[Federal Register Volume 70, Number 188 (Thursday, September 29, 2005)]
[Notices]
[Pages 56901-56909]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-19481]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2230-FN]


State Children's Health Insurance Program (SCHIP); Redistribution 
of Unexpended SCHIP Funds From the Appropriation for Fiscal Year 2002

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

ACTION: Final notice.

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SUMMARY: This final notice describes and finalizes the procedure, which 
was previously published in the Federal Register on January 19, 2005 
(70 FR 3036) as a notice with comment period, for redistribution of 
States' unexpended Federal fiscal year (FY) 2002 SCHIP allotments 
remaining at the end of FY 2004 to those States that fully expended the 
allotments. These redistributed allotments will be available through 
the end of FY 2005 (September 30, 2005).

DATES: The provisions described in this final notice are effective on 
September 29, 2005.

FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.

I. Background

A. Extension of Availability and Redistribution of SCHIP Fiscal Year 
1998 Through 2001 Allotments

    Title XXI of the Social Security Act (the Act) sets forth the State 
Children's Health Insurance Program (SCHIP) to enable States, the 
District of Columbia, and specified Commonwealths and Territories to 
initiate and expand health insurance coverage to uninsured, low-income 
children. In this notice, unless otherwise indicated, the terms 
``State'' and ``States'' refer to any or all of the 50 States, the 
District of Columbia, and the Commonwealths and Territories. States may 
implement the SCHIP through a separate child health program under title 
XXI of the Act, an expanded program under title XIX of the Act, or a 
combination of both.
    Under section 2104(e) of the Act, the SCHIP allotments for a 
Federal fiscal year are available to match expenditures under an 
approved State child health plan for an initial 3-fiscal year ``period 
of availability,'' including the fiscal year for which the allotment 
was provided. After the initial period of availability, the amount of 
unspent allotments is reallotted and continues to be available during a 
subsequent period of availability, specified in SCHIP statute. With the 
exception described below for the allotments made in FYs 1998 through 
2001, allotments that are unexpended at the end of the initial 3-year 
period of availability are redistributed from the States that did not 
fully spend the allotments to States that fully spent their allotments 
for that fiscal year.
    The Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000 (BIPA), enacted as part of Pub. L. 106-554 on 
December 21, 2000, amended title XXI of the Act in part by establishing 
requirements for a subsequent extended period of availability with 
respect to the amounts of States' FY 1998 and FY 1999 allotments that 
were unspent during the initial 3-year period of availability.

[[Page 56902]]

Under the BIPA amendments, the subsequent period of availability (after 
the initial 3-year period of availability) for States' unspent FY 1998 
and 1999 allotments was extended to the end of FY 2002.
    Section 1 of the Extension of Availability of SCHIP Allotments Act, 
Pub. L. 108-74, enacted on August 15, 2003, amended title XXI of the 
Act to establish further requirements for the subsequent period of 
availability associated with the unexpended amounts of States' FYs 
1998, 1999, 2000, and 2001 allotments during the initial 3-year period 
of availability, or subsequent period of availability, relating to 
those fiscal years. Specifically, Pub. L. 108-74 amended section 
2104(g) of the Act to extend the subsequent period of availability 
associated with the allotments and redistribution of allotments for FYs 
1998 through 2000 through the end of fiscal year 2004. Pub. L. 108-74 
also extended the subsequent period of availability for the 
redistributed and extended FY 2001 allotments through the end of fiscal 
year 2005.
    As amended by Pub. L. 108-74, section 2104(g) of the Act prescribes 
a methodology and process that includes the retention of certain 
amounts of unspent FY 2000 and FY 2001 allotments that would remain 
available to the States that did not fully expend their FY 2000 or FY 
2001 allotments (retained allotments), and the redistribution of 
unspent FY 2000 or FY 2001 allotments that would not be retained but 
which would be redistributed to those other States that fully spent 
their FY 2000 or FY 2001 allotments (redistributed allotments).

B. Availability and Redistribution of SCHIP Fiscal Year 2002 Allotments

    Section 2104(e) of the Act provides that amounts allotted to a 
State shall remain available for expenditures by the State through the 
end of the second succeeding fiscal year, except that amounts 
reallotted to a State are available for expenditure by the State 
through the end of the fiscal year in which they are reallotted. 
Section 2104(f) of the Act requires the Secretary to ``determine an 
appropriate procedure for redistribution of allotments'' from States 
that have not expended their allotments for the fiscal year to States 
that have fully expended their allotments. Section 2104(g) of the Act, 
as added by BIPA and amended by Pub. L. 108-74, sets forth the process 
for reallotting unexpended amounts of SCHIP allotments for FY 1998 
through FY 2001 (as well as for the extension of the period of time to 
expend allotments). Section 2104(g) of the Act does not address the 
treatment of States' unexpended SCHIP allotments for FY 2002 and the 
following fiscal years. Under sections 2104(e) and (f) of the Act, the 
Secretary is required to establish a procedure that provides for the 
treatment of States' unused SCHIP allotments for FY 2002 and following 
fiscal years. In particular, in applying section 2104(f) of the Act, 
following the initial 3-year period of availability referenced in 
section 2104(e) of the Act, the Secretary must determine an 
``appropriate procedure for redistribution'' of the amounts of States'' 
FY 2002 SCHIP allotments from States that did not expend the allotments 
during the 3-year period of availability for that fiscal year (that is, 
FY 2002 through FY 2004) only to States that fully expended their FY 
2002 allotments during the 3-year period of availability.

C. Expenditures, Authority for Qualifying States To Use Available SCHIP 
Allotments for Medicaid Expenditures, and Ordering of Allotments 
Elections

    Under section 2105(a)(1)(A) through (D) and (a)(2) of the Act and 
before enactment of Pub. L. 108-74, only Federal payments for the 
following Medicaid and SCHIP expenditures were applied against States' 
available SCHIP allotments in the following order: (1) Medical 
assistance provided under title XIX (Medicaid) at the SCHIP enhanced 
Federal medical assistance percentage (FMAP) matching rate with respect 
to the States' Medicaid SCHIP expansion population; (2) medical 
assistance provided on behalf of a child during presumptive eligibility 
under section 1920A of the Act (these funds are matched at the regular 
Medicaid FMAP rate); (3) child health assistance to targeted low income 
children that meets minimum benefit requirements under SCHIP; and (4) 
certain expenditures in the SCHIP that are subject to the 10-Percent 
Limit on non-primary expenditures (including other child health 
assistance for targeted low-income children, health services 
initiatives, outreach, and administrative costs).
    However, section 1(b) of Pub. L. 108'74, as amended by Pub. L. 
108'127, added new section 2105(g) to the Act under which certain 
``Qualifying States'' that met prescribed criteria may elect to use up 
to 20 percent of any of the States' available SCHIP allotments for FY 
1998, 1999, 2000, or 2001 as additional Federal financial participation 
for expenditures under the State's Medicaid program, instead of 
expenditures under the State's SCHIP. As described in the Federal 
Register published on July 23, 2004 (69 FR 44013), if a Qualified State 
submits both 20 percent allowance expenditures and other ``regular'' 
SCHIP expenditures at the same time in a quarter, the 20 percent 
allowance expenditures will be applied first against the available 
fiscal year reallotments. However, the 20 percent allowance 
expenditures may be applied only against the specified available fiscal 
year allotment funds upon which the 20 percent allowances were based.

II. Provisions of the Notice With Comment Period

A. Appropriate Procedure for Redistribution of Unexpended FY 2002 
Allotments

    The notice with comment period, published in the Federal Register 
on January 19, 2005 (70 FR 3036), described our proposal for the 
appropriate procedure for redistribution of States' unexpended FY 2002 
SCHIP allotments, as authorized and required under section 2104(f) of 
the Act.
    Under section 2104(f) of the Act, the Secretary must determine an 
appropriate procedure to redistribute the entire amount of States' 
unexpended SCHIP allotments following the end of the related initial 3-
year period of availability only to those States that fully expended 
the allotments by the end of the initial 3-year period of availability 
(referred to in this notice as the redistribution States). In 
determining the appropriate procedure for reallocating the unused FY 
2002 allotments, our primary consideration was to address, to the 
greatest extent possible, any projected State shortfalls for each of 
the redistribution States that would occur in FY 2005, the fiscal year 
in which the FY 2002 redistribution would occur. We determined these 
State shortfalls in FY 2005 by considering for each redistribution 
State: (1) The projected SCHIP-related expenditures in FY 2005, as 
reflected in the State's November 15, 2004 quarterly budget submission 
(Forms CMS-37 and/or CMS-21B); and (2) the total SCHIP allotments 
available in FY 2005 for the State, exclusive of any FY 2002 
redistribution. For a redistribution State whose FY 2005 projected 
SCHIP-related expenditures are greater than its total SCHIP allotments 
available in FY 2005, the difference between the amounts under (1) and 
(2) for a State represents that State's ``shortfall'' for FY 2005.
    In the procedure for redistributing the unexpended FY 2002 
allotments described in the January 19, 2005 Federal Register notice 
(70 FR 3036),

[[Page 56903]]

only after accounting for the FY 2005 shortfall amounts of the 
Redistribution States did we further redistribute any remaining 
unexpended FY 2002 allotments to the Redistribution States. For 
purposes of consistency with previous fiscal year redistribution 
methodologies, we based the redistribution of the remaining unexpended 
FY 2002 allotments (that is, only after first accounting for the total 
shortfalls for each Redistribution State) on the same redistribution 
methodology as set forth in the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554, enacted 
on December 21, 2000) amending section 2104(g)(1) of the Act. 
Specifically, we allocated the remaining amounts of the unexpended FY 
2002 allotments based on the difference between each of the 
Redistribution States' total SCHIP-related expenditures for the 3-year 
period of availability related to FY 2002 (that is, FY 2002 through FY 
2004) and the State's FY 2002 allotment. The allocation basis is the 
percentage determined by dividing this difference for each 
Redistribution State (including those Redistribution States with a FY 
2005 shortfall) by the total of those differences for all 
Redistribution States.

III. Analysis and Responses to Comments on the Notice With Comment 
Period

    We received three comments with respect to the January 19, 2005 
Federal Register notice, two from States, and one from an organization 
representing American Indian/Alaska Natives for substance abuse 
services. The following describes the comments and provides our 
responses.
    Comment: One comment from a State Office of Health and Human 
Services agreed with the methodology used to determine the FY 2002 
redistribution amounts, but requested that they be recalculated based 
on updated information. In particular, the commenter indicated that the 
use of the expenditure projections for FY 2005 from the State's 
November 15, 2004 submission to the Centers for Medicare & Medicaid 
Services did not adequately reflect its actual expenditures for FY 
2005. In that regard, the State requested that the FY 2002 
redistribution amounts be recalculated based on revised reporting of 
the State's expenditures projections that more accurately represented 
the State's expenditures for FY 2005.
    Response: We agree with the commenter and, in this notice, have 
recalculated the States' FY 2002 redistribution amounts using States' 
updated expenditure projections for FY 2005 from the States' August 15, 
2005 submissions to CMS of Forms CMS-37 and CMS-21B. As indicated in 
the January 19, 2005 Federal Register notice, our primary consideration 
is to address, to the greatest extent possible, any projected State 
shortfalls for each of the Redistribution States that would occur in FY 
2005, the fiscal year in which the FY 2002 redistribution occurs. 
Accordingly, we believe using the States' most recent expenditure 
projections for FY 2005, contained in their August 2005 submissions, 
will provide the best reflection of this information.
    Comment: One comment received from an organization representing 
American Indian/Alaska Natives for substance abuse services provided a 
number of significant observations regarding the SCHIP program with 
respect to tribal issues. In particular, the commenter recommended that 
the FY 2002 SCHIP redistribution should not be redistributed without 
first consulting tribes and tribal governments, and also suggested that 
the Secretary has discretion to require each State to have meaningful 
consultation with tribal governments and to develop a plan for spending 
the redistributions.
    Response: The commenter discussed significant issues relating to 
tribal concerns; however, those comments and the related suggestions 
made are outside the scope of the notice with comment period. In 
particular, the comment did not address the procedure for calculating 
the redistribution of the unexpended FY 2002 allotments. Furthermore, 
with respect to the commenter's suggestion that the FY 2002 
redistribution should not occur without giving the tribes an 
opportunity for consultation, we believe the public comment period with 
respect to the January 19, 2005 Federal Register notice provided that 
opportunity. Therefore, we have not revised the procedure for 
redistribution of States' unexpended FY 2002 allotments with respect to 
this comment.
    Comment: The third comment, from a State Department of Health and 
Human Services, commended CMS for addressing the objectives of the 
program and strongly supported the basic procedure for calculating the 
FY 2002 redistribution amounts in addressing the objectives of the 
SCHIP as described in the January 19, 2005 Federal Register notice.
    Response: We appreciate the support expressed by the commenter. As 
indicated in our response to the first comment above, in this final 
notice, we are retaining the same procedure for calculating the States' 
FY 2002 redistribution amounts methodology as described in the January 
19, 2005 Federal Register notice with comment period. Again, the only 
revision we are making to this procedure, in accordance with our stated 
objective of addressing States' needs to the greatest extent possible, 
is to base the calculation of the FY 2002 redistribution amounts on the 
States' updated FY 2005 expenditure projections as contained in States' 
August 2005 submissions to CMS.

IV. Provisions of the Final Notice

    The only change we are making in this final notice, from the 
January 19, 2005 Federal Register notice with comment period, is to 
recalculate States' FY 2002 redistribution amounts using States' 
updated expenditure projections for FY 2005 as provided in their August 
15, 2005 submissions to CMS of Forms CMS-37 and CMS-21B. Otherwise, the 
procedure for calculating States' FY 2002 redistribution amounts is 
exactly the same as described in the January 19, 2005 Federal Register 
notice with comment period. We believe using the updated FY 2005 
expenditure projections most appropriately reflects the States' needs 
in funding their SCHIP programs.

V. Final FY 2002 Redistribution Amounts

A. Unexpended FY 2002 Allotments

    In Table 1 of this final notice, we set forth the shortfall 
calculation for the 50 States and the District of Columbia. In Table 2 
of this final notice, we set forth the amount of States' unexpended FY 
2002 allotments as reflected by the States' expenditure submissions 
through November 30, 2004. These amounts are used in determining the 
States' FY 2002 redistribution amounts. We established the amount of 
States' unexpended FY 2002 allotments at the end of the initial 3-year 
period of availability based on the SCHIP-related expenditures, as 
reported and certified by States to us on the quarterly expenditure 
reports (Form CMS-64 and/or Form CMS-21) by November 30, 2004. These 
expenditures are applied and tracked against the States' FY 2002 
allotments (as published in the Federal Register on October 26, 2001 
(66 FR 54246), and on November 13, 2001 (correction notice (66 FR 
56902)), and other available allotments, on Form CMS-21C, Allocation of 
the Title XIX and Title XXI Expenditures to SCHIP Fiscal Year 
Allotment.
    By November 30, 2004, all States reported and certified their FY 
2004 fourth quarter expenditures (representing the last quarter of the 
3-

[[Page 56904]]

year period of availability for FY 2002). Expenditures reflected in 
Table 2 below were taken from our Medicaid Budget and Expenditure 
System/State Children's Health Program Budget and Expenditure System 
(MBES/CBES) ``masterfile,'' which represents the State's official 
certified SCHIP and Medicaid expenditure reporting system records 
related to FY 2002 allotments. Based on States' expenditure reports 
submitted and certified through November 30, 2004, the total amount of 
States' FY 2002 SCHIP allotments that were unexpended at the end of the 
3-year period ending September 30, 2004, is $642,617,724.

B. FY 2002 Redistribution Amounts for the Commonwealths and Territories

    Section 2104(g)(1)(A)(ii) of the Act specifies the methodology for 
determining the FY 1998 through FY 2001 redistributed allotments for 
the Commonwealths and Territories that fully expended their SCHIP 
allotments related to those fiscal years. We applied the same 
methodology for purposes of determining an appropriate procedure under 
section 2104(f) of the Act to redistribute the unexpended FY 2002 
allotments remaining at the end of FY 2004. Under this procedure, the 
total FY 2002 allotment amount available for redistribution to the 
Commonwealths and Territories is determined by multiplying the total 
amount of the unexpended FY 2002 allotments available for 
redistribution nationally by 1.05 percent. For the FY 2002 
redistribution calculation, this amount is $6,747,486 (1.05 percent of 
$642,617,724). Only those Commonwealths and Territories that have fully 
expended their FY 2002 allotments will receive an allocation of this 
amount, equal to a specified percentage of the 1.05 percent amount; 
with respect to the FY 2002 allotments, all 5 Commonwealths and 
Territories fully expended those allotments by the end of FY 2004. This 
specified percentage is the amount determined by dividing the 
respective SCHIP FY 2002 allotment for each Commonwealth or Territory 
(that has fully expended its FY 2002 allotment) by the total of all the 
FY 2002 allotments for those Commonwealths and Territories that fully 
expended their FY 2002 allotments.

C. FY 2002 Redistribution Amounts for the States and the District of 
Columbia

    Section 2104(f) of the Act requires the Secretary to determine an 
appropriate procedure for calculating the redistribution amounts for 
each of those States and the District of Columbia that have fully 
expended their allotments; this final notice sets forth the procedure 
for the redistribution of the unexpended FY 2002 allotments. The 
attached tables and table descriptions provide detailed information on 
how the FY 2002 reallotment amounts are calculated. Generally, the FY 
2002 redistribution amounts for the 50 States and the District of 
Columbia were determined as follows:
    First, the total amount available for FY 2002 redistribution 
nationally was established by determining the total amount of 
unexpended FY 2002 allotments remaining at the end of FY 2004, as 
reported by the States through November 30, 2004.
    Second, the total amount available for the FY 2002 redistribution 
to the States and the District of Columbia (not including the 
Commonwealths and Territories) was determined by subtracting the total 
of the FY 2002 redistribution amounts for the Commonwealths and 
Territories from the total available nationally for redistribution.
    Third, the allocation of this total amount available for 
redistribution to the States and District of Columbia is determined by 
determining the ``shortfall'' amounts (if any) for these redistribution 
States that would occur in FY 2005, the fiscal year in which the 
unexpended FY 2002 allotments are actually redistributed. The FY 2005 
shortfall amount, described previously, was determined as the excess 
(if any) of the FY 2002 redistribution States' projected FY 2005 
expenditures (taken from the States' August 15, 2005 budget quarterly 
budget report submissions) over those States' total SCHIP allotments 
available in FY 2005 (not including any potential FY 2002 
redistribution amounts). In this regard, the total available allotments 
in FY 2005 include the following: any remaining FY 2001 reallotments 
carried over from FY 2004 into FY 2005, any remaining 2003 allotments 
carried over from FY 2004 into FY 2005, any remaining 2004 allotments 
carried over from FY 2004 into FY 2005, and the FY 2005 allotments 
(available beginning with FY 2005).
    Fourth, the amount of any unexpended FY 2002 allotments remaining 
after determining and accounting for the shortfall amounts was 
multiplied by a percentage specific to each FY 2002 Redistribution 
State. This percentage was determined for each FY 2002 Redistribution 
State by dividing the difference between that State's total reported 
applicable expenditures for the FY 2002 3-year period of availability 
and the State's FY 2002 allotment related to that period of 
availability, by the total of these differences for all Redistribution 
States.

D. Tables for Calculating the SCHIP FY 2002 Redistributed Allotments

    The following is a description of Table 1 and Table 2, which 
present the calculation of each Redistribution State's FY 2002 SCHIP 
redistribution amount.
    A total of $3,115,200,000 was allotted nationally for FY 2002, 
representing $3,082,125,000 in allotments to the 50 States and the 
District of Columbia, and $33,075,000 in allotments to the 
Commonwealths and Territories. Based on the quarterly expenditure 
reports, submitted and certified by November 30, 2003, 28 States fully 
expended their FY 2002 allotments, 23 States and the District of 
Columbia did not fully expend their FY 2002 allotments, and all 5 of 
the Commonwealths and Territories fully expended their FY 2002 
allotments. For the States and the District of Columbia that did not 
fully expend their FY 2002 allotments, their total FY 2002 allotments 
were $1,413,648,379 and the total expenditures applied against their FY 
2002 allotments were $771,030,655. Therefore, the total amount of 
unexpended FY 2002 allotments at the end of FY 2004 equaled 
$642,617,724 ($1,413,648,379 minus $771,030,655). As discussed in the 
January 19, 2005 Federal Register notice with comment period, no 
maintenance of effort (MOE) reductions were necessary with respect to 
the FY 2002 allotments. Therefore, the total amount of the FY 2002 
allotments unexpended at the end of FY 2004 equaled $642,617,724 
($642,617,724 plus $0 related to the MOE provision).
    In accordance with the redistribution calculation for FY 2002 
described above, $6,747,486 is redistributed to the five Commonwealths 
and Territories, and $635,870,238 redistributed to the 28 
Redistribution States. The total $642,617,724 in FY 2002 redistributed 
allotment amounts will remain available to these States through the end 
of FY 2005.

Key to Table 1--FY 2005 Shortfall Calculation

    Table 1 presents the FY 2005 shortfall calculation for the 50 
States and the District of Columbia.
Column/Description
    Column A = State. Name of State, District of Columbia, the 
Commonwealth or Territory. This is the only column in Table 1 that 
includes Commonwealths and Territories; the

[[Page 56905]]

shortfall calculation in Table 1 is not applicable to the Commonwealths 
and Territories.
    Column B = FY 2001 Retained/Redistributed Allotments Carried Over 
From FY 2004. This column contains the amounts of States' FY 2001 
redistributed or retained allotments carried over from FY 2004 and 
available in FY 2005.
    Column C = FY 2003 Allotments Carried Over From FY 2004. This 
column contains the amounts of States' FY 2003 allotments carried over 
from FY 2004 and available in FY 2005.
    Column D = FY 2004 Allotments Carried Over From FY 2004. This 
column contains the amounts of States' FY 2004 allotments carried over 
from FY 2004 and available in FY 2005.
    Column E = FY 2005 Allotments Initially Available Beginning FY 
2005. This column contains the FY 2005 SCHIP allotments, which are 
initially available in FY 2005, and were published in the Federal 
Register on August 27, 2004 (69 FR 52700).
    Column F = Total Available Allotments In FY 2005 Not Including FY 
2002 Redistribution. This column contains the States' total allotment 
amounts (not including any FY 2002 redistribution amounts) available in 
FY 2005. This amount is the sum of Columns B through E.
    Column G = Projected Expenditures FY 2005. This column contains the 
amounts of States' projected FY 2005 SCHIP and SCHIP-related 
expenditures as contained in the States' August 15, 2005 quarterly 
budget submission.
    Column H = Projected FY 2005 Shortfall Not Including FY 2002 
Redistribution. This column contains the States' projected FY 2005 
shortfall amounts, calculated as Column G minus Column F.

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[[Page 56907]]


BILLING CODE 4120-01-C

Key to Table 2--Calculation of the Schip Redistribution of the 
Unexpended Allotments for Fiscal Year: 2002

    Table 2 Contains the calculation of States' FY 2002 redistribution.
Column/Description
    Column A = State. Name of State, District of Columbia, the 
Commonwealth or Territory.
    Column B = FY 2002 Allotment. This column contains the FY 2002 
SCHIP allotments for all States, which were published in the Federal 
Register on October 26, 2001 (66 FR 54246) and in the correction notice 
on November 13, 2001 (66 FR 56902).
    Column C = Expenditures Applied Against FY 2002 Allotment. This 
column contains the cumulative expenditures applied against the FY 2002 
allotments, as reported and certified by all States through November 
30, 2004.
    Column D = Unexpended FY 2002 Allotments Or ``Redistribution.'' 
This column contains the amounts of unexpended FY 2002 SCHIP allotments 
for States that did not fully expend the allotments during the 3-year 
period of availability for FY 2002 (FYs 2002 through 2004), and is 
equal to the difference between the amounts in Column B and Column C. 
For States that did fully expend their FY 2002 allotments during the 
period of availability, the entry in this column is ``REDISTRIBUTION.'' 
The MOE amount is added to the total of the amounts of the States' 
unexpended FY 2002 allotments in this column at the bottom of Column D. 
However, since the MOE is $0, $642,617,724 represents the total amount 
available for the FY 2002 redistribution ($642,617,724, the total 
unexpended FY 2002 allotments, plus $0, the MOE provision amount).
    Column E = Projected FY 2005 Shortfall. This column contains the 
projected ``shortfall'' amounts for the redistribution States, taken 
from Column H, Table 1. If there is no projected shortfall for the 
Redistribution State, the entry in this column is ``NO Shortfall.'' If 
the State is not a Redistribution State, the entry in this column is 
``NA.'' For the Commonwealths and Territories, the entry in Column E is 
``NA.''
    Column F = For Redistribution States Only FY 2002--FY 2004 
Expenditures. For the Redistribution States only (States that have 
fully expended their FY 2002 allotments), this column contains the 
total amounts of those States' reported SCHIP/SCHIP-related 
expenditures for the years FY 2002 through FY 2004, representing the FY 
2002 3-year period of availability. For those States, Commonwealths, 
and Territories that did not fully expend their FY 2002 allotments 
during the period of availability, the entry in Column F is ``NA.''
    Column G = Redistribution States Only FY 02-04 Expenditures Minus 
FY 02 Allotment. This column contains the amounts of Redistribution 
States' reported SCHIP/SCHIP-related expenditures for each of the years 
FY 2002 through FY 2004 minus the FY 2002 allotment, calculated as the 
entry in Column F minus the entry in Column B.
    Column H = For Redistribution States Percent Of Total 
Redistribution. This column contains each Redistribution State's 
redistribution percentage of the total amount available for 
redistribution, calculated as the entry in Column G divided by the 
total (for Redistribution States only, and exclusive of the 
Commonwealths and Territories) of Column G.
    Column I = FY 2002 Redistributed Allotment Amounts. This column 
contains the amounts of States' unexpended FY 2002 SCHIP allotments 
that are being redistributed to the Redistribution States in addition 
to any shortfall amounts being provided to those States. The amount in 
Column I is calculated as the percentage for each redistribution State 
in Column H multiplied by the total additional amount available for 
redistribution. For the 28 States that have fully expended their FY 
2002 allotments, the total additional FY 2002 redistribution is 
$382,163,614. For the Commonwealths and Territories that have fully 
expended their FY 2002 allotments, the amounts in Column I represent 
their respective proportionate shares (allocated based on their FY 2002 
allotments) of the total amount available for redistribution to the 
Commonwealths and Territories, $6,747,486 (representing 1.05 percent of 
the total amount for redistribution of $642,617,724). For those States 
and the District of Columbia that did not fully expend their FY 2002 
allotments during the 3-year period of availability, the entry in 
Column I is ``NA.''
    Column J = FY 2005 Shortfall Amount. This column contains the 
shortfall amounts for the Redistribution States; the amounts in this 
column are the same as the entries in Column E. The total shortfall 
amount is $253,706,624.
    Column K = Total FY 2002 Redistribution Including FY 2005 
Shortfall. For the Redistribution States, this column reflects the 
total FY 2002 redistribution calculated as the sum of Column I and 
Column J. For the States and the District of Columbia, the total FY 
2002 redistribution amount in FY 2005 is $635,870,238. For the 
Commonwealths and Territories, the total FY 2002 redistribution amount 
in FY 2005 is $6,747,486. The total FY 2002 redistribution amount 
available nationally is $642,617,724.

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[[Page 56908]]

[GRAPHIC] [TIFF OMITTED] TN29SE05.050


[[Page 56909]]


BILLING CODE 4120-01-C

VI. Regulatory Impact Statement

    We have examined the impact of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 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 one year). We have 
determined that this final notice is not a major rule. The States' FY 
2002 SCHIP allotments, totaling $3,115,200,000 were originally 
published in a notice in the Federal Register (66 FR 54246) and 
allotted to States in FY 2002. This final notice does not revise the 
amount of the 2002 allotment originally made available to the States, 
but rather, sets forth the procedure for redistributing those FY 2002 
allotments, which were unexpended at the end of FY 2004 (the end of the 
3-year period of availability referenced in section 2104(e) of the 
Act), and announces the amount of the FY 2002 allotments to be 
redistributed to the redistribution States and the availability of the 
unexpended FY 2002 allotment amounts to the end of 2005. Because 
participation in the SCHIP program on the part of States is voluntary, 
any payments and expenditures States make or incur on behalf of the 
program that are not reimbursed by the Federal Government are made 
voluntarily.
    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 small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$6 million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this final notice 
will not have a significant economic impact on a substantial number of 
small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 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 Core-Based 
Statistical Area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined that 
this final notice will not have a significant impact on the operations 
of a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $120 million. This final notice will 
not create an unfunded mandate on States, tribal, or local governments. 
Therefore, we are not required to perform an assessment of the costs 
and benefits of this notice.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it publishes a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have reviewed this final notice and have determined 
that it does not significantly affect States' rights, roles, and 
responsibilities.
    Low-income children will benefit from payments under this program 
through increased opportunities for health insurance coverage. We 
believe this final notice will have an overall positive impact by 
informing States, the District of Columbia, and Commonwealths and 
Territories of the extent to which they are permitted to expend funds 
under their child health plans using the FY 2002 allotment's 
redistribution amounts.
    In accordance with the provisions of Executive Order 12866, this 
final notice was reviewed by the Office of Management and Budget.

VII. Waiver of Delay in Effective Date

    We ordinarily provide a 30-day delay in the effective date of the 
provisions of a rule in accordance with the Administrative Procedure 
Act (APA) (5 U.S.C. 553 (d)). However, we can waive the 30-day delay in 
effective date if the Secretary finds, for good cause, that such delay 
is impracticable, unnecessary, or contrary to the public interest, and 
incorporates a statement of the finding and the reasons in the rule 
issued. 5 U.S.C. 553(d)(3).
    The provisions of this final notice need to be effective before 
September 30, 2005, the end of FY 2005, because with respect to the 
redistribution of unused allotments under section 2104(e) of the Act, 
``amounts reallotted to a State under subsection (f) [on redistribution 
of unused allotments] shall be available for expenditure by the State 
through the end of the fiscal year in which they are reallotted.'' 
Because CMS needed to receive and analyze the States' expenditure 
estimates as contained in the States' August 15, 2005 submissions, it 
was impracticable to publish this final notice earlier. Furthermore, we 
believe that the most up-to-date expenditure projections for FY 2005 
from the States' August 2005 budget submissions best reflect the needs 
of the States in FY 2005. In order to redistribute the FY 2002 
allotments by the end of FY 2005 (that is, by September 30, 2005) based 
on the most recent FY 2005 estimates, this final notice needs to be 
effective before the end of September 2005, which requires a waiver of 
the 30-day delay in the effective date. We believe it is contrary to 
the public interest not to waive the 30-day delay in effective date. 
Therefore, on the basis that it would be impracticable and contrary to 
the public interest, we find that good cause exists to waive the 
requirement for a 30-day delay in the effective date.

    Authority: (Section 1102 of the Social Security Act (42 U.S.C. 
1302) (Catalog of Federal Domestic Assistance Program No. 93.767, 
State Children's Health Insurance Program))

    Dated: September 15, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: September 26, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05-19481 Filed 9-26-05; 2:34 pm]
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