odology (or methodologies) established in accordance 
with this subsection. 
‘‘(2) TRANSITION FROM FEE-FOR-SERVICE TO 
RISK-BASED PAYMENT MODEL.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), payment to nationally designated 
children’s hospital networks under this sub-
section shall be based initially on a fee-for-serv-
ice payment model and shall gradually transi-
tion, over a 5-year period, to an equitable, risk- 
based payment model using a methodology de-
veloped under paragraph (3). For the first two 
years of such period, a nationally designated 
children’s hospital network may receive, in addi-
tion to any fee-for-service payments made to 
such hospital network, per capita care coordina-
tion payments with respect to expenditures for 
items and services furnished to eligible children 
enrolled in the MCCC program operated by the 
hospital network through medical home pro-
grams and other care coordination activities for 
which an all-inclusive payment model is more 
suitable than fee-for-service reimbursement. 
‘‘(B) EXCEPTION FOR CERTAIN STATES.— 
Subparagraph (A) shall not apply in the case of 
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a State that, as of the date of the enactment 
of this section, uses a risk-based payment meth-
odology with respect to payments made for 
items and services furnished to eligible children 
under the State plan or State child health plan. 
‘‘(C) DATA ANALYSIS DURING INITIAL PE-
RIOD.—During the first two years of the imple-
mentation of an MCCC program, the Secretary 
shall analyze data collected under subsection (f) 
for purposes of developing a risk-based payment 
methodology that would be implemented begin-
ning with the third year of implementation of 
the MCCC program. 
‘‘(3) DEVELOPMENT OF RISK-BASED PAYMENT 
METHODOLOGY.—The relevant State administering 
agency shall develop, in coordination with the Med-
icaid and CHIP Payment and Access Commission 
and the pediatric health care provider community, 
payment methodologies for payment under the State 
plan in accordance with this subsection that— 
‘‘(A) take into account the data analyzed 
under paragraph (2)(C); 
‘‘(B) are actuarially sound, determined 
using an actuarial method that ensures that 
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such methodologies reflect historic pediatric 
claims data; 
‘‘(C) include— 
‘‘(i) a risk adjustment method, re-in-
surance system, or risk-corridor procedure 
to account for variations in acuity of the 
eligible children enrolled in MCCC pro-
grams; and 
‘‘(ii) a shared savings approach, which 
may include a form of bundled payment or 
risk-reward payment model that aligns 
payment with both cost savings and quality 
improvement; and 
‘‘(D) may provide for a model for making 
payments other than payments made on a per- 
member, per-month basis. 
‘‘(h) WAIVERS OF REQUIREMENTS.— 
‘‘(1) IN GENERAL.—With respect to carrying 
out an MCCC program under this section, the fol-
lowing provisions of law shall not apply: 
‘‘(A) 
Section 
1902(a)(1), 
relating 
to 
statewideness. 
‘‘(B) Section 1902(a)(10), insofar as such 
section relates to comparability of services 
among different population groups. 
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‘‘(C) Sections 1902(a)(23) and 1915(b)(4), 
relating to freedom of choice of providers. 
‘‘(D) Section 1903(m)(2)(A), insofar as 
such section would prohibit a nationally des-
ignated children’s hospital network from receiv-
ing certain payments. 
‘‘(E) Such other provisions of this title, 
title XVIII, sections 1128A and 1128B, and 
any provisions of the Federal antitrust laws as 
the Secretary determines are inapplicable or the 
waiver of which are necessary for purposes of 
carrying out an MCCC program under this sec-
tion. 
‘‘(2) APPLICATION
IN
STATES
OPERATING 
UNDER DEMONSTRATION PROJECTS.— 
‘‘(A) IN
GENERAL.—In the case of any 
State which is providing medical assistance to 
its residents under a waiver described in sub-
paragraph (B), the Secretary shall not require 
that the State meet the requirements of this 
section in the same manner as the State would 
be required to meet such requirements if the 
State had in effect a plan approved under this 
title. 
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‘‘(B) WAIVER DESCRIBED.—A waiver de-
scribed in this subparagraph is a waiver grant-
ed under section 1115 under which a State— 
‘‘(i) provides for coverage through a 
medicaid managed care plan of all or a 
certain proportion of MCCC program serv-
ices furnished to eligible children in the 
State through a nationally designated chil-
dren’s hospital network; 
‘‘(ii) assigns such eligible children to 
such a network in accordance with sub-
section (c); 
‘‘(iii) requires that the State and such 
network enter into a program agreement 
that meets the requirements applicable to 
program agreements under subsection (d); 
and 
‘‘(iv) uses a payment methodology to 
make payments made for MCCC program 
services furnished to eligible children that 
is consistent with the requirements of sub-
section (g). 
‘‘(i) PREEMPTION OF STATE LAW.—A State may not 
impose any requirement on the nationally qualified chil-
dren’s hospital network’s operation of an MCCC program 
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under a program agreement that meets the requirements 
of this section that is inconsistent with or would otherwise 
impede the satisfaction by such hospital network of the 
requirements of this section (including the requirements 
of such program agreement). 
‘‘(j) DEFINITIONS.—In this section: 
‘‘(1) ELIGIBLE
CHILD.—The term ‘eligible 
child’ means, with respect to an MCCC program, an 
individual who is under the age of 18 and who— 
‘‘(A) is eligible for medical assistance 
under the State plan under this title or child 
health assistance under the State child health 
plan under title XXI; and 
‘‘(B) has a chronic, physical, develop-
mental, behavioral, or emotional condition 
that— 
‘‘(i) affects two or more body systems; 
‘‘(ii) requires intensive care coordina-
tion to avoid excessive hospitalizations or 
emergency department visits; or 
‘‘(iii) meets the criteria for medical 
complexity using risk adjustment meth-
odologies (such as Clinical Risk Groups or 
another recognized pediatric population 
grouping system) agreed upon by the Sec-
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‘‘(B) in which the full complement of 
health care providers needed to provide the best 
care for children in the network participate; and 
‘‘(C) that represents the interests of physi-
cians, other health care providers, parents of 
medically complex children, and other relatives 
of such children. 
‘‘(5) PROGRAM AGREEMENT.—The term ‘pro-
gram agreement’ means an agreement between a na-
tionally designated children’s hospital network, the 
Secretary, and a State administering agency for the 
operation of an MCCC program by the hospital net-
work in the State that meets the requirements of 
this section. 
‘‘(6) QUALIFIED CHILDREN’S HOSPITAL.—The 
term ‘qualified children’s hospital’ means a chil-
dren’s hospital that— 
‘‘(A) qualifies to receive payment under 
section 340E of the Public Health Service Act 
(relating to children’s hospitals that operate 
graduate medical education programs); or 
‘‘(B) meets 3 or more of the following cri-
teria: 
‘‘(i) 
MINIMUM
PEDIATRIC
DIS-
CHARGES.—The hospital has at least 5,000 
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annual pediatric discharges (including neo-
nates, but excluding obstetrics and normal 
newborns) for the most recent cost report-
ing period for which data are available. 
‘‘(ii) MINIMUM NUMBER OF BEDS.— 
The hospital has 100 licensed pediatric 
beds, not including beds in neonatal inten-
sive care units but including beds in pedi-
atric intensive care units and other acute 
care beds. 
‘‘(iii) ACCESS
TO
PEDIATRIC
EMER-
GENCY SERVICES.—The hospital has access 
(through ownership or otherwise) to pedi-
atric emergency services. 
‘‘(iv) MEDICAID
RELIANT.—At least 
30 percent of the pediatric discharges or 
inpatient days (excluding observation days) 
in the hospital for the most recent cost re-
porting period for which data are available 
were children eligible for medical assist-
ance under this title or for children’s 
health assistance under title XXI. 
‘‘(v) AFFILIATION WITH ACCREDITED 
PEDIATRIC
RESIDENCY
TRAINING
PRO-
GRAM.—The hospital sponsors or is affili-
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ated with a pediatric residency program 
that is accredited by the Accreditation 
Council for Graduate Medical Education. 
‘‘(vi) PEDIATRIC MEDICAL HOME PRO-
GRAMS.—The hospital has established and 
implemented demonstrable pediatric med-
ical home programs dedicated to medically 
complex children. 
‘‘(7) STATE
ADMINISTERING
AGENCY.—The 
term ‘State administering agency’ means, with re-
spect to the operation of an MCCC program in a 
State, the agency of that State (which may be the 
single agency responsible for administration of the 
State plan under this title in the State) responsible 
for administering program agreements under this 
section.’’. 
(b) INCLUSION AS MEDICAL ASSISTANCE.—Section 
1905(a) of the Social Security Act (42 U.S.C. 1396d(a)) 
is amended— 
(1) in paragraph (28), by striking ‘‘and’’ at the 
end; 
(2) by redesignating paragraph (29) as para-
graph (30); and 
(3) by inserting after paragraph (28) the fol-
lowing new paragraph: 
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‘‘(29) items and services furnished under an 
MCCC program under section 1947 to eligible chil-
dren enrolled in an MCCC program under such sec-
tion; and’’. 
(c) APPLICATION UNDER CHIP.—Section 2107(e)(1) 
of the Social Security Act (42 U.S.C. 1397gg(e)(1)) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(P) Section 1947 (relating to Medicaid 
Children’s Care Coordination programs for chil-
dren with complex medical conditions).’’. 
(d) REGULATIONS.—Not later than 120 days after 
the date of the enactment of this Act, the Secretary of 
Health and Human Services shall make rules on the 
record, after opportunity for an agency hearing to carry 
out the amendments made by this section in accordance 
with sections 556 and 557 of title 5, United States Code. 
Æ 
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