1390
‘‘(A) fiscal year 1996 is $95.673 billion;
‘‘(B) fiscal year 1997 is $102.135 billion;
‘‘(C) fiscal year 1998 is $106.221 billion;
‘‘(D) fiscal year 1999 is $110.469 billion;
‘‘(E) fiscal year 2000 is $114.888 billion;
‘‘(F) fiscal year 2001 is $119.483 billion;
‘‘(G) fiscal year 2002 is $124.263 billion;
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
percent or the annual percentage increase in
the consumer price index for all urban consum-
ers (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
‘‘(B) such pool amount for the previous
fiscal year.
1391
‘‘(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
data reported on the HCFA Form 64 as of
September 1, 1995, based on—
1392
‘‘(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
with fiscal year 1997) is equal to the product
of—
1393
‘‘(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
(taking into account the floors and ceilings
under paragraph (3)), the total of the outlay al-
1394
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.—102 percent
of the amount of the State outlay allot-
ment under this subsection for the pre-
vious fiscal year.
‘‘(ii) FLOOR BASED ON OUTLAY AL-
LOTMENT
GROWTH
RATE
IN
FIRST
YEAR.—Beginning with fiscal year 1998,
1395
in the case of a State for which the outlay
allotment under this subsection for fiscal
year 1997 exceeded its outlay allotment
under this subsection for the previous fis-
cal year by—
‘‘(I) more than 125 percent of
the national MediGrant growth per-
centage for fiscal year 1997, 104 per-
cent of the amount of the State outlay
allotment under this subsection for
the previous fiscal year; or
‘‘(II) less than 125 percent (but
more than 75 percent) of the national
MediGrant growth percentage for fis-
cal year 1997, 103 percent of the
amount of the State outlay allotment
under this subsection for the previous
fiscal year.
‘‘(B) CEILING.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), in no case shall the amount of the
State outlay allotment under paragraph
(2) for a fiscal year be greater than the
product of—
1396
‘‘(I) the State outlay allotment
under this subsection for the State for
the preceding fiscal year, and
‘‘(II) 133 percent of the national
MediGrant growth percentage (as de-
termined under subsection (b)(2)) for
the fiscal year involved.
‘‘(ii) SPECIAL
RULE.—For a fiscal
year after fiscal year 1997, in the case of
a State (among the 50 States and the Dis-
trict of Columbia) that is one of the 10
States with the lowest Federal MediGrant
spending per resident-in-poverty rates (as
determined under clause (iii)) for the fiscal
year, the reference in clause (i)(II) to ‘133
percent’ is deemed a reference to ‘150 per-
cent’.
‘‘(iii) DETERMINATION
OF
FEDERAL
MEDIGRANT SPENDING PER RESIDENT-IN-
POVERTY RATE.—For purposes of clause
(ii), the ‘Federal MediGrant spending per
resident-in-poverty rate’ for a State for a
fiscal year is equal to—
‘‘(I) the State’s outlay allotment
under this subsection for the previous
1397
fiscal year (determined without regard
to paragraph (4)), divided by
‘‘(II) the average annual number
of residents of the State in poverty
(as defined in subsection (d)(2)) with
respect to the fiscal year.
‘‘(4) ELECTION
OF
ALTERNATIVE
GROWTH
FORMULA.—
‘‘(A) ELECTION.—In order to reduce vari-
ations in increases in outlay allotments over
time, any of the 50 States or the District of Co-
lumbia may elect (by notice provided to the Sec-
retary by not later than April 1, 1996) to adopt
an alternative growth rate formula under this
paragraph for the determination of the State’s
outlay allotment in fiscal year 1996 and for the
increase in the amount of such allotment in
subsequent fiscal years.
‘‘(B) FORMULA.—The alternative growth
formula under this paragraph may be any for-
mula under which a portion of the State outlay
allotment for fiscal year 1996 under paragraph
(1) is deferred and applied to increase the
amount of its outlay allotment for one or more
subsequent fiscal years, so long as the total
1398
amount of such increases for all such subse-
quent fiscal years does not exceed the amount
of the outlay allotment deferred from fiscal year
1996.
‘‘(5) COMMONWEALTHS
AND
TERRITORIES.—
The outlay allotment for each of the Commonwealths
and territories for a fiscal year is the maximum
amount that could have been certified under section
1108(c) with respect to the Commonwealth or terri-
tory for the fiscal year with respect to title XIX, if
the national MediGrant growth percentage (as deter-
mined under subsection (b)(2)) for the fiscal year
had been substituted (beginning with fiscal year
1997) for the percentage increase referred to in sec-
tion 1108(c)(1)(B).
‘‘(d) STATE AGGREGATE EXPENDITURE NEED DE-
TERMINED.—
‘‘(1) IN GENERAL.—For purposes of subsection
(c), the ‘State aggregate expenditure need’ for a
State for a fiscal year is equal to the product of the
following 4 factors:
‘‘(A) RESIDENTS IN POVERTY.—The aver-
age annual number of residents in poverty of
the State with respect to the fiscal year (as de-
termined under paragraph (2)).
1399
‘‘(B) CASE MIX INDEX.—The average of
the case mix indexes for the State (as deter-
mined under paragraph (3)) for the 3 most re-
cent fiscal years for which data are available,
but in no case less than .9 or greater than 1.15.
‘‘(C) INPUT COST INDEX.—The average of
the input cost indexes for the State (as deter-
mined under paragraph (4)) for the 3 most re-
cent fiscal years for which data are available.
‘‘(D) NATIONAL AVERAGE SPENDING PER
RESIDENT IN POVERTY.—The national average
spending per resident in poverty (as determined
under paragraph (5)).
‘‘(2) RESIDENTS
IN
POVERTY.—In this sec-
tion—
‘‘(A) IN GENERAL.—The term ‘average an-
nual number of residents in poverty’ means,
with respect to a State and a fiscal year, the
average annual number of residents in poverty
(as defined in subparagraph (B)) in the State
(based on data made generally available by the
Bureau of the Census from the Current Popu-
lation Survey) for the most recent 3-calendar-
year period (ending before the fiscal year) for
which such data are available.
1400
‘‘(B) RESIDENT IN POVERTY DEFINED.—
The term ‘resident in poverty’ means an indi-
vidual whose family income does not exceed the
poverty threshold (as such terms are defined by
the Office of Management and Budget and are
generally interpreted and applied by the Bureau
of the Census for the year involved).
‘‘(3) CASE MIX INDEX.—
‘‘(A) IN GENERAL.—In this subsection, the
‘case mix index’ for a State for a fiscal year is
equal to—
‘‘(i) the sum of—
‘‘(I) the projected per recipient
expenditures with respect to elderly
individuals in the State for the fiscal
year (determined under subparagraph
(B)),
‘‘(II) the projected per recipient
expenditures with respect to the blind
and disabled individuals in the State
for the fiscal year (determined under
subparagraph (C)), and
‘‘(III) the projected per recipient
expenditures with respect to other in-
1401
dividuals in the State (determined
under subparagraph (D));
divided by—
‘‘(ii) the national average spending
per recipient determined under subpara-
graph (E) for the fiscal year involved.
‘‘(B) PROJECTED PER RECIPIENT EXPEND-
ITURES FOR THE ELDERLY.—For purposes of
subparagraph (A)(I)(i), the ‘projected per recip-
ient expenditures with respect to elderly individ-
uals’ in a State for a fiscal year is equal to the
product of—
‘‘(i) the national average per recipient
expenditures under this title in the 50
States and the District of Columbia for the
most recent fiscal year for which data are
available for individuals who are 65 years
of age or older, and
‘‘(ii) the proportion, of all individuals
who received medical assistance under this
title in the State in the most recent fiscal
year referred to in clause (i), that were in-
dividuals described in such clause.
‘‘(C) PROJECTED PER RECIPIENT EXPEND-
ITURES FOR THE BLIND AND DISABLED.—For
1402
purposes of subparagraph (A)(i)(II), the ‘pro-
jected per recipient expenditures with respect to
blind and disabled individuals’ in a State for a
fiscal year is equal to the product of—
‘‘(i) the national average per recipient
expenditures under this title in the 50
States and the District of Columbia for the
most recent fiscal year for which data are
available for individuals who are eligible
for medical assistance because they are
blind or disabled and under 65 years of
age, and
‘‘(ii) the proportion, of all individuals
who received medical assistance under this
title in the State in the most recent fiscal
year referred to in clause (i), that were in-
dividuals described in such clause.
‘‘(D) PROJECTED
PER
RECIPIENT
EX-
PENDITURES
FOR
OTHER
INDIVIDUALS.—For
purposes of subparagraph (A)(i)(III), the ‘pro-
jected per recipient expenditures with respect to
other individuals’ in a State for a fiscal year is
equal to the product of—
‘‘(i) the national average per recipient
expenditures under this title in the 50
1403
States and the District of Columbia for the
most recent fiscal year for which data are
available for individuals who are not de-
scribed in subparagraph (B)(i) or (C)(i),
and
‘‘(ii) the proportion, of all individuals
who received medical assistance under this
title in the State in the most recent fiscal
year referred to in clause (i), that were in-
dividuals described in such clause.
‘‘(E) NATIONAL AVERAGE SPENDING PER
RECIPIENT.—For purposes of this paragraph,
the ‘national average expenditures per recipient’
for a fiscal year is equal to the sum of—
‘‘(i) the product of (I) the national av-
erage described in subparagraph (B)(i),
and (II) the proportion, of all individuals
who received medical assistance under this
title in any of the 50 States or the District
of Columbia in the fiscal year referred to
in such subparagraph, who are described
in such subparagraph;
‘‘(ii) the product of (I) the national
average described in subparagraph (C)(i),
and (II) the proportion, of all individuals
1404
who received medical assistance under this
title in any of the 50 States or the District
of Columbia in the fiscal year referred to
in such subparagraph, who are described
in such subparagraph; and
‘‘(iii) the product of (I) the national
average described in subparagraph (D)(i),
and (II) the proportion, of all individuals
who received medical assistance under this
title in any of the 50 States or the District
of Columbia in the fiscal year referred to
in such subparagraph, who are described
in such subparagraph.
‘‘(F) DETERMINATION OF NATIONAL AVER-
AGES AND PROPORTIONS.—
‘‘(i) IN GENERAL.—The national aver-
ages per recipient and the proportions re-
ferred to in clauses (i) and (ii), respec-
tively, of subparagraphs (B), (C), and (D)
and subparagraph (E) shall be determined
by the Secretary using the most recent
data available.
‘‘(ii) USE OF MEDICAID DATA.—If for
a fiscal year there is inadequate data to
compute such averages and proportions
1405
based on expenditures and numbers of in-
dividuals 
receiving 
medical 
assistance
under this title, the Secretary may com-
pute such averages based on expenditures
and numbers of such individuals under
title XIX for the most recent fiscal year
for which data are available and, for this
purpose—
‘‘(I) any reference in subpara-
graph (B)(i) to ‘individuals 65 years
of age or older’ is deemed a reference
to ‘individuals whose eligibility for
medical assistance is based on being
65 years of age or older’,
‘‘(II) the reference in subpara-
graph (C)(i) to ‘and under 65 years of
age’ shall be considered to be deleted,
and
‘‘(III) individuals whose basis for
eligibility for medical assistance was
reported as unknown shall not be
counted as individuals under subpara-
graph (D)(i).
‘‘(4) INPUT COST INDEX.—
1406
‘‘(A) IN
GENERAL.—In this section, the
‘input cost index’ for a State for a fiscal year
is the sum of—
‘‘(i) 0.15, and
‘‘(ii) 0.85 multiplied by the ratio of
(I) the annual average wages for hospital
employees in the State for the fiscal year
(as determined under subparagraph (B)),
to (II) the annual average wages for hos-
pital employees in the 50 States and the
District of Columbia for such year (as de-
termined under such subparagraph).
‘‘(B) DETERMINATION OF ANNUAL AVER-
AGE
WAGES
OF
HOSPITAL
EMPLOYEES.—The
Secretary shall provide for the determination of
annual average wages for hospital employees in
a State and, collectively, in the 50 States and
the District of Columbia for a fiscal year based
on the area wage index applicable to hospitals
under 1886(d)(2)(E) (or, if such index no
longer exists, a comparable index of hospital
wages) for discharges occurring during the fis-
cal year involved.
‘‘(5) NATIONAL AVERAGE SPENDING PER RESI-
DENT
IN
POVERTY.—For purposes of this sub-
1407
section, the ‘national average spending per resident
in poverty’—
‘‘(A) for fiscal year 1997 is equal to—
‘‘(i) the sum (for each of the 50
States and the District of Columbia) of the
total of the Federal and State expenditures
under title XIX for calendar quarters in
fiscal year 1994, increased by the percent-
age specified in subsection (c)(1)(A)(ii), di-
vided by
‘‘(ii) the sum of the number of resi-
dents in poverty (as defined in paragraph
(2)(A)) for all of the 50 States and the
District of Columbia for fiscal year 1994;
‘‘(B) for a succeeding fiscal year is equal
to the national average spending per resident in
poverty under this paragraph for the preceding
fiscal year increased by the national MediGrant
growth percentage (as defined in subsection
(b)(2)) for the fiscal year involved.
‘‘(e) PUBLICATION OF OBLIGATION AND OUTLAY AL-
LOTMENTS.—
‘‘(1) NOTICE OF PRELIMINARY ALLOTMENTS.—
Not later than April 1 before the beginning of each
fiscal year (beginning with fiscal year 1997), the
1408
Secretary shall initially compute, after consultation
with the Comptroller General, and publish in the
Federal Register notice of the proposed obligation
and outlay allotments for each State under this sec-
tion (not taking into account subsection (a)(2)(B))
for the fiscal year. The Secretary shall include in the
notice a description of the methodology and data
used in deriving such allotments for the year.
‘‘(2) REVIEW BY GAO.—The Comptroller Gen-
eral shall submit to Congress by not later than May
15 of each such fiscal year, a report analyzing such
allotments and the extent to which they comply with
the precise requirements of this section.
‘‘(3) NOTICE
OF
FINAL
ALLOTMENTS.—Not
later than July 1 before the beginning of each such
fiscal year, the Secretary, taking into consideration
the analysis contained in the report of the Comptrol-
ler General under paragraph (2), shall compute and
publish in the Federal Register notice of the final al-
lotments under this section (both taking into ac-
count and not taking into account subsection
(a)(2)(B)) for the fiscal year. The Secretary shall in-
clude in the notice a description of any changes in
such allotments from the initial allotments published
under paragraph (1) for the fiscal year and the rea-
1409
sons for such changes. Once published under this
paragraph, the Secretary is not authorized to change
such allotments.
‘‘(4) GAO REPORT ON FINAL ALLOTMENTS.—
The Comptroller General shall submit to Congress
by not later than August 1 of each such fiscal year,
a report analyzing the final allotments under para-
graph (3) and the extent to which they comply with
the precise requirements of this section.
‘‘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)—
1410
‘‘(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
1411
subsection (a) for such quarter, such estimates to be
based on (A) a report filed by the State containing
its estimate of the total sum to be expended in such
quarter in accordance with the provisions of such
subsections, and stating the amount appropriated or
made available by the State and its political subdivi-
sions for such expenditures in such quarter, and if
such amount is less than the State’s proportionate
share of the total sum of such estimated expendi-
tures, the source or sources from which the dif-
ference is expected to be derived, and (B) such other
investigation as the Secretary may find necessary.
‘‘(2) PAYMENT.—
‘‘(A) IN
GENERAL.—The Secretary shall
then pay to the State, in such installments as
the Secretary may determine and in accordance
with section 6503(a) of title 31, United States
Code, the amount so estimated, reduced or in-
creased to the extent of any overpayment or
underpayment which the Secretary determines
was made under this section (or section 1903)
to such State for any prior quarter and with re-
spect to which adjustment has not already been
made under this subsection (or under section
1903(d)).
1412
‘‘(B) TREATMENT
AS
OVERPAYMENTS.—
Expenditures for which payments were made to
the State under subsection (a) shall be treated
as an overpayment to the extent that the State
or local agency administering such plan has
been reimbursed for such expenditures by a
third party pursuant to the provisions of its
plan in compliance with section 2135.
‘‘(C) RECOVERY OF OVERPAYMENTS.—For
purposes of this subsection, when an overpay-
ment is discovered, which was made by a State
to a person or other entity, the State shall have
a period of 60 days in which to recover or at-
tempt to recover such overpayment before ad-
justment is made in the Federal payment to
such State on account of such overpayment.
Except as otherwise provided in subparagraph
(D), the adjustment in the Federal payment
shall be made at the end of the 60 days, wheth-
er or not recovery was made.
‘‘(D) 
NO
ADJUSTMENT
FOR
UNCOLLECTABLES.—In any case where the
State is unable to recover a debt which rep-
resents an overpayment (or any portion thereof)
made to a person or other entity on account of
1413
such debt having been discharged in bankruptcy
or otherwise being uncollectable, no adjustment
shall be made in the Federal payment to such
State on account of such overpayment (or por-
tion thereof).
‘‘(3) FEDERAL SHARE OF RECOVERIES.—The
pro rata share to which the United States is equi-
tably entitled, as determined by the Secretary, of the
net amount recovered during any quarter by the
State or any political subdivision thereof with re-
spect to medical assistance furnished under the
State plan shall be considered an overpayment to be
adjusted under this subsection.
‘‘(4) TIMING
OF
OBLIGATION
OF
FUNDS.—
Upon the making of any estimate by the Secretary
under this subsection, any appropriations available
for payments under this section shall be deemed ob-
ligated.
‘‘(5) DISALLOWANCES.—In any case in which
the Secretary estimates that there has been an over-
payment under this section to a State on the basis
of a claim by such State that has been disallowed by
the Secretary under section 1116(d), and such State
disputes such disallowance, the amount of the Fed-
eral payment in controversy shall, at the option of
1414
the State, be retained by such State or recovered by
the Secretary pending a final determination with re-
spect to such payment amount. If such final deter-
mination is to the effect that any amount was prop-
erly disallowed, and the State chose to retain pay-
ment of the amount in controversy, the Secretary
shall offset, from any subsequent payments made to
such State under this title, an amount equal to the
proper amount of the disallowance plus interest on
such amount disallowed for the period beginning on
the date such amount was disallowed and ending on
the date of such final determination at a rate (deter-
mined by the Secretary) based on the average of the
bond equivalent of the weekly 90-day treasury bill
auction rates during such period.
‘‘(c) APPLICABLE FEDERAL MEDICAL ASSISTANCE
PERCENTAGE DEFINED.—In this section, except as pro-
vided in subsection (f), the term ‘applicable Federal medi-
cal assistance percentage’ means, with respect to one of
the 50 States or the District of Columbia, at the State’s
or District’s option—
‘‘(1) the old Federal medical assistance percent-
age (as determined in subsection (d)), or
‘‘(2) the new Federal medical assistance per-
centage (as determined under subsection (e)) or, if
1415
less, the old Federal medical assistance percentage
plus 10 percentage points.
‘‘(d) OLD FEDERAL MEDICAL ASSISTANCE PER-
CENTAGE.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2) and subsection (f), the term ‘old Federal
medical assistance percentage’ for any State is 100
percent less the State percentage; and the State per-
centage is that percentage which bears the same
ratio to 45 percent as the square of the per capita
income of such State bears to the square of the per
capita income of the continental United States (in-
cluding Alaska) and Hawaii.
‘‘(2) LIMITATION ON RANGE.—In no case shall
the old Federal medical assistance percentage be less
than 50 percent or more than 83 percent.
‘‘(3) PROMULGATION.—The old Federal medical
assistance percentage for any State shall be deter-
mined and promulgated in accordance with the pro-
visions of section 1101(a)(8)(B).
‘‘(e) NEW FEDERAL MEDICAL ASSISTANCE PER-
CENTAGE DEFINED.—
‘‘(1) IN GENERAL.—
‘‘(A) TERM DEFINED.—Except as provided
in paragraph (3) and subsection (f), the term
1416
‘new Federal medical assistance percentage’
means, for each of the 50 States and the Dis-
trict of Columbia, 100 percent reduced by the
product 0.39 and the ratio of—
‘‘(i)(I) for each of the 50 States, the
total taxable resources (TTR) ratio of the
State specified in subparagraph (B), or
‘‘(II) for the District of Columbia, the
per capita income ratio specified in sub-
paragraph (C),
to—
‘‘(ii) the aggregate expenditure need
ratio of the State or District, as described
in subparagraph (D).
‘‘(B) TOTAL
TAXABLE
RESOURCES
(TTR)
RATIO.—For 
purposes 
of 
subparagraph
(A)(i)(I), the total taxable resources (TTR)
ratio for each of the 50 States is—
‘‘(i) an amount equal to the most re-
cent 3-year average of the total taxable re-
sources (TTR) of the State, as determined
by the Secretary of the Treasury, divided
by
1417
‘‘(ii) an amount equal to the sum of
the 3-year averages determined under
clause (i) for each of the 50 States.
‘‘(C) PER
CAPITA
INCOME
RATIO.—For
purposes of subparagraph (A)(i)(II), the per
capita income ratio of the District of Columbia
is—
‘‘(i) an amount equal to the most re-
cent 3-year average of the total personal
income of the District of Columbia, as de-
termined in accordance with the provisions
of section 1101(a)(8)(B), divided by
‘‘(ii) an amount equal to the total per-
sonal income of the continental United
States (including Alaska) and Hawaii, as
determined under section 1101(a)(8)(B).
‘‘(D) AGGREGATE
EXPENDITURE
NEED
RATIO.—For purposes of subparagraph (A),
with respect to each of the 50 States and the
District of Columbia for a fiscal year, the ag-
gregate expenditure need ratio is—
‘‘(i) the State aggregate expenditure
need (as defined in section 2121(d)) for
the State for the fiscal year, divided by
1418
‘‘(ii) the such of such State aggregate
expenditure needs for the 50 States and
the District of Columbia for the fiscal year.
‘‘(2) LIMITATION ON RANGE.—Except as pro-
vided in subsection (f), the new Federal medical as-
sistance percentage shall in no case be less than 40
percent or greater than 83 percent.
‘‘(3) PROMULGATION.—The new Federal medi-
cal assistance percentage for any State shall be pro-
mulgated in a timely manner consistent with the
promulgation of the old Federal medical assistance
percentage under section 1101(a)(8)(B).
‘‘(f) SPECIAL RULES.—For purposes of this title—
‘‘(1) COMMONWEALTHS AND TERRITORIES.—In
the case of Puerto Rico, the Virgin Islands, Guam,
the Northern Mariana Islands, and American
Samoa, the old and new Federal medical assistance
percentages are 50 percent.
‘‘(2) INDIAN HEALTH SERVICE FACILITIES.—
‘‘(A) IN GENERAL.—The old and new Fed-
eral medical assistance percentages shall be 100
percent with respect to the amounts expended
as medical assistance for services which are re-
ceived through a facility described in subpara-
graph (B) of an Indian tribe or tribal organiza-
1419
tion or through an Indian Health Service facil-
ity whether operated by the Indian Health
Service or by an Indian tribe or tribal organiza-
tion (as defined in section 4 of the Indian
Health Care Improvement Act).
‘‘(B) FACILITY DESCRIBED.—For purposes
of subparagraph (A), a facility described in this
subparagraph is a facility of an Indian tribe
if—
‘‘(i) the facility is located in a State
which, as of the date of the enactment of
this title, was not operating its State plan
under title XIX pursuant to a Statewide
waiver approved under section 1115,
‘‘(ii) the facility is not an Indian
Health Service facility,
‘‘(iii) the tribe owns at least 2 such
facilities, and
‘‘(iv) the tribe has at least 50,000
members (as of the date of the enactment
of this title).
‘‘(3) NO STATE MATCHING REQUIRED FOR CER-
TAIN EXPENDITURES.—In applying subsection (a)(1)
with respect to medical assistance provided to unlaw-
ful aliens pursuant to the exception specified in sec-
1420
tion 2123(e)(2), payment shall be made for the
amount of such assistance without regard to any
need for a State match.
‘‘SEC. 2123. LIMITATION ON USE OF FUNDS; DISALLOW-
ANCE.
‘‘(a) IN GENERAL.—Funds provided to a State under
this title shall only be used to carry out the purposes of
this title.
‘‘(b) DISALLOWANCES
FOR
EXCLUDED
PROVID-
ERS.—
‘‘(1) IN GENERAL.—Payment shall not be made
to a State under this part for expenditures for items
and services furnished—
‘‘(A) by a provider who was excluded from
participation under title V, XVIII, or XX or
under this title pursuant to section 1128,
1128A, 1156, or 1842(j)(2), or
‘‘(B) under the medical direction or on the
prescription of a physician who was so excluded,
if the provider of the services knew or had rea-
son to know of the exclusion.
‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—
Paragraph (1) shall not apply to emergency items or
services, not including hospital emergency room serv-
ices.
1421
‘‘(c) LIMITATIONS.—
‘‘(1) IN GENERAL.—No Federal financial assist-
ance is available for expenditures under the
MediGrant plan for—
‘‘(A) medically-related services for a quar-
ter to the extent such expenditures exceed 5
percent of the total expenditures under the plan
for the quarter; or
‘‘(B) total administrative expenses (other
than expenses described in paragraph (2) dur-
ing the first 8 quarters in which the plan is in
effect under this title) for quarters in a fiscal
year to the extent such expenditures exceed the
sum of $20,000,000 plus 10 percent of the total
expenditures under the plan for the year.
‘‘(2) ADMINISTRATIVE EXPENSES NOT SUBJECT
TO
LIMITATION.—The administrative expenses re-
ferred to in this paragraph are expenditures under
the MediGrant plan for the following activities:
‘‘(A) Quality assurance.
‘‘(B) The development and operation of the
certification program for nursing facilities and
intermediate care facilities for the mentally re-
tarded under section 2137(a)(2).
1422
‘‘(C) Utilization review activities, including
medical activities and activities of peer review
organizations.
‘‘(D) Inspection and oversight of providers
and capitated health care organizations.
‘‘(E) Anti-fraud activities.
‘‘(F) Independent evaluations.
‘‘(G) Activities required to meet reporting
requirements under this title.
‘‘(d) TREATMENT OF THIRD PARTY LIABILITY.—No
payment shall be made to a State under this part for ex-
penditures for medical assistance provided for an individ-
ual under its MediGrant plan to the extent that a private
insurer (as defined by the Secretary by regulation and in-
cluding a group health plan (as defined in section 607(1)
of the Employee Retirement Income Security Act of
1974), a service benefit plan, and a health maintenance
organization) would have been obligated to provide such
assistance but for a provision of its insurance contract
which has the effect of limiting or excluding such obliga-
tion because the individual is eligible for or is provided
medical assistance under the plan.
‘‘(e) LIMITATION
ON PAYMENTS
TO EMERGENCY
SERVICES FOR NONLAWFUL ALIENS.—
1423
‘‘(1) IN GENERAL.—Notwithstanding the pre-
ceding provisions of this section, except as provided
in paragraph (2), no payment may be made to a
State under this part for medical assistance fur-
nished to an alien who is not lawfully admitted for
permanent residence or otherwise permanently resid-
ing in the United States under color of law.
‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—
Payment may be made under this section for care
and services that are furnished to an alien described
in paragraph (1) only if—
‘‘(A) such care and services are necessary
for the treatment of an emergency medical con-
dition of the alien,
‘‘(B) such alien otherwise meets the eligi-
bility requirements for medical assistance under
the MediGrant plan (other than a requirement
of the receipt of aid or assistance under title
IV, supplemental security income benefits under
title XVI, or a State supplementary payment),
and
‘‘(C) such care and services are not related
to an organ transplant procedure.
‘‘(3) EMERGENCY
MEDICAL
CONDITION
DE-
FINED.—For purposes of this subsection, the term
1424
‘emergency medical condition’ means a medical con-
dition (including emergency labor and delivery)
manifesting itself by acute symptoms of sufficient
severity (including severe pain) such that the ab-
sence of immediate medical attention could reason-
ably be expected to result in—
‘‘(A) placing the patient’s health in serious
jeopardy,
‘‘(B) serious impairment to bodily func-
tions, or
‘‘(C) serious dysfunction of any bodily
organ or part.
‘‘(f) LIMITATION ON PAYMENT FOR CERTAIN OUT-
PATIENT PRESCRIPTION DRUGS.—
‘‘(1) IN GENERAL.—No payment may be made
to a State under this part for medical assistance for
covered outpatient drugs (as defined in section
2175(i)(2)) of a manufacturer provided under the
MediGrant plan unless the manufacturer (as defined
in section 2175(i)(4)) of the drug—
‘‘(A) has entered into a MediGrant master
rebate agreement with the Secretary under sec-
tion 2175; and
‘‘(B) is complying with the provisions of
section 8126 of title 38, United States Code, in-
1425
cluding the requirement of entering into a mas-
ter agreement with the Secretary of Veterans
Affairs under such section.
‘‘(2) CONSTRUCTION.—Nothing in this sub-
section shall be construed as requiring a State to
participate in the MediGrant master rebate agree-
ment under section 2175.
‘‘(3) 
EFFECT
OF
SUBSEQUENT
AMEND-
MENTS.—For purposes of paragraph (1)(B), in de-
termining whether a manufacturer is in compliance
with the requirements of section 8126 of title 38,
United States Code—
‘‘(A) the Secretary shall not take into ac-
count any amendments to such section that are
enacted after the enactment of title VI of the
Veterans Health Care Act of 1992; and
‘‘(B) a manufacturer is deemed to meet
such requirements if the manufacturer estab-
lishes to the satisfaction of the Secretary that
the manufacturer would comply (and has of-
fered to comply) with the provisions of section
8126 of title 38, United States Code (as in ef-
fect immediately after the enactment of the
Veterans Health Care Act of 1992) and would
have entered into an agreement under such sec-
1426
tion (as such section was in effect at such
time), but for a legislative change in such sec-
tion after the date of the enactment of the Vet-
erans Health Care Act of 1992.
‘‘(g) LIMITATION ON PAYMENT FOR ABORTIONS.—
‘‘(1) IN GENERAL.—Payment shall not be made
to a State under this part for any amount expended
under the MediGrant plan to pay for any abortion
or to assist in the purchase, in whole or in part, of
health benefit coverage that includes coverage of
abortion.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to an abortion—
‘‘(A) if the pregnancy is the result of an
act of rape or incest, or
‘‘(B) in the case where a woman suffers
from a physical disorder, illness, or injury that
would, as certified by a physician, place the
woman in danger of death unless an abortion is
performed.
‘‘(h) LIMITATION
ON
PAYMENT
FOR
ASSISTING
DEATHS.—Payment shall not be made to a State under
this part for amounts expended under the MediGrant plan
to pay for, or to assist in the purchase, in whole or in
part, of health benefit coverage that includes payment for
1427
any drug, biological product, or service which was fur-
nished for the purpose of causing, or assisting in causing,
the death, suicide, euthanasia, or mercy killing of a per-
son.
‘‘PART D—PROGRAM INTEGRITY AND QUALITY
‘‘SEC. 2131. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.
‘‘(a) FINANCIAL AUDITS OF PROGRAM.—
‘‘(1) IN GENERAL.—Each MediGrant plan shall
provide for an annual audit of the State’s expendi-
tures from amounts received under this title, in com-
pliance with chapter 75 of title 31, United States
Code.
‘‘(2) VERIFICATION AUDITS.—If, after consulta-
tion with the State and the Comptroller General and
after a fair hearing, the Secretary determines that
a State’s audit under paragraph (1) was performed
in substantial violation of chapter 75 of title 31,
United States Code, the Secretary may—
‘‘(A) require that the State provide for a
verification audit in compliance with such chap-
ter, or
‘‘(B) conduct such a verification audit.
‘‘(3) AVAILABILITY OF AUDIT REPORTS.—With-
in 30 days after completion of each audit or verifica-
tion audit under this subsection, the State shall—
1428
‘‘(A) provide the Secretary with a copy of
the audit report, including the State’s response
to any recommendations of the auditor, and
‘‘(B) make the audit report available for
public inspection in the same manner as pro-
posed MediGrant plan amendments are made
available under section 2105.
‘‘(b) FISCAL CONTROLS.—
‘‘(1) IN
GENERAL.—With respect to the ac-
counting and expenditure of funds under this title,
each State shall adopt and maintain such fiscal con-
trols, accounting procedures, and data processing
safeguards as the State deems reasonably necessary
to assure the fiscal integrity of the State’s activities
under this title.
‘‘(2) CONSISTENCY WITH GENERALLY ACCEPT-
ED
ACCOUNTING
PRINCIPLES.—Such controls and
procedures shall be generally consistent with gen-
erally accepted accounting principles as recognized
by the Governmental Accounting Standards Board
or the Comptroller General.
‘‘(c) AUDITS OF PROVIDERS.—Each MediGrant plan
shall provide that the records of any entity providing items
or services for which payment may be made under the plan
1429
may be audited as necessary to ensure that proper pay-
ments are made under the plan.
‘‘SEC. 2132. FRAUD PREVENTION PROGRAM.
‘‘(a) ESTABLISHMENT.—Each MediGrant plan shall
provide for the establishment and maintenance of an effec-
tive program for the detection and prevention of fraud and
abuse by beneficiaries, providers, and others in connection
with the operation of the program.
‘‘(b) PROGRAM REQUIREMENTS.—The program es-
tablished pursuant to subsection (a) shall include at least
the following requirements:
‘‘(1) DISCLOSURE OF INFORMATION.—Any dis-
closing entity (as defined in section 1124(a)) receiv-
ing payments under the MediGrant plan shall com-
ply with the requirements of section 1124.
‘‘(2) SUPPLY
OF
INFORMATION.—An entity
(other than an individual practitioner or a group of
practitioners) that furnishes, or arranges for the fur-
nishing of, an item or service under the MediGrant
plan shall supply upon request specifically addressed
to the entity by the Secretary or the State agency
the information described in section 1128(b)(9).
‘‘(3) EXCLUSION.—
‘‘(A) IN GENERAL.—The MediGrant plan
shall exclude any specified individual or entity
1430
from participation in the plan for the period
specified by the Secretary when required by the
Secretary to do so pursuant to section 1128 or
section 1128A, and provide that no payment
may be made under the plan with respect to
any item or service furnished by such individual
or entity during such period.
‘‘(B) AUTHORITY.—In addition to any
other authority, a State may exclude any indi-
vidual or entity for purposes of participating
under the MediGrant plan for any reason for
which the Secretary could exclude the individual
or entity from participation in a program under
title XVIII or under section 1128, 1128A, or
1866(b)(2).
‘‘(4) NOTICE.—The MediGrant plan shall pro-
vide that whenever a provider of services or any
other person is terminated, suspended, or otherwise
sanctioned or prohibited from participating under
the plan, the State agency responsible for admin-
istering the plan shall promptly notify the Secretary
and, in the case of a physician, the State medical li-
censing board of such action.
‘‘(5) 
ACCESS
TO
INFORMATION.—The
MediGrant plan shall provide that the State will pro-
1431
vide information and access to certain information
respecting sanctions taken against health care prac-
titioners and providers by State licensing authorities
in accordance with section 2133.
‘‘SEC. 2133. INFORMATION CONCERNING SANCTIONS TAKEN
BY STATE LICENSING AUTHORITIES AGAINST
HEALTH CARE PRACTITIONERS AND PROVID-
ERS.
‘‘(a) INFORMATION REPORTING REQUIREMENT.—
The requirement referred to in section 2132(b)(5) is that
the State must provide for the following:
‘‘(1) INFORMATION REPORTING SYSTEM.—The
State must have in effect a system of reporting the
following information with respect to formal proceed-
ings (as defined by the Secretary in regulations)
concluded against a health care practitioner or entity
by any authority of the State (or of a political sub-
division thereof) responsible for the licensing of
health care practitioners (or any peer review organi-
zation or private accreditation entity reviewing the
services provided by health care practitioners) or en-
tities:
‘‘(A) Any adverse action taken by such li-
censing authority as a result of the proceeding,
including any revocation or suspension of a li-
1432
cense (and the length of any such suspension),
reprimand, censure, or probation.
‘‘(B) Any dismissal or closure of the pro-
ceedings by reason of the practitioner or entity
surrendering the license or leaving the State or
jurisdiction.
‘‘(C) Any other loss of the license of the
practitioner or entity, whether by operation of
law, voluntary surrender, or otherwise.
‘‘(D) Any negative action or finding by
such authority, organization, or entity regard-
ing the practitioner or entity.
‘‘(2) ACCESS TO DOCUMENTS.—The State must
provide the Secretary (or an entity designated by the
Secretary) with access to such documents of the au-
thority described in paragraph (1) as may be nec-
essary for the Secretary to determine the facts and
circumstances concerning the actions and determina-
tions described in such paragraph for the purpose
of carrying out this Act.
‘‘(b) FORM OF INFORMATION.—The information de-
scribed in subsection (a)(1) shall be provided to the Sec-
retary (or to an appropriate private or public agency,
under suitable arrangements made by the Secretary with
respect to receipt, storage, protection of confidentiality,
1433
and dissemination of information) in such a form and
manner as the Secretary determines to be appropriate in
order to provide for activities of the Secretary under this
Act and in order to provide, directly or through suitable
arrangements made by the Secretary, information—
‘‘(1) to agencies administering Federal health
care programs, including private entities administer-
ing such programs under contract,
‘‘(2) to licensing authorities described in sub-
section (a)(1),
‘‘(3) to State agencies administering or super-
vising the administration of State health care pro-
grams (as defined in section 1128(h)),
‘‘(4) to utilization and quality control peer re-
view organizations described in part B of title XI
and to appropriate entities with contracts under sec-
tion 1154(a)(4)(C) with respect to eligible organiza-
tions reviewed under the contracts,
‘‘(5) to State MediGrant fraud control units (as
defined in section 2134),
‘‘(6) to hospitals and other health care entities
(as defined in section 431 of the Health Care Qual-
ity Improvement Act of 1986), with respect to physi-
cians or other licensed health care practitioners that
have entered (or may be entering) into an employ-
1434
ment or affiliation relationship with, or have applied
for clinical privileges or appointments to the medical
staff of, such hospitals or other health care entities
(and such information shall be deemed to be dis-
closed pursuant to section 427 of, and be subject to
the provisions of, that Act),
‘‘(7) to the Attorney General and such other
law enforcement officials as the Secretary deems ap-
propriate, and
‘‘(8) upon request, to the Comptroller General,
in order for such authorities to determine the fitness
of individuals to provide health care services, to pro-
tect the health and safety of individuals receiving
health care through such programs, and to protect
the fiscal integrity of such programs.
‘‘(c) CONFIDENTIALITY
OF
INFORMATION
PRO-
VIDED.—The Secretary shall provide for suitable safe-
guards for the confidentiality of the information furnished
under subsection (a). Nothing in this subsection shall pre-
vent the disclosure of such information by a party which
is otherwise authorized, under applicable State law, to
make such disclosure.
‘‘(d) APPROPRIATE COORDINATION.—The Secretary
shall provide for the maximum appropriate coordination
in the implementation of subsection (a) of this section and
1435
section 422 of the Health Care Quality Improvement Act
of 1986.
‘‘SEC. 2134. STATE MEDIGRANT FRAUD CONTROL UNITS.
‘‘(a) IN GENERAL.—Each MediGrant plan shall pro-
vide for a State MediGrant fraud control unit described
in subsection (b) that effectively carries out the functions
and requirements described in such subsection, unless the
State demonstrates to the satisfaction of the Secretary
that the effective operation of such a unit in the State
would not be cost-effective because minimal fraud exists
in connection with the provision of covered services to eli-
gible individuals under the plan, and that beneficiaries
under the plan will be protected from abuse and neglect
in connection with the provision of medical assistance
under the plan without the existence of such a unit
‘‘(b) UNITS DESCRIBED.—For purposes of this sub-
section, the term ‘State MediGrant fraud control unit’
means a single identifiable entity of the State government
which meets the following requirements:
‘‘(1) ORGANIZATION.—The entity—
‘‘(A) is a unit of the office of the State At-
torney General or of another department of
State government which possesses statewide au-
thority to prosecute individuals for criminal vio-
lations;
1436
‘‘(B) is in a State the constitution of which
does not provide for the criminal prosecution of
individuals by a statewide authority and has
formal procedures that—
‘‘(i) assure its referral of suspected
criminal violations relating to the program
under this title to the appropriate author-
ity or authorities in the State for prosecu-
tion, and
‘‘(ii) assure its assistance of, and co-
ordination with, such authority or authori-
ties in such prosecutions; or
‘‘(C) has a formal working relationship
with the office of the State Attorney General
and has formal procedures (including proce-
dures for its referral of suspected criminal vio-
lations to such office) which provide effective
coordination of activities between the entity and
such office with respect to the detection, inves-
tigation, and prosecution of suspected criminal
violations relating to the program under this
title.
‘‘(2) INDEPENDENCE.—The entity is separate
and distinct from any State agency that has prin-
1437
cipal responsibilities for administering or supervising
the administration of the MediGrant plan.
‘‘(3) FUNCTION.—The entity’s function is con-
ducting a statewide program for the investigation
and prosecution of violations of all applicable State
laws regarding any and all aspects of fraud in con-
nection with any aspect of the provision of medical
assistance and the activities of providers of such as-
sistance under the MediGrant plan.
‘‘(4) REVIEW OF COMPLAINTS.—The entity has
procedures for reviewing complaints of the abuse
and neglect of patients of health care facilities which
receive payments under the MediGrant plan under
this title, and, where appropriate, for acting upon
such complaints under the criminal laws of the State
or for referring them to other State agencies for ac-
tion.
‘‘(5) OVERPAYMENTS.—The entity provides for
the collection, or referral for collection to a single
State agency, of overpayments that are made under
the MediGrant plan to health care providers and
that are discovered by the entity in carrying out its
activities.
‘‘(6) PERSONNEL.—The entity employs such
auditors, attorneys, investigators, and other nec-
1438
essary personnel and is organized in such a manner
as is necessary to promote the effective and efficient
conduct of the entity’s activities.
‘‘SEC. 2135. RECOVERIES FROM THIRD PARTIES AND OTH-
ERS.
‘‘(a) THIRD PARTY LIABILITY.—Each MediGrant
plan shall provide for reasonable steps—
‘‘(1) to ascertain the legal liability of third par-
ties to pay for care and services available under the
plan, including the collection of sufficient informa-
tion to enable States to pursue claims against third
parties; and
‘‘(2) to seek reimbursement for medical assist-
ance provided to the extent legal liability is establish
where the amount expected to be recovered exceeds
the costs of the recovery.
‘‘(b) BENEFICIARY PROTECTION.—
‘‘(1) IN GENERAL.—Each MediGrant plan shall
provide that in the case of a person furnishing serv-
ices under the plan for which a third party may be
liable for payment—
‘‘(A) the person may not seek to collect
from the individual (or financially responsible
relative) payment of an amount for the service
1439
more than could be collected under the plan in
the absence of such third party liability, and
‘‘(B) may not refuse to furnish services to
such an individual because of a third party’s
potential liability for payment for the service.
‘‘(2) PENALTY.—A MediGrant plan may pro-
vide for a reduction of any payment amount other-
wise due with respect to a person who furnishes
services under the plan in an amount equal to up to
three times the amount of any payment sought to be
collected by that person in violation of paragraph
(1)(A).
‘‘(c) GENERAL LIABILITY.—The State shall prohibit
any health insurer (including a group health plan as de-
fined in section 607 of the Employee Retirement Income
Security Act of 1974, a service benefit plan, or a health
maintenance organization), in enrolling an individual or
in making any payments for benefits to the individual or
on the individual’s behalf, from taking into account that
the individual is eligible for or is provided medical assist-
ance under a MediGrant plan for any State.
‘‘(d) ACQUISITION OF RIGHTS OF BENEFICIARIES.—
To the extent that payment has been made under a
MediGrant plan in any case where a third party has a
legal liability to make payment for such assistance, the
1440
State shall have in effect laws under which, to the extent
that payment has been made under the plan for health
care items or services furnished to an individual, the State
is considered to have acquired the rights of such individual
to payment by any other party for such health care items
or services.
‘‘(e) ASSIGNMENT OF MEDICAL SUPPORT RIGHTS.—
The MediGrant plan shall provide for mandatory assign-
ment of rights of payment for medical support and other
medical care owed to recipients in accordance with section
2136.
‘‘(f) REQUIRED LAWS RELATING TO MEDICAL CHILD
SUPPORT.—
‘‘(1) 
IN
GENERAL.—Each 
State 
with 
a
MediGrant plan shall have in effect the following
laws:
‘‘(A) A law that prohibits an insurer from
denying enrollment of a child under the health
coverage of the child’s parent on the ground
that—
‘‘(i) the child was born out of wedlock,
‘‘(ii) the child is not claimed as a de-
pendent on the parent’s Federal income
tax return, or
1441
‘‘(iii) the child does not reside with
the parent or in the insurer’s service area.
‘‘(B) In any case in which a parent is re-
quired by a court or administrative order to
provide health coverage for a child and the par-
ent is eligible for family health coverage
through an insurer, a law that requires such in-
surer—
‘‘(i) to permit such parent to enroll
under such family coverage any such child
who is otherwise eligible for such coverage
(without regard to any enrollment season
restrictions);
‘‘(ii) if such a parent is enrolled but
fails to make application to obtain cov-
erage of such child, to enroll such child
under such family coverage upon applica-
tion by the child’s other parent or by the
State agency administering the program
under this title or part D of title IV; and
‘‘(iii) not to disenroll (or eliminate
coverage of) such a child unless the insurer
is provided satisfactory written evidence
that—
1442
‘‘(I) such court or administrative
order is no longer in effect, or
‘‘(II) the child is or will be en-
rolled in comparable health coverage
through another insurer which will
take effect not later than the effective
date of such disenrollment.
‘‘(C) In any case in which a parent is re-
quired by a court or administrative order to
provide health coverage for a child and the par-
ent is eligible for family health coverage
through an employer doing business in the
State, a law that requires such employer—
‘‘(i) to permit such parent to enroll
under such family coverage any such child
who is otherwise eligible for such coverage
(without regard to any enrollment season
restrictions);
‘‘(ii) if such a parent is enrolled but
fails to make application to obtain cov-
erage of such child, to enroll such child
under such family coverage upon applica-
tion by the child’s other parent or by the
State agency administering the program
under this title or part D of title IV; and
1443
‘‘(iii) not to disenroll (or eliminate
coverage of) any such child unless—
‘‘(I) the employer is provided sat-
isfactory written evidence that such
court or administrative order is no
longer in effect, or the child is or will
be enrolled in comparable health cov-
erage which will take effect not later
than the effective date of such
disenrollment, or
‘‘(II) the employer has eliminated
family health coverage for all of its
employees; and
‘‘(iv) to withhold from such employ-
ee’s compensation the employee’s share (if
any) of premiums for health coverage (ex-
cept that the amount so withheld may not
exceed the maximum amount permitted to
be withheld under section 303(b) of the
Consumer Credit Protection Act), and to
pay such share of premiums to the insurer,
except that the Secretary may provide by
regulation for appropriate circumstances
under which an employer may withhold