Regulatory Guidance Regarding Crowd-Out Under SCHIP
The Title XXI legislation contains language indicating that SCHIP funds are
explicitly designed to provide health insurance coverage only to uninsured, not
already insured children. Therefore the law also includes provisions to ensure that
the intended target group is the primary benefactor of the new program. These
provisions are described in HCFA's (now CMS) February 1998 Letter to State Officials as summarized
below.
SCHIP Requirements Regarding Crowd-Out
All States are required to submit a description of the procedures they will implement
to ensure that coverage provided under SCHIP does not substitute for coverage provided by either
Medicaid or private group health plans.
- States Providing Direct Insurance Coverage are required to describe the
procedures in their SCHIP plan that reduce the potential for crowd-out, particularly
when coverage is provided to children with family income at higher poverty levels (above
150 percent of the Federal Poverty Level).
- States Providing Employer-Sponsored Group Health Plans are required to incorporate
in their SCHIP plan mechanisms that are equivalent to the following five provisions aimed
at promoting cost-effectiveness and discouraging reductions in employer
coverage/contributions and reductions in utilization of such coverage/contributions:
- Children may not be eligible for SCHIP if the family had employer-sponsored group
coverage for these children within the previous 6 months.
- Subsidies will be available for the purchase of dependent coverage only in cases where
the employer contributes at least 6 percent of the cost of coverage.
- Families must be required to apply for the full premium contribution available from the
employer to reduce the SCHIP contribution toward the premium.
- The State’s payment for a child enrolled in the plan will be no greater than the
payment that the State would make if the child were enrolled in a separate SCHIP
program.
- The State must collect information and conduct an evaluation that examines the amount of
substitution that has occurred under the program and the effect of these provisions on
access to the program.
Related
Questions:
Give me an overall context
Give me details
Take me to related sites
- HCFA’s (now CMS) February 13, 1998, Letter to State Officials regarding
substitution of SCHIP coverage for private group health coverage.
This letter and other HCFA (now CMS) guidance can be found at http://www.cms.hhs.gov/home/schip.asp
Where else is HCFA (now CMS) guidance discussed?
Who presented this material?
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Crowd-Out 
