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Kids and Health Care: Medicaid Launches CHIP

In the U.S., uninsured children are at greater risk for preventable health problems because they're likely to go without needed medical care. For this reason, the government created the Children's Health Insurance Program (CHIP). CHIP gives federal money to states so that they can create coverage programs for kids whose families have or earn too much to qualify for Medicaid but can't afford private health insurance.

The U.S. Congress created CHIP in 1997, in a bit of deal-making, as part of the Balanced Budget Act.

The program gives states the flexibility to create their own programs; they can use CHIP money to:

  • expand traditional Medicaid coverage;
  • create new and separate programs aimed at children; or
  • create a combination of both a separate program and an expanded Medicaid program.

This flexibility has allowed a broad range of program designs involving eligibility requirements, scope of benefits and administrative rules.

States that implement a CHIP Medicaid Expansion program simply extend medical assistance under Medicaid to cover children who are not otherwise eligible for Medicaid. Medicaid can be expanded to include kids in what government types call "targeted low-income" families; this usually means families whose incomes are below 200 percent of the federal poverty level -- though some states choose different percentages.

This type of program offers CHIP enrollees the same benefits and applies the same rules that are offered or applied to traditional Medicaid enrollees under the Title XIX of the Social Security Act.

As of January 2004, 20 states and territories were operating Medicaid expansion programs with CHIP money.

States that implement a separate CHIP operate directly under the authority of the federal CHIP statute. These states usually provide benefits by charging participants different premiums based on household income levels (the higher the income, the higher the premium). States are free, within the boundaries of the federal statute and regulations, to design whatever processes they choose and to develop their own plans for determining eligibility. For example, a separate program may cover children whose parents have incomes higher than the state's Medicaid eligibility levels. However, states under the separate state plan may choose not to provide due process protections as extensive as those required by Medicaid.

As of January 2004, 18 states were operating separate CHIPs.

States that use the combination plan approach generally extend Medicaid coverage to children whose families fall within a low-income bracket and -- at the same time -- create an entirely separate program to cover other children in a somewhat higher income bracket. For example, a state may choose to extend Medicaid coverage to children with family incomes that fall below 150 percent of the federal poverty level (FPL) while creating a separate CHIP that covers children who fall between 150 and 200 percent of the FPL. The federal poverty level for a family of four was $18,850 for 2004.

As of March 2003, 19 states were operating combination programs.

Unlike Medicaid, the CHIP statute contains language stating that it is not an entitlement program.

Also, statutes and case law have established extensive and detailed rules for how Medicaid is operated. The result: The rules for operating a CHIP program are more flexible than for operating a Medicaid program. In many cases, this means CHIP programs can work with a family to make sure its children qualify for coverage.

On the other hand, the rules for appealing adverse decisions (about whether your kids qualify or are denied coverage) are also less-clearly defined. The CHIP legislation does provide for "an external review" of issues related to services:

  • delay, denial, reduction, suspension or termination of health services; and
  • failure to provide payment for health services in a timely manner.

There are minimal standards prescribed for this "external review": states need only ensure that the review offered be conducted by the state or a contractor other than the contractor involved in the matter under review. States must also ensure that reviews be completed within 90 days, unless "the medical needs of the patient...dictate a shorter time frame." If a physician says it's urgent, the review must be completed within 72 hours. Still, this is all more vaguely stated than Medicaid's extension rules for review and appeal.

If you think your kids might qualify for a CHIP program, you can get more information by calling the nationwide toll-free hotline: (877) KIDS-NOW. You can also find out more on the Insure Kids Now Web site, which offers information about eligibility in your state and applying for coverage.

If you live in Rhode Island or Wisconsin and are the parent of a CHIP-eligible child, you may also qualify for health insurance under the program. Those two states have special permission to use money from CHIP to cover parents as well as children.

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