S.Amdt. 1030

SA 1030. Mr. GRAHAM (for himself, Mr. Cassidy, Mr. Heller, Mr.
Johnson, and Mr. Blunt) submitted an amendment intended to be proposed
by him to the bill H.R. 1628, to provide for reconciliation pursuant to
title II of the concurrent resolution on the budget for fiscal year
2017; which was ordered to lie on the table; as follows:

Strike all after the enacting clause and insert the
following:

TITLE I

SEC. 101. ELIMINATION OF LIMITATION ON RECAPTURE OF EXCESS
ADVANCE PAYMENTS OF PREMIUM TAX CREDITS.

Subparagraph (B) of section 36B(f)(2) of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new clause:
``(iii) Nonapplicability of limitation.--This subparagraph
shall not apply to taxable years ending after December 31,
2017.''.

SEC. 102. PREMIUM TAX CREDIT.

(a) Premium Tax Credit.--
(1) Modification of definition of qualified health plan.--
(A) In general.--Section 36B(c)(3)(A) of the Internal
Revenue Code of 1986 is amended by inserting before the
period at the end the following: ``or a plan that includes
coverage for abortions (other than any abortion necessary to
save the life of the mother or any abortion with respect to a
pregnancy that is the result of an act of rape or incest)''.
(B) Effective date.--The amendment made by this paragraph
shall apply to taxable years beginning after December 31,
2017.
(2) Repeal.--
(A) In general.--Subpart C of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
striking section 36B.
(B) Effective date.--The amendment made by this paragraph
shall apply to taxable years beginning after December 31,
2019.
(b) Repeal of Eligibility Determinations.--
(1) In general.--The following sections of the Patient
Protection and Affordable Care Act are repealed:
(A) Section 1411 (other than subsection (i), the last
sentence of subsection (e)(4)(A)(ii), and such provisions of
such section solely to the extent related to the application
of the last sentence of subsection (e)(4)(A)(ii)).
(B) Section 1412.
(2) Effective date.--The repeals in paragraph (1) shall
take effect on January 1, 2020.

SEC. 103. MODIFICATIONS TO SMALL BUSINESS TAX CREDIT.

(a) Sunset.--
(1) In general.--Section 45R of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(j) Shall Not Apply.--This section shall not apply with
respect to amounts paid or incurred in taxable years
beginning after December 31, 2019.''.
(2) Effective date.--The amendment made by this subsection
shall apply to taxable years beginning after December 31,
2019.
(b) Disallowance of Small Employer Health Insurance Expense
Credit for Plan Which Includes Coverage for Abortion.--
(1) In general.--Subsection (h) of section 45R of the
Internal Revenue Code of 1986 is amended--
(A) by striking ``Any term'' and inserting the following:
``(1) In general.--Any term'', and

[[Page S5683]]

(B) by adding at the end the following new paragraph:
``(2) Exclusion of health plans including coverage for
abortion.--The term `qualified health plan' does not include
any health plan that includes coverage for abortions (other
than any abortion necessary to save the life of the mother or
any abortion with respect to a pregnancy that is the result
of an act of rape or incest).''.
(2) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2017.

SEC. 104. INDIVIDUAL MANDATE.

(a) In General.--Section 5000A(c) of the Internal Revenue
Code of 1986 is amended--
(1) in paragraph (2)(B)(iii), by striking ``2.5 percent''
and inserting ``Zero percent'', and
(2) in paragraph (3)--
(A) by striking ``$695'' in subparagraph (A) and inserting
``$0'', and
(B) by striking subparagraph (D).
(b) Effective Date.--The amendments made by this section
shall apply to months beginning after December 31, 2015.

SEC. 105. EMPLOYER MANDATE.

(a) In General.--
(1) Paragraph (1) of section 4980H(c) of the Internal
Revenue Code of 1986 is amended by inserting ``($0 in the
case of months beginning after December 31, 2015)'' after
``$2,000''.
(2) Paragraph (1) of section 4980H(b) of the Internal
Revenue Code of 1986 is amended by inserting ``($0 in the
case of months beginning after December 31, 2015)'' after
``$3,000''.
(b) Effective Date.--The amendments made by this section
shall apply to months beginning after December 31, 2015.

SEC. 106. SHORT TERM ASSISTANCE FOR STATES AND MARKET-BASED
HEALTH CARE GRANT PROGRAM.

(a) In General.--Section 2105 of the Social Security Act
(42 U.S.C. 1397ee) is amended by adding at the end the
following new subsections:
``(h) Short-term Assistance to Address Coverage and Access
Disruption and Provide Support for States.--
``(1) Appropriation.--There are authorized to be
appropriated, and are appropriated, out of monies in the
Treasury not otherwise obligated, $10,000,000,000 for
calendar year 2019, and $15,000,000,000 for calendar year
2020, to the Administrator of the Centers for Medicare &
Medicaid Services (in this subsection and subsection (i)
referred to as the `Administrator') to fund arrangements with
health insurance issuers to assist in the purchase of health
benefits coverage by addressing coverage and access
disruption and responding to urgent health care needs within
States. Funds appropriated under this paragraph shall remain
available until expended.
``(2) Participation requirements.--
``(A) Guidance.--Not later than 30 days after the date of
enactment of this subsection, the Administrator shall issue
guidance to health insurance issuers regarding how to submit
a notice of intent to participate in the program established
under this subsection.
``(B) Notice of intent to participate.--To be eligible for
funding for a calendar year under this subsection, a health
insurance issuer shall submit to the Administrator a notice
of intent to participate not later than March 31 of the
previous fiscal year, in such form and manner as specified by
the Administrator, and containing--
``(i) a certification that the health insurance issuer will
use the funds in accordance with the requirements of
paragraph (4); and
``(ii) such information as the Administrator may require to
carry out this subsection.
``(3) Procedure for distribution of funds.--The
Administrator shall determine an appropriate procedure for
providing and distributing funds under this subsection.
``(4) Use of funds.--Funds provided to a health insurance
issuer under paragraph (1) shall be subject to the
requirements of paragraphs (1)(A)(iii) and (7) of subsection
(i) in the same manner as such requirements apply to States
receiving payments under subsection (i) and shall be used
only for the activities specified in paragraph (1)(A)(i)(II)
of subsection (i).
``(i) Market-based Health Care Grant Program.--
``(1) Application and certification requirements.--
``(A) In general.--To be eligible for an allotment of funds
under this subsection, a State shall submit to the
Administrator an application, not later than March 31, 2019,
in the case of allotments for calendar year 2020, and not
later than March 31 of the previous year, in the case of
allotments for any subsequent calendar year) and in such form
and manner as specified by the Administrator, that contains
the following:
``(i) A description of how the funds will be used to do 1
or more of the following:

``(I) To establish or maintain a program or mechanism to
help high-risk individuals in the purchase of health benefits
coverage, including by reducing premium costs for such
individuals, who have or are projected to have a high rate of
utilization of health services, as measured by cost, and who
do not have access to health insurance coverage offered
through an employer, enroll in health insurance coverage
under a plan offered in the individual market (within the
meaning of section 5000A(f)(1)(C) of the Internal Revenue
Code of 1986).
``(II) To establish or maintain a program to enter into
arrangements with health insurance issuers to assist in the
purchase of health benefits coverage by stabilizing premiums
and promoting State health insurance market participation and
choice in plans offered in the individual market (within the
meaning of section 5000A(f)(1)(C) of the Internal Revenue
Code of 1986).
``(III) To provide payments for health care providers for
the provision of health care services, as specified by the
Administrator.
``(IV) To provide health insurance coverage by funding
assistance to reduce out-of-pocket costs, such as copayments,
coinsurance, and deductibles, of individuals enrolled in
plans offered in the individual market (within the meaning of
section 5000A(f)(1)(C) of the Internal Revenue Code of 1986).
``(V) To establish or maintain a program or mechanism to
help individuals purchase health benefits coverage, including
by reducing premium costs for plans offered in the individual
market (within the meaning of section 5000A(f)(1)(C) of the
Internal Revenue Code of 1986) for individuals who do not
have access to health insurance coverage offered through an
employer.
``(VI) Subject to paragraph (4)(B)(iii), to provide health
insurance coverage for individuals who are eligible for
medical assistance under a State plan under title XIX by
establishing or maintaining relationships with health
insurance issuers to provide such coverage.
``(VII) To assist in the purchase of health benefits
coverage by establishing or maintaining a program or
mechanism, as specified by the State, to establish coverage
programs through arrangements with managed care organizations
for the provision of health care services to individuals who
are not eligible for medical assistance or child health
assistance under the State plans under title XIX or this
title.

``(ii) A certification that the funds provided under this
subsection shall only be used for the activities specified in
clause (i).
``(iii) A certification that none of the funds provided
under this subsection shall be used by the State for an
expenditure that is attributable to an intergovernmental
transfer, certified public expenditure, or any other
expenditure to finance the non-Federal share of expenditures
required under any provision of law, including under the
State plans established under this title and title XIX or
under a waiver of such plans.
``(iv) A description of any waiver of the provisions
described in subparagraph (B)(i) that the State is
requesting, and how the State intends to maintain access to
adequate and affordable health insurance coverage for
individuals with pre-existing conditions if such waiver is
approved.
``(v) Such other information as necessary for the
Administrator to carry out this subsection.
``(B) Waivers.--
``(i) In general.--Subject to clause (ii), the Secretary
shall waive the requirements of the following Federal
statutory provisions with respect to health insurance
coverage in a State for a plan year during which the State
has an application approved under this subsection and to the
extent that such application includes a request for such a
waiver and the information described in subparagraph (A)(iv):

``(I) Any provision that restricts the criteria which a
health insurance issuer may use to vary premium rates for
health insurance coverage offered in the individual or small
group market, or the degree to which an issuer may vary such
rates, except that a health insurance issuer may not vary
premium rates based on an individual's sex or membership in a
protected class under the Constitution of the United States.
``(II) Any provision that prevents a health insurance
issuer offering a coverage plan in the individual or small
group market from requiring an individual to pay a premium or
contribution (as a condition of enrollment or continued
enrollment under the plan) which is greater than such premium
or contribution for a similarly situated individual enrolled
in the plan on the basis of any health status-related factor
in relation to the individual or to an individual enrolled
under the plan as a dependent of the individual.
``(III) Any provision that requires a health insurance
issuer offering a coverage plan in the individual or small
group market to ensure that certain benefits are included in
such coverage.
``(IV) Any provision that requires a health insurance
issuer offering a coverage plan in the individual or small
group market to provide a rebate to each enrollee under such
coverage if the ratio of the amount of premium revenue
expended by the issuer on the costs of providing such
coverage for a plan year to the total amount of premium
revenue for the plan year is less than a certain percentage.

``(ii) Scope of waiver.--

``(I) Relationship to grant program.--Any provision waived
under this subparagraph shall only be waived with respect to
health insurance coverage that is--

``(aa) provided by an health insurance issuer that is
receiving funding under a State program that is funded by a
grant under this subsection; and
``(bb) provided to an individual who is receiving a direct
benefit (including reduced premium costs or reduced out-of-
pocket costs) under a State program that is funded by a grant
under this subsection.

``(II) Limitation.--The Secretary shall not waive any
requirement under a Federal statute enacted before January 1,
2009.

``(2) Eligibility.--Only the 50 States and the District of
Columbia shall be eligible for

[[Page S5684]]

an allotment and payments under this subsection and all
references in this subsection to a State shall be treated as
only referring to the 50 States and the District of Columbia.
``(3) One-time application.--If an application of a State
submitted under this subsection is approved by the
Administrator for a year, the application shall be deemed to
be approved by the Administrator for that year and each
subsequent year through December 31, 2026.
``(4) Market-based health care grant allotments.--
``(A) Appropriation.--For the purpose of providing
allotments to States under this subsection, there is
appropriated, out of any money in the Treasury not otherwise
appropriated--
``(i) for calendar year 2020, $146,000,000,000;
``(ii) for calendar year 2021, $146,000,000,000;
``(iii) for calendar year 2022, $157,000,000,000;
``(iv) for calendar year 2023, $168,000,000,000;
``(v) for calendar year 2024, $179,000,000,000;
``(vi) for calendar year 2025, $190,000,000,000; and
``(vii) for calendar year 2026, $190,000,000,000.
``(B) Allotments; availability of allotments.--
``(i) In general.--In the case of a State with an
application approved under this subsection with respect to a
year, the Administrator shall allot to the State for the
year, from amounts appropriated for such year under
subparagraph (A), the amount determined for the State and
year under paragraph (5).
``(ii) Availability of allotments; unused amounts.--

``(I) In general.--Amounts allotted to a State for a
calendar year under this subparagraph shall remain available
for obligation by the State through December 31 of the second
calendar year following the year for which the allotment is
made, except that in no case shall amounts appropriated for
any year before calendar year 2027 remain available for
obligation by a State after December 31, 2026.
``(II) Unused amounts to be used for deficit reduction.--
Amounts allotted to a State for a calendar year that remain
unobligated on April 1 of the following year shall be
deposited into the general fund of the Treasury and shall be
used for deficit reduction

``(iii) Limitation.--

``(I) In general.--Subject to subclause (II), in no case
may a State use more than 15 percent of the amount allotted
to the State for a year under this subparagraph for the
purpose described in subclause (VI) of paragraph (1)(A)(i).
``(II) Exception.--The Secretary may permit a State to use
not more than 20 percent of the amount allotted to the State
for a year under this subparagraph for the purpose described
in subclause (VI) of paragraph (1)(A)(i) if the State submits
an application to waive the restriction in subclause (I) and
the Secretary determines that the State is using such amounts
allotted to the State to supplement, and not supplant, State
expenditures on the State plan under title XIX.

``(C) Reservation of funds for advanced payments to states
in 2020.--
``(i) In general.--From the amount appropriated for
calendar year 2020, $10,000,000,000 shall be reserved for the
purpose of increasing State allotments for calendar year 2020
under paragraph (9).
``(ii) Availability of reserved funds.--

``(I) In general.--Funds reserved under clause (i) shall be
available for the purpose described in such clause until
December 31, 2020.
``(II) Availability for 2026 allotments.--To the extent
that any funds reserved under clause (i) remain after
December 31, 2020, such funds shall be available for making
allotments to States for calendar year 2026.

``(5) Determination of allotment amounts.--
``(A) Calendar year 2020.--
``(i) In general.--Subject to subparagraph (H), the amount
determined under this paragraph for a State for calendar year
2020 shall be equal to the State's base period amount, as
defined in clause (ii).
``(ii) Base period amount.--In this paragraph, the term
`base period amount' means, with respect to a State, the sum
of the following amounts:

``(I) The amount, increased by the State growth factor
described in clause (iv)(I), of Federal payments--

``(aa) that were made to the State during the State's
premium assistance base period (as defined in clause (iii))
for medical assistance provided to individuals under clause
(i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) (including
medical assistance provided to individuals who are not newly
eligible (as defined in section 1905(y)(2)) individuals
described in subclause (VIII) of section 1902(a)(10)(A)(i));
or
``(bb) that would have been made to a State during the
State's premium assistance base period for medical assistance
provided to individuals who would have been described in
section 1902(a)(10)(A)(i)(VIII) (without regard to the first
sunset date in such section) but who were provided such
assistance under a title XIX State plan waiver that made
medical assistance available to all individuals described in
such subsection whose income did not exceed 100 percent of
the poverty line and that was in effect on September 1, 2017,
if such assistance was treated as assistance under such
section.

``(II) The amount, increased by the State growth factor
described in clause (iv)(II), of Federal payments made to the
State during the State's premium assistance base period for
operating a Basic Health Program under section 1331 of the
Patient Protection and Affordable Care Act during such
period.
``(III) The amount, increased by the State growth factor
described in clause (iv)(II), of advance payments of premium
assistance credits allowable under section 36B of the
Internal Revenue Code of 1986 made under section 1412(a) of
the Patient Protection and Affordable Care Act during the
State's premium assistance base period on behalf of
individuals who purchased insurance through the Exchange
established for or by the State pursuant to title I of such
Act.
``(IV) The amount, increased by the State growth factor
described in clause (iv)(II), of Federal payments for cost-
sharing reductions provided during the State's premium
assistance base period under section 1402 of such Act to
individuals who purchased insurance through the Exchange
established for or by the State pursuant to title I of such
Act.

``(iii) Premium assistance base period.--

``(I) In general.--In this paragraph, the term `premium
assistance base period' means, with respect to a State, a
period of 4 consecutive fiscal quarters selected by the
State.
``(II) Timeline.--Each State shall submit its selection of
a premium assistance base period to the Secretary not later
than July 1, 2018.
``(III) Parameters.--In selecting a premium assistance base
period under this clause, a State shall--

``(aa) only select a period of 4 consecutive fiscal
quarters for which all the data necessary to make
determinations required under this paragraph is available, as
determined by the Secretary; and
``(bb) shall not select any period of 4 consecutive fiscal
quarters that begins with a fiscal quarter earlier than the
first quarter of fiscal year 2014 or ends with a fiscal
quarter later than the first fiscal quarter of 2018.
``(iv) Growth factors.--The growth factor described in this
clause for a State is--

``(I) for the amount described in subclause (I) of clause
(i), the projected percentage increase in Medicaid
expenditures from the last month of the State's premium
assistance base period to November of 2019, as determined by
the Medicaid and CHIP Payment and Access Commission; and
``(II) for the amounts described in subclauses (II), (III),
and (IV) of clause (i), the percentage increase in the
medical care component of the consumer price index for all
urban consumers (U.S. city average) from the last month of
the State's premium assistance base period to November of
2019.

``(B) Calendar years 2021 through 2025.--Subject to
subparagraphs (D), (E), (F), (G), and (H), for each of
calendar years 2021 through 2025, the amount determined under
this paragraph for a State and calendar year shall be equal
to--
``(i) the amount determined for the State under this
paragraph (including any applicable adjustments) for the
previous calendar year; plus
``(ii) an amount equal to \1/6\ of the difference between--

``(I) the projected 2026 amount for the State and year (as
defined in subparagraph (J)); minus
``(II) the amount allotted to the State for calendar year
2020.

``(C) Calendar year 2026.--Subject to subparagraphs (D),
(E), (F), (G), and (H), for calendar year 2026, the amount
determined under this paragraph for a State shall be equal to
the product of the amount appropriated for the year under
paragraph (4)(A)(vii) (increased by any available amounts
described in paragraph (4)(C)(ii)(II)) and the ratio of--
``(i) the number of low-income individuals (as defined in
subparagraph (I)) in the State for calendar year 2025; to
``(ii) the number of low-income individuals in all States
for calendar year 2025.
``(D) Population risk adjustment.--
``(i) In general.--Subject to clauses (ii) and (iii), for
each calendar year after 2020, the Secretary shall adjust the
amount determined for each State for the year under
subparagraph (B) or (C) so that the amount is equal to the
product of--

``(I) the amount so determined for the State and year; and
``(II) the population risk index (as defined in
subparagraph (K)) for the State and year.

``(ii) Phase-in of population risk adjustment.--For each of
calendar years 2021 through 2023, the amount of the
adjustment determined for a State for a year under clause (i)
shall be reduced--

``(I) in calendar year 2021, by 75 percent;
``(II) in calendar year 2022, by 50 percent; and
``(III) in calendar year 2023, by 25 percent.

``(iii) Cap on risk adjustment.--In no case shall the
Secretary increase or reduce the amount determined for a
State and year under subparagraph (B) or (C) by an amount
that is greater than 10 percent of the amount so determined.
``(E) Coverage value adjustment.--
``(i) In general.--Subject to clause (iii), for each
calendar year after 2023, the amount determined for a State
under subparagraph (B) or (C) and adjusted under subparagraph
(D) shall be reduced by the coverage value adjustment amount
determined for the State and year under clause (ii).
``(ii) Coverage value adjustment amount.--The coverage
value adjustment

[[Page S5685]]

amount determined under this clause for a State and year
shall be equal to the amount, if any, by which the amount
determined for the State and year under subparagraph (B) or
(C) and adjusted under subparagraph (D) exceeds the product
of--

``(I) the amount so determined and adjusted for the State
and year; and
``(II) the ratio of--

``(aa) the average actuarial value of health care coverage
for low-income individuals in the State for the previous
calendar year, as determined under subparagraph (N); and
``(bb) the lowest possible actuarial value of health
benefits coverage that would satisfy the requirements of
section 2103(a) (or, if applicable, any waiver of such
requirements that is effective in such State for such year)
if such coverage were provided as child health assistance to
a targeted low-income child under the State child health
plan.
``(iii) Phase-in of coverage value adjustment.--For each of
calendar years 2024 through 2026, the amount of any reduction
determined for a State for a year under clause (ii) shall be
reduced--

``(I) in calendar year 2024, by 75 percent;
``(II) in calendar year 2025, by 50 percent; and
``(III) in calendar year 2026, by 25 percent.

``(F) State specific population adjustment factor.--
``(i) In general.--For calendar years after 2020, the
Secretary may adjust the amount determined for a State for a
year under subparagraph (B) or (C) and adjusted under
subparagraphs (D) and (E) according to a population
adjustment factor developed by the Secretary.
``(ii) Development of population adjustment factor.--Not
later than July 31, 2019, the Secretary shall develop a State
specific population adjustment factor that accounts for
legitimate factors that impact the health care expenditures
in a State beyond the clinical characteristics of the low-
income individuals in the State. Such factors may include
State demographics, wage rates, income levels, and other
factors as determined by the Secretary.
``(G) 2026 reduction for states receiving advanced payments
in 2020.--For calendar year 2026, the amount determined for a
State for such year under subparagraph (C) and adjusted under
subparagraphs (D), (E), and (F), shall be reduced by the
amount of any increase to the State's allotment for calendar
year 2020 under paragraph (9).
``(H) Proration rule.--
``(i) In general.--In no case shall the total amount of
State allotments (including any adjustments under
subparagraphs (D), (E), (F), and (G)) determined for a
calendar year under this paragraph exceed the amount
appropriated for a calendar year under paragraph (4)(A)
(increased, in the case of calendar year 2026, by any
available amounts described in paragraph (4)(C)(ii)(II)).
``(ii) Proration.--If the amount so appropriated--

``(I) is less than the total amount of State allotments
determined for such year under this paragraph (after any
adjustments under subparagraphs (D), (E), (F), and (G)), the
amount allotted to each State for such year shall be reduced
proportionally; and
``(II) is greater than the total amount of State allotments
determined for such year under this paragraph (after any
adjustments under subparagraphs (D), (E), (F), and (G)), the
amount allotted to each State for such year shall be
increased proportionally.

``(I) Low-income individual.--In this paragraph, the term
`low-income individual' means an individual--
``(i) who is a citizen or legal resident; and
``(ii) whose income (as determined under section
1902(e)(14) (relating to modified adjusted gross income)) is
greater than 45 percent but less than 133 percent of the
poverty line (as defined in section 2110(c)(5), subject to
subparagraph (O)(ii)) applicable to a family of the size
involved.
``(J) Projected 2026 amount.--The term `projected 2026
amount' means, with respect to a State and calendar year, the
product of the amount appropriated for calendar year 2026
under paragraph (4)(A)(vii) and the ratio of--
``(i) the number of low-income individuals (as defined in
subparagraph (I)) in the State for the calendar year
preceding the calendar year involved; to
``(ii) the number of low-income individuals in all States
for such preceding year.
``(K) Population risk index.--The term `population risk
index' means, for a State for a calendar year, the ratio of--
``(i) the sum of the products, for each of the clinical
risk categories (as defined in subparagraph (L)(i)), of--

``(I) the clinical risk factor for the category (as defined
in subparagraph (M)); and
``(II) the number of low-income individuals for the State,
year, and category; to

``(ii) the number of enrollees in the State.
``(L) Clinical risk category.--
``(i) In general.--The term `clinical risk category' means
a grouping of low-income individuals based on their clinical
characteristics that is established by the Secretary under
this subparagraph.
``(ii) Methodology for establishing categories and
assigning individuals to a category.--The Secretary shall
select a methodology for establishing clinical risk
categories and for assigning low-income individuals to such
categories, except that any methodology selected by the
Secretary shall meet the following requirements:

``(I) The methodology shall be composed of exhaustive and
mutually exclusive risk categories such that every low-income
individual is assigned to a risk category and each individual
may be assigned to only one risk category.
``(II) The methodology shall account for clinical
characteristics of individuals that impact per capita health
care expenditures.
``(III) The methodology shall account for the chronic
illness burden associated with multiple comorbid chronic
diseases and be composed of risk categories that explicitly
differentiate individuals based on their severity of illness.
``(IV) The methodology shall include risk categories that
account for complex pediatric enrollees.
``(V) The methodology for assigning individuals to such
clinical risk categories shall be based on characteristics of
individuals contained in data routinely collected in
administrative claims data and shall be capable of utilizing
pharmacy data and functional health status data when such
data becomes routinely available.
``(VI) To the extent possible, the methodology shall be a
methodology that has been implemented for the purpose of
determining per capita payments by a State plan under title
XIX to a managed care entity responsible for providing or
arranging for services for a population of enrollees that
includes enrollees with complex pediatric conditions and
enrollees who are eligible for benefits under both titles
XVIII and XIX.
``(VII) The methodology shall be open, transparent, and
available for review and comment by the public.

``(iii) Timeline.--

``(I) In general.--The Secretary shall select the
methodology for establishing clinical risk categories and
assigning low-income individuals to such categories not later
than January 1, 2020.
``(II) Annual updates.--Not later than 15 days prior to the
beginning of each calendar year, the Secretary shall make
publicly available updates to the methodology selected under
subclause (I).

``(M) Clinical risk factor.--The term `clinical risk
factor' means, with respect to each clinical risk category
and calendar year, the ratio of--
``(i) the average per capita amount of expenditures for all
States for the previous calendar year for low-income
individuals in the category; to
``(ii) the average per capita amount of expenditures for
all States for the previous calendar year for all low-income
individuals.
``(N) Determination of actuarial value of coverage.--In
determining the average actuarial value of coverage for low-
income individuals for a State and calendar year--
``(i) any plan offered on the health insurance marketplace
established for or by the State that does not offer a
benefits package that is at least equivalent to one of the
benchmark benefits packages described in section 2103(b)
shall be deemed to have an actuarial value of 40 percent; and
``(ii) any low-income individual who is not enrolled in any
plan for health benefits coverage for more than 3 months
during such year shall be deemed to have been enrolled in a
plan for health benefits coverage with an actuarial value of
0 percent.
``(O) Population and poverty data.--
``(i) In general.--In making the determinations required
under this paragraph, the Secretary shall, where appropriate,
use data from the most recently available Current Population
Survey of the Bureau of the Census.
``(ii) Use of separate poverty lines.--In the case of a
State for which the Secretary has issued under the authority
of section 673(2) of the Omnibus Budget Reconciliation Act of
1981 a separate poverty guideline for 2017 that is higher
than the poverty line (as defined in section 2110(c)(5)) that
is applicable to the majority of States, the Secretary shall
determine the number of low-income individuals in such State
using such separate poverty guideline instead of such poverty
line.
``(6) Payments.--
``(A) In general.--The Administrator shall pay to each
State that has an application approved under this subsection
for a year, from the amount allotted to the State under
paragraph (4)(B) for the year, an amount equal to the State's
expenditures for the year on the activities described by the
State in its application approved under paragraph (1).
``(B) Advance payment; retrospective adjustment.--
``(i) In general.--If the Administrator deems it
appropriate, the Administrator shall make payments under this
subsection for each 6 month period in a year on the basis of
advance estimates of expenditures submitted by the State and
such other investigation as the Administrator shall find
necessary, and shall reduce or increase the payments as
necessary to adjust for any overpayment or underpayment for
prior periods.
``(ii) Misuse of funds.--If the Administrator determines
that a State is not using funds paid to the State under this
subsection in a manner consistent with the description
provided by the State in its application approved under
paragraph (1) or is inappropriately withholding payments owed
to providers of services or health insurance issuers, the
Administrator may withhold payments, reduce payments, or
recover previous payments to the State under this subsection
as the Administrator deems appropriate.
``(C) Flexibility in submittal of claims.--Nothing in this
subsection shall be construed

[[Page S5686]]

as preventing a State from claiming as expenditures in the
year expenditures that were incurred in a previous year.
``(7) Exemptions.--Paragraphs (2), (3), (5), (6), (8),
(10), and (11) of subsection (c) do not apply to payments
under this subsection.
``(8) Contingency fund.--
``(A) In general.--From the amount appropriated under
subparagraph (C), the Secretary may increase the allotment
amount determined under paragraph (5) for each of calendar
years 2020 and 2021 for any State that is a low-density State
or a non-expansion State for the year.
``(B) Definitions.--In this paragraph:
``(i) Low-density state defined.--The term `low-density
State' means, with respect to a calendar year, a State that
has a population density of less than 15 individuals per
square mile, based on the most recent data available from the
Bureau of the Census.
``(ii) Non-expansion state.--The term `non-expansion State'
means a State that--

``(I) is not a low-density State; and
``(II) did not provide eligibility under section
1902(a)(10)(A)(i)(VIII) for medical assistance under the
State plan under title XIX on September 1, 2017 (or provided
eligibility for individuals described in such section under a
waiver of the State plan approved under section 1115).

``(C) Funding.--
``(i) In general.--There is appropriated, out of any money
in the Treasury not otherwise appropriated, $6,000,000,000
for calendar year 2020, and $5,000,000,00 for calendar year
2021, for the purpose of carrying out this paragraph.
``(ii) Reservation of funds.--The Secretary shall reserve,
for each of calendar years 2020 and 2021, from the funds
appropriated for each such year under clause (i)--

``(I) 25 percent of such funds for the purpose of
increasing the grant amounts for States that are low-density
States; and
``(II) 75 percent of such funds for the purpose of
increasing the grant amounts for States that are non-
expansion States.

``(9) Advance payment fund.--
``(A) In general.--From the amount reserved under paragraph
(4)(C), the Secretary may increase the allotment amount
determined under paragraph (5) for calendar year 2020 for any
State that applies for an increase under this paragraph by
the amount determined for the State under subparagraph (B).
``(B) Amount of increase.--Subject to subparagraph (C), the
Secretary shall increase the allotment amount determined
under paragraph (5) for a State for calendar year 2020 by the
amount requested by the State, except that in no case shall
the Secretary increase a State's allotment amount by an
amount that exceeds 5 percent of the amount so determined.
``(C) Proration rule.--If the amount reserved under
paragraph (4)(C) is less than the total amount of increases
requested by States under this paragraph, the amount of the
increase for each State shall be reduced proportionally.''.
(b) Other Title XXI Amendments.--
(1) Section 2101 of such Act (42 U.S.C. 1397aa) is
amended--
(A) in subsection (a), in the matter preceding paragraph
(1), by striking ``The purpose'' and inserting ``Except with
respect to short-term assistance activities under section
2105(h) and the Market-Based Health Care Grant Program
established in section 2105(i), the purpose''; and
(B) in subsection (b), in the matter preceding paragraph
(1), by inserting ``subsection (a) or (g) of'' before
``section 2105''.
(2) Section 2105(c)(1) of such Act (42 U.S.C. 1397ee(c)(1))
is amended by striking ``and may not include'' and inserting
``or to carry out short-term assistance activities under
subsection (h) or the Market-Based Health Care Grant Program
established in subsection (i) and, except in the case of
funds made available under subsection (h) or (i), may not
include''.
(3) Section 2106(a)(1) of such Act (42 U.S.C. 1397ff(a)(1))
is amended by inserting ``subsection (a) or (g) of'' before
``section 2105''.

SEC. 107. BETTER CARE RECONCILIATION IMPLEMENTATION FUND.

(a) In General.--There is hereby established a Better Care
Reconciliation Implementation Fund (referred to in this
section as the ``Fund'') within the Department of Health and
Human Services to provide for Federal administrative expenses
in carrying out this Act.
(b) Funding.--There is appropriated to the Fund, out of any
funds in the Treasury not otherwise appropriated,
$2,000,000,000.

SEC. 108. REPEAL OF TAX ON OVER-THE-COUNTER MEDICATIONS.

(a) HSAs.--Subparagraph (A) of section 223(d)(2) of the
Internal Revenue Code of 1986 is amended by striking ``Such
term'' and all that follows through the period.
(b) Archer MSAs.--Subparagraph (A) of section 220(d)(2) of
the Internal Revenue Code of 1986 is amended by striking
``Such term'' and all that follows through the period.
(c) Health Flexible Spending Arrangements and Health
Reimbursement Arrangements.--Section 106 of the Internal
Revenue Code of 1986 is amended by striking subsection (f).
(d) Effective Dates.--
(1) Distributions from savings accounts.--The amendments
made by subsections (a) and (b) shall apply to amounts paid
with respect to taxable years beginning after December 31,
2016.
(2) Reimbursements.--The amendment made by subsection (c)
shall apply to expenses incurred with respect to taxable
years beginning after December 31, 2016.

SEC. 109. REPEAL OF TAX ON HEALTH SAVINGS ACCOUNTS.

(a) HSAs.--Section 223(f)(4)(A) of the Internal Revenue
Code of 1986 is amended by striking ``20 percent'' and
inserting ``10 percent''.
(b) Archer MSAs.--Section 220(f)(4)(A) of the Internal
Revenue Code of 1986 is amended by striking ``20 percent''
and inserting ``15 percent''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions made after December 31, 2016.

SEC. 110. REPEAL OF MEDICAL DEVICE EXCISE TAX.

Section 4191 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:
``(d) Applicability.--The tax imposed under subsection (a)
shall not apply to sales after December 31, 2017.''.

SEC. 111. REPEAL OF ELIMINATION OF DEDUCTION FOR EXPENSES
ALLOCABLE TO MEDICARE PART D SUBSIDY.

(a) In General.--Section 139A of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
sentence: ``This section shall not be taken into account for
purposes of determining whether any deduction is allowable
with respect to any cost taken into account in determining
such payment.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2016.

SEC. 112. PURCHASE OF INSURANCE FROM HEALTH SAVINGS ACCOUNT.

(a) In General.--Paragraph (2) of section 223(d) of the
Internal Revenue Code of 1986 is amended--
(1) by striking ``and any dependent (as defined in section
152, determined without regard to subsections (b)(1), (b)(2),
and (d)(1)(B) thereof) of such individual'' in subparagraph
(A) and inserting ``any dependent (as defined in section 152,
determined without regard to subsections (b)(1), (b)(2), and
(d)(1)(B) thereof) of such individual, and any child (as
defined in section 152(f)(1)) of such individual who has not
attained the age of 27 before the end of such individual's
taxable year'',
(2) by striking subparagraph (B) and inserting the
following:
``(B) Health insurance may not be purchased from account.--
Except as provided in subparagraph (C), subparagraph (A)
shall not apply to any payment for insurance.'', and
(3) by striking ``or'' at the end of subparagraph (C)(iii),
by striking the period at the end of subparagraph (C)(iv) and
inserting ``, or'', and by adding at the end the following:
``(v) a high deductible health plan but only to the extent
of the portion of such expense in excess of--

``(I) any amount allowable as a credit under section 36B
for the taxable year with respect to such coverage,
``(II) any amount allowable as a deduction under section
162(l) with respect to such coverage, or
``(III) any amount excludable from gross income with
respect to such coverage under section 106 (including by
reason of section 125) or 402(l).''.

(b) Effective Date.--The amendments made by this section
shall apply with respect to amounts paid for expenses
incurred for, and distributions made for, coverage under a
high deductible health plan beginning after December 31,
2017.

SEC. 113. PRIMARY CARE ENHANCEMENT.

(a) Treatment of Direct Primary Care Service
Arrangements.--Section 223(c) of the Internal Revenue Code of
1986 is amended by adding at the end the following new
paragraph:
``(6) Treatment of direct primary care service
arrangements.--An arrangement under which an individual is
provided coverage restricted to primary care services in
exchange for a fixed periodic fee or payment for such
services--
``(A) shall not be treated as a health plan for purposes of
paragraph (1)(A)(ii), and
``(B) shall not be treated as insurance for purposes of
subsection (d)(2)(B).''.
(b) Certain Provider Fees to Be Treated as Medical Care.--
Section 213(d) of the Internal Revenue Code of 1986 is
amended by adding at the end the following new paragraph:
``(12) Periodic provider fees.--The term `medical care'
shall include periodic fees paid for a defined set of primary
care medical services provided on an as-needed basis.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2016.

SEC. 114. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAVINGS
ACCOUNT INCREASED TO AMOUNT OF DEDUCTIBLE AND
OUT-OF-POCKET LIMITATION.

(a) Self-Only Coverage.--Section 223(b)(2)(A) of the
Internal Revenue Code of 1986 is amended by striking
``$2,250'' and inserting ``the amount in effect under
subsection (c)(2)(A)(ii)(I)''.
(b) Family Coverage.--Section 223(b)(2)(B) of such Code is
amended by striking ``$4,500'' and inserting ``the amount in
effect under subsection (c)(2)(A)(ii)(II)''.
(c) Cost-of-living Adjustment.--Section 223(g)(1) of such
Code is amended--
(1) by striking ``subsections (b)(2) and'' both places it
appears and inserting ``subsection'', and

[[Page S5687]]

(2) in subparagraph (B), by striking ``determined by'' and
all that follows through `` `calendar year 2003'.'' and
inserting ``determined by substituting `calendar year 2003'
for `calendar year 1992' in subparagraph (B) thereof.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2017.

SEC. 115. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS
TO THE SAME HEALTH SAVINGS ACCOUNT.

(a) In General.--Section 223(b)(5) of the Internal Revenue
Code of 1986 is amended to read as follows:
``(5) Special rule for married individuals with family
coverage.--
``(A) In general.--In the case of individuals who are
married to each other, if both spouses are eligible
individuals and either spouse has family coverage under a
high deductible health plan as of the first day of any
month--
``(i) the limitation under paragraph (1) shall be applied
by not taking into account any other high deductible health
plan coverage of either spouse (and if such spouses both have
family coverage under separate high deductible health plans,
only one such coverage shall be taken into account),
``(ii) such limitation (after application of clause (i))
shall be reduced by the aggregate amount paid to Archer MSAs
of such spouses for the taxable year, and
``(iii) such limitation (after application of clauses (i)
and (ii)) shall be divided equally between such spouses
unless they agree on a different division.
``(B) Treatment of additional contribution amounts.--If
both spouses referred to in subparagraph (A) have attained
age 55 before the close of the taxable year, the limitation
referred to in subparagraph (A)(iii) which is subject to
division between the spouses shall include the additional
contribution amounts determined under paragraph (3) for both
spouses. In any other case, any additional contribution
amount determined under paragraph (3) shall not be taken into
account under subparagraph (A)(iii) and shall not be subject
to division between the spouses.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.

SEC. 116. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED
BEFORE ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT.

(a) In General.--Section 223(d)(2) of the Internal Revenue
Code of 1986 is amended by adding at the end the following
new subparagraph:
``(D) Treatment of certain medical expenses incurred before
establishment of account.--If a health savings account is
established during the 60-day period beginning on the date
that coverage of the account beneficiary under a high
deductible health plan begins, then, solely for purposes of
determining whether an amount paid is used for a qualified
medical expense, such account shall be treated as having been
established on the date that such coverage begins.''.
(b) Effective Date.--The amendment made by this subsection
shall apply with respect to coverage under a high deductible
health plan beginning after December 31, 2017.

SEC. 117. EXCLUSION FROM HSAS OF HIGH DEDUCTIBLE HEALTH PLANS
INCLUDING COVERAGE FOR ABORTION.

(a) In General.--Subparagraph (C) of section 223(d)(2) of
the Internal Revenue Code of 1986 is amended by adding at the
end the following flush sentence:

``A high deductible health plan shall not be treated as
described in clause (v) if such plan includes coverage for
abortions (other than any abortion necessary to save the life
of the mother or any abortion with respect to a pregnancy
that is the result of an act of rape or incest).''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to coverage under a high deductible
health plan beginning after December 31, 2017.

SEC. 118. FEDERAL PAYMENTS TO STATES.

(a) In General.--Notwithstanding section 504(a),
1902(a)(23), 1903(a), 2002, 2005(a)(4), 2102(a)(7), or
2105(a)(1) of the Social Security Act (42 U.S.C. 704(a),
1396a(a)(23), 1396b(a), 1397a, 1397d(a)(4), 1397bb(a)(7),
1397ee(a)(1)), or the terms of any Medicaid waiver in effect
on the date of enactment of this Act that is approved under
section 1115 or 1915 of the Social Security Act (42 U.S.C.
1315, 1396n), for the 1-year period beginning on the date of
enactment of this Act, no Federal funds provided from a
program referred to in this subsection that is considered
direct spending for any year may be made available to a State
for payments to a prohibited entity, whether made directly to
the prohibited entity or through a managed care organization
under contract with the State.
(b) Definitions.--In this section:
(1) Prohibited entity.--The term ``prohibited entity''
means an entity, including its affiliates, subsidiaries,
successors, and clinics--
(A) that, as of the date of enactment of this Act--
(i) is an organization described in section 501(c)(3) of
the Internal Revenue Code of 1986 and exempt from tax under
section 501(a) of such Code;
(ii) is an essential community provider described in
section 156.235 of title 45, Code of Federal Regulations (as
in effect on the date of enactment of this Act), that is
primarily engaged in family planning services, reproductive
health, and related medical care; and
(iii) provides for abortions, other than an abortion--

(I) if the pregnancy is the result of an act of rape or
incest; or
(II) in the case where a woman suffers from a physical
disorder, physical injury, or physical illness that would, as
certified by a physician, place the woman in danger of death
unless an abortion is performed, including a life-endangering
physical condition caused by or arising from the pregnancy
itself; and

(B) for which the total amount of Federal and State
expenditures under the Medicaid program under title XIX of
the Social Security Act in fiscal year 2014 made directly to
the entity and to any affiliates, subsidiaries, successors,
or clinics of the entity, or made to the entity and to any
affiliates, subsidiaries, successors, or clinics of the
entity as part of a nationwide health care provider network,
exceeded $1,000,000.
(2) Direct spending.--The term ``direct spending'' has the
meaning given that term under section 250(c) of the Balanced
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C.
900(c)).

SEC. 119. MEDICAID.

The Social Security Act (42 U.S.C. 301 et seq.) is
amended--
(1) in section 1902--
(A) in subsection (a)(10)(A)--
(i) in each of clauses (i)(VIII) and (ii)(XX), by inserting
``and ending September 1, 2017 (or, in the case of a State
that provided for medical assistance under this subclause on
July 1, 2016, December 31, 2019),'' after ``January 1,
2014,''; and
(ii) in clause (ii), by adding at the end the following new
subclause:

``(XXIII) beginning January 1, 2020, who--

``(aa) are members of an Indian tribe;
``(bb) are described in subclause (VIII) of clause (i)
(without regard to the sunset dates in such subclause);
``(cc) reside in a State that provided for medical
assistance under such subclause on December 31, 2019;
``(dd) were enrolled under the State plan under this title
(or a waiver of such plan) on December 31, 2019; and
``(ee) after December 31, 2019, do not have a break in
eligibility for medical assistance under the State plan under
this title for such a period of time as the State may specify
(but which in no case shall be less than 6 months);'' and
(B) in subsection (a)(47)(B), by inserting ``and provided
that any such election shall cease to be effective on January
1, 2020, and no such election shall be made after that date''
before the semicolon at the end;
(2) in section 1905--
(A) in the first sentence of subsection (b), by inserting
``(50 percent on or after January 1, 2020)'' after ``55
percent'';
(B) in subsection (y)(1), by striking the semicolon at the
end of subparagraph (D) and all that follows through
``thereafter''; and
(C) in subsection (z)(2)--
(i) in subparagraph (A), by inserting ``through 2019''
after ``each year thereafter''; and
(ii) in subparagraph (B)(ii):

(I) in subclause (V), by striking ``2018 is 90'' inserting
``2018 and 2019 is 90 percent''; and
(II) in subclause (VI) by striking ``2019 and each
subsequent year is 90 percent'' and inserting ``2020 and each
subsequent year is 0 percent'';

(3) in section 1915(k)(2), by striking ``during the period
described in paragraph (1)'' and inserting ``on or after the
date referred to in paragraph (1) and before January 1,
2020'';
(4) in section 1920(e), by adding at the end the following:
``This subsection shall not apply after December 31, 2019.'';
(5) in section 1937(b)(5), by adding at the end the
following: ``This paragraph shall not apply after December
31, 2019.''; and
(6) in section 1943(a), by inserting ``and before January
1, 2020,'' after ``January 1, 2014,''.

SEC. 120. REDUCING STATE MEDICAID COSTS.

(a) In General.--
(1) State plan requirements.--Section 1902(a)(34) of the
Social Security Act (42 U.S.C. 1396a(a)(34)) is amended by
striking ``in or after the third month'' and all that follows
through ``individual)'' and inserting ``in or after the
second month before the month in which the individual (or, in
the case of a deceased individual, another individual acting
on the individual's behalf) made application (or, in the case
of an individual who is 65 years of age or older or who is
eligible for medical assistance under the plan on the basis
of being blind or disabled, in or after the month before such
second month)''.
(2) Definition of medical assistance.--Section 1905(a) of
the Social Security Act (42 U.S.C. 1396d(a)) is amended by
striking ``in or after the third month before the month in
which the recipient makes application for assistance'' and
inserting ``in or after the second month before the month in
which the recipient makes application for assistance, or, in
the case of a recipient who is 65 years of age or older or
who is eligible for medical assistance on the basis of being
blind or disabled at the time application is made, in or
after the month before such second month,''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to medical assistance with respect to individuals
whose eligibility for such assistance is based on an
application for such assistance made (or deemed to be made)
on or after October 1, 2017.

SEC. 121. ELIGIBILITY REDETERMINATIONS.

(a) In General.--Section 1902(e)(14) of the Social Security
Act (42 U.S.C. 1396a(e)(14))

[[Page S5688]]

(relating to modified adjusted gross income) is amended by
adding at the end the following:
``(J) Frequency of eligibility redeterminations.--Beginning
on October 1, 2017, and notwithstanding subparagraph (H), in
the case of an individual whose eligibility for medical
assistance under the State plan under this title (or a waiver
of such plan) is determined based on the application of
modified adjusted gross income under subparagraph (A) and who
is so eligible on the basis of clause (i)(VIII) or (ii)(XX)
of subsection (a)(10)(A), at the option of the State, the
State plan may provide that the individual's eligibility
shall be redetermined every 6 months (or such shorter number
of months as the State may elect).''.
(b) Increased Administrative Matching Percentage.--For each
calendar quarter during the period beginning on October 1,
2017, and ending on December 31, 2019, the Federal matching
percentage otherwise applicable under section 1903(a) of the
Social Security Act (42 U.S.C. 1396b(a)) with respect to
State expenditures during such quarter that are attributable
to meeting the requirement of section 1902(e)(14) (relating
to determinations of eligibility using modified adjusted
gross income) of such Act shall be increased by 5 percentage
points with respect to State expenditures attributable to
activities carried out by the State (and approved by the
Secretary) to exercise the option described in subparagraph
(J) of such section (relating to eligibility redeterminations
made on a 6-month or shorter basis) (as added by subsection
(a)) to increase the frequency of eligibility
redeterminations.

SEC. 122. OPTIONAL WORK REQUIREMENT FOR NONDISABLED,
NONELDERLY, NONPREGNANT INDIVIDUALS.

(a) In General.--Section 1902 of the Social Security Act
(42 U.S.C. 1396a), as previously amended, is further amended
by adding at the end the following new subsection:
``(oo) Optional Work Requirement for Nondisabled,
Nonelderly, Nonpregnant Individuals.--
``(1) In general.--Beginning October 1, 2017, subject to
paragraph (3), a State may elect to condition medical
assistance to a nondisabled, nonelderly, nonpregnant
individual under this title upon such an individual's
satisfaction of a work requirement (as defined in paragraph
(2)).
``(2) Work requirement defined.--In this section, the term
`work requirement' means, with respect to an individual, the
individual's participation in work activities (as defined in
section 407(d)) for such period of time as determined by the
State, and as directed and administered by the State.
``(3) Required exceptions.--States administering a work
requirement under this subsection may not apply such
requirement to--
``(A) a woman during pregnancy through the end of the month
in which the 60-day period (beginning on the last day of her
pregnancy) ends;
``(B) an individual who is under 19 years of age;
``(C) an individual who is the only parent or caretaker
relative in the family of a child who has not attained 6
years of age or who is the only parent or caretaker of a
child with disabilities;
``(D) an individual who is married or a head of household
and has not attained 20 years of age and who--
``(i) maintains satisfactory attendance at secondary school
or the equivalent; or
``(ii) participates in education directly related to
employment;
``(E) an individual who is a regular participant in an
inpatient or intensive outpatient drug addiction or alcoholic
treatment and rehabilitation program that satisfies such
criteria as the State shall require; or
``(F) an individual who is a full-time student at an
institution of higher education as defined in sections 101
and 102 of the Higher Education Act of 1965.''.
(b) Increase in Matching Rate for Implementation.--Section
1903 of the Social Security Act (42 U.S.C. 1396b) is amended
by adding at the end the following:
``(aa) The Federal matching percentage otherwise applicable
under subsection (a) with respect to State administrative
expenditures during a calendar quarter for which the State
receives payment under such subsection shall, in addition to
any other increase to such Federal matching percentage, be
increased for such calendar quarter by 5 percentage points
with respect to State expenditures attributable to activities
carried out by the State (and approved by the Secretary) to
implement subsection (oo) of section 1902.''.

SEC. 123. PROVIDER TAXES.

Section 1903(w)(4)(C) of the Social Security Act (42 U.S.C.
1396b(w)(4)(C)) is amended by adding at the end the following
new clause:
``(iii) For purposes of clause (i), a determination of the
existence of an indirect guarantee shall be made under
paragraph (3)(i) of section 433.68(f) of title 42, Code of
Federal Regulations, as in effect on June 1, 2017, except
that--

``(I) for fiscal year 2021, `5.6 percent' shall be
substituted for `6 percent' each place it appears;
``(II) for fiscal year 2022, `5.2 percent' shall be
substituted for `6 percent' each place it appears;
``(III) for fiscal year 2023, `4.8 percent' shall be
substituted for `6 percent' each place it appears;
``(IV) for fiscal year 2024, `4.4 percent' shall be
substituted for `6 percent' each place it appears; and
``(V) for fiscal year 2025 and each subsequent fiscal year,
`4 percent' shall be substituted for `6 percent' each place
it appears.''.

SEC. 124. PER CAPITA ALLOTMENT FOR MEDICAL ASSISTANCE.

(a) In General.--Title XIX of the Social Security Act is
amended--
(1) in section 1903 (42 U.S.C. 1396b)--
(A) in subsection (a), in the matter before paragraph (1),
by inserting ``and section 1903A(a)'' after ``except as
otherwise provided in this section''; and
(B) in subsection (d)(1), by striking ``to which'' and
inserting ``to which, subject to section 1903A(a),''; and
(2) by inserting after such section 1903 the following new
section:

``SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR MEDICAL
ASSISTANCE.

``(a) Application of Per Capita Cap on Payments for Medical
Assistance Expenditures.--
``(1) In general.--Subject to subsection (i), if a State
which is one of the 50 States or the District of Columbia has
excess aggregate medical assistance expenditures (as defined
in paragraph (2)) for a fiscal year (beginning with fiscal
year 2020), the amount of payment to the State under section
1903(a)(1) for each quarter in the following fiscal year
shall be reduced by \1/4\ of the excess aggregate medical
assistance payments (as defined in paragraph (3)) for that
previous fiscal year. In this section, the term `State' means
only the 50 States and the District of Columbia.
``(2) Excess aggregate medical assistance expenditures.--In
this subsection, the term `excess aggregate medical
assistance expenditures' means, for a State for a fiscal
year, the amount (if any) by which--
``(A) the amount of the adjusted total medical assistance
expenditures (as defined in subsection (b)(1)) for the State
and fiscal year; exceeds
``(B) the amount of the target total medical assistance
expenditures (as defined in subsection (c)) for the State and
fiscal year.
``(3) Excess aggregate medical assistance payments.--In
this subsection, the term `excess aggregate medical
assistance payments' means, for a State for a fiscal year,
the product of--
``(A) the excess aggregate medical assistance expenditures
(as defined in paragraph (2)) for the State for the fiscal
year; and
``(B) the Federal average medical assistance matching
percentage (as defined in paragraph (4)) for the State for
the fiscal year.
``(4) Federal average medical assistance matching
percentage.--In this subsection, the term `Federal average
medical assistance matching percentage' means, for a State
for a fiscal year, the ratio (expressed as a percentage) of--
``(A) the amount of the Federal payments that would be made
to the State under section 1903(a)(1) for medical assistance
expenditures for calendar quarters in the fiscal year if
paragraph (1) did not apply; to
``(B) the amount of the medical assistance expenditures for
the State and fiscal year.
``(5) Per capita base period.--
``(A) In general.--In this section, the term `per capita
base period' means, with respect to a State, a period of 8
consecutive fiscal quarters selected by the State.
``(B) Timeline.--Each State shall submit its selection of a
per capita base period to the Secretary not later than
January 1, 2018.
``(C) Parameters.--In selecting a per capita base period
under this paragraph, a State shall--
``(i) only select a period of 8 consecutive fiscal quarters
for which all the data necessary to make determinations
required under this section is available, as determined by
the Secretary; and
``(ii) shall not select any period of 8 consecutive fiscal
quarters that begins with a fiscal quarter earlier than the
first quarter of fiscal year 2014 or ends with a fiscal
quarter later than the third fiscal quarter of 2017.
``(b) Adjusted Total Medical Assistance Expenditures.--
Subject to subsection (g), the following shall apply:
``(1) In general.--In this section, the term `adjusted
total medical assistance expenditures' means, for a State--
``(A) for the State's per capita base period (as defined in
subsection (a)(5)), the product of--
``(i) the amount of the medical assistance expenditures (as
defined in paragraph (2) and adjusted under paragraph (5))
for the State and period, reduced by the amount of any
excluded expenditures (as defined in paragraph (3) and
adjusted under paragraph (5)) for the State and period
otherwise included in such medical assistance expenditures;
and
``(ii) the 1903A base period population percentage (as
defined in paragraph (4)) for the State; or
``(B) for fiscal year 2019 or a subsequent fiscal year, the
amount of the medical assistance expenditures (as defined in
paragraph (2)) for the State and fiscal year that is
attributable to 1903A enrollees, reduced by the amount of any
excluded expenditures (as defined in paragraph (3)) for the
State and fiscal year otherwise included in such medical
assistance expenditures and includes non-DSH supplemental
payments (as defined in subsection (d)(4)(A)(ii)) and
payments described in subsection (d)(4)(A)(iii) but shall not
be construed as including any expenditures attributable to
the program under section 1928 (relating to State pediatric
vaccine distribution programs). In applying subparagraph (B),
non-DSH supplemental payments (as defined in subsection
(d)(4)(A)(ii)) and payments described in subsection

[[Page S5689]]

(d)(4)(A)(iii) shall be treated as fully attributable to
1903A enrollees.
``(2) Medical assistance expenditures.--In this section,
the term `medical assistance expenditures' means, for a State
and fiscal year or per capita base period, the medical
assistance payments as reported by medical service category
on the Form CMS-64 quarterly expense report (or successor to
such a report form, and including enrollment data and
subsequent adjustments to any such report, in this section
referred to collectively as a `CMS-64 report') for quarters
in the year or base period for which payment is (or may
otherwise be) made pursuant to section 1903(a)(1), adjusted,
in the case of a per capita base period, under paragraph (5).
``(3) Excluded expenditures.--In this section, the term
`excluded expenditures' means, for a State and fiscal year or
per capita base period, expenditures under the State plan (or
under a waiver of such plan) that are attributable to any of
the following:
``(A) DSH.--Payment adjustments made for disproportionate
share hospitals under section 1923.
``(B) Medicare cost-sharing.--Payments made for medicare
cost-sharing (as defined in section 1905(p)(3)).
``(C) Expenditures for public health emergencies.--Any
expenditures that are subject to a public health emergency
exclusion under paragraph (6).
``(4) 1903A base period population percentage.--In this
subsection, the term `1903A base period population
percentage' means, for a State, the Secretary's calculation
of the percentage of the actual medical assistance
expenditures, as reported by the State on the CMS-64 reports
for calendar quarters in the State's per capita base period,
that are attributable to 1903A enrollees (as defined in
subsection (e)(1)).
``(5) Adjustments for per capita base period.--In
calculating medical assistance expenditures under paragraph
(2) and excluded expenditures under paragraph (3) for a State
for the State's per capita base period, the total amount of
each type of expenditure for the State and base period shall
be divided by 2.
``(6) Authority to exclude state expenditures from caps
during public health emergency.--
``(A) In general.--During the period that begins on January
1, 2020, and ends on December 31, 2024, the Secretary may
exclude, from a State's medical assistance expenditures for a
fiscal year or portion of a fiscal year that occurs during
such period, an amount that shall not exceed the amount
determined under subparagraph (B) for the State and year or
portion of a year if--
``(i) a public health emergency declared by the Secretary
pursuant to section 319 of the Public Health Service Act
existed within the State during such year or portion of a
year; and
``(ii) the Secretary determines that such an exemption
would be appropriate.
``(B) Maximum amount of adjustment.--The amount excluded
for a State and fiscal year or portion of a fiscal year under
this paragraph shall not exceed the amount by which--
``(i) the amount of State expenditures for medical
assistance for 1903A enrollees in areas of the State which
are subject to a declaration described in subparagraph (A)(i)
for the fiscal year or portion of a fiscal year; exceeds
``(ii) the amount of such expenditures for such enrollees
in such areas during the most recent fiscal year or portion
of a fiscal year of equal length to the portion of a fiscal
year involved during which no such declaration was in effect.
``(C) Aggregate limitation on exclusions and additional
block grant payments.--The aggregate amount of expenditures
excluded under this paragraph and additional payments made
under section 1903B(c)(3)(E) for the period described in
subparagraph (A) shall not exceed $5,000,000,000.
``(D) Review.--If the Secretary exercises the authority
under this paragraph with respect to a State for a fiscal
year or portion of a fiscal year, the Secretary shall, not
later than 6 months after the declaration described in
subparagraph (A)(i) ceases to be in effect, conduct an audit
of the State's medical assistance expenditures for 1903A
enrollees during the year or portion of a year to ensure that
all of the expenditures so excluded were made for the purpose
of ensuring that the health care needs of 1903A enrollees in
areas affected by a public health emergency are met.
``(c)  Target Total Medical Assistance Expenditures.--
``(1) Calculation.--In this section, the term `target total
medical assistance expenditures' means, for a State for a
fiscal year, the sum of the products, for each of the 1903A
enrollee categories (as defined in subsection (e)(2)), of--
``(A) the target per capita medical assistance expenditures
(as defined in paragraph (2)) for the enrollee category,
State, and fiscal year; and
``(B) the number of 1903A enrollees for such enrollee
category, State, and fiscal year, as determined under
subsection (e)(4).
``(2) Target per capita medical assistance expenditures.--
In this subsection, the term `target per capita medical
assistance expenditures' means, for a 1903A enrollee category
and State--
``(A) for fiscal year 2020, an amount equal to--
``(i) the provisional FY19 target per capita amount for
such enrollee category (as calculated under subsection
(d)(5)) for the State; increased by
``(ii) the applicable annual inflation factor (as defined
in paragraph (3)) for fiscal year 2020; and
``(B) for each succeeding fiscal year, an amount equal to--
``(i) the target per capita medical assistance expenditures
(under subparagraph (A) or this subparagraph) for the 1903A
enrollee category and State for the preceding fiscal year;
increased by
``(ii) the applicable annual inflation factor for that
succeeding fiscal year.
``(3) Applicable annual inflation factor.--In paragraph
(2), the term `applicable annual inflation factor' means--
``(A) for fiscal years before 2025--
``(i) for each of the 1903A enrollee categories described
in subparagraphs (C) and (D) of subsection (e)(2), the
percentage increase in the medical care component of the
consumer price index for all urban consumers (U.S. city
average) from September of the previous fiscal year to
September of the fiscal year involved; and
``(ii) for each of the 1903A enrollee categories described
in subparagraphs (A) and (B) of subsection (e)(2), the
percentage increase described in clause (i) plus 1 percentage
point; and
``(B) for fiscal years after 2024--
``(i) for each of the 1903A enrollee categories described
in subparagraphs (C) and (D) of subsection (e)(2), the
percentage increase in the consumer price index for all urban
consumers (U.S. city average) from September of the previous
fiscal year to September of the fiscal year involved; and
``(ii) for each of the 1903A enrollee categories described
in subparagraphs (A) and (B) of subsection (e)(2), the
percentage increase in the medical care component of the
consumer price index for all urban consumers (U.S. city
average) from September of the previous fiscal year to
September of the fiscal year involved.
``(4) Adjustments to state expenditures targets to promote
program equity across states.--
``(A) In general.--Beginning with fiscal year 2020, the
target per capita medical assistance expenditures for a 1903A
enrollee category, State, and fiscal year, as determined
under paragraph (2), shall be adjusted (subject to
subparagraph (C)(i)) in accordance with this paragraph.
``(B) Adjustment based on level of per capita spending for
1903a enrollee categories.--Subject to subparagraph (C), with
respect to a State, fiscal year, and 1903A enrollee category,
if the State's per capita categorical medical assistance
expenditures (as defined in subparagraph (D)) for the State
and category in the preceding fiscal year--
``(i) exceed the mean per capita categorical medical
assistance expenditures for the category for all States for
such preceding year by not less than 25 percent, the State's
target per capita medical assistance expenditures for such
category for the fiscal year involved shall be reduced by a
percentage that shall be determined by the Secretary but
which shall not be less than 0.5 percent or greater than 2
percent; or
``(ii) are less than the mean per capita categorical
medical assistance expenditures for the category for all
States for such preceding year by not less than 25 percent,
the State's target per capita medical assistance expenditures
for such category for the fiscal year involved shall be
increased by a percentage that shall be determined by the
Secretary but which shall not be less than 0.5 percent or
greater than 3 percent.
``(C) Rules of application.--
``(i) Budget neutrality requirement.--In determining the
appropriate percentages by which to adjust States' target per
capita medical assistance expenditures for a category and
fiscal year under this paragraph, the Secretary shall make
such adjustments in a manner that does not result in a net
increase in Federal payments under this section for such
fiscal year, and if the Secretary cannot adjust such
expenditures in such a manner there shall be no adjustment
under this paragraph for such fiscal year.
``(ii) Assumption regarding state expenditures.--For
purposes of clause (i), in the case of a State that has its
target per capita medical assistance expenditures for a 1903A
enrollee category and fiscal year increased under this
paragraph, the Secretary shall assume that the categorical
medical assistance expenditures (as defined in subparagraph
(D)(ii)) for such State, category, and fiscal year will equal
such increased target medical assistance expenditures.
``(iii) Nonapplication to low-density states.--This
paragraph shall not apply to any State that has a population
density of less than 15 individuals per square mile, based on
the most recent data available from the Bureau of the Census.
``(iv) Application for fiscal years 2020 and 2021.--In
fiscal years 2020 and 2021, the Secretary shall apply this
paragraph by deeming all categories of 1903A enrollees to be
a single category.
``(D) Per capita categorical medical assistance
expenditures.--
``(i) In general.--In this paragraph, the term `per capita
categorical medical assistance expenditures' means, with
respect to a State, 1903A enrollee category, and fiscal year,
an amount equal to--

``(I) the categorical medical expenditures (as defined in
clause (ii)) for the State, category, and year; divided by

[[Page S5690]]

``(II) the number of 1903A enrollees for the State,
category, and year.

``(ii) Categorical medical assistance expenditures.--The
term `categorical medical assistance expenditures' means,
with respect to a State, 1903A enrollee category, and fiscal
year, an amount equal to the total medical assistance
expenditures (as defined in paragraph (2)) for the State and
fiscal year that are attributable to 1903A enrollees in the
category, excluding any excluded expenditures (as defined in
paragraph (3)) for the State and fiscal year that are
attributable to 1903A enrollees in the category.
``(d) Calculation of FY19 Provisional Target Amount for
Each 1903A Enrollee Category.--Subject to subsection (g), the
following shall apply:
``(1) Calculation of base amounts for per capita base
period.--For each State the Secretary shall calculate (and
provide notice to the State not later than April 1, 2018, of)
the following:
``(A) The amount of the adjusted total medical assistance
expenditures (as defined in subsection (b)(1)) for the State
for the State's per capita base period.
``(B) The number of 1903A enrollees for the State in the
State's per capita base period (as determined under
subsection (e)(4)).
``(C) The average per capita medical assistance
expenditures for the State for the State's per capita base
period equal to--
``(i) the amount calculated under subparagraph (A); divided
by
``(ii) the number calculated under subparagraph (B).
``(2) Fiscal year 2019 average per capita amount based on
inflating the per capita base period amount to fiscal year
2019 by cpi-medical.--The Secretary shall calculate a fiscal
year 2019 average per capita amount for each State equal to--
``(A) the average per capita medical assistance
expenditures for the State for the State's per capita base
period (calculated under paragraph (1)(C)); increased by
``(B) the percentage increase in the medical care component
of the consumer price index for all urban consumers (U.S.
city average) from the last month of the State's per capita
base period to September of fiscal year 2019.
``(3) Aggregate and average expenditures per capita for
fiscal year 2019.--The Secretary shall calculate for each
State the following:
``(A) The amount of the adjusted total medical assistance
expenditures (as defined in subsection (b)(1)) for the State
for fiscal year 2019.
``(B) The number of 1903A enrollees for the State in fiscal
year 2019 (as determined under subsection (e)(4)).
``(4) Per capita expenditures for fiscal year 2019 for each
1903a enrollee category.--The Secretary shall calculate (and
provide notice to each State not later than January 1, 2020,
of) the following:
``(A)(i) For each 1903A enrollee category, the amount of
the adjusted total medical assistance expenditures (as
defined in subsection (b)(1)) for the State for fiscal year
2019 for individuals in the enrollee category, calculated by
excluding from medical assistance expenditures those
expenditures attributable to expenditures described in clause
(iii) or non-DSH supplemental expenditures (as defined in
clause (ii)).
``(ii) In this paragraph, the term `non-DSH supplemental
expenditure' means a payment to a provider under the State
plan (or under a waiver of the plan) that--
``(I) is not made under section 1923;
``(II) is not made with respect to a specific item or
service for an individual;
``(III) is in addition to any payments made to the provider
under the plan (or waiver) for any such item or service; and
``(IV) complies with the limits for additional payments to
providers under the plan (or waiver) imposed pursuant to
section 1902(a)(30)(A), including the regulations specifying
upper payment limits under the State plan in part 447 of
title 42, Code of Federal Regulations (or any successor
regulations).
``(iii) An expenditure described in this clause is an
expenditure that meets the criteria specified in subclauses
(I), (II), and (III) of clause (ii) and is authorized under
section 1115 for the purposes of funding a delivery system
reform pool, uncompensated care pool, a designated State
health program, or any other similar expenditure (as defined
by the Secretary).
``(B) For each 1903A enrollee category, the number of 1903A
enrollees for the State in fiscal year 2019 in the enrollee
category (as determined under subsection (e)(4)).
``(C) For the State's per capita base period, the State's
non-DSH supplemental and pool payment percentage is equal to
the ratio (expressed as a percentage) of--
``(i) the total amount of non-DSH supplemental expenditures
(as defined in subparagraph (A)(ii) and adjusted under
subparagraph (E)) and payments described in subparagraph
(A)(iii) (and adjusted under subparagraph (E)) for the State
for the period; to
``(ii) the amount described in subsection (b)(1)(A) for the
State for the State's per capita base period.
``(D) For each 1903A enrollee category an average medical
assistance expenditures per capita for the State for fiscal
year 2019 for the enrollee category equal to--
``(i) the amount calculated under subparagraph (A) for the
State, increased by the non-DSH supplemental and pool payment
percentage for the State (as calculated under subparagraph
(C)); divided by
``(ii) the number calculated under subparagraph (B) for the
State for the enrollee category.
``(E) For purposes of subparagraph (C)(i), in calculating
the total amount of non-DSH supplemental expenditures and
payments described in subparagraph (A)(iii) for a State for
the per capita base period, the total amount of such
expenditures and the total amount of such payments for the
State and base period shall each be divided by 2.
``(5) Provisional fy19 per capita target amount for each
1903a enrollee category.--Subject to subsection (f)(2), the
Secretary shall calculate for each State a provisional FY19
per capita target amount for each 1903A enrollee category
equal to the average medical assistance expenditures per
capita for the State for fiscal year 2019 (as calculated
under paragraph (4)(D)) for such enrollee category multiplied
by the ratio of--
``(A) the product of--
``(i) the fiscal year 2019 average per capita amount for
the State, as calculated under paragraph (2); and
``(ii) the number of 1903A enrollees for the State in
fiscal year 2019, as calculated under paragraph (3)(B); to
``(B) the amount of the adjusted total medical assistance
expenditures for the State for fiscal year 2019, as
calculated under paragraph (3)(A).
``(e) 1903A Enrollee; 1903A Enrollee Category.--Subject to
subsection (g), for purposes of this section, the following
shall apply:
``(1) 1903A enrollee.--The term `1903A enrollee' means,
with respect to a State and a month and subject to subsection
(i)(1)(B), any Medicaid enrollee (as defined in paragraph
(3)) for the month, other than such an enrollee who for such
month is in any of the following categories of excluded
individuals:
``(A) CHIP.--An individual who is provided, under this
title in the manner described in section 2101(a)(2), child
health assistance under title XXI.
``(B) IHS.--An individual who receives any medical
assistance under this title for services for which payment is
made under the third sentence of section 1905(b).
``(C) Breast and cervical cancer services eligible
individual.--An individual who is eligible for medical
assistance under this title only on the basis of section
1902(a)(10)(A)(ii)(XVIII).
``(D) Partial-benefit enrollees.--An individual who--
``(i) is an alien who is eligible for medical assistance
under this title only on the basis of section 1903(v)(2);
``(ii) is eligible for medical assistance under this title
only on the basis of subclause (XII) or (XXI) of section
1902(a)(10)(A)(ii) (or on the basis of a waiver that provides
only comparable benefits);
``(iii) is a dual eligible individual (as defined in
section 1915(h)(2)(B)) and is eligible for medical assistance
under this title (or under a waiver) only for some or all of
medicare cost-sharing (as defined in section 1905(p)(3)); or
``(iv) is eligible for medical assistance under this title
and for whom the State is providing a payment or subsidy to
an employer for coverage of the individual under a group
health plan pursuant to section 1906 or section 1906A (or
pursuant to a waiver that provides only comparable benefits).
``(E) Blind and disabled children.--An individual who--
``(i) is a child under 19 years of age; and
``(ii) is eligible for medical assistance under this title
on the basis of being blind or disabled.
``(2) 1903A enrollee category.--The term `1903A enrollee
category' means each of the following:
``(A) Elderly.--A category of 1903A enrollees who are 65
years of age or older.
``(B) Blind and disabled.--A category of 1903A enrollees
(not described in the previous subparagraph) who--
``(i) are 19 years of age or older; and
``(ii) are eligible for medical assistance under this title
on the basis of being blind or disabled.
``(C) Children.--A category of 1903A enrollees (not
described in a previous subparagraph) who are children under
19 years of age.
``(D) Other nonelderly, nondisabled, non-expansion
adults.--A category of 1903A enrollees who are not described
in any previous subparagraph.
``(3) Medicaid enrollee.--The term `Medicaid enrollee'
means, with respect to a State for a month, an individual who
is eligible for medical assistance for items or services
under this title and enrolled under the State plan (or a
waiver of such plan) under this title for the month.
``(4) Determination of number of 1903a enrollees.--The
number of 1903A enrollees for a State and fiscal year or the
State's per capita base period, and, if applicable, for a
1903A enrollee category, is the average monthly number of
Medicaid enrollees for such State and fiscal year or base
period (and, if applicable, in such category) that are
reported through the CMS-64 report under (and subject to
audit under) subsection (h).
``(f) Special Payment Rules.--
``(1) Application in case of research and demonstration
projects and other waivers.--In the case of a State with a
waiver of the State plan approved under section 1115, section
1915, or another provision of this

[[Page S5691]]

title, this section shall apply to medical assistance
expenditures and medical assistance payments under the
waiver, in the same manner as if such expenditures and
payments had been made under a State plan under this title
and the limitations on expenditures under this section shall
supersede any other payment limitations or provisions
(including limitations based on a per capita limitation)
otherwise applicable under such a waiver.
``(2) In case of state failure to report necessary data.--
If a State for any quarter in a fiscal year (beginning with
fiscal year 2019) fails to satisfactorily submit data on
expenditures and enrollees in accordance with subsection
(h)(1), for such fiscal year and any succeeding fiscal year
for which such data are not satisfactorily submitted--
``(A) the Secretary shall calculate and apply subsections
(a) through (e) with respect to the State as if all 1903A
enrollee categories for which such expenditure and enrollee
data were not satisfactorily submitted were a single 1903A
enrollee category; and
``(B) the growth factor otherwise applied under subsection
(c)(2)(B) shall be decreased by 1 percentage point.
``(g) Recalculation of Certain Amounts for Data Errors.--
The amounts and percentage calculated under paragraphs (1)
and (4)(C) of subsection (d) for a State for the State's per
capita base period, and the amounts of the adjusted total
medical assistance expenditures calculated under subsection
(b) and the number of Medicaid enrollees and 1903A enrollees
determined under subsection (e)(4) for a State for the
State's per capita base period, fiscal year 2019, and any
subsequent fiscal year, may be adjusted by the Secretary
based upon an appeal (filed by the State in such a form,
manner, and time, and containing such information relating to
data errors that support such appeal, as the Secretary
specifies) that the Secretary determines to be valid, except
that any adjustment by the Secretary under this subsection
for a State may not result in an increase of the target total
medical assistance expenditures exceeding 2 percent.
``(h) Required Reporting and Auditing; Transitional
Increase in Federal Matching Percentage for Certain
Administrative Expenses.--
``(1) Auditing of cms-64 data.--The Secretary shall conduct
for each State an audit of the number of individuals and
expenditures reported through the CMS-64 report for the
State's per capita base period, fiscal year 2019, and each
subsequent fiscal year, which audit may be conducted on a
representative sample (as determined by the Secretary).
``(2) Auditing of state spending.--The Inspector General of
the Department of Health and Human Services shall conduct an
audit (which shall be conducted using random sampling, as
determined by the Inspector General) of each State's spending
under this section not less than once every 3 years.
``(3) Temporary increase in federal matching percentage to
support improved data reporting systems for fiscal years 2018
and 2019.--In the case of any State that selects as its per
capita base period the most recent 8 consecutive quarter
period for which the data necessary to make the
determinations required under this section is available, for
amounts expended during calendar quarters beginning on or
after October 1, 2017, and before October 1, 2019--
``(A) the Federal matching percentage applied under section
1903(a)(3)(A)(i) shall be increased by 10 percentage points
to 100 percent; and
``(B) the Federal matching percentage applied under section
1903(a)(3)(B) shall be increased by 25 percentage points to
100 percent.
``(i) Delay of Per Capita Cap for Certain Low-density
States.--
``(1) In general.--Subsection (a) shall not to apply for a
fiscal year with respect to any State--
``(A) that has a population density of less than 15
individuals per square mile, based on the most recent data
available from the Bureau of the Census;
``(B) that is allotted an amount under section 2105(i) for
the calendar year that begins on January 1 of such fiscal
year that--
``(i) is less than--

``(I) the amount allotted to such State under such section
for calendar year 2020; increased by
``(II) the percentage increase in the medical care
component of the consumer price index for all urban consumers
(U.S. city average) from September of 2020 to September of
the last calendar year that ended before the fiscal year
involved; or

``(ii) is insufficient, as determined by the Secretary
(after taking into consideration the unique circumstances of
such State), to provide comprehensive and adequate assistance
to individuals in the State under a market-based health care
grant program under such section; and
``(C) for each fiscal year after fiscal year 2020, to which
subsection (a) did not apply for the previous fiscal year as
a result of the application of this subsection.
``If a State elects to terminate a Medicaid Flexibility
Program, the per capita cap limitations under section 1903A
shall apply effective with the day described in clause (i),
and such limitations shall be applied as if the State had
never conducted a Medicaid Flexibility Program.
``(2) Application of per capita cap after delay.--If a
State to which subsection (a) does not apply for a fiscal
year as a result of the application of this subsection is not
described in paragraph (1) in any subsequent fiscal year,
subsection (a)--
``(A) shall apply to such State effective with the first
day of such subsequent fiscal year; and
``(B) shall be applied as if it had applied to the State
from the first day of fiscal year 2020.''.
(b) Ensuring Access to Home and Community Based Services.--
Section 1915 of the Social Security Act (42 U.S.C. 1396n) is
amended by adding at the end the following new subsection:
``(l) Incentive Payments for Home and Community-based
Services.--
``(1) In general.--The Secretary shall establish a
demonstration project (referred to in this subsection as the
`demonstration project') under which eligible States may make
HCBS payment adjustments for the purpose of continuing to
provide and improving the quality of home and community-based
services provided under a waiver under subsection (c) or (d)
or a State plan amendment under subsection (i).
``(2) Selection of eligible states.--
``(A) Application.--A State seeking to participate in the
demonstration project shall submit to the Secretary, at such
time and in such manner as the Secretary shall require, an
application that includes--
``(i) an assurance that any HCBS payment adjustment made by
the State under this subsection will comply with the health
and welfare and financial accountability safeguards taken by
the State under subsection (c)(2)(A); and
``(ii) such other information and assurances as the
Secretary shall require.
``(B) Selection.--The Secretary shall select States to
participate in the demonstration project on a competitive
basis except that, in making selections under this paragraph,
the Secretary shall give priority to any State that is one of
the 15 States in the United States with the lowest population
density, as determined by the Secretary based on data from
the Bureau of the Census.
``(3) Term of demonstration project.--The demonstration
project shall be conducted for the 4-year period beginning on
January 1, 2020, and ending on December 31, 2023.
``(4) State allotments and increased fmap for payment
adjustments.--
``(A) In general.--
``(i) Annual allotment.--Subject to clause (ii), for each
year of the demonstration project, the Secretary shall allot
an amount to each State that is an eligible State for the
year.
``(ii) Limitation on federal spending.--The aggregate
amount that may be allotted to eligible States under clause
(i) for all years of the demonstration project shall not
exceed $8,000,000,000.
``(B) FMAP applicable to hcbs payment adjustments.--For
each year of the demonstration project, notwithstanding
section 1905(b) but subject to the limitations described in
subparagraph (C), the Federal medical assistance percentage
applicable with respect to expenditures by an eligible State
that are attributable to HCBS payment adjustments shall be
equal to (and shall in no case exceed) 100 percent.
``(C) Individual provider and allotment limitations.--
Payment under section 1903(a) shall not be made to an
eligible State for expenditures for a year that are
attributable to an HCBS payment adjustment--
``(i) that is paid to a single provider and exceeds a
percentage which shall be established by the Secretary of the
payment otherwise made to the provider; or
``(ii) to the extent that the aggregate amount of HCBS
payment adjustments made by the State in the year exceeds the
amount allotted to the State for the year under clause (i).
``(5) Reporting and evaluation.--
``(A) In general.--As a condition of receiving the
increased Federal medical assistance percentage described in
paragraph (4)(B), each eligible State shall collect and
report information, as determined necessary by the Secretary,
for the purposes of providing Federal oversight and
evaluating the State's compliance with the health and welfare
and financial accountability safeguards taken by the State
under subsection (c)(2)(A).
``(B) Forms.--Expenditures by eligible States on HCBS
payment adjustments shall be separately reported on the CMS-
64 Form and in T-MSIS.
``(6) Definitions.--In this subsection:
``(A) Eligible state.--The term `eligible State' means a
State that--
``(i) is one of the 50 States or the District of Columbia;
``(ii) has in effect--

``(I) a waiver under subsection (c) or (d); or
``(II) a State plan amendment under subsection (i);

``(iii) submits an application under paragraph (2)(A); and
``(iv) is selected by the Secretary to participate in the
demonstration project.
``(B) HCBS payment adjustment.--The term `HCBS payment
adjustment' means a payment adjustment made by an eligible
State to the amount of payment otherwise provided under a
waiver under subsection (c) or (d) or a State plan amendment
under subsection (i) for a home and community-based service
which is provided to a 1903A enrollee (as defined in section
1903A(e)(1)) who is in the enrollee category described in
subparagraph (A) or (B) of section 1903A(e)(2).''.

[[Page S5692]]

SEC. 125. FLEXIBLE BLOCK GRANT OPTION FOR STATES.

Title XIX of the Social Security Act, as previously
amended, is further amended by inserting after section 1903A
the following new section:

``SEC. 1903B. MEDICAID FLEXIBILITY PROGRAM.

``(a) In General.--Beginning with fiscal year 2020, any
State (as defined in subsection (e)) that has an application
approved by the Secretary under subsection (b) may conduct a
Medicaid Flexibility Program to provide targeted health
assistance to program enrollees.
``(b) State Application.--
``(1) In general.--To be eligible to conduct a Medicaid
Flexibility Program, a State shall submit an application to
the Secretary that meets the requirements of this subsection.
``(2) Contents of application.--An application under this
subsection shall include the following:
``(A) A description of the proposed Medicaid Flexibility
Program and how the State will satisfy the requirements
described in subsection (d).
``(B) The proposed conditions for eligibility of program
enrollees.
``(C) A description of the types, amount, duration, and
scope of services which will be offered as targeted health
assistance under the program, including a description of the
proposed package of services which will be provided to
program enrollees to whom the State would otherwise be
required to make medical assistance available under section
1902(a)(10)(A)(i).
``(D) A description of how the State will notify
individuals currently enrolled in the State plan for medical
assistance under this title of the transition to such
program.
``(E) Statements certifying that the State agrees to--
``(i) submit regular enrollment data with respect to the
program to the Centers for Medicare & Medicaid Services at
such time and in such manner as the Secretary may require;
``(ii) submit timely and accurate data to the Transformed
Medicaid Statistical Information System (T-MSIS);
``(iii) report annually to the Secretary on adult health
quality measures implemented under the program and
information on the quality of health care furnished to
program enrollees under the program as part of the annual
report required under section 1139B(d)(1);
``(iv) submit such additional data and information not
described in any of the preceding clauses of this
subparagraph but which the Secretary determines is necessary
for monitoring, evaluation, or program integrity purposes,
including--

``(I) survey data, such as the data from Consumer
Assessment of Healthcare Providers and Systems (CAHPS)
surveys;
``(II) birth certificate data; and
``(III) clinical patient data for quality measurements
which may not be present in a claim, such as laboratory data,
body mass index, and blood pressure; and

``(v) on an annual basis, conduct a report evaluating the
program and make such report available to the public.
``(F) An information technology systems plan demonstrating
that the State has the capability to support the
technological administration of the program and comply with
reporting requirements under this section.
``(G) A statement of the goals of the proposed program,
which shall include--
``(i) goals related to quality, access, rate of growth
targets, consumer satisfaction, and outcomes;
``(ii) a plan for monitoring and evaluating the program to
determine whether such goals are being met; and
``(iii) a proposed process for the State, in consultation
with the Centers for Medicare & Medicaid Services, to take
remedial action to make progress on unmet goals.
``(H) Such other information as the Secretary may require.
``(3) State notice and comment period.--
``(A) In general.--Before submitting an application under
this subsection, a State shall make the application publicly
available for a 30 day notice and comment period.
``(B) Notice and comment process.--During the notice and
comment period described in subparagraph (A), the State shall
provide opportunities for a meaningful level of public input,
which shall include public hearings on the proposed Medicaid
Flexibility Program.
``(4) Federal notice and comment period.--The Secretary
shall not approve of any application to conduct a Medicaid
Flexibility Program without making such application publicly
available for a 30 day notice and comment period.
``(5) Timeline for submission.--
``(A) In general.--A State may submit an application under
this subsection to conduct a Medicaid Flexibility Program
that would begin in the next fiscal year at any time, subject
to subparagraph (B).
``(B) Deadlines.--Each year beginning with 2019, the
Secretary shall specify a deadline for submitting an
application under this subsection to conduct a Medicaid
Flexibility Program that would begin in the next fiscal year,
but such deadline shall not be earlier than 60 days after the
date that the Secretary publishes the amounts of State block
grants as required under subsection (c)(4).
``(c) Financing.--
``(1) In general.--For each fiscal year during which a
State is conducting a Medicaid Flexibility Program, the State
shall receive, instead of amounts otherwise payable to the
State under this title for medical assistance for program
enrollees, the amount specified in paragraph (3)(A).
``(2) Amount of block grant funds.--
``(A) In general.--The block grant amount under this
paragraph for a State and year shall be equal to the amount
determined under subparagraph (B) for the State and year.
``(B) Enrollee category amounts.--
``(i) For initial year.--Subject to subparagraph (C), for
the first fiscal year in which a Medicaid Flexibility Program
is conducted by a State, the amount determined under this
subparagraph for the State and year shall be equal to the
Federal average medical assistance matching percentage (as
defined in section 1903A(a)(4)) for the State and year
multiplied by the product of--

``(I) the target per capita medical assistance expenditures
(as defined in section 1903A(c)(2)) for the State and year;
and
``(II) the number of 1903A enrollees in the category
described in section 1903A(e)(2)(D) for the State for the
second fiscal year preceding such first fiscal year,
increased by the percentage increase in State population from
such second preceding fiscal year to such first fiscal year,
based on the best available estimates of the Bureau of the
Census.

``(ii) For any subsequent year.--For any fiscal year that
is not the first fiscal year in which a Medicaid Flexibility
Program is conducted by the State, the block grant amount
under this paragraph for the State and year shall be equal to
the amount determined for the State for the most recent
previous fiscal year in which the State conducted a Medicaid
Flexibility Program, except that such amount shall be
increased by the percentage increase in the consumer price
index for all urban consumers (U.S. city average) from April
of the second fiscal year preceding the fiscal year involved
to April of the fiscal year preceding the fiscal year
involved.
``(C) Cap on total population of 1903a enrollees for
purposes of block grant calculation.--
``(i) In general.--In calculating the amount of a block
grant for the first year in which a Medicaid Flexibility
Program is conducted by the State under subparagraph (B)(i),
the total number of 1903A enrollees in the category described
in section 1903A(e)(2)(D) for the State and year shall not
exceed the adjusted number of base period enrollees for the
State (as defined in clause (ii)).
``(ii) Adjusted number of base period enrollees.--The term
`adjusted number of base period enrollees' means, with
respect to a State, the number of 1903A enrollees in the
enrollee category described in section 1903A(e)(2)(D) for the
State for the State's per capita base period (as determined
under section 1903A(e)(4)), increased by the percentage
increase, if any, in the total State population from the last
April in the State's per capita base period to April of the
fiscal year preceding the fiscal year involved (determined
using the best available data from the Bureau of the Census)
plus 3 percentage points.
``(3) Federal payment and state maintenance of effort.--
``(A) Federal payment.--Subject to subparagraphs (D) and
(E), the Secretary shall pay to each State conducting a
Medicaid Flexibility Program under this section for a fiscal
year, from its block grant amount under paragraph (2) for
such year, an amount for each quarter of such year equal to
the Federal average medical assistance percentage (as defined
in section 1903A(a)(4)) of the total amount expended under
the program during such quarter as targeted health
assistance, and the State is responsible for the balance of
the funds to carry out such program.
``(B) State maintenance of effort expenditures.--For each
year during which a State is conducting a Medicaid
Flexibility Program, the State shall make expenditures for
targeted health assistance under the program in an amount
equal to the product of--
``(i) the block grant amount determined for the State and
year under paragraph (2); and
``(ii) the enhanced FMAP described in the first sentence of
section 2105(b) for the State and year.
``(C) Reduction in block grant amount for states failing to
meet moe requirement.--
``(i) In general.--In the case of a State conducting a
Medicaid Flexibility Program that makes expenditures for
targeted health assistance under the program for a fiscal
year in an amount that is less than the required amount for
the fiscal year under subparagraph (B), the amount of the
block grant determined for the State under paragraph (2) for
the succeeding fiscal year shall be reduced by the amount by
which such expenditures are less than such required amount.
``(ii) Disregard of reduction.--For purposes of determining
the amount of a State block grant under paragraph (2), any
reduction made under this subparagraph to a State's block
grant amount in a previous fiscal year shall be disregarded.
``(iii) Application to states that terminate program.--In
the case of a State described in clause (i) that terminates
the State Medicaid Flexibility Program under subsection
(d)(2)(B) and such termination is effective with the end of
the fiscal year in which the State fails to make the required
amount of expenditures under subparagraph (B), the reduction
amount determined for the

[[Page S5693]]

State and succeeding fiscal year under clause (i) shall be
treated as an overpayment under this title.
``(D) Reduction for noncompliance.--If the Secretary
determines that a State conducting a Medicaid Flexibility
Program is not complying with the requirements of this
section, the Secretary may withhold payments, reduce
payments, or recover previous payments to the State under
this section as the Secretary deems appropriate.
``(E) Additional federal payments during public health
emergency.--
``(i) In general.--In the case of a State and fiscal year
or portion of a fiscal year for which the Secretary has
excluded expenditures under section 1903A(b)(6), if the State
has uncompensated targeted health assistance expenditures for
the year or portion of a year, the Secretary may make an
additional payment to such State equal to the Federal average
medical assistance percentage (as defined in section
1903A(a)(4)) for the year or portion of a year of the amount
of such uncompensated targeted health assistance
expenditures, except that the amount of such payment shall
not exceed the amount determined for the State and year or
portion of a year under clause (ii).
``(ii) Maximum amount of additional payment.--The amount
determined for a State and fiscal year or portion of a fiscal
year under this subparagraph shall not exceed the Federal
average medical assistance percentage (as defined in section
1903A(a)(4)) for such year or portion of a year of the amount
by which--

``(I) the amount of State expenditures for targeted health
assistance for program enrollees in areas of the State which
are subject to a declaration described in section
1903A(b)(6)(A)(i) for the year or portion of a year; exceeds
``(II) the amount of such expenditures for such enrollees
in such areas during the most recent fiscal year involved (or
portion of a fiscal year of equal length to the portion of a
fiscal year involved) during which no such declaration was in
effect.

``(iii) Uncompensated targeted health assistance.--In this
subparagraph, the term `uncompensated targeted health
assistance expenditures' means, with respect to a State and
fiscal year or portion of a fiscal year, an amount equal to
the amount (if any) by which--

``(I) the total amount expended by the State under the
program for targeted health assistance for the year or
portion of a year; exceeds
``(II) the amount equal to the amount of the block grant
(reduced, in the case of a portion of a year, to the same
proportion of the full block grant amount that the portion of
the year bears to the whole year) divided by the Federal
average medical assistance percentage for the year or portion
of a year.

``(iv) Review.--If the Secretary makes a payment to a State
for a fiscal year or portion of a fiscal year, the Secretary
shall, not later than 6 months after the declaration
described in section 1903A(b)(6)(A)(i) ceases to be in
effect, conduct an audit of the State's targeted health
assistance expenditures for program enrollees during the year
or portion of a year to ensure that all of the expenditures
for which the additional payment was made were made for the
purpose of ensuring that the health care needs of program
enrollees in areas affected by a public health emergency are
met.
``(4) Determination and publication of block grant
amount.--Beginning in 2019 and each year thereafter, the
Secretary shall determine for each State, regardless of
whether the State is conducting a Medicaid Flexibility
Program or has submitted an application to conduct such a
program, the amount of the block grant for the State under
paragraph (2) which would apply for the upcoming fiscal year
if the State were to conduct such a program in such fiscal
year, and shall publish such determinations not later than
June 1 of each year.
``(d) Program Requirements.--
``(1) In general.--No payment shall be made under this
section to a State conducting a Medicaid Flexibility Program
unless such program meets the requirements of this
subsection.
``(2) Term of program.--
``(A) In general.--A State Medicaid Flexibility Program
approved under subsection (b)--
``(i) shall be conducted for not less than 1 program
period;
``(ii) at the option of the State, may be continued for
succeeding program periods without resubmitting an
application under subsection (b), provided that--

``(I) the State provides notice to the Secretary of its
decision to continue the program; and
``(II) no significant changes are made to the program; and

``(iii) shall be subject to termination only by the State,
which may terminate the program by making an election under
subparagraph (B).
``(B) Election to terminate program.--
``(i) In general.--Subject to clause (ii), a State
conducting a Medicaid Flexibility Program may elect to
terminate the program effective with the first day after the
end of the program period in which the State makes the
election.
``(ii) Transition plan requirement.--A State may not elect
to terminate a Medicaid Flexibility Program unless the State
has in place an appropriate transition plan approved by the
Secretary.
``(iii) Effect of termination.--If a State elects to
terminate a Medicaid Flexibility Program, the per capita cap
limitations under section 1903A shall apply effective with
the day described in clause (i), and such limitations shall
be applied as if the State had never conducted a Medicaid
Flexibility Program.
``(3) Provision of targeted health assistance.--
``(A) In general.--A State Medicaid Flexibility Program
shall provide targeted health assistance to program enrollees
and such assistance shall be instead of medical assistance
which would otherwise be provided to the enrollees under this
title.
``(B) Conditions for eligibility.--
``(i) In general.--A State conducting a Medicaid
Flexibility Program shall establish conditions for
eligibility of program enrollees, which shall be instead of
other conditions for eligibility under this title, except
that the program must provide for eligibility for program
enrollees to whom the State would otherwise be required to
make medical assistance available under section
1902(a)(10)(A)(i).
``(ii) MAGI.--Any determination of income necessary to
establish the eligibility of a program enrollee for purposes
of a State Medicaid Flexibility Program shall be made using
modified adjusted gross income in accordance with section
1902(e)(14).
``(4) Benefits and services.--
``(A) Required services.--In the case of program enrollees
to whom the State would otherwise be required to make medical
assistance available under section 1902(a)(10)(A)(i), a State
conducting a Medicaid Flexibility Program shall provide as
targeted health assistance the following types of services:
``(i) Inpatient and outpatient hospital services.
``(ii) Laboratory and X-ray services.
``(iii) Nursing facility services for individuals aged 21
and older.
``(iv) Physician services.
``(v) Home health care services (including home nursing
services, medical supplies, equipment, and appliances).
``(vi) Rural health clinic services (as defined in section
1905(l)(1)).
``(vii) Federally-qualified health center services (as
defined in section 1905(l)(2)).
``(viii) Family planning services and supplies.
``(ix) Nurse midwife services.
``(x) Certified pediatric and family nurse practitioner
services.
``(xi) Freestanding birth center services (as defined in
section 1905(l)(3)).
``(xii) Emergency medical transportation.
``(xiii) Non-cosmetic dental services.
``(xiv) Pregnancy-related services, including postpartum
services for the 12-week period beginning on the last day of
a pregnancy.
``(B) Optional benefits.--A State may, at its option,
provide services in addition to the services described in
subparagraph (A) as targeted health assistance under a
Medicaid Flexibility Program.
``(C) Benefit packages.--
``(i) In general.--The targeted health assistance provided
by a State to any group of program enrollees under a Medicaid
Flexibility Program shall have an aggregate actuarial value
that is equal to at least 95 percent of the aggregate
actuarial value of the benchmark coverage described in
subsection (b)(1) of section 1937 or benchmark-equivalent
coverage described in subsection (b)(2) of such section, as
such subsections were in effect prior to the enactment of the
Patient Protection and Affordable Care Act.
``(ii) Amount, duration, and scope of benefits.--Subject to
clause (i), the State shall determine the amount, duration,
and scope with respect to services provided as targeted
health assistance under a Medicaid Flexibility Program,
including with respect to services that are required to be
provided to certain program enrollees under subparagraph (A)
except as otherwise provided under such subparagraph.
``(iii) Mental health and substance use disorder coverage
and parity.--The targeted health assistance provided by a
State to program enrollees under a Medicaid Flexibility
Program shall include mental health services and substance
use disorder services and the financial requirements and
treatment limitations applicable to such services under the
program shall comply with the requirements of section 2726 of
the Public Health Service Act in the same manner as such
requirements apply to a group health plan.
``(iv) Prescription drugs.--If the targeted health
assistance provided by a State to program enrollees under a
Medicaid Flexibility Program includes assistance for covered
outpatient drugs, such drugs shall be subject to a rebate
agreement that complies with the requirements of section
1927, and any requirements applicable to medical assistance
for covered outpatient drugs under a State plan (including
the requirement that the State provide information to a
manufacturer) shall apply in the same manner to targeted
health assistance for covered outpatient drugs under a
Medicaid Flexibility Program.
``(D) Cost sharing.--A State conducting a Medicaid
Flexibility Program may impose premiums, deductibles, cost-
sharing, or other similar charges, except that the total
annual aggregate amount of all such charges imposed with
respect to all program enrollees in a family shall not exceed
5 percent of the family's income for the year involved.

[[Page S5694]]

``(5) Administration of program.--Each State conducting a
Medicaid Flexibility Program shall do the following:
``(A) Single agency.--Designate a single State agency
responsible for administering the program.
``(B) Enrollment simplification and coordination with state
health insurance exchanges.--Provide for simplified
enrollment processes (such as online enrollment and
reenrollment and electronic verification) and coordination
with State health insurance exchanges.
``(C) Beneficiary protections.--Establish a fair process
(which the State shall describe in the application required
under subsection (b)) for individuals to appeal adverse
eligibility determinations with respect to the program.
``(6) Application of rest of title xix.--
``(A) In general.--To the extent that a provision of this
section is inconsistent with another provision of this title,
the provision of this section shall apply.
``(B) Application of section 1903a.--With respect to a
State that is conducting a Medicaid Flexibility Program,
section 1903A shall be applied as if program enrollees were
not 1903A enrollees for each program period during which the
State conducts the program.
``(C) Waivers and state plan amendments.--
``(i) In general.--In the case of a State conducting a
Medicaid Flexibility Program that has in effect a waiver or
State plan amendment, such waiver or amendment shall not
apply with respect to the program, targeted health assistance
provided under the program, or program enrollees.
``(ii) Replication of waiver or amendment.--In designing a
Medicaid Flexibility Program, a State may mirror provisions
of a waiver or State plan amendment described in clause (i)
in the program to the extent that such provisions are
otherwise consistent with the requirements of this section.
``(iii) Effect of termination.--In the case of a State
described in clause (i) that terminates its program under
subsection (d)(2)(B), any waiver or amendment which was
limited pursuant to subparagraph (A) shall cease to be so
limited effective with the effective date of such
termination.
``(D) Nonapplication of provisions.--With respect to the
design and implementation of Medicaid Flexibility Programs
conducted under this section, paragraphs (1), (10)(B), (17),
and (23) of section 1902(a), as well as any other provision
of this title (except for this section and as otherwise
provided by this section) that the Secretary deems
appropriate, shall not apply.
``(e) Definitions.--For purposes of this section:
``(1) Medicaid flexibility program.--The term `Medicaid
Flexibility Program' means a State program for providing
targeted health assistance to program enrollees funded by a
block grant under this section.
``(2) Program enrollee.--
``(A) In general.--The term `program enrollee' means, with
respect to a State that is conducting a Medicaid Flexibility
Program for a program period, an individual who is a 1903A
enrollee (as defined in section 1903A(e)(1)) who is in the
1903A enrollee category described in section 1903A(e)(2)(D).
``(B) Rule of construction.--For purposes of section
1903A(e)(3), eligibility and enrollment of an individual
under a Medicaid Flexibility Program shall be deemed to be
eligibility and enrollment under a State plan (or waiver of
such plan) under this title.
``(3) Program period.--The term `program period' means,
with respect to a State Medicaid Flexibility Program, a
period of 5 consecutive fiscal years that begins with
either--
``(A) the first fiscal year in which the State conducts the
program; or
``(B) the next fiscal year in which the State conducts such
a program that begins after the end of a previous program
period.
``(4) State.--The term `State' means one of the 50 States
or the District of Columbia.
``(5) Targeted health assistance.--The term `targeted
health assistance' means assistance for health-care-related
items and medical services for program enrollees.''.

SEC. 126. MEDICAID AND CHIP QUALITY PERFORMANCE BONUS
PAYMENTS.

Section 1903 of the Social Security Act (42 U.S.C. 1396b),
as previously amended, is further amended by adding at the
end the following new subsection:
``(bb) Quality Performance Bonus Payments.--
``(1) Increased federal share.--With respect to each of
fiscal years 2023 through 2026, in the case of one of the 50
States or the District of Columbia (each referred to in this
subsection as a `State') that--
``(A) equals or exceeds the qualifying amount (as
established by the Secretary) of lower than expected
aggregate medical assistance expenditures (as defined in
paragraph (4)) for that fiscal year; and
``(B) submits to the Secretary, in accordance with such
manner and format as specified by the Secretary and for the
performance period (as defined by the Secretary) for such
fiscal year--
``(i) information on the applicable quality measures
identified under paragraph (3) with respect to each category
of Medicaid eligible individuals under the State plan or a
waiver of such plan; and
``(ii) a plan for spending a portion of additional funds
resulting from application of this subsection on quality
improvement within the State plan under this title or under a
waiver of such plan,

the Federal matching percentage otherwise applied under
subsection (a)(7) for such fiscal year shall be increased by
such percentage (as determined by the Secretary) so that the
aggregate amount of the resulting increase pursuant to this
subsection for the State and fiscal year does not exceed the
State allotment established under paragraph (2) for the State
and fiscal year.
``(2) Allotment determination.--The Secretary shall
establish a formula for computing State allotments under this
paragraph for each fiscal year described in paragraph (1)
such that--
``(A) such an allotment to a State is determined based on
the performance, including improvement, of such State under
this title and title XXI with respect to the quality measures
submitted under paragraph (3) by such State for the
performance period (as defined by the Secretary) for such
fiscal year; and
``(B) the total of the allotments under this paragraph for
all States for the period of the fiscal years described in
paragraph (1) is equal to $8,000,000,000.
``(3) Quality measures required for bonus payments.--For
purposes of this subsection, the Secretary shall, pursuant to
rulemaking and after consultation with State agencies
administering State plans under this title, identify and
publish (and update as necessary) peer-reviewed quality
measures (which shall include health care and long-term care
outcome measures and may include the quality measures that
are overseen or developed by the National Committee for
Quality Assurance or the Agency for Healthcare Research and
Quality or that are identified under section 1139A or 1139B)
that are quantifiable, objective measures that take into
account the clinically appropriate measures of quality for
different types of patient populations receiving benefits or
services under this title or title XXI.
``(4) Lower than expected aggregate medical assistance
expenditures.--In this subsection, the term `lower than
expected aggregate medical assistance expenditures' means,
with respect to a State the amount (if any) by which--
``(A) the amount of the adjusted total medical assistance
expenditures for the State and fiscal year determined in
section 1903A(b)(1) without regard to the 1903A enrollee
category described in section 1903A(e)(2)(E); is less than
``(B) the amount of the target total medical assistance
expenditures for the State and fiscal year determined in
section 1903A(c) without regard to the 1903A enrollee
category described in section 1903A(e)(2)(E).''.

SEC. 127. OPTIONAL ASSISTANCE FOR CERTAIN INPATIENT
PSYCHIATRIC SERVICES.

(a) State Option.--Section 1905 of the Social Security Act
(42 U.S.C. 1396d) is amended--
(1) in subsection (a)--
(A) in paragraph (16)--
(i) by striking ``and, (B)'' and inserting ``(B)''; and
(ii) by inserting before the semicolon at the end the
following: ``, and (C) subject to subsection (h)(4),
qualified inpatient psychiatric hospital services (as defined
in subsection (h)(3)) for individuals who are over 21 years
of age and under 65 years of age''; and
(B) in the subdivision (B) that follows paragraph (29), by
inserting ``(other than services described in subparagraph
(C) of paragraph (16) for individuals described in such
subparagraph)'' after ``patient in an institution for mental
diseases''; and
(2) in subsection (h), by adding at the end the following
new paragraphs:
``(3) For purposes of subsection (a)(16)(C), the term
`qualified inpatient psychiatric hospital services' means,
with respect to individuals described in such subsection,
services described in subparagraph (B) of paragraph (1) that
are not otherwise covered under subsection (a)(16)(A) and are
furnished--
``(A) in an institution (or distinct part thereof) which is
a psychiatric hospital (as defined in section 1861(f)); and
``(B) with respect to such an individual, for a period not
to exceed 30 consecutive days in any month and not to exceed
90 days in any calendar year.
``(4) As a condition for a State including qualified
inpatient psychiatric hospital services as medical assistance
under subsection (a)(16)(C), the State must (during the
period in which it furnishes medical assistance under this
title for services and individuals described in such
subsection)--
``(A) maintain at least the number of licensed beds at
psychiatric hospitals owned, operated, or contracted for by
the State that were being maintained as of the date of the
enactment of this paragraph or, if higher, as of the date the
State applies to the Secretary to include medical assistance
under such subsection; and
``(B) maintain on an annual basis a level of funding
expended by the State (and political subdivisions thereof)
other than under this title from non-Federal funds for
inpatient services in an institution described in paragraph
(3)(A), and for active psychiatric care and treatment
provided on an outpatient basis, that is not less than the
level of such funding for such services and care as of the
date of the enactment of this paragraph or, if higher, as of
the date the State applies to the Secretary to include
medical assistance under such subsection.''.

[[Page S5695]]

(b) Special Matching Rate.--Section 1905(b) of the Social
Security Act (42 U.S.C. 1395d(b)) is amended by adding at the
end the following: ``Notwithstanding the previous provisions
of this subsection, the Federal medical assistance percentage
shall be 50 percent with respect to medical assistance for
services and individuals described in subsection (a)(16)(C),
except that, in the case of a State for which the Federal
medical assistance percentage applicable to such assistance
for such services and individuals on September 30, 2018, was
greater than 50 percent, such greater percentage shall
continue to apply with respect to medical assistance provided
by such State for such services and individuals.''.
(c) Effective Date.--The amendments made by this section
shall apply to qualified inpatient psychiatric hospital
services furnished on or after October 1, 2018.

SEC. 128. ENHANCED FMAP FOR MEDICAL ASSISTANCE TO ELIGIBLE
INDIANS.

Section 1905(b) of the Social Security Act (42 U.S.C.
1396d(b)) is amended, in the third sentence, by inserting
``and with respect to amounts expended by a State as medical
assistance for services provided by any other provider under
the State plan to an individual who is a member of an Indian
tribe who is eligible for assistance under the State plan''
before the period.

SEC. 129. NON-APPLICATION OF DSH CUTS FOR STATES WITH LOW
MARKET-BASED HEALTH CARE GRANT ALLOTMENTS; ONE-
TIME DSH ALLOTMENT INCREASE FOR 2026.

Section 1923(f)(7) of the Social Security Act (42 U.S.C.
1396r-4(f)(7)) is amended by adding at the end the following
new subparagraph:
``(C) Low-grant states.--
``(i) In general.--For each of fiscal years 2021 through
2025, the amount of the reduction specified under
subparagraph (B) for a State and fiscal year shall be reduced
by the grant shortfall amount for the State and year.
``(ii) One-time increase for fiscal 2026.--

``(I) In general.--Any State that has a grant shortfall
amount for fiscal year 2026 shall be eligible for a one-time
increase in the State's DSH allotment for fiscal year 2026 in
the amount described in subclause (II).
``(II) Amount of increase.--Subject to clause (III), the
amount described in this subclause for a State shall be equal
to--

``(aa) the total amount of the reductions specified for the
State under subparagraph (B) for each of fiscal years 2018
through 2025; minus
``(bb) the total amount of any reductions for each of
fiscal years 2021 through 2025 under clause (i).

``(III) Limitation.--The amount of the increase for a State
and fiscal year under this clause shall not exceed the grant
shortfall amount for the State and year.

``(iii) Grant shortfall amount defined.--

``(I) In general.--In this subparagraph, the term `grant
shortfall amount' means, with respect to a State and a fiscal
year, the amount, if any, by which the amount that was
allotted to the State under section 2105(i) for the last
calendar year that began before the end of such fiscal year
is less than--

``(aa) the amount allotted to such State under such section
for calendar year 2020; increased by
``(bb) the percentage increase in the medical care
component of the consumer price index for all urban consumers
(U.S. city average) from September of 2020 to September of
the last calendar year that ended before the fiscal year
involved.

``(II) Limitation.--For fiscal years before fiscal year
2026, in no case shall the grant shortfall amount for a State
and a fiscal year exceed the amount of the reduction
specified under subparagraph (B) for the State and fiscal
year.''.

TITLE II

SEC. 201. THE PREVENTION AND PUBLIC HEALTH FUND.

Subsection (b) of section 4002 of the Patient Protection
and Affordable Care Act (42 U.S.C. 300u-11) is amended--
(1) in paragraph (3), by striking ``each of fiscal years
2018 and 2019'' and inserting ``fiscal year 2018''; and
(2) by striking paragraphs (4) through (8).

SEC. 202. COMMUNITY HEALTH CENTER PROGRAM.

Effective as if included in the enactment of the Medicare
Access and CHIP Reauthorization Act of 2015 (Public Law 114-
10, 129 Stat. 87), paragraph (1) of section 221(a) of such
Act is amended by inserting ``, and an additional
$422,000,000 for fiscal year 2017'' after ``2017''.

SEC. 203. ALLOWING ALL INDIVIDUALS PURCHASING HEALTH
INSURANCE IN THE INDIVIDUAL MARKET THE OPTION
TO PURCHASE A LOWER PREMIUM CATASTROPHIC PLAN.

(a) In General.--Section 1302(e) of the Patient Protection
and Affordable Care Act (42 U.S.C. 18022(e)) is amended by
adding at the end the following:
``(4) Consumer freedom.--For plan years beginning on or
after January 1, 2019, paragraph (1)(A) shall not apply with
respect to any plan offered in the State.''.
(b) Risk Pools.--Section 1312(c) of the Patient Protection
and Affordable Care Act (42 U.S.C. 18032(c)) is amended--
(1) in paragraph (1), by inserting ``and including, with
respect to plan years beginning on or after January 1, 2019,
enrollees in catastrophic plans described in section
1302(e)'' after ``Exchange''; and
(2) in paragraph (2), by inserting ``and including, with
respect to plan years beginning on or after January 1, 2019,
enrollees in catastrophic plans described in section
1302(e)'' after ``Exchange''.

SEC. 204. APPLICATION OF ENFORCEMENT PENALTIES.

(a) In General.--Section 2723 of the Public Health Service
Act (42 U.S.C. 300gg-22) is amended--
(1) in subsection (a)--
(A) in paragraph (1), by inserting ``and of section 1303 of
the Patient Protection and Affordable Care Act'' after ``this
part''; and
(B) in paragraph (2), by inserting ``or in such section
1303'' after ``this part''; and
(2) in subsection (b)--
(A) in paragraphs (1) and (2)(A), by inserting ``or section
1303 of the Patient Protection and Affordable Care Act''
after ``this part'' each place such term appears;
(B) in paragraph (2)(C)(ii), by inserting ``and section
1303 of the Patient Protection and Affordable Care Act''
after ``this part''.
(b) Effect of Waiver.--A State waiver pursuant to section
1332 of the Patient Protection and Affordable Care Act (42
U.S.C. 18052) shall not affect the authority of the Secretary
to impose penalties under section 2723 of the Public Health
Service Act (42 U.S.C. 300gg-22).

SEC. 205. REPEAL OF COST-SHARING SUBSIDY PROGRAM.

(a) In General.--Section 1402 of the Patient Protection and
Affordable Care Act is repealed.
(b) Effective Date.--The repeal made by subsection (a)
shall apply to cost-sharing reductions (and payments to
issuers for such reductions) for plan years beginning after
December 31, 2019.
______