I 

115TH CONGRESS 

1ST SESSION H. R. 1275 

To eliminate the individual and employer health coverage mandates under 

the Patient Protection and Affordable Care Act, to expand beyond that 

Act the choices in obtaining and financing affordable health insurance 

coverage, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 1, 2017 

Mr. SESSIONS introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on 

Ways and Means, and Education and the Workforce, for a period to be 

subsequently determined by the Speaker, in each case for consideration 

of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To eliminate the individual and employer health coverage 

mandates under the Patient Protection and Affordable 

Care Act, to expand beyond that Act the choices in 

obtaining and financing affordable health insurance coverage, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE; PURPOSES; TABLE OF CON2 TENTS. 

3 (a) SHORT TITLE.—This Act may be cited as the 

4 ‘‘World’s Greatest Healthcare Plan of 2017’’. 

5 (b) PURPOSES.—The purposes of this Act are as fol6 lows: 

7 (1) ELIMINATION OF INDIVIDUAL AND EM8 PLOYER MANDATES UNDER ACA.—To eliminate man9 dates on individuals and employers, and other tax 

10 requirements, imposed under Patient Protection and 

11 Affordable Care Act. 

12 (2) PROVIDING STATES WITH ALTERNATIVE, 

13 AFFORDABLE COVERAGE OPTIONS.—To provide 

14 greater flexibility in providing States with options in 

15 making affordable health insurance coverage avail16 able by eliminating certain mandates under PPACA, 

17 while retaining essential consumer protections, by 

18 promoting health savings accounts to pay for such 

19 coverage and long-term care coverage, while permit20 ting States to continue coverage as provided under 

21 PPACA. 

22 (c) TABLE OF CONTENTS.—The table of contents of 

23 this Act is as follows: 

Sec. 1. Short title; purposes; table of contents. 

Sec. 2. Definitions. 

TITLE I—REVISIONS OF PPACA 

Subtitle A—Elimination of Individual and Employer Mandates 


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Sec. 101. Repeal of individual health insurance mandate. 

Sec. 102. Repeal of employer health insurance mandate. 

Sec. 103. Clarifying employer’s ability to reimburse employee premiums for 

purchase of individual health insurance coverage. 

Subtitle B—Limitation on Application of PPACA Plan Requirements 

Sec. 121. Limiting application of requirements to consumer protections. 

Sec. 122. Offering of basic health insurance; protection of assets from liability 

or attachment or seizure. 

Subtitle C—Health Insurance Tax Benefit 

Sec. 131. Health insurance tax benefit. 

Sec. 132. Application of portion of unused tax credits by States for indigent 

health care. 

Sec. 133. Medicaid option of enrollment under private plan and contribution to 

an HSA. 

TITLE II—IMPROVING HEALTH SAVINGS ACCOUNTS TO PROMOTE 

ACCOUNTABILITY 

Sec. 201. Transition to non-deductible HSAs. 

Sec. 202. Elimination of medical expense deduction. 

Sec. 203. Treatment of HSA after death of account beneficiary. 

Sec. 204. Treatment of concierge medicine. 

TITLE III—STATE FLEXIBILITY IN REGULATION OF HEALTH 

INSURANCE COVERAGE 

Sec. 301. State flexibility in regulation of health insurance coverage. 

TITLE IV—MEDICAID PAYMENT REFORM 

Sec. 401. Medicaid payment reform. 

TITLE V—INCREASING PRICE TRANSPARENCY AND FREEDOM OF 

PRACTICE 

Sec. 501. Ensuring access to emergency services without excessive charges for 

out-of-network services. 

Sec. 502. Publishing of cash price for care paid through health savings accounts. 

Sec. 503. Liberating the local practice of health care. 

1 SEC. 2. DEFINITIONS. 

2 Except as otherwise provided, in this Act: 

3 (1) BASIC HEALTH INSURANCE.—The term 

4 ‘‘basic health insurance’’ is defined in section 

5 122(a). 


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1 (2) DEFAULT HEALTH INSURANCE COV2 ERAGE.—The term ‘‘default health insurance cov3 erage’’ is defined in section 121(b)(4)(B). 

4 (3) EXCHANGE.—The term ‘‘Exchange’’ means 

5 an Exchange established under title I of PPACA. 

6 (4) HEALTH INSURANCE COVERAGE; GROUP

7 HEALTH PLAN, ETC.—The terms defined in section 

8 2791 of the Public Health Service Act, including 

9 ‘‘health insurance coverage’’, ‘‘group health plan’’ 

10 ‘‘individual market’’, shall apply. 

11 (5) LIMITED BENEFIT INSURANCE.—The term 

12 ‘‘limited benefit insurance’’ is defined in section 

13 122(b). 

14 (6) PPACA.—The term ‘‘PPACA’’ means the 

15 Patient Protection and Affordable Care Act (Public 

16 Law 111–148). 

17 (7) SECRETARY.—The term ‘‘Secretary’’ means 

18 the Secretary of Health and Human Services. 

19 (8) STATE.—The term ‘‘State’’ includes the 

20 District of Columbia, Puerto Rico, the United States 

21 Virgin Islands, American Samoa, Guam, and the 

22 Northern Mariana Islands. 


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1 TITLE I—REVISIONS OF PPACA 

2 Subtitle A—Elimination of 

3 Individual and Employer Mandates 

4 SEC. 101. REPEAL OF INDIVIDUAL HEALTH INSURANCE 

5 MANDATE. 

6 Section 5000A of the Internal Revenue Code of 1986 

7 is amended by adding at the end the following new sub8 section: 

9 ‘‘(h) TERMINATION.—This section shall not apply 

10 with respect to any month beginning more than 30 days 

11 after the date of the enactment of the World’s Greatest 

12 Healthcare Plan of 2017.’’. 

13 SEC. 102. REPEAL OF EMPLOYER HEALTH INSURANCE MAN14 DATE. 

15 (a) IN GENERAL.—Chapter 43 of the Internal Rev16 enue Code of 1986 is amended— 

17 (1) by striking section 4980H; and 

18 (2) by striking the item relating to section 

19 4980H from the table of sections for such chapter. 

20 (b) REPEAL OF RELATED REPORTING REQUIRE21 MENTS.—Subpart D of part III of subchapter A of chap22 ter 61 of such Code is amended by striking section 6056 

23 and by striking the item relating to section 6056 in the 

24 table of sections for such subpart. 

25 (c) CONFORMING AMENDMENTS.— 


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1 (1) Section 6724(d)(1)(B) of such Code is 

2 amended— 

3 (A) by inserting ‘‘or’’ at the end of clause 

4 (xxiii); 

5 (B) by striking ‘‘, or’’ at the end of clause 

6 (xxiv) and inserting a period; and 

7 (C) by striking clause (xxv). 

8 (2) Section 6724(d)(2) of such Code is amend9 ed by inserting ‘‘or’’ at the end of subparagraph 

10 (FF), by striking ‘‘, or’’ at the end of subparagraph 

11 (GG) and inserting a period, and by striking sub12 paragraph (HH). 

13 (3) Section 1513 of the Patient Protection and 

14 Affordable Care Act is amended by striking sub15 section (c). 

16 (d) EFFECTIVE DATES.— 

17 (1) IN GENERAL.—Except as otherwise pro18 vided in this subsection, the amendments made by 

19 this section shall apply to months and other periods 

20 beginning more than 30 days after the date of the 

21 enactment of this Act. 

22 (2) REPEAL OF STUDY AND REPORT.—The 

23 amendment made by subsection (c)(3) shall take ef24 fect on the date of the enactment of this Act. 


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1 SEC. 103. CLARIFYING EMPLOYER’S ABILITY TO REIM2 BURSE EMPLOYEE PREMIUMS FOR PUR3 CHASE OF INDIVIDUAL HEALTH INSURANCE 

4 COVERAGE. 

5 An employer health care arrangement, such as a 

6 health or medical reimbursement arrangement (HRA) or 

7 other employment plans, under which an employer reim8 burses an employee for the premiums for the purchase of 

9 individual health insurance coverage does not constitute 

10 a group health plan for any purposes, including for pur11 poses of applying any of the following: 

12 (1) The Public Health Service Act (including 

13 sections 2711 and 2714 of such Act, 42 U.S.C. 

14 300gg–11, 300gg–14). 

15 (2) The Patient Protection and Affordable Care 

16 Act. 

17 (3) The Internal Revenue Code of 1986. 

18 (4) The Employee Retirement Income Security 

19 Act of 1974. 

20 (5) The HIPAA privacy regulations (as defined 

21 in section 1180(b)(3) of the Social Security Act, 42 

22 U.S.C. 1320d–9(b)(3)). 

23 (6) The Health Insurance Portability and Ac24 countability Act of 1996. 

25 (7) COBRA continuation coverage under title 

26 XXII of the Public Health Service Act (42 U.S.C. 


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1 300bb–1 et seq.), section 4980B of the Internal Rev2 enue Code of 1986, or title VI of the Employee Re3 tirement Income Security Act of 1974 (29 U.S.C. 

4 1161 et seq.). 

5 Subtitle B—Limitation on Applica6 tion of PPACA Plan Require7 ments 

8 SEC. 121. LIMITING APPLICATION OF REQUIREMENTS TO 

9 CONSUMER PROTECTIONS. 

10 (a) REMOVAL OF PPACA PLAN REQUIREMENTS, 

11 OTHER THAN CERTAIN CONSUMER PROTECTIONS.— 

12 (1) IN GENERAL.—Notwithstanding any other 

13 provision of law, with respect to group health plans 

14 and health insurance coverage whether or not of15 fered through an Exchange, except as provided in 

16 paragraphs (2) and (3), the provisions of title 

17 XXVII of the Public Health Service Act (42 U.S.C. 

18 300gg et seq.) as in effect on the day before the date 

19 of the enactment of PPACA shall apply instead of 

20 the provisions of such title as in effect after such 

21 date. 

22 (2) PPACA CONSUMER PROTECTIONS CON23 TINUING TO BE APPLIED.—The following sections of 

24 the Public Health Service Act, that were added or 

25 amended by subtitles A and C of title I of PPACA, 


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1 shall continue to apply to group health plans and to 

2 health insurance coverage offered in the individual 

3 and group market: 

4 (A) NO LIFETIME OR ANNUAL LIMITS.— 

5 Section 2711 (42 U.S.C. 300gg–11; relating to 

6 no lifetime or annual limits), except in the case 

7 of limited benefit insurance (as defined in sec8 tion 122(b)). 

9 (B) DEPENDENT COVERAGE THROUGH

10 AGE 26.—Section 2714 (42 U.S.C. 300bb–14; 

11 relating to extension of dependent coverage). 

12 (C) MODIFIED GUARANTEED AVAIL13 ABILITY.—Section 2702 (42 U.S.C. 300gg–1; 

14 relating to guaranteed availability of coverage), 

15 subject to paragraph (3) and subsection (c). 

16 (D) GUARANTEED RENEWABILITY.—Sec17 tion 2703 (42 U.S.C. 300gg–2; relating to 

18 guaranteed renewability of coverage). 

19 (E) PROHIBITING PRE-EXISTING CONDI20 TION EXCLUSIONS.—Section 2704 (42 U.S.C. 

21 300gg–3; relating to prohibition on preexisting 

22 conditions). 

23 (F) PROHIBITING DISCRIMINATION BASED

24 ON HEALTH STATUS.—Section 2705 (42 U.S.C. 

25 300gg–4; relating to prohibiting discrimination 


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1 against individual participants and beneficiaries 

2 based on health status), subject to subsection 

3 (c). 

4 (G) NON-DISCRIMINATION IN HEALTH

5 CARE.—Section 2706 (42 U.S.C. 300gg–5; re6 lating to non-discrimination in health care). 

7 (3) APPLICATION OF A LATE ENROLLMENT

8 PENALTY FOR THOSE WITHOUT CONTINUOUS COV9 ERAGE.— 

10 (A) IN GENERAL.—In the case of an indi11 vidual who seeks to enroll in health insurance 

12 coverage and who, as of the effective date of 

13 such enrollment, does not have a continuous pe14 riod of at least 12 months of creditable cov15 erage, there shall be imposed a late enrollment 

16 penalty in the form of an increase in the 

17 monthly premiums for coverage of under the 

18 plan of 20 percent of the monthly premium oth19 erwise determined for each consecutive full 12- 

20 month period (ending before such effective 

21 date) in which the individual was not enrolled 

22 in creditable coverage. Such increase shall apply 

23 during a period, to be specified under regula24 tions of the Secretary but in no case longer 

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1 riod in which the individual did not have contin2 uous coverage. 

3 (B) STATE WAIVER.—A State may apply 

4 to the Secretary for a waiver of the provisions 

5 of subparagraph (A) and the application of al6 ternative provisions providing incentives for 

7 State residents to enroll in creditable coverage 

8 and maintain continuous creditable coverage. 

9 The Secretary shall approve such waiver if the 

10 Secretary determines that the alternative provi11 sions provide similar or greater incentives for 

12 such enrollment than the incentives otherwise 

13 applicable. 

14 (4) COORDINATING IMPLEMENTATION OF PRE15 PPACA PHSA PROVISIONS WITH PPACA CONSUMER

16 PROTECTIONS.— 

17 (A) IN GENERAL.—In applying this sub18 section, the provisions described in paragraph 

19 (2) shall be treated as if they were included in 

20 title XXVII of the Public Health Service Act, 

21 as in effect before the date of enactment of 

22 PPACA, and, with respect to group health 

23 plans and health insurance coverage offered in 

24 connection with such plans, in part 7 of subtitle 

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1 come Security Act of 1974 (29 U.S.C. 1181 et 

2 seq.), and, with respect to group health plans, 

3 in chapter 100 of the Internal Revenue Code of 

4 1986 as follows: 

5 (i) LIFETIME LIMITS; DEPENDENT

6 COVERAGE.—The provisions described in 

7 paragraphs (2)(A) and (2)(B) shall be 

8 treated as included— 

9 (I) with respect to group health 

10 plans (and health insurance coverage 

11 offered with respect to such plans), 

12 under subpart 2 of part A of title 

13 XXVII of the Public Health Service 

14 Act (42 U.S.C. 300gg–11 et seq.) and 

15 subpart B of part 7 of subtitle B of 

16 title I of the Employee Retirement 

17 and Income Security Act of 1974 (29 

18 U.S.C. 1181 et seq.); 

19 (II) also with respect to group 

20 health plans, under subchapter B of 

21 chapter 100 of the Internal Revenue 

22 Code of 1986; and 

23 (III) with respect to individual 

24 health insurance coverage, under sub25 part 2 of part B of title XXVII of the 


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1 Public Health Service Act (42 U.S.C. 

2 300gg–15 et seq.). 

3 (ii) REMAINING PROVISIONS.—The 

4 provision described in paragraph (2) (other 

5 than in subparagraph (A) or (B) of such 

6 paragraph) shall be treated as included— 

7 (I) with respect to group health 

8 plans (and health insurance coverage 

9 offered with respect to such plans), 

10 under subpart 1 of part A of title 

11 XXVII of the Public Health Service 

12 Act (42 U.S.C. 300gg et seq.) and 

13 subpart A of part 7 of subtitle B of 

14 title I of the Employee Retirement 

15 and Income Security Act of 1974 (29 

16 U.S.C. 1181 et seq.); 

17 (II) also with respect to group 

18 health plans, under subchapter A of 

19 chapter 100 of the Internal Revenue 

20 Code of 1986; and 

21 (III) with respect to individual 

22 health insurance coverage, under sub23 part 1 of part B of title XXVII of the 

24 Public Health Service Act (42 U.S.C. 

25 300gg–41 et seq.). 


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1 (B) CONFLICTING PROVISIONS.—In the 

2 case described in paragraph (1) where there is 

3 a conflict between a provision described in para4 graph (2) and a provision of law described in 

5 paragraph (1), the provision described in para6 graph (2) shall control and the Secretary, in 

7 consultation with the Secretary of the Treasury 

8 and the Secretary of Labor, shall establish such 

9 rules as may be necessary to carry out this sub10 paragraph. 

11 (5) CONFORMING AMENDMENTS.— 

12 (A) ERISA.—Section 715 of the Employee 

13 Retirement Income Security Act of 1974 (29 

14 U.S.C. 1185d) is amended— 

15 (i) in subsection (a), by striking ‘‘sub16 section (b)’’ and inserting ‘‘subsections (b) 

17 and (c)’’; and 

18 (ii) by adding at the end the following 

19 new subsection: 

20 ‘‘(c) ADDITIONAL EXCEPTION.—Pursuant to section 

21 121 of the World’s Greatest Healthcare Plan of 2017, the 

22 provisions of part A of title XXVII of the Public Health 

23 Service Act referred to in subsection (a), other than those 

24 provisions specified in section 121(a)(2) of the World’s 

25 Greatest Healthcare Plan of 2017, shall not apply to plans 


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1 and coverage described in subsection (a), whether or not 

2 the plans or coverage are offered through an Exchange 

3 established under the Patient Protection and Affordable 

4 Care Act.’’. 

5 (B) IRC.—Section 9815 of the Internal 

6 Revenue Code of 1986 is amended— 

7 (i) in subsection (a), by striking ‘‘sub8 section (b)’’ and inserting ‘‘subsections (b) 

9 and (c)’’; and 

10 (ii) by adding at the end the following 

11 new subsection: 

12 ‘‘(c) ADDITIONAL EXCEPTION.—Pursuant to section 

13 121 of the World’s Greatest Healthcare Plan of 2017, the 

14 provisions of part A of title XXVII of the Public Health 

15 Service Act referred to in subsection (a), other than those 

16 provisions specified in section 121(a)(2) of the World’s 

17 Greatest Healthcare Plan of 2017, shall not apply to plans 

18 described in subsection (a).’’. 

19 (b) STATE FLEXIBILITY IN ENSURING ORDERLY

20 HEALTH INSURANCE MARKET OUTSIDE OF AN EX21 CHANGE.— 

22 (1) IN GENERAL.—With respect to health insur23 ance coverage offered in a State, the State may, in 

24 consultation with the Secretary, take such steps, 

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1 rollment periods, imposing delays in the effectiveness 

2 for coverage, permitting differentials in premiums 

3 based on age and other factors, as the State deter4 mines necessary in order to ensure an orderly mar5 ket for health insurance coverage in the State that 

6 is not offered through an Exchange. Such steps may 

7 include the establishment of such initial open enroll8 ment period during which qualified residents may 

9 enroll in health insurance coverage without the im10 position of any underwriting as the State determines 

11 to be appropriate in ensuring initial access to such 

12 coverage. 

13 (2) FLEXIBILITY IN IMPOSING ADDITIONAL RE14 QUIREMENTS.—Subject to paragraph (5), nothing in 

15 this section shall be construed as preventing a State 

16 from continuing to apply, to health insurance cov17 erage issued in the State, requirements under the 

18 provisions of title XXVII of the Public Health Serv19 ice Act (as amended by subtitles A and C of title I 

20 of PPACA) that are not continued under subsection 

21 (a). 

22 (3) STATE FLEXIBILITY WITH RESPECT TO EX23 CHANGES.—A State may waive such provisions of 

24 part II of subtitle D of title I of PPACA (42 U.S.C. 

25 18031 et seq.), in relation to the establishment of an 


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1 Exchange in such State, as the State determines ap2 propriate in order for the State to implement and 

3 administer a market-based system for the avail4 ability of health insurance coverage throughout the 

5 State. 

6 (4) STATE DEFAULT ENROLLMENT OPTION.— 

7 (A) ENROLLMENT, SUBJECT TO INDI8 VIDUAL OPT-OUT.—Subject to subparagraph 

9 (D), a State may elect to provide for the enroll10 ment of residents of the State who are unin11 sured in default health insurance coverage (as 

12 defined in subparagraph (B)) and establishing a 

13 Roth HSA for such residents who do not have 

14 a Roth HSA unless the resident has affirma15 tively elected not to be so enrolled and not to 

16 have such an account. respectively. If a State 

17 makes such an election, the State shall permit 

18 eligible residents to enroll in such coverage on 

19 a continuous basis. 

20 (B) DEFAULT HEALTH INSURANCE COV21 ERAGE DEFINED.—In this paragraph, the term 

22 ‘‘default health insurance coverage’’ means, 

23 with respect to a State, health insurance cov24 erage that— 


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1 (i) is a high deductible health plan 

2 (within the meaning of section 223(c)(2) of 

3 the Internal Revenue Code of 1986) with 

4 prescription drug coverage limited to ge5 neric drugs for a limited number of chronic 

6 conditions (commonly referred to as tier I 

7 pharmacy benefit); 

8 (ii) meets such requirements as may 

9 apply to qualify for the payment of plan 

10 premiums from a health savings account 

11 under section 223 of such Code (such as 

12 age-related premiums and limitation on 

13 imposition of preexisting condition exclu14 sions); 

15 (iii) has a provider network for cov16 ered benefits that is adequate (as deter17 mined consistent with guidelines issued by 

18 the Secretary) to ensure access to health 

19 benefits under such plan; 

20 (iv) provides for coverage of childhood 

21 immunizations without cost sharing re22 quirements to the extent such immuniza23 tions have in effect a recommendation 

24 from the Advisory Committee on Immuni25 zation Practices of the Centers for Disease 


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1 Control and Prevention with respect to the 

2 individual involved; and 

3 (v) meets such other requirements as 

4 the State may specify. 

5 (C) ROTH HSA.—In this paragraph, the 

6 term ‘‘Roth HSA’’ shall have the meaning given 

7 such term by section 530A(c) of the Internal 

8 Revenue Code of 1986, as added by section 

9 201(a) of this Act. 

10 (D) SIMPLE PROCESS FOR INDIVIDUALS TO

11 OPT-OUT.—As a condition of a State providing 

12 for the enrollment function described in sub13 paragraph (A), the State must establish an 

14 easy-to-use and transparent means by which in15 dividuals may elect not to be enrolled in default 

16 health insurance coverage or to have a Roth 

17 HSA established on the individual’s behalf, or 

18 both. 

19 (5) MINIMUM AGE VARIATION PERMITTED FOR

20 PREMIUM RATES.—With respect to the premium rate 

21 charged by a health insurance issuer for health in22 surance coverage offered in the individual or small 

23 group market, a State may not limit the variation by 

24 age in such rate with respect to a particular plan or 

25 coverage involved by less than a factor of 5 to 1 for 


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1 adults. The previous sentence shall be treated as if 

2 it were included in subpart I of part A of title 

3 XXVII of the Public Health Service Act (42 U.S.C. 

4 300gg et seq.). 

5 (c) INAPPLICABILITY OF REQUIRED ESSENTIAL

6 HEALTH BENEFITS.— 

7 (1) IN GENERAL.—Notwithstanding any other 

8 provision of law, no health benefits plan shall be re9 quired by reason of Federal law to comply with the 

10 requirements of sections 1301(a)(1)(B) and 1302 of 

11 PPACA (42 U.S.C. 18021(a)(1)(B), 18022). 

12 (2) STATE FLEXIBILITY.—Nothing in this sub13 section shall be construed as preventing a State 

14 from applying, at its option with respect to health 

15 insurance coverage offered through an Exchange or 

16 otherwise in the State, the requirements referred to 

17 in paragraph (1). 

18 (d) EFFECTIVE DATE; TRANSITION.— 

19 (1) IN GENERAL.—Subsection (a), (b), and (c) 

20 shall apply to plan years beginning after the date of 

21 the enactment of this Act. 

22 (2) SUNSETTING REQUIRED CONTRIBUTION FOR

23 ACA REINSURANCE PROGRAM.—No contribution shall 

24 be required under section 1341 of PPACA (42 

25 U.S.C. 18061) from any group health plan or health 


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1 insurance issuer for portions of plans years occur2 ring in months beginning more than 30 days after 

3 the date of the enactment of this Act. 

4 (e) SECRETARIAL GUIDANCE.—The Secretary of 

5 Health and Human Services, in coordination with the Sec6 retary of Labor and the Secretary of the Treasury, shall 

7 provide such guidance as may be necessary for the coordi8 nated implementation of this section on a timely basis. 

9 (f) TRANSFERRING HEALTH PLAN RECORDS UPON

10 CHANGING PLANS.— 

11 (1) IN GENERAL.—In the case of an individual 

12 who is covered under health insurance coverage or as 

13 a beneficiary or participant in a group health plan 

14 (as such terms are defined in section 2791 of the 

15 Public Health Service Act, 42 U.S.C. 300gg–91), if 

16 such coverage is ended and the individual obtains 

17 other health insurance coverage, group health plan 

18 coverage, or other creditable coverage (as defined for 

19 purposes of title XXVII of such Act), the issuer of 

20 the prior coverage or administrator of the prior plan 

21 shall forward information respecting such prior cov22 erage to the issuer of the new coverage or adminis23 trator of the new plan or coverage, as the case may 

24 be, subject to such rules as the Secretary establishes 


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1 regarding the right of the beneficiary or participant 

2 to object to such forwarding of information. 

3 (2) TREATMENT AS PLAN REQUIREMENT

4 UNDER PHSA, ERISA, IRC.—The requirement of 

5 paragraph (1) shall apply as if it were a section 

6 under part A of title XXVII of the Public Health 

7 Service Act, including for purposes of applying sec8 tion 715 of the Employee Retirement Income Secu9 rity Act of 1976 (29 U.S.C. 1185d) and section 

10 9815 of the Internal Revenue Code of 1986. 

11 (g) APPLICATION OF RISK ADJUSTMENT.— 

12 (1) IN GENERAL.—Any issuer that offers health 

13 insurance coverage in the individual market in any 

14 of the 50 States or the District of Columbia shall 

15 participate in a risk adjustment mechanism under 

16 this subsection with respect to any health insurance 

17 coverage it so offers in such market, whether or not 

18 such coverage is offered through an Exchange. 

19 (2) FORM AND DESIGN OF RISK ADJUSTMENT

20 MECHANISM.—The Secretary shall, in consultation 

21 with the National Association of Insurance Commis22 sioners and other interested parties, develop a mech23 anism to permit the adjustment of risk among 

24 health insurance coverage offered in the individual 

25 market throughout the 50 States and the District of 


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1 Columbia. Such mechanism shall be designed to ef2 fect the same type of risk adjustment among such 

3 coverage that is applicable to risk adjustment of 

4 payments among Medicare Advantage organizations 

5 under part C of title XVIII of the Social Security 

6 Act (42 U.S.C. 1395w–21 et seq.). 

7 (3) TRANSITION FOR NEW COVERAGE.—The 

8 mechanism developed under paragraph (2) shall pro9 vide for transitional protection, over a 3-year period, 

10 in the case of health insurance coverage that has not 

11 been previously marketed. 

12 (4) DEVELOPMENT OF FURTHER RISK ADJUST13 MENT MECHANISM.—The Secretary shall request the 

14 National Association of Insurance Commissioners to 

15 develop a permanent model for adjustment of risk 

16 among health insurance issuers with respect to 

17 health insurance coverage offered in the individual 

18 market, with the intention that such a model would 

19 substitute for the mechanism developed under para20 graph (2). 

21 (5) TREATMENT AS PLAN REQUIREMENT

22 UNDER PHSA, ERISA, IRC.—The requirement of 

23 paragraph (1) shall apply as if it were a section 

24 under part A of title XXVII of the Public Health 

25 Service Act (42 U.S.C. 300gg et seq.), including for 


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1 purposes of applying section 715 of the Employee 

2 Retirement Income Security Act of 1976 (29 U.S.C. 

3 1185d) and section 9815 of the Internal Revenue 

4 Code of 1986. 

5 SEC. 122. OFFERING OF BASIC HEALTH INSURANCE; PRO6 TECTION OF ASSETS FROM LIABILITY OR AT7 TACHMENT OR SEIZURE. 

8 (a) REQUIREMENT FOR EXCHANGES.— 

9 (1) IN GENERAL.—No tax credit shall be allow10 able under section 36B or 36C of the Internal Rev11 enue Code of 1986 for residents of a State unless 

12 any Exchange established in the State provides for 

13 the offering of basic health insurance in all areas of 

14 the State. 

15 (2) BASIC HEALTH INSURANCE DEFINED.—In 

16 this subsection, the term ‘‘basic health insurance’’ 

17 means, with respect to a State, such health insur18 ance coverage as the State may specify and includes 

19 limited benefit insurance (as defined in subsection 

20 (b)). 

21 (b) LIMITED BENEFIT INSURANCE DEFINED.— 

22 (1) IN GENERAL.—In this title, the term ‘‘lim23 ited benefit insurance’’ means individual health in24 surance coverage that, with respect to a plan year, 

25 imposes (consistent with paragraph (2)) an annual 


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1 limit on the amounts that may be payable under the 

2 coverage with respect to expenses incurred for items 

3 and services furnished in that plan year. 

4 (2) SPECIFICATION OF ANNUAL LIMIT; VARI5 ATION IN LIMIT FOR INDIVIDUAL AND FAMILY COV6 ERAGE.—The Secretary shall specify, from year to 

7 year, the annual limit (or range of annual limits) 

8 that may be applied under paragraph (1). Such a 

9 limit may distinguish between coverage that is only 

10 provided for an individual and coverage that is pro11 vided also for family members of the individual. 

12 (c) PROTECTION OF CERTAIN ASSETS IN CASE OF

13 INDIVIDUALS COVERED UNDER LIMITED BENEFIT IN14 SURANCE.— 

15 (1) IN GENERAL.—Notwithstanding any other 

16 provision of law, if an individual is covered under 

17 limited benefit insurance for a plan year and bene18 fits under such insurance have reached the annual 

19 limit under such insurance for items and services 

20 furnished in the plan year, the individual is not lia21 ble for debt incurred and arising from the provision 

22 of subsequently furnished items and services during 

23 the plan year, regardless of whether benefits are oth24 erwise covered for such items and services under 


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1 such policy, insofar as the liability attributable to 

2 such items and services exceeds— 

3 (A) the bankruptcy valuation of the indi4 vidual’s property at the time the debt is in5 curred; reduced by 

6 (B) such annual limit of benefits under the 

7 limited benefit insurance for the plan year. 

8 Property in the amount so protected from liability 

9 shall be exempt and immune from attachment or sei10 zure with respect to any judgment related to such 

11 debt. 

12 (2) BANKRUPTCY VALUATION DEFINED.—In 

13 this subsection, the term ‘‘bankruptcy valuation’’ 

14 means, with respect to property of an individual as 

15 of a date, the value of the property as of such date 

16 as determined as if the individual were a debtor in 

17 a bankruptcy case that could have been filed under 

18 title 11 of the United States Code and the property 

19 could not be exempt under section 522 of such title. 

20 (3) NO REQUIREMENT FOR PROVIDERS TO FUR21 NISH SUBSEQUENT SERVICES WITHOUT ENSURING

22 PAYMENT.—Except as may be explicitly provided in 

23 other law (such as under section 1867 of the Social 

24 Security Act, 42 U.S.C. 1395dd; popularly known as 

25 EMTALA), a health care provider is not required to 


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1 furnish any items or services to an individual who 

2 has exhausted benefits under limited benefit insur3 ance for a plan year without the individual (or an4 other person on the individual’s behalf) providing for 

5 such advance or guarantee of payment for such 

6 items and services as may be arranged between the 

7 health care provider and the individual. 

8 Subtitle C—Health Insurance Tax 

9 Benefit 

10 SEC. 131. HEALTH INSURANCE TAX BENEFIT. 

11 (a) IN GENERAL.—Subpart C of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of 

13 1986 is amended by inserting after section 36B the fol14 lowing new section: 

15 ‘‘SEC. 36C. HEALTH INSURANCE TAX CREDIT. 

16 ‘‘(a) IN GENERAL.—In the case of an individual who 

17 is a qualified resident, there shall be allowed as a credit 

18 against the tax imposed by this subtitle for any taxable 

19 year an amount equal to the health credit amount of the 

20 taxpayer for the taxable year. 

21 ‘‘(b) HEALTH CREDIT AMOUNT.—For purposes of 

22 this section— 

23 ‘‘(1) IN GENERAL.—The term ‘health credit 

24 amount’ means the sum of the amounts determined 


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1 under paragraph (2) with respect to all months of 

2 the taxpayer for the taxable year. 

3 ‘‘(2) MONTHLY CREDIT AMOUNT.— 

4 ‘‘(A) IN GENERAL.—Subject to paragraph 

5 (4), the amount determined under this para6 graph with respect to any month shall be an 

7 amount equal to the sum of— 

‘‘(i) 1 8 ⁄12 of $2,500 in the case of any 

9 month the first day of which the taxpayer 

10 is a qualified resident and is covered by 

11 creditable coverage (twice such amount in 

12 the case of a joint return if both spouses 

13 are so covered by creditable coverage and 

14 are qualified residents), plus 

‘‘(ii) 1 15 ⁄12 of an amount equal to 

16 $1,500 multiplied by the number of quali17 fying children (within the meaning of sec18 tion 152) who are qualified residents 

19 and— 

20 ‘‘(I) for whom the taxpayer is al21 lowed a deduction under section 151 

22 for the taxable year in which such 

23 month ends, and 


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1 ‘‘(II) who are covered by cred2 itable coverage on the first day of 

3 such month. 

4 ‘‘(B) CARRYFORWARD OF MONTHLY CRED5 IT AMOUNT IN CASE CREDIT AMOUNT EXCEEDS

6 HSA CONTRIBUTIONS AND PREMIUM PAY7 MENTS.—In the case of any month for which 

8 the credit amount determined with respect to 

9 the taxpayer under subparagraph (A) exceeds 

10 the limitation amount determined with respect 

11 to the taxpayer for such month under para12 graph (3), such excess may be carried forward 

13 to any subsequent month during the taxable 

14 year for purposes of determining the credit 

15 amount for such month under this paragraph. 

16 ‘‘(3) MONTHLY LIMITATION.— 

17 ‘‘(A) IN GENERAL.—The amount deter18 mined under paragraph (2) for any month of 

19 the taxpayer shall not exceed the sum of— 

20 ‘‘(i) the amounts contributed to a 

21 health savings account of the taxpayer for 

22 such month, plus 

23 ‘‘(ii) the premiums paid by the tax24 payer for creditable coverage. 


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1 ‘‘(B) CARRYFORWARD OF MONTHLY LIMI2 TATION IN CASE HSA CONTRIBUTIONS AND PRE3 MIUM PAYMENTS EXCEED MONTHLY CREDIT

4 AMOUNT.—In the case of any month for which 

5 the amount determined with respect to the tax6 payer under subparagraph (A) exceeds the cred7 it amount determined with respect to the tax8 payer for such month under paragraph (2), 

9 such excess may be carried forward to any sub10 sequent month during the taxable year for pur11 poses of determining the limitation under sub12 paragraph (A). 

13 ‘‘(4) ADJUSTMENT FOR LIMITED BENEFIT IN14 SURANCE.—In the case of a taxpayer whose only 

15 health insurance coverage for a month is limited 

16 benefit insurance (as defined in section 123(b) of the 

17 World’s Greatest Healthcare Plan of 2017), the 

18 amount determined under paragraph (2) shall be de19 creased by such proportion as the Secretary, in con20 sultation with the Secretary of Health and Human 

21 Services, determines appropriate, taking into ac22 count the ratio of the actuarial value of such limited 

23 benefit insurance to the average actuarial value of 

24 health insurance coverage that is not limited benefit 

25 insurance. 


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1 ‘‘(5) ADJUSTMENT FOR GEOGRAPHIC AREA AND

2 AGE OF COVERED INDIVIDUAL.—The amount deter3 mined under paragraph (2) shall be adjusted, in a 

4 manner specified by the Secretary, in consultation 

5 with and based on data collected by the Secretary of 

6 Health and Human Services, to take into account, 

7 for a taxpayer or other covered individual of an age 

8 and residing in an area, the ratio of the average cost 

9 of typical individual health insurance coverage for an 

10 individual of such age and residing in such area to 

11 the national average cost of such typical health in12 surance coverage. Such adjustment shall be made in 

13 a manner so that the application of this paragraph 

14 is estimated not to change the aggregate amount of 

15 the credits allowable under this section for taxable 

16 years ending in a year. 

17 ‘‘(c) COORDINATION WITH EMPLOYER-PROVIDED

18 HEALTH INSURANCE TAX SUBSIDY.— 

19 ‘‘(1) CREDIT LIMITED BY EMPLOYER-PROVIDED

20 HEALTH INSURANCE TAX SUBSIDY.—The credit al21 lowed under this section for any taxable year shall 

22 not exceed an amount equal to the excess (if any) 

23 of— 

24 ‘‘(A) the maximum credit which would be 

25 allowed for all months of the taxpayer during 


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1 the taxable year (determined under subsection 

2 (b)(2) and without regard to this subsection, 

3 the limitation under subsection (b)(3), and any 

4 reduction under subsection (d)(1)), over 

5 ‘‘(B) the taxpayer’s employer-provided 

6 health insurance tax subsidy for the taxable 

7 year. 

8 ‘‘(2) EMPLOYER-PROVIDED HEALTH INSURANCE

9 TAX SUBSIDY.—For purposes of this subsection— 

10 ‘‘(A) IN GENERAL.—The term ‘employer11 provided health insurance tax subsidy’ means, 

12 with respect to any taxpayer for a taxable year, 

13 the sum of— 

14 ‘‘(i) the Federal income tax subsidy of 

15 the taxpayer for the taxable year, plus 

16 ‘‘(ii) the Federal payroll tax subsidy 

17 of the taxpayer for the taxable year. 

18 ‘‘(B) FEDERAL INCOME TAX SUBSIDY.— 

19 The term ‘Federal income tax subsidy’ means, 

20 with respect to any taxpayer for the taxable 

21 year, the excess (if any) of— 

22 ‘‘(i) the amount of tax that would 

23 have been imposed by this chapter for the 

24 taxable year had such tax been determined 

25 without regard to this section and by inVerDate Sep 11 2014 21:30 Mar 06, 2017 Jkt 069200 PO 00000 Frm 00032 Fmt 6652 Sfmt 6201 E:\BILLS\H1275.IH H1275

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1 cluding amounts otherwise excluded from 

2 gross income which were paid by or on be3 half of the taxpayer for employer-provided 

4 insurance that constitutes medical care, 

5 over 

6 ‘‘(ii) the amount of tax imposed by 

7 this chapter for the taxable year (deter8 mined without regard to this section). 

9 ‘‘(C) FEDERAL PAYROLL TAX SUBSIDY.— 

10 The term ‘Federal payroll tax subsidy’ means, 

11 with respect to any taxpayer for the taxable 

12 year, the excess (if any) of— 

13 ‘‘(i) the sum of— 

14 ‘‘(I) the amount of tax that 

15 would have been imposed by chapter 

16 21 with respect to any wages of the 

17 taxpayer paid during the taxable year 

18 had such tax been determined by in19 cluding amounts otherwise excluded 

20 from wages which were paid by or on 

21 behalf of the taxpayer during the tax22 able year for employer-provided insur23 ance that constitutes medical care, 

24 plus 


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1 ‘‘(II) the amount of tax that 

2 would have been imposed by chapter 2 

3 on any self-employment income of the 

4 taxpayer for such taxable year had 

5 self-employment income been deter6 mined without regard to any deduc7 tion from gross income for amounts 

8 paid for insurance which constitutes 

9 medical care for the taxpayer, the tax10 payer’s spouse, and any qualifying 

11 children (within the meaning of sec12 tion 152) for whom the taxpayer is al13 lowed a deduction under section 151 

14 for the taxable year, over 

15 ‘‘(ii) the amount of tax imposed with 

16 respect to the taxpayer during such taxable 

17 year under chapter 21 and for such taxable 

18 year under chapter 2. 

19 ‘‘(d) RECONCILIATION OF CREDIT AND ADVANCE

20 CREDIT.— 

21 ‘‘(1) IN GENERAL.—The amount of the credit 

22 allowed under this section for any taxable year (after 

23 the application of subsections (b) and (c)) shall be 

24 reduced (but not below zero) by the amount of any 


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1 advance payment of such credit under subsection 

2 (e)(1). 

3 ‘‘(2) EXCESS ADVANCE PAYMENTS.— 

4 ‘‘(A) IN GENERAL.—If the advance pay5 ments to a taxpayer under subsection (e)(1) for 

6 a taxable year exceed the credit allowed by this 

7 section (determined without regard to para8 graph (1)), the tax imposed by this chapter for 

9 the taxable year shall be increased by the 

10 amount of such excess. 

11 ‘‘(B) LIMITATION ON INCREASE.—In the 

12 case of a taxpayer whose household income is 

13 less than 400 percent of the poverty line for the 

14 size of the family involved for the taxable year, 

15 the amount of the increase under subparagraph 

16 (A) shall in no event exceed the applicable dol17 lar amount determined in accordance with the 

18 following table (one-half of such amount in the 

19 case of a taxpayer whose tax is determined 

20 under section 1(c) for the taxable year): 

‘‘If the household income

(expressed as a percent

of poverty line) is: 

The applicable 

dollar 

amount is: 

Less than 200% .............................................................. $600

At least 200% but less than 300% ................................ $1,500

At least 300% but less than 400% ................................ $2,500. 

21 ‘‘(e) SPECIAL RULES.—For purpose of this section— 


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1 ‘‘(1) ADVANCE PAYMENT PROGRAM.— 

2 ‘‘(A) IN GENERAL.—The Secretary of the 

3 Treasury, in consultation with the Secretary of 

4 Health and Human Services, shall establish a 

5 program— 

6 ‘‘(i) to make advance determinations 

7 with respect to the eligibility of individuals 

8 for the credit allowed under this section, 

9 and 

10 ‘‘(ii) to make advance payments of the 

11 credit allowed under this section, at the 

12 election of any such individual so eligible, 

13 directly to the health savings account of 

14 any such individual, or, as a subsidy to the 

15 cost of health insurance coverage provided 

16 to any such individual, to the health insur17 ance issuer providing such coverage or the 

18 person that administers the plan benefits 

19 with respect to such coverage. 

20 ‘‘(B) PROGRAM REQUIREMENTS.—Such 

21 program shall be established under rules similar 

22 to the rules of section 1412 of the Patient Pro23 tection and Affordable Care Act, as in effect on 

24 the day before the date of the enactment of this 

25 section, except that advance determinations and 


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1 advance payments shall be made on request of 

2 the individual with respect to whom the deter3 mination is to be made. 

4 ‘‘(2) INFORMATION REQUIREMENTS.— 

5 ‘‘(A) IN GENERAL.—Each person providing 

6 health insurance coverage which constitutes 

7 medical care, and each trustee of a health sav8 ings account, shall provide the following infor9 mation to the Secretary and to the taxpayer 

10 with respect to such coverage or such account: 

11 ‘‘(i) The total premium for the cov12 erage without regard to the credit under 

13 this section. 

14 ‘‘(ii) The aggregate amount of any ad15 vance payment of such credit made with 

16 respect to such coverage or to such ac17 count. 

18 ‘‘(iii) The name, address, age, and 

19 TIN of the primary insured or account 

20 holder (as the case may be) and the name, 

21 age, and TIN of each other individual ob22 taining coverage under such policy of in23 surance. 


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1 ‘‘(iv) Any information provided to 

2 such person necessary to determine eligi3 bility for, and the amount of, such credit. 

4 ‘‘(v) Information necessary to deter5 mine whether a taxpayer has received ex6 cess advance payments. 

7 ‘‘(B) EXCEPTION.—Subparagraph (A) 

8 shall not apply to any coverage with respect to 

9 which reporting under section 6051 is required. 

10 ‘‘(3) INDEXING.— 

11 ‘‘(A) IN GENERAL.—In the case of any cal12 endar year beginning after 2016, each of the 

13 dollar amounts in subsection (b)(2) and in the 

14 table contained under subsection (d)(2)(B) shall 

15 be equal to such dollar amount multiplied by 

16 the ratio of— 

17 ‘‘(i) the current dollar gross domestic 

18 product (as determined based on the third 

19 estimate of the Bureau of Economic Anal20 ysis of the Department of Commerce for 

21 the second quarter of the previous year), to 

22 ‘‘(ii) the current dollar gross domestic 

23 product (as so determined) for the second 

24 quarter of 2015. 


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1 ‘‘(B) ROUNDING.—If the amount of any 

2 change under subparagraph (A) is not a mul3 tiple of $50, such change shall be rounded to 

4 the next lowest multiple of $50. 

5 ‘‘(f) DEFINITIONS.—For purposes of this section— 

6 ‘‘(1) CREDITABLE COVERAGE.— 

7 ‘‘(A) IN GENERAL.—The term ‘creditable 

8 coverage’ has the meaning given such term for 

9 purposes of title XXVII of the Public Health 

10 Service Act. Such term shall not include cov11 erage under any health plan that includes cov12 erage for abortions (other than any abortion de13 scribed in subparagraph (B)). 

14 ‘‘(B) EXCEPTION.—The second sentence of 

15 subparagraph (A) shall not apply to an abor16 tion— 

17 ‘‘(i) if the pregnancy is the result of 

18 an act of rape or incest, or 

19 ‘‘(ii) in the case where a woman suf20 fers from a physical disorder, physical in21 jury, or physical illness that would, as cer22 tified by a physician, place the woman in 

23 danger of death unless an abortion is per24 formed, including a life-endangering physVerDate Sep 11 2014 21:30 Mar 06, 2017 Jkt 069200 PO 00000 Frm 00039 Fmt 6652 Sfmt 6201 E:\BILLS\H1275.IH H1275

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1 ical condition caused by or arising from 

2 the pregnancy itself. 

3 ‘‘(C) SEPARATE ABORTION COVERAGE OR

4 PLAN ALLOWED.— 

5 ‘‘(i) OPTION TO PURCHASE SEPARATE

6 COVERAGE OR PLAN.—Nothing in subpara7 graph (A) shall be construed as prohibiting 

8 any individual from purchasing separate 

9 coverage for abortions described in such 

10 subparagraph, or a health plan that in11 cludes such abortions, so long as no credit 

12 is allowed under this section with respect 

13 to the premiums for such coverage or plan. 

14 ‘‘(ii) OPTION TO OFFER COVERAGE OR

15 PLAN.—Nothing in subparagraph (A) shall 

16 restrict any non-Federal health insurance 

17 issuer offering a health plan from offering 

18 separate coverage for abortions described 

19 in such subparagraph, or a plan that in20 cludes such abortions, so long as premiums 

21 for such separate coverage or plan are not 

22 paid for with any amount attributable to 

23 the credit allowed under this section (or 

24 the amount of any advance payment of the 

25 credit). 


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1 ‘‘(2) QUALIFIED RESIDENT.—The term ‘quali2 fied resident’ means an individual who is a citizen or 

3 national of the United States or otherwise lawfully 

4 residing in the United States under color of law.’’. 

5 (b) DISQUALIFICATION FROM EXCHANGE PLAN SUB6 SIDIES FOR INDIVIDUAL ONCE THEY ELECT TAX BENE7 FITS.—Section 36B(c)(1) of such Code is amended by 

8 adding at the end the following new subparagraph: 

9 ‘‘(E) DENIAL OF CREDIT FOR THOSE

10 ELECTING UNIVERSAL CREDIT.—In the case of 

11 an individual who is allowed a credit under sec12 tion 36C for any taxable year, no credit shall be 

13 allowed under this section to such individual for 

14 such taxable year or any subsequent taxable 

15 year.’’. 

16 (c) GUIDANCE.—The Secretary of the Treasury shall 

17 issue such guidance as is necessary— 

18 (1) to assist employees and employers in adjust19 ing Federal income tax withholding to take into ac20 count the health insurance tax credit under section 

21 36C of the Internal Revenue Code of 1986 (and any 

22 advance payment thereof), and 

23 (2) to require employers to report to each em24 ployee with respect to periods not longer than quar25 terly the employer-provided health insurance tax 


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1 subsidy (as defined in section 36C(c)(2) of such 

2 Code) with respect to such employee for such period. 

3 (d) CLERICAL AMENDMENT.—The table of sections 

4 for subpart C of part IV of subchapter A of chapter 1 

5 of the Internal Revenue Code of 1986 is amended by in6 serting after the item relating to section 36B the following 

7 new item: 

‘‘Sec. 36C. Health insurance tax credit.’’. 

8 (e) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 December 31, 2015. 

11 SEC. 132. APPLICATION OF PORTION OF UNUSED TAX 

12 CREDITS BY STATES FOR INDIGENT HEALTH 

13 CARE. 

14 (a) COMPUTATION OF UNUSED CREDITS.—The Sec15 retary, in consultation with the Secretary of the Treasury, 

16 shall calculate for each State for each year, beginning with 

17 2017, using the most recent data available — 

18 (1) the maximum aggregate amount of credits 

19 under section 36C of the Internal Revenue Code of 

20 1986 that would have been allowed for the year for 

21 qualified residents of the State for taxable years 

22 ending in the year if all eligible qualified residents 

23 had qualified for such credits; 

24 (2) the aggregate amount of credits under such 

25 section that were allowed for taxable years ending in 


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1 that the year by qualified residents of such State; 

2 and 

3 (3) 25 percent of the amount by which— 

4 (A) the amount determined under para5 graph (1) with respect to qualified residents of 

6 the State for such year; exceeds 

7 (B) the amount determined under para8 graph (2) for such State for that year. 

9 (b) APPROPRIATION.—For the purpose of making 

10 grants to States under this section, there is hereby appro11 priated to the Secretary, out of any funds in the Treasury 

12 not otherwise appropriated, for each year (beginning with 

13 2017) an amount equivalent to the amount determined 

14 under subsection (a)(3) for all States under subsection (a) 

15 for the year in which such fiscal year ends, subject to ad16 justment under subsection (d)(2). 

17 (c) GRANTS TO STATES FOR INDIGENT ASSIST18 ANCE.— 

19 (1) APPLICATION.—A State may file with the 

20 Secretary (in a form and manner specified by the 

21 Secretary) an application to provide assistance in 

22 furnishing health services to indigent individuals re23 siding in the State. Such application shall dem24 onstrate the manner in which such assistance is furVerDate Sep 11 2014 21:30 Mar 06, 2017 Jkt 069200 PO 00000 Frm 00043 Fmt 6652 Sfmt 6201 E:\BILLS\H1275.IH H1275

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1 nished in an equitable manner to individuals residing 

2 in all parts of the State. 

3 (2) AMOUNT OF FUNDS.—From the funds ap4 propriated under subsection (b) for a year, the 

5 amount of funds paid to any State in any year 

6 under this section with an application filed in ac7 cordance with paragraph (1) is equal to an amount 

8 specified in the application, but not to exceed the 

9 amount computed under subsection (a)(3) for the 

10 State and the year. 

11 (3) USE OF FUNDS.—Funds paid to a State 

12 under this subsection may be used only to assist in 

13 the furnishing of health services to uninsured indi14 viduals residing in the State or for purposes of in15 creasing the payment adjustments made under sec16 tions 1886(d)(5)(F) and 1923 of the Social Security 

17 Act (42 U.S.C. 1395ww(d)(5)(F), 1396r–4) to hos18 pitals that serve a disproportionate share of such in19 dividuals in the State. 

20 (d) INITIAL ESTIMATE; FINAL CALCULATION AND

21 RECONCILIATION.— 

22 (1) USE OF ESTIMATES.—The calculations 

23 under subsection (a) for a year shall initially be esti24 mated before the beginning of the year. Payments 

25 under this section to a State for a year shall be 


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1 made, subject to reconciliation under paragraph (2), 

2 based on the amount so estimated. 

3 (2) RECONCILIATION BASED ON FINAL CAL4 CULATION.—The calculations under subsection (a) 

5 for a year shall also be made after the end of the 

6 year. Insofar as the amount calculated under this 

7 paragraph for subsection (a)(3) for a State for a 

8 year exceeds (or is less than) by a material amount 

9 from the amount for subsection (a)(3) estimated and 

10 applied for the State and year under paragraph (1), 

11 the amount calculated under subsection (a)(3) for 

12 the State for the 2nd year beginning after such year, 

13 shall be reduced or increased, respectively by the 

14 amount of such excess or deficit. 

15 SEC. 133. MEDICAID OPTION OF ENROLLMENT UNDER PRI16 VATE PLAN AND CONTRIBUTION TO AN HSA. 

17 (a) IN GENERAL.—Notwithstanding any other provi18 sion of law, a State plan under title XIX of the Social 

19 Security Act (42 U.S.C. 1396 et seq.) may make available 

20 to an individual, who is entitled to medical assistance for 

21 a full range of acute care items and services under such 

22 title and at the individual’s option, instead of the medical 

23 assistance otherwise provided, medical assistance con24 sisting of coverage under a health plan that qualifies for 

25 a tax credit under section 36C of the Internal Revenue 


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1 Code of 1986, but only if the State provides for the indi2 vidual medical assistance, in the form of a deposit into 

3 a health savings account for the individual, an amount 

4 equivalent to the amount by which the amount of tax cred5 it for the individual under such section exceeds the cost 

6 of coverage of the individual under the plan. 

7 (b) FFP TREATMENT.—The payments by a State de8 scribed in subsection (a) for coverage under a health plan 

9 and for deposit into a health savings account shall be 

10 treated as medical assistance for purposes of section 1903 

11 of the Social Security Act (42 U.S.C. 1396b) and subject 

12 to Federal financial participating, including the applica13 tion of State matching payments, in the same manner as 

14 other medical assistance furnished under title XIX of such 

15 Act, except that such amount shall be reduced by the 

16 amount of .any health insurance credits provided under 

17 section 36C of the Internal Revenue Code of 1986 with 

18 respect to such coverage or deposit. 

19 SEC. 134. REPEAL OF THE TAX ON EMPLOYEE HEALTH IN20 SURANCE PREMIUMS AND HEALTH PLAN 

21 BENEFITS AND RELATED REPORTING RE22 QUIREMENTS. 

23 (a) EXCISE TAX.—Chapter 43 of the Internal Rev24 enue Code of 1986 is amended by striking section 4980I. 


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1 (b) REPORTING REQUIREMENT.—Section 6051(a) of 

2 such Code is amended by inserting ‘‘and’’ at the end of 

3 paragraph (12), by striking ‘‘, and’’ at the end of para4 graph (13) and inserting a period, and by striking para5 graph (14). 

6 (c) CLERICAL AMENDMENT.—The table of sections 

7 for chapter 43 of such Code is amended by striking the 

8 item relating to section 4980I. 

9 (d) EFFECTIVE DATES.— 

10 (1) IN GENERAL.—Except as provided by para11 graph (2), the amendments made by this section 

12 shall apply to taxable years beginning after Decem13 ber 31, 2019. 

14 (2) REPORTING REQUIREMENT.—The amend15 ment made by subsection (b) shall apply to calendar 

16 years beginning after December 31, 2016. 

17 TITLE II—IMPROVING HEALTH 

18 SAVINGS ACCOUNTS TO PRO19 MOTE ACCOUNTABILITY 

20 SEC. 201. TRANSITION TO NON-DEDUCTIBLE HSAS. 

21 (a) NON-DEDUCTIBLE HSAS.—Subchapter F of 

22 chapter 1 of the Internal Revenue Code of 1986 is amend23 ed by adding at the end the following new part: 

24 ‘‘PART IX—HEALTH SAVINGS ACCOUNTS 

‘‘Sec. 530A. Roth HSAs. 


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1 ‘‘SEC. 530A. ROTH HSAS. 

2 ‘‘(a) IN GENERAL.—A Roth HSA shall be exempt 

3 from taxation under this subtitle. Notwithstanding the 

4 preceding sentence, the Roth HSA shall be subject to the 

5 taxes imposed by section 511 (relating to imposition of 

6 tax on unrelated business income of charitable organiza7 tions). No deduction shall be allowed for any contribution 

8 to a Roth HSA. 

9 ‘‘(b) DOLLAR LIMITATION.— 

10 ‘‘(1) IN GENERAL.—The aggregate amount of 

11 contributions for any taxable year to all Roth HSAs 

12 maintained for the benefit of an individual shall not 

13 exceed the sum of the monthly limitations for month 

14 during such taxable year that the individual is an el15 igible individual. 

16 ‘‘(2) MONTHLY LIMITATION.—The monthly limitation for any month is 1 17 ⁄12 of— 

18 ‘‘(A) in the case of an eligible individual 

19 who has self-only creditable coverage as of the 

20 first day of such month, $5,000, and 

21 ‘‘(B) in the case of an eligible individual 

22 who has family creditable coverage as of the 

23 first day of such month, the amount in effect 

24 under subparagraph (A) for the taxable year 

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1 ing the eligible individual) covered under such 

2 family creditable coverage as of such day. 

3 ‘‘(3) ADDITIONAL CONTRIBUTIONS FOR INDI4 VIDUALS 55 OR OLDER.—In the case of an individual 

5 who has attained age 55 before the close of the tax6 able year, the applicable limitation under subpara7 graphs (A) and (B) of paragraph (2) shall be in8 creased by $1,000. 

9 ‘‘(4) COORDINATION WITH OTHER CONTRIBU10 TIONS.—The limitation which would (but for this 

11 paragraph) apply under this subsection to an indi12 vidual for any taxable year shall be reduced (but not 

13 below zero) by the sum of— 

14 ‘‘(A) the aggregate amount paid for such 

15 taxable year to Archer MSAs of such individual, 

16 ‘‘(B) the aggregate amount contributed to 

17 Roth HSAs of such individual which is exclud18 able from the taxpayer’s gross income for such 

19 taxable year under section 106(d) (and such 

20 amount shall not be allowed as a deduction 

21 under subsection (a)), and 

22 ‘‘(C) the aggregate amount contributed to 

23 Roth HSAs of such individual for such taxable 

24 year under section 408(d)(9) (and such amount 


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1 shall not be allowed as a deduction under sub2 section (a)). 

3 Subparagraph (A) shall not apply with respect to 

4 any individual to whom paragraph (5) applies. 

5 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVID6 UALS.—In the case of individuals who are married 

7 to each other, if either spouse has family coverage— 

8 ‘‘(A) both spouses shall be treated as hav9 ing only such family coverage (and if such 

10 spouses each have family coverage under dif11 ferent plans, as having the family coverage with 

12 the lowest annual deductible), and 

13 ‘‘(B) the limitation under paragraph (1) 

14 (after the application of subparagraph (A) and 

15 without regard to any additional contribution 

16 amount under paragraph (3))— 

17 ‘‘(i) shall be reduced by the aggregate 

18 amount paid to Archer MSAs of such 

19 spouses for the taxable year, and 

20 ‘‘(ii) after such reduction, shall be di21 vided equally between them unless they 

22 agree on a different division. 

23 ‘‘(6) DENIAL OF DEDUCTION TO DEPEND24 ENTS.—No contribution may be made to a Roth 

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1 spect to whom a deduction under section 151 is al2 lowable to another taxpayer for a taxable year begin3 ning in the calendar year in which such individual’s 

4 taxable year begins. 

5 ‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.—The 

6 limitation under this subsection for any month with 

7 respect to an individual shall be zero for the first 

8 month such individual is entitled to benefits under 

9 title XVIII of the Social Security Act and for each 

10 month thereafter. 

11 ‘‘(8) INCREASE IN LIMIT FOR INDIVIDUALS BE12 COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN13 NING OF THE YEAR.— 

14 ‘‘(A) IN GENERAL.—For purposes of com15 puting the limitation under paragraph (1) for 

16 any taxable year, an individual who is an eligi17 ble individual during the last month of such 

18 taxable year shall be treated— 

19 ‘‘(i) as having been an eligible indi20 vidual during each of the months in such 

21 taxable year, and 

22 ‘‘(ii) as having been enrolled, during 

23 each of the months such individual is 

24 treated as an eligible individual solely by 

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1 ductible health plan in which the individual 

2 was enrolled for the last month of such 

3 taxable year. 

4 ‘‘(B) FAILURE TO MAINTAIN CREDITABLE

5 COVERAGE.— 

6 ‘‘(i) IN GENERAL.—If, at any time 

7 during the testing period, the individual is 

8 not an eligible individual, then— 

9 ‘‘(I) gross income of the indi10 vidual for the taxable year in which 

11 occurs the first month in the testing 

12 period for which such individual is not 

13 an eligible individual is increased by 

14 the aggregate amount of all contribu15 tions to the Roth HSA of the indi16 vidual which could not have been 

17 made but for subparagraph (A), and 

18 ‘‘(II) the tax imposed by this 

19 chapter for any taxable year on the 

20 individual shall be increased by 10 

21 percent of the amount of such in22 crease. 

23 ‘‘(ii) EXCEPTION FOR DISABILITY OR

24 DEATH.—Subclauses (I) and (II) of clause 

25 (i) shall not apply if the individual ceased 


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1 to be an eligible individual by reason of the 

2 death of the individual or the individual 

3 becoming disabled (within the meaning of 

4 section 72(m)(7)). 

5 ‘‘(iii) TESTING PERIOD.—The term 

6 ‘testing period’ means the period beginning 

7 with the last month of the taxable year re8 ferred to in subparagraph (A) and ending 

9 on the last day of the 12th month fol10 lowing such month. 

11 ‘‘(c) ROTH HSA.—For purposes of this section— 

12 ‘‘(1) IN GENERAL.—The term ‘Roth HSA’ 

13 means a trust created or organized in the United 

14 States as a Roth HSA exclusively for the purpose of 

15 paying the qualified medical expenses of the account 

16 beneficiary, but only if the written governing instru17 ment creating the trust meets the following require18 ments: 

19 ‘‘(A) Except in the case of a rollover con20 tribution described in subsection (f)(5) or sec21 tion 220(f)(5), no contribution will be accept22 ed— 

23 ‘‘(i) unless it is in cash, or 

24 ‘‘(ii) to the extent such contribution, 

25 when added to previous contributions to 


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1 the trust for the calendar year, exceeds the 

2 sum of— 

3 ‘‘(I) the dollar amount in effect 

4 under subsection (b)(2)(B), and 

5 ‘‘(II) the dollar amount in effect 

6 under subsection (b)(3). 

7 ‘‘(B) The trustee is a bank (as defined in 

8 section 408(n)), an insurance company (as de9 fined in section 816), or another person who 

10 demonstrates to the satisfaction of the Sec11 retary that the manner in which such person 

12 will administer the trust will be consistent with 

13 the requirements of this section. 

14 ‘‘(C) No part of the trust assets will be in15 vested in life insurance contracts. 

16 ‘‘(D) The assets of the trust will not be 

17 commingled with other property except in a 

18 common trust fund or common investment 

19 fund. 

20 ‘‘(E) The interest of an individual in the 

21 balance in his account is nonforfeitable. 

22 ‘‘(2) QUALIFIED MEDICAL EXPENSES.—For 

23 purposes of this section— 

24 ‘‘(A) IN GENERAL.—The term ‘qualified 

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1 count beneficiary, amounts paid by such bene2 ficiary for medical care (as defined in section 

3 213(d) as in effect on the day before the date 

4 of the enactment of the World’s Greatest 

5 Healthcare Plan of 2017) for such individual, 

6 the spouse of such individual, and any depend7 ent (as defined in section 152, determined with8 out regard to subsections (b)(1), (b)(2), and 

9 (d)(1)(B) thereof) of such individual, but only 

10 to the extent such amounts are not com11 pensated for by insurance or otherwise. 

12 ‘‘(B) LIMITATION ON HEALTH INSURANCE

13 PURCHASED FROM ACCOUNT.—Such term shall 

14 not include any payment for health benefits cov15 erage that is not creditable coverage (as defined 

16 in section 36C). 

17 ‘‘(C) EXCEPTIONS.—Subparagraph (B) 

18 shall not apply to any expense for coverage 

19 under— 

20 ‘‘(i) a health plan during any period 

21 of continuation coverage required under 

22 any Federal law, 

23 ‘‘(ii) a qualified long-term care insur24 ance contract (as defined in section 

25 7702B(b)), 


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1 ‘‘(iii) a health plan during a period in 

2 which the individual is receiving unemploy3 ment compensation under any Federal or 

4 State law, or 

5 ‘‘(iv) in the case of an account bene6 ficiary who has attained the age specified 

7 in section 1811 of the Social Security Act, 

8 any health insurance other than a medi9 care supplemental policy (as defined in sec10 tion 1882 of the Social Security Act). 

11 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac12 count beneficiary’ means the individual on whose be13 half the Roth HSA was established. 

14 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 

15 to the following rules shall apply for purposes of this 

16 section: 

17 ‘‘(A) Section 219(f)(3) (relating to time 

18 when contributions deemed made). 

19 ‘‘(B) Except as provided in section 106(d), 

20 section 219(f)(5) (relating to employer pay21 ments). 

22 ‘‘(C) Section 408(g) (relating to commu23 nity property laws). 

24 ‘‘(D) Section 408(h) (relating to custodial 

25 accounts). 


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1 ‘‘(d) ELIGIBLE INDIVIDUAL; CREDITABLE COV2 ERAGE.—For purposes of this section— 

3 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

4 individual’ means, with respect to any month, any 

5 individual if such individual is covered under cred6 itable coverage as of the first day of such month. 

7 ‘‘(2) CREDITABLE COVERAGE.—The term ‘cred8 itable coverage’ shall have the meaning given such 

9 term in section 36C(f). 

10 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 

11 ‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL

12 EXPENSES.—Any amount paid or distributed out of 

13 a Roth HSA which is used exclusively to pay quali14 fied medical expenses of any account beneficiary 

15 shall not be includible in gross income. 

16 ‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR

17 QUALIFIED MEDICAL EXPENSES.—Any amount paid 

18 or distributed out of a Roth HSA which is not used 

19 exclusively to pay the qualified medical expenses of 

20 the account beneficiary shall be included in the gross 

21 income of such beneficiary. 

22 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE23 FORE DUE DATE OF RETURN.— 

24 ‘‘(A) IN GENERAL.—If any excess con25 tribution is contributed for a taxable year to 


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1 any Roth HSA of an individual, paragraph (2) 

2 shall not apply to distributions from the Roth 

3 HSAs of such individual (to the extent such dis4 tributions do not exceed the aggregate excess 

5 contributions to all such accounts of such indi6 vidual for such year) if— 

7 ‘‘(i) such distribution is received by 

8 the individual on or before the last day 

9 prescribed by law (including extensions of 

10 time) for filing such individual’s return for 

11 such taxable year, and 

12 ‘‘(ii) such distribution is accompanied 

13 by the amount of net income attributable 

14 to such excess contribution. 

15 Any net income described in clause (ii) shall be 

16 included in the gross income of the individual 

17 for the taxable year in which it is received. 

18 ‘‘(B) EXCESS CONTRIBUTION.—For pur19 poses of subparagraph (A), the term ‘excess 

20 contribution’ means any contribution (other 

21 than a rollover contribution described in para22 graph (5) or section 220(f)(5)) which exceeds 

23 the contribution limitation with respect to the 

24 individual for the taxable year. 


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1 ‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT

2 USED FOR QUALIFIED MEDICAL EXPENSES.— 

3 ‘‘(A) IN GENERAL.—The tax imposed by 

4 this chapter on the account beneficiary for any 

5 taxable year in which there is a payment or dis6 tribution from a Roth HSA of such beneficiary 

7 which is includible in gross income under para8 graph (2) shall be increased by 10 percent of 

9 the amount which is so includible. 

10 ‘‘(B) EXCEPTION FOR DISABILITY OR

11 DEATH.—Subparagraph (A) shall not apply if 

12 the payment or distribution is made after the 

13 account beneficiary becomes disabled within the 

14 meaning of section 72(m)(7) or dies. 

15 ‘‘(C) EXCEPTION FOR DISTRIBUTIONS

16 AFTER MEDICARE ELIGIBILITY.—Subparagraph 

17 (A) shall not apply to any payment or distribu18 tion after the date on which the account bene19 ficiary attains the age specified in section 1811 

20 of the Social Security Act. 

21 ‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 

22 described in this paragraph as a rollover contribu23 tion if it meets the requirements of subparagraphs 

24 (A) and (B). 


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1 ‘‘(A) IN GENERAL.—Paragraph (2) shall 

2 not apply to any amount paid or distributed 

3 from a health savings account (as defined in 

4 section 223) or a Roth HSA to the account 

5 beneficiary to the extent the amount received is 

6 paid into a Roth HSA for the benefit of such 

7 beneficiary not later than the 60th day after 

8 the day on which the beneficiary receives the 

9 payment or distribution. 

10 ‘‘(B) LIMITATION.—This paragraph shall 

11 not apply to any amount described in subpara12 graph (A) received by an individual from a 

13 health savings account or a Roth HSA if, at 

14 any time during the 1-year period ending on the 

15 day of such receipt, such individual received any 

16 other amount described in subparagraph (A) 

17 from a health savings account or Roth HSA 

18 which was not includible in the individual’s 

19 gross income because of the application of this 

20 paragraph. 

21 ‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI22 VORCE.—The transfer of an individual’s interest in 

23 a Roth HSA to an individual’s spouse or former 

24 spouse under a divorce or separation instrument de25 scribed in subparagraph (A) of section 71(b)(2) shall 


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1 not be considered a taxable transfer made by such 

2 individual notwithstanding any other provision of 

3 this subtitle, and such interest shall, after such 

4 transfer, be treated as a Roth HSA with respect to 

5 which such spouse is the account beneficiary. 

6 ‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT

7 BENEFICIARY.—If an individual acquires an account 

8 beneficiary’s interest in a health savings account by 

9 reason of the death of the account beneficiary, such 

10 health savings account shall be treated as if the indi11 vidual were the account beneficiary. 

12 ‘‘(f) COST-OF-LIVING ADJUSTMENT.— 

13 ‘‘(1) IN GENERAL.—In the case of any calendar 

14 year beginning after 2016, the $5,000 dollar amount 

15 in subsection (b)(2) shall be increased by an amount 

16 equal to— 

17 ‘‘(A) such dollar amount, multiplied by 

18 ‘‘(B) the cost-of-living adjustment deter19 mined under section 1(f)(3) for the calendar 

20 year, determined— 

21 ‘‘(i) by substituting ‘calendar year 

22 2015’ for ‘calendar year 1992’ in subpara23 graph (B) thereof, and 

24 ‘‘(ii) by substituting ‘CPI medical care 

25 component’ for ‘CPI’. 


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1 ‘‘(2) CPI MEDICAL CARE COMPONENT.—For 

2 purposes of this paragraph, the term ‘CPI medical 

3 care component’ means the medical care component 

4 for the Consumer Price Index for All Urban Con5 sumers published by the Department of Labor. 

6 ‘‘(3) ROUNDING.—If the amount of any in7 crease under the preceding sentence is not a mul8 tiple of $50, such increase shall be rounded to the 

9 next lowest multiple of $50. 

10 ‘‘(g) REPORTS.—The Secretary may require— 

11 ‘‘(1) the trustee of a Roth HSA to make such 

12 reports regarding such account to the Secretary and 

13 to the account beneficiary with respect to contribu14 tions, distributions, the return of excess contribu15 tions, and such other matters as the Secretary deter16 mines appropriate, and 

17 ‘‘(2) any person who provides an individual with 

18 creditable coverage to make such reports to the Sec19 retary and to the account beneficiary with respect to 

20 such plan as the Secretary determines appropriate. 

21 The reports required by this subsection shall be filed at 

22 such time and in such manner and furnished to such indi23 viduals at such time and in such manner as may be re24 quired by the Secretary.’’. 


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1 (b) LIMIT ON CONTRIBUTIONS TO DEDUCTIBLE

2 HEALTH SAVINGS ACCOUNTS.—Section 223 of such Code 

3 is amended by adding at the end the following new sub4 section: 

5 ‘‘(i) LIMITED CONTRIBUTIONS AFTER 2016.— 

6 ‘‘(1) IN GENERAL.—No contribution may be ac7 cepted by a health savings account after December 

8 31, 2016. 

9 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 

10 apply— 

11 ‘‘(A) in the case of a rollover contribution 

12 described in subsection (f)(5) or section 

13 220(f)(5), or 

14 ‘‘(B) in the case of a month for which an 

15 individual is covered by insurance that con16 stitutes medical care and that is provided by an 

17 employer with respect to which an election is in 

18 effect for such month under section 131(b) of 

19 the World’s Greatest Healthcare Plan of 

20 2017.’’. 

21 (c) CLERICAL AMENDMENT.—The table of parts for 

22 subchapter F of chapter 1 of such Code is amended by 

23 adding a the end the following new item: 

‘‘PART IX. ROTH HEALTH SAVINGS ACCOUNTS’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2016. 

4 SEC. 202. ELIMINATION OF MEDICAL EXPENSE DEDUCTION. 

5 Section 213 of the Internal Revenue Code of 1986 

6 is amended by adding at the end the following new sub7 section: 

8 ‘‘(g) TERMINATION.—Except in the case of long-term 

9 care premiums (as defined in subsection (d)(10)), sub10 section (a) shall not apply to any amounts paid during 

11 any taxable year beginning after December 31, 2015.’’. 

12 SEC. 203. TREATMENT OF HSA AFTER DEATH OF ACCOUNT 

13 BENEFICIARY. 

14 (a) IN GENERAL.—Section 223(f)(8) of the Internal 

15 Revenue Code of 1986 is amended to read as follows: 

16 ‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT

17 BENEFICIARY.—If an individual acquires an account 

18 beneficiary’s interest in a health savings account by 

19 reason of the death of the account beneficiary, such 

20 health savings account shall be treated as if the indi21 vidual were the account beneficiary.’’. 

22 (b) EFFECTIVE DATE.—The amendment made by 

23 this section shall apply with respect to interests acquired 

24 after the date of the enactment of this Act. 


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1 SEC. 204. TREATMENT OF CONCIERGE MEDICINE. 

2 (a) HSAS.— 

3 (1) ROTH HSA.—Section 530A(c)(2)(A) of the 

4 Internal Revenue Code of 1986, as added by section 

5 201(a) of this Act, is amended by adding at the end 

6 the following: ‘‘Such term shall include the payment 

7 of a monthly or other prepaid amount for the fur8 nishing (or access to the furnishing) by a physician 

9 or group of physicians of physician professional serv10 ices (and ancillary services).’’. 

11 (2) HSA.—Section 223(d)(2)(A) of such Code 

12 is amended by adding at the end the following: 

13 ‘‘Such term shall include the payment of a monthly 

14 or other prepaid amount for the furnishing (or ac15 cess to the furnishing) by a physician or group of 

16 physicians of physician professional services (and an17 cillary services).’’. 

18 (b) NOT TREATED AS HEALTH INSURANCE COV19 ERAGE.— 

20 (1) IN GENERAL.—For purposes of title XXVII 

21 of the Public Health Service Act (42 U.S.C. 300gg), 

22 subtitle B of title I of the Employee Retirement and 

23 Income Security Act of 1974 (29 U.S.C. 1021 et 

24 seq.), PPACA, and this Act, the offering of con25 cierge medicine shall not be treated as the offering 


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1 of health insurance coverage and shall not be subject 

2 to regulations as such coverage under such Acts. 

3 (2) CONCIERGE MEDICINE DEFINED.—In this 

4 subsection, the term ‘‘concierge medicine’’ means the 

5 furnishing (or access to the furnishing) by a physi6 cian or group of physicians of physician professional 

7 services (and ancillary services) in return for pay8 ment of a monthly or other prepaid amount. 

9 TITLE III—STATE FLEXIBILITY 

10 IN REGULATION OF HEALTH 

11 INSURANCE COVERAGE 

12 SEC. 301. STATE FLEXIBILITY IN REGULATION OF HEALTH 

13 INSURANCE COVERAGE. 

14 (a) IN GENERAL.—States are given the flexibility 

15 under section 122(b) to revise their regulations of the 

16 health insurance marketplace, without regard to many of 

17 the requirements imposed under PPACA, in order to pro18 mote freedom of choice of affordable health insurance cov19 erage options offered outside of an Exchange. 

20 (b) CONSTRUCTION.—Nothing in the Employee Re21 tirement and Income Security Act of 1974 (29 U.S.C. 

22 1001 et seq.) or of any amendments made by the Health 

23 Insurance Portability and Accountability Act of 1996 

24 (Public Law 104–191) shall be interpreted as preventing 

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1 tribution towards, individual health insurance coverage for 

2 employees and dependent family members. 

3 (c) ASSOCIATION HEALTH PLANS.—Nothing in this 

4 Act shall be construed as prohibiting the formation of as5 sociation health plans (as defined under State law). 

6 (d) HIGH-RISK POOLS.—Nothing in this Act shall be 

7 construed as prohibiting States from establishing pooling 

8 arrangements for high-risk individuals. 

9 TITLE IV—MEDICAID PAYMENT 

10 REFORM 

11 SEC. 401. MEDICAID PAYMENT REFORM. 

12 (a) IN GENERAL.—Title XIX of the Social Security 

13 Act (42 U.S.C. 1396 et seq.) is amended by inserting after 

14 section 1903 the following section: 

15 ‘‘SEC. 1903A. REFORMED PAYMENT TO STATES. 

16 ‘‘(a) REFORMED PAYMENT SYSTEM.— 

17 ‘‘(1) IN GENERAL.—For quarters beginning on 

18 or after the implementation date (as defined in sub19 section (k)(1)), in lieu of amounts otherwise payable 

20 to a State under this title (including any payments 

21 attributable to section 1923), except as otherwise 

22 provided in this section, the amount payable to such 

23 State shall be equal to the sum of the following: 

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1 ficiary-based amount specified in subsection (b) 

2 for the quarter and the State, adjusted under 

3 subsection (e). 

4 ‘‘(B) CHRONIC CARE QUALITY BONUS.— 

5 The amount (if any) of the chronic care quality 

6 bonus payment specified in subsection (f) for 

7 the quarter for the State. 

8 ‘‘(2) REQUIREMENT OF STATE SHARE.— 

9 ‘‘(A) IN GENERAL.—A State shall make, 

10 from non-Federal funds, expenditures in an 

11 amount equal to its State share (as determined 

12 under subparagraph (B)) for a quarter for 

13 items, services, and other costs for which, but 

14 for paragraph (1), Federal funds would have 

15 been payable under this title. 

16 ‘‘(B) STATE SHARE.—The State share for 

17 a State for a quarter in a fiscal year is equal 

18 to the product of— 

19 ‘‘(i) the aggregate beneficiary-based 

20 amount specified in subsection (b) for the 

21 quarter and the State; and 

22 ‘‘(ii) the ratio of— 

23 ‘‘(I) the State percentage de24 scribed in subparagraph (D)(ii) for 

25 such State and fiscal year; to 


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1 ‘‘(II) the Federal percentage de2 scribed in subparagraph (D)(i) for 

3 such State and fiscal year. 

4 ‘‘(C) NONPAYMENT FOR FAILURE TO PAY

5 STATE SHARE.— 

6 ‘‘(i) IN GENERAL.—If a State fails to 

7 expend the amount required under sub8 paragraph (A) for a quarter in a fiscal 

9 year, the amount payable to the State 

10 under paragraph (1) shall be reduced by 

11 the product of the amount by which the 

12 State payment is less than the State share 

13 and the ratio of— 

14 ‘‘(I) the Federal percentage de15 scribed in subparagraph (D)(i) for 

16 such State and fiscal year; to 

17 ‘‘(II) the State percentage de18 scribed in subparagraph (D)(ii) for 

19 such State and fiscal year. 

20 ‘‘(ii) GRACE PERIOD.—A State shall 

21 not be considered to have failed to provide 

22 payment of its required State share for a 

23 quarter under subparagraph (A) if the ag24 gregate State payment towards the State’s 

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1 riod beginning with such quarter exceeds 

2 the required State share amount for such 

3 4-quarter period. 

4 ‘‘(D) FEDERAL AND STATE PERCENT5 AGES.—In this paragraph, with respect to a 

6 State and a fiscal year: 

7 ‘‘(i) FEDERAL PERCENTAGE.—The 

8 Federal percentage described in this clause 

9 is 75 percent or, if higher, the Federal 

10 medical assistance percentage for such 

11 State for such fiscal year. 

12 ‘‘(ii) STATE PERCENTAGE.—The State 

13 percentage described in this clause is 100 

14 percent minus the Federal percentage de15 scribed in clause (i). 

16 ‘‘(E) RULES FOR CREDITING TOWARD

17 STATE SHARE.— 

18 ‘‘(i) GENERAL LIMITATION TO MATCH19 ABLE EXPENDITURES.—A payment for ex20 penditures shall not be counted toward the 

21 State share under subparagraph (A) unless 

22 Federal payments may be used for such 

23 expenditures consistent with paragraph 

24 (3)(B). 


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1 ‘‘(ii) FURTHER LIMITATIONS ON AL2 LOWABLE EXPENDITURES.—A payment for 

3 expenditures shall not be counted towards 

4 the State share under subparagraph (A) if 

5 the expenditure is for any of the following: 

6 ‘‘(I) ABORTION.—Expenditures 

7 for an abortion. 

8 ‘‘(II) INTERGOVERNMENTAL

9 TRANSFERS.—An expenditure that is 

10 attributable to an intergovernmental 

11 transfer. 

12 ‘‘(III) CERTIFIED PUBLIC EX13 PENDITURES.—An expenditure that is 

14 attributable to certified public expend15 itures. 

16 ‘‘(iii) CREDITING FRAUD AND ABUSE

17 RECOVERIES.—Amounts recovered by a 

18 State through the operation of its Medicaid 

19 fraud and abuse control unit described in 

20 section 1903(q) shall be fully counted to21 ward the State share under subparagraph 

22 (A). 

23 ‘‘(F) CONSTRUCTION.—Nothing in the 

24 paragraph shall be construed as preventing a 

25 State from expending, from non-Federal funds, 


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1 an amount under this title in excess of the 

2 amount of the State share. 

3 ‘‘(G) DETERMINATION BASED UPON SUB4 MITTED CLAIMS.—In applying this paragraph 

5 with respect to expenditures of a State for a 

6 quarter, the determination of the expenditures 

7 for such State for such quarter shall be made 

8 after the end of the period (which, as of the 

9 date of the enactment of this section, is 2 

10 years) for which the Secretary accepts claims 

11 for payment under this title with respect to 

12 such quarter. 

13 ‘‘(3) USE OF FEDERAL PAYMENTS.— 

14 ‘‘(A) APPLICATION OF MEDICAID LIMITA15 TIONS.—A State may only use Federal pay16 ments received under subsection (a) for expend17 itures for which Federal funds would have been 

18 payable under this title but for this section. 

19 ‘‘(B) LIMITATION FOR CERTAIN ELIGI20 BLES.— 

21 ‘‘(i) APPLICATION OF 100 PERCENT

22 FEDERAL POVERTY LINE LIMIT ON ELIGI23 BILITY.—Subject to clause (iii), a State 

24 may not use such Federal payments to 

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1 vidual who has an income (as determined 

2 under clause (ii)) that exceeds 100 percent 

3 of the poverty line (as defined in section 

4 2110(c)(5)) applicable to a family of the 

5 size involved. 

6 ‘‘(ii) DETERMINATION OF INCOME

7 USING MODIFIED ADJUSTED GROSS IN8 COME WITHOUT ANY 5 PERCENT IN9 CREASE.—In determining income for pur10 poses of clause (i) under section 

11 1902(e)(14) (relating to modified adjusted 

12 gross income), the following rules shall 

13 apply: 

14 ‘‘(I) APPLICATION OF SPEND

15 DOWN.—The State shall take into ac16 count the costs incurred for medical 

17 care or for any other type of remedial 

18 care recognized under State law in the 

19 same manner and to the same extent 

20 that such State takes such costs into 

21 account for purposes of section 

22 1902(a)(17). 

23 ‘‘(II) DISREGARD OF 5 PERCENT

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1 tion 1902(e)(14) (relating to a 5 per2 cent reduction) shall not apply. 

3 ‘‘(iii) EXCEPTION.—Clause (i) shall 

4 not apply to an individual who is— 

5 ‘‘(I) a woman described in clause 

6 (i) of section 1903(v)(4)(A); 

7 ‘‘(II) a child who is an individual 

8 described in clause (i) of section 

9 1905(a); 

10 ‘‘(III) enrolled in a State plan 

11 under this title as of the date of the 

12 enactment of this section for the pe13 riod of continuous enrollment; or 

14 ‘‘(IV) described in section 

15 1902(e)(14)(D) (relating to modified 

16 adjusted gross income). 

17 ‘‘(iv) CLARIFICATION RELATED TO

18 COMMUNITY SPOUSE.—Nothing in this 

19 subparagraph shall supersede the applica20 tion of section 1924 (related to community 

21 spouse income and assets). 

22 ‘‘(4) EXCEPTIONS FOR PASS-THROUGH PAY23 MENTS.— 

24 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

25 not apply, and amounts shall continue to be 


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1 payable under this title (and not under sub2 section (a)), in the case of the following pay3 ments (and related administrative costs and ex4 penditures): 

5 ‘‘(i) PAYMENTS TO TERRITORIES.— 

6 Payments to a State other than the 50 

7 States and the District of Columbia. 

8 ‘‘(ii) MEDICARE COST SHARING.— 

9 Payments attributable to Medicare cost 

10 sharing under section 1905(p). 

11 ‘‘(iii) PEDIATRIC VACCINES.—Pay12 ments attributable to section 1928. 

13 ‘‘(iv) EMERGENCY SERVICES FOR CER14 TAIN INDIVIDUALS.—Payments for treat15 ment of emergency medical conditions at16 tributable to the application of section 

17 1903(v)(2). 

18 ‘‘(v) INDIAN HEALTH CARE FACILI19 TIES.—Payments for medical assistance 

20 described in the third sentence of section 

21 1905(b). 

22 ‘‘(vi) EMPLOYER-SPONSORED INSUR23 ANCE (ESI).—Payments for medical assist24 ance attributable to payments to employers 


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1 for employer-sponsored health benefits cov2 erage. 

3 ‘‘(vii) OTHER POPULATIONS WITH

4 LIMITED BENEFIT COVERAGE.—Other pay5 ments that are determined by the Sec6 retary to be related to a specified popu7 lation for which the medical assistance 

8 under this title is limited and does not in9 clude any inpatient, nursing facility, or 

10 long-term care services. 

11 ‘‘(B) CERTAIN EXPENSES.—Paragraph (1) 

12 shall not apply, and amounts shall continue to 

13 be payable under this title (and not under sub14 section (a)), in the case of the following: 

15 ‘‘(i) ADMINISTRATION OF MEDICARE

16 PRESCRIPTION DRUG BENEFIT.—Expendi17 tures described in section 1935(b) (relating 

18 to administration of the Medicare prescrip19 tion drug benefit). 

20 ‘‘(ii) PAYMENTS FOR HIT BONUSES.— 

21 Payments under section 1903(a)(3)(F) (re22 lating to payments to encourage the adop23 tion and use of certified EHR technology). 

24 ‘‘(iii) PAYMENTS FOR DESIGN, DEVEL25 OPMENT, AND INSTALLATION OF MMIS AND


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1 ELIGIBILITY SYSTEMS.—Payments under 

2 subparagraphs (A)(i) and (H)(i) of section 

3 1903(a)(3) for expenditures for design, de4 velopment, and installation of the Medicaid 

5 management information systems and 

6 mechanized verification and information 

7 retrieval systems (related to eligibility). 

8 ‘‘(5) PAYMENT OF AMOUNTS.— 

9 ‘‘(A) IN GENERAL.—Except as the Sec10 retary may otherwise provide, amounts shall be 

11 payable to a State under subsection (a) in the 

12 same manner as amounts are payable under 

13 subsection (d) of section 1903 to a State under 

14 subsection (a) of such section. 

15 ‘‘(B) INFORMATION AND FORMS.— 

16 ‘‘(i) SUBMISSION.—As a condition of 

17 receiving payment under subsection (a), a 

18 State shall submit such information, in 

19 such form, and manner, as the Secretary 

20 shall specify, including information nec21 essary to make the computations under 

22 subsections (c)(2)(C) and (e). 

23 ‘‘(ii) UNIFORM REPORTING.—The 

24 Secretary shall develop such forms as may 

25 be needed to assure a system of uniform 


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1 reporting of such information across 

2 States. 

3 ‘‘(C) REQUIRED REPORTING OF INFORMA4 TION ON MEDICAL LOSS RATIOS FOR MANAGED

5 CARE.—The information required to be reported 

6 under subparagraph (B)(i) shall include infor7 mation on the medical loss ratio with respect to 

8 coverage provided under each Medicaid man9 aged care plan with a contract with the State 

10 under section 1903(m) or 1932. 

11 ‘‘(b) AGGREGATE BENEFICIARY-BASED AMOUNT.— 

12 ‘‘(1) IN GENERAL.—The aggregate beneficiary13 based amount specified in this subsection for a State 

14 for a quarter is equal to the sum of the products, 

15 for each of the categories of Medicaid beneficiaries 

16 specified in paragraph (2), of the following: 

17 ‘‘(A) BENEFICIARY-BASED QUARTERLY

18 AMOUNT.—The beneficiary-based quarterly 

19 amount for such category computed under sub20 section (c) for such State for such quarter. 

21 ‘‘(B) NUMBER OF INDIVIDUALS IN CAT22 EGORY.—Subject to subsection (d), the average 

23 number of Medicaid beneficiaries enrolled in 

24 such category in the State in such quarter. 


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1 ‘‘(2) CATEGORIES.—The categories specified in 

2 this paragraph are the following: 

3 ‘‘(A) ELDERLY.—A category of Medicaid 

4 beneficiaries who are 65 years of age or older. 

5 ‘‘(B) BLIND OR DISABLED.—A category of 

6 Medicaid beneficiaries not described in subpara7 graph (A) who are described in section 

8 1937(a)(2)(B)(ii). 

9 ‘‘(C) CHILDREN.—A category of Medicaid 

10 beneficiaries not described in subparagraph (B) 

11 who are under 21 years of age. 

12 ‘‘(D) OTHER ADULTS.—A category of any 

13 Medicaid beneficiaries who are not described in 

14 a previous subparagraph of this paragraph. 

15 ‘‘(c) COMPUTATION OF PER BENEFICIARY, PER CAT16 EGORY QUARTERLY AMOUNT.— 

17 ‘‘(1) IN GENERAL.—For a State, for each cat18 egory of beneficiary for a quarter— 

19 ‘‘(A) FIRST REFORM YEAR.—For quarters 

20 in the first reform year (as defined in sub21 section (k)(2)), the beneficiary-based quarterly 

amount is equal to 1 22 ⁄4 of the base average per 

23 beneficiary Federal payments for such State for 

24 such category determined under paragraph (2), 


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1 increased by a factor that reflects the sum of 

2 the following: 

3 ‘‘(i) HISTORICAL MEDICAL CARE COM4 PONENT OF CPI THROUGH PREVIOUS RE5 FORM YEAR.—The percentage increase in 

6 the historical medical care component of 

7 the Consumer Price Index for all urban 

8 consumers (U.S. city average) from the 

9 midpoint of the base fiscal year (as defined 

10 in paragraph (6)) to the midpoint of the 

11 fiscal year preceding the first reform year. 

12 ‘‘(ii) PROJECTED MEDICAL CARE COM13 PONENT OF CPI FOR THE FIRST REFORM

14 YEAR.—The percentage increase in the 

15 projected medical care component of the 

16 Consumer Price Index for all urban con17 sumers (U.S. city average) from the mid18 point of the previous fiscal year referred to 

19 in clause (i) to the midpoint of the first re20 form year. 

21 ‘‘(B) SECOND AND THIRD REFORM

22 YEARS.—The beneficiary-based quarterly 

23 amount for a State for a category for quarters 

24 in the second reform year or the third reform 

25 year is equal to the beneficiary-based quarterly 


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1 amount under this paragraph for such State 

2 and category for the previous reform year in3 creased by the per beneficiary percentage in4 crease (as defined in subparagraph (E)) for 

5 such category and reform year. 

6 ‘‘(C) FOURTH THROUGH TENTH REFORM

7 YEARS.—The beneficiary-based quarterly 

8 amount for a State for a category for quarters 

9 in a reform year beginning with the fourth re10 form year and ending with the tenth reform 

11 year is— 

12 ‘‘(i) in the case of a State that is a 

13 high per beneficiary State or a low per 

14 beneficiary State (as defined in paragraph 

15 (4)(B)(iii)) for the category, the amount 

16 determined under clause (i) or (ii) of para17 graph (4)(B) for such State, category, and 

18 reform year; or 

19 ‘‘(ii) in the case of any other State, 

20 the beneficiary-based quarterly amount 

21 under this paragraph for such State and 

22 category for the previous reform year in23 creased by the per beneficiary percentage 

24 increase for such category and reform 

25 year. 


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1 ‘‘(D) ELEVENTH REFORM YEAR AND SUB2 SEQUENT REFORM YEARS.—The beneficiary3 based quarterly amount for a State for a cat4 egory for quarters in a reform year beginning 

5 with the eleventh reform year is equal to the 

6 beneficiary-based quarterly amount under this 

7 paragraph for such State and category for the 

8 previous reform year increased by the per bene9 ficiary percentage increase for such category 

10 and reform year. 

11 ‘‘(E) ANNUAL PERCENTAGE INCREASE BE12 GINNING WITH SECOND REFORM YEAR.—For 

13 purposes of this subsection, the term ‘per bene14 ficiary percentage increase’ means, for a reform 

15 year, the sum of— 

16 ‘‘(i) the projected percentage change 

17 in nominal gross domestic product from 

18 the midpoint of the previous reform year to 

19 the midpoint of the reform year for which 

20 the percentage increase is being applied; 

21 and 

22 ‘‘(ii) one percentage point. 

23 ‘‘(2) BASE PER BENEFICIARY, PER CATEGORY

24 AMOUNT FOR EACH STATE.— 

25 ‘‘(A) AVERAGE PER CATEGORY.— 


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1 ‘‘(i) IN GENERAL.—The Secretary 

2 shall determine, consistent with this para3 graph and paragraph (3), a base per bene4 ficiary, per category amount for each of 

5 the 50 States and the District of Columbia 

6 equal to the average amount, per Medicaid 

7 beneficiary, of Federal payments under 

8 this title, including payments attributable 

9 to disproportionate share hospital pay10 ments under section 1923, for each of the 

11 categories of beneficiaries under subsection 

12 (b)(2) for the base fiscal year for each of 

13 the 50 States and the District of Colum14 bia. 

15 ‘‘(ii) BEST AVAILABLE DATA.—The 

16 determination under clause (i) shall ini17 tially be estimated by the Secretary, based 

18 upon the best available data at the time 

19 the determination is made. 

20 ‘‘(iii) UPDATES.—The determination 

21 under clause (i) shall be updated by the 

22 Secretary on an annual basis based upon 

23 improved data. The Secretary shall adjust 

24 the amounts under subsection (a)(1)(A) to 


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1 reflect changes in the amounts so deter2 mined based on such updates. 

3 ‘‘(B) EXCLUSION OF PASS-THROUGH PAY4 MENTS.—In computing base per beneficiary, 

5 per category amounts under subparagraph 

6 (A)(i) the Secretary shall exclude payments de7 scribed in subsection (a)(4). 

8 ‘‘(C) STANDARDIZATION.— 

9 ‘‘(i) IN GENERAL.—In computing each 

10 such amount, the Secretary shall stand11 ardize the amount in order to remove the 

12 variation attributable to the following: 

13 ‘‘(I) RISK FACTORS.—Such risk 

14 factors as age, health and disability 

15 status (including high cost medical 

16 conditions), gender, institutional sta17 tus, and such other factors as the 

18 Secretary determines to be appro19 priate, so as to ensure actuarial 

20 equivalence. 

21 ‘‘(II) GEOGRAPHIC.—Variations 

22 in costs on a county-by-county basis. 

23 ‘‘(ii) METHOD OF STANDARDIZA24 TION.— 


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1 ‘‘(I) CONSULTATION IN DEVEL2 OPMENT OF RISK STANDARDIZA3 TION.—In developing the methodology 

4 for risk standardization for purposes 

5 of clause (i)(I), the Secretary shall 

6 consult with the Medicaid and CHIP 

7 Payment and Access Commission, the 

8 Medicare Payment Advisory Commis9 sion, and the National Association of 

10 Medicaid Directors. 

11 ‘‘(II) METHOD FOR RISK STAND12 ARDIZATION.—In carrying out clause 

13 (i)(I), the Secretary may apply the 

14 hierarchal condition category method15 ology under section 1853(a)(1)(C). If 

16 the Secretary uses such methodology, 

17 the Secretary shall adjust the applica18 tion of such methodology to take into 

19 account the differences in services 

20 provided under this title compared to 

21 title XVIII, such as the coverage of 

22 long term care, pregnancy, and pedi23 atric services. 

24 ‘‘(III) METHOD FOR GEOGRAPHIC

25 STANDARDIZATION.—The Secretary 


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1 shall apply the standardization under 

2 clause (i)(II) in a manner similar to 

3 that applied under section 

4 1853(c)(4)(A)(iii). 

5 ‘‘(iii) APPLICATION ON A NATIONAL, 

6 BUDGET NEUTRAL BASIS.—The standard7 ization under clause (i) shall be designed 

8 and implemented on a uniform national 

9 basis and shall be budget neutral so as to 

10 not result in any aggregate change in pay11 ments under subsection (a). 

12 ‘‘(iv) RESPONSE TO NEW RISK.—Sub13 ject to clause (iii), the Secretary may ad14 just the standardization under clause (i) to 

15 respond promptly to new instances of com16 municable diseases and other public health 

17 hazards. 

18 ‘‘(v) REFERENCE TO APPLICATION OF

19 RISK ADJUSTMENT.—For rules related to 

20 the application of risk adjustment to 

21 amounts under subsection (a)(1)(A), see 

22 subsection (e). 

23 ‘‘(D) ADJUSTMENT FOR TEMPORARY FMAP

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1 graph (A)(i) the Secretary shall disregard por2 tions of payments that are attributable to a 

3 temporary increase in the Federal matching 

4 rates, including those attributable to the fol5 lowing: 

6 ‘‘(i) PPACA DISASTER FMAP.—Sec7 tion 1905(aa). 

8 ‘‘(ii) ARRA.—Section 5001 of the 

9 American Recovery and Reinvestment Act 

10 of 2009 (42 U.S.C. 1396d note). 

11 ‘‘(iii) EXTRAORDINARY EMPLOYER

12 PENSION CONTRIBUTION.—Section 614 of 

13 the Children’s Health Insurance Program 

14 Reauthorization Act of 2009 (42 U.S.C. 

15 1396d note). 

16 ‘‘(3) ALLOCATION OF NONMEDICAL ASSISTANCE

17 PAYMENTS.—The Secretary shall establish rules for 

18 the allocation of payments under this title (other 

19 than those payments described in paragraph (1) or 

20 (5) of section 1903(a) and including such payments 

21 attributable to section 1923)— 

22 ‘‘(A) among different categories of bene23 ficiaries; and 


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1 ‘‘(B) between payments included under 

2 subsection (a)(1) and payments described in 

3 subsection (a)(4). 

4 ‘‘(4) TRANSITION TO A CORRIDOR AROUND THE

5 NATIONAL AVERAGE.— 

6 ‘‘(A) DETERMINATION OF NATIONAL AVER7 AGE BASE PER BENEFICIARY, PER CATEGORY

8 AMOUNT.—Subject to subparagraph (C), the 

9 Secretary shall determine a national average 

10 base per beneficiary, per category amount equal 

11 to the average of the base per beneficiary, per 

12 category amounts for each of the 50 States and 

13 the District of Columbia determined under 

14 paragraph (2), weighted by the average number 

15 of beneficiaries in each such category and State 

16 as determined by the Secretary consistent with 

17 subsection (d) for the base fiscal year. 

18 ‘‘(B) TRANSITION ADJUSTMENT.— 

19 ‘‘(i) HIGH PER BENEFICIARY

20 STATES.—In the case of a high per bene21 ficiary State (as defined in clause (iii)(I)) 

22 for a category, the beneficiary-based quar23 terly amount for such State and category 

24 for a quarter in a reform year (beginning 

25 with the fourth reform year and ending 


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1 with the tenth reform year) is equal to the 

2 sum of— 

3 ‘‘(I) the product of the State-spe4 cific factor for such reform year (as 

5 defined in clause (iv)) and the bene6 ficiary-based quarterly amount that 

7 would otherwise be determined under 

8 paragraph (1) for such State and cat9 egory if the State were a State de10 scribed in clause (ii) of paragraph 

11 (1)(C), instead of a State described in 

12 clause (i) of such paragraph; and 

13 ‘‘(II) the product of 1 minus the 

14 State-specific factor for such reform 

15 year and the beneficiary-based quar16 terly amount that would otherwise be 

17 determined under paragraph (1) for a 

18 State and category if the base per 

19 beneficiary, per category amount de20 termined under paragraph (2) for the 

21 State and category were equal to 110 

22 percent of the national average base 

23 per beneficiary, per category amount 

24 determined under subparagraph (A) 

25 for such category. 


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1 ‘‘(ii) LOW PER BENEFICIARY

2 STATES.—In the case of a low per bene3 ficiary State (as defined in clause (iii)(II)) 

4 for a category, the beneficiary-based quar5 terly amount for such State and category 

6 for a quarter in a reform year (beginning 

7 with the fourth reform year and ending 

8 with the tenth reform year) is equal to the 

9 sum of— 

10 ‘‘(I) the product of the State-spe11 cific factor for such reform year and 

12 the beneficiary-based quarterly 

13 amount that would otherwise be deter14 mined under paragraph (1) for such 

15 State and category if the State were 

16 a State described in clause (ii) of 

17 paragraph (1)(C), instead of a State 

18 described in clause (i) of such para19 graph; and 

20 ‘‘(II) the product of 1 minus the 

21 State-specific factor for such reform 

22 year and the beneficiary-based quar23 terly amount that would otherwise be 

24 determined under paragraph (1) for a 

25 State and category if the base per 


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1 beneficiary, per category amount de2 termined under paragraph (2) for the 

3 State and category were equal to 90 

4 percent of the national average base 

5 per beneficiary, per category amount 

6 determined under subparagraph (A) 

7 for such category. 

8 ‘‘(iii) HIGH AND LOW PER BENE9 FICIARY STATES DEFINED.—In this sub10 paragraph: 

11 ‘‘(I) HIGH PER BENEFICIARY

12 STATE.—The term ‘high per bene13 ficiary State’ means, with respect to a 

14 category, a State for which the base 

15 per beneficiary, per category amount 

16 determined under paragraph (2) for 

17 such category is greater than 110 per18 cent of the national average base per 

19 beneficiary, per category amount de20 termined under subparagraph (A) for 

21 such category. 

22 ‘‘(II) LOW PER BENEFICIARY

23 STATE.—The term ‘low per bene24 ficiary State’ means, with respect to a 

25 category, a State for which the base 


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1 per beneficiary, per category amount 

2 determined under paragraph (2) for 

3 such category is less than 90 percent 

4 of the national average base per bene5 ficiary, per category amount deter6 mined under subparagraph (A) for 

7 such category. 

8 ‘‘(iv) STATE-SPECIFIC FACTOR.—In 

9 this subparagraph, the term ‘State-specific 

10 factor’ means— 

11 ‘‘(I) for the fourth reform year, 

7 12 ⁄8; and 

13 ‘‘(II) for a subsequent reform 

14 year, the State-specific factor under 

15 this clause for the previous reform 

year minus 1 16 ⁄8.

17 ‘‘(C) NO ADDITIONAL EXPENDITURES.— 

18 ‘‘(i) DETERMINATION OF INCREASE IN

19 FEDERAL EXPENDITURES.—For each cat20 egory for each reform year (beginning with 

21 the fourth reform year and ending with the 

22 tenth reform year), the Secretary shall de23 termine whether the application of this 

24 paragraph— 


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1 ‘‘(I) to the category for the re2 form year will result in an aggregate 

3 increase in the aggregate Federal ex4 penditures under subsection (a); and 

5 ‘‘(II) to all the categories for the 

6 reform year will result in a net aggre7 gate increase in the aggregate Federal 

8 expenditures under subsection (a). 

9 ‘‘(ii) ADJUSTMENT.—If the Secretary 

10 determines under clause (i)(II) that the 

11 application of this paragraph to all the cat12 egories for a reform year will result in a 

13 net aggregate increase in the aggregate 

14 Federal expenditures under subsection (a), 

15 the Secretary shall reduce the national av16 erage base per beneficiary, per category 

17 amount computed under subparagraph (A) 

18 for each of the categories determined 

19 under clause (i)(I) for which there will be 

20 an aggregate increase in the aggregate 

21 Federal expenditures under subsection (a) 

22 by such uniform percentage as will ensure 

23 that there is no net aggregate Federal ex24 penditure increase described in clause 

25 (i)(II) for the reform year. 


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1 ‘‘(5) REPORTS ON PER BENEFICIARY RATES; 

2 APPEALS.— 

3 ‘‘(A) REPORT TO STATES.—Not later than 

4 8 months after the date of the enactment of 

5 this section, the Secretary shall submit to each 

6 State the Secretary’s initial determination of— 

7 ‘‘(i) the base per beneficiary, per cat8 egory amounts under paragraph (2) for 

9 such State; and 

10 ‘‘(ii) the national average base per 

11 beneficiary, per category amounts under 

12 paragraph (4)(A). 

13 ‘‘(B) OPPORTUNITY TO APPEAL.—Not 

14 later than 3 months after the date a State re15 ceives notice of the Secretary’s initial deter16 mination of such base per beneficiary, per cat17 egory amounts for such State under subpara18 graph (A)(i), the State may file with the Sec19 retary, in a form and manner specified by the 

20 Secretary, an appeal of such determination. 

21 ‘‘(C) DETERMINATION ON APPEAL.—Not 

22 later than 3 months after receiving such an ap23 peal, the Secretary shall make a final deter24 mination on such amounts for such State. If no 

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1 retary’s initial determination under subpara2 graph (A)(i) shall become final. 

3 ‘‘(6) BASE FISCAL YEAR DEFINED.—In this 

4 section, the term ‘base fiscal year’ means the latest 

5 fiscal year, ending before the date of the enactment 

6 of this section, for which the Secretary determines 

7 that adequate data are available to make the com8 putations required under this subsection. 

9 ‘‘(d) NOT COUNTING INDIVIDUALS TO ACCOUNT FOR

10 EXCLUDED PAYMENTS.—Under rules specified by the 

11 Secretary, individuals shall not be counted as Medicaid 

12 beneficiaries for purposes of subsection (b)(1)(B) and sub13 section (c)(2)(A) in proportion to the extent that such in14 dividuals are receiving medical assistance for which pay15 ments described under subsection (a)(4)(A) are made. 

16 ‘‘(e) RISK ADJUSTMENT.— 

17 ‘‘(1) IN GENERAL.—The amount under sub18 section (a)(1)(A) shall be adjusted under this sub19 section in an appropriate manner, specified by the 

20 Secretary and consistent with paragraph (2), to take 

21 into account— 

22 ‘‘(A) the factors described in subsection 

23 (c)(2)(C)(i)(I) within a category of bene24 ficiaries; and 


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1 ‘‘(B) variations in costs on a county-by2 county basis for medical assistance and admin3 istrative expenses. 

4 ‘‘(2) METHOD OF ADJUSTMENT.— 

5 ‘‘(A) IN GENERAL.—The adjustments 

6 under paragraph (1) shall be made in a manner 

7 similar to the manner in which similar adjust8 ments are made under subsection (c)(2)(C) and 

9 consistent with the requirements of clause (iii) 

10 of such subsection and subparagraph (B). 

11 ‘‘(B) BIANNUAL UPDATE OF RISK ADJUST12 MENT METHODOLOGY.—In applying clause 

13 (i)(I) of subsection (c)(2)(C) for purposes of 

14 subparagraph (A), the Secretary shall, in con15 sultation with the entities described in clause 

16 (ii)(I) of such subsection, update the risk ad17 justment methodology applied as appropriate 

18 not less often than every 2 years. 

19 ‘‘(f) CHRONIC CARE QUALITY BONUS PAYMENTS.— 

20 ‘‘(1) DETERMINATION OF BONUS PAYMENTS.— 

21 If the Secretary determines that, based on the re22 ports under paragraph (5), with respect to cat23 egories of chronic disease for which chronic care per24 formance targets had been established under para25 graph (3) for each category of Medicaid beneficiaries 


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1 specified under subsection (b)(2) such targets have 

2 been met by a State for a reform year, the Secretary 

3 shall make an additional payment to such State in 

4 the amount specified in paragraph (6) for each quar5 ter in the succeeding reform year. Such payments 

6 shall be made in a manner specified by the Secretary 

7 and may only be used consistent with subsection 

8 (a)(3). 

9 ‘‘(2) IDENTIFICATION OF CATEGORIES OF

10 CHRONIC DISEASE.—The Secretary shall determine 

11 the categories of chronic disease for which bonus 

12 payments may be available under this subsection for 

13 each category of Medicaid beneficiaries. 

14 ‘‘(3) ADOPTION OF QUALITY MEASUREMENT

15 SYSTEM AND IDENTIFICATION OF PERFORMANCE

16 TARGETS.— 

17 ‘‘(A) SYSTEM AND DATA.—With respect to 

18 the categories of chronic disease under para19 graph (2), the Secretary shall adopt a quality 

20 measurement system that uses data described 

21 in paragraph (4) and is similar to the Five-Star 

22 Quality Rating System used to indicate the per23 formance of Medicare Advantage plans under 

24 part C of title XVIII. 


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1 ‘‘(B) TARGETS.—Using such system and 

2 data, the Secretary shall establish for each re3 form year the chronic care performance targets 

4 for purposes of the payments under paragraph 

5 (1). Such performance targets shall be estab6 lished in consultation with States, associations 

7 representing individuals with chronic illnesses, 

8 entities providing treatment to such individuals 

9 for such chronic illnesses, and other stake10 holders, including the National Association of 

11 Medicaid Directors and the National Governors 

12 Association. 

13 ‘‘(4) DATA TO BE USED.—The data to be used 

14 under paragraph (3) shall include— 

15 ‘‘(A) data collected through methods such 

16 as— 

17 ‘‘(i) the ‘Healthcare Effectiveness 

18 Data and Information Set’ (also known as 

19 ‘HEDIS’) (or an appropriate successor 

20 performance measurement tool); 

21 ‘‘(ii) the ‘Consumer Assessment of 

22 Healthcare Providers and Systems’ (also 

23 known as ‘CAHPS’) (or an appropriate 

24 successor performance measurement tool); 

25 and 


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1 ‘‘(iii) the ‘Health Outcomes Survey’ 

2 (also known as ‘HOS’) (or an appropriate 

3 successor performance measurement tool); 

4 and 

5 ‘‘(B) other data collected by the State. 

6 ‘‘(5) REPORTS.— 

7 ‘‘(A) IN GENERAL.—Each State shall col8 lect, analyze, and report to the Secretary, at a 

9 frequency and in a manner to be established by 

10 the Secretary, data described in paragraph (4) 

11 that permit the Secretary to monitor the State’s 

12 performance relative to the chronic care per13 formance targets established under paragraph 

14 (3). 

15 ‘‘(B) REVIEW AND VERIFICATION.—The 

16 Secretary may review the data collected by the 

17 State under subparagraph (A) to verify the 

18 State’s analysis of such data with respect to the 

19 performance targets under paragraph (3). 

20 ‘‘(6) AMOUNT OF BONUS PAYMENTS.— 

21 ‘‘(A) IN GENERAL.—Subject to subpara22 graphs (B) and (C), with respect to each cat23 egory of Medicaid beneficiaries, in the case of 

24 a State that the Secretary determines, based on 

25 the chronic care performance targets set under 


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1 paragraph (3) for a reform year for such cat2 egory, performs— 

3 ‘‘(i) in the top five States in such cat4 egory, subject to subparagraph (C)(ii), the 

5 amount of the bonus for each quarter in 

6 the succeeding reform year shall be 10 per7 cent of the payment amount otherwise paid 

8 to the State under subsection (a) for indi9 viduals enrolled under the plan within such 

10 category; 

11 ‘‘(ii) in the next five States in such 

12 category, subject to subparagraph (C)(ii), 

13 the amount of the bonus for each such 

14 quarter shall be 5 percent of the payment 

15 amount otherwise paid to the State under 

16 subsection (a) for individuals enrolled 

17 under the plan within such category; 

18 ‘‘(iii) in the next five States in such 

19 category, subject to clauses (i) and (iii) of 

20 subparagraph (C), the amount of the 

21 bonus for each such quarter shall be 3 per22 cent of the payment amount otherwise paid 

23 to the State under subsection (a) for indi24 viduals enrolled under the plan within such 

25 category; 


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1 ‘‘(iv) in the next five States in such 

2 category, subject to clauses (i) and (iii) of 

3 subparagraph (C), the amount of the 

4 bonus for each such quarter shall be 2 per5 cent of the payment amount otherwise paid 

6 to the State under subsection (a) for indi7 viduals enrolled under the plan within such 

8 category; and 

9 ‘‘(v) in the next five States in such 

10 category, subject to clauses (i) and (iii) of 

11 subparagraph (C), the amount of the 

12 bonus for each such quarter shall be 1 per13 cent of the payment amount otherwise paid 

14 to the State under subsection (a) for indi15 viduals enrolled under the plan within such 

16 category. 

17 ‘‘(B) AGGREGATE ANNUAL LIMIT FOR

18 EACH CATEGORY OF MEDICAID BENE19 FICIARIES.— 

20 ‘‘(i) IN GENERAL.—In no case may 

21 the aggregate amount of bonuses under 

22 this subsection for quarters in a reform 

23 year for a category of Medicaid bene24 ficiaries exceed the limit specified in clause 

25 (ii) for the reform year. 


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1 ‘‘(ii) LIMIT.—The limit specified in 

2 this clause— 

3 ‘‘(I) for the second reform year is 

4 equal to $250,000,000; or 

5 ‘‘(II) for a subsequent reform 

6 year is equal to the limit specified in 

7 this clause for the previous reform 

8 year increased by the per beneficiary 

9 percentage increase determined under 

10 paragraph (1)(E) of subsection (c). 

11 ‘‘(C) LIMITATION AND PRORATION OF BO12 NUSES BASED ON APPLICATION OF AGGREGATE

13 LIMIT.— 

14 ‘‘(i) NO BONUS FOR THIRD OR SUBSE15 QUENT TIERS UNLESS AGGREGATE LIMIT

16 NOT REACHED ON FIRST TWO TIERS.—No 

17 bonus shall be payable under clause (iii), 

18 (iv), or (v) of subparagraph (A) for a cat19 egory of Medicaid beneficiaries for a quar20 ter in a reform year unless the aggregate 

21 amount of bonuses under clauses (i) and 

22 (ii) of such subparagraph for such category 

23 and reform year is less than the limit spec24 ified in subparagraph (B)(ii) for the re25 form year. 


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1 ‘‘(ii) PRORATION FOR FIRST TWO

2 TIERS.—If the aggregate amount of bo3 nuses under clauses (i) and (ii) of subpara4 graph (A) for a category of Medicaid bene5 ficiaries for quarters in a reform year ex6 ceeds the limit specified in subparagraph 

7 (B)(ii) for the reform year, the amount of 

8 each such bonus shall be prorated in a 

9 manner so the aggregate amount of such 

10 bonuses is equal to such limit. 

11 ‘‘(iii) PRORATION FOR NEXT THREE

12 TIERS.—If the aggregate amount of bo13 nuses under clauses (i) and (ii) of subpara14 graph (A) for a category of Medicaid bene15 ficiaries for quarters in a reform year is 

16 less than the limit specified in subpara17 graph (B)(ii) for the reform year, but the 

18 aggregate amount of bonuses under clauses 

19 (i) through (v) of subparagraph (A) for the 

20 category and such quarters in the reform 

21 year exceeds the limit specified in subpara22 graph (B)(ii) for the reform year, the 

23 amount of each bonus in clauses (iii), (iv), 

24 and (v) of subparagraph (A) shall be pro25 rated in a manner so the aggregate 


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1 amount of all the bonuses under subpara2 graph (A) is equal to such limit. 

3 ‘‘(g) STATE OPTION FOR RECEIVING MEDICARE PAY4 MENTS FOR FULL-BENEFIT DUAL ELIGIBLE INDIVID5 UALS.— 

6 ‘‘(1) IN GENERAL.—Under this subsection a 

7 State may elect for quarters beginning on or after 

8 the implementation date in a reform year to receive 

9 payment from the Secretary under paragraph (3). 

10 As a condition of receiving such payment, the State 

11 shall agree to provide to full-benefit dual eligible in12 dividuals eligible for medical assistance under the 

13 State plan— 

14 ‘‘(A) the medical assistance to which such 

15 eligible individuals would otherwise be entitled 

16 under this title; and 

17 ‘‘(B) any items and services which such eli18 gible individuals would otherwise receive under 

19 title XVIII. 

20 ‘‘(2) PROVIDER PAYMENT REQUIREMENT.— 

21 ‘‘(A) IN GENERAL.—A State electing the 

22 option under this subsection shall provide pay23 ment to health care providers for the items and 

24 services described under paragraph (1)(B) at a 

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1 ments would be made to such providers for such 

2 items and services under title XVIII. 

3 ‘‘(B) FLEXIBILITY IN PAYMENT METH4 ODS.—Nothing in subparagraph (A) shall be 

5 construed as preventing a State from using al6 ternative payment methodologies (such as bun7 dled payments or the use of accountable care 

8 organizations (as such term is used in section 

9 1899)) for purposes of making payments to 

10 health care providers for items and services pro11 vided to dual eligible individuals in the State 

12 under the option under this subsection. 

13 ‘‘(3) PAYMENTS TO STATES IN LIEU OF MEDI14 CARE PAYMENTS.—With respect to a full-benefit 

15 dual eligible individual, in the case of a State that 

16 elects the option under paragraph (1) for quarters in 

17 a reform year— 

18 ‘‘(A) the Secretary shall not make any pay19 ment under title XVIII for items and services 

20 furnished to such individual for such quarters; 

21 and 

22 ‘‘(B) the Secretary shall pay to the State, 

23 in addition to the amounts paid to such State 

24 under subsection (a), the amount that the Sec25 retary would, but for this subsection, otherwise 


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1 pay under title XVIII for items and services 

2 furnished to such an individual in such State 

3 for such quarters. 

4 ‘‘(4) FULL-BENEFIT DUAL ELIGIBLE INDI5 VIDUAL DEFINED.—In this subsection, the term 

6 ‘full-benefit dual eligible individual’ means an indi7 vidual who meets the requirements of section 

8 1935(c)(6)(A)(ii). 

9 ‘‘(h) AUDITS.—The Secretary shall conduct such au10 dits on the number and classification of Medicaid bene11 ficiaries under such subsections and expenditures under 

12 this section as may be necessary to ensure appropriate 

13 payments under this section. 

14 ‘‘(i) TREATMENT OF WAIVERS.— 

15 ‘‘(1) NO IMPACT ON CURRENT WAIVERS.—In 

16 the case of a waiver of requirements of this title pur17 suant to section 1115 or other law that is in effect 

18 as of the date of the enactment of this section, noth19 ing in this section shall be construed to affect such 

20 waiver for the period of the waiver as approved as 

21 of such date. 

22 ‘‘(2) APPLICATION OF BUDGET NEUTRALITY TO

23 SUBSEQUENT WAIVERS AND RENEWALS TAKING SEC24 TION INTO ACCOUNT.—In the case of a waiver of re25 quirements of this title pursuant to section 1115 or 


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1 other law that is approved or renewed after the date 

2 of the enactment of this section, to the extent that 

3 such approval or renewal is conditioned upon a dem4 onstration of budget neutrality, budget neutrality 

5 shall be determined taking into account the applica6 tion of this section. 

7 ‘‘(j) REPORT TO CONGRESS.—Not later than Janu8 ary 1 of the second reform year, the Secretary shall submit 

9 to Congress a report on the implementation of this section. 

10 ‘‘(k) DEFINITIONS.—In this section: 

11 ‘‘(1) IMPLEMENTATION DATE.—The term ‘im12 plementation date’ means— 

13 ‘‘(A) July 1, 2018, if this section is en14 acted on or before July 1, 2017; or 

15 ‘‘(B) July 1, 2019, if this section is en16 acted after July 1, 2017. 

17 ‘‘(2) REFORM YEARS.— 

18 ‘‘(A) The term ‘reform year’ means a fiscal 

19 year beginning with the first reform year. 

20 ‘‘(B) The term ‘first reform year’ means 

21 the fiscal year in which the implementation date 

22 occurs. 

23 ‘‘(C) The terms ‘second’, ‘third’, and suc24 cessive similar terms mean, with respect to a 

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1 form year, respectively, succeeding the first re2 form year.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) CONTINUED APPLICATION OF CLAWBACK

5 PROVISIONS.— 

6 (A) CONTINUED APPLICATION.—Sub7 sections (a) and (c)(1)(C) of section 1935 of 

8 such Act (42 U.S.C. 1396u–5) are each amend9 ed by inserting ‘‘or 1903A(a)’’ after ‘‘1903(a)’’. 

10 (B) TECHNICAL AMENDMENT.—Section 

11 1935(d)(1) of the Social Security Act (42 

12 U.S.C. 1396u–5(d)(1)) is amended by inserting 

13 ‘‘except as provided in section 1903A(g)’’ after 

14 ‘‘any other provision of this title’’. 

15 (2) PAYMENT RULES UNDER SECTION 1903.— 

16 (A) Section 1903(a) of the Social Security 

17 Act (42 U.S.C. 1396b(a)) is amended, in the 

18 matter before paragraph (1), by inserting ‘‘and 

19 section 1903A’’ after ‘‘except as otherwise pro20 vided in this section’’. 

21 (B) Section 1903(d) of such Act (42 

22 U.S.C. 1396b(d)) is amended— 

23 (i) in paragraph (1), by inserting 

24 ‘‘and under section 1903A’’ after ‘‘sub25 sections (a) and (b)’’; 


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1 (ii) in paragraph (2)— 

2 (I) in subparagraph (A), by in3 serting ‘‘or section 1903A’’ after ‘‘was 

4 made under this section’’; and 

5 (II) in subparagraph (B), by in6 serting ‘‘or section 1903A’’ after 

7 ‘‘under subsection (a)’’; 

8 (iii) in paragraph (4)— 

9 (I) by striking ‘‘under this sub10 section’’ and inserting ‘‘, with respect 

11 to this section or section 1903A, 

12 under this subsection’’; and 

13 (II) by striking ‘‘under this sec14 tion’’ and inserting ‘‘under the respec15 tive section’’; and 

16 (iv) in paragraph (5), by inserting ‘‘or 

17 section 1903A’’ after ‘‘overpayment under 

18 this section’’. 

19 (3) CONFORMING WAIVER AUTHORITY.—Section 

20 1115(a)(2)(A) of the Social Security Act (42 U.S.C. 

21 1315(a)(2)(A)) is amended by striking ‘‘or 1903’’ 

22 and inserting ‘‘1903, or 1903A’’. 

23 (4) REPORT ON ADDITIONAL CONFORMING

24 AMENDMENTS NEEDED.—Not later than 6 months 

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1 retary of Health and Human Services shall submit 

2 to Congress a report that includes a description of 

3 any additional technical and conforming amend4 ments to law that are required to properly carry out 

5 this Act. 

6 TITLE V—INCREASING PRICE 

7 TRANSPARENCY AND FREE8 DOM OF PRACTICE 

9 SEC. 501. ENSURING ACCESS TO EMERGENCY SERVICES 

10 WITHOUT EXCESSIVE CHARGES FOR OUT-OF11 NETWORK SERVICES. 

12 (a) IN GENERAL.—Section 1867 of the Social Secu13 rity Act (42 U.S.C. 1395dd) is amended— 

14 (1) in subsection (d), by adding at the end the 

15 following new paragraph: 

16 ‘‘(5) ENFORCEMENT WITH RESPECT TO EXCES17 SIVE CHARGES.—A hospital, physician, or other enti18 ty that violates the requirements of subsection (j)(1) 

19 with respect to the furnishing of items and services 

20 is subject to a civil money penalty of not more than 

21 $25,000 for each such violation. The provisions of 

22 section 1128A (other than subsections (a) and (b)) 

23 shall apply to a civil money penalty under this para24 graph in the same manner as such provisions apply 


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1 with respect to a penalty or proceeding under section 

2 1128A(a).’’; and 

3 (2) by adding at the end the following new sub4 section: 

5 ‘‘(j) PROTECTIONS AGAINST EXCESSIVE OUT-OF6 NETWORK CHARGES FOR EMERGENCY SERVICES.— 

7 ‘‘(1) IN GENERAL.—If items or services to 

8 screen or treat an emergency medical condition are 

9 furnished under this section in a participating hos10 pital with respect to an individual and the individual 

11 has not, directly or through a health insurance 

12 issuer, group health plan, or other third party, nego13 tiated a payment rate for such items and services, 

14 subject to paragraph (2), the charges imposed for 

15 such items and services may not be in excess of the 

16 following: 

17 ‘‘(A) PHYSICIANS’ AND OTHER PROFES18 SIONAL SERVICES.—For physicians’ services or 

19 services of a health care provider to which sec20 tion 223(e)(9) of the Internal Revenue Code of 

21 1986 applies (and including drugs and 

22 biologicals furnished in conjunction with and 

23 billed as part of such services), the lesser of— 

24 ‘‘(i) the cash price for such services 

25 posted pursuant to such section; or 


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1 ‘‘(ii) 85 percent of the usual, cus2 tomary, and reasonable (UCR) charge for 

3 such services, as determined under rules 

4 established by the department of insurance 

5 for the State in which the services are fur6 nished. 

7 ‘‘(B) HOSPITAL SERVICES.—For inpatient 

8 and outpatient hospital services for which pay9 ment rates are established under this title (and 

10 including drugs and biologicals furnished in 

11 conjunction with and billed as part of such 

12 services), the lesser of— 

13 ‘‘(i) the cash price for such services 

14 posted pursuant to section 223(e)(9) of the 

15 Internal Revenue Code of 1986; or 

16 ‘‘(ii) 110 percent of the payment rate 

17 applicable to such services in the case of 

18 an individual entitled to benefits under 

19 part A and enrolled under part B. 

20 ‘‘(C) DRUGS AND BIOLOGICALS.—For 

21 drugs and other pharmaceuticals furnished to 

22 which a previous subparagraph does not apply, 

23 the lesser of— 


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1 ‘‘(i) twice the acquisition cost to the 

2 hospital or other provider for the dose in3 volved; or 

4 ‘‘(ii) the acquisition cost to the hos5 pital or other provider plus $250. 

6 The dollar amount in clause (ii) shall be in7 creased from year to year (beginning with the 

8 year after the first year in which this subsection 

9 applies) by the same percentage as the percent10 age increase in the consumer price index for all 

11 urban consumers (all items; U.S. city average) 

12 for the year involved (as determined by the Sec13 retary). Any such dollar amount as so increased 

14 that is not a multiple of $5 shall be rounded to 

15 the nearest multiple of $5 (or, if a multiple of 

16 $2.50, to the next highest multiple of $5). 

17 ‘‘(D) OTHER ITEMS AND SERVICES.—For 

18 any other items or services, the lesser of— 

19 ‘‘(i) the cash price for such items and 

20 services posted pursuant to section 

21 223(e)(9) of the Internal Revenue Code of 

22 1986; or 

23 ‘‘(ii) 110 percent of the payment basis 

24 that would be applicable to payment for 

25 such items and services under this title in 


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1 the case of an individual entitled to bene2 fits under part A and enrolled under part 

3 B. 

4 ‘‘(2) SPECIAL RULE FOR ITEMS AND SERVICES

5 FURNISHED AS A BUNDLE.—In the case of items 

6 and services for which there is a single price for a 

7 group or bundle of such items and services, the max8 imum charge permitted under paragraph (1) may 

9 not exceed the lesser of— 

10 ‘‘(A) the price charged for such bundled 

11 services; or 

12 ‘‘(B) the aggregate of the maximum 

13 charges permitted under paragraph (1) with re14 spect to items and services included in such 

15 bundle.’’. 

16 (b) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to charges imposed for items and 

18 services furnished on or after January 1, 2018. 

19 SEC. 502. PUBLISHING OF CASH PRICE FOR CARE PAID 

20 THROUGH HEALTH SAVINGS ACCOUNTS. 

21 (a) HEALTH SAVINGS ACCOUNTS.—Section 223(f) of 

22 the Internal Revenue Code of 1986 is amended by adding 

23 at the end the following new paragraph: 

24 ‘‘(9) CASH PRICE TRANSPARENCY REQUIRED

25 FOR PAYMENTS TO HEALTH CARE PROVIDERS.— 


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1 ‘‘(A) IN GENERAL.—A payment to a health 

2 care provider with respect to the furnishing of 

3 health care items and services by such provider 

4 shall not be treated as a qualified medical ex5 pense unless health care provider provides for 

6 continuing disclosure (such as through posting 

7 on a publicly accessible website) of the cash 

8 price the health care provider charges for the 

9 furnishing of such items and services. 

10 ‘‘(B) FORM OF DISCLOSURE.—The disclo11 sure of prices under this subsection shall be in 

12 a form and manner specified by the Secretary 

13 of Health and Human Services, in consultation 

14 with the Secretary, and shall be designed— 

15 ‘‘(i) to establish a single price for re16 lated items and services in a manner simi17 lar to the manner in which pricing and 

18 payment for such items and services is pro19 vided under the Medicare program under 

20 title XVIII of the Social Security Act, and 

21 ‘‘(ii) to make it easy for consumers to 

22 compare the prices for similar items and 

23 services furnished by different providers. 

24 ‘‘(C) FAILURE TO FURNISH SERVICES OR

25 CHARGE IN EXCESS OF STATED PRICE.—A 


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1 health care provider shall be treated as not 

2 meeting the requirement of subparagraph (A), 

3 in the case of items and services for which the 

4 provider is disclosing a cash price, if the pro5 vider— 

6 ‘‘(i) refuses to furnish such items or 

7 services at the price listed, or 

8 ‘‘(ii) charges more than the price list9 ed for the furnishing of the items and serv10 ices.’’. 

11 (b) ROTH HSA.—Section 530A(c)(4) of such Code, 

12 as added by section 201(a) of this Act, is amended by add13 ing at the end the following new subparagraph: 

14 ‘‘(E) Section 223(f) (relating to cash price 

15 transparency required for payments to health 

16 care providers).’’. 

17 (c) ENFORCEMENT.—If the Secretary of Health and 

18 Human Services determines that a health care provider 

19 has not provided for continuing disclosure of the cash 

20 price of health care provider charges under section 

21 223(f)(9) of the Internal Revenue Code of 1986, the Sec22 retary may instruct the Secretary of the Treasury that 

23 payments made to such provider shall be not treated, for 

24 purposes of section 223 of the Internal Revenue Code of 


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1 1986, as an amount used for a qualified medical expense 

2 for a period of not to exceed 1 year. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2017. 

6 SEC. 503. LIBERATING THE LOCAL PRACTICE OF HEALTH 

7 CARE. 

8 (a) WAIVING NATIONAL RESTRICTIONS ON PHYSI9 CIAN-OWNED FACILITIES.—Section 1877 of the Social Se10 curity Act (42 U.S.C. 1395nn) is amended by adding at 

11 the end the following new subsection: 

12 ‘‘(j) WAIVER AUTHORITY.—A physician or other enti13 ty may apply to the Secretary to waive any provision of 

14 this section and the Secretary may waive such provision 

15 with respect to such physician or entity if the Secretary 

16 determines that such waiver would— 

17 ‘‘(1) increase competition within the health care 

18 market; 

19 ‘‘(2) reduce the costs of health care; and 

20 ‘‘(3) increase the quality of health care.’’. 

21 (b) REMOVING CERTAIN STATE AND LOCAL LICEN22 SURE OR CERTIFICATION RESTRICTIONS.— 

23 (1) APPLICATION FOR WAIVER OF RESTRIC24 TIONS.—An individual who is required to be licensed 

25 or certified by a State as a condition of furnishing 


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1 items or services as a health care professional (as 

2 defined by the Secretary of Health and Human 

3 Services) may submit to the Secretary an application 

4 to waive any condition of such licensure or certifi5 cation. 

6 (2) STANDARD.—The Secretary may grant a 

7 waiver submitted under paragraph (1) if the Sec8 retary determines such waiver would— 

9 (A) increase competition within the health 

10 care market; 

11 (B) reduce the costs of health care; and 

12 (C) increase the quality of health care. 

13 (3) PREEMPTION.—In the case of a health care 

14 professional granted a waiver under paragraph (2), 

15 any requirement with respect to which such waiver 

16 is granted is preempted to the extent specified in 

17 such waiver. 

Æ 


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