S 1031

112th CONGRESS
1st Session

S. 1031

To empower States with programmatic flexibility and financial predictability to improve their Medicaid programs and State Children's Health Insurance Programs by ensuring better health care for low-income pregnant women, children, and families, and for elderly individuals and disabled individuals in need of long-term care services and supports, whose income and resources are insufficient to meet the costs of necessary medical services.

IN THE SENATE OF THE UNITED STATES

May 19, 2011

Mr. COBURN (for himself, Mr. BURR, and Mr. CHAMBLISS) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To empower States with programmatic flexibility and financial predictability to improve their Medicaid programs and State Children's Health Insurance Programs by ensuring better health care for low-income pregnant women, children, and families, and for elderly individuals and disabled individuals in need of long-term care services and supports, whose income and resources are insufficient to meet the costs of necessary medical services.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    (a) Short Title- This Act may be cited as the `Medicaid Improvement and State Empowerment Act'.

    (b) Table of Contents- The table of contents for this Act is as follows:

      Sec. 1. Short title.

      Sec. 2. Sustainable Medicaid and CHIP programs that meet the needs of each State.

`PART B--Taxpayer-Provided Pass-Through Funding of Health Care Grants to States for Pregnant Women, Low-Income Children, and Low-Income Families and for Long-Term Care Services and Supports for Low-Income Elderly or Disabled Individuals

`Sec. 1950. Purposes; application.

`Sec. 1951. State plans.

`Sec. 1952. Grants to States.

`Sec. 1953. Use of grants.

`Sec. 1954. Administrative provisions.

`Sec. 1955. Penalties.

`Sec. 1956. Appeal of adverse decision.

`Sec. 1957. Annual Reports.

`Sec. 1958. Definitions.

      Sec. 3. Medical malpractice reform State incentive fund.

      Sec. 4. Repeals.

      Sec. 5. Development of new formula for Federal financial participation for State child support and welfare programs to replace the FMAP.

SEC. 2. SUSTAINABLE MEDICAID AND CHIP PROGRAMS THAT MEET THE NEEDS OF EACH STATE.

    (a) In General- Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) is amended--

      (1) by inserting after section 1900, the following:

`Part A--FMAP-Based Acute Care State Health Programs for the Elderly and Disabled';

      and

      (2) by adding at the end the following:

`PART B--TAXPAYER-PROVIDED PASS-THROUGH FUNDING OF HEALTH CARE GRANTS TO STATES FOR PREGNANT WOMEN, LOW-INCOME CHILDREN, AND LOW-INCOME FAMILIES AND FOR LONG-TERM CARE SERVICES AND SUPPORTS FOR LOW-INCOME ELDERLY OR DISABLED INDIVIDUALS

`SEC. 1950. PURPOSES; APPLICATION.

    `(a) In General- The purposes of this part are to empower States with programmatic flexibility and financial predictability in designing and operating State programs to--

      `(1) provide medical assistance for pregnant women, low-income children, and low-income families with children whose income and resources are insufficient to meet the costs of necessary medical services and rehabilitation and other services to help such women, children, and families attain or retain capability for independence or self-care; and

      `(2) provide long-term care services and supports for low-income elderly or disabled individuals whose income and resources are insufficient to meet the costs of such services and supports and rehabilitation and other services to help such individuals attain or retain capability for independence or self-care.

    `(b) Application-

      `(1) IN GENERAL- Except as provided in paragraph (2) and section 1951(a)(1)(B)(iv), with respect to a State, on and after January 1, 2013:

        `(A) Medical assistance for pregnant women, low-income children, or low-income families with children shall be provided only in accordance with the provisions of this part and the provisions of title XI applicable to the provision of such assistance.

        `(B) Long-term care services and supports for low-income elderly or disabled individuals (including dual eligible individuals) shall only be provided in accordance with the provisions of this part and the provisions of title XI applicable to the provision of such services and supports.

        `(C) The provisions of part A of this title shall no longer apply to a State program established under this title to provide medical assistance for pregnant women, low-income children, or low-income families with children or to provide long-term care services and supports to low-income elderly or disabled individuals and the provisions of any drug rebate agreement that is in effect under section 1927 on that date that relate to the provision of medical assistance for covered outpatient drugs for such women, children, or families or to the provision of long-term care services and supports for low-income elderly or disabled individuals are terminated as of such effective date.

        `(D) A targeted low-income child or a parent of such a child who would be eligible for child health assistance or health benefits coverage under a State child health plan under title XXI on June 30, 2012, shall no longer receive such assistance or benefits under title XXI and shall be eligible for medical assistance under a State program funded under this part only to the extent the child or parent satisfies the eligibility criteria established by the State in its State plan under section 1951. Federal funds appropriated for making payments under title XXI or for administering title XXI that are unobligated on January 1, 2013, are rescinded on that date.

        `(E) No payment shall be made under section 1903(a) to a State with respect to any disproportionate share payment adjustment made under section 1923 on or after January 1, 2013.

        `(F) In the case of a State conducting a waiver under section 1115 or other authority to provide medical assistance for pregnant women, low-income children, or low-income families with children under a State program established under this title or to provide long-term care services and supports for low-income elderly or disabled individuals that is in effect on such date, the State may elect to terminate the waiver as of January 1, 2013, or may submit a request to continue to provide medical assistance or long-term care services and supports for such individuals in accordance with the terms of the waiver. The Secretary shall approve a request of a State with such a waiver to extend the waiver for additional periods so long as the total amount of Federal funds paid to the State to conduct the waiver does not exceed the amount of Federal funds that would be paid to the State under this part if the waiver were not conducted and medical assistance or long-term care services and supports are provided under the waiver consistent with the requirements of this part.

      `(2) HOLD HARMLESS PROVISIONS-

        `(A) ACUTE CARE FOR LOW-INCOME ELDERLY AND DISABLED-

          `(i) IN GENERAL- The provisions of part A shall apply to State expenditures attributable to the provision of medical assistance for acute care for low-income elderly or disabled individuals (including dual eligible individuals) on and after January 1, 2013.

          `(ii) RULE OF CONSTRUCTION- Clause (i) shall not be construed as affecting--

            `(I) the termination under paragraph (1)(E) of payments under section 1903(a) for disproportionate share hospital adjustment payments under section 1923; or

            `(II) State flexibility to provide dual eligible individuals with medical assistance for acute care through enrollment in a managed care entity under the amendment made by section 2(b) of the Medicaid Improvement and State Empowerment Act.

        `(B) COMMONWEALTHS AND TERRITORIES- This part shall not apply to the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the Commonwealth of the Northen Mariana Islands, and American Samoa. Any program to provide medical assistance established under this title by any such commonwealth or territory shall be operated in accordance with the provisions of part A of this title and subsections (f) and (g) of section 1108.

        `(C) VACCINES FOR CHILDREN PROGRAM- The program for the distribution of pediatric vaccines established under section 1928 shall continue to be operated in accordance with the provisions of that section.

    `(c) Budget Authority- This part constitutes budget authority in advance of appropriations Acts and represents the obligation of the Federal Government to provide for the payment to States of amounts provided under section 1952.

    `(d) Nonentitlement- This part shall not be interpreted to entitle any individual or family to medical assistance under any State program funded under this part or to entitle any provider or entity to payment for the provision of items or services under any State program funded under this part.

`SEC. 1951. STATE PLANS.

    `(a) In General- In order to receive a grant under section 1952 for a year and for the purpose of ensuring transparency with respect to the expenditure of Federal revenues, a State shall submit to the Secretary a plan that includes the following:

      `(1) OUTLINE OF MEDICAL ASSISTANCE PROGRAM-

        `(A) GENERAL PROVISIONS- A written document that outlines how the State intends to conduct a program, designed to serve all political subdivisions in the State (not necessarily in a uniform manner), that provides--

          `(i) medical assistance to pregnant women, low-income children, and low-income families with children whose income and resources are insufficient to meet the costs of necessary medical services, and rehabilitation and other services to help such women, children, and families attain or retain capability for independence or self-care; and

          `(ii) long-term care services and supports for low-income elderly or disabled individuals whose income and resources are insufficient to meet the costs of such services and supports and rehabilitation and other services to help such individuals attain or retain capability for independence or self-care.

        `(B) SPECIAL PROVISIONS-

          `(i) The document shall set forth objective criteria for--

            `(I) the determination of eligibility for medical assistance and for long-term care services and supports (which may be based on standards relating to income, family composition, patient population, health status, or age); and

            `(II) fair and equitable treatment of recipients and providers, including an explanation of how the State will provide opportunities for recipients and providers who have been adversely affected to be heard in a State administrative or appeal process.

          `(ii) The document shall include a description of--

            `(I) the benefits to be provided, which, in the case of medical assistance, shall at a minimum be of the types listed in paragraph (1) of section 8904(a) of title 5, United States Code; and

            `(II) the amount (if any) of premiums, deductibles, coinsurance, or other cost sharing imposed.

          `(iii) The document shall include a description of how medical assistance and long-term care services and supports will be provided under the State plan, such as through contracts with health maintenance organizations, managed care organizations, or regional preferred provider organization care networks, the establishment of cash-for-counseling programs, family health care scholarships, or health savings accounts, the provision of consumer-driven health vouchers, or any other health coverage benefit delivery design determined by the State as appropriate for achieving the purpose of this part.

          `(iv) The document shall indicate how the State shall satisfy the requirements of sections 1902(a)(46) (relating to verification of declarations of citizenship, nationality, or satisfactory immigration status).

      `(2) CERTIFICATION OF THE ADMINISTRATION OF THE PROGRAM- A certification by the Governor of the State specifying which State agency or agencies will administer and supervise the State plan under this part, which shall include assurances that local governments and private sector organizations--

        `(A) have been consulted regarding the plan and design of the provision of medical assistance and long-term care services and supports in the State so that such assistance and services and supports are provided in a manner appropriate to local populations; and

        `(B) have had at least 45 days to submit comments on such plan and design.

      `(3) CERTIFICATION THAT THE STATE WILL PROVIDE MEDICAL ASSISTANCE TO CHILDREN IN FOSTER CARE AND ADOPTION ASSISTANCE PROGRAM- A certification by the Governor of the State that the State will take such actions as are necessary to ensure that children receiving assistance under part E of title IV are eligible for medical assistance under the State plan under this part.

      `(4) CERTIFICATION THAT THE STATE WILL PROVIDE INDIANS WITH EQUITABLE ACCESS TO ASSISTANCE- A certification by the Governor of the State that the State will provide each member of an Indian tribe who is domiciled in the State with equitable access to medical assistance and to long-term care services and supports under the State plan under this part.

      `(5) CERTIFICATION OF STANDARDS AND PROCEDURES TO ENSURE AGAINST PROGRAM FRAUD, WASTE, AND ABUSE- A certification by the Governor of the State that the State has established and is enforcing standards and procedures to ensure against program fraud, waste, and abuse, including standards and procedures concerning nepotism, conflicts of interest among individuals responsible for the administration and supervision of the State program, kickbacks, and the use of political patronage.

    `(b) Plan Amendments- Within 30 days after a State amends a plan submitted pursuant to subsection (a), the State shall notify the Secretary of the amendment.

    `(c) Public Availability of State Plan Summary- The State shall make a summary of any plan or plan amendment submitted by the State under this section publicly available on a website and through such other means as the State determines appropriate.

    `(d) Limitation on Secretarial Authority- The Secretary may only review a State plan or plan amendment submitted under this section for the purpose of confirming that a State has submitted the required documentation. The Secretary shall not have any authority to approve or deny a State plan or plan amendment submitted under this section or to otherwise inhibit or control the expenditure of grants paid to a State under section 1952.

`SEC. 1952. GRANTS TO STATES.

    `(a) Establishment of Sustainable Medicaid Funding for States-

      `(1) IN GENERAL- Beginning January 1, 2013, and annually thereafter, each State that has submitted a plan under section 1951 shall be entitled to receive from the Secretary for each 12-month period, a grant in an amount equal to the State health grant determined for the State for the period under subsection (b).

      `(2) TERMINATION OF OLD MEDICAID AND CHIP FUNDING- No payment shall be made by the Secretary to any State under part A of this title or under title XXI for State expenditures attributable to providing on or after January 1, 2013--

        `(A) medical assistance (as defined in section 1905(a)), child health assistance (as defined in section 2110(a)), or health benefits coverage for pregnant women, low-income children, or low-income families with children; or

        `(B) long-term care services and supports for elderly or disabled individuals.

    `(b) Taxpayer-Provided Pass-Through Funding of Health Grants to States-

      `(1) APPROPRIATION- For the purpose of making health grants to States under this part, there is appropriated, out of any money in the Treasury not otherwise appropriated--

        `(A) for the 12-month period beginning January 1, 2013, an amount equal to the product of--

          `(i) the base appropriation amount determined under paragraph (3); and

          `(ii) the appropriation increase factor determined under paragraph (4) for the period; and

        `(B) for each 12-month period thereafter, an amount equal to the amount appropriated under this paragraph for the preceding 12-month period, increased by the appropriation increase factor determined under paragraph (4) for the period.

      `(2) AMOUNT OF GRANTS-

        `(A) BASED ON POVERTY POPULATION- For each 12-month period beginning on and after January 1, 2013, the Secretary shall pay each State an amount equal to the product of--

          `(i) the amount appropriated under paragraph (1) for the period; and

          `(ii) the ratio of the number of individuals residing in the State whose income does not exceed 100 percent of the poverty line applicable to a family of the size involved to the number of such individuals in all States that have submitted a plan under section 1951 for the period (based on data for the most recent 12-month period for which data is available).

        `(B) PRO RATA ADJUSTMENTS- The Secretary shall make pro rata increases or reductions in the amounts determined for States under subparagraph (A) for a period as necessary to ensure that the total amount appropriated for the period is allotted among all States and that the total amount of all health grants for States determined for a period does not exceed the amount appropriated for the period.

      `(3) BASE APPROPRIATION AMOUNT- The base appropriation amount determined under this paragraph is the product of--

        `(A) $165,000,000,000;

        `(B) the appropriation increase factor determined under paragraph (4) with respect to the 12-month period beginning on January 1, 2011; and

        `(C) the appropriation increase factor determined under paragraph (4) with respect to the 12-month period beginning on January 1, 2012.

      `(4) APPROPRIATION INCREASE FACTOR- The appropriation increase factor determined under this paragraph for a 12-month period is equal to the sum of 1 plus the sum of following:

        `(A) CPI-U GROWTH FACTOR- The percentage increase, if any, in the consumer price index for all urban consumers (all items; United States city average) published by the Bureau of Labor Statistics, or the successor index thereto, for the fiscal year ending on September 30 of the preceding 12-month period.

        `(B) POPULATION GROWTH FACTOR- The percentage increase (if any) in the population of the United States for the fiscal year ending on September 30 of the preceding 12-month period, as determined by the Secretary based on the most recent published estimates of the Bureau of the Census.

    `(c) Availability- A health grant paid to a State under this section for a period shall remain available until expended.

    `(d) Reports to Congress- Not later than January 1 of 2018, and of every 5 years thereafter, the Comptroller General of the United States shall submit a report to Congress that includes an analysis of changes among the States in the population of individuals described in each clause of subsection (b)(2)(A) and such recommendations for legislative changes to the health grant distribution formula applied under subsection (b)(2) as the Comptroller General determines appropriate to achieve the purpose of this part and ensure a fair distribution of the Federal funds appropriated to carry out this part among the States.

`SEC. 1953. USE OF GRANTS.

    `(a) General Rule- A State to which a grant is made under section 1952 may use the grant in any manner that is reasonably demonstrated to accomplish the purpose of this part.

    `(b) Limitation on Use of Grant for Administrative Purposes-

      `(1) LIMITATION- A State to which a grant is made under section 1952 shall not expend more than 5 percent of the grant for administrative purposes.

      `(2) EXCEPTION- Paragraph (1) shall not apply to the use of a grant for expenditures related to preventing or eliminating waste, fraud, or abuse, and expenditures for information technology and computerization needed for tracking or monitoring required by or under this part.

`SEC. 1954. ADMINISTRATIVE PROVISIONS.

    `(a) Payments to States-

      `(1) QUARTERLY PAYMENTS- The Secretary shall pay each health grant payable to a State under section 1952 in quarterly installments, subject to this section.

      `(2) COMPUTATION AND CERTIFICATION OF PAYMENTS TO STATES-

        `(A) COMPUTATION- The Secretary shall estimate the amount to be paid to each State for each quarter under this part, with such estimate to be based on a report filed by the State containing an estimate by the State of the total sum to be expended by the State in the quarter under the State program funded under this part and such other information as the Secretary may find necessary.

        `(B) CERTIFICATION- The Secretary of Health and Human Services shall certify to the Secretary of the Treasury the amount estimated under subparagraph (A) with respect to a State, reduced or increased to the extent of any overpayment or underpayment which the Secretary of Health and Human Services determines was made under this part to the State for any prior quarter and with respect to which adjustment has not been made under this paragraph.

      `(3) PAYMENT METHOD- Upon receipt of a certification under paragraph (2)(B) with respect to a State, the Secretary of the Treasury shall, through the Fiscal Service of the Department of the Treasury and before audit or settlement by the General Accounting Office, pay to the State, at the time or times fixed by the Secretary of Health and Human Services, the amount so certified.

    `(b) No Waiver Authority- Except as provided in section 1950(b)(1)(F), the Secretary may not waive any provision of this part under section 1115 or any other authority.

    `(c) Limitation on Federal Authority- No officer or employee of the Federal Government may regulate the conduct of States under this part or enforce any provision of this part, except to the extent expressly provided in this part.

`SEC. 1955. PENALTIES.

    `(a) In General- Subject to this section:

      `(1) USE OF GRANT IN VIOLATION OF THIS PART-

        `(A) GENERAL PENALTY- If an audit conducted under chapter 75 of title 31, United States Code, finds that an amount paid to a State under section 1952 for a period has been used in violation of this part, the Secretary shall reduce the grant payable to the State under that section for the immediately succeeding period by the amount so used.

        `(B) ENHANCED PENALTY FOR INTENTIONAL VIOLATIONS- If the State does not prove to the satisfaction of the Secretary that the State did not intend to use the amount in violation of this part, the Secretary shall further reduce the grant payable to the State under section 1952 for the immediately succeeding period by an amount equal to 5 percent of the State health grant determined for that period.

      `(2) FAILURE TO SUBMIT REQUIRED REPORT- If the Secretary determines that a State has not, within 45 days after the end of a period for which a grant is made under section 1952, submitted the report required by section 1957 for the period, the Secretary shall reduce the grant payable to the State under section 1952 for the immediately succeeding period by an amount equal to 5 percent of the State health grant determined for that period.

    `(b) Reasonable Cause Exception- The Secretary may not impose a penalty on a State under subsection (a) with respect to a requirement if the Secretary determines that the State has reasonable cause for failing to comply with the requirement.

    `(c) Corrective Compliance Plan-

      `(1) IN GENERAL-

        `(A) NOTIFICATION OF VIOLATION- Before imposing a penalty against a State under subsection (a) with respect to a violation of this part, the Secretary shall notify the State of the violation and allow the State the opportunity to enter into a corrective compliance plan in accordance with this subsection which outlines how the State will correct or discontinue, as appropriate, the violation and how the State will insure continuing compliance with this part.

        `(B) 60-DAY PERIOD TO PROPOSE A CORRECTIVE COMPLIANCE PLAN- During the 60-day period that begins on the date the State receives a notice provided under subparagraph (A) with respect to a violation, the State may submit to the Federal Government a corrective compliance plan to correct or discontinue, as appropriate, the violation.

        `(C) CONSULTATION ABOUT MODIFICATIONS- During the 60-day period that begins with the date the Secretary receives a corrective compliance plan submitted by a State in accordance with subparagraph (B), the Secretary may consult with the State on modifications to the plan.

        `(D) ACCEPTANCE OF PLAN- A corrective compliance plan submitted by a State in accordance with subparagraph (B) is deemed to be accepted by the Secretary if the Secretary does not accept or reject the plan during 60-day period that begins on the date the plan is submitted.

      `(2) EFFECT OF CORRECTING OR DISCONTINUING VIOLATION- The Secretary may not impose any penalty under subsection (a) with respect to any violation covered by a State corrective compliance plan accepted by the Secretary if the State corrects or discontinues, as appropriate, the violation pursuant to the plan.

      `(3) EFFECT OF FAILING TO CORRECT OR DISCONTINUE VIOLATION- The Secretary shall assess some or all of a penalty imposed on a State under subsection (a) with respect to a violation if the State does not, in a timely manner, correct or discontinue, as appropriate, the violation pursuant to a State corrective compliance plan accepted by the Secretary.

    `(d) Limitation on Amount of Penalties-

      `(1) IN GENERAL- In imposing the penalties described in subsection (a), the Secretary shall not reduce any health grant payable to a State for a period by more than 10 percent.

      `(2) CARRYFORWARD OF UNRECOVERED PENALTIES- To the extent that paragraph (1) of this subsection prevents the Secretary from recovering during a period the full amount of penalties imposed on a State under subsection (a) of this section for a prior period, the Secretary shall apply any remaining amount of such penalties to the health grant payable to the State under section 1952 for the immediately succeeding period.

`SEC. 1956. APPEAL OF ADVERSE DECISION.

    `(a) In General- Within 5 days after the date the Secretary takes any adverse action under this part with respect to a State, the Secretary shall notify the Governor of the State of the adverse action, including any action with respect to the State plan submitted under section 1951 or the imposition of a penalty under section 1955.

    `(b) Administrative Review-

      `(1) IN GENERAL- Within 60 days after the date a State receives notice under subsection (a) of an adverse action, the State may appeal the action, in whole or in part, to the Departmental Appeals Board established in the Department of Health and Human Services (in this section referred to as the `Board') by filing an appeal with the Board.

      `(2) PROCEDURAL RULES- The Board shall consider an appeal filed by a State under paragraph (1) on the basis of such documentation as the State may submit and as the Board may require to support the final decision of the Board. In deciding whether to uphold an adverse action or any portion of such an action, the Board shall conduct a thorough review of the issues and take into account all relevant evidence. The Board shall make a final determination with respect to an appeal filed under paragraph (1) not less than 60 days after the date the appeal is filed.

    `(c) Judicial Review of Adverse Decision-

      `(1) IN GENERAL- Within 90 days after the date of a final decision by the Board under this section with respect to an adverse action taken against a State, the State may obtain judicial review of the final decision (and the findings incorporated into the final decision) by filing an action in--

        `(A) the district court of the United States for the judicial district in which the principal or headquarters office of the State agency is located; or

        `(B) the United States District Court for the District of Columbia.

      `(2) PROCEDURAL RULES- The district court in which an action is filed under paragraph (1) shall review the final decision of the Board on the record established in the administrative proceeding, in accordance with the standards of review prescribed by subparagraphs (A) through (E) of section 706(2) of title 5, United States Code. The review shall be on the basis of the documents and supporting data submitted to the Board.

`SEC. 1957. ANNUAL REPORTS.

    `Each State shall submit an annual report to the Secretary that describes the State's expenditures of the amount paid to the State under section 1952 for the most recently ended period, and includes the number of individuals provided medical assistance and the number of individuals provided long-term care services and supports under the State plan under this part and such other information as the Secretary may require. The Secretary shall submit to Congress copies of all State reports submitted under this section with respect to a period.

`SEC. 1958. DEFINITIONS.

    `In this part:

      `(1) DISABLED INDIVIDUAL- The term `disabled individual' means an individual who would be considered disabled under section 1614(a)(3) or under criteria applied under the State plan under part A (as in effect on March 22, 2010).

      `(2) DUAL ELIGIBLE DEFINED- The term `dual eligible individual' means an individual who is entitled to, or enrolled for, benefits under part A of title XVIII of the Social Security Act, or enrolled for benefits under part B of title XVIII of such Act, and is eligible for medical assistance under a State plan under this title or under a waiver of such plan (as in effect on March 22, 2010).

      `(3) ELDERLY INDIVIDUAL- The term `elderly individual' means an individual who has attained age 65 or the age specified in section 226(a)(1), whichever is greater.

      `(4) LONG-TERM CARE SERVICES AND SUPPORTS-

        `(A) IN GENERAL- The term `long-term care services and supports' means any of the services or supports described in subparagraph (B) that may be provided in a nursing facility, an institution, a home, or other setting.

        `(B) SERVICES AND SUPPORTS DESCRIBED- For purposes of subparagraph (A), the services and supports described in this subparagraph include assistive technology, adaptive equipment, remote monitoring equipment, case management for the aged, case management for individuals with disabilities, nursing home services, long-term rehabilitative services necessary to restore functional abilities, services provided in intermediate care facilities for people with disabilities, habilitation services (including adult day care programs), community treatment teams for individuals with mental illness, home health services, services provided in an institution for mental disease, a Program of All-Inclusive Care for the Elderly (PACE), personal care (including personal assistance services), recovery support including peer counseling, supportive employment, training skills necessary to assist the individual in achieving or maintaining independence, training of family members including foster parents in supportive and behavioral modification skills, ongoing and periodic training to maintain life skills, transitional care including room and board not to exceed 60 days within a 12-month period.

      `(5) LOW-INCOME- The term `low-income' means income (as determined under standards established by the State) that does not exceed such percentage of the poverty line for a family of the size involved as the State shall establish.

      `(6) MEDICAL ASSISTANCE- The term `medical assistance' means health care coverage, as determined by a State and described in the State plan in accordance with section 1951(a)(1)(B)(ii).

      `(7) POVERTY LINE DEFINED- The term `poverty line' has the meaning given such term in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)), including any revision required by such section.

      `(8) PREGNANT WOMAN- The term `pregnant woman' includes a woman during the 60-day period beginning on the last day of the pregnancy.

      `(9) STATE- The term `State' means each of the 50 States and the District of Columbia.'.

    (b) Removal of Barrier to Providing Dual Eligible Individuals With Acute Care Through a Managed Care Entity-

      (1) IN GENERAL- Section 1932(a)(2) of the Social Security Act (42 U.S.C. 1396u-2(a)(2)) is amended by striking subparagraph (B).

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) takes effect on January 1, 2013.

SEC. 3. MEDICAL MALPRACTICE REFORM STATE INCENTIVE FUND.

    (a) Grants- The Secretary of Health and Human Services (referred to in this section as the `Secretary') shall award grants to eligible States to assist such States in implementing State-based medical malpractice reforms.

    (b) Eligibility-

      (1) IN GENERAL- To be eligible to receive a grant under subsection (a), a State shall--

        (A) submit to the Secretary an application, at such time, in such manner, and containing such information as the Secretary may require; and

        (B) shall certify, as part of the application under subparagraph (A), that the State has carried out activities, including enacting State laws, that have been demonstrated to lower medical malpractice claim or premiums costs for physicians or to lower health care costs for patients.

      (2) STUDY- As part of a certification provided under paragraph (1)(B), the State shall include the results of at least one longitudinal, empirically-based study or data based on an actuarial analysis that demonstrates cost reductions of the type described in such paragraph. Such results shall be provided in a manner that enables the Comptroller General of the United States to make a determination as to whether such results are the reasonable and demonstrable conclusion of the State activities involved.

      (3) TYPES OF LAWS- Laws described in paragraph (1)(B) may include caps on non-economic damages, the establishment of health courts, the establishment of a comprehensive patient compensation program, providing for administrative determinations of compensation, providing for early offers, establishing safe harbors for the practice of evidence-based medicine, or other demonstrated methods to reduce costs.

    (c) Authorization of Appropriations- There is authorized to be appropriated to carry out this section--

      (1) $500,000,000 for the period of fiscal years 2012 through 2016; and

      (2) $500,000,000 for the period of fiscal years 2017 through 2021.

    (d) Sunset- The authority established under this section shall not apply after September 30, 2021.

SEC. 4. REPEALS.

    (a) PPACA and the Health Care-Related Provisions in the Health Care and Education Reconciliation Act of 2010-

      (1) IN GENERAL- Except as provided in paragraph (2):

        (A) Effective as of the enactment of Public Law 111-148, such Act is repealed, and the provisions of law amended or repealed by such Act are restored or revived as if such Act had not been enacted.

        (B) Effective as of the enactment of the Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), title I and subtitle B of title II of such Act are repealed, and the provisions of law amended or repealed by such title or subtitle, respectively, are restored or revived as if such title and subtitle had not been enacted.

      (2) NONAPPLICATION TO PROGRAM INTEGRITY PROVISIONS- The repeals under paragraph (1) do not apply to the provisions of, and amendments made by the following:

        (A) Section 2801 of Public Law 111-148 (relating to MACPAC).

        (B) Title IV of Public Law 111-148 (relating to transparency and program integrity).

        (C) Subtitle D of title I of Public Law 111-152 (relating to reducing fraud, waste, and abuse).

    (b) Repeal of ARRA Maintenance of Effort- Subsection (f) of section 5001 of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) is amended by striking paragraph (1).

    (c) CHIP- Effective January 1, 2013, title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.) is repealed.

SEC. 5. DEVELOPMENT OF NEW FORMULA FOR FEDERAL FINANCIAL PARTICIPATION FOR STATE CHILD SUPPORT AND WELFARE PROGRAMS TO REPLACE THE FMAP.

    Not later than January 1, 2012, the Secretary of Health and Human Services, in consultation with the States, shall establish a new formula for payments made to or received from States under parts D and E of title IV of the Social Security Act that are based on the Federal medical assistance percentage applicable to the State under title XIX of the Social Security Act. On and after January 1, 2013, the Federal medical assistance percentage shall only be used for purposes of making payments to States under part A of title XIX of that Act for expenditures attributable to providing medical assistance for elderly individuals, disabled individual, and dual eligible individuals in accordance with section 1958 of such Act (as added by section 3). Payments made to or received from a State under parts D or E of title IV of such Act shall be made on and after January 1, 2013, by applying the formula developed by the Secretary of Health and Human Services under this section in lieu of the Federal medical assistance percentage.

END