I 
117TH CONGRESS 
2D SESSION 
H. R. 7258 
To eliminate the individual and employer health coverage mandates under 
the Patient Protection and Affordable Care Act, to expand beyond that 
Act the choices in obtaining and financing affordable health insurance 
coverage, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 28, 2022 
Mr. SESSIONS introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committees on 
Ways and Means, and Education and Labor, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To eliminate the individual and employer health coverage 
mandates under the Patient Protection and Affordable 
Care Act, to expand beyond that Act the choices in 
obtaining and financing affordable health insurance cov-
erage, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; PURPOSES; TABLE OF CON-
TENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Health Care Equality and Modernization Act of 2022’’. 
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(b) PURPOSES.—The purposes of this Act are as fol-
lows: 
(1) ELIMINATION
OF
INDIVIDUAL
AND
EM-
PLOYER MANDATES UNDER ACA.—To eliminate man-
dates on individuals and employers, and other tax 
requirements, imposed under Patient Protection and 
Affordable Care Act. 
(2) PROVIDING
STATES
WITH
ALTERNATIVE, 
AFFORDABLE
COVERAGE
OPTIONS.—To 
provide 
greater flexibility in providing States with options in 
making affordable health insurance coverage avail-
able by eliminating certain mandates under PPACA, 
while retaining essential consumer protections, by 
promoting health savings accounts to pay for such 
coverage and long-term care coverage, while permit-
ting States to continue coverage as provided under 
PPACA. 
(c) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; purposes; table of contents. 
Sec. 2. Definitions. 
TITLE I—REVISIONS OF PPACA 
Subtitle A—Elimination of Employer Mandate 
Sec. 101. Repeal of employer health insurance mandate. 
Sec. 102. Clarifying employer’s ability to reimburse employee premiums for 
purchase of individual health insurance coverage. 
Subtitle B—Limitation on Application of PPACA Plan Requirements 
Sec. 121. Limiting application of requirements to consumer protections. 
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Sec. 122. Offering of basic health insurance; protection of assets from liability 
or attachment or seizure. 
Subtitle C—Health Insurance Tax Benefit 
Sec. 131. Health insurance tax benefit. 
Sec. 132. Application of portion of unused tax credits by States for indigent 
health care. 
Sec. 133. Medicaid option of enrollment under private plan and contribution to 
an HSA. 
Sec. 134. Repeal of reporting requirements relating to employee health insur-
ance premiums and health plan benefits. 
TITLE II—IMPROVING HEALTH SAVINGS ACCOUNTS TO PROMOTE 
ACCOUNTABILITY 
Sec. 201. Transition to non-deductible HSAs. 
Sec. 202. Elimination of medical expense deduction. 
Sec. 203. Treatment of HSA after death of account beneficiary. 
Sec. 204. Treatment of concierge medicine. 
TITLE III—STATE FLEXIBILITY IN REGULATION OF HEALTH 
INSURANCE COVERAGE 
Sec. 301. State flexibility in regulation of health insurance coverage. 
TITLE IV—MEDICAID PAYMENT REFORM 
Sec. 401. Medicaid payment reform. 
TITLE V—INCREASING PRICE TRANSPARENCY AND FREEDOM OF 
PRACTICE 
Sec. 501. Publishing of cash price for care paid through health savings ac-
counts. 
Sec. 502. Liberating the local practice of health care. 
SEC. 2. DEFINITIONS. 
Except as otherwise provided, in this Act: 
(1) BASIC
HEALTH
INSURANCE.—The term 
‘‘basic health insurance’’ is defined in section 
122(a). 
(2) 
DEFAULT
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘‘default health insurance cov-
erage’’ is defined in section 121(b)(4)(B). 
(3) EXCHANGE.—The term ‘‘Exchange’’ means 
an Exchange established under title I of PPACA. 
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(4) HEALTH
INSURANCE
COVERAGE; GROUP 
HEALTH PLAN, ETC.—The terms defined in section 
2791 of the Public Health Service Act, including 
‘‘health insurance coverage’’, ‘‘group health plan’’ 
‘‘individual market’’, shall apply. 
(5) LIMITED BENEFIT INSURANCE.—The term 
‘‘limited benefit insurance’’ is defined in section 
122(b). 
(6) PPACA.—The term ‘‘PPACA’’ means the 
Patient Protection and Affordable Care Act (Public 
Law 111–148). 
(7) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services. 
(8) STATE.—The term ‘‘State’’ includes the 
District of Columbia, Puerto Rico, the United States 
Virgin Islands, American Samoa, Guam, and the 
Northern Mariana Islands. 
TITLE I—REVISIONS OF PPACA 
Subtitle A—Elimination of 
Employer Mandate 
SEC. 101. REPEAL OF EMPLOYER HEALTH INSURANCE MAN-
DATE. 
(a) IN GENERAL.—Chapter 43 of the Internal Rev-
enue Code of 1986 is amended— 
(1) by striking section 4980H, and 
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(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to months and other periods 
beginning more than 30 days after the date of the 
enactment of this Act. 
(2) REPEAL
OF
STUDY
AND
REPORT.—The 
amendment made by subsection (c)(3) shall take ef-
fect on the date of the enactment of this Act. 
SEC. 102. CLARIFYING EMPLOYER’S ABILITY TO REIM-
BURSE 
EMPLOYEE 
PREMIUMS 
FOR 
PUR-
CHASE OF INDIVIDUAL HEALTH INSURANCE 
COVERAGE. 
An employer health care arrangement, such as a 
health or medical reimbursement arrangement (HRA) or 
other employment plans, under which an employer reim-
burses an employee for the premiums for the purchase of 
individual health insurance coverage does not constitute 
a group health plan for any purposes, including for pur-
poses of applying any of the following: 
(1) The Public Health Service Act (including 
sections 2711 and 2714 of such Act, 42 U.S.C. 
300gg–11, 300gg–14). 
(2) The Patient Protection and Affordable Care 
Act. 
(3) The Internal Revenue Code of 1986. 
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(4) The Employee Retirement Income Security 
Act of 1974. 
(5) The HIPAA privacy regulations (as defined 
in section 1180(b)(3) of the Social Security Act, 42 
U.S.C. 1320d–9(b)(3)). 
(6) The Health Insurance Portability and Ac-
countability Act of 1996. 
(7) COBRA continuation coverage under title 
XXII of the Public Health Service Act (42 U.S.C. 
300bb–1 et seq.), section 4980B of the Internal Rev-
enue Code of 1986, or title VI of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 
1161 et seq.). 
Subtitle B—Limitation on Applica-
tion of PPACA Plan Require-
ments 
SEC. 121. LIMITING APPLICATION OF REQUIREMENTS TO 
CONSUMER PROTECTIONS. 
(a) REMOVAL
OF PPACA PLAN REQUIREMENTS, 
OTHER THAN CERTAIN CONSUMER PROTECTIONS.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, with respect to group health plans 
and health insurance coverage whether or not of-
fered through an Exchange, except as provided in 
paragraphs (2) and (3), the provisions of title 
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XXVII of the Public Health Service Act (42 U.S.C. 
300gg et seq.) as in effect on the day before the date 
of the enactment of PPACA shall apply instead of 
the provisions of such title as in effect after such 
date. 
(2) PPACA CONSUMER
PROTECTIONS
CON-
TINUING TO BE APPLIED.—The following sections of 
the Public Health Service Act, that were added or 
amended by subtitles A and C of title I of PPACA, 
shall continue to apply to group health plans and to 
health insurance coverage offered in the individual 
and group market: 
(A) NO LIFETIME OR ANNUAL LIMITS.— 
Section 2711 (42 U.S.C. 300gg–11; relating to 
no lifetime or annual limits), except in the case 
of limited benefit insurance (as defined in sec-
tion 122(b)). 
(B) DEPENDENT
COVERAGE
THROUGH 
AGE 26.—Section 2714 (42 U.S.C. 300bb–14; 
relating to extension of dependent coverage). 
(C) 
MODIFIED
GUARANTEED
AVAIL-
ABILITY.—Section 2702 (42 U.S.C. 300gg–1; 
relating to guaranteed availability of coverage), 
subject to paragraph (3) and subsection (c). 
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(D) GUARANTEED
RENEWABILITY.—Sec-
tion 2703 (42 U.S.C. 300gg–2; relating to 
guaranteed renewability of coverage). 
(E) PROHIBITING
PRE-EXISTING
CONDI-
TION EXCLUSIONS.—Section 2704 (42 U.S.C. 
300gg–3; relating to prohibition on preexisting 
conditions). 
(F) PROHIBITING DISCRIMINATION BASED 
ON HEALTH STATUS.—Section 2705 (42 U.S.C. 
300gg–4; relating to prohibiting discrimination 
against individual participants and beneficiaries 
based on health status), subject to subsection 
(c). 
(G) 
NON-DISCRIMINATION
IN
HEALTH 
CARE.—Section 2706 (42 U.S.C. 300gg–5; re-
lating to non-discrimination in health care). 
(3) APPLICATION
OF
A
LATE
ENROLLMENT 
PENALTY FOR THOSE WITHOUT CONTINUOUS COV-
ERAGE.— 
(A) IN GENERAL.—In the case of an indi-
vidual who seeks to enroll in health insurance 
coverage and who, as of the effective date of 
such enrollment, does not have a continuous pe-
riod of at least 12 months of creditable cov-
erage, there shall be imposed a late enrollment 
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penalty in the form of an increase in the 
monthly premiums for coverage of under the 
plan of 20 percent of the monthly premium oth-
erwise determined for each consecutive full 12- 
month period (ending before such effective 
date) in which the individual was not enrolled 
in creditable coverage. Such increase shall apply 
during a period, to be specified under regula-
tions of the Secretary but in no case longer 
than 3 times the length of the most recent pe-
riod in which the individual did not have contin-
uous coverage. 
(B) STATE WAIVER.—A State may apply 
to the Secretary for a waiver of the provisions 
of subparagraph (A) and the application of al-
ternative provisions providing incentives for 
State residents to enroll in creditable coverage 
and maintain continuous creditable coverage. 
The Secretary shall approve such waiver if the 
Secretary determines that the alternative provi-
sions provide similar or greater incentives for 
such enrollment than the incentives otherwise 
applicable. 
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(4) COORDINATING IMPLEMENTATION OF PRE- 
PPACA
PHSA
PROVISIONS
WITH
PPACA
CONSUMER 
PROTECTIONS.— 
(A) IN GENERAL.—In applying this sub-
section, the provisions described in paragraph 
(2) shall be treated as if they were included in 
title XXVII of the Public Health Service Act, 
as in effect before the date of the enactment of 
PPACA, and, with respect to group health 
plans and health insurance coverage offered in 
connection with such plans, in part 7 of subtitle 
B of title I of the Employee Retirement and In-
come Security Act of 1974 (29 U.S.C. 1181 et 
seq.), and, with respect to group health plans, 
in chapter 100 of the Internal Revenue Code of 
1986 as follows: 
(i) LIFETIME
LIMITS; 
DEPENDENT 
COVERAGE.—The provisions described in 
paragraphs (2)(A) and (2)(B) shall be 
treated as included— 
(I) with respect to group health 
plans (and health insurance coverage 
offered with respect to such plans), 
under subpart 2 of part A of title 
XXVII of the Public Health Service 
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‘‘(c) ADDITIONAL EXCEPTION.—Pursuant to section 
121 of the Health Care Equality and Modernization Act 
of 2022, the provisions of part A of title XXVII of the 
Public Health Service Act referred to in subsection (a), 
other than those provisions specified in section 121(a)(2) 
of the Health Care Equality and Modernization Act of 
2022, shall not apply to plans described in subsection 
(a).’’. 
(b) STATE FLEXIBILITY
IN ENSURING ORDERLY 
HEALTH INSURANCE MARKET OUTSIDE
OF
AN EX-
CHANGE.— 
(1) IN GENERAL.—With respect to health insur-
ance coverage offered in a State, the State may, in 
consultation with the Secretary, take such steps, 
such as limiting the availability of general open en-
rollment periods, imposing delays in the effectiveness 
for coverage, permitting differentials in premiums 
based on age and other factors, as the State deter-
mines necessary in order to ensure an orderly mar-
ket for health insurance coverage in the State that 
is not offered through an Exchange. Such steps may 
include the establishment of such initial open enroll-
ment period during which qualified residents may 
enroll in health insurance coverage without the im-
position of any underwriting as the State determines 
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to be appropriate in ensuring initial access to such 
coverage. 
(2) FLEXIBILITY IN IMPOSING ADDITIONAL RE-
QUIREMENTS.—Subject to paragraph (5), nothing in 
this section shall be construed as preventing a State 
from continuing to apply, to health insurance cov-
erage issued in the State, requirements under the 
provisions of title XXVII of the Public Health Serv-
ice Act (as amended by subtitles A and C of title I 
of PPACA) that are not continued under subsection 
(a). 
(3) STATE FLEXIBILITY WITH RESPECT TO EX-
CHANGES.—A State may waive such provisions of 
part II of subtitle D of title I of PPACA (42 U.S.C. 
18031 et seq.), in relation to the establishment of an 
Exchange in such State, as the State determines ap-
propriate in order for the State to implement and 
administer a market-based system for the avail-
ability of health insurance coverage throughout the 
State. 
(4) STATE DEFAULT ENROLLMENT OPTION.— 
(A) ENROLLMENT, 
SUBJECT
TO
INDI-
VIDUAL
OPT-OUT.—Subject to subparagraph 
(D), a State may elect to provide for the enroll-
ment of residents of the State who are unin-
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sured in default health insurance coverage (as 
defined in subparagraph (B)) and establishing a 
Roth HSA for such residents who do not have 
a Roth HSA unless the resident has affirma-
tively elected not to be so enrolled and not to 
have such an account. respectively. If a State 
makes such an election, the State shall permit 
eligible residents to enroll in such coverage on 
a continuous basis. 
(B) DEFAULT
HEALTH
INSURANCE
COV-
ERAGE DEFINED.—In this paragraph, the term 
‘‘default health insurance coverage’’ means, 
with respect to a State, health insurance cov-
erage that— 
(i) is a high deductible health plan 
(within the meaning of section 223(c)(2) of 
the Internal Revenue Code of 1986) with 
prescription drug coverage limited to ge-
neric drugs for a limited number of chronic 
conditions (commonly referred to as tier I 
pharmacy benefit); 
(ii) meets such requirements as may 
apply to qualify for the payment of plan 
premiums from a health savings account 
under section 223 of such Code (such as 
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age-related premiums and limitation on 
imposition of preexisting condition exclu-
sions); 
(iii) has a provider network for cov-
ered benefits that is adequate (as deter-
mined consistent with guidelines issued by 
the Secretary) to ensure access to health 
benefits under such plan; 
(iv) provides for coverage of childhood 
immunizations without cost sharing re-
quirements to the extent such immuniza-
tions have in effect a recommendation 
from the Advisory Committee on Immuni-
zation Practices of the Centers for Disease 
Control and Prevention with respect to the 
individual involved; and 
(v) meets such other requirements as 
the State may specify. 
(C) ROTH
HSA.—In this paragraph, the 
term ‘‘Roth HSA’’ shall have the meaning given 
such term by section 530A(c) of the Internal 
Revenue Code of 1986, as added by section 
201(a) of this Act. 
(D) SIMPLE PROCESS FOR INDIVIDUALS TO 
OPT-OUT.—As a condition of a State providing 
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for the enrollment function described in sub-
paragraph (A), the State must establish an 
easy-to-use and transparent means by which in-
dividuals may elect not to be enrolled in default 
health insurance coverage or to have a Roth 
HSA established on the individual’s behalf, or 
both. 
(5) MINIMUM AGE VARIATION PERMITTED FOR 
PREMIUM RATES.—With respect to the premium rate 
charged by a health insurance issuer for health in-
surance coverage offered in the individual or small 
group market, a State may not limit the variation by 
age in such rate with respect to a particular plan or 
coverage involved by less than a factor of 5 to 1 for 
adults. The previous sentence shall be treated as if 
it were included in subpart I of part A of title 
XXVII of the Public Health Service Act (42 U.S.C. 
300gg et seq.). 
(c) INAPPLICABILITY
OF
REQUIRED
ESSENTIAL 
HEALTH BENEFITS.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, no health benefits plan shall be re-
quired by reason of Federal law to comply with the 
requirements of sections 1301(a)(1)(B) and 1302 of 
PPACA (42 U.S.C. 18021(a)(1)(B), 18022). 
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(2) STATE FLEXIBILITY.—Nothing in this sub-
section shall be construed as preventing a State 
from applying, at its option with respect to health 
insurance coverage offered through an Exchange or 
otherwise in the State, the requirements referred to 
in paragraph (1). 
(d) EFFECTIVE DATE; TRANSITION.— 
(1) IN GENERAL.—Subsections (a), (b), and (c) 
shall apply to plan years beginning after the date of 
the enactment of this Act. 
(2) SUNSETTING REQUIRED CONTRIBUTION FOR 
ACA REINSURANCE PROGRAM.—No contribution shall 
be required under section 1341 of PPACA (42 
U.S.C. 18061) from any group health plan or health 
insurance issuer for portions of plans years occur-
ring in months beginning more than 30 days after 
the date of the enactment of this Act. 
(e) SECRETARIAL
GUIDANCE.—The Secretary of 
Health and Human Services, in coordination with the Sec-
retary of Labor and the Secretary of the Treasury, shall 
provide such guidance as may be necessary for the coordi-
nated implementation of this section on a timely basis. 
(f) TRANSFERRING HEALTH PLAN RECORDS UPON 
CHANGING PLANS.— 
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(1) IN GENERAL.—In the case of an individual 
who is covered under health insurance coverage or as 
a beneficiary or participant in a group health plan 
(as such terms are defined in section 2791 of the 
Public Health Service Act, 42 U.S.C. 300gg–91), if 
such coverage is ended and the individual obtains 
other health insurance coverage, group health plan 
coverage, or other creditable coverage (as defined for 
purposes of title XXVII of such Act), the issuer of 
the prior coverage or administrator of the prior plan 
shall forward information respecting such prior cov-
erage to the issuer of the new coverage or adminis-
trator of the new plan or coverage, as the case may 
be, subject to such rules as the Secretary establishes 
regarding the right of the beneficiary or participant 
to object to such forwarding of information. 
(2) 
TREATMENT
AS
PLAN
REQUIREMENT 
UNDER
PHSA, ERISA, IRC.—The requirement of 
paragraph (1) shall apply as if it were a section 
under part A of title XXVII of the Public Health 
Service Act, including for purposes of applying sec-
tion 715 of the Employee Retirement Income Secu-
rity Act of 1976 (29 U.S.C. 1185d) and section 
9815 of the Internal Revenue Code of 1986. 
(g) APPLICATION OF RISK ADJUSTMENT.— 
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(1) IN GENERAL.—Any issuer that offers health 
insurance coverage in the individual market in any 
of the 50 States or the District of Columbia shall 
participate in a risk adjustment mechanism under 
this subsection with respect to any health insurance 
coverage it so offers in such market, whether or not 
such coverage is offered through an Exchange. 
(2) FORM AND DESIGN OF RISK ADJUSTMENT 
MECHANISM.—The Secretary shall, in consultation 
with the National Association of Insurance Commis-
sioners and other interested parties, develop a mech-
anism to permit the adjustment of risk among 
health insurance coverage offered in the individual 
market throughout the 50 States and the District of 
Columbia. Such mechanism shall be designed to ef-
fect the same type of risk adjustment among such 
coverage that is applicable to risk adjustment of 
payments among Medicare Advantage organizations 
under part C of title XVIII of the Social Security 
Act (42 U.S.C. 1395w–21 et seq.). 
(3) TRANSITION
FOR
NEW
COVERAGE.—The 
mechanism developed under paragraph (2) shall pro-
vide for transitional protection, over a 3-year period, 
in the case of health insurance coverage that has not 
been previously marketed. 
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(4) DEVELOPMENT OF FURTHER RISK ADJUST-
MENT MECHANISM.—The Secretary shall request the 
National Association of Insurance Commissioners to 
develop a permanent model for adjustment of risk 
among health insurance issuers with respect to 
health insurance coverage offered in the individual 
market, with the intention that such a model would 
substitute for the mechanism developed under para-
graph (2). 
(5) 
TREATMENT
AS
PLAN
REQUIREMENT 
UNDER
PHSA, ERISA, IRC.—The requirement of 
paragraph (1) shall apply as if it were a section 
under part A of title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg et seq.), including for 
purposes of applying section 715 of the Employee 
Retirement Income Security Act of 1976 (29 U.S.C. 
1185d) and section 9815 of the Internal Revenue 
Code of 1986. 
SEC. 122. OFFERING OF BASIC HEALTH INSURANCE; PRO-
TECTION OF ASSETS FROM LIABILITY OR AT-
TACHMENT OR SEIZURE. 
(a) REQUIREMENT FOR EXCHANGES.— 
(1) IN GENERAL.—No tax credit shall be allow-
able under section 36B or 36C of the Internal Rev-
enue Code of 1986 for residents of a State unless 
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any Exchange established in the State provides for 
the offering of basic health insurance in all areas of 
the State. 
(2) BASIC HEALTH INSURANCE DEFINED.—In 
this subsection, the term ‘‘basic health insurance’’ 
means, with respect to a State, such health insur-
ance coverage as the State may specify and includes 
limited benefit insurance (as defined in subsection 
(b)). 
(b) LIMITED BENEFIT INSURANCE DEFINED.— 
(1) IN GENERAL.—In this title, the term ‘‘lim-
ited benefit insurance’’ means individual health in-
surance coverage that, with respect to a plan year, 
imposes (consistent with paragraph (2)) an annual 
limit on the amounts that may be payable under the 
coverage with respect to expenses incurred for items 
and services furnished in that plan year. 
(2) SPECIFICATION
OF
ANNUAL
LIMIT; VARI-
ATION IN LIMIT FOR INDIVIDUAL AND FAMILY COV-
ERAGE.—The Secretary shall specify, from year to 
year, the annual limit (or range of annual limits) 
that may be applied under paragraph (1). Such a 
limit may distinguish between coverage that is only 
provided for an individual and coverage that is pro-
vided also for family members of the individual. 
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(c) PROTECTION OF CERTAIN ASSETS IN CASE OF 
INDIVIDUALS COVERED UNDER LIMITED BENEFIT IN-
SURANCE.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, if an individual is covered under 
limited benefit insurance for a plan year and bene-
fits under such insurance have reached the annual 
limit under such insurance for items and services 
furnished in the plan year, the individual is not lia-
ble for debt incurred and arising from the provision 
of subsequently furnished items and services during 
the plan year, regardless of whether benefits are oth-
erwise covered for such items and services under 
such policy, insofar as the liability attributable to 
such items and services exceeds— 
(A) the bankruptcy valuation of the indi-
vidual’s property at the time the debt is in-
curred; reduced by 
(B) such annual limit of benefits under the 
limited benefit insurance for the plan year. 
Property in the amount so protected from liability 
shall be exempt and immune from attachment or sei-
zure with respect to any judgment related to such 
debt. 
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(2) BANKRUPTCY
VALUATION
DEFINED.—In 
this subsection, the term ‘‘bankruptcy valuation’’ 
means, with respect to property of an individual as 
of a date, the value of the property as of such date 
as determined as if the individual were a debtor in 
a bankruptcy case that could have been filed under 
title 11 of the United States Code and the property 
could not be exempt under section 522 of such title. 
(3) NO REQUIREMENT FOR PROVIDERS TO FUR-
NISH SUBSEQUENT SERVICES WITHOUT ENSURING 
PAYMENT.—Except as may be explicitly provided in 
other law (such as under section 1867 of the Social 
Security Act, 42 U.S.C. 1395dd; popularly known as 
EMTALA), a health care provider is not required to 
furnish any items or services to an individual who 
has exhausted benefits under limited benefit insur-
ance for a plan year without the individual (or an-
other person on the individual’s behalf) providing for 
such advance or guarantee of payment for such 
items and services as may be arranged between the 
health care provider and the individual. 
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Subtitle C—Health Insurance Tax 
Benefit 
SEC. 131. HEALTH INSURANCE TAX BENEFIT. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 36B the fol-
lowing new section: 
‘‘SEC. 36C. HEALTH INSURANCE TAX CREDIT. 
‘‘(a) IN GENERAL.—In the case of an individual who 
is a qualified resident, there shall be allowed as a credit 
against the tax imposed by this subtitle for any taxable 
year an amount equal to the health credit amount of the 
taxpayer for the taxable year. 
‘‘(b) HEALTH CREDIT AMOUNT.—For purposes of 
this section— 
‘‘(1) IN
GENERAL.—The term ‘health credit 
amount’ means the sum of the amounts determined 
under paragraph (2) with respect to all months of 
the taxpayer for the taxable year. 
‘‘(2) MONTHLY CREDIT AMOUNT.— 
‘‘(A) IN GENERAL.—Subject to paragraph 
(4), the amount determined under this para-
graph with respect to any month shall be an 
amount equal to the sum of— 
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‘‘(i) 1⁄12 of $2,500 in the case of any 
month the first day of which the taxpayer 
is a qualified resident and is covered by 
creditable coverage (twice such amount in 
the case of a joint return if both spouses 
are so covered by creditable coverage and 
are qualified residents), plus 
‘‘(ii) 
1⁄12
of an amount equal to 
$1,500 multiplied by the number of quali-
fying children (within the meaning of sec-
tion 152) who are qualified residents 
and— 
‘‘(I) for whom the taxpayer is al-
lowed a deduction under section 151 
for the taxable year in which such 
month ends, and 
‘‘(II) who are covered by cred-
itable coverage on the first day of 
such month. 
‘‘(B) CARRYFORWARD OF MONTHLY CRED-
IT AMOUNT IN CASE CREDIT AMOUNT EXCEEDS 
HSA
CONTRIBUTIONS
AND
PREMIUM
PAY-
MENTS.—In the case of any month for which 
the credit amount determined with respect to 
the taxpayer under subparagraph (A) exceeds 
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the limitation amount determined with respect 
to the taxpayer for such month under para-
graph (3), such excess may be carried forward 
to any subsequent month during the taxable 
year for purposes of determining the credit 
amount for such month under this paragraph. 
‘‘(3) MONTHLY LIMITATION.— 
‘‘(A) IN
GENERAL.—The amount deter-
mined under paragraph (2) for any month of 
the taxpayer shall not exceed the sum of— 
‘‘(i) the amounts contributed to a 
health savings account of the taxpayer for 
such month, plus 
‘‘(ii) the premiums paid by the tax-
payer for creditable coverage. 
‘‘(B) CARRYFORWARD OF MONTHLY LIMI-
TATION IN CASE HSA CONTRIBUTIONS AND PRE-
MIUM
PAYMENTS
EXCEED
MONTHLY
CREDIT 
AMOUNT.—In the case of any month for which 
the amount determined with respect to the tax-
payer under subparagraph (A) exceeds the cred-
it amount determined with respect to the tax-
payer for such month under paragraph (2), 
such excess may be carried forward to any sub-
sequent month during the taxable year for pur-
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poses of determining the limitation under sub-
paragraph (A). 
‘‘(4) ADJUSTMENT FOR LIMITED BENEFIT IN-
SURANCE.—In the case of a taxpayer whose only 
health insurance coverage for a month is limited 
benefit insurance (as defined in section 123(b) of the 
Health Care Equality and Modernization Act of 
2022), the amount determined under paragraph (2) 
shall be decreased by such proportion as the Sec-
retary, in consultation with the Secretary of Health 
and Human Services, determines appropriate, taking 
into account the ratio of the actuarial value of such 
limited benefit insurance to the average actuarial 
value of health insurance coverage that is not limited 
benefit insurance. 
‘‘(5) ADJUSTMENT FOR GEOGRAPHIC AREA AND 
AGE OF COVERED INDIVIDUAL.—The amount deter-
mined under paragraph (2) shall be adjusted, in a 
manner specified by the Secretary, in consultation 
with and based on data collected by the Secretary of 
Health and Human Services, to take into account, 
for a taxpayer or other covered individual of an age 
and residing in an area, the ratio of the average cost 
of typical individual health insurance coverage for an 
individual of such age and residing in such area to 
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the national average cost of such typical health in-
surance coverage. Such adjustment shall be made in 
a manner so that the application of this paragraph 
is estimated not to change the aggregate amount of 
the credits allowable under this section for taxable 
years ending in a year. 
‘‘(c) COORDINATION
WITH
EMPLOYER-PROVIDED 
HEALTH INSURANCE TAX SUBSIDY.— 
‘‘(1) CREDIT LIMITED BY EMPLOYER-PROVIDED 
HEALTH INSURANCE TAX SUBSIDY.—The credit al-
lowed under this section for any taxable year shall 
not exceed an amount equal to the excess (if any) 
of— 
‘‘(A) the maximum credit which would be 
allowed for all months of the taxpayer during 
the taxable year (determined under subsection 
(b)(2) and without regard to this subsection, 
the limitation under subsection (b)(3), and any 
reduction under subsection (d)(1)), over 
‘‘(B) the taxpayer’s employer-provided 
health insurance tax subsidy for the taxable 
year. 
‘‘(2) EMPLOYER-PROVIDED HEALTH INSURANCE 
TAX SUBSIDY.—For purposes of this subsection— 
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‘‘(A) IN GENERAL.—The term ‘employer- 
provided health insurance tax subsidy’ means, 
with respect to any taxpayer for a taxable year, 
the sum of— 
‘‘(i) the Federal income tax subsidy of 
the taxpayer for the taxable year, plus 
‘‘(ii) the Federal payroll tax subsidy 
of the taxpayer for the taxable year. 
‘‘(B) FEDERAL INCOME TAX SUBSIDY.— 
The term ‘Federal income tax subsidy’ means, 
with respect to any taxpayer for the taxable 
year, the excess (if any) of— 
‘‘(i) the amount of tax that would 
have been imposed by this chapter for the 
taxable year had such tax been determined 
without regard to this section and by in-
cluding amounts otherwise excluded from 
gross income which were paid by or on be-
half of the taxpayer for employer-provided 
insurance that constitutes medical care, 
over 
‘‘(ii) the amount of tax imposed by 
this chapter for the taxable year (deter-
mined without regard to this section). 
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‘‘(C) FEDERAL PAYROLL TAX SUBSIDY.— 
The term ‘Federal payroll tax subsidy’ means, 
with respect to any taxpayer for the taxable 
year, the excess (if any) of— 
‘‘(i) the sum of— 
‘‘(I) the amount of tax that 
would have been imposed by chapter 
21 with respect to any wages of the 
taxpayer paid during the taxable year 
had such tax been determined by in-
cluding amounts otherwise excluded 
from wages which were paid by or on 
behalf of the taxpayer during the tax-
able year for employer-provided insur-
ance that constitutes medical care, 
plus 
‘‘(II) the amount of tax that 
would have been imposed by chapter 2 
on any self-employment income of the 
taxpayer for such taxable year had 
self-employment income been deter-
mined without regard to any deduc-
tion from gross income for amounts 
paid for insurance which constitutes 
medical care for the taxpayer, the tax-
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payer’s spouse, and any qualifying 
children (within the meaning of sec-
tion 152) for whom the taxpayer is al-
lowed a deduction under section 151 
for the taxable year, over 
‘‘(ii) the amount of tax imposed with 
respect to the taxpayer during such taxable 
year under chapter 21 and for such taxable 
year under chapter 2. 
‘‘(d) RECONCILIATION
OF CREDIT
AND ADVANCE 
CREDIT.— 
‘‘(1) IN GENERAL.—The amount of the credit 
allowed under this section for any taxable year (after 
the application of subsections (b) and (c)) shall be 
reduced (but not below zero) by the amount of any 
advance payment of such credit under subsection 
(e)(1). 
‘‘(2) EXCESS ADVANCE PAYMENTS.— 
‘‘(A) IN GENERAL.—If the advance pay-
ments to a taxpayer under subsection (e)(1) for 
a taxable year exceed the credit allowed by this 
section (determined without regard to para-
graph (1)), the tax imposed by this chapter for 
the taxable year shall be increased by the 
amount of such excess. 
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‘‘(B) LIMITATION ON INCREASE.—In the 
case of a taxpayer whose household income is 
less than 400 percent of the poverty line for the 
size of the family involved for the taxable year, 
the amount of the increase under subparagraph 
(A) shall in no event exceed the applicable dol-
lar amount determined in accordance with the 
following table (one-half of such amount in the 
case of a taxpayer whose tax is determined 
under section 1(c) for the taxable year): 
‘‘If the household income
(expressed as a percent
of poverty line) is: 
The applicable 
dollar 
amount is: 
Less than 200% ..............................................................
$600
At least 200% but less than 300% ................................
$1,500
At least 300% but less than 400% ................................
$2,500. 
‘‘(e) SPECIAL RULES.—For purpose of this section— 
‘‘(1) ADVANCE PAYMENT PROGRAM.— 
‘‘(A) IN GENERAL.—The Secretary of the 
Treasury, in consultation with the Secretary of 
Health and Human Services, shall establish a 
program— 
‘‘(i) to make advance determinations 
with respect to the eligibility of individuals 
for the credit allowed under this section, 
and 
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‘‘(ii) to make advance payments of the 
credit allowed under this section, at the 
election of any such individual so eligible, 
directly to the health savings account of 
any such individual, or, as a subsidy to the 
cost of health insurance coverage provided 
to any such individual, to the health insur-
ance issuer providing such coverage or the 
person that administers the plan benefits 
with respect to such coverage. 
‘‘(B) 
PROGRAM
REQUIREMENTS.—Such 
program shall be established under rules similar 
to the rules of section 1412 of the Patient Pro-
tection and Affordable Care Act, as in effect on 
the day before the date of the enactment of this 
section, except that advance determinations and 
advance payments shall be made on request of 
the individual with respect to whom the deter-
mination is to be made. 
‘‘(2) INFORMATION REQUIREMENTS.— 
‘‘(A) IN GENERAL.—Each person providing 
health insurance coverage which constitutes 
medical care, and each trustee of a health sav-
ings account, shall provide the following infor-
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mation to the Secretary and to the taxpayer 
with respect to such coverage or such account: 
‘‘(i) The total premium for the cov-
erage without regard to the credit under 
this section. 
‘‘(ii) The aggregate amount of any ad-
vance payment of such credit made with 
respect to such coverage or to such ac-
count. 
‘‘(iii) The name, address, age, and 
TIN of the primary insured or account 
holder (as the case may be) and the name, 
age, and TIN of each other individual ob-
taining coverage under such policy of in-
surance. 
‘‘(iv) Any information provided to 
such person necessary to determine eligi-
bility for, and the amount of, such credit. 
‘‘(v) Information necessary to deter-
mine whether a taxpayer has received ex-
cess advance payments. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply to any coverage with respect to 
which reporting under section 6051 is required. 
‘‘(3) INDEXING.— 
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‘‘(A) IN GENERAL.—In the case of any cal-
endar year beginning after 2022, each of the 
dollar amounts in subsection (b)(2) and in the 
table contained under subsection (d)(2)(B) shall 
be equal to such dollar amount multiplied by 
the ratio of— 
‘‘(i) the current dollar gross domestic 
product (as determined based on the third 
estimate of the Bureau of Economic Anal-
ysis of the Department of Commerce for 
the second quarter of the previous year), to 
‘‘(ii) the current dollar gross domestic 
product (as so determined) for the second 
quarter of 2021. 
‘‘(B) ROUNDING.—If the amount of any 
change under subparagraph (A) is not a mul-
tiple of $50, such change shall be rounded to 
the next lowest multiple of $50. 
‘‘(f) DEFINITIONS.—For purposes of this section— 
‘‘(1) CREDITABLE COVERAGE.— 
‘‘(A) IN GENERAL.—The term ‘creditable 
coverage’ has the meaning given such term for 
purposes of title XXVII of the Public Health 
Service Act. Such term shall not include cov-
erage under any health plan that includes cov-
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erage for abortions (other than any abortion de-
scribed in subparagraph (B)). 
‘‘(B) EXCEPTION.—The second sentence of 
subparagraph (A) shall not apply to an abor-
tion— 
‘‘(i) if the pregnancy is the result of 
an act of rape or incest, or 
‘‘(ii) in the case where a woman suf-
fers from a physical disorder, physical in-
jury, or physical illness that would, as cer-
tified by a physician, place the woman in 
danger of death unless an abortion is per-
formed, including a life-endangering phys-
ical condition caused by or arising from 
the pregnancy itself. 
‘‘(C) SEPARATE ABORTION COVERAGE OR 
PLAN ALLOWED.— 
‘‘(i) OPTION TO PURCHASE SEPARATE 
COVERAGE OR PLAN.—Nothing in subpara-
graph (A) shall be construed as prohibiting 
any individual from purchasing separate 
coverage for abortions described in such 
subparagraph, or a health plan that in-
cludes such abortions, so long as no credit 
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is allowed under this section with respect 
to the premiums for such coverage or plan. 
‘‘(ii) OPTION TO OFFER COVERAGE OR 
PLAN.—Nothing in subparagraph (A) shall 
restrict any non-Federal health insurance 
issuer offering a health plan from offering 
separate coverage for abortions described 
in such subparagraph, or a plan that in-
cludes such abortions, so long as premiums 
for such separate coverage or plan are not 
paid for with any amount attributable to 
the credit allowed under this section (or 
the amount of any advance payment of the 
credit). 
‘‘(2) QUALIFIED RESIDENT.—The term ‘quali-
fied resident’ means an individual who is a citizen or 
national of the United States or otherwise lawfully 
residing in the United States under color of law.’’. 
(b) DISQUALIFICATION FROM EXCHANGE PLAN SUB-
SIDIES FOR INDIVIDUAL ONCE THEY ELECT TAX BENE-
FITS.—Section 36B(c)(1) of such Code is amended by 
adding at the end the following new subparagraph: 
‘‘(E) DENIAL
OF
CREDIT
FOR
THOSE 
ELECTING UNIVERSAL CREDIT.—In the case of 
an individual who is allowed a credit under sec-
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tion 36C for any taxable year, no credit shall be 
allowed under this section to such individual for 
such taxable year or any subsequent taxable 
year.’’. 
(c) GUIDANCE.—The Secretary of the Treasury shall 
issue such guidance as is necessary— 
(1) to assist employees and employers in adjust-
ing Federal income tax withholding to take into ac-
count the health insurance tax credit under section 
36C of the Internal Revenue Code of 1986 (and any 
advance payment thereof), and 
(2) to require employers to report to each em-
ployee with respect to periods not longer than quar-
terly the employer-provided health insurance tax 
subsidy (as defined in section 36C(c)(2) of such 
Code) with respect to such employee for such period. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 36B the following 
new item: 
‘‘Sec. 36C. Health insurance tax credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
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SEC. 132. APPLICATION OF PORTION OF UNUSED TAX 
CREDITS BY STATES FOR INDIGENT HEALTH 
CARE. 
(a) COMPUTATION OF UNUSED CREDITS.—The Sec-
retary, in consultation with the Secretary of the Treasury, 
shall calculate for each State for each year, beginning with 
2022, using the most recent data available— 
(1) the maximum aggregate amount of credits 
under section 36C of the Internal Revenue Code of 
1986 that would have been allowed for the year for 
qualified residents of the State for taxable years 
ending in the year if all eligible qualified residents 
had qualified for such credits; 
(2) the aggregate amount of credits under such 
section that were allowed for taxable years ending in 
that the year by qualified residents of such State; 
and 
(3) 25 percent of the amount by which— 
(A) the amount determined under para-
graph (1) with respect to qualified residents of 
the State for such year; exceeds 
(B) the amount determined under para-
graph (2) for such State for that year. 
(b) APPROPRIATION.—For the purpose of making 
grants to States under this section, there is hereby appro-
priated to the Secretary, out of any funds in the Treasury 
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not otherwise appropriated, for each year (beginning with 
2021) an amount equivalent to the amount determined 
under subsection (a)(3) for all States under subsection (a) 
for the year in which such fiscal year ends, subject to ad-
justment under subsection (d)(2). 
(c) GRANTS
TO STATES
FOR INDIGENT ASSIST-
ANCE.— 
(1) APPLICATION.—A State may file with the 
Secretary (in a form and manner specified by the 
Secretary) an application to provide assistance in 
furnishing health services to indigent individuals re-
siding in the State. Such application shall dem-
onstrate the manner in which such assistance is fur-
nished in an equitable manner to individuals residing 
in all parts of the State. 
(2) AMOUNT OF FUNDS.—From the funds ap-
propriated under subsection (b) for a year, the 
amount of funds paid to any State in any year 
under this section with an application filed in ac-
cordance with paragraph (1) is equal to an amount 
specified in the application, but not to exceed the 
amount computed under subsection (a)(3) for the 
State and the year. 
(3) USE OF FUNDS.—Funds paid to a State 
under this subsection may be used only to assist in 
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the furnishing of health services to uninsured indi-
viduals residing in the State or for purposes of in-
creasing the payment adjustments made under sec-
tions 1886(d)(5)(F) and 1923 of the Social Security 
Act (42 U.S.C. 1395ww(d)(5)(F), 1396r–4) to hos-
pitals that serve a disproportionate share of such in-
dividuals in the State. 
(d) INITIAL ESTIMATE; FINAL CALCULATION AND 
RECONCILIATION.— 
(1) USE
OF
ESTIMATES.—The calculations 
under subsection (a) for a year shall initially be esti-
mated before the beginning of the year. Payments 
under this section to a State for a year shall be 
made, subject to reconciliation under paragraph (2), 
based on the amount so estimated. 
(2) RECONCILIATION
BASED
ON
FINAL
CAL-
CULATION.—The calculations under subsection (a) 
for a year shall also be made after the end of the 
year. Insofar as the amount calculated under this 
paragraph for subsection (a)(3) for a State for a 
year exceeds (or is less than) by a material amount 
from the amount for subsection (a)(3) estimated and 
applied for the State and year under paragraph (1), 
the amount calculated under subsection (a)(3) for 
the State for the 2nd year beginning after such year, 
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shall be reduced or increased, respectively by the 
amount of such excess or deficit. 
SEC. 133. MEDICAID OPTION OF ENROLLMENT UNDER PRI-
VATE PLAN AND CONTRIBUTION TO AN HSA. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, a State plan under title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.) may make available 
to an individual, who is entitled to medical assistance for 
a full range of acute care items and services under such 
title and at the individual’s option, instead of the medical 
assistance otherwise provided, medical assistance con-
sisting of coverage under a health plan that qualifies for 
a tax credit under section 36C of the Internal Revenue 
Code of 1986, but only if the State provides for the indi-
vidual medical assistance, in the form of a deposit into 
a health savings account for the individual, an amount 
equivalent to the amount by which the amount of tax cred-
it for the individual under such section exceeds the cost 
of coverage of the individual under the plan. 
(b) FFP TREATMENT.—The payments by a State de-
scribed in subsection (a) for coverage under a health plan 
and for deposit into a health savings account shall be 
treated as medical assistance for purposes of section 1903 
of the Social Security Act (42 U.S.C. 1396b) and subject 
to Federal financial participating, including the applica-
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tion of State matching payments, in the same manner as 
other medical assistance furnished under title XIX of such 
Act, except that such amount shall be reduced by the 
amount of .any health insurance credits provided under 
section 36C of the Internal Revenue Code of 1986 with 
respect to such coverage or deposit. 
SEC. 134. REPEAL OF REPORTING REQUIREMENTS RELAT-
ING TO EMPLOYEE HEALTH INSURANCE PRE-
MIUMS AND HEALTH PLAN BENEFITS. 
(a) REPORTING REQUIREMENTS.—Section 6051(a) 
of such Code is amended by striking paragraph (14) and 
by redesignating paragraphs (15), (16), and (17) as para-
graphs (14), (15), and (16), respectively. 
(b) EFFECTIVE DATES.—The amendment made by 
this section shall apply to calendar years beginning after 
December 31, 2018. 
TITLE II—IMPROVING HEALTH 
SAVINGS ACCOUNTS TO PRO-
MOTE ACCOUNTABILITY 
SEC. 201. TRANSITION TO NON-DEDUCTIBLE HSAS. 
(a) NON-DEDUCTIBLE
HSAS.—Subchapter F of 
chapter 1 of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new part: 
‘‘PART IX—HEALTH SAVINGS ACCOUNTS 
‘‘Sec. 530A. Roth HSAs. 
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‘‘SEC. 530A. ROTH HSAS. 
‘‘(a) IN GENERAL.—A Roth HSA shall be exempt 
from taxation under this subtitle. Notwithstanding the 
preceding sentence, the Roth HSA shall be subject to the 
taxes imposed by section 511 (relating to imposition of 
tax on unrelated business income of charitable organiza-
tions). No deduction shall be allowed for any contribution 
to a Roth HSA. 
‘‘(b) DOLLAR LIMITATION.— 
‘‘(1) IN GENERAL.—The aggregate amount of 
contributions for any taxable year to all Roth HSAs 
maintained for the benefit of an individual shall not 
exceed the sum of the monthly limitations for month 
during such taxable year that the individual is an el-
igible individual. 
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is 1⁄12 of— 
‘‘(A) in the case of an eligible individual 
who has self-only creditable coverage as of the 
first day of such month, $5,000, and 
‘‘(B) in the case of an eligible individual 
who has family creditable coverage as of the 
first day of such month, the amount in effect 
under subparagraph (A) for the taxable year 
multiplied by the number of individuals (includ-
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ing the eligible individual) covered under such 
family creditable coverage as of such day. 
‘‘(3) ADDITIONAL
CONTRIBUTIONS
FOR
INDI-
VIDUALS 55 OR OLDER.—In the case of an individual 
who has attained age 55 before the close of the tax-
able year, the applicable limitation under subpara-
graphs (A) and (B) of paragraph (2) shall be in-
creased by $1,000. 
‘‘(4) COORDINATION WITH OTHER CONTRIBU-
TIONS.—The limitation which would (but for this 
paragraph) apply under this subsection to an indi-
vidual for any taxable year shall be reduced (but not 
below zero) by the sum of— 
‘‘(A) the aggregate amount paid for such 
taxable year to Archer MSAs of such individual, 
‘‘(B) the aggregate amount contributed to 
Roth HSAs of such individual which is exclud-
able from the taxpayer’s gross income for such 
taxable year under section 106(d) (and such 
amount shall not be allowed as a deduction 
under subsection (a)), and 
‘‘(C) the aggregate amount contributed to 
Roth HSAs of such individual for such taxable 
year under section 408(d)(9) (and such amount 
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shall not be allowed as a deduction under sub-
section (a)). 
Subparagraph (A) shall not apply with respect to 
any individual to whom paragraph (5) applies. 
‘‘(5) SPECIAL
RULE
FOR
MARRIED
INDIVID-
UALS.—In the case of individuals who are married 
to each other, if either spouse has family coverage— 
‘‘(A) both spouses shall be treated as hav-
ing only such family coverage (and if such 
spouses each have family coverage under dif-
ferent plans, as having the family coverage with 
the lowest annual deductible), and 
‘‘(B) the limitation under paragraph (1) 
(after the application of subparagraph (A) and 
without regard to any additional contribution 
amount under paragraph (3))— 
‘‘(i) shall be reduced by the aggregate 
amount paid to Archer MSAs of such 
spouses for the taxable year, and 
‘‘(ii) after such reduction, shall be di-
vided equally between them unless they 
agree on a different division. 
‘‘(6) DENIAL
OF
DEDUCTION
TO
DEPEND-
ENTS.—No contribution may be made to a Roth 
HSA under this section by any individual with re-
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spect to whom a deduction under section 151 is al-
lowable to another taxpayer for a taxable year begin-
ning in the calendar year in which such individual’s 
taxable year begins. 
‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.—The 
limitation under this subsection for any month with 
respect to an individual shall be zero for the first 
month such individual is entitled to benefits under 
title XVIII of the Social Security Act and for each 
month thereafter. 
‘‘(8) INCREASE IN LIMIT FOR INDIVIDUALS BE-
COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN-
NING OF THE YEAR.— 
‘‘(A) IN GENERAL.—For purposes of com-
puting the limitation under paragraph (1) for 
any taxable year, an individual who is an eligi-
ble individual during the last month of such 
taxable year shall be treated— 
‘‘(i) as having been an eligible indi-
vidual during each of the months in such 
taxable year, and 
‘‘(ii) as having been enrolled, during 
each of the months such individual is 
treated as an eligible individual solely by 
reason of clause (i), in the same high de-
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ductible health plan in which the individual 
was enrolled for the last month of such 
taxable year. 
‘‘(B) FAILURE TO MAINTAIN CREDITABLE 
COVERAGE.— 
‘‘(i) IN
GENERAL.—If, at any time 
during the testing period, the individual is 
not an eligible individual, then— 
‘‘(I) gross income of the indi-
vidual for the taxable year in which 
occurs the first month in the testing 
period for which such individual is not 
an eligible individual is increased by 
the aggregate amount of all contribu-
tions to the Roth HSA of the indi-
vidual which could not have been 
made but for subparagraph (A), and 
‘‘(II) the tax imposed by this 
chapter for any taxable year on the 
individual shall be increased by 10 
percent of the amount of such in-
crease. 
‘‘(ii) EXCEPTION FOR DISABILITY OR 
DEATH.—Subclauses (I) and (II) of clause 
(i) shall not apply if the individual ceased 
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to be an eligible individual by reason of the 
death of the individual or the individual 
becoming disabled (within the meaning of 
section 72(m)(7)). 
‘‘(iii) TESTING
PERIOD.—The term 
‘testing period’ means the period beginning 
with the last month of the taxable year re-
ferred to in subparagraph (A) and ending 
on the last day of the 12th month fol-
lowing such month. 
‘‘(c) ROTH HSA.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘Roth HSA’ 
means a trust created or organized in the United 
States as a Roth HSA exclusively for the purpose of 
paying the qualified medical expenses of the account 
beneficiary, but only if the written governing instru-
ment creating the trust meets the following require-
ments: 
‘‘(A) Except in the case of a rollover con-
tribution described in subsection (f)(5) or sec-
tion 220(f)(5), no contribution will be accept-
ed— 
‘‘(i) unless it is in cash, or 
‘‘(ii) to the extent such contribution, 
when added to previous contributions to 
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the trust for the calendar year, exceeds the 
sum of— 
‘‘(I) the dollar amount in effect 
under subsection (b)(2)(B), and 
‘‘(II) the dollar amount in effect 
under subsection (b)(3). 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)), an insurance company (as de-
fined in section 816), or another person who 
demonstrates to the satisfaction of the Sec-
retary that the manner in which such person 
will administer the trust will be consistent with 
the requirements of this section. 
‘‘(C) No part of the trust assets will be in-
vested in life insurance contracts. 
‘‘(D) The assets of the trust will not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(E) The interest of an individual in the 
balance in his account is nonforfeitable. 
‘‘(2) QUALIFIED
MEDICAL
EXPENSES.—For 
purposes of this section— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
medical expenses’ means, with respect to an ac-
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count beneficiary, amounts paid by such bene-
ficiary for medical care (as defined in section 
213(d) as in effect on the day before the date 
of the enactment of the Health Care Equality 
and Modernization Act of 2022) for such indi-
vidual, the spouse of such individual, and any 
dependent (as defined in section 152, deter-
mined without regard to subsections (b)(1), 
(b)(2), and (d)(1)(B) thereof) of such indi-
vidual, but only to the extent such amounts are 
not compensated for by insurance or otherwise. 
‘‘(B) LIMITATION ON HEALTH INSURANCE 
PURCHASED FROM ACCOUNT.—Such term shall 
not include any payment for health benefits cov-
erage that is not creditable coverage (as defined 
in section 36C). 
‘‘(C) 
EXCEPTIONS.—Subparagraph 
(B) 
shall not apply to any expense for coverage 
under— 
‘‘(i) a health plan during any period 
of continuation coverage required under 
any Federal law, 
‘‘(ii) a qualified long-term care insur-
ance contract (as defined in section 
7702B(b)), 
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‘‘(iii) a health plan during a period in 
which the individual is receiving unemploy-
ment compensation under any Federal or 
State law, or 
‘‘(iv) in the case of an account bene-
ficiary who has attained the age specified 
in section 1811 of the Social Security Act, 
any health insurance other than a medi-
care supplemental policy (as defined in sec-
tion 1882 of the Social Security Act). 
‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
count beneficiary’ means the individual on whose be-
half the Roth HSA was established. 
‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 
to the following rules shall apply for purposes of this 
section: 
‘‘(A) Section 219(f)(3) (relating to time 
when contributions deemed made). 
‘‘(B) Except as provided in section 106(d), 
section 219(f)(5) (relating to employer pay-
ments). 
‘‘(C) Section 408(g) (relating to commu-
nity property laws). 
‘‘(D) Section 408(h) (relating to custodial 
accounts). 
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‘‘(d) ELIGIBLE
INDIVIDUAL; CREDITABLE
COV-
ERAGE.—For purposes of this section— 
‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 
individual’ means, with respect to any month, any 
individual if such individual is covered under cred-
itable coverage as of the first day of such month. 
‘‘(2) CREDITABLE COVERAGE.—The term ‘cred-
itable coverage’ shall have the meaning given such 
term in section 36C(f). 
‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL 
EXPENSES.—Any amount paid or distributed out of 
a Roth HSA which is used exclusively to pay quali-
fied medical expenses of any account beneficiary 
shall not be includible in gross income. 
‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR 
QUALIFIED MEDICAL EXPENSES.—Any amount paid 
or distributed out of a Roth HSA which is not used 
exclusively to pay the qualified medical expenses of 
the account beneficiary shall be included in the gross 
income of such beneficiary. 
‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to 
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any Roth HSA of an individual, paragraph (2) 
shall not apply to distributions from the Roth 
HSAs of such individual (to the extent such dis-
tributions do not exceed the aggregate excess 
contributions to all such accounts of such indi-
vidual for such year) if— 
‘‘(i) such distribution is received by 
the individual on or before the last day 
prescribed by law (including extensions of 
time) for filing such individual’s return for 
such taxable year, and 
‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such excess contribution. 
Any net income described in clause (ii) shall be 
included in the gross income of the individual 
for the taxable year in which it is received. 
‘‘(B) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution (other 
than a rollover contribution described in para-
graph (5) or section 220(f)(5)) which exceeds 
the contribution limitation with respect to the 
individual for the taxable year. 
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‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT 
USED FOR QUALIFIED MEDICAL EXPENSES.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter on the account beneficiary for any 
taxable year in which there is a payment or dis-
tribution from a Roth HSA of such beneficiary 
which is includible in gross income under para-
graph (2) shall be increased by 10 percent of 
the amount which is so includible. 
‘‘(B) EXCEPTION
FOR
DISABILITY
OR 
DEATH.—Subparagraph (A) shall not apply if 
the payment or distribution is made after the 
account beneficiary becomes disabled within the 
meaning of section 72(m)(7) or dies. 
‘‘(C) 
EXCEPTION
FOR
DISTRIBUTIONS 
AFTER MEDICARE ELIGIBILITY.—Subparagraph 
(A) shall not apply to any payment or distribu-
tion after the date on which the account bene-
ficiary attains the age specified in section 1811 
of the Social Security Act. 
‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 
described in this paragraph as a rollover contribu-
tion if it meets the requirements of subparagraphs 
(A) and (B). 
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‘‘(A) IN
GENERAL.—Paragraph (2) shall 
not apply to any amount paid or distributed 
from a health savings account (as defined in 
section 223) or a Roth HSA to the account 
beneficiary to the extent the amount received is 
paid into a Roth HSA for the benefit of such 
beneficiary not later than the 60th day after 
the day on which the beneficiary receives the 
payment or distribution. 
‘‘(B) LIMITATION.—This paragraph shall 
not apply to any amount described in subpara-
graph (A) received by an individual from a 
health savings account or a Roth HSA if, at 
any time during the 1-year period ending on the 
day of such receipt, such individual received any 
other amount described in subparagraph (A) 
from a health savings account or Roth HSA 
which was not includible in the individual’s 
gross income because of the application of this 
paragraph. 
‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI-
VORCE.—The transfer of an individual’s interest in 
a Roth HSA to an individual’s spouse or former 
spouse under a divorce or separation instrument de-
scribed in subparagraph (A) of section 71(b)(2) shall 
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not be considered a taxable transfer made by such 
individual notwithstanding any other provision of 
this subtitle, and such interest shall, after such 
transfer, be treated as a Roth HSA with respect to 
which such spouse is the account beneficiary. 
‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.—If an individual acquires an account 
beneficiary’s interest in a health savings account by 
reason of the death of the account beneficiary, such 
health savings account shall be treated as if the indi-
vidual were the account beneficiary. 
‘‘(f) COST-OF-LIVING ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any calendar 
year beginning after 2022, the $5,000 dollar amount 
in subsection (b)(2) shall be increased by an amount 
equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year, determined— 
‘‘(i) by substituting ‘calendar year 
2021’ for ‘calendar year 1992’ in subpara-
graph (B) thereof, and 
‘‘(ii) by substituting ‘CPI medical care 
component’ for ‘CPI’. 
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‘‘(2) CPI MEDICAL
CARE
COMPONENT.—For 
purposes of this paragraph, the term ‘CPI medical 
care component’ means the medical care component 
for the Consumer Price Index for All Urban Con-
sumers published by the Department of Labor. 
‘‘(3) ROUNDING.—If the amount of any in-
crease under the preceding sentence is not a mul-
tiple of $50, such increase shall be rounded to the 
next lowest multiple of $50. 
‘‘(g) REPORTS.—The Secretary may require— 
‘‘(1) the trustee of a Roth HSA to make such 
reports regarding such account to the Secretary and 
to the account beneficiary with respect to contribu-
tions, distributions, the return of excess contribu-
tions, and such other matters as the Secretary deter-
mines appropriate, and 
‘‘(2) any person who provides an individual with 
creditable coverage to make such reports to the Sec-
retary and to the account beneficiary with respect to 
such plan as the Secretary determines appropriate. 
The reports required by this subsection shall be filed at 
such time and in such manner and furnished to such indi-
viduals at such time and in such manner as may be re-
quired by the Secretary.’’. 
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(b) LIMIT
ON CONTRIBUTIONS
TO DEDUCTIBLE 
HEALTH SAVINGS ACCOUNTS.—Section 223 of such Code 
is amended by adding at the end the following new sub-
section: 
‘‘(i) LIMITED CONTRIBUTIONS AFTER 2021.— 
‘‘(1) IN GENERAL.—No contribution may be ac-
cepted by a health savings account after December 
31, 2021. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply— 
‘‘(A) in the case of a rollover contribution 
described in subsection (f)(5) or section 
220(f)(5), or 
‘‘(B) in the case of a month for which an 
individual is covered by insurance that con-
stitutes medical care and that is provided by an 
employer with respect to which an election is in 
effect for such month under section 131(b) of 
the Health Care Equality and Modernization 
Act of 2022.’’. 
(c) CLERICAL AMENDMENT.—The table of parts for 
subchapter F of chapter 1 of such Code is amended by 
adding a the end the following new item: 
‘‘PART IX. ROTH HEALTH SAVINGS ACCOUNTS’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 202. ELIMINATION OF MEDICAL EXPENSE DEDUCTION. 
Section 213 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new sub-
section: 
‘‘(f) TERMINATION.—Except in the case of long-term 
care premiums (as defined in subsection (d)(10)), sub-
section (a) shall not apply to any amounts paid during 
any taxable year beginning after December 31, 2021.’’. 
SEC. 203. TREATMENT OF HSA AFTER DEATH OF ACCOUNT 
BENEFICIARY. 
(a) IN GENERAL.—Section 223(f)(8) of the Internal 
Revenue Code of 1986 is amended to read as follows: 
‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.—If an individual acquires an account 
beneficiary’s interest in a health savings account by 
reason of the death of the account beneficiary, such 
health savings account shall be treated as if the indi-
vidual were the account beneficiary.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to interests acquired 
after the date of the enactment of this Act. 
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SEC. 204. TREATMENT OF CONCIERGE MEDICINE. 
(a) HSAS.— 
(1) ROTH HSA.—Section 530A(c)(2)(A) of the 
Internal Revenue Code of 1986, as added by section 
201(a) of this Act, is amended by adding at the end 
the following: ‘‘Such term shall include the payment 
of a monthly or other prepaid amount for the fur-
nishing (or access to the furnishing) by a physician 
or group of physicians of physician professional serv-
ices (and ancillary services).’’. 
(2) HSA.—Section 223(d)(2)(A) of such Code 
is amended by adding at the end the following: ‘‘The 
term ‘qualified medical care expenses’ shall include 
the payment of a monthly or other prepaid amount 
for the furnishing (or access to the furnishing) by a 
physician or group of physicians of physician profes-
sional services (and ancillary services).’’. 
(b) NOT TREATED AS HEALTH INSURANCE COV-
ERAGE.— 
(1) IN GENERAL.—For purposes of title XXVII 
of the Public Health Service Act (42 U.S.C. 300gg), 
subtitle B of title I of the Employee Retirement and 
Income Security Act of 1974 (29 U.S.C. 1021 et 
seq.), PPACA, and this Act, the offering of con-
cierge medicine shall not be treated as the offering 
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of health insurance coverage and shall not be subject 
to regulations as such coverage under such Acts. 
(2) CONCIERGE MEDICINE DEFINED.—In this 
subsection, the term ‘‘concierge medicine’’ means the 
furnishing (or access to the furnishing) by a physi-
cian or group of physicians of physician professional 
services (and ancillary services) in return for pay-
ment of a monthly or other prepaid amount. 
TITLE III—STATE FLEXIBILITY 
IN REGULATION OF HEALTH 
INSURANCE COVERAGE 
SEC. 301. STATE FLEXIBILITY IN REGULATION OF HEALTH 
INSURANCE COVERAGE. 
(a) IN GENERAL.—States are given the flexibility 
under section 122(b) to revise their regulations of the 
health insurance marketplace, without regard to many of 
the requirements imposed under PPACA, in order to pro-
mote freedom of choice of affordable health insurance cov-
erage options offered outside of an Exchange. 
(b) CONSTRUCTION.—Nothing in the Employee Re-
tirement and Income Security Act of 1974 (29 U.S.C. 
1001 et seq.) or of any amendments made by the Health 
Insurance Portability and Accountability Act of 1996 
(Public Law 104–191) shall be interpreted as preventing 
an employer from offering, or making an employer con-
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tribution towards, individual health insurance coverage for 
employees and dependent family members. 
(c) ASSOCIATION HEALTH PLANS.—Nothing in this 
Act shall be construed as prohibiting the formation of as-
sociation health plans (as defined under State law). 
(d) HIGH-RISK POOLS.—Nothing in this Act shall be 
construed as prohibiting States from establishing pooling 
arrangements for high-risk individuals. 
TITLE IV—MEDICAID PAYMENT 
REFORM 
SEC. 401. MEDICAID PAYMENT REFORM. 
(a) IN GENERAL.—Title XIX of the Social Security 
Act (42 U.S.C. 1396 et seq.) is amended by inserting after 
section 1903 the following section: 
‘‘SEC. 1903A. REFORMED PAYMENT TO STATES. 
‘‘(a) REFORMED PAYMENT SYSTEM.— 
‘‘(1) IN GENERAL.—For quarters beginning on 
or after the implementation date (as defined in 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-
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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. 
‘‘(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 
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‘‘(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— 
‘‘(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-
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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 
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). 
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‘‘(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 
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, 
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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.— 
‘‘(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-
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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: 
‘‘(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-
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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 
‘‘(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 
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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. 
‘‘(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 
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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 
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 
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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 
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 
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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.— 
‘‘(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. 
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‘‘(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. 
‘‘(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), 
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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. 
‘‘(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 
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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— 
‘‘(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. 
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‘‘(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. 
‘‘(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.— 
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‘‘(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 
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 
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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-
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.— 
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‘‘(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. 
‘‘(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 
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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 
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-
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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). 
‘‘(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 
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‘‘(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 
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 
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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-
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. 
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‘‘(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— 
‘‘(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 
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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. 
‘‘(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 
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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. 
‘‘(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— 
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‘‘(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). 
‘‘(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. 
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‘‘(5) REPORTS
ON
PER
BENEFICIARY
RATES; 
APPEALS.— 
‘‘(A) REPORT TO STATES.—Not later than 
8 months after the date of the enactment of 
this section, the Secretary shall submit to each 
State the Secretary’s initial determination of— 
‘‘(i) the base per beneficiary, per 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-
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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-
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 
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‘‘(B) variations in costs on a county-by- 
county basis for medical assistance and admin-
istrative expenses. 
‘‘(2) METHOD OF ADJUSTMENT.— 
‘‘(A) 
IN
GENERAL.—The 
adjustments 
under paragraph (1) shall be made in a manner 
similar to the manner in which similar adjust-
ments are made under subsection (c)(2)(C) and 
consistent with the requirements of clause (iii) 
of such subsection and subparagraph (B). 
‘‘(B) BIANNUAL UPDATE OF RISK ADJUST-
MENT
METHODOLOGY.—In 
applying 
clause 
(i)(I) of subsection (c)(2)(C) for purposes of 
subparagraph (A), the Secretary shall, in con-
sultation with the entities described in clause 
(ii)(I) of such subsection, update the risk ad-
justment methodology applied as appropriate 
not less often than every 2 years. 
‘‘(f) CHRONIC CARE QUALITY BONUS PAYMENTS.— 
‘‘(1) DETERMINATION OF BONUS PAYMENTS.— 
If the Secretary determines that, based on the re-
ports under paragraph (5), with respect to cat-
egories of chronic disease for which chronic care per-
formance targets had been established under para-
graph (3) for each category of Medicaid beneficiaries 
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specified under subsection (b)(2) such targets have 
been met by a State for a reform year, the Secretary 
shall make an additional payment to such State in 
the amount specified in paragraph (6) for each quar-
ter in the succeeding reform year. Such payments 
shall be made in a manner specified by the Secretary 
and may only be used consistent with subsection 
(a)(3). 
‘‘(2) IDENTIFICATION
OF
CATEGORIES
OF 
CHRONIC DISEASE.—The Secretary shall determine 
the categories of chronic disease for which bonus 
payments may be available under this subsection for 
each category of Medicaid beneficiaries. 
‘‘(3) ADOPTION
OF
QUALITY
MEASUREMENT 
SYSTEM
AND
IDENTIFICATION
OF
PERFORMANCE 
TARGETS.— 
‘‘(A) SYSTEM AND DATA.—With respect to 
the categories of chronic disease under 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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‘‘(B) TARGETS.—Using such system and 
data, the Secretary shall establish for each re-
form year the chronic care performance targets 
for purposes of the payments under paragraph 
(1). Such performance targets shall be estab-
lished in consultation with States, associations 
representing individuals with chronic illnesses, 
entities providing treatment to such individuals 
for such chronic illnesses, and other stake-
holders, including the National Association of 
Medicaid Directors and the National Governors 
Association. 
‘‘(4) DATA TO BE USED.—The data to be used 
under paragraph (3) shall include— 
‘‘(A) data collected through methods such 
as— 
‘‘(i) the ‘Healthcare Effectiveness 
Data and Information Set’ (also known as 
‘HEDIS’) (or an appropriate successor 
performance measurement tool); 
‘‘(ii) the ‘Consumer Assessment of 
Healthcare Providers and Systems’ (also 
known as ‘CAHPS’) (or an appropriate 
successor performance measurement tool); 
and 
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‘‘(iii) the ‘Health Outcomes Survey’ 
(also known as ‘HOS’) (or an appropriate 
successor performance measurement tool); 
and 
‘‘(B) other data collected by the State. 
‘‘(5) REPORTS.— 
‘‘(A) IN GENERAL.—Each State shall col-
lect, analyze, and report to the Secretary, at a 
frequency and in a manner to be established by 
the Secretary, data described in paragraph (4) 
that permit the Secretary to monitor the State’s 
performance relative to the chronic care per-
formance targets established under paragraph 
(3). 
‘‘(B) REVIEW
AND
VERIFICATION.—The 
Secretary may review the data collected by the 
State under subparagraph (A) to verify the 
State’s analysis of such data with respect to the 
performance targets under paragraph (3). 
‘‘(6) AMOUNT OF BONUS PAYMENTS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), with respect to each cat-
egory of Medicaid beneficiaries, in the case of 
a State that the Secretary determines, based on 
the chronic care performance targets set under 
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paragraph (3) for a reform year for such cat-
egory, performs— 
‘‘(i) in the top five States in such cat-
egory, subject to subparagraph (C)(ii), the 
amount of the bonus for each quarter in 
the succeeding reform year shall be 10 per-
cent of the payment amount otherwise paid 
to the State under subsection (a) for indi-
viduals enrolled under the plan within such 
category; 
‘‘(ii) in the next five States in such 
category, subject to subparagraph (C)(ii), 
the amount of the bonus for each such 
quarter shall be 5 percent of the payment 
amount otherwise paid to the State under 
subsection (a) for individuals enrolled 
under the plan within such category; 
‘‘(iii) in the next five States in such 
category, subject to clauses (i) and (iii) of 
subparagraph (C), the amount of the 
bonus for each such quarter shall be 3 per-
cent of the payment amount otherwise paid 
to the State under subsection (a) for indi-
viduals enrolled under the plan within such 
category; 
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100 
‘‘(iv) in the next five States in such 
category, subject to clauses (i) and (iii) of 
subparagraph (C), the amount of the 
bonus for each such quarter shall be 2 per-
cent of the payment amount otherwise paid 
to the State under subsection (a) for indi-
viduals enrolled under the plan within such 
category; and 
‘‘(v) in the next five States in such 
category, subject to clauses (i) and (iii) of 
subparagraph (C), the amount of the 
bonus for each such quarter shall be 1 per-
cent of the payment amount otherwise paid 
to the State under subsection (a) for indi-
viduals enrolled under the plan within such 
category. 
‘‘(B) AGGREGATE
ANNUAL
LIMIT
FOR 
EACH
CATEGORY
OF
MEDICAID
BENE-
FICIARIES.— 
‘‘(i) IN GENERAL.—In no case may 
the aggregate amount of bonuses under 
this subsection for quarters in a reform 
year for a category of Medicaid bene-
ficiaries exceed the limit specified in clause 
(ii) for the reform year. 
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101 
‘‘(ii) LIMIT.—The limit specified in 
this clause— 
‘‘(I) for the second reform year is 
equal to $250,000,000; or 
‘‘(II) for a subsequent reform 
year is equal to the limit specified in 
this clause for the previous reform 
year increased by the per beneficiary 
percentage increase determined under 
paragraph (1)(E) of subsection (c). 
‘‘(C) LIMITATION AND PRORATION OF BO-
NUSES BASED ON APPLICATION OF AGGREGATE 
LIMIT.— 
‘‘(i) NO BONUS FOR THIRD OR SUBSE-
QUENT TIERS UNLESS AGGREGATE LIMIT 
NOT REACHED ON FIRST TWO TIERS.—No 
bonus shall be payable under clause (iii), 
(iv), or (v) of subparagraph (A) for a cat-
egory of Medicaid beneficiaries for a quar-
ter in a reform year unless the aggregate 
amount of bonuses under clauses (i) and 
(ii) of such subparagraph for such category 
and reform year is less than the limit spec-
ified in subparagraph (B)(ii) for the re-
form year. 
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102 
‘‘(ii) PRORATION
FOR
FIRST
TWO 
TIERS.—If the aggregate amount of bo-
nuses under clauses (i) and (ii) of subpara-
graph (A) for a category of Medicaid bene-
ficiaries for quarters in a reform year ex-
ceeds the limit specified in subparagraph 
(B)(ii) for the reform year, the amount of 
each such bonus shall be prorated in a 
manner so the aggregate amount of such 
bonuses is equal to such limit. 
‘‘(iii) PRORATION FOR NEXT THREE 
TIERS.—If the aggregate amount of bo-
nuses under clauses (i) and (ii) of subpara-
graph (A) for a category of Medicaid bene-
ficiaries for quarters in a reform year is 
less than the limit specified in subpara-
graph (B)(ii) for the reform year, but the 
aggregate amount of bonuses under clauses 
(i) through (v) of subparagraph (A) for the 
category and such quarters in the reform 
year exceeds the limit specified in subpara-
graph (B)(ii) for the reform year, the 
amount of each bonus in clauses (iii), (iv), 
and (v) of subparagraph (A) shall be pro-
rated in a manner so the aggregate 
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103 
amount of all the bonuses under subpara-
graph (A) is equal to such limit. 
‘‘(g) STATE OPTION FOR RECEIVING MEDICARE PAY-
MENTS FOR FULL-BENEFIT DUAL ELIGIBLE INDIVID-
UALS.— 
‘‘(1) IN
GENERAL.—Under this subsection a 
State may elect for quarters beginning on or after 
the implementation date in a reform year to receive 
payment from the Secretary under paragraph (3). 
As a condition of receiving such payment, the State 
shall agree to provide to full-benefit dual eligible in-
dividuals eligible for medical assistance under the 
State plan— 
‘‘(A) the medical assistance to which such 
eligible individuals would otherwise be entitled 
under this title; and 
‘‘(B) any items and services which such eli-
gible individuals would otherwise receive under 
title XVIII. 
‘‘(2) PROVIDER PAYMENT REQUIREMENT.— 
‘‘(A) IN GENERAL.—A State electing the 
option under this subsection shall provide pay-
ment to health care providers for the items and 
services described under paragraph (1)(B) at a 
rate that is not less than the rate at which pay-
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104 
ments would be made to such providers for such 
items and services under title XVIII. 
‘‘(B) FLEXIBILITY
IN
PAYMENT
METH-
ODS.—Nothing in subparagraph (A) shall be 
construed as preventing a State from using al-
ternative payment methodologies (such as bun-
dled payments or the use of accountable care 
organizations (as such term is used in section 
1899)) for purposes of making payments to 
health care providers for items and services pro-
vided to dual eligible individuals in the State 
under the option under this subsection. 
‘‘(3) PAYMENTS TO STATES IN LIEU OF MEDI-
CARE
PAYMENTS.—With respect to a full-benefit 
dual eligible individual, in the case of a State that 
elects the option under paragraph (1) for quarters in 
a reform year— 
‘‘(A) the Secretary shall not make any pay-
ment under title XVIII for items and services 
furnished to such individual for such quarters; 
and 
‘‘(B) the Secretary shall pay to the State, 
in addition to the amounts paid to such State 
under subsection (a), the amount that the Sec-
retary would, but for this subsection, otherwise 
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105 
pay under title XVIII for items and services 
furnished to such an individual in such State 
for such quarters. 
‘‘(4) FULL-BENEFIT
DUAL
ELIGIBLE
INDI-
VIDUAL
DEFINED.—In this subsection, the term 
‘full-benefit dual eligible individual’ means an indi-
vidual who meets the requirements of section 
1935(c)(6)(A)(ii). 
‘‘(h) AUDITS.—The Secretary shall conduct such au-
dits on the number and classification of Medicaid bene-
ficiaries under such subsections and expenditures under 
this section as may be necessary to ensure appropriate 
payments under this section. 
‘‘(i) TREATMENT OF WAIVERS.— 
‘‘(1) NO IMPACT ON CURRENT WAIVERS.—In 
the case of a waiver of requirements of this title pur-
suant to section 1115 or other law that is in effect 
as of the date of the enactment of this section, noth-
ing in this section shall be construed to affect such 
waiver for the period of the waiver as approved as 
of such date. 
‘‘(2) APPLICATION OF BUDGET NEUTRALITY TO 
SUBSEQUENT WAIVERS AND RENEWALS TAKING SEC-
TION INTO ACCOUNT.—In the case of a waiver of re-
quirements of this title pursuant to section 1115 or 
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106 
other law that is approved or renewed after the date 
of the enactment of this section, to the extent that 
such approval or renewal is conditioned upon a dem-
onstration of budget neutrality, budget neutrality 
shall be determined taking into account the applica-
tion of this section. 
‘‘(j) REPORT TO CONGRESS.—Not later than Janu-
ary 1 of the second reform year, the Secretary shall submit 
to Congress a report on the implementation of this section. 
‘‘(k) DEFINITIONS.—In this section: 
‘‘(1) IMPLEMENTATION DATE.—The term ‘im-
plementation date’ means— 
‘‘(A) July 1, 2022, if this section is en-
acted on or before July 1, 2021; or 
‘‘(B) July 1, 2022, if this section is en-
acted after July 1, 2021. 
‘‘(2) REFORM YEARS.— 
‘‘(A) The term ‘reform year’ means a fiscal 
year beginning with the first reform year. 
‘‘(B) The term ‘first reform year’ means 
the fiscal year in which the implementation date 
occurs. 
‘‘(C) The terms ‘second’, ‘third’, and suc-
cessive similar terms mean, with respect to a 
reform year, the second, third, or successive re-
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107 
form year, respectively, succeeding the first re-
form year.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) CONTINUED
APPLICATION
OF
CLAWBACK 
PROVISIONS.— 
(A) 
CONTINUED
APPLICATION.—Sub-
sections (a) and (c)(1)(C) of section 1935 of 
such Act (42 U.S.C. 1396u–5) are each amend-
ed by inserting ‘‘or 1903A(a)’’ after ‘‘1903(a)’’. 
(B) 
TECHNICAL
AMENDMENT.—Section 
1935(d)(1) of the Social Security Act (42 
U.S.C. 1396u–5(d)(1)) is amended by inserting 
‘‘except as provided in section 1903A(g)’’ after 
‘‘any other provision of this title’’. 
(2) PAYMENT RULES UNDER SECTION 1903.— 
(A) Section 1903(a) of the Social Security 
Act (42 U.S.C. 1396b(a)) is amended, in the 
matter before paragraph (1), by inserting ‘‘and 
section 1903A’’ after ‘‘except as otherwise pro-
vided in this section’’. 
(B) Section 1903(d) of such Act (42 
U.S.C. 1396b(d)) is amended— 
(i) in paragraph (1), by inserting 
‘‘and under section 1903A’’ after ‘‘sub-
sections (a) and (b)’’; 
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109 
retary of Health and Human Services shall submit 
to Congress a report that includes a description of 
any additional technical and conforming amend-
ments to law that are required to properly carry out 
this Act. 
TITLE 
V—INCREASING 
PRICE 
TRANSPARENCY AND FREE-
DOM OF PRACTICE 
SEC. 501. PUBLISHING OF CASH PRICE FOR CARE PAID 
THROUGH HEALTH SAVINGS ACCOUNTS. 
(a) HEALTH SAVINGS ACCOUNTS.—Section 223(f) of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new paragraph: 
‘‘(9) CASH
PRICE
TRANSPARENCY
REQUIRED 
FOR PAYMENTS TO HEALTH CARE PROVIDERS.— 
‘‘(A) IN GENERAL.—A payment to a health 
care provider with respect to the furnishing of 
health care items and services by such provider 
shall not be treated as a qualified medical ex-
pense unless health care provider provides for 
continuing disclosure (such as through posting 
on a publicly accessible website) of the cash 
price the health care provider charges for the 
furnishing of such items and services. 
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110 
‘‘(B) FORM OF DISCLOSURE.—The disclo-
sure of prices under this subsection shall be in 
a form and manner specified by the Secretary 
of Health and Human Services, in consultation 
with the Secretary, and shall be designed— 
‘‘(i) to establish a single price for re-
lated items and services in a manner simi-
lar to the manner in which pricing and 
payment for such items and services is pro-
vided under the Medicare program under 
title XVIII of the Social Security Act, and 
‘‘(ii) to make it easy for consumers to 
compare the prices for similar items and 
services furnished by different providers. 
‘‘(C) FAILURE TO FURNISH SERVICES OR 
CHARGE
IN
EXCESS
OF
STATED
PRICE.—A 
health care provider shall be treated as not 
meeting the requirement of subparagraph (A), 
in the case of items and services for which the 
provider is disclosing a cash price, if the pro-
vider— 
‘‘(i) refuses to furnish such items or 
services at the price listed, or 
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‘‘(ii) charges more than the price list-
ed for the furnishing of the items and serv-
ices.’’. 
(b) ROTH HSA.—Section 530A(c)(4) of such Code, 
as added by section 201(a) of this Act, is amended by add-
ing at the end the following new subparagraph: 
‘‘(E) Section 223(f) (relating to cash price 
transparency required for payments to health 
care providers).’’. 
(c) ENFORCEMENT.—If the Secretary of Health and 
Human Services determines that a health care provider 
has not provided for continuing disclosure of the cash 
price of health care provider charges under section 
223(f)(9) of the Internal Revenue Code of 1986, the Sec-
retary may instruct the Secretary of the Treasury that 
payments made to such provider shall be not treated, for 
purposes of section 223 of the Internal Revenue Code of 
1986, as an amount used for a qualified medical expense 
for a period of not to exceed 1 year. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
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112 
SEC. 502. LIBERATING THE LOCAL PRACTICE OF HEALTH 
CARE. 
(a) WAIVING NATIONAL RESTRICTIONS ON PHYSI-
CIAN-OWNED FACILITIES.—Section 1877 of the Social Se-
curity Act (42 U.S.C. 1395nn) is amended by adding at 
the end the following new subsection: 
‘‘(j) WAIVER AUTHORITY.—A physician or other enti-
ty may apply to the Secretary to waive any provision of 
this section and the Secretary may waive such provision 
with respect to such physician or entity if the Secretary 
determines that such waiver would— 
‘‘(1) increase competition within the health care 
market; 
‘‘(2) reduce the costs of health care; and 
‘‘(3) increase the quality of health care.’’. 
(b) REMOVING CERTAIN STATE AND LOCAL LICEN-
SURE OR CERTIFICATION RESTRICTIONS.— 
(1) APPLICATION
FOR
WAIVER
OF
RESTRIC-
TIONS.—An individual who is required to be licensed 
or certified by a State as a condition of furnishing 
items or services as a health care professional (as 
defined by the Secretary of Health and Human 
Services) may submit to the Secretary an application 
to waive any condition of such licensure or certifi-
cation. 
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(2) STANDARD.—The Secretary may grant a 
waiver submitted under paragraph (1) if the Sec-
retary determines such waiver would— 
(A) increase competition within the health 
care market; 
(B) reduce the costs of health care; and 
(C) increase the quality of health care. 
(3) PREEMPTION.—In the case of a health care 
professional granted a waiver under paragraph (2), 
any requirement with respect to which such waiver 
is granted is preempted to the extent specified in 
such waiver. 
Æ 
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