GAO has determined that a State Children’s Health Insurance Program directive issued last August by the Centers for Medicare and Medicaid Services should not take effect until it is submitted to both houses of Congress and to GAO’s comptroller general. In a letter late Thursday to Sens. John (Jay) Rockefeller, D-W.Va., and Olympia Snowe, R-Maine, GAO General Counsel Gary Kepplinger said the directive meets the criteria for a formal agency rule under the Administrative Procedures Act. Democrats and many Republicans have been critical of the directive, which was issued last August. Among other things, the letter required states to certify that 95 percent of eligible children under 200 percent of poverty are enrolled in the program before states can offer health coverage to children above 250 percent of poverty. States say that benchmark is impossible to meet, although CMS officials say at least half of the states that go above 250 percent already are at that saturation level.
Rockefeller and Snowe released the GAO letter today, along with a Congressional Research Service report issued in January that reached the same conclusion. “Both GAO and CRS have now confirmed what so many of us have known for some time, that the administration clearly overstepped its legal authority in issuing the August 17 letter,” Rockefeller said. Earlier this month, CMS Director of the Center for Medicaid and State Operations Dennis Smith defended the agency’s actions before a Senate Finance subcommittee, saying the letter simply clarified an earlier regulation. “This is guidance to the states. It is saying, ‘This is what you can expect from us’” when seeking SCHIP waivers, he said. Smith is no longer in the CMS position. He had no comment on his departure at the Finance Committee hearing.
Neither GAO nor CRS has the authority to rescind the letter, but Rockefeller and Snowe claim the reports bolster their argument that the administration should shift course. To date, CMS has not shown a willingness to do that. “CMS chose to circumvent the rules and go their own way,” said Snowe. “As we can see from the opinions released today, this is clearly the wrong approach. That’s why we have encouraged the administration to rescind their August 17th directive and try to develop a workable consensus.” House Democratic leaders have hinted that legislation addressing the letter would be on the floor this summer. Such a move would call attention to a popular Democratic campaign issue leading up to the November elections.
This article appears in the April 19, 2008 edition of National Journal Daily PM Update.