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or American Samoa with respect to amounts ex-
pended for medical assistance for newly eligible 
(as defined in section 1905(y)(2)) nonpregnant 
childless adults who are eligible under subclause 
(VIII) of section 1902(a)(10)(A)(i) and whose in-
come (as determined under section 1902(e)(14)) 
does not exceed (in the case of each such com-
monwealth and territory respectively) the income 
eligibility level in effect for that population 
under title XIX or under a waiver on the date 
of enactment of the Patient Protection and Af-
fordable Care Act, shall not be taken into ac-
count in applying subsection (f) (as increased in 
accordance with paragraphs (1), (2), (3), and 
(5) of this subsection) to such commonwealth or 
territory for such fiscal year.’’. 
(c) INCREASED FMAP.— 
(1) IN GENERAL.—The first sentence of section 
1905(b) of the Social Security Act (42 U.S.C. 
1396d(b)) is amended by striking ‘‘shall be 50 per 
centum’’ and inserting ‘‘shall be 55 percent’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) takes effect on January 1, 2011.
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SEC. 2006. SPECIAL ADJUSTMENT TO FMAP DETERMINA-
TION FOR CERTAIN STATES RECOVERING 
FROM A MAJOR DISASTER. 
Section 1905 of the Social Security Act (42 U.S.C. 
1396d), as amended by sections 2001(a)(3) and 2001(b)(2), 
is amended— 
(1) in subsection (b), in the first sentence, by 
striking ‘‘subsection (y)’’ and inserting ‘‘subsections 
(y) and (aa)’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(aa)(1) Notwithstanding subsection (b), beginning 
January 1, 2011, the Federal medical assistance percentage 
for a fiscal year for a disaster-recovery FMAP adjustment 
State shall be equal to the following: 
‘‘(A) In the case of the first fiscal year (or part 
of a fiscal year) for which this subsection applies to 
the State, the Federal medical assistance percentage 
determined for the fiscal year without regard to this 
subsection and subsection (y), increased by 50 percent 
of the number of percentage points by which the Fed-
eral medical assistance percentage determined for the 
State for the fiscal year without regard to this sub-
section and subsection (y), is less than the Federal 
medical assistance percentage determined for the 
State for the preceding fiscal year after the applica-
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tion of only subsection (a) of section 5001 of Public 
Law 111–5 (if applicable to the preceding fiscal year) 
and without regard to this subsection, subsection (y), 
and subsections (b) and (c) of section 5001 of Public 
Law 111–5. 
‘‘(B) In the case of the second or any succeeding 
fiscal year for which this subsection applies to the 
State, the Federal medical assistance percentage de-
termined for the preceding fiscal year under this sub-
section for the State, increased by 25 percent of the 
number of percentage points by which the Federal 
medical assistance percentage determined for the 
State for the fiscal year without regard to this sub-
section and subsection (y), is less than the Federal 
medical assistance percentage determined for the 
State for the preceding fiscal year under this sub-
section. 
‘‘(2) In this subsection, the term ‘disaster-recovery 
FMAP adjustment State’ means a State that is one of the 
50 States or the District of Columbia, for which, at any 
time during the preceding 7 fiscal years, the President has 
declared a major disaster under section 401 of the Robert 
T. Stafford Disaster Relief and Emergency Assistance Act 
and determined as a result of such disaster that every coun-
ty or parish in the State warrant individual and public
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assistance or public assistance from the Federal Govern-
ment under such Act and for which— 
‘‘(A) in the case of the first fiscal year (or part 
of a fiscal year) for which this subsection applies to 
the State, the Federal medical assistance percentage 
determined for the State for the fiscal year without 
regard to this subsection and subsection (y), is less 
than the Federal medical assistance percentage deter-
mined for the State for the preceding fiscal year after 
the application of only subsection (a) of section 5001 
of Public Law 111–5 (if applicable to the preceding 
fiscal year) and without regard to this subsection, 
subsection (y), and subsections (b) and (c) of section 
5001 of Public Law 111–5, by at least 3 percentage 
points; and 
‘‘(B) in the case of the second or any succeeding 
fiscal year for which this subsection applies to the 
State, the Federal medical assistance percentage de-
termined for the State for the fiscal year without re-
gard to this subsection and subsection (y), is less than 
the Federal medical assistance percentage determined 
for the State for the preceding fiscal year under this 
subsection by at least 3 percentage points. 
‘‘(3) The Federal medical assistance percentage deter-
mined for a disaster-recovery FMAP adjustment State
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under paragraph (1) shall apply for purposes of this title 
(other than with respect to disproportionate share hospital 
payments described in section 1923 and payments under 
this title that are based on the enhanced FMAP described 
in 2105(b)) and shall not apply with respect to payments 
under title IV (other than under part E of title IV) or pay-
ments under title XXI.’’. 
SEC. 2007. MEDICAID IMPROVEMENT FUND RESCISSION. 
(a) RESCISSION.—Any amounts available to the Med-
icaid Improvement Fund established under section 1941 of 
the Social Security Act (42 U.S.C. 1396w–1) for any of 
fiscal years 2014 through 2018 that are available for ex-
penditure from the Fund and that are not so obligated as 
of the date of the enactment of this Act are rescinded. 
(b) CONFORMING AMENDMENTS.—Section 1941(b)(1) 
of the Social Security Act (42 U.S.C. 1396w–1(b)(1)) is 
amended— 
(1) 
in 
subparagraph 
(A), 
by 
striking 
‘‘$100,000,000’’ and inserting ‘‘$0’’; and 
(2) 
in 
subparagraph 
(B), 
by 
striking 
‘‘$150,000,000’’ and inserting ‘‘$0’’.
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Subtitle B—Enhanced Support for 
the Children’s Health Insurance 
Program 
SEC. 2101. ADDITIONAL FEDERAL FINANCIAL PARTICIPA-
TION FOR CHIP. 
(a) IN GENERAL.—Section 2105(b) of the Social Secu-
rity Act (42 U.S.C. 1397ee(b)) is amended by adding at 
the end the following: ‘‘Notwithstanding the preceding sen-
tence, during the period that begins on October 1, 2013, and 
ends on September 30, 2019, the enhanced FMAP deter-
mined for a State for a fiscal year (or for any portion of 
a fiscal year occurring during such period) shall be in-
creased by 23 percentage points, but in no case shall exceed 
100 percent. The increase in the enhanced FMAP under the 
preceding sentence shall not apply with respect to deter-
mining the payment to a State under subsection (a)(1) for 
expenditures described in subparagraph (D)(iv), para-
graphs (8), (9), (11) of subsection (c), or clause (4) of the 
first sentence of section 1905(b).’’. 
(b) MAINTENANCE OF EFFORT.— 
(1) IN GENERAL.—Section 2105(d) of the Social 
Security Act (42 U.S.C. 1397ee(d)) is amended by 
adding at the end the following: 
‘‘(3) CONTINUATION OF ELIGIBILITY STANDARDS 
FOR CHILDREN UNTIL OCTOBER 1, 2019.—
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‘‘(A) IN GENERAL.—During the period that 
begins on the date of enactment of the Patient 
Protection and Affordable Care Act and ends on 
September 30, 2019, a State shall not have in ef-
fect eligibility standards, methodologies, or proce-
dures under its State child health plan (includ-
ing any waiver under such plan) for children 
(including children provided medical assistance 
for which payment is made under section 
2105(a)(1)(A)) that are more restrictive than the 
eligibility standards, methodologies, or proce-
dures, respectively, under such plan (or waiver) 
as in effect on the date of enactment of that Act. 
The preceding sentence shall not be construed as 
preventing a State during such period from— 
‘‘(i) applying eligibility standards, 
methodologies, or procedures for children 
under the State child health plan or under 
any waiver of the plan that are less restric-
tive than the eligibility standards, meth-
odologies, or procedures, respectively, for 
children under the plan or waiver that are 
in effect on the date of enactment of such 
Act; or
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‘‘(ii) imposing a limitation described 
in section 2112(b)(7) for a fiscal year in 
order to limit expenditures under the State 
child health plan to those for which Federal 
financial participation is available under 
this section for the fiscal year. 
‘‘(B) ASSURANCE OF EXCHANGE COVERAGE 
FOR TARGETED LOW-INCOME CHILDREN UNABLE 
TO BE PROVIDED CHILD HEALTH ASSISTANCE AS 
A
RESULT
OF
FUNDING
SHORTFALLS.—In the 
event that allotments provided under section 
2104 are insufficient to provide coverage to all 
children who are eligible to be targeted low-in-
come children under the State child health plan 
under this title, a State shall establish proce-
dures to ensure that such children are provided 
coverage through an Exchange established by the 
State under section 1311 of the Patient Protec-
tion and Affordable Care Act.’’. 
(2) CONFORMING
AMENDMENT
TO
TITLE
XXI 
MEDICAID
MAINTENANCE
OF
EFFORT.—Section 
2105(d)(1) of the Social Security Act (42 U.S.C. 
1397ee(d)(1)) is amended by adding before the period 
‘‘, except as required under section 1902(e)(14)’’.
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(c) NO ENROLLMENT BONUS PAYMENTS FOR CHIL-
DREN ENROLLED AFTER FISCAL YEAR 2013.—Section 
2105(a)(3)(F)(iii) of the Social Security Act (42 U.S.C. 
1397ee(a)(3)(F)(iii)) is amended by inserting ‘‘or any chil-
dren enrolled on or after October 1, 2013’’ before the period. 
(d) INCOME ELIGIBILITY DETERMINED USING MODI-
FIED GROSS INCOME.— 
(1) 
STATE
PLAN
REQUIREMENT.—Section 
2102(b)(1)(B) of the Social Security Act (42 U.S.C. 
1397bb(b)(1)(B)) is amended— 
(A) in clause (iii), by striking ‘‘and’’ after 
the semicolon; 
(B) in clause (iv), by striking the period 
and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(v) shall, beginning January 1, 2014, 
use modified gross income and household in-
come (as defined in section 36B(d)(2) of the 
Internal Revenue Code of 1986) to deter-
mine eligibility for child health assistance 
under the State child health plan or under 
any waiver of such plan and for any other 
purpose applicable under the plan or waiv-
er for which a determination of income is 
required, including with respect to the im-
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position of premiums and cost-sharing, con-
sistent with section 1902(e)(14).’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
2107(e)(1) of the Social Security Act (42 U.S.C. 
1397gg(e)(1)) is amended— 
(A) by redesignating subparagraphs (E) 
through (L) as subparagraphs (F) through (M), 
respectively; and 
(B) by inserting after subparagraph (D), 
the following: 
‘‘(E) Section 1902(e)(14) (relating to in-
come determined using modified gross income 
and household income).’’. 
(e) APPLICATION OF STREAMLINED ENROLLMENT SYS-
TEM.—Section 2107(e)(1) of the Social Security Act (42 
U.S.C. 1397gg(e)(1)), as amended by subsection (d)(2), is 
amended by adding at the end the following: 
‘‘(N) Section 1943(b) (relating to coordina-
tion with State Exchanges and the State Med-
icaid agency).’’. 
(f) CHIP ELIGIBILITY FOR CHILDREN INELIGIBLE 
FOR MEDICAID AS A RESULT OF ELIMINATION OF DIS-
REGARDS.—Notwithstanding any other provision of law, a 
State shall treat any child who is determined to be ineligible 
for medical assistance under the State Medicaid plan or
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under a waiver of the plan as a result of the elimination 
of the application of an income disregard based on expense 
or type of income, as required under section 1902(e)(14) 
of the Social Security Act (as added by this Act), as a tar-
geted low-income child under section 2110(b) (unless the 
child is excluded under paragraph (2) of that section) and 
shall provide child health assistance to the child under the 
State child health plan (whether implemented under title 
XIX or XXI, or both, of the Social Security Act). 
SEC. 2102. TECHNICAL CORRECTIONS. 
(a) CHIPRA.—Effective as if included in the enact-
ment of the Children’s Health Insurance Program Reau-
thorization Act of 2009 (Public Law 111–3) (in this section 
referred to as ‘‘CHIPRA’’): 
(1) Section 2104(m) of the Social Security Act, 
as added by section 102 of CHIPRA, is amended— 
(A) by redesignating paragraph (7) as 
paragraph (8); and 
(B) by inserting after paragraph (6), the 
following: 
‘‘(7) ADJUSTMENT OF FISCAL YEAR 2010 ALLOT-
MENTS
TO
ACCOUNT
FOR
CHANGES
IN
PROJECTED 
SPENDING FOR CERTAIN PREVIOUSLY APPROVED EX-
PANSION PROGRAMS.—For purposes of recalculating 
the fiscal year 2010 allotment, in the case of one of
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the 50 States or the District of Columbia that has an 
approved State plan amendment effective January 1, 
2006, to provide child health assistance through the 
provision of benefits under the State plan under title 
XIX for children from birth through age 5 whose fam-
ily income does not exceed 200 percent of the poverty 
line, the Secretary shall increase the allotment by an 
amount that would be equal to the Federal share of 
expenditures that would have been claimed at the en-
hanced FMAP rate rather than the Federal medical 
assistance percentage matching rate for such popu-
lation.’’. 
(2) Section 605 of CHIPRA is amended by strik-
ing ‘‘legal residents’’ and insert ‘‘lawfully residing in 
the United States’’. 
(3) Subclauses (I) and (II) of paragraph 
(3)(C)(i) of section 2105(a) of the Social Security Act 
(42 U.S.C. 1397ee(a)(3)(ii)), as added by section 104 
of CHIPRA, are each amended by striking ‘‘, respec-
tively’’. 
(4) Section 2105(a)(3)(E)(ii) of the Social Secu-
rity Act (42 U.S.C. 1397ee(a)(3)(E)(ii)), as added by 
section 104 of CHIPRA, is amended by striking sub-
clause (IV).
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(5) Section 2105(c)(9)(B) of the Social Security 
Act (42 U.S.C. 1397e(c)(9)(B)), as added by section 
211(c)(1) of CHIPRA, is amended by striking ‘‘sec-
tion 
1903(a)(3)(F)’’ 
and 
inserting 
‘‘section 
1903(a)(3)(G)’’. 
(6) Section 2109(b)(2)(B) of the Social Security 
Act (42 U.S.C. 1397ii(b)(2)(B)), as added by section 
602 of CHIPRA, is amended by striking ‘‘the child 
population 
growth 
factor 
under 
section 
2104(m)(5)(B)’’ and inserting ‘‘a high-performing 
State under section 2111(b)(3)(B)’’. 
(7) Section 2110(c)(9)(B)(v) of the Social Secu-
rity Act (42 U.S.C. 1397jj(c)(9)(B)(v)), as added by 
section 505(b) of CHIPRA, is amended by striking 
‘‘school or school system’’ and inserting ‘‘local edu-
cational agency (as defined under section 9101 of the 
Elementary and Secondary Education Act of 1965’’. 
(8) Section 211(a)(1)(B) of CHIPRA is amend-
ed— 
(A) by striking ‘‘is amended’’ and all that 
follows through ‘‘adding’’ and inserting ‘‘is 
amended by adding’’; and 
(B) by redesignating the new subparagraph 
to be added by such section to section 1903(a)(3)
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of the Social Security Act as a new subpara-
graph (H). 
(b) ARRA.—Effective as if included in the enactment 
of section 5006(a) of division B of the American Recovery 
and Reinvestment Act of 2009 (Public Law 111–5), the sec-
ond sentence of section 1916A(a)(1) of the Social Security 
Act (42 U.S.C. 1396o–1(a)(1)) is amended by striking ‘‘or 
(i)’’ and inserting ‘‘, (i), or (j)’’. 
Subtitle C—Medicaid and CHIP 
Enrollment Simplification 
SEC. 2201. ENROLLMENT SIMPLIFICATION AND COORDINA-
TION WITH STATE HEALTH INSURANCE EX-
CHANGES. 
Title XIX of the Social Security Act (42 U.S.C. 1397aa 
et seq.) is amended by adding at the end the following: 
‘‘SEC. 1943. ENROLLMENT SIMPLIFICATION AND COORDINA-
TION WITH STATE HEALTH INSURANCE EX-
CHANGES. 
‘‘(a) CONDITION FOR PARTICIPATION IN MEDICAID.— 
As a condition of the State plan under this title and receipt 
of any Federal financial assistance under section 1903(a) 
for calendar quarters beginning after January 1, 2014, a 
State shall ensure that the requirements of subsection (b) 
is met.
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‘‘(b) ENROLLMENT SIMPLIFICATION AND COORDINA-
TION WITH STATE HEALTH INSURANCE EXCHANGES AND 
CHIP.— 
‘‘(1) IN GENERAL.—A State shall establish proce-
dures for— 
‘‘(A) enabling individuals, through an 
Internet website that meets the requirements of 
paragraph (4), to apply for medical assistance 
under the State plan or under a waiver of the 
plan, to be enrolled in the State plan or waiver, 
to renew their enrollment in the plan or waiver, 
and to consent to enrollment or reenrollment in 
the State plan through electronic signature; 
‘‘(B) enrolling, without any further deter-
mination by the State and through such website, 
individuals who are identified by an Exchange 
established by the State under section 1311 of the 
Patient Protection and Affordable Care Act as 
being eligible for— 
‘‘(i) medical assistance under the State 
plan or under a waiver of the plan; or 
‘‘(ii) child health assistance under the 
State child health plan under title XXI; 
‘‘(C) ensuring that individuals who apply 
for but are determined to be ineligible for med-
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ical assistance under the State plan or a waiver 
or ineligible for child health assistance under the 
State child health plan under title XXI, are 
screened for eligibility for enrollment in qualified 
health plans offered through such an Exchange 
and, if applicable, premium assistance for the 
purchase of a qualified health plan under section 
36B of the Internal Revenue Code of 1986 (and, 
if applicable, advance payment of such assist-
ance under section 1412 of the Patient Protec-
tion and Affordable Care Act), and, if eligible, 
enrolled in such a plan without having to submit 
an additional or separate application, and that 
such individuals receive information regarding 
reduced cost-sharing for eligible individuals 
under section 1402 of the Patient Protection and 
Affordable Care Act, and any other assistance or 
subsidies available for coverage obtained through 
the Exchange; 
‘‘(D) ensuring that the State agency respon-
sible for administering the State plan under this 
title (in this section referred to as the ‘State 
Medicaid agency’), the State agency responsible 
for administering the State child health plan 
under title XXI (in this section referred to as the
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‘State CHIP agency’) and an Exchange estab-
lished by the State under section 1311 of the Pa-
tient Protection and Affordable Care Act utilize 
a secure electronic interface sufficient to allow 
for a determination of an individual’s eligibility 
for such medical assistance, child health assist-
ance, or premium assistance, and enrollment in 
the State plan under this title, title XXI, or a 
qualified health plan, as appropriate; 
‘‘(E) coordinating, for individuals who are 
enrolled in the State plan or under a waiver of 
the plan and who are also enrolled in a qualified 
health plan offered through such an Exchange, 
and for individuals who are enrolled in the State 
child health plan under title XXI and who are 
also enrolled in a qualified health plan, the pro-
vision of medical assistance or child health as-
sistance to such individuals with the coverage 
provided under the qualified health plan in 
which they are enrolled, including services de-
scribed in section 1905(a)(4)(B) (relating to 
early and periodic screening, diagnostic, and 
treatment services defined in section 1905(r)) 
and provided in accordance with the require-
ments of section 1902(a)(43); and
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‘‘(F) conducting outreach to and enrolling 
vulnerable and underserved populations eligible 
for medical assistance under this title XIX or for 
child health assistance under title XXI, including 
children, unaccompanied homeless youth, chil-
dren and youth with special health care needs, 
pregnant women, racial and ethnic minorities, 
rural populations, victims of abuse or trauma, 
individuals with mental health or substance-re-
lated disorders, and individuals with HIV/AIDS. 
‘‘(2) AGREEMENTS WITH STATE HEALTH INSUR-
ANCE EXCHANGES.—The State Medicaid agency and 
the State CHIP agency may enter into an agreement 
with an Exchange established by the State under sec-
tion 1311 of the Patient Protection and Affordable 
Care Act under which the State Medicaid agency or 
State CHIP agency may determine whether a State 
resident is eligible for premium assistance for the 
purchase of a qualified health plan under section 36B 
of the Internal Revenue Code of 1986 (and, if appli-
cable, advance payment of such assistance under sec-
tion 1412 of the Patient Protection and Affordable 
Care Act), so long as the agreement meets such condi-
tions and requirements as the Secretary of the Treas-
ury may prescribe to reduce administrative costs and
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the likelihood of eligibility errors and disruptions in 
coverage. 
‘‘(3) STREAMLINED ENROLLMENT SYSTEM.—The 
State Medicaid agency and State CHIP agency shall 
participate in and comply with the requirements for 
the system established under section 1413 of the Pa-
tient Protection and Affordable Care Act (relating to 
streamlined procedures for enrollment through an Ex-
change, Medicaid, and CHIP). 
‘‘(4) ENROLLMENT WEBSITE REQUIREMENTS.— 
The procedures established by State under paragraph 
(1) shall include establishing and having in oper-
ation, not later than January 1, 2014, an Internet 
website that is linked to any website of an Exchange 
established by the State under section 1311 of the Pa-
tient Protection and Affordable Care Act and to the 
State CHIP agency (if different from the State Med-
icaid agency) and allows an individual who is eligi-
ble for medical assistance under the State plan or 
under a waiver of the plan and who is eligible to re-
ceive premium credit assistance for the purchase of a 
qualified health plan under section 36B of the Inter-
nal Revenue Code of 1986 to compare the benefits, 
premiums, and cost-sharing applicable to the indi-
vidual under the State plan or waiver with the bene-
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fits, premiums, and cost-sharing available to the indi-
vidual under a qualified health plan offered through 
such an Exchange, including, in the case of a child, 
the coverage that would be provided for the child 
through the State plan or waiver with the coverage 
that would be provided to the child through enroll-
ment in family coverage under that plan and as sup-
plemental coverage by the State under the State plan 
or waiver. 
‘‘(5) CONTINUED
NEED
FOR
ASSESSMENT
FOR 
HOME
AND
COMMUNITY-BASED
SERVICES.—Nothing 
in paragraph (1) shall limit or modify the require-
ment that the State assess an individual for purposes 
of providing home and community-based services 
under the State plan or under any waiver of such 
plan 
for 
individuals 
described 
in 
subsection 
(a)(10)(A)(ii)(VI).’’. 
SEC. 2202. PERMITTING HOSPITALS TO MAKE PRESUMPTIVE 
ELIGIBILITY DETERMINATIONS FOR ALL MED-
ICAID ELIGIBLE POPULATIONS. 
(a) IN GENERAL.—Section 1902(a)(47) of the Social 
Security Act (42 U.S.C. 1396a(a)(47)) is amended— 
(1) by striking ‘‘at the option of the State, pro-
vide’’ and inserting ‘‘provide— 
‘‘(A) at the option of the State,’’;
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(2) by inserting ‘‘and’’ after the semicolon; and 
(3) by adding at the end the following: 
‘‘(B) that any hospital that is a partici-
pating provider under the State plan may elect 
to be a qualified entity for purposes of deter-
mining, on the basis of preliminary information, 
whether any individual is eligible for medical as-
sistance under the State plan or under a waiver 
of the plan for purposes of providing the indi-
vidual with medical assistance during a pre-
sumptive eligibility period, in the same manner, 
and subject to the same requirements, as apply 
to the State options with respect to populations 
described in section 1920, 1920A, or 1920B (but 
without regard to whether the State has elected 
to provide for a presumptive eligibility period 
under any such sections), subject to such guid-
ance as the Secretary shall establish;’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
1903(u)(1)(D)(v) of such Act (42 U.S.C. 1396b(u)(1)(D)v)) 
is amended— 
(1) by striking ‘‘or for’’ and inserting ‘‘for’’; and 
(2) by inserting before the period at the end the 
following: ‘‘, or for medical assistance provided to an 
individual during a presumptive eligibility period re-
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sulting from a determination of presumptive eligi-
bility made by a hospital that elects under section 
1902(a)(47)(B) to be a qualified entity for such pur-
pose’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section take effect on January 1, 2014, and apply to services 
furnished on or after that date. 
Subtitle D—Improvements to 
Medicaid Services 
SEC. 2301. COVERAGE FOR FREESTANDING BIRTH CENTER 
SERVICES. 
(a) IN GENERAL.—Section 1905 of the Social Security 
Act (42 U.S.C. 1396d), is amended— 
(1) in subsection (a)— 
(A) in paragraph (27), by striking ‘‘and’’ 
at the end; 
(B) by redesignating paragraph (28) as 
paragraph (29); and 
(C) by inserting after paragraph (27) the 
following new paragraph: 
‘‘(28) freestanding birth center services (as de-
fined in subsection (l)(3)(A)) and other ambulatory 
services that are offered by a freestanding birth center 
(as defined in subsection (l)(3)(B)) and that are oth-
erwise included in the plan; and’’; and
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(2) in subsection (l), by adding at the end the 
following new paragraph: 
‘‘(3)(A) The term ‘freestanding birth center services’ 
means services furnished to an individual at a freestanding 
birth center (as defined in subparagraph (B)) at such cen-
ter. 
‘‘(B) The term ‘freestanding birth center’ means a 
health facility— 
‘‘(i) that is not a hospital; 
‘‘(ii) where childbirth is planned to occur away 
from the pregnant woman’s residence; 
‘‘(iii) that is licensed or otherwise approved by 
the State to provide prenatal labor and delivery or 
postpartum care and other ambulatory services that 
are included in the plan; and 
‘‘(iv) that complies with such other requirements 
relating to the health and safety of individuals fur-
nished services by the facility as the State shall estab-
lish. 
‘‘(C) A State shall provide separate payments to pro-
viders administering prenatal labor and delivery or 
postpartum care in a freestanding birth center (as defined 
in subparagraph (B)), such as nurse midwives and other 
providers of services such as birth attendants recognized 
under State law, as determined appropriate by the Sec-
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retary. For purposes of the preceding sentence, the term 
‘birth attendant’ means an individual who is recognized or 
registered by the State involved to provide health care at 
childbirth and who provides such care within the scope of 
practice under which the individual is legally authorized 
to perform such care under State law (or the State regu-
latory mechanism provided by State law), regardless of 
whether the individual is under the supervision of, or asso-
ciated with, a physician or other health care provider. Noth-
ing in this subparagraph shall be construed as changing 
State law requirements applicable to a birth attendant.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
1902(a)(10)(A) of the Social Security Act (42 U.S.C. 
1396a(a)(10)(A)), is amended in the matter preceding 
clause (i) by striking ‘‘and (21)’’ and inserting ‘‘, (21), and 
(28)’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
take effect on the date of the enactment of this Act 
and shall apply to services furnished on or after such 
date. 
(2) EXCEPTION
IF
STATE
LEGISLATION
RE-
QUIRED.—In the case of a State plan for medical as-
sistance under title XIX of the Social Security Act
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which the Secretary of Health and Human Services 
determines requires State legislation (other than legis-
lation appropriating funds) in order for the plan to 
meet the additional requirement imposed by the 
amendments made by this section, the State plan 
shall not be regarded as failing to comply with the re-
quirements of such title solely on the basis of its fail-
ure to meet this additional requirement before the 
first day of the first calendar quarter beginning after 
the close of the first regular session of the State legis-
lature that begins after the date of the enactment of 
this Act. For purposes of the previous sentence, in the 
case of a State that has a 2-year legislative session, 
each year of such session shall be deemed to be a sepa-
rate regular session of the State legislature. 
SEC. 2302. CONCURRENT CARE FOR CHILDREN. 
(a) IN GENERAL.—Section 1905(o)(1) of the Social Se-
curity Act (42 U.S.C. 1396d(o)(1)) is amended— 
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and 
(C)’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(C) A voluntary election to have payment made for 
hospice care for a child (as defined by the State) shall not
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constitute a waiver of any rights of the child to be provided 
with, or to have payment made under this title for, services 
that are related to the treatment of the child’s condition 
for which a diagnosis of terminal illness has been made.’’. 
(b) APPLICATION TO CHIP.—Section 2110(a)(23) of 
the Social Security Act (42 U.S.C. 1397jj(a)(23)) is amend-
ed by inserting ‘‘(concurrent, in the case of an individual 
who is a child, with care related to the treatment of the 
child’s condition with respect to which a diagnosis of ter-
minal illness has been made’’ after ‘‘hospice care’’. 
SEC. 2303. STATE ELIGIBILITY OPTION FOR FAMILY PLAN-
NING SERVICES. 
(a) COVERAGE AS OPTIONAL CATEGORICALLY NEEDY 
GROUP.— 
(1) IN GENERAL.—Section 1902(a)(10)(A)(ii) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1396a(a)(10)(A)(ii)), as amended by section 2001(e), 
is amended— 
(A) in subclause (XIX), by striking ‘‘or’’ at 
the end; 
(B) in subclause (XX), by adding ‘‘or’’ at 
the end; and 
(C) by adding at the end the following new 
subclause:
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‘‘(XXI) who are described in sub-
section (ii) (relating to individuals 
who meet certain income standards);’’. 
(2) GROUP DESCRIBED.—Section 1902 of such 
Act (42 U.S.C. 1396a), as amended by section 
2001(d), is amended by adding at the end the fol-
lowing new subsection: 
‘‘(ii)(1) Individuals described in this subsection are in-
dividuals— 
‘‘(A) whose income does not exceed an in-
come eligibility level established by the State that 
does not exceed the highest income eligibility 
level established under the State plan under this 
title (or under its State child health plan under 
title XXI) for pregnant women; and 
‘‘(B) who are not pregnant. 
‘‘(2) At the option of a State, individuals de-
scribed in this subsection may include individuals 
who, had individuals applied on or before January 1, 
2007, would have been made eligible pursuant to the 
standards and processes imposed by that State for 
benefits described in clause (XV) of the matter fol-
lowing subparagraph (G) of section subsection (a)(10) 
pursuant to a waiver granted under section 1115.
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‘‘(3) At the option of a State, for purposes of 
subsection (a)(17)(B), in determining eligibility for 
services under this subsection, the State may consider 
only the income of the applicant or recipient.’’. 
(3) 
LIMITATION
ON
BENEFITS.—Section 
1902(a)(10) of the Social Security Act (42 U.S.C. 
1396a(a)(10)), as amended by section 2001(a)(5)(A), 
is amended in the matter following subparagraph 
(G)— 
(A) by striking ‘‘and (XV)’’ and inserting 
‘‘(XV)’’; and 
(B) by inserting ‘‘, and (XVI) the medical 
assistance made available to an individual de-
scribed in subsection (ii) shall be limited to fam-
ily planning services and supplies described in 
section 1905(a)(4)(C) including medical diag-
nosis and treatment services that are provided 
pursuant to a family planning service in a fam-
ily planning setting’’ before the semicolon. 
(4) CONFORMING AMENDMENTS.— 
(A) Section 1905(a) of the Social Security 
Act (42 U.S.C. 1396d(a)), as amended by section 
2001(e)(2)(A), is amended in the matter pre-
ceding paragraph (1)—
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(i) in clause (xiv), by striking ‘‘or’’ at 
the end; 
(ii) in clause (xv), by adding ‘‘or’’ at 
the end; and 
(iii) by inserting after clause (xv) the 
following: 
‘‘(xvi) individuals described in section 
1902(ii),’’. 
(B) Section 1903(f)(4) of such Act (42 
U.S.C. 1396b(f)(4)), as amended by section 
2001(e)(2)(B), 
is 
amended 
by 
inserting 
‘‘1902(a)(10)(A)(ii)(XXI),’’ 
after 
‘‘1902(a)(10)(A)(ii)(XX),’’. 
(b) PRESUMPTIVE ELIGIBILITY.— 
(1) IN GENERAL.—Title XIX of the Social Secu-
rity Act (42 U.S.C. 1396 et seq.) is amended by in-
serting after section 1920B the following: 
‘‘PRESUMPTIVE ELIGIBILITY FOR FAMILY PLANNING 
SERVICES 
‘‘SEC. 1920C. (a) STATE OPTION.—State plan ap-
proved under section 1902 may provide for making medical 
assistance available to an individual described in section 
1902(ii) (relating to individuals who meet certain income 
eligibility standard) during a presumptive eligibility pe-
riod. In the case of an individual described in section 
1902(ii), such medical assistance shall be limited to family
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planning services and supplies described in 1905(a)(4)(C) 
and, at the State’s option, medical diagnosis and treatment 
services that are provided in conjunction with a family 
planning service in a family planning setting. 
‘‘(b) DEFINITIONS.—For purposes of this section: 
‘‘(1) PRESUMPTIVE
ELIGIBILITY
PERIOD.—The 
term ‘presumptive eligibility period’ means, with re-
spect to an individual described in subsection (a), the 
period that— 
‘‘(A) begins with the date on which a quali-
fied entity determines, on the basis of prelimi-
nary information, that the individual is de-
scribed in section 1902(ii); and 
‘‘(B) ends with (and includes) the earlier 
of— 
‘‘(i) the day on which a determination 
is made with respect to the eligibility of 
such individual for services under the State 
plan; or 
‘‘(ii) in the case of such an individual 
who does not file an application by the last 
day of the month following the month dur-
ing which the entity makes the determina-
tion referred to in subparagraph (A), such 
last day.
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‘‘(2) QUALIFIED ENTITY.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘qualified entity’ means any 
entity that— 
‘‘(i) is eligible for payments under a 
State plan approved under this title; and 
‘‘(ii) is determined by the State agency 
to be capable of making determinations of 
the type described in paragraph (1)(A). 
‘‘(B) RULE OF CONSTRUCTION.—Nothing in 
this paragraph shall be construed as preventing 
a State from limiting the classes of entities that 
may become qualified entities in order to prevent 
fraud and abuse. 
‘‘(c) ADMINISTRATION.— 
‘‘(1) IN GENERAL.—The State agency shall pro-
vide qualified entities with— 
‘‘(A) such forms as are necessary for an ap-
plication to be made by an individual described 
in subsection (a) for medical assistance under 
the State plan; and 
‘‘(B) information on how to assist such in-
dividuals in completing and filing such forms. 
‘‘(2) NOTIFICATION
REQUIREMENTS.—A quali-
fied entity that determines under subsection (b)(1)(A)
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that an individual described in subsection (a) is pre-
sumptively eligible for medical assistance under a 
State plan shall— 
‘‘(A) notify the State agency of the deter-
mination within 5 working days after the date 
on which determination is made; and 
‘‘(B) inform such individual at the time the 
determination is made that an application for 
medical assistance is required to be made by not 
later than the last day of the month following the 
month during which the determination is made. 
‘‘(3) APPLICATION FOR MEDICAL ASSISTANCE.— 
In the case of an individual described in subsection 
(a) who is determined by a qualified entity to be pre-
sumptively eligible for medical assistance under a 
State plan, the individual shall apply for medical as-
sistance by not later than the last day of the month 
following the month during which the determination 
is made. 
‘‘(d) PAYMENT.—Notwithstanding any other provision 
of law, medical assistance that— 
‘‘(1) is furnished to an individual described in 
subsection (a)— 
‘‘(A) during a presumptive eligibility pe-
riod; and
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‘‘(B) by a entity that is eligible for pay-
ments under the State plan; and 
‘‘(2) is included in the care and services covered 
by the State plan, 
shall be treated as medical assistance provided by such plan 
for purposes of clause (4) of the first sentence of section 
1905(b).’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1902(a)(47) of the Social Secu-
rity Act (42 U.S.C. 1396a(a)(47)), as amended 
by section 2202(a), is amended— 
(i) in subparagraph (A), by inserting 
before the semicolon at the end the fol-
lowing: ‘‘and provide for making medical 
assistance available to individuals described 
in subsection (a) of section 1920C during a 
presumptive eligibility period in accordance 
with such section’’; and 
(ii) in subparagraph (B), by striking 
‘‘or 1920B’’ and inserting ‘‘1920B, or 
1920C’’. 
(B) Section 1903(u)(1)(D)(v) of such Act 
(42 U.S.C. 1396b(u)(1)(D)(v)), as amended by 
section 2202(b), is amended by inserting ‘‘or for 
medical assistance provided to an individual de-
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scribed in subsection (a) of section 1920C during 
a presumptive eligibility period under such sec-
tion,’’ after ‘‘1920B during a presumptive eligi-
bility period under such section,’’. 
(c) CLARIFICATION OF COVERAGE OF FAMILY PLAN-
NING SERVICES AND SUPPLIES.—Section 1937(b) of the So-
cial Security Act (42 U.S.C. 1396u–7(b)), as amended by 
section 2001(c), is amended by adding at the end the fol-
lowing: 
‘‘(7) COVERAGE OF FAMILY PLANNING SERVICES 
AND SUPPLIES.—Notwithstanding the previous provi-
sions of this section, a State may not provide for 
medical assistance through enrollment of an indi-
vidual with benchmark coverage or benchmark-equiva-
lent coverage under this section unless such coverage 
includes for any individual described in section 
1905(a)(4)(C), medical assistance for family planning 
services and supplies in accordance with such sec-
tion.’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section take effect on the date of the enactment of this Act 
and shall apply to items and services furnished on or after 
such date.
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SEC. 2304. CLARIFICATION OF DEFINITION OF MEDICAL AS-
SISTANCE. 
Section 1905(a) of the Social Security Act (42 U.S.C. 
1396d(a)) is amended by inserting ‘‘or the care and services 
themselves, or both’’ before ‘‘(if provided in or after’’. 
Subtitle E—New Options for States 
to Provide Long-Term Services 
and Supports 
SEC. 2401. COMMUNITY FIRST CHOICE OPTION. 
Section 1915 of the Social Security Act (42 U.S.C. 
1396n) is amended by adding at the end the following: 
‘‘(k) STATE PLAN OPTION TO PROVIDE HOME AND 
COMMUNITY-BASED
ATTENDANT
SERVICES
AND
SUP-
PORTS.— 
‘‘(1) IN
GENERAL.—Subject to the succeeding 
provisions of this subsection, beginning October 1, 
2010, a State may provide through a State plan 
amendment for the provision of medical assistance for 
home and community-based attendant services and 
supports for individuals who are eligible for medical 
assistance under the State plan whose income does 
not exceed 150 percent of the poverty line (as defined 
in section 2110(c)(5)) or, if greater, the income level 
applicable for an individual who has been determined 
to require an institutional level of care to be eligible 
for nursing facility services under the State plan and
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with respect to whom there has been a determination 
that, but for the provision of such services, the indi-
viduals would require the level of care provided in a 
hospital, a nursing facility, an intermediate care fa-
cility for the mentally retarded, or an institution for 
mental diseases, the cost of which could be reimbursed 
under the State plan, but only if the individual 
chooses to receive such home and community-based at-
tendant services and supports, and only if the State 
meets the following requirements: 
‘‘(A) AVAILABILITY.—The State shall make 
available home and community-based attendant 
services and supports to eligible individuals, as 
needed, to assist in accomplishing activities of 
daily living, instrumental activities of daily liv-
ing, and health-related tasks through hands-on 
assistance, supervision, or cueing— 
‘‘(i) under a person-centered plan of 
services and supports that is based on an 
assessment of functional need and that is 
agreed to in writing by the individual or, 
as appropriate, the individual’s representa-
tive; 
‘‘(ii) in a home or community setting, 
which does not include a nursing facility,
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institution for mental diseases, or an inter-
mediate care facility for the mentally re-
tarded; 
‘‘(iii) under an agency-provider model 
or other model (as defined in paragraph 
(6)(C )); and 
‘‘(iv) the furnishing of which— 
‘‘(I) is selected, managed, and dis-
missed by the individual, or, as appro-
priate, with assistance from the indi-
vidual’s representative; 
‘‘(II) is controlled, to the max-
imum extent possible, by the indi-
vidual or where appropriate, the indi-
vidual’s representative, regardless of 
who may act as the employer of record; 
and 
‘‘(III) provided by an individual 
who is qualified to provide such serv-
ices, including family members (as de-
fined by the Secretary). 
‘‘(B) 
INCLUDED
SERVICES
AND
SUP-
PORTS.—In addition to assistance in accom-
plishing activities of daily living, instrumental 
activities of daily living, and health related
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tasks, the home and community-based attendant 
services and supports made available include— 
‘‘(i) the acquisition, maintenance, and 
enhancement of skills necessary for the indi-
vidual to accomplish activities of daily liv-
ing, instrumental activities of daily living, 
and health related tasks; 
‘‘(ii) back-up systems or mechanisms 
(such as the use of beepers or other elec-
tronic devices) to ensure continuity of serv-
ices and supports; and 
‘‘(iii) voluntary training on how to se-
lect, manage, and dismiss attendants. 
‘‘(C) 
EXCLUDED
SERVICES
AND
SUP-
PORTS.—Subject to subparagraph (D), the home 
and community-based attendant services and 
supports made available do not include— 
‘‘(i) room and board costs for the indi-
vidual; 
‘‘(ii) special education and related 
services provided under the Individuals 
with Disabilities Education Act and voca-
tional rehabilitation services provided under 
the Rehabilitation Act of 1973;
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‘‘(iii) assistive technology devices and 
assistive technology services other than those 
under (1)(B)(ii); 
‘‘(iv) medical supplies and equipment; 
or 
‘‘(v) home modifications. 
‘‘(D) PERMISSIBLE
SERVICES
AND
SUP-
PORTS.—The home and community-based attend-
ant services and supports may include— 
‘‘(i) expenditures for transition costs 
such as rent and utility deposits, first 
month’s rent and utilities, bedding, basic 
kitchen supplies, and other necessities re-
quired for an individual to make the transi-
tion from a nursing facility, institution for 
mental diseases, or intermediate care facil-
ity for the mentally retarded to a commu-
nity-based home setting where the indi-
vidual resides; and 
‘‘(ii) expenditures relating to a need 
identified in an individual’s person-cen-
tered plan of services that increase inde-
pendence or substitute for human assistance, 
to the extent that expenditures would other-
wise be made for the human assistance.
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‘‘(2) INCREASED FEDERAL FINANCIAL PARTICIPA-
TION.—For purposes of payments to a State under 
section 1903(a)(1), with respect to amounts expended 
by the State to provide medical assistance under the 
State plan for home and community-based attendant 
services and supports to eligible individuals in ac-
cordance with this subsection during a fiscal year 
quarter occurring during the period described in 
paragraph (1), the Federal medical assistance per-
centage applicable to the State (as determined under 
section 1905(b)) shall be increased by 6 percentage 
points. 
‘‘(3) STATE
REQUIREMENTS.—In order for a 
State plan amendment to be approved under this sub-
section, the State shall— 
‘‘(A) develop and implement such amend-
ment in collaboration with a Development and 
Implementation Council established by the State 
that includes a majority of members with dis-
abilities, elderly individuals, and their represent-
atives and consults and collaborates with such 
individuals; 
‘‘(B) provide consumer controlled home and 
community-based attendant services and sup-
ports to individuals on a statewide basis, in a
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manner that provides such services and supports 
in the most integrated setting appropriate to the 
individual’s needs, and without regard to the in-
dividual’s age, type or nature of disability, se-
verity of disability, or the form of home and 
community-based attendant services and sup-
ports that the individual requires in order to 
lead an independent life; 
‘‘(C) with respect to expenditures during the 
first full fiscal year in which the State plan 
amendment is implemented, maintain or exceed 
the level of State expenditures for medical assist-
ance that is provided under section 1905(a), sec-
tion 1915, section 1115, or otherwise to individ-
uals with disabilities or elderly individuals at-
tributable to the preceding fiscal year; 
‘‘(D) establish and maintain a comprehen-
sive, continuous quality assurance system with 
respect to community- based attendant services 
and supports that— 
‘‘(i) includes standards for agency- 
based and other delivery models with respect 
to training, appeals for denials and recon-
sideration procedures of an individual plan,
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and other factors as determined by the Sec-
retary; 
‘‘(ii) incorporates feedback from con-
sumers and their representatives, disability 
organizations, providers, families of dis-
abled or elderly individuals, members of the 
community, and others and maximizes con-
sumer independence and consumer control; 
‘‘(iii) monitors the health and well- 
being of each individual who receives home 
and community-based attendant services 
and supports, including a process for the 
mandatory reporting, investigation, and 
resolution of allegations of neglect, abuse, or 
exploitation in connection with the provi-
sion of such services and supports; and 
‘‘(iv) provides information about the 
provisions of the quality assurance required 
under clauses (i) through (iii) to each indi-
vidual receiving such services; and 
‘‘(E) collect and report information, as de-
termined necessary by the Secretary, for the pur-
poses of approving the State plan amendment, 
providing Federal oversight, and conducting an 
evaluation under paragraph (5)(A), including
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data regarding how the State provides home and 
community-based attendant services and sup-
ports and other home and community-based serv-
ices, the cost of such services and supports, and 
how the State provides individuals with disabil-
ities who otherwise qualify for institutional care 
under the State plan or under a waiver the 
choice to instead receive home and community- 
based services in lieu of institutional care. 
‘‘(4) COMPLIANCE
WITH
CERTAIN
LAWS.—A 
State shall ensure that, regardless of whether the State 
uses an agency-provider model or other models to pro-
vide home and community-based attendant services 
and supports under a State plan amendment under 
this subsection, such services and supports are pro-
vided in accordance with the requirements of the Fair 
Labor Standards Act of 1938 and applicable Federal 
and State laws regarding— 
‘‘(A) withholding and payment of Federal 
and State income and payroll taxes; 
‘‘(B) the provision of unemployment and 
workers compensation insurance; 
‘‘(C) maintenance of general liability insur-
ance; and 
‘‘(D) occupational health and safety.
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‘‘(5) EVALUATION, DATA COLLECTION, AND RE-
PORT TO CONGRESS.— 
‘‘(A) EVALUATION.—The Secretary shall 
conduct an evaluation of the provision of home 
and community-based attendant services and 
supports under this subsection in order to deter-
mine the effectiveness of the provision of such 
services and supports in allowing the individuals 
receiving such services and supports to lead an 
independent life to the maximum extent possible; 
the impact on the physical and emotional health 
of the individuals who receive such services; and 
an comparative analysis of the costs of services 
provided under the State plan amendment under 
this subsection and those provided under institu-
tional care in a nursing facility, institution for 
mental diseases, or an intermediate care facility 
for the mentally retarded. 
‘‘(B) DATA COLLECTION.—The State shall 
provide the Secretary with the following infor-
mation regarding the provision of home and 
community-based attendant services and sup-
ports under this subsection for each fiscal year 
for which such services and supports are pro-
vided:
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‘‘(i) The number of individuals who 
are estimated to receive home and commu-
nity-based attendant services and supports 
under this subsection during the fiscal year. 
‘‘(ii) The number of individuals that 
received such services and supports during 
the preceding fiscal year. 
‘‘(iii) The specific number of individ-
uals served by type of disability, age, gen-
der, education level, and employment status. 
‘‘(iv) Whether the specific individuals 
have been previously served under any other 
home and community based services pro-
gram under the State plan or under a 
waiver. 
‘‘(C) REPORTS.—Not later than— 
‘‘(i) December 31, 2013, the Secretary 
shall submit to Congress and make available 
to the public an interim report on the find-
ings of the evaluation under subparagraph 
(A); and 
‘‘(ii) December 31, 2015, the Secretary 
shall submit to Congress and make available 
to the public a final report on the findings 
of the evaluation under subparagraph (A).
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‘‘(6) DEFINITIONS.—In this subsection: 
‘‘(A) ACTIVITIES
OF
DAILY
LIVING.—The 
term ‘activities of daily living’ includes tasks 
such as eating, toileting, grooming, dressing, 
bathing, and transferring. 
‘‘(B) CONSUMER
CONTROLLED.—The term 
‘consumer controlled’ means a method of select-
ing and providing services and supports that 
allow the individual, or where appropriate, the 
individual’s representative, maximum control of 
the home and community-based attendant serv-
ices and supports, regardless of who acts as the 
employer of record. 
‘‘(C) DELIVERY MODELS.— 
‘‘(i) AGENCY-PROVIDER
MODEL.—The 
term ‘agency-provider model’ means, with 
respect to the provision of home and com-
munity-based attendant services and sup-
ports for an individual, subject to para-
graph (4), a method of providing consumer 
controlled services and supports under 
which entities contract for the provision of 
such services and supports. 
‘‘(ii) 
OTHER
MODELS.—The 
term 
‘other models’ means, subject to paragraph
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(4), methods, other than an agency-provider 
model, for the provision of consumer con-
trolled services and supports. Such models 
may include the provision of vouchers, di-
rect cash payments, or use of a fiscal agent 
to assist in obtaining services. 
‘‘(D) HEALTH-RELATED TASKS.—The term 
‘health-related tasks’ means specific tasks related 
to the needs of an individual, which can be dele-
gated or assigned by licensed health-care profes-
sionals under State law to be performed by an 
attendant. 
‘‘(E) INDIVIDUAL’S REPRESENTATIVE.—The 
term ‘individual’s representative’ means a par-
ent, family member, guardian, advocate, or other 
authorized representative of an individual 
‘‘(F) INSTRUMENTAL ACTIVITIES OF DAILY 
LIVING.—The term ‘instrumental activities of 
daily living’ includes (but is not limited to) 
meal planning and preparation, managing fi-
nances, shopping for food, clothing, and other es-
sential items, performing essential household 
chores, communicating by phone or other media, 
and traveling around and participating in the 
community.’’.
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SEC. 2402. REMOVAL OF BARRIERS TO PROVIDING HOME 
AND COMMUNITY-BASED SERVICES. 
(a) OVERSIGHT AND ASSESSMENT OF THE ADMINIS-
TRATION OF HOME AND COMMUNITY-BASED SERVICES.— 
The Secretary of Health and Human Services shall promul-
gate regulations to ensure that all States develop service sys-
tems that are designed to— 
(1) allocate resources for services in a manner 
that is responsive to the changing needs and choices 
of beneficiaries receiving non-institutionally-based 
long-term services and supports (including such serv-
ices and supports that are provided under programs 
other the State Medicaid program), and that provides 
strategies for beneficiaries receiving such services to 
maximize their independence, including through the 
use of client-employed providers; 
(2) provide the support and coordination needed 
for a beneficiary in need of such services (and their 
family caregivers or representative, if applicable) to 
design an individualized, self-directed, community- 
supported life; and 
(3) improve coordination among, and the regula-
tion of, all providers of such services under federally 
and State-funded programs in order to—
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(A) achieve a more consistent administra-
tion of policies and procedures across programs 
in relation to the provision of such services; and 
(B) oversee and monitor all service system 
functions to assure— 
(i) coordination of, and effectiveness of, 
eligibility determinations and individual 
assessments; 
(ii) development and service moni-
toring of a complaint system, a manage-
ment system, a system to qualify and mon-
itor providers, and systems for role-setting 
and individual budget determinations; and 
(iii) an adequate number of qualified 
direct care workers to provide self-directed 
personal assistance services. 
(b) ADDITIONAL STATE OPTIONS.—Section 1915(i) of 
the Social Security Act (42 U.S.C. 1396n(i)) is amended 
by adding at the end the following new paragraphs: 
‘‘(6) STATE OPTION TO PROVIDE HOME AND COM-
MUNITY-BASED SERVICES TO INDIVIDUALS ELIGIBLE 
FOR SERVICES UNDER A WAIVER.— 
‘‘(A) IN GENERAL.—A State that provides 
home and community-based services in accord-
ance with this subsection to individuals who sat-
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isfy the needs-based criteria for the receipt of 
such services established under paragraph (1)(A) 
may, in addition to continuing to provide such 
services to such individuals, elect to provide 
home and community-based services in accord-
ance with the requirements of this paragraph to 
individuals who are eligible for home and com-
munity-based services under a waiver approved 
for the State under subsection (c), (d), or (e) or 
under section 1115 to provide such services, but 
only for those individuals whose income does not 
exceed 300 percent of the supplemental security 
income benefit rate established by section 
1611(b)(1). 
‘‘(B) APPLICATION OF SAME REQUIREMENTS 
FOR INDIVIDUALS SATISFYING NEEDS-BASED CRI-
TERIA.—Subject to subparagraph (C), a State 
shall provide home and community-based serv-
ices to individuals under this paragraph in the 
same manner and subject to the same require-
ments as apply under the other paragraphs of 
this subsection to the provision of home and com-
munity-based services to individuals who satisfy 
the needs-based criteria established under para-
graph (1)(A).
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‘‘(C) AUTHORITY
TO
OFFER
DIFFERENT 
TYPE, AMOUNT, DURATION, OR SCOPE OF HOME 
AND
COMMUNITY-BASED
SERVICES.—A State 
may offer home and community-based services to 
individuals under this paragraph that differ in 
type, amount, duration, or scope from the home 
and community-based services offered for indi-
viduals who satisfy the needs-based criteria es-
tablished under paragraph (1)(A), so long as 
such services are within the scope of services de-
scribed in paragraph (4)(B) of subsection (c) for 
which the Secretary has the authority to approve 
a waiver and do not include room or board. 
‘‘(7) STATE OPTION TO OFFER HOME AND COM-
MUNITY-BASED
SERVICES
TO
SPECIFIC, TARGETED 
POPULATIONS.— 
‘‘(A) IN GENERAL.—A State may elect in a 
State plan amendment under this subsection to 
target the provision of home and community- 
based services under this subsection to specific 
populations and to differ the type, amount, du-
ration, or scope of such services to such specific 
populations. 
‘‘(B) 5-YEAR TERM.—
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‘‘(i) IN GENERAL.—An election by a 
State under this paragraph shall be for a 
period of 5 years. 
‘‘(ii) PHASE-IN OF SERVICES AND ELI-
GIBILITY
PERMITTED
DURING
INITIAL
5- 
YEAR PERIOD.—A State making an election 
under this paragraph may, during the first 
5-year period for which the election is 
made, phase-in the enrollment of eligible in-
dividuals, or the provision of services to 
such individuals, or both, so long as all eli-
gible individuals in the State for such serv-
ices are enrolled, and all such services are 
provided, before the end of the initial 5-year 
period. 
‘‘(C) RENEWAL.—An election by a State 
under this paragraph may be renewed for addi-
tional 5-year terms if the Secretary determines, 
prior to beginning of each such renewal period, 
that the State has— 
‘‘(i) adhered to the requirements of this 
subsection and paragraph in providing 
services under such an election; and
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‘‘(ii) met the State’s objectives with re-
spect to quality improvement and bene-
ficiary outcomes.’’. 
(c) REMOVAL OF LIMITATION ON SCOPE OF SERV-
ICES.—Paragraph (1) of section 1915(i) of the Social Secu-
rity Act (42 U.S.C. 1396n(i)), as amended by subsection 
(a), is amended by striking ‘‘or such other services requested 
by the State as the Secretary may approve’’. 
(d) OPTIONAL ELIGIBILITY CATEGORY TO PROVIDE 
FULL MEDICAID BENEFITS TO INDIVIDUALS RECEIVING 
HOME AND COMMUNITY-BASED SERVICES UNDER A STATE 
PLAN AMENDMENT.— 
(1) IN GENERAL.—Section 1902(a)(10)(A)(ii) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1396a(a)(10)(A)(ii)), 
as 
amended 
by 
section 
2304(a)(1), is amended— 
(A) in subclause (XX), by striking ‘‘or’’ at 
the end; 
(B) in subclause (XXI), by adding ‘‘or’’ at 
the end; and 
(C) by inserting after subclause (XXI), the 
following new subclause: 
‘‘(XXII) who are eligible for home 
and community-based services under 
needs-based criteria established under
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paragraph (1)(A) of section 1915(i), or 
who are eligible for home and commu-
nity-based services under paragraph 
(6) of such section, and who will re-
ceive home and community-based serv-
ices pursuant to a State plan amend-
ment under such subsection;’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1903(f)(4) of the Social Secu-
rity Act (42 U.S.C. 1396b(f)(4)), as amended by 
section 2304(a)(4)(B), is amended in the matter 
preceding 
subparagraph 
(A), 
by 
inserting 
‘‘1902(a)(10)(A)(ii)(XXII),’’ 
after 
‘‘1902(a)(10)(A)(ii)(XXI),’’. 
(B) Section 1905(a) of the Social Security 
Act (42 U.S.C. 1396d(a)), as so amended, is 
amended in the matter preceding paragraph 
(1)— 
(i) in clause (xv), by striking ‘‘or’’ at 
the end; 
(ii) in clause (xvi), by adding ‘‘or’’ at 
the end; and 
(iii) by inserting after clause (xvi) the 
following new clause:
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‘‘(xvii) individuals who are eligible for home and 
community-based services under needs-based criteria 
established under paragraph (1)(A) of section 1915(i), 
or who are eligible for home and community-based 
services under paragraph (6) of such section, and who 
will receive home and community-based services pur-
suant to a State plan amendment under such sub-
section,’’. 
(e) ELIMINATION OF OPTION TO LIMIT NUMBER OF 
ELIGIBLE INDIVIDUALS
OR LENGTH
OF PERIOD
FOR 
GRANDFATHERED INDIVIDUALS IF ELIGIBILITY CRITERIA 
IS MODIFIED.—Paragraph (1) of section 1915(i) of such 
Act (42 U.S.C. 1396n(i)) is amended— 
(1) by striking subparagraph (C) and inserting 
the following: 
‘‘(C) PROJECTION OF NUMBER OF INDIVID-
UALS TO BE PROVIDED HOME AND COMMUNITY- 
BASED SERVICES.—The State submits to the Sec-
retary, in such form and manner, and upon such 
frequency as the Secretary shall specify, the pro-
jected number of individuals to be provided home 
and community-based services.’’; and 
(2) in subclause (II) of subparagraph (D)(ii), by 
striking ‘‘to be eligible for such services for a period 
of at least 12 months beginning on the date the indi-
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vidual first received medical assistance for such serv-
ices’’ and inserting ‘‘to continue to be eligible for such 
services after the effective date of the modification and 
until such time as the individual no longer meets the 
standard for receipt of such services under such pre- 
modified criteria’’. 
(f) 
ELIMINATION
OF
OPTION
TO
WAIVE 
STATEWIDENESS; ADDITION OF OPTION TO WAIVE COM-
PARABILITY.—Paragraph (3) of section 1915(i) of such Act 
(42 U.S.C. 1396n(3)) is amended by striking ‘‘1902(a)(1) 
(relating to statewideness)’’ and inserting ‘‘1902(a)(10)(B) 
(relating to comparability)’’. 
(g) EFFECTIVE DATE.—The amendments made by sub-
sections (b) through (f) take effect on the first day of the 
first fiscal year quarter that begins after the date of enact-
ment of this Act. 
SEC. 2403. MONEY FOLLOWS THE PERSON REBALANCING 
DEMONSTRATION. 
(a) EXTENSION OF DEMONSTRATION.— 
(1) IN GENERAL.—Section 6071(h) of the Deficit 
Reduction Act of 2005 (42 U.S.C. 1396a note) is 
amended— 
(A) in paragraph (1)(E), by striking ‘‘fiscal 
year 2011’’ and inserting ‘‘each of fiscal years 
2011 through 2016’’; and
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(B) in paragraph (2), by striking ‘‘2011’’ 
and inserting ‘‘2016’’. 
(2) EVALUATION.—Paragraphs (2) and (3) of 
section 6071(g) of such Act is amended are each 
amended by striking ‘‘2011’’ and inserting ‘‘2016’’. 
(b) REDUCTION OF INSTITUTIONAL RESIDENCY PE-
RIOD.— 
(1) IN GENERAL.—Section 6071(b)(2) of the Def-
icit Reduction Act of 2005 (42 U.S.C. 1396a note) is 
amended— 
(A) in subparagraph (A)(i), by striking ‘‘, 
for a period of not less than 6 months or for such 
longer minimum period, not to exceed 2 years, as 
may be specified by the State’’ and inserting ‘‘for 
a period of not less than 90 consecutive days’’; 
and 
(B) by adding at the end the following: 
‘‘Any days that an individual resides in an institu-
tion on the basis of having been admitted solely for 
purposes of receiving short-term rehabilitative services 
for a period for which payment for such services is 
limited under title XVIII shall not be taken into ac-
count for purposes of determining the 90-day period 
required under subparagraph (A)(i).’’.
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(2) EFFECTIVE DATE.—The amendments made 
by this subsection take effect 30 days after the date of 
enactment of this Act. 
SEC. 2404. PROTECTION FOR RECIPIENTS OF HOME AND 
COMMUNITY-BASED 
SERVICES 
AGAINST 
SPOUSAL IMPOVERISHMENT. 
During the 5-year period that begins on January 1, 
2014, section 1924(h)(1)(A) of the Social Security Act (42 
U.S.C. 1396r–5(h)(1)(A)) shall be applied as though ‘‘is eli-
gible for medical assistance for home and community-based 
services provided under subsection (c), (d), or (i) of section 
1915, under a waiver approved under section 1115, or who 
is eligible for such medical assistance by reason of being 
determined eligible under section 1902(a)(10)(C) or by rea-
son of section 1902(f) or otherwise on the basis of a reduc-
tion of income based on costs incurred for medical or other 
remedial care, or who is eligible for medical assistance for 
home and community-based attendant services and sup-
ports under section 1915(k)’’ were substituted in such sec-
tion for ‘‘(at the option of the State) is described in section 
1902(a)(10)(A)(ii)(VI)’’. 
SEC. 2405. FUNDING TO EXPAND STATE AGING AND DIS-
ABILITY RESOURCE CENTERS. 
Out of any funds in the Treasury not otherwise appro-
priated, there is appropriated to the Secretary of Health
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and Human Services, acting through the Assistant Sec-
retary for Aging, $10,000,000 for each of fiscal years 2010 
through 2014, to carry out subsections (a)(20)(B)(iii) and 
(b)(8) of section 202 of the Older Americans Act of 1965 
(42 U.S.C. 3012). 
SEC. 2406. SENSE OF THE SENATE REGARDING LONG-TERM 
CARE. 
(a) FINDINGS.—The Senate makes the following find-
ings: 
(1) Nearly 2 decades have passed since Congress 
seriously considered long-term care reform. The 
United States Bipartisan Commission on Comprehen-
sive Health Care, also know as the ‘‘Pepper Commis-
sion’’, released its ‘‘Call for Action’’ blueprint for 
health reform in September 1990. In the 20 years 
since those recommendations were made, Congress has 
never acted on the report. 
(2) In 1999, under the United States Supreme 
Court’s decision in Olmstead v. L.C., 527 U.S. 581 
(1999), individuals with disabilities have the right to 
choose to receive their long-term services and supports 
in the community, rather than in an institutional 
setting. 
(3) 
Despite 
the 
Pepper 
Commission 
and 
Olmstead decision, the long-term care provided to our
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Nation’s elderly and disabled has not improved. In 
fact, for many, it has gotten far worse. 
(4) In 2007, 69 percent of Medicaid long-term 
care spending for elderly individuals and adults with 
physical disabilities paid for institutional services. 
Only 6 states spent 50 percent or more of their Med-
icaid long-term care dollars on home and community- 
based services for elderly individuals and adults with 
physical disabilities while 1⁄2 of the States spent less 
than 25 percent. This disparity continues even 
though, on average, it is estimated that Medicaid dol-
lars can support nearly 3 elderly individuals and 
adults with physical disabilities in home and commu-
nity-based services for every individual in a nursing 
home. Although every State has chosen to provide cer-
tain services under home and community-based waiv-
ers, these services are unevenly available within and 
across States, and reach a small percentage of eligible 
individuals. 
(b) SENSE OF THE SENATE.—It is the sense of the Sen-
ate that— 
(1) during the 111th session of Congress, Con-
gress should address long-term services and supports 
in a comprehensive way that guarantees elderly and 
disabled individuals the care they need; and
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(2) long term services and supports should be 
made available in the community in addition to in 
institutions. 
Subtitle F—Medicaid Prescription 
Drug Coverage 
SEC. 2501. PRESCRIPTION DRUG REBATES. 
(a) INCREASE IN MINIMUM REBATE PERCENTAGE FOR 
SINGLE
SOURCE
DRUGS
AND
INNOVATOR
MULTIPLE 
SOURCE DRUGS.— 
(1) IN GENERAL.—Section 1927(c)(1)(B) of the 
Social Security Act (42 U.S.C. 1396r–8(c)(1)(B)) is 
amended— 
(A) in clause (i)— 
(i) in subclause (IV), by striking 
‘‘and’’ at the end; 
(ii) in subclause (V)— 
(I) by inserting ‘‘and before Janu-
ary 1, 2010’’ after ‘‘December 31, 
1995,’’; and 
(II) by striking the period at the 
end and inserting ‘‘; and’’; and 
(iii) by adding at the end the following 
new subclause:
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‘‘(VI) except as provided in clause 
(iii), after December 31, 2009, 23.1 
percent.’’; and 
(B) by adding at the end the following new 
clause: 
‘‘(iii) MINIMUM REBATE PERCENTAGE 
FOR CERTAIN DRUGS.— 
‘‘(I) IN GENERAL.—In the case of 
a single source drug or an innovator 
multiple source drug described in sub-
clause (II), the minimum rebate per-
centage for rebate periods specified in 
clause (i)(VI) is 17.1 percent. 
‘‘(II) 
DRUG
DESCRIBED.—For 
purposes of subclause (I), a single 
source drug or an innovator multiple 
source drug described in this subclause 
is any of the following drugs: 
‘‘(aa) A clotting factor for 
which a separate furnishing pay-
ment 
is 
made 
under 
section 
1842(o)(5) and which is included 
on a list of such factors specified 
and updated regularly by the Sec-
retary.
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‘‘(bb) A drug approved by the 
Food and Drug Administration 
exclusively for pediatric indica-
tions.’’. 
(2) RECAPTURE OF TOTAL SAVINGS DUE TO IN-
CREASE.—Section 1927(b)(1) of such Act (42 U.S.C. 
1396r–8(b)(1)) is amended by adding at the end the 
following new subparagraph: 
‘‘(C) SPECIAL RULE FOR INCREASED MIN-
IMUM REBATE PERCENTAGE.— 
‘‘(i) IN GENERAL.—In addition to the 
amounts applied as a reduction under sub-
paragraph (B), for rebate periods beginning 
on or after January 1, 2010, during a fiscal 
year, the Secretary shall reduce payments to 
a State under section 1903(a) in the man-
ner specified in clause (ii), in an amount 
equal to the product of— 
‘‘(I) 100 percent minus the Fed-
eral medical assistance percentage ap-
plicable to the rebate period for the 
State; and 
‘‘(II) the amounts received by the 
State under such subparagraph that 
are attributable (as estimated by the
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Secretary based on utilization and 
other data) to the increase in the min-
imum rebate percentage effected by the 
amendments 
made 
by 
subsections 
(a)(1), (b), and (d) of section 2501 of 
the Patient Protection and Affordable 
Care Act, taking into account the addi-
tional 
drugs 
included 
under 
the 
amendments made by subsection (c) of 
section 2501 of such Act. 
The Secretary shall adjust such payment re-
duction for a calendar quarter to the extent 
the Secretary determines, based upon subse-
quent utilization and other data, that the 
reduction for such quarter was greater or 
less than the amount of payment reduction 
that should have been made. 
‘‘(ii) MANNER
OF
PAYMENT
REDUC-
TION.—The amount of the payment reduc-
tion under clause (i) for a State for a quar-
ter shall be deemed an overpayment to the 
State under this title to be disallowed 
against the State’s regular quarterly draw 
for all Medicaid spending under section 
1903(d)(2). Such a disallowance is not sub-
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ject to a reconsideration under section 
1116(d).’’. 
(b) INCREASE IN REBATE FOR OTHER DRUGS.—Sec-
tion 1927(c)(3)(B) of such Act (42 U.S.C. 1396r– 
8(c)(3)(B)) is amended— 
(1) in clause (i), by striking ‘‘and’’ at the end; 
(2) in clause (ii)— 
(A) by inserting ‘‘and before January 1, 
2010,’’ after ‘‘December 31, 1993,’’; and 
(B) by striking the period and inserting ‘‘; 
and’’; and 
(3) by adding at the end the following new 
clause: 
‘‘(iii) after December 31, 2009, is 13 
percent.’’. 
(c) EXTENSION OF PRESCRIPTION DRUG DISCOUNTS 
TO ENROLLEES OF MEDICAID MANAGED CARE ORGANIZA-
TIONS.— 
(1) IN GENERAL.—Section 1903(m)(2)(A) of such 
Act (42 U.S.C. 1396b(m)(2)(A)) is amended— 
(A) in clause (xi), by striking ‘‘and’’ at the 
end; 
(B) in clause (xii), by striking the period at 
the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following:
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‘‘(xiii) such contract provides that (I) 
covered outpatient drugs dispensed to indi-
viduals eligible for medical assistance who 
are enrolled with the entity shall be subject 
to the same rebate required by the agree-
ment entered into under section 1927 as the 
State is subject to and that the State shall 
collect such rebates from manufacturers, (II) 
capitation rates paid to the entity shall be 
based on actual cost experience related to re-
bates and subject to the Federal regulations 
requiring actuarially sound rates, and (III) 
the entity shall report to the State, on such 
timely and periodic basis as specified by the 
Secretary in order to include in the infor-
mation submitted by the State to a manu-
facturer and the Secretary under section 
1927(b)(2)(A), information on the total 
number of units of each dosage form and 
strength and package size by National Drug 
Code of each covered outpatient drug dis-
pensed to individuals eligible for medical 
assistance who are enrolled with the entity 
and for which the entity is responsible for 
coverage of such drug under this subsection
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(other than covered outpatient drugs that 
under subsection (j)(1) of section 1927 are 
not subject to the requirements of that sec-
tion) and such other data as the Secretary 
determines necessary to carry out this sub-
section.’’. 
(2) CONFORMING
AMENDMENTS.—Section 1927 
(42 U.S.C. 1396r–8) is amended— 
(A) in subsection (b)— 
(i) in paragraph (1)(A), in the first 
sentence, by inserting ‘‘, including such 
drugs dispensed to individuals enrolled with 
a medicaid managed care organization if 
the organization is responsible for coverage 
of such drugs’’ before the period; and 
(ii) in paragraph (2)(A), by inserting 
‘‘including such information reported by 
each medicaid managed care organization,’’ 
after ‘‘for which payment was made under 
the plan during the period,’’; and 
(B) in subsection (j), by striking paragraph 
(1) and inserting the following: 
‘‘(1) Covered outpatient drugs are not subject to 
the requirements of this section if such drugs are—
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‘‘(A) dispensed by health maintenance orga-
nizations, including Medicaid managed care or-
ganizations that contract under section 1903(m); 
and 
‘‘(B) subject to discounts under section 
340B of the Public Health Service Act.’’. 
(d) ADDITIONAL REBATE FOR NEW FORMULATIONS OF 
EXISTING DRUGS.— 
(1) IN GENERAL.—Section 1927(c)(2) of the So-
cial Security Act (42 U.S.C. 1396r–8(c)(2)) is 
amended by adding at the end the following new sub-
paragraph: 
‘‘(C) 
TREATMENT
OF
NEW
FORMULA-
TIONS.— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), in the case of a drug that is 
a new formulation, such as an extended-re-
lease formulation, of a single source drug or 
an innovator multiple source drug, the re-
bate obligation with respect to the drug 
under this section shall be the amount com-
puted under this section for the new formu-
lation of the drug or, if greater, the product 
of—
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‘‘(I) the average manufacturer 
price for each dosage form and strength 
of the new formulation of the single 
source drug or innovator multiple 
source drug; 
‘‘(II) the highest additional rebate 
(calculated as a percentage of average 
manufacturer price) under this section 
for any strength of the original single 
source drug or innovator multiple 
source drug; and 
‘‘(III) the total number of units of 
each dosage form and strength of the 
new formulation paid for under the 
State plan in the rebate period (as re-
ported by the State). 
‘‘(ii) NO APPLICATION TO NEW FORMU-
LATIONS
OF
ORPHAN
DRUGS.—Clause (i) 
shall not apply to a new formulation of a 
covered outpatient drug that is or has been 
designated under section 526 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 
360bb) for a rare disease or condition, with-
out regard to whether the period of market 
exclusivity for the drug under section 527 of
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such Act has expired or the specific indica-
tion for use of the drug.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall apply to drugs that are paid for 
by a State after December 31, 2009. 
(e) MAXIMUM REBATE AMOUNT.—Section 1927(c)(2) 
of such Act (42 U.S.C. 1396r–8(c)(2)), as amended by sub-
section (d), is amended by adding at the end the following 
new subparagraph: 
‘‘(D) MAXIMUM
REBATE
AMOUNT.—In no 
case shall the sum of the amounts applied under 
paragraph (1)(A)(ii) and this paragraph with 
respect to each dosage form and strength of a 
single source drug or an innovator multiple 
source drug for a rebate period beginning after 
December 31, 2009, exceed 100 percent of the av-
erage manufacturer price of the drug.’’. 
(f) CONFORMING AMENDMENTS.— 
(1) IN GENERAL.—Section 340B of the Public 
Health Service Act (42 U.S.C. 256b) is amended— 
(A) in subsection (a)(2)(B)(i), by striking 
‘‘1927(c)(4)’’ and inserting ‘‘1927(c)(3)’’; and 
(B) by striking subsection (c); and 
(C) redesignating subsection (d) as sub-
section (c).
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(2) EFFECTIVE DATE.—The amendments made 
by this subsection take effect on January 1, 2010. 
SEC. 2502. ELIMINATION OF EXCLUSION OF COVERAGE OF 
CERTAIN DRUGS. 
(a) IN GENERAL.—Section 1927(d) of the Social Secu-
rity Act (42 U.S.C. 1397r–8(d)) is amended— 
(1) in paragraph (2)— 
(A) by striking subparagraphs (E), (I), and 
(J), respectively; and 
(B) by redesignating subparagraphs (F), 
(G), (H), and (K) as subparagraphs (E), (F), 
(G), and (H), respectively; and 
(2) by adding at the end the following new para-
graph: 
‘‘(7) NON-EXCLUDABLE
DRUGS.—The following 
drugs or classes of drugs, or their medical uses, shall 
not be excluded from coverage: 
‘‘(A) Agents when used to promote smoking 
cessation, including agents approved by the Food 
and Drug Administration under the over-the- 
counter monograph process for purposes of pro-
moting, and when used to promote, tobacco ces-
sation. 
‘‘(B) Barbiturates. 
‘‘(C) Benzodiazepines.’’.
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(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to services furnished on or after January 
1, 2014. 
SEC. 2503. PROVIDING ADEQUATE PHARMACY REIMBURSE-
MENT. 
(a) PHARMACY REIMBURSEMENT LIMITS.— 
(1) IN GENERAL.—Section 1927(e) of the Social 
Security Act (42 U.S.C. 1396r–8(e)) is amended— 
(A) in paragraph (4), by striking ‘‘(or, ef-
fective January 1, 2007, two or more)’’; and 
(B) by striking paragraph (5) and inserting 
the following: 
‘‘(5) USE OF AMP IN UPPER PAYMENT LIMITS.— 
The Secretary shall calculate the Federal upper reim-
bursement limit established under paragraph (4) as 
no less than 175 percent of the weighted average (de-
termined on the basis of utilization) of the most re-
cently reported monthly average manufacturer prices 
for pharmaceutically and therapeutically equivalent 
multiple source drug products that are available for 
purchase by retail community pharmacies on a na-
tionwide basis. The Secretary shall implement a 
smoothing process for average manufacturer prices. 
Such process shall be similar to the smoothing process
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used in determining the average sales price of a drug 
or biological under section 1847A.’’. 
(2) DEFINITION OF AMP.—Section 1927(k)(1) of 
such Act (42 U.S.C. 1396r–8(k)(1)) is amended— 
(A) in subparagraph (A), by striking ‘‘by’’ 
and all that follows through the period and in-
serting ‘‘by— 
‘‘(i) wholesalers for drugs distributed to 
retail community pharmacies; and 
‘‘(ii) retail community pharmacies 
that purchase drugs directly from the man-
ufacturer.’’; and 
(B) by striking subparagraph (B) and in-
serting the following: 
‘‘(B) EXCLUSION
OF
CUSTOMARY
PROMPT 
PAY DISCOUNTS AND OTHER PAYMENTS.— 
‘‘(i) IN GENERAL.—The average manu-
facturer price for a covered outpatient drug 
shall exclude— 
‘‘(I) customary prompt pay dis-
counts extended to wholesalers; 
‘‘(II) bona fide service fees paid 
by manufacturers to wholesalers or re-
tail community pharmacies, including 
(but not limited to) distribution service
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fees, inventory management fees, prod-
uct stocking allowances, and fees asso-
ciated with administrative services 
agreements and patient care programs 
(such as medication compliance pro-
grams and patient education pro-
grams); 
‘‘(III) reimbursement by manu-
facturers for recalled, damaged, ex-
pired, or otherwise unsalable returned 
goods, including (but not limited to) 
reimbursement for the cost of the goods 
and any reimbursement of costs associ-
ated with return goods handling and 
processing, reverse logistics, and drug 
destruction; and 
‘‘(IV) payments received from, 
and rebates or discounts provided to, 
pharmacy benefit managers, managed 
care organizations, health maintenance 
organizations, insurers, hospitals, clin-
ics, mail order pharmacies, long term 
care providers, manufacturers, or any 
other entity that does not conduct busi-
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ness as a wholesaler or a retail com-
munity pharmacy. 
‘‘(ii) INCLUSION OF OTHER DISCOUNTS 
AND
PAYMENTS.—Notwithstanding clause 
(i), any other discounts, rebates, payments, 
or other financial transactions that are re-
ceived by, paid by, or passed through to, re-
tail community pharmacies shall be in-
cluded in the average manufacturer price 
for a covered outpatient drug.’’; and 
(C) in subparagraph (C), by striking ‘‘the 
retail pharmacy class of trade’’ and inserting 
‘‘retail community pharmacies’’. 
(3) DEFINITION OF MULTIPLE SOURCE DRUG.— 
Section 1927(k)(7) of such Act (42 U.S.C. 1396r– 
8(k)(7)) is amended— 
(A) in subparagraph (A)(i)(III), by striking 
‘‘the State’’ and inserting ‘‘the United States’’; 
and 
(B) in subparagraph (C)— 
(i) in clause (i), by inserting ‘‘and’’ 
after the semicolon; 
(ii) in clause (ii), by striking ‘‘; and’’ 
and inserting a period; and 
(iii) by striking clause (iii).
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(4) DEFINITIONS OF RETAIL COMMUNITY PHAR-
MACY; WHOLESALER.—Section 1927(k) of such Act 
(42 U.S.C. 1396r–8(k)) is amended by adding at the 
end the following new paragraphs: 
‘‘(10) 
RETAIL
COMMUNITY
PHARMACY.—The 
term ‘retail community pharmacy’ means an inde-
pendent pharmacy, a chain pharmacy, a supermarket 
pharmacy, or a mass merchandiser pharmacy that is 
licensed as a pharmacy by the State and that dis-
penses medications to the general public at retail 
prices. Such term does not include a pharmacy that 
dispenses prescription medications to patients pri-
marily through the mail, nursing home pharmacies, 
long-term care facility pharmacies, hospital phar-
macies, clinics, charitable or not-for-profit phar-
macies, government pharmacies, or pharmacy benefit 
managers. 
‘‘(11) 
WHOLESALER.—The 
term 
‘wholesaler’ 
means a drug wholesaler that is engaged in wholesale 
distribution of prescription drugs to retail community 
pharmacies, including (but not limited to) manufac-
turers, repackers, distributors, own-label distributors, 
private-label distributors, jobbers, brokers, warehouses 
(including manufacturer’s and distributor’s ware-
houses, chain drug warehouses, and wholesale drug
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warehouses) independent wholesale drug traders, and 
retail community pharmacies that conduct wholesale 
distributions.’’. 
(b) DISCLOSURE
OF PRICE INFORMATION
TO
THE 
PUBLIC.—Section 1927(b)(3) of such Act (42 U.S.C. 1396r– 
8(b)(3)) is amended— 
(1) in subparagraph (A)— 
(A) in the first sentence, by inserting after 
clause (iii) the following: 
‘‘(iv) not later than 30 days after the 
last day of each month of a rebate period 
under the agreement, on the manufacturer’s 
total number of units that are used to cal-
culate the monthly average manufacturer 
price for each covered outpatient drug;’’; 
and 
(B) in the second sentence, by inserting 
‘‘(relating to the weighted average of the most re-
cently reported monthly average manufacturer 
prices)’’ after ‘‘(D)(v)’’; and 
(2) in subparagraph (D)(v), by striking ‘‘average 
manufacturer prices’’ and inserting ‘‘the weighted av-
erage of the most recently reported monthly average 
manufacturer prices and the average retail survey
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price determined for each multiple source drug in ac-
cordance with subsection (f)’’. 
(c) CLARIFICATION OF APPLICATION OF SURVEY OF 
RETAIL PRICES.—Section 1927(f)(1) of such Act (42 U.S.C. 
1396r–8(b)(1)) is amended— 
(1) in subparagraph (A)(i), by inserting ‘‘with 
respect to a retail community pharmacy,’’ before ‘‘the 
determination’’; and 
(2) in subparagraph (C)(ii), by striking ‘‘retail 
pharmacies’’ and inserting ‘‘retail community phar-
macies’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the first day of the first calendar 
year quarter that begins at least 180 days after the date 
of enactment of this Act, without regard to whether or not 
final regulations to carry out such amendments have been 
promulgated by such date. 
Subtitle 
G—Medicaid 
Dispropor-
tionate Share Hospital (DSH) 
Payments 
SEC. 2551. DISPROPORTIONATE SHARE HOSPITAL PAY-
MENTS. 
(a) IN GENERAL.—Section 1923(f) of the Social Secu-
rity Act (42 U.S.C. 1396r–4(f)) is amended—
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(1) in paragraph (1), by striking ‘‘and (3)’’ and 
inserting ‘‘, (3), and (7)’’; 
(2) in paragraph (3)(A), by striking ‘‘paragraph 
(6)’’ and inserting ‘‘paragraphs (6) and (7)’’; 
(3) by redesignating paragraph (7) as para-
graph (8); and 
(4) by inserting after paragraph (6) the fol-
lowing new paragraph: 
‘‘(7) REDUCTION
OF
STATE
DSH
ALLOTMENTS 
ONCE
REDUCTION
IN
UNINSURED
THRESHOLD 
REACHED.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (E), the DSH allotment for a State for fis-
cal years beginning with the fiscal year described 
in subparagraph (C) (with respect to the State), 
is equal to— 
‘‘(i) in the case of the first fiscal year 
described in subparagraph (C) with respect 
to a State, the DSH allotment that would 
be determined under this subsection for the 
State for the fiscal year without application 
of this paragraph (but after the application 
of subparagraph (D)), reduced by the appli-
cable percentage determined for the State
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for the fiscal year under subparagraph 
(B)(i); and 
‘‘(ii) in the case of any subsequent fis-
cal year with respect to the State, the DSH 
allotment determined under this paragraph 
for the State for the preceding fiscal year, 
reduced by the applicable percentage deter-
mined for the State for the fiscal year under 
subparagraph (B)(ii). 
‘‘(B) APPLICABLE PERCENTAGE.—For pur-
poses of subparagraph (A), the applicable per-
centage for a State for a fiscal year is the fol-
lowing: 
‘‘(i) UNINSURED REDUCTION THRESH-
OLD FISCAL YEAR.—In the case of the first 
fiscal year described in subparagraph (C) 
with respect to the State— 
‘‘(I) if the State is a low DSH 
State described in paragraph (5)(B), 
the applicable percentage is equal to 25 
percent; and 
‘‘(II) if the State is any other 
State, the applicable percentage is 50 
percent.
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‘‘(ii) SUBSEQUENT
FISCAL
YEARS
IN 
WHICH
THE
PERCENTAGE
OF
UNINSURED 
DECREASES.—In the case of any fiscal year 
after the first fiscal year described in sub-
paragraph (C) with respect to a State, if 
the Secretary determines on the basis of the 
most recent American Community Survey 
of the Bureau of the Census, that the per-
centage of uncovered individuals residing in 
the State is less than the percentage of such 
individuals determined for the State for the 
preceding fiscal year— 
‘‘(I) if the State is a low DSH 
State described in paragraph (5)(B), 
the applicable percentage is equal to 
the product of the percentage reduction 
in uncovered individuals for the fiscal 
year from the preceding fiscal year and 
25 percent; and 
‘‘(II) if the State is any other 
State, the applicable percentage is 
equal to the product of the percentage 
reduction in uncovered individuals for 
the fiscal year from the preceding fiscal 
year and 50 percent.
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‘‘(C) FISCAL YEAR DESCRIBED.—For pur-
poses of subparagraph (A), the fiscal year de-
scribed in this subparagraph with respect to a 
State is the first fiscal year that occurs after fis-
cal year 2012 for which the Secretary deter-
mines, on the basis of the most recent American 
Community Survey of the Bureau of the Census, 
that the percentage of uncovered individuals re-
siding in the State is at least 45 percent less 
than the percentage of such individuals deter-
mined for the State for fiscal year 2009. 
‘‘(D) EXCLUSION OF PORTIONS DIVERTED 
FOR COVERAGE EXPANSIONS.—For purposes of 
applying the applicable percentage reduction 
under subparagraph (A) to the DSH allotment 
for a State for a fiscal year, the DSH allotment 
for a State that would be determined under this 
subsection for the State for the fiscal year with-
out the application of this paragraph (and prior 
to any such reduction) shall not include any 
portion of the allotment for which the Secretary 
has approved the State’s diversion to the costs of 
providing medical assistance or other health ben-
efits coverage under a waiver that is in effect on 
July 2009.
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‘‘(E) MINIMUM ALLOTMENT.—In no event 
shall the DSH allotment determined for a State 
in accordance with this paragraph for fiscal year 
2013 or any succeeding fiscal year be less than 
the amount equal to 35 percent of the DSH allot-
ment determined for the State for fiscal year 
2012 under this subsection (and after the appli-
cation of this paragraph, if applicable), in-
creased by the percentage change in the consumer 
price index for all urban consumers (all items, 
U.S. city average) for each previous fiscal year 
occurring before the fiscal year. 
‘‘(F) UNCOVERED
INDIVIDUALS.—In this 
paragraph, the term ‘uncovered individuals’ 
means individuals with no health insurance cov-
erage at any time during a year (as determined 
by the Secretary based on the most recent data 
available).’’. 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) take effect on October 1, 2011.
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Subtitle H—Improved Coordination 
for Dual Eligible Beneficiaries 
SEC. 
2601. 
5-YEAR 
PERIOD 
FOR 
DEMONSTRATION 
PROJECTS. 
(a) IN GENERAL.—Section 1915(h) of the Social Secu-
rity Act (42 U.S.C. 1396n(h)) is amended— 
(1) by inserting ‘‘(1)’’ after ‘‘(h)’’; 
(2) by inserting ‘‘, or a waiver described in 
paragraph (2)’’ after ‘‘(e)’’; and 
(3) by adding at the end the following new para-
graph: 
‘‘(2)(A) Notwithstanding subsections (c)(3) and (d) 
(3), any waiver under subsection (b), (c), or (d), or a waiver 
under section 1115, that provides medical assistance for 
dual eligible individuals (including any such waivers under 
which non dual eligible individuals may be enrolled in ad-
dition to dual eligible individuals) may be conducted for 
a period of 5 years and, upon the request of the State, may 
be extended for additional 5-year periods unless the Sec-
retary determines that for the previous waiver period the 
conditions for the waiver have not been met or it would 
no longer be cost-effective and efficient, or consistent with 
the purposes of this title, to extend the waiver. 
‘‘(B) In this paragraph, the term ‘dual eligible indi-
vidual’ means an individual who is entitled to, or enrolled
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for, benefits under part A of title XVIII, or enrolled for ben-
efits under part B of title XVIII, and is eligible for medical 
assistance under the State plan under this title or under 
a waiver of such plan.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1915 of such Act (42 U.S.C. 1396n) 
is amended— 
(A) in subsection (b), by adding at the end 
the following new sentence: ‘‘Subsection (h)(2) 
shall apply to a waiver under this subsection.’’; 
(B) in subsection (c)(3), in the second sen-
tence, by inserting ‘‘(other than a waiver de-
scribed in subsection (h)(2))’’ after ‘‘A waiver 
under this subsection’’; 
(C) in subsection (d)(3), in the second sen-
tence, by inserting ‘‘(other than a waiver de-
scribed in subsection (h)(2))’’ after ‘‘A waiver 
under this subsection’’. 
(2) Section 1115 of such Act (42 U.S.C. 1315) is 
amended— 
(A) in subsection (e)(2), by inserting ‘‘(5 
years, in the case of a waiver described in sec-
tion 1915(h)(2))’’ after ‘‘3 years’’; and
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(B) in subsection (f)(6), by inserting ‘‘(5 
years, in the case of a waiver described in sec-
tion 1915(h)(2))’’ after ‘‘3 years’’. 
SEC. 2602. PROVIDING FEDERAL COVERAGE AND PAYMENT 
COORDINATION FOR DUAL ELIGIBLE BENE-
FICIARIES. 
(a) ESTABLISHMENT
OF
FEDERAL
COORDINATED 
HEALTH CARE OFFICE.— 
(1) IN GENERAL.—Not later than March 1, 2010, 
the Secretary of Health and Human Services (in this 
section referred to as the ‘‘Secretary’’) shall establish 
a Federal Coordinated Health Care Office. 
(2) ESTABLISHMENT
AND
REPORTING
TO
CMS 
ADMINISTRATOR.—The Federal Coordinated Health 
Care Office— 
(A) shall be established within the Centers 
for Medicare & Medicaid Services; and 
(B) have as the Office a Director who shall 
be appointed by, and be in direct line of author-
ity to, the Administrator of the Centers for Medi-
care & Medicaid Services. 
(b) PURPOSE.—The purpose of the Federal Coordi-
nated Health Care Office is to bring together officers and 
employees of the Medicare and Medicaid programs at the 
Centers for Medicare & Medicaid Services in order to—
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(1) more effectively integrate benefits under the 
Medicare program under title XVIII of the Social Se-
curity Act and the Medicaid program under title XIX 
of such Act; and 
(2) improve the coordination between the Federal 
Government and States for individuals eligible for 
benefits under both such programs in order to ensure 
that such individuals get full access to the items and 
services to which they are entitled under titles XVIII 
and XIX of the Social Security Act. 
(c) GOALS.—The goals of the Federal Coordinated 
Health Care Office are as follows: 
(1) Providing dual eligible individuals full ac-
cess to the benefits to which such individuals are enti-
tled under the Medicare and Medicaid programs. 
(2) Simplifying the processes for dual eligible in-
dividuals to access the items and services they are en-
titled to under the Medicare and Medicaid programs. 
(3) Improving the quality of health care and 
long-term services for dual eligible individuals. 
(4) Increasing dual eligible individuals’ under-
standing of and satisfaction with coverage under the 
Medicare and Medicaid programs. 
(5) Eliminating regulatory conflicts between 
rules under the Medicare and Medicaid programs.
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(6) Improving care continuity and ensuring safe 
and effective care transitions for dual eligible individ-
uals. 
(7) Eliminating cost-shifting between the Medi-
care and Medicaid program and among related health 
care providers. 
(8) Improving the quality of performance of pro-
viders of services and suppliers under the Medicare 
and Medicaid programs. 
(d) SPECIFIC RESPONSIBILITIES.—The specific re-
sponsibilities of the Federal Coordinated Health Care Office 
are as follows: 
(1) Providing States, specialized MA plans for 
special needs individuals (as defined in section 
1859(b)(6) of the Social Security Act (42 U.S.C. 
1395w–28(b)(6))), physicians and other relevant enti-
ties or individuals with the education and tools nec-
essary for developing programs that align benefits 
under the Medicare and Medicaid programs for dual 
eligible individuals. 
(2) Supporting State efforts to coordinate and 
align acute care and long-term care services for dual 
eligible individuals with other items and services fur-
nished under the Medicare program.
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States Code, submit to Congress an annual report con-
taining recommendations for legislation that would im-
prove care coordination and benefits for dual eligible indi-
viduals. 
(f) DUAL ELIGIBLE DEFINED.—In this section, the 
term ‘‘dual eligible individual’’ means an individual who 
is entitled to, or enrolled for, benefits under part A of title 
XVIII of the Social Security Act, or enrolled for benefits 
under part B of title XVIII of such Act, and is eligible for 
medical assistance under a State plan under title XIX of 
such Act or under a waiver of such plan. 
Subtitle I—Improving the Quality 
of Medicaid for Patients and 
Providers 
SEC. 2701. ADULT HEALTH QUALITY MEASURES. 
Title XI of the Social Security Act (42 U.S.C. 1301 
et seq.), as amended by section 401 of the Children’s Health 
Insurance Program Reauthorization Act of 2009 (Public 
Law 111–3), is amended by inserting after section 1139A 
the following new section: 
‘‘SEC. 1139B. ADULT HEALTH QUALITY MEASURES. 
‘‘(a) DEVELOPMENT OF CORE SET OF HEALTH CARE 
QUALITY MEASURES FOR ADULTS ELIGIBLE FOR BENEFITS 
UNDER MEDICAID.—The Secretary shall identify and pub-
lish a recommended core set of adult health quality meas-
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ures for Medicaid eligible adults in the same manner as 
the Secretary identifies and publishes a core set of child 
health quality measures under section 1139A, including 
with respect to identifying and publishing existing adult 
health quality measures that are in use under public and 
privately sponsored health care coverage arrangements, or 
that are part of reporting systems that measure both the 
presence and duration of health insurance coverage over 
time, that may be applicable to Medicaid eligible adults. 
‘‘(b) DEADLINES.— 
‘‘(1) RECOMMENDED MEASURES.—Not later than 
January 1, 2011, the Secretary shall identify and 
publish for comment a recommended core set of adult 
health quality measures for Medicaid eligible adults. 
‘‘(2) DISSEMINATION.—Not later than January 
1, 2012, the Secretary shall publish an initial core set 
of adult health quality measures that are applicable 
to Medicaid eligible adults. 
‘‘(3) STANDARDIZED
REPORTING.—Not later 
than January 1, 2013, the Secretary, in consultation 
with States, shall develop a standardized format for 
reporting information based on the initial core set of 
adult health quality measures and create procedures 
to encourage States to use such measures to volun-
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tarily report information regarding the quality of 
health care for Medicaid eligible adults. 
‘‘(4) REPORTS TO CONGRESS.—Not later than 
January 1, 2014, and every 3 years thereafter, the 
Secretary shall include in the report to Congress re-
quired under section 1139A(a)(6) information similar 
to the information required under that section with 
respect to the measures established under this section. 
‘‘(5) ESTABLISHMENT
OF
MEDICAID
QUALITY 
MEASUREMENT PROGRAM.— 
‘‘(A) IN
GENERAL.—Not later than 12 
months after the release of the recommended core 
set of adult health quality measures under para-
graph (1)), the Secretary shall establish a Med-
icaid Quality Measurement Program in the same 
manner as the Secretary establishes the pediatric 
quality 
measures 
program 
under 
section 
1139A(b). The aggregate amount awarded by the 
Secretary for grants and contracts for the devel-
opment, testing, and validation of emerging and 
innovative evidence-based measures under such 
program shall equal the aggregate amount 
awarded by the Secretary for grants under sec-
tion 1139A(b)(4)(A)
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‘‘(B) REVISING, STRENGTHENING, AND IM-
PROVING INITIAL CORE MEASURES.—Beginning 
not later than 24 months after the establishment 
of the Medicaid Quality Measurement Program, 
and annually thereafter, the Secretary shall pub-
lish recommended changes to the initial core set 
of adult health quality measures that shall reflect 
the results of the testing, validation, and con-
sensus process for the development of adult health 
quality measures. 
‘‘(c) CONSTRUCTION.—Nothing in this section shall be 
construed as supporting the restriction of coverage, under 
title XIX or XXI or otherwise, to only those services that 
are evidence-based, or in anyway limiting available serv-
ices. 
‘‘(d) ANNUAL STATE REPORTS REGARDING STATE- 
SPECIFIC QUALITY OF CARE MEASURES APPLIED UNDER 
MEDICAID.— 
‘‘(1) ANNUAL STATE REPORTS.—Each State with 
a State plan or waiver approved under title XIX 
shall annually report (separately or as part of the an-
nual report required under section 1139A(c)), to the 
Secretary on the— 
‘‘(A) State-specific adult health quality 
measures applied by the State under the such
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plan, including measures described in subsection 
(a)(5); and 
‘‘(B) State-specific information on the qual-
ity of health care furnished to Medicaid eligible 
adults under such plan, including information 
collected through external quality reviews of 
managed care organizations under section 1932 
and benchmark plans under section 1937. 
‘‘(2) PUBLICATION.—Not later than September 
30, 2014, and annually thereafter, the Secretary shall 
collect, analyze, and make publicly available the in-
formation reported by States under paragraph (1). 
‘‘(e) APPROPRIATION.—Out of any funds in the Treas-
ury not otherwise appropriated, there is appropriated for 
each of fiscal years 2010 through 2014, $60,000,000 for the 
purpose of carrying out this section. Funds appropriated 
under this subsection shall remain available until ex-
pended.’’. 
SEC. 2702. PAYMENT ADJUSTMENT FOR HEALTH CARE-AC-
QUIRED CONDITIONS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (in this subsection referred to as the ‘‘Sec-
retary’’) shall identify current State practices that prohibit 
payment for health care-acquired conditions and shall in-
corporate the practices identified, or elements of such prac-
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tices, which the Secretary determines appropriate for appli-
cation to the Medicaid program in regulations. Such regu-
lations shall be effective as of July 1, 2011, and shall pro-
hibit payments to States under section 1903 of the Social 
Security Act for any amounts expended for providing med-
ical assistance for health care-acquired conditions specified 
in the regulations. The regulations shall ensure that the pro-
hibition on payment for health care-acquired conditions 
shall not result in a loss of access to care or services for 
Medicaid beneficiaries. 
(b) HEALTH CARE-ACQUIRED CONDITION.—In this 
section. the term ‘‘health care-acquired condition’’ means a 
medical condition for which an individual was diagnosed 
that could be identified by a secondary diagnostic code de-
scribed in section 1886(d)(4)(D)(iv) of the Social Security 
Act (42 U.S.C. 1395ww(d)(4)(D)(iv)). 
(c) MEDICARE PROVISIONS.—In carrying out this sec-
tion, the Secretary shall apply to State plans (or waivers) 
under title XIX of the Social Security Act the regulations 
promulgated pursuant to section 1886(d)(4)(D) of such Act 
(42 U.S.C. 1395ww(d)(4)(D)) relating to the prohibition of 
payments based on the presence of a secondary diagnosis 
code specified by the Secretary in such regulations, as ap-
propriate for the Medicaid program. The Secretary may ex-
clude certain conditions identified under title XVIII of the
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(2) The demonstration project shall focus on con-
ditions where there is evidence of an opportunity for 
providers of services and suppliers to improve the 
quality of care furnished to Medicaid beneficiaries 
while reducing total expenditures under the State 
Medicaid programs selected to participate, as deter-
mined by the Secretary. 
(3) A State selected to participate in the dem-
onstration project shall specify the 1 or more episodes 
of care the State proposes to address in the project, 
the services to be included in the bundled payments, 
and the rationale for the selection of such episodes of 
care and services. The Secretary may modify the epi-
sodes of care as well as the services to be included in 
the bundled payments prior to or after approving the 
project. The Secretary may also vary such factors 
among the different States participating in the dem-
onstration project. 
(4) The Secretary shall ensure that payments 
made under the demonstration project are adjusted 
for severity of illness and other characteristics of Med-
icaid beneficiaries within a category or having a di-
agnosis targeted as part of the demonstration project. 
States shall ensure that Medicaid beneficiaries are not 
liable for any additional cost sharing than if their
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‘‘(I) through an interactive telephonic or 
web-based program that meets the standards es-
tablished under subparagraph (B); 
‘‘(II) during an encounter with a health 
care professional; 
‘‘(III) through community-based prevention 
programs; or 
‘‘(IV) through any other means the Sec-
retary determines appropriate to maximize ac-
cessibility and ease of use by beneficiaries, while 
ensuring the privacy of such beneficiaries. 
‘‘(B) Not later than 1 year after the date of enactment 
of this subsection, the Secretary shall establish standards 
for interactive telephonic or web-based programs used to 
furnish health risk assessments under subparagraph 
(A)(ii)(I). The Secretary may utilize any health risk assess-
ment developed under section 4004(f) of the Patient Protec-
tion and Affordable Care Act as part of the requirement 
to develop a personalized prevention plan to comply with 
this subparagraph. 
‘‘(C)(i) Not later than 18 months after the date of en-
actment of this subsection, the Secretary shall develop and 
make available to the public a health risk assessment model. 
Such model shall meet the guidelines under subparagraph