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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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 household income (expressed as a percent of the poverty line) within the following income tier: Up to Age 29 Age 30-39 Age 40-49 Age 50-59 Over Age 59 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 1 (1) IN GENERAL.Section 45R of the Internal 2 Revenue Code of 1986 is amended by adding at the 3 end the following new subsection: 4 (j) SHALL NOT APPLY.This section shall not 5 apply with respect to amounts paid or incurred in taxable 6 years beginning after December 31, 2019.. 7 (2) EFFECTIVE DATE.The amendment made 8 by this subsection shall apply to taxable years begin- 9 ning after December 31, 2019. 10 (b) DISALLOWANCE OF SMALL EMPLOYER HEALTH 11 INSURANCE EXPENSE CREDIT 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 ERN17282 Discussion Draft S.L.C. 1 any abortion with respect to a pregnancy that is the 2 result of an act of rape or incest).. 3 (2) EFFECTIVE DATE.The amendments made 4 by this subsection shall apply to taxable years begin- 5 ning after December 31, 2017. 6 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 21 Internal Revenue Code of 1986 is amended by in- 22 serting ($0 in the case of months beginning after 23 December 31, 2015) after $2,000. 24 (2) Paragraph (1) of section 4980H(b) of the 25 Internal Revenue Code of 1986 is amended by in- 11 ERN17282 Discussion Draft S.L.C. 1 serting ($0 in the case of months beginning after 2 December 31, 2015) after $3,000. 3 (b) EFFECTIVE DATE.The amendments made by 4 this section shall apply to months beginning after 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 10 year 2022, 7 percent; 11 (V) in the case of calendar year 12 2023, 14 percent; 13 (VI) in the case of calendar 14 year 2024, 21 percent; 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 1 (b) EFFECTIVE DATE.The amendment made by 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 ERN17282 Discussion Draft S.L.C. 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.. 10 (b) EFFECTIVE DATE.The amendment made by 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. 17 (b) EFFECTIVE DATE.The amendment made by 18 this section shall apply to taxable years beginning after 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 ERN17282 Discussion Draft S.L.C. 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.. 13 (c) EFFECTIVE DATE.The amendments made by 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. 20 (b) EFFECTIVE DATE.The amendment made by 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 ERN17282 Discussion Draft S.L.C. 1 (b) EFFECTIVE DATE.The amendment made by 2 this section shall apply to taxable years beginning after 3 December 31, 2016. 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 ERN17282 Discussion Draft S.L.C. 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 7 this section shall apply to taxable years beginning after 8 December 31, 2017. 9 SEC. 122. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON- 10 TRIBUTIONS TO THE SAME HEALTH SAVINGS 11 ACCOUNT. 12 (a) IN GENERAL.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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 1 (b) EFFECTIVE DATE.The amendment made by 2 this section shall apply to taxable years beginning after 3 December 31, 2017. 4 SEC. 123. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 5 INCURRED 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.. 21 (b) EFFECTIVE DATE.The amendment made by 22 this subsection shall apply with respect to coverage under 23 a high deductible health plan beginning after December 24 31, 2017. 34 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 1 (C) NON-EXPANSION STATES. 2 (i) IN GENERAL.In the case of a 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 1 serting in or after the month in which the recipient 2 makes application for assistance. 3 (b) EFFECTIVE DATE.The amendments made by 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 5 percent shall be substituted for 6 6 percent each place it appears; 7 (III) for fiscal year 2023, 5.4 8 percent shall be substituted for 6 9 percent each place it appears; 10 (IV) for fiscal year 2024, 5.2 11 percent shall be substituted for 6 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 ERN17282 Discussion Draft S.L.C. 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 in the following fiscal year shall be reduced by 1 16 4 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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- 12 ance expenditures (as defined in paragraph (2)) 13 for the State and fiscal year that is attributable 14 to 1903A enrollees, reduced by the amount of 15 any excluded expenditures (as defined in para- 16 graph (3)) for the State and fiscal year other- 17 wise included in such medical assistance ex- 18 penditures and includes non-DSH supplemental 19 payments (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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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- 12 ance expenditures (as defined in paragraph (2)) 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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. 22 (i) IN GENERAL.In the case of a 23 State conducting a Medicaid Flexibility 24 Program that makes expenditures for tar- 25 geted health assistance under the program 97 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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. 5 (i) IN GENERAL.In the case of a 6 State conducting a Medicaid Flexibility 7 Program that has in effect a waiver or 8 State plan amendment, such waiver or 9 amendment shall not apply with respect to 10 the program, targeted health assistance 11 provided under the program, or program 12 enrollees. 13 (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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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- 15 ance expenditures (as defined in paragraph (4)) 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 1 medical assistance for services and individuals described 2 in subsection (a)(16)(C).. 3 (c) EFFECTIVE DATE.The amendments made by 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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) 18 (A) in paragraph (1) 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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) 22 (A) in paragraph (1) 23 (i) in the matter preceding subpara- 24 graph (A) 139 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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 ERN17282 Discussion Draft S.L.C. 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- 19 ning after December 31, 2019.

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