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Discussion Draft

ERN17282

AMENDMENT NO.llll

S.L.C.

Calendar No.lll

Purpose: In the nature of a substitute.
IN THE SENATE OF THE UNITED STATESa115th Cong., 1st Sess.

H. R. 1628
To provide for reconciliation pursuant to title II of the
concurrent resolution on the budget for fiscal year 2017.
Referred to the Committee on llllllllll and
ordered to be printed
Ordered to lie on the table and to be printed
AMENDMENT IN THE NATURE OF A SUBSTITUTE intended
to be proposed by lllllll
Viz:
1

Strike all after the enacting clause and insert the fol-

2 lowing:
3
4

SECTION 1. SHORT TITLE.

This Act may be cited as the aaBetter Care Reconcili-

5 ation Act of 2017aa.
6

TITLE I

7

SEC. 101. ELIMINATION OF LIMITATION ON RECAPTURE OF

8

EXCESS ADVANCE PAYMENTS OF PREMIUM

9

TAX CREDITS.

10

Subparagraph (B) of section 36B(f)(2) of the Inter-

11 nal Revenue Code of 1986 is amended by adding at the
12 end the following new clause:

Discussion Draft

ERN17282

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2
1

aa(iii) NONAPPLICABILITY

OF LIMITA-

2

TION.aThis

3

to taxable years ending after December 31,

4

2017.aa.

5
6
7
8

subparagraph shall not apply

SEC. 102. RESTRICTIONS FOR THE PREMIUM TAX CREDIT.

(a) ELIGIBILITY FOR CREDIT.a
(1) IN

GENERAL.aSection

36B(c)(1) of the In-

ternal Revenue Code of 1986 is amendeda

9

(A) by striking aaequals or exceeds 100 per-

10

cent but does not exceed 400 percentaa in sub-

11

paragraph (A) and inserting aadoes not exceed

12

350 percentaa, and

13

(B) by striking subparagraph (B) and re-

14

designating subparagraphs (C) and (D) as sub-

15

paragraphs (B) and (C), respectively.

16

(2) TREATMENT

17

(A) IN

OF CERTAIN ALIENS.a

GENERAL.aParagraph

(2) of sec-

18

tion 36B(e) of the Internal Revenue Code of

19

1986 is amended by striking aaan alien lawfully

20

present in the United Statesaa and inserting aaa

21

qualified alien (within the meaning of section

22

431 of the Personal Responsibility and Work

23

Opportunity Reconciliation Act of 1996)aa.

24
25

(B) AMENDMENTS

TO PATIENT PROTEC-

TION AND AFFORDABLE CARE ACT.a

ERN17282

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3
1

(i) Section 1411(a)(1) of the Patient

2

Protection and Affordable Care Act is

3

amended by striking aaor an alien lawfully

4

present in the United Statesaa and insert-

5

ing aaor a qualified alien (within the mean-

6

ing of section 431 of the Personal Respon-

7

sibility and Work Opportunity Reconcili-

8

ation Act of 1996)aa.

9

(ii) Section 1411(c)(2)(B) of such Act

10

is amended by striking aaan alien lawfully

11

present in the United Statesaa each place it

12

appears in clauses (i)(I) and (ii)(II) and

13

inserting aaa qualified alien (within the

14

meaning of section 431 of the Personal Re-

15

sponsibility and Work Opportunity Rec-

16

onciliation Act of 1996)aa.

17
18

(iii) Section 1412(d) of such Act is
amendeda

19

(I) by striking aanot lawfully

20

present in the United Statesaa and in-

21

serting aanot citizens or nationals of

22

the United States or qualified aliens

23

(within the meaning of section 431 of

24

the Personal Responsibility and Work

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4
1

Opportunity

2

1996)aa, and

Reconciliation

Act

of

3

(II) by striking aaINDIVIDUALS

4

NOT LAWFULLY PRESENTaa in the

5

heading

6

ALIENSaa.

7
8
9

(b) MODIFICATION
SISTANCE

OF

and

inserting

LIMITATION

ON

aaCERTAIN

PREMIUM AS-

AMOUNT.a
(1)

USE

OF

BENCHMARK

PLAN.aSection

10

36B(b) of the Internal Revenue Code of 1986 is

11

amendeda

12

(A) by striking aaapplicable second lowest

13

cost silver planaa each place it appears in para-

14

graph (2)(B)(i) and (3)(C) and inserting aaap-

15

plicable median cost benchmark planaa,

16

(B) by striking aasuch silver planaa in para-

17

graph (3)(C) and inserting aasuch benchmark

18

planaa, and

19

(C) in paragraph (3)(B)a

20

(i) by redesignating clauses (i) and

21

(ii) as clauses (iii) and (iv), respectively,

22

and by striking all that precedes clause

23

(iii) (as so redesignated) and inserting the

24

following:

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5
1

aa(B) APPLICABLE

MEDIAN COST BENCH-

2

MARK

3

benchmark plan with respect to any applicable

4

taxpayer is the qualified health plan offered in

5

the individual market in the rating area in

6

which the taxpayer resides whicha

PLAN.aThe

applicable

median

cost

7

aa(i) provides a level of coverage that

8

is designed to provide benefits that are ac-

9

tuarially equivalent to 58 percent of the

10

full actuarial value of the benefits (as de-

11

termined under rules similar to the rules of

12

paragraphs (2) and (3) of section 1302(d)

13

of the Patient Protection and Affordable

14

Care Act) provided under the plan,

15

aa(ii) has a premium which is the me-

16

dian premium of all qualified health plans

17

described in clause (i) which are offered in

18

the individual market in such rating area

19

(or, in any case in which no such plan has

20

such median premium, has a premium

21

nearest (but not in excess of) such median

22

premium),aa, and

23

(ii) by striking aaclause (ii)(I)aa in the

24

flush text at the end and inserting aaclause

25

(iv)(I)aa.

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6
1

(2) MODIFICATION

OF APPLICABLE PERCENT-

2

AGE.aSection

3

Code of 1986 is amendeda

36B(b)(3)(A) of the Internal Revenue

4

(A) in clause (i), by striking aafrom the ini-

5

tial premium percentageaa and all that follows

6

and inserting aafrom the initial percentage to

7

the final percentage specified in such table for

8

such income tier with respect to a taxpayer of

9

the age involved:
aaIn the case of
household income
(expressed as a
percent of the
poverty line)
within the following income
tier:
Up to 100%
100%-133%
133%-150%
150%-200%
200%-250%
250%-300%
300%-350%

10
11
12
13
14

Up to Age 29

Age 30-39

Age 40-49

Age 50-59

Over Age 59

Initial
%

Final
%

Initial
%

Final
%

Initial
%

Final
%

Initial
%

Final
%

Initial
%

Final
%

2
2
2.5
4
4.3
4.3
4.3

2
2.5
4
4.3
4.3
4.3
6.4

2
2
2.5
4
5.3
5.9
5.9

2
2.5
4
5.3
5.9
5.9
8.9

2
2
2.5
4
6.3
8.05
8.35

2
2.5
4
6.3
8.05
8.35
12.5

2
2
2.5
4
7.3
9
10.5

2
2.5
4
7.3
9
10.5
15.8

2
2
2.5
4
8.3
10
11.5

2
2.5
4
8.3
10
11.5
16.2aa,

(B) by striking aa0.504aa in clause (ii)(III)
and inserting aa0.4aa, and
(C) by adding at the end the following new
clause:
aa(iii)

AGE

DETERMINATIONS.aFor

15

purposes of clause (i), the age of the tax-

16

payer taken into account under clause (i)

17

with respect to any taxable year is the age

18

attained before the close of the taxable

19

year by the oldest individual taken into ac-

Discussion Draft

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7
1

count on such taxpayeras return who is

2

covered by a qualified health plan taken

3

into account under paragraph (2)(A).aa.

4

(c) ELIMINATION

OF

ELIGIBILITY EXCEPTIONS

FOR

5 EMPLOYER-SPONSORED COVERAGE.a
6

(1) IN

GENERAL.aSection

36B(c)(2) of the In-

7

ternal Revenue Code of 1986 is amended by striking

8

subparagraph (C).

9

(2) AMENDMENTS

RELATED

TO

QUALIFIED

10

SMALL EMPLOYER HEALTH REIMBURSEMENT AR-

11

RANGEMENTS.aSection

12

amendeda

13
14

36B(c)(4) of such Code is

(A) by striking aawhich constitutes affordable coverageaa in subparagraph (A),

15

(B) by striking aathe amount described in

16

subparagraph (C)(i)(II) for such monthaa in

17

subparagraph (B) and inserting aa1/12 of the

18

employeeas permitted benefit (as defined in sec-

19

tion 9831(d)(3)(C)) under such arrangementaa,

20

(C) by striking subparagraphs (C) and (F)

21

and redesignating subparagraphs (D) and (E)

22

as subparagraphs (C) and (D), respectively, and

23

(D) in subparagraph (D), as so redesig-

24

nated, by striking aasubparagraph (C)(i)(II)aa

25

and inserting aasubparagraph (B)aa.

Discussion Draft

ERN17282

S.L.C.

8
1

(d) MODIFICATION

OF

DEFINITION

OF

QUALIFIED

2 HEALTH PLAN.a
3

(1) IN

GENERAL.aSection

36B(c)(3)(A) of the

4

Internal Revenue Code of 1986 is amended by in-

5

serting before the period at the end the following:

6

aaor a plan that includes coverage for abortions

7

(other than any abortion necessary to save the life

8

of the mother or any abortion with respect to a

9

pregnancy that is the result of an act of rape or in-

10

cest)aa.

11

(2) EFFECTIVE

DATE.aThe

amendment made

12

by this subsection shall apply to taxable years begin-

13

ning after December 31, 2017.

14

(e) INCREASED PENALTY ON ERRONEOUS CLAIMS OF

15 CREDIT.aSection 6676(a) of the Internal Revenue Code
16 of 1986 is amended by inserting aa(25 percent in the case
17 of a claim for refund or credit relating to the health insur18 ance coverage credit under section 36B)aa after aa20 per19 centaa.
20

(f) EFFECTIVE DATE.aExcept as otherwise provided

21 in this section, the amendments made by this section shall
22 apply to taxable years beginning after December 31, 2019.
23
24
25

SEC. 103. MODIFICATIONS TO SMALL BUSINESS TAX CREDIT.

(a) SUNSET.a

Discussion Draft

ERN17282

S.L.C.

9
1

(1) IN

GENERAL.aSection

45R of the Internal

2

Revenue Code of 1986 is amended by adding at the

3

end the following new subsection:

4

aa(j) SHALL NOT APPLY.aThis section shall not

5 apply with respect to amounts paid or incurred in taxable
6 years beginning after December 31, 2019.aa.
7

(2) EFFECTIVE

DATE.aThe

amendment made

8

by this subsection shall apply to taxable years begin-

9

ning after December 31, 2019.

10

(b) DISALLOWANCE

OF

SMALL EMPLOYER HEALTH

11 INSURANCE EXPENSE CREDIT
12
13

CLUDES

FOR

PLAN WHICH IN-

COVERAGE FOR ABORTION.a
(1) IN

GENERAL.aSubsection

(h) of section

14

45R of the Internal Revenue Code of 1986 is

15

amendeda

16

(A) by striking aaAny termaa and inserting

17

the following:

18

aa(1) IN

19

GENERAL.aAny

termaa, and

(B) by adding at the end the following new

20

paragraph:

21

aa(2) EXCLUSION

OF HEALTH PLANS INCLUDING

22

COVERAGE

23

health plana does not include any health plan that

24

includes coverage for abortions (other than any

25

abortion necessary to save the life of the mother or

FOR

ABORTION.aThe

term aqualified

Discussion Draft

ERN17282

S.L.C.

10
1

any abortion with respect to a pregnancy that is the

2

result of an act of rape or incest).aa.

3

(2) EFFECTIVE

DATE.aThe

amendments made

4

by this subsection shall apply to taxable years begin-

5

ning after December 31, 2017.

6
7

SEC. 104. INDIVIDUAL MANDATE.

(a) IN GENERAL.aSection 5000A(c) of the Internal

8 Revenue Code of 1986 is amendeda
9
10
11

(1) in paragraph (2)(B)(iii), by striking aa2.5
percentaa and inserting aaZero percentaa, and
(2) in paragraph (3)a

12
13

(A) by striking aa$695aa in subparagraph
(A) and inserting aa$0aa, and

14

(B) by striking subparagraph (D).

15

(b) EFFECTIVE DATE.aThe amendments made by

16 this section shall apply to months beginning after Decem17 ber 31, 2015.
18
19

SEC. 105. EMPLOYER MANDATE.

(a) IN GENERAL.a

20

(1) Paragraph (1) of section 4980H(c) of the

21

Internal Revenue Code of 1986 is amended by in-

22

serting aa($0 in the case of months beginning after

23

December 31, 2015)aa after aa$2,000aa.

24

(2) Paragraph (1) of section 4980H(b) of the

25

Internal Revenue Code of 1986 is amended by in-

Discussion Draft

ERN17282

S.L.C.

11
1

serting aa($0 in the case of months beginning after

2

December 31, 2015)aa after aa$3,000aa.

3

(b) EFFECTIVE DATE.aThe amendments made by

4 this section shall apply to months beginning after Decem5 ber 31, 2015.
6

SEC. 106. STATE STABILITY AND INNOVATION PROGRAM.

7

(a) IN GENERAL.aSection 2105 of the Social Secu-

8 rity Act (42 U.S.C. 1397ee) is amended by adding at the
9 end the following new subsections:
10

aa(h) SHORT-TERM ASSISTANCE

11

ERAGE AND

12

FOR

ACCESS DISRUPTION

AND

TO

ADDRESS COV-

PROVIDE SUPPORT

STATES.a

13

aa(1) APPROPRIATION.aThere are authorized to

14

be appropriated, and are appropriated, out of monies

15

in

16

$15,000,000,000 for each of calendar years 2018

17

and 2019, and $10,000,000,000 for each of calendar

18

years 2020 and 2021, to the Administrator of the

19

Centers for Medicare & Medicaid Services (in this

20

subsection and subsection (i) referred to as the aAd-

21

ministratora) to fund arrangements with health in-

22

surance issuers to address coverage and access dis-

23

ruption and respond to urgent health care needs

24

within States. Funds appropriated under this para-

25

graph shall remain available until expended.

the

Treasury

not

otherwise

obligated,

ERN17282

Discussion Draft

S.L.C.

12
1

aa(2) PARTICIPATION

REQUIREMENTS.a

2

aa(A) GUIDANCE.aNot later than 30 days

3

after the date of enactment of this subsection,

4

the Administrator shall issue guidance to health

5

insurance issuers regarding how to submit a no-

6

tice of intent to participate in the program es-

7

tablished under this subsection.

8
9

aa(B) NOTICE
PATE.aTo

OF

INTENT

TO

PARTICI-

be eligible for funding under this

10

subsection, a health insurance issuer shall sub-

11

mit to the Administrator a notice of intent to

12

participate at such time (but, in the case of

13

funding for calendar year 2018, not later than

14

35 days after the date of enactment of this sub-

15

section and, in the case of funding for calendar

16

year 2019, 2020, or 2021, not later than March

17

31 of the previous year) and in such form and

18

manner as specified by the Administrator and

19

containinga

20

aa(i) a certification that the health in-

21

surance issuer will use the funds in accord-

22

ance with the requirements of paragraph

23

(5); and

Discussion Draft

ERN17282

S.L.C.

13
1

aa(ii) such information as the Adminis-

2

trator may require to carry out this sub-

3

section.

4

aa(3)

5

FUNDS.aThe

6

propriate procedure for providing and distributing

7

funds under this subsection.

8

PROCEDURE

aa(4) NO

FOR

DISTRIBUTION

OF

Administrator shall determine an ap-

MATCH.aNeither

the State percentage

9

applicable to payments to States under subsection

10

(i)(5)(B) nor any other matching requirement shall

11

apply to funds provided to health insurance issuers

12

under this subsection.

13

aa(5) USE

OF FUNDS.aFunds

provided to a

14

health insurance issuer under paragraph (1) shall be

15

subject to the requirements of paragraphs (1)(D)

16

and (7) of subsection (i) in the same manner as

17

such requirements apply to States receiving pay-

18

ments under subsection (i) and shall be used for the

19

activities specified in paragraph (1)(A)(ii) of sub-

20

section (i).

21

aa(i) LONG-TERM STATE STABILITY AND INNOVATION

22 PROGRAM.a
23

aa(1) APPLICATION

AND

CERTIFICATION

RE-

24

QUIREMENTS.aTo

25

funds under this subsection, a State shall submit to

be eligible for an allotment of

ERN17282

Discussion Draft

S.L.C.

14
1

the Administrator an application, not later than

2

March 31, 2018, in the case of allotments for cal-

3

endar year 2019, and not later than March 31 of

4

the previous year, in the case of allotments for any

5

subsequent calendar year) and in such form and

6

manner as specified by the Administrator, that con-

7

tains the following:

8
9

aa(A) A description of how the funds will be
used to do 1 or more of the following:

10

aa(i) To establish or maintain a pro-

11

gram or mechanism to provide financial as-

12

sistance to help high-risk individuals, in-

13

cluding by reducing premium costs for

14

such individuals, who have or are projected

15

to have a high rate of utilization of health

16

services, as measured by cost, and who do

17

not have access to health insurance cov-

18

erage offered through an employer, enroll

19

in health insurance coverage under a plan

20

offered in the individual market (within

21

the meaning of section 5000A(f)(1)(C) of

22

the Internal Revenue Code of 1986).

23

aa(ii) To establish or maintain a pro-

24

gram to enter into arrangements with

25

health insurance issuers to help stabilize

ERN17282

Discussion Draft

S.L.C.

15
1

premiums and promote State health insur-

2

ance market participation and choice in

3

plans offered in the individual market

4

(within

5

5000A(f)(1)(C) of the Internal Revenue

6

Code of 1986).

the

meaning

of

section

7

aa(iii) To provide payments for health

8

care providers for the provision of health

9

care services, as specified by the Adminis-

10

trator.

11

aa(iv) To provide assistance to reduce

12

out-of-pocket costs, such as copayments,

13

coinsurance, and deductibles, of individuals

14

enrolled in plans offered in the individual

15

market (within the meaning of section

16

5000A(f)(1)(C) of the Internal Revenue

17

Code of 1986).

18

aa(B) A certification that the State shall

19

make, from non-Federal funds, expenditures for

20

1 or more of the activities specified in subpara-

21

graph (A) in an amount that is not less than

22

the State percentage required for the year

23

under paragraph (5)(B)(ii).

Discussion Draft

ERN17282

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16
1

aa(C) A certification that the funds pro-

2

vided under this subsection shall only be used

3

for the activities specified in subparagraph (A).

4

aa(D) A certification that none of the funds

5

provided under this subsection shall be used by

6

the State for an expenditure that is attributable

7

to an intergovernmental transfer, certified pub-

8

lic expenditure, or any other expenditure to fi-

9

nance the non-Federal share of expenditures re-

10

quired under any provision of law, including

11

under the State plans established under this

12

title and title XIX or under a waiver of such

13

plans.

14

aa(E) Such other information as necessary

15

for the Administrator to carry out this sub-

16

section.

17

aa(2) ELIGIBILITY.aOnly the 50 States and the

18

District of Columbia shall be eligible for an allot-

19

ment and payments under this subsection and all

20

references in this subsection to a State shall be

21

treated as only referring to the 50 States and the

22

District of Columbia.

23

aa(3) ONE-TIME

APPLICATION.aIf

an applica-

24

tion of a State submitted under this subsection is

25

approved by the Administrator for a year, the appli-

Discussion Draft

ERN17282

S.L.C.

17
1

cation shall be deemed to be approved by the Admin-

2

istrator for that year and each subsequent year

3

through December 31, 2026.

4

aa(4) LONG-TERM

STATE STABILITY AND INNO-

5

VATION ALLOTMENTS.a

6

aa(A)

APPROPRIATION;

TOTAL

ALLOT-

7

MENT.aFor

8

ments to States under this subsection, there is

9

appropriated, out of any money in the Treasury

10
11
12
13
14
15
16
17
18
19
20
21

the purpose of providing allot-

not otherwise appropriateda
aa(i)

for

year

2019,

calendar

year

2020,

calendar

year

2021,

calendar

year

2022,

calendar

year

2023,

calendar

year

2024,

calendar

year

2025,

$8,000,000,000;
aa(ii)

for

$14,000,000,000;
aa(iii)

for

$14,000,000,000;
aa(iv)

for

$6,000,000,000;
aa(v)

for

$6,000,000,000;
aa(vi)

for

22

$5,000,000,000;

23

aa(vii)

24

calendar

for

$5,000,000,000; and

ERN17282

Discussion Draft

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18
1

aa(viii)

2

$4,000,000,000.

3

aa(B) ALLOTMENTS.a

4

aa(i) IN

for

calendar

GENERAL.aIn

year

2026,

the case of a

5

State with an application approved under

6

this subsection with respect to a year, the

7

Administrator shall allot to the State, in

8

accordance with an allotment methodology

9

specified by the Administrator that ensures

10

that the spending requirement in para-

11

graph (6) is met for the year, from

12

amounts appropriated for such year under

13

subparagraph (A), such amount as speci-

14

fied by the Administrator with respect to

15

the State and application and year.

16
17
18

aa(ii) ANNUAL

REDISTRIBUTION

OF

PREVIOUS YEARaS UNUSED FUNDS.a

aa(I) IN

GENERAL.a

In carrying

19

out clause (i), with respect to a year

20

(beginning with 2021), the Adminis-

21

trator shall, not later than March 31

22

of such yeara

23

aa(aa) determine the amount

24

of funds, if any, remaining un-

ERN17282

Discussion Draft

S.L.C.

19
1

used under subparagraph (A)

2

from the previous year; and

3

aa(bb) if the Administrator

4

determines that any funds so re-

5

main from the previous year, re-

6

distribute such remaining funds

7

in accordance with an allotment

8

methodology specified by the Ad-

9

ministrator to States that have

10

submitted

11

proved under this subsection for

12

the year.

13

aa(II) APPLICABLE

an

application

ap-

STATE PER-

14

CENTAGE.aThe

15

specified for a year in paragraph

16

(5)(B)(ii) shall apply to funds redis-

17

tributed under subclause (I) in that

18

year.

19
20
21

aa(C) AVAILABILITY

State

percentage

OF ALLOTTED STATE

FUNDS.a

aa(i) IN

GENERAL.aAmounts

allotted

22

to a State pursuant to subparagraph (B)(i)

23

for a year shall remain available for ex-

24

penditure by the State through the end of

25

the second succeeding year.

Discussion Draft

ERN17282

S.L.C.

20
1

aa(ii) AVAILABILITY

OF AMOUNTS RE-

2

DISTRIBUTED.aAmounts

3

a State under subparagraph (B)(ii) in a

4

year shall be available for expenditure by

5

the State through the end of the second

6

succeeding year.

7
8
9

redistributed to

aa(5) PAYMENTS.a
aa(A)

ANNUAL

MENTS.aSubject

PAYMENT

OF

ALLOT-

to subparagraph (B), the Ad-

10

ministrator shall pay to each State that has an

11

application approved under this subsection for a

12

year, the allotment determined under paragraph

13

(4)(B) for the State for the year.

14
15

aa(B) MATCH
aa(i) IN

REQUIRED.a

GENERAL.aThe

Administrator

16

shall pay each State that has an applica-

17

tion approved under this subsection for a

18

year, the Federal percentage of the allot-

19

ment determined for the State under para-

20

graph (4)(B) for the year.

21

aa(ii) FEDERAL

AND STATE PERCENT-

22

AGES DEFINED.aFor

23

(i), the Federal percentage is equal to 100

24

percent reduced by the State percentage

purposes of clause

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1

for that year, and the State percentage is

2

equal toa

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

aa(I) in the case of calendar year
2019, 0 percent;
aa(II) in the case of calendar year
2020, 0 percent;
aa(III) in the case of calendar
year 2021, 0 percent;
aa(IV) in the case of calendar
year 2022, 7 percent;
aa(V) in the case of calendar year
2023, 14 percent;
aa(VI) in the case of calendar
year 2024, 21 percent;
aa(VII) in the case of calendar
year 2025, 28 percent; and
aa(VIII) in the case of calendar
year 2026, 35 percent.
aa(C) ADVANCE

PAYMENT; RETROSPECTIVE

ADJUSTMENT.a

aa(i) IN

GENERAL.aIf

the Adminis-

22

trator deems it appropriate, the Adminis-

23

trator shall make payments under this sub-

24

section for each year on the basis of ad-

25

vance estimates of expenditures submitted

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1

by the State and such other investigation

2

as the Administrator shall find necessary,

3

and shall reduce or increase the payments

4

as necessary to adjust for any overpayment

5

or underpayment for prior years.

6

aa(ii) MISUSE

OF FUNDS.aIf

the Ad-

7

ministrator determines that a State is not

8

using funds paid to the State under this

9

subsection in a manner consistent with the

10

description provided by the State in its ap-

11

plication approved under paragraph (1),

12

the Administrator may withhold payments,

13

reduce payments, or recover previous pay-

14

ments to the State under this subsection

15

as the Administrator deems appropriate.

16

aa(D) FLEXIBILITY

IN

SUBMITTAL

OF

17

CLAIMS.aNothing

18

construed as preventing a State from claiming

19

as expenditures in the year expenditures that

20

were incurred in a previous year.

21

aa(6) REQUIRED

in this subsection shall be

USE FOR PREMIUM STABILIZA-

22

TION AND INCENTIVES FOR INDIVIDUAL MARKET

23

PARTICIPATION.aIn

24

States under this subsection for each of calendar

25

years 2019, 2020, and 2021, the Administrator shall

determining

allotments

for

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1

ensure that at least $5,000,000,000 of the amounts

2

appropriated for each such year under paragraph

3

(4)(A) are used by States for the purposes described

4

in paragraph (1)(A)(ii) and in accordance with guid-

5

ance issued by the Administrator not later than 30

6

days after the date of enactment of this subsection

7

that specifies the parameters for the use of funds for

8

such purposes.

9

aa(7) EXEMPTIONS.aParagraphs (2), (3), (5),

10

(6), (8), (10), and (11) of subsection (c) do not

11

apply to payments under this subsection.aa.

12

(b) OTHER TITLE XXI AMENDMENTS.a

13
14

(1) Section 2101 of such Act (42 U.S.C.
1397aa) is amendeda

15

(A) in subsection (a), in the matter pre-

16

ceding paragraph (1), by striking aaThe pur-

17

poseaa and inserting aaExcept with respect to

18

short-term assistance activities under section

19

2105(h) and the Long-Term State Stability and

20

Innovation Program established in section

21

2105(i), the purposeaa; and

22

(B) in subsection (b), in the matter pre-

23

ceding paragraph (1), by inserting aasubsection

24

(a) or (g) ofaa before aasection 2105aa.

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1

(2) Section 2105(c)(1) of such Act (42 U.S.C.

2

1397ee(c)(1)) is amended by striking aaand may not

3

includeaa and inserting aaor to carry out short-term

4

assistance activities under subsection (h) or the

5

Long-Term State Stability and Innovation Program

6

established in subsection (i) and, except in the case

7

of funds made available under subsection (h) or (i),

8

may not includeaa.

9

(3) Section 2106(a)(1) of such Act (42 U.S.C.

10

1397ff(a)(1)) is amended by inserting aasubsection

11

(a) or (g) ofaa before aasection 2105aa.

12
13
14

SEC. 107. BETTER CARE RECONCILIATION IMPLEMENTATION FUND.

(a) IN GENERAL.aThere is hereby established a Bet-

15 ter Care Reconciliation Implementation Fund (referred to
16 in this section as the aaFundaa) within the Department of
17 Health and Human Services to provide for Federal admin18 istrative expenses in carrying out this Act.
19

(b) FUNDING.aThere is appropriated to the Fund,

20 out of any funds in the Treasury not otherwise appro21 priated, $500,000,000.

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1

SEC. 108. REPEAL OF THE TAX ON EMPLOYEE HEALTH IN-

2

SURANCE

3

BENEFITS.

4

PREMIUMS

AND

HEALTH

PLAN

(a) IN GENERAL.aChapter 43 of the Internal Rev-

5 enue Code of 1986 is amended by striking section 4980I.
6

(b) EFFECTIVE DATE.aThe amendment made by

7 subsection (a) shall apply to taxable years beginning after
8 December 31, 2019.
9

(c) SUBSEQUENT EFFECTIVE DATE.aThe amend-

10 ment made by subsection (a) shall not apply to taxable
11 years beginning after December 31, 2025, and chapter 43
12 of the Internal Revenue Code of 1986 is amended to read
13 as such chapter would read if such subsection had never
14 been enacted.
15

SEC. 109. REPEAL OF TAX ON OVER-THE-COUNTER MEDICA-

16

TIONS.

17

(a) HSAS.aSubparagraph (A) of section 223(d)(2)

18 of the Internal Revenue Code of 1986 is amended by strik19 ing aaSuch termaa and all that follows through the period.
20

(b) ARCHER MSAS.aSubparagraph (A) of section

21 220(d)(2) of the Internal Revenue Code of 1986 is amend22 ed by striking aaSuch termaa and all that follows through
23 the period.
24
25

(c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS
AND

HEALTH REIMBURSEMENT ARRANGEMENTS.aSec-

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1 tion 106 of the Internal Revenue Code of 1986 is amended
2 by striking subsection (f).
3
4

(d) EFFECTIVE DATES.a
(1)

DISTRIBUTIONS

FROM

SAVINGS

AC-

5

COUNTS.aThe

6

and (b) shall apply to amounts paid with respect to

7

taxable years beginning after December 31, 2016.

amendments made by subsections (a)

8

(2) REIMBURSEMENTS.aThe amendment made

9

by subsection (c) shall apply to expenses incurred

10

with respect to taxable years beginning after Decem-

11

ber 31, 2016.

12

SEC. 110. REPEAL OF TAX ON HEALTH SAVINGS ACCOUNTS.

13

(a) HSAS.aSection 223(f)(4)(A) of the Internal

14 Revenue Code of 1986 is amended by striking aa20 per15 centaa and inserting aa10 percentaa.
16

(b) ARCHER MSAS.aSection 220(f)(4)(A) of the In-

17 ternal Revenue Code of 1986 is amended by striking aa20
18 percentaa and inserting aa15 percentaa.
19

(c) EFFECTIVE DATE.aThe amendments made by

20 this section shall apply to distributions made after Decem21 ber 31, 2016.
22

SEC. 111. REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO

23

FLEXIBLE SPENDING ACCOUNTS.

24

(a) IN GENERAL.aSection 125 of the Internal Rev-

25 enue Code of 1986 is amended by striking subsection (i).

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1

(b) EFFECTIVE DATE.aThe amendment made by

2 this section shall apply to plan years beginning after De3 cember 31, 2017.
4

SEC. 112. REPEAL OF TAX ON PRESCRIPTION MEDICA-

5
6

TIONS.

Subsection (j) of section 9008 of the Patient Protec-

7 tion and Affordable Care Act is amended to read as fol8 lows:
9

aa(j) REPEAL.aThis section shall apply to calendar

10 years beginning after December 31, 2010, and ending be11 fore January 1, 2018.aa.
12
13

SEC. 113. REPEAL OF MEDICAL DEVICE EXCISE TAX.

Section 4191 of the Internal Revenue Code of 1986

14 is amended by adding at the end the following new sub15 section:
16

aa(d) APPLICABILITY.aThe tax imposed under sub-

17 section (a) shall not apply to sales after December 31,
18 2017.aa.
19
20

SEC. 114. REPEAL OF HEALTH INSURANCE TAX.

Subsection (j) of section 9010 of the Patient Protec-

21 tion and Affordable Care Act is amended by striking aa,
22 andaa at the end of paragraph (1) and all that follows
23 through aa2017aa.

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1

SEC. 115. REPEAL OF ELIMINATION OF DEDUCTION FOR

2

EXPENSES ALLOCABLE TO MEDICARE PART D

3

SUBSIDY.

4

(a) IN GENERAL.aSection 139A of the Internal Rev-

5 enue Code of 1986 is amended by adding at the end the
6 following new sentence: aaThis section shall not be taken
7 into account for purposes of determining whether any de8 duction is allowable with respect to any cost taken into
9 account in determining such payment.aa.
10

(b) EFFECTIVE DATE.aThe amendment made by

11 this section shall apply to taxable years beginning after
12 December 31, 2016.
13
14

SEC. 116. REPEAL OF CHRONIC CARE TAX.

(a) IN GENERAL.aSubsection (a) of section 213 of

15 the Internal Revenue Code of 1986 is amended by striking
16 aa10 percentaa and inserting aa7.5 percentaa.
17

(b) EFFECTIVE DATE.aThe amendment made by

18 this section shall apply to taxable years beginning after
19 December 31, 2016.
20
21

SEC. 117. REPEAL OF MEDICARE TAX INCREASE.

(a) IN GENERAL.aSubsection (b) of section 3101 of

22 the Internal Revenue Code of 1986 is amended to read
23 as follows:
24

aa(b) HOSPITAL INSURANCE.aIn addition to the tax

25 imposed by the preceding subsection, there is hereby im26 posed on the income of every individual a tax equal to 1.45

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29
1 percent of the wages (as defined in section 3121(a)) re2 ceived by such individual with respect to employment (as
3 defined in section 3121(b).aa.
4

(b) SECA.aSubsection (b) of section 1401 of the In-

5 ternal Revenue Code of 1986 is amended to read as fol6 lows:
7

aa(b) HOSPITAL INSURANCE.aIn addition to the tax

8 imposed by the preceding subsection, there shall be im9 posed for each taxable year, on the self-employment in10 come of every individual, a tax equal to 2.9 percent of the
11 amount of the self-employment income for such taxable
12 year.aa.
13

(c) EFFECTIVE DATE.aThe amendments made by

14 this section shall apply with respect to remuneration re15 ceived after, and taxable years beginning after, December
16 31, 2022.
17
18

SEC. 118. REPEAL OF TANNING TAX.

(a) IN GENERAL.aThe Internal Revenue Code of

19 1986 is amended by striking chapter 49.
20

(b) EFFECTIVE DATE.aThe amendment made by

21 this section shall apply to services performed after Sep22 tember 30, 2017.
23
24

SEC. 119. REPEAL OF NET INVESTMENT TAX.

(a) IN GENERAL.aSubtitle A of the Internal Rev-

25 enue Code of 1986 is amended by striking chapter 2A.

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1

(b) EFFECTIVE DATE.aThe amendment made by

2 this section shall apply to taxable years beginning after
3 December 31, 2016.
4
5

SEC. 120. REMUNERATION.

Paragraph (6) of section 162(m) of the Internal Rev-

6 enue Code of 1986 is amended by adding at the end the
7 following new subparagraph:
8

aa(I) TERMINATION.aThis paragraph shall

9

not apply to taxable years beginning after De-

10

cember 31, 2016.aa.

11

SEC. 121. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAV-

12

INGS ACCOUNT INCREASED TO AMOUNT OF

13

DEDUCTIBLE AND OUT-OF-POCKET LIMITA-

14

TION.

15

(a) SELF-ONLY COVERAGE.aSection 223(b)(2)(A)

16 of the Internal Revenue Code of 1986 is amended by strik17 ing aa$2,250aa and inserting aathe amount in effect under
18 subsection (c)(2)(A)(ii)(I)aa.
19

(b) FAMILY COVERAGE.aSection 223(b)(2)(B) of

20 such Code is amended by striking aa$4,500aa and inserting
21 aathe amount in effect under subsection (c)(2)(A)(ii)(II)aa.
22

(c)

COST-OF-LIVING

ADJUSTMENT.aSection

23 223(g)(1) of such Code is amendeda
24
25

(1) by striking aasubsections (b)(2) andaa both
places it appears and inserting aasubsectionaa, and

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31
1

(2) in subparagraph (B), by striking aadeter-

2

mined byaa and all that follows through aa acalendar

3

year 2003a.aa and inserting aadetermined by sub-

4

stituting acalendar year 2003a for acalendar year

5

1992a in subparagraph (B) thereof.aa.

6

(d) EFFECTIVE DATE.aThe amendments made by

7 this section shall apply to taxable years beginning after
8 December 31, 2017.
9

SEC. 122. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON-

10

TRIBUTIONS TO THE SAME HEALTH SAVINGS

11

ACCOUNT.

12

(a) IN GENERAL.aSection 223(b)(5) of the Internal

13 Revenue Code of 1986 is amended to read as follows:
14

aa(5) SPECIAL

RULE FOR MARRIED INDIVIDUALS

15

WITH FAMILY COVERAGE.a

16

aa(A) IN

GENERAL.aIn

the case of individ-

17

uals who are married to each other, if both

18

spouses are eligible individuals and either

19

spouse has family coverage under a high de-

20

ductible health plan as of the first day of any

21

montha

22

aa(i) the limitation under paragraph

23

(1) shall be applied by not taking into ac-

24

count any other high deductible health

25

plan coverage of either spouse (and if such

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1

spouses both have family coverage under

2

separate high deductible health plans, only

3

one such coverage shall be taken into ac-

4

count),

5

aa(ii) such limitation (after application

6

of clause (i)) shall be reduced by the ag-

7

gregate amount paid to Archer MSAs of

8

such spouses for the taxable year, and

9

aa(iii) such limitation (after application

10

of clauses (i) and (ii)) shall be divided

11

equally between such spouses unless they

12

agree on a different division.

13

aa(B) TREATMENT

OF ADDITIONAL CON-

14

TRIBUTION AMOUNTS.aIf

15

to in subparagraph (A) have attained age 55

16

before the close of the taxable year, the limita-

17

tion referred to in subparagraph (A)(iii) which

18

is subject to division between the spouses shall

19

include the additional contribution amounts de-

20

termined under paragraph (3) for both spouses.

21

In any other case, any additional contribution

22

amount determined under paragraph (3) shall

23

not be taken into account under subparagraph

24

(A)(iii) and shall not be subject to division be-

25

tween the spouses.aa.

both spouses referred

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1

(b) EFFECTIVE DATE.aThe amendment made by

2 this section shall apply to taxable years beginning after
3 December 31, 2017.
4

SEC. 123. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES

5

INCURRED

6

HEALTH SAVINGS ACCOUNT.

7

BEFORE

ESTABLISHMENT

OF

(a) IN GENERAL.aSection 223(d)(2) of the Internal

8 Revenue Code of 1986 is amended by adding at the end
9 the following new subparagraph:
10

aa(D) TREATMENT

OF CERTAIN MEDICAL

11

EXPENSES INCURRED BEFORE ESTABLISHMENT

12

OF ACCOUNT.aIf

13

established during the 60-day period beginning

14

on the date that coverage of the account bene-

15

ficiary under a high deductible health plan be-

16

gins, then, solely for purposes of determining

17

whether an amount paid is used for a qualified

18

medical expense, such account shall be treated

19

as having been established on the date that

20

such coverage begins.aa.

21

a health savings account is

(b) EFFECTIVE DATE.aThe amendment made by

22 this subsection shall apply with respect to coverage under
23 a high deductible health plan beginning after December
24 31, 2017.

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1
2

SEC. 124. FEDERAL PAYMENTS TO STATES.

(a) IN GENERAL.aNotwithstanding section 504(a),

3 1902(a)(23), 1903(a), 2002, 2005(a)(4), 2102(a)(7), or
4 2105(a)(1) of the Social Security Act (42 U.S.C. 704(a),
5 1396a(a)(23),

1396b(a),

1397a,

1397d(a)(4),

6 1397bb(a)(7), 1397ee(a)(1)), or the terms of any Med7 icaid waiver in effect on the date of enactment of this Act
8 that is approved under section 1115 or 1915 of the Social
9 Security Act (42 U.S.C. 1315, 1396n), for the 1-year pe10 riod beginning on the date of enactment of this Act, no
11 Federal funds provided from a program referred to in this
12 subsection that is considered direct spending for any year
13 may be made available to a State for payments to a pro14 hibited entity, whether made directly to the prohibited en15 tity or through a managed care organization under con16 tract with the State.
17
18

(b) DEFINITIONS.aIn this section:
(1) PROHIBITED

ENTITY.aThe

term aaprohib-

19

ited entityaa means an entity, including its affiliates,

20

subsidiaries, successors, and clinicsa

21
22

(A) that, as of the date of enactment of
this Acta

23

(i) is an organization described in sec-

24

tion 501(c)(3) of the Internal Revenue

25

Code of 1986 and exempt from tax under

26

section 501(a) of such Code;

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1

(ii) is an essential community provider

2

described in section 156.235 of title 45,

3

Code of Federal Regulations (as in effect

4

on the date of enactment of this Act), that

5

is primarily engaged in family planning

6

services, reproductive health, and related

7

medical care; and

8
9
10
11

(iii) provides for abortions, other than
an abortiona
(I) if the pregnancy is the result
of an act of rape or incest; or

12

(II) in the case where a woman

13

suffers from a physical disorder, phys-

14

ical injury, or physical illness that

15

would, as certified by a physician,

16

place the woman in danger of death

17

unless an abortion is performed, in-

18

cluding a life-endangering physical

19

condition caused by or arising from

20

the pregnancy itself; and

21

(B) for which the total amount of Federal

22

and State expenditures under the Medicaid pro-

23

gram under title XIX of the Social Security Act

24

in fiscal year 2014 made directly to the entity

25

and to any affiliates, subsidiaries, successors, or

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1

clinics of the entity, or made to the entity and

2

to any affiliates, subsidiaries, successors, or

3

clinics of the entity as part of a nationwide

4

health

5

$350,000,000.

6

(2) DIRECT

care

provider

network,

SPENDING.aThe

exceeded

term aadirect

7

spendingaa has the meaning given that term under

8

section 250(c) of the Balanced Budget and Emer-

9

gency Deficit Control Act of 1985 (2 U.S.C. 900(c)).

10
11
12

SEC. 125. MEDICAID PROVISIONS.

The Social Security Act is amendeda
(1) in section 1902 (42 U.S.C. 1396a)a

13

(A) in subsection (a)(47)(B), by inserting

14

aaand provided that any such election shall cease

15

to be effective on January 1, 2020, and no such

16

election shall be made after that dateaa before

17

the semicolon at the end; and

18

(B) in subsection (l)(2)(C), by inserting

19

aaand ending December 31, 2019,aa after aaJanu-

20

ary 1, 2014,aa;

21

(2)

in

section

1915(k)(2)

(42

U.S.C.

22

1396n(k)(2)), by striking aaduring the period de-

23

scribed in paragraph (1)aa and inserting aaon or after

24

the date referred to in paragraph (1) and before

25

January 1, 2020aa; and

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1

(3) in section 1920(e) (42 U.S.C. 1396ra1(e)),

2

by striking aaunder clause (i)(VIII), clause (i)(IX), or

3

clause (ii)(XX) of subsection (a)(10)(A)aa and insert-

4

ing aaunder clause (i)(VIII) or clause (ii)(XX) of sec-

5

tion 1902(a)(10)(A) before January 1, 2020, section

6

1902(a)(10)(A)(i)(IX),aa.

7
8

SEC. 126. MEDICAID EXPANSION.

(a) IN GENERAL.aTitle XIX of the Social Security

9 Act (42 U.S.C. 1396 et seq.) is amendeda
10

(1) in section 1902 (42 U.S.C. 1396a)a

11

(A) in subsection (a)(10)(A)a

12

(i) in clause (i)(VIII), by inserting

13

aaand ending December 31, 2019,aa after

14

aa2014,aa; and

15

(ii) in clause (ii), in subclause (XX),

16

by inserting aaand ending December 31,

17

2017,aa after aa2014,aa, and by adding at

18

the end the following new subclause:

19

aa(XXIII) beginning January 1, 2020,

20

who are expansion enrollees (as defined in

21

subsection (nn)(1));aa; and

22

(B) by adding at the end the following new

23
24

subsection:
aa(nn) EXPANSION ENROLLEES.a

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1
2

aa(1) IN

GENERAL.aIn

this title, the term aex-

pansion enrolleea means an individuala

3

aa(A) who is under 65 years of age;

4

aa(B) who is not pregnant;

5

aa(C) who is not entitled to, or enrolled for,

6

benefits under part A of title XVIII, or enrolled

7

for benefits under part B of title XVIII;

8
9
10

aa(D) who is not described in any of subclauses

(I)

through

(VII)

of

subsection

(a)(10)(A)(i); and

11

aa(E) whose income (as determined under

12

subsection (e)(14)) does not exceed 133 percent

13

of the poverty line (as defined in section

14

2110(c)(5)) applicable to a family of the size in-

15

volved.

16

aa(2) APPLICATION

OF RELATED PROVISIONS.a

17

Any reference in subsection (a)(10)(G), (k), or (gg)

18

of this section or in section 1903, 1905(a), 1920(e),

19

or 1937(a)(1)(B) to individuals described in sub-

20

clause (VIII) of subsection (a)(10)(A)(i) shall be

21

deemed to include a reference to expansion enroll-

22

ees.aa; and

23
24

(2) in section 1905 (42 U.S.C. 1396d)a
(A) in subsection (y)(1)a

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1

(i) in the matter preceding subpara-

2

graph (A), by striking aa, with respect toaa

3

and all that follows through aashall be equal

4

toaa and inserting aaand that has elected to

5

cover newly eligible individuals before

6

March 1, 2017, with respect to amounts

7

expended by such State before January 1,

8

2020, for medical assistance for newly eli-

9

gible individuals described in subclause

10

(VIII) of section 1902(a)(10)(A)(i), and,

11

with respect to amounts expended by such

12

State after December 31, 2019, and before

13

January 1, 2024, for medical assistance

14

for expansion enrollees (as defined in sec-

15

tion 1902(nn)(1)), shall be equal to the

16

higher of the percentage otherwise deter-

17

mined for the State and year under sub-

18

section (b) (without regard to this sub-

19

section) andaa;

20
21

(ii) in subparagraph (D), by striking
aaandaa after the semicolon;

22

(iii) by striking subparagraph (E) and

23

inserting the following new subparagraphs:

24

aa(E) 90 percent for calendar quarters in

25

2020;

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1
2
3
4
5
6

aa(F) 85 percent for calendar quarters in
2021;
aa(G) 80 percent for calendar quarters in
2022; and
aa(H) 75 percent for calendar quarters in
2023.aa; and

7

(iv) by adding after and below sub-

8

paragraph (H) (as added by clause (iii)),

9

the following flush sentence:

10

aaThe Federal medical assistance percentage deter-

11

mined for a State and year under subsection (b)

12

shall apply to expenditures for medical assistance to

13

newly eligible individuals (as so described) and ex-

14

pansion enrollees (as so defined), in the case of a

15

State that has elected to cover newly eligible individ-

16

uals before March 1, 2017, for calendar quarters

17

after 2023, and, in the case of any other State, for

18

calendar quarters (or portions of calendar quarters)

19

after February 28, 2017.aa; and

20
21
22
23

(B) in subsection (z)(2)a
(i) in subparagraph (A)a
(I) by inserting aathrough 2023aa
after aaeach year thereafteraa; and

24

(II) by striking aashall be equal

25

toaa and inserting aaand, for periods

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1

after December 31, 2019 and before

2

January 1, 2024, who are expansion

3

enrollees

4

1902(nn)(1)) shall be equal to the

5

higher of the percentage otherwise de-

6

termined for the State and year under

7

subsection (b) (without regard to this

8

subsection) andaa; and

9

(ii) in subparagraph (B)(ii)a

10

(as

defined

in

section

(I) in subclause (III), by adding

11

aaandaa at the end; and

12

(II) by striking subclauses (IV),

13

(V), and (VI) and inserting the fol-

14

lowing new subclause:

15
16

aa(IV) 2017 and each subsequent year
through 2023 is 80 percent.aa.

17

(b) SUNSET

18

QUIREMENT.aSection

OF

ESSENTIAL HEALTH BENEFITS RE1937(b)(5) of the Social Security

19 Act (42 U.S.C. 1396ua7(b)(5)) is amended by adding at
20 the end the following: aaThis paragraph shall not apply
21 after December 31, 2019.aa.
22
23

SEC. 127. RESTORING FAIRNESS IN DSH ALLOTMENTS.

Section 1923(f)(7) of the Social Security Act (42

24 U.S.C. 1396ra4(f)(7)) is amended by adding at the end
25 the following new subparagraph:

ERN17282

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42
1
2

aa(C) NON-EXPANSION
aa(i) IN

STATES.a

GENERAL.aIn

the case of a

3

State that is a non-expansion State for a

4

fiscal yeara

5

aa(I) subparagraph (A) shall not

6

apply to the DSH allotment for such

7

State and fiscal year; and

8

aa(II) the DSH allotment for the

9

State for fiscal year 2020 shall be in-

10

creased by the amount calculated ac-

11

cording to clause (iii).

12

aa(ii) NO

CHANGE IN REDUCTION FOR

13

EXPANSION

14

State that is an expansion State for a fis-

15

cal year, the DSH allotment for such State

16

and fiscal year shall be determined as if

17

clause (i) did not apply.

18

aa(iii)

STATES.aIn

AMOUNT

the case of a

CALCULATED.aFor

19

purposes of clause (i)(II), the amount cal-

20

culated according to this clause for a non-

21

expansion State is the following:

22

aa(I) For each State, the Sec-

23

retary shall calculate a ratio equal to

24

the Stateas fiscal year 2016 DSH al-

25

lotment divided by the number of indi-

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43
1

viduals enrolled in the State plan

2

under this title for such fiscal year.

3

aa(II) The Secretary shall identify

4

the States whose ratio as so deter-

5

mined is below the national average of

6

such ratio for all States.

7

aa(III) The amount calculated

8

pursuant to this clause is an amount

9

that, if added to the Stateas fiscal

10

year 2016 DSH allotment, would in-

11

crease the ratio calculated pursuant to

12

subclause (I) up to the national aver-

13

age for all States.

14

aa(iv) DISREGARD

OF INCREASE.aThe

15

DSH allotment for a non-expansion State

16

for the second, third, and fourth quarters

17

of fiscal year 2024 and fiscal years there-

18

after shall be determined as if there had

19

been no increase in the Stateas DSH allot-

20

ment for fiscal year 2020 under clause

21

(i)(II).

22
23

aa(v) NON-EXPANSION
STATE DEFINED.aIn

AND EXPANSION

this subparagraph:

24

aa(I) The term aexpansion Statea

25

means with respect to a fiscal year, a

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1

State that, as of the date of enact-

2

ment of this subparagraph, provided

3

for eligibility under clause (i)(VIII) or

4

(ii)(XX) of section 1902(a)(10)(A) for

5

medical assistance under this title (or

6

a waiver of the State plan approved

7

under section 1115).

8

aa(II) The term anon-expansion

9

Statea means, with respect to a fiscal

10

year, a State that is not an expansion

11

State.aa.

12
13
14

SEC. 128. REDUCING STATE MEDICAID COSTS.

(a) IN GENERAL.a
(1)

STATE

PLAN

REQUIREMENTS.aSection

15

1902(a)(34) of the Social Security Act (42 U.S.C.

16

1396a(a)(34)) is amended by striking aain or after

17

the third month before the month in which he made

18

applicationaa and inserting aain or after the month in

19

which the individual made applicationaa.

20

(2) DEFINITION

OF MEDICAL ASSISTANCE.a

21

Section 1905(a) of the Social Security Act (42

22

U.S.C. 1396d(a)) is amended by striking aain or

23

after the third month before the month in which the

24

recipient makes application for assistanceaa and in-

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1

serting aain or after the month in which the recipient

2

makes application for assistanceaa.

3

(b) EFFECTIVE DATE.aThe amendments made by

4 subsection (a) shall apply to medical assistance with re5 spect to individuals whose eligibility for such assistance
6 is based on an application for such assistance made (or
7 deemed to be made) on or after October 1, 2017.
8
9
10

SEC. 129. PROVIDING SAFETY NET FUNDING FOR NON-EXPANSION STATES.

Title XIX of the Social Security Act is amended by

11 inserting after section 1923 (42 U.S.C. 1396ra4) the fol12 lowing new section:
13
14
15

aaADJUSTMENT

IN PAYMENT FOR SERVICES OF SAFETY

NET PROVIDERS IN NON-EXPANSION STATES

aaSEC. 1923A. (a) IN GENERAL.aSubject to the limi-

16 tations of this section, for each year during the period be17 ginning with fiscal year 2018 and ending with fiscal year
18 2022, each State that is one of the 50 States or the Dis19 trict of Columbia and that, as of July 1 of the preceding
20 fiscal year, did not provide for eligibility under clause
21 (i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) for medical
22 assistance under this title (or a waiver of the State plan
23 approved under section 1115) (each such State or District
24 referred to in this section for the fiscal year as a anon25 expansion Statea) may adjust the payment amounts other26 wise provided under the State plan under this title (or a

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46
1 waiver of such plan) to health care providers that provide
2 health care services to individuals enrolled under this title
3 (in this section referred to as aeligible providersa) so long
4 as the payment adjustment to such an eligible provider
5 does not exceed the provideras costs in furnishing health
6 care services (as determined by the Secretary and net of
7 payments under this title, other than under this section,
8 and by uninsured patients) to individuals who either are
9 eligible for medical assistance under the State plan (or
10 under a waiver of such plan) or have no health insurance
11 or health plan coverage for such services.
12

aa(b) INCREASE

IN

APPLICABLE FMAP.aNotwith-

13 standing section 1905(b), the Federal medical assistance
14 percentage applicable with respect to expenditures attrib15 utable to a payment adjustment under subsection (a) for
16 which payment is permitted under subsection (c) shall be
17 equal toa
18
19
20

aa(1) 100 percent for calendar quarters in fiscal
years 2018, 2019, 2020, and 2021; and
aa(2) 95 percent for calendar quarters in fiscal

21

year 2022.

22

aa(c) ANNUAL ALLOTMENT LIMITATION.aPayment

23 under section 1903(a) shall not be made to a State with
24 respect to any payment adjustment made under this sec-

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47
1 tion for all calendar quarters in a fiscal year in excess
2 of the $2,000,000,000 multiplied by the ratio ofa
3

aa(1) the population of the State with income

4

below 138 percent of the poverty line in 2015 (as de-

5

termined based the table entitled aHealth Insurance

6

Coverage Status and Type by Ratio of Income to

7

Poverty Level in the Past 12 Months by Agea for the

8

universe of the civilian noninstitutionalized popu-

9

lation for whom poverty status is determined based

10

on the 2015 American Community Survey 1aYear

11

Estimates, as published by the Bureau of the Cen-

12

sus), to

13

aa(2) the sum of the populations under para-

14

graph (1) for all non-expansion States.

15

aa(d) DISQUALIFICATION

16

ERAGE

IN

CASE

OF

STATE COV-

EXPANSION.aIf a State is a non-expansion for a

17 fiscal year and provides eligibility for medical assistance
18 described in subsection (a) during the fiscal year, the
19 State shall no longer be treated as a non-expansion State
20 under this section for any subsequent fiscal years.aa.
21
22

SEC. 130. ELIGIBILITY REDETERMINATIONS.

(a) IN GENERAL.aSection 1902(e)(14) of the Social

23 Security Act (42 U.S.C. 1396a(e)(14)) (relating to modi24 fied adjusted gross income) is amended by adding at the
25 end the following:

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1

aa(J) FREQUENCY

2

TERMINATIONS.aBeginning

3

2017, and notwithstanding subparagraph (H),

4

in the case of an individual whose eligibility for

5

medical assistance under the State plan under

6

this title (or a waiver of such plan) is deter-

7

mined based on the application of modified ad-

8

justed gross income under subparagraph (A)

9

and who is so eligible on the basis of clause

10

(i)(VIII), (ii)(XX), or (ii)(XXIII) of subsection

11

(a)(10)(A), at the option of the State, the State

12

plan may provide that the individualas eligibility

13

shall be redetermined every 6 months (or such

14

shorter number of months as the State may

15

elect).aa.

16
17

OF ELIGIBILITY REDE-

on

October

1,

(b) INCREASED ADMINISTRATIVE MATCHING PERCENTAGE.aFor

each calendar quarter during the period

18 beginning on October 1, 2017, and ending on December
19 31, 2019, the Federal matching percentage otherwise ap20 plicable under section 1903(a) of the Social Security Act
21 (42 U.S.C. 1396b(a)) with respect to State expenditures
22 during such quarter that are attributable to meeting the
23 requirement of section 1902(e)(14) (relating to determina24 tions of eligibility using modified adjusted gross income)
25 of such Act shall be increased by 5 percentage points with

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49
1 respect to State expenditures attributable to activities car2 ried out by the State (and approved by the Secretary) to
3 exercise the option described in subparagraph (J) of such
4 section (relating to eligibility redeterminations made on a
5 6-month or shorter basis) (as added by subsection (a)) to
6 increase the frequency of eligibility redeterminations.
7

SEC.

131.

OPTIONAL

WORK

REQUIREMENT

FOR

NON-

8

DISABLED, NONELDERLY, NONPREGNANT IN-

9

DIVIDUALS.

10

(a) IN GENERAL.aSection 1902 of the Social Secu-

11 rity Act (42 U.S.C. 1396a), as previously amended, is fur12 ther amended by adding at the end the following new sub13 section:
14

aa(oo) OPTIONAL WORK REQUIREMENT

15

DISABLED,

16

UALS.a

17

NONELDERLY,

aa(1) IN

FOR

NONPREGNANT

GENERAL.aBeginning

NON-

INDIVID-

October 1,

18

2017, subject to paragraph (3), a State may elect to

19

condition medical assistance to a nondisabled, non-

20

elderly, nonpregnant individual under this title upon

21

such an individualas satisfaction of a work require-

22

ment (as defined in paragraph (2)).

23

aa(2) WORK

REQUIREMENT DEFINED.aIn

this

24

section, the term awork requirementa means, with re-

25

spect to an individual, the individualas participation

Discussion Draft

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50
1

in work activities (as defined in section 407(d)) for

2

such period of time as determined by the State, and

3

as directed and administered by the State.

4

aa(3) REQUIRED

EXCEPTIONS.aStates

admin-

5

istering a work requirement under this subsection

6

may not apply such requirement toa

7

aa(A) a woman during pregnancy through

8

the end of the month in which the 60-day pe-

9

riod (beginning on the last day of her preg-

10
11
12

nancy) ends;
aa(B) an individual who is under 19 years
of age;

13

aa(C) an individual who is the only parent

14

or caretaker relative in the family of a child

15

who has not attained 6 years of age or who is

16

the only parent or caretaker of a child with dis-

17

abilities; or

18

aa(D) an individual who is married or a

19

head of household and has not attained 20

20

years of age and whoa

21
22
23
24

aa(i) maintains satisfactory attendance
at secondary school or the equivalent; or
aa(ii) participates in education directly
related to employment.aa.

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1
2

(b) INCREASE
TATION.aSection

IN

MATCHING RATE

FOR

IMPLEMEN-

1903 of the Social Security Act (42

3 U.S.C. 1396b) is amended by adding at the end the fol4 lowing:
5

aa(aa) The Federal matching percentage otherwise ap-

6 plicable under subsection (a) with respect to State admin7 istrative expenditures during a calendar quarter for which
8 the State receives payment under such subsection shall,
9 in addition to any other increase to such Federal matching
10 percentage, be increased for such calendar quarter by 5
11 percentage points with respect to State expenditures at12 tributable to activities carried out by the State (and ap13 proved by the Secretary) to implement subsection (oo) of
14 section 1902.aa.
15
16

SEC. 132. PROVIDER TAXES.

Section 1903(w)(4)(C) of the Social Security Act (42

17 U.S.C. 1396b(w)(4)(C)) is amended by adding at the end
18 the following new clause:
19

aa(iii) For purposes of clause (i), a de-

20

termination of the existence of an indirect

21

guarantee shall be made under paragraph

22

(3)(i) of section 433.68(f) of title 42, Code

23

of Federal Regulations, as in effect on

24

June 1, 2017, except thata

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52
1

aa(I) for fiscal year 2021, a5.8

2

percenta shall be substituted for a6

3

percenta each place it appears;

4

aa(II) for fiscal year 2022, a5.6

5

percenta shall be substituted for a6

6

percenta each place it appears;

7

aa(III) for fiscal year 2023, a5.4

8

percenta shall be substituted for a6

9

percenta each place it appears;

10

aa(IV) for fiscal year 2024, a5.2

11

percenta shall be substituted for a6

12

percenta each place it appears; and

13

aa(V) for fiscal year 2025 and

14

each subsequent fiscal year, a5 per-

15

centa shall be substituted for a6 per-

16

centa each place it appears.aa.

17
18
19
20

SEC. 133. PER CAPITA ALLOTMENT FOR MEDICAL ASSISTANCE.

Title XIX of the Social Security Act is amendeda
(1) in section 1903 (42 U.S.C. 1396b)a

21

(A) in subsection (a), in the matter before

22

paragraph (1), by inserting aaand section

23

1903A(a)aa after aaexcept as otherwise provided

24

in this sectionaa; and

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1

(B) in subsection (d)(1), by striking aato

2

whichaa and inserting aato which, subject to sec-

3

tion 1903A(a),aa; and

4

(2) by inserting after such section 1903 the fol-

5
6

lowing new section:
aaSEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR

7
8
9
10

MEDICAL ASSISTANCE.

aa(a) APPLICATION
MENTS FOR

OF

PER CAPITA CAP

ON

PAY-

MEDICAL ASSISTANCE EXPENDITURES.a

aa(1) IN

GENERAL.aIf

a State which is one of

11

the 50 States or the District of Columbia has excess

12

aggregate medical assistance expenditures (as de-

13

fined in paragraph (2)) for a fiscal year (beginning

14

with fiscal year 2020), the amount of payment to

15

the State under section 1903(a)(1) for each quarter

16

in the following fiscal year shall be reduced by 1a4 of

17

the excess aggregate medical assistance payments

18

(as defined in paragraph (3)) for that previous fiscal

19

year. In this section, the term aStatea means only the

20

50 States and the District of Columbia.

21

aa(2) EXCESS

AGGREGATE MEDICAL ASSISTANCE

22

EXPENDITURES.aIn

23

cess aggregate medical assistance expendituresa

24

means, for a State for a fiscal year, the amount (if

25

any) by whicha

this subsection, the term aex-

Discussion Draft

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54
1

aa(A) the amount of the adjusted total med-

2

ical assistance expenditures (as defined in sub-

3

section (b)(1)) for the State and fiscal year; ex-

4

ceeds

5

aa(B) the amount of the target total med-

6

ical assistance expenditures (as defined in sub-

7

section (c)) for the State and fiscal year.

8

aa(3) EXCESS

9

PAYMENTS.aIn

AGGREGATE MEDICAL ASSISTANCE

this subsection, the term aexcess ag-

10

gregate medical assistance paymentsa means, for a

11

State for a fiscal year, the product ofa

12

aa(A) the excess aggregate medical assist-

13

ance expenditures (as defined in paragraph (2))

14

for the State for the fiscal year; and

15

aa(B) the Federal average medical assist-

16

ance matching percentage (as defined in para-

17

graph (4)) for the State for the fiscal year.

18

aa(4) FEDERAL

AVERAGE MEDICAL ASSISTANCE

19

MATCHING PERCENTAGE.aIn

20

term aFederal average medical assistance matching

21

percentagea means, for a State for a fiscal year, the

22

ratio (expressed as a percentage) ofa

this subsection, the

23

aa(A) the amount of the Federal payments

24

that would be made to the State under section

25

1903(a)(1) for medical assistance expenditures

Discussion Draft

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55
1

for calendar quarters in the fiscal year if para-

2

graph (1) did not apply; to

3

aa(B) the amount of the medical assistance

4

expenditures for the State and fiscal year.

5

aa(5) PER

6

CAPITA BASE PERIOD.a

aa(A) IN

GENERAL.aIn

this section, the

7

term aper capita base perioda means, with re-

8

spect to a State, a period of 8 consecutive fiscal

9

quarters selected by the State.

10

aa(B) TIMELINE.aEach State shall submit

11

its selection of per capita base period to the

12

Secretary not later than January 1, 2018.

13

aa(C) PARAMETERS.aIn selecting a per

14

capita base period under this paragraph, a

15

State shalla

16

aa(i) only select a period of 8 consecu-

17

tive fiscal quarters for which all the data

18

necessary to make determinations required

19

under this section is available, as deter-

20

mined by the Secretary; and

21

aa(ii) shall not select any period of 8

22

consecutive fiscal quarters that begins with

23

a fiscal quarter earlier than the first quar-

24

ter of fiscal year 2014 or ends with a fiscal

Discussion Draft

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1

quarter later than the third fiscal quarter

2

of 2017.

3

aa(D) ADJUSTMENT

BY THE SECRETARY.a

4

If the Secretary determines that a State took

5

actions after the date of enactment of this sec-

6

tion (including making retroactive adjustments

7

to supplemental payment data in a manner that

8

affects a fiscal quarter in the per capita base

9

period) to diminish the quality of the data from

10

the per capita base period used to make deter-

11

minations under this section, the Secretary may

12

adjust the data as the Secretary deems appro-

13

priate.

14
15

aa(b) ADJUSTED TOTAL MEDICAL ASSISTANCE EXPENDITURES.aSubject

to subsection (g), the following

16 shall apply:
17

aa(1) IN

GENERAL.aIn

this section, the term

18

aadjusted total medical assistance expendituresa

19

means, for a Statea

20

aa(A) for the Stateas per capita base period

21

(as defined in subsection (a)(5)), the product

22

ofa

23

aa(i) the amount of the medical assist-

24

ance expenditures (as defined in paragraph

25

(2) and adjusted under paragraph (5)) for

Discussion Draft

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57
1

the State and period, reduced by the

2

amount of any excluded expenditures (as

3

defined in paragraph (3) and adjusted

4

under paragraph (5)) for the State and pe-

5

riod otherwise included in such medical as-

6

sistance expenditures; and

7

aa(ii) the 1903A base period popu-

8

lation percentage (as defined in paragraph

9

(4)) for the State; or

10

aa(B) for fiscal year 2019 or a subsequent

11

fiscal year, the amount of the medical assist-

12

ance expenditures (as defined in paragraph (2))

13

for the State and fiscal year that is attributable

14

to 1903A enrollees, reduced by the amount of

15

any excluded expenditures (as defined in para-

16

graph (3)) for the State and fiscal year other-

17

wise included in such medical assistance ex-

18

penditures and includes non-DSH supplemental

19

payments

20

(d)(4)(A)(ii)) and payments described in sub-

21

section (d)(4)(A)(iii) but shall not be construed

22

as including any expenditures attributable to

23

the program under section 1928 (relating to

24

State pediatric vaccine distribution programs).

25

In applying subparagraph (B), non-DSH sup-

(as

defined

in

subsection

Discussion Draft

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1

plemental payments (as defined in subsection

2

(d)(4)(A)(ii)) and payments described in sub-

3

section (d)(4)(A)(iii) shall be treated as fully at-

4

tributable to 1903A enrollees.

5

aa(2) MEDICAL

ASSISTANCE EXPENDITURES.a

6

In this section, the term amedical assistance expendi-

7

turesa means, for a State and fiscal year or per cap-

8

ita base period, the medical assistance payments as

9

reported by medical service category on the Form

10

CMS-64 quarterly expense report (or successor to

11

such a report form, and including enrollment data

12

and subsequent adjustments to any such report, in

13

this section referred to collectively as a aCMS-64 re-

14

porta) for quarters in the year or base period for

15

which payment is (or may otherwise be) made pur-

16

suant to section 1903(a)(1), adjusted, in the case of

17

a per capita base period, under paragraph (5).

18

aa(3) EXCLUDED

EXPENDITURES.aIn

this sec-

19

tion, the term aexcluded expendituresa means, for a

20

State and fiscal year or per capita base period, ex-

21

penditures under the State plan (or under a waiver

22

of such plan) that are attributable to any of the fol-

23

lowing:

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1

aa(A) DSH.aPayment adjustments made

2

for disproportionate share hospitals under sec-

3

tion 1923.

4

aa(B)

MEDICARE

COST-SHARING.aPay-

5

ments made for medicare cost-sharing (as de-

6

fined in section 1905(p)(3)).

7

aa(C) SAFETY

NET PROVIDER PAYMENT AD-

8

JUSTMENTS IN NON-EXPANSION STATES.aPay-

9

ment adjustments under subsection (a) of sec-

10

tion 1923A for which payment is permitted

11

under subsection (c) of such section.

12

aa(4) 1903A

BASE PERIOD POPULATION PER-

13

CENTAGE.aIn

14

period population percentagea means, for a State,

15

the Secretaryas calculation of the percentage of the

16

actual medical assistance expenditures, as reported

17

by the State on the CMSa64 reports for calendar

18

quarters in the Stateas per capita base period, that

19

are attributable to 1903A enrollees (as defined in

20

subsection (e)(1)).

21

this subsection, the term a1903A base

aa(5) ADJUSTMENTS

FOR PER CAPITA BASE PE-

22

RIOD.aIn

23

tures under paragraph (2) and excluded expendi-

24

tures under paragraph (3) for a State for the Stateas

25

per capita base period, the total amount of each type

calculating medical assistance expendi-

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1

of expenditure for the State and base period shall be

2

divided by 2.

3

aa(c) TARGET TOTAL MEDICAL ASSISTANCE EXPEND-

4

ITURES.a

5

aa(1) CALCULATION.aIn this section, the term

6

atarget total medical assistance expendituresa means,

7

for a State for a fiscal year and subject to para-

8

graph (4), the sum of the products, for each of the

9

1903A enrollee categories (as defined in subsection

10

(e)(2)), ofa

11

aa(A) the target per capita medical assist-

12

ance expenditures (as defined in paragraph (2))

13

for the enrollee category, State, and fiscal year;

14

and

15

aa(B) the number of 1903A enrollees for

16

such enrollee category, State, and fiscal year, as

17

determined under subsection (e)(4).

18

aa(2) TARGET

PER CAPITA MEDICAL ASSISTANCE

19

EXPENDITURES.aIn

20

get per capita medical assistance expendituresa

21

means, for a 1903A enrollee category and Statea

22
23

this subsection, the term atar-

aa(A) for fiscal year 2020, an amount equal
toa

24

aa(i) the provisional FY19 target per

25

capita amount for such enrollee category

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1

(as calculated under subsection (d)(5)) for

2

the State; increased by

3

aa(ii) the applicable annual inflation

4

factor (as defined in paragraph (3)) for

5

fiscal year 2020; and

6

aa(B) for each succeeding fiscal year, an

7

amount equal toa

8

aa(i) the target per capita medical as-

9

sistance expenditures (under subparagraph

10

(A) or this subparagraph) for the 1903A

11

enrollee category and State for the pre-

12

ceding fiscal year; increased by

13

aa(ii) the applicable annual inflation

14
15

factor for that succeeding fiscal year.
aa(3) APPLICABLE

16

TOR.aIn

17

inflation factora meansa

18

ANNUAL

INFLATION

FAC-

paragraph (2), the term aapplicable annual

aa(A) for fiscal years before 2025a

19

aa(i) for each of the 1903A enrollee

20

categories described in subparagraphs (C),

21

(D), and (E) of subsection (e)(2), the per-

22

centage increase in the medical care com-

23

ponent of the consumer price index for all

24

urban consumers (U.S. city average) from

ERN17282

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1

September of the previous fiscal year to

2

September of the fiscal year involved; and

3

aa(ii) for each of the 1903A enrollee

4

categories described in subparagraphs (A)

5

and (B) of subsection (e)(2), the percent-

6

age increase described in clause (i) plus 1

7

percentage point; and

8

aa(B) for fiscal years after 2024, for all

9

1903A enrollee categories, the percentage in-

10

crease in the consumer price index for all urban

11

consumers (U.S. city average) from September

12

of the previous fiscal year to September of the

13

fiscal year involved.

14

aa(4) DECREASE

IN

TARGET

EXPENDITURES

15

FOR REQUIRED EXPENDITURES BY CERTAIN POLIT-

16

ICAL SUBDIVISIONS.a

17

aa(A) IN

GENERAL.aIn

the case of a State

18

that had a DSH allotment under section

19

1923(f) for fiscal year 2016 that was more than

20

6 times the national average of such allotments

21

for all the States for such fiscal year and that

22

requires political subdivisions within the State

23

to contribute funds towards medical assistance

24

or other expenditures under the State plan

25

under this title (or under a waiver of such plan)

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1

for a fiscal year (beginning with fiscal year

2

2020), the target total medical assistance ex-

3

penditures for such State and fiscal year shall

4

be decreased by the amount that political sub-

5

divisions in the State are required to contribute

6

under the plan (or waiver) without reimburse-

7

ment from the State for such fiscal year, other

8

than contributions described in subparagraph

9

(B).

10

aa(B) EXCEPTIONS.aThe contributions de-

11

scribed in this subparagraph are the following:

12

aa(i) Contributions required by a State

13

from a political subdivision that, as of the

14

first day of the calendar year in which the

15

fiscal year involved beginsa

16

aa(I) has a population of more

17

than 5,000,000, as estimated by the

18

Bureau of the Census; and

19

aa(II) imposes a local income tax

20

upon its residents.

21

aa(ii) Contributions required by a

22

State from a political subdivision for ad-

23

ministrative expenses if the State required

24

such contributions from such subdivision

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1

without reimbursement from the State as

2

of January 1, 2017.

3

aa(5) ADJUSTMENTS

TO STATE EXPENDITURES

4

TARGETS TO PROMOTE PROGRAM EQUITY ACROSS

5

STATES.a

6

aa(A) IN

GENERAL.aBeginning

with fiscal

7

year 2020, the target per capita medical assist-

8

ance expenditures for a 1903A enrollee cat-

9

egory, State, and fiscal year, as determined

10

under paragraph (2), shall be adjusted (subject

11

to subparagraph (C)(i)) in accordance with this

12

paragraph.

13

aa(B) ADJUSTMENT

BASED ON LEVEL OF

14

PER CAPITA SPENDING FOR 1903A ENROLLEE

15

CATEGORIES.aSubject

16

with respect to a State, fiscal year, and 1903A

17

enrollee category, if the Stateas per capita cat-

18

egorical medical assistance expenditures (as de-

19

fined in subparagraph (D)) for the State and

20

category in the preceding fiscal yeara

to subparagraph (C),

21

aa(i) exceed the mean per capita cat-

22

egorical medical assistance expenditures

23

for the category for all States for such pre-

24

ceding year by not less than 25 percent,

25

the Stateas target per capita medical as-

Discussion Draft

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1

sistance expenditures for such category for

2

the fiscal year involved shall be reduced by

3

a percentage that shall be determined by

4

the Secretary but which shall not be less

5

than 0.5 percent or greater than 2 percent;

6

or

7

aa(ii) are less than the mean per capita

8

categorical medical assistance expenditures

9

for the category for all States for such pre-

10

ceding year by not less than 25 percent,

11

the Stateas target per capita medical as-

12

sistance expenditures for such category for

13

the fiscal year involved shall be increased

14

by a percentage that shall be determined

15

by the Secretary but which shall not be

16

less than 0.5 percent or greater than 2

17

percent.

18

aa(C) RULES

19

OF APPLICATION.a

aa(i) BUDGET

NEUTRALITY REQUIRE-

20

MENT.aIn

21

percentages by which to adjust Statesa tar-

22

get per capita medical assistance expendi-

23

tures for a category and fiscal year under

24

this paragraph, the Secretary shall make

25

such adjustments in a manner that does

determining the appropriate

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1

not result in a net increase in Federal pay-

2

ments under this section for such fiscal

3

year, and if the Secretary cannot adjust

4

such expenditures in such a manner there

5

shall be no adjustment under this para-

6

graph for such fiscal year.

7

aa(ii) ASSUMPTION

REGARDING STATE

8

EXPENDITURES.aFor

9

(i), in the case of a State that has its tar-

10

get per capita medical assistance expendi-

11

tures for a 1903A enrollee category and

12

fiscal year increased under this paragraph,

13

the Secretary shall assume that the cat-

14

egorical medical assistance expenditures

15

(as defined in subparagraph (D)(ii)) for

16

such State, category, and fiscal year will

17

equal such increased target medical assist-

18

ance expenditures.

19

purposes of clause

aa(iii) NONAPPLICATION

TO LOW-DEN-

20

SITY STATES.aThis

21

apply to any State that has a population

22

density of less than 15 individuals per

23

square mile, based on the most recent data

24

available from the Bureau of the Census.

paragraph shall not

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1

aa(iv) DISREGARD

OF ADJUSTMENT.a

2

Any adjustment under this paragraph to

3

target medical assistance expenditures for

4

a State, 1903A enrollee category, and fis-

5

cal year shall be disregarded when deter-

6

mining the target medical assistance ex-

7

penditures for such State and category for

8

a succeeding year under paragraph (2).

9

aa(v) APPLICATION

FOR FISCAL YEARS

10

2020 AND 2021.aIn

11

2021, the Secretary shall apply this para-

12

graph by deeming all categories of 1903A

13

enrollees to be a single category.

14

aa(D) PER

15
16

fiscal years 2020 and

CAPITA CATEGORICAL MEDICAL

ASSISTANCE EXPENDITURES.a

aa(i) IN

GENERAL.aIn

this paragraph,

17

the term aper capita categorical medical as-

18

sistance expendituresa means, with respect

19

to a State, 1903A enrollee category, and

20

fiscal year, an amount equal toa

21

aa(I) the categorical medical ex-

22

penditures (as defined in clause (ii))

23

for the State, category, and year; di-

24

vided by

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1

aa(II) the number of 1903A en-

2

rollees for the State, category, and

3

year.

4

aa(ii) CATEGORICAL

5

ANCE EXPENDITURES.aThe

6

ical

7

means, with respect to a State, 1903A en-

8

rollee category, and fiscal year, an amount

9

equal to the total medical assistance ex-

10

penditures (as defined in paragraph (2))

11

for the State and fiscal year that are at-

12

tributable to 1903A enrollees in the cat-

13

egory, excluding any excluded expenditures

14

(as defined in paragraph (3)) for the State

15

and fiscal year that are attributable to

16

1903A enrollees in the category.

17

medical

aa(d) CALCULATION

OF

MEDICAL ASSIST-

assistance

term acategorexpendituresa

FY19 PROVISIONAL TARGET

18 AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.aSub19 ject to subsection (g), the following shall apply:
20

aa(1) CALCULATION

21

CAPITA BASE PERIOD.aFor

22

retary shall calculate (and provide notice to the

23

State not later than April 1, 2018, of) the following:

24

aa(A) The amount of the adjusted total

25

medical assistance expenditures (as defined in

OF BASE AMOUNTS FOR PER

each State the Sec-

Discussion Draft

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1

subsection (b)(1)) for the State for the Stateas

2

per capita base period.

3

aa(B) The number of 1903A enrollees for

4

the State in the Stateas per capita base period

5

(as determined under subsection (e)(4)).

6

aa(C) The average per capita medical as-

7

sistance expenditures for the State for the

8

Stateas per capita base period equal toa

9
10

aa(i) the amount calculated under subparagraph (A); divided by

11
12
13

aa(ii) the number calculated under subparagraph (B).
aa(2) FISCAL

YEAR 2019 AVERAGE PER CAPITA

14

AMOUNT BASED ON INFLATING THE PER CAPITA

15

BASE PERIOD AMOUNT TO FISCAL YEAR 2019 BY CPI-

16

MEDICAL.aThe

17

year 2019 average per capita amount for each State

18

equal toa

Secretary shall calculate a fiscal

19

aa(A) the average per capita medical assist-

20

ance expenditures for the State for the Stateas

21

per capita base period (calculated under para-

22

graph (1)(C)); increased by

23

aa(B) the percentage increase in the med-

24

ical care component of the consumer price index

25

for all urban consumers (U.S. city average)

Discussion Draft

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1

from the last month of the Stateas per capita

2

base period to September of fiscal year 2019.

3

aa(3) AGGREGATE

AND

AVERAGE

EXPENDI-

4

TURES PER CAPITA FOR FISCAL YEAR 2019.aThe

5

Secretary shall calculate for each State the fol-

6

lowing:

7

aa(A) The amount of the adjusted total

8

medical assistance expenditures (as defined in

9

subsection (b)(1)) for the State for fiscal year

10

2019.

11

aa(B) The number of 1903A enrollees for

12

the State in fiscal year 2019 (as determined

13

under subsection (e)(4)).

14

aa(4) PER

CAPITA EXPENDITURES FOR FISCAL

15

YEAR 2019 FOR EACH 1903A ENROLLEE CATEGORY.a

16

The Secretary shall calculate (and provide notice to

17

each State not later than January 1, 2020, of) the

18

following:

19

aa(A)(i) For each 1903A enrollee category,

20

the amount of the adjusted total medical assist-

21

ance expenditures (as defined in subsection

22

(b)(1)) for the State for fiscal year 2019 for in-

23

dividuals in the enrollee category, calculated by

24

excluding from medical assistance expenditures

25

those expenditures attributable to expenditures

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1

described in clause (iii) or non-DSH supple-

2

mental expenditures (as defined in clause (ii)).

3

aa(ii) In this paragraph, the term anon-

4

DSH supplemental expenditurea means a pay-

5

ment to a provider under the State plan (or

6

under a waiver of the plan) thata

7

aa(I) is not made under section 1923;

8

aa(II) is not made with respect to a

9

specific item or service for an individual;

10

aa(III) is in addition to any payments

11

made to the provider under the plan (or

12

waiver) for any such item or service; and

13

aa(IV) complies with the limits for ad-

14

ditional payments to providers under the

15

plan (or waiver) imposed pursuant to sec-

16

tion 1902(a)(30)(A), including the regula-

17

tions specifying upper payment limits

18

under the State plan in part 447 of title

19

42, Code of Federal Regulations (or any

20

successor regulations).

21

aa(iii) An expenditure described in this

22

clause is an expenditure that meets the criteria

23

specified in subclauses (I), (II), and (III) of

24

clause (ii) and is authorized under section 1115

25

for the purposes of funding a delivery system

Discussion Draft

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1

reform pool, uncompensated care pool, a des-

2

ignated State health program, or any other

3

similar expenditure (as defined by the Sec-

4

retary).

5

aa(B) For each 1903A enrollee category,

6

the number of 1903A enrollees for the State in

7

fiscal year 2019 in the enrollee category (as de-

8

termined under subsection (e)(4)).

9

aa(C) For the Stateas per capita base pe-

10

riod, the Stateas non-DSH supplemental and

11

pool payment percentage is equal to the ratio

12

(expressed as a percentage) ofa

13

aa(i) the total amount of non-DSH

14

supplemental expenditures (as defined in

15

subparagraph (A)(ii) and adjusted under

16

subparagraph (E)) and payments described

17

in subparagraph (A)(iii) (and adjusted

18

under subparagraph (E)) for the State for

19

the period; to

20

aa(ii) the amount described in sub-

21

section (b)(1)(A) for the State for the

22

Stateas per capita base period.

23

aa(D) For each 1903A enrollee category an

24

average medical assistance expenditures per

Discussion Draft

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1

capita for the State for fiscal year 2019 for the

2

enrollee category equal toa

3

aa(i) the amount calculated under sub-

4

paragraph (A) for the State, increased by

5

the non-DSH supplemental and pool pay-

6

ment percentage for the State (as cal-

7

culated under subparagraph (C)); divided

8

by

9

aa(ii) the number calculated under sub-

10

paragraph (B) for the State for the en-

11

rollee category.

12

aa(E) For purposes of subparagraph (C)(i),

13

in calculating the total amount of non-DSH

14

supplemental expenditures and payments de-

15

scribed in subparagraph (A)(iii) for a State for

16

the per capita base period, the total amount of

17

such expenditures and the total amount of such

18

payments for the State and base period shall

19

each be divided by 2.

20

aa(5) PROVISIONAL

FY19 PER CAPITA TARGET

21

AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.a

22

Subject to subsection (f)(2), the Secretary shall cal-

23

culate for each State a provisional FY19 per capita

24

target amount for each 1903A enrollee category

25

equal to the average medical assistance expenditures

Discussion Draft

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1

per capita for the State for fiscal year 2019 (as cal-

2

culated under paragraph (4)(D)) for such enrollee

3

category multiplied by the ratio ofa

4

aa(A) the product ofa

5

aa(i) the fiscal year 2019 average per

6

capita amount for the State, as calculated

7

under paragraph (2); and

8

aa(ii) the number of 1903A enrollees

9

for the State in fiscal year 2019, as cal-

10

culated under paragraph (3)(B); to

11

aa(B) the amount of the adjusted total

12

medical assistance expenditures for the State

13

for fiscal year 2019, as calculated under para-

14

graph (3)(A).

15
16

aa(e) 1903A ENROLLEE; 1903A ENROLLEE CATEGORY.aSubject

to subsection (g), for purposes of this

17 section, the following shall apply:
18

aa(1) 1903A

ENROLLEE.aThe

term a1903A en-

19

rolleea means, with respect to a State and a month

20

and subject to subsection (i)(1)(B), any Medicaid

21

enrollee (as defined in paragraph (3)) for the month,

22

other than such an enrollee who for such month is

23

in any of the following categories of excluded indi-

24

viduals:

Discussion Draft

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1

aa(A) CHIP.aAn individual who is pro-

2

vided, under this title in the manner described

3

in section 2101(a)(2), child health assistance

4

under title XXI.

5

aa(B) IHS.aAn individual who receives

6

any medical assistance under this title for serv-

7

ices for which payment is made under the third

8

sentence of section 1905(b).

9

aa(C) BREAST

AND

CERVICAL

CANCER

10

SERVICES

11

vidual who is eligible for medical assistance

12

under this title only on the basis of section

13

1902(a)(10)(A)(ii)(XVIII).

14
15

ELIGIBLE

INDIVIDUAL.aAn

aa(D) PARTIAL-BENEFIT

indi-

ENROLLEES.aAn

individual whoa

16

aa(i) is an alien who is eligible for

17

medical assistance under this title only on

18

the basis of section 1903(v)(2);

19

aa(ii) is eligible for medical assistance

20

under this title only on the basis of sub-

21

clause

22

1902(a)(10)(A)(ii) (or on the basis of a

23

waiver that provides only comparable bene-

24

fits);

(XII)

or

(XXI)

of

section

Discussion Draft

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1

aa(iii) is a dual eligible individual (as

2

defined in section 1915(h)(2)(B)) and is

3

eligible for medical assistance under this

4

title (or under a waiver) only for some or

5

all of medicare cost-sharing (as defined in

6

section 1905(p)(3)); or

7

aa(iv) is eligible for medical assistance

8

under this title and for whom the State is

9

providing a payment or subsidy to an em-

10

ployer for coverage of the individual under

11

a group health plan pursuant to section

12

1906 or section 1906A (or pursuant to a

13

waiver that provides only comparable bene-

14

fits).

15

aa(E) BLIND

16

AND DISABLED CHILDREN.a

An individual whoa

17

aa(i) is a child under 19 years of age;

18

and

19

aa(ii) is eligible for medical assistance

20

under this title on the basis of being blind

21

or disabled.

22

aa(2) 1903A

ENROLLEE CATEGORY.aThe

term

23

a1903A enrollee categorya means each of the fol-

24

lowing:

Discussion Draft

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1
2
3

aa(A) ELDERLY.aA category of 1903A enrollees who are 65 years of age or older.
aa(B) BLIND

AND DISABLED.aA

category

4

of 1903A enrollees (not described in the pre-

5

vious subparagraph) whoa

6

aa(i) are 19 years of age or older; and

7

aa(ii) are eligible for medical assistance

8

under this title on the basis of being blind

9

or disabled.

10

aa(C) CHILDREN.aA category of 1903A

11

enrollees (not described in a previous subpara-

12

graph) who are children under 19 years of age.

13

aa(D) EXPANSION

ENROLLEES.aA

cat-

14

egory of 1903A enrollees (not described in a

15

previous subparagraph) who are eligible for

16

medical assistance under this title only on the

17

basis

18

(ii)(XXIII) of section 1902(a)(10)(A).

19

of

clause

aa(E) OTHER

(i)(VIII),

(ii)(XX),

or

NONELDERLY, NONDISABLED,

20

NON-EXPANSION

21

1903A enrollees who are not described in any

22

previous subparagraph.

23

aa(3) MEDICAID

ADULTS.aA

category

ENROLLEE.aThe

of

term aMed-

24

icaid enrolleea means, with respect to a State for a

25

month, an individual who is eligible for medical as-

ERN17282

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1

sistance for items or services under this title and en-

2

rolled under the State plan (or a waiver of such

3

plan) under this title for the month.

4

aa(4) DETERMINATION

OF NUMBER OF 1903A

5

ENROLLEES.aThe

6

State and fiscal year or the Stateas per capita base

7

period, and, if applicable, for a 1903A enrollee cat-

8

egory, is the average monthly number of Medicaid

9

enrollees for such State and fiscal year or base pe-

10

riod (and, if applicable, in such category) that are

11

reported through the CMSa64 report under (and

12

subject to audit under) subsection (h).

13

aa(f) SPECIAL PAYMENT RULES.a

14

number of 1903A enrollees for a

aa(1) APPLICATION

IN CASE OF RESEARCH AND

15

DEMONSTRATION PROJECTS AND OTHER WAIVERS.a

16

In the case of a State with a waiver of the State

17

plan approved under section 1115, section 1915, or

18

another provision of this title, this section shall

19

apply to medical assistance expenditures and medical

20

assistance payments under the waiver, in the same

21

manner as if such expenditures and payments had

22

been made under a State plan under this title and

23

the limitations on expenditures under this section

24

shall supersede any other payment limitations or

25

provisions (including limitations based on a per cap-

Discussion Draft

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1

ita limitation) otherwise applicable under such a

2

waiver.

3

aa(2) TREATMENT

OF STATES EXPANDING COV-

4

ERAGE AFTER FISCAL YEAR 2016.aIn

5

State that did not provide for medical assistance for

6

the 1903A enrollee category described in subsection

7

(e)(2)(D) during fiscal year 2016 but which provides

8

for such assistance for such category in a subse-

9

quent year, the provisional FY19 per capita target

10

amount for such enrollee category under subsection

11

(d)(5) shall be equal to the provisional FY19 per

12

capita target amount for the 1903A enrollee cat-

13

egory described in subsection (e)(2)(E).

14

aa(3) IN

the case of a

CASE OF STATE FAILURE TO REPORT

15

NECESSARY DATA.aIf

16

fiscal year (beginning with fiscal year 2019) fails to

17

satisfactorily submit data on expenditures and en-

18

rollees in accordance with subsection (h)(1), for such

19

fiscal year and any succeeding fiscal year for which

20

such data are not satisfactorily submitteda

a State for any quarter in a

21

aa(A) the Secretary shall calculate and

22

apply subsections (a) through (e) with respect

23

to the State as if all 1903A enrollee categories

24

for which such expenditure and enrollee data

ERN17282

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1

were not satisfactorily submitted were a single

2

1903A enrollee category; and

3

aa(B) the growth factor otherwise applied

4

under subsection (c)(2)(B) shall be decreased

5

by 1 percentage point.

6

aa(g) RECALCULATION

OF

CERTAIN AMOUNTS

FOR

7 DATA ERRORS.aThe amounts and percentage calculated
8 under paragraphs (1) and (4)(C) of subsection (d) for a
9 State for the Stateas per capita base period, and the
10 amounts of the adjusted total medical assistance expendi11 tures calculated under subsection (b) and the number of
12 Medicaid enrollees and 1903A enrollees determined under
13 subsection (e)(4) for a State for the Stateas per capita
14 base period, fiscal year 2019, and any subsequent fiscal
15 year, may be adjusted by the Secretary based upon an ap16 peal (filed by the State in such a form, manner, and time,
17 and containing such information relating to data errors
18 that support such appeal, as the Secretary specifies) that
19 the Secretary determines to be valid, except that any ad20 justment by the Secretary under this subsection for a
21 State may not result in an increase of the target total
22 medical assistance expenditures exceeding 2 percent.
23

aa(h) REQUIRED REPORTING AND AUDITING; TRANSI-

24

TIONAL INCREASE IN

25

FOR

FEDERAL MATCHING PERCENTAGE

CERTAIN ADMINISTRATIVE EXPENSES.a

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1
2

aa(1) REPORTING
aa(A) IN

OF CMSa64 DATA.a

GENERAL.aIn

addition to the

3

data required on form Group VIII on the CMSa

4

64 report form as of January 1, 2017, in each

5

CMS-64 report required to be submitted (for

6

each quarter beginning on or after October 1,

7

2018), the State shall include data on medical

8

assistance expenditures within such categories

9

of services and categories of enrollees (including

10

each 1903A enrollee category and each category

11

of excluded individuals under subsection (e)(1))

12

and the numbers of enrollees within each of

13

such enrollee categories, as the Secretary deter-

14

mines are necessary (including timely guidance

15

published as soon as possible after the date of

16

the enactment of this section) in order to imple-

17

ment this section and to enable States to com-

18

ply with the requirement of this paragraph on

19

a timely basis.

20

aa(B) REPORTING

ON

QUALIFIED

INPA-

21

TIENT PSYCHIATRIC HOSPITAL SERVICES.aNot

22

later than 60 days after the date of the enact-

23

ment of this section, the Secretary shall modify

24

the CMSa64 report form to require that States

25

submit data with respect to medical assistance

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1

expenditures for qualified inpatient psychiatric

2

hospital

3

1905(h)(3)).

4

services

(as

aa(C) REPORTING

defined

ON

in

section

CHILDREN

WITH

5

COMPLEX

6

than January 1, 2020, the Secretary shall mod-

7

ify the CMSa64 report form to require that

8

States submit data with respect to individuals

9

whoa

MEDICAL

CONDITIONS.aNot

later

10

aa(i) are enrolled in a State plan under

11

this title or title XXI or under a waiver of

12

such plan;

13

aa(ii) are under 21 years of age; and

14

aa(iii) have a chronic medical condition

15
16
17

or serious injury thata
aa(I) affects two or more body
systems;

18

aa(II) affects cognitive or physical

19

functioning (such as reducing the abil-

20

ity to perform the activities of daily

21

living, including the ability to engage

22

in movement or mobility, eat, drink,

23

communicate, or breathe independ-

24

ently); and

25

aa(III) eithera

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1

aa(aa)

requires

intensive

2

healthcare interventions (such as

3

multiple medications, therapies,

4

or durable medical equipment)

5

and intensive care coordination to

6

optimize health and avoid hos-

7

pitalizations or emergency de-

8

partment visits; or

9

aa(bb) meets the criteria for

10

medical complexity under existing

11

risk

12

using a recognized, publicly avail-

13

able pediatric grouping system

14

(such as the pediatric complex

15

conditions classification system

16

or the Pediatric Medical Com-

17

plexity Algorithm) selected by the

18

Secretary in close collaboration

19

with the State agencies respon-

20

sible

21

plans under this title and a na-

22

tional panel of pediatric, pedi-

23

atric specialty, and pediatric sub-

24

specialty experts.

adjustment

for

methodologies

administering

State

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1

aa(2) AUDITING

OF CMSa64 DATA.aThe

Sec-

2

retary shall conduct for each State an audit of the

3

number of individuals and expenditures reported

4

through the CMSa64 report for the Stateas per cap-

5

ita base period, fiscal year 2019, and each subse-

6

quent fiscal year, which audit may be conducted on

7

a representative sample (as determined by the Sec-

8

retary).

9

aa(3) AUDITING

OF STATE SPENDING.aThe

In-

10

spector General of the Department of Health and

11

Human Services shall conduct an audit (which shall

12

be conducted using random sampling, as determined

13

by the Inspector General) of each Stateas spending

14

under this section not less than once every 3 years.

15

aa(4)

TEMPORARY

INCREASE

IN

FEDERAL

SUPPORT

IMPROVED

16

MATCHING

17

DATA REPORTING SYSTEMS FOR FISCAL YEARS 2018

18

AND 2019.aIn

19

its per capita base period the most recent 8 consecu-

20

tive quarter period for which the data necessary to

21

make the determinations required under this section

22

is available, for amounts expended during calendar

23

quarters beginning on or after October 1, 2017, and

24

before October 1, 2019a

PERCENTAGE

TO

the case of any State that selects as

Discussion Draft

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1

aa(A) the Federal matching percentage ap-

2

plied under section 1903(a)(3)(A)(i) shall be in-

3

creased by 10 percentage points to 100 percent;

4

aa(B) the Federal matching percentage ap-

5

plied under section 1903(a)(3)(B) shall be in-

6

creased by 25 percentage points to 100 percent;

7

and

8

aa(C) the Federal matching percentage ap-

9

plied under section 1903(a)(7) shall be in-

10

creased by 10 percentage points to 60 percent

11

but only with respect to amounts expended that

12

are attributable to a Stateas additional adminis-

13

trative expenditures to implement the data re-

14

quirements of paragraph (1).

15

aa(5) HHS

REPORT ON ADOPTION OF TaMSIS

16

DATA.aNot

17

retary shall submit to Congress a report making rec-

18

ommendations as to whether data from the Trans-

19

formed Medicaid Statistical Information System

20

would be preferable to CMSa64 report data for pur-

21

poses of making the determinations necessary under

22

this section.aa.

later than January 1, 2025, the Sec-

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1
2

SEC. 134. FLEXIBLE BLOCK GRANT OPTION FOR STATES.

Title XIX of the Social Security Act, as amended by

3 section 133, is further amended by inserting after section
4 1903A the following new section:
5
6

aaSEC. 1903B. MEDICAID FLEXIBILITY PROGRAM.

aa(a) IN GENERAL.aBeginning with fiscal year 2020,

7 any State (as defined in subsection (e)) that has an appli8 cation approved by the Secretary under subsection (b)
9 may conduct a Medicaid Flexibility Program to provide
10 targeted health assistance to program enrollees.
11
12

aa(b) STATE APPLICATION.a
aa(1) IN

GENERAL.aTo

be eligible to conduct a

13

Medicaid Flexibility Program, a State shall submit

14

an application to the Secretary that meets the re-

15

quirements of this subsection.

16

aa(2) CONTENTS

OF APPLICATION.aAn

applica-

17

tion under this subsection shall include the fol-

18

lowing:

19

aa(A) A description of the proposed Med-

20

icaid Flexibility Program and how the State will

21

satisfy the requirements described in subsection

22

(d).

23
24

aa(B) The proposed conditions for eligibility
of program enrollees.

25

aa(C) A description of the types, amount,

26

duration, and scope of services which will be of-

ERN17282

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87
1

fered as targeted health assistance under the

2

program, including a description of the pro-

3

posed package of services which will be provided

4

to program enrollees to whom the State would

5

otherwise be required to make medical assist-

6

ance available under section 1902(a)(10)(A)(i).

7

aa(D) A description of how the State will

8

notify individuals currently enrolled in the State

9

plan for medical assistance under this title of

10
11
12

the transition to such program.
aa(E) Statements certifying that the State
agrees toa

13

aa(i) submit regular enrollment data

14

with respect to the program to the Centers

15

for Medicare & Medicaid Services at such

16

time and in such manner as the Secretary

17

may require;

18

aa(ii) submit timely and accurate data

19

to the Transformed Medicaid Statistical

20

Information System (TaMSIS);

21

aa(iii) report annually to the Secretary

22

on adult health quality measures imple-

23

mented under the program and informa-

24

tion on the quality of health care furnished

25

to program enrollees under the program as

ERN17282

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88
1

part of the annual report required under

2

section 1139B(d)(1);

3

aa(iv) submit such additional informa-

4

tion not described in any of the preceding

5

clauses of this subparagraph but which the

6

Secretary determines is necessary for mon-

7

itoring, evaluation, or program integrity

8

purposes, includinga

9

aa(I) survey data, such as the

10

data from Consumer Assessment of

11

Healthcare Providers and Systems

12

(CAHPS) surveys;

13

aa(II) birth certificate data; and

14

aa(III) clinical patient data for

15

quality measurements which may not

16

be present in a claim, such as labora-

17

tory data, body mass index, and blood

18

pressure; and

19

aa(v) on an annual basis, conduct a re-

20

port evaluating the program and make

21

such report available to the public.

22

aa(F) An information technology systems

23

plan demonstrating that the State has the capa-

24

bility to support the technological administra-

ERN17282

Discussion Draft

S.L.C.

89
1

tion of the program and comply with reporting

2

requirements under this section.

3
4

aa(G) A statement of the goals of the proposed program, which shall includea

5

aa(i) goals related to quality, access,

6

rate of growth targets, consumer satisfac-

7

tion, and outcomes;

8

aa(ii) a plan for monitoring and evalu-

9

ating the program to determine whether

10

such goals are being met; and

11

aa(iii) a proposed process for the State,

12

in consultation with the Centers for Medi-

13

care & Medicaid Services, to take remedial

14

action to make progress on unmet goals.

15

aa(H) Such other information as the Sec-

16

retary may require.

17

aa(3) STATE

18

aa(A) IN

NOTICE AND COMMENT PERIOD.a
GENERAL.aBefore

submitting an

19

application under this subsection, a State shall

20

make the application publicly available for a 30

21

day notice and comment period.

22

aa(B) NOTICE

AND COMMENT PROCESS.a

23

During the notice and comment period de-

24

scribed in subparagraph (A), the State shall

25

provide opportunities for a meaningful level of

Discussion Draft

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1

public input, which shall include public hearings

2

on the proposed Medicaid Flexibility Program.

3

aa(4) FEDERAL

NOTICE

AND

COMMENT

PE-

4

RIOD.aThe

5

plication to conduct a Medicaid Flexibility Program

6

without making such application publicly available

7

for a 30 day notice and comment period.

8
9

Secretary shall not approve of any ap-

aa(5) TIMELINE
aa(A) IN

FOR SUBMISSION.a

GENERAL.aA

State may submit

10

an application under this subsection to conduct

11

a Medicaid Flexibility Program that would

12

begin in the next fiscal year at any time, sub-

13

ject to subparagraph (B).

14

aa(B) DEADLINES.aEach year beginning

15

with 2019, the Secretary shall specify a dead-

16

line for submitting an application under this

17

subsection to conduct a Medicaid Flexibility

18

Program that would begin in the next fiscal

19

year, but such deadline shall not be earlier than

20

60 days after the date that the Secretary pub-

21

lishes the amounts of State block grants as re-

22

quired under subsection (c)(4).

23
24
25

aa(c) FINANCING.a
aa(1) IN

GENERAL.aFor

each fiscal year during

which a State is conducting a Medicaid Flexibility

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1

Program, the State shall receive, instead of amounts

2

otherwise payable to the State under this title for

3

medical

4

amount specified in paragraph (3)(A).

5

assistance

aa(2) AMOUNT

6

for

program

enrollees,

the

OF BLOCK GRANT FUNDS.a

aa(A) FOR

INITIAL YEAR.aSubject

to sub-

7

paragraph (C), for the first fiscal year in which

8

a State conducts a Medicaid Flexibility Pro-

9

gram, the block grant amount under this para-

10

graph for the State and year shall be equal to

11

the Federal average medical assistance match-

12

ing

13

1903A(a)(4)) for the State and year multiplied

14

by the product ofa

percentage

(as

defined

in

section

15

aa(i) the target per capita medical as-

16

sistance expenditures (as defined in section

17

1903A(c)(2)) for the State and year for

18

the enrollee category described in section

19

1903A(e)(2)(E); and

20

aa(ii) the number of 1903A enrollees in

21

such category for the State for the second

22

fiscal year preceding such first fiscal year,

23

increased by the percentage increase in

24

State population from such second pre-

25

ceding fiscal year to such first fiscal year,

Discussion Draft

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1

based on the best available estimates of the

2

Bureau of the Census.

3

aa(B) FOR

ANY SUBSEQUENT YEAR.aFor

4

any fiscal year that is not the first fiscal year

5

in which a State conducts a Medicaid Flexibility

6

Program, the block grant amount under this

7

paragraph for the State and year shall be equal

8

to the block grant amount determined for the

9

State for the most recent previous fiscal year in

10

which the State conducted a Medicaid Flexi-

11

bility Program, except that such amount shall

12

be increased by the percentage increase in the

13

consumer price index for all urban consumers

14

(U.S. city average) from April of the second fis-

15

cal year preceding the fiscal year involved to

16

April of the fiscal year preceding the fiscal year

17

involved.

18

aa(C) CAP

ON TOTAL POPULATION OF 1903A

19

ENROLLEES FOR PURPOSES OF BLOCK GRANT

20

CALCULATION.a

21

aa(i) IN

GENERAL.aIn

calculating the

22

amount of a block grant for the first year

23

in which a State conducts a Medicaid

24

Flexibility Program under subparagraph

25

(A), the total number of 1903A enrollees

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1

in the 1903A enrollee category described in

2

section 1903A(e)(2)(E) for the State and

3

year shall not exceed the adjusted number

4

of base period non-expansion enrollees for

5

the State (as defined in clause (ii)).

6

aa(ii) ADJUSTED

NUMBER

OF

2016

ENROLLEES.aThe

term

7

NON-EXPANSION

8

aadjusted number of base period non-ex-

9

pansion enrolleesa means, with respect to a

10

State, the number of 1903A enrollees in

11

the enrollee category described in section

12

1903A(e)(2)(E) for the State for the

13

Stateas per capita base period (as deter-

14

mined under section 1903A(e)(4)), in-

15

creased by the percentage increase, if any,

16

in the total State population from the last

17

April in the Stateas per capita base period

18

to April of the fiscal year preceding the fis-

19

cal year involved (determined using the

20

best available data from the Bureau of the

21

Census) plus 3 percentage points.

22

aa(D)

23

FUNDS.a

24
25

AVAILABILITY

aa(i) IN

OF

GENERAL.aTo

ROLLOVER

the extent that

the block grant amount available to a

ERN17282

Discussion Draft

S.L.C.

94
1

State for a fiscal year under this para-

2

graph exceeds the amount of Federal pay-

3

ments made to the State for such fiscal

4

year under paragraph (3)(A), the Sec-

5

retary shall make such funds available to

6

the State for the succeeding fiscal year if

7

the Statea

8

aa(I) satisfies the State mainte-

9

nance of effort requirement under

10

paragraph (3)(B); and

11

aa(II) is conducting a Medicaid

12

Flexibility Program in such suc-

13

ceeding fiscal year.

14

aa(ii)

USE

OF

FUNDS.aSection

15

1903(i)(17) shall not apply to funds made

16

available to a State under this subpara-

17

graph and a State may use such funds for

18

other State health programs (as defined or

19

approved by the Secretary) or for any

20

other purpose which is consistent with the

21

quality standards established by the Sec-

22

retary under clause (iii).

23

aa(iii) QUALITY

24
25

aa(I) IN

STANDARDS.a
GENERAL.aNot

later

than January 1, 2020, the Secretary

ERN17282

Discussion Draft

S.L.C.

95
1

shall establish quality standards appli-

2

cable to a Stateas use of funds made

3

available to the State under this sub-

4

paragraph.

5

aa(II) ALLOWABLE

USES.aIn

es-

6

tablishing quality standards under

7

this clause, the Secretary shall not

8

prohibit a State from using such

9

funds fora

10

aa(aa) a program that is not

11

related to health care, provided

12

that using the funds for such

13

program is otherwise consistent

14

with the standards; or

15

aa(bb) the State maintenance

16

of effort expenditures required

17

under paragraph (3)(B).

18
19
20

aa(3) FEDERAL

PAYMENT AND STATE MAINTE-

NANCE OF EFFORT.a

aa(A) FEDERAL

PAYMENT.aSubject

to sub-

21

paragraph (D), the Secretary shall pay to each

22

State conducting a Medicaid Flexibility Pro-

23

gram under this section for a fiscal year, from

24

its block grant amount under paragraph (2) for

25

such year, an amount for each quarter of such

Discussion Draft

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1

year equal to the Federal average medical as-

2

sistance percentage (as defined in section

3

1903A(a)(4)) of the total amount expended

4

under the program during such quarter, and

5

the State is responsible for the balance of the

6

funds to carry out such program.

7

aa(B) STATE

8

EXPENDITURES.aFor

9

State is conducting a Medicaid Flexibility Pro-

10

gram, the State shall make expenditures for

11

targeted health assistance under the program in

12

an amount equal to the product ofa

MAINTENANCE OF EFFORT

each year during which a

13

aa(i) the block grant amount deter-

14

mined for the State and year under para-

15

graph (2); and

16

aa(ii) the enhanced FMAP described in

17

the first sentence of section 2105(b) for

18

the State and year.

19

aa(C)

REDUCTION

IN

BLOCK

GRANT

20

AMOUNT FOR STATES FAILING TO MEET MOE

21

REQUIREMENT.a

22

aa(i) IN

GENERAL.aIn

the case of a

23

State conducting a Medicaid Flexibility

24

Program that makes expenditures for tar-

25

geted health assistance under the program

ERN17282

Discussion Draft

S.L.C.

97
1

for a fiscal year in an amount that is less

2

than the required amount for the fiscal

3

year under subparagraph (B), the amount

4

of the block grant determined for the State

5

under paragraph (2) for the succeeding fis-

6

cal year shall be reduced by the amount by

7

which such expenditures are less than such

8

required amount.

9

aa(ii) DISREGARD

OF REDUCTION.a

10

For purposes of determining the amount of

11

a State block grant under paragraph (2),

12

any reduction made under this subpara-

13

graph to a Stateas block grant amount in

14

a previous fiscal year shall be disregarded.

15

aa(iii) APPLICATION

TO STATES THAT

16

TERMINATE PROGRAM.aIn

17

State described in clause (i) that termi-

18

nates the State Medicaid Flexibility Pro-

19

gram under subsection (d)(2)(B) and such

20

termination is effective with the end of the

21

fiscal year in which the State fails to make

22

the required amount of expenditures under

23

subparagraph (B), the reduction amount

24

determined for the State and succeeding

the case of a

Discussion Draft

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1

fiscal year under clause (i) shall be treated

2

as an overpayment under this title.

3

aa(D) REDUCTION

FOR NONCOMPLIANCE.a

4

If the Secretary determines that a State con-

5

ducting a Medicaid Flexibility Program is not

6

complying with the requirements of this section,

7

the Secretary may withhold payments, reduce

8

payments, or recover previous payments to the

9

State under this section as the Secretary deems

10

appropriate.

11

aa(4) DETERMINATION

AND PUBLICATION OF

12

BLOCK GRANT AMOUNT.aBeginning

13

each year thereafter, the Secretary shall determine

14

for each State, regardless of whether the State is

15

conducting a Medicaid Flexibility Program or has

16

submitted an application to conduct such a program,

17

the amount of the block grant for the State under

18

paragraph (2) which would apply for the upcoming

19

fiscal year if the State were to conduct such a pro-

20

gram in such fiscal year, and shall publish such de-

21

terminations not later than June 1 of each year.

22

aa(d) PROGRAM REQUIREMENTS.a

23
24

aa(1) IN

GENERAL.aNo

in 2019 and

payment shall be made

under this section to a State conducting a Medicaid

Discussion Draft

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1

Flexibility Program unless such program meets the

2

requirements of this subsection.

3
4

aa(2) TERM

OF PROGRAM.a

aa(A) IN

GENERAL.aA

State Medicaid

5

Flexibility Program approved under subsection

6

(b)a

7
8

aa(i) shall be conducted for not less
than 1 program period;

9

aa(ii) at the option of the State, may

10

be continued for succeeding program peri-

11

ods without resubmitting an application

12

under subsection (b), provided thata

13

aa(I) the State provides notice to

14

the Secretary of its decision to con-

15

tinue the program; and

16

aa(II) no significant changes are

17

made to the program; and

18

aa(iii) shall be subject to termination

19

only by the State, which may terminate the

20

program by making an election under sub-

21

paragraph (B).

22

aa(B) ELECTION

23
24
25

TO

TERMINATE

PRO-

GRAM.a

aa(i) IN

GENERAL.aSubject

to clause

(ii), a State conducting a Medicaid Flexi-

Discussion Draft

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1

bility Program may elect to terminate the

2

program effective with the first day after

3

the end of the program period in which the

4

State makes the election.

5

aa(ii) TRANSITION

PLAN

REQUIRE-

6

MENT.aA

7

nate a Medicaid Flexibility Program unless

8

the State has in place an appropriate tran-

9

sition plan approved by the Secretary.

10

State may not elect to termi-

aa(iii) EFFECT

OF TERMINATION.aIf

a

11

State elects to terminate a Medicaid Flexi-

12

bility Program, the per capita cap limita-

13

tions under section 1903A shall apply ef-

14

fective with the day described in clause (i),

15

and such limitations shall be applied as if

16

the State had never conducted a Medicaid

17

Flexibility Program.

18
19
20

aa(3) PROVISION

OF TARGETED HEALTH ASSIST-

ANCE.a

aa(A) IN

GENERAL.aA

State Medicaid

21

Flexibility Program shall provide targeted

22

health assistance to program enrollees and such

23

assistance shall be instead of medical assistance

24

which would otherwise be provided to the enroll-

25

ees under this title.

ERN17282

Discussion Draft

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101
1

aa(B) CONDITIONS

2

aa(i) IN

FOR ELIGIBILITY.a

GENERAL.aA

State con-

3

ducting a Medicaid Flexibility Program

4

shall establish conditions for eligibility of

5

program enrollees, which shall be instead

6

of other conditions for eligibility under this

7

title, except that the program must provide

8

for eligibility for program enrollees to

9

whom the State would otherwise be re-

10

quired to make medical assistance available

11

under section 1902(a)(10)(A)(i).

12

aa(ii) MAGI.aAny determination of

13

income necessary to establish the eligibility

14

of a program enrollee for purposes of a

15

State Medicaid Flexibility Program shall

16

be made using modified adjusted gross in-

17

come

18

1902(e)(14).

19
20

in

aa(4) BENEFITS

accordance

with

section

AND SERVICES.a

aa(A) REQUIRED

SERVICES.aIn

the case of

21

program enrollees to whom the State would oth-

22

erwise be required to make medical assistance

23

available under section 1902(a)(10)(A)(i), a

24

State conducting a Medicaid Flexibility Pro-

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102
1

gram shall provide as targeted health assistance

2

the following types of services:

3
4

aa(i) Inpatient and outpatient hospital
services.

5

aa(ii) Laboratory and X-ray services.

6

aa(iii) Nursing facility services for indi-

7

viduals aged 21 and older.

8

aa(iv) Physician services.

9

aa(v) Home health care services (in-

10

cluding home nursing services, medical

11

supplies, equipment, and appliances).

12
13

aa(vi) Rural health clinic services (as
defined in section 1905(l)(1)).

14

aa(vii) Federally-qualified health center

15

services (as defined in section 1905(l)(2)).

16

aa(viii) Family planning services and

17

supplies.

18

aa(ix) Nurse midwife services.

19

aa(x) Certified pediatric and family

20
21
22
23
24
25

nurse practitioner services.
aa(xi) Freestanding birth center services (as defined in section 1905(l)(3)).
aa(xii) Emergency medical transportation.
aa(xiii) Non-cosmetic dental services.

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1

aa(xiv) Pregnancy-related services, in-

2

cluding postpartum services for the 12-

3

week period beginning on the last day of a

4

pregnancy.

5

aa(B) OPTIONAL

BENEFITS.aA

State may,

6

at its option, provide services in addition to the

7

services described in subparagraph (A) as tar-

8

geted health assistance under a Medicaid Flexi-

9

bility Program.

10

aa(C) BENEFIT

11

aa(i)

IN

PACKAGES.a
GENERAL.aThe

targeted

12

health assistance provided by a State to

13

any group of program enrollees under a

14

Medicaid Flexibility Program shall have an

15

aggregate actuarial value that is equal to

16

at least 95 percent of the aggregate actu-

17

arial value of the benchmark coverage de-

18

scribed in subsection (b)(1) of section 1937

19

or

20

scribed in subsection (b)(2) of such sec-

21

tion, as such subsections were in effect

22

prior to the enactment of the Patient Pro-

23

tection and Affordable Care Act.

benchmark-equivalent

24

aa(ii) AMOUNT,

25

OF BENEFITS.aSubject

coverage

de-

DURATION, AND SCOPE

to clause (i), the

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1

State shall determine the amount, dura-

2

tion, and scope with respect to services

3

provided as targeted health assistance

4

under a Medicaid Flexibility Program, in-

5

cluding with respect to services that are re-

6

quired to be provided to certain program

7

enrollees under subparagraph (A) except

8

as otherwise provided under such subpara-

9

graph.

10

aa(iii) MENTAL

HEALTH

AND

SUB-

11

STANCE USE DISORDER COVERAGE AND

12

PARITY.aThe

13

provided by a State to program enrollees

14

under a Medicaid Flexibility Program shall

15

include mental health services and sub-

16

stance use disorder services and the finan-

17

cial requirements and treatment limitations

18

applicable to such services under the pro-

19

gram shall comply with the requirements

20

of section 2726 of the Public Health Serv-

21

ice Act in the same manner as such re-

22

quirements apply to a group health plan.

23

targeted health assistance

aa(iv) PRESCRIPTION

DRUGS.aIf

the

24

targeted health assistance provided by a

25

State to program enrollees under a Med-

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105
1

icaid Flexibility Program includes assist-

2

ance for covered outpatient drugs, such

3

drugs shall be subject to a rebate agree-

4

ment that complies with the requirements

5

of section 1927, and any requirements ap-

6

plicable to medical assistance for covered

7

outpatient drugs under a State plan (in-

8

cluding the requirement that the State pro-

9

vide information to a manufacturer) shall

10

apply in the same manner to targeted

11

health assistance for covered outpatient

12

drugs under a Medicaid Flexibility Pro-

13

gram.

14

aa(D) COST

SHARING.aA

State conducting

15

a Medicaid Flexibility Program may impose

16

premiums, deductibles, cost-sharing, or other

17

similar charges, except that the total annual ag-

18

gregate amount of all such charges imposed

19

with respect to all program enrollees in a family

20

shall not exceed 5 percent of the familyas in-

21

come for the year involved.

22

aa(5) ADMINISTRATION

OF

PROGRAM.aEach

23

State conducting a Medicaid Flexibility Program

24

shall do the following:

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1

aa(A) SINGLE

AGENCY.aDesignate

a single

2

State agency responsible for administering the

3

program.

4

aa(B) ENROLLMENT

SIMPLIFICATION AND

5

COORDINATION WITH STATE HEALTH INSUR-

6

ANCE EXCHANGES.aProvide

7

rollment processes (such as online enrollment

8

and reenrollment and electronic verification)

9

and coordination with State health insurance

10
11

for simplified en-

exchanges.
aa(C) BENEFICIARY

PROTECTIONS.aEstab-

12

lish a fair process (which the State shall de-

13

scribe in the application required under sub-

14

section (b)) for individuals to appeal adverse

15

eligibility determinations with respect to the

16

program.

17

aa(6) APPLICATION

18

aa(A) IN

OF REST OF TITLE XIX.a

GENERAL.aTo

the extent that a

19

provision of this section is inconsistent with an-

20

other provision of this title, the provision of this

21

section shall apply.

22

aa(B) APPLICATION

OF SECTION 1903A.a

23

With respect to a State that is conducting a

24

Medicaid Flexibility Program, section 1903A

25

shall be applied as if program enrollees were

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107
1

not 1903A enrollees for each program period

2

during which the State conducts the program.

3
4
5

aa(C) WAIVERS

AND STATE PLAN AMEND-

MENTS.a

aa(i) IN

GENERAL.aIn

the case of a

6

State conducting a Medicaid Flexibility

7

Program that has in effect a waiver or

8

State plan amendment, such waiver or

9

amendment shall not apply with respect to

10

the program, targeted health assistance

11

provided under the program, or program

12

enrollees.

13

aa(ii) REPLICATION

OF

WAIVER

OR

14

AMENDMENT.aIn

15

Flexibility Program, a State may mirror

16

provisions of a waiver or State plan

17

amendment described in clause (i) in the

18

program to the extent that such provisions

19

are otherwise consistent with the require-

20

ments of this section.

21

aa(iii) EFFECT

designing a Medicaid

OF TERMINATION.aIn

22

the case of a State described in clause (i)

23

that terminates its program under sub-

24

section (d)(2)(B), any waiver or amend-

25

ment which was limited pursuant to sub-

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1

paragraph (A) shall cease to be so limited

2

effective with the effective date of such ter-

3

mination.

4

aa(D) NONAPPLICATION

OF PROVISIONS.a

5

With respect to the design and implementation

6

of Medicaid Flexibility Programs conducted

7

under this section, paragraphs (1), (10)(B),

8

(17), and (23) of section 1902(a), as well as

9

any other provision of this title (except for this

10

section and as otherwise provided by this sec-

11

tion) that the Secretary deems appropriate,

12

shall not apply.

13
14

aa(e) DEFINITIONS.aFor purposes of this section:
aa(1) MEDICAID

FLEXIBILITY PROGRAM.aThe

15

term aMedicaid Flexibility Programa means a State

16

program for providing targeted health assistance to

17

program enrollees funded by a block grant under

18

this section.

19
20

aa(2) PROGRAM
aa(A) IN

ENROLLEE.a
GENERAL.aThe

term aprogram

21

enrolleea means, with respect to a State that is

22

conducting a Medicaid Flexibility Program, an

23

individual who is a 1903A enrollee (as defined

24

in section 1903A(e)(1)) who is in the 1903A

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109
1

enrollee

2

1903A(e)(2)(E).

3

aa(B) RULE

category

described

in

section

OF CONSTRUCTION.aFor

pur-

4

poses of section 1903A(e)(3), eligibility and en-

5

rollment of an individual under a Medicaid

6

Flexibility Program shall be deemed to be eligi-

7

bility and enrollment under a State plan (or

8

waiver of such plan) under this title.

9

aa(3) PROGRAM

PERIOD.aThe

term aprogram

10

perioda means, with respect to a State Medicaid

11

Flexibility Program, a period of 5 consecutive fiscal

12

years that begins with eithera

13
14

aa(A) the first fiscal year in which the State
conducts the program; or

15

aa(B) the next fiscal year in which the

16

State conducts such a program that begins

17

after the end of a previous program period.

18

aa(4) STATE.aThe term aStatea means one of

19
20

the 50 States or the District of Columbia.
aa(5) TARGETED

HEALTH

ASSISTANCE.aThe

21

term atargeted health assistancea means assistance

22

for health-care-related items and medical services for

23

program enrollees.aa.

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1

SEC. 135. MEDICAID AND CHIP QUALITY PERFORMANCE

2
3

BONUS PAYMENTS.

Section 1903 of the Social Security Act (42 U.S.C.

4 1396b) is amended by adding at the end the following new
5 subsection:
6
7

aa(aa) QUALITY PERFORMANCE BONUS PAYMENTS.a
aa(1) INCREASED

FEDERAL SHARE.aWith

re-

8

spect to each of fiscal years 2023 through 2026, in

9

the case of one of the 50 States or the District of

10

Columbia (each referred to in this subsection as a

11

aStatea) thata

12

aa(A) equals or exceeds the qualifying

13

amount (as established by the Secretary) of

14

lower than expected aggregate medical assist-

15

ance expenditures (as defined in paragraph (4))

16

for that fiscal year; and

17

aa(B) submits to the Secretary, in accord-

18

ance with such manner and format as specified

19

by the Secretary and for the performance pe-

20

riod (as defined by the Secretary) for such fis-

21

cal yeara

22

aa(i) information on the applicable

23

quality measures identified under para-

24

graph (3) with respect to each category of

25

Medicaid eligible individuals under the

26

State plan or a waiver of such plan; and

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1

aa(ii) a plan for spending a portion of

2

additional funds resulting from application

3

of this subsection on quality improvement

4

within the State plan under this title or

5

under a waiver of such plan,

6

the Federal matching percentage otherwise ap-

7

plied under subsection (a)(7) for such fiscal

8

year shall be increased by such percentage (as

9

determined by the Secretary) so that the aggre-

10

gate amount of the resulting increase pursuant

11

to this subsection for the State and fiscal year

12

does not exceed the State allotment established

13

under paragraph (2) for the State and fiscal

14

year.

15

aa(2) ALLOTMENT

DETERMINATION.aThe

Sec-

16

retary shall establish a formula for computing State

17

allotments under this paragraph for each fiscal year

18

described in paragraph (1) such thata

19

aa(A) such an allotment to a State is deter-

20

mined based on the performance, including im-

21

provement, of such State under this title and

22

title XXI with respect to the quality measures

23

submitted under paragraph (3) by such State

24

for the performance period (as defined by the

25

Secretary) for such fiscal year; and

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1

aa(B) the total of the allotments under this

2

paragraph for all States for the period of the

3

fiscal years described in paragraph (1) is equal

4

to $8,000,000,000.

5

aa(3)

QUALITY

MEASURES

REQUIRED

FOR

6

BONUS PAYMENTS.aFor

7

the Secretary shall, pursuant to rulemaking and

8

after consultation with State agencies administering

9

State plans under this title, identify and publish

10

(and update as necessary) peer-reviewed quality

11

measures (which shall include health care and long-

12

term care outcome measures and may include the

13

quality measures that are overseen or developed by

14

the National Committee for Quality Assurance or

15

the Agency for Healthcare Research and Quality or

16

that are identified under section 1139A or 1139B)

17

that are quantifiable, objective measures that take

18

into account the clinically appropriate measures of

19

quality for different types of patient populations re-

20

ceiving benefits or services under this title or title

21

XXI.

22

aa(4) LOWER

purposes of this subsection,

THAN

EXPECTED

AGGREGATE

23

MEDICAL ASSISTANCE EXPENDITURES.aIn

24

section, the term alower than expected aggregate

this sub-

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1

medical assistance expendituresa means, with respect

2

to a State the amount (if any) by whicha

3

aa(A) the amount of the adjusted total med-

4

ical assistance expenditures for the State and

5

fiscal year determined in section 1903A(b)(1)

6

without regard to the 1903A enrollee category

7

described in section 1903A(e)(2)(E); is less

8

than

9

aa(B) the amount of the target total med-

10

ical assistance expenditures for the State and

11

fiscal year determined in section 1903A(c) with-

12

out regard to the 1903A enrollee category de-

13

scribed in section 1903A(e)(2)(E).aa.

14
15
16
17

SEC. 136. GRANDFATHERING CERTAIN MEDICAID WAIVERS;
PRIORITIZATION OF HCBS WAIVERS.

(a) MANAGED CARE WAIVERS.a
(1) IN

GENERAL.aIn

the case of a State with

18

a grandfathered managed care waiver, the State

19

may, at its option through a State plan amendment,

20

continue to implement the managed care delivery

21

system that is the subject of such waiver in per-

22

petuity under the State plan under title XIX of the

23

Social Security Act (or a waiver of such plan) with-

24

out submitting an application to the Secretary for a

25

new waiver to implement such managed care delivery

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114
1

system, so long as the terms and conditions of the

2

waiver involved (other than such terms and condi-

3

tions that relate to budget neutrality as modified

4

pursuant to section 1903A(f)(1) of the Social Secu-

5

rity Act) are not modified.

6
7

(2) MODIFICATIONS.a
(A) IN

GENERAL.aIf

a State with a

8

grandfathered managed care waiver seeks to

9

modify the terms or conditions of such a waiv-

10

er, the State shall submit to the Secretary an

11

application for approval of a new waiver under

12

such modified terms and conditions.

13

(B) APPROVAL

14

(i) IN

OF MODIFICATION.a

GENERAL.aAn

application de-

15

scribed in subparagraph (A) is deemed ap-

16

proved unless the Secretary, not later than

17

90 days after the date on which the appli-

18

cation is submitted, submits to the Statea

19

(I) a denial; or

20

(II) a request for more informa-

21

tion regarding the application.

22

(ii) ADDITIONAL

INFORMATION.aIf

23

the Secretary requests additional informa-

24

tion, the Secretary has 30 days after a

25

State submission in response to the Sec-

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1

retaryas request to deny the application or

2

request more information.

3

(3) GRANDFATHERED

MANAGED CARE WAIVER

4

DEFINED.aIn

5

fathered managed care waiveraa means the provisions

6

of a waiver or an experimental, pilot, or demonstra-

7

tion project that relate to the authority of a State

8

to implement a managed care delivery system under

9

the State plan under title XIX of such Act (or under

10

a waiver of such plan under section 1115 of such

11

Act) thata

this subsection, the term aagrand-

12

(A) is approved by the Secretary of Health

13

and Human Services under section 1915(b),

14

1932, or 1115(a)(1) of the Social Security Act

15

(42 U.S.C. 1396n(b), 1396ua2, 1315(a)(1)) as

16

of January 1, 2017; and

17
18
19

(B) has been renewed by the Secretary not
less than 1 time.
(b) HCBS WAIVERS.aThe Secretary of Health and

20 Human Services shall implement procedures encouraging
21 States to adopt or extend waivers related to the authority
22 of a State to make medical assistance available for home
23 and community-based services under the State plan under
24 title XIX of the Social Security Act if the State determines
25 that such waivers would improve patient access to services.

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1
2

SEC. 137. COORDINATION WITH STATES.

Title XIX of the Social Security Act is amended by

3 inserting after section 1904 (42 U.S.C. 1396d) the fol4 lowing:
5
6

aaCOORDINATION

WITH STATES

aaSEC. 1904A. No proposed rule (as defined in section

7 551(4) of title 5, United States Code) implementing or
8 interpreting any provision of this title shall be finalized
9 on or after January 1, 2018, unless the Secretarya
10

aa(1) provides for a process under which the

11

Secretary or the Secretaryas designee solicits advice

12

from each Stateas State agency responsible for ad-

13

ministering the State plan under this title (or a

14

waiver of such plan) and State Medicaid Directora

15

aa(A) on a regular, ongoing basis on mat-

16

ters relating to the application of this title that

17

are likely to have a direct effect on the oper-

18

ation or financing of State plans under this title

19

(or waivers of such plans); and

20

aa(B) prior to submission of any final pro-

21

posed rule, plan amendment, waiver request, or

22

proposal for a project that is likely to have a di-

23

rect effect on the operation or financing of

24

State plans under this title (or waivers of such

25

plans);

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1

aa(2) accepts and considers written and oral

2

comments from a bipartisan, nonprofit, professional

3

organization that represents State Medicaid Direc-

4

tors, and from any State agency administering the

5

plan under this title, regarding such proposed rule;

6

and

7

aa(3) incorporates in the preamble to the pro-

8

posed rule a summary of comments referred to in

9

paragraph (2) and the Secretaryas response to such

10
11
12
13

comments.aa.
SEC. 138. OPTIONAL ASSISTANCE FOR CERTAIN INPATIENT
PSYCHIATRIC SERVICES.

(a) STATE OPTION.aSection 1905 of the Social Se-

14 curity Act (42 U.S.C. 1396d) is amendeda
15
16
17
18

(1) in subsection (a)a
(A) in paragraph (16)a
(i) by striking aaand, (B)aa and inserting aa(B)aa; and

19

(ii) by inserting before the semicolon

20

at the end the following: aa, and (C) subject

21

to subsection (h)(4), qualified inpatient

22

psychiatric hospital services (as defined in

23

subsection (h)(3)) for individuals who are

24

over 21 years of age and under 65 years

25

of ageaa; and

Discussion Draft

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1

(B) in the subdivision (B) that follows

2

paragraph (29), by inserting aa(other than serv-

3

ices described in subparagraph (C) of para-

4

graph (16) for individuals described in such

5

subparagraph)aa after aapatient in an institution

6

for mental diseasesaa; and

7

(2) in subsection (h), by adding at the end the

8

following new paragraphs:

9

aa(3) For purposes of subsection (a)(16)(C), the term

10 aqualified inpatient psychiatric hospital servicesa means,
11 with respect to individuals described in such subsection,
12 services described in subparagraph (B) of paragraph (1)
13 that

are

not

otherwise

covered

under

subsection

14 (a)(16)(A) and are furnisheda
15

aa(A) in an institution (or distinct part thereof)

16

which is a psychiatric hospital (as defined in section

17

1861(f)); and

18

aa(B) with respect to such an individual, for a

19

period not to exceed 30 consecutive days in any

20

month and not to exceed 90 days in any calendar

21

year.

22

aa(4) As a condition for a State including qualified

23 inpatient psychiatric hospital services as medical assist24 ance under subsection (a)(16)(C), the State must (during
25 the period in which it furnishes medical assistance under

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1 this title for services and individuals described in such
2 subsection)a
3

aa(A) maintain at least the number of licensed

4

beds at psychiatric hospitals owned, operated, or

5

contracted for by the State that were being main-

6

tained as of the date of the enactment of this para-

7

graph or, if higher, as of the date the State applies

8

to the Secretary to include medical assistance under

9

such subsection; and

10

aa(B) maintain on an annual basis a level of

11

funding expended by the State (and political subdivi-

12

sions thereof) other than under this title from non-

13

Federal funds for inpatient services in an institution

14

described in paragraph (3)(A), and for active psy-

15

chiatric care and treatment provided on an out-

16

patient basis, that is not less than the level of such

17

funding for such services and care as of the date of

18

the enactment of this paragraph or, if higher, as of

19

the date the State applies to the Secretary to include

20

medical assistance under such subsection.aa.

21

(b) SPECIAL MATCHING RATE.aSection 1905(b) of

22 the Social Security Act (42 U.S.C. 1395d(b)) is amended
23 by adding at the end the following: aaNotwithstanding the
24 previous provisions of this subsection, the Federal medical
25 assistance percentage shall be 50 percent with respect to

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120
1 medical assistance for services and individuals described
2 in subsection (a)(16)(C).aa.
3

(c) EFFECTIVE DATE.aThe amendments made by

4 this section shall apply to qualified inpatient psychiatric
5 hospital services furnished on or after October 1, 2018.
6
7

SEC. 139. SMALL BUSINESS HEALTH PLANS.

(a) TAX TREATMENT

OF

SMALL BUSINESS HEALTH

8 PLANS.aFor purposes of applying subchapter B of chap9 ter 100 of the Internal Revenue Code of 1986, title XXVII
10 of the Public Health Service Act (42 U.S.C. 300gg et
11 seq.), and part 7 of title I of the Employee Retirement
12 Income Security Act of 1974 (29 U.S.C. 1181 et seq.),
13 a small business health plan as defined in section 801(a)
14 of the Employee Retirement Income Security Act of 1974
15 that is offered to employees shall be treated as a group
16 health plan, as defined in section 2791 of the Public
17 Health Service Act (42 U.S.C. 300gga91).
18

(b) IN GENERAL.aSubtitle B of title I of the Em-

19 ployee Retirement Income Security Act of 1974 (29
20 U.S.C. 1021 et seq.) is amended by adding at the end
21 the following new part:

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1

aaPART 8aRULES GOVERNING SMALL BUSINESS

2

RISK SHARING POOLS

3
4

aaSEC. 801. SMALL BUSINESS HEALTH PLANS.

aa(a) IN GENERAL.aFor purposes of this part, the

5 term asmall business health plana means a fully insured
6 group health plan, offered by a health insurance issuer in
7 the large group market, whose sponsor is described in sub8 section (b).
9

aa(b) SPONSOR.aThe sponsor of a group health plan

10 is described in this subsection ifa
11
12

aa(1) such sponsor is a qualified sponsor and receives certification by the Secretary;

13

aa(2) is organized and maintained in good faith,

14

with a constitution and bylaws specifically stating its

15

purpose and providing for periodic meetings on at

16

least an annual basis;

17

aa(3) is established as a permanent entity;

18

aa(4) is established for a purpose other than

19

providing health benefits to its members, such as an

20

organization established as a bona fide trade asso-

21

ciation; and

22
23

aa(5) does not condition membership on the
basis of a minimum group size.

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1

aaSEC. 802. FILING FEE AND CERTIFICATION OF SMALL

2
3

BUSINESS HEALTH PLANS.

aa(a) FILING FEE.aA small business health plan

4 shall pay to the Secretary at the time of filing an applica5 tion for certification under subsection (b) a filing fee in
6 the amount of $5,000, which shall be available to the Sec7 retary for the sole purpose of administering the certifi8 cation procedures applicable with respect to small business
9 health plans.
10
11

aa(b) CERTIFICATION.a
aa(1) IN

GENERAL.aNot

later than 6 months

12

after the date of enactment of this part, the Sec-

13

retary shall prescribe by interim final rule a proce-

14

dure under which the Secretarya

15

aa(A) will certify a qualified sponsor of a

16

small business health plan, upon receipt of an

17

application that includes the information de-

18

scribed in paragraph (2);

19

aa(B) may provide for continued certifi-

20

cation of small business health plans under this

21

part; and

22

aa(C) shall provide for the revocation of a

23

certification if the applicable authority finds

24

that the small business health plan involved

25

fails to comply with the requirements of this

26

part.

Discussion Draft

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1

aa(2) INFORMATION

TO BE INCLUDED IN APPLI-

2

CATION FOR CERTIFICATION.aAn

3

certification under this part meets the requirements

4

of this section only if it includes, in a manner and

5

form which shall be prescribed by the applicable au-

6

thority by regulation, at least the following informa-

7

tion:

application for

8

aa(A) Identifying information.

9

aa(B) States in which the plan intends to

10

do business.

11

aa(C) Bonding requirements.

12

aa(D) Plan documents.

13

aa(E) Agreements with service providers.

14

aa(c) FILING NOTICE

OF

CERTIFICATION WITH

15 STATES.aA certification granted under this part to a
16 small business health plan shall not be effective unless
17 written notice of such certification is filed with the appli18 cable State authority of each State in which the small
19 business health plans operate.
20

aa(d) NOTICE

OF

MATERIAL CHANGES.aIn the case

21 of any small business health plan certified under this part,
22 descriptions of material changes in any information which
23 was required to be submitted with the application for the
24 certification under this part shall be filed in such form
25 and manner as shall be prescribed by the applicable au-

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1 thority by regulation. The applicable authority may re2 quire by regulation prior notice of material changes with
3 respect to specified matters which might serve as the basis
4 for suspension or revocation of the certification.
5
6

aa(e) NOTICE REQUIREMENTS
MINATION.aA

FOR

VOLUNTARY TER-

small business health plan which is or has

7 been certified under this part may terminate (upon or at
8 any time after cessation of accruals in benefit liabilities)
9 only if the board of trustees, not less than 60 days before
10 the proposed termination datea
11

aa(1) provides to the participants and bene-

12

ficiaries a written notice of intent to terminate stat-

13

ing that such termination is intended and the pro-

14

posed termination date;

15

aa(2) develops a plan for winding up the affairs

16

of the plan in connection with such termination in

17

a manner which will result in timely payment of all

18

benefits for which the plan is obligated; and

19

aa(3) submits such plan in writing to the appli-

20

cable authority.

21

aa(f) OVERSIGHT

OF

CERTIFIED PLAN SPONSORS.a

22 The Secretary has the discretion to determine whether any
23 person has violated or is about to violate any provision
24 of this part, and may conduct periodic review of certified
25 small business health plan sponsors, consistent with sec-

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1 tion 504, and apply the requirements of sections 518, 519,
2 and 520.
3
4

aa(g) EXPEDITED AND DEEMED CERTIFICATION.a
aa(1) IN

GENERAL.aIf

the Secretary fails to act

5

on a complete application for certification under this

6

section within 90 days of receipt of such complete

7

application, the applying small business health plan

8

sponsor shall be deemed certified until such time as

9

the Secretary may deny for cause the application for

10

certification.

11

aa(2) PENALTY.aThe Secretary may assess a

12

penalty against the board of trustees and plan spon-

13

sor (jointly and severally) of a small business health

14

plan sponsor that is deemed certified under para-

15

graph (1) of up to $500,000 in the event the Sec-

16

retary determines that the application for certifi-

17

cation of such small business health plan sponsor

18

was willfully or with gross negligence incomplete or

19

inaccurate.

20

aa(h) MODIFICATIONS.aThe Secretary shall, through

21 promulgation and implementation of such regulations as
22 the Secretary may reasonably determine necessary or ap23 propriate, and in consultation with a balanced spectrum
24 of effected entities and persons, modify the implementa25 tion and application of this part to accommodate with min-

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1 imum disruption such changes to State or Federal law
2 provided in this part and the (and the amendments made
3 by such Act) or in regulations issued thereto.
4
5
6

aaSEC. 803. REQUIREMENTS RELATING TO SPONSORS AND
BOARDS OF TRUSTEES.

aa(a) BOARD

OF

TRUSTEES.aThe Secretary shall en-

7 sure that Board of Trustees of a small business health
8 plan certified under this part complies with the require9 ments such Secretary sets forth with respect to fiscal con10 trol and rules of operation and financial controls.
11

aa(b) TREATMENT

OF

FRANCHISES.aIn the case of

12 a group health plan that is established and maintained
13 by a franchisor for a franchisor or for its franchiseesa
14

aa(1) the requirements of subsection (a) and sec-

15

tion 801(a) shall be deemed met if such require-

16

ments would otherwise be met if the franchisor were

17

deemed to be the sponsor referred to in section

18

801(b) and each franchisee were deemed to be a

19

member (of the sponsor) referred to in section

20

801(b); and

21
22

aa(2) the requirements of section 804(a)(1) shall
be deemed met.

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1

aaSEC.

804.

2
3

PARTICIPATION

AND

COVERAGE

REQUIRE-

MENTS.

aa(a) COVERED EMPLOYERS

AND INDIVIDUALS.aThe

4 requirements of this subsection are met with respect to
5 a small business health plan if, under the terms of the
6 plana
7

aa(1) each participating employer must bea

8

aa(A) a member of the sponsor;

9

aa(B) the sponsor; or

10

aa(C) an affiliated member of the sponsor,

11

except that, in the case of a sponsor which is

12

a professional association or other individual-

13

based association, if at least one of the officers,

14

directors, or employees of an employer, or at

15

least one of the individuals who are partners in

16

an employer and who actively participates in

17

the business, is a member or such an affiliated

18

member of the sponsor, participating employers

19

may also include such employer; and

20

aa(2) all individuals commencing coverage under

21

the plan after certification under this part must

22

bea

23

aa(A) active or retired owners (including

24

self-employed individuals), officers, directors, or

25

employees of, or partners in, participating em-

26

ployers; or

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1
2
3

aa(B) the dependents of individuals described in subparagraph (A).
aa(b) INDIVIDUAL MARKET UNAFFECTED.aThe re-

4 quirements of this subsection are met with respect to a
5 small business health plan if, under the terms of the plan,
6 no participating employer may provide health insurance
7 coverage in the individual market for any employee not
8 covered under the plan, if such exclusion of the employee
9 from coverage under the plan is based on a health status10 related factor with respect to the employee and such em11 ployee would, but for such exclusion on such basis, be eligi12 ble for coverage under the plan.
13
14

aa(c) PROHIBITION OF DISCRIMINATION AGAINST EMPLOYERS AND

EMPLOYEES ELIGIBLE

TO

PARTICIPATE.a

15 The requirements of this subsection are met with respect
16 to a small business health plan if information regarding
17 all coverage options available under the plan is made read18 ily available to any employer eligible to participate.
19
20
21

aaSEC. 805. DEFINITIONS; RENEWAL.

aa(a) DEFINITIONS.aFor purposes of this part:
aa(1) AFFILIATED

MEMBER.aThe

term aaffili-

22

ated membera means, in connection with a sponsora

23

aa(A) a person who is otherwise eligible to

24

be a member of the sponsor but who elects an

25

affiliated status with the sponsor, or

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1

aa(B) in the case of a sponsor with mem-

2

bers which consist of associations, a person who

3

is a member or employee of any such associa-

4

tion and elects an affiliated status with the

5

sponsor.

6

aa(2) APPLICABLE

STATE

AUTHORITY.aThe

7

term aapplicable State authoritya means, with respect

8

to a health insurance issuer in a State, the State in-

9

surance commissioner or official or officials des-

10

ignated by the State to enforce the requirements of

11

title XXVII of the Public Health Service Act for the

12

State involved with respect to such issuer.

13

aa(3) FRANCHISOR;

FRANCHISEE.aThe

terms

14

afranchisora and afranchiseea have the meanings given

15

such terms for purposes of sections 436.2(a)

16

through 436.2(c) of title 16, Code of Federal Regu-

17

lations (including any such amendments to such reg-

18

ulation after the date of enactment of this part).

19

aa(4) HEALTH

PLAN TERMS.aThe

terms agroup

20

health plana, ahealth insurance coveragea, and ahealth

21

insurance issuera have the meanings provided in sec-

22

tion 733.

23

aa(5) INDIVIDUAL

24

aa(A) IN

25

MARKET.a

GENERAL.aThe

term aindividual

marketa means the market for health insurance

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1

coverage offered to individuals other than in

2

connection with a group health plan.

3
4
5

aa(B)

TREATMENT

OF

VERY

SMALL

GROUPS.a

aa(i) IN

GENERAL.aSubject

to clause

6

(ii), such term includes coverage offered in

7

connection with a group health plan that

8

has fewer than 2 participants as current

9

employees or participants described in sec-

10

tion 732(d)(3) on the first day of the plan

11

year.

12

aa(ii) STATE

EXCEPTION.aClause

(i)

13

shall not apply in the case of health insur-

14

ance coverage offered in a State if such

15

State regulates the coverage described in

16

such clause in the same manner and to the

17

same extent as coverage in the small group

18

market (as defined in section 2791(e)(5) of

19

the Public Health Service Act) is regulated

20

by such State.

21

aa(6) PARTICIPATING

EMPLOYER.aThe

term

22

aparticipating employera means, in connection with a

23

small business health plan, any employer, if any in-

24

dividual who is an employee of such employer, a

25

partner in such employer, or a self-employed indi-

Discussion Draft

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131
1

vidual who is such employer (or any dependent, as

2

defined under the terms of the plan, of such indi-

3

vidual) is or was covered under such plan in connec-

4

tion with the status of such individual as such an

5

employee, partner, or self-employed individual in re-

6

lation to the plan.

7

aa(b) RENEWAL.aA participating employer in a small

8 business health plan shall not be deemed to be a plan
9 sponsor in applying requirements relating to coverage re10 newal.aa.
11

(c) PREEMPTION RULES.aSection 514 of the Em-

12 ployee Retirement Income Security Act of 1974 (29
13 U.S.C. 1144) is amended by adding at the end the fol14 lowing:
15

aa(e) Except as provided in subsection (b)(4), the pro-

16 visions of this title shall supersede any and all State laws
17 insofar as they may now or hereafter preclude a health
18 insurance issuer from offering health insurance coverage
19 in connection with a small business health plan which is
20 certified under part 8.aa.
21

(d) PLAN SPONSOR.aSection 3(16)(B) of such Act

22 (29 U.S.C. 102(16)(B)) is amended by adding at the end
23 the following new sentence: aaSuch term also includes a
24 person serving as the sponsor of a small business health
25 plan under part 8.aa.

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1

(e) SAVINGS CLAUSE.aSection 731(c) of such Act is

2 amended by inserting aaor part 8aa after aathis partaa.
3

(f) COOPERATION BETWEEN FEDERAL

AND

STATE

4 AUTHORITIES.aSection 506 of the Employee Retirement
5 Income Security Act of 1974 (29 U.S.C. 1136) is amended
6 by adding at the end the following new subsection:
7
8
9

aa(d) CONSULTATION WITH STATES WITH RESPECT
TO

SMALL BUSINESS HEALTH PLANS.a
aa(1) AGREEMENTS

WITH STATES.aThe

Sec-

10

retary shall consult with the State recognized under

11

paragraph (2) with respect to a small business

12

health plan regarding the exercise ofa

13

aa(A) the Secretaryas authority under sec-

14

tions 502 and 504 to enforce the requirements

15

for certification under part 8; and

16

aa(B) the Secretaryas authority to certify

17

small business health plans under part 8 in ac-

18

cordance with regulations of the Secretary ap-

19

plicable to certification under part 8.

20

aa(2) RECOGNITION

OF DOMICILE STATE.aIn

21

carrying out paragraph (1), the Secretary shall en-

22

sure that only one State will be recognized, with re-

23

spect to any particular small business health plan,

24

as the State with which consultation is required.aa.

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1

(g) EFFECTIVE DATE.aThe amendments made by

2 this section shall take effect 1 year after the date of the
3 enactment of this Act. The Secretary of Labor shall first
4 issue all regulations necessary to carry out the amend5 ments made by this section within 6 months after the date
6 of the enactment of this Act.

TITLE II

7
8
9

SEC. 201. THE PREVENTION AND PUBLIC HEALTH FUND.

Subsection (b) of section 4002 of the Patient Protec-

10 tion and Affordable Care Act (42 U.S.C. 300ua11) is
11 amended by striking paragraphs (3) through (8).
12
13
14

SEC. 202. SUPPORT FOR STATE RESPONSE TO OPIOID CRISIS.

There is authorized to be appropriated, and is appro-

15 priated, out of monies in the Treasury not otherwise obli16 gated, $2,000,000,000 for fiscal year 2018, to the Sec17 retary of Health and Human Services to provide grants
18 to States to support substance use disorder treatment and
19 recovery support services for individuals with mental or
20 substance use disorders. Funds appropriated under this
21 section shall remain available until expended.
22
23

SEC. 203. COMMUNITY HEALTH CENTER PROGRAM.

Effective as if included in the enactment of the Medi-

24 care Access and CHIP Reauthorization Act of 2015 (Pub25 lic Law 114a10, 129 Stat. 87), paragraph (1) of section

Discussion Draft

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134
1 221(a) of such Act is amended by inserting aa, and an ad2 ditional $422,000,000 for fiscal year 2017aa after aa2017aa.
3

SEC. 204. CHANGE IN PERMISSIBLE AGE VARIATION IN

4
5

HEALTH INSURANCE PREMIUM RATES.

Section 2701(a)(1)(A)(iii) of the Public Health Serv-

6 ice Act (42 U.S.C. 300gg(a)(1)(A)(iii)) is amended by in7 serting after aa(consistent with section 2707(c))aa the fol8 lowing: aaor, for plan years beginning on or after January
9 1, 2019, 5 to 1 for adults (consistent with section 2707(c))
10 or such other ratio for adults (consistent with section
11 2707(c)) as the State may determineaa.
12

SEC. 205. MEDICAL LOSS RATIO DETERMINED BY THE

13
14

STATE.

Section 2718(b) of the Public Health Service Act (42

15 U.S.C. 300gga18(b)) is amended by adding at the end the
16 following:
17

aa(4) SUNSET.aParagraphs (1) through (3)

18

shall not apply for plan years beginning on or after

19

January 1, 2019, and after such date any reference

20

in law to such paragraphs shall have no force or ef-

21

fect.

22

aa(5) MEDICAL

LOSS RATIO DETERMINED BY

23

THE STATE.aFor

24

January 1, 2019, each State shalla

plan years beginning on or after

Discussion Draft

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135
1

aa(A) set the ratio of the amount of pre-

2

mium revenue a health insurance issuer offering

3

group or individual health insurance coverage

4

may expend on non-claims costs to the total

5

amount of premium revenue; and

6

aa(B) determine the amount of any annual

7

rebate required to be paid to enrollees under

8

such coverage if the ratio of the amount of pre-

9

mium revenue expended by the issuer on non-

10

claims costs to the total amount of premium

11

revenue exceeds the ratio set by the State under

12

subparagraph (A).aa.

13
14

SEC. 206. WAIVERS FOR STATE INNOVATION.

(a) IN GENERAL.aSection 1332 of the Patient Pro-

15 tection and Affordable Care Act (42 U.S.C. 18052) is
16 amendeda
17
18
19
20

(1) in subsection (a)a
(A) in paragraph (1)a
(i) in subparagraph (B)a
(I) by amending clause (i) to

21

read as follows:

22

aa(i) a description of how the State

23

plan meeting the requirements of a waiver

24

under this section would, with respect to

ERN17282

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136
1

health

2

Statea

insurance

coverage

within

the

3

aa(I) take the place of the require-

4

ments described in paragraph (2) that

5

are waived; and

6

aa(II)

provide

for

alternative

7

means of, and requirements for, in-

8

creasing access to comprehensive cov-

9

erage, reducing average premiums,

10

and increasing enrollment; andaa; and

11

(II) in clause (ii), by striking

12

aathat is budget neutral for the Fed-

13

eral Governmentaa and inserting aa,

14

demonstrating that the State plan

15

does not increase the Federal deficitaa;

16

and

17

(ii) in subparagraph (C), by striking

18

aathe lawaa and inserting aaa law or has in

19

effect a certificationaa;

20

(B) in paragraph (3)a

21

(i) by adding after the second sen-

22

tence the following: aaA State may request

23

that all of, or any portion of, such aggre-

24

gate amount of such credits or reductions

Discussion Draft

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1

be paid to the State as described in the

2

first sentence.aa;

3

(ii) in the paragraph heading, by

4

striking aaPASS

5

and inserting aaFUNDINGaa;

6

THROUGH OF FUNDINGaa

(iii) by striking aaWith respectaa and

7

inserting the following:

8

aa(A) PASS

9

THROUGH OF FUNDING.aWith

respectaa; and

10

(iv) by adding at the end the fol-

11

lowing:

12

aa(B) ADDITIONAL

FUNDING.aThere

is au-

13

thorized to be appropriated, and is appro-

14

priated, to the Secretary of Health and Human

15

Services, out of monies in the Treasury not oth-

16

erwise obligated, $2,000,000,000 for fiscal year

17

2017, to remain available until the end of fiscal

18

year 2019, to provide grants to States for pur-

19

poses of submitting an application for a waiver

20

granted under this section and implementing

21

the State plan under such waiver.

22

aa(C) AUTHORITY

TO

USE

LONG-TERM

23

STATE

24

MENT.aIf

25

allotment under section 2105(i) of the Social

INNOVATION

AND

STABILITY

ALLOT-

the State has an application for an

ERN17282

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138
1

Security Act for the plan year, the State may

2

use the funds available under the Stateas allot-

3

ment for the plan year to carry out the State

4

plan under this section, so long as such use is

5

consistent with the requirements of paragraphs

6

(1) and (7) of section 2105(i) of such Act

7

(other than paragraph (1)(B) of such section).

8

Any funds used to carry out a State plan under

9

this subparagraph shall not be considered in de-

10

termining whether the State plan increases the

11

Federal deficit.aa; and

12
13
14

(C) in paragraph (4), by adding at the end
the following:
aa(D) EXPEDITED

PROCESS.aThe

Sec-

15

retary shall establish an expedited application

16

and approval process that may be used if the

17

Secretary determines that such expedited proc-

18

ess is necessary to respond to an urgent or

19

emergency situation with respect to health in-

20

surance coverage within a State.aa;

21

(2) in subsection (b)a

22
23
24

(A) in paragraph (1)a
(i) in the matter preceding subparagraph (A)a

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1
2
3

(I) by striking aamayaa and inserting aashallaa; and
(II) by striking aaonly ifaa and in-

4

serting aaunlessaa; and

5

(ii) by striking aaplanaaa and all that

6

follows through the period at the end of

7

subparagraph (D) and inserting aaplan will

8

increase the Federal deficit, not taking

9

into account any amounts received through

10

a grant under subsection (a)(3)(B).aa;

11

(B) in paragraph (2)a

12
13

(i) in the paragraph heading, by inserting aaOR

CERTIFYaa

after aaLAWaa;

14

(ii) in subparagraph (A), by inserting

15

before the period aa, and a certification de-

16

scribed in this paragraph is a document,

17

signed by the Governor, and the State in-

18

surance commissioner, of the State, that

19

provides authority for State actions under

20

a waiver under this section, including the

21

implementation of the State plan under

22

subsection (a)(1)(B)aa; and

23
24
25

(iii) in subparagraph (B)a
(I) in the subparagraph heading,
by striking aaOF

OPT OUTaa;

and

Discussion Draft

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1

(II) by striking aa may repeal a

2

lawaa and all that follows through the

3

period at the end and inserting the

4

following: aamay terminate the author-

5

ity provided under the waiver with re-

6

spect to the State bya

7

aa(i) repealing a law described in sub-

8

paragraph (A); or

9

aa(ii) terminating a certification de-

10

scribed in subparagraph (A), through a

11

certification for such termination signed by

12

the Governor, and the State insurance

13

commissioner, of the State.aa;

14

(3) in subsection (d)(2)(B), by striking aaand

15

the reasons thereforeaa and inserting aaand the rea-

16

sons therefore, and provide the data on which such

17

determination was madeaa; and

18

(4) in subsection (e), by striking aaNo waiveraa

19

and all that follows through the period at the end

20

and inserting the following: aaA waiver under this

21

sectiona

22
23
24
25

aa(1) shall be in effect for a period of 8 years
unless the State requests a shorter duration;
aa(2) may be renewed for unlimited additional 8year periods upon application by the State; and

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1

aa(3) may not be cancelled by the Secretary be-

2

fore the expiration of the 8-year period (including

3

any renewal period under paragraph (2)).aa.

4

(b) APPLICABILITY.aSection 1332 of the Patient

5 Protection and Affordable Care Act (42 U.S.C. 18052)
6 shall apply as follows:
7

(1) In the case of a State for which a waiver

8

under such section was granted prior to the date of

9

enactment of this Act, such section 1332, as in ef-

10

fect on the day before the date of enactment of this

11

Act shall apply to the waiver and State plan.

12

(2) In the case of a State that submitted an ap-

13

plication for a waiver under such section prior to the

14

date of enactment of this Act, and which application

15

the Secretary of Health and Human Services has

16

not approved prior to such date, the State may elect

17

to have such section 1332, as in effect on the day

18

before the date of enactment of this Act, or such

19

section 1332, as amended by subsection (a), apply to

20

such application and State plan.

21

(3) In the case of a State that submits an ap-

22

plication for a waiver under such section on or after

23

the date of enactment of this Act, such section 1332,

24

as amended by subsection (a), shall apply to such

25

application and State plan.

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1
2

SEC. 207. FUNDING FOR COST-SHARING PAYMENTS.

There is appropriated to the Secretary of Health and

3 Human Services, out of any money in the Treasury not
4 otherwise appropriated, such sums as may be necessary
5 for payments for cost-sharing reductions authorized by the
6 Patient Protection and Affordable Care Act (including ad7 justments to any prior obligations for such payments) for
8 the period beginning on the date of enactment of this Act
9 and ending on December 31, 2019. Notwithstanding any
10 other provision of this Act, payments and other actions
11 for adjustments to any obligations incurred for plan years
12 2018 and 2019 may be made through December 31, 2020.
13
14

SEC. 208. REPEAL OF COST-SHARING SUBSIDY PROGRAM.

(a) IN GENERAL.aSection 1402 of the Patient Pro-

15 tection and Affordable Care Act is repealed.
16

(b) EFFECTIVE DATE.aThe repeal made by sub-

17 section (a) shall apply to cost-sharing reductions (and pay18 ments to issuers for such reductions) for plan years begin19 ning after December 31, 2019.