Medicaid and the Children’s Health Insurance Program (CHIP) Provisions in H.R. 3590, as Passed by the Senate

Kelly Wilkicki, Coordinator
Presidential Management Fellow

Evelyne P. Baumrucker
Analyst in Health Care Financing

Cliff Binder
Analyst in Health Care Financing

Elicia J. Herz
Specialist in Health Care Financing

Julie Stone
Specialist in Health Care Financing


This report summarizes key provisions applicable to Medicaid and the Children's Health Insurance Program (CHIP) in H.R. 3590, the Patient Protection and Affordable Care Act, as passed by the Senate on December 24, 2009. In general, the bill would expand health insurance coverage to many Americans who currently are uninsured, while attempting to reduce expenditures and offering mechanisms to increase care coordination, encourage more use of health prevention, and improve quality of care. The bill would reform the private health insurance market, impose a mandate for most legal U.S. residents to obtain health insurance, establish health insurance "Exchanges" that would subsidize health insurance coverage for eligible individuals; expand Medicaid eligibility; create programs to improve quality of care and encourage more use of preventive services; address healthcare workforce issues; and propose a number of other Medicaid and Medicare program and federal tax code changes. 

Among the proposed Medicaid reforms, the bill would modify eligibility standards and methodologies, add several new mandatory and optional Medicaid benefits, expand Medicaid benefits, and increase CHIP funding. Beginning in 2014, or sooner at state option, nonelderly, non-pregnant individuals with income below 133% of the federal poverty level (FPL) would become eligible for Medicaid. New optional eligibility groups also would be added, such as nonelderly, non-pregnant individuals (childless adults) with income above 133% of poverty. The bill also would require states to maintain current coverage levels for individuals under Medicaid and CHIP. In addition, the bill would add several new mandatory Medicaid benefits including coverage of services in free standing birth clinics, and coverage of tobacco cessation services for pregnant women. 

The bill would make a number of Medicaid and CHIP financing changes, such as reducing Medicaid disproportionate share hospital (DSH) payments, increasing prescription drug rebates and increasing certain pharmacy reimbursement, increasing federal spending for the Territories, providing special enhanced disaster recovery Medicaid funding, and requiring payment system reforms. 

The bill includes provisions that would give states and other stakeholders new program integrity (PI)—waste, fraud and abuse—enforcement and monitoring tools as well as impose some new data reporting and oversight requirements on states and providers. Additional PI provisions affecting Medicaid and CHIP include requirements for states to implement a national correct coding initiative similar to the Medicare program, a broad new nursing home accountability initiative, and other new requirements to enhance PI that increase the uniformity of Medicare, Medicaid, and CHIP requirements. 

The bill also offers opportunities for states and other stakeholders to use new demonstrations and grants to modify payment systems, introduce care delivery models, and improve care quality, which include a medical global payment system demonstration and school-based health center grants.


Date of Report: January 20, 2010
Number of Pages: 72
Order Number: R41037
Price: $29.95

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