841
and publish in the Federal Register the
amount of the pre-fiscal year 1997-obliga-
tion outlays (as defined in clause (iv)) for
each State (including the District of Co-
lumbia, Commonwealths, and Territories).
The total of such amounts shall equal the
dollar amount specified in paragraph
(3)(C)(ii).
‘‘(iii) AGREEMENT.—The submission
of a State plan by a State under this title
is deemed to constitute the State’s accept-
ance of the obligation allotment limitations
under this subsection, including the for-
mula for computing the amount of the
base obligation allotment and any supple-
mental obligation allotments.
‘‘(iv) PRE-FISCAL YEAR 1997-OBLIGA-
TION
OUTLAYS
DEFINED.—In this sub-
section, the term ‘pre-fiscal year 1997-obli-
gation outlays’ means, for a State, the out-
lays of the Federal Government that result
from obligations that have been incurred
under title XIX with respect to the State
before October 1, 1996, but for which pay-
842
ments to States have not been made as of
such date.
‘‘(D) ADJUSTMENT TO REFLECT ADOPTION
OF
ALTERNATIVE
GROWTH
FORMULA.—Any
State that has elected an alternative growth
formula under subsection (c)(4) which increases
or decreases the dollar amount of an outlay al-
lotment for a fiscal year is deemed to have in-
creased or decreased, respectively, its obligation
amount for such fiscal year by the amount of
such increase or decrease.
‘‘(E) TRANSITIONAL CORRECTION FOR FIS-
CAL YEAR 1997.—
‘‘(i) IN GENERAL.—The base obliga-
tion amount for fiscal year 1998 for any
State described in clause (ii) shall be in-
creased by the amount by which the
amount described in clause (ii)(I) exceeds
the amount described in clause (ii)(II), di-
vided by the payout adjustment factor
specified in paragraph (3)(B) for fiscal
year 1997. The increase under this clause
shall be paid to a State in the first quarter
of fiscal year 1998.
843
‘‘(ii) STATES
DESCRIBED.—A State
described in this clause is a State for
which—
‘‘(I) the amount of the pre-fiscal
year 1997-obligation outlays (as es-
tablished for such State under sub-
paragraph (C)(ii)), exceeded
‘‘(II) the outlays of the Federal
Government during fiscal year 1997
that are attributable to obligations
that were incurred under title XIX
with respect to the State before Octo-
ber 1, 1996, but for which payments
to States had not been made as of
such date.
‘‘(5) SEQUENCE
OF
OBLIGATIONS.—For pur-
poses of carrying out this title, payments under sec-
tion 1512 to a State eligible for a supplemental out-
lay allotment that are attributable to—
‘‘(A) expenditures for medical assistance
described in the second sentence of subsection
(f)(1) or the second sentence of subsection
(h)(1) shall first be counted toward the supple-
mental outlay allotment provided under sub-
section (f) or (h), respectively, rather than to-
844
ward the base outlay allotment otherwise pro-
vided under this section; or
‘‘(B) subsection (g) (relating to the um-
brella fund) shall first be counted toward the
allotment provided other than under such sub-
section, and then to such subsection.
‘‘(b) BASE POOL OF AVAILABLE FUNDS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the ‘base pool amount’ under this subsection
for—
‘‘(A) fiscal year 1996 is $96,601,037,894,
‘‘(B) fiscal year 1997 is $103,447,755,053,
‘‘(C) fiscal year 1998 is $108,430,173,129,
‘‘(D) 
fiscal 
year 
1999 
is
$113,652,562,483,
‘‘(E) fiscal year 2000 is $119,126,480,999,
‘‘(F) fiscal year 2001 is $124,864,043,230,
‘‘(G) fiscal year 2002 is $130,877,947,213,
and
‘‘(H) each subsequent fiscal year is the
pool amount under this paragraph for the pre-
vious fiscal year increased by the lesser of 4.82
percent or the annual percentage increase in
the gross domestic product for the 12-month
845
period ending in June before the beginning of
that subsequent fiscal year.
‘‘(2) NATIONAL
GROWTH
PERCENTAGE.—For
purposes of this section for a fiscal year (beginning
with fiscal year 1997), the ‘national growth percent-
age’ is the percentage by which—
‘‘(A) the base pool amount under para-
graph (1) for the fiscal year, exceeds
‘‘(B) such base pool amount for the pre-
vious fiscal year.
‘‘(c) STATE BASE OUTLAY ALLOTMENTS.—
‘‘(1) FISCAL YEAR 1996.—
‘‘(A) IN GENERAL.—For each of the 50
States and the District of Columbia, the
amount of the State base outlay allotment
under this subsection for fiscal year 1996 is,
subject to paragraph (4), determined in accord-
ance with the following table:
‘‘State or District:
Outlay allotment (in dollars):
Alabama .........................................
1,517,652,207
Alaska ............................................
204,933,213
Arizona ..........................................
1,385,781,297
Arkansas ........................................
1,011,457,933
California .......................................
8,946,838,461
Colorado .........................................
757,492,679
Connecticut ....................................
1,463,011,635
Delaware ........................................
212,327,763
District of Columbia ......................
501,412,091
Florida ...........................................
3,715,624,180
Georgia ..........................................
2,426,320,602
Hawaii ...........................................
323,124,375
Idaho ..............................................
278,329,686
Illinois ............................................
3,467,274,342
Indiana ..........................................
1,952,467,267
846
‘‘State or District:
Outlay allotment (in dollars):
Iowa ...............................................
835,235,895
Kansas ...........................................
713,700,869
Kentucky .......................................
1,577,828,832
Louisiana .......................................
2,622,000,000
Maine .............................................
694,220,790
Maryland .......................................
1,369,699,847
Massachusetts ................................
2,870,346,862
Michigan ........................................
3,465,182,886
Minnesota ......................................
1,793,776,356
Mississippi .....................................
1,261,781,330
Missouri .........................................
1,849,248,945
Montana .........................................
312,212,472
Nebraska .......................................
463,900,417
Nevada ...........................................
257,896,453
New Hampshire .............................
560,000,000
New Jersey ....................................
2,854,621,241
New Mexico ...................................
634,756,945
New York .......................................
12,901,793,038
North Carolina ..............................
2,587,883,809
North Dakota ................................
241,168,563
Ohio ...............................................
4,034,049,690
Oklahoma .......................................
911,198,775
Oregon ...........................................
1,088,670,440
Pennsylvania ..................................
4,454,423,400
Rhode Island .................................
545,686,262
South Carolina ...............................
1,621,021,815
South Dakota ................................
262,804,959
Tennessee ......................................
2,519,934,251
Texas .............................................
6,351,909,343
Utah ...............................................
484,274,254
Vermont .........................................
248,158,729
Virginia ..........................................
1,144,962,509
Washington ....................................
1,763,460,996
West Virginia .................................
1,156,813,157
Wisconsin .......................................
1,709,500,642
Wyoming ........................................
132,915,390.
‘‘(2) FOR SUBSEQUENT FISCAL YEARS.—
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding provisions of this subsection, the
amount of the State base outlay allotment
under this subsection for one of the 50 States
and the District of Columbia for a fiscal year
(beginning with fiscal year 1997) is equal to the
product of—
847
‘‘(i) the needs-based amount deter-
mined under subparagraph (B) for such
State or District for the fiscal year, and
‘‘(ii) the adjustment factor described
in subparagraph (C) for the fiscal year.
‘‘(B) NEEDS-BASED AMOUNT.—The needs-
based amount under this subparagraph for a
State or the District of Columbia for a fiscal
year is equal to the product of—
‘‘(i) the State’s or District’s aggregate
expenditure need for the fiscal year (as de-
termined under subsection (d)), and
‘‘(ii) the State’s or District’s old Fed-
eral medical assistance percentage (as de-
fined in section 1512(d)) for the fiscal year
(or, in the case of fiscal year 1997, the
Federal medical assistance percentage de-
termined under section 1905(b) for fiscal
year 1996).
‘‘(C) ADJUSTMENT FACTOR.—The adjust-
ment factor under this subparagraph for a fis-
cal year is such proportion so that, when it is
applied under subparagraph (A)(ii) for the fis-
cal year (taking into account the floors and ceil-
ings under paragraph (3)), the total of the base
848
outlay allotments under this subsection for all
the 50 States and the District of Columbia for
the fiscal year (not taking into account any in-
crease in a base outlay allotment for a fiscal
year attributable to the election of an alter-
native growth formula under paragraph (4)) is
equal to the amount by which (i) the base pool
amount for the fiscal year (as determined under
subsection (b)), exceeds (ii) the sum of the base
outlay allotments provided under paragraph (5)
for the Commonwealths and Territories for the
fiscal year.
‘‘(3) FLOORS AND CEILINGS.—
‘‘(A) FLOORS.—Subject to the ceiling es-
tablished under subparagraph (B), in no case
shall the amount of the State base outlay allot-
ment under paragraph (2) for a fiscal year be
less than the greatest of the following:
‘‘(i) IN
GENERAL.—Beginning with
fiscal year 1998, 0.24 percent of the pool
amount for the fiscal year.
‘‘(ii) FLOOR
BASED
ON
PREVIOUS
YEAR’S OUTLAY ALLOTMENT.—Subject to
clause (iii)—
849
‘‘(I) for fiscal year 1997, 103.5
percent of the amount of the State
base outlay allotment under this sub-
section for fiscal year 1996,
‘‘(II) for fiscal year 1998, 103
percent of the amount of the State
base outlay allotment under this sub-
section for fiscal year 1997,
‘‘(III) for fiscal year 1999, 102.5
percent of the amount of the State
base outlay allotment under this sub-
section for fiscal year 1998,
‘‘(IV) 
for 
fiscal 
year 
2000,
102.25 percent of the amount of the
State base outlay allotment under this
subsection for fiscal year 1999, and
‘‘(V) for each of fiscal years 2001
and 2002, 102 percent of the amount
of the State base outlay allotment
under this subsection for the previous
fiscal year.
‘‘(iii) FLOOR BASED ON OUTLAY AL-
LOTMENT
GROWTH
RATE
IN
FIRST
YEAR.—Beginning with fiscal year 1998,
in the case of a State for which the outlay
850
allotment under this subsection for fiscal
year 1997 exceeded its outlay allotment
under this subsection for the previous fis-
cal year by more than 95 percent of the
national growth percentage for fiscal year
1997, 90 percent of the national growth
percentage for the fiscal year involved.
‘‘(B) CEILINGS.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), in no case shall the amount of the
State base outlay allotment under para-
graph (2) for a fiscal year be greater than
the product of—
‘‘(I) the State base outlay allot-
ment under this subsection for the
State for the preceding fiscal year,
and
‘‘(II) 
the 
applicable 
percent
(specified in clause (ii) or (iii)) for the
fiscal year involved.
‘‘(ii) GENERAL
RULE
FOR
APPLICA-
BLE
PERCENT.—For purposes of clause
(i), subject to clause (iii), the ‘applicable
percent’ for a fiscal year is 133 percent of
851
the national growth percentage for the fis-
cal year.
‘‘(iii) SPECIAL
RULE.—For a fiscal
year after fiscal year 1997, in the case of
a State (among the 50 States and the Dis-
trict of Columbia) that is one of the 10
States with the lowest Federal spending
per resident-in-poverty rates (as deter-
mined under clause (iv)) for the fiscal
year, the ‘applicable percent’ is 150 per-
cent of the national growth percentage for
the fiscal year.
‘‘(iv) DETERMINATION
OF
FEDERAL
SPENDING
PER
RESIDENT-IN-POVERTY
RATE.—For purposes of clause (iii), the
‘Federal spending per resident-in-poverty
rate’ for a State for a fiscal year is equal
to—
‘‘(I) the State’s outlay allotment
under this subsection for the previous
fiscal year (determined without regard
to paragraph (4)), divided by
‘‘(II) the average annual number
of residents of the State in poverty
852
(as defined in subsection (d)(2)) with
respect to the fiscal year.
‘‘(C) SPECIAL RULE.—
‘‘(i) IN
GENERAL.—Notwithstanding
the preceding subparagraphs of this para-
graph, the State base outlay allotment
for—
‘‘(I) Louisiana, subject to sub-
clause (II), for each of the fiscal years
1997 
through 
2000, 
is
$2,622,000,000,
‘‘(II) Louisiana for fiscal year
1997 only, as otherwise determined,
shall be increased by $37,048,207,
and
‘‘(III) Nevada for each of fiscal
years 1997, 1998, and 1999, as other-
wise determined, shall be increased by
$90,000,000.
‘‘(ii) EXCEPTION.—A State described
in subclause (I) of clause (i) may apply to
the Secretary for use of the State base out-
lay allotment otherwise determined under
this subsection for any fiscal year, if such
State notifies the Secretary not later than
853
March 1 preceding such fiscal year that
such State will be able to expend sufficient
State funds in such fiscal year to qualify
for such allotment.
‘‘(iii) TREATMENT
OF
INCREASE
AS
SUPPLEMENTAL
ALLOTMENT.—Any 
in-
crease in an outlay allotment under clause
(i)(II) or (i)(III) shall not be taken into ac-
count for purposes of determining—
‘‘(I) the adjustment factor under
paragraph (2) for fiscal year 1997,
‘‘(II) any State base outlay allot-
ment for a fiscal year after fiscal year
1997,
‘‘(III) the base pool amount for a
fiscal year after fiscal year 1997, or
‘‘(IV) determination of the na-
tional growth percentage for any fiscal
year.
‘‘(4) ELECTION
OF
ALTERNATIVE
GROWTH
FORMULA.—
‘‘(A) ELECTION.—In order to reduce vari-
ations in increases in outlay allotments over
time, any of the 50 States or the District of Co-
lumbia may elect (by notice provided to the Sec-
854
retary by not later than April 1, 1997) to adopt
an alternative growth rate formula under this
paragraph for the determination of the State’s
base outlay allotment in fiscal year 1997 and
for the increase in the amount of such allot-
ment in subsequent fiscal years.
‘‘(B) FORMULA.—The alternative growth
formula under this paragraph may be any for-
mula under which a portion of the State base
outlay allotment for fiscal year 1997 under
paragraph (1) is deferred and applied to in-
crease the amount of its base outlay allotment
for one or more subsequent fiscal years, so long
as the total amount of such increases for all
such subsequent fiscal years does not exceed the
amount of the base outlay allotment deferred
from fiscal year 1997.
‘‘(5) COMMONWEALTHS AND TERRITORIES.—
‘‘(A) IN GENERAL.—The base outlay allot-
ment for each of the Commonwealths and Ter-
ritories for a fiscal year is the maximum
amount that could have been certified under
section 1108(c) (as in effect on the day before
the date of the enactment of this title) with re-
spect to the Commonwealth or Territory for the
855
fiscal year with respect to title XIX, if the na-
tional growth percentage (as determined under
subsection (b)(2)) for the fiscal year had been
substituted (beginning with fiscal year 1997)
for the percentage increase referred to in sec-
tion 1108(c)(1)(B) (as so in effect).
‘‘(B) DISREGARD OF ROUNDING REQUIRE-
MENTS.—For purposes of subparagraph (A),
the 
rounding 
requirements 
under 
section
1108(c) shall not apply.
‘‘(C) LIMITATION ON TOTAL AMOUNT FOR
FISCAL YEAR 1996.—Notwithstanding the provi-
sions of subparagraph (A), the total amount of
the base outlay allotments for the Common-
wealths and Territories for fiscal year 1996
may not exceed $139,950,000.
‘‘(d) STATE AGGREGATE EXPENDITURE NEED DE-
TERMINED.—
‘‘(1) IN GENERAL.—For purposes of subsection
(c), the ‘State aggregate expenditure need’ for a
State or the District of Columbia for a fiscal year
is equal to the product of the following 4 factors:
‘‘(A) PROGRAM NEED.—The program need
for the State for the fiscal year, as determined
under paragraph (2).
856
‘‘(B) HEALTH
CARE
COST
INDEX.—The
health care cost index for the State (as deter-
mined under paragraph (3)) for the most recent
fiscal year for which data are available.
‘‘(C) PROJECTED
INFLATION.—The CPI
increase factor for the fiscal year (as defined in
subsection (g)(4)(C)).
‘‘(D) NATIONAL AVERAGE SPENDING PER
RESIDENT IN POVERTY.—The national average
spending per resident in poverty (as determined
under paragraph (4)).
‘‘(2) PROGRAM NEED.—
‘‘(A) IN GENERAL.—In this subsection, the
‘program need’ of a State for a fiscal year is
equal to the sum, for each of the population
groups described in subparagraph (B), of the
product described in subparagraph (C) for that
population group.
‘‘(B) POPULATION GROUPS DESCRIBED.—
The population groups described in this sub-
paragraph are as follows:
‘‘(i) INDIVIDUALS BETWEEN 60 AND
85.—Individuals who are least 60, but less
than 85, years of age.
857
‘‘(ii) INDIVIDUALS 85 OR OLDER.—In-
dividuals who are 85 years of age or older.
‘‘(iii) DISABLED INDIVIDUALS.—Indi-
viduals who are eligible for medical assist-
ance because such individuals are blind or
disabled and are not described in clause (i)
or (ii).
‘‘(iv) 
CHILDREN.—Individuals 
de-
scribed in subsection (g)(2)(B).
‘‘(v) OTHER
INDIVIDUALS.—Individ-
uals not described in a previous clause of
this subparagraph.
‘‘(C) PRODUCT DESCRIBED.—The product
described in this subparagraph, with respect to
a population group for a fiscal year for a State
(or District), is the product of the following 2
factors for that group, year, and State (or Dis-
trict):
‘‘(i) WEIGHTING FACTOR REFLECTING
RELATIVE NEED FOR THE GROUP.—For all
States, the national average per recipient
expenditures under this title in the 50
States and the District of Columbia for in-
dividuals in such group, as determined
under subparagraph (D), divided by the
858
national average of such averages for all
such groups (weighted by the number of
recipients in each group); except that in no
case shall be factor under this clause be
less than 0.9 or be greater than 1.15.
‘‘(ii) NUMBER OF NEEDY IN GROUP.—
The product of—
‘‘(I) for all groups, the average
annual number of residents in poverty
in such State or District (based on
data made generally available by the
Bureau of the Census from the Cur-
rent Population Survey) for the most
recent 3-calendar-year period (ending
before the fiscal year) for which such
data are available; and
‘‘(II) the proportion, of all indi-
viduals who received medical assist-
ance under this title in such State or
District, that were individuals in such
group.
In clause (ii)(II), the term ‘resident in pov-
erty’ means an individual whose family in-
come does not exceed the poverty threshold
(as such terms are defined by the Office of
859
Management and Budget and are generally
interpreted and applied by the Bureau of
the Census for the year involved).
‘‘(D) 
DETERMINATION
OF
NATIONAL
AVERAGES
AND
PROPORTIONS.—The national
averages per recipient and the proportions re-
ferred to in subparagraph (C)(ii) and (C)(iii),
respectively, shall be determined by the Sec-
retary using the most recent data available.
‘‘(E) EXPENDITURE DEFINED.—For pur-
poses of this paragraph, the term ‘expenditure’
means medical vendor payments by basis of eli-
gibility as reported by HCFA Form 2082.
‘‘(3) HEALTH CARE COST INDEX.—
‘‘(A) IN
GENERAL.—In this section, the
‘health care cost index’ for a State or the Dis-
trict of Columbia for a fiscal year is the sum
of—
‘‘(i) 0.15, and
‘‘(ii) 0.85 multiplied by the ratio of
(I) the annual average wages for hospital
employees in such State or District for the
fiscal year (as determined under subpara-
graph (B)), to (II) the annual average
wages for hospital employees in the 50
860
States and the District of Columbia for
such year (as determined under such sub-
paragraph).
‘‘(B) DETERMINATION OF ANNUAL AVER-
AGE
WAGES
OF
HOSPITAL
EMPLOYEES.—The
Secretary shall provide for the determination of
annual average wages for hospital employees in
a State or the District of Columbia and, collec-
tively, in the 50 States and the District of Co-
lumbia for a fiscal year based on the area wage
data applicable to hospitals under section
1886(d)(2)(E) (or, if such data no longer ex-
ists, comparable data of hospital wages) for dis-
charges occurring during the fiscal year in-
volved.
‘‘(4) NATIONAL AVERAGE SPENDING PER RESI-
DENT
IN
POVERTY.—For purposes of this sub-
section, the ‘national average spending per resident
in poverty’—
‘‘(A) for fiscal year 1997 is equal to—
‘‘(i) the sum (for each of the 50
States and the District of Columbia) of the
total of the Federal and State expenditures
under title XIX for calendar quarters in
fiscal year 1994, increased by the percent-
861
age by which (I) the base pool amount for
fiscal 
year 
1997, 
exceeds 
(II)
$83,213,431,458 (which represents Fed-
eral medicaid expenditures for such States
and District for fiscal year 1994); divided
by
‘‘(ii) the sum of the number of resi-
dents in poverty (as defined in paragraph
(2)(A)) for all of the 50 States and the
District of Columbia for fiscal year 1994;
and
‘‘(B) for a succeeding fiscal year is equal
to the national average spending per resident in
poverty under this paragraph for the preceding
fiscal year increased by the national growth
percentage (as defined in subsection (b)(2)) for
the fiscal year involved.
‘‘(e) PUBLICATION OF OBLIGATION AND OUTLAY AL-
LOTMENTS.—
‘‘(1) NOTICE OF PRELIMINARY ALLOTMENTS.—
Not later than April 1 before the beginning of each
fiscal year (beginning with fiscal year 1997), the
Secretary shall initially compute, after consultation
with the Comptroller General, and publish in the
Federal Register notice of the proposed base obliga-
862
tion allotment, base outlay allotment, and supple-
mental allotments under subsections (f) and (h) for
each State under this section (not taking into ac-
count subsection (a)(2)(B)) for the fiscal year. The
Secretary shall include in the notice a description of
the methodology and data used in deriving such al-
lotments for the year.
‘‘(2) REVIEW BY GAO.—The Comptroller Gen-
eral shall submit to Congress by not later than May
15 of each such fiscal year, a report analyzing such
allotments and the extent to which they comply with
the precise requirements of this section.
‘‘(3) NOTICE
OF
FINAL
ALLOTMENTS.—Not
later than July 1 before the beginning of each such
fiscal year, the Secretary, taking into consideration
the analysis contained in the report of the Comptrol-
ler General under paragraph (2), shall compute and
publish in the Federal Register notice of the final al-
lotments under this section (both taking into ac-
count and not taking into account subsection
(a)(2)(B)) for the fiscal year. The Secretary shall in-
clude in the notice a description of any changes in
such allotments from the initial allotments published
under paragraph (1) for the fiscal year and the rea-
sons for such changes. Once published under this
863
paragraph, the Secretary is not authorized to change
such allotments.
‘‘(4) GAO REPORT ON FINAL ALLOTMENTS.—
The Comptroller General shall submit to Congress
by not later than August 1 of each such fiscal year,
a report analyzing the final allotments under para-
graph (3) and the extent to which they comply with
the precise requirements of this section.
‘‘(5) TRANSITIONAL
RULE
FOR
FISCAL
YEAR
1997.—With respect to fiscal year 1997, the dead-
lines under the previous provisions of this subsection
shall be extended by a number of days equal to the
number of days between March 1, 1996, and the
date of the enactment of this title.
‘‘(f) SUPPLEMENTAL
ALLOTMENT
FOR
CERTAIN
HEALTH CARE SERVICES TO CERTAIN ALIENS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion for each of fiscal years 1997 through 2001 in
the case of a subsection (f) supplemental allotment
eligible State, the amount of the supplemental allot-
ment under this subsection is the amount provided
under paragraph (2) for the State for that year.
Such amount may only be used for the purpose of
providing medical assistance for care and services
for aliens described in paragraph (1) of section
864
1513(f) and for which the exception described in
paragraph (2) of such section applies. Section
1512(f)(4) shall apply to such assistance in the same
manner as it applies to medical assistance described
in such section.
‘‘(2) SUPPLEMENTAL AMOUNT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the supplemental amount for a sub-
section (f) supplemental allotment eligible State
for a fiscal year is equal to the subsection (f)
supplemental allotment ratio (as defined in sub-
paragraph (C)) multiplied by the subsection (f)
supplemental pool amount (specified in sub-
paragraph (D)) for the fiscal year.
‘‘(B) SUBSECTION (f) SUPPLEMENTAL AL-
LOTMENT ELIGIBLE STATE.—In this subsection,
the term ‘subsection (f) supplemental allotment
eligible State’ means one of the 15 States with
the highest number of undocumented alien resi-
dents of all the States.
‘‘(C) SUBSECTION (f) SUPPLEMENTAL AL-
LOTMENT RATIO.—In this paragraph, the ‘sub-
section (f) supplemental allotment ratio’ for a
State is the ratio of—
865
‘‘(i) the number of undocumented
aliens residing in the State, to
‘‘(ii) the sum of such numbers for all
subsection (f) supplemental allotment eligi-
ble States.
‘‘(D) 
SUBSECTION
(f)
SUPPLEMENTAL
POOL AMOUNT.—In this paragraph, the ‘sub-
section (f) supplemental pool amount’—
‘‘(i) 
for 
fiscal 
year 
1997 
is
$500,000,000,
‘‘(ii) 
for 
fiscal 
year 
1998 
is
$600,000,000,
‘‘(iii) 
for 
fiscal 
year 
1999 
is
$700,000,000,
‘‘(iv) 
for 
fiscal 
year 
2000 
is
$800,000,000, and
‘‘(v) 
for 
fiscal 
year 
2001 
is
$900,000,000.
‘‘(E) DETERMINATION OF NUMBER.—
‘‘(i) IN
GENERAL.—The number of
undocumented aliens residing in a State
under this paragraph—
‘‘(I) for fiscal year 1997 shall be
determined based on estimates of the
resident illegal alien population resid-
866
ing in each State prepared by the Sta-
tistics Division of the Immigration
and Naturalization Service as of Octo-
ber 1992, and
‘‘(II) for a subsequent fiscal year
shall be determined based on the most
recent updated estimate made under
clause (ii).
‘‘(ii) UPDATING ESTIMATE.—For each
fiscal year beginning with fiscal year 1998,
the Secretary, in consultation with the
Commission of the Immigration and Natu-
ralization Service, States, and outside ex-
perts, shall estimate the number of un-
documented aliens residing in each of the
50 States and the District of Columbia.
‘‘(g) SUPPLEMENTAL PER BENEFICIARY UMBRELLA
ALLOTMENT FOR STATES WITH EXCESS GROWTH IN CER-
TAIN POPULATION GROUPS.—
‘‘(1) IN GENERAL.—Subject to paragraphs (5)
through (7), for purposes of this section the amount
of the supplemental allotment under this subsection
for a State for a fiscal year (beginning with fiscal
year 1997) is the sum, for each supplemental allot-
867
ment population group described in paragraph (2),
of the product of the following:
‘‘(A) EXCESS NUMBER OF INDIVIDUALS.—
The excess number of individuals (if any, deter-
mined under paragraph (3)) for State and the
fiscal year who are in the population group.
‘‘(B) 
APPLICABLE
PER
BENEFICIARY
AMOUNT.—The 
applicable 
per 
beneficiary
amount (determined under paragraph (4)) for
the State and fiscal year for the population
group.
‘‘(C) FMAP.—The old Federal medical as-
sistance percentage (as defined in section
1512(d)) for the State and fiscal year.
‘‘(2) SUPPLEMENTAL ALLOTMENT POPULATION
GROUP.—In this subsection, each of the following
shall be considered to be a separate ‘supplemental
allotment population group’:
‘‘(A) POOR PREGNANT WOMEN.—Individ-
uals described in section 1501(a)(1)(A).
‘‘(B) POOR
CHILDREN.—Individuals (not
described in subparagraph (C))—
‘‘(i) described in subparagraph (B) or
(C) of section 1501(a)(1),
868
‘‘(ii) described in subparagraph (F) or
(G) of section 1501(a)(1) who are under
21 years of age and who are not pregnant
women, or
‘‘(iii) described in section 1502(a)
under paragraph (1) of that section.
‘‘(C) POOR DISABLED INDIVIDUALS.—Only
in the case of a State that has elected the op-
tion (of guaranteeing coverage of disabled indi-
viduals) described in section 1501(a)(1)(D)(ii)
for the fiscal year (and, in the case of a fiscal
year after fiscal year 1997, for the previous fis-
cal year), individuals—
‘‘(i) who are described in such section;
or
‘‘(ii) who are described in section
1502(a) under paragraph (2) of that sec-
tion.
‘‘(D) POOR ELDERLY INDIVIDUALS.—Indi-
viduals who are—
‘‘(i) 
described 
in 
section
1501(a)(1)(E); or
‘‘(ii) described in section 1502(a)
under paragraph (3) of that section.
869
‘‘(E) 
QUALIFIED
MEDICARE
BENE-
FICIARIES.—Individuals described in section
1501(b)(1)(A) who are not described in sub-
paragraph (D).
‘‘(F) QUALIFIED DISABLED AND WORKING
INDIVIDUALS.—Individuals described in section
1501(b)(1)(B) who are not described in sub-
paragraph (D).
‘‘(G) CERTAIN
OTHER
MEDICARE
BENE-
FICIARIES.—Individuals described in section
1501(b)(1)(C) who are not described in sub-
paragraph (D).
‘‘(H) OTHER POOR ADULTS.—Individuals
described in section 1501(a)(1)(G) who are not
within a population group described in a pre-
vious subparagraph.
‘‘(3) EXCESS NUMBER OF INDIVIDUALS.—
‘‘(A) IN GENERAL.—In this subsection, the
‘excess number of individuals’, for a State for
a fiscal year with respect to a supplemental al-
lotment population group, is equal to the
amount (if any) by which—
‘‘(i) the number of full-year equivalent
individuals in the population group for the
State and fiscal year, exceeds
870
‘‘(ii) the anticipated number of such
individuals (as determined under subpara-
graph (B)) for the State and fiscal year in
such group.
‘‘(B) ANTICIPATED NUMBER.—
‘‘(i) IN GENERAL.—In subparagraph
(A)(ii), the ‘anticipated number’ of individ-
uals for a State in a supplemental allot-
ment population group for—
‘‘(I) fiscal year 1997 is equal to
the number of full-year equivalent in-
dividuals in such group enrolled in the
State medicaid plan under title XIX
in fiscal year 1996 increased by the
percentage increase factor (described
in clause (ii)) for fiscal year 1997; or
‘‘(II) a subsequent fiscal year is
equal to the number of full-year equiv-
alent individuals in the population
group for the State for the previous
fiscal year increased by the percentage
increase factor (described in clause
(ii)) for that subsequent fiscal year.
‘‘(ii) PERCENTAGE
INCREASE
FAC-
TOR.—For purposes of this subparagraph,
871
the ‘percentage increase factor’ for a fiscal
year is equal to zero or, if greater, the per-
centage by which (I) the State percentage
growth factor (as defined in subparagraph
(C)) for the fiscal year, exceeds (II) the
percentage increase in the consumer price
index for all urban consumers (U.S. city
average) during the 12-month period be-
ginning with July before the beginning of
the fiscal year.
‘‘(C) STATE
PERCENTAGE
GROWTH
FAC-
TOR.—In this paragraph, the term ‘State per-
centage growth factor’ means, for a State for a
fiscal year, the percentage by which (i) the
State outlay allotment for the State for the fis-
cal year (determined under this section without
regard to this subsection or subsection (f) or
(h)), exceeds (ii) such outlay allotment for such
State for the preceding fiscal year (as so deter-
mined).
‘‘(D) INDIVIDUALS COUNT ONLY ONCE.—
An individual may at any time not be counted
in more than one supplemental allotment popu-
lation group.
872
‘‘(4) 
APPLICABLE
PER
BENEFICIARY
AMOUNT.—
‘‘(A) IN
GENERAL.—In this subsection,
subject to subparagraph (D), the ‘applicable per
beneficiary amount’, for a State for a fiscal
year for a supplemental allotment population
group, is equal to the base per beneficiary
amount (determined under subparagraph (B))
for the State for the group, increased by the
Secretary’s estimate of the increase in the per
beneficiary expenditures under this title (and
title XIX) for States between fiscal year 1995
and fiscal year 1996, and further increased (for
each subsequent fiscal year up to the fiscal year
involved and in a compounded manner) by the
CPI increase factor (as defined in subparagraph
(C)) for each such fiscal year.
‘‘(B) BASE PER BENEFICIARY AMOUNT.—
‘‘(i) IN
GENERAL.—The Secretary
shall determine for each State a base per
beneficiary amount for each supplemental
allotment population group equal to—
‘‘(I) the sum of the total expendi-
ture amounts described in clauses (ii)
and (iii), divided by
873
‘‘(II) the full-year equivalent
number of such individuals in such
group enrolled under the State plan
under title XIX for fiscal year 1995.
‘‘(ii) MEDICAL ASSISTANCE EXPENDI-
TURES.—The total expenditure amount de-
scribed in this clause, with respect to a
supplemental allotment population group,
is the total amount of expenditures for
which Federal financial participation was
provided to the State under paragraphs (1)
and (5) of section 1903(a) for fiscal year
1995 with respect to medical assistance
furnished with respect to individuals in-
cluded in such group. Such amount shall
not include expenditures attributable to
payment adjustments under section 1923.
‘‘(iii) 
ADMINISTRATIVE
EXPENDI-
TURES.—The total expenditure amount de-
scribed in this clause, with respect to a
supplemental allotment population group,
is the product of—
‘‘(I) the total amount of adminis-
trative expenditures for which Federal
financial participation was provided to
874
the State under section 1903(a)
(other than paragraphs (1) and (5) of
such section) for fiscal year 1995, and
‘‘(II) the ratio described in clause
(iv) for the population group.
‘‘(iv) RATIO
DESCRIBED.—The ratio de-
scribed in this clause for a group is the ratio
of—
‘‘(I) the total amount of expendi-
tures described in clause (ii) for the
group, to
‘‘(II) the total amount of expend-
itures described in such clause for all
individuals under the State plan
under title XIX in the base fiscal
year.
‘‘(C) CPI INCREASE FACTOR.—In subpara-
graph (A), the ‘CPI increase factor’ for a fiscal
year is the percentage by which—
‘‘(i) the Secretary’s estimate of the
average value of the consumer price index
for all urban consumers (all items, U.S.
city average) for months in the fiscal year,
exceeds
875
‘‘(ii) the average value of such index
for months in the previous fiscal year.
‘‘(D) SPECIAL RULES FOR CERTAIN MEDI-
CARE BENEFICIARIES.—
‘‘(i) 
QUALIFIED
DISABLED
AND
WORKING
INDIVIDUALS.—In the case of
the supplemental allotment population
group described in paragraph (2)(F), the
‘applicable per beneficiary amount’, for all
States for a fiscal year is the sum of the
medicare premiums applied under section
1818A for months in the fiscal year.
‘‘(ii) 
OTHER
MEDICARE
BENE-
FICIARIES.—In the case of the supple-
mental allotment population group de-
scribed in paragraph (2)(G), the ‘applica-
ble per beneficiary amount’, for all States
for a fiscal year is the sum of the medicare
premiums applied under section 1839 for
months in the fiscal year.
‘‘(5) CONDITIONS FOR ACCESS TO UMBRELLA
SUPPLEMENTAL ALLOTMENT.—
‘‘(A) IN GENERAL.—A State may receive a
supplemental umbrella allotment under this
876
subsection for a fiscal year only if the following
conditions are met:
‘‘(i) The State provides assurances
satisfactory to the Secretary that it will ob-
ligate during the fiscal year the full
amount of the allotment otherwise provided
under this section for the fiscal year.
‘‘(ii) The State provides assurances
satisfactory to the Secretary that any
amount attributable to a carryover from a
previous fiscal year under subsection
(a)(2)(B) shall also be obligated under the
plan by the end of the fiscal year.
‘‘(iii) The State submits to the Sec-
retary on a periodic basis such reports on
numbers of individuals within each supple-
mental allotment population group as the
Secretary may determine necessary to as-
sure the accuracy of the supplemental um-
brella allotments under this subsection.
The Secretary may not require the submis-
sion of such reports more frequently than
quarterly.
‘‘(iv) The State provides assurances
satisfactory to the Secretary that it has in
877
effect such data collection procedures as
may be necessary to provide for the reports
described in clause (iii).
‘‘(B) ESTIMATE.—The amount of any sup-
plemental allotment under this subsection shall
be estimated in advance of the fiscal year in-
volved, based on data required to be reported
under subparagraph (A)(iii). The Secretary is
authorized to adjust such data on a preliminary
basis if the Secretary determines that the esti-
mates do not reasonably reflect the actual ex-
cess number of individuals in the supplemental
allotment population groups for the fiscal year
involved. Section 1512(b)(6) provides for ad-
justment of payments of the supplemental allot-
ment under this subsection based on a final de-
termination using data on actual numbers of in-
dividual in each supplemental allotment popu-
lation group.
‘‘(6) ADJUSTMENT
IN
ALLOTMENT
FOR
SAV-
INGS FROM SLOWER POPULATION GROWTH.—
‘‘(A) IN
GENERAL.—The amount of the
supplemental umbrella allotment to a State
under this subsection for a fiscal year shall be
reduced (but not below zero) by the sum, for
878
each supplemental allotment population group
described in paragraph (2), of the product of
the following:
‘‘(i) LESS-THAN-ANTICIPATED
NUM-
BER OF INDIVIDUALS.—The less-than-an-
ticipated number of individuals (if any, de-
termined under subparagraph (B)) for
State and the fiscal year who are in the
population group.
‘‘(ii) APPLICABLE
PER
BENEFICIARY
AMOUNT.—The applicable per beneficiary
amount (determined under paragraph (4))
for the State and fiscal year for the popu-
lation group.
‘‘(iii) FMAP.—The old Federal medi-
cal assistance percentage (as defined in
section 1512(d)) for the State and fiscal
year.
‘‘(B) LESS-THAN-ANTICIPATED
NUMBER
OF INDIVIDUALS.—In this paragraph, the ‘less-
than-anticipated number of individuals’, for a
State for a fiscal year with respect to a supple-
mental allotment population group, is equal to
the amount (if any) by which—
879
‘‘(i) the anticipated number of such
individuals (as determined under para-
graph (3)(B)) for the State and fiscal year
in such group, exceeds
‘‘(ii) the number of full-year equiva-
lent individuals in the population group for
the State and fiscal year.
‘‘(7) SPECIAL RULE FOR FISCAL YEAR 1997.—
In applying this subsection to fiscal year 1997—
‘‘(A) in determining the excess number of
individuals under paragraph (3)—
‘‘(i) the number of full-year equivalent
individuals shall only be determined based
on the portion of fiscal year 1997 in which
the State plan is in effect under this title,
and
‘‘(ii) the anticipated number of such
individuals (referred to in paragraph
(3)(A)(ii)) shall be the anticipated number
otherwise determined multiplied by the
proportion of fiscal year 1997 in which
such State plan will be in effect; and
‘‘(B) if the State plan is effective before
April 1, 1997, the amount of the supplemental
allotment otherwise determined under this sub-
880
section shall be multiplied by the ratio of the
portion of fiscal year 1997 that occurs on or
after April 1, 1997, to the total portion of such
fiscal year in which the State plan is in effect.
‘‘(h) ALLOTMENT FOR MEDICAL ASSISTANCE FOR
SERVICES PROVIDED IN INDIAN HEALTH SERVICE AND
RELATED FACILITIES.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion for each of fiscal years 1997 through 2002 in
the case of a subsection (h) supplemental allotment
eligible State, the amount of the supplemental allot-
ment under this subsection is the amount provided
under paragraph (2) for the State for that year.
Such amount may only be used for the purpose of
providing medical assistance described in section
1512(f)(3)(A) (relating to services provided by the
Indian Health Service and related facilities).
‘‘(2) SUPPLEMENTAL OUTLAY ALLOTMENT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the amount under this paragraph for
a subsection (h) supplemental allotment eligible
State for a fiscal year is equal to the subsection
(h) supplemental allotment ratio (as defined in
subparagraph (C)) multiplied by the subsection
881
(h) supplemental pool amount (specified in sub-
paragraph (D)) for the fiscal year.
‘‘(B) SUBSECTION (h) SUPPLEMENTAL AL-
LOTMENT ELIGIBLE STATE.—In this subsection,
the term ‘subsection (h) supplemental allotment
eligible State’ means a State that has one or
more 
facilities 
described 
in 
section
1512(f)(3)(A).
‘‘(C) SUBSECTION (h) SUPPLEMENTAL AL-
LOTMENT RATIO.—In this paragraph, the ‘sub-
section (h) supplemental allotment ratio’ for a
State is the ratio of—
‘‘(i) the number of Indians residing in
the State, to
‘‘(ii) the sum of such numbers for all
subsection (h) supplemental allotment eli-
gible States.
‘‘(D) SUBSECTION
(h)
SUPPLEMENTAL
POOL AMOUNT.—In this paragraph, the ‘sub-
section (h) supplemental pool amount’, for—
‘‘(i) fiscal year 1997 is $72,080,969,
‘‘(ii) fiscal year 1998 is $76,246,683,
‘‘(iii) fiscal year 1999 is $80,653,142,
‘‘(iv) fiscal year 2000 is $85,314,260,
882
‘‘(v) fiscal year 2001 is $90,244,754,
and
‘‘(vi) fiscal year 2002 is $95,460,192.
‘‘(E) DETERMINATION OF NUMBER.—The
number of Indians residing in a State under
this paragraph for a fiscal year shall be based
on the most recent available estimate of the
Secretary of the Interior.
‘‘(3) INDIAN DEFINED.—The term ‘Indian’ has
the meaning given such term in section 4 of the In-
dian Self-Determination and Education Assistance
Act (25 U.S.C. 450b(d)).
‘‘SEC. 1512. PAYMENTS TO STATES.
‘‘(a) AMOUNT OF PAYMENT.—From the allotment of
a State under section 1511 for a fiscal year, subject to
the succeeding provisions of this title, the Secretary shall
pay to each State which has a State plan approved under
part C, for each quarter in the fiscal year—
‘‘(1) an amount equal to the applicable Federal
medical assistance percentage (as defined in sub-
section (c)) of the total amount expended during
such quarter as medical assistance under the plan;
plus
‘‘(2) an amount equal to the applicable Federal
medical assistance percentage of the total amount
883
expended during such quarter for medically-related
services (as defined in section 1571(g)); plus
‘‘(3) subject to section 1513(c)—
‘‘(A) an amount equal to 90 percent of the
amounts expended during such quarter for the
design, development, and installation of infor-
mation systems and for providing incentives to
promote the enforcement of medical support or-
ders, plus
‘‘(B) an amount equal to 75 percent of the
amounts expended during such quarter for
medical personnel, administrative support of
medical personnel, operation and maintenance
of information systems, modification of infor-
mation systems, quality assurance activities,
utilization review, medical and peer review,
anti-fraud activities, independent evaluations,
coordination of benefits, and meeting reporting
requirements under this title, plus
‘‘(C) an amount equal to 50 percent of so
much of the remainder of the amounts ex-
pended during such quarter as are expended by
the State in the administration of the State
plan.
‘‘(b) PAYMENT PROCESS.—
885
respect to which adjustment has not already
been made under this subsection (or under sec-
tion 1903(d)).
‘‘(B) TREATMENT
AS
OVERPAYMENTS.—
Expenditures for which payments were made to
the State under subsection (a) shall be treated
as an overpayment to the extent that the State
or local agency administering such plan has
been reimbursed for such expenditures by a
third party pursuant to the provisions of its
plan in compliance with section 1555.
‘‘(C) RECOVERY OF OVERPAYMENTS.—For
purposes of this subsection, when an overpay-
ment is discovered, which was made by a State
to a person or other entity, the State shall have
a period of 60 days in which to recover or at-
tempt to recover such overpayment before ad-
justment is made in the Federal payment to
such State on account of such overpayment.
Except as otherwise provided in subparagraph
(D), the adjustment in the Federal payment
shall be made at the end of the 60 days, wheth-
er or not recovery was made.
‘‘(D) 
NO
ADJUSTMENT
FOR
UNCOLLECTABLES.—In any case where the
886
State is unable to recover a debt which rep-
resents an overpayment (or any portion thereof)
made to a person or other entity on account of
such debt having been discharged in bankruptcy
or otherwise being uncollectable, no adjustment
shall be made in the Federal payment to such
State on account of such overpayment (or por-
tion thereof).
‘‘(3) FEDERAL SHARE OF RECOVERIES.—The
pro rata share to which the United States is equi-
tably entitled, as determined by the Secretary, of the
net amount recovered during any quarter by the
State or any political subdivision thereof with re-
spect to medical assistance furnished under the
State plan shall be considered an overpayment to be
adjusted under this subsection.
‘‘(4) TIMING
OF
OBLIGATION
OF
FUNDS.—
Upon the making of any estimate by the Secretary
under this subsection, any appropriations available
for payments under this section shall be deemed ob-
ligated.
‘‘(5) DISALLOWANCES.—In any case in which
the Secretary estimates that there has been an over-
payment under this section to a State on the basis
of a claim by such State that has been disallowed by
887
the Secretary under section 1116(d) or in the case
described in paragraph (6)(C), and such State dis-
putes such disallowance or an adjustment under
such paragraph, the amount of the Federal payment
in controversy shall, at the option of the State, be
retained by such State or recovered by the Secretary
pending a final determination with respect to such
payment amount. If such final determination is to
the effect that any amount was properly disallowed,
and the State chose to retain payment of the
amount in controversy, the Secretary shall offset,
from any subsequent payments made to such State
under this title, an amount equal to the proper
amount of the disallowance plus interest on such
amount disallowed for the period beginning on the
date such amount was disallowed and ending on the
date of such final determination at a rate (deter-
mined by the Secretary) based on the average of the
bond equivalent of the weekly 90-day treasury bill
auction rates during such period.
‘‘(6) ADJUSTMENTS IN PAYMENTS REFLECTING
OVER- AND UNDER-ESTIMATIONS OF SUPPLEMENTAL
UMBRELLA ALLOTMENT.—
‘‘(A) IN
GENERAL.—Based on data re-
ported under section 1511(g)(5)(A)(iii) and an-
888
nual audits provided for under section 1551(a)
on the actual excess number of individuals in
each population group for a fiscal year, the Sec-
retary shall determine the final amount of the
supplemental umbrella allotment for each State
for the fiscal year and whether, based on such
final amount, the amount of payment made for
the fiscal year was greater, or less, than the
amount that should have been paid if payments
had been made based on such final amount.
‘‘(B) PAYMENT IN CASE OF UNDERESTI-
MATION.—If the Secretary determines under
subparagraph (A) there was an underpayment
to a State, the Secretary shall increase the
amount of the next quarterly payment under
this section to the State by the amount of such
underpayment.
‘‘(C) OFFSETTING OF PAYMENTS IN CASE
OF OVERESTIMATION.—If the Secretary deter-
mines under subparagraph (A) there was an
overpayment to a State, the Secretary shall,
subject to the procedures provided under para-
graph (5), decrease the amount of the payment
for the next quarter (or, at the discretion of the
Secretary, over a period of not more than 4 cal-
889
endar quarters) by the amount of such overpay-
ment. In the case in which a State seeks review
of such a determination in accordance with the
procedures under paragraph (5), the Secretary
shall provide for completion of such review
process within 1 year after the date the State
requests such review.
‘‘(c) APPLICABLE FEDERAL MEDICAL ASSISTANCE
PERCENTAGE DEFINED.—In this section, except as pro-
vided in subsection (f), the term ‘applicable Federal medi-
cal assistance percentage’ means, with respect to one of
the 50 States or the District of Columbia, at the State’s
or District’s option—
‘‘(1) the old Federal medical assistance percent-
age (as determined in subsection (d));
‘‘(2) the lesser of—
‘‘(A) new Federal medical assistance per-
centage (as determined under subsection (e)) or
‘‘(B) the old Federal medical assistance
percentage plus 10 percentage points; or
‘‘(3) 60 percent.
‘‘(d) OLD FEDERAL MEDICAL ASSISTANCE PER-
CENTAGE.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2) and subsection (f), the term ‘old Federal
890
medical assistance percentage’ for any State is 100
percent less the State percentage; and the State per-
centage is that percentage which bears the same
ratio to 45 percent as the square of the per capita
income of such State bears to the square of the per
capita income of the continental United States (in-
cluding Alaska) and Hawaii.
‘‘(2) LIMITATION ON RANGE.—In no case shall
the old Federal medical assistance percentage be less
than 50 percent or more than 83 percent.
‘‘(3) PROMULGATION.—The old Federal medical
assistance percentage for any State shall be deter-
mined and promulgated in accordance with the pro-
visions of section 1101(a)(8)(B).
‘‘(e) NEW FEDERAL MEDICAL ASSISTANCE PER-
CENTAGE DEFINED.—
‘‘(1) IN GENERAL.—
‘‘(A) TERM DEFINED.—Except as provided
in paragraph (3) and subsection (f), the term
‘new Federal medical assistance percentage’
means, for each of the 50 States and the Dis-
trict of Columbia, 100 percent reduced by the
product 0.39 and the ratio of—
891
‘‘(i)(I) for each of the 50 States, the
total taxable resources (TTR) ratio of the
State specified in subparagraph (B), or
‘‘(II) for the District of Columbia, the
per capita income ratio specified in sub-
paragraph (C),
to—
‘‘(ii) the aggregate expenditure need
ratio of the State or District, as described
in subparagraph (D).
‘‘(B) TOTAL
TAXABLE
RESOURCES
(TTR)
RATIO.—For 
purposes 
of 
subparagraph
(A)(i)(I), the total taxable resources (TTR)
ratio for each of the 50 States is—
‘‘(i) an amount equal to the most re-
cent 3-year average of the total taxable re-
sources (TTR) of the State, as determined
by the Secretary of the Treasury, divided
by
‘‘(ii) an amount equal to the sum of
the 3-year averages determined under
clause (i) for each of the 50 States.
‘‘(C) PER
CAPITA
INCOME
RATIO.—For
purposes of subparagraph (A)(i)(II), the per
892
capita income ratio of the District of Columbia
is—
‘‘(i) an amount equal to the most re-
cent 3-year average of the total personal
income of the District of Columbia, as de-
termined in accordance with the provisions
of section 1101(a)(8)(B), divided by
‘‘(ii) an amount equal to the total per-
sonal income of the continental United
States (including Alaska) and Hawaii, as
determined under section 1101(a)(8)(B).
‘‘(D) AGGREGATE
EXPENDITURE
NEED
RATIO.—For purposes of subparagraph (A),
with respect to each of the 50 States and the
District of Columbia for a fiscal year, the ag-
gregate expenditure need ratio is—
‘‘(i) the State aggregate expenditure
need (as defined in section 1511(d)) for
the State for the fiscal year, divided by
‘‘(ii) the sum of such State aggregate
expenditure needs for the 50 States and
the District of Columbia for the fiscal year.
‘‘(2) LIMITATION ON RANGE.—Except as pro-
vided in subsection (f), the new Federal medical as-
893
sistance percentage shall in no case be less than 40
percent or greater than 83 percent.
‘‘(3) PROMULGATION.—The new Federal medi-
cal assistance percentage for any State shall be pro-
mulgated in a timely manner consistent with the
promulgation of the old Federal medical assistance
percentage under section 1101(a)(8)(B).
‘‘(f) SPECIAL RULES.—For purposes of this title—
‘‘(1) COMMONWEALTHS AND TERRITORIES.—In
the case of Puerto Rico, the Virgin Islands, Guam,
the Northern Mariana Islands, and American
Samoa, the old and new Federal medical assistance
percentages are 50 percent.
‘‘(2) ALASKA.—In the case of Alaska, the old
Federal medical assistance percentage is that per-
centage which bears the same ratio to 45 percent as
the square of the adjusted per capita income of such
State bears to the square of the per capita income
of the continental United States. For purposes of
the preceding sentence, the adjusted per capita in-
come for Alaska shall be determined by dividing the
State’s most recent 3-year average per capita by the
health care cost index for such State (as determined
under section 1511(d)(3)).
894
‘‘(3) INDIAN HEALTH SERVICE AND RELATED
FACILITIES.—The old and new Federal medical as-
sistance percentages shall be 100 percent with re-
spect to the amounts expended as medical assistance
for services provided by—
‘‘(A) an Indian Health Service facility;
‘‘(B) an Indian health program operated
by an Indian tribe or tribal organization (as de-
fined in section 4 of the Indian Health Care
Improvement Act) pursuant to a contract,
grant, cooperative agreement, or compact with
the Indian Health Service under the Indian
Self-Determination Act; or
‘‘(C) an urban Indian health program op-
erated by an urban Indian organization pursu-
ant to a grant or contract with the Indian
Health Service under title V of the Indian
Health Care Improvement Act.
‘‘(4) NO STATE MATCHING REQUIRED FOR CER-
TAIN EXPENDITURES.—In applying subsection (a)(1)
with respect to medical assistance provided to unlaw-
ful aliens pursuant to the exception specified in sec-
tion 1513(f)(2), pay ment shall be made for the
amount of such assistance without regard to any
need for a State match.
895
‘‘(5) SPECIAL TRANSITIONAL RULE.—
‘‘(A) IN GENERAL.—Notwithstanding sub-
sections (a) and (f), in order to receive the full
State outlay allotment described in section
1511(c)(3)(C)(i), a State described in subpara-
graph (C) shall expend State funds in a fiscal
year (before fiscal year 2000) under a State
plan under this title in an amount not less than
the adjusted base year State expenditures, plus
the applicable percentage of the difference be-
tween such expenditures and the amount nec-
essary to qualify for the full State outlay allot-
ment so described in such fiscal year as deter-
mined under this section without regard to this
paragraph.
‘‘(B) REDUCTION IN ALLOTMENT IF EX-
PENDITURE NOT MET.—In the event a State
described in subparagraph (C) fails to expend
State funds in an amount required by subpara-
graph (A) for a fiscal year, the outlay allotment
described in section 1511(c)(3)(C)(i) for such
year for such State shall be reduced by an
amount which bears the same ratio to such out-
lay allotment as the State funds expended in
896
such fiscal year bears to the amount required
by subparagraph (A).
‘‘(C) ADJUSTED
BASE
YEAR
STATE
EX-
PENDITURES.—For purposes of this paragraph,
the term ‘adjusted base year State expendi-
tures’ means, for Louisiana, $355,000,000.
‘‘(D) 
APPLICABLE
PERCENTAGE.—For
purposes of this paragraph, the applicable per-
centage for a fiscal year is specified in the fol-
lowing table:
Applicable
‘‘Fiscal year:
Percentage:
1996 .........................................................................................
1997 .........................................................................................
1998 .........................................................................................
1999 .........................................................................................
80.
‘‘(6) TREATMENT OF EXPENDITURES ATTRIB-
UTABLE TO UMBRELLA FUND.—The ‘applicable Fed-
eral medical assistance percentage’ with respect to
amounts attributable to supplemental amounts de-
scribed in section 1511(g), is the old Federal medi-
cal assistance percentage.
‘‘(g) USE OF LOCAL FUNDS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), a
State may use local funds to meet the non-Federal
share of the expenditures under the State plan with
respect to which payments may be made under this
section.
897
‘‘(2) LIMITATION.—For any fiscal year local
funds may not exceed 40 percent of the total of the
non-Federal share of such expenditures for the fiscal
year.
‘‘(h) PERMITTING INTER-GOVERNMENTAL FUNDS
TRANSFERS.—
‘‘(1) IN GENERAL.—Public funds, as defined in
paragraph (2), may be considered as the State’s
share in determining State financial participation
under this title.
‘‘(2) PUBLIC FUNDS DEFINED.—For purposes
of this subsection, the term ’public funds’ means
funds—
‘‘(A) that are—
‘‘(i) appropriated directly to the State
or to the local agency administering the
State plan under this title, or transferred
from other public agencies (including In-
dian tribes) to the State or local agency
and under its administrative control, or
‘‘(ii) certified by the contributing pub-
lic agency as representing expenditures eli-
gible for Federal financial participation
under this title; and
‘‘(B) that—
898
‘‘(i) are not Federal funds, or
‘‘(ii) are Federal funds authorized by
Federal law to be used to match other
Federal funds.
‘‘SEC. 1513. LIMITATION ON USE OF FUNDS; DISALLOW-
ANCE.
‘‘(a) IN GENERAL.—Funds provided to a State under
this title shall only be used to carry out the purposes of
this title.
‘‘(b) DISALLOWANCES
FOR
EXCLUDED
PROVID-
ERS.—
‘‘(1) IN GENERAL.—Payment shall not be made
to a State under this part for expenditures for items
and services furnished—
‘‘(A) by a provider who was excluded from
participation under title V, XVIII, or – or
under this title pursuant to section 1128,
1128A, 1156, or 1842(j)(2), or
‘‘(B) under the medical direction or on the
prescription of a physician who was so excluded,
if the provider of the services knew or had rea-
son to know of the exclusion.
‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—
Subparagraph (A) shall not apply to emergency
899
items or services, not including hospital emergency
room services.
‘‘(c) LIMITATIONS ON PAYMENTS FOR MEDICALLY-
RELATED SERVICES AND ADMINISTRATIVE EXPENSES.—
‘‘(1) IN GENERAL.—No Federal financial assist-
ance is available for expenditures under the State
plan for—
‘‘(A) medically-related services for a quar-
ter to the extent such expenditures exceed 5
percent of the total expenditures under the plan
for the quarter, or
‘‘(B) total administrative expenses (other
than expenses described in paragraph (2) dur-
ing the first 8 quarters in which the plan is in
effect under this title) for quarters in a fiscal
year to the extent such expenditures exceed the
sum of $20,000,000 plus 10 percent of the total
expenditures under the plan for the year.
‘‘(2) ADMINISTRATIVE EXPENSES NOT SUBJECT
TO
LIMITATION.—The administrative expenses re-
ferred to in this paragraph are expenditures under
the State plan for the following activities:
‘‘(A) Quality assurance.
‘‘(B) The development and operation of the
certification program for nursing facilities and
900
intermediate care facilities for the mentally re-
tarded under section 1557.
‘‘(C) Utilization review activities, including
medical activities and activities of peer review
organizations.
‘‘(D) Inspection and oversight of providers
and capitated health care organizations.
‘‘(E) Anti-fraud activities.
‘‘(F) Independent evaluations.
‘‘(G) Activities required to meet reporting
requirements under this title.
‘‘(d) TREATMENT OF THIRD PARTY LIABILITY.—No
payment shall be made to a State under this part for ex-
penditures for medical assistance provided for an individ-
ual under its State plan to the extent that a private in-
surer (as defined by the Secretary by regulation and in-
cluding a group health plan (as defined in section 607(1)
of the Employee Retirement Income Security Act of
1974), a service benefit plan, and a health maintenance
organization) would have been obligated to provide such
assistance but for a provision of its insurance contract
which has the effect of limiting or excluding such obliga-
tion because the individual is eligible for or is provided
medical assistance under the plan.
901
‘‘(e) SECONDARY PAYER PROVISIONS.—Except as
otherwise provided by law, no payment shall be made to
a State under this part for expenditures for medical assist-
ance provided for an individual under its State plan to
the extent that payment has been made or can reasonably
be expected to be made promptly (as determined in accord-
ance with regulations) under any other federally operated
or financed health care insurance program, other than an
insurance program operated or financed by the Indian
Health Service, as identified by the Secretary. For pur-
poses of this subsection, rules similar to the rules for over-
payments under section 1512(b) shall apply.
‘‘(f) LIMITATION ON PAYMENTS FOR SERVICES TO
NONLAWFUL ALIENS.—
‘‘(1) IN GENERAL.—Notwithstanding the pre-
ceding provisions of this section, except as provided
in paragraph (2), no payment may be made to a
State under this part for medical assistance fur-
nished to an alien who is not lawfully admitted for
permanent residence or otherwise permanently resid-
ing in the United States under color of law.
‘‘(2) EXCEPTION.—Payment may be made
under this section for care and services that are fur-
nished to an alien described in paragraph (1) only
if—
902
‘‘(A) such care and services are necessary
for the treatment of an emergency medical con-
dition of the alien (or, at the option of the
State, for prenatal care),
‘‘(B) such alien otherwise meets the eligi-
bility requirements for medical assistance under
the State plan (other than a requirement of the
receipt of aid or assistance under title IV, sup-
plemental security income benefits under title
XVI, or a State supplementary payment), and
‘‘(C) such care and services are not related
to an organ transplant procedure.
‘‘(3) EMERGENCY
MEDICAL
CONDITION
DE-
FINED.—For purposes of this subsection, the term
‘emergency medical condition’ means a medical con-
dition (including emergency labor and delivery)
manifesting itself by acute symptoms of sufficient
severity (including severe pain) such that the ab-
sence of immediate medical attention could reason-
ably be expected to result in—
‘‘(A) placing the patient’s health in serious
jeopardy,
‘‘(B) serious impairment to bodily func-
tions, or
903
‘‘(C) serious dysfunction of any bodily
organ or part.
‘‘(g) LIMITATION ON PAYMENT FOR CERTAIN OUT-
PATIENT PRESCRIPTION DRUGS.—
‘‘(1) IN GENERAL.—No payment may be made
to a State under this part for medical assistance for
covered outpatient drugs (as defined in section
1575(i)(2)) of a manufacturer provided under the
State plan unless the manufacturer (as defined in
section 1575(i)(4)) of the drug—
‘‘(A) has entered into a master rebate
agreement with the Secretary under section
1575,
‘‘(B) is otherwise complying with the provi-
sions of such section,
‘‘(C) is complying with the provisions of
section 8126 of title 38, United States Code, in-
cluding the requirement of entering into a mas-
ter agreement with the Secretary of Veterans
Affairs under such section, and
‘‘(D) subject to paragraph (4), is comply-
ing with the provisions of section 340B of the
Public Health Service Act, including the re-
quirement of entering into an agreement with
the Secretary under such section.
904
‘‘(2) CONSTRUCTION.—Nothing in this sub-
section shall be construed as requiring a State to
participate in the master rebate agreement under
section 1575.
‘‘(3) 
EFFECT
OF
SUBSEQUENT
AMEND-
MENTS.—For purposes of subparagraphs (C) and
(D), in determining whether a manufacturer is in
compliance with the requirements of section 8126 of
title 38, United States Code, or section 340B of the
Public Health Service Act—
‘‘(A) the Secretary shall not take into ac-
count any amendments to such sections that
are enacted after the enactment of title VI of
the Veterans Health Care Act of 1992, and
‘‘(B) a manufacturer is deemed to meet
such requirements if the manufacturer estab-
lishes to the satisfaction of the Secretary that
the manufacturer would comply (and has of-
fered to comply) with the provisions of such
sections (as in effect immediately after the en-
actment of the Veterans Health Care Act of
1992) and would have entered into an agree-
ment under such section (as such section was in
effect at such time), but for a legislative change
905
in such section after the date of the enactment
of the Veterans Health Care Act of 1992.
‘‘(4) EFFECT OF ESTABLISHMENT OF ALTER-
NATIVE MECHANISM UNDER PUBLIC HEALTH SERV-
ICE
ACT.—If the Secretary does not establish a
mechanism to ensure against duplicate discounts or
rebates under section 340B(a)(5)(A) of the Public
Health Service Act within 12 months of the date of
the enactment of such section, the following require-
ments shall apply:
‘‘(A) Each covered entity under such sec-
tion shall inform the State when it is seeking
reimbursement from the State plan for medical
assistance with respect to a unit of any covered
outpatient drug which is subject to an agree-
ment under section 340B(a) of such Act.
‘‘(B) Each such State shall provide a
means by which such an entity shall indicate on
any drug reimbursement claims form (or for-
mat, where electronic claims management is
used) that a unit of the drug that is the subject
of the form is subject to an agreement under
section 340B of such Act, and not submit to
any manufacturer a claim for a rebate payment
with respect to such a drug.
906
‘‘(h) LIMITATION ON PAYMENT FOR ABORTIONS.—
‘‘(1) IN GENERAL.—Payment shall not be made
to a State under this part for any amount expended
under the State plan to pay for any abortion or to
assist in the purchase, in whole or in part, of health
benefit coverage that includes coverage of abortion.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to an abortion—
‘‘(A) if the pregnancy is the result of an
act of rape or incest, or
‘‘(B) in the case where a woman suffers
from a physical disorder, illness, or injury that
would, as certified by a physician, place the
woman in danger of death unless an abortion is
performed.
‘‘(i) LIMITATION
ON
PAYMENT
FOR
ASSISTING
DEATHS.—Payment shall not be made to a State under
this part for amounts expended under the State plan to
pay for, or to assist in the purchase, in whole or in part,
of health benefit coverage that includes payment for any
drug, biological product, or service which was furnished
for the purpose of causing, or assisting in causing, the
death, suicide, euthanasia, or mercy killing of a person.
907
‘‘PART C—ESTABLISHMENT AND AMENDMENT OF
STATE PLANS
‘‘SEC. 1521. DESCRIPTION OF STRATEGIC OBJECTIVES AND
PERFORMANCE GOALS.
‘‘(a) DESCRIPTION.—A State plan shall include a de-
scription of the strategic objectives and performance goals
the State has established for providing health care services
to low-income populations under this title, including a gen-
eral description of the manner in which the plan is de-
signed to meet these objectives and goals.
‘‘(b) 
CERTAIN
OBJECTIVES
AND
GOALS
RE-
QUIRED.—A State plan shall include strategic objectives
and performance goals relating to rates of childhood im-
munizations, reductions in infant mortality and morbidity,
and access to services for children with special health care
needs (as defined by the State).
‘‘(c) CONSIDERATIONS.—In specifying these objec-
tives and goals the State may consider factors such as the
following:
‘‘(1) The State’s priorities with respect to pro-
viding assistance to low-income populations.
‘‘(2) The State’s priorities with respect to the
general public health and the health status of indi-
viduals eligible for assistance under the State plan.
908
‘‘(3) The State’s financial resources, the par-
ticular economic conditions in the State, and relative
adequacy of the health care infrastructure in dif-
ferent regions of the State.
‘‘(d) PERFORMANCE
MEASURES.—To the extent
practicable—
‘‘(1) one or more performance goals shall be es-
tablished by the State for each strategic objective
identified in the State plan; and
‘‘(2) the State plan shall describe, how program
performance will be—
‘‘(A) measured through objective, inde-
pendently verifiable means, and
‘‘(B) compared against performance goals,
in order to determine the State’s performance
under this title.
‘‘(e) PERIOD COVERED.—
‘‘(1) STRATEGIC
OBJECTIVES.—The strategic
objectives shall cover a period of not less than 5
years and shall be updated and revised at least every
3 years.
‘‘(2) PERFORMANCE GOALS.—The performance
goals shall be established for dates that are not more
than 3 years apart.
909
‘‘SEC. 1522. ANNUAL REPORTS.
‘‘(a) IN GENERAL.—In the case of a State with a
State plan that is in effect for part or all of a fiscal year,
no later than March 31 following such fiscal year the State
shall prepare and submit to the Secretary and the Con-
gress a report on program activities and performance
under this title for such fiscal year.
‘‘(b) CONTENTS.—Each annual report under this sec-
tion for a fiscal year shall include the following:
‘‘(1) EXPENDITURE
AND
BENEFICIARY
SUM-
MARY.—
‘‘(A) INITIAL SUMMARY.—For the report
for fiscal year 1997, a summary of all expendi-
tures under the State plan during the fiscal
year as follows:
‘‘(i) Aggregate medical assistance ex-
penditures, disaggregated to the extent re-
quired to determine compliance with the
set-aside requirement of section 1502(c)
and to determine the program need of the
State under section 1511(d)(2).
‘‘(ii) For each general category of eli-
gible individuals (specified in subsection
(c)(1)), aggregate medical assistance ex-
penditures and the total and average num-
910
ber of eligible individuals under the State
plan.
‘‘(iii) By each general category of eli-
gible individuals, total expenditures for
each of the categories of health care items
and services (specified in subsection (c)(2))
which are covered under the State plan
and provided on a fee-for-service basis.
‘‘(iv) By each general category of eli-
gible individuals, total expenditures for
payments to capitated health care organi-
zations (as defined in section 1504(c)(1)).
‘‘(v) Total administrative expendi-
tures.
‘‘(B) SUBSEQUENT SUMMARIES.—For re-
ports for each succeeding fiscal year, a sum-
mary of—
‘‘(i) all expenditures under the State
plan, and
‘‘(ii) the total and average number of
eligible individuals under the State plan for
each general category of eligible individ-
uals.
‘‘(2) UTILIZATION SUMMARY.—
911
‘‘(A) INITIAL SUMMARY.—For the report
for fiscal year 1997, summary statistics on the
utilization of health care services under the
State plan during the year as follows:
‘‘(i) For each general category of eli-
gible individuals and for each of the cat-
egories of health care items and services
which are covered under the State plan
and provided on a fee-for-service basis, the
number and percentage of persons who re-
ceived such a type of service or item dur-
ing the period covered by the report.
‘‘(ii) Summary of health care utiliza-
tion data reported to the State by
capitated health care organizations.
‘‘(B) SUBSEQUENT SUMMARIES.—For re-
ports for each succeeding fiscal year, summary
statistics on the utilization of health care serv-
ices under the State plan.
‘‘(3) 
ACHIEVEMENT
OF
PERFORMANCE
GOALS.—With respect to each performance goal es-
tablished under section 1521 and applicable to the
year involved—
‘‘(A) a brief description of the goal;
912
‘‘(B) a description of the methods to be
used to measure the attainment of such goal;
‘‘(C) data on the actual performance with
respect to the goal;
‘‘(D) a review of the extent to which the
goal was achieved, based on such data; and
‘‘(E) if a performance goal has not been
met—
‘‘(i) why the goal was not met, and
‘‘(ii) actions to be taken in response
to such performance, including adjust-
ments in performance goals or program ac-
tivities for subsequent years.
‘‘(4) PROGRAM EVALUATIONS.—A summary of
the findings of evaluations under section 1523 com-
pleted during the fiscal year covered by the report.
‘‘(5) FRAUD AND ABUSE AND QUALITY CON-
TROL
ACTIVITIES.—A general description of the
State’s activities under part D to detect and deter
fraud and abuse and to assure quality of services
provided under the program.
‘‘(6) PLAN ADMINISTRATION.—
‘‘(A) A description of the administrative
roles and responsibilities of entities in the State
responsible for administration of this title.
913
‘‘(B) Organizational charts for each entity
in the State primarily responsible for activities
under this title.
‘‘(C) A brief description of each interstate
compact (if any) the State has entered into
with other States with respect to activities
under this title.
‘‘(D) General citations to the State stat-
utes and administrative rules governing the
State’s activities under this title.
‘‘(c) DESCRIPTION OF CATEGORIES.—In this section:
‘‘(1) GENERAL CATEGORIES OF ELIGIBLE INDI-
VIDUALS.—Each of the following is a general cat-
egory of eligible individuals:
‘‘(A) Pregnant women.
‘‘(B) Children.
‘‘(C) Blind or disabled adults who are not
elderly individuals.
‘‘(D) Elderly individuals.
‘‘(E) Other adults.
‘‘(2) CATEGORIES OF HEALTH CARE ITEMS AND
SERVICES.—The health care items and services de-
scribed in each paragraph of section 1571(a) shall
be considered a separate category of health care
items and services.
914
‘‘SEC. 1523. PERIODIC, INDEPENDENT EVALUATIONS.
‘‘(a) IN GENERAL.—During fiscal year 1999 and
every third fiscal year thereafter, each State shall provide
for an evaluation of the operation of its State plan under
this title.
‘‘(b) INDEPENDENT.—Each such evaluation with re-
spect to an activity under the State plan shall be con-
ducted by an entity that is neither responsible under State
law for the submission of the State plan (or part thereof)
nor responsible for administering (or supervising the ad-
ministration of) the activity. If consistent with the pre-
vious sentence, such an entity may be a college or univer-
sity, a State agency, a legislative branch agency in a State,
or an independent contractor.
‘‘(c) RESEARCH
DESIGN.—Each such evaluation
shall be conducted in accordance with a research design
that is based on generally accepted models of survey de-
sign and sampling and statistical analysis.
‘‘SEC. 1524. DESCRIPTION OF PROCESS FOR STATE PLAN
DEVELOPMENT.
‘‘Each State plan shall include a description of the
process under which the plan shall be developed and imple-
mented in the State (consistent with section 1525).
915
‘‘SEC. 1525. CONSULTATION IN STATE PLAN DEVELOPMENT.
‘‘(a) PUBLIC NOTICE PROCESS.—Before submitting
a State plan or a plan amendment described in subsection
(c) to the Secretary under part C, a State shall provide—
‘‘(1) public notice respecting the submittal of
the proposed plan or amendment, including a gen-
eral description of the plan or amendment,
‘‘(2) a means for the public to inspect or obtain
a copy (at reasonable charge) of the proposed plan
or amendment,
‘‘(3) an opportunity for submittal and consider-
ation of public comments on the proposed plan or
amendment, and
‘‘(4) for consultation with one or more advisory
committees established and maintained by the State.
The previous sentence shall not apply to a revision of a
State plan (or revision of an amendment to a plan) made
by a State under section 1529(c)(1) or to a plan amend-
ment withdrawal described in section 1529(c)(4).
‘‘(b) CONTENTS OF NOTICE.—A notice under sub-
section (a)(1) for a proposed plan or amendment shall in-
clude a description of—
‘‘(1) the general purpose of the proposed plan
or amendment (including applicable effective dates),
‘‘(2) where the public may inspect the proposed
plan or amendment,
916
‘‘(3) how the public may obtain a copy of the
proposed plan or amendment and the applicable
charge (if any) for the copy, and
‘‘(4) how the public may submit comments on
the proposed plan or amendment, including any
deadlines applicable to consideration of such com-
ments.
‘‘(c) AMENDMENTS DESCRIBED.—An amendment to
a State plan described in this subsection is an amendment
which makes a material and substantial change in eligi-
bility under the State plan or the benefits provided under
the plan.
‘‘(d) PUBLICATION.—Notices under this section may
be published (as selected by the State) in one or more daily
newspapers of general circulation in the State or in any
publication used by the State to publish State statutes or
rules.
‘‘(e) COMPARABLE PROCESS.—A separate notice, or
notices, shall not be required under this section for a State
if notice of the State plan or an amendment to the plan
will be provided under a process specified in State law that
is substantially equivalent to the notice process specified
in this section.
917
‘‘SEC. 1526. SUBMITTAL AND APPROVAL OF STATE PLANS.
‘‘(a) SUBMITTAL.—As a condition of receiving fund-
ing under part B, each State shall submit to the Secretary
a State plan that meets the applicable requirements of this
title.
‘‘(b) APPROVAL.—Except as the Secretary may pro-
vide under section 1529 (including subsection (b) relating
to noncompliance with required guarantees), a State plan
submitted under subsection (a)—
‘‘(1) shall be approved for purposes of this title,
and
‘‘(2) shall be effective beginning on a date that
is specified in the plan, but in no case earlier than
60 days after the date the plan is submitted.
‘‘(c) CONSTRUCTION.—Nothing in this section shall
be construed as prohibiting a State from submitting a
State plan that includes the coverage and benefits (includ-
ing those provided under a waiver granted under section
1115) of its State plan under title XIX (as in effect as
of the date of the enactment of the Medicaid Restructur-
ing Act of 1996), so long as such plan complies with the
applicable requirements of this title, including the guaran-
tees under section 1501, and remains subject to the fund-
ing provisions of section 1511.
918
‘‘SEC. 1527. SUBMITTAL AND APPROVAL OF PLAN AMEND-
MENTS.
‘‘(a) SUBMITTAL OF AMENDMENTS.—A State may
amend, in whole or in part, its State plan at any time
through transmittal of a plan amendment under this sec-
tion.
‘‘(b) APPROVAL.—Except as the Secretary may pro-
vide under section 1529 (including subsection (b) relating
to noncompliance with required guarantees), an amend-
ment to a State plan submitted under subsection (a)—
‘‘(1) shall be approved for purposes of this title,
and
‘‘(2) shall be effective as provided in subsection
(c).
‘‘(c) EFFECTIVE DATES FOR AMENDMENTS.—
‘‘(1) IN GENERAL.—Subject to the succeeding
provisions of this subsection, an amendment to a
State plan shall take effect on one or more effective
dates specified in the amendment.
‘‘(2) AMENDMENTS RELATING TO ELIGIBILITY
OR
BENEFITS.—Except as provided in paragraph
(4)—
‘‘(A) NOTICE
REQUIREMENT.—Any plan
amendment that eliminates or restricts eligi-
bility or benefits under the plan may not take
effect unless the State certifies that it has pro-
919
vided prior or contemporaneous public notice of
the change, in a form and manner provided
under applicable State law.
‘‘(B) TIMELY
TRANSMITTAL.—Any plan
amendment that eliminates or restricts eligi-
bility or benefits under the plan shall not be ef-
fective for longer than a 60-day period unless
the amendment has been transmitted to the
Secretary before the end of such period.
‘‘(3) OTHER AMENDMENTS.—Subject to para-
graph (4), any plan amendment that is not described
in paragraph (2) becomes effective in a State fiscal
year may not remain in effect after the end of such
fiscal year (or, if later, the end of the 90-day period
on which it becomes effective) unless the amendment
has been transmitted to the Secretary.
‘‘(4) EXCEPTION.—The requirements of para-
graphs (2) and (3) shall not apply to a plan amend-
ment that is submitted on a timely basis pursuant
to a court order or an order of the Secretary.
‘‘SEC. 1528. PROCESS FOR STATE WITHDRAWAL FROM PRO-
GRAM.
‘‘(a) IN GENERAL.—A State may rescind its State
plan and discontinue participation in the program under
this title at any time after providing—
920
‘‘(1) the public with 90 days prior notice in a
publication in one or more daily newspapers of gen-
eral circulation in the State or in any publication
used by the State to publish State statutes or rules,
and
‘‘(2) the Secretary with 90 days prior written
notice.
‘‘(b) EFFECTIVE DATE.—Such discontinuation shall
not apply to payments under part B for expenditures
made for items and services furnished under the State
plan before the effective date of the discontinuation.
‘‘(c) PRORATION OF ALLOTMENTS.—In the case of
any withdrawal under this section other than at the end
of a Federal fiscal year, notwithstanding any provision of
section 1511 to the contrary, the Secretary shall provide
for such appropriate proration of the application of allot-
ments under section 1511 as is appropriate.
‘‘SEC. 1529. SANCTIONS FOR NONCOMPLIANCE.
‘‘(a) PROMPT REVIEW OF PLAN SUBMITTALS.—The
Secretary shall promptly review State plans and plan
amendments submitted under this part to determine if
they substantially comply with the requirements of this
title.
‘‘(b) DETERMINATIONS OF NONCOMPLIANCE WITH
CERTAIN GUARANTEES.—
921
‘‘(1) AT TIME OF PLAN OR AMENDMENT SUB-
MITTAL.—If the Secretary determines that a State
plan or plan amendment submitted under this part
violates the guarantees of coverage and benefits
under subsections (a) and (b) of section 1501, the
Secretary shall notify the State in writing of such
determination and shall issue an order specifying
that the plan or amendment, insofar as it is in viola-
tion with such requirement, shall not be effective,
except as provided in subsection (d), as of the date
specified in the order.
‘‘(2) VIOLATIONS
IN
ADMINISTRATION
OF
PLAN.—If the Secretary determines, after reasonable
notice and opportunity for a hearing for the State,
that in the administration of a State plan there is
a violation of guarantee of coverage and benefits
under subsection (a) or (b) of section 1501, the Sec-
retary shall provide the State with written notice of
the determination and with an order to remedy such
violation. Such an order shall become effective pro-
spectively, as specified in the order, after the date of
receipt of such written notice. Such an order may
include the withholding of funds, consistent with
subsection (g), for parts of the State plan affected
922
by such violation, until the Secretary is satisfied that
the violation has been corrected.
‘‘(3) CONSULTATION
WITH
STATE.—Before
making a determination adverse to a State under
this section, the Secretary shall—
‘‘(A) reasonably consult with the State in-
volved,
‘‘(B) offer the State a reasonable oppor-
tunity to clarify the submission and submit fur-
ther information to substantiate compliance
with the requirements of subsections (a) and
(b) of section 1501, and
‘‘(C) reasonably consider any such clari-
fications and information submitted.
‘‘(4) JUSTIFICATION OF ANY INCONSISTENCIES
IN DETERMINATIONS.—If the Secretary makes a de-
termination under this section that is, in whole or in
part, inconsistent with any previous determination
issued by the Secretary under this title, the Sec-
retary shall include in the determination a detailed
explanation and justification for any such difference.
‘‘(c) DETERMINATIONS
OF OTHER SUBSTANTIAL
NONCOMPLIANCE.—
‘‘(1) AT TIME OF PLAN OR AMENDMENT SUB-
MITTAL.—
923
‘‘(A) IN GENERAL.—If the Secretary, dur-
ing the 30-day period beginning on the date of
submittal of a State plan or plan amendment—
‘‘(i) determines that the plan or
amendment substantially violates (within
the meaning of paragraph (5)) a require-
ment of this title, and
‘‘(ii) provides written notice of such
determination to the State,
the Secretary shall issue an order specifying
that the plan or amendment, insofar as it is in
substantial violation of such a requirement,
shall not be effective, except as provided in sub-
section (d), beginning at the end of a period of
not less than 30 days (or 120 days in the case
of the initial submission of the State plan) spec-
ified in the order beginning on the date of the
notice of the determination.
‘‘(B) EXTENSION OF TIME PERIODS.—The
time periods specified in subparagraph (A) may
be extended by written agreement of the Sec-
retary and the State involved.
‘‘(2) VIOLATIONS
IN
ADMINISTRATION
OF
PLAN.—
924
‘‘(A) IN GENERAL.—If the Secretary deter-
mines, after reasonable notice and opportunity
for a hearing for the State, that in the adminis-
tration of a State plan there is a substantial
violation of a requirement of this title, the Sec-
retary shall provide the State with written no-
tice of the determination and with an order to
remedy such violation. Such an order shall be-
come effective prospectively, as specified in the
order, after the date of receipt of such written
notice. Such an order may include the withhold-
ing of funds, consistent with subsection (g), for
parts of the State plan affected by such viola-
tion, until the Secretary is satisfied that the
violation has been corrected.
‘‘(B) EFFECTIVENESS.—If the Secretary
issues an order under paragraph (1), the order
shall become effective, except as provided in
subsection (d), beginning at the end of a period
(of not less than 30 days) specified in the order
beginning on the date of the notice of the deter-
mination to the State.
‘‘(C) TIMELINESS
OF
DETERMINATIONS
RELATING
TO
REPORT-BASED
COMPLIANCE.—
The Secretary shall make determinations under
925
this paragraph respecting violations relating to
information contained in an annual report
under section 1522, an independent evaluation
under section 1523, or an audit report under
section 1551 not later than 30 days after the
date of transmittal of the report or evaluation
to the Secretary.
‘‘(3) CONSULTATION
WITH
STATE.—Before
making a determination adverse to a State under
this section, the Secretary shall (within any time pe-
riods provided under this section)—
‘‘(A) reasonably consult with the State in-
volved,
‘‘(B) offer the State a reasonable oppor-
tunity to clarify the submission and submit fur-
ther information to substantiate compliance
with the requirements of this title, and
‘‘(C) reasonably consider any such clari-
fications and information submitted.
‘‘(4) JUSTIFICATION OF ANY INCONSISTENCIES
IN DETERMINATIONS.—If the Secretary makes a de-
termination under this section that is, in whole or in
part, inconsistent with any previous determination
issued by the Secretary under this title, the Sec-
926
retary shall include in the determination a detailed
explanation and justification for any such difference.
‘‘(5) SUBSTANTIAL VIOLATION DEFINED.—For
purposes of this title, a State plan (or amendment
to such a plan) or the administration of the State
plan is considered to ‘substantially violate’ a require-
ment of this title if a provision of the plan or
amendment (or an omission from the plan or amend-
ment) or the administration of the plan—
‘‘(A) is material and substantial in nature
and effect, and
‘‘(B) is inconsistent with an express re-
quirement of this title.
A failure to meet a strategic objective or perform-
ance goal (as described in section 1521) shall not be
considered to substantially violate a requirement of
this title.
‘‘(6) RELATION
TO
OTHER
PROVISION.—This
subsection shall not apply to violation of a require-
ment of subsection (a) or (b) of section 1501.
‘‘(d) STATE RESPONSE TO ORDERS.—
‘‘(1) STATE RESPONSE BY REVISING PLAN.—
‘‘(A) IN GENERAL.—Insofar as an order
under subsection (b)(1) or (c)(1) relates to a
violation by a State plan or plan amendment, a
927
State may respond (before the date the order
becomes effective) to such an order by submit-
ting a written revision of the State plan or plan
amendment to comply with the requirements of
this title.
‘‘(B) REVIEW OF REVISION.—In the case
of submission of such a revision, the Secretary
shall promptly review the submission and shall,
in the case of an order under subsection (c)(1),
withhold any action on the order during the pe-
riod of such review.
‘‘(C) SECRETARIAL RESPONSE.—
‘‘(i) ORDERS RELATING TO GUARAN-
TEES.—In the case of a revision submitted
in response to an order under subsection
(b)(1), the revision shall not be considered
to have corrected the deficiency unless the
Secretary determines and notifies the State
that the State plan or amendment, as pro-
posed to be revised complies with the re-
quirements of subsections (a) and (b) of
section 1501. If the Secretary determines
that the revision does not correct the defi-
ciency, the Secretary shall notify the State
in writing of such determination and the
928
State may respond by seeking reconsider-
ation or a hearing under paragraph (2).
‘‘(ii) OTHER ORDERS.—In the case of
a revision submitted in response to an
order under subsection (c)(1), the revision
shall be considered to have corrected the
deficiency (and the order rescinded insofar
as it relates to such deficiency) unless the
Secretary determines and notifies the State
in writing, within 15 days after the date
the Secretary receives the revision, that the
State plan or amendment, as proposed to
be revised, still substantially violates a re-
quirement of this title. In such case the
State may respond by seeking reconsider-
ation or a hearing under paragraph (2).
‘‘(D) REVISION RETROACTIVE.—If the re-
vision provides for compliance (in the case of an
order under subsection (b)(1)) or substantial
compliance (in the case of an order under sub-
section (c)(1)), the revision may be treated, at
the option of the State, as being effective either
as of the effective date of the provision to which
it relates or such later date as the State and
Secretary may agree.
929
‘‘(2) STATE RESPONSE BY SEEKING RECONSID-
ERATION
OR
AN
ADMINISTRATIVE
HEARING.—A
State may respond to an order under subsection (b)
or (c) by filing a request with the Secretary for—
‘‘(A) a reconsideration of the determina-
tion, pursuant to subsection (e)(1), or
‘‘(B) a review of the determination through
an administrative hearing, pursuant to sub-
section (e)(2).
In such case for an order under subsection (c), the
order shall not take effect before the completion of
the reconsideration or hearing.
‘‘(3) STATE RESPONSE BY CORRECTIVE ACTION
PLAN.—
‘‘(A) IN
GENERAL.—In the case of an
order described in subsection (b)(2) or (c)(2)
that relates to a violation in the administration
of the State plan, a State may respond to such
an order by submitting a corrective action plan
with the Secretary to correct deficiencies in the
administration of the plan which are the subject
of the order.
‘‘(B) REVIEW
OF
CORRECTIVE
ACTION
PLAN.—In the case of a corrective action plan
submitted in response to an order under sub-
930
section (c)(2), the Secretary shall withhold any
action on the order for a period (not to exceed
30 days) during which the Secretary reviews
the corrective action plan.
‘‘(C) SECRETARIAL RESPONSE.—
‘‘(i) ORDERS RELATING TO GUARAN-
TEES.—In the case of a corrective action
plan submitted in response to an order
under subsection (b)(2), the plan shall not
be considered to have corrected the defi-
ciency unless the Secretary determines and
notifies the State that the State’s adminis-
tration of the State plan, as proposed to be
corrected in the plan, will not violate a re-
quirement of subsection (a) or (b) of sec-
tion 1501. If the Secretary determines that
the plan does not correct the deficiency,
the Secretary shall notify the State in writ-
ing of such determination and the State
may respond by seeking reconsideration or
a hearing under paragraph (2).
‘‘(ii) OTHER ORDERS.—In the case of
a corrective action plan submitted in re-
sponse to an order under subsection (c)(2),
the corrective action plan shall be consid-
931
ered to have corrected the deficiency (and
the order rescinded insofar as it relates to
such deficiency) unless the Secretary deter-
mines and notifies the State in writing,
within 15 days after the date the Secretary
receives the corrective action plan, that the
State’s administration of the State plan, as
proposed to be corrected in the plan, will
still substantially violate a requirement of
this title. In such case the State may re-
spond by seeking reconsideration or a
hearing under paragraph (2).
‘‘(4) STATE
RESPONSE
BY
WITHDRAWAL
OF
PLAN AMENDMENT; FAILURE TO RESPOND.—Insofar
as an order relates to a violation in a plan amend-
ment submitted, a State may respond to such an
order by withdrawing the plan amendment and the
State plan shall be treated as though the amend-
ment had not been made.
‘‘(e) ADMINISTRATIVE REVIEW AND HEARING.—
‘‘(1) RECONSIDERATION.—Within 30 days after
the date of receipt of a request under subsection
(d)(2)(A), the Secretary shall notify the State of the
time and place at which a hearing will be held for
the purpose of reconsidering the Secretary’s deter-
933
of such determination, file with the United States
court of appeals for the circuit in which the State
is located a petition for review of such determina-
tion. A copy of the petition shall be forthwith trans-
mitted by the clerk of the court to the Secretary
and, in the case of a determination under subsection
(e)(2), to the administrative law judge involved. The
Secretary (or judge involved) thereupon shall file in
the court the record of the proceedings on which the
final determination was based, as provided in section
1502 of title 28, United States Code. Except as pro-
vided in section 1507, only the Secretary, in accord-
ance with this title, may compel a State under Fed-
eral law to comply with the provisions of this title
or a State plan, or otherwise enforce a provision of
this title against a State, and no action may be filed
under Federal law against a State in relation to the
State’s compliance, or failure to comply, with the
provisions of this title or of a State plan except
under section 1507 or by the Secretary as provided
under this subsection.
‘‘(2) STANDARD FOR REVIEW.—The findings of
fact by the Secretary or administrative law judge, if
supported by substantial evidence, shall be conclu-
sive, but the court, for good cause shown, may re-
934
mand the case to the Secretary or judge to take fur-
ther evidence, and the Secretary or judge may there-
upon make new or modified findings of fact and may
modify a previous determination, and shall certify to
the court the transcript and record of the further
proceedings. Such new or modified findings of fact
shall likewise be conclusive if supported by substan-
tial evidence.
‘‘(3) JURISDICTION
OF
APPELLATE
COURT.—
The court shall have jurisdiction to affirm the action
of the Secretary or judge or to set it aside, in whole
or in part. The judgment of the court shall be sub-
ject to review by the Supreme Court of the United
States upon certiorari or certification as provided in
section 1254 of title 28, United States Code.
‘‘(g) WITHHOLDING OF FUNDS.—
‘‘(1) IN GENERAL.—Any order under this sec-
tion relating to the withholding of funds shall be ef-
fective not earlier than the effective date of the
order and shall only relate to the portions of a State
plan or administration thereof which violate a re-
quirement of subsection (a) or (b) of section 1501
or substantially violate another requirement of this
title. In the case of a failure to meet a set-aside re-
935
quirement under section 1502(c), any withholding
shall only apply to the extent of such failure.
‘‘(2) SUSPENSION OF WITHHOLDING.—The Sec-
retary may suspend withholding of funds under
paragraph (1) during the period reconsideration or
administrative and judicial review is pending under
subsection (e) or (f).
‘‘(3) RESTORATION
OF
FUNDS.—Any funds
withheld under this subsection under an order shall
be immediately restored to a State—
‘‘(A) to the extent and at the time the
order is—
‘‘(i) modified or withdrawn by the
Secretary upon reconsideration,
‘‘(ii) modified or reversed by an ad-
ministrative law judge, or
‘‘(iii) set aside (in whole or in part) by
an appellate court; or
‘‘(B) when the Secretary determines that
the deficiency which was the basis for the order
is corrected;
‘‘(C) when the Secretary determines that
violation which was the basis for the order is
resolved or the amendment which was the basis
for the order is withdrawn; or
936
‘‘(D) at any time upon the initiative of the
Secretary.
‘‘(h) INDIVIDUAL COMPLAINT PROCESS.—The Sec-
retary shall provide for a process under which an individ-
ual may notify the Secretary concerning a State’s failure
to provide medical assistance as required under the State
plan or otherwise comply with the requirements of this
title or such plan, including any failure to comply with
a requirement of subsection (a) or (b) of section 1501.
If the Secretary finds that there is a pattern of complaints
with respect to a State or that a particular failure or find-
ing of noncompliance is egregious, the Secretary shall no-
tify the chief executive officer of the State of such finding
and shall notify the Congress if the State fails to respond
to such notification within a reasonable period of time.
‘‘SEC. 1530. SECRETARIAL AUTHORITY.
‘‘(a) NEGOTIATED AGREEMENT AND DISPUTE RESO-
LUTION.—
‘‘(1) NEGOTIATIONS.—Nothing in this part
shall be construed as preventing the Secretary and
a State from at any time negotiating a satisfactory
resolution to any dispute concerning the approval of
a State plan (or amendments to a State plan) or the
compliance of a State plan (including its administra-
tion) with requirements of this title.
937
‘‘(2) COOPERATION.—The Secretary shall act in
a cooperative manner with the States in carrying out
this title. In the event of a dispute between a State
and the Secretary, the Secretary shall, whenever
practicable, engage in informal dispute resolution ac-
tivities in lieu of formal enforcement or sanctions
under section 1529.
‘‘(b) LIMITATIONS ON DELEGATION OF DECISION-
MAKING AUTHORITY.—The Secretary may not delegate
(other than to the Administrator of the Health Care Fi-
nancing Administration) the authority to make determina-
tions or reconsiderations respecting the approval of State
plans (or amendments to such plans) or the compliance
of a State plan (including its administration) with require-
ments of this title. Such Administrator may not further
delegate such authority to any individual, including any
regional official of such Administration.
‘‘(c) 
REQUIRING
FORMAL
RULEMAKING
FOR
CHANGES IN SECRETARIAL ADMINISTRATION.—The Sec-
retary shall carry out the administration of the program
under this title only through a prospective formal rule-
making process, including issuing notices of proposed rule-
making, publishing proposed rules or modifications to
rules in the Federal Register, and soliciting public com-
ment.
938
‘‘PART D—PROGRAM INTEGRITY AND QUALITY
‘‘SEC. 1551. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.
‘‘(a) FINANCIAL AUDITS OF PROGRAM.—
‘‘(1) IN GENERAL.—Each State plan shall pro-
vide for an annual audit of the State’s expenditures
from amounts received under this title, in compli-
ance with chapter 75 of title 31, United States
Code.
‘‘(2) VERIFICATION AUDITS.—If, after consulta-
tion with the State and the Comptroller General and
after a fair hearing, the Secretary determines that
a State’s audit under paragraph (1) was performed
in substantial violation of chapter 75 of title 31,
United States Code, the Secretary may—
‘‘(A) require that the State provide for a
verification audit in compliance with such chap-
ter, or
‘‘(B) conduct such a verification audit.
‘‘(3) AVAILABILITY OF AUDIT REPORTS.—With-
in 30 days after completion of each audit or verifica-
tion audit under this subsection, the State shall—
‘‘(A) provide the Secretary with a copy of
the audit report, including the State’s response
to any recommendations of the auditor, and
939
‘‘(B) make the audit report available for
public inspection in the same manner as pro-
posed State plan amendments are made avail-
able under section 1525.
‘‘(b) FISCAL CONTROLS.—
‘‘(1) IN
GENERAL.—With respect to the ac-
counting and expenditure of funds under this title,
each State shall adopt and maintain such fiscal con-
trols, accounting procedures, and data processing
safeguards as the State deems reasonably necessary
to assure the fiscal integrity of the State’s activities
under this title.
‘‘(2) CONSISTENCY WITH GENERALLY ACCEPT-
ED
ACCOUNTING
PRINCIPLES.—Such controls and
procedures shall be generally consistent with gen-
erally accepted accounting principles as recognized
by the Governmental Accounting Standards Board
or the Comptroller General.
‘‘(c) AUDITS OF PROVIDERS.—Each State plan shall
provide that the records of any entity providing items or
services for which payment may be made under the plan
may be audited as necessary to ensure that proper pay-
ments are made under the plan.
940
‘‘SEC. 1552. FRAUD PREVENTION PROGRAM.
‘‘(a) ESTABLISHMENT.—Each State plan shall pro-
vide for the establishment and maintenance of an effective
program for the detection and prevention of fraud and
abuse by beneficiaries, providers, and others in connection
with the operation of the program.
‘‘(b) PROGRAM REQUIREMENTS.—The program es-
tablished pursuant to subsection (a) shall include at least
the following requirements:
‘‘(1) DISCLOSURE OF INFORMATION.—Any dis-
closing entity (as defined in section 1124(a)) receiv-
ing payments under the State plan shall comply with
the requirements of section 1124.
‘‘(2) SUPPLY
OF
INFORMATION.—An entity
(other than an individual practitioner or a group of
practitioners) that furnishes, or arranges for the fur-
nishing of, an item or service under the State plan
shall supply upon request specifically addressed to
the entity by the Secretary or the State agency the
information described in section 1128(b)(9).
‘‘(3) EXCLUSION.—
‘‘(A) IN GENERAL.—The State plan shall
exclude any specified individual or entity from
participation in the plan for the period specified
by the Secretary when required by the Sec-
retary to do so pursuant to section 1128 or sec-
941
tion 1128A, and provide that no payment may
be made under the plan with respect to any
item or service furnished by such individual or
entity during such period.
‘‘(B) AUTHORITY.—In addition to any
other authority, a State may exclude any indi-
vidual or entity for purposes of participating
under the State plan for any reason for which
the Secretary could exclude the individual or
entity from participation in a program under
title XVIII or under section 1128, 1128A, or
1866(b)(2).
‘‘(4) NOTICE.—The State plan shall provide
that whenever a provider of services or any other
person is terminated, suspended, or otherwise sanc-
tioned or prohibited from participating under the
plan, the State agency responsible for administering
the plan shall promptly notify the Secretary and, in
the case of a physician, the State medical licensing
board of such action.
‘‘(5) ACCESS
TO
INFORMATION.—The State
plan shall provide that the State will provide infor-
mation and access to certain information respecting
sanctions taken against health care practitioners and
942
providers by State licensing authorities in accord-
ance with section 1553.
‘‘SEC. 1553. INFORMATION CONCERNING SANCTIONS TAKEN
BY STATE LICENSING AUTHORITIES AGAINST
HEALTH CARE PRACTITIONERS AND PROVID-
ERS.
‘‘(a) INFORMATION REPORTING REQUIREMENT.—
The requirement referred to in section 1552(b)(5) is that
the State must provide for the following:
‘‘(1) INFORMATION REPORTING SYSTEM.—The
State must have in effect a system of reporting the
following information with respect to formal proceed-
ings (as defined by the Secretary in regulations)
concluded against a health care practitioner or entity
by any authority of the State (or of a political sub-
division thereof) responsible for the licensing of
health care practitioners (or any peer review organi-
zation or private accreditation entity reviewing the
services provided by health care practitioners) or en-
tities:
‘‘(A) Any adverse action taken by such li-
censing authority as a result of the proceeding,
including any revocation or suspension of a li-
cense (and the length of any such suspension),
reprimand, censure, or probation.
943
‘‘(B) Any dismissal or closure of the pro-
ceedings by reason of the practitioner or entity
surrendering the license or leaving the State or
jurisdiction.
‘‘(C) Any other loss of the license of the
practitioner or entity, whether by operation of
law, voluntary surrender, or otherwise.
‘‘(D) Any negative action or finding by
such authority, organization, or entity regard-
ing the practitioner or entity.
‘‘(2) ACCESS TO DOCUMENTS.—The State must
provide the Secretary (or an entity designated by the
Secretary) with access to such documents of the au-
thority described in paragraph (1) as may be nec-
essary for the Secretary to determine the facts and
circumstances concerning the actions and determina-
tions described in such paragraph for the purpose of
carrying out this Act.
‘‘(b) FORM OF INFORMATION.—The information de-
scribed in subsection (a)(1) shall be provided to the Sec-
retary (or to an appropriate private or public agency,
under suitable arrangements made by the Secretary with
respect to receipt, storage, protection of confidentiality,
and dissemination of information) in such a form and
manner as the Secretary determines to be appropriate in
944
order to provide for activities of the Secretary under this
Act and in order to provide, directly or through suitable
arrangements made by the Secretary, information—
‘‘(1) to agencies administering Federal health
care programs, including private entities administer-
ing such programs under contract,
‘‘(2) to licensing authorities described in sub-
section (a)(1),
‘‘(3) to State agencies administering or super-
vising the administration of State health care pro-
grams (as defined in section 1128(h)),
‘‘(4) to utilization and quality control peer re-
view organizations described in part B of title XI
and to appropriate entities with contracts under sec-
tion 1154(a)(4)(C) with respect to eligible organiza-
tions reviewed under the contracts,
‘‘(5) to State fraud control units (as defined in
section 1534),
‘‘(6) to hospitals and other health care entities
(as defined in section 431 of the Health Care Qual-
ity Improvement Act of 1986), with respect to physi-
cians or other licensed health care practitioners that
have entered (or may be entering) into an employ-
ment or affiliation relationship with, or have applied
for clinical privileges or appointments to the medical
945
staff of, such hospitals or other health care entities
(and such information shall be deemed to be dis-
closed pursuant to section 427 of, and be subject
to the provisions of, that Act),
‘‘(7) to the Attorney General and such other
law enforcement officials as the Secretary deems ap-
propriate, and
‘‘(8) upon request, to the Comptroller General,
in order for such authorities to determine the fitness
of individuals to provide health care services, to pro-
tect the health and safety of individuals receiving
health care through such programs, and to protect
the fiscal integrity of such programs.
‘‘(c) CONFIDENTIALITY
OF
INFORMATION
PRO-
VIDED.—The Secretary shall provide for suitable safe-
guards for the confidentiality of the information furnished
under subsection (a). Nothing in this subsection shall pre-
vent the disclosure of such information by a party which
is otherwise authorized, under applicable State law, to
make such disclosure.
‘‘(d) APPROPRIATE COORDINATION.—The Secretary
shall provide for the maximum appropriate coordination
in the implementation of subsection (a) of this section and
section 422 of the Health Care Quality Improvement Act
of 1986 and section 1128E.
946
‘‘SEC. 1554. STATE FRAUD CONTROL UNITS.
‘‘(a) IN GENERAL.—Each State plan shall provide for
a State fraud control unit described in subsection (b) that
effectively carries out the functions and requirements de-
scribed in such subsection, unless the State demonstrates
to the satisfaction of the Secretary that the effective oper-
ation of such a unit in the State would not be cost-effective
because minimal fraud exists in connection with the provi-
sion of covered services to eligible individuals under the
plan, and that beneficiaries under the plan will be pro-
tected from abuse and neglect in connection with the pro-
vision of medical assistance under the plan without the
existence of such a unit.
‘‘(b) UNITS DESCRIBED.—For purposes of this sec-
tion, the term ‘State fraud control unit’ means a single
identifiable entity of the State government which meets
the following requirements:
‘‘(1) ORGANIZATION.—The entity—
‘‘(A) is a unit of the office of the State At-
torney General or of another department of
State government which possesses statewide au-
thority to prosecute individuals for criminal vio-
lations;
‘‘(B) is in a State the constitution of which
does not provide for the criminal prosecution of
947
individuals by a statewide authority and has
formal procedures that—
‘‘(i) assure its referral of suspected
criminal violations relating to the program
under this title to the appropriate author-
ity or authorities in the State for prosecu-
tion, and
‘‘(ii) assure its assistance of, and co-
ordination with, such authority or authori-
ties in such prosecutions; or
‘‘(C) has a formal working relationship
with the office of the State Attorney General
and has formal procedures (including proce-
dures for its referral of suspected criminal vio-
lations to such office) which provide effective
coordination of activities between the entity and
such office with respect to the detection, inves-
tigation, and prosecution of suspected criminal
violations relating to the program under this
title.
‘‘(2) INDEPENDENCE.—The entity is separate
and distinct from any State agency that has prin-
cipal responsibilities for administering or supervising
the administration of the State plan.
948
‘‘(3) FUNCTION.—The entity’s function is con-
ducting a statewide program for the investigation
and prosecution of violations of all applicable State
laws regarding any and all aspects of fraud in con-
nection with any aspect of the provision of medical
assistance and the activities of providers of such as-
sistance under the State plan.
‘‘(4) REVIEW OF COMPLAINTS.—The entity has
procedures for reviewing complaints of the abuse
and neglect of patients of health care facilities which
receive payments under the State plan under this
title, and, where appropriate, for acting upon such
complaints under the criminal laws of the State or
for referring them to other State agencies for action.
‘‘(5) OVERPAYMENTS.—
‘‘(A) IN
GENERAL.—The entity provides
for the collection, or referral for collection to a
single State agency, of overpayments that are
made under the State plan to health care pro-
viders and that are discovered by the entity in
carrying out its activities.
‘‘(B) TREATMENT OF CERTAIN OVERPAY-
MENTS.—If an overpayment is the direct result
of the failure of the provider (or the provider’s
billing agent) to adhere to a change in the
949
State’s billing instructions, the entity may re-
cover the overpayment only if the entity dem-
onstrates that the provider (or the provider’s
billing agent) received prior written or elec-
tronic notice of the change in the billing in-
structions before the submission of the claims
on which the overpayment is based.
‘‘(6) PERSONNEL.—The entity employs such
auditors, attorneys, investigators, and other nec-
essary personnel and is organized in such a manner
as is necessary to promote the effective and efficient
conduct of the entity’s activities.
‘‘SEC. 1555. RECOVERIES FROM THIRD PARTIES AND OTH-
ERS.
‘‘(a) THIRD PARTY LIABILITY.—Each State plan
shall provide for reasonable steps—
‘‘(1) to ascertain the legal liability of third par-
ties to pay for care and services available under the
plan, including the collection of sufficient informa-
tion to enable States to pursue claims against third
parties, and
‘‘(2) to seek reimbursement for medical assist-
ance provided to the extent legal liability is estab-
lished where the amount expected to be recovered ex-
ceeds the costs of the recovery.
950
‘‘(b) BENEFICIARY PROTECTION.—
‘‘(1) IN GENERAL.—Each State plan shall pro-
vide that in the case of a person furnishing services
under the plan for which a third party may be liable
for payment—
‘‘(A) the person may not seek to collect
from the individual (or financially responsible
relative) payment of an amount for the service
more than could be collected under the plan in
the absence of such third party liability, and
‘‘(B) may not refuse to furnish services to
such an individual because of a third party’s
potential liability for payment for the service.
‘‘(2) PENALTY.—A State plan may provide for
a reduction of any payment amount otherwise due
with respect to a person who furnishes services
under the plan in an amount equal to up to 3 times
the amount of any payment sought to be collected by
that person in violation of paragraph (1)(A).
‘‘(c) GENERAL LIABILITY.—The State shall prohibit
any health insurer, including a group health plan as de-
fined in section 607 of the Employee Retirement Income
Security Act of 1974, a service benefit plan, or a health
maintenance organization, in enrolling an individual or in
making any payments for benefits to the individual or on
951
the individual’s behalf, from taking into account that the
individual is eligible for or is provided medical assistance
under a State plan for any State.
‘‘(d) ACQUISITION OF RIGHTS OF BENEFICIARIES.—
To the extent that payment has been made under a State
plan in any case where a third party has a legal liability
to make payment for such assistance, the State shall have
in effect laws under which, to the extent that payment
has been made under the plan for health care items or
services furnished to an individual, the State is considered
to have acquired the rights of such individual to payment
by any other party for such health care items or services.
‘‘(e) ASSIGNMENT OF MEDICAL SUPPORT RIGHTS.—
The State plan shall provide for mandatory assignment
of rights of payment for medical support and other medi-
cal care owed to recipients in accordance with section
1556.
‘‘(f) REQUIRED LAWS RELATING TO MEDICAL CHILD
SUPPORT.—
‘‘(1) IN GENERAL.—Each State with a State
plan under this title shall have in effect the following
laws:
‘‘(A) A law that prohibits an insurer from
denying enrollment of a child under the health
952
coverage of the child’s parent on the ground
that—
‘‘(i) the child was born out of wedlock,
‘‘(ii) the child is not claimed as a de-
pendent on the parent’s Federal income
tax return, or
‘‘(iii) the child does not reside with
the parent or in the insurer’s service area.
‘‘(B) In any case in which a parent is re-
quired by a court or administrative order to
provide health coverage for a child and the par-
ent is eligible for family health coverage
through an insurer, a law that requires such in-
surer—
‘‘(i) to permit such parent to enroll
under such family coverage any such child
who is otherwise eligible for such coverage
(without regard to any enrollment season
restrictions);
‘‘(ii) if such a parent is enrolled but
fails to make application to obtain cov-
erage of such child, to enroll such child
under such family coverage upon applica-
tion by the child’s other parent or by the
953
State agency administering the program
under this title or part D of title IV; and
‘‘(iii) not to disenroll, or eliminate
coverage of, such a child unless the insurer
is provided satisfactory written evidence
that—
‘‘(I) such court or administrative
order is no longer in effect, or
‘‘(II) the child is or will be en-
rolled in comparable health coverage
through another insurer which will
take effect not later than the effective
date of such disenrollment.
‘‘(C) In any case in which a parent is re-
quired by a court or administrative order to
provide health coverage for a child and the par-
ent is eligible for family health coverage
through an employer doing business in the
State, a law that requires such employer—
‘‘(i) to permit such parent to enroll
under such family coverage any such child
who is otherwise eligible for such coverage
(without regard to any enrollment season
restrictions);
954
‘‘(ii) if such a parent is enrolled but
fails to make application to obtain cov-
erage of such child, to enroll such child
under such family coverage upon applica-
tion by the child’s other parent or by the
State agency administering the program
under this title or part D of title IV; and
‘‘(iii) not to disenroll (or eliminate
coverage of) any such child unless—
‘‘(I) the employer is provided sat-
isfactory written evidence that such
court or administrative order is no
longer in effect, or the child is or will
be enrolled in comparable health cov-
erage which will take effect not later
than the effective date of such
disenrollment, or
‘‘(II) the employer has eliminated
family health coverage for all of its
employees; and
‘‘(iv) to withhold from such employ-
ee’s compensation the employee’s share (if
any) of premiums for health coverage (ex-
cept that the amount so withheld may not
exceed the maximum amount permitted to
955
be withheld under section 303(b) of the
Consumer Credit Protection Act), and to
pay such share of premiums to the insurer,
except that the Secretary may provide by
regulation for appropriate circumstances
under which an employer may withhold
less than such employee’s share of such
premiums.
‘‘(D) A law that prohibits an insurer from
imposing requirements on a State agency,
which has been assigned the rights of an indi-
vidual eligible for medical assistance under this
title and covered for health benefits from the
insurer, that are different from requirements
applicable to an agent or assignee of any other
individual so covered.
‘‘(E) A law that requires an insurer, in
any case in which a child has health coverage
through the insurer of a noncustodial parent—
‘‘(i) to provide such information to the
custodial parent as may be necessary for
the child to obtain benefits through such
coverage,
‘‘(ii) to permit the custodial parent
(or provider, with the custodial parent’s
956
approval) to submit claims for covered
services without the approval of the non-
custodial parent, and
‘‘(iii) to make payment on claims sub-
mitted in accordance with clause (ii) di-
rectly to such custodial parent, the pro-
vider, or the State agency.
‘‘(F) A law that permits the State agency
under this title to garnish the wages, salary, or
other employment income of, and requires with-
holding amounts from State tax refunds to, any
person who—
‘‘(i) is required by court or adminis-
trative order to provide coverage of the
costs of health services to a child who is el-
igible for medical assistance under this
title,
‘‘(ii) has received payment from a
third party for the costs of such services to
such child, but
‘‘(iii) has not used such payments to
reimburse, as appropriate, either the other
parent or guardian of such child or the
provider of such services,
957
to the extent necessary to reimburse the State
agency for expenditures for such costs under its
plan under this title, but any claims for current
or past-due child support shall take priority
over any such claims for the costs of such serv-
ices.
‘‘(2) DEFINITION.—For purposes of this sub-
section, the term ‘insurer’ includes a group health
plan, as defined in section 607(1) of the Employee
Retirement Income Security Act of 1974, a health
maintenance organization, and an entity offering a
service benefit plan.
‘‘(g) 
ESTATE
RECOVERIES
AND
LIENS
PER-
MITTED.—A State may take such actions as it considers
appropriate to adjust or recover from the individual or the
individual’s estate any amounts paid as medical assistance
to or on behalf of the individual under the State plan, in-
cluding through the imposition of liens against the prop-
erty or estate of the individual to the extent consistent
with section 1506.
‘‘SEC. 1556. ASSIGNMENT OF RIGHTS OF PAYMENT.
‘‘(a) IN GENERAL.—For the purpose of assisting in
the collection of medical support payments and other pay-
ments for medical care owed to recipients of medical as-
sistance under the State plan, each State plan shall—
958
‘‘(1) provide that, as a condition of eligibility
for medical assistance under the plan to an individ-
ual who has the legal capacity to execute an assign-
ment for himself, the individual is required—
‘‘(A) to assign the State any rights, of the
individual or of any other person who is eligible
for medical assistance under the plan and on
whose behalf the individual has the legal au-
thority to execute an assignment of such rights,
to support (specified as support for the purpose
of medical care by a court or administrative
order) and to payment for medical care from
any third party,
‘‘(B) to cooperate with the State (i) in es-
tablishing the paternity of such person (referred
to in subparagraph (A)) if the person is a child
born out of wedlock, and (ii) in obtaining sup-
port and payments (described in subparagraph
(A)) for himself and for such person, unless (in
either case) the individual is a pregnant woman
or the individual is found to have good cause
for refusing to cooperate as determined by the
State, and
‘‘(C) to cooperate with the State in identi-
fying, and providing information to assist the
959
State in pursuing, any third party who may be
liable to pay for care and services available
under the plan, unless such individual has good
cause for refusing to cooperate as determined
by the State; and
‘‘(2) provide for entering into cooperative ar-
rangements, including financial arrangements, with
any appropriate agency of any State (including, with
respect to the enforcement and collection of rights of
payment for medical care by or through a parent,
with a State’s agency established or designated
under section 454(3)) and with appropriate courts
and law enforcement officials, to assist the agency or
agencies administering the plan with respect to—
‘‘(A) the enforcement and collection of
rights to support or payment assigned under
this section, and
‘‘(B) any other matters of common con-
cern.
‘‘(b) USE OF AMOUNTS COLLECTED.—Such part of
any amount collected by the State under an assignment
made under the provisions of this section shall be retained
by the State as is necessary to reimburse it for medical
assistance payments made on behalf of an individual with
respect to whom such assignment was executed (with ap-
960
propriate reimbursement of the Federal Government to
the extent of its participation in the financing of such
medical assistance), and the remainder of such amount
collected shall be paid to such individual.
‘‘SEC. 1557. QUALITY ASSURANCE REQUIREMENTS FOR
NURSING FACILITIES.
‘‘(a) NURSING FACILITY DEFINED.—In this title, the
term ‘nursing facility’ means an institution (or a distinct
part of an institution) which—
‘‘(1) is primarily engaged in providing to resi-
dents—
‘‘(A) skilled nursing care and related serv-
ices for residents who require medical or nurs-
ing care,
‘‘(B) rehabilitation services for the reha-
bilitation of injured, disabled, or sick persons,
or
‘‘(C) on a regular basis, health-related care
and services to individuals who because of their
mental or physical condition require care and
services (above the level of room and board)
which can be made available to them only
through institutional facilities,
and is not primarily for the care and treatment of
mental diseases;
961
‘‘(2) has in effect a transfer agreement (meet-
ing the requirements of section 1861(l)) with one or
more hospitals having agreements in effect under
section 1866; and
‘‘(3) meets the requirements for a nursing facil-
ity described in subsections (b), (c), and (d) of this
section.
Such term also includes any facility which is located in
a State on an Indian reservation and is certified by the
Secretary as meeting the requirements of paragraph (1)
and subsections (b), (c), and (d).
‘‘(b) REQUIREMENTS RELATING TO PROVISION OF
SERVICES.—
‘‘(1) QUALITY OF LIFE.—
‘‘(A) IN
GENERAL.—A nursing facility
must care for its residents in such a manner
and in such an environment as will promote
maintenance or enhancement of the quality of
life of each resident.
‘‘(B) QUALITY ASSESSMENT AND ASSUR-
ANCE.—A nursing facility must maintain a
quality assessment and assurance committee,
consisting of the director of nursing services, a
physician designated by the facility, and at least
3 other members of the facility’s staff, which
962
(i) meets at least quarterly to identify issues
with respect to which quality assessment and
assurance activities are necessary and (ii) devel-
ops and implements appropriate plans of action
to correct identified quality deficiencies. A State
or the Secretary may not require disclosure of
the records of such committee except insofar as
such disclosure is related to the compliance of
such committee with the requirements of this
subparagraph.
‘‘(2) SCOPE
OF
SERVICES
AND
ACTIVITIES
UNDER
PLAN
OF
CARE.—A nursing facility must
provide services and activities to attain or maintain
the highest practicable physical, mental, and
psychosocial well-being of each resident in accord-
ance with a written plan of care which—
‘‘(A) describes the medical, nursing, and
psychosocial needs of the resident and how such
needs will be met;
‘‘(B) is initially prepared, with the partici-
pation to the extent practicable of the resident
or the resident’s family or legal representative,
by a team which includes the resident’s attend-
ing physician and a registered professional
nurse with responsibility for the resident; and
963
‘‘(C) is periodically reviewed and revised by
such team after each assessment under para-
graph (3).
‘‘(3) RESIDENTS’ ASSESSMENT.—
‘‘(A) REQUIREMENT.—A nursing facility
must conduct a comprehensive, accurate, stand-
ardized, reproducible assessment of each resi-
dent’s functional capacity, which assessment—
‘‘(i) describes the resident’s capability
to perform daily life functions and signifi-
cant impairments in functional capacity;
‘‘(ii) is based on a uniform minimum
data set specified by the Secretary under
subsection (f)(6)(A);
‘‘(iii) uses an instrument which is
specified by the State under subsection
(e)(5); and
‘‘(iv) includes the identification of
medical problems.
‘‘(B) CERTIFICATION.—
‘‘(i) IN GENERAL.—Each such assess-
ment must be conducted or coordinated
(with the appropriate participation of
health professionals) by a registered pro-
fessional nurse who signs and certifies the
964
completion of the assessment. Each indi-
vidual who completes a portion of such an
assessment shall sign and certify as to the
accuracy of that portion of the assessment.
‘‘(ii) PENALTY FOR FALSIFICATION.—
‘‘(I) An individual who willfully
and knowingly certifies under clause
(i) a material and false statement in
a resident assessment is subject to a
civil money penalty of not more than
$1,000 with respect to each assess-
ment.
‘‘(II) An individual who willfully
and knowingly causes another individ-
ual to certify under clause (i) a mate-
rial and false statement in a resident
assessment is subject to a civil money
penalty of not more than $5,000 with
respect to each assessment.
‘‘(III) The provisions of section
1128A (other than subsections (a)
and (b)) shall apply to a civil money
penalty under this clause in the same
manner as such provisions apply to a
965
penalty or proceeding under section
1128A(a).
‘‘(iii) USE OF INDEPENDENT ASSES-
SORS.—If a State determines, under a sur-
vey under subsection (g) or otherwise, that
there has been a knowing and willful cer-
tification of false assessments under this
paragraph, the State may require (for a
period specified by the State) that resident
assessments under this paragraph be con-
ducted and certified by individuals who are
independent of the facility and who are ap-
proved by the State.
‘‘(C) FREQUENCY.—
‘‘(i) IN
GENERAL.—Such an assess-
ment must be conducted—
‘‘(I) promptly upon (but no later
than 14 days after the date of) admis-
sion for each individual admitted;
‘‘(II) promptly after a significant
change in the resident’s physical or
mental condition; and
‘‘(III) in no case less often than
once every 12 months.
966
‘‘(ii) RESIDENT REVIEW.—The nurs-
ing facility must examine each resident no
less frequently than once every 3 months
and, as appropriate, revise the resident’s
assessment to assure the continuing accu-
racy of the assessment.
‘‘(D) USE.—The results of such an assess-
ment shall be used in developing, reviewing, and
revising the resident’s plan of care under para-
graph (2).
‘‘(E) COORDINATION.—Such assessments
shall be coordinated with any State-required
preadmission screening program to the maxi-
mum extent practicable in order to avoid dupli-
cative testing and effort. In addition, a nursing
facility shall notify the State mental health au-
thority or State mental retardation or devel-
opmental disability authority, as applicable,
promptly after a significant change in the phys-
ical or mental condition of a resident who is
mentally ill or mentally retarded.
‘‘(4) PROVISION
OF
SERVICES
AND
ACTIVI-
TIES.—
‘‘(A) IN GENERAL.—To the extent needed
to fulfill all plans of care described in para-
967
graph (2), a nursing facility must provide (or
arrange for the provision of)—
‘‘(i) nursing and related services and
specialized rehabilitative services to attain
or maintain the highest practicable phys-
ical, mental, and psychosocial well-being of
each resident;
‘‘(ii) medically-related social services
to attain or maintain the highest prac-
ticable physical, mental, and psychosocial
well-being of each resident;
‘‘(iii) pharmaceutical services (includ-
ing procedures that assure the accurate ac-
quiring, receiving, dispensing, and admin-
istering of all drugs and biologicals) to
meet the needs of each resident;
‘‘(iv) dietary services that assure that
the meals meet the daily nutritional and
special dietary needs of each resident;
‘‘(v) an on-going program, directed by
a qualified professional, of activities de-
signed to meet the interests and the phys-
ical, mental, and psychosocial well-being of
each resident;
968
‘‘(vi) routine dental services (to the
extent covered under the State plan) and
emergency dental services to meet the
needs of each resident; and
‘‘(vii) treatment and services required
by mentally ill and mentally retarded resi-
dents not otherwise provided or arranged
for (or required to be provided or arranged
for) by the State.
The services provided or arranged by the facil-
ity must meet professional standards of quality.
‘‘(B) 
QUALIFIED
PERSONS
PROVIDING
SERVICES.—Services described in clauses (i),
(ii), (iii), (iv), and (vi) of subparagraph (A)
must be provided by qualified persons in ac-
cordance with each resident’s written plan of
care.
‘‘(C) REQUIRED NURSING CARE; FACILITY
WAIVERS.—
‘‘(i) GENERAL
REQUIREMENTS.—A
nursing facility—
‘‘(I) except as provided in clause
(ii), must provide 24-hour licensed
nursing services which are sufficient
969
to meet the nursing needs of its resi-
dents, and
‘‘(II) except as provided in clause
(ii), must use the services of a reg-
istered professional nurse for at least
8 consecutive hours a day, 7 days a
week.
‘‘(ii) WAIVER BY STATE.—To the ex-
tent that a facility is unable to meet the
requirements of clause (i), a State may
waive such requirements with respect to
the facility if—
‘‘(I) the facility demonstrates to
the satisfaction of the State that the
facility has been unable, despite dili-
gent efforts (including offering wages
at the community prevailing rate for
nursing facilities), to recruit appro-
priate personnel,
‘‘(II) the State determines that a
waiver of the requirement will not en-
danger the health or safety of individ-
uals staying in the facility,
‘‘(III) the State finds that, for
any such periods in which licensed
970
nursing services are not available, a
registered professional nurse or a phy-
sician is obligated to respond imme-
diately to telephone calls from the fa-
cility,
‘‘(IV) the State agency granting
a waiver of such requirements pro-
vides notice of the waiver to the State
long-term care ombudsman (estab-
lished under section 307(a)(12) of the
Older Americans Act of 1965) and the
protection and advocacy system in the
State for the mentally ill and the
mentally retarded, and
‘‘(V) the nursing facility that is
granted such a waiver by a State noti-
fies residents of the facility (or, where
appropriate, the guardians or legal
representatives of such residents) and
members of their immediate families
of the waiver.
A waiver under this clause shall be subject
to annual review and to the review of the
Secretary and subject to clause (iii) shall
be accepted by the Secretary for purposes
971
of this title to the same extent as is the
State’s certification of the facility. In
granting or renewing a waiver, a State
may require the facility to use other quali-
fied, licensed personnel.
‘‘(iii) ASSUMPTION
OF
WAIVER
AU-
THORITY BY SECRETARY.—If the Secretary
determines that a State has shown a clear
pattern and practice of allowing waivers in
the absence of diligent efforts by facilities
to meet the staffing requirements, the Sec-
retary shall assume and exercise the au-
thority of the State to grant waivers.
‘‘(5) REQUIRED TRAINING OF NURSE AIDES.—
‘‘(A) IN GENERAL.—(i) Except as provided
in clause (ii), a nursing facility must not use on
a full-time basis any individual as a nurse aide
in the facility, for more than 4 months unless
the individual—
‘‘(I) has completed a training and
competency evaluation program, or a com-
petency evaluation program, approved by
the State under subsection (e)(1)(A), and
‘‘(II) is competent to provide nursing
or nursing-related services.
972
‘‘(ii) A nursing facility must not use on a
temporary, per diem, leased, or on any other
basis other than as a permanent employee any
individual as a nurse aide in the facility, unless
the individual meets the requirements described
in clause (i).
‘‘(B) OFFERING
COMPETENCY
EVALUA-
TION PROGRAMS FOR CURRENT EMPLOYEES.—
A nursing facility must provide, for individuals
used as a nurse aide by the facility, for a com-
petency evaluation program approved by the
State under subsection (e)(1) and such prepara-
tion as may be necessary for the individual to
complete such a program.
‘‘(C) COMPETENCY.—The nursing facility
must not permit an individual, other than in a
training and competency evaluation program
approved by the State, to serve as a nurse aide
or provide services of a type for which the indi-
vidual has not demonstrated competency and
must not use such an individual as a nurse aide
unless the facility has inquired of any State
registry established under subsection (e)(2)(A)
that the facility believes will include information
concerning the individual.
973
‘‘(D) RE-TRAINING REQUIRED.—For pur-
poses of subparagraph (A), if, since an individ-
ual’s most recent completion of a training and
competency evaluation program, there has been
a continuous period of 24 consecutive months
during none of which the individual performed
nursing or nursing-related services for monetary
compensation, such individual shall complete a
new training and competency evaluation pro-
gram, or a new competency evaluation program.
‘‘(E) REGULAR IN-SERVICE EDUCATION.—
The nursing facility must provide such regular
performance review and regular in-service edu-
cation as assures that individuals used as nurse
aides are competent to perform services as
nurse aides, including training for individuals
providing nursing and nursing-related services
to residents with cognitive impairments.
‘‘(F) NURSE
AIDE
DEFINED.—In this
paragraph, the term ‘nurse aide’ means any in-
dividual providing nursing or nursing-related
services to residents in a nursing facility, but
does not include an individual—
974
‘‘(i) who is a licensed health profes-
sional (as defined in subparagraph (G)) or
a registered dietitian, or
‘‘(ii) who volunteers to provide such
services without monetary compensation.
‘‘(G) LICENSED
HEALTH
PROFESSIONAL
DEFINED.—In this paragraph, the term ‘li-
censed health professional’ means a physician,
physician assistant, nurse practitioner, physical,
speech, or occupational therapist, physical or
occupational therapy assistant, registered pro-
fessional nurse, licensed practical nurse, or li-
censed or certified social worker.
‘‘(6) PHYSICIAN
SUPERVISION
AND
CLINICAL
RECORDS.—A nursing facility must—
‘‘(A) require that the health care of every
resident be provided under the supervision of a
physician (or, at the option of a State, under
the supervision of a nurse practitioner, clinical
nurse specialist, or physician assistant who is
not an employee of the facility but who is work-
ing in collaboration with a physician);
‘‘(B) provide for having a physician avail-
able to furnish necessary medical care in case
of emergency; and
975
‘‘(C) maintain clinical records on all resi-
dents, which records include the plans of care
(described in paragraph (2)) and the residents’
assessments (described in paragraph (3)), as
well as the results of any pre-admission screen-
ing conducted under subsection (e)(7).
‘‘(7) REQUIRED SOCIAL SERVICES.—In the case
of a nursing facility with more than 120 beds, the
facility must have at least one social worker (with at
least a bachelor’s degree in social work or similar
professional qualifications) employed full-time to
provide or assure the provision of social services.
‘‘(c) REQUIREMENTS
RELATING
TO
RESIDENTS’
RIGHTS.—
‘‘(1) GENERAL RIGHTS.—
‘‘(A) SPECIFIED RIGHTS.—A nursing facil-
ity must protect and promote the rights of each
resident, including each of the following rights:
‘‘(i) FREE
CHOICE.—The right to
choose a personal attending physician, to
be fully informed in advance about care
and treatment, to be fully informed in ad-
vance of any changes in care or treatment
that may affect the resident’s well-being,
and (except with respect to a resident ad-
976
judged incompetent) to participate in plan-
ning care and treatment or changes in care
and treatment.
‘‘(ii) FREE FROM RESTRAINTS.—The
right to be free from physical or mental
abuse, corporal punishment, involuntary
seclusion, and any physical or chemical re-
straints imposed for purposes of discipline
or convenience and not required to treat
the resident’s medical symptoms. Re-
straints may only be imposed—
‘‘(I) to ensure the physical safety
of the resident or other residents, and
‘‘(II) only upon the written order
of a physician that specifies the dura-
tion and circumstances under which
the restraints are to be used (except
in emergency circumstances specified
by the Secretary until such an order
could reasonably be obtained).
‘‘(iii) PRIVACY.—The right to privacy
with regard to accommodations, medical
treatment, written and telephonic commu-
nications, visits, and meetings of family
and of resident groups.
977
‘‘(iv) CONFIDENTIALITY.—The right
to confidentiality of personal and clinical
records and to access to current clinical
records of the resident upon request by the
resident or the resident’s legal representa-
tive, within 24 hours (excluding hours oc-
curring during a weekend or holiday) after
making such a request.
‘‘(v) ACCOMMODATION
OF
NEEDS.—
The right—
‘‘(I) to reside and receive services
with reasonable accommodation of in-
dividual needs and preferences, except
where the health or safety of the indi-
vidual or other residents would be en-
dangered, and
‘‘(II) to receive notice before the
room or roommate of the resident in
the facility is changed.
‘‘(vi) GRIEVANCES.—The right to
voice grievances with respect to treatment
or care that is (or fails to be) furnished,
without discrimination or reprisal for voic-
ing the grievances and the right to prompt
efforts by the facility to resolve grievances
978
the resident may have, including those with
respect to the behavior of other residents.
‘‘(vii) PARTICIPATION
IN
RESIDENT
AND FAMILY GROUPS.—The right of the
resident to organize and participate in resi-
dent groups in the facility and the right of
the resident’s family to meet in the facility
with the families of other residents in the
facility.
‘‘(viii) PARTICIPATION IN OTHER AC-
TIVITIES.—The right of the resident to
participate in social, religious, and commu-
nity activities that do not interfere with
the rights of other residents in the facility.
‘‘(ix) EXAMINATION OF SURVEY RE-
SULTS.—The right to examine, upon rea-
sonable request, the results of the most re-
cent survey of the facility conducted by the
Secretary or a State with respect to the fa-
cility and any plan of correction in effect
with respect to the facility.
‘‘(x) REFUSAL
OF
CERTAIN
TRANS-
FERS.—The right to refuse a transfer to
another room within the facility, if a pur-
poses of the transfer is to relocate the resi-
979
dent from a portion of the facility that is
not a skilled nursing facility (for purposes
of title XVIII) to a portion of the facility
that is such a skilled nursing facility.
‘‘(xi) OTHER
RIGHTS.—Any other
right established by the Secretary.
Clause (i) shall not be construed as precluding
a State from requiring a resident of a nursing
facility to choose a personal attending physician
who participates in a managed care network
under a contract with the State to provide med-
ical assistance under this title. Clause (iii) shall
not be construed as requiring the provision of
a private room. A resident’s exercise of a right
to refuse transfer under clause (x) shall not af-
fect the resident’s eligibility or entitlement to
medical assistance under this title or a State’s
entitlement to Federal medical assistance under
this title with respect to services furnished to
such a resident.
‘‘(B) NOTICE OF RIGHTS.—A nursing fa-
cility must—
‘‘(i) inform each resident, orally and
in writing at the time of admission to the
facility, of the resident’s legal rights dur-
980
ing the stay at the facility and of the re-
quirements and procedures for establishing
eligibility for medical assistance under this
title, including the right to request an as-
sessment under section 1505(c)(1)(B);
‘‘(ii) make available to each resident,
upon reasonable request, a written state-
ment of such rights (which statement is
updated upon changes in such rights) in-
cluding the notice (if any) of the State de-
veloped under subsection (e)(6);
‘‘(iii) inform each resident who is enti-
tled to medical assistance under this
title—
‘‘(I) at the time of admission to
the facility or, if later, at the time the
resident becomes eligible for such as-
sistance, of the items and services
that are included in nursing facility
services under the State plan and for
which the resident may not be
charged, and of those other items and
services that the facility offers and for
which the resident may be charged
981
and the amount of the charges for
such items and services, and
‘‘(II) of changes in the items and
services described in subclause (I) and
of changes in the charges imposed for
items and services described in that
subclause; and
‘‘(iv) inform each other resident, in
writing before or at the time of admission
and periodically during the resident’s stay,
of services available in the facility and of
related charges for such services, including
any charges for services not covered under
title XVIII or by the facility’s basic per
diem charge.
The written description of legal rights under
this subparagraph shall include a description of
the protection of personal funds under para-
graph (6) and a statement that a resident may
file a complaint with a State survey and certifi-
cation agency respecting resident abuse and ne-
glect and misappropriation of resident property
in the facility.
‘‘(C) RIGHTS
OF
INCOMPETENT
RESI-
DENTS.—In the case of a resident adjudged in-
982
competent under the laws of a State, the rights
of the resident under this title shall devolve
upon, and, to the extent judged necessary by a
court of competent jurisdiction, be exercised by,
the person appointed under State law to act on
the resident’s behalf.
‘‘(D) USE
OF
PSYCHOPHARMACOLOGIC
DRUGS.—Psychopharmacologic drugs may be
administered only on the orders of a physician
and only as part of a plan (included in the writ-
ten plan of care described in paragraph (2)) de-
signed to eliminate or modify the symptoms for
which the drugs are prescribed and only if, at
least annually an independent, external consult-
ant reviews the appropriateness of the drug
plan of each resident receiving such drugs.
‘‘(2) TRANSFER AND DISCHARGE RIGHTS.—
‘‘(A) IN
GENERAL.—A nursing facility
must permit each resident to remain in the fa-
cility and must not transfer or discharge the
resident from the facility unless—
‘‘(i) the transfer or discharge is nec-
essary to meet the resident’s welfare and
the resident’s welfare cannot be met in the
facility;
1037
‘‘(D) CONTINUATION OF PAYMENTS PEND-
ING
REMEDIATION.—The Secretary may con-
tinue payments, over a period of not longer
than 6 months after the effective date of the
findings, under this title with respect to a nurs-
ing facility not in compliance with a require-
ment of subsection (b), (c), or (d), if—
‘‘(i) the State survey agency finds
that it is more appropriate to take alter-
native action to assure compliance of the
facility with the requirements than to ter-
minate the certification of the facility,
‘‘(ii) the State has submitted a plan
and timetable for corrective action to the
Secretary for approval and the Secretary
approves the plan of corrective action, and
‘‘(iii) the State agrees to repay to the
Federal Government payments received
under this subparagraph if the corrective
action is not taken in accordance with the
approved plan and timetable.
The Secretary shall establish guidelines for ap-
proval of corrective actions requested by States
under this subparagraph.