I 
113TH CONGRESS 
1ST SESSION H. R. 1853 
To amend title XIX of the Social Security Act to reform payment to States 
under the Medicaid program. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 7, 2013 
Mr. CASSIDY introduced the following bill; which was referred to the 
Committee on Energy and Commerce 
A BILL 
To amend title XIX of the Social Security Act to reform 
payment to States under the Medicaid program. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicaid Account-
ability and Care Act of 2013’’. 
SEC. 2. 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: 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘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 sub-
section (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
BENE-
FICIARY-BASED AMOUNT.—The aggregate bene-
ficiary-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. 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(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 de-
scribed in subparagraph (D)(ii) for 
such State and fiscal year; to 
‘‘(II) the Federal percentage de-
scribed 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 sub-
paragraph (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— 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(I) the Federal percentage de-
scribed in subparagraph (D)(i) for 
such State and fiscal year; to 
‘‘(II) the State percentage de-
scribed 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 ag-
gregate State payment towards the State’s 
required State share for the 4-quarter pe-
riod beginning with such quarter exceeds 
the required State share amount for such 
4-quarter period. 
‘‘(D) FEDERAL
AND
STATE
PERCENT-
AGES.—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 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
percent minus the Federal percentage de-
scribed in clause (i). 
‘‘(E) RULES
FOR
CREDITING
TOWARD 
STATE SHARE.— 
‘‘(i) GENERAL LIMITATION TO MATCH-
ABLE EXPENDITURES.—A payment for ex-
penditures 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 AL-
LOWABLE 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
EX-
PENDITURES.—An expenditure that is 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
attributable to certified public expend-
itures. 
‘‘(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 to-
ward 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 SUB-
MITTED 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.— 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(A) APPLICATION OF MEDICAID LIMITA-
TIONS.—A State may only use Federal pay-
ments received under subsection (a) for expend-
itures for which Federal funds would have been 
payable under this title but for this section. 
‘‘(B) LIMITATION
FOR
CERTAIN
ELIGI-
BLES.— 
‘‘(i) APPLICATION
OF
100
PERCENT 
FEDERAL POVERTY LINE LIMIT ON ELIGI-
BILITY.—Subject to clause (iii), a State 
may not use such Federal payments to 
provide medical assistance for an indi-
vidual 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
IN-
COME
WITHOUT
ANY
PERCENT
IN-
CREASE.—In determining income for pur-
poses 
of 
clause 
(i) 
under 
section 
1902(e)(14) (relating to modified adjusted 
gross income), the following rules shall 
apply: 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(I) APPLICATION
OF
SPEND 
DOWN.—The State shall take into ac-
count 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 sec-
tion 1902(e)(14) (relating to a 5 per-
cent 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 pe-
riod of continuous enrollment; or 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(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 applica-
tion of section 1924 (related to community 
spouse income and assets). 
‘‘(4) EXCEPTIONS
FOR
PASS-THROUGH
PAY-
MENTS.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply, and amounts shall continue to be 
payable under this title (and not under sub-
section (a)), in the case of the following pay-
ments (and related administrative costs and ex-
penditures): 
‘‘(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.—Pay-
ments attributable to section 1928. 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(iv) EMERGENCY SERVICES FOR CER-
TAIN
INDIVIDUALS.—Payments for treat-
ment of emergency medical conditions at-
tributable to the application of section 
1903(v)(2). 
‘‘(v) INDIAN
HEALTH
CARE
FACILI-
TIES.—Payments for medical assistance 
described in the third sentence of section 
1905(b). 
‘‘(vi) EMPLOYER-SPONSORED
INSUR-
ANCE (ESI).—Payments for medical assist-
ance attributable to payments to employers 
for employer-sponsored health benefits cov-
erage. 
‘‘(vii) OTHER
POPULATIONS
WITH 
LIMITED BENEFIT COVERAGE.—Other pay-
ments that are determined by the Sec-
retary to be related to a specified popu-
lation for which the medical assistance 
under this title is limited and does not in-
clude any inpatient, nursing facility, or 
long-term care services. 
‘‘(B) CERTAIN EXPENSES.—Paragraph (1) 
shall not apply, and amounts shall continue to 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
be payable under this title (and not under sub-
section (a)), in the case of the following: 
‘‘(i) ADMINISTRATION
OF
MEDICARE 
PRESCRIPTION DRUG BENEFIT.—Expendi-
tures described in section 1935(b) (relating 
to administration of the Medicare prescrip-
tion drug benefit). 
‘‘(ii) PAYMENTS FOR HIT BONUSES.— 
Payments under section 1903(a)(3)(F) (re-
lating to payments to encourage the adop-
tion and use of certified EHR technology). 
‘‘(iii) PAYMENTS FOR DESIGN, DEVEL-
OPMENT, AND INSTALLATION OF MMIS AND 
ELIGIBILITY
SYSTEMS.—Payments under 
subparagraphs (A)(i) and (H)(i) of section 
1903(a)(3) for expenditures for design, de-
velopment, 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 Sec-
retary may otherwise provide, amounts shall be 
payable to a State under subsection (a) in the 
same manner as amounts are payable under 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
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 nec-
essary 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 INFORMA-
TION ON MEDICAL LOSS RATIOS FOR MANAGED 
CARE.—The information required to be reported 
under subparagraph (B)(i) shall include infor-
mation on the medical loss ratio with respect to 
coverage provided under each Medicaid man-
aged care plan with a contract with the State 
under section 1903(m) or 1932. 
‘‘(b) AGGREGATE BENEFICIARY-BASED AMOUNT.— 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(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 sub-
section (c) for such State for such quarter. 
‘‘(B) NUMBER
OF
INDIVIDUALS
IN
CAT-
EGORY.—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 subpara-
graph (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. 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(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 CAT-
EGORY QUARTERLY AMOUNT.— 
‘‘(1) IN GENERAL.—For a State, for each cat-
egory of beneficiary for a quarter— 
‘‘(A) FIRST REFORM YEAR.—For quarters 
in the first reform year (as defined in sub-
section (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 COM-
PONENT OF CPI THROUGH PREVIOUS RE-
FORM 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. 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(ii) PROJECTED MEDICAL CARE COM-
PONENT OF CPI FOR THE FIRST REFORM 
YEAR.—The percentage increase in the 
projected medical care component of the 
Consumer Price Index for all urban con-
sumers (U.S. city average) from the mid-
point of the previous fiscal year referred to 
in clause (i) to the midpoint of the first re-
form 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 in-
creased by the per beneficiary percentage in-
crease (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 re-
form year and ending with the tenth reform 
year is— 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(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 para-
graph (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 in-
creased by the per beneficiary percentage 
increase for such category and reform 
year. 
‘‘(D) ELEVENTH REFORM YEAR AND SUB-
SEQUENT
REFORM
YEARS.—The beneficiary- 
based quarterly amount for a State for a cat-
egory 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 bene-
ficiary percentage increase for such category 
and reform year. 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(E) ANNUAL PERCENTAGE INCREASE BE-
GINNING
WITH
SECOND
REFORM
YEAR.—For 
purposes of this subsection, the term ‘per bene-
ficiary 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 para-
graph and paragraph (3), a base per bene-
ficiary, 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 pay-
ments under section 1923, for each of the 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
categories of beneficiaries under subsection 
(b)(2) for the base fiscal year for each of 
the 50 States and the District of Colum-
bia. 
‘‘(ii) BEST
AVAILABLE
DATA.—The 
determination under clause (i) shall ini-
tially 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 deter-
mined based on such updates. 
‘‘(B) EXCLUSION OF PASS-THROUGH PAY-
MENTS.—In computing base per beneficiary, 
per category amounts under subparagraph 
(A)(i) the Secretary shall exclude payments de-
scribed in subsection (a)(4). 
‘‘(C) STANDARDIZATION.— 
‘‘(i) IN GENERAL.—In computing each 
such amount, the Secretary shall stand-
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
ardize 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 sta-
tus, and such other factors as the 
Secretary determines to be appro-
priate, so as to ensure actuarial 
equivalence. 
‘‘(II) 
GEOGRAPHIC.—Variations 
in costs on a county-by-county basis. 
‘‘(ii) 
METHOD
OF
STANDARDIZA-
TION.— 
‘‘(I) CONSULTATION
IN
DEVEL-
OPMENT
OF
RISK
STANDARDIZA-
TION.—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 Commis-
sion, and the National Association of 
Medicaid Directors. 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(II) METHOD FOR RISK STAND-
ARDIZATION.—In carrying out clause 
(i)(I), the Secretary may apply the 
hierarchal condition category method-
ology under section 1853(a)(1)(C). If 
the Secretary uses such methodology, 
the Secretary shall adjust the applica-
tion 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 pedi-
atric 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 standard-
ization under clause (i) shall be designed 
and implemented on a uniform national 
basis and shall be budget neutral so as to 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
not result in any aggregate change in pay-
ments under subsection (a). 
‘‘(iv) RESPONSE TO NEW RISK.—Sub-
ject to clause (iii), the Secretary may ad-
just the standardization under clause (i) to 
respond promptly to new instances of com-
municable 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 bene-
ficiary, per category amounts under subpara-
graph (A)(i) the Secretary shall disregard por-
tions of payments that are attributable to a 
temporary increase in the Federal matching 
rates, including those attributable to the fol-
lowing: 
‘‘(i) PPACA DISASTER
FMAP.—Sec-
tion 1905(aa). 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(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 bene-
ficiaries; 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 AVER-
AGE BASE PER BENEFICIARY, PER CATEGORY 
AMOUNT.—Subject to subparagraph (C), the 
Secretary shall determine a national average 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
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 bene-
ficiary State (as defined in clause (iii)(I)) 
for a category, the beneficiary-based quar-
terly 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-spe-
cific factor for such reform year (as 
defined in clause (iv)) and the bene-
ficiary-based quarterly amount that 
would otherwise be determined under 
paragraph (1) for such State and cat-
egory if the State were a State de-
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
scribed 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 quar-
terly amount that would otherwise be 
determined under paragraph (1) for a 
State and category if the base per 
beneficiary, per category amount de-
termined 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 bene-
ficiary State (as defined in clause (iii)(II)) 
for a category, the beneficiary-based quar-
terly 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— 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(I) the product of the State-spe-
cific factor for such reform year and 
the 
beneficiary-based 
quarterly 
amount that would otherwise be deter-
mined 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 para-
graph; and 
‘‘(II) the product of 1 minus the 
State-specific factor for such reform 
year and the beneficiary-based quar-
terly amount that would otherwise be 
determined under paragraph (1) for a 
State and category if the base per 
beneficiary, per category amount de-
termined 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. 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(iii) HIGH
AND
LOW
PER
BENE-
FICIARY
STATES
DEFINED.—In this sub-
paragraph: 
‘‘(I) HIGH
PER
BENEFICIARY 
STATE.—The term ‘high per bene-
ficiary 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 per-
cent of the national average base per 
beneficiary, per category amount de-
termined under subparagraph (A) for 
such category. 
‘‘(II) LOW
PER
BENEFICIARY 
STATE.—The term ‘low per bene-
ficiary 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 bene-
ficiary, per category amount deter-
mined under subparagraph (A) for 
such category. 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(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 cat-
egory for each reform year (beginning with 
the fourth reform year and ending with the 
tenth reform year), the Secretary shall de-
termine whether the application of this 
paragraph— 
‘‘(I) to the category for the re-
form year will result in an aggregate 
increase in the aggregate Federal ex-
penditures under subsection (a); and 
‘‘(II) to all the categories for the 
reform year will result in a net aggre-
gate increase in the aggregate Federal 
expenditures under subsection (a). 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(ii) ADJUSTMENT.—If the Secretary 
determines under clause (i)(II) that the 
application of this paragraph to all the cat-
egories 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 av-
erage 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 ex-
penditure 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— 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS
‘‘(i) the base per beneficiary, per cat-
egory 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 re-
ceives notice of the Secretary’s initial deter-
mination of such base per beneficiary, per cat-
egory amounts for such State under subpara-
graph (A)(i), the State may file with the Sec-
retary, 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 
VerDate Mar 15 2010 
05:12 May 09, 2013
Jkt 029200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H1853.IH
H1853
pwalker on DSK7TPTVN1PROD with BILLS