Discussion Draft ERN17490 AMENDMENT NO.llll S.L.C. Calendar No.lll Purpose: In the nature of a substitute. IN THE SENATE OF THE UNITED STATES—115th 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 ‘‘Better Care Reconcili- 5 ation Act of 2017’’. 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 ERN17490 S.L.C. 2 1 ‘‘(iii) NONAPPLICABILITY OF LIMITA- 2 TION.—This 3 to taxable years ending after December 31, 4 2017.’’. 5 6 7 8 subparagraph shall not apply SEC. 102. RESTRICTIONS FOR THE PREMIUM TAX CREDIT. (a) ELIGIBILITY FOR CREDIT.— (1) IN GENERAL.—Section 36B(c)(1) of the In- ternal Revenue Code of 1986 is amended— 9 (A) by striking ‘‘equals or exceeds 100 per- 10 cent but does not exceed 400 percent’’ in sub- 11 paragraph (A) and inserting ‘‘does not exceed 12 350 percent’’, 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.— GENERAL.—Paragraph (2) of sec- 18 tion 36B(e) of the Internal Revenue Code of 19 1986 is amended by striking ‘‘an alien lawfully 20 present in the United States’’ and inserting ‘‘a 21 qualified alien (within the meaning of section 22 431 of the Personal Responsibility and Work 23 Opportunity Reconciliation Act of 1996)’’. 24 25 (B) AMENDMENTS TO PATIENT PROTEC- TION AND AFFORDABLE CARE ACT.— ERN17490 Discussion Draft S.L.C. 3 1 (i) Section 1411(a)(1) of the Patient 2 Protection and Affordable Care Act is 3 amended by striking ‘‘or an alien lawfully 4 present in the United States’’ and insert- 5 ing ‘‘or 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)’’. 9 (ii) Section 1411(c)(2)(B) of such Act 10 is amended by striking ‘‘an alien lawfully 11 present in the United States’’ each place it 12 appears in clauses (i)(I) and (ii)(II) and 13 inserting ‘‘a qualified alien (within the 14 meaning of section 431 of the Personal Re- 15 sponsibility and Work Opportunity Rec- 16 onciliation Act of 1996)’’. 17 18 (iii) Section 1412(d) of such Act is amended— 19 (I) by striking ‘‘not lawfully 20 present in the United States’’ and in- 21 serting ‘‘not 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 Discussion Draft ERN17490 S.L.C. 4 1 Opportunity 2 1996)’’, and Reconciliation Act of 3 (II) by striking ‘‘INDIVIDUALS 4 NOT LAWFULLY PRESENT’’ in the 5 heading 6 ALIENS’’. 7 8 9 (b) MODIFICATION SISTANCE OF and inserting LIMITATION ON ‘‘CERTAIN PREMIUM AS- AMOUNT.— (1) USE OF BENCHMARK PLAN.—Section 10 36B(b) of the Internal Revenue Code of 1986 is 11 amended— 12 (A) by striking ‘‘applicable second lowest 13 cost silver plan’’ each place it appears in para- 14 graph (2)(B)(i) and (3)(C) and inserting ‘‘ap- 15 plicable median cost benchmark plan’’, 16 (B) by striking ‘‘such silver plan’’ in para- 17 graph (3)(C) and inserting ‘‘such benchmark 18 plan’’, and 19 (C) in paragraph (3)(B)— 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: Discussion Draft ERN17490 S.L.C. 5 1 ‘‘(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 which— PLAN.—The applicable median cost 7 ‘‘(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 ‘‘(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),’’, and 23 (ii) by striking ‘‘clause (ii)(I)’’ in the 24 flush text at the end and inserting ‘‘clause 25 (iv)(I)’’. Discussion Draft ERN17490 S.L.C. 6 1 (2) MODIFICATION OF APPLICABLE PERCENT- 2 AGE.—Section 3 Code of 1986 is amended— 36B(b)(3)(A) of the Internal Revenue 4 (A) in clause (i), by striking ‘‘from the ini- 5 tial premium percentage’’ and all that follows 6 and inserting ‘‘from 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: ‘‘In 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 16.2’’, (B) by striking ‘‘0.504’’ in clause (ii)(III) and inserting ‘‘0.4’’, and (C) by adding at the end the following new clause: ‘‘(iii) AGE DETERMINATIONS.—For 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 ERN17490 S.L.C. 7 1 count on such taxpayer’s return who is 2 covered by a qualified health plan taken 3 into account under paragraph (2)(A).’’. 4 (c) ELIMINATION OF ELIGIBILITY EXCEPTIONS FOR 5 EMPLOYER-SPONSORED COVERAGE.— 6 (1) IN GENERAL.—Section 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.—Section 12 amended— 13 14 36B(c)(4) of such Code is (A) by striking ‘‘which constitutes affordable coverage’’ in subparagraph (A), and 15 (B) by striking subparagraphs (B), (C), 16 (E), and (F) and redesignating subparagraph 17 (D) as subparagraph (B). 18 (d) MODIFICATIONS TO DEFINITION OF QUALIFIED 19 HEALTH PLAN.— 20 (1) IN GENERAL.—Section 36B(c)(3)(A) of the 21 Internal Revenue Code of 1986 is amended by in- 22 serting at the end the following new sentence: ‘‘Such 23 term shall not include a plan that includes coverage 24 for abortions (other than any abortion necessary to 25 save the life of the mother or any abortion with re- Discussion Draft ERN17490 S.L.C. 8 1 spect to a pregnancy that is the result of an act of 2 rape or incest).’’. 3 (2) EFFECTIVE DATE.—The amendment made 4 by this subsection shall apply to taxable years begin- 5 ning after December 31, 2017. 6 (e) ALLOWANCE OF CREDIT FOR CATASTROPHIC 7 PLANS.—Section 36B(c)(3)(A) of the Internal Revenue 8 Code of 1986, as amended by this Act, is amended by 9 striking ‘‘, except that such term shall not include a quali10 fied health plan that is a catastrophic plan described in 11 section 1302(e) of such Act’’. 12 (f) INCREASED PENALTY ON ERRONEOUS CLAIMS OF 13 CREDIT.—Section 6676(a) of the Internal Revenue Code 14 of 1986 is amended by inserting ‘‘(25 percent in the case 15 of a claim for refund or credit relating to the health insur16 ance coverage credit under section 36B)’’ after ‘‘20 per17 cent’’. 18 (g) EFFECTIVE DATE.—Except as otherwise provided 19 in this section, the amendments made by this section shall 20 apply to taxable years beginning after December 31, 2019. 21 22 23 SEC. 103. MODIFICATIONS TO SMALL BUSINESS TAX CREDIT. (a) SUNSET.— Discussion Draft ERN17490 S.L.C. 9 1 (1) IN GENERAL.—Section 45R of the Internal 2 Revenue Code of 1986 is amended by adding at the 3 end the following new subsection: 4 ‘‘(j) SHALL NOT APPLY.—This section shall not 5 apply with respect to amounts paid or incurred in taxable 6 years beginning after December 31, 2019.’’. 7 (2) EFFECTIVE DATE.—The 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.— (1) IN GENERAL.—Subsection (h) of section 14 45R of the Internal Revenue Code of 1986 is 15 amended— 16 (A) by striking ‘‘Any term’’ and inserting 17 the following: 18 ‘‘(1) IN 19 GENERAL.—Any term’’, and (B) by adding at the end the following new 20 paragraph: 21 ‘‘(2) EXCLUSION OF HEALTH PLANS INCLUDING 22 COVERAGE 23 health plan’ 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.—The term ‘qualified Discussion Draft ERN17490 S.L.C. 10 1 any abortion with respect to a pregnancy that is the 2 result of an act of rape or incest).’’. 3 (2) EFFECTIVE DATE.—The 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.—Section 5000A(c) of the Internal 8 Revenue Code of 1986 is amended— 9 10 11 (1) in paragraph (2)(B)(iii), by striking ‘‘2.5 percent’’ and inserting ‘‘Zero percent’’, and (2) in paragraph (3)— 12 13 (A) by striking ‘‘$695’’ in subparagraph (A) and inserting ‘‘$0’’, and 14 (B) by striking subparagraph (D). 15 (b) EFFECTIVE DATE.—The 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.— 20 (1) Paragraph (1) of section 4980H(c) of the 21 Internal Revenue Code of 1986 is amended by in- 22 serting ‘‘($0 in the case of months beginning after 23 December 31, 2015)’’ after ‘‘$2,000’’. 24 (2) Paragraph (1) of section 4980H(b) of the 25 Internal Revenue Code of 1986 is amended by in- Discussion Draft ERN17490 S.L.C. 11 1 serting ‘‘($0 in the case of months beginning after 2 December 31, 2015)’’ after ‘‘$3,000’’. 3 (b) EFFECTIVE DATE.—The 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.—Section 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 ‘‘(h) SHORT-TERM ASSISTANCE 11 ERAGE AND 12 FOR ACCESS DISRUPTION AND TO ADDRESS COV- PROVIDE SUPPORT STATES.— 13 ‘‘(1) APPROPRIATION.—There 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 ‘Ad- 21 ministrator’) to fund arrangements with health in- 22 surance issuers to assist in the purchase of health 23 benefits coverage by addressing coverage and access 24 disruption and responding to urgent health care the Treasury not otherwise obligated, ERN17490 Discussion Draft S.L.C. 12 1 needs within States. Funds appropriated under this 2 paragraph shall remain available until expended. 3 ‘‘(2) PARTICIPATION REQUIREMENTS.— 4 ‘‘(A) GUIDANCE.—Not later than 30 days 5 after the date of enactment of this subsection, 6 the Administrator shall issue guidance to health 7 insurance issuers regarding how to submit a no- 8 tice of intent to participate in the program es- 9 tablished under this subsection. 10 ‘‘(B) NOTICE OF INTENT TO PARTICI- 11 PATE.—To 12 subsection, a health insurance issuer shall sub- 13 mit to the Administrator a notice of intent to 14 participate at such time (but, in the case of 15 funding for calendar year 2018, not later than 16 35 days after the date of enactment of this sub- 17 section and, in the case of funding for calendar 18 year 2019, 2020, or 2021, not later than March 19 31 of the previous year) and in such form and 20 manner as specified by the Administrator and 21 containing— be eligible for funding under this 22 ‘‘(i) a certification that the health in- 23 surance issuer will use the funds in accord- 24 ance with the requirements of paragraph 25 (5); and Discussion Draft ERN17490 S.L.C. 13 1 ‘‘(ii) such information as the Adminis- 2 trator may require to carry out this sub- 3 section. 4 ‘‘(3) 5 FUNDS.—The 6 propriate procedure for providing and distributing 7 funds under this subsection that includes reserving 8 an amount equal to 1 percent of the amount appro- 9 priated under paragraph (1) for a calendar year for 10 providing and distributing funds to health insurance 11 issuers in States where the cost of insurance pre- 12 miums are at least 75 percent higher than the na- 13 tional average. 14 PROCEDURE ‘‘(4) NO FOR DISTRIBUTION OF Administrator shall determine an ap- MATCH.—Neither the State percentage 15 applicable to payments to States under subsection 16 (i)(5)(B) nor any other matching requirement shall 17 apply to funds provided to health insurance issuers 18 under this subsection. 19 ‘‘(5) USE OF FUNDS.—Funds provided to a 20 health insurance issuer under paragraph (1) shall be 21 subject to the requirements of paragraphs (1)(D) 22 and (7) of subsection (i) in the same manner as 23 such requirements apply to States receiving pay- 24 ments under subsection (i) and shall be used only Discussion Draft ERN17490 S.L.C. 14 1 for the activities specified in paragraph (1)(A)(ii) of 2 subsection (i). 3 ‘‘(i) LONG-TERM STATE STABILITY AND INNOVATION 4 PROGRAM.— 5 ‘‘(1) APPLICATION AND CERTIFICATION RE- 6 QUIREMENTS.—To 7 funds under this subsection, a State shall submit to 8 the Administrator an application, not later than 9 March 31, 2018, in the case of allotments for cal- 10 endar year 2019, and not later than March 31 of 11 the previous year, in the case of allotments for any 12 subsequent calendar year) and in such form and 13 manner as specified by the Administrator, that con- 14 tains the following: 15 16 be eligible for an allotment of ‘‘(A) A description of how the funds will be used to do 1 or more of the following: 17 ‘‘(i) To establish or maintain a pro- 18 gram or mechanism to help high-risk indi- 19 viduals in the purchase of health benefits 20 coverage, including by reducing premium 21 costs for such individuals, who have or are 22 projected to have a high rate of utilization 23 of health services, as measured by cost, 24 and who do not have access to health in- 25 surance coverage offered through an em- Discussion Draft ERN17490 S.L.C. 15 1 ployer, enroll in health insurance coverage 2 under a plan offered in the individual mar- 3 ket 4 5000A(f)(1)(C) of the Internal Revenue 5 Code of 1986). (within the meaning of section 6 ‘‘(ii) To establish or maintain a pro- 7 gram to enter into arrangements with 8 health insurance issuers to assist in the 9 purchase of health benefits coverage by 10 stabilizing premiums and promoting State 11 health insurance market participation and 12 choice in plans offered in the individual 13 market (within the meaning of section 14 5000A(f)(1)(C) of the Internal Revenue 15 Code of 1986). 16 ‘‘(iii) To provide payments for health 17 care providers for the provision of health 18 care services, as specified by the Adminis- 19 trator. 20 ‘‘(iv) To provide health insurance cov- 21 erage by funding assistance to reduce out- 22 of-pocket costs, such as copayments, coin- 23 surance, and deductibles, of individuals en- 24 rolled in plans offered in the individual 25 market (within the meaning of section Discussion Draft ERN17490 S.L.C. 16 1 5000A(f)(1)(C) of the Internal Revenue 2 Code of 1986). 3 ‘‘(B) A certification that the State shall 4 make, from non-Federal funds, expenditures for 5 1 or more of the activities specified in subpara- 6 graph (A) in an amount that is not less than 7 the State percentage required for the year 8 under paragraph (5)(B)(ii). 9 ‘‘(C) A certification that the funds pro- 10 vided under this subsection shall only be used 11 for the activities specified in subparagraph (A). 12 ‘‘(D) A certification that none of the funds 13 provided under this subsection shall be used by 14 the State for an expenditure that is attributable 15 to an intergovernmental transfer, certified pub- 16 lic expenditure, or any other expenditure to fi- 17 nance the non-Federal share of expenditures re- 18 quired under any provision of law, including 19 under the State plans established under this 20 title and title XIX or under a waiver of such 21 plans. 22 ‘‘(E) Such other information as necessary 23 for the Administrator to carry out this sub- 24 section. Discussion Draft ERN17490 S.L.C. 17 1 ‘‘(2) ELIGIBILITY.—Only the 50 States and the 2 District of Columbia shall be eligible for an allot- 3 ment and payments under this subsection and all 4 references in this subsection to a State shall be 5 treated as only referring to the 50 States and the 6 District of Columbia. 7 ‘‘(3) ONE-TIME APPLICATION.—If an applica- 8 tion of a State submitted under this subsection is 9 approved by the Administrator for a year, the appli- 10 cation shall be deemed to be approved by the Admin- 11 istrator for that year and each subsequent year 12 through December 31, 2026. 13 ‘‘(4) LONG-TERM STATE STABILITY AND INNO- 14 VATION ALLOTMENTS.— 15 ‘‘(A) APPROPRIATION; TOTAL ALLOT- 16 MENT.—For 17 ments to States under this subsection, there is 18 appropriated, out of any money in the Treasury 19 not otherwise appropriated— 20 21 22 23 24 25 the purpose of providing allot- ‘‘(i) for calendar year 2019, calendar year 2020, calendar year 2021, $8,000,000,000; ‘‘(ii) for $14,000,000,000; ‘‘(iii) for $14,000,000,000; ERN17490 Discussion Draft S.L.C. 18 1 2 3 4 5 6 7 8 9 ‘‘(iv) for calendar year 2022, calendar year 2023, calendar year 2024, calendar year 2025, year 2026, $19,200,000,000; ‘‘(v) for $19,200,000,000; ‘‘(vi) for $19,200,000,000; ‘‘(vii) for $19,200,000,000; and ‘‘(viii) for calendar 10 $19,200,000,000. 11 ‘‘(B) ALLOTMENTS.— 12 ‘‘(i) IN GENERAL.—In the case of a 13 State with an application approved under 14 this subsection with respect to a year, the 15 Administrator shall allot to the State, in 16 accordance with an allotment methodology 17 specified by the Administrator that ensures 18 that the spending requirement in para- 19 graph (6) is met for the year and that re- 20 serves an amount that is at least 1 percent 21 of the amount appropriated under sub- 22 paragraph (A) for a calendar year for al- 23 lotments to each State where the cost of 24 insurance premiums are at least 75 per- 25 cent higher than the national average, ERN17490 Discussion Draft S.L.C. 19 1 from amounts appropriated for such year 2 under subparagraph (A), such amount as 3 specified by the Administrator with respect 4 to the State and application and year. 5 6 7 ‘‘(ii) ANNUAL REDISTRIBUTION OF PREVIOUS YEAR’S UNUSED FUNDS.— ‘‘(I) IN GENERAL.— In carrying 8 out clause (i), with respect to a year 9 (beginning with 2021), the Adminis- 10 trator shall, not later than March 31 11 of such year— 12 ‘‘(aa) determine the amount 13 of funds, if any, remaining un- 14 used under subparagraph (A) 15 from the previous year; and 16 ‘‘(bb) if the Administrator 17 determines that any funds so re- 18 main from the previous year, re- 19 distribute such remaining funds 20 in accordance with an allotment 21 methodology specified by the Ad- 22 ministrator to States that have 23 submitted 24 proved under this subsection for 25 the year. an application ap- Discussion Draft ERN17490 S.L.C. 20 1 ‘‘(II) APPLICABLE STATE PER- 2 CENTAGE.—The 3 specified for a year in paragraph 4 (5)(B)(ii) shall apply to funds redis- 5 tributed under subclause (I) in that 6 year. 7 8 ‘‘(C) AVAILABILITY State percentage OF ALLOTTED STATE FUNDS.— 9 ‘‘(i) IN GENERAL.—Amounts allotted 10 to a State pursuant to subparagraph (B)(i) 11 for a year shall remain available for ex- 12 penditure by the State through the end of 13 the second succeeding year. 14 ‘‘(ii) AVAILABILITY OF AMOUNTS RE- 15 DISTRIBUTED.—Amounts 16 a State under subparagraph (B)(ii) in a 17 year shall be available for expenditure by 18 the State through the end of the second 19 succeeding year. 20 21 redistributed to ‘‘(5) PAYMENTS.— ‘‘(A) ANNUAL PAYMENT OF ALLOT- 22 MENTS.—Subject 23 ministrator shall pay to each State that has an 24 application approved under this subsection for a 25 year, from the allotment determined under to subparagraph (B), the Ad- Discussion Draft ERN17490 S.L.C. 21 1 paragraph (4)(B) for the State for the year, an 2 amount equal to the Federal percentage of the 3 State’s expenditures for the year. 4 ‘‘(B) STATE 5 BEGINNING 2022.—For 6 graph (A), the Federal percentage is equal to 7 100 percent reduced by the State percentage 8 for that year, and the State percentage is equal 9 to— 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 EXPENDITURES REQUIRED purposes of subpara- ‘‘(i) in the case of calendar year 2019, 0 percent; ‘‘(ii) in the case of calendar year 2020, 0 percent; ‘‘(iii) in the case of calendar year 2021, 0 percent; ‘‘(iv) in the case of calendar year 2022, 7 percent; ‘‘(v) in the case of calendar year 2023, 14 percent; ‘‘(vi) in the case of calendar year 2024, 21 percent; ‘‘(vii) in the case of calendar year 2025, 28 percent; and ‘‘(viii) in the case of calendar year 2026, 35 percent. ERN17490 Discussion Draft S.L.C. 22 1 2 3 ‘‘(C) ADVANCE PAYMENT; RETROSPECTIVE ADJUSTMENT.— ‘‘(i) IN GENERAL.—If the Adminis- 4 trator deems it appropriate, the Adminis- 5 trator shall make payments under this sub- 6 section for each year on the basis of ad- 7 vance estimates of expenditures submitted 8 by the State and such other investigation 9 as the Administrator shall find necessary, 10 and shall reduce or increase the payments 11 as necessary to adjust for any overpayment 12 or underpayment for prior years. 13 ‘‘(ii) MISUSE OF FUNDS.—If the Ad- 14 ministrator determines that a State is not 15 using funds paid to the State under this 16 subsection in a manner consistent with the 17 description provided by the State in its ap- 18 plication approved under paragraph (1), 19 the Administrator may withhold payments, 20 reduce payments, or recover previous pay- 21 ments to the State under this subsection 22 as the Administrator deems appropriate. 23 ‘‘(D) FLEXIBILITY IN SUBMITTAL OF 24 CLAIMS.—Nothing 25 construed as preventing a State from claiming in this subsection shall be ERN17490 Discussion Draft S.L.C. 23 1 as expenditures in the year expenditures that 2 were incurred in a previous year. 3 ‘‘(6) REQUIRED USE FOR PREMIUM STABILIZA- 4 TION AND INCENTIVES FOR INDIVIDUAL MARKET 5 PARTICIPATION.—In 6 States under this subsection for each of calendar 7 years 2019, 2020, and 2021, the Administrator shall 8 ensure that at least $5,000,000,000 of the amounts 9 appropriated for each such year under paragraph 10 (4)(A) are used by States for the purposes described 11 in paragraph (1)(A)(ii) and in accordance with guid- 12 ance issued by the Administrator not later than 30 13 days after the date of enactment of this subsection 14 that specifies the parameters for the use of funds for 15 such purposes. determining allotments for 16 ‘‘(7) EXEMPTIONS.—Paragraphs (2), (3), (5), 17 (6), (8), (10), and (11) of subsection (c) do not 18 apply to payments under this subsection.’’. 19 (b) OTHER TITLE XXI AMENDMENTS.— 20 21 (1) Section 2101 of such Act (42 U.S.C. 1397aa) is amended— 22 (A) in subsection (a), in the matter pre- 23 ceding paragraph (1), by striking ‘‘The pur- 24 pose’’ and inserting ‘‘Except with respect to 25 short-term assistance activities under section ERN17490 Discussion Draft S.L.C. 24 1 2105(h) and the Long-Term State Stability and 2 Innovation Program established in section 3 2105(i), the purpose’’; and 4 (B) in subsection (b), in the matter pre- 5 ceding paragraph (1), by inserting ‘‘subsection 6 (a) or (g) of’’ before ‘‘section 2105’’. 7 (2) Section 2105(c)(1) of such Act (42 U.S.C. 8 1397ee(c)(1)) is amended by striking ‘‘and may not 9 include’’ and inserting ‘‘or to carry out short-term 10 assistance activities under subsection (h) or the 11 Long-Term State Stability and Innovation Program 12 established in subsection (i) and, except in the case 13 of funds made available under subsection (h) or (i), 14 may not include’’. 15 (3) Section 2106(a)(1) of such Act (42 U.S.C. 16 1397ff(a)(1)) is amended by inserting ‘‘subsection 17 (a) or (g) of’’ before ‘‘section 2105’’. 18 19 20 SEC. 107. BETTER CARE RECONCILIATION IMPLEMENTATION FUND. (a) IN GENERAL.—There is hereby established a Bet- 21 ter Care Reconciliation Implementation Fund (referred to 22 in this section as the ‘‘Fund’’) within the Department of 23 Health and Human Services to provide for Federal admin24 istrative expenses in carrying out this Act. Discussion Draft ERN17490 S.L.C. 25 1 (b) FUNDING.—There is appropriated to the Fund, 2 out of any funds in the Treasury not otherwise appro3 priated, $500,000,000. 4 SEC. 108. REPEAL OF THE TAX ON EMPLOYEE HEALTH IN- 5 SURANCE 6 BENEFITS. 7 PREMIUMS AND HEALTH PLAN (a) IN GENERAL.—Chapter 43 of the Internal Rev- 8 enue Code of 1986 is amended by striking section 4980I. 9 (b) EFFECTIVE DATE.—The amendment made by 10 subsection (a) shall apply to taxable years beginning after 11 December 31, 2019. 12 (c) SUBSEQUENT EFFECTIVE DATE.—The amend- 13 ment made by subsection (a) shall not apply to taxable 14 years beginning after December 31, 2025, and chapter 43 15 of the Internal Revenue Code of 1986 is amended to read 16 as such chapter would read if such subsection had never 17 been enacted. 18 19 20 SEC. 109. REPEAL OF TAX ON OVER-THE-COUNTER MEDICATIONS. (a) HSAS.—Subparagraph (A) of section 223(d)(2) 21 of the Internal Revenue Code of 1986 is amended by strik22 ing ‘‘Such term’’ and all that follows through the period. 23 (b) ARCHER MSAS.—Subparagraph (A) of section 24 220(d)(2) of the Internal Revenue Code of 1986 is amend- Discussion Draft ERN17490 S.L.C. 26 1 ed by striking ‘‘Such term’’ and all that follows through 2 the period. 3 4 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sec- 5 tion 106 of the Internal Revenue Code of 1986 is amended 6 by striking subsection (f). 7 8 9 (d) EFFECTIVE DATES.— (1) DISTRIBUTIONS COUNTS.—The FROM SAVINGS AC- amendments made by subsections (a) 10 and (b) shall apply to amounts paid with respect to 11 taxable years beginning after December 31, 2016. 12 (2) REIMBURSEMENTS.—The amendment made 13 by subsection (c) shall apply to expenses incurred 14 with respect to taxable years beginning after Decem- 15 ber 31, 2016. 16 SEC. 110. REPEAL OF TAX ON HEALTH SAVINGS ACCOUNTS. 17 (a) HSAS.—Section 223(f)(4)(A) of the Internal 18 Revenue Code of 1986 is amended by striking ‘‘20 per19 cent’’ and inserting ‘‘10 percent’’. 20 (b) ARCHER MSAS.—Section 220(f)(4)(A) of the In- 21 ternal Revenue Code of 1986 is amended by striking ‘‘20 22 percent’’ and inserting ‘‘15 percent’’. 23 (c) EFFECTIVE DATE.—The amendments made by 24 this section shall apply to distributions made after Decem25 ber 31, 2016. Discussion Draft ERN17490 S.L.C. 27 1 SEC. 111. REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO 2 FLEXIBLE SPENDING ACCOUNTS. 3 (a) IN GENERAL.—Section 125 of the Internal Rev- 4 enue Code of 1986 is amended by striking subsection (i). 5 (b) EFFECTIVE DATE.—The amendment made by 6 this section shall apply to plan years beginning after De7 cember 31, 2017. 8 SEC. 112. REPEAL OF TAX ON PRESCRIPTION MEDICA- 9 10 TIONS. Subsection (j) of section 9008 of the Patient Protec- 11 tion and Affordable Care Act is amended to read as fol12 lows: 13 ‘‘(j) REPEAL.—This section shall apply to calendar 14 years beginning after December 31, 2010, and ending be15 fore January 1, 2018.’’. 16 17 SEC. 113. REPEAL OF MEDICAL DEVICE EXCISE TAX. Section 4191 of the Internal Revenue Code of 1986 18 is amended by adding at the end the following new sub19 section: 20 ‘‘(d) APPLICABILITY.—The tax imposed under sub- 21 section (a) shall not apply to sales after December 31, 22 2017.’’. 23 24 SEC. 114. REPEAL OF HEALTH INSURANCE TAX. Subsection (j) of section 9010 of the Patient Protec- 25 tion and Affordable Care Act is amended by striking ‘‘, Discussion Draft ERN17490 S.L.C. 28 1 and’’ at the end of paragraph (1) and all that follows 2 through ‘‘2017’’. 3 SEC. 115. REPEAL OF ELIMINATION OF DEDUCTION FOR 4 EXPENSES ALLOCABLE TO MEDICARE PART D 5 SUBSIDY. 6 (a) IN GENERAL.—Section 139A of the Internal Rev- 7 enue Code of 1986 is amended by adding at the end the 8 following new sentence: ‘‘This section shall not be taken 9 into account for purposes of determining whether any de10 duction is allowable with respect to any cost taken into 11 account in determining such payment.’’. 12 (b) EFFECTIVE DATE.—The amendment made by 13 this section shall apply to taxable years beginning after 14 December 31, 2016. 15 16 SEC. 116. REPEAL OF CHRONIC CARE TAX. (a) IN GENERAL.—Subsection (a) of section 213 of 17 the Internal Revenue Code of 1986 is amended by striking 18 ‘‘10 percent’’ and inserting ‘‘7.5 percent’’. 19 (b) EFFECTIVE DATE.—The amendment made by 20 this section shall apply to taxable years beginning after 21 December 31, 2016. 22 23 SEC. 117. REPEAL OF TANNING TAX. (a) IN GENERAL.—The Internal Revenue Code of 24 1986 is amended by striking chapter 49. Discussion Draft ERN17490 S.L.C. 29 1 (b) EFFECTIVE DATE.—The amendment made by 2 this section shall apply to services performed after Sep3 tember 30, 2017. 4 5 6 SEC. 118. PURCHASE OF INSURANCE FROM HEALTH SAVINGS ACCOUNT. (a) IN GENERAL.—Paragraph (2) of section 223(d) 7 of the Internal Revenue Code of 1986, as amended by sec8 tion 109(a), is amended— 9 (1) by striking ‘‘and any dependent (as defined 10 in section 152, determined without regard to sub- 11 sections (b)(1), (b)(2), and (d)(1)(B) thereof) of 12 such individual’’ in subparagraph (A) and inserting 13 ‘‘any dependent (as defined in section 152, deter- 14 mined without regard to subsections (b)(1), (b)(2), 15 and (d)(1)(B) thereof) of such individual, and any 16 child (as defined in section 152(f)(1)) of such indi- 17 vidual who has not attained the age of 27 before the 18 end of such individual’s taxable year’’, 19 20 (2) by striking subparagraph (B) and inserting the following: 21 ‘‘(B) HEALTH INSURANCE MAY NOT BE 22 PURCHASED FROM ACCOUNT.—Except 23 vided in subparagraph (C), subparagraph (A) 24 shall not apply to any payment for insurance.’’, 25 and as pro- ERN17490 Discussion Draft S.L.C. 30 1 (3) by striking ‘‘or’’ at the end of subparagraph 2 (C)(iii), by striking the period at the end of subpara- 3 graph (C)(iv) and inserting ‘‘, or’’, and by adding at 4 the end the following: 5 ‘‘(v) a high deductible health plan but 6 only to the extent of the portion of such 7 expense in excess of— 8 ‘‘(I) any amount allowable as a 9 credit under section 36B for the tax- 10 able year with respect to such cov- 11 erage, 12 ‘‘(II) any amount allowable as a 13 deduction under section 162(l) with 14 respect to such coverage, or 15 ‘‘(III) any amount excludable 16 from gross income with respect to 17 such coverage under section 106 (in- 18 cluding by reason of section 125) or 19 402(l).’’. 20 (b) EFFECTIVE DATE.—The amendments made by 21 this section shall apply with respect to amounts paid for 22 expenses incurred for, and distributions made for, cov23 erage under a high deductible health plan beginning after 24 December 31, 2017. Discussion Draft ERN17490 S.L.C. 31 1 SEC. 119. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAV- 2 INGS ACCOUNT INCREASED TO AMOUNT OF 3 DEDUCTIBLE AND OUT-OF-POCKET LIMITA- 4 TION. 5 (a) SELF-ONLY COVERAGE.—Section 223(b)(2)(A) 6 of the Internal Revenue Code of 1986 is amended by strik7 ing ‘‘$2,250’’ and inserting ‘‘the amount in effect under 8 subsection (c)(2)(A)(ii)(I)’’. 9 (b) FAMILY COVERAGE.—Section 223(b)(2)(B) of 10 such Code is amended by striking ‘‘$4,500’’ and inserting 11 ‘‘the amount in effect under subsection (c)(2)(A)(ii)(II)’’. 12 (c) COST-OF-LIVING ADJUSTMENT.—Section 13 223(g)(1) of such Code is amended— 14 15 (1) by striking ‘‘subsections (b)(2) and’’ both places it appears and inserting ‘‘subsection’’, and 16 (2) in subparagraph (B), by striking ‘‘deter- 17 mined by’’ and all that follows through ‘‘ ‘calendar 18 year 2003’.’’ and inserting ‘‘determined by sub- 19 stituting ‘calendar year 2003’ for ‘calendar year 20 1992’ in subparagraph (B) thereof.’’. 21 (d) EFFECTIVE DATE.—The amendments made by 22 this section shall apply to taxable years beginning after 23 December 31, 2017. Discussion Draft ERN17490 S.L.C. 32 1 SEC. 120. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON- 2 TRIBUTIONS TO THE SAME HEALTH SAVINGS 3 ACCOUNT. 4 (a) IN GENERAL.—Section 223(b)(5) of the Internal 5 Revenue Code of 1986 is amended to read as follows: 6 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVIDUALS 7 WITH FAMILY COVERAGE.— 8 ‘‘(A) IN GENERAL.—In the case of individ- 9 uals who are married to each other, if both 10 spouses are eligible individuals and either 11 spouse has family coverage under a high de- 12 ductible health plan as of the first day of any 13 month— 14 ‘‘(i) the limitation under paragraph 15 (1) shall be applied by not taking into ac- 16 count any other high deductible health 17 plan coverage of either spouse (and if such 18 spouses both have family coverage under 19 separate high deductible health plans, only 20 one such coverage shall be taken into ac- 21 count), 22 ‘‘(ii) such limitation (after application 23 of clause (i)) shall be reduced by the ag- 24 gregate amount paid to Archer MSAs of 25 such spouses for the taxable year, and ERN17490 Discussion Draft S.L.C. 33 1 ‘‘(iii) such limitation (after application 2 of clauses (i) and (ii)) shall be divided 3 equally between such spouses unless they 4 agree on a different division. 5 ‘‘(B) TREATMENT OF ADDITIONAL CON- 6 TRIBUTION AMOUNTS.—If 7 to in subparagraph (A) have attained age 55 8 before the close of the taxable year, the limita- 9 tion referred to in subparagraph (A)(iii) which 10 is subject to division between the spouses shall 11 include the additional contribution amounts de- 12 termined under paragraph (3) for both spouses. 13 In any other case, any additional contribution 14 amount determined under paragraph (3) shall 15 not be taken into account under subparagraph 16 (A)(iii) and shall not be subject to division be- 17 tween the spouses.’’. 18 both spouses referred (b) EFFECTIVE DATE.—The amendment made by 19 this section shall apply to taxable years beginning after 20 December 31, 2017. Discussion Draft ERN17490 S.L.C. 34 1 SEC. 121. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 2 INCURRED 3 HEALTH SAVINGS ACCOUNT. 4 BEFORE ESTABLISHMENT OF (a) IN GENERAL.—Section 223(d)(2) of the Internal 5 Revenue Code of 1986 is amended by adding at the end 6 the following new subparagraph: 7 ‘‘(D) TREATMENT OF CERTAIN MEDICAL 8 EXPENSES INCURRED BEFORE ESTABLISHMENT 9 OF ACCOUNT.—If a health savings account is 10 established during the 60-day period beginning 11 on the date that coverage of the account bene- 12 ficiary under a high deductible health plan be- 13 gins, then, solely for purposes of determining 14 whether an amount paid is used for a qualified 15 medical expense, such account shall be treated 16 as having been established on the date that 17 such coverage begins.’’. 18 (b) EFFECTIVE DATE.—The amendment made by 19 this subsection shall apply with respect to coverage under 20 a high deductible health plan beginning after December 21 31, 2017. Discussion Draft ERN17490 S.L.C. 35 1 SEC. 122. EXCLUSION FROM HSAS OF HIGH DEDUCTIBLE 2 HEALTH PLANS INCLUDING COVERAGE FOR 3 ABORTION. 4 (a) IN GENERAL.—Subparagraph (C) of section 5 223(d)(2) of the Internal Revenue Code of 1986 is amend6 ed by adding at the end the following flush sentence: 7 ‘‘A high deductible health plan shall not be 8 treated as described in clause (v) if such plan 9 includes coverage for abortions (other than any 10 abortion necessary to save the life of the mother 11 or any abortion with respect to a pregnancy 12 that is the result of an act of rape or incest).’’. 13 (b) EFFECTIVE DATE.—The amendment made by 14 this section shall apply with respect to coverage under a 15 high deductible health plan beginning after December 31, 16 2017. 17 18 SEC. 123. FEDERAL PAYMENTS TO STATES. (a) IN GENERAL.—Notwithstanding section 504(a), 19 1902(a)(23), 1903(a), 2002, 2005(a)(4), 2102(a)(7), or 20 2105(a)(1) of the Social Security Act (42 U.S.C. 704(a), 21 1396a(a)(23), 1396b(a), 1397a, 1397d(a)(4), 22 1397bb(a)(7), 1397ee(a)(1)), or the terms of any Med23 icaid waiver in effect on the date of enactment of this Act 24 that is approved under section 1115 or 1915 of the Social 25 Security Act (42 U.S.C. 1315, 1396n), for the 1-year pe26 riod beginning on the date of enactment of this Act, no ERN17490 Discussion Draft S.L.C. 36 1 Federal funds provided from a program referred to in this 2 subsection that is considered direct spending for any year 3 may be made available to a State for payments to a pro4 hibited entity, whether made directly to the prohibited en5 tity or through a managed care organization under con6 tract with the State. 7 8 9 10 11 12 (b) DEFINITIONS.—In this section: (1) PROHIBITED ENTITY.—The term ‘‘prohib- ited entity’’ means an entity, including its affiliates, subsidiaries, successors, and clinics— (A) that, as of the date of enactment of this Act— 13 (i) is an organization described in sec- 14 tion 501(c)(3) of the Internal Revenue 15 Code of 1986 and exempt from tax under 16 section 501(a) of such Code; 17 (ii) is an essential community provider 18 described in section 156.235 of title 45, 19 Code of Federal Regulations (as in effect 20 on the date of enactment of this Act), that 21 is primarily engaged in family planning 22 services, reproductive health, and related 23 medical care; and 24 25 (iii) provides for abortions, other than an abortion— Discussion Draft ERN17490 S.L.C. 37 1 (I) if the pregnancy is the result 2 of an act of rape or incest; or 3 (II) in the case where a woman 4 suffers from a physical disorder, phys- 5 ical injury, or physical illness that 6 would, as certified by a physician, 7 place the woman in danger of death 8 unless an abortion is performed, in- 9 cluding a life-endangering physical 10 condition caused by or arising from 11 the pregnancy itself; and 12 (B) for which the total amount of Federal 13 and State expenditures under the Medicaid pro- 14 gram under title XIX of the Social Security Act 15 in fiscal year 2014 made directly to the entity 16 and to any affiliates, subsidiaries, successors, or 17 clinics of the entity, or made to the entity and 18 to any affiliates, subsidiaries, successors, or 19 clinics of the entity as part of a nationwide 20 health 21 $350,000,000. 22 (2) DIRECT care provider network, SPENDING.—The exceeded term ‘‘direct 23 spending’’ has the meaning given that term under 24 section 250(c) of the Balanced Budget and Emer- 25 gency Deficit Control Act of 1985 (2 U.S.C. 900(c)). Discussion Draft ERN17490 S.L.C. 38 1 2 SEC. 124. MEDICAID PROVISIONS. The Social Security Act is amended— 3 (1) in section 1902(a)(47)(B) (42 U.S.C. 4 1396a(a)(47)(B)), by inserting ‘‘and provided that 5 any such election shall cease to be effective on Janu- 6 ary 1, 2020, and no such election shall be made 7 after that date’’ before the semicolon at the end; 8 (2) in section 1915(k)(2) (42 U.S.C. 9 1396n(k)(2)), by striking ‘‘during the period de- 10 scribed in paragraph (1)’’ and inserting ‘‘on or after 11 the date referred to in paragraph (1) and before 12 January 1, 2020’’; and 13 (3) in section 1920(e) (42 U.S.C. 1396r–1(e)), 14 by striking ‘‘under clause (i)(VIII), clause (i)(IX), or 15 clause (ii)(XX) of subsection (a)(10)(A)’’ and insert- 16 ing ‘‘under clause (i)(VIII) or clause (ii)(XX) of sec- 17 tion 1902(a)(10)(A) before January 1, 2020, section 18 1902(a)(10)(A)(i)(IX),’’. 19 20 SEC. 125. MEDICAID EXPANSION. (a) IN GENERAL.—Title XIX of the Social Security 21 Act (42 U.S.C. 1396 et seq.) is amended— 22 (1) in section 1902 (42 U.S.C. 1396a)— 23 (A) in subsection (a)(10)(A)— 24 (i) in clause (i)(VIII), by inserting 25 ‘‘and ending December 31, 2019,’’ after 26 ‘‘2014,’’; and Discussion Draft ERN17490 S.L.C. 39 1 (ii) in clause (ii), in subclause (XX), 2 by inserting ‘‘and ending December 31, 3 2017,’’ after ‘‘2014,’’, and by adding at 4 the end the following new subclause: 5 ‘‘(XXIII) beginning January 1, 2020, 6 who are expansion enrollees (as defined in 7 subsection (nn)(1));’’; and 8 (B) by adding at the end the following new 9 10 11 12 subsection: ‘‘(nn) EXPANSION ENROLLEES.— ‘‘(1) IN GENERAL.—In this title, the term ‘ex- pansion enrollee’ means an individual— 13 ‘‘(A) who is under 65 years of age; 14 ‘‘(B) who is not pregnant; 15 ‘‘(C) who is not entitled to, or enrolled for, 16 benefits under part A of title XVIII, or enrolled 17 for benefits under part B of title XVIII; 18 ‘‘(D) who is not described in any of sub- 19 clauses 20 (a)(10)(A)(i); and (I) through (VII) of subsection 21 ‘‘(E) whose income (as determined under 22 subsection (e)(14)) does not exceed 133 percent 23 of the poverty line (as defined in section 24 2110(c)(5)) applicable to a family of the size in- 25 volved. Discussion Draft ERN17490 S.L.C. 40 1 ‘‘(2) APPLICATION OF RELATED PROVISIONS.— 2 Any reference in subsection (a)(10)(G), (k), or (gg) 3 of this section or in section 1903, 1905(a), 1920(e), 4 or 1937(a)(1)(B) to individuals described in sub- 5 clause (VIII) of subsection (a)(10)(A)(i) shall be 6 deemed to include a reference to expansion enroll- 7 ees.’’; and 8 9 (2) in section 1905 (42 U.S.C. 1396d)— (A) in subsection (y)(1)— 10 (i) in the matter preceding subpara- 11 graph (A), by striking ‘‘, with respect to’’ 12 and all that follows through ‘‘shall be equal 13 to’’ and inserting ‘‘and that has elected to 14 cover newly eligible individuals before 15 March 1, 2017, with respect to amounts 16 expended by such State before January 1, 17 2020, for medical assistance for newly eli- 18 gible individuals described in subclause 19 (VIII) of section 1902(a)(10)(A)(i), and, 20 with respect to amounts expended by such 21 State after December 31, 2019, and before 22 January 1, 2024, for medical assistance 23 for expansion enrollees (as defined in sec- 24 tion 1902(nn)(1)), shall be equal to the 25 higher of the percentage otherwise deter- Discussion Draft ERN17490 S.L.C. 41 1 mined for the State and year under sub- 2 section (b) (without regard to this sub- 3 section) and’’; 4 5 (ii) in subparagraph (D), by striking ‘‘and’’ after the semicolon; 6 (iii) by striking subparagraph (E) and 7 inserting the following new subparagraphs: 8 ‘‘(E) 90 percent for calendar quarters in 9 10 11 12 13 14 15 2020; ‘‘(F) 85 percent for calendar quarters in 2021; ‘‘(G) 80 percent for calendar quarters in 2022; and ‘‘(H) 75 percent for calendar quarters in 2023.’’; and 16 (iv) by adding after and below sub- 17 paragraph (H) (as added by clause (iii)), 18 the following flush sentence: 19 ‘‘The Federal medical assistance percentage deter- 20 mined for a State and year under subsection (b) 21 shall apply to expenditures for medical assistance to 22 newly eligible individuals (as so described) and ex- 23 pansion enrollees (as so defined), in the case of a 24 State that has elected to cover newly eligible individ- 25 uals before March 1, 2017, for calendar quarters ERN17490 Discussion Draft S.L.C. 42 1 after 2023, and, in the case of any other State, for 2 calendar quarters (or portions of calendar quarters) 3 after February 28, 2017.’’; and 4 5 6 7 (B) in subsection (z)(2)— (i) in subparagraph (A)— (I) by inserting ‘‘through 2023’’ after ‘‘each year thereafter’’; and 8 (II) by striking ‘‘shall be equal 9 to’’ and inserting ‘‘and, for periods 10 after December 31, 2019 and before 11 January 1, 2024, who are expansion 12 enrollees 13 1902(nn)(1)) shall be equal to the 14 higher of the percentage otherwise de- 15 termined for the State and year under 16 subsection (b) (without regard to this 17 subsection) and’’; and 18 (ii) in subparagraph (B)(ii)— 19 20 (as defined in section (I) in subclause (III), by adding ‘‘and’’ at the end; and 21 (II) by striking subclauses (IV), 22 (V), and (VI) and inserting the fol- 23 lowing new subclause: 24 25 ‘‘(IV) 2017 and each subsequent year through 2023 is 80 percent.’’. Discussion Draft ERN17490 S.L.C. 43 1 2 (b) SUNSET OF MEDICAID ESSENTIAL HEALTH BENEFITS REQUIREMENT.—Section 1937(b)(5) of the Social 3 Security Act (42 U.S.C. 1396u–7(b)(5)) is amended by 4 adding at the end the following: ‘‘This paragraph shall not 5 apply after December 31, 2019.’’. 6 7 SEC. 126. RESTORING FAIRNESS IN DSH ALLOTMENTS. Section 1923(f)(7) of the Social Security Act (42 8 U.S.C. 1396r–4(f)(7)) is amended by adding at the end 9 the following new subparagraph: 10 11 ‘‘(C) NON-EXPANSION ‘‘(i) IN STATES.— GENERAL.—In the case of a 12 State that is a non-expansion State for a 13 fiscal year— 14 ‘‘(I) subparagraph (A) shall not 15 apply to the DSH allotment for such 16 State and fiscal year; and 17 ‘‘(II) the DSH allotment for the 18 State for fiscal year 2020 (including 19 for a non-expansion State that has a 20 DSH 21 paragraph (6)) shall be increased by 22 the amount calculated according to 23 clause (iii). 24 ‘‘(ii) NO 25 EXPANSION allotment determined under CHANGE IN REDUCTION FOR STATES.—In the case of a ERN17490 Discussion Draft S.L.C. 44 1 State that is an expansion State for a fis- 2 cal year, the DSH allotment for such State 3 and fiscal year shall be determined as if 4 clause (i) did not apply. 5 ‘‘(iii) AMOUNT CALCULATED.—For 6 purposes of clause (i)(II), the amount cal- 7 culated according to this clause for a non- 8 expansion State is the following: 9 ‘‘(I) For each State, the Sec- 10 retary shall calculate a ratio equal to 11 the State’s fiscal year 2016 DSH al- 12 lotment divided by the number of un- 13 insured individuals in the State for 14 such fiscal year (determined on the 15 basis of the most recent information 16 available from the Bureau of the Cen- 17 sus). 18 ‘‘(II) The Secretary shall identify 19 the States whose ratio as so deter- 20 mined is below the national average of 21 such ratio for all States. 22 ‘‘(III) The amount calculated 23 pursuant to this clause is an amount 24 that, if added to the State’s fiscal 25 year 2016 DSH allotment, would in- ERN17490 Discussion Draft S.L.C. 45 1 crease the ratio calculated pursuant to 2 subclause (I) up to the national aver- 3 age for all States. 4 ‘‘(iv) DISREGARD OF INCREASE.—The 5 DSH allotment for a non-expansion State 6 for the second, third, and fourth quarters 7 of fiscal year 2024 and fiscal years there- 8 after shall be determined as if there had 9 been no increase in the State’s DSH allot- 10 ment for fiscal year 2020 under clause 11 (i)(II). 12 13 ‘‘(v) NON-EXPANSION STATE DEFINED.—In AND EXPANSION this subparagraph: 14 ‘‘(I) The term ‘expansion State’ 15 means with respect to a fiscal year, a 16 State that, on or after January 1, 17 2021, provides eligibility under clause 18 (i)(VIII) 19 1902(a)(10)(A) for medical assistance 20 under this title (or provides eligibility 21 for individuals described in either 22 such clause under a waiver of the 23 State plan approved under section 24 1115). or (ii)(XX) of section Discussion Draft ERN17490 S.L.C. 46 1 ‘‘(II) The term ‘non-expansion 2 State’ means, with respect to a fiscal 3 year, a State that is not an expansion 4 State, except that, in the case of a 5 State that provides eligibility under 6 clause (i)(VIII) or (ii)(XX) of section 7 1902(a)(10)(A) for medical assistance 8 under this title (or provides eligibility 9 for individuals described in either 10 such clause under a waiver of the 11 State plan approved under section 12 1115) for any quarter occurring dur- 13 ing the period that begins on October 14 1, 2017, and ends on December 31, 15 2020, the State shall be treated as a 16 non-expansion State for purposes of 17 clause (i) only for quarters beginning 18 on or after the first day of the first 19 month for which the State no longer 20 provides such eligibility.’’. 21 22 23 SEC. 127. REDUCING STATE MEDICAID COSTS. (a) IN GENERAL.— (1) STATE PLAN REQUIREMENTS.—Section 24 1902(a)(34) of the Social Security Act (42 U.S.C. 25 1396a(a)(34)) is amended by striking ‘‘in or after Discussion Draft ERN17490 S.L.C. 47 1 the third month’’ and all that follows through ‘‘indi- 2 vidual)’’ and inserting ‘‘in or after the month in 3 which the individual (or, in the case of a deceased 4 individual, another individual acting on the individ- 5 ual’s behalf) made application (or, in the case of an 6 individual who is 65 years of age or older or who is 7 eligible for medical assistance under the plan on the 8 basis of being blind or disabled, in or after the third 9 month before such month)’’. 10 (2) DEFINITION OF MEDICAL ASSISTANCE.— 11 Section 1905(a) of the Social Security Act (42 12 U.S.C. 1396d(a)) is amended by striking ‘‘in or 13 after the third month before the month in which the 14 recipient makes application for assistance’’ and in- 15 serting ‘‘in or after the month in which the recipient 16 makes application for assistance, or, in the case of 17 a recipient who is 65 years of age or older or who 18 is eligible for medical assistance on the basis of 19 being blind or disabled at the time application is 20 made, in or after the third month before the month 21 in which the recipient makes application for assist- 22 ance,’’. 23 (b) EFFECTIVE DATE.—The amendments made by 24 subsection (a) shall apply to medical assistance with re25 spect to individuals whose eligibility for such assistance Discussion Draft ERN17490 S.L.C. 48 1 is based on an application for such assistance made (or 2 deemed to be made) on or after October 1, 2017. 3 4 5 SEC. 128. PROVIDING SAFETY NET FUNDING FOR NON-EXPANSION STATES. Title XIX of the Social Security Act is amended by 6 inserting after section 1923 (42 U.S.C. 1396r–4) the fol7 lowing new section: 8 9 10 ‘‘ADJUSTMENT IN PAYMENT FOR SERVICES OF SAFETY NET PROVIDERS IN NON-EXPANSION STATES ‘‘SEC. 1923A. (a) IN GENERAL.—Subject to the limi- 11 tations of this section, for each year during the period be12 ginning with fiscal year 2018 and ending with fiscal year 13 2022, each State that is one of the 50 States or the Dis14 trict of Columbia and that, as of July 1 of the preceding 15 fiscal year, did not provide for eligibility under clause 16 (i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) for medical 17 assistance under this title (or a waiver of the State plan 18 approved under section 1115) (each such State or District 19 referred to in this section for the fiscal year as a ‘non20 expansion State’) may adjust the payment amounts other21 wise provided under the State plan under this title (or a 22 waiver of such plan) to health care providers that provide 23 health care services to individuals enrolled under this title 24 (in this section referred to as ‘eligible providers’) so long 25 as the payment adjustment to such an eligible provider 26 does not exceed the provider’s costs in furnishing health Discussion Draft ERN17490 S.L.C. 49 1 care services (as determined by the Secretary and net of 2 payments under this title, other than under this section, 3 and by uninsured patients) to individuals who either are 4 eligible for medical assistance under the State plan (or 5 under a waiver of such plan) or have no health insurance 6 or health plan coverage for such services. 7 ‘‘(b) INCREASE IN APPLICABLE FMAP.—Notwith- 8 standing section 1905(b), the Federal medical assistance 9 percentage applicable with respect to expenditures attrib10 utable to a payment adjustment under subsection (a) for 11 which payment is permitted under subsection (c) shall be 12 equal to— 13 14 15 ‘‘(1) 100 percent for calendar quarters in fiscal years 2018, 2019, 2020, and 2021; and ‘‘(2) 95 percent for calendar quarters in fiscal 16 year 2022. 17 ‘‘(c) ANNUAL ALLOTMENT LIMITATION.—Payment 18 under section 1903(a) shall not be made to a State with 19 respect to any payment adjustment made under this sec20 tion for all calendar quarters in a fiscal year in excess 21 of the product of $2,000,000,000 multiplied by the ratio 22 of— 23 ‘‘(1) the population of the State with income 24 below 138 percent of the poverty line in 2015 (as de- 25 termined based the table entitled ‘Health Insurance Discussion Draft ERN17490 S.L.C. 50 1 Coverage Status and Type by Ratio of Income to 2 Poverty Level in the Past 12 Months by Age’ for the 3 universe of the civilian noninstitutionalized popu- 4 lation for whom poverty status is determined based 5 on the 2015 American Community Survey 1–Year 6 Estimates, as published by the Bureau of the Cen- 7 sus), to 8 9 10 11 ‘‘(2) the sum of the populations under paragraph (1) for all non-expansion States. ‘‘(d) DISQUALIFICATION ERAGE IN CASE OF STATE COV- EXPANSION.—If a State is a non-expansion for a 12 fiscal year and provides eligibility for medical assistance 13 described in subsection (a) during the fiscal year, the 14 State shall no longer be treated as a non-expansion State 15 under this section for any subsequent fiscal years.’’. 16 17 SEC. 129. ELIGIBILITY REDETERMINATIONS. (a) IN GENERAL.—Section 1902(e)(14) of the Social 18 Security Act (42 U.S.C. 1396a(e)(14)) (relating to modi19 fied adjusted gross income) is amended by adding at the 20 end the following: 21 ‘‘(J) FREQUENCY 22 TERMINATIONS.—Beginning 23 2017, and notwithstanding subparagraph (H), 24 in the case of an individual whose eligibility for 25 medical assistance under the State plan under OF ELIGIBILITY REDE- on October 1, Discussion Draft ERN17490 S.L.C. 51 1 this title (or a waiver of such plan) is deter- 2 mined based on the application of modified ad- 3 justed gross income under subparagraph (A) 4 and who is so eligible on the basis of clause 5 (i)(VIII), (ii)(XX), or (ii)(XXIII) of subsection 6 (a)(10)(A), at the option of the State, the State 7 plan may provide that the individual’s eligibility 8 shall be redetermined every 6 months (or such 9 shorter number of months as the State may 10 11 12 elect).’’. (b) INCREASED ADMINISTRATIVE MATCHING PERCENTAGE.—For each calendar quarter during the period 13 beginning on October 1, 2017, and ending on December 14 31, 2019, the Federal matching percentage otherwise ap15 plicable under section 1903(a) of the Social Security Act 16 (42 U.S.C. 1396b(a)) with respect to State expenditures 17 during such quarter that are attributable to meeting the 18 requirement of section 1902(e)(14) (relating to determina19 tions of eligibility using modified adjusted gross income) 20 of such Act shall be increased by 5 percentage points with 21 respect to State expenditures attributable to activities car22 ried out by the State (and approved by the Secretary) to 23 exercise the option described in subparagraph (J) of such 24 section (relating to eligibility redeterminations made on a Discussion Draft ERN17490 S.L.C. 52 1 6-month or shorter basis) (as added by subsection (a)) to 2 increase the frequency of eligibility redeterminations. 3 SEC. 130. OPTIONAL WORK REQUIREMENT FOR NON- 4 DISABLED, NONELDERLY, NONPREGNANT IN- 5 DIVIDUALS. 6 (a) IN GENERAL.—Section 1902 of the Social Secu- 7 rity Act (42 U.S.C. 1396a), as previously amended, is fur8 ther amended by adding at the end the following new sub9 section: 10 ‘‘(oo) OPTIONAL WORK REQUIREMENT 11 DISABLED, 12 UALS.— 13 NONELDERLY, ‘‘(1) IN FOR NONPREGNANT GENERAL.—Beginning NON- INDIVID- October 1, 14 2017, subject to paragraph (3), a State may elect to 15 condition medical assistance to a nondisabled, non- 16 elderly, nonpregnant individual under this title upon 17 such an individual’s satisfaction of a work require- 18 ment (as defined in paragraph (2)). 19 ‘‘(2) WORK REQUIREMENT DEFINED.—In this 20 section, the term ‘work requirement’ means, with re- 21 spect to an individual, the individual’s participation 22 in work activities (as defined in section 407(d)) for 23 such period of time as determined by the State, and 24 as directed and administered by the State. Discussion Draft ERN17490 S.L.C. 53 1 ‘‘(3) REQUIRED EXCEPTIONS.—States admin- 2 istering a work requirement under this subsection 3 may not apply such requirement to— 4 ‘‘(A) a woman during pregnancy through 5 the end of the month in which the 60-day pe- 6 riod (beginning on the last day of her preg- 7 nancy) ends; 8 ‘‘(B) an individual who is under 19 years 9 of age; 10 ‘‘(C) an individual who is the only parent 11 or caretaker relative in the family of a child 12 who has not attained 6 years of age or who is 13 the only parent or caretaker of a child with dis- 14 abilities; or 15 ‘‘(D) an individual who is married or a 16 head of household and has not attained 20 17 years of age and who— 18 ‘‘(i) maintains satisfactory attendance 19 at secondary school or the equivalent; or 20 ‘‘(ii) participates in education directly 21 22 23 related to employment.’’. (b) INCREASE TATION.—Section IN MATCHING RATE FOR IMPLEMEN- 1903 of the Social Security Act (42 24 U.S.C. 1396b) is amended by adding at the end the fol25 lowing: Discussion Draft ERN17490 S.L.C. 54 1 ‘‘(aa) The Federal matching percentage otherwise ap- 2 plicable under subsection (a) with respect to State admin3 istrative expenditures during a calendar quarter for which 4 the State receives payment under such subsection shall, 5 in addition to any other increase to such Federal matching 6 percentage, be increased for such calendar quarter by 5 7 percentage points with respect to State expenditures at8 tributable to activities carried out by the State (and ap9 proved by the Secretary) to implement subsection (oo) of 10 section 1902.’’. 11 12 SEC. 131. PROVIDER TAXES. Section 1903(w)(4)(C) of the Social Security Act (42 13 U.S.C. 1396b(w)(4)(C)) is amended by adding at the end 14 the following new clause: 15 ‘‘(iii) For purposes of clause (i), a de- 16 termination of the existence of an indirect 17 guarantee shall be made under paragraph 18 (3)(i) of section 433.68(f) of title 42, Code 19 of Federal Regulations, as in effect on 20 June 1, 2017, except that— 21 ‘‘(I) for fiscal year 2021, ‘5.8 22 percent’ shall be substituted for ‘6 23 percent’ each place it appears; Discussion Draft ERN17490 S.L.C. 55 1 ‘‘(II) for fiscal year 2022, ‘5.6 2 percent’ shall be substituted for ‘6 3 percent’ each place it appears; 4 ‘‘(III) for fiscal year 2023, ‘5.4 5 percent’ shall be substituted for ‘6 6 percent’ each place it appears; 7 ‘‘(IV) for fiscal year 2024, ‘5.2 8 percent’ shall be substituted for ‘6 9 percent’ each place it appears; and 10 ‘‘(V) for fiscal year 2025 and 11 each subsequent fiscal year, ‘5 per- 12 cent’ shall be substituted for ‘6 per- 13 cent’ each place it appears.’’. 14 15 16 SEC. 132. PER CAPITA ALLOTMENT FOR MEDICAL ASSISTANCE. (a) IN GENERAL.—Title XIX of the Social Security 17 Act is amended— 18 (1) in section 1903 (42 U.S.C. 1396b)— 19 (A) in subsection (a), in the matter before 20 paragraph (1), by inserting ‘‘and section 21 1903A(a)’’ after ‘‘except as otherwise provided 22 in this section’’; and 23 (B) in subsection (d)(1), by striking ‘‘to 24 which’’ and inserting ‘‘to which, subject to sec- 25 tion 1903A(a),’’; and Discussion Draft ERN17490 S.L.C. 56 1 2 3 (2) by inserting after such section 1903 the following new section: ‘‘SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR 4 5 6 7 MEDICAL ASSISTANCE. ‘‘(a) APPLICATION MENTS FOR OF PER CAPITA CAP ON PAY- MEDICAL ASSISTANCE EXPENDITURES.— ‘‘(1) IN GENERAL.—If a State which is one of 8 the 50 States or the District of Columbia has excess 9 aggregate medical assistance expenditures (as de- 10 fined in paragraph (2)) for a fiscal year (beginning 11 with fiscal year 2020), the amount of payment to 12 the State under section 1903(a)(1) for each quarter 13 in the following fiscal year shall be reduced by 1⁄4 of 14 the excess aggregate medical assistance payments 15 (as defined in paragraph (3)) for that previous fiscal 16 year. In this section, the term ‘State’ means only the 17 50 States and the District of Columbia. 18 ‘‘(2) EXCESS AGGREGATE MEDICAL ASSISTANCE 19 EXPENDITURES.—In 20 cess aggregate medical assistance expenditures’ 21 means, for a State for a fiscal year, the amount (if 22 any) by which— this subsection, the term ‘ex- 23 ‘‘(A) the amount of the adjusted total med- 24 ical assistance expenditures (as defined in sub- Discussion Draft ERN17490 S.L.C. 57 1 section (b)(1)) for the State and fiscal year; ex- 2 ceeds 3 ‘‘(B) the amount of the target total med- 4 ical assistance expenditures (as defined in sub- 5 section (c)) for the State and fiscal year. 6 ‘‘(3) EXCESS AGGREGATE MEDICAL ASSISTANCE 7 PAYMENTS.—In 8 gregate medical assistance payments’ means, for a 9 State for a fiscal year, the product of— this subsection, the term ‘excess ag- 10 ‘‘(A) the excess aggregate medical assist- 11 ance expenditures (as defined in paragraph (2)) 12 for the State for the fiscal year; and 13 ‘‘(B) the Federal average medical assist- 14 ance matching percentage (as defined in para- 15 graph (4)) for the State for the fiscal year. 16 ‘‘(4) FEDERAL AVERAGE MEDICAL ASSISTANCE 17 MATCHING PERCENTAGE.—In 18 term ‘Federal average medical assistance matching 19 percentage’ means, for a State for a fiscal year, the 20 ratio (expressed as a percentage) of— this subsection, the 21 ‘‘(A) the amount of the Federal payments 22 that would be made to the State under section 23 1903(a)(1) for medical assistance expenditures 24 for calendar quarters in the fiscal year if para- 25 graph (1) did not apply; to Discussion Draft ERN17490 S.L.C. 58 1 ‘‘(B) the amount of the medical assistance 2 expenditures for the State and fiscal year. 3 ‘‘(5) PER 4 CAPITA BASE PERIOD.— ‘‘(A) IN GENERAL.—In this section, the 5 term ‘per capita base period’ means, with re- 6 spect to a State, a period of 8 (or, in the case 7 of a State selecting a period under subpara- 8 graph (D), not less than 4) consecutive fiscal 9 quarters selected by the State. 10 ‘‘(B) TIMELINE.—Each State shall submit 11 its selection of a per capita base period to the 12 Secretary not later than January 1, 2018. 13 ‘‘(C) PARAMETERS.—In selecting a per 14 capita base period under this paragraph, a 15 State shall— 16 ‘‘(i) only select a period of 8 (or, in 17 the case of a State selecting a base period 18 under subparagraph (D), not less than 4) 19 consecutive fiscal quarters for which all the 20 data necessary to make determinations re- 21 quired under this section is available, as 22 determined by the Secretary; and 23 ‘‘(ii) shall not select any period of 8 24 (or, in the case of a State selecting a base 25 period under subparagraph (D), not less ERN17490 Discussion Draft S.L.C. 59 1 than 4) consecutive fiscal quarters that be- 2 gins with a fiscal quarter earlier than the 3 first quarter of fiscal year 2014 or ends 4 with a fiscal quarter later than the third 5 fiscal quarter of 2017. 6 ‘‘(D) BASE 7 8 PERIOD FOR LATE-EXPANDING STATES.— ‘‘(i) IN GENERAL.—In the case of a 9 State that did not provide for medical as- 10 sistance for the 1903A enrollee category 11 described in subsection (e)(2)(D) as of the 12 first day of the fourth fiscal quarter of fis- 13 cal year 2015 but which provided for such 14 assistance for such category in a subse- 15 quent fiscal quarter that is not later than 16 the fourth quarter of fiscal year 2016, the 17 State may select a per capita base period 18 that is less than 8 consecutive fiscal quar- 19 ters, but in no case shall the period se- 20 lected be less than 4 consecutive fiscal 21 quarters. 22 ‘‘(ii) APPLICATION OF OTHER RE- 23 QUIREMENTS.—Except 24 that a per capita base period be a period 25 of 8 consecutive fiscal quarters, all other for the requirement Discussion Draft ERN17490 S.L.C. 60 1 requirements of this paragraph shall apply 2 to a per capita base period selected under 3 this subparagraph. 4 ‘‘(iii) APPLICATION OF BASE PERIOD 5 ADJUSTMENTS.—The 6 amounts for per capita base periods re- 7 quired 8 (d)(4)(E) shall be applied to amounts for 9 per capita base periods selected under this 10 subparagraph by substituting ‘divided by 11 the ratio that the number of quarters in 12 the base period bears to 4’ for ‘divided by 13 2’. 14 ‘‘(E) ADJUSTMENT under adjustments subsections (b)(5) to and BY THE SECRETARY.— 15 If the Secretary determines that a State took 16 actions after the date of enactment of this sec- 17 tion (including making retroactive adjustments 18 to supplemental payment data in a manner that 19 affects a fiscal quarter in the per capita base 20 period) to diminish the quality of the data from 21 the per capita base period used to make deter- 22 minations under this section, the Secretary may 23 adjust the data as the Secretary deems appro- 24 priate. Discussion Draft ERN17490 S.L.C. 61 1 2 ‘‘(b) ADJUSTED TOTAL MEDICAL ASSISTANCE EXPENDITURES.—Subject to subsection (g), the following 3 shall apply: 4 ‘‘(1) IN GENERAL.—In this section, the term 5 ‘adjusted total medical assistance expenditures’ 6 means, for a State— 7 ‘‘(A) for the State’s per capita base period 8 (as defined in subsection (a)(5)), the product 9 of— 10 ‘‘(i) the amount of the medical assist- 11 ance expenditures (as defined in paragraph 12 (2) and adjusted under paragraph (5)) for 13 the State and period, reduced by the 14 amount of any excluded expenditures (as 15 defined in paragraph (3) and adjusted 16 under paragraph (5)) for the State and pe- 17 riod otherwise included in such medical as- 18 sistance expenditures; and 19 ‘‘(ii) the 1903A base period popu- 20 lation percentage (as defined in paragraph 21 (4)) for the State; or 22 ‘‘(B) for fiscal year 2019 or a subsequent 23 fiscal year, the amount of the medical assist- 24 ance expenditures (as defined in paragraph (2)) 25 for the State and fiscal year that is attributable Discussion Draft ERN17490 S.L.C. 62 1 to 1903A enrollees, reduced by the amount of 2 any excluded expenditures (as defined in para- 3 graph (3)) for the State and fiscal year other- 4 wise included in such medical assistance ex- 5 penditures and includes non-DSH supplemental 6 payments 7 (d)(4)(A)(ii)) and payments described in sub- 8 section (d)(4)(A)(iii) but shall not be construed 9 as including any expenditures attributable to 10 the program under section 1928 (relating to 11 State pediatric vaccine distribution programs). 12 In applying subparagraph (B), non-DSH sup- 13 plemental payments (as defined in subsection 14 (d)(4)(A)(ii)) and payments described in sub- 15 section (d)(4)(A)(iii) shall be treated as fully at- 16 tributable to 1903A enrollees. 17 ‘‘(2) MEDICAL (as defined in subsection ASSISTANCE EXPENDITURES.— 18 In this section, the term ‘medical assistance expendi- 19 tures’ means, for a State and fiscal year or per cap- 20 ita base period, the medical assistance payments as 21 reported by medical service category on the Form 22 CMS-64 quarterly expense report (or successor to 23 such a report form, and including enrollment data 24 and subsequent adjustments to any such report, in 25 this section referred to collectively as a ‘CMS-64 re- Discussion Draft ERN17490 S.L.C. 63 1 port’) for quarters in the year or base period for 2 which payment is (or may otherwise be) made pur- 3 suant to section 1903(a)(1), adjusted, in the case of 4 a per capita base period, under paragraph (5). 5 ‘‘(3) EXCLUDED EXPENDITURES.—In this sec- 6 tion, the term ‘excluded expenditures’ means, for a 7 State and fiscal year or per capita base period, ex- 8 penditures under the State plan (or under a waiver 9 of such plan) that are attributable to any of the fol- 10 lowing: 11 ‘‘(A) DSH.—Payment adjustments made 12 for disproportionate share hospitals under sec- 13 tion 1923. 14 ‘‘(B) MEDICARE COST-SHARING.—Pay- 15 ments made for medicare cost-sharing (as de- 16 fined in section 1905(p)(3)). 17 ‘‘(C) SAFETY NET PROVIDER PAYMENT AD- 18 JUSTMENTS IN NON-EXPANSION STATES.—Pay- 19 ment adjustments under subsection (a) of sec- 20 tion 1923A for which payment is permitted 21 under subsection (c) of such section. 22 ‘‘(D) EXPENDITURES FOR PUBLIC HEALTH 23 EMERGENCIES.—Any 24 ject to a public health emergency exclusion 25 under paragraph (6). expenditures that are sub- Discussion Draft ERN17490 S.L.C. 64 1 ‘‘(4) 1903A BASE PERIOD POPULATION PER- 2 CENTAGE.—In 3 period population percentage’ means, for a State, 4 the Secretary’s calculation of the percentage of the 5 actual medical assistance expenditures, as reported 6 by the State on the CMS–64 reports for calendar 7 quarters in the State’s per capita base period, that 8 are attributable to 1903A enrollees (as defined in 9 subsection (e)(1)). 10 this subsection, the term ‘1903A base ‘‘(5) ADJUSTMENTS FOR PER CAPITA BASE PE- 11 RIOD.—In 12 tures under paragraph (2) and excluded expendi- 13 tures under paragraph (3) for a State for the State’s 14 per capita base period, the total amount of each type 15 of expenditure for the State and base period shall be 16 divided by 2. 17 calculating medical assistance expendi- ‘‘(6) AUTHORITY TO EXCLUDE STATE EXPENDI- 18 TURES FROM CAPS DURING PUBLIC HEALTH EMER- 19 GENCY.— 20 ‘‘(A) IN GENERAL.—During the period 21 that begins on January 1, 2020, and ends on 22 December 31, 2024, the Secretary may exclude, 23 from a State’s medical assistance expenditures 24 for a fiscal year or portion of a fiscal year that 25 occurs during such period, an amount that shall Discussion Draft ERN17490 S.L.C. 65 1 not exceed the amount determined under sub- 2 paragraph (B) for the State and year or portion 3 of a year if— 4 ‘‘(i) a public health emergency de- 5 clared by the Secretary pursuant to section 6 319 of the Public Health Service Act ex- 7 isted within the State during such year or 8 portion of a year; and 9 ‘‘(ii) the Secretary determines that 10 such an exemption would be appropriate. 11 ‘‘(B) MAXIMUM AMOUNT OF ADJUST- 12 MENT.—The 13 fiscal year or portion of a fiscal year under this 14 paragraph shall not exceed the amount by 15 which— amount excluded for a State and 16 ‘‘(i) the amount of State expenditures 17 for medical assistance for 1903A enrollees 18 in areas of the State which are subject to 19 a declaration described in subparagraph 20 (A)(i) for the fiscal year or portion of a fis- 21 cal year; exceeds 22 ‘‘(ii) the amount of such expenditures 23 for such enrollees in such areas during the 24 most recent fiscal year or portion of a fis- 25 cal year of equal length to the portion of Discussion Draft ERN17490 S.L.C. 66 1 a fiscal year involved during which no such 2 declaration was in effect. 3 ‘‘(C) AGGREGATE LIMITATION ON EXCLU- 4 SIONS AND ADDITIONAL BLOCK GRANT PAY- 5 MENTS.—The 6 tures excluded under this paragraph and addi- 7 tional 8 1903B(c)(3)(E) for the period described in sub- 9 paragraph (A) shall not exceed $5,000,000,000. 10 ‘‘(D) REVIEW.—If the Secretary exercises 11 the authority under this paragraph with respect 12 to a State for a fiscal year or portion of a fiscal 13 year, the Secretary shall, not later than 6 14 months after the declaration described in sub- 15 paragraph (A)(i) ceases to be in effect, conduct 16 an audit of the State’s medical assistance ex- 17 penditures for 1903A enrollees during the year 18 or portion of a year to ensure that all of the ex- 19 penditures so excluded were made for the pur- 20 pose of ensuring that the health care needs of 21 1903A enrollees in areas affected by a public 22 health emergency are met. 23 24 aggregate amount of expendi- payments made under section ‘‘(c) TARGET TOTAL MEDICAL ASSISTANCE EXPENDITURES.— Discussion Draft ERN17490 S.L.C. 67 1 ‘‘(1) CALCULATION.—In this section, the term 2 ‘target total medical assistance expenditures’ means, 3 for a State for a fiscal year and subject to para- 4 graph (4), the sum of the products, for each of the 5 1903A enrollee categories (as defined in subsection 6 (e)(2)), of— 7 ‘‘(A) the target per capita medical assist- 8 ance expenditures (as defined in paragraph (2)) 9 for the enrollee category, State, and fiscal year; 10 and 11 ‘‘(B) the number of 1903A enrollees for 12 such enrollee category, State, and fiscal year, as 13 determined under subsection (e)(4). 14 ‘‘(2) TARGET PER CAPITA MEDICAL ASSISTANCE 15 EXPENDITURES.—In 16 get per capita medical assistance expenditures’ 17 means, for a 1903A enrollee category and State— 18 19 this subsection, the term ‘tar- ‘‘(A) for fiscal year 2020, an amount equal to— 20 ‘‘(i) the provisional FY19 target per 21 capita amount for such enrollee category 22 (as calculated under subsection (d)(5)) for 23 the State; increased by Discussion Draft ERN17490 S.L.C. 68 1 ‘‘(ii) the applicable annual inflation 2 factor (as defined in paragraph (3)) for 3 fiscal year 2020; and 4 ‘‘(B) for each succeeding fiscal year, an 5 amount equal to— 6 ‘‘(i) the target per capita medical as- 7 sistance expenditures (under subparagraph 8 (A) or this subparagraph) for the 1903A 9 enrollee category and State for the pre- 10 ceding fiscal year; increased by 11 ‘‘(ii) the applicable annual inflation 12 13 factor for that succeeding fiscal year. ‘‘(3) APPLICABLE 14 TOR.—In 15 inflation factor’ means— 16 ANNUAL INFLATION FAC- paragraph (2), the term ‘applicable annual ‘‘(A) for fiscal years before 2025— 17 ‘‘(i) for each of the 1903A enrollee 18 categories described in subparagraphs (C), 19 (D), and (E) of subsection (e)(2), the per- 20 centage increase in the medical care com- 21 ponent of the consumer price index for all 22 urban consumers (U.S. city average) from 23 September of the previous fiscal year to 24 September of the fiscal year involved; and ERN17490 Discussion Draft S.L.C. 69 1 ‘‘(ii) for each of the 1903A enrollee 2 categories described in subparagraphs (A) 3 and (B) of subsection (e)(2), the percent- 4 age increase described in clause (i) plus 1 5 percentage point; and 6 ‘‘(B) for fiscal years after 2024, for all 7 1903A enrollee categories, the percentage in- 8 crease in the consumer price index for all urban 9 consumers (U.S. city average) from September 10 of the previous fiscal year to September of the 11 fiscal year involved. 12 ‘‘(4) DECREASE IN TARGET EXPENDITURES 13 FOR REQUIRED EXPENDITURES BY CERTAIN POLIT- 14 ICAL SUBDIVISIONS.— 15 ‘‘(A) IN GENERAL.—In the case of a State 16 that had a DSH allotment under section 17 1923(f) for fiscal year 2016 that was more than 18 6 times the national average of such allotments 19 for all the States for such fiscal year and that 20 requires political subdivisions within the State 21 to contribute funds towards medical assistance 22 or other expenditures under the State plan 23 under this title (or under a waiver of such plan) 24 for a fiscal year (beginning with fiscal year 25 2020), the target total medical assistance ex- Discussion Draft ERN17490 S.L.C. 70 1 penditures for such State and fiscal year shall 2 be decreased by the amount that political sub- 3 divisions in the State are required to contribute 4 under the plan (or waiver) without reimburse- 5 ment from the State for such fiscal year, other 6 than contributions described in subparagraph 7 (B). 8 ‘‘(B) EXCEPTIONS.—The contributions de- 9 scribed in this subparagraph are the following: 10 ‘‘(i) Contributions required by a State 11 from a political subdivision that, as of the 12 first day of the calendar year in which the 13 fiscal year involved begins— 14 ‘‘(I) has a population of more 15 than 5,000,000, as estimated by the 16 Bureau of the Census; and 17 ‘‘(II) imposes a local income tax 18 upon its residents. 19 ‘‘(ii) Contributions required by a 20 State from a political subdivision for ad- 21 ministrative expenses if the State required 22 such contributions from such subdivision 23 without reimbursement from the State as 24 of January 1, 2017. Discussion Draft ERN17490 S.L.C. 71 1 ‘‘(5) ADJUSTMENTS TO STATE EXPENDITURES 2 TARGETS TO PROMOTE PROGRAM EQUITY ACROSS 3 STATES.— 4 ‘‘(A) IN GENERAL.—Beginning with fiscal 5 year 2020, the target per capita medical assist- 6 ance expenditures for a 1903A enrollee cat- 7 egory, State, and fiscal year, as determined 8 under paragraph (2), shall be adjusted (subject 9 to subparagraph (C)(i)) in accordance with this 10 11 paragraph. ‘‘(B) ADJUSTMENT BASED ON LEVEL OF 12 PER CAPITA SPENDING FOR 1903A ENROLLEE 13 CATEGORIES.—Subject 14 with respect to a State, fiscal year, and 1903A 15 enrollee category, if the State’s per capita cat- 16 egorical medical assistance expenditures (as de- 17 fined in subparagraph (D)) for the State and 18 category in the preceding fiscal year— to subparagraph (C), 19 ‘‘(i) exceed the mean per capita cat- 20 egorical medical assistance expenditures 21 for the category for all States for such pre- 22 ceding year by not less than 25 percent, 23 the State’s target per capita medical as- 24 sistance expenditures for such category for 25 the fiscal year involved shall be reduced by Discussion Draft ERN17490 S.L.C. 72 1 a percentage that shall be determined by 2 the Secretary but which shall not be less 3 than 0.5 percent or greater than 2 percent; 4 or 5 ‘‘(ii) are less than the mean per capita 6 categorical medical assistance expenditures 7 for the category for all States for such pre- 8 ceding year by not less than 25 percent, 9 the State’s target per capita medical as- 10 sistance expenditures for such category for 11 the fiscal year involved shall be increased 12 by a percentage that shall be determined 13 by the Secretary but which shall not be 14 less than 0.5 percent or greater than 2 15 percent. 16 ‘‘(C) RULES 17 OF APPLICATION.— ‘‘(i) BUDGET NEUTRALITY REQUIRE- 18 MENT.—In 19 percentages by which to adjust States’ tar- 20 get per capita medical assistance expendi- 21 tures for a category and fiscal year under 22 this paragraph, the Secretary shall make 23 such adjustments in a manner that does 24 not result in a net increase in Federal pay- 25 ments under this section for such fiscal determining the appropriate ERN17490 Discussion Draft S.L.C. 73 1 year, and if the Secretary cannot adjust 2 such expenditures in such a manner there 3 shall be no adjustment under this para- 4 graph for such fiscal year. 5 ‘‘(ii) ASSUMPTION REGARDING STATE 6 EXPENDITURES.—For 7 (i), in the case of a State that has its tar- 8 get per capita medical assistance expendi- 9 tures for a 1903A enrollee category and 10 fiscal year increased under this paragraph, 11 the Secretary shall assume that the cat- 12 egorical medical assistance expenditures 13 (as defined in subparagraph (D)(ii)) for 14 such State, category, and fiscal year will 15 equal such increased target medical assist- 16 ance expenditures. 17 purposes of clause ‘‘(iii) NONAPPLICATION TO LOW-DEN- 18 SITY STATES.—This 19 apply to any State that has a population 20 density of less than 15 individuals per 21 square mile, based on the most recent data 22 available from the Bureau of the Census. 23 ‘‘(iv) DISREGARD paragraph shall not OF ADJUSTMENT.— 24 Any adjustment under this paragraph to 25 target medical assistance expenditures for ERN17490 Discussion Draft S.L.C. 74 1 a State, 1903A enrollee category, and fis- 2 cal year shall be disregarded when deter- 3 mining the target medical assistance ex- 4 penditures for such State and category for 5 a succeeding year under paragraph (2). 6 ‘‘(v) APPLICATION FOR FISCAL YEARS 7 2020 AND 2021.—In 8 2021, the Secretary shall apply this para- 9 graph by deeming all categories of 1903A fiscal years 2020 and 10 enrollees to be a single category. 11 ‘‘(D) PER 12 13 CAPITA CATEGORICAL MEDICAL ASSISTANCE EXPENDITURES.— ‘‘(i) IN GENERAL.—In this paragraph, 14 the term ‘per capita categorical medical as- 15 sistance expenditures’ means, with respect 16 to a State, 1903A enrollee category, and 17 fiscal year, an amount equal to— 18 ‘‘(I) the categorical medical ex- 19 penditures (as defined in clause (ii)) 20 for the State, category, and year; di- 21 vided by 22 ‘‘(II) the number of 1903A en- 23 rollees for the State, category, and 24 year. Discussion Draft ERN17490 S.L.C. 75 1 ‘‘(ii) CATEGORICAL 2 ANCE EXPENDITURES.—The 3 ical 4 means, with respect to a State, 1903A en- 5 rollee category, and fiscal year, an amount 6 equal to the total medical assistance ex- 7 penditures (as defined in paragraph (2)) 8 for the State and fiscal year that are at- 9 tributable to 1903A enrollees in the cat- 10 egory, excluding any excluded expenditures 11 (as defined in paragraph (3)) for the State 12 and fiscal year that are attributable to 13 1903A enrollees in the category. 14 medical ‘‘(d) CALCULATION OF MEDICAL ASSIST- assistance term ‘categorexpenditures’ FY19 PROVISIONAL TARGET 15 AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.—Sub16 ject to subsection (g), the following shall apply: 17 ‘‘(1) CALCULATION 18 CAPITA BASE PERIOD.—For 19 retary shall calculate (and provide notice to the 20 State not later than April 1, 2018, of) the following: 21 ‘‘(A) The amount of the adjusted total 22 medical assistance expenditures (as defined in 23 subsection (b)(1)) for the State for the State’s 24 per capita base period. OF BASE AMOUNTS FOR PER each State the Sec- Discussion Draft ERN17490 S.L.C. 76 1 ‘‘(B) The number of 1903A enrollees for 2 the State in the State’s per capita base period 3 (as determined under subsection (e)(4)). 4 ‘‘(C) The average per capita medical as- 5 sistance expenditures for the State for the 6 State’s per capita base period equal to— 7 8 ‘‘(i) the amount calculated under subparagraph (A); divided by 9 10 11 ‘‘(ii) the number calculated under subparagraph (B). ‘‘(2) FISCAL YEAR 2019 AVERAGE PER CAPITA 12 AMOUNT BASED ON INFLATING THE PER CAPITA 13 BASE PERIOD AMOUNT TO FISCAL YEAR 2019 BY CPI- 14 MEDICAL.—The 15 year 2019 average per capita amount for each State 16 equal to— Secretary shall calculate a fiscal 17 ‘‘(A) the average per capita medical assist- 18 ance expenditures for the State for the State’s 19 per capita base period (calculated under para- 20 graph (1)(C)); increased by 21 ‘‘(B) the percentage increase in the med- 22 ical care component of the consumer price index 23 for all urban consumers (U.S. city average) 24 from the last month of the State’s per capita 25 base period to September of fiscal year 2019. Discussion Draft ERN17490 S.L.C. 77 1 ‘‘(3) AGGREGATE AND AVERAGE EXPENDI- 2 TURES PER CAPITA FOR FISCAL YEAR 2019.—The 3 Secretary shall calculate for each State the fol- 4 lowing: 5 ‘‘(A) The amount of the adjusted total 6 medical assistance expenditures (as defined in 7 subsection (b)(1)) for the State for fiscal year 8 2019. 9 ‘‘(B) The number of 1903A enrollees for 10 the State in fiscal year 2019 (as determined 11 under subsection (e)(4)). 12 ‘‘(4) PER CAPITA EXPENDITURES FOR FISCAL 13 YEAR 2019 FOR EACH 1903A ENROLLEE CATEGORY.— 14 The Secretary shall calculate (and provide notice to 15 each State not later than January 1, 2020, of) the 16 following: 17 ‘‘(A)(i) For each 1903A enrollee category, 18 the amount of the adjusted total medical assist- 19 ance expenditures (as defined in subsection 20 (b)(1)) for the State for fiscal year 2019 for in- 21 dividuals in the enrollee category, calculated by 22 excluding from medical assistance expenditures 23 those expenditures attributable to expenditures 24 described in clause (iii) or non-DSH supple- 25 mental expenditures (as defined in clause (ii)). ERN17490 Discussion Draft S.L.C. 78 1 ‘‘(ii) In this paragraph, the term ‘non- 2 DSH supplemental expenditure’ means a pay- 3 ment to a provider under the State plan (or 4 under a waiver of the plan) that— 5 ‘‘(I) is not made under section 1923; 6 ‘‘(II) is not made with respect to a 7 specific item or service for an individual; 8 ‘‘(III) is in addition to any payments 9 made to the provider under the plan (or 10 waiver) for any such item or service; and 11 ‘‘(IV) complies with the limits for ad- 12 ditional payments to providers under the 13 plan (or waiver) imposed pursuant to sec- 14 tion 1902(a)(30)(A), including the regula- 15 tions specifying upper payment limits 16 under the State plan in part 447 of title 17 42, Code of Federal Regulations (or any 18 successor regulations). 19 ‘‘(iii) An expenditure described in this 20 clause is an expenditure that meets the criteria 21 specified in subclauses (I), (II), and (III) of 22 clause (ii) and is authorized under section 1115 23 for the purposes of funding a delivery system 24 reform pool, uncompensated care pool, a des- 25 ignated State health program, or any other Discussion Draft ERN17490 S.L.C. 79 1 similar expenditure (as defined by the Sec- 2 retary). 3 ‘‘(B) For each 1903A enrollee category, 4 the number of 1903A enrollees for the State in 5 fiscal year 2019 in the enrollee category (as de- 6 termined under subsection (e)(4)). 7 ‘‘(C) For the State’s per capita base pe- 8 riod, the State’s non-DSH supplemental and 9 pool payment percentage is equal to the ratio 10 (expressed as a percentage) of— 11 ‘‘(i) the total amount of non-DSH 12 supplemental expenditures (as defined in 13 subparagraph (A)(ii) and adjusted under 14 subparagraph (E)) and payments described 15 in subparagraph (A)(iii) (and adjusted 16 under subparagraph (E)) for the State for 17 the period; to 18 ‘‘(ii) the amount described in sub- 19 section (b)(1)(A) for the State for the 20 State’s per capita base period. 21 ‘‘(D) For each 1903A enrollee category an 22 average medical assistance expenditures per 23 capita for the State for fiscal year 2019 for the 24 enrollee category equal to— Discussion Draft ERN17490 S.L.C. 80 1 ‘‘(i) the amount calculated under sub- 2 paragraph (A) for the State, increased by 3 the non-DSH supplemental and pool pay- 4 ment percentage for the State (as cal- 5 culated under subparagraph (C)); divided 6 by 7 ‘‘(ii) the number calculated under sub- 8 paragraph (B) for the State for the en- 9 rollee category. 10 ‘‘(E) For purposes of subparagraph (C)(i), 11 in calculating the total amount of non-DSH 12 supplemental expenditures and payments de- 13 scribed in subparagraph (A)(iii) for a State for 14 the per capita base period, the total amount of 15 such expenditures and the total amount of such 16 payments for the State and base period shall 17 each be divided by 2. 18 ‘‘(5) PROVISIONAL FY19 PER CAPITA TARGET 19 AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.— 20 Subject to subsection (f)(2), the Secretary shall cal- 21 culate for each State a provisional FY19 per capita 22 target amount for each 1903A enrollee category 23 equal to the average medical assistance expenditures 24 per capita for the State for fiscal year 2019 (as cal- Discussion Draft ERN17490 S.L.C. 81 1 culated under paragraph (4)(D)) for such enrollee 2 category multiplied by the ratio of— 3 ‘‘(A) the product of— 4 ‘‘(i) the fiscal year 2019 average per 5 capita amount for the State, as calculated 6 under paragraph (2); and 7 ‘‘(ii) the number of 1903A enrollees 8 for the State in fiscal year 2019, as cal- 9 culated under paragraph (3)(B); to 10 ‘‘(B) the amount of the adjusted total 11 medical assistance expenditures for the State 12 for fiscal year 2019, as calculated under para- 13 graph (3)(A). 14 15 ‘‘(e) 1903A ENROLLEE; 1903A ENROLLEE CATEGORY.—Subject to subsection (g), for purposes of this 16 section, the following shall apply: 17 ‘‘(1) 1903A ENROLLEE.—The term ‘1903A en- 18 rollee’ means, with respect to a State and a month 19 and subject to subsection (i)(1)(B), any Medicaid 20 enrollee (as defined in paragraph (3)) for the month, 21 other than such an enrollee who for such month is 22 in any of the following categories of excluded indi- 23 viduals: 24 ‘‘(A) CHIP.—An individual who is pro- 25 vided, under this title in the manner described Discussion Draft ERN17490 S.L.C. 82 1 in section 2101(a)(2), child health assistance 2 under title XXI. 3 ‘‘(B) IHS.—An individual who receives 4 any medical assistance under this title for serv- 5 ices for which payment is made under the third 6 sentence of section 1905(b). 7 ‘‘(C) BREAST AND CERVICAL CANCER 8 SERVICES 9 vidual who is eligible for medical assistance 10 under this title only on the basis of section 11 1902(a)(10)(A)(ii)(XVIII). 12 13 ELIGIBLE INDIVIDUAL.—An ‘‘(D) PARTIAL-BENEFIT indi- ENROLLEES.—An individual who— 14 ‘‘(i) is an alien who is eligible for 15 medical assistance under this title only on 16 the basis of section 1903(v)(2); 17 ‘‘(ii) is eligible for medical assistance 18 under this title only on the basis of sub- 19 clause 20 1902(a)(10)(A)(ii) (or on the basis of a 21 waiver that provides only comparable bene- 22 fits); (XII) or (XXI) of section 23 ‘‘(iii) is a dual eligible individual (as 24 defined in section 1915(h)(2)(B)) and is 25 eligible for medical assistance under this Discussion Draft ERN17490 S.L.C. 83 1 title (or under a waiver) only for some or 2 all of medicare cost-sharing (as defined in 3 section 1905(p)(3)); or 4 ‘‘(iv) is eligible for medical assistance 5 under this title and for whom the State is 6 providing a payment or subsidy to an em- 7 ployer for coverage of the individual under 8 a group health plan pursuant to section 9 1906 or section 1906A (or pursuant to a 10 waiver that provides only comparable bene- 11 fits). 12 ‘‘(E) BLIND 13 AND DISABLED CHILDREN.— An individual who— 14 ‘‘(i) is a child under 19 years of age; 15 and 16 ‘‘(ii) is eligible for medical assistance 17 under this title on the basis of being blind 18 or disabled. 19 ‘‘(2) 1903A ENROLLEE CATEGORY.—The term 20 ‘1903A enrollee category’ means each of the fol- 21 lowing: 22 23 ‘‘(A) ELDERLY.—A category of 1903A enrollees who are 65 years of age or older. Discussion Draft ERN17490 S.L.C. 84 1 ‘‘(B) BLIND AND DISABLED.—A category 2 of 1903A enrollees (not described in the pre- 3 vious subparagraph) who— 4 ‘‘(i) are 19 years of age or older; and 5 ‘‘(ii) are eligible for medical assistance 6 under this title on the basis of being blind 7 or disabled. 8 ‘‘(C) CHILDREN.—A category of 1903A 9 enrollees (not described in a previous subpara- 10 graph) who are children under 19 years of age. 11 ‘‘(D) EXPANSION ENROLLEES.—A cat- 12 egory of 1903A enrollees (not described in a 13 previous subparagraph) who are eligible for 14 medical assistance under this title only on the 15 basis 16 (ii)(XXIII) of section 1902(a)(10)(A). 17 of clause ‘‘(E) OTHER (i)(VIII), (ii)(XX), or NONELDERLY, NONDISABLED, 18 NON-EXPANSION 19 1903A enrollees who are not described in any 20 previous subparagraph. 21 ‘‘(3) MEDICAID ADULTS.—A category ENROLLEE.—The of term ‘Med- 22 icaid enrollee’ means, with respect to a State for a 23 month, an individual who is eligible for medical as- 24 sistance for items or services under this title and en- ERN17490 Discussion Draft S.L.C. 85 1 rolled under the State plan (or a waiver of such 2 plan) under this title for the month. 3 ‘‘(4) DETERMINATION OF NUMBER OF 1903A 4 ENROLLEES.—The 5 State and fiscal year or the State’s per capita base 6 period, and, if applicable, for a 1903A enrollee cat- 7 egory, is the average monthly number of Medicaid 8 enrollees for such State and fiscal year or base pe- 9 riod (and, if applicable, in such category) that are 10 reported through the CMS–64 report under (and 11 subject to audit under) subsection (h). 12 ‘‘(f) SPECIAL PAYMENT RULES.— 13 number of 1903A enrollees for a ‘‘(1) APPLICATION IN CASE OF RESEARCH AND 14 DEMONSTRATION PROJECTS AND OTHER WAIVERS.— 15 In the case of a State with a waiver of the State 16 plan approved under section 1115, section 1915, or 17 another provision of this title, this section shall 18 apply to medical assistance expenditures and medical 19 assistance payments under the waiver, in the same 20 manner as if such expenditures and payments had 21 been made under a State plan under this title and 22 the limitations on expenditures under this section 23 shall supersede any other payment limitations or 24 provisions (including limitations based on a per cap- Discussion Draft ERN17490 S.L.C. 86 1 ita limitation) otherwise applicable under such a 2 waiver. 3 ‘‘(2) TREATMENT OF STATES EXPANDING COV- 4 ERAGE AFTER JULY 1, 2016.—In 5 that did not provide for medical assistance for the 6 1903A enrollee category described in subsection 7 (e)(2)(D) as of July 1, 2016, but which subsequently 8 provides for such assistance for such category, the 9 provisional FY19 per capita target amount for such 10 enrollee category under subsection (d)(5) shall be 11 equal to the provisional FY19 per capita target 12 amount for the 1903A enrollee category described in 13 subsection (e)(2)(E). 14 ‘‘(3) IN the case of a State CASE OF STATE FAILURE TO REPORT 15 NECESSARY DATA.—If 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 submitted— a State for any quarter in a 21 ‘‘(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 ERN17490 Discussion Draft S.L.C. 87 1 were not satisfactorily submitted were a single 2 1903A enrollee category; and 3 ‘‘(B) the growth factor otherwise applied 4 under subsection (c)(2)(B) shall be decreased 5 by 1 percentage point. 6 ‘‘(g) RECALCULATION OF CERTAIN AMOUNTS FOR 7 DATA ERRORS.—The amounts and percentage calculated 8 under paragraphs (1) and (4)(C) of subsection (d) for a 9 State for the State’s 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 State’s 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 ‘‘(h) REQUIRED REPORTING AND AUDITING; TRANSI- 24 TIONAL INCREASE IN 25 FOR FEDERAL MATCHING PERCENTAGE CERTAIN ADMINISTRATIVE EXPENSES.— ERN17490 Discussion Draft S.L.C. 88 1 2 ‘‘(1) REPORTING ‘‘(A) IN OF CMS–64 DATA.— GENERAL.—In addition to the 3 data required on form Group VIII on the CMS– 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 ‘‘(B) REPORTING ON QUALIFIED INPA- 21 TIENT PSYCHIATRIC HOSPITAL SERVICES.—Not 22 later than 60 days after the date of the enact- 23 ment of this section, the Secretary shall modify 24 the CMS–64 report form to require that States 25 submit data with respect to medical assistance Discussion Draft ERN17490 S.L.C. 89 1 expenditures for qualified inpatient psychiatric 2 hospital 3 1905(h)(3)). 4 services (as ‘‘(C) REPORTING defined ON in section CHILDREN WITH 5 COMPLEX 6 than January 1, 2020, the Secretary shall mod- 7 ify the CMS–64 report form to require that 8 States submit data with respect to individuals 9 who— MEDICAL CONDITIONS.—Not later 10 ‘‘(i) are enrolled in a State plan under 11 this title or title XXI or under a waiver of 12 such plan; 13 ‘‘(ii) are under 21 years of age; and 14 ‘‘(iii) have a chronic medical condition 15 16 17 or serious injury that— ‘‘(I) affects two or more body systems; 18 ‘‘(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 ‘‘(III) either— ERN17490 Discussion Draft S.L.C. 90 1 ‘‘(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 ‘‘(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 Discussion Draft ERN17490 S.L.C. 91 1 ‘‘(2) AUDITING OF CMS–64 DATA.—The Sec- 2 retary shall conduct for each State an audit of the 3 number of individuals and expenditures reported 4 through the CMS–64 report for the State’s 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 ‘‘(3) AUDITING OF STATE SPENDING.—The 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 State’s spending 14 under this section not less than once every 3 years. 15 ‘‘(4) TEMPORARY INCREASE IN FEDERAL SUPPORT IMPROVED 16 MATCHING 17 DATA REPORTING SYSTEMS FOR FISCAL YEARS 2018 18 AND 2019.—In 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, 2019— PERCENTAGE TO the case of any State that selects as Discussion Draft ERN17490 S.L.C. 92 1 ‘‘(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 ‘‘(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 ‘‘(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 State’s additional adminis- 13 trative expenditures to implement the data re- 14 quirements of paragraph (1). 15 ‘‘(5) HHS REPORT ON ADOPTION OF T–MSIS 16 DATA.—Not 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 CMS–64 report data for pur- 21 poses of making the determinations necessary under 22 this section.’’. 23 (b) ENSURING ACCESS later than January 1, 2025, the Sec- TO HOME AND COMMUNITY 24 BASED SERVICES.—Section 1915 of the Social Security Discussion Draft ERN17490 S.L.C. 93 1 Act (42 U.S.C. 1396n) is amended by adding at the end 2 the following new subsection: 3 4 5 ‘‘(l) INCENTIVE PAYMENTS NITY-BASED FOR HOME AND COMMU- SERVICES.— ‘‘(1) IN GENERAL.—The Secretary shall estab- 6 lish a demonstration project (referred to in this sub- 7 section as the ‘demonstration project’) under which 8 eligible States may make HCBS payment adjust- 9 ments for the purpose of continuing to provide and 10 improving the quality of home and community-based 11 services provided under a waiver under subsection 12 (c) or (d) or a State plan amendment under sub- 13 section (i). 14 ‘‘(2) SELECTION OF ELIGIBLE STATES.— 15 ‘‘(A) APPLICATION.—A State seeking to 16 participate in the demonstration project shall 17 submit to the Secretary, at such time and in 18 such manner as the Secretary shall require, an 19 application that includes— 20 ‘‘(i) an assurance that any HCBS 21 payment adjustment made by the State 22 under this subsection will comply with the 23 health and welfare and financial account- 24 ability safeguards taken by the State under 25 subsection (c)(2)(A); and ERN17490 Discussion Draft S.L.C. 94 1 ‘‘(ii) such other information and as- 2 surances as the Secretary shall require. 3 ‘‘(B) SELECTION.—The Secretary shall se- 4 lect States to participate in the demonstration 5 project on a competitive basis except that, in 6 making selections under this paragraph, the 7 Secretary shall give priority to any State that 8 is one of the 15 States in the United States 9 with the lowest population density, as deter- 10 mined by the Secretary based on data from the 11 Bureau of the Census. 12 ‘‘(3) TERM OF DEMONSTRATION PROJECT.— 13 The demonstration project shall be conducted for the 14 4-year period beginning on January 1, 2020, and 15 ending on December 31, 2023. 16 17 18 19 ‘‘(4) STATE ALLOTMENTS AND INCREASED FMAP FOR PAYMENT ADJUSTMENTS.— ‘‘(A) IN GENERAL.— ‘‘(i) ANNUAL ALLOTMENT.—Subject 20 to clause (ii), for each year of the dem- 21 onstration project, the Secretary shall allot 22 an amount to each State that is an eligible 23 State for the year. 24 25 ‘‘(ii) LIMITATION SPENDING.—The ON FEDERAL aggregate amount that Discussion Draft ERN17490 S.L.C. 95 1 may be allotted to eligible States under 2 clause (i) for all years of the demonstra- 3 tion 4 $8,000,000,000. 5 ‘‘(B) FMAP project shall not exceed APPLICABLE TO HCBS PAY- 6 MENT ADJUSTMENTS.—For 7 demonstration project, notwithstanding section 8 1905(b) but subject to the limitations described 9 in subparagraph (C), the Federal medical as- 10 sistance percentage applicable with respect to 11 expenditures by an eligible State that are at- 12 tributable to HCBS payment adjustments shall 13 be equal to (and shall in no case exceed) 100 14 percent. 15 ‘‘(C) INDIVIDUAL each year of the PROVIDER AND ALLOT- 16 MENT LIMITATIONS.—Payment 17 1903(a) shall not be made to an eligible State 18 for expenditures for a year that are attributable 19 to an HCBS payment adjustment— under section 20 ‘‘(i) that is paid to a single provider 21 and exceeds a percentage which shall be 22 established by the Secretary of the pay- 23 ment otherwise made to the provider; or 24 ‘‘(ii) to the extent that the aggregate 25 amount of HCBS payment adjustments ERN17490 Discussion Draft S.L.C. 96 1 made by the State in the year exceeds the 2 amount allotted to the State for the year 3 under clause (i). 4 ‘‘(5) REPORTING 5 ‘‘(A) IN AND EVALUATION.— GENERAL.—As a condition of re- 6 ceiving the increased Federal medical assistance 7 percentage described in paragraph (4)(B), each 8 eligible State shall collect and report informa- 9 tion, as determined necessary by the Secretary, 10 for the purposes of providing Federal oversight 11 and evaluating the State’s compliance with the 12 health and welfare and financial accountability 13 safeguards taken by the State under subsection 14 (c)(2)(A). 15 ‘‘(B) FORMS.—Expenditures by eligible 16 States on HCBS payment adjustments shall be 17 separately reported on the CMS-64 Form and 18 in T-MSIS. 19 ‘‘(6) DEFINITIONS.—In this subsection: 20 21 22 23 24 ‘‘(A) ELIGIBLE STATE.—The term ‘eligible State’ means a State that— ‘‘(i) is one of the 50 States or the District of Columbia; ‘‘(ii) has in effect— ERN17490 Discussion Draft S.L.C. 97 1 2 3 ‘‘(I) a waiver under subsection (c) or (d); or ‘‘(II) a State plan amendment 4 under subsection (i); 5 ‘‘(iii) submits an application under 6 7 paragraph (2)(A); and ‘‘(iv) is selected by the Secretary to 8 participate in the demonstration project. 9 ‘‘(B) HCBS PAYMENT ADJUSTMENT.—The 10 term ‘HCBS payment adjustment’ means a 11 payment adjustment made by an eligible State 12 to the amount of payment otherwise provided 13 under a waiver under subsection (c) or (d) or 14 a State plan amendment under subsection (i) 15 for a home and community-based service which 16 is provided to a 1903A enrollee (as defined in 17 section 1903A(e)(1)) who is in the enrollee cat- 18 egory described in subparagraph (A) or (B) of 19 section 1903A(e)(2).’’. 20 21 SEC. 133. FLEXIBLE BLOCK GRANT OPTION FOR STATES. Title XIX of the Social Security Act, as amended by 22 section 132, is further amended by inserting after section 23 1903A the following new section: Discussion Draft ERN17490 S.L.C. 98 1 2 ‘‘SEC. 1903B. MEDICAID FLEXIBILITY PROGRAM. ‘‘(a) IN GENERAL.—Beginning with fiscal year 2020, 3 any State (as defined in subsection (e)) that has an appli4 cation approved by the Secretary under subsection (b) 5 may conduct a Medicaid Flexibility Program to provide 6 targeted health assistance to program enrollees. 7 8 ‘‘(b) STATE APPLICATION.— ‘‘(1) IN GENERAL.—To be eligible to conduct a 9 Medicaid Flexibility Program, a State shall submit 10 an application to the Secretary that meets the re- 11 quirements of this subsection. 12 ‘‘(2) CONTENTS OF APPLICATION.—An applica- 13 tion under this subsection shall include the fol- 14 lowing: 15 ‘‘(A) A description of the proposed Med- 16 icaid Flexibility Program and how the State will 17 satisfy the requirements described in subsection 18 (d). 19 20 21 22 ‘‘(B) The proposed conditions for eligibility of program enrollees. ‘‘(C) The applicable program enrollee category (as defined in subsection (e)(1)). 23 ‘‘(D) A description of the types, amount, 24 duration, and scope of services which will be of- 25 fered as targeted health assistance under the 26 program, including a description of the pro- ERN17490 Discussion Draft S.L.C. 99 1 posed package of services which will be provided 2 to program enrollees to whom the State would 3 otherwise be required to make medical assist- 4 ance available under section 1902(a)(10)(A)(i). 5 ‘‘(E) A description of how the State will 6 notify individuals currently enrolled in the State 7 plan for medical assistance under this title of 8 the transition to such program. 9 10 ‘‘(F) Statements certifying that the State agrees to— 11 ‘‘(i) submit regular enrollment data 12 with respect to the program to the Centers 13 for Medicare & Medicaid Services at such 14 time and in such manner as the Secretary 15 may require; 16 ‘‘(ii) submit timely and accurate data 17 to the Transformed Medicaid Statistical 18 Information System (T–MSIS); 19 ‘‘(iii) report annually to the Secretary 20 on adult health quality measures imple- 21 mented under the program and informa- 22 tion on the quality of health care furnished 23 to program enrollees under the program as 24 part of the annual report required under 25 section 1139B(d)(1); ERN17490 Discussion Draft S.L.C. 100 1 ‘‘(iv) submit such additional data and 2 information not described in any of the 3 preceding clauses of this subparagraph but 4 which the Secretary determines is nec- 5 essary for monitoring, evaluation, or pro- 6 gram integrity purposes, including— 7 ‘‘(I) survey data, such as the 8 data from Consumer Assessment of 9 Healthcare Providers and Systems 10 (CAHPS) surveys; 11 ‘‘(II) birth certificate data; and 12 ‘‘(III) clinical patient data for 13 quality measurements which may not 14 be present in a claim, such as labora- 15 tory data, body mass index, and blood 16 pressure; and 17 ‘‘(v) on an annual basis, conduct a re- 18 port evaluating the program and make 19 such report available to the public. 20 ‘‘(G) An information technology systems 21 plan demonstrating that the State has the capa- 22 bility to support the technological administra- 23 tion of the program and comply with reporting 24 requirements under this section. ERN17490 Discussion Draft S.L.C. 101 1 2 ‘‘(H) A statement of the goals of the proposed program, which shall include— 3 ‘‘(i) goals related to quality, access, 4 rate of growth targets, consumer satisfac- 5 tion, and outcomes; 6 ‘‘(ii) a plan for monitoring and evalu- 7 ating the program to determine whether 8 such goals are being met; and 9 ‘‘(iii) a proposed process for the State, 10 in consultation with the Centers for Medi- 11 care & Medicaid Services, to take remedial 12 action to make progress on unmet goals. 13 ‘‘(I) Such other information as the Sec- 14 retary may require. 15 ‘‘(3) STATE 16 ‘‘(A) IN NOTICE AND COMMENT PERIOD.— GENERAL.—Before submitting an 17 application under this subsection, a State shall 18 make the application publicly available for a 30 19 day notice and comment period. 20 ‘‘(B) NOTICE AND COMMENT PROCESS.— 21 During the notice and comment period de- 22 scribed in subparagraph (A), the State shall 23 provide opportunities for a meaningful level of 24 public input, which shall include public hearings 25 on the proposed Medicaid Flexibility Program. Discussion Draft ERN17490 S.L.C. 102 1 ‘‘(4) FEDERAL NOTICE AND COMMENT PE- 2 RIOD.—The 3 plication to conduct a Medicaid Flexibility Program 4 without making such application publicly available 5 for a 30 day notice and comment period. 6 7 Secretary shall not approve of any ap- ‘‘(5) TIMELINE ‘‘(A) IN FOR SUBMISSION.— GENERAL.—A State may submit 8 an application under this subsection to conduct 9 a Medicaid Flexibility Program that would 10 begin in the next fiscal year at any time, sub- 11 ject to subparagraph (B). 12 ‘‘(B) DEADLINES.—Each year beginning 13 with 2019, the Secretary shall specify a dead- 14 line for submitting an application under this 15 subsection to conduct a Medicaid Flexibility 16 Program that would begin in the next fiscal 17 year, but such deadline shall not be earlier than 18 60 days after the date that the Secretary pub- 19 lishes the amounts of State block grants as re- 20 quired under subsection (c)(4). 21 22 ‘‘(c) FINANCING.— ‘‘(1) IN GENERAL.—For each fiscal year during 23 which a State is conducting a Medicaid Flexibility 24 Program, the State shall receive, instead of amounts 25 otherwise payable to the State under this title for Discussion Draft ERN17490 S.L.C. 103 1 medical 2 amount specified in paragraph (3)(A). assistance 3 ‘‘(2) AMOUNT 4 ‘‘(A) IN for program enrollees, the OF BLOCK GRANT FUNDS.— GENERAL.—The block grant 5 amount under this paragraph for a State and 6 year shall be equal to the sum of the amounts 7 determined under subparagraph (B) for each 8 1903A enrollee category within the applicable 9 program enrollee category for the State and 10 11 12 year. ‘‘(B) ENROLLEE ‘‘(i) FOR CATEGORY AMOUNTS.— INITIAL YEAR.—Subject to 13 subparagraph (C), for the first fiscal year 14 in which a 1903A enrollee category is in- 15 cluded in the applicable program enrollee 16 category for a Medicaid Flexibility Pro- 17 gram conducted by the State, the amount 18 determined under this subparagraph for 19 the State, year, and category shall be equal 20 to the Federal average medical assistance 21 matching percentage (as defined in section 22 1903A(a)(4)) for the State and year multi- 23 plied by the product of— 24 ‘‘(I) the target per capita medical 25 assistance expenditures (as defined in ERN17490 Discussion Draft S.L.C. 104 1 section 1903A(c)(2)) for the State, 2 year, and category; and 3 ‘‘(II) the number of 1903A en- 4 rollees in such category for the State 5 for the second fiscal year preceding 6 such first fiscal year, increased by the 7 percentage increase in State popu- 8 lation from such second preceding fis- 9 cal year to such first fiscal year, based 10 on the best available estimates of the 11 Bureau of the Census. 12 ‘‘(ii) FOR ANY SUBSEQUENT YEAR.— 13 For any fiscal year that is not the first fis- 14 cal year in which a 1903A enrollee cat- 15 egory is included in the applicable program 16 enrollee category for a Medicaid Flexibility 17 Program conducted by the State, the block 18 grant amount under this paragraph for the 19 State, year, and category shall be equal to 20 the amount determined for the State and 21 category for the most recent previous fiscal 22 year in which the State conducted a Med- 23 icaid Flexibility Program that included 24 such category, except that such amount 25 shall be increased by the percentage in- Discussion Draft ERN17490 S.L.C. 105 1 crease in the consumer price index for all 2 urban consumers (U.S. city average) from 3 April of the second fiscal year preceding 4 the fiscal year involved to April of the fis- 5 cal year preceding the fiscal year involved. 6 ‘‘(C) CAP ON TOTAL POPULATION OF 1903A 7 ENROLLEES FOR PURPOSES OF BLOCK GRANT 8 CALCULATION.— 9 ‘‘(i) IN GENERAL.—In calculating the 10 amount of a block grant for the first year 11 in which a 1903A enrollee category is in- 12 cluded in the applicable program enrollee 13 category for a Medicaid Flexibility Pro- 14 gram conducted by the State under sub- 15 paragraph (B)(i), the total number of 16 1903A enrollees in such 1903A enrollee 17 category for the State and year shall not 18 exceed the adjusted number of base period 19 enrollees for the State (as defined in clause 20 (ii)). 21 ‘‘(ii) ADJUSTED NUMBER OF BASE PE- 22 RIOD 23 number of base period enrollees’ means, 24 with respect to a State and 1903A enrollee 25 category, the number of 1903A enrollees in ENROLLEES.—The term ‘adjusted ERN17490 Discussion Draft S.L.C. 106 1 the enrollee category for the State for the 2 State’s per capita base period (as deter- 3 mined under section 1903A(e)(4)), in- 4 creased by the percentage increase, if any, 5 in the total State population from the last 6 April in the State’s per capita base period 7 to April of the fiscal year preceding the fis- 8 cal year involved (determined using the 9 best available data from the Bureau of the 10 Census) plus 3 percentage points. 11 ‘‘(D) 12 FUNDS.— 13 AVAILABILITY ‘‘(i) IN OF GENERAL.—To ROLLOVER the extent that 14 the block grant amount available to a 15 State for a fiscal year under this para- 16 graph exceeds the amount of Federal pay- 17 ments made to the State for such fiscal 18 year under paragraph (3)(A), the Sec- 19 retary shall make such funds available to 20 the State for the succeeding fiscal year if 21 the State— 22 ‘‘(I) satisfies the State mainte- 23 nance of effort requirement under 24 paragraph (3)(B); and ERN17490 Discussion Draft S.L.C. 107 1 ‘‘(II) is conducting a Medicaid 2 Flexibility Program in such suc- 3 ceeding fiscal year. 4 ‘‘(ii) USE OF FUNDS.—Funds made 5 available to a State under this subpara- 6 graph shall only be used for expenditures 7 related to the State plan under this title or 8 to the State Medicaid Flexibility Program. 9 10 11 ‘‘(3) FEDERAL PAYMENT AND STATE MAINTE- NANCE OF EFFORT.— ‘‘(A) FEDERAL PAYMENT.—Subject to sub- 12 paragraphs (D) and (E), the Secretary shall 13 pay to each State conducting a Medicaid Flexi- 14 bility Program under this section for a fiscal 15 year, from its block grant amount under para- 16 graph (2) for such year, an amount for each 17 quarter of such year equal to the Federal aver- 18 age medical assistance percentage (as defined in 19 section 1903A(a)(4)) of the total amount ex- 20 pended under the program during such quarter 21 as targeted health assistance, and the State is 22 responsible for the balance of the funds to carry 23 out such program. 24 ‘‘(B) STATE 25 EXPENDITURES.—For MAINTENANCE OF EFFORT each year during which a Discussion Draft ERN17490 S.L.C. 108 1 State is conducting a Medicaid Flexibility Pro- 2 gram, the State shall make expenditures for 3 targeted health assistance under the program in 4 an amount equal to the product of— 5 ‘‘(i) the block grant amount deter- 6 mined for the State and year under para- 7 graph (2); and 8 ‘‘(ii) the enhanced FMAP described in 9 the first sentence of section 2105(b) for 10 the State and year. 11 ‘‘(C) REDUCTION IN BLOCK GRANT 12 AMOUNT FOR STATES FAILING TO MEET MOE 13 REQUIREMENT.— 14 ‘‘(i) IN GENERAL.—In the case of a 15 State conducting a Medicaid Flexibility 16 Program that makes expenditures for tar- 17 geted health assistance under the program 18 for a fiscal year in an amount that is less 19 than the required amount for the fiscal 20 year under subparagraph (B), the amount 21 of the block grant determined for the State 22 under paragraph (2) for the succeeding fis- 23 cal year shall be reduced by the amount by 24 which such expenditures are less than such 25 required amount. ERN17490 Discussion Draft S.L.C. 109 1 ‘‘(ii) DISREGARD OF REDUCTION.— 2 For purposes of determining the amount of 3 a State block grant under paragraph (2), 4 any reduction made under this subpara- 5 graph to a State’s block grant amount in 6 a previous fiscal year shall be disregarded. 7 ‘‘(iii) APPLICATION TO STATES THAT 8 TERMINATE PROGRAM.—In 9 State described in clause (i) that termi- 10 nates the State Medicaid Flexibility Pro- 11 gram under subsection (d)(2)(B) and such 12 termination is effective with the end of the 13 fiscal year in which the State fails to make 14 the required amount of expenditures under 15 subparagraph (B), the reduction amount 16 determined for the State and succeeding 17 fiscal year under clause (i) shall be treated 18 as an overpayment under this title. 19 ‘‘(D) REDUCTION the case of a FOR NONCOMPLIANCE.— 20 If the Secretary determines that a State con- 21 ducting a Medicaid Flexibility Program is not 22 complying with the requirements of this section, 23 the Secretary may withhold payments, reduce 24 payments, or recover previous payments to the ERN17490 Discussion Draft S.L.C. 110 1 State under this section as the Secretary deems 2 appropriate. 3 4 5 ‘‘(E) ADDITIONAL FEDERAL PAYMENTS DURING PUBLIC HEALTH EMERGENCY.— ‘‘(i) IN GENERAL.—In the case of a 6 State and fiscal year or portion of a fiscal 7 year for which the Secretary has excluded 8 expenditures under section 1903A(b)(6), if 9 the State has uncompensated targeted 10 health assistance expenditures for the year 11 or portion of a year, the Secretary may 12 make an additional payment to such State 13 equal to the Federal average medical as- 14 sistance percentage (as defined in section 15 1903A(a)(4)) for the year or portion of a 16 year of the amount of such uncompensated 17 targeted health assistance expenditures, ex- 18 cept that the amount of such payment 19 shall not exceed the amount determined for 20 the State and year or portion of a year 21 under clause (ii). 22 ‘‘(ii) MAXIMUM AMOUNT OF ADDI- 23 TIONAL 24 mined for a State and fiscal year or por- 25 tion of a fiscal year under this subpara- PAYMENT.—The amount deter- ERN17490 Discussion Draft S.L.C. 111 1 graph shall not exceed the Federal average 2 medical assistance percentage (as defined 3 in section 1903A(a)(4)) for such year or 4 portion of a year of the amount by 5 which— 6 ‘‘(I) the amount of State expend- 7 itures for targeted health assistance 8 for program enrollees in areas of the 9 State which are subject to a declara- 10 tion 11 1903A(b)(6)(A)(i) for the year or por- 12 tion of a year; exceeds described in section 13 ‘‘(II) the amount of such expend- 14 itures for such enrollees in such areas 15 during the most recent fiscal year in- 16 volved (or portion of a fiscal year of 17 equal length to the portion of a fiscal 18 year involved) during which no such 19 declaration was in effect. 20 ‘‘(iii) UNCOMPENSATED TARGETED 21 HEALTH 22 graph, the term ‘uncompensated targeted 23 health 24 with respect to a State and fiscal year or ASSISTANCE.—In assistance this subpara- expenditures’ means, Discussion Draft ERN17490 S.L.C. 112 1 portion of a fiscal year, an amount equal 2 to the amount (if any) by which— 3 ‘‘(I) the total amount expended 4 by the State under the program for 5 targeted health assistance for the year 6 or portion of a year; exceeds 7 ‘‘(II) the amount equal to the 8 amount of the block grant (reduced, 9 in the case of a portion of a year, to 10 the same proportion of the full block 11 grant amount that the portion of the 12 year bears to the whole year) divided 13 by the Federal average medical assist- 14 ance percentage for the year or por- 15 tion of a year. 16 ‘‘(iv) REVIEW.—If the Secretary 17 makes a payment to a State for a fiscal 18 year or portion of a fiscal year, the Sec- 19 retary shall, not later than 6 months after 20 the 21 1903A(b)(6)(A)(i) ceases to be in effect, 22 conduct an audit of the State’s targeted 23 health assistance expenditures for program 24 enrollees during the year or portion of a 25 year to ensure that all of the expenditures declaration described in section Discussion Draft ERN17490 S.L.C. 113 1 for which the additional payment was 2 made were made for the purpose of ensur- 3 ing that the health care needs of program 4 enrollees in areas affected by a public 5 health emergency are met. 6 ‘‘(4) DETERMINATION AND PUBLICATION OF 7 BLOCK GRANT AMOUNT.—Beginning 8 each year thereafter, the Secretary shall determine 9 for each State, regardless of whether the State is 10 conducting a Medicaid Flexibility Program or has 11 submitted an application to conduct such a program, 12 the amount of the block grant for the State under 13 paragraph (2) which would apply for the upcoming 14 fiscal year if the State were to conduct such a pro- 15 gram in such fiscal year, and shall publish such de- 16 terminations not later than June 1 of each year. 17 ‘‘(d) PROGRAM REQUIREMENTS.— 18 ‘‘(1) IN GENERAL.—No in 2019 and payment shall be made 19 under this section to a State conducting a Medicaid 20 Flexibility Program unless such program meets the 21 requirements of this subsection. 22 23 ‘‘(2) TERM OF PROGRAM.— ‘‘(A) IN GENERAL.—A State Medicaid 24 Flexibility Program approved under subsection 25 (b)— Discussion Draft ERN17490 S.L.C. 114 1 2 ‘‘(i) shall be conducted for not less than 1 program period; 3 ‘‘(ii) at the option of the State, may 4 be continued for succeeding program peri- 5 ods without resubmitting an application 6 under subsection (b), provided that— 7 ‘‘(I) the State provides notice to 8 the Secretary of its decision to con- 9 tinue the program; and 10 ‘‘(II) no significant changes are 11 made to the program; and 12 ‘‘(iii) shall be subject to termination 13 only by the State, which may terminate the 14 program by making an election under sub- 15 paragraph (B). 16 ‘‘(B) ELECTION 17 18 TO TERMINATE PRO- GRAM.— ‘‘(i) IN GENERAL.—Subject to clause 19 (ii), a State conducting a Medicaid Flexi- 20 bility Program may elect to terminate the 21 program effective with the first day after 22 the end of the program period in which the 23 State makes the election. 24 25 ‘‘(ii) TRANSITION MENT.—A PLAN REQUIRE- State may not elect to termi- Discussion Draft ERN17490 S.L.C. 115 1 nate a Medicaid Flexibility Program unless 2 the State has in place an appropriate tran- 3 sition plan approved by the Secretary. 4 ‘‘(iii) EFFECT OF TERMINATION.—If a 5 State elects to terminate a Medicaid Flexi- 6 bility Program, the per capita cap limita- 7 tions under section 1903A shall apply ef- 8 fective with the day described in clause (i), 9 and such limitations shall be applied as if 10 the State had never conducted a Medicaid 11 Flexibility Program. 12 13 14 ‘‘(3) PROVISION OF TARGETED HEALTH ASSIST- ANCE.— ‘‘(A) IN GENERAL.—A State Medicaid 15 Flexibility Program shall provide targeted 16 health assistance to program enrollees and such 17 assistance shall be instead of medical assistance 18 which would otherwise be provided to the enroll- 19 ees under this title. 20 ‘‘(B) CONDITIONS 21 ‘‘(i) IN FOR ELIGIBILITY.— GENERAL.—A State con- 22 ducting a Medicaid Flexibility Program 23 shall establish conditions for eligibility of 24 program enrollees, which shall be instead 25 of other conditions for eligibility under this ERN17490 Discussion Draft S.L.C. 116 1 title, except that the program must provide 2 for eligibility for program enrollees to 3 whom the State would otherwise be re- 4 quired to make medical assistance available 5 under section 1902(a)(10)(A)(i). 6 ‘‘(ii) MAGI.—Any determination of 7 income necessary to establish the eligibility 8 of a program enrollee for purposes of a 9 State Medicaid Flexibility Program shall 10 be made using modified adjusted gross in- 11 come 12 1902(e)(14). 13 14 in ‘‘(4) BENEFITS accordance with section AND SERVICES.— ‘‘(A) REQUIRED SERVICES.—In the case of 15 program enrollees to whom the State would oth- 16 erwise be required to make medical assistance 17 available under section 1902(a)(10)(A)(i), a 18 State conducting a Medicaid Flexibility Pro- 19 gram shall provide as targeted health assistance 20 the following types of services: 21 22 ‘‘(i) Inpatient and outpatient hospital services. 23 ‘‘(ii) Laboratory and X-ray services. 24 ‘‘(iii) Nursing facility services for indi- 25 viduals aged 21 and older. ERN17490 Discussion Draft S.L.C. 117 1 ‘‘(iv) Physician services. 2 ‘‘(v) Home health care services (in- 3 cluding home nursing services, medical 4 supplies, equipment, and appliances). 5 6 ‘‘(vi) Rural health clinic services (as defined in section 1905(l)(1)). 7 ‘‘(vii) Federally-qualified health center 8 services (as defined in section 1905(l)(2)). 9 ‘‘(viii) Family planning services and 10 supplies. 11 ‘‘(ix) Nurse midwife services. 12 ‘‘(x) Certified pediatric and family 13 14 15 16 17 nurse practitioner services. ‘‘(xi) Freestanding birth center services (as defined in section 1905(l)(3)). ‘‘(xii) Emergency medical transportation. 18 ‘‘(xiii) Non-cosmetic dental services. 19 ‘‘(xiv) Pregnancy-related services, in- 20 cluding postpartum services for the 12- 21 week period beginning on the last day of a 22 pregnancy. 23 ‘‘(B) OPTIONAL BENEFITS.—A State may, 24 at its option, provide services in addition to the 25 services described in subparagraph (A) as tar- Discussion Draft ERN17490 S.L.C. 118 1 geted health assistance under a Medicaid Flexi- 2 bility Program. 3 ‘‘(C) BENEFIT 4 ‘‘(i) IN PACKAGES.— GENERAL.—The targeted 5 health assistance provided by a State to 6 any group of program enrollees under a 7 Medicaid Flexibility Program shall have an 8 aggregate actuarial value that is equal to 9 at least 95 percent of the aggregate actu- 10 arial value of the benchmark coverage de- 11 scribed in subsection (b)(1) of section 1937 12 or 13 scribed in subsection (b)(2) of such sec- 14 tion, as such subsections were in effect 15 prior to the enactment of the Patient Pro- 16 tection and Affordable Care Act. benchmark-equivalent coverage de- 17 ‘‘(ii) AMOUNT, 18 OF BENEFITS.—Subject 19 State shall determine the amount, dura- 20 tion, and scope with respect to services 21 provided as targeted health assistance 22 under a Medicaid Flexibility Program, in- 23 cluding with respect to services that are re- 24 quired to be provided to certain program 25 enrollees under subparagraph (A) except DURATION, AND SCOPE to clause (i), the ERN17490 Discussion Draft S.L.C. 119 1 as otherwise provided under such subpara- 2 graph. 3 ‘‘(iii) MENTAL HEALTH AND SUB- 4 STANCE USE DISORDER COVERAGE AND 5 PARITY.—The 6 provided by a State to program enrollees 7 under a Medicaid Flexibility Program shall 8 include mental health services and sub- 9 stance use disorder services and the finan- 10 cial requirements and treatment limitations 11 applicable to such services under the pro- 12 gram shall comply with the requirements 13 of section 2726 of the Public Health Serv- 14 ice Act in the same manner as such re- 15 quirements apply to a group health plan. 16 targeted health assistance ‘‘(iv) PRESCRIPTION DRUGS.—If the 17 targeted health assistance provided by a 18 State to program enrollees under a Med- 19 icaid Flexibility Program includes assist- 20 ance for covered outpatient drugs, such 21 drugs shall be subject to a rebate agree- 22 ment that complies with the requirements 23 of section 1927, and any requirements ap- 24 plicable to medical assistance for covered 25 outpatient drugs under a State plan (in- Discussion Draft ERN17490 S.L.C. 120 1 cluding the requirement that the State pro- 2 vide information to a manufacturer) shall 3 apply in the same manner to targeted 4 health assistance for covered outpatient 5 drugs under a Medicaid Flexibility Pro- 6 gram. 7 ‘‘(D) COST SHARING.—A State conducting 8 a Medicaid Flexibility Program may impose 9 premiums, deductibles, cost-sharing, or other 10 similar charges, except that the total annual ag- 11 gregate amount of all such charges imposed 12 with respect to all program enrollees in a family 13 shall not exceed 5 percent of the family’s in- 14 come for the year involved. 15 ‘‘(5) ADMINISTRATION OF PROGRAM.—Each 16 State conducting a Medicaid Flexibility Program 17 shall do the following: 18 ‘‘(A) SINGLE AGENCY.—Designate a single 19 State agency responsible for administering the 20 program. 21 ‘‘(B) ENROLLMENT SIMPLIFICATION AND 22 COORDINATION WITH STATE HEALTH INSUR- 23 ANCE EXCHANGES.—Provide 24 rollment processes (such as online enrollment 25 and reenrollment and electronic verification) for simplified en- Discussion Draft ERN17490 S.L.C. 121 1 and coordination with State health insurance 2 exchanges. 3 ‘‘(C) BENEFICIARY PROTECTIONS.—Estab- 4 lish a fair process (which the State shall de- 5 scribe in the application required under sub- 6 section (b)) for individuals to appeal adverse 7 eligibility determinations with respect to the 8 program. 9 ‘‘(6) APPLICATION 10 ‘‘(A) IN OF REST OF TITLE XIX.— GENERAL.—To the extent that a 11 provision of this section is inconsistent with an- 12 other provision of this title, the provision of this 13 section shall apply. 14 ‘‘(B) APPLICATION OF SECTION 1903A.— 15 With respect to a State that is conducting a 16 Medicaid Flexibility Program, section 1903A 17 shall be applied as if program enrollees were 18 not 1903A enrollees for each program period 19 during which the State conducts the program. 20 21 22 ‘‘(C) WAIVERS AND STATE PLAN AMEND- MENTS.— ‘‘(i) IN GENERAL.—In the case of a 23 State conducting a Medicaid Flexibility 24 Program that has in effect a waiver or 25 State plan amendment, such waiver or ERN17490 Discussion Draft S.L.C. 122 1 amendment shall not apply with respect to 2 the program, targeted health assistance 3 provided under the program, or program 4 enrollees. 5 ‘‘(ii) REPLICATION OF WAIVER OR 6 AMENDMENT.—In 7 Flexibility Program, a State may mirror 8 provisions of a waiver or State plan 9 amendment described in clause (i) in the 10 program to the extent that such provisions 11 are otherwise consistent with the require- 12 ments of this section. 13 ‘‘(iii) EFFECT designing a Medicaid OF TERMINATION.—In 14 the case of a State described in clause (i) 15 that terminates its program under sub- 16 section (d)(2)(B), any waiver or amend- 17 ment which was limited pursuant to sub- 18 paragraph (A) shall cease to be so limited 19 effective with the effective date of such ter- 20 mination. 21 ‘‘(D) NONAPPLICATION OF PROVISIONS.— 22 With respect to the design and implementation 23 of Medicaid Flexibility Programs conducted 24 under this section, paragraphs (1), (10)(B), 25 (17), and (23) of section 1902(a), as well as Discussion Draft ERN17490 S.L.C. 123 1 any other provision of this title (except for this 2 section and as otherwise provided by this sec- 3 tion) that the Secretary deems appropriate, 4 shall not apply. 5 6 ‘‘(e) DEFINITIONS.—For purposes of this section: ‘‘(1) APPLICABLE PROGRAM ENROLLEE CAT- 7 EGORY.—The 8 egory’ means, with respect to a State Medicaid 9 Flexibility Program for a program period, any of the 10 following as specified by the State for the period in 11 its application under subsection (b): 12 term ‘applicable program enrollee cat- ‘‘(A) 2 ENROLLEE CATEGORIES.—Both of 13 the 1903A enrollee categories described in sub- 14 paragraphs (D) and (E) of section 1903A(e)(2). 15 ‘‘(B) EXPANSION ENROLLEES.—The 16 1903A enrollee category described in subpara- 17 graph (D) of section 1903A(e)(2). 18 ‘‘(C) NONELDERLY, NONDISABLED, NON- 19 EXPANSION ADULTS.—The 20 egory described in subparagraph (E) of section 21 1903A(e)(2). 22 ‘‘(2) MEDICAID 1903A enrollee cat- FLEXIBILITY PROGRAM.—The 23 term ‘Medicaid Flexibility Program’ means a State 24 program for providing targeted health assistance to Discussion Draft ERN17490 S.L.C. 124 1 program enrollees funded by a block grant under 2 this section. 3 4 ‘‘(3) PROGRAM ‘‘(A) IN ENROLLEE.— GENERAL.—The term ‘program 5 enrollee’ means, with respect to a State that is 6 conducting a Medicaid Flexibility Program for 7 a program period, an individual who is a 1903A 8 enrollee (as defined in section 1903A(e)(1)) who 9 is in the applicable program enrollee category 10 11 specified by the State for the period. ‘‘(B) RULE OF CONSTRUCTION.—For pur- 12 poses of section 1903A(e)(3), eligibility and en- 13 rollment of an individual under a Medicaid 14 Flexibility Program shall be deemed to be eligi- 15 bility and enrollment under a State plan (or 16 waiver of such plan) under this title. 17 ‘‘(4) PROGRAM PERIOD.—The term ‘program 18 period’ means, with respect to a State Medicaid 19 Flexibility Program, a period of 5 consecutive fiscal 20 years that begins with either— 21 22 ‘‘(A) the first fiscal year in which the State conducts the program; or 23 ‘‘(B) the next fiscal year in which the 24 State conducts such a program that begins 25 after the end of a previous program period. ERN17490 Discussion Draft S.L.C. 125 1 2 3 ‘‘(5) STATE.—The term ‘State’ means one of the 50 States or the District of Columbia. ‘‘(6) TARGETED HEALTH ASSISTANCE.—The 4 term ‘targeted health assistance’ means assistance 5 for health-care-related items and medical services for 6 program enrollees.’’. 7 8 9 SEC. 134. MEDICAID AND CHIP QUALITY PERFORMANCE BONUS PAYMENTS. Section 1903 of the Social Security Act (42 U.S.C. 10 1396b), as amended by section 130, is further amended 11 by adding at the end the following new subsection: 12 13 ‘‘(bb) QUALITY PERFORMANCE BONUS PAYMENTS.— ‘‘(1) INCREASED FEDERAL SHARE.—With re- 14 spect to each of fiscal years 2023 through 2026, in 15 the case of one of the 50 States or the District of 16 Columbia (each referred to in this subsection as a 17 ‘State’) that— 18 ‘‘(A) equals or exceeds the qualifying 19 amount (as established by the Secretary) of 20 lower than expected aggregate medical assist- 21 ance expenditures (as defined in paragraph (4)) 22 for that fiscal year; and 23 ‘‘(B) submits to the Secretary, in accord- 24 ance with such manner and format as specified 25 by the Secretary and for the performance pe- Discussion Draft ERN17490 S.L.C. 126 1 riod (as defined by the Secretary) for such fis- 2 cal year— 3 ‘‘(i) information on the applicable 4 quality measures identified under para- 5 graph (3) with respect to each category of 6 Medicaid eligible individuals under the 7 State plan or a waiver of such plan; and 8 ‘‘(ii) a plan for spending a portion of 9 additional funds resulting from application 10 of this subsection on quality improvement 11 within the State plan under this title or 12 under a waiver of such plan, 13 the Federal matching percentage otherwise ap- 14 plied under subsection (a)(7) for such fiscal 15 year shall be increased by such percentage (as 16 determined by the Secretary) so that the aggre- 17 gate amount of the resulting increase pursuant 18 to this subsection for the State and fiscal year 19 does not exceed the State allotment established 20 under paragraph (2) for the State and fiscal 21 year. 22 ‘‘(2) ALLOTMENT DETERMINATION.—The Sec- 23 retary shall establish a formula for computing State 24 allotments under this paragraph for each fiscal year 25 described in paragraph (1) such that— Discussion Draft ERN17490 S.L.C. 127 1 ‘‘(A) such an allotment to a State is deter- 2 mined based on the performance, including im- 3 provement, of such State under this title and 4 title XXI with respect to the quality measures 5 submitted under paragraph (3) by such State 6 for the performance period (as defined by the 7 Secretary) for such fiscal year; and 8 ‘‘(B) the total of the allotments under this 9 paragraph for all States for the period of the 10 fiscal years described in paragraph (1) is equal 11 to $8,000,000,000. 12 ‘‘(3) QUALITY MEASURES REQUIRED FOR 13 BONUS PAYMENTS.—For 14 the Secretary shall, pursuant to rulemaking and 15 after consultation with State agencies administering 16 State plans under this title, identify and publish 17 (and update as necessary) peer-reviewed quality 18 measures (which shall include health care and long- 19 term care outcome measures and may include the 20 quality measures that are overseen or developed by 21 the National Committee for Quality Assurance or 22 the Agency for Healthcare Research and Quality or 23 that are identified under section 1139A or 1139B) 24 that are quantifiable, objective measures that take 25 into account the clinically appropriate measures of purposes of this subsection, Discussion Draft ERN17490 S.L.C. 128 1 quality for different types of patient populations re- 2 ceiving benefits or services under this title or title 3 XXI. 4 ‘‘(4) LOWER THAN EXPECTED AGGREGATE 5 MEDICAL ASSISTANCE EXPENDITURES.—In 6 section, the term ‘lower than expected aggregate 7 medical assistance expenditures’ means, with respect 8 to a State the amount (if any) by which— this sub- 9 ‘‘(A) the amount of the adjusted total med- 10 ical assistance expenditures for the State and 11 fiscal year determined in section 1903A(b)(1) 12 without regard to the 1903A enrollee category 13 described in section 1903A(e)(2)(E); is less 14 than 15 ‘‘(B) the amount of the target total med- 16 ical assistance expenditures for the State and 17 fiscal year determined in section 1903A(c) with- 18 out regard to the 1903A enrollee category de- 19 scribed in section 1903A(e)(2)(E).’’. 20 21 22 23 SEC. 135. GRANDFATHERING CERTAIN MEDICAID WAIVERS; PRIORITIZATION OF HCBS WAIVERS. (a) MANAGED CARE WAIVERS.— (1) IN GENERAL.—In the case of a State with 24 a grandfathered managed care waiver, the State 25 may, at its option through a State plan amendment, ERN17490 Discussion Draft S.L.C. 129 1 continue to implement the managed care delivery 2 system that is the subject of such waiver in per- 3 petuity under the State plan under title XIX of the 4 Social Security Act (or a waiver of such plan) with- 5 out submitting an application to the Secretary for a 6 new waiver to implement such managed care delivery 7 system, so long as the terms and conditions of the 8 waiver involved (other than such terms and condi- 9 tions that relate to budget neutrality as modified 10 pursuant to section 1903A(f)(1) of the Social Secu- 11 rity Act) are not modified. 12 13 (2) MODIFICATIONS.— (A) IN GENERAL.—If a State with a 14 grandfathered managed care waiver seeks to 15 modify the terms or conditions of such a waiv- 16 er, the State shall submit to the Secretary an 17 application for approval of a new waiver under 18 such modified terms and conditions. 19 (B) APPROVAL 20 (i) IN OF MODIFICATION.— GENERAL.—An application de- 21 scribed in subparagraph (A) is deemed ap- 22 proved unless the Secretary, not later than 23 90 days after the date on which the appli- 24 cation is submitted, submits to the State— 25 (I) a denial; or Discussion Draft ERN17490 S.L.C. 130 1 (II) a request for more informa- 2 tion regarding the application. 3 (ii) ADDITIONAL INFORMATION.—If 4 the Secretary requests additional informa- 5 tion, the Secretary has 30 days after a 6 State submission in response to the Sec- 7 retary’s request to deny the application or 8 request more information. 9 (3) GRANDFATHERED MANAGED CARE WAIVER 10 DEFINED.—In 11 fathered managed care waiver’’ means the provisions 12 of a waiver or an experimental, pilot, or demonstra- 13 tion project that relate to the authority of a State 14 to implement a managed care delivery system under 15 the State plan under title XIX of such Act (or under 16 a waiver of such plan under section 1115 of such 17 Act) that— this subsection, the term ‘‘grand- 18 (A) is approved by the Secretary of Health 19 and Human Services under section 1915(b), 20 1932, or 1115(a)(1) of the Social Security Act 21 (42 U.S.C. 1396n(b), 1396u–2, 1315(a)(1)) as 22 of January 1, 2017; and 23 24 (B) has been renewed by the Secretary not less than 1 time. Discussion Draft ERN17490 S.L.C. 131 1 (b) HCBS WAIVERS.—The Secretary of Health and 2 Human Services shall implement procedures encouraging 3 States to adopt or extend waivers related to the authority 4 of a State to make medical assistance available for home 5 and community-based services under the State plan under 6 title XIX of the Social Security Act if the State determines 7 that such waivers would improve patient access to services. 8 9 SEC. 136. COORDINATION WITH STATES. Title XIX of the Social Security Act is amended by 10 inserting after section 1904 (42 U.S.C. 1396d) the fol11 lowing: 12 13 ‘‘COORDINATION WITH STATES ‘‘SEC. 1904A. No proposed rule (as defined in section 14 551(4) of title 5, United States Code) implementing or 15 interpreting any provision of this title shall be finalized 16 on or after January 1, 2018, unless the Secretary— 17 ‘‘(1) provides for a process under which the 18 Secretary or the Secretary’s designee solicits advice 19 from each State’s State agency responsible for ad- 20 ministering the State plan under this title (or a 21 waiver of such plan) and State Medicaid Director— 22 ‘‘(A) on a regular, ongoing basis on mat- 23 ters relating to the application of this title that 24 are likely to have a direct effect on the oper- 25 ation or financing of State plans under this title 26 (or waivers of such plans); and Discussion Draft ERN17490 S.L.C. 132 1 ‘‘(B) prior to submission of any final pro- 2 posed rule, plan amendment, waiver request, or 3 proposal for a project that is likely to have a di- 4 rect effect on the operation or financing of 5 State plans under this title (or waivers of such 6 plans); 7 ‘‘(2) accepts and considers written and oral 8 comments from a bipartisan, nonprofit, professional 9 organization that represents State Medicaid Direc- 10 tors, and from any State agency administering the 11 plan under this title, regarding such proposed rule; 12 and 13 ‘‘(3) incorporates in the preamble to the pro- 14 posed rule a summary of comments referred to in 15 paragraph (2) and the Secretary’s response to such 16 comments.’’. 17 18 19 SEC. 137. OPTIONAL ASSISTANCE FOR CERTAIN INPATIENT PSYCHIATRIC SERVICES. (a) STATE OPTION.—Section 1905 of the Social Se- 20 curity Act (42 U.S.C. 1396d) is amended— 21 22 23 24 (1) in subsection (a)— (A) in paragraph (16)— (i) by striking ‘‘and, (B)’’ and inserting ‘‘(B)’’; and Discussion Draft ERN17490 S.L.C. 133 1 (ii) by inserting before the semicolon 2 at the end the following: ‘‘, and (C) subject 3 to subsection (h)(4), qualified inpatient 4 psychiatric hospital services (as defined in 5 subsection (h)(3)) for individuals who are 6 over 21 years of age and under 65 years 7 of age’’; and 8 (B) in the subdivision (B) that follows 9 paragraph (29), by inserting ‘‘(other than serv- 10 ices described in subparagraph (C) of para- 11 graph (16) for individuals described in such 12 subparagraph)’’ after ‘‘patient in an institution 13 for mental diseases’’; and 14 (2) in subsection (h), by adding at the end the 15 following new paragraphs: 16 ‘‘(3) For purposes of subsection (a)(16)(C), the term 17 ‘qualified inpatient psychiatric hospital services’ means, 18 with respect to individuals described in such subsection, 19 services described in subparagraph (B) of paragraph (1) 20 that are not otherwise covered under subsection 21 (a)(16)(A) and are furnished— 22 ‘‘(A) in an institution (or distinct part thereof) 23 which is a psychiatric hospital (as defined in section 24 1861(f)); and Discussion Draft ERN17490 S.L.C. 134 1 ‘‘(B) with respect to such an individual, for a 2 period not to exceed 30 consecutive days in any 3 month and not to exceed 90 days in any calendar 4 year. 5 ‘‘(4) As a condition for a State including qualified 6 inpatient psychiatric hospital services as medical assist7 ance under subsection (a)(16)(C), the State must (during 8 the period in which it furnishes medical assistance under 9 this title for services and individuals described in such 10 subsection)— 11 ‘‘(A) maintain at least the number of licensed 12 beds at psychiatric hospitals owned, operated, or 13 contracted for by the State that were being main- 14 tained as of the date of the enactment of this para- 15 graph or, if higher, as of the date the State applies 16 to the Secretary to include medical assistance under 17 such subsection; and 18 ‘‘(B) maintain on an annual basis a level of 19 funding expended by the State (and political subdivi- 20 sions thereof) other than under this title from non- 21 Federal funds for inpatient services in an institution 22 described in paragraph (3)(A), and for active psy- 23 chiatric care and treatment provided on an out- 24 patient basis, that is not less than the level of such 25 funding for such services and care as of the date of ERN17490 Discussion Draft S.L.C. 135 1 the enactment of this paragraph or, if higher, as of 2 the date the State applies to the Secretary to include 3 medical assistance under such subsection.’’. 4 (b) SPECIAL MATCHING RATE.—Section 1905(b) of 5 the Social Security Act (42 U.S.C. 1395d(b)) is amended 6 by adding at the end the following: ‘‘Notwithstanding the 7 previous provisions of this subsection, the Federal medical 8 assistance percentage shall be 50 percent with respect to 9 medical assistance for services and individuals described 10 in subsection (a)(16)(C).’’. 11 (c) EFFECTIVE DATE.—The amendments made by 12 this section shall apply to qualified inpatient psychiatric 13 hospital services furnished on or after October 1, 2018. 14 15 16 SEC. 138. ENHANCED FMAP FOR MEDICAL ASSISTANCE TO ELIGIBLE INDIANS. Section 1905(b) of the Social Security Act (42 U.S.C. 17 1396d(b)) is amended, in the third sentence, by inserting 18 ‘‘and with respect to amounts expended by a State as med19 ical assistance for services provided by any other provider 20 under the State plan to an individual who is a member 21 of an Indian tribe who is eligible for assistance under the 22 State plan’’ before the period. 23 24 SEC. 139. SMALL BUSINESS HEALTH PLANS. (a) TAX TREATMENT OF SMALL BUSINESS HEALTH 25 PLANS.—A small business health plan (as defined in sec- Discussion Draft ERN17490 S.L.C. 136 1 tion 801(a) of the Employee Retirement Income Security 2 Act of 1974) shall be treated— 3 (1) as a group health plan (as defined in sec- 4 tion 2791 of the Public Health Service Act (42 5 U.S.C. 300gg–91)) for purposes of applying title 6 XXVII of the Public Health Service Act (42 U.S.C. 7 300gg et seq.) and title XXII of such Act (42 8 U.S.C. 300bb-1); 9 (2) as a group health plan (as defined in sec- 10 tion 5000(b)(1) of the Internal Revenue Code of 11 1986) for purposes of applying sections 4980B and 12 5000 and chapter 100 of the Internal Revenue Code 13 of 1986; and 14 (3) as a group health plan (as defined in sec- 15 tion 733(a)(1) of the Employee Retirement Income 16 Security Act of 1974 (29 U.S.C. 1191b(a)(1))) for 17 purposes of applying parts 6 and 7 of title I of the 18 Employee Retirement Income Security Act of 1974 19 (29 U.S.C. 1161 et seq.). 20 (b) RULES.—Subtitle B of title I of the Employee 21 Retirement Income Security Act of 1974 (29 U.S.C. 1021 22 et seq.) is amended by adding at the end the following 23 new part: Discussion Draft ERN17490 S.L.C. 137 1 ‘‘PART 8—RULES GOVERNING SMALL BUSINESS 2 RISK SHARING POOLS 3 4 ‘‘SEC. 801. SMALL BUSINESS HEALTH PLANS. ‘‘(a) IN GENERAL.—For purposes of this part, the 5 term ‘small business health plan’ 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 ‘‘(b) SPONSOR.—The sponsor of a group health plan 10 is described in this subsection if such sponsor— 11 12 ‘‘(1) is a qualified sponsor and receives certification by the Secretary; 13 ‘‘(2) is organized and maintained in good faith, 14 with a constitution or bylaws specifically stating its 15 purpose and providing for periodic meetings on at 16 least an annual basis; 17 ‘‘(3) is established as a permanent entity; 18 ‘‘(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, franchise, or section 7705 organization; and 22 ‘‘(5) does not condition membership on the 23 basis of a minimum group size. Discussion Draft ERN17490 S.L.C. 138 1 ‘‘SEC. 802. FILING FEE AND CERTIFICATION OF SMALL 2 3 BUSINESS HEALTH PLANS. ‘‘(a) FILING FEE.—A 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 ‘‘(b) CERTIFICATION.— ‘‘(1) IN GENERAL.—Not 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 Secretary— 15 ‘‘(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 ‘‘(B) may provide for continued certifi- 20 cation of small business health plans under this 21 part; 22 ‘‘(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 ERN17490 S.L.C. 139 1 ‘‘(D) shall conduct oversight of certified 2 plan sponsors, including periodic review, and 3 consistent with section 504, applying the re- 4 quirements of sections 518, 519, and 520; and 5 ‘‘(E) will consult with a State with respect 6 to a small business health plan domiciled in 7 such State regarding the Secretary’s authority 8 under this part and other enforcement author- 9 ity under sections 502 and 504. 10 ‘‘(2) INFORMATION TO BE INCLUDED IN APPLI- 11 CATION FOR CERTIFICATION.—An 12 certification under this part meets the requirements 13 of this section only if it includes, in a manner and 14 form which shall be prescribed by the applicable au- 15 thority by regulation, at least the following informa- 16 tion: application for 17 ‘‘(A) Identifying information. 18 ‘‘(B) States in which the plan intends to 19 do business. 20 ‘‘(C) Bonding requirements. 21 ‘‘(D) Plan documents. 22 ‘‘(E) Agreements with service providers. 23 ‘‘(3) REQUIREMENTS FOR CERTIFIED PLAN 24 SPONSORS.—Not 25 of enactment of this part, the Secretary shall pre- later than 6 months after the date Discussion Draft ERN17490 S.L.C. 140 1 scribe by interim final rule requirements for certified 2 plan sponsors that include requirements regarding— 3 4 ‘‘(A) structure and requirements for boards of trustees or plan administrators; 5 ‘‘(B) notification of material changes; and 6 ‘‘(C) notification for voluntary termination. 7 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH 8 STATES.—A certification granted under this part to a 9 small business health plan shall not be effective unless 10 written notice of such certification is filed by the plan 11 sponsor with the applicable State authority of each State 12 in which the small business health plan operates. 13 14 ‘‘(d) EXPEDITED AND DEEMED CERTIFICATION.— ‘‘(1) IN GENERAL.—If the Secretary fails to act 15 on a complete application for certification under this 16 section within 90 days of receipt of such complete 17 application, the applying small business health plan 18 sponsor shall be deemed certified until such time as 19 the Secretary may deny for cause the application for 20 certification. 21 ‘‘(2) PENALTY.—The Secretary may assess a 22 penalty against the board of trustees, plan adminis- 23 trator, and plan sponsor (jointly and severally) of a 24 small business health plan sponsor that is deemed 25 certified under paragraph (1) of up to $500,000 in Discussion Draft ERN17490 S.L.C. 141 1 the event the Secretary determines that the applica- 2 tion for certification of such small business health 3 plan sponsor was willfully or with gross negligence 4 incomplete or inaccurate. 5 ‘‘SEC. 6 7 803. PARTICIPATION AND COVERAGE REQUIRE- MENTS. ‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The 8 requirements of this subsection are met with respect to 9 a small business health plan if, under the terms of the 10 plan— 11 ‘‘(1) each participating employer must be— 12 ‘‘(A) a member of the sponsor; 13 ‘‘(B) the sponsor; or 14 ‘‘(C) an affiliated member of the sponsor, 15 except that, in the case of a sponsor which is 16 a professional association or other individual- 17 based association, if at least one of the officers, 18 directors, or employees of an employer, or at 19 least one of the individuals who are partners in 20 an employer and who actively participates in 21 the business, is a member or such an affiliated 22 member of the sponsor, participating employers 23 may also include such employer; and Discussion Draft ERN17490 S.L.C. 142 1 ‘‘(2) all individuals commencing coverage under 2 the plan after certification under this part must 3 be— 4 ‘‘(A) active or retired owners (including 5 self-employed individuals with or without em- 6 ployees), officers, directors, or employees of, or 7 partners in, participating employers; or 8 9 10 ‘‘(B) the dependents of individuals described in subparagraph (A). ‘‘(b) PARTICIPATING EMPLOYERS.—In applying re- 11 quirements relating to coverage renewal, a participating 12 employer shall not be deemed to be a plan sponsor. 13 14 ‘‘(c) PROHIBITION OF DISCRIMINATION AGAINST EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICIPATE.— 15 The requirements of this subsection are met with respect 16 to a small business health plan if— 17 ‘‘(1) under the terms of the plan, no partici- 18 pating employer may provide health insurance cov- 19 erage in the individual market for any employee not 20 covered under the plan, if such exclusion of the em- 21 ployee from coverage under the plan is based on a 22 health status-related factor with respect to the em- 23 ployee and such employee would, but for such exclu- 24 sion on such basis, be eligible for coverage under the 25 plan; and Discussion Draft ERN17490 S.L.C. 143 1 ‘‘(2) information regarding all coverage options 2 available under the plan is made readily available to 3 any employer eligible to participate. 4 ‘‘SEC. 804. DEFINITIONS; RENEWAL. 5 ‘‘For purposes of this part: 6 ‘‘(1) AFFILIATED MEMBER.—The term ‘affili- 7 ated member’ means, in connection with a sponsor— 8 ‘‘(A) a person who is otherwise eligible to 9 be a member of the sponsor but who elects an 10 affiliated status with the sponsor, or 11 ‘‘(B) in the case of a sponsor with mem- 12 bers which consist of associations, a person who 13 is a member or employee of any such associa- 14 tion and elects an affiliated status with the 15 sponsor. 16 ‘‘(2) APPLICABLE STATE AUTHORITY.—The 17 term ‘applicable State authority’ means, with respect 18 to a health insurance issuer in a State, the State in- 19 surance commissioner or official or officials des- 20 ignated by the State to enforce the requirements of 21 title XXVII of the Public Health Service Act for the 22 State involved with respect to such issuer. 23 ‘‘(3) FRANCHISOR; FRANCHISEE.—The terms 24 ‘franchisor’ and ‘franchisee’ have the meanings given 25 such terms for purposes of sections 436.2(a) Discussion Draft ERN17490 S.L.C. 144 1 through 436.2(c) of title 16, Code of Federal Regu- 2 lations (including any such amendments to such reg- 3 ulation after the date of enactment of this part) and, 4 for purposes of this part, franchisor or franchisee 5 employers participating in such a group health plan 6 shall not be treated as the employer, co-employer, or 7 joint employer of the employees of another partici- 8 pating franchisor or franchisee employer for any 9 purpose. 10 ‘‘(4) HEALTH PLAN TERMS.—The terms ‘group 11 health plan’, ‘health insurance coverage’, and ‘health 12 insurance issuer’ have the meanings given such 13 terms in section 733. 14 ‘‘(5) INDIVIDUAL 15 ‘‘(A) IN MARKET.— GENERAL.—The term ‘individual 16 market’ means the market for health insurance 17 coverage offered to individuals other than in 18 connection with a group health plan. 19 20 21 ‘‘(B) TREATMENT OF VERY SMALL GROUPS.— ‘‘(i) IN GENERAL.—Subject to clause 22 (ii), such term includes coverage offered in 23 connection with a group health plan that 24 has fewer than 2 participants as current 25 employees or participants described in sec- ERN17490 Discussion Draft S.L.C. 145 1 tion 732(d)(3) on the first day of the plan 2 year. 3 ‘‘(ii) STATE EXCEPTION.—Clause (i) 4 shall not apply in the case of health insur- 5 ance coverage offered in a State if such 6 State regulates the coverage described in 7 such clause in the same manner and to the 8 same extent as coverage in the small group 9 market (as defined in section 2791(e)(5) of 10 the Public Health Service Act) is regulated 11 by such State. 12 ‘‘(6) PARTICIPATING EMPLOYER.—The term 13 ‘participating employer’ means, in connection with a 14 small business health plan, any employer, if any in- 15 dividual who is an employee of such employer, a 16 partner in such employer, or a self-employed indi- 17 vidual who is such employer with or without employ- 18 ees (or any dependent, as defined under the terms 19 of the plan, of such individual) is or was covered 20 under such plan in connection with the status of 21 such individual as such an employee, partner, or 22 self-employed individual in relation to the plan. 23 ‘‘(7) SECTION 7705 ORGANIZATION.—The term 24 ‘section 7705 organization’ means an organization 25 providing services for a customer pursuant to a con- Discussion Draft ERN17490 S.L.C. 146 1 tract meeting the conditions of subparagraphs (A), 2 (B), (C), (D), and (E) (but not (F)) of section 3 7705(e)(2) of the Internal Revenue Code of 1986, 4 including an entity that is part of a section 7705 or- 5 ganization control group . For purposes of this part, 6 any reference to ‘member’ shall include a customer 7 of a section 7705 organization except with respect to 8 references to a ‘member’ or ‘members’ in paragraph 9 (1).’’. 10 (c) PREEMPTION RULES.—Section 514 of the Em- 11 ployee Retirement Income Security Act of 1974 (29 12 U.S.C. 1144) is amended by adding at the end the fol13 lowing: 14 ‘‘(f) The provisions of this title shall supersede any 15 and all State laws insofar as they may now or hereafter 16 preclude a health insurance issuer from offering health in17 surance coverage in connection with a small business 18 health plan which is certified under part 8.’’. 19 (d) PLAN SPONSOR.—Section 3(16)(B) of such Act 20 (29 U.S.C. 102(16)(B)) is amended by adding at the end 21 the following new sentence: ‘‘Such term also includes a 22 person serving as the sponsor of a small business health 23 plan under part 8.’’. 24 (e) SAVINGS CLAUSE.—Section 731(c) of such Act is 25 amended by inserting ‘‘or part 8’’ after ‘‘this part’’. Discussion Draft ERN17490 S.L.C. 147 1 (f) EFFECTIVE DATE.—The 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. 300u–11) is 11 amended— 12 (1) in paragraph (3), by striking ‘‘each of fiscal 13 years 2018 and 2019’’ and inserting ‘‘fiscal year 14 2018’’; and 15 16 17 18 (2) by striking paragraphs (4) through (8). SEC. 202. SUPPORT FOR STATE RESPONSE TO OPIOID AND SUBSTANCE ABUSE CRISIS. There is authorized to be appropriated, and is appro- 19 priated, to the Secretary of Health and Human Services, 20 out of monies in the Treasury not otherwise obligated— 21 (1) $4,972,000,000 for each of fiscal years 22 2018 through 2026, to provide grants to States to 23 support substance use disorder treatment and recov- 24 ery support services for individuals who have or may 25 have mental or substance use disorders, including ERN17490 Discussion Draft S.L.C. 148 1 counseling, medication assisted treatment, and other 2 substance abuse treatment and recovery services as 3 such Secretary determines appropriate; and 4 (2) $50,400,000 for each of fiscal years 2018 5 through 2022, for research on addiction and pain re- 6 lated to the substance abuse crisis. 7 Funds appropriated under this section shall remain avail8 able until expended. 9 10 SEC. 203. COMMUNITY HEALTH CENTER PROGRAM. Effective as if included in the enactment of the Medi- 11 care Access and CHIP Reauthorization Act of 2015 (Pub12 lic Law 114–10, 129 Stat. 87), paragraph (1) of section 13 221(a) of such Act is amended by inserting ‘‘, and an ad14 ditional $422,000,000 for fiscal year 2017’’ after ‘‘2017’’. 15 16 17 SEC. 204. CHANGE IN PERMISSIBLE AGE VARIATION IN HEALTH INSURANCE PREMIUM RATES. Section 2701(a)(1)(A)(iii) of the Public Health Serv- 18 ice Act (42 U.S.C. 300gg(a)(1)(A)(iii)) is amended by in19 serting after ‘‘(consistent with section 2707(c))’’ the fol20 lowing: ‘‘or, for plan years beginning on or after January 21 1, 2019, 5 to 1 for adults (consistent with section 2707(c)) 22 or such other ratio for adults (consistent with section 23 2707(c)) as the State may determine’’. Discussion Draft ERN17490 S.L.C. 149 1 SEC. 205. MEDICAL LOSS RATIO DETERMINED BY THE 2 3 STATE. Section 2718(b) of the Public Health Service Act (42 4 U.S.C. 300gg–18(b)) is amended by adding at the end the 5 following: 6 ‘‘(4) SUNSET.—Paragraphs (1) through (3) and 7 subsection (d) shall not apply for plan years begin- 8 ning on or after January 1, 2019, and after such 9 date any reference in law to such paragraphs and 10 11 subsection shall have no force or effect. ‘‘(5) MEDICAL LOSS RATIO DETERMINED BY 12 THE STATE.—For 13 January 1, 2019, each State shall— plan years beginning on or after 14 ‘‘(A) set the ratio of the amount of pre- 15 mium revenue a health insurance issuer offering 16 group or individual health insurance coverage 17 may expend on non-claims costs to the total 18 amount of premium revenue; and 19 ‘‘(B) determine the amount of any annual 20 rebate required to be paid to enrollees under 21 such coverage if the ratio of the amount of pre- 22 mium revenue expended by the issuer on non- 23 claims costs to the total amount of premium 24 revenue exceeds the ratio set by the State under 25 subparagraph (A).’’. Discussion Draft ERN17490 S.L.C. 150 1 SEC. 206. STABILIZING THE INDIVIDUAL INSURANCE MAR- 2 3 KETS. (a) ENROLLMENT WAITING PERIODS.—Section 4 2702(b)(1) of the Public Health Services Act (42 U.S.C. 5 300gg–1(b)(1)) is amended by inserting ‘‘, and as de6 scribed in paragraph (3)’’ before the period. 7 (b) CREDITABLE COVERAGE REQUIREMENT.—Sec- 8 tion 2702(b)(2) of the Public Health Services Act (42 9 U.S.C. 300gg–1(b)(2)) is amended by striking ‘‘paragraph 10 (3)’’ and inserting ‘‘paragraph (4)’’. 11 (c) APPLICATION OF WAITING PERIODS.—Section 12 2702(b) of the Public Health Services Act (42 U.S.C. 13 300gg-1(b)) is amended— 14 (1) in paragraph (3)— 15 (A) by striking ‘‘with respect to enrollment 16 periods under paragraphs (1) and (2)’’, insert- 17 ing ‘‘in accordance with this subsection’’; and 18 (B) by redesignating such paragraph as 19 paragraph (4); and 20 (2) by inserting after paragraph (2), the fol- 21 22 23 lowing: ‘‘(3) WAITING ‘‘(A) IN PERIODS.— GENERAL.—With respect to health 24 insurance coverage that is effective on or after 25 January 1, 2019, a health insurance issuer de- 26 scribed in subsection (a) that offers such cov- ERN17490 Discussion Draft S.L.C. 151 1 erage in the individual market shall impose a 6 2 month waiting period (as defined in the same 3 manner as such term is defined in section 4 2704(b)(4) for group health plans) on any indi- 5 vidual who enrolls in such coverage and who 6 cannot demonstrate— 7 ‘‘(i) in the case of an individual sub- 8 mitting an application during an open en- 9 rollment period, 12 months of continuous 10 creditable coverage without experiencing a 11 significant break in such coverage as de- 12 scribed in subparagraphs (A) and (B) of 13 section 2704(c)(2); or 14 ‘‘(ii) in the case of an individual sub- 15 mitting an application during a special en- 16 rollment period— 17 ‘‘(I) 12 months of continuous 18 creditable coverage as described in 19 clause (i); or 20 ‘‘(II) at least 1 day of creditable 21 coverage during the 60-day period im- 22 mediately preceding the date of sub- 23 mission of such application. 24 25 ‘‘(B) INDIVIDUALS COVERAGE.—Such ENROLLED IN OTHER a waiting period shall not ERN17490 Discussion Draft S.L.C. 152 1 apply to an individual who is enrolled in health 2 insurance coverage in the individual market on 3 the day before the effective date of the coverage 4 in which the individual is newly enrolling. 5 6 ‘‘(C) WAITING PERIOD DESCRIBED.—For purposes of subparagraph (A)— 7 ‘‘(i) in the case of an individual that 8 submits an application during an open en- 9 rollment period or under a special enroll- 10 ment period for which the individual quali- 11 fies, coverage under the plan begins on the 12 first day of the first month that begins 6 13 months after the date on which the indi- 14 vidual submits an application for health in- 15 surance coverage; and 16 ‘‘(ii) in the case of an individual that 17 submits an application outside of an open 18 enrollment period and does not qualify for 19 enrollment under a special enrollment pe- 20 riod, coverage under the plan begins on the 21 later of— 22 ‘‘(I) the first day of the first 23 month that begins 6 months after the 24 day on which the individual submits ERN17490 Discussion Draft S.L.C. 153 1 an application for health insurance 2 coverage; or 3 ‘‘(II) the first day of the next 4 plan year. 5 ‘‘(D) CERTIFICATES OF CREDITABLE COV- 6 ERAGE.—The 7 surance issuers and health care sharing min- 8 istries (as defined in section 5000A(d)(2)(B) of 9 the Internal Revenue Code of 1986) to provide 10 certification of periods of creditable coverage 11 and waiting periods, in a manner prescribed by 12 the Secretary, for purposes of verifying that the 13 continuous coverage requirements of subpara- 14 graph (A) are met. 15 Secretary shall require health in- ‘‘(E) CONTINUOUS CREDITABLE COVERAGE 16 DEFINED.—For 17 term ‘creditable coverage’— 18 19 purposes of this paragraph, the ‘‘(i) has the meaning given such term in section 2704(c)(1); and 20 ‘‘(ii) includes membership in a health 21 care sharing ministry (as defined in section 22 5000A(d)(2)(B) of the Internal Revenue 23 Code of 1986). 24 ‘‘(F) EXCEPTIONS.—Notwithstanding sub- 25 paragraph (A), a health insurance issuer may Discussion Draft ERN17490 S.L.C. 154 1 not impose a waiting period with respect to the 2 following individuals: 3 ‘‘(i) A newborn who is enrolled in 4 such coverage within 30 days of the date 5 of birth. 6 ‘‘(ii) A child who is adopted or placed 7 for adoption before attaining 18 years of 8 age and who is enrolled in such coverage 9 within 30 days of the date of the adoption. 10 ‘‘(iii) Other individuals, as the Sec- 11 12 13 retary determines appropriate.’’. SEC. 207. WAIVERS FOR STATE INNOVATION. (a) IN GENERAL.—Section 1332 of the Patient Pro- 14 tection and Affordable Care Act (42 U.S.C. 18052) is 15 amended— 16 17 18 (1) in subsection (a)— (A) in paragraph (1)— (i) in subparagraph (B)— 19 (I) by amending clause (i) to 20 read as follows: 21 ‘‘(i) a description of how the State 22 plan meeting the requirements of a waiver 23 under this section would, with respect to 24 health 25 State— insurance coverage within the ERN17490 Discussion Draft S.L.C. 155 1 ‘‘(I) take the place of the require- 2 ments described in paragraph (2) that 3 are waived; and 4 ‘‘(II) provide for alternative 5 means of, and requirements for, in- 6 creasing access to comprehensive cov- 7 erage, reducing average premiums, 8 providing consumers the freedom to 9 purchase the health insurance of their 10 choice, and increasing enrollment in 11 private health insurance; and’’; and 12 (II) in clause (ii), by striking 13 ‘‘that is budget neutral for the Fed- 14 eral Government’’ and inserting ‘‘, 15 demonstrating that the State plan 16 does not increase the Federal deficit’’; 17 and 18 (ii) in subparagraph (C), by striking 19 ‘‘the law’’ and inserting ‘‘a law or has in 20 effect a certification’’; 21 (B) in paragraph (3)— 22 (i) in the first sentence, by inserting 23 ‘‘or would qualify for a reduction in’’ after 24 ‘‘would not qualify for’’; ERN17490 Discussion Draft S.L.C. 156 1 (ii) by adding after the second sen- 2 tence the following: ‘‘A State may request 3 that all of, or any portion of, such aggre- 4 gate amount of such credits or reductions 5 be paid to the State as described in the 6 first sentence.’’; 7 (iii) in the paragraph heading, by 8 striking ‘‘PASS 9 and inserting ‘‘FUNDING’’; 10 THROUGH OF FUNDING’’ (iv) by striking ‘‘With respect’’ and 11 inserting the following: 12 ‘‘(A) PASS 13 14 15 THROUGH OF FUNDING.—With respect’’; and (v) by adding at the end the following: ‘‘(B) ADDITIONAL FUNDING.—There is au- 16 thorized to be appropriated, and is appro- 17 priated, to the Secretary of Health and Human 18 Services, out of monies in the Treasury not oth- 19 erwise obligated, $2,000,000,000 for fiscal year 20 2017, to remain available until the end of fiscal 21 year 2019, to provide grants to States for pur- 22 poses of submitting an application for a waiver 23 granted under this section and implementing 24 the State plan under such waiver. Discussion Draft ERN17490 S.L.C. 157 1 ‘‘(C) AUTHORITY TO USE LONG-TERM 2 STATE 3 MENT.—If 4 allotment under section 2105(i) of the Social 5 Security Act for the plan year, the State may 6 use the funds available under the State’s allot- 7 ment for the plan year to carry out the State 8 plan under this section, so long as such use is 9 consistent with the requirements of paragraphs 10 (1) and (7) of section 2105(i) of such Act 11 (other than paragraph (1)(B) of such section). 12 Any funds used to carry out a State plan under 13 this subparagraph shall not be considered in de- 14 termining whether the State plan increases the 15 Federal deficit.’’; and 16 17 18 INNOVATION AND STABILITY ALLOT- the State has an application for an (C) in paragraph (4), by adding at the end the following: ‘‘(D) EXPEDITED PROCESS.—The Sec- 19 retary shall establish an expedited application 20 and approval process that may be used if the 21 Secretary determines that such expedited proc- 22 ess is necessary to respond to an urgent or 23 emergency situation with respect to health in- 24 surance coverage within a State.’’; 25 (2) in subsection (b)— ERN17490 Discussion Draft S.L.C. 158 1 2 3 4 5 6 (A) in paragraph (1)— (i) in the matter preceding subparagraph (A)— (I) by striking ‘‘may’’ and inserting ‘‘shall’’; and (II) by striking ‘‘only if’’ and in- 7 serting ‘‘unless’’; and 8 (ii) by striking ‘‘plan—’’ and all that 9 follows through the period at the end of 10 subparagraph (D) and inserting ‘‘applica- 11 tion is missing a required element under 12 subsection (a)(1) or that the State plan 13 will increase the Federal deficit, not taking 14 into account any amounts received through 15 a grant under subsection (a)(3)(B).’’; 16 (B) in paragraph (2)— 17 18 (i) in the paragraph heading, by inserting ‘‘OR CERTIFY’’ after ‘‘LAW’’; 19 (ii) in subparagraph (A), by inserting 20 before the period ‘‘, and a certification de- 21 scribed in this paragraph is a document, 22 signed by the Governor, and the State in- 23 surance commissioner, of the State, that 24 provides authority for State actions under 25 a waiver under this section, including the ERN17490 Discussion Draft S.L.C. 159 1 implementation of the State plan under 2 subsection (a)(1)(B)’’; and 3 4 5 (iii) in subparagraph (B)— (I) in the subparagraph heading, by striking ‘‘OF OPT OUT’’; and 6 (II) by striking ‘‘ may repeal a 7 law’’ and all that follows through the 8 period at the end and inserting the 9 following: ‘‘may terminate the author- 10 ity provided under the waiver with re- 11 spect to the State by— 12 ‘‘(i) repealing a law described in sub- 13 paragraph (A); or 14 ‘‘(ii) terminating a certification de- 15 scribed in subparagraph (A), through a 16 certification for such termination signed by 17 the Governor, and the State insurance 18 commissioner, of the State.’’; 19 (3) in subsection (d)(2)(B), by striking ‘‘and 20 the reasons therefore’’ and inserting ‘‘and the rea- 21 sons therefore, and provide the data on which such 22 determination was made’’; and 23 (4) in subsection (e), by striking ‘‘No waiver’’ 24 and all that follows through the period at the end Discussion Draft ERN17490 S.L.C. 160 1 and inserting the following: ‘‘A waiver under this 2 section— 3 4 5 6 ‘‘(1) shall be in effect for a period of 8 years unless the State requests a shorter duration; ‘‘(2) may be renewed for unlimited additional 8year periods upon application by the State; and 7 ‘‘(3) may not be cancelled by the Secretary be- 8 fore the expiration of the 8-year period (including 9 any renewal period under paragraph (2)).’’. 10 (b) APPLICABILITY.—Section 1332 of the Patient 11 Protection and Affordable Care Act (42 U.S.C. 18052) 12 shall apply as follows: 13 (1) In the case of a State for which a waiver 14 under such section was granted prior to the date of 15 enactment of this Act, such section 1332, as in ef- 16 fect on the day before the date of enactment of this 17 Act shall apply to the waiver and State plan. 18 (2) In the case of a State that submitted an ap- 19 plication for a waiver under such section prior to the 20 date of enactment of this Act, and which application 21 the Secretary of Health and Human Services has 22 not approved prior to such date, the State may elect 23 to have such section 1332, as in effect on the day 24 before the date of enactment of this Act, or such Discussion Draft ERN17490 S.L.C. 161 1 section 1332, as amended by subsection (a), apply to 2 such application and State plan. 3 (3) In the case of a State that submits an ap- 4 plication for a waiver under such section on or after 5 the date of enactment of this Act, such section 1332, 6 as amended by subsection (a), shall apply to such 7 application and State plan. 8 SEC. 208. ALLOWING ALL INDIVIDUALS PURCHASING 9 HEALTH 10 MARKET 11 LOWER PREMIUM CATASTROPHIC PLAN. 12 INSURANCE THE IN OPTION THE TO INDIVIDUAL PURCHASE A (a) IN GENERAL.—Section 1302(e) of the Patient 13 Protection and Affordable Care Act (42 U.S.C. 18022(e)) 14 is amended by adding at the end the following: 15 ‘‘(4) CONSUMER FREEDOM.—For plan years be- 16 ginning on or after January 1, 2019, paragraph 17 (1)(A) shall not apply with respect to any plan of- 18 fered in the State.’’. 19 (b) RISK POOLS.—Section 1312(c) of the Patient 20 Protection and Affordable Care Act (42 U.S.C. 18032(c)) 21 is amended— 22 (1) in paragraph (1), by inserting ‘‘and includ- 23 ing, with respect to plan years beginning on or after 24 January 1, 2019, enrollees in catastrophic plans de- 25 scribed in section 1302(e)’’ after ‘‘Exchange’’; and Discussion Draft ERN17490 S.L.C. 162 1 (2) in paragraph (2), by inserting ‘‘and includ- 2 ing, with respect to plan years beginning on or after 3 January 1, 2019, enrollees in catastrophic plans de- 4 scribed in section 1302(e)’’ after ‘‘Exchange’’. 5 6 SEC. 209. APPLICATION OF ENFORCEMENT PENALTIES. (a) IN GENERAL.—Section 2723 of the Public Health 7 Service Act (42 U.S.C. 300gg–22) is amended— 8 (1) in subsection (a)— 9 (A) in paragraph (1), by inserting ‘‘and of 10 section 1303 of the Patient Protection and Af- 11 fordable Care Act’’ after ‘‘this part’’; and 12 (B) in paragraph (2), by inserting ‘‘or in 13 such section 1303’’ after ‘‘this part’’; and 14 (2) in subsection (b)— 15 (A) in paragraphs (1) and (2)(A), by in- 16 serting ‘‘or section 1303 of the Patient Protec- 17 tion and Affordable Care Act’’ after ‘‘this part’’ 18 each place such term appears; 19 (B) in paragraph (2)(C)(ii), by inserting 20 ‘‘and section 1303 of the Patient Protection 21 and Affordable Care Act’’ after ‘‘this part’’. 22 (b) EFFECT OF WAIVER.—A State waiver pursuant 23 to section 1332 of the Patient Protection and Affordable 24 Care Act (42 U.S.C. 18052) shall not affect the authority ERN17490 Discussion Draft S.L.C. 163 1 of the Secretary to impose penalties under section 2723 2 of the Public Health Service Act (42 U.S.C. 300gg–22). 3 4 SEC. 210. FUNDING FOR COST-SHARING PAYMENTS. There is appropriated to the Secretary of Health and 5 Human Services, out of any money in the Treasury not 6 otherwise appropriated, such sums as may be necessary 7 for payments for cost-sharing reductions authorized by the 8 Patient Protection and Affordable Care Act (including ad9 justments to any prior obligations for such payments) for 10 the period beginning on the date of enactment of this Act 11 and ending on December 31, 2019. Notwithstanding any 12 other provision of this Act, payments and other actions 13 for adjustments to any obligations incurred for plan years 14 2018 and 2019 may be made through December 31, 2020. 15 16 SEC. 211. REPEAL OF COST-SHARING SUBSIDY PROGRAM. (a) IN GENERAL.—Section 1402 of the Patient Pro- 17 tection and Affordable Care Act is repealed. 18 (b) EFFECTIVE DATE.—The repeal made by sub- 19 section (a) shall apply to cost-sharing reductions (and pay20 ments to issuers for such reductions) for plan years begin21 ning after December 31, 2019. Discussion Draft ERN17490 S.L.C. 164 1 øTITLE III¿ 2 øSEC. 301. ESTABLISHING FEDERAL FUNDING FOR INDI- 3 4 VIDUAL MARKET PLANS. ø(a) Federal Funding for Individual Market Plans— 5 ¿ 6 ø(1) IN GENERAL.—Notwithstanding sub- 7 sections (h) and (i) of section 2105 of the Social Se- 8 curity Act (42 U.S.C. 1397ee), the following 9 amounts from the amounts appropriated under such 10 subsections for a calendar year are hereby trans- 11 ferred and made available in such calendar year to 12 the Secretary of Health and Human Services (re- 13 ferred to in this subsection as the ‘‘Secretary’’) for 14 the purpose described in paragraph (2):¿ 15 ø(A) For years 2020 through 2026, 16 $70,000,000,000 of the amounts appropriated 17 for each such calendar year under subsection 18 (i)(4)(A) of such section 2105.¿ 19 ø(2) USE OF FUNDS.—The Secretary shall use 20 amounts allocated under paragraph (1) to establish 21 a Federal fund for the purpose of making payments 22 to health insurance issuers that offer a plan in ac- 23 cordance with subsection (b), to assist such health 24 insurance issuers in covering high risk individuals Discussion Draft ERN17490 S.L.C. 165 1 enrolled in the qualified health plans in the rating 2 areas described in subsection (c)(2).¿ 3 ø(A) The Secretary shall prioritize the use 4 of the amounts allocated under paragraph (1) 5 based on the percentage of rating areas in the 6 State that meet the conditions in paragraph (c); 7 and¿ 8 ø(B) The Secretary shall prioritize the use 9 of the amounts allocated under paragraph (1) 10 to health plans certified under subsection (c)(2) 11 in states for which the provisions (1)-(6) de- 12 scribed in subsection (d) are not applicable.¿ 13 ø(b) FEDERALLY FUNDED PLANS.—If a health in- 14 surance issuer (as defined in section 2791(b)(2) of the 15 Public Health Service Act (42 U.S.C. 300gg–91(b)(2)) 16 meets the conditions of subsection (c) for any of plan years 17 2020 through 2026 with respect to an entire rating area 18 within a State (as defined in section 2701(a)(2) of the 19 Public Health Service Act (42 U.S.C. § 300gg(a)(2)), the 20 provisions described in subsection (d) shall be treated as 21 not applying or in effect (directly or through reference) 22 for those plan years to health insurance coverage offered 23 off the Exchange by such issuer in the individual market 24 in the rating area in the State for such plan year (other Discussion Draft ERN17490 S.L.C. 166 1 than with respect to health plans certified under sub2 section (c)(2)).¿ 3 ø(c) CONDITIONS FOR FEDERALLY FUNDED 4 PLANS.—The conditions of this subsection for a health in5 surance issuer for a plan year are that the health insur6 ance issuer, on or before May 3 of the calendar year pre7 ceding the plan year involved—¿ 8 ø(1) notifies the Secretary and the applicable 9 State insurance commissioner of the issuer’s inten- 10 tion to apply subsection (b) with respect to health 11 insurance coverage in a rating area within a State 12 for such plan year; and¿ 13 ø(2) certifies to the Secretary that such issuer 14 will make available through the Exchange in the rat- 15 ing area in the State in such plan year at least— 16 ¿ 17 ø(A) one gold level and one silver level 18 qualified health plan (as described in section 19 1302(d)(1) of the Patient Protection and Af- 20 fordable Care Act, 42 U.S.C. 18022(d)(1)); 21 and¿ ø(B) one health plan that provides the 22 23 level 24 36B(b)(3)(B)(i) of the Internal Revenue Code 25 of 1986.¿ of coverage described in section Discussion Draft ERN17490 S.L.C. 167 1 ø(d) NON-APPLICABLE PROVISIONS DESCRIBED.— 2 The provisions described in this subsection are the fol3 lowing:¿ 4 ø(1) Subsection (d) of section 1302 of the Pa- 5 tient Protection and Affordable Care Act (42 U.S.C. 6 18022); except for the purposes of applying section 7 1302(b) 8 1312(d)(3)(D), 1331, 1333, and 1334 of such Act, 9 subsection (b) of such section 1302; and subsection 10 11 12 to sections 1252, 1301(a)(2), (c)(1)(B) of such section 1302.¿ ø(2) Section 2701(a)(1) of the Public Health Service Act (42 U.S.C. 300gg(a)(1)).¿ 13 ø(3) Section 2702(a) through 2702(b)(2) of the 14 Public Health Service Act (42 U.S.C. §§ 300gg– 15 1(a)–(b)(2)).¿ 16 17 ø(4) Section 2704 of the Public Health Service Act (42 U.S.C. §§ 300gg–3).¿ 18 ø(5) Sections 2705(a) through 2705(j) of the 19 Public Health Service Act (42 U.S.C. §§ 300gg– 20 4(a)-(j)).¿ 21 22 23 24 ø(6) Section 2707 of the Public Health Service Act (42 U.S.C. 300gg–6).¿ ø(7) Section 2708 of the Public Health Service Act (42 U.S.C. 300gg–7).¿ ERN17490 Discussion Draft S.L.C. 168 1 2 3 ø(8) Section 2713(a) of the Public Health Service Act (42 U.S.C. 300gg–13(a)).¿ ø(9) Section 2718(b)(1) of the Public Health 4 Service Act (42 U.S.C. §§ 300gg–18(b)(1)).¿ 5 ø(e) APPLICATION OF PREMIUM TAX CREDIT AND 6 ADVANCE PAYMENT PROVISIONS.—In the case of any tax7 payer who is a resident of a rating area in a State in which 8 a health insurance issuer meets the conditions of sub9 section (c) for any of plan years 2020 through 2026 and 10 who enrolls in a plan offered in accordance with subsection 11 (b), in the respective plan year—¿ 12 ø(1) the premium tax credit described in sec- 13 tion 36B of the Internal Revenue Code of 1986 shall 14 not be available for such plan; and¿ 15 ø(2) such taxpayer may use a health savings 16 account (within the meaning of section 223 of the 17 Internal Revenue Code of 1986) to pay premiums 18 for such plan.¿ 19 ø(A) IN GENERAL.—Subparagraph (C) of 20 section 223(d)(2) of the Internal Revenue Code 21 of 1986 is amended by adding at the end the 22 following flush sentence:¿ 23 ø‘‘(1) ‘‘A high deductible health plan shall not 24 be treated as described in clause (v) if such plan in- 25 cludes coverage for abortions (other than any abor- Discussion Draft ERN17490 S.L.C. 169 1 tion necessary to save the life of the mother or any 2 abortion with respect to a pregnancy that is the re- 3 sult of an act of rape or incest).’’.¿ 4 ø(B) EFFECTIVE DATE.—The amendment 5 made by paragraph (e)(2)(A) shall apply with 6 respect to coverage under a high deductible 7 health plan beginning after calendar December 8 31, 2019.¿ 9 ø(f) APPLICATION OF STATE LAW.—Nothing in this 10 section shall exempt a health insurance issuer from the 11 applicable State requirements with respect to any health 12 coverage offered in a State.¿ 13 ø(g) CONTINUOUS COVERAGE.—For purposes of sec- 14 tion 2702(b) of the Public Health Service Act (42 U.S.C. 15 300gg–1), coverage under a health plan offered in accord16 ance with subsection (b) shall not be deemed creditable 17 coverage, as defined in section 2704(c) of the Public 18 Health Service Act (42 U.S.C. 300gg–3(c)).¿ 19 20 ø(h) NONAPPLICATION GRAM.—Section OF RISK ADJUSTMENT PRO- 1343 of the Patient Protection and Af- 21 fordable Care Act (42 U.S.C. 18063) shall not apply to 22 health insurance coverage offered in accordance with sub23 section (b) or to the issuer of such coverage with respect 24 to that coverage.¿ Discussion Draft ERN17490 S.L.C. 170 1 ø(i) FUNDING FOR OTHER PLANS OFFERED IN THE 2 STATE.—If a health insurance issuer offers coverage in 3 accordance with subsection (b) in a State for a plan year 4 and such State receives an allotment under subsection (h) 5 or (i) of section 2105 of the Social Security Act for such 6 plan year, the State may use the funds available under 7 the State’s allotment for the plan year to reduce premiums 8 with respect to any qualified health plan offered in the 9 State, as described in subsection (c)(2), so long as such 10 use is consistent with such subsection (h) or (i) of 2105 11 of the Social Security Act.¿ 12 ø(j) EFFECT OF WAIVER.—A State that receives a 13 waiver under section 1332 of the Patient Protection and 14 Affordable Care Act (42 U.S.C. 18052) shall not be per15 mitted to receive pass through funding under subsection 16 (a)(3)(C) of such section either to provide assistance to 17 individuals who enroll in health plans offered in accord18 ance with subsection (b) or to make payments to issuers 19 for any health plans offered in accordance with subsection 20 (b).¿ 21 ø(k) WAIVER OF ACTUARIAL VALUE STANDARD FOR 22 BENCHMARK PLANS.—Section 36B(b)(3)(B) of the Inter23 nal Revenue Code of 1986, as amended by this Act, is 24 amended by adding at the end the following new sentence: 25 ‘‘If, for any plan year, the Secretary of the Treasury, in Discussion Draft ERN17490 S.L.C. 171 1 consultation with the Secretary of Health and Human 2 Services, determines that there will be no plan offered in 3 a rating area in the individual market that meets the level 4 of coverage described in clause (i), the Secretary of the 5 Treasury may increase the 58 percent amount in such 6 clause.’’.¿ 7 ø(l) FUNDING FOR STATES.—Section 2105(i) of the 8 Social Security Act (42 U.S.C. 1397ee(i)), as added by 9 section 106(a), is amended by adding at the end the fol10 lowing new paragraph:¿ 11 ø‘‘(8) REGULATION AND OVERSIGHT ALLOT- 12 MENTS FOR STATES WITH FEDERALLY FUNDED IN- 13 DIVIDUAL MARKET PLANS.—¿ 14 ø‘‘(A) APPROPRIATION.—In addition to 15 the amounts appropriated for allotments under 16 paragraph (4)(A), there is appropriated, out of 17 any money in the Treasury not otherwise ap- 18 propriated, $2,000,000,000 for the period be- 19 ginning on January 1, 2020, and ending on De- 20 cember 31, 2026, for the purpose of providing 21 additional allotments for States in which a 22 health insurance issuer offers coverage in ac- 23 cordance with section 301(b) of the Better Care 24 Reconciliation Act. Amounts paid to any such 25 State from such an additional allotment shall be Discussion Draft ERN17490 S.L.C. 172 1 used to offset costs attributable to the State’s 2 regulation and oversight of such coverage.¿ 3 ø‘‘(B) PROCEDURE FOR DISTRIBUTION OF 4 FUNDS.—The 5 appropriate procedure for providing and distrib- 6 uting funds under this paragraph.¿ Administrator shall determine an 7 ø‘‘(C) APPLICATION.—Paragraphs (2), (3), 8 (5)(C), (5)(D), and (7) apply to the additional 9 allotments made available under this paragraph 10 in the same manner as such paragraphs apply 11 to the allotments determined under paragraph 12 (4)(B).¿ 13 ø‘‘(D) NO MATCH; NO REDISTRIBUTION OF 14 FUNDS.—Neither 15 ble to payments to States under paragraph 16 (5)(B) nor any other matching requirement 17 shall apply to funds provided to States under 18 this paragraph and funds allotted to a State 19 under this paragraph shall remain available for 20 expenditure by the State through December 31, 21 2026.’’.¿ 22 the State percentage applica- ø(m) EFFECTIVE DATE.—Except as provided in this 23 section, the amendments made by this section shall apply 24 to calendar years beginning after December 31, 2019.¿