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114th Congress   }                                           {   Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                           {   114-559

======================================================================



 
              NURTURING AND SUPPORTING HEALTHY BABIES ACT

                                _______
                                

  May 10, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4978]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4978) to require the Government Accountability 
Office to submit to Congress a report on neonatal abstinence 
syndrome (NAS) in the United States and its treatment under 
Medicaid, having considered the same, report favorably thereon 
with amendments and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     4
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     5
Statement of General Performance Goals and Objectives............     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     5
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     9
Duplication of Federal Programs..................................     9
Disclosure of Directed Rule Makings..............................     9
Advisory Committee Statement.....................................     9
Applicability to Legislative Branch..............................     9
Section-by-Section Analysis of the Legislation...................    10
Changes in Existing Law Made by the Bill, as Reported............    10

    The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Nurturing And Supporting Healthy 
Babies Act'' or as the ``NAS Healthy Babies Act''.

SEC. 2. GAO REPORT ON NEONATAL ABSTINENCE SYNDROME (NAS).

  (a) In General.--Not later than one year after the date of the 
enactment of this Act, the Comptroller General of the United States 
shall submit to the Committee on Energy and Commerce of the House of 
Representatives and the Committee on Finance and the Committee on 
Health, Education, Labor and Pensions of the Senate a report on 
neonatal abstinence syndrome (in this section referred to as ``NAS'') 
in the United States.
  (b) Information to Be Included in Report.--Such report shall include 
information on the following:
          (1) The prevalence of NAS in the United States, including the 
        proportion of children born in the United States with NAS who 
        are eligible for medical assistance under State Medicaid 
        programs under title XIX of the Social Security Act at birth 
        and the costs associated with NAS through such programs.
          (2) The services for which coverage is available under State 
        Medicaid programs for treatment of infants with NAS.
          (3) The settings (including inpatient, outpatient, hospital-
        based, and other settings) for the treatment of infants with 
        NAS and the reimbursement methodologies and costs associated 
        with such treatment in such settings.
          (4) The prevalence of utilization of various care settings 
        under State Medicaid programs for treatment of infants with NAS 
        and any Federal barriers to treating such infants under such 
        programs, particularly in non-hospital-based settings.
  (c) Recommendations.--Such report also shall include such 
recommendations as the Comptroller General determines appropriate for 
improvements that will ensure access to treatment for infants with NAS 
under State Medicaid programs.

SEC. 3. EXCLUDING ABUSE-DETERRENT FORMULATIONS OF PRESCRIPTION DRUGS 
                    FROM THE MEDICAID ADDITIONAL REBATE REQUIREMENT FOR 
                    NEW FORMULATIONS OF PRESCRIPTION DRUGS.

  (a) In General.--The last sentence of section 1927(c)(2)(C) of the 
Social Security Act (42 U.S.C. 1396r-8(c)(2)(C)) is amended by 
inserting before the period at the end the following: ``, but does not 
include an abuse-deterrent formulation of the drug (as determined by 
the Secretary), regardless of whether such abuse-deterrent formulation 
is an extended release formulation''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to drugs that are paid for by a State in calendar quarters beginning on 
or after the date of the enactment of this Act.

SEC. 4. LIMITING DISCLOSURE OF PREDICTIVE MODELING AND OTHER ANALYTICS 
                    TECHNOLOGIES TO IDENTIFY AND PREVENT WASTE, FRAUD, 
                    AND ABUSE.

  (a) In General.--Title XI of the Social Security Act is amended by 
inserting after section 1128J (42 U.S.C. 1320a-7k) the following new 
section:

``SEC. 1128K. DISCLOSURE OF PREDICTIVE MODELING AND OTHER ANALYTICS 
                    TECHNOLOGIES TO IDENTIFY AND PREVENT WASTE, FRAUD, 
                    AND ABUSE.

  ``(a) Reference to Predictive Modeling Technologies Requirements.--
For provisions relating to the use of predictive modeling and other 
analytics technologies to identify and prevent waste, fraud, and abuse 
with respect to the Medicare program under title XVIII, the Medicaid 
program under title XIX, and the Children's Health Insurance Program 
under title XXI, see section 4241 of the Small Business Jobs Act of 
2010 (42 U.S.C. 1320a-7m).
  ``(b) Limiting Disclosure of Predictive Modeling Technologies.--In 
implementing such provisions under such section 4241 with respect to 
covered algorithms (as defined in subsection (c)), the following shall 
apply:
          ``(1) Nonapplication of foia.--The covered algorithms used or 
        developed for purposes of such section (including by the 
        Secretary or a State (or an entity operating under a contract 
        with a State)) shall be exempt from disclosure under section 
        552(b)(3) of title 5, United States Code.
          ``(2) Limitation with respect to use and disclosure of 
        information by state agencies.--
                  ``(A) In general.--A State agency may not use or 
                disclose covered algorithms used or developed for 
                purposes of such section except for purposes of 
                administering the State plan (or a waiver of the plan) 
                under the Medicaid program under title XIX or the State 
                child health plan (or a waiver of the plan) under the 
                Children's Health Insurance Program under title XXI, 
                including by enabling an entity operating under a 
                contract with a State to assist the State to identify 
                or prevent waste, fraud and abuse with respect to such 
                programs.
                  ``(B) Information security.--A State agency shall 
                have in effect data security and control policies that 
                the Secretary finds adequate to ensure the security of 
                covered algorithms used or developed for purposes of 
                such section 4241 and to ensure that access to such 
                information is restricted to authorized persons for 
                purposes of authorized uses and disclosures described 
                in subparagraph (A).
                  ``(C) Procedural requirements.--State agencies to 
                which information is disclosed pursuant to such section 
                4241 shall adhere to uniform procedures established by 
                the Secretary.
  ``(c) Covered Algorithm Defined.--In this section, the term `covered 
algorithm'--
          ``(1) means a predictive modeling or other analytics 
        technology, as used for purposes of section 4241(a) of the 
        Small Business Jobs Act of 2010 (42 U.S.C. 1320a-7m(a)) to 
        identify and prevent waste, fraud, and abuse with respect to 
        the Medicare program under title XVIII, the Medicaid program 
        under title XIX, and the Children's Health Insurance Program 
        under title XXI; and
          ``(2) includes the mathematical expressions utilized in the 
        application of such technology and the means by which such 
        technology is developed.''.
  (b) Conforming Amendments.--
          (1) Medicaid state plan requirement.--Section 1902(a) of the 
        Social Security Act (42 U.S.C. 1396a(a)) is amended--
                  (A) in paragraph (80), by striking ``and'' at the 
                end;
                  (B) in paragraph (81), by striking the period at the 
                end and inserting ``; and''; and
                  (C) by inserting after paragraph (81) the following 
                new paragraph:
          ``(82) provide that the State agency responsible for 
        administering the State plan under this title provides 
        assurances to the Secretary that the State agency is in 
        compliance with subparagraphs (A), (B), and (C) of section 
        1128K(b)(2).''.
          (2) State child health plan requirement.--Section 2102(a)(7) 
        of the Social Security Act (42 U.S.C. 1397bb(a)(7)) is 
        amended--
                  (A) in subparagraph (A), by striking ``, and'' at the 
                end and inserting a semicolon;
                  (B) in subparagraph (B), by striking the period at 
                the end and inserting ``; and''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(C) to ensure that the State agency involved is in 
                compliance with subparagraphs (A), (B), and (C) of 
                section 1128K(b)(2).''.

SEC. 5. MEDICAID IMPROVEMENT FUND.

  Section 1941(b)(1) of the Social Security Act (42 U.S.C. 1396w-
1(b)(1)) is amended to read as follows:
          ``(1) In general.--There shall be available to the Fund, for 
        expenditures from the Fund for fiscal year 2021 and thereafter, 
        $5,000,000.''.

  Amend the long title so as to read: A bill to require the 
Government Accountability Office to submit to Congress a report 
on neonatal abstinence syndrome (NAS) in the United States and 
its treatment under Medicaid, and for other purposes.

                          Purpose and Summary

    H.R. 4978, the ``Nurturing and Supporting Healthy Babies 
Act,'' would require the Comptroller General of the United 
States to issue a report one year after enactment on neonatal 
abstinence syndrome (NAS), including information on the 
treatment for infants with NAS under Medicaid. The bill would 
also correct an unintended consequence in current law by 
exempting abuse-deterrent formulations (ADF) of prescription 
drugs from the definition of ``line extension'' when 
calculating Medicaid rebates--thus helping to incentivize the 
development of ADF to combat opioid abuse. In addition, the 
bill would prevent the public disclosure of program integrity 
algorithms used to identify and predict waste, fraud, and abuse 
in Medicare, Medicaid, and the Children's Health Insurance 
Program (CHIP) and place savings in the Medicaid Improvement 
Fund.

                  Background and Need for Legislation

    The Centers for Disease Control and Prevention (CDC) has 
estimated that prescription opioid abuse costs the U.S. economy 
tens of billions of dollars each year in lost productivity and 
health care costs. Sadly, the human cost is much higher--more 
than 4 million Americans misuse or abuse prescription 
painkillers, and more than 16,000 individuals die from 
prescription painkiller overdoses each year. Deaths from drug 
overdose are now the leading cause of injury-related death in 
the country--more than from car accidents.
    Even infants are suffering as a result of the drug abuse 
crisis, as opioid use by pregnant women can lead to infants 
being born with NAS, a group of problems that occur in a 
newborn who was exposed to addictive opiate drugs while in the 
mother's womb. There has been a significant increase in the 
national prevalence of NAS. A 2012 article in the Journal of 
the American Medical Association found the diagnosis of NAS 
increased from 1.20 per 1,000 hospital births in 2000 to 3.39 
per 1,000 hospital births in 2009.\1\
---------------------------------------------------------------------------
    \1\Patrick S, Schumacher R, Benneyworth B, et al. ``Neonatal 
abstinence syndrome and associated health care expenditures: United 
States, 2000-2009.'' JAMA. 2012. 307(18):1934-40.
---------------------------------------------------------------------------
    Since Medicaid covers nearly 50 percent of births 
nationwide, many infants born with NAS will be covered by 
Medicaid. To make effective policy regarding treatment of NAS, 
Congress needs better information on the prevalence of NAS 
nationwide and among children covered by Medicaid, the services 
available under Medicaid for the treatment of infants with NAS, 
and the settings in which such care is provided.
    One promising method to try to address the nation's drug 
abuse crisis is the development of ADFs of drugs. In its 
Opioids Action Plan, the Food and Drug Administration (FDA) 
said its goal is to ``expand access to abuse deterrent 
formulations to discourage abuse.'' And in its ADF guidance to 
manufacturers, the agency has said it ``considers the 
development of these products a high public health priority.'' 
However, due to an unintended consequence in current law, ADFs 
are subject to a higher rebate under the Medicaid program, thus 
disincentivizing their development. H.R. 4978 would remove this 
disincentive by ensuring that ADFs are not considered a line 
extension of a drug and thus are not subject to increased 
rebates. This policy was included in the President's fiscal 
year 2017 budget.
    The cost of the ADF policy is being offset by a common 
sense policy from the President's budget to protect tools used 
to identify and prevent fraud, waste, and abuse in Medicare, 
Medicaid, and CHIP. The Centers for Medicare and Medicaid 
Services (CMS) uses mathematical algorithms and predictive 
technologies to uncover fraud, waste, and abuse. However, if 
various aspects of these algorithms were to become publicly 
known, fraudsters could utilize the information to re-direct 
their schemes to other areas of the Medicare, Medicaid, and 
CHIP programs or adjust their schemes to avoid detection. H.R. 
4978 would allow CMS and state Medicaid and CHIP programs to 
freely share algorithms and other predictive analytic tools, 
while protecting these anti-fraud tools from public disclosure.

                                Hearings

    The Subcommittee on Health held no hearings on H.R. 4978.

                        Committee Consideration

    On April 20, 2016, the Subcommittee on Health met in open 
markup session and forwarded H.R. 4978, without amendment, to 
the full Committee by a voice vote. On April 26, 27, and 28, 
2016, the full Committee on Energy and Commerce met in open 
markup session and ordered H.R. 4978 reported to the House, as 
amended, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 4978 reported.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held hearings 
on this legislation.

         Statement of General Performance Goals and Objectives

    The objective of H.R. 4978 is to provide Congress with more 
information about Medicaid treatment for infants with NAS; 
incentivize the development of ADF of drugs to combat opioid 
abuse; and prevent waste, fraud, and abuse in Medicare, 
Medicaid, and CHIP.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4978 would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 4978 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 9, 2016.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4978, the 
Nurturing and Supporting Healthy Babies Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Andrea 
Noda, Lara Robillard, and Zoe Williams.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 4978--Nurturing and Supporting Healthy Babies Act

    Summary: H.R. 4978 would exclude formulations of 
prescription drugs that include abuse deterrents from 
Medicaid's requirement that new drug formulations pay 
additional rebates. The bill also would prevent the disclosure 
of algorithms used to detect fraud, provide additional funding 
to the Medicaid Improvement Fund, and require the Government 
Accountability Office to submit a report to the Congress on 
neonatal abstinence syndrome in the United States.
    CBO estimates that enacting H.R. 4978 would not, on net, 
change direct spending over the 2017-2026 period. Some 
provisions of the bill would increase direct spending by $80 
million over that period while other provisions would decrease 
direct spending by the same amount. In addition, CBO estimates 
that implementing H.R. 4978 would have a discretionary cost of 
less than $500,000; any such spending would be subject to the 
availability of appropriated funds. Pay-as-you-go procedures 
apply because enacting the legislation would affect direct 
spending. Enacting the legislation would not affect revenues.
    CBO estimates that enacting the legislation would not 
increase net direct spending or on-budget deficits by more than 
$5 billion in any of the four consecutive 10-year periods 
beginning in 2027.
    H.R. 4978 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 4978 is shown in the following table. 
The budgetary effects of this legislation fall within budget 
functions 550 (health) and 570 (Medicare).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2017    2018    2019    2020    2021    2022    2023    2024    2025    2026   2017-2021  2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING
 
Exclusion from Medicaid Rebate Requirements:
    Estimated Budget Authority....................       1       3       5       8       8       9       9      10      10      11        26         75
    Estimated Outlays.............................       1       3       5       8       8       9       9      10      10      11        26         75
Disclosure of Predictive Modeling:
    Estimated Budget Authority....................      -8      -8      -8      -8      -8      -8      -8      -8      -8      -8       -40        -80
    Estimated Outlays.............................      -8      -8      -8      -8      -8      -8      -8      -8      -8      -8       -40        -80
Medicaid Improvement Fund:
    Budget Authority..............................       0       0       0       0       5       0       0       0       0       0         5          5
    Estimated Outlays.............................       0       0       0       0       5       0       0       0       0       0         5          5
    Total Changes:
    Estimated Budget Authority....................      -7      -5      -3       0       5       1       1       2       2       3        -9          0
    Estimated Outlays.............................      -7      -5      -3       0       5       1       1       2       2       3        -9          0
 
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
GAO Report:
    Estimated Authorization Level.................       *       0       0       0       0       0       0       0       0       0         *          *
    Estimated Outlays.............................       *       0       0       0       0       0       0       0       0       0         *          *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: * = Less than $500,000; Components may not add to totals because of rounding.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
4978 will be enacted near the end of fiscal year 2016.

Changes in direct spending

    CBO estimates that enacting H.R. 4978 would not have a net 
effect on direct spending over the 2017-2026 period.
    Exclusion from Medicaid Rebate Requirements. Section 3 of 
H.R. 4978 would reduce the Medicaid rebate amount paid by some 
manufacturers of brand-name drugs that contain abuse-deterrent 
formulations (ADFs). ADFs are designed to make it more 
difficult to intentionally use prescription drugs for non-
therapeutic purposes. For example, some ADFs make it more 
difficult for an individual to crush, break, or dissolve a drug 
to inappropriately extract and use its active ingredient.
    Under current law, pharmaceutical manufacturers are 
required to pay rebates to states for prescription drugs 
provided through Medicaid. Based on administrative data from 
the Centers for Medicare and Medicaid Services (CMS), 
manufacturers paid more than $20 billion in rebates to the 
Medicaid program in FY 2015. The formula which determines 
rebate amounts in the Medicaid program has several components. 
Some components generate rebates that are paid to states and 
shared with the federal government and others generate rebates 
that are paid to states and subsequently transferred in their 
entirety to the federal government. Under the bill, the 
component of the rebate formula that would no longer apply to 
ADFs of brand-name drugs is one that is paid to states and 
transferred in full to the federal government. Therefore, 
states would not be directly affected by this section of the 
bill.
    CBO estimates that this section would increase federal 
Medicaid costs by about $75 million over the 2017-2026 period 
by reducing rebates. CBO anticipates that an increasing number 
of ADFs of brand name drugs will launch over time; therefore, 
the component of the rebate affected by H.R. 4978 would also 
grow over time. This estimate is based on a review of potential 
classes of drugs where ADFs may be introduced over the next 10 
years and on rebate calculations generated from Medicaid data 
obtained from the Centers for Medicare and Medicaid Services 
and Red Book data available from Truven Health Analytics.
    Disclosure of Predictive Modeling. CMS currently uses the 
Fraud Prevention System (FPS) to detect questionable and 
fraudulent activity within the fee-for-service Medicare 
program. The FPS uses sophisticated computer algorithms--
similar to those used by credit-card issuers--to review 
millions of claims to look for evidence of inappropriate 
utilization or problematic billing. Originally authorized by 
the Small Business Jobs Act of 2010, the FPS is currently used 
to review Medicare claims. In the future, use of the FPS may 
expand to Medicaid and the Children's Health Insurance Program 
(CHIP), which are administered by the states.
    Section 4 of H.R. 4978 would prevent disclosure of the FPS 
algorithms through requests under the Freedom of Information 
Act. The bill also would forbid disclosure of that information 
by state agencies unless such disclosure is necessary to 
administer their Medicaid and CHIP programs. Permitting public 
access to the algorithms would facilitate fraudulent schemes to 
circumvent the FPS. Because H.R. 4978 prevents public access to 
the FPS algorithms and discourages fraud, CBO estimates that 
enacting Section 4 of H.R. 4978 would reduce direct spending in 
the Medicare, Medicaid, and CHIP programs by about $80 million 
over the 2017-2026 period.
    Medicaid Improvement Fund. Section 5 of H.R. 4978 would 
provide $5 million in mandatory funding to the Medicaid 
Improvement Fund (MIF) in 2021, which would be available to the 
Secretary of Health and Human Services to improve federal 
management of the Medicaid program. Activities that could be 
funded by the MIF include oversight of contracts and 
contractors, and evaluation of demonstration programs. CBO 
estimates that Section 5 would increase spending by $5 million 
over the 2017-2026 period.

Changes in spending subject to appropriation

    Section 2 of H.R. 4978 would require the Government 
Accountability Office to submit a report to the Congress on 
neonatal abstinence syndrome in the United States. CBO 
estimates that implementing section 2 would cost less than 
$500,000 over the 2017-2026 period; any such spending would be 
subject to the availability of appropriated funds.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

   CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4978, THE NURTURING AND SUPPORTING HEALTHY BABIES ACT, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON
                                                          ENERGY AND COMMERCE ON APRIL 27, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2016   2017   2018   2019   2020   2021   2022   2023   2024   2025   2026  2016-2021  2016-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact.......................      0     -7     -5     -3      0      5      1      1      2      2      3        -9          0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits by more than $5 billion 
in any of the four consecutive 10-year periods beginning in 
2026.
    Intergovernmental and private-sector impact: H.R. 4978 
contains no intergovernmental or private-sector mandate as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal costs: Andrea Noda, Lara 
Robillard, and Zoe Williams; Impact on state, local, and tribal 
governments: J'Nell Blanco Suchy; Impact on the Private Sector: 
Amy Petz.
    Estimate approved by: Holly Harvey, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    Duplication of Federal Programs

    No provision of H.R. 4978 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 4978 
specifically directs to be completed no rule making within the 
meaning of 5 U.S.C. 551.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section provides the short title of the ``Nurturing 
and Supporting Healthy Babies Act'' or the ``NAS Healthy Babies 
Act''.

Section 2. GAO report on Neonatal Abstinence Syndrome (NAS)

    Subsection (a) requires the Comptroller General of the 
United States to submit a report, one year after enactment, on 
NAS to the congressional committees of jurisdiction.
    Subsection (b) specifies that the report shall, among other 
things, include information on the prevalence of NAS among 
children covered by Medicaid, NAS treatment services covered by 
Medicaid and the costs associated with that treatment, the 
settings in which Medicaid covered treatment for infants with 
NAS are provided, and any Federal barriers for treating infants 
with NAS.
    Subsection (c) specifies that the report shall include 
recommendations, as the Comptroller General determines 
appropriate, for improving access to treatment for infants with 
NAS under Medicaid.

Section 3. Excluding abuse-deterrent formulations of prescription drugs 
        from the Medicaid additional rebate requirement for new 
        formulations of prescription drugs.

    Subsection (a) specifies that an ADF of a drug is not 
included as a line-extension of a drug, even if such ADF is an 
extended release formulation.
    Subsection (b) specifies that the amendment made by 
subsection (a) is effective for drugs paid for by States in 
calendar quarters beginning on or after the date of enactment.

Section 4. Limiting disclosure of predictive modeling and other 
        analytics technologies to identify and prevent waste, fraud, 
        and abuse

    Subsection (a) inserts a new section in Title XI of the 
Social Security Act. This section limits the disclosure of 
predictive modeling and other analytics technologies to 
identify and prevent waste, fraud, and abuse in Medicare, 
Medicaid, and CHIP. Specifically, the section exempts the 
algorithms used in such technology from disclosure under the 
Freedom of Information Act. It also restricts states from using 
or disclosing such algorithms except for purposes of 
administering their Medicaid or CHIP programs and specifies 
that states must have data security and procedures in place 
that the Secretary of Health and Human Services finds 
appropriate to ensure that the algorithms are protected.
    Subsection (b) makes conforming amendments to the Medicaid 
and CHIP statute.

Section 5. Medicaid Improvement Fund

    This section places $5,000,000 in the Medicaid Improvement 
Fund to be available for fiscal year 2021 or later.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                          SOCIAL SECURITY ACT



           *       *       *       *       *       *       *
     TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
                             SIMPLIFICATION

Part A--General Provisions

           *       *       *       *       *       *       *


SEC. 1128K. DISCLOSURE OF PREDICTIVE MODELING AND OTHER ANALYTICS 
                    TECHNOLOGIES TO IDENTIFY AND PREVENT WASTE, FRAUD, 
                    AND ABUSE.

  (a) Reference to Predictive Modeling Technologies 
Requirements.--For provisions relating to the use of predictive 
modeling and other analytics technologies to identify and 
prevent waste, fraud, and abuse with respect to the Medicare 
program under title XVIII, the Medicaid program under title 
XIX, and the Children's Health Insurance Program under title 
XXI, see section 4241 of the Small Business Jobs Act of 2010 
(42 U.S.C. 1320a-7m).
  (b) Limiting Disclosure of Predictive Modeling 
Technologies.--In implementing such provisions under such 
section 4241 with respect to covered algorithms (as defined in 
subsection (c)), the following shall apply:
          (1) Nonapplication of foia.--The covered algorithms 
        used or developed for purposes of such section 
        (including by the Secretary or a State (or an entity 
        operating under a contract with a State)) shall be 
        exempt from disclosure under section 552(b)(3) of title 
        5, United States Code.
          (2) Limitation with respect to use and disclosure of 
        information by state agencies.--
                  (A) In general.--A State agency may not use 
                or disclose covered algorithms used or 
                developed for purposes of such section except 
                for purposes of administering the State plan 
                (or a waiver of the plan) under the Medicaid 
                program under title XIX or the State child 
                health plan (or a waiver of the plan) under the 
                Children's Health Insurance Program under title 
                XXI, including by enabling an entity operating 
                under a contract with a State to assist the 
                State to identify or prevent waste, fraud and 
                abuse with respect to such programs.
                  (B) Information security.--A State agency 
                shall have in effect data security and control 
                policies that the Secretary finds adequate to 
                ensure the security of covered algorithms used 
                or developed for purposes of such section 4241 
                and to ensure that access to such information 
                is restricted to authorized persons for 
                purposes of authorized uses and disclosures 
                described in subparagraph (A).
                  (C) Procedural requirements.--State agencies 
                to which information is disclosed pursuant to 
                such section 4241 shall adhere to uniform 
                procedures established by the Secretary.
  (c) Covered Algorithm Defined.--In this section, the term 
``covered algorithm''--
          (1) means a predictive modeling or other analytics 
        technology, as used for purposes of section 4241(a) of 
        the Small Business Jobs Act of 2010 (42 U.S.C. 1320a-
        7m(a)) to identify and prevent waste, fraud, and abuse 
        with respect to the Medicare program under title XVIII, 
        the Medicaid program under title XIX, and the 
        Children's Health Insurance Program under title XXI; 
        and
          (2) includes the mathematical expressions utilized in 
        the application of such technology and the means by 
        which such technology is developed.

           *       *       *       *       *       *       *


TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

           *       *       *       *       *       *       *


                   STATE PLANS FOR MEDICAL ASSISTANCE

  Sec. 1902. (a) A State plan for medical assistance must--
          (1) provide that it shall be in effect in all 
        political subdivisions of the State, and, if 
        administered by them, be mandatory upon them;
          (2) provide for financial participation by the State 
        equal to not less than 40 per centum of the non-Federal 
        share of the expenditures under the plan with respect 
        to which payments under section 1903 are authorized by 
        this title; and, effective July 1, 1969, provide for 
        financial participation by the State equal to all of 
        such non-Federal share or provide for distribution of 
        funds from Federal or State sources, for carrying out 
        the State plan, on an equalization or other basis which 
        will assure that the lack of adequate funds from local 
        sources will not result in lowering the amount, 
        duration, scope, or quality of care and services 
        available under the plan;
          (3) provide for granting an opportunity for a fair 
        hearing before the State agency to any individual whose 
        claim for medical assistance under the plan is denied 
        or is not acted upon with reasonable promptness;
          (4) provide (A) such methods of administration 
        (including methods relating to the establishment and 
        maintenance of personnel standards on a merit basis, 
        except that the Secretary shall exercise no authority 
        with respect to the selection, tenure of office, and 
        compensation of any individual employed in accordance 
        with such methods, and including provision for 
        utilization of professional medical personnel in the 
        administration and, where administered locally, 
        supervision of administration of the plan) as are found 
        by the Secretary to be necessary for the proper and 
        efficient operation of the plan, (B) for the training 
        and effective use of paid subprofessional staff, with 
        particular emphasis on the full-time or part-time 
        employment of recipients and other persons of low 
        income, as community service aides, in the 
        administration of the plan and for the use of nonpaid 
        or partially paid volunteers in a social service 
        volunteer program in providing services to applicants 
        and recipients and in assisting any advisory committees 
        established by the State agency, (C) that each State or 
        local officer, employee, or independent contractor who 
        is responsible for the expenditure of substantial 
        amounts of funds under the State plan, each individual 
        who formerly was such an officer, employee, or 
        contractor, and each partner of such an officer, 
        employee, or contractor shall be prohibited from 
        committing any act, in relation to any activity under 
        the plan, the commission of which, in connection with 
        any activity concerning the United States Government, 
        by an officer or employee of the United States 
        Government, an individual who was such an officer or 
        employee, or a partner of such an officer or employee 
        is prohibited by section 207 or 208 of title 18, United 
        States Code, and (D) that each State or local officer, 
        employee, or independent contractor who is responsible 
        for selecting, awarding, or otherwise obtaining items 
        and services under the State plan shall be subject to 
        safeguards against conflicts of interest that are at 
        least as stringent as the safeguards that apply under 
        section 27 of the Office of Federal Procurement Policy 
        Act (41 U.S.C. 423) to persons described in subsection 
        (a)(2) of such section of that Act;
          (5) either provide for the establishment or 
        designation of a single State agency to administer or 
        to supervise the administration of the plan; or provide 
        for the establishment or designation of a single State 
        agency to administer or to supervise the administration 
        of the plan, except that the determination of 
        eligibility for medical assistance under the plan shall 
        be made by the State or local agency administering the 
        State plan approved under title I or XVI (insofar as it 
        relates to the aged) if the State is eligible to 
        participate in the State plan program established under 
        title XVI, or by the agency or agencies administering 
        the supplemental security income program established 
        under title XVI or the State plan approved under part A 
        of title IV if the State is not eligible to participate 
        in the State plan program established under title XVI;
          (6) provide that the State agency will make such 
        reports, in such form and containing such information, 
        as the Secretary may from time to time require, and 
        comply with such provisions as the Secretary may from 
        time to time find necessary to assure the correctness 
        and verification of such reports;
          (7) provide--
                  (A) safeguards which restrict the use or 
                disclosure of information concerning applicants 
                and recipients to purposes directly connected 
                with--
                          (i) the administration of the plan; 
                        and
                          (ii) the exchange of information 
                        necessary to certify or verify the 
                        certification of eligibility of 
                        children for free or reduced price 
                        breakfasts under the Child Nutrition 
                        Act of 1966 and free or reduced price 
                        lunches under the Richard B. Russell 
                        National School Lunch Act, in 
                        accordance with section 9(b) of that 
                        Act, using data standards and formats 
                        established by the State agency; and
                  (B) that, notwithstanding the Express Lane 
                option under subsection (e)(13), the State may 
                enter into an agreement with the State agency 
                administering the school lunch program 
                established under the Richard B. Russell 
                National School Lunch Act under which the State 
                shall establish procedures to ensure that--
                          (i) a child receiving medical 
                        assistance under the State plan under 
                        this title whose family income does not 
                        exceed 133 percent of the poverty line 
                        (as defined in section 673(2) of the 
                        Community Services Block Grant Act, 
                        including any revision required by such 
                        section), as determined without regard 
                        to any expense, block, or other income 
                        disregard, applicable to a family of 
                        the size involved, may be certified as 
                        eligible for free lunches under the 
                        Richard B. Russell National School 
                        Lunch Act and free breakfasts under the 
                        Child Nutrition Act of 1966 without 
                        further application; and
                          (ii) the State agencies responsible 
                        for administering the State plan under 
                        this title, and for carrying out the 
                        school lunch program established under 
                        the Richard B. Russell National School 
                        Lunch Act (42 U.S.C. 1751 et seq.) or 
                        the school breakfast program 
                        established by section 4 of the Child 
                        Nutrition Act of 1966 (42 U.S.C. 1773), 
                        cooperate in carrying out paragraphs 
                        (3)(F) and (15) of section 9(b) of that 
                        Act;
          (8) provide that all individuals wishing to make 
        application for medical assistance under the plan shall 
        have opportunity to do so, and that such assistance 
        shall be furnished with reasonable promptness to all 
        eligible individuals;
          (9) provide--
                  (A) that the State health agency, or other 
                appropriate State medical agency (whichever is 
                utilized by the Secretary for the purpose 
                specified in the first sentence of section 
                1864(a)), shall be responsible for establishing 
                and maintaining health standards for private or 
                public institutions in which recipients of 
                medical assistance under the plan may receive 
                care or services,
                  (B) for the establishment or designation of a 
                State authority or authorities which shall be 
                responsible for establishing and maintaining 
                standards, other than those relating to health, 
                for such institutions,
                  (C) that any laboratory services paid for 
                under such plan must be provided by a 
                laboratory which meets the applicable 
                requirements of section 1861(e)(9) or 
                paragraphs (16) and (17) of section 1861(s), 
                or, in the case of a laboratory which is in a 
                rural health clinic, of section 1861(aa)(2)(G), 
                and
                  (D) that the State maintain a consumer-
                oriented website providing useful information 
                to consumers regarding all skilled nursing 
                facilities and all nursing facilities in the 
                State, including for each facility, Form 2567 
                State inspection reports (or a successor form), 
                complaint investigation reports, the facility's 
                plan of correction, and such other information 
                that the State or the Secretary considers 
                useful in assisting the public to assess the 
                quality of long term care options and the 
                quality of care provided by individual 
                facilities;
          (10) provide--
                  (A) for making medical assistance available, 
                including at least the care and services listed 
                in paragraphs (1) through (5), (17), (21), and 
                (28) of section 1905(a), to--
                          (i) all individuals--
                                  (I) who are receiving aid or 
                                assistance under any plan of 
                                the State approved under title 
                                I, X, XIV, or XVI, or part A or 
                                part E of title IV (including 
                                individuals eligible under this 
                                title by reason of section 
                                402(a)(37), 406(h), or 473(b), 
                                or considered by the State to 
                                be receiving such aid as 
                                authorized under section 
                                482(e)(6)),
                                  (II)(aa) with respect to whom 
                                supplemental security income 
                                benefits are being paid under 
                                title XVI (or were being paid 
                                as of the date of the enactment 
                                of section 211(a) of the 
                                Personal Responsibility and 
                                Work Opportunity Reconciliation 
                                Act of 1996 (P.L. 104-193) and 
                                would continue to be paid but 
                                for the enactment of that 
                                section), (bb) who are 
                                qualified severely impaired 
                                individuals (as defined in 
                                section 1905(q)), or (cc) who 
                                are under 21 years of age and 
                                with respect to whom 
                                supplemental security income 
                                benefits would be paid under 
                                title XVI if subparagraphs (A) 
                                and (B) of section 1611(c)(7) 
                                were applied without regard to 
                                the phrase ``the first day of 
                                the month following'',
                                  (III) who are qualified 
                                pregnant women or children as 
                                defined in section 1905(n),
                                  (IV) who are described in 
                                subparagraph (A) or (B) of 
                                subsection (l)(1) and whose 
                                family income does not exceed 
                                the minimum income level the 
                                State is required to establish 
                                under subsection (l)(2)(A) for 
                                such a family;
                                  (V) who are qualified family 
                                members as defined in section 
                                1905(m)(1),
                                  (VI) who are described in 
                                subparagraph (C) of subsection 
                                (l)(1) and whose family income 
                                does not exceed the income 
                                level the State is required to 
                                establish under subsection 
                                (l)(2)(B) for such a family,
                                  (VII) who are described in 
                                subparagraph (D) of subsection 
                                (l)(1) and whose family income 
                                does not exceed the income 
                                level the State is required to 
                                establish under subsection 
                                (l)(2)(C) for such a family;
                                  (VIII) beginning January 1, 
                                2014, who are under 65 years of 
                                age, not pregnant, not entitled 
                                to, or enrolled for, benefits 
                                under part A of title XVIII, or 
                                enrolled for benefits under 
                                part B of title XVIII, and are 
                                not described in a previous 
                                subclause of this clause, and 
                                whose income (as determined 
                                under subsection (e)(14)) does 
                                not exceed 133 percent of the 
                                poverty line (as defined in 
                                section 2110(c)(5)) applicable 
                                to a family of the size 
                                involved, subject to subsection 
                                (k); or
                                  (IX) who--
                                          (aa) are under 26 
                                        years of age;
                                          (bb) are not 
                                        described in or 
                                        enrolled under any of 
                                        subclauses (I) through 
                                        (VII) of this clause or 
                                        are described in any of 
                                        such subclauses but 
                                        have income that 
                                        exceeds the level of 
                                        income applicable under 
                                        the State plan for 
                                        eligibility to enroll 
                                        for medical assistance 
                                        under such subclause;
                                          (cc) were in foster 
                                        care under the 
                                        responsibility of the 
                                        State on the date of 
                                        attaining 18 years of 
                                        age or such higher age 
                                        as the State has 
                                        elected under section 
                                        475(8)(B)(iii); and
                                          (dd) were enrolled in 
                                        the State plan under 
                                        this title or under a 
                                        waiver of the plan 
                                        while in such foster 
                                        care;
                          (ii) at the option of the State, to 
                        any group or groups of individuals 
                        described in section 1905(a) (or, in 
                        the case of individuals described in 
                        section 1905(a)(i), to any reasonable 
                        categories of such individuals) who are 
                        not individuals described in clause (i) 
                        of this subparagraph but--
                                  (I) who meet the income and 
                                resources requirements of the 
                                appropriate State plan 
                                described in clause (i) or the 
                                supplemental security income 
                                program (as the case may be),
                                  (II) who would meet the 
                                income and resources 
                                requirements of the appropriate 
                                State plan described in clause 
                                (i) if their work-related child 
                                care costs were paid from their 
                                earnings rather than by a State 
                                agency as a service 
                                expenditure,
                                  (III) who would be eligible 
                                to receive aid under the 
                                appropriate State plan 
                                described in clause (i) if 
                                coverage under such plan was as 
                                broad as allowed under Federal 
                                law,
                                  (IV) with respect to whom 
                                there is being paid, or who are 
                                eligible, or would be eligible 
                                if they were not in a medical 
                                institution, to have paid with 
                                respect to them, aid or 
                                assistance under the 
                                appropriate State plan 
                                described in clause (i), 
                                supplemental security income 
                                benefits under title XVI, or a 
                                State supplementary payment;
                                  (V) who are in a medical 
                                institution for a period of not 
                                less than 30 consecutive days 
                                (with eligibility by reason of 
                                this subclause beginning on the 
                                first day of such period), who 
                                meet the resource requirements 
                                of the appropriate State plan 
                                described in clause (i) or the 
                                supplemental security income 
                                program, and whose income does 
                                not exceed a separate income 
                                standard established by the 
                                State which is consistent with 
                                the limit established under 
                                section 1903(f)(4)(C),
                                  (VI) who would be eligible 
                                under the State plan under this 
                                title if they were in a medical 
                                institution, with respect to 
                                whom there has been a 
                                determination that but for the 
                                provision of home or community-
                                based services described in 
                                subsection (c), (d), or (e) of 
                                section 1915 they would require 
                                the level of care provided in a 
                                hospital, nursing facility or 
                                intermediate care facility for 
                                the mentally retarded the cost 
                                of which could be reimbursed 
                                under the State plan, and who 
                                will receive home or community-
                                based services pursuant to a 
                                waiver granted by the Secretary 
                                under subsection (c), (d), or 
                                (e) of section 1915,
                                  (VII) who would be eligible 
                                under the State plan under this 
                                title if they were in a medical 
                                institution, who are terminally 
                                ill, and who will receive 
                                hospice care pursuant to a 
                                voluntary election described in 
                                section 1905(o);
                                  (VIII) who is a child 
                                described in section 
                                1905(a)(i)--
                                          (aa) for whom there 
                                        is in effect an 
                                        adoption assistance 
                                        agreement (other than 
                                        an agreement under part 
                                        E of title IV) between 
                                        the State and an 
                                        adoptive parent or 
                                        parents,
                                          (bb) who the State 
                                        agency responsible for 
                                        adoption assistance has 
                                        determined cannot be 
                                        placed with adoptive 
                                        parents without medical 
                                        assistance because such 
                                        child has special needs 
                                        for medical or 
                                        rehabilitative care, 
                                        and
                                          (cc) who was eligible 
                                        for medical assistance 
                                        under the State plan 
                                        prior to the adoption 
                                        assistance agreement 
                                        being entered into, or 
                                        who would have been 
                                        eligible for medical 
                                        assistance at such time 
                                        if the eligibility 
                                        standards and 
                                        methodologies of the 
                                        State's foster care 
                                        program under part E of 
                                        title IV were applied 
                                        rather than the 
                                        eligibility standards 
                                        and methodologies of 
                                        the State's aid to 
                                        families with dependent 
                                        children program under 
                                        part A of title IV;
                                  (IX) who are described in 
                                subsection (l)(1) and are not 
                                described in clause (i)(IV), 
                                clause (i)(VI), or clause 
                                (i)(VII);
                                  (X) who are described in 
                                subsection (m)(1);
                                  (XI) who receive only an 
                                optional State supplementary 
                                payment based on need and paid 
                                on a regular basis, equal to 
                                the difference between the 
                                individual's countable income 
                                and the income standard used to 
                                determine eligibility for such 
                                supplementary payment (with 
                                countable income being the 
                                income remaining after 
                                deductions as established by 
                                the State pursuant to standards 
                                that may be more restrictive 
                                than the standards for 
                                supplementary security income 
                                benefits under title XVI), 
                                which are available to all 
                                individuals in the State (but 
                                which may be based on different 
                                income standards by political 
                                subdivision according to cost 
                                of living differences), and 
                                which are paid by a State that 
                                does not have an agreement with 
                                the Commissioner of Social 
                                Security under section 1616 or 
                                1634;
                                  (XII) who are described in 
                                subsection (z)(1) (relating to 
                                certain TB-infected 
                                individuals);
                                  (XIII) who are in families 
                                whose income is less than 250 
                                percent of the income official 
                                poverty line (as defined by the 
                                Office of Management and 
                                Budget, and revised annually in 
                                accordance with section 673(2) 
                                of the Omnibus Budget 
                                Reconciliation Act of 1981) 
                                applicable to a family of the 
                                size involved, and who but for 
                                earnings in excess of the limit 
                                established under section 
                                1905(q)(2)(B), would be 
                                considered to be receiving 
                                supplemental security income 
                                (subject, notwithstanding 
                                section 1916, to payment of 
                                premiums or other cost-sharing 
                                charges (set on a sliding scale 
                                based on income) that the State 
                                may determine);
                                  (XIV) who are optional 
                                targeted low-income children 
                                described in section 
                                1905(u)(2)(B);
                                  (XV) who, but for earnings in 
                                excess of the limit established 
                                under section 1905(q)(2)(B), 
                                would be considered to be 
                                receiving supplemental security 
                                income, who is at least 16, but 
                                less than 65, years of age, and 
                                whose assets, resources, and 
                                earned or unearned income (or 
                                both) do not exceed such 
                                limitations (if any) as the 
                                State may establish;
                                  (XVI) who are employed 
                                individuals with a medically 
                                improved disability described 
                                in section 1905(v)(1) and whose 
                                assets, resources, and earned 
                                or unearned income (or both) do 
                                not exceed such limitations (if 
                                any) as the State may 
                                establish, but only if the 
                                State provides medical 
                                assistance to individuals 
                                described in subclause (XV);
                                  (XVII) who are independent 
                                foster care adolescents (as 
                                defined in section 1905(w)(1)), 
                                or who are within any 
                                reasonable categories of such 
                                adolescents specified by the 
                                State;
                                  (XVIII) who are described in 
                                subsection (aa) (relating to 
                                certain breast or cervical 
                                cancer patients);
                                  (XIX) who are disabled 
                                children described in 
                                subsection (cc)(1);
                                  (XX) beginning January 1, 
                                2014, who are under 65 years of 
                                age and are not described in or 
                                enrolled under a previous 
                                subclause of this clause, and 
                                whose income (as determined 
                                under subsection (e)(14)) 
                                exceeds 133 percent of the 
                                poverty line (as defined in 
                                section 2110(c)(5)) applicable 
                                to a family of the size 
                                involved but does not exceed 
                                the highest income eligibility 
                                level established under the 
                                State plan or under a waiver of 
                                the plan, subject to subsection 
                                (hh);
                                  (XXI) who are described in 
                                subsection (ii) (relating to 
                                individuals who meet certain 
                                income standards); or
                                  (XXII) who are eligible for 
                                home and community-based 
                                services under needs-based 
                                criteria established under 
                                paragraph (1)(A) of section 
                                1915(i), or who are eligible 
                                for home and community-based 
                                services under paragraph (6) of 
                                such section, and who will 
                                receive home and community-
                                based services pursuant to a 
                                State plan amendment under such 
                                subsection;
                  (B) that the medical assistance made 
                available to any individual described in 
                subparagraph (A)--
                          (i) shall not be less in amount, 
                        duration, or scope than the medical 
                        assistance made available to any other 
                        such individual, and
                          (ii) shall not be less in amount, 
                        duration, or scope than the medical 
                        assistance made available to 
                        individuals not described in 
                        subparagraph (A);
                  (C) that if medical assistance is included 
                for any group of individuals described in 
                section 1905(a) who are not described in 
                subparagraph (A) or (E), then--
                          (i) the plan must include a 
                        description of (I) the criteria for 
                        determining eligibility of individuals 
                        in the group for such medical 
                        assistance, (II) the amount, duration, 
                        and scope of medical assistance made 
                        available to individuals in the group, 
                        and (III) the single standard to be 
                        employed in determining income and 
                        resource eligibility for all such 
                        groups, and the methodology to be 
                        employed in determining such 
                        eligibility, which shall be no more 
                        restrictive than the methodology which 
                        would be employed under the 
                        supplemental security income program in 
                        the case of groups consisting of aged, 
                        blind, or disabled individuals in a 
                        State in which such program is in 
                        effect, and which shall be no more 
                        restrictive than the methodology which 
                        would be employed under the appropriate 
                        State plan (described in subparagraph 
                        (A)(i)) to which such group is most 
                        closely categorically related in the 
                        case of other groups;
                          (ii) the plan must make available 
                        medical assistance--
                                  (I) to individuals under the 
                                age of 18 who (but for income 
                                and resources) would be 
                                eligible for medical assistance 
                                as an individual described in 
                                subparagraph (A)(i), and
                                  (II) to pregnant women, 
                                during the course of their 
                                pregnancy, who (but for income 
                                and resources) would be 
                                eligible for medical assistance 
                                as an individual described in 
                                subparagraph (A);
                          (iii) such medical assistance must 
                        include (I) with respect to children 
                        under 18 and individuals entitled to 
                        institutional services, ambulatory 
                        services, and (II) with respect to 
                        pregnant women, prenatal care and 
                        delivery services; and
                          (iv) if such medical assistance 
                        includes services in institutions for 
                        mental diseases or in an intermediate 
                        care facility for the mentally retarded 
                        (or both) for any such group, it also 
                        must include for all groups covered at 
                        least the care and services listed in 
                        paragraphs (1) through (5) and (17) of 
                        section 1905(a) or the care and 
                        services listed in any 7 of the 
                        paragraphs numbered (1) through (24) of 
                        such section;
                  (D) for the inclusion of home health services 
                for any individual who, under the State plan, 
                is entitled to nursing facility services;
                  (E)(i) for making medical assistance 
                available for medicare cost-sharing (as defined 
                in section 1905(p)(3)) for qualified medicare 
                beneficiaries described in section 1905(p)(1);
                  (ii) for making medical assistance available 
                for payment of medicare cost-sharing described 
                in section 1905(p)(3)(A)(i) for qualified 
                disabled and working individuals described in 
                section 1905(s);
                  (iii) for making medical assistance available 
                for medicare cost sharing described in section 
                1905(p)(3)(A)(ii) subject to section 
                1905(p)(4), for individuals who would be 
                qualified medicare beneficiaries described in 
                section 1905(p)(1) but for the fact that their 
                income exceeds the income level established by 
                the State under section 1905(p)(2) but is less 
                than 110 percent in 1993 and 1994, and 120 
                percent in 1995 and years thereafter of the 
                official poverty line (referred to in such 
                section) for a family of the size involved; and
                  (iv) subject to sections 1933 and 1905(p)(4), 
                for making medical assistance available for 
                medicare cost-sharing described in section 
                1905(p)(3)(A)(ii) for individuals who would be 
                qualified medicare beneficiaries described in 
                section 1905(p)(1) but for the fact that their 
                income exceeds the income level established by 
                the State under section 1905(p)(2) and is at 
                least 120 percent, but less than 135 percent, 
                of the official poverty line (referred to in 
                such section) for a family of the size involved 
                and who are not otherwise eligible for medical 
                assistance under the State plan;
                  (F) at the option of a State, for making 
                medical assistance available for COBRA premiums 
                (as defined in subsection (u)(2)) for qualified 
                COBRA continuation beneficiaries described in 
                section 1902(u)(1); and
                  (G) that, in applying eligibility criteria of 
                the supplemental security income program under 
                title XVI for purposes of determining 
                eligibility for medical assistance under the 
                State plan of an individual who is not 
                receiving supplemental security income, the 
                State will disregard the provisions of 
                subsections (c) and (e) of section 1613;
        except that (I) the making available of the services 
        described in paragraph (4), (14), or (16) of section 
        1905(a) to individuals meeting the age requirements 
        prescribed therein shall not, by reason of this 
        paragraph (10), require the making available of any 
        such services, or the making available of such services 
        of the same amount, duration, and scope, to individuals 
        of any other ages, (II) the making available of 
        supplementary medical insurance benefits under part B 
        of title XVIII to individuals eligible therefor (either 
        pursuant to an agreement entered into under section 
        1843 or by reason of the payment of premiums under such 
        title by the State agency on behalf of such 
        individuals), or provision for meeting part or all of 
        the cost of deductibles, cost sharing, or similar 
        charges under part B of title XVIII for individuals 
        eligible for benefits under such part, shall not, by 
        reason of this paragraph (10), require the making 
        available of any such benefits, or the making available 
        of services of the same amount, duration, and scope, to 
        any other individuals, (III) the making available of 
        medical assistance equal in amount, duration, and scope 
        to the medical assistance made available to individuals 
        described in clause (A) to any classification of 
        individuals approved by the Secretary with respect to 
        whom there is being paid, or who are eligible, or would 
        be eligible if they were not in a medical institution, 
        to have paid with respect to them, a State 
        supplementary payment shall not, by reason of this 
        paragraph (10), require the making available of any 
        such assistance, or the making available of such 
        assistance of the same amount, duration, and scope, to 
        any other individuals not described in clause (A), (IV) 
        the imposition of a deductible, cost sharing, or 
        similar charge for any item or service furnished to an 
        individual not eligible for the exemption under section 
        1916(a)(2) or (b)(2) shall not require the imposition 
        of a deductible, cost sharing, or similar charge for 
        the same item or service furnished to an individual who 
        is eligible for such exemption, (V) the making 
        available to pregnant women covered under the plan of 
        services relating to pregnancy (including prenatal, 
        delivery, and postpartum services) or to any other 
        condition which may complicate pregnancy shall not, by 
        reason of this paragraph (10), require the making 
        available of such services, or the making available of 
        such services of the same amount, duration, and scope, 
        to any other individuals, provided such services are 
        made available (in the same amount, duration, and 
        scope) to all pregnant women covered under the State 
        plan, (VI) with respect to the making available of 
        medical assistance for hospice care to terminally ill 
        individuals who have made a voluntary election 
        described in section 1905(o) to receive hospice care 
        instead of medical assistance for certain other 
        services, such assistance may not be made available in 
        an amount, duration, or scope less than that provided 
        under title XVIII, and the making available of such 
        assistance shall not, by reason of this paragraph (10), 
        require the making available of medical assistance for 
        hospice care to other individuals or the making 
        available of medical assistance for services waived by 
        such terminally ill individuals, (VII) the medical 
        assistance made available to an individual described in 
        subsection (l)(1)(A) who is eligible for medical 
        assistance only because of subparagraph (A)(i)(IV) or 
        (A)(ii)(IX) shall be limited to medical assistance for 
        services related to pregnancy (including prenatal, 
        delivery, postpartum, and family planning services) and 
        to other conditions which may complicate pregnancy, 
        (VIII) the medical assistance made available to a 
        qualified medicare beneficiary described in section 
        1905(p)(1) who is only entitled to medical assistance 
        because the individual is such a beneficiary shall be 
        limited to medical assistance for medicare cost-sharing 
        (described in section 1905(p)(3)), subject to the 
        provisions of subsection (n) and section 1916(b), (IX) 
        the making available of respiratory care services in 
        accordance with subsection (e)(9) shall not, by reason 
        of this paragraph (10), require the making available of 
        such services, or the making available of such services 
        of the same amount, duration, and scope, to any 
        individuals not included under subsection (e)(9)(A), 
        provided such services are made available (in the same 
        amount, duration, and scope) to all individuals 
        described in such subsection, (X) if the plan provides 
        for any fixed durational limit on medical assistance 
        for inpatient hospital services (whether or not such a 
        limit varies by medical condition or diagnosis), the 
        plan must establish exceptions to such a limit for 
        medically necessary inpatient hospital services 
        furnished with respect to individuals under one year of 
        age in a hospital defined under the State plan, 
        pursuant to section 1923(a)(1)(A), as a 
        disproportionate share hospital and subparagraph (B) 
        (relating to comparability) shall not be construed as 
        requiring such an exception for other individuals, 
        services, or hospitals, (XI) the making available of 
        medical assistance to cover the costs of premiums, 
        deductibles, coinsurance, and other cost-sharing 
        obligations for certain individuals for private health 
        coverage as described in section 1906 shall not, by 
        reason of paragraph (10), require the making available 
        of any such benefits or the making available of 
        services of the same amount, duration, and scope of 
        such private coverage to any other individuals, (XII) 
        the medical assistance made available to an individual 
        described in subsection (u)(1) who is eligible for 
        medical assistance only because of subparagraph (F) 
        shall be limited to medical assistance for COBRA 
        continuation premiums (as defined in subsection 
        (u)(2)), (XIII) the medical assistance made available 
        to an individual described in subsection (z)(1) who is 
        eligible for medical assistance only because of 
        subparagraph (A)(ii)(XII) shall be limited to medical 
        assistance for TB-related services (described in 
        subsection (z)(2)), (XIV) the medical assistance made 
        available to an individual described in subsection (aa) 
        who is eligible for medical assistance only because of 
        subparagraph (A)(10)(ii)(XVIII) shall be limited to 
        medical assistance provided during the period in which 
        such an individual requires treatment for breast or 
        cervical cancer (XV) the medical assistance made 
        available to an individual described in subparagraph 
        (A)(i)(VIII) shall be limited to medical assistance 
        described in subsection (k)(1), (XVI) the medical 
        assistance made available to an individual described in 
        subsection (ii) shall be limited to family planning 
        services and supplies described in section 
        1905(a)(4)(C) including medical diagnosis and treatment 
        services that are provided pursuant to a family 
        planning service in a family planning setting and 
        (XVII) if an individual is described in subclause (IX) 
        of subparagraph (A)(i) and is also described in 
        subclause (VIII) of that subparagraph, the medical 
        assistance shall be made available to the individual 
        through subclause (IX) instead of through subclause 
        (VIII);
          (11)(A) provide for entering into cooperative 
        arrangements with the State agencies responsible for 
        administering or supervising the administration of 
        health services and vocational rehabilitation services 
        in the State looking toward maximum utilization of such 
        services in the provision of medical assistance under 
        the plan, (B) provide, to the extent prescribed by the 
        Secretary, for entering into agreements, with any 
        agency, institution, or organization receiving payments 
        under (or through an allotment under) title V, (i) 
        providing for utilizing such agency, institution, or 
        organization in furnishing care and services which are 
        available under such title or allotment and which are 
        included in the State plan approved under this section 
        (ii) making such provision as may be appropriate for 
        reimbursing such agency, institution, or organization 
        for the cost of any such care and services furnished 
        any individual for which payment would otherwise be 
        made to the State with respect to the individual under 
        section 1903, and (iii) providing for coordination of 
        information and education on pediatric vaccinations and 
        delivery of immunization services, and (C) provide for 
        coordination of the operations under this title, 
        including the provision of information and education on 
        pediatric vaccinations and the delivery of immunization 
        services, with the State's operations under the special 
        supplemental nutrition program for women, infants, and 
        children under section 17 of the Child Nutrition Act of 
        1966;
          (12) provide that, in determining whether an 
        individual is blind, there shall be an examination by a 
        physician skilled in the diseases of the eye or by an 
        optometrist, whichever the individual may select;
          (13) provide--
                  (A) for a public process for determination of 
                rates of payment under the plan for hospital 
                services, nursing facility services, and 
                services of intermediate care facilities for 
                the mentally retarded under which--
                          (i) proposed rates, the methodologies 
                        underlying the establishment of such 
                        rates, and justifications for the 
                        proposed rates are published,
                          (ii) providers, beneficiaries and 
                        their representatives, and other 
                        concerned State residents are given a 
                        reasonable opportunity for review and 
                        comment on the proposed rates, 
                        methodologies, and justifications,
                          (iii) final rates, the methodologies 
                        underlying the establishment of such 
                        rates, and justifications for such 
                        final rates are published, and
                          (iv) in the case of hospitals, such 
                        rates take into account (in a manner 
                        consistent with section 1923) the 
                        situation of hospitals which serve a 
                        disproportionate number of low-income 
                        patients with special needs;
                  (B) for payment for hospice care in amounts 
                no lower than the amounts, using the same 
                methodology, used under part A of title XVIII 
                and for payment of amounts under section 
                1905(o)(3); except that in the case of hospice 
                care which is furnished to an individual who is 
                a resident of a nursing facility or 
                intermediate care facility for the mentally 
                retarded, and who would be eligible under the 
                plan for nursing facility services or services 
                in an intermediate care facility for the 
                mentally retarded if he had not elected to 
                receive hospice care, there shall be paid an 
                additional amount, to take into account the 
                room and board furnished by the facility, equal 
                to at least 95 percent of the rate that would 
                have been paid by the State under the plan for 
                facility services in that facility for that 
                individual; and
                  (C) payment for primary care services (as 
                defined in subsection (jj)) furnished in 2013 
                and 2014 by a physician with a primary 
                specialty designation of family medicine, 
                general internal medicine, or pediatric 
                medicine at a rate not less than 100 percent of 
                the payment rate that applies to such services 
                and physician under part B of title XVIII (or, 
                if greater, the payment rate that would be 
                applicable under such part if the conversion 
                factor under section 1848(d) for the year 
                involved were the conversion factor under such 
                section for 2009);
          (14) provide that enrollment fees, premiums, or 
        similar charges, and deductions, cost sharing, or 
        similar charges, may be imposed only as provided in 
        section 1916;
          (15) provide for payment for services described in 
        clause (B) or (C) of section 1905(a)(2) under the plan 
        in accordance with subsection (bb);
          (16) provide for inclusion, to the extent required by 
        regulations prescribed by the Secretary, of provisions 
        (conforming to such regulations) with respect to the 
        furnishing of medical assistance under the plan to 
        individuals who are residents of the State but are 
        absent therefrom;
          (17) except as provided in subsections (e)(14), 
        (e)(14), (l)(3), (m)(3), and (m)(4), include reasonable 
        standards (which shall be comparable for all groups and 
        may, in accordance with standards prescribed by the 
        Secretary, differ with respect to income levels, but 
        only in the case of applicants or recipients of 
        assistance under the plan who are not receiving aid or 
        assistance under any plan of the State approved under 
        title I, X, XIV, or XVI, or part A of title IV, and 
        with respect to whom supplemental security income 
        benefits are not being paid under title XVI, based on 
        the variations between shelter costs in urban areas and 
        in rural areas) for determining eligibility for and the 
        extent of medical assistance under the plan which (A) 
        are consistent with the objectives of this title, (B) 
        provide for taking into account only such income and 
        resources as are, as determined in accordance with 
        standards prescribed by the Secretary, available to the 
        applicant or recipient and (in the case of any 
        applicant or recipient who would, except for income and 
        resources, be eligible for aid or assistance in the 
        form of money payments under any plan of the State 
        approved under title I, X, XIV, or XVI, or part A of 
        title IV, or to have paid with respect to him 
        supplemental security income benefits under title XVI) 
        as would not be disregarded (or set aside for future 
        needs) in determining his eligibility for such aid, 
        assistance, or benefits, (C) provide for reasonable 
        evaluation of any such income or resources, and (D) do 
        not take into account the financial responsibility of 
        any individual for any applicant or recipient of 
        assistance under the plan unless such applicant or 
        recipient is such individual's spouse or such 
        individual's child who is under age 21 or (with respect 
        to States eligible to participate in the State program 
        established under title XVI), is blind or permanently 
        and totally disabled, or is blind or disabled as 
        defined in section 1614 (with respect to States which 
        are not eligible to participate in such program); and 
        provide for flexibility in the application of such 
        standards with respect to income by taking into 
        account, except to the extent prescribed by the 
        Secretary, the costs (whether in the form of insurance 
        premiums, payments made to the State under section 
        1903(f)(2)(B), or otherwise and regardless of whether 
        such costs are reimbursed under another public program 
        of the State or political subdivision thereof) incurred 
        for medical care or for any other type of remedial care 
        recognized under State law;
          (18) comply with the provisions of section 1917 with 
        respect to liens, adjustments and recoveries of medical 
        assistance correctly paid, transfers of assets, and 
        treatment of certain trusts;
          (19) provide such safeguards as may be necessary to 
        assure that eligibility for care and services under the 
        plan will be determined, and such care and services 
        will be provided, in a manner consistent with 
        simplicity of administration and the best interests of 
        the recipients;
          (20) if the State plan includes medical assistance in 
        behalf of individuals 65 years of age or older who are 
        patients in institutions for mental diseases--
                  (A) provide for having in effect such 
                agreements or other arrangements with State 
                authorities concerned with mental diseases, 
                and, where appropriate, with such institutions, 
                as may be necessary for carrying out the State 
                plan, including arrangements for joint planning 
                and for development of alternate methods of 
                care, arrangements providing assurance of 
                immediate readmittance to institutions where 
                needed for individuals under alternate plans of 
                care, and arrangements providing for access to 
                patients and facilities, for furnishing 
                information, and for making reports;
                  (B) provide for an individual plan for each 
                such patient to assure that the institutional 
                care provided to him is in his best interests, 
                including, to that end, assurances that there 
                will be initial and periodic review of his 
                medical and other needs, that he will be given 
                appropriate medical treatment within the 
                institution, and that there will be a periodic 
                determination of his need for continued 
                treatment in the institution; and
                  (C) provide for the development of alternate 
                plans of care, making maximum utilization of 
                available resources, for recipients 65 years of 
                age or older who would otherwise need care in 
                such institutions, including appropriate 
                medical treatment and other aid or assistance; 
                for services referred to in section 
                3(a)(4)(A)(i) and (ii) or section 
                1603(a)(4)(A)(i) and (ii) which are appropriate 
                for such recipients and for such patients; and 
                for methods of administration necessary to 
                assure that the responsibilities of the State 
                agency under the State plan with respect to 
                such recipients and such patients will be 
                effectively carried out;
          (21) if the State plan includes medical assistance in 
        behalf of individuals 65 years of age or older who are 
        patients in public institutions for mental diseases, 
        show that the State is making satisfactory progress 
        toward developing and implementing a comprehensive 
        mental health program, including provision for 
        utilization of community mental health centers, nursing 
        facilities, and other alternatives to care in public 
        institutions for mental diseases;
          (22) include descriptions of (A) the kinds and 
        numbers of professional medical personnel and 
        supporting staff that will be used in the 
        administration of the plan and of the responsibilities 
        they will have, (B) the standards, for private or 
        public institutions in which recipients of medical 
        assistance under the plan may receive care or services, 
        that will be utilized by the State authority or 
        authorities responsible for establishing and 
        maintaining such standards, (C) the cooperative 
        arrangements with State health agencies and State 
        vocational rehabilitation agencies entered into with a 
        view to maximum utilization of and coordination of the 
        provision of medical assistance with the services 
        administered or supervised by such agencies, and (D) 
        other standards and methods that the State will use to 
        assure that medical or remedial care and services 
        provided to recipients of medical assistance are of 
        high quality;
          (23) provide that (A) any individual eligible for 
        medical assistance (including drugs) may obtain such 
        assistance from any institution, agency, community 
        pharmacy, or person, qualified to perform the service 
        or services required (including an organization which 
        provides such services, or arranges for their 
        availability, on a prepayment basis), who undertakes to 
        provide him such services, and (B) an enrollment of an 
        individual eligible for medical assistance in a primary 
        care case-management system (described in section 
        1915(b)(1)), a medicaid managed care organization, or a 
        similar entity shall not restrict the choice of the 
        qualified person from whom the individual may receive 
        services under section 1905(a)(4)(C), except as 
        provided in subsection (g) and in section 1915, except 
        that this paragraph shall not apply in the case of 
        Puerto Rico, the Virgin Islands, and Guam, and except 
        that nothing in this paragraph shall be construed as 
        requiring a State to provide medical assistance for 
        such services furnished by a person or entity convicted 
        of a felony under Federal or State law for an offense 
        which the State agency determines is inconsistent with 
        the best interests of beneficiaries under the State 
        plan or by a provider or supplier to which a moratorium 
        under subsection (kk)(4) is applied during the period 
        of such moratorium';
          (24) effective July 1, 1969, provide for consultative 
        services by health agencies and other appropriate 
        agencies of the State to hospitals, nursing facilities, 
        home health agencies, clinics, laboratories, and such 
        other institutions as the Secretary may specify in 
        order to assist them (A) to qualify for payments under 
        this Act, (B) to establish and maintain such fiscal 
        records as may be necessary for the proper and 
        efficient administration of this Act, and (C) to 
        provide information needed to determine payments due 
        under this Act on account of care and services 
        furnished to individuals;
          (25) provide--
                  (A) that the State or local agency 
                administering such plan will take all 
                reasonable measures to ascertain the legal 
                liability of third parties (including health 
                insurers, self-insured plans, group health 
                plans (as defined in section 607(1) of the 
                Employee Retirement Income Security Act of 
                1974), service benefit plans, managed care 
                organizations, pharmacy benefit managers, or 
                other parties that are, by statute, contract, 
                or agreement, legally responsible for payment 
                of a claim for a health care item or service) 
                to pay for care and services available under 
                the plan, including--
                          (i) the collection of sufficient 
                        information (as specified by the 
                        Secretary in regulations) to enable the 
                        State to pursue claims against such 
                        third parties, with such information 
                        being collected at the time of any 
                        determination or redetermination of 
                        eligibility for medical assistance, and
                          (ii) the submission to the Secretary 
                        of a plan (subject to approval by the 
                        Secretary) for pursuing claims against 
                        such third parties, which plan shall be 
                        integrated with, and be monitored as a 
                        part of the Secretary's review of, the 
                        State's mechanized claims processing 
                        and information retrieval systems 
                        required under section 1903(r);
                  (B) that in any case where such a legal 
                liability is found to exist after medical 
                assistance has been made available on behalf of 
                the individual and where the amount of 
                reimbursement the State can reasonably expect 
                to recover exceeds the costs of such recovery, 
                the State or local agency will seek 
                reimbursement for such assistance to the extent 
                of such legal liability;
                  (C) that in the case of an individual who is 
                entitled to medical assistance under the State 
                plan with respect to a service for which a 
                third party is liable for payment, the person 
                furnishing the service may not seek to collect 
                from the individual (or any financially 
                responsible relative or representative of that 
                individual) payment of an amount for that 
                service (i) if the total of the amount of the 
                liabilities of third parties for that service 
                is at least equal to the amount payable for 
                that service under the plan (disregarding 
                section 1916), or (ii) in an amount which 
                exceeds the lesser of (I) the amount which may 
                be collected under section 1916, or (II) the 
                amount by which the amount payable for that 
                service under the plan (disregarding section 
                1916) exceeds the total of the amount of the 
                liabilities of third parties for that service;
                  (D) that a person who furnishes services and 
                is participating under the plan may not refuse 
                to furnish services to an individual (who is 
                entitled to have payment made under the plan 
                for the services the person furnishes) because 
                of a third party's potential liability for 
                payment for the service;
                  (E) that in the case of prenatal or 
                preventive pediatric care (including early and 
                periodic screening and diagnosis services under 
                section 1905(a)(4)(B)) covered under the State 
                plan, the State shall--
                          (i) make payment for such service in 
                        accordance with the usual payment 
                        schedule under such plan for such 
                        services without regard to the 
                        liability of a third party for payment 
                        for such services; and
                          (ii) seek reimbursement from such 
                        third party in accordance with 
                        subparagraph (B);
                  (F) that in the case of any services covered 
                under such plan which are provided to an 
                individual on whose behalf child support 
                enforcement is being carried out by the State 
                agency under part D of title IV of this Act, 
                the State shall--
                          (i) make payment for such service in 
                        accordance with the usual payment 
                        schedule under such plan for such 
                        services without regard to any third-
                        party liability for payment for such 
                        services, if such third-party liability 
                        is derived (through insurance or 
                        otherwise) from the parent whose 
                        obligation to pay support is being 
                        enforced by such agency, if payment has 
                        not been made by such third party 
                        within 30 days after such services are 
                        furnished;
                          (ii) seek reimbursement from such 
                        third party in accordance with 
                        subparagraph (B);
                  (G) that the State prohibits any health 
                insurer (including a group health plan, as 
                defined in section 607(1) of the Employee 
                Retirement Income Security Act of 1974, a self-
                insured plan, a service benefit plan, a managed 
                care organization, a pharmacy benefit manager, 
                or other party that is, by statute, contract, 
                or agreement, legally responsible for payment 
                of a claim for a health care item or service), 
                in enrolling an individual or in making any 
                payments for benefits to the individual or on 
                the individual's behalf, from taking into 
                account that the individual is eligible for or 
                is provided medical assistance under a plan 
                under this title for such State, or any other 
                State;
                  (H) that to the extent that payment has been 
                made under the State plan for medical 
                assistance in any case where a third party has 
                a legal liability to make payment for such 
                assistance, the State has in effect laws under 
                which, to the extent that payment has been made 
                under the State plan for medical assistance for 
                health care items or services furnished to an 
                individual, the State is considered to have 
                acquired the rights of such individual to 
                payment by any other party for such health care 
                items or services; and
                  (I) that the State shall provide assurances 
                satisfactory to the Secretary that the State 
                has in effect laws requiring health insurers, 
                including self-insured plans, group health 
                plans (as defined in section 607(1) of the 
                Employee Retirement Income Security Act of 
                1974), service benefit plans, managed care 
                organizations, pharmacy benefit managers, or 
                other parties that are, by statute, contract, 
                or agreement, legally responsible for payment 
                of a claim for a health care item or service, 
                as a condition of doing business in the State, 
                to--
                          (i) provide, with respect to 
                        individuals who are eligible (and, at 
                        State option, individuals who apply or 
                        whose eligibility for medical 
                        assistance is being evaluated in 
                        accordance with section 1902(e)(13)(D)) 
                        for, or are provided, medical 
                        assistance under the State plan under 
                        this title (and, at State option, child 
                        health assistance under title XXI), 
                        upon the request of the State, 
                        information to determine during what 
                        period the individual or their spouses 
                        or their dependents may be (or may have 
                        been) covered by a health insurer and 
                        the nature of the coverage that is or 
                        was provided by the health insurer 
                        (including the name, address, and 
                        identifying number of the plan) in a 
                        manner prescribed by the Secretary;
                          (ii) accept the State's right of 
                        recovery and the assignment to the 
                        State of any right of an individual or 
                        other entity to payment from the party 
                        for an item or service for which 
                        payment has been made under the State 
                        plan;
                          (iii) respond to any inquiry by the 
                        State regarding a claim for payment for 
                        any health care item or service that is 
                        submitted not later than 3 years after 
                        the date of the provision of such 
                        health care item or service; and
                          (iv) agree not to deny a claim 
                        submitted by the State solely on the 
                        basis of the date of submission of the 
                        claim, the type or format of the claim 
                        form, or a failure to present proper 
                        documentation at the point-of-sale that 
                        is the basis of the claim, if--
                                  (I) the claim is submitted by 
                                the State within the 3-year 
                                period beginning on the date on 
                                which the item or service was 
                                furnished; and
                                  (II) any action by the State 
                                to enforce its rights with 
                                respect to such claim is 
                                commenced within 6 years of the 
                                State's submission of such 
                                claim;
          (26) if the State plan includes medical assistance 
        for inpatient mental hospital services, provide, with 
        respect to each patient receiving such services, for a 
        regular program of medical review (including medical 
        evaluation) of his need for such services, and for a 
        written plan of care;
          (27) provide for agreements with every person or 
        institution providing services under the State plan 
        under which such person or institution agrees (A) to 
        keep such records as are necessary fully to disclose 
        the extent of the services provided to individuals 
        receiving assistance under the State plan, and (B) to 
        furnish the State agency or the Secretary with such 
        information, regarding any payments claimed by such 
        person or institution for providing services under the 
        State plan, as the State agency or the Secretary may 
        from time to time request;
          (28) provide--
                  (A) that any nursing facility receiving 
                payments under such plan must satisfy all the 
                requirements of subsections (b) through (d) of 
                section 1919 as they apply to such facilities;
                  (B) for including in ``nursing facility 
                services'' at least the items and services 
                specified (or deemed to be specified) by the 
                Secretary under section 1919(f)(7) and making 
                available upon request a description of the 
                items and services so included;
                  (C) for procedures to make available to the 
                public the data and methodology used in 
                establishing payment rates for nursing 
                facilities under this title; and
                  (D) for compliance (by the date specified in 
                the respective sections) with the requirements 
                of--
                          (i) section 1919(e);
                          (ii) section 1919(g) (relating to 
                        responsibility for survey and 
                        certification of nursing facilities); 
                        and
                          (iii) sections 1919(h)(2)(B) and 
                        1919(h)(2)(D) (relating to 
                        establishment and application of 
                        remedies);
          (29) include a State program which meets the 
        requirements set forth in section 1908, for the 
        licensing of administrators of nursing homes;
          (30)(A) provide such methods and procedures relating 
        to the utilization of, and the payment for, care and 
        services available under the plan (including but not 
        limited to utilization review plans as provided for in 
        section 1903(i)(4)) as may be necessary to safeguard 
        against unnecessary utilization of such care and 
        services and to assure that payments are consistent 
        with efficiency, economy, and quality of care and are 
        sufficient to enlist enough providers so that care and 
        services are available under the plan at least to the 
        extent that such care and services are available to the 
        general population in the geographic area; and
          (B) provide, under the program described in 
        subparagraph (A), that--
                  (i) each admission to a hospital, 
                intermediate care facility for the mentally 
                retarded, or hospital for mental diseases is 
                reviewed or screened in accordance with 
                criteria established by medical and other 
                professional personnel who are not themselves 
                directly responsible for the care of the 
                patient involved, and who do not have a 
                significant financial interest in any such 
                institution and are not, except in the case of 
                a hospital, employed by the institution 
                providing the care involved, and
                  (ii) the information developed from such 
                review or screening, along with the data 
                obtained from prior reviews of the necessity 
                for admission and continued stay of patients by 
                such professional personnel, shall be used as 
                the basis for establishing the size and 
                composition of the sample of admissions to be 
                subject to review and evaluation by such 
                personnel, and any such sample may be of any 
                size up to 100 percent of all admissions and 
                must be of sufficient size to serve the purpose 
                of (I) identifying the patterns of care being 
                provided and the changes occurring over time in 
                such patterns so that the need for modification 
                may be ascertained, and (II) subjecting 
                admissions to early or more extensive review 
                where information indicates that such 
                consideration is warranted to a hospital, 
                intermediate care facility for the mentally 
                retarded, or hospital for mental diseases;
          (31) with respect to services in an intermediate care 
        facility for the mentally retarded (where the State 
        plan includes medical assistance for such services) 
        provide, with respect to each patient receiving such 
        services, for a written plan of care, prior to 
        admission to or authorization of benefits in such 
        facility, in accordance with regulations of the 
        Secretary, and for a regular program of independent 
        professional review (including medical evaluation) 
        which shall periodically review his need for such 
        services;
          (32) provide that no payment under the plan for any 
        care or service provided to an individual shall be made 
        to anyone other than such individual or the person or 
        institution providing such care or service, under an 
        assignment or power of attorney or otherwise; except 
        that--
                  (A) in the case of any care or service 
                provided by a physician, dentist, or other 
                individual practitioner, such payment may be 
                made (i) to the employer of such physician, 
                dentist, or other practitioner if such 
                physician, dentist, or practitioner is required 
                as a condition of his employment to turn over 
                his fee for such care or service to his 
                employer, or (ii) (where the care or service 
                was provided in a hospital, clinic, or other 
                facility) to the facility in which the care or 
                service was provided if there is a contractual 
                arrangement between such physician, dentist, or 
                practitioner and such facility under which such 
                facility submits the bill for such care or 
                service;
                  (B) nothing in this paragraph shall be 
                construed (i) to prevent the making of such a 
                payment in accordance with an assignment from 
                the person or institution providing the care or 
                service involved if such assignment is made to 
                a governmental agency or entity or is 
                established by or pursuant to the order of a 
                court of competent jurisdiction, or (ii) to 
                preclude an agent of such person or institution 
                from receiving any such payment if (but only 
                if) such agent does so pursuant to an agency 
                agreement under which the compensation to be 
                paid to the agent for his services for or in 
                connection with the billing or collection of 
                payments due such person or institution under 
                the plan is unrelated (directly or indirectly) 
                to the amount of such payments or the billings 
                therefor, and is not dependent upon the actual 
                collection of any such payment;
                  (C) in the case of services furnished (during 
                a period that does not exceed 14 continuous 
                days in the case of an informal reciprocal 
                arrangement or 90 continuous days (or such 
                longer period as the Secretary may provide) in 
                the case of an arrangement involving per diem 
                or other fee-for-time compensation) by, or 
                incident to the services of, one physician to 
                the patients of another physician who submits 
                the claim for such services, payment shall be 
                made to the physician submitting the claim (as 
                if the services were furnished by, or incident 
                to, the physician's services), but only if the 
                claim identifies (in a manner specified by the 
                Secretary) the physician who furnished the 
                services; and
                  (D) in the case of payment for a childhood 
                vaccine administered before October 1, 1994, to 
                individuals entitled to medical assistance 
                under the State plan, the State plan may make 
                payment directly to the manufacturer of the 
                vaccine under a voluntary replacement program 
                agreed to by the State pursuant to which the 
                manufacturer (i) supplies doses of the vaccine 
                to providers administering the vaccine, (ii) 
                periodically replaces the supply of the 
                vaccine, and (iii) charges the State the 
                manufacturer's price to the Centers for Disease 
                Control and Prevention for the vaccine so 
                administered (which price includes a reasonable 
                amount to cover shipping and the handling of 
                returns);
          (33) provide--
                  (A) that the State health agency, or other 
                appropriate State medical agency, shall be 
                responsible for establishing a plan, consistent 
                with regulations prescribed by the Secretary, 
                for the review by appropriate professional 
                health personnel of the appropriateness and 
                quality of care and services furnished to 
                recipients of medical assistance under the plan 
                in order to provide guidance with respect 
                thereto in the administration of the plan to 
                the State agency established or designated 
                pursuant to paragraph (5) and, where 
                applicable, to the State agency described in 
                the second sentence of this subsection; and
                  (B) that, except as provided in section 
                1919(g), the State or local agency utilized by 
                the Secretary for the purpose specified in the 
                first sentence of section 1864(a), or, if such 
                agency is not the State agency which is 
                responsible for licensing health institutions, 
                the State agency responsible for such 
                licensing, will perform for the State agency 
                administering or supervising the administration 
                of the plan approved under this title the 
                function of determining whether institutions 
                and agencies meet the requirements for 
                participation in the program under such plan, 
                except that, if the Secretary has cause to 
                question the adequacy of such determinations, 
                the Secretary is authorized to validate State 
                determinations and, on that basis, make 
                independent and binding determinations 
                concerning the extent to which individual 
                institutions and agencies meet the requirements 
                for participation;
          (34) provide that in the case of any individual who 
        has been determined to be eligible for medical 
        assistance under the plan, such assistance will be made 
        available to him for care and services included under 
        the plan and furnished in or after the third month 
        before the month in which he made application (or 
        application was made on his behalf in the case of a 
        deceased individual) for such assistance if such 
        individual was (or upon application would have been) 
        eligible for such assistance at the time such care and 
        services were furnished;
          (35) provide that any disclosing entity (as defined 
        in section 1124(a)(2)) receiving payments under such 
        plan complies with the requirements of section 1124;
          (36) provide that within 90 days following the 
        completion of each survey of any health care facility, 
        laboratory, agency, clinic, or organization, by the 
        appropriate State agency described in paragraph (9), 
        such agency shall (in accordance with regulations of 
        the Secretary) make public in readily available form 
        and place the pertinent findings of each such survey 
        relating to the compliance of each such health care 
        facility, laboratory, clinic, agency, or organization 
        with (A) the statutory conditions of participation 
        imposed under this title, and (B) the major additional 
        conditions which the Secretary finds necessary in the 
        interest of health and safety of individuals who are 
        furnished care or services by any such facility, 
        laboratory, clinic, agency, or organization;
          (37) provide for claims payment procedures which (A) 
        ensure that 90 per centum of claims for payment (for 
        which no further written information or substantiation 
        is required in order to make payment) made for services 
        covered under the plan and furnished by health care 
        practitioners through individual or group practices or 
        through shared health facilities are paid within 30 
        days of the date of receipt of such claims and that 99 
        per centum of such claims are paid within 90 days of 
        the date of receipt of such claims, and (B) provide for 
        procedures of prepayment and postpayment claims review, 
        including review of appropriate data with respect to 
        the recipient and provider of a service and the nature 
        of the service for which payment is claimed, to ensure 
        the proper and efficient payment of claims and 
        management of the program;
          (38) require that an entity (other than an individual 
        practitioner or a group of practitioners) that 
        furnishes, or arranges for the furnishing of, items or 
        services under the plan, shall supply (within such 
        period as may be specified in regulations by the 
        Secretary or by the single State agency which 
        administers or supervises the administration of the 
        plan) upon request specifically addressed to such 
        entity by the Secretary or such State agency, the 
        information described in section 1128(b)(9);
          (39) provide that the State agency shall exclude any 
        specified individual or entity from participation in 
        the program under the State plan for the period 
        specified by the Secretary, when required by him to do 
        so pursuant to section 1128 or section 1128A, terminate 
        the participation of any individual or entity in such 
        program if (subject to such exceptions as are permitted 
        with respect to exclusion under sections 1128(c)(3)(B) 
        and 1128(d)(3)(B)) participation of such individual or 
        entity is terminated under title XVIII or any other 
        State plan under this title, and provide that no 
        payment may be made under the plan with respect to any 
        item or service furnished by such individual or entity 
        during such period;
          (40) require each health services facility or 
        organization which receives payments under the plan and 
        of a type for which a uniform reporting system has been 
        established under section 1121(a) to make reports to 
        the Secretary of information described in such section 
        in accordance with the uniform reporting system 
        (established under such section) for that type of 
        facility or organization;
          (41) provide that whenever a provider of services or 
        any other person is terminated, suspended, or otherwise 
        sanctioned or prohibited from participating under the 
        State plan, the State agency shall promptly notify the 
        Secretary and, in the case of a physician and 
        notwithstanding paragraph (7), the State medical 
        licensing board of such action;
          (42) provide that--
                  (A) the records of any entity participating 
                in the plan and providing services reimbursable 
                on a cost-related basis will be audited as the 
                Secretary determines to be necessary to insure 
                that proper payments are made under the plan; 
                and
                  (B) not later than December 31, 2010, the 
                State shall--
                          (i) establish a program under which 
                        the State contracts (consistent with 
                        State law and in the same manner as the 
                        Secretary enters into contracts with 
                        recovery audit contractors under 
                        section 1893(h), subject to such 
                        exceptions or requirements as the 
                        Secretary may require for purposes of 
                        this title or a particular State) with 
                        1 or more recovery audit contractors 
                        for the purpose of identifying 
                        underpayments and overpayments and 
                        recouping overpayments under the State 
                        plan and under any waiver of the State 
                        plan with respect to all services for 
                        which payment is made to any entity 
                        under such plan or waiver; and
                          (ii) provide assurances satisfactory 
                        to the Secretary that--
                                  (I) under such contracts, 
                                payment shall be made to such a 
                                contractor only from amounts 
                                recovered;
                                  (II) from such amounts 
                                recovered, payment--
                                          (aa) shall be made on 
                                        a contingent basis for 
                                        collecting 
                                        overpayments; and
                                          (bb) may be made in 
                                        such amounts as the 
                                        State may specify for 
                                        identifying 
                                        underpayments;
                                  (III) the State has an 
                                adequate process for entities 
                                to appeal any adverse 
                                determination made by such 
                                contractors; and
                                  (IV) such program is carried 
                                out in accordance with such 
                                requirements as the Secretary 
                                shall specify, including--
                                          (aa) for purposes of 
                                        section 1903(a)(7), 
                                        that amounts expended 
                                        by the State to carry 
                                        out the program shall 
                                        be considered amounts 
                                        expended as necessary 
                                        for the proper and 
                                        efficient 
                                        administration of the 
                                        State plan or a waiver 
                                        of the plan;
                                          (bb) that section 
                                        1903(d) shall apply to 
                                        amounts recovered under 
                                        the program; and
                                          (cc) that the State 
                                        and any such 
                                        contractors under 
                                        contract with the State 
                                        shall coordinate such 
                                        recovery audit efforts 
                                        with other contractors 
                                        or entities performing 
                                        audits of entities 
                                        receiving payments 
                                        under the State plan or 
                                        waiver in the State, 
                                        including efforts with 
                                        Federal and State law 
                                        enforcement with 
                                        respect to the 
                                        Department of Justice, 
                                        including the Federal 
                                        Bureau of 
                                        Investigations, the 
                                        Inspector General of 
                                        the Department of 
                                        Health and Human 
                                        Services, and the State 
                                        medicaid fraud control 
                                        unit; and
          (43) provide for--
                  (A) informing all persons in the State who 
                are under the age of 21 and who have been 
                determined to be eligible for medical 
                assistance including services described in 
                section 1905(a)(4)(B), of the availability of 
                early and periodic screening, diagnostic, and 
                treatment services as described in section 
                1905(r) and the need for age-appropriate 
                immunizations against vaccine-preventable 
                diseases,
                  (B) providing or arranging for the provision 
                of such screening services in all cases where 
                they are requested,
                  (C) arranging for (directly or through 
                referral to appropriate agencies, 
                organizations, or individuals) corrective 
                treatment the need for which is disclosed by 
                such child health screening services, and
                  (D) reporting to the Secretary (in a uniform 
                form and manner established by the Secretary, 
                by age group and by basis of eligibility for 
                medical assistance, and by not later than April 
                1 after the end of each fiscal year, beginning 
                with fiscal year 1990) the following 
                information relating to early and periodic 
                screening, diagnostic, and treatment services 
                provided under the plan during each fiscal 
                year:
                          (i) the number of children provided 
                        child health screening services,
                          (ii) the number of children referred 
                        for corrective treatment (the need for 
                        which is disclosed by such child health 
                        screening services),
                          (iii) the number of children 
                        receiving dental services, and other 
                        information relating to the provision 
                        of dental services to such children 
                        described in section 2108(e) and
                          (iv) the State's results in attaining 
                        the participation goals set for the 
                        State under section 1905(r);
          (44) in each case for which payment for inpatient 
        hospital services, services in an intermediate care 
        facility for the mentally retarded, or inpatient mental 
        hospital services is made under the State plan--
                  (A) a physician (or, in the case of skilled 
                nursing facility services or intermediate care 
                facility services, a physician, or a nurse 
                practitioner or clinical nurse specialist who 
                is not an employee of the facility but is 
                working in collaboration with a physician) 
                certifies at the time of admission, or, if 
                later, the time the individual applies for 
                medical assistance under the State plan (and a 
                physician, a physician assistant under the 
                supervision of a physician, or, in the case of 
                skilled nursing facility services or 
                intermediate care facility services, a 
                physician, or a nurse practitioner or clinical 
                nurse specialist who is not an employee of the 
                facility but is working in collaboration with a 
                physician, recertifies, where such services are 
                furnished over a period of time, in such cases, 
                at least as often as required under section 
                1903(g)(6) (or, in the case of services that 
                are services provided in an intermediate care 
                facility for the mentally retarded, every 
                year), and accompanied by such supporting 
                material, appropriate to the case involved, as 
                may be provided in regulations of the 
                Secretary), that such services are or were 
                required to be given on an inpatient basis 
                because the individual needs or needed such 
                services, and
                  (B) such services were furnished under a plan 
                established and periodically reviewed and 
                evaluated by a physician, or, in the case of 
                skilled nursing facility services or 
                intermediate care facility services, a 
                physician, or a nurse practitioner or clinical 
                nurse specialist who is not an employee of the 
                facility but is working in collaboration with a 
                physician;
          (45) provide for mandatory assignment of rights of 
        payment for medical support and other medical care owed 
        to recipients, in accordance with section 1912;
          (46)(A) provide that information is requested and 
        exchanged for purposes of income and eligibility 
        verification in accordance with a State system which 
        meets the requirements of section 1137 of this Act; and
          (B) provide, with respect to an individual declaring 
        to be a citizen or national of the United States for 
        purposes of establishing eligibility under this title, 
        that the State shall satisfy the requirements of--
                  (i) section 1903(x); or
                  (ii) subsection (ee);
          (47) provide--
                  (A) at the option of the State, for making 
                ambulatory prenatal care available to pregnant 
                women during a presumptive eligibility period 
                in accordance with section 1920 and provide for 
                making medical assistance for items and 
                services described in subsection (a) of section 
                1920A available to children during a 
                presumptive eligibility period in accordance 
                with such section and provide for making 
                medical assistance available to individuals 
                described in subsection (a) of section 1920B 
                during a presumptive eligibility period in 
                accordance with such section and provide for 
                making medical assistance available to 
                individuals described in subsection (a) of 
                section 1920C during a presumptive eligibility 
                period in accordance with such section; and
                  (B) that any hospital that is a participating 
                provider under the State plan may elect to be a 
                qualified entity for purposes of determining, 
                on the basis of preliminary information, 
                whether any individual is eligible for medical 
                assistance under the State plan or under a 
                waiver of the plan for purposes of providing 
                the individual with medical assistance during a 
                presumptive eligibility period, in the same 
                manner, and subject to the same requirements, 
                as apply to the State options with respect to 
                populations described in section 1920, 1920A, 
                1920B, or 1920C (but without regard to whether 
                the State has elected to provide for a 
                presumptive eligibility period under any such 
                sections), subject to such guidance as the 
                Secretary shall establish;
          (48) provide a method of making cards evidencing 
        eligibility for medical assistance available to an 
        eligible individual who does not reside in a permanent 
        dwelling or does not have a fixed home or mailing 
        address;
          (49) provide that the State will provide information 
        and access to certain information respecting sanctions 
        taken against health care practitioners and providers 
        by State licensing authorities in accordance with 
        section 1921;
          (50) provide, in accordance with subsection (q), for 
        a monthly personal needs allowance for certain 
        institutionalized individuals and couples;
          (51) meet the requirements of section 1924 (relating 
        to protection of community spouses);
          (52) meet the requirements of section 1925 (relating 
        to extension of eligibility for medical assistance);
          (53) provide--
                  (A) for notifying in a timely manner all 
                individuals in the State who are determined to 
                be eligible for medical assistance and who are 
                pregnant women, breastfeeding or postpartum 
                women (as defined in section 17 of the Child 
                Nutrition Act of 1966), or children below the 
                age of 5, of the availability of benefits 
                furnished by the special supplemental nutrition 
                program under such section, and
                  (B) for referring any such individual to the 
                State agency responsible for administering such 
                program;
          (54) in the case of a State plan that provides 
        medical assistance for covered outpatient drugs (as 
        defined in section 1927(k)), comply with the applicable 
        requirements of section 1927;
          (55) provide for receipt and initial processing of 
        applications of individuals for medical assistance 
        under subsection (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), 
        (a)(10)(A)(i)(VII), or (a)(10)(A)(ii)(IX)--
                  (A) at locations which are other than those 
                used for the receipt and processing of 
                applications for aid under part A of title IV 
                and which include facilities defined as 
                disproportionate share hospitals under section 
                1923(a)(1)(A) and Federally-qualified health 
                centers described in section 1905(1)(2)(B), and
                  (B) using applications which are other than 
                those used for applications for aid under such 
                part;
          (56) provide, in accordance with subsection (s), for 
        adjusted payments for certain inpatient hospital 
        services;
          (57) provide that each hospital, nursing facility, 
        provider of home health care or personal care services, 
        hospice program, or medicaid managed care organization 
        (as defined in section 1903(m)(1)(A)) receiving funds 
        under the plan shall comply with the requirements of 
        subsection (w);
          (58) provide that the State, acting through a State 
        agency, association, or other private nonprofit entity, 
        develop a written description of the law of the State 
        (whether statutory or as recognized by the courts of 
        the State) concerning advance directives that would be 
        distributed by providers or organizations under the 
        requirements of subsection (w);
          (59) maintain a list (updated not less often than 
        monthly, and containing each physician's unique 
        identifier provided under the system established under 
        subsection (x)) of all physicians who are certified to 
        participate under the State plan;
          (60) provide that the State agency shall provide 
        assurances satisfactory to the Secretary that the State 
        has in effect the laws relating to medical child 
        support required under section 1908A;
          (61) provide that the State must demonstrate that it 
        operates a medicaid fraud and abuse control unit 
        described in section 1903(q) that effectively carries 
        out the functions and requirements described in such 
        section, as determined in accordance with standards 
        established by the Secretary, unless the State 
        demonstrates to the satisfaction of the Secretary that 
        the effective operation of such a unit in the State 
        would not be cost-effective because minimal fraud 
        exists in connection with the provision of covered 
        services to eligible individuals under the State plan, 
        and that beneficiaries under the plan will be protected 
        from abuse and neglect in connection with the provision 
        of medical assistance under the plan without the 
        existence of such a unit;
          (62) provide for a program for the distribution of 
        pediatric vaccines to program-registered providers for 
        the immunization of vaccine-eligible children in 
        accordance with section 1928;
          (63) provide for administration and determinations of 
        eligibility with respect to individuals who are (or 
        seek to be) eligible for medical assistance based on 
        the application of section 1931;
          (64) provide, not later than 1 year after the date of 
        the enactment of this paragraph, a mechanism to receive 
        reports from beneficiaries and others and compile data 
        concerning alleged instances of waste, fraud, and abuse 
        relating to the operation of this title;
          (65) provide that the State shall issue provider 
        numbers for all suppliers of medical assistance 
        consisting of durable medical equipment, as defined in 
        section 1861(n), and the State shall not issue or renew 
        such a supplier number for any such supplier unless--
                  (A)(i) full and complete information as to 
                the identity of each person with an ownership 
                or control interest (as defined in section 
                1124(a)(3)) in the supplier or in any 
                subcontractor (as defined by the Secretary in 
                regulations) in which the supplier directly or 
                indirectly has a 5 percent or more ownership 
                interest; and
                  (ii) to the extent determined to be feasible 
                under regulations of the Secretary, the name of 
                any disclosing entity (as defined in section 
                1124(a)(2)) with respect to which a person with 
                such an ownership or control interest in the 
                supplier is a person with such an ownership or 
                control interest in the disclosing entity; and
                  (B) a surety bond in a form specified by the 
                Secretary under section 1834(a)(16)(B) and in 
                an amount that is not less than $50,000 or such 
                comparable surety bond as the Secretary may 
                permit under the second sentence of such 
                section;
          (66) provide for making eligibility determinations 
        under section 1935(a);
          (67) provide, with respect to services covered under 
        the State plan (but not under title XVIII) that are 
        furnished to a PACE program eligible individual 
        enrolled with a PACE provider by a provider 
        participating under the State plan that does not have a 
        contract or other agreement with the PACE provider that 
        establishes payment amounts for such services, that 
        such participating provider may not require the PACE 
        provider to pay the participating provider an amount 
        greater than the amount that would otherwise be payable 
        for the service to the participating provider under the 
        State plan for the State where the PACE provider is 
        located (in accordance with regulations issued by the 
        Secretary);
          (68) provide that any entity that receives or makes 
        annual payments under the State plan of at least 
        $5,000,000, as a condition of receiving such payments, 
        shall--
                  (A) establish written policies for all 
                employees of the entity (including management), 
                and of any contractor or agent of the entity, 
                that provide detailed information about the 
                False Claims Act established under sections 
                3729 through 3733 of title 31, United States 
                Code, administrative remedies for false claims 
                and statements established under chapter 38 of 
                title 31, United States Code, any State laws 
                pertaining to civil or criminal penalties for 
                false claims and statements, and whistleblower 
                protections under such laws, with respect to 
                the role of such laws in preventing and 
                detecting fraud, waste, and abuse in Federal 
                health care programs (as defined in section 
                1128B(f));
                  (B) include as part of such written policies, 
                detailed provisions regarding the entity's 
                policies and procedures for detecting and 
                preventing fraud, waste, and abuse; and
                  (C) include in any employee handbook for the 
                entity, a specific discussion of the laws 
                described in subparagraph (A), the rights of 
                employees to be protected as whistleblowers, 
                and the entity's policies and procedures for 
                detecting and preventing fraud, waste, and 
                abuse;
          (69) provide that the State must comply with any 
        requirements determined by the Secretary to be 
        necessary for carrying out the Medicaid Integrity 
        Program established under section 1936;
          (70) at the option of the State and notwithstanding 
        paragraphs (1), (10)(B), and (23), provide for the 
        establishment of a non-emergency medical transportation 
        brokerage program in order to more cost-effectively 
        provide transportation for individuals eligible for 
        medical assistance under the State plan who need access 
        to medical care or services and have no other means of 
        transportation which--
                  (A) may include a wheelchair van, taxi, 
                stretcher car, bus passes and tickets, secured 
                transportation, and such other transportation 
                as the Secretary determines appropriate; and
                  (B) may be conducted under contract with a 
                broker who--
                          (i) is selected through a competitive 
                        bidding process based on the State's 
                        evaluation of the broker's experience, 
                        performance, references, resources, 
                        qualifications, and costs;
                          (ii) has oversight procedures to 
                        monitor beneficiary access and 
                        complaints and ensure that transport 
                        personnel are licensed, qualified, 
                        competent, and courteous;
                          (iii) is subject to regular auditing 
                        and oversight by the State in order to 
                        ensure the quality of the 
                        transportation services provided and 
                        the adequacy of beneficiary access to 
                        medical care and services; and
                          (iv) complies with such requirements 
                        related to prohibitions on referrals 
                        and conflict of interest as the 
                        Secretary shall establish (based on the 
                        prohibitions on physician referrals 
                        under section 1877 and such other 
                        prohibitions and requirements as the 
                        Secretary determines to be 
                        appropriate);
          (71) provide that the State will implement an asset 
        verification program as required under section 1940;
          (72) provide that the State will not prevent a 
        Federally-qualified health center from entering into 
        contractual relationships with private practice dental 
        providers in the provision of Federally-qualified 
        health center services;
          (73) in the case of any State in which 1 or more 
        Indian Health Programs or Urban Indian Organizations 
        furnishes health care services, provide for a process 
        under which the State seeks advice on a regular, 
        ongoing basis from designees of such Indian Health 
        Programs and Urban Indian Organizations on matters 
        relating to the application of this title that are 
        likely to have a direct effect on such Indian Health 
        Programs and Urban Indian Organizations and that--
                  (A) shall include solicitation of advice 
                prior to submission of any plan amendments, 
                waiver requests, and proposals for 
                demonstration projects likely to have a direct 
                effect on Indians, Indian Health Programs, or 
                Urban Indian Organizations; and
                  (B) may include appointment of an advisory 
                committee and of a designee of such Indian 
                Health Programs and Urban Indian Organizations 
                to the medical care advisory committee advising 
                the State on its State plan under this title;
          (74) provide for maintenance of effort under the 
        State plan or under any waiver of the plan in 
        accordance with subsection (gg); and
          (75) provide that, beginning January 2015, and 
        annually thereafter, the State shall submit a report to 
        the Secretary that contains--
                  (A) the total number of enrolled and newly 
                enrolled individuals in the State plan or under 
                a waiver of the plan for the fiscal year ending 
                on September 30 of the preceding calendar year, 
                disaggregated by population, including 
                children, parents, nonpregnant childless 
                adults, disabled individuals, elderly 
                individuals, and such other categories or sub-
                categories of individuals eligible for medical 
                assistance under the State plan or under a 
                waiver of the plan as the Secretary may 
                require;
                  (B) a description, which may be specified by 
                population, of the outreach and enrollment 
                processes used by the State during such fiscal 
                year; and
                  (C) any other data reporting determined 
                necessary by the Secretary to monitor 
                enrollment and retention of individuals 
                eligible for medical assistance under the State 
                plan or under a waiver of the plan;
          (76) provide that any data collected under the State 
        plan meets the requirements of section 3101 of the 
        Public Health Service Act;
          (77) provide that the State shall comply with 
        provider and supplier screening, oversight, and 
        reporting requirements in accordance with subsection 
        (kk);
          (79) provide that any agent, clearinghouse, or other 
        alternate payee (as defined by the Secretary) that 
        submits claims on behalf of a health care provider must 
        register with the State and the Secretary in a form and 
        manner specified by the Secretary;
          (80) provide that the State shall not provide any 
        payments for items or services provided under the State 
        plan or under a waiver to any financial institution or 
        entity located outside of the United States; [and]
          (81) provide for implementation of the payment models 
        specified by the Secretary under section 1115A(c) for 
        implementation on a nationwide basis unless the State 
        demonstrates to the satisfaction of the Secretary that 
        implementation would not be administratively feasible 
        or appropriate to the health care delivery system of 
        the State[.]; and
          (82) provide that the State agency responsible for 
        administering the State plan under this title provides 
        assurances to the Secretary that the State agency is in 
        compliance with subparagraphs (A), (B), and (C) of 
        section 1128K(b)(2).
Notwithstanding paragraph (5), if on January 1, 1965, and on 
the date on which a State submits its plan for approval under 
this title, the State agency which administered or supervised 
the administration of the plan of such State approved under 
title X (or title XVI, insofar as it relates to the blind) was 
different from the State agency which administered or 
supervised the administration of the State plan approved under 
title I (or title XVI, insofar as it relates to the aged), the 
State agency which administered or supervised the 
administration of such plan approved under title X (or title 
XVI, insofar as it relates to the blind) may be designated to 
administer or supervise the administration of the portion of 
the State plan for medical assistance which relates to blind 
individuals and a different State agency may be established or 
designated to administer or supervise the administration of the 
rest of the State plan for medical assistance; and in such case 
the part of the plan which each such agency administers, or the 
administration of which each such agency supervises, shall be 
regarded as a separate plan for purposes of this title (except 
for purposes of paragraph (10)). The provisions of paragraphs 
(9)(A), (31), and (33) and of section 1903(i)(4) shall not 
apply to a religious nonmedical health care institution (as 
defined in section 1861(ss)(1)).
  For purposes of paragraph (10) any individual who, for the 
month of August 1972, was eligible for or receiving aid or 
assistance under a State plan approved under title I, X, XIV, 
or XVI, or part A of title IV and who for such month was 
entitled to monthly insurance benefits under title II shall for 
purposes of this title only be deemed to be eligible for 
financial aid or assistance for any month thereafter if such 
individual would have been eligible for financial aid or 
assistance for such month had the increase in monthly insurance 
benefits under title II resulting from enactment of Public Law 
92-336 not been applicable to such individual.
  The requirement of clause (A) of paragraph (37) with respect 
to a State plan may be waived by the Secretary if he finds that 
the State has exercised good faith in trying to meet such 
requirement. For purposes of this title, any child who meets 
the requirements of paragraph (1) or (2) of section 473(b) 
shall be deemed to be a dependent child as defined in section 
406 and shall be deemed to be a recipient of aid to families 
with dependent children under part A of title IV in the State 
where such child resides. Notwithstanding paragraph (10)(B) or 
any other provision of this subsection, a State plan shall 
provide medical assistance with respect to an alien who is not 
lawfully admitted for permanent residence or otherwise 
permanently residing in the United States under color of law 
only in accordance with section 1903(v).
  (b) The Secretary shall approve any plan which fulfills the 
conditions specified in subsection (a) of this section, except 
that he shall not approve any plan which imposes, as a 
condition of eligibility for medical assistance under the 
plan--
          (1) an age requirement of more than 65 years; or
          (2) any residence requirement which excludes any 
        individual who resides in the State, regardless of 
        whether or not the residence is maintained permanently 
        or at a fixed address; or
          (3) any citizenship requirement which excludes any 
        citizen of the United States.
  (c) Notwithstanding subsection (b), the Secretary shall not 
approve any State plan for medical assistance if the State 
requires individuals described in subsection (l)(1) to apply 
for assistance under the State program funded under part A of 
title IV as a condition of applying for or receiving medical 
assistance under this title.
  (d) If a State contracts with an entity which meets the 
requirements of section 1152, as determined by the Secretary, 
or a utilization and quality control peer review organization 
having a contract with the Secretary under part B of title XI 
for the performance of medical or utilization review functions 
(including quality review functions described in subsection 
(a)(30)(C)) required under this title of a State plan with 
respect to specific services or providers (or services or 
providers in a geographic area of the State), such requirements 
shall be deemed to be met for those services or providers (or 
services or providers in that area) by delegation to such an 
entity or organization under the contract of the State's 
authority to conduct such review activities if the contract 
provides for the performance of activities not inconsistent 
with part B of title XI and provides for such assurances of 
satisfactory performance by such an entity or organization as 
the Secretary may prescribe.
  (e)(1) Beginning April 1, 1990, for provisions relating to 
the extension of eligibility for medical assistance for certain 
families who have received aid pursuant to a State plan 
approved under part A of title IV and have earned income, see 
section 1925.
  (2)(A) In the case of an individual who is enrolled with a 
medicaid managed care organization (as defined in section 
1903(m)(1)(A)), with a primary care case manager (as defined in 
section 1905(t)), or with an eligible organization with a 
contract under section 1876 and who would (but for this 
paragraph) lose eligibility for benefits under this title 
before the end of the minimum enrollment period (defined in 
subparagraph (B)), the State plan may provide, notwithstanding 
any other provision of this title, that the individual shall be 
deemed to continue to be eligible for such benefits until the 
end of such minimum period, but, except for benefits furnished 
under section 1905(a)(4)(C), only with respect to such benefits 
provided to the individual as an enrollee of such organization 
or entity or by or through the case manager.
  (B) For purposes of subparagraph (A), the term ``minimum 
enrollment period'' means, with respect to an individual's 
enrollment with an organization or entity under a State plan, a 
period, established by the State, of not more than six months 
beginning on the date the individual's enrollment with the 
organization or entity becomes effective.
  (3) At the option of the State, any individual who--
          (A) is 18 years of age or younger and qualifies as a 
        disabled individual under section 1614(a);
          (B) with respect to whom there has been a 
        determination by the State that--
                  (i) the individual requires a level of care 
                provided in a hospital, nursing facility, or 
                intermediate care facility for the mentally 
                retarded,
                  (ii) it is appropriate to provide such care 
                for the individual outside such an institution, 
                and
                  (iii) the estimated amount which would be 
                expended for medical assistance for the 
                individual for such care outside an institution 
                is not greater than the estimated amount which 
                would otherwise be expended for medical 
                assistance for the individual within an 
                appropriate institution; and
          (C) if the individual were in a medical institution, 
        would be eligible for medical assistance under the 
        State plan under this title,
        shall be deemed, for purposes of this title only, to be 
        an individual with respect to whom a supplemental 
        security income payment, or State supplemental payment, 
        respectively, is being paid under title XVI.
  (4) A child born to a woman eligible for and receiving 
medical assistance under a State plan on the date of the 
child's birth shall be deemed to have applied for medical 
assistance and to have been found eligible for such assistance 
under such plan on the date of such birth and to remain 
eligible for such assistance for a period of one year. During 
the period in which a child is deemed under the preceding 
sentence to be eligible for medical assistance, the medical 
assistance eligibility identification number of the mother 
shall also serve as the identification number of the child, and 
all claims shall be submitted and paid under such number 
(unless the State issues a separate identification number for 
the child before such period expires). Notwithstanding the 
preceding sentence, in the case of a child who is born in the 
United States to an alien mother for whom medical assistance 
for the delivery of the child is made available pursuant to 
section 1903(v), the State immediately shall issue a separate 
identification number for the child upon notification by the 
facility at which such delivery occurred of the child's birth.
  (5) A woman who, while pregnant, is eligible for, has applied 
for, and has received medical assistance under the State plan, 
shall continue to be eligible under the plan, as though she 
were pregnant, for all pregnancy-related and postpartum medical 
assistance under the plan, through the end of the month in 
which the 60-day period (beginning on the last day of her 
pregnancy) ends.
  (6) In the case of a pregnant woman described in subsection 
(a)(10) who, because of a change in income of the family of 
which she is a member, would not otherwise continue to be 
described in such subsection, the woman shall be deemed to 
continue to be an individual described in subsection 
(a)(10)(A)(i)(IV) and subsection (l)(1)(A) without regard to 
such change of income through the end of the month in which the 
60-day period (beginning on the last day of her pregnancy) 
ends. The preceding sentence shall not apply in the case of a 
woman who has been provided ambulatory prenatal care pursuant 
to section 1920 during a presumptive eligibility period and is 
then, in accordance with such section, determined to be 
ineligible for medical assistance under the State plan.
  (7) In the case of an infant or child described in 
subparagraph (B), (C), or (D) of subsection (l)(1) or paragraph 
(2) of section 1905(n)--
          (A) who is receiving inpatient services for which 
        medical assistance is provided on the date the infant 
        or child attains the maximum age with respect to which 
        coverage is provided under the State plan for such 
        individuals, and
          (B) who, but for attaining such age, would remain 
        eligible for medical assistance under such subsection,
the infant or child shall continue to be treated as an 
individual described in such respective provision until the end 
of the stay for which the inpatient services are furnished.
  (8) If an individual is determined to be a qualified medicare 
beneficiary (as defined in section 1905(p)(1)), such 
determination shall apply to services furnished after the end 
of the month in which the determination first occurs. For 
purposes of payment to a State under section 1903(a), such 
determination shall be considered to be valid for an individual 
for a period of 12 months, except that a State may provide for 
such determinations more frequently, but not more frequently 
than once every 6 months for an individual.
  (9)(A) At the option of the State, the plan may include as 
medical assistance respiratory care services for any individual 
who--
          (i) is medically dependent on a ventilator for life 
        support at least six hours per day;
          (ii) has been so dependent for at least 30 
        consecutive days (or the maximum number of days 
        authorized under the State plan, whichever is less) as 
        an inpatient;
          (iii) but for the availability of respiratory care 
        services, would require respiratory care as an 
        inpatient in a hospital, nursing facility, or 
        intermediate care facility for the mentally retarded 
        and would be eligible to have payment made for such 
        inpatient care under the State plan;
          (iv) has adequate social support services to be cared 
        for at home; and
          (v) wishes to be cared for at home.
  (B) The requirements of subparagraph (A)(ii) may be satisfied 
by a continuous stay in one or more hospitals, nursing 
facilities, or intermediate care facilities for the mentally 
retarded.
  (C) For purposes of this paragraph, respiratory care services 
means services provided on a part-time basis in the home of the 
individual by a respiratory therapist or other health care 
professional trained in respiratory therapy (as determined by 
the State), payment for which is not otherwise included within 
other items and services furnished to such individual as 
medical assistance under the plan.
  (10)(A) The fact that an individual, child, or pregnant woman 
may be denied aid under part A of title IV pursuant to section 
402(a)(43) shall not be construed as denying (or permitting a 
State to deny) medical assistance under this title to such 
individual, child, or woman who is eligible for assistance 
under this title on a basis other than the receipt of aid under 
such part.
  (B) If an individual, child, or pregnant woman is receiving 
aid under part A of title IV and such aid is terminated 
pursuant to section 402(a)(43), the State may not discontinue 
medical assistance under this title for the individual, child, 
or woman until the State has determined that the individual, 
child, or woman is not eligible for assistance under this title 
on a basis other than the receipt of aid under such part.
  (11)(A) In the case of an individual who is enrolled with a 
group health plan under section 1906 and who would (but for 
this paragraph) lose eligibility for benefits under this title 
before the end of the minimum enrollment period (defined in 
subparagraph (B)), the State plan may provide, notwithstanding 
any other provision of this title, that the individual shall be 
deemed to continue to be eligible for such benefits until the 
end of such minimum period, but only with respect to such 
benefits provided to the individual as an enrollee of such 
plan.
  (B) For purposes of subparagraph (A), the term ``minimum 
enrollment period'' means, with respect to an individual's 
enrollment with a group health plan, a period established by 
the State, of not more than 6 months beginning on the date the 
individual's enrollment under the plan becomes effective.
  (12) At the option of the State, the plan may provide that an 
individual who is under an age specified by the State (not to 
exceed 19 years of age) and who is determined to be eligible 
for benefits under a State plan approved under this title under 
subsection (a)(10)(A) shall remain eligible for those benefits 
until the earlier of--
          (A) the end of a period (not to exceed 12 months) 
        following the determination; or
          (B) the time that the individual exceeds that age.
  (13) Express Lane Option.--
          (A) In general.--
                  (i) Option to use a finding from an express 
                lane agency.--At the option of the State, the 
                State plan may provide that in determining 
                eligibility under this title for a child (as 
                defined in subparagraph (G)), the State may 
                rely on a finding made within a reasonable 
                period (as determined by the State) from an 
                Express Lane agency (as defined in subparagraph 
                (F)) when it determines whether a child 
                satisfies one or more components of eligibility 
                for medical assistance under this title. The 
                State may rely on a finding from an Express 
                Lane agency notwithstanding sections 
                1902(a)(46)(B) and 1137(d) or any differences 
                in budget unit, disregard, deeming or other 
                methodology, if the following requirements are 
                met:
                          (I) Prohibition on determining 
                        children ineligible for coverage.--If a 
                        finding from an Express Lane agency 
                        would result in a determination that a 
                        child does not satisfy an eligibility 
                        requirement for medical assistance 
                        under this title and for child health 
                        assistance under title XXI, the State 
                        shall determine eligibility for 
                        assistance using its regular 
                        procedures.
                          (II) Notice requirement.--For any 
                        child who is found eligible for medical 
                        assistance under the State plan under 
                        this title or child health assistance 
                        under title XXI and who is subject to 
                        premiums based on an Express Lane 
                        agency's finding of such child's income 
                        level, the State shall provide notice 
                        that the child may qualify for lower 
                        premium payments if evaluated by the 
                        State using its regular policies and of 
                        the procedures for requesting such an 
                        evaluation.
                          (III) Compliance with screen and 
                        enroll requirement.--The State shall 
                        satisfy the requirements under 
                        subparagraphs (A) and (B) of section 
                        2102(b)(3) (relating to screen and 
                        enroll) before enrolling a child in 
                        child health assistance under title 
                        XXI. At its option, the State may 
                        fulfill such requirements in accordance 
                        with either option provided under 
                        subparagraph (C) of this paragraph.
                          (IV) Verification of citizenship or 
                        nationality status.--The State shall 
                        satisfy the requirements of section 
                        1902(a)(46)(B) or 2105(c)(9), as 
                        applicable for verifications of 
                        citizenship or nationality status.
                          (V) Coding.--The State meets the 
                        requirements of subparagraph (E).
                  (ii) Option to apply to renewals and 
                redeterminations.--The State may apply the 
                provisions of this paragraph when conducting 
                initial determinations of eligibility, 
                redeterminations of eligibility, or both, as 
                described in the State plan.
          (B) Rules of construction.--Nothing in this paragraph 
        shall be construed--
                  (i) to limit or prohibit a State from taking 
                any actions otherwise permitted under this 
                title or title XXI in determining eligibility 
                for or enrolling children into medical 
                assistance under this title or child health 
                assistance under title XXI; or
                  (ii) to modify the limitations in section 
                1902(a)(5) concerning the agencies that may 
                make a determination of eligibility for medical 
                assistance under this title.
          (C) Options for satisfying the screen and enroll 
        requirement.--
                  (i) In general.--With respect to a child 
                whose eligibility for medical assistance under 
                this title or for child health assistance under 
                title XXI has been evaluated by a State agency 
                using an income finding from an Express Lane 
                agency, a State may carry out its duties under 
                subparagraphs (A) and (B) of section 2102(b)(3) 
                (relating to screen and enroll) in accordance 
                with either clause (ii) or clause (iii).
                  (ii) Establishing a screening threshold.--
                          (I) In general.--Under this clause, 
                        the State establishes a screening 
                        threshold set as a percentage of the 
                        Federal poverty level that exceeds the 
                        highest income threshold applicable 
                        under this title to the child by a 
                        minimum of 30 percentage points or, at 
                        State option, a higher number of 
                        percentage points that reflects the 
                        value (as determined by the State and 
                        described in the State plan) of any 
                        differences between income 
                        methodologies used by the program 
                        administered by the Express Lane agency 
                        and the methodologies used by the State 
                        in determining eligibility for medical 
                        assistance under this title.
                          (II) Children with income not above 
                        threshold.--If the income of a child 
                        does not exceed the screening 
                        threshold, the child is deemed to 
                        satisfy the income eligibility criteria 
                        for medical assistance under this title 
                        regardless of whether such child would 
                        otherwise satisfy such criteria.
                          (III) Children with income above 
                        threshold.--If the income of a child 
                        exceeds the screening threshold, the 
                        child shall be considered to have an 
                        income above the Medicaid applicable 
                        income level described in section 
                        2110(b)(4) and to satisfy the 
                        requirement under section 2110(b)(1)(C) 
                        (relating to the requirement that CHIP 
                        matching funds be used only for 
                        children not eligible for Medicaid). If 
                        such a child is enrolled in child 
                        health assistance under title XXI, the 
                        State shall provide the parent, 
                        guardian, or custodial relative with 
                        the following:
                                  (aa) Notice that the child 
                                may be eligible to receive 
                                medical assistance under the 
                                State plan under this title if 
                                evaluated for such assistance 
                                under the State's regular 
                                procedures and notice of the 
                                process through which a parent, 
                                guardian, or custodial relative 
                                can request that the State 
                                evaluate the child's 
                                eligibility for medical 
                                assistance under this title 
                                using such regular procedures.
                                  (bb) A description of 
                                differences between the medical 
                                assistance provided under this 
                                title and child health 
                                assistance under title XXI, 
                                including differences in cost-
                                sharing requirements and 
                                covered benefits.
                  (iii) Temporary enrollment in chip pending 
                screen and enroll.--
                          (I) In general.--Under this clause, a 
                        State enrolls a child in child health 
                        assistance under title XXI for a 
                        temporary period if the child appears 
                        eligible for such assistance based on 
                        an income finding by an Express Lane 
                        agency.
                          (II) Determination of eligibility.--
                        During such temporary enrollment 
                        period, the State shall determine the 
                        child's eligibility for child health 
                        assistance under title XXI or for 
                        medical assistance under this title in 
                        accordance with this clause.
                          (III) Prompt follow up.--In making 
                        such a determination, the State shall 
                        take prompt action to determine whether 
                        the child should be enrolled in medical 
                        assistance under this title or child 
                        health assistance under title XXI 
                        pursuant to subparagraphs (A) and (B) 
                        of section 2102(b)(3) (relating to 
                        screen and enroll).
                          (IV) Requirement for simplified 
                        determination.--In making such a 
                        determination, the State shall use 
                        procedures that, to the maximum 
                        feasible extent, reduce the burden 
                        imposed on the individual of such 
                        determination. Such procedures may not 
                        require the child's parent, guardian, 
                        or custodial relative to provide or 
                        verify information that already has 
                        been provided to the State agency by an 
                        Express Lane agency or another source 
                        of information unless the State agency 
                        has reason to believe the information 
                        is erroneous.
                          (V) Availability of chip matching 
                        funds during temporary enrollment 
                        period.--Medical assistance for items 
                        and services that are provided to a 
                        child enrolled in title XXI during a 
                        temporary enrollment period under this 
                        clause shall be treated as child health 
                        assistance under such title.
          (D) Option for automatic enrollment.--
                  (i) In general.--The State may initiate and 
                determine eligibility for medical assistance 
                under the State Medicaid plan or for child 
                health assistance under the State CHIP plan 
                without a program application from, or on 
                behalf of, the child based on data obtained 
                from sources other than the child (or the 
                child's family), but a child can only be 
                automatically enrolled in the State Medicaid 
                plan or the State CHIP plan if the child or the 
                family affirmatively consents to being enrolled 
                through affirmation in writing, by telephone, 
                orally, through electronic signature, or 
                through any other means specified by the 
                Secretary or by signature on an Express Lane 
                agency application, if the requirement of 
                clause (ii) is met.
                  (ii) Information requirement.--The 
                requirement of this clause is that the State 
                informs the parent, guardian, or custodial 
                relative of the child of the services that will 
                be covered, appropriate methods for using such 
                services, premium or other cost sharing charges 
                (if any) that apply, medical support 
                obligations (under section 1912(a)) created by 
                enrollment (if applicable), and the actions the 
                parent, guardian, or relative must take to 
                maintain enrollment and renew coverage.
          (E) Coding; application to enrollment error rates.--
                  (i) In general.--For purposes of subparagraph 
                (A)(iv), the requirement of this subparagraph 
                for a State is that the State agrees to--
                          (I) assign such codes as the 
                        Secretary shall require to the children 
                        who are enrolled in the State Medicaid 
                        plan or the State CHIP plan through 
                        reliance on a finding made by an 
                        Express Lane agency for the duration of 
                        the State's election under this 
                        paragraph;
                          (II) annually provide the Secretary 
                        with a statistically valid sample (that 
                        is approved by Secretary) of the 
                        children enrolled in such plans through 
                        reliance on such a finding by 
                        conducting a full Medicaid eligibility 
                        review of the children identified for 
                        such sample for purposes of determining 
                        an eligibility error rate (as described 
                        in clause (iv)) with respect to the 
                        enrollment of such children (and shall 
                        not include such children in any data 
                        or samples used for purposes of 
                        complying with a Medicaid Eligibility 
                        Quality Control (MEQC) review or a 
                        payment error rate measurement (PERM) 
                        requirement);
                          (III) submit the error rate 
                        determined under subclause (II) to the 
                        Secretary;
                          (IV) if such error rate exceeds 3 
                        percent for either of the first 2 
                        fiscal years in which the State elects 
                        to apply this paragraph, demonstrate to 
                        the satisfaction of the Secretary the 
                        specific corrective actions implemented 
                        by the State to improve upon such error 
                        rate; and
                          (V) if such error rate exceeds 3 
                        percent for any fiscal year in which 
                        the State elects to apply this 
                        paragraph, a reduction in the amount 
                        otherwise payable to the State under 
                        section 1903(a) for quarters for that 
                        fiscal year, equal to the total amount 
                        of erroneous excess payments determined 
                        for the fiscal year only with respect 
                        to the children included in the sample 
                        for the fiscal year that are in excess 
                        of a 3 percent error rate with respect 
                        to such children.
                  (ii) No punitive action based on error 
                rate.--The Secretary shall not apply the error 
                rate derived from the sample under clause (i) 
                to the entire population of children enrolled 
                in the State Medicaid plan or the State CHIP 
                plan through reliance on a finding made by an 
                Express Lane agency, or to the population of 
                children enrolled in such plans on the basis of 
                the State's regular procedures for determining 
                eligibility, or penalize the State on the basis 
                of such error rate in any manner other than the 
                reduction of payments provided for under clause 
                (i)(V).
                  (iii) Rule of construction.--Nothing in this 
                paragraph shall be construed as relieving a 
                State that elects to apply this paragraph from 
                being subject to a penalty under section 
                1903(u), for payments made under the State 
                Medicaid plan with respect to ineligible 
                individuals and families that are determined to 
                exceed the error rate permitted under that 
                section (as determined without regard to the 
                error rate determined under clause (i)(II)).
                  (iv) Error rate defined.--In this 
                subparagraph, the term ``error rate'' means the 
                rate of erroneous excess payments for medical 
                assistance (as defined in section 
                1903(u)(1)(D)) for the period involved, except 
                that such payments shall be limited to 
                individuals for which eligibility 
                determinations are made under this paragraph 
                and except that in applying this paragraph 
                under title XXI, there shall be substituted for 
                references to provisions of this title 
                corresponding provisions within title XXI.
          (F) Express lane agency.--
                  (i) In general.--In this paragraph, the term 
                ``Express Lane agency'' means a public agency 
                that--
                          (I) is determined by the State 
                        Medicaid agency or the State CHIP 
                        agency (as applicable) to be capable of 
                        making the determinations of one or 
                        more eligibility requirements described 
                        in subparagraph (A)(i);
                          (II) is identified in the State 
                        Medicaid plan or the State CHIP plan; 
                        and
                          (III) notifies the child's family--
                                  (aa) of the information which 
                                shall be disclosed in 
                                accordance with this paragraph;
                                  (bb) that the information 
                                disclosed will be used solely 
                                for purposes of determining 
                                eligibility for medical 
                                assistance under the State 
                                Medicaid plan or for child 
                                health assistance under the 
                                State CHIP plan; and
                                  (cc) that the family may 
                                elect to not have the 
                                information disclosed for such 
                                purposes; and
                          (IV) enters into, or is subject to, 
                        an interagency agreement to limit the 
                        disclosure and use of the information 
                        disclosed.
                  (ii) Inclusion of specific public agencies 
                and indian tribes and tribal organizations.--
                Such term includes the following:
                          (I) A public agency that determines 
                        eligibility for assistance under any of 
                        the following:
                                  (aa) The temporary assistance 
                                for needy families program 
                                funded under part A of title 
                                IV.
                                  (bb) A State program funded 
                                under part D of title IV.
                                  (cc) The State Medicaid plan.
                                  (dd) The State CHIP plan.
                                  (ee) The Food and Nutrition 
                                Act of 2008 (7 U.S.C. 2011 et 
                                seq.).
                                  (ff) The Head Start Act (42 
                                U.S.C. 9801 et seq.).
                                  (gg) The Richard B. Russell 
                                National School Lunch Act (42 
                                U.S.C. 1751 et seq.).
                                  (hh) The Child Nutrition Act 
                                of 1966 (42 U.S.C. 1771 et 
                                seq.).
                                  (ii) The Child Care and 
                                Development Block Grant Act of 
                                1990 (42 U.S.C. 9858 et seq.).
                                  (jj) The Stewart B. McKinney 
                                Homeless Assistance Act (42 
                                U.S.C. 11301 et seq.).
                                  (kk) The United States 
                                Housing Act of 1937 (42 U.S.C. 
                                1437 et seq.).
                                  (ll) The Native American 
                                Housing Assistance and Self-
                                Determination Act of 1996 (25 
                                U.S.C. 4101 et seq.).
                          (II) A State-specified governmental 
                        agency that has fiscal liability or 
                        legal responsibility for the accuracy 
                        of the eligibility determination 
                        findings relied on by the State.
                          (III) A public agency that is subject 
                        to an interagency agreement limiting 
                        the disclosure and use of the 
                        information disclosed for purposes of 
                        determining eligibility under the State 
                        Medicaid plan or the State CHIP plan.
                          (IV) The Indian Health Service, an 
                        Indian Tribe, Tribal Organization, or 
                        Urban Indian Organization (as defined 
                        in section 1139(c)).
                  (iii) Exclusions.--Such term does not include 
                an agency that determines eligibility for a 
                program established under the Social Services 
                Block Grant established under title XX or a 
                private, for-profit organization.
                  (iv) Rules of construction.--Nothing in this 
                paragraph shall be construed as--
                          (I) exempting a State Medicaid agency 
                        from complying with the requirements of 
                        section 1902(a)(4) relating to merit-
                        based personnel standards for employees 
                        of the State Medicaid agency and 
                        safeguards against conflicts of 
                        interest); or
                          (II) authorizing a State Medicaid 
                        agency that elects to use Express Lane 
                        agencies under this subparagraph to use 
                        the Express Lane option to avoid 
                        complying with such requirements for 
                        purposes of making eligibility 
                        determinations under the State Medicaid 
                        plan.
                  (v) Additional definitions.--In this 
                paragraph:
                          (I) State.--The term ``State'' means 
                        1 of the 50 States or the District of 
                        Columbia.
                          (II) State chip agency.--The term 
                        ``State CHIP agency'' means the State 
                        agency responsible for administering 
                        the State CHIP plan.
                          (III) State chip plan.--The term 
                        ``State CHIP plan'' means the State 
                        child health plan established under 
                        title XXI and includes any waiver of 
                        such plan.
                          (IV) State medicaid agency.--The term 
                        ``State Medicaid agency'' means the 
                        State agency responsible for 
                        administering the State Medicaid plan.
                          (V) State medicaid plan.--The term 
                        ``State Medicaid plan'' means the State 
                        plan established under title XIX and 
                        includes any waiver of such plan.
          (G) Child defined.--For purposes of this paragraph, 
        the term ``child'' means an individual under 19 years 
        of age, or, at the option of a State, such higher age, 
        not to exceed 21 years of age, as the State may elect.
          (H) State option to rely on state income tax data or 
        return.--At the option of the State, a finding from an 
        Express Lane agency may include gross income or 
        adjusted gross income shown by State income tax records 
        or returns.
          (I) Application.--This paragraph shall not apply with 
        respect to eligibility determinations made after 
        September 30, 2017.
          (14) Income determined using modified adjusted gross 
        income.--
                  (A) In general.--Notwithstanding subsection 
                (r) or any other provision of this title, 
                except as provided in subparagraph (D), for 
                purposes of determining income eligibility for 
                medical assistance under the State plan or 
                under any waiver of such plan and for any other 
                purpose applicable under the plan or waiver for 
                which a determination of income is required, 
                including with respect to the imposition of 
                premiums and cost-sharing, a State shall use 
                the modified adjusted gross income of an 
                individual and, in the case of an individual in 
                a family greater than 1, the household income 
                of such family. A State shall establish income 
                eligibility thresholds for populations to be 
                eligible for medical assistance under the State 
                plan or a waiver of the plan using modified 
                adjusted gross income and household income that 
                are not less than the effective income 
                eligibility levels that applied under the State 
                plan or waiver on the date of enactment of the 
                Patient Protection and Affordable Care Act. For 
                purposes of complying with the maintenance of 
                effort requirements under subsection (gg) 
                during the transition to modified adjusted 
                gross income and household income, a State 
                shall, working with the Secretary, establish an 
                equivalent income test that ensures individuals 
                eligible for medical assistance under the State 
                plan or under a waiver of the plan on the date 
                of enactment of the Patient Protection and 
                Affordable Care Act, do not lose coverage under 
                the State plan or under a waiver of the plan. 
                The Secretary may waive such provisions of this 
                title and title XXI as are necessary to ensure 
                that States establish income and eligibility 
                determination systems that protect 
                beneficiaries.
                  (B) No income or expense disregards.--Subject 
                to subparagraph (I), no type of expense, block, 
                or other income disregard shall be applied by a 
                State to determine income eligibility for 
                medical assistance under the State plan or 
                under any waiver of such plan or for any other 
                purpose applicable under the plan or waiver for 
                which a determination of income is required.
                  (C) No assets test.--A State shall not apply 
                any assets or resources test for purposes of 
                determining eligibility for medical assistance 
                under the State plan or under a waiver of the 
                plan.
                  (D) Exceptions.--
                          (i) Individuals eligible because of 
                        other aid or assistance, elderly 
                        individuals, medically needy 
                        individuals, and individuals eligible 
                        for medicare cost-sharing.--
                        Subparagraphs (A), (B), and (C) shall 
                        not apply to the determination of 
                        eligibility under the State plan or 
                        under a waiver for medical assistance 
                        for the following:
                                  (I) Individuals who are 
                                eligible for medical assistance 
                                under the State plan or under a 
                                waiver of the plan on a basis 
                                that does not require a 
                                determination of income by the 
                                State agency administering the 
                                State plan or waiver, including 
                                as a result of eligibility for, 
                                or receipt of, other Federal or 
                                State aid or assistance, 
                                individuals who are eligible on 
                                the basis of receiving (or 
                                being treated as if receiving) 
                                supplemental security income 
                                benefits under title XVI, and 
                                individuals who are eligible as 
                                a result of being or being 
                                deemed to be a child in foster 
                                care under the responsibility 
                                of the State.
                                  (II) Individuals who have 
                                attained age 65.
                                  (III) Individuals who qualify 
                                for medical assistance under 
                                the State plan or under any 
                                waiver of such plan on the 
                                basis of being blind or 
                                disabled (or being treated as 
                                being blind or disabled) 
                                without regard to whether the 
                                individual is eligible for 
                                supplemental security income 
                                benefits under title XVI on the 
                                basis of being blind or 
                                disabled and including an 
                                individual who is eligible for 
                                medical assistance on the basis 
                                of section 1902(e)(3).
                                  (IV) Individuals described in 
                                subsection (a)(10)(C).
                                  (V) Individuals described in 
                                any clause of subsection 
                                (a)(10)(E).
                          (ii) Express lane agency findings.--
                        In the case of a State that elects the 
                        Express Lane option under paragraph 
                        (13), notwithstanding subparagraphs 
                        (A), (B), and (C), the State may rely 
                        on a finding made by an Express Lane 
                        agency in accordance with that 
                        paragraph relating to the income of an 
                        individual for purposes of determining 
                        the individual's eligibility for 
                        medical assistance under the State plan 
                        or under a waiver of the plan.
                          (iii) Medicare prescription drug 
                        subsidies determinations.--
                        Subparagraphs (A), (B), and (C) shall 
                        not apply to any determinations of 
                        eligibility for premium and cost-
                        sharing subsidies under and in 
                        accordance with section 1860D-14 made 
                        by the State pursuant to section 
                        1935(a)(2).
                          (iv) Long-term care.--Subparagraphs 
                        (A), (B), and (C) shall not apply to 
                        any determinations of eligibility of 
                        individuals for purposes of medical 
                        assistance for nursing facility 
                        services, a level of care in any 
                        institution equivalent to that of 
                        nursing facility services, home or 
                        community-based services furnished 
                        under a waiver or State plan amendment 
                        under section 1915 or a waiver under 
                        section 1115, and services described in 
                        section 1917(c)(1)(C)(ii).
                          (v) Grandfather of current enrollees 
                        until date of next regular 
                        redetermination.--An individual who, on 
                        January 1, 2014, is enrolled in the 
                        State plan or under a waiver of the 
                        plan and who would be determined 
                        ineligible for medical assistance 
                        solely because of the application of 
                        the modified adjusted gross income or 
                        household income standard described in 
                        subparagraph (A), shall remain eligible 
                        for medical assistance under the State 
                        plan or waiver (and subject to the same 
                        premiums and cost-sharing as applied to 
                        the individual on that date) through 
                        March 31, 2014, or the date on which 
                        the individual's next regularly 
                        scheduled redetermination of 
                        eligibility is to occur, whichever is 
                        later.
                  (E) Transition planning and oversight.--Each 
                State shall submit to the Secretary for the 
                Secretary's approval the income eligibility 
                thresholds proposed to be established using 
                modified adjusted gross income and household 
                income, the methodologies and procedures to be 
                used to determine income eligibility using 
                modified adjusted gross income and household 
                income and, if applicable, a State plan 
                amendment establishing an optional eligibility 
                category under subsection (a)(10)(A)(ii)(XX). 
                To the extent practicable, the State shall use 
                the same methodologies and procedures for 
                purposes of making such determinations as the 
                State used on the date of enactment of the 
                Patient Protection and Affordable Care Act. The 
                Secretary shall ensure that the income 
                eligibility thresholds proposed to be 
                established using modified adjusted gross 
                income and household income, including under 
                the eligibility category established under 
                subsection (a)(10)(A)(ii)(XX), and the 
                methodologies and procedures proposed to be 
                used to determine income eligibility, will not 
                result in children who would have been eligible 
                for medical assistance under the State plan or 
                under a waiver of the plan on the date of 
                enactment of the Patient Protection and 
                Affordable Care Act no longer being eligible 
                for such assistance.
                  (F) Limitation on secretarial authority.--The 
                Secretary shall not waive compliance with the 
                requirements of this paragraph except to the 
                extent necessary to permit a State to 
                coordinate eligibility requirements for dual 
                eligible individuals (as defined in section 
                1915(h)(2)(B)) under the State plan or under a 
                waiver of the plan and under title XVIII and 
                individuals who require the level of care 
                provided in a hospital, a nursing facility, or 
                an intermediate care facility for the mentally 
                retarded.
                  (G) Definitions of modified adjusted gross 
                income and household income.--In this 
                paragraph, the terms ``modified adjusted gross 
                income'' and ``household income'' have the 
                meanings given such terms in section 36B(d)(2) 
                of the Internal Revenue Code of 1986.
                  (H) Continued application of medicaid rules 
                regarding point-in-time income and sources of 
                income.--The requirement under this paragraph 
                for States to use modified adjusted gross 
                income and household income to determine income 
                eligibility for medical assistance under the 
                State plan or under any waiver of such plan and 
                for any other purpose applicable under the plan 
                or waiver for which a determination of income 
                is required shall not be construed as affecting 
                or limiting the application of--
                          (i) the requirement under this title 
                        and under the State plan or a waiver of 
                        the plan to determine an individual's 
                        income as of the point in time at which 
                        an application for medical assistance 
                        under the State plan or a waiver of the 
                        plan is processed; or
                          (ii) any rules established under this 
                        title or under the State plan or a 
                        waiver of the plan regarding sources of 
                        countable income.
                  (I) Treatment of portion of modified adjusted 
                gross income.--For purposes of determining the 
                income eligibility of an individual for medical 
                assistance whose eligibility is determined 
                based on the application of modified adjusted 
                gross income under subparagraph (A), the State 
                shall--
                          (i) determine the dollar equivalent 
                        of the difference between the upper 
                        income limit on eligibility for such an 
                        individual (expressed as a percentage 
                        of the poverty line) and such upper 
                        income limit increased by 5 percentage 
                        points; and
                          (ii) notwithstanding the requirement 
                        in subparagraph (A) with respect to use 
                        of modified adjusted gross income, 
                        utilize as the applicable income of 
                        such individual, in determining such 
                        income eligibility, an amount equal to 
                        the modified adjusted gross income 
                        applicable to such individual reduced 
                        by such dollar equivalent amount.
          (14) Exclusion of compensation for participation in a 
        clinical trial for testing of treatments for a rare 
        disease or condition.--The first $2,000 received by an 
        individual (who has attained 19 years of age) as 
        compensation for participation in a clinical trial 
        meeting the requirements of section 1612(b)(26) shall 
        be disregarded for purposes of determining the income 
        eligibility of such individual for medical assistance 
        under the State plan or any waiver of such plan.
  (f) Notwithstanding any other provision of this title, except 
as provided in subsection (e) and section 1619(b)(3) and 
section 1924, except with respect to qualified disabled and 
working individuals (described in section 1905(s)), and except 
with respect to qualified medicare beneficiaries, qualified 
severely impaired individuals, and individuals described in 
subsection (m)(1), no State not eligible to participate in the 
State plan program established under title XVI shall be 
required to provide medical assistance to any aged, blind, or 
disabled individual (within the meaning of title XVI) for any 
month unless such State would be (or would have been) required 
to provide medical assistance to such individual for such month 
had its plan for medical assistance approved under this title 
and in effect on January 1, 1972, been in effect in such month, 
except that for this purpose any such individual shall be 
deemed eligible for medical assistance under such State plan if 
(in addition to meeting such other requirements as are or may 
be imposed under the State plan) the income of any such 
individual as determined in accordance with section 1903(f) 
(after deducting any supplemental security income payment and 
State supplementary payment made with respect to such 
individual, and incurred expenses for medical care as 
recognized under State law regardless of whether such expenses 
are reimbursed under another public program of the State or 
political subdivision thereof) is not in excess of the standard 
for medical assistance established under the State plan as in 
effect on January 1, 1972. In States which provide medical 
assistance to individuals pursuant to paragraph (10)(C) of 
subsection (a) of this section, an individual who is eligible 
for medical assistance by reason of the requirements of this 
section concerning the deduction of incurred medical expenses 
from income shall be considered an individual eligible for 
medical assistance under paragraph (10)(A) of that subsection 
if that individual is, or is eligible to be (1) an individual 
with respect to whom there is payable a State supplementary 
payment on the basis of which similarly situated individuals 
are eligible to receive medical assistance equal in amount, 
duration, and scope to that provided to individuals eligible 
under paragraph (10)(A), or (2) an eligible individual or 
eligible spouse, as defined in title XVI, with respect to whom 
supplemental security income benefits are payable; otherwise 
that individual shall be considered to be an individual 
eligible for medical assistance under paragraph (10)(C) of that 
subsection. In States which do not provide medical assistance 
to individuals pursuant to paragraph (10)(C) of that 
subsection, an individual who is eligible for medical 
assistance by reason of the requirements of this section 
concerning the deduction of incurred medical expenses from 
income shall be considered an individual eligible for medical 
assistance under paragraph (10)(A) of that subsection.
  (g) In addition to any other sanction available to a State, a 
State may provide for a reduction of any payment amount 
otherwise due with respect to a person who furnishes services 
under the plan in an amount equal to up to three times the 
amount of any payment sought to be collected by that person in 
violation of subsection (a)(25)(C).
  (h) Nothing in this title (including subsections (a)(13) and 
(a)(30) of this section) shall be construed as authorizing the 
Secretary to limit the amount of payment that may be made under 
a plan under this title for home and community care.
  (i)(1) In addition to any other authority under State law, 
where a State determines that a intermediate care facility for 
the mentally retarded which is certified for participation 
under its plan no longer substantially meets the requirements 
for such a facility under this title and further determines 
that the facility's deficiencies--
          (A) immediately jeopardize the health and safety of 
        its patients, the State shall provide for the 
        termination of the facility's certification for 
        participation under the plan and may provide, or
          (B) do not immediately jeopardize the health and 
        safety of its patients, the State may, in lieu of 
        providing for terminating the facility's certification 
        for participation under the plan, establish alternative 
        remedies if the State demonstrates to the Secretary's 
        satisfaction that the alternative remedies are 
        effective in deterring noncompliance and correcting 
        deficiencies, and may provide
that no payment will be made under the State plan with respect 
to any individual admitted to such facility after a date 
specified by the State.
  (2) The State shall not make such a decision with respect to 
a facility until the facility has had a reasonable opportunity, 
following the initial determination that it no longer 
substantially meets the requirements for such a facility under 
this title, to correct its deficiencies, and, following this 
period, has been given reasonable notice and opportunity for a 
hearing.
  (3) The State's decision to deny payment may be made 
effective only after such notice to the public and to the 
facility as may be provided for by the State, and its 
effectiveness shall terminate (A) when the State finds that the 
facility is in substantial compliance (or is making good faith 
efforts to achieve substantial compliance) with the 
requirements for such a facility under this title, or (B) in 
the case described in paragraph (1)(B), with the end of the 
eleventh month following the month such decision is made 
effective, whichever occurs first. If a facility to which 
clause (B) of the previous sentence applies still fails to 
substantially meet the provisions of the respective section on 
the date specified in such clause, the State shall terminate 
such facility's certification for participation under the plan 
effective with the first day of the first month following the 
month specified in such clause.
  (j) Notwithstanding any other requirement of this title, the 
Secretary may waive or modify any requirement of this title 
with respect to the medical assistance program in American 
Samoa and the Northern Mariana Islands, other than a waiver of 
the Federal medical assistance percentage, the limitation in 
section 1108(f), or the requirement that payment may be made 
for medical assistance only with respect to amounts expended by 
American Samoa or the Northern Mariana Islands for care and 
services described in a numbered paragraph of section 1905(a).
  (k)(1) The medical assistance provided to an individual 
described in subclause (VIII) of subsection (a)(10)(A)(i) shall 
consist of benchmark coverage described in section 1937(b)(1) 
or benchmark equivalent coverage described in section 
1937(b)(2). Such medical assistance shall be provided subject 
to the requirements of section 1937, without regard to whether 
a State otherwise has elected the option to provide medical 
assistance through coverage under that section, unless an 
individual described in subclause (VIII) of subsection 
(a)(10)(A)(i) is also an individual for whom, under 
subparagraph (B) of section 1937(a)(2), the State may not 
require enrollment in benchmark coverage described in 
subsection (b)(1) of section 1937 or benchmark equivalent 
coverage described in subsection (b)(2) of that section.
  (2) Beginning with the first day of any fiscal year quarter 
that begins on or after April 1, 2010, and before January 1, 
2014, a State may elect through a State plan amendment to 
provide medical assistance to individuals who would be 
described in subclause (VIII) of subsection (a)(10)(A)(i) if 
that subclause were effective before January 1, 2014. A State 
may elect to phase-in the extension of eligibility for medical 
assistance to such individuals based on income, so long as the 
State does not extend such eligibility to individuals described 
in such subclause with higher income before making individuals 
described in such subclause with lower income eligible for 
medical assistance.
  (3) If an individual described in subclause (VIII) of 
subsection (a)(10)(A)(i) is the parent of a child who is under 
19 years of age (or such higher age as the State may have 
elected) who is eligible for medical assistance under the State 
plan or under a waiver of such plan (under that subclause or 
under a State plan amendment under paragraph (2), the 
individual may not be enrolled under the State plan unless the 
individual's child is enrolled under the State plan or under a 
waiver of the plan or is enrolled in other health insurance 
coverage. For purposes of the preceding sentence, the term 
``parent'' includes an individual treated as a caretaker 
relative for purposes of carrying out section 1931.
  (l)(1) Individuals described in this paragraph are--
          (A) women during pregnancy (and during the 60-day 
        period beginning on the last day of the pregnancy),
          (B) infants under one year of age,
          (C) children who have attained one year of age but 
        have not attained 6 years of age, and
          (D) children born after September 30, 1983 (or, at 
        the option of a State, after any earlier date), who 
        have attained 6 years of age but have not attained 19 
        years of age,
who are not described in any of subclauses (I) through (III) of 
subsection (a)(10)(A)(i) and whose family income does not 
exceed the income level established by the State under 
paragraph (2) for a family size equal to the size of the 
family, including the woman, infant, or child.
  (2)(A)(i) For purposes of paragraph (1) with respect to 
individuals described in subparagraph (A) or (B) of that 
paragraph, the State shall establish an income level which is a 
percentage (not less than the percentage provided under clause 
(ii) and not more than 185 percent) of the income official 
poverty line (as defined by the Office of Management and 
Budget, and revised annually in accordance with section 673(2) 
of the Omnibus Budget Reconciliation Act of 1981) applicable to 
a family of the size involved.
  (ii) The percentage provided under this clause, with respect 
to eligibility for medical assistance on or after--
          (I) July 1, 1989, is 75 percent, or, if greater, the 
        percentage provided under clause (iii), and
          (II) April 1, 1990, 133 percent, or, if greater, the 
        percentage provided under clause (iv).
  (iii) In the case of a State which, as of the date of the 
enactment of this clause, has elected to provide, and provides, 
medical assistance to individuals described in this subsection 
or has enacted legislation authorizing, or appropriating funds, 
to provide such assistance to such individuals before July 1, 
1989, the percentage provided under clause (ii)(I) shall not be 
less than--
          (I) the percentage specified by the State in an 
        amendment to its State plan (whether approved or not) 
        as of the date of the enactment of this clause, or
          (II) if no such percentage is specified as of the 
        date of the enactment of this clause, the percentage 
        established under the State's authorizing legislation 
        or provided for under the State's appropriations;
but in no case shall this clause require the percentage 
provided under clause (ii)(I) to exceed 100 percent.
  (iv) In the case of a State which, as of the date of the 
enactment of this clause, has established under clause (i), or 
has enacted legislation authorizing, or appropriating funds, to 
provide for, a percentage (of the income official poverty line) 
that is greater than 133 percent, the percentage provided under 
clause (ii) for medical assistance on or after April 1, 1990, 
shall not be less than--
          (I) the percentage specified by the State in an 
        amendment to its State plan (whether approved or not) 
        as of the date of the enactment of this clause, or
          (II) if no such percentage is specified as of the 
        date of the enactment of this clause, the percentage 
        established under the State's authorizing legislation 
        or provided for under the State's appropriations.
  (B) For purposes of paragraph (1) with respect to individuals 
described in subparagraph (C) of such paragraph, the State 
shall establish an income level which is equal to 133 percent 
of the income official poverty line described in subparagraph 
(A) applicable to a family of the size involved.
  (C) For purposes of paragraph (1) with respect to individuals 
described in subparagraph (D) of that paragraph, the State 
shall establish an income level which is equal to 100 percent 
(or, beginning January 1, 2014, 133 percent) of the income 
official poverty line described in subparagraph (A) applicable 
to a family of the size involved.
  (3) Notwithstanding subsection (a)(17), for individuals who 
are eligible for medical assistance because of subsection 
(a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), (a)(10)(A)(i)(VII), or 
(a)(10)(A)(ii)(IX)--
          (A) application of a resource standard shall be at 
        the option of the State;
          (B) any resource standard or methodology that is 
        applied with respect to an individual described in 
        subparagraph (A) of paragraph (1) may not be more 
        restrictive than the resource standard or methodology 
        that is applied under title XVI;
          (C) any resource standard or methodology that is 
        applied with respect to an individual described in 
        subparagraph (B), (C), or (D) of paragraph (1) may not 
        be more restrictive than the corresponding methodology 
        that is applied under the State plan under part A of 
        title IV;
          (D) the income standard to be applied is the 
        appropriate income standard established under paragraph 
        (2); and
          (E) family income shall be determined in accordance 
        with the methodology employed under the State plan 
        under part A or E of title IV (except to the extent 
        such methodology is inconsistent with clause (D) of 
        subsection (a)(17)), and costs incurred for medical 
        care or for any other type of remedial care shall not 
        be taken into account.
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(17), require 
or permit such treatment for other individuals.
  (4)(A) In the case of any State which is providing medical 
assistance to its residents under a waiver granted under 
section 1115, the Secretary shall require the State to provide 
medical assistance for pregnant women and infants under age 1 
described in subsection (a)(10)(A)(i)(IV) and for children 
described in subsection (a)(10)(A)(i)(VI) or subsection 
(a)(10)(A)(i)(VII) in the same manner as the State would be 
required to provide such assistance for such individuals if the 
State had in effect a plan approved under this title.
  (B) In the case of a State which is not one of the 50 States 
or the District of Columbia, the State need not meet the 
requirement of subsection (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), 
or (a)(10)(A)(i)(VII) and, for purposes of paragraph (2)(A), 
the State may substitute for the percentage provided under 
clause (ii) of such paragraph any percentage.
  (m)(1) Individuals described in this paragraph are 
individuals--
          (A) who are 65 years of age or older or are disabled 
        individuals (as determined under section 1614(a)(3)),
          (B) whose income (as determined under section 1612 
        for purposes of the supplemental security income 
        program, except as provided in paragraph (2)(C)) does 
        not exceed an income level established by the State 
        consistent with paragraph (2)(A), and
          (C) whose resources (as determined under section 1613 
        for purposes of the supplemental security income 
        program) do not exceed (except as provided in paragraph 
        (2)(B)) the maximum amount of resources that an 
        individual may have and obtain benefits under that 
        program.
  (2)(A) The income level established under paragraph (1)(B) 
may not exceed a percentage (not more than 100 percent) of the 
official poverty line (as defined by the Office of Management 
and Budget, and revised annually in accordance with section 
673(2) of the Omnibus Budget Reconciliation Act of 1981) 
applicable to a family of the size involved.
  (B) In the case of a State that provides medical assistance 
to individuals not described in subsection (a)(10)(A) and at 
the State's option, the State may use under paragraph (1)(C) 
such resource level (which is higher than the level described 
in that paragraph) as may be applicable with respect to 
individuals described in paragraph (1)(A) who are not described 
in subsection (a)(10)(A).
  (C) The provisions of section 1905(p)(2)(D) shall apply to 
determinations of income under this subsection in the same 
manner as they apply to determinations of income under section 
1905(p).
  (3) Notwithstanding subsection (a)(17), for individuals 
described in paragraph (1) who are covered under the State plan 
by virtue of subsection (a)(10)(A)(ii)(X)--
          (A) the income standard to be applied is the income 
        standard described in paragraph (1)(B), and
          (B) except as provided in section 1612(b)(4)(B)(ii), 
        costs incurred for medical care or for any other type 
        of remedial care shall not be taken into account in 
        determining income.
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(17), require 
or permit such treatment for other individuals.
  (4) Notwithstanding subsection (a)(17), for qualified 
medicare beneficiaries described in section 1905(p)(1)--
          (A) the income standard to be applied is the income 
        standard described in section 1905(p)(1)(B), and
          (B) except as provided in section 1612(b)(4)(B)(ii), 
        costs incurred for medical care or for any other type 
        of remedial care shall not be taken into account in 
        determining income.
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(17), require 
or permit such treatment for other individuals.
  (n)(1) In the case of medical assistance furnished under this 
title for medicare cost-sharing respecting the furnishing of a 
service or item to a qualified medicare beneficiary, the State 
plan may provide payment in an amount with respect to the 
service or item that results in the sum of such payment amount 
and any amount of payment made under title XVIII with respect 
to the service or item exceeding the amount that is otherwise 
payable under the State plan for the item or service for 
eligible individuals who are not qualified medicare 
beneficiaries.
  (2) In carrying out paragraph (1), a State is not required to 
provide any payment for any expenses incurred relating to 
payment for deductibles, coinsurance, or copayments for 
medicare cost-sharing to the extent that payment under title 
XVIII for the service would exceed the payment amount that 
otherwise would be made under the State plan under this title 
for such service if provided to an eligible recipient other 
than a medicare beneficiary.
  (3) In the case in which a State's payment for medicare cost-
sharing for a qualified medicare beneficiary with respect to an 
item or service is reduced or eliminated through the 
application of paragraph (2)--
          (A) for purposes of applying any limitation under 
        title XVIII on the amount that the beneficiary may be 
        billed or charged for the service, the amount of 
        payment made under title XVIII plus the amount of 
        payment (if any) under the State plan shall be 
        considered to be payment in full for the service;
          (B) the beneficiary shall not have any legal 
        liability to make payment to a provider or to an 
        organization described in section 1903(m)(1)(A) for the 
        service; and
          (C) any lawful sanction that may be imposed upon a 
        provider or such an organization for excess charges 
        under this title or title XVIII shall apply to the 
        imposition of any charge imposed upon the individual in 
        such case.
This paragraph shall not be construed as preventing payment of 
any medicare cost-sharing by a medicare supplemental policy or 
an employer retiree health plan on behalf of an individual.
  (o) Notwithstanding any provision of subsection (a) to the 
contrary, a State plan under this title shall provide that any 
supplemental security income benefits paid by reason of 
subparagraph (E) or (G) of section 1611(e)(1) to an individual 
who--
          (1) is eligible for medical assistance under the 
        plan, and
          (2) is in a hospital, skilled nursing facility, or 
        intermediate care facility at the time such benefits 
        are paid,
will be disregarded for purposes of determining the amount of 
any post-eligibility contribution by the individual to the cost 
of the care and services provided by the hospital, skilled 
nursing facility, or intermediate care facility.
  (p)(1) In addition to any other authority, a State may 
exclude any individual or entity for purposes of participating 
under the State plan under this title for any reason for which 
the Secretary could exclude the individual or entity from 
participation in a program under title XVIII under section 
1128, 1128A, or 1866(b)(2).
  (2) In order for a State to receive payments for medical 
assistance under section 1903(a), with respect to payments the 
State makes to a medicaid managed care organization (as defined 
in section 1903(m)) or to an entity furnishing services under a 
waiver approved under section 1915(b)(1), the State must 
provide that it will exclude from participation, as such an 
organization or entity, any organization or entity that--
          (A) could be excluded under section 1128(b)(8) 
        (relating to owners and managing employees who have 
        been convicted of certain crimes or received other 
        sanctions),
          (B) has, directly or indirectly, a substantial 
        contractual relationship (as defined by the Secretary) 
        with an individual or entity that is described in 
        section 1128(b)(8)(B), or
          (C) employs or contracts with any individual or 
        entity that is excluded from participation under this 
        title under section 1128 or 1128A for the provision of 
        health care, utilization review, medical social work, 
        or administrative services or employs or contracts with 
        any entity for the provision (directly or indirectly) 
        through such an excluded individual or entity of such 
        services.
  (3) As used in this subsection, the term ``exclude'' includes 
the refusal to enter into or renew a participation agreement or 
the termination of such an agreement.
  (q)(1)(A) In order to meet the requirement of subsection 
(a)(50), the State plan must provide that, in the case of an 
institutionalized individual or couple described in 
subparagraph (B), in determining the amount of the individual's 
or couple's income to be applied monthly to payment for the 
cost of care in an institution, there shall be deducted from 
the monthly income (in addition to other allowances otherwise 
provided under the State plan) a monthly personal needs 
allowance--
          (i) which is reasonable in amount for clothing and 
        other personal needs of the individual (or couple) 
        while in an institution, and
          (ii) which is not less (and may be greater) than the 
        minimum monthly personal needs allowance described in 
        paragraph (2).
  (B) In this subsection, the term ``institutionalized 
individual or couple'' means an individual or married couple--
          (i) who is an inpatient (or who are inpatients) in a 
        medical institution or nursing facility for which 
        payments are made under this title throughout a month, 
        and
          (ii) who is or are determined to be eligible for 
        medical assistance under the State plan.
  (2) The minimum monthly personal needs allowance described in 
this paragraph is $30 for an institutionalized individual and 
$60 for an institutionalized couple (if both are aged, blind, 
or disabled, and their incomes are considered available to each 
other in determining eligibility).
  (r)(1)(A) For purposes of sections 1902(a)(17) and 
1924(d)(1)(D) and for purposes of a waiver under section 1915, 
with respect to the post-eligibility treatment of income of 
individuals who are institutionalized or receiving home or 
community-based services under such a waiver, the treatment 
described in subparagraph (B) shall apply, there shall be 
disregarded reparation payments made by the Federal Republic of 
Germany, and there shall be taken into account amounts for 
incurred expenses for medical or remedial care that are not 
subject to payment by a third party, including--
          (i) medicare and other health insurance premiums, 
        deductibles, or coinsurance, and
          (ii) necessary medical or remedial care recognized 
        under State law but not covered under the State plan 
        under this title, subject to reasonable limits the 
        State may establish on the amount of these expenses.
  (B)(i) In the case of a veteran who does not have a spouse or 
a child, if the veteran--
          (I) receives, after the veteran has been determined 
        to be eligible for medical assistance under the State 
        plan under this title, a veteran's pension in excess of 
        $90 per month, and
          (II) resides in a State veterans home with respect to 
        which the Secretary of Veterans Affairs makes per diem 
        payments for nursing home care pursuant to section 
        1741(a) of title 38, United States Code,
any such pension payment, including any payment made due to the 
need for aid and attendance, or for unreimbursed medical 
expenses, that is in excess of $90 per month shall be counted 
as income only for the purpose of applying such excess payment 
to the State veterans home's cost of providing nursing home 
care to the veteran.
  (ii) The provisions of clause (i) shall apply with respect to 
a surviving spouse of a veteran who does not have a child in 
the same manner as they apply to a veteran described in such 
clause.
  (2)(A) The methodology to be employed in determining income 
and resource eligibility for individuals under subsection 
(a)(10)(A)(i)(III), (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), 
(a)(10)(A)(i)(VII), (a)(10)(A)(ii), (a)(10)(C)(i)(III), or (f) 
or under section 1905(p) may be less restrictive, and shall be 
no more restrictive, than the methodology--
          (i) in the case of groups consisting of aged, blind, 
        or disabled individuals, under the supplemental 
        security income program under title XVI, or
          (ii) in the case of other groups, under the State 
        plan most closely categorically related.
  (B) For purposes of this subsection and subsection (a)(10), 
methodology is considered to be ``no more restrictive'' if, 
using the methodology, additional individuals may be eligible 
for medical assistance and no individuals who are otherwise 
eligible are made ineligible for such assistance.
  (s) In order to meet the requirements of subsection (a)(55), 
the State plan must provide that payments to hospitals under 
the plan for inpatient hospital services furnished to infants 
who have not attained the age of 1 year, and to children who 
have not attained the age of 6 years and who receive such 
services in a disproportionate share hospital described in 
section 1923(b)(1), shall--
          (1) if made on a prospective basis (whether per diem, 
        per case, or otherwise) provide for an outlier 
        adjustment in payment amounts for medically necessary 
        inpatient hospital services involving exceptionally 
        high costs or exceptionally long lengths of stay,
          (2) not be limited by the imposition of day limits 
        with respect to the delivery of such services to such 
        individuals, and
          (3) not be limited by the imposition of dollar limits 
        (other than such limits resulting from prospective 
        payments as adjusted pursuant to paragraph (1)) with 
        respect to the delivery of such services to any such 
        individual who has not attained their first birthday 
        (or in the case of such an individual who is an 
        inpatient on his first birthday until such individual 
        is discharged).
  (t) Nothing in this title (including sections 1903(a) and 
1905(a)) shall be construed as authorizing the Secretary to 
deny or limit payments to a State for expenditures, for medical 
assistance for items or services, attributable to taxes of 
general applicability imposed with respect to the provision of 
such items or services.
  (u)(1) Individuals described in this paragraph are 
individuals--
          (A) who are entitled to elect COBRA continuation 
        coverage (as defined in paragraph (3)),
          (B) whose income (as determined under section 1612 
        for purposes of the supplemental security income 
        program) does not exceed 100 percent of the official 
        poverty line (as defined by the Office of Management 
        and Budget, and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act 
        of 1981) applicable to a family of the size involved,
          (C) whose resources (as determined under section 1613 
        for purposes of the supplemental security income 
        program) do not exceed twice the maximum amount of 
        resources that an individual may have and obtain 
        benefits under that program, and
          (D) with respect to whose enrollment for COBRA 
        continuation coverage the State has determined that the 
        savings in expenditures under this title resulting from 
        such enrollment is likely to exceed the amount of 
        payments for COBRA premiums made.
  (2) For purposes of subsection (a)(10)(F) and this 
subsection, the term ``COBRA premiums'' means the applicable 
premium imposed with respect to COBRA continuation coverage.
  (3) In this subsection, the term ``COBRA continuation 
coverage'' means coverage under a group health plan provided by 
an employer with 75 or more employees provided pursuant to 
title XXII of the Public Health Service Act, section 4980B of 
the Internal Revenue Code of 1986, or title VI of the Employee 
Retirement Income Security Act of 1974.
  (4) Notwithstanding subsection (a)(17), for individuals 
described in paragraph (1) who are covered under the State plan 
by virtue of subsection (a)(10)(A)(ii)(XI)--
          (A) the income standard to be applied is the income 
        standard described in paragraph (1)(B), and
          (B) except as provided in section 1612(b)(4)(B)(ii), 
        costs incurred for medical care or for any other type 
        of remedial care shall not be taken into account in 
        determining income.
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(10)(B) or 
(a)(17), require or permit such treatment for other 
individuals.
  (v) A State plan may provide for the making of determinations 
of disability or blindness for the purpose of determining 
eligibility for medical assistance under the State plan by the 
single State agency or its designee, and make medical 
assistance available to individuals whom it finds to be blind 
or disabled and who are determined otherwise eligible for such 
assistance during the period of time prior to which a final 
determination of disability or blindness is made by the Social 
Security Administration with respect to such an individual. In 
making such determinations, the State must apply the 
definitions of disability and blindness found in section 
1614(a) of the Social Security Act.
  (w)(1) For purposes of subsection (a)(57) and sections 
1903(m)(1)(A) and 1919(c)(2)(E), the requirement of this 
subsection is that a provider or organization (as the case may 
be) maintain written policies and procedures with respect to 
all adult individuals receiving medical care by or through the 
provider or organization--
          (A) to provide written information to each such 
        individual concerning--
                  (i) an individual's rights under State law 
                (whether statutory or as recognized by the 
                courts of the State) to make decisions 
                concerning such medical care, including the 
                right to accept or refuse medical or surgical 
                treatment and the right to formulate advance 
                directives (as defined in paragraph (3)), and
                  (ii) the provider's or organization's written 
                policies respecting the implementation of such 
                rights;
          (B) to document in the individual's medical record 
        whether or not the individual has executed an advance 
        directive;
          (C) not to condition the provision of care or 
        otherwise discriminate against an individual based on 
        whether or not the individual has executed an advance 
        directive;
          (D) to ensure compliance with requirements of State 
        law (whether statutory or as recognized by the courts 
        of the State) respecting advance directives; and
          (E) to provide (individually or with others) for 
        education for staff and the community on issues 
        concerning advance directives.
Subparagraph (C) shall not be construed as requiring the 
provision of care which conflicts with an advance directive.
  (2) The written information described in paragraph (1)(A) 
shall be provided to an adult individual--
          (A) in the case of a hospital, at the time of the 
        individual's admission as an inpatient,
          (B) in the case of a nursing facility, at the time of 
        the individual's admission as a resident,
          (C) in the case of a provider of home health care or 
        personal care services, in advance of the individual 
        coming under the care of the provider,
          (D) in the case of a hospice program, at the time of 
        initial receipt of hospice care by the individual from 
        the program, and
          (E) in the case of a medicaid managed care 
        organization, at the time of enrollment of the 
        individual with the organization.
  (3) Nothing in this section shall be construed to prohibit 
the application of a State law which allows for an objection on 
the basis of conscience for any health care provider or any 
agent of such provider which as a matter of conscience cannot 
implement an advance directive.
  (4) In this subsection, the term ``advance directive'' means 
a written instruction, such as a living will or durable power 
of attorney for health care, recognized under State law 
(whether statutory or as recognized by the courts of the State) 
and relating to the provision of such care when the individual 
is incapacitated.
  (5) For construction relating to this subsection, see section 
7 of the Assisted Suicide Funding Restriction Act of 1997 
(relating to clarification respecting assisted suicide, 
euthanasia, and mercy killing).
  (x) The Secretary shall establish a system, for 
implementation by not later than July 1, 1991, which provides 
for a unique identifier for each physician who furnishes 
services for which payment may be made under a State plan 
approved under this title.
  (y)(1) In addition to any other authority under State law, 
where a State determines that a psychiatric hospital which is 
certified for participation under its plan no longer meets the 
requirements for a psychiatric hospital (referred to in section 
1905(h)) and further finds that the hospital's deficiencies--
          (A) immediately jeopardize the health and safety of 
        its patients, the State shall terminate the hospital's 
        participation under the State plan; or
          (B) do not immediately jeopardize the health and 
        safety of its patients, the State may terminate the 
        hospital's participation under the State plan, or 
        provide that no payment will be made under the State 
        plan with respect to any individual admitted to such 
        hospital after the effective date of the finding, or 
        both.
  (2) Except as provided in paragraph (3), if a psychiatric 
hospital described in paragraph (1)(B) has not complied with 
the requirements for a psychiatric hospital under this title--
          (A) within 3 months after the date the hospital is 
        found to be out of compliance with such requirements, 
        the State shall provide that no payment will be made 
        under the State plan with respect to any individual 
        admitted to such hospital after the end of such 3-month 
        period, or
          (B) within 6 months after the date the hospital is 
        found to be out of compliance with such requirements, 
        no Federal financial participation shall be provided 
        under section 1903(a) with respect to further services 
        provided in the hospital until the State finds that the 
        hospital is in compliance with the requirements of this 
        title.
  (3) The Secretary may continue payments, over a period of not 
longer than 6 months from the date the hospital is found to be 
out of compliance with such requirements, if--
          (A) the State finds that it is more appropriate to 
        take alternative action to assure compliance of the 
        hospital with the requirements than to terminate the 
        certification of the hospital,
          (B) the State has submitted a plan and timetable for 
        corrective action to the Secretary for approval and the 
        Secretary approves the plan of corrective action, and
          (C) the State agrees to repay to the Federal 
        Government payments received under this paragraph if 
        the corrective action is not taken in accordance with 
        the approved plan and timetable.
  (z)(1) Individuals described in this paragraph are 
individuals not described in subsection (a)(10)(A)(i)--
          (A) who are infected with tuberculosis;
          (B) whose income (as determined under the State plan 
        under this title with respect to disabled individuals) 
        does not exceed the maximum amount of income a disabled 
        individual described in subsection (a)(10)(A)(i) may 
        have and obtain medical assistance under the plan; and
          (C) whose resources (as determined under the State 
        plan under this title with respect to disabled 
        individuals) do not exceed the maximum amount of 
        resources a disabled individual described in subsection 
        (a)(10)(A)(i) may have and obtain medical assistance 
        under the plan.
  (2) For purposes of subsection (a)(10), the term ``TB-related 
services'' means each of the following services relating to 
treatment of infection with tuberculosis:
          (A) Prescribed drugs.
          (B) Physicians' services and services described in 
        section 1905(a)(2).
          (C) Laboratory and X-ray services (including services 
        to confirm the presence of infection).
          (D) Clinic services and Federally-qualified health 
        center services.
          (E) Case management services (as defined in section 
        1915(g)(2)).
          (F) Services (other than room and board) designed to 
        encourage completion of regimens of prescribed drugs by 
        outpatients, including services to observe directly the 
        intake of prescribed drugs.
  (aa) Individuals described in this subsection are individuals 
who--
          (1) are not described in subsection (a)(10)(A)(i);
          (2) have not attained age 65;
          (3) have been screened for breast and cervical cancer 
        under the Centers for Disease Control and Prevention 
        breast and cervical cancer early detection program 
        established under title XV of the Public Health Service 
        Act (42 U.S.C. 300k et seq.) in accordance with the 
        requirements of section 1504 of that Act (42 U.S.C. 
        300n) and need treatment for breast or cervical cancer; 
        and
          (4) are not otherwise covered under creditable 
        coverage, as defined in section 2701(c) of the Public 
        Health Service Act (42 U.S.C. 300gg(c)), but applied 
        without regard to paragraph (1)(F) of such section.
  (bb) Payment for Services Provided by Federally-Qualified 
Health Centers and Rural Health Clinics.--
          (1) In general.--Beginning with fiscal year 2001 with 
        respect to services furnished on or after January 1, 
        2001, and each succeeding fiscal year, the State plan 
        shall provide for payment for services described in 
        section 1905(a)(2)(C) furnished by a Federally-
        qualified health center and services described in 
        section 1905(a)(2)(B) furnished by a rural health 
        clinic in accordance with the provisions of this 
        subsection.
          (2) Fiscal year 2001.--Subject to paragraph (4), for 
        services furnished on and after January 1, 2001, during 
        fiscal year 2001, the State plan shall provide for 
        payment for such services in an amount (calculated on a 
        per visit basis) that is equal to 100 percent of the 
        average of the costs of the center or clinic of 
        furnishing such services during fiscal years 1999 and 
        2000 which are reasonable and related to the cost of 
        furnishing such services, or based on such other tests 
        of reasonableness as the Secretary prescribes in 
        regulations under section 1833(a)(3), or, in the case 
        of services to which such regulations do not apply, the 
        same methodology used under section 1833(a)(3), 
        adjusted to take into account any increase or decrease 
        in the scope of such services furnished by the center 
        or clinic during fiscal year 2001.
          (3) Fiscal year 2002 and succeeding fiscal years.--
        Subject to paragraph (4), for services furnished during 
        fiscal year 2002 or a succeeding fiscal year, the State 
        plan shall provide for payment for such services in an 
        amount (calculated on a per visit basis) that is equal 
        to the amount calculated for such services under this 
        subsection for the preceding fiscal year--
                  (A) increased by the percentage increase in 
                the MEI (as defined in section 1842(i)(3)) 
                applicable to primary care services (as defined 
                in section 1842(i)(4)) for that fiscal year; 
                and
                  (B) adjusted to take into account any 
                increase or decrease in the scope of such 
                services furnished by the center or clinic 
                during that fiscal year.
          (4) Establishment of initial year payment amount for 
        new centers or clinics.--In any case in which an entity 
        first qualifies as a Federally-qualified health center 
        or rural health clinic after fiscal year 2000, the 
        State plan shall provide for payment for services 
        described in section 1905(a)(2)(C) furnished by the 
        center or services described in section 1905(a)(2)(B) 
        furnished by the clinic in the first fiscal year in 
        which the center or clinic so qualifies in an amount 
        (calculated on a per visit basis) that is equal to 100 
        percent of the costs of furnishing such services during 
        such fiscal year based on the rates established under 
        this subsection for the fiscal year for other such 
        centers or clinics located in the same or adjacent area 
        with a similar case load or, in the absence of such a 
        center or clinic, in accordance with the regulations 
        and methodology referred to in paragraph (2) or based 
        on such other tests of reasonableness as the Secretary 
        may specify. For each fiscal year following the fiscal 
        year in which the entity first qualifies as a 
        Federally-qualified health center or rural health 
        clinic, the State plan shall provide for the payment 
        amount to be calculated in accordance with paragraph 
        (3).
          (5) Administration in the case of managed care.--
                  (A) In general.--In the case of services 
                furnished by a Federally-qualified health 
                center or rural health clinic pursuant to a 
                contract between the center or clinic and a 
                managed care entity (as defined in section 
                1932(a)(1)(B)), the State plan shall provide 
                for payment to the center or clinic by the 
                State of a supplemental payment equal to the 
                amount (if any) by which the amount determined 
                under paragraphs (2), (3), and (4) of this 
                subsection exceeds the amount of the payments 
                provided under the contract.
                  (B) Payment schedule.--The supplemental 
                payment required under subparagraph (A) shall 
                be made pursuant to a payment schedule agreed 
                to by the State and the Federally-qualified 
                health center or rural health clinic, but in no 
                case less frequently than every 4 months.
          (6) Alternative payment methodologies.--
        Notwithstanding any other provision of this section, 
        the State plan may provide for payment in any fiscal 
        year to a Federally-qualified health center for 
        services described in section 1905(a)(2)(C) or to a 
        rural health clinic for services described in section 
        1905(a)(2)(B) in an amount which is determined under an 
        alternative payment methodology that--
                  (A) is agreed to by the State and the center 
                or clinic; and
                  (B) results in payment to the center or 
                clinic of an amount which is at least equal to 
                the amount otherwise required to be paid to the 
                center or clinic under this section.
  (cc)(1) Individuals described in this paragraph are 
individuals--
          (A) who are children who have not attained 19 years 
        of age and are born--
                  (i) on or after January 1, 2001 (or, at the 
                option of a State, on or after an earlier 
                date), in the case of the second, third, and 
                fourth quarters of fiscal year 2007;
                  (ii) on or after October 1, 1995 (or, at the 
                option of a State, on or after an earlier 
                date), in the case of each quarter of fiscal 
                year 2008; and
                  (iii) after October 1, 1989, in the case of 
                each quarter of fiscal year 2009 and each 
                quarter of any fiscal year thereafter;
          (B) who would be considered disabled under section 
        1614(a)(3)(C) (as determined under title XVI for 
        children but without regard to any income or asset 
        eligibility requirements that apply under such title 
        with respect to children); and
          (C) whose family income does not exceed such income 
        level as the State establishes and does not exceed--
                  (i) 300 percent of the poverty line (as 
                defined in section 2110(c)(5)) applicable to a 
                family of the size involved; or
                  (ii) such higher percent of such poverty line 
                as a State may establish, except that--
                          (I) any medical assistance provided 
                        to an individual whose family income 
                        exceeds 300 percent of such poverty 
                        line may only be provided with State 
                        funds; and
                          (II) no Federal financial 
                        participation shall be provided under 
                        section 1903(a) for any medical 
                        assistance provided to such an 
                        individual.
  (2)(A) If an employer of a parent of an individual described 
in paragraph (1) offers family coverage under a group health 
plan (as defined in section 2791(a) of the Public Health 
Service Act), the State shall--
          (i) notwithstanding section 1906, require such parent 
        to apply for, enroll in, and pay premiums for such 
        coverage as a condition of such parent's child being or 
        remaining eligible for medical assistance under 
        subsection (a)(10)(A)(ii)(XIX) if the parent is 
        determined eligible for such coverage and the employer 
        contributes at least 50 percent of the total cost of 
        annual premiums for such coverage; and
          (ii) if such coverage is obtained--
                  (I) subject to paragraph (2) of section 
                1916(h), reduce the premium imposed by the 
                State under that section in an amount that 
                reasonably reflects the premium contribution 
                made by the parent for private coverage on 
                behalf of a child with a disability; and
                  (II) treat such coverage as a third party 
                liability under subsection (a)(25).
  (B) In the case of a parent to which subparagraph (A) 
applies, a State, notwithstanding section 1906 but subject to 
paragraph (1)(C)(ii), may provide for payment of any portion of 
the annual premium for such family coverage that the parent is 
required to pay. Any payments made by the State under this 
subparagraph shall be considered, for purposes of section 
1903(a), to be payments for medical assistance.
  (dd) Electronic Transmission of Information.--If the State 
agency determining eligibility for medical assistance under 
this title or child health assistance under title XXI verifies 
an element of eligibility based on information from an Express 
Lane Agency (as defined in subsection (e)(13)(F)), or from 
another public agency, then the applicant's signature under 
penalty of perjury shall not be required as to such element. 
Any signature requirement for an application for medical 
assistance may be satisfied through an electronic signature, as 
defined in section 1710(1) of the Government Paperwork 
Elimination Act (44 U.S.C. 3504 note). The requirements of 
subparagraphs (A) and (B) of section 1137(d)(2) may be met 
through evidence in digital or electronic form.
  (ee)(1) For purposes of subsection (a)(46)(B)(ii), the 
requirements of this subsection with respect to an individual 
declaring to be a citizen or national of the United States for 
purposes of establishing eligibility under this title, are, in 
lieu of requiring the individual to present satisfactory 
documentary evidence of citizenship or nationality under 
section 1903(x) (if the individual is not described in 
paragraph (2) of that section), as follows:
          (A) The State submits the name and social security 
        number of the individual to the Commissioner of Social 
        Security as part of the program established under 
        paragraph (2).
          (B) If the State receives notice from the 
        Commissioner of Social Security that the name or social 
        security number, or the declaration of citizenship or 
        nationality, of the individual is inconsistent with 
        information in the records maintained by the 
        Commissioner--
                  (i) the State makes a reasonable effort to 
                identify and address the causes of such 
                inconsistency, including through typographical 
                or other clerical errors, by contacting the 
                individual to confirm the accuracy of the name 
                or social security number submitted or 
                declaration of citizenship or nationality and 
                by taking such additional actions as the 
                Secretary, through regulation or other 
                guidance, or the State may identify, and 
                continues to provide the individual with 
                medical assistance while making such effort; 
                and
                  (ii) in the case such inconsistency is not 
                resolved under clause (i), the State--
                          (I) notifies the individual of such 
                        fact;
                          (II) provides the individual with a 
                        period of 90 days from the date on 
                        which the notice required under 
                        subclause (I) is received by the 
                        individual to either present 
                        satisfactory documentary evidence of 
                        citizenship or nationality (as defined 
                        in section 1903(x)(3)) or resolve the 
                        inconsistency with the Commissioner of 
                        Social Security (and continues to 
                        provide the individual with medical 
                        assistance during such 90-day period); 
                        and
                          (III) disenrolls the individual from 
                        the State plan under this title within 
                        30 days after the end of such 90-day 
                        period if no such documentary evidence 
                        is presented or if such inconsistency 
                        is not resolved.
  (2)(A) Each State electing to satisfy the requirements of 
this subsection for purposes of section 1902(a)(46)(B) shall 
establish a program under which the State submits at least 
monthly to the Commissioner of Social Security for comparison 
of the name and social security number, of each individual 
newly enrolled in the State plan under this title that month 
who is not described in section 1903(x)(2) and who declares to 
be a United States citizen or national, with information in 
records maintained by the Commissioner.
  (B) In establishing the State program under this paragraph, 
the State may enter into an agreement with the Commissioner of 
Social Security--
          (i) to provide, through an on-line system or 
        otherwise, for the electronic submission of, and 
        response to, the information submitted under 
        subparagraph (A) for an individual enrolled in the 
        State plan under this title who declares to be citizen 
        or national on at least a monthly basis; or
          (ii) to provide for a determination of the 
        consistency of the information submitted with the 
        information maintained in the records of the 
        Commissioner through such other method as agreed to by 
        the State and the Commissioner and approved by the 
        Secretary, provided that such method is no more 
        burdensome for individuals to comply with than any 
        burdens that may apply under a method described in 
        clause (i).
  (C) The program established under this paragraph shall 
provide that, in the case of any individual who is required to 
submit a social security number to the State under subparagraph 
(A) and who is unable to provide the State with such number, 
shall be provided with at least the reasonable opportunity to 
present satisfactory documentary evidence of citizenship or 
nationality (as defined in section 1903(x)(3)) as is provided 
under clauses (i) and (ii) of section 1137(d)(4)(A) to an 
individual for the submittal to the State of evidence 
indicating a satisfactory immigration status.
  (3)(A) The State agency implementing the plan approved under 
this title shall, at such times and in such form as the 
Secretary may specify, provide information on the percentage 
each month that the inconsistent submissions bears to the total 
submissions made for comparison for such month. For purposes of 
this subparagraph, a name, social security number, or 
declaration of citizenship or nationality of an individual 
shall be treated as inconsistent and included in the 
determination of such percentage only if--
          (i) the information submitted by the individual is 
        not consistent with information in records maintained 
        by the Commissioner of Social Security;
          (ii) the inconsistency is not resolved by the State;
          (iii) the individual was provided with a reasonable 
        period of time to resolve the inconsistency with the 
        Commissioner of Social Security or provide satisfactory 
        documentation of citizenship status and did not 
        successfully resolve such inconsistency; and
          (iv) payment has been made for an item or service 
        furnished to the individual under this title.
  (B) If, for any fiscal year, the average monthly percentage 
determined under subparagraph (A) is greater than 3 percent--
          (i) the State shall develop and adopt a corrective 
        plan to review its procedures for verifying the 
        identities of individuals seeking to enroll in the 
        State plan under this title and to identify and 
        implement changes in such procedures to improve their 
        accuracy; and
          (ii) pay to the Secretary an amount equal to the 
        amount which bears the same ratio to the total payments 
        under the State plan for the fiscal year for providing 
        medical assistance to individuals who provided 
        inconsistent information as the number of individuals 
        with inconsistent information in excess of 3 percent of 
        such total submitted bears to the total number of 
        individuals with inconsistent information.
  (C) The Secretary may waive, in certain limited cases, all or 
part of the payment under subparagraph (B)(ii) if the State is 
unable to reach the allowable error rate despite a good faith 
effort by such State.
  (D) Subparagraphs (A) and (B) shall not apply to a State for 
a fiscal year if there is an agreement described in paragraph 
(2)(B) in effect as of the close of the fiscal year that 
provides for the submission on a real-time basis of the 
information described in such paragraph.
  (4) Nothing in this subsection shall affect the rights of any 
individual under this title to appeal any disenrollment from a 
State plan.
  (ff) Notwithstanding any other requirement of this title or 
any other provision of Federal or State law, a State shall 
disregard the following property from resources for purposes of 
determining the eligibility of an individual who is an Indian 
for medical assistance under this title:
          (1) Property, including real property and 
        improvements, that is held in trust, subject to Federal 
        restrictions, or otherwise under the supervision of the 
        Secretary of the Interior, located on a reservation, 
        including any federally recognized Indian Tribe's 
        reservation, pueblo, or colony, including former 
        reservations in Oklahoma, Alaska Native regions 
        established by the Alaska Native Claims Settlement Act, 
        and Indian allotments on or near a reservation as 
        designated and approved by the Bureau of Indian Affairs 
        of the Department of the Interior.
          (2) For any federally recognized Tribe not described 
        in paragraph (1), property located within the most 
        recent boundaries of a prior Federal reservation.
          (3) Ownership interests in rents, leases, royalties, 
        or usage rights related to natural resources (including 
        extraction of natural resources or harvesting of 
        timber, other plants and plant products, animals, fish, 
        and shellfish) resulting from the exercise of federally 
        protected rights.
          (4) Ownership interests in or usage rights to items 
        not covered by paragraphs (1) through (3) that have 
        unique religious, spiritual, traditional, or cultural 
        significance or rights that support subsistence or a 
        traditional lifestyle according to applicable tribal 
        law or custom.
  (gg) Maintenance of Effort.--
          (1) General requirement to maintain eligibility 
        standards until state exchange is fully operational.--
        Subject to the succeeding paragraphs of this 
        subsection, during the period that begins on the date 
        of enactment of the Patient Protection and Affordable 
        Care Act and ends on the date on which the Secretary 
        determines that an Exchange established by the State 
        under section 1311 of the Patient Protection and 
        Affordable Care Act is fully operational, as a 
        condition for receiving any Federal payments under 
        section 1903(a) for calendar quarters occurring during 
        such period, a State shall not have in effect 
        eligibility standards, methodologies, or procedures 
        under the State plan under this title or under any 
        waiver of such plan that is in effect during that 
        period, that are more restrictive than the eligibility 
        standards, methodologies, or procedures, respectively, 
        under the plan or waiver that are in effect on the date 
        of enactment of the Patient Protection and Affordable 
        Care Act.
          (2) Continuation of eligibility standards for 
        children until october 1, 2019.--The requirement under 
        paragraph (1) shall continue to apply to a State 
        through September 30, 2019, with respect to the 
        eligibility standards, methodologies, and procedures 
        under the State plan under this title or under any 
        waiver of such plan that are applicable to determining 
        the eligibility for medical assistance of any child who 
        is under 19 years of age (or such higher age as the 
        State may have elected).
          (3) Nonapplication.--During the period that begins on 
        January 1, 2011, and ends on December 31, 2013, the 
        requirement under paragraph (1) shall not apply to a 
        State with respect to nonpregnant, nondisabled adults 
        who are eligible for medical assistance under the State 
        plan or under a waiver of the plan at the option of the 
        State and whose income exceeds 133 percent of the 
        poverty line (as defined in section 2110(c)(5)) 
        applicable to a family of the size involved if, on or 
        after December 31, 2010, the State certifies to the 
        Secretary that, with respect to the State fiscal year 
        during which the certification is made, the State has a 
        budget deficit, or with respect to the succeeding State 
        fiscal year, the State is projected to have a budget 
        deficit. Upon submission of such a certification to the 
        Secretary, the requirement under paragraph (1) shall 
        not apply to the State with respect to any remaining 
        portion of the period described in the preceding 
        sentence.
          (4) Determination of compliance.--
                  (A) States shall apply modified adjusted 
                gross income.--A State's determination of 
                income in accordance with subsection (e)(14) 
                shall not be considered to be eligibility 
                standards, methodologies, or procedures that 
                are more restrictive than the standards, 
                methodologies, or procedures in effect under 
                the State plan or under a waiver of the plan on 
                the date of enactment of the Patient Protection 
                and Affordable Care Act for purposes of 
                determining compliance with the requirements of 
                paragraph (1), (2), or (3).
                  (B) States may expand eligibility or move 
                waivered populations into coverage under the 
                state plan.--With respect to any period 
                applicable under paragraph (1), (2), or (3), a 
                State that applies eligibility standards, 
                methodologies, or procedures under the State 
                plan under this title or under any waiver of 
                the plan that are less restrictive than the 
                eligibility standards, methodologies, or 
                procedures, applied under the State plan or 
                under a waiver of the plan on the date of 
                enactment of the Patient Protection and 
                Affordable Care Act, or that makes individuals 
                who, on such date of enactment, are eligible 
                for medical assistance under a waiver of the 
                State plan, after such date of enactment 
                eligible for medical assistance through a State 
                plan amendment with an income eligibility level 
                that is not less than the income eligibility 
                level that applied under the waiver, or as a 
                result of the application of subclause (VIII) 
                of section 1902(a)(10)(A)(i), shall not be 
                considered to have in effect eligibility 
                standards, methodologies, or procedures that 
                are more restrictive than the standards, 
                methodologies, or procedures in effect under 
                the State plan or under a waiver of the plan on 
                the date of enactment of the Patient Protection 
                and Affordable Care Act for purposes of 
                determining compliance with the requirements of 
                paragraph (1), (2), or (3).
  (hh)(1) A State may elect to phase-in the extension of 
eligibility for medical assistance to individuals described in 
subclause (XX) of subsection (a)(10)(A)(ii) based on the 
categorical group (including nonpregnant childless adults) or 
income, so long as the State does not extend such eligibility 
to individuals described in such subclause with higher income 
before making individuals described in such subclause with 
lower income eligible for medical assistance.
  (2) If an individual described in subclause (XX) of 
subsection (a)(10)(A)(ii) is the parent of a child who is under 
19 years of age (or such higher age as the State may have 
elected) who is eligible for medical assistance under the State 
plan or under a waiver of such plan, the individual may not be 
enrolled under the State plan unless the individual's child is 
enrolled under the State plan or under a waiver of the plan or 
is enrolled in other health insurance coverage. For purposes of 
the preceding sentence, the term ``parent'' includes an 
individual treated as a caretaker relative for purposes of 
carrying out section 1931.
  (ii)(1) Individuals described in this subsection are 
individuals--
                  (A) whose income does not exceed an income 
                eligibility level established by the State that 
                does not exceed the highest income eligibility 
                level established under the State plan under 
                this title (or under its State child health 
                plan under title XXI) for pregnant women; and
                  (B) who are not pregnant.
          (2) At the option of a State, individuals described 
        in this subsection may include individuals who, had 
        individuals applied on or before January 1, 2007, would 
        have been made eligible pursuant to the standards and 
        processes imposed by that State for benefits described 
        in clause (XVI) of the matter following subparagraph 
        (G) of section subsection (a)(10) pursuant to a waiver 
        granted under section 1115.
          (3) At the option of a State, for purposes of 
        subsection (a)(17)(B), in determining eligibility for 
        services under this subsection, the State may consider 
        only the income of the applicant or recipient.
  (jj) Primary Care Services Defined.--For purposes of 
subsection (a)(13)(C), the term ``primary care services'' 
means--
          (1) evaluation and management services that are 
        procedure codes (for services covered under title 
        XVIII) for services in the category designated 
        Evaluation and Management in the Healthcare Common 
        Procedure Coding System (established by the Secretary 
        under section 1848(c)(5) as of December 31, 2009, and 
        as subsequently modified); and
          (2) services related to immunization administration 
        for vaccines and toxoids for which CPT codes 90465, 
        90466, 90467, 90468, 90471, 90472, 90473, or 90474 (as 
        subsequently modified) apply under such System.
  (kk) Provider and Supplier Screening, Oversight, and 
Reporting Requirements.--For purposes of subsection (a)(77), 
the requirements of this subsection are the following:
          (1) Screening.--The State complies with the process 
        for screening providers and suppliers under this title, 
        as established by the Secretary under section 
        1886(j)(2).
          (2) Provisional period of enhanced oversight for new 
        providers and suppliers.--The State complies with 
        procedures to provide for a provisional period of 
        enhanced oversight for new providers and suppliers 
        under this title, as established by the Secretary under 
        section 1886(j)(3).
          (3) Disclosure requirements.--The State requires 
        providers and suppliers under the State plan or under a 
        waiver of the plan to comply with the disclosure 
        requirements established by the Secretary under section 
        1886(j)(4).
          (4) Temporary moratorium on enrollment of new 
        providers or suppliers.--
                  (A) Temporary moratorium imposed by the 
                secretary.--
                          (i) In general.--Subject to clause 
                        (ii), the State complies with any 
                        temporary moratorium on the enrollment 
                        of new providers or suppliers imposed 
                        by the Secretary under section 
                        1886(j)(6).
                          (ii) Exception.--A State shall not be 
                        required to comply with a temporary 
                        moratorium described in clause (i) if 
                        the State determines that the 
                        imposition of such temporary moratorium 
                        would adversely impact beneficiaries' 
                        access to medical assistance.
                  (B) Moratorium on enrollment of providers and 
                suppliers.--At the option of the State, the 
                State imposes, for purposes of entering into 
                participation agreements with providers or 
                suppliers under the State plan or under a 
                waiver of the plan, periods of enrollment 
                moratoria, or numerical caps or other limits, 
                for providers or suppliers identified by the 
                Secretary as being at high-risk for fraud, 
                waste, or abuse as necessary to combat fraud, 
                waste, or abuse, but only if the State 
                determines that the imposition of any such 
                period, cap, or other limits would not 
                adversely impact beneficiaries' access to 
                medical assistance.
          (5) Compliance programs.--The State requires 
        providers and suppliers under the State plan or under a 
        waiver of the plan to establish, in accordance with the 
        requirements of section 1866(j)(7), a compliance 
        program that contains the core elements established 
        under subparagraph (B) of that section 1866(j)(7) for 
        providers or suppliers within a particular industry or 
        category.
          (6) Reporting of adverse provider actions.--The State 
        complies with the national system for reporting 
        criminal and civil convictions, sanctions, negative 
        licensure actions, and other adverse provider actions 
        to the Secretary, through the Administrator of the 
        Centers for Medicare & Medicaid Services, in accordance 
        with regulations of the Secretary.
          (7) Enrollment and npi of ordering or referring 
        providers.--The State requires--
                  (A) all ordering or referring physicians or 
                other professionals to be enrolled under the 
                State plan or under a waiver of the plan as a 
                participating provider; and
                  (B) the national provider identifier of any 
                ordering or referring physician or other 
                professional to be specified on any claim for 
                payment that is based on an order or referral 
                of the physician or other professional.
          (8) Other state oversight.--Nothing in this 
        subsection shall be interpreted to preclude or limit 
        the ability of a State to engage in provider and 
        supplier screening or enhanced provider and supplier 
        oversight activities beyond those required by the 
        Secretary.

           *       *       *       *       *       *       *


                  payment for covered outpatient drugs

  Sec. 1927. (a) Requirement for Rebate Agreement.--
          (1) In general.--In order for payment to be available 
        under section 1903(a) or under part B of title XVIII 
        for covered outpatient drugs of a manufacturer, the 
        manufacturer must have entered into and have in effect 
        a rebate agreement described in subsection (b) with the 
        Secretary, on behalf of States (except that, the 
        Secretary may authorize a State to enter directly into 
        agreements with a manufacturer), and must meet the 
        requirements of paragraph (5) (with respect to drugs 
        purchased by a covered entity on or after the first day 
        of the first month that begins after the date of the 
        enactment of title VI of the Veterans Health Care Act 
        of 1992) and paragraph (6). Any agreement between a 
        State and a manufacturer prior to April 1, 1991, shall 
        be deemed to have been entered into on January 1, 1991, 
        and payment to such manufacturer shall be retroactively 
        calculated as if the agreement between the manufacturer 
        and the State had been entered into on January 1, 1991. 
        If a manufacturer has not entered into such an 
        agreement before March 1, 1991, such an agreement, 
        subsequently entered into, shall become effective as of 
        the date on which the agreement is entered into or, at 
        State option, on any date thereafter on or before the 
        first day of the calendar quarter that begins more than 
        60 days after the date the agreement is entered into.
          (2) Effective date.--Paragraph (1) shall first apply 
        to drugs dispensed under this title on or after January 
        1, 1991.
          (3) Authorizing payment for drugs not covered under 
        rebate agreements.--Paragraph (1), and section 
        1903(i)(10)(A), shall not apply to the dispensing of a 
        single source drug or innovator multiple source drug if 
        (A)(i) the State has made a determination that the 
        availability of the drug is essential to the health of 
        beneficiaries under the State plan for medical 
        assistance; (ii) such drug has been given a rating of 
        1-A by the Food and Drug Administration; and (iii)(I) 
        the physician has obtained approval for use of the drug 
        in advance of its dispensing in accordance with a prior 
        authorization program described in subsection (d), or 
        (II) the Secretary has reviewed and approved the 
        State's determination under subparagraph (A); or (B) 
        the Secretary determines that in the first calendar 
        quarter of 1991, there were extenuating circumstances.
          (4) Effect on existing agreements.--In the case of a 
        rebate agreement in effect between a State and a 
        manufacturer on the date of the enactment of this 
        section, such agreement, for the initial agreement 
        period specified therein, shall be considered to be a 
        rebate agreement in compliance with this section with 
        respect to that State, if the State agrees to report to 
        the Secretary any rebates paid pursuant to the 
        agreement and such agreement provides for a minimum 
        aggregate rebate of 10 percent of the State's total 
        expenditures under the State plan for coverage of the 
        manufacturer's drugs under this title. If, after the 
        initial agreement period, the State establishes to the 
        satisfaction of the Secretary that an agreement in 
        effect on the date of the enactment of this section 
        provides for rebates that are at least as large as the 
        rebates otherwise required under this section, and the 
        State agrees to report any rebates under the agreement 
        to the Secretary, the agreement shall be considered to 
        be a rebate agreement in compliance with the section 
        for the renewal periods of such agreement.
          (5) Limitation on prices of drugs purchased by 
        covered entities.--
                  (A) Agreement with secretary.--A manufacturer 
                meets the requirements of this paragraph if the 
                manufacturer has entered into an agreement with 
                the Secretary that meets the requirements of 
                section 340B of the Public Health Service Act 
                with respect to covered outpatient drugs 
                purchased by a covered entity on or after the 
                first day of the first month that begins after 
                the date of the enactment of this paragraph.
                  (B) Covered entity defined.--In this 
                subsection, the term ``covered entity'' means 
                an entity described in section 340B(a)(4) of 
                the Public Health Service Act.
                  (C) Establishment of alternative mechanism to 
                ensure against duplicate discounts or 
                rebates.--If the Secretary does not establish a 
                mechanism under section 340B(a)(5)(A) of the 
                Public Health Service Act within 12 months of 
                the date of the enactment of such section, the 
                following requirements shall apply:
                          (i) Entities.--Each covered entity 
                        shall inform the single State agency 
                        under section 1902(a)(5) when it is 
                        seeking reimbursement from the State 
                        plan for medical assistance described 
                        in section 1905(a)(12) with respect to 
                        a unit of any covered outpatient drug 
                        which is subject to an agreement under 
                        section 340B(a) of such Act.
                          (ii) State agency.--Each such single 
                        State agency shall provide a means by 
                        which a covered entity shall indicate 
                        on any drug reimbursement claims form 
                        (or format, where electronic claims 
                        management is used) that a unit of the 
                        drug that is the subject of the form is 
                        subject to an agreement under section 
                        340B of such Act, and not submit to any 
                        manufacturer a claim for a rebate 
                        payment under subsection (b) with 
                        respect to such a drug.
                  (D) Effect of subsequent amendments.--In 
                determining whether an agreement under 
                subparagraph (A) meets the requirements of 
                section 340B of the Public Health Service Act, 
                the Secretary shall not take into account any 
                amendments to such section that are enacted 
                after the enactment of title VI of the Veterans 
                Health Care Act of 1992.
                  (E) Determination of compliance.--A 
                manufacturer is deemed to meet the requirements 
                of this paragraph if the manufacturer 
                establishes to the satisfaction of the 
                Secretary that the manufacturer would comply 
                (and has offered to comply) with the provisions 
                of section 340B of the Public Health Service 
                Act (as in effect immediately after the 
                enactment of this paragraph, and would have 
                entered into an agreement under such section 
                (as such section was in effect at such time), 
                but for a legislative change in such section 
                after the date of the enactment of this 
                paragraph.
                  (6) Requirements relating to master 
                agreements for drugs procured by department of 
                veterans affairs and certain other federal 
                agencies.--
                          (A) In general.--A manufacturer meets 
                        the requirements of this paragraph if 
                        the manufacturer complies with the 
                        provisions of section 8126 of title 38, 
                        United States Code, including the 
                        requirement of entering into a master 
                        agreement with the Secretary of 
                        Veterans Affairs under such section.
                          (B) Effect of subsequent 
                        amendments.--In determining whether a 
                        master agreement described in 
                        subparagraph (A) meets the requirements 
                        of section 8126 of title 38, United 
                        States Code, the Secretary shall not 
                        take into account any amendments to 
                        such section that are enacted after the 
                        enactment of title VI of the Veterans 
                        Health Care Act of 1992.
                          (C) Determination of compliance.--A 
                        manufacturer is deemed to meet the 
                        requirements of this paragraph if the 
                        manufacturer establishes to the 
                        satisfaction of the Secretary that the 
                        manufacturer would comply (and has 
                        offered to comply) with the provisions 
                        of section 8126 of title 38, United 
                        States Code (as in effect immediately 
                        after the enactment of this paragraph) 
                        and would have entered into an 
                        agreement under such section (as such 
                        section was in effect at such time), 
                        but for a legislative change in such 
                        section after the date of the enactment 
                        of this paragraph.
          (7) Requirement for submission of utilization data 
        for certain physician administered drugs.--
                  (A) Single source drugs.--In order for 
                payment to be available under section 1903(a) 
                for a covered outpatient drug that is a single 
                source drug that is physician administered 
                under this title (as determined by the 
                Secretary), and that is administered on or 
                after January 1, 2006, the State shall provide 
                for the collection and submission of such 
                utilization data and coding (such as J-codes 
                and National Drug Code numbers) for each such 
                drug as the Secretary may specify as necessary 
                to identify the manufacturer of the drug in 
                order to secure rebates under this section for 
                drugs administered for which payment is made 
                under this title.
                  (B) Multiple source drugs.--
                          (i) Identification of most frequently 
                        physician administered multiple source 
                        drugs.--Not later than January 1, 2007, 
                        the Secretary shall publish a list of 
                        the 20 physician administered multiple 
                        source drugs that the Secretary 
                        determines have the highest dollar 
                        volume of physician administered drugs 
                        dispensed under this title. The 
                        Secretary may modify such list from 
                        year to year to reflect changes in such 
                        volume.
                          (ii) Requirement.--In order for 
                        payment to be available under section 
                        1903(a) for a covered outpatient drug 
                        that is a multiple source drug that is 
                        physician administered (as determined 
                        by the Secretary), that is on the list 
                        published under clause (i), and that is 
                        administered on or after January 1, 
                        2008, the State shall provide for the 
                        submission of such utilization data and 
                        coding (such as J-codes and National 
                        Drug Code numbers) for each such drug 
                        as the Secretary may specify as 
                        necessary to identify the manufacturer 
                        of the drug in order to secure rebates 
                        under this section.
                  (C) Use of ndc codes.--Not later than January 
                1, 2007, the information shall be submitted 
                under subparagraphs (A) and (B)(ii) using 
                National Drug Code codes unless the Secretary 
                specifies that an alternative coding system 
                should be used.
                  (D) Hardship waiver.--The Secretary may delay 
                the application of subparagraph (A) or (B)(ii), 
                or both, in the case of a State to prevent 
                hardship to States which require additional 
                time to implement the reporting system required 
                under the respective subparagraph.
  (b) Terms of Rebate Agreement.--
          (1) Periodic rebates.--
                  (A) In general.--A rebate agreement under 
                this subsection shall require the manufacturer 
                to provide, to each State plan approved under 
                this title, a rebate for a rebate period in an 
                amount specified in subsection (c) for covered 
                outpatient drugs of the manufacturer dispensed 
                after December 31, 1990, for which payment was 
                made under the State plan for such period, 
                including such drugs dispensed to individuals 
                enrolled with a medicaid managed care 
                organization if the organization is responsible 
                for coverage of such drugs. Such rebate shall 
                be paid by the manufacturer not later than 30 
                days after the date of receipt of the 
                information described in paragraph (2) for the 
                period involved.
                  (B) Offset against medical assistance.--
                Amounts received by a State under this section 
                (or under an agreement authorized by the 
                Secretary under subsection (a)(1) or an 
                agreement described in subsection (a)(4)) in 
                any quarter shall be considered to be a 
                reduction in the amount expended under the 
                State plan in the quarter for medical 
                assistance for purposes of section 1903(a)(1).
                  (C) Special rule for increased minimum rebate 
                percentage.--
                          (i) In general.--In addition to the 
                        amounts applied as a reduction under 
                        subparagraph (B), for rebate periods 
                        beginning on or after January 1, 2010, 
                        during a fiscal year, the Secretary 
                        shall reduce payments to a State under 
                        section 1903(a) in the manner specified 
                        in clause (ii), in an amount equal to 
                        the product of--
                                  (I) 100 percent minus the 
                                Federal medical assistance 
                                percentage applicable to the 
                                rebate period for the State; 
                                and
                                  (II) the amounts received by 
                                the State under such 
                                subparagraph that are 
                                attributable (as estimated by 
                                the Secretary based on 
                                utilization and other data) to 
                                the increase in the minimum 
                                rebate percentage effected by 
                                the amendments made by 
                                subsections (a)(1), (b), and 
                                (d) of section 2501 of the 
                                Patient Protection and 
                                Affordable Care Act, taking 
                                into account the additional 
                                drugs included under the 
                                amendments made by subsection 
                                (c) of section 2501 of such 
                                Act.
                        The Secretary shall adjust such payment 
                        reduction for a calendar quarter to the 
                        extent the Secretary determines, based 
                        upon subsequent utilization and other 
                        data, that the reduction for such 
                        quarter was greater or less than the 
                        amount of payment reduction that should 
                        have been made.
                          (ii) Manner of payment reduction.--
                        The amount of the payment reduction 
                        under clause (i) for a State for a 
                        quarter shall be deemed an overpayment 
                        to the State under this title to be 
                        disallowed against the State's regular 
                        quarterly draw for all Medicaid 
                        spending under section 1903(d)(2). Such 
                        a disallowance is not subject to a 
                        reconsideration under section 1116(d).
          (2) State provision of information.--
                  (A) State responsibility.--Each State agency 
                under this title shall report to each 
                manufacturer not later than 60 days after the 
                end of each rebate period and in a form 
                consistent with a standard reporting format 
                established by the Secretary, information on 
                the total number of units of each dosage form 
                and strength and package size of each covered 
                outpatient drug dispensed after December 31, 
                1990, for which payment was made under the plan 
                during the period, including such information 
                reported by each medicaid managed care 
                organization, and shall promptly transmit a 
                copy of such report to the Secretary.
                  (B) Audits.--A manufacturer may audit the 
                information provided (or required to be 
                provided) under subparagraph (A). Adjustments 
                to rebates shall be made to the extent that 
                information indicates that utilization was 
                greater or less than the amount previously 
                specified.
          (3) Manufacturer provision of price information.--
                  (A) In general.--Each manufacturer with an 
                agreement in effect under this section shall 
                report to the Secretary--
                          (i) not later than 30 days after the 
                        last day of each rebate period under 
                        the agreement--
                          (I) on the average manufacturer price 
                        (as defined in subsection (k)(1)) for 
                        covered outpatient drugs for the rebate 
                        period under the agreement (including 
                        for all such drugs that are sold under 
                        a new drug application approved under 
                        section 505(c) of the Federal Food, 
                        Drug, and Cosmetic Act); and
                          (II) for single source drugs and 
                        innovator multiple source drugs 
                        (including all such drugs that are sold 
                        under a new drug application approved 
                        under section 505(c) of the Federal 
                        Food, Drug, and Cosmetic Act), on the 
                        manufacturer's best price (as defined 
                        in subsection (c)(1)(C)) for such drugs 
                        for the rebate period under the 
                        agreement;
                          (ii) not later than 30 days after the 
                        date of entering into an agreement 
                        under this section on the average 
                        manufacturer price (as defined in 
                        subsection (k)(1)) as of October 1, 
                        1990 for each of the manufacturer's 
                        covered outpatient drugs (including for 
                        such drugs that are sold under a new 
                        drug application approved under section 
                        505(c) of the Federal Food, Drug, and 
                        Cosmetic Act); and
                          (iii) for calendar quarters beginning 
                        on or after January 1, 2004, in 
                        conjunction with reporting required 
                        under clause (i) and by National Drug 
                        Code (including package size)--
                                  (I) the manufacturer's 
                                average sales price (as defined 
                                in section 1847A(c)) and the 
                                total number of units specified 
                                under section 1847A(b)(2)(A);
                                  (II) if required to make 
                                payment under section 1847A, 
                                the manufacturer's wholesale 
                                acquisition cost, as defined in 
                                subsection (c)(6) of such 
                                section; and
                                  (III) information on those 
                                sales that were made at a 
                                nominal price or otherwise 
                                described in section 
                                1847A(c)(2)(B);
                        for a drug or biological described in 
                        subparagraph (C), (D), (E), or (G) of 
                        section 1842(o)(1) or section 
                        1881(b)(13)(A)(ii), and, for calendar 
                        quarters beginning on or after January 
                        1, 2007 and only with respect to the 
                        information described in subclause 
                        (III), for covered outpatient drugs.
                          (iv) not later than 30 days after the 
                        last day of each month of a rebate 
                        period under the agreement, on the 
                        manufacturer's total number of units 
                        that are used to calculate the monthly 
                        average manufacturer price for each 
                        covered outpatient drug;
                Information reported under this subparagraph is 
                subject to audit by the Inspector General of 
                the Department of Health and Human Services. 
                Beginning July 1, 2006, the Secretary shall 
                provide on a monthly basis to States under 
                subparagraph (D)(iv) the most recently reported 
                average manufacturer prices for single source 
                drugs and for multiple source drugs and shall, 
                on at least a quarterly basis, update the 
                information posted on the website under 
                subparagraph (D)(v) (relating to the weighted 
                average of the most recently reported monthly 
                average manufacturer prices).
                  (B) Verification surveys of average 
                manufacturer price and manufacturer's average 
                sales price.--The Secretary may survey 
                wholesalers and manufacturers that directly 
                distribute their covered outpatient drugs, when 
                necessary, to verify manufacturer prices and 
                manufacturer's average sales prices (including 
                wholesale acquisition cost) if required to make 
                payment reported under subparagraph (A). The 
                Secretary may impose a civil monetary penalty 
                in an amount not to exceed $100,000 on a 
                wholesaler, manufacturer, or direct seller, if 
                the wholesaler, manufacturer, or direct seller 
                of a covered outpatient drug refuses a request 
                for information about charges or prices by the 
                Secretary in connection with a survey under 
                this subparagraph or knowingly provides false 
                information. The provisions of section 1128A 
                (other than subsections (a) (with respect to 
                amounts of penalties or additional assessments) 
                and (b)) shall apply to a civil money penalty 
                under this subparagraph in the same manner as 
                such provisions apply to a penalty or 
                proceeding under section 1128A(a).
                  (C) Penalties.--
                          (i) Failure to provide timely 
                        information.--In the case of a 
                        manufacturer with an agreement under 
                        this section that fails to provide 
                        information required under subparagraph 
                        (A) on a timely basis, the amount of 
                        the penalty shall be increased by 
                        $10,000 for each day in which such 
                        information has not been provided and 
                        such amount shall be paid to the 
                        Treasury, and, if such information is 
                        not reported within 90 days of the 
                        deadline imposed, the agreement shall 
                        be suspended for services furnished 
                        after the end of such 90-day period and 
                        until the date such information is 
                        reported (but in no case shall such 
                        suspension be for a period of less than 
                        30 days).
                          (ii) False information.--Any 
                        manufacturer with an agreement under 
                        this section that knowingly provides 
                        false information is subject to a civil 
                        money penalty in an amount not to 
                        exceed $100,000 for each item of false 
                        information. Such civil money penalties 
                        are in addition to other penalties as 
                        may be prescribed by law. The 
                        provisions of section 1128A (other than 
                        subsections (a) and (b)) shall apply to 
                        a civil money penalty under this 
                        subparagraph in the same manner as such 
                        provisions apply to a penalty or 
                        proceeding under section 1128A(a).
                  (D) Confidentiality of information.--
                Notwithstanding any other provision of law, 
                information disclosed by manufacturers or 
                wholesalers under this paragraph or under an 
                agreement with the Secretary of Veterans 
                Affairs described in subsection (a)(6)(A)(ii) 
                (other than the wholesale acquisition cost for 
                purposes of carrying out section 1847A) is 
                confidential and shall not be disclosed by the 
                Secretary or the Secretary of Veterans Affairs 
                or a State agency (or contractor therewith) in 
                a form which discloses the identity of a 
                specific manufacturer or wholesaler, prices 
                charged for drugs by such manufacturer or 
                wholesaler, except--
                          (i) as the Secretary determines to be 
                        necessary to carry out this section, to 
                        carry out section 1847A (including the 
                        determination and implementation of the 
                        payment amount), or to carry out 
                        section 1847B,
                          (ii) to permit the Comptroller 
                        General to review the information 
                        provided,
                          (iii) to permit the Director of the 
                        Congressional Budget Office to review 
                        the information provided,
                          (iv) to States to carry out this 
                        title, and
                          (v) to the Secretary to disclose 
                        (through a website accessible to the 
                        public) the weighted average of the 
                        most recently reported monthly average 
                        manufacturer prices and the average 
                        retail survey price determined for each 
                        multiple source drug in accordance with 
                        subsection (f).
                The previous sentence shall also apply to 
                information disclosed under section 1860D-
                2(d)(2) or 1860D-4(c)(2)(E) and drug pricing 
                data reported under the first sentence of 
                section 1860D-31(i)(1).
          (4) Length of agreement.--
                  (A) In general.--A rebate agreement shall be 
                effective for an initial period of not less 
                than 1 year and shall be automatically renewed 
                for a period of not less than one year unless 
                terminated under subparagraph (B).
                  (B) Termination.--
                          (i) By the secretary.--The Secretary 
                        may provide for termination of a rebate 
                        agreement for violation of the 
                        requirements of the agreement or other 
                        good cause shown. Such termination 
                        shall not be effective earlier than 60 
                        days after the date of notice of such 
                        termination. The Secretary shall 
                        provide, upon request, a manufacturer 
                        with a hearing concerning such a 
                        termination, but such hearing shall not 
                        delay the effective date of the 
                        termination.
                          (ii) By a manufacturer.--A 
                        manufacturer may terminate a rebate 
                        agreement under this section for any 
                        reason. Any such termination shall not 
                        be effective until the calendar quarter 
                        beginning at least 60 days after the 
                        date the manufacturer provides notice 
                        to the Secretary.
                          (iii) Effectiveness of termination.--
                        Any termination under this subparagraph 
                        shall not affect rebates due under the 
                        agreement before the effective date of 
                        its termination.
                          (iv) Notice to states.--In the case 
                        of a termination under this 
                        subparagraph, the Secretary shall 
                        provide notice of such termination to 
                        the States within not less than 30 days 
                        before the effective date of such 
                        termination.
                          (v) Application to terminations of 
                        other agreements.--The provisions of 
                        this subparagraph shall apply to the 
                        terminations of agreements described in 
                        section 340B(a)(1) of the Public Health 
                        Service Act and master agreements 
                        described in section 8126(a) of title 
                        38, United States Code.
                  (C) Delay before reentry.--In the case of any 
                rebate agreement with a manufacturer under this 
                section which is terminated, another such 
                agreement with the manufacturer (or a successor 
                manufacturer) may not be entered into until a 
                period of 1 calendar quarter has elapsed since 
                the date of the termination, unless the 
                Secretary finds good cause for an earlier 
                reinstatement of such an agreement.
  (c) Determination of Amount of Rebate.--
          (1) Basic rebate for single source drugs and 
        innovator multiple source drugs.--
                  (A) In general.--Except as provided in 
                paragraph (2), the amount of the rebate 
                specified in this subsection for a rebate 
                period (as defined in subsection (k)(8)) with 
                respect to each dosage form and strength of a 
                single source drug or an innovator multiple 
                source drug shall be equal to the product of--
                          (i) the total number of units of each 
                        dosage form and strength paid for under 
                        the State plan in the rebate period (as 
                        reported by the State); and
                          (ii) subject to subparagraph (B)(ii), 
                        the greater of--
                                  (I) the difference between 
                                the average manufacturer price 
                                and the best price (as defined 
                                in subparagraph (C)) for the 
                                dosage form and strength of the 
                                drug, or
                                  (II) the minimum rebate 
                                percentage (specified in 
                                subparagraph (B)(i)) of such 
                                average manufacturer price,
                        of or the rebate period.
                  (B) Range of rebates required.--
                          (i) Minimum rebate percentage.--For 
                        purposes of subparagraph (A)(ii)(II), 
                        the ``minimum rebate percentage'' for 
                        rebate periods beginning--
                                  (I) after December 31, 1990, 
                                and before October 1, 1992, is 
                                12.5 percent;
                                  (II) after September 30, 
                                1992, and before January 1, 
                                1994, is 15.7 percent;
                                  (III) after December 31, 
                                1993, and before January 1, 
                                1995, is 15.4 percent;
                                  (IV) after December 31, 1994, 
                                and before January 1, 1996, is 
                                15.2 percent;
                                  (V) after December 31, 1995, 
                                and before January 1, 2010 is 
                                15.1 percent;and
                                  (VI) except as provided in 
                                clause (iii), after December 
                                31, 2009, 23.1 percent.
                          (ii) Temporary limitation on maximum 
                        rebate amount.--In no case shall the 
                        amount applied under subparagraph 
                        (A)(ii) for a rebate period beginning--
                                  (I) before January 1, 1992, 
                                exceed 25 percent of the 
                                average manufacturer price; or
                                  (II) after December 31, 1991, 
                                and before January 1, 1993, 
                                exceed 50 percent of the 
                                average manufacturer price.
                          (iii) Minimum rebate percentage for 
                        certain drugs.--
                                  (I) In general.--In the case 
                                of a single source drug or an 
                                innovator multiple source drug 
                                described in subclause (II), 
                                the minimum rebate percentage 
                                for rebate periods specified in 
                                clause (i)(VI) is 17.1 percent.
                                  (II) Drug described.--For 
                                purposes of subclause (I), a 
                                single source drug or an 
                                innovator multiple source drug 
                                described in this subclause is 
                                any of the following drugs:
                                          (aa) A clotting 
                                        factor for which a 
                                        separate furnishing 
                                        payment is made under 
                                        section 1842(o)(5) and 
                                        which is included on a 
                                        list of such factors 
                                        specified and updated 
                                        regularly by the 
                                        Secretary.
                                          (bb) A drug approved 
                                        by the Food and Drug 
                                        Administration 
                                        exclusively for 
                                        pediatric indications.
                  (C) Best price defined.--For purposes of this 
                section--
                          (i) In general.--The term ``best 
                        price'' means, with respect to a single 
                        source drug or innovator multiple 
                        source drug of a manufacturer 
                        (including the lowest price available 
                        to any entity for any such drug of a 
                        manufacturer that is sold under a new 
                        drug application approved under section 
                        505(c) of the Federal Food, Drug, and 
                        Cosmetic Act), the lowest price 
                        available from the manufacturer during 
                        the rebate period to any wholesaler, 
                        retailer, provider, health maintenance 
                        organization, nonprofit entity, or 
                        governmental entity within the United 
                        States, excluding--
                                  (I) any prices charged on or 
                                after October 1, 1992, to the 
                                Indian Health Service, the 
                                Department of Veterans Affairs, 
                                a State home receiving funds 
                                under section 1741 of title 38, 
                                United States Code, the 
                                Department of Defense, the 
                                Public Health Service, or a 
                                covered entity described in 
                                subsection (a)(5)(B) (including 
                                inpatient prices charged to 
                                hospitals described in section 
                                340B(a)(4)(L) of the Public 
                                Health Service Act);
                                  (II) any prices charged under 
                                the Federal Supply Schedule of 
                                the General Services 
                                Administration;
                                  (III) any prices used under a 
                                State pharmaceutical assistance 
                                program;
                                  (IV) any depot prices and 
                                single award contract prices, 
                                as defined by the Secretary, of 
                                any agency of the Federal 
                                Government;
                                  (V) the prices negotiated 
                                from drug manufacturers for 
                                covered discount card drugs 
                                under an endorsed discount card 
                                program under section 1860D-31; 
                                and
                                  (VI) any prices charged which 
                                are negotiated by a 
                                prescription drug plan under 
                                part D of title XVIII, by an 
                                MA-PD plan under part C of such 
                                title with respect to covered 
                                part D drugs or by a qualified 
                                retiree prescription drug plan 
                                (as defined in section 1860D-
                                22(a)(2)) with respect to such 
                                drugs on behalf of individuals 
                                entitled to benefits under part 
                                A or enrolled under part B of 
                                such title, or any discounts 
                                provided by manufacturers under 
                                the Medicare coverage gap 
                                discount program under section 
                                1860D-14A.
                          (ii) Special rules.--The term ``best 
                        price''--
                                  (I) shall be inclusive of 
                                cash discounts, free goods that 
                                are contingent on any purchase 
                                requirement, volume discounts, 
                                and rebates (other than rebates 
                                under this section);
                                  (II) shall be determined 
                                without regard to special 
                                packaging, labeling, or 
                                identifiers on the dosage form 
                                or product or package;
                                  (III) shall not take into 
                                account prices that are merely 
                                nominal in amount; and
                          (IV) in the case of a manufacturer 
                        that approves, allows, or otherwise 
                        permits any other drug of the 
                        manufacturer to be sold under a new 
                        drug application approved under section 
                        505(c) of the Federal Food, Drug, and 
                        Cosmetic Act, shall be inclusive of the 
                        lowest price for such authorized drug 
                        available from the manufacturer during 
                        the rebate period to any manufacturer, 
                        wholesaler, retailer, provider, health 
                        maintenance organization, nonprofit 
                        entity, or governmental entity within 
                        the United States, excluding those 
                        prices described in subclauses (I) 
                        through (IV) of clause (i).
                          (iii) Application of auditing and 
                        recordkeeping requirements.--With 
                        respect to a covered entity described 
                        in section 340B(a)(4)(L) of the Public 
                        Health Service Act, any drug purchased 
                        for inpatient use shall be subject to 
                        the auditing and recordkeeping 
                        requirements described in section 
                        340B(a)(5)(C) of the Public Health 
                        Service Act.
                  (D) Limitation on sales at a nominal price.--
                          (i) In general.--For purposes of 
                        subparagraph (C)(ii)(III) and 
                        subsection (b)(3)(A)(iii)(III), only 
                        sales by a manufacturer of covered 
                        outpatient drugs at nominal prices to 
                        the following shall be considered to be 
                        sales at a nominal price or merely 
                        nominal in amount:
                                  (I) A covered entity 
                                described in section 340B(a)(4) 
                                of the Public Health Service 
                                Act.
                                  (II) An intermediate care 
                                facility for the mentally 
                                retarded.
                                  (III) A State-owned or 
                                operated nursing facility.
                                  (IV) An entity that--
                                          (aa) is described in 
                                        section 501(c)(3) of 
                                        the Internal Revenue 
                                        Code of 1986 and exempt 
                                        from tax under section 
                                        501(a) of such Act or 
                                        is State-owned or 
                                        operated; and
                                          (bb) would be a 
                                        covered entity 
                                        described in section 
                                        340(B)(a)(4) of the 
                                        Public Health Service 
                                        Act insofar as the 
                                        entity provides the 
                                        same type of services 
                                        to the same type of 
                                        populations as a 
                                        covered entity 
                                        described in such 
                                        section provides, but 
                                        does not receive 
                                        funding under a 
                                        provision of law 
                                        referred to in such 
                                        section;
                                  (V) A public or nonprofit 
                                entity, or an entity based at 
                                an institution of higher 
                                learning whose primary purpose 
                                is to provide health care 
                                services to students of that 
                                institution, that provides a 
                                service or services described 
                                under section 1001(a) of the 
                                Public Health Service Act, 42 
                                U.S.C. 300.
                                  (VI) Any other facility or 
                                entity that the Secretary 
                                determines is a safety net 
                                provider to which sales of such 
                                drugs at a nominal price would 
                                be appropriate based on the 
                                factors described in clause 
                                (ii).
                          (ii) Factors.--The factors described 
                        in this clause with respect to a 
                        facility or entity are the following:
                                  (I) The type of facility or 
                                entity.
                                  (II) The services provided by 
                                the facility or entity.
                                  (III) The patient population 
                                served by the facility or 
                                entity.
                                  (IV) The number of other 
                                facilities or entities eligible 
                                to purchase at nominal prices 
                                in the same service area.
                          (iii) Nonapplication.--Clause (i) 
                        shall not apply with respect to sales 
                        by a manufacturer at a nominal price of 
                        covered outpatient drugs pursuant to a 
                        master agreement under section 8126 of 
                        title 38, United States Code.
                          (iv) Rule of Construction.--Nothing 
                        in this subparagraph shall be construed 
                        to alter any existing statutory or 
                        regulatory prohibition on services with 
                        respect to an entity described in 
                        clause (i)(IV), including the 
                        prohibition set forth in section 1008 
                        of the Public Health Service Act.
          (2) Additional rebate for single source and innovator 
        multiple source drugs.--
                  (A) In general.--The amount of the rebate 
                specified in this subsection for a rebate 
                period, with respect to each dosage form and 
                strength of a single source drug or an 
                innovator multiple source drug, shall be 
                increased by an amount equal to the product 
                of--
                          (i) the total number of units of such 
                        dosage form and strength dispensed 
                        after December 31, 1990, for which 
                        payment was made under the State plan 
                        for the rebate period; and
                          (ii) the amount (if any) by which--
                                  (I) the average manufacturer 
                                price for the dosage form and 
                                strength of the drug for the 
                                period, exceeds
                                  (II) the average manufacturer 
                                price for such dosage form and 
                                strength for the calendar 
                                quarter beginning July 1, 1990 
                                (without regard to whether or 
                                not the drug has been sold or 
                                transferred to an entity, 
                                including a division or 
                                subsidiary of the manufacturer, 
                                after the first day of such 
                                quarter), increased by the 
                                percentage by which the 
                                consumer price index for all 
                                urban consumers (United States 
                                city average) for the month 
                                before the month in which the 
                                rebate period begins exceeds 
                                such index for September 1990.
                  (B) Treatment of subsequently approved 
                drugs.--In the case of a covered outpatient 
                drug approved by the Food and Drug 
                Administration after October 1, 1990, clause 
                (ii)(II) of subparagraph (A) shall be applied 
                by substituting ``the first full calendar 
                quarter after the day on which the drug was 
                first marketed'' for ``the calendar quarter 
                beginning July 1, 1990'' and ``the month prior 
                to the first month of the first full calendar 
                quarter after the day on which the drug was 
                first marketed'' for ``September 1990''.
                  (C) Treatment of new formulations.--In the 
                case of a drug that is a line extension of a 
                single source drug or an innovator multiple 
                source drug that is an oral solid dosage form, 
                the rebate obligation with respect to such drug 
                under this section shall be the amount computed 
                under this section for such new drug or, if 
                greater, the product of--
                          (i) the average manufacturer price of 
                        the line extension of a single source 
                        drug or an innovator multiple source 
                        drug that is an oral solid dosage form;
                          (ii) the highest additional rebate 
                        (calculated as a percentage of average 
                        manufacturer price) under this section 
                        for any strength of the original single 
                        source drug or innovator multiple 
                        source drug; and
                          (iii) the total number of units of 
                        each dosage form and strength of the 
                        line extension product paid for under 
                        the State plan in the rebate period (as 
                        reported by the State).
                In this subparagraph, the term ``line 
                extension'' means, with respect to a drug, a 
                new formulation of the drug, such as an 
                extended release formulation, but does not 
                include an abuse-deterrent formulation of the 
                drug (as determined by the Secretary), 
                regardless of whether such abuse-deterrent 
                formulation is an extended release formulation.
                  (D) Maximum rebate amount.--In no case shall 
                the sum of the amounts applied under paragraph 
                (1)(A)(ii) and this paragraph with respect to 
                each dosage form and strength of a single 
                source drug or an innovator multiple source 
                drug for a rebate period beginning after 
                December 31, 2009, exceed 100 percent of the 
                average manufacturer price of the drug.
          (3) Rebate for other drugs.--
                  (A) In general.--Except as provided in 
                subparagraph (C), the amount of the rebate paid 
                to a State for a rebate period with respect to 
                each dosage form and strength of covered 
                outpatient drugs (other than single source 
                drugs and innovator multiple source drugs) 
                shall be equal to the product of--
                          (i) the applicable percentage (as 
                        described in subparagraph (B)) of the 
                        average manufacturer price for the 
                        dosage form and strength for the rebate 
                        period, and
                          (ii) the total number of units of 
                        such dosage form and strength dispensed 
                        after December 31, 1990, for which 
                        payment was made under the State plan 
                        for the rebate period.
                  (B) Applicable percentage defined.--For 
                purposes of subparagraph (A)(i), the 
                ``applicable percentage'' for rebate periods 
                beginning--
                          (i) before January 1, 1994, is 10 
                        percent,
                          (ii) after December 31, 1993, and 
                        before January 1, 2010, is 11 percent; 
                        and
                          (iii) after December 31, 2009, is 13 
                        percent.
                  (C) Additional rebate.--
                          (i) In general.--The amount of the 
                        rebate specified in this paragraph for 
                        a rebate period, with respect to each 
                        dosage form and strength of a covered 
                        outpatient drug other than a single 
                        source drug or an innovator multiple 
                        source drug of a manufacturer, shall be 
                        increased in the manner that the rebate 
                        for a dosage form and strength of a 
                        single source drug or an innovator 
                        multiple source drug is increased under 
                        subparagraphs (A) and (D) of paragraph 
                        (2), except as provided in clause (ii).
                          (ii) Special rules for application of 
                        provision.--In applying subparagraphs 
                        (A) and (D) of paragraph (2) under 
                        clause (i)--
                                  (I) the reference in 
                                subparagraph (A)(i) of such 
                                paragraph to ``1990'' shall be 
                                deemed a reference to ``2014'';
                                  (II) subject to clause (iii), 
                                the reference in subparagraph 
                                (A)(ii) of such paragraph to 
                                ``the calendar quarter 
                                beginning July 1, 1990'' shall 
                                be deemed a reference to ``the 
                                calendar quarter beginning July 
                                1, 2014''; and
                                  (III) subject to clause 
                                (iii), the reference in 
                                subparagraph (A)(ii) of such 
                                paragraph to ``September 1990'' 
                                shall be deemed a reference to 
                                ``September 2014'';
                                  (IV) the references in 
                                subparagraph (D) of such 
                                paragraph to ``paragraph 
                                (1)(A)(ii)'', ``this 
                                paragraph'', and ``December 31, 
                                2009'' shall be deemed 
                                references to ``subparagraph 
                                (A)'', ``this subparagraph'', 
                                and ``December 31, 2014'', 
                                respectively; and
                                  (V) any reference in such 
                                paragraph to a ``single source 
                                drug or an innovator multiple 
                                source drug'' shall be deemed 
                                to be a reference to a drug to 
                                which clause (i) applies.
                          (iii) Special rule for certain 
                        noninnovator multiple source drugs.--In 
                        applying paragraph (2)(A)(ii)(II) under 
                        clause (i) with respect to a covered 
                        outpatient drug that is first marketed 
                        as a drug other than a single source 
                        drug or an innovator multiple source 
                        drug after April 1, 2013, such 
                        paragraph shall be applied--
                                  (I) by substituting ``the 
                                applicable quarter'' for ``the 
                                calendar quarter beginning July 
                                1, 1990''; and
                                  (II) by substituting ``the 
                                last month in such applicable 
                                quarter'' for ``September 
                                1990''.
                          (iv) Applicable quarter defined.--In 
                        this subsection, the term ``applicable 
                        quarter'' means, with respect to a drug 
                        described in clause (iii), the fifth 
                        full calendar quarter after which the 
                        drug is marketed as a drug other than a 
                        single source drug or an innovator 
                        multiple source drug.
  (d) Limitations on Coverage of Drugs.--
          (1) Permissible restrictions.--(A) A State may 
        subject to prior authorization any covered outpatient 
        drug. Any such prior authorization program shall comply 
        with the requirements of paragraph (5).
          (B) A State may exclude or otherwise restrict 
        coverage of a covered outpatient drug if--
                  (i) the prescribed use is not for a medically 
                accepted indication (as defined in subsection 
                (k)(6));
                  (ii) the drug is contained in the list 
                referred to in paragraph (2);
                  (iii) the drug is subject to such 
                restrictions pursuant to an agreement between a 
                manufacturer and a State authorized by the 
                Secretary under subsection (a)(1) or in effect 
                pursuant to subsection (a)(4); or
                  (iv) the State has excluded coverage of the 
                drug from its formulary established in 
                accordance with paragraph (4).
          (2) List of drugs subject to restriction.--The 
        following drugs or classes of drugs, or their medical 
        uses, may be excluded from coverage or otherwise 
        restricted:
                  (A) Agents when used for anorexia, weight 
                loss, or weight gain.
                  (B) Agents when used to promote fertility.
                  (C) Agents when used for cosmetic purposes or 
                hair growth.
                  (D) Agents when used for the symptomatic 
                relief of cough and colds.
                  (E) Prescription vitamins and mineral 
                products, except prenatal vitamins and fluoride 
                preparations.
                  (F) Nonprescription drugs, except, in the 
                case of pregnant women when recommended in 
                accordance with the Guideline referred to in 
                section 1905(bb)(2)(A), agents approved by the 
                Food and Drug Administration under the over-
                the-counter monograph process for purposes of 
                promoting, and when used to promote, tobacco 
                cessation.
                  (G) Covered outpatient drugs which the 
                manufacturer seeks to require as a condition of 
                sale that associated tests or monitoring 
                services be purchased exclusively from the 
                manufacturer or its designee.
                  (H) Agents when used for the treatment of 
                sexual or erectile dysfunction, unless such 
                agents are used to treat a condition, other 
                than sexual or erectile dysfunction, for which 
                the agents have been approved by the Food and 
                Drug Administration.
          (3) Update of drug listings.--The Secretary shall, by 
        regulation, periodically update the list of drugs or 
        classes of drugs described in paragraph (2) or their 
        medical uses, which the Secretary has determined, based 
        on data collected by surveillance and utilization 
        review programs of State medical assistance programs, 
        to be subject to clinical abuse or inappropriate use.
          (4) Requirements for formularies.--A State may 
        establish a formulary if the formulary meets the 
        following requirements:
                  (A) The formulary is developed by a committee 
                consisting of physicians, pharmacists, and 
                other appropriate individuals appointed by the 
                Governor of the State (or, at the option of the 
                State, the State's drug use review board 
                established under subsection (g)(3)).
                  (B) Except as provided in subparagraph (C), 
                the formulary includes the covered outpatient 
                drugs of any manufacturer which has entered 
                into and complies with an agreement under 
                subsection (a) (other than any drug excluded 
                from coverage or otherwise restricted under 
                paragraph (2)).
                  (C) A covered outpatient drug may be excluded 
                with respect to the treatment of a specific 
                disease or condition for an identified 
                population (if any) only if, based on the 
                drug's labeling (or, in the case of a drug the 
                prescribed use of which is not approved under 
                the Federal Food, Drug, and Cosmetic Act but is 
                a medically accepted indication, based on 
                information from the appropriate compendia 
                described in subsection (k)(6)), the excluded 
                drug does not have a significant, clinically 
                meaningful therapeutic advantage in terms of 
                safety, effectiveness, or clinical outcome of 
                such treatment for such population over other 
                drugs included in the formulary and there is a 
                written explanation (available to the public) 
                of the basis for the exclusion.
                  (D) The State plan permits coverage of a drug 
                excluded from the formulary (other than any 
                drug excluded from coverage or otherwise 
                restricted under paragraph (2)) pursuant to a 
                prior authorization program that is consistent 
                with paragraph (5).
                  (E) The formulary meets such other 
                requirements as the Secretary may impose in 
                order to achieve program savings consistent 
                with protecting the health of program 
                beneficiaries.
        A prior authorization program established by a State 
        under paragraph (5) is not a formulary subject to the 
        requirements of this paragraph.
          (5) Requirements of prior authorization programs.--A 
        State plan under this title may require, as a condition 
        of coverage or payment for a covered outpatient drug 
        for which Federal financial participation is available 
        in accordance with this section, with respect to drugs 
        dispensed on or after July 1, 1991, the approval of the 
        drug before its dispensing for any medically accepted 
        indication (as defined in subsection (k)(6)) only if 
        the system providing for such approval--
                  (A) provides response by telephone or other 
                telecommunication device within 24 hours of a 
                request for prior authorization; and
                  (B) except with respect to the drugs on the 
                list referred to in paragraph (2), provides for 
                the dispensing of at least 72-hour supply of a 
                covered outpatient prescription drug in an 
                emergency situation (as defined by the 
                Secretary).
          (6) Other permissible restrictions.--A State may 
        impose limitations, with respect to all such drugs in a 
        therapeutic class, on the minimum or maximum quantities 
        per prescription or on the number of refills, if such 
        limitations are necessary to discourage waste, and may 
        address instances of fraud or abuse by individuals in 
        any manner authorized under this Act.
          (7) Non-excludable drugs.--The following drugs or 
        classes of drugs, or their medical uses, shall not be 
        excluded from coverage:
                  (A) Agents when used to promote smoking 
                cessation, including agents approved by the 
                Food and Drug Administration under the over-
                the-counter monograph process for purposes of 
                promoting, and when used to promote, tobacco 
                cessation.
                  (B) Barbiturates.
                  (C) Benzodiazepines.
  (e) Treatment of Pharmacy Reimbursement Limits.--
          (1) In general.--During the period beginning on 
        January 1, 1991, and ending on December 31, 1994--
                  (A) a State may not reduce the payment limits 
                established by regulation under this title or 
                any limitation described in paragraph (3) with 
                respect to the ingredient cost of a covered 
                outpatient drug or the dispensing fee for such 
                a drug below the limits in effect as of January 
                1, 1991, and
                  (B) except as provided in paragraph (2), the 
                Secretary may not modify by regulation the 
                formula established under sections 447.331 
                through 447.334 of title 42, Code of Federal 
                Regulations, in effect on November 5, 1990, to 
                reduce the limits described in subparagraph 
                (A).
          (2) Special rule.--If a State is not in compliance 
        with the regulations described in paragraph (1)(B), 
        paragraph (1)(A) shall not apply to such State until 
        such State is in compliance with such regulations.
          (3) Effect on state maximum allowable cost 
        limitations.--This section shall not supersede or 
        affect provisions in effect prior to January 1, 1991, 
        or after December 31, 1994, relating to any maximum 
        allowable cost limitation established by a State for 
        payment by the State for covered outpatient drugs, and 
        rebates shall be made under this section without regard 
        to whether or not payment by the State for such drugs 
        is subject to such a limitation or the amount of such a 
        limitation.
          (4) Establishment of upper payment Limits.--Subject 
        to paragraph (5), the Secretary shall establish a 
        Federal upper reimbursement limit for each multiple 
        source drug for which the FDA has rated three or more 
        products therapeutically and pharmaceutically 
        equivalent, regardless of whether all such additional 
        formulations are rated as such and shall use only such 
        formulations when determining any such upper limit.
          (5) Use of amp in upper payment limits.--The 
        Secretary shall calculate the Federal upper 
        reimbursement limit established under paragraph (4) as 
        no less than 175 percent of the weighted average 
        (determined on the basis of utilization) of the most 
        recently reported monthly average manufacturer prices 
        for pharmaceutically and therapeutically equivalent 
        multiple source drug products that are available for 
        purchase by retail community pharmacies on a nationwide 
        basis. The Secretary shall implement a smoothing 
        process for average manufacturer prices. Such process 
        shall be similar to the smoothing process used in 
        determining the average sales price of a drug or 
        biological under section 1847A.
  (f) Survey of Retail Prices; State Payment and Utilization 
Rates; and Performance Rankings.--
          (1) Survey of retail prices.--
                  (A) Use of vendor.--The Secretary may 
                contract services for--
                          (i) with respect to a retail 
                        community pharmacy, the determination 
                        on a monthly basis of retail survey 
                        prices for covered outpatient drugs 
                        that represent a nationwide average of 
                        consumer purchase prices for such 
                        drugs, net of all discounts and rebates 
                        (to the extent any information with 
                        respect to such discounts and rebates 
                        is available); and
                          (ii) the notification of the 
                        Secretary when a drug product that is 
                        therapeutically and pharmaceutically 
                        equivalent and bioequivalent becomes 
                        generally available.
                  (B) Secretary response to notification of 
                availability of multiple source products.--If 
                contractor notifies the Secretary under 
                subparagraph (A)(ii) that a drug product 
                described in such subparagraph has become 
                generally available, the Secretary shall make a 
                determination, within 7 days after receiving 
                such notification, as to whether the product is 
                now described in subsection (e)(4).
                  (C) Use of competitive bidding.--In 
                contracting for such services, the Secretary 
                shall competitively bid for an outside vendor 
                that has a demonstrated history in--
                          (i) surveying and determining, on a 
                        representative nationwide basis, retail 
                        prices for ingredient costs of 
                        prescription drugs;
                          (ii) working with retail community 
                        pharmacies, commercial payers, and 
                        States in obtaining and disseminating 
                        such price information; and
                          (iii) collecting and reporting such 
                        price information on at least a monthly 
                        basis.
                In contracting for such services, the Secretary 
                may waive such provisions of the Federal 
                Acquisition Regulation as are necessary for the 
                efficient implementation of this subsection, 
                other than provisions relating to 
                confidentiality of information and such other 
                provisions as the Secretary determines 
                appropriate.
                  (D) Additional provisions.--A contract with a 
                vendor under this paragraph shall include such 
                terms and conditions as the Secretary shall 
                specify, including the following:
                          (i) The vendor must monitor the 
                        marketplace and report to the Secretary 
                        each time there is a new covered 
                        outpatient drug generally available.
                          (ii) The vendor must update the 
                        Secretary no less often than monthly on 
                        the retail survey prices for covered 
                        outpatient drugs.
                          (iii) The contract shall be effective 
                        for a term of 2 years.
                  (E) Availability of information to states.--
                Information on retail survey prices obtained 
                under this paragraph, including applicable 
                information on single source drugs, shall be 
                provided to States on at least a monthly basis. 
                The Secretary shall devise and implement a 
                means for providing access to each State agency 
                designated under section 1902(a)(5) with 
                responsibility for the administration or 
                supervision of the administration of the State 
                plan under this title of the retail survey 
                price determined under this paragraph.
          (2) Annual state report.--Each State shall annually 
        report to the Secretary information on--
                  (A) the payment rates under the State plan 
                under this title for covered outpatient drugs;
                  (B) the dispensing fees paid under such plan 
                for such drugs; and
                  (C) utilization rates for noninnovator 
                multiple source drugs under such plan.
          (3) Annual state performance rankings.--
                  (A) Comparative analysis.--The Secretary 
                annually shall compare, for the 50 most widely 
                prescribed drugs identified by the Secretary, 
                the national retail sales price data (collected 
                under paragraph (1)) for such drugs with data 
                on prices under this title for each such drug 
                for each State.
                  (B) Availability of information.--The 
                Secretary shall submit to Congress and the 
                States full information regarding the annual 
                rankings made under subparagraph (A).
          (4) Appropriation.--Out of any funds in the Treasury 
        not otherwise appropriated, there is appropriated to 
        the Secretary of Health and Human Services $5,000,000 
        for each of fiscal years 2006 through 2010 to carry out 
        this subsection.
  (g) Drug Use Review.--
          (1) In general.--
                  (A) In order to meet the requirement of 
                section 1903(i)(10)(B), a State shall provide, 
                by not later than January 1, 1993, for a drug 
                use review program described in paragraph (2) 
                for covered outpatient drugs in order to assure 
                that prescriptions (i) are appropriate, (ii) 
                are medically necessary, and (iii) are not 
                likely to result in adverse medical results. 
                The program shall be designed to educate 
                physicians and pharmacists to identify and 
                reduce the frequency of patterns of fraud, 
                abuse, gross overuse, or inappropriate or 
                medically unnecessary care, among physicians, 
                pharmacists, and patients, or associated with 
                specific drugs or groups of drugs, as well as 
                potential and actual severe adverse reactions 
                to drugs including education on therapeutic 
                appropriateness, overutilization and 
                underutilization, appropriate use of generic 
                products, therapeutic duplication, drug-disease 
                contraindications, drug-drug interactions, 
                incorrect drug dosage or duration of drug 
                treatment, drug-allergy interactions, and 
                clinical abuse/misuse.
                  (B) The program shall assess data on drug use 
                against predetermined standards, consistent 
                with the following:
                          (i) compendia which shall consist of 
                        the following:
                                  (I) American Hospital 
                                Formulary Service Drug 
                                Information;
                                  (II) United States 
                                Pharmacopeia-Drug Information 
                                (or its successor 
                                publications); and
                                  (III) the DRUGDEX Information 
                                System; and
                          (ii) the peer-reviewed medical 
                        literature.
                  (C) The Secretary, under the procedures 
                established in section 1903, shall pay to each 
                State an amount equal to 75 per centum of so 
                much of the sums expended by the State plan 
                during calendar years 1991 through 1993 as the 
                Secretary determines is attributable to the 
                statewide adoption of a drug use review program 
                which conforms to the requirements of this 
                subsection.
                  (D) States shall not be required to perform 
                additional drug use reviews with respect to 
                drugs dispensed to residents of nursing 
                facilities which are in compliance with the 
                drug regimen review procedures prescribed by 
                the Secretary for such facilities in 
                regulations implementing section 1919, 
                currently at section 483.60 of title 42, Code 
                of Federal Regulations.
          (2) Description of program.--Each drug use review 
        program shall meet the following requirements for 
        covered outpatient drugs:
                  (A) Prospective drug review.--(i) The State 
                plan shall provide for a review of drug therapy 
                before each prescription is filled or delivered 
                to an individual receiving benefits under this 
                title, typically at the point-of-sale or point 
                of distribution. The review shall include 
                screening for potential drug therapy problems 
                due to therapeutic duplication, drug-disease 
                contraindications, drug-drug interactions 
                (including serious interactions with 
                nonprescription or over-the-counter drugs), 
                incorrect drug dosage or duration of drug 
                treatment, drug-allergy interactions, and 
                clinical abuse/misuse. Each State shall use the 
                compendia and literature referred to in 
                paragraph (1)(B) as its source of standards for 
                such review.
                  (ii) As part of the State's prospective drug 
                use review program under this subparagraph 
                applicable State law shall establish standards 
                for counseling of individuals receiving 
                benefits under this title by pharmacists which 
                includes at least the following:
                          (I) The pharmacist must offer to 
                        discuss with each individual receiving 
                        benefits under this title or caregiver 
                        of such individual (in person, whenever 
                        practicable, or through access to a 
                        telephone service which is toll-free 
                        for long-distance calls) who presents a 
                        prescription, matters which in the 
                        exercise of the pharmacist's 
                        professional judgment (consistent with 
                        State law respecting the provision of 
                        such information), the pharmacist deems 
                        significant including the following:
                                  (aa) The name and description 
                                of the medication.
                                  (bb) The route, dosage form, 
                                dosage, route of 
                                administration, and duration of 
                                drug therapy.
                                  (cc) Special directions and 
                                precautions for preparation, 
                                administration and use by the 
                                patient.
                                  (dd) Common severe side or 
                                adverse effects or interactions 
                                and therapeutic 
                                contraindications that may be 
                                encountered, including their 
                                avoidance, and the action 
                                required if they occur.
                                  (ee) Techniques for self-
                                monitoring drug therapy.
                                  (ff) Proper storage.
                                  (gg) Prescription refill 
                                information.
                                  (hh) Action to be taken in 
                                the event of a missed dose.
                          (II) A reasonable effort must be made 
                        by the pharmacist to obtain, record, 
                        and maintain at least the following 
                        information regarding individuals 
                        receiving benefits under this title:
                                  (aa) Name, address, telephone 
                                number, date of birth (or age) 
                                and gender.
                                  (bb) Individual history where 
                                significant, including disease 
                                state or states, known 
                                allergies and drug reactions, 
                                and a comprehensive list of 
                                medications and relevant 
                                devices.
                                  (cc) Pharmacist comments 
                                relevant to the individual's 
                                drug therapy.
                Nothing in this clause shall be construed as 
                requiring a pharmacist to provide consultation 
                when an individual receiving benefits under 
                this title or caregiver of such individual 
                refuses such consultation, or to require 
                verification of the offer to provide 
                consultation or a refusal of such offer.
                  (B) Retrospective drug use review.--The 
                program shall provide, through its mechanized 
                drug claims processing and information 
                retrieval systems (approved by the Secretary 
                under section 1903(r)) or otherwise, for the 
                ongoing periodic examination of claims data and 
                other records in order to identify patterns of 
                fraud, abuse, gross overuse, or inappropriate 
                or medically unnecessary care, among 
                physicians, pharmacists and individuals 
                receiving benefits under this title, or 
                associated with specific drugs or groups of 
                drugs.
                  (C) Application of standards.--The program 
                shall, on an ongoing basis, assess data on drug 
                use against explicit predetermined standards 
                (using the compendia and literature referred to 
                in subsection (1)(B) as the source of standards 
                for such assessment) including but not limited 
                to monitoring for therapeutic appropriateness, 
                overutilization and underutilization, 
                appropriate use of generic products, 
                therapeutic duplication, drug-disease 
                contraindications, drug-drug interactions, 
                incorrect drug dosage or duration of drug 
                treatment, and clinical abuse/misuse and, as 
                necessary, introduce remedial strategies, in 
                order to improve the quality of care and to 
                conserve program funds or personal 
                expenditures.
                  (D) Educational program.--The program shall, 
                through its State drug use review board 
                established under paragraph (3), either 
                directly or through contracts with accredited 
                health care educational institutions, State 
                medical societies or State pharmacists 
                associations/societies or other organizations 
                as specified by the State, and using data 
                provided by the State drug use review board on 
                common drug therapy problems, provide for 
                active and ongoing educational outreach 
                programs (including the activities described in 
                paragraph (3)(C)(iii) of this subsection) to 
                educate practitioners on common drug therapy 
                problems with the aim of improving prescribing 
                or dispensing practices.
          (3) State drug use review board.--
                  (A) Establishment.--Each State shall provide 
                for the establishment of a drug use review 
                board (hereinafter referred to as the ``DUR 
                Board'') either directly or through a contract 
                with a private organization.
                  (B) Membership.--The membership of the DUR 
                Board shall include health care professionals 
                who have recognized knowledge and expertise in 
                one or more of the following:
                          (i) The clinically appropriate 
                        prescribing of covered outpatient 
                        drugs.
                          (ii) The clinically appropriate 
                        dispensing and monitoring of covered 
                        outpatient drugs.
                          (iii) Drug use review, evaluation, 
                        and intervention.
                          (iv) Medical quality assurance.
                The membership of the DUR Board shall be made 
                up at least \1/3\ but no more than 51 percent 
                licensed and actively practicing physicians and 
                at least \1/3\ licensed and actively practicing 
                pharmacists.
                  (C) Activities.--The activities of the DUR 
                Board shall include but not be limited to the 
                following:
                          (i) Retrospective DUR as defined in 
                        section (2)(B).
                          (ii) Application of standards as 
                        defined in section (2)(C).
                          (iii) Ongoing interventions for 
                        physicians and pharmacists, targeted 
                        toward therapy problems or individuals 
                        identified in the course of 
                        retrospective drug use reviews 
                        performed under this subsection. 
                        Intervention programs shall include, in 
                        appropriate instances, at least:
                                  (I) information dissemination 
                                sufficient to ensure the ready 
                                availability to physicians and 
                                pharmacists in the State of 
                                information concerning its 
                                duties, powers, and basis for 
                                its standards;
                                  (II) written, oral, or 
                                electronic reminders containing 
                                patient-specific or drug-
                                specific (or both) information 
                                and suggested changes in 
                                prescribing or dispensing 
                                practices, communicated in a 
                                manner designed to ensure the 
                                privacy of patient-related 
                                information;
                                  (III) use of face-to-face 
                                discussions between health care 
                                professionals who are experts 
                                in rational drug therapy and 
                                selected prescribers and 
                                pharmacists who have been 
                                targeted for educational 
                                intervention, including 
                                discussion of optimal 
                                prescribing, dispensing, or 
                                pharmacy care practices, and 
                                follow-up face-to-face 
                                discussions; and
                                  (IV) intensified review or 
                                monitoring of selected 
                                prescribers or dispensers.
                The Board shall re-evaluate interventions after 
                an appropriate period of time to determine if 
                the intervention improved the quality of drug 
                therapy, to evaluate the success of the 
                interventions and make modifications as 
                necessary.
                  (D) Annual report.--Each State shall require 
                the DUR Board to prepare a report on an annual 
                basis. The State shall submit a report on an 
                annual basis to the Secretary which shall 
                include a description of the activities of the 
                Board, including the nature and scope of the 
                prospective and retrospective drug use review 
                programs, a summary of the interventions used, 
                an assessment of the impact of these 
                educational interventions on quality of care, 
                and an estimate of the cost savings generated 
                as a result of such program. The Secretary 
                shall utilize such report in evaluating the 
                effectiveness of each State's drug use review 
                program.
  (h) Electronic Claims Management.--
          (1) In general.--In accordance with chapter 35 of 
        title 44, United States Code (relating to coordination 
        of Federal information policy), the Secretary shall 
        encourage each State agency to establish, as its 
        principal means of processing claims for covered 
        outpatient drugs under this title, a point-of-sale 
        electronic claims management system, for the purpose of 
        performing on-line, real time eligibility 
        verifications, claims data capture, adjudication of 
        claims, and assisting pharmacists (and other authorized 
        persons) in applying for and receiving payment.
          (2) Encouragement.--In order to carry out paragraph 
        (1)--
                  (A) for calendar quarters during fiscal years 
                1991 and 1992, expenditures under the State 
                plan attributable to development of a system 
                described in paragraph (1) shall receive 
                Federal financial participation under section 
                1903(a)(3)(A)(i) (at a matching rate of 90 
                percent) if the State acquires, through 
                applicable competitive procurement process in 
                the State, the most cost-effective 
                telecommunications network and automatic data 
                processing services and equipment; and
                  (B) the Secretary may permit, in the 
                procurement described in subparagraph (A) in 
                the application of part 433 of title 42, Code 
                of Federal Regulations, and parts 95, 205, and 
                307 of title 45, Code of Federal Regulations, 
                the substitution of the State's request for 
                proposal in competitive procurement for advance 
                planning and implementation documents otherwise 
                required.
  (i) Annual Report.--
          (1) In general.--Not later than May 1 of each year 
        the Secretary shall transmit to the Committee on 
        Finance of the Senate, the Committee on Energy and 
        Commerce of the House of Representatives, and the 
        Committees on Aging of the Senate and the House of 
        Representatives a report on the operation of this 
        section in the preceding fiscal year.
          (2) Details.--Each report shall include information 
        on--
                  (A) ingredient costs paid under this title 
                for single source drugs, multiple source drugs, 
                and nonprescription covered outpatient drugs;
                  (B) the total value of rebates received and 
                number of manufacturers providing such rebates;
                  (C) how the size of such rebates compare with 
                the size or rebates offered to other purchasers 
                of covered outpatient drugs;
                  (D) the effect of inflation on the value of 
                rebates required under this section;
                  (E) trends in prices paid under this title 
                for covered outpatient drugs; and
                  (F) Federal and State administrative costs 
                associated with compliance with the provisions 
                of this title.
  (j) Exemption of Organized Health Care Settings.--
          (1) Covered outpatient drugs are not subject to the 
        requirements of this section if such drugs are--
                  (A) dispensed by health maintenance 
                organizations, including Medicaid managed care 
                organizations that contract under section 
                1903(m); and
                  (B) subject to discounts under section 340B 
                of the Public Health Service Act.
  (2) The State plan shall provide that a hospital (providing 
medical assistance under such plan) that dispenses covered 
outpatient drugs using drug formulary systems, and bills the 
plan no more than the hospital's purchasing costs for covered 
outpatient drugs (as determined under the State plan) shall not 
be subject to the requirements of this section.
  (3) Nothing in this subsection shall be construed as 
providing that amounts for covered outpatient drugs paid by the 
institutions described in this subsection should not be taken 
into account for purposes of determining the best price as 
described in subsection (c).
  (k) Definitions.--In the section--
          (1) Average manufacturer price.--
                  (A) In general.--Subject to subparagraph (B), 
                the term ``average manufacturer price'' means, 
                with respect to a covered outpatient drug of a 
                manufacturer for a rebate period, the average 
                price paid to the manufacturer for the drug in 
                the United States by--
                          (i) wholesalers for drugs distributed 
                        to retail community pharmacies; and
                          (ii) retail community pharmacies that 
                        purchase drugs directly from the 
                        manufacturer.
                  (B) Exclusion of customary prompt pay 
                discounts and other payments.--
                          (i) In general.--The average 
                        manufacturer price for a covered 
                        outpatient drug shall exclude--
                                  (I) customary prompt pay 
                                discounts extended to 
                                wholesalers;
                                  (II) bona fide service fees 
                                paid by manufacturers to 
                                wholesalers or retail community 
                                pharmacies, including (but not 
                                limited to) distribution 
                                service fees, inventory 
                                management fees, product 
                                stocking allowances, and fees 
                                associated with administrative 
                                services agreements and patient 
                                care programs (such as 
                                medication compliance programs 
                                and patient education 
                                programs);
                                  (III) reimbursement by 
                                manufacturers for recalled, 
                                damaged, expired, or otherwise 
                                unsalable returned goods, 
                                including (but not limited to) 
                                reimbursement for the cost of 
                                the goods and any reimbursement 
                                of costs associated with return 
                                goods handling and processing, 
                                reverse logistics, and drug 
                                destruction;
                                  (IV) payments received from, 
                                and rebates or discounts 
                                provided to, pharmacy benefit 
                                managers, managed care 
                                organizations, health 
                                maintenance organizations, 
                                insurers, hospitals, clinics, 
                                mail order pharmacies, long 
                                term care providers, 
                                manufacturers, or any other 
                                entity that does not conduct 
                                business as a wholesaler or a 
                                retail community pharmacy, 
                                unless the drug is an 
                                inhalation, infusion, 
                                instilled, implanted, or 
                                injectable drug that is not 
                                generally dispensed through a 
                                retail community pharmacy; and
                                  (V) discounts provided by 
                                manufacturers under section 
                                1860D-14A.
                          (ii) Inclusion of other discounts and 
                        payments.--Notwithstanding clause (i), 
                        any other discounts, rebates, payments, 
                        or other financial transactions that 
                        are received by, paid by, or passed 
                        through to, retail community pharmacies 
                        shall be included in the average 
                        manufacturer price for a covered 
                        outpatient drug.
                  (C) Inclusion of section 505(c) drugs.--In 
                the case of a manufacturer that approves, 
                allows, or otherwise permits any drug of the 
                manufacturer to be sold under a new drug 
                application approved under section 505(c) of 
                the Federal Food, Drug, and Cosmetic Act, such 
                term shall be inclusive of the average price 
                paid for such drug by wholesalers for drugs 
                distributed to retail community pharmacies.
          (2) Covered outpatient drug.--Subject to the 
        exceptions in paragraph (3), the term ``covered 
        outpatient drug'' means--
                  (A) of those drugs which are treated as 
                prescribed drugs for purposes of section 
                1905(a)(12), a drug which may be dispensed only 
                upon prescription (except as provided in 
                paragraph (5)), and--
                          (i) which is approved for safety and 
                        effectiveness as a prescription drug 
                        under section 505 or 507 of the Federal 
                        Food, Drug, and Cosmetic Act or which 
                        is approved under section 505(j) of 
                        such Act;
                          (ii)(I) which was commercially used 
                        or sold in the United States before the 
                        date of the enactment of the Drug 
                        Amendments of 1962 or which is 
                        identical, similar, or related (within 
                        the meaning of section 310.6(b)(1) of 
                        title 21 of the Code of Federal 
                        Regulations) to such a drug, and (II) 
                        which has not been the subject of a 
                        final determination by the Secretary 
                        that it is a ``new drug'' (within the 
                        meaning of section 201(p) of the 
                        Federal Food, Drug, and Cosmetic Act) 
                        or an action brought by the Secretary 
                        under section 301, 302(a), or 304(a) of 
                        such Act to enforce section 502(f) or 
                        505(a) of such Act; or
                          (iii)(I) which is described in 
                        section 107(c)(3) of the Drug 
                        Amendments of 1962 and for which the 
                        Secretary has determined there is a 
                        compelling justification for its 
                        medical need, or is identical, similar, 
                        or related (within the meaning of 
                        section 310.6(b)(1) of title 21 of the 
                        Code of Federal Regulations) to such a 
                        drug, and (II) for which the Secretary 
                        has not issued a notice of an 
                        opportunity for a hearing under section 
                        505(e) of the Federal Food, Drug, and 
                        Cosmetic Act on a proposed order of the 
                        Secretary to withdraw approval of an 
                        application for such drug under such 
                        section because the Secretary has 
                        determined that the drug is less than 
                        effective for some or all conditions of 
                        use prescribed, recommended, or 
                        suggested in its labeling; and
                  (B) a biological product, other than a 
                vaccine which--
                          (i) may only be dispensed upon 
                        prescription,
                          (ii) is licensed under section 351 of 
                        the Public Health Service Act, and
                          (iii) is produced at an establishment 
                        licensed under such section to produce 
                        such product; and
                  (C) insulin certified under section 506 of 
                the Federal Food, Drug, and Cosmetic Act.
          (3) Limiting definition.--The term ``covered 
        outpatient drug'' does not include any drug, biological 
        product, or insulin provided as part of, or as incident 
        to and in the same setting as, any of the following 
        (and for which payment may be made under this title as 
        part of payment for the following and not as direct 
        reimbursement for the drug):
                  (A) Inpatient hospital services.
                  (B) Hospice services.
                  (C) Dental services, except that drugs for 
                which the State plan authorizes direct 
                reimbursement to the dispensing dentist are 
                covered outpatient drugs.
                  (D) Physicians' services.
                  (E) Outpatient hospital services.
                  (F) Nursing facility services and services 
                provided by an intermediate care facility for 
                the mentally retarded.
                  (G) Other laboratory and x-ray services.
                  (H) Renal dialysis.
        Such term also does not include any such drug or 
        product for which a National Drug Code number is not 
        required by the Food and Drug Administration or a drug 
        or biological used for a medical indication which is 
        not a medically accepted indication. Any drug, 
        biological product, or insulin excluded from the 
        definition of such term as a result of this paragraph 
        shall be treated as a covered outpatient drug for 
        purposes of determining the best price (as defined in 
        subsection (c)(1)(C)) for such drug, biological 
        product, or insulin.
          (4) Nonprescription drugs.--If a State plan for 
        medical assistance under this title includes coverage 
        of prescribed drugs as described in section 1905(a)(12) 
        and permits coverage of drugs which may be sold without 
        a prescription (commonly referred to as ``over-the-
        counter'' drugs), if they are prescribed by a physician 
        (or other person authorized to prescribe under State 
        law), such a drug shall be regarded as a covered 
        outpatient drug.
          (5) Manufacturer.--The term ``manufacturer'' means 
        any entity which is engaged in--
                  (A) the production, preparation, propagation, 
                compounding, conversion, or processing of 
                prescription drug products, either directly or 
                indirectly by extraction from substances of 
                natural origin, or independently by means of 
                chemical synthesis, or by a combination of 
                extraction and chemical synthesis, or
                  (B) in the packaging, repackaging, labeling, 
                relabeling, or distribution of prescription 
                drug products.
        Such term does not include a wholesale distributor of 
        drugs or a retail pharmacy licensed under State law.
          (6) Medically accepted indication.--The term 
        ``medically accepted indication'' means any use for a 
        covered outpatient drug which is approved under the 
        Federal Food, Drug, and Cosmetic Act, or the use of 
        which is supported by one or more citations included or 
        approved for inclusion in any of the compendia 
        described in subsection (g)(1)(B)(i).
          (7) Multiple source drug; innovator multiple source 
        drug; noninnovator multiple source drug; single source 
        drug.--
                  (A) Defined.--
                          (i) Multiple source drug.--The term 
                        ``multiple source drug'' means, with 
                        respect to a rebate period, a covered 
                        outpatient drug (not including any drug 
                        described in paragraph (5)) for which 
                        there at least 1 other drug product 
                        which--
                                  (I) is rated as 
                                therapeutically equivalent 
                                (under the Food and Drug 
                                Administration's most recent 
                                publication of ``Approved Drug 
                                Products with Therapeutic 
                                Equivalence Evaluations''),
                                  (II) except as provided in 
                                subparagraph (B), is 
                                pharmaceutically equivalent and 
                                bioequivalent, as defined in 
                                subparagraph (C) and as 
                                determined by the Food and Drug 
                                Administration, and
                                  (III) is sold or marketed in 
                                the United States during the 
                                period.
                          (ii) Innovator multiple source 
                        drug.--The term ``innovator multiple 
                        source drug'' means a multiple source 
                        drug that was originally marketed under 
                        an original new drug application 
                        approved by the Food and Drug 
                        Administration.
                          (iii) Noninnovator multiple source 
                        drug.--The term ``noninnovator multiple 
                        source drug'' means a multiple source 
                        drug that is not an innovator multiple 
                        source drug.
                          (iv) Single source drug.--The term 
                        ``single source drug'' means a covered 
                        outpatient drug which is produced or 
                        distributed under an original new drug 
                        application approved by the Food and 
                        Drug Administration, including a drug 
                        product marketed by any cross-licensed 
                        producers or distributors operating 
                        under the new drug application.
                  (B) Exception.--Subparagraph (A)(i)(II) shall 
                not apply if the Food and Drug Administration 
                changes by regulation the requirement that, for 
                purposes of the publication described in 
                subparagraph (A)(i)(I), in order for drug 
                products to be rated as therapeutically 
                equivalent, they must be pharmaceutically 
                equivalent and bioequivalent, as defined in 
                subparagraph (C).
                  (C) Definitions.--For purposes of this 
                paragraph--
                          (i) drug products are 
                        pharmaceutically equivalent if the 
                        products contain identical amounts of 
                        the same active drug ingredient in the 
                        same dosage form and meet compendial or 
                        other applicable standards of strength, 
                        quality, purity, and identity; and
                          (ii) drugs are bioequivalent if they 
                        do not present a known or potential 
                        bioequivalence problem, or, if they do 
                        present such a problem, they are shown 
                        to meet an appropriate standard of 
                        bioequivalence.
          (8) Rebate period.--The term ``rebate period'' means, 
        with respect to an agreement under subsection (a), a 
        calendar quarter or other period specified by the 
        Secretary with respect to the payment of rebates under 
        such agreement.
          (9) State agency.--The term ``State agency'' means 
        the agency designated under section 1902(a)(5) to 
        administer or supervise the administration of the State 
        plan for medical assistance.
          (10) Retail community pharmacy.--The term ``retail 
        community pharmacy'' means an independent pharmacy, a 
        chain pharmacy, a supermarket pharmacy, or a mass 
        merchandiser pharmacy that is licensed as a pharmacy by 
        the State and that dispenses medications to the general 
        public at retail prices. Such term does not include a 
        pharmacy that dispenses prescription medications to 
        patients primarily through the mail, nursing home 
        pharmacies, long-term care facility pharmacies, 
        hospital pharmacies, clinics, charitable or not-for-
        profit pharmacies, government pharmacies, or pharmacy 
        benefit managers.
          (11) Wholesaler.--The term ``wholesaler'' means a 
        drug wholesaler that is engaged in wholesale 
        distribution of prescription drugs to retail community 
        pharmacies, including (but not limited to) 
        manufacturers, repackers, distributors, own-label 
        distributors, private-label distributors, jobbers, 
        brokers, warehouses (including manufacturer's and 
        distributor's warehouses, chain drug warehouses, and 
        wholesale drug warehouses) independent wholesale drug 
        traders, and retail community pharmacies that conduct 
        wholesale distributions.

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                       medicaid improvement fund

  Sec. 1941. (a) Establishment.--The Secretary shall establish 
under this title a Medicaid Improvement Fund (in this section 
referred to as the ``Fund'') which shall be available to the 
Secretary to improve the management of the Medicaid program by 
the Centers for Medicare & Medicaid Services, including 
oversight of contracts and contractors and evaluation of 
demonstration projects. Payments made for activities under this 
subsection shall be in addition to payments that would 
otherwise be made for such activities.
  (b) Funding.--
          [(1) In general.--There shall be available to the 
        Fund, for expenditures from the Fund--
                  [(A) for fiscal year 2014, $10,000,000; and
                  [(B) for each of fiscal years 2015 through 
                2018, $0.]
          (1) In general.--There shall be available to the 
        Fund, for expenditures from the Fund for fiscal year 
        2021 and thereafter, $5,000,000.
          (2) Funding limitation.--Amounts in the Fund shall be 
        available in advance of appropriations but only if the 
        total amount obligated from the Fund does not exceed 
        the amount available to the Fund under paragraph (1). 
        The Secretary may obligate funds from the Fund only if 
        the Secretary determines (and the Chief Actuary of the 
        Centers for Medicare & Medicaid Services and the 
        appropriate budget officer certify) that there are 
        available in the Fund sufficient amounts to cover all 
        such obligations incurred consistent with the previous 
        sentence.

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TITLE XXI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

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SEC. 2102. GENERAL CONTENTS OF STATE CHILD HEALTH PLAN; ELIGIBILITY; 
                    OUTREACH.

  (a) General Background and Description.--A State child health 
plan shall include a description, consistent with the 
requirements of this title, of--
          (1) the extent to which, and manner in which, 
        children in the State, including targeted low-income 
        children and other classes of children classified by 
        income and other relevant factors, currently have 
        creditable health coverage (as defined in section 
        2110(c)(2));
          (2) current State efforts to provide or obtain 
        creditable health coverage for uncovered children, 
        including the steps the State is taking to identify and 
        enroll all uncovered children who are eligible to 
        participate in public health insurance programs and 
        health insurance programs that involve public-private 
        partnerships;
          (3) how the plan is designed to be coordinated with 
        such efforts to increase coverage of children under 
        creditable health coverage;
          (4) the child health assistance provided under the 
        plan for targeted low-income children, including the 
        proposed methods of delivery, and utilization control 
        systems;
          (5) eligibility standards consistent with subsection 
        (b);
          (6) outreach activities consistent with subsection 
        (c); and
          (7) methods (including monitoring) used--
                  (A) to assure the quality and appropriateness 
                of care, particularly with respect to well-baby 
                care, well-child care, and immunizations 
                provided under the plan[, and];
                  (B) to assure access to covered services, 
                including emergency services and services 
                described in section 2103(c)(5)[.]; and
                  (C) to ensure that the State agency involved 
                is in compliance with subparagraphs (A), (B), 
                and (C) of section 1128K(b)(2).
  (b) General Description of Eligibility Standards and 
Methodology.--
          (1) Eligibility standards.--
                  (A) In general.--The plan shall include a 
                description of the standards used to determine 
                the eligibility of targeted low-income children 
                for child health assistance under the plan. 
                Such standards may include (to the extent 
                consistent with this title) those relating to 
                the geographic areas to be served by the plan, 
                age, income and resources (including any 
                standards relating to spenddowns and 
                disposition of resources), residency, 
                disability status (so long as any standard 
                relating to such status does not restrict 
                eligibility), access to or coverage under other 
                health coverage, and duration of eligibility. 
                Such standards may not discriminate on the 
                basis of diagnosis.
                  (B) Limitations on eligibility standards.--
                Such eligibility standards--
                          (i) shall, within any defined group 
                        of covered targeted low-income 
                        children, not cover such children with 
                        higher family income without covering 
                        children with a lower family income;
                          (ii) may not deny eligibility based 
                        on a child having a preexisting medical 
                        condition;
                          (iii) may not apply a waiting period 
                        (including a waiting period to carry 
                        out paragraph (3)(C)) in the case of a 
                        targeted low-income pregnant woman 
                        provided pregnancy-related assistance 
                        under section 2112;
                          (iv) at State option, may not apply a 
                        waiting period in the case of a child 
                        provided dental-only supplemental 
                        coverage under section 2110(b)(5); and
                          (v) shall, beginning January 1, 2014, 
                        use modified adjusted gross income and 
                        household income (as defined in section 
                        36B(d)(2) of the Internal Revenue Code 
                        of 1986) to determine eligibility for 
                        child health assistance under the State 
                        child health plan or under any waiver 
                        of such plan and for any other purpose 
                        applicable under the plan or waiver for 
                        which a determination of income is 
                        required, including with respect to the 
                        imposition of premiums and cost-
                        sharing, consistent with section 
                        1902(e)(14).
          (2) Methodology.--The plan shall include a 
        description of methods of establishing and continuing 
        eligibility and enrollment.
          (3) Eligibility screening; coordination with other 
        health coverage programs.--The plan shall include a 
        description of procedures to be used to ensure--
                  (A) through both intake and followup 
                screening, that only targeted low-income 
                children are furnished child health assistance 
                under the State child health plan;
                  (B) that children found through the screening 
                to be eligible for medical assistance under the 
                State medicaid plan under title XIX are 
                enrolled for such assistance under such plan;
                  (C) that the insurance provided under the 
                State child health plan does not substitute for 
                coverage under group health plans;
                  (D) the provision of child health assistance 
                to targeted low-income children in the State 
                who are Indians (as defined in section 4(c) of 
                the Indian Health Care Improvement Act, 25 
                U.S.C. 1603(c)); and
                  (E) coordination with other public and 
                private programs providing creditable coverage 
                for low-income children.
          (4) Reduction of administrative barriers to 
        enrollment.--
                  (A) In general.--Subject to subparagraph (B), 
                the plan shall include a description of the 
                procedures used to reduce administrative 
                barriers to the enrollment of children and 
                pregnant women who are eligible for medical 
                assistance under title XIX or for child health 
                assistance or health benefits coverage under 
                this title. Such procedures shall be 
                established and revised as often as the State 
                determines appropriate to take into account the 
                most recent information available to the State 
                identifying such barriers.
                  (B) Deemed compliance if joint application 
                and renewal process that permits application 
                other than in person.--A State shall be deemed 
                to comply with subparagraph (A) if the State's 
                application and renewal forms and supplemental 
                forms (if any) and information verification 
                process is the same for purposes of 
                establishing and renewing eligibility for 
                children and pregnant women for medical 
                assistance under title XIX and child health 
                assistance under this title, and such process 
                does not require an application to be made in 
                person or a face-to-face interview.
          (5) Nonentitlement.--Nothing in this title shall be 
        construed as providing an individual with an 
        entitlement to child health assistance under a State 
        child health plan.
  (c) Outreach and Coordination.--A State child health plan 
shall include a description of the procedures to be used by the 
State to accomplish the following:
          (1) Outreach.--Outreach (through community health 
        workers and others) to families of children likely to 
        be eligible for child health assistance under the plan 
        or under other public or private health coverage 
        programs to inform these families of the availability 
        of, and to assist them in enrolling their children in, 
        such a program.
          (2) Coordination with other health insurance 
        programs.--Coordination of the administration of the 
        State program under this title with other public and 
        private health insurance programs.
          (3) Premium assistance subsidies.--In the case of a 
        State that provides for premium assistance subsidies 
        under the State child health plan in accordance with 
        paragraph (2)(B), (3), or (10) of section 2105(c), or a 
        waiver approved under section 1115, outreach, 
        education, and enrollment assistance for families of 
        children likely to be eligible for such subsidies, to 
        inform such families of the availability of, and to 
        assist them in enrolling their children in, such 
        subsidies, and for employers likely to provide coverage 
        that is eligible for such subsidies, including the 
        specific, significant resources the State intends to 
        apply to educate employers about the availability of 
        premium assistance subsidies under the State child 
        health plan.

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