S 2923 IS

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

July 26, 2000

Mr. KENNEDY (for himself, Mr. ROCKEFELLER, Mr. DASCHLE, Mr. MOYNIHAN, Mr. REED, Mr. L. CHAFEE, Ms. COLLINS, Ms. SNOWE, Mr. BAUCUS, Mr. BREAUX, Mr. CONRAD, Mr. GRAHAM, Mr. BRYAN, Mr. KERREY, Mr. ROBB, Mr. INOUYE, Mr. LAUTENBERG, Mr. AKAKA, Mr. SCHUMER, and Mr. LEAHY) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend title 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; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `FamilyCare Act of 2000'.

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

Sec. 1. Short title; table of contents.

Sec. 2. Renaming of title XXI program.

Sec. 3. FamilyCare coverage of parents 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. Improving welfare-to-work transition under the medicaid program.

Sec. 9. Elimination of 100 hour rule and other AFDC-related eligibility restrictions.

Sec. 10. State grant program for market innovation.

Sec. 11. Limitations on conflicts of interest.

Sec. 12. Increase in CHIP allotment for each of fiscal years 2002 through 2004.

Sec. 13. Demonstration programs to improve medicaid and chip outreach to homeless individuals and families.

Sec. 14. Authority to pay medicaid expansion costs from title XXI appropriation.

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 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 (XVI);

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

(iii) by adding at the end the following new subclause:

`(XVIII) who are parents described in subsection (k)(1), but only if the State meets the conditions described in subsection (k)(2);'.

(B) CONDITIONS FOR COVERAGE- Section 1902 of such Act is further amended by inserting after subsection (j) the following new subsection:

`(k)(1)(A) Parents described in this paragraph 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 and enrolled for medical assistance under subsection (a)(10)(A), if--

`(i) such parents are not otherwise eligible for such assistance under such subsection; and

`(ii) the income of the family that includes such parents does not exceed an income level specified by the State consistent with paragraph (2)(B).

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

`(2) The conditions for a State to provide medical assistance under subsection (a)(10)(A)(ii)(XVIII) are as follows:

`(A) The State has a State child health plan under title XXI which (whether implemented under such title or under this title)--

`(i) has an income standard (or will establish an income standard that is effective at the time additional allotments are available to the State under section 2104(d), as amended by the FamilyCare Act of 2000) for children that is at least 200 percent of the poverty line; and

`(ii) 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.

`(B) The income level specified under paragraph (1)(A)(ii) for parents in a family exceeds the income level applicable under section 1931 but does not exceed the highest income level applicable to a child in the family under this title. A State may not cover such parents with higher family income without covering parents with a lower family income.

`(3) In the case of a parent described in paragraph (1) who is also the parent of a child who is eligible and enrolled for child health assistance under title XXI, the State may elect (on a uniform basis) to cover all such parents under section 2111 or under subsection (a)(10)(A).'.

(C) ENHANCED MATCHING FUNDS AVAILABLE- Section 1905 of such 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 new paragraph:

`(4) For purposes of subsection (b) and section 2105(a)(1):

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

`(i) PARENTS- Expenditures for medical assistance made available under section 1931, or under section 1902(a)(10)(A)(ii)(XVIII) for parents described in section 1902(k)(1), in a family the income of which exceeds the income level applicable under such section 1931 to a family of the size involved as of January 1, 2000.

`(ii) CERTAIN PREGNANT WOMEN- Expenditures for medical assistance for pregnant women under section 1902(l)(1)(A) in a family the income of which exceeds the income level applicable under section 1902(l)(2)(A) to a family of the size involved as of January 1, 2000.'.

(D) APPROPRIATION FROM TITLE XXI ALLOTMENT FOR CERTAIN MEDICAID EXPANSION COSTS- Subparagraph (C) of section 2105(a)(1) of such Act, as inserted by section 14(a)(3), is amended to read as follows:

`(C) FAMILYCARE PARENTS- Expenditures for medical assistance that is attributable to expenditures described in section 1905(u)(4)(A).'.

(E) ONLY COUNTING ENHANCED PORTION FOR COVERAGE OF ADDITIONAL PREGNANT WOMEN- Section 1905 of such Act (42 U.S.C. 1396d) is amended--

(i) in the fourth sentence of subsection (b), by inserting `(except in the case of expenditures described in subsection (u)(5))' after `do not exceed';

(ii) in subsection (u), by inserting after paragraph (4) (as inserted by subparagraph (C)), the following new paragraph:

`(5) For purposes of the fourth sentence of subsection (b) and section 2105(a), the following payments under this title do not count against a State's allotment under section 2104:

`(A) REGULAR FMAP FOR EXPENDITURES FOR PREGNANT WOMEN WITH INCOME ABOVE JANUARY 1, 2000 INCOME LEVEL AND BELOW 185 PERCENT OF POVERTY- The portion of the payments made for expenditures described in paragraph (4)(A)(ii) that represents the amount that would have been paid if the enhanced FMAP had not been substituted for the Federal medical assistance percentage.'.

(2) UNDER TITLE XXI-

(A) FAMILYCARE COVERAGE- Title XXI of such Act is amended by adding at the end the following new section:

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

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

`(1) the State meets the conditions described in section 1902(k)(2); and

`(2) the State elects to provide medical assistance under section 1902(a)(10)(A)(ii)(XVIII) and elects an applicable income limit that is not lower than the limit described in subsection (b)(2)(A).

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

`(1) FAMILYCARE ASSISTANCE- The term `FamilyCare 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) 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 limit described in paragraph (1)(B)(ii)(I) the applicable income limit in effect for a targeted low-income child;

`(B) in paragraph (3), January 1, 2000, shall be substituted for July 1, 1997; and

`(C) in paragraph (4), January 1, 2000, shall be substituted for March 31, 1997.

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

`(4) OPTIONAL TREATMENT OF PREGNANT WOMEN AS PARENTS- A State child health plan may treat a pregnant woman who is not otherwise a parent as a targeted low-income parent for purposes of this section but only if the State has established an income level under section 1902(l)(2)(A)(i) for pregnant women that is at least 185 percent of the income official poverty line described in such section.

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

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

`(2) Any such reference to child health assistance with respect to such parents is deemed a reference to FamilyCare assistance.

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

`(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 income level applicable to parents under section 1931, or, in the case of a pregnant woman described in

subsection (b)(4), the income level established under section 1902(l)(2)(A).'.

(B) ADDITIONAL ALLOTMENT FOR STATES PROVIDING FAMILYCARE-

(i) IN GENERAL- Section 2104 of such Act (42 U.S.C. 1397dd), as amended by section 14(b), is amended by inserting after subsection (c) the following new subsection:

`(d) ADDITIONAL ALLOTMENTS FOR STATE PROVIDING FAMILYCARE-

`(1) APPROPRIATION; TOTAL ALLOTMENT- For the purpose of providing additional allotments to States electing to provide FamilyCare coverage under section 2111, there is appropriated, out of any money in the Treasury not otherwise appropriated--

`(A) for fiscal year 2002, $2,000,000,000;

`(B) for fiscal year 2003, $2,000,000,000;

`(C) for fiscal year 2004, $3,000,000,000;

`(D) for fiscal year 2005, $3,000,000,000;

`(E) for fiscal year 2006, $6,000,000,000;

`(F) for fiscal year 2007, $7,000,000,000;

`(G) for fiscal year 2008, $8,000,000,000;

`(H) for fiscal year 2009, $9,000,000,000;

`(I) for fiscal year 2010, $10,000,000,000; and

`(J) for fiscal year 2011 and each fiscal year thereafter, the amount of the allotment provided under this paragraph for the preceding fiscal year increased by the percentage increase (if any) in the medical care expenditure category of the Consumer Price Index for All Urban Consumers (United States city average).

`(2) STATE AND TERRITORIAL ALLOTMENTS-

`(A) IN GENERAL- In addition to the allotments provided under subsections (b) and (c), subject to paragraph (3), 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 and which has elected to provide coverage under section 2111 during the fiscal year--

`(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 section 2104(b) (determined without regard to section 2104(f)) to 98.95 percent of the total amount of the allotments under such section for such States eligible for an allotment under this subparagraph for such fiscal year; and

`(ii) in the case of a commonwealth or territory described in section 2104(c)(3), the same proportion as the proportion of the commonwealth's or territory's allotment under section 2104(c) (determined without regard to section 2104(f)) to 1.05 percent of the total amount of the allotments under such section for commonwealths and territories eligible for an allotment under this subparagraph for such fiscal year.

`(B) REDISTRIBUTION OF UNUSED ALLOTMENTS- In applying subsection (f) with respect to additional allotments made available under this subsection, the procedures established under such subsection 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, 2001. 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 FamilyCare assistance.'.

(ii) CONFORMING AMENDMENTS- Section 2104 of such Act (42 U.S.C. 1397dd), as amended by section 14(d)(3), is further 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 such 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'.

(3) EFFECTIVE DATE- The amendments made by this subsection apply to items and services furnished on or after October 1, 2000.

(b) RULES FOR IMPLEMENTATION BEGINNING WITH FISCAL YEAR 2006-

(1) REQUIRED COVERAGE OF FAMILYCARE PARENTS- Section 1902(a)(10)(A)(i) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)) is amended--

(A) by striking `or' at the end of subclause (VI);

(B) by striking the semicolon at the end of subclause (VII) and insert `, or'; and

(C) by adding at the end the following new subclause:

`(VIII) who would be parents described in subsection (k)(1) if the income level specified in subsection (k)(2)(B) were equal to at least 100 percent of the poverty line referred to in such subsection;'.

(2) EXPANSION OF AVAILABILITY OF ENHANCED MATCH UNDER MEDICAID FOR PRE-CHIP EXPANSIONS- Paragraph (4) of section 1905(u) of such Act (42 U.S.C. 1396d(u)), as inserted by subsection (a)(1)(C), is amended--

(A) by amending clause (ii) of subparagraph (A) to read as follows:

`(ii) CERTAIN PREGNANT WOMEN- Expenditures for medical assistance for pregnant women under section 1902(l)(1)(A) in a family the income of which exceeds the 133 percent of the income official poverty line.'; and

(B) by adding at the end the following new subparagraphs:

`(B) PARENTS WITH INCOME ABOVE 100 PERCENT OF POVERTY BUT BELOW JANUARY 1, 2000 INCOME LEVEL- The expenditures described in this subparagraph are expenditures for medical assistance made available for any parents described in section 1902(a)(10)(A)(i)(VIII), whose income exceeds 100 percent of the income official poverty line applicable to a family of the size involved but does not exceed the applicable income level established under this title (under section 1931 or otherwise) for a parent in a family of the size involved as of January 1, 2000.

`(C) CHILDREN IN FAMILIES WITH INCOME ABOVE MEDICAID MANDATORY LEVEL NOT PREVIOUSLY DESCRIBED- The expenditures described in this subparagraph are expenditures (other than expenditures described in paragraph (2) or (3)) for medical assistance made available to any child who is eligible for assistance under section 1902(a)(10)(A) and the income of whose family exceeds the minimum income level required under subsection 1902(l)(2) for a child of the age involved (treating any child who is 19 or 20 years of age as being 18 years of age).'.

(3) OFFSET OF ADDITIONAL EXPENDITURES FOR ENHANCED MATCH FOR PRE-CHIP EXPANSION; ELIMINATION OF OFFSET FOR REQUIRED COVERAGE OF FAMILYCARE PARENTS-

(A) IN GENERAL- Section 1905(u)(5) of such Act (42 U.S.C. 1396d(u)(5)), as added by subsection (a)(1)(E), is amended--

(i) by amending subparagraph (A) to read as follows:

`(A) REGULAR FMAP FOR EXPENDITURES FOR PREGNANT WOMEN WITH INCOME ABOVE 133 PERCENT OF POVERTY- The portion of the payments made for expenditures described in paragraph (4)(A)(ii) that represents the amount that would have been paid if the enhanced FMAP had not been substituted for the Federal medical assistance percentage.'; and

(ii) by adding at the end the following new subparagraphs:

`(B) FAMILYCARE PARENTS UNDER 100 PERCENT OF POVERTY- Payments for expenditures described in paragraph (4)(A)(i) in the case of parents whose income does not exceed 100 percent of the income official poverty line applicable to a family of the size involved.

`(C) REGULAR FMAP FOR EXPENDITURES FOR PARENTS WITH INCOME ABOVE 100 PERCENT OF POVERTY BUT BELOW JANUARY 1, 2000 INCOME LEVEL- The portion of the payments made for expenditures described in paragraph (4)(B) that represents the amount that would have been paid if the enhanced FMAP had not been substituted for the Federal medical assistance percentage.

`(D) REGULAR FMAP FOR EXPENDITURES FOR CERTAIN CHILDREN IN FAMILIES WITH INCOME ABOVE MEDICAID MANDATORY LEVEL- The portion of the payments made for expenditures described in paragraph (4)(C) that represents the amount that would have been paid if the enhanced FMAP had not been substituted for the Federal medical assistance percentage.'.

(B) CONFORMING AMENDMENTS- Subparagraph (C) of section 2105(a)(1) of such Act, as inserted by section 14(a)(3) and as amended by subsection (a)(1)(D), is amended to read as follows:

`(C) CERTAIN FAMILYCARE PARENTS AND OTHERS- Expenditures for medical assistance that is attributable to expenditures described in section 1905(u)(4), except as provided in section 1905(u)(5).'.

(3) EFFECTIVE DATE- The amendments made by this subsection apply as of October 1, 2005, to fiscal years beginning on or after such date and to expenditures under the State plan on and after such date.

(c) MAKING TITLE XXI BASE ALLOTMENTS PERMANENT- Section 2104(a) of such Act (42 U.S.C. 1397dd(a)) is amended--

(1) by striking `and' at the end of paragraph (9);

(2) by striking the period at the end of paragraph (10) and inserting `; and'; and

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

`(11) for fiscal year 2008 and each fiscal year thereafter, the amount of the allotment provided under this subsection for the preceding fiscal year increased by the percentage increase (if any) in the medical care expenditure category of the Consumer Price Index for All Urban Consumers (United States city average).'.

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

`(e) In accordance with regulations, 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 of a child with respect to whom such a period is provided under this section.'.

(e) CONFORMING AMENDMENTS-

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

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

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

(C) by inserting after clause (xii) the following new clause:

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

(2) INCOME LIMITATIONS- Section 1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4))--

(A) effective October 1, 2005, by inserting `1902(a)(10)(A)(i)(VIII),' after `1902(a)(10)(A)(i)(VII),'; and

(B) by inserting `1902(a)(10)(A)(ii)(XVII), 1902(a)(10)(A)(ii)(XVIII),' after `1902(a)(10)(A)(ii)(XVI),'.

(3) CONFORMING AMENDMENT RELATING TO NO WAITING PERIOD FOR CERTAIN WOMEN- Section 2102(b)(1)(B) of such 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 new clause:

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

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

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 new subparagraph:

`(C) AUTOMATIC ELIGIBILITY OF CHILDREN BORN TO A PARENT BEING PROVIDED FAMILYCARE- 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.'.

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 new paragraph:

`(4)(A) A State may elect (in a plan amendment under this title) to provide medical assistance under this title, notwithstanding sections 401(a), 402(b), 403, and 421 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, for aliens who are lawfully residing in the United States (including battered aliens described in section 431(c) of such Act) 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 (as defined by the State) of children (described in such clause or otherwise) who are eligible for medical assistance under the plan.

`(B) In the case of a State that has elected to provide medical assistance to a category of aliens under subparagraph (A), no action may be brought under an affidavit of support against any sponsor of such an alien on the basis of provision of assistance to such category.'.

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

`(D) Section 1903(v)(4) (relating to optional coverage of categories of permanent resident alien 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.'.

(c) EFFECTIVE DATE- The amendments made by this section take effect on October 1, 2000, and apply to medical assistance and child health assistance furnished on or after such date.

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 such 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 such 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 1902(l)(5) of such Act (42 U.S.C. 1396a(l)(5)), as added by section 7(a)(2), is amended by inserting `(or such higher age as the State has elected under paragraph (1)(D))' after `19 years of age'.

(D) Section 1920A(b)(1) of such 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'.

(E) Section 1928(h)(1) of such 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.

(F) Section 1932(a)(2)(A) of such 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 such 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))'.

(c) EFFECTIVE DATE- The amendments made by this section take effect on October 1, 2000, and apply to medical assistance and child health assistance provided on or after such date.

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 new paragraph:

`(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)(XVIII), 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 if the State does not apply such a standard under such child health plan with respect to such individuals;

`(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 the same verification policies, forms, and frequency as 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.

(b) ADDITIONAL ENTITIES QUALIFIED TO DETERMINE MEDICAID PRESUMPTIVE ELIGIBILITY FOR LOW-INCOME CHILDREN-

(1) IN GENERAL- Section 1920A(b)(3)(A)(i) of such Act (42 U.S.C. 1396r-1a(b)(3)(A)(i)) is amended--

(A) by striking `or (II)' and inserting `, (II)'; and

(B) by inserting `eligibility of a child for medical assistance under the State plan under this title, or eligibility of a child for child health assistance under the program funded under title XXI, (III) is an elementary school or secondary school, as such terms are defined in section 14101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 8801), an elementary or secondary school operated or supported by the Bureau of Indian Affairs, a State child support enforcement agency, a child care resource and referral agency, an organization that is providing emergency food and shelter under a grant under the Stewart B. McKinney Homeless Assistance Act, or a State office or entity involved in enrollment in the program under this title, under part A of title IV, under title XXI, or that determines eligibility for any assistance or benefits provided under any program of public or assisted housing that receives Federal funds, including the program under section 8 or any other section of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), or (IV) any other entity the State so deems, as approved by the Secretary' before the semicolon.

(2) TECHNICAL AMENDMENTS- Section 1920A of such Act (42 U.S.C. 1396r-1a) is amended--

(A) in subsection (b)(3)(A)(ii), by striking `paragraph (1)(A)' and inserting `paragraph (2)(A)'; and

(B) in subsection (c)(2), in the matter preceding subparagraph (A), by striking `subsection (b)(1)(A)' and inserting `subsection (b)(2)(A)'.

(3) APPLICATION TO PRESUMPTIVE ELIGIBILITY FOR PREGNANT WOMEN UNDER MEDICAID- Section 1920(b) of such 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).'.

(4) APPLICATION UNDER TITLE XXI-

(A) IN GENERAL- Section 2107(e)(1) of such Act (42 U.S.C. 1397gg(e)(1)), as amended by section 5(b), is amended by adding at the end the following new subparagraph:

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

(B) EXCEPTION FROM LIMITATION ON ADMINISTRATIVE EXPENSES- Section 2105(c)(2) of such Act (42 U.S.C. 1397ee(c)(2)) is amended by adding at the end the following new subparagraph:

`(C) EXCEPTION FOR PRESUMPTIVE ELIGIBILITY EXPENDITURES- The limitation

under subparagraph (A) on expenditures shall not apply to expenditures attributable to the application of section 1920A (pursuant to section 2107(e)(1)(E)), regardless of whether the child is determined to be ineligible for the program under this title or title XIX.'.

(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 new paragraph:

`(66) provide, by not later than the first day of the first month that begins more than 1 year after the date of the enactment of this paragraph and 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- Section 2102(b)(3) (42 U.S.C. 1397bb(b)(3)) is amended by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively, and by inserting after subparagraph (C) the following new subparagraph:

`(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;'.

(3) EFFECTIVE DATE- The amendments made by paragraphs (1) and (2) apply to individuals who lose eligibility under the medicaid program under title XIX, or under a State child health insurance plan under title XXI, respectively, of the Social Security Act on or after the date that is 60 days after the date of the enactment of this Act.

(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 new clause:

`(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.) (commonly referred to as the `medicaid program') and of child health assistance under title XXI of such Act (commonly referred to as `CHIP'), including information on how to obtain an application for assistance under such program.

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

SEC. 8. IMPROVING WELFARE-TO-WORK TRANSITION UNDER THE MEDICAID PROGRAM.

(a) MAKING PROVISION PERMANENT-

(1) IN GENERAL- Subsection (f) of section 1925 of the Social Security Act (42 U.S.C. 1396r-6) is repealed.

(2) CONFORMING AMENDMENT- Section 1902(e)(1) of such Act (42 U.S.C. 1396a(e)(1)) is repealed.

(b) STATE OPTION OF INITIAL 12-MONTH ELIGIBILITY- Section 1925 of such Act (42 U.S.C. 1396r-6) is amended--

(1) in subsection (a), by adding at the end the following new paragraph:

`(5) OPTION OF 12-MONTH INITIAL ELIGIBILITY PERIOD- A State may elect to treat any reference in this subsection to a 6-month period (or 6 months) as a reference to a 12-month period (or 12 months). In the case of such an election, subsection (b) shall not apply.'; and

(2) in subsection (b)(1), by inserting `and subsection (a)(5)' after `paragraph (3)'.

(c) SIMPLIFICATION OPTIONS-

(1) REMOVAL OF ADMINISTRATIVE REPORTING REQUIREMENTS FOR ADDITIONAL 6-MONTH EXTENSION- Section 1925(b)(2) of such Act (42 U.S.C. 1396r-6(b)(2)) is amended--

(A) by striking subparagraph (B);

(B) in subparagraph (A)(i)--

(i) by striking `(I)' and all that follows through `(II)' and inserting `(i)';

(ii) by striking `, and (III)' and inserting `and (ii)'; and

(iii) by redesignating such subparagraph as subparagraph (A) (with appropriate indentation); and

(C) in subparagraph (A)(ii)--

(i) by striking `notify the family of the reporting requirement under subparagraph (B)(ii) and' and inserting `provide the family with notification of'; and

(ii) by redesignating such subparagraph as subparagraph (B) (with appropriate indentation).

(2) REMOVAL OF REQUIREMENT FOR PREVIOUS RECEIPT OF MEDICAL ASSISTANCE- Section 1925(a)(1) of such Act (42 U.S.C. 1396r-6(a)(1)) is amended--

(A) by redesignating the matter after `REQUIREMENT- ' as a subparagraph (A) with

the heading `IN GENERAL- ' and with appropriate indentation; and

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

`(B) STATE OPTION TO WAIVE REQUIREMENT FOR PREVIOUS RECEIPT OF MEDICAL ASSISTANCE- A State may elect to apply subparagraph (A) to any family whose eligibility for assistance under section 1931 would otherwise terminate because of hours of, or income from, employment, without regard to the period of previous receipt of assistance or aid.'.

(3) PERMITTING INCREASE OR WAIVER OF 185 PERCENT OF POVERTY EARNING LIMIT- Section 1925(b)(3)(A)(iii)(III) of such Act (42 U.S.C. 1396r-6(b)(3)(A)(iii)(III)) is amended--

(A) by inserting `(at its option)' after `the State'; and

(B) by inserting `(or such higher percent as the State may specify)' after `185 percent'.

(4) EXEMPTION FOR STATES COVERING NEEDY FAMILIES UP TO 185 PERCENT OF POVERTY- Section 1925 of such Act (42 U.S.C. 1396r-6), as amended by subsection (a), is amended--

(A) in each of subsections (a)(1) and (b)(1), by inserting `but subject to subsection (f),' after `Notwithstanding any other provision of this title,'; and

(B) by adding at the end the following new subsection:

`(f) EXEMPTION FOR STATE COVERING NEEDY FAMILIES UP TO 185 PERCENT OF POVERTY-

`(1) IN GENERAL- At State option, the provisions of this section shall not apply to a State that uses the authority under section 1931(b)(2)(C) to make medical assistance available under the State plan under this title, at a minimum, to all individuals described in section 1931(b)(1) in families with gross incomes (determined without regard to work-related child care expenses of such individuals) at or below 185 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved.

`(2) APPLICATION TO OTHER PROVISIONS OF THIS TITLE- The State plan of a State described in paragraph (1) shall be deemed to meet the requirements of sections 1902(a)(10)(A)(i)(I) and 1902(e)(1).'.

(d) EFFECTIVE DATE- The amendments made by this section take effect on October 1, 2000.

SEC. 9. 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 such 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'.

(c) EFFECTIVE DATE- The amendments made by this section apply to eligibility determinations made on or after October 1, 2000.

SEC. 10. 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), 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 to carry out this section. Amounts appropriated under this subsection shall remain available until expended.

(g) STATE DEFINED- For purposes of this section, the term `State' has the meaning given such term for purposes of title XIX of the Social Security Act.

SEC. 11. 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 new paragraph:

`(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 such 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 new paragraph:

`(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 such Act (42 U.S.C. 1397gg(e)(1)), as amended by sections 5(b) and 7(c)(3), is further amended by adding at the end the following new subparagraph:

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

(c) EFFECTIVE DATE- The amendments made by this section shall apply to expenditures made on or after the date of the enactment of this Act.

SEC. 12. INCREASE IN CHIP ALLOTMENT FOR EACH OF FISCAL YEARS 2002 THROUGH 2004.

Paragraphs (5), (6), and (7) of Section 2104(a) of the Social Security Act (42 U.S.C. 1397dd(a)) are amended by striking `$3,150,000,000' each place it appears and inserting `$4,150,000,000'.

SEC. 13. DEMONSTRATION PROGRAMS TO IMPROVE MEDICAID AND CHIP 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 such Act (42 U.S.C. 1397aa et seq.).

(3) TANF- The program under part of A of title IV of such 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, out of any funds in the Treasury not otherwise appropriated, $10,000,000, to remain available until expended.

SEC. 14. AUTHORITY TO PAY MEDICAID EXPANSION COSTS FROM TITLE XXI APPROPRIATION.

(a) AUTHORITY TO PAY MEDICAID EXPANSION COSTS FROM TITLE XXI APPROPRIATION- Section 2105(a) of the Social Security Act (42 U.S.C. 1397ee(a)) is amended--

(1) in paragraph (1)--

(A) by inserting `CHILD HEALTH ASSISTANCE UNDER THIS TITLE- Expenditures' before `for child health assistance';

(B) by striking `; and' at the end and inserting a period; and

(C) by redesignating such paragraph as subparagraph (D) and indenting appropriately;

(2) in paragraph (2)--

(A) in subparagraph (A), by striking `for payment';

(B) by inserting `ASSISTANCE AND ADMINISTRATIVE EXPENDITURES SUBJECT TO LIMIT- Expenditures' before `only to the extent';

(C) by redesignating subparagraphs (A) through (D) as clauses (i) through (iv), respectively, and indenting appropriately; and

(D) by redesignating such paragraph as subparagraph (E) and indenting appropriately;

(3) by striking `(a) IN GENERAL- ' and all that follows up to subparagraph (D), as so redesignated, and inserting the following:

`(a) ALLOWABLE EXPENDITURES-

`(1) IN GENERAL- Subject to the succeeding provisions of this section, the Secretary shall pay to

each State with a plan approved under this title, from its allotment under section 2104, an amount for each quarter equal to the enhanced FMAP (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))) of the following expenditures in the quarter:

`(A) CHILD HEALTH ASSISTANCE UNDER MEDICAID- Expenditures for child health assistance under the plan for targeted low-income children in the form of providing medical assistance for expenditures described in the fourth sentence of section 1905(b).

`(B) MEDICAID PRESUMPTIVE ELIGIBILITY FOR CHILDREN- Expenditures for the provision of medical assistance on behalf of a child during a presumptive eligibility period under section 1920A.

`(C) RESERVED- [reserved].'; and

(4) by adding at the end the following new paragraphs:

`(2) ORDER OF PAYMENTS- Payments under a subparagraph of paragraph (1) from a State's allotment for expenditures described in each such subparagraph shall be made on a quarterly basis in the order of such subparagraph in such paragraph.

`(3) NO DUPLICATIVE PAYMENT- In the case of expenditures for which payment is made under paragraph (1), no payment shall be made under title XIX.'.

(b) ELIMINATION OF REQUIREMENT TO REDUCE TITLE XXI ALLOTMENT BY MEDICAID EXPANSION COSTS- Section 2104 of such Act (42 U.S.C. 1397dd) is amended by striking subsection (d).

(c) AUTHORITY TO TRANSFER TITLE XXI APPROPRIATIONS TO TITLE XIX APPROPRIATION ACCOUNT AS REIMBURSEMENT FOR MEDICAID EXPENDITURES FOR MEDICAID EXPANSION SERVICES- Notwithstanding any other provision of law, all amounts appropriated under title XXI of the Social Security Act and allotted to a State pursuant to subsection (b) or (c) of section 2104 of such Act (42 U.S.C. 1397dd) for fiscal years 1998 through 2000 (including any amounts that, but for this provision, would be considered to no longer be available) and not expended in providing child health assistance or related services for which payment may be made pursuant to subparagraph (D) or (E) of section 2105(a)(1) of such Act (42 U.S.C. 1397ee(a)(1)), as redesignated by subsection (a), shall be available to reimburse the Grants to States for Medicaid account in an amount equal to the total payments made to such State under section 1903(a) of such Act (42 U.S.C. 1396b(a)) for expenditures in such years for medical assistance described in subparagraphs (A) and (B) of section 2105(a)(1) of such Act (42 U.S.C. 1397ee(a)(1)), as so amended.

(d) CONFORMING AMENDMENTS-

(1) SECTION 1905(b)- Section 1905(b) of such Act (42 U.S.C. 1396d(b)) is amended in the fourth sentence by striking `the State's allotment under section 2104 (not taking into account reductions under section 2104(d)(2)) for the fiscal year reduced by the amount of any payments made under section 2105 to the State from such allotment for such fiscal year' and inserting `the State's allotment under section 2104'.

(2) SECTION 1905(u)- Section 1905(u)(1)(B) of such Act (42 U.S.C. 1396d(u)(1)(B)) is amended by striking `and section 2104(d)' and inserting `and section 2105(a)(1)'.

(3) SECTION 2104- Section 2104 of such Act (42 U.S.C. 1397dd), as amended by subsection (b), is further amended--

(A) in subsection (b)(1), by striking `and subsection (d)'; and

(B) in subsection (c)(1), by striking `subject to subsection (d),'.

(4) SECTION 2105(c)- Section 2105(c) of such Act (42 U.S.C. 1397ee(c)) is amended--

(A) in paragraph (2)(A), by striking all that follows `Except as provided in this paragraph,' and inserting `the amount of payment that may be made under subsection (a) for a fiscal year for expenditures for items described in paragraph (1)(E) of such subsection shall not exceed 10 percent of the total amount of expenditures for which payment is made under paragraph (1) of such subsection (other than subparagraph (B)).';

(B) in paragraph (2)(B), by striking `described in subsection (a)(2)' and inserting `described in subsection (a)(1)(E)'; and

(C) in paragraph (6)(B), by striking `Except as otherwise provided by law,' and inserting `Except as provided in subparagraph (A) or (B) of subsection (a)(1) or any other provision of law,'.

(5) SECTION 2110(a)- Section 2110(a) of such Act (42 U.S.C. 1397jj) is amended by striking `section 2105(a)(2)(A)' and inserting `section 2105(a)(1)(E)(i)'.

(e) TECHNICAL AMENDMENT- Section 2105(d)(2)(B)(ii) of such Act (42 U.S.C. 1397ee(d)(2)(B)(ii)) is amended by striking `enhanced FMAP under section 1905(u)' and inserting `enhanced FMAP under the fourth sentence of section 1905(b)'.

(f) EFFECTIVE DATE- The amendments made by this section shall be effective as if included in the enactment of the Balanced Budget Act of 1997.

END