[Federal Register Volume 72, Number 243 (Wednesday, December 19, 2007)]
[Notices]
[Pages 71915-71921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-6092]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2273-N]
RIN 0938-AO99


State Children's Health Insurance Program (SCHIP); Additional 
Allotments To Eliminate FY 2007 Funding Shortfalls

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

ACTION: Notice.

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SUMMARY: This notice describes the methodology and process we are using 
for determining the amounts of certain States' remaining SCHIP funding 
shortfalls in Federal fiscal year (FY) 2007, in accordance with the 
provisions of the U.S. Troop Readiness, Veteran's Care, Katrina 
Recovery, and Iraq Accountability Appropriations Act, 2007. This notice 
also contains the amounts of the additional allotments to be provided 
to such States to eliminate such FY 2007 funding shortfalls, determined 
in accordance with this methodology.

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

SUPPLEMENTARY INFORMATION:

I. Background

A. Availability and Redistribution of SCHIP Fiscal Year 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. The 50 States, the District of Columbia, and the 
Commonwealths and Territories 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.
    Section 2104(e) of the Act specifies that the SCHIP allotments for 
a Federal fiscal year are available for payment to States for their 
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. Section 2104(f) of the Act specifies 
that the amounts of States' allotments which are not expended during 
the initial 3-year period of availability are to be redistributed to 
those States that have

[[Page 71916]]

fully spent these fiscal year allotments during this period of 
availability in accordance with an appropriate procedure determined by 
the Secretary. Furthermore, section 2104(e) of the Act specifies that 
the amounts of the redistributed allotments continue to be available 
for expenditure by the States receiving these redistributions to the 
end of the fiscal year in which these funds are redistributed.

B. Enactment of NIHRA, UTRA, and Special Rules for Addressing FY 2007 
SCHIP Funding Shortfalls

    In general, under section 2104(e) and (f) of the Act, any 
unexpended SCHIP allotments remaining following the end of the initial 
3-year period of availability would otherwise be redistributed in 
accordance with an appropriate procedure determined by the Secretary. 
However, section 201(a) of the National Institutes of Health Reform Act 
of 2006 (NIHRA) (Pub. L. 109-482, enacted on January 15, 2007) amended 
the SCHIP statute to add a new section 2104(h) of the Act. This new 
subsection provided for special rules to address States' FY 2007 SCHIP 
funding shortfalls. Specifically, in order to address States' FY 2007 
SCHIP funding shortfalls, section 2104(h)(1) of the Act provided for 
the redistribution in FY 2007 of the unexpended FY 2004 allotments 
remaining at the end of FY 2006. Furthermore, section 2104(h)(2) of the 
Act provided for the redistribution of certain amounts of unexpended FY 
2005 allotments which became available for redistribution in months 
after March 31, 2007. On May 29, 2007, we published a notice in the 
Federal Register (72 FR 29502) describing the implementation of section 
201(a) of the NIHRA and containing the amounts of the States' 
redistributed FY 2004 and FY 2005 allotments, determined in accordance 
with the NIHRA.
    In accordance with the methodology established under NIHRA, the 
amounts of the States' projected FY 2007 shortfalls, and the associated 
FY 2004 and FY 2005 redistributed allotments, were determined on a 
monthly basis to address the FY 2007 shortfalls. In that regard, and 
since the total amounts of the FY 2004 and FY 2005 allotments available 
for redistribution were limited (to about $146.9 million and $137.4 
million, respectively), the total FY 2007 shortfalls for the 6 States 
receiving the redistributions were not addressed. That is, the total 
amounts of the FY 2004 and FY 2005 redistributed allotments that were 
provided to the 6 recipient States were only sufficient to address the 
States' FY 2007 shortfalls experienced through May 2007; these amounts 
were not sufficient to cover the 6 States' remaining FY 2007 shortfalls 
occurring in months after May 2007, nor were these amounts sufficient 
to address other States' FY 2007 projected shortfalls occurring after 
May 2007.
    On May 29, 2007, the U.S. Troop Readiness, Veteran's Care, Katrina 
Recovery, and Iraq Accountability Appropriations Act, 2007 (UTRA, Pub 
L. 110-28) was enacted; in particular, title VII of this law amended 
section 2104(h) of the Act (as amended by NIHRA), to provide for 
additional allotment amounts to fund States' remaining SCHIP funding 
shortfalls in FY 2007.
    Note, under paragraph 2104(h)(7) of the Act as amended by the 
NIHRA, the special rules for the redistribution of the unexpended FY 
2004 and FY 2005 allotments in FY 2007 to address FY 2007 SCHIP funding 
shortfalls apply only to a State that receives an allotment for FY 2007 
under subsection 2104(b) of the Act. In that regard, under subsection 
2104(b) of the Act, a State refers only to the 50 States and the 
District of Columbia. Therefore, subsection 2104(h) of the Act, as 
amended by NIHRA and as further amended by UTRA, does not apply to the 
Commonwealths and Territories, which received SCHIP allotments for FY 
2007 under the authority of subsection 2104(c) of the Act. Accordingly, 
unless otherwise indicated in this notice, in referring to the 
redistribution of the FY 2004 and FY 2005 allotments or the additional 
allotments for eliminating FY 2007 shortfalls, the term ``State'' means 
only the 50 States and the District of Columbia, as applicable.

II. Provisions of This Notice

    The purpose of this notice is to set forth the methodology and 
process we are using to implement the UTRA provision for eliminating 
States' SCHIP funding Shortfalls in FY 2007.

A. Methodology for Determining the Amounts of Additional Allotments To 
Eliminate States' SCHIP Funding Shortfalls in FY 2007

    Section 2104(h)(1) and (2) of the Act, as amended by NIHRA 
contained the methodology for determining the amounts of States' 
redistributions of the unexpended FY 2004 allotments remaining at the 
end of FY 2006 and certain amounts of unexpended FY 2005 allotments, 
respectively. The methodology for determining these redistributed 
allotment amounts, and the actual amounts of the redistributed 
allotments determined in accordance with such methodology, was 
described in the Federal Register published on May 29, 2007.
    Subsequent to the enactment of NIHRA, section 7001(a) of UTRA 
amended section 2104(h)(4) of the Act (as amended by NIHRA) to provide 
for additional allotment amounts to eliminate the FY 2007 SCHIP funding 
shortfalls remaining after the redistributions of the unexpended FY 
2004 and FY 2005 allotments in FY 2007, both for States that received 
the FY 2004 and FY 2005 redistributions, as well as for other States 
that did not receive such redistributions, but which also have 
projected FY 2007 shortfalls. Under the amended section 2104(h)(4) of 
the Act, a ``remaining shortfall State'' is defined as a State for 
which the Secretary estimates on the basis of the most recent data 
available to the Secretary as of the date of enactment (of UTRA) that 
the projected FY 2007 Federal SCHIP expenditures will exceed the sum 
of:
     The amounts of the State's allotments for FY 2005 and FY 
2006 that were not expended by the end of FY 2006.
     The amount of the State's allotment for FY 2007.
     The amounts, if any, of the FY 2004 and FY 2005 allotments 
that were redistributed to the State in FY 2007, in accordance with 
section 2104(h)(1) and (2) of the Act, respectively.
    Section 2104(h)(7) of the Act as amended by the NIHRA indicates 
that the provisions of subsection 2104(h) of the Act apply only to the 
50 States and the District of Columbia; that is, these provisions do 
not apply to the Commonwealths and Territories. Therefore, the FY 2004 
and FY 2005 shortfall redistributions, and the FY 2007 shortfall 
allotments, are only available for the 50 States and the District of 
Columbia. Accordingly, unless otherwise indicated in this notice, the 
term ``State'' means only the 50 States and the District of Columbia, 
as applicable.
    Before enactment of UTRA, section 2104(h)(4) of the Act (as amended 
by NIHRA) required that the FY 2004 and FY 2005 redistributed 
allotments could only be used to make payments by States with respect 
to their expenditures for (1) providing child health assistance or 
other health benefits coverage for populations eligible under the State 
child health plan (including under a waiver of this plan) on October 1, 
2006; and (2) providing child health assistance or other health 
benefits coverage to an individual who is not a child or a pregnant 
woman at the regular Federal medical assistance percentage (FMAP, 
referenced in section

[[Page 71917]]

1905(b) of the Act) only (not the enhanced FMAP, referenced in section 
2105(b) of the Act). Under the NIHRA, the FY 2004 and FY 2005 
redistributed allotments were available for States' expenditures for a 
child or a pregnant woman only, at the enhanced FMAP rate. However, the 
UTRA amended section 2104(h)(4) of the Act to remove both of these 
limitations. Under the revised section 2104(h)(4) of the Act, the 
Federal matching rate for expenditures related to all the populations 
indicated is the enhanced FMAP rate.
    As indicated above, under section 2104(h)(4) of the Act, as amended 
by UTRA, the amount of a State's remaining FY 2007 shortfall, if any, 
is determined by comparing each State's allotment funds available in FY 
2007 (including FY 2004 and FY 2005 redistributed allotments, if any) 
to its projected FY 2007 expenditures, based on the State's most recent 
estimates available as of May 25, 2007, the date of enactment of UTRA. 
In this regard, we determined the amounts of States' projected FY 2007 
expenditures, by using their estimated expenditures as reported and 
certified by the State to CMS on their quarterly budget submissions of 
Forms CMS-37 and CMS-21B. By May 25, 2007, most States had submitted 
their certified estimates of their FY 2007 expenditures on their May 
2007 Forms CMS-37 and CMS-21B. However, there were 3 States that had 
not submitted and certified their May 2007 submissions of these reports 
by May 25, 2007; for those 3 States, we are using the projected FY 2007 
expenditures as provided in their February 2007 submissions of such 
reports, as those represented the most recent certified estimates of 
their FY 2007 expenditures available as of May 25, 2007.
    As described in the notice published in the Federal Register on May 
29, 2007, the amounts of the States' FY 2004 and FY 2005 redistributed 
allotments were determined in accordance with the provisions of section 
2104(h)(1) and (2) of the Act respectively, based on the States' other 
available allotments in FY 2007 (that is, the unexpended FY 2005 and FY 
2006 allotments carried into FY 2007 and the FY 2007 allotments) and 
the States' projected FY 2007 allotments using the States' February FY 
2007 estimates. This determination did not include any additional FY 
2007 shortfall allotments as provided under the recently enacted UTRA, 
since as provided in section 2104(h)(2) of the Act, we used the 
information available as of March 31, 2007, and UTRA was not enacted 
until May 25, 2007.
    In accordance with section 2104(h)(4) of the Act, as amended by 
UTRA, the amounts of the FY 2007 shortfall allotments were determined 
based on the amounts of each State's other available allotments in FY 
2007 (that is, the unexpended FY 2005 and FY 2006 allotments carried 
into FY 2007 and the FY 2007 allotments), the previously determined FY 
2004 and FY 2005 redistributed allotments, and the States' projected FY 
2007 expenditures available as of the date of enactment of UTRA. 
Because the UTRA provided for an additional $650 million to address the 
shortfalls in FY 2007 remaining after the provision of such FY 2004 and 
FY 2005 redistributed allotments, and furthermore, since such 
redistributed allotments were required to be based on the FY 2007 
shortfalls determined with the data available at the times indicated 
above and in the May 29, 2007 Federal Register notice (that is, using 
the February 2007 estimates), we are not recalculating the amounts of 
the States' FY 2004 and FY 2005 redistributed allotments in order to 
determine the amounts of the addition FY 2007 shortfall allotments. 
Rather, since the $650 million is available and intended to cover the 
States' full remaining FY 2007 shortfalls, we determined the amounts of 
the FY 2007 shortfall allotments by subtracting each shortfall State's 
allotments available in FY 2007 (including the FY 2004 and FY 2005 
redistributed allotments, if any) from its projected FY 2007 
expenditures; the difference (for the shortfall States with projected 
FY 2007 expenditures greater than their available allotments) 
represents the amount of the State's FY 2007 shortfall allotment.

B. Retrospective Adjustment

    Section 2104(h)(5) of the Act provides that the Secretary may 
adjust the estimates and determinations of the amounts of the FY 2004 
redistributed allotments (section 2104(h)(1) of the Act), the FY 2005 
redistributed allotments (section 2104(h)(2) of the Act), the amounts 
available for the FY 2005 redistribution (section 2104(h)(3) of the 
Act), and the additional FY 2007 shortfall allotments (section 
2104(h)(4) of the Act) on the basis of the amounts reported by States 
not later than November 30, 2007 on Forms CMS-64 and CMS-21. However, 
in no case may the amounts of the FY 2005 allotments redistributed from 
States (as determined under section 2104(h)(3) of the Act) exceed the 
amounts that were determined based on the most recent data available as 
of March 31, 2007. As described in the May 29, 2007 Federal Register, 
these amounts were determined based on the States' submissions of the 
February 2007 quarterly estimate reports of their FY 2007 expenditures, 
and using those estimates would not exceed the lesser of 50 percent of 
the States' available FY 2005 allotments as were determined available 
as of March 31, 2007 or $20 million. Furthermore, under section 
2104(h)(5)(B) of the Act, in providing for any additional FY 2005 
redistributed allotments under any retrospective adjustment, only the 
actual unexpended FY 2005 allotments remaining at the end of FY 2007 
(as determined following the submission of States' fourth quarter FY 
2007 expenditure reports submitted by November 30, 2007) may be used. 
The additional funds made available under UTRA to eliminate FY 2007 
shortfalls may be available for any retrospective adjustments. Finally, 
under section 2104(h)(5)(C) of the Act, any retrospective adjustment 
may not provide for the reduction of any States' FY 2006 or FY 2007 
allotments.

C. Ordering of Expenditures

    In applying State's expenditures against their available SCHIP 
allotments, expenditures are ordered as provided under section 
2105(a)(1)(A) through (D) and 2105(a)(2) of the Act as follows:
     Title XIX SCHIP-related expenditures for which payment is 
made at the enhanced FMAP (section 2105(a)(1)(A) of the Act);
     Title XIX expenditures for medical assistance provided 
during a presumptive eligibility period under section 1920A of the Act 
(section 2105(a)(1)(B) of the Act);
     Child health assistance for targeted low-income children 
in the form of providing health benefits coverage that meets the 
requirements of section 2103 (per section 2105(a)(1)(C) of the Act);
     Expenditures listed in section 2105(a)(1)(D)(i) through 
(iv) of the Act, respectively: Other child health assistance for 
targeted low-income children; health services initiatives under the 
plan for improving the health of children (including targeted low-
income children and other low-income children); expenditures for 
outreach activities; and administration expenditures.
    In accordance with the ordering of allotments and expenditures 
provisions described above, the expenditures of States will be applied 
against the FY 2004 and FY 2005 redistributed allotments, the 
additional FY 2007 shortfall allotments, and any other allotments 
available to the States in FY

[[Page 71918]]

2007 (that is, the FY 2005, FY 2006 and FY 2007 allotments).

D. No Ordering Election for Amounts of States' FY 2004 Redistributed 
Allotments, FY 2005 Redistributed Allotments, and FY 2007 Shortfall 
Allotments

    In the past, for purposes of applying States' expenditures against 
the redistributed allotments, States receiving redistributed allotment 
amounts were given flexibility to decide the ordering of the 
redistributed allotments with respect to the States' other available 
allotments. This allowed the redistribution States to optimize the use 
of these redistributed funds. However, because of the statutory 
provisions made by the NIHRA and UTRA on the identification of 
shortfall States and the determination of the amount of the funding 
shortfalls on a monthly basis, and the requirement that these 
redistributed allotments and additional allotments be available only 
after the States' other SCHIP allotment funds have been exhausted, we 
believe that the FY 2004 and FY 2005 redistributed allotments and the 
FY 2007 shortfall allotments must be ordered after the States' other 
available allotments are exhausted. Therefore, shortfall States must 
spend their available FY 2005, FY 2006, and FY 2007 allotments first, 
before any amounts of redistributed FY 2004 allotments, redistributed 
FY 2005 allotments, and FY 2007 shortfall allotments. Furthermore, 
since the unexpended FY 2004 allotments must be redistributed before 
any redistribution of the FY 2005 allotments, and the FY 2007 shortfall 
allotments are available for any remaining shortfalls, the amounts of 
any FY 2004 redistributed allotment must be ordered prior to any FY 
2005 redistributed allotments, and the FY 2005 redistributed allotments 
must be ordered prior to any FY 2007 shortfall allotments.
    As specified in section 2104(h)(6) of the Act, as added by section 
201(a) of the NIHRA, and as amended by UTRA, the amounts of the 
unexpended FY 2004 and FY 2005 allotments redistributed to a State in 
FY 2007, and the amounts of the FY 2007 shortfall allotments, are only 
available for expenditure by the State through September 30, 2007; and 
any amounts of these redistributed allotments or additional allotments 
remaining at the end of FY 2007, shall not be subject to redistribution 
under section 2104(f) of the Act. This provision does not limit the 
authority of the Secretary to make any retrospective adjustments under 
section 2104(h)(5) of the Act, as discussed above.
    The amounts of the FY 2004 and FY 2005 redistributed allotment 
amounts, the reduction of the FY 2005 allotments, and the amounts of 
the additional FY 2007 shortfall allotments, will be incorporated into 
the Form CMS-21C (Allocation of Title XIX and Title XXI Expenditures to 
the SCHIP Fiscal Year Allotment). Form CMS-21C is used for tracking 
States' expenditures against their available SCHIP allotments. The 
Medicaid and SCHIP expenditure system will then automatically apply 
expenditures reported on the quarterly expenditure reports for FY 2007 
against the revised FY 2005 allotments, the other SCHIP allotments 
available in FY 2007, the FY 2004 and FY 2005 redistributed amounts, 
and the additional FY 2007 shortfall allotments available in FY 2007.

E. Repeal of Special Rule for Coverage for Populations Eligible on 
October 1, 2006

    Section 2104(h)(4)(A) of the Act, was added by the NIHRA and under 
which States could only use amounts of FY 2004 allotments or FY 2005 
allotments, redistributed under section 2104(h) of the Act, only for 
expenditures for providing child health assistance or other health 
benefits coverage for populations eligible for assistance or benefits 
under its approved State child health assistance plan (including a 
waiver of this plan) as in effect on October 1, 2006, has been repealed 
by UTRA.

F. Table for Determination of the Additional FY 2007 Shortfall 
Allotments

    In the table included in this notice we set forth the determination 
of the additional FY 2007 shortfall allotments. In the Federal Register 
notice published on May 29, 2007, we provided the amounts of the 
States' FY 2004 and FY 2005 redistributed allotments; those amounts are 
incorporated into the calculation of the additional FY 2007 shortfall 
allotments to eliminate States remaining FY 2007 shortfalls.
    The following describes the table for determining the FY 2007 
shortfall allotments to eliminate the remaining FY 2007 shortfalls. 
Based on the States' most recent estimates of their FY 2007 
expenditures available as of May 25, 2007, the date of enactment for 
UTRA, there are 12 States with projected shortfalls in SCHIP funds in 
FY 2007.
Key to Table--Additional FY 2007 Allotments to Eliminate the Remaining 
FY 2007 Shortfalls
    This Table presents the determination of the amounts of the 
additional FY 2007 shortfall allotments to eliminate the shortfalls 
remaining in FY 2007 for the 50 States and DC based on the most recent 
expenditure projections for FY 2007, after the provision of the FY 2004 
and FY 2005 redistributed allotments.

Column/Description

    Column A = State. Name of State, District of Columbia, the 
Commonwealth or Territory.
    Column B = FY 2007 Expends. MAY 2007 Estimates. Column B contains 
the projected FY 2007 Federal expenditures based on the most recent 
data available submitted as of May 25, 2007, the date of enactment for 
UTRA. For most States this data was obtained from the certified May 
2007 submissions of the Forms CMS-37 and CMS-21B. For 3 States, the 
certified May 2007 submission was not available as of May 25, 2007; for 
those States, the certified February 2007 submission of these forms was 
used.
    Column C = Tot. Allotments in FY 2007 NOT Including FY 04/05 
Redists. Column C contains the total allotments available to each State 
in FY 2007, not including any FY 2004 or FY 2005 redistributed 
allotments. These allotments include: the unexpended FY 2005 allotments 
remaining at the end of FY 2006 and carried into FY 2007 (and further 
reduced, as applicable, by the provisions of section 2104(h)(3) of the 
Act, as amended by NIHRA); the unexpended FY 2006 allotments remaining 
at the end of FY 2006 and carried into FY 2007; and the FY 2007 
allotments.
    Column D = Tot. FY 07 SF Before Redist. or Addtl Allots. Column D 
contains the amounts of the States' FY 2007 shortfalls, if any, 
determined before the provision of any redistributed FY 2004 or FY 2005 
allotments, and is equal to the difference between the amounts in 
Column B and Column C. For States whose available allotments in FY 2007 
in Column C is greater than or equal to the projected FY 2007 
expenditures in Column B, the entry in Column D is $0.
    Column E = For SF States FY 2004 Redistributions u/NIHRA. Column E 
contains the total FY 2004 redistributed allotments as published in the 
May 29, 2007 Federal Register in Table 3 (72 FR 29513). With respect to 
States for which there is no redistribution of FY 2004 allotments, the 
entry in Column E is $0.
    Column F = For SF States FY 2005 Redistributions u/NIHRA. Column F

[[Page 71919]]

contains the total FY 2005 redistributed allotments as published in the 
May 29, 2007 Federal Register in Table 3 (72 FR 29513). With respect to 
States for which there is no redistribution of FY 2005 allotments, the 
entry in Column F is $0.
    Column G = Tot. FY 04/05 Redist. Amounts. Column G contains the 
total FY 2004 and FY 2005 redistributed allotments, if any, determined 
as the sum of the entries is Column E and Column F.
    Column H = Tot. FY 07 SF AFTER FY 04/05 Redist. Column H contains 
the amount of the States' FY 2007 shortfalls, if any, remaining after 
the provision of any FY 2004 or FY 2005 redistributed allotments, and 
is determined as the difference between the amounts in Column D and 
Column G. The amount in Column H represents the amount of the States' 
additional FY 2007 shortfall allotment, provided to eliminate the 
States' remaining projected FY 2007 shortfall after the provision of 
the FY 2004 and FY 2005 redistributed allotments. With respect to 
States for which there is no additional FY 2007 shortfall allotment, 
the entry in Column H is $0.
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[GRAPHIC] [TIFF OMITTED] TN19DE07.032


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III. 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 with respect to the additional FY 2007 shortfall 
allotments totaling about $606.9 million, this notice is economically 
significant. However, because this notice only announces the provision 
of additional allotment funds determined based on the formula specified 
in statute and does not put forward any administrative policies, we 
have not performed an analysis beyond that which is presented in 
section II. above.
    Because State participation in the SCHIP program 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 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 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 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 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 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 additional FY 2007 shortfall allotment 
amounts.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

IV. Waiver of Notice of Proposed Rulemaking and Delay in Effective Date

    We ordinarily publish a proposed notice in the Federal Register to 
provide a period of public comment before the provisions of a notice, 
such as this, are effective in accordance with section 553(b) of the 
Administrative Procedure Act (APA) (5 U.S.C. 553(b)). We also 
ordinarily provide a 30-day delay in the effective date of the 
provisions of a notice in accordance with section 553(d) of the APA (5 
U.S.C. 553(d)). However, we can waive both the notice of proposed 
rulemaking and the 30-day delay in effective date if the Secretary 
finds, for good cause, that it is impracticable, unnecessary, or 
contrary to the public interest, and incorporates a statement of the 
finding and the reasons in the notice.
    We find there is good cause to waive notice of proposed rulemaking 
and the delay in the effective date of this issuance of the additional 
FY 2007 allotments and the methodology for the additional allotments to 
eliminate the FY 2007 funding shortfalls in SCHIP because the delay 
required for a notice of proposed rulemaking and the delay in the 
effective date would be contrary to the public interest in light of the 
pressing financial needs faced by some States that could result in 
disruption of program operations.
    We determined the amounts of the additional FY 2007 allotments to 
eliminate the FY 2007 SCHIP funding shortfall as expeditiously as 
possible in order to make them available to the States as soon as 
possible. In determining the amounts of the additional FY 2007 
allotments we used State FY 2007 projected Federal expenditures as 
contained in the most recent available States' quarterly budget report 
submissions as certified by the States as of May 25, 2007, the date of 
enactment of UTRA . The additional FY 2007 shortfall allotments make 
available Federal funds to the recipient shortfall States, which is 
especially important for those shortfall States that may need these 
funds.
    We are waiving notice of proposed rulemaking and the 30-day delay 
in effective date, and are publishing this issuance of the Federal 
Register as a notice.
    In accordance with the provisions of this notice, we have 
determined the amounts of the additional FY 2007 shortfall allotments 
to eliminate the FY 2007 shortfalls in SCHIP funding available to 
shortfall States are effective immediately upon publication of this 
notice.

    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: July 6, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.

    Dated: July 12, 2007.
Michael O. Leavitt,
Secretary.

    (Editorial Note:
    This document was received at the Federal Register on December 
14, 2007.)

[FR Doc. 07-6092 Filed 12-14-07; 12:13 pm]
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