II 

115TH CONGRESS 

2D SESSION H. R. 7217 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 12, 2018 

Received 

AN ACT 

To amend title XIX of the Social Security Act to provide 

States with the option of providing coordinated care for 

children with complex medical conditions through a 

health home, and for other purposes. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Improving Medicaid 

3 Programs and Opportunities for Eligible Beneficiaries 

4 Act’’ or the ‘‘IMPROVE Act’’. 

5 TITLE I—ACE KIDS 

6 SEC. 101. STATE OPTION TO PROVIDE COORDINATED CARE 

7 THROUGH A HEALTH HOME FOR CHILDREN 

8 WITH MEDICALLY COMPLEX CONDITIONS. 

9 Title XIX of the Social Security Act (42 U.S.C. 1396 

10 et seq.) is amended by inserting after section 1945 the 

11 following new section: 

12 ‘‘SEC. 1945A. STATE OPTION TO PROVIDE COORDINATED 

13 CARE THROUGH A HEALTH HOME FOR CHIL14 DREN WITH MEDICALLY COMPLEX CONDI15 TIONS. 

16 ‘‘(a) IN GENERAL.—Notwithstanding section 

17 1902(a)(1) (relating to statewideness) and section 

18 1902(a)(10)(B) (relating to comparability), beginning Oc19 tober 1, 2022, a State, at its option as a State plan 

20 amendment, may provide for medical assistance under this 

21 title to children with medically complex conditions who 

22 choose to enroll in a health home under this section by 

23 selecting a designated provider, a team of health care pro24 fessionals operating with such a provider, or a health team 

25 as the child’s health home for purposes of providing the 

26 child with health home services. 


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1 ‘‘(b) HEALTH HOME QUALIFICATION STANDARDS.— 

2 The Secretary shall establish standards for qualification 

3 as a health home for purposes of this section. Such stand4 ards shall include requiring designated providers, teams 

5 of health care professionals operating with such providers, 

6 and health teams to demonstrate to the State the ability 

7 to do the following: 

8 ‘‘(1) Coordinate prompt care for children with 

9 medically complex conditions, including access to pe10 diatric emergency services at all times. 

11 ‘‘(2) Develop an individualized comprehensive 

12 pediatric family-centered care plan for children with 

13 medically complex conditions that accommodates pa14 tient preferences. 

15 ‘‘(3) Work in a culturally and linguistically ap16 propriate manner with the family of a child with 

17 medically complex conditions to develop and incor18 porate into such child’s care plan, in a manner con19 sistent with the needs of the child and the choices 

20 of the child’s family, ongoing home care, community21 based pediatric primary care, pediatric inpatient 

22 care, social support services, and local hospital pedi23 atric emergency care. 

24 ‘‘(4) Coordinate access to— 


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1 ‘‘(A) subspecialized pediatric services and 

2 programs for children with medically complex 

3 conditions, including the most intensive diag4 nostic, treatment, and critical care levels as 

5 medically necessary; and 

6 ‘‘(B) palliative services if the State pro7 vides such services under the State plan (or a 

8 waiver of such plan). 

9 ‘‘(5) Coordinate care for children with medically 

10 complex conditions with out-of-State providers fur11 nishing care to such children to the maximum extent 

12 practicable for the families of such children and 

13 where medically necessary, in accordance with guid14 ance issued under subsection (e)(1) and section 

15 431.52 of title 42, Code of Federal Regulations. 

16 ‘‘(6) Collect and report information under sub17 section (g)(1). 

18 ‘‘(c) PAYMENTS.— 

19 ‘‘(1) IN GENERAL.—A State shall provide a des20 ignated provider, a team of health care professionals 

21 operating with such a provider, or a health team 

22 with payments for the provision of health home serv23 ices to each child with medically complex conditions 

24 that selects such provider, team of health care pro25 fessionals, or health team as the child’s health home. 


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1 Payments made to a designated provider, a team of 

2 health care professionals operating with such a pro3 vider, or a health team for such services shall be 

4 treated as medical assistance for purposes of section 

5 1903(a), except that, during the first 2 fiscal year 

6 quarters that the State plan amendment is in effect, 

7 the Federal medical assistance percentage applicable 

8 to such payments shall be increased by 15 percent9 age points, but in no case may exceed 90 percent. 

10 ‘‘(2) METHODOLOGY.— 

11 ‘‘(A) IN GENERAL.—The State shall speci12 fy in the State plan amendment the method13 ology the State will use for determining pay14 ment for the provision of health home services. 

15 Such methodology for determining payment— 

16 ‘‘(i) may be tiered to reflect, with re17 spect to each child with medically complex 

18 conditions provided such services by a des19 ignated provider, a team of health care 

20 professionals operating with such a pro21 vider, or a health team, the severity or 

22 number of each such child’s chronic condi23 tions, life-threatening illnesses, disabilities, 

24 or rare diseases, or the specific capabilities 


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1 of the provider, team of health care profes2 sionals, or health team; and 

3 ‘‘(ii) shall be established consistent 

4 with section 1902(a)(30)(A). 

5 ‘‘(B) ALTERNATE MODELS OF PAYMENT.— 

6 The methodology for determining payment for 

7 provision of health home services under this 

8 section shall not be limited to a per-member 

9 per-month basis and may provide (as proposed 

10 by the State and subject to approval by the 

11 Secretary) for alternate models of payment. 

12 ‘‘(3) PLANNING GRANTS.— 

13 ‘‘(A) IN GENERAL.—Beginning October 1, 

14 2022, the Secretary may award planning grants 

15 to States for purposes of developing a State 

16 plan amendment under this section. A planning 

17 grant awarded to a State under this paragraph 

18 shall remain available until expended. 

19 ‘‘(B) STATE CONTRIBUTION.—A State 

20 awarded a planning grant shall contribute an 

21 amount equal to the State percentage deter22 mined under section 1905(b) (without regard to 

23 section 5001 of Public Law 111–5) for each fis24 cal year for which the grant is awarded. 


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1 ‘‘(C) LIMITATION.—The total amount of 

2 payments made to States under this paragraph 

3 shall not exceed $5,000,000. 

4 ‘‘(d) COORDINATING CARE.— 

5 ‘‘(1) HOSPITAL NOTIFICATION.—A State with a 

6 State plan amendment approved under this section 

7 shall require each hospital that is a participating 

8 provider under the State plan (or a waiver of such 

9 plan) to establish procedures for, in the case of a 

10 child with medically complex conditions who is en11 rolled in a health home pursuant to this section and 

12 seeks treatment in the emergency department of 

13 such hospital, notifying the health home of such 

14 child of such treatment. 

15 ‘‘(2) EDUCATION WITH RESPECT TO AVAIL16 ABILITY OF HEALTH HOME SERVICES.—In order for 

17 a State plan amendment to be approved under this 

18 section, a State shall include in the State plan 

19 amendment a description of the State’s process for 

20 educating providers participating in the State plan 

21 (or a waiver of such plan) on the availability of 

22 health home services for children with medically 

23 complex conditions, including the process by which 

24 such providers can refer such children to a des25 ignated provider, team of health care professionals 


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1 operating such a provider, or health team for the 

2 purpose of establishing a health home through which 

3 such children may receive such services. 

4 ‘‘(3) FAMILY EDUCATION.—In order for a State 

5 plan amendment to be approved under this section, 

6 a State shall include in the State plan amendment 

7 a description of the State’s process for educating 

8 families with children eligible to receive health home 

9 services pursuant to this section of the availability of 

10 such services. Such process shall include the partici11 pation of family-to-family entities or other public or 

12 private organizations or entities who provide out13 reach and information on the availability of health 

14 care items and services to families of individuals eli15 gible to receive medical assistance under the State 

16 plan (or a waiver of such plan). 

17 ‘‘(4) MENTAL HEALTH COORDINATION.—A 

18 State with a State plan amendment approved under 

19 this section shall consult and coordinate, as appro20 priate, with the Secretary in addressing issues re21 garding the prevention and treatment of mental ill22 ness and substance use among children with medi23 cally complex conditions receiving health home serv24 ices under this section. 


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1 ‘‘(e) GUIDANCE ON COORDINATING CARE FROM

2 OUT-OF-STATE PROVIDERS.— 

3 ‘‘(1) IN GENERAL.—Not later than October 1, 

4 2020, the Secretary shall issue (and update as the 

5 Secretary determines necessary) guidance to State 

6 Medicaid directors on— 

7 ‘‘(A) best practices for using out-of-State 

8 providers to provide care to children with medi9 cally complex conditions; 

10 ‘‘(B) coordinating care for such children 

11 provided by such out-of-State providers (includ12 ing when provided in emergency and non-emer13 gency situations); 

14 ‘‘(C) reducing barriers for such children 

15 receiving care from such providers in a timely 

16 fashion; and 

17 ‘‘(D) processes for screening and enrolling 

18 such providers in the respective State plan (or 

19 a waiver of such plan), including efforts to 

20 streamline such processes or reduce the burden 

21 of such processes on such providers. 

22 ‘‘(2) STAKEHOLDER INPUT.—In carrying out 

23 paragraph (1), the Secretary shall issue a request 

24 for information to seek input from children with 

25 medically complex conditions and their families, 


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1 States, providers (including children’s hospitals, hos2 pitals, pediatricians, and other providers), managed 

3 care plans, children’s health groups, family and ben4 eficiary advocates, and other stakeholders with re5 spect to coordinating the care for such children pro6 vided by out-of-State providers. 

7 ‘‘(f) MONITORING.—A State shall include in the State 

8 plan amendment— 

9 ‘‘(1) a methodology for tracking avoidable hos10 pital readmissions and calculating savings that re11 sult from improved care coordination and manage12 ment under this section; 

13 ‘‘(2) a proposal for use of health information 

14 technology in providing health home services under 

15 this section and improving service delivery and co16 ordination across the care continuum (including the 

17 use of wireless patient technology to improve coordi18 nation and management of care and patient adher19 ence to recommendations made by their provider); 

20 and 

21 ‘‘(3) a methodology for tracking prompt and 

22 timely access to medically necessary care for children 

23 with medically complex conditions from out-of-State 

24 providers. 

25 ‘‘(g) DATA COLLECTION.— 


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1 ‘‘(1) PROVIDER REPORTING REQUIREMENTS.— 

2 In order to receive payments from a State under 

3 subsection (c), a designated provider, a team of 

4 health care professionals operating with such a pro5 vider, or a health team shall report to the State, at 

6 such time and in such form and manner as may be 

7 required by the State, the following information: 

8 ‘‘(A) With respect to each such provider, 

9 team of health care professionals, or health 

10 team, the name, National Provider Identifica11 tion number, address, and specific health care 

12 services offered to be provided to children with 

13 medically complex conditions who have selected 

14 such provider, team of health care profes15 sionals, or health team as the health home of 

16 such children. 

17 ‘‘(B) Information on all applicable meas18 ures for determining the quality of health home 

19 services provided by such provider, team of 

20 health care professionals, or health team, in21 cluding, to the extent applicable, child health 

22 quality measures and measures for centers of 

23 excellence for children with complex needs de24 veloped under this title, title XXI, and section 

25 1139A. 


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1 ‘‘(C) Such other information as the Sec2 retary shall specify in guidance. 

3 When appropriate and feasible, such provider, team 

4 of health care professionals, or health team, as the 

5 case may be, shall use health information technology 

6 in providing the State with such information. 

7 ‘‘(2) STATE REPORTING REQUIREMENTS.— 

8 ‘‘(A) COMPREHENSIVE REPORT.—A State 

9 with a State plan amendment approved under 

10 this section shall report to the Secretary (and, 

11 upon request, to the Medicaid and CHIP Pay12 ment and Access Commission), at such time 

13 and in such form and manner determined by 

14 the Secretary to be reasonable and minimally 

15 burdensome, the following information: 

16 ‘‘(i) Information reported under para17 graph (1). 

18 ‘‘(ii) The number of children with 

19 medically complex conditions who have se20 lected a health home pursuant to this sec21 tion. 

22 ‘‘(iii) The nature, number, and preva23 lence of chronic conditions, life-threatening 

24 illnesses, disabilities, or rare diseases that 

25 such children have. 


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1 ‘‘(iv) The type of delivery systems and 

2 payment models used to provide services to 

3 such children under this section. 

4 ‘‘(v) The number and characteristics 

5 of designated providers, teams of health 

6 care professionals operating with such pro7 viders, and health teams selected as health 

8 homes pursuant to this section, including 

9 the number and characteristics of out-of10 State providers, teams of health care pro11 fessionals operating with such providers, 

12 and health teams who have provided health 

13 care items and services to such children. 

14 ‘‘(vi) The extent to which such chil15 dren receive health care items and services 

16 under the State plan. 

17 ‘‘(vii) Quality measures developed spe18 cifically with respect to health care items 

19 and services provided to children with 

20 medically complex conditions. 

21 ‘‘(B) REPORT ON BEST PRACTICES.—Not 

22 later than 90 days after a State has a State 

23 plan amendment approved under this section, 

24 such State shall submit to the Secretary, and 

25 make publicly available on the appropriate 


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1 State website, a report on how the State is im2 plementing guidance issued under subsection 

3 (e)(1), including through any best practices 

4 adopted by the State. 

5 ‘‘(h) RULE OF CONSTRUCTION.—Nothing in this sec6 tion may be construed— 

7 ‘‘(1) to require a child with medically complex 

8 conditions to enroll in a health home under this sec9 tion; 

10 ‘‘(2) to limit the choice of a child with medically 

11 complex conditions in selecting a designated pro12 vider, team of health care professionals operating 

13 with such a provider, or health team that meets the 

14 health home qualification standards established 

15 under subsection (b) as the child’s health home; or 

16 ‘‘(3) to reduce or otherwise modify— 

17 ‘‘(A) the entitlement of children with medi18 cally complex conditions to early and periodic 

19 screening, diagnostic, and treatment services 

20 (as defined in section 1905(r)); or 

21 ‘‘(B) the informing, providing, arranging, 

22 and reporting requirements of a State under 

23 section 1902(a)(43). 

24 ‘‘(i) DEFINITIONS.—In this section: 


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1 ‘‘(1) CHILD WITH MEDICALLY COMPLEX CONDI2 TIONS.— 

3 ‘‘(A) IN GENERAL.—Subject to subpara4 graph (B), the term ‘child with medically com5 plex conditions’ means an individual under 21 

6 years of age who— 

7 ‘‘(i) is eligible for medical assistance 

8 under the State plan (or under a waiver of 

9 such plan); and 

10 ‘‘(ii) has at least— 

11 ‘‘(I) one or more chronic condi12 tions that cumulatively affect three or 

13 more organ systems and severely re14 duces cognitive or physical functioning 

15 (such as the ability to eat, drink, or 

16 breathe independently) and that also 

17 requires the use of medication, dura18 ble medical equipment, therapy, sur19 gery, or other treatments; or 

20 ‘‘(II) one life-limiting illness or 

21 rare pediatric disease (as defined in 

22 section 529(a)(3) of the Federal 

23 Food, Drug, and Cosmetic Act (21 

24 U.S.C. 360ff(a)(3))). 


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1 ‘‘(B) RULE OF CONSTRUCTION.—Nothing 

2 in this paragraph shall prevent the Secretary 

3 from establishing higher levels as to the number 

4 or severity of chronic, life threatening illnesses, 

5 disabilities, rare diseases or mental health con6 ditions for purposes of determining eligibility 

7 for receipt of health home services under this 

8 section. 

9 ‘‘(2) CHRONIC CONDITION.—The term ‘chronic 

10 condition’ means a serious, long-term physical, men11 tal, or developmental disability or disease, including 

12 the following: 

13 ‘‘(A) Cerebral palsy. 

14 ‘‘(B) Cystic fibrosis. 

15 ‘‘(C) HIV/AIDS. 

16 ‘‘(D) Blood diseases, such as anemia or 

17 sickle cell disease. 

18 ‘‘(E) Muscular dystrophy. 

19 ‘‘(F) Spina bifida. 

20 ‘‘(G) Epilepsy. 

21 ‘‘(H) Severe autism spectrum disorder. 

22 ‘‘(I) Serious emotional disturbance or seri23 ous mental health illness. 

24 ‘‘(3) HEALTH HOME.—The term ‘health home’ 

25 means a designated provider (including a provider 


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1 that operates in coordination with a team of health 

2 care professionals) or a health team selected by a 

3 child with medically complex conditions (or the fam4 ily of such child) to provide health home services. 

5 ‘‘(4) HEALTH HOME SERVICES.— 

6 ‘‘(A) IN GENERAL.—The term ‘health 

7 home services’ means comprehensive and timely 

8 high-quality services described in subparagraph 

9 (B) that are provided by a designated provider, 

10 a team of health care professionals operating 

11 with such a provider, or a health team. 

12 ‘‘(B) SERVICES DESCRIBED.—The services 

13 described in this subparagraph shall include— 

14 ‘‘(i) comprehensive care management; 

15 ‘‘(ii) care coordination, health pro16 motion, and providing access to the full 

17 range of pediatric specialty and sub18 specialty medical services, including serv19 ices from out-of-State providers, as medi20 cally necessary; 

21 ‘‘(iii) comprehensive transitional care, 

22 including appropriate follow-up, from inpa23 tient to other settings; 

24 ‘‘(iv) patient and family support (in25 cluding authorized representatives); 


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1 ‘‘(v) referrals to community and social 

2 support services, if relevant; and 

3 ‘‘(vi) use of health information tech4 nology to link services, as feasible and ap5 propriate. 

6 ‘‘(5) DESIGNATED PROVIDER.—The term ‘des7 ignated provider’ means a physician (including a pe8 diatrician or a pediatric specialty or subspecialty 

9 provider), children’s hospital, clinical practice or 

10 clinical group practice, prepaid inpatient health plan 

11 or prepaid ambulatory health plan (as defined by the 

12 Secretary), rural clinic, community health center, 

13 community mental health center, home health agen14 cy, or any other entity or provider that is deter15 mined by the State and approved by the Secretary 

16 to be qualified to be a health home for children with 

17 medically complex conditions on the basis of docu18 mentation evidencing that the entity has the sys19 tems, expertise, and infrastructure in place to pro20 vide health home services. Such term may include 

21 providers who are employed by, or affiliated with, a 

22 children’s hospital. 

23 ‘‘(6) TEAM OF HEALTH CARE PROFES24 SIONALS.—The term ‘team of health care profes25 sionals’ means a team of health care professionals 


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1 (as described in the State plan amendment under 

2 this section) that may— 

3 ‘‘(A) include— 

4 ‘‘(i) physicians and other profes5 sionals, such as pediatricians or pediatric 

6 specialty or subspecialty providers, nurse 

7 care coordinators, dietitians, nutritionists, 

8 social workers, behavioral health profes9 sionals, physical therapists, occupational 

10 therapists, speech pathologists, nurses, in11 dividuals with experience in medical sup12 portive technologies, or any professionals 

13 determined to be appropriate by the State 

14 and approved by the Secretary; 

15 ‘‘(ii) an entity or individual who is 

16 designated to coordinate such a team; and 

17 ‘‘(iii) community health workers, 

18 translators, and other individuals with cul19 turally-appropriate expertise; and 

20 ‘‘(B) be freestanding, virtual, or based at 

21 a children’s hospital, hospital, community 

22 health center, community mental health center, 

23 rural clinic, clinical practice or clinical group 

24 practice, academic health center, or any entity 


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1 determined to be appropriate by the State and 

2 approved by the Secretary. 

3 ‘‘(7) HEALTH TEAM.—The term ‘health team’ 

4 has the meaning given such term for purposes of 

5 section 3502 of Public Law 111–148.’’. 

6 TITLE II—OTHER MEDICAID 

7 SEC. 201. EXTENSION OF MONEY FOLLOWS THE PERSON 

8 REBALANCING DEMONSTRATION. 

9 (a) GENERAL FUNDING.—Section 6071(h) of the 

10 Deficit Reduction Act of 2005 (42 U.S.C. 1396a note) is 

11 amended— 

12 (1) in paragraph (1)— 

13 (A) in subparagraph (D), by striking 

14 ‘‘and’’ after the semicolon; 

15 (B) in subparagraph (E), by striking the 

16 period at the end and inserting ‘‘; and’’; and 

17 (C) by adding at the end the following: 

18 ‘‘(F) subject to paragraph (3), 

19 $112,000,000 for fiscal year 2019.’’; 

20 (2) in paragraph (2)— 

21 (A) by striking ‘‘Amounts made’’ and in22 serting ‘‘Subject to paragraph (3), amounts 

23 made’’; and 

24 (B) by striking ‘‘September 30, 2016’’ and 

25 inserting ‘‘September 30, 2021’’; and 


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1 (3) by adding at the end the following new 

2 paragraph: 

3 ‘‘(3) SPECIAL RULE FOR FY 2019.—Funds ap4 propriated under paragraph (1)(F) shall be made 

5 available for grants to States only if such States 

6 have an approved MFP demonstration project under 

7 this section as of December 31, 2018.’’. 

8 (b) FUNDING FOR QUALITY ASSURANCE AND IM9 PROVEMENT; TECHNICAL ASSISTANCE; OVERSIGHT.— 

10 Section 6071(f) of the Deficit Reduction Act of 2005 (42 

11 U.S.C. 1396a note) is amended by striking paragraph (2) 

12 and inserting the following: 

13 ‘‘(2) FUNDING.—From the amounts appro14 priated under subsection (h)(1)(F) for fiscal year 

15 2019, $500,000 shall be available to the Secretary 

16 for such fiscal year to carry out this subsection.’’. 

17 (c) TECHNICAL AMENDMENT.—Section 6071(b) of 

18 the Deficit Reduction Act of 2005 (42 U.S.C. 1396a note) 

19 is amended by adding at the end the following: 

20 ‘‘(10) SECRETARY.—The term ‘Secretary’ 

21 means the Secretary of Health and Human Serv22 ices.’’. 


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1 SEC. 202. EXTENSION OF PROTECTION FOR MEDICAID RE2 CIPIENTS OF HOME AND COMMUNITY-BASED 

3 SERVICES AGAINST SPOUSAL IMPOVERISH4 MENT. 

5 (a) IN GENERAL.—Section 2404 of Public Law 111– 

6 148 (42 U.S.C. 1396r–5 note) is amended by striking ‘‘the 

7 5-year period that begins on January 1, 2014,’’ and in8 serting ‘‘the period beginning on January 1, 2014, and 

9 ending on March 31, 2019,’’. 

10 (b) RULE OF CONSTRUCTION.— 

11 (1) PROTECTING STATE SPOUSAL INCOME AND

12 ASSET DISREGARD FLEXIBILITY UNDER WAIVERS

13 AND PLAN AMENDMENTS.—Nothing in section 2404 

14 of Public Law 111–148 (42 U.S.C. 1396r–5 note) or 

15 section 1924 of the Social Security Act (42 U.S.C. 

16 1396r–5) shall be construed as prohibiting a State 

17 from disregarding an individual’s spousal income 

18 and assets under a State waiver or plan amendment 

19 described in paragraph (2) for purposes of making 

20 determinations of eligibility for home and commu21 nity-based services or home and community-based 

22 attendant services and supports under such waiver 

23 or plan amendment. 

24 (2) STATE WAIVER OR PLAN AMENDMENT DE25 SCRIBED.—A State waiver or plan amendment de26 scribed in this paragraph is any of the following: 


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1 (A) A waiver or plan amendment to pro2 vide medical assistance for home and commu3 nity-based services under a waiver or plan 

4 amendment under subsection (c), (d), or (i) of 

5 section 1915 of the Social Security Act (42 

6 U.S.C. 1396n) or under section 1115 of such 

7 Act (42 U.S.C. 1315). 

8 (B) A plan amendment to provide medical 

9 assistance for home and community-based serv10 ices for individuals by reason of being deter11 mined eligible under section 1902(a)(10)(C) of 

12 such Act (42 U.S.C. 1396a(a)(10)(C)) or by 

13 reason of section 1902(f) of such Act (42 

14 U.S.C. 1396a(f)) or otherwise on the basis of a 

15 reduction of income based on costs incurred for 

16 medical or other remedial care under which the 

17 State disregarded the income and assets of the 

18 individual’s spouse in determining the initial 

19 and ongoing financial eligibility of an individual 

20 for such services in place of the spousal impov21 erishment provisions applied under section 1924 

22 of such Act (42 U.S.C. 1396r–5). 

23 (C) A plan amendment to provide medical 

24 assistance for home and community-based atVerDate Sep 11 2014 21:50 Dec 27, 2018 Jkt 089200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\H7217.RDS H7217

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1 tendant services and supports under section 

2 1915(k) of such Act (42 U.S.C. 1396n(k)). 

3 SEC. 203. REDUCTION IN FMAP AFTER 2020 FOR STATES 

4 WITHOUT ASSET VERIFICATION PROGRAM. 

5 Section 1940 of the Social Security Act (42 U.S.C. 

6 1396w) is amended by adding at the end the following 

7 new subsection: 

8 ‘‘(k) REDUCTION IN FMAP AFTER 2020 FOR NON9 COMPLIANT STATES.— 

10 ‘‘(1) IN GENERAL.—With respect to a calendar 

11 quarter beginning on or after January 1, 2021, the 

12 Federal medical assistance percentage otherwise de13 termined under section 1905(b) for a non-compliant 

14 State shall be reduced— 

15 ‘‘(A) for calendar quarters in 2021 and 

16 2022, by 0.12 percentage points; 

17 ‘‘(B) for calendar quarters in 2023, by 

18 0.25 percentage points; 

19 ‘‘(C) for calendar quarters in 2024, by 

20 0.35 percentage points; and 

21 ‘‘(D) for calendar quarters in 2025 and 

22 each year thereafter, by 0.5 percentage points. 

23 ‘‘(2) NON-COMPLIANT STATE DEFINED.—For 

24 purposes of this subsection, the term ‘non-compliant 

25 State’ means a State— 


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1 ‘‘(A) that is one of the 50 States or the 

2 District of Columbia; 

3 ‘‘(B) with respect to which the Secretary 

4 has not approved a State plan amendment sub5 mitted under subsection (a)(2); and 

6 ‘‘(C) that is not operating, on an ongoing 

7 basis, an asset verification program in accord8 ance with this section.’’. 

9 SEC. 204. DENIAL OF FFP FOR CERTAIN EXPENDITURES RE10 LATING TO VACUUM ERECTION SYSTEMS 

11 AND PENILE PROSTHETIC IMPLANTS. 

12 (a) IN GENERAL.—Section 1903(i) of the Social Se13 curity Act (42 U.S.C. 1396b(i)) is amended by inserting 

14 after paragraph (11) the following: 

15 ‘‘(12) with respect to any amounts expended 

16 for— 

17 ‘‘(A) a vacuum erection system that is not 

18 medically necessary; or 

19 ‘‘(B) the insertion, repair, or removal and 

20 replacement of a penile prosthetic implant (un21 less such insertion, repair, or removal and re22 placement is medically necessary); or’’. 

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

24 subsection (a) shall apply with respect to items and serv25 ices furnished on or after January 1, 2019. 


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1 SEC. 205. MEDICAID IMPROVEMENT FUND. 

2 Section 1941(b)(1) of the Social Security Act (42 

3 U.S.C. 1396w–1(b)(1)) is amended by striking 

4 ‘‘$31,000,000’’ and inserting ‘‘$9,000,000’’. 

5 SEC. 206. PREVENTING THE MISCLASSIFICATION OF DRUGS 

6 UNDER THE MEDICAID DRUG REBATE PRO7 GRAM. 

8 (a) APPLICATION OF CIVIL MONEY PENALTY FOR

9 MISCLASSIFICATION OF COVERED OUTPATIENT

10 DRUGS.— 

11 (1) IN GENERAL.—Section 1927(b)(3) of the 

12 Social Security Act (42 U.S.C. 1396r–8(b)(3)) is 

13 amended— 

14 (A) in the paragraph heading, by inserting 

15 ‘‘AND DRUG PRODUCT’’ after ‘‘PRICE’’; 

16 (B) in subparagraph (A)— 

17 (i) in clause (ii), by striking ‘‘; and’’ 

18 at the end and inserting a semicolon; 

19 (ii) in clause (iii), by striking the pe20 riod at the end and inserting a semicolon; 

21 (iii) in clause (iv), by striking the 

22 semicolon at the end and inserting ‘‘; 

23 and’’; and 

24 (iv) by inserting after clause (iv) the 

25 following new clause: 


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1 ‘‘(v) not later than 30 days after the 

2 last day of each month of a rebate period 

3 under the agreement, such drug product 

4 information as the Secretary shall require 

5 for each of the manufacturer’s covered out6 patient drugs.’’; and 

7 (C) in subparagraph (C)— 

8 (i) in clause (ii), by inserting ‘‘, in9 cluding information related to drug pric10 ing, drug product information, and data 

11 related to drug pricing or drug product in12 formation,’’ after ‘‘provides false informa13 tion’’; and 

14 (ii) by adding at the end the following 

15 new clauses: 

16 ‘‘(iii) MISCLASSIFIED OR

17 MISREPORTED INFORMATION.— 

18 ‘‘(I) IN GENERAL.—Any manu19 facturer with an agreement under this 

20 section that knowingly (as defined in 

21 section 1003.110 of title 42, Code of 

22 Federal Regulations (or any successor 

23 regulation)) misclassifies a covered 

24 outpatient drug, such as by knowingly 

25 submitting incorrect drug category inVerDate Sep 11 2014 21:50 Dec 27, 2018 Jkt 089200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\H7217.RDS H7217

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1 formation, is subject to a civil money 

2 penalty for each covered outpatient 

3 drug that is misclassified in an 

4 amount not to exceed 2 times the 

5 amount of the difference, as deter6 mined by the Secretary, between— 

7 ‘‘(aa) the total amount of 

8 rebates that the manufacturer 

9 paid with respect to the drug to 

10 all States for all rebate periods 

11 during which the drug was 

12 misclassified; and 

13 ‘‘(bb) the total amount of 

14 rebates that the manufacturer 

15 would have been required to pay, 

16 as determined by the Secretary, 

17 with respect to the drug to all 

18 States for all rebate periods dur19 ing which the drug was 

20 misclassified if the drug had been 

21 correctly classified. 

22 ‘‘(II) OTHER PENALTIES AND

23 RECOVERY OF UNDERPAID RE24 BATES.—The civil money penalties de25 scribed in subclause (I) are in addiVerDate Sep 11 2014 21:50 Dec 27, 2018 Jkt 089200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\H7217.RDS H7217

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1 tion to other penalties as may be pre2 scribed by law and any other recovery 

3 of the underlying underpayment for 

4 rebates due under this section or the 

5 terms of the rebate agreement as de6 termined by the Secretary. 

7 ‘‘(iv) INCREASING OVERSIGHT AND

8 ENFORCEMENT.—Each year the Secretary 

9 shall retain, in addition to any amount re10 tained by the Secretary to recoup inves11 tigation and litigation costs related to the 

12 enforcement of the civil money penalties 

13 under this subparagraph and subsection 

14 (c)(4)(B)(ii)(III), an amount equal to 25 

15 percent of the total amount of civil money 

16 penalties collected under this subparagraph 

17 and subsection (c)(4)(B)(ii)(III) for the 

18 year, and such retained amount shall be 

19 available to the Secretary, without further 

20 appropriation and until expended, for ac21 tivities related to the oversight and en22 forcement of this section and agreements 

23 under this section, including— 

24 ‘‘(I) improving drug data report25 ing systems; 


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1 ‘‘(II) evaluating and ensuring 

2 manufacturer compliance with rebate 

3 obligations; and 

4 ‘‘(III) oversight and enforcement 

5 related to ensuring that manufactur6 ers accurately and fully report drug 

7 information, including data related to 

8 drug classification.’’; and 

9 (iii) in subparagraph (D)— 

10 (I) in clause (iv), by striking ‘‘, 

11 and’’ and inserting a comma; 

12 (II) in clause (v), by striking 

13 ‘‘subsection (f).’’ and inserting ‘‘sub14 section (f), and’’; and 

15 (III) by inserting after clause (v) 

16 the following new clause: 

17 ‘‘(vi) in the case of categories of drug 

18 product or classification information that 

19 were not considered confidential by the 

20 Secretary on the day before the date of the 

21 enactment of the IMPROVE Act.’’. 

22 (2) TECHNICAL AMENDMENTS.— 

23 (A) Section 1903(i)(10) of the Social Secu24 rity Act (42 U.S.C. 1396b(i)(10)) is amended— 

25 (i) in subparagraph (C)— 


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1 (I) by adjusting the left margin 

2 so as to align with the left margin of 

3 subparagraph (B); and 

4 (II) by striking ‘‘, and’’ and in5 serting a semicolon; 

6 (ii) in subparagraph (D), by striking 

7 ‘‘; or’’ and inserting ‘‘; and’’; and 

8 (iii) by adding at the end the fol9 lowing new subparagraph: 

10 ‘‘(E) with respect to any amount expended 

11 for a covered outpatient drug for which a sus12 pension under section 1927(c)(4)(B)(ii)(II) is in 

13 effect; or’’. 

14 (B) Section 1927(b)(3)(C)(ii) of the Social 

15 Security Act (42 U.S.C. 1396r–8(b)(3)(C)(ii)) 

16 is amended by striking ‘‘subsections (a) and 

17 (b)’’ and inserting ‘‘subsections (a), (b), (f)(3), 

18 and (f)(4)’’. 

19 (b) RECOVERY OF UNPAID REBATE AMOUNTS DUE

20 TO MISCLASSIFICATION OF COVERED OUTPATIENT

21 DRUGS.— 

22 (1) IN GENERAL.—Section 1927(c) of the So23 cial Security Act (42 U.S.C. 1396r–8(c)) is amended 

24 by adding at the end the following new paragraph: 


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1 ‘‘(4) RECOVERY OF UNPAID REBATE AMOUNTS

2 DUE TO MISCLASSIFICATION OF COVERED OUT3 PATIENT DRUGS.— 

4 ‘‘(A) IN GENERAL.—If the Secretary deter5 mines that a manufacturer with an agreement 

6 under this section paid a lower per-unit rebate 

7 amount to a State for a rebate period as a re8 sult of the misclassification by the manufac9 turer of a covered outpatient drug (without re10 gard to whether the manufacturer knowingly 

11 made the misclassification or should have 

12 known that the misclassification would be 

13 made) than the per-unit rebate amount that the 

14 manufacturer would have paid to the State if 

15 the drug had been correctly classified, the man16 ufacturer shall pay to the State an amount 

17 equal to the product of— 

18 ‘‘(i) the difference between— 

19 ‘‘(I) the per-unit rebate amount 

20 paid to the State for the period; and 

21 ‘‘(II) the per-unit rebate amount 

22 that the manufacturer would have 

23 paid to the State for the period, as 

24 determined by the Secretary, if the 

25 drug had been correctly classified; and 


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1 ‘‘(ii) the total units of the drug paid 

2 for under the State plan in the period. 

3 ‘‘(B) AUTHORITY TO CORRECT

4 MISCLASSIFICATIONS.— 

5 ‘‘(i) IN GENERAL.—If the Secretary 

6 determines that a manufacturer with an 

7 agreement under this section has 

8 misclassified a covered outpatient drug 

9 (without regard to whether the manufac10 turer knowingly made the misclassification 

11 or should have known that the 

12 misclassification would be made), the Sec13 retary shall notify the manufacturer of the 

14 misclassification and require the manufac15 turer to correct the misclassification in a 

16 timely manner. 

17 ‘‘(ii) ENFORCEMENT.—If, after receiv18 ing notice of a misclassification from the 

19 Secretary under clause (i), a manufacturer 

20 fails to correct the misclassification by 

21 such time as the Secretary shall require, 

22 until the manufacturer makes such correc23 tion, the Secretary may— 

24 ‘‘(I) correct the misclassification 

25 on behalf of the manufacturer; 


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1 ‘‘(II) suspend the misclassified 

2 drug and the drug’s status as a cov3 ered outpatient drug under the manu4 facturer’s national rebate agreement; 

5 or 

6 ‘‘(III) impose a civil money pen7 alty (which shall be in addition to any 

8 other recovery or penalty which may 

9 be available under this section or any 

10 other provision of law) for each rebate 

11 period during which the drug is 

12 misclassified not to exceed an amount 

13 equal to the product of— 

14 ‘‘(aa) the total number of 

15 units of each dosage form and 

16 strength of such misclassified 

17 drug paid for under any State 

18 plan during such a rebate period; 

19 and 

20 ‘‘(bb) 23.1 percent of the av21 erage manufacturer price for the 

22 dosage form and strength of such 

23 misclassified drug. 

24 ‘‘(C) REPORTING AND TRANSPARENCY.— 


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1 ‘‘(i) IN GENERAL.—The Secretary 

2 shall submit a report to Congress on at 

3 least an annual basis that includes infor4 mation on the covered outpatient drugs 

5 that have been identified as misclassified, 

6 the steps taken to reclassify such drugs, 

7 the actions the Secretary has taken to en8 sure the payment of any rebate amounts 

9 which were unpaid as a result of such 

10 misclassification, and a disclosure of ex11 penditures from the fund created in sub12 section (b)(3)(C)(iv), including an account13 ing of how such funds have been allocated 

14 and spent in accordance with such sub15 section. 

16 ‘‘(ii) PUBLIC ACCESS.—The Secretary 

17 shall make the information contained in 

18 the report required under clause (i) avail19 able to the public on a timely basis. 

20 ‘‘(D) OTHER PENALTIES AND ACTIONS.— 

21 Actions taken and penalties imposed under this 

22 paragraph shall be in addition to other remedies 

23 available to the Secretary including terminating 

24 the manufacturer’s rebate agreement for non25 compliance with the terms of such agreement 


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1 and shall not exempt a manufacturer from, or 

2 preclude the Secretary from pursuing, any civil 

3 money penalty under this title or title XI, or 

4 any other penalty or action as may be pre5 scribed by law.’’. 

6 (2) OFFSET OF RECOVERED AMOUNTS AGAINST

7 MEDICAL ASSISTANCE.—Section 1927(b)(1)(B) of 

8 the Social Security Act (42 U.S.C. 1396r– 

9 8(b)(1)(B)) is amended by inserting ‘‘, including 

10 amounts received by a State under subsection 

11 (c)(4),’’ after ‘‘in any quarter’’. 

12 (c) CLARIFYING DEFINITIONS.—Section 

13 1927(k)(7)(A) of the Social Security Act (42 U.S.C. 

14 1396r–8(k)(7)(A)) is amended— 

15 (1) by striking ‘‘an original new drug applica16 tion’’ and inserting ‘‘a new drug application’’ each 

17 place it appears; 

18 (2) in clause (i), by inserting ‘‘but including a 

19 drug product approved for marketing as a non-pre20 scription drug that is regarded as a covered out21 patient drug under paragraph (4)’’ after ‘‘drug de22 scribed in paragraph (5)’’; 

23 (3) in clause (ii), by striking ‘‘was originally 

24 marketed’’ and inserting ‘‘is marketed’’; and 

25 (4) in clause (iv)— 


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1 (A) by inserting ‘‘, including a drug prod2 uct approved for marketing as a non-prescrip3 tion drug that is regarded as a covered out4 patient drug under paragraph (4),’’ after ‘‘cov5 ered outpatient drug’’; and 

6 (B) by adding at the end the following new 

7 sentence: ‘‘Such term also includes a covered 

8 outpatient drug that is a biological product li9 censed, produced, or distributed under a bio10 logics license application approved by the Food 

11 and Drug Administration.’’. 

12 (d) EXCLUSION OF MANUFACTURERS FOR KNOWING

13 MISCLASSIFICATION OF COVERED OUTPATIENT

14 DRUGS.—Section 1128(b) of the Social Security Act (42 

15 U.S.C. 1320a–7(b)) is amended by adding at the end the 

16 following new paragraph: 

17 ‘‘(17) KNOWINGLY MISCLASSIFYING COVERED

18 OUTPATIENT DRUGS.—Any manufacturer or officer, 

19 director, agent, or managing employee of such man20 ufacturer that knowingly misclassifies a covered out21 patient drug under an agreement under section 

22 1927, knowingly fails to correct such 

23 misclassification, or knowingly provides false infor24 mation related to drug pricing, drug product inforVerDate Sep 11 2014 21:50 Dec 27, 2018 Jkt 089200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\H7217.RDS H7217

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1 mation, or data related to drug pricing or drug 

2 product information.’’. 

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

4 this section shall take effect on the date of the enactment 

5 of this Act, and shall apply to covered outpatient drugs 

6 supplied by manufacturers under agreements under sec7 tion 1927 of the Social Security Act (42 U.S.C. 1396r– 

8 8) on or after such date. 

9 TITLE III—MEDICARE 

10 SEC. 301. EXCLUSION OF COMPLEX REHABILITATIVE MAN11 UAL WHEELCHAIRS FROM MEDICARE COM12 PETITIVE ACQUISITION PROGRAM; NON-AP13 PLICATION OF MEDICARE FEE-SCHEDULE 

14 ADJUSTMENTS FOR CERTAIN WHEELCHAIR 

15 ACCESSORIES AND CUSHIONS. 

16 (a) EXCLUSION OF COMPLEX REHABILITATIVE MAN17 UAL WHEELCHAIRS FROM COMPETITIVE ACQUISITION

18 PROGRAM.—Section 1847(a)(2)(A) of the Social Security 

19 Act (42 U.S.C. 1395w–3(a)(2)(A)) is amended— 

20 (1) by inserting ‘‘, complex rehabilitative man21 ual wheelchairs (as determined by the Secretary), 

22 and certain manual wheelchairs (identified, as of Oc23 tober 1, 2018, by HCPCS codes E1235, E1236, 

24 E1237, E1238, and K0008 or any successor to such 

25 codes)’’ after ‘‘group 3 or higher’’; and 


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1 (2) by striking ‘‘such wheelchairs’’ and insert2 ing ‘‘such complex rehabilitative power wheelchairs, 

3 complex rehabilitative manual wheelchairs, and cer4 tain manual wheelchairs’’. 

5 (b) NON-APPLICATION OF MEDICARE FEE SCHED6 ULE ADJUSTMENTS FOR WHEELCHAIR ACCESSORIES AND

7 SEAT AND BACK CUSHIONS WHEN FURNISHED IN CON8 NECTION WITH COMPLEX REHABILITATIVE MANUAL

9 WHEELCHAIRS.— 

10 (1) IN GENERAL.—Notwithstanding any other 

11 provision of law, the Secretary of Health and 

12 Human Services shall not, during the period begin13 ning on January 1, 2019, and ending on June 30, 

14 2020, use information on the payment determined 

15 under the competitive acquisition programs under 

16 section 1847 of the Social Security Act (42 U.S.C. 

17 1395w–3) to adjust the payment amount that would 

18 otherwise be recognized under section 

19 1834(a)(1)(B)(ii) of such Act (42 U.S.C. 

20 1395m(a)(1)(B)(ii)) for wheelchair accessories (in21 cluding seating systems) and seat and back cushions 

22 when furnished in connection with complex rehabili23 tative manual wheelchairs (as determined by the 

24 Secretary), and certain manual wheelchairs (identi25 fied, as of October 1, 2018, by HCPCS codes 


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1 E1235, E1236, E1237, E1238, and K0008 or any 

2 successor to such codes). 

3 (2) IMPLEMENTATION.—Notwithstanding any 

4 other provision of law, the Secretary may implement 

5 this subsection by program instruction or otherwise. 

Passed the House of Representatives December 11, 

2018. 

Attest: KAREN L. HAAS, 

Clerk. 


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