Congress punts CHIP to 2018 as states reach panic mode

(Updated at 7:20 p.m. ET)

Both houses of Congress reached a deal on a plan to avert a government shutdown, but it won't be enough to help states that are running out of money for their Children's Health Insurance Programs.

"There is no way that is enough through March," said Bruce Lesley of the Washington, D,C.-based advocacy group First Focus. "This is a disaster for CHIP."

Thursday night, the Senate followed the House lead and passed a budget patch to fund the government through Jan. 19. The package included the House plan (PDF) to add just $2.85 billion to CHIP through March 31.

The two leaders of the Senate Finance Committee, which earlier this year agreed to fund CHIP for five years, voiced opposition to the stopgap.

"We share a commitment to extend full funding for CHIP as soon as possible," said Senate Finance Committee Chair Orrin Hatch (R-Utah) and Ranking Democrat Ron Wyden (Ore.) a joint statement on Thursday afternoon. "In our view, a long-term, five-year extension of the KIDS Act is essential to providing certainty for families and states. While the proposed short-term patch offers some funding relief, it falls short of providing families and states the certainty they need."

Wyden and Hatch promised they would be "vigilant to ensure this program isn't subject to repeated short-term fixes and constantly looming deadlines – families across the nation deserve better."

Lawmakers' disgruntlement over their inability to agree on how to fund CHIP longterm doesn't match the states' dismay. Some have reached a critical point in their programs, and no one is happy about another short-term fix.

"We're in a terrible situation right now," said Linda Nablo, who oversees Virginia's CHIP operations, ahead of the decision.

The plan also includes the controversial provision that House Democrats staunchly oppose, taking $750 million out of the Affordable Care Act's Prevention and Public Health Fund to help pay for $550 million in funding for community health centers and other programs.

The CHIP stopgap measure, although adding some funding, allows the CMS to shift money from states that currently have a surplus of funding to programs that are running out of money. Congress approved a similar provision in its Dec. 8 continuing budget resolution. That patch, however, accelerated the rate at which the other states will run out of money for CHIP. Researchers at Georgetown University's Center for Children and Families found that 25 states will run out of money in January and a total of 31 states will run out sooner than anticipated. That rate will now pick up again.

The Dec. 8 patch was worse than useless and has already jeopardized coverage in the states that see their dollars taken, Nablo said.

After the Dec. 8 patch, Virginia decided to send notices to CHIP parents that the program would have to end by Jan. 31 if Congress didn't act on an appropriation. The state had enough money to offer full coverage of all the enrolled kids through January but not beyond that. Full coverage is crucial, Nablo said, as some kids are hospitalized or undergoing treatments that can't be interrupted.

Just after Virginia officials sent out letters to CHIP families—which cost $23,000, Nablo noted—the CMS notified them that other states needed some of the budgeted funds. Now Virginia has to alert parents that they will have to roll back coverage.

Utah and Colorado have also warned families of CHIP-enrolled kids that they will have to terminate their CHIP programs on Jan. 31 if funding isn't finalized. Alabama will freeze CHIP enrollment starting Jan. 1 and also terminate its program Jan. 31. It isn't clear as of press time what the state will do now that there is additional funding added.

If no new funding had been added, Alabama would have to proceed with its plans to shutter the program, Alabama Children's Hospital officials said Wednesday before the final provision was released.

Texas, one of the shortfall states, is getting $146 million in redistributed funds even though officials requested $90 million from the CMS.

A spokesperson for Sen. David Perdue of (R-Ga.)—a state whose funds will go to the redistribution pot—said the patch doesn't solve the problem.

"Sen. Perdue applauds Georgia for budgeting for the Children's Health Insurance Program responsibly, unlike Washington, and he believes we need to stop using short-term band-aids to fix this program, which needs a long-term solution," the spokesperson told Modern Healthcare.

CHIP isn't the only health program under distress due to Congress' inaction. Funding for two Medicare programs that rural and critical-access hospitals depend on—the Medicare dependent hospital program and the low-volume adjustment—have also expired and were left out of the package.