II

103D CONGRESS

1ST SESSION S. 1600

To amend the Social Security Act to establish long-term care assistance

programs for the elderly, and for other purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 28 (legislative day, OCTOBER 13), 1993

Mr. PACKWOOD (for himself, Mr. DOLE, Mr. SIMPSON, and Mr. DURENBERGER) introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend the Social Security Act to establish long-term

care assistance programs for the elderly, 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 ‘‘Secure Choice Act of

5 1993’’.

6 SEC. 2. TABLE OF CONTENTS.

7 The table of contents is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I—LONG-TERM CARE PROVISIONS
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Sec. 101. Long-term care assistance programs established.

Sec. 102. Continuing eligibility of individuals eligible for long-term care benefits

under title XIX under new title XXI.

Sec. 103. Repeal of long-term care provisions in title XIX of the Social Security

Act.

Sec. 104. Study of formula for payment of long-term care services.

Sec. 105. Long-term care data collection system.

Sec. 106. Creation of new administrative unit for long-term care program.

Sec. 107. Secretarial submission of legislative proposal for technical and conforming amendments.

TITLE II—LONG-TERM CARE TAX PROVISIONS

Sec. 200. Amendment of 1986 Code.

PART I—GENERAL PROVISIONS

Sec. 201. Qualified long-term care services treated as medical care.

Sec. 202. Treatment of long-term care insurance or plans.

Sec. 203. Effective dates.

PART II—CONSUMER PROTECTION PROVISIONS

Sec. 211. Policy requirements.

Sec. 212. Additional requirements for issuers of long-term care insurance policies.

Sec. 213. Coordination with State requirements.

Sec. 214. Uniform language and definitions.

Sec. 215. Effective dates.

1 TITLE I—LONG-TERM CARE

2 PROVISIONS

3 SEC. 101. LONG-TERM CARE ASSISTANCE PROGRAMS ES4 TABLISHED.

5 (a) IN GENERAL.—The Social Security Act (42

6 U.S.C. 301 et seq.) is amended by adding at the end the

7 following new title:

8 ‘‘TITLE XXI—LONG-TERM CARE

9 ASSISTANCE PROGRAMS

‘‘TABLE OF CONTENTS OF TITLE

‘‘PART A—GRANTS TO STATES FOR LONG-TERM CARE ASSISTANCE

PROGRAMS

‘‘Sec. 2101. Appropriation.

‘‘Sec. 2102. State plans for long-term care assistance.
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‘‘Sec. 2103. Payment to States.

‘‘Sec. 2104. Operation of State plans.

‘‘Sec. 2105. Observance of religious beliefs.

‘‘Sec. 2106. Indian health service providers.

‘‘Sec. 2107. Assignment of rights of payment.

‘‘Sec. 2108. Hospital providers of nursing facility services.

‘‘Sec. 2109. Withholding of Federal share of payments for certain medicare and

medicaid providers.

‘‘Sec. 2110. Provisions respecting inapplicability of certain requirements.

‘‘Sec. 2111. Use of deductible, cost sharing, and similar charges.

‘‘Sec. 2112. Transfers of assets, trusts, liens, and adjustments and recoveries.

‘‘Sec. 2113. Application of provisions of title II relating to subpoenas.

‘‘Sec. 2114. Treatment of income and resources for certain impaired spouses.

‘‘Sec. 2115. Definitions.

‘‘PART B—SECURE CHOICE INSURANCE OPTION

‘‘Sec. 2131. Purpose.

‘‘Sec. 2132. Definitions.

‘‘Sec. 2133. Establishment of program.

‘‘Sec. 2134. Requirements on qualified long-term care insurance policies.

‘‘Sec. 2135. Benefits under qualified long-term care insurance policies.

‘‘Sec. 2136. Premiums under qualified long-term care insurance policies.

‘‘Sec. 2137. Portability requirements.

‘‘Sec. 2138. Payments to qualified providers; benefit subsidies.

‘‘Sec. 2139. Federal contribution.

‘‘Sec. 2140. Resource rules.

‘‘Sec. 2141. Standards and performance organizations.

‘‘Sec. 2142. Educational program.

1 ‘‘PART A—GRANTS TO STATES FOR LONG-TERM CARE

2 ASSISTANCE PROGRAMS

3 ‘‘APPROPRIATION

4 ‘‘SEC. 2101. (a) IN GENERAL.—For the purpose of

5 enabling each State to—

6 ‘‘(1) furnish long-term care assistance to any

7 functionally impaired individual, severely function8 ally impaired individual, or functionally impaired

9 child under this part; and

10 ‘‘(2) establish a Secure Choice Insurance Pro11 gram under part B;
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1 there is hereby authorized to be appropriated and is ap2 propriated for each fiscal year a sum sufficient to carry

3 out the purposes of this title.

4 ‘‘(b) LIMITATION ON FEDERAL EXPENDITURES FOR

5 LONG-TERM CARE ASSISTANCE.—

6 ‘‘(1) IN GENERAL.—The total amount of pay7 ments made by the Federal Government under this

8 part for a fiscal year shall not exceed the sum of the

9 allotments for all States determined under para10 graph (2).

11 ‘‘(2) STATE ALLOTMENTS.—The Secretary shall

12 determine an allotment for each State for each fiscal

13 year equal to the sum of the State’s allotments for

14 all applicable age groups determined under para15 graph (3).

16 ‘‘(3) STATE ALLOTMENTS BY APPLICABLE AGE

17 GROUP.—The Secretary shall determine a State al18 lotment for each applicable age group in accordance

19 with the following formula:

State

allotment

for

applicable

age group

= -

applicable

actual

percentage )

adjusted

actual

per capita

amount

for the

age group * +

applicable

median

percentage )

adjusted

median

per capita

amount

for the

age group *& ×

number of

countable

individuals

in the age

group

20 ‘‘(4) DEFINITIONS.—For purposes of this sub21 section:
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1 ‘‘(A) APPLICABLE AGE GROUP.—The term

2 ‘applicable age group’ means any of the follow3 ing age groups:

4 ‘‘(i) Individuals who have not attained

5 65 years of age.

6 ‘‘(ii) Individuals who have attained at

7 least 65 years of age but have not attained

8 75 years of age.

9 ‘‘(iii) Individuals who have attained at

10 least 75 years of age but have not attained

11 85 years of age.

12 ‘‘(iv) Individuals who have attained at

13 least 85 years of age.

14 ‘‘(B) APPLICABLE ACTUAL PERCENT15 AGE.—The term ‘applicable actual percentage’

16 means—

17 ‘‘(i) for fiscal year 1995, 90 percent;

18 and

19 ‘‘(ii) for each succeeding fiscal year,

20 the percentage determined under this sub21 paragraph for the preceding fiscal year re22 duced by 10 percent, but not less than 0

23 percent.
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1 ‘‘(C) APPLICABLE MEDIAN PERCENT2 AGE.—The term ‘applicable median percentage’

3 means—

4 ‘‘(i) for fiscal year 1995, 10 percent;

5 and

6 ‘‘(ii) for each succeeding fiscal year,

7 the percentage determined under this sub8 paragraph for the preceding fiscal year in9 creased by 10 percent, but not greater

10 than 100 percent.

11 ‘‘(D) ADJUSTED ACTUAL PER CAPITA

12 AMOUNT.—

13 ‘‘(i) IN GENERAL.—The term ‘ad14 justed actual per capita amount’ for an ap15 plicable age group means—

16 ‘‘(I) for fiscal year 1995, an

17 amount equal to the unadjusted ac18 tual per capita amount (as determined

19 under clause (ii)) for the age group

20 updated by the inflation percentage

21 (as determined under clause (iii)); and

22 ‘‘(II) for fiscal year 1996 and

23 succeeding fiscal years, an amount

24 equal to the amount determined under

25 this subparagraph for the age group
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1 for the previous fiscal year updated by

2 the inflation percentage.

3 ‘‘(ii) UNADJUSTED ACTUAL PER CAP4 ITA AMOUNT.—

5 ‘‘(I) IN GENERAL.—The

6 unadjusted actual per capita amount

7 determined under this clause for an

8 applicable age group is an amount

9 equal to the quotient of—

10 ‘‘(aa) the total Federal pay11 ment made to the State under

12 section 1903 for long-term care

13 services (as defined in subclause

14 (II)) furnished to individuals in

15 the applicable age group for fis16 cal year 1994, divided by

17 ‘‘(bb) the total number of

18 individuals in such applicable age

19 group who had incomes below the

20 income official poverty line (as

21 defined in section 2115(f)) dur22 ing fiscal year 1994.

23 ‘‘(II) LONG-TERM CARE SERV24 ICES.—For purposes of subclause (I),
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1 the term ‘long-term care services’

2 means—

3 ‘‘(aa) nursing facility serv4 ices (as defined in section

5 1905(f));

6 ‘‘(bb) home or community7 based services furnished under a

8 waiver under subsection (c) or

9 (d) of section 1915;

10 ‘‘(cc) home and community

11 care furnished under section

12 1929;

13 ‘‘(dd) home health care serv14 ices (as referred to in section

15 1905(a)(7));

16 ‘‘(ee) personal care services

17 (as described in section

18 1905(a)(24)); and

19 ‘‘(ff) private duty nursing

20 services (as referred to in section

21 1905(a)(8)).

22 ‘‘(iii) INFLATION PERCENTAGE.—The

23 inflation percentage determined under this

24 clause is equal to—
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1 ‘‘(I) the percentage change in the

2 long-term care inflation index (as de3 fined in subparagraph (G)) for the fis4 cal year; or

5 ‘‘(II) if the long-term care infla6 tion index has not been developed, 5

7 percent.

8 ‘‘(E) ADJUSTED MEDIAN PER CAPITA

9 AMOUNT.—

10 ‘‘(i) IN GENERAL.—The term ‘ad11 justed median per capita amount’ for an

12 applicable age group means—

13 ‘‘(I) for fiscal year 1995, an

14 amount equal to the unadjusted me15 dian per capita amount (as deter16 mined under clause (ii)) for the age

17 group updated by the inflation per18 centage (as determined under sub19 paragraph (D)(iii)); and

20 ‘‘(II) for fiscal year 1996 and

21 succeeding fiscal years, an amount

22 equal to the amount determined under

23 this subparagraph for the age group

24 for the previous fiscal year updated by

25 the inflation percentage.
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1 ‘‘(ii) UNADJUSTED MEDIAN PER CAP2 ITA AMOUNT.—The unadjusted median per

3 capita amount determined under this

4 clause for an applicable age group is an

5 amount equal to the median of the

6 unadjusted actual per capita amounts (de7 termined under subparagraph (D)(ii)) for

8 all States for such age group.

9 ‘‘(F) COUNTABLE INDIVIDUALS.—The

10 term ‘number of countable individuals’ for an

11 applicable age group means the number of indi12 viduals in the State who are in the age group

13 who have incomes below the income official pov14 erty line during the fiscal year.

15 ‘‘(G) LONG-TERM CARE INFLATION

16 INDEX.—The term ‘long-term care inflation

17 index’ means an inflation index developed by

18 the Secretary which is based on the growth in

19 the average annual total wages of individuals—

20 ‘‘(i) who are employed by nursing fa21 cilities or home health agencies, and

22 ‘‘(ii) who are nurses, personal care at23 tendants, or other individuals providing

24 long-term care services under this part.
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1 ‘‘(c) LIMITATION ON STATE OBLIGATION TO MAKE

2 EXPENDITURES.—A State shall not be obligated to make

3 expenditures under this part in excess of the amount of

4 expenditures necessary for such State to receive payments

5 from the Federal Government under this part equal to the

6 amount of such State’s allotment determined under sub7 section (b)(2).

8 ‘‘STATE PLANS FOR LONG-TERM CARE ASSISTANCE

9 ‘‘SEC. 2102. (a) STATE PLAN REQUIREMENTS.—A

10 State plan for long-term care assistance must meet the

11 following requirements:

12 ‘‘(1) ADMINISTRATION OF THE STATE PLAN.—

13 The State plan must—

14 ‘‘(A) provide for the establishment or des15 ignation of a single State agency to administer

16 or to supervise the administration of the plan;

17 ‘‘(B) provide that the plan shall be in ef18 fect in all political subdivisions of the State;

19 ‘‘(C) provide—

20 ‘‘(i) such methods of administration

21 as are found by the Secretary to be nec22 essary for the proper and efficient oper23 ation of the plan; and

24 ‘‘(ii) that each State or local officer or

25 employee who is responsible for the ex26 penditure of substantial amounts of funds
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1 under the State plan, each individual who

2 formerly was such an officer or employee

3 and each partner of such an officer or em4 ployee shall be prohibited from committing

5 any act, in relation to any activity under

6 the plan, the commission of which, in con7 nection with any activity concerning the

8 Federal Government, by an officer or em9 ployee of the Federal Government, an indi10 vidual who was such an officer or em11 ployee, or a partner of such an officer or

12 employee is prohibited by section 207 or

13 208 of title 18, United States Code;

14 ‘‘(D) provide for financial participation by

15 the State equal to not less than 40 percent of

16 the non-Federal share of the expenditures

17 under the plan with respect to which payments

18 under section 2103 are authorized by this part

19 and provide for financial participation by the

20 State equal to all of such non-Federal share or

21 provide for distribution of funds from Federal

22 or State sources, for carrying out the State

23 plan, on an equalization or other basis which

24 will assure that the lack of adequate funds from

25 local sources will not result in lowering the
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1 amount, duration, scope, or quality of care and

2 services available under the plan;

3 ‘‘(E) provide that all individuals wishing to

4 make application for long-term care assistance

5 under the plan shall have opportunity to do so,

6 and that such assistance shall be furnished with

7 reasonable promptness to all eligible individuals;

8 ‘‘(F) provide for granting an opportunity

9 for a fair hearing before the State agency to

10 any individual whose claim for long-term care

11 assistance under the plan is denied or is not

12 acted upon with reasonable promptness;

13 ‘‘(G) provide that the State will have in ef14 fect an appropriate appeals process for deter15 minations under the comprehensive functional

16 assessment (as defined in section 2115(b)) and

17 the individual community care plan (as defined

18 in section 2115(g)) established for such individ19 uals; and

20 ‘‘(H) provide that the State health agency,

21 or other appropriate State agency (whichever is

22 utilized by the Secretary for the purpose speci23 fied in the first sentence of section 1864(a)),

24 shall be responsible for establishing and main25 taining standards for private or public entities
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1 from which recipients of long-term care assist2 ance under the plan may receive care or serv3 ices.

4 ‘‘(2) INDIVIDUALS ELIGIBLE FOR ASSIST5 ANCE.—The State plan must provide—

6 ‘‘(A)(i) for making long-term care assist7 ance available, including at least the care and

8 services described in subparagraphs (A) and (C)

9 of section 2115(h)(1), to functionally impaired

10 individuals described in section 2115(d)(1) who

11 meet the income and resource eligibility require12 ments of paragraphs (1) and (2) of subsection

13 (f);

14 ‘‘(ii) for making long-term care assistance

15 available, including at least the care and serv16 ices described in subparagraphs (A), (B), and

17 (C) of section 2115(h)(1), to severely function18 ally impaired individuals described in section

19 2115(d)(2) who meet the income and resource

20 eligibility requirements of paragraphs (1) and

21 (2) subsection (f); or

22 ‘‘(iii) for making long-term care assistance

23 available, including at least the care and serv24 ices described in subparagraphs (A), (B), and

25 (C) of section 2115(h)(1), to functionally im-
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1 paired children described in section 2115(d)(3)

2 who meet the income and resource eligibility re3 quirements of paragraphs (1) and (2) sub4 section (f);

5 ‘‘(B) that the long-term care assistance

6 made available to any individual described in

7 subparagraph (A) shall not be less in amount,

8 duration, or scope than the long-term care as9 sistance made available to any other such indi10 vidual; and

11 ‘‘(C) for inclusion, to the extent required

12 by regulations prescribed by the Secretary, of

13 provisions conforming to such regulations with

14 respect to the furnishing of long-term care as15 sistance under the plan to individuals who are

16 residents of the State but are absent from the

17 State.

18 ‘‘(3) STANDARDS FOR ELIGIBILITY.—

19 ‘‘(A) IN GENERAL.—The State plan must

20 provide for reasonable standards which shall be

21 comparable for all individuals for determining

22 eligibility for and the extent of long-term care

23 assistance under the plan which—

24 ‘‘(i) are consistent with the objectives

25 of this part;
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1 ‘‘(ii) provide for taking into account

2 only such income and resources as are, as

3 determined in accordance with standards

4 prescribed by the Secretary, available to

5 the applicant or recipient;

6 ‘‘(iii) provide for reasonable evaluation

7 of any such income or resources;

8 ‘‘(iv) do not take into account the fi9 nancial responsibility of any individual for

10 any applicant or recipient of assistance

11 under the plan unless such applicant or re12 cipient is such individual’s spouse or such

13 individual’s child who is under age 21; and

14 ‘‘(v) at the option of the State provide

15 for flexibility in the application of such

16 standards with respect to income by taking

17 into account, except to the extent pre18 scribed by the Secretary, necessary expend19 itures incurred by an individual for medical

20 care that are not reimbursable by any

21 other payor.

22 ‘‘(B) INFORMATION REGARDING INCOME

23 AND ELIGIBILITY VERIFICATION.—The State

24 plan must provide that information is requested

25 and exchanged for purposes of income and eligi-
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1 bility verification in accordance with a State

2 system which meets the requirements of section

3 1137.

4 ‘‘(C) POST-ELIGIBILITY APPLICATION OF

5 INCOME TO COST OF CARE AND PERSONAL

6 NEEDS ALLOWANCES.—The State plan must

7 comply with the provisions of subsection (g)

8 with respect to the application of an individual’s

9 income to the cost of care and personal needs

10 allowances.

11 ‘‘(D) TRANSFER OF ASSETS, TRUSTS,

12 LIENS, AND ADJUSTMENTS AND RECOVERIES.—

13 The State plan must comply with the provisions

14 of section 2112 with respect to transfers of as15 sets, trusts, liens, and adjustments and recover16 ies.

17 ‘‘(E) COMMUNITY SPOUSES.—The State

18 plan must meet the requirements of section

19 2114 with respect to protection of community

20 spouses.

21 ‘‘(4) QUALITY OF CARE FURNISHED UNDER

22 THE PLAN.—

23 ‘‘(A) BEST INTERESTS OF RECIPIENTS.—

24 The State plan must provide such safeguards as

25 may be necessary to assure that eligibility for
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1 care and services under the plan will be deter2 mined, and such care and services will be pro3 vided, in a manner consistent with simplicity of

4 administration and the best interests of the re5 cipients.

6 ‘‘(B) EVALUATIONS OF INDIVIDUALS RE7 CEIVING CARE.—The State plan must provide

8 that in each case for which payment is made for

9 services under the State plan—

10 ‘‘(i) the individual who receives such

11 services has received a comprehensive func12 tional assessment under which a qualified

13 community care case manager, in consulta14 tion with an individual’s primary medical

15 care provider, determines that the individ16 ual is a functionally impaired individual, a

17 severely functionally impaired individual,

18 or a functionally impaired child; and

19 ‘‘(ii) in the case of payment for home

20 and community based services, such serv21 ices were furnished under a written plan of

22 care established and periodically reviewed

23 and evaluated by a qualified community

24 care case manager.
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1 ‘‘(C) COMMUNITY CARE CASE MAN2 AGERS.—The State plan must provide that any

3 contract with a qualified community care case

4 manager to provide case management services

5 shall include a provision under which such case

6 manager agrees not to provide long-term care

7 services to any individual for whom the case

8 manager provides case management services.

9 ‘‘(D) APPROPRIATENESS AND QUALITY OF

10 CARE.—The State plan must provide—

11 ‘‘(i) that the State health agency, or

12 other appropriate State agency, shall be re13 sponsible for establishing a plan, consistent

14 with regulations prescribed by the Sec15 retary, for the review by appropriate pro16 fessional personnel of the appropriateness

17 and quality of care and services furnished

18 to recipients of long-term care assistance

19 under the plan in order to provide guid20 ance with respect thereto in the adminis21 tration of the plan to the State agency;

22 and

23 ‘‘(ii) that, except as provided in sec24 tion 1919(g), the State or local agency uti25 lized by the Secretary for the purpose spec-
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1 ified in the first sentence of section

2 1864(a), or, if such agency is not the State

3 agency which is responsible for licensing

4 institutions, the State agency responsible

5 for such licensing, will perform for the

6 State agency administering or supervising

7 the administration of the plan approved

8 under this part the function of determining

9 whether institutions and other long-term

10 care providers meet the requirements for

11 participation under such plan, except that,

12 if the Secretary has cause to question the

13 adequacy of such determinations, the Sec14 retary is authorized to validate State deter15 minations and, on that basis, make inde16 pendent and binding determinations con17 cerning the extent to which individual in18 stitutions and agencies meet the require19 ments for participation.

20 ‘‘(E) DESCRIPTIONS OF METHODS USED

21 TO ASSURE QUALITY.—The State plan must in22 clude descriptions of—

23 ‘‘(i) the kinds and numbers of profes24 sional personnel and supporting staff that

25 will be used in the administration of the
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1 plan and of the responsibilities they will

2 have;

3 ‘‘(ii) the standards, for private or pub4 lic entities from which recipients of long5 term care assistance under the plan may

6 receive care or services, that will be utilized

7 by the State authority or authorities re8 sponsible for establishing and maintaining

9 such standards;

10 ‘‘(iii) the cooperative arrangements

11 with State health agencies entered into

12 with a view to appropriate utilization of

13 and maximum coordination of the provi14 sion of long-term care assistance with the

15 services administered or supervised by such

16 agencies; and

17 ‘‘(iv) other standards and methods

18 that the State will use to assure that care

19 and services provided to recipients of long20 term care assistance are of high quality.

21 ‘‘(5) NURSING FACILITIES.—The State plan

22 must provide—

23 ‘‘(A) that any nursing facility receiving

24 payments under such plan must satisfy all the
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1 requirements of subsections (b) through (d) of

2 section 1919 as they apply to such facilities;

3 ‘‘(B) for including in ‘nursing facility serv4 ices’ at least the items and services specified (or

5 deemed to be specified) by the Secretary under

6 section 1919(f)(7) and making available upon

7 request a description of the items and services

8 so included;

9 ‘‘(C) for procedures to make available to

10 the public the data and methodology used in es11 tablishing payment rates for nursing facilities

12 under this part; and

13 ‘‘(D) for compliance (by the date specified

14 in the respective sections) with the require15 ments of—

16 ‘‘(i) section 1919(e) (relating to State

17 requirements for nursing facilities);

18 ‘‘(ii) section 1919(g) (relating to re19 sponsibility for survey and certification of

20 nursing facilities); and

21 ‘‘(iii) sections 1919(h)(2)(B) and

22 1919(h)(2)(D) (relating to establishment

23 and application of remedies).

24 ‘‘(6) FREEDOM OF CHOICE OF PROVIDER.—Ex25 cept as provided in section 2110 and except in the
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1 case of Puerto Rico, the Virgin Islands, and Guam,

2 the State plan must provide that any individual eli3 gible for long-term care assistance may obtain such

4 assistance from any institution, agency, or person,

5 qualified to perform the services required, who un6 dertakes to provide the individual with such services.

7 ‘‘(7) AGREEMENTS WITH PROVIDERS AND PAY8 MENT FOR SERVICES.—

9 ‘‘(A) AGREEMENTS.—The State plan must

10 provide for agreements with every person or in11 stitution providing services under the State plan

12 under which such person or institution agrees—

13 ‘‘(i) to keep such records as are nec14 essary fully to disclose the extent of the

15 services provided to individuals receiving

16 long-term care assistance under the State

17 plan; and

18 ‘‘(ii) to furnish the State agency or

19 the Secretary with such information, re20 garding any payments claimed by such

21 person or institution for providing services

22 under the State plan, as the State agency

23 or the Secretary may from time to time re24 quest.
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1 ‘‘(B) DEDUCTIBLE, COST SHARING, AND

2 SIMILAR CHARGES.—The State plan must pro3 vide that deductible, cost sharing, and similar

4 charges may be imposed only as provided in

5 section 2111.

6 ‘‘(C) PAYMENTS UNDER THE PLAN.—

7 ‘‘(i) PAYMENTS TO NURSING FACILI8 TIES.—The State plan must provide for

9 payment (except where the State agency is

10 subject to an adjustment under section

11 2109) for nursing facility services provided

12 under the plan through the use of rates

13 (determined in accordance with methods

14 and standards developed by the State)

15 which take into account the costs (includ16 ing the costs of services required to attain

17 or maintain the physical, mental, and

18 psychosocial well-being of each resident eli19 gible for benefits under this part) of com20 plying with subsections (b) (other than

21 paragraph (3)(F) thereof), (c), and (d) of

22 section 1919 and provide (in the case of a

23 nursing facility with a waiver under section

24 1919(b)(4)(C)(ii)) for an appropriate re25 duction to take into account the lower
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1 costs (if any) of the facility for nursing

2 care and which the State finds, and makes

3 assurances satisfactory to the Secretary,

4 are reasonable and adequate to meet the

5 costs which must be incurred by efficiently

6 and economically operated facilities in

7 order to provide care and services in con8 formity with applicable Federal and State

9 laws, regulations, and quality and safety

10 standards and to assure that individuals

11 eligible for long-term care assistance have

12 reasonable access (taking into account geo13 graphic location and reasonable travel

14 time) to nursing facility services of ade15 quate quality.

16 ‘‘(ii) VALUATION OF CAPITAL AS17 SETS.—The State plan shall provide assur18 ances satisfactory to the Secretary that the

19 valuation of capital assets, for purposes of

20 determining payment rates for nursing fa21 cilities will not be increased (as measured

22 from the date of acquisition by the seller to

23 the date of the change of ownership), solely

24 as a result of a change of ownership, by

25 more than the lesser of—
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1 ‘‘(I) one-half of the percentage

2 increase (as measured over the same

3 period of time, or, if necessary, as ex4 trapolated retrospectively by the Sec5 retary) in the Dodge Construction

6 Systems Costs for Nursing Homes,

7 applied in the aggregate with respect

8 to those facilities which have under9 gone a change of ownership during

10 the fiscal year; or

11 ‘‘(II) one-half of the percentage

12 increase (as measured over the same

13 period of time) in the Consumer Price

14 Index for All Urban Consumers (Unit15 ed States city average).

16 ‘‘(iii) PAYMENT FOR HOME AND COM17 MUNITY BASED SERVICES.—The State plan

18 shall provide for payment for home and

19 community based services through rates es20 tablished by the State in conformance with

21 applicable Federal and State laws, regula22 tions, and quality and safety standards.

23 ‘‘(D) CLAIMS PAYMENT PROCEDURES.—

24 The State plan must provide for claims pay25 ment procedures which—
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1 ‘‘(i) ensure that 90 percent of claims

2 for payment (for which no further written

3 information or substantiation is required in

4 order to make payment) made for services

5 covered under the plan are paid within 30

6 days after the date of receipt of such

7 claims and that 99 percent of such claims

8 are paid within 60 days after the date of

9 receipt of such claims; and

10 ‘‘(ii) provide for procedures of prepay11 ment and postpayment claims review, in12 cluding review of appropriate data with re13 spect to the recipient and provider of a

14 service and the nature of the service for

15 which payment is claimed, to ensure the

16 proper and efficient payment of claims and

17 management of the program.

18 ‘‘(E) CONSULTATIVE SERVICES.—The

19 State plan must provide for consultative serv20 ices by health agencies and other appropriate

21 agencies of the State to nursing facilities and

22 such other long-term care providers as the Sec23 retary may specify in order to assist them—

24 ‘‘(i) to qualify for payments under

25 this part;
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1 ‘‘(ii) to establish and maintain such

2 fiscal records as may be necessary for the

3 proper and efficient administration of this

4 part; and

5 ‘‘(iii) to provide information needed to

6 determine payments due under this part on

7 account of care and services furnished to

8 individuals.

9 ‘‘(F) METHODS AND PROCEDURES RELAT10 ING TO UTILIZATION AND PAYMENT.—The

11 State plan must provide such methods and pro12 cedures relating to the utilization of, and the

13 payment for, care and services available under

14 the plan as may be necessary to safeguard

15 against unnecessary utilization of such care and

16 services and to assure that payments are con17 sistent with efficiency, economy, and quality of

18 care and are sufficient to enlist enough provid19 ers so that care and services are available under

20 the plan at least to the extent that such care

21 and services are available to the general popu22 lation in the geographic area.

23 ‘‘(G) DISCLOSING ENTITIES.—The State

24 plan must provide that any disclosing entity (as

25 defined in section 1124(a)(2)) receiving pay-
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1 ments under such plan complies with the re2 quirements of section 1124.

3 ‘‘(H) EXCLUSION OF CERTAIN INDIVID4 UALS OR ENTITIES.—The State plan must pro5 vide that the State agency shall exclude any

6 specified individual or entity from participation

7 under the State plan for the period specified by

8 the Secretary, when required by the Secretary

9 to do so pursuant to section 1128 or 1128A or

10 title XVIII, and provide that no payment may

11 be made under the plan with respect to any

12 item or service furnished by such individual or

13 entity during such period.

14 ‘‘(I) AUDITING OF RECORDS.—The State

15 plan must provide that the records of any entity

16 participating in the plan and providing services

17 reimbursable on a cost-related basis will be au18 dited as the Secretary determines to be nec19 essary to ensure that proper payments are

20 made under the plan.

21 ‘‘(8) THIRD PARTY LIABILITY.—The State plan

22 must provide—

23 ‘‘(A) that the State or local agency admin24 istering such plan will take all reasonable meas25 ures to ascertain the legal liability of third par-
30

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1 ties (including entities providing for health or

2 long-term care insurance) to pay for care and

3 services available under the plan, including—

4 ‘‘(i) the collection of sufficient infor5 mation (as specified by the Secretary in

6 regulations) to enable the State to pursue

7 claims against such third parties, with

8 such information being collected at the

9 time of any determination or redetermina10 tion of eligibility for long-term care assist11 ance; and

12 ‘‘(ii) the submission to the Secretary

13 of a plan (subject to approval by the Sec14 retary) for pursuing claims against such

15 third parties, which plan shall—

16 ‘‘(I) be integrated with, and be

17 monitored as a part of the Secretary’s

18 review of, the State’s mechanized

19 claims processing and information re20 trieval system under section 2103(h),

21 and

22 ‘‘(II) be subject to the provisions

23 of section 2103(h)(4) relating to re24 ductions in Federal payments for fail25 ure to meet conditions of approval;
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1 ‘‘(B) that in any case where such a legal

2 liability is found to exist after long-term care

3 assistance has been made available on behalf of

4 the individual and where the amount of reim5 bursement the State can reasonably expect to

6 recover exceeds the costs of such recovery, the

7 State or local agency will seek reimbursement

8 for such assistance to the extent of such legal

9 liability;

10 ‘‘(C) that in the case of an individual who

11 is entitled to long-term care assistance under

12 the State plan with respect to a service for

13 which a third party is liable for payment, the

14 person furnishing the service may not seek to

15 collect from the individual (or any financially

16 responsible relative or representative of that in17 dividual) payment of an amount for that serv18 ice—

19 ‘‘(i) if the total of the amount of the

20 liabilities of third parties for that service is

21 at least equal to the amount payable for

22 that service under the plan (disregarding

23 section 2111); or

24 ‘‘(ii) in an amount which exceeds the

25 lesser of (I) the amount which may be col-
32

•S 1600 IS

1 lected under section 2111, or (II) the

2 amount by which the amount payable for

3 that service under the plan (disregarding

4 section 2111) exceeds the total of the

5 amount of the liabilities of third parties for

6 that service; and

7 ‘‘(D) that a person who furnishes services

8 and is participating under the plan may not

9 refuse to furnish services to an individual (who

10 is entitled to have payment made under the

11 plan for the services the person furnishes) be12 cause of a third party’s potential liability for

13 payment for the service.

14 ‘‘(9) ASSIGNMENT.—The State plan must pro15 vide for mandatory assignment of rights of payment

16 for long-term care services owed to recipients, in ac17 cordance with section 2107.

18 ‘‘(10) INFORMATION REQUIREMENTS.—

19 ‘‘(A) REQUIREMENTS ON STATE.—The

20 State plan must provide—

21 ‘‘(i) that the State agency will make

22 such reports, in such form and containing

23 such information, as the Secretary may

24 from time to time require, and comply with

25 such provisions as the Secretary may from
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•S 1600 IS

1 time to time find necessary to assure the

2 correctness and verification of such re3 ports;

4 ‘‘(ii) safeguards which restrict the use

5 or disclosure of information concerning ap6 plicants and recipients to purposes directly

7 connected with the administration of the

8 plan;

9 ‘‘(iii) that within 90 days following

10 the completion of each survey of any facil11 ity or other provider of long-term care

12 services by the appropriate State agency,

13 such agency shall (in accordance with reg14 ulations of the Secretary) make public in

15 readily available form and place the perti16 nent findings of each such survey relating

17 to the compliance of each such facility or

18 other provider with (I) the statutory condi19 tions of participation imposed under this

20 part, and (II) the major additional condi21 tions which the Secretary finds necessary

22 in the interest of health and safety of indi23 viduals who are furnished care or services

24 by any such facility or other provider;
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1 ‘‘(iv) that whenever a provider of serv2 ices or any other person is terminated, sus3 pended, or otherwise sanctioned or prohib4 ited from participating under the State

5 plan, the State agency shall promptly no6 tify the Secretary of such action;

7 ‘‘(v) a method of making information

8 evidencing eligibility for long-term care as9 sistance available to an eligible individual

10 who does not reside in a permanent dwell11 ing or does not have a fixed home or mail12 ing address; and

13 ‘‘(vi) that the State will provide infor14 mation and access to certain information

15 respecting sanctions taken against practi16 tioners and providers by State licensing

17 authorities in accordance with section

18 1921.

19 ‘‘(B) REQUIREMENTS ON PROVIDERS.—

20 The State plan must—

21 ‘‘(i) require that an entity (other than

22 an individual practitioner or a group of

23 practitioners) that furnishes, or arranges

24 for the furnishing of, services under the

25 plan, shall supply (within such period as
35

•S 1600 IS

1 may be specified in regulations by the Sec2 retary or by the single State agency which

3 administers or supervises the administra4 tion of the plan) upon request specifically

5 addressed to such entity by the Secretary

6 or such State agency, the information de7 scribed in section 1128(b)(9);

8 ‘‘(ii) require each facility or other pro9 vider of long-term care services which re10 ceives payments under the plan and of a

11 type for which a uniform reporting system

12 has been established under section 1121(a)

13 to make reports to the Secretary of infor14 mation described in such section in accord15 ance with the uniform reporting system for

16 that type of facility or provider; and

17 ‘‘(iii) provide for filing of uniform cost

18 reports by each nursing facility and peri19 odic audits by the State of such reports.

20 ‘‘(b) CONDITIONS OF APPROVAL OF PLAN.—The Sec21 retary shall approve any plan which fulfills the conditions

22 specified in subsection (a), except that the Secretary shall

23 not approve any plan which imposes, as a condition of eli24 gibility for long-term care assistance under the plan—
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•S 1600 IS

1 ‘‘(1) any residence requirement which excludes

2 any individual who resides in the State, regardless of

3 whether or not the residence is maintained perma4 nently or at a fixed address; or

5 ‘‘(2) any citizenship requirement which excludes

6 any citizen of the United States.

7 ‘‘(c) SANCTION.—In addition to any other sanction

8 available to a State, a State may provide for a reduction

9 of any payment amount otherwise due with respect to a

10 person who furnishes services under the plan in an amount

11 equal to up to 3 times the amount of any payment sought

12 to be collected by that person in violation of subsection

13 (a)(8)(C).

14 ‘‘(d) LIMITED WAIVER OF REQUIREMENTS.—Not15 withstanding any other requirement of this part, the Sec16 retary may waive or modify any requirement of this part

17 with respect to the long-term care assistance program in

18 American Samoa and the Northern Mariana Islands, other

19 than—

20 ‘‘(1) a waiver of the Federal long-term care as21 sistance percentage;

22 ‘‘(2) the limitation in section 1108(c), or

23 ‘‘(3) the requirement that payment may be

24 made for long-term care assistance only with respect

25 to amounts expended by American Samoa or the
37

•S 1600 IS

1 Northern Mariana Islands for care and services de2 scribed in subparagraphs (A) through (D) of section

3 2115(h)(1).

4 ‘‘(e) WAIVER RELATING TO CLAIMS PROCEDURE.—

5 The requirement of subsection (a)(7)(D) with respect to

6 a State plan may be waived by the Secretary if the Sec7 retary finds that the State has exercised good faith in try8 ing to meet such requirement.

9 ‘‘(f) INCOME AND RESOURCE REQUIREMENTS FOR

10 ELIGIBILITY DETERMINATIONS.—

11 ‘‘(1) INCOME REQUIREMENT.—An individual

12 meets the income requirement of this subsection if—

13 ‘‘(A) the amount of the individual’s month14 ly income, less

15 ‘‘(B) the amount of the individual’s in16 curred costs for long-term care services for the

17 month that are not reimbursed by a third

18 party,

19 does not exceed 100 percent of the income official

20 poverty line (as defined in section 2115(f)).

21 ‘‘(2) RESOURCE REQUIREMENT.—An individual

22 meets the resource requirement of this subsection if

23 the individual’s resources do not exceed—

24 ‘‘(A) $2,000 for individuals receiving long25 term care assistance in a nursing facility; and
38

•S 1600 IS

1 ‘‘(B) $5,000 for individuals receiving long2 term care assistance in a setting other than a

3 nursing facility.

4 ‘‘(3) ROUNDING.—The total amount of the in5 come limitation determined under paragraph (1)

6 shall, if it is not a multiple of $100 or such other

7 amount as the Secretary may prescribe, be rounded

8 to the next higher multiple of $100 or such other

9 amount, as the case may be.

10 ‘‘(4) DEFINITIONS.—Except as otherwise pro11 vided, for purposes of this part, the term ‘income’

12 has the meaning given such term in section 1612

13 and the term ‘resources’ has the meaning given such

14 term in section 1613.

15 ‘‘(g) POST-ELIGIBILITY APPLICATION OF INCOME TO

16 COST OF CARE AND PERSONAL NEEDS ALLOWANCES.—

17 ‘‘(1) IN GENERAL.—Each individual receiving

18 long-term care assistance under this part shall con19 tribute an amount equal to the amount determined

20 under paragraph (2) to the cost of the long-term

21 care services furnished to such individual under this

22 part.

23 ‘‘(2) AMOUNT OF CONTRIBUTION.—

24 ‘‘(A) IN GENERAL.—With respect to an in25 dividual, the amount determined under this
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1 paragraph is an amount equal to such individ2 ual’s post-eligibility monthly income (as defined

3 in paragraph (3)) less the applicable personal

4 needs allowance determined under subpara5 graph (B).

6 ‘‘(B) APPLICABLE PERSONAL NEEDS AL7 LOWANCE.—

8 ‘‘(i) INSTITUTIONALIZED INDIVID9 UALS.—In the case of an institutionalized

10 individual, the applicable personal needs al11 lowance is an amount—

12 ‘‘(I) which is reasonable in

13 amount for personal needs of the indi14 vidual while in an institution, and

15 ‘‘(II) which is not less (and may

16 be greater) than $50 per month.

17 ‘‘(ii) INDIVIDUALS RECEIVING HOME

18 AND COMMUNITY BASED SERVICES.—In

19 the case of an individual receiving home

20 and community based services, the applica21 ble personal needs allowance is an amount

22 determined appropriate by the State, in23 cluding amounts necessary to pay for food,

24 shelter, and utilities.
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1 ‘‘(iii) DEFINITION.—For purposes of

2 this subparagraph, the term ‘institutional3 ized individual’ means an individual—

4 ‘‘(I) who is an inpatient in a

5 nursing facility for which payments

6 are made under this part throughout

7 a month, and

8 ‘‘(II) who is determined to be eli9 gible for long-term care assistance

10 under the State plan.

11 ‘‘(3) POST-ELIGIBILITY MONTHLY INCOME.—

12 For purposes of this subsection, the term ‘post-eligi13 bility monthly income’ means—

14 ‘‘(A) in the case of an individual whose

15 monthly income is equal to or less than 100

16 percent of the income official poverty line, an

17 amount equal to such individual’s monthly in18 come; and

19 ‘‘(B) in the case of an individual whose

20 monthly income exceeds 100 percent of the in21 come official poverty line, an amount equal to

22 100 percent of the income official poverty line.

23 ‘‘PAYMENT TO STATES

24 ‘‘SEC. 2103. (a) IN GENERAL.—Except as otherwise

25 provided in this section, the Secretary shall pay to each
41

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1 State which has a plan approved under this part, for each

2 quarter—

3 ‘‘(1) an amount equal to the Federal long-term

4 care assistance percentage (as defined in section

5 2115(c)) of the total amount expended during such

6 quarter as long-term care assistance under the State

7 plan;

8 ‘‘(2)(A) an amount equal to 75 percent of so

9 much of the sums expended during such quarter (as

10 found necessary by the Secretary for the proper and

11 efficient administration of the State plan) as are at12 tributable to compensation or training of skilled pro13 fessional personnel, and staff directly supporting

14 such personnel, of the State agency or any other

15 public agency;

16 ‘‘(B) notwithstanding paragraph (1) or sub17 paragraph (A), with respect to amounts expended

18 during such quarter under this part for nursing aide

19 training and competency evaluation programs de20 scribed in section 1919(e)(1) (including the costs for

21 nurse aides to complete such competency evaluation

22 programs), regardless of whether the programs are

23 provided in or outside nursing facilities or of the

24 skill of the personnel involved in such programs, an

25 amount equal to 50 percent of so much of the sums
42

•S 1600 IS

1 expended during such quarter under this part (as

2 found necessary by the Secretary for the proper and

3 efficient administration of the State plan) as are at4 tributable to such programs;

5 ‘‘(C) an amount equal to 75 percent of so much

6 of the sums expended during such quarter under

7 this part (as found necessary by the Secretary for

8 the proper and efficient administration of the State

9 plan) as are attributable to preadmission screening

10 and resident review activities conducted by the State

11 under section 1919(e)(7); and

12 ‘‘(D) an amount equal to 75 percent of so much

13 of the sums expended during such quarter under

14 this part (as found necessary by the Secretary for

15 the proper and efficient administration of the State

16 plan) as are attributable to State activities under

17 section 1919(g);

18 ‘‘(3) an amount equal to—

19 ‘‘(A) 90 percent of so much of the sums

20 expended during such quarter as are attrib21 utable to the design, development, or installa22 tion of such mechanized claims processing and

23 information retrieval systems as the Secretary

24 determines are likely to provide more efficient,

25 economical and effective administration of the
43

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1 State plan and to be compatible with the claims

2 processing and information retrieval systems

3 utilized in the administration of title XVIII, in4 cluding the State’s share of the cost of install5 ing such a system to be used jointly in the ad6 ministration of such State’s plan and the plan

7 of any other State approved under this part,

8 ‘‘(B) 75 percent of so much of the sums

9 expended during such quarter as are attrib10 utable to the operation of systems (whether

11 such systems are operated directly by the State

12 or by another person under a contract with the

13 State) of the type described in subparagraph

14 (A) (whether or not designed, developed, or in15 stalled with assistance under such subpara16 graph) which are approved by the Secretary

17 and which include provision for prompt written

18 notice to each individual who is furnished serv19 ices covered by the State plan of the specific

20 services (other than confidential services) so

21 covered, the name of the person or persons fur22 nishing the services, the date or dates on which

23 the services were furnished, and the amount of

24 the payment or payments made under the plan

25 on account of the services, and
44

•S 1600 IS

1 ‘‘(C) 75 percent of the sums expended with

2 respect to costs incurred during such quarter

3 (as found necessary by the Secretary for the

4 proper and efficient administration of the State

5 plan) as are attributable to the performance of

6 utilization review or quality review;

7 ‘‘(4) an amount equal to 100 percent of the

8 sums expended during such quarter under this part

9 which are attributable to the costs of the implemen10 tation and operation of the immigration status ver11 ification system described in section 1137(d);

12 ‘‘(5) subject to subsection (b) an amount equal

13 to—

14 ‘‘(A) 90 percent of the sums expended dur15 ing such a quarter within the 12-quarter period

16 beginning with the first quarter in which a pay17 ment is made to the State pursuant to this

18 paragraph, and

19 ‘‘(B) 75 percent of the sums expended dur20 ing each succeeding calendar quarter,

21 with respect to costs incurred during such quarter

22 (as found necessary by the Secretary for the elimi23 nation of fraud in the provision and administration

24 of long-term care assistance provided under the

25 State plan) which are attributable to the establish-
45

•S 1600 IS

1 ment and operation of (including the training of per2 sonnel employed by) a State long-term care fraud

3 control unit (as defined in section 2115(m)); and

4 ‘‘(6) subject to section 1919(g)(3)(B), an

5 amount equal to 50 percent of the remainder of the

6 amounts expended during such quarter as found

7 necessary by the Secretary for the proper and effi8 cient administration of the State plan.

9 ‘‘(b) LIMIT ON THE AMOUNT OF PAYMENT.—The

10 amount of funds which the Secretary is otherwise obli11 gated to pay a State during a quarter under subsection

12 (a)(5) may not exceed one-quarter of 1 percent of the

13 sums expended by the Federal, State, and local govern14 ments during the previous quarter in carrying out the

15 State’s plan under this part.

16 ‘‘(c) ESTIMATE OF QUARTERLY PAYMENT TO

17 STATE.—

18 ‘‘(1) IN GENERAL.—Prior to the beginning of

19 each quarter, the Secretary shall estimate the

20 amount to which a State will be entitled under sub21 section (a) for such quarter. Such estimates shall be

22 based on—

23 ‘‘(A) a report filed by the State containing

24 its estimate of the total sum to be expended in

25 such quarter in accordance with the provisions
46

•S 1600 IS

1 of such subsections, and stating the amount ap2 propriated or made available by the State and

3 its political subdivisions for such expenditures

4 in such quarter, and if such amount is less than

5 the State’s proportionate share of the total sum

6 of such estimated expenditures, the source or

7 sources from which the difference is expected to

8 be derived, and

9 ‘‘(B) such other investigation as the Sec10 retary may find necessary.

11 ‘‘(2) PAYMENTS.—

12 ‘‘(A) IN GENERAL.—The Secretary shall

13 pay to the State, in such installments as the

14 Secretary may determine, the amount estimated

15 under paragraph (1), reduced or increased to

16 the extent of any overpayment or underpayment

17 which the Secretary determines was made

18 under this section to such State for any prior

19 quarter and with respect to which adjustment

20 has not already been made under this sub21 section.

22 ‘‘(B) THIRD PARTY REIMBURSEMENTS.—

23 Expenditures for which payments were made to

24 the State under subsection (a) shall be treated

25 as an overpayment to the extent that the State
47

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1 or local agency administering such plan has

2 been reimbursed for such expenditures by a

3 third party pursuant to the provisions of its

4 plan in compliance with section 2102(a)(8).

5 ‘‘(C) OVERPAYMENT BY A STATE.—

6 ‘‘(i) IN GENERAL.—For purposes of

7 this subsection, when an overpayment by a

8 State to a person or other entity is discov9 ered, the State shall have a period of 60

10 days in which to recover or attempt to re11 cover such overpayment before adjustment

12 is made in the Federal payment to such

13 State on account of such overpayment. Ex14 cept as otherwise provided in clause (ii),

15 the adjustment in the Federal payment

16 shall be made at the end of the 60 days,

17 whether or not recovery was made.

18 ‘‘(ii) SPECIAL RULE.—In any case

19 where the State is unable to recover an

20 overpayment (or any portion of such over21 payment) made to a person or other entity

22 on account of such overpayment having

23 been a debt discharged in bankruptcy or

24 otherwise being uncollectible, no adjust25 ment shall be made in the Federal pay-
48

•S 1600 IS

1 ment to such State on account of such

2 overpayment (or portion of such overpay3 ment).

4 ‘‘(iii) AMOUNTS RECOVERED.—The

5 pro rata share to which the United States

6 is equitably entitled, as determined by the

7 Secretary, of the net amount recovered

8 during any quarter by the State or any po9 litical subdivision of the State with respect

10 to long-term care assistance furnished

11 under the State plan shall be considered an

12 overpayment to be adjusted under this sub13 section.

14 ‘‘(3) APPROPRIATIONS DEEMED OBLIGATED.—

15 Upon the making of any estimate by the Secretary

16 under this subsection, any appropriations available

17 for payments under this section shall be deemed ob18 ligated.

19 ‘‘(4) OVERPAYMENTS TO STATES.—In any case

20 in which the Secretary estimates that there has been

21 an overpayment under this section to a State on the

22 basis of a claim by such State that has been dis23 allowed by the Secretary under section 1116(d), and

24 such State disputes such disallowance, the amount

25 of the Federal payment in controversy shall, at the
49

•S 1600 IS

1 option of the State, be retained by such State or re2 covered by the Secretary pending a final determina3 tion with respect to such payment amount. If such

4 final determination is to the effect that any amount

5 was properly disallowed, and the State chose to re6 tain payment of the amount in controversy, the Sec7 retary shall offset, from any subsequent payments

8 made to such State under this part, an amount

9 equal to the proper amount of the disallowance plus

10 interest on such amount disallowed for the period

11 beginning on the dates such amount was disallowed

12 and ending on the date of such final determination

13 at the rate (determined by the Secretary) based on

14 the average of the bond equivalent of the weekly 90-

15 day Treasury bill auction rates during such period.

16 ‘‘(d) PROHIBITIONS ON PAYMENT.—Payment under

17 the preceding provisions of this section shall not be

18 made—

19 ‘‘(1) with respect to any amount expended for

20 long-term care assistance—

21 ‘‘(A) for nursing facility services to reim22 burse (or otherwise compensate) a nursing facil23 ity for payment of a civil money penalty im24 posed under this part or title XI, or
50

•S 1600 IS

1 ‘‘(B) for home and community based serv2 ices to reimburse (or otherwise compensate) a

3 provider of such services for payment of a civil

4 money penalty imposed under this part or title

5 XI; and

6 ‘‘(2) with respect to any amount expended to

7 reimburse (or otherwise compensate) any provider of

8 long-term care services under this part for payment

9 of legal expenses associated with any action initiated

10 by the facility that is dismissed on the basis that no

11 reasonable legal ground existed for the institution of

12 such action.

13 ‘‘(e) ADJUSTMENT OF PAYMENTS.—Notwithstanding

14 the preceding provisions of this section, the amount deter15 mined under subsection (a)(1) for any State for any quar16 ter shall be adjusted in accordance with section 2109.

17 ‘‘(f) PROHIBITION ON PAYMENT IN CASES OF EX18 CLUSION CONTRACTS.—Notwithstanding the preceding

19 provisions of this section, no payment shall be made to

20 a State under the preceding provisions of this section for

21 expenditures for long-term care assistance provided for an

22 individual under the State’s plan approved under this part

23 to the extent that a private insurer (as defined by the Sec24 retary by regulation) would have been obligated to provide

25 such assistance but for a provision of its insurance con-
51

•S 1600 IS

1 tract which has the effect of limiting or excluding such

2 obligation because the individual is eligible for or is pro3 vided long-term care assistance under the plan.

4 ‘‘(g) PAYMENT FOR COLLECTION OF SUPPORT OR

5 PAYMENT UNDER COOPERATIVE ARRANGEMENT.—

6 ‘‘(1) IN GENERAL.—When a political subdivi7 sion of a State makes, for the State of which it is

8 a political subdivision, or one State makes, for an9 other State, the enforcement and collection of rights

10 of support or payment assigned under section 2107,

11 pursuant to a cooperative arrangement under such

12 section (either within or outside of such State), there

13 shall be paid to such political subdivision or such

14 other State from amounts which would otherwise

15 represent the Federal share of payments for long16 term care assistance provided to the eligible individ17 uals on whose behalf such enforcement and collec18 tion was made, an amount equal to 15 percent of

19 any amount collected which is attributable to such

20 rights of support or payment.

21 ‘‘(2) ALLOCATION WHERE MULTIPLE JURISDIC22 TIONS INVOLVED.—Where more than one jurisdic23 tion is involved in an enforcement or collection under

24 paragraph (1), the amount of the incentive payment

25 determined under such paragraph shall be allocated
52

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1 among the jurisdictions in a manner to be prescribed

2 by the Secretary.

3 ‘‘(h) MECHANIZED CLAIMS PROCESSING AND RE4 TRIEVAL SYSTEMS.—

5 ‘‘(1) IN GENERAL.—In order to receive pay6 ments under paragraph (3)(B) of subsection (a)

7 without being subject to percent reductions set forth

8 in paragraph (4)(B) of this subsection, a State must

9 provide that mechanized claims processing and infor10 mation retrieval systems of the type described in

11 subsection (a)(3)(A) and detailed in an advance

12 planning document approved by the Secretary are

13 operational on or before September 30, 1995.

14 ‘‘(2) APPROVAL OF SYSTEMS.—

15 ‘‘(A) IN GENERAL.—In order to receive

16 payments under paragraph (3)(B) of subsection

17 (a) without being subject to the percent reduc18 tions set forth in paragraph (4)(B) of this sub19 section, a State must have its mechanized

20 claims processing and information retrieval sys21 tems, of the type required to be operational

22 under paragraph (1), initially approved by the

23 Secretary in accordance with paragraph (5)(A).

24 ‘‘(B) DEADLINE.—The deadline for ap25 proval of such systems for a State is the last
53

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1 day of the fourth quarter that begins after the

2 date on which the Secretary determines that

3 such systems became operational as required

4 under paragraph (1).

5 ‘‘(C) DEEMED APPROVAL.—Any State’s

6 systems which are approved by the Secretary

7 for purposes of subsection (a)(3)(A) on or be8 fore the date of the enactment of this sub9 section shall be deemed to be initially approved

10 for purposes of this subsection.

11 ‘‘(3) FEDERAL MATCH.—When a State’s sys12 tems are approved, the 75 percent Federal matching

13 provided in subsection (a)(3)(B) shall become effec14 tive with respect to such systems, retroactive to the

15 first quarter beginning after the date on which such

16 systems became operational as required under para17 graph (1).

18 ‘‘(4) REVIEW OF SYSTEMS.—

19 ‘‘(A) IN GENERAL.—The Secretary shall

20 review all approved systems not less often than

21 once every 3 years, and shall reapprove or dis22 approve any such systems. Systems which fail

23 to meet the current performance standards, sys24 tem requirements, and any other conditions for

25 approval developed by the Secretary under
54

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1 paragraph (6) shall be disapproved. Any State

2 having systems which are so disapproved shall

3 be subject to a percent reduction under sub4 paragraph (B). The Secretary shall make the

5 determination of reapproval or disapproval and

6 so notify the States not later than the end of

7 the first quarter following the review period.

8 Reviews may, at the Secretary’s discretion, con9 stitute reviews of the entire system or only

10 those standards, systems requirements, and

11 other conditions which have demonstrated

12 weakness in previous reviews.

13 ‘‘(B) DISAPPROVAL OF SYSTEM.—If the

14 Secretary disapproves a State’s systems under

15 subparagraph (A), the Secretary shall, with re16 spect to such State, for quarters beginning

17 after the determination of disapproval and be18 fore the first quarter beginning after such sys19 tems are reapproved, reduce the percent speci20 fied in subsection (a)(3)(B) to a percent of not

21 less than 50 percent and not more than 70 per22 cent as the Secretary determines to be appro23 priate and commensurate with the nature of

24 noncompliance by such State, except that such

25 percent may not be reduced by more than 10
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1 percentage points in any 4-quarter period by

2 reason of this subparagraph. No State shall be

3 subject to a percent reduction under this para4 graph before the fifth quarter beginning after

5 such State’s systems were initially approved.

6 ‘‘(C) WAIVER.—The Secretary may retro7 actively waive a percent reduction imposed

8 under subparagraph (B), if the Secretary deter9 mines that the State’s systems meet all current

10 performance standards and other requirements

11 for reapproval and that such action would im12 prove the administration of the State’s plan

13 under this part, except that no such waiver may

14 extend beyond the 4 quarters immediately prior

15 to the quarter in which the State’s systems are

16 reapproved.

17 ‘‘(5) REQUIREMENTS FOR INITIAL APPROVAL.—

18 ‘‘(A) IN GENERAL.—In order to be initially

19 approved by the Secretary, mechanized claims

20 processing and information retrieval systems

21 must be of the type described in subsection

22 (a)(3)(A) and must meet the following require23 ments:

24 ‘‘(i) The systems must be capable of

25 developing provider and patient profiles
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1 which are sufficient to provide specific in2 formation as to the use of covered types of

3 services and items.

4 ‘‘(ii) The State must provide that in5 formation on probable fraud or abuse

6 which is obtained from, or developed by,

7 the systems, is made available to the

8 State’s long-term care fraud control unit

9 (if any).

10 ‘‘(iii) The systems must meet all per11 formance standards and other require12 ments for initial approval developed by the

13 Secretary under paragraph (6).

14 ‘‘(B) REAPPROVAL.—In order to be

15 reapproved by the Secretary, mechanized claims

16 processing and information retrieval systems

17 must meet the requirements of clauses (i) and

18 (ii) of subparagraph (A) and performance

19 standards and other requirements for

20 reapproval developed by the Secretary under

21 paragraph (6).

22 ‘‘(6) DEVELOPMENT OF PERFORMANCE STAND23 ARDS.—The Secretary, with respect to State sys24 tems, shall—
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1 ‘‘(A) develop performance standards, sys2 tem requirements, and other conditions for ap3 proval for use in initially approving such State

4 systems, and shall further develop written ap5 proval procedures for conducting reviews for

6 initial approval, including specific criteria for

7 assessing systems in operation to ensure that

8 all such performance standards and other re9 quirements are met;

10 ‘‘(B) develop an initial set of performance

11 standards, system requirements, and other con12 ditions for reapproval for use in reapproving or

13 disapproving State systems, and shall further

14 develop written reapproval procedures for con15 ducting reviews for reapproval, including spe16 cific criteria for reassessing systems operations

17 over a period of at least 6 months during each

18 fiscal year to ensure that all such performance

19 standards and other requirements are met on a

20 continuous basis;

21 ‘‘(C) provide that reviews for reapproval

22 shall be for the purpose of developing a systems

23 performance data base and assisting States to

24 improve their systems, and that no percent re-
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1 duction shall be made under paragraph (4) on

2 the basis of such a review;

3 ‘‘(D) ensure that review procedures, per4 formance standards, and other requirements de5 veloped under subparagraph (B) are sufficiently

6 flexible to allow for differing administrative

7 needs among the States, and that such proce8 dures, standards, and requirements are of a na9 ture which will permit their use by the States

10 for self-evaluation;

11 ‘‘(E) notify all States of proposed proce12 dures, standards, and other requirements at

13 least 1 quarter prior to the fiscal year in which

14 such procedures, standards, and other require15 ments will be used for conducting reviews for

16 reapproval;

17 ‘‘(F) periodically update the systems per18 formance standards, system requirements, re19 view criteria, objectives, regulations, and guides

20 as the Secretary shall from time to time deem

21 appropriate;

22 ‘‘(G) provide technical assistance to States

23 in the development and improvement of the sys24 tems so as to continually improve the capacity
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1 of such systems to effectively detect cases of

2 fraud or abuse;

3 ‘‘(H) for the purpose of ensuring compat4 ibility between the State systems and the sys5 tems utilized in the administration of title

6 XVIII and title XIX—

7 ‘‘(i) develop a uniform identification

8 coding system (to the extent feasible) for

9 providers, other persons receiving pay10 ments under the State plans approved

11 under this part or under title XVIII or

12 XIX, and beneficiaries of medical services

13 under such plans or title;

14 ‘‘(ii) provide liaison between States

15 and carriers and intermediaries having

16 agreements under title XVIII to facilitate

17 timely exchange of appropriate data; and

18 ‘‘(iii) improve the exchange of data

19 between the States and the Secretary with

20 respect to providers and other persons who

21 have been terminated, suspended, or other22 wise sanctioned under a State plan ap23 proved under this part or under title XVIII

24 or XIX;
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1 ‘‘(I) develop and disseminate clear defini2 tions of those types of reasonable costs relating

3 to State systems which are reimbursable under

4 the provisions of subsection (a)(3) of this sec5 tion; and

6 ‘‘(J) develop and disseminate performance

7 standards for assessing the State’s third party

8 collection efforts in accordance with section

9 2102(a)(8)(A)(ii).

10 ‘‘(i) PAYMENT PROHIBITED FOR ERRONEOUS EX11 CESS PAYMENTS BEYOND A CERTAIN LEVEL.—

12 ‘‘(1) IN GENERAL.—

13 ‘‘(A) PAYMENT PROHIBITED.—Notwith14 standing subsection (a)(1), if the ratio of a

15 State’s erroneous excess payments for long-term

16 care assistance (as defined in subparagraph

17 (D)) to its total expenditures for long-term care

18 assistance under the State plan approved under

19 this part exceeds 0.03 for any full fiscal year,

20 then the Secretary shall make no payment for

21 such fiscal year with respect to so much of such

22 erroneous excess payments as exceeds such al23 lowable error rate of 0.03.

24 ‘‘(B) WAIVER.—The Secretary may waive,

25 in certain limited cases, all or part of the reduc-
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1 tion required under subparagraph (A) with re2 spect to any State if such State is unable to

3 reach the allowable error rate for a period or

4 fiscal year despite a good faith effort by such

5 State.

6 ‘‘(C) ESTIMATIONS.—In estimating the

7 amount to be paid to a State under subsection

8 (c), the Secretary shall take into consideration

9 the limitation on Federal financial participation

10 imposed by subparagraph (A) and shall reduce

11 the estimate the Secretary makes under sub12 section (c)(1), for purposes of payment to the

13 State under subsection (c)(2), in light of any

14 expected erroneous excess payments for long15 term care assistance (estimated in accordance

16 with such criteria, including sampling proce17 dures, as the Secretary may prescribe and sub18 ject to subsequent adjustment, if necessary,

19 under subsection (c)(2)).

20 ‘‘(D) DEFINITION.—

21 ‘‘(i) IN GENERAL.—For purposes of

22 this subsection, the term ‘erroneous excess

23 payments for long-term care assistance’

24 means the total of—
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1 ‘‘(I) payments under the State

2 plan with respect to ineligible individ3 uals and families, and

4 ‘‘(II) overpayments on behalf of

5 eligible individuals and families by

6 reason of error in determining the

7 amount of expenditures for long-term

8 care services required of an individual

9 or a family as a condition of eligi10 bility.

11 ‘‘(ii) INELIGIBLES.—In determining

12 the amount of erroneous excess payments

13 for long-term care assistance to an ineli14 gible individual or family under clause

15 (i)(I), if such ineligibility is the result of

16 an error in determining the amount of the

17 resources of such individual or family, the

18 amount of the erroneous excess payment

19 shall be the smaller of (I) the amount of

20 the payment with respect to such individ21 ual or family, or (II) the difference be22 tween the actual amount of such resources

23 and the allowance resource level estab24 lished under the State plan.
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1 ‘‘(iii) ERRORS.—In determining the

2 amount of erroneous excess payments for

3 long-term care assistance to an individual

4 or family under clause (i)(II), the amount

5 of the erroneous excess payment shall be

6 the smaller of (I) the amount of the pay7 ment on behalf of the individual or family,

8 or (II) the difference between the actual

9 amount incurred for long-term care serv10 ices by the individual or family and the

11 amount which should have been incurred in

12 order to establish eligibility for long-term

13 care assistance.

14 ‘‘(iv) THIRD-PARTY LIABILITY.—In

15 determining the amount of erroneous ex16 cess payments, there shall not be included

17 any error resulting from a failure of an in18 dividual to cooperate or give correct infor19 mation with respect to third-party liability

20 as required under section 2107(a)(1)(B) or

21 402(a)(26)(C).

22 ‘‘(E) EXCLUSIONS.—For purposes of sub23 paragraph (D), there shall be excluded, in de24 termining both erroneous excess payments
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1 made for long-term care assistance and total

2 expenditures for long-term care assistance—

3 ‘‘(i) payments with respect to any in4 dividual whose eligibility for long-term care

5 assistance was determined exclusively by

6 the Secretary under an agreement pursu7 ant to section 1634 and such other classes

8 of individuals as the Secretary may by reg9 ulation prescribe whose eligibility was de10 termined in part under such an agreement;

11 and

12 ‘‘(ii) payments made as the result of

13 a technical error.

14 ‘‘(2) PROVISION OF INFORMATION.—The State

15 agency administering the plan approved under this

16 part shall, at such times and in such form as the

17 Secretary may specify, provide information on the

18 rates of erroneous excess payments made (or ex19 pected, with respect to future periods specified by

20 the Secretary) in connection with its administration

21 of such plan, together with any other data the Sec22 retary requests that are reasonably necessary for the

23 Secretary to carry out the provisions of this sub24 section.

25 ‘‘(3) STATE FAILURE TO COOPERATE.—
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1 ‘‘(A) IN GENERAL.—If a State fails to co2 operate with the Secretary in providing infor3 mation necessary to carry out this subsection,

4 the Secretary, directly or through contractual

5 or such other arrangements as the Secretary

6 may find appropriate, shall establish the error

7 rates for that State on the basis of the best

8 data reasonably available to the Secretary and

9 in accordance with such techniques for sam10 pling and estimating as the Secretary finds ap11 propriate.

12 ‘‘(B) REDUCTION FOR COSTS.—In any

13 case in which it is necessary for the Secretary

14 to exercise the Secretary’s authority under sub15 paragraph (A) to determine a State’s error

16 rates for a fiscal year, the amount that would

17 otherwise be payable to such State under this

18 part for quarters in such year shall be reduced

19 by the costs incurred by the Secretary in mak20 ing (directly or otherwise) such determination.

21 ‘‘(4) APPLICABILITY.—This subsection shall not

22 apply with respect to Puerto Rico, Guam, the Virgin

23 Islands, the Northern Mariana Islands, or American

24 Samoa.
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1 ‘‘(j) PAYMENT PROHIBITED FOR ASSISTANCE TO

2 NONRESIDENT ALIENS.—Notwithstanding the preceding

3 provisions of this section, no payment may be made to a

4 State under this section for long-term care assistance fur5 nished to an alien who is not lawfully admitted for perma6 nent residence or otherwise permanently residing in the

7 United States under color of law.

8 ‘‘(k) DISALLOWANCE OF CLAIMS BY STATES.—

9 ‘‘(1) IN GENERAL.—In any case in which the

10 Secretary proposes to disallow under section 1116(d)

11 a claim by a State under this section, the Secretary

12 shall, if the proposed disallowance is described in

13 paragraph (2)(A), follow the procedure described in

14 paragraph (2)(B). The Secretary may disallow such

15 claim only if the State fails to take the action speci16 fied in paragraph (2)(B).

17 ‘‘(2) APPLICABLE DISALLOWANCES AND PROCE18 DURE.—

19 ‘‘(A) APPLICABLE DISALLOWANCES.—The

20 procedure described in subparagraph (B) ap21 plies to any proposed disallowance where there

22 is no contention by the Secretary that the serv23 ices rendered were not medically necessary and

24 appropriate, or that the quality of care provided
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1 to eligible individuals was deficient and the pro2 posed disallowance is not based upon—

3 ‘‘(i) an erroneous determination of eli4 gibility of individuals;

5 ‘‘(ii) services of a type that are not

6 covered by this part;

7 ‘‘(iii) services provided by an ineligible

8 provider;

9 ‘‘(iv) erroneous computation of a

10 State’s indirect cost allocation rate or an

11 ineligible provider’s rate;

12 ‘‘(v) claims based on an inapplicable

13 Federal long-term care assistance percent14 age; or

15 ‘‘(vi) failure to comply with utilization

16 control procedures.

17 ‘‘(B) PROCEDURE.—In the case of any

18 proposed disallowance described in subpara19 graph (A) the Secretary shall notify the State

20 of the Secretary’s intent to disallow a claim.

21 Within 60 days of receipt of such notice, the

22 State may inform the Secretary of its intention

23 to alter its program or practices on a prospec24 tive basis to satisfy the matters on which the

25 proposed disallowance is based, in which event
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1 the Secretary shall review the State’s program

2 or practices, as appropriate, to assure that the

3 necessary changes have been made or will be

4 made within a reasonable time.

5 ‘‘(3) DETERMINATION OF AMOUNT OF DIS6 ALLOWANCE.—Whenever the Secretary disallows any

7 claim by a State under this section, whether or not

8 described in paragraph (2)(A) of this subsection,

9 and the State exercises its right of reconsideration

10 under section 1116(d), the Department Appeals

11 Board established in the Department of Health and

12 Human Services shall, if such Board upholds the

13 basis for the disallowance, determine whether the

14 amount of the disallowance should be reduced. In

15 making this determination, the Board shall take into

16 account (to the extent the State makes a showing)

17 factors which shall include, but not be limited to—

18 ‘‘(A) whether the basis of the disallowance

19 was procedural in nature;

20 ‘‘(B) whether the amount of the disallow21 ance is proportionate to the error or deficiency

22 on which the disallowance is based;

23 ‘‘(C) whether the basis of the disallowance

24 constitutes noncompliance that prevented or
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1 materially affected the provision of appropriate

2 services of recipients eligible under this part; or

3 ‘‘(D) whether Federal guidance with re4 spect to the action that is the basis for the pro5 posed disallowance was insufficient and the

6 State made good faith efforts to conform its ac7 tion to the intent of the applicable Federal stat8 ute or regulation.

9 ‘‘(4) NO DISALLOWANCE IF ACTION CONSIST10 ENT WITH STATE PLAN.—No disallowance shall be

11 taken or upheld if action of the State on which the

12 disallowance would be based is consistent with its

13 approved State plan.

14 ‘‘(5) INTEREST.—In any case of a disallowance

15 as to which the State does not elect to retain the

16 amount of the Federal payment in dispute pending

17 a final determination with respect to such payment

18 amount, and such final determination (either by ad19 ministrative or judicial decision) is to the effect that

20 such payment amount, or any portion thereof, shall

21 not be disallowed, the State shall be entitled to in22 terest on the amount determined not to be dis23 allowed for the period beginning on the date such

24 amount was disallowed and ending on the date of
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1 such final determination at the rate specified in sub2 section (c)(4).

3 ‘‘(6) AUDIT OR FINANCIAL REVIEW.—No dis4 allowance of a claim under this section may be taken

5 with respect to any amounts paid to a State unless

6 an audit or financial review with respect to such

7 amounts has been initiated, and the State has been

8 informed that the audit has been initiated, within 3

9 years of the date of filing of the State’s claim for

10 such amounts.

11 ‘‘(l) APPLICATION OF RULES REGARDING LIMITA12 TIONS ON PROVIDER-RELATED DONATIONS AND HEALTH

13 CARE RELATED TAXES.—

14 ‘‘(1) IN GENERAL.—Except as provided in para15 graph (2), the provisions of subsection (w) of section

16 1903 shall apply to payments to States under this

17 section in the same manner as they apply to pay18 ments to States under subsection (a) of such section.

19 ‘‘(2) ADDITIONAL HEALTH CARE ITEMS AND

20 SERVICES.—For purposes of paragraph (1), sub21 section (w)(7)(A) of section 1903 shall be applied by

22 adding case management services and home and

23 community based services to the health care items

24 and services listed in such subsection.
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1 ‘‘OPERATION OF STATE PLANS

2 ‘‘SEC. 2104. If the Secretary, after reasonable notice

3 and opportunity for hearing to the State agency admin4 istering or supervising the administration of the State

5 plan approved under this part, finds—

6 ‘‘(1) that the plan has been so changed that it

7 no longer complies with the provisions of section

8 2102; or

9 ‘‘(2) that in the administration of the plan

10 there is a failure to comply substantially with any

11 such provision,

12 the Secretary shall notify such State agency that further

13 payments will not be made to the State (or, in the Sec14 retary’s discretion, that payments will be limited to cat15 egories under or parts of the State plan not affected by

16 such failure), until the Secretary is satisfied that there will

17 no longer be any such failure to comply. Until the Sec18 retary is so satisfied, the Secretary shall make no further

19 payments to such State (or shall limit payments to cat20 egories under or parts of the State plan not affected by

21 such failure).

22 ‘‘OBSERVANCE OF RELIGIOUS BELIEFS

23 ‘‘SEC. 2105. Nothing in this part shall be construed

24 to require any State which has a plan approved under this

25 part to compel any person to receive services under the

26 plan (other than for the purpose of discovering and pre-
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1 venting the spread of infection or contagious disease or

2 for the purpose of protecting environmental health) if such

3 person objects to the receipt of such services on religious

4 grounds.

5 ‘‘INDIAN HEALTH SERVICE PROVIDERS

6 ‘‘SEC. 2106. (a) ELIGIBILITY FOR PAYMENT.—An

7 Indian Health Service provider (including a nursing facil8 ity, or any other provider of services of a type otherwise

9 covered under the State plan), whether operated by such

10 Service or by an Indian tribe or tribal organization (as

11 those terms are defined in section 4 of the Indian Health

12 Care Improvement Act), shall be eligible for reimburse13 ment for long-term care assistance provided under a State

14 plan if and for so long as the provider meets all of the

15 conditions and requirements which are applicable gen16 erally to such providers under this part.

17 ‘‘(b) SUBMISSION OF PLAN FOR ELIGIBILITY.—Not18 withstanding subsection (a), an Indian Health Service pro19 vider (including a nursing facility, or any other provider

20 of services of a type otherwise covered under the State

21 plan) which does not meet all of the conditions and re22 quirements of this part which are applicable generally to

23 such provider, but which submits to the Secretary within

24 6 months after the date of the enactment of this section

25 an acceptable plan for achieving compliance with such con26 ditions and requirements, shall be deemed to meet such
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1 conditions and requirements (and to be eligible for reim2 bursement under this part), without regard to the extent

3 of its actual compliance with such conditions and require4 ments, during the first 12 months after the month in

5 which such plan is submitted.

6 ‘‘ASSIGNMENT OF RIGHTS OF PAYMENT

7 ‘‘SEC. 2107. (a) IN GENERAL.—For the purpose of

8 assisting in the collection of long-term care support pay9 ments and other payments for long-term care owed to re10 cipients of long-term care assistance under the State plan

11 approved under this part, a State plan for long-term care

12 assistance shall—

13 ‘‘(1) provide that, as a condition of eligibility

14 for long-term care assistance under the State plan to

15 an individual who has the legal capacity to execute

16 an assignment on the individual’s own behalf, the in17 dividual is required—

18 ‘‘(A) to assign the State any rights, of the

19 individual or of any other person who is eligible

20 for long-term care assistance under this part

21 and on whose behalf the individual has the legal

22 authority to execute an assignment of such

23 rights, to support (specified as support for the

24 purpose of long-term care by a court or admin25 istrative order) and to payment for long-term

26 care from any third party; and
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1 ‘‘(B) to cooperate with the State in identi2 fying, and providing information to assist the

3 State in pursuing, any third party who may be

4 liable to pay for care and services available

5 under the plan, unless such individual has good

6 cause for refusing to cooperate as determined

7 by the State agency in accordance with stand8 ards prescribed by the Secretary, which stand9 ards shall take into consideration the best inter10 ests of the individuals involved; and

11 ‘‘(2) provide for entering into cooperative ar12 rangements (including financial arrangements), with

13 any appropriate agency of any State (including, with

14 respect to the enforcement and collection of rights of

15 payment for long-term care by or through a parent,

16 with a State’s agency established or designated

17 under section 454(3)) and with appropriate courts

18 and law enforcement officials, to assist the agency or

19 agencies administering the State plan with respect

20 to the enforcement and collection of rights to sup21 port or payment assigned under this section, and

22 any other matters of common concern.

23 ‘‘(b) DISTRIBUTION OF AMOUNTS COLLECTED.—

24 Such part of any amount collected by the State under an

25 assignment made under the provisions of this section shall
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1 be retained by the State as is necessary to reimburse the

2 State for long-term care assistance payments made on be3 half of an individual with respect to whom such assign4 ment was executed (with appropriate reimbursement of

5 the Federal Government to the extent of its participation

6 in the financing of such long-term care assistance), and

7 the remainder of such amount collected shall be paid to

8 such individual.

9 ‘‘HOSPITAL PROVIDERS OF NURSING FACILITY SERVICES

10 ‘‘SEC. 2108. (a) IN GENERAL.—Notwithstanding any

11 other provision of this part, payment may be made, in ac12 cordance with this section, under a State plan approved

13 under this part for nursing facility services furnished by

14 a hospital which has in effect an agreement under section

15 1883 and which, with respect to the provision of such serv16 ices, meets the requirements of subsections (b) through

17 (d) of section 1919.

18 ‘‘(b) PAYMENT FOR SERVICES.—

19 ‘‘(1) IN GENERAL.—Except as provided in para20 graph (3), payment to any such hospital for any

21 nursing facility services furnished pursuant to sub22 section (a) shall be at a rate equal to the average

23 rate per patient-day paid for routine services during

24 the previous calendar year under the State plan to

25 nursing facilities located in the State in which the

26 hospital is located. The reasonable cost of ancillary
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1 services shall be determined in the same manner as

2 the reasonable cost of ancillary services provided for

3 inpatient hospital services.

4 ‘‘(2) ALLOCATION OF COSTS.—With respect to

5 any period for which a hospital has an agreement

6 under section 1883, in order to allocate routine costs

7 between hospital and long-term care services, the

8 total reimbursement for routine services due from all

9 classes of long-term care services, the total reim10 bursement for routine services due from all classes

11 of long-term care patients (including title XVIII,

12 title XIX, and private pay patients) shall be sub13 tracted from the hospital total routine costs before

14 calculations are made to determine reimbursement

15 for routine hospital services under the State plan.

16 ‘‘(3) PAYMENT RATES.—Payment to any hos17 pital for any nursing facility services furnished pur18 suant to subsection (a) may be made at a payment

19 rate established by the State in accordance with the

20 requirements of section 2102(a)(7)(C)(i).

21 ‘‘WITHHOLDING OF FEDERAL SHARE OF PAYMENTS FOR

22 CERTAIN MEDICARE AND MEDICAID PROVIDERS

23 ‘‘SEC. 2109. (a) IN GENERAL.—

24 ‘‘(1) MEDICARE PROGRAM.—The Secretary may

25 adjust, in accordance with this section, the Federal

26 matching payment to a State with respect to expend-
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1 itures for long-term care assistance for services fur2 nished in any quarter by—

3 ‘‘(A) an institution—

4 ‘‘(i) which has or previously had in ef5 fect an agreement with the Secretary

6 under section 1866; and

7 ‘‘(ii)(I) from which the Secretary has

8 been unable to recover overpayments made

9 under title XVIII, or (II) from which the

10 Secretary has been unable to collect the in11 formation necessary to enable the Sec12 retary to determine the amount (if any) of

13 the overpayments made to such institution

14 under title XVIII; and

15 ‘‘(B) any person—

16 ‘‘(i) who (I) has previously accepted

17 payment on the basis of an assignment

18 under section 1842(b)(3)(B)(ii), and (II)

19 during the annual period immediately pre20 ceding such quarter submitted no claims

21 for payment under title XVIII which ag22 gregated less than the amount of overpay23 ments made to such person, and

24 ‘‘(ii)(I) from whom the Secretary has

25 been unable to recover overpayments re-
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1 ceived in violation of the terms of such as2 signment, or (II) from whom the Secretary

3 has been unable to collect the information

4 necessary to enable such person to deter5 mine the amount (if any) of the overpay6 ments made to such person under title

7 XVIII.

8 ‘‘(2) MEDICAID PROGRAM.—The Secretary may

9 adjust, in accordance with this section, the Federal

10 matching payment to a State with respect to expend11 itures for long-term care assistance for services fur12 nished in any quarter by—

13 ‘‘(A) an institution (i) from which the Sec14 retary has been unable to recover overpayments

15 made under title XIX, or (ii) from which the

16 Secretary has been unable to collect the infor17 mation necessary to enable the Secretary to de18 termine the amount (if any) of the overpay19 ments made to such institution under title XIX;

20 and

21 ‘‘(B) any person (i) from whom the Sec22 retary has been unable to recover overpayments

23 made under title XIX, or (ii) from whom the

24 Secretary has been unable to collect the infor25 mation necessary to enable such person to de-
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1 termine the amount (if any) of the overpay2 ments made to such person under title XIX.

3 ‘‘(b) REDUCTION OF PAYMENT TO STATES.—The

4 Secretary may (subject to the remaining provisions of this

5 section) reduce payment to a State under this part for

6 any quarter by an amount equal to the lesser of the Fed7 eral matching share of payments to any institution or per8 son specified in subsection (a), or the total overpayments

9 to such institution or person under title XVIII or XIX,

10 and may require the State to reduce its payment to such

11 institution or person by such amount.

12 ‘‘(c) NOTICE OF REDUCTION.—The Secretary shall

13 not make any adjustment in the payment to a State, nor

14 require any adjustment in the payment to an institution

15 or person pursuant to subsection (b), until after the Sec16 retary has provided adequate notice (which shall be not

17 less than 60 days) to the State agency and the institution

18 or person.

19 ‘‘(d) REGULATORY PROCEDURES.—The Secretary

20 shall by regulation provide procedures for implementation

21 of this section. Such procedures shall—

22 ‘‘(1) determine the amount of the Federal pay23 ment to which the institution or person would other24 wise be entitled under this section which shall be
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1 treated as a setoff against overpayments under title

2 XVIII or XIX; and

3 ‘‘(2) assure the restoration to the institution or

4 person of amounts withheld under this section that

5 are ultimately determined to be in excess of overpay6 ments under title XVIII or XIX and to which the in7 stitution or person would otherwise be entitled under

8 this part.

9 ‘‘(e) AMOUNTS RECOVERED RESTORED TO TRUST

10 FUNDS.—The Secretary shall restore to the trust funds

11 established under sections 1817 and 1841, as appropriate,

12 amounts recovered under this section as setoffs against

13 overpayments under title XVIII.

14 ‘‘(f) CERTAIN AMOUNTS NOT RECOVERABLE.—Not15 withstanding any other provision of this part, an institu16 tion or person shall not be entitled to recover from any

17 State any amount in payment for long-term care services

18 under this part that is withheld by the State agency pursu19 ant to an order by the Secretary under subsection (b).

20 ‘‘PROVISIONS RESPECTING INAPPLICABILITY OF CERTAIN

21 REQUIREMENTS

22 ‘‘SEC. 2110. (a) IN GENERAL.—A State shall not be

23 deemed to be out of compliance with the requirements of

24 paragraph (1)(B), (2), or (6) of section 2102(a) solely by

25 reason of the fact that the State (or any political subdivi26 sion of the State)—
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1 ‘‘(1) has entered into a contract with an organi2 zation which has agreed to provide care and services

3 in addition to those offered under the State plan to

4 individuals eligible for long-term care assistance who

5 reside in the geographic area served by such organi6 zation and who elect to obtain such care and services

7 from such organization; or

8 ‘‘(2) restricts for a reasonable period of time

9 the provider or providers from which an individual

10 (eligible for long-term care assistance for items or

11 services under the State plan) can receive such items

12 or services, if—

13 ‘‘(A) the State has found, after notice and

14 opportunity for a hearing (in accordance with

15 procedures established by the State), that the

16 individual has utilized such items or services at

17 a frequency or amount not necessary (as deter18 mined in accordance with utilization guidelines

19 established by the State), and

20 ‘‘(B) under such restriction, individuals eli21 gible for long-term care assistance for such

22 services have reasonable access (taking into ac23 count geographic location and reasonable travel

24 time) to such services of adequate quality.
82

•S 1600 IS

1 ‘‘(b) CASE MANAGEMENT SERVICES EXEMPTED

2 FROM CERTAIN REQUIREMENTS.—A State may provide,

3 as long-term care assistance, case management services

4 under the plan without regard to the requirements of

5 paragraphs (1)(B) and (2)(B) of section 2102(a). The

6 provision of case management services under this sub7 section shall not restrict the choice of the individual to

8 receive long-term care assistance in violation of section

9 2102(a)(6). The State may limit the case managers avail10 able with respect to case management services for eligible

11 individuals in order to ensure that the case managers for

12 such individuals are capable of ensuring that such individ13 uals receive needed services.

14 ‘‘USE OF DEDUCTIBLE, COST SHARING, AND SIMILAR

15 CHARGES

16 ‘‘SEC. 2111. (a) IN GENERAL.—The State plan shall

17 provide that any deductible, cost sharing, or similar charge

18 imposed under the plan will be nominal in amount (as de19 termined by the Secretary in regulations).

20 ‘‘(b) NONDENIAL OF CARE.—The State plan shall re21 quire that no provider participating under the State plan

22 may deny care or services to an individual eligible for such

23 care or services under the plan on account of such individ24 ual’s inability to pay a deduction, cost sharing, or similar

25 charge. The requirements of this subsection shall not ex26 tinguish the liability of the individual to whom the care
83

•S 1600 IS

1 or services were furnished for payment of the deductible,

2 cost sharing, or similar charge.

3 ‘‘TRANSFERS OF ASSETS, TRUSTS, LIENS, AND

4 ADJUSTMENTS AND RECOVERIES

5 ‘‘SEC. 2112. (a) PROHIBITION ON ELIGIBILITY

6 UNDER CERTAIN CIRCUMSTANCES.—

7 ‘‘(1) REQUIRED PERIODS OF INELIGIBILITY.—

8 ‘‘(A) IN GENERAL.—In order to meet the

9 requirements of this section (for purposes of

10 section 2102(a)(3)(D), the State plan must pro11 vide for a period of ineligibility for long-term

12 care assistance during the period beginning on

13 the date specified in subparagraph (C) and

14 equal to the number of months specified in sub15 paragraph (D) in the case of an individual who,

16 or whose spouse, at any time on or after the

17 look-back date specified in subparagraph

18 (B)(i)—

19 ‘‘(i) disposed of assets for less than

20 fair market value;

21 ‘‘(ii) transferred assets (or ownership

22 or control of such assets) to a trustee, fi23 duciary, or other person or entity; or

24 ‘‘(iii) converted countable resources to

25 noncountable resources.

26 ‘‘(B) LOOK-BACK DATE.—
84

•S 1600 IS

1 ‘‘(i) IN GENERAL.—The look-back

2 date specified in this subparagraph is a

3 date that is—

4 ‘‘(I) 36 months (or, in the case of

5 payments from a trust or portions of

6 a trust that are treated as assets dis7 posed of by the individual pursuant to

8 paragraph (3)(A)(iii) or (3)(B)(ii) of

9 subsection (b), 60 months) before the

10 date specified in clause (ii); or

11 ‘‘(II) at the option of the State,

12 such earlier date as provided by the

13 State where there is reasonable cause

14 to believe that an individual engaged

15 in the activities described in clause (i),

16 (ii), or (iii) of subparagraph (A) solely

17 for the purposes of qualifying for

18 long-term care assistance under this

19 part.

20 ‘‘(ii) DATE SPECIFIED.—The date

21 specified in this clause, with respect to—

22 ‘‘(I) an institutionalized individ23 ual is the first date as of which the

24 individual both is an institutionalized

25 individual and has applied for long-
85

•S 1600 IS

1 term care assistance under the State

2 plan, or

3 ‘‘(II) a noninstitutionalized indi4 vidual is the date on which the indi5 vidual applies for long-term care as6 sistance under the State plan or, if

7 later, the date on which the individual

8 disposes of assets for less than fair

9 market value.

10 ‘‘(C) BEGINNING DATE OF PERIOD OF IN11 ELIGIBILITY.—The date specified in this sub12 paragraph is the first day of the first month in

13 which the individual—

14 ‘‘(i) is an institutionalized individual;

15 ‘‘(ii) is (or but for the provisions of

16 this subsection would be) entitled to long17 term care assistance under the State plan;

18 and

19 ‘‘(iii) is receiving or is an applicant

20 for such long-term care assistance.

21 ‘‘(D) PERIOD OF INELIGIBILITY.—

22 ‘‘(i) INSTITUTIONALIZED INDIVID23 UALS.—With respect to an institutionalized

24 individual, the number of months of ineli-
86

•S 1600 IS

1 gibility under this subparagraph for an in2 dividual shall be equal to—

3 ‘‘(I) the total, cumulative uncom4 pensated value of all assets or re5 sources transferred by the individual

6 (or individual’s spouse) on or after the

7 look-back date specified in subpara8 graph (B)(i), divided by

9 ‘‘(II) the average monthly cost to

10 a private patient of nursing facility

11 services in the State (or, at the option

12 of the State, in the community in

13 which the individual is institutional14 ized) at the time of application.

15 ‘‘(ii) NONINSTITUTIONALIZED INDI16 VIDUALS.—With respect to a

17 noninstitutionalized individual, the number

18 of months of ineligibility under this sub19 paragraph for an individual shall not be

20 greater than a number equal to—

21 ‘‘(I) the total, cumulative uncom22 pensated value of all assets trans23 ferred by the individual (or individ24 ual’s spouse) on or after the look-back
87

•S 1600 IS

1 date specified in subparagraph (B)(i),

2 divided by

3 ‘‘(II) the average monthly cost to

4 a private patient of nursing facility

5 services in the State (or, at the option

6 of the State, in the community in

7 which the individual is institutional8 ized) at the time of application.

9 ‘‘(iii) REDUCTION IN PERIOD OF IN10 ELIGIBILITY.—The number of months of

11 ineligibility otherwise determined under

12 clause (i) or (ii) with respect to the dis13 posal of an asset shall be reduced—

14 ‘‘(I) in the case of periods of in15 eligibility determined under clause (i),

16 by the number of months of ineligibil17 ity applicable to the individual under

18 clause (ii) as a result of such disposal,

19 and

20 ‘‘(II) in the case of periods of in21 eligibility determined under clause (ii),

22 by the number of months of ineligibil23 ity applicable to the individual under

24 clause (i) as a result of such disposal.
88

•S 1600 IS

1 ‘‘(2) EXCEPTION TO INELIGIBILITY.—An indi2 vidual shall not be ineligible for long-term care as3 sistance by reason of paragraph (1) to the extent

4 that—

5 ‘‘(A) ownership of the assets was trans6 ferred to—

7 ‘‘(i) the spouse of such individual; or

8 ‘‘(ii) a child of such individual who—

9 ‘‘(I) is under age 21,

10 ‘‘(II) with respect to States eligi11 ble to participate in the State pro12 gram established under title XVI, is

13 blind or permanently and totally dis14 abled, or

15 ‘‘(III) with respect to States

16 which are not eligible to participate in

17 such program, is blind or disabled as

18 defined in section 1614 who is deter19 mined by the State to be financially

20 dependent on such individual;

21 ‘‘(B) the assets—

22 ‘‘(i) were transferred to, or to a trust

23 (including a trust described in subsection

24 (b)(4)) established solely for the benefit of,
89

•S 1600 IS

1 the individual’s child described in subpara2 graph (A)(ii)(II), or

3 ‘‘(ii) were transferred to a trust (in4 cluding a trust described in subsection

5 (b)(4)) established solely for the benefit of

6 an individual under 65 years of age who is

7 disabled (as defined in section 1614(a)(3));

8 ‘‘(C) a satisfactory showing is made to the

9 State (in accordance with any regulations pro10 mulgated by the Secretary) that—

11 ‘‘(i) the individual intended to dispose

12 of the assets either at fair market value, or

13 for other valuable consideration;

14 ‘‘(ii) the assets were transferred or

15 converted in accordance with a court order;

16 or

17 ‘‘(iii) assets transferred for less than

18 fair market value have been returned to

19 the individual; or

20 ‘‘(D) the State determines that denial of

21 eligibility would work an undue hardship.

22 ‘‘(3) JOINT OWNERSHIP.—For purposes of this

23 subsection, in the case of an asset held by an indi24 vidual in common with another person or persons in

25 a joint tenancy, tenancy in common, or similar ar-
90

•S 1600 IS

1 rangement, the asset (or the affected portion of such

2 asset) shall be considered to be transferred by such

3 individual when any action is taken, either by such

4 individual or by any other person, that reduces or

5 eliminates such individual’s ownership or control of

6 such asset.

7 ‘‘(4) PERIODS OF INELIGIBILITY IN ACCORD8 ANCE WITH THIS SUBSECTION; APPORTIONING PERI9 ODS OF INELIGIBILITY.—A State may not provide

10 for any period of ineligibility for an individual due

11 to transfer of assets for less than fair market value

12 except in accordance with this subsection. In the

13 case of a transfer by the spouse of an individual

14 which results in a period of ineligibility for long-term

15 care assistance under a State plan for such individ16 ual, a State shall, using a reasonable methodology

17 (as specified by the Secretary), apportion such pe18 riod of ineligibility (or any portion of such period)

19 among the individual and the individual’s spouse if

20 the spouse otherwise becomes eligible for long-term

21 care assistance under the State plan.

22 ‘‘(b) TRUSTS.—

23 ‘‘(1) IN GENERAL.—For purposes of determin24 ing an individual’s eligibility for, or amount of, bene25 fits under a State plan under this part, subject to
91

•S 1600 IS

1 paragraph (4), the rules specified in paragraph (3)

2 shall apply to a trust established by such individual.

3 ‘‘(2) ESTABLISHMENT OF TRUSTS.—

4 ‘‘(A) IN GENERAL.—For purposes of this

5 subsection, an individual shall be considered to

6 have established a trust if assets of the individ7 ual were used to form all or part of the corpus

8 of the trust and if any of the following individ9 uals established such trust other than by will:

10 ‘‘(i) The individual.

11 ‘‘(ii) The individual’s spouse.

12 ‘‘(iii) A person, including a court or

13 administrative body, with legal authority to

14 act in place of or on behalf of the individ15 ual or the individual’s spouse.

16 ‘‘(iv) A person, including any court or

17 administrative body, acting at the direction

18 or upon the request of the individual or the

19 individual’s spouse.

20 ‘‘(B) JOINT OWNERSHIP.—In the case of a

21 trust the corpus of which includes assets of an

22 individual (as determined under subparagraph

23 (A)) and assets of any other person or persons,

24 the provisions of this subsection shall apply to
92

•S 1600 IS

1 the portion of the trust attributable to the as2 sets of the individual.

3 ‘‘(C) APPLICABILITY.—Subject to para4 graph (4), this subsection shall apply without

5 regard to—

6 ‘‘(i) the purposes for which a trust is

7 established,

8 ‘‘(ii) whether the trustees have or ex9 ercise any discretion under the trust,

10 ‘‘(iii) any restrictions on when or

11 whether distributions may be made from

12 the trust, or

13 ‘‘(iv) any restrictions on the use of

14 distributions from the trust.

15 ‘‘(3) RULES APPLICABLE TO TRUSTS.—

16 ‘‘(A) REVOCABLE TRUSTS.—In the case of

17 a revocable trust—

18 ‘‘(i) the corpus of the trust shall be

19 considered resources available to the indi20 vidual,

21 ‘‘(ii) payments from the trust to or

22 for the benefit of the individual shall be

23 considered income of the individual, and

24 ‘‘(iii) any other payments from the

25 trust shall be considered assets disposed of
93

•S 1600 IS

1 by the individual for purposes of sub2 section (a).

3 ‘‘(B) IRREVOCABLE TRUSTS.—In the case

4 of an irrevocable trust—

5 ‘‘(i) if there are any circumstances

6 under which payment from the trust could

7 be made to or for the benefit of the indi8 vidual, the portion of the corpus from

9 which, or the income on the corpus from

10 which, payment to the individual could be

11 made shall be considered resources avail12 able to the individual, and payments from

13 that portion of the corpus or income—

14 ‘‘(I) to or for the benefit of the

15 individual, shall be considered income

16 of the individual, and

17 ‘‘(II) for any other purpose, shall

18 be considered a transfer of assets by

19 the individual subject to subsection

20 (a); and

21 ‘‘(ii) any portion of the trust from

22 which, or any income on the corpus from

23 which, no payment could under any cir24 cumstances be made to the individual shall

25 be considered, as of the date of establish-
94

•S 1600 IS

1 ment of the trust (or, if later, the date on

2 which payment to the individual was fore3 closed) to be assets disposed by the indi4 vidual for purposes of subsection (a), and

5 the value of the trust shall be determined

6 for purposes of such subsection by includ7 ing the amount of any payments made

8 from such portion of the trust after such

9 date.

10 ‘‘(4) EXCEPTIONS.—This subsection shall not

11 apply to any of the following trusts:

12 ‘‘(A) A trust containing the assets of an

13 individual under age 65 who is disabled (as de14 fined in section 1614(a)(3)) and which is estab15 lished for the benefit of such individual by a

16 parent, grandparent, legal guardian of the indi17 vidual, or a court if the State will receive all

18 amounts remaining in the trust upon the death

19 of such individual up to an amount equal to the

20 total long-term care assistance paid on behalf of

21 the individual under a State plan under this

22 part.

23 ‘‘(B) A trust established in a State for the

24 benefit of an individual if—
95

•S 1600 IS

1 ‘‘(i) the trust is composed only of pen2 sion, Social Security, and other income to

3 the individual (and accumulated income in

4 the trust), and

5 ‘‘(ii) the State will receive all amounts

6 remaining in the trust upon the death of

7 such individual up to an amount equal to

8 the total long-term care assistance paid on

9 behalf of the individual under a State plan

10 under this part.

11 ‘‘(C) A trust containing the assets of an

12 individual who is disabled (as defined in section

13 1614(a)(3)) that meets the following conditions:

14 ‘‘(i) The trust is established and man15 aged by a non-profit association.

16 ‘‘(ii) A separate account is maintained

17 for each beneficiary of the trust, but, for

18 purposes of investment and management of

19 funds, the trust pools these accounts.

20 ‘‘(iii) Accounts in the trust are estab21 lished solely for the benefit of individuals

22 who are disabled (as defined in section

23 1614(a)(3)) by the parent, grandparent, or

24 legal guardian of such individuals, by such

25 individuals, or by a court.
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•S 1600 IS

1 ‘‘(iv) To the extent that amounts re2 maining in the beneficiary’s account upon

3 the death of the beneficiary are not re4 tained by the trust, the trust pays to the

5 State from such remaining amounts in the

6 account an amount equal to the total

7 amount of long-term care assistance paid

8 on behalf of the beneficiary under the

9 State plan under this part.

10 ‘‘(5) HARDSHIP PROVISION.—The State agency

11 shall establish procedures (in accordance with stand12 ards specified by the Secretary) under which the

13 agency waives the application of this subsection with

14 respect to an individual if the individual establishes

15 that such application would work an undue hardship

16 on the individual as determined on the basis of cri17 teria established by the Secretary.

18 ‘‘(6) TRUST.—For purposes of this subsection,

19 the term ‘trust’ includes any legal instrument or de20 vice that is similar to a trust but includes an annu21 ity only to such extent and in such manner as the

22 Secretary specifies.

23 ‘‘(c) IMPOSITION OF LIEN.—

24 ‘‘(1) IN GENERAL.—In order to meet the re25 quirements of this section (for purposes of section
97

•S 1600 IS

1 2102(a)(3)(D)) a lien may be imposed against the

2 real property of any individual as a condition of re3 ceiving payment for long-term care assistance under

4 the State plan.

5 ‘‘(2) DISSOLUTION OF LIEN.—Any lien imposed

6 with respect to an individual pursuant to paragraph

7 (1) shall dissolve (without regard to otherwise appli8 cable State law) upon that individual’s—

9 ‘‘(A)(i) not owing any amounts paid as

10 long-term care assistance under the State plan;

11 and

12 ‘‘(ii) no longer receiving long-term care as13 sistance under such plan; or

14 ‘‘(B) discharge from a nursing facility

15 where the individual makes a reasonable show16 ing that such lien imposes an undue hardship.

17 ‘‘(d) RECOVERY OF LIEN.—

18 ‘‘(1) IN GENERAL.—In order to meet the re19 quirements of this section (for purposes of section

20 2102(a)(3)(D)), the State shall seek adjustment or

21 recovery of any long-term care assistance correctly

22 paid on behalf of an individual under the State plan

23 (including foreclosure on a lien imposed under sub24 section (c)).
98

•S 1600 IS

1 ‘‘(2) CONDITIONS WHERE ADJUSTMENT OR RE2 COVERY PERMITTED.—Any adjustment or recovery

3 under paragraph (1) may be made only—

4 ‘‘(A) after the death of the individual and

5 such individual’s surviving spouse, if any; and

6 ‘‘(B) at a time when the individual has no

7 surviving child who—

8 ‘‘(i) is under age 21;

9 ‘‘(ii) with respect to States eligible to

10 participate in the State program estab11 lished under title XVI, is blind or perma12 nently and totally disabled; or

13 ‘‘(iii) with respect to States which are

14 not eligible to participate in such program,

15 is blind or disabled as defined in section

16 1614.

17 ‘‘(3) The State agency shall establish proce18 dures (in accordance with standards specified by the

19 Secretary) under which the agency shall waive the

20 application of this subsection (other than paragraph

21 (1)(C)) if such application would work an undue

22 hardship as determined on the basis of criteria es23 tablished by the Secretary.

24 ‘‘(e) DEFINITIONS.—For purposes of this section:
99

•S 1600 IS

1 ‘‘(1) ASSETS.—The term ‘assets’, with respect

2 to an individual, includes all income and resources of

3 the individual and of the individual’s spouse, includ4 ing any income or resources which the individual or

5 such individual’s spouse is entitled to but does not

6 receive because of action—

7 ‘‘(A) by the individual or such individual’s

8 spouse,

9 ‘‘(B) by a person, including a court or ad10 ministrative body, with legal authority to act in

11 place of or on behalf of the individual or such

12 individual’s spouse, or

13 ‘‘(C) by any person, including any court or

14 administrative body, acting at the direction or

15 upon the request of the individual or such indi16 vidual’s spouse.

17 ‘‘(2) INCOME.—The term ‘income’ has the

18 meaning given such term in section 1612.

19 ‘‘(3) INSTITUTIONALIZED INDIVIDUAL.—The

20 term ‘institutionalized individual’ means an individ21 ual who is an inpatient in a nursing facility.

22 ‘‘(4) NONINSTITUTIONALIZED INDIVIDUAL.—

23 The term ‘noninstitutionalized individual’ means an

24 individual receiving home and community based

25 services.
100

•S 1600 IS

1 ‘‘(5) RESOURCES.—The term ‘resources’ has

2 the meaning given such term in section 1613 with3 out regard to the exclusions described in paragraphs

4 (1) and (2)(A) of subsection (a) of such section.

5 ‘‘APPLICATION OF PROVISIONS OF TITLE II RELATING TO

6 SUBPOENAS

7 ‘‘SEC. 2113. The provisions of subsections (d) and

8 (e) of section 205 shall apply with respect to this part

9 to the same extent as they are applicable with respect to

10 title II.

11 ‘‘TREATMENT OF INCOME AND RESOURCES FOR

12 IMPAIRED SPOUSES

13 ‘‘SEC. 2114. (a) SPECIAL TREATMENT FOR IM14 PAIRED SPOUSES.—

15 ‘‘(1) SUPERSEDES OTHER PROVISIONS.—In de16 termining the eligibility for long-term care assistance

17 of an impaired spouse (as defined in subsection

18 (f)(1)), the provisions of this section supersede any

19 other provision of this part which is inconsistent

20 with them.

21 ‘‘(2) NO COMPARABLE TREATMENT RE22 QUIRED.—Any different treatment provided under

23 this section for impaired spouses shall not require

24 such treatment for other individuals.
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•S 1600 IS

1 ‘‘(3) DOES NOT AFFECT CERTAIN DETERMINA2 TIONS.—Except as this section specifically provides,

3 this section does not apply to—

4 ‘‘(A) the determination of what constitutes

5 income or resources, or

6 ‘‘(B) the methodology and standards for

7 determining and evaluating income and re8 sources.

9 ‘‘(4) APPLICATION IN CERTAIN STATES AND

10 TERRITORIES.—

11 ‘‘(A) APPLICATION IN STATES OPERATING

12 UNDER DEMONSTRATION PROJECTS.—In the

13 case of any State which is providing long-term

14 care assistance to its residents under waiver

15 granted under section 1115, the Secretary shall

16 require the State to meet the requirements of

17 this section in the same manner as the State

18 would be required to meet such requirement if

19 the State had in effect a plan approved under

20 this part.

21 ‘‘(B) NO APPLICATION IN COMMON22 WEALTHS AND TERRITORIES.—This section

23 shall only apply to a State that is 1 of the 50

24 States or the District of Columbia.
102

•S 1600 IS

1 ‘‘(5) APPLICATION TO INDIVIDUALS RECEIVING

2 SERVICES FROM ORGANIZATIONS RECEIVING CER3 TAIN WAIVERS.—This section applies to individuals

4 receiving institutional or noninstitutional services

5 from any organization receiving a frail elderly dem6 onstration project waiver under section 9412(b) of

7 the Omnibus Budget Reconciliation Act of 1986.

8 ‘‘(b) RULES FOR TREATMENT OF INCOME.—

9 ‘‘(1) SEPARATE TREATMENT OF INCOME.—Dur10 ing any month in which an impaired spouse is in the

11 institution, except as provided in paragraph (2) no

12 income of the community spouse shall be deemed

13 available to the impaired spouse.

14 ‘‘(2) ATTRIBUTION OF INCOME.—In determin15 ing the income of an impaired spouse or community

16 spouse, for purposes of the posteligibility income de17 termination described in subsection (d), except as

18 otherwise provided in this section and regardless of

19 any State laws relating to community property or

20 the division of marital property, the following rules

21 apply:

22 ‘‘(A) NONTRUST PROPERTY.—Subject to

23 subparagraphs (C) and (D), in the case of in24 come not from a trust, unless the instrument
103

•S 1600 IS

1 providing the income otherwise specifically pro2 vides—

3 ‘‘(i) if payment of income is made

4 solely in the name of the impaired spouse

5 or the community spouse, the income shall

6 be considered available only to that respec7 tive spouse;

8 ‘‘(ii) if payment of income is made in

9 the names of the impaired spouse and the

10 community spouse, one-half of the income

11 shall be considered available to each of

12 them; and

13 ‘‘(iii) if payment of income is made in

14 the names of the impaired spouse or the

15 community spouse, or both, and to another

16 person or persons, the income shall be con17 sidered available to each spouse in propor18 tion to the spouse’s interest (or, if payment

19 is made with respect to both spouses and

20 no such interest is specified, one-half of

21 the joint interest shall be considered avail22 able to each spouse).

23 ‘‘(B) TRUST PROPERTY.—In the case of a

24 trust—
104

•S 1600 IS

1 ‘‘(i) except as provided in clause (ii),

2 income shall be attributed in accordance

3 with the provisions of this part, and

4 ‘‘(ii) income shall be considered avail5 able to each spouse as provided in the

6 trust, or, in the absence of a specific provi7 sion in the trust—

8 ‘‘(I) if payment of income is

9 made solely to the impaired spouse or

10 the community spouse, the income

11 shall be considered available only to

12 that respective spouse;

13 ‘‘(II) if payment of income is

14 made to both the impaired spouse and

15 the community spouse, one-half of the

16 income shall be considered available to

17 each of them; and

18 ‘‘(III) if payment of income is

19 made to the impaired spouse or the

20 community spouse, or both, and to

21 another person or persons, the income

22 shall be considered available to each

23 spouse in proportion to the spouse’s

24 interest (or, if payment is made with

25 respect to both spouses and no such
105

•S 1600 IS

1 interest is specified, one-half of the

2 joint interest shall be considered avail3 able to each spouse).

4 ‘‘(C) PROPERTY WITH NO INSTRUMENT.—

5 In the case of income not from a trust in which

6 there is no instrument establishing ownership,

7 subject to subparagraph (D), one-half of the in8 come shall be considered to be available to the

9 impaired spouse and one-half to the community

10 spouse.

11 ‘‘(D) REBUTTING OWNERSHIP.—The rules

12 of subparagraphs (A) and (C) are superseded to

13 the extent that an impaired spouse can estab14 lish, by a preponderance of the evidence, that

15 the ownership interests in income are other

16 than as provided under such subparagraphs.

17 ‘‘(c) RULES FOR TREATMENT OF RESOURCES.—

18 ‘‘(1) COMPUTATION OF SPOUSAL SHARE AT

19 TIME OF INSTITUTIONALIZATION.—

20 ‘‘(A) TOTAL JOINT RESOURCES.—There

21 shall be computed (as of the beginning of the

22 first period of eligibility of the impaired

23 spouse)—

24 ‘‘(i) the total value of resources to the

25 extent either the impaired spouse or the
106

•S 1600 IS

1 community spouse has an ownership inter2 est, and

3 ‘‘(ii) a spousal share which is equal to

4 one-half of such total value.

5 ‘‘(B) ASSESSMENT.—At the request of an

6 impaired spouse or community spouse, as of the

7 beginning of the first period of eligibility of the

8 impaired spouse and upon the receipt of rel9 evant documentation of resources, the State

10 shall promptly assess and document the total

11 value described in subparagraph (A)(i) and

12 shall provide a copy of such assessment and

13 documentation to each spouse and shall retain

14 a copy of the assessment for use under this sec15 tion. If the request is not part of an application

16 for long-term care assistance under this part,

17 the State may, at its option as a condition of

18 providing the assessment, require payment of a

19 fee not exceeding the reasonable expenses of

20 providing and documenting the assessment. At

21 the time of providing the copy of the assess22 ment, the State shall include a notice indicating

23 that the spouse will have a right to a fair hear24 ing under subsection (d)(2).
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1 ‘‘(2) ATTRIBUTION OF RESOURCES AT TIME OF

2 INITIAL ELIGIBILITY DETERMINATION.—In deter3 mining the resources of an impaired spouse at the

4 time of application for benefits under this part, re5 gardless of any State laws relating to community

6 property or the division of marital property—

7 ‘‘(A) except as provided in subparagraph

8 (B), all the resources held by either the im9 paired spouse, community spouse, or both, shall

10 be considered to be available to the impaired

11 spouse, and

12 ‘‘(B) resources shall be considered to be

13 available to an impaired spouse.

14 ‘‘(3) ASSIGNMENT OF SUPPORT RIGHTS.—The

15 impaired spouse shall not be ineligible by reason of

16 resources determined under paragraph (2) to be

17 available for the cost of care where—

18 ‘‘(A) the impaired spouse has assigned to

19 the State any rights to support from the com20 munity spouse;

21 ‘‘(B) the impaired spouse lacks the ability

22 to execute an assignment due to physical or

23 mental impairment, but the State has the right

24 to bring a support proceeding against a commu25 nity spouse without such assignment; or
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1 ‘‘(C) the State determines that denial of

2 eligibility would work an undue hardship.

3 ‘‘(4) SEPARATE TREATMENT OF RESOURCES

4 AFTER ELIGIBILITY FOR BENEFITS ESTABLISHED.—

5 During the continuous period in which an impaired

6 spouse is in an institution and after the month in

7 which an impaired spouse is determined to be eligi8 ble for benefits under this part, no resources of the

9 community spouse shall be deemed available to the

10 impaired spouse.

11 ‘‘(5) RESOURCES DEFINED.—In this section,

12 the term ‘resources’ has the meaning given such

13 term in section 1613 without regard to the exclu14 sions described in paragraphs (1) and (2)(A) of sub15 section (a) of such section.

16 ‘‘(d) PROTECTING INCOME FOR COMMUNITY

17 SPOUSE.—

18 ‘‘(1) ALLOWANCES TO BE OFFSET FROM IN19 COME OF IMPAIRED SPOUSE.—After an impaired

20 spouse is determined or redetermined to be eligible

21 for long-term care assistance, in determining the

22 amount of the spouse’s income that is to be applied

23 monthly to payment for the costs of care in the in24 stitution, there shall be deducted from the spouse’s
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•S 1600 IS

1 monthly income the following amounts in the follow2 ing order:

3 ‘‘(A) A personal needs allowance in an

4 amount not less than the amount specified in

5 section 2102(g)(2)(B).

6 ‘‘(B) A community spouse monthly income

7 allowance (as defined in paragraph (2)), but

8 only to the extent income of the impaired

9 spouse is made available to (or for the benefit

10 of) the community spouse.

11 ‘‘(C) A family allowance, for each family

12 member, equal to at least one-third of the

13 amount by which the amount described in para14 graph (3)(A)(i) exceeds the amount of the

15 monthly income of that family member.

16 In subparagraph (C), the term ‘family member’ only

17 includes minor or dependent children, dependent

18 parents, or dependent siblings of the institutional19 ized or community spouse who are residing with the

20 community spouse.

21 ‘‘(2) COMMUNITY SPOUSE MONTHLY INCOME

22 ALLOWANCE DEFINED.—In this section (except as

23 provided in paragraph (5)), the ‘community spouse

24 monthly income allowance’ for a community spouse

25 is an amount by which—
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1 ‘‘(A) except as provided in subsection (d),

2 the minimum monthly maintenance needs allow3 ance (established under and in accordance with

4 paragraph (3)) for the spouse, exceeds

5 ‘‘(B) the amount of monthly income other6 wise available to the community spouse (deter7 mined without regard to such an allowance).

8 ‘‘(3) ESTABLISHMENT OF MINIMUM MONTHLY

9 MAINTENANCE NEEDS ALLOWANCE.—

10 ‘‘(A) IN GENERAL.—Each State shall es11 tablish a minimum monthly maintenance needs

12 allowance for each community spouse which,

13 subject to subparagraph (B), is equal to or ex14 ceeds 150 percent of one-twelfth of the income

15 official poverty line (as defined in section

16 2115(f)) for a family unit of 2 members plus an

17 excess shelter allowance (as defined in para18 graph (4)). A revision of the official poverty line

19 shall apply to long-term care services furnished

20 during and after the second calendar quarter

21 that begins after the date of publication of the

22 revision.

23 ‘‘(B) CAP ON MINIMUM MONTHLY MAINTE24 NANCE NEEDS ALLOWANCE.—The minimum

25 monthly maintenance needs allowance estab-
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1 lished under subparagraph (A) may not exceed

2 $1,500 (subject to adjustment under subpara3 graph (C) and subsection (e)).

4 ‘‘(C) INDEXING DOLLAR AMOUNT.—The

5 dollar amount specified in subparagraph (B)

6 during a fiscal year after fiscal year 1995 shall

7 be increased by the same percentage as the per8 centage increase in the consumer price index for

9 all urban consumers (all items; U.S. city aver10 age) between September 1994 and the Septem11 ber before the fiscal year involved.

12 ‘‘(4) EXCESS SHELTER ALLOWANCE DE13 FINED.—In paragraph (3)(A)(ii), the term ‘excess

14 shelter allowance’ means, for a community spouse,

15 the amount by which the sum of—

16 ‘‘(A) the spouse’s expenses for rent or

17 mortgage payment (including principal and in18 terest), taxes and insurance and, in the case of

19 a condominium or cooperative, required mainte20 nance charge, for the community spouse’s prin21 cipal residence, and

22 ‘‘(B) the standard utility allowance used by

23 the State under section 9(e) of the Food Stamp

24 Act of 1977 or, if the State does not use such
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•S 1600 IS

1 an allowance, the spouse’s actual utility ex2 penses,

3 exceeds 30 percent of the amount described in para4 graph (3)(A)(i), except that, in the case of a con5 dominium or cooperative, for which a maintenance

6 charge is included under subparagraph (A), any al7 lowance under subparagraph (B) shall be reduced to

8 the extent the maintenance charge includes utility

9 expenses.

10 ‘‘(5) COURT ORDERED SUPPORT.—If a court

11 has entered an order against an impaired spouse for

12 monthly income for the support of the community

13 spouse, the community spouse monthly income al14 lowance for the spouse shall be not less than the

15 amount of the monthly income so ordered.

16 ‘‘(e) NOTICE AND FAIR HEARING.—

17 ‘‘(1) NOTICE.—Upon—

18 ‘‘(A) a determination of eligibility for long19 term care assistance of an impaired spouse, or

20 ‘‘(B) a request by either the impaired

21 spouse, or the community spouse, or a rep22 resentative acting on behalf of either spouse,

23 each State shall notify both spouses (in the case de24 scribed in subparagraph (A)) or the spouse making

25 the request (in the case described in subparagraph
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•S 1600 IS

1 (B)) of the amount of the community spouse month2 ly income allowance (described in subsection

3 (d)(1)(B), of the amount of any family allowances

4 (described in subsection (d)(1)(C)), and of the

5 spouse’s right to a fair hearing under this subsection

6 respecting ownership or availability of income or re7 sources, and the determination of the community

8 spouse monthly income or resource allowance.

9 ‘‘(2) FAIR HEARING.—

10 ‘‘(A) IN GENERAL.—If either the impaired

11 spouse or the community spouse is dissatisfied

12 with a determination of—

13 ‘‘(i) the community spouse monthly

14 income allowance;

15 ‘‘(ii) the amount of monthly income

16 otherwise available to the community

17 spouse (as applied under subsection

18 (d)(2)(B));

19 ‘‘(iii) the computation of the spousal

20 share of resources under subsection (c)(1);

21 or

22 ‘‘(iv) the attribution of resources

23 under subsection (c)(2);

24 such spouse is entitled to a fair hearing de25 scribed in section 2102(a)(1)(F) with respect to
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•S 1600 IS

1 such determination if an application for benefits

2 under this part has been made on behalf of the

3 impaired spouse. Any such hearing respecting

4 the determination of the community spouse re5 source allowance shall be held within 30 days of

6 the date of the request for the hearing.

7 ‘‘(B) REVISION OF MINIMUM MONTHLY

8 MAINTENANCE NEEDS ALLOWANCE.—If either

9 such spouse establishes that the community

10 spouse needs income, above the level otherwise

11 provided by the minimum monthly maintenance

12 needs allowance, due to exceptional cir13 cumstances resulting in significant financial du14 ress, there shall be substituted, for the mini15 mum monthly maintenance needs allowance in

16 subsection (d)(2)(A), an amount adequate to

17 provide such additional income as is necessary.

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

19 ‘‘(1) IMPAIRED SPOUSE.—The term ‘impaired

20 spouse’ means an individual who—

21 ‘‘(A) is receiving services under this part,

22 and

23 ‘‘(B) is married to a spouse who is not a

24 functionally impaired or severely functionally

25 impaired individual;
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•S 1600 IS

1 but does not include any such individual who does

2 not meet the requirements of subparagraph (A) for

3 at least 30 days.

4 ‘‘(2) COMMUNITY SPOUSE.—The term ‘commu5 nity spouse’ means the spouse of a functionally im6 paired or severely functionally impaired individual.

7 ‘‘DEFINITIONS

8 ‘‘SEC. 2115. (a) CASE MANAGEMENT SERVICES.—

9 For purposes of this part, the term ‘case management

10 services’ means services which—

11 ‘‘(1) maximize the independent functioning of

12 individuals eligible for long-term care assistance

13 under the State plan in the least restrictive environ14 ment possible;

15 ‘‘(2) coordinate the most appropriate mixture of

16 long-term care services for such individuals; and

17 ‘‘(3) contain costs through the appropriate or18 ganization of the available resources and sequencing

19 of services to respond to the functional and long20 term care needs of such individuals.

21 ‘‘(b) COMPREHENSIVE FUNCTIONAL ASSESSMENT

22 DEFINED.—For purposes of this part, the term ‘com23 prehensive functional assessment’ means an assessment

24 which—

25 ‘‘(1) is conducted by a qualified community care

26 case manager;
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1 ‘‘(2) is used to determine whether or not an in2 dividual is a functionally impaired individual, a se3 verely functionally impaired individual, or a func4 tionally impaired child;

5 ‘‘(3) uses an instrument which has been speci6 fied by the State;

7 ‘‘(4) is used in establishing, reviewing, and re8 vising an individual’s individual community care

9 plan;

10 ‘‘(5) is provided free of charge to the individual

11 receiving the assessment;

12 ‘‘(6) includes an interview with the individual

13 and such individual’s primary caregiver, where ap14 propriate, to determine the individual’s—

15 ‘‘(A) ability or inability to perform the ac16 tivities of daily living described in subsection

17 (c)(4);

18 ‘‘(B) health status;

19 ‘‘(C) mental status;

20 ‘‘(D) current living arrangements; and

21 ‘‘(E) formal and informal long-term care

22 support systems;

23 ‘‘(7) includes a schedule for reassessment of the

24 individual within a reasonable period after the initial

25 assessment if the physical or cognitive status of the
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•S 1600 IS

1 individual is determined to be likely to change sig2 nificantly;

3 ‘‘(8) for each individual who is determined to be

4 a functionally impaired individual, severely function5 ally impaired individual, or a functionally impaired

6 child, includes a periodic review of such individual’s

7 status and assessment and a revision of such indi8 vidual’s individual community care plan by the quali9 fied community care case manager as appropriate,

10 but no less often than once every 6 months;

11 ‘‘(9) includes the development of an individual

12 community care plan; and

13 ‘‘(10) includes arrangement by the qualified

14 community care case manager, in consultation with

15 the individual’s primary medical care provider, for

16 the provision of appropriate care and services.

17 ‘‘(c) FEDERAL LONG-TERM CARE ASSISTANCE PER18 CENTAGE DEFINED.—

19 ‘‘(1) IN GENERAL.—The term ‘Federal long20 term care assistance percentage’ for any State shall

21 be 100 percent less the State percentage, and the

22 State percentage shall be that percentage which

23 bears the same ratio to 45 percent as the square of

24 the per capita income of such State bears to the
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1 square of the per capita income of the continental

2 United States (including Alaska and Hawaii).

3 ‘‘(2) SPECIAL RULES.—Notwithstanding para4 graph (1)—

5 ‘‘(A) the Federal long-term care assistance

6 percentage shall in no case be less than 50 per7 cent or more than 80 percent,

8 ‘‘(B) the Federal long-term care assistance

9 percentage for Puerto Rico, the Virgin Islands,

10 Guam, the Northern Mariana Islands, and

11 American Samoa shall be 50 percent, and

12 ‘‘(C) the Federal long-term care assistance

13 percentage shall be 100 percent with respect to

14 amounts expended as long-term care assistance

15 for services which are received through an In16 dian Health Service facility whether operated by

17 the Indian Health Service or by an Indian tribe

18 or tribal organization (as defined in section 4 of

19 the Indian Health Care Improvement Act).

20 ‘‘(3) DETERMINATION.—The Federal long-term

21 care assistance percentage for any State shall be de22 termined and promulgated in accordance with the

23 provisions of section 1101(a)(8)(B).

24 ‘‘(d) FUNCTIONALLY IMPAIRED DEFINED.—
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1 ‘‘(1) FUNCTIONALLY IMPAIRED INDIVIDUAL.—

2 For purposes of this part, the term ‘functionally im3 paired individual’ means an individual 6 years of age

4 or older who is certified by a licensed health care

5 practitioner (other than a relative of such individual)

6 as being unable to perform at least 3 of the activi7 ties of daily living described in subparagraph (A) of

8 paragraph (4) on a daily basis for a period of at

9 least 60 consecutive days, without substantial assist10 ance from another individual (including assistance

11 involving verbal reminding, physical cueing, or sub12 stantial supervision).

13 ‘‘(2) SEVERELY FUNCTIONALLY IMPAIRED INDI14 VIDUAL.—For purposes of this part, the term ‘se15 verely functionally impaired individual’ means an in16 dividual 6 years of age or older who is certified by

17 a licensed health care practitioner (other than a rel18 ative of such individual) as being unable to perform

19 more than 3 of the activities of daily living described

20 in subparagraph (A) of paragraph (4) on a daily

21 basis for a period of at least 60 consecutive days,

22 without substantial assistance from another individ23 ual (including assistance involving verbal reminding,

24 physical cueing, or substantial supervision).

25 ‘‘(3) FUNCTIONALLY IMPAIRED CHILD.—
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1 ‘‘(A) IN GENERAL.—For purposes of this

2 part, the term ‘functionally impaired child’

3 means an individual under 6 years of age who

4 is certified by a licensed health care practitioner

5 (other than a relative of such individual) as

6 having comparable levels of functional impair7 ment which would entitle such individual to

8 benefits under this part.

9 ‘‘(B) COMPARABLE LEVELS OF FUNC10 TIONAL IMPAIRMENT.—In subparagraph (A),

11 the term ‘comparable levels of functional im12 pairment’ means physical, cognitive, or other

13 impairments that limit the ability of an individ14 ual who is under 6 years of age to perform ac15 tivities of daily living appropriate for the age of

16 the individual on a daily basis for a period of

17 at least 60 consecutive days and that are com18 parable to the physical, cognitive or other im19 pairments of a functionally impaired individual

20 or a severely functionally impaired individual.

21 ‘‘(4) ACTIVITIES OF DAILY LIVING.—

22 ‘‘(A) DESCRIPTION.—The activities of

23 daily living described in this paragraph are—

24 ‘‘(i) eating;

25 ‘‘(ii) transferring;
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1 ‘‘(iii) toileting;

2 ‘‘(iv) dressing; and

3 ‘‘(v) bathing.

4 ‘‘(B) REQUIREMENTS ON THE SEC5 RETARY.—The Secretary shall develop defini6 tions and standards for measuring the ability to

7 perform the activities of daily living described

8 in subparagraph (A) in conjunction with—

9 ‘‘(i) experts in gerontology, pediatrics,

10 and functional impairment research;

11 ‘‘(ii) representatives from appropriate

12 State agencies that are involved in the pro13 vision of long-term care services;

14 ‘‘(iii) representatives of providers of

15 long-term care services;

16 ‘‘(iv) representatives of insurance

17 companies offering long-term care insur18 ance;

19 ‘‘(v) representatives of consumers; and

20 ‘‘(vi) other individuals determined ap21 propriate by the Secretary.

22 ‘‘(5) LICENSED HEALTH CARE PRACTI23 TIONER.—For purposes of this part, the term ‘li24 censed health care practitioner’ means—
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1 ‘‘(A) a physician or registered professional

2 nurse, or

3 ‘‘(B) a qualified community care case man4 ager.

5 ‘‘(e) HOME AND COMMUNITY BASED SERVICES DE6 FINED.—For purposes of this part, the term ‘home and

7 community based services’ means services furnished in a

8 home or other location (but not including such services

9 furnished to an inpatient or resident of a nursing facility)

10 required to meet the individual’s activities of daily living11 related needs including the following:

12 ‘‘(1) Homemaker services.

13 ‘‘(2) Personal care services.

14 ‘‘(3) Home health care.

15 ‘‘(4) Adult day health care.

16 ‘‘(5) Nursing services provided by or under the

17 supervision of a registered nurse.

18 ‘‘(6) Physical therapy and related services.

19 ‘‘(7) Respite care.

20 ‘‘(f) INCOME OFFICIAL POVERTY LINE.—For pur21 poses of this part, the term ‘income official poverty line’

22 means the income official poverty line (as defined by the

23 Office of Management and Budget, and revised annually

24 in accordance with section 673(2) of the Omnibus Budget

25 Reconciliation Act of 1981).
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1 ‘‘(g) INDIVIDUAL COMMUNITY CARE PLAN DE2 FINED.—For purposes of this part, the term ‘individual

3 community care plan’ means a written plan which—

4 ‘‘(1) is in accordance with the long-term care

5 service needs of the individual and the availability of

6 the appropriate care and services;

7 ‘‘(2) identifies—

8 ‘‘(A) the long-term care problems and

9 needs of the individual;

10 ‘‘(B) the mix of formal and informal serv11 ices and support systems that are available to

12 meet the long-term care service needs of the in13 dividual;

14 ‘‘(C) the goals for the individual;

15 ‘‘(D) the appropriate services necessary to

16 meet such needs; and

17 ‘‘(E) the arrangements made for appro18 priate care and services;

19 ‘‘(3) is established, and is periodically reviewed

20 and revised, by a qualified community care case

21 manager in consultation with the individual’s pri22 mary medical care provider, after a face-to-face

23 interview with the individual and such individual’s

24 spouse or primary caregiver, where appropriate, and
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1 based upon the most recent comprehensive func2 tional assessment of such individual;

3 ‘‘(4) specifies, within any amount, duration,

4 and scope, limitations imposed on care and services

5 provided under the State plan, and indicates the in6 dividual’s preferences for the types and providers of

7 services;

8 ‘‘(5) may specify other services required by

9 such individual; and

10 ‘‘(6) does not restrict or otherwise limit the spe11 cific persons or individuals (who are competent and

12 authorized by the State to provide home and com13 munity based services under the State plan) who will

14 provide the home and community based services de15 scribed, except as otherwise described in this part.

16 ‘‘(h) LONG-TERM CARE ASSISTANCE DEFINED.—

17 ‘‘(1) IN GENERAL.—For purposes of this part,

18 the term ‘long-term care assistance’ means payment

19 of part or all of the cost of the following care and

20 services for individuals described in section

21 2102(a)(2)(A):

22 ‘‘(A) Case management services provided

23 by a qualified community care case manager.

24 ‘‘(B) Nursing facility services (other than

25 services in an institution for mental diseases).
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1 ‘‘(C) Home and community based services.

2 ‘‘(D) Any other type of long-term care

3 service (other than room and board) recognized

4 under State law as specified by the Secretary.

5 ‘‘(2) SPECIAL RULE.—The term ‘long-term care

6 assistance’ does not include any payment of part or

7 all of the cost of the care and services described in

8 paragraph (1) for an individual described in section

9 2102(a)(2)(A) who is an inmate of a public institu10 tion.

11 ‘‘(i) NURSING FACILITY DEFINED.—For purposes of

12 this part, the term ‘nursing facility’ has the meaning given

13 such term under section 1919 and which meets the re14 quirements for such a facility described in such section.

15 ‘‘(j) NURSING FACILITY SERVICES DEFINED.—For

16 purposes of this part, the term ‘nursing facility services’

17 means services which are or were required to be given an

18 individual who needs or needed, on a daily basis, nursing

19 care (provided directly by or requiring the supervision of

20 nursing personnel) which as a practical matter can only

21 be provided in a nursing facility on an inpatient basis.

22 ‘‘(k) QUALIFIED COMMUNITY CARE CASE MAN23 AGER.—For purposes of this part, the term ‘qualified com24 munity care case manager’ means a person or entity

25 which—
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1 ‘‘(1) provides case management services to an

2 individual who is eligible for long-term care assist3 ance under the State plan;

4 ‘‘(2) is not a relative of the individual receiving

5 such case management services;

6 ‘‘(3) has experience in assessing individuals’

7 functional and cognitive impairment;

8 ‘‘(4) has experience or has been trained in es9 tablishing, and in periodically reviewing and revising,

10 individual community care plans and in the provision

11 of case management services to individuals who are

12 eligible for long-term care assistance under this part;

13 ‘‘(5) completes the individual community care

14 plan in a timely manner and reviews and discusses

15 new and revised individual community care plans

16 with the individual or such individual’s primary

17 caregiver or both; and

18 ‘‘(6) meets such other standards established by

19 the Secretary or the State which may include stand20 ards which assure—

21 ‘‘(A) the quality of case management serv22 ices; and

23 ‘‘(B) that individuals whose home and

24 community based services they manage are not
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1 at risk of financial exploitation due to such a

2 manager.

3 ‘‘(l) RELATIVE DEFINED.—For purposes of this part,

4 the term ‘relative’ means an individual bearing a relation5 ship to another individual which is described in para6 graphs (1) through (8) of section 152(a) of the Internal

7 Revenue Code of 1986.

8 ‘‘(m) STATE LONG-TERM CARE FRAUD CONTROL

9 UNIT DEFINED.—For purposes of this part, the term

10 ‘State long-term care fraud control unit’ means an identi11 fiable entity of the State government which the Secretary

12 certifies (and annually recertifies) as meeting the require13 ments described in section 1903(q), and such entity may

14 be the same entity as the medicaid fraud unit described

15 in such section.

16 ‘‘PART B—SECURE CHOICE INSURANCE PROGRAM

17 ‘‘PURPOSE

18 ‘‘SEC. 2131. This part establishes a public-private

19 partnership to provide long-term care assistance to indi20 viduals through the expanded availability of long-term

21 care insurance policies which cover care and services that

22 are subsidized by Federal and State funding.

23 ‘‘DEFINITIONS

24 ‘‘SEC. 2132. For purposes of this part:
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1 ‘‘(1) ACTIVITIES OF DAILY LIVING.—The term

2 ‘activities of daily living’ refers to the activities de3 scribed in section 2115(d)(4).

4 ‘‘(2) BENEFIT SUBSIDY.—The term ‘benefit

5 subsidy’ means the amount determined under sec6 tion 2138(b)(2).

7 ‘‘(3) CASE MANAGEMENT SERVICES.—The term

8 ‘case management services’ has the meaning pro9 vided in section 2115(a).

10 ‘‘(4) ELIMINATION PERIOD.—The term ‘elimi11 nation period’ means the period of time beginning on

12 the date on which a policyholder qualifies for bene13 fits under a qualified long-term care insurance policy

14 issued under this part during which no benefits

15 under such policy will be paid.

16 ‘‘(5) FUNCTIONALLY IMPAIRED INDIVIDUAL.—

17 The term ‘functionally impaired individual’ has the

18 meaning provided in section 2115(d)(1).

19 ‘‘(6) SEVERELY FUNCTIONALLY IMPAIRED INDI20 VIDUAL.—The term ‘severely functionally impaired

21 individual’ has the meaning provided in section

22 2115(d)(2).

23 ‘‘(7) HOME AND COMMUNITY BASED SERV24 ICES.—The term ‘home and community based serv25 ices’ has the meaning provided in section 2115(e).
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1 ‘‘(8) INCOME OFFICIAL POVERTY LINE.—The

2 term ‘income official poverty line’ has the meaning

3 provided in section 2115(f).

4 ‘‘(9) NURSING FACILITY SERVICES.—The term

5 ‘nursing facility services’ has the meaning provided

6 in section 2115(j).

7 ‘‘(10) POLICYHOLDER.—The term ‘policyholder’

8 means an individual who purchases a qualified long9 term care insurance policy.

10 ‘‘(11) QUALIFIED CASE MANAGER.—The term

11 ‘qualified case manager’ means a qualified commu12 nity care case manager as defined in section

13 2115(k).

14 ‘‘(12) QUALIFIED INSURER.—The term ‘quali15 fied insurer’ means an entity that is certified by the

16 Standard and Performance Organization of a State

17 (established under section 2141) as an entity that—

18 ‘‘(A) is licensed or certified under applica19 ble State law to sell insurance in the State;

20 ‘‘(B) complies with State laws and meets

21 or exceeds insurance standards of the National

22 Association of Insurance Commissioners, adopt23 ed as of January of 1993;

24 ‘‘(C) uses case management services to

25 monitor the needs of policyholders;
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•S 1600 IS

1 ‘‘(D) guarantees a loss ratio of not less

2 than 60 percent for individual and group long3 term care policies;

4 ‘‘(E) provides the Standards and Perform5 ance Organization with the underwriting cri6 teria used by the insurer and such other infor7 mation as may be required by such Organiza8 tion; and

9 ‘‘(F) meets any other requirements estab10 lished by the State insurance commission.

11 ‘‘(13) QUALIFIED LONG-TERM CARE INSURANCE

12 POLICY.—The term ‘qualified long-term care insur13 ance policy’ means an insurance policy that meets

14 the requirements of section 2134.

15 ‘‘(14) QUALIFIED PROVIDER.—The term ‘quali16 fied provider’ means an individual or entity—

17 ‘‘(A) that provides long-term care services

18 for which reimbursement is available under a

19 qualified long-term care insurance policy; and

20 ‘‘(B) is in compliance with licensure and

21 certification standards established by the State

22 under part A.

23 ‘‘ESTABLISHMENT OF PROGRAM

24 ‘‘SEC. 2133. There is established a program (to be

25 known as the ‘Secure Choice Insurance Program’) under

26 which—
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1 ‘‘(1) each State shall—

2 ‘‘(A) ensure that qualified insurers, quali3 fied long-term care insurance policies, and

4 qualified providers within the State meet the re5 quirements under this part;

6 ‘‘(B) ensure that individuals have access to

7 qualified long-term care insurance policies;

8 ‘‘(C) ensure that care and services pro9 vided under any long-term care insurance policy

10 comply with the requirements of this part;

11 ‘‘(D) pay the benefit subsidy for the costs

12 of care and services provided under qualified

13 long-term care insurance policies as provided in

14 section 2138(b)(2);

15 ‘‘(E) establish a Standards and Perform16 ance Organization in accordance with section

17 2141;

18 ‘‘(F) prepare and submit to the Secretary

19 such reports as the Secretary may require, in

20 such form, containing such information, and

21 complying with such requirements as the Sec22 retary determines necessary to assure the

23 soundness, correctness, nonduplicative nature,

24 and verification of such reports; and
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1 ‘‘(G) otherwise comply with the require2 ments of this part; and

3 ‘‘(2) the Federal government shall contribute

4 funds to reimburse the State for a portion of the ex5 penditures by the State, in accordance with section

6 2139.

7 ‘‘REQUIREMENTS ON QUALIFIED LONG-TERM CARE

8 INSURANCE POLICIES

9 ‘‘SEC. 2134. (a) IN GENERAL.—An insurance policy

10 shall be treated as a qualified long-term care insurance

11 policy meeting the requirements of this section if the pol12 icy—

13 ‘‘(1) is approved for sale in the State by the

14 State insurance commission;

15 ‘‘(2) offers benefits that meet the requirements

16 of section 2135;

17 ‘‘(3) offers premiums that meet the require18 ments of section 2136;

19 ‘‘(4) meets the portability requirements of sec20 tion 2137;

21 ‘‘(5) provides payment for care and services

22 furnished under such policy in accordance with sec23 tion 2138(a);

24 ‘‘(6) provides for no more than a 30 cumulative

25 day elimination period; and
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1 ‘‘(7) meets the standards for long-term care in2 surance policies under subsection (h) of section

3 7702B of the Internal Revenue Code of 1986 and

4 subsections (c), (d), and (e) of section 4980C of

5 such Code.

6 ‘‘BENEFITS UNDER QUALIFIED LONG-TERM CARE

7 INSURANCE POLICIES

8 ‘‘SEC. 2135. (a) SERVICES.—

9 ‘‘(1) MINIMUM BENEFITS.—

10 ‘‘(A) IN GENERAL.—Qualified long-term

11 care insurance policies shall cover at least—

12 ‘‘(i) with respect to policyholders who

13 are functionally impaired individuals, home

14 and community based services and case

15 management services; and

16 ‘‘(ii) with respect to policyholders who

17 are severely functionally impaired individ18 uals, nursing facility services, home and

19 community based services, and case man20 agement services.

21 ‘‘(B) LIMITATIONS.—Qualified long-term

22 care insurance policies shall pay only for serv23 ices described in subparagraph (A)—

24 ‘‘(i) that are appropriate to assist a

25 policyholder in performing activities of

26 daily living, as determined by a qualified
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•S 1600 IS

1 case manager and specified under a writ2 ten plan of care; and

3 ‘‘(ii) that are provided by qualified

4 providers.

5 ‘‘(2) ADDITIONAL BENEFITS.—Qualified insur6 ers may offer qualified long-term care insurance

7 policies that provide for benefits in addition to those

8 required under paragraph (1) if such policies are ap9 proved by the State insurance commission as meet10 ing the requirements of this section.

11 ‘‘(3) REQUIREMENTS ON CASE MANAGEMENT

12 SERVICES.—Any case management services fur13 nished under a qualified long-term care insurance

14 policy shall be provided in accordance with para15 graph (4) and the standards established by the

16 Standards and Performance Organization for the

17 State.

18 ‘‘(4) PROVISION OF CASE MANAGEMENT SERV19 ICES.—

20 ‘‘(A) ASSIGNMENT.—Upon a preliminary

21 determination that a policyholder may be in

22 need of care and services under a qualified

23 long-term care insurance policy, the qualified

24 insurer shall ensure that a qualified case man-
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1 ager is assigned to provide case management

2 services for such policyholder.

3 ‘‘(B) ACTIVITIES.—

4 ‘‘(i) BENEFITS ASSESSMENT.—An as5 sessment shall be made by a qualified case

6 manager to determine whether the policy7 holder is in need of care and services under

8 the qualified long-term care insurance pol9 icy. In making such assessment, the quali10 fied case manager shall conduct an inter11 view with the policyholder to determine the

12 functional level (in terms of performance of

13 activities of daily living) and cognitive im14 pairment status of the policyholder. Such

15 benefits assessment shall include an assess16 ment of the policyholder’s—

17 ‘‘(I) ability or inability to per18 form any activities of daily living;

19 ‘‘(II) health status;

20 ‘‘(III) mental status;

21 ‘‘(IV) current living arrange22 ments; and

23 ‘‘(V) use of formal and informal

24 long-term care support systems.
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1 If the health or mental condition of the

2 policyholder is determined to be likely to

3 change, the qualified case manager shall

4 reassess such policyholder within a reason5 able period of time after such initial as6 sessment, as determined appropriate by the

7 qualified case manager in consultation with

8 the appropriate qualified insurer.

9 ‘‘(ii) CARE PLAN DEVELOPMENT.—

10 After the qualified case manager conducts

11 the benefits assessment of the policyholder,

12 the case manager shall develop a written

13 care plan that is in accordance with the

14 care and service needs of the policyholder

15 and the availability of the appropriate care

16 and services. The care plan shall identify—

17 ‘‘(I) the long-term care problems

18 and needs of the policyholder;

19 ‘‘(II) the mix of formal and infor20 mal services and support systems that

21 are available to meet the long-term

22 care and service needs of the policy23 holder;

24 ‘‘(III) the goals for the policy25 holder; and
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•S 1600 IS

1 ‘‘(IV) the appropriate services

2 necessary to meet such needs.

3 ‘‘(iii) CARE PLAN IMPLEMENTA4 TION.—After a face-to-face interview with

5 the policyholder and such policyholder’s

6 spouse or primary caregiver, where appro7 priate, the qualified case manager, in con8 sultation with the policyholder’s primary

9 medical care provider, shall arrange for the

10 provision of appropriate care and services.

11 The qualified case manager shall assist in

12 making the necessary service arrangements

13 for the implementation of the care plan to

14 the extent that the policyholder consents.

15 ‘‘(iv) CARE PLAN MONITORING.—The

16 qualified case manager shall monitor the

17 delivery of services to the policyholder, the

18 quality of care provided, and the status of

19 the policyholder. Periodic reassessments of

20 the status and needs of the policyholder,

21 and revisions of the care plan, shall be

22 made by the qualified case manager as ap23 propriate. Such reassessments shall be con24 ducted not less than every 6 months. If the

25 policyholder is no longer eligible for bene-
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•S 1600 IS

1 fits as a result of improved health condi2 tions, death, or depletion of the maximum

3 lifetime benefit, the qualified case man4 ager, in consultation with the policy5 holder’s primary medical care provider,

6 shall discharge the case.

7 ‘‘(b) MAXIMUM DAILY AND LIFETIME BENEFITS.—

8 ‘‘(1) MAXIMUM DAILY BENEFITS.—

9 ‘‘(A) IN GENERAL.—Each qualified long10 term care insurance policy shall provide for a

11 maximum daily benefit payable for nursing fa12 cility services and a maximum daily benefit pay13 able for home and community based services.

14 ‘‘(B) INCREASES IN MAXIMUM DAILY BEN15 EFITS.—The maximum daily benefits under

16 subparagraph (A) shall be increased at a

17 compounded rate of 5 percent per year.

18 ‘‘(2) MAXIMUM LIFETIME BENEFIT.—

19 ‘‘(A) IN GENERAL.—Each qualified long20 term care insurance policy shall offer a maxi21 mum lifetime benefit equal to the amount deter22 mined under subparagraph (B). The maximum

23 lifetime benefit shall be increased at a

24 compounded rate of 5 percent per year.
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•S 1600 IS

1 ‘‘(B) AMOUNT OF MAXIMUM LIFETIME

2 BENEFIT.—The amount determined under this

3 subparagraph shall be an amount equal to—

4 ‘‘(i) for qualified long-term care insur5 ance policies issued during fiscal year

6 1995, an amount equal to $60,000 in7 creased or decreased by the percentage by

8 which the cost of furnishing services under

9 such policies in the State is greater or less10 er than median cost of furnishing such

11 services in all States, as determined by the

12 Secretary; and

13 ‘‘(ii) for qualified long-term care in14 surance policies issued during fiscal year

15 1996 and succeeding fiscal years, an

16 amount equal to the amount determined

17 under this subparagraph for the preceding

18 fiscal year updated by the estimated per19 centage change in the Consumer Price

20 Index from the midpoint of the preceding

21 fiscal year through the midpoint of such

22 succeeding fiscal year, with appropriate ad23 justments to reflect previous

24 underestimations or overestimations in the

25 estimated percentage change in that index.
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•S 1600 IS

1 ‘‘(C) USE.—The maximum lifetime benefit

2 under subparagraph (A) may be used to pay for

3 case management services, nursing facility serv4 ices, and home and community based services.

5 ‘‘(D) TERM OF POLICY.—Coverage under a

6 qualified long-term care insurance policy shall

7 continue for the life of the policyholder or until

8 the maximum lifetime benefit has been de9 pleted.

10 ‘‘PREMIUMS UNDER QUALIFIED LONG-TERM CARE

11 INSURANCE POLICIES

12 ‘‘SEC. 2136. (a) AMOUNT.—

13 ‘‘(1) IN GENERAL.—The amount of the pre14 mium to be charged by a qualified insurer for a

15 qualified long-term care insurance policy shall be de16 termined by each qualified insurer, subject to State

17 insurance regulations.

18 ‘‘(2) PREMIUM RATE STRUCTURE.—The State

19 insurance commission shall ensure that the premium

20 rate structure applicable to a qualified long-term

21 care insurance policy remains level throughout the

22 life of the policy.

23 ‘‘(3) REDUCED PREMIUMS.—

24 ‘‘(A) IN GENERAL.—A policyholder shall be

25 eligible for reduced premiums under the policy26 holder’s qualified long-term care insurance pol-
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•S 1600 IS

1 icy if the policyholder’s income during any pe2 riod determined appropriate by the State

3 Standards and Performance Organization does

4 not equal or exceed 400 percent of the income

5 official poverty line for such period. Such re6 duced premiums shall remain in effect for a pe7 riod determined appropriate by such Organiza8 tion.

9 ‘‘(B) DETERMINATION OF AMOUNT OF RE10 DUCTION.—The amount of the premium reduc11 tion under subparagraph (A) shall be based on

12 a sliding scale established by the State Stand13 ards and Performance Organization. The maxi14 mum amount of a premium reduction shall be

15 an amount equal to 75 percent of the premium

16 amount and shall apply in the case of a policy17 holder with an income at or below 100 percent

18 of the income official poverty line.

19 ‘‘(b) CESSATION OF PREMIUM PAYMENTS.—A quali20 fied long-term care insurance policy shall provide that,

21 after the expiration of a 30-consecutive day period during

22 which nursing facility service or home and community

23 based service benefits are paid under the policy, the policy24 holder shall no longer be required to pay the premium due

25 under such policy if the policyholder remains continuously
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•S 1600 IS

1 eligible for and receives benefits for which reimbursement

2 is available under the policy.

3 ‘‘(c) REVIEW OF PREMIUM RATE STRUCTURES.—

4 ‘‘(1) IN GENERAL.—The State insurance com5 mission, at least once during each consecutive 3-year

6 period, shall review the premium rate structure ap7 plicable to a qualified long-term care insurance pol8 icy for the purpose of determining whether to permit

9 adjustments to be made by a qualified insurer to

10 such premium rate structure.

11 ‘‘(2) APPROVALS OF PREMIUM RATE STRUC12 TURE CHANGE.—

13 ‘‘(A) APPROVAL REQUIRED.—A qualified

14 insurer may not adjust the premium rate struc15 ture for a qualified long-term care insurance

16 policy unless such adjustment is approved by

17 the State insurance commission.

18 ‘‘(B) REVIEW UNDER PART A.—For pur19 poses of determining whether an adjustment in

20 a premium rate structure should be approved

21 under subparagraph (A), the State insurance

22 commission, at least once during each consecu23 tive 3-year period, shall review the payment

24 rates applicable to services provided under part

25 A of this title. The State insurance commission
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•S 1600 IS

1 may approve a change in the premium rate

2 structure applicable to a qualified long-term

3 care insurance policy for qualified insurers if

4 the rate of increase in payment rates for serv5 ices provided under part A differs significantly

6 from the rate of increase for maximum daily

7 benefit amounts under section 2135(b)(1)(B).

8 ‘‘(C) ADDITIONAL REQUIREMENTS FOR

9 GROUP POLICY PREMIUM RATE STRUCTURE AD10 JUSTMENTS.—Premium rate structure adjust11 ments for group qualified long-term care insur12 ance policies shall be permitted under this sec13 tion only—

14 ‘‘(i) on a class basis;

15 ‘‘(ii) if such adjustment is applied to

16 all individuals in the particular enrollment

17 class; and

18 ‘‘(iii) if such adjustment meets all ap19 propriate State requirements for premium

20 rate structure adjustments required under

21 applicable State law.

22 ‘‘(d) POLICY LAPSES FOR FAILURE TO PAY PRE23 MIUM.—

24 ‘‘(1) IN GENERAL.—Except as provided in para25 graph (2), a qualified long-term care insurance pol-
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•S 1600 IS

1 icy shall provide that if a scheduled premium for

2 such policy is not paid, the policy will not lapse prior

3 to the expiration of a 60-day period beginning on the

4 date on which such premium is due for failure to

5 pay premiums and such policy shall remain in force

6 during such 60-day period.

7 ‘‘(2) REINSTATEMENT.—A qualified insurer

8 may elect to reinstate a qualified long-term care in9 surance policy that has lapsed. The acceptance of a

10 premium payment by a qualified insurer, after the

11 expiration of the period referred to in paragraph (1),

12 shall constitute a reinstatement of the policy to

13 which such premium is applied and no application

14 for such reinstatement shall be required. No under15 writing or new age-related premiums shall be per16 mitted in the case of such reinstatements.

17 ‘‘PORTABILITY REQUIREMENTS

18 ‘‘SEC. 2137. (a) GROUP POLICIES.—In the case of

19 a qualified long-term care insurance policy that is offered

20 in the form of a group insurance policy, the qualified in21 surer providing such policy shall ensure that the policy in22 cludes a continuation and conversion of coverage provision

23 that permits a policyholder who is no longer part of the

24 group to make direct premium payments to the insurer,

25 as provided under this part, to keep such policy from laps26 ing. For the 18-month period beginning on the date a pol-
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•S 1600 IS

1 icyholder leaves a group, the premium amount required

2 to be paid by such policyholder shall be the amount in

3 effect on such date.

4 ‘‘(b) POLICYHOLDERS WHO CHANGE STATE OF RES5 IDENCE.—

6 ‘‘(1) IN GENERAL.—If a policyholder residing in

7 a State has purchased a qualified long-term care in8 surance policy under this part and such policyholder

9 at a later date changes the policyholder’s residence

10 to another State, such policyholder shall convert to

11 a qualified long-term care insurance policy offered

12 by a qualified insurer in the State of new residence

13 as provided in this part.

14 ‘‘(2) RESPONSIBILITIES OF STATE OF NEW

15 RESIDENCE.—In the case of a policyholder who con16 verts the policyholder’s qualified long-term care in17 surance policy under paragraph (1), the State of

18 new residence shall—

19 ‘‘(A) upon the application of the policy20 holder, accept such policyholder into the Secure

21 Choice Insurance Program of the State; or

22 ‘‘(B) in the case of a policyholder who is

23 receiving services under the policy at the time

24 of the change in residence, reimburse the quali-
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•S 1600 IS

1 fied insurer for the benefit subsidy amount

2 under section 2138(b)(2).

3 ‘‘PAYMENTS TO QUALIFIED PROVIDERS; BENEFIT

4 SUBSIDIES

5 ‘‘SEC. 2138. (a) PAYMENTS TO QUALIFIED

6 PROVIDERS.—

7 ‘‘(1) IN GENERAL.—Except as provided in para8 graph (2), a qualified insurer shall pay a qualified

9 provider for the costs of furnishing services covered

10 under a qualified long-term care insurance policy.

11 ‘‘(2) LIMITATIONS.—

12 ‘‘(A) MAXIMUM DAILY BENEFITS.—A

13 qualified insurer shall not be liable for costs of

14 furnishing services described in section

15 2135(a)(1) under a qualified long-term care in16 surance policy which are in excess of the maxi17 mum daily benefits described in section

18 2135(b)(1).

19 ‘‘(B) MAXIMUM LIFETIME BENEFIT.—A

20 qualified insurer shall not be liable for costs of

21 furnishing services described in section

22 2135(a)(1) under a qualified long-term care in23 surance policy which are in excess of the maxi24 mum lifetime benefit described in section

25 2135(b)(2).
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1 ‘‘(b) REIMBURSEMENT BY STATE TO QUALIFIED IN2 SURER.—

3 ‘‘(1) IN GENERAL.—Upon receipt of a claim

4 from a qualified insurer in connection with payments

5 described in subsection (a)(1), a State shall pay to

6 the qualified insurer the benefit subsidy amount de7 termined in accordance with paragraph (2). A State

8 shall make payment under a claim submitted by a

9 qualified insurer under this paragraph not later than

10 30 days after the State receives such claim.

11 ‘‘(2) BENEFIT SUBSIDY AMOUNT.—For pur12 poses of paragraph (1), the benefit subsidy amount

13 for a payment under subsection (a)(1) is an amount

14 equal to the amount of such payment less the

15 amount for which the qualified insurer is liable as

16 determined under paragraph (3) and the amount for

17 which the policyholder is liable as determined under

18 paragraph (4).

19 ‘‘(3) LIABILITY OF QUALIFIED INSURER.—

20 ‘‘(A) IN GENERAL.—A qualified insurer

21 shall be liable for a portion of the amount paid

22 under subsection (a)(1) for any services equal

23 to the sum of—

24 ‘‘(i) the additional benefit amount de25 termined under subparagraph (B); and
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•S 1600 IS

1 ‘‘(ii) the premium related amount de2 termined under subparagraph (C).

3 ‘‘(B) ADDITIONAL BENEFIT AMOUNT.—

4 The additional benefit amount determined

5 under this subparagraph is an amount equal to

6 the portion of the amount paid under sub7 section (a)(1) for any services attributable to

8 payments for benefits that are in addition to

9 the benefits required under section 2135(a)(1).

10 ‘‘(C) PREMIUM RELATED AMOUNT.—

11 ‘‘(i) IN GENERAL.—The premium re12 lated amount determined under this sub13 paragraph is an amount equal to the prod14 uct of the amount paid under subsection

15 (a)(1) for the services and the ratio of the

16 actual premium payment amount deter17 mined under clause (ii) to the estimated

18 premium payment amount determined

19 under clause (iii).

20 ‘‘(ii) ACTUAL PREMIUM PAYMENT

21 AMOUNT.—The actual premium payment

22 amount determined under this clause is an

23 amount equal to the accumulated value of

24 the actual premiums paid by a policyholder

25 under a qualified long-term care insurance
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•S 1600 IS

1 policy with respect to the benefits required

2 under section 2135(a)(1).

3 ‘‘(iii) ESTIMATED PREMIUM PAYMENT

4 AMOUNT.—The estimated premium pay5 ment amount determined under this clause

6 is an amount equal to the estimated accu7 mulated value of the premiums that would

8 have been paid by a policyholder under a

9 qualified long-term care insurance policy

10 with respect to the benefits required under

11 section 2135(a)(1) if no premium reduc12 tions occurred with respect to such policy

13 under section 2136(a)(3). The estimated

14 premium payment amount under this

15 clause shall be determined using the same

16 assumptions and methodologies used to de17 termine the actual premium payment

18 amount under clause (ii).

19 ‘‘(4) LIABILITY OF POLICYHOLDER.—

20 ‘‘(A) IN GENERAL.—A policyholder shall be

21 liable for a portion of the amount paid under

22 subsection (a)(1) for any services equal to the

23 excess amount determined under subparagraph

24 (B).

25 ‘‘(B) EXCESS AMOUNT.—
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•S 1600 IS

1 ‘‘(i) IN GENERAL.—The excess

2 amount determined under this subpara3 graph for any services is the amount by

4 which—

5 ‘‘(I) the amount paid under sub6 section (a)(1), less the additional ben7 efit amount determined under para8 graph (3)(B) and the premium related

9 amount determined under paragraph

10 (3)(C), exceeds

11 ‘‘(II) the limitation amount de12 termined under clause (ii).

13 ‘‘(ii) LIMITATION AMOUNT.—The limi14 tation amount determined under this

15 clause for any services is an amount equal

16 to the product of—

17 ‘‘(I) the limited cost of services

18 amount determined under clause (iii)

19 for the services; and

20 ‘‘(II) the number of days for

21 which the services were provided.

22 ‘‘(iii) LIMITED COST OF SERVICES

23 AMOUNT.—The limited cost of services

24 amount determined under this clause is—
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•S 1600 IS

1 ‘‘(I) in the case of nursing facil2 ity services, the amount that is equal

3 to the 80th percentile nursing facility

4 resident per diem rate paid under

5 part A in the State on the date an in6 dividual becomes eligible to have pay7 ments made on such individual’s be8 half under a qualified long-term care

9 insurance policy, or

10 ‘‘(II) in the case of home and

11 community based services, the amount

12 that is equal to 60 percent of the

13 amount determined under subclause

14 (I).

15 ‘‘FEDERAL CONTRIBUTION

16 ‘‘SEC. 2139. The Secretary shall pay to each State

17 for each quarter beginning with the first quarter after the

18 date of the enactment of this part an amount that is equal

19 to the sum of—

20 ‘‘(1) an amount equal to the product of the

21 Federal long-term care assistance percentage for the

22 State under part A and the State’s expenditures for

23 benefit subsidies under section 2138(b) for such

24 quarter; and

25 ‘‘(2) an amount equal to 75 percent of the

26 amount expended during such quarter as the Sec-
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1 retary determines to be necessary for the proper and

2 efficient administration of the State plan.

3 ‘‘RESOURCE RULES

4 ‘‘SEC. 2140. (a) IN GENERAL.—The minimum re5 source requirement under part A that applies to a policy6 holder shall be increased by an amount equal to $5,000

7 for each year during which a qualified long-term care in8 surance policy is in effect, up to $100,000 above such min9 imum resource requirement.

10 ‘‘(b) ELIGIBILITY UNDER PART A.—A policyholder

11 shall not be eligible for services under part A until the

12 policyholder—

13 ‘‘(1) has exhausted the maximum lifetime bene14 fit under a qualified long-term care insurance policy

15 purchased under this part; and

16 ‘‘(2) meets the eligibility requirements under

17 part A (except that with respect to the minimum re18 source requirement, the provisions of subsection (a)

19 shall be substituted for the provisions under part A).

20 ‘‘STANDARDS AND PERFORMANCE ORGANIZATIONS

21 ‘‘SEC. 2141. (a) REQUIREMENT.—Each State shall

22 establish a Standards and Performance Organization in

23 accordance with this section.

24 ‘‘(b) ESTABLISHMENT.—In establishing the Stand25 ards and Performance Organization under subsection (a),

26 the chief executive officer of the State shall consult with
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•S 1600 IS

1 representatives of appropriate State agencies, as identified

2 by the chief executive officer. The chief executive officer

3 of the State may create a new entity to operate as the

4 Standards and Performance Organization within the State

5 or may designate an existing State entity as such Organi6 zation. The chief executive officer shall appoint represent7 atives of appropriate State agencies to serve as the board

8 of directors of the Standards and Performance Organiza9 tion.

10 ‘‘(c) FUNCTIONS.—The Standards and Performance

11 Organization shall—

12 ‘‘(1) ensure that the qualified long-term care in13 surance policies under this part cover at least the

14 care and services described in section 2135(a)(1);

15 ‘‘(2) ensure that qualified insurers comply with

16 the insurance laws and regulations established by

17 the State;

18 ‘‘(3) ensure that information concerning the

19 program established under this part is made avail20 able to individuals within the State in accordance

21 with section 2142;

22 ‘‘(4) ensure the quality and appropriateness of

23 the case management services provided to policy24 holders under any qualified long-term care insurance

25 policy;
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1 ‘‘(5) ensure that qualified providers meet stand2 ards established by the State;

3 ‘‘(6) develop and submit to the State insurance

4 commission standards applicable to qualified insur5 ers regarding rejection rates for underwriting;

6 ‘‘(7) on an annual basis, verify the income of

7 the policyholders and determine eligibility for any

8 premium reductions as provided for under section

9 2136(a)(3);

10 ‘‘(8) provide written notice to insurers of any

11 changes in the income of policyholders which result

12 in such policyholders being eligible for a premium

13 reduction;

14 ‘‘(9) carry out the educational program imple15 mented under section 2142 in the State;

16 ‘‘(10) establish appropriate appeals procedures

17 for the appeals described in subsection (d); and

18 ‘‘(12) carry out such other functions as the Sec19 retary or the chief executive officer of the State may

20 require.

21 ‘‘(d) APPEALS OF CERTAIN DENIALS.—A policy22 holder may appeal to the Standards and Performance Or23 ganization any decision of a qualified insurer to deny such

24 policyholder coverage, to refuse to pay a claim or to refuse

25 to provide the policyholder with access to benefits.
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1 ‘‘EDUCATIONAL PROGRAM

2 ‘‘SEC. 2142. (a) IN GENERAL.—The Standards and

3 Performance Organization of the State shall implement a

4 comprehensive public information and education program

5 that shall be targeted to individuals age 45 and above but

6 which shall attempt to educate the general public as a

7 whole concerning the need for long-term care insurance.

8 ‘‘(b) REQUIREMENTS.—The public information and

9 education program implemented in a State under sub10 section (a) shall include—

11 ‘‘(1) the development and distribution of bro12 chures and other written materials that describe—

13 ‘‘(A) the growing elderly population of the

14 United States and the State, and its anticipated

15 impact on financial resources and available

16 long-term care services;

17 ‘‘(B) the current methods of financing

18 long-term care (including Government pro19 grams);

20 ‘‘(C) the need for long-term care insur21 ance;

22 ‘‘(D) the eligibility requirements for par23 ticipation in the program implemented under

24 this part;
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1 ‘‘(E) the basic minimum benefit package,

2 limitations, and qualifications for qualified long3 term care insurance policies; and

4 ‘‘(F) the appropriateness of purchasing

5 qualified long-term care insurance policies;

6 ‘‘(2) the convening of educational forums deal7 ing with the program implemented under the State

8 plan throughout the State;

9 ‘‘(3) mass media advertisements;

10 ‘‘(4) programs to assist employers in providing

11 information to their employees concerning the pro12 gram established in the State under this part; and

13 ‘‘(5) other public information and education

14 strategies that are determined appropriate by the

15 Standards and Performance Organization.’’.

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

17 subsection (a) shall become effective on October 1, 1994.

18 SEC. 102. CONTINUING ELIGIBILITY OF INDIVIDUALS ELIGI19 BLE FOR LONG-TERM CARE BENEFITS UNDER

20 TITLE XIX UNDER NEW TITLE XXI.

21 The Secretary of Health and Human Services shall

22 provide that individuals eligible for services provided under

23 title XIX of the Social Security Act which effective upon

24 the date of enactment of this Act are provided under title

25 XXI of the Social Security Act shall continue to be eligible
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1 to receive such services in the same amount, duration, and

2 scope as such individuals would have been eligible to re3 ceive but for the provisions of this Act.

4 SEC. 103. REPEAL OF LONG-TERM CARE PROVISIONS IN

5 TITLE XIX OF THE SOCIAL SECURITY ACT.

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

7 Act (42 U.S.C. 1901 et seq.) is amended—

8 (1) in section 1902 by repealing subsection

9 (a)(13)(F); and

10 (2) by repealing section 1929.

11 (b) EFFECTIVE DATE.—The amendments made by

12 this section shall become effective on October 1, 1994.

13 SEC. 104. STUDY OF FORMULA FOR PAYMENT OF LONG14 TERM CARE SERVICES.

15 The Comptroller General shall study, and report to

16 Congress on such study no later than 1 year after the date

17 of enactment of this Act, on the appropriateness and ade18 quacy of using the Federal medical assistance percentage

19 utilized under title XIX of the Social Security Act for pay20 ment of services provided under title XXI of the Social

21 Security Act. Such study shall consider the following fac22 tors in determining a payment formula:

23 (1) The average income of the elderly in the

24 State compared to the average income of the elderly

25 in the Nation.
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1 (2) The percent of elderly in the State under

2 the income official poverty line (as determined by

3 the Office of Management and Budget and revised

4 annually in accordance with section 673(2) of the

5 Omnibus Budget Reconciliation Act of 1981) com6 pared to the percent of elderly under such income

7 line in the Nation.

8 (3) The percentage of elderly in the State with

9 income above the income official poverty line (as de10 scribed in paragraph (2)) but below 240 percent of

11 such income line (and various intervals in between)

12 compared to national statistics.

13 (4) The percent of elderly over 75 years of age

14 in the State compared to the percent of elderly over

15 75 in the Nation.

16 (5) Other appropriate issues, including meas17 ures of State fiscal capacity.

18 SEC. 105. LONG-TERM CARE DATA COLLECTION SYSTEM.

19 (a) IN GENERAL.—The Secretary of Health and

20 Human Services, in collaboration with the National Asso21 ciation of Insurance Commissioners, shall establish a data

22 collection system for public and private long-term care

23 services to be utilized—

24 (1) to assess the costs of long-term care serv25 ices and predict the future costs of such services;
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1 (2) to determine the types of long-term care

2 services provided and predict the future need for

3 such services;

4 (3) to determine how long-term care relates to

5 the medical problems experienced by the elderly; and

6 (4) in other matters determined appropriate by

7 such Secretary.

8 (b) REPORT.—Not later than 2 years after the date

9 of enactment of this Act and annually thereafter, the Sec10 retary of Health and Human Services shall prepare and

11 submit to the appropriate committees of Congress a report

12 that shall include—

13 (1) a description of the data collection system

14 described in subsection (a);

15 (2) a description of the types of data collected

16 using such system and an analysis of such data;

17 (3) a description of the sources of the data;

18 (4) a description of the manner in which the

19 data was collected; and

20 (5) any other information determined appro21 priate by such Secretary.
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1 SEC. 106. CREATION OF NEW ADMINISTRATIVE UNIT FOR

2 LONG-TERM CARE PROGRAM.

3 The Secretary of Health and Human Services shall

4 establish a new organizational unit to administer the new

5 long-term care assistance program established by this Act.

6 SEC. 107. SECRETARIAL SUBMISSION OF LEGISLATIVE PRO7 POSAL FOR TECHNICAL AND CONFORMING

8 AMENDMENTS.

9 The Secretary of Health and Human Services shall,

10 within 90 days of the date of enactment of this Act, sub11 mit to the appropriate committees of the Congress, a legis12 lative proposal providing for such technical and conform13 ing amendments in the law as are required by the provi14 sions of this Act.

15 TITLE II—LONG-TERM CARE TAX

16 PROVISIONS

17 SEC. 200. AMENDMENT OF 1986 CODE.

18 Except as otherwise expressly provided, whenever in

19 this title an amendment or repeal is expressed in terms

20 of an amendment to, or repeal of, a section or other provi21 sion, the reference shall be considered to be made to a

22 section or other provision of the Internal Revenue Code

23 of 1986.
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1 PART I—GENERAL PROVISIONS

2 SEC. 201. QUALIFIED LONG-TERM CARE SERVICES TREAT3 ED AS MEDICAL CARE.

4 (a) GENERAL RULE.—Paragraph (1) of section

5 213(d) (defining medical care) is amended by striking

6 ‘‘or’’ at the end of subparagraph (B), by redesignating

7 subparagraph (C) as subparagraph (D), and by inserting

8 after subparagraph (B) the following new subparagraph:

9 ‘‘(C) for qualified long-term care services

10 (as defined in subsection (f)), or’’.

11 (b) QUALIFIED LONG-TERM CARE SERVICES DE12 FINED.—Section 213 (relating to deduction for medical,

13 dental, etc. expenses), as amended by section 13131(d)(3)

14 of the Omnibus Budget Reconciliation Act of 1993, is

15 amended by adding at the end the following new sub16 section:

17 ‘‘(f) QUALIFIED LONG-TERM CARE SERVICES.—For

18 purposes of this section—

19 ‘‘(1) IN GENERAL.—The term ‘qualified long20 term care services’ means necessary diagnostic, pre21 ventive, therapeutic, rehabilitative, and maintenance

22 (including personal care) services—

23 ‘‘(A) which are required by an individual

24 during any period during which such individual

25 is a functionally impaired individual,
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1 ‘‘(B) which have as their primary purpose

2 the provision of needed assistance with 1 or

3 more activities of daily living which a function4 ally impaired individual is certified as being un5 able to perform under paragraph (2)(A), and

6 ‘‘(C) which are provided pursuant to a con7 tinuing plan of care prescribed by a licensed

8 health care practitioner (other than a relative of

9 such individual).

10 ‘‘(2) FUNCTIONALLY IMPAIRED INDIVIDUAL.—

11 ‘‘(A) IN GENERAL.—The term ‘functionally

12 impaired individual’ means any individual who

13 is certified by a licensed health care practitioner

14 (other than a relative of such individual) as

15 being unable to perform, without substantial as16 sistance from another individual (including as17 sistance involving verbal reminding, physical

18 cueing, or substantial supervision), at least 3

19 activities of daily living described in paragraph

20 (3).

21 ‘‘(B) SPECIAL RULE FOR HOME HEALTH

22 CARE SERVICES.—In the case of services which

23 are provided during any period during which an

24 individual is residing within the individual’s

25 home (whether or not the services are provided
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1 within the home), subparagraph (A) shall be

2 applied by substituting ‘2’ for ‘3’. For purposes

3 of this subparagraph, a nursing home or similar

4 facility shall not be treated as a home.

5 ‘‘(3) ACTIVITIES OF DAILY LIVING.—

6 ‘‘(A) IN GENERAL.—Each of the following

7 is an activity of daily living:

8 ‘‘(i) Eating.

9 ‘‘(ii) Transferring.

10 ‘‘(iii) Toileting.

11 ‘‘(iv) Dressing.

12 ‘‘(v) Bathing.

13 ‘‘(B) REQUIREMENT ON THE SEC14 RETARY.—For purposes of this section, the Sec15 retary shall utilize the definitions and standards

16 for measuring the ability to perform the activi17 ties of daily living described in subparagraph

18 (A) developed by the Secretary of Health and

19 Human Services under section 2115(d)(4)(B) of

20 the Social Security Act.

21 ‘‘(4) LICENSED HEALTH CARE PRACTI22 TIONER.—The term ‘licensed health care practi23 tioner’ means—

24 ‘‘(A) a physician or registered professional

25 nurse,
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1 ‘‘(B) a qualified community care case man2 ager (as defined in section 2115(k) of the So3 cial Security Act), or

4 ‘‘(C) any other individual who meets such

5 requirements as may be prescribed by the Sec6 retary after consultation with the Secretary of

7 Health and Human Services.

8 ‘‘(5) RELATIVE.—The term ‘relative’ means an

9 individual bearing a relationship to another individ10 ual which is described in paragraphs (1) through (8)

11 of section 152(a).’’

12 (c) TECHNICAL AMENDMENTS.—

13 (1) Subparagraph (D) of section 213(d)(1) (as

14 redesignated by subsection (a)) is amended to read

15 as follows:

16 ‘‘(D) for insurance (including amounts

17 paid as premiums under part B of title XVIII

18 of the Social Security Act, relating to supple19 mentary medical insurance for the aged)—

20 ‘‘(i) covering medical care referred to

21 in subparagraphs (A) and (B), or

22 ‘‘(ii) covering medical care referred to

23 in subparagraph (C), but only if such in24 surance is provided under a qualified long-
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1 term care insurance contract (as defined in

2 section 7702B(b)).’’

3 (2) Paragraph (6) of section 213(d) is amend4 ed—

5 (A) by striking ‘‘subparagraphs (A) and

6 (B)’’ in the matter preceding subparagraph (A),

7 and inserting ‘‘subparagraphs (A), (B), and

8 (C)’’, and

9 (B) by striking ‘‘paragraph (1)(C)’’ in sub10 paragraph (A) and inserting ‘‘paragraph

11 (1)(D)’’.

12 SEC. 202. TREATMENT OF LONG-TERM CARE INSURANCE

13 OR PLANS.

14 (a) GENERAL RULE.—Chapter 79 (relating to defini15 tions) is amended by inserting after section 7702A the fol16 lowing new section:

17 ‘‘SEC. 7702B. TREATMENT OF LONG-TERM CARE INSURANCE

18 OR PLANS.

19 ‘‘(a) GENERAL RULE.—For purposes of this title—

20 ‘‘(1) a qualified long-term care insurance con21 tract shall be treated as an accident or health insur22 ance contract,

23 ‘‘(2) any plan of an employer providing cov24 erage of qualified long-term care services shall be
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1 treated as an accident or health plan with respect to

2 such services,

3 ‘‘(3) amounts received under such a contract or

4 plan with respect to qualified long-term care services

5 shall be treated as amounts received for personal in6 juries or sickness, and

7 ‘‘(4) payments described in subsection (b)(5)

8 shall be treated as payments made with respect to

9 qualified long-term care services.

10 ‘‘(b) QUALIFIED LONG-TERM CARE INSURANCE

11 CONTRACT.—

12 ‘‘(1) IN GENERAL.—For purposes of this title,

13 the term ‘qualified long-term care insurance con14 tract’ means any insurance contract if—

15 ‘‘(A) the only insurance protection pro16 vided under such contract is coverage of quali17 fied long-term care services,

18 ‘‘(B) such contract meets the requirements

19 of paragraphs (2), (3), and (4), and

20 ‘‘(C) such contract is issued by a qualified

21 issuer.

22 ‘‘(2) PREMIUM REQUIREMENTS.—

23 ‘‘(A) IN GENERAL.—The requirements of

24 this paragraph are met with respect to a con25 tract if such contract provides that—
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1 ‘‘(i) premium payments may not be

2 made earlier than the date such payments

3 would have been made if the contract pro4 vided for level annual payments over the

5 life of the contract (or, if shorter, 20

6 years), and

7 ‘‘(ii) all refunds of premiums, and all

8 policyholder dividends or similar amounts,

9 under such contract are to be applied as a

10 reduction in future premiums or to in11 crease future benefits.

12 A contract shall not be treated as failing to

13 meet the requirements of clause (i) solely by

14 reason of a provision providing for a waiver of

15 premiums if the policyholder becomes a func16 tionally impaired individual.

17 ‘‘(B) REFUNDS UPON DEATH OR COM18 PLETE SURRENDER OR CANCELLATION.—Sub19 paragraph (A)(ii) shall not apply to any refund

20 on the death of the policyholder, or on any com21 plete surrender or cancellation of the contract,

22 if, under the contract, the amount refunded

23 may not exceed the amount of the premiums

24 paid under the contract. For purposes of this

25 title, any refund described in the preceding sen-
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1 tence shall be includible in gross income to the

2 extent that any deduction or exclusion was al3 lowed with respect to the refund.

4 ‘‘(3) BORROWING, PLEDGING, OR ASSIGNING

5 PROHIBITED.—The requirements of this paragraph

6 are met with respect to a contract if such contract

7 provides that no money may be borrowed under such

8 contract and that such contract (or any portion

9 thereof) may not be assigned or pledged as collateral

10 for a loan.

11 ‘‘(4) PROHIBITION OF DUPLICATE PAYMENT.—

12 The requirements of this paragraph are met with re13 spect to a contract if such contract does not cover

14 expenses incurred to the extent that such expenses

15 are reimbursable under title XVIII of the Social Se16 curity Act.

17 ‘‘(5) PER DIEM AND OTHER PERIODIC PAY18 MENTS PERMITTED.—

19 ‘‘(A) IN GENERAL.—For purposes of sub20 section (a)(4), and except as provided in sub21 paragraph (B), payments are described in this

22 paragraph for any calendar year if, under the

23 contract, such payments are made to (or on be24 half of) a functionally impaired individual on a

25 per diem or other periodic basis without regard
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1 to the expenses incurred or services rendered

2 during the period to which the payments relate.

3 ‘‘(B) EXCEPTION WHERE AGGREGATE PAY4 MENTS EXCEED LIMIT.—If the aggregate pay5 ments under the contract for any period

6 (whether on a periodic basis or otherwise) ex7 ceed the dollar amount in effect for such pe8 riod—

9 ‘‘(i) subparagraph (A) shall not apply

10 for such period, and

11 ‘‘(ii) the requirements of paragraph

12 (1)(A) shall be met only if such payments

13 are made with respect to qualified long14 term care services provided during such

15 period.

16 ‘‘(C) DOLLAR AMOUNT.—The dollar

17 amount in effect under this paragraph shall be

18 $150 per day (or the equivalent amount in the

19 case of payments on another periodic basis).

20 ‘‘(D) ADJUSTMENTS FOR INCREASED

21 COSTS.—

22 ‘‘(i) IN GENERAL.—In the case of any

23 calendar year after 1993, the dollar

24 amount in effect under subparagraph (C)
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1 for any period occurring during such cal2 endar year shall be equal to the sum of—

3 ‘‘(I) the amount in effect under

4 subparagraph (C) for the preceding

5 calendar year (after application of this

6 subparagraph), plus

7 ‘‘(II) the applicable percentage of

8 the amount under subclause (I).

9 ‘‘(ii) APPLICABLE PERCENTAGE.—For

10 purposes of clause (i), the term ‘applicable

11 percentage’ means, with respect to any cal12 endar year, the greater of—

13 ‘‘(I) 5 percent, or

14 ‘‘(II) the cost-of-living adjust15 ment for such calendar year.

16 ‘‘(iii) COST-OF-LIVING ADJUST17 MENT.—For purposes of clause (ii), the

18 cost-of-living adjustment for any calendar

19 year is the percentage (if any) by which

20 the cost index under clause (iv) for the

21 preceding calendar year exceeds such index

22 for the second preceding calendar year. In

23 the case of any calendar year beginning be24 fore 1995, this clause shall be applied by

25 substituting the Consumer Price Index (as
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1 defined in section 1(f)(5)) for the cost

2 index under clause (iv).

3 ‘‘(iv) COST INDEX.—The Secretary, in

4 consultation with the Secretary of Health

5 and Human Services, shall before January

6 1, 1995, establish a cost index to measure

7 increases in costs of nursing home and

8 similar facilities. The Secretary may from

9 time to time revise such index to the extent

10 necessary to accurately measure increases

11 or decreases in such costs.

12 ‘‘(E) AGGREGATION RULE.—For purposes

13 of this paragraph, all contracts issued with re14 spect to the same policyholder by the same

15 company shall be treated as 1 contract.

16 ‘‘(c) QUALIFIED ISSUER.—For purposes of this sec17 tion, the term ‘qualified issuer’ means any person which

18 at the time of the issuance of a long-term care insurance

19 contract—

20 ‘‘(1) uses a one year preliminary term method

21 for setting up reserves, and

22 ‘‘(2) maintains a capital ratio equal to not less

23 than 25 percent of long-term care insurance pre24 mium receivables.
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1 ‘‘(d) SPECIAL RULES FOR TAX TREATMENT OF POL2 ICYHOLDERS.—For purposes of this title, solely with re3 spect to the policyholder under any qualified long-term

4 care insurance contract—

5 ‘‘(1) AGGREGATE PAYMENTS IN EXCESS OF

6 LIMITS.—If the aggregate payments under all quali7 fied long-term care insurance contracts with respect

8 to a policyholder for any period (whether on a peri9 odic basis or otherwise) exceed the dollar amount in

10 effect for such period under subsection (b)(5)—

11 ‘‘(A) subsection (b)(5) shall not apply for

12 such period, and

13 ‘‘(B) such payments shall be treated as

14 made for qualified long-term care services only

15 if made with respect to such services provided

16 during such period.

17 ‘‘(2) ASSIGNMENT OR PLEDGE.—Such contract

18 shall not be treated as a qualified long-term care in19 surance contract during any period on or after the

20 date on which the contract (or any portion thereof)

21 is assigned or pledged as collateral for a loan.

22 ‘‘(e) TREATMENT OF COVERAGE AS PART OF A LIFE

23 INSURANCE CONTRACT.—

24 ‘‘(1) IN GENERAL.—Except as provided in regu25 lations, in the case of coverage of qualified long-term
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1 care services provided as part of a life insurance

2 contract, the requirements of this section shall apply

3 as if the portion of the contract providing such cov4 erage was a separate contract.

5 ‘‘(2) PORTION DEFINED.—For purposes of

6 paragraph (1), the term ‘portion’ means only the

7 terms and benefits under a life insurance contract

8 (whether provided by a rider to, addendum on, or

9 other provision of, such contract) that are in addi10 tion to the terms and benefits under the contract

11 without regard to the coverage of qualified long-term

12 care services.

13 ‘‘(f) QUALIFIED LONG-TERM CARE SERVICES.—For

14 purposes of this section—

15 ‘‘(1) IN GENERAL.—The term ‘qualified long16 term care services’ has the meaning given such term

17 by section 213(f).

18 ‘‘(2) RECERTIFICATION.—If an individual has

19 been certified as a functionally impaired individual

20 under section 213(f)(2)(A), services shall not be

21 treated as qualified long-term care services with re22 spect to the individual unless such individual is

23 recertified no less frequently than annually as a

24 functionally impaired individual in the same manner

25 as under such section, except that such
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1 recertification may be made by any licensed health

2 care practitioner (as defined in section 213(f)(4)),

3 other than a relative (as defined by section

4 213(f)(5)) of such individual.

5 ‘‘(g) CONTINUATION COVERAGE EXCISE TAX NOT

6 TO APPLY.—Section 4980B shall not apply to—

7 ‘‘(1) qualified long-term care insurance con8 tracts, or

9 ‘‘(2) plans described in subsection (a)(2).

10 ‘‘(h) REGULATIONS.—The Secretary shall prescribe

11 such regulations as may be necessary to carry out the re12 quirements of this section, including regulations to prevent

13 the avoidance of this section by providing qualified long14 term care services under a life insurance contract.’’

15 (b) CLERICAL AMENDMENT.—The table of sections

16 for chapter 79 is amended by inserting after the item re17 lating to section 7702A the following new item:

‘‘Sec. 7702B. Treatment of long-term care insurance or plans.’’

18 SEC. 203. EFFECTIVE DATES.

19 (a) SECTION 201.—The amendments made by section

20 201 shall apply to taxable years beginning after the date

21 of the enactment of this Act.

22 (b) SECTION 202.—The amendments made by sec23 tion 202 shall apply to contracts issued after the date of

24 the enactment of this Act.
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1 (c) TRANSITION RULE.—If, after the date of the en2 actment of this Act and before January 1, 1996, a con3 tract providing coverage for services which are similar to

4 qualified long-term care services (as defined in section

5 213(f) of the Internal Revenue Code of 1986) and issued

6 on or before January 1, 1994, is exchanged for a qualified

7 long-term care insurance contract (as defined in section

8 7702B(b) of such Code), such exchange shall be treated

9 as an exchange to which section 1035 of such Code ap10 plies.

11 PART II—CONSUMER PROTECTION PROVISIONS

12 SEC. 211. POLICY REQUIREMENTS.

13 (a) IN GENERAL.—Section 7702B (as added by sec14 tion 202) is amended by redesignating subsection (h) as

15 subsection (i) and by inserting after subsection (g) the fol16 lowing new subsection:

17 ‘‘(h) CONSUMER PROTECTION PROVISIONS.—

18 ‘‘(1) IN GENERAL.—The requirements of this

19 subsection are met with respect to any contract if

20 any long-term care insurance policy issued under the

21 contract meets—

22 ‘‘(A) the requirements of the model regula23 tion and model Act described in paragraph (2),

24 ‘‘(B) the disclosure requirement of para25 graph (3),
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1 ‘‘(C) the requirements relating to

2 nonforfeitability under paragraph (4), and

3 ‘‘(D) the requirements relating to rate sta4 bilization under paragraph (5).

5 ‘‘(2) REQUIREMENTS OF MODEL REGULATION

6 AND ACT.—

7 ‘‘(A) IN GENERAL.—The requirements of

8 this paragraph are met with respect to any pol9 icy if such policy meets—

10 ‘‘(i) MODEL REGULATION.—The fol11 lowing requirements of the model regula12 tion:

13 ‘‘(I) Section 7A (relating to guar14 anteed renewal or noncancellability),

15 and the requirements of section 6B of

16 the model Act relating to such section

17 7A.

18 ‘‘(II) Section 7B (relating to pro19 hibitions on limitations and exclu20 sions).

21 ‘‘(III) Section 7C (relating to ex22 tension of benefits).

23 ‘‘(IV) Section 7D (relating to

24 continuation or conversion of cov25 erage).
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1 ‘‘(V) Section 7E (relating to dis2 continuance and replacement of poli3 cies).

4 ‘‘(VI) Section 8 (relating to unin5 tentional lapse).

6 ‘‘(VII) Section 9 (relating to dis7 closure), other than section 9F there8 of.

9 ‘‘(VIII) Section 10 (relating to

10 prohibitions against post-claims un11 derwriting).

12 ‘‘(IX) Section 11 (relating to

13 minimum standards).

14 ‘‘(X) Section 12 (relating to re15 quirement to offer inflation protec16 tion), except that any requirement for

17 a signature on a rejection of inflation

18 protection shall permit the signature

19 to be on an application or on a sepa20 rate form.

21 ‘‘(XI) Section 23 (relating to pro22 hibition against preexisting conditions

23 and probationary periods in replace24 ment policies or certificates).
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1 ‘‘(ii) MODEL ACT.—The following re2 quirements of the model Act:

3 ‘‘(I) Section 6C (relating to pre4 existing conditions).

5 ‘‘(II) Section 6D (relating to

6 prior hospitalization).

7 ‘‘(B) DEFINITIONS.—For purposes of this

8 paragraph—

9 ‘‘(i) MODEL PROVISIONS.—The terms

10 ‘model regulation’ and ‘model Act’ mean

11 the long-term care insurance model regula12 tion, and the long-term care insurance

13 model Act, respectively, promulgated by

14 the National Association of Insurance

15 Commissioners (as adopted in January of

16 1993).

17 ‘‘(ii) COORDINATION.—Any provision

18 of the model regulation or model Act listed

19 under clause (i) or (ii) shall be treated as

20 including any other provision of such regu21 lation or Act necessary to implement the

22 provision.

23 ‘‘(3) TAX DISCLOSURE REQUIREMENT.—The re24 quirement of this paragraph is met with respect to
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1 any policy if such policy meets the requirements of

2 section 4980C(e)(1).

3 ‘‘(4) NONFORFEITURE REQUIREMENTS.—

4 ‘‘(A) IN GENERAL.—The requirements of

5 this paragraph are met with respect to any level

6 premium long-term care insurance policy, if the

7 issuer of such policy offers to the policyholder,

8 including any group policyholder, a

9 nonforfeiture provision.

10 ‘‘(B) REQUIREMENTS OF PROVISION.—The

11 nonforfeiture provision required under subpara12 graph (A) shall meet the following require13 ments:

14 ‘‘(i) The nonforfeiture provision shall

15 be appropriately captioned.

16 ‘‘(ii) The nonforfeiture provision shall

17 provide for a benefit available in the event

18 of a default in the payment of any pre19 miums and the amount of the benefit may

20 be adjusted subsequent to being initially

21 granted only as necessary to reflect

22 changes in claims, persistency, and interest

23 as reflected in changes in rates for pre24 mium paying policies approved by the Sec25 retary for the same policy form.
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1 ‘‘(iii) The nonforfeiture provision shall

2 provide at least one of the following:

3 ‘‘(I) Reduced paid-up insurance.

4 ‘‘(II) Extended term insurance.

5 ‘‘(III) Shortened benefit period.

6 ‘‘(IV) Other similar offerings ap7 proved by the Secretary.

8 ‘‘(5) RATE STABILIZATION.—

9 ‘‘(A) IN GENERAL.—The requirements of

10 this paragraph are met with respect to any

11 long-term care insurance policy, including any

12 group master policy, if—

13 ‘‘(i) such policy contains the minimum

14 rate guarantees specified in subparagraph

15 (B), and

16 ‘‘(ii) the issuer of such policy meets

17 the requirements specified in subparagraph

18 (C).

19 ‘‘(B) MINIMUM RATE GUARANTEES.—The

20 minimum rate guarantees specified in this sub21 paragraph are as follows:

22 ‘‘(i) Rates under the policy shall be

23 guaranteed for a period of at least 3 years

24 from the date of issue of the policy.
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1 ‘‘(ii) After the expiration of the 3-year

2 period required under clause (i), any rate

3 increase shall be guaranteed for a period of

4 at least 2 years from the effective date of

5 such rate increase.

6 ‘‘(iii) In the case of any individual age

7 75 or older who has maintained coverage

8 under a long-term care insurance policy for

9 10 years, rate increases under such policy

10 shall not exceed 10 percent in any 12-

11 month period.

12 ‘‘(C) INCREASES IN PREMIUMS.—The re13 quirements specified in this subparagraph are

14 as follows:

15 ‘‘(i) IN GENERAL.—If an issuer of any

16 long-term care insurance policy, including

17 any group master policy, plans to increase

18 the premium rates for a policy, such issuer

19 shall, at least 90 days before the effective

20 date of the rate increase, offer to each in21 dividual policyholder under such policy the

22 option to remain insured under the policy

23 at a reduced level of benefits which main24 tains the premium rate at the rate in effect
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1 on the day before the effective date of the

2 rate increase.

3 ‘‘(ii) INCREASES OF MORE THAN 50

4 PERCENT.—

5 ‘‘(I) IN GENERAL.—If an issuer

6 of any long-term care insurance pol7 icy, including any group master pol8 icy, increases premium rates for a pol9 icy by more than 50 percent in any 3-

10 year period—

11 ‘‘(aa) in the case of a group

12 master long-term care insurance

13 policy, the issuer shall dis14 continue issuing all group master

15 long-term care insurance policies

16 in any State in which the issuer

17 issues such policy for a period of

18 2 years from the effective date of

19 such premium increase; and

20 ‘‘(bb) in the case of an indi21 vidual long-term care insurance

22 policy, the issuer shall dis23 continue issuing all individual

24 long-term care policies in any

25 State in which the issuer issues
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1 such policy for a period of 2

2 years from the effective date of

3 such premium increase.

4 ‘‘(II) APPLICABILITY.—Subclause

5 (I) shall apply to any issuer of long6 term care insurance policies or any

7 other person that purchases or other8 wise acquires any long-term care in9 surance policies from another issuer

10 or person.

11 ‘‘(C) MODIFICATIONS OR WAIVERS OF RE12 QUIREMENTS.—The Secretary may modify or

13 waive any of the requirements under this para14 graph if—

15 ‘‘(i) such requirements will adversely

16 affect an issuer’s solvency;

17 ‘‘(ii) such modification or waiver is re18 quired for the issuer to meet other State or

19 Federal requirements;

20 ‘‘(iii) medical developments, new dis21 abling diseases, changes in long-term care

22 delivery, or a new method of financing

23 long-term care will result in changes to

24 mortality and morbidity patterns or as25 sumptions;
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1 ‘‘(iv) judicial interpretation of a pol2 icy’s benefit features results in unintended

3 claim liabilities; or

4 ‘‘(v) in the case of a purchase or other

5 acquisition of long-term care insurance

6 policies of an issuer or other person, the

7 continued sale of other long-term care in8 surance policies by the purchasing issuer

9 or person is in the best interests of individ10 ual consumers.

11 ‘‘(6) LONG-TERM CARE INSURANCE POLICY DE12 FINED.—For purposes of this subsection, the term

13 ‘long-term care insurance policy’ has the meaning

14 given such term by section 4980C(f).’’.

15 (b) CONFORMING AMENDMENT.—Section

16 7702B(b)(1)(B) (as added by section 202) is amended by

17 inserting ‘‘and of subsection (h)’’ after ‘‘and (4)’’.

18 SEC. 212. ADDITIONAL REQUIREMENTS FOR ISSUERS OF

19 LONG-TERM CARE INSURANCE POLICIES.

20 (a) IN GENERAL.—Chapter 43 is amended by adding

21 at the end the following new section:

22 ‘‘SEC. 4980C. FAILURE TO MEET REQUIREMENTS FOR LONG23 TERM CARE INSURANCE POLICIES.

24 ‘‘(a) GENERAL RULE.—There is hereby imposed on

25 any person failing to meet the requirements of subsection
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1 (c), (d), or (e) a tax in the amount determined under sub2 section (b).

3 ‘‘(b) AMOUNT OF TAX.—

4 ‘‘(1) IN GENERAL.—The amount of the tax im5 posed by subsection (a) shall be $100 per policy for

6 each day any requirements of subsection (c), (d), or

7 (e) are not met with respect to each long-term care

8 insurance policy.

9 ‘‘(2) WAIVER.—In the case of a failure which is

10 due to reasonable cause and not to willful neglect,

11 the Secretary may waive part or all of the tax im12 posed by subsection (a) to the extent that payment

13 of the tax would be excessive relative to the failure

14 involved.

15 ‘‘(c) PROHIBITION OF SALE OR ISSUANCE TO BENE16 FICIARIES UNDER PART A OF TITLE XXI OF THE SOCIAL

17 SECURITY ACT.—The requirement of this subsection is

18 met if a person does not knowingly sell or issue a long19 term care insurance policy to an individual who is eligible

20 for medical assistance under part A of title XXI of the

21 Social Security Act.

22 ‘‘(d) ADDITIONAL RESPONSIBILITIES.—The require23 ments of this subsection are as follows:

24 ‘‘(1) REQUIREMENTS OF MODEL PROVISIONS.—
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1 ‘‘(A) MODEL REGULATION.—The following

2 requirements of the model regulation must be

3 met:

4 ‘‘(i) Section 13 (relating to application

5 forms and replacement coverage).

6 ‘‘(ii) Section 14 (relating to reporting

7 requirements), except that the issuer shall

8 also report at least annually the number of

9 claims denied during the reporting period

10 for each class of business (expended as a

11 percentage of claims denied), other than

12 claims denied for failure to meet the wait13 ing period or because of any applicable

14 pre-existing condition.

15 ‘‘(iii) Section 20 (relating to filing re16 quirements for marketing).

17 ‘‘(iv) Section 21 (relating to standards

18 for marketing), including inaccurate com19 pletion of medical histories, other than sec20 tion 21C(1) and 21C(6) thereof, except

21 that—

22 ‘‘(I) in addition to such require23 ments, no person shall, in selling or

24 offering to sell a long-term care insur-
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1 ance policy, misrepresent a material

2 fact; and

3 ‘‘(II) no such requirements shall

4 include a requirement to inquire or

5 identify whether a prospective appli6 cant or enrollee for long-term care in7 surance has accident and sickness in8 surance.

9 ‘‘(v) Section 22 (relating to appro10 priateness of recommended purchase).

11 ‘‘(vi) Section 24 (relating to standard

12 format outline of coverage).

13 ‘‘(vii) Section 25 (relating to require14 ment to deliver shopper’s guide).

15 ‘‘(B) MODEL ACT.—The following require16 ments of the model Act must be met:

17 ‘‘(i) Section 6F (relating to right to

18 return), except that such section shall also

19 apply to denials of applications and any re20 fund shall be made within 30 days of the

21 return or denial.

22 ‘‘(ii) Section 6G (relating to outline of

23 coverage).

24 ‘‘(iii) Section 6H (relating to require25 ments for certificates under group plans).
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1 ‘‘(iv) Section 6I (relating to policy

2 summary).

3 ‘‘(v) Section 6J (relating to monthly

4 reports on accelerated death benefits).

5 ‘‘(vi) Section 7 (relating to incontest6 ability period).

7 ‘‘(C) DEFINITIONS.—For purposes of this

8 paragraph, the terms ‘model regulation’ and

9 ‘model Act’ have the meanings given such terms

10 by section 7702B(g)(2)(B).

11 ‘‘(2) DELIVERY OF POLICY.—If an application

12 for a long-term care insurance policy (or for a cer13 tificate under a group long-term care insurance pol14 icy) is approved, the issuer shall deliver to the appli15 cant (or policyholder or certificate-holder) the policy

16 (or certificate) of insurance not later than 30 days

17 after the date of the approval.

18 ‘‘(3) INFORMATION ON DENIALS OF CLAIMS.—

19 If a claim under a long-term care insurance policy

20 is denied, the issuer shall, within 60 days of the date

21 of a written request by the policyholder or certifi22 cate-holder (or representative)—

23 ‘‘(A) provide a written explanation of the

24 reasons for the denial, and
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1 ‘‘(B) make available all information di2 rectly relating to such denial.

3 ‘‘(e) DISCLOSURE.—The requirements of this sub4 section are met if either of the following statements,

5 whichever is applicable, is prominently displayed on the

6 front page of any long-term care insurance policy and in

7 the outline of coverage required under subsection

8 (d)(1)(B)(ii):

9 ‘‘(1) A statement that: ‘This policy is intended

10 to be a qualified long-term care insurance contract

11 under section 7702B(b) of the Internal Revenue

12 Code of 1986.’.

13 ‘‘(2) A statement that: ‘This policy is not in14 tended to be a qualified long-term care insurance

15 contract under section 7702B(b) of the Internal

16 Revenue Code of 1986.’.

17 ‘‘(f) LONG-TERM CARE INSURANCE POLICY DE18 FINED.—For purposes of this section, the term ‘long-term

19 care insurance policy’ means any product which is adver20 tised, marketed, or offered as long-term care insurance.’’

21 (b) CONFORMING AMENDMENT.—The table of sec22 tions for chapter 43 is amended by adding at the end the

23 following new item:

‘‘Sec. 4980C. Failure to meet requirements for long-term care insurance policies.’’
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1 SEC. 213. COORDINATION WITH STATE REQUIREMENTS.

2 Nothing in this title shall be construed as preventing

3 a State from applying standards that provide greater pro4 tection of policyholders of long-term care insurance poli5 cies (as defined in section 4980C(f) of the Internal Reve6 nue Code of 1986).

7 SEC. 214. UNIFORM LANGUAGE AND DEFINITIONS.

8 (a) IN GENERAL.—The National Association of In9 surance Commissioners shall not later than January 1,

10 1995, promulgate standards for the use of uniform lan11 guage and definitions in long-term care insurance policies

12 (as defined in section 4980C(f) of the Internal Revenue

13 Code of 1986).

14 (b) VARIATIONS.—Standards under subsection (a)

15 may permit the use of nonuniform language to the extent

16 required to take into account differences among States in

17 the licensing of nursing facilities and other providers of

18 long-term care.

19 SEC. 215. EFFECTIVE DATES.

20 (a) SECTION 211.—The amendments made by section

21 211 shall apply to contracts issued after the date of the

22 enactment of this Act, except that the provisions of section

23 203(c) of this Act shall apply to such contracts.

24 (b) SECTION 212.—The amendments made by sec25 tion 212 shall apply to actions taken after December 31,

26 1993.
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