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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) USE OF ACTUARIAL SCIENCE.—The extent
and manner in which the State uses actuarial
science—
‘‘(A) to analyze and project health care ex-
penditures and utilization for individuals en-
rolled (or to be enrolled) in such an organiza-
tion under the MediGrant plan, and
‘‘(B) to develop capitation payment rates,
including a brief description of the general
methodologies used by actuaries.
‘‘(2) QUALIFICATIONS
OF
ORGANIZATIONS.—
The general qualifications (including any accredita-
tion, State licensure or certification, or provider net-
work standards) required by the State for participa-
tion of capitated health care organizations under the
MediGrant plan.
‘‘(3) DISSEMINATION
PROCESS.—The process
used by the State under subsection (b) and other-
wise to disseminate, before entering into contracts
with capitated health care organizations, actuarial
information to such organizations on the historical
fee-for-service costs (or, if not available, other recent
financial data associated with providing covered
services) and utilization associated with individuals
described in paragraph (1)(A).
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‘‘(b) PUBLIC NOTICE AND COMMENT.—Under the
MediGrant plan the State shall provide a process for pro-
viding, before the beginning of each contract year—
‘‘(1) public notice of—
‘‘(A) the amounts of the capitation pay-
ments (if any) made under the plan for the con-
tract year preceding the public notice, and
‘‘(B)(i) the information described under
subsection (a)(1) with respect to capitation pay-
ments for the contract year involved or (ii) the
amounts of the capitation payments the State
expects to make for the contract year involved,
unless such information is designated as proprietary
and not subject to public disclosure under State law;
and
‘‘(2) an opportunity for receiving public com-
ment on the amounts and information for which no-
tice is provided under paragraph (1).
‘‘(c) DEFINITIONS.—In this title:
‘‘(1) CAPITATED
HEALTH
CARE
ORGANIZA-
TION.—The term ‘capitated health care organiza-
tion’ means a health maintenance organization or
any other entity (including a health insuring organi-
zation, managed care organization, prepaid health
plan, integrated service network, or similar entity)
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which under State law is permitted to accept capita-
tion payments for providing (or arranging for the
provision of) a group of items and services including
at least inpatient hospital services and physicians’
services.
‘‘(2) CAPITATION PAYMENT.—The term ‘capita-
tion payment’ means, with respect to payment, pay-
ment on a prepaid capitation basis or any other risk
basis to an entity for the entity’s provision (or ar-
ranging for the provision) of a group of items and
services (including at least inpatient hospital services
and physicians’ services).
‘‘SEC. 2115. PREVENTING SPOUSAL IMPOVERISHMENT.
‘‘(a) SPECIAL TREATMENT FOR INSTITUTIONALIZED
SPOUSES.—
‘‘(1) SUPERSEDES OTHER PROVISIONS.—In de-
termining the eligibility for medical assistance of an
institutionalized spouse (as defined in subsection
(h)(1)), the provisions of this section supersede any
other provision of this title which is inconsistent
with them.
‘‘(2) DOES NOT AFFECT CERTAIN DETERMINA-
TIONS.—Except as this section specifically provides,
this section does not apply to—
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‘‘(A) the determination of what constitutes
income or resources, or
‘‘(B) the methodology and standards for
determining and evaluating income and re-
sources.
‘‘(3) NO
APPLICATION
IN
COMMONWEALTHS
AND TERRITORIES.—This section shall only apply to
a State that is one of the 50 States or the District
of Columbia.
‘‘(b) RULES FOR TREATMENT OF INCOME.—
‘‘(1) SEPARATE TREATMENT OF INCOME.—Dur-
ing any month in which an institutionalized spouse
is in the institution, except as provided in paragraph
(2), no income of the community spouse shall be
deemed available to the institutionalized spouse.
‘‘(2) ATTRIBUTION OF INCOME.—In determin-
ing the income of an institutionalized spouse or com-
munity spouse for purposes of the post-eligibility in-
come determination described in subsection (d), ex-
cept as otherwise provided in this section and re-
gardless of any State laws relating to community
property or the division of marital property, the fol-
lowing rules apply:
‘‘(A) NON-TRUST PROPERTY.—Subject to
subparagraphs (C) and (D), in the case of in-
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come not from a trust, unless the instrument
providing the income otherwise specifically pro-
vides—
‘‘(i) if payment of income is made
solely in the name of the institutionalized
spouse or the community spouse, the in-
come shall be considered available only to
that respective spouse;
‘‘(ii) if payment of income is made in
the names of the institutionalized spouse
and the community spouse, one-half of the
income shall be considered available to
each of them; and
‘‘(iii) if payment of income is made in
the names of the institutionalized spouse
or the community spouse, or both, and to
another person or persons, the income
shall be considered available to each spouse
in proportion to the spouse’s interest (or,
if payment is made with respect to both
spouses and no such interest is specified,
one-half of the joint interest shall be con-
sidered available to each spouse).
‘‘(B) TRUST PROPERTY.—In the case of a
trust—
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‘‘(i) except as provided in clause (ii),
income shall be attributed in accordance
with the provisions of this title, and
‘‘(ii) income shall be considered avail-
able to each spouse as provided in the
trust, or, in the absence of a specific provi-
sion in the trust—
‘‘(I) if payment of income is
made solely to the institutionalized
spouse or the community spouse, the
income shall be considered available
only to that respective spouse;
‘‘(II) if payment of income is
made to both the institutionalized
spouse and the community spouse,
one-half of the income shall be consid-
ered available to each of them; and
‘‘(III) if payment of income is
made to the institutionalized spouse
or the community spouse, or both,
and to another person or persons, the
income shall be considered available to
each spouse in proportion to the
spouse’s interest (or, if payment is
made with respect to both spouses
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and no such interest is specified, one-
half of the joint interest shall be con-
sidered available to each spouse).
‘‘(C) PROPERTY WITH NO INSTRUMENT.—
In the case of income not from a trust in which
there is no instrument establishing ownership,
subject to subparagraph (D), one-half of the in-
come shall be considered to be available to the
institutionalized spouse and one-half to the
community spouse.
‘‘(D) REBUTTING OWNERSHIP.—The rules
of subparagraphs (A) and (C) are superseded to
the extent that an institutionalized spouse can
establish, by a preponderance of the evidence,
that the ownership interests in income are other
than as provided under such subparagraphs.
‘‘(c) RULES FOR TREATMENT OF RESOURCES.—
‘‘(1) COMPUTATION
OF
SPOUSAL
SHARE
AT
TIME OF INSTITUTIONALIZATION.—
‘‘(A) TOTAL
JOINT
RESOURCES.—There
shall be computed (as of the beginning of the
first continuous period of institutionalization of
the institutionalized spouse)—
‘‘(i) the total value of the resources to
the extent either the institutionalized
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spouse or the community spouse has an
ownership interest, and
‘‘(ii) a spousal share which is equal to
1⁄2 of such total value.
‘‘(B) ASSESSMENT.—At the request of an
institutionalized spouse or community spouse,
at the beginning of the first continuous period
of institutionalization of the institutionalized
spouse and upon the receipt of relevant docu-
mentation of resources, the State shall promptly
assess and document the total value described
in subparagraph (A)(i) and shall provide a copy
of such assessment and documentation to each
spouse and shall retain a copy of the assess-
ment for use under this section. If the request
is not part of an application for medical assist-
ance under this title, the State may, at its op-
tion as a condition of providing the assessment,
require payment of a fee not exceeding the rea-
sonable expenses of providing and documenting
the assessment. At the time of providing the
copy of the assessment, the State shall include
a notice indicating that the spouse will have a
right to a fair hearing under subsection (e)(2).
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‘‘(2) ATTRIBUTION OF RESOURCES AT TIME OF
INITIAL
ELIGIBILITY
DETERMINATION.—In deter-
mining the resources of an institutionalized spouse
at the time of application for medical assistance
under this title, regardless of any State laws relating
to community property or the division of marital
property—
‘‘(A) except as provided in subparagraph
(B), all the resources held by either the institu-
tionalized spouse, community spouse, or both,
shall be considered to be available to the insti-
tutionalized spouse, and
‘‘(B) resources shall be considered to be
available to an institutionalized spouse, but only
to the extent that the amount of such resources
exceeds the amount computed under subsection
(f)(2)(A) (as of the time of application for med-
ical assistance).
‘‘(3) ASSIGNMENT OF SUPPORT RIGHTS.—The
institutionalized spouse shall not be ineligible by rea-
son of resources determined under paragraph (2) to
be available for the cost of care where—
‘‘(A) the institutionalized spouse has as-
signed to the State any rights to support from
the community spouse;
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‘‘(B) the institutionalized spouse lacks the
ability to execute an assignment due to physical
or mental impairment but the State has the
right to bring a support proceeding against a
community spouse without such assignment; or
‘‘(C) the State determines that denial of
eligibility would work an undue hardship.
‘‘(4) SEPARATE
TREATMENT
OF
RESOURCES
AFTER ELIGIBILITY FOR MEDICAL ASSISTANCE ES-
TABLISHED.—During the continuous period in which
an institutionalized spouse is in an institution and
after the month in which an institutionalized spouse
is determined to be eligible for medical assistance
under this title, no resources of the community
spouse shall be deemed available to the institutional-
ized spouse.
‘‘(5) RESOURCES
DEFINED.—In this section,
the term ‘resources’ does not include—
‘‘(A) resources excluded under subsection
(a) or (d) of section 1613, and
‘‘(B) resources that would be excluded
under section 1613(a)(2)(A) but for the limita-
tion on total value described in such section.
‘‘(d) 
PROTECTING
INCOME
FOR
COMMUNITY
SPOUSE.—
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‘‘(1) ALLOWANCES TO BE OFFSET FROM IN-
COME
OF
INSTITUTIONALIZED
SPOUSE.—After an
institutionalized spouse is determined or redeter-
mined to be eligible for medical assistance, in deter-
mining the amount of the spouse’s income that is to
be applied monthly to payment for the costs of care
in the institution, there shall be deducted from the
spouse’s monthly income the following amounts in
the following order:
‘‘(A) A personal needs allowance (described
in paragraph (6)(A)), in an amount not less
than the amount specified in paragraph (6)(C).
‘‘(B) A community spouse monthly income
allowance (as defined in paragraph (2)), but
only to the extent income of the institutional-
ized spouse is made available to (or for the ben-
efit of) the community spouse.
‘‘(C) A family allowance, for each family
member, equal to at least 1⁄3 of the amount by
which the amount described in paragraph
(3)(A)(i) exceeds the amount of the monthly in-
come of that family member.
‘‘(D) Amounts for incurred expenses for
medical or remedial care for the institutional-
ized spouse (as provided under paragraph (7)).
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In subparagraph (C), the term ‘family member’ only
includes minor or dependent children, dependent
parents, or dependent siblings of the institutional-
ized or community spouse who are residing with the
community spouse.
‘‘(2) COMMUNITY
SPOUSE
MONTHLY
INCOME
ALLOWANCE DEFINED.—In this section (except as
provided in paragraph (5)), the ‘community spouse
monthly income allowance’ for a community spouse
is an amount by which—
‘‘(A) except as provided in subsection (e),
the minimum monthly maintenance needs allow-
ance (established under and in accordance with
paragraph (3)) for the spouse, exceeds
‘‘(B) the amount of monthly income other-
wise available to the community spouse (deter-
mined without regard to such an allowance).
‘‘(3) ESTABLISHMENT OF MINIMUM MONTHLY
MAINTENANCE NEEDS ALLOWANCE.—
‘‘(A) IN GENERAL.—Each State shall es-
tablish a minimum monthly maintenance needs
allowance for each community spouse which,
subject to subparagraph (B), is equal to or ex-
ceeds—
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‘‘(i) 150 percent of 1⁄12 of the income
official poverty line (defined by the Office
of Management and Budget and revised
annually 
in 
accordance 
with 
section
673(2)) for a family unit of 2 members;
plus
‘‘(ii) an excess shelter allowance (as
defined in paragraph (4)).
A revision of the official poverty line referred to
in clause (i) shall apply to medical assistance
furnished during and after the second calendar
quarter that begins after the date of publication
of the revision.
‘‘(B) CAP ON MINIMUM MONTHLY MAINTE-
NANCE
NEEDS
ALLOWANCE.—The minimum
monthly maintenance needs allowance estab-
lished under subparagraph (A) may not exceed
$1,500 (subject to adjustment under sub-
sections (e) and (g)).
‘‘(4) 
EXCESS
SHELTER
ALLOWANCE
DE-
FINED.—In paragraph (3)(A)(ii), the term ‘excess
shelter allowance’ means, for a community spouse,
the amount by which the sum of—
‘‘(A) the spouse’s expenses for rent or
mortgage payment (including principal and in-
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terest), taxes and insurance and, in the case of
a condominium or cooperative, required mainte-
nance charge, for the community spouse’s prin-
cipal residence, and
‘‘(B) the standard utility allowance (used
by the State under section 5(e) of the Food
Stamp Act of 1977) or, if the State does not
use such an allowance, the spouse’s actual util-
ity expenses,
exceeds 30 percent of the amount described in para-
graph (3)(A)(i), except that, in the case of a con-
dominium or cooperative, for which a maintenance
charge is included under subparagraph (A), any al-
lowance under subparagraph (B) shall be reduced to
the extent the maintenance charge includes utility
expenses.
‘‘(5) COURT
ORDERED
SUPPORT.—If a court
has entered an order against an institutionalized
spouse for monthly income for the support of the
community spouse, the community spouse monthly
income allowance for the spouse shall be not less
than the amount of the monthly income so ordered.
‘‘(6) PERSONAL NEEDS ALLOWANCE.—
‘‘(A) IN GENERAL.—The State MediGrant
plan must provide that, in the case of an insti-
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tutionalized individual or couple described in
subparagraph (B), in determining the amount
of the individual’s or couple’s income to be ap-
plied monthly to payment for the cost of care
in an institution, there shall be deducted from
the monthly income (in addition to other allow-
ances otherwise provided under the plan) a
monthly personal needs allowance—
‘‘(i) which is reasonable in amount for
clothing and other personal needs of the
individual (or couple) while in an institu-
tion, and
‘‘(ii) which is not less (and may be
greater) than the minimum monthly per-
sonal needs allowance described in sub-
paragraph (C).
‘‘(B) INSTITUTIONALIZED INDIVIDUAL OR
COUPLE
DEFINED.—In this paragraph, the
term ‘institutionalized individual or couple’
means an individual or married couple—
‘‘(i) who is an inpatient (or who are
inpatients) in a medical institution or
nursing facility for which payments are
made under this title throughout a month,
and
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‘‘(ii) who is or are determined to be
eligible for medical assistance under the
State MediGrant plan.
‘‘(C) MINIMUM
ALLOWANCE.—The mini-
mum monthly personal needs allowance de-
scribed in this subparagraph is $40 for an insti-
tutionalized individual and $80 for an institu-
tionalized couple (if both are aged, blind, or dis-
abled, and their incomes are considered avail-
able to each other in determining eligibility).
‘‘(7) TREATMENT OF INCURRED EXPENSES.—
With respect to the post-eligibility treatment of in-
come under this section, there shall be taken into ac-
count amounts for incurred expenses for medical or
remedial care that are not subject to payment by a
third party, including—
‘‘(A) medicare and other health insurance
premiums, deductibles, or coinsurance, and
‘‘(B) necessary medical or remedial care
recognized under State law but not covered
under the State MediGrant plan under this
title, subject to reasonable limits the State may
establish on the amount of these expenses.
‘‘(e) NOTICE AND HEARING.—
‘‘(1) NOTICE.—Upon—
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‘‘(A) a determination of eligibility for med-
ical assistance of an institutionalized spouse, or
‘‘(B) a request by either the institutional-
ized spouse, or the community spouse, or a rep-
resentative acting on behalf of either spouse,
each State shall notify both spouses (in the case de-
scribed in subparagraph (A)) or the spouse making
the request (in the case described in subparagraph
(B)) of the amount of the community spouse month-
ly 
income 
allowance 
(described 
in 
subsection
(d)(1)(B)), of the amount of any family allowances
(described in subsection (d)(1)(C)), of the method
for computing the amount of the community spouse
resources allowance permitted under subsection (f),
and of the spouse’s right to a hearing under the
MediGrant plan respecting ownership or availability
of income or resources, and the determination of the
community spouse monthly income or resource al-
lowance.
‘‘(2) RESULTS OF HEARING.—
‘‘(A) REVISION
OF
MINIMUM
MONTHLY
MAINTENANCE
NEEDS
ALLOWANCE.—If either
such spouse establishes in a hearing under this
subsection that the community spouse needs in-
come, above the level otherwise provided by the
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minimum monthly maintenance needs allow-
ance, due to exceptional circumstances resulting
in significant financial duress, there shall be
substituted, for the minimum monthly mainte-
nance needs allowance in subsection (d)(2)(A),
an amount adequate to provide such additional
income as is necessary.
‘‘(B) REVISION
OF
COMMUNITY
SPOUSE
RESOURCE ALLOWANCE.—If either such spouse
establishes in such a hearing that the commu-
nity spouse resource allowance (in relation to
the amount of income generated by such an al-
lowance) is inadequate to raise the community
spouse’s income to the minimum monthly main-
tenance needs allowance, there shall be sub-
stituted, for the community spouse resource al-
lowance under subsection (f)(2), an amount
adequate to provide such a minimum monthly
maintenance needs allowance.
‘‘(f) PERMITTING TRANSFER
OF RESOURCES
TO
COMMUNITY SPOUSE.—
‘‘(1) IN GENERAL.—An institutionalized spouse
may, without regard to any other provision of the
MediGrant plan to contrary, transfer an amount
equal to the community spouse resource allowance
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(as defined in paragraph (2)), but only to the extent
the resources of the institutionalized spouse are
transferred to (or for the sole benefit of) the com-
munity spouse. The transfer under the preceding
sentence shall be made as soon as practicable after
the date of the initial determination of eligibility,
taking into account such time as may be necessary
to obtain a court order under paragraph (3).
‘‘(2) COMMUNITY
SPOUSE
RESOURCE
ALLOW-
ANCE DEFINED.—In paragraph (1), the ‘community
spouse resource allowance’ for a community spouse
is an amount (if any) by which—
‘‘(A) the greatest of—
‘‘(i) $12,000 (subject to adjustment
under subsection (g)), or, if greater (but
not to exceed the amount specified in
clause (ii)(II)) an amount specified under
the State plan,
‘‘(ii) the lesser of (I) the spousal
share computed under subsection (c)(1), or
(II) $60,000 (subject to adjustment under
subsection (g)),
‘‘(iii) the amount established under
subsection (e)(2); or
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‘‘(iv) the amount transferred under a
court order under paragraph (3);
exceeds
‘‘(B) the amount of the resources other-
wise available to the community spouse (deter-
mined without regard to such an allowance).
‘‘(g) INDEXING DOLLAR AMOUNTS.—For services
furnished during a calendar year after 1989, the dollar
amounts specified in subsections (d)(3)(C), (f)(2)(A)(i),
and (f)(2)(A)(ii)(II) shall be increased by the same per-
centage as the percentage increase in the consumer price
index for all urban consumers (all items; U.S. city aver-
age) between September 1988 and the September before
the calendar year involved.
‘‘(h) DEFINITIONS.—In this section:
‘‘(1) The term ‘institutionalized spouse’ means
an individual—
‘‘(A)(i) who is in a medical institution or
nursing facility, or
‘‘(ii) at the option of the State (I) who
would be eligible under the MediGrant plan
under this title if they were in a medical insti-
tution, (II) with respect to whom there has
been a determination that but for the provision
of home or community-based services they
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would require the level of care provided in a
hospital, nursing facility or intermediate care
facility for the mentally retarded the cost of
which could be reimbursed under the plan, and
(III) who will receive home or community-based
services pursuant the plan, and
‘‘(B) is married to a spouse who is not in
a medical institution or nursing facility;
but does not include any such individual who is not
likely to meet the requirements of subparagraph (A)
for at least 30 consecutive days.
‘‘(2) The term ‘community spouse’ means the
spouse of an institutionalized spouse.
‘‘SEC. 2116. CONSTRUCTION.
‘‘(a) NO FEDERAL ENTITLEMENT.—Nothing in this
title (including section 2112) shall be construed as creat-
ing an entitlement under Federal law in any individual
or category of individuals for medical assistance under a
MediGrant plan.
‘‘(b) STATE FLEXIBILITY IN BENEFITS, PROVIDER
PAYMENTS, GEOGRAPHICAL COVERAGE AREA, AND SE-
LECTION OF PROVIDERS.—Nothing in this title (other
than section 2111(b)) shall be construed as requiring a
State—
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‘‘(1) to provide medical assistance for any par-
ticular items or services;
‘‘(2) subject to section 2111(c), to provide for
any payments with respect to any specific health
care providers or any level of payments for any serv-
ices;
‘‘(3) to provide for the same medical assistance
in all geographical areas or political subdivisions of
the State;
‘‘(4) to provide that the medical assistance
made available to any individual eligible for medical
assistance must not be less in amount, duration, or
scope than the medical assistance made available to
any other such individual; or
‘‘(5) to provide that any individual eligible for
medical assistance with respect to an item or service
may choose to obtain such assistance from any insti-
tution, agency, or person qualified to provide the
item or service.
‘‘(c) STATE FLEXIBILITY WITH RESPECT TO MAN-
AGED CARE.—Nothing in this title shall be construed—
‘‘(1) to limit a State’s ability to contract with,
on a capitated basis or otherwise, health care plans
or individual health care providers for the provision
or arrangement of medical assistance;
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‘‘(2) to limit a State’s ability to contract with
health care plans or other entities for case manage-
ment services or for coordination of medical assist-
ance; or
‘‘(3) to restrict a State from establishing capi-
tation rates on the basis of competition among
health care plans or negotiations between the State
and one or more health care plans.
‘‘SEC. 2117. LIMITATIONS ON CAUSES OF ACTION.
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of this Act (including section 1130A), no person (in-
cluding an applicant, beneficiary, provider, or health plan)
shall have a cause of action under Federal law against
a State in relation to a State’s compliance (or failure to
comply) with the provisions of this title or of a MediGrant
plan.
‘‘(b) NO EFFECT ON STATE LAW.—Nothing in sub-
section (a) may be construed as affecting any actions
brought under State law.
‘‘PART C—PAYMENTS TO STATES
‘‘SEC. 2121. ALLOTMENT OF FUNDS AMONG STATES.
‘‘(a) ALLOTMENTS.—
‘‘(1) COMPUTATION.—The Secretary shall pro-
vide for the computation of State obligation and out-
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lay allotments in accordance with this section for
each fiscal year beginning with fiscal year 1996.
‘‘(2) LIMITATION ON OBLIGATIONS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary shall not enter into
obligations with any State under this title for a
fiscal year in excess of the obligation allotment
for that State for the fiscal year under para-
graph (4). The sum of such obligation allot-
ments for all States in any fiscal year (exclud-
ing amounts carried over under subparagraph
(B) and excluding changes in allotments ef-
fected under paragraph (4)(D)) shall not exceed
the aggregate limit on new obligation authority
specified in paragraph (3) for that fiscal year.
‘‘(B) ADJUSTMENTS.—
‘‘(i) CARRYOVER OF ALLOTMENT PER-
MITTED.—If the amount of obligations en-
tered into under this part with a State for
quarters in a fiscal year is less than the
amount of the obligation allotment under
this section to the State for the fiscal year,
the amount of the difference shall be added
to the amount of the State obligation allot-
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ment otherwise provided under this section
for the succeeding fiscal year.
‘‘(ii) REDUCTION
FOR
POST-ENACT-
MENT
NEW
OBLIGATIONS
UNDER
TITLE
XIX IN FISCAL YEAR 1996.—The amount of
the obligation allotment otherwise provided
under this section for fiscal year 1996 for
a State shall be reduced by the amount of
the obligations entered into with respect to
the State under section 1903(a) after the
date of the enactment of this Act.
‘‘(3) AGGREGATE LIMIT ON NEW OBLIGATION
AUTHORITY.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, subject to subparagraph (C), the
‘aggregate limit on new obligation authority’,
for a fiscal year, is the pool amount under sub-
section (b) for the fiscal year, divided by the
payout adjustment factor (described in subpara-
graph (B)) for the fiscal year.
‘‘(B) PAYOUT ADJUSTMENT FACTOR.—For
purposes of this subsection, the ‘payout adjust-
ment factor’—
‘‘(i) for fiscal year 1996 is .950,
‘‘(ii) for fiscal year 1997 is .986, and
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‘‘(iii) for a subsequent fiscal year is
.998.
‘‘(C) TRANSITIONAL
ADJUSTMENT
FOR
PRE-ENACTMENT-OBLIGATION
OUTLAYS.—In
order to account for pre-enactment-obligation
outlays described in paragraph (4)(C)(iv), in
determining the aggregate limit on new obliga-
tion authority under subparagraph (A) for fis-
cal year 1996, the pool amount for such fiscal
year is equal to—
‘‘(i) the pool amount for such year,
reduced by
‘‘(ii) $24.624 billion.
‘‘(4) OBLIGATION ALLOTMENTS.—
‘‘(A) GENERAL RULE FOR 50 STATES AND
THE DISTRICT OF COLUMBIA.—Except as pro-
vided in this paragraph, the ‘obligation allot-
ment’ for any of the 50 States or the District
of Columbia for a fiscal year (beginning with
fiscal year 1997) is an amount that bears the
same ratio to the outlay allotment under sub-
section (c)(2) for such State or District (not
taking into account any adjustment due to an
election under paragraph (4)) for the fiscal year
as the ratio of—
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‘‘(i) the aggregate limit on new obliga-
tion authority (less the total of the obliga-
tion allotments under subparagraph (B))
for the fiscal year, to
‘‘(ii) the pool amount (less the sum of
the outlay allotments for the territories)
for such fiscal year.
‘‘(B) TERRITORIES.—The obligation allot-
ment for each of the Commonwealths and terri-
tories for a fiscal year is the outlay allotment
for such Commonwealth or territory (as deter-
mined under subsection (c)(5)) for the fiscal
year divided by the payout adjustment factor
for the fiscal year (as defined in paragraph
(3)(B)).
‘‘(C) TRANSITIONAL
RULE
FOR
FISCAL
YEAR 1996.—
‘‘(i) IN
GENERAL.—The obligation
amount for fiscal year 1996 for any State
(including the District, a Commonwealth,
or territory) is determined according to the
formula: A=(B-C)/D, where—
‘‘(I) ‘A’ is the obligation amount
for such State;
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‘‘(II) ‘B’ is the outlay allotment
of such State for fiscal year 1996, as
determined under subsection (c);
‘‘(III) ‘C’ is the amount of the
pre-enactment-obligation outlays (as
established for such State under
clause (ii)); and
‘‘(IV) ‘D’ is the payout adjust-
ment factor for such fiscal year (as
defined in paragraph (3)(B)).
‘‘(ii) 
PRE-ENACTMENT-OBLIGATION
OUTLAY AMOUNTS.—Within 30 days after
the date of the enactment of this title, the
Secretary shall estimate (based on the best
data available) and publish in the Federal
Register the amount of the pre-enactment-
obligation outlays (as defined in clause
(iv)) for each State (including the District,
Commonwealths, and territories). The total
of such amounts shall equal the dollar
amount specified in paragraph (3)(C)(ii).
‘‘(iii) AGREEMENT.—The submission
of a MediGrant plan by a State under this
title is deemed to constitute the State’s ac-
ceptance of the obligation allotment limita-
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tions under this subsection (including the
formula for computing the amount of such
obligation allotment).
‘‘(iv) 
PRE-ENACTMENT-OBLIGATION
OUTLAYS
DEFINED.—In this subsection,
the term ‘pre-enactment-obligation outlays’
means, for a State, the outlays of the Fed-
eral Government that result from obliga-
tions that have been incurred under title
XIX with respect to the State before the
date of the enactment of this title, but for
which payments to States have not been
made as of such date of enactment.
‘‘(D) ADJUSTMENT TO REFLECT ADOPTION
OF
ALTERNATIVE
GROWTH
FORMULA.—Any
State that has elected an alternative growth
formula under subsection (c)(4) which increases
or decreases the dollar amount of an outlay al-
lotment for a fiscal year is deemed to have in-
creased or decreased, respectively, its obligation
amount for such fiscal year by the amount of
such increase or decrease.
‘‘(b) POOL OF AVAILABLE FUNDS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the ‘pool amount’ under this subsection for—
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‘‘(A) fiscal year 1996 is $95,662,990,500;
‘‘(B) fiscal year 1997 is $102,748,012,797;
‘‘(C) fiscal year 1998 is $107,268,354,400;
‘‘(D) 
fiscal 
year 
1999 
is
$111,826,877,512;
‘‘(E) fiscal year 2000 is $116,472,575,350;
‘‘(F) fiscal year 2001 is $121,311,325,403;
‘‘(G) fiscal year 2002 is $126,351,055,338;
and
‘‘(H) each subsequent fiscal year is the
pool amount under this paragraph for the pre-
vious fiscal year increased by the lesser of
4.1546 percent or the annual percentage in-
crease in the consumer price index for all urban
consumers (U.S. city average) for the 12-month
period ending in June before the beginning of
that subsequent fiscal year.
‘‘(2) NATIONAL MEDIGRANT GROWTH PERCENT-
AGE.—For purposes of this section for a fiscal year
(beginning with fiscal year 1997), the ‘national
MediGrant growth percentage’ is the percentage by
which—
‘‘(A) the pool amount under paragraph (1)
for the fiscal year, exceeds
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‘‘(B) such pool amount for the previous
fiscal year.
‘‘(c) STATE OUTLAY ALLOTMENTS.—
‘‘(1) FISCAL YEAR 1996.—
‘‘(A) IN GENERAL.—For each of the 50
States and the District of Columbia, the
amount of the State outlay allotment under this
subsection for fiscal year 1996 is, subject to
paragraph (4), equal to—
‘‘(i) the total amount of Federal ex-
penditures made to the State under title
XIX for the 4 quarters in fiscal year 1994,
increased by
‘‘(ii) the percentage by which (I)
$95,529,490,500 (which represents the
total amount of outlay allotments for such
States and District for fiscal year 1996),
exceeds (II) $83,213,431,458 (which rep-
resents Federal medicaid expenditures for
such States and District for fiscal year
1994).
‘‘(B) COMPUTATION OF EXPENDITURES.—
The amount of Federal expenditures described
in subparagraph (A)(i) shall be computed, using
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data reported on the HCFA Form 64 as of
September 1, 1995, based on—
‘‘(i) the amount reported on line 11,
or
‘‘(ii) on the amount reported on line 6
multiplied by the ratio of (I) the sum of
the amounts so reported on line 11 of such
Form for fiscal year 1994 for the 50
States and the District of Columbia, to
(II) the sum of the amounts so reported on
line 6 of such Form for fiscal year 1994
for such States and District,
whichever is greater.
‘‘(C) LIMITATION ON ADJUSTMENT.—The
amount computed under subparagraph (B)
shall not be subject to adjustment (based on
any subsequent disallowances or otherwise).
‘‘(2) COMPUTATION OF STATE OUTLAY ALLOT-
MENTS.—
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding provisions of this subsection, the
amount of the State outlay allotment under this
subsection for one of the 50 States and the Dis-
trict of Columbia for a fiscal year (beginning
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with fiscal year 1997) is equal to the product
of—
‘‘(i) the needs-based amount deter-
mined under subparagraph (B) for the
State for the fiscal year, and
‘‘(ii) the scalar factor described in
subparagraph (C) for the fiscal year.
‘‘(B) NEEDS-BASED AMOUNT.—The needs-
based amount under this subparagraph for a
State for a fiscal year is equal to the product
of—
‘‘(i) the State’s aggregate expenditure
need for the fiscal year (as determined
under subsection (d)), and
‘‘(ii) the State’s old Federal medical
assistance percentage (as defined in section
2122(d)) for the previous fiscal year (or, in
the case of fiscal year 1997, the Federal
medical assistance percentage determined
under section 1905(b) for fiscal year
1996).
‘‘(C) SCALAR FACTOR.—The scalar factor
under this subparagraph for a fiscal year is
such proportion so that, when it is applied
under subparagraph (A)(ii) for the fiscal year
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(taking into account the floors and ceilings
under paragraph (3)), the total of the outlay al-
lotments under this subsection for all the 50
States and the District of Columbia for the fis-
cal year (not taking into account any increase
in an outlay allotment for a fiscal year attrib-
utable to the election of an alternative growth
formula under paragraph (4)) is equal to the
amount by which (i) the pool amount for the
fiscal year (as determined under subsection
(b)), exceeds (ii) the sum of the outlay allot-
ments provided under paragraph (5) for the
Commonwealths and territories for the fiscal
year.
‘‘(3) FLOORS AND CEILINGS.—
‘‘(A) FLOORS.—In no case shall the
amount of the State outlay allotment under
paragraph (2) for a fiscal year be less than the
following:
‘‘(i) FLOOR
BASED
ON
PREVIOUS
YEAR’S OUTLAY ALLOTMENT.—Subject to
clause (ii)—
‘‘(I) FISCAL YEAR 1997.—For fis-
cal year 1997, 103.5 percent of the
amount of the State outlay allotment
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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)—
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‘‘(A) an amount equal to 90 percent of the
amounts expended during such quarter for the
design, development, and installation of infor-
mation systems and for providing incentives to
promote the enforcement of medical support or-
ders, plus
‘‘(B) an amount equal to 75 percent of the
amounts expended during such quarter for
medical personnel, administrative support of
medical personnel, operation and maintenance
of information systems, modification of infor-
mation systems, quality assurance activities,
utilization review, medical and peer review,
anti-fraud activities, independent evaluations,
coordination of benefits, and meeting reporting
requirements under this title, plus
‘‘(C) an amount equal to 50 percent of so
much of the remainder of the amounts ex-
pended during such quarter as are expended by
the State in the administration of the State
plan.
‘‘(b) PAYMENT PROCESS.—
‘‘(1) QUARTERLY ESTIMATES.—Prior to the be-
ginning of each quarter, the Secretary shall estimate
the amount to which a State will be entitled under