548 
any item or service subject to a payment exclu-
sion under this title or title XI. 
‘‘(b) ADMINISTRATION OF FEDERAL MEDICAID PRO-
GRAM THROUGH CONTRACTS WITH MEDICAID MANAGED 
CARE ORGANIZATION AND THIRD PARTY PLAN ADMINIS-
TRATOR REQUIREMENTS.— 
‘‘(1) IN GENERAL.—For the purpose of pro-
viding medical assistance to individuals described in 
section 1902(a)(10)(A)(i)(VIII) enrolled under the 
Federal Medicaid program across all coverage gap 
geographic areas (as defined in paragraph (8)) in 
which such individuals reside, the Secretary shall so-
licit bids described in paragraph (2) and enter into 
contracts with a total of at least 2 eligible entities 
(as specified by the Secretary, which may be a med-
icaid managed care organization (in this section de-
fined as a managed care organization described in 
section 1932(a)(1)(B)(i)), a third party plan admin-
istrator, or both). An eligible entity entering into a 
contract with the Secretary under this paragraph 
may administer such benefits as a medicaid man-
aged care organization (as so defined), in which case 
such contract shall be in accordance with paragraph 
(3) with respect to such geographic area, or as a 
third-party administrator, in which case such con-
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549 
tract shall be in accordance with paragraph (4) with 
respect to such geographic area. The Secretary may 
so contract with a Medicaid managed care organiza-
tion or third party plan administrator in each cov-
erage gap geographic area (and may specify which 
type of eligible entity may bid with respect to a cov-
erage gap geographic area or areas) and may con-
tract with more than one such eligible entity in the 
same coverage gap geographic area. 
‘‘(2) BIDS.— 
‘‘(A) IN GENERAL.—To be eligible to enter 
into a contract under this subsection, for a 
year, an entity shall submit (at such time, in 
such manner, and containing such information 
as specified by the Secretary) one or more bids 
to provide medical assistance under the Pro-
gram in one or more coverage gap geographic 
areas, which are actuarially sound and reflect 
the projected monthly cost to the entity of pro-
viding medical assistance under the Program to 
an individual enrolled under the Program in 
such a geographic area (or areas) for such year. 
‘‘(B) SELECTION.—In selecting from bids 
submitted under subparagraph (A) for purposes 
of entering into contracts with eligible entities 
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under this subsection, with respect to a cov-
erage gap geographic area, the Secretary shall 
take into account at least each of the following, 
with respect to each such bid: 
‘‘(i) Network adequacy (as proposed 
in the submitted bid). 
‘‘(ii) The amount, duration, and scope 
of benefits (such as value-added services 
offered in the submitted bid), as compared 
to the minimum set of benefits established 
by 
the 
Secretary 
under 
subsection 
(a)(2)(A). 
‘‘(iii) The amount of the bid, taking 
into account the average per member cost 
of providing medical assistance under 
State plans under this title (or waivers of 
such plans) to individuals enrolled in such 
plans (or waivers) who are at least 18 
years of age and residing in the coverage 
gap geographic area, as well as the average 
cost of providing medical assistance under 
State plans under this title (and waivers of 
such plans) to individuals described in sec-
tion 1902(a)(10)(A)(i)(VIII). 
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‘‘(iv) The organizational capacity of 
the entity, the experience of the entity with 
Medicaid managed care, the experience of 
the entity with Medicaid managed care for 
individuals 
described 
in 
section 
1902(a)(10)(A)(i)(VIII), the performance 
of the entity (if available) on the adult core 
set quality measures in States that are not 
coverage gap States. 
‘‘(3) CONTRACT
WITH
MEDICAID
MANAGED 
CARE
ORGANIZATION.—In the case of a contract 
under paragraph (1) between the Secretary and an 
eligible entity administering benefits under the Pro-
gram as a Medicaid managed care organization, with 
respect to one or more coverage gap geographic 
areas, the following shall apply: 
‘‘(A) The provisions of clauses (i) through 
(xi) of section 1903(m)(2)(A), clause (xii) of 
such section (to the extent such clause relates 
to subsections (b), (d), (f), and (i) of section 
1932), and clause (xiii) of such section 
1903(m)(2)(A) shall, to the greatest extent 
practicable, apply to the contract, to the Sec-
retary, and to the Medicaid managed care orga-
nization, with respect to providing medical as-
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552 
sistance under the Federal Medicaid program 
with respect to such area (or areas), in the 
same manner and to the same extent as such 
provisions apply to a contract under section 
1903(m) between a State and an entity that is 
a medicaid managed care organization (as de-
fined in section 1903(m)(1)), to the State, and 
to the entity, with respect to providing medical 
assistance to individuals eligible for benefits 
under this title. 
‘‘(B) The provisions of section 1932(h) 
shall apply to the contract, Secretary, and Med-
icaid managed care organization. 
‘‘(C) The contract shall provide that the 
entity pay claims in a timely manner and in ac-
cordance 
with 
the 
provisions 
of 
section 
1902(a)(37). 
‘‘(D) The contract shall provide that the 
Secretary shall make payments under this sec-
tion to the entity, with respect to coverage of 
each individual enrolled under the Program in 
such a coverage gap geographic area with re-
spect to which the entity administers the Pro-
gram in an amount specified in the contract, 
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subject to subparagraph (D)(ii) and paragraph 
(6). 
‘‘(E) The contract shall require— 
‘‘(i) the application of a minimum 
medical loss ratio (as calculated under sub-
section (d) of section 438.8 of title 42, 
Code of Federal Regulations (or any suc-
cessor regulation)) for payment for medical 
assistance administered by the managed 
care organization under the Program, with 
respect to a year, that is equal to or great-
er than 85 percent (or such higher percent 
as specified by the Secretary); and 
‘‘(ii) in the case, with respect to a 
year, the minimum medical loss ratio (as 
so calculated) for payment for services 
under the benefits so administered is less 
than 85 percent (or such higher percent as 
specified by the Secretary under clause 
(i)), remittance by the organization to the 
Secretary of any payments (or portions of 
payments) made to the organization under 
this section in an amount equal to the dif-
ference in payments for medical assistance, 
with respect to the year, resulting from the 
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organization’s failure to meet such ratio 
for such year. 
‘‘(F) The contract shall require that the el-
igible entity submit to the Secretary— 
‘‘(i) the number of individuals enrolled 
in the Program with respect to each cov-
erage gap geographic area and month with 
respect to which the contract applies; 
‘‘(ii) encounter data (disaggregated by 
race, ethnicity, and age) with respect to 
each coverage gap geographic area and 
month with respect to which the contract 
applies; and 
‘‘(iii) such additional information as 
specified by the Secretary for purposes of 
payment, program integrity, oversight, 
quality measurement, or such other pur-
pose specified by the Secretary. 
‘‘(G) The contract shall require that the el-
igible entity perform any other activity identi-
fied by the Secretary. 
‘‘(4) CONTRACT WITH A THIRD PARTY PLAN 
ADMINISTRATOR.— 
‘‘(A) IN GENERAL.—In the case of a con-
tract under paragraph (1) between the Sec-
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retary and an eligible entity to administer the 
Program as a third party plan administrator, 
with respect to one or more coverage gap geo-
graphic areas, such contract shall provide that, 
with respect to medical assistance provided 
under the Federal Medicaid program to individ-
uals who are enrolled in the Program with re-
spect to such area (or areas)— 
‘‘(i) the third party plan administrator 
shall, consistent with such requirements as 
may be established by the Secretary— 
‘‘(I) establish provider networks, 
payment rates, and utilization man-
agement, consistent with the provi-
sions of section 1902(a)(30)(A), as 
applied by subsection (a)(4) of this 
section; 
‘‘(II) pay claims in a timely man-
ner and in accordance with the provi-
sions of section 1902(a)(37); 
‘‘(III) submit to the Secretary— 
‘‘(aa) the number of individ-
uals enrolled in the Program with 
respect to each coverage gap geo-
graphic area and month with re-
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556 
spect to which the contract ap-
plies; 
‘‘(bb) 
encounter 
data 
(disaggregated by race, ethnicity, 
and age) with respect to each 
coverage gap geographic area and 
month with respect to which the 
contract applies; and 
‘‘(cc) such additional infor-
mation as specified by the Sec-
retary for purposes of payment, 
program 
integrity, 
oversight, 
quality measurement, or such 
other purpose specified by the 
Secretary; and 
‘‘(IV) perform any other activity 
identified by the Secretary; 
‘‘(ii) the Secretary shall make pay-
ments (for the claims submitted by the 
third party plan administrator and for an 
economic and efficient administrative fee) 
under this section to the third party plan 
administrator, with respect to coverage of 
each individual enrolled under the Program 
in a coverage gap geographic area with re-
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557 
spect to which the third party plan admin-
istrator administers the Program in an 
amount determined under the contract, 
subject to subclause (VI)(bb) and para-
graph (7); and 
‘‘(iii) the provisions of clause (xii) of 
section 1903(m)(2)(A) (to the extent such 
clause relates to subsections (b), (d), (f), 
and (i) of section 1932) shall, to the great-
est extent practicable, apply to the con-
tract, to the Secretary, and to the third 
party plan administrator, with respect to 
providing medical assistance under the 
Federal Medicaid program with respect to 
such area (or areas), in the same manner 
and to the same extent as such provisions 
apply to a contract under section 1903(m) 
between a State and an entity that is a 
medicaid managed care organization (as 
defined in section 1903(m)(1)), to the 
State, and to the entity, with respect to 
providing medical assistance to individuals 
eligible for benefits under this title 
‘‘(B) THIRD PARTY PLAN ADMINISTRATOR 
DEFINED.—For purposes of this section, the 
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558 
term ‘third party plan administrator’ means an 
entity that satisfies such requirements as estab-
lished by the Secretary, which shall include at 
least that such an entity administers health 
plan benefits, pays claims under the plan, es-
tablishes provider networks, sets payment rates, 
and are not risk-bearing entities. 
‘‘(5) ADMINISTRATIVE AUTHORITY.—The Sec-
retary may take such actions as are necessary to ad-
minister this subsection, including by setting net-
work adequacy standards, establishing quality re-
quirements, establishing reporting requirements, lim-
iting administrative costs, and specifying any other 
program requirements or standards necessary in 
contracting with specified entities under this sub-
section, and overseeing such entities, with respect to 
the administration of the Federal Medicaid program. 
‘‘(6) PREEMPTION.—In carrying out the duties 
under a contract entered into under paragraph (1) 
between the Secretary and a Medicaid managed care 
organization or a third party plan administrator, 
with respect to a coverage gap State— 
‘‘(A) the Secretary may establish minimum 
standards and licensure requirements for such a 
Medicaid managed care organization or third 
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559 
party plan administrator for purposes of car-
rying out such duties; and 
‘‘(B) any provisions of law of that State 
which relate to the licensing of the organization 
or administrator and which prohibit the organi-
zation or administrator from providing coverage 
pursuant to a contract under this section shall 
be superseded. 
‘‘(7) PENALTIES.—In the case of an eligible en-
tity with a contract under this section that fails to 
comply with the requirements of such entity pursu-
ant to this section or such contract, the Secretary 
may withhold payment (or any portion of such pay-
ment) to such entity under this section in accord-
ance with a process specified by the Secretary, im-
pose a corrective action plan on such entity, termi-
nate the contract, or impose a civil monetary penalty 
on such entity in an amount not to exceed $10,000 
for each such failure. In implementing this para-
graph, the Secretary shall have the authorities pro-
vided the Secretary under section 1932(e) and sub-
parts F and I of part 438 of title 42, Code of Fed-
eral Regulations. 
‘‘(8) COVERAGE GAP GEOGRAPHIC AREA.—For 
purposes of this section, the term ‘coverage gap geo-
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graphic area’ means an area of one or more coverage 
gap States, as specified by the Secretary, or any 
area within such a State, as specified by the Sec-
retary. 
‘‘(c) PERIODIC DATA MATCHING.—The Secretary 
shall, including through contract, periodically verify the 
income of an individual enrolled in the Federal Medicaid 
program for a year, before the end of such year, to deter-
mine if there has been any change in the individual’s eligi-
bility for benefits under the program. For purposes of the 
previous sentence, in the case that, pursuant to such 
verification, an individual is determined to have had a 
change in income that results in such individual no longer 
be included as an individual described in section 
1902(a)(10)(A)(i)(VIII), the Secretary shall apply the 
same processes and protections as States are required 
under this title to apply with respect to an individual who 
is determined to have had a change in income that results 
in such individual no longer being included as eligible for 
medical assistance under this title (other than pursuant 
to this section). 
‘‘(d) DRUG REBATES.—For purposes of subsection 
(a)(2)(C), in applying section 1927, the Secretary shall 
(either directly or through contracts)— 
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‘‘(1) require an eligible entity with a contract 
under subsection (b) to report the data required to 
be reported under section 1927(b)(2) by a State 
agency and require such entity to submit to the Sec-
retary rebate data, utilization data, and any other 
information that would otherwise be required under 
section 1927 to be submitted to the Secretary by a 
State; 
‘‘(2) shall take such actions as are necessary 
and develop or adapt such processes and mecha-
nisms as are necessary to report and collect data as 
is necessary and to bill and track rebates under sec-
tion 1927, as applied pursuant to subsection 
(a)(2)(B) for drugs that are provided under the Fed-
eral Medicaid program; 
‘‘(3) provide that the coverage requirements of 
prescription drugs under the Federal Medicaid pro-
gram comply with the coverage requirements under 
section 1927; 
‘‘(4) require that in order for payment to be 
available under the Federal Medicaid program or 
under section 1903(a) for covered outpatient drugs 
of a manufacturer, the manufacturer must have en-
tered into and have in effect a rebate agreement to 
provide rebates under section 1927 to the Federal 
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562 
Medicaid program in the same form and manner as 
the manufacturer is required to provide rebates 
under an agreement described in section 1927(b) to 
a State Medicaid program under this title; 
‘‘(5) require an eligible entity with a contract 
under subsection (b) to provide for a drug use re-
view program described in subsection (g) of section 
1927 in accordance with the requirements applicable 
to a State under such subsection (g) with respect to 
a drug use review program; and 
‘‘(6) adopt a mechanism to prevent the require-
ments of section 1927 from applying to covered out-
patient drugs under the Federal Medicaid program 
pursuant to this subsection and subsection (a)(2)(C) 
if such drugs are subject to discounts under section 
340B of the Public Health Service Act. 
‘‘(e) TRANSITIONS.— 
‘‘(1) FROM EXCHANGE PLANS ONTO FEDERAL 
MEDICAID PROGRAM.—The Secretary shall provide 
for a process under which, in the case of individuals 
entitled to medical assistance pursuant section 
1902(a)(10)(A)(i)(VIII) who are enrolled in qualified 
health plans through an Exchange in a coverage gap 
State, the Secretary takes such steps as are nec-
essary to transition such individuals to coverage 
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563 
under the Federal Medicaid program. Such process 
shall 
apply 
procedures 
described 
in 
section 
1943(b)(1)(C) to screen for eligibility and enroll-
ment under the Federal Medicaid program in the 
same manner as such procedures screen for eligi-
bility and enrollment under qualified health plans 
through an Exchange established under title I of the 
Patient Protection and Affordable Care Act. 
‘‘(2) IN CASE COVERAGE GAP STATE BEGINS 
PROVIDING
COVERAGE
UNDER
STATE
PLAN.—The 
Secretary shall provide for a process for, in the case 
of a coverage gap State in which the State begins 
to provide medical assistance to individuals described 
in section 1902(a)(10)(A)(i)(VIII) under the State 
plan (or waiver of such plan) and the Federal Med-
icaid program ceases to be offered, transitioning in-
dividuals from such program to the State plan (or 
waiver), 
as 
eligible, 
including 
a 
process 
for 
transitioning all eligibility redeterminations. 
‘‘(3) AUTHORITY
FOR
PHASE-IN.—The Sec-
retary may apply section 1902(a)(34), pursuant to 
subsection (a)(2)(B) of this section, in accordance 
with such phased-in implementation as the Secretary 
deems necessary, but beginning as soon as prac-
ticable. 
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564 
‘‘(f) COORDINATION
WITH
AND
ENROLLMENT 
THROUGH EXCHANGES.—The Secretary shall take such 
actions as are necessary to provide, in the case of a cov-
erage gap State in which the Federal Medicaid program 
is offered, for the availability of information on, deter-
minations of eligibility for, and enrollment in such pro-
gram through and coordinated with the Exchange estab-
lished with respect to such State under title I of the Pa-
tient Protection and Affordable Care Act. 
‘‘(g) THIRD PARTY LIABILITY.—The provisions of 
section 1902(a)(25) shall apply with respect to the Fed-
eral Medicaid program, the Secretary, and the eligible en-
tities with a contract under subsection (b) in the same 
manner as such provisions apply with respect to State 
plans under this title (or waiver of such plans) and the 
State or local agency administering such plan (or waiver). 
The Secretary may specify a timeline (which may include 
a phase-in) for implementing this subsection. 
‘‘(h) FRAUD AND ABUSE PROVISIONS.—Provisions of 
law (other than criminal law provisions) identified by the 
Secretary, in consultation (as appropriate) with the In-
spector General of the Department of Health and Human 
Services, that impose sanctions with respect to waste, 
fraud, and abuse under this title or title XI, such as the 
False Claims Act (31 U.S.C. 3729 et seq.), as well as pro-
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565 
visions of law (other than criminal law provisions) identi-
fied by the Secretary that provide oversight authority, 
shall also apply to the Federal Medicaid program. 
‘‘(i) MAINTENANCE OF EFFORT.— 
‘‘(1) PAYMENT.— 
‘‘(A) IN GENERAL.—In the case of a State 
that, as of January 1, 2022, is expending 
amounts for all individuals described in section 
1902(a)(10)(A)(i)(VIII) under the State plan 
(or waiver of such plan) and that stops expend-
ing amounts for all such individuals under the 
State plan (or waiver of such plan), such State 
shall for each quarter beginning after January 
1, 2022, during which such State does not ex-
pend amounts for all such individuals provide 
for payment under this subsection to the Sec-
retary of the product of— 
‘‘(i) 10 percent of, subject to subpara-
graph (B), the average monthly per capita 
costs expended under the State plan (or 
waiver of such plan) for such individuals 
during the most recent previous quarter 
with respect to which the State expended 
amounts for all such individuals; and 
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‘‘(ii) the sum, for each month during 
such quarter, of the number of individuals 
enrolled under such program in such State. 
‘‘(B) ANNUAL INCREASE.—For purposes of 
subparagraph (A), in the case of a State with 
respect to which such subparagraph applies 
with respect to a period of consecutive quarters 
occurring during more than one calendar year, 
for such consecutive quarters occurring during 
the second of such calendar years or a subse-
quent calendar year, the average monthly per 
capita costs for each such quarter for such 
State determined under subparagraph (A)(i), or 
this subparagraph, shall be annually increased 
by the Secretary by the percentage increase in 
Medicaid spending under this title during the 
preceding year (as determined based on the 
most recent National Health Expenditure data 
with respect to such year). 
‘‘(2) FORM AND MANNER OF PAYMENT.—Pay-
ment under paragraph (1) shall be made in a form 
and manner specified by the Secretary. 
‘‘(3) COMPLIANCE.—If a State fails to pay to 
the Secretary an amount required under paragraph 
(1), interest shall accrue on such amount at the rate 
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567 
provided under section 1903(d)(5). The amount so 
owed and applicable interest shall be immediately 
offset against amounts otherwise payable to the 
State under section 1903(a), in accordance with the 
Federal Claims Collection Act of 1996 and applica-
ble regulations. 
‘‘(4) DATA MATCH.—The Secretary shall per-
form such periodic data matches as may be nec-
essary to identify and compute the number of indi-
viduals enrolled under the Federal Medicaid pro-
gram under section 1948 in a coverage gap State (as 
referenced in subsection (a) of such section) for pur-
poses of computing the amount under paragraph 
(1). 
‘‘(5) NOTICE.—The Secretary shall notify each 
State described in paragraph (1) not later than a 
date specified by the Secretary that is before the be-
ginning of each quarter (beginning with 2022) of the 
amount computed under paragraph (1) for the State 
for that year. 
‘‘(j) APPROPRIATIONS.—In addition to amounts oth-
erwise available, there is appropriated, out of any funds 
in the Treasury not otherwise appropriated, for each fiscal 
year such sums as are necessary to carry out subsections 
(a) through (i) of this section.’’. 
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568 
(b) DRUG REBATE CONFORMING AMENDMENT.— 
Section 1927(a)(1) of the Social Security Act (42 U.S.C. 
1396r–8(a)(1)) is amended in the first sentence— 
(1) by striking ‘‘or under part B of title XVIII’’ 
and inserting ‘‘, under the Federal Medicaid pro-
gram under section 1948, or under part B of title 
XVIII’’; and 
(2) by inserting ‘‘including as such subsection is 
applied pursuant to subsections (a)(2)(C) and (d) of 
section 1948 with respect to the Federal Medicaid 
program,’’ before ‘‘and must meet’’. 
PART 2—EXPANDING ACCESS TO MEDICAID 
HOME AND COMMUNITY-BASED SERVICES 
SEC. 30711. DEFINITIONS. 
In this part: 
(1) 
APPROPRIATE
COMMITTEES
OF
CON-
GRESS.—The term ‘‘appropriate committees of Con-
gress’’ means the Committee on Energy and Com-
merce of the House of Representatives, the Com-
mittee on Finance of the Senate, the Committee on 
Health, Education, Labor and Pensions of the Sen-
ate, and the Special Committee on Aging of the Sen-
ate. 
(2) DIRECT CARE WORKER.—The term ‘‘direct 
care worker’’ means, with respect to a State, any of 
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the following individuals who by contract, by receipt 
of payment for care, or as a result of the operation 
of law, provides directly to Medicaid eligible individ-
uals home and community-based services available 
under the State Medicaid program: 
(A) A registered nurse, licensed practical 
nurse, nurse practitioner, or clinical nurse spe-
cialist who provides licensed nursing services, or 
a licensed nursing assistant who provides such 
services under the supervision of a registered 
nurse, licensed practical nurse, nurse practi-
tioner, or clinical nurse specialist. 
(B) A direct support professional. 
(C) A personal care attendant. 
(D) A home health aide. 
(E) Any other paid health care profes-
sional or worker determined to be appropriate 
by the State and approved by the Secretary. 
(3) HCBS PROGRAM IMPROVEMENT STATE.— 
The term ‘‘HCBS program improvement State’’ 
means a State that is awarded a planning grant 
under section 1011(a) and has an HCBS improve-
ment plan approved by the Secretary under section 
1011(d). 
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570 
(4) HEALTH PLAN.—The term ‘‘health plan’’ 
means any of the following entities that provide or 
arrange for home and community-based services for 
Medicaid eligible individuals who are enrolled with 
the entities under a contract with a State: 
(A) A medicaid managed care organiza-
tion, as defined in section 1903(m)(1)(A) of the 
Social 
Security 
Act 
(42 
U.S.C. 
1396b(m)(1)(A)). 
(B) A prepaid inpatient health plan or pre-
paid ambulatory health plan, as defined in sec-
tion 438.2 of title 42, Code of Federal Regula-
tions (or any successor regulation)). 
(C) Any other entity determined to be ap-
propriate by the State and approved by the Sec-
retary. 
(5) HOME
AND
COMMUNITY-BASED
SERV-
ICES.—The term ‘‘home and community-based serv-
ices’’ means any of the following (whether provided 
on a fee-for-service, risk, or other basis): 
(A) Home health care services authorized 
under paragraph (7) of section 1905(a) of the 
Social Security Act (42 U.S.C. 1396d(a)). 
(B) Private duty nursing services author-
ized under paragraph (8) of such section, when 
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