DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-01-16 
Baltimore, Maryland 21244-1850 
 
Center for Medicaid and State Operations 
 
                  SMDL #05-003 
            September 29, 2005 
 
Dear State Medicaid Director: 
 
A new optional Medicaid benefit for sickle cell disease (SCD) was included in the American 
Jobs Creation Act of 2004 (AJCA) (Pub. L. No. 108-357), which was signed by the President on 
October 22, 2004.  Section 712 of the AJCA amends title XIX of the Social Security Act (the 
Act) in order to provide a new optional benefit in the Medicaid program and to make available 
Federal matching funds for education and outreach to Medicaid eligible adults and children with 
SCD.  This letter is intended to provide you with information regarding the new SCD benefit and 
to briefly explain its provisions.   
 
First, section 712(a) of the AJCA amends section 1905(a) of the Act, which contains the 
definition of medical assistance, to include primary and secondary medical benefits for 
individuals who have SCD.  These benefits include: 
 
  1.  Chronic blood transfusion (with deferoxamine chelation) to prevent strokes for       
    individuals with SCD who are at high risk for strokes;  
 
  2.  Genetic counseling and testing to treat SCD individuals or individuals with the sickle cell 
trait and prevent symptoms; and 
 
  3.  Other treatments and services to prevent SCD individuals who have had a stroke from 
having another stroke. 
 
Section 712(a)(2) of the AJCA states that the addition of these SCD benefits shall not be 
construed as implying that a state Medicaid program, prior to the addition of these benefits, 
could not have treated any of the primary and secondary medical strategies and treatment and 
services as medical assistance under its Medicaid program, including early and periodic 
screening, diagnostic, and treatment services.  However, the new provision offers additional 
flexibility to states.  For example, under this benefit, states could: 
 
  Cover additional services as part of the SCD benefit that might not otherwise be covered 
in the state plan; 
 
  Reimburse for SCD services at a different rate than they pay for similar services provided 
to individuals with other diseases.  For example, under this benefit, if a state wanted to 
increase reimbursement rates for SCD blood transfusions, it could do so through rate 
setting for the SCD benefit without having to increase reimbursement for all Medicaid 
blood transfusions.  Reimbursement levels, however, must still be set within current 
Federal guidelines; and 
  Page 2  State Medicaid Director 
 
 
  Establish different coverage limits for SCD services under Federal amount, duration, and 
scope provisions at 42 CFR section 440.230 from those that apply to services in other 
benefit categories in section 1905(a) of the Act. 
 
Second, section 712(b) of the AJCA amends section 1903(a)(3) of the Act to add a new 
subsection (E) that emphasizes the availability of matching funds for the costs of certain 
administrative activities performed with respect to SCD.  The administrative activities specified 
by this legislation, in general, would have been permitted under the previous Medicaid statute.  
However, this legislation makes it clear that the costs of activities related to conducting public 
education campaigns are allowable and may be claimed under Medicaid if they are performed 
specifically with respect to SCD.  Expenditures related to any public education campaigns not 
specific to SCD remain unallowable under Medicaid.   
 
Also, the amended section 1903(a)(3)(E) of the Act makes clear that the Federal matching rate 
for these activities is 50 percent.  The allowable administrative activities specified in section 
1903(a)(3)(E) of the Act, essentially representing outreach, are as follows:   
 
  Services to identify and educate individuals who are likely to be eligible for medical 
assistance under the title and who have SCD or are carriers of the sickle cell gene, 
including education on how to identify such individuals; or 
 
  Education regarding the risks of strokes and other complications, as well as the 
prevention of stroke and other complications, in individuals who are likely to be eligible 
for medical assistance under this title and who have SCD. 
 
The costs for administrative activities allowed under this subsection should be included and 
reported with all other administrative costs reported at the 50 percent Federal matching rate. 
 
Section 1903(a)(3)(E) of the Act, as amended by the AJCA, does not alter our view of what 
constitutes Medicaid outreach.  Rather, the new provision specifies SCD as a target for outreach.   
 
The Centers for Medicare & Medicaid Services (CMS) has developed state plan preprint pages 
for the new SCD optional benefit.  They are currently going through the CMS clearance process.  
We will provide the regional offices with those preprint pages for distribution to states once they 
have been approved. 
 
The CMS contact for this new legislation is Ms. Jean Sheil, Director, Family and Childrens Health 
Program Group, who may be reached at (410) 786-5647 or Jean.Sheil@cms.hhs.gov.    Page 3  State Medicaid Director 
 
 
Enclosed is a copy of the legislation pertaining to the SCD benefit.  We hope this information is 
helpful to you. 
 
            Sincerely, 
 
            /s/ 
 
            Dennis G. Smith 
            Director 
 
Enclosure 
 
cc: 
 
CMS Regional Administrators 
 
CMS Associate Regional Administrators 
     for Medicaid and State Operations 
 
Martha Roherty 
Director, Health Policy Unit  
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Matt Salo 
Director of Health Legislation 
National Governors Association 
 
Brent Ewig 
Senior Director, Access Policy 
Association of State and Territorial Health Officials 
 
Sandy Bourne 
Legislative Director 
American Legislative Exchange Council 
 
Trudi Matthews 
Senior Health Policy Analyst 
Council of State Governments 
  SEC. 712. INCLUSION OF PRIMARY AND SECONDARY MEDICAL 
STRATEGIES FOR CHILDREN AND ADULTS WITH SICKLE CELL 
DISEASE AS MEDICAL ASSISTANCE UNDER THE MEDICAID 
PROGRAM. 
(a) OPTIONAL MEDICAL ASSISTANCE- 
(1) IN GENERAL- Section 1905 of the Social Security Act (42 U.S.C. 
1396d) is amended-- 
(A) in subsection (a)-- 
(i) by striking `and' at the end of paragraph (26); 
(ii) by redesignating paragraph (27) as paragraph (28); and 
(iii) by inserting after paragraph (26), the following: 
`(27) subject to subsection (x), primary and secondary medical strategies 
and treatment and services for individuals who have Sickle Cell Disease; 
and'; and 
(B) by adding at the end the following: 
`(x) For purposes of subsection (a)(27), the strategies, treatment, and services 
described in that subsection include the following: 
`(1) Chronic blood transfusion (with deferoxamine chelation) to prevent 
stroke in individuals with Sickle Cell Disease who have been identified as 
being at high risk for stroke. 
`(2) Genetic counseling and testing for individuals with Sickle Cell 
Disease or the sickle cell trait to allow health care professionals to treat 
such individuals and to prevent symptoms of Sickle Cell Disease. 
`(3) Other treatment and services to prevent individuals who have Sickle 
Cell Disease and who have had a stroke from having another stroke.'. 
(2) RULE OF CONSTRUCTION- Nothing in subsections (a)(27) or (x) of 
section 1905 of the Social Security Act (42 U.S.C. 1396d), as added by 
paragraph (1), shall be construed as implying that a State medicaid 
program under title XIX of such Act could not have treated, prior to the 
date of enactment of this Act, any of the primary and secondary medical 
strategies and treatment and services described in such subsections as 
medical assistance under such program, including as early and periodic 
screening, diagnostic, and treatment services under section 1905(r) of such 
Act. 
(b) FEDERAL REIMBURSEMENT FOR EDUCATION AND OTHER 
SERVICES RELATED TO THE PREVENTION AND TREATMENT OF 
SICKLE CELL DISEASE- Section 1903(a)(3) of the Social Security Act (42 
U.S.C. 1396b(a)(3)) is amended-- 
(1) in subparagraph (D), by striking `plus' at the end and inserting `and'; 
and 
(2) by adding at the end the following: 
`(E) 50 percent of the sums expended with respect to costs incurred 
during such quarter as are attributable to providing--  `(i) services to identify and educate individuals who are 
likely to be eligible for medical assistance under this title 
and who have Sickle Cell Disease or who are carriers of the 
sickle cell gene, including education regarding how to 
identify such individuals; or 
`(ii) education regarding the risks of stroke and other 
complications, as well as the prevention of stroke and other 
complications, in individuals who are likely to be eligible 
for medical assistance under this title and who have Sickle 
Cell Disease; plus'. 
(c) DEMONSTRATION PROGRAM FOR THE DEVELOPMENT AND 
ESTABLISHMENT OF SYSTEMIC MECHANISMS FOR THE PREVENTION 
AND TREATMENT OF SICKLE CELL DISEASE- 
(1) AUTHORITY TO CONDUCT DEMONSTRATION PROGRAM- 
(A) IN GENERAL- The Administrator, through the Bureau of 
Primary Health Care and the Maternal and Child Health Bureau, 
shall conduct a demonstration program by making grants to up to 
40 eligible entities for each fiscal year in which the program is 
conducted under this section for the purpose of developing and 
establishing systemic mechanisms to improve the prevention and 
treatment of Sickle Cell Disease, including through-- 
(i) the coordination of service delivery for individuals with 
Sickle Cell Disease; 
(ii) genetic counseling and testing; 
(iii) bundling of technical services related to the prevention 
and treatment of Sickle Cell Disease; 
(iv) training of health professionals; and 
(v) identifying and establishing other efforts related to the 
expansion and coordination of education, treatment, and 
continuity of care programs for individuals with Sickle Cell 
Disease. 
(B) GRANT AWARD REQUIREMENTS- 
(i) GEOGRAPHIC DIVERSITY- The Administrator shall, 
to the extent practicable, award grants under this section to 
eligible entities located in different regions of the United 
States. 
(ii) PRIORITY- In awarding grants under this subsection, 
the Administrator shall give priority to awarding grants to 
eligible entities that are-- 
(I) Federally-qualified health centers that have a 
partnership or other arrangement with a 
comprehensive Sickle Cell Disease treatment center 
that does not receive funds from the National 
Institutes of Health; or 
(II) Federally-qualified health centers that intend to 
develop a partnership or other arrangement with a  comprehensive Sickle Cell Disease treatment center 
that does not receive funds from the National 
Institutes of Health. 
(2) ADDITIONAL REQUIREMENTS- An eligible entity awarded a grant 
under this subsection shall use funds made available under the grant to 
carry out, in addition to the activities described in paragraph (1)(A), the 
following activities: 
(A) To facilitate and coordinate the delivery of education, 
treatment, and continuity of care for individuals with Sickle Cell 
Disease under-- 
(i) the entity's collaborative agreement with a community-
based Sickle Cell Disease organization or a nonprofit entity 
that works with individuals who have Sickle Cell Disease; 
(ii) the Sickle Cell Disease newborn screening program for 
the State in which the entity is located; and 
(iii) the maternal and child health program under title V of 
the Social Security Act (42 U.S.C. 701 et seq.) for the State 
in which the entity is located. 
(B) To train nursing and other health staff who provide care for 
individuals with Sickle Cell Disease. 
(C) To enter into a partnership with adult or pediatric 
hematologists in the region and other regional experts in Sickle 
Cell Disease at tertiary and academic health centers and State and 
county health offices. 
(D) To identify and secure resources for ensuring reimbursement 
under the medicaid program, State children's health insurance 
program, and other health programs for the prevention and 
treatment of Sickle Cell Disease. 
(3) NATIONAL COORDINATING CENTER- 
(A) ESTABLISHMENT- The Administrator shall enter into a 
contract with an entity to serve as the National Coordinating 
Center for the demonstration program conducted under this 
subsection. 
(B) ACTIVITIES DESCRIBED- The National Coordinating 
Center shall-- 
(i) collect, coordinate, monitor, and distribute data, best 
practices, and findings regarding the activities funded under 
grants made to eligible entities under the demonstration 
program; 
(ii) develop a model protocol for eligible entities with 
respect to the prevention and treatment of Sickle Cell 
Disease; 
(iii) develop educational materials regarding the prevention 
and treatment of Sickle Cell Disease; and 
(iv) prepare and submit to Congress a final report that 
includes recommendations regarding the effectiveness of  the demonstration program conducted under this subsection 
and such direct outcome measures as-- 
(I) the number and type of health care resources 
utilized (such as emergency room visits, hospital 
visits, length of stay, and physician visits for 
individuals with Sickle Cell Disease); and 
(II) the number of individuals that were tested and 
subsequently received genetic counseling for the 
sickle cell trait. 
(4) APPLICATION- An eligible entity desiring a grant under this 
subsection shall submit an application to the Administrator at such time, in 
such manner, and containing such information as the Administrator may 
require. 
(5) DEFINITIONS- In this subsection: 
(A) ADMINISTRATOR- The term `Administrator' means the 
Administrator of the Health Resources and Services 
Administration. 
(B) ELIGIBLE ENTITY- The term `eligible entity' means a 
Federally-qualified health center, a nonprofit hospital or clinic, or a 
university health center that provides primary health care, that-- 
(i) has a collaborative agreement with a community-based 
Sickle Cell Disease organization or a nonprofit entity with 
experience in working with individuals who have Sickle 
Cell Disease; and 
(ii) demonstrates to the Administrator that either the 
Federally-qualified health center, the nonprofit hospital or 
clinic, the university health center, the organization or 
entity described in clause (i), or the experts described in 
paragraph (2)(C), has at least 5 years of experience in 
working with individuals who have Sickle Cell Disease. 
(C) FEDERALLY-QUALIFIED HEALTH CENTER- The term 
`Federally-qualified health center' has the meaning given that term 
in section 1905(l)(2)(B) of the Social Security Act (42 U.S.C. 
1396d(l)(2)(B)). 
(6) AUTHORIZATION OF APPROPRIATIONS- There is authorized to 
be appropriated to carry out this subsection, $10,000,000 for each of fiscal 
years 2005 through 2009. 
(d) EFFECTIVE DATE- The amendments made by subsections (a) and (b) take 
effect on the date of enactment of this Act and apply to medical assistance and 
services provided under title XIX of the Social Security Act (42 U.S.C. 1396 et 
seq.) on or after that date.