DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland 21244-1850 
 
Center for Medicaid and State Operations 
 
May 1, 2008                SHO #08-002 
             
 
Dear State Health Official:  
 
The purpose of this letter is to provide you with information regarding the availability of 
additional grant funding related to High Risk Pool operations.   
 
A funding level of $49,127,000 has been made available pursuant to the Consolidated 
Appropriations Act of 2008 (Pub. L. 110-161) to support the operation of State high risk 
insurance pools.   
 
Grant Opportunities Announcement: 
 
The grant opportunity requirements and instructions were announced April 7, 2008, with 
applications due by June 9, 2008, at www.grants.gov.  Grant awards will be announced on or 
about July 1, 2008.   
 
Grants for Operational Losses and Bonus Grants - States that have established a qualified 
high risk pool that has incurred losses and meets certain programmatic and operational standards 
may apply for funding.  The programmatic and operational standards are detailed in the official 
grant announcement. 
 
Allocation of Grant Amounts for the Operational Losses Grants - The amount of dollars 
available for the operational grants is based on the following funding methodology.  Two-thirds 
of the total appropriation for a specific year will be allotted to qualifying States for operational 
losses grants as follows:  40 percent of the allotted funds will be divided equally among those 
States; 30 percent will be distributed based on the ratio of uninsured residents in the State to total 
uninsured residents in all of the qualified States that apply; and 30 percent will be distributed 
based on the ratio number of people enrolled in a States qualified high risk pool to people 
enrolled in the high risk pools of all of the States that apply.  
 
Premiums charged under the pool must be no more than 200 percent of the premium of 
applicable standard risk rates.  However, if a States qualified high risk pool program charges 
premiums that exceed 150 percent of the premium for applicable standard risks, the State must 
use at least 50 percent of the amount of the grant award to reduce premiums for enrollees.  
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Bonus Grants for Supplemental Consumer Benefits - The remaining one-third of the total 
available funding is set aside for use for supplemental consumer benefits.  If a State has an 
established qualified high risk pool and is receiving a grant for operational losses, it may apply 
for a grant to be used to provide supplemental consumer benefits to enrollees or potential 
enrollees.  The benefits to be funded with this grant may include one or more of the following: 
(1) low-income premium subsidies; (2) reduction in premium trends, actual premium, or other 
cost-sharing requirements; (3) an expansion or broadening of the pool of individuals eligible for 
coverage, such as through eliminating waiting lists, increasing enrollment caps, or providing 
flexibility in enrolment rules; (4) less stringent rules, or additional waiver authority with respect 
to coverage of pre-existing conditions; (5) increased benefits; and (6) the establishment of 
disease management programs.   
 
We encourage all States with qualified high risk pools to consider applying for these grant funds. 
 
Sincerely,  
 
/s/ 
 
Herb B. Kuhn 
Deputy Administrator 
Acting Director, Center for Medicaid and State Operations 
 
Enclosure 
 
cc: 
 
CMS Regional Administrators 
 
CMS Associate Regional Administrators, 
   Division of Medicaid and Childrens Health 
 
Barbara Edwards           
NASMD Interim Director 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Matt Salo 
Director of Health Legislation 
National Governors Association 
 
  Page 3  State Health Official 
 
Debra Miller 
Director for Health Policy 
Council of State Governments 
 
Christie Raniszewski Herrera 
Director, Health and Human Services Task Force 
American Legislative Exchange Council 
 
Barbara Levine 
Director of Policy and Programs 
Association of State and Territorial Health Officials 
 
Governors 
 
State Health Insurance Commissioners