279 
retary to provide for the payment of amounts pro-
vided under this subsection. 
‘‘(3) PREFERENCE.—In providing for payments 
to States under this subsection, the Secretary shall 
provide preference to States that establish, or pro-
vide for, alternate non-emergency services providers 
or networks of such providers that— 
‘‘(A) serve rural or underserved areas 
where beneficiaries under this title may not 
have regular access to providers of primary care 
services; or 
‘‘(B) are in partnership with local commu-
nity hospitals. 
‘‘(4) FORM AND MANNER OF PAYMENT.—Pay-
ment to a State under this subsection shall be made 
only upon the filing of such application in such form 
and in such manner as the Secretary shall specify. 
Payment to a State under this subsection shall be 
made in the same manner as other payments under 
section 1903(a).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to non-emergency services fur-
nished on or after the date of the enactment of this Act.
280 
SEC. 3124. USE OF BENCHMARK BENEFIT PACKAGES. 
Title XIX of the Social Security Act is amended by 
redesignating section 1936 as section 1937 and by insert-
ing after section 1935 the following new section: 
‘‘STATE FLEXIBILITY IN BENEFIT PACKAGES 
‘‘SEC. 1936. (a) STATE OPTION
OF PROVIDING 
BENCHMARK BENEFITS.— 
‘‘(1) AUTHORITY.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of this title, a State, at its op-
tion as a State plan amendment, may provide 
for medical assistance under this title to indi-
viduals within one or more groups of individuals 
specified by the State through enrollment in 
coverage that provides— 
‘‘(i) benchmark coverage described in 
subsection (b)(1) and, for a qualifying 
child, benchmark dental coverage as de-
fined in subparagraph (F); or 
‘‘(ii) benchmark equivalent coverage 
described in subsection (b)(2)and, for a 
qualifying child, benchmark dental cov-
erage as defined in subparagraph (F). 
‘‘(B) LIMITATION.—The State may only 
exercise the option under subparagraph (A) for
281 
eligibility categories that had been established 
before the date of the enactment of this section. 
‘‘(C) OPTION
OF
WRAP-AROUND
BENE-
FITS.—In the case of coverage described in sub-
paragraph (A), a State, at its option, may pro-
vide such wrap-around or additional benefits as 
the State may specify. 
‘‘(D) TREATMENT
AS
MEDICAL
ASSIST-
ANCE.—Payment of premiums for such cov-
erage under this subsection shall be treated as 
payment of other insurance premiums described 
in the third sentence of section 1905(a). 
‘‘(E) QUALIFYING CHILD DEFINED.—For 
purposes of subparagraph (A), the term ‘quali-
fying child’ means a child under 18 years of age 
with a family income below 133 percent of the 
poverty line applicable to a family of the size in-
volved. 
‘‘(F) BENCHMARK DENTAL COVERAGE.— 
For purposes of subparagraph (A), the term 
‘benchmark dental coverage’ means, with re-
spect to a State, dental benefits coverage that 
is equivalent to or better than the dental cov-
erage offered under the dental benefit plan that 
covers the greatest number of individuals in the
282 
State who are not entitled to medical assistance 
under this title. 
‘‘(2) APPLICATION.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), a State may require that a 
full-benefit eligible individual (as defined in 
subparagraph (C)) within a group obtain bene-
fits under this title through enrollment in cov-
erage described in paragraph (1)(A). A State 
may apply the previous sentence to individuals 
within one or more groups of such individuals. 
‘‘(B) LIMITATION
ON
APPLICATION.—A 
State may not require under subparagraph (A) 
an individual to obtain benefits through enroll-
ment described in paragraph (1)(A) if the indi-
vidual is within one of the following categories 
of individuals: 
‘‘(i) MANDATORY PREGNANT WOMEN 
AND CHILDREN.—The individual is a preg-
nant woman or child under 18 years of age 
who is required to be covered under the 
State 
plan 
under 
section 
1902(a)(10)(A)(i).
283 
‘‘(ii) DUAL
ELIGIBLES.—The indi-
vidual is entitled to benefits under any 
part of title XVIII. 
‘‘(iii) TERMINALLY ILL HOSPICE PA-
TIENTS.—The individual is terminally ill 
and is receiving benefits for hospice care 
under this title. 
‘‘(iv) ELIGIBLE ON BASIS OF INSTITU-
TIONALIZATION.—The individual is an in-
patient in a hospital, nursing facility, in-
termediate care facility for the mentally re-
tarded, or other medical institution, and is 
required, as a condition of receiving serv-
ices in such institution under the State 
plan, to spend for costs of medical care all 
but a minimal amount of the individual’s 
income required for personal needs. 
‘‘(v) MEDICALLY FRAIL AND SPECIAL 
MEDICAL NEEDS INDIVIDUALS.—The indi-
vidual is medically frail or otherwise an in-
dividual with special medical needs (as 
identified in accordance with regulations of 
the Secretary). 
‘‘(vi) 
BENEFICIARIES
QUALIFYING 
FOR LONG-TERM CARE SERVICES.—The in-
284 
dividual qualifies based on medical condi-
tion for medical assistance for long-term 
care 
services 
described 
in 
section 
1917(c)(1)(C). 
‘‘(C) FULL-BENEFIT
ELIGIBLE
INDIVID-
UALS.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, subject to clause (ii), the 
term ‘full-benefit eligible individual’ means 
for a State for a month an individual who 
is determined eligible by the State for med-
ical assistance for all services defined in 
section 1905(a) which are covered under 
the State plan under this title for such 
month under section 1902(a)(10)(A) or 
under any other category of eligibility for 
medical assistance for all such services 
under this title, as determined by the Sec-
retary. 
‘‘(ii) 
EXCLUSION
OF
MEDICALLY 
NEEDY AND SPEND-DOWN POPULATIONS.— 
Such term shall not include an individual 
determined to be eligible by the State for 
medical 
assistance 
under 
section 
1902(a)(10)(C) or by reason of section
285 
1902(f) or otherwise eligible based on a re-
duction of income based on costs incurred 
for medical or other remedial care. 
‘‘(b) BENCHMARK BENEFIT PACKAGES.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a)(1), each of the following coverage shall be con-
sidered to be benchmark coverage: 
‘‘(A) FEHBP-EQUIVALENT
HEALTH
IN-
SURANCE
COVERAGE.—The 
standard 
Blue 
Cross/Blue Shield preferred provider option 
service benefit plan, described in and offered 
under section 8903(1) of title 5, United States 
Code. 
‘‘(B) STATE
EMPLOYEE
COVERAGE.—A 
health benefits coverage plan that is offered and 
generally available to State employees in the 
State involved. 
‘‘(C) 
COVERAGE
OFFERED
THROUGH 
HMO.—The health insurance coverage plan 
that— 
‘‘(i) is offered by a health mainte-
nance organization (as defined in section 
2791(b)(3) of the Public Health Service 
Act), and
286 
‘‘(ii) has the largest insured commer-
cial, non-medicaid enrollment of covered 
lives of such coverage plans offered by 
such a health maintenance organization in 
the State involved. 
‘‘(2) BENCHMARK-EQUIVALENT
COVERAGE.— 
For purposes of subsection (a)(1), coverage that 
meets the following requirement shall be considered 
to be benchmark-equivalent coverage: 
‘‘(A) INCLUSION
OF
BASIC
SERVICES.— 
The coverage includes benefits for items and 
services within each of the following categories 
of basic services: 
‘‘(i) Inpatient and outpatient hospital 
services. 
‘‘(ii) Physicians’ surgical and medical 
services. 
‘‘(iii) Laboratory and x-ray services. 
‘‘(iv) Well-baby and well-child care, 
including age-appropriate immunizations. 
‘‘(v) Other appropriate preventive 
services, as designated by the Secretary. 
‘‘(B) 
AGGREGATE
ACTUARIAL
VALUE 
EQUIVALENT TO BENCHMARK PACKAGE.—The 
coverage has an aggregate actuarial value that
287 
is at least actuarially equivalent to one of the 
benchmark benefit packages described in para-
graph (1). 
‘‘(C) SUBSTANTIAL ACTUARIAL VALUE FOR 
ADDITIONAL
SERVICES
INCLUDED
IN
BENCH-
MARK PACKAGE.—With respect to each of the 
following categories of additional services for 
which coverage is provided under the bench-
mark benefit package used under subparagraph 
(B), the coverage has an actuarial value that is 
equal to at least 75 percent of the actuarial 
value of the coverage of that category of serv-
ices in such package: 
‘‘(i) Coverage of prescription drugs. 
‘‘(ii) Mental health services. 
‘‘(iii) Vision services. 
‘‘(iv) Hearing services. 
‘‘(3) DETERMINATION OF ACTUARIAL VALUE.— 
The actuarial value of coverage of benchmark benefit 
packages shall be set forth in an actuarial opinion 
in an actuarial report that has been prepared— 
‘‘(A) by an individual who is a member of 
the American Academy of Actuaries; 
‘‘(B) using generally accepted actuarial 
principles and methodologies;
288 
‘‘(C) using a standardized set of utilization 
and price factors; 
‘‘(D) using a standardized population that 
is representative of the population involved; 
‘‘(E) applying the same principles and fac-
tors in comparing the value of different cov-
erage (or categories of services); 
‘‘(F) without taking into account any dif-
ferences in coverage based on the method of de-
livery or means of cost control or utilization 
used; and 
‘‘(G) taking into account the ability of a 
State to reduce benefits by taking into account 
the increase in actuarial value of benefits cov-
erage offered under this title that results from 
the limitations on cost sharing under such cov-
erage. 
The actuary preparing the opinion shall select and 
specify in the memorandum the standardized set and 
population to be used under subparagraphs (C) and 
(D). 
‘‘(4) COVERAGE OF RURAL HEALTH CLINIC AND 
FQHC SERVICES.—Notwithstanding the previous pro-
visions of this section, a State may not provide for 
medical assistance through enrollment of an indi-
289 
vidual with benchmark coverage or benchmark equiv-
alent coverage under this section unless— 
‘‘(A) the individual has access, through 
such coverage or otherwise, to services de-
scribed in subparagraphs (B) and (C) of section 
1905(a)(2); and 
‘‘(B) payment for such services is made in 
accordance with the requirements of section 
1902(bb).’’. 
SEC. 3125. STATE OPTION TO ESTABLISH NON-EMERGENCY 
MEDICAL TRANSPORTATION PROGRAM. 
(a) IN GENERAL.—Section 1902(a) of the Social Se-
curity Act (42 U.S.C. 1396a(a)) is amended— 
(1) in paragraph (66), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (67) by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by inserting after paragraph (67) the fol-
lowing: 
‘‘(68) at the option of the State and notwith-
standing paragraph (10)(B) or (23), provide for the 
establishment of a non-emergency medical transpor-
tation brokerage program in order to more cost-ef-
fectively provide transportation for individuals eligi-
ble for medical assistance under the State plan who
290 
need access to medical care or services and have no 
other means of transportation which— 
‘‘(A) may include a wheelchair van, taxi, 
stretcher car, bus passes and tickets, secured 
transportation, and such other transportation 
as the Secretary determines appropriate; and 
‘‘(B) may be conducted under contract 
with a broker who— 
‘‘(i) is selected through a competitive 
bidding process based on the State’s eval-
uation of the broker’s experience, perform-
ance, references, resources, qualifications, 
and costs; 
‘‘(ii) has oversight procedures to mon-
itor beneficiary access and complaints and 
ensure that transport personnel are li-
censed, qualified, competent, and cour-
teous; 
‘‘(iii) is subject to regular auditing 
and oversight by the State in order to en-
sure the quality of the transportation serv-
ices provided and the adequacy of bene-
ficiary access to medical care and services; 
and
291 
‘‘(iv) complies with such requirements 
related to prohibitions on referrals and 
conflict of interest as the Secretary shall 
establish (based on the prohibitions on 
physician referrals under section 1877 and 
such other prohibitions and requirements 
as the Secretary determines to be appro-
priate).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) take effect on the date of the enactment 
of this Act. 
(c) IG REPORT ON UTILIZATION.—Not later than 
January 1, 2007, the Inspector General of the Depart-
ment of Health and Human Services shall submit to Con-
gress a report that examines the non-emergency medical 
transportation brokerage programs implemented under 
section 1902(a)(68) of the Social Security Act, as inserted 
by subsection (a). The report shall include findings re-
garding conflicts of interest and improper utilization of 
transportation services under such programs, as well as 
recommendations for improvements in such programs. 
SEC. 3126. EXEMPTING WOMEN COVERED UNDER BREAST 
OR CERVICAL CANCER PROGRAM. 
Notwithstanding any other provision of law, none of 
provisions of the previous sections of this chapter, or
292 
amendments made by such sections, shall apply to women 
who are receiving medical assistance by virtue of the appli-
cation of sections 1902(a)(10)(A)(ii)(XVIII) and 1902(aa) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1396a(a)(10)(A)(ii)(XVIII), 1396a(aa)). 
CHAPTER 4—EXPANDED ACCESS TO 
CERTAIN BENEFITS 
SEC. 3131. EXPANDED ACCESS TO HOME AND COMMUNITY- 
BASED SERVICES FOR THE ELDERLY AND 
DISABLED. 
(a) IN GENERAL.—Section 1905(a) of the Social Se-
curity Act (42 U.S.C. 1396d(a)) is amended— 
(1) in paragraph (27), by striking ‘‘and’’ at the 
end; 
(2) by redesignating paragraph (28) as para-
graph (29); and 
(3) by inserting after paragraph (27) the fol-
lowing new paragraph: 
‘‘(28) subject to section 1902(cc), home and 
community-based services (within the scope of serv-
ices described in paragraph (4)(B) of section 
1915(c) for which the Secretary has the authority to 
approve a waiver and not including room and board) 
provided pursuant to a written plan of care for indi-
viduals—
293 
‘‘(A) who are 65 years of age or older, who 
are disabled (as defined under the State plan), 
who are persons with developmental disabilities 
or mental retardation or persons with related 
conditions, or who are within a subgroup there-
of under the State plan; 
‘‘(B) with respect to whom there has been 
a determination, in the manner described in 
paragraph (1) of such section, that but for the 
provision of such services the individuals would 
require the level of care provided in a hospital, 
a nursing facility, or an intermediate care facil-
ity for the mentally retarded the cost of which 
could be reimbursed under the State plan; and 
‘‘(C) who qualify for medical assistance 
under the eligibility standards in effect in the 
State (which may include standards in effect 
under an approved waiver) as of the date of the 
enactment of this paragraph; and’’. 
(b) CONDITIONS.—Section 1902 of such Act (42 
U.S.C. 1396a) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(cc) PROVISION OF HOME AND COMMUNITY-BASED 
SERVICES UNDER STATE PLAN.—
294 
‘‘(1) CONDITIONS.—A State may provide home 
and 
community-based 
services 
under 
section 
1905(a)(28), other than through a waiver or dem-
onstration project under section 1915 or 1115, only 
if the following conditions are met: 
‘‘(A) EXPIRATION OF PREVIOUS WAIVER.— 
Any State waiver or demonstration project 
under either such section with respect to serv-
ices for individuals described in such section 
has expired. 
‘‘(B) 
INFORMATION.—The 
State 
must 
monitor and report to the Secretary, in a form 
and manner specified by the Secretary and on 
a quarterly basis, enrollment and expenditures 
for provision of such services under such sec-
tion. 
‘‘(2) OPTIONS.—Notwithstanding any other 
provision of this title, in a State’s provision of serv-
ices under section 1905(a)(28)— 
‘‘(A) a State is not required to comply with 
the requirements of section 1902(a)(1) (relating 
to statewideness), section 1902(a)(10)(B) (re-
lating 
to 
comparability), 
and 
section 
1902(a)(10)(C)(i)(III) (relating to income and 
resource rules applicable in the community);
295 
‘‘(B) a State may limit the number of indi-
viduals who are eligible for such services and 
may establish waiting lists for the receipt of 
such services; and 
‘‘(C) a State may limit the amount, dura-
tion, and scope of such services. 
Nothing in this section shall be construed as apply-
ing the previous sentence to any items or services 
other than home and community-based services pro-
vided under section 1905(a)(28). 
‘‘(3) USE OF ELECTRONIC DATA.—The State 
shall permit health care providers to comply with 
documentation and data requirements imposed with 
respect to home and community-based services 
through the maintenance of data in electronic form 
rather than in paper form.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to home and community-based 
services furnished on or after October 1, 2006. 
SEC. 3132. OPTIONAL CHOICE OF SELF-DIRECTED PER-
SONAL ASSISTANCE SERVICES (CASH AND 
COUNSELING). 
(a) EXEMPTION FROM CERTAIN REQUIREMENTS.— 
Section 1915 of the Social Security Act (42 U.S.C. 1396n)
296 
is amended by adding at the end the following new sub-
section: 
‘‘(i)(1) A State may provide, as ‘medical assistance’, 
payment for part or all of the cost of self-directed personal 
assistance services (other than room and board) under the 
plan which are provided pursuant to a written plan of care 
to individuals with respect to whom there has been a de-
termination that, but for the provision of such services, 
the individuals would require and receive personal care 
services under the plan, or home and community-based 
services provided pursuant to a waiver under subsection 
(c). Self-directed personal assistance services may not be 
provided under this subsection to individuals who reside 
in a home or property that is owned, operated, or con-
trolled by a provider of services, not related by blood or 
marriage. 
‘‘(2) The Secretary shall not grant approval for a 
State self-directed personal assistance services program 
under this section unless the State provides assurances 
satisfactory to the Secretary of the following: 
‘‘(A) Necessary safeguards have been taken to 
protect the health and welfare of individuals pro-
vided services under the program, and to assure fi-
nancial accountability for funds expended with re-
spect to such services.
297 
‘‘(B) The State will provide, with respect to in-
dividuals who— 
‘‘(i) are entitled to medical assistance for 
personal care services under the plan, or receive 
home and community-based services under a 
waiver granted under subsection (c); 
‘‘(ii) may require self-directed personal as-
sistance services; and 
‘‘(iii) may be eligible for self-directed per-
sonal assistance services, 
an evaluation of the need for personal care under 
the plan, or personal services under a waiver granted 
under subsection (c). 
‘‘(C) Such individuals who are determined to be 
likely to require personal care under the plan, or 
home and community-based services under a waiver 
granted under subsection (c) are informed of the 
feasible alternatives, if available under the State’s 
self-directed personal assistance services program, at 
the choice of such individuals, to the provision of 
personal care services under the plan, or personal 
assistance services under a waiver granted under 
subsection (c). 
‘‘(D) The State will provide for a support sys-
tem that ensures participants in the self-directed
298 
personal assistance services program are appro-
priately assessed and counseled prior to enrollment 
and are able to manage their budgets. Additional 
counseling and management support may be pro-
vided at the request of the participant. 
‘‘(E) The State will provide to the Secretary an 
annual report on the number of individuals served 
and total expenditures on their behalf in the aggre-
gate. The State shall also provide an evaluation of 
overall impact on the health and welfare of partici-
pating individuals compared to non-participants 
every three years. 
‘‘(3) A State may provide self-directed personal as-
sistance services under the State plan without regard to 
the requirements of section 1902(a)(1) and may limit the 
population eligible to receive these services and limit the 
number of persons served without regard to section 
1902(a)(10)(B). 
‘‘(4)(A) For purposes of this subsection, the term 
‘self-directed personal assistance services’ means personal 
care and related services, or home and community-based 
services otherwise available under the plan under this title 
or subsection (c), that are provided to an eligible partici-
pant under a self-directed personal assistance services pro-
gram under this section, under which individuals, within
299 
an approved self-directed services plan and budget, pur-
chase personal assistance and related services, and per-
mits participants to hire, fire, supervise, and manage the 
individuals providing such services. 
‘‘(B) At the election of the State— 
‘‘(i) a participant may choose to use any indi-
vidual capable of providing the assigned tasks in-
cluding legally liable relatives as paid providers of 
the services; and 
‘‘(ii) the individual may use the individual’s 
budget to acquire items that increase independence 
or substitute (such as a microwave oven or an acces-
sibility ramp) for human assistance, to the extent 
that expenditures would otherwise be made for the 
human assistance. 
‘‘(5) For purpose of this section, the term ‘approved 
self-directed services plan and budget’ means, with respect 
to a participant, the establishment of a plan and budget 
for the provision of self-directed personal assistance serv-
ices, consistent with the following requirements: 
‘‘(A) SELF-DIRECTION.—The participant (or in 
the case of a participant who is a minor child, the 
participant’s parent or guardian, or in the case of an 
incapacitated adult, another individual recognized by 
State law to act on behalf of the participant) exer-
300 
cises choice and control over the budget, planning, 
and purchase of self-directed personal assistance 
services, including the amount, duration, scope, pro-
vider, and location of service provision. 
‘‘(B) ASSESSMENT OF NEEDS.—There is an as-
sessment of the needs, strengths, and preferences of 
the participants for such services. 
‘‘(C) SERVICE PLAN.—A plan for such services 
(and supports for such services) for the participant 
has been developed and approved by the State based 
on such assessment through a person-centered proc-
ess that— 
‘‘(i) builds upon the participant’s capacity 
to engage in activities that promote community 
life and that respects the participant’s pref-
erences, choices, and abilities; and 
‘‘(ii) involves families, friends, and profes-
sionals in the planning or delivery of services or 
supports as desired or required by the partici-
pant. 
‘‘(D) SERVICE
BUDGET.—A budget for such 
services and supports for the participant has been 
developed and approved by the State based on such 
assessment and plan and on a methodology that uses 
valid, reliable cost data, is open to public inspection,
301 
and includes a calculation of the expected cost of 
such services if those services were not self-directed. 
The budget may not restrict access to other medi-
cally necessary care and services furnished under the 
plan and approved by the State but not included in 
the budget. 
‘‘(E) APPLICATION
OF
QUALITY
ASSURANCE 
AND
RISK
MANAGEMENT.—There are appropriate 
quality assurance and risk management techniques 
used in establishing and implementing such plan and 
budget that recognize the roles and responsibilities 
in obtaining services in a self-directed manner and 
assure the appropriateness of such plan and budget 
based upon the participant’s resources and capabili-
ties. 
‘‘(6) A State may employ a financial management en-
tity to make payments to providers, track costs, and make 
reports under the program. Payment for the activities of 
the financial management entity shall be at the adminis-
trative rate established in section 1903(a).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to services furnished on or after 
January 1, 2006.
302 
SEC. 3133. EXPANSION OF STATE LONG-TERM CARE PART-
NERSHIP PROGRAM. 
(a) IN GENERAL.—Section 1917(b)(1)(C) of the So-
cial Security Act (42 U.S.C. 1396p(b)(1)(C)) is amend-
ed— 
(1) in clause (ii), by inserting ‘‘or which has a 
State plan amendment that provides for a qualified 
State long-term care insurance partnership (as de-
fined in clause (iii))’’ after ‘‘1993,’’; and 
(2) by adding at the end the following new 
clauses: 
‘‘(iii) For purposes of this paragraph, the term 
‘qualified State long-term care insurance partner-
ship’ means an approved State plan amendment 
under this title that provides for the disregard of 
any assets or resources in an amount equal to the 
insurance benefit payments that are made to or on 
behalf of an individual who is a beneficiary under a 
long-term care insurance policy (including a certifi-
cate issued under a group insurance contract), if the 
following requirements are met: 
‘‘(I) The policy covers an insured who was 
a resident of such State when coverage first be-
came effective under the policy. 
‘‘(II) The policy is a qualified long-term 
care insurance policy (as defined in section
303 
7702B(b) of the Internal Revenue Code of 
1986) issued on or after the first day of the 
first calendar quarter in which the plan amend-
ment was submitted to the Secretary. 
‘‘(III) If the policy does not provide some 
level of inflation protection, the insured was of-
fered, before the policy was sold, a long-term 
care insurance policy that provides some level of 
inflation protection. 
‘‘(IV) The State Medicaid agency under 
section 1902(a)(5) provides information and 
technical assistance to the State insurance de-
partment on the insurance department’s role of 
assuring that any individual who sells a long- 
term care insurance policy under the partner-
ship receives training or demonstrates evidence 
of an understanding of such policies and how 
they relate to other public and private coverage 
of long-term care. 
‘‘(V) The issuer of the policy provides reg-
ular reports to the Secretary that include, in ac-
cordance with regulations of the Secretary (pro-
mulgated after consultation with the States), 
notification regarding when all benefits provided 
under the policy have been paid and the amount
304 
of such benefits paid, when the policy otherwise 
terminates, and such other information as the 
Secretary determines may be appropriate to the 
administration of such partnerships. 
‘‘(VI) The State does not impose any re-
quirement affecting the terms or benefits of 
such a policy unless the State imposes such re-
quirement on long-term care insurance policies 
without regard to whether the policy is covered 
under the partnership or is offered in connec-
tion with such a partnership. 
In the case of a long-term care insurance policy 
which is exchanged for another such policy, sub-
clause (I) shall be applied based on the coverage of 
the first such policy that was exchanged. 
‘‘(iv) The Secretary— 
‘‘(I) as appropriate, shall provide copies of 
the reports described in clause (iii)(V) to the 
State involved; and 
‘‘(II) shall promote the education of con-
sumers regarding qualified State long-term care 
insurance partnerships. 
‘‘(v) The Secretary, in consultation with other 
appropriate Federal agencies, issuers of long-term 
care insurance, the National Association of Insur-
305 
ance Commissioners, and State insurance commis-
sioners, shall develop recommendations for Congress 
to authorize and fund a uniform minimum data set 
to be reported electronically by all issuers of long- 
term care insurance policies under qualified State 
long-term care insurance partnerships to a secure, 
centralized electronic query and report-generating 
mechanism that the State, the Secretary, and other 
Federal agencies can access.’’. 
(b) CONSTRUCTION.—Nothing in the amendments 
made by subsection (a) shall be construed as affecting the 
treatment of long-term care insurance policies that will be, 
are, or were provided under a State plan amendment de-
scribed in section 1917(b)(1)(C)(ii) of the Social Security 
Act that was approved as of May 14, 1993. 
(c) EFFECTIVE DATE.—A State plan amendment 
that provides for a qualified State long-term care insur-
ance partnership under the amendments made by sub-
section (a) may provide that such amendment is effective 
for long-term care insurance policies issued on or after a 
date, specified in the amendment, that is not earlier than 
the first day of the first calendar quarter in which the 
plan amendment was submitted to the Secretary of Health 
and Human Services.
306 
(d) STANDARDS
FOR RECIPROCAL RECOGNITION 
AMONG PARTNERSHIP STATES.—In order to permit port-
ability in long-term care insurance policies purchased 
under State long-term care insurance partnerships, the 
Secretary of Health and Human Services may develop, in 
consultation with the States and the National Association 
of Insurance Commissioners, uniform standards for recip-
rocal recognition of such policies among States with quali-
fied State long-term care insurance partnerships. 
SEC. 3134. HEALTH OPPORTUNITY ACCOUNTS. 
Title XIX of the Social Security Act, as amended by 
section 3124, is amended— 
(1) by redesignating section 1937 as section 
1938; and 
(2) by inserting after section 1936 the following 
new section: 
‘‘HEALTH OPPORTUNITY ACCOUNTS 
‘‘SEC. 1937. (a) AUTHORITY.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this title, the Secretary shall establish a 
demonstration program under which States may pro-
vide under their State plans under this title (includ-
ing such a plan operating under a statewide waiver 
under section 1115) in accordance with this section 
for the provision of alternative benefits consistent 
with subsection (c) for eligible population groups in
307 
one or more geographic areas of the State specified 
by the State. An amendment under the previous sen-
tence is referred to in this section as a ‘State dem-
onstration program’. 
‘‘(2) INITIAL
DEMONSTRATION.—The dem-
onstration program under this section shall begin on 
January 1, 2006. During the first 5 years of such 
program, the Secretary shall not approve more than 
10 State demonstration programs, with each State 
demonstration program covering one or more geo-
graphic areas specified by the State. After such 5- 
year period— 
‘‘(A) unless the Secretary finds, taking 
into account cost-effectiveness, quality of care, 
and other criteria that the Secretary specifies, 
that a State demonstration program previously 
implemented has been unsuccessful, such a 
demonstration program may be extended or 
made permanent in the State; and 
‘‘(B) unless the Secretary finds, taking 
into account cost-effectiveness, quality of care, 
and other criteria that the Secretary specifies, 
that all State demonstration programs pre-
viously implemented were unsuccessful, other
308 
States may implement State demonstration pro-
grams. 
‘‘(3) APPROVAL.—The Secretary shall not ap-
prove a State demonstration program under para-
graph (1) unless the program includes the following: 
‘‘(A) Creating patient awareness of the 
high cost of medical care. 
‘‘(B) Providing incentives to patients to 
seek preventive care services. 
‘‘(C) Reducing inappropriate use of health 
care services. 
‘‘(D) Enabling patients to take responsi-
bility for health outcomes. 
‘‘(E) Providing enrollment counselors and 
ongoing education activities. 
‘‘(F) 
Providing 
transactions 
involving 
health opportunity accounts to be conducted 
electronically and without cash. 
‘‘(G) Providing access to negotiated pro-
vider payment rates consistent with this section. 
Nothing in this section shall be construed as pre-
venting a State demonstration program from pro-
viding incentives for patients obtaining appropriate 
preventive care (as defined for purposes of section 
223(c)(2)(C) of the Internal Revenue Code of 1986),
309 
such as additional account contributions for an indi-
vidual demonstrating healthy prevention practices. 
‘‘(4) 
NO
REQUIREMENT
FOR 
STATEWIDENESS.—Nothing in this section or any 
other provision of law shall be construed to require 
that a State must provide for the implementation of 
a State demonstration program on a Statewide 
basis. 
‘‘(5) REPORTS.—The Secretary shall periodi-
cally submit to Congress reports regarding the suc-
cess of State demonstration programs. 
‘‘(b) ELIGIBLE POPULATION GROUPS.— 
‘‘(1) IN GENERAL.—A State demonstration pro-
gram under this section shall specify the eligible 
population groups consistent with paragraphs (2) 
and (3). 
‘‘(2) ELIGIBILITY LIMITATIONS DURING INITIAL 
DEMONSTRATION
PERIOD.—During the initial 5 
years of the demonstration program under this sec-
tion, a State demonstration program shall not apply 
to any of the following individuals: 
‘‘(A) Individuals who are 65 years of age 
or older. 
‘‘(B) Individuals who are disabled, regard-
less of whether or not their eligibility for med-
310 
ical assistance under this title is based on such 
disability. 
‘‘(C) Individuals who are eligible for med-
ical assistance under this title only because they 
are (or were within the previous 60 days) preg-
nant. 
‘‘(D) Individuals who have been eligible for 
medical assistance for a continuous period of 
less than 3 months. 
‘‘(3) ADDITIONAL LIMITATIONS.—A State dem-
onstration program shall not apply to any individual 
within a category of individuals described in section 
1936(a)(2)(B). 
‘‘(4) LIMITATIONS.— 
‘‘(A) STATE
OPTION.—This subsection 
shall not be construed as preventing a State 
from further limiting eligibility. 
‘‘(B) ON ENROLLEES IN MEDICAID MAN-
AGED
CARE
ORGANIZATIONS.—Insofar as the 
State provides for eligibility of individuals who 
are enrolled in medicaid managed care organi-
zations, such individuals may participate in the 
State demonstration program only if the State 
provides assurances satisfactory to the Sec-
311 
retary that the following conditions are met 
with respect to any such organization: 
‘‘(i) In no case may the number of 
such individuals enrolled in the organiza-
tion who participate in the program exceed 
5 percent of the total number of individ-
uals enrolled in such organization. 
‘‘(ii) The proportion of enrollees in 
the organization who so participate is not 
significantly disproportionate to the pro-
portion of such enrollees in other such or-
ganizations who participate. 
‘‘(iii) The State has provided for an 
appropriate adjustment in the per capita 
payments to the organization to account 
for such participation, taking into account 
differences in the likely use of health serv-
ices between enrollees who so participate 
and enrollees who do not so participate. 
‘‘(5) VOLUNTARY PARTICIPATION.—An eligible 
individual shall be enrolled in a State demonstration 
program only if the individual voluntarily enrolls. 
Except in such hardship cases as the Secretary shall 
specify, such an enrollment shall be effective for a 
period of 12 months, but may be extended for addi-
312 
tional periods of 12 months each with the consent of 
the individual. 
‘‘(c) ALTERNATIVE BENEFITS.— 
‘‘(1) IN
GENERAL.—The alternative benefits 
provided under this section shall consist, consistent 
with this subsection, of at least— 
‘‘(A) coverage for medical expenses in a 
year for items and services for which benefits 
are otherwise provided under this title after an 
annual deductible described in paragraph (2) 
has been met; and 
‘‘(B) contribution into a health opportunity 
account. 
Nothing in subparagraph (A) shall be construed as 
preventing a State from providing for coverage of 
preventive care (referred to in subsection (a)(3)) 
within the alternative benefits without regard to the 
annual deductible. 
‘‘(2) ANNUAL
DEDUCTIBLE.—The amount of 
the annual deductible described in paragraph (1)(A) 
shall be at least 100 percent, but no more than 110 
percent, of the annualized amount of contributions 
to the health opportunity account under subsection 
(d)(2)(A)(i), determined without regard to any limi-
tation described in subsection (d)(2)(C)(i)(II).
313 
‘‘(3) ACCESS TO NEGOTIATED PROVIDER PAY-
MENT RATES.— 
‘‘(A) FEE-FOR-SERVICE
ENROLLEES.—In 
the case of an individual who is participating in 
a State demonstration program and who is not 
enrolled with a medicaid managed care organi-
zation, the State shall provide that the indi-
vidual may obtain demonstration program med-
icaid services from— 
‘‘(i) any participating provider under 
this title at the same payment rates that 
would be applicable to such services if the 
deductible described in paragraph (1)(A) 
was not applicable; or 
‘‘(ii) any provider at payment rates 
that do not exceed 125 percent of the pay-
ment rate that would be applicable to such 
services furnished by a participating pro-
vider under this title if the deductible de-
scribed in paragraph (1)(A) was not appli-
cable. 
‘‘(B) TREATMENT UNDER MEDICAID MAN-
AGED CARE PLANS.—In the case of an indi-
vidual who is participating in a State dem-
onstration program and is enrolled with a med-
314 
icaid managed care organization, the State shall 
enter into an arrangement with the organiza-
tion under which the individual may obtain 
demonstration program medicaid services from 
any provider under such organization at pay-
ment rates that do not exceed the payment rate 
that would be applicable to such services if the 
deductible described in paragraph (1)(A) was 
not applicable. 
‘‘(C) COMPUTATION.—The payment rates 
described in subparagraphs (A) and (B) shall 
be computed without regard to any cost sharing 
that would be otherwise applicable under sec-
tions 1916 and 1916A. 
‘‘(D) DEFINITIONS.—For purposes of this 
paragraph: 
‘‘(i) The term ‘demonstration program 
medicaid services’ means, with respect to 
an individual participating in a State dem-
onstration program, services for which the 
individual would be provided medical as-
sistance under this title but for the appli-
cation of the deductible described in para-
graph (1)(A).
315 
‘‘(ii) The term ‘participating provider’ 
means— 
‘‘(I) with respect to an individual 
described in subparagraph (A), a 
health care provider that has entered 
into a participation agreement with 
the State for the provision of services 
to individuals entitled to benefits 
under the State plan; or 
‘‘(II) with respect to an indi-
vidual described in subparagraph (B) 
who is enrolled in a medicaid man-
aged care organization, a health care 
provider that has entered into an ar-
rangement for the provision of serv-
ices to enrollees of the organization 
under this title. 
‘‘(4) NO EFFECT ON SUBSEQUENT BENEFITS.— 
Except as provided under paragraphs (1) and (2), 
alternative benefits for an eligible individual shall 
consist of the benefits otherwise provided to the indi-
vidual, including cost sharing relating to such bene-
fits. 
‘‘(5) OVERRIDING
COST
SHARING
AND
COM-
PARABILITY
REQUIREMENTS
FOR
ALTERNATIVE