[Federal Register Volume 67, Number 191 (Wednesday, October 2, 2002)]
[Rules and Regulations]
[Pages 61956-61974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24856]



[[Page 61955]]

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Part II





Department of Health and Human Services





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Centers for Medicare and Medicaid Services



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42 CFR Part 457



State Children's Health Insurance Program; Eligibility for Prenatal 
Care and Other Health Services for Unborn Children; Final Rule

  Federal Register / Vol. 67, No. 191 / Wednesday, October 2, 2002 / 
Rules and Regulations  

[[Page 61956]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare and Medicaid Services

42 CFR Part 457

[CMS-2127-F]
RIN 0938-AL37


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

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

ACTION: Final rule.

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SUMMARY: In order to provide prenatal care and other health services, 
this final rule revises 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.

EFFECTIVE DATE: These regulations are effective on November 1, 2002.

FOR FURTHER INFORMATION CONTACT: Kathleen Farrell, (410) 786-1236.

SUPPLEMENTARY INFORMATION: Copies: To order copies of the Federal 
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I. Background

    Section 4901 of the Balanced Budget Act, (Pub. L. 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.
    Benefits under SCHIP are jointly financed by the Federal and State 
governments and are 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 457.

II. Provisions of the Proposed Regulations

    On March 5, 2002, we published a proposed rule in the Federal 
Register that proposed to revise the definition of ``child'' under the 
SCHIP program (67 FR 9936). In the interest of providing necessary 
prenatal care and other health services to children, we proposed 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 under the State plan. Specifically, we 
proposed to revise the definition at Sec.  457.10 to clarify that 
``child'' means an individual under the age of 19 and may include any 
period of time from conception to birth up to age 19. In this rule, we 
explained that while 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, a pregnant woman over age 19 could not be eligible 
as a targeted low-income child.
    We stated that the proposed definition would 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 would permit States to ensure 
that needed services are available to benefit unborn children 
independent of the mother's eligibility status. We also discussed in 
detail the Department's 1999 report, Trends in the Well-Being of 
America's Children and Youth, which describes the benefits of prenatal 
care for the mother and the child. We stated that our proposed 
revisions were intended to benefit both the unborn children and their 
mothers by promoting continuity of important medical care.
    In order to protect against the substitution of title XXI enhanced 
payments for Medicaid payments, we proposed to add a new paragraph 
(a)(3) to Sec.  457.626(a), Prevention of duplicate payments, to 
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.
    With regard to maintenance of effort requirements, we proposed that 
if a State elects to include unborn children in the SCHIP definition of 
children, the State must also apply that same interpretation in 
assessing compliance with the Medicaid maintenance of effort provision 
of section 2105(d)(1) of the Act. Specifically, we proposed to revise 
Sec.  457.622, Rate of Federal Financial Participation (FFP) for State 
expenditures, to provide that 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.
    We also stated that, 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 Sec.  
457.350, Eligibility screening and facilitation of Medicaid enrollment. 
We proposed to add a new Sec.  457.350(b)(2) to clarify that screening

[[Page 61957]]

procedures must 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 
section 1902(l) of the Act, section 1931 of the Act, or a Medicaid 
demonstration project approved under section 1115 of the Act.
    We noted that under our proposed regulation, States would 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. Hence, States would not be required to extend coverage to this 
population. States that opt to extend eligibility to unborn children 
must submit a State plan amendment in accordance with Sec.  457.60. 
States can use the preprinted application template for the State 
Children's Health Insurance Program, sections 4.1.2 and 4.4, and the 
preprinted budget template in submitting this State plan amendment.

III. Analysis of and Responses to Public Comments

    We received and accepted 7,783 comments. The majority of these were 
form letters that were part of write-in campaigns. Because of possible 
residual delays in the Washington, DC mail, resulting from new security 
procedures, we accepted comments that were postmarked up to and 
including May 13, 2002. All public comments have been summarized and 
are discussed in detail in the following discussion.

1. General Comments

    In this section, we have summarized and responded to general public 
comments on the program or the proposed rule as a whole and not to any 
particular provision of this rule. All other public comments are 
addressed below in the context of the particular subpart.
    Comment: We received a great number of comments from people who 
viewed the proposed rule as having a hidden agenda of providing unborn 
children with formal legal rights as the first step in abolishing 
abortion.
    Commenters stated that since the child in the womb would be 
recognized as a patient, there would never be a case where abortion is 
justified. Another commenter stated that the unborn child's status as a 
patient in need of health care has long enjoyed international 
recognition and cited the United Nations Declaration on the Rights of 
the Child and the 1990 Convention implementing its principles, which 
declared that the child needs special safeguards and care, including 
appropriate legal protection, before as well as after birth. Other 
commenters viewed the proposed rule as empowering lower-income women to 
choose life for their children and enhance their ability to raise their 
families with dignity.
    Many commenters expressed opposing views on this issue, saying that 
this is an anti-choice proposal disguised as a health care proposal. 
Commenters considered the proposal as the Administration's attempt to 
create legal precedent for viewing unborn children as separate physical 
and legal entities, which they believe devalues women as persons and is 
counterproductive to the health and well being of both women and 
children. Commenters stated that the underlying purpose of the proposed 
rule is to advance fetal personhood and deny the right of every woman 
to determine the direction of her own life. They believe the proposed 
rule would undermine the foundation of the right to choose abortion and 
threatens a woman's reproductive freedom. They said the proposed rule 
would lay the legal groundwork for an adversarial relationship between 
a woman and her unborn child.
    Commenters expressed the opinion that the proposed rule is a tactic 
for extending the rights of a person under the constitution to an 
unborn child through the regulatory process as a means of circumventing 
the legislative process where it can be debated and voted on openly by 
elected representatives. Many commenters considered the proposed rule 
an attempt to provoke controversy over Roe v. Wade and provide the 
groundwork for having it overturned with the long-term goal of having 
abortion declared illegal.
    Response: CMS does not believe that this revised definition of 
``child'' is inconsistent with the United Nations Declaration on the 
Rights of the Child or with Roe v. Wade.
    At the core of a number of commenters' arguments against the rule 
is a fundamental misconception that this rule would set up an 
adversarial relationship between the mother and her unborn child that 
might threaten the mother's autonomy.
    Such reasoning overlooks the reality that the SCHIP program is a 
voluntary assistance program that begins when an individual applies for 
the benefit. If the woman did not want the health insurance coverage 
offered by the State's SCHIP program, she simply would not apply for it 
or would discontinue her participation in the program.
    This rule, rather than limiting an uninsured woman's choices in 
fact expands them by offering important health care that may not 
otherwise be available to her.
    In general, patient education literature affirms that prenatal care 
benefits both the mother and the unborn child. For example, the Web 
site of the American College of Obstetricians and Gynecologists (ACOG) 
provides excerpts from its patient education material. ACOG Education 
Pamphlet AP098--Special Tests for Monitoring Fetal Health explains 
that, ``[e]arly prenatal care gives your doctor a chance to check on 
your health and the progress of your pregnancy. Based on the results of 
routine prenatal care, your doctor may suggest tests to check the 
health of the baby. Most of the time, these tests help assure you and 
your doctor that all is going well. Monitoring helps you and your 
doctor during your pregnancy by telling more about the well being of 
the baby. Monitoring may be done during pregnancy to help assess the 
health, activity level, and growth of the unborn child. Some of the 
tests used for monitoring check the movement, heartbeat, blood flow, 
and rate of growth of the unborn child. If so, the baby may need 
special care or may need to be delivered right away.''
    In another article, ``Nutrition During Pregnancy,'' available 
through the Medem.com Web site, ACOG explains that, ``[a] balanced diet 
is a basic part of good health at all times in your life. During 
pregnancy, diet is even more important. The foods you eat are the main 
source of the nutrients for your baby. As your baby grows, you will 
need more of most nutrients.''
    This rule reflects the common understanding that prenatal care 
benefits both mother and child and therefore does not create tension 
between them.
    It is also useful to bear in mind that these generally are children 
who will otherwise be eligible for their respective SCHIP program in a 
State at birth. It only makes sense, and indeed is medically obvious 
that establishing eligibility during the prenatal stage advances the 
likelihood of a healthy pregnancy, healthy birth, and healthy life.
    Comment: Many of the commenters asserted that if the intent of the 
proposed regulation is to provide additional health care to pregnant 
women, it could be done through existing regulations. Commenters were 
concerned that the designation of the unborn child as a child would 
raise legal and operational issues that would take years to resolve, 
resulting in litigation that would prevent many pregnant women from 
receiving needed

[[Page 61958]]

health care. For this reason, numerous commenters recommended the 
withdrawal of this rule. One commenter mentioned that for States to 
adopt this rule, they would be required to act through their State 
legislatures to redefine a ``child'' as being from conception through 
age 19, which would cause enormous tension in State capitals across the 
country and unproductive bipartisan politics, which would not further 
the health care needs of pregnant women or children.
    Since States already have the means to cover pregnant women, the 
commenter urged HHS to facilitate the process and not complicate it and 
many commenters stated that they believe the regulation is unnecessary. 
As examples, commenters cited the States of New Jersey and Rhode Island 
that have applied for and received section 1115 waivers to expand 
coverage to low-income women. They noted that SCHIP waivers are 
relatively easy for States to secure since under the existing SCHIP 
waiver program, the Federal government does not require ``budget 
neutrality'', States can spend additional funds up to the State's 
unspent SCHIP allotment and there is already a template in place to 
streamline the waiver application process.
    Commenters suggested alternative options to HHS rather than 
implementing the rule that included: use options under Medicaid to 
provide comprehensive prenatal and pregnancy-related care to women; use 
the existing authority of approving waivers and implement a process for 
expediting the approval of waiver applications; amend the SCHIP statute 
to provide prenatal care for pregnant women by expanding eligibility to 
the woman rather than to the unborn child; and support and work with 
the Congress to approve pending legislation that would provide access 
to prenatal care for uninsured women as well as additional funding for 
States.
    Response: This regulation bridges a gap in eligibility between the 
Medicaid and the SCHIP programs that has now existed for five years. 
Members of the Congress have also recognized this gap and have 
introduced various pieces of legislation over the years to address this 
gap. The opportunity to expand vital health insurance coverage during a 
critical time is at hand.
    We welcome all of these suggestions for expanding health insurance 
coverage and indeed States and the Secretary have already used the 
flexibility in current regulations. However, there are still gaps. We 
also welcome support for the actions of the Secretary in granting 
waivers to States that expand eligibility for individuals who would not 
otherwise be eligible for Medicaid or SCHIP. But the Secretary's 
ability to intervene through one mechanism (a waiver) should not be the 
sole option for States and may in fact be an inferior option. Waivers 
are discretionary on the part of the Secretary and time limited while 
State plan amendments are permanent, and are subject to allotment 
neutrality.
    Commenters recognize that certain low-income pregnant women are not 
currently eligible for coverage under either Medicaid or SCHIP. We 
recognize that States already have the ability to provide prenatal care 
to pregnant women through expanding their title XIX coverage of 
pregnant women either through an amendment to their approved State Plan 
or through a demonstration project under section 1115 of the Act. 
However, States have been reluctant to do so under the regular Medicaid 
match rate. It is the enhanced match under title XXI that has proven to 
be the incentive for States to increase eligibility.
    The approval process for a SCHIP demonstration project to extend 
coverage to pregnant women under section 1115 is a relatively 
streamlined process. However, as the commenters also acknowledge, only 
five States have applied to cover pregnant women (Colorado, Maryland, 
Michigan, New Jersey and Rhode Island) of which two have been approved 
as of July 2002 (New Jersey and Rhode Island).
    States may decide not to pursue this option because of the local 
political climate, the need for State legislative modifications or a 
variety of other reasons. Our regulation is simply an option to make it 
faster and easier for States that want to use SCHIP funds to expand 
prenatal services for low-income women and to do so without having to 
go through the 1115 process or wait for the passage of legislation.
    With respect to comments relating to potential legislative changes 
to the Medicaid and SCHIP statute, discussion of such changes are 
beyond the scope of this regulation.
    Comment: One commenter said that another way the Administration 
could help ensure prenatal care was to change the Medicaid system to 
make it less confusing and more accessible, by reducing the complexity 
of the eligibility process, the burdensome application forms and by 
addressing the lack of knowledge surrounding access and other 
regulatory barriers that prevent women from accessing this health care 
insurance.
    Response: Many States in fact have taken action to lower barriers 
to enrollment, renewal, and access. Barriers to enrollment have been 
one of the major areas CMS has worked on with States in recent years. 
States were given significant flexibility to simplify the eligibility 
process in the SCHIP statute and regulations, and CMS has encouraged 
States to take similar steps within the framework of Medicaid 
requirements. States have the option to provide presumptive eligibility 
for pregnant women and the Medicaid regulations have mandated 
simplification and streamlining of the enrollment process. It is the 
State's option how they choose to accomplish this. However, 
administrative simplification has its limits and cannot bridge the 
eligibility gap as the proposed regulation would.
    Comment: A commenter noted that the unborn child was a feature of 
the Medicaid program until 1986 when it was replaced with a coverage 
category tied directly to the woman's pregnancy status (Pub. L. 99-509, 
the Budget Reconciliation Act of 1986). The commenter considered that 
option to be an invaluable means of permitting coverage of certain 
children whose mothers could not for a variety of reasons qualify for 
Medicaid coverage. The commenter believes that the recognition of this 
option in SCHIP at least partially restores this State flexibility, 
which was lost 16 years ago, and positions State programs to extend 
public health insurance to pregnant women who are currently unqualified 
in their own right.
    Response: We appreciate the commenter's support and agree that the 
intent of this regulation is to provide States with flexibility in 
selecting the options that are available to them in providing this 
vital care.
    The proposed regulation in fact would restore flexibility that the 
previous Federal policy provided that allowed welfare and Medicaid 
coverage for not-yet-born children.
    As early as 1941, the Bureau of Public Assistance, a predecessor 
agency within the Department of Health, Education and Welfare (HEW), 
determined that unborn children could be covered under the Social 
Security Act of 1935. It was determined that under the Act, Federal 
funds could be provided to the States for the aid of unborn children. 
The Agency's 1946 Handbook of Public Assistance Administration 
permitted the inclusion of unborn children among those eligible for 
State-plan aid ``on the basis of the same eligibility conditions as 
apply to other children.'' The operating policy remained unchanged 
through 1971. The option remained with State welfare plans to determine 
whether to include unborn children as

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dependents. At the time of the institution of the Medicaid program, 
many State social service agencies adopted similar eligibility 
definitions for the purposes of qualifying for Medicaid under a State 
plan. The approaches were later changed through a decision by the HEW 
Secretary. While this change was in part a reaction to the 
determination with respect the historic Aid to Families with Dependent 
Children program in Burns v. Alcala, 420 U.S. 575 (1975) that States 
were not required to extend eligibility based on unborn children, this 
decision is not applicable to the SCHIP statute and does not reflect 
the congressional intent to provide broad State flexibility under SCHIP 
to expand the provision of child health assistance. These precedents 
are important as we look for ways for all women to receive prenatal 
care.
    Comment: A commenter noted that several States have sought and 
obtained waivers allowing them to provide SCHIP coverage to unborn 
children as beneficiaries of SCHIP and felt that this offers in itself 
a strong argument for making that inclusion uniform among the States 
and independent of the waiver process.
    Response: We agree with the commenter, but note that States still 
retain the option to apply for section 1115 waivers to provide prenatal 
coverage to low-income pregnant women.
    Comment: A commenter noted that the U.S. House of Representatives 
also recognizes the value of Secretary Thompson's decision and has, 
therefore, drafted a Congressional Resolution (H.R. Res. 346) 
commending the decision to recognize that pregnant mothers and unborn 
children are deserving of concern about their health and well being. 
Another commenter mentioned the bills currently being considered by the 
Congress that would allow States to provide low-income women with 
prenatal coverage under SCHIP, specifically the ``Start Healthy, Stay 
Healthy Act of 2001 (S. 1016/H.R. 3729), the ``Mothers and Newborns 
Health Insurance Act of 2001 (S. 724/H.R. 2610), and the ``Legal 
Immigrant Children's Health Improvement Act of 2001 (S. 582/H.R. 1143) 
on which the Congress has yet to schedule action. The commenters said 
that absent the change in statute, they are pleased that, once 
finalized, the proposed CMS regulation will allow States to extend 
coverage to pregnant women without delay. Commenters concluded that 
extending eligibility for SCHIP coverage to unborn children, including 
prenatal care and delivery, as consistent with SCHIP requirements, is 
the best way to provide needed medical care to those low-income 
children and pregnant women that would otherwise be without health 
insurance.
    Response: We agree and appreciate the commenters' support.
    2. Definition of Targeted Low-Income Child
    Comment: The commenters expressed their belief that life begins at 
conception and unborn children are human beings who should be eligible 
for health care. The commenters asserted that any threshold for 
eligibility other than conception is inevitably arbitrary, because 
conception is the point when an individual human life comes into 
existence. Commenters stated that the proposed rule reflects the 
medical reality that the life of a child begins before birth at 
conception, and is thoroughly consistent with precedent, according 
legal significance to, and protecting the life of the unborn child. The 
commenters stated that the proposed rule's definition of ``child'' is 
consistent with a vast body of scientific literature, and with modern 
medical practice, which recognizes that the life of a child begins at 
conception and continues until adulthood.
    The commenters mentioned that the statute defines the maximum age 
of eligibility for services as 19, but specifies no minimum age. Thus, 
without this regulatory clarification, it is possible that many 
otherwise eligible children would not receive prenatal care under this 
program, and might suffer severe health consequences as a result. 
Another commenter noted that Pediatrics, Vol 81, 5, May 1988, 
p. 736, defines commitment to the health of the individual as beginning 
at conception. The commenter supported the proposed rule based on the 
importance of ensuring adequate health care for children, both before 
and after birth, and the health of their mothers.
    Response: We appreciate all of the comments as important 
contributions to the public record, which helps shape the Secretary's 
decision-making. We recognize that while the intent of this rule is to 
extend health insurance coverage, policy determinations are often 
carried into other important public discussions. We agree with these 
commenters that conception can be a logical point to recognize a 
targeted low income child, and thus, we are retaining our revised 
definition to permit States the option in administering the SCHIP 
program.
    Comment: Commenters stated that the proposed rule has ample legal 
precedent. Outside the abortion context, they stated that unborn 
children are often recognized as persons who warrant the law's 
protection. As examples, the commenters said that most States allow 
recovery in one form or another for prenatal injuries. Thus, several 
commenters cited Roe v. Wade, 410 U.S. 113, 161-2 (1973) and an article 
by Paul Benjamin Linton, Planned Parenthood v. Casey, 13 St. Louis U. 
Public Law Rev. 15, 46-64 (1993). Another commenter noted that roughly 
half the States criminalize fetal homicide. Commenters said that unborn 
children have long been recognized as persons for purposes of 
inheritance, Roe, 410 U.S., at 162, and a child unborn at the time of 
his or her father's wrongful death has been held to be among the 
children for whose benefit a wrongful death action may be brought, 22A 
Am.Jur.2d death Sec.  99 (1988). A commenter cited a Kansas bill 
(HB2797) that would treat a fetus as ``an unborn child'' and declare 
the ``unborn child'' to be a ``person or human being'' so as to allow, 
under State criminal law, prosecution following the ``death or injury 
of a fetus.'' (See Hanna, AP/Topeka Capital-Journal, April 2, 2002.)
    One commenter said that Federal statute similarly recognizes the 
unborn child as a human subject deserving protection from harmful 
research as soon as pregnancy is confirmed, 42 U.S.C. 289g(b); 45 CFR 
part 46 Sec. Sec.  46.203 et seq. Therefore, the commenters did not 
consider it to be an innovation to treat an unborn child as a human 
individual for the purpose of providing quality prenatal care to the 
child and his or her mother.
    Response: We appreciate all of the comments as important 
contributions to the public record, which helps shape the Secretary's 
decision-making. We recognize that while the intent of this rule is to 
extend health insurance coverage, policy determinations are often 
carried into other important public discussions. We agree with these 
commenters that unborn children are often recognized for other purposes 
under State law, and thus are retaining our revised definition to 
permit States such an option in administering the SCHIP program.
    Comment: Commenters said that defining unborn children as children 
is not an appropriate administrative decision. Commenters considered 
defining a child in this way to be arbitrary and they asserted that 
most of this country's population does not agree with this position. 
The commenters go on to say that this approach will enforce a minority 
point of view, is highly political, and is not in the best interests of 
women and their children. One commenter noted that the government 
should not be in the business of

[[Page 61960]]

deciding when life begins. Another commenter noted that to define 
childhood as beginning at conception is an idea not universally held by 
religious or medical experts and imposes a particular theological view 
on the American public. Another commenter noted that the proposed rule 
is both cynical and futile given the widespread disagreement and 
confusion about what constitutes life and when an unborn child becomes 
a person. They went on to say that there is no ethical or medical 
justification for expanding the definition of ``child'' to include the 
unborn under the SCHIP provisions, when all medical services offered to 
an unborn child must be performed on a pregnant woman. Another 
commenter noted that it is inconceivable that a child be defined as 
``from conception to 19 years of age.'' If all of the world's greatest 
theologians, sociologists and scientists and other great minds cannot 
determine when life begins, the commenter asserted, then DHHS certainly 
cannot. Another commenter expressed concern that these rules have the 
hidden agenda of attempting to define ``when life beings''--a deeply 
divisive issue around which the American public has not achieved 
consensus. The commenter stated that the fact of existence outside the 
body of its mother has consistently been the point at which legal 
personhood (including the ability to receive benefits) has been 
distinguished from the unborn child, which is not yet a legal person. 
The commenter believes that changing this understanding by an executive 
department must inevitably lead to Constitutional challenges.
    Response: We appreciate all of the comments as important 
contributions to the public record, which helps shape the Secretary's 
decision-making. We recognize that while the intent of this rule is to 
extend health insurance coverage, policy determinations are often 
carried into other important public discussions. We disagree with these 
commenters' contention that there is only one appropriate 
interpretation of the statutory term at issue, and we believe the range 
of comments supports our view that States should have the option to 
include unborn children as eligible targeted low income children. We 
are therefore retaining a revised definition that does not attempt to 
define when life begins but permits States maximum flexibility in 
extending SCHIP eligibility.
    Comment: The commenters said that in their view, unborn children 
are not children who should be deemed eligible for health care. The 
commenters stated that until birth occurs, mother and the unborn child 
are one and not two different people. Another commenter said that the 
proposed change would make an arbitrary separation between a woman and 
her developing unborn child and goes onto say that such a separation 
can only be a concept, for the unborn child is a functioning part of 
the mother, sharing physical systems. Other commenters noted that the 
unborn child is a part of the mother's body that cannot survive without 
the use of the mother's heart, the mother's lungs and so forth. The 
commenters asserted that as a society we must allow women to control 
their own bodies and not turn them into mere holding vessels for an 
unborn child. The commenters believe that the emphasis should be placed 
upon the pregnant woman on whom the unborn child's health care is 
completely dependent. They believe that life begins at birth, not at 
conception and noted that defining childhood as beginning at conception 
is not an idea universally held by religious or medical experts.
    Response: We appreciate all of the comments as important 
contributions to the public record, which helps shape the Secretary's 
decision-making. We recognize that while the intent of this rule is to 
extend health insurance coverage, policy determinations are often 
carried into other important public discussions. We disagree with these 
commenters that extending SCHIP eligibility to unborn children would 
work to the disadvantage of, or devalue the role of, the mother. 
Indeed, we believe the extension of SCHIP eligibility will be in the 
best interest of both mother and child, and thus are retaining our 
revised definition to permit States such an option in administering the 
SCHIP program.
    Comment: Two commenters asked what the status of zygotes held in 
infertility clinics would be. They asked if such clinics would be faced 
with criminal suits for the practice of destroying embryos? Another 
commenter asked why sperm are not classified as children so sexually 
active men could receive funding to maintain the health of their sperm. 
The commenters asked who will arbitrate when a third party decides the 
interests of the woman conflict with those of the unborn child she is 
carrying? And, will the State decide whether to save the life of the 
mother or her unborn child? Commenters also asked if another person 
could be appointed the guardian of an unborn child?
    Response: While the questions raised by the commenters are 
interesting, they are well beyond the issue of providing eligibility 
under a publicly funded health insurance program. The important medical 
and ethical issues raised in the comments existed prior to the 
promulgation of the proposed regulation and are resolved separately 
from the specific issue of eligibility for a publicly funded health 
insurance program. Guardianship is established through legal 
proceedings and is unlikely to be an issue in the routine application, 
enrollment, and participation process.
    Comment: Commenters discussed the language of the majority in Roe 
v. Wade that they believe clearly States ``the word `person' as used in 
the 14th Amendment does not include the unborn.'' The commenters 
asserted that the Administration does not have the right to reverse 
this clear and unambiguous statement unilaterally in a regulation. The 
commenters stated that the unborn child is not recognized as a person 
in our legal system, where mothers and fathers are responsible for 
decision making when it comes to health care for their offspring.
    Response: While we understand the views of the commenters, we do 
not believe that limiting the definition of child is consistent with 
the flexibility that Congress accorded to States under the SCHIP 
statute. We believe that the range of comments supports our view that 
States should have the option to include unborn children as eligible 
targeted low income children. We are therefore retaining a revised 
definition that permits States maximum flexibility in extending SCHIP 
eligibility.
    We appreciate all of the comments as important contributions to the 
public record, which helps shape the Secretary's decision-making. We 
recognize that while the intent of this rule is to extend health 
insurance coverage, policy determinations are often carried into other 
important public discussions.
    Comment: Commenters asked if defining the unborn child as a person 
means that we will restructure the National Census and tax forms to 
include this new population of citizens? They asked if we will rethink 
our welfare policies to consider unborn children in deciding an 
individual's or family's benefits? Commenters expressed concern that 
the proposed rule will lay the legal groundwork for an adversarial 
relationship between a woman and her unborn child by defining the 
unborn child as a person, who would then have full legal status, equal 
to that of the woman. A commenter noted that an unborn child is not 
given a social security number; it is not a Medicaid beneficiary; 
pregnant women do not receive an exemption on their income taxes for 
the unborn child;

[[Page 61961]]

and census-takers count only born individuals.
    Response: These comments extend beyond the scope of this 
regulation, which concerns only the ability of States to extend SCHIP 
eligibility to unborn children, and would not change any other Federal 
programs. The only government forms affected are those directly 
connected to the SCHIP program.
    Comment: Commenters expressed concern that for women of color, 
distinguishing the needs of the unborn child from those of the mother 
has more than once resulted in adverse consequences for the mother. The 
commenters referred to Ferguson v. City of Charleston, 532 U.S. 67 
(2001), where the Supreme Court considered issues related to a South 
Carolina hospital that, pursuant to State law, reported women, all of 
color, to the police because her unborn child in the third trimester or 
her newborn tested positive for drugs. Consequently, the commenters 
asked us to reconsider the definition in this rule.
    Response: We appreciate all of the comments as important 
contributions to the public record, which helps shape the Secretary's 
decision-making. We recognize that while the intent of this rule is to 
extend health insurance coverage, policy determinations are often 
carried into other important public discussions.
    While we understand the commenters' concern, we do not agree that 
extending SCHIP eligibility to unborn children would work to the 
disadvantage of, or devalue the role of, the mother. Indeed, we believe 
the extension of SCHIP eligibility will be in the best interest of both 
mother and child. Furthermore, we believe that it is consistent with 
congressional intent to provide broad State flexibility under SCHIP to 
expand the provision of child health assistance.
    Comment: Commenters stated that language in SCHIP suggests that the 
term ``child'' does not include an unborn child because the statute 
makes reference to the State in which the child ``resides,'' 42 U.S.C. 
section. 1397jj(b)(1)(ii)(III). Commenters asserted that in ordinary 
usage, an unborn child is not considered to have a ``reside[nce].'' 
And, the commenters continued that Federal courts have ruled that in 
other Federal benefits programs, including AFDC and Medicaid, that the 
term ``child'' does not include a fetus. Therefore, the commenters 
asserted, the same reasoning applies here, and it is clear that the 
Congress did not intend the phrase ``individual under 19 years of age'' 
to include the ``unborn.''
    Response: As previously mentioned, recognition of the unborn child 
in Federal assistance programs can be traced back more than half a 
century. Currently some Federally funded programs such as Medicaid 
include, (or as in SCHIP, provide States with the option to include), 
the unborn child in the size of a family for purposes of determining 
eligibility for members of that family. Eligibility for some families 
may indeed rest on counting the unborn child.
    Comment: The commenter stated that in numerous cases related to 
child abuse statutes, courts have ruled that the term ``child'' does 
not include ``unborn children'' and as such, this rule's 
``clarification'' is without merit. In support of this argument, the 
commenter cited U.S. v. Spencer, 839 F.2d 1341 (9th Cir. 1988) in which 
the defendant's infliction of injuries on an unborn child, who was born 
alive, but died as a result of such injuries, was within the Federal 
statutory definition of murder. The commenter mentioned that the key to 
the holding in that case was that the unborn child was born alive. 
Under the Uniform Code of Military Justice, the term ``human being'' 
was defined as a child that was ``born alive.'' U.S. v. Nelson, 53 M.J. 
319 (U.S. Armed Forces, 2000). Moreover, in numerous other cases, 
courts have held that the term ``child'' contained in a State's child 
abuse statute does not include ``unborn children.'' As an example, 
commenters cited In re Unborn Child, 18 P.3d342 (Okla.2001) (holding 
fetus is not a ``child'' for purposes of State children's code); State 
v. Dunn, 916 P.2d 952 (Wash. Ct. App.1996) (dismissing child 
mistreatment charges, finding that the legislature did not intend to 
include unborn children within the scope of the term ``child,'' which 
was defined as a ``person under eighteen years of age''); Reinesto v. 
Superior Court, 894 P.2d 733, 735 (Ariz. Ct. App. 1995) (ordinary 
meaning of ``child'' does not include ``activity that affects 
fetuses''); State v. Gray, 584 N.E. 2d 710, 711-713 (Ohio 1992) (same).
    Response: We recognize there is not a single, uniform standard for 
treating an unborn child under all State and Federal statutes. We do 
not agree with the commenter's basic premise that the interpretation of 
the term ``child'' under SCHIP must be controlled by the interpretation 
of that term under other, unrelated statutes that deal with criminal 
issues or other purposes. Thus we are retaining our revised definition 
in this final rule.
    Comment: Commenters stated their belief that the statutory language 
is clear regarding the age determination as post-birth. Commenters 
asserted that the Congress does not mention care for unborn children in 
SCHIP and that, by omission, Congress has spoken on this issue. 
Commenters cited Chevron v. Natural Resources Defense Council, Inc. et 
al., for the proposition that, in constructing a statute, primary 
weight must go to whether Congress has spoken on the issue and only 
when Congress has not spoken is weight given to a permissible agency 
construction of the statute.'' Commenters cited State of Wyoming v. 
United States of America et al., 279 F. 3d 1214, 1230 (10th Cir. 2002) 
and said the ``question of whether Federal law authorized certain 
Federal agency action is one of congressional intent.'' The commenters 
asserted that it cannot be assumed that the Congress would have 
intended ``child'' to mean a fertilized egg, embryo or fetus unless it 
had been explicitly discussed. As an example, commenters cited State v. 
Ashley, 701 So.2d 338, 342-43 (Fla. 1997) (rejecting homicide 
prosecution of a woman who shot herself in the abdomen while pregnant, 
causing premature birth and the subsequent death of her unborn child).
    The commenters stated that in the months leading up to the creation 
of the SCHIP program there was extensive discussion in the Congress 
about the need for a comprehensive children's health insurance program. 
And, the commenters said that when describing the problem of uninsured 
children, the very first statistic Senator Daschle used was that ``[e] 
very 48 seconds a child is born without insurance'' [emphasis added]. 
Commenters mentioned that in the House, Congresswoman Furse promoted as 
a model an Oregon policy that ``cover[ed] a child from birth to 18 
years.'' The commenters asserted that not once in the legislative 
history does the Congress mention including fetuses or embryos as 
beneficiaries of a children's health insurance program, and the 
problems it identified were problems afflicting children, not embryos 
and fetuses. Commenters continued, that when the Congress spoke of the 
need for health insurance for prenatal care, ``uninsured pregnant women 
were specifically mentioned.''
    The commenters continued by stating that an examination of the 
Congress' intent in passing the SCHIP statute demonstrates that the 
Secretary's action in promulgating this rule is ultra vires. They 
asserted that although the Secretary's interpretation of the term 
``child'' is consistent with a possible legal meaning of the word, it 
is entirely inconsistent with the legislative history and the structure 
of the legislation.

[[Page 61962]]

First, they asserted, there is no evidence from any of the 
Congressional debates on the SCHIP statute that the Congress intended 
to extend SCHIP benefits to include ``unborn children.'' And, they 
stated, it seems unlikely that the Congress would have intended the 
statute to cover this group unless it had been explicitly discussed.
    The commenters argued that this is further supported by the fact 
that the Congress deliberately chose to include ``well-baby and well-
child care'' in the list of benefits that must be included in a basic 
benefit package to determine actuarial equivalence under SCHIP. If the 
Congress had intended that the children covered by this statute would 
include ``unborn children'' then including these specific benefits 
would have been unnecessary. The commenters said that it seems unlikely 
that coverage for unborn children was intended because it was not 
included on the list.
    Furthermore, the commenters noted that the Balanced Budget Act of 
1997 (BBA), contains other sections that explicitly use the term 
``unborn child.'' Title IV of that Act amended sections of the Medicare 
and Medicaid statutes to define the term ``emergency medical 
condition'' as a medical condition which ``place[es] the health of the 
individual) or, with respect to a pregnant woman, the health of the 
woman or her unborn child) in serious jeopardy. BBA of 1997, Pub. L. 
No. 105-33, Sec. Sec.  4001, 4704, 111 Stat. 251, 290, 496 (1997) 
(codified as amended at 42 U.S. C. Sec.  1395w-22(d)(3)(B)(i) and 42 
U.S.C. 1396u-2(b)(2)(C)(i)) [emphasis added].
    The commenters asserted that if the Congress intended to include a 
fetus as a ``child'' eligible for SCHIP, it would have explicitly used 
the term ``unborn child'' in this section of the Act as it did in the 
Medicare and Medicaid sections of the same statute. The proposed 
amendment to the SCHIP regulations is therefore unauthorized. The 
commenters concluded by stating that the proposed change appears to use 
a rule change to advance an ideological position on the ``personhood'' 
of an unborn `` a position never contemplated by the Congress during 
debate on this program.
    Response: We do not believe that Congress directly spoke to the 
issue of whether the term ``child'' could include unborn children, 
because the statute contains no limitation on such an interpretation. 
We believe the commenters effectively conceded that point by focusing 
on congressional silence and raising peripheral issues and statements 
by individual legislators taken out of context. The argument that 
Congress explicitly used the term ``unborn child'' in a number of 
legislative enactments and did not do so in SCHIP goes both ways, 
because while Congress did not expressly include unborn children, 
Congress did not exclude them either. Instead, Congress clearly sought 
to provide a maximum level of State flexibility under SCHIP. Thus we do 
not see a compelling reason to change our proposed interpretation in 
this final rule.
    The reference to ``well child'' benefits in the statute simply 
means that the Congress chose to specify some benefits rather than 
others as it gave States wide latitude and broad authority to establish 
what benefits would be offered to those enrolled in the program. The 
suggestion that the Congress limited benefits to those expressly 
defined is wrong as indicated by the language of section 2103 (c)(3), 
``Nothing in this subsection shall be construed as preventing a State 
child health plan from providing coverage of benefits that are not 
within a category of services described in paragraph (1) or (2).'' 
Furthermore, the definition of ``child health assistance'' at section 
2110(a)(9) expressly includes prenatal care.
    The construction of title XXI is a broad delegation of authority to 
the Secretary and the States. The Congress considered various forms of 
expanding health insurance including one limited solely to the 
expansion of Medicaid. The Congress chose not to duplicate the Medicaid 
program, but rather constructed a program that left a great deal of 
authority up to the Secretary and the States to design eligibility and 
benefits.
    Comment: Commenters stated that no regulation or Federal statute 
currently on the books treats the unborn child as the equivalent of a 
person and no Federal regulation should do so. The commenters asserted 
that the SCHIP statute nowhere states or suggests that ``child'' as 
used in the statute includes a fetus and they asserted that defining a 
``child'' to include a fetus is inconsistent with the plain and 
ordinary meaning of the term.
    Commenters mentioned that Federal courts have been asked to rule on 
whether AFDC and Medicaid apply to fetuses and in both contexts, 
Federal courts have concluded that the term ``child'' does not include 
a fetus. In Burns v. Alcala, 420 U.S. 575 (1975), the Supreme Court 
held that the term ``dependent child,'' as used in the AFDC statute, 
does not include ``unborn children.'' 420 U.S. at 580-81. Likewise, the 
commenters asserted, in Lewis v. Grinker, 794 F. Supp. 1193 
(E.D.N.Y.1991), aff'd on other grounds, 965 F.2d 1206 (2d Cir. 1992), 
the Federal district concluded that fetuses are not eligible for 
Medicaid. 794 F. Supp.at 1198. Commenters stated that it held that in 
all events, the phrase ``individuals under the age of 21'' does not 
easily apply to unborn children under ordinary usage. The unborn are 
not ``persons'' under the Constitution. Roe v. Wade, 410 U.S. 113, 93 
S. Ct. 705, 35 L. Ed.2d 147 (1973).
    In addition, one commenter noted that the ``age'' of any individual 
is normally computed from birth. The commenter asserted that while the 
statute does not require calculation of the precise age ``under 21,'' 
it is apparent that any construction of the phrase ``individuals under 
the age of 21,'' which will accommodate the unborn is not ordinary 
usage. Accordingly, this commenter concluded that the Congress did not 
intend the phrase ``individuals under the age of 21'' to include the 
unborn.
    Other commenters asserted that the same reasoning applies here: 
under ordinary rules of statutory construction, it is clear that the 
Congress did not intend the phrase ``individual under 19 years of 
age,'' within the meaning of the SCHIP statute, to include the 
``unborn.''
    For this reason, commenters asserted that the Secretary lacks the 
authority to promulgate the proposed regulation. The commenters 
contended that the definition can only be changed by amending the 
current statute and that is far beyond the reach of the Department. The 
commenters went onto say that what the Department calls a 
``clarification'' of the definition is an attempt to change what the 
Congress intended to include in the definition of child for the 
purposes of SCHIP eligibility.
    Response: As noted above, the SCHIP statute is silent on the issue 
of eligibility for unborn children, and we do not believe that the 
interpretation of the term ``child,'' is appropriately controlled by 
the cases cited, which involved other programs and situations. We 
believe instead that Congress had a broader purpose under title XXI, 
which included maximizing State flexibility in offering access to child 
health assistance under SCHIP.
    There is little doubt that the purpose of title XXI is to provide 
access to health insurance. This regulation would provide eligibility 
at an earlier point in time that is also one of the most critical times 
in the lifecycle.
    The statute clearly established an age ceiling of 19 that could not 
be circumvented absent a waiver. However, other broad eligibility 
standards were

[[Page 61963]]

left to the States. A State has the authority to target to different 
ages below age 19. For example, Federal statute requires Medicaid 
eligibility at 133 percent of the Federal poverty level up to age 6. 
After age 6, the Federal minimum is 100 percent of poverty. To fill the 
gap in Medicaid eligibility, a State could have used the enhanced 
funding provided by title XXI and designed their SCHIP program to 
simply cover children at 133 percent of poverty between the ages of 6 
and 19.
    A State could target resources to younger children as an early 
childhood development program and thus create an eligibility category 
at higher income levels specifically for infants and children up to age 
4 for example.
    Many commenters who oppose this rule have indicated their belief 
that the Secretary does have authority to extend eligibility to a 
pregnant woman who is over the age limit set by statute and indeed have 
indicated support for such a waiver. We believe the Secretary's 
authority extends to the adoption of definitions through the rulemaking 
process.
    Comment: One commenter suggested that the Secretary might be 
exceeding his authority by applying the revised SCHIP definition of 
child in assessing compliance with the Medicaid maintenance of effort 
provision of section 2105(d)(1), as stated in the preamble to the 
proposed rule at 67 FR 9938.
    Response: We disagree with the commenter because we believe the 
Secretary's authority clearly extends to the interpretation of 
statutory terms such as the SCHIP term ``child.'' Furthermore, in this 
instance, we have used rulemaking procedures to ensure that we have 
fully considered the issues. We clarify that we interpret the 
maintenance of effort provision at 2105(d)(1) for purposes of the SCHIP 
statute, consistent with our overall definition of the term ``child.'' 
Thus, because a State may extend SCHIP eligibility to unborn children, 
we will review compliance with SCHIP maintenance of effort provisions 
by including unborn children in our review. The provision at issue is a 
SCHIP provision, and it ensures that SCHIP funds will not be used to 
replace Medicaid coverage.
    Comment: Commenters stated that by defining an egg as a child and 
consequently, when life begins, DHHS is imposing a religious belief on 
all women. The commenters stated that for each group of people whose 
religion teaches them that an unborn child is a child at any stage of 
development, there is another whose religion teaches them precisely the 
contrary. One commenter mentioned that forcing people to proceed 
against their religious beliefs in order to access a public benefit is 
almost certainly illegal and to dangle prenatal care in front of needy 
women who do not happen to share a particular religious viewpoint would 
not only be illegal, it would be morally reprehensible.
    In support of this position, one of the commenters stated that the 
Supreme Court found as much in the seminal case of Sherbert v. Verner, 
374 U.S. 398 (1963), while more recently holding that a State may deny 
unemployment benefits for illegal conduct, even if that conduct is 
religiously motivated.
    The commenter continued by saying, that the free exercise of 
religion means, first and foremost, the right to believe and profess 
whatever religious doctrine one desires. Thus, the commenter asserted 
that the First Amendment obviously excludes all ``governmental 
regulation of religious beliefs as such'' and cited Sherbert v. Verner, 
supra, at 402. The commenter asserted that the government may not 
compel affirmation of religious belief, and cited several cases in 
support of this argument, including Torcaso v. Watkins, 367 U.S. 488 
(1961), United States v. Ballard, 322 U.S. 78, 86-88 (1944), McDaniel 
v. Paty, 435 U.S. 618 (1978); Fowler v. Rhode Island, 345 U.S. 67, 69 
(1953); cf. Larson v. Valente, 456 U.S. 228, 245 (1982), Presbyterian 
Church in U.S. v. Mary Elizabeth Blue Hull Memorial Presbyterian 
Church, 393 U.S. 440, 445-452 (1969); Kedroff v. St. Nicholas 
Cathedral, 344 U.S. 94, 95-119 (1952); Serbian Eastern Orthodox 
Diocese1 v. Milivojevich, 426 U.S. 696, 708-725 (1976), Employment Div. 
of Oregon v. Smith, 494 U.S. 872, 877 (1990).
    The commenter stated that in the Sherbert case, a person was denied 
unemployment benefits on the basis of work related misconduct because 
she refused to work on her Sabbath. The Court ruled that forcing a 
person to choose between following her religious beliefs and receiving 
a public benefit violates the First Amendment, and in the absence of 
criminal behavior, that remains the statute today.
    The commenter contended that the regime proposed by CMS will 
confront many pregnant women with just such a choice in that they must 
either be willing to publicly declare the unborn child they are 
carrying to be a human being, even if their religion teaches them 
otherwise, or they must forego perhaps prenatal care and delivery 
services. The commenter asserted that CMS would be attempting to ``lend 
its power to one or the other side in controversies over religious 
authority or dogma.'' Smith, supra at 877.
    Response: Application for SCHIP benefits is voluntary, and there is 
nothing in the SCHIP statute that forces a mother to accept SCHIP 
benefits. While it is certainly possible that acceptance of SCHIP 
benefits for an unborn child may be contrary to some women's religious 
beliefs, we do not believe this should preclude States from offering 
such benefits. If a woman has a religious objection, she simply would 
not accept SCHIP benefits.
    Comment: Commenters stated that by establishing eligibility 
benefits from the point of conception, a woman's right to make 
decisions about her health care is undermined. The commenters pointed 
out that the U.S. Supreme Court has consistently ruled that women's 
health interests may not be supplanted by State or fetal health 
interests and cited the following cases: in Stenberg v. Carhart, the 
Court struck down a State law imposing government restrictions on 
abortion that failed to provide an adequate exception for preservation 
of the woman's health; and in Colautti v. Franklin, the Court 
invalidated a statute that failed to guarantee that a woman's health 
would always prevail over the life and health of her unborn child.
    The commenters believe that this rule opens up the possibility for 
the government or others to claim the right to represent such fetal 
interests, and thus the right to make decisions about a woman's 
pregnancy over her objections. The commenters asserted that amending 
the definition of a covered ``child'' to include ``the period from 
conception to birth,'' thereby allowing health insurance coverage for a 
zygote, embryo and fetus in utero has legal and practical problems and 
could actually undermine the health of the pregnant woman. The 
commenters stated that current constitutional statute allows States to 
place limited restrictions on a woman's access to abortion, but a 
pregnant woman holds an absolute right to make decisions about her 
pregnancy during the first trimester, including decisions about her 
health care.
    The commenters believe the proposed regulation is inconsistent with 
the constitutionally protected right of a woman to determine the course 
of her pregnancy.
    Response: As stated previously, enrollment and participation in the 
SCHIP program is voluntary. There is no conflict as the services to be 
provided benefit both mother and child.
    Comment: One commenter stated that the term ``conception'' should 
be understood to mean at the time of

[[Page 61964]]

fertilization when the new genetically complete and unique individual 
begins his or her existence. The commenter said it would be good to 
define clearly what is meant by ``conception'' since there are other 
potentially confusing definitions being used.
    Response: We do not generally believe there is any confusion about 
the term ``conception.'' To the extent that there is, however, we 
believe States should have flexibility to adopt any reasonable 
definition of that term.

3. Program Eligibility

    Comment: Several commenters asked about when coverage of the unborn 
child would begin, given the logistical difficulties in establishing 
the exact date of conception. These commenters also asked whether or 
not the pregnancy would need to be medically verified, and whether 
coverage could be retroactive to the date of conception.
    Response: Under title XXI, States have discretion in adopting 
administrative procedures regarding eligibility for coverage. States, 
at their option, may elect to offer retroactive coverage or may require 
medical confirmation of the pregnancy before any prenatal care would be 
provided. If the application had been filed prior to such confirmation 
and it turned out that the woman was not pregnant, the costs of the 
pregnancy test could be paid as an administrative cost, at the State's 
option. If the pregnancy were confirmed, the cost of the pregnancy test 
and any prenatal care subsequently provided could be treated as child 
health assistance.
    Comment: One commenter asked whether Medicaid rules should be 
applied to SCHIP. A few commenters asked about whose income would be 
used to determine the unborn child's eligibility. One specifically 
asked whether States would need the mother's income and resource 
information. Another asked whether income from the parents of an unwed 
pregnant teen living at home should be counted, as would be the case if 
the teenager were applying for coverage as a pregnant woman under 
Medicaid. This commenter also asked whether child support enforcement 
requirements apply to the unborn child or to the mother.
    Response: Medicaid eligibility rules only apply when a State has 
implemented its SCHIP through a Medicaid expansion program. Medicaid 
eligibility rules do not apply to separate child health programs. 
States have broad discretion in defining ``family income'' for purposes 
of determining eligibility under a separate child health program. 
States have discretion to determine whose income shall be considered in 
determining a child's eligibility. Similarly, States have broad 
discretion on whether to have a resource test for their separate child 
health program and, if so, whose resources to count. Thus, in the 
example cited by one commenter, a State could opt to count the income 
and/or resources of a pregnant teen's parents in determining 
eligibility. However, it is not required to do so.
    There are no Federal child support enforcement requirements for 
separate child health programs. Thus, while States can impose such 
requirements, they are not required to do so.
    Comment: One commenter asked whether the baby would be eligible for 
a year of presumptive eligibility.
    Response: In general, infants born to mothers who were eligible for 
and receiving Medicaid at the time of the infant's birth automatically 
are eligible for Medicaid for one year. It is unclear whether this 
commenter is asking if babies, who were covered by SCHIP while in 
utero, would be covered by this rule, or whether the commenter is 
asking if such babies would be eligible for one year of presumptive 
eligibility under SCHIP. We will respond to both questions.
    Under 42 CFR 457.350(b) regarding the SCHIP regulation's screen and 
enroll requirements, if a mother is Medicaid eligible, the unborn child 
cannot be eligible for SCHIP. Conversely, if the unborn child is 
covered under SCHIP, that means that the State determined, in the 
screening and eligibility process, that the mother was not eligible 
for, or receiving, Medicaid. Accordingly, the automatic one-year 
eligibility enjoyed by infants born to mothers on Medicaid would not 
apply to infants covered by SCHIP while in utero.
    If a State has adopted presumptive eligibility for its separate 
child health program, an unborn child could be determined to be 
presumptively eligible, to the same extent as any other child, 
consistent with the regulations at 42 CFR 457.355. However, presumptive 
eligibility cannot be applied to a child once the child has been 
determined to be eligible for coverage under SCHIP. This basic 
principle is true for a child determined eligible for coverage while in 
utero, as well as one who is first determined eligible after birth.
    This does not mean, however, that an infant eligible in utero loses 
coverage at birth. Under current regulations at 42 CFR 457.320(e)(2), 
States have the flexibility to establish an eligibility period of up to 
12 months. A child's eligibility for a separate child health program 
must be redetermined at the end of the eligibility period adopted by 
the State. Between regularly scheduled redeterminations, States are not 
required to reevaluate a child's continued eligibility, regardless of 
changes in circumstances (other than the child turning 19).
    Under this regulation, the term ``targeted low-income child'' is 
defined to include an unborn child, who otherwise meets the State's 
income eligibility criteria. Thus, whatever period of eligibility the 
State has adopted for children covered under its separate child health 
program also would apply to an unborn child. Birth in and of itself 
does not alter the baby's status as a ``targeted low-income child.'' 
Thus, once born, the infant would remain eligible for coverage under 
the separate child health program until the next regularly scheduled 
redetermination.
    For example, suppose that a State has adopted a 12-month 
eligibility period and that an unborn child was determined eligible for 
SCHIP three months prior to birth. At birth, the infant would remain 
eligible for coverage under the State's separate child health program 
for 1 year from the date of initial eligibility, or, in this case, nine 
months from the date of birth.
    Note that, at any point a parent or other caretaker has the right 
to file a Medicaid application on behalf of the infant. If such an 
application were filed, the State then would be required to determine 
the infant's eligibility for Medicaid.
    Comment: One commenter asked if the continuous eligibility afforded 
to pregnant women by Medicaid `` under which pregnant women retain 
eligibility for the duration of their pregnancy and postpartum period 
regardless of changes in income--would be available to unborn children 
eligible for SCHIP under this regulation.
    Response: No. As explained above, Medicaid rules do not apply to 
separate child health programs. However, as also explained above, under 
current regulations at 42 CFR 457.320(e)(2), States can adopt 
continuous eligibility for children eligible for their separate child 
health program, with an eligibility period of up to 12 months. A 
child's eligibility must be redetermined at the end of the eligibility 
period adopted by the State. Between regularly scheduled 
redeterminations, States are not required to reevaluate a child's 
continued eligibility, regardless of changes in income or other 
circumstances (other than the child turning 19).

[[Page 61965]]

    Comment: One commenter asked whether an unborn child could be 
eligible for SCHIP if the mother is not eligible for Medicaid because 
she does not satisfy the State's residency requirement.
    Response: Subject to the provisions of 42 CFR 457.320(d), States 
may establish residency requirements for their separate child health 
programs. An application for an unborn child for this program would be 
treated the same as any other application for coverage. Thus, it also 
would be subject to the residency requirements established by the 
State.
    Comment: One commenter asked whether States would need the mother's 
social security number (SSN).
    Response: States are not permitted to require the SSN of anyone, 
other than the child applying for coverage, as a condition of 
eligibility. This rule does not change that situation. Thus, States may 
not require that the unborn child's mother provide her SSN. However, 
States would likely assign a unique identifier to every unborn child 
that is found eligible for coverage and enrolled in a separate child 
health program in order to perform normal administrative functions. The 
mechanism used to assign such an identifier is left to the discretion 
of each State.
    As in current practice, a State may request the pregnant woman's 
SSN as long as the State makes it clear for what purpose her SSN would 
be used; and that she is not required to provide her SSN and that 
eligibility will not be affected if she does not do so.
    Comment: One commenter asked whether either parent would be able to 
submit an application on behalf of the unborn child.
    Response: Under title XXI of the Social Security Act, States have 
broad discretion to adopt administrative procedures governing the 
filing and processing of applications. Thus, States can, but are not 
required, to place restrictions on who can file an application on 
behalf of a child. There is nothing in this regulation, however, that 
would permit any individual to compel another to seek or use health 
care services.
    Comment: A few commenters asked whether an unborn child would have 
to be issued a SSN or other unique identifier. These commenters also 
asked what method the State would use to track services provided to the 
unborn child.
    Response: We are not aware of any circumstances in which the Social 
Security Administration assigns a SSN to an individual prior to birth. 
This rule does not request, let alone require, that it do so.
    Therefore, we do not anticipate that an unborn child that is 
determined to be eligible for coverage under a separate child health 
program would be given a SSN. Consequently, it will be necessary for 
States to assign a unique identifier to appropriately process claims. 
The mechanism used to assign the identifier is left to the discretion 
of each State.
    The data collection and reporting requirements for separate child 
health programs are set forth at 42 CFR subpart G. Regulations 
governing payment for and verification of services provided are found 
at 42 CFR 457.950 and 42 CFR 457.980. States are required to comply 
with these requirements with respect to coverage of all enrolled 
individuals. This rule does not impose any additional requirements on 
States with respect to services provided to an unborn child.
    Comment: In the March 5, 2002 proposed rule, we explained that this 
regulation will give States the option to consider an unborn child to 
be a targeted low-income child and therefore eligible for SCHIP ``if 
other applicable eligibility criteria are met.'' One commenter asked 
whether the ``other eligibility criteria'' applies to the unborn child 
or the pregnant woman.
    Response: The ``other eligibility criteria'' pertain to the unborn 
child.
    Comment: One commenter emphasized the importance of the screen and 
enroll requirements.
    Response: We agree with the commenter that the screen and enroll 
requirements are very important. As we explained in the March 5, 2002 
proposed rule, the purpose of the rule is to encourage States to 
increase the availability of prenatal care. In order to ensure that 
funding for prenatal care under SCHIP does not replace funding for 
prenatal care under Medicaid, we explained that States must apply the 
screen and enroll process described in the SCHIP regulations at 42 CFR 
457.350. Consistent with the terms of that regulation, States must 
screen the unborn child's mother for Medicaid eligibility. If the State 
determines that the mother is potentially eligible for Medicaid, then 
the State must assist her in completing the Medicaid application 
process, again, consistent with the requirements set forth in 42 CFR 
457.350.
    Comment: One commenter asked whether a State could include this 
group in an existing Medicaid waiver, such as the family planning and 
Healthy Start waivers.
    Response: Section 1115 waivers are demonstration projects awarded 
to States at the Secretary's discretion on a case by case basis. As 
such, consideration of this eligibility group could be considered for 
inclusion in an existing waiver but a sufficient rationale would need 
to be provided by the State. Also, it may not make sense to include 
this group, as in the case of family planning waivers, for example.
    Comment: Two commenters said that all States should be required to 
cover the unborn child.
    Response: We cannot require States to cover unborn children. The 
statute does not require that States cover all children who meet the 
definition of a targeted low-income child. Section 2102(b)(1) of the 
Act and implementing regulations at 42 CFR 457.320(a)(2) specifically 
permit States to adopt eligibility standards based on age. Thus, we are 
precluded from mandating that all States cover unborn children.

4. Immigration Status

    Comment: Commenters stated that the proposed regulations do not 
address how the unborn child will be classified in determining its 
citizenship or immigration status. Many commenters urged the Department 
to make clear in the final rule that unborn children will be eligible 
for SCHIP benefits under the rule, regardless of the immigration status 
of their mothers. The commenters asserted that since no unborn child is 
a citizen or a qualified immigrant, there is no basis for making 
distinctions among unborn children on nationality and immigration 
status grounds.
    Commenters stated that low-income pregnant women who are either 
recent legal immigrants (subject to the 5 year bar on receipt of 
Federal public benefits) or are undocumented immigrants are often 
unable to secure prenatal care, and such an exclusion is likely to 
result in serious harm to the unborn child.
    Yet, commenters noted, the babies born to these women in the United 
States will become citizens immediately upon their birth. Commenters 
asserted that effective health care for these children, no less than 
others, must begin with access to prenatal care. In addition, this 
would provide effective coverage for the maximum number of unborn 
children. One commenter noted that the proposed regulation would permit 
States to ensure that essential prenatal services are available ``to 
benefit unborn children regardless of the mother's eligibility 
status.'' (67 FR 9937) The commenter noted that this position is 
consistent with existing statute and practice since many children whose 
parents would not be eligible for SCHIP are currently enrolled in the 
SCHIP program. These include children whose

[[Page 61966]]

parents are subject to the 5-year bar. The commenter states that with 
the exception of income available to the child, parents' eligibility 
for SCHIP is irrelevant. They noted that SCHIP eligibility is based 
upon the age, immigration status, insurance coverage and other factors 
specific to the child. 42 U.S.C. 1397bb(b)(1)(A); 42 CFR 457.320, as 
amended by interim final rule published at 66 FR 33810 (June 25, 2001).
    The commenters stated that HHS should amend the proposed regulation 
to clarify that all unborn children will be treated equally for SCHIP 
eligibility purposes. One commenter specifically requested that we 
amend Sec.  457.320(b)(6) to state that ``In establishing eligibility 
standards and methodologies a State may not exclude individuals based 
on citizenship or nationality to the extent that the children are U.S. 
citizens, which includes unborn children from conception to birth who 
upon birth will be U.S. citizens, U.S. nationals or qualified aliens.'' 
Commenters contended that if the regulation were adopted, treating all 
unborn children as constructively born in the U.S. would be the most 
straightforward way to accomplish this end and cited Lewis v. Thompson, 
252 F.3rd 567, 581 (2d Cir. 2001), (discussing the ``constructive 
birth'' provisions of 42 U.S.C. 1396d(n)(1)(A), which treats a 
childless pregnant woman as a parent with one child for TANF 
eligibility purposes.)
    Response: We agree with the commenters that requiring exclusion of 
unborn children on the basis of immigration status is neither legally 
mandated nor desirable. Unborn children do not have immigration status 
as ``aliens'' and thus are not precluded from receiving Federal means-
tested benefits under the provisions of Title IV of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA), Public Law No. 104-193. Under PRWORA, these restrictions 
apply only to ``aliens'' who are not ``qualified aliens''; since unborn 
children are not ``aliens,'' they are not within the scope of this 
preclusion nor are unborn children subject to the 5-year bar. 
Furthermore, as we stated in the preamble to the proposed rule, the 
goal is to permit States to ensure that needed services are ``available 
to benefit unborn children independent of the mother's eligibility 
status'' (67 FR 9937). Because prenatal care is a key element to 
ensuring healthy infants and children, this goal would maximize the 
availability of prenatal care and, consequently, promote the overall 
health of infants and children. It would be inconsistent with this goal 
to tie services for prenatal care to the immigration status of the 
mother.
    We do not, however, believe that it is necessary to explicitly 
amend the proposed rule to express this interpretation of applicable 
law. Since unborn children would not be precluded from receiving 
benefits under applicable law, there is no reason to further address 
the issue in the regulation text.
    Comment: One commenter noted that the unborn child of an ineligible 
immigrant woman is indistinguishable from that of any other woman 
present in that State. In the real world, upon birth, that unborn child 
becomes a child and a U.S. citizen. This commenter asked, ``But if CMS 
adopts a position that deems that fetus a ``child'' in utero, then what 
possible justification could there be for denying SCHIP benefits to 
such a ``child''?'' Another commenter recommended that the proposed 
regulation should not be clarified to deny coverage to the unborn 
children of immigrant women merely because the women would themselves 
be ineligible to receive benefits under Federal statute. This commenter 
stated that any clarification of the regulation should make explicit 
that the woman's immigration status is irrelevant to the provision of 
SCHIP benefits. If the proposed regulation is adopted, there is no 
principal basis on which to distinguish the unborn children of 
immigrant women from the unborn children of citizen women. The 
commenter said that although Federal statute provides that ``an alien 
who is not a qualified alien is not eligible for any Federal public 
benefit * * *'' 8 U.S.C. 1611(a), an unborn child has no citizenship or 
immigration status whatsoever, and is therefore not made ineligible for 
coverage by reason of 8 U.S.C. 1611(a) or any other immigration-related 
eligibility restriction. The commenter stated that any exclusion of the 
unborn children of ineligible immigrant women would thus have to be 
accomplished by altering the proposed regulation to exclude such unborn 
children explicitly. The commenter contended that such a change would 
be contrary to the avowed purpose of the proposed regulation and would 
have no basis in logic, given that the regulation is premised entirely 
on the unborn child's status and not the woman's and in support of this 
position cited Plyler v. Doe, 457 U.S. 202, 220 (1982) (invalidating 
State law denying public schooling to the children of undocumented 
immigrants because the denial ``directed the onus of a parent's 
misconduct against his children'').
    Response: We agree that it is does not make sense to try to impute 
an immigration status to an unborn child based on the status of the 
mother. As discussed above, an unborn child is not an alien, and the 
status of the child is not necessarily tied to the status of the 
mother. Moreover, to do so would not be consistent with the purpose of 
providing States with the flexibility to maximize the availability of 
prenatal care to ensure healthy infants and children.
    Comment: Commenters stated that the rule should be clarified to 
make clear that undocumented immigrants may not be reported to 
immigration authorities for seeking medical care for their unborn 
children. Commenters were concerned that in the absence of such a 
protection, undocumented immigrant mothers may not seek medical care, 
and their unborn children will not receive care they need to help 
ensure a healthy birth and are entitled to as a U.S. citizen. 
Commenters stated that since the pregnant woman will never be the 
recipient, it would seem that a State, pursuant to the ``Tri-Agency 
Guidance'' issued by the Departments of Health and Human Services and 
Agriculture (on 9/21/00), would be prohibited from inquiring about her 
immigration status.
    Response: Nothing in this regulation alters section 434 of the 1996 
welfare reform statute, which prohibits the Federal government from 
restricting State or local government entities from sending to or 
receiving from the Immigration and Naturalization Service information 
regarding the immigration status of an alien in the U.S. Further, 
nothing in this regulation alters the Tri-Agency Guidance with respect 
to inquiries about immigration status of nonapplicants.
    Comment: The commenter was concerned about the additional cost of 
covering all unborn children conceived in the United States by illegal 
immigrant women. The commenter believes that under this rule, the 
unborn child should be eligible for benefits if (she is conceived in 
the United States. The commenter was concerned that if women are 
permitted to self-declare whether conception occurred in United States 
that the Administration's cost estimate is too low because of the large 
numbers of undocumented immigrants who would be receiving coverage.
    Response: The question of where conception occurred is irrelevant 
to the question of the unborn child's immigration status or this final 
rule. This regulation provides states with the flexibility to assure 
essential prenatal care to the maximum number of unborn children, 
regardless of the immigration

[[Page 61967]]

status of their mothers. States, in deciding whether or not to adopt 
this option under their title XXI state plan, will certainly weigh, 
along with numerous other factors, the potential costs associated with 
providing coverage to unborn children since States cannot receive 
Federal funding that exceeds title XXI allotment.
    Comment: One commenter stated that prenatal care is even more 
important among Latinas, who suffer from higher rates of pregnancy-
induced hypertension and maternal mortality. The commenter noted that 
12 States offer prenatal care to immigrant women who are ineligible for 
Federally funded medical assistance, which has lessened the effects of 
PRWORA. The commenter stated that if the new regulation explicitly 
covers children of undocumented immigrants, it would increase the 
number of States that provide prenatal care services to pregnant 
immigrant women and provide an incentive for those States that have 
seen a large influx of Latina immigrants in recent years.
    Response: This rule ensures that States have maximum flexibility to 
extend SCHIP eligibility to unborn children, independent of the 
immigration status of the mother. We believe that this rule addresses 
the concerns of the commenter since the intent of this rule is to 
benefit both the unborn child and their mothers by promoting continuity 
of important medical care.

5. Benefits

    Comment: Commenters, whether in favor of this rule or not, 
expressed their belief that all women should receive regular and 
adequate prenatal care because there is overwhelming data that shows 
that there are still too many women who receive no or less than 
adequate care during pregnancy. Commenters agreed that health care 
should be provided from the prenatal stage.
    Many commenters, in support of this rule, expressed their belief 
that all women should be able to receive prenatal services that 
increase the chances of every child being born healthy. This regulation 
would allow pregnant women and unborn children to receive the medical 
treatment they need. Commenters noted that the lack of prenatal care 
results in increased health costs for taxpayers in caring for problems 
and complications after birth, and some noted that coverage of the 
unborn child may result in the incidental improvement in the health of 
the mother. But, all too often proper prenatal care has been cost 
prohibitive to low-income women, and the commenters view this proposal 
as assisting the millions of women of childbearing age who lose or lack 
health insurance. Proper prenatal care can prevent avoidable birth 
defects. Fetal surgery is able to correct many life-threatening 
congenital disorders. There is no reason the unborn child should be 
denied the lifesaving procedures that will permit him or her to live a 
full, normal life after birth, particularly with the recent medical 
advances that will continue to develop and evolve. Providing this care 
is a benefit, not only for the unborn child, but for women and families 
as well. Commenters stated that this policy provides a way for the 
mother to make positive choices with regard to caring for her unborn 
child and herself.
    Some commenters noted that coverage would decrease infant mortality 
rates. Two commenters cited a DHHS report, ``Trends in the Well-Being 
of America's Children & Youth 2000,'' that indicated prenatal care can 
improve birth outcomes and decrease health costs. Two commenters also 
cited an American Academy of Pediatrics (AAP) policy that indicates ``* 
* * physical and psychosocial growth, development, and health of the 
individual begins prior to birth when conception is apparent * * * the 
responsibility of pediatrics may therefore begin with the fetus * * * 
.''
    Commenters expressed a concern that it is in the public's interest 
to assure that expectant mothers have access to quality prenatal health 
care coverage as highlighted in Healthy People 2010. Additionally, 
commenters noted that it is less expensive to care for healthy babies 
than unhealthy babies and that access to prenatal care means long-term 
reduction in the cost of health care for these children. Expanding 
Federal health programs to give more low-income pregnant women access 
to prenatal care is an important step in making sure children get a 
healthy start in life.
    Response: We appreciate the commenters' support of our goal in 
developing this rule. By providing States with the option of ensuring 
that needed prenatal care is available under SCHIP to benefit unborn 
children, uninsured low-income women, who are less likely to receive 
prenatal care, would be able to access crucial services that they may 
not otherwise be able to receive. This regulatory clarification is 
intended to benefit both the unborn child and the mother by promoting 
continuity of important medical care. We agree that healthy pregnancies 
should also result in significant savings in public expenditures over a 
child's lifetime.
    Comment: While commenters agreed with the importance of prenatal 
care as essential for the mother and child, many disagreed with the 
mechanism this Administration has taken for accessing that care. They 
feel very strongly that eligibility should be extended to the pregnant 
woman and not to the unborn child. Several commenters opposed this 
approach as a false separation of the woman and child. Commenters were 
concerned that the medical needs of the embryo would take precedence 
over the needs of the mother and stressed their belief that the benefit 
should be conferred to the woman and not to the unborn child. They 
expressed concern that this regulation may create a conflict of 
interest between the woman and the unborn child.
    They believe that a crucial question is whose needs take priority? 
Many felt that treating the unborn child as if it exists separately and 
should be considered before and above the health of the woman carrying 
the unborn child is a false separation that would ultimately prove 
detrimental to the health of many women as well as to their unborn 
children or newborns. They believe that this proposal interferes with 
women's autonomy to make medical care decisions and represents an 
arbitrary separation of the woman and child (since one cannot be cared 
for without the other also receiving care). One commenter indicated 
that conflicts of interest between the mother and child would not arise 
if the woman was determined the patient, as under the Medicaid program 
(42 U.S.C. 1396a(a)(10)(A)(i)(III), (IV), (VI), (VII), (A)(ii) and 
(1).)
    Response: We understand the commenters' concerns. The intent of 
this rule is to maximize the availability of SCHIP benefits in the 
interest of both pregnant women and unborn children. The statutory 
provisions of title XXI are very clear that only targeted low-income 
children can be eligible for the program. Although, under Sec.  
457.1010 States do have the option of applying for a variance to 
purchase family coverage through which a pregnant woman over the age of 
19 could be determined SCHIP eligible.
    States do have options available if they wish to expand eligibility 
to a pregnant woman over the age of 19 whose income is over the current 
Medicaid income guidelines rather than to the unborn child, which 
include: a title XIX expansion under one of their poverty groups; or a 
section 1115 waiver demonstration. However, absent a

[[Page 61968]]

waiver, eligibility can only be conferred to the targeted low-income 
child.
    That being said, nothing in this rule is intended to affect the 
traditional relationship between the pregnant mother and the physician. 
Questions of medical treatment for the pregnant woman and/or her unborn 
are a decision between the pregnant woman and her physician and nothing 
in this rule would circumvent or alter that relationship.
    Comment: Commenters were concerned that a woman could possibly be 
denied medical treatments such as prescription drugs, psychotropic 
medications to treat psychiatric illnesses, and life-saving radiation 
or chemotherapy treatments because of the effects they would have on 
the unborn child.
    Commenters asked if the pregnant woman would be denied other care 
that might be harmful to the unborn child, thus effectively pitting her 
needs against those of the unborn child? One commenter asked whether 
the State would be subjecting women to drug and alcohol tests on the 
alleged ground that it is protecting its patient-beneficiary? Several 
commenters referred to this policy as medically unsound, ethically 
unacceptable, and/or poor public policy. Commenters questioned if 
physicians would be required to consult with the unborn child's father 
or another legal guardian if these types of issues exist. Several 
questioned what entities would have the authority to assert the rights 
of the unborn child (such as, State, Federal government, physician, 
pregnant woman, father?).
    To illustrate their point, two commenters cited a court case (In re 
A.C., 573 A. 2d 1235, 1235 (D.C.1990) in which a woman was compelled by 
the court to undergo a caesarean section, following which both the 
mother and unborn child died (Veronica E. B. Kolder et. al, Court-
Ordered Obstetrical Interventions, 316, New Engl. J. Med. 1192, 1195 
(1987).
    Several commenters also raised the question as to what happens in 
cases where continuing the pregnancy itself endangers the life of the 
mother, since the assumption made by the commenters is that the life of 
the unborn child would take precedence over the life of the mother or 
that both would be allowed to die.
    Response: These comments extend beyond the scope of this 
regulation, which concerns only the ability of States to extend SCHIP 
eligibility to unborn children. As in Medicaid, nothing in this rule is 
intended to affect the traditional relationship between the pregnant 
mother and the physician. Questions of medical treatment for the 
pregnant woman and/or her unborn are a decision between the pregnant 
woman and her physician and nothing in this rule would circumvent or 
alter that relationship.
    Comment: Commenters expressed concern that certain benefits that 
would provide comfort for the pregnant women would not be covered, such 
as epidurals or anesthesia during delivery.
    Response: Within the options for benefit coverage selected by a 
State, as described at Sec.  457.410, a State selecting this SCHIP 
option has the flexibility in defining its benefit package to provide 
benefits it deems necessary.
    Regarding the specific question asked by the commenters, while 
analgesia given as an epidural and/or intramuscular intravenous 
injections of pain relievers, and/or anesthesia given as regional or 
general anesthesia is primarily provided during labor and delivery to 
relieve the mother's pain from uterine contractions or to perform 
surgery, that is, C-section, if a woman's pain during labor and 
delivery is not reduced or properly relieved, adverse and sometimes 
disastrous effects can occur for the unborn child. There is no question 
that analgesia/anesthesia is required in order to perform a C-section 
and such a procedure cannot even be considered if some form of pain 
relief is not provided. In terms of vaginal deliveries, without 
relieving the mother's pain from uterine contractions, the progress and 
labor may be interrupted and not efficient, which in turn can cause 
fetal complications, such as fetal distress and infection from 
prolonged labor and prolonged rupture of membranes and other 
complications. Therefore, we would expect that this coverage would be 
provided.
    Comment: Several commenters were concerned about whether States 
would have the flexibility to use enhanced Federal funds to provide 
comprehensive benefits to pregnant women and stated that the failure to 
provide a comprehensive range of services for all of a pregnant woman's 
health care needs and treatment of some stated diseases, could 
compromise her health, as well as, that of the unborn child.
    Although many commenters supported expanded access to prenatal care 
among low-income, uninsured women, many believed that the benefit 
should be given to the woman, in addition to or instead of her unborn 
child. One commenter stated that one cannot effectively treat an unborn 
child without treating the woman carrying it, believing that a healthy 
pregnancy resulting in the delivery of a healthy baby requires a 
healthy mother. One commenter stated that low-income women deserve 
actual, not merely incidental, health insurance coverage that covers 
all of their health needs. Several commenters indicated that women 
deserve comprehensive care, not simply care related to the unborn 
child, and several referred to the proposal as ``reducing women to 
vessels.''
    Commenters also felt that extending comprehensive care to the 
mother would result in women who are healthier and ultimately would 
result in better birth outcomes. One commenter felt that targeting 
coverage for the unborn child, not the mother raised ethical issues and 
puts the mother's health at risk by providing inadequate coverage.
    Commenters expressed concern or questioned whether care would be 
extended to women for injury or disease not related to the pregnancy, 
such as skin melanoma, emergencies, accidents, broken bones, or mental 
illness. One commenter advocated for coverage of drug treatment 
programs for mothers who were addicted.
    Several commenters indicated that the focus should be on addressing 
the health care needs of millions of uninsured women, and one advocated 
expanded access to uninsured women to ``take care of those already 
here.''
    Response: The SCHIP statute provides States with broad flexibility 
in defining those services for which they choose to provide coverage 
under their State plan. States have the flexibility to define and 
provide comprehensive services that are related to the pregnancy or to 
conditions that could complicate the pregnancy. Under the regulation, 
States would define what services would be included. Services related 
to conditions that could complicate the pregnancy include those for 
diagnosis or treatment of illnesses or medical conditions that might 
threaten the carrying of the unborn child to full term or the safe 
delivery of the unborn child. Within these parameters, States have 
discretion in the services for which coverage can be provided.
    However, SCHIP eligibility is limited by statute to targeted low-
income children and there must be a connection between the benefits 
provided and the health of the unborn child.
    We would point out that the regulation is intended to reach 
individuals who are currently uninsured and who therefore lack access 
to any services.
    Comment: Commenters believe that, by permitting States to extend 
SCHIP coverage to unborn children, this rule would effectively deny 
women access to needed postpartum care. They felt that pregnancy-
related care should be

[[Page 61969]]

viewed as a continuum comprising three distinctly important periods: 
prenatal, intrapartum (during labor and delivery), and postpartum care. 
Commenters stressed that a woman's pregnancy-related health care needs 
do not end the moment her child is born. The commenters stated that the 
woman still requires many pregnancy-related services and optimal 
maternal health is important for overall family health. Under the 
proposed regulation, covered care would be available only during ``the 
period from conception to birth.'' These commenters are concerned that 
the moment after the birth of the child, a woman would lose any 
incidental covered care that she had received as a result of having an 
SCHIP-covered unborn child in utero. The commenters continued with 
their concern that woman would therefore not be eligible for any care 
during the postpartum period including but not limited to the treatment 
of hemorrhage, infection, episiotomy repair, C-section repair, family 
planning counseling, treatment of complications after delivery, and 
postpartum depression. Several cited this proposal as bad public policy 
that will ultimately result in increased health care costs.
    One commenter questioned whether hospitals and practitioners would 
be compelled to release women immediately after delivery due to lack of 
maternal coverage. Others expressed concern that some women will leave 
the hospital immediately after birth to avoid expenses, against ACOG 
and AAP recommendations, while others will not attend the four to six 
week recommended follow-up visits (resulting in decreased maternal 
health).
    Several commenters noted that if the mother is ill and does not get 
the care she needs, she may not be able to take care of her children, 
especially an infant, appropriately. This indirectly jeopardizes the 
health of women, children and families, and will inevitably result in 
compromised health outcomes for both the woman and the unborn child.
    Commenters quoted ACOG and AAP's recommendation that four to six 
weeks after delivery the mother should receive a postpartum review and 
examination. Several commenters referenced Medicaid statute and 
regulations as an illustration of how public programs rely on 
established medical standards (Sec.  1902(1) of the Act as defined in 
Sec.  1902(a)(10)(a) (clause VII).
    One commenter also indicated that lack of family planning 
counseling creates greater risk of unintended pregnancy with serious 
social and economic costs to the woman, State, and community. Others 
noted that maternal mortality represents a serious health problem, 
particularly for African-American women.
    One commenter stated that coverage for postpartum care and 
assistance in enrollment in Medicaid or SCHIP should be a requirement 
for States electing to implement this rule, even in cases where the 
child is not born alive.
    Commenters asked clarifying questions such as: would postpartum 
follow-up be covered; would emergencies arising to the mother following 
delivery be covered; and would benefits such as the 60 days postpartum 
care available through Medicaid be provided?
    Response: Again, the intent of this rule is to extend access to 
individuals who are currently uninsured. We believe that the benefits 
that would be available to the mother and unborn child are indeed 
vital.
    The SCHIP statute provides States with flexibility in defining 
those services for which they choose to provide coverage under their 
State plan. States have the flexibility to define and provide services 
that are related to the pregnancy or to conditions that could 
complicate the pregnancy. Within these parameters, States have 
significant flexibility in the services for which coverage can be 
provided.
    Commenters are correct that care after delivery, such as postpartum 
services could not be covered as part of the title XXI State Plan, 
(unless the mother is under age 19 and eligible for SCHIP in her own 
right), because they are not services for an eligible child.
    Comment: One commenter expressed concern that there are those who 
would define care to include abortion, which the commenter felt would 
be a complete twisting of the term ``care.'' This commenter did not 
want abortions covered by the government.
    Response: FFP is available in expenditures for abortions under 
SCHIP only as specifically authorized by the Congress in the statute 
and this will not change with this regulation. Section 2105(c)(1) and 
(c)(7) of the Act sets limitations on payment for abortion services 
under SCHIP. Section 457.475 of the January 2001 SCHIP final 
regulation, specifies that FFP is not available for expenditures for 
abortion, or for expenditures for the purchase of health benefits 
coverage that includes coverage of abortion services, unless the 
abortion is necessary to save the life of the mother or the abortion is 
performed to terminate a pregnancy resulting from an act of rape or 
incest. Additionally, FFP is not available to a State for expenditures 
of any amount under its title XXI plan to assist in the purchase, in 
whole or in part, of health benefits coverage that includes coverage of 
abortion other than to save the life of the mother or resulting from an 
act of rape or incest.
    Comment: Commenters asserted that fetal surgery saves lives, as in 
the case of spina bifida or repair of heart defects and asserted that 
this type of coverage should be offered to unborn children.
    Response: We provided a discussion of ``fetal medicine'' or 
``fetology'' in the preamble to this rule as an example of a distinct 
and important medical specialty that represents emerging opportunities 
for services specifically targeted to the care of the unborn child.
    Consistent with section 2103 of the Act, States have flexibility in 
defining the benefits that are included as part of the health coverage 
provided to targeted low-income children. The specific prenatal and 
pregnancy related benefits included in a State's benefit package would 
be the decision of the State.
    Comment: The commenters stated that the practices of ``fetal 
surgery,'' as described in the March 5, 2002 proposed rule, have been 
deeply plagued by both clinical and ethical problems. The commenters 
wanted to make clear that there is no such thing as fetal surgery 
independent of the mother, and that surgery on the unborn child occurs 
only through the woman's body and can occur only with her consent. 
Commenters stated that surgery on the fetus presents significant risks 
to the pregnant woman's life and health and the impact this surgery can 
have on pregnant woman should be recognized and strongly considered. 
Commenters continued that modest improvements (or no improvements at 
all) in the outcomes for fetuses with neonatal operations often happen 
in conjunction with severe obstetrical complications for the woman.
    In support of the medical and ethical controversy surrounding fetal 
surgery, one commenter cited several articles: Bruner et al, Fetal 
surgery for myelomeningocele and the incidence of shunt dependent 
hydrocephalus JAMA 1999;282;1819-25; Sutton et al, Improvement in 
hindbrain herniation demonstrated by serial fetal magnetic resonance 
imaging following fetal surgery for myelomeningocele JAMA 
1999;282:1826-31; Simpson JL, Fetal surgery for myelomeningocele: 
Promise, progress, problems JAMA 1999;282;1873-4; Lyerly et al, 
Attitudes of maternal-fetal specialists concerning maternal-fetal 
surgery, American Journal of Obstetrics and Gynecology 2001;185;1052-8; 
Lyerly et al, Toward the ethical evaluation and use of

[[Page 61970]]

maternal-fetal surgery. Obstetrics and Gynecology 2001;98;689-97. This 
commenter also cited a National Institutes of Health conference 
examining the scientific, clinical, and ethical issues related to 
maternal-fetal surgery.
    The commenters stressed that a review of the medical literature 
shows that maternal-fetal surgery is still considered experimental or 
investigational by such medical professional organizations as the 
American College of Obstetricians and Gynecologists. One commenter 
quoted a member survey of the Society for Maternal-Fetal Medicine, 
which found that 57 percent of respondents believed that a moratorium 
should be imposed on open fetal surgery for nonlethal conditions until 
a multicenter controlled trial is completed. The commenter noted that 
most of the conditions listed by the March 5, 2002 proposed rule are 
exceptionally rare and the mortality rates following surgery have been 
high. Another commenter indicated that current Medicaid programs and 
most private insurers do not cover experimental procedures.
    In addition, the commenters expressed concern that there is no 
research or data to support the assertion that fetal surgery can 
ultimately lower postpartum medical care costs. They indicated that 
while long-term research in this field may someday produce such 
results, the March 5, 2002 proposed rule's claims that cost-savings 
currently exist is without support.
    The commenters noted that despite the fact that fetal surgery is at 
this stage largely experimental, the March 5, 2002 proposed rule states 
that the ``Secretary would like to permit the States the flexibility to 
pay for the medical expenses related to unborn children,'' suggesting a 
departure from longstanding State and Federal policy regarding denying 
coverage for experimental treatments. One commenter indicated that this 
rule seems to signal a radical shift in policy regarding experimental 
treatments, and if this is the case, there are many patients suffering 
from cancer and other diseases who might benefit from an overall change 
in policy regarding experimental treatments. The commenter refers to a 
May 26, 1993, letter to State Medicaid Directors and cites the 
following: Miller by Miller v. Whitburn, 10 F.3d 1315 (7th Cir. 1993); 
Rush v. Parham, 625 F.2d 1150, 1156 (5th Cir. 1980); Weaver v. Reagan, 
886 F.2d 194 (8th Cir. 1989).
    In addition, commenters are concerned that since fetal surgery is 
so new and lacking in proven benefits that it really should be 
considered research. Commenters asserted that this would make it 
appear, then, that this rule is promoting unreviewed and unapproved 
research on pregnant human subjects, in conflict with statutes 
regarding human subjects of medical research (Anne E. Drapkin Lyerly, 
MD et al. Toward the Ethical Evaluation and Use of Maternal-Fetal 
Surgery, 98 ACOG 689 (2001).) They also stated that fetal surgery is 
experimental and it is highly unlikely that this would be covered by 
Medicaid or any other insurance program (45 CFR 46.101 through 45 CFR 
46.409, promulgated pursuant to the Health Research Extension Act, 42 
U.S.C. 289.)
    Response: As we have said previously, nothing in this rule is 
intended to affect the traditional relationship between the pregnant 
woman and her physician. Questions of medical treatment for the 
pregnant woman and/or her fetus are a decision between the pregnant 
woman and her physician and nothing in this rule would circumvent or 
alter that relationship.
    Additionally, we are not saying that States that choose to extend 
coverage to the unborn child must provide fetal medicine or fetology. 
Consistent with section 2103 of the Act, States have flexibility in 
defining the benefits that are included as part of the health coverage 
provided to targeted low-income children. As such, States have always 
had the ability under SCHIP to provide treatments or surgery that may 
be considered investigational or experimental if they determine they 
are medically necessary. We note that States have the same option for 
providing such coverage under Medicaid. But, the specific prenatal and 
pregnancy related benefits included in a State's benefit package would 
be the decision of the State.
    We do not have data that fetal surgery can ultimately lower 
postpartum medical care costs and did not make this assertion. In the 
preamble to the proposed rule we said that conditions in utero that can 
be medically or surgically corrected can have beneficial consequences 
that 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.
    Comment: Commenters stated that according to this rule, the unborn 
child is the patient and the one eligible for services and, as such, 
they asked, ``When the needs of the fetus and mother diverge, to whom 
is the medical professional's ethical duty owed?'' They asked whether 
SCHIP or Medicaid would still pay for surgery if the unborn child were 
endangered to save the life of the pregnant women? Commenters stated 
that this proposal raises troubling ethical issues for physicians 
because ancillary health care potentially puts women's health at risk.
    Response: We understand the commenters' concerns, and want to be 
very clear that nothing in this rule is intended to affect the 
traditional relationship between the pregnant woman and her physician. 
Questions of medical treatment for the pregnant woman and/or her unborn 
child are a decision between the woman and her physician and nothing in 
this rule would circumvent or alter that relationship.
    Comment: Many commenters were also concerned that coverage would 
not be extended in the case of miscarriage or stillbirth since the 
SCHIP beneficiary would no longer exist. Many cited such a policy as 
disrespectful to women.
    Response: Services provided under those circumstances would be 
allowable costs. We believe that providing uninsured women with access 
to health insurance coverage that benefits both mother and child 
contributes to the respect of women. This proposed regulation is one 
option that would become available to States and is one action out of 
many that the Secretary has taken to promote the health of women.
    Comment: Another commenter indicated that the rule allows for 
unscrupulous providers to bill twice for some services--once on the 
mother's account and a second time on the unborn child's account.
    Response: We believe that States with separate SCHIP programs have 
implemented sufficient safeguards to address the commenter's concerns. 
Specifically, Sec.  457.980 of the June 25, 2001 SCHIP implementing 
rule requires States to establish and maintain systems to identify, 
report, and verify the accuracy of claims for those enrolled children 
who meet the requirements of section 2105(a) of the Act, where enhanced 
Federal medical assistance computations apply. Additionally, States are 
required by Sec.  457.915 of the January 2001 SCHIP final rule to 
establish procedures for ensuring program integrity and detecting 
fraudulent or abusive activity.
    Comment: The commenter questioned why prenatal care should be 
provided to an expectant mother and indicated care should wait until 
after delivery.
    Response: Prenatal care has been clearly shown to reduce the 
likelihood of premature delivery or low birth weight, both of which are 
associated

[[Page 61971]]

with a wide range of congenital disabilities as well as infant 
mortality. Moreover, proper prenatal care can detect a great number of 
serious and even life-threatening disabilities, many of which can now 
be successfully treated in utero. Ensuring prenatal care for more 
children will significantly help reduce infant mortality and morbidity 
rates and will spare many infants from the burden of congenital 
disabilities and reduce the cost of treating those congenital 
disabilities after birth.
    Comment: The commenter noted that States have the option under 
SCHIP to offer a benefit package that is equivalent to benchmark 
coverage, coverage under a State-based plan, or Secretary-approved 
coverage. The commenter questioned how a State would determine a 
comparable or actuarially equivalent benefit package for unborn 
children.
    Response: Rather than carving out services and establishing a 
benefit package exclusively for unborn children as the commenter 
suggests, we would expect the prenatal benefits for unborn children to 
be part of the State's overall health benefits coverage package that is 
consistent with section 2103 of the Act and Sec.  457.410 of the final 
regulation.
    The definition of child health assistance at Sec.  457.402 provides 
a comprehensive listing of services that includes prenatal care along 
with other services that would be pregnancy-related. These are services 
that many States already provide to SCHIP eligible children who become 
pregnant as part of their current benefit coverage
    Comment: One commenter asked whether Medicaid currently covers the 
types of services listed in the March 5, 2002 proposed rule. If so, the 
commenter asked how this could be so, since unborn children are not 
covered under Medicaid. If not, the commenter asked whether there are 
estimates of the cost of providing fetology services to Medicaid 
eligibles, since States cannot offer higher income children greater 
benefits than lower income children.
    Response: Under Medicaid, coverage may include services for 
pregnant women that are related to pregnancy (including prenatal, 
delivery, postpartum, and family planning services) and to other 
conditions that may complicate pregnancy. Within those parameters, 
States have broad discretion in what services to cover in their 
Medicaid State plan. While these types of services are available to 
eligible pregnant women under Medicaid, this rule would authorize SCHIP 
coverage of these types of services to unborn children whose mothers 
are not eligible under Medicaid.
    Medicaid and SCHIP are different programs, authorized through title 
XIX and title XXI respectively although States can expand their 
Medicaid program through the enhanced funding made available by title 
XXI. As in Medicaid, the specific prenatal services, which any given 
State will cover under SCHIP is left to the discretion of the State. 
Inasmuch as States are not required to cover the same package of 
benefits relating to prenatal care under Medicaid and SCHIP, States can 
cover the same, fewer or more services under SCHIP than Medicaid. In 
the event that a State decided to cover certain prenatal services 
provided to an unborn child under SCHIP, but not to pregnant women 
under Medicaid, the commenter seems concerned that the State would be 
in violation of section 2102(b)(1)(B)(i) of the Act.
    Section 2102(b)(1)(B)(i) of the Act prohibits States from covering 
targeted low-income children at a higher income level without covering 
children at a lower-income level within any defined group of targeted 
low-income children. An unborn child who is eligible under SCHIP and a 
lower-income pregnant woman who is eligible under Medicaid are not 
within the same defined group of targeted low income children under 
SCHIP. Accordingly, the provisions of section 2102(b)(1)(B)(i) of the 
Act would not apply.

6. Maintenance of Effort

    Comment: One commenter underscored that the Maintenance of Effort 
requirements under title XXI should apply to unborn children to the 
same extent that they apply to born children. Several other commenters 
opposed application of the maintenance of effort requirements to unborn 
children. These commenters felt that doing so punishes States that 
already have expanded Medicaid coverage to pregnant women beyond the 
minimum required and may discourage States from expanding coverage to 
new populations in the future. They also suggested revising the final 
rule to clarify that any State that expanded eligibility for pregnant 
women after June 1, 1997 be permitted to convert that expansion to 
SCHIP.
    One commenter asked whether a proposal to convert optional coverage 
for pregnant women with incomes from 150 percent to 185 percent of the 
Federal poverty level (FPL) from title XIX to title XXI funding would 
be consistent with the March 5, 2002 proposed rule. This commenter 
asked specifically whether a State could shift the current optional 
coverage of pregnant women under Medicaid up to 185 percent of the FPL 
to SCHIP, expand the income limit to 200 percent of the FPL and use the 
savings to fund the expansion.
    A final commenter felt that the purpose of the maintenance of 
effort provision in the March 5, 2002 proposed rule was unclear. This 
commenter advocated an interpretation that ``SCHIP coverage for fetuses 
picks up where Medicaid coverage of pregnant women ends.'' However, the 
commenter was concerned that, through application of the maintenance of 
effort provisions of title XXI, we might be purporting to redefine a 
child for purposes of Medicaid.
    Response: We agree with the first commenter that title XXI's 
maintenance of effort requirements apply equally to unborn and born 
children. We do not agree that such application is punitive. By 
including section 2105(d) in the SCHIP legislation, the Congress sought 
to ensure that title XXI funds were used by States to expand coverage 
to new populations, not to take the place of Medicaid expenditures for 
populations already covered. Application of this principle is no 
different when coverage of prenatal care for an unborn child is at 
issue, than when coverage of children post-birth is at issue.
    Accordingly, in applying the maintenance of effort requirements in 
the case of unborn children, enhanced Federal Medical Assistance 
Percentages (FMAP) will not be available if a State adopts income and 
resource standards and methodologies for purposes of determining 
eligibility for Medicaid under a group for pregnant women that are more 
restrictive than those applied under the policies of the State plan in 
effect on June 1, 1997. We are applying the maintenance of effort 
requirements to the Medicaid eligibility groups for pregnant women 
because the unborn child of a pregnant woman who is eligible for 
Medicaid receives the benefits of the prenatal care covered by 
Medicaid. Thus, to allow States to cover this an unborn child under 
SCHIP would result in precisely the kind of cost shifting between 
Medicaid and SCHIP that the Congress intended to preclude in Sec.  
2105(d) of the Act. Application of the maintenance of effort 
requirements in this way does not in any way alter the definition of 
child for purposes of Medicaid.
    We agree with the commenters that the maintenance of effort 
requirements do not apply with respect to expansions of coverage for 
pregnant women implemented after June 1, 1997 (just as they do not 
apply to expansions of Medicaid coverage of children implemented after 
June 1, 1997.)

[[Page 61972]]

However, we do not believe that revision of this rule is necessary, as 
this fact is clearly stated in section 2105(d) of the Act as well as 
the implementing regulations at 42 CFR 433.11(b)(1).
    Thus, States generally will not be permitted to drop optional 
coverage of pregnant women under Medicaid and pick up coverage of 
unborn children in the same income range under SCHIP, because most 
States expanded Medicaid coverage of pregnant women prior to June 1, 
1997. However, as stated above, expansions implemented after June 1, 
1997 are not subject to the maintenance of effort requirements. Thus, a 
State could eliminate an optional expansion of Medicaid coverage for 
pregnant women implemented after June 1, 1997 and pick up coverage for 
the unborn children of the affected women under SCHIP. Similarly, if a 
State does not already cover pregnant women between 185 percent and 200 
percent of the Federal poverty level under Medicaid, it could extend 
coverage to unborn children in that income range under this regulation.
    To permit a State to eliminate coverage of pregnant women 
implemented on or before June 1, 1997, and pick up coverage of their 
unborn children under SCHIP, would require that the Secretary waive the 
maintenance of effort requirements found in section 2105(d) of the Act. 
The Secretary has never approved a waiver of these requirements in the 
past and we do not believe that doing so would be consistent with the 
objectives of title XXI, as required by section 1115 of the Act.

7. Budget Implications

    Comment: Numerous commenters noted that this rule does not bring 
new funding to SCHIP. Some stated that this rule also would increase 
the financial burden on SCHIP by expanding eligibility and could 
potentially result in inadequate funds for SCHIP coverage. Others noted 
that some States already are having trouble maintaining their SCHIP 
programs and may be freezing enrollment of currently eligible children. 
Some also noted that the high costs of in utero treatments make 
expanding care under this regulation less likely. One commenter stated 
that the expansion in eligibility should be accompanied by additional 
funds to allow for an increase in enrollment, not just a shift in 
priorities of the ``type'' of uninsured child to be covered.
    One commenter felt that the lack of funds for this rule means that 
States also would have access to less Federal funds to provide care to 
poor immigrant women. Another commenter cited concern that because the 
current funding for SCHIP is not adequate to support comprehensive 
care, the rule could represent an unfunded mandate on States.
    A number of these commenters argued that the Department should be 
making efforts to address the lack of funds to cover existing children. 
Some suggested that money should be added to other programs to provide 
prenatal care. One commenter noted in particular that the 
Administration's new budget contains no additional funding for the 
Maternal and Child Health grants, which could provide additional 
resources to pregnant women and their children. Some of the commenters 
noted that some bills currently pending before the Congress include 
additional funds for coverage of pregnant women, and that these funds 
would be available to States that already have expanded coverage to 
pregnant women under Medicaid.
    Response: We recognize that States do not have access to unlimited 
Federal matching funds for SCHIP. As a result, each State will have to 
set its own priorities regarding the populations and services to be 
covered under its SCHIP program. This rule gives States an additional 
option--to cover prenatal care for unborn children under SCHIP. Some 
States may not choose to exercise this option, because they lack 
sufficient funds or for other reasons. This choice is left to each 
State.
    Nearly all States still have unspent SCHIP funds and the President 
has proposed that the Congress extend the allotments from previous 
years that would otherwise be returned to the Federal treasury.
    Finally, inasmuch as the regulation provides States with an option 
to extend coverage to unborn children under SCHIP, but does not mandate 
that they do so, it does not represent an unfunded mandate for States.
    Comment: Some commenters mentioned that healthy babies are less 
expensive to care for than unhealthy babies, so that the cost of 
prenatal care can be recouped through reduced expenditures on 
subsequent intervention and surgeries. The commenters noted that this 
rule will prevent taxpayers from having to bear the burden of unhealthy 
babies, teens, and adults.
    Response: We agree with the commenters. As explained in the March 
5, 2002 proposed rule, it is well established that access to prenatal 
care can improve health outcomes during infancy as well as over a 
child's life. Since healthy babies and children require less medical 
care than babies and children with health problems, provision of 
prenatal care will result in lower medical expenditures for the 
affected children in the long run.
    Comment: One commenter noted that this rule is more costly than 
other options, since States will receive the enhanced match available 
for services provided under SCHIP instead of their regular Medicaid 
match. The commenter further notes that, with the strict budget 
neutrality requirements of Health Insurance Flexibility and 
Accountability (HIFA), States are cutting back benefits to provide 
coverage. The commenter argues that cost savings derived from providing 
prenatal services through Medicaid could be used to provide benefits 
under HIFA.
    Response: We agree that States can accomplish the goal of this 
regulation--increased access to prenatal care--by expanding Medicaid 
coverage of pregnant women, just as States can expand coverage to 
children under Medicaid, and that FFP would be available for services 
provided under the expansion at the State's regular Medicaid match.
    With the passage of title XXI, the Congress created a greater 
incentive for States to expand coverage of low-income children. By 
expanding the definition of targeted low-income child to include an 
unborn child, we are extending the increased incentive created by the 
Congress to include coverage of prenatal services for unborn children.
    HIFA provides a vehicle for States seeking to expand Medicaid 
coverage to populations not typically covered under Medicaid. Nothing 
in this regulation would preclude States from incorporating the 
provision of prenatal care into a HIFA waiver proposal, and CMS staff 
is available to work with any State that may want to do so.

8. Miscellaneous

    Comment: Several commenters noted that generally, an American 
citizen is only counted for taxation purposes after they are born. They 
asked if granting of legal personhood under this rule mean that unborn 
children could be taxed inside the womb? Alternatively, the commenters 
asked, could they be claimed as a deduction before they are born?
    Response: The regulation does not purport, nor do we have the 
authority, to alter the definition of a child or individual for 
purposes of Federal or State tax statutes or regulations.

[[Page 61973]]

IV. Provisions of the Final Rule

    In the preamble of the March 5, 2002 proposed rule, we noted an 
error that we have corrected. The preamble stated that we proposed to 
revise the definition at Sec.  457.10 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 should have been stated 
as up to age 19 and has been corrected. In this final rule, we are 
adopting the provisions of the March 5, 2002 proposed rule, without 
change.

V. Collection of Information Requirements

    States that opt to extend eligibility to unborn children must 
submit a State plan amendment in accordance with Sec.  457.60. OMB has 
approved information collection requirements associated with SCHIP 
State plan amendments under OMB approval number OMB-0938-0841.

VI. Regulatory Impact Statement

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    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 in any 1 year).
    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 $6 to $29 
million in any 1 year. 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 604 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 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a 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 final rule does 
not meet the criteria for having Federalism implications. This 
provision does 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.
    This final rule revises and clarifies 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 developed cost estimates based on the following assumptions and 
calculations. We excluded from the calculations a few States that 
already have eligibility for pregnant women under SCHIP, as well as 
those that appear likely to exhaust their Federal SCHIP funding at some 
point. We assumed that each remaining State would have a one-third 
probability of taking the proposed option to cover unborn children. The 
increase in SCHIP spending for a State picking up the option was based 
on Current Population Survey data on the number of infants relative to 
the total population of children between 100 percent and 200 percent of 
poverty in the State. The infant count was used as a proxy for pregnant 
women. Per-person costs were assumed to be twice that of a child on 
SCHIP.
    The costs also include an increase in Medicaid spending as a result 
of the rule. The reason for this is that, with more SCHIP allotments 
being spent on unborn children, less is available for redistribution to 
States that expend all their allotments. Some of these States will run 
short of funds, and those that are using Medicaid expansions in their 
SCHIPs will get FFP at the regular matching rate, thus increasing title 
XIX expenditures.
    Regarding state take-up: The estimating model is based on iterative 
simulations using the one-third participation probability assumption, 
so there is not a specific set of States that we assume will take the 
option. Although on average the number of states participating is about 
a dozen.
    Based on the assumptions, we estimate that the budget impact will 
be $330 million over a 5-year period. Please see the table below.

                              Net Medicaid and SCHIP Costs--With Buyout of Post-BBA
----------------------------------------------------------------------------------------------------------------
                                  2003          2004          2005          2006          2007         2003-7
----------------------------------------------------------------------------------------------------------------
Federal cost................           98            44            81            93            14           330
----------------------------------------------------------------------------------------------------------------

    Therefore, the provisions set forth in this rule will not have an 
impact of $110 million or more in any one year. Neither is this rule 
expected to impose an unfunded mandate on States exceeding $110 million 
in any 1 year. Therefore, we have not prepared an analysis of cost and 
benefits as required by E.O. 12866 and the Unfunded 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,

[[Page 61974]]

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.

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 
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 
(b)(1).
    B. Add a new 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 section 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) For States that elect to extend eligibility to unborn children 
under the approved Child Health Plan, 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 by adding 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: August 4, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.

    Approved: August 8, 2002.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-24856 Filed 9-27-02; 8:45 am]
BILLING CODE 4120-01-P