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 
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 
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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. 
(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— 
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(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. 
(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-
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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. 
SEC. 123. ENSURING ACCESS TO SHORT-TERM LIMITED DU-
RATION INSURANCE. 
Section 2791(b)(5) of the Public Health Service Act 
(42 U.S.C. 300gg–91(b)(5)) is amended by inserting ‘‘(as 
defined in the rule entitled ‘Short-Term, Limited Duration 
Insurance’ (83 Fed. Reg. 38212 (August 3, 2018)))’’ after 
‘‘short-term limited duration insurance’’. 
SEC. 124. MAKING TELEHEALTH FLEXIBILITIES PERMA-
NENT. 
Notwithstanding any other provision of law, in the 
case of any provision of section 1834(m) of the Social Se-
curity Act (42 U.S.C. 1395m(m)) that would, absent this 
section, end on the last day of the emergency period de-
scribed in section 1135(g)(1)(B) of the Social Security Act 
(42 U.S.C. 1320b–5(a)(1)(B)) or December 1, 2026, such 
provision shall be deemed to continue to apply on or after 
such last day or such date (as applicable). 
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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 $4,000 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 
$2,000 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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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 Fairness for All Act), the amount de-
termined under paragraph (2) shall be decreased by 
such proportion as the Secretary, 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 insur-
ance to the average actuarial value of health insur-
ance coverage that is not limited benefit insurance. 
‘‘(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, 
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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) EXCESS EMPLOYER-PROVIDED HEALTH IN-
SURANCE
TAX
SUBSIDY
INCLUDED
IN
GROSS
IN-
COME.—In the case of a taxpayer for whom sub-
paragraph (B) of paragraph (1) exceeds subpara-
graph (A) of such paragraph for the taxable year, 
the tax imposed by this chapter shall be increased 
for such taxable year by the amount of such excess. 
‘‘(3) EMPLOYER-PROVIDED HEALTH INSURANCE 
TAX SUBSIDY.—For purposes of this subsection— 
‘‘(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, 
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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). 
‘‘(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 
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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-
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.— 
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‘‘(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. 
‘‘(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 an amount equal 
to the applicable percentage of the amount of 
the credit allowed under this section for the 
taxable year, determined in accordance with the 
following table (one-half of such amount so de-
termined in the case of a taxpayer whose tax is 
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determined under section 1(c) for the taxable 
year): 
‘‘If the household income 
(expressed as a percent 
of poverty line) is: 
The applicable 
percentage 
is: 
Less than 200% ..............................................................
30% 
At least 200% but less than 300% ................................
50% 
At least 300% but less than 400% ................................
80% 
‘‘(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 
‘‘(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 
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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 Public Law 111– 
148, as in effect on the day before the date of 
the enactment of this section, except that ad-
vance determinations and advance payments 
shall be made on request of the individual with 
respect to whom the determination 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-
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. 
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‘‘(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.— 
‘‘(A) IN GENERAL.—In the case of any cal-
endar year beginning after 2026, 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-
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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 2025. 
‘‘(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-
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-
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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 
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 
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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: 
‘‘(F) DENIAL
OF
CREDIT
FOR
THOSE 
ELECTING UNIVERSAL CREDIT.—In the case of 
an individual who is allowed a credit under sec-
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 
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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) TRANSFERS TO FEDERAL OLD-AGE AND SUR-
VIVORS INSURANCE TRUST FUND.—With respect to each 
individual for whom tax is increased under section 
36C(c)(2), there are hereby appropriated to the Federal 
Old Age and Survivors Trust Fund and the Disability In-
surance Trust Fund established under section 201 of the 
Social Security Act amounts equal to the amount which 
bears the same ratio to the amount of such increase as— 
(1) the Federal payroll tax subsidy (as defined 
in section 36C(c)(3)) of such individual for the tax-
able year, bears to 
(2) the employer-provided health insurance tax 
subsidy (as defined in such section) of the individual 
for the taxable year. 
(e) 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-
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serting after the item relating to section 36B the following 
new item: 
‘‘Sec. 36C. Health insurance tax credit.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
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 
2026, 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 
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 
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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 
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 
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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, 
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. 
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(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-
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 the Internal Revenue Code of 1986 is amended by strik-
ing paragraph (14) and by redesignating paragraphs (15), 
(16), and (17) as paragraphs (14), (15), and (16), respec-
tively. 
(b) EFFECTIVE DATES.—The amendment made by 
this section shall apply to calendar years beginning after 
December 31, 2018. 
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SEC. 135. REPORT. 
For each year beginning on or after the date of the 
enactment of this Act, the Secretary of Health and 
Human Services shall submit to Congress a report on the 
extent to which health insurance tax credits allowed under 
section 36C of the Internal Revenue Code of 1986, as 
added by this Act, are sufficient to cover the cost of health 
insurance coverage for individuals electing to purchase 
such coverage. 
Subtitle D—Medicare Reforms 
SEC. 141. PHYSICIAN-OWNED HOSPITALS. 
The amendments made by section 6001 of Public 
Law 111–148 are repealed and the provisions amended 
by such section are restored as if such amendments had 
never occurred. 
SEC. 142. PROHIBITING THE USE OF AN INPATIENT-ONLY 
LIST 
IN 
DESIGNATING 
HOSPITAL 
OUT-
PATIENT SERVICES UNDER THE MEDICARE 
PROGRAM. 
Section 1833(t)(1) of the Social Security Act (42 
U.S.C. 1395l(t)(1)) is amended by adding at the end the 
following new subparagraph: 
‘‘(C) PROHIBITION ON USE OF AN INPA-
TIENT-ONLY
LIST.—In designating outpatient 
hospital services pursuant to subparagraph 
(B)(i), the Secretary may not refuse to so des-
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ignate such a service based solely on the Sec-
retary’s determination that such service may 
only be safely furnished in an inpatient set-
ting.’’. 
SEC. 143. PROMOTING MEDICARE SITE-NEUTRAL PAY-
MENTS. 
(a) REMOVING CERTAIN EXCEPTIONS TO THE DEFI-
NITION OF AN OFF-CAMPUS OUTPATIENT DEPARTMENT 
OF A PROVIDER.— 
(1) IN
GENERAL.—Section 1833(t)(21)(B) of 
the Social Security Act (42 U.S.C. 1395l(t)(21)(B)) 
is amended to read as follows: 
‘‘(B) OFF-CAMPUS
OUTPATIENT
DEPART-
MENT OF A PROVIDER.—For purposes of para-
graph (1)(B)(v) and this paragraph, the term 
‘off-campus outpatient department of a pro-
vider’ means a department of a provider (as de-
fined in section 413.65(a)(2) of title 42 of the 
Code of Federal Regulations, as in effect as of 
the date of the enactment of the Bipartisan 
Budget Act of 2015) that is not located— 
‘‘(i) on the campus (as defined in such 
section 413.65(a)(2)) of such provider; or 
‘‘(ii) within the distance (described in 
such definition of campus) from a remote 
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location of a hospital facility (as defined in 
such section 413.65(a)(2)).’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply with respect to items 
and services furnished on or after January 1, 2026. 
(3) REMOVING SITE-NEUTRAL EXCEPTION FOR 
OFF-CAMPUS
EMERGENCY
DEPARTMENTS.—Section 
1833(t)(21)(A) of the Social Security Act (42 
U.S.C. 1395l(t)(21)(A)) is amended by inserting 
‘‘before January 1, 2026’’ after ‘‘furnished’’. 
(4) CLARIFYING SECRETARIAL AUTHORITY TO 
PROMOTE
SITE-NEUTRAL
PAYMENTS.—Section 
1833(t)(2)(F) of the Social Security Act (42 U.S.C. 
1395l(t)(2)(F)) is amended by adding at the end the 
following new sentence: ‘‘Such method may include 
actions determined appropriate by the Secretary to 
promote site-neutral payment policies to reduce ex-
penditures attributable to items and services fur-
nished under this part, such as actions to prevent 
hospitals from billing for items and services fur-
nished at an off-campus outpatient department of a 
provider as if such items and services were furnished 
at such hospital.’’. 
(b) ENSURING SEPARATE NPIS FOR OFF-CAMPUS 
OUTPATIENT DEPARTMENTS OF A PROVIDER.— 
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(1) IN GENERAL.—Section 1173(b) of the So-
cial Security Act (42 U.S.C. 1320d–2(b)) is amend-
ed by adding at the end the following new para-
graph: 
‘‘(3) ENSURING SEPARATE NPIS FOR OFF-CAM-
PUS OUTPATIENT DEPARTMENTS OF A PROVIDER.— 
The standards specified under paragraph (1) shall 
ensure that, not later than January 1, 2026, each 
off-campus outpatient department of a provider (as 
defined in section 1833(t)(21)(B)) is assigned a sep-
arate unique health identifier from such provider.’’. 
(2) TREATMENT OF CERTAIN DEPARTMENTS AS 
SUBPARTS OF A HOSPITAL.—Not later than January 
1, 2026, the Secretary of Health and Human Serv-
ices shall revise sections 162.408 and 162.410 of 
title 45, Code of Federal Regulations, to ensure that 
each off-campus outpatient department of a provider 
(as defined in section 1833(t)(21)(B) of the Social 
Security Act (42 U.S.C. 1395l(t)(21)(B))) is treated 
as a subpart (as described in such sections) of such 
provider and assigned a unique health identifier pur-
suant to section 1173(b)(3) of such Act (as added 
by paragraph (1)). 
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SEC. 144. MEDICARE ADVANTAGE CONTRIBUTIONS TO 
ROTH HSAS FOR CHRONICALLY ILL ENROLL-
EES. 
Section 1852(a)(3)(D)(ii)(I) of the Social Security 
Act (42 U.S.C. 1395w–22(a)(3)(D)(ii)(I)) is amended— 
(1) by striking ‘‘are supplemental benefits’’ and 
inserting the following: ‘‘are 
‘‘(aa) 
supplemental 
bene-
fits’’; 
(2) by striking the period at the end of item 
(aa), as inserted by paragraph (1), and inserting ‘‘; 
and’’; and 
(3) by adding at the end the following new 
item: 
‘‘(bb) deposits made to a 
Roth HSA (as described in sec-
tion 530A of the Internal Rev-
enue Code of 1986) of a chron-
ically ill enrollee.’’. 
SEC. 145. EXTENDING ACUTE HOSPITAL CARE AT HOME 
WAIVER FLEXIBILITIES. 
Section 1812 of the Social Security Act (42 U.S.C. 
1395d) is amended— 
(1) by redesignating subsection (g) as sub-
section (h); and 
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(2) by inserting after subsection (f) the fol-
lowing new subsection: 
‘‘(g)(1) Beginning on the date of the enactment of 
this subsection, inpatient hospital services or inpatient 
critical access hospital services described in subsection 
(a)(1) shall include services (including telehealth services 
as defined in section 1834(m)) furnished to an individual 
by an Acute Hospital Care at Home Program (as defined 
by the Secretary). 
‘‘(2) With respect to telehealth services furnished by 
an Acute Hospital Care at Home Program described in 
paragraph (1), the requirements described in section 
1834(m)(4)(C)(i) shall not apply and the sites described 
in section 1834(m)(4)(C)(ii) shall include the home or 
temporary residence of the individual. 
‘‘(3) With respect to services furnished in the home 
or temporary residence of the individual through an Acute 
Hospital Care at Home Program, the requirement for pro-
viding 24-hour nursing services and immediate availability 
of nursing services as conditions of participation shall also 
be satisfied by providing virtual access to nurses, advanced 
practice providers, or physicians 24 hours per day. 
‘‘(4) With respect to services furnished in the home 
or temporary residence of the individual through an Acute 
Hospital Care at Home Program, life safety code require-
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ments shall be deemed satisfied for homes or temporary 
residences determined to be safe and appropriate for this 
care by the Acute Hospital Care at Home Program. 
‘‘(5) Not later than 12 months after the date of the 
enactment of this subsection, the Secretary shall issue reg-
ulations establishing health and safety requirements for 
Acute Hospital Care at Home Programs.’’. 
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—ROTH HEALTH SAVINGS ACCOUNTS 
‘‘Sec. 530A. Roth HSAs. 
‘‘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.— 
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‘‘(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 any 
month during such taxable year that the individual 
is an eligible 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-
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. 
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‘‘(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 
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 
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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-
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) 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 
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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-
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-
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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 
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 
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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 
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. 
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‘‘(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-
count beneficiary, amounts paid by such bene-
ficiary for medical care (as defined in section 
213(d)) for such individual, the spouse of such 
individual, and any dependent (as defined in 
section 152, determined without regard to sub-
sections (b)(1), (b)(2), and (d)(1)(B) thereof) 
of such individual, 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). 
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‘‘(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)), 
‘‘(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: 
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‘‘(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). 
‘‘(d) ELIGIBLE
INDIVIDUAL; CREDITABLE
COV-
ERAGE.—For purposes of this section— 
‘‘(1) ELIGIBLE INDIVIDUAL.— 
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means, with respect to any month, any 
individual if such individual is covered under 
creditable coverage as of the first day of such 
month. 
‘‘(B) EXCEPTION.—An individual shall not 
be treated as an eligible individual for any 
month for which a credit is determined with re-
spect to the individual under section 36B. 
‘‘(2) CREDITABLE COVERAGE.—The term ‘cred-
itable coverage’ shall have the meaning given such 
term in section 36C(f). 
‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 
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‘‘(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 
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 
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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. 
‘‘(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. 
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‘‘(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). 
‘‘(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. 
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‘‘(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 
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 
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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 2026, 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 
2023’ for ‘calendar year 1992’ in subpara-
graph (B) thereof, and 
‘‘(ii) by substituting ‘CPI medical care 
component’ for ‘CPI’. 
‘‘(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. 
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‘‘(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. 
‘‘(h) CROSS-REFERENCE.—For contributions from 
Medicare Advantage plans of chronically ill enrollees, see 
section 1852(a)(3)(D)(ii)(I) of the Social Security Act.’’. 
(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 2025.— 
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‘‘(1) IN GENERAL.—No contribution may be ac-
cepted by a health savings account after December 
31, 2025. 
‘‘(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 Fairness for All Act.’’. 
(c) CLERICAL AMENDMENT.—The table of parts for 
subchapter F of chapter 1 of such Code is amended by 
adding at the end the following new item: 
‘‘PART IX. ROTH HEALTH SAVINGS ACCOUNTS’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
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: 
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‘‘(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, 2025.’’. 
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. 
SEC. 204. TREATMENT OF DIRECT PATIENT CARE AR-
RANGEMENTS. 
(a) HSAS.— 
(1) ROTH HSA.—Section 530A(c)(2)(A) of the 
Internal Revenue Code of 1986, as added by section 
201 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-
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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 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.), Public Law 111–148, and this Act, the offer-
ing of direct patient care arrangements shall not be 
treated as the offering of health insurance coverage 
and shall not be subject to regulations as such cov-
erage under such Acts. 
(2) DIRECT PATIENT CARE ARRANGEMENT DE-
FINED.—In this subsection, the term ‘‘direct patient 
care arrangement’’ means the furnishing (or access 
to the furnishing) by a physician or group of physi-
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cians of physician professional services (and ancil-
lary services) in return for payment 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 Public Law 111–148, in 
order to promote freedom of choice of affordable health 
insurance coverage options offered outside of an Ex-
change. 
(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-
tribution towards, individual health insurance coverage for 
employees and dependent family members. 
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(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 TO ENSURE EQUI-
TABLE ACCESS TO CARE. 
(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-
ficiary-based amount specified in subsection (b) 
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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) PUBLIC
LAW
111–148
DISASTER 
FMAP.—Section 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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100 
‘‘(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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101 
‘‘(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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102 
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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103 
‘‘(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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104 
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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105 
‘‘(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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106 
‘‘(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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107 
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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108 
‘‘(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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109 
‘‘(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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110 
‘‘(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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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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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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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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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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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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(ii) in paragraph (2)— 
(I) in subparagraph (A), by in-
serting ‘‘or section 1903A’’ after ‘‘was 
made under this section’’; and 
(II) in subparagraph (B), by in-
serting ‘‘or section 1903A’’ after 
‘‘under subsection (a)’’; 
(iii) in paragraph (4)— 
(I) by striking ‘‘under this sub-
section’’ and inserting ‘‘, with respect 
to this section or section 1903A, 
under this subsection’’; and 
(II) by striking ‘‘under this sec-
tion’’ and inserting ‘‘under the respec-
tive section’’; and 
(iv) in paragraph (5), by inserting ‘‘or 
section 1903A’’ after ‘‘overpayment under 
this section’’. 
(3) CONFORMING WAIVER AUTHORITY.—Section 
1115(a)(2)(A) of the Social Security Act (42 U.S.C. 
1315(a)(2)(A)) is amended by striking ‘‘or 1903’’ 
and inserting ‘‘1903, or 1903A’’. 
(4) REPORT
ON
ADDITIONAL
CONFORMING 
AMENDMENTS NEEDED.—Not later than 6 months 
after the date of the enactment of this Act, the Sec-
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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—PRICE TRANSPARENCY 
SEC. 501. PROMOTING TRANSPARENT HOSPITAL PRICES 
FOR CONSUMERS. 
The provisions of the rule entitled ‘‘Price Trans-
parency Requirements for Hospitals to Make Standard 
Charges Public’’ published by the Department of Health 
and Human Services on November 27, 2019 (85 Fed. Reg. 
65524), shall have the force and effect of law. 
Æ 
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