SENATEHEALTHCARE

ERN17282 Discussion Draft S.L.C.
AMENDMENT NO.llll Calendar No.lll

Purpose: In the nature of a substitute.
IN THE SENATE OF THE UNITED STATES115th 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 SECTION 1. SHORT TITLE.
4 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:
2
1 (iii) NONAPPLICABILITY OF LIMITA-
2 TION.This subparagraph shall not apply

3 to taxable years ending after December 31,
4 2017..
5 SEC. 102. RESTRICTIONS FOR THE PREMIUM TAX CREDIT.
6 (a) ELIGIBILITY FOR CREDIT.

7 (1) IN GENERAL.Section 36B(c)(1) of the In-
8 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 OF CERTAIN ALIENS.
17 (A) IN 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 (B) AMENDMENTS TO PATIENT PROTEC-
25 TION AND AFFORDABLE CARE ACT.

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 (iii) Section 1412(d) of such Act is
18 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
4
1 Opportunity Reconciliation Act of
2 1996), and
3 (II) by striking INDIVIDUALS
4 NOT LAWFULLY PRESENT in the
5 heading and inserting CERTAIN
6 ALIENS.
7 (b) MODIFICATION OF LIMITATION ON PREMIUM AS-
8 SISTANCE AMOUNT.
9 (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:
5
1 (B) APPLICABLE MEDIAN COST BENCH-
2 MARK PLAN.The applicable median cost

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
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).
6
1 (2) MODIFICATION OF APPLICABLE PERCENT-
2 AGE.Section 36B(b)(3)(A) of the Internal Revenue

3 Code of 1986 is amended
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 Up to Age 29 Age 30-39 Age 40-49 Age 50-59 Over Age 59
household income
(expressed as a
percent of the
poverty line) Initial Final Initial Final Initial Final Initial Final Initial Final
within the fol- % % % % % % % % % %
lowing income
tier:
Up to 100% 2 2 2 2 2 2 2 2 2 2
100%-133% 2 2.5 2 2.5 2 2.5 2 2.5 2 2.5
133%-150% 2.5 4 2.5 4 2.5 4 2.5 4 2.5 4
150%-200% 4 4.3 4 5.3 4 6.3 4 7.3 4 8.3
200%-250% 4.3 4.3 5.3 5.9 6.3 8.05 7.3 9 8.3 10
250%-300% 4.3 4.3 5.9 5.9 8.05 8.35 9 10.5 10 11.5
300%-350% 4.3 6.4 5.9 8.9 8.35 12.5 10.5 15.8 11.5 16.2,
10 (B) by striking 0.504 in clause (ii)(III)

11 and inserting 0.4, and
12 (C) by adding at the end the following new
13 clause:
14 (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-
7
1 count on such taxpayers 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 36B(c)(4) of such Code is

12 amended
13 (A) by striking which constitutes afford-
14 able coverage in subparagraph (A),
15 (B) by striking the amount described in
16 subparagraph (C)(i)(II) for such month in
17 subparagraph (B) and inserting 1/12 of the
18 employees permitted benefit (as defined in sec-
19 tion 9831(d)(3)(C)) under such arrangement,
20 (C) by striking subparagraphs (C) and (F)
21 and redesignating subparagraphs (D) and (E)
22 as subparagraphs (C) and (D), respectively, and
23 (D) in subparagraph (D), as so redesig-
24 nated, by striking subparagraph (C)(i)(II)
25 and inserting subparagraph (B).
8
1 (d) MODIFICATION OF DEFINITION OF QUALIFIED
2 HEALTH PLAN.
3 (1) IN GENERAL.Section 36B(c)(3)(A) of the
4 Internal Revenue Code of 1986 is amended by in-
5 serting before the period at the end the following:
6 or a plan that includes coverage for abortions
7 (other than any abortion necessary to save the life
8 of the mother or any abortion with respect to a
9 pregnancy that is the result of an act of rape or in-
10 cest).
11 (2) EFFECTIVE DATE.The amendment made
12 by this subsection shall apply to taxable years begin-
13 ning after December 31, 2017.
14 (e) INCREASED PENALTY ON ERRONEOUS CLAIMS OF
15 CREDIT.Section 6676(a) of the Internal Revenue Code
16 of 1986 is amended by inserting (25 percent in the case
17 of a claim for refund or credit relating to the health insur-
18 ance coverage credit under section 36B) after 20 per-
19 cent.
20 (f) EFFECTIVE DATE.Except as otherwise provided
21 in this section, the amendments made by this section shall
22 apply to taxable years beginning after December 31, 2019.
23 SEC. 103. MODIFICATIONS TO SMALL BUSINESS TAX CRED-
24 IT.
25 (a) SUNSET.
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
10 (b) DISALLOWANCE OF SMALL EMPLOYER HEALTH
11 INSURANCE EXPENSE CREDIT FOR PLAN WHICH IN-
12 CLUDES COVERAGE FOR ABORTION.
13 (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 GENERAL.Any term, and
19 (B) by adding at the end the following new
20 paragraph:
21 (2) EXCLUSION OF HEALTH PLANS INCLUDING
22 COVERAGE FOR ABORTION.The term qualified

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
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
6 SEC. 104. INDIVIDUAL MANDATE.
7 (a) IN GENERAL.Section 5000A(c) of the Internal

8 Revenue Code of 1986 is amended
9 (1) in paragraph (2)(B)(iii), by striking 2.5
10 percent and inserting Zero percent, and
11 (2) in paragraph (3)
12 (A) by striking $695 in subparagraph
13 (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 Decem-
17 ber 31, 2015.
18 SEC. 105. EMPLOYER MANDATE.
19 (a) IN GENERAL.
20 (1) Paragraph (1) of section 4980H(c) of the
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
11
1 serting ($0 in the case of months beginning after
2 December 31, 2015) after $3,000.
4 this section shall apply to months beginning after Decem-
5 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 TO ADDRESS COV-
11 ERAGE AND ACCESS DISRUPTION AND PROVIDE SUPPORT
12 FOR STATES.
13 (1) APPROPRIATION.There are authorized to
14 be appropriated, and are appropriated, out of monies
15 in the Treasury not otherwise obligated,
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 address coverage and access dis-
23 ruption and respond to urgent health care needs
24 within States. Funds appropriated under this para-
25 graph shall remain available until expended.
12
1 (2) PARTICIPATION REQUIREMENTS.
2 (A) GUIDANCE.Not later than 30 days

3 after the date of enactment of this subsection,
4 the Administrator shall issue guidance to health
5 insurance issuers regarding how to submit a no-
6 tice of intent to participate in the program es-
7 tablished under this subsection.
8 (B) NOTICE OF INTENT TO PARTICI-
9 PATE.To be eligible for funding under this

10 subsection, a health insurance issuer shall sub-
11 mit to the Administrator a notice of intent to
12 participate at such time (but, in the case of
13 funding for calendar year 2018, not later than
14 35 days after the date of enactment of this sub-
15 section and, in the case of funding for calendar
16 year 2019, 2020, or 2021, not later than March
17 31 of the previous year) and in such form and
18 manner as specified by the Administrator and
19 containing
20 (i) a certification that the health in-
21 surance issuer will use the funds in accord-
22 ance with the requirements of paragraph
23 (5); and
13
1 (ii) such information as the Adminis-
2 trator may require to carry out this sub-
3 section.
4 (3) PROCEDURE FOR DISTRIBUTION OF
5 FUNDS.The Administrator shall determine an ap-

6 propriate procedure for providing and distributing
7 funds under this subsection.
8 (4) NO MATCH.Neither the State percentage
9 applicable to payments to States under subsection
10 (i)(5)(B) nor any other matching requirement shall
11 apply to funds provided to health insurance issuers
12 under this subsection.
13 (5) USE OF FUNDS.Funds provided to a
14 health insurance issuer under paragraph (1) shall be
15 subject to the requirements of paragraphs (1)(D)
16 and (7) of subsection (i) in the same manner as
17 such requirements apply to States receiving pay-
18 ments under subsection (i) and shall be used for the
19 activities specified in paragraph (1)(A)(ii) of sub-
20 section (i).
21 (i) LONG-TERM STATE STABILITY AND INNOVATION
22 PROGRAM.
23 (1) APPLICATION AND CERTIFICATION RE-
24 QUIREMENTS.To be eligible for an allotment of

25 funds under this subsection, a State shall submit to
14
1 the Administrator an application, not later than
2 March 31, 2018, in the case of allotments for cal-
3 endar year 2019, and not later than March 31 of
4 the previous year, in the case of allotments for any
5 subsequent calendar year) and in such form and
6 manner as specified by the Administrator, that con-
7 tains the following:
8 (A) A description of how the funds will be
9 used to do 1 or more of the following:
10 (i) To establish or maintain a pro-
11 gram or mechanism to provide financial as-
12 sistance to help high-risk individuals, in-
13 cluding by reducing premium costs for
14 such individuals, who have or are projected
15 to have a high rate of utilization of health
16 services, as measured by cost, and who do
17 not have access to health insurance cov-
18 erage offered through an employer, enroll
19 in health insurance coverage under a plan
20 offered in the individual market (within
21 the meaning of section 5000A(f)(1)(C) of
22 the Internal Revenue Code of 1986).
23 (ii) To establish or maintain a pro-
24 gram to enter into arrangements with
25 health insurance issuers to help stabilize
15
1 premiums and promote State health insur-
2 ance market participation and choice in
3 plans offered in the individual market
4 (within the meaning of section
5 5000A(f)(1)(C) of the Internal Revenue
6 Code of 1986).
7 (iii) To provide payments for health
8 care providers for the provision of health
9 care services, as specified by the Adminis-
10 trator.
11 (iv) To provide assistance to reduce
12 out-of-pocket costs, such as copayments,
13 coinsurance, and deductibles, of individuals
14 enrolled in plans offered in the individual
15 market (within the meaning of section
16 5000A(f)(1)(C) of the Internal Revenue
17 Code of 1986).
18 (B) A certification that the State shall
19 make, from non-Federal funds, expenditures for
20 1 or more of the activities specified in subpara-
21 graph (A) in an amount that is not less than
22 the State percentage required for the year
23 under paragraph (5)(B)(ii).
16
1 (C) A certification that the funds pro-
2 vided under this subsection shall only be used
3 for the activities specified in subparagraph (A).
4 (D) A certification that none of the funds
5 provided under this subsection shall be used by
6 the State for an expenditure that is attributable
7 to an intergovernmental transfer, certified pub-
8 lic expenditure, or any other expenditure to fi-
9 nance the non-Federal share of expenditures re-
10 quired under any provision of law, including
11 under the State plans established under this
12 title and title XIX or under a waiver of such
13 plans.
14 (E) Such other information as necessary
15 for the Administrator to carry out this sub-
16 section.
17 (2) ELIGIBILITY.Only the 50 States and the
18 District of Columbia shall be eligible for an allot-
19 ment and payments under this subsection and all
20 references in this subsection to a State shall be
21 treated as only referring to the 50 States and the
22 District of Columbia.
23 (3) ONE-TIME APPLICATION.If an applica-
24 tion of a State submitted under this subsection is
25 approved by the Administrator for a year, the appli-
17
1 cation shall be deemed to be approved by the Admin-
2 istrator for that year and each subsequent year
3 through December 31, 2026.
4 (4) LONG-TERM STATE STABILITY AND INNO-
5 VATION ALLOTMENTS.
6 (A) APPROPRIATION; TOTAL ALLOT-
7 MENT.For the purpose of providing allot-

8 ments to States under this subsection, there is
9 appropriated, out of any money in the Treasury
10 not otherwise appropriated
11 (i) for calendar year 2019,
12 $8,000,000,000;
13 (ii) for calendar year 2020,
14 $14,000,000,000;
15 (iii) for calendar year 2021,
16 $14,000,000,000;
17 (iv) for calendar year 2022,
18 $6,000,000,000;
19 (v) for calendar year 2023,
20 $6,000,000,000;
21 (vi) for calendar year 2024,
22 $5,000,000,000;
23 (vii) for calendar year 2025,
24 $5,000,000,000; and
18
1 (viii) for calendar year 2026,
2 $4,000,000,000.
3 (B) ALLOTMENTS.
4 (i) IN GENERAL.In the case of a
5 State with an application approved under
6 this subsection with respect to a year, the
7 Administrator shall allot to the State, in
8 accordance with an allotment methodology
9 specified by the Administrator that ensures
10 that the spending requirement in para-
11 graph (6) is met for the year, from
12 amounts appropriated for such year under
13 subparagraph (A), such amount as speci-
14 fied by the Administrator with respect to
15 the State and application and year.
16 (ii) ANNUAL REDISTRIBUTION OF
17 PREVIOUS YEARS UNUSED FUNDS.
18 (I) IN GENERAL. In carrying

19 out clause (i), with respect to a year
20 (beginning with 2021), the Adminis-
21 trator shall, not later than March 31
22 of such year
23 (aa) determine the amount
24 of funds, if any, remaining un-
19
1 used under subparagraph (A)
2 from the previous year; and
3 (bb) if the Administrator
4 determines that any funds so re-
5 main from the previous year, re-
6 distribute such remaining funds
7 in accordance with an allotment
8 methodology specified by the Ad-
9 ministrator to States that have
10 submitted an application ap-
11 proved under this subsection for
12 the year.
13 (II) APPLICABLE STATE PER-
14 CENTAGE.The State percentage

15 specified for a year in paragraph
16 (5)(B)(ii) shall apply to funds redis-
17 tributed under subclause (I) in that
18 year.
19 (C) AVAILABILITY OF ALLOTTED STATE
20 FUNDS.
21 (i) IN GENERAL.Amounts allotted

22 to a State pursuant to subparagraph (B)(i)
23 for a year shall remain available for ex-
24 penditure by the State through the end of
25 the second succeeding year.
20
1 (ii) AVAILABILITY OF AMOUNTS RE-
2 DISTRIBUTED.Amounts redistributed to
3 a State under subparagraph (B)(ii) in a
4 year shall be available for expenditure by
5 the State through the end of the second
6 succeeding year.
7 (5) PAYMENTS.
8 (A) ANNUAL PAYMENT OF ALLOT-
9 MENTS.Subject to subparagraph (B), the Ad-

10 ministrator shall pay to each State that has an
11 application approved under this subsection for a
12 year, the allotment determined under paragraph
13 (4)(B) for the State for the year.
14 (B) MATCH REQUIRED.
15 (i) IN GENERAL.The Administrator

16 shall pay each State that has an applica-
17 tion approved under this subsection for a
18 year, the Federal percentage of the allot-
19 ment determined for the State under para-
20 graph (4)(B) for the year.
21 (ii) FEDERAL AND STATE PERCENT-
22 AGES DEFINED.For purposes of clause

23 (i), the Federal percentage is equal to 100
24 percent reduced by the State percentage
21
1 for that year, and the State percentage is
2 equal to
3 (I) in the case of calendar year
4 2019, 0 percent;
5 (II) in the case of calendar year
6 2020, 0 percent;
7 (III) in the case of calendar
8 year 2021, 0 percent;
9 (IV) in the case of calendar
11 (V) in the case of calendar year
12 2023, 14 percent;
13 (VI) in the case of calendar
15 (VII) in the case of calendar
16 year 2025, 28 percent; and
17 (VIII) in the case of calendar
18 year 2026, 35 percent.
19 (C) ADVANCE PAYMENT; RETROSPECTIVE
20 ADJUSTMENT.
21 (i) IN GENERAL.If the Adminis-

22 trator deems it appropriate, the Adminis-
23 trator shall make payments under this sub-
24 section for each year on the basis of ad-
25 vance estimates of expenditures submitted
22
1 by the State and such other investigation
2 as the Administrator shall find necessary,
3 and shall reduce or increase the payments
4 as necessary to adjust for any overpayment
5 or underpayment for prior years.
6 (ii) MISUSE OF FUNDS.If the Ad-
7 ministrator determines that a State is not
8 using funds paid to the State under this
9 subsection in a manner consistent with the
10 description provided by the State in its ap-
11 plication approved under paragraph (1),
12 the Administrator may withhold payments,
13 reduce payments, or recover previous pay-
14 ments to the State under this subsection
15 as the Administrator deems appropriate.
16 (D) FLEXIBILITY IN SUBMITTAL OF
17 CLAIMS.Nothing in this subsection shall be

18 construed as preventing a State from claiming
19 as expenditures in the year expenditures that
20 were incurred in a previous year.
21 (6) REQUIRED USE FOR PREMIUM STABILIZA-
22 TION AND INCENTIVES FOR INDIVIDUAL MARKET
23 PARTICIPATION.In determining allotments for

24 States under this subsection for each of calendar
25 years 2019, 2020, and 2021, the Administrator shall
23
1 ensure that at least $5,000,000,000 of the amounts
2 appropriated for each such year under paragraph
3 (4)(A) are used by States for the purposes described
4 in paragraph (1)(A)(ii) and in accordance with guid-
5 ance issued by the Administrator not later than 30
6 days after the date of enactment of this subsection
7 that specifies the parameters for the use of funds for
8 such purposes.
9 (7) EXEMPTIONS.Paragraphs (2), (3), (5),
10 (6), (8), (10), and (11) of subsection (c) do not
11 apply to payments under this subsection..
12 (b) OTHER TITLE XXI AMENDMENTS.
13 (1) Section 2101 of such Act (42 U.S.C.
14 1397aa) is amended
15 (A) in subsection (a), in the matter pre-
16 ceding paragraph (1), by striking The pur-
17 pose and inserting Except with respect to
18 short-term assistance activities under section
19 2105(h) and the Long-Term State Stability and
20 Innovation Program established in section
21 2105(i), the purpose; and
22 (B) in subsection (b), in the matter pre-
23 ceding paragraph (1), by inserting subsection
24 (a) or (g) of before section 2105.
24
1 (2) Section 2105(c)(1) of such Act (42 U.S.C.
2 1397ee(c)(1)) is amended by striking and may not
3 include and inserting or to carry out short-term
4 assistance activities under subsection (h) or the
5 Long-Term State Stability and Innovation Program
6 established in subsection (i) and, except in the case
7 of funds made available under subsection (h) or (i),
8 may not include.
9 (3) Section 2106(a)(1) of such Act (42 U.S.C.
10 1397ff(a)(1)) is amended by inserting subsection
11 (a) or (g) of before section 2105.
12 SEC. 107. BETTER CARE RECONCILIATION IMPLEMENTA-
13 TION FUND.
14 (a) IN GENERAL.There is hereby established a Bet-

15 ter Care Reconciliation Implementation Fund (referred to
16 in this section as the Fund) within the Department of
17 Health and Human Services to provide for Federal admin-
18 istrative expenses in carrying out this Act.
19 (b) FUNDING.There is appropriated to the Fund,
20 out of any funds in the Treasury not otherwise appro-
21 priated, $500,000,000.
25
1 SEC. 108. REPEAL OF THE TAX ON EMPLOYEE HEALTH IN-
2 SURANCE PREMIUMS AND HEALTH PLAN
3 BENEFITS.
4 (a) IN GENERAL.Chapter 43 of the Internal Rev-

5 enue Code of 1986 is amended by striking section 4980I.
6 (b) EFFECTIVE DATE.The amendment made by
7 subsection (a) shall apply to taxable years beginning after
8 December 31, 2019.
9 (c) SUBSEQUENT EFFECTIVE DATE.The amend-
10 ment made by subsection (a) shall not apply to taxable
11 years beginning after December 31, 2025, and chapter 43
12 of the Internal Revenue Code of 1986 is amended to read
13 as such chapter would read if such subsection had never
14 been enacted.
15 SEC. 109. REPEAL OF TAX ON OVER-THE-COUNTER MEDICA-
16 TIONS.
17 (a) HSAS.Subparagraph (A) of section 223(d)(2)

18 of the Internal Revenue Code of 1986 is amended by strik-
19 ing Such term and all that follows through the period.
20 (b) ARCHER MSAS.Subparagraph (A) of section
21 220(d)(2) of the Internal Revenue Code of 1986 is amend-
22 ed by striking Such term and all that follows through
23 the period.
24 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS
25 AND HEALTH REIMBURSEMENT ARRANGEMENTS.Sec-
26
1 tion 106 of the Internal Revenue Code of 1986 is amended
2 by striking subsection (f).
3 (d) EFFECTIVE DATES.
4 (1) DISTRIBUTIONS FROM SAVINGS AC-
5 COUNTS.The amendments made by subsections (a)

6 and (b) shall apply to amounts paid with respect to
7 taxable years beginning after December 31, 2016.
8 (2) REIMBURSEMENTS.The amendment made
9 by subsection (c) shall apply to expenses incurred
10 with respect to taxable years beginning after Decem-
11 ber 31, 2016.
12 SEC. 110. REPEAL OF TAX ON HEALTH SAVINGS ACCOUNTS.
13 (a) HSAS.Section 223(f)(4)(A) of the Internal

14 Revenue Code of 1986 is amended by striking 20 per-
15 cent and inserting 10 percent.
16 (b) ARCHER MSAS.Section 220(f)(4)(A) of the In-
17 ternal Revenue Code of 1986 is amended by striking 20
18 percent and inserting 15 percent.
19 (c) EFFECTIVE DATE.The amendments made by
20 this section shall apply to distributions made after Decem-
21 ber 31, 2016.
22 SEC. 111. REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO
23 FLEXIBLE SPENDING ACCOUNTS.
24 (a) IN GENERAL.Section 125 of the Internal Rev-

25 enue Code of 1986 is amended by striking subsection (i).
27
2 this section shall apply to plan years beginning after De-
3 cember 31, 2017.
4 SEC. 112. REPEAL OF TAX ON PRESCRIPTION MEDICA-
5 TIONS.
6 Subsection (j) of section 9008 of the Patient Protec-

7 tion and Affordable Care Act is amended to read as fol-
8 lows:
9 (j) REPEAL.This section shall apply to calendar
10 years beginning after December 31, 2010, and ending be-
11 fore January 1, 2018..
12 SEC. 113. REPEAL OF MEDICAL DEVICE EXCISE TAX.
13 Section 4191 of the Internal Revenue Code of 1986

14 is amended by adding at the end the following new sub-
15 section:
16 (d) APPLICABILITY.The tax imposed under sub-
17 section (a) shall not apply to sales after December 31,
18 2017..
19 SEC. 114. REPEAL OF HEALTH INSURANCE TAX.
20 Subsection (j) of section 9010 of the Patient Protec-

21 tion and Affordable Care Act is amended by striking ,
22 and at the end of paragraph (1) and all that follows
23 through 2017.
28
1 SEC. 115. REPEAL OF ELIMINATION OF DEDUCTION FOR
2 EXPENSES ALLOCABLE TO MEDICARE PART D
3 SUBSIDY.
4 (a) IN GENERAL.Section 139A of the Internal Rev-

5 enue Code of 1986 is amended by adding at the end the
6 following new sentence: This section shall not be taken
7 into account for purposes of determining whether any de-
8 duction is allowable with respect to any cost taken into
9 account in determining such payment..
11 this section shall apply to taxable years beginning after
12 December 31, 2016.
13 SEC. 116. REPEAL OF CHRONIC CARE TAX.
14 (a) IN GENERAL.Subsection (a) of section 213 of

15 the Internal Revenue Code of 1986 is amended by striking
16 10 percent and inserting 7.5 percent.
19 December 31, 2016.
20 SEC. 117. REPEAL OF MEDICARE TAX INCREASE.
21 (a) IN GENERAL.Subsection (b) of section 3101 of

22 the Internal Revenue Code of 1986 is amended to read
23 as follows:
24 (b) HOSPITAL INSURANCE.In addition to the tax
25 imposed by the preceding subsection, there is hereby im-
26 posed on the income of every individual a tax equal to 1.45
29
1 percent of the wages (as defined in section 3121(a)) re-
2 ceived by such individual with respect to employment (as
3 defined in section 3121(b)..
4 (b) SECA.Subsection (b) of section 1401 of the In-
5 ternal Revenue Code of 1986 is amended to read as fol-
6 lows:
7 (b) HOSPITAL INSURANCE.In addition to the tax
8 imposed by the preceding subsection, there shall be im-
9 posed for each taxable year, on the self-employment in-
10 come of every individual, a tax equal to 2.9 percent of the
11 amount of the self-employment income for such taxable
12 year..
14 this section shall apply with respect to remuneration re-
15 ceived after, and taxable years beginning after, December
16 31, 2022.
17 SEC. 118. REPEAL OF TANNING TAX.
18 (a) IN GENERAL.The Internal Revenue Code of

19 1986 is amended by striking chapter 49.
21 this section shall apply to services performed after Sep-
22 tember 30, 2017.
23 SEC. 119. REPEAL OF NET INVESTMENT TAX.
24 (a) IN GENERAL.Subtitle A of the Internal Rev-

25 enue Code of 1986 is amended by striking chapter 2A.
30
4 SEC. 120. REMUNERATION.
5 Paragraph (6) of section 162(m) of the Internal Rev-

6 enue Code of 1986 is amended by adding at the end the
7 following new subparagraph:
8 (I) TERMINATION.This paragraph shall
9 not apply to taxable years beginning after De-
10 cember 31, 2016..
11 SEC. 121. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAV-
12 INGS ACCOUNT INCREASED TO AMOUNT OF
13 DEDUCTIBLE AND OUT-OF-POCKET LIMITA-
14 TION.
15 (a) SELF-ONLY COVERAGE.Section 223(b)(2)(A)

16 of the Internal Revenue Code of 1986 is amended by strik-
17 ing $2,250 and inserting the amount in effect under
18 subsection (c)(2)(A)(ii)(I).
19 (b) FAMILY COVERAGE.Section 223(b)(2)(B) of
20 such Code is amended by striking $4,500 and inserting
21 the amount in effect under subsection (c)(2)(A)(ii)(II).
22 (c) COST-OF-LIVING ADJUSTMENT.Section
23 223(g)(1) of such Code is amended
24 (1) by striking subsections (b)(2) and both
25 places it appears and inserting subsection, and
31
1 (2) in subparagraph (B), by striking deter-
2 mined by and all that follows through calendar
3 year 2003. and inserting determined by sub-
4 stituting calendar year 2003 for calendar year
5 1992 in subparagraph (B) thereof..
6 (d) EFFECTIVE DATE.The amendments made by
9 SEC. 122. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON-
10 TRIBUTIONS TO THE SAME HEALTH SAVINGS
11 ACCOUNT.
12 (a) IN GENERAL.Section 223(b)(5) of the Internal

13 Revenue Code of 1986 is amended to read as follows:
14 (5) SPECIAL RULE FOR MARRIED INDIVIDUALS
15 WITH FAMILY COVERAGE.
16 (A) IN GENERAL.In the case of individ-

17 uals who are married to each other, if both
18 spouses are eligible individuals and either
19 spouse has family coverage under a high de-
20 ductible health plan as of the first day of any
21 month
22 (i) the limitation under paragraph
23 (1) shall be applied by not taking into ac-
24 count any other high deductible health
25 plan coverage of either spouse (and if such
32
1 spouses both have family coverage under
2 separate high deductible health plans, only
3 one such coverage shall be taken into ac-
4 count),
5 (ii) such limitation (after application
6 of clause (i)) shall be reduced by the ag-
7 gregate amount paid to Archer MSAs of
8 such spouses for the taxable year, and
9 (iii) such limitation (after application
10 of clauses (i) and (ii)) shall be divided
11 equally between such spouses unless they
12 agree on a different division.
13 (B) TREATMENT OF ADDITIONAL CON-
14 TRIBUTION AMOUNTS.If both spouses referred

15 to in subparagraph (A) have attained age 55
16 before the close of the taxable year, the limita-
17 tion referred to in subparagraph (A)(iii) which
18 is subject to division between the spouses shall
19 include the additional contribution amounts de-
20 termined under paragraph (3) for both spouses.
21 In any other case, any additional contribution
22 amount determined under paragraph (3) shall
23 not be taken into account under subparagraph
24 (A)(iii) and shall not be subject to division be-
25 tween the spouses..
33
4 SEC. 123. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES
5 INCURRED BEFORE ESTABLISHMENT OF
6 HEALTH SAVINGS ACCOUNT.
7 (a) IN GENERAL.Section 223(d)(2) of the Internal

8 Revenue Code of 1986 is amended by adding at the end
9 the following new subparagraph:
10 (D) TREATMENT OF CERTAIN MEDICAL
11 EXPENSES INCURRED BEFORE ESTABLISHMENT
12 OF ACCOUNT.If a health savings account is

13 established during the 60-day period beginning
14 on the date that coverage of the account bene-
15 ficiary under a high deductible health plan be-
16 gins, then, solely for purposes of determining
17 whether an amount paid is used for a qualified
18 medical expense, such account shall be treated
19 as having been established on the date that
20 such coverage begins..
22 this subsection shall apply with respect to coverage under
23 a high deductible health plan beginning after December
24 31, 2017.
34
1 SEC. 124. FEDERAL PAYMENTS TO STATES.
2 (a) IN GENERAL.Notwithstanding section 504(a),

3 1902(a)(23), 1903(a), 2002, 2005(a)(4), 2102(a)(7), or
4 2105(a)(1) of the Social Security Act (42 U.S.C. 704(a),
5 1396a(a)(23), 1396b(a), 1397a, 1397d(a)(4),
6 1397bb(a)(7), 1397ee(a)(1)), or the terms of any Med-
7 icaid waiver in effect on the date of enactment of this Act
8 that is approved under section 1115 or 1915 of the Social
9 Security Act (42 U.S.C. 1315, 1396n), for the 1-year pe-
10 riod beginning on the date of enactment of this Act, no
11 Federal funds provided from a program referred to in this
12 subsection that is considered direct spending for any year
13 may be made available to a State for payments to a pro-
14 hibited entity, whether made directly to the prohibited en-
15 tity or through a managed care organization under con-
16 tract with the State.
17 (b) DEFINITIONS.In this section:
18 (1) PROHIBITED ENTITY.The term prohib-
19 ited entity means an entity, including its affiliates,
20 subsidiaries, successors, and clinics
21 (A) that, as of the date of enactment of
22 this Act
23 (i) is an organization described in sec-
24 tion 501(c)(3) of the Internal Revenue
25 Code of 1986 and exempt from tax under
26 section 501(a) of such Code;
35
1 (ii) is an essential community provider
2 described in section 156.235 of title 45,
3 Code of Federal Regulations (as in effect
4 on the date of enactment of this Act), that
5 is primarily engaged in family planning
6 services, reproductive health, and related
7 medical care; and
8 (iii) provides for abortions, other than
9 an abortion
10 (I) if the pregnancy is the result
11 of an act of rape or incest; or
12 (II) in the case where a woman
13 suffers from a physical disorder, phys-
14 ical injury, or physical illness that
15 would, as certified by a physician,
16 place the woman in danger of death
17 unless an abortion is performed, in-
18 cluding a life-endangering physical
19 condition caused by or arising from
20 the pregnancy itself; and
21 (B) for which the total amount of Federal
22 and State expenditures under the Medicaid pro-
23 gram under title XIX of the Social Security Act
24 in fiscal year 2014 made directly to the entity
25 and to any affiliates, subsidiaries, successors, or
36
1 clinics of the entity, or made to the entity and
2 to any affiliates, subsidiaries, successors, or
3 clinics of the entity as part of a nationwide
4 health care provider network, exceeded
5 $350,000,000.
6 (2) DIRECT SPENDING.The term direct
7 spending has the meaning given that term under
8 section 250(c) of the Balanced Budget and Emer-
9 gency Deficit Control Act of 1985 (2 U.S.C. 900(c)).
10 SEC. 125. MEDICAID PROVISIONS.
11 The Social Security Act is amended

12 (1) in section 1902 (42 U.S.C. 1396a)
13 (A) in subsection (a)(47)(B), by inserting
14 and provided that any such election shall cease
15 to be effective on January 1, 2020, and no such
16 election shall be made after that date before
17 the semicolon at the end; and
18 (B) in subsection (l)(2)(C), by inserting
19 and ending December 31, 2019, after Janu-
20 ary 1, 2014,;
21 (2) in section 1915(k)(2) (42 U.S.C.
22 1396n(k)(2)), by striking during the period de-
23 scribed in paragraph (1) and inserting on or after
24 the date referred to in paragraph (1) and before
25 January 1, 2020; and
37
1 (3) in section 1920(e) (42 U.S.C. 1396r1(e)),
2 by striking under clause (i)(VIII), clause (i)(IX), or
3 clause (ii)(XX) of subsection (a)(10)(A) and insert-
4 ing under clause (i)(VIII) or clause (ii)(XX) of sec-
5 tion 1902(a)(10)(A) before January 1, 2020, section
6 1902(a)(10)(A)(i)(IX),.
7 SEC. 126. MEDICAID EXPANSION.
8 (a) IN GENERAL.Title XIX of the Social Security

9 Act (42 U.S.C. 1396 et seq.) is amended
10 (1) in section 1902 (42 U.S.C. 1396a)
11 (A) in subsection (a)(10)(A)
12 (i) in clause (i)(VIII), by inserting
13 and ending December 31, 2019, after
14 2014,; and
15 (ii) in clause (ii), in subclause (XX),
16 by inserting and ending December 31,
17 2017, after 2014,, and by adding at
18 the end the following new subclause:
19 (XXIII) beginning January 1, 2020,
20 who are expansion enrollees (as defined in
21 subsection (nn)(1));; and
22 (B) by adding at the end the following new
23 subsection:
24 (nn) EXPANSION ENROLLEES.
38
1 (1) IN GENERAL.In this title, the term ex-
2 pansion enrollee means an individual
3 (A) who is under 65 years of age;
4 (B) who is not pregnant;
5 (C) who is not entitled to, or enrolled for,
6 benefits under part A of title XVIII, or enrolled
7 for benefits under part B of title XVIII;
8 (D) who is not described in any of sub-
9 clauses (I) through (VII) of subsection
10 (a)(10)(A)(i); and
11 (E) whose income (as determined under
12 subsection (e)(14)) does not exceed 133 percent
13 of the poverty line (as defined in section
14 2110(c)(5)) applicable to a family of the size in-
15 volved.
16 (2) APPLICATION OF RELATED PROVISIONS.
17 Any reference in subsection (a)(10)(G), (k), or (gg)

18 of this section or in section 1903, 1905(a), 1920(e),
19 or 1937(a)(1)(B) to individuals described in sub-
20 clause (VIII) of subsection (a)(10)(A)(i) shall be
21 deemed to include a reference to expansion enroll-
22 ees.; and
23 (2) in section 1905 (42 U.S.C. 1396d)
24 (A) in subsection (y)(1)
39
1 (i) in the matter preceding subpara-
2 graph (A), by striking , with respect to
3 and all that follows through shall be equal
4 to and inserting and that has elected to
5 cover newly eligible individuals before
6 March 1, 2017, with respect to amounts
7 expended by such State before January 1,
8 2020, for medical assistance for newly eli-
9 gible individuals described in subclause
10 (VIII) of section 1902(a)(10)(A)(i), and,
11 with respect to amounts expended by such
12 State after December 31, 2019, and before
13 January 1, 2024, for medical assistance
14 for expansion enrollees (as defined in sec-
15 tion 1902(nn)(1)), shall be equal to the
16 higher of the percentage otherwise deter-
17 mined for the State and year under sub-
18 section (b) (without regard to this sub-
19 section) and;
20 (ii) in subparagraph (D), by striking
21 and after the semicolon;
22 (iii) by striking subparagraph (E) and
23 inserting the following new subparagraphs:
24 (E) 90 percent for calendar quarters in
25 2020;
40
1 (F) 85 percent for calendar quarters in
2 2021;
3 (G) 80 percent for calendar quarters in
4 2022; and
5 (H) 75 percent for calendar quarters in
6 2023.; and
7 (iv) by adding after and below sub-
8 paragraph (H) (as added by clause (iii)),
9 the following flush sentence:
10 The Federal medical assistance percentage deter-
11 mined for a State and year under subsection (b)
12 shall apply to expenditures for medical assistance to
13 newly eligible individuals (as so described) and ex-
14 pansion enrollees (as so defined), in the case of a
15 State that has elected to cover newly eligible individ-
16 uals before March 1, 2017, for calendar quarters
17 after 2023, and, in the case of any other State, for
18 calendar quarters (or portions of calendar quarters)
19 after February 28, 2017.; and
20 (B) in subsection (z)(2)
21 (i) in subparagraph (A)
22 (I) by inserting through 2023
23 after each year thereafter; and
24 (II) by striking shall be equal
25 to and inserting and, for periods
41
1 after December 31, 2019 and before
2 January 1, 2024, who are expansion
3 enrollees (as defined in section
4 1902(nn)(1)) shall be equal to the
5 higher of the percentage otherwise de-
6 termined for the State and year under
7 subsection (b) (without regard to this
8 subsection) and; and
9 (ii) in subparagraph (B)(ii)
10 (I) in subclause (III), by adding
11 and at the end; and
12 (II) by striking subclauses (IV),
13 (V), and (VI) and inserting the fol-
14 lowing new subclause:
15 (IV) 2017 and each subsequent year
16 through 2023 is 80 percent..
17 (b) SUNSET OF ESSENTIAL HEALTH BENEFITS RE-
18 QUIREMENT.Section 1937(b)(5) of the Social Security
19 Act (42 U.S.C. 1396u7(b)(5)) is amended by adding at
20 the end the following: This paragraph shall not apply
21 after December 31, 2019..
22 SEC. 127. RESTORING FAIRNESS IN DSH ALLOTMENTS.
23 Section 1923(f)(7) of the Social Security Act (42

24 U.S.C. 1396r4(f)(7)) is amended by adding at the end
25 the following new subparagraph:
42
1 (C) NON-EXPANSION STATES.

3 State that is a non-expansion State for a
4 fiscal year
5 (I) subparagraph (A) shall not
6 apply to the DSH allotment for such
7 State and fiscal year; and
8 (II) the DSH allotment for the
9 State for fiscal year 2020 shall be in-
10 creased by the amount calculated ac-
11 cording to clause (iii).
12 (ii) NO CHANGE IN REDUCTION FOR
13 EXPANSION STATES.In the case of a

14 State that is an expansion State for a fis-
15 cal year, the DSH allotment for such State
16 and fiscal year shall be determined as if
17 clause (i) did not apply.
18 (iii) AMOUNT CALCULATED.For
19 purposes of clause (i)(II), the amount cal-

20 culated according to this clause for a non-
21 expansion State is the following:
22 (I) For each State, the Sec-
23 retary shall calculate a ratio equal to
24 the States fiscal year 2016 DSH al-
25 lotment divided by the number of indi-
43
1 viduals enrolled in the State plan
2 under this title for such fiscal year.
3 (II) The Secretary shall identify
4 the States whose ratio as so deter-
5 mined is below the national average of
6 such ratio for all States.
7 (III) The amount calculated
8 pursuant to this clause is an amount
9 that, if added to the States fiscal
10 year 2016 DSH allotment, would in-
11 crease the ratio calculated pursuant to
12 subclause (I) up to the national aver-
13 age for all States.
14 (iv) DISREGARD OF INCREASE.The
15 DSH allotment for a non-expansion State

16 for the second, third, and fourth quarters
17 of fiscal year 2024 and fiscal years there-
18 after shall be determined as if there had
19 been no increase in the States DSH allot-
20 ment for fiscal year 2020 under clause
21 (i)(II).
22 (v) NON-EXPANSION AND EXPANSION
23 STATE DEFINED.In this subparagraph:

24 (I) The term expansion State
25 means with respect to a fiscal year, a
44
1 State that, as of the date of enact-
2 ment of this subparagraph, provided
3 for eligibility under clause (i)(VIII) or
4 (ii)(XX) of section 1902(a)(10)(A) for
5 medical assistance under this title (or
6 a waiver of the State plan approved
7 under section 1115).
8 (II) The term non-expansion
9 State means, with respect to a fiscal
10 year, a State that is not an expansion
11 State..
12 SEC. 128. REDUCING STATE MEDICAID COSTS.
13 (a) IN GENERAL.
14 (1) STATE PLAN REQUIREMENTS.Section
15 1902(a)(34) of the Social Security Act (42 U.S.C.

16 1396a(a)(34)) is amended by striking in or after
17 the third month before the month in which he made
18 application and inserting in or after the month in
19 which the individual made application.
20 (2) DEFINITION OF MEDICAL ASSISTANCE.
21 Section 1905(a) of the Social Security Act (42

22 U.S.C. 1396d(a)) is amended by striking in or
23 after the third month before the month in which the
24 recipient makes application for assistance and in-
45
1 serting in or after the month in which the recipient
2 makes application for assistance.
4 subsection (a) shall apply to medical assistance with re-
5 spect to individuals whose eligibility for such assistance
6 is based on an application for such assistance made (or
7 deemed to be made) on or after October 1, 2017.
8 SEC. 129. PROVIDING SAFETY NET FUNDING FOR NON-EX-
9 PANSION STATES.
10 Title XIX of the Social Security Act is amended by

11 inserting after section 1923 (42 U.S.C. 1396r4) the fol-
12 lowing new section:
13 ADJUSTMENT IN PAYMENT FOR SERVICES OF SAFETY
14 NET PROVIDERS IN NON-EXPANSION STATES
15 SEC. 1923A. (a) IN GENERAL.Subject to the limi-

16 tations of this section, for each year during the period be-
17 ginning with fiscal year 2018 and ending with fiscal year
18 2022, each State that is one of the 50 States or the Dis-
19 trict of Columbia and that, as of July 1 of the preceding
20 fiscal year, did not provide for eligibility under clause
21 (i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) for medical
22 assistance under this title (or a waiver of the State plan
23 approved under section 1115) (each such State or District
24 referred to in this section for the fiscal year as a non-
25 expansion State) may adjust the payment amounts other-
26 wise provided under the State plan under this title (or a
46
1 waiver of such plan) to health care providers that provide
2 health care services to individuals enrolled under this title
3 (in this section referred to as eligible providers) so long
4 as the payment adjustment to such an eligible provider
5 does not exceed the providers costs in furnishing health
6 care services (as determined by the Secretary and net of
7 payments under this title, other than under this section,
8 and by uninsured patients) to individuals who either are
9 eligible for medical assistance under the State plan (or
10 under a waiver of such plan) or have no health insurance
11 or health plan coverage for such services.
12 (b) INCREASE IN APPLICABLE FMAP.Notwith-
13 standing section 1905(b), the Federal medical assistance
14 percentage applicable with respect to expenditures attrib-
15 utable to a payment adjustment under subsection (a) for
16 which payment is permitted under subsection (c) shall be
17 equal to
18 (1) 100 percent for calendar quarters in fiscal
19 years 2018, 2019, 2020, and 2021; and
20 (2) 95 percent for calendar quarters in fiscal
21 year 2022.
22 (c) ANNUAL ALLOTMENT LIMITATION.Payment
23 under section 1903(a) shall not be made to a State with
24 respect to any payment adjustment made under this sec-
47
1 tion for all calendar quarters in a fiscal year in excess
2 of the $2,000,000,000 multiplied by the ratio of
3 (1) the population of the State with income
4 below 138 percent of the poverty line in 2015 (as de-
5 termined based the table entitled Health Insurance
6 Coverage Status and Type by Ratio of Income to
7 Poverty Level in the Past 12 Months by Age for the
8 universe of the civilian noninstitutionalized popu-
9 lation for whom poverty status is determined based
10 on the 2015 American Community Survey 1Year
11 Estimates, as published by the Bureau of the Cen-
12 sus), to
13 (2) the sum of the populations under para-
14 graph (1) for all non-expansion States.
15 (d) DISQUALIFICATION IN CASE OF STATE COV-
16 ERAGE EXPANSION.If a State is a non-expansion for a
17 fiscal year and provides eligibility for medical assistance
18 described in subsection (a) during the fiscal year, the
19 State shall no longer be treated as a non-expansion State
20 under this section for any subsequent fiscal years..
21 SEC. 130. ELIGIBILITY REDETERMINATIONS.
22 (a) IN GENERAL.Section 1902(e)(14) of the Social

23 Security Act (42 U.S.C. 1396a(e)(14)) (relating to modi-
24 fied adjusted gross income) is amended by adding at the
25 end the following:
48
1 (J) FREQUENCY OF ELIGIBILITY REDE-
2 TERMINATIONS.Beginning on October 1,
3 2017, and notwithstanding subparagraph (H),
4 in the case of an individual whose eligibility for
5 medical assistance under the State plan under
6 this title (or a waiver of such plan) is deter-
7 mined based on the application of modified ad-
8 justed gross income under subparagraph (A)
9 and who is so eligible on the basis of clause
10 (i)(VIII), (ii)(XX), or (ii)(XXIII) of subsection
11 (a)(10)(A), at the option of the State, the State
12 plan may provide that the individuals eligibility
13 shall be redetermined every 6 months (or such
14 shorter number of months as the State may
15 elect)..
16 (b) INCREASED ADMINISTRATIVE MATCHING PER-
17 CENTAGE.For each calendar quarter during the period
18 beginning on October 1, 2017, and ending on December
19 31, 2019, the Federal matching percentage otherwise ap-
20 plicable under section 1903(a) of the Social Security Act
21 (42 U.S.C. 1396b(a)) with respect to State expenditures
22 during such quarter that are attributable to meeting the
23 requirement of section 1902(e)(14) (relating to determina-
24 tions of eligibility using modified adjusted gross income)
25 of such Act shall be increased by 5 percentage points with
49
1 respect to State expenditures attributable to activities car-
2 ried out by the State (and approved by the Secretary) to
3 exercise the option described in subparagraph (J) of such
4 section (relating to eligibility redeterminations made on a
5 6-month or shorter basis) (as added by subsection (a)) to
6 increase the frequency of eligibility redeterminations.
7 SEC. 131. OPTIONAL WORK REQUIREMENT FOR NON-
8 DISABLED, NONELDERLY, NONPREGNANT IN-
9 DIVIDUALS.
10 (a) IN GENERAL.Section 1902 of the Social Secu-

11 rity Act (42 U.S.C. 1396a), as previously amended, is fur-
12 ther amended by adding at the end the following new sub-
13 section:
14 (oo) OPTIONAL WORK REQUIREMENT FOR NON-
15 DISABLED, NONELDERLY, NONPREGNANT INDIVID-
16 UALS.
17 (1) IN GENERAL.Beginning October 1,

18 2017, subject to paragraph (3), a State may elect to
19 condition medical assistance to a nondisabled, non-
20 elderly, nonpregnant individual under this title upon
21 such an individuals satisfaction of a work require-
22 ment (as defined in paragraph (2)).
23 (2) WORK REQUIREMENT DEFINED.In this
24 section, the term work requirement means, with re-
25 spect to an individual, the individuals participation
50
1 in work activities (as defined in section 407(d)) for
2 such period of time as determined by the State, and
3 as directed and administered by the State.
4 (3) REQUIRED EXCEPTIONS.States admin-
5 istering a work requirement under this subsection
6 may not apply such requirement to
7 (A) a woman during pregnancy through
8 the end of the month in which the 60-day pe-
9 riod (beginning on the last day of her preg-
10 nancy) ends;
11 (B) an individual who is under 19 years
12 of age;
13 (C) an individual who is the only parent
14 or caretaker relative in the family of a child
15 who has not attained 6 years of age or who is
16 the only parent or caretaker of a child with dis-
17 abilities; or
18 (D) an individual who is married or a
19 head of household and has not attained 20
20 years of age and who
21 (i) maintains satisfactory attendance
22 at secondary school or the equivalent; or
23 (ii) participates in education directly
24 related to employment..
51
1 (b) INCREASE IN MATCHING RATE FOR IMPLEMEN-
2 TATION.Section 1903 of the Social Security Act (42
3 U.S.C. 1396b) is amended by adding at the end the fol-
4 lowing:
5 (aa) The Federal matching percentage otherwise ap-
6 plicable under subsection (a) with respect to State admin-
7 istrative expenditures during a calendar quarter for which
8 the State receives payment under such subsection shall,
9 in addition to any other increase to such Federal matching
10 percentage, be increased for such calendar quarter by 5
11 percentage points with respect to State expenditures at-
12 tributable to activities carried out by the State (and ap-
13 proved by the Secretary) to implement subsection (oo) of
14 section 1902..
15 SEC. 132. PROVIDER TAXES.
16 Section 1903(w)(4)(C) of the Social Security Act (42

17 U.S.C. 1396b(w)(4)(C)) is amended by adding at the end
18 the following new clause:
19 (iii) For purposes of clause (i), a de-
20 termination of the existence of an indirect
21 guarantee shall be made under paragraph
22 (3)(i) of section 433.68(f) of title 42, Code
23 of Federal Regulations, as in effect on
24 June 1, 2017, except that
52
1 (I) for fiscal year 2021, 5.8
2 percent shall be substituted for 6
3 percent each place it appears;
4 (II) for fiscal year 2022, 5.6
7 (III) for fiscal year 2023, 5.4
10 (IV) for fiscal year 2024, 5.2
12 percent each place it appears; and
13 (V) for fiscal year 2025 and
14 each subsequent fiscal year, 5 per-
15 cent shall be substituted for 6 per-
16 cent each place it appears..
17 SEC. 133. PER CAPITA ALLOTMENT FOR MEDICAL ASSIST-
18 ANCE.
19 Title XIX of the Social Security Act is amended

20 (1) in section 1903 (42 U.S.C. 1396b)
21 (A) in subsection (a), in the matter before
22 paragraph (1), by inserting and section
23 1903A(a) after except as otherwise provided
24 in this section; and
53
1 (B) in subsection (d)(1), by striking to
2 which and inserting to which, subject to sec-
3 tion 1903A(a),; and
4 (2) by inserting after such section 1903 the fol-
5 lowing new section:
6 SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR
7 MEDICAL ASSISTANCE.
8 (a) APPLICATION OF PER CAPITA CAP ON PAY-

9 MENTS FOR MEDICAL ASSISTANCE EXPENDITURES.
10 (1) IN GENERAL.If a State which is one of
11 the 50 States or the District of Columbia has excess
12 aggregate medical assistance expenditures (as de-
13 fined in paragraph (2)) for a fiscal year (beginning
14 with fiscal year 2020), the amount of payment to
15 the State under section 1903(a)(1) for each quarter
16 in the following fiscal year shall be reduced by 14 of
17 the excess aggregate medical assistance payments
18 (as defined in paragraph (3)) for that previous fiscal
19 year. In this section, the term State means only the
20 50 States and the District of Columbia.
21 (2) EXCESS AGGREGATE MEDICAL ASSISTANCE
22 EXPENDITURES.In this subsection, the term ex-

23 cess aggregate medical assistance expenditures
24 means, for a State for a fiscal year, the amount (if
25 any) by which
54
1 (A) the amount of the adjusted total med-
2 ical assistance expenditures (as defined in sub-
3 section (b)(1)) for the State and fiscal year; ex-
4 ceeds
5 (B) the amount of the target total med-
6 ical assistance expenditures (as defined in sub-
7 section (c)) for the State and fiscal year.
8 (3) EXCESS AGGREGATE MEDICAL ASSISTANCE
9 PAYMENTS.In this subsection, the term excess ag-

10 gregate medical assistance payments means, for a
11 State for a fiscal year, the product of
12 (A) the excess aggregate medical assist-
13 ance expenditures (as defined in paragraph (2))
14 for the State for the fiscal year; and
15 (B) the Federal average medical assist-
16 ance matching percentage (as defined in para-
17 graph (4)) for the State for the fiscal year.
18 (4) FEDERAL AVERAGE MEDICAL ASSISTANCE
19 MATCHING PERCENTAGE.In this subsection, the

20 term Federal average medical assistance matching
21 percentage means, for a State for a fiscal year, the
22 ratio (expressed as a percentage) of
23 (A) the amount of the Federal payments
24 that would be made to the State under section
25 1903(a)(1) for medical assistance expenditures
55
1 for calendar quarters in the fiscal year if para-
2 graph (1) did not apply; to
3 (B) the amount of the medical assistance
4 expenditures for the State and fiscal year.
5 (5) PER CAPITA BASE PERIOD.
6 (A) IN GENERAL.In this section, the

7 term per capita base period means, with re-
8 spect to a State, a period of 8 consecutive fiscal
9 quarters selected by the State.
10 (B) TIMELINE.Each State shall submit
11 its selection of 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 consecu-
17 tive fiscal quarters for which all the data
18 necessary to make determinations required
19 under this section is available, as deter-
20 mined by the Secretary; and
21 (ii) shall not select any period of 8
22 consecutive fiscal quarters that begins with
23 a fiscal quarter earlier than the first quar-
24 ter of fiscal year 2014 or ends with a fiscal
56
1 quarter later than the third fiscal quarter
2 of 2017.
3 (D) ADJUSTMENT BY THE SECRETARY.
4 If the Secretary determines that a State took

5 actions after the date of enactment of this sec-
6 tion (including making retroactive adjustments
7 to supplemental payment data in a manner that
8 affects a fiscal quarter in the per capita base
9 period) to diminish the quality of the data from
10 the per capita base period used to make deter-
11 minations under this section, the Secretary may
12 adjust the data as the Secretary deems appro-
13 priate.
14 (b) ADJUSTED TOTAL MEDICAL ASSISTANCE EX-
15 PENDITURES.Subject to subsection (g), the following
16 shall apply:
17 (1) IN GENERAL.In this section, the term
18 adjusted total medical assistance expenditures
19 means, for a State
20 (A) for the States per capita base period
21 (as defined in subsection (a)(5)), the product
22 of
23 (i) the amount of the medical assist-
24 ance expenditures (as defined in paragraph
25 (2) and adjusted under paragraph (5)) for
57
1 the State and period, reduced by the
2 amount of any excluded expenditures (as
3 defined in paragraph (3) and adjusted
4 under paragraph (5)) for the State and pe-
5 riod otherwise included in such medical as-
6 sistance expenditures; and
7 (ii) the 1903A base period popu-
8 lation percentage (as defined in paragraph
9 (4)) for the State; or
10 (B) for fiscal year 2019 or a subsequent
11 fiscal year, the amount of the medical assist-
13 for the State and fiscal year that is attributable
14 to 1903A enrollees, reduced by the amount of
15 any excluded expenditures (as defined in para-
16 graph (3)) for the State and fiscal year other-
17 wise included in such medical assistance ex-
18 penditures and includes non-DSH supplemental
19 payments (as defined in subsection
20 (d)(4)(A)(ii)) and payments described in sub-
21 section (d)(4)(A)(iii) but shall not be construed
22 as including any expenditures attributable to
23 the program under section 1928 (relating to
24 State pediatric vaccine distribution programs).
25 In applying subparagraph (B), non-DSH sup-
58
1 plemental payments (as defined in subsection
2 (d)(4)(A)(ii)) and payments described in sub-
3 section (d)(4)(A)(iii) shall be treated as fully at-
4 tributable to 1903A enrollees.
5 (2) MEDICAL ASSISTANCE EXPENDITURES.
6 In this section, the term medical assistance expendi-

7 tures means, for a State and fiscal year or per cap-
8 ita base period, the medical assistance payments as
9 reported by medical service category on the Form
10 CMS-64 quarterly expense report (or successor to
11 such a report form, and including enrollment data
12 and subsequent adjustments to any such report, in
13 this section referred to collectively as a CMS-64 re-
14 port) for quarters in the year or base period for
15 which payment is (or may otherwise be) made pur-
16 suant to section 1903(a)(1), adjusted, in the case of
17 a per capita base period, under paragraph (5).
18 (3) EXCLUDED EXPENDITURES.In this sec-
19 tion, the term excluded expenditures means, for a
20 State and fiscal year or per capita base period, ex-
21 penditures under the State plan (or under a waiver
22 of such plan) that are attributable to any of the fol-
23 lowing:
59
1 (A) DSH.Payment adjustments made
2 for disproportionate share hospitals under sec-
3 tion 1923.
4 (B) MEDICARE COST-SHARING.Pay-
5 ments made for medicare cost-sharing (as de-

6 fined in section 1905(p)(3)).
7 (C) SAFETY NET PROVIDER PAYMENT AD-
8 JUSTMENTS IN NON-EXPANSION STATES.Pay-
9 ment adjustments under subsection (a) of sec-

10 tion 1923A for which payment is permitted
11 under subsection (c) of such section.
12 (4) 1903A BASE PERIOD POPULATION PER-
13 CENTAGE.In this subsection, the term 1903A base

14 period population percentage means, for a State,
15 the Secretarys calculation of the percentage of the
16 actual medical assistance expenditures, as reported
17 by the State on the CMS64 reports for calendar
18 quarters in the States per capita base period, that
19 are attributable to 1903A enrollees (as defined in
20 subsection (e)(1)).
21 (5) ADJUSTMENTS FOR PER CAPITA BASE PE-
22 RIOD.In calculating medical assistance expendi-

23 tures under paragraph (2) and excluded expendi-
24 tures under paragraph (3) for a State for the States
25 per capita base period, the total amount of each type
60
1 of expenditure for the State and base period shall be
2 divided by 2.
3 (c) TARGET TOTAL MEDICAL ASSISTANCE EXPEND-
4 ITURES.
5 (1) CALCULATION.In this section, the term

6 target total medical assistance expenditures means,
7 for a State for a fiscal year and subject to para-
8 graph (4), the sum of the products, for each of the
9 1903A enrollee categories (as defined in subsection
10 (e)(2)), of
11 (A) the target per capita medical assist-
13 for the enrollee category, State, and fiscal year;
14 and
15 (B) the number of 1903A enrollees for
16 such enrollee category, State, and fiscal year, as
17 determined under subsection (e)(4).
18 (2) TARGET PER CAPITA MEDICAL ASSISTANCE
19 EXPENDITURES.In this subsection, the term tar-

20 get per capita medical assistance expenditures
21 means, for a 1903A enrollee category and State
22 (A) for fiscal year 2020, an amount equal
23 to
24 (i) the provisional FY19 target per
25 capita amount for such enrollee category
61
1 (as calculated under subsection (d)(5)) for
2 the State; increased by
3 (ii) the applicable annual inflation
4 factor (as defined in paragraph (3)) for
5 fiscal year 2020; and
6 (B) for each succeeding fiscal year, an
7 amount equal to
8 (i) the target per capita medical as-
9 sistance expenditures (under subparagraph
10 (A) or this subparagraph) for the 1903A
11 enrollee category and State for the pre-
12 ceding fiscal year; increased by
13 (ii) the applicable annual inflation
14 factor for that succeeding fiscal year.
15 (3) APPLICABLE ANNUAL INFLATION FAC-
16 TOR.In paragraph (2), the term applicable annual

17 inflation factor means
18 (A) for fiscal years before 2025
19 (i) for each of the 1903A enrollee
20 categories described in subparagraphs (C),
21 (D), and (E) of subsection (e)(2), the per-
22 centage increase in the medical care com-
23 ponent of the consumer price index for all
24 urban consumers (U.S. city average) from
62
1 September of the previous fiscal year to
2 September of the fiscal year involved; and
3 (ii) for each of the 1903A enrollee
4 categories described in subparagraphs (A)
5 and (B) of subsection (e)(2), the percent-
6 age increase described in clause (i) plus 1
7 percentage point; and
8 (B) for fiscal years after 2024, for all
9 1903A enrollee categories, the percentage in-
10 crease in the consumer price index for all urban
11 consumers (U.S. city average) from September
12 of the previous fiscal year to September of the
13 fiscal year involved.
14 (4) DECREASE IN TARGET EXPENDITURES
15 FOR REQUIRED EXPENDITURES BY CERTAIN POLIT-
16 ICAL SUBDIVISIONS.
17 (A) IN GENERAL.In the case of a State

18 that had a DSH allotment under section
19 1923(f) for fiscal year 2016 that was more than
20 6 times the national average of such allotments
21 for all the States for such fiscal year and that
22 requires political subdivisions within the State
23 to contribute funds towards medical assistance
24 or other expenditures under the State plan
25 under this title (or under a waiver of such plan)
63
1 for a fiscal year (beginning with fiscal year
2 2020), the target total medical assistance ex-
3 penditures for such State and fiscal year shall
4 be decreased by the amount that political sub-
5 divisions in the State are required to contribute
6 under the plan (or waiver) without reimburse-
7 ment from the State for such fiscal year, other
8 than contributions described in subparagraph
9 (B).
10 (B) EXCEPTIONS.The contributions de-
11 scribed in this subparagraph are the following:
12 (i) Contributions required by a State
13 from a political subdivision that, as of the
14 first day of the calendar year in which the
15 fiscal year involved begins
16 (I) has a population of more
17 than 5,000,000, as estimated by the
18 Bureau of the Census; and
19 (II) imposes a local income tax
20 upon its residents.
21 (ii) Contributions required by a
22 State from a political subdivision for ad-
23 ministrative expenses if the State required
24 such contributions from such subdivision
64
1 without reimbursement from the State as
2 of January 1, 2017.
3 (5) ADJUSTMENTS TO STATE EXPENDITURES
4 TARGETS TO PROMOTE PROGRAM EQUITY ACROSS
5 STATES.
6 (A) IN GENERAL.Beginning with fiscal

7 year 2020, the target per capita medical assist-
8 ance expenditures for a 1903A enrollee cat-
9 egory, State, and fiscal year, as determined
10 under paragraph (2), shall be adjusted (subject
11 to subparagraph (C)(i)) in accordance with this
12 paragraph.
13 (B) ADJUSTMENT BASED ON LEVEL OF
14 PER CAPITA SPENDING FOR 1903A ENROLLEE
15 CATEGORIES.Subject to subparagraph (C),

16 with respect to a State, fiscal year, and 1903A
17 enrollee category, if the States per capita cat-
18 egorical medical assistance expenditures (as de-
19 fined in subparagraph (D)) for the State and
20 category in the preceding fiscal year
21 (i) exceed the mean per capita cat-
22 egorical medical assistance expenditures
23 for the category for all States for such pre-
24 ceding year by not less than 25 percent,
25 the States target per capita medical as-
65
1 sistance expenditures for such category for
2 the fiscal year involved shall be reduced by
3 a percentage that shall be determined by
4 the Secretary but which shall not be less
5 than 0.5 percent or greater than 2 percent;
6 or
7 (ii) are less than the mean per capita
8 categorical medical assistance expenditures
9 for the category for all States for such pre-
10 ceding year by not less than 25 percent,
11 the States target per capita medical as-
12 sistance expenditures for such category for
13 the fiscal year involved shall be increased
14 by a percentage that shall be determined
15 by the Secretary but which shall not be
16 less than 0.5 percent or greater than 2
17 percent.
18 (C) RULES OF APPLICATION.
19 (i) BUDGET NEUTRALITY REQUIRE-
20 MENT.In determining the appropriate

21 percentages by which to adjust States tar-
22 get per capita medical assistance expendi-
23 tures for a category and fiscal year under
24 this paragraph, the Secretary shall make
25 such adjustments in a manner that does
66
1 not result in a net increase in Federal pay-
2 ments under this section for such fiscal
3 year, and if the Secretary cannot adjust
4 such expenditures in such a manner there
5 shall be no adjustment under this para-
6 graph for such fiscal year.
7 (ii) ASSUMPTION REGARDING STATE
8 EXPENDITURES.For purposes of clause

9 (i), in the case of a State that has its tar-
10 get per capita medical assistance expendi-
11 tures for a 1903A enrollee category and
12 fiscal year increased under this paragraph,
13 the Secretary shall assume that the cat-
14 egorical medical assistance expenditures
15 (as defined in subparagraph (D)(ii)) for
16 such State, category, and fiscal year will
17 equal such increased target medical assist-
18 ance expenditures.
19 (iii) NONAPPLICATION TO LOW-DEN-
20 SITY STATES.This paragraph shall not

21 apply to any State that has a population
22 density of less than 15 individuals per
23 square mile, based on the most recent data
24 available from the Bureau of the Census.
67
1 (iv) DISREGARD OF ADJUSTMENT.
2 Any adjustment under this paragraph to

3 target medical assistance expenditures for
4 a State, 1903A enrollee category, and fis-
5 cal year shall be disregarded when deter-
6 mining the target medical assistance ex-
7 penditures for such State and category for
8 a succeeding year under paragraph (2).
9 (v) APPLICATION FOR FISCAL YEARS
10 2020 AND 2021.In fiscal years 2020 and

11 2021, the Secretary shall apply this para-
12 graph by deeming all categories of 1903A
13 enrollees to be a single category.
14 (D) PER CAPITA CATEGORICAL MEDICAL
15 ASSISTANCE EXPENDITURES.
16 (i) IN GENERAL.In this paragraph,

17 the term per capita categorical medical as-
18 sistance expenditures means, with respect
19 to a State, 1903A enrollee category, and
20 fiscal year, an amount equal to
21 (I) the categorical medical ex-
22 penditures (as defined in clause (ii))
23 for the State, category, and year; di-
24 vided by
68
1 (II) the number of 1903A en-
2 rollees for the State, category, and
3 year.
4 (ii) CATEGORICAL MEDICAL ASSIST-
5 ANCE EXPENDITURES.The term categor-

6 ical medical assistance expenditures
7 means, with respect to a State, 1903A en-
8 rollee category, and fiscal year, an amount
9 equal to the total medical assistance ex-
10 penditures (as defined in paragraph (2))
11 for the State and fiscal year that are at-
12 tributable to 1903A enrollees in the cat-
13 egory, excluding any excluded expenditures
14 (as defined in paragraph (3)) for the State
15 and fiscal year that are attributable to
16 1903A enrollees in the category.
17 (d) CALCULATION OF FY19 PROVISIONAL TARGET
18 AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.Sub-
19 ject to subsection (g), the following shall apply:
20 (1) CALCULATION OF BASE AMOUNTS FOR PER
21 CAPITA BASE PERIOD.For each State the Sec-

22 retary shall calculate (and provide notice to the
23 State not later than April 1, 2018, of) the following:
24 (A) The amount of the adjusted total
25 medical assistance expenditures (as defined in
69
1 subsection (b)(1)) for the State for the States
2 per capita base period.
3 (B) The number of 1903A enrollees for
4 the State in the States per capita base period
5 (as determined under subsection (e)(4)).
6 (C) The average per capita medical as-
7 sistance expenditures for the State for the
8 States per capita base period equal to
9 (i) the amount calculated under sub-
10 paragraph (A); divided by
11 (ii) the number calculated under sub-
12 paragraph (B).
13 (2) FISCAL YEAR 2019 AVERAGE PER CAPITA
14 AMOUNT BASED ON INFLATING THE PER CAPITA
15 BASE PERIOD AMOUNT TO FISCAL YEAR 2019 BY CPI-
16 MEDICAL.The Secretary shall calculate a fiscal

17 year 2019 average per capita amount for each State
18 equal to
19 (A) the average per capita medical assist-
20 ance expenditures for the State for the States
21 per capita base period (calculated under para-
22 graph (1)(C)); increased by
23 (B) the percentage increase in the med-
24 ical care component of the consumer price index
25 for all urban consumers (U.S. city average)
70
1 from the last month of the States per capita
2 base period to September of fiscal year 2019.
3 (3) AGGREGATE AND AVERAGE EXPENDI-
4 TURES PER CAPITA FOR FISCAL YEAR 2019.The
5 Secretary shall calculate for each State the fol-

6 lowing:
7 (A) The amount of the adjusted total
8 medical assistance expenditures (as defined in
9 subsection (b)(1)) for the State for fiscal year
10 2019.
11 (B) The number of 1903A enrollees for
12 the State in fiscal year 2019 (as determined
13 under subsection (e)(4)).
14 (4) PER CAPITA EXPENDITURES FOR FISCAL
15 YEAR 2019 FOR EACH 1903A ENROLLEE CATEGORY.
16 The Secretary shall calculate (and provide notice to

17 each State not later than January 1, 2020, of) the
18 following:
19 (A)(i) For each 1903A enrollee category,
20 the amount of the adjusted total medical assist-
21 ance expenditures (as defined in subsection
22 (b)(1)) for the State for fiscal year 2019 for in-
23 dividuals in the enrollee category, calculated by
24 excluding from medical assistance expenditures
25 those expenditures attributable to expenditures
71
1 described in clause (iii) or non-DSH supple-
2 mental expenditures (as defined in clause (ii)).
3 (ii) In this paragraph, the term non-
4 DSH supplemental expenditure means a pay-
5 ment to a provider under the State plan (or
6 under a waiver of the plan) that
7 (I) is not made under section 1923;
8 (II) is not made with respect to a
9 specific item or service for an individual;
10 (III) is in addition to any payments
11 made to the provider under the plan (or
12 waiver) for any such item or service; and
13 (IV) complies with the limits for ad-
14 ditional payments to providers under the
15 plan (or waiver) imposed pursuant to sec-
16 tion 1902(a)(30)(A), including the regula-
17 tions specifying upper payment limits
18 under the State plan in part 447 of title
19 42, Code of Federal Regulations (or any
20 successor regulations).
21 (iii) An expenditure described in this
22 clause is an expenditure that meets the criteria
23 specified in subclauses (I), (II), and (III) of
24 clause (ii) and is authorized under section 1115
25 for the purposes of funding a delivery system
72
1 reform pool, uncompensated care pool, a des-
2 ignated State health program, or any other
3 similar expenditure (as defined by the Sec-
4 retary).
5 (B) For each 1903A enrollee category,
6 the number of 1903A enrollees for the State in
7 fiscal year 2019 in the enrollee category (as de-
8 termined under subsection (e)(4)).
9 (C) For the States per capita base pe-
10 riod, the States non-DSH supplemental and
11 pool payment percentage is equal to the ratio
12 (expressed as a percentage) of
13 (i) the total amount of non-DSH
14 supplemental expenditures (as defined in
15 subparagraph (A)(ii) and adjusted under
16 subparagraph (E)) and payments described
17 in subparagraph (A)(iii) (and adjusted
18 under subparagraph (E)) for the State for
19 the period; to
20 (ii) the amount described in sub-
21 section (b)(1)(A) for the State for the
22 States per capita base period.
23 (D) For each 1903A enrollee category an
24 average medical assistance expenditures per
73
1 capita for the State for fiscal year 2019 for the
2 enrollee category equal to
3 (i) the amount calculated under sub-
4 paragraph (A) for the State, increased by
5 the non-DSH supplemental and pool pay-
6 ment percentage for the State (as cal-
7 culated under subparagraph (C)); divided
8 by
9 (ii) the number calculated under sub-
10 paragraph (B) for the State for the en-
11 rollee category.
12 (E) For purposes of subparagraph (C)(i),
13 in calculating the total amount of non-DSH
14 supplemental expenditures and payments de-
15 scribed in subparagraph (A)(iii) for a State for
16 the per capita base period, the total amount of
17 such expenditures and the total amount of such
18 payments for the State and base period shall
19 each be divided by 2.
20 (5) PROVISIONAL FY19 PER CAPITA TARGET
21 AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.
22 Subject to subsection (f)(2), the Secretary shall cal-

23 culate for each State a provisional FY19 per capita
24 target amount for each 1903A enrollee category
25 equal to the average medical assistance expenditures
74
1 per capita for the State for fiscal year 2019 (as cal-
2 culated under paragraph (4)(D)) for such enrollee
3 category multiplied by the ratio of
4 (A) the product of
5 (i) the fiscal year 2019 average per
6 capita amount for the State, as calculated
7 under paragraph (2); and
8 (ii) the number of 1903A enrollees
9 for the State in fiscal year 2019, as cal-
10 culated under paragraph (3)(B); to
11 (B) the amount of the adjusted total
12 medical assistance expenditures for the State
13 for fiscal year 2019, as calculated under para-
14 graph (3)(A).
15 (e) 1903A ENROLLEE; 1903A ENROLLEE CAT-
16 EGORY.Subject to subsection (g), for purposes of this
17 section, the following shall apply:
18 (1) 1903A ENROLLEE.The term 1903A en-
19 rollee means, with respect to a State and a month
20 and subject to subsection (i)(1)(B), any Medicaid
21 enrollee (as defined in paragraph (3)) for the month,
22 other than such an enrollee who for such month is
23 in any of the following categories of excluded indi-
24 viduals:
75
1 (A) CHIP.An individual who is pro-
2 vided, under this title in the manner described
3 in section 2101(a)(2), child health assistance
4 under title XXI.
5 (B) IHS.An individual who receives
6 any medical assistance under this title for serv-
7 ices for which payment is made under the third
8 sentence of section 1905(b).
9 (C) BREAST AND CERVICAL CANCER
10 SERVICES ELIGIBLE INDIVIDUAL.An indi-

11 vidual who is eligible for medical assistance
12 under this title only on the basis of section
13 1902(a)(10)(A)(ii)(XVIII).
14 (D) PARTIAL-BENEFIT ENROLLEES.An
15 individual who
16 (i) is an alien who is eligible for
17 medical assistance under this title only on
18 the basis of section 1903(v)(2);
19 (ii) is eligible for medical assistance
20 under this title only on the basis of sub-
21 clause (XII) or (XXI) of section
22 1902(a)(10)(A)(ii) (or on the basis of a
23 waiver that provides only comparable bene-
24 fits);
76
1 (iii) is a dual eligible individual (as
2 defined in section 1915(h)(2)(B)) and is
3 eligible for medical assistance under this
4 title (or under a waiver) only for some or
5 all of medicare cost-sharing (as defined in
6 section 1905(p)(3)); or
7 (iv) is eligible for medical assistance
8 under this title and for whom the State is
9 providing a payment or subsidy to an em-
10 ployer for coverage of the individual under
11 a group health plan pursuant to section
12 1906 or section 1906A (or pursuant to a
13 waiver that provides only comparable bene-
14 fits).
15 (E) BLIND AND DISABLED CHILDREN.
16 An individual who
17 (i) is a child under 19 years of age;
18 and
19 (ii) is eligible for medical assistance
20 under this title on the basis of being blind
21 or disabled.
22 (2) 1903A ENROLLEE CATEGORY.The term
23 1903A enrollee category means each of the fol-
24 lowing:
77
1 (A) ELDERLY.A category of 1903A en-
2 rollees who are 65 years of age or older.
3 (B) BLIND AND DISABLED.A category
4 of 1903A enrollees (not described in the pre-
5 vious subparagraph) who
6 (i) are 19 years of age or older; and
7 (ii) are eligible for medical assistance
8 under this title on the basis of being blind
9 or disabled.
10 (C) CHILDREN.A category of 1903A
11 enrollees (not described in a previous subpara-
12 graph) who are children under 19 years of age.
13 (D) EXPANSION ENROLLEES.A cat-
14 egory of 1903A enrollees (not described in a
15 previous subparagraph) who are eligible for
16 medical assistance under this title only on the
17 basis of clause (i)(VIII), (ii)(XX), or
18 (ii)(XXIII) of section 1902(a)(10)(A).
19 (E) OTHER NONELDERLY, NONDISABLED,
20 NON-EXPANSION ADULTS.A category of

21 1903A enrollees who are not described in any
22 previous subparagraph.
23 (3) MEDICAID ENROLLEE.The term Med-
24 icaid enrollee means, with respect to a State for a
25 month, an individual who is eligible for medical as-
78
1 sistance for items or services under this title and en-
2 rolled under the State plan (or a waiver of such
3 plan) under this title for the month.
4 (4) DETERMINATION OF NUMBER OF 1903A
5 ENROLLEES.The number of 1903A enrollees for a

6 State and fiscal year or the States per capita base
7 period, and, if applicable, for a 1903A enrollee cat-
8 egory, is the average monthly number of Medicaid
9 enrollees for such State and fiscal year or base pe-
10 riod (and, if applicable, in such category) that are
11 reported through the CMS64 report under (and
12 subject to audit under) subsection (h).
13 (f) SPECIAL PAYMENT RULES.
14 (1) APPLICATION IN CASE OF RESEARCH AND
15 DEMONSTRATION PROJECTS AND OTHER WAIVERS.
16 In the case of a State with a waiver of the State

17 plan approved under section 1115, section 1915, or
18 another provision of this title, this section shall
19 apply to medical assistance expenditures and medical
20 assistance payments under the waiver, in the same
21 manner as if such expenditures and payments had
22 been made under a State plan under this title and
23 the limitations on expenditures under this section
24 shall supersede any other payment limitations or
25 provisions (including limitations based on a per cap-
79
1 ita limitation) otherwise applicable under such a
2 waiver.
3 (2) TREATMENT OF STATES EXPANDING COV-
4 ERAGE AFTER FISCAL YEAR 2016.In the case of a

5 State that did not provide for medical assistance for
6 the 1903A enrollee category described in subsection
7 (e)(2)(D) during fiscal year 2016 but which provides
8 for such assistance for such category in a subse-
9 quent year, the provisional FY19 per capita target
10 amount for such enrollee category under subsection
11 (d)(5) shall be equal to the provisional FY19 per
12 capita target amount for the 1903A enrollee cat-
13 egory described in subsection (e)(2)(E).
14 (3) IN CASE OF STATE FAILURE TO REPORT
15 NECESSARY DATA.If a State for any quarter in a

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
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
80
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 States per capita base period, and the
10 amounts of the adjusted total medical assistance expendi-
11 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 States per capita
14 base period, fiscal year 2019, and any subsequent fiscal
15 year, may be adjusted by the Secretary based upon an ap-
16 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 ad-
20 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 FEDERAL MATCHING PERCENTAGE
25 FOR CERTAIN ADMINISTRATIVE EXPENSES.
81
1 (1) REPORTING OF CMS64 DATA.
2 (A) IN 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 CMS64 report form to require that States
25 submit data with respect to medical assistance
82
1 expenditures for qualified inpatient psychiatric
2 hospital services (as defined in section
3 1905(h)(3)).
4 (C) REPORTING ON CHILDREN WITH
5 COMPLEX MEDICAL CONDITIONS.Not later

6 than January 1, 2020, the Secretary shall mod-
7 ify the CMS64 report form to require that
8 States submit data with respect to individuals
9 who
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 or serious injury that
16 (I) affects two or more body
17 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
83
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 adjustment methodologies
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 for administering State
21 plans under this title and a na-
22 tional panel of pediatric, pedi-
23 atric specialty, and pediatric sub-
24 specialty experts.
84
1 (2) AUDITING OF CMS64 DATA.The Sec-
2 retary shall conduct for each State an audit of the
3 number of individuals and expenditures reported
4 through the CMS64 report for the States 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 States spending
14 under this section not less than once every 3 years.
15 (4) TEMPORARY INCREASE IN FEDERAL
16 MATCHING PERCENTAGE TO SUPPORT IMPROVED
17 DATA REPORTING SYSTEMS FOR FISCAL YEARS 2018
18 AND 2019.In the case of any State that selects as

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
85
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 States additional adminis-
13 trative expenditures to implement the data re-
14 quirements of paragraph (1).
15 (5) HHS REPORT ON ADOPTION OF TMSIS
16 DATA.Not later than January 1, 2025, the Sec-

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 CMS64 report data for pur-
21 poses of making the determinations necessary under
22 this section..
86
1 SEC. 134. FLEXIBLE BLOCK GRANT OPTION FOR STATES.
2 Title XIX of the Social Security Act, as amended by

3 section 133, is further amended by inserting after section
4 1903A the following new section:
5 SEC. 1903B. MEDICAID FLEXIBILITY PROGRAM.
6 (a) IN GENERAL.Beginning with fiscal year 2020,

7 any State (as defined in subsection (e)) that has an appli-
8 cation approved by the Secretary under subsection (b)
9 may conduct a Medicaid Flexibility Program to provide
10 targeted health assistance to program enrollees.
11 (b) STATE APPLICATION.
12 (1) IN GENERAL.To be eligible to conduct a
13 Medicaid Flexibility Program, a State shall submit
14 an application to the Secretary that meets the re-
15 quirements of this subsection.
16 (2) CONTENTS OF APPLICATION.An applica-
17 tion under this subsection shall include the fol-
18 lowing:
19 (A) A description of the proposed Med-
20 icaid Flexibility Program and how the State will
21 satisfy the requirements described in subsection
22 (d).
23 (B) The proposed conditions for eligibility
24 of program enrollees.
25 (C) A description of the types, amount,
26 duration, and scope of services which will be of-
87
1 fered as targeted health assistance under the
2 program, including a description of the pro-
3 posed package of services which will be provided
4 to program enrollees to whom the State would
5 otherwise be required to make medical assist-
6 ance available under section 1902(a)(10)(A)(i).
7 (D) A description of how the State will
8 notify individuals currently enrolled in the State
9 plan for medical assistance under this title of
10 the transition to such program.
11 (E) Statements certifying that the State
12 agrees to
13 (i) submit regular enrollment data
14 with respect to the program to the Centers
15 for Medicare & Medicaid Services at such
16 time and in such manner as the Secretary
17 may require;
18 (ii) submit timely and accurate data
19 to the Transformed Medicaid Statistical
20 Information System (TMSIS);
21 (iii) report annually to the Secretary
22 on adult health quality measures imple-
23 mented under the program and informa-
24 tion on the quality of health care furnished
25 to program enrollees under the program as
88
1 part of the annual report required under
2 section 1139B(d)(1);
3 (iv) submit such additional informa-
4 tion not described in any of the preceding
5 clauses of this subparagraph but which the
6 Secretary determines is necessary for mon-
7 itoring, evaluation, or program integrity
8 purposes, including
9 (I) survey data, such as the
10 data from Consumer Assessment of
11 Healthcare Providers and Systems
12 (CAHPS) surveys;
13 (II) birth certificate data; and
14 (III) clinical patient data for
15 quality measurements which may not
16 be present in a claim, such as labora-
17 tory data, body mass index, and blood
18 pressure; and
19 (v) on an annual basis, conduct a re-
20 port evaluating the program and make
21 such report available to the public.
22 (F) An information technology systems
23 plan demonstrating that the State has the capa-
24 bility to support the technological administra-
89
1 tion of the program and comply with reporting
2 requirements under this section.
3 (G) A statement of the goals of the pro-
4 posed program, which shall include
5 (i) goals related to quality, access,
6 rate of growth targets, consumer satisfac-
7 tion, and outcomes;
8 (ii) a plan for monitoring and evalu-
9 ating the program to determine whether
10 such goals are being met; and
11 (iii) a proposed process for the State,
12 in consultation with the Centers for Medi-
13 care & Medicaid Services, to take remedial
14 action to make progress on unmet goals.
15 (H) Such other information as the Sec-
16 retary may require.
17 (3) STATE NOTICE AND COMMENT PERIOD.
18 (A) IN GENERAL.Before submitting an

19 application under this subsection, a State shall
20 make the application publicly available for a 30
21 day notice and comment period.
22 (B) NOTICE AND COMMENT PROCESS.
23 During the notice and comment period de-

24 scribed in subparagraph (A), the State shall
25 provide opportunities for a meaningful level of
90
1 public input, which shall include public hearings
2 on the proposed Medicaid Flexibility Program.
3 (4) FEDERAL NOTICE AND COMMENT PE-
4 RIOD.The Secretary shall not approve of any ap-

5 plication to conduct a Medicaid Flexibility Program
6 without making such application publicly available
7 for a 30 day notice and comment period.
8 (5) TIMELINE FOR SUBMISSION.
9 (A) IN GENERAL.A State may submit

10 an application under this subsection to conduct
11 a Medicaid Flexibility Program that would
12 begin in the next fiscal year at any time, sub-
13 ject to subparagraph (B).
14 (B) DEADLINES.Each year beginning
15 with 2019, the Secretary shall specify a dead-
16 line for submitting an application under this
17 subsection to conduct a Medicaid Flexibility
18 Program that would begin in the next fiscal
19 year, but such deadline shall not be earlier than
20 60 days after the date that the Secretary pub-
21 lishes the amounts of State block grants as re-
22 quired under subsection (c)(4).
23 (c) FINANCING.
24 (1) IN GENERAL.For each fiscal year during
25 which a State is conducting a Medicaid Flexibility
91
1 Program, the State shall receive, instead of amounts
2 otherwise payable to the State under this title for
3 medical assistance for program enrollees, the
4 amount specified in paragraph (3)(A).
5 (2) AMOUNT OF BLOCK GRANT FUNDS.
6 (A) FOR INITIAL YEAR.Subject to sub-

7 paragraph (C), for the first fiscal year in which
8 a State conducts a Medicaid Flexibility Pro-
9 gram, the block grant amount under this para-
10 graph for the State and year shall be equal to
11 the Federal average medical assistance match-
12 ing percentage (as defined in section
13 1903A(a)(4)) for the State and year multiplied
14 by the product of
15 (i) the target per capita medical as-
16 sistance expenditures (as defined in section
17 1903A(c)(2)) for the State and year for
18 the enrollee category described in section
19 1903A(e)(2)(E); and
20 (ii) the number of 1903A enrollees in
21 such category for the State for the second
22 fiscal year preceding such first fiscal year,
23 increased by the percentage increase in
24 State population from such second pre-
25 ceding fiscal year to such first fiscal year,
92
1 based on the best available estimates of the
2 Bureau of the Census.
3 (B) FOR ANY SUBSEQUENT YEAR.For
4 any fiscal year that is not the first fiscal year

5 in which a State conducts a Medicaid Flexibility
6 Program, the block grant amount under this
7 paragraph for the State and year shall be equal
8 to the block grant amount determined for the
9 State for the most recent previous fiscal year in
10 which the State conducted a Medicaid Flexi-
11 bility Program, except that such amount shall
12 be increased by the percentage increase in the
13 consumer price index for all urban consumers
14 (U.S. city average) from April of the second fis-
15 cal year preceding the fiscal year involved to
16 April of the fiscal year preceding the fiscal year
17 involved.
18 (C) CAP ON TOTAL POPULATION OF 1903A
19 ENROLLEES FOR PURPOSES OF BLOCK GRANT
20 CALCULATION.
21 (i) IN GENERAL.In calculating the

22 amount of a block grant for the first year
23 in which a State conducts a Medicaid
24 Flexibility Program under subparagraph
25 (A), the total number of 1903A enrollees
93
1 in the 1903A enrollee category described in
2 section 1903A(e)(2)(E) for the State and
3 year shall not exceed the adjusted number
4 of base period non-expansion enrollees for
5 the State (as defined in clause (ii)).
6 (ii) ADJUSTED NUMBER OF 2016
7 NON-EXPANSION ENROLLEES.The term

8 adjusted number of base period non-ex-
9 pansion enrollees means, with respect to a
10 State, the number of 1903A enrollees in
11 the enrollee category described in section
12 1903A(e)(2)(E) for the State for the
13 States per capita base period (as deter-
14 mined under section 1903A(e)(4)), in-
15 creased by the percentage increase, if any,
16 in the total State population from the last
17 April in the States per capita base period
18 to April of the fiscal year preceding the fis-
19 cal year involved (determined using the
20 best available data from the Bureau of the
21 Census) plus 3 percentage points.
22 (D) AVAILABILITY OF ROLLOVER
23 FUNDS.
24 (i) IN GENERAL.To the extent that

25 the block grant amount available to a
94
1 State for a fiscal year under this para-
2 graph exceeds the amount of Federal pay-
3 ments made to the State for such fiscal
4 year under paragraph (3)(A), the Sec-
5 retary shall make such funds available to
6 the State for the succeeding fiscal year if
7 the State
8 (I) satisfies the State mainte-
9 nance of effort requirement under
10 paragraph (3)(B); and
11 (II) is conducting a Medicaid
12 Flexibility Program in such suc-
13 ceeding fiscal year.
14 (ii) USE OF FUNDS.Section
15 1903(i)(17) shall not apply to funds made

16 available to a State under this subpara-
17 graph and a State may use such funds for
18 other State health programs (as defined or
19 approved by the Secretary) or for any
20 other purpose which is consistent with the
21 quality standards established by the Sec-
22 retary under clause (iii).
23 (iii) QUALITY STANDARDS.
24 (I) IN GENERAL.Not later

25 than January 1, 2020, the Secretary
95
1 shall establish quality standards appli-
2 cable to a States use of funds made
3 available to the State under this sub-
4 paragraph.
5 (II) ALLOWABLE USES.In es-
6 tablishing quality standards under
7 this clause, the Secretary shall not
8 prohibit a State from using such
9 funds for
10 (aa) a program that is not
11 related to health care, provided
12 that using the funds for such
13 program is otherwise consistent
14 with the standards; or
15 (bb) the State maintenance
16 of effort expenditures required
17 under paragraph (3)(B).
18 (3) FEDERAL PAYMENT AND STATE MAINTE-
19 NANCE OF EFFORT.
20 (A) FEDERAL PAYMENT.Subject to sub-

21 paragraph (D), the Secretary shall pay to each
22 State conducting a Medicaid Flexibility Pro-
23 gram under this section for a fiscal year, from
24 its block grant amount under paragraph (2) for
25 such year, an amount for each quarter of such
96
1 year equal to the Federal average medical as-
2 sistance percentage (as defined in section
3 1903A(a)(4)) of the total amount expended
4 under the program during such quarter, and
5 the State is responsible for the balance of the
6 funds to carry out such program.
7 (B) STATE MAINTENANCE OF EFFORT
8 EXPENDITURES.For each year during which a

9 State is conducting a Medicaid Flexibility Pro-
10 gram, the State shall make expenditures for
11 targeted health assistance under the program in
12 an amount equal to the product of
13 (i) the block grant amount deter-
14 mined for the State and year under para-
15 graph (2); and
16 (ii) the enhanced FMAP described in
17 the first sentence of section 2105(b) for
18 the State and year.
19 (C) REDUCTION IN BLOCK GRANT
20 AMOUNT FOR STATES FAILING TO MEET MOE
21 REQUIREMENT.

23 State conducting a Medicaid Flexibility
24 Program that makes expenditures for tar-
25 geted health assistance under the program
97
1 for a fiscal year in an amount that is less
2 than the required amount for the fiscal
3 year under subparagraph (B), the amount
4 of the block grant determined for the State
5 under paragraph (2) for the succeeding fis-
6 cal year shall be reduced by the amount by
7 which such expenditures are less than such
8 required amount.
9 (ii) DISREGARD OF REDUCTION.
10 For purposes of determining the amount of

11 a State block grant under paragraph (2),
12 any reduction made under this subpara-
13 graph to a States block grant amount in
14 a previous fiscal year shall be disregarded.
15 (iii) APPLICATION TO STATES THAT
16 TERMINATE PROGRAM.In the case of a

17 State described in clause (i) that termi-
18 nates the State Medicaid Flexibility Pro-
19 gram under subsection (d)(2)(B) and such
20 termination is effective with the end of the
21 fiscal year in which the State fails to make
22 the required amount of expenditures under
23 subparagraph (B), the reduction amount
24 determined for the State and succeeding
98
1 fiscal year under clause (i) shall be treated
2 as an overpayment under this title.
3 (D) REDUCTION FOR NONCOMPLIANCE.
4 If the Secretary determines that a State con-

5 ducting a Medicaid Flexibility Program is not
6 complying with the requirements of this section,
7 the Secretary may withhold payments, reduce
8 payments, or recover previous payments to the
9 State under this section as the Secretary deems
10 appropriate.
11 (4) DETERMINATION AND PUBLICATION OF
12 BLOCK GRANT AMOUNT.Beginning in 2019 and

13 each year thereafter, the Secretary shall determine
14 for each State, regardless of whether the State is
15 conducting a Medicaid Flexibility Program or has
16 submitted an application to conduct such a program,
17 the amount of the block grant for the State under
18 paragraph (2) which would apply for the upcoming
19 fiscal year if the State were to conduct such a pro-
20 gram in such fiscal year, and shall publish such de-
21 terminations not later than June 1 of each year.
22 (d) PROGRAM REQUIREMENTS.
23 (1) IN GENERAL.No payment shall be made
24 under this section to a State conducting a Medicaid
99
1 Flexibility Program unless such program meets the
2 requirements of this subsection.
3 (2) TERM OF PROGRAM.
4 (A) IN GENERAL.A State Medicaid

5 Flexibility Program approved under subsection
6 (b)
7 (i) shall be conducted for not less
8 than 1 program period;
9 (ii) at the option of the State, may
10 be continued for succeeding program peri-
11 ods without resubmitting an application
12 under subsection (b), provided that
13 (I) the State provides notice to
14 the Secretary of its decision to con-
15 tinue the program; and
16 (II) no significant changes are
17 made to the program; and
18 (iii) shall be subject to termination
19 only by the State, which may terminate the
20 program by making an election under sub-
21 paragraph (B).
22 (B) ELECTION TO TERMINATE PRO-
23 GRAM.
24 (i) IN GENERAL.Subject to clause

25 (ii), a State conducting a Medicaid Flexi-
100
1 bility Program may elect to terminate the
2 program effective with the first day after
3 the end of the program period in which the
4 State makes the election.
5 (ii) TRANSITION PLAN REQUIRE-
6 MENT.A State may not elect to termi-

7 nate a Medicaid Flexibility Program unless
8 the State has in place an appropriate tran-
9 sition plan approved by the Secretary.
10 (iii) EFFECT OF TERMINATION.If a
11 State elects to terminate a Medicaid Flexi-
12 bility Program, the per capita cap limita-
13 tions under section 1903A shall apply ef-
14 fective with the day described in clause (i),
15 and such limitations shall be applied as if
16 the State had never conducted a Medicaid
17 Flexibility Program.
18 (3) PROVISION OF TARGETED HEALTH ASSIST-
19 ANCE.
20 (A) IN GENERAL.A State Medicaid

21 Flexibility Program shall provide targeted
22 health assistance to program enrollees and such
23 assistance shall be instead of medical assistance
24 which would otherwise be provided to the enroll-
25 ees under this title.
101
1 (B) CONDITIONS FOR ELIGIBILITY.
2 (i) IN GENERAL.A State con-

3 ducting a Medicaid Flexibility Program
4 shall establish conditions for eligibility of
5 program enrollees, which shall be instead
6 of other conditions for eligibility under this
7 title, except that the program must provide
8 for eligibility for program enrollees to
9 whom the State would otherwise be re-
10 quired to make medical assistance available
11 under section 1902(a)(10)(A)(i).
12 (ii) MAGI.Any determination of
13 income necessary to establish the eligibility
14 of a program enrollee for purposes of a
15 State Medicaid Flexibility Program shall
16 be made using modified adjusted gross in-
17 come in accordance with section
18 1902(e)(14).
19 (4) BENEFITS AND SERVICES.
20 (A) REQUIRED SERVICES.In the case of

21 program enrollees to whom the State would oth-
22 erwise be required to make medical assistance
23 available under section 1902(a)(10)(A)(i), a
24 State conducting a Medicaid Flexibility Pro-
102
1 gram shall provide as targeted health assistance
2 the following types of services:
3 (i) Inpatient and outpatient hospital
4 services.
5 (ii) Laboratory and X-ray services.
6 (iii) Nursing facility services for indi-
7 viduals aged 21 and older.
8 (iv) Physician services.
9 (v) Home health care services (in-
10 cluding home nursing services, medical
11 supplies, equipment, and appliances).
12 (vi) Rural health clinic services (as
13 defined in section 1905(l)(1)).
14 (vii) Federally-qualified health center
15 services (as defined in section 1905(l)(2)).
16 (viii) Family planning services and
17 supplies.
18 (ix) Nurse midwife services.
19 (x) Certified pediatric and family
20 nurse practitioner services.
21 (xi) Freestanding birth center serv-
22 ices (as defined in section 1905(l)(3)).
23 (xii) Emergency medical transpor-
24 tation.
25 (xiii) Non-cosmetic dental services.
103
1 (xiv) Pregnancy-related services, in-
2 cluding postpartum services for the 12-
3 week period beginning on the last day of a
4 pregnancy.
5 (B) OPTIONAL BENEFITS.A State may,
6 at its option, provide services in addition to the
7 services described in subparagraph (A) as tar-
8 geted health assistance under a Medicaid Flexi-
9 bility Program.
10 (C) BENEFIT PACKAGES.
11 (i) IN GENERAL.The targeted

12 health assistance provided by a State to
13 any group of program enrollees under a
14 Medicaid Flexibility Program shall have an
15 aggregate actuarial value that is equal to
16 at least 95 percent of the aggregate actu-
17 arial value of the benchmark coverage de-
18 scribed in subsection (b)(1) of section 1937
19 or benchmark-equivalent coverage de-
20 scribed in subsection (b)(2) of such sec-
21 tion, as such subsections were in effect
22 prior to the enactment of the Patient Pro-
23 tection and Affordable Care Act.
24 (ii) AMOUNT, DURATION, AND SCOPE
25 OF BENEFITS.Subject to clause (i), the

104
1 State shall determine the amount, dura-
2 tion, and scope with respect to services
3 provided as targeted health assistance
4 under a Medicaid Flexibility Program, in-
5 cluding with respect to services that are re-
6 quired to be provided to certain program
7 enrollees under subparagraph (A) except
8 as otherwise provided under such subpara-
9 graph.
10 (iii) MENTAL HEALTH AND SUB-
11 STANCE USE DISORDER COVERAGE AND
12 PARITY.The targeted health assistance

13 provided by a State to program enrollees
14 under a Medicaid Flexibility Program shall
15 include mental health services and sub-
16 stance use disorder services and the finan-
17 cial requirements and treatment limitations
18 applicable to such services under the pro-
19 gram shall comply with the requirements
20 of section 2726 of the Public Health Serv-
21 ice Act in the same manner as such re-
22 quirements apply to a group health plan.
23 (iv) PRESCRIPTION DRUGS.If the
24 targeted health assistance provided by a
25 State to program enrollees under a Med-
105
1 icaid Flexibility Program includes assist-
2 ance for covered outpatient drugs, such
3 drugs shall be subject to a rebate agree-
4 ment that complies with the requirements
5 of section 1927, and any requirements ap-
6 plicable to medical assistance for covered
7 outpatient drugs under a State plan (in-
8 cluding the requirement that the State pro-
9 vide information to a manufacturer) shall
10 apply in the same manner to targeted
11 health assistance for covered outpatient
12 drugs under a Medicaid Flexibility Pro-
13 gram.
14 (D) COST SHARING.A State conducting
15 a Medicaid Flexibility Program may impose
16 premiums, deductibles, cost-sharing, or other
17 similar charges, except that the total annual ag-
18 gregate amount of all such charges imposed
19 with respect to all program enrollees in a family
20 shall not exceed 5 percent of the familys in-
21 come for the year involved.
22 (5) ADMINISTRATION OF PROGRAM.Each
23 State conducting a Medicaid Flexibility Program

24 shall do the following:
106
1 (A) SINGLE AGENCY.Designate a single
2 State agency responsible for administering the
3 program.
4 (B) ENROLLMENT SIMPLIFICATION AND
5 COORDINATION WITH STATE HEALTH INSUR-
6 ANCE EXCHANGES.Provide for simplified en-

7 rollment processes (such as online enrollment
8 and reenrollment and electronic verification)
9 and coordination with State health insurance
10 exchanges.
11 (C) BENEFICIARY PROTECTIONS.Estab-
12 lish a fair process (which the State shall de-

13 scribe in the application required under sub-
14 section (b)) for individuals to appeal adverse
15 eligibility determinations with respect to the
16 program.
17 (6) APPLICATION OF REST OF TITLE XIX.
18 (A) IN GENERAL.To the extent that a

19 provision of this section is inconsistent with an-
20 other provision of this title, the provision of this
21 section shall apply.
22 (B) APPLICATION OF SECTION 1903A.
23 With respect to a State that is conducting a

24 Medicaid Flexibility Program, section 1903A
25 shall be applied as if program enrollees were
107
1 not 1903A enrollees for each program period
2 during which the State conducts the program.
3 (C) WAIVERS AND STATE PLAN AMEND-
4 MENTS.

6 State conducting a Medicaid Flexibility
7 Program that has in effect a waiver or
8 State plan amendment, such waiver or
9 amendment shall not apply with respect to
10 the program, targeted health assistance
11 provided under the program, or program
12 enrollees.
13 (ii) REPLICATION OF WAIVER OR
14 AMENDMENT.In designing a Medicaid

15 Flexibility Program, a State may mirror
16 provisions of a waiver or State plan
17 amendment described in clause (i) in the
18 program to the extent that such provisions
19 are otherwise consistent with the require-
20 ments of this section.
21 (iii) EFFECT OF TERMINATION.In
22 the case of a State described in clause (i)

23 that terminates its program under sub-
24 section (d)(2)(B), any waiver or amend-
25 ment which was limited pursuant to sub-
108
1 paragraph (A) shall cease to be so limited
2 effective with the effective date of such ter-
3 mination.
4 (D) NONAPPLICATION OF PROVISIONS.
5 With respect to the design and implementation

6 of Medicaid Flexibility Programs conducted
7 under this section, paragraphs (1), (10)(B),
8 (17), and (23) of section 1902(a), as well as
9 any other provision of this title (except for this
10 section and as otherwise provided by this sec-
11 tion) that the Secretary deems appropriate,
12 shall not apply.
13 (e) DEFINITIONS.For purposes of this section:
14 (1) MEDICAID FLEXIBILITY PROGRAM.The
15 term Medicaid Flexibility Program means a State

16 program for providing targeted health assistance to
17 program enrollees funded by a block grant under
18 this section.
19 (2) PROGRAM ENROLLEE.
20 (A) IN GENERAL.The term program

21 enrollee means, with respect to a State that is
22 conducting a Medicaid Flexibility Program, an
23 individual who is a 1903A enrollee (as defined
24 in section 1903A(e)(1)) who is in the 1903A
109
1 enrollee category described in section
2 1903A(e)(2)(E).
3 (B) RULE OF CONSTRUCTION.For pur-
4 poses of section 1903A(e)(3), eligibility and en-
5 rollment of an individual under a Medicaid
6 Flexibility Program shall be deemed to be eligi-
7 bility and enrollment under a State plan (or
8 waiver of such plan) under this title.
9 (3) PROGRAM PERIOD.The term program
10 period means, with respect to a State Medicaid
11 Flexibility Program, a period of 5 consecutive fiscal
12 years that begins with either
13 (A) the first fiscal year in which the State
14 conducts the program; or
15 (B) the next fiscal year in which the
16 State conducts such a program that begins
17 after the end of a previous program period.
18 (4) STATE.The term State means one of
19 the 50 States or the District of Columbia.
20 (5) TARGETED HEALTH ASSISTANCE.The
21 term targeted health assistance means assistance

22 for health-care-related items and medical services for
23 program enrollees..
110
1 SEC. 135. MEDICAID AND CHIP QUALITY PERFORMANCE
2 BONUS PAYMENTS.
3 Section 1903 of the Social Security Act (42 U.S.C.

4 1396b) is amended by adding at the end the following new
5 subsection:
6 (aa) QUALITY PERFORMANCE BONUS PAYMENTS.
7 (1) INCREASED FEDERAL SHARE.With re-
8 spect to each of fiscal years 2023 through 2026, in
9 the case of one of the 50 States or the District of
10 Columbia (each referred to in this subsection as a
11 State) that
12 (A) equals or exceeds the qualifying
13 amount (as established by the Secretary) of
14 lower than expected aggregate medical assist-
16 for that fiscal year; and
17 (B) submits to the Secretary, in accord-
18 ance with such manner and format as specified
19 by the Secretary and for the performance pe-
20 riod (as defined by the Secretary) for such fis-
21 cal year
22 (i) information on the applicable
23 quality measures identified under para-
24 graph (3) with respect to each category of
25 Medicaid eligible individuals under the
26 State plan or a waiver of such plan; and
111
1 (ii) a plan for spending a portion of
2 additional funds resulting from application
3 of this subsection on quality improvement
4 within the State plan under this title or
5 under a waiver of such plan,
6 the Federal matching percentage otherwise ap-
7 plied under subsection (a)(7) for such fiscal
8 year shall be increased by such percentage (as
9 determined by the Secretary) so that the aggre-
10 gate amount of the resulting increase pursuant
11 to this subsection for the State and fiscal year
12 does not exceed the State allotment established
13 under paragraph (2) for the State and fiscal
14 year.
15 (2) ALLOTMENT DETERMINATION.The Sec-
16 retary shall establish a formula for computing State
17 allotments under this paragraph for each fiscal year
18 described in paragraph (1) such that
19 (A) such an allotment to a State is deter-
20 mined based on the performance, including im-
21 provement, of such State under this title and
22 title XXI with respect to the quality measures
23 submitted under paragraph (3) by such State
24 for the performance period (as defined by the
25 Secretary) for such fiscal year; and
112
1 (B) the total of the allotments under this
2 paragraph for all States for the period of the
3 fiscal years described in paragraph (1) is equal
4 to $8,000,000,000.
5 (3) QUALITY MEASURES REQUIRED FOR
6 BONUS PAYMENTS.For purposes of this subsection,

7 the Secretary shall, pursuant to rulemaking and
8 after consultation with State agencies administering
9 State plans under this title, identify and publish
10 (and update as necessary) peer-reviewed quality
11 measures (which shall include health care and long-
12 term care outcome measures and may include the
13 quality measures that are overseen or developed by
14 the National Committee for Quality Assurance or
15 the Agency for Healthcare Research and Quality or
16 that are identified under section 1139A or 1139B)
17 that are quantifiable, objective measures that take
18 into account the clinically appropriate measures of
19 quality for different types of patient populations re-
20 ceiving benefits or services under this title or title
21 XXI.
22 (4) LOWER THAN EXPECTED AGGREGATE
23 MEDICAL ASSISTANCE EXPENDITURES.In this sub-

24 section, the term lower than expected aggregate
113
1 medical assistance expenditures means, with respect
2 to a State the amount (if any) by which
3 (A) the amount of the adjusted total med-
4 ical assistance expenditures for the State and
5 fiscal year determined in section 1903A(b)(1)
6 without regard to the 1903A enrollee category
7 described in section 1903A(e)(2)(E); is less
8 than
9 (B) the amount of the target total med-
10 ical assistance expenditures for the State and
11 fiscal year determined in section 1903A(c) with-
12 out regard to the 1903A enrollee category de-
13 scribed in section 1903A(e)(2)(E)..
14 SEC. 136. GRANDFATHERING CERTAIN MEDICAID WAIVERS;
15 PRIORITIZATION OF HCBS WAIVERS.
16 (a) MANAGED CARE WAIVERS.

17 (1) IN GENERAL.In the case of a State with
18 a grandfathered managed care waiver, the State
19 may, at its option through a State plan amendment,
20 continue to implement the managed care delivery
21 system that is the subject of such waiver in per-
22 petuity under the State plan under title XIX of the
23 Social Security Act (or a waiver of such plan) with-
24 out submitting an application to the Secretary for a
25 new waiver to implement such managed care delivery
114
1 system, so long as the terms and conditions of the
2 waiver involved (other than such terms and condi-
3 tions that relate to budget neutrality as modified
4 pursuant to section 1903A(f)(1) of the Social Secu-
5 rity Act) are not modified.
6 (2) MODIFICATIONS.
7 (A) IN GENERAL.If a State with a
8 grandfathered managed care waiver seeks to
9 modify the terms or conditions of such a waiv-
10 er, the State shall submit to the Secretary an
11 application for approval of a new waiver under
12 such modified terms and conditions.
13 (B) APPROVAL OF MODIFICATION.
14 (i) IN GENERAL.An application de-

15 scribed in subparagraph (A) is deemed ap-
16 proved unless the Secretary, not later than
17 90 days after the date on which the appli-
18 cation is submitted, submits to the State
19 (I) a denial; or
20 (II) a request for more informa-
21 tion regarding the application.
22 (ii) ADDITIONAL INFORMATION.If
23 the Secretary requests additional informa-

24 tion, the Secretary has 30 days after a
25 State submission in response to the Sec-
115
1 retarys request to deny the application or
2 request more information.
3 (3) GRANDFATHERED MANAGED CARE WAIVER
4 DEFINED.In this subsection, the term grand-

5 fathered managed care waiver means the provisions
6 of a waiver or an experimental, pilot, or demonstra-
7 tion project that relate to the authority of a State
8 to implement a managed care delivery system under
9 the State plan under title XIX of such Act (or under
10 a waiver of such plan under section 1115 of such
11 Act) that
12 (A) is approved by the Secretary of Health
13 and Human Services under section 1915(b),
14 1932, or 1115(a)(1) of the Social Security Act
15 (42 U.S.C. 1396n(b), 1396u2, 1315(a)(1)) as
16 of January 1, 2017; and
17 (B) has been renewed by the Secretary not
18 less than 1 time.
19 (b) HCBS WAIVERS.The Secretary of Health and
20 Human Services shall implement procedures encouraging
21 States to adopt or extend waivers related to the authority
22 of a State to make medical assistance available for home
23 and community-based services under the State plan under
24 title XIX of the Social Security Act if the State determines
25 that such waivers would improve patient access to services.
116
1 SEC. 137. COORDINATION WITH STATES.
2 Title XIX of the Social Security Act is amended by

3 inserting after section 1904 (42 U.S.C. 1396d) the fol-
4 lowing:
5 COORDINATION WITH STATES
6 SEC. 1904A. No proposed rule (as defined in section

7 551(4) of title 5, United States Code) implementing or
8 interpreting any provision of this title shall be finalized
9 on or after January 1, 2018, unless the Secretary
10 (1) provides for a process under which the
11 Secretary or the Secretarys designee solicits advice
12 from each States State agency responsible for ad-
13 ministering the State plan under this title (or a
14 waiver of such plan) and State Medicaid Director
15 (A) on a regular, ongoing basis on mat-
16 ters relating to the application of this title that
17 are likely to have a direct effect on the oper-
18 ation or financing of State plans under this title
19 (or waivers of such plans); and
20 (B) prior to submission of any final pro-
21 posed rule, plan amendment, waiver request, or
22 proposal for a project that is likely to have a di-
23 rect effect on the operation or financing of
24 State plans under this title (or waivers of such
25 plans);
117
1 (2) accepts and considers written and oral
2 comments from a bipartisan, nonprofit, professional
3 organization that represents State Medicaid Direc-
4 tors, and from any State agency administering the
5 plan under this title, regarding such proposed rule;
6 and
7 (3) incorporates in the preamble to the pro-
8 posed rule a summary of comments referred to in
9 paragraph (2) and the Secretarys response to such
10 comments..
11 SEC. 138. OPTIONAL ASSISTANCE FOR CERTAIN INPATIENT
12 PSYCHIATRIC SERVICES.
13 (a) STATE OPTION.Section 1905 of the Social Se-

14 curity Act (42 U.S.C. 1396d) is amended
15 (1) in subsection (a)
16 (A) in paragraph (16)
17 (i) by striking and, (B) and insert-
18 ing (B); and
19 (ii) by inserting before the semicolon
20 at the end the following: , and (C) subject
21 to subsection (h)(4), qualified inpatient
22 psychiatric hospital services (as defined in
23 subsection (h)(3)) for individuals who are
24 over 21 years of age and under 65 years
25 of age; and
118
1 (B) in the subdivision (B) that follows
2 paragraph (29), by inserting (other than serv-
3 ices described in subparagraph (C) of para-
4 graph (16) for individuals described in such
5 subparagraph) after patient in an institution
6 for mental diseases; and
7 (2) in subsection (h), by adding at the end the
8 following new paragraphs:
9 (3) For purposes of subsection (a)(16)(C), the term
10 qualified inpatient psychiatric hospital services means,
11 with respect to individuals described in such subsection,
12 services described in subparagraph (B) of paragraph (1)
13 that are not otherwise covered under subsection
14 (a)(16)(A) and are furnished
15 (A) in an institution (or distinct part thereof)
16 which is a psychiatric hospital (as defined in section
17 1861(f)); and
18 (B) with respect to such an individual, for a
19 period not to exceed 30 consecutive days in any
20 month and not to exceed 90 days in any calendar
21 year.
22 (4) As a condition for a State including qualified
23 inpatient psychiatric hospital services as medical assist-
24 ance under subsection (a)(16)(C), the State must (during
25 the period in which it furnishes medical assistance under
119
1 this title for services and individuals described in such
2 subsection)
3 (A) maintain at least the number of licensed
4 beds at psychiatric hospitals owned, operated, or
5 contracted for by the State that were being main-
6 tained as of the date of the enactment of this para-
7 graph or, if higher, as of the date the State applies
8 to the Secretary to include medical assistance under
9 such subsection; and
10 (B) maintain on an annual basis a level of
11 funding expended by the State (and political subdivi-
12 sions thereof) other than under this title from non-
13 Federal funds for inpatient services in an institution
14 described in paragraph (3)(A), and for active psy-
15 chiatric care and treatment provided on an out-
16 patient basis, that is not less than the level of such
17 funding for such services and care as of the date of
18 the enactment of this paragraph or, if higher, as of
19 the date the State applies to the Secretary to include
20 medical assistance under such subsection..
21 (b) SPECIAL MATCHING RATE.Section 1905(b) of
22 the Social Security Act (42 U.S.C. 1395d(b)) is amended
23 by adding at the end the following: Notwithstanding the
24 previous provisions of this subsection, the Federal medical
25 assistance percentage shall be 50 percent with respect to
120
1 medical assistance for services and individuals described
2 in subsection (a)(16)(C)..
4 this section shall apply to qualified inpatient psychiatric
5 hospital services furnished on or after October 1, 2018.
6 SEC. 139. SMALL BUSINESS HEALTH PLANS.
7 (a) TAX TREATMENT OF SMALL BUSINESS HEALTH

8 PLANS.For purposes of applying subchapter B of chap-
9 ter 100 of the Internal Revenue Code of 1986, title XXVII
10 of the Public Health Service Act (42 U.S.C. 300gg et
11 seq.), and part 7 of title I of the Employee Retirement
12 Income Security Act of 1974 (29 U.S.C. 1181 et seq.),
13 a small business health plan as defined in section 801(a)
14 of the Employee Retirement Income Security Act of 1974
15 that is offered to employees shall be treated as a group
16 health plan, as defined in section 2791 of the Public
17 Health Service Act (42 U.S.C. 300gg91).
18 (b) IN GENERAL.Subtitle B of title I of the Em-
19 ployee Retirement Income Security Act of 1974 (29
20 U.S.C. 1021 et seq.) is amended by adding at the end
21 the following new part:
121
1 PART 8RULES GOVERNING SMALL BUSINESS
2 RISK SHARING POOLS
3 SEC. 801. SMALL BUSINESS HEALTH PLANS.
4 (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 sub-
8 section (b).
9 (b) SPONSOR.The sponsor of a group health plan
10 is described in this subsection if
11 (1) such sponsor is a qualified sponsor and re-
12 ceives certification by the Secretary;
13 (2) is organized and maintained in good faith,
14 with a constitution and bylaws specifically stating its
15 purpose and providing for periodic meetings on at
16 least an annual basis;
17 (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; and
22 (5) does not condition membership on the
23 basis of a minimum group size.
122
1 SEC. 802. FILING FEE AND CERTIFICATION OF SMALL
2 BUSINESS HEALTH PLANS.
3 (a) FILING FEE.A small business health plan

4 shall pay to the Secretary at the time of filing an applica-
5 tion for certification under subsection (b) a filing fee in
6 the amount of $5,000, which shall be available to the Sec-
7 retary for the sole purpose of administering the certifi-
8 cation procedures applicable with respect to small business
9 health plans.
10 (b) CERTIFICATION.
11 (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; and
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.
123
1 (2) INFORMATION TO BE INCLUDED IN APPLI-
2 CATION FOR CERTIFICATION.An application for

3 certification under this part meets the requirements
4 of this section only if it includes, in a manner and
5 form which shall be prescribed by the applicable au-
6 thority by regulation, at least the following informa-
7 tion:
8 (A) Identifying information.
9 (B) States in which the plan intends to
10 do business.
11 (C) Bonding requirements.
12 (D) Plan documents.
13 (E) Agreements with service providers.
14 (c) FILING NOTICE OF CERTIFICATION WITH
15 STATES.A certification granted under this part to a
16 small business health plan shall not be effective unless
17 written notice of such certification is filed with the appli-
18 cable State authority of each State in which the small
19 business health plans operate.
20 (d) NOTICE OF MATERIAL CHANGES.In the case
21 of any small business health plan certified under this part,
22 descriptions of material changes in any information which
23 was required to be submitted with the application for the
24 certification under this part shall be filed in such form
25 and manner as shall be prescribed by the applicable au-
124
1 thority by regulation. The applicable authority may re-
2 quire by regulation prior notice of material changes with
3 respect to specified matters which might serve as the basis
4 for suspension or revocation of the certification.
5 (e) NOTICE REQUIREMENTS FOR VOLUNTARY TER-
6 MINATION.A small business health plan which is or has
7 been certified under this part may terminate (upon or at
8 any time after cessation of accruals in benefit liabilities)
9 only if the board of trustees, not less than 60 days before
10 the proposed termination date
11 (1) provides to the participants and bene-
12 ficiaries a written notice of intent to terminate stat-
13 ing that such termination is intended and the pro-
14 posed termination date;
15 (2) develops a plan for winding up the affairs
16 of the plan in connection with such termination in
17 a manner which will result in timely payment of all
18 benefits for which the plan is obligated; and
19 (3) submits such plan in writing to the appli-
20 cable authority.
21 (f) OVERSIGHT OF CERTIFIED PLAN SPONSORS.
22 The Secretary has the discretion to determine whether any
23 person has violated or is about to violate any provision
24 of this part, and may conduct periodic review of certified
25 small business health plan sponsors, consistent with sec-
125
1 tion 504, and apply the requirements of sections 518, 519,
2 and 520.
3 (g) EXPEDITED AND DEEMED CERTIFICATION.
4 (1) IN GENERAL.If the Secretary fails to act
5 on a complete application for certification under this
6 section within 90 days of receipt of such complete
7 application, the applying small business health plan
8 sponsor shall be deemed certified until such time as
9 the Secretary may deny for cause the application for
10 certification.
11 (2) PENALTY.The Secretary may assess a
12 penalty against the board of trustees and plan spon-
13 sor (jointly and severally) of a small business health
14 plan sponsor that is deemed certified under para-
15 graph (1) of up to $500,000 in the event the Sec-
16 retary determines that the application for certifi-
17 cation of such small business health plan sponsor
18 was willfully or with gross negligence incomplete or
19 inaccurate.
20 (h) MODIFICATIONS.The Secretary shall, through
21 promulgation and implementation of such regulations as
22 the Secretary may reasonably determine necessary or ap-
23 propriate, and in consultation with a balanced spectrum
24 of effected entities and persons, modify the implementa-
25 tion and application of this part to accommodate with min-
126
1 imum disruption such changes to State or Federal law
2 provided in this part and the (and the amendments made
3 by such Act) or in regulations issued thereto.
4 SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND
5 BOARDS OF TRUSTEES.
6 (a) BOARD OF TRUSTEES.The Secretary shall en-

7 sure that Board of Trustees of a small business health
8 plan certified under this part complies with the require-
9 ments such Secretary sets forth with respect to fiscal con-
10 trol and rules of operation and financial controls.
11 (b) TREATMENT OF FRANCHISES.In the case of
12 a group health plan that is established and maintained
13 by a franchisor for a franchisor or for its franchisees
14 (1) the requirements of subsection (a) and sec-
15 tion 801(a) shall be deemed met if such require-
16 ments would otherwise be met if the franchisor were
17 deemed to be the sponsor referred to in section
18 801(b) and each franchisee were deemed to be a
19 member (of the sponsor) referred to in section
20 801(b); and
21 (2) the requirements of section 804(a)(1) shall
22 be deemed met.
127
1 SEC. 804. PARTICIPATION AND COVERAGE REQUIRE-
2 MENTS.
3 (a) COVERED EMPLOYERS AND INDIVIDUALS.The
4 requirements of this subsection are met with respect to

5 a small business health plan if, under the terms of the
6 plan
7 (1) each participating employer must be
8 (A) a member of the sponsor;
9 (B) the sponsor; or
10 (C) an affiliated member of the sponsor,
11 except that, in the case of a sponsor which is
12 a professional association or other individual-
13 based association, if at least one of the officers,
14 directors, or employees of an employer, or at
15 least one of the individuals who are partners in
16 an employer and who actively participates in
17 the business, is a member or such an affiliated
18 member of the sponsor, participating employers
19 may also include such employer; and
20 (2) all individuals commencing coverage under
21 the plan after certification under this part must
22 be
23 (A) active or retired owners (including
24 self-employed individuals), officers, directors, or
25 employees of, or partners in, participating em-
26 ployers; or
128
1 (B) the dependents of individuals de-
2 scribed in subparagraph (A).
3 (b) INDIVIDUAL MARKET UNAFFECTED.The re-
4 quirements of this subsection are met with respect to a
5 small business health plan if, under the terms of the plan,
6 no participating employer may provide health insurance
7 coverage in the individual market for any employee not
8 covered under the plan, if such exclusion of the employee
9 from coverage under the plan is based on a health status-
10 related factor with respect to the employee and such em-
11 ployee would, but for such exclusion on such basis, be eligi-
12 ble for coverage under the plan.
13 (c) PROHIBITION OF DISCRIMINATION AGAINST EM-
14 PLOYERS AND EMPLOYEES ELIGIBLE TO PARTICIPATE.
15 The requirements of this subsection are met with respect
16 to a small business health plan if information regarding
17 all coverage options available under the plan is made read-
18 ily available to any employer eligible to participate.
19 SEC. 805. DEFINITIONS; RENEWAL.
20 (a) DEFINITIONS.For purposes of this part:

21 (1) AFFILIATED MEMBER.The term affili-
22 ated member means, in connection with a sponsor
23 (A) a person who is otherwise eligible to
24 be a member of the sponsor but who elects an
25 affiliated status with the sponsor, or
129
1 (B) in the case of a sponsor with mem-
2 bers which consist of associations, a person who
3 is a member or employee of any such associa-
4 tion and elects an affiliated status with the
5 sponsor.
6 (2) APPLICABLE STATE AUTHORITY.The
7 term applicable State authority means, with respect

8 to a health insurance issuer in a State, the State in-
9 surance commissioner or official or officials des-
10 ignated by the State to enforce the requirements of
11 title XXVII of the Public Health Service Act for the
12 State involved with respect to such issuer.
13 (3) FRANCHISOR; FRANCHISEE.The terms
14 franchisor and franchisee have the meanings given
15 such terms for purposes of sections 436.2(a)
16 through 436.2(c) of title 16, Code of Federal Regu-
17 lations (including any such amendments to such reg-
18 ulation after the date of enactment of this part).
19 (4) HEALTH PLAN TERMS.The terms group
20 health plan, health insurance coverage, and health
21 insurance issuer have the meanings provided in sec-
22 tion 733.
23 (5) INDIVIDUAL MARKET.
24 (A) IN GENERAL.The term individual

25 market means the market for health insurance
130
1 coverage offered to individuals other than in
2 connection with a group health plan.
3 (B) TREATMENT OF VERY SMALL
4 GROUPS.
5 (i) IN GENERAL.Subject to clause

6 (ii), such term includes coverage offered in
7 connection with a group health plan that
8 has fewer than 2 participants as current
9 employees or participants described in sec-
10 tion 732(d)(3) on the first day of the plan
11 year.
12 (ii) STATE EXCEPTION.Clause (i)
13 shall not apply in the case of health insur-
14 ance coverage offered in a State if such
15 State regulates the coverage described in
16 such clause in the same manner and to the
17 same extent as coverage in the small group
18 market (as defined in section 2791(e)(5) of
19 the Public Health Service Act) is regulated
20 by such State.
21 (6) PARTICIPATING EMPLOYER.The term
22 participating employer means, in connection with a
23 small business health plan, any employer, if any in-
24 dividual who is an employee of such employer, a
25 partner in such employer, or a self-employed indi-
131
1 vidual who is such employer (or any dependent, as
2 defined under the terms of the plan, of such indi-
3 vidual) is or was covered under such plan in connec-
4 tion with the status of such individual as such an
5 employee, partner, or self-employed individual in re-
6 lation to the plan.
7 (b) RENEWAL.A participating employer in a small
8 business health plan shall not be deemed to be a plan
9 sponsor in applying requirements relating to coverage re-
10 newal..
11 (c) PREEMPTION RULES.Section 514 of the Em-
12 ployee Retirement Income Security Act of 1974 (29
13 U.S.C. 1144) is amended by adding at the end the fol-
14 lowing:
15 (e) Except as provided in subsection (b)(4), the pro-
16 visions of this title shall supersede any and all State laws
17 insofar as they may now or hereafter preclude a health
18 insurance issuer from offering health insurance coverage
19 in connection with a small business health plan which is
20 certified under part 8..
21 (d) PLAN SPONSOR.Section 3(16)(B) of such Act
22 (29 U.S.C. 102(16)(B)) is amended by adding at the end
23 the following new sentence: Such term also includes a
24 person serving as the sponsor of a small business health
25 plan under part 8..
132
1 (e) SAVINGS CLAUSE.Section 731(c) of such Act is
2 amended by inserting or part 8 after this part.
3 (f) COOPERATION BETWEEN FEDERAL AND STATE
4 AUTHORITIES.Section 506 of the Employee Retirement
5 Income Security Act of 1974 (29 U.S.C. 1136) is amended
6 by adding at the end the following new subsection:
7 (d) CONSULTATION WITH STATES WITH RESPECT
8 TO SMALL BUSINESS HEALTH PLANS.
9 (1) AGREEMENTS WITH STATES.The Sec-
10 retary shall consult with the State recognized under
11 paragraph (2) with respect to a small business
12 health plan regarding the exercise of
13 (A) the Secretarys authority under sec-
14 tions 502 and 504 to enforce the requirements
15 for certification under part 8; and
16 (B) the Secretarys authority to certify
17 small business health plans under part 8 in ac-
18 cordance with regulations of the Secretary ap-
19 plicable to certification under part 8.
20 (2) RECOGNITION OF DOMICILE STATE.In
21 carrying out paragraph (1), the Secretary shall en-

22 sure that only one State will be recognized, with re-
23 spect to any particular small business health plan,
24 as the State with which consultation is required..
133
1 (g) 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 amend-
5 ments made by this section within 6 months after the date
6 of the enactment of this Act.
7 TITLE II
8 SEC. 201. THE PREVENTION AND PUBLIC HEALTH FUND.
9 Subsection (b) of section 4002 of the Patient Protec-

10 tion and Affordable Care Act (42 U.S.C. 300u11) is
11 amended by striking paragraphs (3) through (8).
12 SEC. 202. SUPPORT FOR STATE RESPONSE TO OPIOID CRI-
13 SIS.
14 There is authorized to be appropriated, and is appro-

15 priated, out of monies in the Treasury not otherwise obli-
16 gated, $2,000,000,000 for fiscal year 2018, to the Sec-
17 retary of Health and Human Services to provide grants
18 to States to support substance use disorder treatment and
19 recovery support services for individuals with mental or
20 substance use disorders. Funds appropriated under this
21 section shall remain available until expended.
22 SEC. 203. COMMUNITY HEALTH CENTER PROGRAM.
23 Effective as if included in the enactment of the Medi-

24 care Access and CHIP Reauthorization Act of 2015 (Pub-
25 lic Law 11410, 129 Stat. 87), paragraph (1) of section
134
1 221(a) of such Act is amended by inserting , and an ad-
2 ditional $422,000,000 for fiscal year 2017 after 2017.
3 SEC. 204. CHANGE IN PERMISSIBLE AGE VARIATION IN
4 HEALTH INSURANCE PREMIUM RATES.
5 Section 2701(a)(1)(A)(iii) of the Public Health Serv-

6 ice Act (42 U.S.C. 300gg(a)(1)(A)(iii)) is amended by in-
7 serting after (consistent with section 2707(c)) the fol-
8 lowing: or, for plan years beginning on or after January
9 1, 2019, 5 to 1 for adults (consistent with section 2707(c))
10 or such other ratio for adults (consistent with section
11 2707(c)) as the State may determine.
12 SEC. 205. MEDICAL LOSS RATIO DETERMINED BY THE
13 STATE.
14 Section 2718(b) of the Public Health Service Act (42

15 U.S.C. 300gg18(b)) is amended by adding at the end the
16 following:
17 (4) SUNSET.Paragraphs (1) through (3)
18 shall not apply for plan years beginning on or after
19 January 1, 2019, and after such date any reference
20 in law to such paragraphs shall have no force or ef-
21 fect.
22 (5) MEDICAL LOSS RATIO DETERMINED BY
23 THE STATE.For plan years beginning on or after

24 January 1, 2019, each State shall
135
1 (A) set the ratio of the amount of pre-
2 mium revenue a health insurance issuer offering
3 group or individual health insurance coverage
4 may expend on non-claims costs to the total
5 amount of premium revenue; and
6 (B) determine the amount of any annual
7 rebate required to be paid to enrollees under
8 such coverage if the ratio of the amount of pre-
9 mium revenue expended by the issuer on non-
10 claims costs to the total amount of premium
11 revenue exceeds the ratio set by the State under
12 subparagraph (A)..
13 SEC. 206. WAIVERS FOR STATE INNOVATION.
14 (a) IN GENERAL.Section 1332 of the Patient Pro-

15 tection and Affordable Care Act (42 U.S.C. 18052) is
16 amended
17 (1) in subsection (a)
19 (i) in subparagraph (B)
20 (I) by amending clause (i) to
21 read as follows:
22 (i) a description of how the State
23 plan meeting the requirements of a waiver
24 under this section would, with respect to
136
1 health insurance coverage within the
2 State
3 (I) take the place of the require-
4 ments described in paragraph (2) that
5 are waived; and
6 (II) provide for alternative
7 means of, and requirements for, in-
8 creasing access to comprehensive cov-
9 erage, reducing average premiums,
10 and increasing enrollment; and; and
11 (II) in clause (ii), by striking
12 that is budget neutral for the Fed-
13 eral Government and inserting ,
14 demonstrating that the State plan
15 does not increase the Federal deficit;
16 and
17 (ii) in subparagraph (C), by striking
18 the law and inserting a law or has in
19 effect a certification;
20 (B) in paragraph (3)
21 (i) by adding after the second sen-
22 tence the following: A State may request
23 that all of, or any portion of, such aggre-
24 gate amount of such credits or reductions
137
1 be paid to the State as described in the
2 first sentence.;
3 (ii) in the paragraph heading, by
4 striking PASS THROUGH OF FUNDING
5 and inserting FUNDING;

6 (iii) by striking With respect and
7 inserting the following:
8 (A) PASS THROUGH OF FUNDING.With
9 respect; and
10 (iv) by adding at the end the fol-
11 lowing:
12 (B) ADDITIONAL FUNDING.There is au-
13 thorized to be appropriated, and is appro-
14 priated, to the Secretary of Health and Human
15 Services, out of monies in the Treasury not oth-
16 erwise obligated, $2,000,000,000 for fiscal year
17 2017, to remain available until the end of fiscal
18 year 2019, to provide grants to States for pur-
19 poses of submitting an application for a waiver
20 granted under this section and implementing
21 the State plan under such waiver.
22 (C) AUTHORITY TO USE LONG-TERM
23 STATE INNOVATION AND STABILITY ALLOT-
24 MENT.If the State has an application for an

25 allotment under section 2105(i) of the Social
138
1 Security Act for the plan year, the State may
2 use the funds available under the States allot-
3 ment for the plan year to carry out the State
4 plan under this section, so long as such use is
5 consistent with the requirements of paragraphs
6 (1) and (7) of section 2105(i) of such Act
7 (other than paragraph (1)(B) of such section).
8 Any funds used to carry out a State plan under
9 this subparagraph shall not be considered in de-
10 termining whether the State plan increases the
11 Federal deficit.; and
12 (C) in paragraph (4), by adding at the end
13 the following:
14 (D) EXPEDITED PROCESS.The Sec-
15 retary shall establish an expedited application
16 and approval process that may be used if the
17 Secretary determines that such expedited proc-
18 ess is necessary to respond to an urgent or
19 emergency situation with respect to health in-
20 surance coverage within a State.;
21 (2) in subsection (b)
23 (i) in the matter preceding subpara-
24 graph (A)
139
1 (I) by striking may and insert-
2 ing shall; and
3 (II) by striking only if and in-
4 serting unless; and
5 (ii) by striking plan and all that
6 follows through the period at the end of
7 subparagraph (D) and inserting plan will
8 increase the Federal deficit, not taking
9 into account any amounts received through
10 a grant under subsection (a)(3)(B).;
11 (B) in paragraph (2)
12 (i) in the paragraph heading, by in-
13 serting OR CERTIFY after LAW;
14 (ii) in subparagraph (A), by inserting
15 before the period , and a certification de-
16 scribed in this paragraph is a document,
17 signed by the Governor, and the State in-
18 surance commissioner, of the State, that
19 provides authority for State actions under
20 a waiver under this section, including the
21 implementation of the State plan under
22 subsection (a)(1)(B); and
23 (iii) in subparagraph (B)
24 (I) in the subparagraph heading,
25 by striking OF OPT OUT; and
140
1 (II) by striking may repeal a
2 law and all that follows through the
3 period at the end and inserting the
4 following: may terminate the author-
5 ity provided under the waiver with re-
6 spect to the State by
7 (i) repealing a law described in sub-
8 paragraph (A); or
9 (ii) terminating a certification de-
10 scribed in subparagraph (A), through a
11 certification for such termination signed by
12 the Governor, and the State insurance
13 commissioner, of the State.;
14 (3) in subsection (d)(2)(B), by striking and
15 the reasons therefore and inserting and the rea-
16 sons therefore, and provide the data on which such
17 determination was made; and
18 (4) in subsection (e), by striking No waiver
19 and all that follows through the period at the end
20 and inserting the following: A waiver under this
21 section
22 (1) shall be in effect for a period of 8 years
23 unless the State requests a shorter duration;
24 (2) may be renewed for unlimited additional 8-
25 year periods upon application by the State; and
141
1 (3) may not be cancelled by the Secretary be-
2 fore the expiration of the 8-year period (including
3 any renewal period under paragraph (2))..
4 (b) APPLICABILITY.Section 1332 of the Patient
5 Protection and Affordable Care Act (42 U.S.C. 18052)
6 shall apply as follows:
7 (1) In the case of a State for which a waiver
8 under such section was granted prior to the date of
9 enactment of this Act, such section 1332, as in ef-
10 fect on the day before the date of enactment of this
11 Act shall apply to the waiver and State plan.
12 (2) In the case of a State that submitted an ap-
13 plication for a waiver under such section prior to the
14 date of enactment of this Act, and which application
15 the Secretary of Health and Human Services has
16 not approved prior to such date, the State may elect
17 to have such section 1332, as in effect on the day
18 before the date of enactment of this Act, or such
19 section 1332, as amended by subsection (a), apply to
20 such application and State plan.
21 (3) In the case of a State that submits an ap-
22 plication for a waiver under such section on or after
23 the date of enactment of this Act, such section 1332,
24 as amended by subsection (a), shall apply to such
25 application and State plan.
142
1 SEC. 207. FUNDING FOR COST-SHARING PAYMENTS.
2 There is appropriated to the Secretary of Health and

3 Human Services, out of any money in the Treasury not
4 otherwise appropriated, such sums as may be necessary
5 for payments for cost-sharing reductions authorized by the
6 Patient Protection and Affordable Care Act (including ad-
7 justments to any prior obligations for such payments) for
8 the period beginning on the date of enactment of this Act
9 and ending on December 31, 2019. Notwithstanding any
10 other provision of this Act, payments and other actions
11 for adjustments to any obligations incurred for plan years
12 2018 and 2019 may be made through December 31, 2020.
13 SEC. 208. REPEAL OF COST-SHARING SUBSIDY PROGRAM.
14 (a) IN GENERAL.Section 1402 of the Patient Pro-

15 tection and Affordable Care Act is repealed.
16 (b) EFFECTIVE DATE.The repeal made by sub-
17 section (a) shall apply to cost-sharing reductions (and pay-
18 ments to issuers for such reductions) for plan years begin-

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ERN17282 Discussion Draft S.L.C.

AMENDMENT NO.llll Calendar No.lll

IN THE SENATE OF THE UNITED STATES115th Cong., 1st Sess.

To provide for reconciliation pursuant to title II of the

4 This Act may be cited as the Better Care Reconcili-

8 EXCESS ADVANCE PAYMENTS OF PREMIUM

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

2 TION.This subparagraph shall not apply

6 (a) ELIGIBILITY FOR CREDIT.

17 (A) IN GENERAL.Paragraph (2) of sec-

25 TION AND AFFORDABLE CARE ACT.

10 36B(b) of the Internal Revenue Code of 1986 is

2 MARK PLAN.The applicable median cost

2 AGE.Section 36B(b)(3)(A) of the Internal Revenue

10 (B) by striking 0.504 in clause (ii)(III)

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

10 SMALL EMPLOYER HEALTH REIMBURSEMENT AR-

11 RANGEMENTS.Section 36B(c)(4) of such Code is

22 COVERAGE FOR ABORTION.The term qualified

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

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

2 (A) GUIDANCE.Not later than 30 days

9 PATE.To be eligible for funding under this

5 FUNDS.The Administrator shall determine an ap-

24 QUIREMENTS.To be eligible for an allotment of

6 (A) APPROPRIATION; TOTAL ALLOT-

7 MENT.For the purpose of providing allot-

17 PREVIOUS YEARS UNUSED FUNDS.

18 (I) IN GENERAL. In carrying

14 CENTAGE.The State percentage

21 (i) IN GENERAL.Amounts allotted

9 MENTS.Subject to subparagraph (B), the Ad-

15 (i) IN GENERAL.The Administrator

22 AGES DEFINED.For purposes of clause

21 (i) IN GENERAL.If the Adminis-

17 CLAIMS.Nothing in this subsection shall be

22 TION AND INCENTIVES FOR INDIVIDUAL MARKET

23 PARTICIPATION.In determining allotments for

14 (a) IN GENERAL.There is hereby established a Bet-

2 SURANCE PREMIUMS AND HEALTH PLAN

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

17 (a) HSAS.Subparagraph (A) of section 223(d)(2)

5 COUNTS.The amendments made by subsections (a)

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

23 FLEXIBLE SPENDING ACCOUNTS.

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

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

13 Section 4191 of the Internal Revenue Code of 1986

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

2 EXPENSES ALLOCABLE TO MEDICARE PART D

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

14 (a) IN GENERAL.Subsection (a) of section 213 of

21 (a) IN GENERAL.Subsection (b) of section 3101 of

18 (a) IN GENERAL.The Internal Revenue Code of

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

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

12 INGS ACCOUNT INCREASED TO AMOUNT OF

13 DEDUCTIBLE AND OUT-OF-POCKET LIMITA-