under such section for such States eligible
for an allotment under this subparagraph
for such fiscal year; and
‘‘(ii) in the case of a commonwealth or
territory described in subsection (c)(3), the
same proportion as the proportion of the
commonwealth’s or territory’s allotment
under subsection (c) (determined without
regard to subsection (f)) to 1.05 percent of
the total amount of the allotments under
such section for commonwealths and terri-
tories eligible for an allotment under this
subparagraph for such fiscal year.
‘‘(B) AVAILABILITY AND REDISTRIBUTION
OF
UNUSED
ALLOTMENTS.—In applying sub-
sections (e) and (f) with respect to additional
allotments made available under this subsection,
the procedures established under such sub-
sections shall ensure such additional allotments
are only made available to States which have
elected to provide coverage under section 2111.
‘‘(3) USE OF ADDITIONAL ALLOTMENT.—Addi-
tional allotments provided under this subsection are
not available for amounts expended before October
1, 2001. Such amounts are available for amounts ex-
pended on or after such date for child health assist-
ance for targeted low-income children, as well as for
FamilyCare assistance.
‘‘(4) 
REQUIRING
ELECTION
TO
PROVIDE
FAMILYCARE
COVERAGE.—No payments may be
made to a State under this title from an allotment
provided under this subsection unless the State has
made an election to provide FamilyCare assist-
ance.’’.
(ii) 
CONFORMING
AMENDMENTS.—
Section 2104 of the Social Security Act
(42 U.S.C. 1397dd) is amended—
(I) in subsection (a), by inserting
‘‘subject to subsection (d),’’ after
‘‘under this section,’’;
(II) in subsection (b)(1), by in-
serting ‘‘and subsection (d)’’ after
‘‘Subject to paragraph (4)’’; and
(III) in subsection (c)(1), by in-
serting ‘‘subject to subsection (d),’’
after ‘‘for a fiscal year,’’.
(C) NO COST-SHARING FOR PREGNANCY-
RELATED
BENEFITS.—Section 2103(e)(2) of
the 
Social 
Security 
Act 
(42 
U.S.C.
1397cc(e)(2)) is amended—
(i) in the heading, by inserting ‘‘AND
PREGNANCY-RELATED
SERVICES’’ 
after
‘‘PREVENTIVE SERVICES’’; and
(ii) by inserting before the period at
the end the following: ‘‘and for pregnancy-
related services’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection apply to items and services fur-
nished on or after October 1, 2001, whether or not
regulations implementing such amendments have
been issued.
(b) RULES FOR IMPLEMENTATION BEGINNING WITH
FISCAL YEAR 2005.—
(1) REQUIRED COVERAGE OF FAMILYCARE PAR-
ENTS.—Section 1902(a)(10)(A)(i) of the Social Se-
curity Act (42 U.S.C. 1396a(a)(10)(A)(i)) is
amended—
(A) by striking ‘‘or’’ at the end of sub-
clause (VI);
(B) by striking the semicolon at the end of
subclause (VII) and insert ‘‘, or’’; and
(C) by adding at the end the following:
‘‘(VIII) who are described in sub-
section (k)(1) (or would be described
if subparagraph (A)(ii) of such sub-
section did not apply) and who are in
families with incomes that do not ex-
ceed 100 percent of the poverty line
applicable to a family of the size in-
volved;’’.
(2) EXPANSION
OF
AVAILABILITY
OF
EN-
HANCED
MATCH
UNDER
MEDICAID
FOR
PRE-CHIP
EXPANSIONS.—Paragraph (4) of section 1905(u) of
the Social Security Act (42 U.S.C. 1396d(u)), as in-
serted by subsection (a)(1)(C), is amended—
(A) by amending clause (ii) of subpara-
graph (A) to read as follows:
‘‘(ii) CERTAIN
PREGNANT
WOMEN.—Ex-
penditures for medical assistance for pregnant
women under section 1902(l)(1)(A) in a family
the income of which exceeds the 133 percent of
the income official poverty line.’’; and
(B) by adding at the end the following:
‘‘(B) CHILDREN
IN
FAMILIES
WITH
INCOME
ABOVE
MEDICAID
MANDATORY
LEVEL
NOT
PRE-
VIOUSLY
DESCRIBED.—The expenditures described
in this subparagraph are expenditures (other than
expenditures described in paragraph (2) or (3)) for
medical assistance made available to any child who
is 
eligible 
for 
assistance 
under 
section
1902(a)(10)(A) (other than under clause (i)) and
the income of whose family exceeds the minimum in-
come level required under subsection 1902(l)(2) (or,
if higher, the minimum level required under section
1931 for that State) for a child of the age involved
(treating any child who is 19 or 20 years of age
as being 18 years of age).’’.
(3) OFFSET
OF
ADDITIONAL
EXPENDITURES
FOR ENHANCED MATCH FOR PRE-CHIP EXPANSION;
ELIMINATION OF OFFSET FOR REQUIRED COVERAGE
OF FAMILYCARE PARENTS.—
(A) IN GENERAL.—Section 1905(u)(5) of
the 
Social 
Security 
Act 
(42 
U.S.C.
1396d(u)(5)), as added by subsection (a)(1)(E),
is amended—
(i) by amending subparagraph (A) to
read as follows:
‘‘(A) REGULAR FMAP FOR EXPENDITURES FOR
PREGNANT WOMEN WITH INCOME ABOVE 133 PER-
CENT OF POVERTY.—The portion of the payments
made for expenditures described in paragraph
(4)(A)(ii) that represents the amount that would
have been paid if the enhanced FMAP had not been
substituted for the Federal medical assistance per-
centage.’’; and
(ii) by adding at the end the fol-
lowing:
‘‘(B) FAMILYCARE PARENTS UNDER 100 PER-
CENT OF POVERTY.—Payments for expenditures de-
scribed in paragraph (4)(A)(i) in the case of parents
whose income does not exceed 100 percent of the in-
come official poverty line applicable to a family of
the size involved.
‘‘(C) REGULAR FMAP FOR EXPENDITURES FOR
CERTAIN
CHILDREN
IN
FAMILIES
WITH
INCOME
ABOVE MEDICAID MANDATORY LEVEL.—The portion
of the payments made for expenditures described in
paragraph (4)(B) that represents the amount that
would have been paid if the enhanced FMAP had
not been substituted for the Federal medical assist-
ance percentage.’’.
(B) CONFORMING
AMENDMENTS.—Sub-
paragraph (B) of section 2105(a)(1) of the So-
cial Security Act, as amended by section 14(a)
and subsection (a)(1)(D), is amended to read as
follows:
‘‘(B) CERTAIN FAMILYCARE PARENTS AND
OTHERS.—Expenditures for medical assistance
that is attributable to expenditures described in
section 1905(u)(4), except as provided in sec-
tion 1905(u)(5).’’.
(4) EFFECTIVE DATE.—The amendments made
by this subsection apply as of October 1, 2004, to
fiscal years beginning on or after such date and to
expenditures under the State plan on and after such
date, whether or not regulations implementing such
amendments have been issued.
(c) MAKING TITLE XXI BASE ALLOTMENTS PERMA-
NENT.—Section 2104(a) of the Social Security Act (42
U.S.C. 1397dd(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(9);
(2) by striking the period at the end of para-
graph (10) and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(11) for fiscal year 2008 and each fiscal year
thereafter, the amount of the allotment provided
under this subsection for the preceding fiscal year
increased by the percentage increase (if any) in the
medical care expenditure category of the Consumer
Price Index for All Urban Consumers (United States
city average).’’.
(d) OPTIONAL APPLICATION OF PRESUMPTIVE ELI-
GIBILITY PROVISIONS TO PARENTS.—Section 1920A of
the Social Security Act (42 U.S.C. 1396r–1a) is amended
by adding at the end the following:
‘‘(e) A State may elect to apply the previous provi-
sions of this section to provide for a period of presumptive
eligibility for medical assistance for a parent (as defined
for purposes of section 1902(k)(1)) of a child with respect
to whom such a period is provided under this section.’’.
(e) CONFORMING AMENDMENTS.—
(1) 
ELIGIBILITY
CATEGORIES.—Section
1905(a) of the Social Security Act (42 U.S.C.
1396d(a)) is amended, in the matter before para-
graph (1)—
(A) by striking ‘‘or’’ at the end of clause
(xii);
(B) by inserting ‘‘or’’ at the end of clause
(xiii); and
(C) by inserting after clause (xiii) the fol-
lowing:
‘‘(xiv) who are parents described (or treated as
if described) in section 1902(k)(1),’’.
(2) INCOME LIMITATIONS.—Section 1903(f)(4)
of the Social Security Act (42 U.S.C. 1396b(f)(4))
is amended—
(A) effective October 1, 2004, by inserting
‘‘1902(a)(10)(A)(i)(VIII),’’ 
after
‘‘1902(a)(10)(A)(i)(VII),’’; and
(B) 
by 
inserting
‘‘1902(a)(10)(A)(ii)(XIX),’’ 
after
‘‘1902(a)(10)(A)(ii)(XVIII),’’.
(3) CONFORMING
AMENDMENT
RELATING
TO
NO WAITING PERIOD FOR PREGNANT WOMEN.—Sec-
tion 2102(b)(1)(B) of the Social Security Act (42
U.S.C. 1397bb(b)(1)(B)) is amended—
(A) by striking ‘‘, and’’ at the end of
clause (i) and inserting a semicolon;
(B) by striking the period at the end of
clause (ii) and inserting ‘‘; and’’; and
(C) by adding at the end the following:
‘‘(iii) may not apply a waiting period
(including a waiting period to carry out
paragraph (3)(C)) in the case of a targeted
low-income parent who is pregnant.’’.
SEC. 4. AUTOMATIC ENROLLMENT OF CHILDREN BORN TO
TITLE XXI PARENTS.
Section 2102(b)(1) of the Social Security Act (42
U.S.C. 1397bb(b)(1)) is amended by adding at the end
the following:
‘‘(C) AUTOMATIC
ELIGIBILITY
OF
CHIL-
DREN
BORN
TO
A
PARENT
BEING
PROVIDED
FAMILYCARE.—Such eligibility standards shall
provide for automatic coverage of a child born
to an individual who is provided assistance
under this title in the same manner as medical
assistance would be provided under section
1902(e)(4) to a child described in such sec-
tion.’’.
SEC. 5. OPTIONAL COVERAGE OF LEGAL IMMIGRANTS
UNDER THE MEDICAID PROGRAM AND TITLE
XXI.
(a) MEDICAID PROGRAM.—Section 1903(v) of the
Social Security Act (42 U.S.C. 1396b(v)) is amended—
(1) in paragraph (1), by striking ‘‘paragraph
(2)’’ and inserting ‘‘paragraphs (2) and (4)’’; and
(2) by adding at the end the following:
‘‘(4)(A) A State may elect (in a plan amendment
under this title) to provide medical assistance under this
title, notwithstanding sections 401(a), 402(b), 403, and
421 of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996, for aliens who are lawfully re-
siding in the United States (including battered aliens de-
scribed in section 431(c) of such Act) and who are other-
wise eligible for such assistance, within any of the fol-
lowing eligibility categories:
‘‘(i) PREGNANT WOMEN.—Women during preg-
nancy (and during the 60-day period beginning on
the last day of the pregnancy).
‘‘(ii) CHILDREN.—Children (as defined under
such plan), including optional targeted low-income
children described in section 1905(u)(2)(B).
‘‘(iii) PARENTS.—If the State has elected the
eligibility category described in clause (ii), caretaker
relatives who are parents (including individuals
treated as a caregiver for purposes of carrying out
section 1931) of children (described in such clause
or otherwise) who are eligible for medical assistance
under the plan.
‘‘(B) In the case of a State that has elected to provide
medical assistance to a category of aliens under subpara-
graph (A), no debt shall accrue under an affidavit of sup-
port against any sponsor of such an alien on the basis
of provision of assistance to such category and the cost
of such assistance shall not be considered as an unreim-
bursed cost.’’.
(b) TITLE XXI.—Section 2107(e)(1) of the Social
Security Act (42 U.S.C. 1397gg(e)(1)) is amended by add-
ing at the end the following:
‘‘(E) Section 1903(v)(4) (relating to op-
tional coverage of categories of lawful resident
alien children and parents), but only with re-
spect to an eligibility category under this title,
if the same eligibility category has been elected
under such section for purposes of title XIX.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on October 1, 2001, and apply to
medical assistance and child health assistance furnished
on or after such date, whether or not regulations imple-
menting such amendments have been issued.
SEC. 6. OPTIONAL COVERAGE OF CHILDREN THROUGH AGE
20 UNDER THE MEDICAID PROGRAM AND
TITLE XXI.
(a) MEDICAID.—
(1) IN GENERAL.—Section 1902(l)(1)(D) of the
Social Security Act (42 U.S.C. 1396a(l)(1)(D)) is
amended by inserting ‘‘(or, at the election of a
State, 20 or 21 years of age)’’ after ‘‘19 years of
age’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 1902(e)(3)(A) of the Social Se-
curity Act (42 U.S.C. 1396a(e)(3)(A)) is
amended by inserting ‘‘(or 1 year less than the
age the State has elected under subsection
(l)(1)(D))’’ after ‘‘18 years of age’’.
(B) Section 1902(e)(12) of the Social Se-
curity Act (42 U.S.C. 1396a(e)(12)) is amend-
ed by inserting ‘‘or such higher age as the State
has elected under subsection (l)(1)(D)’’ after
‘‘19 years of age’’.
(C) Section 1920A(b)(1) of the Social Se-
curity Act (42 U.S.C. 1396r–1a(b)(1)) is
amended by inserting ‘‘or such higher age as
the 
State 
has 
elected 
under 
section
1902(l)(1)(D)’’ after ‘‘19 years of age’’.
(D) Section 1928(h)(1) of the Social Secu-
rity Act (42 U.S.C. 1396s(h)(1)) is amended by
inserting ‘‘or 1 year less than the age the State
has elected under section 1902(l)(1)(D)’’ before
the period at the end.
(E) Section 1932(a)(2)(A) of the Social
Security Act (42 U.S.C. 1396u–2(a)(2)(A)) is
amended by inserting ‘‘(or such higher age as
the 
State 
has 
elected 
under 
section
1902(l)(1)(D))’’ after ‘‘19 years of age’’.
(b) TITLE XXI.—Section 2110(c)(1) of the Social
Security Act (42 U.S.C. 1397jj(c)(1)) is amended by in-
serting ‘‘(or such higher age as the State has elected under
section 1902(l)(1)(D))’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on October 1, 2001, and apply to
medical assistance and child health assistance provided on
or after such date, whether or not regulations imple-
menting such amendments have been issued.
SEC. 7. APPLICATION OF SIMPLIFIED TITLE XXI PROCE-
DURES UNDER THE MEDICAID PROGRAM.
(a) APPLICATION UNDER MEDICAID.—
(1) IN GENERAL.—Section 1902(l) of the Social
Security Act (42 U.S.C. 1396a(l)) is amended—
(A) in paragraph (3), by inserting ‘‘subject
to paragraph (5)’’, after ‘‘Notwithstanding sub-
section (a)(17),’’; and
(B) by adding at the end the following:
‘‘(5) With respect to determining the eligibility of in-
dividuals under 19 years of age (or such higher age as
the State has elected under paragraph (1)(D)) for medical
assistance under subsection (a)(10)(A) and, separately,
with respect to determining the eligibility of individuals
for 
medical 
assistance 
under 
subsection
(a)(10)(A)(i)(VIII) 
or 
(a)(10)(A)(ii)(XIX), 
notwith-
standing any other provision of this title, if the State has
established a State child health plan under title XXI—
‘‘(A) the State may not apply a resource stand-
ard;
‘‘(B) the State shall use the same simplified eli-
gibility form (including, if applicable, permitting ap-
plication other than in person) as the State uses
under such State child health plan with respect to
such individuals;
‘‘(C) the State shall provide for initial eligibility
determinations and redeterminations of eligibility
using verification policies, forms, and frequency that
are no less restrictive than the policies, forms, and
frequency the State uses for such purposes under
such State child health plan with respect to such in-
dividuals; and
‘‘(D) the State shall not require a face-to-face
interview for purposes of initial eligibility determina-
tions and redeterminations unless the State requires
such an interview for such purposes under such child
health plan with respect to such individuals.’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) apply to determinations of eligi-
bility made on or after the date that is 1 year after
the date of the enactment of this Act, whether or
not regulations implementing such amendments have
been issued.
(b) PRESUMPTIVE ELIGIBILITY.—
(1) IN GENERAL.—Section 1920A(b)(3)(A)(i) of
the 
Social 
Security 
Act 
(42 
U.S.C. 
1396r–
1a(b)(3)(A)(i)) is amended by inserting ‘‘a child care
resource and referral agency,’’ after ‘‘a State or trib-
al child support enforcement agency,’’.
(2) APPLICATION TO PRESUMPTIVE ELIGIBILITY
FOR PREGNANT WOMEN UNDER MEDICAID.—Section
1920(b) of the Social Security Act (42 U.S.C.
1396r–1(b)) is amended by adding at the end after
and below paragraph (2) the following flush sen-
tence:
‘‘The term ‘qualified provider’ includes a qualified entity
as defined in section 1920A(b)(3).’’.
(3) APPLICATION UNDER TITLE XXI.—
(A) IN GENERAL.—Section 2107(e)(1)(D)
of 
the 
Social 
Security 
Act 
(42 
U.S.C.
1397gg(e)(1)) is amended to read as follows:
‘‘(D) Sections 1920 and 1920A (relating to
presumptive eligibility).’’.
(B) CONFORMING
ELIMINATION
OF
RE-
SOURCE TEST.—Section 2102(b)(1)(A) of such
Act (42 U.S.C. 1397bb(b)(1)(A)) is amended—
(i) by striking ‘‘ and resources (in-
cluding 
any 
standards 
relating 
to
spenddowns and disposition of resources)’’;
and
(ii) by adding at the end the fol-
lowing: ‘‘Effective 1 year after the date of
the enactment of the FamilyCare Act of
2001, such standards may not include the
application of a resource standard or
test.’’.
(c) AUTOMATIC REASSESSMENT OF ELIGIBILITY FOR
TITLE XXI AND MEDICAID BENEFITS FOR CHILDREN
LOSING MEDICAID OR TITLE XXI ELIGIBILITY.—
(1) LOSS OF MEDICAID ELIGIBILITY.—Section
1902(a) of the Social Security Act (42 U.S.C.
1396a(a)) is amended—
(A) by striking the period at the end of
paragraph (65) and inserting ‘‘; and’’, and
(B) by inserting after paragraph (65) the
following:
‘‘(66) provide, in the case of a State with a
State child health plan under title XXI, that before
medical assistance to a child (or a parent of a child)
is discontinued under this title, a determination of
whether the child (or parent) is eligible for benefits
under title XXI shall be made and, if determined to
be so eligible, the child (or parent) shall be auto-
matically enrolled in the program under such title
without the need for a new application.’’.
(2) LOSS OF TITLE XXI ELIGIBILITY AND CO-
ORDINATION WITH MEDICAID.—Section 2102(b) (42
U.S.C. 1397bb(b)) is amended—
(A) in paragraph (3), by redesignating
subparagraphs (D) and (E) as subparagraphs
(E) and (F), respectively, and by inserting after
subparagraph (C) the following:
‘‘(D) that before health assistance to a
child (or a parent of a child) is discontinued
under this title, a determination of whether the
child (or parent) is eligible for benefits under
title XIX is made and, if determined to be so
eligible, the child (or parent) is automatically
enrolled in the program under such title with-
out the need for a new application;’’;
(B) by redesignating paragraph (4) as
paragraph (5); and
(C) by inserting after paragraph (3) the
following new paragraph:
‘‘(4) COORDINATION
WITH
MEDICAID.—The
State shall coordinate the screening and enrollment
of individuals under this title and under title XIX
consistent with the following:
‘‘(A) Information that is collected under
this title or under title XIX which is needed to
make an eligibility determination under the
other title shall be transmitted to the appro-
priate administering entity under such other
title in a timely manner so that coverage is not
delayed and families do not have to submit the
same information twice. Families shall be pro-
vided the information they need to complete the
application process for coverage under both ti-
tles and be given appropriate notice of any de-
terminations made on their applications for
such coverage.
‘‘(B) If a State does not use a joint appli-
cation under this title and such title, the State
shall—
‘‘(i) promptly inform a child’s parent
or caretaker in writing and, if appropriate,
orally, that a child has been found likely to
be eligible under title XIX;
‘‘(ii) provide the family with an appli-
cation for medical assistance under such
title and offer information about what (if
any) further information, documentation,
or other steps are needed to complete such
application process;
‘‘(iii) offer assistance in completing
such application process; and
‘‘(iv) promptly transmit the separate
application under this title or the informa-
tion obtained through such application,
and all other relevant information and doc-
umentation, including the results of the
screening process, to the State agency
under title XIX for a final determination
on eligibility under such title.
‘‘(C) Applicants are notified in writing
of—
‘‘(i) benefits (including restrictions on
cost-sharing) under title XIX; and
‘‘(ii) eligibility rules that prohibit chil-
dren who have been screened eligible for
medical assistance under such title from
being enrolled under this title, other than
provisional temporary enrollment while a
final eligibility determination is being made
under such title.
‘‘(D) If the agency administering this title
is different from the agency administering a
State plan under title XIX, such agencies shall
coordinate the screening and enrollment of ap-
plicants for such coverage under both titles.
‘‘(E) The coordination procedures estab-
lished between the program under this title and
under title XIX shall apply not only to the ini-
tial eligibility determination of a family but also
to any renewals or redeterminations of such eli-
gibility.’’.
(3) EFFECTIVE DATE.—The amendments made
by paragraphs (1) and (2) apply to individuals who
lose eligibility under the medicaid program under
title XIX, or under a State child health insurance
plan under title XXI, respectively, of the Social Se-
curity Act on or after October 1, 2001 (or, if later,
60 days after the date of the enactment of this Act),
whether or not regulations implementing such
amendments have been issued.
(d) PROVISION OF MEDICAID AND CHIP APPLICA-
TIONS AND INFORMATION UNDER THE SCHOOL LUNCH
PROGRAM.—Section 9(b)(2)(B) of the Richard B. Russell
National School Lunch Act (42 U.S.C. 1758(b)(2)(B)) is
amended—
(1) by striking ‘‘(B) Applications’’ and inserting
‘‘(B)(i) Applications’’; and
(2) by adding at the end the following:
‘‘(ii)(I) Applications for free and reduced price
lunches that are distributed pursuant to clause (i) to par-
ents or guardians of children in attendance at schools par-
ticipating in the school lunch program under this Act shall
also contain information on the availability of medical as-
sistance under title XIX of the Social Security Act (42
U.S.C. 1396 et seq.) and of child health and FamilyCare
assistance under title XXI of such Act, including informa-
tion on how to obtain an application for assistance under
such programs.
‘‘(II) Information on the programs referred to in sub-
clause (I) shall be provided on a form separate from the
application form for free and reduced price lunches under
clause (i).’’.
(e) 12-MONTHS CONTINUOUS ELIGIBILITY.—
(1) MEDICAID.—Section 1902(e)(12) of the So-
cial Security Act (42 U.S.C. 1396a(e)(12)) is
amended—
(A) by striking ‘‘At the option of the State,
the plan may’’ and inserting ‘‘The plan shall’’;
(B) by striking ‘‘an age specified by the
State (not to exceed 19 years of age)’’ and in-
serting ‘‘19 years of age (or such higher age as
the 
State 
has 
elected 
under 
subsection
ulations implementing such amendments have
been issued.
SEC. 
8. 
IMPROVING 
WELFARE-TO-WORK 
TRANSITION
UNDER THE MEDICAID PROGRAM.
(a) MAKING PROVISION PERMANENT.—
(1) IN
GENERAL.—Subsection (f) of section
1925 of the Social Security Act (42 U.S.C. 1396r–
6) is repealed.
(2) 
CONFORMING
AMENDMENT.—Section
1902(e)(1) of the Social Security Act (42 U.S.C.
1396a(e)(1)) is repealed.
(b) STATE OPTION OF INITIAL 12-MONTH ELIGI-
BILITY.—Section 1925 of the Social Security Act (42
U.S.C. 1396r–6) is amended—
(1) in subsection (a), by adding at the end the
following:
‘‘(5) OPTION OF 12-MONTH INITIAL ELIGIBILITY
PERIOD.—A State may elect to treat any reference
in this subsection to a 6-month period (or 6 months)
as a reference to a 12-month period (or 12 months).
In the case of such an election, subsection (b) shall
not apply.’’; and
(2) in subsection (b)(1), by inserting ‘‘and sub-
section (a)(5)’’ after ‘‘paragraph (3)’’.
(c) SIMPLIFICATION.—
(1) REMOVAL OF ADMINISTRATIVE REPORTING
REQUIREMENTS FOR ADDITIONAL 6-MONTH EXTEN-
SION.—Section 1925(b)(2) of the Social Security Act
(42 U.S.C. 1396r–6(b)(2)) is amended—
(A) by striking subparagraph (B);
(B) in subparagraph (A)(i)—
(i) in the heading, by striking ‘‘AND
REQUIREMENTS’’;
(ii) by striking ‘‘(I)’’ and all that fol-
lows through ‘‘(II)’’ and inserting ‘‘(i)’’;
(iii) by striking ‘‘, and (III)’’ and in-
serting ‘‘and (ii)’’;
(iv) by redesignating such subpara-
graph as subparagraph (A) (with appro-
priate indentation); and
(C) in subparagraph (A)(ii)—
(i) in the heading, by striking ‘‘RE-
PORTING REQUIREMENTS AND’’;
(ii) by striking ‘‘notify the family of
the reporting requirement under subpara-
graph (B)(ii) and’’ and inserting ‘‘provide
the family with notification of’’; and
(iii) by redesignating such subpara-
graph as subparagraph (B) (with appro-
priate indentation).
(2) REMOVAL OF REQUIREMENT FOR PREVIOUS
RECEIPT
OF
MEDICAL
ASSISTANCE.—Section
1925(a)(1) of the Social Security Act (42 U.S.C.
1396r–6(a)(1)) is amended—
(A) by inserting ‘‘but subject to subpara-
graph (B)’’ after ‘‘any other provision of this
title’’;
(B) by redesignating the matter after ‘‘RE-
QUIREMENT.—’’ as a subparagraph (A) with
the heading ‘‘IN
GENERAL.—’’ and with the
same indentation as subparagraph (B) (as
added by subparagraph (C)); and
(C) by adding at the end the following:
‘‘(B) STATE OPTION TO WAIVE REQUIRE-
MENT FOR 3 MONTHS PREVIOUS RECEIPT OF
MEDICAL ASSISTANCE.—A State may, at its op-
tion, elect also to apply subparagraph (A) in
the case of a family that had applied for and
was eligible for such aid for fewer than 3
months during the 6 immediately preceding
months described in such subparagraph.’’.
(3) PERMITTING INCREASE OR WAIVER OF 185
PERCENT
OF
POVERTY
EARNING
LIMIT.—Section
1925(b)(3)(A)(iii)(III) of the Social Security Act (42
U.S.C. 1396r–6(b)(3)(A)(iii)(III)) is amended—
(A) by inserting ‘‘(at its option)’’ after
‘‘the State’’; and
(B) by inserting ‘‘(or such higher percent
as the State may specify)’’ after ‘‘185 percent’’.
(4) EXEMPTION FOR STATES COVERING NEEDY
FAMILIES UP TO 185 PERCENT OF POVERTY.—Sec-
tion 1925 of the Social Security Act (42 U.S.C.
1396r–6), as amended by subsection (a), is
amended—
(A) in each of subsections (a)(1) and
(b)(1), by inserting ‘‘but subject to subsection
(f),’’ after ‘‘Notwithstanding any other provi-
sion of this title,’’; and
(B) by adding at the end the following:
‘‘(f) EXEMPTION
FOR STATE COVERING NEEDY
FAMILIES UP TO 185 PERCENT OF POVERTY.—
‘‘(1) IN GENERAL.—At State option, the provi-
sions of this section shall not apply to a State that
uses 
the 
authority 
under 
section
1902(a)(10)(A)(ii)(XIX), section 1931(b)(2)(C), or
otherwise to make medical assistance available under
the State plan under this title to eligible individuals
described in section 1902(k)(1), or all individuals de-
scribed in section 1931(b)(1), and who are in fami-
lies with gross incomes (determined without regard
to work-related child care expenses of such individ-
uals) at or below 185 percent of the income official
poverty line (as defined by the Office of Manage-
ment and Budget, and revised annually in accord-
ance with section 673(2) of the Omnibus Budget
Reconciliation Act of 1981) applicable to a family of
the size involved.
‘‘(2) APPLICATION TO OTHER PROVISIONS OF
THIS TITLE.—The State plan of a State described in
paragraph (1) shall be deemed to meet the require-
ments of section 1902(a)(10)(A)(i)(I).’’.
(d) EFFECTIVE DATE.—The amendments made by
this section take effect on October 1, 2001, whether or
not regulations implementing such amendments have been
issued.
SEC. 9. ELIMINATION OF 100 HOUR RULE AND OTHER
AFDC-RELATED ELIGIBILITY RESTRICTIONS.
(a) IN GENERAL.—Section 1931(b)(1)(A)(ii) of the
Social Security Act (42 U.S.C. 1396u–1(b)(1)(A)(ii)) is
amended by inserting ‘‘other than the requirement that
the child be deprived of parental support or care by reason
of the death, continued absence from the home, incapacity,
or unemployment of a parent,’’ after ‘‘section 407(a),’’.
(b) CONFORMING AMENDMENT.—Section 1905(a) of
the Social Security Act (42 U.S.C. 1396d(a)) is amended,
in the matter before paragraph (1), in clause (ii), by strik-
ing ‘‘if such child is (or would, if needy, be) a dependent
child under part A of title IV’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to eligibility determinations made on or
after October 1, 2001, whether or not regulations imple-
menting such amendments have been issued.
SEC. 10. STATE GRANT PROGRAM FOR MARKET INNOVA-
TION.
(a) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall establish a program (in this section referred
to as the ‘‘program’’) to award demonstration grants
under this section to States to allow States to demonstrate
the effectiveness of innovative ways to increase access to
health insurance through market reforms and other inno-
vative means. Such innovative means may include any of
the following:
(1) Alternative group purchasing or pooling ar-
rangements, such as purchasing cooperatives for
small businesses, reinsurance pools, or high risk
pools.
(2) Individual or small group market reforms.
(3) Consumer education and outreach.
(4) Subsidies to individuals, employers, or both,
in obtaining health insurance.
(b) SCOPE; DURATION.—The program shall be lim-
ited to not more than 10 States and to a total period of
5 years, beginning on the date the first demonstration
grant is made.
(c) CONDITIONS FOR DEMONSTRATION GRANTS.—
(1) IN GENERAL.—The Secretary may not pro-
vide for a demonstration grant to a State under the
program unless the Secretary finds that under the
proposed demonstration grant—
(A) the State will provide for demonstrated
increase of access for some portion of the exist-
ing uninsured population through a market in-
novation (other than merely through a financial
expansion of a program initiated before the
date of the enactment of this Act);
(B) the State will comply with applicable
Federal laws;
(C) the State will not discriminate among
participants on the basis of any health status-
related factor (as defined in section 2791(d)(9)
of the Public Health Service Act (42 U.S.C.
300gg–91(d)(9)), except to the extent a State
wishes to focus on populations that otherwise
would not obtain health insurance because of
such factors; and
(D) the State will provide for such evalua-
tion, in coordination with the evaluation re-
quired under subsection (d), as the Secretary
may specify.
(2) APPLICATION.—The Secretary shall not
provide a demonstration grant under the program to
a State unless—
(A) the State submits to the Secretary
such an application, in such a form and man-
ner, as the Secretary specifies;
(B) the application includes information
regarding how the demonstration grant will ad-
dress issues such as governance, targeted popu-
lation, expected cost, and the continuation after
the completion of the demonstration grant pe-
riod; and
(C) the Secretary determines that the dem-
onstration grant will be used consistent with
this section.
(3) FOCUS.—A demonstration grant proposal
under this section need not cover all uninsured indi-
viduals in a State or all health care benefits with re-
spect to such individuals.
(d) EVALUATION.—The Secretary shall enter into a
contract with an appropriate entity outside the Depart-
ment of Health and Human Services to conduct an overall
evaluation of the program at the end of the program pe-
riod. Such evaluation shall include an analysis of improve-
ments in access, costs, quality of care, or choice of cov-
erage, under different demonstration grants.
(e) OPTION TO PROVIDE FOR INITIAL PLANNING
GRANTS.—Notwithstanding the previous provisions of this
section, under the program the Secretary may provide for
a portion of the amounts appropriated under subsection
(f) (not to exceed $5,000,000) to be made available to any
State for initial planning grants to permit States to de-
velop demonstration grant proposals under the previous
provisions of this section.
(f) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $100,000,000 for each
fiscal year to carry out this section. Amounts appropriated
under this subsection shall remain available until ex-
pended.
(g) STATE DEFINED.—In this section, the term
‘‘State’’ has the meaning given such term for purposes of
title XIX of the Social Security Act (42 U.S.C. 1396 et
seq.).
SEC. 11. LIMITATIONS ON CONFLICTS OF INTEREST.
(a) LIMITATION
ON CONFLICTS
OF INTEREST
IN
MARKETING ACTIVITIES.—
(1) TITLE XXI.—Section 2105(c) of the Social
Security Act (42 U.S.C. 300aa–5(c)) is amended by
adding at the end the following:
‘‘(8) LIMITATION ON EXPENDITURES FOR MAR-
KETING ACTIVITIES.—Amounts expended by a State
for the use of an administrative vendor in marketing
health benefits coverage to low-income children
under this title shall not be considered, for purposes
of subsection (a)(2)(D), to be reasonable costs to ad-
minister the plan unless the following conditions are
met with respect to the vendor:
‘‘(A) The vendor is independent of any en-
tity offering the coverage in the same area of
the State in which the vendor is conducting
marketing activities.
‘‘(B) No person who is an owner, em-
ployee, consultant, or has a contract with the
vendor either has any direct or indirect finan-
cial interest with such an entity or has been ex-
cluded from participation in the program under
this title or title XVIII or XIX or debarred by
any Federal agency, or subject to a civil money
penalty under this Act.’’.
(b) PROHIBITION OF AFFILIATION WITH DEBARRED
INDIVIDUALS.—
(1) MEDICAID.—Section 1903(i) of the Social
Security Act (42 U.S.C. 1396b(i))is amended—
(A) by striking the period at the end of
paragraph (20) and inserting ‘‘; or’’; and
(B) by inserting after paragraph (20) the
following:
‘‘(21) with respect to any amounts expended for
an entity that receives payments under the plan
unless—
‘‘(A) no person with an ownership or con-
trol interest (as defined in section 1124(a)(3))
in the entity is a person that is debarred, sus-
pended, or otherwise excluded from partici-
pating in procurement or non-procurement ac-
tivities under the Federal Acquisition Regula-
tion; and
‘‘(B) such entity has not entered into an
employment, consulting, or other agreement for
the provision of items or services that are mate-
rial to such entity’s obligations under the plan
with a person described in subparagraph (A).’’.
(2) TITLE XXI.—Section 2107(e)(1) of the So-
cial Security Act (42 U.S.C. 1397gg(e)(1)), as
amended by sections 5(b) and 7(b)(3), is further
amended—
(A) in subparagraph (B), by striking ‘‘and
(17)’’ and inserting ‘‘(17), and (21)’’; and
(B) by adding at the end the following:
‘‘(F) Section 1902(a)(67) (relating to pro-
hibition of affiliation with debarred individ-
uals).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenditures made on or after
October 1, 2001, whether or not regulations implementing
such amendments have been issued.
SEC. 12. INCREASE IN CHIP ALLOTMENT FOR EACH OF FIS-
CAL YEARS 2002 THROUGH 2004.
Paragraphs (5), (6), and (7) of section 2104(a) of
the Social Security Act (42 U.S.C. 1397dd(a)) are amend-
ed by striking ‘‘$3,150,000,000’’ each place it appears and
inserting ‘‘$4,150,000,000’’.
SEC. 13. DEMONSTRATION PROGRAMS TO IMPROVE MED-
ICAID AND CHIP OUTREACH TO HOMELESS
INDIVIDUALS AND FAMILIES.
(a) AUTHORITY.—The Secretary of Health and
Human Services may award demonstration grants to not
more than 7 States (or other qualified entities) to conduct
innovative programs that are designed to improve out-
reach to homeless individuals and families under the pro-
grams described in subsection (b) with respect to enroll-
ment of such individuals and families under such pro-
grams and the provision of services (and coordinating the
provision of such services) under such programs.
(b) PROGRAMS FOR HOMELESS DESCRIBED.—The
programs described in this subsection are as follows:
(1) MEDICAID.—The program under title XIX
of the Social Security Act (42 U.S.C. 1396 et seq.).
(2) CHIP.—The program under title XXI of
the Social Security Act (42 U.S.C. 1397aa et seq.).
(3) TANF.—The program under part A of title
IV of the Social Security Act (42 U.S.C. 601 et
seq.).
(4) SAMHSA BLOCK GRANTS.—The program
of grants under part B of title XIX of the Public
Health Service Act (42 U.S.C. 300x–1 et seq.).
(5) FOOD
STAMP
PROGRAM.—The program
under the Food Stamp Act of 1977 (7 U.S.C. 2011
et seq.).
(6) WORKFORCE INVESTMENT ACT.—The pro-
gram under the Workforce Investment Act of 1999
(29 U.S.C. 2801 et seq.).
(7) WELFARE-TO-WORK.—The welfare-to-work
program under section 403(a)(5) of the Social Secu-
rity Act (42 U.S.C. 603(a)(5)).
(8) OTHER PROGRAMS.—Other public and pri-
vate benefit programs that serve low-income individ-
uals.
(c) APPROPRIATIONS.—For the purposes of carrying
out this section, there is appropriated for fiscal year 2002,
out of any funds in the Treasury not otherwise appro-
priated, $10,000,000, to remain available until expended.
SEC. 14. TECHNICAL AND CONFORMING AMENDMENTS TO
AUTHORITY TO PAY MEDICAID EXPANSION
COSTS FROM TITLE XXI APPROPRIATION.
(a) AUTHORITY TO PAY MEDICAID EXPANSION
COSTS
FROM
TITLE
XXI APPROPRIATION.—Section
2105(a) of the Social Security Act (42 U.S.C. 1397ee(a))
is amended to read as follows:
‘‘(a) ALLOWABLE EXPENDITURES.—
‘‘(1) IN GENERAL.—Subject to the succeeding
provisions of this section, the Secretary shall pay to
each State with a plan approved under this title,
from its allotment under section 2104, an amount
for each quarter equal to the enhanced FMAP of the
following expenditures in the quarter:
‘‘(A) CHILD HEALTH ASSISTANCE UNDER
MEDICAID.—Expenditures for child health as-
sistance under the plan for targeted low-income
children in the form of providing medical assist-
ance for expenditures described in the fourth
sentence of section 1905(b).
‘‘(B) RESERVED.—[reserved].
‘‘(C) CHILD HEALTH ASSISTANCE UNDER
THIS TITLE.—Expenditures for child health as-
sistance under the plan for targeted low-income
children in the form of providing health benefits
coverage that meets the requirements of section
2103.
‘‘(D) ASSISTANCE
AND
ADMINISTRATIVE
EXPENDITURES SUBJECT TO LIMIT.—Expendi-
tures only to the extent permitted consistent
with subsection (c)—
‘‘(i) for other child health assistance
for targeted low-income children;
‘‘(ii) for expenditures for health serv-
ices initiatives under the plan for improv-
ing the health of children (including tar-
geted low-income children and other low-
income children);
‘‘(iii) for expenditures for outreach ac-
tivities as provided in section 2102(c)(1)
under the plan; and
‘‘(iv) for other reasonable costs in-
curred by the State to administer the plan.
‘‘(2) ORDER OF PAYMENTS.—Payments under a
subparagraph of paragraph (1) from a State’s allot-
ment for expenditures described in each such sub-
paragraph shall be made on a quarterly basis in the
order of such subparagraph in such paragraph.
‘‘(3) NO DUPLICATIVE PAYMENT.—In the case
of expenditures for which payment is made under
paragraph (1), no payment shall be made under title
XIX.’’.
(b) CONFORMING AMENDMENTS.—
(1) SECTION
1905(u).—Section 1905(u)(1)(B)
of 
the 
Social 
Security 
Act 
(42 
U.S.C.
1396d(u)(1)(B)) is amended by inserting ‘‘and sec-
tion 2105(a)(1)’’ after ‘‘subsection (b)’’.
(2) SECTION 2105(c).—Section 2105(c)(2)(A) of
the Social Security Act (42 U.S.C. 1397ee(c)(2)(A))
is amended by striking ‘‘subparagraphs (A), (C),
and (D) of’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall be effective as if included in the enact-
ment of the Balanced Budget Act of 1997 (Public Law
105–33; 111 Stat. 251), whether or not regulations imple-
menting such amendments have been issued.
SEC. 15. ADDITIONAL CHIP REVISIONS.
(a) LIMITING COST-SHARING TO 2.5 PERCENT FOR
FAMILIES WITH INCOME BELOW 150 PERCENT OF POV-
ERTY.—Section 2103(e)(3)(A) of the Social Security Act
(42 U.S.C. 1397cc(e)(3)(A)) is amended—
(1) by striking ‘‘and’’ at the end of clause (i);
(2) by striking the period at the end of clause
(ii) and inserting ‘‘; and’’; and
(3) by adding at the end the following new
clause:
‘‘(iii) total annual aggregate cost-
sharing described in clauses (i) and (ii)
with respect to all such targeted low-in-
come children in a family under this title
that exceeds 2.5 percent of such family’s
income for the year involved.’’.
(b) REPORTING OF ENROLLMENT DATA.—
(1) QUARTERLY REPORTS.—Section 2107(b)(1)
of such Act (42 U.S.C. 1397gg(b)(1)) is amended by
adding at the end the following: ‘‘In quarterly re-
ports on enrollment required under this paragraph,
a State shall include information on the age, gender,