ticipation in a demonstration project 
pursuant to this subsection; 
‘‘(viii) refuse to allow a political sub-
division to rely on State Medicaid systems 
and State Medicaid agency staff to imple-
ment a demonstration project, including— 
‘‘(I) the State’s Medicaid eligi-
bility check and enrollment system; 
‘‘(II) provider payment system; 
‘‘(III) claims processing system; 
‘‘(IV) fair hearing system; and 
‘‘(V) Federal reporting require-
ment system; or 
‘‘(ix) take any other punitive action 
against a political subdivision that estab-
lish a demonstration project. 
‘‘(8) TIMELINE
SPECIFIED.—For purposes of 
paragraph (1), the timeline specified in this para-
graph shall require— 
‘‘(A) not later than 180 days after the date 
of the enactment of this subsection, the Sec-
retary to promulgate any regulations necessary 
to carry out this subsection, including— 
‘‘(i) the application requirements for a 
political subdivision to apply for a dem-
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onstration project, criteria on which appli-
cations will be reviewed, and how long po-
litical subdivisions have to begin the dem-
onstration once an application is approved; 
and 
‘‘(ii) the application of all require-
ments under section 1903 to a partici-
pating political subdivision as if it was a 
State; 
‘‘(B) not later than 180 days after receiv-
ing an application from a qualifying political 
subdivision described in paragraph (3), the Sec-
retary to transmit a notice to such qualifying 
political subdivision of the application’s ap-
proval or rejection, and in case of a rejection an 
explanation for the rejection; and 
‘‘(C) not later than 7 years after the ap-
proval of an application, the Secretary to trans-
mit a notice to such qualifying political subdivi-
sion of the application’s approval or rejection 
for an extension under this subsection. 
‘‘(9) LIMITATION ON NUMBER OF DEMONSTRA-
TION PROJECTS.—The Secretary may not approve 
more than 100 demonstration projects under this 
subsection, which may consist of demonstration 
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projects implemented by a single participating polit-
ical subdivision or implemented as partnerships 
formed by multiple participating political subdivi-
sions (as described in paragraph (3)(B)). 
‘‘(10) APPLICATION
WITHOUT
REGARD
TO 
BUDGET NEUTRALITY.—The Secretary shall not re-
quire, as a condition for carrying out the demonstra-
tion project under this subsection, that the dem-
onstration project ensure that such model is budget 
neutral initially with respect to expenditures under 
the applicable title. 
‘‘(11) REPORT.—Not later than 4 years after 
the first date of the demonstration project, the Sec-
retary shall submit a report to Congress on— 
‘‘(A) the effect of the demonstration 
project on— 
‘‘(i) the number of beneficiaries en-
rolled in demonstration projects under this 
subsection; and 
‘‘(ii) the amount of uncompensated 
care costs for State Medicaid plans; and 
‘‘(B) whether any States with a dem-
onstration project under this subsection have 
expanded Medicaid coverage under the Patient 
Protection and Affordable Care Act.’’. 
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(b) PAYMENT TO STATES.—Section 1903(a) of the 
Social Security Act (42 U.S.C. 1396b(a)) is amended— 
(1) in paragraph (6)(B), by striking at the end 
‘‘and’’; 
(2) in paragraph (7), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(8) an amount equal to an increase of 5 per-
centage points to Federal matching percentage for 
administrative costs for every 100,000 individuals 
described in paragraph (1) of section 1115(g) who 
are enrolled in a demonstration project of a partici-
pating political subdivision (as referred to in para-
graph (4)(A) of such section) during a calendar 
quarter.’’. 
Æ 
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