DDEEPPAARRTTMMEENNTT  OOFF  HHEEAALLTTHH  &&  HHUUMMAANN  
SSEERRVVIICCEESS 
HHeeaalltthh  CCaarree  FFiinnaanncciinngg  AAddmmiinniissttrraattiioonn 
Center for Medicaid and State Operations 
7500 Security Boulevard 
Baltimore, MD 21244-1850 
SMDL # 01-008 
January 18, 2001 
Dear State Medicaid Director: 
I am writing concerning the requirement that States provide pregnant women and children opportunities 
to apply for Medicaid at locations other than welfare offices, such as Federally Qualified Health Centers 
(FQHCs) and disproportionate share hospitals (DSH). 
Studies demonstrate that application sites outside the welfare office can greatly assist States in their 
efforts to enroll eligible children in Medicaid and the State Childrens Health Insurance Program. 
Recent studies by the Kaiser Commission on Medicaid and the Uninsured and by George Washington 
University find that parents say they are much more likely to enroll children in Medicaid if they could do 
so in convenient locations within the community, such as a doctors office or clinic, or a school or day 
care center. 
This finding is supported by States own experiences; many States have found outstationing to be a 
particularly effective strategy to enroll eligible children and their families and to address stigma issues that 
may arise when welfare offices are the primary point of entry into Medicaid. The need for outstationing 
has grown in importance as an increasing number of persons who are not eligible for either cash 
assistance or food stamps can establish eligibility for Medicaid and do not otherwise have a need to go 
to a welfare office. In addition, many people, such as homeless persons, frequently do not consider 
health coverage until a need for health care services arises. The opportunity to apply at the provider site 
can greatly facilitate enrollment in these circumstances. 
Information that the Health Care Financing Administration (HCFA) has received from the Temporary 
Assistance for Needy Families (TANF)/Medicaid reviews, the Department of Health and Human 
Services (DHHS) Office of the Inspector General, and university-based studies suggests that States are 
not all in full compliance with the outstationing requirement found at section 1902 (a)(55) of the Social 
Security Act, as implemented by regulations at 42 CFR 435.904. While the regulations give States 
considerable flexibility to determine how best to comply with the outstationing requirements, States must 
comply with the mandatory requirements imposed by this longstanding statutory provision and the 
implementing regulations.  In this letter, we review both the requirements and flexibility to ensure States 
understand what is required and how the flexibility offered by the regulations can be used to meet these 
requirements in an effective and efficient manner. 
In addition, we encourage you to expand your outstationing efforts beyond what the law and regulations 
require. Utah, Georgia, and Indiana, for example, have moved staff out of the traditional office setting 
into the community, and recognized staff activities to promote clearly articulated enrollment goals. The 
result, as reported by these States, has been increased enrollment, a higher level of staff satisfaction and  lower turnover rates, and increased overall program satisfaction on the part of families and the provider 
community. 
Page 2  State Medicaid Director 
Requirements and Options 
1. Outstation Locations 
A.  Requirements 
Locations at Each FQHC and DSH Hospital

In general, unless a State has demonstrated to the HCFA that it has an equally or more effective 

alternative plan for outstationing, it must establish outstation locations at each DSH hospital and each 

FQHC participating in the States Medicaid program. 

For outstationing purposes, FQHC means an entity that meets the definition in section 1905 (l)(2)(B) of

the Social Security Act. It includes an entity receiving a grant under section 330 of the Public Health 

Service Act; an entity receiving funding under a contract with the recipient of a section 330 grant that 

meets the requirements to receive a section 330 grant; an entity that the Secretary determines meets the 

requirements to receive a section 330 grant (FQHC look-alike); and an entity that was treated by the 

Secretary for purposes of Medicare Part B as a comprehensive Federally-funded center as of January 

1, 1990. It also includes an outpatient program or facility operated by a tribe or tribal organization 

under the Indian Self-Determination Act or by an urban Indian organization receiving funds under title V 

of the Indian Health Care Improvement Act for the provision of primary care services. 

FQHCs are particularly important sites for outstationing because most, if not all, FQHC sites are 

frequently used by pregnant women and children. According to DHHS data, nationally, 59.4 percent of 

the 10 million FQHC patients are women and children below 200 percent of the Federal poverty line 

and 77 percent of FQHC patients are either receiving Medicaid or are uninsured. While we encourage 

States to consider outstationing at sites in addition to FQHCs and DSH hospitals (see options below), 

we strongly encourage States to comply with their outstationing obligation by outstationing at each 

FQHC site.  As explained below there is significant flexibility in the regulations for staffing and 

implementing outstationing arrangements.  For example, the regulations do not require State staff to be 

placed at each outstation location. There are various other ways that outstationing can be effectively 

implemented at most or all sites operated by an FQHC, through rotational arrangements, use of 

provider staff, and other means. Broad access at multiple FQHC sites greatly enhances the 

opportunities to enroll Medicaid-eligible children and families.

Alternate Outstationing Plan

Under the regulations, a State may develop an alternate outstationing plan it is reflected in the States 

Medicaid plan and approved by HCFA. The regulations permit States to develop an alternate plan that 

includes at least some FQHCs and DSH hospitals and other locations. The State must demonstrate that 

the alternate plan is an equally or more effective method for reaching the target group, and that an 

equivalent level of funding and staffing would be committed to implement the alternate plan. 
 Page 3  State Medicaid Director 
In reviewing these State Plan Amendments (SPAs), HCFA will take into account the following 
considerations and factors: 
--number of full time equivalents (FTE) State staff and non-State staff devoted to 

outstationing under the alternate plan;

--number and location of FQHC and DSH hospital outstation location sites that will be 

part of the alternate plan and the number and location of FQHC and DSH sites that 
would not serve as outstation sites under the plan; 
--the type, location and activity level of alternate sites under the plan; 
--hours of operation of outstationing sites; 
--number of sites that will provide initial application enrollment services only and the 
number of sites where eligibility determination will be made on site; 
--availability of translation services at outstationing sites; 
--available data on use of sites included in the alternate plan by pregnant 
women, infants, and children under 19 and available data on such use at the 
FQHCs and DSH hospitals not included in the plan; 
--method for informing the public of the new sites; and 
--any other pertinent data, information, or studies that have a bearing on the 
effectiveness of the alternate plan; and 
--the method proposed by the State to evaluate the effectiveness of the plan. 
B.  Options 
Outstation at Every FQHC or DSH Hospital Satellite

The regulations do not require States to outstation staff at every satellite site operated by a DSH 

hospitalor FQHC. However, in order to be consistent with the intent and spirit of the law and 

regulations, all sites that are frequently used by pregnant women and children should be outstation sites.

Outstation at Additional Locations

Outstation sites need not be limited to required outstation locations or locations that provide health care 

services. Additional sites may include school-linked service centers, family support centers and other 

community-based organizations that provide support services, homeless health centers and other 

community-based health care provider sites, job service centers, day care centers, and Head Start and 

other programs that provide support services to pregnant women, families, or children. 

Beyond the requirements and choices available under the regulations which implement the outstationing 
requirement of the law, States are free to outstation State eligibility workers at any location that they 
believe will help facilitate the enrollment of families and children into Medicaid. In addition, outstationing 
can be used to facilitate the enrollment of other individuals into Medicaid, such as homeless persons and 
persons that are dually eligible for Medicare and Medicaid.  Page 4  State Medicaid Director 
2. Outstation Functions 
A.  Requirements 
Initial Processing of Applications

At a minimum, applications must be received and initially processed at each outstation location. Initial 

processing includes taking applications, providing information and referrals, obtaining required 

documentation, ensuring that information on the application form is complete, and conducting any 

required interviews. It does not include evaluating the information and making the determination of 

eligibility.

All initial processing activities must occur at the outstation location. Therefore, for example, if the State 
requires a face-to-face interview, the State must arrange for the interview to be completed at the 
outstation location. Requiring the applicant to go to the local welfare office to complete the interview 
defeats the purpose of the outstationing requirements. 
Proper application forms must be available at all locations. 
B.  Options 
Determine Eligibility at Outstation Locations

In addition to initial processing, the determination of eligibility can be made at the outstation location by 

State staff authorized to make eligibility determinations. To the extent the State has staff available for this 

purpose, it promotes the proper and efficient administration of the program to do so.

Link Outstation Sites to Automated Information Systems

States also may consider linking outstationed sites to their automated information system so that 

applications taken at the outstation site can be input directly into the system. Safeguards would be 

needed to ensure that outstation workers who are not State employees only have access to information 

they are permitted to see under Federal and State confidentiality requirements. Federal law permits 

disclosure of information in State files which is directly connected to the administration of the program. 

The establishment of eligibility is a purpose directly connected to program administration. As such, 

Federal requirements do not preclude access to application information entered into the system. 

However, they do preclude giving a non-State employee access to eligibility information in State files 

about persons other than applicants on the application the non-State worker is initially processing. 

Extend Opportunity to Apply to Families and Others

In addition to taking and initially processing applications from pregnant women and children, as 

required, States may consider extending the process to low-income families, dual-eligibles, and other 

applicants. Many children may be eligible for Medicaid under the section 1931 family group. It makes 

sense to provide these children and their parents the opportunity to apply for Medicaid-only coverage at 
 the outstation site instead of requiring families to apply at the local welfare office. Several States have 

developed shortened family applications that are simple to complete and particularly appropriate for 

outstation sites and mail-in use.  States have also found 

Page 5  State Medicaid Director

that training outstationed workers to be able to accept both State Childrens Health Insurance Program 

(SCHIP) and Medicaid applications as well as those for the dual eligible elderly has been beneficial. 

Most states with separate SCHIP programs use joint SCHIP/Medicaid applications for children.

Combine Outstationing with Presumptive Eligibility

Another available option is to combine outstationing with presumptive eligibility for children. Sites 

where presumptive eligibility determinations can be made for children, such as FQHCs, hopitals, WIC 

offices, Head Start Centers, and Child Care Eligibility Centers, also can serve as outstation locations. 

By combining presumptive eligibility determinations and outstationing at the same locations, 

presumptively eligible children can receive immediate Medicaid coverage and can begin the process for 

determining his or her continuing eligibility for Medicaid without the need to go elsewhere to file a formal 

Medicaid applications.  This will lessen the number of otherwise eligible children who lose Medicaid 

after a presumptive eligibility period because they failed to file a regular Medicaid application.

States can also combine outstationing with presumptive eligibility for pregnant women. Medicaid 

providers can presumptively enroll pregnant women in Medicaid to ensure that they can receive care 

pending a final determination of eligibility and, in addition, initially process the Medicaid application.

Use Outstation Locations in the Redetermination Process

States may consider using outstation locations to assist in the redetermination process. Retention is a 

major challenge for Medicaid programs, particularly when families and individuals do not reply to 

requests for information from the State in order to complete the redetermination process. Outstation 

locations, such as FQHCs, could assist in the process when an individual is at the outstation site for a 

follow up visit. At least one State is piloting a rolling redetermination process under which the 

information needed to redetermine the familys or individuals eligibility is obtained when the family or 

individual is at the outstationed site. The redetermination/renewal process is thereby completed 

whenever the information is available, as long as it is done at least every 12 months. FQHCs, in 

particular, are well suited to this type of rolling redetermination process. 

3. Staffing 
A.  Requirements 
Hours of Staffing

Except for outstation locations infrequently used by pregnant women or children, States must have staff 

available at each outstation location during regular office operating hours of the State 

Medicaid agency to accept and initially process applications.

State failure to ensure adequate staffing at outstation sites has been reported as a major barrier to  successful outstationing and enrollment strategies. If States do not have available staff, the State is 
obligated to make other arrangements to ensure that the minimum requirements of the 
Page 6  State Medicaid Director 
regulations are met. For example, the outstationing requirement can be carried out by DSH hospital and 
FQHC staff, or by contractors, or volunteers. If States do not have sufficient staff for outstation sites, it 
is important that FQHCs and DSH hospitals understand that alternatives to the State staffing model can 
be used, and that states work with these facilities, as required, to implement alternative arrangements. 
Some States have contracted with their State Primary Care Association to manage and provide 
technical assistance to outstationed staff. Contact information for these organizations is currently 
available at www.bphc.hrsa.gov/osnp by double clicking on the Outreach and Enrollment button. 
Payment for outstationing activities is discussed below. 
Staffing at Infrequently Used Locations

Initial application processing assistance must be provided at infrequently used locations but it is not 

necessary to have the location staffed with a full-time person during regular State Medicaid agency 

operating hours as noted above.  Outstationing assistance must be provided at these locations during the 

regular operating hours (or when the location provides services during these hours) through staff on site 

or through telephone assistance, or a combination of both. On-site staff would include State staff, 

provider or contractor employees, or volunteers. The regulations provide that at these locations States 

must display a notice in a prominent place which advises 

potential applicants of when outstation intake workers will be available and provides a telephone 

number that applicants may call for assistance when staff are not available. In addition, the regulations 

require compliance with Federal and State laws and regulations governing the provision of adequate 

notice to persons who are blind or deaf or who are unable to read or understand the English language.

The regulations do not define infrequently used location, and States have discretion to define this term 

utilizing reasonable criteria and guidelines. The definition must be related to infrequent use by pregnant 

women, infants, and children under 19; it is unlikely many DSH hospitals or FQHCs would properly be 

considered sites infrequently used by pregnant women and children in light of the patient mix at most 

DSH hospitals and FQHCs. The States definition should be made publicly available. 

Confidentiality and Conflict of Interest Requirements

The regulations provide that provider and contractor employees and volunteers are subject to the 

Federal confidentiality requirements that apply to Medicaid, and to State and Federal laws concerning 

conflicts of interest.

B.  Options 
Use Persons Other Than State Workers to Perform Certain Outstationing Functions

States may use State employees, provider or contractor employees, or volunteers who have been 

properly trained to staff outstation locations. As noted previously, only State employees so authorized 

may make eligibility determinations.
 Page 7  State Medicaid Director

Non-agency staff may perform initial processing services provided they are properly trained. States also 

may work with local community-based organizations to identify volunteers. However, it is very unlikely 

that a State will be able to fully comply with its responsibility to ensure that outstationing is operating as 

intended in all required sites by relying solely or primarily on volunteers. Payment for non-agency staff is 

discussed below.

Extend Outstationing Hours to Coincide with Provider Operating Hours

While the regulations require the availability of staff at each outstation location during the regular 

working office hours of the State Medicaid office, frequently, these hours do not coincide with the hours 

of health centers, which regularly have evening and weekend hours.  We strongly encourage States to 

extend outstationing hours to coincide with provider operating hours, which often are more convenient 

for families in which the parents work regular daytime shifts.

Rotate Staff Among Outstation Locations

The regulations allow States to station staff at outstation locations or to rotate staff among several 

locations as workload and staffing availability dictate. While rotation is an option, it does not override 

the obligation of the State to provide staffing at outstation locations during regular office operating hours 

and to have either staff or telephone assistance at infrequently used locations. As a practical matter, 

rotation may be best suited as a means to provide staffing at infrequently used locations, or to cover 

evening or other nontraditional hours.  States may also use State staff on a rotating basis to make 

eligibility determinations at several locations, or to provide guidance and assistance at several locations 

to provider staff or other persons performing initial processing activities. 

4. Payment for Outstationing Activities 
Requirements 
Payment for Outstationing Functions

Staffing and resource limitations do not relieve States of the obligation to comply with and pay for the 

outstationing requirements of the law and regulations.  Federal financial participation (FFP) is available 

in expenditures incurred by the State associated with outstation locations, regardless of whether the 

function is provided by a State or county employee or other person authorized to perform initial 

processing activities under the regulation. FFP is available for State expenditures for incurred 

outstationing costs at regular outstationing locations and at infrequently used and optional locations. The 

administrative functions of taking and processing applications are reimbursed at the 50 percent rate. 

Subject to the limitations noted below, this rate includes costs incurred by the State to implement and 

provide outstationing of intake workers who are 

State employees, provider employees, volunteers, or contractor employees. The rate covers such 

necessary administrative costs as salaries, fringe benefits, travel, training, equipment, and space directly 
 attributable to outstationing activities.  To the extent that outstationing activities are directed at both 

Medicaid and SCHIP- eligible children, enhanced matching funds would be available for the SCHIP-

related activities subject to the cap on SCHIP non-coverage expenditures.

Page 8  State Medicaid Director

Funding Under the $500 Million Fund

Funding for some outstationing activities is also available under the $500 million fund authorized under 

the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) as part of 

cash assistance/Medicaid delinking. This fund can be used for a wide range of activities related to 

enrollment systems and outreach for individuals, including outstationing for individuals who could 

possibly be eligible under the Medicaid eligibility group for low-income families established by 

PRWORA in section 1931 of the Social Security Act. When a State performs such activities underor 

related tothe 1931 provision, the State can consider the full cost of that activity as attributable to the 

enactment of section 1931. FFP is available under this fund at the 90 percent rate for outstationed staff, 

including State eligibility workers and provider employees; see Dear State Medicaid Director letter 

dated January 6, 2000 for further information. (This letter is available on HCFAs website at 

www.hcfa.gov). Funding under the $500 million fund is not available for the minimum outstationing 

requirements mandated by Federal law (section 1902 (a)(55) and regulations at 42 CFR 435.904 

(which were in effect prior to the enactment of PRWORA). However, the $500 million fund would be 

available for new outstationing activity (including outstationing options beyond the minimum 

requirements) which is related to section 1931. 

Use of Provider Donations 
Provider-related donations made to a State by a hospital, clinic, or similar entity for the direct costs of 
State or local agency personnel who are stationed at the facility to determine eligibility or to provide 
outreach services may be used as the State share of such State costs, within a statutorily prescribed 
limit.  Specifically, the provider-related donations for outstationed eligibility workers (i.e., State or local 
agency workers) are limited to 10 percent of a States medical assistance administrative costs, excluding 
the costs of family planning activities. Direct costs of outstationed eligibility workers refers to the costs 
of training, salaries, and fringe benefits associated with each outstationed worker and a prorated cost of 
outreach activities applicable to the outstationed worker. The Medicaid statute permits this arrangement 
as an exception to the general prohibition on provider-related donations. The exception does not apply 
to donations made by a hospital, clinic, or similar entity for the direct costs of non-State personnel. 
Financial Obligation of the State

Although FQHCs and DSH hospitals contribute toward the cost of outstationing in several states, they 

are not obligated to do so. The State is not relieved of its financial obligation to implement outstationing 

at a provider location if the provider is unwilling or unable to contribute toward the cost of the 

outstationing arrangements.  The State must arrange for outstationing at that location consistent with the 

requirements and options of the law and regulations. 

Review of State Outstationing Arrangements 
As part of our reviews of State enrollment practices in delinking Medicaid/TANF, HCFA received 
information regarding State outstationing arrangements. We were made aware of shortcomings in some  States and successful outstationing efforts in other States. The DHHS Office of the Inspector General is 
following up on these reviews to examine State compliance with Federal requirements and to help 
identify model strategies. 
Page 9  State Medicaid Director 
We encourage States to review their outstationing arrangements in light of this guidance and to come 
into compliance with the law and regulations promptly if they are not already in full compliance. States 
that seek to meet their outstationing obligations under an alternate plan must submit a SPA; in the 
absence of a SPA, the State will be held to the minimum requirements set forth in the law and 
regulations.  Our goal in providing this guidance is to clarify Federal rules and opinions, and to offer 
technical assistance and encouragement so that innovative outstationing arrangements will continue to 
flourish. Outstationing has proven to be a very successful outreach and enrollment strategy for States 
seeking ways to reach families outside of the welfare office. 
If you have any questions or would like technical assistance with respect to these outstationing 
requirements and options, please contact your regional office. 
Sincerely, 
/s/ 
Timothy M. Westmoreland 
Director 
cc:

HCFA Regional Administrators

HCFA Associate Regional Administrators 
for Medicaid and State Operations 
Lee Partridge

Director, Health Policy Unit

American  Public Human Services Association

Joy Wilson

Director, Health Committee

National Conference of State Legislatures

Matt Salo

Director of Health Legislation

National Governors Association