DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
Center for Medicaid, CHIP and Survey & Certification 
 
CMCS Informational Bulletin 
  
DATE:  August 31, 2011 
 
FROM:  Cindy Mann 
  Director 
  Center for Medicaid, CHIP and Survey and & Certification (CMCS) 
 
SUBJECT:  Updates on Medicaid/CHIP  
 
This Informational Bulletin is to update States and other interested parties on a number of important 
items: 
  The publication of three proposed rules regarding access to affordable coverage under the 
Affordable Care Act, including changes to Medicaid eligibility and FMAP rates; 
  The publication of a proposed rule entitled Medicaid and Childrens Health Insurance 
Programs; Disallowance of Claims for FFP and Technical Corrections; 
  The issuance of a State Medicaid Director Letter regarding the Affordable Care Act 
Maintenance of Effort (MOE) provisions; 
  The issuance of a Tri-Agency Letter on Cost Allocation of Information Technology Systems 
  The availability of grants for States to develop Medicaid Emergency Psychiatric 
Demonstrations 
 
 
Three Proposed Rules Regarding Affordable Coverage 
 
On August 12, 2011, the Departments of Health and Human Services and Treasury released three 
proposed rules regarding the provisions of the Affordable Care Act under which millions of 
uninsured Americans will gain access to health coverage through Affordable Insurance 
Exchanges and improvements in Medicaid and CHIP.   
 
Together, the rules seek to create a path to a simple, seamless and affordable system of coverage.  
Information about each of the three rules is below: 
 
  Medicaid and CHIP Eligibility: This proposed rule expands Medicaid and simplifies 
Medicaid and CHIP eligibility and promotes a simple, seamless system of affordable 
coverage by coordinating Medicaid and CHIP with the new Exchanges.  The proposed 
rule can be viewed at http://www.gpo.gov/fdsys/pkg/FR-2011-08-17/pdf/2011-
20756.pdf. 
 
  Exchange Eligibility and Employer Standards: This proposed rule details the 
standards and process for enrolling in qualified health plans and insurance affordability 
 
  programs.  It also outlines basic standards for employer participation in Small Business 
Health Options Program (SHOP). The proposed rule can be viewed at 
http://www.gpo.gov/fdsys/pkg/FR-2011-08-17/pdf/2011-20776.pdf. 
 
Health Insurance Premium Tax Credit: Treasury Department proposed regulations specifying 
how individuals and families will receive premium tax credits to help defray insurance costs.  
The premium tax credits make it easier for millions of Americans to purchase affordable health 
insurance. The proposed rule can be viewed at  
http://www.treasury.gov/press-center/Documents/36BFactSheet.PDF 
 
 
CMCS encourages all stakeholders to read the proposed rules and submit comments.  The comment 
period is open through October 31, 2011 and comments can be submitted at 
http://www.regulations.gov. 
 
 
Disallowance of Claims for FFP 
 
On August 3, 2011, CMS published a proposed rule which makes several changes related to State 
overpayments and disallowances in the Medicaid program. In accordance with the Affordable 
Care Act the proposed rule lengthens the time States have to credit the Federal government for 
identified but uncollected Medicaid provider overpayments.  Additionally, the rule makes other 
changes to improve the disallowance process and to update the regulations to reflect recent 
changes in federal law, and provide States more time to repay the Federal share of overpayments 
to providers.  The proposed rule can be viewed at http://www.gpo.gov/fdsys/pkg/FR-2011-08-
03/pdf/2011-19528.pdf.  Comments must be submitted by September 2, 2011. 
 
 
Additional Guidance regarding the Affordable Care Act Maintenance of Effort Provisions 
 
On August 5, 2011, CMS issued a State Medicaid Directors letter and a set of Questions and 
Answers (Q&As) providing guidance on the maintenance of effort (MOE) provisions in the 
Affordable Care Act and their relationship to institutional level of care requirements and home 
and community-based services (HCBS). The policies contained in the letter and Q&A build upon 
guidance previously issued on the Affordable Care Act MOE provisions, as well as the American 
Reinvestment and Recovery Act (the Recovery Act) MOE provisions.  The letter is available at: 
http://www.cms.gov/smdl/downloads/SMD11-009.pdf.  
 
 
Tri-Agency Letter Regarding Cost Allocation for IT Systems 
 
On August 10, 2011, CMS, the HHS Administration for Children and Families (ACF), and the 
U.S. Department of Agriculture released a Tri-Agency letter providing States with information 
about a time-limited, specific exception to the cost allocation requirements set forth in OMB 
Circular A-87 (Section C.3) to allow Federally funded human services programs to benefit from 
investments in State eligibility systems being made by State-operated Exchanges, Medicaid and 
the Childrens Health Insurance Program (CHIP). The exception gives States the opportunity to 
 
  consider the benefits of integrating the eligibility determination functions across health and 
human services programs. 
 
The exception allows human services programs (including, but not limited to, Temporary 
Assistance for Needy Families (TANF), Child Care and Development Fund (CCDF), and the 
Supplemental Nutrition Assistance Program (SNAP)) to utilize systems designed specifically for 
determining a persons eligibility for certain health coverage programs (Medicaid, CHIP, and 
premium tax credits and cost sharing benefits through the Exchange) without sharing in the 
common system development costs, so long as those costs would have been incurred to develop 
systems for the Exchanges, Medicaid, and CHIP. This exception is effective immediately, 
applies only to development costs for eligibility determination systems, and terminates on 
December 31, 2015.   
 
The Tri-Agency Letter is available at http://www.cms.gov/smdl/downloads/tri-agency.pdf. 
  
 
Medicaid Emergency Psychiatric Demonstration 
On August 9, 2011, CMS announced a new Medicaid Emergency Psychiatric Demonstration, 
authorized by the Affordable Care Act, to provide States with more flexibility and resources to 
care for Medicaid beneficiaries with mental illnesses.  The demonstration provides up to $75 
million in funding to States over three years to help care for Medicaid patients with psychiatric 
emergencies, in private inpatient psychiatric facilities with 17 or more beds, also known as 
institutions for mental diseases (IMDs).   
CMS is now accepting applications to participate in this demonstration from interested State 
Medicaid Directors.  States will be selected competitively based on their application proposals.   
More information, including the solicitation, application and fact sheet can be found at 
http://www.cms.gov/DemonstrProjectsEvalRepts/MDP/itemdetail.asp?filterType=none&filterBy
DID=-99&sortByDID=3&sortOrder=ascending&itemID=CMS1249074&intNumPerPage=10 
 
I hope you find this information helpful.