Children's Health Insurance Program (CHIP); Allotment Methodology and States' Fiscal Years 2009 Through 2015 CHIP Allotments, 9233-9249 [2011-3639]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 76, Number 33 (Thursday, February 17, 2011)]
[Rules and Regulations]
[Pages 9233-9249]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-3639]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 457

[CMS-2291-F]
RIN 0938-AP53


Children's Health Insurance Program (CHIP); Allotment Methodology 
and States' Fiscal Years 2009 Through 2015 CHIP Allotments

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule describes the implementation of funding 
provisions under Title XXI of the Social Security Act (the Act), for 
the Children's Health Insurance Program (CHIP), as amended by the 
Children's Health Insurance Program Reauthorization Act of 2009 
(CHIPRA), by the Medicare, Medicaid, and SCHIP Extension Act of 2007 
(MMSEA), by other related CHIP legislation, and most recently by the 
Patient Protection and Affordable Care Act of 2010 (the Affordable Care 
Act). Specifically, this final rule addresses methodologies and 
procedures for determining States' fiscal years 2009 through 2015 
allotments and payments in accordance with sections 2104 and 2105 of 
the Act, as amended by CHIPRA and the Affordable Care Act.

DATES: Effective Date: These regulations are effective on April 18, 
2011.

FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.

SUPPLEMENTARY INFORMATION:

I. Background

A. The Children's Health Insurance Program

    Title XXI of the Social Security Act (the Act) sets forth CHIP to 
enable States, the District of Columbia, and specified Commonwealths 
and Territories to initiate and expand health insurance coverage to 
uninsured, low-income children. The 50 States, the District of 
Columbia, and the Commonwealths and Territories may implement the CHIP 
through a separate child health program under title XXI of the Act, an 
expanded Medicaid program under title XIX of the Act, or a combination 
of both.
    Federal funds appropriated for title XXI are limited, and the law 
specifies a formula and methodology to divide the total annual 
appropriation into individual allotments available for each State, the 
District of Columbia, and each U.S. Territory and Commonwealth with an 
approved child health plan.

B. Funding of CHIP Allotments Before the Enactment of CHIPRA

    Section 4901 of the Balanced Budget Act of 1997 (Pub. L. 105-33, 
enacted on August 5, 1997) (BBA), which added Title XXI to the Social 
Security Act, appropriated funding for States' CHIPs for each fiscal 
year over a 10 fiscal year (FY) period from 1998 through 2007. The 
funding for each FY varied from $4.295 billion for FY 1998 up to $5.0 
billion for FY 2007. Under section 2104(c)(4) of the Act, additional 
appropriations were provided for each of FYs 1999 through 2007 to 
provide additional allotment amounts particularly for the Commonwealths 
and Territories.
    Public Law 110-92 (enacted on September 29, 2007), contained 
provisions to extend funding under the CHIP through November 16, 2007. 
In particular, section 136(a) of Public Law 110-92 appropriated $5 
billion for the purposes of providing FY 2008 allotments to the 50 
States, the District of Columbia, and the Commonwealths and 
Territories. In addition, $40 million was appropriated by this section 
to provide additional allotments to the Commonwealths and Territories 
in FY 2008.

[[Page 9234]]

    Section 136(b) of Public Law 110-92 also provided that the FY 2008 
allotments will be determined in accordance with the same methodology 
as previous CHIP fiscal year allotments were determined. In addition, 
section 136(c) of Public Law 110-92 amended the CHIP statute to add a 
new section 2104(i) of the Act to provide for the redistribution in FY 
2008 of the unexpended FY 2005 allotments remaining at the end of FY 
2007 to those 50 States or the District of Columbia that had estimated 
shortfalls in FY 2008. Finally, section 106 of Public Law 110-92 made 
the FY 2008 allotment funds available only for States' CHIP 
expenditures for assistance provided through November 16, 2007.
    Subsequent to the enactment of Public Law 110-92; further 
continuing appropriation legislation was enacted which extended the 
dates which the FY 2008 allotment funds were available as provided in 
section 106 of Public Law 110-92; in particular, Public Law 110-116 
(enacted on November 13, 2007), Public Law 110-137 (enacted on December 
14, 2007), and Public Law 110-149 (enacted on December 21, 2007) 
extended the dates to December 14, 2007, December 21, 2007, and 
December 31, 2007, respectively.
    Section 201 of the Medicare, Medicaid, and SCHIP Extension Act of 
2007 (Pub. L. 110-173, enacted on December 29, 2007) (MMSEA) amended 
section 2104(a) of the CHIP statute to explicitly provide funding for 
CHIP allotments in the amount of $5 billion for each of FYs 2008 and 
2009 for the 50 States and the District of Columbia and the 
Commonwealths and Territories, and for $40 million for the 
Commonwealths and Territories for each of FYs 2008 and 2009. These 
allotments will be determined in accordance with the existing 
methodology in CHIP statute for fiscal years before FY 2008. The 
funding provided for FY 2008 under the Continuing Appropriation 
legislation discussed above and enacted before MMSEA will no longer be 
available (and thus expenditures for FY 2008 will be paid from the 
allotments as provided under MMSEA). MMSEA provided that the FYs 2008 
and 2009 allotment funds were only available for States' expenditures 
through March 31, 2009.
    Section 201 of MMSEA amended the CHIP statute to add section 
2104(j) of the Act which appropriated $1.6 billion for the purpose of 
providing additional allotments to eliminate States' CHIP shortfalls in 
FY 2008.
    The provisions of MMSEA were implemented and described in a Federal 
Register notice dated May 23, 2008 (73 FR 30112).

C. Enactment of CHIPRA

    Section 101 of the CHIPRA amended section 2104(a) of the Act to 
appropriate funding for each of FYs 2009 through 2012, and for two 
semi-annual periods in FY 2013, October 1, 2012 through March 31, 2013 
and April 1, 2013 through September 30, 2013 respectively, for the 
purpose of providing allotments to States for each of those fiscal 
years or fiscal year periods. Furthermore, section 108 of CHIPRA 
provided additional funding for State allotments for the period October 
1, 2012 through March 31, 2013 (the first half of FY 2013). Finally, 
section 3(c) of CHIPRA provides for the coordination of funding for 
CHIP in FY 2009 as previously provided under section 201 of MMSEA.
    In particular, section 3(c) of CHIPRA requires the Federal 
government to rescind any previously appropriated amounts that were not 
allotted or obligated before April 1, 2009 for the following:
     Section 2104(a)(11) of the Act for purposes of providing 
State CHIP allotments for FY 2009 for States' expenditures through 
March 31, 2009.
     Section 2104(k) of the Act for purposes of the 
redistribution of unexpended FY 2006 allotments in FY 2009 to address 
States' funding shortfalls in FY 2009.
     Section 2104(l) of the Act for purposes of providing 
additional allotments for States' expenditures in FY 2009 to fund 
States' shortfalls for their expenditures through March 31, 2009.
    Furthermore, any amounts provided for FY 2009 CHIP allotments in 
section 2104(a)(12) as appropriated through the amendments made by 
CHIPRA must be reduced by the amounts that were obligated before April 
1, 2009 under sections 2104(a)(11), 2104(k), or 2104(l) of the Act, as 
amended by section 201 of MMSEA (which refer to States' FY 2009 CHIP 
allotments, amounts of unexpended FY 2006 allotments redistributed in 
FY 2009, and the amounts of additional FY 2009 allotments to address 
States' CHIP funding shortfalls through March 31, 2009, respectively). 
Funding for Territories and Commonwealths under Section 2104(c)(4) of 
the Act was not subject to coordination of funding under section 3(c) 
of CHIPRA.
    The rescission of these unobligated amounts as well as the 
reduction in the FY 2009 allotment for the amounts that were obligated 
before April 1, 2009 ensure that States do not receive FY 2009 
allotments as determined under CHIPRA in excess of the total amount 
provided under section 2104(a)(12) of the Act for FY 2009, as amended 
by CHIPRA, and 2104(c)(4).

D. The Patient Protection and Affordable Care Act

    Section 10203(d)(1) of the Patient Protection and Affordable Care 
Act of 2010 (``Affordable Care Act''), Public Law 111-148, amended 
section 2104 of the CHIP statute to extend funding for CHIP to the end 
of FY 2015 and made other technical changes to the funding provisions 
under CHIP that do not affect the overall funding mechanism.

E. Authority for Qualifying States to Use Available CHIP Allotments for 
Medicaid Expenditures

    Under section 2105(a)(1)(A) through (D) and (a)(2) of the Act, and 
before enactment of Extension of Availability of CHIP Allotment Act 
(Pub. L. 108-74, enacted on August 15, 2003), only Federal payments for 
the following Medicaid and CHIP expenditures were applied against 
States' available CHIP allotments to include:
     Medical assistance provided under title XIX (Medicaid) of 
the Act, to targeted low-income children in a CHIP-related Medicaid 
expansion, for which the CHIP enhanced Federal medical assistance 
percentage (CHIP EFMAP) rate is available.
     Medical assistance provided on behalf of a child during a 
period of presumptive eligibility under section 1920A of the Act (these 
funds are matched at the regular Medicaid Federal medical assistance 
percentage (FMAP) rate).
     Child health assistance to targeted low income children 
that meets minimum benefit requirements under CHIP.
     Other types of expenditures in CHIP that are subject to 
the 10-percent limit on non-primary expenditures (including other child 
health assistance for targeted low-income children, health services 
initiatives, outreach, and administrative costs).
    Section 1(b) of the Extension of Availability of CHIP Allotment Act 
as amended by the Social Security Act, Technical corrections (Pub. L. 
108-127, enacted November 17, 2003), added new section 2105(g) to the 
Act that certain ``qualifying States'' that met prescribed criteria 
could elect to use up to 20 percent of any of the States' available 
CHIP allotments for FYs 1998, 1999, 2000, or 2001 to increase the FMAP 
rate for certain regular Medicaid expenditures to the EFMAP rate 
available under CHIP. These

[[Page 9235]]

expenditures were for children under 19 years of age whose family 
income exceeds 150 percent of the Federal poverty line and who are 
eligible under the States' Medicaid program. As described in the 
Federal Register notice published on July 23, 2004 (69 FR 44013), if a 
qualified State submitted both 20 percent allowance expenditures and 
other ``regular'' CHIP expenditures at the same time in a quarter, the 
20 percent allowance expenditures would be applied first against the 
available fiscal year reallotments. However, the 20 percent allowance 
expenditures could be applied only against the specified fiscal year 
allotment funds (upon which the 20 percent allowances were based) and 
which would remain available. Under section 2104(g)(1)(B)(iii) of the 
Act, the amounts of States' FY 2001 reallotments would only be 
available through the end of FY 2005; therefore, the FY 2001 20 percent 
allowances for the qualifying States are only available through the end 
of FY 2005.
    Section 6103 of the Deficit Reduction Act of 2005 (Pub. L. 109-171, 
enacted on February 8, 2006) amended section 2105(g) of the Act to 
provide for continued authority for qualifying States to use a portion 
of their available FYs 2004 and 2005 CHIP allotments for payments to 
supplement the Medicaid FMAP that result in total Federal participation 
at the EFMAP rate (as determined in section 2105(b) of the Act) for 
certain expenditures made in the Medicaid program.
    Section 201(b) of the National Institutes of Health Reform Act of 
2006 (Pub. L. 109-482, enacted on January 15, 2007) and section 201(b) 
of MMSEA, amended section 2105(g) of the Act to provide for continued 
authority of payments to qualifying States for FYs 2006 through 2009.
    Finally, section 107 of CHIPRA amended title XXI of the Act to add 
a new paragraph (4) of section 2105(g) of the Act; under this new 
provision, qualifying states at their option may use up to their entire 
fiscal year allotments for each of FYs 2009 through 2015, to the extent 
such allotments remain available to the State under the Act, in an 
amount equal to the additional amount that would have been paid to the 
State if the EFMAP as determined by section 2104(b) of the Act was 
substituted for the FMAP defined in section 1905(b) of the Act. Section 
10203(d)(2)(C) of the Affordable Care Act further amended section 
2105(g)(4) of the Act to provide that qualifying states at their option 
may use up to their entire fiscal year allotments for each of FYs 2009 
through 2015.
    The CHIPRA amendments to the qualifying State provision provide 
that the indicated amounts of such allotments are available for certain 
expenditures of the qualifying States as described in section 
2105(g)(4)(B) of the Act, as amended by CHIPRA. In particular, these 
are expenditures made by such States on or after February 5, 2009 for 
children whose family income equals or exceeds 133 percent of the 
Federal poverty line but does not exceed the Medicaid applicable income 
level. As indicated above in this preamble, this is a change from what 
was in effect previously; that is, before CHIPRA, the income level was 
150 percent of the Federal poverty line.

II. Provisions of the Proposed Rule

    We published on September 16, 2009 a proposed rule in the Federal 
Register (74 FR 47517), that set forth the methodologies and procedures 
to determine allotments of federal funds under title XXI of the Social 
Security Act (the Act), reflecting the statutory changes described 
above. We proposed new regulatory provisions that would be set forth in 
42 CFR part 457 subpart F.

III. Analysis of and Responses to Public Comments

    We received a total of 2 timely comments on the September 16, 2009 
(74 FR 47517) proposed rule. Both comments either indicated agreement 
with the content of the proposed rule or were outside of the scope of 
the rule; neither of these comments suggested any changes to the 
content of the proposed rule.

IV. Provisions of the Final Regulations

    After consideration of the comments reviewed and further analysis 
of specific issues, we are adopting the September 16, 2009 proposed 
rule as final with minor revisions discussed and identified below.
    The provisions of this final rule that differ from those of the 
proposed rule relate to the amendments made by the Affordable Care Act, 
which extended funding for CHIP to the end of FY 2015; previously 
funding for CHIP extended only through the end of FY 2013. Therefore, 
we are implementing the new provisions of the Affordable Care Act 
discussed in this final regulation as final without the need for public 
comments.
    In this final rule, we are retaining the provisions as published in 
the proposed rule, as follows:
     Set forth the methodology and procedures for determining 
the CHIP allotments for FYs 2009 through 2015 for the 50 States and the 
District of Columbia, and the U.S. Commonwealths and Territories as 
provided under section 2104(m) of the Act.
     Describe the methodology and process used to coordinate 
the funding provided previously to States under MMSEA, as described in 
the May 23, 2008 Federal Register notice (73 FR 30112), under the 
provisions of section 2104(a)(11) of the Act related to States' FY 2009 
allotments provided to States before CHIPRA, section 2104(k) of the Act 
related to the redistribution of States' unexpended FY 2006 allotments 
to address States' shortfalls in FY 2009, and section 2104(l) of the 
Act related to funding States' shortfalls in FY 2009 for their 
expenditures through March 31, 2009.
     Set forth the FY 2009 allotments as determined in 
accordance with such methodologies and procedures.
     Set forth the FY 2010 allotments as determined in 
accordance with such methodologies and procedures.
     Describe the implementation of the continued authority 
under section 2105(g)(4) of the Act as amended by CHIPRA for 
``qualifying States'' to elect to receive their available CHIP 
allotments for FYs 2009 through 2015 CHIP as increased Federal matching 
funds for certain expenditures in their Medicaid programs.
     Describe the retrospective adjustment for the FY 2008 
shortfall funding as provided under section 2104(j) of the Act.
    To incorporate the policies and implement the statutory provisions 
as described above, we applied the following revisions:
     In Sec.  457.600(a), we removed the date ``2007'' and 
added in its place ``2015''.
     In Sec.  457.608, we revised the heading ``Process and 
calculation of State allotments for a fiscal year'' to read ``Process 
and calculation of State allotments prior to FY 2009''.
     In part 457 subpart F, we added Sec.  457.609, ``Process 
and calculation of State allotments for a fiscal year after FY 2008'', 
which implements the funding amounts available for States' CHIP 
allotments for FYs 2009 through 2015 of this regulation.
     In Sec.  457.610, we revised the heading ``Period of 
availability for State allotments for a fiscal year'' to read ``Period 
of availability for State allotments prior to FY 2009''. In the first 
line of the paragraph for this section, we removed the words ``for a 
fiscal year'' and add in its place ``prior to FY 2009''.
     In part 457 subpart F, we add Sec.  457.611, ``Period of 
availability for State allotments for a fiscal year after FY 2008'', 
which reflects the 3 fiscal year and 2 fiscal year periods of 
availability,

[[Page 9236]]

as applicable to fiscal years before 2009 and effective for FY 2009 and 
subsequent fiscal years, respectively.

A. Methodology and Procedures for Determining the CHIP Allotments for 
FY 2009 Through FY 2015 for the 50 States and the District of Columbia, 
and the U.S. Commonwealths and Territories

1. Reauthorization Funding for the CHIP
    Section 2104(a)(1) through (18) of the Act, as amended by section 
101 of CHIPRA, and as further amended by section 10203(d) of the 
Affordable Care Act, provides funding for providing States' allotments 
for FYs 2009 through 2015. In particular, section 101 of CHIPRA amended 
section 2104(a) of the Act to revise paragraph (11) for FY 2008, and 
adds new paragraphs (12) through (16) to provide appropriations for FY 
2009 through FY 2013, respectively. The Affordable Care Act further 
amended section 2104(a) of the Act to add new paragraphs (17) and (18), 
which provide appropriations for CHIP in FYs 2014 and 2015. In 
particular, under the amendments made by CHIPRA and the Affordable Care 
Act, the appropriated amounts available for allotments for FYs 2009 
through 2015, respectively are: $10,562,000,000 for FY 2009 (before 
CHIPRA the amount for FY 2009 was $5,000,000,000); 12,520,000,000 for 
FY 2010; $13,459,000,000 for FY 2011; $14,982,000,000 for FY 2012; 
$17,406,000,000 for FY 2013, $19,147,000,000 for FY 2014, and 
$2,850,000,000 for each of the first and second half of FY 2015. Also, 
section 108 of CHIPRA, as amended by 10203(d) of the Affordable Care 
Act, provides for a one-time appropriation of $15,361,000,000 for 
allotments for the first half of FY 2015. Therefore, the total 
appropriation for providing allotments during FY 2015 is 
$21,061,000,000 (determined as the sum of $2,850,000,000, 
$15,361,000,000, and $2,850,000,000).
2. Methodology for Determining State's Fiscal Year Allotments
a. CHIPRA and Affordable Care Act Provisions
    Section 2104(m) of the Act, as amended by section 102 of CHIPRA and 
section 10203(d) of the Affordable Care Act sets forth the methodology 
for determining States' CHIP allotments for each of FYs 2009 through 
2015. In general, the States' fiscal year allotments are provided from 
the appropriation for the respective fiscal year allotment, subject to 
a proration adjustment, described in section II.A.2.i. of this final 
rule.
b. FY 2009 Allotments
    The FY 2009 allotments for the 50 States and the District of 
Columbia, and the Commonwealths and Territories, are provided from the 
FY 2009 appropriation of $10,562,000,000, and the $40,000,000 available 
at section 2104(c)(4) and are subject to a proration adjustment 
described in II.A.2.i. of this final rule, if necessary. The FY 2009 
CHIP allotments for the 50 States and the District of Columbia are 
determined under a different methodology than is used for the 
determining the FY 2009 allotments for the Commonwealths and 
Territories.
    The FY 2009 allotment for the 50 States and the District of 
Columbia is determined as 110 percent of the highest of the following 3 
amounts:
     The total Federal payments to the State from the States' 
available CHIP allotments in FY 2008 as reported by the State and 
certified to the Secretary through the November 2008 submission of the 
quarterly expenditure reports, Forms CMS-21 (OMB 0938-0731 
with an expiration date of August 31, 2011) and CMS-64 (OMB 
0938-0067 with an expiration date of August 31, 2011), multiplied by 
the allotment increase factor described in section II.A.2.j. of this 
final rule.
     The amount allotted to the State for FY 2008, multiplied 
by the allotment increase factor described in section II.A.2.j. of this 
final rule.
     The projected total Federal payments to the State under 
title XXI of the Act for FY 2009, determined based on the February 
submission of projections of expenditures as certified by the State to 
CMS no later than March 31, 2009. These projections may include certain 
amounts of Medicaid expenditures for certain ``qualifying States'' 
described in section 2105(g) of the Act.
    With respect to the last item related to projected total Federal 
payments for FY 2009 under title XXI, section 107 of CHIPRA added a new 
paragraph section 2105(g)(4) of the Act to allow States to use up to 
100 percent of their FY 2009 allotments for these expenditures. This 
provision is further described in section II.E. of this final rule.
    The FY 2009 allotment for the Commonwealths and Territories is 
determined as the highest amount of the Federal payments made to the 
Commonwealth or Territory under title XXI of the Act in any of the 
fiscal years for the period of FYs 1999 through 2008, multiplied by the 
allotment increase factor described in section II.A.2.j. of this final 
rule, plus an additional amount. The additional amount is equal to 
$40,000,000, as appropriated under section 2104(c)(4)(B) of the Act, 
multiplied by the following percentage provided under section 
2104(c)(2) of the Act for the indicated jurisdiction: 91.6 percent for 
Puerto Rico; 3.5 percent for Guam; 2.6 percent for the Virgin Islands; 
1.2 percent for American Samoa; and 1.1 percent for the Northern 
Mariana Islands.
c. FY 2010 Allotments
    The FY 2010 allotments for the 50 States and the District of 
Columbia, and the Commonwealths and Territories, are provided from the 
FY 2010 appropriation of $12,520,000,000, and are subject to a 
proration adjustment if necessary, described in section II.A.2.i. of 
this final rule. Under the CHIPRA, the FY 2010 allotment for each State 
is determined by multiplying the allotment increase factor for FY 2010 
for the State, by the sum of: The State's FY 2009 allotment; the amount 
of the final FY 2006 redistributed allotments paid to the State as 
determined under section 2104(k) of the Act, and subject to any final 
retrospective adjustment to such amount determined by section 
2104(k)(5) of the Act; the amount of the final additional FY 2009 
allotments paid to the State as determined by section 2104(l) of the 
Act, and subject to any final retrospective adjustment to such amount 
determined by section 2104(l)(5) of the Act; and the amount of any 
contingency fund payment made to the State for FY 2010, as determined 
by section 2104(n) of the Act.
    For the 50 States and the District of Columbia, section 2104(m)(6) 
of the Act, the FY 2010 allotment may include additional amounts in 
situations where such States have submitted an expansion allotment 
adjustment request before August 31, 2009.
    For the Commonwealths and Territories, in accounting for the 
amounts of the FY 2009 allotments for purposes of determining the FY 
2010 allotments, the component of the FY 2009 allotment for such 
jurisdictions relating to the additional $40 million referenced in 
section 2104(c)(4) of the Act, is not included. Section 
2104(m)(2)(A)(i)(I) of the Act, as amended by CHIPRA, references the FY 
2009 allotment as determined in section 2104(m)(1) of the Act; that 
section, in turn, provides for determining the FY 2009 allotments from 
the amounts appropriated in section 2104(a)(12) of the Act. That is, 
such section 2104(m)(1) of the Act does not include the additional $40 
million which is separately appropriated and available only for the 
jurisdictions in determining their FY 2009 allotments. Therefore, the

[[Page 9237]]

component of the jurisdictions' FY 2009 allotment related to the 
additional $40 million would not be included in determining the amount 
of the jurisdictions' FY 2010 allotments.
d. FY 2011 Allotments
    The FY 2011 allotments for the 50 States and the District of 
Columbia, and the Commonwealths and Territories, are provided from the 
FY 2011 appropriation ($13,459,000,000). The amounts of these 
allotments are subject to a proration adjustment described in section 
II.A.2.i of this final rule, if necessary. Section 2104(m)(2)(A)(ii) of 
the Act, as amended by CHIPRA requires a ``rebasing'' process be used 
for determining the FY 2011 allotments; under the rebasing methodology, 
States' payments rather than their allotments for FY 2010 must be 
considered in calculating the FY 2011 allotments. In particular, the FY 
2011 allotments are determined by multiplying the allotment increase 
factor for FY 2011 for the State by the sum of: Any Federal payments 
made from the States' available allotments in FY 2010; any amounts 
provided as redistributed allotments in FY 2010 to the State; and any 
Federal payments attributable to any contingency fund payments made to 
the State for FY 2010 determined under Section 2104(n) of the Act.
e. FY 2012 Allotments
    The FY 2012 allotments for the 50 States and the District of 
Columbia, and the Commonwealths and Territories, are provided from the 
FY 2012 appropriation ($14,982,000,000), and are subject to a proration 
adjustment described in section II.A.2.i. of this final rule, if 
necessary. Under the CHIPRA, the FY 2012 allotment for each State will 
be determined by multiplying the allotment increase factor for FY 2012 
for the State, by the sum of: The State's FY 2011 allotment and any 
contingency fund payment made to the State for FY 2011, as determined 
under section 2104(n) of the Act.
    For the 50 States and the District of Columbia, in section 
2104(m)(6) of the Act, the FY 2012 allotment may include additional 
amounts in situations where such States have submitted an expansion 
allotment adjustment request before August 31, 2011.
f. FY 2013 Allotments
    The FY 2013 allotments for the 50 States and the District of 
Columbia, and the Commonwealths and Territories, are provided from the 
FY 2013 appropriation ($17,406,000,000). The amounts of these 
allotments are subject to a proration adjustment described in section 
II.A.i. of this final rule, if necessary. Section 2104(m)(2)(B)(i) of 
the of the Act, as amended by the Affordable Care Act requires a 
``rebasing'' process be used for determining the FY 2013 allotments; 
the rebasing methodology means the States' payments rather than their 
allotments for FY 2012 must be considered in calculating the FY 2013 
allotments. In particular, the FY 2013 allotments are determined by 
multiplying the allotment increase factor for FY 2013 for the State by 
the sum of: Any Federal payments made from the States' available 
allotments in FY 2012; any amounts provided as redistributed allotments 
in FY 2012 to the State; and any Federal payments attributable to any 
contingency fund payments made to the State for FY 2012 determined 
under Section 2104(n) of the Act.
g. FY 2014 Allotments
    The FY 2014 allotments for the 50 States and the District of 
Columbia, and the Commonwealths and Territories, are provided from the 
FY 2014 appropriation of $19,147,000,000, and are subject to a 
proration adjustment described in II.A.2.i. of this final rule, if 
necessary. Under section 2104(m), as amended by the Affordable Care 
Act, the FY 2014 allotment for each State is determined by multiplying 
the allotment increase factor for FY 2014 for the State, by the sum of: 
The State's FY 2013 allotment and any contingency fund payment made to 
the State for FY 2013, as determined in section 2104(n) of the Act.
    For the 50 States and the District of Columbia, under section 
2104(m)(6) of the Act, the FY 2014 allotment may include additional 
amounts in situations where such States have submitted an expansion 
allotment adjustment request before August 31, 2013.
h. FY 2015 Allotments
    The FY 2015 allotments for the 50 States and the District of 
Columbia, and the Commonwealths and Territories, are comprised of two 
components related to the first half of FY 2015 (that is, the period of 
October 1, 2014 through March 31, 2015) and second half of FY 2015 
(that is, April 1, 2015 through September 30, 2015). The FY 2015 
allotments for the first and second half of FY 2015 are subject to a 
proration adjustment described in section II.A.2.i. of this final rule, 
as necessary.
    The allotments for the first half of FY 2015 are provided from a 
total available appropriation of $18,211,000,000, comprised of 
$2,850,000,000 appropriated under section 2104(a)(18)(A) of the Act, 
and $15,361,000,000 appropriated by section 108 of CHIPRA, as amended 
by the Affordable Care Act. The allotments for the first half of FY 
2015 are equal to the ``first half ratio'' multiplied by the allotment 
increase factor for FY 2015 multiplied by the sum of any Federal 
payments made from the States' available allotments in FY 2014; any 
amounts provided as redistributed allotments in FY 2014 to the State; 
and any Federal payments attributable to any contingency fund payments 
made to the State for FY 2014 as determined under Section 2104(n) of 
the Act. Therefore, the first half ratio is the percentage determined 
by dividing $18,211,000,000 (calculated as the sum of $2,850,000,000 
(the appropriation for the first half of FY 2015) and 15,361,000,000 
(the one-time appropriation for the first half of the FY 2015)) by 
$21,061,000,000 (calculated as $2,850,000,000, the appropriation for 
the second half of FY 2015) plus the $18,211,000,000 amount).
    The States' CHIP allotments for the second half of FY 2015 are 
provided from a total available appropriation of $2,850,000,000, 
appropriated under section 2104(a)(18)(B) of the Act. The allotments 
for the second half of FY 2015 are equal to $2,850,000,000 multiplied 
by a percentage equal to the amount of the allotment for the State for 
the first half of FY 2015 divided by the sum of all such first half of 
FY 2015 allotments for all States.
i. Proration Rule
    Under section 2104(m)(4) of the Act, as amended by CHIPRA, if the 
amount of States' allotments for a fiscal year (in accordance with the 
provisions described in this final rule, or in the case of FY 2015, the 
amount of an allotment for each half of the fiscal year) exceeds the 
total appropriations available for such periods, the total allotments 
for each of these periods will be reduced on a proportional basis. The 
total amount available nationally for the period is multiplied by a 
proration percentage determined by dividing the amount determined for 
the period by the sum of such amounts.
j. The Allotment Increase Factor for a Fiscal Year
    Under Section 2104(m)(5) of the Act, the allotment increase factor 
for a fiscal year is equal to the product of two amounts for the fiscal 
year: The per capita health care growth factor and the child population 
growth factor.
    The per capita health care growth factor for a fiscal year is equal 
to 1 plus the percentage increase in the projected

[[Page 9238]]

per capita amount of the National Health Expenditures from the calendar 
year in which the previous fiscal year ends to the calendar year in 
which the fiscal year involved ends, as most recently published by CMS 
before the beginning of the fiscal year involved.
    In general, for the 50 States and the District of Columbia, the 
Child Population Growth Factor (CPGF) for a fiscal year is equal to 1 
plus the percentage increase (if any) in the population of children in 
the State from July 1 in the previous fiscal year to July 1 in the 
fiscal year involved, as determined by CMS based on the most recent 
published estimates of the Census Bureau available before the beginning 
of the fiscal year involved plus 1 percentage point. In the 
determination of the CPGF, section 2104(m)(5)(B) refers to ``the 
percentage increase (if any)'' of the population of children in the 
State. In this regard, CPGF refers only to increases in the population 
of children. Thus, if there was a decrease in the population of 
children over the indicated period, the CPGF for such State would be 
0.0 percent plus one percentage point; that is, negative growth in the 
children population would not result in the growth factor being less 
than 101 percent.
    Because of concerns about availability of data to determine the 
CGPF for the Commonwealths and the Territories, section 2104(m)(1)(B) 
of the Act explicitly required that the term ``United States'' be 
substituted for the term ``the State''. For fiscal years after FY 2009, 
that exception does not apply, and CMS will determine the CPGF for the 
Commonwealths and the Territories, based on the most recent published 
estimates of the Census Bureau. In accordance with section 602(b) of 
the CHIPRA, which added a new section 2109(b)(2)(B) of the Act, we will 
be working with the Secretary of the Commerce Department on appropriate 
adjustments to improve the Current Population Survey (CPS), or develop 
other data, to determine the CPGF.
k. CHIP Fiscal Year Allotment Process
    As described above, the determination of the allotments for each 
fiscal year potentially involves the collection of relevant data, such 
as related to the allotment increase factor, or the consideration of 
additional information later or after the end of the fiscal year; for 
example, the determination of the FYs 2010, 2012, and 2014 allotments 
allows States to receive increases in their CHIP allotments to reflect 
the submission of certain expansions to their CHIP programs. In that 
regard, we are incorporating into the CHIP regulation a process, which 
the Secretary may elect to publish preliminary fiscal year allotments. 
Consequently, this process at the time the updated allotment amounts 
became available the Secretary would publish a final notice. For 
example, the CHIPRA legislation as amended by the Affordable Care Act, 
in the determination of the FYs 2010, 2012, and 2014 allotments, States 
can amend their CHIP programs to provide for certain expansions; the 
increase in expenditures for such expansions will serve to increase the 
amount of the State fiscal year allotments associated with the year of 
such expansions. As determined by the Secretary, the CHIP allotments 
for a fiscal year may need to be published first as ``Preliminary 
Allotments'' and then later as ``Final Allotments'' in the Federal 
Register. The proposed rule provided for the potential for a 
preliminary and final allotment to be determined.

B. Coordination of CHIP Funding for FY 2009

    Before the enactment of CHIPRA, section 2104(a)(11) of the Act, as 
amended by MMSEA, appropriated $5 billion for purposes of providing FY 
2009 allotments for States. The CHIP statute as amended by MMSEA and 
before the enactment of CHIPRA, funds were potentially available for 
allotment and obligation to States for their CHIP related expenditures 
in FY 2009 through March 31, 2009. Furthermore, section 2104(k) of the 
Act and section 2104(l) of the Act, as amended by MMSEA, provided for 
redistribution of the unexpended FY 2006 allotments in FY 2009, and for 
additional FY 2009 shortfall allotments in FY 2009, respectively. 
However, section 3(c)(1) of CHIPRA provides for a rescission of amounts 
of these funds that were not obligated before April 1, 2009. Also, 
section 3(c)(2) of CHIPRA requires that the FY 2009 allotments, as 
determined under section 2104(m)(1) of the Act as amended by CHIPRA, be 
reduced by the following amounts that were appropriated and obligated 
before April 1, 2009. Amounts appropriated and obligated before April 
1, 2009 include the amounts of the FY 2009 allotments appropriated by 
section 2104(a)(11) of the Act, as amended by MMSEA and before the 
enactment of CHIPRA; amounts of FY 2006 redistributed allotments, 
provided in section 2104(k) of the Act; and, the amounts of the FY 2009 
shortfall allotments, provided in section 2104(l) of the Act. Funding 
for Territories and Commonwealths under section 2104(c)(4) is not part 
of this coordination of funding. This coordination ensures that States' 
FY 2009 CHIP funding does not exceed the final FY 2009 CHIP allotments 
as determined under the CHIPRA.

C. FY 2009 Allotments Determined in Accordance With Such Methodologies 
and Procedures

    We calculated the FY 2009 allotments for the States in accordance 
with the methodology described in section II.A. of the September 16, 
2009 (74 FR 47517) proposed rule relating to the calculation of the 
fiscal year CHIP allotments, and in section II.B. of the same proposed 
rule. That calculation was contained in three tables described as Table 
1 provided the calculation of the allotment increase factor for FY 
2009, Table 2 provided the calculation of the FY 2009 allotment, and 
Table 3 provided the coordination of funds in FY 2009.

D. FY 2010 Allotments Determined in Accordance With Such Methodologies 
and Procedures

    In accordance with the methodology described in section II.A.2.c. 
of this final rule, relating to the calculation of the FY 2010 CHIP 
allotments, and the availability of additional allotments, we 
calculated the FY 2010 allotments for the States. That calculation is 
contained in two tables described in section III of this final rule; 
Table 1 provides the calculation of the allotment increase factor for 
FY 2010, and Table 2 provides the calculation of the FY 2010 allotment.

E. FY 2011 Allotments Determined in Accordance With Such Methodologies 
and Procedures

    In accordance with the methodology described in section II.A.2.d. 
of this final rule relating to the calculation of the fiscal year CHIP 
allotments, we calculated the FY 2011 allotments for the States. That 
calculation is contained in two tables described in section III of this 
final rule; Table 3 provides the calculation of the allotment increase 
factor for FY 2011, and Table 4 provides the calculation of the FY 2011 
allotment, determined under the ``rebasing'' methodology.

F. Period of Availability for CHIP Allotments

    Section 105 of CHIPRA amended section 2104(e) of the Act to revise 
the period of availability for expenditure by States of their CHIP 
fiscal year allotments. Before the enactment of CHIPRA, States' CHIP 
fiscal year allotments were available for expenditure by the State for 
three fiscal

[[Page 9239]]

years, the fiscal year in which they were initially allotted and the 
subsequent two fiscal years. Section 2104(e) of the Act, as amended by 
CHIPRA, now provides that each of the States' fiscal year allotments 
for FYs 1998 through 2008 are available for expenditure by the State 
for three fiscal years and allotments for FY 2009 and each succeeding 
fiscal year are available for expenditure by the States for two fiscal 
years; the fiscal year in which they were initially allotted and the 
immediately subsequent fiscal year. In this final rule, we have amended 
the CHIP regulations at Sec.  457.610 and added Sec.  457.611 to 
reflect the three fiscal year and two fiscal year periods of 
availability, as applicable to fiscal years before FY 2009 and 
effective for FY 2009 and subsequent fiscal years, respectively.

G. Continuing Authority for Qualifying States to Use FY 2009 Through FY 
2015 Allotments for Certain Medicaid Expenditures

    Section 107 of CHIPRA amended the CHIP statute to add a new section 
2105(g)(4) of the Act to allow certain ``qualifying States'' described 
in section 2105(g) of the Act to elect to use up to 100 percent of 
their available CHIP fiscal year allotments for FY 2009 and following 
fiscal years (through FY 2015, as amended by section 10203(d)(2) of the 
Affordable Care Act) for certain expenditures in Medicaid. Before the 
enactment of CHIPRA, States were only able to use up to 20 percent of 
their available fiscal year CHIP allotments for the applicable Medicaid 
expenditures. With the enactment of CHIPRA, beginning with the FY 2009 
allotment, States can use up to 100 percent of their FY 2009 and 
following fiscal year allotments for the States' qualifying 
expenditures. In that case, only the Federal share portion of the 
expenditures which is above the amount that the State would have 
received under Medicaid will be applied against the CHIP allotment.
    Under section 5001 of the American Recovery and Reinvestment Act of 
2009 (ARRA, Pub. L. 111-5, enacted on February 17, 2009), and as 
further amended by the Public Law 111-226 (enacted on August 10, 2010), 
the FMAP has been increased during the 11-quarter period, October 1, 
2009 through June 30, 2011 under the Medicaid program. Therefore, the 
amount of the Federal share funds that will be applied against the CHIP 
qualifying States' FY 2009 (and following) allotments will be reduced. 
For example, a qualifying State's regular Medicaid FMAP rate in FY 2009 
is 50 percent, its increased FMAP under ARRA in Medicaid is 60.00 
percent, and its CHIP EFMAP is 65.00 percent. The qualifying State will 
be able to claim the ``qualifying'' expenditures in FY 2009 at the 
65.00 percent EFMAP rate in CHIP, and only 5 percent of such 
expenditures will apply against the State's FY 2009 allotment, 
calculated as 65.00 percent (CHIP EFMAP) minus 60.00 percent (increased 
FMAP under ARRA) claimable under the Medicaid program. In the same 
example (and assuming the same FMAP for Medicaid and EFMAP in CHIP), 
after June 30, 2011, 15.00 percent of the qualifying expenditure in FY 
2011 will apply against the State's FY 2011 CHIP allotment, calculated 
as 65.00 percent (CHIP EFMAP) minus 50.00 percent (regular FMAP) 
claimable under the Medicaid program. We have amended the CHIP 
regulations to reflect this provision in this final rule.

H. Retrospective Adjustment of FY 2008 Shortfall Allotments

    Section 2104(j)(5) of the Act, as amended by MMSEA provides for a 
potential retrospective adjustment with respect to the amounts of 
States' FY 2008 shortfall allotments provided to them in FY 2008 and 
based on expenditure reports for FY 2008 submitted and certified by 
States to CMS no later than November 30, 2008.
    Under section 2104(j)(2) and (3)(A) of the Act, additional FY 2008 
shortfall allotments were made available only to those 50 States and 
the District of Columbia that were initially determined to have a 
shortfall in CHIP funding in FY 2008 based on their FY 2008 expenditure 
projections as submitted and certified by the States by November 30, 
2007. For those States, section 2104(j)(5) of the Act, the 
retrospective adjustment to the amounts of their additional FY 2008 
shortfall allotments is based on the FY 2008 expenditure projections 
submitted and certified by such States by November 30, 2008.
    Through the end of FY 2008 and based on States' estimated FY 2008 
CHIP expenditures, we had provided approximately $1,201 million in 
total additional FY 2008 shortfall allotments to States to address 
their projected shortfalls in FY 2008. However, based on the States' 
actual FY 2008 expenditures, as submitted through November 30, 2008, 
the final States' shortfalls in FY 2008 were only approximately $995 
million. That is, of those States who overestimated their projected 
shortfalls, final shortfalls for FY 2008 were about $232 million less 
than were previously estimated, and for States that underestimated 
their shortfalls, their actual shortfalls were about $26 million 
higher. Thus, the final net shortfall for States was about $995 million 
($1,201 million minus $232 million plus $26 million). Table 4 of the 
proposed rule published in the Federal Register on September 16, 2009 
(74 FR 47517) contained the final FY 2008 shortfall allotments after 
applying the retrospective adjustment under section 2104(j)(5) of the 
Act.

I. Retrospective Adjustment of FY 2009 Shortfall Allotments

    Section 2104(l)(5) of the Act, as amended by MMSEA provides for a 
potential retrospective adjustment with respect to the amounts of 
States' FY 2009 shortfall allotments provided to them in FY 2009 prior 
to April 1, 2009 based on expenditure reports for the first two 
quarters of FY 2009 as submitted and certified by States to CMS no 
later than May 31, 2009.
    Under section 2104(l)(2) and (3)(A) of the Act, additional FY 2009 
shortfall allotments were made available to those States that were 
initially determined to have a shortfall in CHIP funding in FY 2009 
based on their expenditure projections for the first two quarters of FY 
2009 as submitted and certified by the States by November 30, 2008. For 
those States, section 2104(l)(5) of the Act, provided the retrospective 
adjustment to the amounts of their additional FY 2009 shortfall 
allotments is based on the FY 2009 expenditures for the first two 
quarters of FY 2009 as submitted and certified by such States by May 
31, 2009.
    Before April 1, 2009, and based on States' estimated FY 2009 CHIP 
expenditures through the end of the second quarter of FY 2009, we had 
provided approximately $267 million in total additional FY 2009 
shortfall allotments to States to address their projected shortfalls in 
FY 2009 through the end of the second quarter FY 2009 in that amount. 
However, based on the States' actual FY 2009 expenditures for the first 
two quarters of FY 2009, as submitted through May 31, 2009, the final 
States' shortfalls in FY 2009 through the second quarter of FY 2009 for 
the shortfall States were only approximately $210 million. That is, for 
the shortfall States initially receiving the additional FY 2009 
shortfall allotments, based on their actual FY 2009 reported 
expenditures for the first two quarters of FY 2009, their final 
shortfalls for the first two quarters of FY 2009 were about $58 million 
less than was previously estimated. Table 5 of the proposed rule 
published in the September 16, 2009 Federal Register (74 FR 47517) 
contained the final FY 2009 shortfall allotments after applying the

[[Page 9240]]

retrospective adjustment under section 2104(l)(5) of the Act.

III. Tables

    Following are the keys and associated tables for the CHIP funding 
provisions as discussed in previous sections:
    Table 1--Allotment Increase Factor for 2010
    Table 2--FY 2010 Children's Health Insurance Program Allotments 
Under the Children's Health Insurance Program Reauthorization Act Of 
2010
    Table 3--Allotment Increase Factor for 2011
    Table 4--FY 2011 Children's Health Insurance Program Allotments 
Under the Children's Health Insurance Program Reauthorization Act Of 
2011.

A. Table 1--Allotment Increase Factor for 2010

Key to Table 1 Column/Description
    Column A = State. Column A contains the name of the State, District 
of Columbia, U.S. Commonwealth or Territory.
    Column B = PCNHE 2009, PCNHE 2010, PCHCG Factor. Column B contains 
the calculation of the Per Capita Health Care Growth (PCHCG) Factor for 
FY 2010, determined as 1 plus the percentage increase in the Per 
Capital National Health Expenditures (PCNHE) from calendar year 2009 to 
calendar year 2010.
    Columns C through F = Calculation of the Child Population Growth 
Factor (CPGF) for FY 2010:
    Column C = July 1, 2009 Child Population. Column C contains the 
population of children in each State or the United States as of July 1, 
2009, as provided by the most recent published data of the Census 
Bureau before the beginning of FY 2010.
    Column D = July 1, 2010 Child Population. Column D contains the 
population of children in each State or the United States as of July 1, 
2010, as provided by the most recent published data of the Census 
Bureau before the beginning of FY 2010.
    Column E = Percent Increase 2009-2010. Column E contains the 
percentage increase, if any, of the population of children in each 
State, or the United States, from July 1, 2009 to July 1, 2010, 
calculated as the difference between the number in Column D minus the 
number in Column C divided by the number in Column C.
    Column F = FY 2010 Child Population Growth Factor. Column F 
contains the Child Population Growth Factor (CPGF) for each State, 
determined as 1.01 plus the percent in Column E for the State.
    Column G = FY 2010 Allotment Increase Factor. Column G contains the 
FY 2010 Allotment Increase Factor, calculated as the PCHCG factor in 
Column B multiplied by the CPGF percent in Column F.

B. Table 2--FY 2010 Children's Health Insurance Program Allotments 
Under the Children's Health Insurance Program Reauthorization Act of 
2009

Key to Table 2 Column/Description
    Column A = State. Column A contains the name of the State, District 
of Columbia, U.S. Commonwealth or Territory.
    Column B = FY 2009 CHIP Allotments. Column B contains, for the 50 
States and the District of Columbia only, the States' FY 2009 CHIP 
allotments, as were published in the September 16, 2009 Federal 
Register (74 FR 47617).
    Column C = FY 2006 Redistributed Allotment Payments. Column C 
contains for the 50 States and the District of Columbia only, the 
amounts of redistributed FY 2006 allotments provided in FY 2009 as 
determined under section 2104(k) of the Act.
    Column D = FY 2009 Additional Allotment Payments. Column D contains 
the any additional allotment payments provided to the State in FY 2009 
under the provisions of section 2104(l) of the Act, including the 
retrospective adjustments made under section 2104(l)(5) of the Act.
    Column E = FY 2009 Contingency Fund Payments. Column E contains any 
contingency fund payments made to a State for FY 2009, if any, under 
the provisions of section 2104(n) of the Act.
    Column F = Total. Column F contains the total of the amounts in 
Columns B, C, D, E, and F.
    Column G = FY 2010 Allotment Increase Factor. Column G contains the 
Allotment Increase Factor for each State as contained in Column G of 
Table 1.
    Column H = FY 2010 Total x Increase Factor. Column H contains the 
product of the total amount in Column F and the amount of the FY 2010 
Allotment Increase Factor in Column G. This amount represents the FY 
2010 CHIP allotment without the inclusion of any additional amounts 
available for the FY 2010 allotment indicated in Column I.
    Column I = Additional Amount Available for FY 2010 Allotment. 
Column I contains, for the 50 States and the District of Columbia only, 
the amount of additional amounts available to increase the FY 2010 
allotment, if any, as determined under the provisions of section 
2014(m)(6) or (7) of the Act.
    Column J = Total FY 2010 Allotment. Column J contains the total FY 
2010 CHIP allotment, determined as the sum of the amounts in Column H 
and Column I, if any.

C. Table 3--Allotment Increase Factor for 2011

Key to Table 1 Column/Description
    Column A = State. Column A contains the name of the State, District 
of Columbia, U.S. Commonwealth or Territory.
    Column B = PCNHE 2010, PCNHE 2011, PCHCG Factor. Column B contains 
the calculation of the Per Capita Health Care Growth (PCHCG) Factor for 
FY 2011, determined as 1 plus the percentage increase in the Per 
Capital National Health Expenditures (PCNHE) from calendar year 2010 to 
calendar year 2011.
    Columns C through F = Calculation of the Child Population Growth 
Factor (CPGF) for FY 2011:
    Column C = July 1, 2010 Child Population. Column C contains the 
population of children in each State or the United States as of July 1, 
2010, as provided by the most recent published data of the Census 
Bureau before the beginning of FY 2011.
    Column D = July 1, 2011 Child Population. Column D contains the 
population of children in each State or the United States as of July 1, 
2010, as provided by the most recent published data of the Census 
Bureau before the beginning of FY 2011.
    Column E = Percent Increase 2010-2011. Column E contains the 
percentage increase, if any, of the population of children in each 
State, or the United States, from July 1, 2010 to July 1, 2011, 
calculated as the difference between the numbers in Column D minus the 
number in Column C divided by the number in Column C.
    Column F = FY 2011 Child Population Growth Factor. Column F 
contains the Child Population Growth Factor (CPGF) determined as 1.01 
plus the percent in Column E for the State.
    Column G = FY 2011 Allotment Increase Factor. Column G contains the 
FY 2011 Allotment Increase Factor, calculated as the PCHCG factor in 
Column B multiplied by the CPGF percent in Column F.

D. Table 4--FY 2011 Children's Health Insurance Program Allotments 
Under the Children's Health Insurance Program Reauthorization Act of 
2009

Key to Table 4
Column/Description
    Column A = State. Column A contains the name of the State, District 
of Columbia, U.S. Commonwealth or Territory.

[[Page 9241]]

    Column B = FY 2010 FS Exp. Applied Against Allotments. Column B 
contains the amounts of the Federal share expenditures that were 
applied against the State's available allotments in FY 2010.
    Column C = Contingency Fund Payments in FY 2010. Column C contains 
the amounts of contingency fund payments made to the State in FY 2010, 
if any.
    Column D = Redistributed Allotments in FY 2010. Column D contains 
the amounts of redistributed allotments provided to the State in FY 
2010, if any.
    Column E = Total FY 2010 FS Expenditures. Column E contains the sum 
of the total amounts of Federal Share expenditures applied against the 
States available allotments in FY 2010, Contingency Fund payments made 
in FY 2010, if any, and amounts of Redistributed Allotments in FY 2010, 
if any, calculated as the sum of the amounts in Columns B, C, and D.
    Column F = FY 2011 Allotment Increase Factor. Column F contains the 
Allotment Increase Factor for each State as contained in Column G of 
Table 3.
    Column G = FY 2011 CHIP Allotment. Column G contains the FY 2011 
CHIP Allotment, calculated as the product of the total amount in Column 
E and the amount of the FY 2011 Allotment Increase Factor in Column F.
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V. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on the proposed rule. This 
procedure can be waived, however, if an agency finds good cause that a 
notice-and-comment procedure is impracticable, unnecessary, or contrary 
to the public interest and incorporates a statement of the finding and 
its reasons in the rule issued.
    As discussed above, on September 16, 2009, we issued a proposed 
rule that set forth the methodologies and procedures to determine CHIP 
allotments in accordance with applicable federal laws on that date. 
Since that date, the Affordable Care Act was enacted into law. The 
Affordable Care Act made technical changes to the CHIP funding 
provisions and extended CHIP funding through the end of federal fiscal 
year 2015. The Affordable Care Act did not make any fundamental changes 
to the overall funding mechanism. Because there was no fundamental 
change to the funding mechanism, we believe it is unnecessary to reopen 
for public comment the methodologies and procedures to determine CHIP 
allotments set out in the proposed rule and made final in this rule. 
The changes made in the Affordable Care Act to extend the period of 
funding do not open up any new issues or concerns as to the calculation 
methodology or procedures.
    Therefore, we find good cause to waive the notice of proposed 
rulemaking and to issue this final rule.

VI. Collection of Information Requirements

    This document does not impose any information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 35).

VII. Regulatory Impact Analysis

A. Overall

    We have examined the impacts of this final rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), the Regulatory Flexibility Act (RFA) (September 19, 1980, Public 
Law 96-354), section 1102(b) of the Social Security Act, section 202 of 
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive 
Order 13132 on Federalism (August 4, 1999), and the Congressional 
Review Act (5 U.S.C. 804(2)).
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). We have 
determined that this final rule is economically significant, since it 
provides the methodologies under which State allotments for FYs 2009 
through 2015 are calculated. In particular, this final rule implements 
the CHIP statute as amended by CHIPRA and the Affordable Care Act, 
under which approximately up to $74 billion in additional Federal funds 
may be made available for FYs 2009 through 2016 in addition to the 
amount of funds previously appropriated for States' CHIPs in accordance 
with the methodology established in the CHIP statute. This final rule 
also includes the actual State fiscal year CHIP allotments for FYs 2010 
and 2011 determined in accordance with the methodology set out in this 
final rule. The methodologies for determining the States' CHIP 
allotments was established in accordance with the methodologies 
specified in statute and does not put forward any discretionary 
administrative policies for determining such allotments. Therefore, we 
have determined that there are no policy options that require an 
analysis beyond that which is presented in section II of this final 
rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, we estimate that 
most hospitals and most other providers and suppliers are small 
entities as that term is used in the RFA nonprofit organizations. The 
great majority of hospitals and most other health care providers and 
suppliers are small entities, either by being nonprofit organizations 
or by meeting the SBA definition of a small business having revenues of 
less than $7.0 million to $34.5 million in any 1 year. Individuals and 
States are not included in the definition of a small entity. We are not 
preparing an analysis for the RFA because we have determined that this 
final rule will not have a significant economic impact on a substantial 
number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. We 
are not preparing an analysis for section 1102(b) of the Act because we 
have determined that this final rule will not have a significant impact 
on the operations of a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2011, that 
threshold is approximately $136 million. This final rule will not 
create an unfunded mandate on States, tribal, or local governments in 
the aggregate, or by the private sector in the amount of $136 million 
in any one year.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have determined that this final rule will not 
significantly affect States' rights, roles, and responsibilities.
    Low-income children will benefit from payments under this program 
through increased opportunities for health insurance coverage. We 
believe this final rule will have an overall positive impact by 
informing States, the District of Columbia, and Commonwealths and 
Territories of the extent to which they are permitted to expend funds 
under their child health plans using the additional funds provided by 
the FY 2009 allotment amounts.

B. Anticipated Effects

    1. Effects on the CHIP program. This final rule provides the 
methodologies established in accordance with the CHIP statute, for 
determining the amounts of States' CHIP FY allotments through FY 2015. 
In accordance with such methodologies, CMS will determine and issue 
CHIP allotments to States each FY. States will be able to administer 
their CHIP programs with the appropriate levels of funding made 
available determined in accordance with the methodologies provided in 
this rule.
    2. Effects on other entities. This final rule will have no effects 
on other entities; it is only promulgating the methodologies for 
determining the amounts of States' CHIP allotments.

[[Page 9246]]

C. Anticipated Effects

    1. Effects on the CHIP program. This final rule provides the 
methodologies established in accordance with the CHIP statute, for 
determining the amounts of States' CHIP FY 2009 allotments through FY 
2015. In accordance with such methodologies, CMS will determine and 
issue CHIP allotments to States each FY. States will be able to 
administer their CHIP programs with the appropriate levels of funding 
made available determined in accordance with the methodologies provided 
in this rule.
    2. Effects on other entities. This final rule will have no effects 
on other entities; it is only promulgating the methodologies for 
determining the amounts of States' CHIP allotments.

D. Alternatives Considered

    The methodologies for determining the States' fiscal year CHIP 
allotments, as reflected in the previously published proposed rule, and 
in final rule, were established in accordance with the methodologies 
and formula for determining States' allotments as specified in statute. 
As indicated above, the only comments we received with respect to 
proposed rule either agreed with the substance of the proposed rule or 
were outside the scope of the rule. This final rule does not put 
forward any further discretionary administrative policies for 
determining such allotments. The main difference from the notice of 
proposed rule published in the Federal Register on September 16, 2009, 
is that this final rule reflects the extension of funding for t