SECTION 1. REFERENCES TO SOCIAL SECURITY ACT.

    Except as otherwise specifically provided, whenever in this Act an 
amendment is expressed in terms of an amendment to or repeal of a 
section or other provision, the reference shall be considered to be 
made to that section or other provision of the Social Security Act.

SEC. 2. DEFINITION OF FUNCTIONALLY DISABLED ELDERLY INDIVIDUAL.

    Section 1929(b)(1)(C) (42 U.S.C. 1396t(b)(1)(C)) is amended to read 
as follows:
                    ``(C) subject to section 1902(f) (as applied 
                consistent with section 1902(r)(2))--
                            ``(i) is receiving supplemental security 
                        income benefits under title XVI (or under a 
                        State plan approved under title XVI), or
                            ``(ii) at the option of the State--
                                    ``(I) is described in section 
                                1902(a)(10)(C), or
                                    ``(II) has income (as determined 
                                under section 1612 for purposes of the 
                                supplementary security income program) 
                                that does not exceed three times the 
                                maximum amount of income that an 
                                individual may have and obtain benefits 
                                under such program.''.

SEC. 3. DETERMINATIONS OF FUNCTIONAL DISABILITY.

    Section 1929(c)(1) (42 U.S.C. 1396t(c)(1)) is amended--
            (1) in subparagraph (A)--
                    (A) by striking ``3'' and inserting ``5'', and
                    (B) by striking ``toileting, transferring, and 
                eating; or'' and inserting ``bathing, dressing, 
                toileting, transferring, and eating;'',
            (2) in subparagraph (B)--
                    (A) by striking ``of the following 5 activities of 
                daily living: bathing, dressing, toileting, 
                transferring, and eating'' and inserting ``of the 5 
                activities of daily living described in subparagraph 
                (A)'', and
                    (B) by striking the period at the end and inserting 
                ``; or'', and
            (3) by adding at the end the following new subparagraph:
                    ``(C) needs substantial supervision due to 
                cognitive or other mental impairment resulting in 
                behaviors that are dangerous (to the individual or 
                others), disruptive, or difficult to manage.''.

SEC. 4. LIMITATION ON PARTICIPATION OF STATES IN PROGRAM.

    (a) In General.--Section 1929(m) (42 U.S.C. 1396t(m)) is amended--
            (1) by redesignating paragraphs (2), (3), and (4), as 
        paragraphs (3), (4), and (5), respectively;
            (2) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) Participation of states.--
                    ``(A) Applications by states.--Each State desiring 
                to provide home and community care under this section 
                shall submit an application to the Secretary at such 
                time and in such manner as the Secretary determines 
                appropriate.
                    ``(B) Criteria for selection of participating 
                states.--The Secretary shall develop criteria to review 
                the applications of States submitted under this section 
                to provide home and community care.
                    ``(C) Limit on number of participating states.--The 
                Secretary shall select no more than 25 States to 
                receive Federal financial participation for providing 
                home and community care.''.
    (b) Conforming Amendments.--Section 1929 (42 U.S.C. 1396t) is 
amended--
            (1) in subsection (b)(2)(A)(i), by striking ``election'' 
        and inserting ``selection under subsection (m)(2)'';
            (2) in subsection (b)(2)(B), by striking ``a State'' and 
        inserting ``a State selected to provide home and community 
        care'';
            (3) in subsection (b)(3), by striking ``a State'' and 
        inserting ``a State selected to provide such care'';
            (4) in subsection (c)(2)(A), by striking ``has elected'' 
        and inserting ``is selected'';
            (5) in subsection (c)(2)(G), by striking ``which elects'' 
        and inserting ``which is selected'';
            (6) in subsection (d)(3), by striking ``which elects'' and 
        inserting ``which is selected'';
            (7) in subsection (i)(1)(A), by striking ``under this 
        title'' and inserting ``under this title of a State which is 
        selected to provide home and community care under this 
        section'';
            (8) in subsection (i)(3)(A), by striking ``each State's'' 
        and inserting ``a State's'';
            (9) in subsection (i)(3)(D)--
                    (A) by striking ``each State'' and inserting ``each 
                State which is selected to provide home and community 
                care under this section''; and
                    (B) by striking ``each State's'' and inserting 
                ``each such State's'';
            (10) in subsection (i)(4), by striking ``Each State'' and 
        inserting ``Each State which is selected to provide home and 
        community care under this section'';
            (11) in subsection (i)(6)(A), by striking ``Each State'' 
        and inserting ``Each State which is selected to provide home 
        and community care under this section'';
            (12) in subsection (i)(6)(C), by striking ``Each State'' 
        and inserting ``Each State which is selected to provide home 
        and community care under this section'';
            (13) in subsection (j)(1)(B)(i), by striking ``Each State'' 
        and inserting ``Each State which is selected to provide home 
        and community care under this section'';
            (14) in subsection (j)(1)(B)(ii), by striking ``which 
        elects'' and inserting ``which is selected''; and
            (15) in paragraph (5) of subsection (m), by striking 
        ``paragraph (2)'' and inserting ``paragraph (3)''.

SEC. 5. LIMITATION ON NUMBER OF INDIVIDUALS ELIGIBLE TO PARTICIPATE.

    Section 1929(m)(3) (42 U.S.C. 1396t(m)(3)), as redesignated, is 
amended by striking ``, without regard to the amount of funds available 
to the State under paragraph (1).''. and inserting ``. If a State 
determines that the amount of funds available to such State under 
paragraph (1) is insufficient to serve all individuals described in 
subsection (b), such State may, at any time during an election period, 
limit the number of individuals who will receive home and community 
care under this section.''.

SEC. 6. APPLICATION OF SPOUSAL IMPOVERISHMENT RULES UNDER MEDICAID TO 
              SPOUSES OF INDIVIDUALS RECEIVING HOME OR COMMUNITY-BASED 
              SERVICES.

    Section 1924(h)(1)(A) (42 U.S.C. 1396r-5(h)(1)(A)) is amended to 
read as follows:
                    ``(A)(i) is in a medical institution or nursing 
                facility; or
                    ``(ii) is described in section 
                1902(a)(10)(A)(ii)(VI) (except that for purposes of 
                subsection (d), such term shall include such individual 
                only if the State elects to apply such subsection to 
                the individual); and''.

SEC. 7. EFFECTIVE DATE.

    The amendments made by this Act shall be effective on the date of 
the enactment of this Act.
Amends title XIX (Medicaid) of the Social Security Act with respect to the home- and community-based care program to:  (1) revise income and disability eligibility requirements; (2) limit the number of States which may participate in such program; (3) permit States to limit the number of individuals who may receive program services; and (4) revise application of Medicaid spousal impoverishment rules to spouses of individuals receiving program services.
A bill to amend title XIX of the Social Security Act to improve the program related to home and community based care.