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115th Congress     }                                          {   Report
                         HOUSE OF REPRESENTATIVES                 
1st Session        }                                          {  115-52
_______________________________________________________________________

                                     

 
                          AMERICAN HEALTH CARE

                              ACT OF 2017

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET

                        HOUSE OF REPRESENTATIVES

                              to accompany

                               H.R. 1628

                             together with

                             MINORITY VIEWS
                             
                             

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





 March 20 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
              
              
              
              
                             _________ 

                U.S. GOVERNMENT PUBLISHING OFFICE
                   
 24-617                  WASHINGTON : 2017       
____________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Publishing Office,
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  Fax:(202) 512-2104 Mail:Stop IDCC,Washington,DC 20402-001                  
              
              
              
              
              
                        COMMITTEE ON THE BUDGET

                    DIANE BLACK, Tennessee, Chairman
TODD ROKITA, Indiana, Vice Chairman  JOHN A. YARMUTH, Kentucky,
MARIO DIAZ-BALART, Florida             Ranking Minority Member
TOM COLE, Oklahoma                   BARBARA LEE, California
TOM McCLINTOCK, California           MICHELLE LUJAN GRISHAM, New Mexico
ROB WOODALL, Georgia                 SETH MOULTON, Massachusetts
MARK SANFORD, South Carolina         HAKEEM S. JEFFRIES, New York
STEVE WOMACK, Arkansas               BRIAN HIGGINS, New York
DAVE BRAT, Virginia                  SUZAN K. DelBENE, Washington
GLENN GROTHMAN, Wisconsin            DEBBIE WASSERMAN SCHULTZ, Florida
GARY J. PALMER, Alabama              BRENDAN F. BOYLE, Pennsylvania
BRUCE WESTERMAN, Arkansas            RO KHANNA, California
JAMES B. RENACCI, Ohio               PRAMILA JAYAPAL, Washington,
BILL JOHNSON, Ohio                     Vice Ranking Minority Member
JASON SMITH, Missouri                SALUD CARBAJAL, California
JASON LEWIS, Minnesota               SHEILA JACKSON LEE, Texas
JACK BERGMAN, Michigan               JANICE D. SCHAKOWSKY, Illinois
JOHN J. FASO, New York
LLOYD SMUCKER, Pennsylvania
MATT GAETZ, Florida
JODEY C. ARRINGTON, Texas
A. DREW FERGUSON IV, Georgia

                           Professional Staff

                     Richard E. May, Staff Director
                  Ellen Balis, Minority Staff Director
                  
                            C O N T E N T S

                                                                   Page
Introduction by the Committee on the Budget......................     1
Title I--Energy and Commerce:
    Transmittal Letter (Chairman Walden).........................    13
    Committee print begins and includes:
        Committee votes..........................................    18
        CBO estimate.............................................    39
        Section-by-Section Analysis..............................    73
        Ramseyer.................................................    78
        Minority Views...........................................   323
    Legislative Text.............................................   337
Title II--Ways and Means:
        Transmittal Letter (Chairman Brady)......................   363
    Subtitle A--Repeal and Replace of Health-Related Tax Policy:
        I. Summary and Background................................   367
        II. Explanation of Provisions............................   370
        III. Votes of the Committee..............................   406
        IV. Budget Effects of the Provisions.....................   412
            JCT Table............................................   413
            CBO Estimate.........................................   415
        V. Other Matters to be Discussed Under the Rules of the 
          House..................................................   415
        VI. Changes in Existing Law Made by the Budget 
          Reconciliation Legislative Recommendations, As 
          Transmitted............................................   420
        VII. Dissenting Views....................................   421
        Legislative Text.........................................   431
    Subtitle B--Repeal of Certain Consumer Taxes:
        I. Summary and Background................................   454
        II. Explanation of Provisions............................   455
        III. Votes of the Committee..............................   458
        IV. Budget Effects of the Provisions.....................   459
            CBO Estimate.........................................   461
        V. Other Matters to be Discussed Under the Rules of the 
          House..................................................   461
        VI. Changes in Existing Law Made by the Budget 
          Reconciliation Legislative Recommendations, As 
          Transmitted............................................   463
        VII. Dissenting Views....................................   464
        Legislative Text.........................................   469
    Subtitle C--Repeal of Tanning Tax:
        I. Summary and Background................................   472
        II. Explanation of Provision.............................   473
        III. Votes of the Committee..............................   474
        IV. Budget Effects of the Provisions.....................   475
            CBO Estimate.........................................   475
        V. Other Matters to be Discussed Under the Rules of the 
          House..................................................   476
        VI. Changes in Existing Law Made by the Budget 
          Reconciliation Legislative Recommendations, As 
          Transmitted............................................   477
        VII. Dissenting Views....................................   478
        Legislative Text.........................................   483
    Subtitle D--Remuneration from Certain Insurers:
        I. Summary and Background................................   486
        II. Explanation of Provision.............................   487
        III. Votes of the Committee..............................   489
        IV. Budget Effects of the Provision......................   496
            CBO Estimate.........................................   497
        V. Other Matters to be Discussed Under the Rules of the 
          House..................................................   497
        VI. Changes in Existing Law Made by the Budget 
          Reconciliation Legislative Recommendations, As 
          Transmitted............................................   498
        VII. Dissenting Views....................................   499
        Legislative Text.........................................   511
    Subtitle E--Repeal of Net Investment Income Tax:
        I. Summary and Background................................   514
        II. Explanation of Provision.............................   515
        III. Votes of the Committee..............................   517
        IV. Budget Effects of the Provision......................   518
            CBO Estimate.........................................   519
        V. Other Matters to be Discussed Under the Rules of the 
          House..................................................   553
        VI. Changes in Existing Law Made by the Budget 
          Reconciliation Legislative Recommendations, As 
          Transmitted............................................   555
        VII. Dissenting Views....................................   731
        Legislative Text.........................................   735
    Amendments Considered by the Committee on Ways and Means.....   737
Committee on the Budget:
    Votes of the Committee on the Budget.........................   745
    Other House Report Requirements..............................   759
    Views of Committee Members...................................   761
American Health Care Act of 2017 (legislative text)..............   767



                                                                       
115th Congress  }                                              {   Report
                        HOUSE OF REPRESENTATIVES
 1st Session    }                                              {   115-52

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


                    AMERICAN HEALTH CARE ACT OF 2017

                                _______
                                

 March 20, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mrs. Black, from the Committee on the Budget, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1628]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Budget, to whom reconciliation 
recommendations were submitted pursuant to title II of S. Con. 
Res. 3, the concurrent resolution on the budget for fiscal year 
2017, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.


                          INTRODUCTION BY THE
                        COMMITTEE ON THE BUDGET

                              ----------                              

    What is often called President Obama's ``signature'' 
achievement is now well known to be a defining failure. The 
Affordable Care Act [ACA]\1\ has led to higher insurance 
premiums and deductibles; has limited consumers' choices of 
doctors and health plans; has deprived millions of the coverage 
they had; and has imposed taxes aimed at compelling people to 
purchase health coverage they do not want. Insurance markets 
are collapsing, and total national health care spending is 
projected to more than double during the next three decades. 
All these outcomes and more are precisely contrary to what the 
law's authors promised.
---------------------------------------------------------------------------
    \1\The legislation commonly called the Affordable Care Act consists 
of the two related measures enacted in March 2010 that constituted the 
health care legislation: the ``Patient Protection and Affordable Care 
Act'' (Public Law 111-148), and the ``Health Care and Education 
Reconciliation Act of 2010'' (Public Law 111-152).
---------------------------------------------------------------------------
    For these and numerous other reasons, the ACA, or 
Obamacare, must be repealed. Yet a return to the status quo 
ante is not acceptable either. Repealing Obamacare merely 
begins the process of establishing truly patient-centered 
health care in America--and aspects of both are contained in 
this legislation, the ``American Health Care Act''. This 
measure is just one component of a broader effort to transform 
the Nation's troubled health care network. It will be 
supplemented by other elements, described below.

                    The Essential Folly of Obamacare

    To fully appreciate the character of this transformation, 
it is critical to look deeper than Obamacare's many evident 
failures and understand why it failed. Without this 
recognition, there can be no real change; policymakers will 
simply fall back into the seductive but false beliefs that 
spawned Obamacare in the first place.
    Health care comprises a vast network of doctors and nurses, 
technicians, medical device manufacturers, pharmaceutical 
makers, hospitals and in-home services, educational 
institutions, financial arrangements, and, above all, 
patients--along with numerous others. It is a complex, 
sophisticated, and dynamic set of interactions that consumes 
more than $3 trillion of the Nation's resources and represents 
about one-fifth of the economy.\2\ It is a sector in which the 
participants themselves--not experts, academics, or 
bureaucrats--are clearly best suited to establishing effective 
and efficient means of delivering this uniquely valued service.
---------------------------------------------------------------------------
    \2\Centers for Medicare and Medicaid Services, National Health 
Expenditures 2015 Highlights: https://www.cms.gov/Research-Statistics-
Data-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpendData/Downloads/highlights.pdf.
---------------------------------------------------------------------------
    Nevertheless, for decades, Federal policymakers have 
relentlessly sought to systematize health care and impose a 
government-controlled model onto the medical sector. The folly 
of this approach is easy to see. When the Federal Government 
sets the standards of health care, or determines the required 
contents of health coverage--and it cannot do one without the 
other--this practice necessarily limits the options available 
to consumers, suffocates innovation, and drives up costs. Such 
an approach must assume that a population of 323 million--
living in a wide range of geographical and climatic settings, 
and possessing diverse cultural backgrounds and values--all 
require roughly the same set of health care services. States or 
regions that want something different must queue up for waivers 
from Washington that may or may not be granted; indeed, 18 
States have waivers pending with the Federal Government. 
Because many people will not voluntarily purchase a product 
that fails to meet their needs, exceeds their economic 
resources, or violates their moral principles, the government 
must coerce them to do so.
    The central government approach to health care necessarily 
leads to a byzantine system of reimbursements that ultimately 
dictates the kinds of treatments patients receive. Because 
private insurance companies often follow the politically 
determined rates, the result is homogenized services even for 
patients in the private health-care sector. In addition, the 
government is slow in updating its payment regime to account 
for the most recent advances in health care technology or 
delivery, which delays the progress of innovation in patient 
care. Government price-fixing has become so entrenched that 
many cannot imagine letting private plans determine payment 
rates through competition.
    Obamacare sprang from the faulty premise that health care 
delivery and financing could be centrally managed from 
Washington. The results were entirely predictable, and today 
are all too clear. They prove that a nationalized approach to 
health care in America simply cannot work.
    For instance, the ACA established a system of four tiers of 
insurance coverage--described as bronze, silver, gold, and 
platinum--that forces insurers to construct their plans 
according to the demands of Washington, not the marketplace. 
These tiers mandate the actuarial value of benefits insurers 
must cover rather than letting insurers design plans for a 
broader variety of patient needs--thus sharply restricting the 
available choices.
    The resulting limited options are so unsatisfying that 
enrollments under Obamacare are about half of what was 
projected when the law was enacted, and millions have chosen to 
pay its individual ``mandate'' tax penalty rather than buy 
coverage they did not want. Approximately 6.5 million taxpayers 
paid the penalty for the 2015 plan year. Average payments were 
$470, and added up to a total of $3.0 billion. Another 12.7 
million individuals applied for an exemption from the tax 
penalty.\3\ Thus, 19.2 million individuals have chosen to go 
without coverage despite the government's ``mandate.'' This 
upends the fatal conceit of Obamacare's redistributionist 
financial arrangement: ``The young subsidize the old, singles 
subsidize families, men subsidize women, those who go to the 
doctor only when sick subsidize those who consume lots of 
elective or preventive care.''\4\ The cost-shifting scheme has 
not worked; consequently, Obamacare is facing a financial death 
spiral.
---------------------------------------------------------------------------
    \3\Internal Revenue Service Commissioner John A. Koskinen updated 
members of Congress regarding 2016 tax filings related to Affordable 
Care Act provisions, 9 January 2017: https://www.irs.gov/pub/newsroom/
commissionerletteracafilingseason.pdf.
    \4\Holman W. Jenkins Jr., ``Obamacare 2.0,'' The Wall Street 
Journal, 8 March 2017.

                FIGURE 1
    
    

    To the extent Obamacare may have expanded health coverage, 
it has not enhanced access to affordable health care. Due to 
higher premiums and deductibles, many who have obtained ACA 
coverage cannot use it because their out-of-pocket medical 
expenses are too high. Recent reports showed that 50 percent of 
Obamacare customers were cutting back on care to help manage 
their health costs. This compares to 33 percent among the 
general insured population.\5\ In other words, enrollees cannot 
afford their Affordable Care Act coverage. ``[F]or routine 
illness or injury, having Obamacare is the equivalent of being 
uninsured * * *.''\6\
---------------------------------------------------------------------------
    \5\GfK, ``To Reduce Health Costs, 50% of ACA Exchange Customers Are 
Cutting Back on Care--GfK Study,'' 27 October 2016: http://www.gfk.com/
en-us/insights/press-release/to-reduce-health-costs-50-of-aca-exchange-
customers-are-cutting-back-on-care-gfk-study/.
    \6\Jenkins, op. cit.
---------------------------------------------------------------------------
    The ACA's many broken promises are not mere accidents or 
unexpected glitches in an ambitious new government program. 
They are the inevitable and predictable results of Obamacare's 
attempt to extend the reach of the central government ever 
deeper into Americans' health care. It has failed because it 
was destined to fail.

                  Toward Patient-Centered Health Care

    The Republican pledge to ``repeal and replace'' the ACA has 
served as a shorthand to describe something deeper--a 
fundamental transformation of health care policy toward a 
better strategy for true reform. The phrase reflects a more 
essential and profound change in how Americans should think 
about health care. It grows from a different concept more 
deeply rooted in the American tradition of freedom and personal 
choice, coupled with the cost-saving innovations that creative 
markets produce. As Senator Alexander of Tennessee has said: 
``[W]e will build better systems providing Americans with more 
choices of insurance that costs less. Note I say systems, not 
one system * * *. We don't want to replace a failed Obamacare 
Federal system with another failed Federal system. So, we will 
build better systems providing Americans with more choices of 
insurance that costs less. We will do this by moving more 
health care decisions out of Washington and into the hands of 
States and patients * * *.''\7\
---------------------------------------------------------------------------
    \7\Senator A. Lamar Alexander Jr., floor speech in the United 
States Senate, 10 January 2017.

                FIGURE 2
    
    

    To put this another way: ``In a nation of over 323 million 
people, each with different needs and circumstances, it makes 
no sense for one federal agency to dictate the contents of 
every American's health insurance plan.''\8\
---------------------------------------------------------------------------
    \8\The Speaker's Health Care Reform Task Force, A Better Way: Our 
Vision for a Confident America--Health Care, 22 June 2016, p. 12.
---------------------------------------------------------------------------
    Four principles guide the formulation of Republicans' 
approach to health care:

      Lower costs;

      Provide more choices;

      Put patients in control;

      Ensure universal access to health care.

    Provisions developed by the authorizing committees 
(detailed further in the committee submissions) follow this 
guidance. They repeal some of the most paternalistic components 
of Obamacare, such as the individual and employer ``mandate'' 
tax penalties. They expand access and affordability by 
providing for portable, monthly tax credits not tied to a job 
or a Washington-mandated program. The credit is based on age 
and family size, so it evolves with the health care needs of 
the individual over time, and phases out as income rises. 
Further, the credit will be available for individuals with no 
other form of insurance to take with them from job to job, to 
take home, to start a business, or to raise a family. Lower 
costs, resulting from increased competition and choice, will 
provide greater access to care for everyday Americans.
    The reforms will make more options available for 
individuals and families, who will be free to choose the health 
plan that best meets their needs. Protections and access to 
care for individuals with pre-existing conditions will 
continue. Further, by increasing the amount of money that can 
be placed in health savings accounts, coupled with other 
reforms, the policies will allow individuals and families to 
save and spend their health care dollars the way they want.
    These provisions will be implemented in a way that ensures 
a stable transition, one that does not disrupt people's current 
coverage, or the insurance market.
    A key component of this strategy involves the restoration 
of federalism in health care--giving States more flexibility to 
handle health care arrangements for their distinctive 
populations. There is ample evidence that States are capable of 
doing so. A prime example is Massachusetts, a leader in health 
care market reform for more than a decade. Yet even 
Massachusetts, not a conservative State, seeks greater autonomy 
in determining factors such as a State-specific actuarial value 
calculator and a State-specific risk adjustment system.\9\ The 
State also prefers greater administrative control over rules 
and regulations to address compliance more directly than the 
Federal Government can. ``States have been in the business of 
regulating health insurance for decades. They should be 
empowered to make the right tradeoffs between consumer 
protections and individual choice, not regulators in 
Washington.''\10\
---------------------------------------------------------------------------
    \9\``Read the letter Governor Baker sent to Congress,'' The Boston 
Globe, 12 January 2017: https://www.bostonglobe.com/metro/2017/01/12/
read-letter-governor-baker-sent-congress/h9m7B1HrkewyRjxNiNgJnK/
story.html.
    \10\A Better Way op. cit., p. 12.
---------------------------------------------------------------------------
    Some touted the Massachusetts approach as a model for 
national health care reform. It is not. It is a good model for 
Massachusetts. Other States have different kinds of populations 
and, hence, different approaches to health care; what works for 
a family farmer in Iowa might not work for a metropolitan New 
Yorker employed by a large financial firm--or vice versa.
    The Healthy Indiana Plan provided the State's residents who 
did not qualify for Medicaid with access to health benefits 
such as physician services, prescription drugs, inpatient and 
outpatient hospital care, and disease management, all without 
additional funding. In Utah, health insurers are exchanging 
data and analytics between coverage and care providers. This 
approach enables doctors and hospitals to improve the quality 
of care while simultaneously tracking its costs. Physician 
groups participating in the program reduced hospital 
readmission rates by 28 percent relative to the rates of non-
participating doctors. Completion of key cancer screenings for 
women improved by more than 10 percent, and participating 
providers reported average member satisfaction scores of 87 
percent.\11\
---------------------------------------------------------------------------
    \11\Utah Business, ``Regence, Utah Physician Groups Report Positive 
Results from New Care Management Model,'' Press Release, 20 February 
2017: https://www.utahbusiness.com/regence-utah-physicians-group-
report-positive-results-for-care-management-model/.
---------------------------------------------------------------------------
    In another example of State initiatives, before the ACA, 34 
States had high-risk pools for their vulnerable populations. 
Among the most successful was Minnesota's, which enrolled about 
30,000 State residents. The program mainly provided 
comprehensive major medical coverage for people with pre-
existing conditions.\12\ In neighboring Wisconsin, officials 
had to modify their high-risk pool several times, but by 2012 
the plan covered a record 21,770 enrollees and offered a 
variety of coverage options from low-deductible, high-premium 
to high-deductible, low-premium.\13\ Utah and Washington State 
also had their own high-risk pools. All these were supplanted 
by the costly, Washington-centered control of Obamacare. Under 
the ``American Health Care Act'', States will have the 
opportunity to assist high-risk individuals or fund innovation 
programs to care for their unique patient populations.
---------------------------------------------------------------------------
    \12\Courtney Burke and Lynn Blewett, ``All High-Risk Pools Are Not 
Equal: Examining The Minnesota Model,'' Health Affairs Blog, 19 March 
2010: http://healthaffairs.org/blog/2010/03/19/all-high-risk-pools-are-
not-equal-examining-the-minnesota-model/.
    \13\Steven Walters, ``Walters: Wisconsin insurance plan may enter 
health-care debate,'' The Janesville Gazette, 16 January 2017: http://
www.gazettextra.com/20170116/walters--wisconsin--insurance--plan--may--
enter--health--care--debate
---------------------------------------------------------------------------
    Greater State flexibility also will come through 
modernizing Medicaid for the 21st Century. Significant reforms 
will ensure the program is available for the populations it was 
intended to serve: children, pregnant women, the aged, and the 
disabled. A reformed payment structure will give States greater 
flexibility and control to meet their varied needs.
    A recent account in The Wall Street Journal illustrated how 
some of the Nation's governors, not waiting for Washington, 
already have begun seeking cost-saving reforms to their 
respective Medicaid programs. ``Maine, for example, may limit 
most people on Medicaid to five years of benefits. Kentucky 
could require many recipients to work. Wisconsin wants to drug-
test enrollees.''\14\ These modifications do not, however, 
``provide a window into how an overhaul of Medicaid at the 
national level by Congress could reshape the program for low-
income Americans across the country,'' as the article 
suggests.\15\ To the contrary, they demonstrate how greater 
State flexibility can lead to faster and better-tailored reform 
of Medicaid--and of health care generally. Under current law, 
these States had to appeal to a domineering Federal bureaucracy 
to receive permission, in the form of Medicaid waivers, to 
pursue these reforms. The process is lengthy, slowing reform, 
and sometimes the waivers are never granted. The Federal 
Government has denied State requests to waive certain Medicaid 
benefits; has denied most attempts to impose cost-sharing in 
amounts greater than those allowed under Federal law; and never 
approved Pennsylvania's attempt to include a work requirement 
for all able-bodied adults, 21 to 64 years old, as a condition 
of eligibility.\16\
---------------------------------------------------------------------------
    \14\``States Push to Revise Medicaid Programs,'' The Wall Street 
Journal, 24 February 2017.
    \15\Ibid.
    \16\Centers for Medicare and Medicaid Services, letter from 
Administrator Marilyn Tavenner to Pennsylvania Department of Public 
Welfare Secretary Mackereth regarding Healthy Pennsylvania Section 1115 
demonstration, 28 April 2014: https://www.medicaid.gov/Medicaid-CHIP-
Program-Information/By-Topics/Waivers/1115/downloads/pa/Healthy-
Pennsylvania-Private-Coverage-Option-Demonstration/pa-healthy-ca.pdf.
---------------------------------------------------------------------------
    That is fundamentally what the Republican approach to 
health care aims to overturn. It rejects the tired and 
discredited notion that Washington knows best, that health care 
delivery and financing can be centrally planned and 
systematized.
    All of this, however, is just the beginning of what might 
be possible by breaking out of the government-centered model 
for health care. Talk of medical innovation often provokes 
thoughts of new technologies or pharmaceutical products. Yet 
innovation can occur in health care delivery as well, and many 
concepts--such as skilled nursing facilities and outpatient 
surgery--started small, in the private sector, and eventually 
became mainstream.
    The path toward true health care reform begins with this 
legislation. The ``American Health Care Act'' sheds the notion 
that health care can or should be managed by regulation and 
mandate, by academics and Washington bureacrats. It plants the 
seed for a new vision of health care, one rooted where it 
should be--in the decisions and choices of patients and their 
doctors. Patient-centered health care is the true reform for 
the 21st Century.

            Advancing Patient-Centered Care on Three Fronts

    The provisions of this legislation are being pursued 
through the process of budget ``reconciliation.'' It is a 
powerful instrument for policy reform, provided for under 
Section 310 of the Congressional Budget and Impoundment Control 
Act of 1974 [Budget Act]. A principal advantage of 
reconciliation is that it cannot be filibustered in the Senate. 
On the other hand, a reconciliation bill in the Senate is 
limited to budget-related matters; its provisions must affect 
spending or revenue. Consequently, many of the onerous mandates 
and regulations of the Affordable Care Act will have to be 
addressed through subsequent legislation or administrative 
action. The current measure represents one of three fronts for 
advancing patient-centered health care reform.
    A second front will be administrative action. The Obamacare 
legislation contains 1,442 instances in which it grants the 
Department of Health and Human Services [HHS] broad discretion 
in determining Federal health care policy. Apart from 
subjecting individuals' medical care to the dictates of 
government bureaucrats, this constitutes a dangerous expansion 
of the administrative state.
    President Trump has already started rolling back regulation 
with his Executive Order 13765, which includes the following 
provisions:

      It allows the Secretary of HHS, and the heads of 
all other executive departments and agencies ``to waive, defer, 
grant exemptions from, or delay the implementation'' of 
provisions or requirements of Obamacare that would fiscally 
burden any State or impose a cost, fee, tax, penalty, or 
regulatory burden on individuals, families, health care 
providers, health insurers, patients, recipients of health care 
services, purchasers of health insurance, or makers of medical 
devices, products, or medications.

      It allows the HHS Secretary and other agency 
heads to provide greater flexibility to States and cooperate 
with them in implementing health care programs.

      It authorizes agency heads to promote an open 
market in interstate commerce for offering health care services 
or health insurance, ``with the goal of achieving and 
preserving maximum options for patients and consumers.''

    Another element of this second front will be the HHS 
Secretary's exercise of his own authority to modify or rescind 
previous administrative provisions under the Affordable Care 
Act. On 15 February 2017, Secretary Price took the first step 
by issuing new proposed regulations to stabilize individual and 
small group markets damaged by Obamacare. Specifically, these 
regulations reduce the number of special enrollment periods; 
require 100-percent enrollment verification with documentation 
for special enrollment periods; and shorten the open enrollment 
period deadline from 31 January to 15 December, encouraging 
full-year coverage.

    The third front will be additional legislative provisions 
that cannot be included in reconciliation. These might include 
selling insurance across State lines, or implementing the tort 
reform provisions of H.R. 1215, the ``Protecting Access to Care 
Act of 2017''. Other options could include allowing small 
businesses to pool their employees together to purchase 
association health plans, and eliminating the Independent 
Payment Advisory Board, a group of unelected bureaucrats 
authorized under the ACA to recommend cuts in Medicare provider 
payments if the program's spending exceeds certain targets.

                Setting the Stage for Entitlement Reform

    Another benefit of this legislation is that it can start 
the long-needed effort toward reforming the government's 
unsustainable entitlement programs. Federal entitlements, many 
of them launched or expanded in President Johnson's Great 
Society, are failing many of the people they were intended to 
serve. Income assistance programs often trap their 
beneficiaries in a lifetime of dependency. Medical programs 
such as Medicaid subject enrollees to second-rate care--if they 
can get care at all. Programs such as the ACA actually 
discourage work and self-sufficiency.
    These are the recognizable moral failings of these 
programs. Equally immoral is how the uncontrolled costs of 
these programs are loading future generations with debt.
    The latest projections show entitlements will constitute 
the only growth in spending as a share of the economy over the 
next 10 years and beyond. By 2028, entitlement spending plus 
net interest is expected to consume all Federal revenue, 
meaning all other government activities--such as national 
defense, education, infrastructure, and research, and myriad 
others--will have to be financed on borrowed money. Ten years 
later, by 2038, the situation will worsen, as a mere handful of 
programs--Social Security and health care entitlement 
spending--plus net interest are expected to consume all Federal 
revenue; at that point, all discretionary spending and all 
other direct spending will be debt-financed. These trends 
result not from temporary surges in spending or economic 
downturns, but from permanent government spending programs. 
This is an entrenched, structural excess of spending over 
revenues.
    This spending is driving the government's mounting deficits 
and debt. The most recent long-term estimates from the 
Congressional Budget Office [CBO] project Federal debt held by 
the public--which stands at roughly 75 percent of GDP today--
will surge to 110 percent of GDP in the next 20 years, and will 
exceed 141 percent of GDP by 2046.\17\ That figure is well 
beyond the 60-percent ratio adopted in the European Union's 
Maastricht Treaty, the maximum level most economists consider 
sustainable.
---------------------------------------------------------------------------
    \17\Congressional Budget Office, The 2016 Long-Term Budget Outlook, 
July 2016.
---------------------------------------------------------------------------
    CBO notes it is impossible to predict how long the Nation 
could sustain such growth in Federal debt, but at some point 
investors would begin to doubt the government's willingness or 
ability to pay its debt obligations. This would require the 
government to pay much higher interest costs to borrow money, 
resulting in significant negative consequences for the economy 
and the Federal budget. This growing and unsustainable debt 
would restrict policymakers' ability to use tax and spending 
policies to respond to unexpected challenges, such as economic 
downturns, financial crises, or national security emergencies, 
and would pose substantial risks to the Nation.
    Clearly, entitlement reform is indispensable for taking 
control of the Federal Government's fiscal condition. It begins 
with the ``American Health Care Act''.

                    Cost Estimate of the Legislation

    The three-front strategy for health care reform has 
significant implications with regard to the cost estimate of 
this legislation. The analysis by CBO and the Joint Committee 
on Taxation [JCT], released on 13 March 2017, reflects only the 
provisions of this measure; it does not account for further 
planned actions that cannot be included in a reconciliation 
bill. For instance, it cannot show how deregulatory initiatives 
by the Executive Branch would allow insurers to develop a 
greater variety of coverage options, some at lower costs, and 
compete for a broader range of customers. Nor can it evaluate 
the effects of interstate purchasing--should such a policy be 
enacted--which might also enhance competition and lead to more 
choices of policies. This is because the two agencies can only 
estimate the legislation at hand.
    With those considerations in mind, the CBO/JCT estimate of 
the ``American Health Care Act'' offers important projections 
of the potential effects of the legislation.

    Reduced Spending and Lower Deficits. The bill as reported 
by the Budget Committee would reduce projected spending by $1.2 
trillion over the period of 2017 through 2026, mainly due to 
reforms to the Medicaid Program and the elimination of the 
ACA's insurance subsidies for non-group coverage. The measure 
also would return $883 billion to taxpayers by eliminating some 
of Obamacare's burdensome tax hikes. The net effect is a 
reduction in projected deficits of $336.6 billion.\18\
---------------------------------------------------------------------------
    \18\Congressional Budget Office Cost Estimate for the ``American 
Health Care Act'', 13 March 2017: https: / / www.cbo.gov / sites / 
default / files / 115th-congress-2017-2018 / costestimate / 
americanhealthcareact_0.pdf.

    Stability of the Insurance Market. Confirming Republican 
expectations, the analysis projects stability in the nogroup 
health insurance market. ``[K]ey factors bringing about market 
stability include subsidies to purchase insurance, which would 
maintain sufficient demand for insurance by people with low 
health care expenditures, and grants to states from the Patient 
and State Stability Fund, which would reduce the costs to 
insurers of people with high health care expenditures.'' 
Although the new tax credits would be structured differently 
from current subsidies, the analysis notes, the other changes 
would ``lower average premiums enough to attract a sufficient 
number of relatively healthy people to stabilize the 
market.''\19\
---------------------------------------------------------------------------
    \19\Ibid.

                FIGURE 3
    
    

    Lower Insurance Premiums. The estimate projects a near-term 
(through 2019) bump during transition, but by 2026 average 
health insurance premiums would be about 10 percent less than 
under current law. This is partly because premium rates would 
be determined more by actual risk and market effects rather 
than by government dictate. The Patient and State Stability 
Fund would help as well. CBO and JCT also expect a younger mix 
of enrollees under the legislation.\20\ In this area, though, 
the estimate is unable to account for other potential actions 
that cannot be included here--such as deregulation and other 
potential changes in law outside the reconciliation process--
which would likely contribute to even lower premiums.
---------------------------------------------------------------------------
    \20\Ibid.

    Effects on Insurance Coverage. This is where context is 
especially important. CBO and JCT estimate a significant 
decline in insurance coverage resulting from the legislation, 
relative to current law.\21\ The agencies, however, have tended 
to overestimate the extent to which the individual ``mandate'' 
tax encourages a significant boost in insurance purchases. As 
noted earlier, nearly 20 million people have chosen to remain 
without coverage by either paying the tax or seeking an 
exemption from it. Further, CBO counts only ``comprehensive 
major medical policies,'' while excluding health savings 
accounts and plans bought with portable tax credits that give 
patients choices as opposed to Washington-defined coverage. In 
addition, the limited breadth of the cost estimate--analyzing 
in isolation only one of three fronts in the overall health 
care strategy--limits a full understanding of the health care 
plan. It cannot project how many more people would buy coverage 
if there were a greater variety of affordable options as a 
result of forthcoming legislative or administrative actions. 
Hence the full effects on insurance coverage cannot be 
evaluated until the other components are in place.
---------------------------------------------------------------------------
    \21\Ibid.

    No Macroeconomic Feedback Analysis. House rules require a 
macroeconomic feedback analysis of major legislation to the 
extent practicable.\22\ For the ``American Health Care Act'', 
such an evaluation would reflect how the measure's tax 
reductions and shrinking deficits might boost economic 
performance, thereby potentially yielding tax revenues higher 
than estimated. CBO said, however, that ``because of the very 
short time available to prepare this cost estimate, quantifying 
and incorporating these macroeconomic effects have not been 
practicable.''\23\
---------------------------------------------------------------------------
    \22\Clause 8 of Rule XIII of H.Res. 5, the ``Rules of the House of 
Representatives'' for the 115th Congress.
    \23\Congressional Budget Office Cost Estimate for the ``American 
Health Care Act'', 13 March 2017.
---------------------------------------------------------------------------

          The Budget Committee's Role in Obamacare Legislation

    The major steps in the reconciliation process, as provided 
for under Section 310 of the Budget Act, and how they apply in 
this instance, are the following:

    The Budget Resolution. Reconciliation can be triggered only 
by the adoption of a budget resolution. Therefore, the fiscal 
year 2017 budget resolution, passed in January, carried 
reconciliation instructions for the Committees on Energy and 
Commerce and Ways and Means, which have jurisdiction over major 
health care and tax policies. The directives were written to 
give the committees maximum flexibility in writing their 
legislative provisions.

    Authorizing Committees. The two authorizing committees 
marked up legislative provisions pursuant to their instructions 
and transmitted them to the Committee on the Budget. Detailed 
descriptions of the provisions are presented in the committees' 
submissions.

    The Budget Committee. Having received the submissions, the 
Committee on the Budget, as provided for under Section 310 of 
the Budget Act, has bound the provisions together, without 
substantive change, into a single measure--a reconciliation 
bill--and conducted a markup. The Committee then reported the 
measure to the House for floor consideration.

    Following House passage, the bill will be sent to the 
Senate, which will consider the measure under that Chamber's 
reconciliation process.

                          House of Representatives,
                          Committee on Energy and Commerce,
                                    Washington, DC, March 13, 2017.
Hon. Diane Black,
Chairman, Committee on the Budget,
House of Representatives, Washington, DC.
    Dear Chairman Black: Pursuant to section 2002 of S. Con. 
Res. 3, the Fiscal Year 2017 Concurrent Resolution on the 
Budget, as well as section 310 of the Congressional Budget and 
Impoundment Control Act of 1974, I hereby transmit these 
recommendations, which have been approved by vote of the 
Committee on Energy and Commerce, and the appropriate 
accompanying material including additional, supplemental or 
dissenting views, to the House Committee on the Budget.
            Sincerely,
                                               Greg Walden,
                                                          Chairman.

  Committee Print: Budget Reconciliation Legislative Recommendations 
Relating to Repeal and Replace of the Patient Protection and Affordable 
                 Care Act; Title I--Energy and Commerce

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................    16
Background and Need for Legislation..............................    16
Committee Action.................................................    18
Committee Votes..................................................    18
Oversight Findings and Recommendations...........................    38
New Budget Authority, Entitlement Authority, and Tax Expenditures    38
Congressional Budget Office Estimate.............................    38
Federal Mandates Statement.......................................    73
Statement of General Performance Goals and Objectives............    73
Duplication of Federal Programs..................................    73
Committee Cost Estimate..........................................    73
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......    73
Disclosure of Directed Rule Makings..............................    73
Advisory Committee Statement.....................................    73
Applicability to Legislative Branch..............................    73
Section-by-Section Analysis of the Legislation...................    73
Changes in Existing Law Made by the Bill, as Reported............    79
Minority, Additional, or Dissenting Views........................   324
                          Purpose and Summary

    The Patient Protection and Affordable Care Act (PPACA) has 
failed to live up to the promise of lowering health care costs 
for individuals and families. The purpose of the Committee on 
Energy and Commerce's budget reconciliation legislative 
recommendations is to advance the repeal and replacement of 
this failed law.

                  Background and Need for Legislation

    The PPACA has led to a deterioration of the health 
insurance market where most individuals and families have 
limited choices. Patients have seen premium increases paired 
with high cost sharing. Nearly one-third of counties have only 
one insurer offering an exchange plan. The average increase in 
premiums this year on the healthcare.gov exchange is 25 percent 
according to data from the Department of Health and Human 
Services. As a result, 19.2 million taxpayers have chosen to 
pay the individual mandate penalty or claim an exemption from 
the mandate.
    The PPACA has also dramatically overburdened the Medicaid 
program. Medicaid is a critical safety net for some of our 
nation's most vulnerable patients, as the program provides 
health care for children, pregnant mothers, elderly 
individuals, blind individuals, and individuals with 
disabilities. Created in 1965 to finance health care coverage 
to serve low-income Americans, Medicaid is now the world's 
largest health insurance program. Medicaid currently covers 
approximately 72 million Americans--more than Medicare--and up 
to 98 million may be covered at any one point in a given 
year.\1\
---------------------------------------------------------------------------
    \1\See the Congressional Budget Office's Medicaid baseline, 
available online here: https://www.cbo.gov/sites/default/files/
recurringdata/51301-2016-03-medicaid.pdf.
---------------------------------------------------------------------------
    Medicaid is jointly funded by Federal and State 
governments. According to the Congressional Budget Office, 
Federal Medicaid outlays are expected to increase dramatically 
over the coming decade, from $368 billion in 2016 to $650 
billion in 2027.\2\ According to National Health Expenditure 
projections, total Medicaid outlays will climb to approximately 
$1 trillion each year by the end of a decade.\3\
---------------------------------------------------------------------------
    \2\See the Congressional Budget Office's Medicaid baseline, 
available online here: https://www.cbo.gov/sites/default/files/
recurringdata/51301-2016-03-medicaid.pdf.
    \3\See the Centers for Medicare & Medicaid Service National Health 
Expenditures Data, available online here: https://www.cms.gov/Research-
Statistics-Data-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpendData/NationalHealthAccountsProjected.html.
---------------------------------------------------------------------------
    Today, Medicaid is one of the fastest growing spending 
items for States, and accounted for more than 28 percent of 
State spending in fiscal year 2015, according to the National 
Association of State Budget Officers.\4\ This portion of State 
budgets devoted to Medicaid has grown over time, and has 
accelerated in recent years. Notably, irrespective of whether 
or not a State chose to expand Medicaid under PPACA, all States 
are experiencing greater Medicaid program outlays due to the 
effects of the individual mandate and penalties. A recent 
estimate by the Congressional Budget Office (CBO) attributed 
$281 billion in Federal Medicaid outlays over a decade to the 
effect of the individual mandate tax penalty in PPACA, because 
the mandate has effectively forced many individuals who were 
previously eligible (but not previously enrolled) to enroll in 
Medicaid.\5\
---------------------------------------------------------------------------
    \4\See the National Association of State Budget Officers, State 
Expenditure Report, available online here: https://
higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-
0fca152d64c2/UploadedImages/SER%20Archive/
State%20Expenditure%20Report%20(Fiscal%202014-2016)%20-%20S.pdf.
    \5\See the Congressional Budget Office's Budget Option, Repeal the 
Individual Health Insurance Mandate, available online here: https://
www.cbo.gov/budget-options/2016/52232.
---------------------------------------------------------------------------
    As these numbers suggest, the Medicaid safety net is under 
strain and unfortunately is not serving patients as well as it 
should. Many State Medicaid programs suffer from significant 
waste, fraud, and abuse, due to failures in State and Federal 
oversight. In fact, the Government Accountability Office (GAO) 
has designated Medicaid as a high-risk program since 2003 due 
to their concerns about conducting proper oversight of the 
program.\6\ Medicaid's incentives often lead States to offer 
more benefits but cut payments to health care providers, which 
means low-income patients have less and less access to quality 
care. The result is nationally, only a portion of primary 
health care providers accept Medicaid beneficiaries--often with 
even fewer specialists accepting such patients.\7\ On its 
current path, the Medicaid program is on unsustainable 
financial footing. This is not merely a fiscal issue, but an 
issue that jeopardizes the ability of the Federal and State 
government to take care of the most vulnerable who actually 
rely on the program.
---------------------------------------------------------------------------
    \6\See the Government Accountability Office's, 2017 High Risk 
Report, available online here: http://www.gao.gov/assets/690/
682765.pdf.
    \7\See Avik Roy's Testimony before the Energy & Commerce Health 
Subcommittee, available online here: http://docs.house.gov/meetings/IF/
IF14/20170201/105498/HHRG-115-IF14-Wstate-RoyA-20170201.pdf pages 4 and 
5.
---------------------------------------------------------------------------
    Unfortunately, PPACA has made this dynamic of not being 
able to care for the most vulnerable worse. Under PPACA, States 
may expand Medicaid eligibility to people under the age of 65 
with income up to 138 percent of the Federal poverty level 
(FPL). The law provided enhanced Federal funding for coverage 
of this new expansion population, in the form of a higher 
Federal Medical Assistance Percentage (FMAP). Specifically, the 
Federal government covered 100 percent of the costs for the 
expansion population through 2016--a 100 percent FMAP. In 2017, 
the FMAP for this population is 95 percent, and the FMAP 
gradually diminishes to 90 percent by 2020. Thus, under PPACA, 
the Federal government covers a higher percentage of the cost 
of care for able-bodied adults above poverty compared to the 
disabled, elderly, or children below poverty. In some cases, 
this may create an incentive for States that face budgetary 
pressures to use policy tools to reduce benefits, services, or 
eligibility for the traditional, vulnerable Medicaid 
populations served by their programs. According to the most 
recent estimate from the Congressional Budget Office, the 
provisions of PPACA will cost Federal taxpayers nearly $1 
trillion over the next decade.
    For Medicaid to be strengthened and sustained as a vital 
safety net to provide needed care for our nation's most 
vulnerable patients for coming decades, Congress and the 
Centers for Medicare and Medicaid Services (CMS) will be forced 
to make changes to the program. As GAO has noted, ``the effects 
of unprecedented changes recently made to the Medicaid program 
will continue to emerge in the coming years and are likely to 
exacerbate the challenges and shortcomings that already exist 
in federal oversight and management of the program.''\8\
---------------------------------------------------------------------------
    \8\See the Government Accountability Office's, 2017 High Risk 
Report, available online here: http://www.gao.gov/assets/690/
682765.pdf.
---------------------------------------------------------------------------

                            Committee Action

    The Committee on Energy and Commerce has convened 31 
oversight hearings on the Affordable Care Act through the 
Subcommittees on Health, the Subcommittee on Oversight and 
Investigations, and the Full Committee. One-hundred and seven 
witnesses testified before the Committee, included 38 
Administration officials. These hearings focused on a variety 
of provisions within the law and their implementation. Topics 
discussed at these hearings include the Cost-Sharing reduction 
program, the Basic Health Program, the mismanagement of 
healthcare.gov and information technology systems by HHS and 
its component agencies, state-based exchanges, the Consumer 
Operated and Oriented Plan, premium increases resulting from 
provisions of the law, and the ACA Medicaid expansion.
    On March 8, 2017, the full Committee on Energy and Commerce 
met in open markup session and ordered the Committee Print, as 
amended, favorably reported to the House by a record vote of 31 
yeas and 23 nays.

                            Committee Votes

    Clause 3(b) of rule XIII requires the Committee to list the 
record votes on the motion to report legislation and amendments 
thereto. The following reflects the record votes taken during 
the Committee consideration:


                 Oversight Findings and Recommendations

    Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII, has not held hearings on the Committee Print: Budget 
Reconciliation Legislative Recommendations Relating to Repeal 
and Replace of the Patient Protection and Affordable Care Act; 
Title I--Energy and Commerce.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to clause 3(c)(2) of rule XIII, the Committee 
finds that the Committee Print would result in no new or 
increased budget authority, entitlement authority, or tax 
expenditures or revenues.

                  Congressional Budget Office Estimate

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

                      CONGRESSIONAL BUDGET OFFICE
                             COST ESTIMATE

                              ----------                              

                                                    March 13, 2017.

                        American Health Care Act

 Budget Reconciliation Recommendations of the House Committees on Ways 
            and Means and Energy and Commerce, March 9, 2017

                                SUMMARY

    The Concurrent Resolution on the Budget for Fiscal Year 
2017 directed the House Committees on Ways and Means and Energy 
and Commerce to develop legislation to reduce the deficit. The 
Congressional Budget Office and the staff of the Joint 
Committee on Taxation (JCT) have produced an estimate of the 
budgetary effects of the American Health Care Act, which 
combines the pieces of legislation approved by the two 
committees pursuant to that resolution. In consultation with 
the budget committees, CBO used its March 2016 baseline with 
adjustments for subsequently enacted legislation, which 
underlies the resolution, as the benchmark to measure the cost 
of the legislation.

                     Effects on the Federal Budget

    CBO and JCT estimate that enacting the legislation would 
reduce federal deficits by $337 billion over the 2017-2026 
period. That total consists of $323 billion in on-budget 
savings and $13 billion in off-budget savings. Outlays would be 
reduced by $1.2 trillion over the period, and revenues would be 
reduced by $0.9 trillion.
    The largest savings would come from reductions in outlays 
for Medicaid and from the elimination of the Affordable Care 
Act's (ACA's) subsidies for nongroup health insurance. The 
largest costs would come from repealing many of the changes the 
ACA made to the Internal Revenue Code--including an increase in 
the Hospital Insurance payroll tax rate for high-income 
taxpayers, a surtax on those taxpayers' net investment income, 
and annual fees imposed on health insurers--and from the 
establishment of a new tax credit for health insurance.
    Pay-as-you-go procedures apply because enacting the 
legislation would affect direct spending and revenues. CBO and 
JCT estimate 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.

                  Effects on Health Insurance Coverage

    To estimate the budgetary effects, CBO and JCT projected 
how the legislation would change the number of people who 
obtain federally subsidized health insurance through Medicaid, 
the nongroup market, and the employment-based market, as well 
as many other factors.
    CBO and JCT estimate that, in 2018, 14 million more people 
would be uninsured under the legislation than under current 
law. Most of that increase would stem from repealing the 
penalties associated with the individual mandate. Some of those 
people would choose not to have insurance because they chose to 
be covered by insurance under current law only to avoid paying 
the penalties, and some people would forgo insurance in 
response to higher premiums.
    Later, following additional changes to subsidies for 
insurance purchased in the nongroup market and to the Medicaid 
program, the increase in the number of uninsured people 
relative to the number under current law would rise to 21 
million in 2020 and then to 24 million in 2026. The reductions 
in insurance coverage between 2018 and 2026 would stem in large 
part from changes in Medicaid enrollment--because some states 
would discontinue their expansion of eligibility, some states 
that would have expanded eligibility in the future would choose 
not to do so, and per-enrollee spending in the program would be 
capped. In 2026, an estimated 52 million people would be 
uninsured, compared with 28 million who would lack insurance 
that year under current law.

                Stability of the Health Insurance Market

    Decisions about offering and purchasing health insurance 
depend on the stability of the health insurance market--that 
is, on having insurers participating in most areas of the 
country and on the likelihood of premiums' not rising in an 
unsustainable spiral. The market for insurance purchased 
individually (that is, nongroup coverage) would be unstable, 
for example, if the people who wanted to buy coverage at any 
offered price would have average health care expenditures so 
high that offering the insurance would be unprofitable. In CBO 
and JCT's assessment, however, the nongroup market would 
probably be stable in most areas under either current law or 
the legislation.
    Under current law, most subsidized enrollees purchasing 
health insurance coverage in the nongroup market are largely 
insulated from increases in premiums because their out-of-
pocket payments for premiums are based on a percentage of their 
income; the government pays the difference. The subsidies to 
purchase coverage combined with the penalties paid by uninsured 
people stemming from the individual mandate are anticipated to 
cause sufficient demand for insurance by people with low health 
care expenditures for the market to be stable.
    Under the legislation, in the agencies' view, key factors 
bringing about market stability include subsidies to purchase 
insurance, which would maintain sufficient demand for insurance 
by people with low health care expenditures, and grants to 
states from the Patient and State Stability Fund, which would 
reduce the costs to insurers of people with high health care 
expenditures. Even though the new tax credits would be 
structured differently from the current subsidies and would 
generally be less generous for those receiving subsidies under 
current law, the other changes would, in the agencies' view, 
lower average premiums enough to attract a sufficient number of 
relatively healthy people to stabilize the market.

                          Effects on Premiums

    The legislation would tend to increase average premiums in 
the nongroup market prior to 2020 and lower average premiums 
thereafter, relative to projections under current law. In 2018 
and 2019, according to CBO and JCT's estimates, average 
premiums for single policyholders in the nongroup market would 
be 15 percent to 20 percent higher than under current law, 
mainly because the individual mandate penalties would be 
eliminated, inducing fewer comparatively healthy people to sign 
up.
    Starting in 2020, the increase in average premiums from 
repealing the individual mandate penalties would be more than 
offset by the combination of several factors that would 
decrease those premiums: grants to states from the Patient and 
State Stability Fund (which CBO and JCT expect to largely be 
used by states to limit the costs to insurers of enrollees with 
very high claims); the elimination of the requirement for 
insurers to offer plans covering certain percentages of the 
cost of covered benefits; and a younger mix of enrollees. By 
2026, average premiums for single policyholders in the nongroup 
market under the legislation would be roughly 10 percent lower 
than under current law, CBO and JCT estimate.
    Although average premiums would increase prior to 2020 and 
decrease starting in 2020, CBO and JCT estimate that changes in 
premiums relative to those under current law would differ 
significantly for people of different ages because of a change 
in age-rating rules. Under the legislation, insurers would be 
allowed to generally charge five times more for older enrollees 
than younger ones rather than three times more as under current 
law, substantially reducing premiums for young adults and 
substantially raising premiums for older people.

                 Uncertainty Surrounding the Estimates

    The ways in which federal agencies, states, insurers, 
employers, individuals, doctors, hospitals, and other affected 
parties would respond to the changes made by the legislation 
are all difficult to predict, so the estimates in this report 
are uncertain. But CBO and JCT have endeavored to develop 
estimates that are in the middle of the distribution of 
potential outcomes.

                         Macroeconomic Effects

    Because of the magnitude of its budgetary effects, this 
legislation is ``major legislation,'' as defined in the rules 
of the House of Representatives.\1\ Hence, it triggers the 
requirement that the cost estimate, to the greatest extent 
practicable, include the budgetary impact of its macroeconomic 
effects. However, because of the very short time available to 
prepare this cost estimate, quantifying and incorporating those 
macroeconomic effects have not been practicable.
---------------------------------------------------------------------------
    \1\Cl. 8 of Rule XIII of the Rules of the House of Representatives, 
H.R. Res. 5, 115th Congress (2017).
---------------------------------------------------------------------------

             Intergovernmental and Private-Sector Mandates

    JCT and CBO have reviewed the provisions of the legislation 
and determined that they would impose no intergovernmental 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    JCT and CBO have determined that the legislation would 
impose private-sector mandates as defined in UMRA. On the basis 
of information from JCT, CBO estimates the aggregate cost of 
the mandates would exceed the annual threshold established in 
UMRA for private-sector mandates ($156 million in 2017, 
adjusted annually for inflation).

                  MAJOR PROVISIONS OF THE LEGISLATION

    Budgetary effects related to health insurance coverage 
would stem primarily from the following provisions:

     LEliminating penalties associated with the 
requirements that most people obtain health insurance coverage 
and that large employers offer their employees coverage that 
meets specified standards.

     LReducing the federal matching rate for adults 
made eligible for Medicaid by the ACA to equal the rate for 
other enrollees in the state, beginning in 2020.

     LCapping the growth in per-enrollee payments for 
most Medicaid beneficiaries to no more than the medical care 
component of the consumer price index starting in 2020.

     LRepealing current-law subsidies for health 
insurance coverage obtained through the nongroup market--which 
include refundable tax credits for premium assistance and 
subsidies to reduce cost-sharing payments--as well as the Basic 
Health Program, beginning in 2020.

     LCreating a new refundable tax credit for health 
insurance coverage purchased through the nongroup market 
beginning in 2020.

     LAppropriating funding for grants to states 
through the Patient and State Stability Fund beginning in 2018.

     LRelaxing the current-law requirement that 
prevents insurers from charging older people premiums that are 
more than three times larger than the premiums charged to 
younger people in the nongroup and small-group markets. Unless 
a state sets a different limit, the legislation would allow 
insurers to charge older people five times more than younger 
ones, beginning in 2018.

     LRemoving the requirement, beginning in 2020, that 
insurers who offer plans in the nongroup and small-group 
markets generally must offer plans that cover at least 60 
percent of the cost of covered benefits.

     LRequiring insurers to apply a 30 percent 
surcharge on premiums for people who enroll in insurance in the 
nongroup or small-group markets if they have been uninsured for 
more than 63 days within the past year.

    Other parts of the legislation would repeal or delay many 
of the changes the ACA made to the Internal Revenue Code that 
were not directly related to the law's insurance coverage 
provisions. Those with the largest budgetary effects include:

     LRepealing the surtax on certain high-income 
taxpayers' net investment income;

     LRepealing the increase in the Hospital Insurance 
payroll tax rate for certain high-income taxpayers;

     LRepealing the annual fee on health insurance 
providers; and

     LDelaying when the excise tax imposed on some 
health insurance plans with high premiums would go into effect.

    In addition, the legislation would make several changes to 
other health-related programs that would have smaller budgetary 
effects.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    CBO and JCT estimate that, on net, enacting the legislation 
would decrease federal deficits by $337 billion over the 2017-
2026 period (see Table 1). That change would result from a $1.2 
trillion decrease in direct spending, partially offset by an 
$883 billion reduction in revenues.

                           BASIS OF ESTIMATE

    For this estimate, CBO and JCT assume that the legislation 
will be enacted by May 2017. Costs and savings are measured 
relative to CBO's March 2016 baseline projections, with 
adjustments for legislation that was enacted after that 
baseline was produced.
    The largest budgetary effects would stem from provisions in 
the recommendations from both committees that would affect 
insurance coverage. Those provisions, taken together, would 
reduce projected deficits by $935 billion over the 2017-2026 
period. Other provisions would increase deficits by $599 
billion, mostly by reducing tax revenues. All told, deficits 
would be reduced by $337 billion over that period, CBO and JCT 
estimate. (See Table 2 for the estimated budgetary effects of 
each major provision.)

       Budgetary Effects of Health Insurance Coverage Provisions

    The $935 billion in estimated deficit reduction over the 
2017-2026 period that would stem from the insurance coverage 
provisions includes the following amounts (shown in Table 3):

     LA reduction of $880 billion in federal outlays 
for Medicaid;

     LSavings of $673 billion, mostly stemming from the 
elimination of the ACA's subsidies for nongroup health 
insurance--which include refundable tax credits for premium 
assistance and subsidies to reduce cost-sharing payments--in 
2020;

     LSavings of $70 billion mostly associated with 
shifts in the mix of taxable and nontaxable compensation 
resulting from net decreases in the number of people estimated 
to enroll in employment-based health insurance coverage; and

     LSavings of $6 billion from the repeal of a tax 
credit for certain small employers that provide health 
insurance to their employees.

    Those decreases would be partially offset by:

     LA cost of $361 billion for the new tax credit for 
health insurance established by the legislation in 2020;

     LA reduction in revenues of $210 billion from 
eliminating the penalties paid by uninsured people and 
employers;

     LAn increase in spending of $80 billion for the 
new Patient and State Stability Fund grant program; and

     LA net increase in spending of $43 billion under 
the Medicare program stemming from changes in payments to 
hospitals that serve a disproportionate share of low-income 
patients.

    Methodology. The legislation would change the pricing of 
nongroup insurance and the eligibility for and the amount of 
subsidies to purchase that insurance. It would also lead to 
changes in Medicaid eligibility and per capita spending. The 
legislation's effects on health insurance coverage would depend 
in part on how responsive individuals are to changes in the 
prices, after subsidies, they would have to pay for nongroup 
insurance; on changes in their eligibility for public coverage; 
and on their underlying desire for such insurance. Effects on 
coverage would also stem from how responsive firms are to 
changes in those post subsidy prices and in the attractiveness 
of other aspects of nongroup alternatives to employment-based 
insurance.
    To capture those complex interactions, CBO uses a 
microsimulation model to estimate how rates of coverage and 
sources of insurance would change as a result of alterations in 
eligibility and subsidies for--and thus the net cost of--
various insurance options. Based on survey data, that model 
incorporates a wide range of information about a representative 
sample of individuals and families, including their income, 
employment, health status, and health insurance coverage. The 
model also incorporates information from the research 
literature about the responsiveness of individuals and 
employers to price changes and the responsiveness of 
individuals to changes in eligibility for public coverage. CBO 
regularly updates the model so that it incorporates information 
from the most recent administrative data on insurance coverage 
and premiums. CBO and JCT use that model--in combination with 
models of tax revenues, models of Medicaid spending and actions 
by states, projections of trends in early retirees' health 
insurance coverage, and other available information--to inform 
their estimates of the numbers of people with certain types of 
coverage and the associated federal budgetary costs.\2\
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    \2\For additional information, see Congressional Budget Office, 
``Methods for Analyzing Health Insurance Coverage'' (accessed March 13, 
2017), www.cbo.gov/topics/health-care/methods-analyzing-health-
insurance-coverage.

    Effects of Repealing Mandate Penalties. Eliminating the 
penalties associated with two requirements, while keeping the 
requirements themselves in place, would affect insurance 
coverage in various ways. Those two requirements are that most 
people obtain health insurance coverage (also called the 
individual mandate) and that large employers offer their 
employees health insurance coverage that meets specified 
standards (also called the employer mandate). Eliminating their 
associated penalties would reduce federal revenues starting in 
2017, but CBO and JCT estimate that doing so would also 
substantially reduce the number of people with health insurance 
coverage and, accordingly, would reduce the costs incurred by 
the federal government in subsidizing some health insurance 
coverage. The estimated savings stemming from fewer people 
enrolling in Medicaid, in health insurance obtained through the 
nongroup market, and in employment-based health insurance 
coverage would exceed the estimated loss of revenues from 
eliminating mandate penalties.
    CBO and JCT estimate that repealing the individual mandate 
penalties would also result in higher health insurance premiums 
in the nongroup market after 2017.\3\ Insurers would still be 
required to provide coverage to any applicant, would not be 
able to vary premiums to reflect enrollees' health status or to 
limit coverage of preexisting medical conditions, and would be 
limited in how premiums could vary by age. Those features are 
most attractive to applicants with relatively high expected 
costs for health care, so CBO and JCT expect that repealing the 
individual mandate penalties would tend to reduce insurance 
coverage less among older and less healthy people than among 
younger and healthier people. Thus, the agencies estimate that 
repealing those penalties, taken by itself, would increase 
premiums. Nevertheless, CBO and JCT anticipate that a 
significant number of relatively healthy people would still 
purchase insurance in the nongroup market because of the 
availability of government subsidies.
---------------------------------------------------------------------------
    \3\CBO and JCT expect that insurers would not be able to change 
their 2017 premiums because those premiums have already been set.

    Major Changes to Medicaid. CBO estimates that several major 
provisions affecting Medicaid would decrease direct spending by 
$880 billion over the 2017-2026 period. That reduction would 
stem primarily from lower enrollment throughout the period, 
culminating in 14 million fewer Medicaid enrollees by 2026, a 
reduction of about 17 percent relative to the number under 
current law. Some of that decline would be among people who are 
currently eligible for Medicaid benefits, and some would be 
among people who CBO projects would be made eligible as a 
result of state actions in the future under current law (that 
is, from additional states adopting the optional expansion of 
eligibility authorized by the ACA). Some decline in spending 
and enrollment would begin immediately, but most of the changes 
would begin in 2020, when the legislation would terminate the 
enhanced federal matching rate for new enrollees under the 
ACA's expansion of Medicaid and would place a per capita-based 
cap on the federal government's payments to states for medical 
assistance provided through Medicaid. By 2026, Medicaid 
spending would be about 25 percent less than what CBO projects 
---------------------------------------------------------------------------
under current law.

    Changes Before 2020. Under current law, the penalties 
associated with the individual mandate apply to some Medicaid-
eligible adults and children. (For example, the penalties apply 
to single individuals with income above about 90 percent of the 
federal poverty guidelines, also known as the federal poverty 
level, or FPL). CBO estimates that, without those penalties, 
fewer people would enroll in Medicaid, including some who are 
not subject to the penalties but might think they are. Some 
people might be uncertain about what circumstances trigger the 
penalty and others might be uncertain about their annual 
income. The estimated lower enrollment would result in less 
spending for the program. Those effects on enrollment and 
spending would continue throughout the 2017-2026 period.

    Termination of Enhanced Federal Matching Funds for New 
Enrollees From Expanding Eligibility for Medicaid. Under 
current law, states are permitted, but not required, to expand 
eligibility for Medicaid to adults under 65 whose income is 
equal to or less than 138 percent of the FPL (referred to here 
as ``newly eligible''). The federal government pays a larger 
share of the medical costs for those people than it pays for 
those who were previously eligible. Beginning in 2020, the 
legislation would reduce the federal matching rate for newly 
eligible adults from 90 percent of medical costs to the rate 
for other enrollees in the state. (The federal matching rate 
for other enrollees ranges from 50 percent to 75 percent, 
depending on the state, with an average of about 57 percent.) 
The lower federal matching rate would apply only to those newly 
enrolled after December 31, 2019.
    The 31 states and the District of Columbia that have 
already expanded Medicaid to the newly eligible cover roughly 
half of that population nationwide. CBO projects that under 
current law, additional states will expand their Medicaid 
programs and that, by 2026, roughly 80 percent of newly 
eligible people will reside in states that have done so. Under 
the legislation, largely because states would pay for a greater 
share of enrollees' costs, CBO expects that no additional 
states would expand eligibility, thereby reducing both 
enrollment in and spending for Medicaid. According to CBO's 
estimates, that effect would be modest in the near term, but by 
2026, on an average annual basis, 5 million fewer people would 
be enrolled in Medicaid than would have been enrolled under 
current law (see Figure 1).
    CBO also anticipates some states that have already expanded 
their Medicaid programs would no longer offer that coverage, 
reducing the share of the newly eligible population residing in 
a state with expanded eligibility to about 30 percent in 2026. 
That estimate reflects different possible outcomes without any 
explicit prediction about which states would make which 
choices. In considering the possible outcomes, CBO took into 
account several factors: the extent of optional coverage 
provided to the newly eligible population and other groups 
before the ACA's enactment (as a measure of a state's 
willingness to provide coverage above statutory minimums), 
states' ability to bear costs under the legislation, and 
potential methods to mitigate those costs (such as changes to 
benefit packages and payment rates). Some states might also 
begin to take action prior to 2020 in anticipation of future 
changes that would result from the legislation to avoid abrupt 
changes to eligibility and other program features. How 
individual states would ultimately respond is highly uncertain.
    Because the lower federal matching rate would apply only to 
those newly enrolled after December 31, 2019 (or who experience 
a break in eligibility after that date), CBO estimates that 
reductions in spending for the newly eligible would increase 
over several years, as ``grandfathered'' enrollees would cycle 
off the program and be replaced by new enrollees. On the basis 
of historical data (and taking into account the increased 
frequency of eligibility redeterminations required by the 
legislation), CBO projects that fewer than one-third of those 
enrolled as of December 31, 2019, would have maintained 
continuous eligibility two years later. Under the legislation, 
the higher federal matching rate would apply for fewer than 5 
percent of newly eligible enrollees by the end of 2024, CBO 
estimates.

    Per Capita-Based Cap on Medicaid Payments for Medical 
Assistance. Under current law, the federal government and state 
governments share in the financing and administration of 
Medicaid. In general, states pay health care providers for 
services to enrollees, and the federal government reimburses 
states for a percentage of their expenditures. All federal 
reimbursement for medical services is open-ended, meaning that 
if a state spends more because enrollment increases or costs 
per enrollee rise, additional federal payments are 
automatically generated.
    Under the legislation, beginning in 2020, the federal 
government would establish a limit on the amount of 
reimbursement it provides to states. That limit would be set by 
calculating the average per-enrollee cost of medical services 
for most enrollees who received full Medicaid benefits in 2016 
for each state. The Secretary of Health and Human Services 
would then inflate the average per-enrollee costs for each 
state by the growth in the consumer price index for medical 
care services (CPI-M). The final limit on federal reimbursement 
for each state for 2020 and after would be the average cost per 
enrollee for five specified groups of enrollees (the elderly, 
disabled people, children, newly eligible adults, and all other 
adults), reflecting growth in the CPI-M from 2016 multiplied by 
the number of enrollees in each category in that year. If a 
state spent more than the limit on federal reimbursement, the 
federal government would provide no additional funding to match 
that spending.
    The limit on federal reimbursement would reduce outlays 
because (after the changes to the Medicaid expansion population 
have been accounted for) Medicaid spending would grow on a per-
enrollee basis at a faster rate than the CPI-M, according to 
CBO's projections: at an average annual rate of 4.4 percent for 
Medicaid and 3.7 percent for the CPI-M over the 2017-2026 
period. With less federal reimbursement for Medicaid, states 
would need to decide whether to commit more of their own 
resources to finance the program at current-law levels or 
whether to reduce spending by cutting payments to health care 
providers and health plans, eliminating optional services, 
restricting eligibility for enrollment, or (to the extent 
feasible) arriving at more efficient methods for delivering 
services. CBO anticipates that states would adopt a mix of 
those approaches, which would result in additional savings to 
the federal government. (Other provisions affecting Medicaid 
are discussed below.)

    Changes to Subsidies and Market Rules for Nongroup Health 
Insurance Before 2020. Under the legislation, existing 
subsidies for health insurance coverage purchased in the 
nongroup market would largely remain in effect until 2020--but 
the premium tax credits would differ by the age of the 
individual in 2019. Aside from the changes in enrollment and 
premiums as a result of eliminating the individual mandate 
penalties (mentioned earlier), the other changes discussed in 
this section would have small effects on coverage and federal 
subsidies in the nongroup market.

    Nongroup Market Subsidies. Subsidies under current law fall 
into two categories: subsidies to cover a portion of 
participants' health insurance premiums (which take the form of 
refundable tax credits) and subsidies to reduce their cost-
sharing amounts (out-of-pocket payments required under 
insurance policies). The first category of subsidies, also 
called premium tax credits, is generally available to people 
with income between 100 percent and 400 percent of the FPL, 
with certain exceptions. The second category, also called cost-
sharing subsidies, is available to those who are eligible for 
premium tax credits, generally have a household income between 
100 percent and 250 percent of the FPL, and enroll in an 
eligible plan.
    Under current law, those subsidies can be obtained only by 
purchasing nongroup coverage through a health insurance 
marketplace. Under the legislation, premium tax credits--but 
not cost-sharing subsidies--would also be available for most 
plans purchased in the nongroup market outside of marketplaces 
beginning in 2018. However, the tax credits for those plans 
could not be advanced and could only be claimed on a person's 
tax return. CBO and JCT estimate that roughly 2 million people 
who are expected to enroll in plans purchased in the nongroup 
market outside of marketplaces in 2018 and 2019 under current 
law would newly receive premium tax credits for that coverage 
under the legislation.
    The premium tax credits would differ by the age of the 
individual for one year in 2019, while cost-sharing subsidies 
would remain unchanged prior to 2020. For those with household 
income exceeding 150 percent of the FPL, the legislation would 
generally reduce the percentage of income that younger people 
had to pay toward their premiums and increase that percentage 
for older people.\4\ CBO and JCT expect that roughly 1 million 
more people would enroll in coverage obtained through the 
nongroup market as a result of the change in the structure of 
premium tax credits. That increase would be the net result of 
higher enrollment among younger people and lower enrollment 
among older people.
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    \4\For families, the age of the oldest taxpayer would be used to 
determine the age-adjusted percentage of income that must be paid 
toward the premiums. As under current law, the premium tax credits 
would cover the amount by which the reference premium--that is, the 
premium for the second-lowest-cost ``silver'' plan that covers the 
eligible people in the household in the area in which they reside--
exceeds that percentage of income. A silver plan covers about 70 
percent of the costs of covered benefits.

    Patient and State Stability Fund Grants. Beginning in 2018 
and ending after 2026, the federal government would make a 
total of $100 billion in allotments to states that they could 
use for a variety of purposes, including reducing premiums for 
insurance in the nongroup market. CBO and JCT estimate that 
federal outlays for grants from the Patient and State Stability 
Fund would total $80 billion over the 2018-2026 period.
    By the agencies' estimates, the grants would reduce 
premiums for insurance in the nongroup market in many states. 
CBO and JCT expect that states would use those grants mostly to 
reimburse insurers for some of the costs of enrollees with 
claims above a threshold. For states that did not develop plans 
to spend the funds, the federal government would make payments 
to insurers in the individual market who have enrollees with 
relatively high claims. Before 2020, CBO expects, the Secretary 
of Health and Human Services would make payments to insurers on 
the behalf of most states because most would not have enough 
time to set up their own programs before insurers had to set 
premiums for 2018. As a result, CBO estimates that most states 
would rely on the federal default program for one or more years 
until they had more time to establish their own programs.

    Continuous Coverage Provisions. Insurers would be required 
to impose a penalty on people who enrolled in insurance in the 
nongroup or small-group markets if they had been uninsured for 
more than 63 days within the past year. When they purchased 
insurance in the nongroup or small-group market, they would be 
subject to a surcharge equal to 30 percent of their monthly 
premium for up to 12 months. The requirement would apply to 
people enrolling during a special enrollment period in 2018 
and, beginning in 2019, to people enrolling at any time during 
the year.
    CBO and JCT expect that increasing the future price of 
insurance through the surcharge for people who do not have 
continuous coverage would increase the number of people with 
insurance in 2018 and reduce that number in 2019 and later 
years. By the agencies' estimates, roughly 1 million people 
would be induced to purchase insurance in 2018 to avoid 
possibly having to pay the surcharge in the future. In most 
years after 2018, however, roughly 2 million fewer people would 
purchase insurance because they would either have to pay the 
surcharge or provide documentation about previous health 
insurance coverage. The people deterred from purchasing 
coverage would tend to be healthier than those who would not be 
deterred and would be willing to pay the surcharge.

    Age Rating Rules. Beginning in 2018, the legislation would 
expand the limits on how much insurers in the nongroup and 
small-group markets can vary premiums on the basis of age. 
However, CBO and JCT expect that the provision could not be 
implemented until 2019 because there would be insufficient time 
for the federal government, states, and insurers to incorporate 
the changes and then set premiums for 2018. Under current law, 
a 64-year-old can generally be charged premiums that cost up to 
three times as much as those offered to a 21-year-old. Under 
the legislation, that allowable difference would shift to five 
times as much unless a state chose otherwise. That change would 
tend to reduce premiums for younger people and increase 
premiums for older people.
    However, CBO and JCT estimate that the structure of the 
premium tax credits before 2020 would limit how changes in age 
rating rules affected the number of people who would enroll in 
health insurance coverage in the nongroup market. People 
eligible for subsidies in the nongroup market are now largely 
insulated from changes in premiums: A person receiving a 
premium tax credit pays a certain percentage of his or her 
income toward the reference premium, and the tax credit covers 
the difference between the premium and that percentage of 
income. Consequently, despite the changes in premiums for 
younger and older people, the person's out-of-pocket payments 
would not be affected much. Therefore, CBO and JCT estimate 
that the increase in the number of people enrolled in coverage 
through the nongroup market as a result of changes in age 
rating rules would be less than 500,000 in 2019 and would be 
the net result of higher enrollment among younger people and 
lower enrollment among older people. The small increase would 
mostly stem from net changes in enrollment among people who had 
income high enough to be ineligible for subsidies and who would 
face substantial changes in out-of-pocket payments for 
premiums.

    Changes to Subsidies and Market Rules for Nongroup Health 
Insurance Beginning in 2020. Beginning in 2020, the current 
premium tax credits and cost-sharing subsidies would both be 
repealed. That same year, the legislation would create new 
refundable tax credits for insurance purchased in the nongroup 
market. In addition to making the market changes discussed thus 
far (eliminating mandate penalties, providing grants to states 
to help stabilize the nongroup market, establishing a 
requirement for continuous coverage, and changing the age 
rating rules), the legislation would relax the current 
requirements about the share of benefits that must be covered 
by a health insurance plan.
    Many rules governing the nongroup market would remain in 
effect as under current law. For example, insurers would be 
required to accept all applicants during specified open-
enrollment periods, could not vary people's premiums on the 
basis of their health, and could not restrict coverage of 
enrollees' preexisting health conditions. Insurers would also 
still be required to cover specified categories of health care 
services, and the amount of costs for covered services that 
enrollees have to pay out of pocket would remain limited to a 
specified threshold. Prohibitions on annual and lifetime 
maximum benefits would still apply. Also, the risk adjustment 
program--which transfers funds from plans that attract a 
relatively small proportion of high-risk enrollees (people with 
serious chronic conditions, for example) to plans that attract 
a relatively large proportion of such people--would remain in 
place.
    Because the new tax credits are designed primarily to be 
paid in advance on behalf of enrollees to insurers, procedures 
would need to be in place to enable the Internal Revenue 
Service and the Department of Health and Human Services to 
verify that the credits were being paid to eligible insurers 
who were offering qualified insurance as defined under federal 
and state law on behalf of eligible enrollees. CBO and JCT's 
estimates reflect an assumption that adequate resources would 
be made available through future appropriations to those 
executive branch agencies to ensure that such systems were put 
in place in a timely manner. To the extent that they were not, 
enrollment and compliance could be negatively affected.

    Changes to Actuarial Value Requirements. Actuarial value is 
the percentage of total costs for covered benefits that the 
plan pays when covering a standard population. Under current 
law, most plans in the nongroup and small-group markets must 
have an actuarial value that is in one of four tiers: about 60 
percent, 70 percent, 80 percent, or 90 percent. Beginning in 
2020, the legislation would repeal those requirements, 
potentially allowing plans to have an actuarial value below 60 
percent. However, plans would still be required to cover 10 
categories of health benefits that are defined as ``essential'' 
under current law, and the total annual out-of-pocket costs for 
an enrollee would remain capped. In CBO and JCT's estimation, 
complying with those two requirements would significantly limit 
the ability of insurers to design plans with an actuarial value 
much below 60 percent.
    Nevertheless, CBO and JCT estimate that repealing the 
actuarial value requirements would lower the actuarial value of 
plans in the nongroup market on average. The requirement that 
insurers offer both a plan with an actuarial value of 70 
percent and one with an actuarial value of 80 percent in order 
to participate in the marketplace would no longer apply under 
the legislation. As a result, an insurer could choose to sell 
only plans with lower actuarial values. Many insurers would 
find that option attractive because they could offer a plan 
priced closer to the amount of the premium tax credit so that a 
younger person would have low out-of-pocket costs for premiums 
and would be more likely to enroll. Insurers might be less 
likely to offer plans with high actuarial values out of a fear 
of attracting a greater proportion of less healthy enrollees to 
those plans, although the availability of the Patient and State 
Stability Fund grants in most states would reduce that risk. 
The continuation of the risk adjustment program could also help 
limit insurers' costs from high-risk enrollees.
    Because of plans' lower average actuarial values, CBO and 
JCT expect that individuals' cost-sharing payments, including 
deductibles, in the nongroup market would tend to be higher 
than those anticipated under current law. In addition, cost-
sharing subsidies would be repealed in 2020, significantly 
increasing out-of-pocket costs for nongroup insurance for many 
lower-income enrollees. The higher costs would make the plans 
less attractive than those available under current law to many 
potential enrollees, especially people who are eligible for the 
largest subsidies under current law.

    Changes in the Ways the Nongroup Market Would Function. 
Under the legislation, some of the ways that the nongroup 
market functions would change for consumers. The current 
actuarial value requirements help people compare different 
insurance plans, because all plans in a tier cover the same 
share of costs, on average. CBO and JCT expect that, under the 
legislation, plans would be harder to compare, making shopping 
for a plan on the basis of price more difficult.
    Another feature of the nongroup market under current law is 
that there is one central website through the state or federal 
marketplace where people can shop for all the plans in their 
area that are eligible for subsidies. Under the legislation, 
insurers participating in the nongroup market would no longer 
have to offer plans through the marketplaces in order for 
people to receive subsidies toward those plans; therefore, CBO 
and JCT estimate that fewer would do so. With more plans that 
are eligible for subsidies offered directly from insurers or 
directly through agents and brokers and not through the 
marketplaces' central websites, shopping for and comparing 
plans could be harder, depending on insurers' decisions about 
how to market their plans.

    Changes in Nongroup Market Subsidies. With the repeal in 
2020 of the current premium tax credits and the cost-sharing 
subsidies, different refundable tax credits for insurance 
purchased in the nongroup market would become available.\5\ The 
new tax credits would vary on the basis of age by a factor of 2 
to 1: Someone age 60 or older would be eligible for a tax 
credit of $4,000, while someone younger than age 30 would be 
eligible for a tax credit of $2,000. People would generally be 
eligible for the full amount of the tax credit if their 
adjusted gross income was below $75,000 for a single tax filer 
and below $150,000 for joint filers and if they were not 
eligible for certain other types of insurance coverage.\6\ The 
credits would phase out for people with income above those 
thresholds. The tax credits would be refundable if the size of 
the credit exceeded a person's tax liability. They could also 
be advanced to insurers on a monthly basis throughout the year 
on behalf of an enrollee. Finally, tax credits could be used 
for most health insurance plans purchased through a marketplace 
or directly from an insurer.
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    \5\People would also be able to use the new tax credits toward 
unsubsidized of continuation coverage under the Consolidated Omnibus 
Budget Reconciliation Act of 1985 (COBRA).
    \6\The tax credits and the income thresholds would both be indexed 
each year by the consumer price index for all urban consumers plus 1 
percentage point.
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    Under current law, the size of the premium tax credit 
depends on household income and the reference premium in an 
enrollee's rating area. The enrollee pays a certain percentage 
of his or her income toward the reference premium, and the size 
of the subsidy varies by geography and age for a given income 
level. In that way, the enrollee is insulated from variations 
in premiums by geography and is also largely insulated from 
increases in the reference premium. An enrollee would pay the 
difference between the reference premium and the premium for 
the plan he or she chose, providing some incentive to choose 
lower-priced insurance. Beginning in 2020, under the 
legislation, the size of a premium tax credit would vary with 
age, rather than with income (except for people with income in 
the phase-out range) or the amount of the premium. The enrollee 
would be responsible for any premium above the credit amount. 
That structure would provide greater incentives for enrollees 
to choose lower-priced insurance and would mean that people 
living in high-cost areas would be responsible for a larger 
share of the premium.
    Under the legislation, some people would be eligible for 
smaller subsidies than those under current law, and others 
would be eligible for larger ones. As a result, by CBO and 
JCT's estimates, the composition of the population purchasing 
health insurance in the nongroup market under the legislation 
would differ significantly from that under current law, 
particularly by income and age.
    For many lower-income people, the new tax credits under the 
legislation would tend to be smaller than the premium tax 
credits under current law.\7\ In an illustrative example, CBO 
and JCT estimate that a 21-year-old with income at 175 percent 
of the FPL in 2026 would be eligible for a premium tax credit 
of about $3,400 under current law; the tax credit would fall to 
about $2,450 under the legislation (see Table 4). In addition, 
because cost-sharing subsidies would be eliminated under the 
legislation, lower-income people's share of medical services 
paid in the form of deductibles and other cost sharing would 
increase. As a result, CBO and JCT estimate, fewer lower-income 
people would obtain coverage through the nongroup market under 
the legislation than under current law.
---------------------------------------------------------------------------
    \7\People with income below 100 percent of the FPL who are 
ineligible for Medicaid and meet other eligibility criteria would 
become newly eligible for a premium tax credit under the legislation.
---------------------------------------------------------------------------
    Conversely, the tax credits under the legislation would 
tend to be larger than current-law premium tax credits for many 
people with higher income--particularly for those with income 
above 400 percent of the FPL but below the income cap for a 
full credit, which is set by the legislation at $75,000 for a 
single tax filer and $150,000 for joint filers in 2020. For 
example, CBO and JCT estimate that a 21-year-old with income at 
450 percent of the FPL in 2026 would be ineligible for a credit 
under current law but newly eligible for a tax credit of about 
$2,450 under the legislation. Lower out-of-pocket payments 
toward premiums would tend to increase enrollment in the 
nongroup market among higher-income people.
    Enacting the legislation would also result in significant 
changes in the size of subsidies in the nongroup market 
according to people's age. For example, CBO and JCT estimate 
that a 21-year-old, 40-year-old, and 64-year-old with income at 
175 percent of the FPL in 2026 would all pay roughly $1,700 
toward their reference premium under current law, even though 
the reference premium for a 64-year-old is three times larger 
than that for a 21-year-old in most states. Under the 
legislation, premiums for older people could be five times 
larger than those for younger people in many states, but the 
size of the tax credits for older people would only be twice 
the size of the credits for younger people. Because of that 
difference in how much the tax credits would cover, CBO and JCT 
estimate that, under the legislation, a larger share of 
enrollees in the nongroup market would be younger people and a 
smaller share would be older people.
    According to CBO and JCT's estimates, total federal 
subsidies for nongroup health insurance would be significantly 
smaller under the legislation than under current law for two 
reasons. First, by the agencies' projections, fewer people, on 
net, would obtain coverage in the nongroup health insurance 
market under the legislation. Second, the average subsidy per 
subsidized enrollee under the legislation would be 
significantly lower than the average subsidy under current law. 
In 2020, CBO and JCT estimate, the average subsidy under the 
legislation would be about 60 percent of the average subsidy 
under current law. In addition, the average subsidy would grow 
more slowly under the legislation than under current law. That 
difference results from the fact that subsidies under current 
law tend to grow with insurance premiums, whereas subsidies 
under the legislation would grow more slowly, with the consumer 
price index for all urban consumers plus 1 percentage point. By 
2026, CBO and JCT estimate that the average subsidy under the 
legislation would be about 50 percent of the average subsidy 
under current law.

    Patient and State Stability Fund Grants. As a condition of 
the grants, beginning in 2020, states would be required to 
provide matching funds, which would generally increase from 7 
percent of the federal funds provided in 2020 to 50 percent of 
the federal funds provided in 2026. The agencies expect that 
the grants' effects on premiums after 2020 would be limited by 
the share of states that took action and decided to pay the 
required matching funds in order to receive federal money and 
by the extent to which states chose to use the money for 
purposes that did not directly help to lower premiums in the 
nongroup market. Nevertheless, CBO and JCT estimate that the 
grants would exert substantial downward pressure on premiums in 
the nongroup market in 2020 and later years and would help 
encourage participation in the market by insurers.

    Effects of Changes in the Nongroup Market on Employers' 
Decisions to Offer Coverage. CBO and JCT estimate that, over 
time, fewer employers would offer health insurance because the 
legislation would change their incentives to do so. First, the 
mandate penalties would be eliminated. Second, the tax credits 
under the legislation, for which people would be ineligible if 
they had any offer of employment-based insurance, would be 
available to people with a broader range of incomes than the 
current tax credits are. That change could make nongroup 
coverage more attractive to a larger share of employees. 
Consequently, in CBO and JCT's estimation, some employers would 
choose not to offer coverage and instead increase other forms 
of compensation in the belief that nongroup insurance was a 
close substitute for employment-based coverage for their 
employees.
    However, two factors would partially offset employers' 
incentives not to offer insurance. First, the average subsidy 
for those who are eligible would be smaller under the 
legislation than under current law and would grow more slowly 
than health care costs over time. Second, CBO and JCT 
anticipate, nongroup insurance under the legislation would be 
less attractive to many people with employment-based coverage 
than under current law because nongroup insurance under the 
legislation would cover a smaller share of enrollees' expenses, 
on average, and because shopping for and comparing plans would 
probably be more difficult. In general, CBO and JCT expect that 
businesses that decided not to offer insurance coverage under 
the legislation would have, on average, younger and higher-
income workforces than businesses that choose not to offer 
insurance under current law.
    CBO and JCT expect that employers would adapt slowly to the 
legislation. Some employers would probably delay making 
decisions because of uncertainty about the viability of and 
regulations for the nongroup market and about implementation of 
the new law.

    Market Stability. CBO and JCT anticipate that, under the 
legislation, the combination of subsidies to purchase nongroup 
insurance and rules regulating the market would result in a 
relatively stable nongroup market. That is, most areas of the 
country would have insurers participating in the nongroup 
market, and the market would not be subject to an unsustainable 
spiral of rising premiums. First and most important, a 
substantial number of relatively healthy (mostly young) people 
would continue to purchase insurance in the nongroup market 
because of the availability of government subsidies. Second, 
grants from the Patient and State Stability Fund would help 
stabilize premiums and reduce potential losses to insurers from 
enrollees with very large claims. Finally, in CBO and JCT's 
judgment, the risk adjustment program would help protect 
insurers from losses arising from high-risk enrollees. The 
agencies expect that all of those factors would encourage 
insurers to continue to participate in the nongroup market.
    However, significant changes in nongroup subsidies and 
market rules would occur each year for the first three years 
following enactment, which might cause uncertainty for insurers 
in setting premiums. As a result of the elimination of the 
individual mandate penalties, CBO and JCT project that nongroup 
enrollment in 2018 would be smaller than that in 2017 and that 
the average health status of enrollees would worsen. A small 
share of that decline in enrollment would be offset by the 
onetime effect of the continuous coverage provisions, which 
would somewhat increase enrollment in the nongroup market in 
2018 as people anticipated potential surcharges in 2019. Grants 
from the Patient and State Stability Fund would begin to take 
effect in 2018 to help mitigate losses and encourage 
participation by insurers.
    The mix of enrollees in 2019 would differ from that in 
2018, because the change to age-rating rules would allow older 
adults to be charged five times as much as younger adults in 
many states. In addition, there would be a one-year change to 
the premium tax credits, which CBO and JCT expect would 
somewhat increase enrollment among younger adults and decrease 
enrollment among older adults. Although the combined effect of 
those two changes would reduce the average age and improve the 
average health of enrollees in the nongroup market, it might be 
difficult for insurers to set premiums for 2019 using their 
prior experience in the market.
    In 2020, CBO estimates, grants to states from the Patient 
and State Stability Fund, once fully implemented, would 
significantly reduce premiums in the nongroup market and 
encourage participation by insurers. The grants would help to 
reduce the risk to insurers of offering nongroup insurance. As 
a result, CBO expects that those grants would contribute 
substantially to the stability of the nongroup market.
    That effect would occur despite the fact that more major 
changes taking effect in that year would make it difficult for 
insurers to predict the mix of enrollees on the basis of their 
recent experience. The new age-based tax credits would be 
introduced in 2020 and actuarial value requirements would be 
eliminated. In response, insurers would have the flexibility to 
sell different types of plans than they do under current law. 
The nongroup market is expected to be smaller in 2020 than in 
2019 but then is expected to grow somewhat over the 2020-2026 
period.

    Other Budgetary Effects of Health Insurance Coverage 
Provisions. Because the insurance coverage provisions of the 
legislation would increase the number of uninsured people and 
decrease the number of people with Medicaid coverage relative 
to the numbers under current law, CBO estimates that Medicare 
spending would increase by $43 billion over the 2018-2026 
period.
    Medicare makes additional ``disproportionate share 
hospital'' payments to facilities that serve a higher 
percentage of uninsured patients. Those payments have two 
components: an increase to the payment rate for each inpatient 
case and a lump-sum allocation of a pool of funds based on each 
qualifying hospital's share of the days of care provided to 
beneficiaries of Supplemental Security Income and Medicaid.
    Under the legislation, the decreased enrollment in Medicaid 
would slightly reduce the amounts paid to hospitals, CBO 
estimates. However, the increase in the number of uninsured 
people would substantially boost the amounts distributed on a 
lump-sum basis.

                Net Effects on Health Insurance Coverage

    CBO and JCT expect that under the legislation, the number 
of people without health insurance coverage would increase but 
that the increase would be limited initially, because insurers 
have already set their premiums for the current year and many 
people have already made their enrollment decisions for the 
year. However, in 2017, the elimination of the individual 
mandate penalties would result in about 4 million additional 
people becoming uninsured (see Table 5).
    In 2018, by CBO and JCT's estimates, about 14 million more 
people would be uninsured, relative to the number under current 
law. That increase would consist of about 6 million fewer 
people with coverage obtained in the nongroup market, roughly 5 
million fewer people with coverage under Medicaid, and about 2 
million fewer people with employment-based coverage. In 2019, 
the number of uninsured would grow to 16 million people because 
of further reductions in Medicaid and nongroup coverage. Most 
of the reductions in coverage in 2018 and 2019 would stem from 
repealing the penalties associated with the individual mandate. 
Some of those people would choose not to have insurance because 
they choose to be covered by insurance under current law only 
to avoid paying the penalties. And some people would forgo 
insurance in response to higher premiums. CBO and JCT estimate 
that, in total, 41 million people under age 65 would be 
uninsured in 2018 and 43 million people under age 65 would be 
uninsured in 2019.
    In 2020, according to CBO and JCT's estimates, as a result 
of the insurance coverage provisions of the legislation, 21 
million more nonelderly people in the United States would be 
without health insurance than under current law. By 2026, that 
number would total 24 million, CBO and JCT estimate. 
Specifically:

     LRoughly 9 million fewer people would enroll in 
Medicaid in 2020; that figure would rise to 14 million in 2026, 
as states that expanded eligibility for Medicaid discontinued 
doing so, as states projected to expand Medicaid in the future 
chose not to do so, and as the cap on per-enrollee spending 
took effect.

     LRoughly 9 million fewer people, on net, would 
obtain coverage through the nongroup market in 2020; that 
number would fall to 2 million in 2026. The reduction in 
enrollment in the nongroup market would shrink over the 2020-
2026 period because people would gain experience with the new 
structure of the tax credits and some employers would respond 
to those tax credits by declining to offer insurance to their 
employees.

     LRoughly 2 million fewer people, on net, would 
enroll in employment-based coverage in 2020, and that number 
would grow to roughly 7 million in 2026. Part of that net 
reduction in employment-based coverage would occur because 
fewer employees would take up the offer of such coverage in the 
absence of the individual mandate penalties. In addition, CBO 
and JCT expect that, over time, fewer employers would offer 
health insurance to their workers.

    CBO and JCT estimate that 48 million people under age 65, 
or roughly 17 percent of the nonelderly population, would be 
uninsured in 2020 if the legislation was enacted. That figure 
would grow to 52 million, or roughly 19 percent of the 
nonelderly population, in 2026. (That figure is currently about 
10 percent and is projected to remain at that level in each 
year through 2026 under current law.) Although the agencies 
expect that the legislation would increase the number of 
uninsured broadly, the increase would be disproportionately 
larger among older people with lower income; in particular, 
people between 50 and 64 years old with income of less than 200 
percent of the FPL would make up a larger share of the 
uninsured (see Figure 2).

                Net Effects on Health Insurance Premiums

    The legislation would tend to increase average premiums in 
the nongroup market prior to 2020 and lower average premiums 
thereafter, relative to the outcomes under current law. (This 
discussion is focused on premiums before any applicable tax 
credits and before any surcharges for not maintaining 
continuous coverage.)
    In 2018 and 2019, according to CBO and JCT's estimates, 
average premiums for single policyholders in the nongroup 
market would be 15 percent to 20 percent higher than under 
current law mainly because of the elimination of the individual 
mandate penalties. Eliminating those penalties would markedly 
reduce enrollment in the nongroup market and increase the share 
of enrollees who would be less healthy. CBO and JCT expect that 
grants from the Patient and State Stability Fund would largely 
be used for reinsurance programs, particularly in 2018 and 
2019, when many states would rely on the federal default before 
establishing their own programs and, as explained earlier, that 
those payments would help lower premiums in the nongroup 
market. The agencies estimate that program would have a 
relatively small effect on premiums in 2018 because there would 
not be much time between enactment of the legislation and 
insurers' deadlines for setting premiums for 2018. By 2019, 
however, in CBO and JCT's judgment, the Patient and State 
Stability Fund would have the effect of somewhat moderating the 
increases in average premiums in the nongroup market resulting 
from the legislation.
    Starting in 2020, the increase in average premiums from 
repealing the individual mandate penalties would be more than 
offset by the combination of three main factors. First, the mix 
of people enrolled in coverage obtained in the nongroup market 
is anticipated to be younger, on average, than the mix under 
current law. Second, premiums, on average, are estimated to 
fall because of the elimination of actuarial value 
requirements, which would result in plans that cover a lower 
share of health care costs, on average. Third, reinsurance 
programs supported by the Patient and State Stability Fund are 
estimated to reduce premiums. If those funds were devoted to 
other purposes, then premium reductions would be smaller. By 
2026, average premiums for single policyholders in the nongroup 
market under the legislation would be roughly 10 percent lower 
than the estimates under current law.
    The changes in premiums would vary for people of different 
ages. The change in age-rating rules, effective in 2019, would 
directly change the premiums faced by different age groups, 
substantially reducing premiums for young adults and raising 
premiums for older people. By 2026, CBO and JCT project, 
premiums in the nongroup market would be 20 percent to 25 
percent lower for a 21-year-old and 8 percent to 10 percent 
lower for a 40-year-old--but 20 percent to 25 percent higher 
for a 64-year-old.

                  Revenue Effects of Other Provisions

    JCT estimates that the legislation would reduce revenues by 
$592 billion over the 2017-2026 period as a result of 
provisions that would repeal many of the revenue-related 
provisions of the ACA (apart from provisions related to health 
insurance coverage discussed above). Those with the most 
significant budgetary effects include an increase in the 
Hospital Insurance payroll tax rate for high-income taxpayers, 
a surtax on those taxpayers' net investment income, and annual 
fees imposed on health insurers.\8\
---------------------------------------------------------------------------
    \8\JCT published 10 documents (JCX-7-17 through JCX-16-17) on March 
7, 2017, relating to the legislation. For more information, see 
www.jct.gov/publications.html.
---------------------------------------------------------------------------

              Direct Spending Effects of Other Provisions

    The legislation would also make changes to spending for 
other federal health care programs. CBO and JCT estimate that 
those provisions would increase direct spending by about $7 
billion over the 2017-2026 period.

    Prevention and Public Health Fund. The legislation would, 
beginning in fiscal year 2019, repeal the provision that 
established the Prevention and Public Health Fund and rescind 
all unobligated balances. The Department of Health and Human 
Services awards grants through the fund to public and private 
entities to carry out prevention, wellness, and public health 
activities. Funding under current law is projected to be $1 
billion in 2017 and to rise to $2 billion in 2025 and each year 
thereafter. CBO estimates that eliminating that funding would 
reduce direct spending by $9 billion over the 2017-2026 period.

    Community Health Center Program. The legislation would 
increase the funds available to the Community Health Center 
Program, which provides grant funds to health centers that 
offer primary and preventive care to patients regardless of 
their ability to pay. Under current law, the program will 
receive about $4 billion in fiscal year 2017. The legislation 
would increase funding for the program by $422 million in 
fiscal year 2017. CBO estimates that implementing the provision 
would increase direct spending by $422 million over the 2017-
2026 period.

    Provision Affecting Planned Parenthood. For a one-year 
period following enactment, the legislation would prevent 
federal funds from being made available to an entity (including 
its affiliates, subsidiaries, successors, and clinics) if it 
is:

     LA nonprofit organization described in section 
501(c)(3) of the Internal Revenue Code and exempt from tax 
under section 501(a) of the code;

     LAn essential community provider that is primarily 
engaged in providing family planning and reproductive health 
services and related medical care;

     LAn entity that provides abortions--except in 
instances in which the pregnancy is the result of an act of 
rape or incest or the woman's life is in danger; and

     LAn entity that had expenditures under the 
Medicaid program that exceeded $350 million in fiscal year 
2014.

    CBO expects that, according to those criteria, only Planned 
Parenthood Federation of America and its affiliates and clinics 
would be affected. Most federal funds received by such entities 
come from payments for services provided to enrollees in 
states' Medicaid programs. CBO estimates that the prohibition 
would reduce direct spending by $178 million in 2017 and by 
$234 million over the 2017-2026 period. Those savings would be 
partially offset by increased spending for other Medicaid 
services, as discussed below.
    To the extent that there would be reductions in access to 
care under the legislation, they would affect services that 
help women avert pregnancies. The people most likely to 
experience reduced access to care would probably reside in 
areas without other health care clinics or medical 
practitioners who serve low-income populations. CBO projects 
that about 15 percent of those people would lose access to 
care.
    The government would incur some costs for Medicaid 
beneficiaries currently served by affected entities because the 
costs of about 45 percent of all births are paid for by the 
Medicaid program. CBO estimates that the additional births 
stemming from the reduced access under the legislation would 
add to federal spending for Medicaid. In addition, some of 
those children would themselves qualify for Medicaid and 
possibly for other federal programs. By CBO's estimates, in the 
one-year period in which federal funds for Planned Parenthood 
would be prohibited under the legislation, the number of births 
in the Medicaid program would increase by several thousand, 
increasing direct spending for Medicaid by $21 million in 2017 
and by $77 million over the 2017-2026 period. Overall, with 
those costs netted against the savings estimated above, 
implementing the provision would reduce direct spending by $156 
million over the 2017-2026 period, CBO estimates.

    Repeal of Medicaid Provisions. Under current law, states 
can elect the Community First Choice option, allowing them to 
receive a 6 percentage-point increase in their federal matching 
rate for some services provided by home and community-based 
attendants to certain Medicaid recipients. The legislation 
would terminate the increase in the federal matching funds 
beginning in calendar year 2020, which would decrease direct 
spending by about $12 billion over the next 10 years.

    Repeal of Reductions to Allotments for Disproportionate 
Share Hospitals. Under current law, Medicaid allotments to 
states for payments to hospitals that treat a disproportionate 
share of uninsured and Medicaid patients are to be cut 
significantly in each year from 2018 to 2025. The cuts are 
currently scheduled to be $2 billion in 2018 and to increase 
each year until they reach $8 billion in 2024 and 2025. The 
legislation would eliminate those cuts for states that have not 
expanded Medicaid under the ACA starting in 2018 and for the 
remaining states starting in 2020, boosting outlays by $31 
billion over the next 10 years.

    Safety Net Funding for States That Did Not Expand Medicaid. 
The legislation would provide $2 billion in funding in each 
year from 2018 to 2021 to states that did not expand Medicaid 
eligibility under the ACA. Those states could use the funding, 
within limits, to supplement payments to providers that treat 
Medicaid enrollees. Such payments to providers would not be 
subject to the per capita caps also established by the proposed 
legislation. Any states that chose to expand Medicaid coverage 
as of July 1 of each year from 2017 through 2020 would lose 
access to the funding available under this provision in the 
following year and thereafter. CBO estimates that this 
provision would increase direct spending by $8 billion over the 
2017-2026 period.

    Reductions to States' Medicaid Costs. The legislation would 
make a number of additional changes to the Medicaid program, 
including these:

     LRequiring states to treat lottery winnings and 
certain other income as income for purposes of determining 
eligibility;

     LDecreasing the period when Medicaid benefits may 
be covered retroactively from up to three months before a 
recipient's application to the first of the month in which a 
recipient makes an application;

     LEliminating federal payments to states for 
Medicaid services provided to applicants who did not provide 
satisfactory evidence of citizenship or nationality during a 
reasonable opportunity period; and

     LEliminating states' option to increase the amount 
of allowable home equity from $500,000 to $750,000 for 
individuals applying for Medicaid coverage of long-term 
services and supports.

    Together, CBO estimates, those changes would decrease 
direct spending by about $7 billion over the 2017-2026 period.

              Changes in Spending Subject to Appropriation

    CBO has not completed an estimate of the potential impact 
of the legislation on discretionary spending, which would be 
subject to future appropriation action.

                 UNCERTAINTY SURROUNDING THE ESTIMATES

    CBO and JCT considered the potential responses of many 
parties that would be affected by the legislation, including 
these:

     LFederal agencies--which would need to implement 
major changes in the regulation of the health care system and 
administration of new subsidy structures and eligibility 
verification systems in a short time frame;

     LStates--which would need to decide how to use 
Patient and State Stability Fund grants, whether to pass new 
laws affecting the nongroup market, how to respond to the 
reduction in the federal matching rate for certain Medicaid 
enrollees, how to respond to constraints from the cap on 
Medicaid payments, and how to provide information to the 
federal government about insurers and enrollees;

     LInsurers--who would need to decide about the 
extent of their participation in the insurance market and what 
types of plans to sell in the face of different market rules 
and federal subsidies;

     LEmployers--who would need to decide whether to 
offer insurance given the different federal subsidies and 
insurance products available to their employees;

     LIndividuals--who would make decisions about 
health insurance in the context of different premiums, 
subsidies, and penalties than those under current law; and

     LDoctors and hospitals--who would need to 
negotiate contracts with insurers in a new regulatory 
environment.

    Each of those responses is difficult to predict. Moreover, 
the responses would depend upon how the provisions in the 
legislation were implemented, such as whether advance payments 
of the new tax credits were made reliably. And flaws in the 
determination of eligibility, for instance, could keep 
subsidies from people who were eligible or provide them to 
people who were not.
    In addition, CBO and JCT's projections under current law 
itself are inexact, which could also affect the estimated 
effects. For example, enrollment in the marketplaces under 
current law could be lower than is projected, which would tend 
to decrease the budgetary savings of the legislation. 
Alternatively, the average subsidy per enrollee under current 
law could be higher than is projected, which would tend to 
increase the budgetary savings of the legislation.
    CBO and JCT have endeavored to develop estimates that are 
in the middle of the distribution of potential outcomes. One 
way to assess the range of uncertainty around the estimated 
effects of the legislation is to compare previous projections 
with actual results. For example, some aspects of CBO and JCT's 
projections of health insurance coverage and related spending 
made in July 2012 (after the Supreme Court issued a decision 
that essentially made the expansion of the Medicaid program 
under the ACA an option for states) can be compared with actual 
results for 2016. Projected spending on people made eligible 
for Medicaid because of the ACA was about 60 percent of the 
actual amount. The number of people predicted in 2012 to 
purchase insurance through the marketplaces in 2016 was more 
than twice the actual number. The decline in the number of 
insured people from 2012 to 2016 was projected to be 23 
million, and the decline measured in the National Health 
Interview Survey turned out to be 20 million. CBO and JCT have 
continued to learn from experience with the ACA and have 
endeavored to use that experience to improve their modeling.
    That comparison of projections with actual results and the 
great uncertainties surrounding the actions of the many parties 
that would be affected by the legislation suggest that outcomes 
of the legislation could differ substantially from some of the 
estimates provided here. Nevertheless, CBO and JCT are 
confident about the direction of certain effects of the 
legislation. For example, spending on Medicaid would almost 
surely be lower than under current law. The cost of the new tax 
credit would probably be lower than the cost of the subsidies 
for coverage through marketplaces under current law. And the 
number of uninsured people under the legislation would almost 
surely be greater than under current law.

                      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 2027.

                       MANDATES ON STATE, LOCAL,
                         AND TRIBAL GOVERNMENTS

    JCT and CBO reviewed the provisions of the legislation and 
determined that they would impose no intergovernmental mandates 
as defined in the Unfunded Mandates Reform Act. For large 
entitlement programs like Medicaid, UMRA defines an increase in 
the stringency of conditions or a cap on federal funding as an 
intergovernmental mandate if the affected governments lack 
authority to offset those costs while continuing to provide 
required services. As discussed earlier in this estimate, the 
legislation would eliminate the enhanced federal matching rate 
for some future enrollees, establish new per capita caps in the 
Medicaid program, and make other changes that would affect 
Medicaid spending--some of which would provide additional 
assistance to states.
    On net, CBO estimates that states would see an overall 
decrease in federal assistance, as reflected in estimates of 
federal savings in the Medicaid program. In response to the 
caps and other changes, CBO anticipates that states could use 
existing flexibility allowed in the Medicaid program and 
additional authorities provided by the legislation to cut 
payments to health care providers and health plans, eliminate 
optional services, restrict eligibility for enrollment, or (to 
the extent feasible) change the way services are delivered to 
save costs. Because flexibility in the program would allow 
states to make such changes and still provide statutorily 
required services, the per capita caps and other changes in 
Medicaid would not impose intergovernmental mandates as defined 
in UMRA.

                     MANDATES ON THE PRIVATE SECTOR

    JCT and CBO have determined that the legislation would 
impose private-sector mandates as defined in UMRA. On the basis 
of information from JCT, CBO estimates that the aggregate 
direct cost of the mandates imposed by the legislation would 
exceed the annual threshold established in UMRA for private-
sector mandates ($156 million in 2017, adjusted annually for 
inflation).
    The tax provisions of the legislation contain two mandates. 
Specifically, the legislation would recapture excess advance 
payments of premium tax credits (so that the full amount of 
excess advance payments is treated as an additional tax 
liability for the individual) and repeal the small business 
(health insurance) tax credit.
    The nontax provisions of the legislation would impose a 
private-sector mandate as defined in UMRA on insurers that 
offer health insurance coverage in the individual or small-
group market. The legislation would require those insurers to 
charge a penalty equal to 30 percent of the monthly premium for 
a period of 12 months to individuals who enroll in insurance in 
a given year after having allowed their health insurance to 
lapse for more than 63 days during the previous year. CBO 
estimates that the costs of complying with the mandate would be 
largely offset by the penalties insurers would collect.

                         ESTIMATE PREPARED BY:

Federal Spending
Kate Fritzsche, Sarah Masi, Daniel Hoople, Robert Stewart, Lisa 
        Ramirez-Branum, Andrea Noda, Allison Percy, Sean Lyons, 
        Alexandra Minicozzi, Eamon Molloy, Ben Hopkins, Susan Yeh 
        Beyer, Jared Maeda, Christopher Zogby, Romain Parsad, Ezra 
        Porter, Lori Housman, Kevin McNellis, Jamease Kowalczyk, Noah 
        Meyerson, T.J. McGrath, Rebecca Verreau, Alissa Ardito, and the 
        staff of the Joint Committee on Taxation
Federal Revenues
Staff of the Joint Committee on Taxation
Impact on State, Local, and Tribal Governments
Leo Lex, Zachary Byrum, and the staff of the Joint Committee on 
        Taxation
Impact on the Private Sector
Amy Petz and the staff of the Joint Committee on Taxation

                    ESTIMATE REVIEWED AND EDITED BY:

Mark Hadley, Theresa Gullo, Jeffrey Kling, Robert Sunshine, David 
        Weaver, John Skeen, Kate Kelly, Jorge Salazar, and Darren Young

                         ESTIMATE APPROVED BY:

Holly Harvey, Deputy Assistant Director for Budget Analysis; Jessica 
        Banthin, Deputy Assistant Director for Health, Retirement, and 
        Long-Term Analysts; Chad Chirico, Chief, Low-Income Health 
        Programs and Prescription Drugs Cost Estimates Unit

 TABLE 1.--SUMMARY OF THE DIRECT SPENDING AND REVENUE EFFECTS OF THE AHCA, THE BUDGET RECONCILIATION RECOMMENDATIONS OF THE HOUSE COMMITTEES ON WAYS AND
                                                      MEANS AND ENERGY AND COMMERCE, MARCH 9, 2017
                                                          [Billions of dollars, by fiscal year]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    2017     2018     2019     2020     2021      2022      2023      2024      2025      2026     2017-2021   2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              CHANGES IN DIRECT SPENDING\a\
Coverage Provisions:
  Estimated Budget Authority....     -6.6    -12.5    -22.9    -97.6    -139.1    -157.4    -173.8    -186.9    -199.4    -210.5      -278.6    -1,206.7
  Estimated Outlays.............     -6.6    -27.5    -25.6    -92.5    -138.6    -158.5    -175.2    -188.5    -201.3    -212.0      -290.7    -1,226.2
Non Coverage Provisions:
  Estimated Budget Authority....      0.3     -0.5     -0.7      0.6       1.7      -0.2       1.0       1.1       0.7       0.0         1.3         3.8
  Estimated Outlays.............     -0.1      0.3     -0.1      0.8       1.8       0.5       0.8       1.5       1.3       0.3         2.7         7.1
Total Changes in Direct
 Spending:
  Estimated Budget Authority....     -6.3    -13.0    -23.6    -97.1    -137.4    -157.6    -172.8    -185.8    -198.7    -210.5      -277.4    -1,202.8
  Estimated Outlays.............     -6.7    -27.2    -25.7    -91.7    -136.9    -158.0    -174.3    -187.0    -200.0    -211.7      -288.1    -1,219.1
 
                                                                 CHANGES IN REVENUES\b\
 
Coverage Provisions.............     -3.8    -13.7    -16.8    -25.5     -33.6     -36.4     -38.9     -40.4     -41.0     -40.7       -93.5      -290.9
Non Coverage Provisions.........     -2.1    -37.5    -41.8    -57.6     -65.1     -70.2     -76.0     -83.1     -79.7     -78.7      -204.2      -591.9
                                 -----------------------------------------------------------------------------------------------------------------------
      Total Changes in Revenues.     -5.9    -51.2    -58.6    -83.1     -98.7    -106.6    -114.9    -123.5    -120.6    -119.4      -297.6      -882.8
 
                                   INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING OR REVENUES
 
Net Increase or Decrease (-) in      -0.8     24.0     33.0     -8.6     -38.2     -51.3     -59.4     -63.5     -79.4     -92.4         9.4      -336.5
 the Deficit....................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
 
Notes: The costs of this legislation fall within budget function 550 (health), 570 (Medicare), 600 (Income Security), and 650 (Social Security).
AHCA = American Health Care Act; numbers may not add up to totals because of rounding.
 
\a\For outlays, a positive number indicates an increase (adding to the deficit) and a negative number indicates a decrease (reducing the deficit).
\b\For revenues, a negative number indicates a decrease (adding to the deficit).


 TABLE 2.--ESTIMATE OF THE DIRECT SPENDING AND REVENUE EFFECTS OF THE AHCA, THE BUDGET RECONCILIATION RECOMMENDATIONS OF THE  HOUSE COMMITTEES ON WAYS AND MEANS AND ENERGY AND COMMERCE, MARCH
                                                                                             9, 2017
                                                                              [Billions of dollars, by fiscal year]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            2017     2018     2019     2020     2021      2022      2023      2024      2025      2026     2017-2021   2017-2026
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  CHANGES IN DIRECT SPENDING\a\
Coverage Provisions:
  Estimated Budget Authority............................................     -6.6    -12.5    -22.9    -97.6    -139.1    -157.4    -173.8    -186.9    -199.4    -210.5      -278.6    -1,206.7
  Estimated Outlays.....................................................     -6.6    -27.5    -25.6    -92.5    -138.6    -158.5    -175.2    -188.5    -201.3    -212.0      -290.7    -1,226.2
    On-Budget...........................................................     -6.6    -27.5    -25.6    -92.5    -138.6    -158.2    -174.7    -187.9    -200.7    -211.4      -290.7    -1,223.6
    Off-Budget..........................................................        0      (*)      (*)      (*)      -0.1      -0.2      -0.4      -0.6      -0.6      -0.6         (*)        -2.5
Prevention and Public Health Fund:
  Estimated Budget Authority............................................        0     -0.9     -0.9     -1.0      -1.0      -1.5      -1.0      -1.7      -2.0      -2.0        -3.8       -12.0
  Estimated Outlays.....................................................        0     -0.1     -0.4     -0.7      -0.9      -1.0      -1.1      -1.3      -1.4      -1.7        -2.2        -8.8
Community Health Center Program:
  Estimated Budget Authority............................................      0.4      0.0        0        0         0         0         0         0         0         0         0.4         0.4
  Estimated Outlays.....................................................      0.1      0.3      0.1        0         0         0         0         0         0         0         0.4         0.4
Provision Affecting Planned Parenthood:
  Estimated Budget Authority............................................     -0.2      (*)      (*)      (*)       (*)       (*)       (*)       (*)       (*)       (*)        -0.2        -0.2
  Estimated Outlays.....................................................     -0.2      (*)      (*)      (*)       (*)       (*)       (*)       (*)       (*)       (*)        -0.2        -0.2
Repeal of Medicaid Provisions:\b\
  Estimated Budget Authority............................................        0        0        0     -0.8      -1.3      -1.6      -1.9      -2.0      -2.1      -2.2        -2.1       -11.7
  Estimated Outlays.....................................................        0        0        0     -0.8      -1.3      -1.6      -1.9      -2.0      -2.1      -2.2        -2.1       -11.7
Repeal of Medicaid Expansion:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Repeal of Reductions to Allotments for DSH:
  Estimated Budget Authority............................................        0      0.6      1.0      1.9       2.8       3.7       4.7       5.7       5.7       5.1         6.3        31.2
  Estimated Outlays.....................................................        0      0.6      1.0      1.9       2.8       3.7       4.7       5.7       5.7       5.1         6.3        31.2
Reductions to States' Medicaid Costs:\b\
  Estimated Budget Authority............................................        0     -0.3     -0.6     -0.8      -0.8      -0.8      -0.9      -0.9      -0.9      -1.0        -2.5        -7.1
  Estimated Outlays.....................................................        0     -0.3     -0.6     -0.8      -0.8      -0.8      -0.9      -0.9      -0.9      -1.0        -2.5        -7.1
Safety Net Funding for Non Expansion States:
  Estimated Budget Authority............................................        0      2.0      2.0      2.0       2.0       0.0       0.0       0.0       0.0       0.0         8.0         8.0
  Estimated Outlays.....................................................        0      1.8      2.0      2.0       2.0       0.2       0.0       0.0       0.0       0.0         7.8         8.0
Providing Incentives for Increased Frequency of Eligibility
 Redeterminations:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Per Capita Allotment for Medical Assistance:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Repeal of Cost-Sharing Subsidy:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Patient and State Stability Fund:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Continuous Health Insurance Coverage Incentive:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Increasing Levels of Coverage Options:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Change in Permissible Age Variation:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Recapture Excess Advance Payments of Premium Tax Credits:
  Estimated Budget Authority............................................        0     -2.0     -2.2     -0.7         0         0         0         0         0         0        -4.9        -4.9
  Estimated Outlays.....................................................        0     -2.0     -2.2     -0.7         0         0         0         0         0         0        -4.9        -4.9
Additional Modifications to Premium Tax Credit:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Premium Tax Credit:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Small Business Tax Credit:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Individual Mandate:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
Employer Mandate:
  Estimated Budget Authority............................................
                                                                                                           [Included in estimate of coverage provisions]
                                                                                                           [Included in estimate of coverage provisions]
  Estimated Outlays.....................................................
  Total Changes in Direct Spending:
    Estimated Budget Authority..........................................     -6.3    -13.0    -23.6    -97.1    -137.4    -157.6    -172.8    -185.8    -198.7    -210.5      -277.4    -1,202.8
    Estimated Outlays...................................................     -6.7    -27.2    -25.7    -91.7    -136.9    -158.0    -174.3    -187.0    -200.0    -211.7      -288.1    -1,219.1
      On-Budget.........................................................     -6.7    -27.2    -25.7    -91.7    -136.8    -157.7    -173.9    -186.4    -199.4    -211.1      -288.0    -1,216.6
      Off-Budget........................................................        0      (*)      (*)      (*)      -0.1      -0.2      -0.4      -0.6      -0.6      -0.6         (*)        -2.5
 
                                                                                     CHANGES IN REVENUES\c\
Coverage Provisions:
  Estimated Revenues....................................................     -3.8    -13.7    -16.8    -25.5     -33.6     -36.4     -38.9     -40.4     -41.0     -40.7       -93.5      -290.9
    On-Budget...........................................................     -4.5    -17.0    -19.9    -27.6     -35.5     -38.4     -41.7     -44.7     -46.7     -48.0      -104.5      -324.2
    Off-Budget..........................................................      0.7      3.3      3.1      2.0       1.9       2.0       2.8       4.3       5.8       7.3        11.1        33.3
Recapture Excess Advance Payments of Premium Tax Credits................        0      0.6      0.7      0.5         0         0         0         0         0         0         1.8         1.8
  Additional Modifications to Premium Tax Credit........................
                                                                                                           [Included in estimate of coverage provisions]
  Premium Tax Credit....................................................
                                                                                                           [Included in estimate of coverage provisions]
  Small Business Tax Credit.............................................
                                                                                                           [Included in estimate of coverage provisions]
  Individual Mandate....................................................
                                                                                                           [Included in estimate of coverage provisions]
  Employer Mandate......................................................
                                                                                                           [Included in estimate of coverage provisions]
Repeal of the Tax on Employee Health Insurance Premiums and Health Plan         0        0        0     -3.4      -6.9      -8.7     -10.7     -13.6      -5.5         0       -10.3       -48.7
 Benefits\d\............................................................
Repeal of Tax on Over-the-Counter Medications...........................        0     -0.4     -0.5     -0.6      -0.6      -0.6      -0.6      -0.7      -0.7      -0.7        -2.1        -5.5
Repeal of Increase of Tax on Health Savings.............................        0      (*)      (*)      (*)       (*)       (*)       (*)       (*)       (*)       (*)         (*)        -0.1
Repeal of Limitations on Contributions to Flexible Spending Accounts....        0     -0.3     -1.2     -1.6      -1.7      -1.8      -2.2      -2.6      -3.3      -4.1        -4.7       -18.6
Repeal of Tax on Prescription Medications...............................        0     -3.1     -2.7     -2.7      -2.7      -2.7      -2.7      -2.7      -2.7      -2.7       -11.2       -24.8
Repeal of Medical Device Excise Tax.....................................        0     -1.4     -1.9     -2.0      -2.1      -2.2      -2.3      -2.4      -2.6      -2.7        -7.4       -19.6
Repeal of Health Insurance Tax..........................................        0    -12.8    -13.5    -14.3     -15.1     -15.9     -16.8     -17.8     -18.7     -19.7       -55.7      -144.7
Repeal of Elimination of Deduction for Expenses Allocable to Medicare           0     -0.1     -0.2     -0.2      -0.2      -0.2      -0.2      -0.2      -0.2      -0.2        -0.6        -1.7
 Part D Subsidy.........................................................
Repeal of Increase in Income Threshold for Determining Medical Care          -0.2     -2.0     -3.2     -3.4      -3.6      -3.9      -4.2      -4.5      -4.8      -5.1       -12.4       -34.9
 Deduction..............................................................
Repeal of Medicare Tax Increase.........................................     -0.4     -6.5    -10.1    -11.4     -12.3     -13.2     -14.1     -15.2     -16.5     -17.6       -40.8      -117.3
Refundable Tax Credit for Health Insurance..............................
                                                                                                           [Included in estimate of coverage provisions]
Maximum Contribution Limit to Health Savings............................        0     -1.0     -1.6     -1.7      -1.9      -2.1      -2.3      -2.5      -2.7      -2.9        -6.2       -18.6
Allow Both Spouses to Make Catch-up Contributions to the Same Health            0      (*)      (*)      (*)       (*)       (*)       (*)       (*)      -0.1      -0.1        -0.1        -0.4
 Savings Account........................................................
Special Rule for Certain Medical Expenses Incurred Before Establishment         0      (*)      (*)      (*)       (*)       (*)       (*)       (*)       (*)       (*)        -0.1        -0.2
 of Health Savings......................................................
Repeal of Tanning Tax...................................................        0      (*)     -0.1     -0.1      -0.1      -0.1      -0.1      -0.1      -0.1      -0.1        -0.2        -0.6
Repeal of Net Investment Tax............................................     -1.5    -10.5     -7.5    -16.7     -17.8     -18.7     -19.7     -20.7     -21.7     -22.7       -54.1      -157.6
Remuneration............................................................        0      (*)      (*)      (*)      -0.1      -0.1      -0.1      -0.1      -0.1      -0.1        -0.1        -0.4
  Total Changes in Revenues.............................................     -5.9    -51.2    -58.6    -83.1     -98.7    -106.6    -114.9    -123.5    -120.6    -119.4      -297.6      -882.8
    On-Budget...........................................................     -6.6    -53.8    -60.8    -83.3     -98.0    -105.5    -114.0    -123.2    -123.3    -124.7      -302.7      -893.5
    Off-Budget..........................................................      0.7      2.6      2.2      0.2      -0.7      -1.2      -1.0      -0.3       2.7       5.3         5.0        10.7
 
                                                       INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING OR REVENUES
 
Net Increase or Decrease (-) in the Deficit.............................     -0.8     24.0     33.0     -8.6     -38.2     -51.3     -59.4     -63.5     -79.4     -92.4         9.4      -336.5
  On-Budget.............................................................      (*)     26.6     35.1     -8.4     -38.8     -52.3     -59.9     -63.2     -76.0     -86.4        14.5      -323.3
  Off-Budget............................................................     -0.7     -2.6     -2.2     -0.2       0.6       0.9       0.5      -0.3      -3.3      -5.9        -5.1       -13.2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
 
Notes: The costs of this legislation fall within budget function 550 (health), 570 (Medicare), 600 (Income Security), and 650 (Social Security).
Numbers may not add up to totals because of rounding; DSH = Disproportionate Share Hospital; AHCA = American Health Care Act;
* = an increase or decrease between zero and $50 million.
 
\a\For outlays, a positive number indicates an increase (adding to the deficit) and a negative number indicates a decrease (reducing the deficit).
\b\Estimate interacts with the provision related to the Per Capita Allotment for Medical Assistance.
\c\For revenues, a positive number indicates an increase (reducing the deficit) and a negative number indicates a decrease (adding to the deficit).
\d\This estimate does not include effects of interactions with other subsidies; those effects are included in estimates of other relevant provisions.


                                    TABLE 3.--NET BUDGETARY EFFECTS OF THE INSURANCE COVERAGE PROVISIONS OF THE AHCA
                                                          [Billions of dollars, by fiscal year]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Total 2017-
                                                2017     2018     2019     2020     2021      2022      2023      2024      2025      2026       2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medicaid Outlays............................       -3      -18      -26      -68       -94      -111      -124      -135      -146      -155        -880
Subsidies for Coverage Through Marketplaces        -5      -11      -16      -62       -87       -91       -95       -99      -102      -106        -673
 and Related Spending and Revenues\a,b\.....
Small-Employer Tax Credits\b,c\.............      (*)      (*)      (*)      (*)        -1        -1        -1        -1        -1        -1          -6
Tax Credits for Nongroup Insurance\b,d\.....        0        0        0       30        44        47        52        58        63        68         361
Penalty Payments by Employers\c\............        2       16       20       15        16        18        19        20        22        23         171
Penalty Payments by Uninsured People........        3        3        3        3         4         4         4         4         4         5          38
Patient and State Stability Fund Grants.....        0        0       12       15        10         9         9         8         8         8          80
Medicare\e\.................................        0        1        3        4         6         6         6         6         6         6          43
Other Effects on Revenues and Outlays\d,f\..       -1       -5       -5       -4        -4        -4        -6       -10       -14       -18         -70
                                             -----------------------------------------------------------------------------------------------------------
  Total Effect on the Deficit...............       -3      -14       -9      -67      -105      -122      -136      -148      -160      -171        -935
Memorandum:
Decreases in Mandatory Spending.............       -7      -27      -26      -93      -139      -158      -175      -188      -201      -212      -1,226
Decreases in Revenues.......................       -4      -14      -17      -26       -34       -36       -39       -40       -41       -41        -291
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
 
Except in the memorandum lines, positive numbers indicate an increase in the deficit, and negative numbers indicate a decrease in the deficit.
 
Numbers may not add up to totals because of rounding; AHCA = American Health Care Act; * = between -$500 million and zero.
 
\a\Related spending and revenues include spending for the Basic Health Program and net spending and revenues for risk adjustment.
\b\Includes effects on outlays and on revenues.
\c\Effects on the deficit include the associated effects of changes in taxable compensation on revenues.
\d\Includes costs for a new tax credit for continuation of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
\e\Effects arise mostly from changes in Disproportionate Share Hospital payments.
\f\Consists mainly of the effects of changes in taxable compensation on revenues. CBO also estimates that outlays for Social Security benefits would
  decrease by about $3 billion over the 2017-2026 period.


 TABLE 4.--ILLUSTRATIVE EXAMPLE OF SUBSIDIES FOR NONGROUP HEALTH INSURANCE UNDER CURRENT LAW AND THE AHCA, 2026
                                                    [Dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                                     Actuarial
                                                                                                   value of plan
                                                                    Premium tax     Net premium     after cost-
                                                    Premium\a\       credit\b\         paid           sharing
                                                                                                     subsidies
                                                                                                   (percent)\c\
----------------------------------------------------------------------------------------------------------------
                     SINGLE INDIVIDUAL WITH ANNUAL INCOME OF $26,500 (175 PERCENT OF FPL)\d\
Current Law:
  21 years old..................................           5,100           3,400           1,700
  40 years old..................................           6,500           4,800           1,700        87
  64 years old..................................          15,300          13,600           1,700
                                                 ---------------------------------------------------------------
AHCA:
  21 years old..................................           3,900           2,450           1,450
  40 years old..................................           6,050           3,650           2,400        65
  64 years old..................................          19,500           4,900          14,600
----------------------------------------------------------------------------------------------------------------
                     SINGLE INDIVIDUAL WITH ANNUAL INCOME OF $68,200 (450 PERCENT OF FPL)\d\
Current Law:
  21 years old..................................           5,100               0           5,100
  40 years old..................................           6,500               0           6,500        70
  64 years old..................................          15,300               0          15,300
                                                 ---------------------------------------------------------------
AHCA:
  21 years old..................................           3,900           2,450           1,450
  40 years old..................................           6,050           3,650           2,400        65
  64 years old..................................          19,500           4,900          14,600
----------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
 
All dollar figures have been rounded to the nearest $50; AHCA = American Health Care Act; FPL = federal poverty
  level.
 
\a\For this illustration, CBO projected the average national premiums for a 21-year-old in the nongroup health
  insurance market in 2026 both under current law and under the AHCA. On the basis of those amounts, CBO
  calculated premiums for a 40-year-old and a 64-year-old, assuming that the person lives in a state that uses
  the federal default age-rating methodology, which limits variation of premiums to a ratio of 3 to 1 for adults
  under current law and 5 to 1 for adults under the AHCA. CBO projects that, under current law, most states will
  use the default 3-to-1 age-rating curve; under the AHCA, CBO projects, most would use an age-rating curve with
  a maximum ratio of 5 to 1.
\b\Under current law, premium tax credits are calculated as the difference between the reference premium and a
  specified percentage of income for a person with income at a given percentage of the FPL. The reference
  premium is the premium for the second-lowest-cost silver plan available in the marketplace in the area in
  which the person resides. A silver plan covers about 70 percent of the costs of covered benefits. CBO's
  projection of the maximum percentage of income for calculating premium tax credits in 2026 for someone with
  income at 175 percent of the FPL takes into account the probability, estimated in CBO's March 2016 baseline,
  that additional indexing may apply. Under the AHCA, the premium tax credits offered for nongroup coverage
  would be indexed to the consumer price index for all urban consumers plus 1 percentage point. In 2026, CBO
  projects, those tax credits would be about 22 percent higher than the amounts specified in 2020.
\c\The actuarial value of a plan is the percentage of costs for covered services that the plan pays. Cost-
  sharing subsidies are payments made by the federal government to insurers that reduce the cost-sharing amounts
  (out-of-pocket payments required under insurance policies) for covered people whose income is generally
  between 100 percent and 250 percent of the FPL. The cost-sharing subsidy amounts in this example would range
  from $1,100 for a 21-year-old with income at 175 percent of the FPL to $3,350 for a 64-year-old at the same
  income level. Under current law, cost-sharing subsidies have the effect of increasing the actuarial value of
  the plan from 70 percent for a typical silver plan to 94 percent for people whose income is between 100
  percent and 149 percent of the FPL; 87 percent for people between 150 percent and 199 percent of the FPL; and
  73 percent for people between 200 percent and 249 percent of the FPL. People whose income is 250 percent of
  the FPL or more would receive a standard 70 percent actuarial value when purchasing a silver plan. CBO
  projects that, under the AHCA, the elimination of required actuarial values and the structure of new tax
  credits would, by 2026, result in a reduction to about 65 percent in the average actuarial value of plans
  purchased in the nongroup market.
\d\Income levels reflect modified adjusted gross income, which equals adjusted gross income plus untaxed Social
  Security benefits, foreign earned income that is excluded from adjusted gross income, tax-exempt interest, and
  income of dependent filers. CBO projects that in 2026, a modified adjusted gross income of $26,500 would equal
  175 percent of the FPL and an income of $68,200 would equal 450 percent of the FPL.


               TABLE 5.--EFFECTS OF THE AHCA ON HEALTH INSURANCE COVERAGE FOR PEOPLE UNDER AGE 65
                                     [Millions of people, by calendar year]
----------------------------------------------------------------------------------------------------------------
                                       2017   2018   2019   2020   2021    2022    2023    2024    2025    2026
----------------------------------------------------------------------------------------------------------------
Total Population Under Age 65.......    273    274    275    276     276     277     278     279     279     280
Uninsured Under Current Law.........     26     26     27     27      27      27      27      28      28      28
Change in Coverage Under the AHCA:
  Medicaid\a\.......................     -1     -5     -6     -9     -12     -13     -13     -14     -14     -14
  Nongroup coverage, including           -2     -6     -7     -9      -8      -8      -6      -5      -4      -2
   marketplaces\b\..................
  Employment-based coverage.........     -1     -2     -2     -2      -2      -2      -3      -5      -5      -7
  Other coverage\c\.................    (*)    (*)    (*)     -1      -1      -1      -1      -1      -1      -1
  Uninsured.........................      4     14     16     21      23      23      23      24      24      24
Uninsured Under the AHCA............     31     41     43     48      50      50      51      51      51      52
Percentage of the Population Under
 Age 65 With Insurance Under the
 AHCA:
  Including all U.S. residents......     89     85     84     83      82      82      82      82      82      81
  Excluding unauthorized immigrants.     91     87     87     85      84      84      84      84      84      84
----------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
 
Estimates are based on CBO's March 2016 baseline, adjusted for subsequent legislation. They reflect average
  enrollment over the course of a year among noninstitutionalized civilian residents of the 50 states and the
  District of Columbia who are under the age of 65, and they include spouses and dependents covered under family
  policies.
 
AHCA = American Health Care Act; * = a reduction that falls between zero and 500,000 people.
 
\a\Includes noninstitutionalized enrollees with full Medicaid benefits.
\b\Under current law, many people can purchase subsidized health insurance coverage through the marketplaces
  (sometimes called exchanges) operated by the federal government, by state governments, or as partnerships
  between federal and state governments. People also can purchase unsubsidized coverage in the nongroup market
  outside of those marketplaces. Under the AHCA, people could receive subsidies for coverage purchased either
  inside or outside of the marketplaces.
\c\Includes coverage under the Basic Health Program, which allows states to establish a coverage program
  primarily for people whose income is between 138 percent and 200 percent of the federal poverty level. To
  subsidize that coverage, the federal government provides states with funding that is equal to 95 percent of
  the subsidies for which those people would otherwise have been eligible by purchasing health insurance through
  a marketplace. Payments for that program would be rescinded by the AHCA in 2020.

  
  
                       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.

         Statement of General Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to advance 
the repeal and replacement of PPACA and begin the process of 
lowering health care costs, increasing plan options for 
consumers, and helping to ensure the Medicaid health care 
safety is put on sustainable footing.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
the Committee Print is known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of Public Law 111-139 
or the most recent Catalog of Federal Domestic Assistance.

                        Committee Cost Estimate

    Pursuant to clause 3(d)(1) of rule XIII, 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.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that the Committee Print contains no earmarks, 
limited tax benefits, or limited tariff benefits.

                  Disclosure of Directed Rule Makings

    Pursuant to section 3(i) of H. Res. 5, the Committee finds 
that the Committee Print contains no directed rule makings.

                      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


Subtitle A--Patient Access to Public Health Programs

Section 101. The Prevention and Public Health Fund: This 
section repeals Section 4002 of the Patient Protection and 
Affordable Care Act. Section 4002 established the Prevention 
and Public Health Fund (PPHF) as a permanent advanced 
appropriation for prevention, wellness, and public health 
initiatives to be administered Department of Health and Human 
Services (HHS). This section repeals PPHF appropriations for 
fiscal year (FY) 2019 onwards and rescinds unobligated funds at 
the end of FY 2018.
Section 102. Community Health Center Program: This section 
provides increased funding for the Community Health Center 
Fund, which awards grants to Federally Qualified Health Centers 
(FQHCs).
Section 103. Federal Payments to States: This section imposes a 
one-year freeze on mandatory funding to a class of providers 
designated as prohibited entities. A prohibited entity is one 
that meets the following criteria: it is designated as a non-
profit by the Internal Revenue Service; it is an essential 
community provider primarily engaged in family planning and 
reproductive health services; it provides abortions in cases 
that do not meet the Hyde amendment exception for federal 
payment; and it received over $350 million in federal and state 
Medicaid dollars in fiscal year 2014.

Subtitle B--Medicaid Program Enhancement

Section 111. Repeal of Medicaid Provisions: This section 
repeals States' expanded authority to make presumptive 
eligibility determinations for certain populations and alter 
mandatory Medicaid income eligibility level for poverty-related 
children back to 100 percent of federal poverty level. In 
addition, this section repeals the 6-percentage point bonus in 
the federal match rate for community-based attendant services.
Section 112. Repeal of Medicaid Expansion: This section 
codifies NFIB v. Sebelius by making Medicaid expansion optional 
for States. This section also repeals the State option to 
extend coverage to adults above 133 percent of federal poverty 
by December 31, 2019, and ends the enhanced match rate for 
newly eligible beneficiaries after December 31, 2019. States 
can keep the enhanced match for newly eligible expenditures 
that occur before January 1, 2020. However, for expenditures 
after January 1, 2020, the newly eligible matching rate would 
only apply to expenditures for newly eligible individuals who 
were enrolled in Medicaid (under the State plan or a waiver) as 
of December 31, 2019 and do not have a break in eligibility for 
more than one month after that date. After January 1, 2020, the 
State could only enroll newly eligible individuals at the 
State's traditional FMAP for that individual. This section also 
amends the formula for the expansion State matching rate so 
that the matching rate stops phasing up after calendar year 
(CY) 2017 and the transition percentage would remain at the CY 
2017 level for each subsequent year. In addition, for 
expenditures after January 1, 2020, the expansion State 
matching rate would only apply to expenditures for individuals 
who are eligible for the expansion State matching rate and were 
enrolled in Medicaid (under the State plan or a waiver) as of 
December 31, 2019, and do not have a break in eligibility for 
more than one month after that date. After January 1, 2020, the 
State would have the option to enroll newly eligible 
individuals, but the State would receive the State's 
traditional federal medical assistance program (FMAP) for that 
individual.
    The section also repeals the requirement that State 
Medicaid plans must provide the same ``essential health 
benefits'' that are required by plans on the exchanges, 
returning flexibility to the States on December 31, 2019.
Section 113. Elimination of DSH Cuts: This section repeals the 
Medicaid Disproportionate Share Hospital (DSH) cuts for non-
expansion States in 2018. States that expanded Medicaid would 
have their DSH cuts repealed in 2020.
Section 114. Reducing State Medicaid Costs: This section would 
eliminate an unintended consequence in the current statute and 
regulations by requiring States, for purposes of determining 
modified adjusted gross income (MAGI) for Medicaid and CHIP 
eligibility, to consider monetary winnings from lotteries (and 
other lump sum payments) as if they were obtained over multiple 
months, even if obtained in a single month.
    This section would close the loophole by requiring 
individuals to provide documentation of citizenship or lawful 
presence before obtaining coverage.
    This section would repeal the authority for States to elect 
to substitute a higher home equity limit that is above the 
statutory minimum in law. It would apply to Medicaid 
eligibility determinations that are made more than 180 days 
after enactment. In situations where the Secretary of HHS 
determines that State legislation would be required to amend 
the State plan, then States would have additional time to 
comply with these requirements.
Section 115. Safety Net Funding for Non-Expansion States: This 
section provides $10 billion over five years to non-expansion 
States for safety net funding for CY 2018 through CY 2022.
Section 116. Providing Incentives for Increased Frequency of 
Eligibility Redetermination: This section requires States with 
Medicaid expansion populations to re-determine expansion 
enrollees' eligibility every 6 months. This policy also 
provides a temporary five percent FMAP increase to States for 
activities directly related to complying with this section.

Subtitle C--Per Capita Allotment for Medical Assistance

Section 121. Per Capita Allotment for Medical Assistance: 
Reforms federal Medicaid financing by creating a per capita cap 
model (i.e., per enrollee limits on federal payments to States) 
starting in FY 2020. Section 121 would use each State's 
spending in FY 2016 as the base year to set targeted spending 
for each enrollee category (elderly, blind and disabled, 
children, non-expansion adults, and expansion adults) in FY 
2019 and subsequent years for that State. Each State's targeted 
spending amount would increase by the percentage increase in 
the medical care component of the consumer price index for all 
urban consumers from September 2019 to September of the next 
fiscal year. Starting in FY 2020, any State with spending 
higher than their specified targeted aggregate amount would 
receive reductions to their Medicaid funding for the following 
fiscal year.
    Section 121 would also modernize Medicaid's data and 
reporting systems. The additional reporting requirements would 
include data on medical assistance expenditures within 
categories of services and categories of all enrollees on 
Medicaid.
    Certain payments are exempt from the caps. For example, DSH 
payments operate outside of the caps since they are already a 
capped allotment. Administrative payments are also exempt. In 
addition, certain populations would be exempt.
    Finally, to ensure that gaming does not take place, the 
Secretary of Health and Human Services (HHS) would conduct 
audits of each State's enrollment and expenditures reported on 
the Form CMS-64 for FY 2016, FY 2019, and subsequent years.

Subtitle D--Patient Relief and Health Insurance Market Stability

Section 131. Repeal of Cost-Sharing Subsidy: This section 
repeals the Affordable Care Act (ACA) cost-sharing subsidy 
program at the end of 2019. The Obama administration made 
payments through this program without an appropriation, leading 
to a lawsuit from House Republicans arguing that Congress and 
in particular, the House of Representatives alone holds the 
constitutional power of the purse. The lawsuit is being held in 
abeyance. The next filing date in the case for both parties is 
May 22, 2017.
Section 132. Patient and State Stability Fund: This section 
establishes the Patient and State Stability Fund, which is 
designed to lower patient costs and stabilize State markets.
    If a State chooses not to use the funding for their own 
program, the resources will be available to the Administrator 
of CMS to help stabilize premiums for patients.
    This section annually appropriates $15 billion for State 
use for 2018 and 2019. For years 2020 through 2026, $10 billion 
is appropriated annually. A State match is phased in beginning 
in 2020 at a different schedule, depending if a State chooses 
to use the money for their own program or utilizes the federal 
default program administered through CMS.
Section 133. Continuous Health Insurance Coverage Incentive: 
The continuous coverage incentive would limit adverse selection 
in health care markets. Beginning in open enrollment for 
benefit year 2019, there will be a 12-month lookback period to 
determine if the applicant went longer than 63 days without 
continuous health insurance coverage. If the applicant had a 
lapse in coverage for greater than 63 days, issuers will assess 
a flat 30 percent late-enrollment surcharge on top of their 
base premium based on their decision to forgo coverage. This 
late-enrollment surcharge would be the same for all market 
entrants, regardless of health status, and discontinued after 
12 months, incentivizing enrollees to remain covered. This 
process would begin for special enrollment period applicants in 
benefit year 2018.
Section 134. Increasing Coverage Options: Under the ACA, plan 
issuers are required to label their offerings by metal tier: 
Bronze, Silver, Gold, and Platinum. These metal tiers are 
determined by a calculation known as actuarial value (AV). This 
section repeals the AV standards.
Section 135. Change in Permissible Age Variation in Health 
Insurance Premium Rate: Current law limits the cost of the most 
generous plan for older Americans to three times the cost of 
the least generous plan for younger Americans. The true cost of 
care is 4.8-to-one, according to health economists. This 
provision loosens the ratio to five-to-one and gives States the 
flexibility to set their own ratio.
  

       Changes in Existing Law Made by Title I of FY2017 Budget 
 Reconciliation, as Recommended by the Committee on Energy and Commerce

  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 italics, and existing law in which no 
change is proposed is shown in roman):

PATIENT PROTECTION AND AFFORDABLE CARE ACT

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TITLE I--QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS

           *       *       *       *       *       *       *


        Subtitle D--Available Coverage Choices for All Americans

PART 1--ESTABLISHMENT OF QUALIFIED HEALTH PLANS

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SEC. 1302. ESSENTIAL HEALTH BENEFITS REQUIREMENTS.

  (a) Essential Health Benefits Package.--In this title, the 
term ``essential health benefits package'' means, with respect 
to any health plan, coverage that--
          (1) provides for the essential health benefits 
        defined by the Secretary under subsection (b);
          (2) limits cost-sharing for such coverage in 
        accordance with subsection (c); and
          (3) subject to subsection (e) and with respect to a 
        plan year before plan year 2020, provides either the 
        bronze, silver, gold, or platinum level of coverage 
        described in subsection (d).
  (b) Essential Health Benefits.--
          (1) In general.--Subject to paragraph (2), the 
        Secretary shall define the essential health benefits, 
        except that such benefits shall include at least the 
        following general categories and the items and services 
        covered within the categories:
                  (A) Ambulatory patient services.
                  (B) Emergency services.
                  (C) Hospitalization.
                  (D) Maternity and newborn care.
                  (E) Mental health and substance use disorder 
                services, including behavioral health 
                treatment.
                  (F) Prescription drugs.
                  (G) Rehabilitative and habilitative services 
                and devices.
                  (H) Laboratory services.
                  (I) Preventive and wellness services and 
                chronic disease management.
                  (J) Pediatric services, including oral and 
                vision care.
          (2) Limitation.--
                  (A) In general.--The Secretary shall ensure 
                that the scope of the essential health benefits 
                under paragraph (1) is equal to the scope of 
                benefits provided under a typical employer 
                plan, as determined by the Secretary. To inform 
                this determination, the Secretary of Labor 
                shall conduct a survey of employer-sponsored 
                coverage to determine the benefits typically 
                covered by employers, including multiemployer 
                plans, and provide a report on such survey to 
                the Secretary.
                  (B) Certification.--In defining the essential 
                health benefits described in paragraph (1), and 
                in revising the benefits under paragraph 
                (4)(H), the Secretary shall submit a report to 
                the appropriate committees of Congress 
                containing a certification from the Chief 
                Actuary of the Centers for Medicare & Medicaid 
                Services that such essential health benefits 
                meet the limitation described in paragraph (2).
          (3) Notice and hearing.--In defining the essential 
        health benefits described in paragraph (1), and in 
        revising the benefits under paragraph (4)(H), the 
        Secretary shall provide notice and an opportunity for 
        public comment.
          (4) Required elements for consideration.--In defining 
        the essential health benefits under paragraph (1), the 
        Secretary shall--
                  (A) ensure that such essential health 
                benefits reflect an appropriate balance among 
                the categories described in such subsection, so 
                that benefits are not unduly weighted toward 
                any category;
                  (B) not make coverage decisions, determine 
                reimbursement rates, establish incentive 
                programs, or design benefits in ways that 
                discriminate against individuals because of 
                their age, disability, or expected length of 
                life;
                  (C) take into account the health care needs 
                of diverse segments of the population, 
                including women, children, persons with 
                disabilities, and other groups;
                  (D) ensure that health benefits established 
                as essential not be subject to denial to 
                individuals against their wishes on the basis 
                of the individuals' age or expected length of 
                life or of the individuals' present or 
                predicted disability, degree of medical 
                dependency, or quality of life;
                  (E) provide that a qualified health plan 
                shall not be treated as providing coverage for 
                the essential health benefits described in 
                paragraph (1) unless the plan provides that--
                          (i) coverage for emergency department 
                        services will be provided without 
                        imposing any requirement under the plan 
                        for prior authorization of services or 
                        any limitation on coverage where the 
                        provider of services does not have a 
                        contractual relationship with the plan 
                        for the providing of services that is 
                        more restrictive than the requirements 
                        or limitations that apply to emergency 
                        department services received from 
                        providers who do have such a 
                        contractual relationship with the plan; 
                        and
                          (ii) if such services are provided 
                        out-of-network, the cost-sharing 
                        requirement (expressed as a copayment 
                        amount or coinsurance rate) is the same 
                        requirement that would apply if such 
                        services were provided in-network;
                  (F) provide that if a plan described in 
                section 1311(b)(2)(B)(ii) (relating to stand-
                alone dental benefits plans) is offered through 
                an Exchange, another health plan offered 
                through such Exchange shall not fail to be 
                treated as a qualified health plan solely 
                because the plan does not offer coverage of 
                benefits offered through the stand-alone plan 
                that are otherwise required under paragraph 
                (1)(J); and
                  (G) periodically review the essential health 
                benefits under paragraph (1), and provide a 
                report to Congress and the public that 
                contains--
                          (i) an assessment of whether 
                        enrollees are facing any difficulty 
                        accessing needed services for reasons 
                        of coverage or cost;
                          (ii) an assessment of whether the 
                        essential health benefits needs to be 
                        modified or updated to account for 
                        changes in medical evidence or 
                        scientific advancement;
                          (iii) information on how the 
                        essential health benefits will be 
                        modified to address any such gaps in 
                        access or changes in the evidence base;
                          (iv) an assessment of the potential 
                        of additional or expanded benefits to 
                        increase costs and the interactions 
                        between the addition or expansion of 
                        benefits and reductions in existing 
                        benefits to meet actuarial limitations 
                        described in paragraph (2); and
                  (H) periodically update the essential health 
                benefits under paragraph (1) to address any 
                gaps in access to coverage or changes in the 
                evidence base the Secretary identifies in the 
                review conducted under subparagraph (G).
          (5) Rule of construction.--Nothing in this title 
        shall be construed to prohibit a health plan from 
        providing benefits in excess of the essential health 
        benefits described in this subsection.
  (c) Requirements Relating to Cost-Sharing.--
          (1) Annual limitation on cost-sharing.--
                  (A) 2014.--The cost-sharing incurred under a 
                health plan with respect to self-only coverage 
                or coverage other than self-only coverage for a 
                plan year beginning in 2014 shall not exceed 
                the dollar amounts in effect under section 
                223(c)(2)(A)(ii) of the Internal Revenue Code 
                of 1986 for self-only and family coverage, 
                respectively, for taxable years beginning in 
                2014.
                  (B) 2015 and later.--In the case of any plan 
                year beginning in a calendar year after 2014, 
                the limitation under this paragraph shall--
                          (i) in the case of self-only 
                        coverage, be equal to the dollar amount 
                        under subparagraph (A) for self-only 
                        coverage for plan years beginning in 
                        2014, increased by an amount equal to 
                        the product of that amount and the 
                        premium adjustment percentage under 
                        paragraph (4) for the calendar year; 
                        and
                          (ii) in the case of other coverage, 
                        twice the amount in effect under clause 
                        (i).
                If the amount of any increase under clause (i) 
                is not a multiple of $50, such increase shall 
                be rounded to the next lowest multiple of $50.
          (2)
          (3) Cost-sharing.--In this title--
                  (A) In general.--The term ``cost-sharing'' 
                includes--
                          (i) deductibles, coinsurance, 
                        copayments, or similar charges; and
                          (ii) any other expenditure required 
                        of an insured individual which is a 
                        qualified medical expense (within the 
                        meaning of section 223(d)(2) of the 
                        Internal Revenue Code of 1986) with 
                        respect to essential health benefits 
                        covered under the plan.
                  (B) Exceptions.--Such term does not include 
                premiums, balance billing amounts for non-
                network providers, or spending for non-covered 
                services.
          (4) Premium adjustment percentage.--For purposes of 
        paragraph (1)(B)(i), the premium adjustment percentage 
        for any calendar year is the percentage (if any) by 
        which the average per capita premium for health 
        insurance coverage in the United States for the 
        preceding calendar year (as estimated by the Secretary 
        no later than October 1 of such preceding calendar 
        year) exceeds such average per capita premium for 2013 
        (as determined by the Secretary).
  (d) Levels of Coverage.--
          (1) Levels of coverage defined.--The levels of 
        coverage described in this subsection are as follows:
                  (A) Bronze level.--A plan in the bronze level 
                shall provide a level of coverage that is 
                designed to provide benefits that are 
                actuarially equivalent to 60 percent of the 
                full actuarial value of the benefits provided 
                under the plan.
                  (B) Silver level.--A plan in the silver level 
                shall provide a level of coverage that is 
                designed to provide benefits that are 
                actuarially equivalent to 70 percent of the 
                full actuarial value of the benefits provided 
                under the plan.
                  (C) Gold level.--A plan in the gold level 
                shall provide a level of coverage that is 
                designed to provide benefits that are 
                actuarially equivalent to 80 percent of the 
                full actuarial value of the benefits provided 
                under the plan.
                  (D) Platinum level.--A plan in the platinum 
                level shall provide a level of coverage that is 
                designed to provide benefits that are 
                actuarially equivalent to 90 percent of the 
                full actuarial value of the benefits provided 
                under the plan.
          (2) Actuarial value.--
                  (A) In general.--Under regulations issued by 
                the Secretary, the level of coverage of a plan 
                shall be determined on the basis that the 
                essential health benefits described in 
                subsection (b) shall be provided to a standard 
                population (and without regard to the 
                population the plan may actually provide 
                benefits to).
                  (B) Employer contributions.--The Secretary 
                shall issue regulations under which employer 
                contributions to a health savings account 
                (within the meaning of section 223 of the 
                Internal Revenue Code of 1986) may be taken 
                into account in determining the level of 
                coverage for a plan of the employer.
                  (C) Application.--In determining under this 
                title, the Public Health Service Act, or the 
                Internal Revenue Code of 1986 the percentage of 
                the total allowed costs of benefits provided 
                under a group health plan or health insurance 
                coverage that are provided by such plan or 
                coverage, the rules contained in the 
                regulations under this paragraph shall apply.
          (3) Allowable variance.--The Secretary shall develop 
        guidelines to provide for a de minimis variation in the 
        actuarial valuations used in determining the level of 
        coverage of a plan to account for differences in 
        actuarial estimates.
          (4) Plan reference.--In this title, any reference to 
        a bronze, silver, gold, or platinum plan shall be 
        treated as a reference to a qualified health plan 
        providing a bronze, silver, gold, or platinum level of 
        coverage, as the case may be.
          (5) Sunset.--The provisions of this subsection shall 
        not apply after December 31, 2019, and after such date 
        any reference to this subsection or level of coverage 
        or plan described in this subsection and any 
        requirement under law applying such a level of coverage 
        or plan shall have no force or effect (and such a 
        requirement shall be applied as if this section had 
        been repealed).
  (e) Catastrophic Plan.--
          (1) In general.--A health plan not providing a 
        bronze, silver, gold, or platinum level of coverage 
        shall be treated as meeting the requirements of 
        subsection (d) with respect to any plan year if--
                  (A) the only individuals who are eligible to 
                enroll in the plan are individuals described in 
                paragraph (2); and
                  (B) the plan provides--
                          (i) except as provided in clause 
                        (ii), the essential health benefits 
                        determined under subsection (b), except 
                        that the plan provides no benefits for 
                        any plan year until the individual has 
                        incurred cost-sharing expenses in an 
                        amount equal to the annual limitation 
                        in effect under subsection (c)(1) for 
                        the plan year (except as provided for 
                        in section 2713); and
                          (ii) coverage for at least three 
                        primary care visits.
          (2) Individuals eligible for enrollment.--An 
        individual is described in this paragraph for any plan 
        year if the individual--
                  (A) has not attained the age of 30 before the 
                beginning of the plan year; or
                  (B) has a certification in effect for any 
                plan year under this title that the individual 
                is exempt from the requirement under section 
                5000A of the Internal Revenue Code of 1986 by 
                reason of--
                          (i) section 5000A(e)(1) of such Code 
                        (relating to individuals without 
                        affordable coverage); or
                          (ii) section 5000A(e)(5) of such Code 
                        (relating to individuals with 
                        hardships).
          (3) Restriction to individual market.--If a health 
        insurance issuer offers a health plan described in this 
        subsection, the issuer may only offer the plan in the 
        individual market.
  (f) Child-only Plans.--If a qualified health plan is offered 
through the Exchange in any level of coverage specified under 
subsection (d), the issuer shall also offer that plan through 
the Exchange in that level as a plan in which the only 
enrollees are individuals who, as of the beginning of a plan 
year, have not attained the age of 21, and such plan shall be 
treated as a qualified health plan.
  (g) Payments to Federally-Qualified Health Centers.--If any 
item or service covered by a qualified health plan is provided 
by a Federally-qualified health center (as defined in section 
1905(l)(2)(B) of the Social Security Act (42 U.S.C. 
1396d(l)(2)(B)) to an enrollee of the plan, the offeror of the 
plan shall pay to the center for the item or service an amount 
that is not less than the amount of payment that would have 
been paid to the center under section 1902(bb) of such Act (42 
U.S.C. 1396a(bb)) for such item or service.

           *       *       *       *       *       *       *


       Subtitle E--Affordable Coverage Choices for All Americans

        PART I--PREMIUM TAX CREDITS AND COST-SHARING REDUCTIONS

Subpart A--Premium Tax Credits and Cost-Sharing Reductions

           *       *       *       *       *       *       *


[SEC. 1402. REDUCED COST-SHARING FOR INDIVIDUALS ENROLLING IN QUALIFIED 
                    HEALTH PLANS.

  [(a) In General.--In the case of an eligible insured enrolled 
in a qualified health plan--
          [(1) the Secretary shall notify the issuer of the 
        plan of such eligibility; and
          [(2) the issuer shall reduce the cost-sharing under 
        the plan at the level and in the manner specified in 
        subsection (c).
  [(b) Eligible Insured.--In this section, the term ``eligible 
insured'' means an individual--
          [(1) who enrolls in a qualified health plan in the 
        silver level of coverage in the individual market 
        offered through an Exchange; and
          [(2) whose household income exceeds 100 percent but 
        does not exceed 400 percent of the poverty line for a 
        family of the size involved.
In the case of an individual described in section 36B(c)(1)(B) 
of the Internal Revenue Code of 1986, the individual shall be 
treated as having household income equal to 100 percent for 
purposes of applying this section.
  [(c) Determination of Reduction in Cost-Sharing.--
          [(1) Reduction in out-of-pocket limit.--
                  [(A) In general.--The reduction in cost-
                sharing under this subsection shall first be 
                achieved by reducing the applicable out-of 
                pocket limit under section 1302(c)(1) in the 
                case of--
                          [(i) an eligible insured whose 
                        household income is more than 100 
                        percent but not more than 200 percent 
                        of the poverty line for a family of the 
                        size involved, by two-thirds;
                          [(ii) an eligible insured whose 
                        household income is more than 200 
                        percent but not more than 300 percent 
                        of the poverty line for a family of the 
                        size involved, by one-half; and
                          [(iii) an eligible insured whose 
                        household income is more than 300 
                        percent but not more than 400 percent 
                        of the poverty line for a family of the 
                        size involved, by one-third.
                  [(B) Coordination with actuarial value 
                limits.--
                          [(i) In general.--The Secretary shall 
                        ensure the reduction under this 
                        paragraph shall not result in an 
                        increase in the plan's share of the 
                        total allowed costs of benefits 
                        provided under the plan above--
                                  [(I) 94 percent in the case 
                                of an eligible insured 
                                described in paragraph (2)(A);
                                  [(II) 87 percent in the case 
                                of an eligible insured 
                                described in paragraph (2)(B);
                                  [(III) 73 percent in the case 
                                of an eligible insured whose 
                                household income is more than 
                                200 percent but not more than 
                                250 percent of the poverty line 
                                for a family of the size 
                                involved; and
                                  [(IV) 70 percent in the case 
                                of an eligible insured whose 
                                household income is more than 
                                250 percent but not more than 
                                400 percent of the poverty line 
                                for a family of the size 
                                involved.
                          [(ii) Adjustment.--The Secretary 
                        shall adjust the out-of pocket limits 
                        under paragraph (1) if necessary to 
                        ensure that such limits do not cause 
                        the respective actuarial values to 
                        exceed the levels specified in clause 
                        (i).
          [(2) Additional reduction for lower income 
        insureds.--The Secretary shall establish procedures 
        under which the issuer of a qualified health plan to 
        which this section applies shall further reduce cost-
        sharing under the plan in a manner sufficient to--
                  [(A) in the case of an eligible insured whose 
                household income is not less than 100 percent 
                but not more than 150 percent of the poverty 
                line for a family of the size involved, 
                increase the plan's share of the total allowed 
                costs of benefits provided under the plan to 94 
                percent of such costs;
                  [(B) in the case of an eligible insured whose 
                household income is more than 150 percent but 
                not more than 200 percent of the poverty line 
                for a family of the size involved, increase the 
                plan's share of the total allowed costs of 
                benefits provided under the plan to 87 percent 
                of such costs; and
                  [(C) in the case of an eligible insured whose 
                household income is more than 200 percent but 
                not more than 250 percent of the poverty line 
                for a family of the size involved, increase the 
                plan's share of the total allowed costs of 
                benefits provided under the plan to 73 percent 
                of such costs.
          [(3) Methods for reducing cost-sharing.--
                  [(A) In general.--An issuer of a qualified 
                health plan making reductions under this 
                subsection shall notify the Secretary of such 
                reductions and the Secretary shall make 
                periodic and timely payments to the issuer 
                equal to the value of the reductions.
                  [(B) Capitated payments.--The Secretary may 
                establish a capitated payment system to carry 
                out the payment of cost-sharing reductions 
                under this section. Any such system shall take 
                into account the value of the reductions and 
                make appropriate risk adjustments to such 
                payments.
          [(4) Additional benefits.--If a qualified health plan 
        under section 1302(b)(5) offers benefits in addition to 
        the essential health benefits required to be provided 
        by the plan, or a State requires a qualified health 
        plan under section 1311(d)(3)(B) to cover benefits in 
        addition to the essential health benefits required to 
        be provided by the plan, the reductions in cost-sharing 
        under this section shall not apply to such additional 
        benefits.
          [(5) Special rule for pediatric dental plans.--If an 
        individual enrolls in both a qualified health plan and 
        a plan described in section 1311(d)(2)(B)(ii)(I) for 
        any plan year, subsection (a) shall not apply to that 
        portion of any reduction in cost-sharing under 
        subsection (c) that (under regulations prescribed by 
        the Secretary) is properly allocable to pediatric 
        dental benefits which are included in the essential 
        health benefits required to be provided by a qualified 
        health plan under section 1302(b)(1)(J).
  [(d) Special Rules for Indians.--
          [(1) Indians under 300 percent of poverty.--If an 
        individual enrolled in any qualified health plan in the 
        individual market through an Exchange is an Indian (as 
        defined in section 4(d) of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 
        450b(d))) whose household income is not more than 300 
        percent of the poverty line for a family of the size 
        involved, then, for purposes of this section--
                  [(A) such individual shall be treated as an 
                eligible insured; and
                  [(B) the issuer of the plan shall eliminate 
                any cost-sharing under the plan.
          [(2) Items or services furnished through Indian 
        health providers.--If an Indian (as so defined) 
        enrolled in a qualified health plan is furnished an 
        item or service directly by the Indian Health Service, 
        an Indian Tribe, Tribal Organization, or Urban Indian 
        Organization or through referral under contract health 
        services--
                  [(A) no cost-sharing under the plan shall be 
                imposed under the plan for such item or 
                service; and
                  [(B) the issuer of the plan shall not reduce 
                the payment to any such entity for such item or 
                service by the amount of any cost-sharing that 
                would be due from the Indian but for 
                subparagraph (A).
          [(3) Payment.--The Secretary shall pay to the issuer 
        of a qualified health plan the amount necessary to 
        reflect the increase in actuarial value of the plan 
        required by reason of this subsection.
  [(e) Rules for Individuals Not Lawfully Present.--
          [(1) In general.--If an individual who is an eligible 
        insured is not lawfully present--
                  [(A) no cost-sharing reduction under this 
                section shall apply with respect to the 
                individual; and
                  [(B) for purposes of applying this section, 
                the determination as to what percentage a 
                taxpayer's household income bears to the 
                poverty level for a family of the size involved 
                shall be made under one of the following 
                methods:
                          [(i) A method under which--
                                  [(I) the taxpayer's family 
                                size is determined by not 
                                taking such individuals into 
                                account, and
                                  [(II) the taxpayer's 
                                household income is equal to 
                                the product of the taxpayer's 
                                household income (determined 
                                without regard to this 
                                subsection) and a fraction--
                                          [(aa) the numerator 
                                        of which is the poverty 
                                        line for the taxpayer's 
                                        family size determined 
                                        after application of 
                                        subclause (I), and
                                          [(bb) the denominator 
                                        of which is the poverty 
                                        line for the taxpayer's 
                                        family size determined 
                                        without regard to 
                                        subclause (I).
                          [(ii) A comparable method reaching 
                        the same result as the method under 
                        clause (i).
          [(2) Lawfully present.--For purposes of this section, 
        an individual shall be treated as lawfully present only 
        if the individual is, and is reasonably expected to be 
        for the entire period of enrollment for which the cost-
        sharing reduction under this section is being claimed, 
        a citizen or national of the United States or an alien 
        lawfully present in the United States.
          [(3) Secretarial authority.--The Secretary, in 
        consultation with the Secretary of the Treasury, shall 
        prescribe rules setting forth the methods by which 
        calculations of family size and household income are 
        made for purposes of this subsection. Such rules shall 
        be designed to ensure that the least burden is placed 
        on individuals enrolling in qualified health plans 
        through an Exchange and taxpayers eligible for the 
        credit allowable under this section.
  [(f) Definitions and Special Rules.--In this section:
          [(1) In general.--Any term used in this section which 
        is also used in section 36B of the Internal Revenue 
        Code of 1986 shall have the meaning given such term by 
        such section.
          [(2) Limitations on reduction.--No cost-sharing 
        reduction shall be allowed under this section with 
        respect to coverage for any month unless the month is a 
        coverage month with respect to which a credit is 
        allowed to the insured (or an applicable taxpayer on 
        behalf of the insured) under section 36B of such Code.
          [(3) Data used for eligibility.--Any determination 
        under this section shall be made on the basis of the 
        taxable year for which the advance determination is 
        made under section 1412 and not the taxable year for 
        which the credit under section 36B of such Code is 
        allowed.]

           *       *       *       *       *       *       *


  TITLE IV--PREVENTION OF CHRONIC DISEASE AND IMPROVING PUBLIC HEALTH

Subtitle A--Modernizing Disease Prevention and Public Health Systems

           *       *       *       *       *       *       *


SEC. 4002. PREVENTION AND PUBLIC HEALTH FUND.

  (a) Purpose.--It is the purpose of this section to establish 
a Prevention and Public Health Fund (referred to in this 
section as the ``Fund''), to be administered through the 
Department of Health and Human Services, Office of the 
Secretary, to provide for expanded and sustained national 
investment in prevention and public health programs to improve 
health and help restrain the rate of growth in private and 
public sector health care costs.
  (b) Funding.--There are hereby authorized to be appropriated, 
and appropriated, to the Fund, out of any monies in the 
Treasury not otherwise appropriated--
          (1) for fiscal year 2010, $500,000,000;
          (2) for each of fiscal years 2012 through 2017, 
        $1,000,000,000; and
          (3) for [each of fiscal years 2018 and 2019] fiscal 
        year 2018, $900,000,000[;].
          [(4) for each of fiscal years 2020 and 2021, 
        $1,000,000,000; and
          [(5) for fiscal year 2022, $1,500,000,000;
          [(6) for fiscal year 2023, $1,000,000,000;
          [(7) for fiscal year 2024, $1,700,000,000; and
          [(8) for fiscal year 2025 and each fiscal year 
        thereafter, $2,000,000,000.]
  (c) Use of Fund.--The Secretary shall transfer amounts in the 
Fund to accounts within the Department of Health and Human 
Services to increase funding, over the fiscal year 2008 level, 
for programs authorized by the Public Health Service Act, for 
prevention, wellness, and public health activities including 
prevention research, health screenings, and initiatives, such 
as the Community Transformation grant program, the Education 
and Outreach Campaign Regarding Preventive Benefits, and 
immunization programs.
  (d) Transfer Authority.--The Committee on Appropriations of 
the Senate and the Committee on Appropriations of the House of 
Representatives may provide for the transfer of funds in the 
Fund to eligible activities under this section, subject to 
subsection (c).

           *       *       *       *       *       *       *

                              ----------                              


MEDICARE ACCESS AND CHIP REAUTHORIZATION ACT OF 2015

           *       *       *       *       *       *       *


TITLE II--MEDICARE AND OTHER HEALTH EXTENDERS

           *       *       *       *       *       *       *


Subtitle B--Other Health Extenders

           *       *       *       *       *       *       *


SEC. 221. EXTENSION OF FUNDING FOR COMMUNITY HEALTH CENTERS, THE 
                    NATIONAL HEALTH SERVICE CORPS, AND TEACHING HEALTH 
                    CENTERS.

  (a) Funding for Community Health Centers and the National 
Health Service Corps.--
          (1) Community health centers.--Section 10503(b)(1)(E) 
        of the Patient Protection and Affordable Care Act (42 
        U.S.C. 254b-2(b)(1)(E)) is amended by striking ``for 
        fiscal year 2015'' and inserting ``for each of fiscal 
        years 2015 through 2017, and an additional $422,000,000 
        for fiscal year 2017''.
          (2) National health service corps.--Section 
        10503(b)(2)(E) of the Patient Protection and Affordable 
        Care Act (42 U.S.C. 254b-2(b)(2)(E)) is amended by 
        striking ``for fiscal year 2015'' and inserting ``for 
        each of fiscal years 2015 through 2017''.
  (b) Extension of Teaching Health Centers Program.--Section 
340H(g) of the Public Health Service Act (42 U.S.C. 256h(g)) is 
amended by inserting ``and $60,000,000 for each of fiscal years 
2016 and 2017'' before the period at the end.
  (c) Application.--Amounts appropriated pursuant to this 
section for fiscal year 2016 and fiscal year 2017 are subject 
to the requirements contained in Public Law 113-235 for funds 
for programs authorized under sections 330 through 340 of the 
Public Health Service Act (42 U.S.C. 254b-256).

           *       *       *       *       *       *       *

                              ----------                              


SOCIAL SECURITY ACT

           *       *       *       *       *       *       *


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

Part A--General Provisions

           *       *       *       *       *       *       *


                        civil monetary penalties

  Sec. 1128A. (a) Any person (including an organization, 
agency, or other entity, but excluding a beneficiary, as 
defined in subsection (i)(5)) that--
          (1) knowingly presents or causes to be presented to 
        an officer, employee, or agent of the United States, or 
        of any department or agency thereof, or of any State 
        agency (as defined in subsection (i)(1)), a claim (as 
        defined in subsection (i)(2)) that the Secretary 
        determines--
                  (A) is for a medical or other item or service 
                that the person knows or should know was not 
                provided as claimed, including any person who 
                engages in a pattern or practice of presenting 
                or causing to be presented a claim for an item 
                or service that is based on a code that the 
                person knows or should know will result in a 
                greater payment to the person than the code the 
                person knows or should know is applicable to 
                the item or service actually provided,
                  (B) is for a medical or other item or service 
                and the person knows or should know the claim 
                is false or fraudulent,
                  (C) is presented for a physician's service 
                (or an item or service incident to a 
                physician's service) by a person who knows or 
                should know that the individual who furnished 
                (or supervised the furnishing of) the service--
                          (i) was not licensed as a physician,
                          (ii) was licensed as a physician, but 
                        such license had been obtained through 
                        a misrepresentation of material fact 
                        (including cheating on an examination 
                        required for licensing), or
                          (iii) represented to the patient at 
                        the time the service was furnished that 
                        the physician was certified in a 
                        medical specialty by a medical 
                        specialty board when the individual was 
                        not so certified,
                  (D) is for a medical or other item or service 
                furnished during a period in which the person 
                was excluded from the program under which the 
                claim was made pursuant to a determination by 
                the Secretary under this section or under 
                section 1128, 1156, 1160(b) (as in effect on 
                September 2, 1982), 1862(d) (as in effect on 
                the date of the enactment of the Medicare and 
                Medicaid Patient and Program Protection Act of 
                1987), or 1866(b) or as a result of the 
                application of the provisions of section 
                1842(j)(2), or
                  (E) is for a pattern of medical or other 
                items or services that a person knows or should 
                know are not medically necessary;
          (2) knowingly presents or causes to be presented to 
        any person a request for payment which is in violation 
        of the terms of (A) an assignment under section 
        1842(b)(3)(B)(ii), or (B) an agreement with a State 
        agency (or other requirement of a State plan under 
        title XIX) not to charge a person for an item or 
        service in excess of the amount permitted to be 
        charged, or (C) an agreement to be a participating 
        physician or supplier under section 1842(h)(1), or (D) 
        an agreement pursuant to section 1866(a)(1)(G);
          (3) knowingly gives or causes to be given to any 
        person, with respect to coverage under title XVIII of 
        inpatient hospital services subject to the provisions 
        of section 1886, information that he knows or should 
        know is false or misleading, and that could reasonably 
        be expected to influence the decision when to discharge 
        such person or another individual from the hospital;
          (4) in the case of a person who is not an 
        organization, agency, or other entity, is excluded from 
        participating in a program under title XVIII or a State 
        health care program in accordance with this subsection 
        or under section 1128 and who, at the time of a 
        violation of this subsection--
                  (A) retains a direct or indirect ownership or 
                control interest in an entity that is 
                participating in a program under title XVIII or 
                a State health care program, and who knows or 
                should know of the action constituting the 
                basis for the exclusion; or
                  (B) is an officer or managing employee (as 
                defined in section 1126(b)) of such an entity;
          (5) offers to or transfers remuneration to any 
        individual eligible for benefits under title XVIII of 
        this Act, or under a State health care program (as 
        defined in section 1128(h)) that such person knows or 
        should know is likely to influence such individual to 
        order or receive from a particular provider, 
        practitioner, or supplier any item or service for which 
        payment may be made, in whole or in part, under title 
        XVIII, or a State health care program (as so defined);
          (6) arranges or contracts (by employment or 
        otherwise) with an individual or entity that the person 
        knows or should know is excluded from participation in 
        a Federal health care program (as defined in section 
        1128B(f)), for the provision of items or services for 
        which payment may be made under such a program;
          (7) commits an act described in paragraph (1) or (2) 
        of section 1128B(b);
          (8) knowingly makes, uses, or causes to be made or 
        used, a false record or statement material to a false 
        or fraudulent claim for payment for items and services 
        furnished under a Federal health care program; or
          (9) fails to grant timely access, upon reasonable 
        request (as defined by the Secretary in regulations), 
        to the Inspector General of the Department of Health 
        and Human Services, for the purpose of audits, 
        investigations, evaluations, or other statutory 
        functions of the Inspector General of the Department of 
        Health and Human Services;
          (8) orders or prescribes a medical or other item or 
        service during a period in which the person was 
        excluded from a Federal health care program (as so 
        defined), in the case where the person knows or should 
        know that a claim for such medical or other item or 
        service will be made under such a program;
          (9) knowingly makes or causes to be made any false 
        statement, omission, or misrepresentation of a material 
        fact in any application, bid, or contract to 
        participate or enroll as a provider of services or a 
        supplier under a Federal health care program (as so 
        defined), including Medicare Advantage organizations 
        under part C of title XVIII, prescription drug plan 
        sponsors under part D of title XVIII, medicaid managed 
        care organizations under title XIX, and entities that 
        apply to participate as providers of services or 
        suppliers in such managed care organizations and such 
        plans;
          (10) knows of an overpayment (as defined in paragraph 
        (4) of section 1128J(d)) and does not report and return 
        the overpayment in accordance with such section;
shall be subject, in addition to any other penalties that may 
be prescribed by law, to a civil money penalty of not more than 
$10,000 for each item or service [(or, in cases under paragraph 
(3)] (or, in cases under paragraph (1) in which an individual 
was knowingly enrolled on or after October 1, 2017, pursuant to 
section 1902(a)(10)(A)(i)(VIII) for medical assistance under 
the State plan under title XIX whose income does not meet the 
income threshold specified in such section or in which a claim 
was presented on or after October 1, 2017, as a claim for an 
item or service furnished to an individual described in such 
section but whose enrollment under such State plan is not made 
on the basis of such individual's meeting the income threshold 
specified in such section, $20,000 for each such individual or 
claim; in cases under paragraph (3), $15,000 for each 
individual with respect to whom false or misleading information 
was given; in cases under paragraph (4), $10,000 for each day 
the prohibited relationship occurs; in cases under paragraph 
(7), $50,000 for each such act; or in cases under paragraph 
(9), $50,000 for each false statement or misrepresentation of a 
material fact). In addition, such a person shall be subject to 
an assessment of not more than 3 times the amount claimed for 
each such item or service in lieu of damages sustained by the 
United States or a State agency because of such claim (or, in 
cases under paragraph (7), damages of not more than 3 times the 
total amount of remuneration offered, paid, solicited, or 
received, without regard to whether a portion of such 
remuneration was offered, paid, solicited, or received for a 
lawful purpose; or in cases under paragraph (9), an assessment 
of not more than 3 times the total amount claimed for each item 
or service for which payment was made based upon the 
application containing the false statement or misrepresentation 
of a material fact). In addition the Secretary may make a 
determination in the same proceeding to exclude the person from 
participation in the Federal health care programs (as defined 
in section 1128B(f)(1)) and to direct the appropriate State 
agency to exclude the person from participation in any State 
health care program.
  (b)(1) If a hospital or a critical access hospital knowingly 
makes a payment, directly or indirectly, to a physician as an 
inducement to reduce or limit medically necessary services 
provided with respect to individuals who--
          (A) are entitled to benefits under part A or part B 
        of title XVIII or to medical assistance under a State 
        plan approved under title XIX, and
          (B) are under the direct care of the physician,
the hospital or a critical access hospital shall be subject, in 
addition to any other penalties that may be prescribed by law, 
to a civil money penalty of not more than $2,000 for each such 
individual with respect to whom the payment is made.
  (2) Any physician who knowingly accepts receipt of a payment 
described in paragraph (1) shall be subject, in addition to any 
other penalties that may be prescribed by law, to a civil money 
penalty of not more than $2,000 for each individual described 
in such paragraph with respect to whom the payment is made.
  (3)(A) Any physician who executes a document described in 
subparagraph (B) with respect to an individual knowing that all 
of the requirements referred to in such subparagraph are not 
met with respect to the individual shall be subject to a civil 
monetary penalty of not more than the greater of--
          (i) $5,000, or
          (ii) three times the amount of the payments under 
        title XVIII for home health services which are made 
        pursuant to such certification.
  (B) A document described in this subparagraph is any document 
that certifies, for purposes of title XVIII, that an individual 
meets the requirements of section 1814(a)(2)(C) or 
1835(a)(2)(A) in the case of home health services furnished to 
the individual.
  (c)(1) The Secretary may initiate a proceeding to determine 
whether to impose a civil money penalty, assessment, or 
exclusion under subsection (a) or (b) only as authorized by the 
Attorney General pursuant to procedures agreed upon by them. 
The Secretary may not initiate an action under this section 
with respect to any claim, request for payment, or other 
occurrence described in this section later than six years after 
the date the claim was presented, the request for payment was 
made, or the occurrence took place. The Secretary may initiate 
an action under this section by serving notice of the action in 
any manner authorized by Rule 4 of the Federal Rules of Civil 
Procedure.
  (2) The Secretary shall not make a determination adverse to 
any person under subsection (a) or (b) until the person has 
been given written notice and an opportunity for the 
determination to be made on the record after a hearing at which 
the person is entitled to be represented by counsel, to present 
witnesses, and to cross-examine witnesses against the person.
  (3) In a proceeding under subsection (a) or (b) which--
          (A) is against a person who has been convicted 
        (whether upon a verdict after trial or upon a plea of 
        guilty or nolo contendere) of a Federal crime charging 
        fraud or false statements, and
          (B) involves the same transaction as in the criminal 
        action, the person is estopped from denying the 
        essential elements of the criminal offense.
  (4) The official conducting a hearing under this section may 
sanction a person, including any party or attorney, for failing 
to comply with an order or procedure, failing to defend an 
action, or other misconduct as would interfere with the speedy, 
orderly, or fair conduct of the hearing. Such sanction shall 
reasonably relate to the severity and nature of the failure or 
misconduct. Such sanction may include--
          (A) in the case of refusal to provide or permit 
        discovery, drawing negative factual inferences or 
        treating such refusal as an admission by deeming the 
        matter, or certain facts, to be established,
          (B) prohibiting a party from introducing certain 
        evidence or otherwise supporting a particular claim or 
        defense,
          (C) striking pleadings, in whole or in part,
          (D) staying the proceedings,
          (E) dismissal of the action,
          (F) entering a default judgment,
          (G) ordering the party or attorney to pay attorneys' 
        fees and other costs caused by the failure or 
        misconduct, and
          (H) refusing to consider any motion or other action 
        which is not filed in a timely manner.
  (d) In determining the amount or scope of any penalty, 
assessment, or exclusion imposed pursuant to subsection (a) or 
(b), the Secretary shall take into account--
          (1) the nature of claims and the circumstances under 
        which they were presented,
          (2) the degree of culpability, history of prior 
        offenses, and financial condition of the person 
        presenting the claims, and
          (3) such other matters as justice may require.
  (e) Any person adversely affected by a determination of the 
Secretary under this section may obtain a review of such 
determination in the United States Court of Appeals for the 
circuit in which the person resides, or in which the claim or 
specified claim was presented, by filing in such court (within 
sixty days following the date the person is notified of the 
Secretary's determination) a written petition requesting that 
the determination be modified or set aside. A copy of the 
petition shall be forthwith transmitted by the clerk of the 
court to the Secretary, and thereupon the Secretary shall file 
in the Court the record in the proceeding as provided in 
section 2112 of title 28, United States Code. Upon such filing, 
the court shall have jurisdiction of the proceeding and of the 
question determined therein, and shall have the power to make 
and enter upon the pleadings, testimony, and proceedings set 
forth in such record a decree affirming, modifying, remanding 
for further consideration, or setting aside, in whole or in 
part, the determination of the Secretary and enforcing the same 
to the extent that such order is affirmed or modified. No 
objection that has not been urged before the Secretary shall be 
considered by the court, unless the failure or neglect to urge 
such objection shall be excused because of extraordinary 
circumstances. The findings of the Secretary with respect to 
questions of fact, if supported by substantial evidence on the 
record considered as a whole, shall be conclusive. If any party 
shall apply to the court for leave to adduce additional 
evidence and shall show to the satisfaction of the court that 
such additional evidence is material and that there were 
reasonable grounds for the failure to adduce such evidence in 
the hearing before the Secretary, the court may order such 
additional evidence to be taken before the Secretary and to be 
made a part of the record. The Secretary may modify his 
findings as to the facts, or make new findings, by reason of 
additional evidence so taken and filed, and he shall file with 
the court such modified or new findings, which findings with 
respect to questions of fact, if supported by substantial 
evidence on the record considered as a whole, shall be 
conclusive, and his recommendations, if any, for the 
modification or setting aside of his original order. Upon the 
filing of the record with it, the jurisdiction of the court 
shall be exclusive and its judgment and decree shall be final, 
except that the same shall be subject to review by the Supreme 
Court of the United States, as provided in section 1254 of 
title 28, United States Code.
  (f) Civil money penalties and assessments imposed under this 
section may be compromised by the Secretary and may be 
recovered in a civil action in the name of the United States 
brought in United States district court for the district where 
the claim or specified claim (as defined in subsection (r)) was 
presented, or where the claimant (or, with respect to a person 
described in subsection (o), the person) resides, as determined 
by the Secretary. Amounts recovered under this section shall be 
paid to the Secretary and disposed of as follows:
          (1)(A) In the case of amounts recovered arising out 
        of a claim under title XIX, there shall be paid to the 
        State agency an amount bearing the same proportion to 
        the total amount recovered as the State's share of the 
        amount paid by the State agency for such claim bears to 
        the total amount paid for such claim.
          (B) In the case of amounts recovered arising out of a 
        claim under an allotment to a State under title V, 
        there shall be paid to the State agency an amount equal 
        to three-sevenths of the amount recovered.
          (2) Such portion of the amounts recovered as is 
        determined to have been paid out of the trust funds 
        under sections 1817 and 1841 shall be repaid to such 
        trust funds.
          (3) With respect to amounts recovered arising out of 
        a claim under a Federal health care program (as defined 
        in section 1128B(f)), the portion of such amounts as is 
        determined to have been paid by the program shall be 
        repaid to the program, and the portion of such amounts 
        attributable to the amounts recovered under this 
        section by reason of the amendments made by the Health 
        Insurance Portability and Accountability Act of 1996 
        (as estimated by the Secretary) shall be deposited into 
        the Federal Hospital Insurance Trust Fund pursuant to 
        section 1817(k)(2)(C).
          (4) The remainder of the amounts recovered shall be 
        deposited as miscellaneous receipts of the Treasury of 
        the United States.
The amount of such penalty or assessment, when finally 
determined, or the amount agreed upon in compromise, may be 
deducted from any sum then or later owing by the United States 
or a State agency (or, in the case of a penalty or assessment 
under subsection (o), by a specified State agency (as defined 
in subsection (q)(6)), to the person against whom the penalty 
or assessment has been assessed.
  (g) A determination by the Secretary to impose a penalty, 
assessment, or exclusion under subsection (a) or (b) shall be 
final upon the expiration of the sixty-day period referred to 
in subsection (e). Matters that were raised or that could have 
been raised in a hearing before the Secretary or in an appeal 
pursuant to subsection (e) may not be raised as a defense to a 
civil action by the United States to collect a penalty, 
assessment, or exclusion assessed under this section.
  (h) Whenever the Secretary's determination to impose a 
penalty, assessment, or exclusion under subsection (a) or (b) 
becomes final, he shall notify the appropriate State or local 
medical or professional organization, the appropriate State 
agency or agencies administering or supervising the 
administration of State health care programs (as defined in 
section 1128(h)), and the appropriate utilization and quality 
control peer review organization, and the appropriate State or 
local licensing agency or organization (including the agency 
specified in section 1864(a) and 1902(a)(33)) that such a 
penalty, assessment, or exclusion has become final and the 
reasons therefor.
  (i) For the purposes of this section:
          (1) The term ``State agency'' means the agency 
        established or designated to administer or supervise 
        the administration of the State plan under title XIX of 
        this Act or designated to administer the State's 
        program under title V or subtitle 1 of title XX of this 
        Act.
          (2) The term ``claim'' means an application for 
        payments for items and services under a Federal health 
        care program (as defined in section 1128B(f)).
          (3) The term ``item or service'' includes (A) any 
        particular item, device, medical supply, or service 
        claimed to have been provided to a patient and listed 
        in an itemized claim for payment, and (B) in the case 
        of a claim based on costs, any entry in the cost 
        report, books of account or other documents sup- 
        porting such claim.
          (4) The term ``agency of the United States'' includes 
        any contractor acting as a fiscal intermediary, 
        carrier, or fiscal agent or any other claims processing 
        agent for a Federal health care program (as so 
        defined).
          (5) The term ``beneficiary'' means an individual who 
        is eligible to receive items or services for which 
        payment may be made under a Federal health care program 
        (as so defined) but does not include a provider, 
        supplier, or practitioner.
          (6) The term ``remuneration'' includes the waiver of 
        coinsurance and deductible amounts (or any part 
        thereof), and transfers of items or services for free 
        or for other than fair market value. The term 
        ``remuneration'' does not include--
                  (A) the waiver of coinsurance and deductible 
                amounts by a person, if--
                          (i) the waiver is not offered as part 
                        of any advertisement or solicitation;
                          (ii) the person does not routinely 
                        waive coinsurance or deductible 
                        amounts; and
                          (iii) the person--
                                  (I) waives the coinsurance 
                                and deductible amounts after 
                                determining in good faith that 
                                the individual is in financial 
                                need; or
                                  (II) fails to collect 
                                coinsurance or deductible 
                                amounts after making reasonable 
                                collection efforts;
                  (B) subject to subsection (n), any 
                permissible practice described in any 
                subparagraph of section 1128B(b)(3) or in 
                regulations issued by the Secretary;
                  (C) differentials in coinsurance and 
                deductible amounts as part of a benefit plan 
                design as long as the differentials have been 
                disclosed in writing to all beneficiaries, 
                third party payers, and providers, to whom 
                claims are presented and as long as the 
                differentials meet the standards as defined in 
                regulations promulgated by the Secretary not 
                later than 180 days after the date of the 
                enactment of the Health Insurance Portability 
                and Accountability Act of 1996;
                  (D) incentives given to individuals to 
                promote the delivery of preventive care as 
                determined by the Secretary in regulations so 
                promulgated;
                  (E) a reduction in the copayment amount for 
                covered OPD services under section 
                1833(t)(5)(B);
                  (F) any other remuneration which promotes 
                access to care and poses a low risk of harm to 
                patients and Federal health care programs (as 
                defined in section 1128B(f) and designated by 
                the Secretary under regulations);
                  (G) the offer or transfer of items or 
                services for free or less than fair market 
                value by a person, if--
                          (i) the items or services consist of 
                        coupons, rebates, or other rewards from 
                        a retailer;
                          (ii) the items or services are 
                        offered or transferred on equal terms 
                        available to the general public, 
                        regardless of health insurance status; 
                        and
                          (iii) the offer or transfer of the 
                        items or services is not tied to the 
                        provision of other items or services 
                        reimbursed in whole or in part by the 
                        program under title XVIII or a State 
                        health care program (as defined in 
                        section 1128(h));
                  (H) the offer or transfer of items or 
                services for free or less than fair market 
                value by a person, if--
                          (i) the items or services are not 
                        offered as part of any advertisement or 
                        solicitation;
                          (ii) the items or services are not 
                        tied to the provision of other services 
                        reimbursed in whole or in part by the 
                        program under title XVIII or a State 
                        health care program (as so defined);
                          (iii) there is a reasonable 
                        connection between the items or 
                        services and the medical care of the 
                        individual; and
                          (iv) the person provides the items or 
                        services after determining in good 
                        faith that the individual is in 
                        financial need; or
                  (I) effective on a date specified by the 
                Secretary (but not earlier than January 1, 
                2011), the waiver by a PDP sponsor of a 
                prescription drug plan under part D of title 
                XVIII or an MA organization offering an MA-PD 
                plan under part C of such title of any 
                copayment for the first fill of a covered part 
                D drug (as defined in section 1860D-2(e)) that 
                is a generic drug for individuals enrolled in 
                the prescription drug plan or MA-PD plan, 
                respectively.
          (7) The term ``should know'' means that a person, 
        with respect to information--
                  (A) acts in deliberate ignorance of the truth 
                or falsity of the information; or
                  (B) acts in reckless disregard of the truth 
                or falsity of the information,
        and no proof of specific intent to defraud is required.
  (j)(1) The provisions of subsections (d) and (e) of section 
205 shall apply with respect to this section to the same extent 
as they are applicable with respect to title II. The Secretary 
may delegate the authority granted by section 205(d) (as made 
applicable to this section) to the Inspector General of the 
Department of Health and Human Services for purposes of any 
investigation under this section.
  (2) The Secretary may delegate authority granted under this 
section and under section 1128 to the Inspector General of the 
Department of Health and Human Services.
  (k) Whenever the Secretary has reason to believe that any 
person has engaged, is engaging, or is about to engage in any 
activity which makes the person subject to a civil monetary 
penalty under this section, the Secretary may bring an action 
in an appropriate district court of the United States (or, if 
applicable, a United States court of any territory) to enjoin 
such activity, or to enjoin the person from concealing, 
removing, encumbering, or disposing of assets which may be 
required in order to pay a civil monetary penalty if any such 
penalty were to be imposed or to seek other appropriate relief.
  (l) A principal is liable for penalties, assessments, and an 
exclusion under this section for the actions of the principal's 
agent acting within the scope of the agency.
  (m)(1) For purposes of this section, with respect to a 
Federal health care program not contained in this Act, 
references to the Secretary in this section shall be deemed to 
be references to the Secretary or Administrator of the 
department or agency with jurisdiction over such program and 
references to the Inspector General of the Department of Health 
and Human Services in this section shall be deemed to be 
references to the Inspector General of the applicable 
department or agency.
  (2)(A) The Secretary and Administrator of the departments and 
agencies referred to in paragraph (1) may include in any action 
pursuant to this section, claims within the jurisdiction of 
other Federal departments or agencies as long as the following 
conditions are satisfied:
          (i) The case involves primarily claims submitted to 
        the Federal health care programs of the department or 
        agency initiating the action.
          (ii) The Secretary or Administrator of the department 
        or agency initiating the action gives notice and an 
        opportunity to participate in the investigation to the 
        Inspector General of the department or agency with 
        primary jurisdiction over the Federal health care 
        programs to which the claims were submitted.
  (B) If the conditions specified in subparagraph (A) are 
fulfilled, the Inspector General of the department or agency 
initiating the action is authorized to exercise all powers 
granted under the Inspector General Act of 1978 (5 U.S.C. App.) 
with respect to the claims submitted to the other departments 
or agencies to the same manner and extent as provided in that 
Act with respect to claims submitted to such departments or 
agencies.
  (n)(1) Subparagraph (B) of subsection (i)(6) shall not apply 
to a practice described in paragraph (2) unless--
          (A) the Secretary, through the Inspector General of 
        the Department of Health and Human Services, 
        promulgates a rule authorizing such a practice as an 
        exception to remuneration; and
          (B) the remuneration is offered or transferred by a 
        person under such rule during the 2-year period 
        beginning on the date the rule is first promulgated.
  (2) A practice described in this paragraph is a practice 
under which a health care provider or facility pays, in whole 
or in part, premiums for medicare supplemental policies for 
individuals entitled to benefits under part A of title XVIII 
pursuant to section 226A.
  (o) Any person (including an organization, agency, or other 
entity, but excluding a program beneficiary, as defined in 
subsection (q)(4)) that, with respect to a grant, contract, or 
other agreement for which the Secretary provides funding--
          (1) knowingly presents or causes to be presented a 
        specified claim (as defined in subsection (r)) under 
        such grant, contract, or other agreement that the 
        person knows or should know is false or fraudulent;
          (2) knowingly makes, uses, or causes to be made or 
        used any false statement, omission, or 
        misrepresentation of a material fact in any 
        application, proposal, bid, progress report, or other 
        document that is required to be submitted in order to 
        directly or indirectly receive or retain funds provided 
        in whole or in part by such Secretary pursuant to such 
        grant, contract, or other agreement;
          (3) knowingly makes, uses, or causes to be made or 
        used, a false record or statement material to a false 
        or fraudulent specified claim under such grant, 
        contract, or other agreement;
          (4) knowingly makes, uses, or causes to be made or 
        used, a false record or statement material to an 
        obligation (as defined in subsection (s)) to pay or 
        transmit funds or property to such Secretary with 
        respect to such grant, contract, or other agreement, or 
        knowingly conceals or knowingly and improperly avoids 
        or decreases an obligation to pay or transmit funds or 
        property to such Secretary with respect to such grant, 
        contract, or other agreement; or
          (5) fails to grant timely access, upon reasonable 
        request (as defined by such Secretary in regulations), 
        to the Inspector General of the Department, for the 
        purpose of audits, investigations, evaluations, or 
        other statutory functions of such Inspector General in 
        matters involving such grants, contracts, or other 
        agreements;
shall be subject, in addition to any other penalties that may 
be prescribed by law, to a civil money penalty in cases under 
paragraph (1), of not more than $10,000 for each specified 
claim; in cases under paragraph (2), not more than $50,000 for 
each false statement, omission, or misrepresentation of a 
material fact; in cases under paragraph (3), not more than 
$50,000 for each false record or statement; in cases under 
paragraph (4), not more than $50,000 for each false record or 
statement or $10,000 for each day that the person knowingly 
conceals or knowingly and improperly avoids or decreases an 
obligation to pay; or in cases under paragraph (5), not more 
than $15,000 for each day of the failure described in such 
paragraph. In addition, in cases under paragraphs (1) and (3), 
such a person shall be subject to an assessment of not more 
than 3 times the amount claimed in the specified claim 
described in such paragraph in lieu of damages sustained by the 
United States or a specified State agency because of such 
specified claim, and in cases under paragraphs (2) and (4), 
such a person shall be subject to an assessment of not more 
than 3 times the total amount of the funds described in 
paragraph (2) or (4), respectively (or, in the case of an 
obligation to transmit property to the Secretary described in 
paragraph (4), of the value of the property described in such 
paragraph) in lieu of damages sustained by the United States or 
a specified State agency because of such case. In addition, the 
Secretary may make a determination in the same proceeding to 
exclude the person from participation in the Federal health 
care programs (as defined in section 1128B(f)(1)) and to direct 
the appropriate State agency to exclude the person from 
participation in any State health care program.
  (p) The provisions of subsections (c), (d), (g), and (h) 
shall apply to a civil money penalty or assessment under 
subsection (o) in the same manner as such provisions apply to a 
penalty, assessment, or proceeding under subsection (a). In 
applying subsection (d), each reference to a claim under such 
subsection shall be treated as including a reference to a 
specified claim (as defined in subsection (r)).
  (q) For purposes of this subsection and subsections (o) and 
(p):
          (1) The term ``Department'' means the Department of 
        Health and Human Services.
          (2) The term ``material'' means having a natural 
        tendency to influence, or be capable of influencing, 
        the payment or receipt of money or property.
          (3) The term ``other agreement'' includes a 
        cooperative agreement, scholarship, fellowship, loan, 
        subsidy, payment for a specified use, donation 
        agreement, award, or subaward (regardless of whether 
        one or more of the persons entering into the agreement 
        is a contractor or subcontractor).
          (4) The term ``program beneficiary'' means, in the 
        case of a grant, contract, or other agreement designed 
        to accomplish the objective of awarding or otherwise 
        furnishing benefits or assistance to individuals and 
        for which the Secretary provides funding, an individual 
        who applies for, or who receives, such benefits or 
        assistance from such grant, contract, or other 
        agreement. Such term does not include, with respect to 
        such grant, contract, or other agreement, an officer, 
        employee, or agent of a person or entity that receives 
        such grant or that enters into such contract or other 
        agreement.
          (5) The term ``recipient'' includes a subrecipient or 
        subcontractor.
          (6) The term ``specified State agency'' means an 
        agency of a State government established or designated 
        to administer or supervise the administration of a 
        grant, contract, or other agreement funded in whole or 
        in part by the Secretary.
  (r) For purposes of this section, the term ``specified 
claim'' means any application, request, or demand under a 
grant, contract, or other agreement for money or property, 
whether or not the United States or a specified State agency 
has title to the money or property, that is not a claim (as 
defined in subsection (i)(2)) and that--
          (1) is presented or caused to be presented to an 
        officer, employee, or agent of the Department or agency 
        thereof, or of any specified State agency; or
          (2) is made to a contractor, grantee, or any other 
        recipient if the money or property is to be spent or 
        used on the Department's behalf or to advance a 
        Department program or interest, and if the Department--
                  (A) provides or has provided any portion of 
                the money or property requested or demanded; or
                  (B) will reimburse such contractor, grantee, 
                or other recipient for any portion of the money 
                or property which is requested or demanded.
  (s) For purposes of subsection (o), the term ``obligation'' 
means an established duty, whether or not fixed, arising from 
an express or implied contractual, grantor-grantee, or 
licensor-licensee relationship, for a fee-based or similar 
relationship, from statute or regulation, or from the retention 
of any overpayment.

           *       *       *       *       *       *       *


               income and eligibility verification system

  Sec. 1137. (a) In order to meet the requirements of this 
section, a State must have in effect an income and eligibility 
verification system which meets the requirements of subsection 
(d) and under which--
          (1) the State shall require, as a condition of 
        eligibility for benefits under any program listed in 
        subsection (b), that each applicant for or recipient of 
        benefits under that program furnish to the State his 
        social security account number (or numbers, if he has 
        more than one such number), and the State shall utilize 
        such account numbers in the administration of that 
        program so as to enable the association of the records 
        pertaining to the applicant or recipient with his 
        account number;
          (2) wage information from agencies administering 
        State unemployment compensation laws available pursuant 
        to section 3304(a)(16) of the Internal Revenue Code of 
        1954, wage information reported pursuant to paragraph 
        (3) of this subsection, and wage, income, and other 
        information from the Social Security Administration and 
        the Internal Revenue Service available pursuant to 
        section 6103(l)(7) of such Code, shall be requested and 
        utilized to the extent that such information may be 
        useful in verifying eligibility for, and the amount of, 
        benefits available under any program listed in 
        subsection (b), as determined by the Secretary of 
        Health and Human Services (or, in the case of the 
        unemployment compensation program, by the Secretary of 
        Labor, or, in the case of the supplemental nutrition 
        assistance program, by the Secretary of Agriculture);
          (3) employers (as defined in section 453A(a)(2)(B)) 
        (including State and local governmental entities and 
        labor organizations (as defined in section 
        453A(a)(2)(B)(ii))) in such State are required, 
        effective September 30, 1988, to make quarterly wage 
        reports to a State agency (which may be the agency 
        administering the State's unemployment compensation 
        law) except that the Secretary of Labor (in 
        consultation with the Secretary of Health and Human 
        Services and the Secretary of Agriculture) may waive 
        the provisions of this paragraph if he determines that 
        the State has in effect an alternative system which is 
        as effective and timely for purposes of providing 
        employment related income and eligibility data for the 
        purposes described in paragraph (2), and except that no 
        report shall be filed with respect to an employee of a 
        State or local agency performing intelligence or 
        counterintelligence functions, if the head of such 
        agency has determined that filing such a report could 
        endanger the safety of the employee or compromise an 
        ongoing investigation or intelligence mission, and 
        except that in the case of wage reports with respect to 
        domestic service employment, a State may permit 
        employers (as so defined) that make returns with 
        respect to such employment on a calendar year basis 
        pursuant to section 3510 of the Internal Revenue Code 
        of 1986 to make such reports on an annual basis;
          (4) the State agencies administering the programs 
        listed in subsection (b) adhere to standardized formats 
        and procedures established by the Secretary of Health 
        and Human Services (in consultation with the Secretary 
        of Agriculture) under which--
                  (A) the agencies will exchange with each 
                other information in their possession which may 
                be of use in establishing or verifying 
                eligibility or benefit amounts under any other 
                such program;
                  (B) such information shall be made available 
                to assist in the child support program under 
                part D of title IV of this Act, and to assist 
                the Secretary of Health and Human Services in 
                establishing or verifying eligibility or 
                benefit amounts under titles II and XVI of this 
                Act, but subject to the safeguards and 
                restrictions established by the Secretary of 
                the Treasury with respect to information 
                released pursuant to section 6103(l) of the 
                Internal Revenue Code of 1954; and
                  (C) the use of such information shall be 
                targeted to those uses which are most likely to 
                be productive in identifying and preventing 
                ineligibility and incorrect payments, and no 
                State shall be required to use such information 
                to verify the eligibility of all recipients;
          (5) adequate safeguards are in effect so as to assure 
        that--
                  (A) the information exchanged by the State 
                agencies is made available only to the extent 
                necessary to assist in the valid administrative 
                needs of the program receiving such 
                information, and the information released 
                pursuant to section 6103(l) of the Internal 
                Revenue Code of 1954 is only exchanged with 
                agencies authorized to receive such information 
                under such section 6103(l); and
                  (B) the information is adequately protected 
                against unauthorized disclosure for other 
                purposes, as provided in regulations 
                established by the Secretary of Health and 
                Human Services, or, in the case of the 
                unemployment compensation program, the 
                Secretary of Labor, or, in the case of the 
                supplemental nutrition assistance program, the 
                Secretary of Agriculture, or in the case of 
                information released pursuant to section 
                6103(l) of the Internal Revenue Code of 1954, 
                the Secretary of the Treasury;
          (6) all applicants for and recipients of benefits 
        under any such program shall be notified at the time of 
        application, and periodically thereafter, that 
        information available through the system will be 
        requested and utilized; and
          (7) accounting systems are utilized which assure that 
        programs providing data receive appropriate 
        reimbursement from the programs utilizing the data for 
        the costs incurred in providing the data.
  (b) The programs which must participate in the income and 
eligibility verification system are--
          (1) any State program funded under part A of title IV 
        of this Act;
          (2) the medicaid program under title XIX of this Act;
          (3) the unemployment compensation program under 
        section 3304 of the Internal Revenue Code of 1954;
          (4) the supplemental nutrition assistance program 
        established under the Food and Nutrition Act of 2008 (7 
        U.S.C. 2011 et seq.); and
          (5) any State program under a plan approved under 
        title I, X, XIV, or XVI of this Act.
  (c)(1) In order to protect applicants for and recipients of 
benefits under the programs identified in subsection (b), or 
under the supplemental security income program under title XVI, 
from the improper use of information obtained from the 
Secretary of the Treasury under section 6103(l)(7)(B) of the 
Internal Revenue Code of 1954, no Federal, State, or local 
agency receiving such information may terminate, deny, suspend, 
or reduce any benefits of an individual until such agency has 
taken appropriate steps to independently verify information 
relating to--
          (A) the amount of the asset or income involved,
          (B) whether such individual actually has (or had) 
        access to such asset or income for his own use, and
          (C) the period or periods when the individual 
        actually had such asset or income.
  (2) Such individual shall be informed by the agency of the 
findings made by the agency on the basis of such verified 
information, and shall be given an opportunity to contest such 
findings, in the same manner as applies to other information 
and findings relating to eligibility factors under the program.
  (d) The requirements of this subsection, with respect to an 
income and eligibility verification system of a State, are as 
follows:
          (1)(A) The State shall require, as a condition of an 
        individual's eligibility for benefits under a program 
        listed in subsection (b), a declaration in writing, 
        under penalty of perjury--
                  (i) by the individual,
                  (ii) in the case in which eligibility for 
                program benefits is determined on a family or 
                household basis, by any adult member of such 
                individual's family or household (as 
                applicable), or
                  (iii) in the case of an individual born into 
                a family or household receiving benefits under 
                such program, by any adult member or such 
                family or household no later than the next 
                redetermination of eligibility of such family 
                or household following the birth of such 
                individual,
        stating whether the individual is a citizen or national 
        of the United States, and, if that individual is not a 
        citizen or national of the United States, that the 
        individual is in a satisfactory immigration status.
          (B) In this subsection, in the case of the program 
        described in subsection (b)(4)--
                  (i) any reference to the State shall be 
                considered a reference to the State agency, and
                  (ii) any reference to an individual's 
                eligibility for benefits under the program 
                shall be considered a reference to the 
                individual's eligibility to participate in the 
                program as a member of a household, and
                  (iii) the term ``satisfactory immigration 
                status'' means an immigration status which does 
                not make the individual ineligible for benefits 
                under the applicable program.
          (2) If such an individual is not a citizen or 
        national of the United States, there must be presented 
        either--
                  (A) alien registration documentation or other 
                proof of immigration registration from the 
                Immigration and Naturalization Service that 
                contains the individual's alien admission 
                number or alien file number (or numbers if the 
                individual has more than one number), or
                  (B) such other documents as the State 
                determines constitutes reasonable evidence 
                indicating a satisfactory immigration status.
          (3) If the documentation described in paragraph 
        (2)(A) is presented, the State shall utilize the 
        individual's alien file or alien admission number to 
        verify with the Immigration and Naturalization Service 
        the individual's immigration status through an 
        automated or other system (designated by the Service 
        for use with States) that--
                  (A) utilizes the individual's name, file 
                number, admission number, or other means 
                permitting efficient verification, and
                  (B) protects the individual's privacy to the 
                maximum degree possible.
          (4) In the case of such an individual who is not a 
        citizen or national of the United States, if, at the 
        time of application for benefits, the statement 
        described in paragraph (1) is submitted but the 
        documentation required under paragraph (2) is not 
        presented or if the documentation required under 
        paragraph (2)(A) is presented but such documentation is 
        not verified under paragraph (3)--
                  (A) subject to subsection (f)(2), the State--
                          (i) shall provide a reasonable 
                        opportunity to submit to the State 
                        evidence indicating a satisfactory 
                        immigration status, and
                          (ii) may not delay, deny, reduce, or 
                        terminate the individual's eligibility 
                        for benefits under the program on the 
                        basis of the individual's immigration 
                        status until such a reasonable 
                        opportunity has been provided; and
                  (B) if there are submitted documents which 
                the State determines constitutes reasonable 
                evidence indicating such status--
                          (i) the State shall transmit to the 
                        Immigration and Naturalization Service 
                        either photostatic or other similar 
                        copies of such documents, or 
                        information from such documents, as 
                        specified by the Immigration and 
                        Naturalization Service, for official 
                        verification,
                          (ii) subject to subsection (f)(2), 
                        pending such verification, the State 
                        may not delay, deny, reduce, or 
                        terminate the individual's eligibility 
                        for benefits under the program on the 
                        basis of the individual's immigration 
                        status, and
                          (iii) the State shall not be liable 
                        for the consequences of any action, 
                        delay, or failure of the Service to 
                        conduct such verification.
          (5) If the State determines, after complying with the 
        requirements of paragraph (4), that such an individual 
        is not in a satisfactory immigration status under the 
        applicable program--
                  (A) the State shall deny or terminate the 
                individual's eligibility for benefits under the 
                program, and
                  (B) the applicable fair hearing process shall 
                be made available with respect to the 
                individual.
  (e) Each Federal agency responsible for administration of a 
program described in subsection (b) shall not take any 
compliance, disallowance, penalty, or other regulatory action 
against a State with respect to any error in the State's 
determination to make an individual eligible for benefits based 
on citizenship or immigration status--
          (1) if the State has provided such eligibility based 
        on a verification of satisfactory immigration status by 
        the Immigration and Naturalization Service,
          (2) because the State, under subsection 
        (d)(4)(A)(ii), was required to provide a reasonable 
        opportunity to submit documentation,
          (3) because the State, under subsection 
        (d)(4)(B)(ii), was required to wait for the response of 
        the Immigration and Naturalization Service to the 
        State's request for official verification of the 
        immigration status of the individual, or
          (4) because of a fair hearing process described in 
        subsection (d)(5)(B).
  (f) [Subsections (a)(1) and (d)] (1) Subsections (a)(1) and 
(d) shall not apply with respect to aliens seeking medical 
assistance for the treatment of an emergency medical condition 
under section 1903(v)(2).
  (2)(A) Subparagraphs (A) and (B)(ii) of subsection (d)(4) 
shall not apply in the case of an initial determination made on 
or after the date that is 6 months after the date of the 
enactment of this paragraph with respect to the eligibility of 
an alien described in subparagraph (B) for benefits under the 
program listed in subsection (b)(2).
  (B) An alien described in this subparagraph is an individual 
declaring to be a citizen or national of the United States with 
respect to whom a State, in accordance with section 
1902(a)(46)(B), requires--
          (i) pursuant to 1902(ee), the submission of a social 
        security number; or
          (ii) pursuant to 1903(x), the presentation of 
        satisfactory documentary evidence of citizenship or 
        nationality.

           *       *       *       *       *       *       *


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, at the option of a State, 
                                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, and ending December 31, 
                                2019, 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)] (e)(15), (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;
                  (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, except that the 
                        State may, if the State determines 
                        doing so is cost-effective and will not 
                        adversely affect access to care, only 
                        make such payment if a third party so 
                        liable has not made payment within 90 
                        days after the date the provider of 
                        such services has initially submitted a 
                        claim to such 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 90 days after the date the 
                        provider of such services has initially 
                        submitted a claim to such third party 
                        for payment for such services, except 
                        that the State may make such payment 
                        within 30 days after such date if the 
                        State determines doing so is cost-
                        effective and necessary to ensure 
                        access to care.;
                          (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 any 
                payments by such third party; 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] in or 
        after the month in which the individual 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, any other State 
        plan under this title (or waiver of the plan), or any 
        State child health plan under title XXI (or waiver of 
        the plan) and such termination is included by the 
        Secretary in any database or similar system developed 
        pursuant to section 6401(b)(2) of the Patient 
        Protection and Affordable Care Act, 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, in accordance with subsection (kk)(8) 
        (as applicable), 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 and provided that any 
                such election shall cease to be effective on 
                January 1, 2020, and no such election shall be 
                made after that date;
          (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);
          (78) provide that, not later than January 1, 2017, in 
        the case of a State that pursuant to its State plan or 
        waiver of the plan for medical assistance pays for 
        medical assistance on a fee-for-service basis, the 
        State shall require each provider furnishing items and 
        services to, or ordering, prescribing, referring, or 
        certifying eligibility for, services for individuals 
        eligible to receive medical assistance under such plan 
        to enroll with the State agency and provide to the 
        State agency the provider's identifying information, 
        including the name, specialty, date of birth, Social 
        Security number, national provider identifier (if 
        applicable), Federal taxpayer identification number, 
        and the State license or certification number of the 
        provider (if applicable);
          (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;
          (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;
          (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); and
          (83) provide that, not later than January 1, 2017, in 
        the case of a State plan (or waiver of the plan) that 
        provides medical assistance on a fee-for-service basis 
        or through a primary care case-management system 
        described in section 1915(b)(1) (other than a primary 
        care case management entity (as defined by the 
        Secretary)), the State shall publish (and update on at 
        least an annual basis) on the public website of the 
        State agency administering the State plan, a directory 
        of the physicians described in subsection (mm) and, at 
        State option, other providers described in such 
        subsection that--
                  (A) includes--
                          (i) with respect to each such 
                        physician or provider--
                                  (I) the name of the physician 
                                or provider;
                                  (II) the specialty of the 
                                physician or provider;
                                  (III) the address at which 
                                the physician or provider 
                                provides services; and
                                  (IV) the telephone number of 
                                the physician or provider; and
                          (ii) with respect to any such 
                        physician or provider participating in 
                        such a primary care case-management 
                        system, information regarding--
                                  (I) whether the physician or 
                                provider is accepting as new 
                                patients individuals who 
                                receive medical assistance 
                                under this title; and
                                  (II) the physician's or 
                                provider's cultural and 
                                linguistic capabilities, 
                                including the languages spoken 
                                by the physician or provider or 
                                by the skilled medical 
                                interpreter providing 
                                interpretation services at the 
                                physician's or provider's 
                                office; and
                  (B) may include, at State option, with 
                respect to each such physician or provider--
                          (i) the Internet website of such 
                        physician or provider; or
                          (ii) whether the physician or 
                        provider is accepting as new patients 
                        individuals who receive medical 
                        assistance under this title.
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.
                  (J) Treatment of certain lottery winnings and 
                income received as a lump sum.--
                          (i) In general.--In the case of an 
                        individual who is the recipient of 
                        qualified lottery winnings (pursuant to 
                        lotteries occurring on or after January 
                        1, 2020) or qualified lump sum income 
                        (received on or after such date) and 
                        whose eligibility for medical 
                        assistance is determined based on the 
                        application of modified adjusted gross 
                        income under subparagraph (A), a State 
                        shall, in determining such eligibility, 
                        include such winnings or income (as 
                        applicable) as income received--
                                  (I) in the month in which 
                                such winnings or income (as 
                                applicable) is received if the 
                                amount of such winnings or 
                                income is less than $80,000;
                                  (II) over a period of 2 
                                months if the amount of such 
                                winnings or income (as 
                                applicable) is greater than or 
                                equal to $80,000 but less than 
                                $90,000;
                                  (III) over a period of 3 
                                months if the amount of such 
                                winnings or income (as 
                                applicable) is greater than or 
                                equal to $90,000 but less than 
                                $100,000; and
                                  (IV) over a period of 3 
                                months plus 1 additional month 
                                for each increment of $10,000 
                                of such winnings or income (as 
                                applicable) received, not to 
                                exceed a period of 120 months 
                                (for winnings or income of 
                                $1,260,000 or more), if the 
                                amount of such winnings or 
                                income is greater than or equal 
                                to $100,000.
                          (ii) Counting in equal 
                        installments.--For purposes of 
                        subclauses (II), (III), and (IV) of 
                        clause (i), winnings or income to which 
                        such subclause applies shall be counted 
                        in equal monthly installments over the 
                        period of months specified under such 
                        subclause.
                          (iii) Hardship exemption.--An 
                        individual whose income, by application 
                        of clause (i), exceeds the applicable 
                        eligibility threshold established by 
                        the State, may continue to be eligible 
                        for medical assistance to the extent 
                        that the State determines, under 
                        procedures established by the State 
                        under the State plan (or in the case of 
                        a waiver of the plan under section 
                        1115, incorporated in such waiver), or 
                        as otherwise established by such State 
                        in accordance with such standards as 
                        may be specified by the Secretary, that 
                        the denial of eligibility of the 
                        individual would cause an undue medical 
                        or financial hardship as determined on 
                        the basis of criteria established by 
                        the Secretary.
                          (iv) Notifications and assistance 
                        required in case of loss of 
                        eligibility.--A State shall, with 
                        respect to an individual who loses 
                        eligibility for medical assistance 
                        under the State plan (or a waiver of 
                        such plan) by reason of clause (i), 
                        before the date on which the individual 
                        loses such eligibility, inform the 
                        individual of the date on which the 
                        individual would no longer be 
                        considered ineligible by reason of such 
                        clause to receive medical assistance 
                        under the State plan or under any 
                        waiver of such plan and the date on 
                        which the individual would be eligible 
                        to reapply to receive such medical 
                        assistance.
                          (v) Qualified lottery winnings 
                        defined.--In this subparagraph, the 
                        term ``qualified lottery winnings'' 
                        means winnings from a sweepstakes, 
                        lottery, or pool described in paragraph 
                        (3) of section 4402 of the Internal 
                        Revenue Code of 1986 or a lottery 
                        operated by a multistate or 
                        multijurisdictional lottery 
                        association, including amounts awarded 
                        as a lump sum payment.
                          (vi) Qualified lump sum income 
                        defined.--In this subparagraph, the 
                        term ``qualified lump sum income'' 
                        means income that is received as a lump 
                        sum from one of the following sources:
                                  (I) Monetary winnings from 
                                gambling (as defined by the 
                                Secretary and including 
                                monetary winnings from gambling 
                                activities described in section 
                                1955(b)(4) of title 18, United 
                                States Code).
                                  (II) Income received as 
                                liquid assets from the estate 
                                (as defined in section 
                                1917(b)(4)) of a deceased 
                                individual.
                  (K) Frequency of eligibility 
                redeterminations.--Beginning on October 1, 
                2017, and notwithstanding subparagraph (H), in 
                the case of an individual whose eligibility for 
                medical assistance under the State plan under 
                this title (or a waiver of such plan) is 
                determined based on the application of modified 
                adjusted gross income under subparagraph (A) 
                and who is so eligible on the basis of clause 
                (i)(VIII) or clause (ii)(XX) of subsection 
                (a)(10)(A), a State shall redetermine such 
                individual's eligibility for such medical 
                assistance no less frequently than once every 6 
                months.
          [(14)] (15) 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, and ending December 31, 2019, 
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 
        1866(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 1866(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 
        1866(j)(5).
          (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 
                        1866(j)(7).
                          (ii) Exceptions.--
                                  (I) Compliance with 
                                moratorium.--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.
                                  (II) FFP available.--
                                Notwithstanding section 
                                1903(i)(2)(E), payment may be 
                                made to a State under this 
                                title with respect to amounts 
                                expended for items and services 
                                described in such section if 
                                the Secretary, in consultation 
                                with the State agency 
                                administering the State plan 
                                under this title (or a waiver 
                                of the plan), determines that 
                                denying payment to the State 
                                pursuant to such section would 
                                adversely impact beneficiaries' 
                                access to medical assistance. 
                          (iii) Limitation on charges to 
                        beneficiaries.--With respect to any 
                        amount expended for items or services 
                        furnished during calendar quarters 
                        beginning on or after October 1, 2017, 
                        the State prohibits, during the period 
                        of a temporary moratorium described in 
                        clause (i), a provider meeting the 
                        requirements specified in subparagraph 
                        (C)(iii) of section 1866(j)(7) from 
                        charging an individual or other person 
                        eligible to receive medical assistance 
                        under the State plan under this title 
                        (or a waiver of the plan) for an item 
                        or service described in section 
                        1903(i)(2)(E) furnished to such an 
                        individual.
                  (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) Provider terminations.--
                  (A) In general.--Beginning on July 1, 2018, 
                in the case of a notification under subsection 
                (a)(41) with respect to a termination for a 
                reason specified in section 455.101 of title 
                42, Code of Federal Regulations (as in effect 
                on November 1, 2015) or for any other reason 
                specified by the Secretary, of the 
                participation of a provider of services or any 
                other person under the State plan (or under a 
                waiver of the plan), the State, not later than 
                30 days after the effective date of such 
                termination, submits to the Secretary with 
                respect to any such provider or person, as 
                appropriate--
                          (i) the name of such provider or 
                        person;
                          (ii) the provider type of such 
                        provider or person;
                          (iii) the specialty of such 
                        provider's or person's practice;
                          (iv) the date of birth, Social 
                        Security number, national provider 
                        identifier (if applicable), Federal 
                        taxpayer identification number, and the 
                        State license or certification number 
                        of such provider or person (if 
                        applicable);
                          (v) the reason for the termination;
                          (vi) a copy of the notice of 
                        termination sent to the provider or 
                        person;
                          (vii) the date on which such 
                        termination is effective, as specified 
                        in the notice; and
                          (viii) any other information required 
                        by the Secretary.
                  (B) Effective date defined.--For purposes of 
                this paragraph, the term ``effective date'' 
                means, with respect to a termination described 
                in subparagraph (A), the later of--
                          (i) the date on which such 
                        termination is effective, as specified 
                        in the notice of such termination; or
                          (ii) the date on which all appeal 
                        rights applicable to such termination 
                        have been exhausted or the timeline for 
                        any such appeal has expired.
          (9) 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.
  (ll) Termination Notification Database.--In the case of a 
provider of services or any other person whose participation 
under this title or title XXI is terminated (as described in 
subsection (kk)(8)), the Secretary shall, not later than 30 
days after the date on which the Secretary is notified of such 
termination under subsection (a)(41) (as applicable), review 
such termination and, if the Secretary determines appropriate, 
include such termination in any database or similar system 
developed pursuant to section 6401(b)(2) of the Patient 
Protection and Affordable Care Act (42 U.S.C. 1395cc note; 
Public Law 111-148).
  (mm) Directory Physician or Provider Described.--A physician 
or provider described in this subsection is--
          (1) in the case of a physician or provider of a 
        provider type for which the State agency, as a 
        condition on receiving payment for items and services 
        furnished by the physician or provider to individuals 
        eligible to receive medical assistance under the State 
        plan, requires the enrollment of the physician or 
        provider with the State agency, a physician or a 
        provider that--
                  (A) is enrolled with the agency as of the 
                date on which the directory is published or 
                updated (as applicable) under subsection 
                (a)(83); and
                  (B) received payment under the State plan in 
                the 12-month period preceding such date; and
          (2) in the case of a physician or provider of a 
        provider type for which the State agency does not 
        require such enrollment, a physician or provider that 
        received payment under the State plan (or a waiver of 
        the plan) in the 12-month period preceding the date on 
        which the directory is published or updated (as 
        applicable) under subsection (a)(83).

                           PAYMENT TO STATES

  Sec. 1903. (a) From the sums appropriated therefor, the 
Secretary (except as otherwise provided in this section and 
section 1903A(a)) shall pay to each State which has a plan 
approved under this title, for each quarter, beginning with the 
quarter commencing January 1, 1966--
          (1) an amount equal to the Federal medical assistance 
        percentage (as defined in section 1905(b), subject to 
        subsections (g) and (j) of this section and subsection 
        1923(f)) of the total amount expended during such 
        quarter as medical assistance under the State plan; 
        plus
          (2)(A) an amount equal to 75 per centum of so much of 
        the sums expended during such quarter (as found 
        necessary by the Secretary for the proper and efficient 
        administration of the State plan) as are attributable 
        to compensation or training of skilled professional 
        medical personnel, and staff directly supporting such 
        personnel, of the State agency or any other public 
        agency; plus
          (B) notwithstanding paragraph (1) or subparagraph 
        (A), with respect to amounts expended for nursing aide 
        training and competency evaluation programs, and 
        competency evaluation programs, described in section 
        1919(e)(1) (including the costs for nurse aides to 
        complete such competency evaluation programs), 
        regardless of whether the programs are provided in or 
        outside nursing facilities or of the skill of the 
        personnel involved in such programs, an amount equal to 
        50 percent (or, for calendar quarters beginning on or 
        after July 1, 1988, and before October 1, 1990, the 
        lesser of 90 percent or the Federal medical assistance 
        percentage plus 25 percentage points) of so much of the 
        sums expended during such quarter (as found necessary 
        by the Secretary for the proper and efficient 
        administration of the State plan) as are attributable 
        to such programs; plus
          (C) an amount equal to 75 percent of so much of the 
        sums expended during such quarter (as found necessary 
        by the Secretary for the proper and efficient 
        administration of the State plan) as are attributable 
        to preadmission screening and resident review 
        activities conducted by the State under section 
        1919(e)(7); plus
          (D) for each calendar quarter during--
                  (i) fiscal year 1991, an amount equal to 90 
                percent,
                  (ii) fiscal year 1992, an amount equal to 85 
                percent,
                  (iii) fiscal year 1993, an amount equal to 80 
                percent, and
                  (iv) fiscal year 1994 and thereafter, an 
                amount equal to 75 percent,
        of so much of the sums expended during such quarter (as 
        found necessary by the Secretary for the proper and 
        efficient administration of the State plan) as are 
        attributable to State activities under section 1919(g); 
        plus
          (E) an amount equal to 75 percent of so much of the 
        sums expended during such quarter (as found necessary 
        by the Secretary for the proper and efficient 
        administration of the State plan) as are attributable 
        to translation or interpretation services in connection 
        with the enrollment of, retention of, and use of 
        services under this title by, children of families for 
        whom English is not the primary language; plus
          (3) an amount equal to--
                  (A)(i) 90 per centum of so much of the sums 
                expended during such quarter as are 
                attributable to the design, development, or 
                installation of such mechanized claims 
                processing and information retrieval systems as 
                the Secretary determines are likely to provide 
                more efficient, economical, and effective 
                administration of the plan and to be compatible 
                with the claims processing and information 
                retrieval systems utilized in the 
                administration of title XVIII, including the 
                State's share of the cost of installing such a 
                system to be used jointly in the administration 
                of such State's plan and the plan of any other 
                State approved under this title,
                  (ii) 90 per centum of so much of the sums 
                expended during any such quarter in the fiscal 
                year ending June 30, 1972, or the fiscal year 
                ending June 30, 1973, as are attributable to 
                the design, development, or installation of 
                cost determination systems for State-owned 
                general hospitals (except that the total amount 
                paid to all States under this clause for either 
                such fiscal year shall not exceed $150,000), 
                and
                  (iii) an amount equal to the Federal medical 
                assistance percentage (as defined in section 
                1905(b)) of so much of the sums expended during 
                such quarter (as found necessary by the 
                Secretary for the proper and efficient 
                administration of the State plan) as are 
                attributable to such developments or 
                modifications of systems of the type described 
                in clause (i) as are necessary for the 
                efficient collection and reporting on child 
                health measures; and
                  (B) 75 per centum of so much of the sums 
                expended during such quarter as are 
                attributable to the operation of systems 
                (whether such systems are operated directly by 
                the State or by another person under a contract 
                with the State) of the type described in 
                subparagraph (A)(i) (whether or not designed, 
                developed, or installed with assistance under 
                such subparagraph) which are approved by the 
                Secretary and which include provision for 
                prompt written notice to each individual who is 
                furnished services covered by the plan, or to 
                each individual in a sample group of 
                individuals who are furnished such services, of 
                the specific services (other than confidential 
                services) so covered, the name of the person or 
                persons furnishing the services, the date or 
                dates on which the services were furnished, and 
                the amount of the payment or payments made 
                under the plan on account of the services; and
                  (C)(i) 75 per centum of the sums expended 
                with respect to costs incurred during such 
                quarter (as found necessary by the Secretary 
                for the proper and efficient administration of 
                the State plan) as are attributable to the 
                performance of medical and utilization review 
                by a utilization and quality control peer 
                review organization or by an entity which meets 
                the requirements of section 1152, as determined 
                by the Secretary, under a contract entered into 
                under section 1902(d); and
                  (ii) 75 percent of the sums expended with 
                respect to costs incurred during such quarter 
                (as found necessary by the Secretary for the 
                proper and efficient administration of the 
                State plan) as are attributable to the 
                performance of independent external reviews 
                conducted under section 1932(c)(2); and
                  (D) 75 percent of so much of the sums 
                expended by the State plan during a quarter in 
                1991, 1992, or 1993, as the Secretary 
                determines is attributable to the statewide 
                adoption of a drug use review program which 
                conforms to the requirements of section 
                1927(g);
                  (E) 50 percent of the sums expended with 
                respect to costs incurred during such quarter 
                as are attributable to providing--
                          (i) services to identify and educate 
                        individuals who are likely to be 
                        eligible for medical assistance under 
                        this title and who have Sickle Cell 
                        Disease or who are carriers of the 
                        sickle cell gene, including education 
                        regarding how to identify such 
                        individuals; or
                          (ii) education regarding the risks of 
                        stroke and other complications, as well 
                        as the prevention of stroke and other 
                        complications, in individuals who are 
                        likely to be eligible for medical 
                        assistance under this title and who 
                        have Sickle Cell Disease; and
                  (F)(i) 100 percent of so much of the sums 
                expended during such quarter as are 
                attributable to payments to Medicaid providers 
                described in subsection (t)(1) to encourage the 
                adoption and use of certified EHR technology; 
                and
                  (ii) 90 percent of so much of the sums 
                expended during such quarter as are 
                attributable to payments for reasonable 
                administrative expenses related to the 
                administration of payments described in clause 
                (i) if the State meets the condition described 
                in subsection (t)(9); plus
                  (H)(i) 90 percent of the sums expended during 
                the quarter as are attributable to the design, 
                development, or installation of such mechanized 
                verification and information retrieval systems 
                as the Secretary determines are necessary to 
                implement section 1902(ee) (including a system 
                described in paragraph (2)(B) thereof), and
                  (ii) 75 percent of the sums expended during 
                the quarter as are attributable to the 
                operation of systems to which clause (i) 
                applies, plus
          (4) an amount equal to 100 percent of the sums 
        expended during the quarter which are attributable to 
        the costs of the implementation and operation of the 
        immigration status verification system described in 
        section 1137(d); plus
          (5) an amount equal to 90 per centum of the sums 
        expended during such quarter which are attributable to 
        the offering, arranging, and furnishing (directly or on 
        a contract basis) of family planning services and 
        supplies;
          (6) subject to subsection (b)(3), an amount equal 
        to--
                  (A) 90 per centum of the sums expended during 
                such a quarter within the twelve-quarter period 
                beginning with the first quarter in which a 
                payment is made to the State pursuant to this 
                paragraph, and
                  (B) 75 per centum of the sums expended during 
                each succeeding calendar quarter,
        with respect to costs incurred during such quarter (as 
        found necessary by the Secretary for the elimination of 
        fraud in the provision and administration of medical 
        assistance provided under the State plan) which are 
        attributable to the establishment and operation of 
        (including the training of personnel employed by) a 
        State medicaid fraud control unit (described in 
        subsection (q)); plus
          (7) subject to section 1919(g)(3)(B), an amount equal 
        to 50 per centum of the remainder of the amounts 
        expended during such quarter as found necessary by the 
        Secretary for the proper and efficient administration 
        of the State plan.
  (b)(1) Notwithstanding the preceding provisions of this 
section, the amount determined under subsection (a)(1) for any 
State for any quarter beginning after December 31, 1969, shall 
not take into account any amounts expended as medical 
assistance with respect to individuals aged 65 or over and 
disabled individuals entitled to hospital insurance benefits 
under title XVIII which would not have been so expended if the 
individuals involved had been enrolled in the insurance program 
established by part B of title XVIII, other than amounts 
expended under provisions of the plan of such State required by 
section 1902(a)(34).
  (2) For limitation on Federal participation for capital 
expenditures which are out of conformity with a comprehensive 
plan of a State or areawide planning agency, see section 1122.
  (3) The amount of funds which the Secretary is otherwise 
obligated to pay a State during a quarter under subsection 
(a)(6) may not exceed the higher of--
          (A) $125,000, or
          (B) one-quarter of 1 per centum of the sums expended 
        by the Federal, State, and local governments during the 
        previous quarter in carrying out the State's plan under 
        this title.
  (4) Amounts expended by a State for the use of an enrollment 
broker in marketing medicaid managed care organizations and 
other managed care entities to eligible individuals under this 
title shall be considered, for purposes of subsection (a)(7), 
to be necessary for the proper and efficient administration of 
the State plan but only if the following conditions are met 
with respect to the broker:
          (A) The broker is independent of any such entity and 
        of any health care providers (whether or not any such 
        provider participates in the State plan under this 
        title) that provide coverage of services in the same 
        State in which the broker is conducting enrollment 
        activities.
          (B) No person who is an owner, employee, consultant, 
        or has a contract with the broker either has any direct 
        or indirect financial interest with such an entity or 
        health care provider or has been excluded from 
        participation in the program under this title or title 
        XVIII or debarred by any Federal agency, or subject to 
        a civil money penalty under this Act.
  (5) Notwithstanding the preceding provisions of this section, 
the amount determined under subsection (a)(1) for any State 
shall be decreased in a quarter by the amount of any health 
care related taxes (described in section 1902(w)(3)(A)) that 
are imposed on a hospital described in subsection (w)(3)(F) in 
that quarter.
  (c) Nothing in this title shall be construed as prohibiting 
or restricting, or authorizing the Secretary to prohibit or 
restrict, payment under subsection (a) for medical assistance 
for covered services furnished to a child with a disability 
because such services are included in the child's 
individualized education program established pursuant to part B 
of the Individuals with Disabilities Education Act or furnished 
to an infant or toddler with a disability because such services 
are included in the child's individualized family service plan 
adopted pursuant to part C of such Act.
  (d)(1) Prior to the beginning of each quarter, the Secretary 
shall estimate the amount [to which] to which, subject to 
section 1903A(a), a State will be entitled under subsections 
(a) and (b) for such quarter, such estimates to be based on (A) 
a report filed by the State containing its estimate of the 
total sum to be expended in such quarter in accordance with the 
provisions of such subsections, and stating the amount 
appropriated or made available by the State and its political 
subdivisions for such expenditures in such quarter, and if such 
amount is less than the State's proportionate share of the 
total sum of such estimated expenditures, the source or sources 
from which the difference is expected to be derived, and (B) 
such other investigation as the Secretary may find necessary.
  (2)(A) The Secretary shall then pay to the State, in such 
installments as he may determine, the amount so estimated, 
reduced or increased to the extent of any overpayment or 
underpayment which the Secretary determines was made under this 
section to such State for any prior quarter and with respect to 
which adjustment has not already been made under this 
subsection.
  (B) Expenditures for which payments were made to the State 
under subsection (a) shall be treated as an overpayment to the 
extent that the State or local agency administering such plan 
has been reimbursed for such expenditures by a third party 
pursuant to the provisions of its plan in compliance with 
section 1902(a)(25).
  (C) For purposes of this subsection, when an overpayment is 
discovered, which was made by a State to a person or other 
entity, the State shall have a period of 1 year in which to 
recover or attempt to recover such overpayment before 
adjustment is made in the Federal payment to such State on 
account of such overpayment. Except as otherwise provided in 
subparagraph (D), the adjustment in the Federal payment shall 
be made at the end of the 1-year period, whether or not 
recovery was made.
  (D)(i) In any case where the State is unable to recover a 
debt which represents an overpayment (or any portion thereof) 
made to a person or other entity on account of such debt having 
been discharged in bankruptcy or otherwise being uncollectable, 
no adjustment shall be made in the Federal payment to such 
State on account of such overpayment (or portion thereof).
  (ii) In any case where the State is unable to recover a debt 
which represents an overpayment (or any portion thereof) made 
to a person or other entity due to fraud within 1 year of 
discovery because there is not a final determination of the 
amount of the overpayment under an administrative or judicial 
process (as applicable), including as a result of a judgment 
being under appeal, no adjustment shall be made in the Federal 
payment to such State on account of such overpayment (or 
portion thereof) before the date that is 30 days after the date 
on which a final judgment (including, if applicable, a final 
determination on an appeal) is made.
  (3)(A) The pro rata share to which the United States is 
equitably entitled, as determined by the Secretary, of the net 
amount recovered during any quarter by the State or any 
political subdivision thereof with respect to medical 
assistance furnished under the State plan shall be considered 
an overpayment to be adjusted under this subsection.
  (B)(i) Subparagraph (A) and paragraph (2)(B) shall not apply 
to any amount recovered or paid to a State as part of the 
comprehensive settlement of November 1998 between manufacturers 
of tobacco products, as defined in section 5702(d) of the 
Internal Revenue Code of 1986, and State Attorneys General, or 
as part of any individual State settlement or judgment reached 
in litigation initiated or pursued by a State against one or 
more such manufacturers.
  (ii) Except as provided in subsection (i)(19), a State may 
use amounts recovered or paid to the State as part of a 
comprehensive or individual settlement, or a judgment, 
described in clause (i) for any expenditures determined 
appropriate by the State.
  (4) Upon the making of any estimate by the Secretary under 
this subsection, any appropriations available for payments 
under this section shall be deemed obligated.
  (5) In any case in which the Secretary estimates that there 
has been an overpayment under this section to a State on the 
basis of a claim by such State that has been disallowed by the 
Secretary under section 1116(d), and such State disputes such 
disallowance, the amount of the Federal payment in controversy 
shall, at the option of the State, be retained by such State or 
recovered by the Secretary pending a final determination with 
respect to such payment amount. If such final determination is 
to the effect that any amount was properly disallowed, and the 
State chose to retain payment of the amount in controversy, the 
Secretary shall offset, from any subsequent payments made to 
such State under this title, an amount equal to the proper 
amount of the disallowance plus interest on such amount 
disallowed for the period beginning on the date such amount was 
disallowed and ending on the date of such final determination 
at a rate (determined by the Secretary) based on the average of 
the bond equivalent of the weekly 90-day treasury bill auction 
rates during such period.
  (6)(A) Each State (as defined in subsection (w)(7)(D)) shall 
include, in the first report submitted under paragraph (1) 
after the end of each fiscal year, information related to--
          (i) provider-related donations made to the State or 
        units of local government during such fiscal year, and
          (ii) health care related taxes collected by the State 
        or such units during such fiscal year.
  (B) Each State shall include, in the first report submitted 
under paragraph (1) after the end of each fiscal year, 
information related to the total amount of payment adjustments 
made, and the amount of payment adjustments made to individual 
providers (by provider), under section 1923(c) during such 
fiscal year.
  (e) A State plan approved under this title may include, as a 
cost with respect to hospital services under the plan under 
this title, periodic expenditures made to reflect transitional 
allowances established with respect to a hospital closure or 
conversion under section 1884.
  (f)(1)(A) Except as provided in paragraph (4), payment under 
the preceding provisions of this section shall not be made with 
respect to any amount expended as medical assistance in a 
calendar quarter, in any State, for any member of a family the 
annual income of which exceeds the applicable income limitation 
determined under this paragraph.
  (B)(i) Except as provided in clause (ii) of this 
subparagraph, the applicable income limitation with respect to 
any family is the amount determined, in accordance with 
standards prescribed by the Secretary, to be equivalent to 
133\1/3\ percent of the highest amount which would ordinarily 
be paid to a family of the same size without any income or 
resources, in the form of money payments, under the plan of the 
State approved under part A of title IV of this Act.
  (ii) If the Secretary finds that the operation of a uniform 
maximum limits payments to families of more than one size, he 
may adjust the amount otherwise determined under clause (i) to 
take account of families of different sizes.
  (C) The total amount of any applicable income limitation 
determined under subparagraph (B) shall, if it is not a 
multiple of $100 or such other amount as the Secretary may 
prescribe, be rounded to the next higher multiple of $100 or 
such other amount, as the case may be.
  (2)(A) In computing a family's income for purposes of 
paragraph (1), there shall be excluded any costs (whether in 
the form of insurance premiums or otherwise and regardless of 
whether such costs are reimbursed under another public program 
of the State or political subdivision thereof) incurred by such 
family for medical care or for any other type of remedial care 
recognized under State law or, (B) notwithstanding section 1916 
at State option, an amount paid by such family, at the family's 
option, to the State, provided that the amount, when combined 
with costs incurred in prior months, is sufficient when 
excluded from the family's income to reduce such family's 
income below the applicable income limitation described in 
paragraph (1). The amount of State expenditures for which 
medical assistance is available under subsection (a)(1) will be 
reduced by amounts paid to the State pursuant to this 
subparagraph.
  (3) For purposes of paragraph (1)(B), in the case of a family 
consisting of only one individual, the ``highest amount which 
would ordinarily be paid'' to such family under the State's 
plan approved under part A of title IV of this Act shall be the 
amount determined by the State agency (on the basis of 
reasonable relationship to the amounts payable under such plan 
to families consisting of two or more persons) to be the amount 
of the aid which would ordinarily be payable under such plan to 
a family (without any income or resources) consisting of one 
person if such plan provided for aid to such a family.
  (4) The limitations on payment imposed by the preceding 
provisions of this subsection shall not apply with respect to 
any amount expended by a State as medical assistance for any 
individual described in section 1902(a)(10)(A)(i)(III), 
1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V), 
1902(a)(10)(A)(i)(VI), 1902(a)(10)(A)(i)(VII), 
1902(a)(10)(A)(i)(VIII),1902(a)(10)(A)(i)(IX), 
1902(a)(10)(A)(ii)(IX), 1902(a)(10)(A)(ii)(X), 
1902(a)(10)(A)(ii)(XIII), 1902(a)(10)(A)(ii)(XIV), or 
1902(a)(10)(A)(ii)(XV), 1902(a)(10)(A)(ii)(XVI), 
1902(a)(10)(A)(ii)(XVII), 1902(a)(10)(A)(ii)(XVIII), 
1902(a)(10)(A)(ii)(XIX), 1902(a)(10)(A)(ii)(XX), 
1902(a)(10)(A)(ii)(XXI), 1902(a)(10)(A)(ii)(XXII), 1905(p)(1) 
or for any individual--
          (A) who is receiving aid or assistance under any plan 
        of the State approved under title I, X, XIV or XVI, or 
        part A of title IV, or with respect to whom 
        supplemental security income benefits are being paid 
        under title XVI, or
          (B) who is not receiving such aid or assistance, and 
        with respect to whom such benefits are not being paid, 
        but (i) is eligible to receive such aid or assistance, 
        or to have such benefits paid with respect to him, or 
        (ii) would be eligible to receive such aid or 
        assistance, or to have such benefits paid with respect 
        to him if he were not in a medical institution, or
          (C) with respect to whom there is being paid, or who 
        is eligible, or would be eligible if he were not in a 
        medical institution, to have paid with respect to him, 
        a State supplementary payment and is eligible for 
        medical assistance equal in amount, duration, and scope 
        to the medical assistance made available to individuals 
        described in section 1902(a)(10)(A), or who is a PACE 
        program eligible individual enrolled in a PACE program 
        under section 1934, but only if the income of such 
        individual (as determined under section 1612, but 
        without regard to subsection (b) thereof) does not 
        exceed 300 percent of the supplemental security income 
        benefit rate established by section 1611(b)(1),
at the time of the provision of the medical assistance giving 
rise to such expenditure.
  (g)(1) Subject to paragraph (3), with respect to amounts paid 
for the following services furnished under the State plan after 
June 30, 1973 (other than services furnished pursuant to a 
contract with a health maintenance organization as defined in 
section 1876 or which is a qualified health maintenance 
organization (as defined in section 1310(d) of the Public 
Health Service Act)), the Federal medical assistance percentage 
shall be decreased as follows: After an individual has received 
inpatient hospital services or services in an intermediate care 
facility for the mentally retarded for 60 days or inpatient 
mental hospital services for 90 days (whether or not such days 
are consecutive), during any fiscal year, the Federal medical 
assistance percentage with respect to amounts paid for any such 
care furnished thereafter to such individual shall be decreased 
by a per centum thereof (determined under paragraph (5)) unless 
the State agency responsible for the administration of the plan 
makes a showing satisfactory to the Secretary that, with 
respect to each calendar quarter for which the State submits a 
request for payment at the full Federal medical assistance 
percentage for amounts paid for inpatient hospital services or 
services in an intermediate care facility for the mentally 
retarded furnished beyond 60 days (or inpatient mental hospital 
services furnished beyond 90 days), such State has an effective 
program of medical review of the care of patients in mental 
hospitals and intermediate care facilities for the mentally 
retarded pursuant to paragraphs (26) and (31) of section 
1902(a) whereby the professional management of each case is 
reviewed and evaluated at least annually by independent 
professional review teams. In determining the number of days on 
which an individual has received services described in this 
subsection, there shall not be counted any days with respect to 
which such individual is entitled to have payments made (in 
whole or in part) on his behalf under section 1812.
  (2) The Secretary shall, as part of his validation procedures 
under this subsection, conduct timely sample onsite surveys of 
private and public institutions in which recipients of medical 
assistance may receive care and services under a State plan 
approved under this title, and his findings with respect to 
such surveys (as well as the showings of the State agency 
required under this subsection) shall be made available for 
public inspection.
  (3)(A) No reduction in the Federal medical assistance 
percentage of a State otherwise required to be imposed under 
this subsection shall take effect--
          (i) if such reduction is due to the State's 
        unsatisfactory or invalid showing made with respect to 
        a calendar quarter beginning before January 1, 1977;
          (ii) before January 1, 1978;
          (iii) unless a notice of such reduction has been 
        provided to the State at least 30 days before the date 
        such reduction takes effect; or
          (iv) due to the State's unsatisfactory or invalid 
        showing made with respect to a calendar quarter 
        beginning after September 30, 1977, unless notice of 
        such reduction has been provided to the State no later 
        than the first day of the fourth calendar quarter 
        following the calendar quarter with respect to which 
        such showing was made.
  (B) The Secretary shall waive application of any reduction in 
the Federal medical assistance percentage of a State otherwise 
required to be imposed under paragraph (1) because a showing by 
the State, made under such paragraph with respect to a calendar 
quarter ending after January 1, 1977, and before January 1, 
1978, is determined to be either unsatisfactory under such 
paragraph or invalid under paragraph (2), if the Secretary 
determines that the State's showing made under paragraph (1) 
with respect to any calendar quarter ending on or before 
December 31, 1978, is satisfactory under such paragraph and is 
valid under paragraph (2).
  (4)(A) The Secretary may not find the showing of a State, 
with respect to a calendar quarter under paragraph (1), to be 
satisfactory if the showing is submitted to the Secretary later 
than the 30th day after the last day of the calendar quarter, 
unless the State demonstrates to the satisfaction of the 
Secretary good cause for not meeting such deadline.
  (B) The Secretary shall find a showing of a State, with 
respect to a calendar quarter under paragraph (1), to be 
satisfactory under such paragraph with respect to the 
requirement that the State conduct annual onsite inspections in 
mental hospitals and intermediate care facilities for the 
mentally retarded under paragraphs (26) and (31) of section 
1902(a), if the showing demonstrates that the State has 
conducted such an onsite inspection during the 12-month period 
ending on the last date of the calendar quarter--
          (i) in each of not less than 98 per centum of the 
        number of such hospitals and facilities requiring such 
        inspection, and
          (ii) in every such hospital or facility which has 200 
        or more beds,
and that, with respect to such hospitals and facilities not 
inspected within such period, the State has exercised good 
faith and due diligence in attempting to conduct such 
inspection, or if the State demonstrates to the satisfaction of 
the Secretary that it would have made such a showing but for 
failings of a technical nature only.
  (5) In the case of a State's unsatisfactory or invalid 
showing made with respect to a type of facility or 
institutional services in a calendar quarter, the per centum 
amount of the reduction of the State's Federal medical 
assistance percentage for that type of services under paragraph 
(1) is equal to 33\1/3\ per centum multiplied by a fraction, 
the denominator of which is equal to the total number of 
patients receiving that type of services in that quarter under 
the State plan in facilities or institutions for which a 
showing was required to be made under this subsection, and the 
numerator of which is equal to the number of such patients 
receiving such type of services in that quarter in those 
facilities or institutions for which a satisfactory and valid 
showing was not made for that calendar quarter.
  (6)(A) Recertifications required under section 1902(a)(44) 
shall be conducted at least every 60 days in the case of 
inpatient hospital services.
  (B) Such recertifications in the case of services in an 
intermediate care facility for the mentally retarded shall be 
conducted at least--
          (i) 60 days after the date of the initial 
        certification,
          (ii) 180 days after the date of the initial 
        certification,
          (iii) 12 months after the date of the initial 
        certification,
          (iv) 18 months after the date of the initial 
        certification,
          (v) 24 months after the date of the initial 
        certification, and
          (vi) every 12 months thereafter.
  (C) For purposes of determining compliance with the schedule 
established by this paragraph, a recertification shall be 
considered to have been done on a timely basis if it was 
performed not later than 10 days after the date the 
recertification was otherwise required and the State 
establishes good cause why the physician or other person making 
such recertification did not meet such schedule.
  (i) Payment under the preceding provisions of this section 
shall not be made--
          (1) for organ transplant procedures unless the State 
        plan provides for written standards respecting the 
        coverage of such procedures and unless such standards 
        provide that--
                  (A) similarly situated individuals are 
                treated alike; and
                  (B) any restriction, on the facilities or 
                practitioners which may provide such 
                procedures, is consistent with the 
                accessibility of high quality care to 
                individuals eligible for the procedures under 
                the State plan; or
          (2) with respect to any amount expended for an item 
        or service (other than an emergency item or service, 
        not including items or services furnished in an 
        emergency room of a hospital) furnished--
                  (A) under the plan by any individual or 
                entity during any period when the individual or 
                entity is excluded from participation under 
                title V, XVIII, or XX or under this title 
                pursuant to section 1128, 1128A, 1156, or 
                1842(j)(2);
                  (B) at the medical direction or on the 
                prescription of a physician, during the period 
                when such physician is excluded from 
                participation under title V, XVIII, or XX or 
                under this title pursuant to section 1128, 
                1128A, 1156, or 1842(j)(2) and when the person 
                furnishing such item or service knew or had 
                reason to know of the exclusion (after a 
                reasonable time period after reasonable notice 
                has been furnished to the person);
                  (C) by any individual or entity to whom the 
                State has failed to suspend payments under the 
                plan during any period when there is pending an 
                investigation of a credible allegation of fraud 
                against the individual or entity, as determined 
                by the State in accordance with regulations 
                promulgated by the Secretary for purposes of 
                section 1862(o) and this subparagraph, unless 
                the State determines in accordance with such 
                regulations there is good cause not to suspend 
                such payments;
                  (D) beginning on July 1, 2018, under the plan 
                by any provider of services or person whose 
                participation in the State plan is terminated 
                (as described in section 1902(kk)(8)) after the 
                date that is 60 days after the date on which 
                such termination is included in the database or 
                other system under section 1902(ll); or
                  (E) with respect to any amount expended for 
                such an item or service furnished during 
                calendar quarters beginning on or after October 
                1, 2017, subject to section 
                1902(kk)(4)(A)(ii)(II), within a geographic 
                area that is subject to a moratorium imposed 
                under section 1866(j)(7) by a provider or 
                supplier that meets the requirements specified 
                in subparagraph (C)(iii) of such section, 
                during the period of such moratorium; or
          (3) with respect to any amount expended for inpatient 
        hospital services furnished under the plan (other than 
        amounts attributable to the special situation of a 
        hospital which serves a disproportionate number of low 
        income patients with special needs) to the extent that 
        such amount exceeds the hospital's customary charges 
        with respect to such services or (if such services are 
        furnished under the plan by a public institution free 
        of charge or at nominal charges to the public) exceeds 
        an amount determined on the basis of those items 
        (specified in regulations prescribed by the Secretary) 
        included in the determination of such payment which the 
        Secretary finds will provide fair compensation to such 
        institution for such services; or
          (4) with respect to any amount expended for care or 
        services furnished under the plan by a hospital unless 
        such hospital has in effect a utilization review plan 
        which meets the requirements imposed by section 1861(k) 
        for purposes of title XVIII; and if such hospital has 
        in effect such a utilization review plan for purposes 
        of title XVIII, such plan shall serve as the plan 
        required by this subsection (with the same standards 
        and procedures and the same review committee or group) 
        as a condition of payment under this title; the 
        Secretary is authorized to waive the requirements of 
        this paragraph if the State agency demonstrates to his 
        satisfaction that it has in operation utilization 
        review procedures which are superior in their 
        effectiveness to the procedures required under section 
        1861(k); or
          (5) with respect to any amount expended for any drug 
        product for which payment may not be made under part B 
        of title XVIII because of section 1862(c); or
          (6) with respect to any amount expended for inpatient 
        hospital tests (other than in emergency situations) not 
        specifically ordered by the attending physician or 
        other responsible practitioner; or
          (7) with respect to any amount expended for clinical 
        diagnostic laboratory tests performed by a physician, 
        independent laboratory, or hospital, to the extent such 
        amount exceeds the amount that would be recognized 
        under section 1833(h) for such tests performed for an 
        individual enrolled under part B of title XVIII; or
          (8) with respect to any amount expended for medical 
        assistance (A) for nursing facility services to 
        reimburse (or otherwise compensate) a nursing facility 
        for payment of a civil money penalty imposed under 
        section 1919(h) or (B) for home and community care to 
        reimburse (or otherwise compensate) a provider of such 
        care for payment of a civil money penalty imposed under 
        this title or title XI or for legal expenses in defense 
        of an exclusion or civil money penalty under this title 
        or title XI if there is no reasonable legal ground for 
        the provider's case; or
          (10)(A) with respect to covered outpatient drugs 
        unless there is a rebate agreement in effect under 
        section 1927 with respect to such drugs or unless 
        section 1927(a)(3) applies,
          (B) with respect to any amount expended for an 
        innovator multiple source drug (as defined in section 
        1927(k)) dispensed on or after July 1, 1991, if, under 
        applicable State law, a less expensive multiple source 
        drug could have been dispensed, but only to the extent 
        that such amount exceeds the upper payment limit for 
        such multiple source drug;
                  (C) with respect to covered outpatient drugs 
                described in section 1927(a)(7), unless 
                information respecting utilization data and 
                coding on such drugs that is required to be 
                submitted under such section is submitted in 
                accordance with such section, and
          (D) with respect to any amount expended for 
        reimbursement to a pharmacy under this title for the 
        ingredient cost of a covered outpatient drug for which 
        the pharmacy has already received payment under this 
        title (other than with respect to a reasonable 
        restocking fee for such drug); or
          (11) with respect to any amount expended for 
        physicians' services furnished on or after the first 
        day of the first quarter beginning more than 60 days 
        after the date of establishment of the physician 
        identifier system under section 1902(x), unless the 
        claim for the services includes the unique physician 
        identifier provided under such system; or
          (13) with respect to any amount expended to reimburse 
        (or otherwise compensate) a nursing facility for 
        payment of legal expenses associated with any action 
        initiated by the facility that is dismissed on the 
        basis that no reasonable legal ground existed for the 
        institution of such action; or
          (14) with respect to any amount expended on 
        administrative costs to carry out the program under 
        section 1928; or
          (15) with respect to any amount expended for a 
        single-antigen vaccine and its administration in any 
        case in which the administration of a combined-antigen 
        vaccine was medically appropriate (as determined by the 
        Secretary); or
          (16) with respect to any amount expended for which 
        funds may not be used under the Assisted Suicide 
        Funding Restriction Act of 1997; or
          (17) with respect to any amount expended for roads, 
        bridges, stadiums, or any other item or service not 
        covered under a State plan under this title; or
          (18) with respect to any amount expended for home 
        health care services provided by an agency or 
        organization unless the agency or organization provides 
        the State agency on a continuing basis a surety bond in 
        a form specified by the Secretary under paragraph (7) 
        of section 1861(o) and in an amount that is not less 
        than $50,000 or such comparable surety bond as the 
        Secretary may permit under the last sentence of such 
        section; or
          (19) with respect to any amount expended on 
        administrative costs to initiate or pursue litigation 
        described in subsection (d)(3)(B);
          (20) with respect to amounts expended for medical 
        assistance provided to an individual described in 
        subclause (XV) or (XVI) of section 1902(a)(10)(A)(ii) 
        for a fiscal year unless the State demonstrates to the 
        satisfaction of the Secretary that the level of State 
        funds expended for such fiscal year for programs to 
        enable working individuals with disabilities to work 
        (other than for such medical assistance) is not less 
        than the level expended for such programs during the 
        most recent State fiscal year ending before the date of 
        the enactment of this paragraph;
          (21) with respect to amounts expended for covered 
        outpatient drugs described in section 1927(d)(2)(C) 
        (relating to drugs when used for cosmetic purposes or 
        hair growth), except where medically necessary, and 
        section 1927(d)(2)(K) (relating to drugs when used for 
        treatment of sexual or erectile dysfunction);
          (22) [with respect to amounts expended] (A) with 
        respect to amounts expended for medical assistance for 
        an individual who declares under section 1137(d)(1)(A) 
        to be a citizen or national of the United States for 
        purposes of establishing eligibility for benefits under 
        this title, unless the requirement of section 
        1902(a)(46)(B) is met; and
          (B) in the case of a State that elects to provide a 
        reasonable period to present satisfactory documentary 
        evidence of such citizenship or nationality pursuant to 
        paragraph (2)(C) of section 1902(ee) or paragraph (4) 
        of subsection (x) of this section, for amounts expended 
        for medical assistance for such an individual (other 
        than an individual described in paragraph (2) of such 
        subsection (x)) during such period;
          (23) with respect to amounts expended for medical 
        assistance for covered outpatient drugs (as defined in 
        section 1927(k)(2)) for which the prescription was 
        executed in written (and non-electronic) form unless 
        the prescription was executed on a tamper-resistant 
        pad;
          (24) if a State is required to implement an asset 
        verification program under section 1940 and fails to 
        implement such program in accordance with such section, 
        with respect to amounts expended by such State for 
        medical assistance for individuals subject to asset 
        verification under such section, unless--
                  (A) the State demonstrates to the Secretary's 
                satisfaction that the State made a good faith 
                effort to comply;
                  (B) not later than 60 days after the date of 
                a finding that the State is in noncompliance, 
                the State submits to the Secretary (and the 
                Secretary approves) a corrective action plan to 
                remedy such noncompliance; and
                  (C) not later than 12 months after the date 
                of such submission (and approval), the State 
                fulfills the terms of such corrective action 
                plan;
          (25) with respect to any amounts expended for medical 
        assistance for individuals for whom the State does not 
        report enrollee encounter data (as defined by the 
        Secretary) to the Medicaid Statistical Information 
        System (MSIS) in a timely manner (as determined by the 
        Secretary);
          (26) with respect to any amounts expended for medical 
        assistance for individuals described in subclause 
        (VIII) of subsection (a)(10)(A)(i) other than medical 
        assistance provided through benchmark coverage 
        described in section 1937(b)(1) or benchmark equivalent 
        coverage described in section 1937(b)(2); or
          (27) with respect to any amounts expended by the 
        State on the basis of a fee schedule for items 
        described in section 1861(n) and furnished on or after 
        January 1, 2018, as determined in the aggregate with 
        respect to each class of such items as defined by the 
        Secretary, in excess of the aggregate amount, if any, 
        that would be paid for such items within such class on 
        a fee-for-service basis under the program under part B 
        of title XVIII, including, as applicable, under a 
        competitive acquisition program under section 1847 in 
        an area of the State.
Nothing in paragraph (1) shall be construed as permitting a 
State to provide services under its plan under this title that 
are not reasonable in amount, duration, and scope to achieve 
their purpose. Paragraphs (1), (2), (16), (17), and (18) shall 
apply with respect to items or services furnished and amounts 
expended by or through a managed care entity (as defined in 
section 1932(a)(1)(B)) in the same manner as such paragraphs 
apply to items or services furnished and amounts expended 
directly by the State.
  (j) Notwithstanding the preceding provisions of this section, 
the amount determined under subsection (a)(1) for any State for 
any quarter shall be adjusted in accordance with section 1914.
  (k) The Secretary is authorized to provide at the request of 
any State (and without cost to such State) such technical and 
actuarial assistance as may be necessary to assist such State 
to contract with any medicaid managed care organization which 
meets the requirements of subsection (m) of this section for 
the purpose of providing medical care and services to 
individuals who are entitled to medical assistance under this 
title.
  (l)(1) Subject to paragraphs (3) and (4), with respect to any 
amount expended for personal care services or home health care 
services requiring an in-home visit by a provider that are 
provided under a State plan under this title (or under a waiver 
of the plan) and furnished in a calendar quarter beginning on 
or after January 1, 2019 (or, in the case of home health care 
services, on or after January 1, 2023), unless a State requires 
the use of an electronic visit verification system for such 
services furnished in such quarter under the plan or such 
waiver, the Federal medical assistance percentage shall be 
reduced--
          (A) in the case of personal care services--
                  (i) for calendar quarters in 2019 and 2020, 
                by .25 percentage points;
                  (ii) for calendar quarters in 2021, by .5 
                percentage points;
                  (iii) for calendar quarters in 2022, by .75 
                percentage points; and
                  (iv) for calendar quarters in 2023 and each 
                year thereafter, by 1 percentage point; and
          (B) in the case of home health care services--
                  (i) for calendar quarters in 2023 and 2024, 
                by .25 percentage points;
                  (ii) for calendar quarters in 2025, by .5 
                percentage points;
                  (iii) for calendar quarters in 2026, by .75 
                percentage points; and
                  (iv) for calendar quarters in 2027 and each 
                year thereafter, by 1 percentage point.
  (2) Subject to paragraphs (3) and (4), in implementing the 
requirement for the use of an electronic visit verification 
system under paragraph (1), a State shall--
          (A) consult with agencies and entities that provide 
        personal care services, home health care services, or 
        both under the State plan (or under a waiver of the 
        plan) to ensure that such system--
                  (i) is minimally burdensome;
                  (ii) takes into account existing best 
                practices and electronic visit verification 
                systems in use in the State; and
                  (iii) is conducted in accordance with the 
                requirements of HIPAA privacy and security law 
                (as defined in section 3009 of the Public 
                Health Service Act);
          (B) take into account a stakeholder process that 
        includes input from beneficiaries, family caregivers, 
        individuals who furnish personal care services or home 
        health care services, and other stakeholders, as 
        determined by the State in accordance with guidance 
        from the Secretary; and
          (C) ensure that individuals who furnish personal care 
        services, home health care services, or both under the 
        State plan (or under a waiver of the plan) are provided 
        the opportunity for training on the use of such system.
  (3) Paragraphs (1) and (2) shall not apply in the case of a 
State that, as of the date of the enactment of this subsection, 
requires the use of any system for the electronic verification 
of visits conducted as part of both personal care services and 
home health care services, so long as the State continues to 
require the use of such system with respect to the electronic 
verification of such visits.
  (4)(A) In the case of a State described in subparagraph (B), 
the reduction under paragraph (1) shall not apply--
          (i) in the case of personal care services, for 
        calendar quarters in 2019; and
          (ii) in the case of home health care services, for 
        calendar quarters in 2023.
  (B) For purposes of subparagraph (A), a State described in 
this subparagraph is a State that demonstrates to the Secretary 
that the State--
          (i) has made a good faith effort to comply with the 
        requirements of paragraphs (1) and (2) (including by 
        taking steps to adopt the technology used for an 
        electronic visit verification system); and
          (ii) in implementing such a system, has encountered 
        unavoidable system delays.
  (5) In this subsection:
          (A) The term ``electronic visit verification system'' 
        means, with respect to personal care services or home 
        health care services, a system under which visits 
        conducted as part of such services are electronically 
        verified with respect to--
                  (i) the type of service performed;
                  (ii) the individual receiving the service;
                  (iii) the date of the service;
                  (iv) the location of service delivery;
                  (v) the individual providing the service; and
                  (vi) the time the service begins and ends.
          (B) The term ``home health care services'' means 
        services described in section 1905(a)(7) provided under 
        a State plan under this title (or under a waiver of the 
        plan).
          (C) The term ``personal care services'' means 
        personal care services provided under a State plan 
        under this title (or under a waiver of the plan), 
        including services provided under section 1905(a)(24), 
        1915(c), 1915(i), 1915(j), or 1915(k) or under a wavier 
        under section 1115.
  (6)(A) In the case in which a State requires personal care 
service and home health care service providers to utilize an 
electronic visit verification system operated by the State or a 
contractor on behalf of the State, the Secretary shall pay to 
the State, for each quarter, an amount equal to 90 per centum 
of so much of the sums expended during such quarter as are 
attributable to the design, development, or installation of 
such system, and 75 per centum of so much of the sums for the 
operation and maintenance of such system.
  (B) Subparagraph (A) shall not apply in the case in which a 
State requires personal care service and home health care 
service providers to utilize an electronic visit verification 
system that is not operated by the State or a contractor on 
behalf of the State.
  (m)(1)(A) The term ``medicaid managed care organization'' 
means a health maintenance organization, an eligible 
organization with a contract under section 1876 or a 
Medicare+Choice organization with a contract under part C of 
title XVIII, a provider sponsored organization, or any other 
public or private organization, which meets the requirement of 
section 1902(w) and--
          (i) makes services it provides to individuals 
        eligible for benefits under this title accessible to 
        such individuals, within the area served by the 
        organization, to the same extent as such services are 
        made accessible to individuals (eligible for medical 
        assistance under the State plan) not enrolled with the 
        organization, and
          (ii) has made adequate provision against the risk of 
        insolvency, which provision is satisfactory to the 
        State, meets the requirements of subparagraph (C)(i) 
        (if applicable), and which assures that individuals 
        eligible for benefits under this title are in no case 
        held liable for debts of the organization in case of 
        the organization's insolvency.
An organization that is a qualified health maintenance 
organization (as defined in section 1310(d) of the Public 
Health Service Act) is deemed to meet the requirements of 
clauses (i) and (ii).
  (B) The duties and functions of the Secretary, insofar as 
they involve making determinations as to whether an 
organization is a medicaid managed care organization within the 
meaning of subparagraph (A), shall be integrated with the 
administration of section 1312 (a) and (b) of the Public Health 
Service Act.
  (C)(i) Subject to clause (ii), a provision meets the 
requirements of this subparagraph for an organization if the 
organization meets solvency standards established by the State 
for private health maintenance organizations or is licensed or 
certified by the State as a risk-bearing entity.
  (ii) Clause (i) shall not apply to an organization if--
          (I) the organization is not responsible for the 
        provision (directly or through arrangements with 
        providers of services) of inpatient hospital services 
        and physicians' services;
          (II) the organization is a public entity;
          (III) the solvency of the organization is guaranteed 
        by the State; or
          (IV) the organization is (or is controlled by) one or 
        more Federally-qualified health centers and meets 
        solvency standards established by the State for such an 
        organization.
For purposes of subclause (IV), the term ``control'' means the 
possession, whether direct or indirect, of the power to direct 
or cause the direction of the management and policies of the 
organization through membership, board representation, or an 
ownership interest equal to or greater than 50.1 percent.
  (2)(A) Except as provided in subparagraphs (B), (C), and (G), 
no payment shall be made under this title to a State with 
respect to expenditures incurred by it for payment (determined 
under a prepaid capitation basis or under any other risk basis) 
for services provided by any entity (including a health 
insuring organization) which is responsible for the provision 
(directly or through arrangements with providers of services) 
of inpatient hospital services and any other service described 
in paragraph (2), (3), (4), (5), or (7) of section 1905(a) or 
for the provision of any three or more of the services 
described in such paragraphs unless--
          (i) the Secretary has determined that the entity is a 
        medicaid managed care organization organization as 
        defined in paragraph (1);
          (iii) such services are provided for the benefit of 
        individuals eligible for benefits under this title in 
        accordance with a contract between the State and the 
        entity under which prepaid payments to the entity are 
        made on an actuarially sound basis and under which the 
        Secretary must provide prior approval for contracts 
        providing for expenditures in excess of $1,000,000 for 
        1998 and, for a subsequent year, the amount established 
        under this clause for the previous year increased by 
        the percentage increase in the consumer price index for 
        all urban consumers over the previous year;
          (iv) such contract provides that the Secretary and 
        the State (or any person or organization designated by 
        either) shall have the right to audit and inspect any 
        books and records of the entity (and of any 
        subcontractor) that pertain (I) to the ability of the 
        entity to bear the risk of potential financial losses, 
        or (II) to services performed or determinations of 
        amounts payable under the contract;
          (v) such contract provides that in the entity's 
        enrollment, reenrollment, or disenrollment of 
        individuals who are eligible for benefits under this 
        title and eligible to enroll, reenroll, or disenroll 
        with the entity pursuant to the contract, the entity 
        will not discriminate among such individuals on the 
        basis of their health status or requirements for health 
        care services;
          (vi) such contract (I) permits individuals who have 
        elected under the plan to enroll with the entity for 
        provision of such benefits to terminate such enrollment 
        in accordance with section 1932(a)(4), and (II) 
        provides for notification in accordance with such 
        section of each such individual, at the time of the 
        individual's enrollment, of such right to terminate 
        such enrollment;
          (vii) such contract provides that, in the case of 
        medically necessary services which were provided (I) to 
        an individual enrolled with the entity under the 
        contract and entitled to benefits with respect to such 
        services under the State's plan and (II) other than 
        through the organization because the services were 
        immediately required due to an unforeseen illness, 
        injury, or condition, either the entity or the State 
        provides for reimbursement with respect to those 
        services,
          (viii) such contract provides for disclosure of 
        information in accordance with section 1124 and 
        paragraph (4) of this subsection;
          (ix) such contract provides, in the case of an entity 
        that has entered into a contract for the provision of 
        services with a Federally-qualified health center or a 
        rural health clinic, that the entity shall provide 
        payment that is not less than the level and amount of 
        payment which the entity would make for the services if 
        the services were furnished by a provider which is not 
        a Federally-qualified health center or a rural health 
        clinic;
          (x) any physician incentive plan that it operates 
        meets the requirements described in section 1876(i)(8);
          (xi) such contract provides for maintenance of 
        sufficient patient encounter data to identify the 
        physician who delivers services to patients and for the 
        provision of such data to the State at a frequency and 
        level of detail to be specified by the Secretary;
          (xii) such contract, and the entity complies with the 
        applicable requirements of section 1932; and
                  (xiii) such contract provides that (I) 
                covered outpatient drugs dispensed to 
                individuals eligible for medical assistance who 
                are enrolled with the entity shall be subject 
                to the same rebate required by the agreement 
                entered into under section 1927 as the State is 
                subject to and that the State shall collect 
                such rebates from manufacturers, (II) 
                capitation rates paid to the entity shall be 
                based on actual cost experience related to 
                rebates and subject to the Federal regulations 
                requiring actuarially sound rates, and (III) 
                the entity shall report to the State, on such 
                timely and periodic basis as specified by the 
                Secretary in order to include in the 
                information submitted by the State to a 
                manufacturer and the Secretary under section 
                1927(b)(2)(A), information on the total number 
                of units of each dosage form and strength and 
                package size by National Drug Code of each 
                covered outpatient drug dispensed to 
                individuals eligible for medical assistance who 
                are enrolled with the entity and for which the 
                entity is responsible for coverage of such drug 
                under this subsection (other than covered 
                outpatient drugs that under subsection (j)(1) 
                of section 1927 are not subject to the 
                requirements of that section) and such other 
                data as the Secretary determines necessary to 
                carry out this subsection.
  (B) Subparagraph (A) except with respect to clause (ix) of 
subparagraph (A), does not apply with respect to payments under 
this title to a State with respect to expenditures incurred by 
it for payment for services provided by an entity which--
          (i)(I) received a grant of at least $100,000 in the 
        fiscal year ending June 30, 1976, under section 
        329(d)(1)(A) or 330(d)(1) of the Public Health Service 
        Act, and for the period beginning July 1, 1976, and 
        ending on the expiration of the period for which 
        payments are to be made under this title has been the 
        recipient of a grant under either such section; and
          (II) provides to its enrollees, on a prepaid 
        capitation risk basis or on any other risk basis, all 
        of the services and benefits described in paragraphs 
        (1), (2), (3), (4)(C), and (5) of section 1905(a) and, 
        to the extent required by section 1902(a)(10)(D) to be 
        provided under a State plan for medical assistance, the 
        services and benefits described in paragraph (7) of 
        section 1905(a); or
          (ii) is a nonprofit primary health care entity 
        located in a rural area (as defined by the Appalachian 
        Regional Commission)--
                  (I) which received in the fiscal year ending 
                June 30, 1976, at least $100,000 (by grant, 
                subgrant, or subcontract) under the Appalachian 
                Regional Development Act of 1965, and
                  (II) for the period beginning July 1, 1976, 
                and ending on the expiration of the period for 
                which payments are to be made under this title 
                either has been the recipient of a grant, 
                subgrant, or subcontract under such Act or has 
                provided services under a contract (initially 
                entered into during a year in which the entity 
                was the recipient of such a grant, subgrant, or 
                subcontract) with a State agency under this 
                title on a prepaid capitation risk basis or on 
                any other risk basis; or
          (iii) which has contracted with the single State 
        agency for the provision of services (but not including 
        inpatient hospital services) to persons eligible under 
        this title on a prepaid risk basis prior to 1970.
  (G) In the case of an entity which is receiving (and has 
received during the previous two years) a grant of at least 
$100,000 under section 329(d)(1)(A) or 330(d)(1) of the Public 
Health Service Act or is receiving (and has received during the 
previous two years) at least $100,000 (by grant, subgrant, or 
subcontract) under the Appalachian Regional Development Act of 
1965, clause (i) of subparagraph (A) shall not apply.
  (H) In the case of an individual who--
          (i) in a month is eligible for benefits under this 
        title and enrolled with a medicaid managed care 
        organization with a contract under this paragraph or 
        with a primary care case manager with a contract 
        described in section 1905(t)(3),
          (ii) in the next month (or in the next 2 months) is 
        not eligible for such benefits, but
          (iii) in the succeeding month is again eligible for 
        such benefits,
the State plan, subject to subparagraph (A)(vi), may enroll the 
individual for that succeeding month with the organization 
described in clause (i) if the organization continues to have a 
contract under this paragraph with the State or with the 
manager described in such clause if the manager continues to 
have a contract described in section 1905(t)(3) with the State.
  (3) No payment shall be made under this title to a State with 
respect to expenditures incurred by the State for payment for 
services provided by a managed care entity (as defined under 
section 1932(a)(1)) under the State plan under this title (or 
under a waiver of the plan) unless the State--
          (A) beginning on July 1, 2018, has a contract with 
        such entity that complies with the requirement 
        specified in section 1932(d)(5); and
          (B) beginning on January 1, 2018, complies with the 
        requirement specified in section 1932(d)(6)(A).
  (4)(A) Each medicaid managed care organization which is not a 
qualified health maintenance organization (as defined in 
section 1310(d) of the Public Health Service Act) must report 
to the State and, upon request, to the Secretary, the Inspector 
General of the Department of Health and Human Services, and the 
Comptroller General a description of transactions between the 
organization and a party in interest (as defined in section 
1318(b) of such Act), including the following transactions:
          (i) Any sale or exchange, or leasing of any property 
        between the organization and such a party.
          (ii) Any furnishing for consideration of goods, 
        services (including management services), or facilities 
        between the organization and such a party, but not 
        including salaries paid to employees for services 
        provided in the normal course of their employment.
          (iii) Any lending of money or other extension of 
        credit between the organization and such a party.
The State or Secretary may require that information reported 
respecting an organization which controls, or is controlled by, 
or is under common control with, another entity be in the form 
of a consolidated financial statement for the organization and 
such entity.
  (B) Each organization shall make the information reported 
pursuant to subparagraph (A) available to its enrollees upon 
reasonable request.
  (5)(A) If the Secretary determines that an entity with a 
contract under this subsection--
          (i) fails substantially to provide medically 
        necessary items and services that are required (under 
        law or under the contract) to be provided to an 
        individual covered under the contract, if the failure 
        has adversely affected (or has substantial likelihood 
        of adversely affecting) the individual;
          (ii) imposes premiums on individuals enrolled under 
        this subsection in excess of the premiums permitted 
        under this title;
          (iii) acts to discriminate among individuals in 
        violation of the provision of paragraph (2)(A)(v), 
        including expulsion or refusal to re-enroll an 
        individual or engaging in any practice that would 
        reasonably be expected to have the effect of denying or 
        discouraging enrollment (except as permitted by this 
        subsection) by eligible individuals with the 
        organization whose medical condition or history 
        indicates a need for substantial future medical 
        services;
          (iv) misrepresents or falsifies information that is 
        furnished--
                  (I) to the Secretary or the State under this 
                subsection, or
                  (II) to an individual or to any other entity 
                under this subsection, or
          (v) fails to comply with the requirements of section 
        1876(i)(8),
the Secretary may provide, in addition to any other remedies 
available under law, for any of the remedies described in 
subparagraph (B).
  (B) The remedies described in this subparagraph are--
          (i) civil money penalties of not more than $25,000 
        for each determination under subparagraph (A), or, with 
        respect to a determination under clause (iii) or 
        (iv)(I) of such subparagraph, of not more than $100,000 
        for each such determination, plus, with respect to a 
        determination under subparagraph (A)(ii), double the 
        excess amount charged in violation of such subparagraph 
        (and the excess amount charged shall be deducted from 
        the penalty and returned to the individual concerned), 
        and plus, with respect to a determination under 
        subparagraph (A)(iii), $15,000 for each individual not 
        enrolled as a result of a practice described in such 
        subparagraph, or
          (ii) denial of payment to the State for medical 
        assistance furnished under the contract under this 
        subsection for individuals enrolled after the date the 
        Secretary notifies the organization of a determination 
        under subparagraph (A) and until the Secretary is 
        satisfied that the basis for such determination has 
        been corrected and is not likely to recur.
The provisions of section 1128A (other than subsections (a) and 
(b)) shall apply to a civil money penalty under clause (i) in 
the same manner as such provisions apply to a penalty or 
proceeding under section 1128A(a).
  (6)(A) For purposes of this subsection and section 
1902(e)(2)(A), in the case of the State of New Jersey, the term 
``contract'' shall be deemed to include an undertaking by the 
State agency, in the State plan under this title, to operate a 
program meeting all requirements of this subsection.
  (B) The undertaking described in subparagraph (A) must 
provide--
          (i) for the establishment of a separate entity 
        responsible for the operation of a program meeting the 
        requirements of this subsection, which entity may be a 
        subdivision of the State agency administering the State 
        plan under this title;
          (ii) for separate accounting for the funds used to 
        operate such program; and
          (iii) for setting the capitation rates and any other 
        payment rates for services provided in accordance with 
        this subsection using a methodology satisfactory to the 
        Secretary designed to ensure that total Federal 
        matching payments under this title for such services 
        will be lower than the matching payments that would be 
        made for the same services, if provided under the State 
        plan on a fee for service basis to an actuarially 
        equivalent population.
  (C) The undertaking described in subparagraph (A) shall be 
subject to approval (and annual re-approval) by the Secretary 
in the same manner as a contract under this subsection.
  (D) The undertaking described in subparagraph (A) shall not 
be eligible for a waiver under section 1915(b).
  (o) Notwithstanding the preceding provisions of this section, 
no payment shall be made to a State under the preceding 
provisions of this section for expenditures for medical 
assistance provided for an individual under its State plan 
approved under this title to the extent that a private insurer 
(as defined by the Secretary by regulation and including a 
group health plan (as defined in section 607(1) of the Employee 
Retirement Income Security Act of 1974), a service benefit 
plan, and a health maintenance organization) would have been 
obligated to provide such assistance but for a provision of its 
insurance contract which has the effect of limiting or 
excluding such obligation because the individual is eligible 
for or is provided medical assistance under the plan.
  (p)(1) When a political subdivision of a State makes, for the 
State of which it is a political subdivision, or one State 
makes, for another State, the enforcement and collection of 
rights of support or payment assigned under section 1912, 
pursuant to a cooperative arrangement under such section 
(either within or outside of such State), there shall be paid 
to such political subdivision or such other State from amounts 
which would otherwise represent the Federal share of payments 
for medical assistance provided to the eligible individuals on 
whose behalf such enforcement and collection was made, an 
amount equal to 15 percent of any amount collected which is 
attributable to such rights of support or payment.
  (2) Where more than one jurisdiction is involved in such 
enforcement or collection, the amount of the incentive payment 
determined under paragraph (1) shall be allocated among the 
jurisdictions in a manner to be prescribed by the Secretary.
  (q) For the purposes of this section, the term ``State 
medicaid fraud control unit'' means a single identifiable 
entity of the State government which the Secretary certifies 
(and annually recertifies) as meeting the following 
requirements:
          (1) The entity (A) is a unit of the office of the 
        State Attorney General or of another department of 
        State government which possesses statewide authority to 
        prosecute individuals for criminal violations, (B) is 
        in a State the constitution of which does not provide 
        for the criminal prosecution of individuals by a 
        statewide authority and has formal procedures, approved 
        by the Secretary, that (i) assure its referral of 
        suspected criminal violations relating to the program 
        under this title to the appropriate authority or 
        authorities in the State for prosecution and (ii) 
        assure its assistance of, and coordination with, such 
        authority or authorities in such prosecutions, or (C) 
        has a formal working relationship with the office of 
        the State Attorney General and has formal procedures 
        (including procedures for its referral of suspected 
        criminal violations to such office) which are approved 
        by the Secretary and which provide effective 
        coordination of activities between the entity and such 
        office with respect to the detection, investigation, 
        and prosecution of suspected criminal violations 
        relating to the program under this title.
          (2) The entity is separate and distinct from the 
        single State agency that administers or supervises the 
        administration of the State plan under this title.
          (3) The entity's function is conducting a statewide 
        program for the investigation and prosecution of 
        violations of all applicable State laws regarding any 
        and all aspects of fraud in connection with (A) any 
        aspect of the provision of medical assistance and the 
        activities of providers of such assistance under the 
        State plan under this title; and (B) upon the approval 
        of the Inspector General of the relevant Federal 
        agency, any aspect of the provision of health care 
        services and activities of providers of such services 
        under any Federal health care program (as defined in 
        section 1128B(f)(1)), if the suspected fraud or 
        violation of law in such case or investigation is 
        primarily related to the State plan under this title.
          (4)(A) The entity has--
                  (i) procedures for reviewing complaints of 
                abuse or neglect of patients in health care 
                facilities which receive payments under the 
                State plan under this title;
                  (ii) at the option of the entity, procedures 
                for reviewing complaints of abuse or neglect of 
                patients residing in board and care facilities; 
                and
                  (iii) procedures for acting upon such 
                complaints under the criminal laws of the State 
                or for referring such complaints to other State 
                agencies for action.
          (B) For purposes of this paragraph, the term ``board 
        and care facility'' means a residential setting which 
        receives payment (regardless of whether such payment is 
        made under the State plan under this title) from or on 
        behalf of two or more unrelated adults who reside in 
        such facility, and for whom one or both of the 
        following is provided:
                  (i) Nursing care services provided by, or 
                under the supervision of, a registered nurse, 
                licensed practical nurse, or licensed nursing 
                assistant.
                  (ii) A substantial amount of personal care 
                services that assist residents with the 
                activities of daily living, including personal 
                hygiene, dressing, bathing, eating, toileting, 
                ambulation, transfer, positioning, self-
                medication, body care, travel to medical 
                services, essential shopping, meal preparation, 
                laundry, and housework.
          (5) The entity provides for the collection, or 
        referral for collection to a single State agency, of 
        overpayments that are made under the State plan or 
        under any Federal health care program (as so defined) 
        to health care facilities and that are discovered by 
        the entity in carrying out its activities. All funds 
        collected in accordance with this paragraph shall be 
        credited exclusively to, and available for expenditure 
        under, the Federal health care program (including the 
        State plan under this title) that was subject to the 
        activity that was the basis for the collection.
          (6) The entity employs such auditors, attorneys, 
        investigators, and other necessary personnel and is 
        organized in such a manner as is necessary to promote 
        the effective and efficient conduct of the entity's 
        activities.
          (7) The entity submits to the Secretary an 
        application and annual reports containing such 
        information as the Secretary determines, by regulation, 
        to be necessary to determine whether the entity meets 
        the other requirements of this subsection.
  (r)(1) In order to receive payments under subsection (a) for 
use of automated data systems in administration of the State 
plan under this title, a State must, in addition to meeting the 
requirements of paragraph (3), have in operation mechanized 
claims processing and information retrieval systems that meet 
the requirements of this subsection and that the Secretary has 
found--
          (A) are adequate to provide efficient, economical, 
        and effective administration of such State plan;
          (B) are compatible with the claims processing and 
        information retrieval systems used in the 
        administration of title XVIII, and for this purpose--
                  (i) have a uniform identification coding 
                system for providers, other payees, and 
                beneficiaries under this title or title XVIII;
                  (ii) provide liaison between States and 
                carriers and intermediaries with agreements 
                under title XVIII to facilitate timely exchange 
                of appropriate data;
                  (iii) provide for exchange of data between 
                the States and the Secretary with respect to 
                persons sanctioned under this title or title 
                XVIII; and
                  (iv) effective for claims filed on or after 
                October 1, 2010, incorporate compatible 
                methodologies of the National Correct Coding 
                Initiative administered by the Secretary (or 
                any successor initiative to promote correct 
                coding and to control improper coding leading 
                to inappropriate payment) and such other 
                methodologies of that Initiative (or such other 
                national correct coding methodologies) as the 
                Secretary identifies in accordance with 
                paragraph (4);
          (C) are capable of providing accurate and timely 
        data;
          (D) are complying with the applicable provisions of 
        part C of title XI;
          (E) are designed to receive provider claims in 
        standard formats to the extent specified by the 
        Secretary; and
          (F) effective for claims filed on or after January 1, 
        1999, provide for electronic transmission of claims 
        data in the format specified by the Secretary and 
        consistent with the Medicaid Statistical Information 
        System (MSIS) (including detailed individual enrollee 
        encounter data and other information that the Secretary 
        may find necessary and including, for data submitted to 
        the Secretary on or after January 1, 2010, data 
        elements from the automated data system that the 
        Secretary determines to be necessary for program 
        integrity, program oversight, and administration, at 
        such frequency as the Secretary shall determine).
  (2) In order to meet the requirements of this paragraph, 
mechanized claims processing and information retrieval systems 
must meet the following requirements:
          (A) The systems must be capable of developing 
        provider, physician, and patient profiles which are 
        sufficient to provide specific information as to the 
        use of covered types of services and items, including 
        prescribed drugs.
          (B) The State must provide that information on 
        probable fraud or abuse which is obtained from, or 
        developed by, the systems, is made available to the 
        State's medicaid fraud control unit (if any) certified 
        under subsection (q) of this section.
          (C) The systems must meet all performance standards 
        and other requirements for initial approval developed 
        by the Secretary.
  (3) In order to meet the requirements of this paragraph, a 
State must have in operation an eligibility determination 
system which provides for data matching through the Public 
Assistance Reporting Information System (PARIS) facilitated by 
the Secretary (or any successor system), including matching 
with medical assistance programs operated by other States.
  (4) For purposes of paragraph (1)(B)(iv), the Secretary shall 
do the following:
          (A) Not later than September 1, 2010:
                  (i) Identify those methodologies of the 
                National Correct Coding Initiative administered 
                by the Secretary (or any successor initiative 
                to promote correct coding and to control 
                improper coding leading to inappropriate 
                payment) which are compatible to claims filed 
                under this title.
                  (ii) Identify those methodologies of such 
                Initiative (or such other national correct 
                coding methodologies) that should be 
                incorporated into claims filed under this title 
                with respect to items or services for which 
                States provide medical assistance under this 
                title and no national correct coding 
                methodologies have been established under such 
                Initiative with respect to title XVIII.
                  (iii) Notify States of--
                          (I) the methodologies identified 
                        under subparagraphs (A) and (B) (and of 
                        any other national correct coding 
                        methodologies identified under 
                        subparagraph (B)); and
                          (II) how States are to incorporate 
                        such methodologies into claims filed 
                        under this title.
          (B) Not later than March 1, 2011, submit a report to 
        Congress that includes the notice to States under 
        clause (iii) of subparagraph (A) and an analysis 
        supporting the identification of the methodologies made 
        under clauses (i) and (ii) of subparagraph (A).
  (s) Notwithstanding the preceding provisions of this section, 
no payment shall be made to a State under this section for 
expenditures for medical assistance under the State plan 
consisting of a designated health service (as defined in 
subsection (h)(6) of section 1877) furnished to an individual 
on the basis of a referral that would result in the denial of 
payment for the service under title XVIII if such title 
provided for coverage of such service to the same extent and 
under the same terms and conditions as under the State plan, 
and subsections (f) and (g)(5) of such section shall apply to a 
provider of such a designated health service for which payment 
may be made under this title in the same manner as such 
subsections apply to a provider of such a service for which 
payment may be made under such title.
  (t)(1) For purposes of subsection (a)(3)(F), the payments 
described in this paragraph to encourage the adoption and use 
of certified EHR technology are payments made by the State in 
accordance with this subsection --
          (A) to Medicaid providers described in paragraph 
        (2)(A) not in excess of 85 percent of net average 
        allowable costs (as defined in paragraph (3)(E)) for 
        certified EHR technology (and support services 
        including maintenance and training that is for, or is 
        necessary for the adoption and operation of, such 
        technology) with respect to such providers; and
          (B) to Medicaid providers described in paragraph 
        (2)(B) not in excess of the maximum amount permitted 
        under paragraph (5) for the provider involved.
  (2) In this subsection and subsection (a)(3)(F), the term 
``Medicaid provider'' means--
          (A) an eligible professional (as defined in paragraph 
        (3)(B))--
                  (i) who is not hospital-based and has at 
                least 30 percent of the professional's patient 
                volume (as estimated in accordance with a 
                methodology established by the Secretary) 
                attributable to individuals who are receiving 
                medical assistance under this title;
                  (ii) who is not described in clause (i), who 
                is a pediatrician, who is not hospital-based, 
                and who has at least 20 percent of the 
                professional's patient volume (as estimated in 
                accordance with a methodology established by 
                the Secretary) attributable to individuals who 
                are receiving medical assistance under this 
                title; and
                  (iii) who practices predominantly in a 
                Federally qualified health center or rural 
                health clinic and has at least 30 percent of 
                the professional's patient volume (as estimated 
                in accordance with a methodology established by 
                the Secretary) attributable to needy 
                individuals (as defined in paragraph (3)(F)); 
                and
          (B)(i) a children's hospital, or
          (ii) an acute-care hospital that is not described in 
        clause (i) and that has at least 10 percent of the 
        hospital's patient volume (as estimated in accordance 
        with a methodology established by the Secretary) 
        attributable to individuals who are receiving medical 
        assistance under this title.
An eligible professional shall not qualify as a Medicaid 
provider under this subsection unless any right to payment 
under sections 1848(o) and 1853(l) with respect to the eligible 
professional has been waived in a manner specified by the 
Secretary. For purposes of calculating patient volume under 
subparagraph (A)(iii), insofar as it is related to 
uncompensated care, the Secretary may require the adjustment of 
such uncompensated care data so that it would be an appropriate 
proxy for charity care, including a downward adjustment to 
eliminate bad debt data from uncompensated care. In applying 
subparagraphs (A) and (B)(ii), the methodology established by 
the Secretary for patient volume shall include individuals 
enrolled in a Medicaid managed care plan (under section 1903(m) 
or section 1932).
  (3) In this subsection and subsection (a)(3)(F):
          (A) The term ``certified EHR technology'' means a 
        qualified electronic health record (as defined in 
        3000(13) of the Public Health Service Act) that is 
        certified pursuant to section 3001(c)(5) of such Act as 
        meeting standards adopted under section 3004 of such 
        Act that are applicable to the type of record involved 
        (as determined by the Secretary, such as an ambulatory 
        electronic health record for office-based physicians or 
        an inpatient hospital electronic health record for 
        hospitals).
          (B) The term ``eligible professional'' means a--
                  (i) physician;
                  (ii) dentist;
                  (iii) certified nurse mid-wife;
                  (iv) nurse practitioner; and
                  (v) physician assistant insofar as the 
                assistant is practicing in a rural health 
                clinic that is led by a physician assistant or 
                is practicing in a Federally qualified health 
                center that is so led.
          (C) The term ``average allowable costs'' means, with 
        respect to certified EHR technology of Medicaid 
        providers described in paragraph (2)(A) for--
                  (i) the first year of payment with respect to 
                such a provider, the average costs for the 
                purchase and initial implementation or upgrade 
                of such technology (and support services 
                including training that is for, or is necessary 
                for the adoption and initial operation of, such 
                technology) for such providers, as determined 
                by the Secretary based upon studies conducted 
                under paragraph (4)(C); and
                  (ii) a subsequent year of payment with 
                respect to such a provider, the average costs 
                not described in clause (i) relating to the 
                operation, maintenance, and use of such 
                technology for such providers, as determined by 
                the Secretary based upon studies conducted 
                under paragraph (4)(C).
          (D) The term ``hospital-based'' means, with respect 
        to an eligible professional, a professional (such as a 
        pathologist, anesthesiologist, or emergency physician) 
        who furnishes substantially all of the individual's 
        professional services in a hospital inpatient or 
        emergency room setting and through the use of the 
        facilities and equipment, including qualified 
        electronic health records, of the hospital. The 
        determination of whether an eligible professional is a 
        hospital-based eligible professional shall be made on 
        the basis of the site of service (as defined by the 
        Secretary) and without regard to any employment or 
        billing arrangement between the eligible professional 
        and any other provider.
          (E) The term ``net average allowable costs'' means, 
        with respect to a Medicaid provider described in 
        paragraph (2)(A), average allowable costs reduced by 
        the average payment the Secretary estimates will be 
        made to such Medicaid providers (determined on a 
        percentage or other basis for such classes or types of 
        providers as the Secretary may specify) from other 
        sources (other than under this subsection, or by the 
        Federal government or a State or local government) that 
        is directly attributable to payment for certified EHR 
        technology or support services described in 
        subparagraph (C).
          (F) The term ``needy individual'' means, with respect 
        to a Medicaid provider, an individual--
                  (i) who is receiving assistance under this 
                title;
                  (ii) who is receiving assistance under title 
                XXI;
                  (iii) who is furnished uncompensated care by 
                the provider; or
                  (iv) for whom charges are reduced by the 
                provider on a sliding scale basis based on an 
                individual's ability to pay.
  (4)(A) With respect to a Medicaid provider described in 
paragraph (2)(A), subject to subparagraph (B), in no case 
shall--
                  (i) the net average allowable costs under 
                this subsection for the first year of payment 
                (which may not be later than 2016), which is 
                intended to cover the costs described in 
                paragraph (3)(C)(i), exceed $25,000 (or such 
                lesser amount as the Secretary determines based 
                on studies conducted under subparagraph (C));
                  (ii) the net average allowable costs under 
                this subsection for a subsequent year of 
                payment, which is intended to cover costs 
                described in paragraph (3)(C)(ii), exceed 
                $10,000; and
                  (iii) payments be made for costs described in 
                clause (ii) after 2021 or over a period of 
                longer than 5 years.
  (B) In the case of Medicaid provider described in paragraph 
(2)(A)(ii), the dollar amounts specified in subparagraph (A) 
shall be \2/3\ of the dollar amounts otherwise specified.
  (C) For the purposes of determining average allowable costs 
under this subsection, the Secretary shall study the average 
costs to Medicaid providers described in paragraph (2)(A) of 
purchase and initial implementation and upgrade of certified 
EHR technology described in paragraph (3)(C)(i) and the average 
costs to such providers of operations, maintenance, and use of 
such technology described in paragraph (3)(C)(ii). In 
determining such costs for such providers, the Secretary may 
utilize studies of such amounts submitted by States.
  (5)(A) In no case shall the payments described in paragraph 
(1)(B) with respect to a Medicaid provider described in 
paragraph (2)(B) exceed--
          (i) in the aggregate the product of--
                          (I) the overall hospital EHR amount 
                        for the provider computed under 
                        subparagraph (B); and
                          (II) the Medicaid share for such 
                        provider computed under subparagraph 
                        (C);
          (ii) in any year 50 percent of the product described 
        in clause (i); and
          (iii) in any 2-year period 90 percent of such 
        product.
  (B) For purposes of this paragraph, the overall hospital EHR 
amount, with respect to a Medicaid provider, is the sum of the 
applicable amounts specified in section 1886(n)(2)(A) for such 
provider for the first 4 payment years (as estimated by the 
Secretary) determined as if the Medicare share specified in 
clause (ii) of such section were 1. The Secretary shall 
establish, in consultation with the State, the overall hospital 
EHR amount for each such Medicaid provider eligible for 
payments under paragraph (1)(B). For purposes of this 
subparagraph in computing the amounts under section 
1886(n)(2)(C) for payment years after the first payment year, 
the Secretary shall assume that in subsequent payment years 
discharges increase at the average annual rate of growth of the 
most recent 3 years for which discharge data are available per 
year.
  (C) The Medicaid share computed under this subparagraph, for 
a Medicaid provider for a period specified by the Secretary, 
shall be calculated in the same manner as the Medicare share 
under section 1886(n)(2)(D) for such a hospital and period, 
except that there shall be substituted for the numerator under 
clause (i) of such section the amount that is equal to the 
number of inpatient-bed-days (as established by the Secretary) 
which are attributable to individuals who are receiving medical 
assistance under this title and who are not described in 
section 1886(n)(2)(D)(i). In computing inpatient-bed-days under 
the previous sentence, the Secretary shall take into account 
inpatient-bed-days attributable to inpatient-bed-days that are 
paid for individuals enrolled in a Medicaid managed care plan 
(under section 1903(m) or section 1932).
  (D) In no case may the payments described in paragraph (1)(B) 
with respect to a Medicaid provider described in paragraph 
(2)(B) be paid--
          (i) for any year beginning after 2016 unless the 
        provider has been provided payment under paragraph 
        (1)(B) for the previous year; and
          (ii) over a period of more than 6 years of payment.
  (6) Payments described in paragraph (1) are not in accordance 
with this subsection unless the following requirements are met:
          (A)(i) The State provides assurances satisfactory to 
        the Secretary that amounts received under subsection 
        (a)(3)(F) with respect to payments to a Medicaid 
        provider are paid, subject to clause (ii), directly to 
        such provider (or to an employer or facility to which 
        such provider has assigned payments) without any 
        deduction or rebate.
          (ii) Amounts described in clause (i) may also be paid 
        to an entity promoting the adoption of certified EHR 
        technology, as designated by the State, if 
        participation in such a payment arrangement is 
        voluntary for the eligible professional involved and if 
        such entity does not retain more than 5 percent of such 
        payments for costs not related to certified EHR 
        technology (and support services including maintenance 
        and training) that is for, or is necessary for the 
        operation of, such technology.
          (B) A Medicaid provider described in paragraph (2)(A) 
        is responsible for payment of the remaining 15 percent 
        of the net average allowable cost and shall be 
        determined to have met such responsibility to the 
        extent that the payment to the Medicaid provider is not 
        in excess of 85 percent of the net average allowable 
        cost.
          (C)(i) Subject to clause (ii), with respect to 
        payments to a Medicaid provider--
                  (I) for the first year of payment to the 
                Medicaid provider under this subsection, the 
                Medicaid provider demonstrates that it is 
                engaged in efforts to adopt, implement, or 
                upgrade certified EHR technology; and
                  (II) for a year of payment, other than the 
                first year of payment to the Medicaid provider 
                under this subsection, the Medicaid provider 
                demonstrates meaningful use of certified EHR 
                technology through a means that is approved by 
                the State and acceptable to the Secretary, and 
                that may be based upon the methodologies 
                applied under section 1848(o) or 1886(n).
          (ii) In the case of a Medicaid provider who has 
        completed adopting, implementing, or upgrading such 
        technology prior to the first year of payment to the 
        Medicaid provider under this subsection, clause (i)(I) 
        shall not apply and clause (i)(II) shall apply to each 
        year of payment to the Medicaid provider under this 
        subsection, including the first year of payment.
          (D) To the extent specified by the Secretary, the 
        certified EHR technology is compatible with State or 
        Federal administrative management systems.
For purposes of subparagraph (B), a Medicaid provider described 
in paragraph (2)(A) may accept payments for the costs described 
in such subparagraph from a State or local government. For 
purposes of subparagraph (C), in establishing the means 
described in such subparagraph, which may include clinical 
quality reporting to the State, the State shall ensure that 
populations with unique needs, such as children, are 
appropriately addressed.
  (7) With respect to Medicaid providers described in paragraph 
(2)(A), the Secretary shall ensure coordination of payment with 
respect to such providers under sections 1848(o) and 1853(l) 
and under this subsection to assure no duplication of funding. 
Such coordination shall include, to the extent practicable, a 
data matching process between State Medicaid agencies and the 
Centers for Medicare & Medicaid Services using national 
provider identifiers. For such purposes, the Secretary may 
require the submission of such data relating to payments to 
such Medicaid providers as the Secretary may specify.
  (8) In carrying out paragraph (6)(C), the State and Secretary 
shall seek, to the maximum extent practicable, to avoid 
duplicative requirements from Federal and State governments to 
demonstrate meaningful use of certified EHR technology under 
this title and title XVIII. In doing so, the Secretary may deem 
satisfaction of requirements for such meaningful use for a 
payment year under title XVIII to be sufficient to qualify as 
meaningful use under this subsection. The Secretary may also 
specify the reporting periods under this subsection in order to 
carry out this paragraph.
  (9) In order to be provided Federal financial participation 
under subsection (a)(3)(F)(ii), a State must demonstrate to the 
satisfaction of the Secretary, that the State--
          (A) is using the funds provided for the purposes of 
        administering payments under this subsection, including 
        tracking of meaningful use by Medicaid providers;
          (B) is conducting adequate oversight of the program 
        under this subsection, including routine tracking of 
        meaningful use attestations and reporting mechanisms; 
        and
          (C) is pursuing initiatives to encourage the adoption 
        of certified EHR technology to promote health care 
        quality and the exchange of health care information 
        under this title, subject to applicable laws and 
        regulations governing such exchange.
  (10) The Secretary shall periodically submit reports to the 
Committee on Energy and Commerce of the House of 
Representatives and the Committee on Finance of the Senate on 
status, progress, and oversight of payments described in 
paragraph (1), including steps taken to carry out paragraph 
(7). Such reports shall also describe the extent of adoption of 
certified EHR technology among Medicaid providers resulting 
from the provisions of this subsection and any improvements in 
health outcomes, clinical quality, or efficiency resulting from 
such adoption.
  (u)(1)(A) Notwithstanding subsection (a)(1), if the ratio of 
a State's erroneous excess payments for medical assistance (as 
defined in subparagraph (D)) to its total expenditures for 
medical assistance under the State plan approved under this 
title exceeds 0.03, for the period consisting of the third and 
fourth quarters of fiscal year 1983, or for any full fiscal 
year thereafter, then the Secretary shall make no payment for 
such period or fiscal year with respect to so much of such 
erroneous excess payments as exceeds such allowable error rate 
of 0.03.
  (B) The Secretary may waive, in certain limited cases, all or 
part of the reduction required under subparagraph (A) with 
respect to any State if such State is unable to reach the 
allowable error rate for a period or fiscal year despite a good 
faith effort by such State.
  (C) In estimating the amount to be paid to a State under 
subsection (d), the Secretary shall take into consideration the 
limitation on Federal financial participation imposed by 
subparagraph (A) and shall reduce the estimate he makes under 
subsection (d)(1), for purposes of payment to the State under 
subsection (d)(3), in light of any expected erroneous excess 
payments for medical assistance (estimated in accordance with 
such criteria, including sampling procedures, as he may 
prescribe and subject to subsequent adjustment, if necessary, 
under subsection (d)(2)).
  (D)(i) For purposes of this subsection, the term ``erroneous 
excess payments for medical assistance'' means the total of--
          (I) payments under the State plan with respect to 
        ineligible individuals and families, and
          (II) overpayments on behalf of eligible individuals 
        and families by reason of error in determining the 
        amount of expenditures for medical care required of an 
        individual or family as a condition of eligibility.
  (ii) In determining the amount of erroneous excess payments 
for medical assistance to an ineligible individual or family 
under clause (i)(I), if such ineligibility is the result of an 
error in determining the amount of the resources of such 
individual or family, the amount of the erroneous excess 
payment shall be the smaller of (I) the amount of the payment 
with respect to such individual or family, or (II) the 
difference between the actual amount of such resources and the 
allowable resource level established under the State plan.
  (iii) In determining the amount of erroneous excess payments 
for medical assistance to an individual or family under clause 
(i)(II), the amount of the erroneous excess payment shall be 
the smaller of (I) the amount of the payment on behalf of the 
individual or family, or (II) the difference between the actual 
amount incurred for medical care by the individual or family 
and the amount which should have been incurred in order to 
establish eligibility for medical assistance.
  (iv) In determining the amount of erroneous excess payments, 
there shall not be included any error resulting from a failure 
of an individual to cooperate or give correct information with 
respect to third-party liability as required under section 
1912(a)(1)(C) or 402(a)(26)(C) or with respect to payments made 
in violation of section 1906.
  (v) In determining the amount of erroneous excess payments, 
there shall not be included any erroneous payments made for 
ambulatory prenatal care provided during a presumptive 
eligibility period (as defined in section 1920(b)(1)), for 
items and services described in subsection (a) of section 1920A 
provided to a child during a presumptive eligibility period 
under such section, for medical assistance provided to an 
individual described in subsection (a) of section 1920B during 
a presumptive eligibility period under such section, or for 
medical assistance provided to an individual during a 
presumptive eligibility period resulting from a determination 
of presumptive eligibility made by a hospital that elects under 
section 1902(a)(47)(B) to be a qualified entity for such 
purpose.
  (E) For purposes of subparagraph (D), there shall be 
excluded, in determining both erroneous excess payments for 
medical assistance and total expenditures for medical 
assistance--
          (i) payments with respect to any individual whose 
        eligibility therefor was determined exclusively by the 
        Secretary under an agreement pursuant to section 1634 
        and such other classes of individuals as the Secretary 
        may by regulation prescribe whose eligibility was 
        determined in part under such an agreement; and
          (ii) payments made as the result of a technical 
        error.
  (2) The State agency administering the plan approved under 
this title shall, at such times and in such form as the 
Secretary may specify, provide information on the rates of 
erroneous excess payments made (or expected, with respect to 
future periods specified by the Secretary) in connection with 
its administration of such plan, together with any other data 
he requests that are reasonably necessary for him to carry out 
the provisions of this subsection.
  (3)(A) If a State fails to cooperate with the Secretary in 
providing information necessary to carry out this subsection, 
the Secretary, directly or through contractual or such other 
arrangements as he may find appropriate, shall establish the 
error rates for that State on the basis of the best data 
reasonably available to him and in accordance with such 
techniques for sampling and estimating as he finds appropriate.
  (B) In any case in which it is necessary for the Secretary to 
exercise his authority under subparagraph (A) to determine a 
State's error rates for a fiscal year, the amount that would 
otherwise be payable to such State under this title for 
quarters in such year shall be reduced by the costs incurred by 
the Secretary in making (directly or otherwise) such 
determination.
  (4) This subsection shall not apply with respect to Puerto 
Rico, Guam, the Virgin Islands, the Northern Mariana Islands, 
or American Samoa.
  (v)(1) Notwithstanding the preceding provisions of this 
section, except as provided in paragraphs (2) and (4), no 
payment may be made to a State under this section for medical 
assistance furnished to an alien who is not lawfully admitted 
for permanent residence or otherwise permanently residing in 
the United States under color of law.
  (2) Payment shall be made under this section for care and 
services that are furnished to an alien described in paragraph 
(1) only if--
          (A) such care and services are necessary for the 
        treatment of an emergency medical condition of the 
        alien,
          (B) such alien otherwise meets the eligibility 
        requirements for medical assistance under the State 
        plan approved under this title (other than the 
        requirement of the receipt of aid or assistance under 
        title IV, supplemental security income benefits under 
        title XVI, or a State supplementary payment), and
          (C) such care and services are not related to an 
        organ transplant procedure.
  (3) For purposes of this subsection, the term ``emergency 
medical condition'' means a medical condition (including 
emergency labor and delivery) manifesting itself by acute 
symptoms of sufficient severity (including severe pain) such 
that the absence of immediate medical attention could 
reasonably be expected to result in--
          (A) placing the patient's health in serious jeopardy,
          (B) serious impairment to bodily functions, or
          (C) serious dysfunction of any bodily organ or part.
  (4)(A) A State may elect (in a plan amendment under this 
title) to provide medical assistance under this title, 
notwithstanding sections 401(a), 402(b), 403, and 421 of the 
Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996, to children and pregnant women who are lawfully 
residing in the United States (including battered individuals 
described in section 431(c) of such Act) and who are otherwise 
eligible for such assistance, within either or both of the 
following eligibility categories:
          (i) Pregnant women.--Women during pregnancy (and 
        during the 60-day period beginning on the last day of 
        the pregnancy).
          (ii) Children.--Individuals under 21 years of age, 
        including optional targeted low-income children 
        described in section 1905(u)(2)(B).
  (B) In the case of a State that has elected to provide 
medical assistance to a category of aliens under subparagraph 
(A), no debt shall accrue under an affidavit of support against 
any sponsor of such an alien on the basis of provision of 
assistance to such category and the cost of such assistance 
shall not be considered as an unreimbursed cost.
  (C) As part of the State's ongoing eligibility 
redetermination requirements and procedures for an individual 
provided medical assistance as a result of an election by the 
State under subparagraph (A), a State shall verify that the 
individual continues to lawfully reside in the United States 
using the documentation presented to the State by the 
individual on initial enrollment. If the State cannot 
successfully verify that the individual is lawfully residing in 
the United States in this manner, it shall require that the 
individual provide the State with further documentation or 
other evidence to verify that the individual is lawfully 
residing in the United States.
  (w)(1)(A) Notwithstanding the previous provisions of this 
section, for purposes of determining the amount to be paid to a 
State (as defined in paragraph (7)(D)) under subsection (a)(1) 
for quarters in any fiscal year, the total amount expended 
during such fiscal year as medical assistance under the State 
plan (as determined without regard to this subsection) shall be 
reduced by the sum of any revenues received by the State (or by 
a unit of local government in the State) during the fiscal 
year--
          (i) from provider-related donations (as defined in 
        paragraph (2)(A)), other than--
                  (I) bona fide provider-related donations (as 
                defined in paragraph (2)(B)), and
                  (II) donations described in paragraph (2)(C);
          (ii) from health care related taxes (as defined in 
        paragraph (3)(A)), other than broad-based health care 
        related taxes (as defined in paragraph (3)(B));
          (iii) from a broad-based health care related tax, if 
        there is in effect a hold harmless provision (described 
        in paragraph (4)) with respect to the tax; or
          (iv) only with respect to State fiscal years (or 
        portions thereof) occurring on or after January 1, 
        1992, and before October 1, 1995, from broad-based 
        health care related taxes to the extent the amount of 
        such taxes collected exceeds the limit established 
        under paragraph (5).
  (B) Notwithstanding the previous provisions of this section, 
for purposes of determining the amount to be paid to a State 
under subsection (a)(7) for all quarters in a Federal fiscal 
year (beginning with fiscal year 1993), the total amount 
expended during the fiscal year for administrative expenditures 
under the State plan (as determined without regard to this 
subsection) shall be reduced by the sum of any revenues 
received by the State (or by a unit of local government in the 
State) during such quarters from donations described in 
paragraph (2)(C), to the extent the amount of such donations 
exceeds 10 percent of the amounts expended under the State plan 
under this title during the fiscal year for purposes described 
in paragraphs (2), (3), (4), (6), and (7) of subsection (a).
  (C)(i) Except as otherwise provided in clause (ii), 
subparagraph (A)(i) shall apply to donations received on or 
after January 1, 1992.
  (ii) Subject to the limits described in clause (iii) and 
subparagraph (E), subparagraph (A)(i) shall not apply to 
donations received before the effective date specified in 
subparagraph (F) if such donations are received under programs 
in effect or as described in State plan amendments or related 
documents submitted to the Secretary by September 30, 1991, and 
applicable to State fiscal year 1992, as demonstrated by State 
plan amendments, written agreements, State budget 
documentation, or other documentary evidence in existence on 
that date.
  (iii) In applying clause (ii) in the case of donations 
received in State fiscal year 1993, the maximum amount of such 
donations to which such clause may be applied may not exceed 
the total amount of such donations received in the 
corresponding period in State fiscal year 1992 (or not later 
than 5 days after the last day of the corresponding period).
  (D)(i) Except as otherwise provided in clause (ii), 
subparagraphs (A)(ii) and (A)(iii) shall apply to taxes 
received on or after January 1, 1992.
  (ii) Subparagraphs (A)(ii) and (A)(iii) shall not apply to 
impermissible taxes (as defined in clause (iii)) received 
before the effective date specified in subparagraph (F) to the 
extent the taxes (including the tax rate or base) were in 
effect, or the legislation or regulations imposing such taxes 
were enacted or adopted, as of November 22, 1991.
  (iii) In this subparagraph and subparagraph (E), the term 
``impermissible tax'' means a health care related tax for which 
a reduction may be made under clause (ii) or (iii) of 
subparagraph (A).
  (E)(i) In no case may the total amount of donations and taxes 
permitted under the exception provided in subparagraphs (C)(ii) 
and (D)(ii) for the portion of State fiscal year 1992 occurring 
during calendar year 1992 exceed the limit under paragraph (5) 
minus the total amount of broad-based health care related taxes 
received in the portion of that fiscal year.
  (ii) In no case may the total amount of donations and taxes 
permitted under the exception provided in subparagraphs (C)(ii) 
and (D)(ii) for State fiscal year 1993 exceed the limit under 
paragraph (5) minus the total amount of broad-based health care 
related taxes received in that fiscal year.
  (F) In this paragraph in the case of a State--
          (i) except as provided in clause (iii), with a State 
        fiscal year beginning on or before July 1, the 
        effective date is October 1, 1992,
          (ii) except as provided in clause (iii), with a State 
        fiscal year that begins after July 1, the effective 
        date is January 1, 1993, or
          (iii) with a State legislature which is not scheduled 
        to have a regular legislative session in 1992, with a 
        State legislature which is not scheduled to have a 
        regular legislative session in 1993, or with a 
        provider-specific tax enacted on November 4, 1991, the 
        effective date is July 1, 1993.
  (2)(A) In this subsection (except as provided in paragraph 
(6)), the term ``provider-related donation'' means any donation 
or other voluntary payment (whether in cash or in kind) made 
(directly or indirectly) to a State or unit of local government 
by--
          (i) a health care provider (as defined in paragraph 
        (7)(B)),
          (ii) an entity related to a health care provider (as 
        defined in paragraph (7)(C)), or
          (iii) an entity providing goods or services under the 
        State plan for which payment is made to the State under 
        paragraph (2), (3), (4), (6), or (7) of subsection (a).
  (B) For purposes of paragraph (1)(A)(i)(I), the term ``bona 
fide provider-related donation'' means a provider-related 
donation that has no direct or indirect relationship (as 
determined by the Secretary) to payments made under this title 
to that provider, to providers furnishing the same class of 
items and services as that provider, or to any related entity, 
as established by the State to the satisfaction of the 
Secretary. The Secretary may by regulation specify types of 
provider-related donations described in the previous sentence 
that will be considered to be bona fide provider-related 
donations.
  (C) For purposes of paragraph (1)(A)(i)(II), donations 
described in this subparagraph are funds expended by a 
hospital, clinic, or similar entity for the direct cost 
(including costs of training and of preparing and distributing 
outreach materials) of State or local agency personnel who are 
stationed at the hospital, clinic, or entity to determine the 
eligibility of individuals for medical assistance under this 
title and to provide outreach services to eligible or 
potentially eligible individuals.
  (3)(A) In this subsection (except as provided in paragraph 
(6)), the term ``health care related tax'' means a tax (as 
defined in paragraph (7)(F)) that--
          (i) is related to health care items or services, or 
        to the provision of, the authority to provide, or 
        payment for, such items or services, or
          (ii) is not limited to such items or services but 
        provides for treatment of individuals or entities that 
        are providing or paying for such items or services that 
        is different from the treatment provided to other 
        individuals or entities.
In applying clause (i), a tax is considered to relate to health 
care items or services if at least 85 percent of the burden of 
such tax falls on health care providers.
  (B) In this subsection, the term ``broad-based health care 
related tax'' means a health care related tax which is imposed 
with respect to a class of health care items or services (as 
described in paragraph (7)(A)) or with respect to providers of 
such items or services and which, except as provided in 
subparagraphs (D), (E), and (F)--
          (i) is imposed at least with respect to all items or 
        services in the class furnished by all non-Federal, 
        nonpublic providers in the State (or, in the case of a 
        tax imposed by a unit of local government, the area 
        over which the unit has jurisdiction) or is imposed 
        with respect to all non-Federal, nonpublic providers in 
        the class; and
          (ii) is imposed uniformly (in accordance with 
        subparagraph (C)).
  (C)(i) Subject to clause (ii), for purposes of subparagraph 
(B)(ii), a tax is considered to be imposed uniformly if--
          (I) in the case of a tax consisting of a licensing 
        fee or similar tax on a class of health care items or 
        services (or providers of such items or services), the 
        amount of the tax imposed is the same for every 
        provider providing items or services within the class;
          (II) in the case of a tax consisting of a licensing 
        fee or similar tax imposed on a class of health care 
        items or services (or providers of such services) on 
        the basis of the number of beds (licensed or otherwise) 
        of the provider, the amount of the tax is the same for 
        each bed of each provider of such items or services in 
        the class;
          (III) in the case of a tax based on revenues or 
        receipts with respect to a class of items or services 
        (or providers of items or services) the tax is imposed 
        at a uniform rate for all items and services (or 
        providers of such items of services) in the class on 
        all the gross revenues or receipts, or net operating 
        revenues, relating to the provision of all such items 
        or services (or all such providers) in the State (or, 
        in the case of a tax imposed by a unit of local 
        government within the State, in the area over which the 
        unit has jurisdiction); or
          (IV) in the case of any other tax, the State 
        establishes to the satisfaction of the Secretary that 
        the tax is imposed uniformly.
  (ii) Subject to subparagraphs (D) and (E), a tax imposed with 
respect to a class of health care items and services is not 
considered to be imposed uniformly if the tax provides for any 
credits, exclusions, or deductions which have as their purpose 
or effect the return to providers of all or a portion of the 
tax paid in a manner that is inconsistent with subclauses (I) 
and (II) of subparagraph (E)(ii) or provides for a hold 
harmless provision described in paragraph (4).
  (D) A tax imposed with respect to a class of health care 
items and services is considered to be imposed uniformly--
          (i) notwithstanding that the tax is not imposed with 
        respect to items or services (or the providers thereof) 
        for which payment is made under a State plan under this 
        title or title XVIII, or
          (ii) in the case of a tax described in subparagraph 
        (C)(i)(III), notwithstanding that the tax provides for 
        exclusion (in whole or in part) of revenues or receipts 
        from a State plan under this title or title XVIII.
  (E)(i) A State may submit an application to the Secretary 
requesting that the Secretary treat a tax as a broad-based 
health care related tax, notwithstanding that the tax does not 
apply to all health care items or services in class (or all 
providers of such items and services), provides for a credit, 
deduction, or exclusion, is not applied uniformly, or otherwise 
does not meet the requirements of subparagraph (B) or (C). 
Permissible waivers may include exemptions for rural or sole-
community providers.
  (ii) The Secretary shall approve such an application if the 
State establishes to the satisfaction of the Secretary that--
          (I) the net impact of the tax and associated 
        expenditures under this title as proposed by the State 
        is generally redistributive in nature, and
          (II) the amount of the tax is not directly correlated 
        to payments under this title for items or services with 
        respect to which the tax is imposed.
The Secretary shall by regulation specify types of credits, 
exclusions, and deductions that will be considered to meet the 
requirements of this subparagraph.
  (F) In no case shall a tax not qualify as a broad-based 
health care related tax under this paragraph because it does 
not apply to a hospital that is described in section 501(c)(3) 
of the Internal Revenue Code of 1986 and exempt from taxation 
under section 501(a) of such Code and that does not accept 
payment under the State plan under this title or under title 
XVIII.
  (4) For purposes of paragraph (1)(A)(iii), there is in effect 
a hold harmless provision with respect to a broad-based health 
care related tax imposed with respect to a class of items or 
services if the Secretary determines that any of the following 
applies:
          (A) The State or other unit of government imposing 
        the tax provides (directly or indirectly) for a payment 
        (other than under this title) to taxpayers and the 
        amount of such payment is positively correlated either 
        to the amount of such tax or to the difference between 
        the amount of the tax and the amount of payment under 
        the State plan.
          (B) All or any portion of the payment made under this 
        title to the taxpayer varies based only upon the amount 
        of the total tax paid.
          (C)(i) The State or other unit of government imposing 
        the tax provides (directly or indirectly) for any 
        payment, offset, or waiver that guarantees to hold 
        taxpayers harmless for any portion of the costs of the 
        tax.
          (ii) For purposes of clause (i), a determination of 
        the existence of an indirect guarantee shall be made 
        under paragraph (3)(i) of section 433.68(f) of title 
        42, Code of Federal Regulations, as in effect on 
        November 1, 2006, except that for portions of fiscal 
        years beginning on or after January 1, 2008, and before 
        October 1, 2011, ``5.5 percent'' shall be substituted 
        for ``6 percent'' each place it appears.
The provisions of this paragraph shall not prevent use of the 
tax to reimburse health care providers in a class for 
expenditures under this title nor preclude States from relying 
on such reimbursement to justify or explain the tax in the 
legislative process.
  (5)(A) For purposes of this subsection, the limit under this 
subparagraph with respect to a State is an amount equal to 25 
percent (or, if greater, the State base percentage, as defined 
in subparagraph (B)) of the non-Federal share of the total 
amount expended under the State plan during a State fiscal year 
(or portion thereof), as it would be determined pursuant to 
paragraph (1)(A) without regard to paragraph (1)(A)(iv).
  (B)(i) In subparagraph (A), the term ``State base 
percentage'' means, with respect to a State, an amount 
(expressed as a percentage) equal to--
          (I) the total of the amount of health care related 
        taxes (whether or not broad-based) and the amount of 
        provider-related donations (whether or not bona fide) 
        projected to be collected (in accordance with clause 
        (ii)) during State fiscal year 1992, divided by
          (II) the non-Federal share of the total amount 
        estimated to be expended under the State plan during 
        such State fiscal year.
  (ii) For purposes of clause (i)(I), in the case of a tax that 
is not in effect throughout State fiscal year 1992 or the rate 
(or base) of which is increased during such fiscal year, the 
Secretary shall project the amount to be collected during such 
fiscal year as if the tax (or increase) were in effect during 
the entire State fiscal year.
  (C)(i) The total amount of health care related taxes under 
subparagraph (B)(i)(I) shall be determined by the Secretary 
based on only those taxes (including the tax rate or base) 
which were in effect, or for which legislation or regulations 
imposing such taxes were enacted or adopted, as of November 22, 
1991.
  (ii) The amount of provider-related donations under 
subparagraph (B)(i)(I) shall be determined by the Secretary 
based on programs in effect on September 30, 1991, and 
applicable to State fiscal year 1992, as demonstrated by State 
plan amendments, written agreements, State budget 
documentation, or other documentary evidence in existence on 
that date.
  (iii) The amount of expenditures described in subparagraph 
(B)(i)(II) shall be determined by the Secretary based on the 
best data available as of the date of the enactment of this 
subsection.
  (6)(A) Notwithstanding the provisions of this subsection, the 
Secretary may not restrict States' use of funds where such 
funds are derived from State or local taxes (or funds 
appropriated to State university teaching hospitals) 
transferred from or certified by units of government within a 
State as the non-Federal share of expenditures under this 
title, regardless of whether the unit of government is also a 
health care provider, except as provided in section 1902(a)(2), 
unless the transferred funds are derived by the unit of 
government from donations or taxes that would not otherwise be 
recognized as the non-Federal share under this section.
  (B) For purposes of this subsection, funds the use of which 
the Secretary may not restrict under subparagraph (A) shall not 
be considered to be a provider-related donation or a health 
care related tax.
  (7) For purposes of this subsection:
          (A) Each of the following shall be considered a 
        separate class of health care items and services:
                  (i) Inpatient hospital services.
                  (ii) Outpatient hospital services.
                  (iii) Nursing facility services (other than 
                services of intermediate care facilities for 
                the mentally retarded).
                  (iv) Services of intermediate care facilities 
                for the mentally retarded.
                  (v) Physicians' services.
                  (vi) Home health care services.
                  (vii) Outpatient prescription drugs.
                  (viii) Services of managed care organizations 
                (including health maintenance organizations, 
                preferred provider organizations, and such 
                other similar organizations as the Secretary 
                may specify by regulation).
                  (ix) Such other classification of health care 
                items and services consistent with this 
                subparagraph as the Secretary may establish by 
                regulation.
          (B) The term ``health care provider'' means an 
        individual or person that receives payments for the 
        provision of health care items or services.
          (C) An entity is considered to be ``related'' to a 
        health care provider if the entity--
                  (i) is an organization, association, 
                corporation or partnership formed by or on 
                behalf of health care providers;
                  (ii) is a person with an ownership or control 
                interest (as defined in section 1124(a)(3)) in 
                the provider;
                  (iii) is the employee, spouse, parent, child, 
                or sibling of the provider (or of a person 
                described in clause (ii)); or
                  (iv) has a similar, close relationship (as 
                defined in regulations) to the provider.
          (D) The term ``State'' means only the 50 States and 
        the District of Columbia but does not include any State 
        whose entire program under this title is operated under 
        a waiver granted under section 1115.
          (E) The ``State fiscal year'' means, with respect to 
        a specified year, a State fiscal year ending in that 
        specified year.
          (F) The term ``tax'' includes any licensing fee, 
        assessment, or other mandatory payment, but does not 
        include payment of a criminal or civil fine or penalty 
        (other than a fine or penalty imposed in lieu of or 
        instead of a fee, assessment, or other mandatory 
        payment).
          (G) The term ``unit of local government'' means, with 
        respect to a State, a city, county, special purpose 
        district, or other governmental unit in the State.
  (x)(1) For purposes of section 1902(a)(46)(B)(i), the 
requirement of this subsection is, with respect to an 
individual declaring to be a citizen or national of the United 
States, that, subject to paragraph (2), there is presented 
satisfactory documentary evidence of citizenship or nationality 
(as defined in paragraph (3)) of the individual.
  (2) The requirement of paragraph (1) shall not apply to an 
individual declaring to be a citizen or national of the United 
States who is eligible for medical assistance under this 
title--
          (A) and is entitled to or enrolled for benefits under 
        any part of title XVIII;
          (B) and is receiving--
                  (i) disability insurance benefits under 
                section 223 or monthly insurance benefits under 
                section 202 based on such individual's 
                disability (as defined in section 223(d)); or
                  (ii) supplemental security income benefits 
                under title XVI;
          (C) and with respect to whom--
                  (i) child welfare services are made available 
                under part B of title IV on the basis of being 
                a child in foster care; or
                  (ii) adoption or foster care assistance is 
                made available under part E of title IV;
          (D) pursuant to the application of section 1902(e)(4) 
        (and, in the case of an individual who is eligible for 
        medical assistance on such basis, the individual shall 
        be deemed to have provided satisfactory documentary 
        evidence of citizenship or nationality and shall not be 
        required to provide further documentary evidence on any 
        date that occurs during or after the period in which 
        the individual is eligible for medical assistance on 
        such basis); or
          (E) on such basis as the Secretary may specify under 
        which satisfactory documentary evidence of citizenship 
        or nationality has been previously presented.
  (3)(A) For purposes of this subsection, the term 
``satisfactory documentary evidence of citizenship or 
nationality'' means--
          (i) any document described in subparagraph (B); or
          (ii) a document described in subparagraph (C) and a 
        document described in subparagraph (D).
  (B) The following are documents described in this 
subparagraph:
          (i) A United States passport.
          (ii) Form N-550 or N-570 (Certificate of 
        Naturalization).
          (iii) Form N-560 or N-561 (Certificate of United 
        States Citizenship).
          (iv) A valid State-issued driver's license or other 
        identity document described in section 274A(b)(1)(D) of 
        the Immigration and Nationality Act, but only if the 
        State issuing the license or such document requires 
        proof of United States citizenship before issuance of 
        such license or document or obtains a social security 
        number from the applicant and verifies before 
        certification that such number is valid and assigned to 
        the applicant who is a citizen.
          (v)(I) Except as provided in subclause (II), a 
        document issued by a federally recognized Indian tribe 
        evidencing membership or enrollment in, or affiliation 
        with, such tribe (such as a tribal enrollment card or 
        certificate of degree of Indian blood).
          (II) With respect to those federally recognized 
        Indian tribes located within States having an 
        international border whose membership includes 
        individuals who are not citizens of the United States, 
        the Secretary shall, after consulting with such tribes, 
        issue regulations authorizing the presentation of such 
        other forms of documentation (including tribal 
        documentation, if appropriate) that the Secretary 
        determines to be satisfactory documentary evidence of 
        citizenship or nationality for purposes of satisfying 
        the requirement of this subsection.
          (vi) Such other document as the Secretary may 
        specify, by regulation, that provides proof of United 
        States citizenship or nationality and that provides a 
        reliable means of documentation of personal identity.
  (C) The following are documents described in this 
subparagraph:
          (i) A certificate of birth in the United States.
          (ii) Form FS-545 or Form DS-1350 (Certification of 
        Birth Abroad).
          (iii) Form I-197 (United States Citizen 
        Identification Card).
          (iv) Form FS-240 (Report of Birth Abroad of a Citizen 
        of the United States).
          (v) Such other document (not described in 
        subparagraph (B)(iv)) as the Secretary may specify that 
        provides proof of United States citizenship or 
        nationality.
  (D) The following are documents described in this 
subparagraph:
          (i) Any identity document described in section 
        274A(b)(1)(D) of the Immigration and Nationality Act.
          (ii) Any other documentation of personal identity of 
        such other type as the Secretary finds, by regulation, 
        provides a reliable means of identification.
  (E) A reference in this paragraph to a form includes a 
reference to any successor form.
  (4) In the case of an individual declaring to be a citizen or 
national of the United States with respect to whom a State 
requires the presentation of satisfactory documentary evidence 
of citizenship or nationality under section 1902(a)(46)(B)(i), 
the individual shall be provided at least the reasonable 
opportunity to present satisfactory documentary evidence of 
citizenship or nationality under this subsection 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.
  (5) Nothing in subparagraph (A) or (B) of section 
1902(a)(46), the preceding paragraphs of this subsection, or 
the Deficit Reduction Act of 2005, including section 6036 of 
such Act, shall be construed as changing the requirement of 
section 1902(e)(4) that a child born in the United States to an 
alien mother for whom medical assistance for the delivery of 
such child is available as treatment of an emergency medical 
condition pursuant to subsection (v) shall be deemed eligible 
for medical assistance during the first year of such child's 
life.
  (y) Payments for Establishment of Alternate Non-Emergency 
Services Providers.--
          (1) Payments.--In addition to the payments otherwise 
        provided under subsection (a), subject to paragraph 
        (2), the Secretary shall provide for payments to States 
        under such subsection for the establishment of 
        alternate non-emergency service providers (as defined 
        in section 1916A(e)(5)(B)), or networks of such 
        providers.
          (2) Limitation.--The total amount of payments under 
        this subsection shall not exceed $50,000,000 during the 
        4-year period beginning with 2006. This subsection 
        constitutes budget authority in advance of 
        appropriations Acts and represents the obligation of 
        the Secretary to provide for the payment of amounts 
        provided under this subsection.
          (3) Preference.--In providing for payments to States 
        under this subsection, the Secretary shall provide 
        preference to States that establish, or provide for, 
        alternate non-emergency services providers or networks 
        of such providers that--
                  (A) serve rural or underserved areas where 
                beneficiaries under this title may not have 
                regular access to providers of primary care 
                services; or
                  (B) are in partnership with local community 
                hospitals.
          (4) Form and manner of payment.--Payment to a State 
        under this subsection shall be made only upon the 
        filing of such application in such form and in such 
        manner as the Secretary shall specify. Payment to a 
        State under this subsection shall be made in the same 
        manner as other payments under section 1903(a).
  (z) Medicaid Transformation Payments.--
          (1) In general.--In addition to the payments provided 
        under subsection (a), subject to paragraph (4), the 
        Secretary shall provide for payments to States for the 
        adoption of innovative methods to improve the 
        effectiveness and efficiency in providing medical 
        assistance under this title.
          (2) Permissible uses of funds.--The following are 
        examples of innovative methods for which funds provided 
        under this subsection may be used:
                  (A) Methods for reducing patient error rates 
                through the implementation and use of 
                electronic health records, electronic clinical 
                decision support tools, or e-prescribing 
                programs.
                  (B) Methods for improving rates of collection 
                from estates of amounts owed under this title.
                  (C) Methods for reducing waste, fraud, and 
                abuse under the program under this title, such 
                as reducing improper payment rates as measured 
                by annual payment error rate measurement (PERM) 
                project rates.
                  (D) Implementation of a medication risk 
                management program as part of a drug use review 
                program under section 1927(g).
                  (E) Methods in reducing, in clinically 
                appropriate ways, expenditures under this title 
                for covered outpatient drugs, particularly in 
                the categories of greatest drug utilization, by 
                increasing the utilization of generic drugs 
                through the use of education programs and other 
                incentives to promote greater use of generic 
                drugs.
                  (F) Methods for improving access to primary 
                and specialty physician care for the uninsured 
                using integrated university-based hospital and 
                clinic systems.
          (3) Application; terms and conditions.--
                  (A) In general.--No payments shall be made to 
                a State under this subsection unless the State 
                applies to the Secretary for such payments in a 
                form, manner, and time specified by the 
                Secretary.
                  (B) Terms and conditions.--Such payments are 
                made under such terms and conditions consistent 
                with this subsection as the Secretary 
                prescribes.
                  (C) Annual report.--Payment to a State under 
                this subsection is conditioned on the State 
                submitting to the Secretary an annual report on 
                the programs supported by such payment. Such 
                report shall include information on--
                          (i) the specific uses of such 
                        payment;
                          (ii) an assessment of quality 
                        improvements and clinical outcomes 
                        under such programs; and
                          (iii) estimates of cost savings 
                        resulting from such programs.
          (4) Funding.--
                  (A) Limitation on funds.--The total amount of 
                payments under this subsection shall be equal 
                to, and shall not exceed--
                          (i) $75,000,000 for fiscal year 2007; 
                        and
                          (ii) $75,000,000 for fiscal year 
                        2008.
                This subsection constitutes budget authority in 
                advance of appropriations Acts and represents 
                the obligation of the Secretary to provide for 
                the payment of amounts provided under this 
                subsection.
                  (B) Allocation of funds.--The Secretary shall 
                specify a method for allocating the funds made 
                available under this subsection among States. 
                Such method shall provide preference for States 
                that design programs that target health 
                providers that treat significant numbers of 
                Medicaid beneficiaries. Such method shall 
                provide that not less than 25 percent of such 
                funds shall be allocated among States the 
                population of which (as determined according to 
                data collected by the United States Census 
                Bureau) as of July 1, 2004, was more than 105 
                percent of the population of the respective 
                State (as so determined) as of April 1, 2000.
                  (C) Form and manner of payment.--Payment to a 
                State under this subsection shall be made in 
                the same manner as other payments under section 
                1903(a). There is no requirement for State 
                matching funds to receive payments under this 
                subsection.
          (5) Medication risk management program.--
                  (A) In general.--For purposes of this 
                subsection, the term ``medication risk 
                management program'' means a program for 
                targeted beneficiaries that ensures that 
                covered outpatient drugs are appropriately used 
                to optimize therapeutic outcomes through 
                improved medication use and to reduce the risk 
                of adverse events.
                  (B) Elements.--Such program may include the 
                following elements:
                          (i) The use of established principles 
                        and standards for drug utilization 
                        review and best practices to analyze 
                        prescription drug claims of targeted 
                        beneficiaries and identify outlier 
                        physicians.
                          (ii) On an ongoing basis provide 
                        outlier physicians--
                                  (I) a comprehensive pharmacy 
                                claims history for each 
                                targeted beneficiary under 
                                their care;
                                  (II) information regarding 
                                the frequency and cost of 
                                relapses and hospitalizations 
                                of targeted beneficiaries under 
                                the physician's care; and
                                  (III) applicable best 
                                practice guidelines and 
                                empirical references.
                          (iii) Monitor outlier physician's 
                        prescribing, such as failure to refill, 
                        dosage strengths, and provide 
                        incentives and information to encourage 
                        the adoption of best clinical 
                        practices.
                  (C) Targeted beneficiaries.--For purposes of 
                this paragraph, the term ``targeted 
                beneficiaries'' means Medicaid eligible 
                beneficiaries who are identified as having high 
                prescription drug costs and medical costs, such 
                as individuals with behavioral disorders or 
                multiple chronic diseases who are taking 
                multiple medications.

SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR MEDICAL ASSISTANCE.

  (a) Application of Per Capita Cap on Payments for Medical 
Assistance Expenditures.--
          (1) In general.--If a State has excess aggregate 
        medical assistance expenditures (as defined in 
        paragraph (2)) for a fiscal year (beginning with fiscal 
        year 2020), the amount of payment to the State under 
        section 1903(a)(1) for each quarter in the following 
        fiscal year shall be reduced by 1/4 of the excess 
        aggregate medical assistance payments (as defined in 
        paragraph (3)) for that previous fiscal year. In this 
        section, the term ``State'' means only the 50 States 
        and the District of Columbia.
          (2) Excess aggregate medical assistance 
        expenditures.--In this subsection, the term ``excess 
        aggregate medical assistance expenditures'' means, for 
        a State for a fiscal year, the amount (if any) by 
        which--
                  (A) the amount of the adjusted total medical 
                assistance expenditures (as defined in 
                subsection (b)(1)) for the State and fiscal 
                year; exceeds
                  (B) the amount of the target total medical 
                assistance expenditures (as defined in 
                subsection (c)) for the State and fiscal year.
          (3) Excess aggregate medical assistance payments.--In 
        this subsection, the term ``excess aggregate medical 
        assistance payments'' means, for a State for a fiscal 
        year, the product of--
                  (A) the excess aggregate medical assistance 
                expenditures (as defined in paragraph (2)) for 
                the State for the fiscal year; and
                  (B) the Federal average medical assistance 
                matching percentage (as defined in paragraph 
                (4)) for the State for the fiscal year.
          (4) Federal average medical assistance matching 
        percentage.--In this subsection, the term ``Federal 
        average medical assistance matching percentage'' means, 
        for a State for a fiscal year, the ratio (expressed as 
        a percentage) of--
                  (A) the amount of the Federal payments that 
                would be made to the State under section 
                1903(a)(1) for medical assistance expenditures 
                for calendar quarters in the fiscal year if 
                paragraph (1) did not apply; to
                  (B) the amount of the medical assistance 
                expenditures for the State and fiscal year.
  (b) Adjusted Total Medical Assistance Expenditures.--Subject 
to subsection (g), the following shall apply:
          (1) In general.--In this section, the term ``adjusted 
        total medical assistance expenditures'' means, for a 
        State--
                  (A) for fiscal year 2016, the product of--
                          (i) the amount of the medical 
                        assistance expenditures (as defined in 
                        paragraph (2)) for the State and fiscal 
                        year, reduced by the amount of any 
                        excluded expenditures (as defined in 
                        paragraph (3)) for the State and fiscal 
                        year otherwise included in such medical 
                        assistance expenditures; and
                          (ii) the 1903A FY16 population 
                        percentage (as defined in paragraph 
                        (4)) for the State; or
                  (B) for fiscal year 2019 or a subsequent 
                fiscal year, the amount of the medical 
                assistance expenditures (as defined in 
                paragraph (2)) for the State and fiscal year 
                that is attributable to 1903A enrollees, 
                reduced by the amount of any excluded 
                expenditures (as defined in paragraph (3)) for 
                the State and fiscal year otherwise included in 
                such medical assistance expenditures.
          (2) Medical assistance expenditures.--In this 
        section, the term ``medical assistance expenditures'' 
        means, for a State and fiscal year, the medical 
        assistance payments as reported by medical service 
        category on the Form CMS-64 quarterly expense report 
        (or successor to such a report form, and including 
        enrollment data and subsequent adjustments to any such 
        report, in this section referred to collectively as a 
        ``CMS-64 report'') that directly result from providing 
        medical assistance under the State plan (including 
        under a waiver of the plan) for which payment is (or 
        may otherwise be) made pursuant to section 1903(a)(1).
          (3) Excluded expenditures.--In this section, the term 
        ``excluded expenditures'' means, for a State and fiscal 
        year, expenditures under the State plan (or under a 
        waiver of such plan) that are attributable to any of 
        the following:
                  (A) DSH.--Payment adjustments made for 
                disproportionate share hospitals under section 
                1923.
                  (B) Medicare cost-sharing.--Payments made for 
                medicare cost-sharing (as defined in section 
                1905(p)(3)).
                  (C) Safety net provider payment adjustments 
                in non-expansion states.--Payment adjustments 
                under subsection (a) of section 1923A for which 
                payment is permitted under subsection (c) of 
                such section.
          (4) 1903A fy 16 population percentage.--In this 
        subsection, the term ``1903A FY16 population 
        percentage'' means, for a State, the Secretary's 
        calculation of the percentage of the actual medical 
        assistance expenditures, as reported by the State on 
        the CMS-64 reports for calendar quarters in fiscal year 
        2016, that are attributable to 1903A enrollees (as 
        defined in subsection (e)(1)).
  (c)  Target Total Medical Assistance Expenditures.--
          (1) Calculation.--In this section, the term ``target 
        total medical assistance expenditures'' means, for a 
        State for a fiscal year, the sum of the products, for 
        each of the 1903A enrollee categories (as defined in 
        subsection (e)(2)), of--
                  (A) the target per capita medical assistance 
                expenditures (as defined in paragraph (2)) for 
                the enrollee category, State, and fiscal year; 
                and
                  (B) the number of 1903A enrollees for such 
                enrollee category, State, and fiscal year, as 
                determined under subsection (e)(4).
          (2) Target per capita medical assistance 
        expenditures.--In this subsection, the term ``target 
        per capita medical assistance expenditures'' means, for 
        a 1903A enrollee category, State, and a fiscal year, an 
        amount equal to--
                  (A) the provisional FY19 target per capita 
                amount for such enrollee category (as 
                calculated under subsection (d)(5)) for the 
                State; increased by
                  (B) the percentage increase in the medical 
                care component of the consumer price index for 
                all urban consumers (U.S. city average) from 
                September of 2019 to September of the fiscal 
                year involved.
  (d) Calculation of FY19 Provisional Target Amount for Each 
1903A Enrollee Category.--Subject to subsection (g), the 
following shall apply:
          (1) Calculation of base amounts for fiscal year 
        2016.--For each State the Secretary shall calculate 
        (and provide notice to the State not later than April 
        1, 2018, of) the following:
                  (A) The amount of the adjusted total medical 
                assistance expenditures (as defined in 
                subsection (b)(1)) for the State for fiscal 
                year 2016.
                  (B) The number of 1903A enrollees for the 
                State in fiscal year 2016 (as determined under 
                subsection (e)(4)).
                  (C) The average per capita medical assistance 
                expenditures for the State for fiscal year 2016 
                equal to--
                          (i) the amount calculated under 
                        subparagraph (A); divided by
                          (ii) the number calculated under 
                        subparagraph (B).
          (2) Fiscal year 2019 average per capita amount based 
        on inflating the fiscal year 2016 amount to fiscal year 
        2019 by cpi-medical.--The Secretary shall calculate a 
        fiscal year 2019 average per capita amount for each 
        State equal to--
                  (A) the average per capita medical assistance 
                expenditures for the State for fiscal year 2016 
                (calculated under paragraph (1)(C)); increased 
                by
                  (B) the percentage increase in the medical 
                care component of the consumer price index for 
                all urban consumers (U.S. city average) from 
                September, 2016 to September, 2019.
          (3) Aggregate and average expenditures per capita for 
        fiscal year 2019.--The Secretary shall calculate for 
        each State the following:
                  (A) The amount of the adjusted total medical 
                assistance expenditures (as defined in 
                subsection (b)(1)) for the State for fiscal 
                year 2019. 
                  (B) The number of 1903A enrollees for the 
                State in fiscal year 2019 (as determined under 
                subsection (e)(4)).
          (4) Per capita expenditures for fiscal year 2019 for 
        each 1903a enrollee category.--The Secretary shall 
        calculate (and provide notice to each State not later 
        than January 1, 2020, of) the following:
                  (A)(i) For each 1903A enrollee category, the 
                amount of the adjusted total medical assistance 
                expenditures (as defined in subsection (b)(1)) 
                for the State for fiscal year 2019 for 
                individuals in the enrollee category, 
                calculated by excluding from medical assistance 
                expenditures those expenditures attributable to 
                expenditures described in clause (iii) or non-
                DSH supplemental expenditures (as defined in 
                clause (ii)).
                  (ii) In this paragraph, the term ``non-DSH 
                supplemental expenditure'' means a payment to a 
                provider under the State plan (or under a 
                waiver of the plan) that--
                          (I) is not made under section 1923;
                          (II) is not made with respect to a 
                        specific item or service for an 
                        individual;
                          (III) is in addition to any payments 
                        made to the provider under the plan (or 
                        waiver) for any such item or service; 
                        and
                          (IV) complies with the limits for 
                        additional payments to providers under 
                        the plan (or waiver) imposed pursuant 
                        to section 1902(a)(30)(A), including 
                        the regulations specifying upper 
                        payment limits under the State plan in 
                        part 447 of title 42, Code of Federal 
                        Regulations (or any successor 
                        regulations).
                  (iii) An expenditure described in this clause 
                is an expenditure that meets the criteria 
                specified in subclauses (I), (II), and (III) of 
                clause (ii) and is authorized under section 
                1115 for the purposes of funding a delivery 
                system reform pool, uncompensated care pool, a 
                designated state health program, or any other 
                similar expenditure (as defined by the 
                Secretary).
                  (B) For each 1903A enrollee category, the 
                number of 1903A enrollees for the State in 
                fiscal year 2019 in the enrollee category (as 
                determined under subsection (e)(4)).
                  (C) For fiscal year 2016, the State's non-DSH 
                supplemental payment percentage is equal to the 
                ratio (expressed as a percentage) of--
                          (i) the total amount of non-DSH 
                        supplemental expenditures (as defined 
                        in subparagraph (A)(ii)) for the State 
                        for fiscal year 2016; to
                          (ii) the amount described in 
                        subsection (b)(1)(A) for the State for 
                        fiscal year 2016.
                  (D) For each 1903A enrollee category an 
                average medical assistance expenditures per 
                capita for the State for fiscal year 2019 for 
                the enrollee category equal to--
                          (i) the amount calculated under 
                        subparagraph (A) for the State, 
                        increased by the non-DSH supplemental 
                        payment percentage for the State (as 
                        calculated under subparagraph (C)); 
                        divided by
                          (ii) the number calculated under 
                        subparagraph (B) for the State for the 
                        enrollee category.
          (5) Provisional fy19 per capita target amount for 
        each 1903a enrollee category.--Subject to subsection 
        (f)(2), the Secretary shall calculate for each State a 
        provisional FY19 per capita target amount for each 
        1903A enrollee category equal to the average medical 
        assistance expenditures per capita for the State for 
        fiscal year 2019 (as calculated under paragraph (4)(D)) 
        for such enrollee category multiplied by the ratio of--
                  (A) the product of--
                          (i) the fiscal year 2019 average per 
                        capita amount for the State, as 
                        calculated under paragraph (2); and
                          (ii) the number of 1903A enrollees 
                        for the State in fiscal year 2019, as 
                        calculated under paragraph (3)(B); to
                  (B) the amount of the adjusted total medical 
                assistance expenditures for the State for 
                fiscal year 2019, as calculated under paragraph 
                (3)(A).
  (e) 1903A Enrollee; 1903A Enrollee Category.--Subject to 
subsection (g), for purposes of this section, the following 
shall apply:
          (1) 1903A enrollee.--The term ``1903A enrollee'' 
        means, with respect to a State and a month, any 
        Medicaid enrollee (as defined in paragraph (3)) for the 
        month, other than such an enrollee who for such month 
        is in any of the following categories of excluded 
        individuals:
                  (A) CHIP.--An individual who is provided, 
                under this title in the manner described in 
                section 2101(a)(2), child health assistance 
                under title XXI.
                  (B) IHS.--An individual who receives any 
                medical assistance under this title for 
                services for which payment is made under the 
                third sentence of section 1905(b).
                  (C) Breast and cervical cancer services 
                eligible individual.--An individual who is 
                entitled to medical assistance under this title 
                only pursuant to section 
                1902(a)(10)(A)(ii)(XVIII).
                  (D) Partial-benefit enrollees.--An individual 
                who--
                          (i) is an alien who is entitled to 
                        medical assistance under this title 
                        only pursuant to section 1903(v)(2);
                          (ii) is entitled to medical 
                        assistance under this title only 
                        pursuant to subclause (XII) or (XXI) of 
                        section 1902(a)(10)(A)(ii) (or pursuant 
                        to a waiver that provides only 
                        comparable benefits);
                          (iii) is a dual eligible individual 
                        (as defined in section 1915(h)(2)(B)) 
                        and is entitled to medical assistance 
                        under this title (or under a waiver) 
                        only for some or all of medicare cost-
                        sharing (as defined in section 
                        1905(p)(3)); or
                          (iv) is entitled to medical 
                        assistance under this title and for 
                        whom the State is providing a payment 
                        or subsidy to an employer for coverage 
                        of the individual under a group health 
                        plan pursuant to section 1906 or 
                        section 1906A (or pursuant to a waiver 
                        that provides only comparable 
                        benefits).
          (2) 1903A enrollee category.--The term ``1903A 
        enrollee category'' means each of the following:
                  (A) Elderly.--A category of 1903A enrollees 
                who are 65 years of age or older.
                  (B) Blind and disabled.--A category of 1903A 
                enrollees (not described in the previous 
                subparagraph) who are eligible for medical 
                assistance under this title on the basis of 
                being blind or disabled.
                  (C) Children.--A category of 1903A enrollees 
                (not described in a previous subparagraph) who 
                are children under 19 years of age.
                  (D) Expansion enrollees.--A category of 1903A 
                enrollees (not described in a previous 
                subparagraph) for whom the amounts expended for 
                medical assistance are subject to an increase 
                or change in the Federal medical assistance 
                percentage under subsection (y) or (z)(2), 
                respectively, of section 1905.
                  (E) Other nonelderly, nondisabled, non-
                expansion adults.--A category of 1903A 
                enrollees who are not described in any previous 
                subparagraph.
          (3) Medicaid enrollee.--The term ``Medicaid 
        enrollee'' means, with respect to a State for a month, 
        an individual who is eligible for medical assistance 
        for items or services under this title and enrolled 
        under the State plan (or a waiver of such plan) under 
        this title for the month.
          (4) Determination of number of 1903a enrollees.--The 
        number of 1903A enrollees for a State and fiscal year, 
        and, if applicable, for a 1903A enrollee category, is 
        the average monthly number of Medicaid enrollees for 
        such State and fiscal year (and, if applicable, in such 
        category) that are reported through the CMS-64 report 
        under (and subject to audit under) subsection (h).
  (f) Special Payment Rules.--
          (1) Application in case of research and demonstration 
        projects and other waivers.--In the case of a State 
        with a waiver of the State plan approved under section 
        1115, section 1915, or another provision of this title, 
        this section shall apply to medical assistance 
        expenditures and medical assistance payments under the 
        waiver, in the same manner as if such expenditures and 
        payments had been made under a State plan under this 
        title and the limitations on expenditures under this 
        section shall supersede any other payment limitations 
        or provisions (including limitations based on a per 
        capita limitation) otherwise applicable under such a 
        waiver.
          (2) Treatment of states expanding coverage after 
        fiscal year 2016.--In the case of a State that did not 
        provide for medical assistance for the 1903A enrollee 
        category described in subsection (e)(2)(D) during 
        fiscal year 2016 but which provides for such assistance 
        for such category in a subsequent year, the provisional 
        FY19 per capita target amount for such enrollee 
        category under subsection (d)(5) shall be equal to the 
        provisional FY19 per capita target amount for the 1903A 
        enrollee category described in subsection (e)(2)(E).
          (3) In case of state failure to report necessary 
        data.--If a State for any quarter in a fiscal year 
        (beginning with fiscal year 2019) fails to 
        satisfactorily submit data on expenditures and 
        enrollees in accordance with subsection (h)(1), for 
        such fiscal year and any succeeding fiscal year for 
        which such data are not satisfactorily submitted--
                  (A) the Secretary shall calculate and apply 
                subsections (a) through (e) with respect to the 
                State as if all 1903A enrollee categories for 
                which such expenditure and enrollee data were 
                not satisfactorily submitted were a single 
                1903A enrollee category; and
                  (B) the growth factor otherwise applied under 
                subsection (c)(2)(B) shall be decreased by 1 
                percentage point.
  (g) Recalculation of Certain Amounts for Data Errors.--The 
amounts and percentage calculated under paragraphs (1) and 
(4)(C) of subsection (d) for a State for fiscal year 2016, and 
the amounts of the adjusted total medical assistance 
expenditures calculated under subsection (b) and the number of 
Medicaid enrollees and 1903A enrollees determined under 
subsection (e)(4) for a State for fiscal year 2016, fiscal year 
2019, and any subsequent fiscal year, may be adjusted by the 
Secretary based upon an appeal (filed by the State in such a 
form, manner, and time, and containing such information 
relating to data errors that support such appeal, as the 
Secretary specifies) that the Secretary determines to be valid, 
except that any adjustment by the Secretary under this 
subsection for a State may not result in an increase of the 
target total medical assistance expenditures exceeding 2 
percent.
  (h) Required Reporting and Auditing of CMS-64 Data; 
Transitional Increase in Federal Matching Percentage for 
Certain Administrative Expenses.--
          (1) Reporting.--In addition to the data required on 
        form Group VIII on the CMS-64 report form as of January 
        1, 2017, in each CMS-64 report required to be submitted 
        (for each quarter beginning on or after October 1, 
        2018), the State shall include data on medical 
        assistance expenditures within such categories of 
        services and categories of enrollees (including each 
        1903A enrollee category and each category of excluded 
        individuals under subsection (e)(1)) and the numbers of 
        enrollees within each of such enrollee categories, as 
        the Secretary determines are necessary (including 
        timely guidance published as soon as possible after the 
        date of the enactment of this section) in order to 
        implement this section and to enable States to comply 
        with the requirement of this paragraph on a timely 
        basis.
          (2) Auditing.--The Secretary shall conduct for each 
        State an audit of the number of individuals and 
        expenditures reported through the CMS-64 report for 
        fiscal year 2016, fiscal year 2019, and each subsequent 
        fiscal year, which audit may be conducted on a 
        representative sample (as determined by the Secretary).
          (3) Temporary increase in federal matching percentage 
        to support improved data reporting systems for fiscal 
        years 2018 and 2019.--For amounts expended during 
        calendar quarters beginning on or after October 1, 
        2017, and before October 1, 2019--
                  (A) the Federal matching percentage applied 
                under section 1903(a)(3)(A)(i) shall be 
                increased by 10 percentage points to 100 
                percent;
                  (B) the Federal matching percentage applied 
                under section 1903(a)(3)(B) shall be increased 
                by 25 percentage points to 100 percent; and
                  (C) the Federal matching percentage applied 
                under section 1903(a)(7) shall be increased by 
                10 percentage points to 60 percent but only 
                with respect to amounts expended that are 
                attributable to a State's additional 
                administrative expenditures to implement the 
                data requirements of paragraph (1).

           *       *       *       *       *       *       *


                              DEFINITIONS

  Sec. 1905. For purposes of this title--
  (a) The term ``medical assistance'' means payment of part or 
all of the cost of the following care and services or the care 
and services themselves, or both (if provided [in or after the 
third month before the month in which the recipient makes 
application for assistance] in or after the month in which the 
recipient makes application for assistance or, in the case of 
medicare cost-sharing with respect to a qualified medicare 
beneficiary described in subsection (p)(1), if provided after 
the month in which the individual becomes such a beneficiary) 
for individuals, and, with respect to physicians' or dentists' 
services, at the option of the State, to individuals (other 
than individuals 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 and are eligible for medical assistance 
equal in amount, duration, and scope to the medical assistance 
made available to individuals described in section 
1902(a)(10)(A)) 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, who are--
          
                  
          (i) under the age of 21, or, at the option of the 
        State, under the age of 20, 19, or 18 as the State may 
        choose,
          (ii) relatives specified in section 406(b)(1) with 
        whom a child is living if such child is (or would, if 
        needy, be) a dependent child under part A of title IV,
          (iii) 65 years of age or older,
          (iv) blind, with respect to States eligible to 
        participate in the State plan program established under 
        title XVI,
          (v) 18 years of age or older and permanently and 
        totally disabled, with respect to States eligible to 
        participate in the State plan program established under 
        title XVI,
          (vi) persons essential (as described in the second 
        sentence of this subsection) to individuals receiving 
        aid or assistance under State plans approved under 
        title I, X, XIV, or XVI,
          (vii) blind or disabled as defined in section 1614, 
        with respect to States not eligible to participate in 
        the State plan program established under title XVI,
          (viii) pregnant women,
          (ix) individuals provided extended benefits under 
        section 1925,
          (x) individuals described in section 1902(u)(1),
          (xi) individuals described in section 1902(z)(1),
          (xii) employed individuals with a medically improved 
        disability (as defined in subsection (v)),
          (xiii) individuals described in section 1902(aa),
          (xiv) individuals described in section 
        1902(a)(10)(A)(i)(VIII) or 1902(a)(10)(A)(i)(IX),
          (xv) individuals described in section 
        1902(a)(10)(A)(ii)(XX),
                          (xvi) individuals described in 
                        section 1902(ii), or
          (xvii) individuals 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,
but whose income and resources are insufficient to meet all of 
such cost--
          (1) inpatient hospital services (other than services 
        in an institution for mental diseases);
          (2)(A) outpatient hospital services, (B) consistent 
        with State law permitting such services, rural health 
        clinic services (as defined in subsection (l)(1)) and 
        any other ambulatory services which are offered by a 
        rural health clinic (as defined in subsection (l)(1)) 
        and which are otherwise included in the plan, and (C) 
        Federally-qualified health center services (as defined 
        in subsection (l)(2)) and any other ambulatory services 
        offered by a Federally-qualified health center and 
        which are otherwise included in the plan;
          (3) other laboratory and X-ray services;
          (4)(A) nursing facility services (other than services 
        in an institution for mental diseases) for individuals 
        21 years of age or older; (B) early and periodic 
        screening, diagnostic, and treatment services (as 
        defined in subsection (r)) for individuals who are 
        eligible under the plan and are under the age of 21; 
        (C) family planning services and supplies furnished 
        (directly or under arrangements with others) to 
        individuals of child-bearing age (including minors who 
        can be considered to be sexually active) who are 
        eligible under the State plan and who desire such 
        services and supplies; and (D) counseling and 
        pharmacotherapy for cessation of tobacco use by 
        pregnant women (as defined in subsection (bb));
          (5)(A) physicians' services furnished by a physician 
        (as defined in section 1861(r)(1)), whether furnished 
        in the office, the patient's home, a hospital, or a 
        nursing facility, or elsewhere, and (B) medical and 
        surgical services furnished by a dentist (described in 
        section 1861(r)(2)) to the extent such services may be 
        performed under State law either by a doctor of 
        medicine or by a doctor of dental surgery or dental 
        medicine and would be described in clause (A) if 
        furnished by a physician (as defined in section 
        1861(r)(1));
          (6) medical care, or any other type of remedial care 
        recognized under State law, furnished by licensed 
        practitioners within the scope of their practice as 
        defined by State law;
          (7) home health care services;
          (8) private duty nursing services;
          (9) clinic services furnished by or under the 
        direction of a physician, without regard to whether the 
        clinic itself is administered by a physician, including 
        such services furnished outside the clinic by clinic 
        personnel to an eligible individual who does not reside 
        in a permanent dwelling or does not have a fixed home 
        or mailing address;
          (10) dental services;
          (11) physical therapy and related services;
          (12) prescribed drugs, dentures, and prosthetic 
        devices; and eyeglasses prescribed by a physician 
        skilled in diseases of the eye or by an optometrist, 
        whichever the individual may select;
          (13) other diagnostic, screening, preventive, and 
        rehabilitative services, including--
                  (A) any clinical preventive services that are 
                assigned a grade of A or B by the United States 
                Preventive Services Task Force;
                  (B) with respect to an adult individual, 
                approved vaccines recommended by the Advisory 
                Committee on Immunization Practices (an 
                advisory committee established by the 
                Secretary, acting through the Director of the 
                Centers for Disease Control and Prevention) and 
                their administration; and
                  (C) any medical or remedial services 
                (provided in a facility, a home, or other 
                setting) recommended by a physician or other 
                licensed practitioner of the healing arts 
                within the scope of their practice under State 
                law, for the maximum reduction of physical or 
                mental disability and restoration of an 
                individual to the best possible functional 
                level;
          (14) inpatient hospital services and nursing facility 
        services for individuals 65 years of age or over in an 
        institution for mental diseases;
          (15) services in an intermediate care facility for 
        the mentally retarded (other than in an institution for 
        mental diseases) for individuals who are determined, in 
        accordance with section 1902(a)(31), to be in need of 
        such care;
          (16) (A) effective January 1, 1973, inpatient 
        psychiatric hospital services for individuals under age 
        21, as defined in subsection (h), and, (B) for 
        individuals receiving services described in 
        subparagraph (A), early and periodic screening, 
        diagnostic, and treatment services (as defined in 
        subsection (r)), whether or not such screening, 
        diagnostic, and treatment services are furnished by the 
        provider of the services described in such 
        subparagraph;
          (17) services furnished by a nurse-midwife (as 
        defined in section 1861(gg)) which the nurse-midwife is 
        legally authorized to perform under State law (or the 
        State regulatory mechanism provided by State law), 
        whether or not the nurse-midwife is under the 
        supervision of, or associated with, a physician or 
        other health care provider, and without regard to 
        whether or not the services are performed in the area 
        of management of the care of mothers and babies 
        throughout the maternity cycle;
          (18) hospice care (as defined in subsection (o));
          (19) case management services (as defined in section 
        1915(g)(2)) and TB-related services described in 
        section 1902(z)(2)(F);
          (20) respiratory care services (as defined in section 
        1902(e)(9)(C));
          (21) services furnished by a certified pediatric 
        nurse practitioner or certified family nurse 
        practitioner (as defined by the Secretary) which the 
        certified pediatric nurse practitioner or certified 
        family nurse practitioner is legally authorized to 
        perform under State law (or the State regulatory 
        mechanism provided by State law), whether or not the 
        certified pediatric nurse practitioner or certified 
        family nurse practitioner is under the supervision of, 
        or associated with, a physician or other health care 
        provider;
          (22) home and community care (to the extent allowed 
        and as defined in section 1929) for functionally 
        disabled elderly individuals;
          (23) community supported living arrangements services 
        (to the extent allowed and as defined in section 1930);
          (24) personal care services furnished to an 
        individual who is not an inpatient or resident of a 
        hospital, nursing facility, intermediate care facility 
        for the mentally retarded, or institution for mental 
        disease that are (A) authorized for the individual by a 
        physician in accordance with a plan of treatment or (at 
        the option of the State) otherwise authorized for the 
        individual in accordance with a service plan approved 
        by the State, (B) provided by an individual who is 
        qualified to provide such services and who is not a 
        member of the individual's family, and (C) furnished in 
        a home or other location;
          (25) primary care case management services (as 
        defined in subsection (t));
          (26) services furnished under a PACE program under 
        section 1934 to PACE program eligible individuals 
        enrolled under the program under such section;
          (27) subject to subsection (x), primary and secondary 
        medical strategies and treatment and services for 
        individuals who have Sickle Cell Disease;
          (28) freestanding birth center services (as defined 
        in subsection (l)(3)(A)) and other ambulatory services 
        that are offered by a freestanding birth center (as 
        defined in subsection (l)(3)(B)) and that are otherwise 
        included in the plan; and
          (29) any other medical care, and any other type of 
        remedial care recognized under State law, specified by 
        the Secretary,
except as otherwise provided in paragraph (16), such term does 
not include--
          (A) any such payments with respect to care or 
        services for any individual who is an inmate of a 
        public institution (except as a patient in a medical 
        institution); or
          (B) any such payments with respect to care or 
        services for any individual who has not attained 65 
        years of age and who is a patient in an institution for 
        mental diseases.
For purposes of clause (vi) of the preceding sentence, a person 
shall be considered essential to another individual if such 
person is the spouse of and is living with such individual, the 
needs of such person are taken into account in determining the 
amount of aid or assistance furnished to such individual (under 
a State plan approved under title I, X, XIV, or XVI), and such 
person is determined, under such a State plan, to be essential 
to the well-being of such individual. The payment described in 
the first sentence may include expenditures for medicare cost-
sharing and for premiums under part B of title XVIII for 
individuals who are eligible for medical assistance under the 
plan and (A) are receiving aid or assistance under any plan of 
the State approved under title I, X, XIV, or XVI, or part A of 
title IV, or with respect to whom supplemental security income 
benefits are being paid under title XVI, or (B) with respect to 
whom there is being paid a State supplementary payment and are 
eligible for medical assistance equal in amount, duration, and 
scope to the medical assistance made available to individuals 
described in section 1902(a)(10)(A), and, except in the case of 
individuals 65 years of age or older and disabled individuals 
entitled to health insurance benefits under title XVIII who are 
not enrolled under part B of title XVIII, other insurance 
premiums for medical or any other type of remedial care or the 
cost thereof. No service (including counseling) shall be 
excluded from the definition of ``medical assistance'' solely 
because it is provided as a treatment service for alcoholism or 
drug dependency.
  (b) Subject to subsections (y), (z), and (aa) and section 
1933(d), the term ``Federal medical assistance percentage'' for 
any State shall be 100 per centum less the State percentage; 
and the State percentage shall be that percentage which bears 
the same ratio to 45 per centum as the square of the per capita 
income of such State bears to the square of the per capita 
income of the continental United States (including Alaska) and 
Hawaii; except that (1) the Federal medical assistance 
percentage shall in no case be less than 50 per centum or more 
than 83 per centum, (2) the Federal medical assistance 
percentage for Puerto Rico, the Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa shall be 55 
percent, (3) for purposes of this title and title XXI, the 
Federal medical assistance percentage for the District of 
Columbia shall be 70 percent, (4) the Federal medical 
assistance percentage shall be equal to the enhanced FMAP 
described in section 2105(b) with respect to medical assistance 
provided to individuals who are eligible for such assistance 
only on the basis of section 1902(a)(10)(A)(ii)(XVIII), and (5) 
in the case of a State that provides medical assistance for 
services and vaccines described in subparagraphs (A) and (B) of 
subsection (a)(13), and prohibits cost-sharing for such 
services and vaccines, the Federal medical assistance 
percentage, as determined under this subsection and subsection 
(y) (without regard to paragraph (1)(C) of such subsection), 
shall be increased by 1 percentage point with respect to 
medical assistance for such services and vaccines and for items 
and services described in subsection (a)(4)(D). The Federal 
medical assistance percentage for any State shall be determined 
and promulgated in accordance with the provisions of section 
1101(a)(8)(B). Notwithstanding the first sentence of this 
section, the Federal medical assistance percentage shall be 100 
per centum with respect to amounts expended as medical 
assistance for services which are received through an Indian 
Health Service facility whether operated by the Indian Health 
Service or by an Indian tribe or tribal organization (as 
defined in section 4 of the Indian Health Care Improvement 
Act). Notwithstanding the first sentence of this subsection, in 
the case of a State plan that meets the condition described in 
subsection (u)(1), with respect to expenditures (other than 
expenditures under section 1923) described in subsection 
(u)(2)(A) or subsection (u)(3) for the State for a fiscal year, 
and that do not exceed the amount of the State's available 
allotment under section 2104, the Federal medical assistance 
percentage is equal to the enhanced FMAP described in section 
2105(b).
  (c) For definition of the term ``nursing facility'', see 
section 1919(a).
  (d) The term ``intermediate care facility for the mentally 
retarded'' means an institution (or distinct part thereof) for 
the mentally retarded or persons with related conditions if--
          (1) the primary purpose of such institution (or 
        distinct part thereof) is to provide health or 
        rehabilitative services for mentally retarded 
        individuals and the institution meets such standards as 
        may be prescribed by the Secretary;
          (2) the mentally retarded individual with respect to 
        whom a request for payment is made under a plan 
        approved under this title is receiving active treatment 
        under such a program; and
          (3) in the case of a public institution, the State or 
        political subdivision responsible for the operation of 
        such institution has agreed that the non-Federal 
        expenditures in any calendar quarter prior to January 
        1, 1975, with respect to services furnished to patients 
        in such institution (or distinct part thereof) in the 
        State will not, because of payments made under this 
        title, be reduced below the average amount expended for 
        such services in such institution in the four quarters 
        immediately preceding the quarter in which the State in 
        which such institution is located elected to make such 
        services available under its plan approved under this 
        title.
  (e) In the case of any State the State plan of which (as 
approved under this title)--
          (1) does not provide for the payment of services 
        (other than services covered under section 1902(a)(12)) 
        provided by an optometrist; but
          (2) at a prior period did provide for the payment of 
        services referred to in paragraph (1);
the term ``physicians' services'' (as used in subsection 
(a)(5)) shall include services of the type which an optometrist 
is legally authorized to perform where the State plan 
specifically provides that the term ``physicians' services'', 
as employed in such plan, includes services of the type which 
an optometrist is legally authorized to perform, and shall be 
reimbursed whether furnished by a physician or an optometrist.
  (f) For purposes of this title, the term ``nursing facility 
services'' means services which are or were required to be 
given an individual who needs or needed on a daily basis 
nursing care (provided directly by or requiring the supervision 
of nursing personnel) or other rehabilitation services which as 
a practical matter can only be provided in a nursing facility 
on an inpatient basis.
  (g) If the State plan includes provision of chiropractors' 
services, such services include only--
          (1) services provided by a chiropractor (A) who is 
        licensed as such by the State and (B) who meets uniform 
        minimum standards promulgated by the Secretary under 
        section 1861(r)(5); and
          (2) services which consist of treatment by means of 
        manual manipulation of the spine which the chiropractor 
        is legally authorized to perform by the State.
  (h)(1) For purposes of paragraph (16) of subsection (a), the 
term ``inpatient psychiatric hospital services for individuals 
under age 21'' includes only--
          (A) inpatient services which are provided in an 
        institution (or distinct part thereof) which is a 
        psychiatric hospital as defined in section 1861(f) or 
        in another inpatient setting that the Secretary has 
        specified in regulations;
          (B) inpatient services which, in the case of any 
        individual (i) involve active treatment which meets 
        such standards as may be prescribed in regulations by 
        the Secretary, and (ii) a team, consisting of 
        physicians and other personnel qualified to make 
        determinations with respect to mental health conditions 
        and the treatment thereof, has determined are necessary 
        on an inpatient basis and can reasonably be expected to 
        improve the condition, by reason of which such services 
        are necessary, to the extent that eventually such 
        services will no longer be necessary; and
          (C) inpatient services which, in the case of any 
        individual, are provided prior to (i) the date such 
        individual attains age 21, or (ii) in the case of an 
        individual who was receiving such services in the 
        period immediately preceding the date on which he 
        attained age 21, (I) the date such individual no longer 
        requires such services, or (II) if earlier, the date 
        such individual attains age 22;
  (2) Such term does not include services provided during any 
calendar quarter under the State plan of any State if the total 
amount of the funds expended, during such quarter, by the State 
(and the political subdivisions thereof) from non-Federal funds 
for inpatient services included under paragraph (1), and for 
active psychiatric care and treatment provided on an outpatient 
basis for eligible mentally ill children, is less than the 
average quarterly amount of the funds expended, during the 4-
quarter period ending December 31, 1971, by the State (and the 
political subdivisions thereof) from non-Federal funds for such 
services.
  (i) The term ``institution for mental diseases'' means a 
hospital, nursing facility, or other institution of more than 
16 beds, that is primarily engaged in providing diagnosis, 
treatment, or care of persons with mental diseases, including 
medical attention, nursing care, and related services.
  (j) The term ``State supplementary payment'' means any cash 
payment made by a State on a regular basis to an individual who 
is receiving supplemental security income benefits under title 
XVI or who would but for his income be eligible to receive such 
benefits, as assistance based on need in supplementation of 
such benefits (as determined by the Commissioner of Social 
Security), but only to the extent that such payments are made 
with respect to an individual with respect to whom supplemental 
security income benefits are payable under title XVI, or would 
but for his income be payable under that title.
  (k) Increased supplemental security income benefits payable 
pursuant to section 211 of Public Law 93-66 shall not be 
considered supplemental security income benefits payable under 
title XVI.
  (l)(1) The terms ``rural health clinic services'' and ``rural 
health clinic'' have the meanings given such terms in section 
1861(aa), except that (A) clause (ii) of section 1861(aa)(2) 
shall not apply to such terms, and (B) the physician 
arrangement required under section 1861(aa)(2)(B) shall only 
apply with respect to rural health clinic services and, with 
respect to other ambulatory care services, the physician 
arrangement required shall be only such as may be required 
under the State plan for those services.
  (2)(A) The term ``Federally-qualified health center 
services'' means services of the type described in 
subparagraphs (A) through (C) of section 1861(aa)(1) when 
furnished to an individual as an patient of a Federally-
qualified health center and, for this purpose, any reference to 
a rural health clinic or a physician described in section 
1861(aa)(2)(B) is deemed a reference to a Federally-qualified 
health center or a physician at the center, respectively.
  (B) The term ``Federally-qualified health center'' means an 
entity which--
          (i) is receiving a grant under section 330 of the 
        Public Health Service Act,
          (ii)(I) is receiving funding from such a grant under 
        a contract with the recipient of such a grant, and
          (II) meets the requirements to receive a grant under 
        section 330 of such Act,
          (iii) based on the recommendation of the Health 
        Resources and Services Administration within the Public 
        Health Service, is determined by the Secretary to meet 
        the requirements for receiving such a grant, including 
        requirements of the Secretary that an entity may not be 
        owned, controlled, or operated by another entity, or
          (iv) was treated by the Secretary, for purposes of 
        part B of title XVIII, as a comprehensive Federally 
        funded health center as of January 1, 1990;
and includes an outpatient health program or facility operated 
by a tribe or tribal organization under the Indian Self-
Determination Act (Public Law 93-638) or by an urban Indian 
organization receiving funds under title V of the Indian Health 
Care Improvement Act for the provision of primary health 
services. In applying clause (ii), the Secretary may waive any 
requirement referred to in such clause for up to 2 years for 
good cause shown.
  (3)(A) The term ``freestanding birth center services'' means 
services furnished to an individual at a freestanding birth 
center (as defined in subparagraph (B)) at such center.
  (B) The term ``freestanding birth center'' means a health 
facility--
          (i) that is not a hospital;
          (ii) where childbirth is planned to occur away from 
        the pregnant woman's residence;
          (iii) that is licensed or otherwise approved by the 
        State to provide prenatal labor and delivery or 
        postpartum care and other ambulatory services that are 
        included in the plan; and
          (iv) that complies with such other requirements 
        relating to the health and safety of individuals 
        furnished services by the facility as the State shall 
        establish.
  (C) A State shall provide separate payments to providers 
administering prenatal labor and delivery or postpartum care in 
a freestanding birth center (as defined in subparagraph (B)), 
such as nurse midwives and other providers of services such as 
birth attendants recognized under State law, as determined 
appropriate by the Secretary. For purposes of the preceding 
sentence, the term ``birth attendant'' means an individual who 
is recognized or registered by the State involved to provide 
health care at childbirth and who provides such care within the 
scope of practice under which the individual is legally 
authorized to perform such care under State law (or the State 
regulatory mechanism provided by State law), regardless of 
whether the individual is under the supervision of, or 
associated with, a physician or other health care provider. 
Nothing in this subparagraph shall be construed as changing 
State law requirements applicable to a birth attendant.
  (m)(1) Subject to paragraph (2), the term ``qualified family 
member'' means an individual (other than a qualified pregnant 
woman or child, as defined in subsection (n)) who is a member 
of a family that would be receiving aid under the State plan 
under part A of title IV pursuant to section 407 if the State 
had not exercised the option under section 407(b)(2)(B)(i).
  (2) No individual shall be a qualified family member for any 
period after September 30, 1998.
  (n) The term ``qualified pregnant woman or child'' means--
          (1) a pregnant woman who--
                  (A) would be eligible for aid to families 
                with dependent children under part A of title 
                IV (or would be eligible for such aid if 
                coverage under the State plan under part A of 
                title IV included aid to families with 
                dependent children of unemployed parents 
                pursuant to section 407) if her child had been 
                born and was living with her in the month such 
                aid would be paid, and such pregnancy has been 
                medically verified;
                  (B) is a member of a family which would be 
                eligible for aid under the State plan under 
                part A of title IV pursuant to section 407 if 
                the plan required the payment of aid pursuant 
                to such section; or
                  (C) otherwise meets the income and resources 
                requirements of a State plan under part A of 
                title IV; and
          (2) a child who has not attained the age of 19, who 
        was born after September 30, 1983 (or such earlier date 
        as the State may designate), and who meets the income 
        and resources requirements of the State plan under part 
        A of title IV.
  (o)(1)(A) Subject to subparagraphs (B) and (C), the term 
``hospice care'' means the care described in section 
1861(dd)(1) furnished by a hospice program (as defined in 
section 1861(dd)(2)) to a terminally ill individual who has 
voluntarily elected (in accordance with paragraph (2)) to have 
payment made for hospice care instead of having payment made 
for certain benefits described in section 1812(d)(2)(A) and for 
which payment may otherwise be made under title XVIII and 
intermediate care facility services under the plan. For 
purposes of such election, hospice care may be provided to an 
individual while such individual is a resident of a skilled 
nursing facility or intermediate care facility, but the only 
payment made under the State plan shall be for the hospice 
care.
  (B) For purposes of this title, with respect to the 
definition of hospice program under section 1861(dd)(2), the 
Secretary may allow an agency or organization to make the 
assurance under subparagraph (A)(iii) of such section without 
taking into account any individual who is afflicted with 
acquired immune deficiency syndrome (AIDS).
  (C) A voluntary election to have payment made for hospice 
care for a child (as defined by the State) shall not constitute 
a waiver of any rights of the child to be provided with, or to 
have payment made under this title for, services that are 
related to the treatment of the child's condition for which a 
diagnosis of terminal illness has been made.
  (2) An individual's voluntary election under this subsection 
--
          (A) shall be made in accordance with procedures that 
        are established by the State and that are consistent 
        with the procedures established under section 
        1812(d)(2);
          (B) shall be for such a period or periods (which need 
        not be the same periods described in section 
        1812(d)(1)) as the State may establish; and
          (C) may be revoked at any time without a showing of 
        cause and may be modified so as to change the hospice 
        program with respect to which a previous election was 
        made.
  (3) In the case of an individual--
          (A) who is residing in a nursing facility or 
        intermediate care facility for the mentally retarded 
        and is receiving medical assistance for services in 
        such facility under the plan,
          (B) who is entitled to benefits under part A of title 
        XVIII and has elected, under section 1812(d), to 
        receive hospice care under such part, and
          (C) with respect to whom the hospice program under 
        such title and the nursing facility or intermediate 
        care facility for the mentally retarded have entered 
        into a written agreement under which the program takes 
        full responsibility for the professional management of 
        the individual's hospice care and the facility agrees 
        to provide room and board to the individual,
instead of any payment otherwise made under the plan with 
respect to the facility's services, the State shall provide for 
payment to the hospice program of an amount equal to the 
additional amount determined in section 1902(a)(13)(B) and, if 
the individual is an individual described in section 
1902(a)(10)(A), shall provide for payment of any coinsurance 
amounts imposed under section 1813(a)(4).
  (p)(1) The term ``qualified medicare beneficiary'' means an 
individual--
          (A) who is entitled to hospital insurance benefits 
        under part A of title XVIII (including an individual 
        entitled to such benefits pursuant to an enrollment 
        under section 1818, but not including an individual 
        entitled to such benefits only pursuant to an 
        enrollment under section 1818A),
          (B) whose income (as determined under section 1612 
        for purposes of the supplemental security income 
        program, except as provided in paragraph (2)(D)) does 
        not exceed an income level established by the State 
        consistent with paragraph (2), and
          (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 or, effective beginning 
        with January 1, 2010, whose resources (as so 
        determined) do not exceed the maximum resource level 
        applied for the year under subparagraph (D) of section 
        1860D-14(a)(3) (determined without regard to the life 
        insurance policy exclusion provided under subparagraph 
        (G) of such section) applicable to an individual or to 
        the individual and the individual's spouse (as the case 
        may be).
  (2)(A) The income level established under paragraph (1)(B) 
shall be at least the percent provided under subparagraph (B) 
(but 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) Except as provided in subparagraph (C), the percent 
provided under this clause, with respect to eligibility for 
medical assistance on or after--
          (i) January 1, 1989, is 85 percent,
          (ii) January 1, 1990, is 90 percent, and
          (iii) January 1, 1991, is 100 percent.
  (C) In the case of a State which has elected treatment under 
section 1902(f) and which, as of January 1, 1987, used an 
income standard for individuals age 65 or older which was more 
restrictive than the income standard established under the 
supplemental security income program under title XVI, the 
percent provided under subparagraph (B), with respect to 
eligibility for medical assistance on or after--
          (i) January 1, 1989, is 80 percent,
          (ii) January 1, 1990, is 85 percent,
          (iii) January 1, 1991, is 95 percent, and
          (iv) January 1, 1992, is 100 percent.
  (D)(i) In determining under this subsection the income of an 
individual who is entitled to monthly insurance benefits under 
title II for a transition month (as defined in clause (ii)) in 
a year, such income shall not include any amounts attributable 
to an increase in the level of monthly insurance benefits 
payable under such title which have occurred pursuant to 
section 215(i) for benefits payable for months beginning with 
December of the previous year.
  (ii) For purposes of clause (i), the term ``transition 
month'' means each month in a year through the month following 
the month in which the annual revision of the official poverty 
line, referred to in subparagraph (A), is published.
  (3) The term ``medicare cost-sharing'' means (subject to 
section 1902(n)(2)) the following costs incurred with respect 
to a qualified medicare beneficiary, without regard to whether 
the costs incurred were for items and services for which 
medical assistance is otherwise available under the plan:
          (A)(i) premiums under section 1818 or 1818A, and
          (ii) premiums under section 1839,
          (B) Coinsurance under title XVIII (including 
        coinsurance described in section 1813).
          (C) Deductibles established under title XVIII 
        (including those described in section 1813 and section 
        1833(b)).
          (D) The difference between the amount that is paid 
        under section 1833(a) and the amount that would be paid 
        under such section if any reference to ``80 percent'' 
        therein were deemed a reference to ``100 percent''.
Such term also may include, at the option of a State, premiums 
for enrollment of a qualified medicare beneficiary with an 
eligible organization under section 1876.
  (4) Notwithstanding any other provision of this title, in the 
case of a State (other than the 50 States and the District of 
Columbia)--
          (A) the requirement stated in section 1902(a)(10)(E) 
        shall be optional, and
          (B) for purposes of paragraph (2), the State may 
        substitute for the percent provided under subparagraph 
        (B) of such paragraph or 1902(a)(10)(E)(iii) any 
        percent.
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 meet the requirement of 
section 1902(a)(10)(E) in the same manner as the State would be 
required to meet such requirement if the State had in effect a 
plan approved under this title.
  (5)(A) The Secretary shall develop and distribute to States a 
simplified application form for use by individuals (including 
both qualified medicare beneficiaries and specified low-income 
medicare beneficiaries) in applying for medical assistance for 
medicare cost-sharing under this title in the States which 
elect to use such form. Such form shall be easily readable by 
applicants and uniform nationally. The Secretary shall provide 
for the translation of such application form into at least the 
10 languages (other than English) that are most often used by 
individuals applying for hospital insurance benefits under 
section 226 or 226A and shall make the translated forms 
available to the States and to the Commissioner of Social 
Security.
  (B) In developing such form, the Secretary shall consult with 
beneficiary groups and the States.
  (6) For provisions relating to outreach efforts to increase 
awareness of the availability of medicare cost-sharing, see 
section 1144.
  (q) The term ``qualified severely impaired individual'' means 
an individual under age 65--
          (1) who for the month preceding the first month to 
        which this subsection applies to such individual--
                  (A) received (i) a payment of supplemental 
                security income benefits under section 1611(b) 
                on the basis of blindness or disability, (ii) a 
                supplementary payment under section 1616 of 
                this Act or under section 212 of Public Law 93-
                66 on such basis, (iii) a payment of monthly 
                benefits under section 1619(a), or (iv) a 
                supplementary payment under section 1616(c)(3), 
                and
                  (B) was eligible for medical assistance under 
                the State plan approved under this title; and
          (2) with respect to whom the Commissioner of Social 
        Security determines that--
                  (A) the individual continues to be blind or 
                continues to have the disabling physical or 
                mental impairment on the basis of which he was 
                found to be under a disability and, except for 
                his earnings, continues to meet all non-
                disability-related requirements for eligibility 
                for benefits under title XVI,
                  (B) the income of such individual would not, 
                except for his earnings, be equal to or in 
                excess of the amount which would cause him to 
                be ineligible for payments under section 
                1611(b) (if he were otherwise eligible for such 
                payments),
                  (C) the lack of eligibility for benefits 
                under this title would seriously inhibit his 
                ability to continue or obtain employment, and
                  (D) the individual's earnings are not 
                sufficient to allow him to provide for himself 
                a reasonable equivalent of the benefits under 
                title XVI (including any federally administered 
                State supplementary payments), this title, and 
                publicly funded attendant care services 
                (including personal care assistance) that would 
                be available to him in the absence of such 
                earnings.
        In the case of an individual who is eligible for 
        medical assistance pursuant to section 1619(b) in June, 
        1987, the individual shall be a qualified severely 
        impaired individual for so long as such individual 
        meets the requirements of paragraph (2).
  (r) The term ``early and periodic screening, diagnostic, and 
treatment services'' means the following items and services:
          (1) Screening services--
                  (A) which are provided--
                          (i) at intervals which meet 
                        reasonable standards of medical and 
                        dental practice, as determined by the 
                        State after consultation with 
                        recognized medical and dental 
                        organizations involved in child health 
                        care and, with respect to immunizations 
                        under subparagraph (B)(iii), in 
                        accordance with the schedule referred 
                        to in section 1928(c)(2)(B)(i) for 
                        pediatric vaccines, and
                          (ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of certain 
                        physical or mental illnesses or 
                        conditions; and
                  (B) which shall at a minimum include--
                          (i) a comprehensive health and 
                        developmental history (including 
                        assessment of both physical and mental 
                        health development),
                          (ii) a comprehensive unclothed 
                        physical exam,
                          (iii) appropriate immunizations 
                        (according to the schedule referred to 
                        in section 1928(c)(2)(B)(i) for 
                        pediatric vaccines) according to age 
                        and health history,
                          (iv) laboratory tests (including lead 
                        blood level assessment appropriate for 
                        age and risk factors), and
                          (v) health education (including 
                        anticipatory guidance).
          (2) Vision services--
                  (A) which are provided--
                          (i) at intervals which meet 
                        reasonable standards of medical 
                        practice, as determined by the State 
                        after consultation with recognized 
                        medical organizations involved in child 
                        health care, and
                          (ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                  (B) which shall at a minimum include 
                diagnosis and treatment for defects in vision, 
                including eyeglasses.
          (3) Dental services--
                  (A) which are provided--
                          (i) at intervals which meet 
                        reasonable standards of dental 
                        practice, as determined by the State 
                        after consultation with recognized 
                        dental organizations involved in child 
                        health care, and
                          (ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                  (B) which shall at a minimum include relief 
                of pain and infections, restoration of teeth, 
                and maintenance of dental health.
          (4) Hearing services--
                  (A) which are provided--
                          (i) at intervals which meet 
                        reasonable standards of medical 
                        practice, as determined by the State 
                        after consultation with recognized 
                        medical organizations involved in child 
                        health care, and
                          (ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                  (B) which shall at a minimum include 
                diagnosis and treatment for defects in hearing, 
                including hearing aids.
          (5) Such other necessary health care, diagnostic 
        services, treatment, and other measures described in 
        section 1905(a) to correct or ameliorate defects and 
        physical and mental illnesses and conditions discovered 
        by the screening services, whether or not such services 
        are covered under the State plan.
Nothing in this title shall be construed as limiting providers 
of early and periodic screening, diagnostic, and treatment 
services to providers who are qualified to provide all of the 
items and services described in the previous sentence or as 
preventing a provider that is qualified under the plan to 
furnish one or more (but not all) of such items or services 
from being qualified to provide such items and services as part 
of early and periodic screening, diagnostic, and treatment 
services. The Secretary shall, not later than July 1, 1990, and 
every 12 months thereafter, develop and set annual 
participation goals for each State for participation of 
individuals who are covered under the State plan under this 
title in early and periodic screening, diagnostic, and 
treatment services.
  (s) The term ``qualified disabled and working individual'' 
means an individual--
          (1) who is entitled to enroll for hospital insurance 
        benefits under part A of title XVIII under section 
        1818A (as added by 6012 of the Omnibus Budget 
        Reconciliation Act of 1989);
          (2) whose income (as determined under section 1612 
        for purposes of the supplemental security income 
        program) does not exceed 200 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;
          (3) 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 or a couple (in the case 
        of an individual with a spouse) may have and obtain 
        benefits for supplemental security income benefits 
        under title XVI; and
          (4) who is not otherwise eligible for medical 
        assistance under this title.
  (t)(1) The term ``primary care case management services'' 
means case-management related services (including locating, 
coordinating, and monitoring of health care services) provided 
by a primary care case manager under a primary care case 
management contract.
  (2) The term ``primary care case manager'' means any of the 
following that provides services of the type described in 
paragraph (1) under a contract referred to in such paragraph:
          (A) A physician, a physician group practice, or an 
        entity employing or having other arrangements with 
        physicians to provide such services.
          (B) At State option--
                  (i) a nurse practitioner (as described in 
                section 1905(a)(21));
                  (ii) a certified nurse-midwife (as defined in 
                section 1861(gg)); or
                  (iii) a physician assistant (as defined in 
                section 1861(aa)(5)).
  (3) The term ``primary care case management contract'' means 
a contract between a primary care case manager and a State 
under which the manager undertakes to locate, coordinate, and 
monitor covered primary care (and such other covered services 
as may be specified under the contract) to all individuals 
enrolled with the manager, and which--
          (A) provides for reasonable and adequate hours of 
        operation, including 24-hour availability of 
        information, referral, and treatment with respect to 
        medical emergencies;
          (B) restricts enrollment to individuals residing 
        sufficiently near a service delivery site of the 
        manager to be able to reach that site within a 
        reasonable time using available and affordable modes of 
        transportation;
          (C) provides for arrangements with, or referrals to, 
        sufficient numbers of physicians and other appropriate 
        health care professionals to ensure that services under 
        the contract can be furnished to enrollees promptly and 
        without compromise to quality of care;
          (D) prohibits discrimination on the basis of health 
        status or requirements for health care services in 
        enrollment, disenrollment, or reenrollment of 
        individuals eligible for medical assistance under this 
        title;
          (E) provides for a right for an enrollee to terminate 
        enrollment in accordance with section 1932(a)(4); and
          (F) complies with the other applicable provisions of 
        section 1932.
  (4) For purposes of this subsection, the term ``primary 
care'' includes all health care services customarily provided 
in accordance with State licensure and certification laws and 
regulations, and all laboratory services customarily provided 
by or through, a general practitioner, family medicine 
physician, internal medicine physician, obstetrician/
gynecologist, or pediatrician.
  (u)(1) The conditions described in this paragraph for a State 
plan are as follows:
          (A) The State is complying with the requirement of 
        section 2105(d)(1).
          (B) The plan provides for such reporting of 
        information about expenditures and payments 
        attributable to the operation of this subsection as the 
        Secretary deems necessary in order to carry out the 
        fourth sentence of subsection (b).
  (2)(A) For purposes of subsection (b), the expenditures 
described in this subparagraph are expenditures for medical 
assistance for optional targeted low-income children described 
in subparagraph (B).
  (B) For purposes of this paragraph, the term ``optional 
targeted low-income child'' means a targeted low-income child 
as defined in section 2110(b)(1) (determined without regard to 
that portion of subparagraph (C) of such section concerning 
eligibility for medical assistance under this title) who would 
not qualify for medical assistance under the State plan under 
this title as in effect on March 31, 1997 (but taking into 
account the expansion of age of eligibility effected through 
the operation of section 1902(l)(1)(D)). Such term excludes any 
child eligible for medical assistance only by reason of section 
1902(a)(10)(A)(ii)(XIX).
  (3) For purposes of subsection (b), the expenditures 
described in this paragraph are expenditures for medical 
assistance for children who are born before October 1, 1983, 
and who would be described in section 1902(l)(1)(D) if they had 
been born on or after such date, and who are not eligible for 
such assistance under the State plan under this title based on 
such State plan as in effect as of March 31, 1997.
  (4) The limitations on payment under subsections (f) and (g) 
of section 1108 shall not apply to Federal payments made under 
section 1903(a)(1) based on an enhanced FMAP described in 
section 2105(b).
  (v)(1) The term ``employed individual with a medically 
improved disability'' means an individual who--
          (A) is at least 16, but less than 65, years of age;
          (B) is employed (as defined in paragraph (2));
          (C) ceases to be eligible for medical assistance 
        under section 1902(a)(10)(A)(ii)(XV) because the 
        individual, by reason of medical improvement, is 
        determined at the time of a regularly scheduled 
        continuing disability review to no longer be eligible 
        for benefits under section 223(d) or 1614(a)(3); and
          (D) continues to have a severe medically determinable 
        impairment, as determined under regulations of the 
        Secretary.
  (2) For purposes of paragraph (1), an individual is 
considered to be ``employed'' if the individual--
          (A) is earning at least the applicable minimum wage 
        requirement under section 6 of the Fair Labor Standards 
        Act (29 U.S.C. 206) and working at least 40 hours per 
        month; or
          (B) is engaged in a work effort that meets 
        substantial and reasonable threshold criteria for hours 
        of work, wages, or other measures, as defined by the 
        State and approved by the Secretary.'
  (w)(1) For purposes of this title, the term ``independent 
foster care adolescent'' means an individual--
          (A) who is under 21 years of age;
          (B) who, on the individual's 18th birthday, was in 
        foster care under the responsibility of a State; and
          (C) whose assets, resources, and income do not exceed 
        such levels (if any) as the State may establish 
        consistent with paragraph (2).
  (2) The levels established by a State under paragraph (1)(C) 
may not be less than the corresponding levels applied by the 
State under section 1931(b).
  (3) A State may limit the eligibility of independent foster 
care adolescents under section 1902(a)(10)(A)(ii)(XVII) to 
those individuals with respect to whom foster care maintenance 
payments or independent living services were furnished under a 
program funded under part E of title IV before the date the 
individuals attained 18 years of age.
  (x) For purposes of subsection (a)(27), the strategies, 
treatment, and services described in that subsection include 
the following:
          (1) Chronic blood transfusion (with deferoxamine 
        chelation) to prevent stroke in individuals with Sickle 
        Cell Disease who have been identified as being at high 
        risk for stroke.
          (2) Genetic counseling and testing for individuals 
        with Sickle Cell Disease or the sickle cell trait to 
        allow health care professionals to treat such 
        individuals and to prevent symptoms of Sickle Cell 
        Disease.
          (3) Other treatment and services to prevent 
        individuals who have Sickle Cell Disease and who have 
        had a stroke from having another stroke.
  (y) Increased FMAP for Medical Assistance for Newly Eligible 
Mandatory Individuals.--
          (1) Amount of increase.--Notwithstanding subsection 
        (b), the Federal medical assistance percentage for a 
        State that is one of the 50 States or the District of 
        Columbia, [with respect to amounts expended by such 
        State for medical assistance for newly eligible 
        individuals described in subclause (VIII) of section 
        1902(a)(10)(A)(i), shall be] with respect to amounts 
        expended before January 1, 2020, by such State for 
        medical assistance for newly eligible individuals 
        described in subclause (VIII) of section 
        1902(a)(10)(A)(i) who are enrolled under the State plan 
        (or a waiver of the plan) before such date and with 
        respect to amounts expended after such date by such 
        State for medical assistance for individuals described 
        in such subclause who were enrolled under such plan (or 
        waiver of such plan) as of December 31, 2019, and who 
        do not have a break in eligibility for medical 
        assistance under such State plan (or waiver) for more 
        than one month after such date, shall be equal to--
                  (A) 100 percent for calendar quarters in 
                2014, 2015, and 2016;
                  (B) 95 percent for calendar quarters in 2017;
                  (C) 94 percent for calendar quarters in 2018;
                  (D) 93 percent for calendar quarters in 2019; 
                and
                  (E) 90 percent for calendar quarters in 2020 
                and each year thereafter.
          (2) Definitions.--In this subsection:
                  (A) Newly eligible.--The term ``newly 
                eligible'' means, with respect to an individual 
                described in subclause (VIII) of section 
                1902(a)(10)(A)(i), an individual who is not 
                under 19 years of age (or such higher age as 
                the State may have elected) and who, as of 
                December 1, 2009, is not eligible under the 
                State plan or under a waiver of the plan for 
                full benefits or for benchmark coverage 
                described in subparagraph (A), (B), or (C) of 
                section 1937(b)(1) or benchmark equivalent 
                coverage described in section 1937(b)(2) that 
                has an aggregate actuarial value that is at 
                least actuarially equivalent to benchmark 
                coverage described in subparagraph (A), (B), or 
                (C) of section 1937(b)(1), or is eligible but 
                not enrolled (or is on a waiting list) for such 
                benefits or coverage through a waiver under the 
                plan that has a capped or limited enrollment 
                that is full.
                  (B) Full benefits.--The term ``full 
                benefits'' means, with respect to an 
                individual, medical assistance for all services 
                covered under the State plan under this title 
                that is not less in amount, duration, or scope, 
                or is determined by the Secretary to be 
                substantially equivalent, to the medical 
                assistance available for an individual 
                described in section 1902(a)(10)(A)(i).
  (z) Equitable Support for Certain States.--
          (1)(A) During the period that begins on January 1, 
        2014, and ends on December 31, 2015, notwithstanding 
        subsection (b), the Federal medical assistance 
        percentage otherwise determined under subsection (b) 
        with respect to a fiscal year occurring during that 
        period shall be increased by 2.2 percentage points for 
        any State described in subparagraph (B) for amounts 
        expended for medical assistance for individuals who are 
        not newly eligible (as defined in subsection (y)(2)) 
        individuals described in subclause (VIII) of section 
        1902(a)(10)(A)(i).
          (B) For purposes of subparagraph (A), a State 
        described in this subparagraph is a State that--
                  (i) is an expansion State described in 
                paragraph (3);
                  (ii) the Secretary determines will not 
                receive any payments under this title on the 
                basis of an increased Federal medical 
                assistance percentage under subsection (y) for 
                expenditures for medical assistance for newly 
                eligible individuals (as so defined); and
                  (iii) has not been approved by the Secretary 
                to divert a portion of the DSH allotment for a 
                State to the costs of providing medical 
                assistance or other health benefits coverage 
                under a waiver that is in effect on July 2009.
          (2)(A) For calendar quarters in 2014 and each year 
        thereafter, the Federal medical assistance percentage 
        otherwise determined under subsection (b) for an 
        expansion State described in paragraph (3) with respect 
        to [medical assistance for individuals described in 
        section 1902(a)(10)(A)(i)(VIII) who are nonpregnant 
        childless adults with respect to whom the State may 
        require enrollment in benchmark coverage under section 
        1937 shall be] amounts expended before January 1, 2020, 
        by such State for medical assistance for individuals 
        described in section 1902(a)(10)(A)(i)(VIII) who are 
        nonpregnant childless adults with respect to whom the 
        State may require enrollment in benchmark coverage 
        under section 1937 and who are enrolled under the State 
        plan (or a waiver of the plan) before such date and 
        with respect to amounts expended after such date by 
        such State for medical assistance for individuals 
        described in such section, who are nonpregnant 
        childless adults with respect to whom the State may 
        require enrollment in benchmark coverage under section 
        1937, who were enrolled under such plan (or waiver of 
        such plan) as of December 31, 2019, and who do not have 
        a break in eligibility for medical assistance under 
        such State plan (or waiver) for more than one month 
        after such date, shall be equal to the percent 
        specified in subparagraph (B)(i) for such year.
          (B)(i) The percent specified in this subparagraph for 
        a State for a year is equal to the Federal medical 
        assistance percentage (as defined in the first sentence 
        of subsection (b)) for the State increased by a number 
        of percentage points equal to the transition percentage 
        (specified in clause (ii) for the year) of the number 
        of percentage points by which--
                  (I) such Federal medical assistance 
                percentage for the State, is less than
                  (II) the percent specified in subsection 
                (y)(1) for the year.
          (ii) The transition percentage specified in this 
        clause for--
                  (I) 2014 is 50 percent;
                  (II) 2015 is 60 percent;
                  (III) 2016 is 70 percent; and
                  [(IV) 2017 is 80 percent;
                  [(V) 2018 is 90 percent; and
                  [(VI) 2019 and each subsequent year is 100 
                percent.]
                  (IV) 2017 and each subsequent year is 80 
                percent.
          (3) A State is an expansion State if, on the date of 
        the enactment of the Patient Protection and Affordable 
        Care Act, the State offers health benefits coverage 
        statewide to parents and nonpregnant, childless adults 
        whose income is at least 100 percent of the poverty 
        line, that includes inpatient hospital services, is not 
        dependent on access to employer coverage, employer 
        contribution, or employment and is not limited to 
        premium assistance, hospital-only benefits, a high 
        deductible health plan, or alternative benefits under a 
        demonstration program authorized under section 1938. A 
        State that offers health benefits coverage to only 
        parents or only nonpregnant childless adults described 
        in the preceding sentence shall not be considered to be 
        an expansion State.
  (aa)(1) Notwithstanding subsection (b), beginning January 1, 
2011, the Federal medical assistance percentage for a fiscal 
year for a disaster-recovery FMAP adjustment State shall be 
equal to the following:
          (A) In the case of the first fiscal year (or part of 
        a fiscal year) for which this subsection applies to the 
        State, the State's regular FMAP shall be increased by 
        50 percent of the number of percentage points by which 
        the State's regular FMAP for such fiscal year is less 
        than the Federal medical assistance percentage 
        determined for the State for the preceding fiscal year 
        after the application of only subsection (a) of section 
        5001 of Public Law 111-5 (if applicable to the 
        preceding fiscal year) and without regard to this 
        subsection, subsections (y) and (z), and subsections 
        (b) and (c) of section 5001 of Public Law 111-5.
          (B) In the case of the second or any succeeding 
        fiscal year for which this subsection applies to the 
        State, the State's regular FMAP for such fiscal year 
        shall be increased by 25 percent (or 50 percent in the 
        case of fiscal year 2013) of the number of percentage 
        points by which the State's regular FMAP for such 
        fiscal year is less than the Federal medical assistance 
        percentage received by the State during the preceding 
        fiscal year.
  (2) In this subsection, the term ``disaster-recovery FMAP 
adjustment State'' means a State that is one of the 50 States 
or the District of Columbia, for which, at any time during the 
preceding 7 fiscal years, the President has declared a major 
disaster under section 401 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act and determined as a result 
of such disaster that every county or parish in the State 
warrant individual and public assistance or public assistance 
from the Federal Government under such Act and for which--
          (A) in the case of the first fiscal year (or part of 
        a fiscal year) for which this subsection applies to the 
        State, the State's regular FMAP for the fiscal year is 
        less than the Federal medical assistance percentage 
        determined for the State for the preceding fiscal year 
        after the application of only subsection (a) of section 
        5001 of Public Law 111-5 (if applicable to the 
        preceding fiscal year) and without regard to this 
        subsection, subsections (y) and (z), and subsections 
        (b) and (c) of section 5001 of Public Law 111-5, by at 
        least 3 percentage points; and
          (B) in the case of the second or any succeeding 
        fiscal year for which this subsection applies to the 
        State, the State's regular FMAP for the fiscal year is 
        less than the Federal medical assistance percentage 
        determined for the State for the preceding fiscal year 
        under this subsection by at least 3 percentage points.
  (3) In this subsection, the term ``regular FMAP'' means, for 
each fiscal year for which this subsection applies to a State, 
the Federal medical assistance percentage that would otherwise 
apply to the State for the fiscal year, as determined under 
subsection (b) and without regard to this subsection, 
subsections (y) and (z), and section 10202 of the Patient 
Protection and Affordable Care Act.
  (4) The Federal medical assistance percentage determined for 
a disaster-recovery FMAP adjustment State under paragraph (1) 
shall apply for purposes of this title (other than with respect 
to disproportionate share hospital payments described in 
section 1923 and payments under this title that are based on 
the enhanced FMAP described in 2105(b)) and shall not apply 
with respect to payments under title IV (other than under part 
E of title IV) or payments under title XXI.
  (bb)(1) For purposes of this title, the term ``counseling and 
pharmacotherapy for cessation of tobacco use by pregnant 
women'' means diagnostic, therapy, and counseling services and 
pharmacotherapy (including the coverage of prescription and 
nonprescription tobacco cessation agents approved by the Food 
and Drug Administration) for cessation of tobacco use by 
pregnant women who use tobacco products or who are being 
treated for tobacco use that is furnished--
          (A) by or under the supervision of a physician; or
          (B) by any other health care professional who--
                  (i) is legally authorized to furnish such 
                services under State law (or the State 
                regulatory mechanism provided by State law) of 
                the State in which the services are furnished; 
                and
                  (ii) is authorized to receive payment for 
                other services under this title or is 
                designated by the Secretary for this purpose.
  (2) Subject to paragraph (3), such term is limited to--
          (A) services recommended with respect to pregnant 
        women in ``Treating Tobacco Use and Dependence: 2008 
        Update: A Clinical Practice Guideline'', published by 
        the Public Health Service in May 2008, or any 
        subsequent modification of such Guideline; and
          (B) such other services that the Secretary recognizes 
        to be effective for cessation of tobacco use by 
        pregnant women.
  (3) Such term shall not include coverage for drugs or 
biologicals that are not otherwise covered under this title.
  (cc) Requirement for Certain States.--Notwithstanding 
subsections (y), (z), and (aa), in the case of a State that 
requires political subdivisions within the State to contribute 
toward the non-Federal share of expenditures required under the 
State plan under section 1902(a)(2), the State shall not be 
eligible for an increase in its Federal medical assistance 
percentage under such subsections if it requires that political 
subdivisions pay a greater percentage of the non-Federal share 
of such expenditures, or a greater percentage of the non-
Federal share of payments under section 1923, than the 
respective percentages that would have been required by the 
State under the State plan under this title, State law, or 
both, as in effect on December 31, 2009, and without regard to 
any such increase. Voluntary contributions by a political 
subdivision to the non-Federal share of expenditures under the 
State plan under this title or to the non-Federal share of 
payments under section 1923, shall not be considered to be 
required contributions for purposes of this subsection. The 
treatment of voluntary contributions, and the treatment of 
contributions required by a State under the State plan under 
this title, or State law, as provided by this subsection, shall 
also apply to the increases in the Federal medical assistance 
percentage under section 5001 of the American Recovery and 
Reinvestment Act of 2009.
  (dd) Increased FMAP for Additional Expenditures for Primary 
Care Services.--Notwithstanding subsection (b), with respect to 
the portion of the amounts expended for medical assistance for 
services described in section 1902(a)(13)(C) furnished on or 
after January 1, 2013, and before January 1, 2015, that is 
attributable to the amount by which the minimum payment rate 
required under such section (or, by application, section 
1932(f)) exceeds the payment rate applicable to such services 
under the State plan as of July 1, 2009, the Federal medical 
assistance percentage for a State that is one of the 50 States 
or the District of Columbia shall be equal to 100 percent. The 
preceding sentence does not prohibit the payment of Federal 
financial participation based on the Federal medical assistance 
percentage for amounts in excess of those specified in such 
sentence.

           *       *       *       *       *       *       *


      PROVISIONS RESPECTING INAPPLICABILITY AND WAIVER OF CERTAIN 
                       REQUIREMENTS OF THIS TITLE

  Sec. 1915. (a) A State shall not be deemed to be out of 
compliance with the requirements of paragraphs (1), (10), or 
(23) of section 1902(a) solely by reason of the fact that the 
State (or any political subdivision thereof)--
          (1) has entered into--
                  (A) a contract with an organization which has 
                agreed to provide care and services in addition 
                to those offered under the State plan to 
                individuals eligible for medical assistance who 
                reside in the geographic area served by such 
                organization and who elect to obtain such care 
                and services from such organization, or by 
                reason of the fact that the plan provides for 
                payment for rural health clinic services only 
                if those services are provided by a rural 
                health clinic; or
                  (B) arrangements through a competitive 
                bidding process or otherwise for the purchase 
                of laboratory services referred to in section 
                1905(a)(3) or medical devices if the Secretary 
                has found that--
                          (i) adequate services or devices will 
                        be available under such arrangements, 
                        and
                          (ii) any such laboratory services 
                        will be provided only through 
                        laboratories--
                                  (I) which meet the applicable 
                                requirements of section 
                                1861(e)(9) or paragraphs (16) 
                                and (17) of section 1861(s), 
                                and such additional 
                                requirements as the Secretary 
                                may require, and
                                  (II) no more than 75 percent 
                                of whose charges for such 
                                services are for services 
                                provided to individuals who are 
                                entitled to benefits under this 
                                title or under part A or part B 
                                of title XVIII; or
          (2) restricts for a reasonable period of time the 
        provider or providers from which an individual 
        (eligible for medical assistance for items or services 
        under the State plan) can receive such items or 
        services, if--
                  (A) the State has found, after notice and 
                opportunity for a hearing (in accordance with 
                procedures established by the State), that the 
                individual has utilized such items or services 
                at a frequency or amount not medically 
                necessary (as determined in accordance with 
                utilization guidelines established by the 
                State), and
                  (B) under such restriction, individuals 
                eligible for medical assistance for such 
                services have reasonable access (taking into 
                account geographic location and reasonable 
                travel time) to such services of adequate 
                quality.
  (b) The Secretary, to the extent he finds it to be cost-
effective and efficient and not inconsistent with the purposes 
of this title, may waive such requirements of section 1902 
(other than subsection (s)) (other than sections 1902(a)(15), 
1902(bb), and 1902(a)(10)(A) insofar as it requires provision 
of the care and services described in section 1905(a)(2)(C)) as 
may be necessary for a State--
          (1) to implement a primary care case-management 
        system or a specialty physician services arrangement 
        which restricts the provider from (or through) whom an 
        individual (eligible for medical assistance under this 
        title) can obtain medical care services (other than in 
        emergency circumstances), if such restriction does not 
        substantially impair access to such services of 
        adequate quality where medically necessary,
          (2) to allow a locality to act as a central broker in 
        assisting individuals (eligible for medical assistance 
        under this title) in selecting among competing health 
        care plans, if such restriction does not substantially 
        impair access to services of adequate quality where 
        medically necessary,
          (3) to share (through provision of additional 
        services) with recipients of medical assistance under 
        the State plan cost savings resulting from use by the 
        recipient of more cost-effective medical care, and
          (4) to restrict the provider from (or through) whom 
        an individual (eligible for medical assistance under 
        this title) can obtain services (other than in 
        emergency circumstances) to providers or practitioners 
        who undertake to provide such services and who meet, 
        accept, and comply with the reimbursement, quality, and 
        utilization standards under the State plan, which 
        standards shall be consistent with the requirements of 
        section 1923 and are consistent with access, quality, 
        and efficient and economic provision of covered care 
        and services, if such restriction does not discriminate 
        among classes of providers on grounds unrelated to 
        their demonstrated effectiveness and efficiency in 
        providing those services and if providers under such 
        restriction are paid on a timely basis in the same 
        manner as health care practitioners must be paid under 
        section 1902(a)(37)(A).
No waiver under this subsection may restrict the choice of the 
individual in receiving services under section 1905(a)(4)(C). 
Subsection (h)(2) shall apply to a waiver under this 
subsection.
  (c)(1) The Secretary may by waiver provide that a State plan 
approved under this title may include as ``medical assistance'' 
under such plan payment for part or all of the cost of home or 
community-based services (other than room and board) approved 
by the Secretary which are provided pursuant to a written plan 
of care to individuals with respect to whom there has been a 
determination that but for the provision of such services the 
individuals would require the level of care provided in a 
hospital or a nursing facility or intermediate care facility 
for the mentally retarded the cost of which could be reimbursed 
under the State plan. For purposes of this subsection, the term 
``room and board'' shall not include an amount established 
under a method determined by the State to reflect the portion 
of costs of rent and food attributable to an unrelated personal 
caregiver who is residing in the same household with an 
individual who, but for the assistance of such caregiver, would 
require admission to a hospital, nursing facility, or 
intermediate care facility for the mentally retarded.
  (2) A waiver shall not be granted under this subsection 
unless the State provides assurances satisfactory to the 
Secretary that--
          (A) necessary safeguards (including adequate 
        standards for provider participation) have been taken 
        to protect the health and welfare of individuals 
        provided services under the waiver and to assure 
        financial accountability for funds expended with 
        respect to such services;
          (B) the State will provide, with respect to 
        individuals who--
                  (i) are entitled to medical assistance for 
                inpatient hospital services, nursing facility 
                services, or services in an intermediate care 
                facility for the mentally retarded under the 
                State plan,
                  (ii) may require such services, and
                  (iii) may be eligible for such home or 
                community-based care under such waiver,
        for an evaluation of the need for inpatient hospital 
        services, nursing facility services, or services in an 
        intermediate care facility for the mentally retarded;
          (C) such individuals who are determined to be likely 
        to require the level of care provided in a hospital, 
        nursing facility, or intermediate care facility for the 
        mentally retarded are informed of the feasible 
        alternatives, if available under the waiver, at the 
        choice of such individuals, to the provision of 
        inpatient hospital services, nursing facility services, 
        or services in an intermediate care facility for the 
        mentally retarded;
          (D) under such waiver the average per capita 
        expenditure estimated by the State in any fiscal year 
        for medical assistance provided with respect to such 
        individuals does not exceed 100 percent of the average 
        per capita expenditure that the State reasonably 
        estimates would have been made in that fiscal year for 
        expenditures under the State plan for such individuals 
        if the waiver had not been granted; and
          (E) the State will provide to the Secretary annually, 
        consistent with a data collection plan designed by the 
        Secretary, information on the impact of the waiver 
        granted under this subsection on the type and amount of 
        medical assistance provided under the State plan and on 
        the health and welfare of recipients.
  (3) A waiver granted under this subsection may include a 
waiver of the requirements of section 1902(a)(1) (relating to 
statewideness), section 1902(a)(10)(B) (relating to 
comparability), and section 1902(a)(10)(C)(i)(III) (relating to 
income and resource rules applicable in the community). A 
waiver under this subsection (other than a waiver described in 
subsection (h)(2)) shall be for an initial term of three years 
and, upon the request of a State, shall be extended for 
additional five-year periods unless the Secretary determines 
that for the previous waiver period the assurances provided 
under paragraph (2) have not been met. A waiver may provide, 
with respect to post-eligibility treatment of income of all 
individuals receiving services under that waiver, that the 
maximum amount of the individual's income which may be 
disregarded for any month for the maintenance needs of the 
individual may be an amount greater than the maximum allowed 
for that purpose under regulations in effect on July 1, 1985.
  (4) A waiver granted under this subsection may, consistent 
with paragraph (2)--
          (A) limit the individuals provided benefits under 
        such waiver to individuals with respect to whom the 
        State has determined that there is a reasonable 
        expectation that the amount of medical assistance 
        provided with respect to the individual under such 
        waiver will not exceed the amount of such medical 
        assistance provided for such individual if the waiver 
        did not apply, and
          (B) provide medical assistance to individuals (to the 
        extent consistent with written plans of care, which are 
        subject to the approval of the State) for case 
        management services, homemaker/home health aide 
        services and personal care services, adult day health 
        services, habilitation services, respite care, and such 
        other services requested by the State as the Secretary 
        may approve and for day treatment or other partial 
        hospitalization services, psychosocial rehabilitation 
        services, and clinic services (whether or not furnished 
        in a facility) for individuals with chronic mental 
        illness.
Except as provided under paragraph (2)(D), the Secretary may 
not restrict the number of hours or days of respite care in any 
period which a State may provide under a waiver under this 
subsection.
  (5) For purposes of paragraph (4)(B), the term ``habilitation 
services''--
          (A) means services designed to assist individuals in 
        acquiring, retaining, and improving the self-help, 
        socialization, and adaptive skills necessary to reside 
        successfully in home and community based settings; and
          (B) includes (except as provided in subparagraph (C)) 
        prevocational, educational, and supported employment 
        services; but
          (C) does not include--
                  (i) special education and related services 
                (as such terms are defined in section 602 of 
                the Individuals with Disabilities Education Act 
                (20 U.S.C. 1401)) which otherwise are available 
                to the individual through a local educational 
                agency; and
                  (ii) vocational rehabilitation services which 
                otherwise are available to the individual 
                through a program funded under section 110 of 
                the Rehabilitation Act of 1973 (29 U.S.C. 730).
  (6) The Secretary may not require, as a condition of approval 
of a waiver under this section under paragraph (2)(D), that the 
actual total expenditures for home and community-based services 
under the waiver (and a claim for Federal financial 
participation in expenditures for the services) cannot exceed 
the approved estimates for these services. The Secretary may 
not deny Federal financial payment with respect to services 
under such a waiver on the ground that, in order to comply with 
paragraph (2)(D), a State has failed to comply with such a 
requirement.
  (7)(A) In making estimates under paragraph (2)(D) in the case 
of a waiver that applies only to individuals with a particular 
illness or condition who are inpatients in, or who would 
require the level of care provided in, hospitals, nursing 
facilities, or intermediate care facilities for the mentally 
retarded, the State may determine the average per capita 
expenditure that would have been made in a fiscal year for 
those individuals under the State plan separately from the 
expenditures for other individuals who are inpatients in, or 
who would require the level of care provided in, those 
respective facilities.
  (B) In making estimates under paragraph (2)(D) in the case of 
a waiver that applies only to individuals with developmental 
disabilities who are inpatients in a nursing facility and whom 
the State has determined, on the basis of an evaluation under 
paragraph (2)(B), to need the level of services provided by an 
intermediate care facility for the mentally retarded, the State 
may determine the average per capita expenditures that would 
have been made in a fiscal year for those individuals under the 
State plan on the basis of the average per capita expenditures 
under the State plan for services to individuals who are 
inpatients in an intermediate care facility for the mentally 
retarded, without regard to the availability of beds for such 
inpatients.
  (C) In making estimates under paragraph (2)(D) in the case of 
a waiver to the extent that it applies to individuals with 
mental retardation or a related condition who are resident in 
an intermediate care facility for the mentally retarded the 
participation of which under the State plan is terminated, the 
State may determine the average per capita expenditures that 
would have been made in a fiscal year for those individuals 
without regard to any such termination.
  (8) The State agency administering the plan under this title 
may, whenever appropriate, enter into cooperative arrangements 
with the State agency responsible for administering the program 
for children with special health care needs under title V in 
order to assure improved access to coordinated services to meet 
the needs of such children.
  (9) In the case of any waiver under this subsection which 
contains a limit on the number of individuals who shall receive 
home or community-based services, the State may substitute 
additional individuals to receive such services to replace any 
individuals who die or become ineligible for services under the 
State plan.
  (10) The Secretary shall not limit to fewer than 200 the 
number of individuals in the State who may receive home and 
community-based services under a waiver under this subsection.
  (d)(1) Subject to paragraph (2), the Secretary shall grant a 
waiver to provide that a State plan approved under this title 
shall include as ``medical assistance'' under such plan payment 
for part or all of the cost of home or community-based services 
(other than room and board) which are provided pursuant to a 
written plan of care to individuals 65 years of age or older 
with respect to whom there has been a determination that but 
for the provision of such services the individuals would be 
likely to require the level of care provided in a skilled 
nursing facility or intermediate care facility the cost of 
which could be reimbursed under the State plan. For purposes of 
this subsection, the term ``room and board'' shall not include 
an amount established under a method determined by the State to 
reflect the portion of costs of rent and food attributable to 
an unrelated personal caregiver who is residing in the same 
household with an individual who, but for the assistance of 
such caregiver, would require admission to a hospital, nursing 
facility, or intermediate care facility for the mentally 
retarded.
  (2) A waiver shall not be granted under this subsection 
unless the State provides assurances satisfactory to the 
Secretary that--
          (A) necessary safeguards (including adequate 
        standards for provider participation) have been taken 
        to protect the health and welfare of individuals 
        provided services under the waiver and to assure 
        financial accountability for funds expended with 
        respect to such services;
          (B) with respect to individuals 65 years of age or 
        older who--
                  (i) are entitled to medical assistance for 
                skilled nursing or intermediate care facility 
                services under the State plan,
                  (ii) may require such services, and
                  (iii) may be eligible for such home or 
                community-based services under such waiver,
        the State will provide for an evaluation of the need 
        for such skilled nursing facility or intermediate care 
        facility services; and
          (C) such individuals who are determined to be likely 
        to require the level of care provided in a skilled 
        nursing facility or intermediate care facility are 
        informed of the feasible alternatives to the provision 
        of skilled nursing facility or intermediate care 
        facility services, which such individuals may choose if 
        available under the waiver.
Each State with a waiver under this subsection shall provide to 
the Secretary annually, consistent with a reasonable data 
collection plan designed by the Secretary, information on the 
impact of the waiver granted under this subsection on the type 
and amount of medical assistance provided under the State plan 
and on the health and welfare of recipients.
  (3) A waiver granted under this subsection may include a 
waiver of the requirements of section 1902(a)(1) (relating to 
statewideness), section 1902(a)(10)(B) (relating to 
comparability), and section 1902(a)(10)(C)(i)(III) (relating to 
income and resource rules applicable in the community). Subject 
to a termination by the State (with notice to the Secretary) at 
any time, a waiver under this subsection (other than a waiver 
described in subsection (h)(2)) shall be for an initial term of 
3 years and, upon the request of a State, shall be extended for 
additional 5-year periods unless the Secretary determines that 
for the previous waiver period the assurances provided under 
paragraph (2) have not been met. A waiver may provide, with 
respect to post-eligibility treatment of income of all 
individuals receiving services under the waiver, that the 
maximum amount of the individual's income which may be 
disregarded for any month is equal to the amount that may be 
allowed for that purpose under a waiver under subsection (c).
  (4) A waiver under this subsection may, consistent with 
paragraph (2), provide medical assistance to individuals for 
case management services, homemaker/home health aide services 
and personal care services, adult day health services, respite 
care, and other medical and social services that can contribute 
to the health and well-being of individuals and their ability 
to reside in a community-based care setting.
  (5)(A) In the case of a State having a waiver approved under 
this subsection, notwithstanding any other provision of section 
1903 to the contrary, the total amount expended by the State 
for medical assistance with respect to skilled nursing facility 
services, intermediate care facility services, and home and 
community-based services under the State plan for individuals 
65 years of age or older during a waiver year under this 
subsection may not exceed the projected amount determined under 
subparagraph (B).
  (B) For purposes of subparagraph (A), the projected amount 
under this subparagraph is the sum of the following:
          (i) The aggregate amount of the State's medical 
        assistance under this title for skilled nursing 
        facility services and intermediate care facility 
        services furnished to individuals who have attained the 
        age of 65 for the base year increased by a percentage 
        which is equal to the lesser of 7 percent times the 
        number of years (rounded to the nearest quarter of a 
        year) beginning after the base year and ending at the 
        end of the waiver year involved or the sum of--
                  (I) the percentage increase (based on an 
                appropriate market-basket index representing 
                the costs of elements of such services) between 
                the beginning of the base year and the 
                beginning of the waiver year involved, plus
                  (II) the percentage increase between the 
                beginning of the base year and the beginning of 
                the waiver year involved in the number of 
                residents in the State who have attained the 
                age of 65, plus
                  (III) 2 percent for each year (rounded to the 
                nearest quarter of a year) beginning after the 
                base year and ending at the end of the waiver 
                year.
          (ii) The aggregate amount of the State's medical 
        assistance under this title for home and community-
        based services for individuals who have attained the 
        age of 65 for the base year increased by a percentage 
        which is equal to the lesser of 7 percent times the 
        number of years (rounded to the nearest quarter of a 
        year) beginning after the base year and ending at the 
        end of the waiver year involved or the sum of--
                  (I) the percentage increase (based on an 
                appropriate market-basket index representing 
                the costs of elements of such services) between 
                the beginning of the base year and the 
                beginning of the waiver year involved, plus
                  (II) the percentage increase between the 
                beginning of the base year and the beginning of 
                the waiver year involved in the number of 
                residents in the State who have attained the 
                age of 65, plus
                  (III) 2 percent for each year (rounded to the 
                nearest quarter of a year) beginning after the 
                base year and ending at the end of the waiver 
                year.
  (iii) The Secretary shall develop and promulgate by 
regulation (by not later than October 1, 1989)--
          (I) a method, based on an index of appropriately 
        weighted indicators of changes in the wages and prices 
        of the mix of goods and services which comprise both 
        skilled nursing facility services and intermediate care 
        facility services (regardless of the source of payment 
        for such services), for projecting the percentage 
        increase for purposes of clause (i)(I);
          (II) a method, based on an index of appropriately 
        weighted indicators of changes in the wages and prices 
        of the mix of goods and services which comprise home 
        and community-based services (regardless of the source 
        of payment for such services), for projecting the 
        percentage increase for purposes of clause (ii)(I); and
          (III) a method for projecting, on a State specific 
        basis, the percentage increase in the number of 
        residents in each State who are over 65 years of age 
        for any period.
The Secretary shall develop (by not later than October 1, 1989) 
a method for projecting, on a State-specific basis, the 
percentage increase in the number of residents in each State 
who are over 65 years of age for any period. Effective on and 
after the date the Secretary promulgates the regulation under 
clause (iii), any reference in this subparagraph to the 
``lesser of 7 percent'' shall be deemed to be a reference to 
the ``greater of 7 percent''.
  (iv) If there is enacted after December 22, 1987, an Act 
which amends this title whose provisions become effective on or 
after such date and which results in an increase in the 
aggregate amount of medical assistance under this title for 
nursing facility services and home and community-based services 
for individuals who have attained the age of 65 years, the 
Secretary, at the request of a State with a waiver under this 
subsection for a waiver year or years and in close consultation 
with the State, shall adjust the projected amount computed 
under this subparagraph for the waiver year or years to take 
into account such increase.
  (C) In this paragraph:
          (i) The term ``home and community-based services'' 
        includes services described in sections 1905(a)(7) and 
        1905(a)(8), services described in subsection (c)(4)(B), 
        services described in paragraph (4), and personal care 
        services.
          (ii)(I) Subject to subclause (II), the term ``base 
        year'' means the most recent year (ending before the 
        date of the enactment of this subsection) for which 
        actual final expenditures under this title have been 
        reported to, and accepted by, the Secretary.
          (II) For purposes of subparagraph (C), in the case of 
        a State that does not report expenditures on the basis 
        of the age categories described in such subparagraph 
        for a year ending before the date of the enactment of 
        this subsection, the term ``base year'' means fiscal 
        year 1989.
          (iii) The term ``intermediate care facility 
        services'' does not include services furnished in an 
        institution certified in accordance with section 
        1905(d).
  (6)(A) A determination by the Secretary to deny a request for 
a waiver (or extension of waiver) under this subsection shall 
be subject to review to the extent provided under section 
1116(b).
  (B) Notwithstanding any other provision of this Act, if the 
Secretary denies a request of the State for an extension of a 
waiver under this subsection, any waiver under this subsection 
in effect on the date such request is made shall remain in 
effect for a period of not less than 90 days after the date on 
which the Secretary denies such request (or, if the State seeks 
review of such determination in accordance with subparagraph 
(A), the date on which a final determination is made with 
respect to such review).
  (e)(1)(A) Subject to paragraph (2), the Secretary shall grant 
a waiver to provide that a State plan approved under this title 
shall include as ``medical assistance'' under such plan payment 
for part or all of the cost of nursing care, respite care, 
physicians' services, prescribed drugs, medical devices and 
supplies, transportation services, and such other services 
requested by the State as the Secretary may approve which are 
provided pursuant to a written plan of care to a child 
described in subparagraph (B) with respect to whom there has 
been a determination that but for the provision of such 
services the infants would be likely to require the level of 
care provided in a hospital or nursing facility the cost of 
which could be reimbursed under the State plan.
  (B) Children described in this subparagraph are individuals 
under 5 years of age who--
          (i) at the time of birth were infected with (or 
        tested positively for) the etiologic agent for acquired 
        immune deficiency syndrome (AIDS),
          (ii) have such syndrome, or
          (iii) at the time of birth were dependent on heroin, 
        cocaine, or phencyclidine,
and with respect to whom adoption or foster care assistance is 
(or will be) made available under part E of title IV.
  (2) A waiver shall not be granted under this subsection 
unless the State provides assurances satisfactory to the 
Secretary that--
          (A) necessary safeguards (including adequate 
        standards for provider participation) have been taken 
        to protect the health and welfare of individuals 
        provided services under the waiver and to assure 
        financial accountability for funds expended with 
        respect to such services;
          (B) under such waiver the average per capita 
        expenditure estimated by the State in any fiscal year 
        for medical assistance provided with respect to such 
        individuals does not exceed 100 percent of the average 
        per capita expenditure that the State reasonably 
        estimates would have been made in that fiscal year for 
        expenditures under the State plan for such individuals 
        if the waiver had not been granted; and
          (C) the State will provide to the Secretary annually, 
        consistent with a data collection plan designed by the 
        Secretary, information on the impact of the waiver 
        granted under this subsection on the type and amount of 
        medical assistance provided under the State plan and on 
        the health and welfare of recipients.
  (3) A waiver granted under this subsection may include a 
waiver of the requirements of section 1902(a)(1) (relating to 
statewideness) and section 1902(a)(10)(B) (relating to 
comparability). A waiver under this subsection shall be for an 
initial term of 3 years and, upon the request of a State, shall 
be extended for additional five-year periods unless the 
Secretary determines that for the previous waiver period the 
assurances provided under paragraph (2) have not been met.
  (4) The provisions of paragraph (6) of subsection (d) shall 
apply to this subsection in the same manner as it applies to 
subsection (d).
  (f)(1) The Secretary shall monitor the implementation of 
waivers granted under this section to assure that the 
requirements for such waiver are being met and shall, after 
notice and opportunity for a hearing, terminate any such waiver 
where he finds noncompliance has occurred.
  (2) A request to the Secretary from a State for approval of a 
proposed State plan or plan amendment or a waiver of a 
requirement of this title submitted by the State pursuant to a 
provision of this title shall be deemed granted unless the 
Secretary, within 90 days after the date of its submission to 
the Secretary, either denies such request in writing or informs 
the State agency in writing with respect to any additional 
information which is needed in order to make a final 
determination with respect to the request. After the date the 
Secretary receives such additional information, the request 
shall be deemed granted unless the Secretary, within 90 days of 
such date, denies such request.
  (g)(1) A State may provide, as medical assistance, case 
management services under the plan without regard to the 
requirements of section 1902(a)(1) and section 1902(a)(10)(B). 
The provision of case management services under this subsection 
shall not restrict the choice of the individual to receive 
medical assistance in violation of section 1902(a)(23). A State 
may limit the provision of case management services under this 
subsection to individuals with acquired immune deficiency 
syndrome (AIDS), or with AIDS-related conditions, or with 
either, or to individuals described in section 1902(z)(1)(A) 
and a State may limit the provision of case management services 
under this subsection to individuals with chronic mental 
illness. The State may limit the case managers available with 
respect to case management services for eligible individuals 
with developmental disabilities or with chronic mental illness 
in order to ensure that the case managers for such individuals 
are capable of ensuring that such individuals receive needed 
services.
  (2) For purposes of this subsection:
          (A)(i) The term ``case management services'' means 
        services which will assist individuals eligible under 
        the plan in gaining access to needed medical, social, 
        educational, and other services.
          (ii) Such term includes the following:
                  (I) Assessment of an eligible individual to 
                determine service needs, including activities 
                that focus on needs identification, to 
                determine the need for any medical, 
                educational, social, or other services. Such 
                assessment activities include the following:
                          (aa) Taking client history.
                          (bb) Identifying the needs of the 
                        individual, and completing related 
                        documentation.
                          (cc) Gathering information from other 
                        sources such as family members, medical 
                        providers, social workers, and 
                        educators, if necessary, to form a 
                        complete assessment of the eligible 
                        individual.
                  (II) Development of a specific care plan 
                based on the information collected through an 
                assessment, that specifies the goals and 
                actions to address the medical, social, 
                educational, and other services needed by the 
                eligible individual, including activities such 
                as ensuring the active participation of the 
                eligible individual and working with the 
                individual (or the individual's authorized 
                health care decision maker) and others to 
                develop such goals and identify a course of 
                action to respond to the assessed needs of the 
                eligible individual.
                  (III) Referral and related activities to help 
                an individual obtain needed services, including 
                activities that help link eligible individuals 
                with medical, social, educational providers or 
                other programs and services that are capable of 
                providing needed services, such as making 
                referrals to providers for needed services and 
                scheduling appointments for the individual.
                  (IV) Monitoring and followup activities, 
                including activities and contacts that are 
                necessary to ensure the care plan is 
                effectively implemented and adequately 
                addressing the needs of the eligible 
                individual, and which may be with the 
                individual, family members, providers, or other 
                entities and conducted as frequently as 
                necessary to help determine such matters as--
                          (aa) whether services are being 
                        furnished in accordance with an 
                        individual's care plan;
                          (bb) whether the services in the care 
                        plan are adequate; and
                          (cc) whether there are changes in the 
                        needs or status of the eligible 
                        individual, and if so, making necessary 
                        adjustments in the care plan and 
                        service arrangements with providers.
          (iii) Such term does not include the direct delivery 
        of an underlying medical, educational, social, or other 
        service to which an eligible individual has been 
        referred, including, with respect to the direct 
        delivery of foster care services, services such as (but 
        not limited to) the following:
                  (I) Research gathering and completion of 
                documentation required by the foster care 
                program.
                  (II) Assessing adoption placements.
                  (III) Recruiting or interviewing potential 
                foster care parents.
                  (IV) Serving legal papers.
                  (V) Home investigations.
                  (VI) Providing transportation.
                  (VII) Administering foster care subsidies.
                  (VIII) Making placement arrangements.
          (B) The term ``targeted case management services'' 
        are case management services that are furnished without 
        regard to the requirements of section 1902(a)(1) and 
        section 1902(a)(10)(B) to specific classes of 
        individuals or to individuals who reside in specified 
        areas.
  (3) With respect to contacts with individuals who are not 
eligible for medical assistance under the State plan or, in the 
case of targeted case management services, individuals who are 
eligible for such assistance but are not part of the target 
population specified in the State plan, such contacts--
          (A) are considered an allowable case management 
        activity, when the purpose of the contact is directly 
        related to the management of the eligible individual's 
        care; and
          (B) are not considered an allowable case management 
        activity if such contacts relate directly to the 
        identification and management of the noneligible or 
        nontargeted individual's needs and care.
  (4)(A) In accordance with section 1902(a)(25), Federal 
financial participation only is available under this title for 
case management services or targeted case management services 
if there are no other third parties liable to pay for such 
services, including as reimbursement under a medical, social, 
educational, or other program.
  (B) A State shall allocate the costs of any part of such 
services which are reimbursable under another federally funded 
program in accordance with OMB Circular A-87 (or any related or 
successor guidance or regulations regarding allocation of costs 
among federally funded programs) under an approved cost 
allocation program.
  (5) Nothing in this subsection shall be construed as 
affecting the application of rules with respect to third party 
liability under programs, or activities carried out under title 
XXVI of the Public Health Service Act or by the Indian Health 
Service.
  (h)(1) No waiver under this section (other than a waiver 
under subsection (c), (d), or (e), or a waiver described in 
paragraph (2)) may extend over a period of longer than two 
years unless the State requests continuation of such waiver, 
and such request shall be deemed granted unless the Secretary, 
within 90 days after the date of its submission to the 
Secretary, either denies such request in writing or informs the 
State agency in writing with respect to any additional 
information which is needed in order to make a final 
determination with respect to the request. After the date the 
Secretary receives such additional information, the request 
shall be deemed granted unless the Secretary, within 90 days of 
such date, denies such request.
  (2)(A) Notwithstanding subsections (c)(3) and (d) (3), any 
waiver under subsection (b), (c), or (d), or a waiver under 
section 1115, that provides medical assistance for dual 
eligible individuals (including any such waivers under which 
non dual eligible individuals may be enrolled in addition to 
dual eligible individuals) may be conducted for a period of 5 
years and, upon the request of the State, may be extended for 
additional 5-year periods unless the Secretary determines that 
for the previous waiver period the conditions for the waiver 
have not been met or it would no longer be cost-effective and 
efficient, or consistent with the purposes of this title, to 
extend the waiver.
  (B) In this paragraph, the term ``dual eligible individual'' 
means an individual who is entitled to, or enrolled for, 
benefits under part A of title XVIII, or enrolled for benefits 
under part B of title XVIII, and is eligible for medical 
assistance under the State plan under this title or under a 
waiver of such plan.
  (i) State Plan Amendment Option To Provide Home and 
Community-Based Services for Elderly and Disabled 
Individuals.--
          (1) In general.--Subject to the succeeding provisions 
        of this subsection, a State may provide through a State 
        plan amendment for the provision of medical assistance 
        for home and community-based services (within the scope 
        of services described in paragraph (4)(B) of subsection 
        (c) for which the Secretary has the authority to 
        approve a waiver and not including room and board) for 
        individuals eligible for medical assistance under the 
        State plan whose income does not exceed 150 percent of 
        the poverty line (as defined in section 2110(c)(5)), 
        without determining that but for the provision of such 
        services the individuals would require the level of 
        care provided in a hospital or a nursing facility or 
        intermediate care facility for the mentally retarded, 
        but only if the State meets the following requirements:
                  (A) Needs-based criteria for eligibility for, 
                and receipt of, home and community-based 
                services.--The State establishes needs-based 
                criteria for determining an individual's 
                eligibility under the State plan for medical 
                assistance for such home and community-based 
                services, and if the individual is eligible for 
                such services, the specific home and community-
                based services that the individual will 
                receive.
                  (B) Establishment of more stringent needs-
                based eligibility criteria for 
                institutionalized care.--The State establishes 
                needs-based criteria for determining whether an 
                individual requires the level of care provided 
                in a hospital, a nursing facility, or an 
                intermediate care facility for the mentally 
                retarded under the State plan or under any 
                waiver of such plan that are more stringent 
                than the needs-based criteria established under 
                subparagraph (A) for determining eligibility 
                for home and community-based services.
                  (C) Projection of number of individuals to be 
                provided home and community-based services.--
                The State submits to the Secretary, in such 
                form and manner, and upon such frequency as the 
                Secretary shall specify, the projected number 
                of individuals to be provided home and 
                community-based services.
                  (D) Criteria based on individual 
                assessment.--
                          (i) In general.--The criteria 
                        established by the State for purposes 
                        of subparagraphs (A) and (B) requires 
                        an assessment of an individual's 
                        support needs and capabilities, and may 
                        take into account the inability of the 
                        individual to perform 2 or more 
                        activities of daily living (as defined 
                        in section 7702B(c)(2)(B) of the 
                        Internal Revenue Code of 1986) or the 
                        need for significant assistance to 
                        perform such activities, and such other 
                        risk factors as the State determines to 
                        be appropriate.
                          (ii) Adjustment authority.--The State 
                        plan amendment provides the State with 
                        the option to modify the criteria 
                        established under subparagraph (A) 
                        (without having to obtain prior 
                        approval from the Secretary) in the 
                        event that the enrollment of 
                        individuals eligible for home and 
                        community-based services exceeds the 
                        projected enrollment submitted for 
                        purposes of subparagraph (C), but only 
                        if--
                                  (I) the State provides at 
                                least 60 days notice to the 
                                Secretary and the public of the 
                                proposed modification;
                                  (II) the State deems an 
                                individual receiving home and 
                                community-based services on the 
                                basis of the most recent 
                                version of the criteria in 
                                effect prior to the effective 
                                date of the modification to 
                                continue to be eligible for 
                                such services after the 
                                effective date of the 
                                modification and until such 
                                time as the individual no 
                                longer meets the standard for 
                                receipt of such services under 
                                such pre-modified criteria; and
                                  (III) after the effective 
                                date of such modification, the 
                                State, at a minimum, applies 
                                the criteria for determining 
                                whether an individual requires 
                                the level of care provided in a 
                                hospital, a nursing facility, 
                                or an intermediate care 
                                facility for the mentally 
                                retarded under the State plan 
                                or under any waiver of such 
                                plan which applied prior to the 
                                application of the more 
                                stringent criteria developed 
                                under subparagraph (B).
                  (E) Independent evaluation and assessment.--
                          (i) Eligibility determination.--The 
                        State uses an independent evaluation 
                        for making the determinations described 
                        in subparagraphs (A) and (B).
                          (ii) Assessment.--In the case of an 
                        individual who is determined to be 
                        eligible for home and community-based 
                        services, the State uses an independent 
                        assessment, based on the needs of the 
                        individual to--
                                  (I) determine a necessary 
                                level of services and supports 
                                to be provided, consistent with 
                                an individual's physical and 
                                mental capacity;
                                  (II) prevent the provision of 
                                unnecessary or inappropriate 
                                care; and
                                  (III) establish an 
                                individualized care plan for 
                                the individual in accordance 
                                with subparagraph (G).
                  (F) Assessment.--The independent assessment 
                required under subparagraph (E)(ii) shall 
                include the following:
                          (i) An objective evaluation of an 
                        individual's inability to perform 2 or 
                        more activities of daily living (as 
                        defined in section 7702B(c)(2)(B) of 
                        the Internal Revenue Code of 1986) or 
                        the need for significant assistance to 
                        perform such activities.
                          (ii) A face-to-face evaluation of the 
                        individual by an individual trained in 
                        the assessment and evaluation of 
                        individuals whose physical or mental 
                        conditions trigger a potential need for 
                        home and community-based services.
                          (iii) Where appropriate, consultation 
                        with the individual's family, spouse, 
                        guardian, or other responsible 
                        individual.
                          (iv) Consultation with appropriate 
                        treating and consulting health and 
                        support professionals caring for the 
                        individual.
                          (v) An examination of the 
                        individual's relevant history, medical 
                        records, and care and support needs, 
                        guided by best practices and research 
                        on effective strategies that result in 
                        improved health and quality of life 
                        outcomes.
                          (vi) If the State offers individuals 
                        the option to self-direct the purchase 
                        of, or control the receipt of, home and 
                        community-based service, an evaluation 
                        of the ability of the individual or the 
                        individual's representative to self-
                        direct the purchase of, or control the 
                        receipt of, such services if the 
                        individual so elects.
                  (G) Individualized care plan.--
                          (i) In general.--In the case of an 
                        individual who is determined to be 
                        eligible for home and community-based 
                        services, the State uses the 
                        independent assessment required under 
                        subparagraph (E)(ii) to establish a 
                        written individualized care plan for 
                        the individual.
                          (ii) Plan requirements.--The State 
                        ensures that the individualized care 
                        plan for an individual--
                                  (I) is developed--
                                          (aa) in consultation 
                                        with the individual, 
                                        the individual's 
                                        treating physician, 
                                        health care or support 
                                        professional, or other 
                                        appropriate 
                                        individuals, as defined 
                                        by the State, and, 
                                        where appropriate the 
                                        individual's family, 
                                        caregiver, or 
                                        representative; and
                                          (bb) taking into 
                                        account the extent of, 
                                        and need for, any 
                                        family or other 
                                        supports for the 
                                        individual;
                                  (II) identifies the necessary 
                                home and community-based 
                                services to be furnished to the 
                                individual (or, if the 
                                individual elects to self-
                                direct the purchase of, or 
                                control the receipt of, such 
                                services, funded for the 
                                individual); and
                                  (III) is reviewed at least 
                                annually and as needed when 
                                there is a significant change 
                                in the individual's 
                                circumstances.
                          (iii) state option to offer election 
                        for self-directed services.--
                                  (I) Individual choice.--At 
                                the option of the State, the 
                                State may allow an individual 
                                or the individual's 
                                representative to elect to 
                                receive self-directed home and 
                                community-based services in a 
                                manner which gives them the 
                                most control over such services 
                                consistent with the 
                                individual's abilities and the 
                                requirements of subclauses (II) 
                                and (III).
                                  (II) Self-directed 
                                services.--The term ``self-
                                directed'' means, with respect 
                                to the home and community-based 
                                services offered under the 
                                State plan amendment, such 
                                services for the individual 
                                which are planned and purchased 
                                under the direction and control 
                                of such individual or the 
                                individual's authorized 
                                representative, including the 
                                amount, duration, scope, 
                                provider, and location of such 
                                services, under the State plan 
                                consistent with the following 
                                requirements:
                                          (aa) Assessment.--
                                        There is an assessment 
                                        of the needs, 
                                        capabilities, and 
                                        preferences of the 
                                        individual with respect 
                                        to such services.
                                          (bb) Service plan.--
                                        Based on such 
                                        assessment, there is 
                                        developed jointly with 
                                        such individual or the 
                                        individual's authorized 
                                        representative a plan 
                                        for such services for 
                                        such individual that is 
                                        approved by the State 
                                        and that satisfies the 
                                        requirements of 
                                        subclause (III).
                                  (III) Plan requirements.--For 
                                purposes of subclause (II)(bb), 
                                the requirements of this 
                                subclause are that the plan--
                                          (aa) specifies those 
                                        services which the 
                                        individual or the 
                                        individual's authorized 
                                        representative would be 
                                        responsible for 
                                        directing;
                                          (bb) identifies the 
                                        methods by which the 
                                        individual or the 
                                        individual's authorized 
                                        representative will 
                                        select, manage, and 
                                        dismiss providers of 
                                        such services;
                                          (cc) specifies the 
                                        role of family members 
                                        and others whose 
                                        participation is sought 
                                        by the individual or 
                                        the individual's 
                                        authorized 
                                        representative with 
                                        respect to such 
                                        services;
                                          (dd) is developed 
                                        through a person-
                                        centered process that 
                                        is directed by the 
                                        individual or the 
                                        individual's authorized 
                                        representative, builds 
                                        upon the individual's 
                                        capacity to engage in 
                                        activities that promote 
                                        community life and that 
                                        respects the 
                                        individual's 
                                        preferences, choices, 
                                        and abilities, and 
                                        involves families, 
                                        friends, and 
                                        professionals as 
                                        desired or required by 
                                        the individual or the 
                                        individual's authorized 
                                        representative;
                                          (ee) includes 
                                        appropriate risk 
                                        management techniques 
                                        that recognize the 
                                        roles and sharing of 
                                        responsibilities in 
                                        obtaining services in a 
                                        self-directed manner 
                                        and assure the 
                                        appropriateness of such 
                                        plan based upon the 
                                        resources and 
                                        capabilities of the 
                                        individual or the 
                                        individual's authorized 
                                        representative; and
                                          (ff) may include an 
                                        individualized budget 
                                        which identifies the 
                                        dollar value of the 
                                        services and supports 
                                        under the control and 
                                        direction of the 
                                        individual or the 
                                        individual's authorized 
                                        representative.
                                  (IV) Budget process.--With 
                                respect to individualized 
                                budgets described in subclause 
                                (III)(ff), the State plan 
                                amendment--
                                          (aa) describes the 
                                        method for calculating 
                                        the dollar values in 
                                        such budgets based on 
                                        reliable costs and 
                                        service utilization;
                                          (bb) defines a 
                                        process for making 
                                        adjustments in such 
                                        dollar values to 
                                        reflect changes in 
                                        individual assessments 
                                        and service plans; and
                                          (cc) provides a 
                                        procedure to evaluate 
                                        expenditures under such 
                                        budgets.
                  (H) Quality assurance; conflict of interest 
                standards.--
                          (i) Quality assurance.--The State 
                        ensures that the provision of home and 
                        community-based services meets Federal 
                        and State guidelines for quality 
                        assurance.
                          (ii) Conflict of interest 
                        standards.--The State establishes 
                        standards for the conduct of the 
                        independent evaluation and the 
                        independent assessment to safeguard 
                        against conflicts of interest.
                  (I) Redeterminations and appeals.--The State 
                allows for at least annual redeterminations of 
                eligibility, and appeals in accordance with the 
                frequency of, and manner in which, 
                redeterminations and appeals of eligibility are 
                made under the State plan.
                  (J) Presumptive eligibility for assessment.--
                The State, at its option, elects to provide for 
                a period of presumptive eligibility (not to 
                exceed a period of 60 days) only for those 
                individuals that the State has reason to 
                believe may be eligible for home and community-
                based services. Such presumptive eligibility 
                shall be limited to medical assistance for 
                carrying out the independent evaluation and 
                assessment under subparagraph (E) to determine 
                an individual's eligibility for such services 
                and if the individual is so eligible, the 
                specific home and community-based services that 
                the individual will receive.
          (2) Definition of individual's representative.--In 
        this section, the term ``individual's representative'' 
        means, with respect to an individual, a parent, a 
        family member, or a guardian of the individual, an 
        advocate for the individual, or any other individual 
        who is authorized to represent the individual.
          (3) Nonapplication.--A State may elect in the State 
        plan amendment approved under this section to not 
        comply with the requirements of section 1902(a)(10)(B) 
        (relating to comparability) and section 
        1902(a)(10)(C)(i)(III) (relating to income and resource 
        rules applicable in the community), but only for 
        purposes of provided home and community-based services 
        in accordance with such amendment. Any such election 
        shall not be construed to apply to the provision of 
        services to an individual receiving medical assistance 
        in an institutionalized setting as a result of a 
        determination that the individual requires the level of 
        care provided in a hospital or a nursing facility or 
        intermediate care facility for the mentally retarded.
          (4) No effect on other waiver authority.--Nothing in 
        this subsection shall be construed as affecting the 
        option of a State to offer home and community-based 
        services under a waiver under subsections (c) or (d) of 
        this section or under section 1115.
          (5) Continuation of federal financial participation 
        for medical assistance provided to individuals as of 
        effective date of state plan amendment.--
        Notwithstanding paragraph (1)(B), Federal financial 
        participation shall continue to be available for an 
        individual who is receiving medical assistance in an 
        institutionalized setting, or home and community-based 
        services provided under a waiver under this section or 
        section 1115 that is in effect as of the effective date 
        of the State plan amendment submitted under this 
        subsection, as a result of a determination that the 
        individual requires the level of care provided in a 
        hospital or a nursing facility or intermediate care 
        facility for the mentally retarded, without regard to 
        whether such individuals satisfy the more stringent 
        eligibility criteria established under that paragraph, 
        until such time as the individual is discharged from 
        the institution or waiver program or no longer requires 
        such level of care.
          (6) State option to provide home and community-based 
        services to individuals eligible for services under a 
        waiver.--
                  (A) In general.--A State that provides home 
                and community-based services in accordance with 
                this subsection to individuals who satisfy the 
                needs-based criteria for the receipt of such 
                services established under paragraph (1)(A) 
                may, in addition to continuing to provide such 
                services to such individuals, elect to provide 
                home and community-based services in accordance 
                with the requirements of this paragraph to 
                individuals who are eligible for home and 
                community-based services under a waiver 
                approved for the State under subsection (c), 
                (d), or (e) or under section 1115 to provide 
                such services, but only for those individuals 
                whose income does not exceed 300 percent of the 
                supplemental security income benefit rate 
                established by section 1611(b)(1).
                  (B) Application of same requirements for 
                individuals satisfying needs-based criteria.--
                Subject to subparagraph (C), a State shall 
                provide home and community-based services to 
                individuals under this paragraph in the same 
                manner and subject to the same requirements as 
                apply under the other paragraphs of this 
                subsection to the provision of home and 
                community-based services to individuals who 
                satisfy the needs-based criteria established 
                under paragraph (1)(A).
                  (C) Authority to offer different type, 
                amount, duration, or scope of home and 
                community-based services.--A State may offer 
                home and community-based services to 
                individuals under this paragraph that differ in 
                type, amount, duration, or scope from the home 
                and community-based services offered for 
                individuals who satisfy the needs-based 
                criteria established under paragraph (1)(A), so 
                long as such services are within the scope of 
                services described in paragraph (4)(B) of 
                subsection (c) for which the Secretary has the 
                authority to approve a waiver and do not 
                include room or board.
          (7) State option to offer home and community-based 
        services to specific, targeted populations.--
                  (A) In general.--A State may elect in a State 
                plan amendment under this subsection to target 
                the provision of home and community-based 
                services under this subsection to specific 
                populations and to differ the type, amount, 
                duration, or scope of such services to such 
                specific populations.
                  (B) 5-year term.--
                          (i) In general.--An election by a 
                        State under this paragraph shall be for 
                        a period of 5 years.
                          (ii) Phase-in of services and 
                        eligibility permitted during initial 5-
                        year period.--A State making an 
                        election under this paragraph may, 
                        during the first 5-year period for 
                        which the election is made, phase-in 
                        the enrollment of eligible individuals, 
                        or the provision of services to such 
                        individuals, or both, so long as all 
                        eligible individuals in the State for 
                        such services are enrolled, and all 
                        such services are provided, before the 
                        end of the initial 5-year period.
                  (C) Renewal.--An election by a State under 
                this paragraph may be renewed for additional 5-
                year terms if the Secretary determines, prior 
                to beginning of each such renewal period, that 
                the State has--
                          (i) adhered to the requirements of 
                        this subsection and paragraph in 
                        providing services under such an 
                        election; and
                          (ii) met the State's objectives with 
                        respect to quality improvement and 
                        beneficiary outcomes.
  (j)(1) A State may provide, as ``medical assistance'', 
payment for part or all of the cost of self-directed personal 
assistance services (other than room and board) under the plan 
which are provided pursuant to a written plan of care to 
individuals with respect to whom there has been a determination 
that, but for the provision of such services, the individuals 
would require and receive personal care services under the 
plan, or home and community-based services provided pursuant to 
a waiver under subsection (c). Self-directed personal 
assistance services may not be provided under this subsection 
to individuals who reside in a home or property that is owned, 
operated, or controlled by a provider of services, not related 
by blood or marriage.
  (2) The Secretary shall not grant approval for a State self-
directed personal assistance services program under this 
section unless the State provides assurances satisfactory to 
the Secretary of the following:
          (A) Necessary safeguards have been taken to protect 
        the health and welfare of individuals provided services 
        under the program, and to assure financial 
        accountability for funds expended with respect to such 
        services.
          (B) The State will provide, with respect to 
        individuals who--
                  (i) are entitled to medical assistance for 
                personal care services under the plan, or 
                receive home and community-based services under 
                a waiver granted under subsection (c);
                  (ii) may require self-directed personal 
                assistance services; and
                  (iii) may be eligible for self-directed 
                personal assistance services,
        an evaluation of the need for personal care under the 
        plan, or personal services under a waiver granted under 
        subsection (c).
          (C) Such individuals who are determined to be likely 
        to require personal care under the plan, or home and 
        community-based services under a waiver granted under 
        subsection (c) are informed of the feasible 
        alternatives, if available under the State's self-
        directed personal assistance services program, at the 
        choice of such individuals, to the provision of 
        personal care services under the plan, or personal 
        assistance services under a waiver granted under 
        subsection (c).
          (D) The State will provide for a support system that 
        ensures participants in the self-directed personal 
        assistance services program are appropriately assessed 
        and counseled prior to enrollment and are able to 
        manage their budgets. Additional counseling and 
        management support may be provided at the request of 
        the participant.
          (E) The State will provide to the Secretary an annual 
        report on the number of individuals served and total 
        expenditures on their behalf in the aggregate. The 
        State shall also provide an evaluation of overall 
        impact on the health and welfare of participating 
        individuals compared to non-participants every three 
        years.
  (3) A State may provide self-directed personal assistance 
services under the State plan without regard to the 
requirements of section 1902(a)(1) and may limit the population 
eligible to receive these services and limit the number of 
persons served without regard to section 1902(a)(10)(B).
  (4)(A) For purposes of this subsection, the term ``self-
directed personal assistance services'' means personal care and 
related services, or home and community-based services 
otherwise available under the plan under this title or 
subsection (c), that are provided to an eligible participant 
under a self-directed personal assistance services program 
under this section, under which individuals, within an approved 
self-directed services plan and budget, purchase personal 
assistance and related services, and permits participants to 
hire, fire, supervise, and manage the individuals providing 
such services.
  (B) At the election of the State--
          (i) a participant may choose to use any individual 
        capable of providing the assigned tasks including 
        legally liable relatives as paid providers of the 
        services; and
          (ii) the individual may use the individual's budget 
        to acquire items that increase independence or 
        substitute (such as a microwave oven or an 
        accessibility ramp) for human assistance, to the extent 
        that expenditures would otherwise be made for the human 
        assistance.
  (5) For purpose of this section, the term ``approved self-
directed services plan and budget'' means, with respect to a 
participant, the establishment of a plan and budget for the 
provision of self-directed personal assistance services, 
consistent with the following requirements:
          (A) Self-direction.--The participant (or in the case 
        of a participant who is a minor child, the 
        participant's parent or guardian, or in the case of an 
        incapacitated adult, another individual recognized by 
        State law to act on behalf of the participant) 
        exercises choice and control over the budget, planning, 
        and purchase of self-directed personal assistance 
        services, including the amount, duration, scope, 
        provider, and location of service provision.
          (B) Assessment of needs.--There is an assessment of 
        the needs, strengths, and preferences of the 
        participants for such services.
          (C) Service plan.--A plan for such services (and 
        supports for such services) for the participant has 
        been developed and approved by the State based on such 
        assessment through a person-centered process that--
                  (i) builds upon the participant's capacity to 
                engage in activities that promote community 
                life and that respects the participant's 
                preferences, choices, and abilities; and
                  (ii) involves families, friends, and 
                professionals in the planning or delivery of 
                services or supports as desired or required by 
                the participant.
          (D) Service budget.--A budget for such services and 
        supports for the participant has been developed and 
        approved by the State based on such assessment and plan 
        and on a methodology that uses valid, reliable cost 
        data, is open to public inspection, and includes a 
        calculation of the expected cost of such services if 
        those services were not self-directed. The budget may 
        not restrict access to other medically necessary care 
        and services furnished under the plan and approved by 
        the State but not included in the budget.
          (E) Application of quality assurance and risk 
        management.--There are appropriate quality assurance 
        and risk management techniques used in establishing and 
        implementing such plan and budget that recognize the 
        roles and responsibilities in obtaining services in a 
        self-directed manner and assure the appropriateness of 
        such plan and budget based upon the participant's 
        resources and capabilities.
  (6) A State may employ a financial management entity to make 
payments to providers, track costs, and make reports under the 
program. Payment for the activities of the financial management 
entity shall be at the administrative rate established in 
section 1903(a).
  (k) State Plan Option To Provide Home and Community-based 
Attendant Services and Supports.--
          (1) In general.--Subject to the succeeding provisions 
        of this subsection, beginning October 1, 2011, a State 
        may provide through a State plan amendment for the 
        provision of medical assistance for home and community-
        based attendant services and supports for individuals 
        who are eligible for medical assistance under the State 
        plan whose income does not exceed 150 percent of the 
        poverty line (as defined in section 2110(c)(5)) or, if 
        greater, the income level applicable for an individual 
        who has been determined to require an institutional 
        level of care to be eligible for nursing facility 
        services under the State plan and with respect to whom 
        there has been a determination that, but for the 
        provision of such services, the individuals would 
        require the level of care provided in a hospital, a 
        nursing facility, an intermediate care facility for the 
        mentally retarded, or an institution for mental 
        diseases, the cost of which could be reimbursed under 
        the State plan, but only if the individual chooses to 
        receive such home and community-based attendant 
        services and supports, and only if the State meets the 
        following requirements:
                  (A) Availability.--The State shall make 
                available home and community-based attendant 
                services and supports to eligible individuals, 
                as needed, to assist in accomplishing 
                activities of daily living, instrumental 
                activities of daily living, and health-related 
                tasks through hands-on assistance, supervision, 
                or cueing--
                          (i) under a person-centered plan of 
                        services and supports that is based on 
                        an assessment of functional need and 
                        that is agreed to in writing by the 
                        individual or, as appropriate, the 
                        individual's representative;
                          (ii) in a home or community setting, 
                        which does not include a nursing 
                        facility, institution for mental 
                        diseases, or an intermediate care 
                        facility for the mentally retarded;
                          (iii) under an agency-provider model 
                        or other model (as defined in paragraph 
                        (6)(C)); and
                          (iv) the furnishing of which--
                                  (I) is selected, managed, and 
                                dismissed by the individual, 
                                or, as appropriate, with 
                                assistance from the 
                                individual's representative;
                                  (II) is controlled, to the 
                                maximum extent possible, by the 
                                individual or where 
                                appropriate, the individual's 
                                representative, regardless of 
                                who may act as the employer of 
                                record; and
                                  (III) provided by an 
                                individual who is qualified to 
                                provide such services, 
                                including family members (as 
                                defined by the Secretary).
                  (B) Included services and supports.--In 
                addition to assistance in accomplishing 
                activities of daily living, instrumental 
                activities of daily living, and health related 
                tasks, the home and community-based attendant 
                services and supports made available include--
                          (i) the acquisition, maintenance, and 
                        enhancement of skills necessary for the 
                        individual to accomplish activities of 
                        daily living, instrumental activities 
                        of daily living, and health related 
                        tasks;
                          (ii) back-up systems or mechanisms 
                        (such as the use of beepers or other 
                        electronic devices) to ensure 
                        continuity of services and supports; 
                        and
                          (iii) voluntary training on how to 
                        select, manage, and dismiss attendants.
                  (C) Excluded services and supports.--Subject 
                to subparagraph (D), the home and community-
                based attendant services and supports made 
                available do not include--
                          (i) room and board costs for the 
                        individual;
                          (ii) special education and related 
                        services provided under the Individuals 
                        with Disabilities Education Act and 
                        vocational rehabilitation services 
                        provided under the Rehabilitation Act 
                        of 1973;
                          (iii) assistive technology devices 
                        and assistive technology services other 
                        than those under (1)(B)(ii);
                          (iv) medical supplies and equipment; 
                        or
                          (v) home modifications.
                  (D) Permissible services and supports.--The 
                home and community-based attendant services and 
                supports may include--
                          (i) expenditures for transition costs 
                        such as rent and utility deposits, 
                        first month's rent and utilities, 
                        bedding, basic kitchen supplies, and 
                        other necessities required for an 
                        individual to make the transition from 
                        a nursing facility, institution for 
                        mental diseases, or intermediate care 
                        facility for the mentally retarded to a 
                        community-based home setting where the 
                        individual resides; and
                          (ii) expenditures relating to a need 
                        identified in an individual's person-
                        centered plan of services that increase 
                        independence or substitute for human 
                        assistance, to the extent that 
                        expenditures would otherwise be made 
                        for the human assistance.
          (2) Increased federal financial participation.--For 
        purposes of payments to a State under section 
        1903(a)(1), with respect to amounts expended by the 
        State to provide medical assistance under the State 
        plan for home and community-based attendant services 
        and supports to eligible individuals in accordance with 
        this subsection during a fiscal year quarter occurring 
        [during the period described in paragraph (1)] on or 
        after the date referred to in paragraph (1) and before 
        January 1, 2020, the Federal medical assistance 
        percentage applicable to the State (as determined under 
        section 1905(b)) shall be increased by 6 percentage 
        points.
          (3) State requirements.--In order for a State plan 
        amendment to be approved under this subsection, the 
        State shall--
                  (A) develop and implement such amendment in 
                collaboration with a Development and 
                Implementation Council established by the State 
                that includes a majority of members with 
                disabilities, elderly individuals, and their 
                representatives and consults and collaborates 
                with such individuals;
                  (B) provide consumer controlled home and 
                community-based attendant services and supports 
                to individuals on a statewide basis, in a 
                manner that provides such services and supports 
                in the most integrated setting appropriate to 
                the individual's needs, and without regard to 
                the individual's age, type or nature of 
                disability, severity of disability, or the form 
                of home and community-based attendant services 
                and supports that the individual requires in 
                order to lead an independent life;
                  (C) with respect to expenditures during the 
                first full fiscal year in which the State plan 
                amendment is implemented, maintain or exceed 
                the level of State expenditures for medical 
                assistance that is provided under section 
                1905(a), section 1915, section 1115, or 
                otherwise to individuals with disabilities or 
                elderly individuals attributable to the 
                preceding fiscal year;
                  (D) establish and maintain a comprehensive, 
                continuous quality assurance system with 
                respect to community- based attendant services 
                and supports that--
                          (i) includes standards for agency-
                        based and other delivery models with 
                        respect to training, appeals for 
                        denials and reconsideration procedures 
                        of an individual plan, and other 
                        factors as determined by the Secretary;
                          (ii) incorporates feedback from 
                        consumers and their representatives, 
                        disability organizations, providers, 
                        families of disabled or elderly 
                        individuals, members of the community, 
                        and others and maximizes consumer 
                        independence and consumer control;
                          (iii) monitors the health and well-
                        being of each individual who receives 
                        home and community-based attendant 
                        services and supports, including a 
                        process for the mandatory reporting, 
                        investigation, and resolution of 
                        allegations of neglect, abuse, or 
                        exploitation in connection with the 
                        provision of such services and 
                        supports; and
                          (iv) provides information about the 
                        provisions of the quality assurance 
                        required under clauses (i) through 
                        (iii) to each individual receiving such 
                        services; and
                  (E) collect and report information, as 
                determined necessary by the Secretary, for the 
                purposes of approving the State plan amendment, 
                providing Federal oversight, and conducting an 
                evaluation under paragraph (5)(A), including 
                data regarding how the State provides home and 
                community-based attendant services and supports 
                and other home and community-based services, 
                the cost of such services and supports, and how 
                the State provides individuals with 
                disabilities who otherwise qualify for 
                institutional care under the State plan or 
                under a waiver the choice to instead receive 
                home and community-based services in lieu of 
                institutional care.
          (4) Compliance with certain laws.--A State shall 
        ensure that, regardless of whether the State uses an 
        agency-provider model or other models to provide home 
        and community-based attendant services and supports 
        under a State plan amendment under this subsection, 
        such services and supports are provided in accordance 
        with the requirements of the Fair Labor Standards Act 
        of 1938 and applicable Federal and State laws 
        regarding--
                  (A) withholding and payment of Federal and 
                State income and payroll taxes;
                  (B) the provision of unemployment and workers 
                compensation insurance;
                  (C) maintenance of general liability 
                insurance; and
                  (D) occupational health and safety.
          (5) Evaluation, data collection, and report to 
        congress.--
                  (A) Evaluation.--The Secretary shall conduct 
                an evaluation of the provision of home and 
                community-based attendant services and supports 
                under this subsection in order to determine the 
                effectiveness of the provision of such services 
                and supports in allowing the individuals 
                receiving such services and supports to lead an 
                independent life to the maximum extent 
                possible; the impact on the physical and 
                emotional health of the individuals who receive 
                such services; and an comparative analysis of 
                the costs of services provided under the State 
                plan amendment under this subsection and those 
                provided under institutional care in a nursing 
                facility, institution for mental diseases, or 
                an intermediate care facility for the mentally 
                retarded.
                  (B) Data collection.--The State shall provide 
                the Secretary with the following information 
                regarding the provision of home and community-
                based attendant services and supports under 
                this subsection for each fiscal year for which 
                such services and supports are provided:
                          (i) The number of individuals who are 
                        estimated to receive home and 
                        community-based attendant services and 
                        supports under this subsection during 
                        the fiscal year.
                          (ii) The number of individuals that 
                        received such services and supports 
                        during the preceding fiscal year.
                          (iii) The specific number of 
                        individuals served by type of 
                        disability, age, gender, education 
                        level, and employment status.
                          (iv) Whether the specific individuals 
                        have been previously served under any 
                        other home and community based services 
                        program under the State plan or under a 
                        waiver.
                  (C) Reports.--Not later than--
                          (i) December 31, 2013, the Secretary 
                        shall submit to Congress and make 
                        available to the public an interim 
                        report on the findings of the 
                        evaluation under subparagraph (A); and
                          (ii) December 31, 2015, the Secretary 
                        shall submit to Congress and make 
                        available to the public a final report 
                        on the findings of the evaluation under 
                        subparagraph (A).
          (6) Definitions.--In this subsection:
                  (A) Activities of daily living.--The term 
                ``activities of daily living'' includes tasks 
                such as eating, toileting, grooming, dressing, 
                bathing, and transferring.
                  (B) Consumer controlled.--The term ``consumer 
                controlled'' means a method of selecting and 
                providing services and supports that allow the 
                individual, or where appropriate, the 
                individual's representative, maximum control of 
                the home and community-based attendant services 
                and supports, regardless of who acts as the 
                employer of record.
                  (C) Delivery models.--
                          (i) Agency-provider model.--The term 
                        ``agency-provider model'' means, with 
                        respect to the provision of home and 
                        community-based attendant services and 
                        supports for an individual, subject to 
                        paragraph (4), a method of providing 
                        consumer controlled services and 
                        supports under which entities contract 
                        for the provision of such services and 
                        supports.
                          (ii) Other models.--The term ``other 
                        models'' means, subject to paragraph 
                        (4), methods, other than an agency-
                        provider model, for the provision of 
                        consumer controlled services and 
                        supports. Such models may include the 
                        provision of vouchers, direct cash 
                        payments, or use of a fiscal agent to 
                        assist in obtaining services.
                  (D) Health-related tasks.--The term ``health-
                related tasks'' means specific tasks related to 
                the needs of an individual, which can be 
                delegated or assigned by licensed health-care 
                professionals under State law to be performed 
                by an attendant.
                  (E) Individual's representative.--The term 
                ``individual's representative'' means a parent, 
                family member, guardian, advocate, or other 
                authorized representative of an individual
                  (F) Instrumental activities of daily 
                living.--The term ``instrumental activities of 
                daily living'' includes (but is not limited to) 
                meal planning and preparation, managing 
                finances, shopping for food, clothing, and 
                other essential items, performing essential 
                household chores, communicating by phone or 
                other media, and traveling around and 
                participating in the community.

           *       *       *       *       *       *       *


       liens, adjustments and recoveries, and transfers of assets

  Sec. 1917. (a)(1) No lien may be imposed against the property 
of any individual prior to his death on account of medical 
assistance paid or to be paid on his behalf under the State 
plan, except--
          (A) pursuant to--
                  (i) the judgment of a court on account of 
                benefits incorrectly paid on behalf of such 
                individual, or
                  (ii) rights acquired by or assigned to the 
                State in accordance with section 1902(a)(25)(H) 
                or section 1912(a)(1)(A), or
          (B) in the case of the real property of an 
        individual--
                  (i) who is an inpatient in a nursing 
                facility, intermediate care facility for the 
                mentally retarded, or other medical 
                institution, if such individual is required, as 
                a condition of receiving services in such 
                institution under the State plan, to spend for 
                costs of medical care all but a minimal amount 
                of his income required for personal needs, and
                  (ii) with respect to whom the State 
                determines, after notice and opportunity for a 
                hearing (in accordance with procedures 
                established by the State), that he cannot 
                reasonably be expected to be discharged from 
                the medical institution and to return home,
        except as provided in paragraph (2).
  (2) No lien may be imposed under paragraph (1)(B) on such 
individual's home if--
          (A) the spouse of such individual,
          (B) 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 (with respect to 
        States which are not eligible to participate in such 
        program) is blind or disabled as defined in section 
        1614, or
          (C) a sibling of such individual (who has an equity 
        interest in such home and who was residing in such 
        individual's home for a period of at least one year 
        immediately before the date of the individual's 
        admission to the medical institution),
is lawfully residing in such home.
  (3) Any lien imposed with respect to an individual pursuant 
to paragraph (1)(B) shall dissolve upon that individual's 
discharge from the medical institution and return home.
  (b)(1) No adjustment or recovery of any medical assistance 
correctly paid on behalf of an individual under the State plan 
may be made, except that the State shall seek adjustment or 
recovery of any medical assistance correctly paid on behalf of 
an individual under the State plan in the case of the following 
individuals:
          (A) In the case of an individual described in 
        subsection (a)(1)(B), the State shall seek adjustment 
        or recovery from the individual's estate or upon sale 
        of the property subject to a lien imposed on account of 
        medical assistance paid on behalf of the individual.
          (B) In the case of an individual who was 55 years of 
        age or older when the individual received such medical 
        assistance, the State shall seek adjustment or recovery 
        from the individual's estate, but only for medical 
        assistance consisting of--
                  (i) nursing facility services, home and 
                community-based services, and related hospital 
                and prescription drug services, or
                  (ii) at the option of the State, any items or 
                services under the State plan (but not 
                including medical assistance for medicare cost-
                sharing or for benefits described in section 
                1902(a)(10)(E)).
          (C)(i) In the case of an individual who has received 
        (or is entitled to receive) benefits under a long-term 
        care insurance policy in connection with which assets 
        or resources are disregarded in the manner described in 
        clause (ii), except as provided in such clause, the 
        State shall seek adjustment or recovery from the 
        individual's estate on account of medical assistance 
        paid on behalf of the individual for nursing facility 
        and other long-term care services.
          (ii) Clause (i) shall not apply in the case of an 
        individual who received medical assistance under a 
        State plan of a State which had a State plan amendment 
        approved as of May 14, 1993, and which satisfies clause 
        (iv), or which has a State plan amendment that provides 
        for a qualified State long-term care insurance 
        partnership (as defined in clause (iii)) which provided 
        for the disregard of any assets or resources--
                  (I) to the extent that payments are made 
                under a long-term care insurance policy; or
                  (II) because an individual has received (or 
                is entitled to receive) benefits under a long-
                term care insurance policy.
          (iii) For purposes of this paragraph, the term 
        ``qualified State long-term care insurance 
        partnership'' means an approved State plan amendment 
        under this title that provides for the disregard of any 
        assets or resources in an amount equal to the insurance 
        benefit payments that are made to or on behalf of an 
        individual who is a beneficiary under a long-term care 
        insurance policy if the following requirements are met:
                  (I) The policy covers an insured who was a 
                resident of such State when coverage first 
                became effective under the policy.
                  (II) The policy is a qualified long-term care 
                insurance policy (as defined in section 
                7702B(b) of the Internal Revenue Code of 1986) 
                issued not earlier than the effective date of 
                the State plan amendment.
                  (III) The policy meets the model regulations 
                and the requirements of the model Act specified 
                in paragraph (5).
                  (IV) If the policy is sold to an individual 
                who--
                          (aa) has not attained age 61 as of 
                        the date of purchase, the policy 
                        provides compound annual inflation 
                        protection;
                          (bb) has attained age 61 but has not 
                        attained age 76 as of such date, the 
                        policy provides some level of inflation 
                        protection; and
                          (cc) has attained age 76 as of such 
                        date, the policy may (but is not 
                        required to) provide some level of 
                        inflation protection.
                  (V) The State Medicaid agency under section 
                1902(a)(5) provides information and technical 
                assistance to the State insurance department on 
                the insurance department's role of assuring 
                that any individual who sells a long-term care 
                insurance policy under the partnership receives 
                training and demonstrates evidence of an 
                understanding of such policies and how they 
                relate to other public and private coverage of 
                long-term care.
                  (VI) The issuer of the policy provides 
                regular reports to the Secretary, in accordance 
                with regulations of the Secretary, that include 
                notification regarding when benefits provided 
                under the policy have been paid and the amount 
                of such benefits paid, notification regarding 
                when the policy otherwise terminates, and such 
                other information as the Secretary determines 
                may be appropriate to the administration of 
                such partnerships.
                  (VII) The State does not impose any 
                requirement affecting the terms or benefits of 
                such a policy unless the State imposes such 
                requirement on long-term care insurance 
                policies without regard to whether the policy 
                is covered under the partnership or is offered 
                in connection with such a partnership.
        In the case of a long-term care insurance policy which 
        is exchanged for another such policy, subclause (I) 
        shall be applied based on the coverage of the first 
        such policy that was exchanged. For purposes of this 
        clause and paragraph (5), the term ``long-term care 
        insurance policy'' includes a certificate issued under 
        a group insurance contract.
          (iv) With respect to a State which had a State plan 
        amendment approved as of May 14, 1993, such a State 
        satisfies this clause for purposes of clause (ii) if 
        the Secretary determines that the State plan amendment 
        provides for consumer protection standards which are no 
        less stringent than the consumer protection standards 
        which applied under such State plan amendment as of 
        December 31, 2005.
          (v) The regulations of the Secretary required under 
        clause (iii)(VI) shall be promulgated after 
        consultation with the National Association of Insurance 
        Commissioners, issuers of long-term care insurance 
        policies, States with experience with long-term care 
        insurance partnership plans, other States, and 
        representatives of consumers of long-term care 
        insurance policies, and shall specify the type and 
        format of the data and information to be reported and 
        the frequency with which such reports are to be made. 
        The Secretary, as appropriate, shall provide copies of 
        the reports provided in accordance with that clause to 
        the State involved.
          (vi) The Secretary, in consultation with other 
        appropriate Federal agencies, issuers of long-term care 
        insurance, the National Association of Insurance 
        Commissioners, State insurance commissioners, States 
        with experience with long-term care insurance 
        partnership plans, other States, and representatives of 
        consumers of long-term care insurance policies, shall 
        develop recommendations for Congress to authorize and 
        fund a uniform minimum data set to be reported 
        electronically by all issuers of long-term care 
        insurance policies under qualified State long-term care 
        insurance partnerships to a secure, centralized 
        electronic query and report-generating mechanism that 
        the State, the Secretary, and other Federal agencies 
        can access.
  (2) Any adjustment or recovery under paragraph (1) may be 
made only after the death of the individual's surviving spouse, 
if any, and only at a time--
          (A) when he has no surviving 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 (with 
        respect to States which are not eligible to participate 
        in such program) is blind or disabled as defined in 
        section 1614; and
          (B) in the case of a lien on an individual's home 
        under subsection (a)(1)(B), when--
                  (i) no sibling of the individual (who was 
                residing in the individual's home for a period 
                of at least one year immediately before the 
                date of the individual's admission to the 
                medical institution), and
                  (ii) no son or daughter of the individual 
                (who was residing in the individual's home for 
                a period of at least two years immediately 
                before the date of the individual's admission 
                to the medical institution, and who establishes 
                to the satisfaction of the State that he or she 
                provided care to such individual which 
                permitted such individual to reside at home 
                rather than in an institution),
        is lawfully residing in such home who has lawfully 
        resided in such home on a continuous basis since the 
        date of the individual's admission to the medical 
        institution.
  (3)(A) The State agency shall establish procedures (in 
accordance with standards specified by the Secretary) under 
which the agency shall waive the application of this subsection 
(other than paragraph (1)(C)) if such application would work an 
undue hardship as determined on the basis of criteria 
established by the Secretary.
  (B) The standards specified by the Secretary under 
subparagraph (A) shall require that the procedures established 
by the State agency under subparagraph (A) exempt income, 
resources, and property that are exempt from the application of 
this subsection as of April 1, 2003, under manual instructions 
issued to carry out this subsection (as in effect on such date) 
because of the Federal responsibility for Indian Tribes and 
Alaska Native Villages. Nothing in this subparagraph shall be 
construed as preventing the Secretary from providing additional 
estate recovery exemptions under this title for Indians.
  (4) For purposes of this subsection, the term ``estate'', 
with respect to a deceased individual--
          (A) shall include all real and personal property and 
        other assets included within the individual's estate, 
        as defined for purposes of State probate law; and
          (B) may include, at the option of the State (and 
        shall include, in the case of an individual to whom 
        paragraph (1)(C)(i) applies), any other real and 
        personal property and other assets in which the 
        individual had any legal title or interest at the time 
        of death (to the extent of such interest), including 
        such assets conveyed to a survivor, heir, or assign of 
        the deceased individual through joint tenancy, tenancy 
        in common, survivorship, life estate, living trust, or 
        other arrangement.
  (5)(A) For purposes of clause (iii)(III), the model 
regulations and the requirements of the model Act specified in 
this paragraph are:
          (i) In the case of the model regulation, the 
        following requirements:
                  (I) Section 6A (relating to guaranteed 
                renewal or noncancellability), other than 
                paragraph (5) thereof, and the requirements of 
                section 6B of the model Act relating to such 
                section 6A.
                  (II) Section 6B (relating to prohibitions on 
                limitations and exclusions) other than 
                paragraph (7) thereof.
                  (III) Section 6C (relating to extension of 
                benefits).
                  (IV) Section 6D (relating to continuation or 
                conversion of coverage).
                  (V) Section 6E (relating to discontinuance 
                and replacement of policies).
                  (VI) Section 7 (relating to unintentional 
                lapse).
                  (VII) Section 8 (relating to disclosure), 
                other than sections 8F, 8G, 8H, and 8I thereof.
                  (VIII) Section 9 (relating to required 
                disclosure of rating practices to consumer).
                  (IX) Section 11 (relating to prohibitions 
                against post-claims underwriting).
                  (X) Section 12 (relating to minimum 
                standards).
                  (XI) Section 14 (relating to application 
                forms and replacement coverage).
                  (XII) Section 15 (relating to reporting 
                requirements).
                  (XIII) Section 22 (relating to filing 
                requirements for marketing).
                  (XIV) Section 23 (relating to standards for 
                marketing), including inaccurate completion of 
                medical histories, other than paragraphs (1), 
                (6), and (9) of section 23C.
                  (XV) Section 24 (relating to suitability).
                  (XVI) Section 25 (relating to prohibition 
                against preexisting conditions and probationary 
                periods in replacement policies or 
                certificates).
                  (XVII) The provisions of section 26 relating 
                to contingent nonforfeiture benefits, if the 
                policyholder declines the offer of a 
                nonforfeiture provision described in paragraph 
                (4).
                  (XVIII) Section 29 (relating to standard 
                format outline of coverage).
                  (XIX) Section 30 (relating to requirement to 
                deliver shopper's guide).
          (ii) In the case of the model Act, the following:
                  (I) Section 6C (relating to preexisting 
                conditions).
                  (II) Section 6D (relating to prior 
                hospitalization).
                  (III) The provisions of section 8 relating to 
                contingent nonforfeiture benefits.
                  (IV) Section 6F (relating to right to 
                return).
                  (V) Section 6G (relating to outline of 
                coverage).
                  (VI) Section 6H (relating to requirements for 
                certificates under group plans).
                  (VII) Section 6J (relating to policy 
                summary).
                  (VIII) Section 6K (relating to monthly 
                reports on accelerated death benefits).
                  (IX) Section 7 (relating to incontestability 
                period).
  (B) For purposes of this paragraph and paragraph (1)(C)--
          (i) the terms ``model regulation'' and ``model Act'' 
        mean the long-term care insurance model regulation, and 
        the long-term care insurance model Act, respectively, 
        promulgated by the National Association of Insurance 
        Commissioners (as adopted as of October 2000);
          (ii) any provision of the model regulation or model 
        Act listed under subparagraph (A) shall be treated as 
        including any other provision of such regulation or Act 
        necessary to implement the provision; and
          (iii) with respect to a long-term care insurance 
        policy issued in a State, the policy shall be deemed to 
        meet applicable requirements of the model regulation or 
        the model Act if the State plan amendment under 
        paragraph (1)(C)(iii) provides that the State insurance 
        commissioner for the State certifies (in a manner 
        satisfactory to the Secretary) that the policy meets 
        such requirements.
  (C) Not later than 12 months after the National Association 
of Insurance Commissioners issues a revision, update, or other 
modification of a model regulation or model Act provision 
specified in subparagraph (A), or of any provision of such 
regulation or Act that is substantively related to a provision 
specified in such subparagraph, the Secretary shall review the 
changes made to the provision, determine whether incorporating 
such changes into the corresponding provision specified in such 
subparagraph would improve qualified State long-term care 
insurance partnerships, and if so, shall incorporate the 
changes into such provision.
  (c)(1)(A) In order to meet the requirements of this 
subsection for purposes of section 1902(a)(18), the State plan 
must provide that if an institutionalized individual or the 
spouse of such an individual (or, at the option of a State, a 
noninstitutionalized individual or the spouse of such an 
individual) disposes of assets for less than fair market value 
on or after the look-back date specified in subparagraph 
(B)(i), the individual is ineligible for medical assistance for 
services described in subparagraph (C)(i) (or, in the case of a 
noninstitutionalized individual, for the services described in 
subparagraph (C)(ii)) during the period beginning on the date 
specified in subparagraph (D) and equal to the number of months 
specified in subparagraph (E).
  (B)(i) The look-back date specified in this subparagraph is a 
date that is 36 months (or, in the case of payments from a 
trust or portions of a trust that are treated as assets 
disposed of by the individual pursuant to paragraph (3)(A)(iii) 
or (3)(B)(ii) of subsection (d) or in the case of any other 
disposal of assets made on or after the date of the enactment 
of the Deficit Reduction Act of 2005, 60 months) before the 
date specified in clause (ii).
  (ii) The date specified in this clause, with respect to--
          (I) an institutionalized individual is the first date 
        as of which the individual both is an institutionalized 
        individual and has applied for medical assistance under 
        the State plan, or
          (II) a noninstitutionalized individual is the date on 
        which the individual applies for medical assistance 
        under the State plan or, if later, the date on which 
        the individual disposes of assets for less than fair 
        market value.
  (C)(i) The services described in this subparagraph with 
respect to an institutionalized individual are the following:
          (I) Nursing facility services.
          (II) A level of care in any institution equivalent to 
        that of nursing facility services.
          (III) Home or community-based services furnished 
        under a waiver granted under subsection (c) or (d) of 
        section 1915.
  (ii) The services described in this subparagraph with respect 
to a noninstitutionalized individual are services (not 
including any services described in clause (i)) that are 
described in paragraph (7), (22), or (24) of section 1905(a), 
and, at the option of a State, other long-term care services 
for which medical assistance is otherwise available under the 
State plan to individuals requiring long-term care.
  (D)(i) In the case of a transfer of asset made before the 
date of the enactment of the Deficit Reduction Act of 2005, the 
date specified in this subparagraph is the first day of the 
first month during or after which assets have been transferred 
for less than fair market value and which does not occur in any 
other periods of ineligibility under this subsection.
  (ii) In the case of a transfer of asset made on or after the 
date of the enactment of the Deficit Reduction Act of 2005, the 
date specified in this subparagraph is the first day of a month 
during or after which assets have been transferred for less 
than fair market value, or the date on which the individual is 
eligible for medical assistance under the State plan and would 
otherwise be receiving institutional level care described in 
subparagraph (C) based on an approved application for such care 
but for the application of the penalty period, whichever is 
later, and which does not occur during any other period of 
ineligibility under this subsection.
  (E)(i) With respect to an institutionalized individual, the 
number of months of ineligibility under this subparagraph for 
an individual shall be equal to--
          (I) the total, cumulative uncompensated value of all 
        assets transferred by the individual (or individual's 
        spouse) on or after the look-back date specified in 
        subparagraph (B)(i), divided by
          (II) the average monthly cost to a private patient of 
        nursing facility services in the State (or, at the 
        option of the State, in the community in which the 
        individual is institutionalized) at the time of 
        application.
  (ii) With respect to a noninstitutionalized individual, the 
number of months of ineligibility under this subparagraph for 
an individual shall not be greater than a number equal to--
          (I) the total, cumulative uncompensated value of all 
        assets transferred by the individual (or individual's 
        spouse) on or after the look-back date specified in 
        subparagraph (B)(i), divided by
          (II) the average monthly cost to a private patient of 
        nursing facility services in the State (or, at the 
        option of the State, in the community in which the 
        individual is institutionalized) at the time of 
        application.
  (iii) The number of months of ineligibility otherwise 
determined under clause (i) or (ii) with respect to the 
disposal of an asset shall be reduced--
          (I) in the case of periods of ineligibility 
        determined under clause (i), by the number of months of 
        ineligibility applicable to the individual under clause 
        (ii) as a result of such disposal, and
          (II) in the case of periods of ineligibility 
        determined under clause (ii), by the number of months 
        of ineligibility applicable to the individual under 
        clause (i) as a result of such disposal.
  (iv) A State shall not round down, or otherwise disregard any 
fractional period of ineligibility determined under clause (i) 
or (ii) with respect to the disposal of assets.
  (F) For purposes of this paragraph, the purchase of an 
annuity shall be treated as the disposal of an asset for less 
than fair market value unless--
          (i) the State is named as the remainder beneficiary 
        in the first position for at least the total amount of 
        medical assistance paid on behalf of the 
        institutionalized individual under this title; or
          (ii) the State is named as such a beneficiary in the 
        second position after the community spouse or minor or 
        disabled child and is named in the first position if 
        such spouse or a representative of such child disposes 
        of any such remainder for less than fair market value.
  (G) For purposes of this paragraph with respect to a transfer 
of assets, the term ``assets'' includes an annuity purchased by 
or on behalf of an annuitant who has applied for medical 
assistance with respect to nursing facility services or other 
long-term care services under this title unless--
          (i) the annuity is--
                  (I) an annuity described in subsection (b) or 
                (q) of section 408 of the Internal Revenue Code 
                of 1986; or
                  (II) purchased with proceeds from--
                          (aa) an account or trust described in 
                        subsection (a), (c), or (p) of section 
                        408 of such Code;
                          (bb) a simplified employee pension 
                        (within the meaning of section 408(k) 
                        of such Code); or
                          (cc) a Roth IRA described in section 
                        408A of such Code; or
          (ii) the annuity--
                  (I) is irrevocable and nonassignable;
                  (II) is actuarially sound (as determined in 
                accordance with actuarial publications of the 
                Office of the Chief Actuary of the Social 
                Security Administration); and
                  (III) provides for payments in equal amounts 
                during the term of the annuity, with no 
                deferral and no balloon payments made.
  (H) Notwithstanding the preceding provisions of this 
paragraph, in the case of an individual (or individual's 
spouse) who makes multiple fractional transfers of assets in 
more than 1 month for less than fair market value on or after 
the applicable look-back date specified in subparagraph (B), a 
State may determine the period of ineligibility applicable to 
such individual under this paragraph by--
          (i) treating the total, cumulative uncompensated 
        value of all assets transferred by the individual (or 
        individual's spouse) during all months on or after the 
        look-back date specified in subparagraph (B) as 1 
        transfer for purposes of clause (i) or (ii) (as the 
        case may be) of subparagraph (E); and
          (ii) beginning such period on the earliest date which 
        would apply under subparagraph (D) to any of such 
        transfers.
  (I) For purposes of this paragraph with respect to a transfer 
of assets, the term ``assets'' includes funds used to purchase 
a promissory note, loan, or mortgage unless such note, loan, or 
mortgage--
          (i) has a repayment term that is actuarially sound 
        (as determined in accordance with actuarial 
        publications of the Office of the Chief Actuary of the 
        Social Security Administration);
          (ii) provides for payments to be made in equal 
        amounts during the term of the loan, with no deferral 
        and no balloon payments made; and
          (iii) prohibits the cancellation of the balance upon 
        the death of the lender.
In the case of a promissory note, loan, or mortgage that does 
not satisfy the requirements of clauses (i) through (iii), the 
value of such note, loan, or mortgage shall be the outstanding 
balance due as of the date of the individual's application for 
medical assistance for services described in subparagraph (C).
  (J) For purposes of this paragraph with respect to a transfer 
of assets, the term ``assets'' includes the purchase of a life 
estate interest in another individual's home unless the 
purchaser resides in the home for a period of at least 1 year 
after the date of the purchase.
  (2) An individual shall not be ineligible for medical 
assistance by reason of paragraph (1) to the extent that--
          (A) the assets transferred were a home and title to 
        the home was transferred to--
                  (i) the spouse of such individual;
                  (ii) a child of such individual who (I) is 
                under age 21, or (II) (with respect to States 
                eligible to participate in the State program 
                established under title XVI) is blind or 
                permanently and totally disabled, or (with 
                respect to States which are not eligible to 
                participate in such program) is blind or 
                disabled as defined in section 1614;
                  (iii) a sibling of such individual who has an 
                equity interest in such home and who was 
                residing in such individual's home for a period 
                of at least one year immediately before the 
                date the individual becomes an 
                institutionalized individual; or
                  (iv) a son or daughter of such individual 
                (other than a child described in clause (ii)) 
                who was residing in such individual's home for 
                a period of at least two years immediately 
                before the date the individual becomes an 
                institutionalized individual, and who (as 
                determined by the State) provided care to such 
                individual which permitted such individual to 
                reside at home rather than in such an 
                institution or facility;
          (B) the assets--
                  (i) were transferred to the individual's 
                spouse or to another for the sole benefit of 
                the individual's spouse,
                  (ii) were transferred from the individual's 
                spouse to another for the sole benefit of the 
                individual's spouse,
                  (iii) were transferred to, or to a trust 
                (including a trust described in subsection 
                (d)(4)) established solely for the benefit of, 
                the individual's child described in 
                subparagraph (A)(ii)(II), or
                  (iv) were transferred to a trust (including a 
                trust described in subsection (d)(4)) 
                established solely for the benefit of an 
                individual under 65 years of age who is 
                disabled (as defined in section 1614(a)(3));
          (C) a satisfactory showing is made to the State (in 
        accordance with regulations promulgated by the 
        Secretary) that (i) the individual intended to dispose 
        of the assets either at fair market value, or for other 
        valuable consideration, (ii) the assets were 
        transferred exclusively for a purpose other than to 
        qualify for medical assistance, or (iii) all assets 
        transferred for less than fair market value have been 
        returned to the individual; or
          (D) the State determines, under procedures 
        established by the State (in accordance with standards 
        specified by the Secretary), that the denial of 
        eligibility would work an undue hardship as determined 
        on the basis of criteria established by the Secretary.
        The procedures established under subparagraph (D) shall 
        permit the facility in which the institutionalized 
        individual is residing to file an undue hardship waiver 
        application on behalf of the individual with the 
        consent of the individual or the personal 
        representative of the individual. While an application 
        for an undue hardship waiver is pending under 
        subparagraph (D) in the case of an individual who is a 
        resident of a nursing facility, if the application 
        meets such criteria as the Secretary specifies, the 
        State may provide for payments for nursing facility 
        services in order to hold the bed for the individual at 
        the facility, but not in excess of payments for 30 
        days.
  (3) For purposes of this subsection, in the case of an asset 
held by an individual in common with another person or persons 
in a joint tenancy, tenancy in common, or similar arrangement, 
the asset (or the affected portion of such asset) shall be 
considered to be transferred by such individual when any action 
is taken, either by such individual or by any other person, 
that reduces or eliminates such individual's ownership or 
control of such asset.
  (4) A State (including a State which has elected treatment 
under section 1902(f)) may not provide for any period of 
ineligibility for an individual due to transfer of resources 
for less than fair market value except in accordance with this 
subsection. In the case of a transfer by the spouse of an 
individual which results in a period of ineligibility for 
medical assistance under a State plan for such individual, a 
State shall, using a reasonable methodology (as specified by 
the Secretary), apportion such period of ineligibility (or any 
portion of such period) among the individual and the 
individual's spouse if the spouse otherwise becomes eligible 
for medical assistance under the State plan.
  (5) In this subsection, the term ``resources'' has the 
meaning given such term in section 1613, without regard to the 
exclusion described in subsection (a)(1) thereof.
  (d)(1) For purposes of determining an individual's 
eligibility for, or amount of, benefits under a State plan 
under this title, subject to paragraph (4), the rules specified 
in paragraph (3) shall apply to a trust established by such 
individual.
  (2)(A) For purposes of this subsection, an individual shall 
be considered to have established a trust if assets of the 
individual were used to form all or part of the corpus of the 
trust and if any of the following individuals established such 
trust other than by will:
          (i) The individual.
          (ii) The individual's spouse.
          (iii) A person, including a court or administrative 
        body, with legal authority to act in place of or on 
        behalf of the individual or the individual's spouse.
          (iv) A person, including any court or administrative 
        body, acting at the direction or upon the request of 
        the individual or the individual's spouse.
  (B) In the case of a trust the corpus of which includes 
assets of an individual (as determined under subparagraph (A)) 
and assets of any other person or persons, the provisions of 
this subsection shall apply to the portion of the trust 
attributable to the assets of the individual.
  (C) Subject to paragraph (4), this subsection shall apply 
without regard to--
          (i) the purposes for which a trust is established,
          (ii) whether the trustees have or exercise any 
        discretion under the trust,
          (iii) any restrictions on when or whether 
        distributions may be made from the trust, or
          (iv) any restrictions on the use of distributions 
        from the trust.
  (3)(A) In the case of a revocable trust--
          (i) the corpus of the trust shall be considered 
        resources available to the individual,
          (ii) payments from the trust to or for the benefit of 
        the individual shall be considered income of the 
        individual, and
          (iii) any other payments from the trust shall be 
        considered assets disposed of by the individual for 
        purposes of subsection (c).
  (B) In the case of an irrevocable trust--
          (i) if there are any circumstances under which 
        payment from the trust could be made to or for the 
        benefit of the individual, the portion of the corpus 
        from which, or the income on the corpus from which, 
        payment to the individual could be made shall be 
        considered resources available to the individual, and 
        payments from that portion of the corpus or income--
                  (I) to or for the benefit of the individual, 
                shall be considered income of the individual, 
                and
                  (II) for any other purpose, shall be 
                considered a transfer of assets by the 
                individual subject to subsection (c); and
          (ii) any portion of the trust from which, or any 
        income on the corpus from which, no payment could under 
        any circumstances be made to the individual shall be 
        considered, as of the date of establishment of the 
        trust (or, if later, the date on which payment to the 
        individual was foreclosed) to be assets disposed by the 
        individual for purposes of subsection (c), and the 
        value of the trust shall be determined for purposes of 
        such subsection by including the amount of any payments 
        made from such portion of the trust after such date.
  (4) This subsection shall not apply to any of the following 
trusts:
          (A) A trust containing the assets of an individual 
        under age 65 who is disabled (as defined in section 
        1614(a)(3)) and which is established for the benefit of 
        such individual by the individual, a parent, 
        grandparent, legal guardian of the individual, or a 
        court if the State will receive all amounts remaining 
        in the trust upon the death of such individual up to an 
        amount equal to the total medical assistance paid on 
        behalf of the individual under a State plan under this 
        title.
          (B) A trust established in a State for the benefit of 
        an individual if--
                  (i) the trust is composed only of pension, 
                Social Security, and other income to the 
                individual (and accumulated income in the 
                trust),
                  (ii) the State will receive all amounts 
                remaining in the trust upon the death of such 
                individual up to an amount equal to the total 
                medical assistance paid on behalf of the 
                individual under a State plan under this title, 
                and
                  (iii) the State makes medical assistance 
                available to individuals described in section 
                1902(a)(10)(A)(ii)(V), but does not make such 
                assistance available to individuals for nursing 
                facility services under section 1902(a)(10)(C).
          (C) A trust containing the assets of an individual 
        who is disabled (as defined in section 1614(a)(3)) that 
        meets the following conditions:
                  (i) The trust is established and managed by a 
                nonprofit association.
                  (ii) A separate account is maintained for 
                each beneficiary of the trust, but, for 
                purposes of investment and management of funds, 
                the trust pools these accounts.
                  (iii) Accounts in the trust are established 
                solely for the benefit of individuals who are 
                disabled (as defined in section 1614(a)(3)) by 
                the parent, grandparent, or legal guardian of 
                such individuals, by such individuals, or by a 
                court.
                  (iv) To the extent that amounts remaining in 
                the beneficiary's account upon the death of the 
                beneficiary are not retained by the trust, the 
                trust pays to the State from such remaining 
                amounts in the account an amount equal to the 
                total amount of medical assistance paid on 
                behalf of the beneficiary under the State plan 
                under this title.
  (5) The State agency shall establish procedures (in 
accordance with standards specified by the Secretary) under 
which the agency waives the application of this subsection with 
respect to an individual if the individual establishes that 
such application would work an undue hardship on the individual 
as determined on the basis of criteria established by the 
Secretary.
  (6) The term ``trust'' includes any legal instrument or 
device that is similar to a trust but includes an annuity only 
to such extent and in such manner as the Secretary specifies.
  (e)(1) In order to meet the requirements of this section for 
purposes of section 1902(a)(18), a State shall require, as a 
condition for the provision of medical assistance for services 
described in subsection (c)(1)(C)(i) (relating to long-term 
care services) for an individual, the application of the 
individual for such assistance (including any recertification 
of eligibility for such assistance) shall disclose a 
description of any interest the individual or community spouse 
has in an annuity (or similar financial instrument, as may be 
specified by the Secretary), regardless of whether the annuity 
is irrevocable or is treated as an asset. Such application or 
recertification form shall include a statement that under 
paragraph (2) the State becomes a remainder beneficiary under 
such an annuity or similar financial instrument by virtue of 
the provision of such medical assistance.
  (2)(A) In the case of disclosure concerning an annuity under 
subsection (c)(1)(F), the State shall notify the issuer of the 
annuity of the right of the State under such subsection as a 
preferred remainder beneficiary in the annuity for medical 
assistance furnished to the individual. Nothing in this 
paragraph shall be construed as preventing such an issuer from 
notifying persons with any other remainder interest of the 
State's remainder interest under such subsection.
  (B) In the case of such an issuer receiving notice under 
subparagraph (A), the State may require the issuer to notify 
the State when there is a change in the amount of income or 
principal being withdrawn from the amount that was being 
withdrawn at the time of the most recent disclosure described 
in paragraph (1). A State shall take such information into 
account in determining the amount of the State's obligations 
for medical assistance or in the individual's eligibility for 
such assistance.
  (3) The Secretary may provide guidance to States on 
categories of transactions that may be treated as a transfer of 
asset for less than fair market value.
  (4) Nothing in this subsection shall be construed as 
preventing a State from denying eligibility for medical 
assistance for an individual based on the income or resources 
derived from an annuity described in paragraph (1).
  (f)(1)(A) Notwithstanding any other provision of this title, 
subject to [subparagraphs (B) and (C)] subparagraph (B) of this 
paragraph and paragraph (2), in determining eligibility of an 
individual for medical assistance with respect to nursing 
facility services or other long-term care services, the 
individual shall not be eligible for such assistance if the 
individual's equity interest in the individual's home exceeds 
$500,000.
  [(B) A State may elect, without regard to the requirements of 
section 1902(a)(1) (relating to statewideness) and section 
1902(a)(10)(B) (relating to comparability), to apply 
subparagraph (A) by substituting for ``$500,000'', an amount 
that exceeds such amount, but does not exceed $750,000.]
  [(C)] (B) The [dollar amounts specified in this paragraph] 
dollar amount specified in subparagraph (A) shall be increased, 
beginning with 2011, from year to year based on the percentage 
increase in the consumer price index for all urban consumers 
(all items; United States city average), rounded to the nearest 
$1,000.
  (2) Paragraph (1) shall not apply with respect to an 
individual if--
          (A) the spouse of such individual, or
          (B) 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 (with respect to 
        States which are not eligible to participate in such 
        program) is blind or disabled as defined in section 
        1614,
is lawfully residing in the individual's home.
  (3) Nothing in this subsection shall be construed as 
preventing an individual from using a reverse mortgage or home 
equity loan to reduce the individual's total equity interest in 
the home.
  (4) The Secretary shall establish a process whereby paragraph 
(1) is waived in the case of a demonstrated hardship.
  (g) Treatment of Entrance Fees of Individuals Residing in 
Continuing Care Retirement Communities.--
          (1) In general.--For purposes of determining an 
        individual's eligibility for, or amount of, benefits 
        under a State plan under this title, the rules 
        specified in paragraph (2) shall apply to individuals 
        residing in continuing care retirement communities or 
        life care communities that collect an entrance fee on 
        admission from such individuals.
          (2) Treatment of entrance fee.--For purposes of this 
        subsection, an individual's entrance fee in a 
        continuing care retirement community or life care 
        community shall be considered a resource available to 
        the individual to the extent that--
                  (A) the individual has the ability to use the 
                entrance fee, or the contract provides that the 
                entrance fee may be used, to pay for care 
                should other resources or income of the 
                individual be insufficient to pay for such 
                care;
                  (B) the individual is eligible for a refund 
                of any remaining entrance fee when the 
                individual dies or terminates the continuing 
                care retirement community or life care 
                community contract and leaves the community; 
                and
                  (C) the entrance fee does not confer an 
                ownership interest in the continuing care 
                retirement community or life care community.
  (h) In this section, the following definitions shall apply:
          (1) The term ``assets'', with respect to an 
        individual, includes all income and resources of the 
        individual and of the individual's spouse, including 
        any income or resources which the individual or such 
        individual's spouse is entitled to but does not receive 
        because of action--
                  (A) by the individual or such individual's 
                spouse,
                  (B) by a person, including a court or 
                administrative body, with legal authority to 
                act in place of or on behalf of the individual 
                or such individual's spouse, or
                  (C) by any person, including any court or 
                administrative body, acting at the direction or 
                upon the request of the individual or such 
                individual's spouse.
          (2) The term ``income'' has the meaning given such 
        term in section 1612.
          (3) The term ``institutionalized individual'' means 
        an individual who is an inpatient in a nursing 
        facility, who is an inpatient in a medical institution 
        and with respect to whom payment is made based on a 
        level of care provided in a nursing facility, or who is 
        described in section 1902(a)(10)(A)(ii)(VI).
          (4) The term ``noninstitutionalized individual'' 
        means an individual receiving any of the services 
        specified in subsection (c)(1)(C)(ii).
          (5) The term ``resources'' has the meaning given such 
        term in section 1613, without regard (in the case of an 
        institutionalized individual) to the exclusion 
        described in subsection (a)(1) of such section.

           *       *       *       *       *       *       *


               PRESUMPTIVE ELIGIBILITY FOR PREGNANT WOMEN

  Sec. 1920. (a) A State plan approved under section 1902 may 
provide for making ambulatory prenatal care available to a 
pregnant woman during a presumptive eligibility period.
  (b) For purposes of this section--
          (1) the term ``presumptive eligibility period'' 
        means, with respect to a pregnant woman, the period 
        that--
                  (A) begins with the date on which a qualified 
                provider determines, on the basis of 
                preliminary information, that the family income 
                of the woman does not exceed the applicable 
                income level of eligibility under the State 
                plan, and
                  (B) ends with (and includes) the earlier of--
                          (i) the day on which a determination 
                        is made with respect to the eligibility 
                        of the woman for medical assistance 
                        under the State plan, or
                          (ii) in the case of a woman who does 
                        not file an application by the last day 
                        of the month following the month during 
                        which the provider makes the 
                        determination referred to in 
                        subparagraph (A), such last day; and
          (2) the term ``qualified provider'' means any 
        provider that--
                  (A) is eligible for payments under a State 
                plan approved under this title,
                  (B) provides services of the type described 
                in subparagraph (A) or (B) of section 
                1905(a)(2) or in section 1905(a)(9),
                  (C) is determined by the State agency to be 
                capable of making determinations of the type 
                described in paragraph (1)(A), and
                  (D)(i) receives funds under--
                          (I) section 330 or 330A of the Public 
                        Health Service Act,
                          (II) title V of this Act, or
                          (III) title V of the Indian Health 
                        Care Improvement Act;
                  (ii) participates in a program established 
                under--
                          (I) section 17 of the Child Nutrition 
                        Act of 1966, or
                          (II) section 4(a) of the Agriculture 
                        and Consumer Protection Act of 1973;
                  (iii) participates in a State perinatal 
                program; or
                  (iv) is the Indian Health Service or is a 
                health program or facility operated by a tribe 
                or tribal organization under the Indian Self-
                Determination Act (Public Law 93-638).
The term ``qualified provider'' also includes a qualified 
entity, as defined in section 1920A(b)(3).
  (c)(1) The State agency shall provide qualified providers 
with--
          (A) such forms as are necessary for a pregnant woman 
        to make application for medical assistance under the 
        State plan, and
          (B) information on how to assist such women in 
        completing and filing such forms.
  (2) A qualified provider that determines under subsection 
(b)(1)(A) that a pregnant woman is presumptively eligible for 
medical assistance under a State plan shall--
          (A) notify the State agency of the determination 
        within 5 working days after the date on which 
        determination is made, and
          (B) inform the woman at the time the determination is 
        made that she is required to make application for 
        medical assistance under the State plan by not later 
        than the last day of the month following the month 
        during which the determination is made.
  (3) A pregnant woman who is determined by a qualified 
provider to be presumptively eligible for medical assistance 
under a State plan shall make application for medical 
assistance under such plan by not later than the last day of 
the month following the month during which the determination is 
made, which application may be the application used for the 
receipt of medical assistance by individuals described in 
section 1902(l)(1)(A).
  (d) Notwithstanding any other provision of this title, 
ambulatory prenatal care that--
          (1) is furnished to a pregnant woman--
                  (A) during a presumptive eligibility period,
                  (B) by a provider that is eligible for 
                payments under the State plan; and
          (2) is included in the care and services covered by a 
        State plan;
shall be treated as medical assistance provided by such plan 
for purposes of section 1903.
  (e) If the State has elected the option to provide a 
presumptive eligibility period under this section or section 
1920A, the State may elect to provide a presumptive eligibility 
period (as defined in subsection (b)(1)) for individuals who 
are eligible for medical assistance [under clause (i)(VIII), 
clause (i)(IX), or clause (ii)(XX) of subsection (a)(10)(A)] 
under clause (i)(VIII) or clause (ii)(XX) of section 
1902(a)(10)(A) before January 1, 2020, section 
1902(a)(10)(A)(i)(IX), or section 1931 in the same manner as 
the State provides for such a period under this section or 
section 1920A, subject to such guidance as the Secretary shall 
establish.

           *       *       *       *       *       *       *


  ADJUSTMENT IN PAYMENT FOR INPATIENT HOSPITAL SERVICES FURNISHED BY 
                    DISPROPORTIONATE SHARE HOSPITALS

  Sec. 1923. (a) Implementation of Requirement.--
          (1) A State plan under this title shall not be 
        considered to meet the requirement of section 
        1902(a)(13)(A)(iv) (insofar as it requires payments to 
        hospitals to take into account the situation of 
        hospitals which serve a disproportionate number of low 
        income patients with special needs), as of July 1, 
        1988, unless the State has submitted to the Secretary, 
        by not later than such date, an amendment to such plan 
        that--
                  (A) specifically defines the hospitals so 
                described (and includes in such definition any 
                disproportionate share hospital described in 
                subsection (b)(1) which meets the requirements 
                of subsection (d)), and
                  (B) provides, effective for inpatient 
                hospital services provided not later than July 
                1, 1988, for an appropriate increase in the 
                rate or amount of payment for such services 
                provided by such hospitals, consistent with 
                subsection (c).
          (2)(A) In order to be considered to have met such 
        requirement of section 1902(a)(13)(A) as of July 1, 
        1989, the State must submit to the Secretary by not 
        later than April 1, 1989, the State plan amendment 
        described in paragraph (1), consistent with subsection 
        (c), effective for inpatient hospital services provided 
        on or after July 1, 1989.
          (B) In order to be considered to have met such 
        requirement of section 1902(a)(13)(A) as of July 1, 
        1990, the State must submit to the Secretary by not 
        later than April 1, 1990, the State plan amendment 
        described in paragraph (1), consistent with subsections 
        (c) and (f), effective for inpatient hospital services 
        provided on or after July 1, 1990.
          (C) If a State plan under this title provides for 
        payments for inpatient hospital services on a 
        prospective basis (whether per diem, per case, or 
        otherwise), in order for the plan to be considered to 
        have met such requirement of section 1902(a)(13)(A) as 
        of July 1, 1989, the State must submit to the Secretary 
        by not later than April 1, 1989, a State plan amendment 
        that provides, in the case of hospitals defined by the 
        State as disproportionate share hospitals under 
        paragraph (1)(A), for an outlier adjustment in payment 
        amounts for medically necessary inpatient hospital 
        services provided on or after July 1, 1989, involving 
        exceptionally high costs or exceptionally long lengths 
        of stay for individuals under one year of age.
          (D) A State plan under this title shall not be 
        considered to meet the requirements of section 
        1902(a)(13)(A)(iv) (insofar as it requires payments to 
        hospitals to take into account the situation of 
        hospitals that serve a disproportionate number of low-
        income patients with special needs), as of October 1, 
        1998, unless the State has submitted to the Secretary 
        by such date a description of the methodology used by 
        the State to identify and to make payments to 
        disproportionate share hospitals, including children's 
        hospitals, on the basis of the proportion of low-income 
        and medicaid patients (including such patients who 
        receive benefits through a managed care entity) served 
        by such hospitals. The State shall provide an annual 
        report to the Secretary describing the disproportionate 
        share payments to each such disproportionate share 
        hospital.
          (3) The Secretary shall, not later than 90 days after 
        the date a State submits an amendment under this 
        subsection, review each such amendment for compliance 
        with such requirement and by such date shall approve or 
        disapprove each such amendment. If the Secretary 
        disapproves such an amendment, the State shall 
        immediately submit a revised amendment which meets such 
        requirement.
          (4) The requirement of this subsection may not be 
        waived under section 1915(b)(4).
  (b) Hospitals Deemed Disproportionate Share.--
          (1) For purposes of subsection (a)(1), a hospital 
        which meets the requirements of subsection (d) is 
        deemed to be a disproportionate share hospital if--
                  (A) the hospital's medicaid inpatient 
                utilization rate (as defined in paragraph (2)) 
                is at least one standard deviation above the 
                mean medicaid inpatient utilization rate for 
                hospitals receiving medicaid payments in the 
                State; or
                  (B) the hospital's low-income utilization 
                rate (as defined in paragraph (3)) exceeds 25 
                percent.
          (2) For purposes of paragraph (1)(A), the term 
        ``medicaid inpatient utilization rate'' means, for a 
        hospital, a fraction (expressed as a percentage), the 
        numerator of which is the hospital's number of 
        inpatient days attributable to patients who (for such 
        days) were eligible for medical assistance under a 
        State plan approved under this title in a period 
        (regardless of whether such patients receive medical 
        assistance on a fee-for-service basis or through a 
        managed care entity), and the denominator of which is 
        the total number of the hospital's inpatient days in 
        that period. In this paragraph, the term ``inpatient 
        day'' includes each day in which an individual 
        (including a newborn) is an inpatient in the hospital, 
        whether or not the individual is in a specialized ward 
        and whether or not the individual remains in the 
        hospital for lack of suitable placement elsewhere.
          (3) For purposes of paragraph (1)(B), the term ``low-
        income utilization rate'' means, for a hospital, the 
        sum of--
                  (A) the fraction (expressed as a 
                percentage)--
                          (i) the numerator of which is the sum 
                        (for a period) of (I) the total 
                        revenues paid the hospital for patient 
                        services under a State plan under this 
                        title (regardless of whether the 
                        services were furnished on a fee-for-
                        service basis or through a managed care 
                        entity) and (II) the amount of the cash 
                        subsidies for patient services received 
                        directly from State and local 
                        governments, and
                          (ii) the denominator of which is the 
                        total amount of revenues of the 
                        hospital for patient services 
                        (including the amount of such cash 
                        subsidies) in the period; and
                  (B) a fraction (expressed as a percentage)--
                          (i) the numerator of which is the 
                        total amount of the hospital's charges 
                        for inpatient hospital services which 
                        are attributable to charity care in a 
                        period, less the portion of any cash 
                        subsidies described in clause (i)(II) 
                        of subparagraph (A) in the period 
                        reasonably attributable to inpatient 
                        hospital services, and
                          (ii) the denominator of which is the 
                        total amount of the hospital's charges 
                        for inpatient hospital services in the 
                        hospital in the period.
        The numerator under subparagraph (B)(i) shall not 
        include contractual allowances and discounts (other 
        than for indigent patients not eligible for medical 
        assistance under a State plan approved under this 
        title).
          (4) The Secretary may not restrict a State's 
        authority to designate hospitals as disproportionate 
        share hospitals under this section. The previous 
        sentence shall not be construed to affect the authority 
        of the Secretary to reduce payments pursuant to section 
        1903(w)(1)(A)(iii) if the Secretary determines that, as 
        a result of such designations, there is in effect a 
        hold harmless provision described in section 
        1903(w)(4).
  (c) Payment adjustment.--Subject to subsections (f) and (g), 
in order to be consistent with this subsection, a payment 
adjustment for a disproportionate share hospital must either--
          (1) be in an amount equal to at least the product of 
        (A) the amount paid under the State plan to the 
        hospital for operating costs for inpatient hospital 
        services (of the kind described in section 1886(a)(4)), 
        and (B) the hospital's disproportionate share 
        adjustment percentage (established under section 
        1886(d)(5)(F)(iv));
          (2) provide for a minimum specified additional 
        payment amount (or increased percentage payment) and 
        (without regard to whether the hospital is described in 
        subparagraph (A) or (B) of subsection (b)(1)) for an 
        increase in such a payment amount (or percentage 
        payment) in proportion to the percentage by which the 
        hospital's medicaid utilization rate (as defined in 
        subsection (b)(2)) exceeds one standard deviation above 
        the mean medicaid inpatient utilization rate for 
        hospitals receiving medicaid payments in the State or 
        the hospital's low-income utilization rate (as defined 
        in paragraph (b)(3)); or
          (3) provide for a minimum specified additional 
        payment amount (or increased percentage payment) that 
        varies according to type of hospital under a 
        methodology that--
                  (A) applies equally to all hospitals of each 
                type; and
                  (B) results in an adjustment for each type of 
                hospital that is reasonably related to the 
                costs, volume, or proportion of services 
                provided to patients eligible for medical 
                assistance under a State plan approved under 
                this title or to low-income patients,
        except that, for purposes of paragraphs (1)(B) and 
        (2)(A) of subsection (a), the payment adjustment for a 
        disproportionate share hospital is consistent with this 
        subsection if the appropriate increase in the rate or 
        amount of payment is equal to at least one-third of the 
        increase otherwise applicable under this subsection (in 
        the case of such paragraph (1)(B)) and at least two-
        thirds of such increase (in the case of such paragraph 
        (2)(A)). In the case of a hospital described in 
        subsection (d)(2)(A)(i) (relating to children's 
        hospitals), in computing the hospital's 
        disproportionate share adjustment percentage for 
        purposes of paragraph (1)(B) of this subsection, the 
        disproportionate patient percentage (defined in section 
        1886(d)(5)(F)(vi)) shall be computed by substituting 
        for the fraction described in subclause (I) of such 
        section the fraction described in subclause (II) of 
        that section. If a State elects in a State plan 
        amendment under subsection (a) to provide the payment 
        adjustment described in paragraph (2), the State must 
        include in the amendment a detailed description of the 
        specific methodology to be used in determining the 
        specified additional payment amount (or increased 
        percentage payment) to be made to each hospital 
        qualifying for such a payment adjustment and must 
        publish at least annually the name of each hospital 
        qualifying for such a payment adjustment and the amount 
        of such payment adjustment made for each such hospital.
  (d) Requirements To Qualify as Disproportionate Share 
Hospital.--
          (1) Except as provided in paragraph (2), no hospital 
        may be defined or deemed as a disproportionate share 
        hospital under a State plan under this title or under 
        subsection (b) of this section unless the hospital has 
        at least 2 obstetricians who have staff privileges at 
        the hospital and who have agreed to provide obstetric 
        services to individuals who are entitled to medical 
        assistance for such services under such State plan.
          (2)(A) Paragraph (1) shall not apply to a hospital--
                  (i) the inpatients of which are predominantly 
                individuals under 18 years of age; or
                  (ii) which does not offer nonemergency 
                obstetric services to the general population as 
                of the date of the enactment of this Act.
          (B) In the case of a hospital located in a rural area 
        (as defined for purposes of section 1886), in paragraph 
        (1) the term ``obstetrician'' includes any physician 
        with staff privileges at the hospital to perform 
        nonemergency obstetric procedures.
          (3) No hospital may be defined or deemed as a 
        disproportionate share hospital under a State plan 
        under this title or under subsection (b) or (e) of this 
        section unless the hospital has a medicaid inpatient 
        utilization rate (as defined in subsection (b)(2)) of 
        not less than 1 percent.
  (e) Special Rule.--(1) A State plan shall be considered to 
meet the requirement of section 1902(a)(13)(A)(iv) (insofar as 
it requires payments to hospitals to take into account the 
situation of hospitals which serve a disproportionate number of 
low income patients with special needs) without regard to the 
requirement of subsection (a) if (A)(i) the plan provided for 
payment adjustments based on a pooling arrangement involving a 
majority of the hospitals participating under the plan for 
disproportionate share hospitals as of January 1, 1984, or (ii) 
the plan as of January 1, 1987, provided for payment 
adjustments based on a statewide pooling arrangement involving 
all acute care hospitals and the arrangement provides for 
reimbursement of the total amount of uncompensated care 
provided by each participating hospital, (B) the aggregate 
amount of the payment adjustments under the plan for such 
hospitals is not less than the aggregate amount of such 
adjustments otherwise required to be made under such 
subsection, and (C) the plan meets the requirement of 
subsection (d)(3) and such payment adjustments are made 
consistent with the last sentence of subsection (c).
  (2) In the case of a State that used a health insuring 
organization before January 1, 1986, to administer a portion of 
its plan on a state-wide basis, beginning on July 1, 1988--
          (A) the requirements of subsections (b) and (c) 
        (other than the last sentence of subsection (c)) shall 
        not apply if the aggregate amount of the payment 
        adjustments under the plan for disproportionate share 
        hospitals (as defined under the State plan) is not less 
        than the aggregate amount of payment adjustments 
        otherwise required to be made if such subsections 
        applied,
          (B) subsection (d)(2)(B) shall apply to hospitals 
        located in urban areas, as well as in rural areas,
          (C) subsection (d)(3) shall apply, and
          (D) subsection (g) shall apply.
  (f) Limitation on Federal Financial Participation.--
          (1) In general.--Payment under section 1903(a) shall 
        not be made to a State with respect to any payment 
        adjustment made under this section for hospitals in a 
        State for quarters in a fiscal year in excess of the 
        disproportionate share hospital (in this subsection 
        referred to as ``DSH'') allotment for the State for the 
        fiscal year, as specified in paragraphs (2), (3), and 
        (7).
          (2) State dsh allotments for fiscal years 1998 
        through 2002.--Subject to paragraph (4), the DSH 
        allotment for a State for each fiscal year during the 
        period beginning with fiscal year 1998 and ending with 
        fiscal year 2002 is determined in accordance with the 
        following table:


----------------------------------------------------------------------------------------------------------------
                                                                     DSH Allotment (in millions of dollars)
                      State or District                        -------------------------------------------------
                                                                  FY 98     FY 99     FY 00     FY 01     FY 02
----------------------------------------------------------------------------------------------------------------
 Alabama                                                             293       269       248       246       246
 Alaska                                                               10        10        10         9         9
 Arizona                                                              81        81        81        81        81
 Arkansas                                                              2         2         2         2         2
 California                                                        1,085     1,068       986       931       877
 Colorado                                                             93        85        79        74        74
 Connecticut                                                         200       194       164       160       160
 Delaware                                                              4         4         4         4         4
 District of Columbia                                                 23        23        49        49        49
 Florida                                                             207       203       197       188       160
 Georgia                                                             253       248       241       228       215
 Hawaii                                                                0         0         0         0         0
 Idaho                                                                 1         1         1         1         1
 Illinois                                                            203       199       193       182       172
 Indiana                                                             201       197       191       181       171
 Iowa                                                                  8         8         8         8         8
 Kansas                                                               51        49        42        36        33
 Kentucky                                                            137       134       130       123       116
 Louisiana                                                           880       795       713       658       631
 Maine                                                               103        99        84        84        84
 Maryland                                                             72        70        68        64        61
 Massachusetts                                                       288       282       273       259       244
 Michigan                                                            249       244       237       224       212
 Minnesota                                                            16     \1\16        33        33        33
 Mississippi                                                         143       141       136       129       122
 Missouri                                                            436       423       379       379       379
 Montana                                                             0.2       0.2       0.2       0.2       0.2
 Nebraska                                                              5         5         5         5         5
 Nevada                                                               37        37        37        37        37
 New Hampshire                                                       140       136       130       130       130
 New Jersey                                                          600       582       515       515       515
 New Mexico                                                            5      \2\5         9         9         9
 New York                                                          1,512     1,482     1,436     1,361     1,285
 North Carolina                                                      278       272       264       250       236
 North Dakota                                                          1         1         1         1         1
 Ohio                                                                382       374       363       344       325
 Oklahoma                                                             16        16        16        16        16
 Oregon                                                               20        20        20        20        20
 Pennsylvania                                                        529       518       502       476       449
 Rhode Island                                                         62        60        58        55        52
 South Carolina                                                      313       303       262       262       262
 South Dakota                                                          1         1         1         1         1
 Tennessee                                                             0         0         0         0         0
 Texas                                                               979       950       806       765       765
 Utah                                                                  3         3         3         3         3
 Vermont                                                              18        18        18        18        18
 Virginia                                                             70        68        66        63        59
 Washington                                                          174       171       166       157       148
 West Virginia                                                        64        63        61        58        54
 Wisconsin                                                             7         7         7         7         7
 Wyoming                                                               0      \3\0       0.1       0.1       0.1
----------------------------------------------------------------------------------------------------------------
\1\The DSH allotment for fiscal year 1999 shall be deemed to be $33,000,000 as provided for by section 702 of
  Public Law 105-277 (112 Stat. 2681-389).
\2\The DSH allotment for fiscal year 1999 shall be deemed to be $9,000,000 as provided for by section 703 of
  Public Law 105-277 (112 Stat. 2681-389).
\1\The DSH allotment for fiscal year 1999 shall be deemed to be $95,000 as provided for by section 704 of Public
  Law 105-277 (112 Stat. 2681-389).

          (3) State dsh allotments for fiscal year 2003 and 
        thereafter.--
                  (A) In general.--Except as provided in 
                paragraphs (6), (7), and (8) and subparagraph 
                (E), the DSH allotment for any State for fiscal 
                year 2003 and each succeeding fiscal year is 
                equal to the DSH allotment for the State for 
                the preceding fiscal year under paragraph (2) 
                or this paragraph, increased, subject to 
                subparagraphs (B) and (C) and paragraph (5), by 
                the percentage change in the consumer price 
                index for all urban consumers (all items; U.S. 
                city average), for the previous fiscal year.
                  (B) Limitation.--The DSH allotment for a 
                State shall not be increased under subparagraph 
                (A) for a fiscal year to the extent that such 
                an increase would result in the DSH allotment 
                for the year exceeding the greater of--
                          (i) the DSH allotment for the 
                        previous year, or
                          (ii) 12 percent of the total amount 
                        of expenditures under the State plan 
                        for medical assistance during the 
                        fiscal year.
                  (C) Special, temporary increase in allotments 
                on a one-time, non-cumulative basis.--The DSH 
                allotment for any State (other than a State 
                with a DSH allotment determined under paragraph 
                (5))--
                          (i) for fiscal year 2004 is equal to 
                        116 percent of the DSH allotment for 
                        the State for fiscal year 2003 under 
                        this paragraph, notwithstanding 
                        subparagraph (B); and
                          (ii) for each succeeding fiscal year 
                        is equal to the DSH allotment for the 
                        State for fiscal year 2004 or, in the 
                        case of fiscal years beginning with the 
                        fiscal year specified in subparagraph 
                        (D) for that State, the DSH allotment 
                        for the State for the previous fiscal 
                        year increased by the percentage change 
                        in the consumer price index for all 
                        urban consumers (all items; U.S. city 
                        average), for the previous fiscal year.
                  (D) Fiscal year specified.--For purposes of 
                subparagraph (C)(ii), the fiscal year specified 
                in this subparagraph for a State is the first 
                fiscal year for which the Secretary estimates 
                that the DSH allotment for that State will 
                equal (or no longer exceed) the DSH allotment 
                for that State under the law as in effect 
                before the date of the enactment of this 
                subparagraph.
                  (E) Temporary increase in allotments during 
                recession.--
                          (i) In general.--Subject to clause 
                        (ii), the DSH allotment for any State--
                                  (I) for fiscal year 2009 is 
                                equal to 102.5 percent of the 
                                DSH allotment that would be 
                                determined under this paragraph 
                                for the State for fiscal year 
                                2009 without application of 
                                this subparagraph, 
                                notwithstanding subparagraphs 
                                (B) and (C);
                                  (II) for fiscal year 2010 is 
                                equal to 102.5 percent of the 
                                DSH allotment for the State for 
                                fiscal year 2009, as determined 
                                under subclause (I); and
                                  (III) for each succeeding 
                                fiscal year is equal to the DSH 
                                allotment for the State under 
                                this paragraph determined 
                                without applying subclauses (I) 
                                and (II).
                          (ii) Application.--Clause (i) shall 
                        not apply to a State for a year in the 
                        case that the DSH allotment for such 
                        State for such year under this 
                        paragraph determined without applying 
                        clause (i) would grow higher than the 
                        DSH allotment specified under clause 
                        (i) for the State for such year.
          (4) Special rule for fiscal years 2001 and 2002.--
                  (A) In general.--Notwithstanding paragraph 
                (2), the DSH allotment for any State for--
                          (i) fiscal year 2001, shall be the 
                        DSH allotment determined under 
                        paragraph (2) for fiscal year 2000 
                        increased, subject to subparagraph (B) 
                        and paragraph (5), by the percentage 
                        change in the consumer price index for 
                        all urban consumers (all items; U.S. 
                        city average) for fiscal year 2000; and
                          (ii) fiscal year 2002, shall be the 
                        DSH allotment determined under clause 
                        (i) increased, subject to subparagraph 
                        (B) and paragraph (5), by the 
                        percentage change in the consumer price 
                        index for all urban consumers (all 
                        items; U.S. city average) for fiscal 
                        year 2001.
                  (B) Limitation.--Subparagraph (B) of 
                paragraph (3) shall apply to subparagraph (A) 
                of this paragraph in the same manner as that 
                subparagraph (B) applies to paragraph (3)(A).
                  (C) No application to allotments after fiscal 
                year 2002.--The DSH allotment for any State for 
                fiscal year 2003 or any succeeding fiscal year 
                shall be determined under paragraph (3) without 
                regard to the DSH allotments determined under 
                subparagraph (A) of this paragraph.
          (5) Special rule for low dsh states.--
                  (A) For fiscal years 2001 through 2003 for 
                extremely low dsh states.--In the case of a 
                State in which the total expenditures under the 
                State plan (including Federal and State shares) 
                for disproportionate share hospital adjustments 
                under this section for fiscal year 1999, as 
                reported to the Administrator of the Health 
                Care Financing Administration as of August 31, 
                2000, is greater than 0 but less than 1 percent 
                of the State's total amount of expenditures 
                under the State plan for medical assistance 
                during the fiscal year, the DSH allotment for 
                fiscal year 2001 shall be increased to 1 
                percent of the State's total amount of 
                expenditures under such plan for such 
                assistance during such fiscal year. In 
                subsequent fiscal years before fiscal year 
                2004, such increased allotment is subject to an 
                increase for inflation as provided in paragraph 
                (3)(A).
                  (B) For fiscal year 2004 and subsequent 
                fiscal years.--In the case of a State in which 
                the total expenditures under the State plan 
                (including Federal and State shares) for 
                disproportionate share hospital adjustments 
                under this section for fiscal year 2000, as 
                reported to the Administrator of the Centers 
                for Medicare & Medicaid Services as of August 
                31, 2003, is greater than 0 but less than 3 
                percent of the State's total amount of 
                expenditures under the State plan for medical 
                assistance during the fiscal year, the DSH 
                allotment for the State with respect to--
                          (i) fiscal year 2004 shall be the DSH 
                        allotment for the State for fiscal year 
                        2003 increased by 16 percent;
                          (ii) each succeeding fiscal year 
                        before fiscal year 2009 shall be the 
                        DSH allotment for the State for the 
                        previous fiscal year increased by 16 
                        percent; and
                          (iii) fiscal year 2009 and any 
                        subsequent fiscal year, shall be the 
                        DSH allotment for the State for the 
                        previous year subject to an increase 
                        for inflation as provided in paragraph 
                        (3)(A).
          (6) Allotment adjustments.--
                  (A) Tennessee.--
                          (i) In general.--Only with respect to 
                        fiscal year 2007, the DSH allotment for 
                        Tennessee for such fiscal year, 
                        notwithstanding the table set forth in 
                        paragraph (2) or the terms of the 
                        TennCare Demonstration Project in 
                        effect for the State, shall be the 
                        greater of--
                                  (I) the amount that the 
                                Secretary determines is equal 
                                to the Federal medical 
                                assistance percentage component 
                                attributable to 
                                disproportionate share hospital 
                                payment adjustments for the 
                                demonstration year ending in 
                                2006 that is reflected in the 
                                budget neutrality provision of 
                                the TennCare Demonstration 
                                Project; and
                                  (II) $280,000,000.
                        Only with respect to fiscal years 2008, 
                        2009, 2010, and 2011, the DSH allotment 
                        for Tennessee for the fiscal year, 
                        notwithstanding such table or terms, 
                        shall be the amount specified in the 
                        previous sentence for fiscal year 2007. 
                        Only with respect to fiscal year 2012 
                        for the period ending on December 31, 
                        2011, the DSH allotment for Tennessee 
                        for such portion of the fiscal year, 
                        notwithstanding such table or terms, 
                        shall be \1/4\ of the amount specified 
                        in the first sentence for fiscal year 
                        2007.
                          (ii) Limitation on amount of payment 
                        adjustments eligible for federal 
                        financial participation.--Payment under 
                        section 1903(a) shall not be made to 
                        Tennessee with respect to the aggregate 
                        amount of any payment adjustments made 
                        under this section for hospitals in the 
                        State for fiscal year 2007, 2008, 2009, 
                        2010, 2011, or for period in fiscal 
                        year 2012 described in clause (i) that 
                        is in excess of 30 percent of the DSH 
                        allotment for the State for such fiscal 
                        year or period determined pursuant to 
                        clause (i).
                          (iii) State plan amendment.--The 
                        Secretary shall permit Tennessee to 
                        submit an amendment to its State plan 
                        under this title that describes the 
                        methodology to be used by the State to 
                        identify and make payments to 
                        disproportionate share hospitals, 
                        including children's hospitals and 
                        institutions for mental diseases or 
                        other mental health facilities. The 
                        Secretary may not approve such plan 
                        amendment unless the methodology 
                        described in the amendment is 
                        consistent with the requirements under 
                        this section for making payment 
                        adjustments to disproportionate share 
                        hospitals. For purposes of 
                        demonstrating budget neutrality under 
                        the TennCare Demonstration Project, 
                        payment adjustments made pursuant to a 
                        State plan amendment approved in 
                        accordance with this subparagraph shall 
                        be considered expenditures under such 
                        project.
                          (iv) Offset of federal share of 
                        payment adjustments for fiscal years 
                        2007 through 2011 and the first 
                        calendar quarter of fiscal year 2012 
                        against essential access hospital 
                        supplemental pool payments under the 
                        tenncare demonstration project.--
                                  (I) The total amount of 
                                Essential Access Hospital 
                                supplemental pool payments that 
                                may be made under the TennCare 
                                Demonstration Project for 
                                fiscal year 2007, 2008, 2009, 
                                2010, 2011, or for a period in 
                                fiscal year 2012 described in 
                                clause (i) shall be reduced on 
                                a dollar for dollar basis by 
                                the amount of any payments made 
                                under section 1903(a) to 
                                Tennessee with respect to 
                                payment adjustments made under 
                                this section for hospitals in 
                                the State for such fiscal year 
                                or period.
                                  (II) The sum of the total 
                                amount of payments made under 
                                section 1903(a) to Tennessee 
                                with respect to payment 
                                adjustments made under this 
                                section for hospitals in the 
                                State for fiscal year 2007, 
                                2008, 2009, 2010, 2011, or for 
                                a period in fiscal year 2012 
                                described in clause (i) and the 
                                total amount of Essential 
                                Access Hospital supplemental 
                                pool payments made under the 
                                TennCare Demonstration Project 
                                for such fiscal year or period 
                                shall not exceed the State's 
                                DSH allotment for such fiscal 
                                or period year established 
                                under clause (i).
                          (v) Allotment for 2d, 3rd, and 4th 
                        quarters of fiscal year 2012 and for 
                        fiscal year 2013.--Notwithstanding the 
                        table set forth in paragraph (2):
                                  (I) 2d, 3rd, and 4th quarters 
                                of fiscal year 2012.--In the 
                                case of a State that has a DSH 
                                allotment of $0 for the 2d, 
                                3rd, and 4th quarters of fiscal 
                                year 2012, the DSH allotment 
                                shall be $47,200,000 for such 
                                quarters.
                                  (II) Fiscal year 2013.--In 
                                the case of a State that has a 
                                DSH allotment of $0 for fiscal 
                                year 2013, the DSH allotment 
                                shall be $53,100,000 for such 
                                fiscal year.
                          (vi) Allotment for fiscal years 2015 
                        through 2025.--Notwithstanding any 
                        other provision of this subsection, any 
                        other provision of law, or the terms of 
                        the TennCare Demonstration Project in 
                        effect for the State, the DSH allotment 
                        for Tennessee for fiscal year 2015, and 
                        for each fiscal year thereafter through 
                        fiscal year 2025, shall be $53,100,000 
                        for each such fiscal year.
                  (B) Hawaii.--
                          (i) In general.--Only with respect to 
                        each of fiscal years 2007 through 2011, 
                        the DSH allotment for Hawaii for such 
                        fiscal year, notwithstanding the table 
                        set forth in paragraph (2), shall be 
                        $10,000,000. Only with respect to 
                        fiscal year 2012 for the period ending 
                        on December 31, 2011, the DSH allotment 
                        for Hawaii for such portion of the 
                        fiscal year, notwithstanding the table 
                        set forth in paragraph (2), shall be 
                        $2,500,000.
                          (ii) State plan amendment.--The 
                        Secretary shall permit Hawaii to submit 
                        an amendment to its State plan under 
                        this title that describes the 
                        methodology to be used by the State to 
                        identify and make payments to 
                        disproportionate share hospitals, 
                        including children's hospitals and 
                        institutions for mental diseases or 
                        other mental health facilities. The 
                        Secretary may not approve such plan 
                        amendment unless the methodology 
                        described in the amendment is 
                        consistent with the requirements under 
                        this section for making payment 
                        adjustments to disproportionate share 
                        hospitals.
                          (iii) Allotment for 2d, 3rd, and 4th 
                        quarter of fiscal year 2012, fiscal 
                        year 2013, and succeeding fiscal 
                        years.--Notwithstanding the table set 
                        forth in paragraph (2):
                                  (I) 2d, 3rd, and 4th quarter 
                                of fiscal year 2012.--The DSH 
                                allotment for Hawaii for the 
                                2d, 3rd, and 4th quarters of 
                                fiscal year 2012 shall be 
                                $7,500,000.
                                  (II) Treatment as a low-dsh 
                                state for fiscal year 2013 and 
                                succeeding fiscal years.--With 
                                respect to fiscal year 2013, 
                                and each fiscal year 
                                thereafter, the DSH allotment 
                                for Hawaii shall be increased 
                                in the same manner as 
                                allotments for low DSH States 
                                are increased for such fiscal 
                                year under clause (iii) of 
                                paragraph (5)(B).
                                  (III) Certain hospital 
                                payments.--The Secretary may 
                                not impose a limitation on the 
                                total amount of payments made 
                                to hospitals under the QUEST 
                                section 1115 Demonstration 
                                Project except to the extent 
                                that such limitation is 
                                necessary to ensure that a 
                                hospital does not receive 
                                payments in excess of the 
                                amounts described in subsection 
                                (g), or as necessary to ensure 
                                that such payments under the 
                                waiver and such payments 
                                pursuant to the allotment 
                                provided in this clause do not, 
                                in the aggregate in any year, 
                                exceed the amount that the 
                                Secretary determines is equal 
                                to the Federal medical 
                                assistance percentage component 
                                attributable to 
                                disproportionate share hospital 
                                payment adjustments for such 
                                year that is reflected in the 
                                budget neutrality provision of 
                                the QUEST Demonstration 
                                Project.
          (7) Medicaid dsh reductions.--
                  (A) Reductions.--
                          (i) In general.--For each of fiscal 
                        years 2018 through [2025] 2019 the 
                        Secretary shall effect the following 
                        reductions:
                                  (I) Reduction in dsh 
                                allotments.--The Secretary 
                                shall reduce DSH allotments to 
                                States in the amount specified 
                                under the DSH health reform 
                                methodology under subparagraph 
                                (B) for the State for the 
                                fiscal year.
                                  (II) Reductions in 
                                payments.--The Secretary shall 
                                reduce payments to States under 
                                section 1903(a) for each 
                                calendar quarter in the fiscal 
                                year, in the manner specified 
                                in clause (iii), in an amount 
                                equal to \1/4\ of the DSH 
                                allotment reduction under 
                                subclause (I) for the State for 
                                the fiscal year.
                          (ii) Aggregate reductions.--The 
                        aggregate reductions in DSH allotments 
                        for all States under clause (i)(I) 
                        shall be equal to--
                                  (I) $2,000,000,000 for fiscal 
                                year 2018; and
                                  (II) $3,000,000,000 for 
                                fiscal year 2019[;].
                                  [(III) $4,000,000,000 for 
                                fiscal year 2020;
                                  [(IV) $5,000,000,000 for 
                                fiscal year 2021;
                                  [(V) $6,000,000,000 for 
                                fiscal year 2022;
                                  [(VI) $7,000,000,000 for 
                                fiscal year 2023;
                                  [(VII) $8,000,000,000 for 
                                fiscal year 2024; and
                                  [(VIII) $8,000,000,000 for 
                                fiscal year 2025.]
                          (iii) Manner of payment reduction.--
                        The amount of the payment reduction 
                        under clause (i)(II) 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 spending under 
                        section 1903(d)(2). Such a disallowance 
                        is not subject to a reconsideration 
                        under subsections (d) and (e) of 
                        section 1116.
                          (iv) Definition.--In this paragraph, 
                        the term ``State'' means the 50 States 
                        and the District of Columbia.
                          (v) Distribution of aggregate 
                        reductions.--The Secretary shall 
                        distribute the aggregate reductions 
                        under clause (ii) among States in 
                        accordance with subparagraph (B).
                  (B) DSH health reform methodology.--The 
                Secretary shall carry out subparagraph (A) 
                through use of a DSH Health Reform methodology 
                that meets the following requirements:
                          (i) The methodology imposes the 
                        largest percentage reductions on the 
                        States that--
                                  (I) have the lowest 
                                percentages of uninsured 
                                individuals (determined on the 
                                basis of data from the Bureau 
                                of the Census, audited hospital 
                                cost reports, and other 
                                information likely to yield 
                                accurate data) during the most 
                                recent year for which such data 
                                are available; or
                                  (II) do not target their DSH 
                                payments on--
                                          (aa) hospitals with 
                                        high volumes of 
                                        Medicaid inpatients (as 
                                        defined in subsection 
                                        (b)(1)(A)); and
                                          (bb) hospitals that 
                                        have high levels of 
                                        uncompensated care 
                                        (excluding bad debt).
                          (ii) The methodology imposes a 
                        smaller percentage reduction on low DSH 
                        States described in paragraph (5)(B).
                          (iii) The methodology takes into 
                        account the extent to which the DSH 
                        allotment for a State was included in 
                        the budget neutrality calculation for a 
                        coverage expansion approved under 
                        section 1115 as of July 31, 2009.
                  (C) Exemption from exemption for non-
                expansion states.--
                          (i) In general.--In the case of a 
                        State that is a non-expansion State for 
                        a fiscal year, subparagraph (A)(i) 
                        shall not apply to the DSH allotment 
                        for such State and fiscal year.
                          (ii) No change in reduction for