The Balanced Budget Act of 1997 ( P.L. 105-33 , BBA-97) established the State Children's Health Insurance Program (CHIP) under a new Title XXI of the Social Security Act. CHIP builds on Medicaid by providing health care coverage to low-income, uninsured children in families with incomes above applicable Medicaid income standards. This report provides a summary of major changes to CHIP enacted in public laws beginning with the legislation authorizing the program in 1997. Creation of CHIP . Under BBA 97, the State Children's Health Insurance Program was established, effective August 5, 1997. A number of provisions specified eligibility criteria; coverage requirements for health insurance; federal allotments and the state allocation formula; payments to states and the enhanced federal medical assistance percentage (FMAP) formula; the process for submission, approval and amendment of state CHIP plans; strategic objectives and performance goals, and plan administration; annual reports and evaluations; options for expanding coverage of children under Medicaid; and diabetes grant programs. CBO Scoring . In making its cost estimates, the Congressional Budget Office (CBO) is required to assume that programs in existence on or before the enactment of BBA97 (which would include CHIP) that lack future appropriations but with current-year outlays of at least $50 million will continue operating at the last appropriated level. Increased Appropriation. This law increased the FY1998 CHIP appropriation from $4.275 billion to $4.295 billion. Increased Appropriation for Territories. For FY1999, an additional appropriation of $32 million for the territories was provided, bringing the FY1999 total appropriation to $4.307 billion. Freeze Each State's Share of Appropriation. Each state's percentage of the total appropriation available to states for the FY1998 CHIP allotments was also used for determining the FY1999 allotments. Change in Allotment Formula Affecting Some Native American Children. For FY1998 and FY1999, the law changed the annual state allotment formula by stipulating that children with access to health care funded by the Indian Health Service and no other health insurance would be counted as uninsured (rather than as insured as required under the previously existing law). Stabilizing the CHIP Allotment Formula . Annual federal allotments to each state are determined in part by states' success in covering previously uninsured low-income children under CHIP. Under prior law, the more successful a state was in enrolling children in CHIP, especially early in the program, the greater the potential reduction in subsequent annual allotments. To limit the amount a state's allocation could fluctuate from one year to the next, BBRA 99 modified the allotment distribution formula and established new floors and ceilings. Targeted, Increased Allotments . Additional allotments for the commonwealths and territories were provided for FY2000-FY2007. Improved Data Collection. The law provided new funding for the collection of data to produce reliable, annual state-level estimates of the number of uninsured children. These data changes were to improve research and evaluation efforts, and to improve the reliability of the estimates using in the formula that determines annual state-specific allotments from federal CHIP appropriations. Federal Evaluation . New funding was also provided for a federal evaluation to identify effective outreach and enrollment practices for both CHIP and Medicaid, barriers to enrollment, and factors influencing beneficiary drop-out. Additional Reports and a Clearinghouse. The law also required (a) an inspector general audit and Government Accountability Office (GAO) report on enrollment of Medicaid-eligible children in CHIP, (b) states to report annually the number of deliveries to pregnant women and the number of infants who receive services under the Maternal and Child Health Services Block Grant or who are entitled to CHIP benefits, and (c) the Secretary of Health and Human Services to establish a clearinghouse for the consolidation and coordination of all federal databases and reports regarding children's health. Information Sharing. This law allowed schools operating federally subsidized school meal programs to take a more active role in identifying children eligible for, and enrolling such children in, the Medicaid and CHIP programs. It permitted schools to share income and other relevant information collected when determining eligibility for free and reduced-price school meals with state Medicaid and CHIP agencies, as long as there is a written agreement that limits use of the information and parents are notified and given a chance to "opt out." Demonstration Project . The law also established a demonstration project in one state in which administrative funds under the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) may be used to help identify children eligible for, and enroll such children in, the Medicaid and CHIP programs. Rights of Institutionalized Children. The law required that general hospitals, nursing facilities, intermediate care and other health care facilities receiving federal funds, including CHIP, protect the rights of each resident, including the right to be free from physical or mental abuse, corporal punishment, and any restraints or involuntary seclusions imposed for the purposes of discipline or convenience. Restraints and seclusion may be imposed in such facilities only to ensure the physical safety of the resident, a staff member or others. Additional requirements govern reporting of resident deaths, promulgation of regulations regarding staff training, and enforcement. Children's Rights in Community-Based Settings. The law also included requirements for protecting the rights of residents of certain non-medical, community-based facilities for children and adolescents, when that facility receives funding under this act or under Medicaid. (Existing regulations did not clarify if and how these rights apply to such facilities funded by CHIP.) For such individuals and facilities, restraints and seclusion may only be imposed in emergency circumstances and only to ensure the physical safety of the resident, a staff member or others, and where less restrictive interventions have been determined to be ineffective. Additional requirements govern reporting of resident deaths, promulgation of regulations regarding staff training, and enforcement. Special Redistribution Rules for Unspent FY1998 and FY1999 Allotments . For each of these years separately, a pool of unspent funds was created from the unused allotment amounts of those states that did not fully expend their original allotments within the applicable three-year time frame. From this pool, 1.05% was set aside for the territories that fully exhaust their original allotments. Each such territory received a percentage of the available 1.05% pool equal to that territory's original allotment divided by the sum of original allotments for such territories. Then the states that did fully expend their original allotments within the three-year deadline received access to redistributed funds from the remaining pool equal to the amount by which their three-year spending exceeds their original allotments. The remaining states that did not use all their original allotments for the year retained access to a portion of the remaining funds in the pool, equal to the ratio of such a state's unspent original allotment to the total amount of unspent funds for that fiscal year. These latter states were permitted to use up to 10% of their retained FY1998 funds for outreach activities. This allowance was over and above spending for such activities under the general administrative cap described above. The deadline for spending all redistributed and retained funds from FY1998 and FY1999 was September 30, 2002, although this date was extended by P.L. 108-74 as described below. (See the text for additional information on redistribution of unspent CHIP funds.) Presumptive Eligibility. Under Medicaid presumptive eligibility rules, states are allowed to temporarily enroll children whose family income appears to be below Medicaid income standards, until a final formal determination of eligibility is made. BIPA clarified states' authority to conduct presumptive eligibility determinations, as defined in Medicaid law, under separate (non-Medicaid) CHIP programs. Authority to Pay CHIP Medicaid Expansion Costs from Title XXI Appropriation . Under prior law, states' allotments under CHIP paid only the federal share of costs associated with separate (non-Medicaid) CHIP programs. The federal share of costs associated with covering targeted low-income children under Medicaid was paid for by Medicaid. State CHIP allotments were reduced by the amounts paid by Medicaid for such costs. BIPA authorized the payment of the costs of targeted low-income children under Medicaid, and the costs of benefits provided during periods of presumptive eligibility, from the CHIP appropriation rather than the Medicaid appropriation, and as a conforming amendment, eliminated the requirement that state CHIP allotments be reduced by these (former) Medicaid payments. Also, for FY1998-FY2000 only, BIPA authorized the transfer of unexpended CHIP appropriations to the Medicaid appropriation account for the purpose of reimbursing payments made on behalf of targeted low-income children under Medicaid. Waiver of Provider Requirements and Medicare+Choice Payment Limits . The law authorized the Secretary to temporarily waive conditions of participation and other certification requirements for any entity that furnishes health care items or services to Medicare, Medicaid, or CHIP beneficiaries in an emergency area during a declared disaster or public health emergency. During such an emergency, the Secretary may waive: (1) participation, state licensing (as long as an equivalent license from another state is held and there is no exclusion from practicing in that state or any state in the emergency area), and pre-approval requirements for physicians and other practitioners; (2) sanctions for failing to meet requirements for emergency transfers between hospitals; (3) sanctions for physician self-referral; and (4) limitations on payments for health care and services furnished to individuals enrolled in Medicare+Choice (M+C) plans when services are provided outside the plan.