SMDL #01-021  
July 5, 2001  
Dear State Medicaid and SCHIP Director:  
This letter provides guidance on recently enacted legislation that provides additional 
flexibility for States to fund outreach activities under the State Children's Health 
Insurance Program (SCHIP). This new provision of law affects states that have 
retained a portion of their fiscal year (FY) 1998 SCHIP allotments.  
Background  
The Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA), which was signed into law on December 21, 2000, establishes new provisions 
for the redistribution and retention of unspent FY 1998 and 1999 SCHIP funds. The 
FY 1998 redistributed and retained funds are available in FY 2001 and 2002. Funds 
unspent at the end of FY 2002 will revert to the Treasury.  
BIPA also provides an exception to the SCHIP statute's existing 10 percent fiscal year 
limit for outreach, administration, health services initiatives and other child health 
assistance, referred to as the "BIPA outreach allowance." Without this BIPA 
exception, such expenditures (particularly outreach) would normally be subject to 
the 10 percent fiscal year limit. The BIPA exception allows states that did not fully 
spend their FY 1998 allotment in the three-year period of availability (FY 1998 
through FY 2000), to use up to 10 percent of their FY 1998 retained allotment 
amounts for outreach activities approved by the Secretary without those 
expenditures being applied against the state's 10 percent fiscal year limit. This 
exception applies only while the state's retained allotment amounts remain available. 
Once a state fully expends its retained allotment amounts, the exception is no longer 
in effect.  
Outreach Policy Under BIPA  
BIPA did not revise the existing definition of outreach activities under the SCHIP 
statute. As indicated above, under the BIPA outreach allowance the amount of a 
State's outreach expenditures up to 10 percent of the State's retained allotment will 
not be applicable to the State's 10 percent fiscal year limit. Accordingly, states may 
use funds under the BIPA outreach allowance provision to conduct outreach activities 
that are targeted at identifying and enrolling children eligible for SCHIP. In addition, 
states may choose to use these funds for outreach efforts that are aimed at enrolling 
children who are likely to be eligible for Medicaid and low-income families who may 
be eligible for SCHIP or Medicaid. This policy will allow states to take full advantage 
of these time-limited outreach funds to reach uninsured children and their families. 
States often conduct combined (SCHIP and Medicaid) outreach activities, and CMS 
generally has encouraged joint program outreach efforts to promote coverage among 
all eligible uninsured children. In addition, some states have very modest SCHIP 
programs due to significant coverage expansions prior to its enactment. These states 
will be able to use the funds to target a broader population of low-income uninsured 
children. We believe that states will be able to continue the many innovative and  diverse outreach strategies that they have implemented to date or are planning for 
the future.  
Process for Spending the BIPA Outreach Allowance  
States will not be required to submit a State Plan Amendment for approval of 
outreach activities under the BIPA outreach allowance, but should ensure that the 
claims under this allowance are consistent with this policy. CMS has modified Form 
CMS-21L in order to track the Federal share amounts of outreach expenditures 
applied against the new BIPA outreach allowance.  
CMS will request that states specify in their annual SCHIP reports the types of 
outreach activities they are conducting under the BIPA outreach allowance for FY 
1998 retained SCHIP funds in addition to the current requirements to describe 
outreach initiatives in the annual report. We believe this policy allows states the 
opportunity to spend these time-limited funds without delay. It also encourages 
states to be responsive to lessons learned and to adapt outreach strategies in a 
timely manner to local needs.  
Please do not hesitate to contact your Regional Office if you have further questions 
about this policy.  
Sincerely,  
/s/  
Penny R. Thompson  
Acting Director  
cc:  
CMS Regional Administrators  
CMS 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  
Brent Ewig  
Association of State and Territorial Health Officials