[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3757 Introduced in House (IH)]







109th CONGRESS
  1st Session
                                H. R. 3757

  To amend title XIX of the Social Security Act to provide for health 
            opportunity accounts under the Medicaid Program.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 13, 2005

 Mr. Rogers of Michigan (for himself, Mr. Burgess, Mr. Blunt, and Mr. 
   Shimkus) introduced the following bill; which was referred to the 
                    Committee on Energy and Commerce

_______________________________________________________________________

                                 A BILL


 
  To amend title XIX of the Social Security Act to provide for health 
            opportunity accounts under the Medicaid Program.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicaid Health Opportunity Account 
Act of 2005''.

SEC. 2. HEALTH OPPORTUNITY ACCOUNTS UNDER THE MEDICAID PROGRAM.

    Title XIX of the Social Security Act is amended--
            (1) by redesignating section 1936 as section 1937; and
            (2) by inserting after section 1935 the following new 
        section:

                     ``health opportunity accounts

    ``Sec. 1936. (a) Authority.--
            ``(1) In general.--Notwithstanding any other provision of 
        this title, the Secretary shall establish a demonstration 
        program under which States may provide under their State plans 
        under this title (including such a plan operating under a 
        statewide waiver under section 1115) in accordance with this 
        section for the provision of alternative benefits consistent 
        with subsection (c) for eligible population groups in one or 
        more geographic areas of the State specified by the State. An 
        amendment under the previous sentence is referred to in this 
        section as a `State demonstration program'.
            ``(2) Initial demonstration.--The demonstration program 
        under this section shall begin on January 1, 2006. During the 
        first 5 years of such program, the Secretary shall not approve 
        more than 10 State demonstration programs, with each State 
        demonstration program covering one or more geographic areas 
        specified by the State. After such 5-year period--
                    ``(A) unless the Secretary finds, taking into 
                account cost-effectiveness, quality of care, and other 
                criteria that the Secretary specifies, that a State 
                demonstration program previously implemented has been 
                unsuccessful, such a demonstration program may be 
                extended or made permanent in the State; and
                    ``(B) unless the Secretary finds, taking into 
                account cost-effectiveness, quality of care, and other 
                criteria that the Secretary specifies, that all State 
                demonstration program previously implemented were 
                unsuccessful, other States may implement State 
                demonstration programs.
            ``(3) Approval.--The Secretary shall not approve a State 
        demonstration program under paragraph (1) unless the program 
        incorporates the following:
                    ``(A) Creating patient awareness of the high cost 
                of medical care.
                    ``(B) Providing incentives to patients to seek 
                preventive care services.
                    ``(C) Reducing inappropriate use of health care 
                services.
                    ``(D) Enabling patients to take responsibility for 
                health outcomes.
                    ``(E) Providing enrollment counselors and ongoing 
                education activities.
                    ``(F) Providing transactions involving health 
                opportunity accounts to be conducted electronically and 
                without cash.
                    ``(G) Providing access to negotiated provider 
                payment rates consistent with this section.
        Nothing in this section shall be construed as preventing a 
        State demonstration program from providing incentives for 
        patients obtaining appropriate preventive care (as defined for 
        purposes of section 223(c)(2)(C) of the Internal Revenue Code 
        of 1986), such as additional account contributions for an 
        individual demonstrating healthy prevention practices.
            ``(4) No requirement for statewideness.--Nothing in this 
        section or any other provision of law shall be construed to 
        require that a State must provide for the implement of a State 
        demonstration program on a Statewide basis.
            ``(5) Reports.--The Secretary shall periodically submit to 
        Congress reports regarding the success of State demonstration 
        programs.
    ``(b) Eligible Population Groups.--
            ``(1) In general.--A State demonstration program under this 
        section shall specify the eligible population groups consistent 
        with paragraph (2).
            ``(2) Eligibility limitations during initial demonstration 
        period.--During the initial 5 years of the demonstration 
        program under this section, a State demonstration project shall 
        not apply to any of the following individuals:
                    ``(A) Individuals who are 65 years of age or older.
                    ``(B) Individuals who are disabled, regardless of 
                whether or not their eligibility for medical assistance 
                under this title is based on such disability.
                    ``(C) Individuals who are eligible for medical 
                assistance under this title only because they are (or 
                were within previous 60 days) pregnant.
                    ``(D) Individuals who have been eligible for 
                medical assistance for a continuous period of less than 
                3 months.
            ``(3) Limitations.--
                    ``(A) State option.--This subsection shall not be 
                construed as preventing a State from further limiting 
                eligibility to individuals who are likely to be 
                eligible for medical assistance for a period of one 
                year or longer.
                    ``(B) On enrollees in medicaid managed care 
                organizations.--Insofar as the State provides for 
                eligibility of individuals who are enrolled in medicaid 
                managed care organizations, such individuals may 
                participate in the State demonstration project only if 
                the State provides assurances satisfactory to the 
                Secretary that the following conditions are met with 
                respect to any such organization:
                            ``(i) In no case may the number of such 
                        individuals enrolled in the organization who 
                        participate in the project exceed 5 percent of 
                        the total number of individuals enrolled in 
                        such organization.
                            ``(ii) The proportion of enrollees in the 
                        organization who so participate is not 
                        significantly disproportionate to the 
                        proportion of such enrollees in other such 
                        organizations who participate.
                            ``(iii) The State has provided for an 
                        appropriate adjustment in the per capita 
                        payments to the organization to account for 
                        such participation, taking into account 
                        differences in the likely use of health 
                        services between enrollees who so participate 
                        and enrollees who do not so participate.
            ``(4) Voluntary participation.--An eligible individual 
        shall be enrolled in a State demonstration project only if the 
        individual voluntarily enrolls. Such an enrollment shall be 
        effective for a period of 12 months, but may be extended for 
        additional periods of 12 months each with the consent of the 
        individual.
    ``(c) Alternative Benefits.--
            ``(1) In general.--The alternative benefits provided under 
        this section shall consist, consistent with this subsection, of 
        at least--
                    ``(A) coverage for medical expenses in a year for 
                items and services for which benefits are otherwise 
                provided under this title after an annual deductible 
                described in paragraph (2) has been met; and
                    ``(B) contribution into a health opportunity 
                account.
        Nothing in subparagraph (A) shall be construed as preventing a 
        State from providing for coverage of preventive care (referred 
        to in subsection (a)(3)) within the alternative benefits 
        without regard to the annual deductible.
            ``(2) Annual deductible.--The amount of the annual 
        deductible described in paragraph (1)(A) shall be at least 100 
        percent, but no more than 110 percent, of the annualized amount 
        of contributions to the health opportunity account under 
        subsection (d)(2)(A)(i), determined without regard to any 
        limitation described in subsection (d)(2)(C)(ii).
            ``(3) Access to negotiated provider payment rates.--
                    ``(A) Fee-for-service enrollees.--In the case of an 
                individual who is participating in a State 
                demonstration project and who is not enrolled with a 
                medicaid managed care organization, the State shall 
                provide that the individual may obtain demonstration 
                project medicaid services from--
                            ``(i) any participating provider under this 
                        title at the same payment rates that would be 
                        applicable to such services if the deductible 
                        described in paragraph (1)(A) was not 
                        applicable; or
                            ``(ii) any provider at payment rates that 
                        do not exceed 125 percent of the payment rate 
                        that would be applicable to such services 
                        furnished by a participating provider under 
                        this title if the deductible described in 
                        paragraph (1)(A) was not applicable.
                    ``(B) Treatment under medicaid managed care 
                plans.--In the case of an individual who is 
                participating in a State demonstration project and is 
                enrolled with a medicaid managed care organization, the 
                State shall enter into an arrangement with the 
                organization under which the individual may obtain 
                demonstration project medicaid services from any 
                provider under such organization at payment rates that 
                do not the payment rate that would be applicable to 
                such services if the deductible described in paragraph 
                (1)(A) was not applicable.
                    ``(C) Computation.--The payment rates described in 
                subparagraphs (A) and (B) shall be computed without 
                regard to any cost-sharing that would be otherwise 
                applicable under section 1916.
                    ``(D) Definitions.--For purposes of this paragraph:
                            ``(i) The term `demonstration project 
                        medicaid services' means, with respect to an 
                        individual participating in a State 
                        demonstration project, services for which the 
                        individual would be provided medical assistance 
                        under this title but for the application of the 
                        deductible described in paragraph (1)(A).
                            ``(ii) The term `participating provider' 
                        means--
                                    ``(I) with respect to an individual 
                                described in subparagraph (A), a health 
                                care provider that has entered into a 
                                participation agreement with the State 
                                for the provision of services to 
                                individuals entitled to benefits under 
                                the State plan; or
                                    ``(II) with respect to an 
                                individual described in subparagraph 
                                (B) who is enrolled in a medicaid 
                                managed care organization, a health 
                                care provider that has entered into an 
                                arrangement for the provision of 
                                services to enrollees of the 
                                organization under this title.
            ``(4) No effect on subsequent benefits.--Except as provided 
        under paragraphs (1) and (2), alternative benefits for an 
        eligible individual shall consist of the benefits otherwise 
        provided to the individual, including cost-sharing relating to 
        such benefits.
            ``(5) Overriding cost-sharing and comparability 
        requirements for alternative benefits.--The provisions of this 
        title relating to cost-sharing for benefits (including section 
        1916) shall not apply with respect to benefits to which the 
        annual deductible under paragraph (1)(A) applies. The 
        provisions of section 1902(a)(10)(B) (relating to 
        comparability) shall not apply with respect to the provision of 
        alternative benefits (as described in this subsection).
            ``(6) Treatment as medical assistance.--Subject to 
        subparagraphs (D) and (E) of subsection (d)(2), payments for 
        alternative benefits under this section (including 
        contributions into a health opportunity account) shall be 
        treated as medical assistance for purposes of section 1903(a).
            ``(7) Use of tiered deductible and cost-sharing.--
                    ``(A) In general.--A State--
                            ``(i) may vary the amount of the annual 
                        deductible applied under paragraph (1)(A) based 
                        on the income of the family involved so long as 
                        it does not favor families with higher income 
                        over those with lower income; and
                            ``(ii) may vary the amount of the maximum 
                        out-of-pocket cost-sharing (as defined in 
                        subparagraph (B)) based on the income of the 
                        family involved so long as it does not favor 
                        families with higher income over those with 
                        lower income.
                    ``(B) Maximum out-of-pocket cost-sharing.--For 
                purposes of subparagraph (A)(ii), the term `maximum 
                out-of-pocket cost-sharing' means, for an individual or 
                family, the amount by which the annual deductible level 
                applied under paragraph (1)(A) to the individual or 
                family exceeds the balance in the health opportunity 
                account for the individual or family.
            ``(8) Contributions by employers.--Nothing in this section 
        shall be construed as preventing an employer from providing 
        health benefits coverage consisting of the coverage described 
        in paragraph (1)(A) to individuals who are provided alternative 
        benefits under this section.
    ``(d) Health Opportunity Account.--
            ``(1) In general.--For purposes of this section, the term 
        `health opportunity account' means an account that meets the 
        requirements of this subsection.
            ``(2) Contributions.--
                    ``(A) In general.--No contribution may be made into 
                a health opportunity account except--
                            ``(i) contributions by the State under this 
                        title; and
                            ``(ii) contributions by other persons and 
                        entities, such as charitable organizations.
                    ``(B) State contribution.--A State shall specify 
                the contribution amount that shall be deposited under 
                subparagraph (A)(i) into a health opportunity account.
                    ``(C) Limitation on annual state contribution 
                provided and permitting imposition of maximum account 
                balance.--
                            ``(i) In general.--A State--
                                    ``(I) may impose limitations on the 
                                maximum contributions that may be 
                                deposited under subparagraph (A)(i) 
                                into a health opportunity account in a 
                                year;
                                    ``(II) may limit contributions into 
                                such an account once the balance in the 
                                account reaches a level specified by 
                                the State; and
                                    ``(III) subject to clauses (ii) and 
                                (iii) and subparagraph (D)(i), may not 
                                provide contributions described in 
                                subparagraph (A)(i) to a health 
                                opportunity account on behalf of an 
                                individual or family to the extent the 
                                amount of such contributions (including 
                                both State and Federal shares) exceeds, 
                                on an annual basis, $2,500 for each 
                                individual (or family member) who is an 
                                adult and $1,000 for each individual 
                                (or family member) who is a child.
                            ``(ii) Indexing of dollar limitations.--For 
                        each year after 2006, the dollar amounts 
                        specified in clause (i)(III) shall be annually 
                        increased by the Secretary by an percentage 
                        that reflects the annual percentage increase in 
                        the medical care component of the consumer 
                        price index for all urban consumers.
                            ``(iii) Budget neutral adjustment.--A State 
                        may provide for dollar limitations in excess of 
                        those specified in clause (i)(III) (as 
                        increased under clause (ii)) for specified 
                        individuals if the State provides assurances 
                        satisfactory to the Secretary that 
                        contributions otherwise made to other 
                        individuals will be reduced in a manner so as 
                        to provide for aggregate contributions that do 
                        not exceed the aggregate contributions that 
                        would otherwise be permitted under this 
                        subparagraph.
                    ``(D) Limitations on federal matching.--
                            ``(i) State contribution.--A State may 
                        contribute under subparagraph (A)(i) amounts to 
                        a health opportunity account in excess of the 
                        limitations provided under subparagraph 
                        (C)(i)(III), but no Federal financial 
                        participation shall be provided under section 
                        1903(a) with respect to contributions in excess 
                        of such limitations.
                            ``(ii) No ffp for private contributions.--
                        No Federal financial participation shall be 
                        provided under section 1903(a) with respect to 
                        any contributions described in subparagraph 
                        (A)(ii) to a health opportunity account.
                    ``(E) Application of different matching rates.--The 
                Secretary shall provide a method under which, for 
                expenditures made from a health opportunity account for 
                medical care for which the Federal matching rate under 
                section 1903(a) exceeds the Federal medical assistance 
                percentage, a State may obtain payment under such 
                section at such higher matching rate for such 
                expenditures.
            ``(3) Use.--
                    ``(A) General uses.--
                            ``(i) In general.--Subject to the 
                        succeeding provisions of this paragraph, 
                        amounts in a health opportunity account may be 
                        used for payment of such health care 
                        expenditures as the State specifies.
                            ``(ii) General limitation.--In no case 
                        shall such account be used for payment for 
                        health care expenditures that are not payment 
                        of medical care (as defined by section 213(d) 
                        of the Internal Revenue Code of 1986).
                            ``(iii) State restrictions.--In applying 
                        clause (i), a State may restrict payment for--
                                    ``(I) providers of items and 
                                services to providers that are licensed 
                                or otherwise authorized under State law 
                                to provide the item or service and may 
                                deny payment for such a provider on the 
                                basis that the provider has been found, 
                                whether with respect to this title or 
                                any other health benefit program, to 
                                have failed to meet quality standards 
                                or to have committed one or more acts 
                                of fraud or abuse; and
                                    ``(II) items and services insofar 
                                as the State finds they are not 
                                medically appropriate or necessary.
                            ``(iv) Electronic withdrawals.-- The State 
                        demonstration program shall provide for a 
                        method whereby withdrawals may be made from the 
                        account for such purposes using an electronic 
                        system and shall not permit withdrawals from 
                        the account in cash.
                    ``(B) Maintenance of health opportunity account 
                after becoming ineligible for public benefit; 25 
                percent savings to government.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of law, if an account holder of 
                        a health opportunity account becomes ineligible 
                        for benefits under this title because of an 
                        increase in income or assets--
                                    ``(I) no additional contribution 
                                shall be made into the account under 
                                paragraph (2)(A)(i);
                                    ``(II) subject to clause (iii), the 
                                balance in the account shall be reduced 
                                by 25 percent; and
                                    ``(III) subject to the succeeding 
                                provisions of this subparagraph, the 
                                account shall remain available to the 
                                account holder for withdrawals under 
                                the same terms and conditions as if the 
                                account holder remained eligible for 
                                such benefits.
                            ``(ii) Special rules.--Withdrawals under 
                        this subparagraph from an account--
                                    ``(I) shall be available for the 
                                purchase of health insurance coverage; 
                                and
                                    ``(II) may, subject to clause (iv), 
                                be made available (at the option of the 
                                State) for such additional expenditures 
                                (such as job training and tuition 
                                expenses) specified by the State (and 
                                approved by the Secretary) as the State 
                                may specify.
                            ``(iii) Exception from 25 percent savings 
                        to government for private contributions.--
                        Clause (i)(II) shall not apply to the portion 
                        of the account that is attributable to 
                        contributions described in paragraph 
                        (2)(A)(ii). For purposes of accounting for such 
                        contributions, withdrawals from a health 
                        opportunity account shall first be attributed 
                        to contributions described in paragraph 
                        (2)(A)(i).
                            ``(iv) Condition for non-health 
                        withdrawals.--No withdrawal may be made from an 
                        account under clause (ii)(II) unless the 
                        accountholder has participated in the program 
                        under this section for at least 1 year.
                            ``(v) No requirement for continuation of 
                        coverage.--An account holder of a health 
                        opportunity account, after becoming ineligible 
                        for medical assistance under this title, is not 
                        required to purchase high-deductible or other 
                        insurance as a condition of maintaining or 
                        using the account.
            ``(4) Administration.--A State may coordinate 
        administration of health opportunity accounts through the use 
        of a third party administrator.
            ``(5) Treatment.--Amounts in, or contributed to, a health 
        opportunity account shall not be counted as income or assets 
        for purposes of determining eligibility for benefits under this 
        title.
            ``(6) Unauthorized withdrawals.--A State may establish 
        procedures--
                    ``(A) to penalize or remove an individual from the 
                health opportunity account based on nonqualified 
                withdrawals by the individual from such an account; and
                    ``(B) to recoup costs that derive from such 
                nonqualified withdrawals.''.
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