[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3705 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 3705

 To amend title XIX of the Social Security Act to improve requirements 
   under the Medicaid program for items and services furnished in or 
   through an educational program or setting to children, including 
children with developmental, physical, or mental health needs, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 20, 2006

Mr. Kennedy (for himself, Mr. Harkin, Mr. Jeffords, Mr. Bingaman, Mrs. 
Clinton, Mrs. Murray, Mr. Reed, Mr. Dodd, Ms. Mikulski, Mr. Dayton, Ms. 
  Stabenow, and Mr. Schumer) introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend title XIX of the Social Security Act to improve requirements 
   under the Medicaid program for items and services furnished in or 
   through an educational program or setting to children, including 
children with developmental, physical, or mental health needs, and for 
                            other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Protecting Children's Health in 
Schools Act of 2006''.

SEC. 2. REQUIREMENTS UNDER THE MEDICAID PROGRAM FOR ITEMS AND SERVICES 
              FURNISHED IN OR THROUGH AN EDUCATIONAL PROGRAM OR SETTING 
              TO CHILDREN, INCLUDING CHILDREN WITH DEVELOPMENTAL, 
              PHYSICAL, OR MENTAL HEALTH NEEDS.

    (a) Requirements for Payments.--Section 1903 of the Social Security 
Act (42 U.S.C. 1396b) is amended--
            (1) in subsection (i)--
                    (A) in paragraph (22), by striking the period at 
                the end and inserting ``; or''; and
                    (B) by inserting after paragraph (22), the 
                following new paragraphs:
            ``(23) with respect to any amount expended by, or on behalf 
        of, the State (including by a local educational agency in the 
        State or the lead agency in the State with responsibility for 
        administering part C of the Individuals with Disabilities 
        Education Act) for an item or service provided under the State 
        plan in or through an educational program or setting, or for 
        any administrative cost incurred to carry out the State plan in 
        or through such a program or setting, or for a transportation 
        service for an individual who has not attained age 21, unless 
        the requirements of subsection (y) are met; or
            ``(24) with respect to any amount expended for an item or 
        service provided under the State plan in or through an 
        educational program or setting, or for any administrative cost 
        incurred to carry out the plan in or through such a program or 
        setting by, or on behalf of, the State through an agency that 
        is not the State agency with responsibility for administering 
        the State plan (including a local educational agency in the 
        State or the lead agency in the State with responsibility for 
        administering part C of the Individuals with Disabilities 
        Education Act) and that enters into a contract or other 
        arrangement with a person or entity for or in connection with 
        the collection or submission of claims for such an expenditure 
        or cost, unless the agency--
                    ``(A) if not a public agency operating a consortium 
                with other public agencies, uses a competitive bidding 
                process or otherwise to contract with such person or 
                entity at a reasonable rate commensurate with the 
                services performed by the person or entity; and
                    ``(B) requires that any fees (including any 
                administrative fees) to be paid to the person or entity 
                for the collection or submission of such claims are 
                identified as a non-contingent, specified dollar amount 
                in the contract.''; and
            (2) by adding at the end the following new subsection:
    ``(y) Requirements for Federal Financial Participation for 
Furnishing Medical Assistance (including Medically Needed 
Transportation) in or Through an Educational Program or Setting.--For 
purposes of subsection (i)(23), the requirements of this subsection are 
the following:
            ``(1) Approved methodology for expenditures for bundled 
        items, services, and administrative costs.--
                    ``(A) In general.--In the case of any amount 
                expended by, or on behalf of, the State for a bundle of 
                individual items, services, and administrative costs 
                under the State plan that are furnished in or through 
                an educational program or setting, the expenditure must 
                be made in accordance with a methodology approved by 
                the Secretary which--
                            ``(i) provides for an itemization to the 
                        Secretary in a manner that ensures 
                        accountability of the cost of the bundled 
                        items, services, and administrative costs and 
                        includes payment rates and the methodologies 
                        underlying the establishment of such rates;
                            ``(ii) has a sound basis for determining 
                        such payment rates and methodologies; and
                            ``(iii) matches payments for the bundled 
                        items, services, and administrative costs with 
                        corresponding items and services provided and 
                        administrative costs incurred under the State 
                        plan.
                    ``(B) Rule of construction.--Nothing in 
                subparagraph (A) shall be construed as--
                            ``(i) requiring a State to establish and 
                        apply such a methodology through a State plan 
                        amendment;
                            ``(ii) requiring a State with such an 
                        approved methodology to obtain the approval of 
                        the Secretary for any increase in rates of 
                        reimbursement that are established consistent 
                        with such methodology; or
                            ``(iii) prohibiting the Secretary from 
                        reviewing a State's costs for the individual 
                        items, services, and administrative costs that 
                        make up a proposed bundle of items, services, 
                        and costs as a condition of approval of the 
                        methodology that the State will establish to 
                        determine the rate of reimbursement for such 
                        bundle of items, services, and costs.
            ``(2) Application of market rate for individual items, 
        services, administrative costs.--In the case of an amount 
        expended by, or on behalf of, the State for an individual item, 
        service, or administrative cost under the State plan that is 
        furnished in or through an educational program or setting, the 
        State must establish that the amount expended--
                    ``(A) does not exceed the amount that would have 
                been paid for the item, service, or administrative cost 
                if the item or service was provided or the cost was 
                incurred by an entity in or through a program or 
                setting other than an educational program or setting; 
                or
                    ``(B) if the amount expended for the item, service, 
                or administrative cost is higher than the amount 
                described in subparagraph (A), was necessary.
            ``(3) Transportation services.--
                    ``(A) In general.--In the case of an amount 
                expended by, or on behalf of, the State for furnishing 
                in or through an educational program or setting a 
                transportation service for an individual who has not 
                attained age 21 and who is eligible for medical 
                assistance under the State plan, the State mush 
                establish that--
                            ``(i) a medical need for transportation is 
                        specifically listed in the individualized 
                        education program for the individual 
                        established pursuant to part B of the 
                        Individuals with Disabilities Education Act or, 
                        in the case of an infant or a toddler with a 
                        disability, in the individualized family 
                        service plan established for such infant or 
                        toddler pursuant to part C of such Act, or is 
                        furnished to the individual pursuant to section 
                        504 of the Rehabilitation Act of 1973;
                            ``(ii) the vehicle used to furnish such 
                        transportation service is specially equipped or 
                        staffed to accommodate individuals who have not 
                        attained age 21 with developmental, physical, 
                        or mental health needs; and
                            ``(iii) payment for such service is made 
                        only for costs directly attributable to costs 
                        associated with transporting individuals who 
                        have not attained age 21 and whose 
                        developmental, physical, or mental health needs 
                        require transport in such a vehicle in order to 
                        receive the services for which medical 
                        assistance is provided under the State plan.
                    ``(B) Rule of construction.--Nothing in 
                subparagraph (A) shall be construed as modifying the 
                obligation of a State to ensure that an individual who 
                has not attained age 21 and who is eligible for medical 
                assistance under the State plan receives necessary 
                transportation services to and from a provider of 
                medical assistance in or through a program or setting 
                other than an educational program or setting.''.
    (b) Requirements for the Provision of Items and Services Through 
Medicaid Managed Care Organizations.--
            (1) Contractual requirements.--Section 1903(m)(2) of the 
        Social Security Act (42 U.S.C. 1396b(m)(2)) is amended--
                    (A) in subparagraph (A), by inserting after clause 
                (i) the following new clause:
            ``(ii) the contract with the entity satisfies the 
        requirements of subparagraph (C) (relating to payment for, and 
        coverage of, such services under an individual's education 
        program, an individualized family service plan, or when 
        furnished in or through an educational program or setting);''; 
        and
                    (B) by inserting after subparagraph (B), the 
                following new subparagraph:
    ``(C) For purposes of clause (ii) of subparagraph (A), the 
requirements of this subparagraph are the following:
            ``(i) The contract with the entity specifies the coverage 
        and payment responsibilities of the entity in relation to 
        medical assistance for items and services that are covered 
        under the State plan and included in the contract, when such 
        items and services are furnished in or through an educational 
        program or setting.
            ``(ii) In any case in which the entity is obligated under 
        the contract to pay for items and services covered under the 
        State plan, the contract with the entity requires the entity 
        to--
                    ``(I) enter into a provider network service 
                agreement with the qualified provider or providers 
                furnishing such items or services in or through an 
                educational program or setting;
                    ``(II) promptly pay such providers at a rate that 
                is at least equal to the rate that would be paid to a 
                provider furnishing the same service in a non-
                educational program or setting; and
                    ``(III) treat as final and binding determinations 
                by State licensed providers or providers eligible for 
                reimbursement under the State plan working in an 
                educational program or setting regarding the medical 
                necessity of an item or service.
            ``(iii) The contract with the entity specifies the 
        obligation of the entity to ensure that providers of items or 
        services that are furnished in or through an educational 
        program or setting refer children furnished such items or 
        services to the entity and its provider network for additional 
        services that are not available in or through such program or 
        setting but that are covered under the State plan and included 
        in the entity's contract with the State.
            ``(iv) The contract with the entity requires, with respect 
        to payment for, and coverage of, services for which the entity 
        is responsible for, that the entity must demonstrate that the 
        entity has established procedures to--
                    ``(I) ensure coordination between the State, a 
                local educational agency and the lead agency in the 
                State with responsibility for administering part C of 
                the Individuals with Disabilities Education Act with 
                respect to those services for an individual who has not 
                attained age 21 and who is eligible for medical 
                assistance under the State plan (including an 
                individual who has an individualized education program 
                established pursuant to part B of the Individuals with 
                Disabilities Education Act or otherwise or an infant or 
                toddler with a disability who has an individualized 
                family service plan established pursuant to part C of 
                such Act) which are required for the individual under 
                the individual's education program or the 
                individualized family service plan, or are furnished to 
                the individual pursuant to section 504 of the 
                Rehabilitation Act of 1973 and which are not 
                specifically included in the services required under 
                the contract, but are the responsibility of the State, 
                a local educational agency, or the lead agency in the 
                State with responsibility for administering part C of 
                the Individuals with Disabilities Education Act; and
                    ``(II) prevent duplication of services and payments 
                under this title with respect to items and services 
                covered under the State plan that are furnished in or 
                through an educational program or setting to such 
                individuals enrolled under the contract.''.
            (2) Prohibition on duplicative payments.--
                    (A) In general.--Section 1903(i) of the Social 
                Security Act (42 U.S.C. 1396b(i)), as amended by 
                subsection (a), is amended--
                            (i) in paragraph (24)(B), by striking the 
                        period and inserting ``; or''; and
                            (ii) by inserting after paragraph (24) the 
                        following new paragraph:
                    ``(25) with respect to any amount expended under 
                the State plan for an item, service, or administrative 
                cost for which payment is or may be made directly to a 
                person or entity (including a State, local educational 
                agency, or the lead agency in the State with 
                responsibility for administering part C of the 
                Individuals with Disabilities Education Act) under the 
                State plan if payment for such item, service, or 
                administrative cost was included in the determination 
                of a prepaid capitation or other risk-based rate of 
                payment to an entity under a contract pursuant to 
                section 1903(m).''.
                    (B) Conforming amendment.--The third sentence of 
                section 1903(i) of such Act (42 U.S.C. 1396b(i)), as 
                amended by subsection (a)(1)(C), is amended by striking 
                ``and (24)'' and inserting ``(24), and (25)''.
    (c) Allowable Share of FFP With Respect to Payment for Services 
Furnished in or Through an Educational Program or Setting.--Section 
1903(w)(6) of the Social Security Act (42 U.S.C. 1396b(w)(6)) is 
amended--
            (1) in subparagraph (A), by inserting ``subject to 
        subparagraph (C),'' after ``subsection,''; and
            (2) by adding at the end the following new subparagraph:
    ``(C) In the case of any Federal financial participation paid under 
subsection (a) with respect to an expenditure for an item or service 
provided under the plan, or for any administrative cost incurred to 
carry out the plan, that is furnished in or through an educational 
program or setting, the State shall provide that--
            ``(i) if 0 percent of the expenditure was made or the cost 
        was incurred directly by the State, the State shall pay the 
        local educational agency in the State or the lead agency in the 
        State with responsibility for administering part C of the 
        Individuals with Disabilities Education Act that made the 
        expenditure or incurred the cost (and, if applicable, any 
        consortium of public agencies that incurred costs in connection 
        with the collection or submission of claims for such 
        expenditures or costs), 100 percent (divided, as appropriate, 
        between such agencies and such a consortium, if applicable) of 
        the amount of the Federal financial participation; and
            ``(ii) if 100 or any lesser percent of the expenditure was 
        made or the cost was directly incurred by the State, the State 
        shall retain only such percentage of the Federal financial 
        participation paid for the expenditure or cost as does not 
        exceed the percentage of such expenditure or cost that was 
        funded by State revenues that are dedicated solely for the 
        provision of such medical assistance (and shall pay out of any 
        remaining percentage of such Federal financial participation, 
        the percentage due to the local educational agency in the State 
        or the lead agency in the State with responsibility for 
        administering part C of the Individuals with Disabilities 
        Education Act that made or incurred the remaining percentage of 
        such expenditure or cost (and, if applicable, any consortium of 
        public agencies that incurred costs in connection with the 
        collection or submission of claims for such expenditures or 
        costs)).''.
    (d) Assurance of Reimbursement for Administrative, Enrollment, and 
Outreach Activities Conducted by Local Educational Agencies.--
            (1) Medicaid.--Section 1902 of the Social Security Act (42 
        U.S.C. 1396a) is amended by inserting after subsection (j) the 
        following new subsection:
    ``(k) Nothing in this title shall be construed as authorizing the 
Secretary to prohibit the State agency with responsibility for the 
administration or supervision of the administration of the State plan 
from entering into interagency agreements with local educational 
agencies under which such local educational agencies shall be 
reimbursed for the Federal share of amounts expended for 
administrative, enrollment, and outreach activities for which payment 
is made to the State under section 1903(a)(7), including with respect 
to such activities as are conducted for purposes of satisfying the 
requirements of subsection (a)(43).''.
            (2) SCHIP.--Section 2107(e)(1) of the Social Security Act 
        (42 U.S.C. 1397gg(e)(1)) is amended--
                    (A) by redesignating subparagraphs (B) through (D) 
                as subparagraphs (C) through (E), respectively; and
                    (B) by inserting after subparagraph (A) the 
                following new subparagraph:
                    ``(B) Section 1902(k) (relating to interagency 
                agreements with local educational agencies for 
                reimbursement for expenditures for administrative, 
                enrollment, and outreach activities).''.
    (e) Clarification of Coverage of Epsdt and Items and Services 
Furnished to a Disabled Child Pursuant to Section 504 of the 
Rehabilitation Act of 1973; Definition of ``Educational Program or 
Setting''.--Section 1903(c) of the Social Security Act (42 U.S.C. 
1396b(c)) is amended--
            (1) by inserting ``(1)'' after ``(c)'';
            (2) by striking ``Education Act or'' and inserting 
        ``Education Act,'';
            (3) by inserting ``, or furnished to a child with a 
        disability pursuant to section 504 of the Rehabilitation Act of 
        1973'' before the period; and
            (4) by adding at the end the following new paragraphs:
    ``(2) Nothing in this title shall be construed as prohibiting or 
restricting, or authorizing the Secretary to prohibit or restrict, 
payment under subsection (a) for the following items or services 
furnished in or through an educational program or setting, or costs 
incurred with respect to the furnishing of such items or services:
            ``(A) Medical assistance for items or services described in 
        section 1905(a)(4)(B) (relating to early and periodic 
        screening, diagnostic, and treatment services defined in 
        section 1905(r)) and costs incurred for providing such items or 
        services in accordance with the requirements of section 
        1902(a)(43).
            ``(B) Costs incurred for providing services related to the 
        administration of the State plan, including providing 
        information regarding the availability of, and eligibility for, 
        medical assistance under the plan, and assistance with 
        determinations of eligibility and enrollment and 
        redeterminations of eligibility under the plan.
    ``(3) Nothing in this title shall be construed as prohibiting or 
restricting, or authorizing the Secretary to prohibit or restrict, 
payment under subsection (a) for medical assistance furnished in or 
through an educational program or setting or costs described in 
paragraph (2)(B) solely because--
            ``(A) the State utilizes an all-inclusive payment 
        arrangement in making payments for medical assistance described 
        in subsections (a) or (r) of section 1905; or
            ``(B) the State utilizes a cost allocation system that 
        meets Federal requirements when paying for the cost of services 
        described in section 1902(a)(43) or other administrative 
        services directly related to the administration of the State 
        plan.
    ``(4)(A) For purposes of this title, the term `educational program 
or setting' means any location in which the items or services included 
in a child's individualized education plan established pursuant to part 
B of the Individuals with Disabilities Education Act or otherwise, or 
in an infant's or toddler's individualized family service plan 
established pursuant to part C of such Act, are delivered, including 
the home, child care setting, or school of the child, infant, or 
toddler.
    ``(B) Such term includes--
            ``(i) any location in which an evaluation or assessment is 
        conducted, in accordance with the requirements of section 
        1902(a)(43) and subsections (a)(4)(B) and (r) of section 1905, 
        to determine if a child is a child with a disability under 
        section 614 of the Individuals with Disabilities Education Act 
        (20 U.S.C. 1414) who requires an individualized education 
        program (IEP) under section 614(d) of such Act (20 U.S.C. 
        1414(d)) or if an infant or toddler is an infant or toddler 
        with a disability under section 635(a)(3) of such Act (20 
        U.S.C. 1435(a)(3)) who requires an individualized family 
        service plan under section 636 of such Act (20 U.S.C. 1436) and 
        any location in which a reevaluation or reassessment of such a 
        determination is conducted; and
            ``(ii) for purposes of subsection (m)(2)(C), any location 
        in which items or services described in section 1905(a)(4)(B) 
        (relating to early and periodic screening, diagnostic, and 
        treatment services defined in section 1905(r)) are delivered 
        and costs are incurred for providing such items or services in 
        accordance with the requirements of section 1902(a)(43).''.
    (f) Assurance of Compliance With Federal and State Requirements.--
Section 1902(a) of the Social Security Act (42 U.S.C. 1396a(a)) is 
amended--
            (1) in paragraph (69), by striking ``and'' at the end;
            (2) in paragraph (70)(B)(iv), by striking the period at the 
        end and inserting ``; and''; and
            (3) by inserting after paragraph (70), the following new 
        paragraph:
            ``(71) provide that--
                    ``(A) the State will establish procedures to ensure 
                that--
                            ``(i) any provider of an item or service 
                        covered under the plan that is furnished in or 
                        through an educational program or setting 
                        complies with all Federal and State 
                        requirements applicable to providers of such 
                        items or services under the plan; and
                            ``(ii) any educational entity that is 
                        engaged in the provision of an activity 
                        described in paragraph (43) or any other 
                        activity that is directly related to the 
                        administration of the plan complies with all 
                        Federal and State requirements applicable for 
                        payment for such activity; and
                    ``(B) the State will not furnish medical assistance 
                for an item or service covered under the plan in or 
                through an educational program or setting, or undertake 
                any activity described in paragraph (43) or any other 
                activity that is directly related to the administration 
                of the plan in or through such a program or setting, 
                unless the entity responsible for providing the item or 
                service, or undertaking such an activity, in or through 
                the educational program or setting will be paid under 
                the State plan for the costs related to the furnishing 
                of such item or service or the undertaking of such 
                activity.''.
    (g) Uniform Methodology for Educational Program or Setting-Based 
Claims.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary of Health and Human 
        Services and the Secretary of Education, acting jointly and in 
        consultation with State medicaid directors, State educational 
        agencies, local educational agencies, and State agencies with 
        responsibility for administering part C of the Individuals with 
        Disabilities Education Act, shall develop and implement a 
        uniform methodology for claims for payment of medical 
        assistance and related administrative costs furnished under 
        title XIX of the Social Security Act in an educational program 
        or setting.
            (2) Requirements.--The methodology developed under 
        paragraph (1)--
                    (A) shall not prohibit or restrict payment for 
                medical assistance and administrative activities that 
                are provided or conducted in accordance with section 
                1903(c) of the Social Security Act (42 U.S.C. 
                1396b(c)); and
                    (B) with respect to administrative costs, shall be 
                based on--
                            (i) standards related to time studies and 
                        population estimates; and
                            (ii) a national standard for determining 
                        payment for such costs.
    (h) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act and shall apply to items 
and services provided and expenditures made on or after such date, 
without regard to whether implementing regulations are in effect.
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