States search for stopgaps as Congress misses CHIP deadline

Now that the federal funding deadline for the Children's Health Insurance Program has lapsed, Minnesota officials have found themselves in an uncomfortable waiting game.

The state had expected to run out of money for CHIP in the coming days, but the CMS said it would provide a last-minute reprieve. The federal agency told Minnesota officials that it plans to reallocate some unspent CHIP funds from around the country to states that were expected to exhaust their funds first, according to Emily Piper, commissioner of Minnesota's Department of Human Services.

Piper is still waiting on details of when the funds will arrive and how much Minnesota will receive. The influx should allow the program to continue for a few more weeks, Piper said.

But if Congress fails to fully reauthorize CHIP, the state may not be able to continue coverage much longer for pregnant women with incomes up to 278% of the federal poverty level and infants in families up to 275% of the federal poverty level. These groups don't qualify for Medicaid.

"We don't have unlimited resources to cover this population," Piper said. In addition, Minnesota would face new budget pressures if officials were forced to move 125,000 now in CHIP to Medicaid.

Minnesota receives an 88% federal match for CHIP enrollees, thanks to a provision of the Affordable Care Act that enhanced federal CHIP funds to the states. The state only receives a 50% federal match for its Medicaid program. Moving CHIP enrollees to Medicaid would leave Minnesota with a multimillion-dollar tab to continue covering those beneficiaries.

Other states are also worried about how they will cover these vulnerable populations. With no new funds coming in, four states, including Minnesota and Arizona, will spend all their federal dollars in the coming weeks, while 27 more will run out of money by March, according to the Medicaid and CHIP Payment and Access Commission.

"The problem is one of benign neglect in that (Congress) assumes wrongly that states can continue without renewed funding right away and they assume dangerously that members of Congress will eventually come together to do the right thing but not making an urgent plan to ensure it's so," Dr. Karen Remley, CEO of American Academy of Pediatrics, said in a statement.

Congress last funded CHIP through the Medicare Access and CHIP Reauthorization Act of 2015. It provided nearly $40 billion in federal funding to states over fiscal 2016 and 2017 and ended Sept. 30. CHIP, which was established in 1997 with bipartisan support, serves about 8.4 million children.

Washington,D.C., officials will be meeting with the CMS this week to determine the amount of re-distribution funds available to the district and when the funds will be received, said Dorinda White, a spokeswoman for its Medicaid agency.

If Congress doesn't extend CHIP funding soon, D.C. will use its unspent fiscal 2017 CHIP allotments and estimates funding could run out next month, White said.

In Arizona, funds are also expected to continue through next month. As the clock runs down, lawmakers there are discussing if it will be possible to continue the program, according to Heidi Capriotti, a spokeswoman for the state's Medicaid agency.

Arizona receives a 100% federal match on CHIP funds, thanks to the ACA enhancement. If that match drops, the state would have to freeze CHIP enrollment, per state legislation. State officials are already discussing whether they could continue the program if federal CHIP funding isn't reauthorized, Capriotti said.

Despite missing the funding deadline, Congress is still behind the program and is working to reauthorize it, lawmakers said.

On Wednesday, the Senate Finance Committee is holding a markup of the Keeping Kids' Insurance Dependable and Secure (KIDS) Act, which has bipartisan support. The bill would extend federal CHIP funding for five years, allocating between $21 billion to $25 billion annually through fiscal 2022. The House Energy and Commerce Committee is also having a hearing on Wednesday to consider its version of the Senate bill.

"This important legislation will ensure the vulnerable children and their families who depend on CHIP receive much-needed certainty by guaranteeing uninterrupted funding for the program, which has been a top priority of this committee," Sen. Orrin Hatch (R-Utah) said in a statement.