however, between the adoption of a new vaccine by ACIP and the completion of federal contract negotiations between CDC and the vaccine manufacturer. For example, an 11-month delay occurred between the time that varicella vaccine was recommended by ACIP (June 1995) and the effective date of VFC coverage (May 1996) (N.Smith, CDC, personal communication, February 10, 2000). In the absence of a VFC contract, state Medicaid agencies must directly cover all ACIP-recommended vaccines as a basic EPSDT service, paying commercial price for the vaccine and sharing the cost of the purchase at the usual Medicaid matching rate. Furthermore, since VFC covers children aged 18 and younger, states remain responsible for the immunization of adolescents aged 18–21 who are enrolled in Medicaid. In sum, the VFC program has reduced, but not eliminated, states’ financial obligations with respect to coverage of immunizations for Medicaid-enrolled children.

State Children’s Health Insurance Program

SCHIP, enacted in 1997, provides states with “child health assistance” to extend services to “targeted low-income” children who are ineligible for Medicaid but otherwise uninsured.15 Unlike Medicaid (including the VFC program), which creates a federal entitlement to coverage and is financed on an open-ended basis, SCHIP is a block grant program subject to aggregate federal payment limits.16 The federal SCHIP allotment formula is more generous than the Medicaid federal financing scheme: the SCHIP state matching requirement is 70 percent of the state’s Medicaid matching rate.

States have the discretion to use their annual SCHIP allotments to expand Medicaid; create separate, freestanding children’s insurance programs; or design a combination of the two. As of January 2000, 33 states had used their SCHIP allotments in whole or in part to establish freestanding programs (see Table 3–4).

To the extent that states use their SCHIP allotments to expand Medicaid, all Medicaid coverage requirements apply. As with other Medicaid-covered children, those whose enrollment is purchased with federal SCHIP funds are entitled to the full EPSDT benefits, including vaccines purchased through the VFC program.

In the case of freestanding SCHIP programs, immunizations are a mandatory service, and coverage is set according to ACIP standards.17 However, SCHIP children enrolled in freestanding programs are not entitled to receive vaccines through the VFC program. States are required to cover vaccines and their administration for children in freestanding SCHIP programs as part of their annual federal SCHIP allotment. States may, however, purchase these vaccines through the federal VFC contract

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