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[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5284 Introduced in House (IH)]

<DOC>

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.

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

SECTION 1. SHORT TITLE; PURPOSES; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``World's Greatest 
Healthcare Plan Act of 2016''.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) Elimination of individual and employer mandates under 
        aca.--To eliminate mandates on individuals and employers, and 
        other tax requirements, imposed under Patient Protection and 
        Affordable Care Act.
            (2) Providing states with alternative, affordable coverage 
        options.--To provide greater flexibility in providing States 
        with options in making affordable health insurance coverage 
        available by eliminating certain mandates under PPACA, while 
        retaining essential consumer protections, by promoting health 
        savings accounts to pay for such coverage and long-term care 
        coverage, while permitting States to continue coverage as 
        provided under PPACA.
    (c) Table of Contents.--The table of contents of 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

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.

SEC. 2. DEFINITIONS.

    Except as otherwise provided, in this Act:
            (1) Basic health insurance.--The term ``basic health 
        insurance'' is defined in section 122(a).
            (2) Default health insurance coverage.--The term ``default 
        health insurance coverage'' is defined in section 121(b)(4)(B).
            (3) Exchange.--The term ``Exchange'' means an Exchange 
        established under title I of PPACA.
            (4) Health insurance coverage; group health plan, etc.--The 
        terms defined in section 2791 of the Public Health Service Act, 
        including ``health insurance coverage'', ``group health plan'', 
        and ``individual market'', shall apply.
            (5) Limited benefit insurance.--The term ``limited benefit 
        insurance'' is defined in section 122(b).
            (6) PPACA.--The term ``PPACA'' means the Patient Protection 
        and Affordable Care Act (Public Law 111-148).
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (8) State.--The term ``State'' includes the District of 
        Columbia, Puerto Rico, the United States Virgin Islands, 
        American Samoa, Guam, and the Northern Mariana Islands.

                      TITLE I--REVISIONS OF PPACA

      Subtitle A--Elimination of Individual and Employer Mandates

SEC. 101. REPEAL OF INDIVIDUAL HEALTH INSURANCE MANDATE.

    Section 5000A of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new subsection:
    ``(h) Termination.--This section shall not apply with respect to 
any month beginning more than 30 days after the date of the enactment 
of the World's Greatest Healthcare Plan Act of 2016.''.

SEC. 102. REPEAL OF EMPLOYER HEALTH INSURANCE MANDATE.

    (a) In General.--Chapter 43 of the Internal Revenue Code of 1986 is 
amended--
            (1) by striking section 4980H; and
            (2) by striking the item relating to section 4980H from the 
        table of sections for such chapter.
    (b) Repeal of Related Reporting Requirements.--Subpart D of part 
III of subchapter A of chapter 61 of such Code is amended by striking 
section 6056 and by striking the item relating to section 6056 in the 
table of sections for such subpart.
    (c) Conforming Amendments.--
            (1) Section 6724(d)(1)(B) of such Code is amended--
                    (A) by inserting ``or'' at the end of clause 
                (xxiii);
                    (B) by striking ``, or'' at the end of clause 
                (xxiv) and inserting a period; and
                    (C) by striking clause (xxv).
            (2) Section 6724(d)(2) of such Code is amended by inserting 
        ``or'' at the end of subparagraph (FF), by striking ``, or'' at 
        the end of subparagraph (GG) and inserting a period, and by 
        striking subparagraph (HH).
            (3) Section 1513 of the Patient Protection and Affordable 
        Care Act is amended by striking subsection (c).
    (d) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        months and other periods beginning more than 30 days after the 
        date of the enactment of this Act.
            (2) Repeal of study and report.--The amendment made by 
        subsection (c)(3) shall take effect on the date of the 
        enactment of this Act.

SEC. 103. CLARIFYING EMPLOYER'S ABILITY TO REIMBURSE EMPLOYEE PREMIUMS 
              FOR PURCHASE OF INDIVIDUAL HEALTH INSURANCE COVERAGE.

    An employer health care arrangement, such as a health or medical 
reimbursement arrangement (HRA) or other employment plans, under which 
an employer reimburses an employee for the premiums for the purchase of 
individual health insurance coverage does not constitute a group health 
plan for any purposes, including for purposes of applying any of the 
following:
            (1) The Public Health Service Act (including sections 2711 
        and 2714 of such Act, 42 U.S.C. 300gg-11, 300gg-14).
            (2) The Patient Protection and Affordable Care Act.
            (3) The Internal Revenue Code of 1986.
            (4) The Employee Retirement Income Security Act of 1974.
            (5) The HIPAA privacy regulations (as defined in section 
        1180(b)(3) of the Social Security Act, 42 U.S.C. 1320d-
        9(b)(3)).
            (6) The Health Insurance Portability and Accountability Act 
        of 1996.
            (7) COBRA continuation coverage under title XXII of the 
        Public Health Service Act, section 4980B of the Internal 
        Revenue Code of 1986, or title VI of the Employee Retirement 
        Income Security Act of 1974.

    Subtitle B--Limitation on Application of PPACA Plan Requirements

SEC. 121. LIMITING APPLICATION OF REQUIREMENTS TO CONSUMER PROTECTIONS.

    (a) Removal of PPACA Plan Requirements, Other Than Certain Consumer 
Protections.--
            (1) In general.--Notwithstanding any other provision of 
        law, with respect to group health plans and health insurance 
        coverage whether or not offered through an Exchange, except as 
        provided in paragraphs (2) and (3), the provisions of title 
        XXVII of the Public Health Service Act as in effect before the 
        date of the enactment of PPACA shall apply instead of the 
        provisions of such title as in effect after such date.
            (2) PPACA consumer protections continuing to be applied.--
        The following sections of the Public Health Service Act, that 
        were added or amended by subtitles A and C of title I of PPACA, 
        shall continue to apply to group health plans and to health 
        insurance coverage offered in the individual and group market:
                    (A) No lifetime or annual limits.--Section 2711 
                (relating to no lifetime or annual limits), except in 
                the case of limited benefit insurance (as defined in 
                section 122(b)).
                    (B) Dependent coverage through age 26.--Section 
                2714 (relating to extension of dependent coverage).
                    (C) Modified guaranteed availability.--Section 2702 
                (relating to guaranteed availability of coverage), 
                subject to paragraph (3) and subsection (c).
                    (D) Guaranteed renewability.--Section 2703 
                (relating to guaranteed renewability of coverage).
                    (E) Prohibiting pre-existing condition 
                exclusions.--Section 2704 (relating to prohibition on 
                preexisting conditions).
                    (F) Prohibiting discrimination based on health 
                status.--Section 2705 (relating to prohibiting 
                discrimination against individual participants and 
                beneficiaries based on health status), subject to 
                subsection (c).
                    (G) Non-discrimination in health care.--Section 
                2706 (relating to non-discrimination in health care).
            (3) Application of a late enrollment penalty for those 
        without continuous coverage.--
                    (A) In general.--In the case of an individual who 
                seeks to enroll in health insurance coverage and who, 
                as of the effective date of such enrollment, does not 
                have a continuous period of at least 12 months of 
                creditable coverage, there shall be imposed a late 
                enrollment penalty in the form of an increase in the 
                monthly premiums for coverage of under the plan of 20 
                percent of the monthly premium otherwise determined for 
                each consecutive full 12-month period (ending before 
                such effective date) in which the individual was not 
                enrolled in creditable coverage. Such increase shall 
                apply during a period, to be specified under 
                regulations of the Secretary but in no case longer than 
                3 times the length of the most recent period in which 
                the individual did not have continuous coverage.
                    (B) State waiver.--A State may apply to the 
                Secretary for a waiver of the provisions of 
                subparagraph (A) and the application of alternative 
                provisions providing incentives for State residents to 
                enroll in creditable coverage and maintain continuous 
                creditable coverage. The Secretary shall approve such 
                waiver if the Secretary determines that the alternative 
                provisions provide similar or greater incentives for 
                such enrollment than the incentives otherwise 
                applicable.
            (4) Coordinating implementation of pre-ppaca phsa 
        provisions with ppaca consumer protections.--
                    (A) In general.--In applying this subsection, the 
                provisions described in paragraph (2) shall be treated 
                as if they were included in title XXVII of the Public 
                Health Service Act, as in effect before the date of 
                enactment of PPACA, and, with respect to group health 
                plans and health insurance coverage offered in 
                connection with such plans, in part 7 of subtitle B of 
                title I of the Employee Retirement and Income Security 
                Act of 1974, and, with respect to group health plans, 
                in chapter 100 of the Internal Revenue Code of 1986 as 
                follows:
                            (i) Lifetime limits; dependent coverage.--
                        The provisions described in paragraphs (2)(A) 
                        and (2)(B) shall be treated as included--
                                    (I) with respect to group health 
                                plans (and health insurance coverage 
                                offered with respect to such plans), 
                                under subpart 2 of part A of title 
                                XXVII of the Public Health Service Act 
                                and subpart B of part 7 of subtitle B 
                                of title I of the Employee Retirement 
                                and Income Security Act of 1974;
                                    (II) also with respect to group 
                                health plans, under subchapter B of 
                                chapter 100 of the Internal Revenue 
                                Code of 1986; and
                                    (III) with respect to individual 
                                health insurance coverage, under 
                                subpart 2 of part B of title XXVII of 
                                the Public Health Service Act.
                            (ii) Remaining provisions.--The provision 
                        described in paragraph (2) (other than in 
                        subparagraph (A) or (B) of such paragraph) 
                        shall be treated as included--
                                    (I) with respect to group health 
                                plans (and health insurance coverage 
                                offered with respect to such plans), 
                                under subpart 1 of part A of title 
                                XXVII of the Public Health Service Act 
                                and subpart A of part 7 of subtitle B 
                                of title I of the Employee Retirement 
                                and Income Security Act of 1974;
                                    (II) also with respect to group 
                                health plans, under subchapter A of 
                                chapter 100 of the Internal Revenue 
                                Code of 1986; and
                                    (III) with respect to individual 
                                health insurance coverage, under 
                                subpart 1 of part B of title XXVII of 
                                the Public Health Service Act.
                    (B) Conflicting provisions.--In the case described 
                in paragraph (1) where there is a conflict between a 
                provision described in paragraph (2) and a provision of 
                law described in paragraph (1), the provision described 
                in paragraph (2) shall control and the Secretary, in 
                consultation with the Secretary of the Treasury and the 
                Secretary of Labor, shall establish such rules as may 
                be necessary to carry out this subparagraph.
            (5) Conforming amendments.--
                    (A) ERISA.--Section 715 of the Employee Retirement 
                Income Security Act of 1974 (29 U.S.C. 1185d) is 
                amended--
                            (i) in subsection (a), by striking 
                        ``subsection (b)'' and inserting ``subsections 
                        (b) and (c)''; and
                            (ii) by adding at the end the following new 
                        subsection:
    ``(c) Additional Exception.--Pursuant to section 121 of the World's 
Greatest Healthcare Plan Act of 2016, the provisions of part A of title 
XXVII of the Public Health Service Act referred to in subsection (a), 
other than those provisions specified in section 121(a)(2) of the 
World's Greatest Healthcare Plan Act of 2016, shall not apply to plans 
and coverage described in subsection (a), whether or not the plans or 
coverage are offered through an Exchange established under the Patient 
Protection and Affordable Care Act.''.
                    (B) IRC.--Section 9815 of the Internal Revenue Code 
                of 1986 is amended--
                            (i) in subsection (a), by striking 
                        ``subsection (b)'' and inserting ``subsections 
                        (b) and (c)''; and
                            (ii) by adding at the end the following new 
                        subsection:
    ``(c) Additional Exception.--Pursuant to section 121 of the World's 
Greatest Healthcare Plan Act of 2016, the provisions of part A of title 
XXVII of the Public Health Service Act referred to in subsection (a), 
other than those provisions specified in section 121(a)(2) of the 
World's Greatest Healthcare Plan Act of 2016, shall not apply to plans 
described in subsection (a).''.
    (b) State Flexibility in Ensuring Orderly Health Insurance Market 
Outside of an Exchange.--
            (1) In general.--With respect to health insurance coverage 
        offered in a State, the State may, in consultation with the 
        Secretary, take such steps, such as limiting the availability 
        of general open enrollment periods, imposing delays in the 
        effectiveness for coverage, permitting differentials in 
        premiums based on age and other factors, as the State 
        determines necessary in order to ensure an orderly market for 
        health insurance coverage in the State that is not offered 
        through an Exchange. Such steps may include the establishment 
        of such initial open enrollment period during which qualified 
        residents may enroll in health insurance coverage without the 
        imposition of any underwriting as the State determines to be 
        appropriate in ensuring initial access to such coverage.
            (2) Flexibility in imposing additional requirements.--
        Nothing in this section shall be construed as preventing a 
        State from continuing to apply, to health insurance coverage 
        issued in the State, requirements under the provisions of title 
        XXVII of the Public Health Service Act (as amended by subtitles 
        A and C of title I of PPACA) that are not continued under 
        subsection (a).
            (3) State flexibility with respect to exchanges.--A State 
        may waive such provisions of part II of subtitle D of title I 
        of PPACA, in relation to the establishment of an Exchange in 
        such State, as the State determines appropriate in order for 
        the State to implement and administer a market-based system for 
        the availability of health insurance coverage throughout the 
        State.
            (4) State default enrollment option.--
                    (A) Enrollment, subject to individual opt-out.--
                Subject to subparagraph (D), a State may elect to 
                provide for the enrollment of residents of the State 
                who are uninsured in default health insurance coverage 
                (as defined in subparagraph (B)) and establishing a 
                Roth HSA for such residents who do not have a Roth HSA 
                unless the resident has affirmatively elected not to be 
                so enrolled and not to have such an account. 
                respectively. If a State makes such an election, the 
                State shall permit eligible residents to enroll in such 
                coverage on a continuous basis.
                    (B) Default health insurance coverage defined.--In 
                this paragraph, the term ``default health insurance 
                coverage'' means, with respect to a State, health 
                insurance coverage that--
                            (i) is a high deductible health plan 
                        (within the meaning of section 223(c)(2) of the 
                        Internal Revenue Code of 1986) with 
                        prescription drug coverage limited to generic 
                        drugs for a limited number of chronic 
                        conditions (commonly referred to as tier I 
                        pharmacy benefit);
                            (ii) meets such requirements as may apply 
                        to qualify for the payment of plan premiums 
                        from a health savings account under section 223 
                        of such Code (such as age-related premiums and 
                        limitation on imposition of preexisting 
                        condition exclusions);
                            (iii) has a provider network for covered 
                        benefits that is adequate (as determined 
                        consistent with guidelines issued by the 
                        Secretary) to ensure access to health benefits 
                        under such plan;
                            (iv) provides for coverage of childhood 
                        immunizations without cost sharing requirements 
                        to the extent such immunizations have in effect 
                        a recommendation from the Advisory Committee on 
                        Immunization Practices of the Centers for 
                        Disease Control and Prevention with respect to 
                        the individual involved; and
                            (v) meets such other requirements as the 
                        State may specify.
                    (C) Roth hsa.--In this paragraph, the term ``Roth 
                HSA'' shall have the meaning given such term by section 
                530A(c) of the Internal Revenue Code of 1986.
                    (D) Simple process for individuals to opt-out.--As 
                a condition of a State providing for the enrollment 
                function described in subparagraph (A), the State must 
                establish an easy-to-use and transparent means by which 
                individuals may elect not to be enrolled in default 
                health insurance coverage or to have a Roth HSA 
                established on the individual's behalf, or both.
    (c) Inapplicability of Required Essential Health Benefits.--
            (1) In general.--Notwithstanding any other provision of 
        law, no health benefits plan shall be required by reason of 
        Federal law to comply with the requirements of sections 
        1301(a)(1)(B) and 1302 of PPACA (42 U.S.C. 18021(a)(1)(B), 
        18022).
            (2) State flexibility.--Nothing in this subsection shall be 
        construed as preventing a State from applying, at its option 
        with respect to health insurance coverage offered through an 
        Exchange or otherwise in the State, the requirements referred 
        to in paragraph (1).
    (d) Effective Date; Transition.--
            (1) In general.--Subsections (a), (b), and (c) shall apply 
        to plan years beginning after the date of the enactment of this 
        Act.
            (2) Sunsetting required contribution for aca reinsurance 
        program.--No contribution shall be required under section 1341 
        of PPACA (42 U.S.C. 18061) from any group health plan or health 
        insurance issuer for portions of plans years occurring in 
        months beginning more than 30 days after the date of the 
        enactment of this Act.
    (e) Secretarial Guidance.--The Secretary of Health and Human 
Services, in coordination with the Secretary of Labor and the Secretary 
of the Treasury, shall provide such guidance as may be necessary for 
the coordinated implementation of this section on a timely basis.
    (f) Transferring Health Plan Records Upon Changing Plans.--
            (1) In general.--In the case of an individual who is 
        covered under health insurance coverage or as a beneficiary or 
        participant in a group health plan (as such terms are defined 
        in section 2791 of the Public Health Service Act), if such 
        coverage is ended and the individual obtains other health 
        insurance coverage, group health plan coverage, or other 
        creditable coverage (as defined for purposes of title XXVII of 
        such Act), the issuer of the prior coverage or administrator of 
        the prior plan shall forward information respecting such prior 
        coverage to the issuer of the new coverage or administrator of 
        the new plan or coverage, as the case may be, subject to such 
        rules as the Secretary establishes regarding the right of the 
        beneficiary or participant to object to such forwarding of 
        information.
            (2) Treatment as plan requirement under phsa, erisa, irc.--
        The requirement of paragraph (1) shall apply as if it were a 
        section under part A of title XXVII of the Public Health 
        Service Act, including for purposes of applying section 715 of 
        the Employee Retirement Income Security Act of 1976 (29 U.S.C. 
        1185d) and section 9815 of the Internal Revenue Code of 1986.
    (g) Application of Risk Adjustment.--
            (1) In general.--Any issuer that offers health insurance 
        coverage in the individual market in any of the 50 States or 
        the District of Columbia shall participate in a risk adjustment 
        mechanism under this subsection with respect to any health 
        insurance coverage it so offers in such market, whether or not 
        such coverage is offered through an Exchange.
            (2) Form and design of risk adjustment mechanism.--The 
        Secretary shall, in consultation with the National Association 
        of Insurance Commissioners and other interested parties, 
        develop a mechanism to permit the adjustment of risk among 
        health insurance coverage offered in the individual market 
        throughout the 50 States and the District of Columbia. Such 
        mechanism shall be designed to effect the same type of risk 
        adjustment among such coverage that is applicable to risk 
        adjustment of payments among Medicare Advantage organizations 
        under part C of title XVIII of the Social Security Act.
            (3) Transition for new coverage.--The mechanism developed 
        under paragraph (2) shall provide for transitional protection, 
        over a 3-year period, in the case of health insurance coverage 
        that has not been previously marketed.
            (4) Development of further risk adjustment mechanism.--The 
        Secretary shall request the National Association of Insurance 
        Commissioners to develop a permanent model for adjustment of 
        risk among health insurance issuers with respect to health 
        insurance coverage offered in the individual market, with the 
        intention that such a model would substitute for the mechanism 
        developed under paragraph (2).
            (5) Treatment as plan requirement under phsa, erisa, irc.--
        The requirement of paragraph (1) shall apply as if it were a 
        section under part A of title XXVII of the Public Health 
        Service Act, including for purposes of applying section 715 of 
        the Employee Retirement Income Security Act of 1976 (29 U.S.C. 
        1185d) and section 9815 of the Internal Revenue Code of 1986.

SEC. 122. OFFERING OF BASIC HEALTH INSURANCE; PROTECTION OF ASSETS FROM 
              LIABILITY OR ATTACHMENT OR SEIZURE.

    (a) Requirement for Exchanges.--
            (1) In general.--No tax credit shall be allowable under 
        section 36B or 36C of the Internal Revenue Code of 1986 for 
        residents of a State unless any Exchange established in the 
        State provides for the offering of basic health insurance in 
        all areas of the State.
            (2) Basic health insurance defined.--In this subsection, 
        the term ``basic health insurance'' means, with respect to a 
        State, such health insurance coverage as the State may specify 
        and includes limited benefit insurance (as defined in 
        subsection (b)).
    (b) Limited Benefit Insurance Defined.--
            (1) In general.--In this title, the term ``limited benefit 
        insurance'' means individual health insurance coverage that, 
        with respect to a plan year, imposes (consistent with paragraph 
        (2)) an annual limit on the amounts that may be payable under 
        the coverage with respect to expenses incurred for items and 
        services furnished in that plan year.
            (2) Specification of annual limit; variation in limit for 
        individual and family coverage.--The Secretary shall specify, 
        from year to year, the annual limit (or range of annual limits) 
        that may be applied under paragraph (1). Such a limit may 
        distinguish between coverage that is only provided for an 
        individual and coverage that is provided also for family 
        members of the individual.
    (c) Protection of Certain Assets in Case of Individuals Covered 
Under Limited Benefit Insurance.--
            (1) In general.--Notwithstanding any other provision of 
        law, if an individual is covered under limited benefit 
        insurance for a plan year and benefits under such insurance 
        have reached the annual limit under such insurance for items 
        and services furnished in the plan year, the individual is not 
        liable for debt incurred and arising from the provision of 
        subsequently furnished items and services during the plan year, 
        regardless of whether benefits are otherwise covered for such 
        items and services under such policy, insofar as the liability 
        attributable to such items and services exceeds--
                    (A) the bankruptcy valuation of the individual's 
                property at the time the debt is incurred; reduced by
                    (B) such annual limit of benefits under the limited 
                benefit insurance for the plan year.
        Property in the amount so protected from liability shall be 
        exempt and immune from attachment or seizure with respect to 
        any judgment related to such debt.
            (2) Bankruptcy valuation defined.--In this subsection, the 
        term ``bankruptcy valuation'' means, with respect to property 
        of an individual as of a date, the value of the property as of 
        such date as determined as if the individual were a debtor in a 
        bankruptcy case that could have been filed under title 11 of 
        the United States Code and the property could not be exempt 
        under section 522 of such title.
            (3) No requirement for providers to furnish subsequent 
        services without ensuring payment.--Except as may be explicitly 
        provided in other law (such as under section 1867 of the Social 
        Security Act, popularly known as EMTALA), a health care 
        provider is not required to furnish any items or services to an 
        individual who has exhausted benefits under limited benefit 
        insurance for a plan year without the individual (or another 
        person on the individual's behalf) providing for such advance 
        or guarantee of payment for such items and services as may be 
        arranged between the health care provider and the individual.

           Subtitle C--Universal Health Insurance Tax Benefit

SEC. 131. UNIVERSAL HEALTH INSURANCE TAX BENEFIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36B the following new section:

``SEC. 36C. UNIVERSAL HEALTH INSURANCE TAX CREDIT.

    ``(a) In General.--In the case of an individual who is a qualified 
resident, there shall be allowed as a credit against the tax imposed by 
this subtitle for any taxable year an amount equal to the universal 
health credit amount of the taxpayer for the taxable year.
    ``(b) Universal Health Credit Amount.--For purposes of this 
section--
            ``(1) In general.--The term `universal health credit 
        amount' means the sum of the amounts determined under paragraph 
        (2) with respect to all months of the taxpayer for the taxable 
        year.
            ``(2) Monthly credit amount.--
                    ``(A) In general.--Subject to paragraph (4), the 
                amount determined under this paragraph with respect to 
                any month shall be an amount equal to the sum of--
                            ``(i) \1/12\ of $2,500 in the case of any 
                        month the first day of which the taxpayer is a 
                        qualified resident and is covered by creditable 
                        coverage (twice such amount in the case of a 
                        joint return if both spouses are so covered by 
                        creditable coverage and are qualified 
                        residents), plus
                            ``(ii) \1/12\ of an amount equal to $1,500 
                        multiplied by the number of qualifying children 
                        (within the meaning of section 152) who are 
                        qualified residents and--
                                    ``(I) for whom the taxpayer is 
                                allowed a deduction under section 151 
                                for the taxable year in which such 
                                month ends, and
                                    ``(II) who are covered by 
                                creditable coverage on the first day of 
                                such month.
                    ``(B) Carryforward of monthly credit amount in case 
                credit amount exceeds hsa contributions and premium 
                payments.--In the case of any month for which the 
                credit amount determined with respect to the taxpayer 
                under subparagraph (A) exceeds the limitation amount 
                determined with respect to the taxpayer for such month 
                under paragraph (3), such excess may be carried forward 
                to any subsequent month during the taxable year for 
                purposes of determining the credit amount for such 
                month under this paragraph.
            ``(3) Monthly limitation.--
                    ``(A) In general.--The amount determined under 
                paragraph (2) for any month of the taxpayer shall not 
                exceed the sum of--
                            ``(i) the amounts contributed to a health 
                        savings account of the taxpayer for such month, 
                        plus
                            ``(ii) the premiums paid by the taxpayer 
                        for creditable coverage.
                    ``(B) Carryforward of monthly limitation in case 
                hsa contributions and premium payments exceed monthly 
                credit amount.--In the case of any month for which the 
                amount determined with respect to the taxpayer under 
                subparagraph (A) exceeds the credit amount determined 
                with respect to the taxpayer for such month under 
                paragraph (2), such excess may be carried forward to 
                any subsequent month during the taxable year for 
                purposes of determining the limitation under 
                subparagraph (A).
            ``(4) Adjustment for limited benefit insurance.--In the 
        case of a taxpayer whose only health insurance coverage for a 
        month is limited benefit insurance (as defined in section 
        123(b) of the World's Greatest Healthcare Plan Act of 2016), 
        the amount determined under paragraph (2) shall be decreased by 
        such proportion as the Secretary, in consultation with the 
        Secretary of Health and Human Services, determines appropriate, 
        taking into account the ratio of the actuarial value of such 
        limited benefit insurance to the average actuarial value of 
        health insurance coverage that is not limited benefit 
        insurance.
            ``(5) Adjustment for geographic area and age of covered 
        individual.--The amount determined under paragraph (2) shall be 
        adjusted, in a manner specified by the Secretary, in 
        consultation with and based on data collected by the Secretary 
        of Health and Human Services, to take into account, for a 
        taxpayer or other covered individual of an age and residing in 
        an area, the ratio of the average cost of typical individual 
        health insurance coverage for an individual of such age and 
        residing in such area to the national average cost of such 
        typical health insurance coverage. Such adjustment shall be 
        made in a manner so that the application of this paragraph is 
        estimated not to change the aggregate amount of the credits 
        allowable under this section for taxable years ending in a 
        year.
    ``(c) Coordination With Employer-Provided Health Insurance Tax 
Subsidy.--
            ``(1) Credit limited by employer-provided health insurance 
        tax subsidy.--The credit allowed under this section for any 
        taxable year shall not exceed an amount equal to the excess (if 
        any) of--
                    ``(A) the maximum credit which would be allowed for 
                all months of the taxpayer during the taxable year 
                (determined under subsection (b)(2) and without regard 
                to this subsection, the limitation under subsection 
                (b)(3), and any reduction under subsection (d)(1)), 
                over
                    ``(B) the taxpayer's employer-provided health 
                insurance tax subsidy for the taxable year.
            ``(2) Recapture of excess employer-provided health 
        insurance tax subsidy.--In the case of any taxpayer with 
        respect to whom for any taxable year the amount described in 
        subparagraph (B) of paragraph (1) exceeds the amount described 
        in subparagraph (A) of such paragraph, the credit allowed under 
        this section shall be treated as zero and the tax imposed by 
        this chapter for the taxable year shall be increased by the 
        amount of such excess.
            ``(3) Employer-provided health insurance tax subsidy.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `employer-provided 
                health insurance tax subsidy' means, with respect to 
                any taxpayer for a taxable year, the sum of--
                            ``(i) the Federal income tax subsidy of the 
                        taxpayer for the taxable year, plus
                            ``(ii) the Federal payroll tax subsidy of 
                        the taxpayer for the taxable year.
                    ``(B) Federal income tax subsidy.--The term 
                `Federal income tax subsidy' means, with respect to any 
                taxpayer for the taxable year, the excess (if any) of--
                            ``(i) the amount of tax that would have 
                        been imposed by this chapter for the taxable 
                        year had such tax been determined without 
                        regard to this section and by including amounts 
                        otherwise excluded from gross income which were 
                        paid by or on behalf of the taxpayer for 
                        employer-provided insurance that constitutes 
                        medical care, over
                            ``(ii) the amount of tax imposed by this 
                        chapter for the taxable year (determined 
                        without regard to this section).
                    ``(C) Federal payroll tax subsidy.--The term 
                `Federal payroll tax subsidy' means, with respect to 
                any taxpayer for the taxable year, the excess (if any) 
                of--
                            ``(i) the sum of--
                                    ``(I) the amount of tax that would 
                                have been imposed by chapter 21 with 
                                respect to any wages of the taxpayer 
                                paid during the taxable year had such 
                                tax been determined by including 
                                amounts otherwise excluded from wages 
                                which were paid by or on behalf of the 
                                taxpayer during the taxable year for 
                                employer-provided insurance that 
                                constitutes medical care, plus
                                    ``(II) the amount of tax that would 
                                have been imposed by chapter 2 on any 
                                self-employment income of the taxpayer 
                                for such taxable year had self-
                                employment income been determined 
                                without regard to any deduction from 
                                gross income for amounts paid for 
                                insurance which constitutes medical 
                                care for the taxpayer, the taxpayer's 
                                spouse, and any qualifying children 
                                (within the meaning of section 152) for 
                                whom the taxpayer is allowed a 
                                deduction under section 151 for the 
                                taxable year, over
                            ``(ii) the amount of tax imposed with 
                        respect to the taxpayer during such taxable 
                        year under chapter 21 and for such taxable year 
                        under chapter 2.
            ``(4) No credit or recapture for insurance provided by 
        employer electing exclusion regime.--In the case of an 
        individual who for any month is covered by insurance that 
        constitutes medical care and that is provided by an employer 
        with respect to which an election is in effect for such month 
        under section 131(b) of the World's Greatest Healthcare Plan 
        Act of 2016--
                    ``(A) the monthly credit amount determined under 
                subsection (b)(2) for such month with respect to such 
                individual shall be zero, and
                    ``(B) such month shall not be taken into account 
                for purposes of determining any recapture under 
                paragraph (2) with respect to such individual.
    ``(d) Reconciliation of Credit and Advance Credit.--
            ``(1) In general.--The amount of the credit allowed under 
        this section for any taxable year (after the application of 
        subsections (b) and (c)) shall be reduced (but not below zero) 
        by the amount of any advance payment of such credit under 
        subsection (e)(1).
            ``(2) Excess advance payments.--
                    ``(A) In general.--If the advance payments to a 
                taxpayer under subsection (e)(1) for a taxable year 
                exceed the credit allowed by this section (determined 
                without regard to paragraph (1)), the tax imposed by 
                this chapter for the taxable year shall be increased by 
                the amount of such excess.
                    ``(B) Limitation on increase.--In the case of a 
                taxpayer whose household income is less than 400 
                percent of the poverty line for the size of the family 
                involved for the taxable year, the amount of the 
                increase under subparagraph (A) shall in no event 
                exceed the applicable dollar amount determined in 
                accordance with the following table (one-half of such 
                amount in the case of a taxpayer whose tax is 
                determined under section 1(c) for the taxable year):

``If the household income           The applicable dollar amount is:
        (expressed as a percent of 
        poverty line) is:
        Less than 200%.....................................       $600 
        At least 200% but less than 300%...................     $1,500 
        At least 300% but less than 400%...................     $2,500.
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Advance payment program.--
                    ``(A) In general.--The Secretary of the Treasury, 
                in consultation with the Secretary of Health and Human 
                Services, shall establish a program--
                            ``(i) to make advance determinations with 
                        respect to the eligibility of individuals for 
                        the credit allowed under this section, and
                            ``(ii) to make advance payments of the 
                        credit allowed under this section, at the 
                        election of any such individual so eligible, 
                        directly to the health savings account of any 
                        such individual, or, as a subsidy to the cost 
                        of health insurance coverage provided to any 
                        such individual, to the health insurance issuer 
                        providing such coverage or the person that 
                        administers the plan benefits with respect to 
                        such coverage.
                    ``(B) Program requirements.--Such program shall be 
                established under rules similar to the rules of section 
                1412 of the Patient Protection and Affordable Care Act, 
                as in effect on the day before the date of the 
                enactment of this section, except that advance 
                determinations and advance payments shall be made on 
                request of the individual with respect to whom the 
                determination is to be made.
            ``(2) Information requirements.--
                    ``(A) In general.--Each person providing health 
                insurance coverage which constitutes medical care, and 
                each trustee of a health savings account, shall provide 
                the following information to the Secretary and to the 
                taxpayer with respect to such coverage or such account:
                            ``(i) The total premium for the coverage 
                        without regard to the credit under this 
                        section.
                            ``(ii) The aggregate amount of any advance 
                        payment of such credit made with respect to 
                        such coverage or to such account.
                            ``(iii) The name, address, age, and TIN of 
                        the primary insured or account holder (as the 
                        case may be) and the name, age, and TIN of each 
                        other individual obtaining coverage under such 
                        policy of insurance.
                            ``(iv) Any information provided to such 
                        person necessary to determine eligibility for, 
                        and the amount of, such credit.
                            ``(v) Information necessary to determine 
                        whether a taxpayer has received excess advance 
                        payments.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to any coverage with respect to which reporting under 
                section 6051 is required.
            ``(3) Indexing.--
                    ``(A) In general.--In the case of any calendar year 
                beginning after 2016, each of the dollar amounts in 
                subsection (b)(2) and in the table contained under 
                subsection (d)(2)(B) shall be equal to such dollar 
                amount multiplied by the ratio of--
                            ``(i) the current dollar gross domestic 
                        product (as determined based on the third 
                        estimate of the Bureau of Economic Analysis of 
                        the Department of Commerce for the second 
                        quarter of the previous year), to
                            ``(ii) the current dollar gross domestic 
                        product (as so determined) for the second 
                        quarter of 2015.
                    ``(B) Rounding.--If the amount of any change under 
                subparagraph (A) is not a multiple of $50, such change 
                shall be rounded to the next lowest multiple of $50.
    ``(f) Definitions.--For purposes of this section--
            ``(1) Creditable coverage.--The term `creditable coverage' 
        has the meaning given such term for purposes of title XXVII of 
        the Public Health Service Act.
            ``(2) Qualified resident.--The term `qualified resident' 
        means an individual who is a citizen or national of the United 
        States or otherwise lawfully residing in the United States 
        under color of law.''.
    (b) Election by Employer To Make Excise Tax Applicable and To Be 
Governed Solely by Exclusion Regime.--
            (1) In general.--If an eligible employer makes the election 
        under this subsection (at such time and in such form and manner 
        as the Secretary shall prescribe) the tax imposed by section 
        4980I of the Internal Revenue Code of 1986 shall apply to any 
        excess benefit with respect to employer-sponsored health 
        coverage provided by such employer and the credit and recapture 
        under section 36C of such Code shall not apply with respect to 
        individuals covered by such coverage. Such election, once made, 
        may be revoked only with the consent of the Secretary.
            (2) Eligible employer.--For purposes of this subsection, 
        the term ``eligible employer'' means an employer in existence 
        before the date of the enactment of this Act.
            (3) Controlled groups.--For purposes of this subsection, 
        all persons treated as a single employer under subsection (a) 
        or (b) of section 52 of the Internal Revenue Code of 1986 or 
        subsection (m) or (o) of section 414 of such Code shall be 
        treated as a single covered entity.
            (4) Regulations.--The Secretary of the Treasury shall 
        prescribe such regulations as may be necessary to prevent the 
        avoidance of the purposes of this subsection.
    (c) Excise Tax on High Cost Employer-Sponsored Health Insurance 
Only To Apply to Employers Making Election.--Section 4980I(d)(1)(B) of 
such Code (relating to exceptions) is amended by striking ``or'' at the 
end of clause (ii), by striking the period at the end of clause (iii) 
and inserting ``, or'', and by adding at the end the following new 
clause:
                            ``(iv) any group health plan made available 
                        by an employer which does not have in effect an 
                        election under section 131(b) of the World's 
                        Greatest Healthcare Plan Act of 2016.''.
    (d) Disqualification From Exchange Plan Subsidies for Individual 
Once They Elect Tax Benefits.--Section 36B(c)(1) of such Code is 
amended by adding at the end the following new subparagraph:
                    ``(E) Denial of credit for those electing universal 
                credit.--In the case of an individual who is allowed a 
                credit under section 36C for any taxable year, no 
                credit shall be allowed under this section to such 
                individual for such taxable year or any subsequent 
                taxable year.''.
    (e) Guidance.--The Secretary of the Treasury shall issue such 
guidance as is necessary--
            (1) to assist employees and employers in adjusting Federal 
        income tax withholding to take into account the universal 
        health insurance tax credit under section 36C of the Internal 
        Revenue Code of 1986 (and any advance payment thereof), and
            (2) to require employers to report to each employee with 
        respect to periods not longer than quarterly the employer-
        provided health insurance tax subsidy (as defined in section 
        36C(c)(3) of such Code) with respect to such employee for such 
        period.
    (f) Clerical Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 36B the 
following new item:

``Sec. 36C. Universal health insurance tax credit.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 132. APPLICATION OF PORTION OF UNUSED TAX CREDITS BY STATES FOR 
              INDIGENT HEALTH CARE.

    (a) Computation of Unused Credits.--The Secretary, in consultation 
with the Secretary of the Treasury, shall calculate for each State for 
each year, beginning with 2017, using the most recent data available--
            (1) the maximum aggregate amount of credits under section 
        36C of the Internal Revenue Code of 1986 that would have been 
        allowed for the year for qualified residents of the State for 
        taxable years ending in the year if all eligible qualified 
        residents had qualified for such credits;
            (2) the aggregate amount of credits under such section that 
        were allowed for taxable years ending in that the year by 
        qualified residents of such State; and
            (3) 25 percent of the amount by which--
                    (A) the amount determined under paragraph (1) with 
                respect to qualified residents of the State for such 
                year; exceeds
                    (B) the amount determined under paragraph (2) for 
                such State for that year.
    (b) Appropriation.--For the purpose of making grants to States 
under this section, there is hereby appropriated to the Secretary, out 
of any funds in the Treasury not otherwise appropriated, for each year 
(beginning with 2017) an amount equivalent to the amount determined 
under subsection (a)(3) for all States under subsection (a) for the 
year in which such fiscal year ends, subject to adjustment under 
subsection (d)(2).
    (c) Grants to States for Indigent Assistance.--
            (1) Application.--A State may file with the Secretary (in a 
        form and manner specified by the Secretary) an application to 
        provide assistance in furnishing health services to indigent 
        individuals residing in the State. Such application shall 
        demonstrate the manner in which such assistance is furnished in 
        an equitable manner to individuals residing in all parts of the 
        State.
            (2) Amount of funds.--From the funds appropriated under 
        subsection (b) for a year, the amount of funds paid to any 
        State in any year under this section with an application filed 
        in accordance with paragraph (1) is equal to an amount 
        specified in the application, but not to exceed the amount 
        computed under subsection (a)(3) for the State and the year.
            (3) Use of funds.--Funds paid to a State under this 
        subsection may be used only to assist in the furnishing of 
        health services to uninsured individuals residing in the State 
        or for purposes of increasing the payment adjustments made 
        under sections 1886(d)(5)(F) and 1923 of the Social Security 
        Act (42 U.S.C. 1395ww(d)(5)(F), 1396r-4) to hospitals that 
        serve a disproportionate share of such individuals in the 
        State.
    (d) Initial Estimate; Final Calculation and Reconciliation.--
            (1) Use of estimates.--The calculations under subsection 
        (a) for a year shall initially be estimated before the 
        beginning of the year. Payments under this section to a State 
        for a year shall be made, subject to reconciliation under 
        paragraph (2), based on the amount so estimated.
            (2) Reconciliation based on final calculation.--The 
        calculations under subsection (a) for a year shall also be made 
        after the end of the year. Insofar as the amount calculated 
        under this paragraph for subsection (a)(3) for a State for a 
        year exceeds (or is less than) by a material amount from the 
        amount for subsection (a)(3) estimated and applied for the 
        State and year under paragraph (1), the amount calculated under 
        subsection (a)(3) for the State for the 2nd year beginning 
        after such year, shall be reduced or increased, respectively by 
        the amount of such excess or deficit.

SEC. 133. MEDICAID OPTION OF ENROLLMENT UNDER PRIVATE PLAN AND 
              CONTRIBUTION TO AN HSA.

    (a) In General.--Notwithstanding any other provision of law, a 
State plan under title XIX of the Social Security Act (42 U.S.C. 1396 
et seq.) may make available to an individual, who is entitled to 
medical assistance for a full range of acute care items and services 
under such title and at the individual's option, instead of the medical 
assistance otherwise provided, medical assistance consisting of 
coverage under a health plan that qualifies for a tax credit under 
section 36C of the Internal Revenue Code of 1986, but only if the State 
provides for the individual medical assistance, in the form of a 
deposit into a health savings account for the individual, an amount 
equivalent to the amount by which the amount of tax credit for the 
individual under such section exceeds the cost of coverage of the 
individual under the plan.
    (b) FFP Treatment.--The payments by a State described in subsection 
(a) for coverage under a health plan and for deposit into a health 
savings account shall be treated as medical assistance for purposes of 
section 1903 of the Social Security Act (42 U.S.C. 1396b) and subject 
to Federal financial participating, including the application of State 
matching payments, in the same manner as other medical assistance 
furnished under title XIX of such Act, except that such amount shall be 
reduced by the amount of any health insurance credits provided under 
section 36C of the Internal Revenue Code of 1986 with respect to such 
coverage or deposit.

 TITLE II--IMPROVING HEALTH SAVINGS ACCOUNTS TO PROMOTE ACCOUNTABILITY

SEC. 201. TRANSITION TO NON-DEDUCTIBLE HSAS.

    (a) Non-Deductible HSAs.--Subchapter F of chapter 1 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
part:

                   ``PART IX--HEALTH SAVINGS ACCOUNTS

``Sec. 530A. Roth HSAs.

``SEC. 530A. ROTH HSAS.

    ``(a) In General.--A Roth HSA shall be exempt from taxation under 
this subtitle. Notwithstanding the preceding sentence, the Roth HSA 
shall be subject to the taxes imposed by section 511 (relating to 
imposition of tax on unrelated business income of charitable 
organizations). No deduction shall be allowed for any contribution to a 
Roth HSA.
    ``(b) Dollar Limitation.--
            ``(1) In general.--The aggregate amount of contributions 
        for any taxable year to all Roth HSAs maintained for the 
        benefit of an individual shall not exceed the sum of the 
        monthly limitations for month during such taxable year that the 
        individual is an eligible individual.
            ``(2) Monthly limitation.--The monthly limitation for any 
        month is \1/12\ of--
                    ``(A) in the case of an eligible individual who has 
                self-only creditable coverage as of the first day of 
                such month, $5,000, and
                    ``(B) in the case of an eligible individual who has 
                family creditable coverage as of the first day of such 
                month, the amount in effect under subparagraph (A) for 
                the taxable year multiplied by the number of 
                individuals (including the eligible individual) covered 
                under such family creditable coverage as of such day.
            ``(3) Additional contributions for individuals 55 or 
        older.--In the case of an individual who has attained age 55 
        before the close of the taxable year, the applicable limitation 
        under subparagraphs (A) and (B) of paragraph (2) shall be 
        increased by $1,000.
            ``(4) Coordination with other contributions.--The 
        limitation which would (but for this paragraph) apply under 
        this subsection to an individual for any taxable year shall be 
        reduced (but not below zero) by the sum of--
                    ``(A) the aggregate amount paid for such taxable 
                year to Archer MSAs of such individual,
                    ``(B) the aggregate amount contributed to Roth HSAs 
                of such individual which is excludable from the 
                taxpayer's gross income for such taxable year under 
                section 106(d) (and such amount shall not be allowed as 
                a deduction under subsection (a)), and
                    ``(C) the aggregate amount contributed to Roth HSAs 
                of such individual for such taxable year under section 
                408(d)(9) (and such amount shall not be allowed as a 
                deduction under subsection (a)).
        Subparagraph (A) shall not apply with respect to any individual 
        to whom paragraph (5) applies.
            ``(5) Special rule for married individuals.--In the case of 
        individuals who are married to each other, if either spouse has 
        family coverage--
                    ``(A) both spouses shall be treated as having only 
                such family coverage (and if such spouses each have 
                family coverage under different plans, as having the 
                family coverage with the lowest annual deductible), and
                    ``(B) the limitation under paragraph (1) (after the 
                application of subparagraph (A) and without regard to 
                any additional contribution amount under paragraph 
                (3))--
                            ``(i) shall be reduced by the aggregate 
                        amount paid to Archer MSAs of such spouses for 
                        the taxable year, and
                            ``(ii) after such reduction, shall be 
                        divided equally between them unless they agree 
                        on a different division.
            ``(6) Denial of deduction to dependents.--No contribution 
        may be made to a Roth HSA under this section by any individual 
        with respect to whom a deduction under section 151 is allowable 
        to another taxpayer for a taxable year beginning in the 
        calendar year in which such individual's taxable year begins.
            ``(7) Medicare eligible individuals.--The limitation under 
        this subsection for any month with respect to an individual 
        shall be zero for the first month such individual is entitled 
        to benefits under title XVIII of the Social Security Act and 
        for each month thereafter.
            ``(8) Increase in limit for individuals becoming eligible 
        individuals after the beginning of the year.--
                    ``(A) In general.--For purposes of computing the 
                limitation under paragraph (1) for any taxable year, an 
                individual who is an eligible individual during the 
                last month of such taxable year shall be treated--
                            ``(i) as having been an eligible individual 
                        during each of the months in such taxable year, 
                        and
                            ``(ii) as having been enrolled, during each 
                        of the months such individual is treated as an 
                        eligible individual solely by reason of clause 
                        (i), in the same high deductible health plan in 
                        which the individual was enrolled for the last 
                        month of such taxable year.
                    ``(B) Failure to maintain creditable coverage.--
                            ``(i) In general.--If, at any time during 
                        the testing period, the individual is not an 
                        eligible individual, then--
                                    ``(I) gross income of the 
                                individual for the taxable year in 
                                which occurs the first month in the 
                                testing period for which such 
                                individual is not an eligible 
                                individual is increased by the 
                                aggregate amount of all contributions 
                                to the Roth HSA of the individual which 
                                could not have been made but for 
                                subparagraph (A), and
                                    ``(II) the tax imposed by this 
                                chapter for any taxable year on the 
                                individual shall be increased by 10 
                                percent of the amount of such increase.
                            ``(ii) Exception for disability or death.--
                        Subclauses (I) and (II) of clause (i) shall not 
                        apply if the individual ceased to be an 
                        eligible individual by reason of the death of 
                        the individual or the individual becoming 
                        disabled (within the meaning of section 
                        72(m)(7)).
                            ``(iii) Testing period.--The term `testing 
                        period' means the period beginning with the 
                        last month of the taxable year referred to in 
                        subparagraph (A) and ending on the last day of 
                        the 12th month following such month.
    ``(c) Roth HSA.--For purposes of this section--
            ``(1) In general.--The term `Roth HSA' means a trust 
        created or organized in the United States as a Roth HSA 
        exclusively for the purpose of paying the qualified medical 
        expenses of the account beneficiary, but only if the written 
        governing instrument creating the trust meets the following 
        requirements:
                    ``(A) Except in the case of a rollover contribution 
                described in subsection (f)(5) or section 220(f)(5), no 
                contribution will be accepted--
                            ``(i) unless it is in cash, or
                            ``(ii) to the extent such contribution, 
                        when added to previous contributions to the 
                        trust for the calendar year, exceeds the sum 
                        of--
                                    ``(I) the dollar amount in effect 
                                under subsection (b)(2)(B), and
                                    ``(II) the dollar amount in effect 
                                under subsection (b)(3).
                    ``(B) The trustee is a bank (as defined in section 
                408(n)), an insurance company (as defined in section 
                816), or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) The interest of an individual in the balance 
                in his account is nonforfeitable.
            ``(2) Qualified medical expenses.--For purposes of this 
        section--
                    ``(A) In general.--The term `qualified medical 
                expenses' means, with respect to an account 
                beneficiary, amounts paid by such beneficiary for 
                medical care (as defined in section 213(d) as in effect 
                on the day before the date of the enactment of the 
                World's Greatest Healthcare Plan Act of 2016) for such 
                individual, the spouse of such individual, and any 
                dependent (as defined in section 152, determined 
                without regard to subsections (b)(1), (b)(2), and 
                (d)(1)(B) thereof) of such individual, but only to the 
                extent such amounts are not compensated for by 
                insurance or otherwise.
                    ``(B) Limitation on health insurance purchased from 
                account.--Such term shall not include any payment for 
                health benefits coverage that is not creditable 
                coverage (as defined in section 36C).
                    ``(C) Exceptions.--Subparagraph (B) shall not apply 
                to any expense for coverage under--
                            ``(i) a health plan during any period of 
                        continuation coverage required under any 
                        Federal law,
                            ``(ii) a qualified long-term care insurance 
                        contract (as defined in section 7702B(b)),
                            ``(iii) a health plan during a period in 
                        which the individual is receiving unemployment 
                        compensation under any Federal or State law, or
                            ``(iv) in the case of an account 
                        beneficiary who has attained the age specified 
                        in section 1811 of the Social Security Act, any 
                        health insurance other than a medicare 
                        supplemental policy (as defined in section 1882 
                        of the Social Security Act).
            ``(3) Account beneficiary.--The term `account beneficiary' 
        means the individual on whose behalf the Roth HSA was 
        established.
            ``(4) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 219(f)(3) (relating to time when 
                contributions deemed made).
                    ``(B) Except as provided in section 106(d), section 
                219(f)(5) (relating to employer payments).
                    ``(C) Section 408(g) (relating to community 
                property laws).
                    ``(D) Section 408(h) (relating to custodial 
                accounts).
    ``(d) Eligible Individual; Creditable Coverage.--For purposes of 
this section--
            ``(1) Eligible individual.--The term `eligible individual' 
        means, with respect to any month, any individual if such 
        individual is covered under creditable coverage as of the 1st 
        day of such month.
            ``(2) Creditable coverage.--The term `creditable coverage' 
        shall have the meaning given such term in section 36C(f).
    ``(e) Tax Treatment of Distributions.--
            ``(1) Amounts used for qualified medical expenses.--Any 
        amount paid or distributed out of a Roth HSA which is used 
        exclusively to pay qualified medical expenses of any account 
        beneficiary shall not be includible in gross income.
            ``(2) Inclusion of amounts not used for qualified medical 
        expenses.--Any amount paid or distributed out of a Roth HSA 
        which is not used exclusively to pay the qualified medical 
        expenses of the account beneficiary shall be included in the 
        gross income of such beneficiary.
            ``(3) Excess contributions returned before due date of 
        return.--
                    ``(A) In general.--If any excess contribution is 
                contributed for a taxable year to any Roth HSA of an 
                individual, paragraph (2) shall not apply to 
                distributions from the Roth HSAs of such individual (to 
                the extent such distributions do not exceed the 
                aggregate excess contributions to all such accounts of 
                such individual for such year) if--
                            ``(i) such distribution is received by the 
                        individual on or before the last day prescribed 
                        by law (including extensions of time) for 
                        filing such individual's return for such 
                        taxable year, and
                            ``(ii) such distribution is accompanied by 
                        the amount of net income attributable to such 
                        excess contribution.
                Any net income described in clause (ii) shall be 
                included in the gross income of the individual for the 
                taxable year in which it is received.
                    ``(B) Excess contribution.--For purposes of 
                subparagraph (A), the term `excess contribution' means 
                any contribution (other than a rollover contribution 
                described in paragraph (5) or section 220(f)(5)) which 
                exceeds the contribution limitation with respect to the 
                individual for the taxable year.
            ``(4) Additional tax on distributions not used for 
        qualified medical expenses.--
                    ``(A) In general.--The tax imposed by this chapter 
                on the account beneficiary for any taxable year in 
                which there is a payment or distribution from a Roth 
                HSA of such beneficiary which is includible in gross 
                income under paragraph (2) shall be increased by 10 
                percent of the amount which is so includible.
                    ``(B) Exception for disability or death.--
                Subparagraph (A) shall not apply if the payment or 
                distribution is made after the account beneficiary 
                becomes disabled within the meaning of section 72(m)(7) 
                or dies.
                    ``(C) Exception for distributions after medicare 
                eligibility.--Subparagraph (A) shall not apply to any 
                payment or distribution after the date on which the 
                account beneficiary attains the age specified in 
                section 1811 of the Social Security Act.
            ``(5) Rollover contribution.--An amount is described in 
        this paragraph as a rollover contribution if it meets the 
        requirements of subparagraphs (A) and (B).
                    ``(A) In general.--Paragraph (2) shall not apply to 
                any amount paid or distributed from a health savings 
                account (as defined in section 223) or a Roth HSA to 
                the account beneficiary to the extent the amount 
                received is paid into a Roth HSA for the benefit of 
                such beneficiary not later than the 60th day after the 
                day on which the beneficiary receives the payment or 
                distribution.
                    ``(B) Limitation.--This paragraph shall not apply 
                to any amount described in subparagraph (A) received by 
                an individual from a health savings account or a Roth 
                HSA if, at any time during the 1-year period ending on 
                the day of such receipt, such individual received any 
                other amount described in subparagraph (A) from a 
                health savings account or Roth HSA which was not 
                includible in the individual's gross income because of 
                the application of this paragraph.
            ``(6) Transfer of account incident to divorce.--The 
        transfer of an individual's interest in a Roth HSA to an 
        individual's spouse or former spouse under a divorce or 
        separation instrument described in subparagraph (A) of section 
        71(b)(2) shall not be considered a taxable transfer made by 
        such individual notwithstanding any other provision of this 
        subtitle, and such interest shall, after such transfer, be 
        treated as a Roth HSA with respect to which such spouse is the 
        account beneficiary.
            ``(7) Treatment after death of account beneficiary.--If an 
        individual acquires an account beneficiary's interest in a 
        health savings account by reason of the death of the account 
        beneficiary, such health savings account shall be treated as if 
        the individual were the account beneficiary.
    ``(f) Cost-of-Living Adjustment.--
            ``(1) In general.--In the case of any calendar year 
        beginning after 2016, the $5,000 dollar amount in subsection 
        (b)(2) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year, 
                determined--
                            ``(i) by substituting `calendar year 2015' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof, and
                            ``(ii) by substituting `CPI medical care 
                        component' for `CPI'.
            ``(2) CPI medical care component.--For purposes of this 
        paragraph, the term `CPI medical care component' means the 
        medical care component for the Consumer Price Index for All 
        Urban Consumers published by the Department of Labor.
            ``(3) Rounding.--If the amount of any increase under the 
        preceding sentence is not a multiple of $50, such increase 
        shall be rounded to the next lowest multiple of $50.
    ``(g) Reports.--The Secretary may require--
            ``(1) the trustee of a Roth HSA to make such reports 
        regarding such account to the Secretary and to the account 
        beneficiary with respect to contributions, distributions, the 
        return of excess contributions, and such other matters as the 
        Secretary determines appropriate, and
            ``(2) any person who provides an individual with creditable 
        coverage to make such reports to the Secretary and to the 
        account beneficiary with respect to such plan as the Secretary 
        determines appropriate.
The reports required by this subsection shall be filed at such time and 
in such manner and furnished to such individuals at such time and in 
such manner as may be required by the Secretary.''.
    (b) Limit on Contributions to Deductible Health Savings Accounts.--
Section 223 of such Code is amended by adding at the end the following 
new subsection:
    ``(i) Limited Contributions After 2016.--
            ``(1) In general.--No contribution may be accepted by a 
        health savings account after December 31, 2016.
            ``(2) Exceptions.--Paragraph (1) shall not apply--
                    ``(A) in the case of a rollover contribution 
                described in subsection (f)(5) or section 220(f)(5), or
                    ``(B) in the case of a month for which an 
                individual is covered by insurance that constitutes 
                medical care and that is provided by an employer with 
                respect to which an election is in effect for such 
                month under section 131(b) of the World's Greatest 
                Healthcare Plan Act of 2016.''.
    (c) Clerical Amendment.--The table of parts for subchapter F of 
chapter 1 of such Code is amended by adding at the end the following 
new item:

               ``Part IX. Roth Health Savings Accounts''.

    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.

SEC. 202. ELIMINATION OF MEDICAL EXPENSE DEDUCTION.

    Section 213 of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new subsection:
    ``(g) Termination.--Except in the case of long-term care premiums 
(as defined in subsection (d)(10)), subsection (a) shall not apply to 
any amounts paid during any taxable year beginning after December 31, 
2015.''.

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

    (a) In General.--Section 223(f)(8) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(8) Treatment after death of account beneficiary.--If an 
        individual acquires an account beneficiary's interest in a 
        health savings account by reason of the death of the account 
        beneficiary, such health savings account shall be treated as if 
        the individual were the account beneficiary.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to interests acquired after the date of the enactment of 
this Act.

SEC. 204. TREATMENT OF CONCIERGE MEDICINE.

    (a) HSAs.--
            (1) Roth hsa.--Section 530A(c)(2)(A) of the Internal 
        Revenue Code of 1986, as added by this Act, is amended by 
        adding at the end the following: ``Such term shall include the 
        payment of a monthly or other prepaid amount for the furnishing 
        (or access to the furnishing) by a physician or group of 
        physicians of physician professional services (and ancillary 
        services).''.
            (2) HSA.--Section 223(d)(2)(A) of such Code is amended by 
        adding at the end the following: ``Such term shall include the 
        payment of a monthly or other prepaid amount for the furnishing 
        (or access to the furnishing) by a physician or group of 
        physicians of physician professional services (and ancillary 
        services).''.
    (b) Not Treated as Health Insurance Coverage.--
            (1) In general.--For purposes of title XXVII of the Public 
        Health Service Act, subtitle B of title I of the Employee 
        Retirement and Income Security Act of 1974, PPACA, and this 
        Act, the offering of concierge medicine shall not be treated as 
        the offering of health insurance coverage and shall not be 
        subject to regulations as such coverage under such Acts.
            (2) Concierge medicine defined.--In this subsection, the 
        term ``concierge medicine'' means the furnishing (or access to 
        the furnishing) by a physician or group of physicians of 
        physician professional services (and ancillary services) in 
        return for payment of a monthly or other prepaid amount.

TITLE III--STATE FLEXIBILITY IN REGULATION OF HEALTH INSURANCE COVERAGE

SEC. 301. STATE FLEXIBILITY IN REGULATION OF HEALTH INSURANCE COVERAGE.

    (a) In General.--States are given the flexibility under section 
122(b) to revise their regulations of the health insurance marketplace, 
without regard to many of the requirements imposed under PPACA, in 
order to promote freedom of choice of affordable health insurance 
coverage options offered outside of an Exchange.
    (b) Construction.--Nothing in the Employee Retirement and Income 
Security Act of 1974 or of any amendments made by the Health Insurance 
Portability and Accountability Act of 1996 shall be interpreted as 
preventing an employer from offering, or making an employer 
contribution towards, individual health insurance coverage for 
employees and dependent family members.

                   TITLE IV--MEDICAID PAYMENT REFORM

SEC. 401. MEDICAID PAYMENT REFORM.

    (a) In General.--Title XIX of the Social Security Act (42 U.S.C. 
1396 et seq.) is amended by inserting after section 1903 the following 
section:

``SEC. 1903A. REFORMED PAYMENT TO STATES.

    ``(a) Reformed Payment System.--
            ``(1) In general.--For quarters beginning on or after the 
        implementation date (as defined in subsection (k)(1)), in lieu 
        of amounts otherwise payable to a State under this title 
        (including any payments attributable to section 1923), except 
        as otherwise provided in this section, the amount payable to 
        such State shall be equal to the sum of the following:
                    ``(A) Adjusted aggregate beneficiary-based 
                amount.--The aggregate beneficiary-based amount 
                specified in subsection (b) for the quarter and the 
                State, adjusted under subsection (e).
                    ``(B) Chronic care quality bonus.--The amount (if 
                any) of the chronic care quality bonus payment 
                specified in subsection (f) for the quarter for the 
                State.
            ``(2) Requirement of state share.--
                    ``(A) In general.--A State shall make, from non-
                Federal funds, expenditures in an amount equal to its 
                State share (as determined under subparagraph (B)) for 
                a quarter for items, services, and other costs for 
                which, but for paragraph (1), Federal funds would have 
                been payable under this title.
                    ``(B) State share.--The State share for a State for 
                a quarter in a fiscal year is equal to the product of--
                            ``(i) the aggregate beneficiary-based 
                        amount specified in subsection (b) for the 
                        quarter and the State; and
                            ``(ii) the ratio of--
                                    ``(I) the State percentage 
                                described in subparagraph (D)(ii) for 
                                such State and fiscal year; to
                                    ``(II) the Federal percentage 
                                described in subparagraph (D)(i) for 
                                such State and fiscal year.
                    ``(C) Nonpayment for failure to pay state share.--
                            ``(i) In general.--If a State fails to 
                        expend the amount required under subparagraph 
                        (A) for a quarter in a fiscal year, the amount 
                        payable to the State under paragraph (1) shall 
                        be reduced by the product of the amount by 
                        which the State payment is less than the State 
                        share and the ratio of--
                                    ``(I) the Federal percentage 
                                described in subparagraph (D)(i) for 
                                such State and fiscal year; to
                                    ``(II) the State percentage 
                                described in subparagraph (D)(ii) for 
                                such State and fiscal year.
                            ``(ii) Grace period.--A State shall not be 
                        considered to have failed to provide payment of 
                        its required State share for a quarter under 
                        subparagraph (A) if the aggregate State payment 
                        towards the State's required State share for 
                        the 4-quarter period beginning with such 
                        quarter exceeds the required State share amount 
                        for such 4-quarter period.
                    ``(D) Federal and state percentages.--In this 
                paragraph, with respect to a State and a fiscal year:
                            ``(i) Federal percentage.--The Federal 
                        percentage described in this clause is 75 
                        percent or, if higher, the Federal medical 
                        assistance percentage for such State for such 
                        fiscal year.
                            ``(ii) State percentage.--The State 
                        percentage described in this clause is 100 
                        percent minus the Federal percentage described 
                        in clause (i).
                    ``(E) Rules for crediting toward state share.--
                            ``(i) General limitation to matchable 
                        expenditures.--A payment for expenditures shall 
                        not be counted toward the State share under 
                        subparagraph (A) unless Federal payments may be 
                        used for such expenditures consistent with 
                        paragraph (3)(B).
                            ``(ii) Further limitations on allowable 
                        expenditures.--A payment for expenditures shall 
                        not be counted towards the State share under 
                        subparagraph (A) if the expenditure is for any 
                        of the following:
                                    ``(I) Abortion.--Expenditures for 
                                an abortion.
                                    ``(II) Intergovernmental 
                                transfers.--An expenditure that is 
                                attributable to an intergovernmental 
                                transfer.
                                    ``(III) Certified public 
                                expenditures.--An expenditure that is 
                                attributable to certified public 
                                expenditures.
                            ``(iii) Crediting fraud and abuse 
                        recoveries.--Amounts recovered by a State 
                        through the operation of its Medicaid fraud and 
                        abuse control unit described in section 1903(q) 
                        shall be fully counted toward the State share 
                        under subparagraph (A).
                    ``(F) Construction.--Nothing in the paragraph shall 
                be construed as preventing a State from expending, from 
                non-Federal funds, an amount under this title in excess 
                of the amount of the State share.
                    ``(G) Determination based upon submitted claims.--
                In applying this paragraph with respect to expenditures 
                of a State for a quarter, the determination of the 
                expenditures for such State for such quarter shall be 
                made after the end of the period (which, as of the date 
                of the enactment of this section, is 2 years) for which 
                the Secretary accepts claims for payment under this 
                title with respect to such quarter.
            ``(3) Use of federal payments.--
                    ``(A) Application of medicaid limitations.--A State 
                may only use Federal payments received under subsection 
                (a) for expenditures for which Federal funds would have 
                been payable under this title but for this section.
                    ``(B) Limitation for certain eligibles.--
                            ``(i) Application of 100 percent federal 
                        poverty line limit on eligibility.--Subject to 
                        clause (iii), a State may not use such Federal 
                        payments to provide medical assistance for an 
                        individual who has an income (as determined 
                        under clause (ii)) that exceeds 100 percent of 
                        the poverty line (as defined in section 
                        2110(c)(5)) applicable to a family of the size 
                        involved.
                            ``(ii) Determination of income using 
                        modified adjusted gross income without any 5 
                        percent increase.--In determining income for 
                        purposes of clause (i) under section 
                        1902(e)(14) (relating to modified adjusted 
                        gross income), the following rules shall apply:
                                    ``(I) Application of spend down.--
                                The State shall take into account the 
                                costs incurred for medical care or for 
                                any other type of remedial care 
                                recognized under State law in the same 
                                manner and to the same extent that such 
                                State takes such costs into account for 
                                purposes of section 1902(a)(17).
                                    ``(II) Disregard of 5 percent 
                                increase.--Subparagraph (I) of section 
                                1902(e)(14) (relating to a 5 percent 
                                reduction) shall not apply.
                            ``(iii) Exception.--Clause (i) shall not 
                        apply to an individual who is--
                                    ``(I) a woman described in clause 
                                (i) of section 1903(v)(4)(A);
                                    ``(II) a child who is an individual 
                                described in clause (i) of section 
                                1905(a);
                                    ``(III) enrolled in a State plan 
                                under this title as of the date of the 
                                enactment of this section for the 
                                period of continuous enrollment; or
                                    ``(IV) described in section 
                                1902(e)(14)(D) (relating to modified 
                                adjusted gross income).
                            ``(iv) Clarification related to community 
                        spouse.--Nothing in this subparagraph shall 
                        supersede the application of section 1924 
                        (related to community spouse income and 
                        assets).
            ``(4) Exceptions for pass-through payments.--
                    ``(A) In general.--Paragraph (1) shall not apply, 
                and amounts shall continue to be payable under this 
                title (and not under subsection (a)), in the case of 
                the following payments (and related administrative 
                costs and expenditures):
                            ``(i) Payments to territories.--Payments to 
                        a State other than the 50 States and the 
                        District of Columbia.
                            ``(ii) Medicare cost sharing.--Payments 
                        attributable to Medicare cost sharing under 
                        section 1905(p).
                            ``(iii) Pediatric vaccines.--Payments 
                        attributable to section 1928.
                            ``(iv) Emergency services for certain 
                        individuals.--Payments for treatment of 
                        emergency medical conditions attributable to 
                        the application of section 1903(v)(2).
                            ``(v) Indian health care facilities.--
                        Payments for medical assistance described in 
                        the third sentence of section 1905(b).
                            ``(vi) Employer-sponsored insurance 
                        (esi).--Payments for medical assistance 
                        attributable to payments to employers for 
                        employer-sponsored health benefits coverage.
                            ``(vii) Other populations with limited 
                        benefit coverage.--Other payments that are 
                        determined by the Secretary to be related to a 
                        specified population for which the medical 
                        assistance under this title is limited and does 
                        not include any inpatient, nursing facility, or 
                        long-term care services.
                    ``(B) Certain expenses.--Paragraph (1) shall not 
                apply, and amounts shall continue to be payable under 
                this title (and not under subsection (a)), in the case 
                of the following:
                            ``(i) Administration of medicare 
                        prescription drug benefit.--Expenditures 
                        described in section 1935(b) (relating to 
                        administration of the Medicare prescription 
                        drug benefit).
                            ``(ii) Payments for hit bonuses.--Payments 
                        under section 1903(a)(3)(F) (relating to 
                        payments to encourage the adoption and use of 
                        certified EHR technology).
                            ``(iii) Payments for design, development, 
                        and installation of mmis and eligibility 
                        systems.--Payments under subparagraphs (A)(i) 
                        and (H)(i) of section 1903(a)(3) for 
                        expenditures for design, development, and 
                        installation of the Medicaid management 
                        information systems and mechanized verification 
                        and information retrieval systems (related to 
                        eligibility).
            ``(5) Payment of amounts.--
                    ``(A) In general.--Except as the Secretary may 
                otherwise provide, amounts shall be payable to a State 
                under subsection (a) in the same manner as amounts are 
                payable under subsection (d) of section 1903 to a State 
                under subsection (a) of such section.
                    ``(B) Information and forms.--
                            ``(i) Submission.--As a condition of 
                        receiving payment under subsection (a), a State 
                        shall submit such information, in such form, 
                        and manner, as the Secretary shall specify, 
                        including information necessary to make the 
                        computations under subsections (c)(2)(C) and 
                        (e).
                            ``(ii) Uniform reporting.--The Secretary 
                        shall develop such forms as may be needed to 
                        assure a system of uniform reporting of such 
                        information across States.
                    ``(C) Required reporting of information on medical 
                loss ratios for managed care.--The information required 
                to be reported under subparagraph (B)(i) shall include 
                information on the medical loss ratio with respect to 
                coverage provided under each Medicaid managed care plan 
                with a contract with the State under section 1903(m) or 
                1932.
    ``(b) Aggregate Beneficiary-Based Amount.--
            ``(1) In general.--The aggregate beneficiary-based amount 
        specified in this subsection for a State for a quarter is equal 
        to the sum of the products, for each of the categories of 
        Medicaid beneficiaries specified in paragraph (2), of the 
        following:
                    ``(A) Beneficiary-based quarterly amount.--The 
                beneficiary-based quarterly amount for such category 
                computed under subsection (c) for such State for such 
                quarter.
                    ``(B) Number of individuals in category.--Subject 
                to subsection (d), the average number of Medicaid 
                beneficiaries enrolled in such category in the State in 
                such quarter.
            ``(2) Categories.--The categories specified in this 
        paragraph are the following:
                    ``(A) Elderly.--A category of Medicaid 
                beneficiaries who are 65 years of age or older.
                    ``(B) Blind or disabled.--A category of Medicaid 
                beneficiaries not described in subparagraph (A) who are 
                described in section 1937(a)(2)(B)(ii).
                    ``(C) Children.--A category of Medicaid 
                beneficiaries not described in subparagraph (B) who are 
                under 21 years of age.
                    ``(D) Other adults.--A category of any Medicaid 
                beneficiaries who are not described in a previous 
                subparagraph of this paragraph.
    ``(c) Computation of Per Beneficiary, Per Category Quarterly 
Amount.--
            ``(1) In general.--For a State, for each category of 
        beneficiary for a quarter--
                    ``(A) First reform year.--For quarters in the first 
                reform year (as defined in subsection (k)(2)), the 
                beneficiary-based quarterly amount is equal to \1/4\ of 
                the base average per beneficiary Federal payments for 
                such State for such category determined under paragraph 
                (2), increased by a factor that reflects the sum of the 
                following:
                            ``(i) Historical medical care component of 
                        cpi through previous reform year.--The 
                        percentage increase in the historical medical 
                        care component of the Consumer Price Index for 
                        all urban consumers (U.S. city average) from 
                        the midpoint of the base fiscal year (as 
                        defined in paragraph (6)) to the midpoint of 
                        the fiscal year preceding the first reform 
                        year.
                            ``(ii) Projected medical care component of 
                        cpi for the first reform year.--The percentage 
                        increase in the projected medical care 
                        component of the Consumer Price Index for all 
                        urban consumers (U.S. city average) from the 
                        midpoint of the previous fiscal year referred 
                        to in clause (i) to the midpoint of the first 
                        reform year.
                    ``(B) Second and third reform years.--The 
                beneficiary-based quarterly amount for a State for a 
                category for quarters in the second reform year or the 
                third reform year is equal to the beneficiary-based 
                quarterly amount under this paragraph for such State 
                and category for the previous reform year increased by 
                the per beneficiary percentage increase (as defined in 
                subparagraph (E)) for such category and reform year.
                    ``(C) Fourth through tenth reform years.--The 
                beneficiary-based quarterly amount for a State for a 
                category for quarters in a reform year beginning with 
                the fourth reform year and ending with the tenth reform 
                year is--
                            ``(i) in the case of a State that is a high 
                        per beneficiary State or a low per beneficiary 
                        State (as defined in paragraph (4)(B)(iii)) for 
                        the category, the amount determined under 
                        clause (i) or (ii) of paragraph (4)(B) for such 
                        State, category, and reform year; or
                            ``(ii) in the case of any other State, the 
                        beneficiary-based quarterly amount under this 
                        paragraph for such State and category for the 
                        previous reform year increased by the per 
                        beneficiary percentage increase for such 
                        category and reform year.
                    ``(D) Eleventh reform year and subsequent reform 
                years.--The beneficiary-based quarterly amount for a 
                State for a category for quarters in a reform year 
                beginning with the eleventh reform year is equal to the 
                beneficiary-based quarterly amount under this paragraph 
                for such State and category for the previous reform 
                year increased by the per beneficiary percentage 
                increase for such category and reform year.
                    ``(E) Annual percentage increase beginning with 
                second reform year.--For purposes of this subsection, 
                the term `per beneficiary percentage increase' means, 
                for a reform year, the sum of--
                            ``(i) the projected percentage change in 
                        nominal gross domestic product from the 
                        midpoint of the previous reform year to the 
                        midpoint of the reform year for which the 
                        percentage increase is being applied; and
                            ``(ii) one percentage point.
            ``(2) Base per beneficiary, per category amount for each 
        state.--
                    ``(A) Average per category.--
                            ``(i) In general.--The Secretary shall 
                        determine, consistent with this paragraph and 
                        paragraph (3), a base per beneficiary, per 
                        category amount for each of the 50 States and 
                        the District of Columbia equal to the average 
                        amount, per Medicaid beneficiary, of Federal 
                        payments under this title, including payments 
                        attributable to disproportionate share hospital 
                        payments under section 1923, for each of the 
                        categories of beneficiaries under subsection 
                        (b)(2) for the base fiscal year for each of the 
                        50 States and the District of Columbia.
                            ``(ii) Best available data.--The 
                        determination under clause (i) shall initially 
                        be estimated by the Secretary, based upon the 
                        best available data at the time the 
                        determination is made.
                            ``(iii) Updates.--The determination under 
                        clause (i) shall be updated by the Secretary on 
                        an annual basis based upon improved data. The 
                        Secretary shall adjust the amounts under 
                        subsection (a)(1)(A) to reflect changes in the 
                        amounts so determined based on such updates.
                    ``(B) Exclusion of pass-through payments.--In 
                computing base per beneficiary, per category amounts 
                under subparagraph (A)(i) the Secretary shall exclude 
                payments described in subsection (a)(4).
                    ``(C) Standardization.--
                            ``(i) In general.--In computing each such 
                        amount, the Secretary shall standardize the 
                        amount in order to remove the variation 
                        attributable to the following:
                                    ``(I) Risk factors.--Such risk 
                                factors as age, health and disability 
                                status (including high cost medical 
                                conditions), gender, institutional 
                                status, and such other factors as the 
                                Secretary determines to be appropriate, 
                                so as to ensure actuarial equivalence.
                                    ``(II) Geographic.--Variations in 
                                costs on a county-by-county basis.
                            ``(ii) Method of standardization.--
                                    ``(I) Consultation in development 
                                of risk standardization.--In developing 
                                the methodology for risk 
                                standardization for purposes of clause 
                                (i)(I), the Secretary shall consult 
                                with the Medicaid and CHIP Payment and 
                                Access Commission, the Medicare Payment 
                                Advisory Commission, and the National 
                                Association of Medicaid Directors.
                                    ``(II) Method for risk 
                                standardization.--In carrying out 
                                clause (i)(I), the Secretary may apply 
                                the hierarchal condition category 
                                methodology under section 
                                1853(a)(1)(C). If the Secretary uses 
                                such methodology, the Secretary shall 
                                adjust the application of such 
                                methodology to take into account the 
                                differences in services provided under 
                                this title compared to title XVIII, 
                                such as the coverage of long term care, 
                                pregnancy, and pediatric services.
                                    ``(III) Method for geographic 
                                standardization.--The Secretary shall 
                                apply the standardization under clause 
                                (i)(II) in a manner similar to that 
                                applied under section 
                                1853(c)(4)(A)(iii).
                            ``(iii) Application on a national, budget 
                        neutral basis.--The standardization under 
                        clause (i) shall be designed and implemented on 
                        a uniform national basis and shall be budget 
                        neutral so as to not result in any aggregate 
                        change in payments under subsection (a).
                            ``(iv) Response to new risk.--Subject to 
                        clause (iii), the Secretary may adjust the 
                        standardization under clause (i) to respond 
                        promptly to new instances of communicable 
                        diseases and other public health hazards.
                            ``(v) Reference to application of risk 
                        adjustment.--For rules related to the 
                        application of risk adjustment to amounts under 
                        subsection (a)(1)(A), see subsection (e).
                    ``(D) Adjustment for temporary fmap increases.--In 
                computing each base per beneficiary, per category 
                amounts under subparagraph (A)(i) the Secretary shall 
                disregard portions of payments that are attributable to 
                a temporary increase in the Federal matching rates, 
                including those attributable to the following:
                            ``(i) PPACA disaster fmap.--Section 
                        1905(aa).
                            ``(ii) ARRA.--Section 5001 of the American 
                        Recovery and Reinvestment Act of 2009 (42 
                        U.S.C. 1396d note).
                            ``(iii) Extraordinary employer pension 
                        contribution.--Section 614 of the Children's 
                        Health Insurance Program Reauthorization Act of 
                        2009 (42 U.S.C. 1396d note).
            ``(3) Allocation of nonmedical assistance payments.--The 
        Secretary shall establish rules for the allocation of payments 
        under this title (other than those payments described in 
        paragraph (1) or (5) of section 1903(a) and including such 
        payments attributable to section 1923)--
                    ``(A) among different categories of beneficiaries; 
                and
                    ``(B) between payments included under subsection 
                (a)(1) and payments described in subsection (a)(4).
            ``(4) Transition to a corridor around the national 
        average.--
                    ``(A) Determination of national average base per 
                beneficiary, per category amount.--Subject to 
                subparagraph (C), the Secretary shall determine a 
                national average base per beneficiary, per category 
                amount equal to the average of the base per 
                beneficiary, per category amounts for each of the 50 
                States and the District of Columbia determined under 
                paragraph (2), weighted by the average number of 
                beneficiaries in each such category and State as 
                determined by the Secretary consistent with subsection 
                (d) for the base fiscal year.
                    ``(B) Transition adjustment.--
                            ``(i) High per beneficiary states.--In the 
                        case of a high per beneficiary State (as 
                        defined in clause (iii)(I)) for a category, the 
                        beneficiary-based quarterly amount for such 
                        State and category for a quarter in a reform 
                        year (beginning with the fourth reform year and 
                        ending with the tenth reform year) is equal to 
                        the sum of--
                                    ``(I) the product of the State-
                                specific factor for such reform year 
                                (as defined in clause (iv)) and the 
                                beneficiary-based quarterly amount that 
                                would otherwise be determined under 
                                paragraph (1) for such State and 
                                category if the State were a State 
                                described in clause (ii) of paragraph 
                                (1)(C), instead of a State described in 
                                clause (i) of such paragraph; and
                                    ``(II) the product of 1 minus the 
                                State-specific factor for such reform 
                                year and the beneficiary-based 
                                quarterly amount that would otherwise 
                                be determined under paragraph (1) for a 
                                State and category if the base per 
                                beneficiary, per category amount 
                                determined under paragraph (2) for the 
                                State and category were equal to 110 
                                percent of the national average base 
                                per beneficiary, per category amount 
                                determined under subparagraph (A) for 
                                such category.
                            ``(ii) Low per beneficiary states.--In the 
                        case of a low per beneficiary State (as defined 
                        in clause (iii)(II)) for a category, the 
                        beneficiary-based quarterly amount for such 
                        State and category for a quarter in a reform 
                        year (beginning with the fourth reform year and 
                        ending with the tenth reform year) is equal to 
                        the sum of--
                                    ``(I) the product of the State-
                                specific factor for such reform year 
                                and the beneficiary-based quarterly 
                                amount that would otherwise be 
                                determined under paragraph (1) for such 
                                State and category if the State were a 
                                State described in clause (ii) of 
                                paragraph (1)(C), instead of a State 
                                described in clause (i) of such 
                                paragraph; and
                                    ``(II) the product of 1 minus the 
                                State-specific factor for such reform 
                                year and the beneficiary-based 
                                quarterly amount that would otherwise 
                                be determined under paragraph (1) for a 
                                State and category if the base per 
                                beneficiary, per category amount 
                                determined under paragraph (2) for the 
                                State and category were equal to 90 
                                percent of the national average base 
                                per beneficiary, per category amount 
                                determined under subparagraph (A) for 
                                such category.
                            ``(iii) High and low per beneficiary states 
                        defined.--In this subparagraph:
                                    ``(I) High per beneficiary state.--
                                The term `high per beneficiary State' 
                                means, with respect to a category, a 
                                State for which the base per 
                                beneficiary, per category amount 
                                determined under paragraph (2) for such 
                                category is greater than 110 percent of 
                                the national average base per 
                                beneficiary, per category amount 
                                determined under subparagraph (A) for 
                                such category.
                                    ``(II) Low per beneficiary state.--
                                The term `low per beneficiary State' 
                                means, with respect to a category, a 
                                State for which the base per 
                                beneficiary, per category amount 
                                determined under paragraph (2) for such 
                                category is less than 90 percent of the 
                                national average base per beneficiary, 
                                per category amount determined under 
                                subparagraph (A) for such category.
                            ``(iv) State-specific factor.--In this 
                        subparagraph, the term `State-specific factor' 
                        means--
                                    ``(I) for the fourth reform year, 
                                \7/8\; and
                                    ``(II) for a subsequent reform 
                                year, the State-specific factor under 
                                this clause for the previous reform 
                                year minus \1/8.\
                    ``(C) No additional expenditures.--
                            ``(i) Determination of increase in federal 
                        expenditures.--For each category for each 
                        reform year (beginning with the fourth reform 
                        year and ending with the tenth reform year), 
                        the Secretary shall determine whether the 
                        application of this paragraph--
                                    ``(I) to the category for the 
                                reform year will result in an aggregate 
                                increase in the aggregate Federal 
                                expenditures under subsection (a); and
                                    ``(II) to all the categories for 
                                the reform year will result in a net 
                                aggregate increase in the aggregate 
                                Federal expenditures under subsection 
                                (a).
                            ``(ii) Adjustment.--If the Secretary 
                        determines under clause (i)(II) that the 
                        application of this paragraph to all the 
                        categories for a reform year will result in a 
                        net aggregate increase in the aggregate Federal 
                        expenditures under subsection (a), the 
                        Secretary shall reduce the national average 
                        base per beneficiary, per category amount 
                        computed under subparagraph (A) for each of the 
                        categories determined under clause (i)(I) for 
                        which there will be an aggregate increase in 
                        the aggregate Federal expenditures under 
                        subsection (a) by such uniform percentage as 
                        will ensure that there is no net aggregate 
                        Federal expenditure increase described in 
                        clause (i)(II) for the reform year.
            ``(5) Reports on per beneficiary rates; appeals.--
                    ``(A) Report to states.--Not later than 8 months 
                after the date of the enactment of this section, the 
                Secretary shall submit to each State the Secretary's 
                initial determination of--
                            ``(i) the base per beneficiary, per 
                        category amounts under paragraph (2) for such 
                        State; and
                            ``(ii) the national average base per 
                        beneficiary, per category amounts under 
                        paragraph (4)(A).
                    ``(B) Opportunity to appeal.--Not later than 3 
                months after the date a State receives notice of the 
                Secretary's initial determination of such base per 
                beneficiary, per category amounts for such State under 
                subparagraph (A)(i), the State may file with the 
                Secretary, in a form and manner specified by the 
                Secretary, an appeal of such determination.
                    ``(C) Determination on appeal.--Not later than 3 
                months after receiving such an appeal, the Secretary 
                shall make a final determination on such amounts for 
                such State. If no such appeal is received for a State, 
                the Secretary's initial determination under 
                subparagraph (A)(i) shall become final.
            ``(6) Base fiscal year defined.--In this section, the term 
        `base fiscal year' means the latest fiscal year, ending before 
        the date of the enactment of this section, for which the 
        Secretary determines that adequate data are available to make 
        the computations required under this subsection.
    ``(d) Not Counting Individuals To Account for Excluded Payments.--
Under rules specified by the Secretary, individuals shall not be 
counted as Medicaid beneficiaries for purposes of subsection (b)(1)(B) 
and subsection (c)(2)(A) in proportion to the extent that such 
individuals are receiving medical assistance for which payments 
described under subsection (a)(4)(A) are made.
    ``(e) Risk Adjustment.--
            ``(1) In general.--The amount under subsection (a)(1)(A) 
        shall be adjusted under this subsection in an appropriate 
        manner, specified by the Secretary and consistent with 
        paragraph (2), to take into account--
                    ``(A) the factors described in subsection 
                (c)(2)(C)(i)(I) within a category of beneficiaries; and
                    ``(B) variations in costs on a county-by-county 
                basis for medical assistance and administrative 
                expenses.
            ``(2) Method of adjustment.--
                    ``(A) In general.--The adjustments under paragraph 
                (1) shall be made in a manner similar to the manner in 
                which similar adjustments are made under subsection 
                (c)(2)(C) and consistent with the requirements of 
                clause (iii) of such subsection and subparagraph (B).
                    ``(B) Biannual update of risk adjustment 
                methodology.--In applying clause (i)(I) of subsection 
                (c)(2)(C) for purposes of subparagraph (A), the 
                Secretary shall, in consultation with the entities 
                described in clause (ii)(I) of such subsection, update 
                the risk adjustment methodology applied as appropriate 
                not less often than every 2 years.
    ``(f) Chronic Care Quality Bonus Payments.--
            ``(1) Determination of bonus payments.--If the Secretary 
        determines that, based on the reports under paragraph (5), with 
        respect to categories of chronic disease for which chronic care 
        performance targets had been established under paragraph (3) 
        for each category of Medicaid beneficiaries specified under 
        subsection (b)(2) such targets have been met by a State for a 
        reform year, the Secretary shall make an additional payment to 
        such State in the amount specified in paragraph (6) for each 
        quarter in the succeeding reform year. Such payments shall be 
        made in a manner specified by the Secretary and may only be 
        used consistent with subsection (a)(3).
            ``(2) Identification of categories of chronic disease.--The 
        Secretary shall determine the categories of chronic disease for 
        which bonus payments may be available under this subsection for 
        each category of Medicaid beneficiaries.
            ``(3) Adoption of quality measurement system and 
        identification of performance targets.--
                    ``(A) System and data.--With respect to the 
                categories of chronic disease under paragraph (2), the 
                Secretary shall adopt a quality measurement system that 
                uses data described in paragraph (4) and is similar to 
                the Five-Star Quality Rating System used to indicate 
                the performance of Medicare Advantage plans under part 
                C of title XVIII.
                    ``(B) Targets.--Using such system and data, the 
                Secretary shall establish for each reform year the 
                chronic care performance targets for purposes of the 
                payments under paragraph (1). Such performance targets 
                shall be established in consultation with States, 
                associations representing individuals with chronic 
                illnesses, entities providing treatment to such 
                individuals for such chronic illnesses, and other 
                stakeholders, including the National Association of 
                Medicaid Directors and the National Governors 
                Association.
            ``(4) Data to be used.--The data to be used under paragraph 
        (3) shall include--
                    ``(A) data collected through methods such as--
                            ``(i) the `Healthcare Effectiveness Data 
                        and Information Set' (also known as `HEDIS') 
                        (or an appropriate successor performance 
                        measurement tool);
                            ``(ii) the `Consumer Assessment of 
                        Healthcare Providers and Systems' (also known 
                        as `CAHPS') (or an appropriate successor 
                        performance measurement tool); and
                            ``(iii) the `Health Outcomes Survey' (also 
                        known as `HOS') (or an appropriate successor 
                        performance measurement tool); and
                    ``(B) other data collected by the State.
            ``(5) Reports.--
                    ``(A) In general.--Each State shall collect, 
                analyze, and report to the Secretary, at a frequency 
                and in a manner to be established by the Secretary, 
                data described in paragraph (4) that permit the 
                Secretary to monitor the State's performance relative 
                to the chronic care performance targets established 
                under paragraph (3).
                    ``(B) Review and verification.--The Secretary may 
                review the data collected by the State under 
                subparagraph (A) to verify the State's analysis of such 
                data with respect to the performance targets under 
                paragraph (3).
            ``(6) Amount of bonus payments.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), with respect to each category of Medicaid 
                beneficiaries, in the case of a State that the 
                Secretary determines, based on the chronic care 
                performance targets set under paragraph (3) for a 
                reform year for such category, performs--
                            ``(i) in the top five States in such 
                        category, subject to subparagraph (C)(ii), the 
                        amount of the bonus for each quarter in the 
                        succeeding reform year shall be 10 percent of 
                        the payment amount otherwise paid to the State 
                        under subsection (a) for individuals enrolled 
                        under the plan within such category;
                            ``(ii) in the next five States in such 
                        category, subject to subparagraph (C)(ii), the 
                        amount of the bonus for each such quarter shall 
                        be 5 percent of the payment amount otherwise 
                        paid to the State under subsection (a) for 
                        individuals enrolled under the plan within such 
                        category;
                            ``(iii) in the next five States in such 
                        category, subject to clauses (i) and (iii) of 
                        subparagraph (C), the amount of the bonus for 
                        each such quarter shall be 3 percent of the 
                        payment amount otherwise paid to the State 
                        under subsection (a) for individuals enrolled 
                        under the plan within such category;
                            ``(iv) in the next five States in such 
                        category, subject to clauses (i) and (iii) of 
                        subparagraph (C), the amount of the bonus for 
                        each such quarter shall be 2 percent of the 
                        payment amount otherwise paid to the State 
                        under subsection (a) for individuals enrolled 
                        under the plan within such category; and
                            ``(v) in the next five States in such 
                        category, subject to clauses (i) and (iii) of 
                        subparagraph (C), the amount of the bonus for 
                        each such quarter shall be 1 percent of the 
                        payment amount otherwise paid to the State 
                        under subsection (a) for individuals enrolled 
                        under the plan within such category.
                    ``(B) Aggregate annual limit for each category of 
                medicaid beneficiaries.--
                            ``(i) In general.--In no case may the 
                        aggregate amount of bonuses under this 
                        subsection for quarters in a reform year for a 
                        category of Medicaid beneficiaries exceed the 
                        limit specified in clause (ii) for the reform 
                        year.
                            ``(ii) Limit.--The limit specified in this 
                        clause--
                                    ``(I) for the second reform year is 
                                equal to $250,000,000; or
                                    ``(II) for a subsequent reform year 
                                is equal to the limit specified in this 
                                clause for the previous reform year 
                                increased by the per beneficiary 
                                percentage increase determined under 
                                paragraph (1)(E) of subsection (c).
                    ``(C) Limitation and proration of bonuses based on 
                application of aggregate limit.--
                            ``(i) No bonus for third or subsequent 
                        tiers unless aggregate limit not reached on 
                        first two tiers.--No bonus shall be payable 
                        under clause (iii), (iv), or (v) of 
                        subparagraph (A) for a category of Medicaid 
                        beneficiaries for a quarter in a reform year 
                        unless the aggregate amount of bonuses under 
                        clauses (i) and (ii) of such subparagraph for 
                        such category and reform year is less than the 
                        limit specified in subparagraph (B)(ii) for the 
                        reform year.
                            ``(ii) Proration for first two tiers.--If 
                        the aggregate amount of bonuses under clauses 
                        (i) and (ii) of subparagraph (A) for a category 
                        of Medicaid beneficiaries for quarters in a 
                        reform year exceeds the limit specified in 
                        subparagraph (B)(ii) for the reform year, the 
                        amount of each such bonus shall be prorated in 
                        a manner so the aggregate amount of such 
                        bonuses is equal to such limit.
                            ``(iii) Proration for next three tiers.--If 
                        the aggregate amount of bonuses under clauses 
                        (i) and (ii) of subparagraph (A) for a category 
                        of Medicaid beneficiaries for quarters in a 
                        reform year is less than the limit specified in 
                        subparagraph (B)(ii) for the reform year, but 
                        the aggregate amount of bonuses under clauses 
                        (i) through (v) of subparagraph (A) for the 
                        category and such quarters in the reform year 
                        exceeds the limit specified in subparagraph 
                        (B)(ii) for the reform year, the amount of each 
                        bonus in clauses (iii), (iv), and (v) of 
                        subparagraph (A) shall be prorated in a manner 
                        so the aggregate amount of all the bonuses 
                        under subparagraph (A) is equal to such limit.
    ``(g) State Option for Receiving Medicare Payments for Full-Benefit 
Dual Eligible Individuals.--
            ``(1) In general.--Under this subsection a State may elect 
        for quarters beginning on or after the implementation date in a 
        reform year to receive payment from the Secretary under 
        paragraph (3). As a condition of receiving such payment, the 
        State shall agree to provide to full-benefit dual eligible 
        individuals eligible for medical assistance under the State 
        plan--
                    ``(A) the medical assistance to which such eligible 
                individuals would otherwise be entitled under this 
                title; and
                    ``(B) any items and services which such eligible 
                individuals would otherwise receive under title XVIII.
            ``(2) Provider payment requirement.--
                    ``(A) In general.--A State electing the option 
                under this subsection shall provide payment to health 
                care providers for the items and services described 
                under paragraph (1)(B) at a rate that is not less than 
                the rate at which payments would be made to such 
                providers for such items and services under title 
                XVIII.
                    ``(B) Flexibility in payment methods.--Nothing in 
                subparagraph (A) shall be construed as preventing a 
                State from using alternative payment methodologies 
                (such as bundled payments or the use of accountable 
                care organizations (as such term is used in section 
                1899)) for purposes of making payments to health care 
                providers for items and services provided to dual 
                eligible individuals in the State under the option 
                under this subsection.
            ``(3) Payments to states in lieu of medicare payments.--
        With respect to a full-benefit dual eligible individual, in the 
        case of a State that elects the option under paragraph (1) for 
        quarters in a reform year--
                    ``(A) the Secretary shall not make any payment 
                under title XVIII for items and services furnished to 
                such individual for such quarters; and
                    ``(B) the Secretary shall pay to the State, in 
                addition to the amounts paid to such State under 
                subsection (a), the amount that the Secretary would, 
                but for this subsection, otherwise pay under title 
                XVIII for items and services furnished to such an 
                individual in such State for such quarters.
            ``(4) Full-benefit dual eligible individual defined.--In 
        this subsection, the term `full-benefit dual eligible 
        individual' means an individual who meets the requirements of 
        section 1935(c)(6)(A)(ii).
    ``(h) Audits.--The Secretary shall conduct such audits on the 
number and classification of Medicaid beneficiaries under such 
subsections and expenditures under this section as may be necessary to 
ensure appropriate payments under this section.
    ``(i) Treatment of Waivers.--
            ``(1) No impact on current waivers.--In the case of a 
        waiver of requirements of this title pursuant to section 1115 
        or other law that is in effect as of the date of the enactment 
        of this section, nothing in this section shall be construed to 
        affect such waiver for the period of the waiver as approved as 
        of such date.
            ``(2) Application of budget neutrality to subsequent 
        waivers and renewals taking section into account.--In the case 
        of a waiver of requirements of this title pursuant to section 
        1115 or other law that is approved or renewed after the date of 
        the enactment of this section, to the extent that such approval 
        or renewal is conditioned upon a demonstration of budget 
        neutrality, budget neutrality shall be determined taking into 
        account the application of this section.
    ``(j) Report to Congress.--Not later than January 1 of the second 
reform year, the Secretary shall submit to Congress a report on the 
implementation of this section.
    ``(k) Definitions.--In this section:
            ``(1) Implementation date.--The term `implementation date' 
        means--
                    ``(A) July 1, 2017, if this section is enacted on 
                or before July 1, 2016; or
                    ``(B) July 1, 2018, if this section is enacted 
                after July 1, 2016.
            ``(2) Reform years.--
                    ``(A) The term `reform year' means a fiscal year 
                beginning with the first reform year.
                    ``(B) The term `first reform year' means the fiscal 
                year in which the implementation date occurs.
                    ``(C) The terms `second', `third', and successive 
                similar terms mean, with respect to a reform year, the 
                second, third, or successive reform year, respectively, 
                succeeding the first reform year.''.
    (b) Conforming Amendments.--
            (1) Continued application of clawback provisions.--
                    (A) Continued application.--Subsections (a) and 
                (c)(1)(C) of section 1935 of such Act (42 U.S.C. 1396u-
                5) are each amended by inserting ``or 1903A(a)'' after 
                ``1903(a)''.
                    (B) Technical amendment.--Section 1935(d)(1) of the 
                Social Security Act (42 U.S.C. 1396u-5(d)(1)) is 
                amended by inserting ``except as provided in section 
                1903A(g)'' after ``any other provision of this title''.
            (2) Payment rules under section 1903.--
                    (A) Section 1903(a) of such Act (42 U.S.C. 
                1396b(a)) is amended, in the matter before paragraph 
                (1), by inserting ``and section 1903A'' after ``except 
                as otherwise provided in this section''.
                    (B) Section 1903(d) of such Act (42 U.S.C. 
                1396b(d)) is amended--
                            (i) in paragraph (1), by inserting ``and 
                        under section 1903A'' after ``subsections (a) 
                        and (b)'';
                            (ii) in paragraph (2)--
                                    (I) in subparagraph (A), by 
                                inserting ``or section 1903A'' after 
                                ``was made under this section''; and
                                    (II) in subparagraph (B), by 
                                inserting ``or section 1903A'' after 
                                ``under subsection (a)'';
                            (iii) in paragraph (4)--
                                    (I) by striking ``under this 
                                subsection'' and inserting ``, with 
                                respect to this section or section 
                                1903A, under this subsection''; and
                                    (II) by striking ``under this 
                                section'' and inserting ``under the 
                                respective section''; and
                            (iv) in paragraph (5), by inserting ``or 
                        section 1903A'' after ``overpayment under this 
                        section''.
            (3) Conforming waiver authority.--Section 1115(a)(2)(A) of 
        the Social Security Act (42 U.S.C. 1315(a)(2)(A)) is amended by 
        striking ``or 1903'' and inserting ``1903, or 1903A''.
            (4) Report on additional conforming amendments needed.--Not 
        later than 6 months after the date of the enactment of this 
        Act, the Secretary of Health and Human Services shall submit to 
        Congress a report that includes a description of any additional 
        technical and conforming amendments to law that are required to 
        properly carry out this Act.

     TITLE V--INCREASING PRICE TRANSPARENCY AND FREEDOM OF PRACTICE

SEC. 501. ENSURING ACCESS TO EMERGENCY SERVICES WITHOUT EXCESSIVE 
              CHARGES FOR OUT-OF-NETWORK SERVICES.

    (a) In General.--Section 1867 of the Social Security Act (42 U.S.C. 
1395dd) is amended--
            (1) in subsection (d), by adding at the end the following 
        new paragraph:
            ``(5) Enforcement with respect to excessive charges.--A 
        hospital, physician, or other entity that violates the 
        requirements of subsection (j)(1) with respect to the 
        furnishing of items and services is subject to a civil money 
        penalty of not more than $25,000 for each such violation. The 
        provisions of section 1128A (other than subsections (a) and 
        (b)) shall apply to a civil money penalty under this paragraph 
        in the same manner as such provisions apply with respect to a 
        penalty or proceeding under section 1128A(a).''; and
            (2) by adding at the end the following new subsection:
    ``(j) Protections Against Excessive Out-of-Network Charges for 
Emergency Services.--
            ``(1) In general.--If items or services to screen or treat 
        an emergency medical condition are furnished under this section 
        in a participating hospital with respect to an individual and 
        the individual has not, directly or through a health insurance 
        issuer, group health plan, or other third party, negotiated a 
        payment rate for such items and services, subject to paragraph 
        (2), the charges imposed for such items and services may not be 
        in excess of the following:
                    ``(A) Physicians' and other professional 
                services.--For physicians' services or services of a 
                health care provider to which section 223(e)(9) of the 
                Internal Revenue Code of 1986 applies (and including 
                drugs and biologicals furnished in conjunction with and 
                billed as part of such services), the lesser of--
                            ``(i) the cash price for such services 
                        posted pursuant to such section; or
                            ``(ii) 85 percent of the usual, customary, 
                        and reasonable (UCR) charge for such services, 
                        as determined under rules established by the 
                        department of insurance for the State in which 
                        the services are furnished.
                    ``(B) Hospital services.--For inpatient and 
                outpatient hospital services for which payment rates 
                are established under this title (and including drugs 
                and biologicals furnished in conjunction with and 
                billed as part of such services), the lesser of--
                            ``(i) the cash price for such services 
                        posted pursuant to section 223(e)(9) of the 
                        Internal Revenue Code of 1986; or
                            ``(ii) 110 percent of the payment rate 
                        applicable to such services in the case of an 
                        individual entitled to benefits under part A 
                        and enrolled under part B.
                    ``(C) Drugs and biologicals.--For drugs and other 
                pharmaceuticals furnished to which a previous 
                subparagraph does not apply, the lesser of--
                            ``(i) twice the acquisition cost to the 
                        hospital or other provider for the dose 
                        involved; or
                            ``(ii) the acquisition cost to the hospital 
                        or other provider plus $250.
                The dollar amount in clause (ii) shall be increased 
                from year to year (beginning with the year after the 
                first year in which this subsection applies) by the 
                same percentage as the percentage increase in the 
                consumer price index for all urban consumers (all 
                items; U.S. city average) for the year involved (as 
                determined by the Secretary). Any such dollar amount as 
                so increased that is not a multiple of $5 shall be 
                rounded to the nearest multiple of $5 (or, if a 
                multiple of $2.50, to the next highest multiple of $5).
                    ``(D) Other items and services.--For any other 
                items or services, the lesser of--
                            ``(i) the cash price for such items and 
                        services posted pursuant to section 223(e)(9) 
                        of the Internal Revenue Code of 1986; or
                            ``(ii) 110 percent of the payment basis 
                        that would be applicable to payment for such 
                        items and services under this title in the case 
                        of an individual entitled to benefits under 
                        part A and enrolled under part B.
            ``(2) Special rule for items and services furnished as a 
        bundle.--In the case of items and services for which there is a 
        single price for a group or bundle of such items and services, 
        the maximum charge permitted under paragraph (1) may not exceed 
        the lesser of--
                    ``(A) the price charged for such bundled services; 
                or
                    ``(B) the aggregate of the maximum charges 
                permitted under paragraph (1) with respect to items and 
                services included in such bundle.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to charges imposed for items and services furnished on or after 
January 1, 2017.

SEC. 502. PUBLISHING OF CASH PRICE FOR CARE PAID THROUGH HEALTH SAVINGS 
              ACCOUNTS.

    (a) Health Savings Accounts.--Section 223(f) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(9) Cash price transparency required for payments to 
        health care providers.--
                    ``(A) In general.--A payment to a health care 
                provider with respect to the furnishing of health care 
                items and services by such provider shall not be 
                treated as a qualified medical expense unless health 
                care provider provides for continuing disclosure (such 
                as through posting on a publicly accessible website) of 
                the cash price the health care provider charges for the 
                furnishing of such items and services.
                    ``(B) Form of disclosure.--The disclosure of prices 
                under this subsection shall be in a form and manner 
                specified by the Secretary of Health and Human 
                Services, in consultation with the Secretary, and shall 
                be designed--
                            ``(i) to establish a single price for 
                        related items and services in a manner similar 
                        to the manner in which pricing and payment for 
                        such items and services is provided under the 
                        Medicare program under title XVIII of the 
                        Social Security Act, and
                            ``(ii) to make it easy for consumers to 
                        compare the prices for similar items and 
                        services furnished by different providers.
                    ``(C) Failure to furnish services or charge in 
                excess of stated price.--A health care provider shall 
                be treated as not meeting the requirement of 
                subparagraph (A), in the case of items and services for 
                which the provider is disclosing a cash price, if the 
                provider--
                            ``(i) refuses to furnish such items or 
                        services at the price listed, or
                            ``(ii) charges more than the price listed 
                        for the furnishing of the items and 
                        services.''.
    (b) Roth HSA.--Section 530A(c)(4) of such Code, as added by this 
Act, is amended by adding at the end the following new subparagraph:
                    ``(E) Section 223(f) (relating to cash price 
                transparency required for payments to health care 
                providers).''.
    (c) Enforcement.--If the Secretary of Health and Human Services 
determines that a health care provider has not provided for continuing 
disclosure of the cash price of health care provider charges under 
section 223(f)(9) of the Internal Revenue Code of 1986, the Secretary 
may instruct the Secretary of the Treasury that payments made to such 
provider shall be not treated, for purposes of section 223 of the 
Internal Revenue Code of 1986, as an amount used for a qualified 
medical expense for a period of not to exceed 1 year.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.

SEC. 503. LIBERATING THE LOCAL PRACTICE OF HEALTH CARE.

    (a) Waiving National Restrictions on Physician-Owned Facilities.--
Section 1877 of the Social Security Act (42 U.S.C. 1395nn) is amended 
by adding at the end the following new subsection:
    ``(j) Waiver Authority.--A physician or other entity may apply to 
the Secretary to waive any provision of this section and the Secretary 
may waive such provision with respect to such physician or entity if 
the Secretary determines that such waiver would--
            ``(1) increase competition within the health care market;
            ``(2) reduce the costs of health care; and
            ``(3) increase the quality of health care.''.
    (b) Removing Certain State and Local Licensure or Certification 
Restrictions.--
            (1) Application for waiver of restrictions.--An individual 
        who is required to be licensed or certified by a State as a 
        condition of furnishing items or services as a health care 
        professional (as defined by the Secretary of Health and Human 
        Services) may submit to the Secretary an application to waive 
        any condition of such licensure or certification.
            (2) Standard.--The Secretary may grant a waiver submitted 
        under paragraph (1) if the Secretary determines such waiver 
        would--
                    (A) increase competition within the health care 
                market;
                    (B) reduce the costs of health care; and
                    (C) increase the quality of health care.
            (3) Preemption.--In the case of a health care professional 
        granted a waiver under paragraph (2), any requirement with 
        respect to which such waiver is granted is preempted to the 
        extent specified in such waiver.
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