SEC. 2. HEALTH DISPARITIES ELIMINATION STATE PLAN 
OPTION. 
Title XIX of the Social Security Act (42 U.S.C. 1396 
et seq.) is amended by adding at the end the following: 
‘‘SEC. 1947. HEALTH DISPARITIES ELIMINATION PROGRAM 
STATE PLAN OPTION. 
‘‘(a) 
IN
GENERAL.—Notwithstanding 
section 
1902(a)(1) 
(relating 
to 
statewideness), 
section 
1902(a)(10)(B) (relating to comparability), and any other 
provision of this title that the Secretary determines is nec-
essary to waive in order to implement this section, begin-
ning fiscal year 2018, a State, at its option as a State 
plan amendment, may establish a Health Disparities 
Elimination Program for purposes of reducing health dis-
parities among targeted populations in communities 
served by qualified community health systems under which 
the State provides incentive payments to qualified commu-
nity health systems for initiatives approved under sub-
section (c), if the State meets the requirements specified 
in subsection (c). 
‘‘(b) STATE PLAN AMENDMENT.—Each State seek-
ing a State plan amendment under this section shall sub-
mit such amendment to the Secretary for approval. The 
Secretary shall approve any such amendment that meets 
the requirements of subsection (c) and includes— 
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‘‘(1) State goals for reducing health disparities 
through the Health Disparities Elimination Program 
to be established by the State; 
‘‘(2) any requirements for the development and 
approval of action plans described in subsection 
(c)(1); 
‘‘(3) eligibility criteria for any qualified commu-
nity health system seeking to establish a health dis-
parities elimination initiative (in this section referred 
to as an ‘initiative’) pursuant to this section; 
‘‘(4) the methodology for determining the 
amount of incentive payments to be made to a quali-
fied community health system through an initiative, 
based on the size of the target population to be 
served through the initiative and the potential of the 
initiative for reducing health disparities; and 
‘‘(5) the period during which initiatives may be 
implemented, in accordance with subsection (c)(3). 
‘‘(c) STATE
REQUIREMENTS.—The requirements 
specified in this subsection with respect to a State are the 
following: 
‘‘(1) HEALTH
SYSTEM
ACTION
PLAN.—The 
State shall require that a qualified community 
health system submit an action plan for an initiative 
to the State agency with responsibility for admin-
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istering the State plan under this title for approval 
that identifies— 
‘‘(A) the target population or populations 
to be served by the initiative; 
‘‘(B) specific, evidence-based projects that 
the system will undertake through the initiative 
to reduce health disparities for such population 
or populations; 
‘‘(C) targets and benchmarks associated 
with such projects that must be met in order to 
receive incentive payments pursuant to this sec-
tion; 
‘‘(D) measures for evaluating the effective-
ness of the initiative in reducing health dispari-
ties with respect to the goals established by the 
State pursuant to subsection (b)(1); and 
‘‘(E) the amount of any proposed initial in-
centive payments to be made pursuant to this 
section to support startup costs of the initiative. 
‘‘(2) PRIORITY IN SELECTION OF HEALTH SYS-
TEMS
FOR
PARTICIPATION.—In selecting qualified 
community health systems to establish an initiative 
under a State plan amendment approved under this 
section, the State shall give priority to health sys-
tems— 
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‘‘(A) that have submitted action plans 
(under paragraph (1)) that include the use of 
evidence-based interventions shown to reduce or 
eliminate health disparities; 
‘‘(B) that demonstrate the potential to 
have a high impact in the elimination of health 
disparities, improved health care access, im-
proved health outcomes, or health care savings 
compared to the total incentive funding re-
quested; 
‘‘(C) that have prior experience working on 
projects with the goal of reducing health dis-
parities; 
‘‘(D) that demonstrate long-term commit-
ment to providing health services to the target 
population or populations; and 
‘‘(E) with a demonstrated need for addi-
tional financial resources in order to strengthen 
and advance existing efforts of the health sys-
tem to reduce health disparities. 
‘‘(3) DURATION OF ACTION PLAN.— 
‘‘(A) IN
GENERAL.—The State may not 
approve an action plan submitted under para-
graph (1) for a period exceeding 5 years. 
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‘‘(B) REPORT.—At the end of any such pe-
riod, the State shall require each participating 
qualified community health system to submit a 
report to the State describing the effectiveness 
of its initiative using the measures described in 
paragraph (1)(D). 
‘‘(C) EXTENSION.—A State may extend 
the initiative of such health system upon ap-
proval of a new action plan to extend, improve, 
or expand the initiative, if the State determines 
that the initiative has proved effective, taking 
into account the report submitted under sub-
paragraph (B). 
‘‘(d) STATE REPORT AND EVALUATION.— 
‘‘(1) IN GENERAL.—A State with a State plan 
amendment approved under this section shall submit 
to the Secretary, in a time and manner to be speci-
fied by the Secretary— 
‘‘(A) an annual report on the progress of 
the Health Disparities Elimination Program of 
the State towards meeting the goals of the 
State described under subsection (b)(1); and 
‘‘(B) not less than once every 5 years, an 
evaluation of the effectiveness of the Health 
Disparities Elimination Program of the State. 
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‘‘(2) CONTENTS.—The evaluation described in 
paragraph (1)(B) shall include— 
‘‘(A) an assessment of the effectiveness of 
initiatives receiving incentive payments pursu-
ant to this section during the period covered by 
the report in meeting the goals of the State de-
scribed under subsection (b)(1); and 
‘‘(B) a description of the activities of such 
initiatives. 
‘‘(3) PUBLICATION.—The Secretary shall pub-
lish on the public Web site of the Centers for Medi-
care & Medicaid Services each evaluation submitted 
under paragraph (1)(B). 
‘‘(e) FUNDING.— 
‘‘(1) STATE FUNDING.— 
‘‘(A) IN
GENERAL.—For the purpose of 
making allocations to States under subpara-
graph (C), there is appropriated for fiscal year 
2018 and each subsequent fiscal year, out of 
any money in the Treasury not otherwise ap-
propriated, an amount equal to one half of one 
percent of the total of the Federal share of ex-
penditures with respect to all State plans under 
this title in the most recent fiscal year for 
which complete expenditure data is available. 
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‘‘(B) INCENTIVE
PAYMENT
FUND.—The 
Secretary shall deposit all funds appropriated 
under subparagraph (A) into an incentive pay-
ment fund. Such funds shall remain available 
until expended. 
‘‘(C) ALLOCATION
AMONG
STATES.—Of 
the total amount appropriated for this section 
for a fiscal year, the Secretary shall, except as 
provided in subparagraph (D), allocate for such 
fiscal year to each State an amount in propor-
tion to the ratio of— 
‘‘(i) the State’s total expenditures 
under the State plan under this title in the 
most recent fiscal year for which complete 
expenditure data is available; to 
‘‘(ii) the sum of all States’ total ex-
penditures under all State plans under this 
title in the fiscal year described in clause 
(i). 
‘‘(D) FUNDS NOT USED BY THE STATE.— 
If the Secretary determines, on the basis of in-
formation available on the first day of a fiscal 
year, that any allocation under subparagraph 
(C) to a State for such fiscal year will not be 
required because a State does not have a State 
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plan amendment approved under subsection (b) 
for such fiscal year, then such State’s allocation 
shall be treated as an unused allocation for 
such fiscal year and re-allocated in accordance 
with subparagraph (E)(i). 
‘‘(E) QUALIFYING STATES.— 
‘‘(i) RE-ALLOCATION TO QUALIFYING 
STATES.—In addition to the allocation 
available to a State under subparagraph 
(C), the Secretary shall allocate to each 
qualifying State for a fiscal year, out of 
the sum of unused allocations, as described 
in subparagraph (D), for such fiscal year, 
an amount in proportion to the ratio of— 
‘‘(I) each such State’s total ex-
penditures under the State plan under 
this title in the most recent fiscal year 
for which complete expenditure data is 
available; to 
‘‘(II) the sum of all such States’ 
total expenditures under all State 
plans of such States under this title in 
the fiscal year described in subclause 
(I). 
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‘‘(ii) AVAILABILITY OF FUNDS.—Allo-
cations made to a qualifying State under 
clause (i) and subparagraph (C) shall re-
main available until expended. 
‘‘(iii) DEFINITIONS.—In this section, 
the term ‘qualifying State’ means a State 
with a State plan amendment approved 
under this section that— 
‘‘(I) has in effect an agreement 
with one or more qualified community 
health system initiatives; and 
‘‘(II) in any fiscal year other 
than the first fiscal year for which 
such State receives an allocation 
under subparagraph (C) that is not 
re-allocated under subparagraph (D), 
has a Health Disparities Elimination 
Program established under this sec-
tion that, as determined by the Sec-
retary, has made measurable progress 
towards meeting the State’s goals, as 
described under subsection (b)(1), 
based on reports and evaluations sub-
mitted under subsection (d). 
‘‘(2) PAYMENTS.— 
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‘‘(A) IN GENERAL.—Subject to the provi-
sions of this section, the Secretary shall pay to 
each State with a State plan amendment ap-
proved under this section, from its allocation 
under paragraph (1)(C) and, in the case of a 
qualifying State, from its allocation under para-
graph (1)(E)(i), an amount for each quarter 
equal to 90 percent of the sum expended by the 
State in such quarter for incentive payments 
made to qualified community health systems for 
initiatives approved pursuant to this section. 
‘‘(B) STATUS OF INCENTIVE PAYMENTS.— 
Incentive payments made under a State plan 
amendment approved under this section shall 
not be considered payment for health care items 
or services and shall not count towards any 
limit with respect to the maximum amount of 
payments that may be made to a provider 
under the State plan under this title (or under 
a waiver of such plan). 
‘‘(f) DEFINITIONS.—In this section: 
‘‘(1) The term ‘health disparity’ means a dis-
parity in care provided to a health disparity popu-
lation, as defined in section 903(d) of the Public 
Health Service Act (42 U.S.C. 299a–1(d)). 
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‘‘(2) The term ‘qualified community health sys-
tem’ means— 
‘‘(A) a hospital described in a report sub-
mitted under section 1900(b)(6)(B)(ii)(III); or 
‘‘(B) an affiliated group of health care pro-
viders anchored by such hospital. 
‘‘(3) The term ‘State’ means each of the several 
States and the District of Columbia. 
‘‘(4) The term ‘target population’ means a pop-
ulation of individuals that has empirically experi-
enced disparities in health care access and quality 
and shall not be limited by source of coverage or 
lack thereof.’’. 
Æ 
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