I 

114TH CONGRESS 

2D SESSION H. R. 5284 

To eliminate the individual and employer health coverage mandates under 

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

Act the choices in obtaining and financing affordable health insurance 

coverage, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 19, 2016 

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

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

subsequently determined by the Speaker, in each case for consideration 

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

A BILL 

To eliminate the individual and employer health coverage 

mandates under the Patient Protection and Affordable 

Care Act, to expand beyond that Act the choices in 

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

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


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

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

4 ‘‘World’s Greatest Healthcare Plan Act of 2016’’. 

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

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

10 requirements, imposed under Patient Protection and 

11 Affordable Care Act. 

12 (2) PROVIDING STATES WITH ALTERNATIVE, 

13 AFFORDABLE COVERAGE OPTIONS.—To provide 

14 greater flexibility in providing States with options in 

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

17 while retaining essential consumer protections, by 

18 promoting health savings accounts to pay for such 

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

21 PPACA. 

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

23 this Act is as follows: 

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

Sec. 2. Definitions. 

TITLE I—REVISIONS OF PPACA 

Subtitle A—Elimination of Individual and Employer Mandates 


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Sec. 101. Repeal of individual health insurance mandate. 

Sec. 102. Repeal of employer health insurance mandate. 

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

purchase of individual health insurance coverage. 

Subtitle B—Limitation on Application of PPACA Plan Requirements 

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

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

or attachment or seizure. 

Subtitle C—Universal Health Insurance Tax Benefit 

Sec. 131. Universal health insurance tax benefit. 

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

health care. 

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

an HSA. 

TITLE II—IMPROVING HEALTH SAVINGS ACCOUNTS TO PROMOTE 

ACCOUNTABILITY 

Sec. 201. Transition to non-deductible HSAs. 

Sec. 202. Elimination of medical expense deduction. 

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

Sec. 204. Treatment of concierge medicine. 

TITLE III—STATE FLEXIBILITY IN REGULATION OF HEALTH 

INSURANCE COVERAGE 

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

TITLE IV—MEDICAID PAYMENT REFORM 

Sec. 401. Medicaid payment reform. 

TITLE V—INCREASING PRICE TRANSPARENCY AND FREEDOM OF 

PRACTICE 

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

out-of-network services. 

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

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

1 SEC. 2. DEFINITIONS. 

2 Except as otherwise provided, in this Act: 

3 (1) BASIC HEALTH INSURANCE.—The term 

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

5 122(a). 


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

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

5 an Exchange established under title I of PPACA. 

6 (4) HEALTH INSURANCE COVERAGE; GROUP

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

8 2791 of the Public Health Service Act, including 

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

10 and ‘‘individual market’’, shall apply. 

11 (5) LIMITED BENEFIT INSURANCE.—The term 

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

13 122(b). 

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

15 Patient Protection and Affordable Care Act (Public 

16 Law 111–148). 

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

18 the Secretary of Health and Human Services. 

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

20 District of Columbia, Puerto Rico, the United States 

21 Virgin Islands, American Samoa, Guam, and the 

22 Northern Mariana Islands. 


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1 TITLE I—REVISIONS OF PPACA 

2 Subtitle A—Elimination of 

3 Individual and Employer Mandates 

4 SEC. 101. REPEAL OF INDIVIDUAL HEALTH INSURANCE 

5 MANDATE. 

6 Section 5000A of the Internal Revenue Code of 1986 

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

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

10 with respect to any month beginning more than 30 days 

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

12 Healthcare Plan Act of 2016.’’. 

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

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

17 (1) by striking section 4980H; and 

18 (2) by striking the item relating to section 

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

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

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

24 table of sections for such subpart. 

25 (c) CONFORMING AMENDMENTS.— 


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

2 amended— 

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

4 (xxiii); 

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

6 (xxiv) and inserting a period; and 

7 (C) by striking clause (xxv). 

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

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

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

13 (3) Section 1513 of the Patient Protection and 

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

16 (d) EFFECTIVE DATES.— 

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

19 this section shall apply to months and other periods 

20 beginning more than 30 days after the date of the 

21 enactment of this Act. 

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

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


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

4 COVERAGE. 

5 An employer health care arrangement, such as a 

6 health or medical reimbursement arrangement (HRA) or 

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

9 individual health insurance coverage does not constitute 

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

12 (1) The Public Health Service Act (including 

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

14 300gg–11, 300gg–14). 

15 (2) The Patient Protection and Affordable Care 

16 Act. 

17 (3) The Internal Revenue Code of 1986. 

18 (4) The Employee Retirement Income Security 

19 Act of 1974. 

20 (5) The HIPAA privacy regulations (as defined 

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

22 U.S.C. 1320d–9(b)(3)). 

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

25 (7) COBRA continuation coverage under title 

26 XXII of the Public Health Service Act, section 


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1 4980B of the Internal Revenue Code of 1986, or 

2 title VI of the Employee Retirement Income Security 

3 Act of 1974. 

4 Subtitle B—Limitation on Applica5 tion of PPACA Plan Require6 ments 

7 SEC. 121. LIMITING APPLICATION OF REQUIREMENTS TO 

8 CONSUMER PROTECTIONS. 

9 (a) REMOVAL OF PPACA PLAN REQUIREMENTS, 

10 OTHER THAN CERTAIN CONSUMER PROTECTIONS.— 

11 (1) IN GENERAL.—Notwithstanding any other 

12 provision of law, with respect to group health plans 

13 and health insurance coverage whether or not of14 fered through an Exchange, except as provided in 

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

16 XXVII of the Public Health Service Act as in effect 

17 before the date of the enactment of PPACA shall 

18 apply instead of the provisions of such title as in ef19 fect after such date. 

20 (2) PPACA CONSUMER PROTECTIONS CON21 TINUING TO BE APPLIED.—The following sections of 

22 the Public Health Service Act, that were added or 

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

24 shall continue to apply to group health plans and to 


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1 health insurance coverage offered in the individual 

2 and group market: 

3 (A) NO LIFETIME OR ANNUAL LIMITS.— 

4 Section 2711 (relating to no lifetime or annual 

5 limits), except in the case of limited benefit in6 surance (as defined in section 122(b)). 

7 (B) DEPENDENT COVERAGE THROUGH

8 AGE 26.—Section 2714 (relating to extension of 

9 dependent coverage). 

10 (C) MODIFIED GUARANTEED AVAIL11 ABILITY.—Section 2702 (relating to guaranteed 

12 availability of coverage), subject to paragraph 

13 (3) and subsection (c). 

14 (D) GUARANTEED RENEWABILITY.—Sec15 tion 2703 (relating to guaranteed renewability 

16 of coverage). 

17 (E) PROHIBITING PRE-EXISTING CONDI18 TION EXCLUSIONS.—Section 2704 (relating to 

19 prohibition on preexisting conditions). 

20 (F) PROHIBITING DISCRIMINATION BASED

21 ON HEALTH STATUS.—Section 2705 (relating to 

22 prohibiting discrimination against individual 

23 participants and beneficiaries based on health 

24 status), subject to subsection (c). 


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1 (G) NON-DISCRIMINATION IN HEALTH

2 CARE.—Section 2706 (relating to non-discrimi3 nation in health care). 

4 (3) APPLICATION OF A LATE ENROLLMENT

5 PENALTY FOR THOSE WITHOUT CONTINUOUS COV6 ERAGE.— 

7 (A) IN GENERAL.—In the case of an indi8 vidual who seeks to enroll in health insurance 

9 coverage and who, as of the effective date of 

10 such enrollment, does not have a continuous pe11 riod of at least 12 months of creditable cov12 erage, there shall be imposed a late enrollment 

13 penalty in the form of an increase in the 

14 monthly premiums for coverage of under the 

15 plan of 20 percent of the monthly premium oth16 erwise determined for each consecutive full 12- 

17 month period (ending before such effective 

18 date) in which the individual was not enrolled 

19 in creditable coverage. Such increase shall apply 

20 during a period, to be specified under regula21 tions of the Secretary but in no case longer 

22 than 3 times the length of the most recent pe23 riod in which the individual did not have contin24 uous coverage. 


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

2 to the Secretary for a waiver of the provisions 

3 of subparagraph (A) and the application of al4 ternative provisions providing incentives for 

5 State residents to enroll in creditable coverage 

6 and maintain continuous creditable coverage. 

7 The Secretary shall approve such waiver if the 

8 Secretary determines that the alternative provi9 sions provide similar or greater incentives for 

10 such enrollment than the incentives otherwise 

11 applicable. 

12 (4) COORDINATING IMPLEMENTATION OF PRE13 PPACA PHSA PROVISIONS WITH PPACA CONSUMER

14 PROTECTIONS.— 

15 (A) IN GENERAL.—In applying this sub16 section, the provisions described in paragraph 

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

18 title XXVII of the Public Health Service Act, 

19 as in effect before the date of enactment of 

20 PPACA, and, with respect to group health 

21 plans and health insurance coverage offered in 

22 connection with such plans, in part 7 of subtitle 

23 B of title I of the Employee Retirement and In24 come Security Act of 1974, and, with respect to 


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1 group health plans, in chapter 100 of the Inter2 nal Revenue Code of 1986 as follows: 

3 (i) LIFETIME LIMITS; DEPENDENT

4 COVERAGE.—The provisions described in 

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

6 treated as included— 

7 (I) with respect to group health 

8 plans (and health insurance coverage 

9 offered with respect to such plans), 

10 under subpart 2 of part A of title 

11 XXVII of the Public Health Service 

12 Act and subpart B of part 7 of sub13 title B of title I of the Employee Re14 tirement and Income Security Act of 

15 1974; 

16 (II) also with respect to group 

17 health plans, under subchapter B of 

18 chapter 100 of the Internal Revenue 

19 Code of 1986; and 

20 (III) with respect to individual 

21 health insurance coverage, under sub22 part 2 of part B of title XXVII of the 

23 Public Health Service Act. 

24 (ii) REMAINING PROVISIONS.—The 

25 provision described in paragraph (2) (other 


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

2 paragraph) shall be treated as included— 

3 (I) with respect to group health 

4 plans (and health insurance coverage 

5 offered with respect to such plans), 

6 under subpart 1 of part A of title 

7 XXVII of the Public Health Service 

8 Act and subpart A of part 7 of sub9 title B of title I of the Employee Re10 tirement and Income Security Act of 

11 1974; 

12 (II) also with respect to group 

13 health plans, under subchapter A of 

14 chapter 100 of the Internal Revenue 

15 Code of 1986; and 

16 (III) with respect to individual 

17 health insurance coverage, under sub18 part 1 of part B of title XXVII of the 

19 Public Health Service Act. 

20 (B) CONFLICTING PROVISIONS.—In the 

21 case described in paragraph (1) where there is 

22 a conflict between a provision described in para23 graph (2) and a provision of law described in 

24 paragraph (1), the provision described in para25 graph (2) shall control and the Secretary, in 


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1 consultation with the Secretary of the Treasury 

2 and the Secretary of Labor, shall establish such 

3 rules as may be necessary to carry out this sub4 paragraph. 

5 (5) CONFORMING AMENDMENTS.— 

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

7 Retirement Income Security Act of 1974 (29 

8 U.S.C. 1185d) is amended— 

9 (i) in subsection (a), by striking ‘‘sub10 section (b)’’ and inserting ‘‘subsections (b) 

11 and (c)’’; and 

12 (ii) by adding at the end the following 

13 new subsection: 

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

15 121 of the World’s Greatest Healthcare Plan Act of 2016, 

16 the provisions of part A of title XXVII of the Public 

17 Health Service Act referred to in subsection (a), other 

18 than those provisions specified in section 121(a)(2) of the 

19 World’s Greatest Healthcare Plan Act of 2016, shall not 

20 apply to plans and coverage described in subsection (a), 

21 whether or not the plans or coverage are offered through 

22 an Exchange established under the Patient Protection and 

23 Affordable Care Act.’’. 

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

25 Revenue Code of 1986 is amended— 


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1 (i) in subsection (a), by striking ‘‘sub2 section (b)’’ and inserting ‘‘subsections (b) 

3 and (c)’’; and 

4 (ii) by adding at the end the following 

5 new subsection: 

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

7 121 of the World’s Greatest Healthcare Plan Act of 2016, 

8 the provisions of part A of title XXVII of the Public 

9 Health Service Act referred to in subsection (a), other 

10 than those provisions specified in section 121(a)(2) of the 

11 World’s Greatest Healthcare Plan Act of 2016, shall not 

12 apply to plans described in subsection (a).’’. 

13 (b) STATE FLEXIBILITY IN ENSURING ORDERLY

14 HEALTH INSURANCE MARKET OUTSIDE OF AN EX15 CHANGE.— 

16 (1) IN GENERAL.—With respect to health insur17 ance coverage offered in a State, the State may, in 

18 consultation with the Secretary, take such steps, 

19 such as limiting the availability of general open en20 rollment periods, imposing delays in the effectiveness 

21 for coverage, permitting differentials in premiums 

22 based on age and other factors, as the State deter23 mines necessary in order to ensure an orderly mar24 ket for health insurance coverage in the State that 

25 is not offered through an Exchange. Such steps may 


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1 include the establishment of such initial open enroll2 ment period during which qualified residents may 

3 enroll in health insurance coverage without the im4 position of any underwriting as the State determines 

5 to be appropriate in ensuring initial access to such 

6 coverage. 

7 (2) FLEXIBILITY IN IMPOSING ADDITIONAL RE8 QUIREMENTS.—Nothing in this section shall be con9 strued as preventing a State from continuing to 

10 apply, to health insurance coverage issued in the 

11 State, requirements under the provisions of title 

12 XXVII of the Public Health Service Act (as amend13 ed by subtitles A and C of title I of PPACA) that 

14 are not continued under subsection (a). 

15 (3) STATE FLEXIBILITY WITH RESPECT TO EX16 CHANGES.—A State may waive such provisions of 

17 part II of subtitle D of title I of PPACA, in relation 

18 to the establishment of an Exchange in such State, 

19 as the State determines appropriate in order for the 

20 State to implement and administer a market-based 

21 system for the availability of health insurance cov22 erage throughout the State. 

23 (4) STATE DEFAULT ENROLLMENT OPTION.— 

24 (A) ENROLLMENT, SUBJECT TO INDI25 VIDUAL OPT-OUT.—Subject to subparagraph 


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1 (D), a State may elect to provide for the enroll2 ment of residents of the State who are unin3 sured in default health insurance coverage (as 

4 defined in subparagraph (B)) and establishing a 

5 Roth HSA for such residents who do not have 

6 a Roth HSA unless the resident has affirma7 tively elected not to be so enrolled and not to 

8 have such an account. respectively. If a State 

9 makes such an election, the State shall permit 

10 eligible residents to enroll in such coverage on 

11 a continuous basis. 

12 (B) DEFAULT HEALTH INSURANCE COV13 ERAGE DEFINED.—In this paragraph, the term 

14 ‘‘default health insurance coverage’’ means, 

15 with respect to a State, health insurance cov16 erage that— 

17 (i) is a high deductible health plan 

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

19 the Internal Revenue Code of 1986) with 

20 prescription drug coverage limited to ge21 neric drugs for a limited number of chronic 

22 conditions (commonly referred to as tier I 

23 pharmacy benefit); 

24 (ii) meets such requirements as may 

25 apply to qualify for the payment of plan 


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1 premiums from a health savings account 

2 under section 223 of such Code (such as 

3 age-related premiums and limitation on 

4 imposition of preexisting condition exclu5 sions); 

6 (iii) has a provider network for cov7 ered benefits that is adequate (as deter8 mined consistent with guidelines issued by 

9 the Secretary) to ensure access to health 

10 benefits under such plan; 

11 (iv) provides for coverage of childhood 

12 immunizations without cost sharing re13 quirements to the extent such immuniza14 tions have in effect a recommendation 

15 from the Advisory Committee on Immuni16 zation Practices of the Centers for Disease 

17 Control and Prevention with respect to the 

18 individual involved; and 

19 (v) meets such other requirements as 

20 the State may specify. 

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

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

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

24 Revenue Code of 1986. 


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1 (D) SIMPLE PROCESS FOR INDIVIDUALS TO

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

3 for the enrollment function described in sub4 paragraph (A), the State must establish an 

5 easy-to-use and transparent means by which in6 dividuals may elect not to be enrolled in default 

7 health insurance coverage or to have a Roth 

8 HSA established on the individual’s behalf, or 

9 both. 

10 (c) INAPPLICABILITY OF REQUIRED ESSENTIAL

11 HEALTH BENEFITS.— 

12 (1) IN GENERAL.—Notwithstanding any other 

13 provision of law, no health benefits plan shall be re14 quired by reason of Federal law to comply with the 

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

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

17 (2) STATE FLEXIBILITY.—Nothing in this sub18 section shall be construed as preventing a State 

19 from applying, at its option with respect to health 

20 insurance coverage offered through an Exchange or 

21 otherwise in the State, the requirements referred to 

22 in paragraph (1). 

23 (d) EFFECTIVE DATE; TRANSITION.— 


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

2 shall apply to plan years beginning after the date of 

3 the enactment of this Act. 

4 (2) SUNSETTING REQUIRED CONTRIBUTION FOR

5 ACA REINSURANCE PROGRAM.—No contribution shall 

6 be required under section 1341 of PPACA (42 

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

8 insurance issuer for portions of plans years occur9 ring in months beginning more than 30 days after 

10 the date of the enactment of this Act. 

11 (e) SECRETARIAL GUIDANCE.—The Secretary of 

12 Health and Human Services, in coordination with the Sec13 retary of Labor and the Secretary of the Treasury, shall 

14 provide such guidance as may be necessary for the coordi15 nated implementation of this section on a timely basis. 

16 (f) TRANSFERRING HEALTH PLAN RECORDS UPON

17 CHANGING PLANS.— 

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

19 who is covered under health insurance coverage or as 

20 a beneficiary or participant in a group health plan 

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

22 Public Health Service Act), if such coverage is ended 

23 and the individual obtains other health insurance 

24 coverage, group health plan coverage, or other cred25 itable coverage (as defined for purposes of title 


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1 XXVII of such Act), the issuer of the prior coverage 

2 or administrator of the prior plan shall forward in3 formation respecting such prior coverage to the 

4 issuer of the new coverage or administrator of the 

5 new plan or coverage, as the case may be, subject 

6 to such rules as the Secretary establishes regarding 

7 the right of the beneficiary or participant to object 

8 to such forwarding of information. 

9 (2) TREATMENT AS PLAN REQUIREMENT

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

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

12 under part A of title XXVII of the Public Health 

13 Service Act, including for purposes of applying sec14 tion 715 of the Employee Retirement Income Secu15 rity Act of 1976 (29 U.S.C. 1185d) and section 

16 9815 of the Internal Revenue Code of 1986. 

17 (g) APPLICATION OF RISK ADJUSTMENT.— 

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

19 insurance coverage in the individual market in any 

20 of the 50 States or the District of Columbia shall 

21 participate in a risk adjustment mechanism under 

22 this subsection with respect to any health insurance 

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

24 such coverage is offered through an Exchange. 


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1 (2) FORM AND DESIGN OF RISK ADJUSTMENT

2 MECHANISM.—The Secretary shall, in consultation 

3 with the National Association of Insurance Commis4 sioners and other interested parties, develop a mech5 anism to permit the adjustment of risk among 

6 health insurance coverage offered in the individual 

7 market throughout the 50 States and the District of 

8 Columbia. Such mechanism shall be designed to ef9 fect the same type of risk adjustment among such 

10 coverage that is applicable to risk adjustment of 

11 payments among Medicare Advantage organizations 

12 under part C of title XVIII of the Social Security 

13 Act. 

14 (3) TRANSITION FOR NEW COVERAGE.—The 

15 mechanism developed under paragraph (2) shall pro16 vide for transitional protection, over a 3-year period, 

17 in the case of health insurance coverage that has not 

18 been previously marketed. 

19 (4) DEVELOPMENT OF FURTHER RISK ADJUST20 MENT MECHANISM.—The Secretary shall request the 

21 National Association of Insurance Commissioners to 

22 develop a permanent model for adjustment of risk 

23 among health insurance issuers with respect to 

24 health insurance coverage offered in the individual 

25 market, with the intention that such a model would 


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1 substitute for the mechanism developed under para2 graph (2). 

3 (5) TREATMENT AS PLAN REQUIREMENT

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

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

6 under part A of title XXVII of the Public Health 

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

10 9815 of the Internal Revenue Code of 1986. 

11 SEC. 122. OFFERING OF BASIC HEALTH INSURANCE; PRO12 TECTION OF ASSETS FROM LIABILITY OR AT13 TACHMENT OR SEIZURE. 

14 (a) REQUIREMENT FOR EXCHANGES.— 

15 (1) IN GENERAL.—No tax credit shall be allow16 able under section 36B or 36C of the Internal Rev17 enue Code of 1986 for residents of a State unless 

18 any Exchange established in the State provides for 

19 the offering of basic health insurance in all areas of 

20 the State. 

21 (2) BASIC HEALTH INSURANCE DEFINED.—In 

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

23 means, with respect to a State, such health insur24 ance coverage as the State may specify and includes 


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1 limited benefit insurance (as defined in subsection 

2 (b)). 

3 (b) LIMITED BENEFIT INSURANCE DEFINED.— 

4 (1) IN GENERAL.—In this title, the term ‘‘lim5 ited benefit insurance’’ means individual health in6 surance coverage that, with respect to a plan year, 

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

8 limit on the amounts that may be payable under the 

9 coverage with respect to expenses incurred for items 

10 and services furnished in that plan year. 

11 (2) SPECIFICATION OF ANNUAL LIMIT; VARI12 ATION IN LIMIT FOR INDIVIDUAL AND FAMILY COV13 ERAGE.—The Secretary shall specify, from year to 

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

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

16 limit may distinguish between coverage that is only 

17 provided for an individual and coverage that is pro18 vided also for family members of the individual. 

19 (c) PROTECTION OF CERTAIN ASSETS IN CASE OF

20 INDIVIDUALS COVERED UNDER LIMITED BENEFIT IN21 SURANCE.— 

22 (1) IN GENERAL.—Notwithstanding any other 

23 provision of law, if an individual is covered under 

24 limited benefit insurance for a plan year and bene25 fits under such insurance have reached the annual 


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1 limit under such insurance for items and services 

2 furnished in the plan year, the individual is not lia3 ble for debt incurred and arising from the provision 

4 of subsequently furnished items and services during 

5 the plan year, regardless of whether benefits are oth6 erwise covered for such items and services under 

7 such policy, insofar as the liability attributable to 

8 such items and services exceeds— 

9 (A) the bankruptcy valuation of the indi10 vidual’s property at the time the debt is in11 curred; reduced by 

12 (B) such annual limit of benefits under the 

13 limited benefit insurance for the plan year. 

14 Property in the amount so protected from liability 

15 shall be exempt and immune from attachment or sei16 zure with respect to any judgment related to such 

17 debt. 

18 (2) BANKRUPTCY VALUATION DEFINED.—In 

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

20 means, with respect to property of an individual as 

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

22 as determined as if the individual were a debtor in 

23 a bankruptcy case that could have been filed under 

24 title 11 of the United States Code and the property 

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


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1 (3) NO REQUIREMENT FOR PROVIDERS TO FUR2 NISH SUBSEQUENT SERVICES WITHOUT ENSURING

3 PAYMENT.—Except as may be explicitly provided in 

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

5 Security Act, popularly known as EMTALA), a 

6 health care provider is not required to furnish any 

7 items or services to an individual who has exhausted 

8 benefits under limited benefit insurance for a plan 

9 year without the individual (or another person on 

10 the individual’s behalf) providing for such advance 

11 or guarantee of payment for such items and services 

12 as may be arranged between the health care provider 

13 and the individual. 

14 Subtitle C—Universal Health 

15 Insurance Tax Benefit 

16 SEC. 131. UNIVERSAL HEALTH INSURANCE TAX BENEFIT. 

17 (a) IN GENERAL.—Subpart C of part IV of sub18 chapter A of chapter 1 of the Internal Revenue Code of 

19 1986 is amended by inserting after section 36B the fol20 lowing new section: 

21 ‘‘SEC. 36C. UNIVERSAL HEALTH INSURANCE TAX CREDIT. 

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

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

24 against the tax imposed by this subtitle for any taxable 


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1 year an amount equal to the universal health credit 

2 amount of the taxpayer for the taxable year. 

3 ‘‘(b) UNIVERSAL HEALTH CREDIT AMOUNT.—For 

4 purposes of this section— 

5 ‘‘(1) IN GENERAL.—The term ‘universal health 

6 credit amount’ means the sum of the amounts deter7 mined under paragraph (2) with respect to all 

8 months of the taxpayer for the taxable year. 

9 ‘‘(2) MONTHLY CREDIT AMOUNT.— 

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

11 (4), the amount determined under this para12 graph with respect to any month shall be an 

13 amount equal to the sum of— 

‘‘(i) 1 14 ⁄12 of $2,500 in the case of any 

15 month the first day of which the taxpayer 

16 is a qualified resident and is covered by 

17 creditable coverage (twice such amount in 

18 the case of a joint return if both spouses 

19 are so covered by creditable coverage and 

20 are qualified residents), plus 

‘‘(ii) 1 21 ⁄12 of an amount equal to 

22 $1,500 multiplied by the number of quali23 fying children (within the meaning of sec24 tion 152) who are qualified residents 

25 and— 


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1 ‘‘(I) for whom the taxpayer is al2 lowed a deduction under section 151 

3 for the taxable year in which such 

4 month ends, and 

5 ‘‘(II) who are covered by cred6 itable coverage on the first day of 

7 such month. 

8 ‘‘(B) CARRYFORWARD OF MONTHLY CRED9 IT AMOUNT IN CASE CREDIT AMOUNT EXCEEDS

10 HSA CONTRIBUTIONS AND PREMIUM PAY11 MENTS.—In the case of any month for which 

12 the credit amount determined with respect to 

13 the taxpayer under subparagraph (A) exceeds 

14 the limitation amount determined with respect 

15 to the taxpayer for such month under para16 graph (3), such excess may be carried forward 

17 to any subsequent month during the taxable 

18 year for purposes of determining the credit 

19 amount for such month under this paragraph. 

20 ‘‘(3) MONTHLY LIMITATION.— 

21 ‘‘(A) IN GENERAL.—The amount deter22 mined under paragraph (2) for any month of 

23 the taxpayer shall not exceed the sum of— 


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1 ‘‘(i) the amounts contributed to a 

2 health savings account of the taxpayer for 

3 such month, plus 

4 ‘‘(ii) the premiums paid by the tax5 payer for creditable coverage. 

6 ‘‘(B) CARRYFORWARD OF MONTHLY LIMI7 TATION IN CASE HSA CONTRIBUTIONS AND PRE8 MIUM PAYMENTS EXCEED MONTHLY CREDIT

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

10 the amount determined with respect to the tax11 payer under subparagraph (A) exceeds the cred12 it amount determined with respect to the tax13 payer for such month under paragraph (2), 

14 such excess may be carried forward to any sub15 sequent month during the taxable year for pur16 poses of determining the limitation under sub17 paragraph (A). 

18 ‘‘(4) ADJUSTMENT FOR LIMITED BENEFIT IN19 SURANCE.—In the case of a taxpayer whose only 

20 health insurance coverage for a month is limited 

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

22 World’s Greatest Healthcare Plan Act of 2016), the 

23 amount determined under paragraph (2) shall be de24 creased by such proportion as the Secretary, in con25 sultation with the Secretary of Health and Human 


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1 Services, determines appropriate, taking into ac2 count the ratio of the actuarial value of such limited 

3 benefit insurance to the average actuarial value of 

4 health insurance coverage that is not limited benefit 

5 insurance. 

6 ‘‘(5) ADJUSTMENT FOR GEOGRAPHIC AREA AND

7 AGE OF COVERED INDIVIDUAL.—The amount deter8 mined under paragraph (2) shall be adjusted, in a 

9 manner specified by the Secretary, in consultation 

10 with and based on data collected by the Secretary of 

11 Health and Human Services, to take into account, 

12 for a taxpayer or other covered individual of an age 

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

14 of typical individual health insurance coverage for an 

15 individual of such age and residing in such area to 

16 the national average cost of such typical health in17 surance coverage. Such adjustment shall be made in 

18 a manner so that the application of this paragraph 

19 is estimated not to change the aggregate amount of 

20 the credits allowable under this section for taxable 

21 years ending in a year. 

22 ‘‘(c) COORDINATION WITH EMPLOYER-PROVIDED

23 HEALTH INSURANCE TAX SUBSIDY.— 

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

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1 lowed under this section for any taxable year shall 

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

3 of— 

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

5 allowed for all months of the taxpayer during 

6 the taxable year (determined under subsection 

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

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

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

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

11 health insurance tax subsidy for the taxable 

12 year. 

13 ‘‘(2) RECAPTURE OF EXCESS EMPLOYER-PRO14 VIDED HEALTH INSURANCE TAX SUBSIDY.—In the 

15 case of any taxpayer with respect to whom for any 

16 taxable year the amount described in subparagraph 

17 (B) of paragraph (1) exceeds the amount described 

18 in subparagraph (A) of such paragraph, the credit 

19 allowed under this section shall be treated as zero 

20 and the tax imposed by this chapter for the taxable 

21 year shall be increased by the amount of such ex22 cess. 

23 ‘‘(3) EMPLOYER-PROVIDED HEALTH INSURANCE

24 TAX SUBSIDY.—For purposes of this subsection— 


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1 ‘‘(A) IN GENERAL.—The term ‘employer2 provided health insurance tax subsidy’ means, 

3 with respect to any taxpayer for a taxable year, 

4 the sum of— 

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

6 the taxpayer for the taxable year, plus 

7 ‘‘(ii) the Federal payroll tax subsidy 

8 of the taxpayer for the taxable year. 

9 ‘‘(B) FEDERAL INCOME TAX SUBSIDY.— 

10 The term ‘Federal income tax subsidy’ means, 

11 with respect to any taxpayer for the taxable 

12 year, the excess (if any) of— 

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

14 have been imposed by this chapter for the 

15 taxable year had such tax been determined 

16 without regard to this section and by in17 cluding amounts otherwise excluded from 

18 gross income which were paid by or on be19 half of the taxpayer for employer-provided 

20 insurance that constitutes medical care, 

21 over 

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

23 this chapter for the taxable year (deter24 mined without regard to this section). 


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

2 The term ‘Federal payroll tax subsidy’ means, 

3 with respect to any taxpayer for the taxable 

4 year, the excess (if any) of— 

5 ‘‘(i) the sum of— 

6 ‘‘(I) the amount of tax that 

7 would have been imposed by chapter 

8 21 with respect to any wages of the 

9 taxpayer paid during the taxable year 

10 had such tax been determined by in11 cluding amounts otherwise excluded 

12 from wages which were paid by or on 

13 behalf of the taxpayer during the tax14 able year for employer-provided insur15 ance that constitutes medical care, 

16 plus 

17 ‘‘(II) the amount of tax that 

18 would have been imposed by chapter 2 

19 on any self-employment income of the 

20 taxpayer for such taxable year had 

21 self-employment income been deter22 mined without regard to any deduc23 tion from gross income for amounts 

24 paid for insurance which constitutes 

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1 payer’s spouse, and any qualifying 

2 children (within the meaning of sec3 tion 152) for whom the taxpayer is al4 lowed a deduction under section 151 

5 for the taxable year, over 

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

7 respect to the taxpayer during such taxable 

8 year under chapter 21 and for such taxable 

9 year under chapter 2. 

10 ‘‘(4) NO CREDIT OR RECAPTURE FOR INSUR11 ANCE PROVIDED BY EMPLOYER ELECTING EXCLU12 SION REGIME.—In the case of an individual who for 

13 any month is covered by insurance that constitutes 

14 medical care and that is provided by an employer 

15 with respect to which an election is in effect for such 

16 month under section 131(b) of the World’s Greatest 

17 Healthcare Plan Act of 2016— 

18 ‘‘(A) the monthly credit amount deter19 mined under subsection (b)(2) for such month 

20 with respect to such individual shall be zero, 

21 and 

22 ‘‘(B) such month shall not be taken into 

23 account for purposes of determining any recap24 ture under paragraph (2) with respect to such 

25 individual. 


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1 ‘‘(d) RECONCILIATION OF CREDIT AND ADVANCE

2 CREDIT.— 

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

4 allowed under this section for any taxable year (after 

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

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

7 advance payment of such credit under subsection 

8 (e)(1). 

9 ‘‘(2) EXCESS ADVANCE PAYMENTS.— 

10 ‘‘(A) IN GENERAL.—If the advance pay11 ments to a taxpayer under subsection (e)(1) for 

12 a taxable year exceed the credit allowed by this 

13 section (determined without regard to para14 graph (1)), the tax imposed by this chapter for 

15 the taxable year shall be increased by the 

16 amount of such excess. 

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

18 case of a taxpayer whose household income is 

19 less than 400 percent of the poverty line for the 

20 size of the family involved for the taxable year, 

21 the amount of the increase under subparagraph 

22 (A) shall in no event exceed the applicable dol23 lar amount determined in accordance with the 

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


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1 case of a taxpayer whose tax is determined 

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

‘‘If the household income (expressed as a percent of 

poverty line) is: 

The applicable dollar amount 

is: 

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

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

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

3 ‘‘(e) SPECIAL RULES.—For purposes of this sec4 tion— 

5 ‘‘(1) ADVANCE PAYMENT PROGRAM.— 

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

7 Treasury, in consultation with the Secretary of 

8 Health and Human Services, shall establish a 

9 program— 

10 ‘‘(i) to make advance determinations 

11 with respect to the eligibility of individuals 

12 for the credit allowed under this section, 

13 and 

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

15 credit allowed under this section, at the 

16 election of any such individual so eligible, 

17 directly to the health savings account of 

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

19 cost of health insurance coverage provided 

20 to any such individual, to the health insur21 ance issuer providing such coverage or the 


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1 person that administers the plan benefits 

2 with respect to such coverage. 

3 ‘‘(B) PROGRAM REQUIREMENTS.—Such 

4 program shall be established under rules similar 

5 to the rules of section 1412 of the Patient Pro6 tection and Affordable Care Act, as in effect on 

7 the day before the date of the enactment of this 

8 section, except that advance determinations and 

9 advance payments shall be made on request of 

10 the individual with respect to whom the deter11 mination is to be made. 

12 ‘‘(2) INFORMATION REQUIREMENTS.— 

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

14 health insurance coverage which constitutes 

15 medical care, and each trustee of a health sav16 ings account, shall provide the following infor17 mation to the Secretary and to the taxpayer 

18 with respect to such coverage or such account: 

19 ‘‘(i) The total premium for the cov20 erage without regard to the credit under 

21 this section. 

22 ‘‘(ii) The aggregate amount of any ad23 vance payment of such credit made with 

24 respect to such coverage or to such ac25 count. 


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

2 TIN of the primary insured or account 

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

4 age, and TIN of each other individual ob5 taining coverage under such policy of in6 surance. 

7 ‘‘(iv) Any information provided to 

8 such person necessary to determine eligi9 bility for, and the amount of, such credit. 

10 ‘‘(v) Information necessary to deter11 mine whether a taxpayer has received ex12 cess advance payments. 

13 ‘‘(B) EXCEPTION.—Subparagraph (A) 

14 shall not apply to any coverage with respect to 

15 which reporting under section 6051 is required. 

16 ‘‘(3) INDEXING.— 

17 ‘‘(A) IN GENERAL.—In the case of any cal18 endar year beginning after 2016, each of the 

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

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

21 be equal to such dollar amount multiplied by 

22 the ratio of— 

23 ‘‘(i) the current dollar gross domestic 

24 product (as determined based on the third 

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1 ysis of the Department of Commerce for 

2 the second quarter of the previous year), to 

3 ‘‘(ii) the current dollar gross domestic 

4 product (as so determined) for the second 

5 quarter of 2015. 

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

7 change under subparagraph (A) is not a mul8 tiple of $50, such change shall be rounded to 

9 the next lowest multiple of $50. 

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

11 ‘‘(1) CREDITABLE COVERAGE.—The term ‘cred12 itable coverage’ has the meaning given such term for 

13 purposes of title XXVII of the Public Health Service 

14 Act. 

15 ‘‘(2) QUALIFIED RESIDENT.—The term ‘quali16 fied resident’ means an individual who is a citizen or 

17 national of the United States or otherwise lawfully 

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

19 (b) ELECTION BY EMPLOYER TO MAKE EXCISE TAX

20 APPLICABLE AND TO BE GOVERNED SOLELY BY EXCLU21 SION REGIME.— 

22 (1) IN GENERAL.—If an eligible employer 

23 makes the election under this subsection (at such 

24 time and in such form and manner as the Secretary 

25 shall prescribe) the tax imposed by section 4980I of 


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1 the Internal Revenue Code of 1986 shall apply to 

2 any excess benefit with respect to employer-spon3 sored health coverage provided by such employer and 

4 the credit and recapture under section 36C of such 

5 Code shall not apply with respect to individuals cov6 ered by such coverage. Such election, once made, 

7 may be revoked only with the consent of the Sec8 retary. 

9 (2) ELIGIBLE EMPLOYER.—For purposes of 

10 this subsection, the term ‘‘eligible employer’’ means 

11 an employer in existence before the date of the en12 actment of this Act. 

13 (3) CONTROLLED GROUPS.—For purposes of 

14 this subsection, all persons treated as a single em15 ployer under subsection (a) or (b) of section 52 of 

16 the Internal Revenue Code of 1986 or subsection 

17 (m) or (o) of section 414 of such Code shall be 

18 treated as a single covered entity. 

19 (4) REGULATIONS.—The Secretary of the 

20 Treasury shall prescribe such regulations as may be 

21 necessary to prevent the avoidance of the purposes 

22 of this subsection. 

23 (c) EXCISE TAX ON HIGH COST EMPLOYER-SPON24 SORED HEALTH INSURANCE ONLY TO APPLY TO EM25 PLOYERS MAKING ELECTION.—Section 4980I(d)(1)(B) of 


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1 such Code (relating to exceptions) is amended by striking 

2 ‘‘or’’ at the end of clause (ii), by striking the period at 

3 the end of clause (iii) and inserting ‘‘, or’’, and by adding 

4 at the end the following new clause: 

5 ‘‘(iv) any group health plan made 

6 available by an employer which does not 

7 have in effect an election under section 

8 131(b) of the World’s Greatest Healthcare 

9 Plan Act of 2016.’’. 

10 (d) DISQUALIFICATION FROM EXCHANGE PLAN SUB11 SIDIES FOR INDIVIDUAL ONCE THEY ELECT TAX BENE12 FITS.—Section 36B(c)(1) of such Code is amended by 

13 adding at the end the following new subparagraph: 

14 ‘‘(E) DENIAL OF CREDIT FOR THOSE

15 ELECTING UNIVERSAL CREDIT.—In the case of 

16 an individual who is allowed a credit under sec17 tion 36C for any taxable year, no credit shall be 

18 allowed under this section to such individual for 

19 such taxable year or any subsequent taxable 

20 year.’’. 

21 (e) GUIDANCE.—The Secretary of the Treasury shall 

22 issue such guidance as is necessary— 

23 (1) to assist employees and employers in adjust24 ing Federal income tax withholding to take into ac25 count the universal health insurance tax credit under 


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1 section 36C of the Internal Revenue Code of 1986 

2 (and any advance payment thereof), and 

3 (2) to require employers to report to each em4 ployee with respect to periods not longer than quar5 terly the employer-provided health insurance tax 

6 subsidy (as defined in section 36C(c)(3) of such 

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

8 (f) CLERICAL AMENDMENT.—The table of sections 

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

10 of the Internal Revenue Code of 1986 is amended by in11 serting after the item relating to section 36B the following 

12 new item: 

‘‘Sec. 36C. Universal health insurance tax credit.’’. 

13 (g) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2015. 

16 SEC. 132. APPLICATION OF PORTION OF UNUSED TAX 

17 CREDITS BY STATES FOR INDIGENT HEALTH 

18 CARE. 

19 (a) COMPUTATION OF UNUSED CREDITS.—The Sec20 retary, in consultation with the Secretary of the Treasury, 

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

22 2017, using the most recent data available— 

23 (1) the maximum aggregate amount of credits 

24 under section 36C of the Internal Revenue Code of 

25 1986 that would have been allowed for the year for 


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1 qualified residents of the State for taxable years 

2 ending in the year if all eligible qualified residents 

3 had qualified for such credits; 

4 (2) the aggregate amount of credits under such 

5 section that were allowed for taxable years ending in 

6 that the year by qualified residents of such State; 

7 and 

8 (3) 25 percent of the amount by which— 

9 (A) the amount determined under para10 graph (1) with respect to qualified residents of 

11 the State for such year; exceeds 

12 (B) the amount determined under para13 graph (2) for such State for that year. 

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

15 grants to States under this section, there is hereby appro16 priated to the Secretary, out of any funds in the Treasury 

17 not otherwise appropriated, for each year (beginning with 

18 2017) an amount equivalent to the amount determined 

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

20 for the year in which such fiscal year ends, subject to ad21 justment under subsection (d)(2). 

22 (c) GRANTS TO STATES FOR INDIGENT ASSIST23 ANCE.— 

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

25 Secretary (in a form and manner specified by the 


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1 Secretary) an application to provide assistance in 

2 furnishing health services to indigent individuals re3 siding in the State. Such application shall dem4 onstrate the manner in which such assistance is fur5 nished in an equitable manner to individuals residing 

6 in all parts of the State. 

7 (2) AMOUNT OF FUNDS.—From the funds ap8 propriated under subsection (b) for a year, the 

9 amount of funds paid to any State in any year 

10 under this section with an application filed in ac11 cordance with paragraph (1) is equal to an amount 

12 specified in the application, but not to exceed the 

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

14 State and the year. 

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

16 under this subsection may be used only to assist in 

17 the furnishing of health services to uninsured indi18 viduals residing in the State or for purposes of in19 creasing the payment adjustments made under sec20 tions 1886(d)(5)(F) and 1923 of the Social Security 

21 Act (42 U.S.C. 1395ww(d)(5)(F), 1396r–4) to hos22 pitals that serve a disproportionate share of such in23 dividuals in the State. 

24 (d) INITIAL ESTIMATE; FINAL CALCULATION AND

25 RECONCILIATION.— 


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1 (1) USE OF ESTIMATES.—The calculations 

2 under subsection (a) for a year shall initially be esti3 mated before the beginning of the year. Payments 

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

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

6 based on the amount so estimated. 

7 (2) RECONCILIATION BASED ON FINAL CAL8 CULATION.—The calculations under subsection (a) 

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

10 year. Insofar as the amount calculated under this 

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

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

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

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

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

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

17 shall be reduced or increased, respectively by the 

18 amount of such excess or deficit. 

19 SEC. 133. MEDICAID OPTION OF ENROLLMENT UNDER PRI20 VATE PLAN AND CONTRIBUTION TO AN HSA. 

21 (a) IN GENERAL.—Notwithstanding any other provi22 sion of law, a State plan under title XIX of the Social 

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

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

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


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

2 assistance otherwise provided, medical assistance con3 sisting of coverage under a health plan that qualifies for 

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

5 Code of 1986, but only if the State provides for the indi6 vidual medical assistance, in the form of a deposit into 

7 a health savings account for the individual, an amount 

8 equivalent to the amount by which the amount of tax cred9 it for the individual under such section exceeds the cost 

10 of coverage of the individual under the plan. 

11 (b) FFP TREATMENT.—The payments by a State de12 scribed in subsection (a) for coverage under a health plan 

13 and for deposit into a health savings account shall be 

14 treated as medical assistance for purposes of section 1903 

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

16 to Federal financial participating, including the applica17 tion of State matching payments, in the same manner as 

18 other medical assistance furnished under title XIX of such 

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

20 amount of any health insurance credits provided under 

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

22 respect to such coverage or deposit. 


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1 TITLE II—IMPROVING HEALTH 

2 SAVINGS ACCOUNTS TO PRO3 MOTE ACCOUNTABILITY 

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

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

6 chapter 1 of the Internal Revenue Code of 1986 is amend7 ed by adding at the end the following new part: 

8 ‘‘PART IX—HEALTH SAVINGS ACCOUNTS 

‘‘Sec. 530A. Roth HSAs. 

9 ‘‘SEC. 530A. ROTH HSAS. 

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

11 from taxation under this subtitle. Notwithstanding the 

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

13 taxes imposed by section 511 (relating to imposition of 

14 tax on unrelated business income of charitable organiza15 tions). No deduction shall be allowed for any contribution 

16 to a Roth HSA. 

17 ‘‘(b) DOLLAR LIMITATION.— 

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

19 contributions for any taxable year to all Roth HSAs 

20 maintained for the benefit of an individual shall not 

21 exceed the sum of the monthly limitations for month 

22 during such taxable year that the individual is an el23 igible individual. 


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

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

4 who has self-only creditable coverage as of the 

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

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

7 who has family creditable coverage as of the 

8 first day of such month, the amount in effect 

9 under subparagraph (A) for the taxable year 

10 multiplied by the number of individuals (includ11 ing the eligible individual) covered under such 

12 family creditable coverage as of such day. 

13 ‘‘(3) ADDITIONAL CONTRIBUTIONS FOR INDI14 VIDUALS 55 OR OLDER.—In the case of an individual 

15 who has attained age 55 before the close of the tax16 able year, the applicable limitation under subpara17 graphs (A) and (B) of paragraph (2) shall be in18 creased by $1,000. 

19 ‘‘(4) COORDINATION WITH OTHER CONTRIBU20 TIONS.—The limitation which would (but for this 

21 paragraph) apply under this subsection to an indi22 vidual for any taxable year shall be reduced (but not 

23 below zero) by the sum of— 

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

25 taxable year to Archer MSAs of such individual, 


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1 ‘‘(B) the aggregate amount contributed to 

2 Roth HSAs of such individual which is exclud3 able from the taxpayer’s gross income for such 

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

5 amount shall not be allowed as a deduction 

6 under subsection (a)), and 

7 ‘‘(C) the aggregate amount contributed to 

8 Roth HSAs of such individual for such taxable 

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

10 shall not be allowed as a deduction under sub11 section (a)). 

12 Subparagraph (A) shall not apply with respect to 

13 any individual to whom paragraph (5) applies. 

14 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVID15 UALS.—In the case of individuals who are married 

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

17 ‘‘(A) both spouses shall be treated as hav18 ing only such family coverage (and if such 

19 spouses each have family coverage under dif20 ferent plans, as having the family coverage with 

21 the lowest annual deductible), and 

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

23 (after the application of subparagraph (A) and 

24 without regard to any additional contribution 

25 amount under paragraph (3))— 


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

2 amount paid to Archer MSAs of such 

3 spouses for the taxable year, and 

4 ‘‘(ii) after such reduction, shall be di5 vided equally between them unless they 

6 agree on a different division. 

7 ‘‘(6) DENIAL OF DEDUCTION TO DEPEND8 ENTS.—No contribution may be made to a Roth 

9 HSA under this section by any individual with re10 spect to whom a deduction under section 151 is al11 lowable to another taxpayer for a taxable year begin12 ning in the calendar year in which such individual’s 

13 taxable year begins. 

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

15 limitation under this subsection for any month with 

16 respect to an individual shall be zero for the first 

17 month such individual is entitled to benefits under 

18 title XVIII of the Social Security Act and for each 

19 month thereafter. 

20 ‘‘(8) INCREASE IN LIMIT FOR INDIVIDUALS BE21 COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN22 NING OF THE YEAR.— 

23 ‘‘(A) IN GENERAL.—For purposes of com24 puting the limitation under paragraph (1) for 

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1 ble individual during the last month of such 

2 taxable year shall be treated— 

3 ‘‘(i) as having been an eligible indi4 vidual during each of the months in such 

5 taxable year, and 

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

7 each of the months such individual is 

8 treated as an eligible individual solely by 

9 reason of clause (i), in the same high de10 ductible health plan in which the individual 

11 was enrolled for the last month of such 

12 taxable year. 

13 ‘‘(B) FAILURE TO MAINTAIN CREDITABLE

14 COVERAGE.— 

15 ‘‘(i) IN GENERAL.—If, at any time 

16 during the testing period, the individual is 

17 not an eligible individual, then— 

18 ‘‘(I) gross income of the indi19 vidual for the taxable year in which 

20 occurs the first month in the testing 

21 period for which such individual is not 

22 an eligible individual is increased by 

23 the aggregate amount of all contribu24 tions to the Roth HSA of the indiVerDate Sep 11 2014 18:49 May 23, 2016 Jkt 059200 PO 00000 Frm 00051 Fmt 6652 Sfmt 6201 E:\BILLS\H5284.IH H5284

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1 vidual which could not have been 

2 made but for subparagraph (A), and 

3 ‘‘(II) the tax imposed by this 

4 chapter for any taxable year on the 

5 individual shall be increased by 10 

6 percent of the amount of such in7 crease. 

8 ‘‘(ii) EXCEPTION FOR DISABILITY OR

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

10 (i) shall not apply if the individual ceased 

11 to be an eligible individual by reason of the 

12 death of the individual or the individual 

13 becoming disabled (within the meaning of 

14 section 72(m)(7)). 

15 ‘‘(iii) TESTING PERIOD.—The term 

16 ‘testing period’ means the period beginning 

17 with the last month of the taxable year re18 ferred to in subparagraph (A) and ending 

19 on the last day of the 12th month fol20 lowing such month. 

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

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

23 means a trust created or organized in the United 

24 States as a Roth HSA exclusively for the purpose of 

25 paying the qualified medical expenses of the account 


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1 beneficiary, but only if the written governing instru2 ment creating the trust meets the following require3 ments: 

4 ‘‘(A) Except in the case of a rollover con5 tribution described in subsection (f)(5) or sec6 tion 220(f)(5), no contribution will be accept7 ed— 

8 ‘‘(i) unless it is in cash, or 

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

10 when added to previous contributions to 

11 the trust for the calendar year, exceeds the 

12 sum of— 

13 ‘‘(I) the dollar amount in effect 

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

15 ‘‘(II) the dollar amount in effect 

16 under subsection (b)(3). 

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

18 section 408(n)), an insurance company (as de19 fined in section 816), or another person who 

20 demonstrates to the satisfaction of the Sec21 retary that the manner in which such person 

22 will administer the trust will be consistent with 

23 the requirements of this section. 

24 ‘‘(C) No part of the trust assets will be in25 vested in life insurance contracts. 


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

2 commingled with other property except in a 

3 common trust fund or common investment 

4 fund. 

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

6 balance in his account is nonforfeitable. 

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

8 purposes of this section— 

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

10 medical expenses’ means, with respect to an ac11 count beneficiary, amounts paid by such bene12 ficiary for medical care (as defined in section 

13 213(d) as in effect on the day before the date 

14 of the enactment of the World’s Greatest 

15 Healthcare Plan Act of 2016) for such indi16 vidual, the spouse of such individual, and any 

17 dependent (as defined in section 152, deter18 mined without regard to subsections (b)(1), 

19 (b)(2), and (d)(1)(B) thereof) of such indi20 vidual, but only to the extent such amounts are 

21 not compensated for by insurance or otherwise. 

22 ‘‘(B) LIMITATION ON HEALTH INSURANCE

23 PURCHASED FROM ACCOUNT.—Such term shall 

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1 erage that is not creditable coverage (as defined 

2 in section 36C). 

3 ‘‘(C) EXCEPTIONS.—Subparagraph (B) 

4 shall not apply to any expense for coverage 

5 under— 

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

7 of continuation coverage required under 

8 any Federal law, 

9 ‘‘(ii) a qualified long-term care insur10 ance contract (as defined in section 

11 7702B(b)), 

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

13 which the individual is receiving unemploy14 ment compensation under any Federal or 

15 State law, or 

16 ‘‘(iv) in the case of an account bene17 ficiary who has attained the age specified 

18 in section 1811 of the Social Security Act, 

19 any health insurance other than a medi20 care supplemental policy (as defined in sec21 tion 1882 of the Social Security Act). 

22 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac23 count beneficiary’ means the individual on whose be24 half the Roth HSA was established. 


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

2 to the following rules shall apply for purposes of this 

3 section: 

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

5 when contributions deemed made). 

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

7 section 219(f)(5) (relating to employer pay8 ments). 

9 ‘‘(C) Section 408(g) (relating to commu10 nity property laws). 

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

12 accounts). 

13 ‘‘(d) ELIGIBLE INDIVIDUAL; CREDITABLE COV14 ERAGE.—For purposes of this section— 

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

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

17 individual if such individual is covered under cred18 itable coverage as of the 1st day of such month. 

19 ‘‘(2) CREDITABLE COVERAGE.—The term ‘cred20 itable coverage’ shall have the meaning given such 

21 term in section 36C(f). 

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

23 ‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL

24 EXPENSES.—Any amount paid or distributed out of 

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1 fied medical expenses of any account beneficiary 

2 shall not be includible in gross income. 

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

4 QUALIFIED MEDICAL EXPENSES.—Any amount paid 

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

6 exclusively to pay the qualified medical expenses of 

7 the account beneficiary shall be included in the gross 

8 income of such beneficiary. 

9 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE10 FORE DUE DATE OF RETURN.— 

11 ‘‘(A) IN GENERAL.—If any excess con12 tribution is contributed for a taxable year to 

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

14 shall not apply to distributions from the Roth 

15 HSAs of such individual (to the extent such dis16 tributions do not exceed the aggregate excess 

17 contributions to all such accounts of such indi18 vidual for such year) if— 

19 ‘‘(i) such distribution is received by 

20 the individual on or before the last day 

21 prescribed by law (including extensions of 

22 time) for filing such individual’s return for 

23 such taxable year, and 


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1 ‘‘(ii) such distribution is accompanied 

2 by the amount of net income attributable 

3 to such excess contribution. 

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

5 included in the gross income of the individual 

6 for the taxable year in which it is received. 

7 ‘‘(B) EXCESS CONTRIBUTION.—For pur8 poses of subparagraph (A), the term ‘excess 

9 contribution’ means any contribution (other 

10 than a rollover contribution described in para11 graph (5) or section 220(f)(5)) which exceeds 

12 the contribution limitation with respect to the 

13 individual for the taxable year. 

14 ‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT

15 USED FOR QUALIFIED MEDICAL EXPENSES.— 

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

17 this chapter on the account beneficiary for any 

18 taxable year in which there is a payment or dis19 tribution from a Roth HSA of such beneficiary 

20 which is includible in gross income under para21 graph (2) shall be increased by 10 percent of 

22 the amount which is so includible. 

23 ‘‘(B) EXCEPTION FOR DISABILITY OR

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

25 the payment or distribution is made after the 


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1 account beneficiary becomes disabled within the 

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

3 ‘‘(C) EXCEPTION FOR DISTRIBUTIONS

4 AFTER MEDICARE ELIGIBILITY.—Subparagraph 

5 (A) shall not apply to any payment or distribu6 tion after the date on which the account bene7 ficiary attains the age specified in section 1811 

8 of the Social Security Act. 

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

10 described in this paragraph as a rollover contribu11 tion if it meets the requirements of subparagraphs 

12 (A) and (B). 

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

14 not apply to any amount paid or distributed 

15 from a health savings account (as defined in 

16 section 223) or a Roth HSA to the account 

17 beneficiary to the extent the amount received is 

18 paid into a Roth HSA for the benefit of such 

19 beneficiary not later than the 60th day after 

20 the day on which the beneficiary receives the 

21 payment or distribution. 

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

23 not apply to any amount described in subpara24 graph (A) received by an individual from a 

25 health savings account or a Roth HSA if, at 


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

2 day of such receipt, such individual received any 

3 other amount described in subparagraph (A) 

4 from a health savings account or Roth HSA 

5 which was not includible in the individual’s 

6 gross income because of the application of this 

7 paragraph. 

8 ‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI9 VORCE.—The transfer of an individual’s interest in 

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

11 spouse under a divorce or separation instrument de12 scribed in subparagraph (A) of section 71(b)(2) shall 

13 not be considered a taxable transfer made by such 

14 individual notwithstanding any other provision of 

15 this subtitle, and such interest shall, after such 

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

17 which such spouse is the account beneficiary. 

18 ‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT

19 BENEFICIARY.—If an individual acquires an account 

20 beneficiary’s interest in a health savings account by 

21 reason of the death of the account beneficiary, such 

22 health savings account shall be treated as if the indi23 vidual were the account beneficiary. 

24 ‘‘(f) COST-OF-LIVING ADJUSTMENT.— 


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

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

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

4 equal to— 

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

6 ‘‘(B) the cost-of-living adjustment deter7 mined under section 1(f)(3) for the calendar 

8 year, determined— 

9 ‘‘(i) by substituting ‘calendar year 

10 2015’ for ‘calendar year 1992’ in subpara11 graph (B) thereof, and 

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

13 component’ for ‘CPI’. 

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

15 purposes of this paragraph, the term ‘CPI medical 

16 care component’ means the medical care component 

17 for the Consumer Price Index for All Urban Con18 sumers published by the Department of Labor. 

19 ‘‘(3) ROUNDING.—If the amount of any in20 crease under the preceding sentence is not a mul21 tiple of $50, such increase shall be rounded to the 

22 next lowest multiple of $50. 

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

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

25 reports regarding such account to the Secretary and 


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1 to the account beneficiary with respect to contribu2 tions, distributions, the return of excess contribu3 tions, and such other matters as the Secretary deter4 mines appropriate, and 

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

6 creditable coverage to make such reports to the Sec7 retary and to the account beneficiary with respect to 

8 such plan as the Secretary determines appropriate. 

9 The reports required by this subsection shall be filed at 

10 such time and in such manner and furnished to such indi11 viduals at such time and in such manner as may be re12 quired by the Secretary.’’. 

13 (b) LIMIT ON CONTRIBUTIONS TO DEDUCTIBLE

14 HEALTH SAVINGS ACCOUNTS.—Section 223 of such Code 

15 is amended by adding at the end the following new sub16 section: 

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

18 ‘‘(1) IN GENERAL.—No contribution may be ac19 cepted by a health savings account after December 

20 31, 2016. 

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

22 apply— 

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

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

25 220(f)(5), or 


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

2 individual is covered by insurance that con3 stitutes medical care and that is provided by an 

4 employer with respect to which an election is in 

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

6 the World’s Greatest Healthcare Plan Act of 

7 2016.’’. 

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

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

10 adding at the end the following new item: 

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

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

12 this section shall apply to taxable years beginning after 

13 December 31, 2016. 

14 SEC. 202. ELIMINATION OF MEDICAL EXPENSE DEDUCTION. 

15 Section 213 of the Internal Revenue Code of 1986 

16 is amended by adding at the end the following new sub17 section: 

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

19 care premiums (as defined in subsection (d)(10)), sub20 section (a) shall not apply to any amounts paid during 

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

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

23 BENEFICIARY. 

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

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


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1 ‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT

2 BENEFICIARY.—If an individual acquires an account 

3 beneficiary’s interest in a health savings account by 

4 reason of the death of the account beneficiary, such 

5 health savings account shall be treated as if the indi6 vidual were the account beneficiary.’’. 

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

8 this section shall apply with respect to interests acquired 

9 after the date of the enactment of this Act. 

10 SEC. 204. TREATMENT OF CONCIERGE MEDICINE. 

11 (a) HSAS.— 

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

13 Internal Revenue Code of 1986, as added by this 

14 Act, is amended by adding at the end the following: 

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

16 or other prepaid amount for the furnishing (or ac17 cess to the furnishing) by a physician or group of 

18 physicians of physician professional services (and an19 cillary services).’’. 

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

21 is amended by adding at the end the following: 

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

23 or other prepaid amount for the furnishing (or ac24 cess to the furnishing) by a physician or group of 


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1 physicians of physician professional services (and an2 cillary services).’’. 

3 (b) NOT TREATED AS HEALTH INSURANCE COV4 ERAGE.— 

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

6 of the Public Health Service Act, subtitle B of title 

7 I of the Employee Retirement and Income Security 

8 Act of 1974, PPACA, and this Act, the offering of 

9 concierge medicine shall not be treated as the offer10 ing of health insurance coverage and shall not be 

11 subject to regulations as such coverage under such 

12 Acts. 

13 (2) CONCIERGE MEDICINE DEFINED.—In this 

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

15 furnishing (or access to the furnishing) by a physi16 cian or group of physicians of physician professional 

17 services (and ancillary services) in return for pay18 ment of a monthly or other prepaid amount. 

19 TITLE III—STATE FLEXIBILITY 

20 IN REGULATION OF HEALTH 

21 INSURANCE COVERAGE 

22 SEC. 301. STATE FLEXIBILITY IN REGULATION OF HEALTH 

23 INSURANCE COVERAGE. 

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

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


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1 health insurance marketplace, without regard to many of 

2 the requirements imposed under PPACA, in order to pro3 mote freedom of choice of affordable health insurance cov4 erage options offered outside of an Exchange. 

5 (b) CONSTRUCTION.—Nothing in the Employee Re6 tirement and Income Security Act of 1974 or of any 

7 amendments made by the Health Insurance Portability 

8 and Accountability Act of 1996 shall be interpreted as pre9 venting an employer from offering, or making an employer 

10 contribution towards, individual health insurance coverage 

11 for employees and dependent family members. 

12 TITLE IV—MEDICAID PAYMENT 

13 REFORM 

14 SEC. 401. MEDICAID PAYMENT REFORM. 

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

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

17 section 1903 the following section: 

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

19 ‘‘(a) REFORMED PAYMENT SYSTEM.— 

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

21 or after the implementation date (as defined in sub22 section (k)(1)), in lieu of amounts otherwise payable 

23 to a State under this title (including any payments 

24 attributable to section 1923), except as otherwise 


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1 provided in this section, the amount payable to such 

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

3 ‘‘(A) ADJUSTED AGGREGATE BENE4 FICIARY-BASED AMOUNT.—The aggregate bene5 ficiary-based amount specified in subsection (b) 

6 for the quarter and the State, adjusted under 

7 subsection (e). 

8 ‘‘(B) CHRONIC CARE QUALITY BONUS.— 

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

10 bonus payment specified in subsection (f) for 

11 the quarter for the State. 

12 ‘‘(2) REQUIREMENT OF STATE SHARE.— 

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

14 from non-Federal funds, expenditures in an 

15 amount equal to its State share (as determined 

16 under subparagraph (B)) for a quarter for 

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

18 for paragraph (1), Federal funds would have 

19 been payable under this title. 

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

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

22 to the product of— 

23 ‘‘(i) the aggregate beneficiary-based 

24 amount specified in subsection (b) for the 

25 quarter and the State; and 


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1 ‘‘(ii) the ratio of— 

2 ‘‘(I) the State percentage de3 scribed in subparagraph (D)(ii) for 

4 such State and fiscal year; to 

5 ‘‘(II) the Federal percentage de6 scribed in subparagraph (D)(i) for 

7 such State and fiscal year. 

8 ‘‘(C) NONPAYMENT FOR FAILURE TO PAY

9 STATE SHARE.— 

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

11 expend the amount required under sub12 paragraph (A) for a quarter in a fiscal 

13 year, the amount payable to the State 

14 under paragraph (1) shall be reduced by 

15 the product of the amount by which the 

16 State payment is less than the State share 

17 and the ratio of— 

18 ‘‘(I) the Federal percentage de19 scribed in subparagraph (D)(i) for 

20 such State and fiscal year; to 

21 ‘‘(II) the State percentage de22 scribed in subparagraph (D)(ii) for 

23 such State and fiscal year. 

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

25 not be considered to have failed to provide 


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1 payment of its required State share for a 

2 quarter under subparagraph (A) if the ag3 gregate State payment towards the State’s 

4 required State share for the 4-quarter pe5 riod beginning with such quarter exceeds 

6 the required State share amount for such 

7 4-quarter period. 

8 ‘‘(D) FEDERAL AND STATE PERCENT9 AGES.—In this paragraph, with respect to a 

10 State and a fiscal year: 

11 ‘‘(i) FEDERAL PERCENTAGE.—The 

12 Federal percentage described in this clause 

13 is 75 percent or, if higher, the Federal 

14 medical assistance percentage for such 

15 State for such fiscal year. 

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

17 percentage described in this clause is 100 

18 percent minus the Federal percentage de19 scribed in clause (i). 

20 ‘‘(E) RULES FOR CREDITING TOWARD

21 STATE SHARE.— 

22 ‘‘(i) GENERAL LIMITATION TO MATCH23 ABLE EXPENDITURES.—A payment for ex24 penditures shall not be counted toward the 

25 State share under subparagraph (A) unless 


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1 Federal payments may be used for such 

2 expenditures consistent with paragraph 

3 (3)(B). 

4 ‘‘(ii) FURTHER LIMITATIONS ON AL5 LOWABLE EXPENDITURES.—A payment for 

6 expenditures shall not be counted towards 

7 the State share under subparagraph (A) if 

8 the expenditure is for any of the following: 

9 ‘‘(I) ABORTION.—Expenditures 

10 for an abortion. 

11 ‘‘(II) INTERGOVERNMENTAL

12 TRANSFERS.—An expenditure that is 

13 attributable to an intergovernmental 

14 transfer. 

15 ‘‘(III) CERTIFIED PUBLIC EX16 PENDITURES.—An expenditure that is 

17 attributable to certified public expend18 itures. 

19 ‘‘(iii) CREDITING FRAUD AND ABUSE

20 RECOVERIES.—Amounts recovered by a 

21 State through the operation of its Medicaid 

22 fraud and abuse control unit described in 

23 section 1903(q) shall be fully counted to24 ward the State share under subparagraph 

25 (A). 


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1 ‘‘(F) CONSTRUCTION.—Nothing in the 

2 paragraph shall be construed as preventing a 

3 State from expending, from non-Federal funds, 

4 an amount under this title in excess of the 

5 amount of the State share. 

6 ‘‘(G) DETERMINATION BASED UPON SUB7 MITTED CLAIMS.—In applying this paragraph 

8 with respect to expenditures of a State for a 

9 quarter, the determination of the expenditures 

10 for such State for such quarter shall be made 

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

12 date of the enactment of this section, is 2 

13 years) for which the Secretary accepts claims 

14 for payment under this title with respect to 

15 such quarter. 

16 ‘‘(3) USE OF FEDERAL PAYMENTS.— 

17 ‘‘(A) APPLICATION OF MEDICAID LIMITA18 TIONS.—A State may only use Federal pay19 ments received under subsection (a) for expend20 itures for which Federal funds would have been 

21 payable under this title but for this section. 

22 ‘‘(B) LIMITATION FOR CERTAIN ELIGI23 BLES.— 

24 ‘‘(i) APPLICATION OF 100 PERCENT

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1 BILITY.—Subject to clause (iii), a State 

2 may not use such Federal payments to 

3 provide medical assistance for an indi4 vidual who has an income (as determined 

5 under clause (ii)) that exceeds 100 percent 

6 of the poverty line (as defined in section 

7 2110(c)(5)) applicable to a family of the 

8 size involved. 

9 ‘‘(ii) DETERMINATION OF INCOME

10 USING MODIFIED ADJUSTED GROSS IN11 COME WITHOUT ANY 5 PERCENT IN12 CREASE.—In determining income for pur13 poses of clause (i) under section 

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

15 gross income), the following rules shall 

16 apply: 

17 ‘‘(I) APPLICATION OF SPEND

18 DOWN.—The State shall take into ac19 count the costs incurred for medical 

20 care or for any other type of remedial 

21 care recognized under State law in the 

22 same manner and to the same extent 

23 that such State takes such costs into 

24 account for purposes of section 

25 1902(a)(17). 


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1 ‘‘(II) DISREGARD OF 5 PERCENT

2 INCREASE.—Subparagraph (I) of sec3 tion 1902(e)(14) (relating to a 5 per4 cent reduction) shall not apply. 

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

6 not apply to an individual who is— 

7 ‘‘(I) a woman described in clause 

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

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

10 described in clause (i) of section 

11 1905(a); 

12 ‘‘(III) enrolled in a State plan 

13 under this title as of the date of the 

14 enactment of this section for the pe15 riod of continuous enrollment; or 

16 ‘‘(IV) described in section 

17 1902(e)(14)(D) (relating to modified 

18 adjusted gross income). 

19 ‘‘(iv) CLARIFICATION RELATED TO

20 COMMUNITY SPOUSE.—Nothing in this 

21 subparagraph shall supersede the applica22 tion of section 1924 (related to community 

23 spouse income and assets). 

24 ‘‘(4) EXCEPTIONS FOR PASS-THROUGH PAY25 MENTS.— 


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

2 not apply, and amounts shall continue to be 

3 payable under this title (and not under sub4 section (a)), in the case of the following pay5 ments (and related administrative costs and ex6 penditures): 

7 ‘‘(i) PAYMENTS TO TERRITORIES.— 

8 Payments to a State other than the 50 

9 States and the District of Columbia. 

10 ‘‘(ii) MEDICARE COST SHARING.— 

11 Payments attributable to Medicare cost 

12 sharing under section 1905(p). 

13 ‘‘(iii) PEDIATRIC VACCINES.—Pay14 ments attributable to section 1928. 

15 ‘‘(iv) EMERGENCY SERVICES FOR CER16 TAIN INDIVIDUALS.—Payments for treat17 ment of emergency medical conditions at18 tributable to the application of section 

19 1903(v)(2). 

20 ‘‘(v) INDIAN HEALTH CARE FACILI21 TIES.—Payments for medical assistance 

22 described in the third sentence of section 

23 1905(b). 

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1 ance attributable to payments to employers 

2 for employer-sponsored health benefits cov3 erage. 

4 ‘‘(vii) OTHER POPULATIONS WITH

5 LIMITED BENEFIT COVERAGE.—Other pay6 ments that are determined by the Sec7 retary to be related to a specified popu8 lation for which the medical assistance 

9 under this title is limited and does not in10 clude any inpatient, nursing facility, or 

11 long-term care services. 

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

13 shall not apply, and amounts shall continue to 

14 be payable under this title (and not under sub15 section (a)), in the case of the following: 

16 ‘‘(i) ADMINISTRATION OF MEDICARE

17 PRESCRIPTION DRUG BENEFIT.—Expendi18 tures described in section 1935(b) (relating 

19 to administration of the Medicare prescrip20 tion drug benefit). 

21 ‘‘(ii) PAYMENTS FOR HIT BONUSES.— 

22 Payments under section 1903(a)(3)(F) (re23 lating to payments to encourage the adop24 tion and use of certified EHR technology). 


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1 ‘‘(iii) PAYMENTS FOR DESIGN, DEVEL2 OPMENT, AND INSTALLATION OF MMIS AND

3 ELIGIBILITY SYSTEMS.—Payments under 

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

5 1903(a)(3) for expenditures for design, de6 velopment, and installation of the Medicaid 

7 management information systems and 

8 mechanized verification and information 

9 retrieval systems (related to eligibility). 

10 ‘‘(5) PAYMENT OF AMOUNTS.— 

11 ‘‘(A) IN GENERAL.—Except as the Sec12 retary may otherwise provide, amounts shall be 

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

14 same manner as amounts are payable under 

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

16 subsection (a) of such section. 

17 ‘‘(B) INFORMATION AND FORMS.— 

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

19 receiving payment under subsection (a), a 

20 State shall submit such information, in 

21 such form, and manner, as the Secretary 

22 shall specify, including information nec23 essary to make the computations under 

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


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1 ‘‘(ii) UNIFORM REPORTING.—The 

2 Secretary shall develop such forms as may 

3 be needed to assure a system of uniform 

4 reporting of such information across 

5 States. 

6 ‘‘(C) REQUIRED REPORTING OF INFORMA7 TION ON MEDICAL LOSS RATIOS FOR MANAGED

8 CARE.—The information required to be reported 

9 under subparagraph (B)(i) shall include infor10 mation on the medical loss ratio with respect to 

11 coverage provided under each Medicaid man12 aged care plan with a contract with the State 

13 under section 1903(m) or 1932. 

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

15 ‘‘(1) IN GENERAL.—The aggregate beneficiary16 based amount specified in this subsection for a State 

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

18 for each of the categories of Medicaid beneficiaries 

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

20 ‘‘(A) BENEFICIARY-BASED QUARTERLY

21 AMOUNT.—The beneficiary-based quarterly 

22 amount for such category computed under sub23 section (c) for such State for such quarter. 

24 ‘‘(B) NUMBER OF INDIVIDUALS IN CAT25 EGORY.—Subject to subsection (d), the average 


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1 number of Medicaid beneficiaries enrolled in 

2 such category in the State in such quarter. 

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

4 this paragraph are the following: 

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

6 beneficiaries who are 65 years of age or older. 

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

8 Medicaid beneficiaries not described in subpara9 graph (A) who are described in section 

10 1937(a)(2)(B)(ii). 

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

12 beneficiaries not described in subparagraph (B) 

13 who are under 21 years of age. 

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

15 Medicaid beneficiaries who are not described in 

16 a previous subparagraph of this paragraph. 

17 ‘‘(c) COMPUTATION OF PER BENEFICIARY, PER CAT18 EGORY QUARTERLY AMOUNT.— 

19 ‘‘(1) IN GENERAL.—For a State, for each cat20 egory of beneficiary for a quarter— 

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

22 in the first reform year (as defined in sub23 section (k)(2)), the beneficiary-based quarterly 

amount is equal to 1 24 ⁄4 of the base average per 

25 beneficiary Federal payments for such State for 


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1 such category determined under paragraph (2), 

2 increased by a factor that reflects the sum of 

3 the following: 

4 ‘‘(i) HISTORICAL MEDICAL CARE COM5 PONENT OF CPI THROUGH PREVIOUS RE6 FORM YEAR.—The percentage increase in 

7 the historical medical care component of 

8 the Consumer Price Index for all urban 

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

10 midpoint of the base fiscal year (as defined 

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

12 fiscal year preceding the first reform year. 

13 ‘‘(ii) PROJECTED MEDICAL CARE COM14 PONENT OF CPI FOR THE FIRST REFORM

15 YEAR.—The percentage increase in the 

16 projected medical care component of the 

17 Consumer Price Index for all urban con18 sumers (U.S. city average) from the mid19 point of the previous fiscal year referred to 

20 in clause (i) to the midpoint of the first re21 form year. 

22 ‘‘(B) SECOND AND THIRD REFORM

23 YEARS.—The beneficiary-based quarterly 

24 amount for a State for a category for quarters 

25 in the second reform year or the third reform 


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1 year is equal to the beneficiary-based quarterly 

2 amount under this paragraph for such State 

3 and category for the previous reform year in4 creased by the per beneficiary percentage in5 crease (as defined in subparagraph (E)) for 

6 such category and reform year. 

7 ‘‘(C) FOURTH THROUGH TENTH REFORM

8 YEARS.—The beneficiary-based quarterly 

9 amount for a State for a category for quarters 

10 in a reform year beginning with the fourth re11 form year and ending with the tenth reform 

12 year is— 

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

14 high per beneficiary State or a low per 

15 beneficiary State (as defined in paragraph 

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

17 determined under clause (i) or (ii) of para18 graph (4)(B) for such State, category, and 

19 reform year; or 

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

21 the beneficiary-based quarterly amount 

22 under this paragraph for such State and 

23 category for the previous reform year in24 creased by the per beneficiary percentage 


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1 increase for such category and reform 

2 year. 

3 ‘‘(D) ELEVENTH REFORM YEAR AND SUB4 SEQUENT REFORM YEARS.—The beneficiary5 based quarterly amount for a State for a cat6 egory for quarters in a reform year beginning 

7 with the eleventh reform year is equal to the 

8 beneficiary-based quarterly amount under this 

9 paragraph for such State and category for the 

10 previous reform year increased by the per bene11 ficiary percentage increase for such category 

12 and reform year. 

13 ‘‘(E) ANNUAL PERCENTAGE INCREASE BE14 GINNING WITH SECOND REFORM YEAR.—For 

15 purposes of this subsection, the term ‘per bene16 ficiary percentage increase’ means, for a reform 

17 year, the sum of— 

18 ‘‘(i) the projected percentage change 

19 in nominal gross domestic product from 

20 the midpoint of the previous reform year to 

21 the midpoint of the reform year for which 

22 the percentage increase is being applied; 

23 and 

24 ‘‘(ii) one percentage point. 


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

2 AMOUNT FOR EACH STATE.— 

3 ‘‘(A) AVERAGE PER CATEGORY.— 

4 ‘‘(i) IN GENERAL.—The Secretary 

5 shall determine, consistent with this para6 graph and paragraph (3), a base per bene7 ficiary, per category amount for each of 

8 the 50 States and the District of Columbia 

9 equal to the average amount, per Medicaid 

10 beneficiary, of Federal payments under 

11 this title, including payments attributable 

12 to disproportionate share hospital pay13 ments under section 1923, for each of the 

14 categories of beneficiaries under subsection 

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

16 the 50 States and the District of Colum17 bia. 

18 ‘‘(ii) BEST AVAILABLE DATA.—The 

19 determination under clause (i) shall ini20 tially be estimated by the Secretary, based 

21 upon the best available data at the time 

22 the determination is made. 

23 ‘‘(iii) UPDATES.—The determination 

24 under clause (i) shall be updated by the 

25 Secretary on an annual basis based upon 


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1 improved data. The Secretary shall adjust 

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

3 reflect changes in the amounts so deter4 mined based on such updates. 

5 ‘‘(B) EXCLUSION OF PASS-THROUGH PAY6 MENTS.—In computing base per beneficiary, 

7 per category amounts under subparagraph 

8 (A)(i) the Secretary shall exclude payments de9 scribed in subsection (a)(4). 

10 ‘‘(C) STANDARDIZATION.— 

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

12 such amount, the Secretary shall stand13 ardize the amount in order to remove the 

14 variation attributable to the following: 

15 ‘‘(I) RISK FACTORS.—Such risk 

16 factors as age, health and disability 

17 status (including high cost medical 

18 conditions), gender, institutional sta19 tus, and such other factors as the 

20 Secretary determines to be appro21 priate, so as to ensure actuarial 

22 equivalence. 

23 ‘‘(II) GEOGRAPHIC.—Variations 

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


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1 ‘‘(ii) METHOD OF STANDARDIZA2 TION.— 

3 ‘‘(I) CONSULTATION IN DEVEL4 OPMENT OF RISK STANDARDIZA5 TION.—In developing the methodology 

6 for risk standardization for purposes 

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

8 consult with the Medicaid and CHIP 

9 Payment and Access Commission, the 

10 Medicare Payment Advisory Commis11 sion, and the National Association of 

12 Medicaid Directors. 

13 ‘‘(II) METHOD FOR RISK STAND14 ARDIZATION.—In carrying out clause 

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

16 hierarchal condition category method17 ology under section 1853(a)(1)(C). If 

18 the Secretary uses such methodology, 

19 the Secretary shall adjust the applica20 tion of such methodology to take into 

21 account the differences in services 

22 provided under this title compared to 

23 title XVIII, such as the coverage of 

24 long term care, pregnancy, and pedi25 atric services. 


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1 ‘‘(III) METHOD FOR GEOGRAPHIC

2 STANDARDIZATION.—The Secretary 

3 shall apply the standardization under 

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

5 that applied under section 

6 1853(c)(4)(A)(iii). 

7 ‘‘(iii) APPLICATION ON A NATIONAL, 

8 BUDGET NEUTRAL BASIS.—The standard9 ization under clause (i) shall be designed 

10 and implemented on a uniform national 

11 basis and shall be budget neutral so as to 

12 not result in any aggregate change in pay13 ments under subsection (a). 

14 ‘‘(iv) RESPONSE TO NEW RISK.—Sub15 ject to clause (iii), the Secretary may ad16 just the standardization under clause (i) to 

17 respond promptly to new instances of com18 municable diseases and other public health 

19 hazards. 

20 ‘‘(v) REFERENCE TO APPLICATION OF

21 RISK ADJUSTMENT.—For rules related to 

22 the application of risk adjustment to 

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

24 subsection (e). 


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1 ‘‘(D) ADJUSTMENT FOR TEMPORARY FMAP

2 INCREASES.—In computing each base per bene3 ficiary, per category amounts under subpara4 graph (A)(i) the Secretary shall disregard por5 tions of payments that are attributable to a 

6 temporary increase in the Federal matching 

7 rates, including those attributable to the fol8 lowing: 

9 ‘‘(i) PPACA DISASTER FMAP.—Sec10 tion 1905(aa). 

11 ‘‘(ii) ARRA.—Section 5001 of the 

12 American Recovery and Reinvestment Act 

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

14 ‘‘(iii) EXTRAORDINARY EMPLOYER

15 PENSION CONTRIBUTION.—Section 614 of 

16 the Children’s Health Insurance Program 

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

18 1396d note). 

19 ‘‘(3) ALLOCATION OF NONMEDICAL ASSISTANCE

20 PAYMENTS.—The Secretary shall establish rules for 

21 the allocation of payments under this title (other 

22 than those payments described in paragraph (1) or 

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

24 attributable to section 1923)— 


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1 ‘‘(A) among different categories of bene2 ficiaries; and 

3 ‘‘(B) between payments included under 

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

5 subsection (a)(4). 

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

7 NATIONAL AVERAGE.— 

8 ‘‘(A) DETERMINATION OF NATIONAL AVER9 AGE BASE PER BENEFICIARY, PER CATEGORY

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

11 Secretary shall determine a national average 

12 base per beneficiary, per category amount equal 

13 to the average of the base per beneficiary, per 

14 category amounts for each of the 50 States and 

15 the District of Columbia determined under 

16 paragraph (2), weighted by the average number 

17 of beneficiaries in each such category and State 

18 as determined by the Secretary consistent with 

19 subsection (d) for the base fiscal year. 

20 ‘‘(B) TRANSITION ADJUSTMENT.— 

21 ‘‘(i) HIGH PER BENEFICIARY

22 STATES.—In the case of a high per bene23 ficiary State (as defined in clause (iii)(I)) 

24 for a category, the beneficiary-based quar25 terly amount for such State and category 


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1 for a quarter in a reform year (beginning 

2 with the fourth reform year and ending 

3 with the tenth reform year) is equal to the 

4 sum of— 

5 ‘‘(I) the product of the State-spe6 cific factor for such reform year (as 

7 defined in clause (iv)) and the bene8 ficiary-based quarterly amount that 

9 would otherwise be determined under 

10 paragraph (1) for such State and cat11 egory if the State were a State de12 scribed in clause (ii) of paragraph 

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

14 clause (i) of such paragraph; and 

15 ‘‘(II) the product of 1 minus the 

16 State-specific factor for such reform 

17 year and the beneficiary-based quar18 terly amount that would otherwise be 

19 determined under paragraph (1) for a 

20 State and category if the base per 

21 beneficiary, per category amount de22 termined under paragraph (2) for the 

23 State and category were equal to 110 

24 percent of the national average base 

25 per beneficiary, per category amount 


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1 determined under subparagraph (A) 

2 for such category. 

3 ‘‘(ii) LOW PER BENEFICIARY

4 STATES.—In the case of a low per bene5 ficiary State (as defined in clause (iii)(II)) 

6 for a category, the beneficiary-based quar7 terly amount for such State and category 

8 for a quarter in a reform year (beginning 

9 with the fourth reform year and ending 

10 with the tenth reform year) is equal to the 

11 sum of— 

12 ‘‘(I) the product of the State-spe13 cific factor for such reform year and 

14 the beneficiary-based quarterly 

15 amount that would otherwise be deter16 mined under paragraph (1) for such 

17 State and category if the State were 

18 a State described in clause (ii) of 

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

20 described in clause (i) of such para21 graph; and 

22 ‘‘(II) the product of 1 minus the 

23 State-specific factor for such reform 

24 year and the beneficiary-based quar25 terly amount that would otherwise be 


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1 determined under paragraph (1) for a 

2 State and category if the base per 

3 beneficiary, per category amount de4 termined under paragraph (2) for the 

5 State and category were equal to 90 

6 percent of the national average base 

7 per beneficiary, per category amount 

8 determined under subparagraph (A) 

9 for such category. 

10 ‘‘(iii) HIGH AND LOW PER BENE11 FICIARY STATES DEFINED.—In this sub12 paragraph: 

13 ‘‘(I) HIGH PER BENEFICIARY

14 STATE.—The term ‘high per bene15 ficiary State’ means, with respect to a 

16 category, a State for which the base 

17 per beneficiary, per category amount 

18 determined under paragraph (2) for 

19 such category is greater than 110 per20 cent of the national average base per 

21 beneficiary, per category amount de22 termined under subparagraph (A) for 

23 such category. 

24 ‘‘(II) LOW PER BENEFICIARY

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1 ficiary State’ means, with respect to a 

2 category, a State for which the base 

3 per beneficiary, per category amount 

4 determined under paragraph (2) for 

5 such category is less than 90 percent 

6 of the national average base per bene7 ficiary, per category amount deter8 mined under subparagraph (A) for 

9 such category. 

10 ‘‘(iv) STATE-SPECIFIC FACTOR.—In 

11 this subparagraph, the term ‘State-specific 

12 factor’ means— 

13 ‘‘(I) for the fourth reform year, 

7 14 ⁄8; and 

15 ‘‘(II) for a subsequent reform 

16 year, the State-specific factor under 

17 this clause for the previous reform 

year minus 1 18 ⁄8.

19 ‘‘(C) NO ADDITIONAL EXPENDITURES.— 

20 ‘‘(i) DETERMINATION OF INCREASE IN

21 FEDERAL EXPENDITURES.—For each cat22 egory for each reform year (beginning with 

23 the fourth reform year and ending with the 

24 tenth reform year), the Secretary shall deVerDate Sep 11 2014 18:49 May 23, 2016 Jkt 059200 PO 00000 Frm 00091 Fmt 6652 Sfmt 6201 E:\BILLS\H5284.IH H5284

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1 termine whether the application of this 

2 paragraph— 

3 ‘‘(I) to the category for the re4 form year will result in an aggregate 

5 increase in the aggregate Federal ex6 penditures under subsection (a); and 

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

8 reform year will result in a net aggre9 gate increase in the aggregate Federal 

10 expenditures under subsection (a). 

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

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

13 application of this paragraph to all the cat14 egories for a reform year will result in a 

15 net aggregate increase in the aggregate 

16 Federal expenditures under subsection (a), 

17 the Secretary shall reduce the national av18 erage base per beneficiary, per category 

19 amount computed under subparagraph (A) 

20 for each of the categories determined 

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

22 an aggregate increase in the aggregate 

23 Federal expenditures under subsection (a) 

24 by such uniform percentage as will ensure 

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1 penditure increase described in clause 

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

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

4 APPEALS.— 

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

6 8 months after the date of the enactment of 

7 this section, the Secretary shall submit to each 

8 State the Secretary’s initial determination of— 

9 ‘‘(i) the base per beneficiary, per cat10 egory amounts under paragraph (2) for 

11 such State; and 

12 ‘‘(ii) the national average base per 

13 beneficiary, per category amounts under 

14 paragraph (4)(A). 

15 ‘‘(B) OPPORTUNITY TO APPEAL.—Not 

16 later than 3 months after the date a State re17 ceives notice of the Secretary’s initial deter18 mination of such base per beneficiary, per cat19 egory amounts for such State under subpara20 graph (A)(i), the State may file with the Sec21 retary, in a form and manner specified by the 

22 Secretary, an appeal of such determination. 

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

24 later than 3 months after receiving such an ap25 peal, the Secretary shall make a final deterVerDate Sep 11 2014 18:49 May 23, 2016 Jkt 059200 PO 00000 Frm 00093 Fmt 6652 Sfmt 6201 E:\BILLS\H5284.IH H5284

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1 mination on such amounts for such State. If no 

2 such appeal is received for a State, the Sec3 retary’s initial determination under subpara4 graph (A)(i) shall become final. 

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

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

7 fiscal year, ending before the date of the enactment 

8 of this section, for which the Secretary determines 

9 that adequate data are available to make the com10 putations required under this subsection. 

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

12 EXCLUDED PAYMENTS.—Under rules specified by the 

13 Secretary, individuals shall not be counted as Medicaid 

14 beneficiaries for purposes of subsection (b)(1)(B) and sub15 section (c)(2)(A) in proportion to the extent that such in16 dividuals are receiving medical assistance for which pay17 ments described under subsection (a)(4)(A) are made. 

18 ‘‘(e) RISK ADJUSTMENT.— 

19 ‘‘(1) IN GENERAL.—The amount under sub20 section (a)(1)(A) shall be adjusted under this sub21 section in an appropriate manner, specified by the 

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

23 into account— 


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1 ‘‘(A) the factors described in subsection 

2 (c)(2)(C)(i)(I) within a category of bene3 ficiaries; and 

4 ‘‘(B) variations in costs on a county-by5 county basis for medical assistance and admin6 istrative expenses. 

7 ‘‘(2) METHOD OF ADJUSTMENT.— 

8 ‘‘(A) IN GENERAL.—The adjustments 

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

10 similar to the manner in which similar adjust11 ments are made under subsection (c)(2)(C) and 

12 consistent with the requirements of clause (iii) 

13 of such subsection and subparagraph (B). 

14 ‘‘(B) BIANNUAL UPDATE OF RISK ADJUST15 MENT METHODOLOGY.—In applying clause 

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

17 subparagraph (A), the Secretary shall, in con18 sultation with the entities described in clause 

19 (ii)(I) of such subsection, update the risk ad20 justment methodology applied as appropriate 

21 not less often than every 2 years. 

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

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

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1 egories of chronic disease for which chronic care per2 formance targets had been established under para3 graph (3) for each category of Medicaid beneficiaries 

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

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

6 shall make an additional payment to such State in 

7 the amount specified in paragraph (6) for each quar8 ter in the succeeding reform year. Such payments 

9 shall be made in a manner specified by the Secretary 

10 and may only be used consistent with subsection 

11 (a)(3). 

12 ‘‘(2) IDENTIFICATION OF CATEGORIES OF

13 CHRONIC DISEASE.—The Secretary shall determine 

14 the categories of chronic disease for which bonus 

15 payments may be available under this subsection for 

16 each category of Medicaid beneficiaries. 

17 ‘‘(3) ADOPTION OF QUALITY MEASUREMENT

18 SYSTEM AND IDENTIFICATION OF PERFORMANCE

19 TARGETS.— 

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

21 the categories of chronic disease under para22 graph (2), the Secretary shall adopt a quality 

23 measurement system that uses data described 

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

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1 formance of Medicare Advantage plans under 

2 part C of title XVIII. 

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

4 data, the Secretary shall establish for each re5 form year the chronic care performance targets 

6 for purposes of the payments under paragraph 

7 (1). Such performance targets shall be estab8 lished in consultation with States, associations 

9 representing individuals with chronic illnesses, 

10 entities providing treatment to such individuals 

11 for such chronic illnesses, and other stake12 holders, including the National Association of 

13 Medicaid Directors and the National Governors 

14 Association. 

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

16 under paragraph (3) shall include— 

17 ‘‘(A) data collected through methods such 

18 as— 

19 ‘‘(i) the ‘Healthcare Effectiveness 

20 Data and Information Set’ (also known as 

21 ‘HEDIS’) (or an appropriate successor 

22 performance measurement tool); 

23 ‘‘(ii) the ‘Consumer Assessment of 

24 Healthcare Providers and Systems’ (also 

25 known as ‘CAHPS’) (or an appropriate 


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1 successor performance measurement tool); 

2 and 

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

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

5 successor performance measurement tool); 

6 and 

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

8 ‘‘(5) REPORTS.— 

9 ‘‘(A) IN GENERAL.—Each State shall col10 lect, analyze, and report to the Secretary, at a 

11 frequency and in a manner to be established by 

12 the Secretary, data described in paragraph (4) 

13 that permit the Secretary to monitor the State’s 

14 performance relative to the chronic care per15 formance targets established under paragraph 

16 (3). 

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

18 Secretary may review the data collected by the 

19 State under subparagraph (A) to verify the 

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

21 performance targets under paragraph (3). 

22 ‘‘(6) AMOUNT OF BONUS PAYMENTS.— 

23 ‘‘(A) IN GENERAL.—Subject to subpara24 graphs (B) and (C), with respect to each cat25 egory of Medicaid beneficiaries, in the case of 


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1 a State that the Secretary determines, based on 

2 the chronic care performance targets set under 

3 paragraph (3) for a reform year for such cat4 egory, performs— 

5 ‘‘(i) in the top five States in such cat6 egory, subject to subparagraph (C)(ii), the 

7 amount of the bonus for each quarter in 

8 the succeeding reform year shall be 10 per9 cent of the payment amount otherwise paid 

10 to the State under subsection (a) for indi11 viduals enrolled under the plan within such 

12 category; 

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

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

15 the amount of the bonus for each such 

16 quarter shall be 5 percent of the payment 

17 amount otherwise paid to the State under 

18 subsection (a) for individuals enrolled 

19 under the plan within such category; 

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

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

22 subparagraph (C), the amount of the 

23 bonus for each such quarter shall be 3 per24 cent of the payment amount otherwise paid 

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1 viduals enrolled under the plan within such 

2 category; 

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

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

5 subparagraph (C), the amount of the 

6 bonus for each such quarter shall be 2 per7 cent of the payment amount otherwise paid 

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

10 category; and 

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

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

13 subparagraph (C), the amount of the 

14 bonus for each such quarter shall be 1 per15 cent of the payment amount otherwise paid 

16 to the State under subsection (a) for indi17 viduals enrolled under the plan within such 

18 category. 

19 ‘‘(B) AGGREGATE ANNUAL LIMIT FOR

20 EACH CATEGORY OF MEDICAID BENE21 FICIARIES.— 

22 ‘‘(i) IN GENERAL.—In no case may 

23 the aggregate amount of bonuses under 

24 this subsection for quarters in a reform 

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1 ficiaries exceed the limit specified in clause 

2 (ii) for the reform year. 

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

4 this clause— 

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

6 equal to $250,000,000; or 

7 ‘‘(II) for a subsequent reform 

8 year is equal to the limit specified in 

9 this clause for the previous reform 

10 year increased by the per beneficiary 

11 percentage increase determined under 

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

13 ‘‘(C) LIMITATION AND PRORATION OF BO14 NUSES BASED ON APPLICATION OF AGGREGATE

15 LIMIT.— 

16 ‘‘(i) NO BONUS FOR THIRD OR SUBSE17 QUENT TIERS UNLESS AGGREGATE LIMIT

18 NOT REACHED ON FIRST TWO TIERS.—No 

19 bonus shall be payable under clause (iii), 

20 (iv), or (v) of subparagraph (A) for a cat21 egory of Medicaid beneficiaries for a quar22 ter in a reform year unless the aggregate 

23 amount of bonuses under clauses (i) and 

24 (ii) of such subparagraph for such category 

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1 ified in subparagraph (B)(ii) for the re2 form year. 

3 ‘‘(ii) PRORATION FOR FIRST TWO

4 TIERS.—If the aggregate amount of bo5 nuses under clauses (i) and (ii) of subpara6 graph (A) for a category of Medicaid bene7 ficiaries for quarters in a reform year ex8 ceeds the limit specified in subparagraph 

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

10 each such bonus shall be prorated in a 

11 manner so the aggregate amount of such 

12 bonuses is equal to such limit. 

13 ‘‘(iii) PRORATION FOR NEXT THREE

14 TIERS.—If the aggregate amount of bo15 nuses under clauses (i) and (ii) of subpara16 graph (A) for a category of Medicaid bene17 ficiaries for quarters in a reform year is 

18 less than the limit specified in subpara19 graph (B)(ii) for the reform year, but the 

20 aggregate amount of bonuses under clauses 

21 (i) through (v) of subparagraph (A) for the 

22 category and such quarters in the reform 

23 year exceeds the limit specified in subpara24 graph (B)(ii) for the reform year, the 

25 amount of each bonus in clauses (iii), (iv), 


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1 and (v) of subparagraph (A) shall be pro2 rated in a manner so the aggregate 

3 amount of all the bonuses under subpara4 graph (A) is equal to such limit. 

5 ‘‘(g) STATE OPTION FOR RECEIVING MEDICARE PAY6 MENTS FOR FULL-BENEFIT DUAL ELIGIBLE INDIVID7 UALS.— 

8 ‘‘(1) IN GENERAL.—Under this subsection a 

9 State may elect for quarters beginning on or after 

10 the implementation date in a reform year to receive 

11 payment from the Secretary under paragraph (3). 

12 As a condition of receiving such payment, the State 

13 shall agree to provide to full-benefit dual eligible in14 dividuals eligible for medical assistance under the 

15 State plan— 

16 ‘‘(A) the medical assistance to which such 

17 eligible individuals would otherwise be entitled 

18 under this title; and 

19 ‘‘(B) any items and services which such eli20 gible individuals would otherwise receive under 

21 title XVIII. 

22 ‘‘(2) PROVIDER PAYMENT REQUIREMENT.— 

23 ‘‘(A) IN GENERAL.—A State electing the 

24 option under this subsection shall provide pay25 ment to health care providers for the items and 


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1 services described under paragraph (1)(B) at a 

2 rate that is not less than the rate at which pay3 ments would be made to such providers for such 

4 items and services under title XVIII. 

5 ‘‘(B) FLEXIBILITY IN PAYMENT METH6 ODS.—Nothing in subparagraph (A) shall be 

7 construed as preventing a State from using al8 ternative payment methodologies (such as bun9 dled payments or the use of accountable care 

10 organizations (as such term is used in section 

11 1899)) for purposes of making payments to 

12 health care providers for items and services pro13 vided to dual eligible individuals in the State 

14 under the option under this subsection. 

15 ‘‘(3) PAYMENTS TO STATES IN LIEU OF MEDI16 CARE PAYMENTS.—With respect to a full-benefit 

17 dual eligible individual, in the case of a State that 

18 elects the option under paragraph (1) for quarters in 

19 a reform year— 

20 ‘‘(A) the Secretary shall not make any pay21 ment under title XVIII for items and services 

22 furnished to such individual for such quarters; 

23 and 

24 ‘‘(B) the Secretary shall pay to the State, 

25 in addition to the amounts paid to such State 


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1 under subsection (a), the amount that the Sec2 retary would, but for this subsection, otherwise 

3 pay under title XVIII for items and services 

4 furnished to such an individual in such State 

5 for such quarters. 

6 ‘‘(4) FULL-BENEFIT DUAL ELIGIBLE INDI7 VIDUAL DEFINED.—In this subsection, the term 

8 ‘full-benefit dual eligible individual’ means an indi9 vidual who meets the requirements of section 

10 1935(c)(6)(A)(ii). 

11 ‘‘(h) AUDITS.—The Secretary shall conduct such au12 dits on the number and classification of Medicaid bene13 ficiaries under such subsections and expenditures under 

14 this section as may be necessary to ensure appropriate 

15 payments under this section. 

16 ‘‘(i) TREATMENT OF WAIVERS.— 

17 ‘‘(1) NO IMPACT ON CURRENT WAIVERS.—In 

18 the case of a waiver of requirements of this title pur19 suant to section 1115 or other law that is in effect 

20 as of the date of the enactment of this section, noth21 ing in this section shall be construed to affect such 

22 waiver for the period of the waiver as approved as 

23 of such date. 

24 ‘‘(2) APPLICATION OF BUDGET NEUTRALITY TO

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1 TION INTO ACCOUNT.—In the case of a waiver of re2 quirements of this title pursuant to section 1115 or 

3 other law that is approved or renewed after the date 

4 of the enactment of this section, to the extent that 

5 such approval or renewal is conditioned upon a dem6 onstration of budget neutrality, budget neutrality 

7 shall be determined taking into account the applica8 tion of this section. 

9 ‘‘(j) REPORT TO CONGRESS.—Not later than Janu10 ary 1 of the second reform year, the Secretary shall submit 

11 to Congress a report on the implementation of this section. 

12 ‘‘(k) DEFINITIONS.—In this section: 

13 ‘‘(1) IMPLEMENTATION DATE.—The term ‘im14 plementation date’ means— 

15 ‘‘(A) July 1, 2017, if this section is en16 acted on or before July 1, 2016; or 

17 ‘‘(B) July 1, 2018, if this section is en18 acted after July 1, 2016. 

19 ‘‘(2) REFORM YEARS.— 

20 ‘‘(A) The term ‘reform year’ means a fiscal 

21 year beginning with the first reform year. 

22 ‘‘(B) The term ‘first reform year’ means 

23 the fiscal year in which the implementation date 

24 occurs. 


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1 ‘‘(C) The terms ‘second’, ‘third’, and suc2 cessive similar terms mean, with respect to a 

3 reform year, the second, third, or successive re4 form year, respectively, succeeding the first re5 form year.’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) CONTINUED APPLICATION OF CLAWBACK

8 PROVISIONS.— 

9 (A) CONTINUED APPLICATION.—Sub10 sections (a) and (c)(1)(C) of section 1935 of 

11 such Act (42 U.S.C. 1396u–5) are each amend12 ed by inserting ‘‘or 1903A(a)’’ after ‘‘1903(a)’’. 

13 (B) TECHNICAL AMENDMENT.—Section 

14 1935(d)(1) of the Social Security Act (42 

15 U.S.C. 1396u–5(d)(1)) is amended by inserting 

16 ‘‘except as provided in section 1903A(g)’’ after 

17 ‘‘any other provision of this title’’. 

18 (2) PAYMENT RULES UNDER SECTION 1903.— 

19 (A) Section 1903(a) of such Act (42 

20 U.S.C. 1396b(a)) is amended, in the matter be21 fore paragraph (1), by inserting ‘‘and section 

22 1903A’’ after ‘‘except as otherwise provided in 

23 this section’’. 

24 (B) Section 1903(d) of such Act (42 

25 U.S.C. 1396b(d)) is amended— 


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1 (i) in paragraph (1), by inserting 

2 ‘‘and under section 1903A’’ after ‘‘sub3 sections (a) and (b)’’; 

4 (ii) in paragraph (2)— 

5 (I) in subparagraph (A), by in6 serting ‘‘or section 1903A’’ after ‘‘was 

7 made under this section’’; and 

8 (II) in subparagraph (B), by in9 serting ‘‘or section 1903A’’ after 

10 ‘‘under subsection (a)’’; 

11 (iii) in paragraph (4)— 

12 (I) by striking ‘‘under this sub13 section’’ and inserting ‘‘, with respect 

14 to this section or section 1903A, 

15 under this subsection’’; and 

16 (II) by striking ‘‘under this sec17 tion’’ and inserting ‘‘under the respec18 tive section’’; and 

19 (iv) in paragraph (5), by inserting ‘‘or 

20 section 1903A’’ after ‘‘overpayment under 

21 this section’’. 

22 (3) CONFORMING WAIVER AUTHORITY.—Section 

23 1115(a)(2)(A) of the Social Security Act (42 U.S.C. 

24 1315(a)(2)(A)) is amended by striking ‘‘or 1903’’ 

25 and inserting ‘‘1903, or 1903A’’. 


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1 (4) REPORT ON ADDITIONAL CONFORMING

2 AMENDMENTS NEEDED.—Not later than 6 months 

3 after the date of the enactment of this Act, the Sec4 retary of Health and Human Services shall submit 

5 to Congress a report that includes a description of 

6 any additional technical and conforming amend7 ments to law that are required to properly carry out 

8 this Act. 

9 TITLE V—INCREASING PRICE 

10 TRANSPARENCY AND FREE11 DOM OF PRACTICE 

12 SEC. 501. ENSURING ACCESS TO EMERGENCY SERVICES 

13 WITHOUT EXCESSIVE CHARGES FOR OUT-OF14 NETWORK SERVICES. 

15 (a) IN GENERAL.—Section 1867 of the Social Secu16 rity Act (42 U.S.C. 1395dd) is amended— 

17 (1) in subsection (d), by adding at the end the 

18 following new paragraph: 

19 ‘‘(5) ENFORCEMENT WITH RESPECT TO EXCES20 SIVE CHARGES.—A hospital, physician, or other enti21 ty that violates the requirements of subsection (j)(1) 

22 with respect to the furnishing of items and services 

23 is subject to a civil money penalty of not more than 

24 $25,000 for each such violation. The provisions of 

25 section 1128A (other than subsections (a) and (b)) 


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1 shall apply to a civil money penalty under this para2 graph in the same manner as such provisions apply 

3 with respect to a penalty or proceeding under section 

4 1128A(a).’’; and 

5 (2) by adding at the end the following new sub6 section: 

7 ‘‘(j) PROTECTIONS AGAINST EXCESSIVE OUT-OF8 NETWORK CHARGES FOR EMERGENCY SERVICES.— 

9 ‘‘(1) IN GENERAL.—If items or services to 

10 screen or treat an emergency medical condition are 

11 furnished under this section in a participating hos12 pital with respect to an individual and the individual 

13 has not, directly or through a health insurance 

14 issuer, group health plan, or other third party, nego15 tiated a payment rate for such items and services, 

16 subject to paragraph (2), the charges imposed for 

17 such items and services may not be in excess of the 

18 following: 

19 ‘‘(A) PHYSICIANS’ AND OTHER PROFES20 SIONAL SERVICES.—For physicians’ services or 

21 services of a health care provider to which sec22 tion 223(e)(9) of the Internal Revenue Code of 

23 1986 applies (and including drugs and 

24 biologicals furnished in conjunction with and 

25 billed as part of such services), the lesser of— 


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1 ‘‘(i) the cash price for such services 

2 posted pursuant to such section; or 

3 ‘‘(ii) 85 percent of the usual, cus4 tomary, and reasonable (UCR) charge for 

5 such services, as determined under rules 

6 established by the department of insurance 

7 for the State in which the services are fur8 nished. 

9 ‘‘(B) HOSPITAL SERVICES.—For inpatient 

10 and outpatient hospital services for which pay11 ment rates are established under this title (and 

12 including drugs and biologicals furnished in 

13 conjunction with and billed as part of such 

14 services), the lesser of— 

15 ‘‘(i) the cash price for such services 

16 posted pursuant to section 223(e)(9) of the 

17 Internal Revenue Code of 1986; or 

18 ‘‘(ii) 110 percent of the payment rate 

19 applicable to such services in the case of 

20 an individual entitled to benefits under 

21 part A and enrolled under part B. 

22 ‘‘(C) DRUGS AND BIOLOGICALS.—For 

23 drugs and other pharmaceuticals furnished to 

24 which a previous subparagraph does not apply, 

25 the lesser of— 


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1 ‘‘(i) twice the acquisition cost to the 

2 hospital or other provider for the dose in3 volved; or 

4 ‘‘(ii) the acquisition cost to the hos5 pital or other provider plus $250. 

6 The dollar amount in clause (ii) shall be in7 creased from year to year (beginning with the 

8 year after the first year in which this subsection 

9 applies) by the same percentage as the percent10 age increase in the consumer price index for all 

11 urban consumers (all items; U.S. city average) 

12 for the year involved (as determined by the Sec13 retary). Any such dollar amount as so increased 

14 that is not a multiple of $5 shall be rounded to 

15 the nearest multiple of $5 (or, if a multiple of 

16 $2.50, to the next highest multiple of $5). 

17 ‘‘(D) OTHER ITEMS AND SERVICES.—For 

18 any other items or services, the lesser of— 

19 ‘‘(i) the cash price for such items and 

20 services posted pursuant to section 

21 223(e)(9) of the Internal Revenue Code of 

22 1986; or 

23 ‘‘(ii) 110 percent of the payment basis 

24 that would be applicable to payment for 

25 such items and services under this title in 


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1 the case of an individual entitled to bene2 fits under part A and enrolled under part 

3 B. 

4 ‘‘(2) SPECIAL RULE FOR ITEMS AND SERVICES

5 FURNISHED AS A BUNDLE.—In the case of items 

6 and services for which there is a single price for a 

7 group or bundle of such items and services, the max8 imum charge permitted under paragraph (1) may 

9 not exceed the lesser of— 

10 ‘‘(A) the price charged for such bundled 

11 services; or 

12 ‘‘(B) the aggregate of the maximum 

13 charges permitted under paragraph (1) with re14 spect to items and services included in such 

15 bundle.’’. 

16 (b) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to charges imposed for items and 

18 services furnished on or after January 1, 2017. 

19 SEC. 502. PUBLISHING OF CASH PRICE FOR CARE PAID 

20 THROUGH HEALTH SAVINGS ACCOUNTS. 

21 (a) HEALTH SAVINGS ACCOUNTS.—Section 223(f) of 

22 the Internal Revenue Code of 1986 is amended by adding 

23 at the end the following new paragraph: 

24 ‘‘(9) CASH PRICE TRANSPARENCY REQUIRED

25 FOR PAYMENTS TO HEALTH CARE PROVIDERS.— 


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1 ‘‘(A) IN GENERAL.—A payment to a health 

2 care provider with respect to the furnishing of 

3 health care items and services by such provider 

4 shall not be treated as a qualified medical ex5 pense unless health care provider provides for 

6 continuing disclosure (such as through posting 

7 on a publicly accessible website) of the cash 

8 price the health care provider charges for the 

9 furnishing of such items and services. 

10 ‘‘(B) FORM OF DISCLOSURE.—The disclo11 sure of prices under this subsection shall be in 

12 a form and manner specified by the Secretary 

13 of Health and Human Services, in consultation 

14 with the Secretary, and shall be designed— 

15 ‘‘(i) to establish a single price for re16 lated items and services in a manner simi17 lar to the manner in which pricing and 

18 payment for such items and services is pro19 vided under the Medicare program under 

20 title XVIII of the Social Security Act, and 

21 ‘‘(ii) to make it easy for consumers to 

22 compare the prices for similar items and 

23 services furnished by different providers. 

24 ‘‘(C) FAILURE TO FURNISH SERVICES OR

25 CHARGE IN EXCESS OF STATED PRICE.—A 


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1 health care provider shall be treated as not 

2 meeting the requirement of subparagraph (A), 

3 in the case of items and services for which the 

4 provider is disclosing a cash price, if the pro5 vider— 

6 ‘‘(i) refuses to furnish such items or 

7 services at the price listed, or 

8 ‘‘(ii) charges more than the price list9 ed for the furnishing of the items and serv10 ices.’’. 

11 (b) ROTH HSA.—Section 530A(c)(4) of such Code, 

12 as added by this Act, is amended by adding at the end 

13 the following new subparagraph: 

14 ‘‘(E) Section 223(f) (relating to cash price 

15 transparency required for payments to health 

16 care providers).’’. 

17 (c) ENFORCEMENT.—If the Secretary of Health and 

18 Human Services determines that a health care provider 

19 has not provided for continuing disclosure of the cash 

20 price of health care provider charges under section 

21 223(f)(9) of the Internal Revenue Code of 1986, the Sec22 retary may instruct the Secretary of the Treasury that 

23 payments made to such provider shall be not treated, for 

24 purposes of section 223 of the Internal Revenue Code of 


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1 1986, as an amount used for a qualified medical expense 

2 for a period of not to exceed 1 year. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2016. 

6 SEC. 503. LIBERATING THE LOCAL PRACTICE OF HEALTH 

7 CARE. 

8 (a) WAIVING NATIONAL RESTRICTIONS ON PHYSI9 CIAN-OWNED FACILITIES.—Section 1877 of the Social Se10 curity Act (42 U.S.C. 1395nn) is amended by adding at 

11 the end the following new subsection: 

12 ‘‘(j) WAIVER AUTHORITY.—A physician or other enti13 ty may apply to the Secretary to waive any provision of 

14 this section and the Secretary may waive such provision 

15 with respect to such physician or entity if the Secretary 

16 determines that such waiver would— 

17 ‘‘(1) increase competition within the health care 

18 market; 

19 ‘‘(2) reduce the costs of health care; and 

20 ‘‘(3) increase the quality of health care.’’. 

21 (b) REMOVING CERTAIN STATE AND LOCAL LICEN22 SURE OR CERTIFICATION RESTRICTIONS.— 

23 (1) APPLICATION FOR WAIVER OF RESTRIC24 TIONS.—An individual who is required to be licensed 

25 or certified by a State as a condition of furnishing 


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1 items or services as a health care professional (as 

2 defined by the Secretary of Health and Human 

3 Services) may submit to the Secretary an application 

4 to waive any condition of such licensure or certifi5 cation. 

6 (2) STANDARD.—The Secretary may grant a 

7 waiver submitted under paragraph (1) if the Sec8 retary determines such waiver would— 

9 (A) increase competition within the health 

10 care market; 

11 (B) reduce the costs of health care; and 

12 (C) increase the quality of health care. 

13 (3) PREEMPTION.—In the case of a health care 

14 professional granted a waiver under paragraph (2), 

15 any requirement with respect to which such waiver 

16 is granted is preempted to the extent specified in 

17 such waiver. 

Æ 


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