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‘‘Sec. 2111. General description of eligibility and benefits.
‘‘Sec. 2112. Set-asides of funds for population groups.
‘‘Sec. 2113. Premiums and cost-sharing.
‘‘Sec. 2114. Description of process for developing capitation payment rates.
‘‘Sec. 2115. Preventing spousal impoverishment.
‘‘Sec. 2116. Construction.
‘‘Sec. 2117. Limitations on causes of action.
‘‘PART C—PAYMENTS TO STATES
‘‘Sec. 2121. Allotment of funds among States.
‘‘Sec. 2122. Payments to States.
‘‘Sec. 2123. Limitation on use of funds; disallowance.
‘‘PART D—PROGRAM INTEGRITY AND QUALITY
‘‘Sec. 2131. Use of audits to achieve fiscal integrity.
‘‘Sec. 2132. Fraud prevention program.
‘‘Sec. 2133. Information concerning sanctions taken by State licensing authori-
ties against health care practitioners and providers.
‘‘Sec. 2134. State MediGrant fraud control units.
‘‘Sec. 2135. Recoveries from third parties and others.
‘‘Sec. 2136. Assignment of rights of payment.
‘‘Sec. 2137. Quality assurance standards for nursing facilities.
‘‘Sec. 2138. Other provisions promoting program integrity.
‘‘PART E—ESTABLISHMENT AND AMENDMENT OF STATE MEDIGRANT PLANS
‘‘Sec. 2151. Submittal and approval of MediGrant plans.
‘‘Sec. 2152. Submittal and approval of plan amendments.
‘‘Sec. 2153. Process for State withdrawal from program.
‘‘Sec. 2154. Sanctions for substantial noncompliance.
‘‘Sec. 2155. Secretarial authority.
‘‘PART F—GENERAL PROVISIONS
‘‘Sec. 2171. Definitions.
‘‘Sec. 2172. Treatment of territories.
‘‘Sec. 2173. Description of treatment of Indian Health Service facilities.
‘‘Sec. 2174. Application of certain general provisions.
‘‘Sec. 2175. MediGrant master drug rebate agreements.
‘‘SEC. 2100. PURPOSE; STATE MEDIGRANT PLANS.
‘‘(a) PURPOSE.—The purpose of this title is to pro-
vide block grants to States to enable them to provide medi-
cal assistance to low-income individuals and families in a
more effective, efficient, and responsive manner.
‘‘(b) STATE PLAN REQUIRED.—A State is not eligible
for payment under section 2122 of this title unless the
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State has submitted to the Secretary under part E a plan
(in this title referred to as a ‘MediGrant plan’) that—
‘‘(1) sets forth how the State intends to use the
funds provided under this title to provide medical as-
sistance to needy individuals and families consistent
with the provisions of this title, and
‘‘(2) is approved under such part.
‘‘(c) 
CONTINUED
APPROVAL.—An 
approved
MediGrant plan shall continue in effect unless and until—
‘‘(1) the State amends the plan under section
2152,
‘‘(2) the State terminates participation under
this title under section 2153, or
‘‘(3) the Secretary finds substantial noncompli-
ance of the plan with the requirements of this title
under section 2154.
‘‘(d) STATE ENTITLEMENT.—This title constitutes
budget authority in advance of appropriations Acts, and
represents the obligation of the Federal Government to
provide for the payment to States of amounts provided
under part C.
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‘‘PART A—OBJECTIVES, GOALS, AND PERFORMANCE
UNDER STATE PLANS
‘‘SEC. 2101. DESCRIPTION OF STRATEGIC OBJECTIVES AND
PERFORMANCE GOALS.
‘‘(a) DESCRIPTION.—A MediGrant plan shall include
a description of the strategic objectives and performance
goals the State has established for providing health care
services to low-income populations under this title, includ-
ing a general description of the manner in which the plan
is designed to meet these objectives and goals.
‘‘(b) 
CERTAIN
OBJECTIVES
AND
GOALS
RE-
QUIRED.—A MediGrant plan shall include strategic objec-
tives and performance goals relating to rates of childhood
immunizations and reductions in infant mortality and
morbidity.
‘‘(c) CONSIDERATIONS.—In specifying these objec-
tives and goals the State may consider factors such as the
following:
‘‘(1) The State’s priorities with respect to such
areas as providing assistance to low-income popu-
lations.
‘‘(2) The State’s priorities with respect to the
general public health and the health status of indi-
viduals eligible for assistance under the MediGrant
plan.
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‘‘(3) The State’s financial resources, the par-
ticular economic conditions in the State, and relative
adequacy of the health care infrastructure in dif-
ferent regions of the State.
‘‘(d) PERFORMANCE
MEASURES.—To the extent
practicable—
‘‘(1) one or more performance goals shall be es-
tablished by the State for each strategic objective
identified in the MediGrant plan; and
‘‘(2) the MediGrant plan shall describe, how
program performance will be—
‘‘(A) measured through objective, inde-
pendently verifiable means, and
‘‘(B) compared against performance goals,
in order to determine the State’s performance
under this title.
‘‘(e) PERIOD COVERED.—
‘‘(1) STRATEGIC
OBJECTIVES.—The strategic
objectives shall cover a period of not less than 5
years and shall be updated and revised at least every
3 years.
‘‘(2) PERFORMANCE GOALS.—The performance
goals shall be established for dates that are not more
than 3 years apart.
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‘‘SEC. 2102. ANNUAL REPORTS.
‘‘(a) IN GENERAL.—In the case of a State with a
MediGrant plan that is in effect for part or all of a fiscal
year, no later than March 31 following such fiscal year
(or March 31, 1998, in the case of fiscal year 1996) the
State shall prepare and submit to the Secretary and the
Congress a report on program activities and performance
under this title for such fiscal year.
‘‘(b) CONTENTS.—Each annual report under this sec-
tion for a fiscal year shall include the following:
‘‘(1) EXPENDITURE
AND
BENEFICIARY
SUM-
MARY.—
‘‘(A) INITIAL SUMMARY.—For the report
for fiscal year 1997 (and, if applicable, fiscal
year 1996), a summary of all expenditures
under the MediGrant plan during the fiscal
year (and during any portions of fiscal year
1996 during which the MediGrant plan was in
effect under this title) as follows:
‘‘(i) Aggregate medical assistance ex-
penditures, disaggregated to the extent re-
quired to determine compliance with the
set-aside requirements of subsections (a)
through (c) section 2112 and to compute
the 
case 
mix 
index 
under 
section
2121(d)(3).
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‘‘(ii) For each general category of eli-
gible individuals (specified in subsection
(c)(1), aggregate medical assistance ex-
penditures and the total and average num-
ber of eligible individuals under the
MediGrant plan.
‘‘(iii) By each general category of eli-
gible individuals, total expenditures for
each of the categories of health care items
and services (specified in subsection (c)(2))
which are covered under the MediGrant
plan and provided on a fee-for-service
basis.
‘‘(iv) By each general category of eli-
gible individuals, total expenditures for
payments to capitated health care organi-
zations (as defined in section 2114(c)(1)).
‘‘(v) Total administrative expendi-
tures.
‘‘(B) SUBSEQUENT SUMMARIES.—For re-
ports for each succeeding fiscal year, a sum-
mary of—
‘‘(i) 
all 
expenditures 
under 
the
MediGrant plan consistent with the report-
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ing format specified by the MediGrant
Task Force under section 2106(d)(1), and
‘‘(ii) the total and average number of
eligible individuals under the MediGrant
plan for each general category of eligible
individuals.
‘‘(2) UTILIZATION SUMMARY.—
‘‘(A) INITIAL SUMMARY.—For the report
for fiscal year 1997 (and, if applicable, fiscal
year 1996), summary statistics on the utiliza-
tion 
of 
health 
care 
services 
under 
the
MediGrant plan during the year (and during
any portions of fiscal year 1996 during which
the MediGrant plan was in effect under this
title) as follows:
‘‘(i) For each general category of eli-
gible individuals and for each of the cat-
egories of health care items and services
which are covered under the MediGrant
plan and provided on a fee-for-service
basis, the number and percentage of per-
sons who received such a type of service or
item during the period covered by the re-
port.
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‘‘(ii) Summary of health care utiliza-
tion data reported to the State by
capitated health care organizations.
‘‘(B) SUBSEQUENT SUMMARIES.—For re-
ports for each succeeding fiscal year, summary
statistics on the utilization of health care serv-
ices under the MediGrant plan consistent with
the 
reporting 
format 
specified 
by 
the
MediGrant 
Task 
Force 
under 
section
2106(d)(1).
‘‘(3) 
ACHIEVEMENT
OF
PERFORMANCE
GOALS.—With respect to each performance goal es-
tablished under section 2101 and applicable to the
year involved—
‘‘(A) a brief description of the goal;
‘‘(B) data on the actual performance with
respect to the goal;
‘‘(C) a review of the extent to which the
goal was achieved, based on such data; and
‘‘(D) where a performance goal has not
been met—
‘‘(i) why the goal was not met, and
‘‘(ii) actions to be taken in response
to such performance (including adjust-
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ments in performance goals or program ac-
tivities for subsequent years).
‘‘(4) PROGRAM EVALUATIONS.—A summary of
the findings of evaluations under section 2103 com-
pleted during the fiscal year covered by the report.
‘‘(5) FRAUD AND ABUSE AND QUALITY CON-
TROL
ACTIVITIES.—A general description of the
State’s activities under part D to detect and deter
fraud and abuse and to assure quality of services
provided under the program.
‘‘(6) PLAN ADMINISTRATION.—
‘‘(A) A description of the administrative
roles and responsibilities of entities in the State
responsible for administration of this title.
‘‘(B) Organizational charts for each entity
in the State primarily responsible for activities
under this title.
‘‘(C) A brief description of each interstate
compact (if any) the State has entered into
with other States with respect to activities
under this title.
‘‘(D) General citations to the State stat-
utes and administrative rules governing the
State’s activities under this title.
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‘‘(7) INPATIENT
HOSPITAL
PAYMENTS.—With
respect to inpatient hospital services provided under
the MediGrant plan on a fee-for-service basis, a de-
scription of the average amount paid per discharge
in the fiscal year compared either to the average
charge for such services or to the State’s estimate
of the average amount paid per discharge by com-
mercial health insurers in the State.
‘‘(c) DEFINITIONS.—In this section:
‘‘(1) Each of the following is a general category
of eligible individuals:
‘‘(A) Children.
‘‘(B) Blind or disabled adults under 65
years of age.
‘‘(C) Persons 65 years of age or older.
‘‘(D) Other adults.
‘‘(2) The health care items and services de-
scribed in each subparagraph of section 2171(a)(1)
shall be considered a separate category of health
care items and services.
‘‘SEC. 2103. PERIODIC, INDEPENDENT EVALUATIONS.
‘‘(a) IN GENERAL.—During fiscal year 1998 and
every third fiscal year thereafter, each State shall provide
for an evaluation of the operation of its MediGrant plan
under this title.
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‘‘(b) INDEPENDENT.—Each such evaluation with re-
spect to an activity under the MediGrant plan shall be con-
ducted by an entity that is neither responsible under State
law for the submission of the State plan (or part thereof)
nor responsible for administering (or supervising the ad-
ministration of) the activity. If consistent with the pre-
vious sentence, such an entity may be a college or univer-
sity, a State agency, a legislative branch agency in a State,
or an independent contractor.
‘‘(c) RESEARCH
DESIGN.—Each such evaluation
shall be conducted in accordance with a research design
that is based on generally accepted models of survey de-
sign and sampling and statistical analysis.
‘‘SEC. 2104. DESCRIPTION OF PROCESS FOR MEDIGRANT
PLAN DEVELOPMENT.
‘‘Each MediGrant plan shall include a description of
the process under which the plan shall be developed and
implemented in the State (consistent with section 2105).
‘‘SEC. 2105. CONSULTATION IN MEDIGRANT PLAN DEVELOP-
MENT.
‘‘(a) PUBLIC NOTICE PROCESS.—
‘‘(1) 
IN
GENERAL.—Before 
submitting 
a
MediGrant plan or a plan amendment described in
paragraph (3) to the Secretary under part E, a
State shall provide—
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‘‘(A) public notice respecting the submittal
of the proposed plan or amendment, including
a general description of the plan or amendment;
‘‘(B) a means for the public to inspect or
obtain a copy (at reasonable charge) of the pro-
posed plan or amendment; and
‘‘(C) an opportunity for submittal and con-
sideration of public comments on the proposed
plan or amendment.
The previous sentence shall not apply to a revision
of a MediGrant plan (or revision of an amendment
to a plan) made by a State under section 2154(c)(1)
or to a plan amendment withdrawal described in sec-
tion 2152(c)(4).
‘‘(2) CONTENTS OF NOTICE.—A notice under
paragraph (1)(A) for a proposed plan or amendment
shall include a description of—
‘‘(A) the general purpose of the proposed
plan or amendment (including applicable effec-
tive dates),
‘‘(B) where the public may inspect the pro-
posed plan or amendment,
‘‘(C) how the public may obtain a copy of
the proposed plan or amendment and the appli-
cable charge (if any) for the copy, and
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‘‘(D) how the public may submit comments
on the proposed plan or amendment, including
any deadlines applicable to consideration of
such comments.
‘‘(3) AMENDMENTS
DESCRIBED.—An amend-
ment to a MediGrant plan described in this para-
graph is an amendment which makes a material and
substantial change in eligibility under the MediGrant
plan or the benefits provided under the plan.
‘‘(4) PUBLICATION.—Notices under this sub-
section may be published (as selected by the State)
in one or more daily newspapers of general circula-
tion in the State or in any publication used by the
State to publish State statutes or rules.
‘‘(5) COMPARABLE PROCESS.—A separate no-
tice, or notices, shall not be required under this sub-
section for a State if notice of the MediGrant plan
or an amendment to the plan will be provided under
a process specified in State law that is substantially
equivalent to the notice process specified in this sub-
section.
‘‘(b) ADVISORY COMMITTEE.—
‘‘(1) 
IN
GENERAL.—Each 
State 
with 
a
MediGrant plan shall establish and maintain an ad-
visory committee.
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‘‘(2) CONSULTATION.—The State shall periodi-
cally consult with the advisory committee in the de-
velopment, revision, and monitoring the performance
of the MediGrant plan, including—
‘‘(A) the development of strategic objec-
tives and performance goals under section
2101,
‘‘(B) the annual report under section
2102, and
‘‘(C) the research design under section
2103(c).
‘‘(3) GEOGRAPHIC
DIVERSITY.—The composi-
tion of the advisory committee shall be chosen in a
manner that assures some representation on the ad-
visory committee of the different general geographic
regions of the State. Nothing in the previous sen-
tence shall be construed as requiring proportional
representation of geographic areas in a State.
‘‘(4) CONSTRUCTION.—Nothing in this title
shall be construed as preventing a State from estab-
lishing more than one advisory committee, including
specialized advisory committees that represent the
interests of specific population groups, provider
groups, or geographic areas.
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‘‘SEC. 2106. MEDIGRANT TASK FORCE.
‘‘(a) IN GENERAL.—The Secretary shall provide for
the establishment of a MediGrant Task Force (in this sec-
tion referred to as the ‘Task Force’).
‘‘(b) COMPOSITION.—The Task Force shall consist of
6 members appointed by the chair of the National Gov-
ernors Association and 6 members appointed by the vice
chair of the National Governors Association.
‘‘(c) ADVISORY GROUP FOR TASK FORCE.—The Sec-
retary shall provide for the establishment of an advisory
group to assist the Task Force in carrying out its duties
under this section, consisting of one representative ap-
pointed by each of the following associations:
‘‘(1) National Committee for Quality Assur-
ance.
‘‘(2) Joint Commission for the Accreditation of
Healthcare Organizations.
‘‘(3) Group Health Association of America.
‘‘(4) American Managed Care and Review Asso-
ciation.
‘‘(5) Association of State and Territorial Health
Officers.
‘‘(6) American Medical Association.
‘‘(7) American Hospital Association.
‘‘(8) American Dental Association.
‘‘(9) American College of Gerontology.
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‘‘(10) American Health Care Association.
‘‘(11) An association identified by the Secretary
as representing the interests of disabled individuals.
‘‘(12) An association identified by the Secretary
as representing the interests of children.
‘‘(13) An association identified by the Secretary
as representing the interests of the elderly.
‘‘(14) An association identified by the Secretary
as representing the interests of mentally ill individ-
uals.
Any reference in this subsection to a particular group shall
be deemed a reference to any successor to such group.
‘‘(d) DUTIES.—
‘‘(1) FORMAT FOR EXPENDITURE AND UTILIZA-
TION SUMMARIES.—The Task Force shall specify, by
not later than December 31, 1996, the format of ex-
penditure summaries and utilization summaries re-
quired under section 2102. Such format may provide
for the reporting of different information from that
required under section 2102(a), but shall include the
reporting of at least the information described in
section 2102(b)(1)(A)(i).
‘‘(2) MODELS AND SUGGESTIONS.—The Task
Force shall study and report to Congress and the
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States, by not later than April 1, 1997, rec-
ommendations on the following:
‘‘(A) Recommended models for strategic
objectives and performance goals for consider-
ation by States in the development of such ob-
jectives and goals under section 2102, including
alternative models for each of the objectives and
goals described in section 2101(b).
‘‘(B) For each suggested model for a stra-
tegic objective or performance goal suggested
methodologies for States to consider in measur-
ing and verifying the objective or goal.
‘‘(C) An assessment of the potential useful-
ness to States of quality assurance safeguards,
utilization data sets, and accreditation pro-
grams that are used or under development in
the private sector.
‘‘(D) Recommended designs and evaluation
methodologies for consideration by States in
providing for independent evaluations under
section 2103.
‘‘(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed as requiring a State to
adopt any of the strategic objectives or performance
goals suggested under paragraph (2).
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‘‘(e) ADMINISTRATIVE ASSISTANCE.—Administrative
support for the Task Force shall be provided by the Agen-
cy for Health Care Policy and Research (or, in the absence
of such Agency, the Secretary).
‘‘PART B—ELIGIBILITY, BENEFITS, AND SET-ASIDES
‘‘SEC. 2111. GENERAL DESCRIPTION OF ELIGIBILITY AND
BENEFITS.
‘‘(a) IN GENERAL.—Each MediGrant plan shall in-
clude a description (consistent with this title) of the fol-
lowing:
‘‘(1) ELIGIBLE POPULATION.—The population
eligible for medical assistance under the plan, in-
cluding—
‘‘(A) any limitations on categories of such
individuals;
‘‘(B) any limitations as to the duration of
eligibility;
‘‘(C) any eligibility standards relating to
age, income (including any standards relating
to spenddowns), residency, resources, disability
status, immigration status, or employment sta-
tus of individuals;
‘‘(D) methods of establishing (and continu-
ing) eligibility and enrollment (including the
methodology for computing family income);
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‘‘(E) the eligibility standards in the plan
that protect the income and resources of a mar-
ried individual who is living in the community
and whose spouse is residing in an institution
in order to prevent the impoverishment of the
community spouse; and
‘‘(F) any other standards relating to eligi-
bility for medical assistance under the plan.
‘‘(2) SCOPE OF ASSISTANCE.—The amount, du-
ration, and scope of health care services and items
covered under the plan, including differences among
different eligible population groups.
‘‘(3) DELIVERY
METHOD.—The State’s ap-
proach to delivery of medical assistance, including a
general description of—
‘‘(A) the use (or intended use) of vouchers,
fee-for-service, or managed care arrangements
(such as capitated health care plans, case man-
agement, and case coordination), and
‘‘(B) utilization control systems.
‘‘(4) FEE-FOR-SERVICE BENEFITS.—To the ex-
tent that medical assistance is furnished on a fee-
for-service basis—
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‘‘(A) how the State determines the quali-
fications of health care providers eligible to pro-
vide such assistance, and
‘‘(B) how the State determines rates of re-
imbursement for providing such assistance.
‘‘(5) COST-SHARING.—Beneficiary cost-sharing
(if any), including variations in such cost-sharing by
population group or type of service and financial re-
sponsibilities of parents of recipients under 21 years
of age and the spouses of recipients.
‘‘(6) UTILIZATION INCENTIVES.—Incentives or
requirements (if any) to encourage the appropriate
utilization of services.
‘‘(7) TREATMENT OF HEALTH CENTERS.—
‘‘(A) IN GENERAL.—In the case of a State
in which one or more health centers is located,
the MediGrant plan shall include a description
of—
‘‘(i) what provision (if any) has been
made for payment for items and services
furnished by health centers, and
‘‘(ii) the manner in which medical as-
sistance for low-income eligible individuals
who received health care services at health
centers on or before the date of the enact-
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ment of this title may be provided, as de-
termined by the State in consultation with
the health centers in the State.
‘‘(B) HEALTH
CENTER
DEFINED.—For
purposes of subparagraph (A), the term ‘health
center’ means an entity that—
‘‘(i) is receiving a grant under section
329, 330, 340, or 340A of the Public
Health Service Act; or
‘‘(ii) based on the recommendation of
the Health Resources and Services Admin-
istration within the Public Health Service,
was determined by the Secretary to meet
the requirements to receive such a grant.
‘‘(8) SUPPORT FOR CERTAIN HOSPITALS.—
‘‘(A) IN GENERAL.—With respect to hos-
pitals described in subparagraph (B) located in
the State, the MediGrant plan shall includes a
description—
‘‘(i) of the extent to which provisions
have been made for expenditures for items
and services furnished by such hospitals
and covered under the plan, and
‘‘(ii) for individuals who (I) are en-
rolled for benefits for covered services
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under the MediGrant plan and (II) were
previously receiving benefits for such serv-
ices under the medicaid program by or
through such hospitals, where or how they
will receive benefits for such services under
the MediGrant plan if the MediGrant plan
does not permit such individuals to obtain
benefits for those services by or through
such hospitals.
‘‘(B) HOSPITALS
DESCRIBED.—For pur-
poses of subparagraph (A), a hospital described
in this subparagraph is a subsection (d) hos-
pital (as defined in section 1886(d)(1)(B)) that
is described in clauses (i) and (ii) of section
340B(a)(4)(L) of the Public Health Service
Act.
‘‘(b) 
IMMUNIZATIONS
FOR
CHILDREN.—The
MediGrant plan shall provide medical assistance for im-
munizations for children eligible for any medical assist-
ance under the MediGrant plan, in accordance with a
schedule for immunizations established by the Health De-
partment of the State in consultation with the individuals
and entities in the State responsible for the administration
of the plan.
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‘‘(c) EQUAL PAYMENT RATES FOR RURAL PROVID-
ERS.—A State with a MediGrant plan shall establish pay-
ment rates for all services of rural providers that are com-
parable to the payment rates established for like services
of such type of providers not in rural areas; except that
a State may provide for incentive payments to attract and
retain providers to medically underserved areas.
‘‘(d) PREEXISTING CONDITION EXCLUSIONS.—Not-
withstanding any other provision of this title—
‘‘(1) a MediGrant plan may not deny or exclude
coverage of any item or service for an eligible indi-
vidual for benefits under the MediGrant plan for
such item or service on the basis of a preexisting
condition; and
‘‘(2) if a State contracts or makes other ar-
rangements (through the eligible individual or
through another entity) with a capitated health care
organization, insurer, or other entity, for the provi-
sion of items or services to eligible individuals under
the MediGrant plan and the State permits such or-
ganization, insurer, or other entity to exclude cov-
erage of a covered item or service on the basis of a
preexisting condition, the State shall provide,
through its MediGrant plan, for such coverage
(through direct payment or otherwise) for any such
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covered item or service denied or excluded on the
basis of a preexisting condition.
‘‘(e) FAMILY RESPONSIBILITY.—A MediGrant plan
may not require an adult child of moderate means (as de-
termined by the Secretary) to contribute to the cost of
covered nursing facility services and other long-term care
services for the child’s parent under the plan.
‘‘SEC. 2112. SET-ASIDES OF FUNDS FOR POPULATION
GROUPS.
‘‘(a) FOR TARGETED LOW-INCOME FAMILIES.—
‘‘(1) IN GENERAL.—Subject to subsection (e), a
MediGrant plan shall provide that the amount of
funds expended under the plan for medical assist-
ance for targeted low-income families (as defined in
paragraph (3)) for a fiscal year shall be not less
than the minimum low-income-family percentage
specified in paragraph (2) of the total funds ex-
pended under the plan for all medical assistance for
the fiscal year.
‘‘(2) MINIMUM LOW-INCOME-FAMILY PERCENT-
AGE.—The minimum low-income-family percentage
specified in this paragraph for a State is equal to 85
percent of the average percentage of the expendi-
tures under title XIX for medical assistance in the
State during Federal fiscal years 1992 through 1994
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which were attributable to expenditures for medical
assistance for mandated benefits (as defined in sub-
section (h)) furnished to individuals—
‘‘(A) who (at the time of furnishing the as-
sistance) were under 65 years of age,
‘‘(B) whose coverage (at such time) under
a State plan under title XIX was required
under Federal law, and
‘‘(C) whose eligibility for such coverage (at
such time) was not on a basis directly related
to disability status (including being blind).
‘‘(3) TARGETED
LOW-INCOME
FAMILY
DE-
FINED.—In this subsection, the term ‘targeted low-
income family’ means a family (which may be an in-
dividual)—
‘‘(A) which includes a child or a pregnant
woman, and
‘‘(B) the income of which does not exceed
185 percent of the poverty line applicable to a
family of the size involved.
‘‘(b) FOR LOW-INCOME ELDERLY.—
‘‘(1) SET-ASIDES.—Subject to subsection (e)—
‘‘(A) GENERAL SET-ASIDE.—A MediGrant
plan shall provide that the amount of funds ex-
pended under the plan for medical assistance
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for eligible low-income individuals 65 years of
age or older for a fiscal year shall be not less
than the minimum low-income-elderly percent-
age specified in paragraph (2)(A) of the total
funds expended under the plan for all medical
assistance for the fiscal year.
‘‘(B) SET-ASIDE FOR MEDICARE PREMIUM
ASSISTANCE.—A MediGrant plan shall provide
that the amount of funds expended under the
plan for medical assistance for medicare cost-
sharing described in section 2171(c)(1) for a
fiscal year shall be not less than the minimum
medicare premium assistance percentage speci-
fied in paragraph (2)(B) of the total funds ex-
pended under the plan for all medical assistance
for the fiscal year. The MediGrant plan shall
provide priority for such making such assist-
ance available for targeted low-income elderly
individuals (as defined in paragraph (3)).
‘‘(2) MINIMUM PERCENTAGES.—
‘‘(A) FOR GENERAL SET-ASIDE.—The min-
imum low-income-elderly percentage specified in
this subparagraph for a State is equal to 85
percent of the average percentage of the ex-
penditures under title XIX for medical assist-
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ance in the State during Federal fiscal years
1992 through 1994 which was attributable to
expenditures for medical assistance for man-
dated benefits furnished to individuals—
‘‘(i) whose eligibility for such assist-
ance was based on their being 65 years of
age or older; and
‘‘(ii)(I) whose coverage (at such time)
under a State plan under title XIX was re-
quired under Federal law, or (II) who (at
such time) were residents of a nursing fa-
cility.
‘‘(B) FOR SET-ASIDE FOR MEDICARE PRE-
MIUM
ASSISTANCE.—The minimum medicare
premium assistance percentage specified in this
subparagraph for a State is equal to 90 percent
of the average percentage of the expenditures
under title XIX for medical assistance in the
State during Federal fiscal years 1993 through
1995 which was attributable to expenditures for
medical assistance for medicare premiums de-
scribed in section 1905(p)(3)(A) for individuals
whose coverage (at such time) for such assist-
ance for such premiums under a State plan
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under title XIX was required under Federal
law.
‘‘(3) TARGETED LOW-INCOME ELDERLY INDI-
VIDUAL DEFINED.—In this subsection, the term ‘tar-
geted low-income elderly individual’ means an indi-
vidual who is 65 years of age or older and whose in-
come does not exceed 100 percent of the poverty line
applicable to a family of the size involved.
‘‘(c) FOR LOW-INCOME DISABLED PERSONS.—
‘‘(1) IN GENERAL.—Subject to subsection (e), a
MediGrant plan shall provide that the percentage of
funds expended under the plan for medical assist-
ance for eligible low-income individuals who are
under 65 years of age and are eligible for such as-
sistance on the basis of a disability (including being
blind) for a fiscal year is not less than the minimum
low-income-disabled percentage specified in para-
graph (2) of the total funds expended under the plan
for medical assistance for the fiscal year.
‘‘(2) MINIMUM
LOW-INCOME-DISABLED
PER-
CENTAGE.—The minimum low-income-disabled per-
centage specified in this paragraph for a State is
equal to 85 percent of the average percentage of the
expenditures under title XIX for medical assistance
in the State during Federal fiscal years 1992
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through 1994 which was attributable to expenditures
for medical assistance for mandated benefits fur-
nished to individuals—
‘‘(A) whose coverage (at such time) under
a State plan under title XIX was required
under Federal law, and
‘‘(B) whose coverage (at such time) was on
a basis directly related to disability status (in-
cluding being blind).
‘‘(d) USE OF RESIDUAL FUNDS.—
‘‘(1) IN GENERAL.—Subject to limitations on
payment under section 2123, any funds not required
to be expended under the set-asides under the pre-
vious subsections may be expended under the
MediGrant plan for any of the following:
‘‘(A) ADDITIONAL MEDICAL ASSISTANCE.—
Medical assistance for eligible low-income indi-
viduals (as defined in section 2171(b)), in addi-
tion to any medical assistance made available
under a previous subsection.
‘‘(B) MEDICALLY-RELATED
SERVICES.—
Payment for medically-related services (as de-
fined in paragraph (2)).
‘‘(C) ADMINISTRATION.—Payment for the
administration of the MediGrant plan.
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‘‘(2) 
MEDICALLY-RELATED
SERVICES
DE-
FINED.—In this title, the term ‘medically-related
services’ means services reasonably related to, or in
direct support of, the State’s attainment of one or
more of the strategic objectives and performance
goals established under section 2101, but does not
include items and services included on the list under
section 2171(a)(1) (relating to the definition of med-
ical assistance).
‘‘(e) EXCEPTIONS TO MINIMUM SET-ASIDES.—
‘‘(1) ALTERNATIVE MINIMUM SET-ASIDES.—
‘‘(A) IN GENERAL.—A State may provide
in its MediGrant plan (through an amendment
to the plan) for a lower dollar amount of ex-
penditures than the minimum amounts specified
in any (or all) of paragraphs (2) of subsections
(a), (b), and (c) if State determines (and cer-
tifies to the Secretary) that—
‘‘(i) the health care needs of the low-
income populations described in paragraph
(1) of the respective subsection who are eli-
gible for medical assistance under the plan
during the previous fiscal year (or medi-
care premium assistance needs described in
subsection (b)(1)(B)) can be reasonably
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met without the expenditure of the
amounts otherwise required to be ex-
pended, and
‘‘(ii) the performance goals estab-
lished under section 2101 relating to the
respective population can reasonably be
met with such lower amount of funds ex-
pended.
‘‘(B) PERIOD OF APPLICATION.—The de-
termination and certification under subpara-
graph (A) shall be made for such period as a
State may request, but may not be made for a
period of more than 3 consecutive Federal fiscal
years (beginning with the first fiscal year for
which the lower amount is sought). A new de-
termination and certification must be made
under such paragraph for any subsequent pe-
riod.
‘‘(C) NO EXCEPTION PERMITTED BEFORE
FISCAL YEAR 1998.—This paragraph may not
apply with respect to a State for a fiscal year
before fiscal year 1998.
‘‘(2) INDEPENDENT CERTIFICATION OF COMPLI-
ANCE WITH GOALS.—
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‘‘(A) IN GENERAL.—For purposes of sec-
tion 2151(c), a MediGrant plan shall not be
considered to be in substantial violation of the
requirements of this section if the amount of
actual State expenditures specified in any (or
all) of paragraphs (1) of subsections (a), (b),
and (c) is lower than the minimum amounts
specified in any (or all) of paragraphs (2) of
subsections (a), (b), and (c) if an independent
actuary determines and certifies to the State
that the MediGrant plan is reasonably designed
to result in a level of expenditures which is con-
sistent with the requirements of such sub-
sections.
‘‘(B) LIMIT
ON
VARIATION.—Subpara-
graph (A) shall not apply in the case of a
MediGrant plan for which the actual State ex-
penditures described in any (or all) of para-
graphs (1) of subsections (a), (b), and (c) are
less than 95 percent of the expenditures which
would be made if the amount of State expendi-
tures specified in any (or all) of such para-
graphs was equal to the applicable minimum
amount specified in any (or all) of paragraphs
(2) of subsections (a), (b), and (c).
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‘‘(3) TREATMENT
OF
STATES
WITH
NO
OP-
TIONAL BENEFITS.—In the case of a State for which
all expenditures under title XIX for medical assist-
ance in the State during Federal fiscal years 1992
through 1994 were expenditures for medical assist-
ance for mandated benefits, ‘75 percent’ shall be
substituted for ‘85 percent’ each place it appears in
paragraphs (2) of subsections (a), (b), and (c).
‘‘(f) COMPUTATIONS.—
‘‘(1) MINIMUM
PERCENTAGES.—States shall
calculate the minimum percentages under sub-
sections (a)(2), (b)(2), and (c)(2) in a reasonable
manner consistent with reports submitted to the
Secretary for the fiscal years involved.
‘‘(2) EXCLUSION OF PAYMENTS FOR CERTAIN
ALIENS.—For purposes of this section, medical as-
sistance attributable to the exception provided under
section 1903(v)(2) shall not be considered to be ex-
penditures for medical assistance.
‘‘(g) BENEFITS INCLUDED FOR PURPOSES OF COM-
PUTING SET-ASIDES.—In this section, the term ‘man-
dated benefits’—
‘‘(1) means medical assistance for items and
services described in section 1905(a) to the extent
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such assistance with respect to such items and serv-
ices was required to be provided under title XIX,
‘‘(2) includes medical assistance for medicare
cost-sharing only to the extent such assistance was
required 
to 
be 
provided 
under 
section
1902(a)(10)(E), and
‘‘(3) does not include medical assistance attrib-
utable to disproportionate share payment adjust-
ments described in section 1923.
‘‘SEC. 2113. PREMIUMS AND COST-SHARING.
‘‘(a) IN GENERAL.—Subject to subsection (b), if any
charges are imposed under the MediGrant plan for cost-
sharing (as defined in subsection (d)), such cost-sharing
shall be pursuant to a public cost-sharing schedule.
‘‘(b) LIMITATION ON PREMIUM AND CERTAIN COST-
SHARING FOR LOW-INCOME FAMILIES INCLUDING CHIL-
DREN OR PREGNANT WOMEN.—
‘‘(1) IN GENERAL.—In the case of a family de-
scribed in paragraph (2)—
‘‘(A) the plan shall not impose any pre-
mium, and
‘‘(B) the plan shall not (except as provided
in subsection (c)(1)) impose any cost-sharing
with respect to primary and preventive care
services (as defined by the State) covered under
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the MediGrant plan for children or pregnant
women unless such cost-sharing is nominal in
nature.
‘‘(2) FAMILY DESCRIBED.—A family described
in this paragraph is a family (which may be an indi-
vidual) which—
‘‘(A) includes a child or a pregnant
woman,
‘‘(B) is made eligible for medical assistance
under the MediGrant plan, and
‘‘(C) the income of which does not exceed
100 percent of the poverty line applicable to a
family of the size involved.
‘‘(c) CERTAIN COST-SHARING PERMITTED.—Nothing
in this section shall be construed as preventing a
MediGrant plan (consistent with subsection (b))—
‘‘(1) from imposing cost-sharing to discourage
the inappropriate use of emergency medical services
(delivered through a hospital emergency room, a
medical transportation provider, or otherwise);
‘‘(2) from imposing premiums and cost-sharing
differentially in order to encourage the use of pri-
mary and preventive care and discourage unneces-
sary or less economical care;
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‘‘(3) from scaling cost-sharing in a manner that
reflects economic factors, employment status, and
family size;
‘‘(4) from scaling cost-sharing based on the
availability to the individual or family of other
health insurance coverage; or
‘‘(5) from scaling cost-sharing based on partici-
pation in employment training program, drug or al-
cohol abuse treatment, counseling programs, or
other programs promoting personal responsibility.
‘‘(d) COST-SHARING DEFINED.—In this section, the
term ‘cost-sharing’ includes copayments, deductibles, coin-
surance, and other charges for the provision of health care
services.
‘‘SEC. 2114. DESCRIPTION OF PROCESS FOR DEVELOPING
CAPITATION PAYMENT RATES.
‘‘(a) IN GENERAL.—If a State contracts (or intends
to contract) with a capitated health care organization (as
defined in subsection (c)(1)) under which the State makes
a capitation payment (as defined in subsection (c)(2)) to
the organization for providing or arranging for the provi-
sion of medical assistance under the MediGrant plan for
a group of services (including at least inpatient hospital
services and physicians’ services), the plan shall include
a description of the following:
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‘‘(1) the State outlay allotment for Oregon for
fiscal year 1996 is increased by $155,682,700, and
‘‘(2) the State outlay allotment for Tennessee
for fiscal year 1996 is increased by $195,468,000.
The increases provided under this subsection shall not
apply to or affect the computation of State outlay allot-
ments of any other States and shall not apply for any fis-
cal year other than fiscal year 1996.
‘‘SEC. 2122. PAYMENTS TO STATES.
‘‘(a) AMOUNT OF PAYMENT.—From the allotment of
a State under section 2121 for a fiscal year, subject to
the succeeding provisions of this title, the Secretary shall
pay to each State which has a MediGrant plan approved
under part E, for each quarter in the fiscal year—
‘‘(1) an amount equal to the applicable Federal
medical assistance percentage (as defined in sub-
section (c)) of the total amount expended during
such quarter as medical assistance under the plan;
plus
‘‘(2) an amount equal to the applicable Federal
medical assistance percentage of the total amount
expended during such quarter for medically-related
services (as defined in section 2112(e)(2)); plus
‘‘(3) subject to section 2123(c)—