I 
111TH CONGRESS 
1ST SESSION H. R. 3823 
To amend titles XIX and XXI of the Social Security Act to make certain 
changes to the State Children’s Health Insurance Program and the 
Medicaid Program. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 15, 2009 
Mr. DEAL of Georgia (for himself, Mr. PITTS, Mr. BLUNT, Mr. BARTON of 
Texas, and Mr. BUYER) introduced the following bill; which was referred 
to the Committee on Energy and Commerce 
A BILL 
To amend titles XIX and XXI of the Social Security Act 
to make certain changes to the State Children’s Health 
Insurance Program and the Medicaid Program. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicaid and SCHIP 
Beneficiary Choice Improvement Act of 2009’’. 
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SEC. 2. EASING ADMINISTRATIVE BARRIERS TO STATE CO-
OPERATION 
WITH 
EMPLOYER-SPONSORED 
INSURANCE COVERAGE. 
(a) REQUIRING SOME COVERAGE FOR EMPLOYER- 
SPONSORED INSURANCE.— 
(1) IN GENERAL.—Section 2102(a) of the So-
cial Security Act (42 U.S.C. 1397b(a)) is amend-
ed— 
(A) in paragraph (6), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (7), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(8) effective for plan years beginning on or 
after October 1, 2010, how the plan will provide for 
child health assistance with respect to targeted low- 
income children who have access to coverage under 
a group health plan.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply beginning on October 
1, 2010. 
(b) FEDERAL FINANCIAL PARTICIPATION FOR EM-
PLOYER-SPONSORED INSURANCE.—Section 2105 of such 
Act (42 U.S.C. 1397d) is amended— 
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(1) in subsection (a)(1)(C), by inserting before 
the semicolon at the end the following: ‘‘and, subject 
to paragraph (3)(C) of subsection (c), in the form of 
payment of the premiums for coverage under a 
group health plan that includes coverage of targeted 
low-income children and benefits supplemental to 
such coverage’’; and 
(2) by amending paragraph (3) of subsection 
(c) to read as follows: 
‘‘(3) PURCHASE OF EMPLOYER-SPONSORED IN-
SURANCE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of family coverage under a group 
health plan that includes coverage of targeted 
low-income children unless such coverage would 
otherwise substitute for coverage that would be 
provided to such children but for the purchase 
of family coverage. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A)— 
‘‘(i) notwithstanding section 2102, no 
minimum benefits requirement (other than 
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those otherwise applicable with respect to 
services within the categories of basic serv-
ices described in section 2103(c)(1) and 
emergency services) under this title shall 
apply; and 
‘‘(ii) no limitation on beneficiary cost- 
sharing otherwise applicable under this 
title or title XIX shall apply. 
‘‘(C) REQUIRED
PROVISION
OF
SUPPLE-
MENTAL BENEFITS.—If the coverage described 
in subparagraph (A) does not provide coverage 
for the services in each of the categories of 
basic services described in section 2103(c)(1) 
and for emergency services, the State child 
health plan shall provide coverage of such serv-
ices as supplemental benefits. 
‘‘(D) LIMITATION ON FFP.—The amount 
of the payment under subsection (a)(1)(C) for 
coverage described in subparagraph (A) (and 
supplemental benefits under subparagraph (C) 
for individuals so covered) during a fiscal year 
may not exceed the product of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
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the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(E) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in family coverage 
described in subparagraph (A) in order to 
obtain child health assistance under this 
title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet website or other 
means) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
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switch coverage under this title from cov-
erage described in subparagraph (A) to the 
coverage that is otherwise made available 
under this title. 
‘‘(F) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2010; 
and 
‘‘(iii) post a description of these cov-
erage options on any official Internet 
website that may be established by the 
State in connection with the plan. 
‘‘(G) SEMIANNUAL VERIFICATION OF COV-
ERAGE.—If coverage described in subparagraph 
(A) is provided under a group health plan with 
respect to a targeted low-income child, the 
State child health plan shall provide for the col-
lection, at least once every six months, of proof 
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from the plan that the child is enrolled in such 
coverage. 
‘‘(H) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) offering wrap around benefits in 
order for a group health plan to meet any 
State-established minimum benefit require-
ments; 
‘‘(ii) establishing a cost-effectiveness 
test to qualify for coverage under such a 
plan; 
‘‘(iii) establishing limits on beneficiary 
cost-sharing under such a plan; 
‘‘(iv) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such a plan; 
‘‘(v) paying less than the full cost of 
the employee’s share of the premium under 
such a plan, including prorating the cost of 
the premium to pay for only what the 
State determines is the portion of the pre-
mium that covers targeted low-income chil-
dren; 
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‘‘(vi) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (D); 
‘‘(vii) allowing beneficiaries enrolled in 
group health plans from changing plans to 
another coverage option available under 
this title at any time; or 
‘‘(viii) providing any guidance or in-
formation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A). 
‘‘(I) GROUP HEALTH PLAN DEFINED.—In 
this paragraph, the term ‘group health plan’ 
has the meaning given such term in section 
2791(a)(1) of the Public Health Service Act (42 
U.S.C. 300gg–91(a)(1)).’’. 
SEC. 3. IMPROVING BENEFICIARY CHOICE IN SCHIP. 
(a) REQUIRING OFFERING OF ALTERNATIVE COV-
ERAGE OPTIONS.—Section 2102 of the Social Security Act 
(42 U.S.C. 1397b), as amended by section 1, is amend-
ed— 
(1) in subsection (a)— 
(A) in paragraph (7), by striking ‘‘and’’ at 
the end; 
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(B) in paragraph (8), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(9) effective for plan years beginning on or 
after October 1, 2010, how the plan will provide for 
child health assistance with respect to targeted low- 
income children through alternative coverage options 
in accordance with subsection (d).’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(d) ALTERNATIVE COVERAGE OPTIONS.— 
‘‘(1) IN GENERAL.—Effective October 1, 2010, 
a State child health plan shall provide for the offer-
ing of any qualified alternative coverage that a 
qualified entity seeks to offer to targeted low-income 
children through the plan in the State. 
‘‘(2) APPLICATION
OF
UNIFORM
FINANCIAL 
LIMITATION FOR ALL ALTERNATIVE COVERAGE OP-
TIONS.—With respect to all qualified alternative cov-
erage offered in a State, the State child health plan 
shall establish a uniform dollar limitation on the per 
capita monthly amount that will be paid by the 
State to the qualified entity with respect to such 
coverage provided to a targeted low-income child. 
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Such limitation may not be less than 90 percent of 
the per capita monthly payment made for coverage 
offered under the State child health plan that is not 
in the form of an alternative coverage option. Noth-
ing in this paragraph shall be construed— 
‘‘(A) as requiring a State to provide for 
the full payment of premiums for qualified al-
ternative coverage; 
‘‘(B) as preventing a State from charging 
additional premiums to cover the difference be-
tween the cost of qualified alternative coverage 
and the amount of such payment limitation; 
‘‘(C) as preventing a State from using its 
own funds to provide a dollar limitation that ex-
ceeds the Federal financial participation as lim-
ited under section 2105(c)(8). 
‘‘(3) QUALIFIED ALTERNATIVE COVERAGE DE-
FINED.—In this section, the term ‘qualified alter-
native coverage’ means health insurance coverage 
that— 
‘‘(A) meets the coverage requirements of 
section 2103; and 
‘‘(B) is offered by a qualified insurer, and 
not directly by the State. 
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‘‘(4) QUALIFIED
INSURER
DEFINED.—In this 
section, the term ‘qualified insurer’ means, with re-
spect to a State, an entity that is licensed to offer 
health insurance coverage in the State.’’. 
(b) FEDERAL
FINANCIAL
PARTICIPATION
FOR 
QUALIFIED ALTERNATIVE COVERAGE.—Section 2105 of 
such Act (42 U.S.C. 1397d), as amended by sections 
301(a) and 601(a) of the Children’s Health Insurance 
Program Reauthorization Act of 2009 (Public Law 111– 
5), is amended— 
(1) in subsection (a)(1)(C), by inserting before 
the semicolon at the end the following: ‘‘and, subject 
to subsection (c)(12)(C), in the form of payment of 
the premiums for coverage for qualified alternative 
coverage’’; and 
(2) by adding at the end of subsection (c) the 
following new paragraph: 
‘‘(12) PURCHASE OF QUALIFIED ALTERNATIVE 
COVERAGE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of qualified alternative coverage. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
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graph (A), no limitation on beneficiary cost- 
sharing otherwise applicable under this title or 
title XIX shall apply. 
‘‘(C) LIMITATION ON FFP.—The amount of 
the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) during a 
fiscal year in the aggregate for all such cov-
erage in the State may not exceed the product 
of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(D) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
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in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet website or other 
means) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
switch coverage under this title from cov-
erage described in subparagraph (A) to the 
coverage that is otherwise made available 
under this title. 
‘‘(E) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
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vidual was enrolled before October 1, 2010; 
and 
‘‘(iii) post a description of these cov-
erage options on any official website that 
may be established by the State in connec-
tion with the plan. 
‘‘(F) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) establishing limits on beneficiary 
cost-sharing under such alternative cov-
erage; 
‘‘(ii) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such coverage; 
‘‘(iii) paying less than the full cost of 
a child’s share of the premium under such 
coverage, insofar as the premium for such 
coverage exceeds the limitation established 
by the State under subparagraph (C); 
‘‘(iv) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); or 
‘‘(v) providing any guidance or infor-
mation it deems appropriate in order to 
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help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A).’’. 
SEC. 4. APPLICATION TO MEDICAID. 
In accordance with rules established by the Secretary 
of Health and Human Services, the requirements imposed 
under a State child health plan under title XXI of the 
Social Security Act under the amendments made by the 
preceding sections of this subtitle shall apply in the same 
manner to a State plan under title XIX of such Act, except 
that— 
(1) such requirements shall not apply to indi-
viduals whose eligibility for medical assistance under 
such title is based on being aged, blind, or disabled 
or to individuals with a category of individuals de-
scribed in section 1937(a)(2)(B) of such Act; 
(2) the national per capita expenditures shall be 
determined based on a benchmark coverage de-
scribed in section 1937(b)(1) of such Act but with-
out regard to expenditures for individuals described 
in paragraph (1) or for nursing facility services and 
other long-term care services (as determined by the 
Secretary). 
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