II

104TH CONGRESS

1ST SESSION S. 844

To replace the Medicaid Program with a block grant to the States, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 23 (legislative day, MAY 15), 1995

Mr. ASHCROFT (for himself, Mr. COVERDELL, Mr. CRAIG, Mr. DEWINE, Mr.

SMITH, Mr. INHOFE, and Mr. KEMPTHORNE) introduced the following

bill; which was read twice and referred to the Committee on Finance

A BILL

To replace the Medicaid Program with a block grant to

the States, 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,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Medicaid Flexibility

5 Act of 1995’’.

6 SEC. 2. BLOCK GRANTS TO THE STATES FOR HEALTH CARE

7 SERVICES TO NEEDY INDIVIDUALS.

8 Title XIX of the Social Security Act (42 U.S.C.

9 1396–1396V) is amended to read as follows:
2

S 844 IS

1 ‘‘TITLE XIX—BLOCK GRANTS TO STATES

2 FOR HEALTH CARE SERVICES TO

3 NEEDY INDIVIDUALS

4 ‘‘PURPOSE; IMPLEMENTATION

5 ‘‘SEC. 1901. (a) PURPOSE.—The purpose of this title

6 is to strengthen families by helping them move from de7 pendence on government benefits to economic independ8 ence by consolidating Federal assistance to the States for

9 health care services and assistance to needy individuals

10 into a single grant for such purpose, thereby giving States

11 maximum flexibility to—

12 ‘‘(1) require beneficiaries who are parents to

13 ensure that their school-age children attend school;

14 ‘‘(2) require minors who are beneficiaries to at15 tend school;

16 ‘‘(3) require parent beneficiaries to ensure that

17 their children receive the full complement of child18 hood immunizations;

19 ‘‘(4) limit the amount of time able-bodied bene20 ficiaries may receive assistance;

21 ‘‘(5) require beneficiaries not to use illegal

22 drugs or abuse other drugs;

23 ‘‘(6) require each mother to identify the father

24 of any child for whom she seeks assistance;

25 ‘‘(7) deny assistance to illegal aliens;
3

S 844 IS

1 ‘‘(8) require individuals who sponsor the resi2 dency of legal aliens to support those they sponsor;

3 and

4 ‘‘(9) involve religious and charitable organiza5 tions, voluntary associations, civic groups, commu6 nity organizations, nonprofit entities, benevolent and

7 fraternal orders, philanthropic entities, and other

8 groups in the private sector, as appropriate, in the

9 provision of health care services and assistance to

10 needy individuals with the funding States receive

11 under this title.

12 ‘‘(b) IMPLEMENTATION.—This purpose shall be im13 plemented in accordance with conditions in each State and

14 as determined by State law.

15 ‘‘PAYMENTS TO STATES

16 ‘‘SEC. 1902. (a) AMOUNT.—

17 ‘‘(1) IN GENERAL.—Each State shall, subject to

18 the requirements of this title, be entitled to receive

19 quarterly payments for fiscal years 1996, 1997,

20 1998, 1999, and 2000 in an amount equal to 25

21 percent of the annual amount determined under

22 paragraph (2) for such fiscal year for carrying out

23 the purpose described in section 1901.

24 ‘‘(2) ANNUAL AMOUNT.—The annual amount

25 determined under this paragraph is equal to—
4

S 844 IS

1 ‘‘(A) in fiscal year 1996, 105 percent of

2 the amount received by a State in fiscal year

3 1995 under this title (as in effect in fiscal year

4 1995); and

5 ‘‘(B) in each fiscal year thereafter, 105

6 percent of the amount received by a State in

7 the preceding fiscal year under this title (as in

8 effect in such preceding fiscal year).

9 ‘‘(b) FUNDING REQUIREMENTS.—The Secretary of

10 the Treasury shall make quarterly payments described in

11 subsection (a)(1) directly to each State in accordance with

12 section 6503 of title 31, United States Code.

13 ‘‘(c) EXPENDITURE OF FUNDS; RAINY DAY FUND.—

14 Amounts received by a State under this title for any fiscal

15 year shall be expended by the State in such fiscal year

16 or in the succeeding fiscal year; except for such amounts

17 as the State deems necessary to set aside in a separate

18 account to provide, without fiscal limitation, for unex19 pected levels of assistance during periods of high unem20 ployment or other events which cause unexpected increases

21 in the need for health care services or assistance for needy

22 individuals. Any amounts remaining in such segregated

23 accounts after fiscal year 2000 shall be expended by a

24 State for the purpose described in section 1901 of this

25 title as in effect in fiscal year 2000.
5

S 844 IS

1 ‘‘(d) AUTHORITY TO USE PORTION OF GRANT FOR

2 OTHER PURPOSES.—

3 ‘‘(1) IN GENERAL.—A State may use not more

4 than 30 percent of the annual amount paid to the

5 State under this title for a fiscal year to carry out

6 a State program pursuant to any or all of the follow7 ing provisions of law:

8 ‘‘(A) Part A of title IV of this Act.

9 ‘‘(B) Title XVI of this Act.

10 ‘‘(C) The Food Stamp Act.

11 ‘‘(2) APPLICABLE RULES.—Any amount paid to

12 the State under this title that is used to carry out

13 a State program pursuant to a provision of law spec14 ified in paragraph (1) shall not be subject to the re15 quirements of this title, but shall be subject to the

16 requirements that apply to Federal funds provided

17 directly under the provision of law to carry out the

18 program.

19 ‘‘ADMINISTRATIVE AND FISCAL ACCOUNTABILITY

20 ‘‘SEC. 1903. (a) AUDITS; REIMBURSEMENT.—

21 ‘‘(1) AUDITS.—

22 ‘‘(A) IN GENERAL.—A State shall, not less

23 than annually, audit the State expenditures

24 from amounts received under this title. Such

25 audit shall—
6

S 844 IS

1 ‘‘(i) determine the extent to which

2 such expenditures were or were not ex3 pended in accordance with this title; and

4 ‘‘(ii) be conducted by an approved en5 tity (as defined in subparagraph (B)) in

6 accordance with generally accepted audit7 ing principles.

8 ‘‘(B) APPROVED ENTITY.—For purposes of

9 subparagraph (A), the term ‘approved entity’

10 means an entity that is—

11 ‘‘(i) approved by the Secretary of the

12 Treasury;

13 ‘‘(ii) approved by the chief executive

14 officer of the State; and

15 ‘‘(iii) independent of any agency ad16 ministering activities or services funded

17 under this title.

18 ‘‘(2) REIMBURSEMENT.—

19 ‘‘(A) IN GENERAL.—Not later than 30

20 days following the completion of an audit under

21 this subsection, a State shall submit a copy of

22 the audit to the State legislature and to the

23 Secretary of the Treasury.

24 ‘‘(B) REPAYMENT.—Each State shall pay

25 to the United States amounts ultimately found
7

S 844 IS

1 by the approved entity under paragraph (1)(A)

2 not to have been expended in accordance with

3 this title plus 10 percent of such amount as a

4 penalty, or the Secretary of the Treasury may

5 offset such amounts plus the 10 percent penalty

6 against any other amount in any other year

7 that the State may be entitled to receive under

8 this title.

9 ‘‘(b) ADDITIONAL ACCOUNTING REQUIREMENTS.—

10 The provisions of chapter 75 of title 31, United States

11 Code, shall apply to the audit requirements of this section.

12 ‘‘(c) REPORTING REQUIREMENTS; FORM, CON13 TENTS.—

14 ‘‘(1) ANNUAL REPORTS.—A State shall prepare

15 comprehensive annual reports on the activities car16 ried out with amounts received by the State under

17 this title.

18 ‘‘(2) CONTENT.—Reports prepared under this

19 section—

20 ‘‘(A) shall be for the most recently com21 pleted fiscal year;

22 ‘‘(B) shall be in accordance with generally

23 accepted accounting principles, including the

24 provisions of chapter 75 of title 31, United

25 States Code;
8

S 844 IS

1 ‘‘(C) shall include the results of the most

2 recent audit conducted in accordance with the

3 requirements of paragraph (a) of this section;

4 and

5 ‘‘(D) shall be in such form and contain

6 such other information as the State deems nec7 essary—

8 ‘‘(i) to provided an accurate descrip9 tion of such activities; and

10 ‘‘(ii) to secure a complete record of

11 the purposes for which amounts were ex12 pended in accordance with this title.

13 ‘‘(3) COPIES.—A State shall make copies of the

14 reports required under this section available for pub15 lic inspection within the State. Copies also shall be

16 provided upon request to any interested public agen17 cy, and each such agency may provide its views on

18 such reports to the Congress.

19 ‘‘(d) ADMINISTRATIVE SUPERVISION.—

20 ‘‘(1) ROLE OF THE SECRETARY OF THE TREAS21 URY.—

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

23 Treasury shall supervise the amounts received

24 under this title in accordance with subpara25 graph (B).
9

S 844 IS

1 ‘‘(B) LIMITED SUPERVISION—The super2 vision by the Secretary of the Treasury shall be

3 limited to—

4 ‘‘(i) making quarterly payments to the

5 States in accordance with section 1902(b);

6 ‘‘(ii) approving the entities referred to

7 in subsection (a)(1)(B); and

8 ‘‘(iii) withholding payment to a State

9 based on the findings of such an entity in

10 accordance with subsection (a)(2)(B).

11 ‘‘(2) OTHER FEDERAL SUPERVISION.—No ad12 ministrative officer or agency of the United States,

13 other than the Secretary of the Treasury and, as

14 provided for in section 1904, the Attorney General,

15 shall supervise the amounts received by the States

16 under this title or the use of such amounts by the

17 States.

18 ‘‘(e) LIMITED FEDERAL OVERSIGHT.—With the ex19 ception of the Department of the Treasury as provided

20 for in this section and section 1904 of this title, no Fed21 eral department or agency may promulgate regulations or

22 issue rules regarding the purpose of this title.

23 ‘‘NONDISCRIMINATION PROVISIONS

24 ‘‘SEC. 1904. (a) NO DISCRIMINATION AGAINST INDI25 VIDUALS.—No individual shall be excluded from participa26 tion in, denied the benefits of, or subjected to discrimina-
10

S 844 IS

1 tion under any program or activity funded in whole or in

2 part with amounts received under this title on the basis

3 of such individual’s—

4 ‘‘(1) disability under section 504 of the Reha5 bilitation Act of 1973 (29 U.S.C. 794);

6 ‘‘(2) sex under title IX of the Education

7 Amendments of 1972 (20 U.S.C. 1681 et seq.); or

8 ‘‘(3) race, color, or national origin under title

9 VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d

10 et seq.).

11 ‘‘(b) COMPLIANCE.—If the Secretary of the Treasury

12 determines that a State, or an entity that has received

13 funds from amounts received by the State under this title,

14 has failed to comply with a provision of law referred to

15 in subsection (a), except as provided for in section 1905

16 of this title, the Secretary of the Treasury shall notify the

17 chief executive officer of the State and shall request the

18 officer to secure compliance with such provision of law.

19 If, not later than 60 days after receiving such notification,

20 the chief executive officer fails or refuses to secure compli21 ance, the Secretary of the Treasury may—

22 ‘‘(1) refer the matter to the Attorney General

23 with a recommendation that an appropriate civil ac24 tion be instituted;
11

S 844 IS

1 ‘‘(2) exercise the powers and functions provided

2 under title VI of the Civil Rights Act of 1964 (42

3 U.S.C. 2000d et seq.), title IX of the Education

4 Amendments of 1972 (20 U.S.C. 1681 et seq.); or

5 section 505 of the Rehabilitation Act of 1973 (29

6 U.S.C. 794a), (as applicable); or

7 ‘‘(3) take such other action as may be provided

8 by law.

9 ‘‘(c) AUTHORITY OF ATTORNEY GENERAL; CIVIL AC10 TIONS.—When a matter is referred to the Attorney Gen11 eral pursuant to subsection (b)(1), or if the Attorney Gen12 eral has reason to believe that an entity is engaged in a

13 pattern or practice in violation of a provision of law re14 ferred to in subsection (a), the Attorney General may

15 bring a civil action in an appropriate district court of the

16 United States for such relief as may be appropriate, in17 cluding injunctive relief.

18 ‘‘NONDISCRIMINATION AND INSTITUTIONAL SAFEGUARDS

19 FOR RELIGIOUS PROVIDERS

20 ‘‘SEC. 1905. (a) PURPOSE.—The purpose of this sec21 tion is to allow the participation of religious and charitable

22 organizations as providers of health care services and as23 sistance under this title without impairing or diminishing

24 the religious character or freedom of such organizations.

25 ‘‘(b) NONDISCRIMINATION.—Religious organizations

26 are eligible as providers of health care services and assist-
12

S 844 IS

1 ance as provided for under this title. Neither the Federal

2 Government nor a State receiving funds under this title

3 shall discriminate against an organization which is or ap4 plies to be a provider of health care services and assistance

5 on the basis that the organization has a religious mission

6 or purpose.

7 ‘‘(c) RELIGIOUS CHARACTER AND FREEDOM.—

8 ‘‘(1) IN GENERAL.—Nothwithstanding any

9 other provision of law, any religious organization

10 participating as a provider of health care services

11 and assistance funded under this title shall retain its

12 independence from Federal, State, and local govern13 ments, including such organization’s control over the

14 definition, development, practice, and expression of

15 its religious beliefs. Such an organization may select,

16 employ, promote, discipline, and dismiss its clerics

17 and other ecclesiastics, directors, officers, employees,

18 and volunteers on the basis of religion, a religious

19 belief, or a religious practice. However, a religious

20 organization shall not deny a needy individual health

21 care services and assistance funded under this title

22 on the basis of religion, a religious belief, or refusal

23 to participate in a religious practice.

24 ‘‘(2) ADDITIONAL SAFEGUARDS.—Neither the

25 Federal Government nor a State shall require a reli-
13

S 844 IS

1 gious provider of health care services and assistance

2 to—

3 ‘‘(A) alter its form of internal governance,

4 or form a separate, nonprofit corporation to re5 ceive and administer the assistance funded

6 under this title; or

7 ‘‘(B) alter real estate of facilities used to

8 provide such assistance, including but not lim9 ited to the removal of religious art, icons, scrip10 ture, or other symbols;

11 in order to be eligible to be a provider of health care

12 services and assistance funded under this title.

13 ‘‘(3) FISCAL ACCOUNTABILITY.—

14 ‘‘(A) IN GENERAL.—Except as provided in

15 subparagraph (B), any religious organization

16 providing assistance funded under this title

17 shall be subject to the same regulations as

18 other providers to account in accord with gen19 erally accepted auditing principles for the use of

20 such funds provided under this title.

21 ‘‘(B) LIMITED AUDIT.—Religious organiza22 tions may segregate Federal funds provided

23 under this title into separate accounts, and then

24 only the financial assistance provided with those

25 funds shall be subject to audit.
14

S 844 IS

1 ‘‘(d) COMPLIANCE.—A religious organization which

2 has its rights under this section violated may enforce its

3 claim by asserting a civil action for such relief as may

4 be appropriate, including injunctive relief or damages, in

5 an appropriate district court of the United States against

6 the entity or agency that commits such violation.

7 ‘‘(e) RIGHTS OF BENEFICIARIES OF ASSISTANCE.—

8 ‘‘(1) IN GENERAL.—If a beneficiary has a bona

9 fide objection to the religious character of the orga10 nization or institution from which the beneficiary is

11 receiving health care services and assistance funded

12 under this title, each State shall provide such bene13 ficiary a certificate, redeemable with any other pro14 vider of assistance funded under this title, for serv15 ices the value of which is no less than the value of

16 the funding received by the religious provider from

17 a State to provide assistance funded under this title

18 for such individual.

19 ‘‘(2) PROHIBITION ON PROVIDING CASH IN EX20 CHANGE FOR CERTIFICATES.—No provider of assist21 ance funded under this title shall provide a bene22 ficiary a cash amount in exchange for a certificate

23 provided for under paragraph (1).

24 ‘‘EMERGENCY ASSISTANCE

25 ‘‘SEC. 1906. (a) IN GENERAL.—Health care services

26 and assistance funded under this title must be provided
15

S 844 IS

1 to a citizen, legal resident, or an alien who is not lawfully

2 admitted for permanent residence or otherwise perma3 nently residing in the United States under color of law,

4 if—

5 ‘‘(1) such services and assistance are necessary

6 for the treatment of an emergency medical condition;

7 ‘‘(2) such person otherwise meets the eligibility

8 requirements for health care services and assistance

9 under the State program funded under this title;

10 and

11 ‘‘(3) such services and assistance are not relat12 ed to an organ transplant procedure.

13 ‘‘(b) EMERGENCY MEDICAL CONDITION.—For pur14 poses of this section, the term ‘emergency medical condi15 tion’ means a medical condition (including emergency

16 labor and delivery) manifesting itself by acute symptoms

17 of sufficient severity (including severe pain) such that the

18 absence of immediate medical attention could reasonably

19 be expected to result in—

20 ‘‘(1) placing the patient’s health in serious jeop21 ardy;

22 ‘‘(2) serious impairment to bodily functions; or

23 ‘‘(3) serious dysfunction of any bodily organ or

24 part.’’.
16

S 844 IS

1 SEC 3. CONFORMING AMENDMENTS TO THE BUDGET ACT.

2 Section 255(h) of the Balanced Budget and Emer3 gency Deficit Control Act of 1985 (2 U.S.C. 905(h)) is

4 amended by striking ‘‘Grants to States for Medicaid (75–

5 0512–0–1–551);’’ and inserting ‘‘Block grants to States

6 for health care services to needy individuals;’’.

7 SEC. 4. EFFECTIVE DATE.

8 The amendments made by this Act shall take effect

9 on October 1, 1995.

Æ