid malformation, congenital diaphragmatic 
hernia, congenital heart disease, gastroschisis, giant neck masses, 
hydrocephalus, obstructive uropathy omphalocele, spina bifida, 
sacrococcygeal teratoma). Once detected, such conditions can often be 
surgically or medically treated in utero, with beneficial consequences 
which can include: saving the life of the child; elimination of long 
neo-natal, post-partum medical care for the child; and ultimately lower 
post-partum medical care costs for the child and therefore the SCHIP 
plan. The Secretary would like to permit the States the flexibility to 
pay for the medical expenses related to unborn children because the 
Secretary has determined that provision of such services before birth 
should result in healthier infants, better long-term child growth and 
development and ultimate cost savings to the SCHIP plans (and the 
federal government through the SCHIP contribution process) through 
reduced expenditures for high cost neo-natal care.
    This regulatory clarification is intended to benefit both the 
unborn children and their mothers by promoting continuity of important 
medical care. Healthy pregnancies should also result in significant 
savings in public expenditures over a child's lifetime.
    In order to protect against the substitution of Title XXI enhanced 
payments for Medicaid payments, we have added a new subparagraph in 
section 457.626(a) Prevention of duplicate payments. This subparagraph 
would clarify that payment is not available under Title XXI when 
payment may be reasonably expected to be made under Medicaid on the 
basis of the Medicaid eligibility or enrollment of the pregnant woman. 
Under section 2105(c)(6)(B) of the SCHIP statute, payment under SCHIP 
is not available if payment can be reasonably expected under another 
federally financed health

[[Page 9938]]

benefits program. To permit shifting of claims for services that could 
be covered under Medicaid to the SCHIP program would not be consistent 
with this provision. The intent of this regulation is to provide 
prenatal services for unborn children who would otherwise not be 
covered by Medicaid or other coverage. We want to ensure that Title XXI 
funds do not substitute for Medicaid funds.
    The purpose of the enhanced match in Title XXI is to encourage 
states to increase eligibility for health insurance coverage. So too is 
the purpose of this proposed rule. Consistent with congressional 
intent, the Department will work with states which seek to adopt this 
definition to ensure that coverage will be expanded beyond current 
Title XIX and Title XXI levels.
    To the extent that a state elects to include unborn children in the 
SCHIP definition of children, as permitted by this rule, we believe 
that the state must also apply that same interpretation in assessing 
compliance with the Medicaid maintenance of effort provision of section 
2105(d)(1). Since unborn children receive medical assistance under the 
Medicaid program through their mothers' status as pregnant women, more 
restrictive eligibility standards or methodologies for pregnant women 
in Medicaid would violate this maintenance of effort requirement. This 
requirement will be considered when state plan amendments to adopt the 
expanded definition are submitted. For the same reasons, a state that 
defines children under SCHIP to include unborn children would need to 
apply the same definition in the screen-and-enroll process described in 
SCHIP regulations at 42 CFR 457.350. We are proposing to modify these 
requirements to clarify that, for purposes of the screen and enroll 
process, individuals are properly enrolled in the appropriate program.
    States will continue to have the authority to set eligibility 
requirements under their State plans, including age limits so long as 
the age limit is under 19 years of age, and hence States would not be 
required to extend coverage to this population. States that opt to 
extend eligibility to unborn children will submit a State plan 
amendment in accordance with Sec. 457.60.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), agencies are 
required to provide a 30-day notice in the Federal Register and solicit 
public comment before a collection of information requirement is 
submitted to the Office of Management and Budget (OMB) for review and 
approval. To fairly evaluate whether an information collection should 
be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we 
solicit comments on the following issues:
     Whether the information collection is necessary and useful 
to carry out the proper functions of the agency;
     The accuracy of the agency's estimate of the information 
collection burden;
     The quality, utility, and clarity of the information to be 
collected; and
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    Section 457.60 requires a State to submit to CMS for approval an 
amendment to its approved State plan, whenever necessary, to reflect 
any changes in; (1) Federal law, regulations, policy interpretations, 
or court decisions, (2) State law, organization, policy or operation of 
the program, or (3) the source of the State share of funding. The 
burden associated with this requirement is the time and effort for a 
State to prepare and submit any necessary amendments to its State plan 
to CMS for approval. Based upon CMS's previous experiences with State 
plan amendments we estimate that on average, it will take a State 8 
hours to complete and submit an amendment. We estimate that 13 States/
territories will submit an amendment on an annual basis for a total 
burden of 104 hours.

IV. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the DATES 
section of this preamble, and, if we proceed with a subsequent 
document, we will respond to the comments in the preamble to that 
document.

V. Regulatory Impact Statement

    We have examined the impacts of this proposed rule as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review) 
and the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 
96-354). Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more annually).
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations and government agencies. Most 
hospitals and most other providers and suppliers are small entities, 
either by nonprofit status or by having revenues of $25 million or less 
annually. Individuals and States are not included in the definition of 
a small entity.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any one year by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $110 million.
    This proposed rule would revise and clarify the definition of 
``child'' under the State Children's Health Insurance Program (SCHIP) 
to provide that an unborn child may be considered a ``targeted low-
income child'' by the State and therefore eligible for SCHIP if other 
applicable State eligibility requirements are met. We estimate that 13 
states will elect to include this definition in their State plans. We 
also estimate that an additional 30,000 unborn children will benefit by 
this change. In States that adopt this option, the health status of 
children will improve to the extent that their mothers receive prenatal 
care. We estimate that the budget impact will be $320 million over a 
five-year period. Therefore, the provisions set forth in this proposed 
rule will not have an impact of $110 million or more annually. These 
are the best estimates available. However, we are interested in seeking 
comment from the public on estimates of the impact of this rule. 
Neither is this rule expected to impose an unfunded mandate on States 
exceeding $110 million annually. Therefore, we have not prepared an 
analysis of cost and benefits as required by E.O. 12866 and the 
Unfunded

[[Page 9939]]

Mandates Act for rules with significant economic impacts or that impose 
significant unfunded mandates on States. Also, we believe the changes 
being promulgated in this document will have very little direct impact 
on small entities as defined under the RFA or on small rural hospitals 
as defined under section 1102(b) of the Social Security Act. Therefore, 
we are not preparing analyses for either the RFA or section 1102(b) of 
the Act because we have determined, and we certify, that this rule will 
not have a significant economic impact on a substantial number of small 
entities or a significant impact on the operations of a substantial 
number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct costs on State and local 
governments, preempts State law, or otherwise has federalism 
implications. The option for States to extend coverage to unborn 
children promulgated in this proposed rule does not meet the criteria 
for having Federalism implications. This provision would not impose 
direct costs on states or local governments, nor does it preempt State 
laws. This new option only increases State flexibility and, therefore, 
prior consultation is not required. However, we welcome input from 
State and local governments through the notice and comment process.

List of Subjects in 42 CFR Part 457

    Administrative practice and procedure, Grant programs--health, 
Children's Health Insurance Program, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 42 CFR part 457 is 
proposed to be amended as set forth below:

PART 457--ALLOTMENTS AND GRANTS TO STATES

    1. The authority citation for part 457 continues to read as 
follows:

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

Subpart A--Introduction; State Plans for Child Health Insurance 
Programs and Outreach Strategies

    2. In Sec. 457.10, the definition of ``Child'' is revised to read 
as follows:


Sec. 457.10  Definitions and use of terms.

* * * * *
    Child means an individual under the age of 19 including the period 
from conception to birth.
* * * * *

Subpart C--State Plan Requirements: Eligibility, Screening, 
Applications, and Enrollment

    3. Amend Sec. 457.350 as follows:
    A. Redesignate the text of paragraph (b) following the heading as 
paragraph (b)(1).
    B. Add paragraph (b)(2) to read as follows:


Sec. 457.350  Eligibility screening and facilitation of Medicaid 
enrollment.

* * * * *
    (b) Screening objectives. (1) * * *
    (2) Screening procedures must also identify any applicant or 
enrollee who would be potentially eligible for Medicaid services based 
on the eligibility of his or her mother under one of the poverty level 
groups described in 1902(l) of the Act, section 1931 of the Act or a 
Medicaid demonstration project approved under section 1115 of the Act.
* * * * *

Subpart F--Payment to States

    4. Revise Sec. 457.622(c)(5) to read as follows:


Sec. 457.622  Rate of FFP for State expenditures.

* * * * *
    (c) * * *
    (5) The state does not adopt eligibility standards and 
methodologies for purposes of determining a child's eligibility under 
the Medicaid State plan that were more restrictive than those applied 
under policies of the State plan in effect on June 1, 1997. This 
limitation applies also to more restrictive standards and methodologies 
for determining eligibility for services for a child based on the 
eligibility of a pregnant woman.
* * * * *
    5. Amend Sec. 457.626 to add a new paragraph (a)(3) to read as 
follows:


Sec. 457.626  Prevention of duplicate payments.

    (a) * * *
    (3) Services are for an unborn child and are payable under Medicaid 
as a service to an eligible pregnant woman under that program.
* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.767, State 
Children's Health Insurance Program)
    Dated: February 18, 2002.
Thomas A Scully,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: February 22, 2002.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-5217 Filed 3-1-02; 2:00 pm]
BILLING CODE 4120-01-P