42 U.S.C. § 1396b : US Code - Section 1396B: Payment to States

Search 42 U.S.C. § 1396b : US Code - Section 1396B: Payment to States

(a) Computation of amount
From the sums appropriated therefor, the Secretary (except as
otherwise provided in this section) shall pay to each State which
has a plan approved under this subchapter, for each quarter,
beginning with the quarter commencing January 1, 1966 -
(1) an amount equal to the Federal medical assistance
percentage (as defined in section 1396d(b) of this title, subject
to subsections (g) and (j) of this section and section 1396r-4(f)
of this title) of the total amount expended during such quarter
as medical assistance under the State plan; plus
(2)(A) an amount equal to 75 per centum of so much of the sums
expended during such quarter (as found necessary by the Secretary
for the proper and efficient administration of the State plan) as
are attributable to compensation or training of skilled
professional medical personnel, and staff directly supporting
such personnel, of the State agency or any other public agency;
plus
(B) notwithstanding paragraph (1) or subparagraph (A), with
respect to amounts expended for nursing aide training and
competency evaluation programs, and competency evaluation
programs, described in section 1396r(e)(1) of this title
(including the costs for nurse aides to complete such competency
evaluation programs), regardless of whether the programs are
provided in or outside nursing facilities or of the skill of the
personnel involved in such programs, an amount equal to 50
percent (or, for calendar quarters beginning on or after July 1,
1988, and before October 1, 1990, the lesser of 90 percent or the
Federal medical assistance percentage plus 25 percentage points)
of so much of the sums expended during such quarter (as found
necessary by the Secretary for the proper and efficient
administration of the State plan) as are attributable to such
programs; plus
(C) an amount equal to 75 percent of so much of the sums
expended during such quarter (as found necessary by the Secretary
for the proper and efficient administration of the State plan) as
are attributable to preadmission screening and resident review
activities conducted by the State under section 1396r(e)(7) of
this title; plus
(D) for each calendar quarter during -
(i) fiscal year 1991, an amount equal to 90 percent,
(ii) fiscal year 1992, an amount equal to 85 percent,
(iii) fiscal year 1993, an amount equal to 80 percent, and
(iv) fiscal year 1994 and thereafter, an amount equal to 75
percent,
of so much of the sums expended during such quarter (as found
necessary by the Secretary for the proper and efficient
administration of the State plan) as are attributable to State
activities under section 1396r(g) of this title; plus
(3) an amount equal to -
(A)(i) 90 per centum of so much of the sums expended during
such quarter as are attributable to the design, development, or
installation of such mechanized claims processing and
information retrieval systems as the Secretary determines are
likely to provide more efficient, economical, and effective
administration of the plan and to be compatible with the claims
processing and information retrieval systems utilized in the
administration of subchapter XVIII of this chapter, including
the State's share of the cost of installing such a system to be
used jointly in the administration of such State's plan and the
plan of any other State approved under this chapter, and
(ii) 90 per centum of so much of the sums expended during any
such quarter in the fiscal year ending June 30, 1972, or the
fiscal year ending June 30, 1973, as are attributable to the
design, development, or installation of cost determination
systems for State-owned general hospitals (except that the
total amount paid to all States under this clause for either
such fiscal year shall not exceed $150,000), and
(B) 75 per centum of so much of the sums expended during such
quarter as are attributable to the operation of systems
(whether such systems are operated directly by the State or by
another person under a contract with the State) of the type
described in subparagraph (A)(i) (whether or not designed,
developed, or installed with assistance under such
subparagraph) which are approved by the Secretary and which
include provision for prompt written notice to each individual
who is furnished services covered by the plan, or to each
individual in a sample group of individuals who are furnished
such services, of the specific services (other than
confidential services) so covered, the name of the person or
persons furnishing the services, the date or dates on which the
services were furnished, and the amount of the payment or
payments made under the plan on account of the services; and
(C)(i) 75 per centum of the sums expended with respect to
costs incurred during such quarter (as found necessary by the
Secretary for the proper and efficient administration of the
State plan) as are attributable to the performance of medical
and utilization review by a utilization and quality control
peer review organization or by an entity which meets the
requirements of section 1320c-1 of this title, as determined by
the Secretary, under a contract entered into under section
1396a(d) of this title; and
(ii) 75 percent of the sums expended with respect to costs
incurred during such quarter (as found necessary by the
Secretary for the proper and efficient administration of the
State plan) as are attributable to the performance of
independent external reviews conducted under section 1396u-
2(c)(2) of this title; and
(D) 75 percent of so much of the sums expended by the State
plan during a quarter in 1991, 1992, or 1993, as the Secretary
determines is attributable to the statewide adoption of a drug
use review program which conforms to the requirements of
section 1396r-8(g) of this title; and
(E) 50 percent of the sums expended with respect to costs
incurred during such quarter as are attributable to providing -

(i) services to identify and educate individuals who are
likely to be eligible for medical assistance under this
subchapter and who have Sickle Cell Disease or who are
carriers of the sickle cell gene, including education
regarding how to identify such individuals; or
(ii) education regarding the risks of stroke and other
complications, as well as the prevention of stroke and other
complications, in individuals who are likely to be eligible
for medical assistance under this subchapter and who have
Sickle Cell Disease; plus
(4) an amount equal to 100 percent of the sums expended during
the quarter which are attributable to the costs of the
implementation and operation of the immigration status
verification system described in section 1320b-7(d) of this
title; plus
(5) an amount equal to 90 per centum of the sums expended
during such quarter which are attributable to the offering,
arranging, and furnishing (directly or on a contract basis) of
family planning services and supplies;
(6) subject to subsection (b)(3) of this section, an amount
equal to -
(A) 90 per centum of the sums expended during such a quarter
within the twelve-quarter period beginning with the first
quarter in which a payment is made to the State pursuant to
this paragraph, and
(B) 75 per centum of the sums expended during each succeeding
calendar quarter,
with respect to costs incurred during such quarter (as found
necessary by the Secretary for the elimination of fraud in the
provision and administration of medical assistance provided under
the State plan) which are attributable to the establishment and
operation of (including the training of personnel employed by) a
State medicaid fraud control unit (described in subsection (q) of
this section); plus
(7) subject to section 1396r(g)(3)(B) of this title, an amount
equal to 50 per centum of the remainder of the amounts expended
during such quarter as found necessary by the Secretary for the
proper and efficient administration of the State plan.
(b) Quarterly expenditures beginning after December 31, 1969
(1) Notwithstanding the preceding provisions of this section, the
amount determined under subsection (a)(1) of this section for any
State for any quarter beginning after December 31, 1969, shall not
take into account any amounts expended as medical assistance with
respect to individuals aged 65 or over and disabled individuals
entitled to hospital insurance benefits under subchapter XVIII of
this chapter which would not have been so expended if the
individuals involved had been enrolled in the insurance program
established by part B of subchapter XVIII of this chapter, other
than amounts expended under provisions of the plan of such State
required by section 1396a(a)(34) of this title.
(2) For limitation on Federal participation for capital
expenditures which are out of conformity with a comprehensive plan
of a State or areawide planning agency, see section 1320a-1 of this
title.
(3) The amount of funds which the Secretary is otherwise
obligated to pay a State during a quarter under subsection (a)(6)
of this section may not exceed the higher of -
(A) $125,000, or
(B) one-quarter of 1 per centum of the sums expended by the
Federal, State, and local governments during the previous quarter
in carrying out the State's plan under this subchapter.
(4) Amounts expended by a State for the use of an enrollment
broker in marketing medicaid managed care organizations and other
managed care entities to eligible individuals under this subchapter
shall be considered, for purposes of subsection (a)(7) of this
section, to be necessary for the proper and efficient
administration of the State plan but only if the following
conditions are met with respect to the broker:
(A) The broker is independent of any such entity and of any
health care providers (whether or not any such provider
participates in the State plan under this subchapter) that
provide coverage of services in the same State in which the
broker is conducting enrollment activities.
(B) No person who is an owner, employee, consultant, or has a
contract with the broker either has any direct or indirect
financial interest with such an entity or health care provider or
has been excluded from participation in the program under this
subchapter or subchapter XVIII of this chapter or debarred by any
Federal agency, or subject to a civil money penalty under this
chapter.
(5) Notwithstanding the preceding provisions of this section, the
amount determined under subsection (a)(1) of this section for any
State shall be decreased in a quarter by the amount of any health
care related taxes (described in subsection (w)(3)(A) of this
section) (!1) that are imposed on a hospital described in
subsection (w)(3)(F) of this section in that quarter.
(c) Treatment of educationally-related services
Nothing in this subchapter shall be construed as prohibiting or
restricting, or authorizing the Secretary to prohibit or restrict,
payment under subsection (a) of this section for medical assistance
for covered services furnished to a child with a disability because
such services are included in the child's individualized education
program established pursuant to part B of the Individuals with
Disabilities Education Act [20 U.S.C. 1411 et seq.] or furnished to
an infant or toddler with a disability because such services are
included in the child's individualized family service plan adopted
pursuant to part C of such Act [20 U.S.C. 1431 et seq.].
(d) Estimates of State entitlement; installments; adjustments to
reflect overpayments or underpayments; time for recovery or
adjustment; uncollectable or discharged debts; obligated
appropriations; disputed claims
(1) Prior to the beginning of each quarter, the Secretary shall
estimate the amount to which a State will be entitled under
subsections (a) and (b) of this section for such quarter, such
estimates to be based on (A) a report filed by the State containing
its estimate of the total sum to be expended in such quarter in
accordance with the provisions of such subsections, and stating the
amount appropriated or made available by the State and its
political subdivisions for such expenditures in such quarter, and
if such amount is less than the State's proportionate share of the
total sum of such estimated expenditures, the source or sources
from which the difference is expected to be derived, and (B) such
other investigation as the Secretary may find necessary.
(2)(A) The Secretary shall then pay to the State, in such
installments as he may determine, the amount so estimated, reduced
or increased to the extent of any overpayment or underpayment which
the Secretary determines was made under this section to such State
for any prior quarter and with respect to which adjustment has not
already been made under this subsection.
(B) Expenditures for which payments were made to the State under
subsection (a) of this section shall be treated as an overpayment
to the extent that the State or local agency administering such
plan has been reimbursed for such expenditures by a third party
pursuant to the provisions of its plan in compliance with section
1396a(a)(25) of this title.
(C) For purposes of this subsection, when an overpayment is
discovered, which was made by a State to a person or other entity,
the State shall have a period of 60 days in which to recover or
attempt to recover such overpayment before adjustment is made in
the Federal payment to such State on account of such overpayment.
Except as otherwise provided in subparagraph (D), the adjustment in
the Federal payment shall be made at the end of the 60 days,
whether or not recovery was made.
(D) In any case where the State is unable to recover a debt which
represents an overpayment (or any portion thereof) made to a person
or other entity on account of such debt having been discharged in
bankruptcy or otherwise being uncollectable, no adjustment shall be
made in the Federal payment to such State on account of such
overpayment (or portion thereof).
(3)(A) The pro rata share to which the United States is equitably
entitled, as determined by the Secretary, of the net amount
recovered during any quarter by the State or any political
subdivision thereof with respect to medical assistance furnished
under the State plan shall be considered an overpayment to be
adjusted under this subsection.
(B)(i) Subparagraph (A) and paragraph (2)(B) shall not apply to
any amount recovered or paid to a State as part of the
comprehensive settlement of November 1998 between manufacturers of
tobacco products, as defined in section 5702(d) of the Internal
Revenue Code of 1986, and State Attorneys General, or as part of
any individual State settlement or judgment reached in litigation
initiated or pursued by a State against one or more such
manufacturers.
(ii) Except as provided in subsection (i)(19) of this section, a
State may use amounts recovered or paid to the State as part of a
comprehensive or individual settlement, or a judgment, described in
clause (i) for any expenditures determined appropriate by the
State.
(4) Upon the making of any estimate by the Secretary under this
subsection, any appropriations available for payments under this
section shall be deemed obligated.
(5) In any case in which the Secretary estimates that there has
been an overpayment under this section to a State on the basis of a
claim by such State that has been disallowed by the Secretary under
section 1316(d) of this title, and such State disputes such
disallowance, the amount of the Federal payment in controversy
shall, at the option of the State, be retained by such State or
recovered by the Secretary pending a final determination with
respect to such payment amount. If such final determination is to
the effect that any amount was properly disallowed, and the State
chose to retain payment of the amount in controversy, the Secretary
shall offset, from any subsequent payments made to such State under
this subchapter, an amount equal to the proper amount of the
disallowance plus interest on such amount disallowed for the period
beginning on the date such amount was disallowed and ending on the
date of such final determination at a rate (determined by the
Secretary) based on the average of the bond equivalent of the
weekly 90-day treasury bill auction rates during such period.
(6)(A) Each State (as defined in subsection (w)(7)(D) of this
section) shall include, in the first report submitted under
paragraph (1) after the end of each fiscal year, information
related to -
(i) provider-related donations made to the State or units of
local government during such fiscal year, and
(ii) health care related taxes collected by the State or such
units during such fiscal year.
(B) Each State shall include, in the first report submitted under
paragraph (1) after the end of each fiscal year, information
related to the total amount of payment adjustments made, and the
amount of payment adjustments made to individual providers (by
provider), under section 1396r-4(c) of this title during such
fiscal year.
(e) Transition costs of closures or conversions permitted
A State plan approved under this subchapter may include, as a
cost with respect to hospital services under the plan under this
subchapter, periodic expenditures made to reflect transitional
allowances established with respect to a hospital closure or
conversion under section 1395uu of this title.
(f) Limitation on Federal participation in medical assistance
(1)(A) Except as provided in paragraph (4), payment under the
preceding provisions of this section shall not be made with respect
to any amount expended as medical assistance in a calendar quarter,
in any State, for any member of a family the annual income of which
exceeds the applicable income limitation determined under this
paragraph.
(B)(i) Except as provided in clause (ii) of this subparagraph,
the applicable income limitation with respect to any family is the
amount determined, in accordance with standards prescribed by the
Secretary, to be equivalent to 133 1/3 percent of the highest
amount which would ordinarily be paid to a family of the same size
without any income or resources, in the form of money payments,
under the plan of the State approved under part A of subchapter IV
of this chapter.
(ii) If the Secretary finds that the operation of a uniform
maximum limits payments to families of more than one size, he may
adjust the amount otherwise determined under clause (i) to take
account of families of different sizes.
(C) The total amount of any applicable income limitation
determined under subparagraph (B) shall, if it is not a multiple of
$100 or such other amount as the Secretary may prescribe, be
rounded to the next higher multiple of $100 or such other amount,
as the case may be.
(2)(A) In computing a family's income for purposes of paragraph
(1), there shall be excluded any costs (whether in the form of
insurance premiums or otherwise and regardless of whether such
costs are reimbursed under another public program of the State or
political subdivision thereof) incurred by such family for medical
care or for any other type of remedial care recognized under State
law or, (B) notwithstanding section 1396o of this title at State
option, an amount paid by such family, at the family's option, to
the State, provided that the amount, when combined with costs
incurred in prior months, is sufficient when excluded from the
family's income to reduce such family's income below the applicable
income limitation described in paragraph (1). The amount of State
expenditures for which medical assistance is available under
subsection (a)(1) of this section will be reduced by amounts paid
to the State pursuant to this subparagraph.
(3) For purposes of paragraph (1)(B), in the case of a family
consisting of only one individual, the "highest amount which would
ordinarily be paid" to such family under the State's plan approved
under part A of subchapter IV of this chapter shall be the amount
determined by the State agency (on the basis of reasonable
relationship to the amounts payable under such plan to families
consisting of two or more persons) to be the amount of the aid
which would ordinarily be payable under such plan to a family
(without any income or resources) consisting of one person if such
plan provided for aid to such a family.
(4) The limitations on payment imposed by the preceding
provisions of this subsection shall not apply with respect to any
amount expended by a State as medical assistance for any individual
described in section 1396a(a)(10)(A)(i)(III),
1396a(a)(10)(A)(i)(IV), 1396a(a)(10)(A)(i)(V),
1396a(a)(10)(A)(i)(VI), 1396a(a)(10)(A)(i)(VII),
1396a(a)(10)(A)(ii)(IX), 1396a(a)(10)(A)(ii)(X),
1396a(a)(10)(A)(ii)(XIII), 1396a(a)(10)(A)(ii)(XIV), or (!2)
1396a(a)(10)(A)(ii)(XV), 1396a(a)(10)(A)(ii)(XVI),
1396a(a)(10)(A)(ii)(XVII), 1396a(a)(10)(A)(ii)(XVIII), 1396d(p)(1)
of this title or for any individual -
(A) who is receiving aid or assistance under any plan of the
State approved under subchapter I, X, XIV or XVI, or part A of
subchapter IV, or with respect to whom supplemental security
income benefits are being paid under subchapter XVI of this
chapter, or
(B) who is not receiving such aid or assistance, and with
respect to whom such benefits are not being paid, but (i) is
eligible to receive such aid or assistance, or to have such
benefits paid with respect to him, or (ii) would be eligible to
receive such aid or assistance, or to have such benefits paid
with respect to him if he were not in a medical institution, or
(C) with respect to whom there is being paid, or who is
eligible, or would be eligible if he were not in a medical
institution, to have paid with respect to him, a State
supplementary payment and is eligible for medical assistance
equal in amount, duration, and scope to the medical assistance
made available to individuals described in section
1396a(a)(10)(A) of this title, or who is a PACE program eligible
individual enrolled in a PACE program under section 1396u-4 of
this title, but only if the income of such individual (as
determined under section 1382a of this title, but without regard
to subsection (b) thereof) does not exceed 300 percent of the
supplemental security income benefit rate established by section
1382(b)(1) of this title,
at the time of the provision of the medical assistance giving rise
to such expenditure.
(g) Decrease in Federal medical assistance percentage of amounts
paid for services furnished under State plan after June 30, 1973
(1) Subject to paragraph (3), with respect to amounts paid for
the following services furnished under the State plan after June
30, 1973 (other than services furnished pursuant to a contract with
a health maintenance organization as defined in section 1395mm of
this title or which is a qualified health maintenance organization
(as defined in section 300e-9(d) (!3) of this title)), the Federal
medical assistance percentage shall be decreased as follows: After
an individual has received inpatient hospital services or services
in an intermediate care facility for the mentally retarded for 60
days or inpatient mental hospital services for 90 days (whether or
not such days are consecutive), during any fiscal year, the Federal
medical assistance percentage with respect to amounts paid for any
such care furnished thereafter to such individual shall be
decreased by a per centum thereof (determined under paragraph (5))
unless the State agency responsible for the administration of the
plan makes a showing satisfactory to the Secretary that, with
respect to each calendar quarter for which the State submits a
request for payment at the full Federal medical assistance
percentage for amounts paid for inpatient hospital services or
services in an intermediate care facility for the mentally retarded
furnished beyond 60 days (or inpatient mental hospital services
furnished beyond 90 days), such State has an effective program of
medical review of the care of patients in mental hospitals and
intermediate care facilities for the mentally retarded pursuant to
paragraphs (26) and (31) of section 1396a(a) of this title whereby
the professional management of each case is reviewed and evaluated
at least annually by independent professional review teams. In
determining the number of days on which an individual has received
services described in this subsection, there shall not be counted
any days with respect to which such individual is entitled to have
payments made (in whole or in part) on his behalf under section
1395d of this title.
(2) The Secretary shall, as part of his validation procedures
under this subsection, conduct timely sample onsite surveys of
private and public institutions in which recipients of medical
assistance may receive care and services under a State plan
approved under this subchapter, and his findings with respect to
such surveys (as well as the showings of the State agency required
under this subsection) shall be made available for public
inspection.
(3)(A) No reduction in the Federal medical assistance percentage
of a State otherwise required to be imposed under this subsection
shall take effect -
(i) if such reduction is due to the State's unsatisfactory or
invalid showing made with respect to a calendar quarter beginning
before January 1, 1977;
(ii) before January 1, 1978;
(iii) unless a notice of such reduction has been provided to
the State at least 30 days before the date such reduction takes
effect; or
(iv) due to the State's unsatisfactory or invalid showing made
with respect to a calendar quarter beginning after September 30,
1977, unless notice of such reduction has been provided to the
State no later than the first day of the fourth calendar quarter
following the calendar quarter with respect to which such showing
was made.
(B) The Secretary shall waive application of any reduction in the
Federal medical assistance percentage of a State otherwise required
to be imposed under paragraph (1) because a showing by the State,
made under such paragraph with respect to a calendar quarter ending
after January 1, 1977, and before January 1, 1978, is determined to
be either unsatisfactory under such paragraph or invalid under
paragraph (2), if the Secretary determines that the State's showing
made under paragraph (1) with respect to any calendar quarter
ending on or before December 31, 1978, is satisfactory under such
paragraph and is valid under paragraph (2).
(4)(A) The Secretary may not find the showing of a State, with
respect to a calendar quarter under paragraph (1), to be
satisfactory if the showing is submitted to the Secretary later
than the 30th day after the last day of the calendar quarter,
unless the State demonstrates to the satisfaction of the Secretary
good cause for not meeting such deadline.
(B) The Secretary shall find a showing of a State, with respect
to a calendar quarter under paragraph (1), to be satisfactory under
such paragraph with respect to the requirement that the State
conduct annual onsite inspections in mental hospitals and
intermediate care facilities for the mentally retarded under
paragraphs (26) and (31) of section 1396a(a) of this title, if the
showing demonstrates that the State has conducted such an onsite
inspection during the 12-month period ending on the last date of
the calendar quarter -
(i) in each of not less than 98 per centum of the number of
such hospitals and facilities requiring such inspection, and
(ii) in every such hospital or facility which has 200 or more
beds,
and that, with respect to such hospitals and facilities not
inspected within such period, the State has exercised good faith
and due diligence in attempting to conduct such inspection, or if
the State demonstrates to the satisfaction of the Secretary that it
would have made such a showing but for failings of a technical
nature only.
(5) In the case of a State's unsatisfactory or invalid showing
made with respect to a type of facility or institutional services
in a calendar quarter, the per centum amount of the reduction of
the State's Federal medical assistance percentage for that type of
services under paragraph (1) is equal to 33 1/3 per centum
multiplied by a fraction, the denominator of which is equal to the
total number of patients receiving that type of services in that
quarter under the State plan in facilities or institutions for
which a showing was required to be made under this subsection, and
the numerator of which is equal to the number of such patients
receiving such type of services in that quarter in those facilities
or institutions for which a satisfactory and valid showing was not
made for that calendar quarter.
(6)(A) Recertifications required under section 1396a(a)(44) of
this title shall be conducted at least every 60 days in the case of
inpatient hospital services.
(B) Such recertifications in the case of services in an
intermediate care facility for the mentally retarded shall be
conducted at least -
(i) 60 days after the date of the initial certification,
(ii) 180 days after the date of the initial certification,
(iii) 12 months after the date of the initial certification,
(iv) 18 months after the date of the initial certification,
(v) 24 months after the date of the initial certification, and
(vi) every 12 months thereafter.
(C) For purposes of determining compliance with the schedule
established by this paragraph, a recertification shall be
considered to have been done on a timely basis if it was performed
not later than 10 days after the date the recertification was
otherwise required and the State establishes good cause why the
physician or other person making such recertification did not meet
such schedule.
(h) Repealed. Pub. L. 100-203, title IV, Sec. 4211(g)(1), Dec. 22,
1987, 101 Stat. 1330-205
(i) Payment for organ transplants; item or service furnished by
excluded individual, entity, or physician; other restrictions
Payment under the preceding provisions of this section shall not
be made -
(1) for organ transplant procedures unless the State plan
provides for written standards respecting the coverage of such
procedures and unless such standards provide that -
(A) similarly situated individuals are treated alike; and
(B) any restriction, on the facilities or practitioners which
may provide such procedures, is consistent with the
accessibility of high quality care to individuals eligible for
the procedures under the State plan; or
(2) with respect to any amount expended for an item or service
(other than an emergency item or service, not including items or
services furnished in an emergency room of a hospital) furnished -

(A) under the plan by any individual or entity during any
period when the individual or entity is excluded from
participation under subchapter V, XVIII, or XX of this chapter
or under this subchapter pursuant to section 1320a-7, 1320a-7a,
1320c-5, or 1395u(j)(2) of this title, or
(B) at the medical direction or on the prescription of a
physician, during the period when such physician is excluded
from participation under subchapter V, XVIII, or XX of this
chapter or under this subchapter pursuant to section 1320a-7,
1320a-7a, 1320c-5, or 1395u(j)(2) of this title and when the
person furnishing such item or service knew or had reason to
know of the exclusion (after a reasonable time period after
reasonable notice has been furnished to the person); or
(3) with respect to any amount expended for inpatient hospital
services furnished under the plan (other than amounts
attributable to the special situation of a hospital which serves
a disproportionate number of low income patients with special
needs) to the extent that such amount exceeds the hospital's
customary charges with respect to such services or (if such
services are furnished under the plan by a public institution
free of charge or at nominal charges to the public) exceeds an
amount determined on the basis of those items (specified in
regulations prescribed by the Secretary) included in the
determination of such payment which the Secretary finds will
provide fair compensation to such institution for such services;
or
(4) with respect to any amount expended for care or services
furnished under the plan by a hospital unless such hospital has
in effect a utilization review plan which meets the requirements
imposed by section 1395x(k) of this title for purposes of
subchapter XVIII of this chapter; and if such hospital has in
effect such a utilization review plan for purposes of subchapter
XVIII of this chapter, such plan shall serve as the plan required
by this subsection (with the same standards and procedures and
the same review committee or group) as a condition of payment
under this subchapter; the Secretary is authorized to waive the
requirements of this paragraph if the State agency demonstrates
to his satisfaction that it has in operation utilization review
procedures which are superior in their effectiveness to the
procedures required under section 1395x(k) of this title; or
(5) with respect to any amount expended for any drug product
for which payment may not be made under part B of subchapter
XVIII of this chapter because of section 1395y(c) of this title;
or
(6) with respect to any amount expended for inpatient hospital
tests (other than in emergency situations) not specifically
ordered by the attending physician or other responsible
practitioner; or
(7) with respect to any amount expended for clinical diagnostic
laboratory tests performed by a physician, independent
laboratory, or hospital, to the extent such amount exceeds the
amount that would be recognized under section 1395l(h) of this
title for such tests performed for an individual enrolled under
part B of subchapter XVIII of this chapter; or
(8) with respect to any amount expended for medical assistance
(A) for nursing facility services to reimburse (or otherwise
compensate) a nursing facility for payment of a civil money
penalty imposed under section 1396r(h) of this title or (B) for
home and community care to reimburse (or otherwise compensate) a
provider of such care for payment of a civil money penalty
imposed under this subchapter or subchapter XI of this chapter or
for legal expenses in defense of an exclusion or civil money
penalty under this subchapter or subchapter XI of this chapter if
there is no reasonable legal ground for the provider's case; or
(9) Repealed. Pub. L. 104-193, title I, Sec. 114(d)(2), Aug.
22, 1996, 110 Stat. 2180.
(10)(A) with respect to covered outpatient drugs unless there
is a rebate agreement in effect under section 1396r-8 of this
title with respect to such drugs or unless section 1396r-8(a)(3)
of this title applies, and
(B) with respect to any amount expended for an innovator
multiple source drug (as defined in section 1396r-8(k) of this
title) dispensed on or after July 1, 1991, if, under applicable
State law, a less expensive multiple source drug could have been
dispensed, but only to the extent that such amount exceeds the
upper payment limit for such multiple source drug; or
(11) with respect to any amount expended for physicians'
services furnished on or after the first day of the first quarter
beginning more than 60 days after the date of establishment of
the physician identifier system under section 1396a(x) of this
title, unless the claim for the services includes the unique
physician identifier provided under such system; or
(12) Repealed. Pub. L. 105-33, title IV, Sec. 4742(a), Aug. 5,
1997, 111 Stat. 523.
(13) with respect to any amount expended to reimburse (or
otherwise compensate) a nursing facility for payment of legal
expenses associated with any action initiated by the facility
that is dismissed on the basis that no reasonable legal ground
existed for the institution of such action; or
(14) with respect to any amount expended on administrative
costs to carry out the program under section 1396s of this title;
or
(15) with respect to any amount expended for a single-antigen
vaccine and its administration in any case in which the
administration of a combined-antigen vaccine was medically
appropriate (as determined by the Secretary); or
(16) with respect to any amount expended for which funds may
not be used under the Assisted Suicide Funding Restriction Act of
1997 [42 U.S.C. 14401 et seq.]; or
(17) with respect to any amount expended for roads, bridges,
stadiums, or any other item or service not covered under a State
plan under this subchapter; or
(18) with respect to any amount expended for home health care
services provided by an agency or organization unless the agency
or organization provides the State agency on a continuing basis a
surety bond in a form specified by the Secretary under paragraph
(7) of section 1395x(o) of this title and in an amount that is
not less than $50,000 or such comparable surety bond as the
Secretary may permit under the last sentence of such section; or
(19) with respect to any amount expended on administrative
costs to initiate or pursue litigation described in subsection
(d)(3)(B) of this section;
(20) with respect to amounts expended for medical assistance
provided to an individual described in subclause (XV) or (XVI) of
section 1396a(a)(10)(A)(ii) of this title for a fiscal year
unless the State demonstrates to the satisfaction of the
Secretary that the level of State funds expended for such fiscal
year for programs to enable working individuals with disabilities
to work (other than for such medical assistance) is not less than
the level expended for such programs during the most recent State
fiscal year ending before December 17, 1999; or
(21) with respect to amounts expended for covered outpatient
drugs described in section 1396r-8(d)(2)(K) of this title
(relating to drugs when used for treatment of sexual or erectile
dysfunction).
Nothing in paragraph (1) shall be construed as permitting a State
to provide services under its plan under this subchapter that are
not reasonable in amount, duration, and scope to achieve their
purpose. Paragraphs (1), (2), (16), (17), and (18) shall apply with
respect to items or services furnished and amounts expended by or
through a managed care entity (as defined in section 1396u-
2(a)(1)(B) of this title) in the same manner as such paragraphs
apply to items or services furnished and amounts expended directly
by the State.
(j) Adjustment of amount
Notwithstanding the preceding provisions of this section, the
amount determined under subsection (a)(1) of this section for any
State for any quarter shall be adjusted in accordance with section
1396m of this title.
(k) Technical assistance to States
The Secretary is authorized to provide at the request of any
State (and without cost to such State) such technical and actuarial
assistance as may be necessary to assist such State to contract
with any medicaid managed care organization which meets the
requirements of subsection (m) of this section for the purpose of
providing medical care and services to individuals who are entitled
to medical assistance under this subchapter.
(l) Repealed. Pub. L. 94-552, Sec. 1, Oct. 18, 1976, 90 Stat. 2540
(m) "Medicaid managed care organization" defined; duties and
functions of Secretary; payments to States; reporting
requirements; remedies
(1)(A) The term "medicaid managed care organization" means a
health maintenance organization, an eligible organization with a
contract under section 1395mm of this title or a Medicare+Choice
organization with a contract under part C of subchapter XVIII of
this chapter, a provider sponsored organization, or any other
public or private organization, which meets the requirement of
section 1396a(w) of this title and -
(i) makes services it provides to individuals eligible for
benefits under this subchapter accessible to such individuals,
within the area served by the organization, to the same extent as
such services are made accessible to individuals (eligible for
medical assistance under the State plan) not enrolled with the
organization, and
(ii) has made adequate provision against the risk of
insolvency, which provision is satisfactory to the State, meets
the requirements of subparagraph (C)(i) (if applicable), and
which assures that individuals eligible for benefits under this
subchapter are in no case held liable for debts of the
organization in case of the organization's insolvency.
An organization that is a qualified health maintenance organization
(as defined in section 300e-9(d) (!4) of this title) is deemed to
meet the requirements of clauses (i) and (ii).
(B) The duties and functions of the Secretary, insofar as they
involve making determinations as to whether an organization is a
medicaid managed care organization within the meaning of
subparagraph (A), shall be integrated with the administration of
section 300e-11(a) and (b) of this title.
(C)(i) Subject to clause (ii), a provision meets the requirements
of this subparagraph for an organization if the organization meets
solvency standards established by the State for private health
maintenance organizations or is licensed or certified by the State
as a risk-bearing entity.
(ii) Clause (i) shall not apply to an organization if -
(I) the organization is not responsible for the provision
(directly or through arrangements with providers of services) of
inpatient hospital services and physicians' services;
(II) the organization is a public entity;
(III) the solvency of the organization is guaranteed by the
State; or
(IV) the organization is (or is controlled by) one or more
Federally-qualified (!5) health centers and meets solvency
standards established by the State for such an organization.
For purposes of subclause (IV), the term "control" means the
possession, whether direct or indirect, of the power to direct or
cause the direction of the management and policies of the
organization through membership, board representation, or an
ownership interest equal to or greater than 50.1 percent.
(2)(A) Except as provided in subparagraphs (B), (C), and (G), no
payment shall be made under this subchapter to a State with respect
to expenditures incurred by it for payment (determined under a
prepaid capitation basis or under any other risk basis) for
services provided by any entity (including a health insuring
organization) which is responsible for the provision (directly or
through arrangements with providers of services) of inpatient
hospital services and any other service described in paragraph (2),
(3), (4), (5), or (7) of section 1396d(a) of this title or for the
provision of any three or more of the services described in such
paragraphs unless -
(i) the Secretary has determined that the entity is a medicaid
managed care organization as defined in paragraph (1);
(ii) Repealed. Pub. L. 105-33, title IV, Sec. 4703(a), Aug. 5,
1997, 111 Stat. 495.
(iii) such services are provided for the benefit of individuals
eligible for benefits under this subchapter in accordance with a
contract between the State and the entity under which prepaid
payments to the entity are made on an actuarially sound basis and
under which the Secretary must provide prior approval for
contracts providing for expenditures in excess of $1,000,000 for
1998 and, for a subsequent year, the amount established under
this clause for the previous year increased by the percentage
increase in the consumer price index for all urban consumers over
the previous year;
(iv) such contract provides that the Secretary and the State
(or any person or organization designated by either) shall have
the right to audit and inspect any books and records of the
entity (and of any subcontractor) that pertain (I) to the ability
of the entity to bear the risk of potential financial losses, or
(II) to services performed or determinations of amounts payable
under the contract;
(v) such contract provides that in the entity's enrollment,
reenrollment, or disenrollment of individuals who are eligible
for benefits under this subchapter and eligible to enroll,
reenroll, or disenroll with the entity pursuant to the contract,
the entity will not discriminate among such individuals on the
basis of their health status or requirements for health care
services;
(vi) such contract (I) permits individuals who have elected
under the plan to enroll with the entity for provision of such
benefits to terminate such enrollment in accordance with section
1396u-2(a)(4) of this title, and (II) provides for notification
in accordance with such section of each such individual, at the
time of the individual's enrollment, of such right to terminate
such enrollment;
(vii) such contract provides that, in the case of medically
necessary services which were provided (I) to an individual
enrolled with the entity under the contract and entitled to
benefits with respect to such services under the State's plan and
(II) other than through the organization because the services
were immediately required due to an unforeseen illness, injury,
or condition, either the entity or the State provides for
reimbursement with respect to those services,(!6)
(viii) such contract provides for disclosure of information in
accordance with section 1320a-3 of this title and paragraph (4)
of this subsection;
(ix) such contract provides, in the case of an entity that has
entered into a contract for the provision of services with a
Federally-qualified (!5) health center or a rural health clinic,
that the entity shall provide payment that is not less than the
level and amount of payment which the entity would make for the
services if the services were furnished by a provider which is
not a Federally-qualified health center or a rural health clinic;
(x) any physician incentive plan that it operates meets the
requirements described in section 1395mm(i)(8) of this title;
(xi) such contract provides for maintenance of sufficient
patient encounter data to identify the physician who delivers
services to patients; and
(xii) such contract, and the entity complies with the
applicable requirements of section 1396u-2 of this title.
(B) Subparagraph (A) (!7) except with respect to clause (ix) of
subparagraph (A), does not apply with respect to payments under
this subchapter to a State with respect to expenditures incurred by
it for payment for services provided by an entity which -
(i)(I) received a grant of at least $100,000 in the fiscal year
ending June 30, 1976, under section 254b(d)(1)(A) or 254c(d)(1)
of this title,(!8) and for the period beginning July 1, 1976, and
ending on the expiration of the period for which payments are to
be made under this subchapter has been the recipient of a grant
under either such section; and
(II) provides to its enrollees, on a prepaid capitation risk
basis or on any other risk basis, all of the services and
benefits described in paragraphs (1), (2), (3), (4)(C), and (5)
of section 1396d(a) of this title and, to the extent required by
section 1396a(a)(10)(D) of this title to be provided under a
State plan for medical assistance, the services and benefits
described in paragraph (7) of section 1396d(a) of this title; or
(ii) is a nonprofit primary health care entity located in a
rural area (as defined by the Appalachian Regional Commission) -
(I) which received in the fiscal year ending June 30, 1976,
at least $100,000 (by grant, subgrant, or subcontract) under
the Appalachian Regional Development Act of 1965,(!8) and
(II) for the period beginning July 1, 1976, and ending on the
expiration of the period for which payments are to be made
under this subchapter either has been the recipient of a grant,
subgrant, or subcontract under such Act or has provided
services under a contract (initially entered into during a year
in which the entity was the recipient of such a grant,
subgrant, or subcontract) with a State agency under this
subchapter on a prepaid capitation risk basis or on any other
risk basis; or
(iii) which has contracted with the single State agency for the
provision of services (but not including inpatient hospital
services) to persons eligible under this subchapter on a prepaid
risk basis prior to 1970.
(C) to (E) Repealed. Pub. L. 105-33, title IV, Sec.
4703(b)(1)(A), Aug. 5, 1997, 111 Stat. 495.
(F) Repealed. Pub. L. 105-33, title IV, Sec. 4701(d)(2)(B), Aug.
5, 1997, 111 Stat. 494.
(G) In the case of an entity which is receiving (and has received
during the previous two years) a grant of at least $100,000 under
section 254b(d)(1)(A) or 254c(d)(1) of this title (!8) or is
receiving (and has received during the previous two years) at least
$100,000 (by grant, subgrant, or subcontract) under the Appalachian
Regional Development Act of 1965,(!8) clause (i) of subparagraph
(A) shall not apply.
(H) In the case of an individual who -
(i) in a month is eligible for benefits under this subchapter
and enrolled with a medicaid managed care organization with a
contract under this paragraph or with a primary care case manager
with a contract described in section 1396d(t)(3) of this title,
(ii) in the next month (or in the next 2 months) is not
eligible for such benefits, but
(iii) in the succeeding month is again eligible for such
benefits,
the State plan, subject to subparagraph (A)(vi), may enroll the
individual for that succeeding month with the organization
described in clause (i) if the organization continues to have a
contract under this paragraph with the State or with the manager
described in such clause if the manager continues to have a
contract described in section 1396d(t)(3) of this title with the
State.
(3) Repealed. Pub. L. 101-508, title IV, Sec. 4732(d)(2), Nov. 5,
1990, 104 Stat. 1388-196.
(4)(A) Each medicaid managed care organization which is not a
qualified health maintenance organization (as defined in section
300e-9(d) (!8) of this title) must report to the State and, upon
request, to the Secretary, the Inspector General of the Department
of Health and Human Services, and the Comptroller General a
description of transactions between the organization and a party in
interest (as defined in section 300e-17(b) of this title),
including the following transactions:
(i) Any sale or exchange, or leasing of any property between
the organization and such a party.
(ii) Any furnishing for consideration of goods, services
(including management services), or facilities between the
organization and such a party, but not including salaries paid to
employees for services provided in the normal course of their
employment.
(iii) Any lending of money or other extension of credit between
the organization and such a party.
The State or Secretary may require that information reported
respecting an organization which controls, or is controlled by, or
is under common control with, another entity be in the form of a
consolidated financial statement for the organization and such
entity.
(B) Each organization shall make the information reported
pursuant to subparagraph (A) available to its enrollees upon
reasonable request.
(5)(A) If the Secretary determines that an entity with a contract
under this subsection -
(i) fails substantially to provide medically necessary items
and services that are required (under law or under the contract)
to be provided to an individual covered under the contract, if
the failure has adversely affected (or has substantial likelihood
of adversely affecting) the individual;
(ii) imposes premiums on individuals enrolled under this
subsection in excess of the premiums permitted under this
subchapter;
(iii) acts to discriminate among individuals in violation of
the provision of paragraph (2)(A)(v), including expulsion or
refusal to re-enroll an individual or engaging in any practice
that would reasonably be expected to have the effect of denying
or discouraging enrollment (except as permitted by this
subsection) by eligible individuals with the organization whose
medical condition or history indicates a need for substantial
future medical services;
(iv) misrepresents or falsifies information that is furnished -

(I) to the Secretary or the State under this subsection, or
(II) to an individual or to any other entity under this
subsection,(!9) or
(v) fails to comply with the requirements of section
1395mm(i)(8) of this title,
the Secretary may provide, in addition to any other remedies
available under law, for any of the remedies described in
subparagraph (B).
(B) The remedies described in this subparagraph are -
(i) civil money penalties of not more than $25,000 for each
determination under subparagraph (A), or, with respect to a
determination under clause (iii) or (iv)(I) of such subparagraph,
of not more than $100,000 for each such determination, plus, with
respect to a determination under subparagraph (A)(ii), double the
excess amount charged in violation of such subparagraph (and the
excess amount charged shall be deducted from the penalty and
returned to the individual concerned), and plus, with respect to
a determination under subparagraph (A)(iii), $15,000 for each
individual not enrolled as a result of a practice described in
such subparagraph, or
(ii) denial of payment to the State for medical assistance
furnished under the contract under this subsection for
individuals enrolled after the date the Secretary notifies the
organization of a determination under subparagraph (A) and until
the Secretary is satisfied that the basis for such determination
has been corrected and is not likely to recur.
The provisions of section 1320a-7a of this title (other than
subsections (a) and (b)) shall apply to a civil money penalty under
clause (i) in the same manner as such provisions apply to a penalty
or proceeding under section 1320a-7a(a) of this title.
(6)(A) For purposes of this subsection and section 1396a(e)(2)(A)
of this title, in the case of the State of New Jersey, the term
"contract" shall be deemed to include an undertaking by the State
agency, in the State plan under this subchapter, to operate a
program meeting all requirements of this subsection.
(B) The undertaking described in subparagraph (A) must provide -
(i) for the establishment of a separate entity responsible for
the operation of a program meeting the requirements of this
subsection, which entity may be a subdivision of the State agency
administering the State plan under this subchapter;
(ii) for separate accounting for the funds used to operate such
program; and
(iii) for setting the capitation rates and any other payment
rates for services provided in accordance with this subsection
using a methodology satisfactory to the Secretary designed to
ensure that total Federal matching payments under this subchapter
for such services will be lower than the matching payments that
would be made for the same services, if provided under the State
plan on a fee for service basis to an actuarially equivalent
population.
(C) The undertaking described in subparagraph (A) shall be
subject to approval (and annual re-approval) by the Secretary in
the same manner as a contract under this subsection.
(D) The undertaking described in subparagraph (A) shall not be
eligible for a waiver under section 1396n(b) of this title.
(n) Repealed. Pub. L. 100-93, Sec. 8(h)(1), Aug. 18, 1987, 101
Stat. 694
(o) Restrictions on authorized payments to States
Notwithstanding the preceding provisions of this section, no
payment shall be made to a State under the preceding provisions of
this section for expenditures for medical assistance provided for
an individual under its State plan approved under this subchapter
to the extent that a private insurer (as defined by the Secretary
by regulation and including a group health plan (as defined in
section 1167(1) of title 29), a service benefit plan, and a health
maintenance organization) would have been obligated to provide such
assistance but for a provision of its insurance contract which has
the effect of limiting or excluding such obligation because the
individual is eligible for or is provided medical assistance under
the plan.
(p) Assignment of rights of payment; incentive payments for
enforcement and collection
(1) When a political subdivision of a State makes, for the State
of which it is a political subdivision, or one State makes, for
another State, the enforcement and collection of rights of support
or payment assigned under section 1396k of this title, pursuant to
a cooperative arrangement under such section (either within or
outside of such State), there shall be paid to such political
subdivision or such other State from amounts which would otherwise
represent the Federal share of payments for medical assistance
provided to the eligible individuals on whose behalf such
enforcement and collection was made, an amount equal to 15 percent
of any amount collected which is attributable to such rights of
support or payment.
(2) Where more than one jurisdiction is involved in such
enforcement or collection, the amount of the incentive payment
determined under paragraph (1) shall be allocated among the
jurisdictions in a manner to be prescribed by the Secretary.
(q) "State medicaid fraud control unit" defined
For the purposes of this section, the term "State medicaid fraud
control unit" means a single identifiable entity of the State
government which the Secretary certifies (and annually recertifies)
as meeting the following requirements:
(1) The entity (A) is a unit of the office of the State
Attorney General or of another department of State government
which possesses statewide authority to prosecute individuals for
criminal violations, (B) is in a State the constitution of which
does not provide for the criminal prosecution of individuals by a
statewide authority and has formal procedures, approved by the
Secretary, that (i) assure its referral of suspected criminal
violations relating to the program under this subchapter to the
appropriate authority or authorities in the State for prosecution
and (ii) assure its assistance of, and coordination with, such
authority or authorities in such prosecutions, or (C) has a
formal working relationship with the office of the State Attorney
General and has formal procedures (including procedures for its
referral of suspected criminal violations to such office) which
are approved by the Secretary and which provide effective
coordination of activities between the entity and such office
with respect to the detection, investigation, and prosecution of
suspected criminal violations relating to the program under this
subchapter.
(2) The entity is separate and distinct from the single State
agency that administers or supervises the administration of the
State plan under this subchapter.
(3) The entity's function is conducting a statewide program for
the investigation and prosecution of violations of all applicable
State laws regarding any and all aspects of fraud in connection
with (A) any aspect of the provision of medical assistance and
the activities of providers of such assistance under the State
plan under this subchapter; and (B) upon the approval of the
Inspector General of the relevant Federal agency, any aspect of
the provision of health care services and activities of providers
of such services under any Federal health care program (as
defined in section 1320a-7b(f)(1) of this title), if the
suspected fraud or violation of law in such case or investigation
is primarily related to the State plan under this subchapter.
(4)(A) The entity has -
(i) procedures for reviewing complaints of abuse or neglect
of patients in health care facilities which receive payments
under the State plan under this subchapter;
(ii) at the option of the entity, procedures for reviewing
complaints of abuse or neglect of patients residing in board
and care facilities; and
(iii) procedures for acting upon such complaints under the
criminal laws of the State or for referring such complaints to
other State agencies for action.
(B) For purposes of this paragraph, the term "board and care
facility" means a residential setting which receives payment
(regardless of whether such payment is made under the State plan
under this subchapter) from or on behalf of two or more unrelated
adults who reside in such facility, and for whom one or both of
the following is provided:
(i) Nursing care services provided by, or under the
supervision of, a registered nurse, licensed practical nurse,
or licensed nursing assistant.
(ii) A substantial amount of personal care services that
assist residents with the activities of daily living, including
personal hygiene, dressing, bathing, eating, toileting,
ambulation, transfer, positioning, self-medication, body care,
travel to medical services, essential shopping, meal
preparation, laundry, and housework.
(5) The entity provides for the collection, or referral for
collection to a single State agency, of overpayments that are
made under the State plan or under any Federal health care
program (as so defined) to health care facilities and that are
discovered by the entity in carrying out its activities. All
funds collected in accordance with this paragraph shall be
credited exclusively to, and available for expenditure under, the
Federal health care program (including the State plan under this
subchapter) that was subject to the activity that was the basis
for the collection.
(6) The entity employs such auditors, attorneys, investigators,
and other necessary personnel and is organized in such a manner
as is necessary to promote the effective and efficient conduct of
the entity's activities.
(7) The entity submits to the Secretary an application and
annual reports containing such information as the Secretary
determines, by regulation, to be necessary to determine whether
the entity meets the other requirements of this subsection.
(r) Mechanized claims processing and information retrieval systems;
operational, etc., requirements
(1) In order to receive payments under subsection (a) of this
section for use of automated data systems in administration of the
State plan under this subchapter, a State must have in operation
mechanized claims processing and information retrieval systems that
meet the requirements of this subsection and that the Secretary has
found -
(A) are adequate to provide efficient, economical, and
effective administration of such State plan;
(B) are compatible with the claims processing and information
retrieval systems used in the administration of subchapter XVIII
of this chapter, and for this purpose -
(i) have a uniform identification coding system for
providers, other payees, and beneficiaries under this
subchapter or subchapter XVIII of this chapter;
(ii) provide liaison between States and carriers and
intermediaries with agreements under subchapter XVIII of this
chapter to facilitate timely exchange of appropriate data; and
(iii) provide for exchange of data between the States and the
Secretary with respect to persons sanctioned under this
subchapter or subchapter XVIII of this chapter;
(C) are capable of providing accurate and timely data;
(D) are complying with the applicable provisions of part C of
subchapter XI of this chapter;
(E) are designed to receive provider claims in standard formats
to the extent specified by the Secretary; and
(F) effective for claims filed on or after January 1, 1999,
provide for electronic transmission of claims data in the format
specified by the Secretary and consistent with the Medicaid
Statistical Information System (MSIS) (including detailed
individual enrollee encounter data and other information that the
Secretary may find necessary).
(2) In order to meet the requirements of this paragraph,
mechanized claims processing and information retrieval systems must
meet the following requirements:
(A) The systems must be capable of developing provider,
physician, and patient profiles which are sufficient to provide
specific information as to the use of covered types of services
and items, including prescribed drugs.
(B) The State must provide that information on probable fraud
or abuse which is obtained from, or developed by, the systems, is
made available to the State's medicaid fraud control unit (if
any) certified under subsection (q) of this section.
(C) The systems must meet all performance standards and other
requirements for initial approval developed by the Secretary.
(s) Limitations on certain physician referrals
Notwithstanding the preceding provisions of this section, no
payment shall be made to a State under this section for
expenditures for medical assistance under the State plan consisting
of a designated health service (as defined in subsection (h)(6) of
section 1395nn of this title) furnished to an individual on the
basis of a referral that would result in the denial of payment for
the service under subchapter XVIII of this chapter if such
subchapter provided for coverage of such service to the same extent
and under the same terms and conditions as under the State plan,
and subsections (f) and (g)(5) of such section shall apply to a
provider of such a designated health service for which payment may
be made under this subchapter in the same manner as such
subsections apply to a provider of such a service for which payment
may be made under such subchapter.
(t) Repealed. Pub. L. 97-35, title XXI, Sec. 2161(c)(2), Aug. 13,
1981, 95 Stat. 805, as amended by Pub. L. 97-248, title I, Sec.
137(a)(2), Sept. 3, 1982, 96 Stat. 376
(u) Limitation of Federal financial participation in erroneous
medical assistance expenditures
(1)(A) Notwithstanding subsection (a)(1) of this section, if the
ratio of a State's erroneous excess payments for medical assistance
(as defined in subparagraph (D)) to its total expenditures for
medical assistance under the State plan approved under this
subchapter exceeds 0.03, for the period consisting of the third and
fourth quarters of fiscal year 1983, or for any full fiscal year
thereafter, then the Secretary shall make no payment for such
period or fiscal year with respect to so much of such erroneous
excess payments as exceeds such allowable error rate of 0.03.
(B) The Secretary may waive, in certain limited cases, all or
part of the reduction required under subparagraph (A) with respect
to any State if such State is unable to reach the allowable error
rate for a period or fiscal year despite a good faith effort by
such State.
(C) In estimating the amount to be paid to a State under
subsection (d) of this section, the Secretary shall take into
consideration the limitation on Federal financial participation
imposed by subparagraph (A) and shall reduce the estimate he makes
under subsection (d)(1) of this section, for purposes of payment to
the State under subsection (d)(3) of this section, in light of any
expected erroneous excess payments for medical assistance
(estimated in accordance with such criteria, including sampling
procedures, as he may prescribe and subject to subsequent
adjustment, if necessary, under subsection (d)(2) of this section).
(D)(i) For purposes of this subsection, the term "erroneous
excess payments for medical assistance" means the total of -
(I) payments under the State plan with respect to ineligible
individuals and families, and
(II) overpayments on behalf of eligible individuals and
families by reason of error in determining the amount of
expenditures for medical care required of an individual or family
as a condition of eligibility.
(ii) In determining the amount of erroneous excess payments for
medical assistance to an ineligible individual or family under
clause (i)(I), if such ineligibility is the result of an error in
determining the amount of the resources of such individual or
family, the amount of the erroneous excess payment shall be the
smaller of (I) the amount of the payment with respect to such
individual or family, or (II) the difference between the actual
amount of such resources and the allowable resource level
established under the State plan.
(iii) In determining the amount of erroneous excess payments for
medical assistance to an individual or family under clause (i)(II),
the amount of the erroneous excess payment shall be the smaller of
(I) the amount of the payment on behalf of the individual or
family, or (II) the difference between the actual amount incurred
for medical care by the individual or family and the amount which
should have been incurred in order to establish eligibility for
medical assistance.
(iv) In determining the amount of erroneous excess payments,
there shall not be included any error resulting from a failure of
an individual to cooperate or give correct information with respect
to third-party liability as required under section 1396k(a)(1)(C)
or 602(a)(26)(C) (!10) of this title or with respect to payments
made in violation of section 1396e of this title.
(v) In determining the amount of erroneous excess payments, there
shall not be included any erroneous payments made for ambulatory
prenatal care provided during a presumptive eligibility period (as
defined in section 1396r-1(b)(1) of this title), for items and
services described in subsection (a) of section 1396r-1a of this
title provided to a child during a presumptive eligibility period
under such section, or for medical assistance provided to an
individual described in subsection (a) of section 1396r-1b of this
title during a presumptive eligibility period under such section.
(E) For purposes of subparagraph (D), there shall be excluded, in
determining both erroneous excess payments for medical assistance
and total expenditures for medical assistance -
(i) payments with respect to any individual whose eligibility
therefor was determined exclusively by the Secretary under an
agreement pursuant to section 1383c of this title and such other
classes of individuals as the Secretary may by regulation
prescribe whose eligibility was determined in part under such an
agreement; and
(ii) payments made as the result of a technical error.
(2) The State agency administering the plan approved under this
subchapter shall, at such times and in such form as the Secretary
may specify, provide information on the rates of erroneous excess
payments made (or expected, with respect to future periods
specified by the Secretary) in connection with its administration
of such plan, together with any other data he requests that are
reasonably necessary for him to carry out the provisions of this
subsection.
(3)(A) If a State fails to cooperate with the Secretary in
providing information necessary to carry out this subsection, the
Secretary, directly or through contractual or such other
arrangements as he may find appropriate, shall establish the error
rates for that State on the basis of the best data reasonably
available to him and in accordance with such techniques for
sampling and estimating as he finds appropriate.
(B) In any case in which it is necessary for the Secretary to
exercise his authority under subparagraph (A) to determine a
State's error rates for a fiscal year, the amount that would
otherwise be payable to such State under this subchapter for
quarters in such year shall be reduced by the costs incurred by the
Secretary in making (directly or otherwise) such determination.
(4) This subsection shall not apply with respect to Puerto Rico,
Guam, the Virgin Islands, the Northern Mariana Islands, or American
Samoa.
(v) Medical assistance to aliens not lawfully admitted for
permanent residence
(1) Notwithstanding the preceding provisions of this section,
except as provided in paragraph (2), no payment may be made to a
State under this section for medical assistance furnished to an
alien who is not lawfully admitted for permanent residence or
otherwise permanently residing in the United States under color of
law.
(2) Payment shall be made under this section for care and
services that are furnished to an alien described in paragraph (1)
only if -
(A) such care and services are necessary for the treatment of
an emergency medical condition of the alien,
(B) such alien otherwise meets the eligibility requirements for
medical assistance under the State plan approved under this
subchapter (other than the requirement of the receipt of aid or
assistance under subchapter IV of this chapter, supplemental
security income benefits under subchapter XVI of this chapter, or
a State supplementary payment), and
(C) such care and services are not related to an organ
transplant procedure.
(3) For purposes of this subsection, the term "emergency medical
condition" means a medical condition (including emergency labor and
delivery) manifesting itself by acute symptoms of sufficient
severity (including severe pain) such that the absence of immediate
medical attention could reasonably be expected to result in -
(A) placing the patient's health in serious jeopardy,
(B) serious impairment to bodily functions, or
(C) serious dysfunction of any bodily organ or part.
(w) Prohibition on use of voluntary contributions, and limitation
on use of provider-specific taxes to obtain Federal financial
participation under medicaid
(1)(A) Notwithstanding the previous provisions of this section,
for purposes of determining the amount to be paid to a State (as
defined in paragraph (7)(D)) under subsection (a)(1) of this
section for quarters in any fiscal year, the total amount expended
during such fiscal year as medical assistance under the State plan
(as determined without regard to this subsection) shall be reduced
by the sum of any revenues received by the State (or by a unit of
local government in the State) during the fiscal year -
(i) from provider-related donations (as defined in paragraph
(2)(A)), other than -
(I) bona fide provider-related donations (as defined in
paragraph (2)(B)), and
(II) donations described in paragraph (2)(C);
(ii) from health care related taxes (as defined in paragraph
(3)(A)), other than broad-based health care related taxes (as
defined in paragraph (3)(B));
(iii) from a broad-based health care related tax, if there is
in effect a hold harmless provision (described in paragraph (4))
with respect to the tax; or
(iv) only with respect to State fiscal years (or portions
thereof) occurring on or after January 1, 1992, and before
October 1, 1995, from broad-based health care related taxes to
the extent the amount of such taxes collected exceeds the limit
established under paragraph (5).
(B) Notwithstanding the previous provisions of this section, for
purposes of determining the amount to be paid to a State under
subsection (a)(7) of this section for all quarters in a Federal
fiscal year (beginning with fiscal year 1993), the total amount
expended during the fiscal year for administrative expenditures
under the State plan (as determined without regard to this
subsection) shall be reduced by the sum of any revenues received by
the State (or by a unit of local government in the State) during
such quarters from donations described in paragraph (2)(C), to the
extent the amount of such donations exceeds 10 percent of the
amounts expended under the State plan under this subchapter during
the fiscal year for purposes described in paragraphs (2), (3), (4),
(6), and (7) of subsection (a) of this section.
(C)(i) Except as otherwise provided in clause (ii), subparagraph
(A)(i) shall apply to donations received on or after January 1,
1992.
(ii) Subject to the limits described in clause (iii) and
subparagraph (E), subparagraph (A)(i) shall not apply to donations
received before the effective date specified in subparagraph (F) if
such donations are received under programs in effect or as
described in State plan amendments or related documents submitted
to the Secretary by September 30, 1991, and applicable to State
fiscal year 1992, as demonstrated by State plan amendments, written
agreements, State budget documentation, or other documentary
evidence in existence on that date.
(iii) In applying clause (ii) in the case of donations received
in State fiscal year 1993, the maximum amount of such donations to
which such clause may be applied may not exceed the total amount of
such donations received in the corresponding period in State fiscal
year 1992 (or not later than 5 days after the last day of the
corresponding period).
(D)(i) Except as otherwise provided in clause (ii), subparagraphs
(A)(ii) and (A)(iii) shall apply to taxes received on or after
January 1, 1992.
(ii) Subparagraphs (A)(ii) and (A)(iii) shall not apply to
impermissible taxes (as defined in clause (iii)) received before
the effective date specified in subparagraph (F) to the extent the
taxes (including the tax rate or base) were in effect, or the
legislation or regulations imposing such taxes were enacted or
adopted, as of November 22, 1991.
(iii) In this subparagraph and subparagraph (E), the term
"impermissible tax" means a health care related tax for which a
reduction may be made under clause (ii) or (iii) of subparagraph
(A).
(E)(i) In no case may the total amount of donations and taxes
permitted under the exception provided in subparagraphs (C)(ii) and
(D)(ii) for the portion of State fiscal year 1992 occurring during
calendar year 1992 exceed the limit under paragraph (5) minus the
total amount of broad-based health care related taxes received in
the portion of that fiscal year.
(ii) In no case may the total amount of donations and taxes
permitted under the exception provided in subparagraphs (C)(ii) and
(D)(ii) for State fiscal year 1993 exceed the limit under paragraph
(5) minus the total amount of broad-based health care related taxes
received in that fiscal year.
(F) In this paragraph in the case of a State -
(i) except as provided in clause (iii), with a State fiscal
year beginning on or before July 1, the effective date is October
1, 1992,
(ii) except as provided in clause (iii), with a State fiscal
year that begins after July 1, the effective date is January 1,
1993, or
(iii) with a State legislature which is not scheduled to have a
regular legislative session in 1992, with a State legislature
which is not scheduled to have a regular legislative session in
1993, or with a provider-specific tax enacted on November 4,
1991, the effective date is July 1, 1993.
(2)(A) In this subsection (except as provided in paragraph (6)),
the term "provider-related donation" means any donation or other
voluntary payment (whether in cash or in kind) made (directly or
indirectly) to a State or unit of local government by -
(i) a health care provider (as defined in paragraph (7)(B)),
(ii) an entity related to a health care provider (as defined in
paragraph (7)(C)), or
(iii) an entity providing goods or services under the State
plan for which payment is made to the State under paragraph (2),
(3), (4), (6), or (7) of subsection (a) of this section.
(B) For purposes of paragraph (1)(A)(i)(I), the term "bona fide
provider-related donation" means a provider-related donation that
has no direct or indirect relationship (as determined by the
Secretary) to payments made under this subchapter to that provider,
to providers furnishing the same class of items and services as
that provider, or to any related entity, as established by the
State to the satisfaction of the Secretary. The Secretary may by
regulation specify types of provider-related donations described in
the previous sentence that will be considered to be bona fide
provider-related donations.
(C) For purposes of paragraph (1)(A)(i)(II), donations described
in this subparagraph are funds expended by a hospital, clinic, or
similar entity for the direct cost (including costs of training and
of preparing and distributing outreach materials) of State or local
agency personnel who are stationed at the hospital, clinic, or
entity to determine the eligibility of individuals for medical
assistance under this subchapter and to provide outreach services
to eligible or potentially eligible individuals.
(3)(A) In this subsection (except as provided in paragraph (6)),
the term "health care related tax" means a tax (as defined in
paragraph (7)(F)) that -
(i) is related to health care items or services, or to the
provision of, the authority to provide, or payment for, such
items or services, or
(ii) is not limited to such items or services but provides for
treatment of individuals or entities that are providing or paying
for such items or services that is different from the treatment
provided to other individuals or entities.
In applying clause (i), a tax is considered to relate to health
care items or services if at least 85 percent of the burden of such
tax falls on health care providers.
(B) In this subsection, the term "broad-based health care related
tax" means a health care related tax which is imposed with respect
to a class of health care items or services (as described in
paragraph (7)(A)) or with respect to providers of such items or
services and which, except as provided in subparagraphs (D), (E),
and (F) -
(i) is imposed at least with respect to all items or services
in the class furnished by all non-Federal, nonpublic providers in
the State (or, in the case of a tax imposed by a unit of local
government, the area over which the unit has jurisdiction) or is
imposed with respect to all non-Federal, nonpublic providers in
the class; and
(ii) is imposed uniformly (in accordance with subparagraph
(C)).
(C)(i) Subject to clause (ii), for purposes of subparagraph
(B)(ii), a tax is considered to be imposed uniformly if -
(I) in the case of a tax consisting of a licensing fee or
similar tax on a class of health care items or services (or
providers of such items or services), the amount of the tax
imposed is the same for every provider providing items or
services within the class;
(II) in the case of a tax consisting of a licensing fee or
similar tax imposed on a class of health care items or services
(or providers of such services) on the basis of the number of
beds (licensed or otherwise) of the provider, the amount of the
tax is the same for each bed of each provider of such items or
services in the class;
(III) in the case of a tax based on revenues or receipts with
respect to a class of items or services (or providers of items or
services) the tax is imposed at a uniform rate for all items and
services (or providers of such items or services) in the class on
all the gross revenues or receipts, or net operating revenues,
relating to the provision of all such items or services (or all
such providers) in the State (or, in the case of a tax imposed by
a unit of local government within the State, in the area over
which the unit has jurisdiction); or
(IV) in the case of any other tax, the State establishes to the
satisfaction of the Secretary that the tax is imposed uniformly.
(ii) Subject to subparagraphs (D) and (E), a tax imposed with
respect to a class of health care items and services is not
considered to be imposed uniformly if the tax provides for any
credits, exclusions, or deductions which have as their purpose or
effect the return to providers of all or a portion of the tax paid
in a manner that is inconsistent with subclauses (I) and (II) of
subparagraph (E)(ii) or provides for a hold harmless provision
described in paragraph (4).
(D) A tax imposed with respect to a class of health care items
and services is considered to be imposed uniformly -
(i) notwithstanding that the tax is not imposed with respect to
items or services (or the providers thereof) for which payment is
made under a State plan under this subchapter or subchapter XVIII
of this chapter, or
(ii) in the case of a tax described in subparagraph
(C)(i)(III), notwithstanding that the tax provides for exclusion
(in whole or in part) of revenues or receipts from a State plan
under this subchapter or subchapter XVIII of this chapter.
(E)(i) A State may submit an application to the Secretary
requesting that the Secretary treat a tax as a broad-based health
care related tax, notwithstanding that the tax does not apply to
all health care items or services in class (or all providers of
such items and services), provides for a credit, deduction, or
exclusion, is not applied uniformly, or otherwise does not meet the
requirements of subparagraph (B) or (C). Permissible waivers may
include exemptions for rural or sole-community providers.
(ii) The Secretary shall approve such an application if the State
establishes to the satisfaction of the Secretary that -
(I) the net impact of the tax and associated expenditures under
this subchapter as proposed by the State is generally
redistributive in nature, and
(II) the amount of the tax is not directly correlated to
payments under this subchapter for items or services with respect
to which the tax is imposed.
The Secretary shall by regulation specify types of credits,
exclusions, and deductions that will be considered to meet the
requirements of this subparagraph.
(F) In no case shall a tax not qualify as a broad-based health
care related tax under this paragraph because it does not apply to
a hospital that is described in section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from taxation under section 501(a)
of such Code and that does not accept payment under the State plan
under this subchapter or under subchapter XVIII of this chapter.
(4) For purposes of paragraph (1)(A)(iii), there is in effect a
hold harmless provision with respect to a broad-based health care
related tax imposed with respect to a class of items or services if
the Secretary determines that any of the following applies:
(A) The State or other unit of government imposing the tax
provides (directly or indirectly) for a payment (other than under
this subchapter) to taxpayers and the amount of such payment is
positively correlated either to the amount of such tax or to the
difference between the amount of the tax and the amount of
payment under the State plan.
(B) All or any portion of the payment made under this
subchapter to the taxpayer varies based only upon the amount of
the total tax paid.
(C) The State or other unit of government imposing the tax
provides (directly or indirectly) for any payment, offset, or
waiver that guarantees to hold taxpayers harmless for any portion
of the costs of the tax.
The provisions of this paragraph shall not prevent use of the tax
to reimburse health care providers in a class for expenditures
under this subchapter nor preclude States from relying on such
reimbursement to justify or explain the tax in the legislative
process.
(5)(A) For purposes of this subsection, the limit under this
subparagraph with respect to a State is an amount equal to 25
percent (or, if greater, the State base percentage, as defined in
subparagraph (B)) of the non-Federal share of the total amount
expended under the State plan during a State fiscal year (or
portion thereof), as it would be determined pursuant to paragraph
(1)(A) without regard to paragraph (1)(A)(iv).
(B)(i) In subparagraph (A), the term "State base percentage"
means, with respect to a State, an amount (expressed as a
percentage) equal to -
(I) the total of the amount of health care related taxes
(whether or not broad-based) and the amount of provider-related
donations (whether or not bona fide) projected to be collected
(in accordance with clause (ii)) during State fiscal year 1992,
divided by
(II) the non-Federal share of the total amount estimated to be
expended under the State plan during such State fiscal year.
(ii) For purposes of clause (i)(I), in the case of a tax that is
not in effect throughout State fiscal year 1992 or the rate (or
base) of which is increased during such fiscal year, the Secretary
shall project the amount to be collected during such fiscal year as
if the tax (or increase) were in effect during the entire State
fiscal year.
(C)(i) The total amount of health care related taxes under
subparagraph (B)(i)(I) shall be determined by the Secretary based
on only those taxes (including the tax rate or base) which were in
effect, or for which legislation or regulations imposing such taxes
were enacted or adopted, as of November 22, 1991.
(ii) The amount of provider-related donations under subparagraph
(B)(i)(I) shall be determined by the Secretary based on programs in
effect on September 30, 1991, and applicable to State fiscal year
1992, as demonstrated by State plan amendments, written agreements,
State budget documentation, or other documentary evidence in
existence on that date.
(iii) The amount of expenditures described in subparagraph
(B)(i)(II) shall be determined by the Secretary based on the best
data available as of December 12, 1991.
(6)(A) Notwithstanding the provisions of this subsection, the
Secretary may not restrict States' use of funds where such funds
are derived from State or local taxes (or funds appropriated to
State university teaching hospitals) transferred from or certified
by units of government within a State as the non-Federal share of
expenditures under this subchapter, regardless of whether the unit
of government is also a health care provider, except as provided in
section 1396a(a)(2) of this title, unless the transferred funds are
derived by the unit of government from donations or taxes that
would not otherwise be recognized as the non-Federal share under
this section.
(B) For purposes of this subsection, funds the use of which the
Secretary may not restrict under subparagraph (A) shall not be
considered to be a provider-related donation or a health care
related tax.
(7) For purposes of this subsection:
(A) Each of the following shall be considered a separate class
of health care items and services:
(i) Inpatient hospital services.
(ii) Outpatient hospital services.
(iii) Nursing facility services (other than services of
intermediate care facilities for the mentally retarded).
(iv) Services of intermediate care facilities for the
mentally retarded.
(v) Physicians' services.
(vi) Home health care services.
(vii) Outpatient prescription drugs.
(viii) Services of a medicaid managed care organization with
a contract under subsection (m) of this section.
(ix) Such other classification of health care items and
services consistent with this subparagraph as the Secretary may
establish by regulation.
(B) The term "health care provider" means an individual or
person that receives payments for the provision of health care
items or services.
(C) An entity is considered to be "related" to a health care
provider if the entity -
(i) is an organization, association, corporation or
partnership formed by or on behalf of health care providers;
(ii) is a person with an ownership or control interest (as
defined in section 1320a-3(a)(3) of this title) in the
provider;
(iii) is the employee, spouse, parent, child, or sibling of
the provider (or of a person described in clause (ii)); or
(iv) has a similar, close relationship (as defined in
regulations) to the provider.
(D) The term "State" means only the 50 States and the District
of Columbia but does not include any State whose entire program
under this subchapter is operated under a waiver granted under
section 1315 of this title.
(E) The "State fiscal year" means, with respect to a specified
year, a State fiscal year ending in that specified year.
(F) The term "tax" includes any licensing fee, assessment, or
other mandatory payment, but does not include payment of a
criminal or civil fine or penalty (other than a fine or penalty
imposed in lieu of or instead of a fee, assessment, or other
mandatory payment).
(G) The term "unit of local government" means, with respect to
a State, a city, county, special purpose district, or other
governmental unit in the State.