‘‘(I) HIGH PER CAPITA STATE.— 
The term ‘high per capita State’ 
means, with respect to a category, a 
State for which the base per capita, 
per 
category 
amount 
determined 
under paragraph (2) for such category 
is greater than 110 percent of the na-
tional average base per capita, per 
category amount determined under 
subparagraph (A) for such category. 
‘‘(II) LOW PER CAPITA STATE.— 
The term ‘low per capita State’ 
means, with respect to a category, a 
State for which the base per capita, 
per 
category 
amount 
determined 
under paragraph (2) for such category 
is less than 90 percent of the national 
average base per capita, per category 
amount determined under subpara-
graph (A) for such category. 
‘‘(iv) STATE-SPECIFIC
FACTOR.—In 
this subparagraph, the term ‘State-specific 
factor’ means— 
‘‘(I) for fiscal year 2017, 7⁄8; and 
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‘‘(II) for a subsequent fiscal year, 
the State-specific factor under this 
clause for the previous fiscal year 
minus 1⁄8. 
‘‘(C) NO ADDITIONAL EXPENDITURES.— 
‘‘(i) DETERMINATION OF INCREASE IN 
FEDERAL EXPENDITURES.—For each cat-
egory for each fiscal year (beginning with 
fiscal year 2017 and ending with fiscal 
year 2024), the Secretary shall determine 
whether the application of this para-
graph— 
‘‘(I) to the category for the fiscal 
year will result in an aggregate in-
crease in the aggregate Federal ex-
penditures under this section; and 
‘‘(II) to all the categories for the 
fiscal year will result in a net aggre-
gate increase in the aggregate Federal 
expenditures under this section. 
‘‘(ii) ADJUSTMENT.—If the Secretary 
determines under clause (i)(II) that the 
application of this paragraph to all the cat-
egories for a fiscal year will result in a net 
aggregate increase in the aggregate Fed-
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eral expenditures under this section, the 
Secretary shall reduce the national average 
base per capita, per category amount com-
puted 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 expendi-
tures under this section by such uniform 
percentage as will ensure that there is no 
net aggregate Federal expenditure increase 
described in clause (i)(II) for the fiscal 
year. 
‘‘(5) REPORTS
ON
PER
CAPITA
RATES; AP-
PEALS.— 
‘‘(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 capita, per category 
amounts under paragraph (2) for such 
State; and 
‘‘(ii) the national average base per 
capita, per category amounts under para-
graph (4)(A). 
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‘‘(B) OPPORTUNITY
TO
APPEAL.—Not 
later than 3 months after the date a State re-
ceives notice of the Secretary’s initial deter-
mination of such base per capita, 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 ap-
peal, the Secretary shall make a final deter-
mination on such amounts for such State. If no 
such appeal is received for a State, the Sec-
retary’s initial determination under subpara-
graph (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 com-
putations 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 sub-
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section (c)(2)(A) in proportion to the extent that such in-
dividuals are receiving medical assistance for which pay-
ments described under subsection (a)(4)(A) are made. 
‘‘(e) RISK ADJUSTMENT.— 
‘‘(1) IN
GENERAL.—The amount under sub-
section (a)(1)(A) shall be adjusted under this sub-
section 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 bene-
ficiaries; and 
‘‘(B) variations in costs on a county-by- 
county basis for medical assistance and admin-
istrative expenses. 
‘‘(2) METHOD OF ADJUSTMENT.—The adjust-
ments under paragraph (1) shall be made in a man-
ner similar to the manner in which similar adjust-
ments are made under subsection (c)(2)(C) and con-
sistent with the requirements of clause (iii) of such 
subsection. 
‘‘(f) CHRONIC CARE QUALITY BONUS PAYMENTS.— 
‘‘(1) DETERMINATION OF BONUS PAYMENTS.— 
If the Secretary determines that, based on the re-
ports under paragraph (5), with respect to cat-
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egories of chronic disease for which chronic care per-
formance targets had been established under para-
graph (3) for each category of Medicaid beneficiaries 
specified under subsection (b)(2) such targets have 
been met by a State, the Secretary shall make an 
additional payment to such State in the amount 
specified in paragraph (6). 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 para-
graph (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 per-
formance of Medicare Advantage plans under 
part C of title XVIII. 
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