To amend titles XIX and XXI of the Social Security Act to provide for FamilyCare coverage for parents of enrolled children, and for other purposes.

November 10, 2003

Ms. SNOWE (for herself and Mr. KENNEDY) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend titles XIX and XXI of the Social Security Act to provide for FamilyCare coverage for parents of enrolled children, and for other purposes.

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

SECTION 1. SHORT TITLE OF TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `FamilyCare Act of 2003'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title of title; table of contents.

Sec. 2. Renaming of title XXI program.

Sec. 3. FamilyCare coverage of parents and pregnant women under the medicaid program and title XXI.

Sec. 4. Automatic enrollment of children born to title XXI parents.

Sec. 5. Optional coverage of legal immigrants under the medicaid program and title XXI.

Sec. 6. Optional coverage of children through age 20 under the medicaid program and title XXI.

Sec. 7. Application of simplified title XXI procedures under the medicaid program.

Sec. 8. Elimination of 100 hour rule and other AFDC-related eligibility restrictions.

Sec. 9. State grant program for market innovation.

Sec. 10. Limitations on conflicts of interest.

Sec. 11. Title XXI funding.

Sec. 12. Demonstration programs to improve medicaid and title XXI outreach to homeless individuals and families.

Sec. 13. Additional title XXI revisions.

Sec. 14. Effective date.

SEC. 2. RENAMING OF TITLE XXI PROGRAM.

(a) IN GENERAL- The heading of title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.) is amended to read as follows:

`TITLE XXI--FAMILYCARE PROGRAM'.

(b) PROGRAM REFERENCES- Any reference in any provision of Federal law or regulation to `SCHIP' or `State children's health insurance program' under title XXI of the Social Security Act shall be deemed a reference to the FamilyCare program under such title.

SEC. 3. FAMILYCARE COVERAGE OF PARENTS AND PREGNANT WOMEN UNDER THE MEDICAID PROGRAM AND TITLE XXI.

(a) INCENTIVES TO IMPLEMENT FAMILYCARE COVERAGE-

(1) UNDER MEDICAID-

(A) ESTABLISHMENT OF NEW OPTIONAL ELIGIBILITY CATEGORY- Section 1902(a)(10)(A)(ii) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended--

(i) by striking `or' at the end of subclause (XVII);

(ii) by adding `or' at the end of subclause (XVIII); and

(iii) by adding at the end the following:

`(XIX) who are individuals described in subsection (k)(1) (relating to parents of categorically eligible children);'.

(B) PARENTS DESCRIBED- Section 1902 of the Social Security Act is further amended by inserting after subsection (j) the following:

`(k)(1)(A) Individuals described in this paragraph are individuals--

`(i) who are the parents of an individual who is under 19 years of age (or such higher age as the State may have elected under section 1902(l)(1)(D) and who is eligible for medical assistance under subsection (a)(10)(A);

`(ii) who are not otherwise eligible for medical assistance under such subsection or under a waiver approved under section 1115 or otherwise (except under section 1931 or under subsection (a)(10)(A)(ii)(XIX)); and

`(iii) whose family income exceeds the effective income level or resource level applicable under the State plan under part A of title IV as in effect as of July 16, 1996, but does not exceed the highest effective income level applicable to a child in the family under this title.

`(B) In establishing an income eligibility level for individuals described in this paragraph, a State may apply to such individuals the highest effective income level applicable to a child in the family under this title in order to ensure that such individuals are enrolled in the same program as their children.

`(C) An individual may not be treated as being described in this paragraph unless, at the time of the individual's enrollment under this title, the child referred to in subparagraph (A)(i) of the individual is also enrolled under this title.

`(D) In this subsection, the term `parent' has the meaning given the term `caretaker relative' for purposes of carrying out section 1931.

`(2) In the case of a parent described in paragraph (1) who is also the parent of a child who is eligible for child health assistance under title XXI, the State may elect (on a uniform basis) to enroll all such parents under this title or under title XXI.'.

(C) ENHANCED MATCHING FUNDS AVAILABLE IF CERTAIN CONDITIONS MET- Section 1905 of the Social Security Act (42 U.S.C. 1396d) is amended--

(i) in the fourth sentence of subsection (b), by striking `or subsection (u)(3)' and inserting `, (u)(3), or (u)(4)'; and

(ii) in subsection (u)--

(I) by redesignating paragraph (4) as paragraph (6), and

(II) by inserting after paragraph (3) the following:

`(4) For purposes of subsection (b):

`(A) FAMILYCARE PARENTS- The expenditures described in this subparagraph are the expenditures described in the following clauses (i) and (ii):

`(i) PARENTS- If the conditions described in clause (iii) are met, expenditures for medical assistance for--

`(I) parents described in section 1902(k)(1);

`(II) parents who would be described in section 1902(k)(1) but for the fact that they are eligible for medical assistance under section 1931 or under a waiver approved under section 1115 and whose family income exceeds the effective income level applicable under section 1931 or under a waiver approved under section 1115 to a family of the size involved as of January 1, 2004; and

`(III) in the case of a State that, as of January 1, 2004, has an effective income level under section 1931 or under a waiver approved under section 1115 for parents described in section 1902(k)(1)(A)(i) that exceeds 100 percent of the poverty line, parents described in such section whose family income exceeds 100 percent of the poverty line.

`(ii) CERTAIN PREGNANT WOMEN- If the conditions described in clause (iv) are met, expenditures for medical assistance for pregnant women described in subsection (n) or under section 1902(l)(1)(A) in a family the income of which exceeds the effective income level applicable under subsection (a)(10)(A)(i)(III) or (l)(2)(A) of section 1902 to a family of the size involved as of January 1, 2004.

`(iii) CONDITIONS FOR EXPENDITURES FOR PARENTS- The conditions described in this clause are the following:

`(I) The State has a State child health plan under title XXI which (whether implemented under such title or under this title) has an effective income level for children that is at least 200 percent of the poverty line.

`(II) Subject to the availability of the State's allotments under title XXI, the State child health plan under that title does not limit the acceptance of applications, does not use a waiting list for children who meet eligibility standards to qualify for assistance, and provides benefits to all children in the State who apply for and meet eligibility standards.

`(III) The State plans under this title and title XXI do not provide coverage for parents with higher family income without covering parents with a lower family income.

`(IV) The State does not apply an income level for parents that is lower than the effective income level (expressed as a percent of the poverty line) that has been specified under the State plan under title XIX (including under a waiver authorized by the Secretary or under section 1902(r)(2)), as of January 1, 2004, to be eligible for medical assistance as a parent under this title.

`(iv) CONDITIONS FOR EXPENDITURES FOR CERTAIN PREGNANT WOMEN- The conditions described in this clause are the following:

`(I) The State has established an effective income eligibility level for pregnant women under subsection (a)(10)(A)(i)(III) or (l)(2)(A) of section 1902 that is at least 185 percent of the poverty line.

`(II) The State plans under this title and title XXI do not provide coverage for pregnant women described in subparagraph (A)(ii) with higher family income without covering such pregnant women with a lower family income.

`(III) The State does not apply an income level for pregnant women that is lower than the effective income level (expressed as a percent of the poverty line and considering applicable income disregards) that has been specified under the State plan under subsection (a)(10)(A)(i)(III) or (l)(2)(A) of section 1902, as of January 1, 2004, to be eligible for medical assistance as a pregnant woman.

`(IV) The State satisfies the conditions described in subclauses (I) and (II) of clause (iii).

`(v) DEFINITIONS- For purposes of this subsection:

`(I) The term `parent' has the meaning given such term for purposes of section 1902(k)(1).

`(II) The term `poverty line' has the meaning given such term in section 2110(c)(5).'.

(D) PAYMENT FROM TITLE XXI ALLOTMENT FOR MEDICAID EXPANSION COSTS; ELIMINATION OF COUNTING MEDICAID CHILD PRESUMPTIVE ELIGIBILITY COSTS AGAINST TITLE XXI ALLOTMENT- Section 2105(a)(1) of the Social Security Act (42 U.S.C. 1397ee(a)(1)) is amended--

(i) in the matter preceding subparagraph (A), by striking `(or, in the case of expenditures described in subparagraph (B), the Federal medical assistance percentage (as defined in the first sentence of section 1905(b)))'; and

(ii) by striking subparagraph (B) and inserting the following:

`(B) for the provision of medical assistance that is attributable to expenditures described in section 1905(u)(4)(A);'.

(2) UNDER TITLE XXI-

(A) FAMILYCARE COVERAGE- Title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.) is amended by adding at the end the following:

`SEC. 2111. OPTIONAL FAMILYCARE COVERAGE OF PARENTS OF TARGETED LOW-INCOME CHILDREN OR TARGETED LOW-INCOME PREGNANT WOMEN.

`(a) OPTIONAL COVERAGE- Notwithstanding any other provision of this title, a State may provide for coverage, through an amendment to its State child health plan under section 2102, of parent health assistance for targeted low-income parents, pregnancy-related assistance for targeted low-income pregnant women, or both, in accordance with this section, but only if--

`(1) with respect to the provision of parent health assistance, the State meets the conditions described in clause (iii) of section 1905(u)(4)(A);

`(2) with respect to the provision of pregnancy-related assistance, the State meets the conditions described in clause (iv) of section 1905(u)(4)(A); and

`(3) in the case of parent health assistance for targeted low-income parents, the State elects to provide medical assistance under section 1902(a)(10)(A)(ii)(XIX), under section 1931, or under a waiver under section 1115 to individuals described in section 1902(k)(1)(A)(i) and elects an effective income level that, consistent with paragraphs (1)(B) and (2) of section 1902(k), ensures that such individuals are enrolled in the same program as their children if their children are eligible for coverage under title XIX (including under a waiver authorized by the Secretary or under section 1902(r)(2)).'.

`(b) DEFINITIONS- For purposes of this title:

`(1) PARENT HEALTH ASSISTANCE- The term `parent health assistance' has the meaning given the term child health assistance in section 2110(a) as if any reference to targeted low-income children were a reference to targeted low-income parents.

`(2) PARENT- The term `parent' has the meaning given the term `caretaker relative' for purposes of carrying out section 1931.

`(3) PREGNANCY-RELATED ASSISTANCE- The term `pregnancy-related assistance' has the meaning given the term child health assistance in section 2110(a) as if any reference to targeted low-income children were a reference to targeted low-income pregnant women, except that the assistance shall be limited to services related to pregnancy (which include prenatal, delivery, and postpartum services) and to other conditions that may complicate pregnancy.

`(4) TARGETED LOW-INCOME PARENT- The term `targeted low-income parent' has the meaning given the term targeted low-income child in section 2110(b) as if the reference to a child were deemed a reference to a parent (as defined in paragraph (3)) of the child; except that in applying such section--

`(A) there shall be substituted for the income level described in paragraph (1)(B)(ii)(I) the applicable income level in effect for a targeted low-income child;

`(B) in paragraph (3), January 1, 2004, shall be substituted for July 1, 1997; and

`(C) in paragraph (4), January 1, 2004, shall be substituted for March 31, 1997.

`(5) TARGETED LOW-INCOME PREGNANT WOMAN- The term `targeted low-income pregnant woman' means a woman--

`(A) during pregnancy and through the end of the month in which the 60-day period (beginning on the last day of her pregnancy) ends;

`(B) whose family income exceeds the effective income level (expressed as a percent of the poverty line and considering applicable income disregards) that has been specified under subsection (a)(10)(A)(i)(III) or (l)(2)(A) of section 1902, as of January 1, 2002, to be eligible for medical assistance as a pregnant woman under title XIX but does not exceed the income eligibility level established under the State child health plan under this title for a targeted low-income child; and

`(C) who satisfies the requirements of paragraphs (1)(A), (1)(C), (2), and (3) of section 2110(b).

`(c) REFERENCES TO TERMS AND SPECIAL RULES- In the case of, and with respect to, a State providing for coverage of parent health assistance to targeted low-income parents or pregnancy-related assistance to targeted low-income pregnant women under subsection (a), the following special rules apply:

`(1) Any reference in this title (other than in subsection (b)) to a targeted low-income child is deemed to include a reference to a targeted low-income parent or a targeted low-income pregnant woman (as applicable).

`(2) Any such reference to child health assistance--

`(A) with respect to such parents is deemed a reference to parent health assistance; and

`(B) with respect to such pregnant women, is deemed a reference to pregnancy-related assistance.

`(3) In applying section 2103(e)(3)(B) in the case of a family or pregnant woman provided coverage under this section, the limitation on total annual aggregate cost-sharing shall be applied to the entire family or such pregnant woman.

`(4) In applying section 2110(b)(4), any reference to `section 1902(l)(2) or 1905(n)(2) (as selected by a State)' is deemed a reference to the effective income level applicable to parents under section 1931 or under a waiver approved under section 1115, or, in the case of a pregnant woman, the income level established under section 1902(l)(2)(A).

`(5) In applying section 2102(b)(3)(B), any reference to children found through screening to be eligible for medical assistance under the State medicaid plan under title XIX is deemed a reference to parents and pregnant women.

`(6) With respect to a targeted low-income parent or a targeted low-income pregnant woman, there shall be no exclusion of benefits for services based on any preexisting condition.'.

(B) ADDITIONAL ALLOTMENT FOR STATES PROVIDING COVERAGE OF PARENTS OR PREGNANT WOMEN-

(i) IN GENERAL- Section 2104 of the Social Security Act (42 U.S.C. 1397dd) is amended by inserting after subsection (c) the following:

`(d) ADDITIONAL ALLOTMENTS FOR STATE COVERAGE OF PARENTS OR PREGNANT WOMEN-

`(1) APPROPRIATION; TOTAL ALLOTMENT- For the purpose of providing additional allotments to States under this title, there is appropriated, out of any money in the Treasury not otherwise appropriated--

`(A) for fiscal year 2005, $5,000,000,000;

`(B) for each of fiscal years 2006 and 2007, $6,000,000,000; and

`(C) for each of fiscal years 2008 through 2011, $7,000,000,000.

`(2) STATE AND TERRITORIAL ALLOTMENTS-

`(A) IN GENERAL- In addition to the allotments provided under subsections (b) and (c), subject to paragraphs (3) and (4), of the amount available for the additional allotments under paragraph (1) for a fiscal year, the Secretary shall allot to each State with a State child health plan approved under this title--

`(i) in the case of such a State other than a commonwealth or territory described in clause (ii), the same proportion as the proportion of the State's allotment under subsection (b) (determined without regard to subsection (f)) to the total amount of the allotments under subsection (b) for such States eligible for an allotment under this paragraph for such fiscal year; and

`(ii) in the case of a commonwealth or territory described in subsection (c)(3), the same proportion as the proportion of the commonwealth's or territory's allotment under subsection (c) (determined without regard to subsection (f)) to the total amount of the allotments under subsection (c) for commonwealths and territories eligible for an allotment under this paragraph for such fiscal year.

`(B) AVAILABILITY AND REDISTRIBUTION OF UNUSED ALLOTMENTS- In applying subsections (e) and (f) with respect to additional allotments made available under this subsection, the procedures established under such subsections shall ensure such additional allotments are only made available to States which have elected to provide coverage under section 2111.

`(3) USE OF ADDITIONAL ALLOTMENT- Additional allotments provided under this subsection are not available for amounts expended before October 1, 2004. Such amounts are available for amounts expended on or after such date for child health assistance for targeted low-income children, as well as for parent health assistance for targeted low-income parents, and pregnancy-related assistance for targeted low-income pregnant women.

`(4) REQUIRING ELECTION TO PROVIDE COVERAGE- No payments may be made to a State under this title from an allotment provided under this subsection unless the State has made an election to provide parent health assistance for targeted low-income parents, or pregnancy-related assistance for targeted low-income pregnant women.'.

(ii) CONFORMING AMENDMENTS- Section 2104 of the Social Security Act (42 U.S.C. 1397dd) is amended--

(I) in subsection (a), by inserting `subject to subsection (d),' after `under this section,';

(II) in subsection (b)(1), by inserting `and subsection (d)' after `Subject to paragraph (4)'; and

(III) in subsection (c)(1), by inserting `subject to subsection (d),' after `for a fiscal year,'.

(C) NO COST-SHARING FOR PREGNANCY-RELATED BENEFITS- Section 2103(e)(2) of the Social Security Act (42 U.S.C. 1397cc(e)(2)) is amended--

(i) in the heading, by inserting `AND PREGNANCY-RELATED SERVICES' after `PREVENTIVE SERVICES'; and

(ii) by inserting before the period at the end the following: `and for pregnancy-related services'.

(b) OPTIONAL APPLICATION OF PRESUMPTIVE ELIGIBILITY PROVISIONS TO PARENTS- Section 1920A of the Social Security Act (42 U.S.C. 1396r-1a) is amended by adding at the end the following:

`(e) A State may elect to apply the previous provisions of this section to provide for a period of presumptive eligibility for medical assistance for a parent (as defined for purposes of section 1902(k)(1)) of a child with respect to whom such a period is provided under this section.'.

(c) INCENTIVE PAYMENTS FOR EXPANSION OF COVERAGE TO PARENTS AND PREGNANT WOMEN- Section 1903 of the Social Security Act (42 U.S.C. 1396b) is amended by adding at the end the following:

`(x) INCENTIVE PAYMENTS FOR EXPANSION OF COVERAGE OF PARENTS AND PREGNANT WOMEN-

`(1) AUTHORITY TO MAKE PAYMENTS- With respect to fiscal year 2005 or 2006, the Secretary shall, in addition to any other payments made to a State under this section for such fiscal year, pay each State an amount equal to the FamilyCare expansion incentive payment payable to the State under this subsection for the fiscal year.

`(2) FAMILYCARE EXPANSION INCENTIVE PAYMENT- Subject to paragraph (3), the FamilyCare expansion incentive payment for a FamilyCare expansion State for each of fiscal years 2005 and 2006 is equal to the product of--

`(A) $1,000,000,000; and

`(B) the ratio (expressed as a percentage) of--

`(i) with respect to such a State--

`(I) the total number of parents or pregnant women who are provided parent health assistance or pregnancy-related assistance under this title or title XXI only under section 1902(a)(10)(ii)(XIX) or section 2111 in the State during the fiscal year; multiplied by

`(II) the total number of months that such parents or pregnant women are provided such assistance during the fiscal year in the State; to

`(ii) the product of--

`(I) the total number of such parents or pregnant women who are provided such assistance during the fiscal year in all such States; multiplied by

`(II) the total number of months that all such parents or pregnant women are provided such assistance during the fiscal year in all such States.

`(3) LIMITATION- The FamilyCare expansion incentive payment for a FamilyCare expansion State for a fiscal year may not exceed the State share of the total amount of expenditures incurred by the State for that fiscal year for providing parent health assistance or pregnancy-related assistance under this title or title XXI to parents or pregnant women under section 1902(a)(10)(ii)(XIX) or section 2111. Any amount that is not paid to a State after the application of the preceding sentence for a fiscal year, subject to the preceding sentence, first shall be available for making FamilyCare expansion incentive payments to other FamilyCare expansion States for that fiscal year and any remaining amount shall be transferred in accordance with paragraph (5).

`(4) ADVANCE PAYMENT; RETROSPECTIVE ADJUSTMENT- The Secretary may make FamilyCare expansion incentive payments under this subsection for each quarter of fiscal years 2005 and 2006 on the basis of advance estimates of expenditures submitted by the State and such other investigation as the Secretary may find necessary, and may reduce or increase the amount of such payments as necessary to adjust for any overpayment or underpayment for prior quarters.

`(5) TRANSFER OF UNUSED FUNDS TO ADDITIONAL ALLOTMENTS FOR FAMILYCARE- Any amounts that are not paid under this subsection for a fiscal year are hereby transferred and made available for allotment under section 2104(d) for the succeeding fiscal year.'.

(d) CONFORMING AMENDMENTS-

(1) ELIGIBILITY CATEGORIES- Section 1905(a) of the Social Security Act (42 U.S.C. 1396d(a)) is amended, in the matter before paragraph (1)--

(A) by striking `or' at the end of clause (xii);

(B) by inserting `or' at the end of clause (xiii); and

(C) by inserting after clause (xiii) the following:

`(xiv) who are parents described (or treated as if described) in section 1902(k)(1),'.

(2) INCOME LIMITATIONS- Section 1903(f)(4) of the Social Security Act (42 U.S.C. 1396b(f)(4)) is amended by inserting `1902(a)(10)(A)(ii)(XIX),' after `1902(a)(10)(A)(ii)(XVIII),'.

(3) CONFORMING AMENDMENT RELATING TO NO WAITING PERIOD FOR PREGNANT WOMEN- Section 2102(b)(1)(B) of the Social Security Act (42 U.S.C. 1397bb(b)(1)(B)) is amended--

(A) by striking `, and' at the end of clause (i) and inserting a semicolon;

(B) by striking the period at the end of clause (ii) and inserting `; and'; and

(C) by adding at the end the following:

`(iii) may not apply a waiting period (including a waiting period to carry out paragraph (3)(C)) in the case of a targeted low-income parent who is pregnant.'.

SEC. 4. AUTOMATIC ENROLLMENT OF CHILDREN BORN TO TITLE XXI PARENTS.

(a) TITLE XXI- Section 2102(b)(1) of the Social Security Act (42 U.S.C. 1397bb(b)(1)) is amended by adding at the end the following:

`(C) AUTOMATIC ELIGIBILITY OF CHILDREN BORN TO PARENTS OR PREGNANT WOMEN- Such eligibility standards shall provide for automatic coverage of a child born to an individual who is provided assistance under this title in the same manner as medical assistance would be provided under section 1902(e)(4) to a child described in such section.'.

(b) CONFORMING AMENDMENT TO MEDICAID- Section 1902(e)(4) (42 U.S.C. 1396a(e)(4)) is amended in the first sentence by striking `so long as the child is a member of the woman's household and the woman remains (or would remain if pregnant) eligible for such assistance'.

SEC. 5. OPTIONAL COVERAGE OF LEGAL IMMIGRANTS UNDER THE MEDICAID PROGRAM AND TITLE XXI.

(a) MEDICAID PROGRAM- Section 1903(v) of the Social Security Act (42 U.S.C. 1396b(v)) is amended--

(1) in paragraph (1), by striking `paragraph (2)' and inserting `paragraphs (2) and (4)'; and

(2) by adding at the end the following:

`(4)(A) A State may elect (in a plan amendment under this title) to provide medical assistance under this title for aliens who are lawfully residing in the United States (including battered aliens described in section 431(c) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) and who are otherwise eligible for such assistance, within any of the following eligibility categories:

`(i) PREGNANT WOMEN- Women during pregnancy (and during the 60-day period beginning on the last day of the pregnancy).

`(ii) CHILDREN- Children (as defined under such plan), including optional targeted low-income children described in section 1905(u)(2)(B).

`(iii) PARENTS- If the State has elected the eligibility category described in clause (ii), caretaker relatives who are parents (including individuals treated as a caregiver for purposes of carrying out section 1931) of children (described in such clause or otherwise) who are eligible for medical assistance under the plan.

`(B)(i) In the case of a State that has elected to provide medical assistance to a category of aliens under subparagraph (A), no debt shall accrue under an affidavit of support against any sponsor of such an alien on the basis of provision of assistance to such category and the cost of such assistance shall not be considered as an unreimbursed cost.

`(ii) The provisions of sections 401(a), 402(b), 403, and 421 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 shall not apply to a State that makes an election under subparagraph (A).'.

(b) TITLE XXI- Section 2107(e)(1) of the Social Security Act (42 U.S.C. 1397gg(e)(1)) is amended by adding at the end the following:

`(E) Section 1903(v)(4) (relating to optional coverage of categories of lawful resident alien pregnant women, children, and parents), but only with respect to an eligibility category under this title, if the same eligibility category has been elected under such section for purposes of title XIX.'.

SEC. 6. OPTIONAL COVERAGE OF CHILDREN THROUGH AGE 20 UNDER THE MEDICAID PROGRAM AND TITLE XXI.

(a) MEDICAID-

(1) IN GENERAL- Section 1902(l)(1)(D) of the Social Security Act (42 U.S.C. 1396a(l)(1)(D)) is amended by inserting `(or, at the election of a State, 20 or 21 years of age)' after `19 years of age'.

(2) CONFORMING AMENDMENTS-

(A) Section 1902(e)(3)(A) of the Social Security Act (42 U.S.C. 1396a(e)(3)(A)) is amended by inserting `(or 1 year less than the age the State has elected under subsection (l)(1)(D))' after `18 years of age'.

(B) Section 1902(e)(12) of the Social Security Act (42 U.S.C. 1396a(e)(12)) is amended by inserting `or such higher age as the State has elected under subsection (l)(1)(D)' after `19 years of age'.

(C) Section 1920A(b)(1) of the Social Security Act (42 U.S.C. 1396r-1a(b)(1)) is amended by inserting `or such higher age as the State has elected under section 1902(l)(1)(D)' after `19 years of age'.

(D) Section 1928(h)(1) of the Social Security Act (42 U.S.C. 1396s(h)(1)) is amended by inserting `or 1 year less than the age the State has elected under section 1902(l)(1)(D)' before the period at the end.

(E) Section 1932(a)(2)(A) of the Social Security Act (42 U.S.C. 1396u-2(a)(2)(A)) is amended by inserting `(or such higher age as the State has elected under section 1902(l)(1)(D))' after `19 years of age'.

(b) TITLE XXI- Section 2110(c)(1) of the Social Security Act (42 U.S.C. 1397jj(c)(1)) is amended by inserting `(or such higher age as the State has elected under section 1902(l)(1)(D))'.

SEC. 7. APPLICATION OF SIMPLIFIED TITLE XXI PROCEDURES UNDER THE MEDICAID PROGRAM.

(a) APPLICATION UNDER MEDICAID-

(1) IN GENERAL- Section 1902(l) of the Social Security Act (42 U.S.C. 1396a(l)) is amended--

(A) in paragraph (3), by inserting `subject to paragraph (5)', after `Notwithstanding subsection (a)(17),'; and

(B) by adding at the end the following:

`(5) With respect to determining the eligibility of individuals under 19 years of age (or such higher age as the State has elected under paragraph (1)(D)) for medical assistance under subsection (a)(10)(A) and, separately, with respect to determining the eligibility of individuals for medical assistance under subsection (a)(10)(A)(i)(VIII) or (a)(10)(A)(ii)(XIX), notwithstanding any other provision of this title, if the State has established a State child health plan under title XXI--

`(A) the State may not apply a resource standard;

`(B) the State shall use the same simplified eligibility form (including, if applicable, permitting application other than in person) as the State uses under such State child health plan with respect to such individuals;

`(C) the State shall provide for initial eligibility determinations and redeterminations of eligibility using verification policies, forms, and frequency that are no less restrictive than the policies, forms, and frequency the State uses for such purposes under such State child health plan with respect to such individuals; and

`(D) the State shall not require a face-to-face interview for purposes of initial eligibility determinations and redeterminations unless the State requires such an interview for such purposes under such child health plan with respect to such individuals.'.

(2) EFFECTIVE DATE- The amendments made by paragraph (1) apply to determinations of eligibility made on or after the date that is 1 year after the date of the enactment of this Act, whether or not regulations implementing such amendments have been issued.

(b) PRESUMPTIVE ELIGIBILITY-

(1) IN GENERAL- Section 1920A(b)(3)(A)(i) of the Social Security Act (42 U.S.C. 1396r-1a(b)(3)(A)(i)) is amended by inserting `a child care resource and referral agency,' after `a State or tribal child support enforcement agency,'.

(2) APPLICATION TO PRESUMPTIVE ELIGIBILITY FOR PREGNANT WOMEN UNDER MEDICAID- Section 1920(b) of the Social Security Act (42 U.S.C. 1396r-1(b)) is amended by adding at the end after

and below paragraph (2) the following flush sentence:

`The term `qualified provider' includes a qualified entity as defined in section 1920A(b)(3).'.

(3) APPLICATION UNDER TITLE XXI-

(A) IN GENERAL- Section 2107(e)(1)(D) of the Social Security Act (42 U.S.C. 1397gg(e)(1)) is amended to read as follows:

`(D) Sections 1920 and 1920A (relating to presumptive eligibility).'.

(B) CONFORMING ELIMINATION OF RESOURCE TEST- Section 2102(b)(1)(A) of such Act (42 U.S.C. 1397bb(b)(1)(A)) is amended--

(i) by striking ` and resources (including any standards relating to spenddowns and disposition of resources)'; and

(ii) by adding at the end the following: `Effective 1 year after the date of the enactment of the FamilyCare Act of 2003, such standards may not include the application of a resource standard or test.'.

(c) AUTOMATIC REASSESSMENT OF ELIGIBILITY FOR TITLE XXI AND MEDICAID BENEFITS FOR CHILDREN LOSING MEDICAID OR TITLE XXI ELIGIBILITY-

(1) LOSS OF MEDICAID ELIGIBILITY- Section 1902(a) of the Social Security Act (42 U.S.C. 1396a(a)) is amended--

(A) by striking the period at the end of paragraph (65) and inserting `; and', and

(B) by inserting after paragraph (65) the following:

`(66) provide, in the case of a State with a State child health plan under title XXI, that before medical assistance to a child (or a parent of a child) is discontinued under this title, a determination of whether the child (or parent) is eligible for benefits under title XXI shall be made and, if determined to be so eligible, the child (or parent) shall be automatically enrolled in the program under such title without the need for a new application.'.

(2) LOSS OF TITLE XXI ELIGIBILITY AND COORDINATION WITH MEDICAID- Section 2102(b) of the Social Security Act (42 U.S.C. 1397bb(b)) is amended--

(A) in paragraph (3), by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively, and by inserting after subparagraph (C) the following:

`(D) that before health assistance to a child (or a parent of a child) is discontinued under this title, a determination of whether the child (or parent) is eligible for benefits under title XIX is made and, if determined to be so eligible, the child (or parent) is automatically enrolled in the program under such title without the need for a new application;';

(B) by redesignating paragraph (4) as paragraph (5); and

(C) by inserting after paragraph (3) the following new paragraph:

`(4) COORDINATION WITH MEDICAID- The State shall coordinate the screening and enrollment of individuals under this title and under title XIX consistent with the following:

`(A) Information that is collected under this title or under title XIX which is needed to make an eligibility determination under the other title shall be transmitted to the appropriate administering entity under such other title in a timely manner so that coverage is not delayed and families do not have to submit the same information twice. Families shall be provided the information they need to complete the application process for coverage under both titles and be given appropriate notice of any determinations made on their applications for such coverage.

`(B) If a State does not use a joint application under this title and such title, the State shall--

`(i) promptly inform a child's parent or caretaker in writing and, if appropriate, orally, that a child has been found likely to be eligible under title XIX;

`(ii) provide the family with an application for medical assistance under such title and offer information about what (if any) further information, documentation, or other steps are needed to complete such application process;

`(iii) offer assistance in completing such application process; and

`(iv) promptly transmit the separate application under this title or the information obtained through such application, and all other relevant information and documentation, including the results of the screening process, to the State agency under title XIX for a final determination on eligibility under such title.

`(C) Applicants are notified in writing of--

`(i) benefits (including restrictions on cost-sharing) under title XIX; and

`(ii) eligibility rules that prohibit children who have been screened eligible for medical assistance under such title from being enrolled under this title, other than provisional temporary enrollment while a final eligibility determination is being made under such title.

`(D) If the agency administering this title is different from the agency administering a State plan under title XIX, such agencies shall coordinate the screening and enrollment of applicants for such coverage under both titles.

`(E) The coordination procedures established between the program under this title and under title XIX shall apply not only to the initial eligibility determination of a family but also

to any renewals or redeterminations of such eligibility.'.

(d) PROVISION OF MEDICAID AND CHIP APPLICATIONS AND INFORMATION UNDER THE SCHOOL LUNCH PROGRAM- Section 9(b)(2)(B) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1758(b)(2)(B)) is amended--

(1) by striking `(B) Applications' and inserting `(B)(i) Applications'; and

(2) by adding at the end the following:

`(ii)(I) Applications for free and reduced price lunches that are distributed pursuant to clause (i) to parents or guardians of children in attendance at schools participating in the school lunch program under this Act shall also contain information on the availability of medical assistance under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) and of child health and FamilyCare assistance under title XXI of such Act, including information on how to obtain an application for assistance under such programs.

`(II) Information on the programs referred to in subclause (I) shall be provided on a form separate from the application form for free and reduced price lunches under clause (i).'.

(e) 12-MONTHS CONTINUOUS ELIGIBILITY-

(1) MEDICAID- Section 1902(e)(12) of the Social Security Act (42 U.S.C. 1396a(e)(12)) is amended--

(A) by striking `At the option of the State, the plan may' and inserting `The plan shall';

(B) by striking `an age specified by the State (not to exceed 19 years of age)' and inserting `19 years of age (or such higher age as the State has elected under subsection (l)(1)(D)) or, at the option of the State, who is eligible for medical assistance as the parent of such a child'; and

(C) in subparagraph (A), by striking `a period (not to exceed 12 months) ' and inserting `the 12-month period beginning on the date'.

(2) TITLE XXI- Section 2102(b)(2) of such Act (42 U.S.C. 1397bb(b)(2)) is amended by adding at the end the following: `Such methods shall provide 12-months continuous eligibility for children under this title in the same manner that section 1902(e)(12) provides 12-months continuous eligibility for children described in such section under title XIX. If a State has elected to apply section 1902(e)(12) to parents, such methods may provide 12-months continuous eligibility for parents under this title in the same manner that such section provides 12-months continuous eligibility for parents described in such section under title XIX.'.

SEC. 8. ELIMINATION OF 100 HOUR RULE AND OTHER AFDC-RELATED ELIGIBILITY RESTRICTIONS.

(a) IN GENERAL- Section 1931(b)(1)(A)(ii) of the Social Security Act (42 U.S.C. 1396u-1(b)(1)(A)(ii)) is amended by inserting `other than the requirement that the child be deprived of parental support or care by reason of the death, continued absence from the home, incapacity, or unemployment of a parent,' after `section 407(a),'.

(b) CONFORMING AMENDMENT- Section 1905(a) of the Social Security Act (42 U.S.C. 1396d(a)) is amended, in the matter before paragraph (1), in clause (ii), by striking `if such child is (or would, if needy, be) a dependent child under part A of title IV'.

SEC. 9. STATE GRANT PROGRAM FOR MARKET INNOVATION.

(a) IN GENERAL- The Secretary of Health and Human Services (in this section referred to as the `Secretary') shall establish a program (in this section referred to as the `program') to award demonstration grants under this section to States to allow States to demonstrate the effectiveness of innovative ways to increase access to health insurance through market reforms and other innovative means. Such innovative means may include any of the following:

(1) Alternative group purchasing or pooling arrangements, such as purchasing cooperatives for small businesses, reinsurance pools, or high risk pools.

(2) Individual or small group market reforms.

(3) Consumer education and outreach.

(4) Subsidies to individuals, employers, or both, in obtaining health insurance.

(b) SCOPE; DURATION- The program shall be limited to not more than 10 States and to a total period of 5 years, beginning on the date the first demonstration grant is made.

(c) CONDITIONS FOR DEMONSTRATION GRANTS-

(1) IN GENERAL- The Secretary may not provide for a demonstration grant to a State under the program unless the Secretary finds that under the proposed demonstration grant--

(A) the State will provide for demonstrated increase of access for some portion of the existing uninsured population through a market innovation (other than merely through a financial

expansion of a program initiated before the date of the enactment of this Act);

(B) the State will comply with applicable Federal laws;

(C) the State will not discriminate among participants on the basis of any health status-related factor (as defined in section 2791(d)(9) of the Public Health Service Act (42 U.S.C. 300gg-91(d)(9)), except to the extent a State wishes to focus on populations that otherwise would not obtain health insurance because of such factors; and

(D) the State will provide for such evaluation, in coordination with the evaluation required under subsection (d), as the Secretary may specify.

(2) APPLICATION- The Secretary shall not provide a demonstration grant under the program to a State unless--

(A) the State submits to the Secretary such an application, in such a form and manner, as the Secretary specifies;

(B) the application includes information regarding how the demonstration grant will address issues such as governance, targeted population, expected cost, and the continuation after the completion of the demonstration grant period; and

(C) the Secretary determines that the demonstration grant will be used consistent with this section.

(3) FOCUS- A demonstration grant proposal under this section need not cover all uninsured individuals in a State or all health care benefits with respect to such individuals.

(d) EVALUATION- The Secretary shall enter into a contract with an appropriate entity outside the Department of Health and Human Services to conduct an overall evaluation of the program at the end of the program period. Such evaluation shall include an analysis of improvements in access, costs, quality of care, or choice of coverage, under different demonstration grants.

(e) OPTION TO PROVIDE FOR INITIAL PLANNING GRANTS- Notwithstanding the previous provisions of this section, under the program the Secretary may provide for a portion of the amounts appropriated under subsection (f) (not to exceed $5,000,000) to be made available to any State for initial planning grants to permit States to develop demonstration grant proposals under the previous provisions of this section.

(f) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated $100,000,000 for each fiscal year beginning with fiscal year 2004 to carry out this section. Amounts appropriated under this subsection shall remain available until expended.

(g) STATE DEFINED- In this section, the term `State' has the meaning given such term for purposes of title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).

SEC. 10. LIMITATIONS ON CONFLICTS OF INTEREST.

(a) LIMITATION ON CONFLICTS OF INTEREST IN MARKETING ACTIVITIES-

(1) TITLE XXI- Section 2105(c) of the Social Security Act (42 U.S.C. 300aa-5(c)) is amended by adding at the end the following:

`(8) LIMITATION ON EXPENDITURES FOR MARKETING ACTIVITIES- Amounts expended by a State for the use of an administrative vendor in marketing health benefits coverage to low-income children under this title shall not be considered, for purposes of subsection (a)(2)(D), to be reasonable costs to administer the plan unless the following conditions are met with respect to the vendor:

`(A) The vendor is independent of any entity offering the coverage in the same area of the State in which the vendor is conducting marketing activities.

`(B) No person who is an owner, employee, consultant, or has a contract with the vendor either has any direct or indirect financial interest with such an entity or has been excluded from participation in the program under this title or title XVIII or XIX or debarred by any Federal agency, or subject to a civil money penalty under this Act.'.

(b) PROHIBITION OF AFFILIATION WITH DEBARRED INDIVIDUALS-

(1) MEDICAID- Section 1903(i) of the Social Security Act (42 U.S.C. 1396b(i))is amended--

(A) by striking the period at the end of paragraph (20) and inserting `; or'; and

(B) by inserting after paragraph (20) the following:

`(21) with respect to any amounts expended for an entity that receives payments under the plan unless--

`(A) no person with an ownership or control interest (as defined in section 1124(a)(3)) in the entity is a person that is debarred, suspended, or otherwise excluded from participating in procurement or non-procurement activities under the Federal Acquisition Regulation; and

`(B) such entity has not entered into an employment, consulting, or other agreement for the provision of items or services that are material to such entity's obligations under the plan with a person described in subparagraph (A).'.

(2) TITLE XXI- Section 2107(e)(1) of the Social Security Act (42 U.S.C. 1397gg(e)(1)), as amended by sections 5(b) and 7(b)(3), is further amended--

(A) in subparagraph (B), by striking `and (17)' and inserting `(17), and (21)'; and

(B) by adding at the end the following:

`(F) Section 1902(a)(67) (relating to prohibition of affiliation with debarred individuals).'.

SEC. 11. TITLE XXI FUNDING.

(a) ELIMINATION OF `DIP' AND EXTENSION OF FUNDING- Section 2104(a) of the Social Security Act (42 U.S.C. 1397dd(a)) is amended--

(1) in paragraph (7), by striking `$3,150,000,000;' and inserting `$4,150,000,000; and'; and

(2) by striking paragraphs (8) through (10) and inserting the following:

`(8) for each of fiscal years 2005 through 2011, $5,000,000,000.'.

(b) EFFECTIVE DATE- The amendments made by this section shall be effective as if this section had been enacted on October 1, 2003.

SEC. 12. DEMONSTRATION PROGRAMS TO IMPROVE MEDICAID AND TITLE XXI OUTREACH TO HOMELESS INDIVIDUALS AND FAMILIES.

(a) AUTHORITY- The Secretary of Health and Human Services may award demonstration grants to not more than 7 States (or other qualified entities) to conduct innovative programs that are designed to improve outreach to homeless individuals and families under the programs described in subsection (b) with respect to enrollment of such individuals and families under such programs and the provision of services (and coordinating the provision of such services) under such programs.

(b) PROGRAMS FOR HOMELESS DESCRIBED- The programs described in this subsection are as follows:

(1) MEDICAID- The program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).

(2) CHIP- The program under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.).

(3) TANF- The program under part of A of title IV of the Social Security Act (42 U.S.C. 601 et seq.).

(4) SAMHSA BLOCK GRANTS- The program of grants under part B of title XIX of the Public Health Service Act (42 U.S.C. 300x-1 et seq.).

(5) FOOD STAMP PROGRAM- The program under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.).

(6) WORKFORCE INVESTMENT ACT- The program under the Workforce Investment Act of 1999 (29 U.S.C. 2801 et seq.).

(7) WELFARE-TO-WORK- The welfare-to-work program under section 403(a)(5) of the Social Security Act (42 U.S.C. 603(a)(5)).

(8) OTHER PROGRAMS- Other public and private benefit programs that serve low-income individuals.

(c) APPROPRIATIONS- For the purposes of carrying out this section, there is appropriated for fiscal year 2004, out of any funds in the Treasury not otherwise appropriated, $10,000,000, to remain available until expended.

SEC. 13. ADDITIONAL TITLE XXI REVISIONS.

(a) LIMITING COST-SHARING TO 2.5 PERCENT FOR FAMILIES WITH INCOME BELOW 150 PERCENT OF POVERTY- Section 2103(e)(3)(A) of the Social Security Act (42 U.S.C. 1397cc(e)(3)(A)) is amended--

(1) by striking `and' at the end of clause (i);

(2) by striking the period at the end of clause (ii) and inserting `; and'; and

(3) by adding at the end the following new clause:

`(iii) total annual aggregate cost-sharing described in clauses (i) and (ii) with respect to all such targeted low-income children in a family under this title that exceeds 2.5 percent of such family's income for the year involved.'.

(b) REPORTING OF ENROLLMENT DATA-

(1) QUARTERLY REPORTS- Section 2107(b)(1) of such Act (42 U.S.C. 1397gg(b)(1)) is amended by adding at the end the following: `In quarterly reports on enrollment required under this paragraph, a State shall include information on the age, gender, race, ethnicity, service delivery system, and family income of individuals enrolled.'.

(2) ANNUAL REPORTS- Section 2108(b)(1)(B)(i) of such Act (42 U.S.C. 1397hh(b)(1)(B)(i)) is amended by inserting `primary language of enrollees,' after `family income,'.

(c) EMPLOYER COVERAGE WAIVER CHANGES- Section 2105(c)(3) of such Act (42 U.S.C. 1397ee(c)(3)) is amended--

(1) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii) and indenting appropriately;

(2) by designating the matter beginning with `Payment may be made' as a subparagraph (A) with the heading `IN GENERAL' and indenting appropriately; and

(3) by adding at the end the following new subparagraph:

`(B) APPLICATION OF REQUIREMENTS- In carrying out subparagraph (A)--

`(i) the Secretary shall not require a minimum employer contribution level that is separate from the requirement of cost-effectiveness under subparagraph (A)(i), but a State shall identify a reasonable minimum employer contribution level that is based on data demonstrating that such a level is representative to the employer-sponsored insurance market in the State and shall monitor employer contribution levels over time to determine whether substitution is occurring and report the findings in annual reports under section 2108(a);

`(ii) the State shall establish a waiting period of at least 6 months without group health coverage, but may establish reasonable exceptions to such period and shall not apply such a waiting period to a child who is provided coverage under a group health plan under section 1906;

`(iii) subject to clause (iv), the State shall provide satisfactory assurances that the minimum benefits and cost-sharing protections established under this title are provided, either through the coverage under subparagraph (A) or as a supplement to such coverage; and

`(iv) coverage under such subparagraph shall not be considered to violate clause (iii) because it does not comply with requirements relating to reviews of health service decisions if the enrollee involved is provided the option of being provided benefits directly under this title.'.

SEC. 14. EFFECTIVE DATE.

Except as otherwise provided in this Act, this Act and the amendments made by this Act take effect on October 1, 2004, without regard to whether regulations implementing this Act or such amendments have been issued.

END