The substitution of private health coverage for public sponsored coverage, commonly referred to as "crowd-out", is a concern for both state and federal programs. To limit the ability of individuals to shift from private to public coverage, all states are required by the Centers for Medicare and Medicaid Services (CMS) to submit to them procedures they have in place to avoid crowd-out in their State Childrens' Health Insurance Program (SCHIP). Over time CMS has developed the opinion that crowd-out is greater for higher income beneficiaries and decided to impose more stringent screening requirements on states who expand SCHIP eligibility above 250 percent of the federal poverty level (FPL). In a letter to the state health officials (August 17, 2007 CMS Directive), the CMS Director for the Center for Medicaid and State Operations issued clarification of these expectations including a requirement that these states assure CMS that they have enrolled at least 95 percent of the children in the state below 200 percent of the FPL. According to the letter, CMS may take corrective action against states that fail to adopt the identified measures within 12 months.
Congressional leaders concerned that the conditions imposed by the letter would make it more difficult for states to provide coverage to uninsured children, requested that the Congressional Research Service (CRS) and the Government Accountability Office (GAO) provide a legal opinion as to the status of this letter as a rule under the Congressional Review Act (CRA). As a rule subject to the CRA, the directive contained in this letter would have been subject to congressional review and possibble nullification by passage of a joint resolution of disapproval. To that end, both GAO and CRS have reported their opinions indicating that this letter is a rule for the purposes of the CRA and must be submitted to Congress and the Comptroller General before it can take effect.
GAO Report: Applicability of the Congressional Review Act to Letter on State Children's Health Insurance Program
CRS Report: Applicability of the Congressional Review Act to a CMS Guidance Document Regarding Statutory and Regulatory Requirements to be Used in Reviewing State Requests to Extend Eligibility Under SCHIP
