DEPARTMENT OF HEALTH & HUMAN SERVICES 
Health Care Financing Administration  
 Center for Medicaid and State Operations 
7500 Security Boulevard 
Baltimore, MD 21244-1850 
December 8, 1997  
Dear State Official:  
The Balanced Budget Act of 1997 (BBA) (Public Law 105-33), as amended by recent technical amendments (Public Law 105-100, 
signed into law on November 19, 1997), established the Children's Health Insurance Program (CHIP) under Title XXI of the Social 
Security Act (the Act). This new Title will enable States to extend health insurance coverage for uninsured children through a new 
CHIP State program, a CHIP expansion of the Medicaid Program, or a combination of both programs. In a letter dated August 27, 
1997, the Health Care Financing Administration (HCFA) provided a summary and highlights of the provisions of this landmark 
legislation.  
This letter and attachments are intended to provide additional and more detailed technical guidance regarding implementation of CHIP 
and provisions related to payment processes and requirements. We intend to incorporate the information contained in this letter and 
attachments into a regulation to be published in the Federal Register and appropriate State manuals. Although the attached guidance 
represents what we believe is required under the CHIP provisions, it is still a DRAFT and the content may change. We are sending 
this to you in DRAFT form both for your review and preliminary planning.  
There are 3 attachments to this letter. The first attachment  provides DRAFT guidance and information on the CHIP fiscal year 
allotment, payment processes, financial reporting forms, and related issues. The areas discussed in this attachment include:  
   Allotments and redistribution process;   
   Payment and grant award process including State reporting and claiming for Federal financial participation (FFP) at regular 
and enhanced Federal medical assistance percentages (FMAP) for expenditures under the Medicaid program and the CHIP;   
   State report forms.   
The second attachment is the September 12, 1997 Federal Register notice (MB-115-N) which contains the charts on the States' CHIP 
reserved allotments for FY 1998 and the enhanced Federal Medical Assistance Percentages (FMAPs), respectively.  
The third attachment  is a chart of the States' CHIP reserved allotments, revised to include a $20 million increase in the FY 1998 Title 
XXI appropriation, which was one of the provisions of the recent technical amendments.  
HCFA staff is available to explain the proposed payment process in greater detail. If you have any questions or require further 
information, please contact your HCFA Regional Office.  
Sincerely,  
/s/  
Sally K. Richardson  
Director  
Center for Medicaid and State Operations  
Attachments
Attachment 1: Child Health Insurance Program (CHIP) and Related Medicaid Program Provisions Attachment 2: September 12, 1997 
Federal Register Notice (MB-115-N) Attachment 3: CHIP reserved allotments for FY 1998 revised to reflect additional $20 million 
appropriation.  
cc:  
Governors' Offices All HCFA Regional Offices All PHS Regional Offices State Health Officers Ms. Lee Partridge - Director Health 
Policy Unit - American Public Welfare Association Ms. Jennifer Baxendell - Senior Policy Analyst - Human Resources Group - 
National Governors' Association Ms. Joy Wilson - Director, Health Committee - National Conference of State Legislatures  
    
DRAFT 12/5/97
ATTACHMENT 1   
 
FINANCING PROVISIONS OF THE 
CHILD HEALTH INSURANCE PROGRAM (CHIP) AND 
RELATED MEDICAID PROGRAM PROVISIONS
 
 
 
TABLE OF CONTENTS
 
 
 
I.  OVERVIEW  1 
 
II.  EFFECTIVE DATE  2 
 
III.  ALLOTMENT PROCESS  2 
A.  GENERAL  2 
B.  RESERVED ALLOTMENT 2 
C.  FINAL ALLOTMENT  3 
1.  Final Allotment Formula  3 
a.  Determine the Number of States with Approved State Plans as of 
the End of the Fiscal Year  3 
b.  Factors in Determining States Final Allotments  3 
D.  PERIOD OF AVAILABILITY OF ALLOTMENT/REDISTRIBUTION 
PROCESS  4 
1.  3-Year Period of Availability (POA) of Allotment  4 
2.  Redistribution Process  4 
a.  Process for Redistribution of Fiscal Year Allotments  4 
I.  Identify the States Which Have Unused Amounts of 
Allotments for a Particular Fiscal Year  4 
ii.  Identify the Amounts of Unused State Allotments for a 
Particular Fiscal Year 5 
iii.  Redistribute the Unused Amounts of State Allotments for a 
Fiscal Year  5 
b.  Report/Track Final Expenditures  5 
 
IV.  ENHANCED FMAP  5 
 
V.  PAYMENT PROCESS  5 
A.  PAYMENT PROCESS OVERVIEW  5 
B.  TYPES OF PROGRAMS AND STATE OPTIONS 6 
1.  Section 1905(u)(2) and (3)  Eligibility  7 
2.  Presumptive Eligibility (PE)  8  Page 2 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
a.  Identify and Claim PE on Ongoing Basis - No Adjustments 8 
b.  Report After Actual Eligibility Determination  9 
c.  Identify and Claim PE on Ongoing Basis - Adjust After Actual 
Eligibility Determination  9 
C.  GRANT PROCESS  11 
1.  Obligation/Appropriation Requirement to Issue States Entire Fiscal Year 
Allotment as Grant Awards in the Fiscal Year  11 
2.  State Funding Requests/Amount and Issuance of Grant Awards  11 
a.  Budget Submissions/Grant Awards for First Three Quarters of the 
Fiscal Year  11 
b.  Budget Submissions/Grant Awards for Fourth Quarter of the Fiscal 
Year  11 
3.  Information Regarding State Administration of the Title XXI Program
  12 
D.  APPLICATION OF STATE EXPENDITURES AGAINST THE STATE 
ALLOTMENTS  12 
1.  OVERVIEW  12 
2.  PRINCIPLES FOR TRACKING EXPENDITURES AGAINST 
ALLOTMENTS  13 
1.  Title XIX Before Title XXI Expenditures (2104(d))  13 
2.  Expenditures Must Be Applied Against a Fiscal Year Allotment in  
the Quarter in Which they Are Claimed . (2104(b), (d), 2105(a))
  13 
3.  Expenditures Should be Applied Consistently Over the 3-Year 
Period of Availability (POA) for Fiscal Year Allotments (2101(a), 
2104(e), (f))  14 
4.  Title XIX Expenditures Should be Applied in the Order Which 
Provides the Most Benefit for States 14 
5.  Apply Expenditures and Allotments in the Least Administratively 
Burdensome, and Most Effective and Efficient Manner (2101(a))
  14 
6.  Application of Expenditures for One Fiscal Year Against a 
Subsequent Fiscal Year Allotment (2104(e), (f)).  14 
7.  Amounts of a States Prior Year Allotments that Have Not Been 
Expended and are Carried Over, are Available for Expenditures 
Within the 3-Year POA for the Carryover Allotment (2104(e), 
(f)).  14 
3.  EXAMPLES ILLUSTRATING APPLICATION OF  TRACKING 
PRINCIPLES 15 
E.  10 PERCENT LIMIT 16 
F.  ADMINISTRATIVE COSTS IN TITLE XXI  18 
1.  General  18 
2.  Administrative Costs are Differentiated  from Program Costs  19 
3.  Principles for Determining Administrative Expenditures  20 
a.  Federal Financial Participation (FFP) Rate for Administration Page 3 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
  20 
b.  Title XXI Funds for Administrative Expenditures Related to Title 
XIX Expansions  20 
c.  Administration of Title XXI, NOT Other Programs  21 
d.  Administrative Costs Included in Child Health Assistance  21 
e.  No Duplicate Payments  22 
f.  Payment for Startup Costs  22 
g.  Outreach  23 
h.  Coordination with Other Health Insurance Programs.  24 
G.  STATE MATCHING REQUIREMENTS UNDER TITLE XXI.  24 
1.  Use of Non-Federal Funds  24 
2.  Offset of Premiums and Other Cost Sharing Amounts  24 
3.  Provider Taxes and Donations  24 
4.  Reporting of Sources of Non-Federal Share. 25 
5.  Government/Department Wide Draw Down Requirements. 25 
6.  Public Funds. 25 
7.  In-Kind Contributions.  25 
H.  MAINTENANCE OF EFFORT (MOE).  25 
I.  PREVENTION OF DUPLICATIVE PAYMENTS  26 
1.  Other Health Plan Obligated to Provide Child Health Assistance  26 
2.  Payment Under Other Federal Governmental Programs  26 
J.  FAMILY PLANNING AND INDIAN HEALTH SERVICES (IHS)  26 
1.  Family Planning and Indian Health Services (IHS) Provided Under 
Presumptive Eligibility Provisions  26 
2.  Family Planning Services  27 
3.  Indian Health Services  27 
K.  APPLICATION OF CERTAIN GENERAL PROVISIONS. 27 
1.  Administrative and Judicial Review (Including Disallowance Process)
  27 
2.  Civil Monetary Penalties  27 
3.  Criminal Penalties  27 
4.  Timely Filing 27 
 
VI.  BUDGET AND EXPENDITURE SYSTEMS - REPORTING  27 
A.  Title XXI Report Forms  28 
1.  Form HCFA-21 - Summary Sheet  28 
2.  Form HCFA-21 Base/HCFA-21/HCFA-21P 28 
3.  Form HCFA-21E - Childrens Health Insurance Program Number of 
Children Served  28 
4.  Form HCFA-21L - Childrens Health Insurance Program Expenditures 
for the Title XXI Program Calculation of the 10 Percent Limit  29 
5.  Form HCFA-21C - Allocation of Title XIX and Title XXI Expenditures to 
CHIP Fiscal Year Allotment  29 
6.  Form HCFA-21B - Childrens Health Insurance Program Budget Report 
for the Title XXI Program State Expenditure Plan  29  Page 4 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
B.  Title XIX Medicaid Forms  29 
1.  Form HCFA-64.21 and 64.21U/64.21P and 64.21UP - Quarterly Medical 
Assistance Expenditures by Child Health Insurance Program Expenditure 
Categories  29 
2.  Form HCFA-64.21C - Allocation of Title XIX and Title XXI 
Expenditures to CHIP Fiscal Year Allotment 30 
3.  Form HCFA-64EA - Number of Adults Served for the Medical Assistance 
Program  30 
4.  Form HCFA-64EC - Number of Children Served by the Medical 
Assistance Program  30 
5.  Form HCFA-64.21E - Number of Children Related to Childrens Health 
Insurance Program  30 
6.  Form HCFA-37.3  30 
 
DRAFT 12/5/97
 
 
FINANCING PROVISIONS OF THE  
CHILD HEALTH INSURANCE PROGRAM (CHIP) AND 
RELATED MEDICAID PROGRAM PROVISIONS
 
 
 
I.  OVERVIEW   
 
The purpose of the new State Childrens Health Insurance Program (CHIP) under Title XXI of 
the Social Security Act (the Act), enacted under the Balanced Budget Act of 1997 (BBA) and 
technical amendments made by Public Law 105-100 on November 19, 1997,  is to provide 
Federal matching funds to States to enable them to extend coverage to uninsured, low-income 
children in an effective and efficient manner.  States are able to use Title XXI funds for obtaining 
health benefit coverage through (1) a CHIP State Program , (2) a CHIP Medicaid expansion, or 
(3) a combination of both. 
 
Because the focus of CHIP is on low-income children, Title XXI funds are only  available for 
targeted low-income children as described in law.  States therefore must describe the standards 
used to determine the eligibility of targeted low-income children under this new program. 
 
Under the statute, funding may NOT be used for children who are: 
 
 Eligible for Medicaid or covered through other health insurance coverage; 
 
 Inmates of a public institution; 
 
 Patients in an institution for mental diseases; or 
  5
Page 5 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
 In families who are eligible for coverage because of a family members 
employment with a public agency in the State. 
 
Although children eligible for other health insurance coverage generally are not eligible for Title 
XXI assistance, children currently covered by a State childrens health program that receives no 
Federal funds and was in operation since before July 1, 1997 can be considered eligible as 
targeted low-income children as long as the program is State-operated. 
 
In conjunction with CHIP, the BBA included three new provisions designed to increase 
childrens health care coverage through the Medicaid program: (1) presumptive eligibility for 
children; (2) coverage of Supplemental Security Income (SSI) Program children; (3) and the 
option to provide 12 months of continuous coverage. 
 
 
II.  EFFECTIVE DATE 
 
Under section 2101(d) of the Act, no State is eligible for payments under Title XXI for child 
health assistance for coverage provided for periods beginning before October 1, 1997. 
 
 
III.  ALLOTMENT PROCESS 
 
A.  GENERAL .  The amount of the Federal funds available for  Title XXI programs is 
limited for each fiscal year both nationally and on a State-specific basis.  Section 2104(a) of the 
Act specifies the national total allotment available for each fiscal year and section 2104(b) and 
(c) of the Act indicates the statutory formula for determining the amount of the allotment for 
each State, or Commonwealth and Territory, respectively.  The following sections describe the 
process under which the Health Care Financing Administration (HCFA) determines the amount 
of each States specific allotment for each fiscal year. 
 
The allotment process involves three determinations.  First, prior to the beginning of each fiscal 
year, HCFA will determine the amount of the reserved allotment for each State for that fiscal 
year, calculated in accordance with the statutory State allotment formula.  That amount is 
calculated as if every State had an approved Title XXI State plan.  This amount will be 
recalculated if some States fail to apply for their Title XXI allotment.  However, only with the 
submission and approval of a State plan by the end of the fiscal year will a States reserved 
allotment become its actual allotment. 
 
Second, at the end of each fiscal year, HCFA will determine a final allotment for each State for 
that fiscal year.  The final allotment will also be calculated in accordance with the statutory 
allotment formula, but based only on those States that have approved State plans for that fiscal 
year.   States which do not have approved State plans for that fiscal year will not receive a final 
allotment for that fiscal year.  Thus, in the final allotment process, the amount of the national 
allotment available for States for that year will be allotted only to those States whose plans have 
been approved by HCFA by the end of the fiscal year.  6
Page 6 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
 
Finally, in the third year following the State allotment fiscal year, under a redistribution 
process HCFA will determine the amounts of the unused fiscal year allotments from States that 
have not expended all of their allotment for that fiscal year and redistribute such amounts to 
States that have fully expended the amount of their allotments for that fiscal year.  
   
B.  RESERVED ALLOTMENT   For each fiscal year, beginning with FY 1998, 
HCFA will develop reserved allotments for the 50 States and the District of Columbia and the 
Commonwealths and Territories based on the principle that an allotment amount should be 
reserved for each State so that accurate planning may take place, regardless of whether the State 
has submitted and the Secretary has approved a State child health plan.  However, the reserved 
allotment does not represent an actual allotment available for a States use; the State allotment 
will only be available to the State once the State has submitted and HCFA has approved a Title 
XXI plan.  This means that in order for a State to receive its FY 1998 allotment, its Title XXI 
State plan must be submitted and approved by September 30, 1998.  As long as this plan remains 
in effect, a State will continue to be eligible to receive its  allotment for succeeding fiscal years. 
 
The reserved allotment for each State will be determined by HCFA using the statutory allotment 
formula and published in the Federal Register prior to the beginning of each fiscal year.  The FY 
1998 reserved allotments were published as a notice in the Federal Register on September 12, 
1997.  That notice, which is attached, provides further details on the reserved allotment process.  
The reserved allotments have been changed however, with the passage of technical corrections 
that add $20 million to the total allotment (see attached chart). 
 
 
C.  FINAL ALLOTMENT   In order to receive a final allotment for a fiscal year, a State 
must submit, and HCFA must approve, the CHIP State plan for that fiscal year before the end of 
the fiscal year.   Because of this requirement, it is critical that States submit their CHIP State 
plans as soon as possible during the fiscal year for which an allotment is needed.  For FY 1998, 
this means the plans must be approved by September 30, 1998.  The length of time from 
submission to approval will vary depending upon the quality of the plan and the extent to which 
the requirements under the law are met.   For FY 1998, HCFA cannot guarantee it will be able to 
approve plans submitted after June 30, 1998 by the end of the fiscal year.  Furthermore, for CHIP 
State plans that are not complete upon submission, HCFA may need to request additional 
information, thereby stopping the time clock on plan approval.  Therefore, States should submit 
their plans for approval as soon as possible before July 1, 1998. 
 
HCFA will determine the final allotments by the end of the fiscal year or very shortly thereafter, 
based on the actual number of State plans that have been submitted and approved by the end of 
such fiscal year.   At that time HCFA will publish the final allotments in the Federal Register. 
 
1.  Final Allotment Formula   The statutory formula for the final allotment is the same as 
the one used for determining the reserved allotment.  However, the potential difference between 
the final allotment and the reserved allotment relates to the actual number of States that have 
approved State plans for the fiscal year by the end of the fiscal year.    7
Page 7 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
 
The process/formula for determining the final allotment is as follows: 
 
a.  Determine the Number of States with Approved State Plans as of the End of the 
Fiscal Year   In order for a State to receive a final allotment for a fiscal year, HCFA must 
approve the CHIP State plan for that State by the end of the fiscal year.  Only States with 
approved State plans by the end of the fiscal year will be included in the final allotment 
calculation. 
 
b.  Factors in Determining States Final Allotments  In general, States final allotments 
will be determined in accordance with the statutory formula that is based on two factors, the 
Number of Children (those potentially eligible for CHIP),  and the State Cost Factor.  These 
factors will be multiplied to yield a final allotment product for each State. 
 
Once the final allotment product has been determined for all the States with approved CHIP 
plans, the products for each State will be added to determine a national total.  Then, each States 
product will be divided by this national total to determine a State specific percentage of the 
national total available amount for allotment  that each State would be eligible to receive.  
Finally, the State specific percentage is then multiplied by the national total amount available for 
allotment, resulting in the final allotment for each State. 
 
The final allotments for each state will be published as a notice in the Federal Register. 
 
D.  PERIOD OF AVAILABILITY OF ALLOTMENT/REDISTRIBUTION PROCESS 
  Sections 2104(e) and (f) of the Act, contain two provisions relating to the availability of 
funds under a specific fiscal year allotment, and the redistribution of States unused funds for a 
particular fiscal year allotment. 
 
1.  3-Year Period of Availability (POA) of Allotment   Section 2104(e) of the Act 
provides that the amount of a States CHIP allotment for a fiscal year shall remain available for 
expenditures by that State for a 3-year concurrent period; the fiscal year and the two subsequent 
fiscal years.  For example, a States FY 1998 allotment for a State with an approved plan would 
be available for that States expenditures for FY 1998 through FY 2000.  Furthermore, unused 
amounts of  States allotments will be redistributed (see below).  Such amounts will be available 
to the States through the end of the fiscal year of the redistribution.  If there is a redistribution, 
the POA therefore is extended for one additional fiscal year. 
 
2.  Redistribution Process   Section 2104(f) of the Act requires the Secretary to 
determine an appropriate procedure for the redistribution of the amounts of  States unused 
allotments to States that have fully expended their allotments for such fiscal year.  HCFA intends 
to redistribute the unused portions as soon as possible after the end of the 3-year POA for the 
fiscal year allotment. 
 
a.  Process for Redistribution of Fiscal Year Allotments    The following identifies the 
steps in the redistribution process:  8
Page 8 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
 
I.  Identify the States Which Have Unused Amounts of Allotments for a Particular 
Fiscal Year   As soon as possible after the end of the 3-year POA, HCFA will identify two 
categories of States: 
 
 States which have not expended all of  their allotments; and,  
 
 States which have expenditures at least equal to their allotments during the 3-year 
POA (the Redistribution States). 
 
ii.  Identify the Amounts of Unused State Allotments for a Particular Fiscal Year 
  For the first category of States, HCFA will identify the exact amounts of unused 
allotments.  The total of these unused allotment amounts will become the pool available to the 
second category of States. 
 
iii.  Redistribute the Unused Amounts of State Allotments for a Fiscal Year   A formula 
for redistribution of unused portions of State allotments will be determined by the Secretary.  
The redistribution amounts will be available for such States through the end of the fiscal year in 
which the redistribution is done.  For example, if the year for which unused allotments are being 
redistributed is FY 1998, the redistribution period would be both determined and available 
through the end of FY 2001 (that is, September 30, 2001). 
 
b.  Report/Track Final Expenditures  States that wish to receive redistribution funds 
would need to continue to report applicable expenditures even after their  allotments are 
exhausted.  States which have exhausted their allotments and do not wish to be considered for 
the redistribution would not be required to continue to report Title XXI expenditures for that 
purpose.  However, States must continue to report Title XXI related Medicaid expenditures to 
claim FFP at the regular Medicaid FMAP rate. 
 
 
IV.  ENHANCED FMAP 
 
Under sections 1905(b) and 2105(b) of the Act, as amended by the BBA, all allowable Title XXI 
and certain Title XIX  Medicaid expenditures will be matched at an enhanced FMAP.  The 
attached September 12, 1997 Federal Register describes the statutory formula for determining 
States enhanced FMAPs and contains each States enhanced FMAP for FY 1998. 
 
 
V.  PAYMENT PROCESS 
 
A.  PAYMENT PROCESS OVERVIEW   States with an approved State plan may 
receive a Title XXI grant award and may make claims for Federal matching payments from 
HCFA for expenditures permissible in Title XIX and Title XXI that are applied against their 
allotments.  The process under which the States will make claims for payment are described 
below in the following sections:  9
Page 9 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
 
 Types of programs and State options. 
 
 Grant process 
 
 Application of State expenditures against the State allotments 
 10 Percent Limit 
 
 Administrative Expenditures 
 
 State Matching Requirements under Title XXI 
 
 Maintenance of Effort Requirements 
 
 Prevention of Duplicate Payments 
 
 Family Planning and Indian Health Services (IHS) 
 
 Application of Certain General Provisions 
 
 Budget and Expenditure Systems Reporting 
 
 
B.  TYPES OF PROGRAMS AND STATE OPTIONS   The Title XXI program 
provides States with the flexibility for providing medical assistance to uninsured low-income 
children through the CHIP and/or Medicaid programs.  This is explicitly referenced in section 
2101(a) of the Act which indicates that States may provide assistance to low-income children in 
3 ways: 
 
 Under Title XXI only; 
 
 Under Title XIX only; 
 
 Under a combination of both programs. 
 
States may use a non-Medicaid Title XXI program to expand coverage to eligible low-income 
children.  The BBA also amended the Medicaid statute to offer States three optional categories 
for providing expanded benefits to children provided as Medical assistance in the Title XIX 
Medicaid program.  The three categories of expanded medical assistance benefits in Title XIX 
are: 
 
 Medical assistance provided to low-income children under section 1905(u)(2) of 
the Act (section 4911 of BBA); 
 
 Medical assistance provided to low-income children under section 1905(u)(3) of  10
Page 10 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
the Act (section 4911 of BBA) (poverty-related children whose coverage is 
accelerated under the CHIP); and 
  
 Medical assistance provided during a presumptive eligibility period for children 
under age 19 under section 1920A of the Act (section 4912 of BBA). 
The following principles provide a basis for determining how the choices a State makes 
determine the requirements for the reporting/tracking of the associated expenditures, application 
against the Title XXI allotment, and the FFP rates to be applied to the applicable expenditures. 
 
1.  FFP in expenditures in accordance with an approved XXI plan, and not under a 
Medicaid expansion, are funded directly from the Title XXI appropriation. 
 
2.  FFP in expenditures for services furnished under a Medicaid expansion are 
funded from the Title XIX Medicaid appropriation (whether or not referenced in a 
Title XXI plan).  However, for States with an approved Title XXI State plan, the 
amount of the Title XXI allotment must be reduced by the Title XIX expenditures 
related to the Medicaid expansions. 
 
3.  For purposes of tracking against a fiscal year CHIP Title XXI State allotment, 
applicable Medicaid Title XIX expenditures need to be properly identified, 
reported, classified, and tracked. 
 
4.  Title XIX expenditures related to medical assistance provided to individuals 
eligible under sections 1905(u)(2) and (u)(3) of the Act are applied against the 
Title XXI State allotment.  FFP is available for section 1905(u)(2) and section 
1905(u)(3) expenditures at the enhanced FMAP rate only until the States Title 
XXI allotment is exhausted, after which FFP is available at the regular Title XIX 
FMAP. 
 
 
1.  Section 1905(u)(2) and (3)  Eligibility   States have the option of covering certain 
low-income children in their Medicaid programs.  If a State has an approved Title XXI child 
health plan for such children, it may receive Federal funds at the enhanced FMAP for the 
Medicaid medical assistance expenditures provided to such children and such expenditures 
would apply against its allotment.  As described in the general principles above, the State can 
cover children under section 1905(u)(2) and (3) of the Act through a Medicaid State plan without 
having a Title XXI Child health plan.  In such a case, no Title XXI allotment would exist and no 
such expenditures would be applied against the allotment.  The FMAP rates are determined by 
whether the State has a Title XXI plan and the particular section of 1905(u) of the Act under 
which it is covering children.   
 
The following table summarizes the treatment of these two optional groups under Title XIX and 
XXI. 
 
  11
Page 11 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
 
 
 
MEDICAID  APPROPRIATION  HAS TITLE XXI PLAN  HAS NO TITLE XXI PLAN 
TITLE XIX  USED 
GROUP 
    APPLIED  FMAP USED  APPLIED  FMAP USED 
AGAINST  AGAINST 
ALLOTMENT  ALLOTMENT 
1905(u)(2)  Title XIX  Yes, until allotment  Enhanced, until  No  Regular FMAP
and (3)*  is used up  allotment is used 
  up. After, at 
regular FMAP* 
 
 
* Prior to the technical amendments made by Public Law 105-100 on November 19, 
1997, the enhanced FMAP continued to be available for expenditures related to 
1905(u)(3) of the Act even after a States allotment was used up.  With the enactment of 
P.L. 105-100, the treatment of expenditures related to section 1905(u)(2) and (3) is the 
same.  
 
 
2.  Presumptive Eligibility (PE)   Section 1920A of the Act permits States to provide 
medical assistance under their Title XIX Medicaid programs for up to two months to children 
during a PE period.  Expenditures classified as Medicaid PE expenditures under section 1920A 
of the Act may only be claimed as medical assistance and matched at the regular Federal medical 
assistance percentage (FMAP) under section 1905(b) of the Act.  Furthermore, if the State has an 
approved Title XXI child health plan, such PE payments under section 1920A of the Act must be 
tracked and applied against the Title XXI allotment. 
 
There are a number of options available to States for classifying and reporting medical assistance 
expenditures provided to children during the section 1920A PE period.  In particular, the actual 
eligibility category in which PE children are ultimately placed may also determine the treatment 
of States expenditures for such children during the PE period.  The options a State chooses with 
respect to reporting expenditures during the PE period and the ultimate eligibility (or 
ineligibility) category, will determine how the expenditures provided during the PE period would 
be treated for purposes of application against the allotment and the FMAP rate (regular or 
enhanced) to be applied. 
 
The following describes the options available to States for classifying and reporting expenditures 
as PE when it does have a Title XXI Child Health Plan and an associated fiscal year State 
allotment: 
 
a.  Identify and Claim PE on Ongoing Basis - No Adjustments   The State can identify 
and claim FFP for all PE expenditures on an ongoing basis (as such expenditures are incurred 
and claimed to the State) and claim FFP for them with no subsequent adjustments after the actual  12
Page 12 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
eligibility determination.  In this case, the amounts of the PE expenditures would be applied 
against the allotment and would be claimed at the regular Title XIX FMAP.  This approach may 
be the easiest for States to administer. 
 
b.  Report After Actual Eligibility Determination   The State can wait and report 
potential PE expenditures after the actual determination of eligibility; in that case it could 
classify the expenditures in accordance with the actual eligibility determination: 
 
 Expenditures for children determined to be in a regular Medicaid eligibility 
category (for example, the Temporary Assistance for Needy Families (TANF) 
program related eligibility under section 1931 of the Act), are funded at the 
regular FMAP and are not applied against the allotment. 
 
 Expenditures for children determined to be eligible under section 1905(u)(2) or 
(u)(3) with an approved Title XXI child health plan are funded at the enhanced 
FMAP. 
 
 Expenditures for children determined to be eligible under a States CHIP are 
funded at the enhanced FMAP. 
 
 Expenditures for children determined not to be eligible for either program are 
funded at the regular FMAP and, if the State has a Title XXI allotment, are 
applied against the allotment; that is, such expenditures are treated and reported as 
PE expenditures. 
 
c.  Identify and Claim PE on Ongoing Basis - Adjust After Actual Eligibility 
Determination   The State can identify and claim FFP for all PE expenditures on an 
ongoing basis, as such expenditures are paid by the State (as would be done in a. above).  
However, after the actual eligibility determination is made, adjustments would be made to reflect 
the actual eligibility category determination.  In this case, the amounts of the PE expenditures 
would be reported on an ongoing basis, applied against the allotment, and would be claimed at 
the regular Title XIX FMAP.  After the actual eligibility determination, the State would make an 
adjustment to the previously reported expenditures as in b. above. 
 
The chart on the following page describes the various options related to PE and the interaction 
between Title XIX and Title XXI. 
 
 
  Page 13 - ATTACHMENT - Child Health Insurance Program  DRAFT 12/5/97 
 
 
 
 
 
 
HOW TO REPORT PRESUMPTIVE ELIGIBLE (PE) EXPENDITURES ON A QUARTERLY BASIS 
  State Has Title XXI Plan  State Has No Title XXI Plan 
PE CASE 
    State Opts to Report During PE Period  State Opts to Reclassify Expenditures   
Appropriation 
Used 
    FMAP Rate Used  Counted Against   FMAP Rate Used  Counted Against  FMAP Rate Used  Counted 
During PE Period  Allotment During  After Final   Allotment After  Against 
PE Period  Determination  Final  Allotment 
Determination 
PE 1 - Ultimately  Title XIX  Regular Title XIX  Yes  Regular Title XIX  No  Regular Title XIX  No 
Determined to  
Be a Regular 
Title XIX Eligible 
PE 2 - Ultimately  Title XIX  Regular Title XIX  Yes  Enhanced Title XXI  Yes  Regular Title XIX  No 
Determined to Be  
1905(u)(2) or (u)(3) 
Eligible 
PE 3 - Ultimately  Title XIX  Regular Title XIX  Yes  Regular Title XIX  Yes  Regular Title XIX  No 
Determined to be 
NOT Eligible or Never 
Submits an Application 
  C.  GRANT PROCESS   (2105(e)) 
 
1.  Obligation/Appropriation Requirement to Issue States Entire Fiscal Year 
Allotment as Grant Awards in the Fiscal Year   Because of the Title XXI appropriation 
language, the Title XXI appropriated funds for each fiscal year (that is, the amounts referred to in 
section 2104(a)(1)-(10) of the Act, for the FYs 1998-2007, respectively) the entire Title XXI 
appropriation amount for each fiscal year must be obligated by the Federal government by the 
end of such fiscal year.  Any funds not obligated by the Federal government by the end of the 
fiscal year (that is, prior to the close of the related Federal governments accounting system for 
that fiscal year) will no longer be available to any State. 
 
The funds are obligated by issuing Title XXI grant awards.  To ensure that all of the appropriated 
funds are available to States, HCFA will issue grant awards to all States with Title XXI State 
plans approved by the end of the fiscal year which equal, in total, the national amount available 
for allotment to the 50 States, the District of Columbia, and the Commonwealths and Territories 
for that fiscal year.  Such grant awards must be issued  by the time the HCFA/HHS accounting 
system closes with respect to that fiscal year.   The total of the grant awards for the fiscal year 
will equal the States, Commonwealths, and Territories final allotments, described earlier.  
Therefore, it is important for Title XXI plans to be submitted as soon as possible before July 1, 
1998. 
 
2.  State Funding Requests/Amount and Issuance of Grant Awards   As indicated 
above, in order to ensure that all appropriated funds are available, HCFA will need to issue Title 
XXI grant awards to all States with approved State plans by the close of the fiscal year in 
amounts equal to the total available fiscal year appropriation. 
 
a.  Budget Submissions/Grant Awards for First Three Quarters of the Fiscal Year 
  For the first three quarters of the fiscal year, each State with an approved plan will submit 
a budget request in an appropriate format.  HCFA is developing both budget and expenditure 
reporting mechanisms and forms, for this purpose.  For the first three quarters of the fiscal year, 
HCFA will review, determine the amount of, and issue grant awards, based on the States Title 
XXI budget request submissions. 
 
b.  Budget Submissions/Grant Awards for Fourth Quarter of the Fiscal Year   For the 
fourth quarter of the fiscal year, States will also submit their Title XXI budget requests.  
However, although HCFA will review the States fourth quarter budget requests, and such 
budget request amounts will be used to project States actual outlays for the quarter, the final 
grant award for the fourth quarter will be based on the amount of the States final allotments for 
the fiscal year.  This is necessary because, in order to obligate and thereby protect the full 
amount of the appropriation,  the grant awards for the entire fiscal year for all States with 
approved plans  must total the full amount of the available appropriation. 
 
Because the States final allotments for the fiscal year may differ from their reserved allotments, 
two grant awards may be needed forthe fourth quarter ofthefiscal year Each States initial fourth quarter grant award will be based on the difference between the States reserved allotment 
for the fiscal year, and the total of the grant awards for the first three quarters that have already 
been issued.  The effect of this is that the total of the grant awards to each State for the four 
quarters of the fiscal year will equal the States reserved allotment for the fiscal year.  However, 
a second (final) grant award may be issued by the close of that fiscal year, obligating any 
additional funds a State may be due as a result of the calculation of the States final allotment.  
This is necessary because a States final allotment may be greater than its reserved allotment; 
and as a result, the total of all grant awards issued to the State for the fiscal year must equal the 
States final allotment for that fiscal year. 
 
3.  Information Regarding State Administration of the Title XXI Program   In 
order to issue a Title XXI grant award to the proper State official, each State will need to provide 
HCFA with the following information regarding the administration of the Title XXI program: 
 
   Name and address of the State agency/organization administering the 
Title XXI program 
 
 The employer identification number (EIN) 
 
 A State financial official contact name and telephone number. 
 
Note, if this information is the same as that for the Medicaid program, the Payment Management 
Systems (PMS) account information should already be established and would be used for the 
Title XXI program.  Similarly, the organization administering the Title XXI program may not be 
the same as the Medicaid agency, in which case the PMS will search its central registry system to 
determine if an EIN already exists for the organization.  If it does, that information would be 
used for the Title XXI program.  If there is no EIN for the Title XXI organization, the PMS will 
assign the proper payment identification number (PIN) number to establish the Title XXI agency.  
 
 
D.  APPLICATION OF STATE EXPENDITURES AGAINST THE STATE 
ALLOTMENTS  
 
1.  OVERVIEW  Title XXI statute requires that two categories of expenditures be tracked 
against the Title XXI fiscal year allotments: 
 
 Title XXI expenditures (referred to in 2105(a) of the Act) 
 
 Certain Title XIX Medicaid Expenditures (referred to in 2104(d) of the Act) 
 
These two categories of expenditures must be reported appropriately and applied against the 
allotments.  The following sections describe how the coordination, reporting, and application of 
the Title XIX and Title XXI expenditures against the Title XXI fiscal year allotments will take 
place.  2. PRINCIPLES FOR TRACKING EXPENDITURES AGAINST ALLOTMENTS
  Under 2104(d) of the Act, Title XXI fiscal year allotments must be reduced by the 
following categories of  expenditures: 
 
 Payments for certain low-income children under 1905(u)(2) and(u)(3) of the 
Act (referred to as u  and u  payments); 
2 3
 
 Payments to States for medical assistance during a presumptive eligibility period 
under 1920A of the Act (referred to as PE payments); 
 
 Payments to States for child health assistance under section 2105(a) of the Act. 
 
The following principles, based in statute, will be used by HCFA to: 
 
 Coordinate the application of the Title XIX and Title XXI expenditures against 
the Title XXI fiscal year allotments 
 
 Determine the order of these expenditures in such application;  and 
 
 Determine how such expenditures apply against multiple fiscal year allotments. 
 
 
1.  Title XIX Before Title XXI Expenditures (2104(d)) .  Under the statute, 
Title XIX expenditures must be applied against Title XXI fiscal year allotments 
before Title XXI expenditures are applied.  Specifically, u , u , and PE payments 
2 3
under the Medicaid program are applied before any Title XXI payments are 
applied. 
 
2.  Expenditures Must Be Applied Against a Fiscal Year Allotment in  the 
Quarter in Which they Are Claimed . (2104(b), (d), 2105(a)) . Title XIX and 
Title XXI expenditures must be applied against  a fiscal year allotment based on 
the quarter in which they are claimed.  Thus, Principle 1 above applies only on the 
basis of the quarter the expenditures are claimed   For example, if Title XXI 
expenditures were claimed in one quarter and Title XIX expenditures were 
claimed in a second, subsequent quarter, the Title XXI expenditures claimed in 
the first quarter would be applied against the fiscal year allotment  before the Title 
XIX expenditures claimed in the second quarter. 
 
3.  Expenditures Should be Applied Consistently Over the 3-Year Period of 
Availability (POA) for Fiscal Year Allotments (2101(a), 2104(e), (f)) . In 
order to treat States consistently in the redistribution process, HCFA will attempt 
to apply the same ordering of expenditures and allotments for all States. 
 
4.  Title XIX Expenditures Should be Applied in the Order Which Provides the 
Most Benefit for States Title XIXexpenditures shouldbe appliedinthe order that maximizes Federal reimbursement for States.   We believe the order 
which most benefits States is as follows: u  expenditures first, then u  
2 3
expenditures, and lastly PE expenditures.  This is because the u  and u  are 
2 3
funded at the enhanced FMAP rate which drops to the regular FMAP rate when 
the allotment is exhausted.  PE expenditures are always matched at the regular 
(lower) FMAP, and also continue to be matched  after the allotment is exhausted. 
 
5.  Apply Expenditures and Allotments in the Least Administratively 
Burdensome, and Most Effective and Efficient Manner (2101(a)) .  To the 
greatest extent possible, HCFA will use processes which are the least 
administratively burdensome, and the most effective and efficient.  We believe 
the first-in-first-out (FIFO) method should be applied both with respect to the 
application of expenditures against the allotment and the availability of fiscal year 
allotments.  Thus, expenditures would be applied against a fiscal year allotment in 
the order they are claimed, and an earlier fiscal year allotment would be used 
before a subsequent fiscal year allotment.  For example, in the case where a State 
had FY 1998 allotment amounts carried over to FY 1999, expenditures claimed in 
FY 1999 would first be counted against the FY 1998 carryover allotment amounts 
before counting them against the FY 1999 allotment (see Principle 7). 
 
6.  Application of Expenditures for One Fiscal Year Against a Subsequent Fiscal 
Year Allotment (2104(e), (f)).   Expenditures claimed in one fiscal year 
would be applied against a subsequent fiscal years allotment, if the earlier fiscal 
years allotment was exhausted.  However, this could not be done until the 
subsequent years allotment was actually available.   For example, expenditures 
claimed in  FY 1998 after the FY 1998 allotment was exhausted  would  be 
applied against the FY 1999 allotment, but only after FY 1999 had begun. 
 
 
 
7.  Amounts of a States Prior Year Allotments that Have Not Been Expended 
and are Carried Over, are Available for Expenditures Within the 3-Year 
POA for the Carryover Allotment (2104(e), (f)).   Under FIFO (see 
Principle 5), unexpended amounts of an allotment for a fiscal year would be 
carried over for use in subsequent fiscal years and through the end of the 3-year 
POA.  Furthermore, the carried over allotment would be used before the 
subsequent fiscal year allotment was used.  For example, unspent amounts of the 
FY 1998 allotment may be carried over up through FY 2000.  The carried over 
amounts of the FY 1998 allotment would be used before the allotments for FYs 
1999 - 2000; that is, expenditures for FYs 1999 and 2000 would be applied 
against the FY 1998 carryover amount before being applied against the FYs 1999 
- 2000 allotments (Principle 5).   
 
Application of Principles 5-7 may mitigate the necessity of having to go through a redistribution 
process because earlier allotments wouldbe exhaustedbyexpenditures astheywere claimed during the POA.
 
 
3.  EXAMPLES ILLUSTRATING APPLICATION OF  TRACKING PRINCIPLES  
 
The following examples illustrate the above principles. 
 
 Example 1 - Illustration of Principle 1.  The amount remaining of the FY 
1998 allotment is $5 million.  Title XIX expenditures claimed  in a quarter are $4 
million.  Title XXI expenditures claimed in the same quarter are $3 million.  
Under Principle 1, the $4 million in Title XIX expenditures are applied against the 
remaining $5 million of the FY 1998 allotment first, leaving $1 million remaining 
of the FY 1998 allotment.  Therefore, FFP would be available for only $1 million 
of the $3 million in Title XXI expenditures; and at that point, the FY 1998 
allotment would be exhausted.  The remaining $2 million in claims for Title XXI 
expenditures would have to be funded by the State. 
 
 
 Example 2 - Illustration of Principle 2.  The FY 1998 allotment is $5 million.  
In quarter 1 of FY 1998, $3 million in Title XXI expenditures are claimed.  In 
quarter 2 of FY 1998, $4 million in Title XIX expenditures are claimed.  Since the 
$3 million in Title XXI expenditures were claimed (first) in quarter 1, under 
Principle 2, they would be applied first against the FY 1998 allotment.  This 
would leave $2 million remaining under the FY 1998 allotment.  In quarter 2 only 
$2 million in FFP would be available from the FY 1998 allotment with respect to 
the $4 million Title XIX expenditures claimed in that quarter.  At that point, the 
FY 1998 allotment would be exhausted, and FFP for the remaining $2 million in 
Title XIX expenditures would be available under Medicaid at the regular 
Medicaid FMAP. 
 
 Example 3 - Illustration of Principle 4.  The FY 1998 allotment is $5 million.  
In Quarter 4 of FY 1998 the following expenditures are claimed: u  $5 million, u  
2 3
$4 million, and PE $1 million.  In accordance with Principle 4, in this case the $5 
million u  expenditures would be applied against the FY 1998 allotment first.  
2
Since the amounts of the u  expenditures and the FY 1998 allotment are the same, 
2
the entire amount of u  expenditures would be reimbursed at the enhanced FMAP.  
2
Although the $5 million FY 1998 allotment has been exhausted, the u  and PE 
3
expenditures would still be reimbursed under the Medicaid program at the regular 
FMAP rate.  Again, this is because the regular Medicaid FMAP rate continues for 
these groups, even though the FY 1998 allotment was exhausted. 
 
 Example 4 - Illustration of Principle 6.  The FY 1998 and 1999 allotments 
are $5 million for each fiscal year.  The State claims $6 million in Title XXI 
expenditures for FY 1998, and $4 million in Title XXI expenditures for FY 1999.  
Inthiscasethe $6millionFY1998expendituresreducethe FY1998allotment to $0 with $1 million of the FY 1998 expenditures remaining unpaid.  When the FY 
1999 allotment becomes available, the remaining $1 million in FY 1998 
expenditures would be applied against the FY 1999 allotment, leaving $4 million 
remaining of the FY 1999 allotment.  The $4 million in Title XXI FY 1999 
expenditures claimed would then be paid from the FY 1999 allotment, thereby 
exhausting the remaining FY 1999 allotment. 
 
 Example 5 - Illustration of Principles 5 and 7.  The FY 1998 and 1999 fiscal 
year allotments are $5 million for each fiscal year.  The State claims  $4 million in 
Title XXI expenditures for FY 1998 and $6 million in Title XXI expenditures for 
FY 1999.  Since the FY 1998 was only reduced by the $4 million amount in FY 
1998 Title XXI expenditures, the $1 million remaining of the FY 1998 allotment 
would be carried over to FY 1999.  In applying the FY 1999 expenditures, $1 
million of the $6 million would first  be applied against the carryover of the FY 
1998 allotment.  The remaining $5 million for the FY 1999 claims  would be 
applied against the remaining $5 million allotment for FY 1999, reducing the 
remaining FY 1999 allotment to $0. 
 
 
E.  10 PERCENT LIMIT   Under 2105(c)(2)(A) of the Act, FFP at the enhanced 
FMAP is available only up to a 10 Percent Limit for certain categories of State Title XXI 
expenditures: 
 
 Administrative expenditures; 
 
 Outreach; 
 
 Health services initiatives; and 
 
 Certain other child health assistance 
 
Under the 10 Percent Limit, the total computable amount of the above States Title XXI 
expenditures (representing the combined total  State and Federal share of the expenditures) for 
which FFP is available cannot exceed 10 percent of the sum of the following: 
 
 The total computable amount of expenditures under 2105(a) of the Act,  
 
 The total computable amount of  expenditures for which the enhanced FMAP was 
available under 1905(u)(2) and (u)(3) of the Act. 
 
The 10 Percent Limit is applied on an annual fiscal year basis, and may be waived by the 
Secretary under section 2105(c)(2)(B) of the Act when coverage is provided through cost-
effective community based health delivery systems.  Note, prior to the technical amendments 
enacted under Public Law 105-100 on November 9, 1997, the 10 Percent Limit was calculated 
on a quarterly basis Furthermore prior tothe technicalamendments thelimit was calculatedon the basis of the Federal share of the expenditures while the expenditures applied against the limit 
were in total computable amounts.  The technical amendments made the calculation of the limit 
and the expenditures applied against the limit be based on total computable amounts. 
 
The following formula for the 10 Percent Limit (L ) is in accordance with the referenced 
10%
statutory provisions.  Note, as indicated, the 10 Percent Limit (L ) is a limit on the amounts of 
10%
total computable expenditures for which FFP is available.  Also, the expenditures that are used to 
calculate the limit are also in total computable amounts. 
 
L  = (a  + u  + u )/9 
10% 1 2 3
 
a   =  Total computable expenditures for the fiscal year under 
1
2105(a)(1) of the Act 
 
u =  Total computable expenditures for the fiscal year under 
2 
1905(u)(2) of the Act 
 
u   =  Total computable expenditures for the fiscal year under 
3
1905(u)(3) of the Act 
 
The applicable expenditures are subject to the 10 Percent Limit on an annual fiscal year 
basis. 
 
The following example illustrates the calculation of the 10 Percent Limit: 
 
Example.  The States Title XXI enhanced FMAP is 65% (that is, 0.65).  The total 
computable expenditures claimed for the fiscal year for the 2105(a)(1) category (a ) is 
1
$10 million; the Federal share claimed for those expenditures is $6.5 million (.65 x $10 
million).  The total computable expenditures claimed for the fiscal year  for the 
2105(a)(2)(A)-(D) category is $3 million; the Federal share claimed for those 
expenditures is $1.95 million (.65 x $3 million).  The total computable expenditures 
claimed for the fiscal year for the 1905(u)(2) category (u ) is $3 million; and the Federal 
2
share claimed for those expenditures is $1.95 million (.65 x 3 million).  The total 
computable expenditures claimed for the fiscal year for the 1905(u)(3) category (u )is 
3
$2 million; and the Federal share claimed for those expenditures is $1.3 million (.65 x 2 
million). 
 
In this example,  the 10 Percent Limit is a total computable amount of  $1,666,667,  
calculated as follows: 
 
 
L  = (a  + u  + u )/9 
10% 1 2 3
 
a   =  Total computable expenditures for the fiscal year under 
1
2105(a)(1)of the Act u =  Total computable expenditures for the fiscal year under 
2 
1905(u)(2) of the Act 
 
u   =  Total computable expenditures for the fiscal year under 
3
1905(u)(3) of the Act 
 
10 Percent Limit  = (($10 million (a ) + $3 million (u ) + $2 million (u ))/9 
1 2 3
 
= $15 million/9 = $1,666,667 
 
In this example, FFP would not be available for that portion of the 2105(a)(2) 
expenditures that are in excess of the 10 Percent Limit of $1,666,667, a total computable 
amount.  Thus, although the State submitted $3 million in total computable amounts of 
2105(a)2) expenditures, only $1,666,667 of the $3 million total computable amount 
would be allowable, and the remainder of $1,333,333 total computable amount would be 
potentially disallowable. 
 
Under this Example, the allowable amount of Federal funds available under the 10 
Percent Limit would be $1,083,334 (.65 x $1,666,667); and the unreimbursable amount 
of Federal funds in excess of the 10 Percent Limit would be $866,667 (.65 x $1,333,333). 
 
 
F.  ADMINISTRATIVE COSTS IN TITLE XXI  
 
1.  General   Title XXI of the Act does not contain a specific definition of 
administrative expenditures.  However, section 2105(a)(2)(D) of the Act  indicates that payment 
under title XXI is available for the other reasonable costs incurred by the State to administer the 
plan.  Administrative expenditures, and certain other expenditures specified in statute (other 
child health assistance, health services initiatives, and outreach activities) in excess of the 10 
Percent Limit described above would not be considered to be reasonable.  Additionally, in 
general, section 2101(a) of the Act refers to the provision of  child health assistance by States in 
an effective and efficient manner.   Other sections of title XXI provide additional guidance 
related to what may be considered effective and efficient and/or identified as administrative 
activities: 
 
 Data Collection/Records/Reports. Section 2107(b)(1) of the Act requires State 
child health plans to assure that data is collected, records maintained, and reports 
provided to the Secretary, for the purpose of enabling the Secretary to monitor 
State program administration and compliance and to evaluate and compare the 
effectiveness of State plans under Title XXI. 
 
 Annual Assessment of Operation of State Plan/Report to Secretary.  Section 
2108(a)(1) of the Act, requires States on an annual basis to assess the operation 
ofthe Stateplanunderthis title ineachfiscal year includingthe progress made in reducing the number of uncovered low-income children, and report the results of 
this assessment to the Secretary. 
 
 Assessment of Effectiveness.  Section 2108(b)(1)(A) of the Act refers to 
an assessment of the effectiveness of the State plan in increasing the number of 
children with creditable health insurance. 
 
 Quality Assurance.   Section 2102(a)(7) of the Act refers to methods 
(including monitoring) to assure quality and appropriateness of care under the 
Title XXI State plan.   Section 2108(b)(1)(B)(ii) of the Act refers to State 
evaluations of the quality of health care coverage in the States Title XXI State 
plan. 
 
 Eligibility Determinations. Section 2102(b) of the Act refers to activities 
related to eligibility determinations such as screening and intake. 
 
 Outreach and Coordination.  Sections 2102(a)(3), (b)(3), and (c), and 
2108(b)(1)(D) of the Act refers to coordination and outreach activities (see 
subsections g. and h. below). 
 
 Measurement of Performance.  Section 2107 of the Act generally refers to 
activities related to measurement of performance. 
 
 Public Involvement. Section 2107(c) of the Act refers to activities related to the 
process used to involve the public in the designg and implementation of the plan 
and the method for ensuring ongoing public involvement.  
 
 
2.  Administrative Costs are Differentiated  from Program Costs   For purposes of 
payment under section 2105(a) of the Act, administrative costs are differentiated from the 
program costs referred to as child health assistance in section 2105(a)(1) of the Act (child 
health assistance is further defined in section 2110(a) of the Act).  Child health assistance is 
generally referred to as payment for part or all of the cost of health benefits coverage for 
targeted low-income children.  Payment for such program costs are not considered to be 
payment for administrative costs, and are generally not subject to the 10 Percent Limit. 
 
3.  Principles for Determining Administrative Expenditures   The following 
principles are applicable for determining the allowability, category, and amount of payment for 
administrative expenditures under Title XXI: 
 
a.  Federal Financial Participation (FFP) Rate for Administration  Under section 
2105(b)(1) of the Act, all Title XXI expenditures, including those for administrative costs, are 
matched at a rate equal to the enhanced Federal Medical Assistance Percentage (FMAP). 
 
b Title XXI Funds for Administrative Expenditures RelatedtoTitle XIXExpansions In general, the enhanced matching rate under Title XXI is not available for administrative 
costs for activities related to other non-Title XXI programs.  An exception to this is that a State 
may elect (at its option) to claim FFP at the Title XXI enhanced matching rate for all Title XIX 
administrative activities directly related to certain Title XIX program expansions that are the 
result of the CHIP legislation.  Specifically, this refers to coverage under Title XIX of targeted 
low-income children under sections 1905(u)(2) and (3) of the Act, and provision of medical 
assistance to a child under Title XIX during a presumptive eligibility period under section 1920A 
of the Act. 
 
If a State elects to claim these Title XIX administrative costs under Title XXI, the State must 
continue to claim all such expenditures on the Title XXI expenditure forms (discussed below) 
until the 10 percent limit and/or the Title XXI allotment is reached. Such expenditures will: (1) 
reduce the States Title XXI allotment, (2) count against the States 10 percent limit, (3) be 
reimbursed at the enhanced Title XXI matching rate, and (4) be paid for out of the Title XXI 
appropriation. 
 
Once the State reaches its 10 percent limit and/or its Title XXI allotment it may then revert to 
claiming all such administrative expenditures under the Medicaid program as discussed below.  
This option of claiming the administrative expenditures under Medicaid is only applicable to 
expendtures for CHIP-related Medicaid expenditures. 
 
Alternatively, a State may elect (at its option) not  to claim FFP at the Title XXI enhanced 
matching rate for Title XIX administrative activities directly related to the Title XXI related Title 
XIX program expansions.  If a State elects to claim for these administrative expenditures under 
Medicaid, the State must continue to claim all such expenditures on the Title XIX expenditure 
forms.  Such expenditures will: (1) not reduce the States Title XXI allotment, (2) not count 
against the States 10 percent limit, (3) not be reimbursed at the enhanced Title XXI matching 
rate, but will be reimbursed at the applicable Medicaid administrative matching rate, and (4) be 
paid for out of the Title XIX appropriation. 
 
The following principles summarize the treatment as administrative costs for Title XIX 
activities: 
 
 States that do NOT Elect CHIP Related Title XIX Expansions.   States that do 
not choose to cover the CHIP related Title XIX expansions will only be able to 
claim for allowable administrative costs under their Title XXI program.  
 
 States that DO Elect CHIP Related Title XIX Expansions.  States that do 
choose to cover the CHIP related Title XIX expansions have a choice of programs 
under which to claim FFP for the related administrative expenditures.  If claimed 
under Title XXI, the FFP rate is the enhanced FMAP; if claimed under Title XIX, 
the FFP rate is the regular Medicaid FFP. 
 
c.  Administration of Title XXI, NOT Other Programs   Allowable Title XXI 
administrative activitiesshouldsupport operationofthe Title XXI Stateplan FFPfor administration under Title XXI would NOT be available for activities related to other programs.  
For example, FFP would not be available for generalized health education or social service 
functions (however, see the exception regarding Title XIX expansions discussed above in 
subsection b., and the exceptions regarding outreach and coordination discussed below in 
subsections g. and h.). 
 
 
d.  Administrative Costs Included in Child Health Assistance   Child health assistance 
means payment for part or all of the cost of health benefits coverage for any of the categories of 
services listed in section 2110(a) of the Act.  State Title XXI administrative expenditures, 
considered under section 2105(a)(2)(D) of the Act as  other reasonable costs incurred by the 
State to administer the plan, are applied against the 10 Percent Limit. 
 
State child health assistance expenditures includes State payments made directly to providers as 
well as payments for the purchase of health insurance coverage.  The reimbursement rates 
associated with the direct payments to providers may account for/include certain administrative 
costs of the providers related to furnishing the services.  Similarly, the reimbursement rates 
associated with payments for health insurance coverage, such as capitation payments, may also 
account for/include certain administrative costs of the managed care entities contracted to the 
State to provide child health assistance.   However, the administrative costs included in the child 
health assistance reimbursement rates are NOT considered as State administrative expenditures 
of the Title XXI in this regard; rather, such costs are considered to be State program (that is, 
child health assistance) expenditures, similar to the way capitation administrative expenditures 
are claimed under Medicaid.  Therefore, these costs are not applied against the 10 Percent Limit. 
 
Note, there are two categories of child health assistance expenditures; those considered under 
section 2105(a)(1), which is the basic child health assistance program described in section 2103 
(and within the definition under section 2110(a)), and those under section 2105(a)(2)(A), which 
are other child health assistance expenditures outside of the basic program.  For example, section 
2105(a)(2)(A) expenditures might include a program to provide free immunizations for all 
children in the primary school system in a low-income area.  Child health assistance 
expenditures under 2105(a)(1) are exempt from the 10 Percent Limit, while all other child 
health assistance expenditures under section 2105(a)(2)(A) are applied against the 10 Percent 
limit.  State administrative expenditures related to the provision of child health assistance under 
both section 2105(a)(1) and (a)(2)(A) are applicable against the 10 Percent Limit. 
 
e.  No Duplicate Payments   Payments for allowable Title XXI administrative activities 
should not duplicate payments that are included and paid as part of another payment mechanism, 
for example: 
 
 rates for outpatient clinic services  
 
 case management services 
 
part ofa capitation rate  other provider rate 
 
 through some other program (e.g., State/Federal) 
 
Furthermore, in no case should there be reimbursement for more than the actual costs incurred by 
a State.  That is, amounts in excess of actual costs are not considered to be costs incurred by the 
State.  It is the States responsibility to ensure that there is no duplication in the claims prior to 
the State submitting any claims for HCFA review. 
 
f.  Payment for Startup Costs  Under title XXI, FFP is available at the enhanced FMAP 
for a States program and administrative expenditures (including related startup costs) during a 
period for which the State has an approved title XXI plan in effect.  Initial State plans can be 
approved effective as early as October 1, 1997.  As indicated above, such administrative 
expenditures (under section 2105(a)(2) of the Act) are subject to the 10 Percent Limit which is 
calculated on a fiscal year basis.  Therefore, startup costs will be limited by the amount of 
section 2105(a)(1), 1905(u)(2) and 1905(u)(3) expenditures claimed during the fiscal year in 
which the startup period occurs.  The following example illustrates the availability of FFP for 
startup costs. 
 
Example.  The 10 Percent Limit formula is: 
 
   L  = (a  + u  + u )/9  Where a  = 2105(a)(1) expenditures,  u = 1905(u)(2) 
10% 1 2 3 1 2 
expenditures, and u  = 1905(u)(3) expenditures 
3
 
In the first two quarters of the fiscal year, the States a , u , and u  expenditures are $0 and the 
1 2 3
States start up administration expenditures (a  expenditures) are $2.0 million.  In the third 
2
quarter of the fiscal year, the a , u , and u  expenditures total $.5 million and the startup and 
1 2 3
other (a ) administrative expenditures are $1.5 million.  In the fourth quarter of the fiscal year, 
2
the a , u , and u  expenditures total $8.5 million and the startup and other (a ) administrative 
1 2 3 2
expenditures are $1.0 million.  The totals for the fiscal year are:  $9.0 million ($0 + $.5 million + 
$8.5 million) in a , u , and u  expenditure, and $4.5  ($2.0 + $1.5 million + $1.0 million) in 
1 2 3
startup and other (a ) administrative expenditures.  In this example, the 10 Percent Limit is $1.0 
2
million, calculated as follows: 
 
L  = (a  + u  + u )/9   = $9.0 million/9 = $1.0 million 
10% 1 2 3
 
In this example, FFP would be available at the enhanced FMAP for $1.0 million of the 
$4.5 million of administrative costs.  Thus, the relatively lower benefit expenditures at 
the beginning of the fiscal year combined with the relatively higher benefits expenditures 
at the end of the fiscal year serve as the basis for the final 10 Percent Limit calculated on 
a fiscal year basis.    
 
It is important to note that if a State has no expenditures other than, for example, startup 
administrative expenditures undersection 2105(a)(2)(D) ofthe Act duringa fiscal year noFFP under Title XXI will be available for such expenditures.  This is because the 10 Percent Limit in 
this example would be $0 calculated as follows: 
 
   L  = (a  + u  + u )/9 = ($0 + $0 + $0)/9 = $0 
10% 1 2 3
 
 
g.  Outreach   Outreach activities are specifically referenced and defined in sections 
2102(c)(1) and 2105(a)(2)(C) of the Act as: 
 
Outreach to families of children likely to be eligible for child health assistance under the 
plan or under other public or private health coverage programs to inform these families of 
the availability of, and to assist them in enrolling their children in, such a program. 
 
Therefore, FFP is available for activities related to Title XXI eligibility outreach and intake, in 
order to enroll children in the Title XXI program.  FFP may also be available for such outreach 
related to public or private health coverage programs.  Under section 2105(c)(2)(A) of the Act, 
outreach activities are subject to the 10 percent limit, unless subject to a variance of the 10 
Percent Limit under section 2105(c)(2)(B) of the Act. 
 
As indicated in subsection b. above, States may choose how to claim FFP for expenditures for 
outreach activities related to CHIP.  If claimed under Title XXI, FFP would be available at the 
enhanced FMAP rate and subject to the 10 Percent Limit; if claimed under Title XIX, FFP for 
such expenditures  would be available at the regular Medicaid FFP rate for administration. 
h.  Coordination with Other Health Insurance Programs.   Section 2102(c)(2) of the 
Act, specifically allows for administrative activities related to coordinating administration of the 
States Child Health Insurance Programs with other public and private health insurance 
programs.   Therefore, FFP at the enhanced FMAP rate is available under Title XXI specifically 
for coordination activities related to the administration of Title XXI with  other public and 
private health insurance programs.   As indicated in subsection c. above, FFP would not be 
available for the costs of administering the other public and private health insurance programs.  
Coordination activities must be distinguished from other administrative activities common 
among different programs. 
 
As indicated in subsection b. above, States may choose how to claim FFP for expenditures for 
coordination activities related to CHIP.  If claimed under Title XXI, FFP for such expenditures 
would be available at the enhanced FMAP rate and subject to the 10 Percent Limit; if claimed 
under Title XIX, FFP would be available at the regular Medicaid FFP rate for administration. 
 
 
G.  STATE MATCHING REQUIREMENTS UNDER TITLE XXI.    There are a 
number of provisions relating to the funds States may use as the State share of Title XXI 
expenditures:  
 
1.  Use of Non-Federal Funds   Section 2105(c)(4) of the Act indicates that amounts 
providedbythe Federalgovernment or servicesassisted or subsidized toany significant extent by the Federal government, may not be included in determining the amount of non-Federal 
contributions...   
 
2.  Offset of Premiums and Other Cost Sharing Amounts   Section 2105(c)(5) of the Act 
establishes that a State must offset the amount of expenditures it can claim against its allotment 
by any premiums or other cost-sharing receipts that it collects.  Amounts of States beneficiary 
cost sharing receipts would not be considered part of the State match for expenditures under Title 
XXI as described in section 2105(c)(5) of the Act.  Beneficiary cost-sharing revenues must be 
applied to offset, that is reduce, Federally matchable Title XXI expenditures.  Thus, such 
revenues effectively reduce both the State and Federal shares of allowable Title XXI 
expenditures. 
 
For example, if the total expenditure for a beneficiary is $1,000 and the State collects $100 in 
beneficiary cost-sharing, the net expenditure claimable for Title XXI against the States 
allotment is $900.  If the enhanced Federal matching rate for that State is 65 percent, the Federal 
government would provide $585 and the State would provide $315.  As a result, the amount from 
the beneficiary cost-sharing is distributed proportionately between the State and Federal 
government.  
 
3.  Provider Taxes and Donations   Section 2107(e)(1)(C) of the Act imposes the same 
limitations on the use of provider taxes and donations as State share as are imposed under 
Section 1903(w) of Title XIX. 
4.  Reporting of Sources of Non-Federal Share.   Section 2107(d) requires the State 
child health plan to include details on the sources of the non-Federal share of plan expenditures. 
 
5.  Government/Department Wide Draw Down Requirements.   All Government-wide 
and Departmental requirements for drawing down Federal funds will be applicable to Title XXI.  
The State matching funds must be available at the time the State draws down the Federal funds.  
 
6.  Public Funds.   The use of IGTs, certified public expenditures (CPE), and public 
funds (including local/county funds) as the required State share of Title XXI expenditures is not 
prohibited under Title XXI.  In general, the provisions applicable to the Medicaid program 
related to IGTs and CPEs should apply in title XXI (for example, Federal regulations at 42 CFR 
433.51). 
 
7.  In-Kind Contributions.   Federal regulations at 45 CFR Part 74 that deal with 
uniform administrative requirements for awards and subawards to various entities including 
grants and agreements with States apply to Title XXI.  Therefore, in kind contributions provided 
by either the public or private sector would qualify for State match if they meet the criteria set 
forth in 45 CFR 74.23.  Furthermore, section 2107(e)(1)(C) of the Act indicates that the 
provisions of section 1903(w) of the Act relating to limitations on provider taxes and donations 
apply with respect to Title XXI.  Therefore, in kind services may qualify for State match if they 
are not in violation of section 1903(w).  
  H. MAINTENANCE OF EFFORT (MOE). Beginning with FY 1999, section 2105(d)(2) 
of the Act requires that the amount of a States allotment for a fiscal year be reduced by the 
amount that the State childrens health insurance expenditures for the previous fiscal year  is 
less than the total of such expenditures for FY 1996.  For purposes of this provision, the term 
State childrens health insurance expenditures means: 
 
 The State share of Title XXI expenditures 
 
 The State share of expenditures under Title XIX attributable to an enhanced 
FMAP under section 1905(u) of the Act. 
 
 State expenditures under health benefits coverage under an existing 
comprehensive State-based program. 
 
With respect to this last condition, under section 2103(d)(1)(C) of the Act, the MOE provision 
applies only to 3 States: New York, Florida, and Pennsylvania.  However, one of the 
administrations main objectives is to make sure that Federal dollars are used to cover children 
who have no insurance coverage and are not covered by Medicaid.  We are concerned that 
singling out only three States for the maintenance of effort on current State programs is 
inconsistent with this intent.  We will work with Congress to clarify whether this provision 
should apply to all States with such programs. 
If these States obtain an approved State Child Health Plan under Title XXI, then the State funds 
that are used to fund their existing programs can be used to draw an enhanced Federal match for 
expenditures under their new plans.  These States must continue to spend --at least-- the same 
level of State funding for child health insurance as was spent in 1996, but they can draw an 
enhanced match on this spending under an approved State plan. 
 
The limited maintenance of effort requirements on spending should not be confused with the 
requirements on maintaining Medicaid eligibility levels.  In order to receive Title XXI funds, 
States must continue to maintain their Medicaid eligibility standards and the methodologies that 
were effective as of June 1, 1997.  If a State wants to expand Medicaid and draw down Title XXI 
funds at the enhanced matching rate, it must maintain the Medicaid eligibility requirements that 
were effective as of March 31, 1997. 
 
 
I.  PREVENTION OF DUPLICATIVE PAYMENTS    Under section 2105(c)(6) of 
the Act, certain provisions relating to preventing duplicate payments are applicable: 
 
1.  Other Health Plan Obligated to Provide Child Health Assistance   No FFP is 
available to States for Title XXI Child Health Assistance expenditures to the extent that a private 
insurer would have been obligated to provide such assistance but for a provision of its insurance 
contract which has the effect of limiting or excluding such obligation  because the individual is 
eligible for or is provided child health assistance under the plan. 
 
2 Payment Under OtherFederal GovernmentalPrograms NoFFPis available to States for Title XXI Child Health Assistance expenditures to the extent that payment has been 
made or can reasonably be expected to be made promptly under any other Federally operated or 
financed health care insurance program, other than an insurance program operated or financed by 
the Indian Health Service.  
 
 
J.  FAMILY PLANNING AND INDIAN HEALTH SERVICES (IHS)  
 
The Medicaid statute provides for a higher Federal matching rate for family planning and Indian 
Health Services.  Because of this, there is special treatment for such services in  Medicaid 
expansions for targeted low-income children.  However, if such services are provided on the 
basis of a presumptive eligibility determination, the treatment may also differ.  The sections 
below describes the treatment for these type expenditures. 
  
1.  Family Planning and Indian Health Services (IHS) Provided Under Presumptive 
Eligibility Provisions   Under section 2104(d)(1) of the Act, Federal matching payments 
attributable to services provided to children on the basis of a presumptive Medicaid eligibility 
determination under section 1920A of the Act, must be applied to reduce the States title XXI 
allotment.  This is regardless of whether the Medicaid presumptive eligibility payments are 
reimbursed at the regular FMAP, at the higher family planning,  or at the  Indian Health Services 
matching rates.   Therefore, the amount of the Federal payments made to a State for Medicaid 
presumptive eligibility payments under Title XIX, even those made at the higher Federal 
matching rates associated with these services, must be applied against the CHIP allotment.   
 
2.  Family Planning Services   Under section 1903(a)(5) of title XIX of the Act, the 
Federal matching rate under Title XIX for family planning services expenditures is at 90 percent, 
NOT the regular Medicaid FMAP rate, and NOT the Title XXI enhanced FMAP rate.  Therefore, 
Federal matching payments for States Medicaid expenditures under Title XIX for Family 
planning  would be Federally matched at the 90 percent rate and such expenditures would not be 
charged against the States title XXI allotment. 
 
3.  Indian Health Services   Section 2104(d)(2) of the Act provides that Medicaid 
expenditures made under section 1903(a)(1) on the basis of the enhanced FMAP under section 
2105(b) of the Act must be applied against the States allotment.  However, IHS expenditures are 
not Federally matched at the section 2105(b) enhanced FMAP, rather they receive a different 
higher rate at section 1905(b) of the Act (100 percent).  Because of this, expenditures for IHS 
provided to States Medicaid expansion groups would be Federally matched at the 100 percent 
rate and such expenditures would not be charged against the States title XXI allotments.  
 
 
K.  APPLICATION OF CERTAIN GENERAL PROVISIONS.   Section 2107(e) of the 
Act requires the following sections of the Act apply to States under Title XXI in the same 
manner as they apply to a State under Title XIX: 
 
1 Administrative andJudicial Review(Including Disallowance Process) (Section 1116 of the Act)
 
2.  Civil Monetary Penalties   (Section 1128A of the Act) 
 
3.  Criminal Penalties   (Section 1128B of the Act) 
 
4.  Timely Filing   (Section 1132 of the Act) 
 
In addition to the above provisions, we believe that in general, the financial/administrative 
provisions that apply in Medicaid should also apply in title XXI. 
 
 
VI.  BUDGET AND EXPENDITURE SYSTEMS - REPORTING 
 
States will need to report expenditures and budget projections related to the CHIP and Medicaid 
programs, for purposes including the following: (Attached are copies of the forms States will use 
for reporting this information.) 
 Claiming FFP 
 
 Tracking Against the CHIP Fiscal Year Allotment 
 
 Maintenance of Effort (MOE) Provisions 
 
 10 Percent Limit Calculation 
 
 Determining Amounts of Grants 
 
Under the current Title XIX Medicaid program, States are already required to submit budget and 
expenditure information using the Medicaid Budget and Expenditure System (MBES).  Using 
the MBES, States report budget information on the Form HCFA-37 and expenditure information 
on the Form HCFA-64.  HCFA is developing forms under which States will report budget and 
expenditure information for their Title XXI programs.  In order to capture the needed 
information and to track that information appropriately, the forms for Title XIX and Title XXI 
will be linked and submissions under each system will be coordinated. 
 
The following highlights  these forms: 
 
A.  Title XXI Report Forms   The Title XXI budget and expenditure report forms will be 
similar to the Medicaid report forms and will include: 
 
1.  Form HCFA-21 - Summary Sheet  Summary expenditure report form for all Title XXI 
expenditures.  There are only two columns, one for reporting total computable amounts of 
expenditures and the other for Federal Share amounts of expenditures. 
 
2 Form HCFA 21Base/HCFA 21/HCFA 21P These forms are for reportingand isolating States Title XXI expenditures related to the service categories referenced in section 
2110(a) of the Act (which define child health assistance), other child health assistance and 
initiatives, outreach and administration, for the groups and programs covered by States under 
their Title XXI programs.  The Form HCFA-21 Base represents the total of these expenditures 
across all Title XXI programs in the State that are being claimed by the State in the quarter.  The 
Form HCFA-21 represent the expenditures that were paid and are being claimed by the State in 
the current quarters submission.  The Form HCFA-21P representing expenditures paid by the 
State in prior periods, but also which are being claimed in the current quarters submission.  
States must separately identify on these forms the amounts of expenditures which apply against 
the 10 Percent Limit. 
 
3.  Form HCFA-21E - Childrens Health Insurance Program Number of Children 
Served   This form is for reporting the total number of children served in the Title XXI 
program.  This form provides for reporting under four age breakouts and three family income 
levels. 
4.  Form HCFA-21L - Childrens Health Insurance Program Expenditures for the 
Title XXI Program Calculation of the 10 Percent Limit . This form is for tracking and 
applying the expenditures applicable the 10 Percent Limit.  This form is generated from 
expenditure data reported by the State under Title XIX and XXI. 
 
5.  Form HCFA-21C - Allocation of Title XIX and Title XXI Expenditures to CHIP 
Fiscal Year Allotment   This form is equivalent to the Medicaid Title XIX program 
Form HCFA-64.21C (see below) for tracking the expenditures under States Title XIX and XXI 
programs that must be applied against the CHIP fiscal year allotment.   This form is generated 
from the Title XIX and Title XXI expenditures that States have reported and claimed for the 
current and prior quarters that are applicable to the Title XXI allotment, for purposes of tracking 
such expenditures against the allotment.  The Form HCFA-64.21C contains  information which 
is accumulated by fiscal year in line categories of: fiscal year allotment, amounts previously 
claimed for the fiscal year, excess amounts reported for previous fiscal years (which may be 
claimed against a subsequent allotment), amounts being claimed in the current quarter,  amounts 
of the fiscal year allotment that is unused, and amounts of the fiscal year allotment which are in 
excess of the allotment for that fiscal year.  Federal share amounts of expenditures are tracked in 
four columns for 4 categories of expenditures: u , u , and PE (for the Title XIX program), and 
2 3
the Title XXI. This form will be used for tracking the expenditures applied against the Title XXI  
fiscal year allotment 
 
6.  Form HCFA-21B - Childrens Health Insurance Program Budget Report for the 
Title XXI Program State Expenditure Plan   This form is for States to report projected 
amounts of Title XXI total computable, Federal Share, and the State share of expenditures by 
quarter and Federal fiscal year.  This form is also used for States to certify the availability of 
funds for the State share of the Title XXI program. 
 
B.  Title XIX Medicaid Forms  States Medicaid programs may provide coverage under the 
three Medicaid options discussed in previous sections, and the Medicaid expenditures related to 
these options would apply against States Title XXI allotments The informationreportedfor these TitleXIX groups must be separately identified.  Furthermore, specific information on the 
quarterly claimed expenditures related to the section 1905(u)(2) and (3) options is needed in 
order to calculate the 10 Percent Limit.  In order to be able to compare the information reported 
on the Medicaid program to the information reported on the Title XXI program, the reported 
expenditure categories in the two programs will need to be comparable.  This requires special 
reporting. 
 
The following describes the new Title XIX Medicaid forms: 
 
1.  Form HCFA-64.21 and 64.21U/64.21P and 64.21UP - Quarterly Medical Assistance 
Expenditures by Child Health Insurance Program Expenditure Categories   Expenditure 
report form for States to separately  report  medical assistance expenditures for the 3 Medicaid 
options (u , u , and PE).  There are 24 expenditure categories, including premiums for private 
2 3
health care coverage.  These expenditure categories are the same as contained in the Title XXI 
report Form HCFA-21.  States will report these expenditures in columns for the categories of 
total computable, and amounts claimed at various FMAPs such as the enhanced FMAP, the IHS 
rate (100%), and the family planning rate (90%).  The Form HCFA-64.21 would be used for 
reporting States current quarter PE expenditures.  The Form HCFA-64.21U would be used for 
reporting States current quarter u  and/or u  expenditures.  The Form HCFA-64.21P would be 
2 3
used for reporting prior period PE expenditures.  The Form HCFA-64.21UP would be used for 
reporting prior period u  and/or u  expenditures. 
2 3
 
2.  Form HCFA-64.21C - Allocation of Title XIX and Title XXI Expenditures to CHIP 
Fiscal Year Allotment   This form is exactly the same as the Title XXI program Form 
HCFA-21C (described above) for tracking expenditures against the fiscal year allotment. 
 
3.  Form HCFA-64EA - Number of Adults Served for the Medical Assistance Program 
  This form is for reporting the number of adults served under the entire Medicaid 
program.  This form provides for reporting under two age breakouts and three income levels. 
 
4.  Form HCFA-64EC - Number of Children Served by the Medical Assistance 
Program   This form is for reporting the number of children served under the entire 
Medicaid program.  This form provides for reporting under four age breakouts and three family 
income levels. 
 
5.  Form HCFA-64.21E - Number of Children Related to Childrens Health Insurance 
Program   Form for reporting the number of children served in the Medicaid program that 
are specifically related to the three Medicaid options (u , u , and PE).  This form provides for 
2 3
reporting under four age breakouts and three family income levels. 
 
6.  Form HCFA-37.3 .  This is an existing Medicaid budget reporting form for which an 
information only line is being added to capture the projected Medicaid expenditures that are 
included in the total medical assistance payments estimates, for the current and budget fiscal 
years, for the three Medicaid options (u , u , and PE). 
2 3 DEPARTMENT OF HEALTH AND HUMAN SERVICES
HEALTH CARE FINANCING ADMINISTRATION
C H I L D R E N ' S   H E A L T H  I N S U R A N C E    P R O G R A M  STATE
           NUMBER OF CHILDREN SERVED AGENCY
QUARTER ENDED
NAME OF PROGRAM______________ AGE FEDERAL POVERTY 
CHILDREN
UNDER 1 1-5 6-12 13-18 <100% 100-150%
1. NUMBER OF UNDUPLICATED CHILDREN EVER ENROLLED IN THE QUARTER
A. FEE-FOR-SERVICE PLANS
B. MANAGED CARE ARRANGEMENTS
2. NUMBER OF UNDUPLICATED NEW ENROLLEES IN THE QUARTER
A. FEE-FOR-SERVICE PLANS
B. MANAGED CARE ARRANGEMENTS
3. NUMBER OF DISENROLLEES IN THE QUARTER
A. FEE-FOR-SERVICE PLANS
B. MANAGED CARE ARRANGEMENTS
4. NUMBER OF MEMBER MONTHS OF ENROLLMENT IN THE QUARTER
A. FEE-FOR-SERVICE PLANS
B. MANAGED CARE ARRANGEMENTS
5. AVERAGE NUMBER OF MONTHS OF ENROLLMENT (LINE 4 DIVIDED BY LINE 1)
A. FEE-FOR-SERVICE PLANS
B. MANAGED CARE ARRANGEMENTS
FORM HCFA-21E LEVEL
>150% ATTACHMENT 3 REVISED RESERVED ALLOTMENTS FOR FY 1998 TO REFLECT 
ADDITIONAL $20 MILLION APPROPRIATION
STATE CHILDREN'S HEALTH INSURANCE PROGRAM ALLOTMENTS FOR FISCAL YEAR 1998
A B C D E F
NUMBER STATE PERCENT
STATE OF COST PRODUCT SHARE ALLOTMENT (1)
CHILDREN (000) FACTOR OF TOTAL (3)
ALABAMA 154                 0.9510                 146.46 2.05% $86,405,380 
ALASKA 9                 1.0669                     9.60 0.13% $5,664,899 
ARIZONA 184                 1.0472                 192.69 2.69% $113,675,378 
ARKANSAS 90                 0.8871                   79.84 1.12% $47,100,971 
CALIFORNIA 1,281                 1.1365              1,455.92 20.33% $858,920,926 
COLORADO 72                 0.9888                   71.19 0.99% $41,999,641 
CONNECTICUT 53                 1.1237                   59.55 0.83% $35,133,989 
DELAWARE 13                 1.0553                   13.72 0.19% $8,093,758 
DISTRICT OF COLUMBIA 16                 1.2857                   20.57 0.29% $12,136,423 
FLORIDA 444                 1.0368                 460.32 6.43% $271,566,713 
GEORGIA 214                 0.9923                 212.36 2.97% $125,283,859 
HAWAII 13                 1.1722                   15.24 0.21% $8,990,060 
IDAHO 31                 0.8726                   27.05 0.38% $15,959,159 
ILLINOIS 211                 0.9892                 208.73 2.92% $123,141,631 
INDIANA 131                 0.9169                 120.12 1.68% $70,865,233 
IOWA 67                 0.8253                   55.30 0.77% $32,622,875 
KANSAS 60                 0.8704                   52.22 0.73% $30,809,906 
KENTUCKY 93                 0.9146                   85.06 1.19% $50,182,358 
LOUISIANA 194                 0.8934                 173.31 2.42% $102,245,869 
MAINE 24                 0.8863                   21.27 0.30% $12,549,454 
MARYLAND 100                 1.0498                 104.98 1.47% $61,935,703 
MASSACHUSETTS 69                 1.0576                   72.97 1.02% $43,050,558 
MICHIGAN 156                 1.0001                 156.02 2.18% $92,043,746 
MINNESOTA 50                 0.9675                   48.37 0.68% $28,538,056 
MISSISSIPPI 110                 0.8675                   95.43 1.33% $56,297,379 
MISSOURI 97                 0.9075                   88.03 1.23% $51,931,664 
MONTANA 20                 0.8333                   16.67 0.23% $9,832,614 
NEBRASKA 30                 0.8440                   25.32 0.35% $14,937,291 
NEVADA 43                 1.2046                   51.80 0.72% $30,559,205 
NEW HAMPSHIRE 20                 0.9760                   19.52 0.27% $11,515,734 
NEW JERSEY 134                 1.1241                 150.62 2.10% $88,860,288 
NEW MEXICO 107                 0.9169                   98.11 1.37% $57,878,570 
NEW YORK 399                 1.0914                 435.47 6.08% $256,905,407 
NORTH CAROLINA 138                 0.9815                 135.45 1.89% $79,906,274 
NORTH DAKOTA 10                 0.8587                     8.59 0.12% $5,065,962 
OHIO 205                 0.9617                 197.16 2.75% $116,313,427 
OKLAHOMA 161                 0.8588                 138.26 1.93% $81,568,137 
OREGON 67                 0.9947                   66.65 0.93% $39,317,403 
PENNSYLVANIA 200                 1.0005                 200.09 2.79% $118,044,201 
RHODE ISLAND 19                 0.9580                   18.20 0.25% $10,737,880 
SOUTH CAROLINA 110                 0.9843                 108.27 1.51% $63,875,823 
SOUTH DAKOTA 15                 0.8559                   12.84 0.18% $7,574,081 
TENNESSEE 115                 0.9799                 112.69 1.57% $66,484,072 
TEXAS 1,031                 0.9275                 956.25 13.35% $564,140,079 
UTAH 46                 0.8977                   41.30 0.58% $24,362,447 
VERMONT 7                 0.8604                     6.02 0.08% $3,553,134 
VIRGINIA 118                 0.9862                 116.38 1.63% $68,656,720 
WASHINGTON 85                 0.9352                   79.49 1.11% $46,894,677 
WEST VIRGINIA 45                 0.8937                   40.21 0.56% $23,724,858 
WISCONSIN 71                 0.9229                   65.53 0.92% $38,658,404 
WYOMING 15                 0.8758                   13.14 0.18% $7,750,222 
TOTAL STATES ONLY              7,160.35 100.00% $4,224,262,500 
ALLOTMENTS FOR COMMONWEALTHS AND TERRITORIES (2)
PUERTO RICO 91.60% $9,835,550 
GUAM 3.50% $375,813 
VIRGIN ISLANDS 2.60% $279,175 
AMERICAN SAMOA 1.20% $128,850 
N. MARIANA ISLANDS 1.10% $118,113 
TOTAL COMMONWEALTHS AND TERRITORIES ONLY 100.00% $10,737,500 
TOTAL STATES AND COMONWEALTHS AND TERRITORIES $4,235,000,000 
FOOTNOTES
(1)  Total amount available for allotment to the 50 States and the District of Columbia is $4,224,262,500; determined as the
       FY 1998 appropriation ($4,295,000,000) reduced by the total amount available for allotment to the Commonwealths and
       Territories ($10,737,500) and amounts for Special Diabetes Grants ($60,000,000) under sections 4921 and 4922 of BBA
(2)  Total amount available for allotment to the Commonwealths and Territories is $10,737,500; determined as .25 percent of
       the FY 1998 appropriation ($4,295,000,000)
(3)  Percent share of total amount available for allotment to the Commonwealths and Territories is as specified in
       section 2104(c) of the Social Security Act