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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 STATES—115th Cong., 1st Sess.

H. R. 1628

To provide for reconciliation pursuant to title II of the

concurrent resolution on the budget for fiscal year 2017.

Referred to the Committee on llllllllll and

ordered to be printed

Ordered to lie on the table and to be printed

AMENDMENT IN THE NATURE OF A SUBSTITUTE intended

to be proposed by lllllll

Viz:

1 Strike all after the enacting clause and insert the fol-

2 lowing:

3 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 taxpayer’s return who is

2 covered by a qualified health plan taken

3 into account under paragraph (2)(A).’’.

4 (c) ELIMINATION OF ELIGIBILITY EXCEPTIONS FOR

5 EMPLOYER-SPONSORED COVERAGE.—

6 (1) IN GENERAL.—Section 36B(c)(2) of the In-

7 ternal Revenue Code of 1986 is amended by striking

8 subparagraph (C).

9 (2) AMENDMENTS RELATED TO QUALIFIED

10 SMALL EMPLOYER HEALTH REIMBURSEMENT AR-

11 RANGEMENTS.—Section 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 employee’s 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 YEAR’S 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).

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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’’.

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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.

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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.’’.

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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.

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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;

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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

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ERN17282 Discussion Draft S.L.C.

1 (3) in section 1920(e) (42 U.S.C. 1396r–1(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.—

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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)—

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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;

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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. 1396u–7(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. 1396r–4(f)(7)) is amended by adding at the end

25 the following new subparagraph:

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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 State’s fiscal year 2016 DSH al-

25 lotment divided by the number of indi-

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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 State’s 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 State’s 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. 1396r–4) 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 provider’s 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 1–Year

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 individual’s 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 individual’s 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 individual’s 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 State’s 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:

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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 Secretary’s calculation of the percentage of the

16 actual medical assistance expenditures, as reported

17 by the State on the CMS–64 reports for calendar

18 quarters in the State’s 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 State’s

25 per capita base period, the total amount of each type

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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 State’s 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 State’s 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 State’s 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.

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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 State’s

2 per capita base period.

3 ‘‘(B) The number of 1903A enrollees for

4 the State in the State’s 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 State’s 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 State’s

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 State’s 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 State’s per capita base pe-

10 riod, the State’s 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 State’s 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:

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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);

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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:

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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-

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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 State’s 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 CMS–64 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-

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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

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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 State’s 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 State’s per capita

14 base period, fiscal year 2019, and any subsequent fiscal

15 year, may be adjusted by the Secretary based upon an 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.—

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ERN17282 Discussion Draft S.L.C.

1 ‘‘(1) REPORTING OF CMS–64 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 CMS–64 report form to require that States

25 submit data with respect to medical assistance

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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 CMS–64 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—

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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.

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ERN17282 Discussion Draft S.L.C.

1 ‘‘(2) AUDITING OF CMS–64 DATA.—The Sec-

2 retary shall conduct for each State an audit of the

3 number of individuals and expenditures reported

4 through the CMS–64 report for the State’s per cap-

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

6 quent fiscal year, which audit may be conducted on

7 a representative sample (as determined by the Sec-

8 retary).

9 ‘‘(3) AUDITING OF STATE SPENDING.—The In-

10 spector General of the Department of Health and

11 Human Services shall conduct an audit (which shall

12 be conducted using random sampling, as determined

13 by the Inspector General) of each State’s spending

14 under this section not less than once every 3 years.

15 ‘‘(4) TEMPORARY INCREASE IN FEDERAL

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 State’s additional adminis-

13 trative expenditures to implement the data re-

14 quirements of paragraph (1).

15 ‘‘(5) HHS REPORT ON ADOPTION OF T–MSIS

16 DATA.—Not 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 CMS–64 report data for pur-

21 poses of making the determinations necessary under

22 this section.’’.

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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-

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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 (T–MSIS);

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-

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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 und