DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
Center for Medicaid, CHIP and Survey & Certification 
 
CMCS Informational Bulletin 
  
 
DATE:  March 25, 2011 
 
FROM:  Cindy Mann, JD 
  Director 
  Center for Medicaid, CHIP and Survey & Certification (CMCS) 
 
SUBJECT:  Recent Developments in Medicaid and CHIP Policy  
 
This CMCS Informational Bulletin is intended to provide a series of operational policy 
clarifications regarding our work implementing the Childrens Health Insurance Program 
Reauthorization Act (CHIPRA) of 2009 and the Affordable Care Act of 2010.  We hope you will 
find this information helpful as you administer these critical health coverage programs. 
   
Further Clarification on CHIPRA Performance Bonuses  
 
In our CMCS Informational Bulletin dated March 3, 2011, we provided information regarding 
the criteria needed to meet the program feature --Liberalization of Asset Tests -- for purposes 
of the Fiscal Year 2011 CHIPRA Performance Bonuses.  As you know, the purpose of the 
Performance Bonuses is to encourage States to remove barriers that prevent eligible children 
from enrolling in and retaining coverage. In our previous Bulletin, we indicated that in order to 
qualify for this program feature, States would be required to liberalize the asset test for all 
Medicaid categories for which being a child is a condition of eligibility (including the section 
1931 family coverage group under which parents can be eligible as well as children). Although 
one of the most effective ways to ensure that children are enrolled in coverage is to remove the 
asset test for the whole family, it was brought to our attention that States may have mechanisms 
in place where, even if there is an asset test for the 1931 group, childrens access to coverage is 
not impaired.   
 
CMCS has determined that, for purposes of CHIPRA Performance Bonuses, States will not be 
required to remove the asset test for the 1931 eligibility group as long as the State can 
demonstrate that all children who are income eligible for Medicaid can be enrolled in one of the 
States eligibility categories that does not include an asset test and, therefore, will not be denied 
eligibility due to an asset test.  States may be able to qualify for this program feature if they 
submit documentation to show that as of April 1, 2011, children in families that do not qualify 
under section 1931 due to assets are placed into another eligibility category and enrolled without 
requiring further action on the part of the family. 
 
  Page 2  CMCS Informational Bulletin 
 
We have also determined that States will not be required to liberalize the asset test for the 
medically needy eligibility group for children, the group of Katie Beckett children eligible 
under 1902(e)(3) of the Act, and children eligible under section 1902(a)(10)(A)(ii)(XIX), as 
created by the Family Opportunity Act.   
 
To recap, for FY2011, the asset test must be eliminated or self-declaration of assets must be 
accepted without the familys verification for all children enrolled in CHIP and children enrolled 
in Medicaid as poverty-related children, Qualified Children, AFDC-related reasonable 
classifications of children, non-IV-E State subsidized adoption children, optional targeted low-
income children, and independent foster care adolescents. 
 
As always, States should submit a State Plan Amendment (SPA) to eliminate the asset test for 
any eligibility category.  These may be in State Plan Attachment 2.2-A, State Plan Attachment 
2.6-A, and/or supplements to State Plan Attachment 2.6-A, as appropriate.  States that choose to 
liberalize the asset test by using self-declaration or administrative verification of assets should 
submit supporting documentation of this change with their FY2011 Performance Bonus 
Application, but a SPA is not required. 
 
States considering applying for a FY 2011 Performance Bonus are encouraged to contact Dena 
Greenblum of the Children and Adults Health Programs Group at 410-786-8684 or via email at 
CHIPRABonusPayments@cms.hhs.gov before April 1, 2011 to ensure that all documentation is 
in order.  We hope this clarification will be helpful. 
 
Coverage of Freestanding Birth Centers 
 
We also wanted to provide States with information regarding section 2301 of the Affordable 
Care Act, which ensures Medicaid coverage of care provided in freestanding birth centers.  
Section 2301 requires States that recognize freestanding birth centers to provide coverage and 
separate payments for freestanding birth center facility services and services rendered by certain 
professionals providing services in a freestanding birth center, to the extent the State licenses or 
otherwise recognizes such providers under State law. This provision took effect upon enactment 
of the Affordable Care Act on March 23, 2010, for services furnished on or after that date, unless 
State legislation is required.   
 
States will need to submit amendments to their Medicaid State plans that specify coverage and 
separate reimbursement of freestanding birth center facility services and professional services in 
order to comply with this provision. Questions regarding this information may be directed to Ms. 
Linda Peltz, Director of the Division of Benefits and Coverage at 410-786-3399 or via email at 
Linda.peltz@cms.hhs.gov. As always, CMS Regional Office staff are available to assist States in 
submitting the appropriate State plan changes.   
 
  Page 3  CMCS Informational Bulletin 
 
Dental Services in FQHCs 
 
Section 501(d) of CHIPRA added a new section 1902(a)(72) of the Social Security Act, which 
provides that a State may not prevent a Federally-Qualified Health Center (FQHC) from entering 
into contractual relationships with private practice dental providers in the provision of FQHC 
services.  Section 501(d) also amended section 2107(e)(1)(B) of Title XXI by applying this same 
requirement to CHIP.  Following are several questions and answers regarding this provision. 
 
Question 1:  How does section 501(d) affect State Medicaid and CHIP programs? 
 
Answer 1: This section removes potential barriers to FQHCs contracting with private dental 
providers to furnish Medicaid and/or CHIP-covered FQHC services.  In the past, some State 
Medicaid agencies may have required dental providers who contracted with FQHCs to 
individually enroll in the Medicaid program.  This is no longer permissible under the statute.  
However, States may set standards that are generally applicable to all dental providers and dental  
services furnished under the Medicaid and CHIP State plan, such as quality standards, but must 
allow FQHCs to contract with qualified providers who meet such standards.   
 
Question 2: How will this provision be implemented? 
 
Answer 2: Dental services furnished off-site by private dental providers who contract with 
FQHCs will be covered by Medicaid and CHIP as FQHC services when those dental services are 
of the type that would be covered if provided on-site at the FQHC.  Payment for such services 
should be made to the FQHC in accordance with the State plan.  This CHIPRA requirement will 
help to ensure dental access for individuals enrolled in CHIP and Medicaid. 
 
Question 3: What is the Health Resources and Services Administrations (HRSA) role and 
responsibility regarding the FQHC program? 
 
Answer 3: FQHCs are defined in section 1905(l)(2)(B) of the Act.  To qualify as an FQHC, an 
organization must meet one of the following criteria: 
 
  Receive a grant under section 330 of the Public Health Service Act,  
  Be designated as meeting the statutory requirements to receive a grant under section 330 
(commonly known as a Look-Alike); or 
  Be an outpatient health program or facility operated by a tribal or urban Indian 
organization. 
 
HRSA is responsible for administering the FQHC program for those organizations that qualify 
under the section 330 grant program of the Public Health Service Act and the Look-Alike 
program.  In this role, HRSA is responsible for assuring that section 330 grantees and Look-
Alikes meet all the same statutory requirements.  HRSA performs its program oversight role in a 
similar manner for both types of entities. 
 
  Page 4  CMCS Informational Bulletin 
 
Questions or concerns regarding HRSAs program requirements, including those regarding 
FQHC contract arrangements with providers, should be referred directly to 
oppdgeneral@hrsa.gov or to Ms. Tonya Bowers, Director, Office of Policy and Program 
Development, Bureau of Primary Health Care, HRSA, who may be reached at (301) 594-4300. 
 
Model Interstate Coordination Process for Medicaid and CHIP 
 
Section 213 of CHIPRA also required that by August 4, 2010, CMS develop a model process 
designed to coordinate Medicaid and CHIP enrollment, retention and access to care for children 
who frequently change their State of residence. The Secretary is required to submit a Report to 
Congress describing additional steps or authority needed to make such further improvements to 
coordinate the enrollment, retention and coverage under CHIP and Medicaid for such children. 
 
In July 2010, CMCS released a proposed model process for interstate coordination based on 
consideration of comments received in response to the notice published in the Federal Register 
on December 18, 2009, information included in the 2006 Report to Congress entitled Studies 
Regarding Barriers to Participation of Farm Workers in Health Programs, and information 
gathered from States and the CMS Tribal Technical Advisory Group. This process has not been 
finalized and we are very interested in States and other stakeholders feedback on the proposed 
model.    
 
Proposed Model for Interstate Coordination 
 
Host State Activities 
The Host State is the State where a Medicaid or CHIP eligible individual arrives seeking 
coverage of medical care.  Upon such a request, the Host State will confirm eligibility in the 
Home State, and upon receipt of confirmation, issue a Guest Card to the individual and notify the 
Home State of the individuals guest status and current address.  The Host State will enroll the 
individual through its Medicaid Management Information Systems (MMIS) with a guest status, 
including a code that identifies the Home State.  The individual will be able to use the Guest 
Card to access any services covered by the Host State, subject to the Host States limitations and 
requirements, from any provider enrolled with the Host State.  The Guest will be exempt from 
enrollment in any managed care plans or benchmark plans. 
 
Home State Activities 
The Home State must confirm eligibility for the Host State, and upon notification from the Host 
State of individuals guest status, change mailing address for the individual on the eligibility file 
and place the individual in a suspense status.  The individual should be disenrolled from any 
managed care plans or benchmark plans, unless the benchmark plan will provide coverage in the 
Host State.  The Home State remains responsible for eligibility for the individual while out of 
State, including performing redeterminations at scheduled intervals. 
 
Federal Financial Participation (FFP) 
The Host State will be reimbursed at 100 percent for services provided to Guests.  CMS will 
adjust the federal matching payment to the Home State by an amount equal to the Home States 
share of services that were provided to its beneficiaries as Guests.   
 
  Page 5  CMCS Informational Bulletin 
 
Eligibility Verification 
The timely and efficient exchange of eligibility data is fundamental to this model.  There are 
several ways in which eligibility can be verified and data can be exchanged, however, these 
methods vary widely with respect to their efficiency and reliability.  As could be expected, the  
methods that can be implemented most quickly and inexpensively will most likely prove to be 
the least efficient, and those that require greater investment of resources will be more efficient  
and reliable.  The Report to Congress will explore a range of potential eligibility verification 
methods.   
 
As we develop the Report to Congress, CMCS encourages stakeholders to provide feedback 
regarding the viability of the model coordination process, especially: 
  
  Suggestions for improvement of the proposal;  
  Identification of CMS policy decisions that must be made in order to put the process in 
  place, such as: 
  o   the length of time allowed for an individual to be a guest in another State 
  o  whether to require  Host States to cover all benefits available under the State plan  
    or just mandatory benefits, and  
  o  whether to allow all eligible individuals to be a guest in another State or if this  
    policy should only apply to mandatory groups; and  
  Identification of implementation issues or major impediments, including statutory, 
  regulatory, and/or systems changes that may be needed both for CMS and the States.   
 
The full proposal is available at 
http://www.cms.gov/CHIPRA/Downloads/InterstateCoordination.pdf 
Please contact Rebecca Bruno of the Division of Eligibility, Enrollment and Outreach at (410) 
786-5568 or via email at Rebecca.Bruno@cms.hhs.gov with feedback and suggestions. 
 
$55 Million Awarded in Grants to Further Childrens Quality Measurement 
 
On March 1, 2011, the Agency for HealthCare Research and Quality (AHRQ) awarded 
cooperative grants to seven AHRQ-CMS CHIPRA Centers of Excellence in Pediatric Quality 
Measures.  These Centers are part of the CHIPRA required Pediatric Quality Measures Program 
(PQMP) and will: (1) test and refine the initial core set of measures to make them more broadly 
applicable to Medicaid, CHIP, and other programs; and (2) develop additional quality measures 
that address dimensions of care where standardized measures do not currently exist. The 
measures developed by the Pediatric Quality Measures Program will be considered for the 
improved CHIPRA core measure set which will be made publically available by January 1, 2013.   
 
The Centers of Excellence awardees are:  
 
1. Gary Freed - Quality Measurement, Evaluation, Testing, Review, and Implementation 
Consortium, University of Michigan-Ann Arbor (Ann Arbor, MI) 
 
2. Lawrence Kleinman - Mount Sinai Collaboration for Advancing Pediatric Quality Measures, 
Mount Sinai School of Medicine (New York, NY) 
 
  Page 6  CMCS Informational Bulletin 
 
3. Mark Schuster - Childrens Hospital Boston Center of Excellence for Quality 
Measurement/Harvard Medical School (Boston, MA) 
 
4. Jeffrey Silber - Childrens Hospital of Philadelphia Center of Excellence/University of 
Pennsylvania School of Medicine (Philadelphia, PA) 
 
5. Sarah Hudson Scholle - National Collaborative for Innovation in Quality Measurement  
National Committee for Quality Assurance (Washington, D.C.) 
 
6. Rita Mangione-Smith - Center of Excellence on Quality of Care Measures for Children with 
Complex Needs  Seattle Childrens Institute (Seattle, WA) 
 
7. Ramesh Sachdeva  Pediatric Measurement Center of Excellence, Medical College of 
Wisconsin/National Outcomes Center (Milwaukee, WI) 
 
A total of $55 million will be awarded to the Centers of Excellence over a period of four years.  
For additional information on the CHIPRA AHRQ-CMS Centers of Excellence, visit: 
http://www.ahrq.gov/chipra/pqmpfact.htm 
 
We hope you will find this information helpful.  Thank you for your commitment to these critical 
health coverage programs.