# H.R. 3200/Division B/Title VII/Subtitle A
## SUBTITLE A — MEDICAID AND HEALTH REFORM
### Sec. 1701. Eligibility for Individuals with Income Below 133 1⁄3 Percent of the Federal Poverty Level..

    (a) Eligibility for Non-traditional Individuals with Income Below 133 Percent of the Federal Poverty Level.—
          (1) In General.—
             Section 1902(a)(10)(A)(i) of the Social Security Act (42 U.S.C. 1396b(a)(10)(A)(i) is amended—
                (A) by striking ``or´´ at the end of subclause (VI);
                (B) by adding ``or´´ at the end of subclause (VII); and
                (C) by adding at the end the following new subclause:
                   ``(VIII) who are under 65 years of age, who are not described in a previous subclause of this clause, and who are in families whose income (determined using methodologies and procedures specified by the Secretary in consultation with the Health Choices Commissioner) does not exceed 1331⁄3 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved;´´.
          (2) 100% FMAP for Non-Traditional Medicaid Eligible Individuals.—
             Section 1905 of such Act (42 U.S.C. 1396d) is amended—
                (A) in the third sentence of subsection (b) by inserting before the period at the end the following: ``and with respect to amounts described in subsection (y)´´; and
                (B) by adding at the end the following new subsection:
                   ``(y) Additional expenditures subject to 100% FMAP.—For purposes of section 1905(b), the amounts described in this subsection are the following:
                      ``(1) Amounts expended for medical assistance for individuals described in subclause (VIII) of section 1902(a)(10)(A)(i).´´.
          (3) Construction.—
             Nothing in this subsection shall be construed as not providing for coverage under subclause (VIII) of section 1902(a)(10)(A)(i) of the Social Security Act, as added by paragraph (1) of, and an increased FMAP under the amendment made by paragraph (2) for, an individual who has been provided medical assistance under title XIX of the Act under a demonstration waiver approved under section 1115 of such Act or with State funds.
          (4) Conforming Amendment.—
             Section 1903(f)(4) of the Social Security Act (42 U.S.C. 1396b(f)(4)) is amended by inserting ``1902(a)(10)(A)(i)(VIII),´´ after ``1902(a)(10)(A)(i)(VII),´´.
    (b) Eligibility for traditional Medicaid eligible individuals with income not exceeding 1331⁄3 percent of the Federal poverty level.—
          (1) In General.—
             Section 1902(a)(10)(A)(i) of the Social Security Act (42 U.S.C. 1396b(a)(10)(A)(i)), as amended by subsection (a), is amended—
                (A) by striking ``or´´ at the end of subclause (VII);
                (B) by adding ``or´´ at the end of subclause (VIII); and
                (C) by adding at the end the following new subclause:
                   ``(IX) who are under 65 years of age, who would be eligible for medical assistance under the State plan under one of subclauses (I) through (VII) (based on the income standards, methodologies, and procedures in effect as of June 16, 2009) but for income and who are in families whose income does not exceed 1331⁄3 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved;´´.
          (2) 100% FMAP for Certain Traditional Medicaid Eligible Individuals.—
             Section 1905(y) of such Act (42 U.S.C. 1396d(b)), as added by subsection (a)(2)(B), is amended by inserting ``or (IX)´´ after ``(VIII)´´.
          (3) Construction.—
             Nothing in this subsection shall be construed as not providing for coverage under subclause (IX) of section 1902(a)(10)(A)(i) of the Social Security Act, as added by paragraph (1) of, and an increased FMAP under the amendment made by paragraph (2) for, an individual who has been provided medical assistance under title XIX of the Act under a demonstration waiver approved under section 1115 of such Act or with State funds.
          (4) Conforming Amendment.—
             Section 1903(f)(4) of the Social Security Act (42 U.S.C. 1396b(f)(4)), as amended by subsection (a)(4), is amended by inserting ``1902(a)(10)(A)(i)(IX),´´ after ``1902(a)(10)(A)(i)(VIII),´´.
    (c) 100% Matching Rate for Temporary Coverage of Certain Newborns.—
       Section 1905(y) of such Act, as added by subsection (a)(2)(B), is amended—
          (1) in paragraph (1), by inserting before the period at the end the following: ``, and who is not provided medical assistance under section 1943(b)(2) of this title or section 205(d)(1)(B) of the America's Affordable Health Choices Act of 2009´´; and
          (2) by adding at the end the following:
             ``(2) Amounts expended for medical assistance for children described in section 203(d)(1)(A) of the America's Affordable Health Choices Act of 2009 during the time period specified in such section.´´.
    (d) Network Adequacy.—
       Section 1932(a)(2) of the Social Security Act (42 U.S.C. 1396u–2(a)(2)) is amended by adding at the end the following new subparagraph:
          ``(D) Enrollment of non-traditional Medicaid eligibles.—A State may not require under paragraph (1) the enrollment in a managed care entity of an individual described in section 1902(a)(10)(A)(i)(VIII) unless the State demonstrates, to the satisfaction of the Secretary, that the entity, through its provider network and other arrangements, has the capacity to meet the health, mental health, and substance abuse needs of such individuals.´´.
    (e) Effective Date.—
       The amendments made by this section shall take effect on the first day of Y1, and shall apply with respect to items and services furnished on or after such date.

### Sec. 1702. Requirements and Special Rules for Certain Medicaid Eligible Individuals.

    (a) In General.—
       Title XIX of the Social Security Act is amended by adding at the end the following new section:
``Requirements and special rules for certain Medicaid eligible individuals
          ``Sec. 1943. (a) Coordination with NHI Exchange through memorandum of understanding.—
             ``(1) In general.—The State shall enter into a Medicaid memorandum of understanding described in section 204(e)(4) of the America’s Affordable Health Choices Act of 2009 with the Health Choices Commissioner, acting in consultation with the Secretary, with respect to coordinating the implementation of the provisions of division A of such Act with the State plan under this title in order to ensure the enrollment of Medicaid eligible individuals in acceptable coverage. Nothing in this section shall be construed as permitting such memorandum to modify or vitiate any requirement of a State plan under this title.
             ``(2) Enrollment of Exchange-referred individuals.—
                ``(A) Non-traditional individuals.—Pursuant to such memorandum the State shall accept without further determination the enrollment under this title of an individual determined by the Commissioner to be a non-traditional Medicaid eligible individual. The State shall not do any redeterminations of eligibility for such individuals unless the periodicity of such redeterminations is consistent with the periodicity for redeterminations by the Commissioner of eligibility for affordability credits under subtitle C of title II of division A of the America’s Affordable Health Choices Act of 2009, as specified under such memorandum.
                ``(B) Traditional individuals.—
                   ``(i) Regular enrollment option.—Pursuant to such memorandum, insofar as the memorandum has selected the option described in section 205(e)(3)(A) of the America’s Affordable Health Choices Act of 2009, the State shall accept without further determination the enrollment under this title of an individual determined by the Commissioner to be a traditional Medicaid eligible individual. The State may do redeterminations of eligibility of such individual consistent with such section and the memorandum.
                   ``(ii) Presumptive eligibility option.—Pursuant to such memorandum, insofar as the memorandum has selected the option described in section 205(e)(3)(B) of the America’s Affordable Health Choices Act of 2009, the State shall provide for making medical assistance available during the presumptive eligibility period and shall, upon application of the individual for medical assistance under this title, promptly make a determination (and subsequent redeterminations) of eligibility in the same manner as if the individual had applied directly to the State for such assistance except that the State shall use the income-related information used by the Commissioner and provided to the State under the memorandum in making the presumptive eligibility determination to the maximum extent feasible.
             ``(3) Determinations of eligibility for affordability credits.—If the Commissioner determines that a State Medicaid agency has the capacity to make determinations of eligibility for affordability credits under subtitle C of title II of division A of the America’s Affordable Health Choices Act of 2009, under such memorandum—
                ``(A) the State Medicaid agency shall conduct such determinations for any Exchange-eligible individual who requests such a determination;
                ``(B) in the case that a State Medicaid agency determines that an Exchange-eligible individual is not eligible for affordability credits, the agency shall forward the information on the basis of which such determination was made to the Commissioner; and
                ``(C) the Commissioner shall reimburse the State Medicaid agency for the costs of conducting such determinations.
          ``(b) Treatment of certain newborns.—
             ``(1) In general.—In the case of a child who is deemed under section 205(d)(1) of the America’s Affordable Health Choices Act of 2009 to be a non-traditional Medicaid eligible individual and enrolled under this title pursuant to such section, the State shall provide for a determination, by not later than the end of the period referred to in subparagraph (A) of such section, of the child’s eligibility for medical assistance under this title.
             ``(2) Extended treatment as traditional Medicaid eligible individual.—In accordance with subparagraph (B) of section 205(d)(1) of the America’s Affordable Health Choices Act of 2009, in the case of a child described in subparagraph (A) of such section who at the end of the period referred to in such subparagraph is not otherwise covered under acceptable coverage, the child shall be deemed (until such time as the child obtains such coverage or the State otherwise makes a determination of the child’s eligibility for medical assistance under its plan under this title pursuant to paragraph (1)) to be a traditional Medicaid eligible individual described in section 1902(l)(1)(B).
          ``(c) Definitions .—In this section:
             ``(1) Medicaid eligible individuals.—In this section, the terms ‘Medicaid eligible individual’, ‘traditional Medicaid eligible individual’, and ‘non-traditional Medicaid eligible individual’ have the meanings given such terms in section 205(e)(5) of the America’s Affordable Health Choices Act of 2009.
             ``(2) Memorandum.—The term ‘memorandum’ means a Medicaid memorandum of understanding under section 205(e)(4) of the America’s Affordable Health Choices Act of 2009.
             ``(3) Y1.—The term ‘Y1’ has the meaning given such term in section 100(c) of the America’s Affordable Health Choices Act of 2009.´´.
    (b) Conforming Amendments to Error Rate.—
          (1) Section 1903(u)(1)(D) of the Social Security Act (42 U.S.C. 1396b(u)(1)(D)) is amended by adding at the end the following new clause:
             ``(vi) In determining the amount of erroneous excess payments, there shall not be included any erroneous payments made that are attributable to an error in an eligibility determination under subtitle C of title II of division A of the America’s Affordable Health Choices Act of 2009.´´.
          (2) Section 2105(c)(11) of such Act (42 U.S.C. 1397ee(c)(11)) is amended by adding at the end the following new sentence: ``Clause (vi) of section 1903(u)(1)(D) shall apply with respect to the application of such requirements under this title and title XIX.´´.

### Sec. 1703. CHIP and Medicaid Maintenance of Effort.

    (a) CHIP Maintenance of Effort.—
       Section 1902 of the Social Security Act (42 U.S.C. 1396a) is amended—
          (1) in subsection (a), as amended by section 1631(b)(1)(D)—
                (A) by striking ``and´´ at the end of paragraph (72);
                (B) by striking the period at the end of paragraph (73) and inserting ``; and´´; and
                (C) by inserting after paragraph (74) the following new paragraph:
                   ``(75) provide for maintenance of effort under the State child health plan under title XXI in accordance with subsection (gg).´´; and
          (2) by adding at the end the following new subsection:
             ``(gg) CHIP maintenance of effort requirement.—
                ``(1) In general.—Subject to paragraph (2), as a condition of its State plan under this title under subsection (a)(75) and receipt of any Federal financial assistance under section 1903(a) for calendar quarters beginning after the date of the enactment of this subsection and before CHIP MOE termination date specified in paragraph (3), a State shall not have in effect eligibility standards, methodologies, or procedures under its State child health plan under title XXI (including any waiver under such title or under section 1115 that is permitted to continue effect) that are more restrictive than the eligibility standards, methodologies, or procedures, respectively, under such plan (or waiver) as in effect on June 16, 2009.
                ``(2) Limitation.—Paragraph (1) shall not be construed as preventing a State from imposing a limitation described in section 2110(b)(5)(C)(i)(II) for a fiscal year in order to limit expenditures under its State child health plan under title XXI to those for which Federal financial participation is available under section 2105 for the fiscal year.
                ``(3) CHIP MOE termination date.—In paragraph (1), the ‘CHIP MOE termination date’ for a State is the date that is the first day of Y1 (as defined in section 100(c) of the America’s Affordable Health Choices Act of 2009) or, if later, the first day after such date that both of the following determinations have been made:
                   ``(A) The Health Choices Commissioner has determined that the Health Insurance Exchange has the capacity to support the participation of CHIP enrollees who are Exchange-eligible individuals (as defined in section 202(b) of the America’s Affordable Health Choices Act of 2009),
                   ``(B) The Secretary has determined that such Exchange, the State, and employers have procedures in effect to ensure the timely transition without interruption of coverage of CHIP enrollees from assistance under title XXI to acceptable coverage (as defined for purposes of such Act).
             ``In this paragraph, the term ‘CHIP enrollee’ means a targeted low-income child or (if the State has elected the option under section 2112, a targeted low-income pregnant woman) who is or otherwise would be (but for acceptable coverage) eligible for child health assistance or pregnancy-related assistance, respectively, under the State child health plan referred to in paragraph (1).´´.
    (b) Medicaid Maintenance of Eeffort; Simplifying and Coordinating Eligibility Rules Between Exchange and Medicaid.—
          (1) In General.—
             Section 1903 of such Act (42 U.S.C. 1396b) is amended by adding at the end the following new subsection:
                ``(aa) Maintenance of Medicaid effort; simplifying and coordinating eligibility rules between Health Insurance Exchange and Medicaid.—
                   ``(1) Maintenance of effort.—A State is not eligible for payment under subsection (a) for a calendar quarter beginning after the date of the enactment of this subsection if eligibility standards, methodologies, or procedures under its plan under this title (including any waiver under this title or under section 1115 that is permitted to continue effect) that are more restrictive than the eligibility standards, methodologies, or procedures, respectively, under such plan (or waiver) as in effect on June 16, 2009. The Secretary shall extend such a waiver (including the availability of Federal financial participation under such waiver) for such period as may be required for a State to meet the requirement of the previous sentence.
                   ``(2) Removal of asset test for certain eligibility categories.—
                      ``(A) In general.—A State is not eligible for payment under subsection (a) for a calendar quarter beginning on or after the first day of Y1 (as defined in section 100(c) of the America’s Affordable Health Choices Act of 2009), if the State applies any asset or resource test in determining (or redetermining) eligibility of any individual on or after such first day under any of the following:
                         ``(i) Subclause (I), (III), (IV), or (VI) of section 1902(a)(10)(A)(i).
                         ``(ii) Subclause (II), (IX), (XIV) or (XVII) of section 1902(a)(10)(A)(ii).
                         ``(iii) Section 1931(b).
                      ``(B) Overriding contrary provisions; references.—The provisions of this title that prevent the waiver of an asset or resource test described in subparagraph (A) are hereby waived.
                      ``(C) References.—Any reference to a provision described in a provision in subparagraph (A) shall be deemed to be a reference to such provision as modified through the application of subparagraphs (A) and (B).´´.
          (2) Conforming Amendments.—
                (A) Section 1902(a)(10)(A) of such Act (42 U.S.C. 1396a(a)(10)(A)) is amended, in the matter before clause (i), by inserting ``subject to section 1903(aa)(2),´´ after ``(A)´´.
                (B) Section 1931(b)(2) of such Act (42 U.S.C. 1396u–1(b)(1)) is amended by inserting ``subject to section 1903(aa)(2)´´ after ``and (3)´´.
    (c) Standards for Benchmark Packages.—
       Section 1937(b) of such Act (42 U.S.C. 1396u–7(b)) is amended—
          (1) in paragraph (1), by inserting ``subject to paragraph (5)´´; and
          (2) by adding at the end the following new paragraph:
             ``(5) Minimum standards.—Effective January 1, 2013, any benchmark benefit package (or benchmark equivalent coverage under paragraph (2)) must meet the minimum benefits and cost-sharing standards of a basic plan offered through the Health Insurance Exchange.´´.

### Sec. 1704. Reduction in Medicaid DSH.

    (a) Report.—
          (1) In General.—
             Not later than January 1, 2016, the Secretary of Health and Human Services (in this title referred to as the ``Secretary´´) shall submit to Congress a report concerning the extent to which, based upon the impact of the health care reforms carried out under division A in reducing the number of uninsured individuals, there is a continued role for Medicaid DSH. In preparing the report, the Secretary shall consult with community-based health care networks serving low-income beneficiaries.
          (2) Matters to be Included.—
             The report shall include the following:
                (A) Recommendations.—
                   Recommendations regarding—
                      (i) the appropriate targeting of Medicaid DSH within States; and
                      (ii) the distribution of Medicaid DSH among the States.
                (B) Specification of DSH Health Reform Methodology.—
                   The DSH Health Reform methodology described in paragraph (2) of subsection (b) for purposes of implementing the requirements of such subsection.
          (3) Coordination with Medicare DSH Report.—
             The Secretary shall coordinate the report under this subsection with the report on Medicare DSH under section 1112.
          (4) Medicaid DSH.—
             In this section, the term ``Medicaid DSH´´ means adjustments in payments under section 1923 of the Social Security Act for inpatient hospital services furnished by disproportionate share hospitals.
    (b) Medicaid DSH Reductions.—
          (1) In General.—
             The Secretary shall reduce Medicaid DSH so as to reduce total Federal payments to all States for such purpose by $1,500,000,000 in fiscal year 2017, $2,500,000,000 in fiscal year 2018, and $6,000,000,000 in fiscal year 2019.
          (2) DSH Health Reform Methodology.—
             The Secretary shall carry out paragraph (1) through use of a DSH Health Reform methodology issued by the Secretary that imposes the largest percentage reductions on the States that—
                (A) have the lowest percentages of uninsured individuals (determined on the basis of audited hospital cost reports) during the most recent year for which such data are available; or
                (B) do not target their DSH payments on—
                      (i) hospitals with high volumes of Medicaid inpatients (as defined in section 1923(b)(1)(A) of the Social Security Act (42 U.S.C. 1396r–4(b)(1)(A)); and
                      (ii) hospitals that have high levels of uncompensated care (excluding bad debt).
          (3) DSH Allotment Publications.—
                (A) In General.—
                   Not later than the publication deadline specified in subparagraph (B), the Secretary shall publish in the Federal Register a notice specifying the DSH allotment to each State under 1923(f) of the Social Security Act for the respective fiscal year specified in such subparagraph, consistent with the application of the DSH Health Reform methodology described in paragraph (2).
                (B) Publicataion Deadline.—
                   The publication deadline specified in this subparagraph is—
                      (i) January 1, 2016, with respect to DSH allotments described in subparagraph (A) for fiscal year 2017;
                      (ii) January 1, 2017, with respect to DSH allotments described in subparagraph (A) for fiscal year 2018; and
                      (iii) January 1, 2018, with respect to DSH allotments described in subparagraph (A) for fiscal year 2019.
    (c) Conforming Amendments.—
          (1) Section 1923(f) of the Social Security Act (42 U.S.C. 1396r–4(f)) is amended—
                (A) by redesignating paragraph (7) as paragraph (8); and
                (B) by inserting after paragraph (6) the following new paragraph:
                   ``(7) Special rule for fiscal years 2017, 2018, and 2019.—
                      ``(A) Fiscal year 2017.—Notwithstanding paragraph (2), the total DSH allotments for all States for—
                         ``(i) fiscal year 2017, shall be the total DSH allotments that would otherwise be determined under this subsection for such fiscal year decreased by $1,500,000,000;
                         ``(ii) fiscal year 2018, shall be the total DSH allotments that would otherwise be determined under this subsection for such fiscal year decreased by $2,500,000,000; and
                         ``(iii) fiscal year 2019, shall be the total DSH allotments that would otherwise be determined under this subsection for such fiscal year decreased by $6,000,000,000.´´.
          (2) Section 1923(b)(4) of such Act (42 U.S.C. 1396r–4(b)(4)) is amended by adding before the period the following: ``or to affect the authority of the Secretary to issue and implement the DSH Health Reform methodology under section 1704(b)(2) of the America’s Health Choices Act of 2009´´.
    (d) Disproportionate share hospitals (DSH) and essential access hospital (EAH) non-Discrimination.—
          (1) In General.—
             Section 1923(d) of the Social Security Act (42 U.S.C. 1396r-4) is amended by adding at the end the following new paragraph:
                ``(4) No hospital may be defined or deemed as a disproportionate share hospital, or as an essential access hospital (for purposes of subsection (f)(6)(A)(iv), under a State plan under this title or subsection (b) of this section (including any waiver under section 1115) unless the hospital—
                   ``(A) provides services to beneficiaries under this title without discrimination on the ground of race, color, national origin, creed, source of payment, status as a beneficiary under this title, or any other ground unrelated to such beneficiary’s need for the services or the availability of the needed services in the hospital; and
                   ``(B) makes arrangements for, and accepts, reimbursement under this title for services provided to eligible beneficiaries under this title.´´.
          (2) Effective Date.—
             The amendment made by subsection (a) shall be apply to expenditures made on or after July 1, 2010.

### Sec. 1705. Expanded Outstationing.

    (a) In General.—
       Section 1902(a)(55) of the Social Security Act (42 U.S.C. 1396a(a)(55)) is amended by striking ``under subsection (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), (a)(10)(A)(i)(VII), or (a)(10)(A)(ii)(IX)´´ and inserting ``(including receipt and processing of applications of individuals for affordability credits under subtitle C of title II of division A of the America’s Affordable Health Choices Act of 2009 pursuant to a Medicaid memorandum of understanding under section 1943(a)(1)) ´´ .
    (b) Effective Date.—
          (1) Except as provided in paragraph (2), the amendment made by subsection (a) shall apply to services furnished on or after July 1, 2010, without regard to whether or not final regulations to carry out such amendment have been promulgated by such date.
          (2) In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the additional requirement imposed by the amendment made by this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet this additional requirement before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature.